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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement"), effective
as of September 1, 1997, is by and among FLORIDA EYE CENTER, SEVER & XXXXXXX,
M.D., P.A., a Florida professional association (the "Company"), XXXXXXX X.
XXXXX, M.D. and XXXXX X. XXXXXXX, M.D. (together, the "Physician"), and VISION
TWENTY-ONE, INC., a Florida corporation ("Vision 21").
RECITALS
A. Physician is a physician licensed to practice medicine in the
State (as defined herein) and currently employs ophthalmology employees and
conducts an ophthalmology practice through the Company and through a Florida
partnership known as Florida Eye Center (the "Partnership"), of which the
Company is a partner.
B. Physician owns all of the issued and outstanding shares of
capital stock of the Company.
C. The Company and Vision 21 desire to effect a business
combination and merger of the Company with and into Vision 21 upon the terms and
subject to the satisfaction of the conditions precedent contained herein (the
"Merger").
D. Simultaneously herewith, Xxxxxxx X. Xxxxxxxx, Xx., M.D., P.A.,
a Florida professional association ("Xxxxxxxx, P.A."), and Xxxxxx X. Xxxxxxxx,
M.D., P.A., a Florida professional association ("Xxxxxxxx, P.A.") (which
professional associations, together with the Company, comprise all of the
partners of the Partnership) shall each enter into an Asset Purchase Agreement
with Vision 21.
E. Simultaneously herewith, but prior to the Merger, the
Partnership shall distribute all of its assets and assign all of its liabilities
to Xxxxxxxx, P.A., Xxxxxxxx, P.A. and the Company.
F. It is intended that for federal income tax purposes the Merger
shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").
G. Vision 21 cannot acquire certain of the Company's assets
because of laws prohibiting general business corporations from engaging in the
practice of medicine or optometry, exercising control over physicians practicing
medicine or optometrists practicing optometry, or engaging in certain practices
such as fee-splitting with physicians or optometrists, and accordingly, the
Company and Vision 21 desire that the Company divest itself of such assets prior
to the Merger.
H. Prior to the Merger, the Company, Xxxxxxxx, P.A. and Xxxxxxxx,
P.A. intend to form a new professional association ("New P.A.") to which the
Company intends to transfer its medical
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and optometry business, all of its Medical Assets (as defined herein) and all of
the Excluded Liabilities (as defined herein) in exchange for shares of New
P.A.'s capital stock, which the Company intends to distribute to Physician.
I. New P.A. intends to employ the Physician and enter into a
Business Management Agreement (as defined herein) with the Company immediately
prior to the Merger.
J. As a result of the Merger, the Surviving Corporation (as
defined herein) will acquire the medical and optometry practice management
business and all of the Nonmedical Assets (as herein defined) of the Company
associated with such business to the extent permitted by law and assume all of
Company's obligations under the Business Management Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings set forth below:
1.1. AAA. The term "AAA" shall mean the American Arbitration
Association.
1.2. Accountants. The term "Accountants" shall mean the accounting
firm for Vision 21.
1.3. Accounts Receivable. The term "Accounts Receivable" shall have
the meaning set forth in Section 3.39.
1.4. Acquisition Proposal. The term "Acquisition Proposal" shall
have the meaning set forth in Section 3.34.
1.5. Actual Knowledge. The terms "actual knowledge," "have no
actual knowledge of" or "do not actually know of" and similar phrases shall mean
(a) in the case of a natural person, the actual conscious awareness, or not, as
the context requires, of the particular fact by such person, and (b) in the case
of an entity, the actual conscious awareness, or not, as the context requires,
of the particular fact by any stockholder, director or executive officer of such
entity.
1.6. Affiliate. The term "Affiliate" with respect to any person or
entity shall mean a person or entity that directly or indirectly through one or
more intermediaries, controls, or is controlled by or is under common control
with, such person or entity.
1.7. Applicable Laws. The term "Applicable Laws" shall have the
meaning set forth in Section 20.5.
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1.8. Audit. The term "Audit" shall have the meaning set forth in
Section 3.9.
1.9. Best Knowledge. The terms "best knowledge," "have no knowledge
of" or "do not know of" and similar phrases shall mean (a) in the case of a
natural person, the particular fact was known, or not known, as the context
requires, to such person after diligent investigation and inquiry by such
person, and (b) in the case of an entity, the particular fact was known, or not
known, as the context requires, to any stockholder, director or executive
officer of such entity after diligent investigation and inquiry by the principal
executive officers of such entity.
1.10. Business Management Agreement. The term "Business Management
Agreement" shall mean the Business Management Agreement entered into between the
Company and New P.A. prior to the Closing.
1.11. Cash Compensation. The term "Cash Compensation" shall have the
meaning set forth in Section 3.11(a).
1.12. Claim Notice. The term "Claim Notice" shall have the meaning
set forth in Section 15.3(a).
1.13. Closing. The term "Closing" shall mean the consummation of the
transactions contemplated by this Agreement.
1.14. Closing Date. The term "Closing Date" shall mean September 15,
1997 or such other date as mutually agreed upon by the parties.
1.15. Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.16. Commitments. The term "Commitments" shall have the meaning set
forth in Section 3.15(a).
1.17. Common Stock. The term "Common Stock" or "Vision 21 Common
Stock" shall mean the common stock, par value $.001 per share, of Vision 21.
1.18. Company Common Stock. The term "Company Common Stock" shall
mean the common stock, par value $____ per share, of the Company.
1.19. Compensation Plans. The term "Compensation Plans" shall have
the meaning set forth in Section 3.11(b).
1.20. Competing Management Business. The term "Competing Management
Business" shall have the meaning set forth in Section 18.1(b).
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1.21. Competitor. The term "Competitor" shall mean any person or
entity which, individually or jointly with others, whether for its own account
or for that of any other person or entity, owns, or holds any ownership or
voting interest in any person or entity engaged in, the practice of
ophthalmology, the practice of optometry, the operation of out patient eye
surgical facilities, the operation of refractive surgery centers and the
operation of optical shops; provided, however, that such term shall not include
any Affiliate of Vision 21 or any entity with which Vision 21 has an agreement
similar to the Business Management Agreement in effect.
1.22. Controlled Group. The term "Controlled Group" shall have the
meaning set forth in Section 3.12(g).
1.23. Corporation Law. The term "Corporation Law" shall mean the
statutes, regulations and laws governing business corporations and professional
associations in the State.
1.24. Xxxxxxxx, P.A. The term "Xxxxxxxx, P.A." shall have the
meaning set forth in the Recitals hereto.
1.25. Damages. The term "Damages" shall have the meaning set forth
in Section 15.1.
1.26. Effective Time. The term "Effective Time" shall have the
meaning set forth in Section 2.3.
1.27. Election Period. The term "Election Period" shall have the
meaning set forth in Section 15.3(a).
1.28. Employee Benefit Plans. The term "Employee Benefit Plans"
shall have the meaning set forth in Section 3.12(a).
1.29. Employee Policies and Procedures. The term "Employee Policies
and Procedures" shall have the meaning set forth in Section 3.11(d).
1.30. Employment Agreements. The term "Employment Agreements" shall
have the meaning set forth in Section 3.11(c).
1.31. Environmental Laws. The term "Environmental Laws" shall have
the meaning set forth in Section 3.27(a).
1.32. ERISA. The term "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
1.33. Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
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1.34. Excluded Liabilities. The term "Excluded Liabilities" shall
mean (i) any and all obligations and liabilities in connection with accrued
shareholder expenses, long-term debt associated with previous liabilities of the
Company and contributions to retirement plans; and (ii) any and all obligations
or liabilities relating to any fees or expenses of the Company's or Physician's
counsel, accountants or other experts incident to the negotiation and
preparation of any of the documents contemplated herein and consummation of the
transactions contemplated thereby.
1.35. FBCA. The term "FBCA" shall mean the Florida Business
Corporation Act.
1.36. Financial Statements. The term "Financial Statements" shall
have the meaning set forth in Section 3.9.
1.37. GAAP. The term "GAAP" shall mean generally accepted accounting
principles, applied on a consistent basis with prior periods, set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity or other practices and procedures as may be approved by a
significant segment of the accounting profession, which are applicable to the
circumstances as of the date of the determination.
1.38. Governmental Authority. The term "Governmental Authority"
shall mean any national, state, provincial, local or tribunal governmental,
judicial or administrative authority or agency.
1.39. Indemnified Party. The term "Indemnified Party" shall have the
meaning set forth in Section 15.3(a).
1.40. Indemnifying Party. The term "Indemnifying Party" shall have
the meaning set forth in Section 15.3(a).
1.41. Indemnity Notice. The term "Indemnity Notice" shall have the
meaning set forth in Section 15.3(c).
1.42. Insurance Policies. The term "Insurance Policies" shall have
the meaning set forth in Section 3.16.
1.43. IRS. The term "IRS" shall mean the Internal Revenue Service.
1.44. Management Business. The term "Management Business" shall have
the meaning set forth in Section 18.1(b)(i).
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1.45. Material Adverse Effect. The term "Material Adverse Effect"
shall mean a material adverse effect on the Nonmedical Assets and the Company's
business, operations, condition (financial or otherwise) or results of
operations, taken as a whole, considering all relevant facts and circumstances.
1.46. Medical Assets. The term "Medical Assets" shall mean the
Company's right, title and interest in any assets as set forth on Schedule 1.46A
which shall also be deemed to include (a) life insurance policies covering the
life of any employee of the Company, (b) personal effects listed on Schedule
1.46B, (c) accounts receivable owed to the Company by Vision 21 in the amount of
__________ Dollars ($_________), (d) accounts receivable owed to the Company
from Managed Health Services, Inc. of Florida Eye Care Associates relating to
physician data review, administrator expenses, or medical services that were
represented by cash held by Managed Health Services, Inc. or Florida Eye Care
Associates as of August 31, 1997, (e) cash and cash equivalents in banks,
certificates of deposit, commercial paper and securities owned by the Company
(but excluding cash held in registers or xxxxx cash drawers on the Closing
Date), and (f) those assets of which the entire cost of maintenance are deemed
to be a "Practice Expense" as defined in the Business Management Agreement.
1.47. Merger . The term "Merger" shall have the meaning set forth in
Recitals hereto.
1.48. Merger Consideration. The term "Merger Consideration" shall
mean the consideration set forth in Sections 2.8, 2.9 and 2.11 of this
Agreement.
1.49. New P.A. The term "New P.A." shall have the meaning set forth
in the Recitals hereto.
1.50. Nonmedical Assets. The term "Nonmedical Assets" shall mean all
of the assets of the Company except for the Medical Assets.
1.51. Optometrist Employee. The term "Optometrist Employee" shall
mean those licensed optometrists who are employees of the Company, but are not
shareholders.
1.52. Optometrist Employment Agreement. The term "Optometrist
Employment Agreement" shall mean the Optometrist Employment Agreement to be
executed between any Optometrist Employee and New P.A.
1.53. Partnership Balance Sheet. The term "Partnership Balance
Sheet" shall have the meaning set forth in Section 3.9.
1.54. Partnership Balance Sheet Date. The term "Partnership Balance
Sheet Date" shall have the meaning set forth in Section 3.9.
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1.55. Payors. The term "Payors" shall have the meaning set forth in
Section 3.30.
1.56. Permitted Encumbrances. The term "Permitted Encumbrances"
shall have the meaning set forth in Section 3.14(b).
1.57. Physician Employee. The term "Physician Employee" shall mean
those licensed physicians who are employees of the Company, but are not
shareholders.
1.58. Physician Employment Agreement. The term "Physician Employment
Agreement" shall mean the Physician Employment Agreement to be executed between
Physician and New P.A., and between any Physician Employee and New P.A.
1.59. Practice. The term "Practice" shall mean the ophthalmology,
optometry and all other vision related health-care practices conducted from time
to time by the Company and the Practice prior to and on the Closing Date and by
the New P.A. after the Closing Date.
1.60. Professional Employee. The term "Professional Employee" shall
mean any Physician Employee or Optometrist Employee.
1.61. Proprietary Rights. The term "Proprietary Rights" shall have
the meaning set forth in Section 3.17.
1.62. Public Offering. The term "Public Offering" shall mean any
underwritten secondary offering of Vision 21 Common Stock.
1.63. Xxxxxxxx, P.A. The term "Xxxxxxxx, P.A." shall have the
meaning set forth in the Recitals hereto.
1.64. Recent Acquisitions. The term "Recent Acquisitions" shall mean
the acquisitions by Vision 21 of third parties which were completed in December
1996, March 1997, May 1997 and June 1997.
1.65. Registration Statement. The term "Registration Statement"
shall mean any S-1 Registration Statement filed by Vision 21 in connection with
a Public Offering.
1.66. SEC. The term "SEC" shall mean the Securities and Exchange
Commission.
1.67. Securities. The term "Securities" shall mean any shares of
Vision 21 Common Stock to be delivered to Physician at the Closing.
1.68. Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended.
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1.69. State. The term "State" shall mean the state of incorporation
of the Company.
1.70. Surviving Corporation. The term "Surviving Corporation" shall
have the meaning set forth in Section 2.1.
1.71. Tax Returns. The term "Tax Returns" shall have the meaning set
forth in Section 3.18(a).
1.72. Third Party Claim. The term "Third Party Claim" shall have the
meaning set forth in Section 15.3(a).
1.73. Vision 21 Financial Statements. The term "Vision 21 Financial
Statements" shall have the meaning set forth in Section 5.10.
2. THE MERGER.
2.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company shall be merged with and into
Vision 21 in accordance with this Agreement and the separate corporate existence
of the Company shall thereupon cease. Vision 21 shall be the surviving
corporation in the Merger (in such capacity, hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Florida, and the separate corporate existence of Vision 21 with all its
rights, privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have the
effects specified in the FBCA and the Corporation Law.
2.2. The Closing. The Closing shall take place on the Closing Date
at the offices of Xxxxxxxx, Loop & Xxxxxxxx, 000 X. Xxxxxxx Xxxxxxxxx, Xxxxx
0000, Xxxxx, Xxxxxxx 00000 or at such other location in the State as the parties
shall mutually agree.
2.3. Effective Time. If all the conditions precedent to the Merger
set forth in this Agreement shall have been fulfilled or waived in accordance
herewith and this Agreement shall not have been terminated in accordance with
the terms set forth herein, the parties hereto shall cause to be properly
executed and filed on the Closing Date, a Certificate of Merger meeting the
requirements of the FBCA and the Corporation Law. The Certificate of Merger
shall be filed with the Secretary of State of the State of Florida and of the
State in accordance with the FBCA and the Corporation Law and the Merger shall
become effective on the Closing Date, to be designated in such filings as the
effective time of the Merger (the "Effective Time").
2.4. Articles of Incorporation of Surviving Corporation. Effective
at the Effective Time, the Articles of Incorporation of Vision 21 shall be the
Articles of Incorporation of the Surviving Corporation unless and until duly
amended in accordance with its terms.
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2.5. Bylaws of Surviving Corporation. The Bylaws of Vision 21 in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation, unless and until duly amended in accordance with their
terms.
2.6. Directors of the Surviving Corporation. The persons who are
directors of Vision 21 immediately prior to the Effective Time shall, from and
after the Effective Time, be the directors of the Surviving Corporation until
their successors have been elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
2.7. Officers of the Surviving Corporation. The persons who are
officers of Vision 21 immediately prior to the Effective Time shall, from and
after the Effective Time, be the officers of the Surviving Corporation and shall
hold their same respective offices until their successors have been duly elected
or appointed and qualified or until their earlier death, resignation or removal.
2.8. Conversion of Company Common Stock. The manner of converting
shares of Company Common Stock in the Merger shall be as follows:
a. As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company Common Stock issued and
outstanding at the Effective Time shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall
thereafter cease to have any rights with respect to such shares of Company
Common Stock, except the right to receive upon the surrender of such
certificate, on the Closing Date, (i) validly issued, fully paid and
nonassessable shares of Vision 21 Common Stock determined in accordance with the
provisions of Exhibit 2.8(a) attached hereto; and (ii) cash in an amount set
forth on Exhibit 2.8(a) attached hereto.
b. Each share of Company Common Stock held in the
Company's treasury at the Effective Time, by virtue of the Merger, shall cease
to be outstanding and shall be cancelled and retired without payment of any
consideration therefor and shall cease to exist.
c. At the Effective Time, each share of Vision 21 Common
Stock issued and outstanding as of the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereto, continue
unchanged and remain outstanding as a validly issued, fully paid, nonassessable
share of Vision 21 Common Stock.
2.9. Exchange of Certificates Representing Shares of Company Common
Stock.
a. On the Closing Date (i) the Physician, as the holder
of a certificate or certificates representing shares of Company Common Stock,
upon surrender of such certificate or certificates, shall receive, as part of
the Merger Consideration, the number of shares of Vision 21 Common Stock
determined in accordance with the provisions of Exhibit 2.8(a) attached hereto;
and
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(ii) until the certificate or certificates representing Company Common Stock
have been surrendered by the Physician and replaced by a certificate or
certificates representing Vision 21 Common Stock, the certificate or
certificates representing Company Common Stock shall, for all purposes be deemed
to evidence ownership of the number of shares of Vision 21 Common Stock
determined in accordance with the provisions of Exhibit 2.8(a) attached hereto.
All shares of Vision 21 Common Stock issuable to the Physician in the Merger
shall be deemed for all purposes to have been issued by Vision 21 at the
Effective Time, although the Merger Consideration shall not actually be paid by
Vision 21 to the Physician until the Closing Date.
b. The Physician shall deliver to Vision 21 at Closing
the certificate or certificates representing Company Common Stock owned by him,
duly endorsed in blank by the Physician, or accompanied by duly endorsed stock
powers in blank, and with all necessary transfer tax and other revenue stamps,
acquired at the Physician's expense, affixed and cancelled. The Physician agrees
to cure any deficiencies with respect to the endorsement of the certificates or
other documents of conveyance with respect to such Company Common Stock or with
respect to the stock powers accompanying any Company Common Stock. Upon such a
delivery, the Physician shall receive in exchange therefor, a certificate or
certificates representing the number of shares of Vision 21 Common Stock that
the Physician is entitled to receive pursuant to Section 2.8 hereof.
2.10. Fractional Shares. Notwithstanding any other provision herein,
no fractional shares of Vision 21 Common Stock will be issued. Fractional shares
shall be rounded up to the nearest whole number of shares.
2.11. Merger Consideration Adjustments. Ernst & Young, LLP shall
within seventy-five (75) days of the Closing Date conduct an audit of the
Company and the Partnership to ensure that the Company and the Partnership have
collected accounts receivable and paid accounts payable in the ordinary course
of business during the ninety (90) day period prior to the Closing Date. In the
event that the audit reveals that the Company and/or the Partnership have (a)
collected accounts receivable at an accelerated rate during such period, or (b)
paid accounts payable at a reduced or delayed rate during such period, Vision 21
shall seek an adjustment to the Merger Consideration. In the event that the
proposed adjustment materially impacts the goodwill which may be created by the
transaction, the proposed adjustment shall take into account the related impact
upon net income created by the change in amortization of such goodwill. Vision
21 shall notify the Physician in writing within seventy-five (75) days of the
Closing Date of its decision to seek an adjustment of the Merger Consideration,
the amount of the proposed adjustment and its reasons for such decision. If
Physician does not notify Vision 21 within ten (10) days of Physician's receipt
of such notice that Physician objects to the proposed adjustment, then the
proposed adjustment shall take place and shall be final. If Physician notifies
Vision 21 within the above-described ten (10) day period that Physician objects
to the proposed adjustment, then Vision 21 and Physician shall in good faith
negotiate an appropriate amount of the adjustment, if any, which should be made.
During all time periods following Vision 21's notice that it intends to adjust
the Merger Consideration until the adjustment is finalized, Vision 21 shall
provide to Physician and his accountants full access to all
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relevant books, records and work papers utilized in preparing the proposed
Merger Consideration adjustment. The adjustment may be settled in cash (which
shall be set-off from moneys due New P.A. pursuant to the Business Management
Agreement) or Vision 21 Common Stock at the Physician's option.
2.12. Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall determine or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company and the Partnership acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, and to effect the cancellation
of all outstanding shares of Company Common Stock in return for the
consideration set forth in this Agreement, the officers and directors of the
Surviving Corporation shall, at the sole cost and expense of the Surviving
Corporation, be authorized to execute and deliver, in the name and on behalf of
the Company and the Partnership, such deeds, bills of sale, assignments and
assurances, and to take and do, in the name and on behalf of the Company and the
Partnership, all such other actions and things as may be necessary or desirable
to vest, perfect or confirm any and all right, title and interest in, to and
under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PHYSICIAN. The Company and the Physician, jointly and severally, represent and
warrant to Vision 21 that the following are true and correct as of the date
hereof, and shall be true and correct through the Closing Date as if made on
that date; when used in this Section 3, the term "best knowledge" shall mean in
the case of the Company the best knowledge of those individuals listed on
Schedule 3:
3.1. Organization and Good Standing; Qualification. The Company is
a professional association duly organized, validly existing and in good standing
under the laws of the State, with all requisite corporate power and authority to
carry on the business in which it is engaged, to own the properties it owns, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby, but it is acknowledged and understood by the Parties that
upon consummation of Merger, the Company will no longer be qualified as a
professional association under the Corporation Law. Neither the Company nor the
Partnership is qualified or licensed to do business in any other jurisdiction.
Neither the Company nor the Partnership has any assets, employees or offices in
any state other than the State. Except as set forth on Schedule 3.1, none of the
Company, the Physician, the Partnership or any Professional Employee owns,
directly or indirectly, any of the capital stock of any other corporation or any
equity, profit sharing, participation or other interest in any corporation,
partnership, joint venture or other entity that is engaged in a business that is
a Competitor.
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3.2. Capitalization. The authorized capital stock of the Company
consists of _____ shares of Company Common Stock, of which ____________ (_____)
shares are issued and outstanding. The Physician owns all of the issued and
outstanding Company Common Stock, free and clear of all security interests,
liens, adverse claims, encumbrances, equities, proxies and shareholder
agreements, except to the extent disclosed on Schedule 3.2. Each outstanding
share of Company Common Stock has been legally and validly issued and is fully
paid and nonassessable. No shares of Company Common Stock are owned by the
Company in treasury. No shares of Company Common Stock of the Company have been
issued or disposed of in violation of the preemptive rights, rights of first
refusal or similar rights of any of the Company's stockholders. The Company has
no bonds, debentures, notes or other obligations the holders of which have the
right to vote (or are convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter.
3.3. Transactions in Capital Stock. The Company has not acquired
any capital stock of the Company within the two (2) year period preceding the
execution of this Agreement. Except as set forth on Schedule 3.3, there exist no
options, warrants, subscriptions or other rights to purchase, or securities
convertible into or exchangeable for, any of the authorized or outstanding
securities of the Company, and no option, warrant, call, conversion right or
commitment of any kind exists which obligates the Company to issue any of its
authorized but unissued capital stock. Except as set forth on Schedule 3.3, the
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof. Neither the equity
structure of the Company nor the relative ownership of shares among any of its
stockholders has been altered or changed within the two (2) year period
preceding the date of this Agreement.
3.4. Continuity of Business Enterprise. Except as set forth on
Schedule 3.4, and except as contemplated by this Agreement, there has not been
any sale, distribution or spin-off of significant assets of the Company, the
Partnership or any of their respective Affiliates other than in the ordinary
course of business within the two (2) year period preceding the date of this
Agreement.
3.5. Corporate and Partnership Records. The copies of (a) the
Articles or Certificate of Incorporation and Bylaws, and all amendments thereto,
of the Company and (b) the Partnership Agreement of the Partnership, and all
amendments thereto, that have been delivered or made available to Vision 21 are
true, correct and complete copies thereof, as in effect on the date hereof. The
minute books of the Company, copies of which have been delivered or made
available to Vision 21, contain accurate minutes of all meetings of, and
accurate consents to all actions taken without meetings by, the Board of
Directors (and any committees thereof) and the stockholders of the Company in
the three (3) years prior to the Closing Date, and contain all other material
minutes and consents of the directors and stockholders of the Company since its
formation.
3.6. Authorization and Validity. The execution, delivery and
performance by the Company of this Agreement and the other agreements
contemplated hereby, and the consummation
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of the transactions contemplated hereby and thereby to be performed by the
Company, have been duly authorized by the Company. The consummation of the
transactions contemplated hereby to be performed by the Partnership have been
duly authorized by the Partnership. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable remedies.
The Company has obtained, in accordance with applicable law and its Articles or
Certificate of Incorporation and Bylaws, the approval of its stockholders
necessary for the consummation of the transactions contemplated hereby.
3.7. Compliance. Except as disclosed on Schedule 3.7, the execution
and delivery of the documents contemplated hereunder by the Company and the
consummation of the transactions contemplated thereby by the Company and the
Partnership will not (i) violate any provision of the Company's or the
Partnership's respective organizational documents, (ii) violate any material
provision of or result in the breach of or entitle any party to accelerate
(whether after the giving of notice or lapse of time or both) any material
obligation under, any mortgage, lien, lease, contract, license, instrument or
any other agreement to which either the Company or the Partnership is a party,
(iii) result in the creation or imposition of any material lien, charge, pledge,
security interest or other material encumbrance upon any property of the Company
or the Partnership or (iv) violate or conflict with any order, award, judgment
or decree or other material restriction or to the best of the Company's
knowledge violate or conflict with any law, ordinance or regulation to which the
Company, the Partnership or their respective properties are subject.
3.8. Consents. No consent, approval, order or authorization of or
registration, declaration, or filing with, any Governmental Authority or other
person is required in connection with the execution and delivery of the
documents contemplated herein by the Company or the consummation by the Company
and the Partnership of the transactions contemplated thereby, except for those
consents or approvals set forth on Schedule 3.8.
3.9. Financial Statements. The Company has furnished to Vision 21
the Partnership's compiled statement of assets, liability and capital on the
income tax basis for the prior two (2) full calendar years and the eight month
period ending August 31, 1997 (the "Partnership Balance Sheet" and the date
thereof shall be referred to as the "Partnership Balance Sheet Date"), and the
related statement of revenues and expenses on the income tax basis for the
prior two (2) full calendar years and the eight month period ending August 31,
1997 (all collectively, the "Financial Statements"). The Company has elected to
omit all the disclosures ordinarily included in financial statements. The
Company has made no provision on liability for Federal and State income tax. The
Partners of the Partnership are taxed on their proportionate share of the
Company's taxable income. The Financial Statements have been prepared on the
accounting basis used by the Company for income tax purpose, which is a
comprehensive basis of Accounting other than generally accepted accounting
principles. The Financial Statements fairly present the financial condition and
results of operations of the Partnership as of the dates and for the periods
indicated except as otherwise indicated in the Financial Statements. The
Company and the Physicians expressly warrant that they will have prior to the
Closing fairly, accurately and completely provided all necessary information
requested in or relevant to the preparation of the audit to be conducted by the
Accountants or their designees prior to Closing (the "Audit").
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3.10. Liabilities and Obligations. Except as set forth on Schedule
3.10, the Financial Statements reflect all liabilities of the Partnership and
the Company, accrued, contingent or otherwise that would be required to be
reflected thereon, or in the notes thereto, prepared in accordance with GAAP,
except for liabilities and obligations incurred in the ordinary course of
business since the Partnership Balance Sheet Date. Except as set forth in the
Financial Statements or on Schedule 3.10, neither the Partnership nor the
Company is liable upon or with respect to, or obligated in any other way to
provide funds in respect of or to guarantee or assume in any manner, any debt,
obligation or dividend of any person, corporation, association, partnership,
joint venture, trust or other entity, and the Company does not know of any valid
basis for the assertion of any other claims or liabilities of any nature or in
any amount.
3.11. Employee Matters.
a. Cash Compensation. Schedule 3.11(a) contains a
complete and accurate list of the names, titles and annual cash compensation as
of the Closing Date, including without limitation wages, salaries, bonuses
(discretionary and formula) and other cash compensation (the "Cash
Compensation") of all employees of the Company and the Partnership. In addition,
Schedule 3.11(a) contains a complete and accurate description of (i) all
increases in Cash Compensation of employees of the Company and the Partnership
during the current fiscal year and the immediately preceding fiscal year and
(ii) any promised increases in Cash Compensation of employees of the Company or
the Partnership that have not yet been effected.
b. Compensation Plans. Schedule 3.11(b) contains a
complete and accurate list of all compensation plans, arrangements or practices
(the "Compensation Plans") sponsored by the Company or the Partnership or to
which the Company or the Partnership contributes on behalf of its employees,
other than Employment Agreements listed on Schedule 3.11(c) and Employee Benefit
Plans listed on Schedule 3.12(a). The Compensation Plans include without
limitation plans, arrangements or practices that provide for performance awards,
and stock ownership or stock options. The Company has provided or made available
to Vision 21 a copy of each written Compensation Plan and a written description
of each unwritten Compensation Plan. Except as set forth on Schedule 3.11(b),
each of the Compensation Plans can be terminated or amended at will by the
Company or the Partnership.
c. Employment Agreements. Except as set forth on
Schedule 3.11(c), neither the Company nor the Partnership is a party to any
employment agreement ("Employment Agreements") with respect to any of its
employees. Employment Agreements include without limitation employee leasing
agreements, employee services agreements and non-competition agreements.
d. Employee Policies and Procedures. Schedule 3.11(d)
contains a complete and accurate list of all employee manuals and all material
policies, procedures and work-related rules (the "Employee Policies and
Procedures") that apply to employees of the Company or the
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Partnership. The Company has provided or made available to Vision 21 a copy of
all written Employee Policies and Procedures and a written description of all
material unwritten Employee Policies and Procedures.
e. Unwritten Amendments. Except as described on Schedule
3.11(b), 3.11(c), or 3.11(d), no material unwritten amendments have been made,
whether by oral communication, pattern of conduct or otherwise, with respect to
any Compensation Plans or Employee Policies and Procedures.
f. Labor Compliance. The Company and the Partnership
have been and are in compliance with all applicable laws, rules, regulations and
ordinances respecting employment and employment practices, terms and conditions
of employment and wages and hours, except for any such failures to be in
compliance that, individually or in the aggregate, would not result in a
Material Adverse Effect, and neither the Company nor the Partnership is liable
for any arrearages of wages or penalties for failure to comply with any of the
foregoing. Neither the Company nor the Partnership has engaged in any unfair
labor practices or discriminated on the basis of race, color, religion, sex,
national origin, age, disability or handicap in its employment conditions or
practices that would, individually or in the aggregate, result in a Material
Adverse Effect. Except as set forth on Schedule 3.11(f), there are no (i) unfair
labor practice charges or complaints or racial, color, religious, sex, national
origin, age, disability or handicap discrimination charges or complaints pending
or, to the actual knowledge of the Company and the Physician, threatened against
the Company or the Partnership before any federal, state or local court, board,
department, commission or agency (nor, to the knowledge of the Company and the
Physician, does any valid basis therefor exist) or (ii) existing or, to the
actual knowledge of the Company and the Physician, threatened labor strikes,
disputes, grievances, controversies or other labor troubles affecting the
Company or the Partnership (nor, to the best knowledge of the Company and the
Physician, does any valid basis therefor exist).
g. Unions. Neither the Company nor the Partnership has
ever been a party to any agreement with any union, labor organization or
collective bargaining unit. No employees of the Company or the Partnership are
represented by any union, labor organization or collective bargaining unit.
Except as set forth on Schedule 3.11(g), to the actual knowledge of the Company,
none of the employees of the Company has threatened to organize or join a union,
labor organization or collective bargaining unit.
h. Aliens. All employees of the Company and the
Partnership are, to the best knowledge of the Company, citizens of, or are
authorized in accordance with federal immigration laws to be employed in, the
United States.
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3.12. Employee Benefit Plans.
a. Identification. Schedule 3.12(a) contains a complete
and accurate list of all employee benefit plans (within the meaning of Section
3(3) of ERISA) sponsored by the Company and the Partnership or to which the
Company and the Partnership contribute on behalf of their respective employees
and all employee benefit plans previously sponsored or contributed to on behalf
of their respective employees within the three (3) years preceding the date
hereof (the "Employee Benefit Plans"). The Company has provided or made
available to Vision 21 copies of all plan documents, determination letters,
pending determination letter applications, trust instruments, insurance
contracts, administrative services contracts, annual reports, actuarial
valuations, summary plan descriptions, summaries of material modifications,
administrative forms and other documents that constitute a part of or are
incident to the administration of the Employee Benefit Plans. In addition, the
Company has provided or made available to Vision 21 a written description of all
existing practices engaged in by the Company and the Partnership that constitute
Employee Benefit Plans. Except as set forth on Schedule 3.12(a) and subject to
the requirements of the Code and ERISA, each of the Employee Benefit Plans can
be terminated or amended at will by the Company or the Partnership. Except as
set forth on Schedule 3.12(a), no unwritten amendment exists with respect to any
Employee Benefit Plan. Except as set forth on Schedule 3.12(b)-(l), each of the
following paragraphs is true and correct.
b. Administration. Each Employee Benefit Plan has been
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect. The
Company, the Partnership and the Physician have (i) made all necessary filings
with respect to such Employee Benefit Plans, including the timely filing of Form
5500 if applicable, and (ii) made all necessary filings, reports and disclosures
pursuant to and have complied with all requirements of the IRS Voluntary
Compliance Resolution Program, if applicable, with respect to all profit sharing
retirement plans and pension plans in which employees of the Company or the
Partnership participate.
c. Examinations. Except as set forth on Schedule
3.12(c), neither the Company nor the Partnership has received any notice that
any Employee Benefit Plan is currently the subject of an audit, investigation,
enforcement action or other similar proceeding conducted by any state or federal
agency.
d. Prohibited Transactions. No prohibited transactions
(within the meaning of Section 4975 of the Code or Sections 406 and 407 of
ERISA) have occurred with respect to any Employee Benefit Plans.
e. Claims and Litigation. No pending or, to the actual
knowledge of the Company and the Physician, threatened claims, suits, or other
proceedings exist with respect to any Employee Benefit Plan other than normal
benefit claims filed by participants or beneficiaries.
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f. Qualification. As set forth in more detail on
Schedule 3.12(f), the Company and the Partnership have received a favorable
determination letter or ruling from the IRS for each of the Employee Benefit
Plans intended to be qualified within the meaning of Section 401(a) of the Code
and/or tax-exempt within the meaning of Section 501(a) of the Code. Except as
set forth on Schedule 3.12(f), no proceedings exist or, to the actual knowledge
of the Company have been threatened that could result in the revocation of any
such favorable determination letter or ruling.
g. Funding Status. No accumulated funding deficiency
(within the meaning of Section 412 of the Code), whether or not waived, exists
with respect to any Employee Benefit Plan or any plan sponsored by any member of
a controlled group (within the meaning of Section 412(n)(6)(B) of the Code) in
which the Company or the Partnership is a member ("Controlled Group"). With
respect to each Employee Benefit Plan subject to Title IV of ERISA, the assets
of each such plan are at least equal in value to the present value of accrued
benefits determined on an ongoing basis as of the date hereof. Neither the
Company nor the Partnership sponsors any Employee Benefit Plan described in
Section 501(c)(9) of the Code. None of the Employee Benefit Plans are subject to
actuarial assumptions.
h. Excise Taxes. None of the Company, the Partnership or
any member of a Controlled Group has any liability to pay excise taxes with
respect to any Employee Benefit Plan under applicable provisions of the Code or
ERISA.
i. Multiemployer Plans. None of the Company, the
Partnership or any member of a Controlled Group is or ever has been obligated to
contribute to a multiemployer plan within the meaning of Section 3(37) of ERISA.
j. Pension Benefit Guaranty Corporation. None of the
Employee Benefit Plans are subject to the requirements of Title IV of ERISA.
k. Retirees. Neither the Company nor the Partnership has
any obligation or commitment to provide medical, dental or life insurance
benefits to or on behalf of any of their respective employees who may retire or
any of their respective former employees who have retired except as may be
required pursuant to the continuation of coverage provisions of Section 4980B of
the Code and Sections 501 through 508 of ERISA.
l. Other Compensation. Except as set forth on Schedules
3.11(a), 3.11(b), 3.11(c), 3.11(d) and 3.12(a), none of the Company, the
Partnership, the Physician or any Professional Employee is a party to any
compensation or debt arrangement with any person relating to the provision of
health care related services other than arrangements with the Company or the
Physician.
3.13. Absence of Certain Changes. Except as set forth on Schedule
3.13 or as contemplated in this Agreement, since the Partnership Balance Sheet
Date, neither the Company nor the Partnership has:
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a. suffered a Material Adverse Effect, whether or not
caused by any deliberate act or omission of the Company, the Partnership or the
Physician;
b. contracted for the purpose of acquiring any capital
asset having a cost in excess of $5,000 or made any single expenditure in excess
of $5,000;
c. incurred any indebtedness for borrowed money (other
than short-term borrowings in the ordinary course of business), or issued or
sold any debt securities;
d. incurred or discharged any material liabilities or
obligations except in the ordinary course of business;
e. paid any amount on any indebtedness prior to the due
date, forgiven or cancelled any claims or any debt in excess of $5,000, or
released or waived any rights or claims except in the ordinary course of
business;
f. mortgaged, pledged or subjected to any security
interest, lien, lease or other charge or encumbrance any of its properties or
assets (other than statutory liens arising in the ordinary course of business or
other liens that do not materially detract from the value or interfere with the
use of such properties or assets);
g. suffered any damage or destruction to or loss of any
assets (whether or not covered by insurance) that has, individually or in the
aggregate, resulted in a Material Adverse Effect;
h. acquired or disposed of any assets having an
aggregate value in excess of $5,000, except in the ordinary course of business;
i. written up or written down the carrying value of any
of its assets, other than accounts receivable in the ordinary course of
business;
j. changed the costing system or depreciation methods of
accounting for its assets in any material respect;
k. lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, resulted in a Material
Adverse Effect;
l. increased the compensation of any director, officer,
key employee or consultant, except as disclosed on Schedule 3.11(a);
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m. increased the compensation of any employee (except
for increases in the ordinary course of business consistent with past practice)
or hired any new employee who is expected to receive annualized compensation of
at least $15,000;
n. made any payments to or loaned any money to any
person or entity referred to in Section 3.25;
o. formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
p. redeemed, purchased or otherwise acquired, or sold,
granted or otherwise disposed of, directly or indirectly, any of its capital
stock or securities, or agreed to change the
terms and conditions of any such capital stock, securities or rights;
q. entered into any agreement providing for total
payments in excess of $5,000 in any twelve (12) month period with any person or
group, or modified or amended in any material respect the terms of any such
existing agreement, except in the ordinary course of business;
r. entered into, adopted or amended any Employee Benefit
Plan, except as contemplated hereby or the other agreements contemplated hereby;
or
s. entered into any other commitment or transaction or
experienced any other event that would materially interfere with its performance
under this Agreement or any other agreement or document executed or to be
executed pursuant to this Agreement, or otherwise has, individually or in the
aggregate, resulted in a Material Adverse Effect.
3.14. Title; Leased Assets.
a. Real Property. Neither the Company, nor the
Partnership owns any interest (other than leasehold interests referred to on
Schedule 3.14(c)) in real property. The leased real property referred to on
Schedule 3.14(c) constitutes the only real property necessary for the conduct of
the Company's and the Partnership's respective businesses.
b. Personal Property. Except as set forth on Schedule
3.14(b), the Company and/or the Physician has good, valid and marketable title
to all the personal property constituting the Nonmedical Assets. The personal
property constituting the Nonmedical Assets constitute the only personal
property necessary for the conduct of the Company's and the Partnership's
respective businesses (except for the Medical Assets). Upon consummation of the
transactions contemplated hereby, such interest in the Nonmedical Assets shall
be free and clear of all security interests, liens, claims and encumbrances,
other than those set forth on Schedule 3.14(b) (the "Permitted Encumbrances")
and statutory liens arising in the ordinary course of business or other liens
that do not materially detract from the value or interfere with the use of such
properties or assets.
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c. Leases. A list and brief description of (i) all
leases of real property and (ii) all leases of personal property involving
rental payments within any twelve (12) month period in excess of $12,000, in
either case to which the Company or the Partnership is a party, either as lessor
or lessee, are set forth on Schedule 3.14(c). All such leases are valid and, to
the knowledge of the Company, enforceable in accordance with their respective
terms except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of equitable
remedies.
3.15. Commitments.
a. Commitments; Defaults. Except as set forth on
Schedule 3.15 or as otherwise disclosed pursuant to this Agreement, the Company
and the Partnership are not a party to, are not bound by, and none of the shares
of Company Common Stock are subject to, nor are the Nonmedical Assets or the
assets or the business of the Company or the Partnership bound by, whether or
not in writing, any of the following (collectively, "Commitments"):
i) partnership or joint venture agreement;
ii) guaranty or suretyship, indemnification or
contribution agreement or performance bond;
iii) debt instrument, loan agreement or other obligation
relating to indebtedness for borrowed money or money lent or to be lent to
another;
iv) contract to purchase real property;
v) agreement with dealers or sales or commission agents,
public relations or advertising agencies, accountants or attorneys (other than
in connection with this Agreement and the transactions contemplated hereby)
involving total payments within any twelve (12) month period in excess of $2,000
and which is not terminable on thirty (30) days' notice or without penalty;
vi) agreement relating to any material matter or
transaction in which an interest is held by a person or entity that is an
Affiliate of the Company, the Partnership or the Physician;
vii) agreement for the acquisition of services, supplies,
equipment, inventory, fixtures or other property involving more than $2,000 in
the aggregate;
viii) powers of attorney;
ix) contracts containing non-competition covenants;
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x) agreement providing for the purchase from a supplier
of all or substantially all of the requirements of the Company or the
Partnership of a particular product or services;
xi) agreements regarding clinical research;
xii) agreements with Payors and contracts to provide
medical or health care services; or
xiii) any other agreement or commitment not made in the
ordinary course of business or that is material to the business, operations,
condition (financial or otherwise) or results of operations of the Company or
the Partnership.
True, correct and complete copies of the written Commitments, and true, correct
and complete written descriptions of the oral Commitments, have heretofore been
delivered or made available to Vision 21. Except as set forth on Schedule 3.15
and to the Company's best knowledge, there are no existing or asserted defaults,
events of default or events, occurrences, acts or omissions that, with the
giving of notice or lapse of time or both, would constitute defaults by the
Company or the Partnership or, to the best knowledge of the Company, any other
party to a material Commitment, and no penalties have been incurred nor are
amendments pending, with respect to the material Commitments, except as
described on Schedule 3.15. The Commitments are in full force and effect and are
valid and enforceable obligations of the Company or the Partnership, and to the
best knowledge of the Company, are valid and enforceable obligations of the
other parties thereto, in accordance with their respective terms, and no
defenses, off-sets or counterclaims have been asserted or, to the best knowledge
of the Company, may be made by any party thereto (other than the Company or the
Partnership), nor have the Company or the Partnership waived any rights
thereunder, except as described on Schedule 3.15. Except as set forth on
Schedule 3.15, no consents or approvals are required under the terms of any
agreement listed on Schedule 3.15 in connection with the transactions
contemplated herein; including without limitation the Merger.
b. No Cancellation or Termination of Commitment. Except
as disclosed pursuant to this Agreement or contemplated hereby, and except where
such default would not have a Material Adverse Effect on the business, (i) none
of the Company, the Partnership or the Physician has received notice of any plan
or intention of any other party to any Commitment to exercise any right to
cancel or terminate any Commitment, and the Company does not know of any fact
that would justify the exercise of such a right; and (ii) none of the Company,
the Partnership or the Physician currently contemplates, or has reason to
believe any other person currently contemplates, any amendment or change to any
Commitment.
3.16. Insurance. The Company, the Partnership, the Physician and
each Professional Employee carries property, liability, malpractice, workers'
compensation and such other types of insurance pursuant to the insurance
policies listed and briefly described on Schedule 3.16 (the "Insurance
Policies"). The Insurance Policies are all of the insurance policies of the
Company, the
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Partnership, the Physician and each Professional Employee relating to the
respective businesses of the Company and the Partnership and the Nonmedical
Assets. All of the Insurance Policies are issued by insurers of recognized
responsibility, and, to the best knowledge of the Company, are valid and
enforceable policies, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. All Insurance Policies shall be maintained
in force without interruption up to and including the Closing Date. True,
complete and correct copies of all Insurance Policies have been provided or made
available to Vision 21. Except as set forth on Schedule 3.16, none of the
Company, the Partnership or the Physician has received any notice or other
communication from any issuer of any Insurance Policy cancelling such policy,
materially increasing any deductibles or retained amounts thereunder, and to the
actual knowledge of the Company, no such cancellation or increase of
deductibles, retainages or premiums is threatened. Except as set forth on
Schedule 3.16, none of the Company, the Partnership, the Physician or any
Professional Employee has any outstanding claims, settlements or premiums owed
against any Insurance Policy, and the Company, the Partnership, the Physician
and each Professional Employee has given all notices or have presented all
potential or actual claims under any Insurance Policy in due and timely fashion.
Except as set forth on Schedule 3.16, since January 1, 1994, none of the
Company, the Partnership, the Physician or any Professional Employee has filed a
written application for any professional liability insurance coverage which has
been denied by an insurance agency or carrier, and the Company, the Partnership,
the Physician and each Professional Employee have been continuously insured for
professional malpractice claims for at least the past seven (7) years (or such
shorter periods of time that any Professional Employee has been licensed to
practice medicine). Schedule 3.16 also sets forth a list of all claims under any
Insurance Policy in excess of $10,000 per occurrence filed by the Company, the
Partnership, the Physician and each Professional Employee since January 1, 1994.
3.17. Proprietary Rights and Information. Set forth on Schedule 3.17
is a true and correct description of the following ("Proprietary Rights"):
a. all trademarks, trade names, service marks and other
trade designations, including common law rights, registrations and applications
therefor, and all patents and applications therefor currently owned, in whole or
in part, by the Company or the Partnership and all licenses, royalties,
assignments and other similar agreements relating to the foregoing to which
either the Company or the Partnership is a party (including the expiration date
thereof if applicable); and
b. all agreements relating to technology, know-how or
processes that the Company or the Partnership has licensed or authorized to use
by others (other than technology, know-how or processes generally available to
other health care providers), or which either the Company or the Partnership
licenses or authorizes others to use.
The Company and/or the Partnership own or have the legal right to use the
Proprietary Rights, and to the knowledge of the Company, such ownership or use
does not conflict, infringe or violate the rights of any other person. Except as
disclosed on Schedule 3.17, no consent of any person will be
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required for the use thereof by Vision 21 upon consummation of the transactions
contemplated hereby and the Proprietary Rights are freely transferable. No claim
has been asserted by any person to the ownership of or for infringement by the
Company or the Partnership of the proprietary right of any other person, and the
Company does not know of any valid basis for any such claim. To the best
knowledge of the Company and the Physician, the Company and the Partnership have
the right to use, free and clear of any adverse claims or rights of others, all
trade secrets, customer lists and proprietary information required for the
marketing of all merchandise and services formerly or presently sold or marketed
by the Company and the Partnership.
3.18. Taxes.
a. Filing of Tax Returns. The Company, and the
Partnership have duly and timely filed (in accordance with any extensions duly
granted by the appropriate governmental agency, if applicable) with the
appropriate governmental agencies all federal, state, local or foreign income,
excise, corporate, franchise, property, sales, use, payroll, withholding,
provider, value added and other tax returns and reports (collectively the "Tax
Returns") required to be filed by the United States or any state or any
political subdivision thereof or any foreign jurisdiction. All such Tax Returns
or reports are complete and accurate in all material respects and properly
reflect the taxes of the Company and the Partnership for the periods covered
thereby.
b. Payment of Taxes. Except for such items as the
Company or the Partnership may be disputing in good faith by proceedings in
compliance with applicable law, which are described on Schedule 3.18, (i) the
Company and the Partnership have paid all taxes, penalties, assessments and
interest that have become due with respect to any Tax Returns they have filed
and have properly accrued on their respective books and records for all of the
same that have not yet become due, and (ii) neither the Company nor the
Partnership is delinquent in the payment of any tax, assessment or governmental
charge.
c. No Pending Deficiencies, Delinquencies, Assessments
or Audits. Except as set forth on Schedule 3.18, neither the Company nor the
Partnership has received any notice that any tax deficiency or delinquency has
been asserted against the Company or the Partnership. There is no unpaid
assessment, proposal for additional taxes, deficiency or delinquency in the
payment of any of the taxes of the Company or the Partnership that could be
asserted by any taxing authority. There is no taxing authority audit of the
Company or the Partnership pending, or to the actual knowledge of the Company,
threatened, and the results of any completed audits are properly reflected in
the Financial Statements. The Company and the Partnership have not, to the
Company's best knowledge, violated any federal, state, local or foreign tax law.
d. No Extension of Limitation Period. Neither the
Company nor the Partnership has granted an extension to any taxing authority of
the limitation period during which any tax liability may be assessed or
collected.
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e. All Withholding Requirements Satisfied. All monies
required to be withheld by the Company or the Partnership and paid to
governmental agencies for all income, social security, unemployment insurance,
sales, excise, use, and other taxes have been collected or withheld and paid to
the respective governmental agencies.
f. Foreign Person. None of the Company, the Partnership
or the Physician is a foreign person, as such term is referred to in Section
1445(f)(3) of the Code.
g. Safe Harbor Lease. None of the Nonmedical Assets
constitutes property that the Company, the Partnership, Vision 21, or any
Affiliate of Vision 21, will be required to treat as being owned by another
person pursuant to the "Safe Harbor Lease" provisions of Section 168(f)(8) of
the Code prior to repeal by the Tax Equity and Fiscal Responsibility Act of
1982.
h. Tax Exempt Entity. None of the assets of the Company
and the Partnership and none of the Nonmedical Assets are subject to a lease to
a "tax exempt entity" as such term is defined in Section 168(h)(2) of the Code.
i. Collapsible Corporation. The Company has not at any
time consented, and the Physician will not permit the Company to elect, to have
the provisions of Section 341(f)(2) of the Code apply to it.
j. Boycotts. Neither the Company nor the Partnership has
at any time participated in or cooperated with any international boycott as
defined in Section 999 of the Code.
k. Parachute Payments. No payment required or
contemplated to be made by the Company or the Partnership will be characterized
as an "excess parachute payment" within the meaning of Section 280G(b)(1) of the
Code.
l. S Corporation. The Company has not made an election
to be taxed as an "S" corporation under Section 1362(a) of the Code.
m. Personal Service Corporation. The Company is not a
personal service corporation subject to the provisions of Section 269A of the
Code.
n. Personal Holding Company. The Company is not or has
not been a personal holding company within the meaning of Section 542 of the
Code.
3.19. Compliance with Laws. Neither the Company nor the Partnership
has failed, and neither the Company nor the Physician is aware of any failure by
the Physician or any Professional Employee to comply with all applicable laws,
regulations and licensing requirements relating to the operation of the Practice
or failure to file with the proper authorities all necessary statements and
reports except where the failure to so comply or file would not, individually or
in the aggregate,
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result in a Material Adverse Effect. There are no existing violations by the
Company or the Partnership, and neither the Company nor the Physician is aware
of any existing violations by the Physician or any Professional Employee of any
federal, state or local law or regulation that could, individually or in the
aggregate, result in a Material Adverse Effect. The Company, the Partnership,
the Physician and each Professional Employee possesses all necessary licenses,
franchises, permits and governmental authorizations for the conduct of the
Company's and the Partnership's respective businesses as now conducted, all of
which are listed (with expiration dates, if applicable) on Schedule 3.19. Except
as set forth on Schedule 3.19, the transactions contemplated by this Agreement
will not result in a default under or a breach or violation of, or adversely
affect the rights and benefits afforded by any such licenses, franchises,
permits or government authorizations, except for any such default, breach or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth on Schedule 3.19, since January 1, 1993,
none of the Company, the Partnership, the Physician or, to the knowledge of the
Company based on a certificate in writing obtained from each Professional
Employee, any Professional Employee has received any notice from any federal,
state or other governmental authority or agency having jurisdiction over its,
his or her properties or activities, or any insurance or inspection body, that
its, his or her operations or any of its, his or her properties, facilities,
equipment, or business practices fail to comply with any applicable law,
ordinance, regulation, building or zoning law, or requirement of any public or
quasi-public authority or body, except where failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect.
3.20. Finder's Fee. Except as set forth on Schedule 3.20, neither
the Company nor the Partnership has incurred any obligation for any finder's,
brokers or agent's fee in connection with the transactions contemplated hereby.
3.21. Litigation. Except as described on Schedule 3.21 or otherwise
disclosed pursuant to this Agreement, there are no legal actions or
administrative proceedings or investigations instituted or, to the actual
knowledge of the Company or the Physician, threatened, which affect or could
affect the outstanding shares of Company Common Stock, the Nonmedical Assets or
the operation, business, condition (financial or otherwise), or results of
operations of the Company or the Partnership which (i) if successful could,
individually or in the aggregate, have a Material Adverse Effect or (ii) could
adversely affect the ability of the Company or the Physician to effect the
transactions contemplated hereby. None of the Company, the Partnership or the
Physician is (a) subject to any continuing court or administrative order,
judgment, writ, injunction or decree applicable specifically to the Nonmedical
Assets, the Company, the Partnership or to their businesses, assets, operations
or employees or (b) in default with respect to any such order, judgment, writ,
injunction or decree. The Company has no knowledge of any valid basis for any
such action, proceeding or investigation. Except as set forth on Schedule 3.21,
all medical malpractice claims asserted, general liability incidents and
incident reports have been submitted to the Company's insurer therefor. All
claims made or threatened against the Company or the Partnership in excess of
its deductible are covered under their Insurance Policies.
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3.22. Condition of Fixed Assets. All of the fixtures, structures and
equipment reflected in the Financial Statements and used by the Company or the
Partnership in their respective businesses, are in good condition and repair,
subject to normal wear and tear, and conform in all material respects with all
applicable ordinances, regulations and other laws, and the Company has no actual
knowledge of any latent defects therein.
3.23. Distributions and Repurchases. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since the Partnership Balance Sheet Date. No repurchase of any of
the Company's capital stock has been approved, effected or is pending, or is
contemplated by the Board of Directors of the Company.
3.24. Banking Relations. Set forth on Schedule 3.24 is a complete
and accurate list of all borrowing and investing arrangements that the Company
and the Partnership have with any bank or other financial institution,
indicating with respect to each relationship the type of arrangement maintained
(such as checking account, borrowing arrangements, safe deposit box, etc.) and
the person or persons authorized in respect thereof.
3.25. Ownership Interests of Interested Persons; Affiliations.
Except as set forth on Schedule 3.25, no officer, supervisory employee or
director of the Company and no partner or supervisory employee of the
Partnership, or their respective spouses, children or Affiliates, owns directly
or indirectly, on an individual or joint basis, any interest in, has a
compensation or other financial arrangement with, or serves as an officer or
director of, any customer or supplier of the Company or the Partnership or any
organization that has a material contract or arrangement with the Company or the
Partnership. Except as may be disclosed pursuant to this Agreement and except
for the Company's status as a partner in the Partnership, none of the Company or
the Partnership, or any of their directors, officers, partners, employees or
consultants, nor any Affiliate of such person is, or within the last three (3)
years was, a party to any contract, lease, agreement or arrangement, including,
but not limited to, any joint venture or consulting agreement with any
physician, hospital, pharmacy, home health agency or other person which is in a
position to make or influence referrals to, or otherwise generate business for,
the Company or the Partnership.
3.26. Investments in Competitors. Except as disclosed on Schedule
3.26, none of the Company, the Partnership or the Physician owns directly or
indirectly any interests or has any investment in any person that is a
Competitor of the Company or the Partnership.
3.27. Environmental Matters.
a. Environmental Laws. To the best knowledge of the
Company and the Physician, none of the Company, the Partnership or any of the
Non-medical Assets (including the leased real property described on Schedule
3.14(c)) are currently in violation of, or subject to any existing, pending or,
to the actual knowledge of the Company threatened, investigation or inquiry by
any governmental authority or to any remedial obligations under, any federal,
state or local laws
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or regulations pertaining to health or the environment ("Environmental Laws"),
except for any such violations, investigations or inquiries that would not,
individually or in the aggregate, result in a Material Adverse Effect.
b. Permits. Neither the Company nor the Partnership is
required to obtain, and the Company has no knowledge of any reason Vision 21 or
the Surviving Corporation will be required to obtain, any permits, licenses or
similar authorizations to occupy, operate or use any buildings, improvements,
fixtures and equipment owned or leased by the Company or the Partnership by
reason of any Environmental Laws.
c. Superfund List. To the best knowledge of the Company,
none of the Nonmedical Assets (including the Company's and the Partnership's
respective leased real properties described on Schedule 3.14(c)) are on any
federal or state "Superfund" list or subject to any environmentally related
liens, except such liens as would not, individually or in the aggregate, result
in a Material Adverse Effect.
3.28. Certain Payments. None of the Company, the Partnership or any
of their respective directors, officers, partners or employees acting for or on
behalf of the Company or the Partnership, has paid or caused to be paid,
directly or indirectly, in connection with the respective businesses of the
Company and the Partnership:
a. to any government or agency thereof or any agent of
any supplier or customer any bribe, kick-back or other similar payment; or
b. any contribution to any political party or candidate
(other than from personal funds of directors, officers or employees not
reimbursed by their respective employers or as otherwise permitted by applicable
law).
3.29. Medical Waste. With respect to the generation, transportation,
treatment, storage, and disposal, or other handling of medical waste, to the
best knowledge of the Company and the Physician, the Company and the Partnership
have complied with all material federal, state or local laws or regulations
pertaining to medical waste.
3.30. Medicare and Medicaid Programs. The Company, the Partnership,
the Physician and each Professional Employee are qualified for participation in
the Medicaid and Medicare programs and is party to provider agreements for such
programs which are in full force and effect with no events of default having
occurred thereunder. The Company, the Partnership, the Physician and each
Professional Employee have timely filed all claims or other reports required to
be filed prior to the Closing Date with respect to the purchase of services by
third-party payors ("Payors"), including but not limited to Medicare and
Medicaid programs, except where the failure to file would not, individually or
in the aggregate, result in a Material Adverse Effect. All such claims or
reports are complete and accurate in all material respects. The Company, the
Partnership, the Physician and
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each Professional Employee has paid or has properly recorded on the Financial
Statements all actually known and undisputed refunds, discounts or adjustments
which have become due pursuant to such claims, and none of the Company, the
Partnership, the Physician or any Professional Employee has any material
liability to any Payor with respect thereto, except as has been reserved for in
the Partnership Balance Sheet. There are no pending appeals, overpayment
determinations, adjustments, challenges, audits, litigation, or notices of
intent to reopen Medicare and/or Medicaid claims determinations or other reports
required to be filed by the Company, the Partnership, the Physician or any
Professional Employee in order to be paid by a Payor for services rendered. None
of the Company, the Partnership or any of their respective directors, officers,
partners, employees, consultants or the Physician has been convicted of, or pled
guilty or nolo contendere to, patient abuse or neglect, or any other Medicare or
Medicaid program-related offense. None of the Company, the Partnership or any of
their respective directors, officers, partners, the Physician, or to the best of
the Company's knowledge, the Partnership's respective employees or consultants,
has committed any offense which may serve as the basis for suspension or
exclusion from the Medicare and Medicaid programs, including but not limited to,
defrauding a government program, loss of a license to provide health services,
and failure to provide quality care.
3.31. Fraud and Abuse. To the best knowledge of the Company and the
Physician, the Company, its officers and directors, the Partnership, its
partners, the Professional Employees, and the other persons and entities
providing professional services for the Company and the Partnership, have not
engaged in any activities which are prohibited under 42 U.S.C. xx.xx. 1320-7, 7a
or 7b or 42 U.S.C. ss.1395nn (subject to the exceptions set forth in such
legislation), or the regulations promulgated thereunder or pursuant to similar
state or local statutes or regulations, or which are prohibited by rules of
professional conduct, including but not limited to the following:
a. knowingly and willfully making or causing to be made
a false statement or representation of a material fact in any application for
any benefit or payment;
b. knowingly and willfully making or causing to be made
a false statement or representation of a material fact for use in determining
rights to any benefit or payment;
c. failure to disclose knowledge by a Medicare or
Medicaid 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;
d. knowingly and willfully offering, paying, soliciting
or receiving any remuneration (including any kickback, bribe, or rebate),
directly or indirectly, overtly or covertly, in cash or in kind (i) in return
for referring an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by Medicare or Medicaid, or (ii) in return for purchasing, leasing, or
ordering, or arranging for or recommending purchasing, leasing, or ordering any
good, facility, service, or item for which payment may be made in whole or in
part by Medicare or Medicaid; and
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e. referring a patient for designated health services
(as defined in 42 U.S.C. ss.1395nn) to or providing designated health services
to a patient upon a referral from an entity or person with which the Physician
or the Professional Employee or an immediate family member has a financial
relationship, and to which no exception under 42 U.S.C. ss.1395nn applies.
3.32. Payors. Schedule 3.32 sets forth a true, correct and complete
list of the names and addresses of each Payor, including any private pay patient
as a single payor, of the Company's or the Partnership's services which
accounted for more than 10% of the revenues of the Company or the Partnership in
the three (3) previous fiscal years. Except as set forth on Schedule 3.32, the
Company and the Partnership have good relations with such Payors and none of
such Payors has notified the Company or the Partnership that it intends to
discontinue its relationship with the Company or the Partnership or to deny any
claims submitted to such Payor for payment.
3.33. Prohibitions on the Corporate Practice of Medicine. To the
best of the Company's and the Physician's knowledge, the actions, transactions
or relationships arising from, and contemplated by this Agreement, do not
violate any law, rule or regulation relating to the corporate practice of
medicine. The Company and the Physician accordingly agree that the Company, the
Partnership, the Physician and New P.A. will not, in an attempt to void or
nullify any document contemplated herein or any relationship involving Vision 21
or the Company or the Physician or New P.A., xxx, claim, aver, allege or assert
that any such document contemplated herein or any such relationship violates any
law, rule or regulation relating to the corporate practice of medicine and
expressly warrant that this Section is valid and enforceable by Vision 21, and
recognize that Vision 21 has relied upon the statements herein in closing the
transaction.
3.34. Acquisition Proposals. Except for (a) the negotiations, offers
and agreements with Vision 21 and its representatives, and (b) the proposed
arrangements with Visionary Health Services, neither the Company nor the
Partnership has received during the twelve (12) month period preceding the date
of this Agreement any proposal or offer (including, without limitation, any
proposal or offer of its stockholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company or
the Partnership (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") nor has the Company, the Partnership or any of their
respective employees, agents, representatives or stockholders engaged in any
negotiations concerning, or provided any confidential information or data to, or
had any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitated any effort or attempted to make or implement an
Acquisition Proposal.
3.35. Investment Company Status. The Company is not currently, nor
has it ever been, an "investment company" as that term is defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
3.36. Equal Exchange; Consistent Treatment of Expenses. Physician
and the Company believe that the fair market value of all the Company Common
Stock shall be approximately equal
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to the fair market value of the Merger Consideration at the Effective Time. The
Company has, in presenting information concerning the Company's and New P.A.'s
expenses to Vision 21 for the purpose of determining the Company's value,
separated out those expenses which shall be borne by New P.A. in a manner which
is consistent with the treatment of expenses which shall be the responsibility
of New P.A. pursuant to the Business Management Agreement.
3.37. Insolvency Proceedings. The Company is not currently under the
jurisdiction of a Federal or state court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code.
3.38. Positive Net Worth. On the Closing Date the fair market value
of the assets of the Company will equal or exceed the sum of the liabilities of
the Company plus the amount of any other liabilities to which the assets of the
Company are subject.
3.39. Accounts Receivable/Payable. The accounts receivable of the
Company and the Partnership relating to the ownership and operation of the
Practice reflected on the Partnership Balance Sheet, to the extent uncollected
on the date hereof, are, and the accounts receivable of the Company and the
Partnership relating to the ownership and operation of the Practice to be
reflected on the books of the Company on the Closing Date (the "Accounts
Receivable") will be, valid, existing and collectible within six months from
the Closing Date (taking into consideration the allowance for doubtful accounts
set forth in the Financial Statements) using reasonably diligent collection
methods taking into account the size and nature of the receivable, and
represent amounts due for goods sold and delivered or services performed. There
are not, and on the date of Closing there will not be, any refunds (other than
refunds in an amount not to exceed 2% of the net collectible accounts
receivable as of August 31, 1997), discounts, set-offs, defenses,
counterclaims or other adjustments payable or assessable with respect to the
Accounts Receivable. The Company and the Partnership have collected Accounts
Receivable only in the ordinary course and have not changed collection
procedures or methods nor accelerated the pace of such collection efforts in
anticipation of the transactions contemplated in this Agreement. The Company
and the Partnership have paid accounts payable in the ordinary course and have
not changed payment procedures or methods nor delayed the timing of such
payments in anticipation of the transactions contemplated in this Agreement.
3.40. Projections. There is no fact, development or threatened
development with respect to the markets, products, services, clients, patients,
facilities, personnel, vendors, suppliers, operations, assets or prospects of
the Practice which are known to the Company or the Physician which would
materially adversely affect the projected fiscal year 1997 earnings of the
Company or New P.A. disclosed to Vision 21 by Physician, other than such
conditions as may affect as a whole the economy or the practice of medicine
generally.
3.41. No Intent to Transfer Vision 21 Common Stock. Physician has no
present plan, intention, or arrangement to dispose of any of the Vision 21
Common Stock received in the Merger.
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3.42. Disclosure. To the best of the Company's and the Physician's
knowledge, no representation, warranty or statement made by the Company or the
Physician in this Agreement or any of the exhibits or schedules hereto, or any
agreements, certificates, documents or instruments delivered or to be delivered
to Vision 21 in accordance with this Agreement or the other documents
contemplated herein, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. The Company and the Physician do not know
of any fact or condition (other than general economic conditions or legislative
or administrative changes or rulings relating to health care delivery) which
materially adversely affects, or in the future may materially affect, the
condition, properties, assets, liabilities, business, operations or prospects of
the Practice which has not been set forth herein or in the Schedules provided
herewith.
4. REPRESENTATIONS AND WARRANTIES OF THE PHYSICIAN. The Physician
represents and warrants to Vision 21 that the following are true and correct as
of the date hereof, and shall be true and correct through the Closing Date as if
made on that date:
4.1. Validity; Physician Capacity. This Agreement, the Physician
Employment Agreement, and each other agreement contemplated hereby or thereby
have been, or will be as of the Closing Date, duly executed and delivered by the
Physician and constitute or will constitute legal, valid and binding obligations
of the Physician, enforceable against the Physician in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies. The Physician has legal capacity to enter into and perform
this Agreement and his Physician Employment Agreement.
4.2. No Violation. Except as set forth on Schedule 4.2, neither the
execution, delivery or performance of this Agreement, other agreements of the
Physician contemplated hereby or thereby, nor the consummation of the
transactions contemplated hereby or thereby, will (a) conflict with, or result
in a violation or breach of the terms, conditions or provisions of, or
constitute a default under, any agreement, indenture or other instrument under
which the Physician is bound or to which any of his property or the shares of
Company Common Stock are subject, or result in the creation or imposition of any
security interest, lien, charge or encumbrance upon any of his property or the
shares of Company Common Stock or (b) to the best knowledge of the Physician,
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or
body.
4.3. Personal Holding Company. The Physician does not own the
shares of Company Common Stock, directly or indirectly, beneficially or of
record, through a personal holding company.
4.4. Transfers of the Company Common Stock. Set forth on Schedule
4.4 is a list of all transfers or other transactions involving capital stock of
the Company since January 1, 1994. All
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transfers of Company Common Stock by the Physician have been made for valid
business reasons and not in anticipation or contemplation of the consummation of
the transactions contemplated by this Agreement.
4.5. Consents. Except as may be required under the Exchange Act,
the Securities Act, the Corporation Law and state securities laws, or otherwise
disclosed pursuant to this Agreement, no consent, authorization, approval,
permit or license of, or filing with, any governmental or public body or
authority, or any other person is required to authorize, or is required in
connection with, the execution, delivery and performance of this Agreement or
the agreements contemplated hereby on the part of the Physician.
4.6. Certain Payments. The Physician has not paid or caused to be
paid, directly or indirectly, in connection with the respective businesses of
the Company or the Partnership:
a. to any government or agency thereof or any agent of
any supplier or customer any bribe, kick-back or other similar payment; or
b. any contribution to any political party or candidate
(other than from personal funds not reimbursed by the Company or the Partnership
or as otherwise permitted by applicable law).
4.7. Finder's Fee. Except as set forth on Schedule 4.7, the
Physician has not incurred any obligation for any finder's, broker's or agent's
fee in connection with the transactions contemplated hereby.
4.8. Ownership of Interested Persons; Affiliations. Except as set
forth on Schedule 4.8, neither the Physician nor his spouse, children or
Affiliates, owns directly or indirectly, on an individual or joint basis, any
interest in, has a compensation or other financial arrangement with, or serves
as an officer or director of, any customer or supplier of the Company or the
Partnership or any organization that has a material contact or arrangement with
the Company or the Partnership. Neither the Physician nor any of his Affiliates
is, or with the last three (3) years was, a party to any contract, lease,
agreement or arrangement, including, but not limited to, any joint venture or
consulting agreement with any physician, hospital, pharmacy, home health agency
or other person which is in a position to make or influence referrals to, or
otherwise generate business for, the Company or the Partnership.
4.9. Litigation. Except as disclosed on Schedule 4.9, there are no
claims, actions, suits, proceedings (arbitration or otherwise) or investigations
pending or, to the Physician's knowledge, threatened against the Physician at
law or at equity in any court or before or by any Governmental Authority, and,
to the Physician's knowledge, there are no, and have not been any, facts,
conditions or incidents that may result in any such actions, suits, proceedings
(arbitration or otherwise) or investigations. Except as set forth on Schedule
4.9, there have been no disciplinary, revocation or
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suspension proceedings or similar types of claims, actions or proceedings,
hearings or investigations against the Physician, the Company or the
Partnership.
4.10. Permits. To the best of the Physician's knowledge, the
Physician has all permits, licenses, orders and approvals of all Governmental
Authorities necessary to perform the services performed by the Physician in
connection with the conduct of the Practice. All such permits, licenses, orders
and approvals are in full force and effect and no suspension or cancellation of
any of them is pending or threatened. To the best of the Physician's knowledge,
none of such permits, licenses, orders or approvals will be adversely affected
by the consummation of the transactions contemplated herein. The Physician is a
participating physician, as such term is defined by the Medicare and Medicaid
programs, and the Physician has not been disciplined, sanctioned or excluded
from either the Medicare or Medicaid programs and has not been subject to any
plan of correction imposed by any professional review body.
4.11. Staff Privileges. Schedule 4.11 lists all hospitals at which
the Physician has full staff privileges. Such staff privileges have not been
revoked, surrendered, suspended or terminated, and to the Physician's knowledge,
there are no, and have not been any, facts, conditions or incidents that may
result in any such revocation, surrender, suspension or termination.
4.12. Intentions. Except as set forth on Schedule 4.12, the
Physician intends to continue practicing medicine on a full-time basis for at
least the next five (5) years with the New P.A. and does not know of any fact or
condition that materially adversely affects, or in the future may materially
adversely affect, his ability or intention to practice medicine on a full-time
basis for the next five (5) years with the New P.A.
5. REPRESENTATIONS AND WARRANTIES OF VISION 21. Vision 21
represents and warrants to the Company and the Physician that the following are
true and correct as of the date hereof and shall be true and correct as of the
Closing Date; when used in this Section 5, the term "best knowledge" shall mean
the best knowledge of those individuals listed on Schedule 5:
5.1. Organization and Good Standing. Vision 21 is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida, with all requisite corporation power and authority to carry on
the business in which it is engaged, to own the properties it owns, to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. Vision 21 is qualified to do business as a foreign corporation in the
jurisdictions listed on Schedule 5.1.
5.2. Capitalization. The authorized capital stock of Vision 21
consists of 50,000,000 shares of Vision 21 Common Stock, of which 8,176,258
shares are issued and outstanding, and 10,000,000 shares of Vision 21 preferred
stock, $.001 par value per share ("Preferred Stock"), of which no shares are
issued and outstanding.
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5.3. Corporate Records. The copies of the Articles of Incorporation
and Bylaws, and all amendments thereto, of Vision 21 that have been delivered or
made available to the Company and the Physician are true, correct and complete
copies thereof, as in effect on the date hereof. The minute books of Vision 21,
copies of which have been delivered or made available to the Company and the
Physician, contain accurate minutes of all meetings of, and accurate consents to
all actions taken without meetings by, the Board of Directors (and any
committees thereof) and the stockholders of Vision 21 since its formation.
5.4. Authorization and Validity. The execution, delivery and
performance by Vision 21 of this Agreement and the other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by Vision 21. This Agreement and each other
agreement contemplated hereby to be executed by Vision 21 have been or will be
as of the Closing Date duly executed and delivered by Vision 21 and constitute
or will constitute legal, valid and binding obligations of Vision 21,
enforceable against Vision 21 in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
5.5. Compliance. The execution and delivery of the documents
contemplated hereunder and the consummation of the transactions contemplated
thereby by Vision 21 shall not (i) violate any provision of Vision 21's
organizational documents, (ii) violate any material provision of or result in
the breach of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any material obligation under, any mortgage,
lien, lease, contract, license, instrument or any other agreement to which
Vision 21 is a party, (iii) result in the creation or imposition of any material
lien, charge, pledge, security interest or other material encumbrance upon any
property of Vision 21 or (iv) violate or conflict with any order, award,
judgment or decree or other material restriction or to the best of Vision 21's
knowledge violate or conflict with any law, ordinance or regulation to which
Vision 21 or its property is subject.
5.6. Consents. No consent, approval, order or authorization of or
registration, declaration, or filing with, any Governmental Authority or other
person is required in connection with the execution and delivery of the
documents contemplated herein by Vision 21 or the consummation by such party of
the transactions contemplated thereby, except for those consents or approvals
set forth on Schedule 5.6.
5.7. Finder's Fee. Except as disclosed on Schedule 5.7, Vision 21
has not incurred any obligation for any finder's, broker's or agent's fee in
connection with the transactions contemplated hereby.
5.8. Capital Stock. The issuance and delivery by Vision 21 of
shares of Vision 21 Common Stock in connection with the Merger have been duly
and validly authorized by all necessary corporate action on the part of Vision
21. The shares of Vision 21 Common Stock to be
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issued in connection with the Merger, when issued in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable and will
not have been issued in violation of any preemptive rights, rights of first
refusal or similar rights of any of Vision 21's stockholders, or any federal or
state law, including, without limitation, the registration requirements of
applicable federal and state securities laws.
5.9. Continuity of Business Enterprise. It is the present intention
of Vision 21 to continue at least one significant historic business line of the
Company, or to use at least a significant portion of the Company's historic
business assets in a business, in each case within the meaning of Treasury
Regulation Section 1.368-1(d).
5.10. Vision 21 Financial Statements. The audited consolidated
balance sheet and related statements of income and cash flows of Vision 21 for
its prior three (3) full fiscal years, and its unaudited interim balance sheet
for the six (6) month period ended June 30, 1997, and the related unaudited
statement of income of Vision 21 for the period then ended (collectively, with
the related notes thereto, the "Vision 21 Financial Statements"), (a) fairly
present the financial condition and results of operations of Vision 21 as of the
dates and for the periods indicated; and (b) have been prepared in conformity
with GAAP (subject to normal year-end adjustments and the absence of notes for
any unaudited interim financial statement), except as otherwise indicated in the
Vision 21 Financial Statements.
5.11. Liabilities and Obligations. Except as disclosed on Schedule
5.11, the Vision 21 Financial Statements shall reflect all material liabilities
of Vision 21, accrued, contingent or otherwise, that would be required to be
reflected on a balance sheet, or in the notes thereto, prepared in accordance
with GAAP. Except as set forth on Schedule 5.11 or in the Vision 21 Financial
Statements, Vision 21 is not liable upon or with respect to, or obligated in any
other way to provide funds in respect of or to guarantee or assume in any
manner, any debt, obligation or dividend of any person, corporation,
association, partnership, joint venture, trust or other entity, and Vision 21
does not know of any valid basis for the assertion of any other claims or
liabilities of any nature or in any amount.
5.12. Compliance with Laws. Vision 21 has not failed to comply with
any applicable laws, regulations and licensing requirements or failed to file
with the proper authorities any necessary statements and reports except where
the failure to so comply or file would not, individually or in the aggregate,
have a material adverse effect on the Merger. There are no existing violations
by Vision 21 of any federal, state or local law or regulation that could,
individually or in the aggregate, have a material adverse effect on the Merger.
Vision 21 possesses all necessary licenses, franchises, permits and governmental
authorizations for the conduct of Vision 21's business as now conducted and
after the Closing, as contemplated in this Agreement and the Business Management
Agreement, except for such licenses, franchises, permits or governmental
authorizations which, if not possessed by Vision 21, would not have a material
adverse effect on the business of Vision 21. The transactions contemplated by
this Agreement will not result in a default under or a breach or
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violation of, or adversely affect the rights and benefits afforded by any such
licenses, franchises, permits or government authorizations, except for any such
default, breach or violation that would not, individually or in the aggregate,
have a material adverse effect on the Merger or the performance of the services
contemplated under the Business Management Agreement. Since January 1, 1993,
Vision 21 has not received any notice from any federal, state or other
governmental authority or agency having jurisdiction over its properties or
activities, or any insurance or inspection body, that its operations or any of
its properties, facilities, equipment, or business practices fail to comply with
any applicable law, ordinance, regulation, building or zoning law, or
requirement of any public or quasi-public authority or body, except where
failure to so comply would not, individually or in the aggregate, have a
material adverse effect on the Merger.
5.13. Insolvency Proceedings. Vision 21 is not currently under the
jurisdiction of a Federal or state court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code.
5.14. Equal Exchange. Vision 21 believes that the fair market value
of all the Company Common Stock shall be approximately equal to the fair market
value of the Merger Consideration at the Effective Time.
5.15. Employment of Company's Employees. Vision 21 does not
currently intend to change the existing composition or employment terms of any
of the non-professional personnel which have employment arrangements with the
Company or the Partnership on the effective date of this Agreement (except as is
necessary for Vision 21 to employ such individuals pursuant to the Business
Management Agreement). Vision 21 reserves the right, however, to change the
number, composition or employment terms of such non-professional personnel in
the future.
6. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
PHYSICIAN. The Physician represents and warrants that, except as disclosed in
the Schedules, the following will be true and correct on the Closing Date as if
made on that date:
6.1. Organization and Good Standing; Qualification. New P.A. is a
professional association duly organized, validly existing and in good standing
under the laws of the State, with all requisite corporate power and authority to
carry on the business in which it intends to engage, to own the properties it
intends to own, and to execute and deliver the Business Management Agreement and
the Physician Employment Agreements and consummate the transactions and perform
the services contemplated thereby. New P.A. is duly qualified and licensed to do
business and is in good standing in all jurisdictions where the nature of its
intended business makes such qualification necessary.
6.2. Capitalization. The authorized capital stock of New P.A.
consists of _____ shares of New P.A. Common Stock, of which _____ shares are
issued and outstanding, and no shares of capital stock of New P.A. are held in
treasury. The Physician, Xxxxxxxx, P.A. and Xxxxxxxx, P.A., collectively own all
of the issued and outstanding shares of New P.A.'s common stock, free and clear
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of all security interests, liens, adverse claims, encumbrances, equities,
proxies and shareholders' agreements, and Physician owns _____ of such shares of
New P.A. common stock. Each outstanding share of New P.A.'s common stock has
been legally and validly issued and is fully paid and nonassessable. There exist
no options, warrants, subscriptions or other rights to purchase, or securities
convertible into or exchangeable for, any of the authorized or outstanding
securities of New P.A. No shares of capital stock of New P.A. have been issued
or disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of New P.A.'s stockholders.
6.3. Corporate Records. The copies of the Articles or Certificate
of Incorporation and Bylaws, and all amendments thereto, of New P.A. that have
been delivered or made available to Vision 21 are true, correct and complete
copies thereof, as in effect on the Closing Date. The minute books of New P.A.,
copies of which have been delivered or made available to Vision 21, contain
accurate minutes of all meetings of, and accurate consents to all actions taken
without meetings by, the Board of Directors (and any committees thereof) and the
stockholders of New P.A. since its formation.
6.4. Authorization and Validity. The execution, delivery and
performance by New P.A. of the Business Management Agreement, the Physician
Employment Agreements, the Optometrist Employment Agreements and the other
agreements contemplated thereby, and the consummation of the transactions and
provisions of services contemplated thereby, have been duly authorized by New
P.A. The Business Management Agreement, the Physician Employment Agreements, the
Optometrist Employment Agreements and each other agreement contemplated thereby
will be as of the Closing Date duly executed and delivered by New P.A. and will
constitute legal, valid and binding obligations of New P.A. enforceable against
New P.A. in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
6.5. No Violation. Neither the execution, delivery or performance
of the Business Management Agreement, the Physician Employment Agreements, the
Optometrist Employment Agreements or the other agreements contemplated thereby
nor the consummation of the transactions or provision of services contemplated
thereby will (a) conflict with, or result in a violation or breach of the terms,
conditions or provisions of, or constitute a default under, the Articles or
Certificate of Incorporation or Bylaws of New P.A., or (b) to the actual
knowledge of the Physician, violate or conflict with any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental or
regulatory agency or body.
6.6. No Business, Agreements, Assets or Liabilities. New P.A. has
not commenced business since its incorporation. Other than its Articles or
Certificate of Incorporation and Bylaws, and as of the Closing Date, the
Business Management Agreement, the Physician Employment Agreements, the
Optometrist Employment Agreements, the Employee Benefit Plans and the other
contracts or agreements listed on Schedule 6.6, New P.A. is not a party to or
subject to any agreement, indenture or other instrument. New P.A. does not own
any assets (tangible or intangible)
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other than the consideration received upon the issuance of shares of capital
stock and New P.A. does not have any liabilities, accrued, contingent or
otherwise (known or unknown and asserted or unasserted).
6.7. Compliance with Laws. New P.A. has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports, except where failure to
so comply or file would not, individually or in the aggregate, have a material
adverse effect on the business, operations or financial condition of New P.A.
7. SECURITIES LAW MATTERS.
7.1. Investment Representations and Covenants of Physician.
a. Physician understands that the Securities will not be
registered under the Securities Act or any state securities laws on the grounds
that the issuance of the Securities is exempt from registration pursuant to
Section 4(2) of the Securities Act under the Securities Act and applicable state
securities laws, and that the reliance of Vision 21 on such exemptions is
predicated in part on the Physician's representations, warranties, covenants and
acknowledgements set forth in this Section.
b. Except as disclosed on Schedule 7.1(b) attached
hereto, Physician represents and warrants that Physician is an "accredited
investor" or "sophisticated investor" as defined under the Securities Act and
state "Blue Sky" laws, or that Physician has utilized, to the extent necessary
to be deemed a sophisticated investor under the Securities Act and State "Blue
Sky" laws, the assistance of a professional advisor.
c. Physician represents and warrants that the Securities
to be acquired by Physician upon consummation of the transactions described in
this Agreement will be acquired by Physician for Physician's own account, not as
a nominee or agent, and without a view to resale or other distribution within
the meaning of the Securities Act and the rules and regulations thereunder,
except as contemplated in this Agreement, and that Physician will not distribute
any of the Securities in violation of the Securities Act. All Securities shall
bear a restrictive legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE
TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE ACT AND APPLICABLE
SECURITIES LAWS."
In addition, the Securities shall bear any legend required by the
securities or "Blue Sky" laws of any state where Physician resides as well as
any other legend deemed appropriate by Vision 21 or its counsel.
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d. Physician represents and warrants that the address
set forth below Physician's name on Schedule 7.1(d) is Physician's principal
residence.
e. Physician (i) acknowledges that the Securities issued
to Physician at the Closing must be held indefinitely by Physician unless
subsequently registered under the Securities Act or an exemption from
registration is available, (ii) is aware that any routine sales of Securities
made pursuant to Rule 144 under the Securities Act may be made only in limited
amounts and in accordance with the terms and conditions of that Rule and that in
such cases where the Rule is not applicable, compliance with some other
registration exemption will be required, and (iii) is aware that Rule 144 is not
currently available for use by Physician for resale of any of the Securities to
be acquired by Physician upon consummation of the transactions described in this
Agreement.
f. Physician represents and warrants to Vision 21 that
Physician, either alone or together with the assistance of Physician's own
professional advisor, has such knowledge and experience in financial and
business matters such that Physician is capable of evaluating the merits and
risks of Physician's investment in any of the Securities to be acquired by
Physician upon consummation of the transactions described in this Agreement.
g. Physician confirms that Physician has had the
opportunity to ask questions of and receive answers from Vision 21 concerning
the terms and conditions of Physician's investment in the Securities, and the
Physician has received to Physician's satisfaction, such additional information,
in addition to that set forth herein, about Vision 21's operations and the terms
and conditions of the offering as Physician has requested.
h. In order to ensure compliance with the provisions of
paragraph (c) hereof, Physician agrees that after the Closing Physician will not
sell or otherwise transfer or dispose of Securities or any interest therein
(unless such shares have been registered under the Securities Act) without first
complying with either of the following conditions, the expenses and costs of
satisfaction of which shall be fully borne and paid for by Physician:
i) Vision 21 shall have received a written
legal opinion from legal counsel, which opinion and counsel shall be
satisfactory to Vision 21 in the exercise of its reasonable judgment, or a copy
of a "no-action" or interpretive letter of the Securities and Exchange
Commission specifying the nature and circumstances of the proposed transfer and
indicating that the proposed transfer will not be in violation of any of the
registration provisions of the Securities Act and the rules and regulations
promulgated thereunder; or
ii) Vision 21 shall have received an opinion
from its own counsel to the effect that the proposed transfer will not be in
violation of any of the registration provisions of the Securities Act and the
rules and regulations promulgated thereunder.
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Physician also agrees that the certificates or instruments representing the
Securities to be issued to Physician pursuant to this Agreement may contain a
restrictive legend noting the restrictions on transfer described in this Section
and required by federal and applicable state securities laws, and that
appropriate "stop-transfer" instructions will be given to Vision 21's transfer
agent, if any, provided that this Section 7.1(h) shall no longer be applicable
to any Securities following their transfer pursuant to a registration statement
effective under the Securities Act or in compliance with Rule 144 or if the
opinion of counsel referred to above is to the further effect that transfer
restrictions and the legend referred to herein are no longer required in order
to establish compliance with any provisions of the Securities Act.
i. Physician understands that there can be no assurance
that a Public Offering by Vision 21 will ever occur or if it does occur that it
will be successful.
j. Physician agrees that he shall be considered an
"affiliate" of Vision 21 for purposes of Rule 144 and agrees to the restrictions
and limitations imposed by Rule 144 on affiliates. Physician further agrees that
he shall be considered an affiliate of Vision 21 for Rule 144 purposes even if
he does not meet the technical definition of "affiliate" under Rule 144.
7.2. Current Public Information. At all times following the
registration of any of Vision 21's securities under the Securities Act or
Exchange Act pursuant to which Vision 21 becomes subject to the reporting
requirements of the Exchange Act, Vision 21 shall use commercially reasonable
efforts to comply with the requirements of Rule 144 under the Securities Act, as
such Rule may be amended from time to time (or any similar rule or regulation
hereafter adopted by the SEC) regarding the availability of current public
information to the extent required to enable any holder of shares of Common
Stock to sell such shares without registration under the Securities Act pursuant
to Rule 144 (or any similar rule or regulation).
8. COVENANTS OF THE COMPANY AND THE PHYSICIAN. The Company and
the Physician, jointly and severally, agree that between the date hereof and the
Closing (with respect to the Company's covenants, the Physician agrees to use
his best efforts to cause the Company to perform, and with respect to covenants
concerning the Partnership, the Company agrees to use its best efforts to cause
the Partnership to perform):
8.1. Consummation of Agreement. The Company and the Physician shall
use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions; provided,
however, that this covenant shall not require the Company, the Partnership or
the Physician to make any expenditures that are not expressly set forth in this
Agreement or otherwise contemplated herein.
8.2. Business Operations. The Company and the Partnership shall
operate their respective businesses in the ordinary course. The Company and the
Physician shall use their best efforts to preserve the respective businesses of
the Company and the Partnership intact. None of the
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Company, the Partnership or the Physician shall take any action that would,
individually or in the aggregate, result in a Material Adverse Effect.
8.3. Access. The Company, the Partnership and the Physician shall,
at reasonable times during normal business hours and on reasonable notice,
permit Vision 21 and its authorized representatives, including without
limitation, the Accountants, reasonable access to, and make available for
inspection, all of the assets and business of the Company and the Partnership,
including its employees, customers and suppliers, and permit Vision 21 and its
authorized representatives to inspect and, at Vision 21's sole cost and expense,
make copies of all documents, records (other than patient medical records) and
information with respect to the affairs of the Company and the Partnership,
including, without limitation, the Financial Statements, as Vision 21 and its
representatives may request, all for the sole purpose of permitting Vision 21 to
become familiar with the business and assets and liabilities of the Company and
the Partnership.
8.4. Notification of Certain Matters. The Company and the Physician
shall promptly inform Vision 21 in writing of (a) any notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by the Company, the Partnership or the
Physician subsequent to the date of this Agreement and prior to the Effective
Time under any Commitment material to the Company's or the Partnership's
conditions (financial or otherwise), operations, assets, liabilities or business
and to which they are subject; or (b) any material adverse change in the
Company's or the Partnership's conditions (financial or otherwise), operations,
assets, liabilities or business.
8.5. Approvals of Third Parties. As soon as practicable after the
date hereof, the Company and the Physician shall secure all necessary approvals
and consents of landlords to the consummation of the transactions contemplated
hereby and shall use their best efforts to secure all necessary approvals and
consents of other third parties to the consummation of the transactions
contemplated hereby; provided, however, that this covenant shall not require the
Company, the Partnership or the Physician to make any material expenditures that
are not expressly set forth in this Agreement or otherwise contemplated herein.
8.6. Employee Matters. Except as set forth in Schedule 3.13 or as
otherwise contemplated by this Agreement, neither the Company nor the
Partnership shall, without the prior written approval of Vision 21, except as
required by law:
a. increase the cash compensation of the Physician or
any other employees of the Company or the Partnership (other than in the
ordinary course of business and consistent with past practice);
b. adopt, amend or terminate any Compensation Plan;
c. adopt, amend or terminate any Employment Agreement;
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d. adopt, amend or terminate any Employee Policies and
Procedures;
e. adopt, amend or terminate any Employee Benefit Plan;
f. take any action that could deplete the assets of any
Employee Benefit Plan, other than payment of benefits in the ordinary course to
participants and beneficiaries;
g. fail to pay any premium or contribution due or with
respect to any Employee Benefit Plan;
h. fail to file any return or report with respect to any
Employee Benefit Plan;
i. institute, settle or dismiss any employment
litigation except as could not, individually or in the aggregate, result in a
Material Adverse Effect;
j. enter into, modify, amend or terminate any agreement
with any union, labor organization or collective bargaining unit; or
k. take or fail to take any action with respect to any
past or present employee of the Company or the Partnership that would,
individually or in the aggregate, result in a Material Adverse Effect.
8.7. Contracts. Except with Vision 21's prior written consent,
neither the Company nor the Partnership shall assume or enter into any contract,
lease, license, obligation, indebtedness, commitment, purchase or sale except in
the ordinary course of business that is material to the Company's or the
Partnership's respective businesses, nor will either entity waive any material
right or cancel any material contract, debt or claim.
8.8. Capital Assets; Payments of Liabilities. Neither the Company
nor the Partnership shall, without the prior written approval of Vision 21 (a)
acquire or dispose of any capital asset having a fair market value of $5,000 or
more, or acquire or dispose of any capital asset outside of the ordinary course
of business or (b) discharge or satisfy any lien or encumbrance or pay or
perform any obligation or liability other than (i) liabilities and obligations
reflected in the Financial Statements, or (ii) current liabilities and
obligations incurred in the usual and ordinary course of business since the
Partnership Balance Sheet Date and, in either case (i) or (ii) above, only as
required by the express terms of the agreement or other instrument pursuant to
which the liability or obligation was incurred.
8.9. Mortgages, Liens and Guaranties. Neither the Company nor the
Partnership shall, without the prior written approval of Vision 21, enter into
or assume any mortgage, pledge, conditional sale or other title retention
agreement, permit any security interest, lien, encumbrance or claim of any kind
to attach to any of their assets (other than statutory liens arising in the
ordinary
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course of business and other liens that do not materially detract from the value
or interfere with the use of such assets), whether now owned or hereafter
acquired, or guarantee or otherwise become contingently liable for any
obligation of another, except obligations arising by reason of endorsement for
collection and other similar transactions in the ordinary course of business, or
make any capital contribution or investment in any person.
8.10. Acquisition Proposals. The Company and the Physician agree
that from the date of this Agreement through the earlier of the Closing Date or
November 30, 1997, (a) none of the Physician, the Company, the Partnership or
any of their respective partners, officers or directors shall, and the Physician
and the Company shall direct and use their best efforts to cause the Company's
and the Partnership's respective employees, agents, and representatives not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any Acquisition Proposal or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; (b) the Physician, the Company and the Partnership will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing and each will take the necessary steps to inform the individuals or
entities referred to in the first sentence hereof of the obligations undertaken
in this Section 8.10; and (c) the Physician and the Company will notify Vision
21 immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, the Company, the Partnership or the
Physician.
8.11. Distributions and Repurchases. Except as contemplated in this
Agreement, no distribution, payment or dividend of any kind will be declared or
paid by the Company with respect of its capital stock, nor will any repurchase
of any of the Company's capital stock be approved or effected.
8.12. Requirements to Effect the Merger. The Company and the
Physician shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all necessary
documents in form approved by counsel for the parties to this Agreement.
8.13. Physician Accounts Payable. The Company shall, and the
Physician shall cause the Company to, pay in a timely manner the accounts
payable of the Physician.
8.14. New P.A. Spinoff. The Company shall, together with Xxxxxxxx,
P.A. and Xxxxxxxx, P.A., form, organize and incorporate New P.A. in the State
and the Articles or Certificate of Incorporation and Bylaws of New P.A. shall be
in form and substance reasonably satisfactory to Vision 21. The Company shall
not permit New P.A. to commence business until the Closing Date. On or prior to
the Closing, Company shall take all actions and execute all documents,
agreements or instruments necessary to transfer to New P.A. the Company's and
the Partnership's medical
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business and to transfer good, valuable, and marketable title to all of the
Company's and the Partnership's Medical Assets in exchange for the assumption by
New P.A. of the Excluded Liabilities and the issuance by New P.A. to the Company
of _____ percent (_____%) of the issued and outstanding shares of New P.A.
common stock. Prior to the Closing, the Company shall declare and make a
distribution to Physician of _____ percent (_____%) of the issued and
outstanding shares of New P.A. common stock.
8.15. Licenses and Permits. The Company, the Partnership and the
Physician shall cooperate fully with Vision 21 to obtain all licenses, permits,
approvals or other authorizations required under any law, statute, rule,
regulation or ordinance, or otherwise necessary or desirable to provide the
services of New P.A., the Physician and the Professional Employees contemplated
by the Business Management Agreement and the Physician Employment Agreements,
and to conduct the intended business of New P.A.
8.16. Physician Employment Agreements. The Company, the Partnership
and the Physician shall cause, at or immediately prior to Closing, each
Physician Employee (except for those non-shareholder Physician Employees
identified on Schedule 8.16) who is then an employee of the Company or the
Partnership and Physician agrees at or immediately prior to Closing (i) to
terminate his employment agreement, if any, with the Company or the Partnership
by mutual consent without any liability therefor on the part of the Company or
the Partnership, and (ii) to enter into a new Physician Employment Agreement
with New P.A. in accordance with the terms of the Business Management Agreement.
8.17. Optometrist Employment Agreements. The Company, the
Partnership and the Physician shall cause, at or immediately prior to Closing,
each Optometrist Employee (except for those Optometrist Employees identified on
Schedule 8.17) who is then an employee of the Company (i) to terminate his
employment agreement, if any, with the Company or the Partnership by mutual
consent without any liability therefor on the part of the Company, and (ii) to
enter into a new Optometrist Employment Agreement with New P.A. in accordance
with the Business Management Agreement.
8.18. Termination of Retirement Plans. Prior to Closing, the
Physician shall cause the Company (and the Company shall cause the Partnership)
to take all steps necessary to discontinue benefits accruals under any Employee
Benefit Plan that is intended to be a qualified employee retirement plan under
Section 401(a) of the Code (a "Retirement Plan") effective as of Closing or as
soon thereafter as may be practical. Effective at the time of Closing, the
Company and the Partnership shall cause New P.A. to assume all of the
obligations of the Company and the Partnership as the sponsoring employer and/or
plan administrator of the Retirement Plan in compliance with applicable law.
Subsequent to Closing, New P.A. and Vision 21 shall review the extent
to which New P.A. can resume contributions to the Retirement Plan without
violating the qualification requirements of
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Sections 410(b) and 401(a)(4) of the Code taking into account any employees of
Vision 21 who would be "leased employees" of New P.A. under Section 414(n) of
the Code. If Vision 21 and New P.A. mutually agree that such qualification
requirements can be satisfied, New P.A. may elect to continue the Retirement
Plan and make contributions in accordance with its terms, provided that New P.A.
shall agree to cover at its own expense any Vision 21 employees who are leased
employees if such coverage is required to maintain the tax-qualified status of
the Retirement Plan.
8.19. Delivery of Schedules. The Company and the Physician shall
deliver to Vision 21 all Schedules required to be delivered by them prior to the
Closing.
8.20. Conversion of Company. After the transfer of the Medical
Assets of the Company and the Partnership to New P.A. and the assumption of the
Excluded Liabilities by New P.A. and prior to Closing, Physician shall cause the
Company to take such action and file such documents or instruments as may be
necessary to convert the Company into a general business corporation in
accordance with applicable law.
8.21. Assignment of Fees for Medical and Optometry Services. On or
prior to the Closing Date, the Company shall obtain an irrevocable assignment
from all Professional Employees of any and all of their rights to receive
payment for the provision of ophthalmology or optometry services which are part
of the Accounts Receivable to the Company existing on the Closing Date, except
for those fees specified and set forth on Schedule 8.21. Each Professional
Employee shall undertake to endorse any payments received on account of such
services to the order of the Company and to take such other action as may be
necessary to confirm to the Company the rights to collect and retain for its own
account such Accounts Receivable. The Company shall cause its Professional
Employees to agree that such security interest of such lender(s) is intended to
be a first priority security interest and is superior to any right, title or
interest which may be asserted by such Professional Employees with respect to
the Accounts Receivable or the proceeds thereof. In the event that the
assignment of rights described in this Section shall be deemed, for any reason,
to be ineffective as an outright assignment, the Company shall cause each
Professional Employee to agree that such Professional Employee shall be deemed,
effective as of the Closing Date, to have granted to the Company a first
priority lien on and security interest in and to any and all interests of such
Professional Employee in any of the Accounts Receivable, and all proceeds with
respect thereto, to secure the collection by the Company of all Accounts
Receivable, and this Agreement shall be deemed to be a security agreement to the
extent necessary to give effect to the foregoing. The Company shall cause each
Professional Employee to execute and deliver, all such financing statements as
the Company or Vision 21 may request in order to perfect such security interest.
The Company shall not suffer any Professional Employee to grant any other lien
on or security interest in or to such Accounts Receivable or any proceeds
thereof.
9. COVENANTS OF VISION 21. Vision 21 agrees that between the date
hereof and the Closing:
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9.1. Consummation of Agreement. Vision 21 shall use its best
efforts to cause the consummation of the transactions contemplated hereby in
accordance with their terms and conditions and take all corporate and other
actions necessary to approve the Merger; provided, however, that this covenant
shall not require Vision 21 to make any expenditures that are not expressly set
forth in this Agreement or otherwise contemplated herein.
9.2. Efforts to Effect. Vision 21 will use its best efforts to
take, or cause to be taken, all actions necessary to effect the Merger under
applicable law, including without limitation the filing with the appropriate
government officials of all necessary documents in form approved by counsel for
the parties to this Agreement.
9.3. Notification of Certain Matters. Vision 21 shall promptly
inform the Company and the Physician in writing of (a) any notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by Vision 21 subsequent to the date of
this Agreement and prior to the Effective Time under any agreement or commitment
entered into by Vision 21 material to Vision 21's condition (financial or
otherwise), operations, assets, liabilities or business and to which it is
subject; or (b) any material adverse change in Vision 21's condition (financial
or otherwise), operations, assets, liabilities or business.
9.4. Approvals of Third Parties. Vision 21 shall use its best
efforts to secure, as soon as practicable after the date hereof, all necessary
approvals and consents of third parties to the consummation of the transactions
contemplated hereby.
9.5. Licenses and Permits. Vision 21 shall use its best efforts to
obtain all licenses, permits, approvals or other authorizations required under
any law, statute, rule, regulation or ordinance, or otherwise necessary or
desirable to consummate the transactions or provide the services contemplated by
the Business Management Agreement and to conduct the intended business of Vision
21.
9.6. Release of Physician From Practice Liabilities. Vision 21
shall use its best efforts to obtain from third party creditors the release of
Physician from any personal liabilities relating to the Practice which are
identified on Schedule 9.6 and assumed by Vision 21 pursuant to the terms of
this Agreement.
10. COVENANTS OF VISION 21, THE COMPANY AND THE PHYSICIAN. Vision
21, the Company and the Physician agree as follows (with respect to New P.A.'s
covenants, the Physician agrees to cause New P.A. to perform and with respect to
the Partnership's covenants, the Company agrees to use its best efforts to cause
the Partnership to perform):
10.1. Amendment of Schedules. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until the Closing to
attach, supplement or amend promptly the Schedules with
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respect to any matter that would have been or would be required to be set forth
or described in the Schedules in order to not materially breach any
representation, warranty or covenant of such party contained herein; provided
that no amendment or supplement to a Schedule that constitutes or reflects a
material adverse change to the Company, the Partnership or the Nonmedical Assets
may be made unless Vision 21 consents to such amendment or supplement, and no
amendment or supplement to a Schedule that constitutes or reflects a material
adverse change to Vision 21 may be made unless the Company and the Physician
consent to such amendment or supplement. For all purposes of this Agreement,
including without limitation for purposes of determining whether the conditions
set forth in Sections 11.1 and 12.1 have been fulfilled, the Schedules hereto
shall be deemed to be the Schedules as amended or supplemented pursuant to this
Section 10.1. In the event that the Company is required to amend or supplement a
Schedule in accordance with this Section 10.1 and Vision 21 does not consent to
such amendment or supplement, or Vision 21 is required to amend or supplement a
Schedule in accordance with this Section 10.1 and the Company and the Physician
do not consent, this Agreement shall be deemed terminated by mutual consent as
set forth in Section 16.1(d) or Section 16.1(e) as appropriate.
10.2. Business Management Agreement. The Company and the Physician
shall use their best efforts to cause the Business Management Agreement to be
executed and delivered by New P.A. on or prior to the Closing Date, which shall
be considered a Nonmedical Asset of the Company and shall be acquired by Vision
21 in the Merger.
10.3. Fees and Expenses.
a. If the Merger is consummated, Vision 21 shall pay all
costs of the Audit of the Partnership's Financial Statements and financial
records by the Accountants (or auditors designated by Vision 21's Accountants).
All items prepared by Vision 21's Accountants in connection with the Audit
("Prepared Audit Materials") shall be for use solely by Vision 21; provided,
however, that the Company may utilize the Prepared Audit Materials solely in
connection with its review of Vision 21's calculation of the Merger
Consideration. The Prepared Audit Materials shall not be deemed to include those
items which customarily remain the property of auditors such as their working
papers and memos.
b. In the event the Merger is not consummated, Vision
21 shall pay for all of the expenses of the Accountants in connection with the
Audit. The Company, Physician, Xxxxxxxx, P.A. and Xxxxxxxx, P.A. shall not be
entitled to copies or originals of the Prepared Audit Materials unless the
Company, Physician, Xxxxxxxx, P.A. and/or Xxxxxxxx, P.A. pays for or reimburses
Vision 21 for all of the expenses of the Accountants in connection with the
Audit in advance of receiving the Prepared Audit Materials (either from Vision
21 or its Accountants). For purposes of this Agreement, Audit expenses shall
include all expenses related to the Audit as well as all expenses incurred to
present the financial statements in accordance with GAAP and all schedules
related thereto.
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c. Vision 21 shall pay all cost of a Medicare audit of
the Company and the Partnership. The Company and the Partnership shall agree in
writing that all information obtained in connection with the Medicare audit
shall be made available to Vision 21. The Company, the Partnership, Physician,
Xxxxxxxx, P.A. and Xxxxxxxx, P.A. shall not be entitled to copies or originals
of the Medicare audit materials until the Company, Physician, Xxxxxxxx, P.A.
and/or Xxxxxxxx, P.A. pays for or reimburses Vision 21 for such audit expenses
in advance of receiving the Medicare audit materials (either from Vision 21 or
its Medicare auditors).
d. Each of the Company, Physician and Vision 21 shall
pay the costs and expenses of their own legal counsel with respect to legal
services rendered in connection with the preparation and negotiation of this
Agreement and the transactions contemplated hereby.
11. CONDITIONS PRECEDENT OF VISION 21. Except as may be waived in
writing by Vision 21, the obligations of Vision 21 hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following conditions
precedent:
11.1. Representations and Warranties. The representations and
warranties of the Company and the Physician contained herein shall have been
true and correct in all material respects when initially made and shall be true
and correct in all material respects as of the Closing Date.
11.2. Covenants. The Company, the Partnership and the Physician
shall have performed and complied in all material respects with all covenants
required by this Agreement to be performed and complied with by the Company, the
Partnership or the Physician prior to the Closing Date.
11.3. Transfer of Partnership Assets and Assignment of Partnership
Liabilities. The Partnership shall have distributed all of its assets and
assigned all of its liabilities to Xxxxxxxx, P.A., Xxxxxxxx, P.A. and the
Company.
11.4. Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
11.5. No Material Adverse Change. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities or business
of the Company or the Partnership shall have occurred since the Partnership
Balance Sheet Date, whether or not such change shall have been caused by the
deliberate act or omission of the Company, the Partnership or the Physician.
11.6. Government Approvals and Required Consents. The Company, the
Physician, New P.A. and Vision 21 shall have obtained all necessary government
and other third-party approvals and consents (other than consents technically
required as a result of the transactions contemplated hereby under the terms of
managed care contracts to which the Company or any of its employees are a
party).
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11.7. Certification. None of the Company, the Partnership, the
Physician or New P.A. shall have received any notice of or been made a party to
any judicial or administrative proceeding, or threatened to so be made a party,
in any action or proceeding that seeks to deny the continued use or receipt of
any necessary permit, license, authorization, certification or approval under
the Medicare and Medicaid programs to provide ophthalmology or optometry
services.
11.8. Closing Deliveries. Vision 21 shall have received all
documents and agreements, duly executed and delivered in form reasonably
satisfactory to Vision 21, referred to in Section 13.1.
11.9. Due Diligence. Vision 21 shall have completed to its
satisfaction a due diligence review of the Company, the Partnership and the
Physician.
11.10. Financial Audit. Vision 21 shall have approved in Vision 21's
sole discretion an Audit of the Company, the Partnership and the Practice which
Audit shall have been performed by an accounting firm designated by Vision 21.
11.11. Medicare Audit. Vision 21 shall have approved in Vision 21's
sole discretion a Medicare audit of the Company, the Partnership and the
Practice.
11.12. Exemption Under State Securities Laws. The transfer of Vision
21's Securities to the Physician as contemplated in this Agreement shall qualify
for one or more exemptions from registration under the State's securities laws.
Vision 21 shall pay all filing fees in connection with any filing required to
qualify the transfer of the Securities for such exemption(s).
11.13. Assignment of Professional Employees' Rights in Accounts
Receivable. The Company shall have caused the Professional Employees to assign
any and all of their rights with respect to Accounts Receivable to the Company
and shall cause such Professional Employees to execute such other agreements and
instruments as contemplated in Section 8.21.
12. CONDITIONS PRECEDENT OF THE COMPANY AND THE PHYSICIAN. Except
as may be waived in writing by the Company and the Physician, the obligations of
the Company and the Physician hereunder are subject to fulfillment at or prior
to the Closing Date of each of the following conditions precedent:
12.1. Representations and Warranties. The representations and
warranties of Vision 21 contained herein shall be true and correct in all
respects when initially made and shall be true and correct in all material
respects as of the Closing Date.
12.2. Covenants. Vision 21 shall have performed and complied in all
material respects with all covenants and conditions required by this Agreement
to be performed and complied with by them prior to the Closing Date.
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12.3. [RESERVED]
12.4. Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
12.5. Government Approvals and Required Consents. The Company, the
Partnership, the Physician, New P.A. and Vision 21 shall have obtained all
necessary government and other third-party approvals and consents (other than
consents technically required as a result of the transactions contemplated
hereby under the terms of managed care contracts to which the Company, the
Partnership or any of their respective employees are a party).
12.6. Closing Deliveries. The Company, the Partnership, New P.A. and
the Physician shall have received all documents, instruments and agreements,
duly executed and delivered in form reasonably satisfactory to the Company,
referred to in Section 13.2.
12.7. No Change in Voting or Ownership Control. There shall have
been no changes in the voting or ownership control of Vision 21 from the date
first above written to the Closing Date.
12.8. No Material Adverse Change. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities or business
of Vision 21 shall have occurred since the end of the last fiscal period
reported in the Vision 21 Financial Statements, whether or not such change shall
have been caused by the deliberate act or omission of Vision 21.
13. CLOSING DELIVERIES; ESCROW OF DOCUMENTS.
13.1. Deliveries of the Company, New P.A. and the Physician. At or
prior to September 30, 1997, the Company, New P.A. and the Physician shall
deliver to Vision 21, c/x Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to Vision 21,
the following, all of which shall be in a form reasonably satisfactory to Vision
21 and shall be held by Xxxxxxxx, Loop & Xxxxxxxx, LLP in escrow pending
Closing, pursuant to an escrow agreement or letter in form and substance
mutually acceptable to the parties hereto:
a. a copy of resolutions of the Board of Directors of
the Company authorizing (i) the execution, delivery and performance of this
Agreement and all related documents and agreements, and (ii) the consummation of
the Merger, certified by the Secretary of the Company as being true and correct
copies of the originals thereof subject to no modifications or amendments;
b. a copy of resolutions of the Board of Directors of
New P.A. authorizing the execution, delivery and performance of the Business
Management Agreement, the Physician Employment Agreements, and all other
documents to be executed and delivered by New P.A. as
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contemplated by this Agreement, certified by the Secretary of New P.A. as being
true and correct copies of the originals thereof subject to no modifications or
amendments;
c. a certificate of the President of the Company, and of
the Physician, dated the Closing Date, as to the truth and correctness of the
representations and warranties of the Company and the Physician contained
herein, on and as of the Closing Date;
d. a certificate of the President of the Company, and of
the Physician, dated the Closing Date, (i) as to the performance of and
compliance in all material respects by the Company, the Partnership and the
Physician with all covenants contained herein on and as of the Closing Date and
(ii) certifying that all conditions precedent of the Company and the Physician
to the Closing have been satisfied;
e. a certificate of the Secretary of the Company and the
Secretary of New P.A. certifying as to the incumbency of the directors and
officers of each such corporation and as to the signatures of such directors and
officers who have executed documents delivered pursuant to the Agreement on
behalf of each such corporation;
f. a certificate, dated within ten (10) days prior to
the Closing Date, of the Secretary of State of the respective states of
incorporation for the Company and New P.A. establishing that each such
corporation is in existence, has paid all franchise or similar taxes, if any,
and, if applicable, otherwise is in good standing to transact business in its
state of organization;
g. certificates, dated within ten (10) days prior to the
Closing Date, of the Secretaries of State of the states in which the Company and
New P.A. are qualified to do business, to the effect that each such corporation
is qualified to do business and, if applicable, is in good standing as a foreign
corporation in each of such states;
h. documentation evidencing the distribution of all
assets of the Partnership and assignment of all liabilities of the Partnership
to Xxxxxxxx, P.A., Xxxxxxxx, P.A. and the Company;
i. all authorizations, consents, permits and licenses
referenced in Section 3.8;
j. the resignations of the directors and officers of the
Company as requested by Vision 21;
k. the executed Business Management Agreement in
substantially the form attached hereto as Exhibit 13.1 (k);
l. an executed Physician Employment Agreement between
New P.A. and the Physician in substantially the form attached hereto as Exhibit
13.1 (l);
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m. an executed Physician Employment Agreement between
New P.A. and each Physician Employee who is then an employee of the Company in
substantially the form attached hereto as Exhibit 13.1 (m);
n. an executed Optometrist Employment Agreement between
New P.A. and each Optometrist Employee who is then an employee of the Company in
substantially the form attached hereto as Exhibit 13.1 (n);
o. an executed Certificate of Merger necessary to effect
the Merger;
p. a non-foreign affidavit, as such affidavit is
referred to in Section 1445(b)(2) of the Code, of the Physician, signed under a
penalty of perjury and dated as of the Closing Date, to the effect that the
Physician is a United States citizen or a resident alien (and thus not a foreign
person) and providing the Physician's United States taxpayer identification
number;
q. if desired by Vision 21, a new lease or leases
between the landlords under each lease for real property described on Schedule
3.14(c) and Vision 21 in form and substance reasonably satisfactory to Vision
21;
r. the Merger Consideration; and
s. such other instrument or instruments of transfer
prepared by Vision 21 as shall be necessary or appropriate, as Vision 21 or its
counsel shall reasonably request, to carry out and effect the purpose and intent
of this Agreement.
13.2. Deliveries of Vision 21. At or prior to September 30, 1997,
Vision 21 shall deliver to the Company and the Physician, c/x Xxxxxxxx, Loop &
Xxxxxxxx, LLP, counsel to Vision 21, the following, all of which shall be in a
form reasonably satisfactory to the Company and the Physician and shall be held
by Xxxxxxxx, Loop & Xxxxxxxx, LLP in escrow pending Closing, pursuant to an
escrow agreement or letter in form and substance mutually acceptable to the
parties hereto:
a. a copy of the resolutions of the Board of Directors
of Vision 21 authorizing (i) the execution, delivery and performance of this
Agreement, and all related documents and agreements, and (ii) the consummation
of the Merger, certified by Vision 21's Secretary as being true and correct
copies of the originals thereof subject to no modifications or amendments;
b. a certificate of an officer of Vision 21 dated the
Closing Date as to the truth and correctness of the representations and
warranties of Vision 21 contained herein, on and as of the Closing Date;
c. a certificate of an officer of Vision 21 dated the
Closing Date, (i) as to the performance and compliance of Vision 21 with all
covenants contained herein on and as of the
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Closing Date and (ii) certifying that all conditions precedent of Vision 21 to
the Closing have been satisfied;
d. certificates, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of the State of Florida establishing
that Vision 21 is in existence, has paid all franchise or similar taxes, if any,
and, if applicable, otherwise is in good standing to transact business in such
state;
e. [RESERVED];
f. [RESERVED];
g. the executed Lease Assignments;
h. the Merger Consideration; and
i. such other instrument or instruments of transfer,
prepared by the Company or the Physician as shall be necessary or appropriate,
as the Company, the Physician or their counsel shall reasonable request, to
carry out and effect the purpose and intent of this Agreement.
13.3. Release of Escrow Materials. Xxxxxxxx, Loop & Xxxxxxxx, LLP
(the "Escrow Agent") shall release the agreements, certificates, instruments,
documents and other materials described in Sections 13.1 and 13.2 to the
appropriate parties to effectuate the transactions contemplated in this
Agreement only after all such materials have been delivered by all applicable
parties (or the parties receiving such documents have waived in writing such
delivery requirement), the parties have completed their due diligence, the Audit
and the Medicare audit have been completed, and each of Vision 21, the Physician
and the Company shall have sent written notice to the Escrow Agent stating that
the conditions to release of the escrowed documents have been satisfied or
waived. In the event that all of Vision 21, the Physician and the Company have
not notified the Escrow Agent in writing that they are satisfied with or have
waived all of the conditions to the release of the escrowed documents, the
Escrow Agent shall immediately return any consideration by Vision 21 held by it
to Vision 21 and shall promptly destroy or return the foregoing materials to the
parties sending such materials.
14. POST CLOSING MATTERS.
14.1. Further Instruments of Transfer. From and after the Closing
Date, at the request of Vision 21 and at Vision 21's sole cost and expense, the
Physician and the Company shall deliver any further instruments of transfer and
take all reasonable action as may be necessary or appropriate to carry out the
purpose and intent of this Agreement.
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14.2. Practice Advisory Council; Local Advisory Council; National
Appeals Council. Vision 21 and New P.A. shall establish a practice advisory
council composed of delegates from Vision 21 and New P.A. which shall advise
Vision 21 and New P.A. and determine certain issues as more fully described in
the Business Management Agreement. Vision 21 shall also establish a local
advisory council composed of delegates from certain practice groups acquired by
Vision 21 in connection with Recent Acquisitions, delegates from the Company and
delegates from Vision 21. Such delegates shall be appointed from practice groups
which are located in a market area to be identified by Vision 21 and in which
New P.A. is located. The local advisory council board shall advise Vision 21 and
the practice groups within the market area as to policy and strategy issues and
shall determine certain types of issues and disputes between Vision 21 and such
practice groups which issues and disputes are identified in the Business
Management Agreement and other management agreements entered into between Vision
21 and practice groups. New P.A. shall have the right to appoint one (1) member
to a local advisory council who shall serve an initial two (2) year term. After
the initial two-year term, election of members to the local advisory council
shall be in accordance with by-laws which shall be adopted and amended by the
local advisory council. Vision 21 shall also establish a national appeals
council which shall have, among other duties and responsibilities, the power to
adopt and amend its by-laws, to review and approve as limited herein certain
decisions of the local advisory councils, and to resolve deadlocks among the
members of such local advisory councils.
14.3. Restrictions on Transfer of Vision 21 Common Stock. Physician
shall not dispose of any of the Vision 21 Common Stock received in the Merger
(including any Vision 21 Common Stock received by the Company as contingent
consideration in connection with the Merger) within two (2) years of the
Effective Time of the Merger if such disposition would reduce the fair value of
the Vision 21 Common Stock (with such fair value measured as of the Effective
Time of the Merger) retained by the Physician to an amount less than fifty
percent (50%) of (a) the fair value of the Company Common Stock held by the
Physician immediately before the Effective Time of the Merger, plus (b) the
value of any contingent consideration received by the Company in connection with
the Merger, unless the Physician obtains an opinion of counsel reasonably
satisfactory to Vision 21 that such transfer will not violate the continuity of
shareholder interest requirement set forth in Treas. Reg. ss.1.388-1. In the
event that Physician wishes to dispose of any shares of Vision 21 Common Stock
received in the Merger within such two (2) year period, Physician shall provide
written notice to Vision 21, not less than ten (10) days prior to the intended
date of disposition, specifying the number of shares of which the Physician
proposes to dispose.
14.4. Access to Books and Records. From and after the Closing Date,
at the request of any party hereto, each of the other parties shall reasonably
cooperate in providing the requesting party with access to such other parties'
personnel who are knowledgeable concerning, and books and records which are
relevant to, the inquiry by the requesting party; provided, however, that (a)
such personnel shall be available at, and the access to such books and records
shall be granted at the responding party's business premises and during the
responding party's regular business hours, and (b) the inquiry shall be for a
legitimate business purpose, including tax filings and compliance,
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defending against litigation or other claims, or for any other legitimate
business purpose. All copies of such books and records shall be at the
requesting party's expense. Each of the parties to this Agreement shall retain
all books and records with respect to the transactions contemplated herein for a
minimum of five (5) years from the Closing Date.
15. REMEDIES.
15.1. Indemnification by the Physician. Subject to the terms and
conditions of this Agreement, the Physician agrees to indemnify, defend and hold
Vision 21, the Surviving Corporation and their respective directors, officers,
employees, agents, attorneys and affiliates harmless from and against all
losses, claims, obligations, demands, assessments, penalties, liabilities,
costs, damages, reasonable attorneys' fees and expenses (collectively,
"Damages") asserted against or incurred by such entities and individuals
(including, but not limited to, any reduction in payments to or revenues of New
P.A.), arising out of or resulting from:
a. a breach of any representation, warranty or covenant
of the Company or the Physician contained herein or in any schedule or
certificate delivered hereunder;
b. any liability under the Securities Act, the Exchange
Act or any other federal or state "Blue Sky" or securities law or regulation, at
common law or otherwise, (i) arising out of or based upon any untrue statement
or alleged untrue statement of a material fact relating to the Physician, the
Company (including its subsidiaries, if any), the Partnership or New P.A., and
provided to Vision 21 or its counsel by the Company or the Physician,
specifically for inclusion in a Registration Statement or any prospectus forming
a part thereof, or any amendment thereof or supplement thereto, (ii) arising out
of or based upon any omission or alleged omission to state therein a material
fact relating to the Physician, the Company (including its subsidiaries, if
any), the Partnership or New P.A. required to be stated therein or necessary to
make the statements therein not misleading, and not provided to Vision 21 or its
counsel by the Company or the Physician, provided, however, that such indemnity
shall not inure to the benefit of Vision 21 to the extent that such untrue
statement (or alleged untrue statement) was made, in, or omission (or alleged
omission) occurred in, any preliminary prospectus, and such information was not
so included by Vision 21 and properly delivered to shareholders of Vision 21 who
acquire Vision 21 Common Stock in any Public Offering;
c. any filings, reports or disclosures made pursuant to
the IRS Voluntary Compliance Resolution Program, if applicable;
d. any failure of the Merger to qualify as a
reorganization within the meaning of Section 368(a)(1)(A) or Section
368(a)(2)(D) of the Code;
e. any liability arising from the spin off of the
Company's medical business and Medical Assets;
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f. any and all liability for any actions, suits, claims,
proceedings or investigations that relate to Physician, the Company or the
Partnership in which the event giving rise thereto occurred prior to the Closing
Date or which result from or arise out of any action of Physician or any
partner, director, officer, employee, agent or representative of the Partnership
or the Company prior to the Closing Date;
g. any liability of Physician, the Company or the
Partnership of any nature whatsoever not disclosed in this Agreement and
expressly assumed by Vision 21; and
h. any liability arising from any alleged unlawful sale
or offer to sell or transfer any of the Common Stock by Physician.
15.2. Indemnification by Vision 21. Subject to the terms and
conditions of this Agreement, Vision 21 hereby agrees to indemnify, defend and
hold the Physician harmless from and against all damages asserted against or
incurred by him arising out of or resulting from:
a. a breach by Vision 21 of any representation, warranty
or covenant of Vision 21 contained therein or in any schedule or certificate
delivered hereunder;
b. any liability under the Securities Act, the Exchange
Act or any other federal or state "Blue Sky" or securities law or regulation, at
common law or otherwise, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact relating to Vision 21, contained in
any preliminary prospectus, Registration Statement or any prospectus forming a
part thereof, or any amendment thereof or supplement thereto, arising out of or
based upon any omission or alleged omission to state therein a material fact
relating to Vision 21 (including its subsidiaries), required to be stated
therein or necessary to make the statements therein not misleading; and
c. any filings, reports or disclosures made pursuant to
the IRS Voluntary Compliance Resolution Program, if applicable.
Notwithstanding anything in this Section 15.2, Vision 21 shall not be
liable for any Damages resulting from any matter not disclosed to Vision 21 by
any of the third parties acquired by Vision 21 in connection with Recent
Acquisitions.
15.3. Conditions of Indemnification. All claims for indemnification
under this Agreement shall be asserted and resolved as follows:
a. A party claiming indemnification under this Agreement
(an "Indemnified Party") shall promptly (and, in any event, at least ten (10)
days prior to the due date for any responsive pleadings, filings or other
documents) (i) notify the party from whom indemnification is sought (the
"Indemnifying Party") of any third-party claim or claims asserted against the
Indemnified Party ("Third Party Claim") that could give rise to a right of
indemnification under this
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Agreement and (ii) transmit to the Indemnifying Party a written notice ("Claim
Notice") describing in reasonable detail the nature of the Third Party Claim, a
copy of all papers served with respect to such claim (if any), an estimate of
the amount of damages attributable to the Third Party Claim and the basis of the
Indemnified Party's request for indemnification under this Agreement. Except as
set forth in Section 15.6, the failure to promptly deliver a Claim Notice shall
not relieve the Indemnifying Party of its obligations to the Indemnified Party
with respect to the related Third Party Claim except to the extent that the
resulting delay is materially prejudicial to the defense of such claim. Within
thirty (30) days after receipt of any Claim Notice (the "Election Period"), the
Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article 15 with respect to such Third Party Claim and (ii) whether
the Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend the Indemnified Party against such Third Party Claim.
If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend, at its sole cost and expense, such Third Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 15.3(b). The Indemnifying
Party shall have full control of such defense and proceedings, including any
compromise or settlement thereof. The Indemnified Party is hereby authorized, at
the sole cost and expense of the Indemnifying Party (but only if the Indemnified
Party is entitled to indemnification hereunder), to file, during the Election
Period, any motion, answer or other pleadings that the Indemnified Party shall
deem necessary or appropriate to protect its interests or those of the
Indemnifying Party and not prejudicial to the Indemnifying Party (it being
understood and agreed that if an Indemnified Party takes any such action that is
prejudicial and causes a final adjudication that is adverse to the Indemnifying
Party, the Indemnifying Party shall be relieved of its obligations hereunder
with respect to such Third Party Claim). If requested by the Indemnifying Party,
the Indemnified Party agrees, at the sole cost and expense of the Indemnifying
Party, to cooperate with the Indemnifying Party and its counsel in contesting
any Third Party Claim that the Indemnifying Party elects to contest, including,
without limitation, the making of any related counterclaim against the person
asserting the Third Party Claim or any cross-complaint against any person. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to
Section 15.3(b) and shall bear its own costs and expenses with respect to such
participation; provided, however, that if the named parties to any such action
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party, and the Indemnified Party has been advised by counsel that
there may be one or more legal defenses available to it that are different from
or additional to those available to the Indemnifying Party, then the Indemnified
Party may employ separate counsel at the expense of the Indemnifying Party, and
upon written notification thereof, the Indemnifying Party shall not have the
right to assume the defense of such action on behalf of the Indemnified Party;
provided further that the Indemnifying Party shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
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circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for the Indemnified Party, which firm
shall be designated in writing by the Indemnified Party.
b. If the Indemnifying Party fails to notify the
Indemnified Party within the Election Period that the Indemnifying Party elects
to defend the Indemnified Party pursuant to Section 15.3(b), or if the
Indemnifying Party elects to defend the Indemnified Party pursuant to Section
15.3(b) but fails diligently and promptly to prosecute or settle the Third Party
Claim, then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party (if the Indemnified Party is entitled
to indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings, provided, however, that
the Indemnified Party may not enter into, without the Indemnifying Party's
consent, which shall not be unreasonably withheld, any compromise or settlement
of such Third Party Claim. Notwithstanding the foregoing, if the Indemnifying
Party has delivered a written notice to the Indemnified Party to the effect that
the Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article 15 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnifying Party's defense pursuant to this Section
or of the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party
in full for all costs and expenses of such litigation. The Indemnifying Party
may participate in, but not control any defense or settlement controlled by the
Indemnified Party pursuant to this Section 15.3(c), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation;
provided, however, that if the named parties to any such action (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party, and the Indemnifying Party has been advised by counsel that there may be
one or more legal defenses available to the Indemnified Party, then the
Indemnifying Party may employ separate counsel and upon written notification
thereof, the Indemnified Party shall not have the right to assume the defense of
such action on behalf of the Indemnifying Party.
c. In the event any Indemnified Party should have a
claim against any Indemnifying Party hereunder that does not involve a Third
Party Claim, the Indemnified Party shall transmit to the Indemnifying Party a
written notice (the "Indemnity Notice") describing in reasonable detail the
nature of the claim, an estimate of the amount of damages attributable to such
claim and the basis of the Indemnified Party's request for indemnification under
this Agreement. If the Indemnifying Party does not notify the Indemnified Party
within sixty (60) days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Party hereunder. If the Indemnifying Party has timely disputed such claim, as
provided above, such dispute shall be resolved by mediation or arbitration as
provided in Section 19.1 if the parties do not reach a settlement of such
dispute within thirty (30) days after notice of a dispute is given.
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d. Payments of all amounts owing by an Indemnifying
Party pursuant to this Article 15 relating to a Third Party Claim shall be made
within thirty (30) days after the latest of (i) the settlement of such Third
Party Claim, (ii) the expiration of the period for appeal of a final
adjudication of such Third Party Claim or (iii) the expiration of the period for
appeal of a final adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement. Payments of all amounts owing by an
Indemnifying Party pursuant to Section 15.3(d) shall be made within thirty (30)
days after the later of (i) the expiration of the sixty (60) day Indemnity
Notice period or (ii) the expiration of the period for appeal, if any, of a
final adjudication or arbitration of the Indemnifying Party's liability to the
Indemnified Party under this Agreement.
15.4. Remedies Not Exclusive. The remedies provided in this
Agreement shall not be exclusive of any other rights or remedies available to
one party against the other, either at law or in equity. This Article 15
regarding indemnification shall survive Closing.
15.5. Costs, Expenses and Legal Fees. Each party hereto agrees to
pay the costs and expenses (including attorneys' fees and expenses) incurred by
the other parties in successfully (a) enforcing any of the terms of this
Agreement, or (b) proving that another party breached any of the terms of this
Agreement.
15.6. Indemnification Limitations. Notwithstanding the provisions of
Sections 15.1 and 15.2, (a) no party shall be required to indemnify another
party with respect to a breach of a representation, warranty or covenant unless
the claim for indemnification is brought within two (2) years after the Closing
Date, except that a claim for indemnification for a breach of the
representations and warranties contained in Sections 3.1, 3.2, 3.3., 3.4, 3.5,
3.6, 3.14, 3.17, 3.20, 3.23, 4.1, 4.3, 4.4, 4.8, 5.1, 5.2, 5.3, 5.4, 5.6, 5.7,
6.1, 6.2, 6.3 and 6.4 may be made at any time, and a claim for indemnification
for a breach of the representations and warranties contained in Sections 3.12,
3.18, 3.21, 3.27, 3.28, 3.29, 3.30, 3.31, 3.33, 4.5, 4.7, 4.10, 5.8 and 7.1 may
be made at any time within the applicable statute of limitations; (b)
indemnification based upon Sections 15.1(b) through (f) and 15.2(b) may be made
at any time within the applicable statute of limitations; and (c) the Physician
shall not be required to indemnify Vision 21 pursuant to Section 15.1 unless,
and to the extent that, the aggregate amount of Damages incurred by Vision 21
shall exceed an amount equal to two percent (2%) of the total Merger
Consideration; and (d) the Physician shall not be required to indemnify Vision
21 with respect to a breach of a representation, warranty or covenant for
Damages in excess of the aggregate Merger Consideration received by the
Physician (other than pursuant to a requirement to indemnify Vision 21 under
Sections 3.30 and 3.31, or unless the breach involves an intentional breach or
fraud by the Physician, which shall be unlimited).
15.7. Tax Benefits; Insurance Proceeds. The total amount of any
indemnity payments owed by one party to another party to this Agreement shall be
reduced by any correlative tax benefit received by the party to be indemnified
or the net proceeds received by the party to be indemnified with respect to
recovery from third parties or insurance proceeds and such correlative insurance
benefit shall be net of the insurance premium, if any, that becomes due as a
result of such claim.
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15.8. Payment of Indemnification Obligation. In the event that the
Physician has an indemnification obligation to Vision 21 hereunder, subject to
Vision 21's approval as set forth below, the Physician may satisfy such
obligation by transferring to Vision 21 such number of shares of Vision 21
Common Stock owned by the Physician having an aggregate fair market value (which
is the fair market value at such time based on the last reported sale price of
Vision 21 Common Stock on a principal national securities exchange or other
exchange on which the Vision 21 Common Stock is then listed or the last quoted
ask price on any over-the-counter market through which the Vision 21 Common
Stock is then quoted on the last trading day immediately preceding the day on
which the Physician transfers shares of Vision 21 Common Stock to Vision 21
hereunder) equal to the indemnification obligation, provided that each of the
following conditions are satisfied:
a. The Physician shall transfer to Vision 21 good, valid
and marketable title to the shares of Vision 21 Common Stock, free and clear of
all adverse claims, security interests, liens, claims, proxies, options,
stockholders' agreements and encumbrances;
b. The Physician shall make such representation and
warranties as to title to the stock, absences of security interests, liens,
claims, proxies, stockholders' agreements and other encumbrances and other
matters as reasonably requested by Vision 21; and
c. The other terms and conditions of any transaction
contemplated pursuant to this Section and the effects thereof, including any
legal or tax consequences, shall be reasonably satisfactory to Vision 21.
16. TERMINATION.
16.1. Termination. This Agreement may be terminated and the Merger
may be abandoned:
a. at any time prior to the Closing Date by mutual
agreement of all parties;
b. at any time prior to the Closing Date by Vision 21 if
any representation or warranty of the Company or the Physician contained in this
Agreement or in any certificate or other document executed and delivered by the
Company or the Physician pursuant to this Agreement is or becomes untrue or
breached in any material respect or if the Company or the Physician fails to
comply in any material respect with any covenant or agreement contained herein,
and any such misrepresentation, noncompliance or breach is not cured, waived or
eliminated within twenty (20) days after receipt of written notice thereof;
c. at any time prior to the Closing Date by the Company
if any representation or warranty of Vision 21 contained in this Agreement is or
becomes untrue in any material respect or if Vision 21 fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt or written notice thereof;
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d. at any time prior to the Closing Date by the Company
in the event of the failure of any of the conditions precedent set forth in
Article 13 of this Agreement;
e. at any time prior to the Closing Date by Vision 21 in
the event of the failure of any of the conditions precedent set forth in Article
12 of this Agreement;
f. by Vision 21 if at any time prior to the Closing
Date, Vision 21 deems termination to be advisable, provided, however, that if
Vision 21 exercises its right to terminate this Agreement under this subsection,
Vision 21 shall reimburse the Company and the Physician for all reasonable
attorneys' and accountants' fees incurred by the Company and the Physician in
connection with this Agreement; provided that Vision 21 shall only reimburse the
Company and the Physician up to an aggregate maximum amount of One Hundred
Thousand and No/100 Dollars ($100,000.00) for such fees; or
g. by Vision 21 or the Company if the Merger shall not
have been consummated by November 30, 1997.
16.2. Effect of Termination. In the event this Agreement is
terminated pursuant to Section 16.1, Vision 21, the Company and the Physician,
shall each be entitled to pursue, exercise and enforce any and all remedies,
rights, powers and privileges available at law or in equity, subject to the
limitations set forth in Section 15.1. In the event of a termination of this
Agreement under the provisions of this Article 16, a party not then in material
breach of this Agreement shall stand fully released and discharged of any and
all obligations under this Agreement.
17. PHYSICIAN EMPLOYMENT AGREEMENT.
17.1. Physician Employment Agreement. The parties acknowledge that
in accordance with the terms of this Agreement, Physician, as employee, and New
P.A., as employer, have entered into the Physician Employment Agreement and that
Vision 21 is entitled to enforce such Physician Employment Agreement as an
intended third party beneficiary. Physician and Vision 21 acknowledge that
Vision 21 would suffer severe harm in the event of Physician's resignation prior
to the expiration of the five (5) year term of such Physician Employment
Agreement (without first obtaining the written consent of Vision 21) or a breach
or default of Physician's obligations under such Physician Employment Agreement,
and Physician, the Company and Vision 21 agree that Vision 21 shall be entitled
to recover from Physician any and all damages incurred by Vision 21 caused by
such resignation, breach or default. Notwithstanding the foregoing, Vision 21
shall not be entitled to recover its damages caused by such resignation, breach
or default if such resignation, breach or default was caused by: (i) the death
or disability of Physician, (ii) circumstances not caused by an act or omission
of Physician and which circumstances are beyond his control, or (iii) loss of
Physician's license to practice as an ophthalmologist, unless such loss of
license is due to an act or omission of Physician. Notwithstanding the
foregoing, Physician shall have no obligation to pay the damages contemplated in
this Section 17.1 if (a) the Business Management Agreement has
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been terminated pursuant to a material breach by Vision 21, or (b) Physician
cures any such breach or default of the Physician Employment Agreement within a
period of thirty (30) days after notice from Vision 21 of such breach or
default.
17.2. Survival. The parties acknowledge and agree that this Article
17 shall survive the Closing of the transactions contemplated herein.
18. NON-COMPETITION AND CONFIDENTIALITY COVENANTS.
18.1. Physician Non-Competition Covenant.
a. The Physician recognizes that the covenants of the
Physician contained in this Section 18.1 are an essential part of this Agreement
and that, but for the agreement of the Physician to comply with such covenants,
Vision 21 would not have entered into this Agreement. The Physician acknowledges
and agrees that the Physician's covenant not to compete is necessary to ensure
the continuation of the Management Business (as defined below) and is necessary
to protect the reputation of Vision 21, and that irreparable and irrevocable
harm and damage will be done to Vision 21 if the Physician competes with the
Management Business or Vision 21. The Physician accordingly agrees that for the
periods set forth in the Business Management Agreement, the Physician shall not:
i) directly or indirectly, either as principal,
agent, independent contractor, consultant, director, officer, employee,
employer, advisor, stockholder, partner or in any other individual or
representative capacity whatsoever, either for the Physician's own benefit or
for the benefit of any other person or entity knowingly (A) hire, attempt to
hire, contact or solicit with respect to hiring any employee of Vision 21 (or of
any of its direct or indirect subsidiaries) or (B) induce or otherwise counsel,
advise or encourage any employee of Vision 21 (or of any of its direct or
indirect subsidiaries) to leave the employment of Vision 21;
ii) act or serve, directly or indirectly, as a
principal, agent, independent contractor, consultant, director, officer,
employee, employer or advisor or in any other position or capacity with or for,
or acquire a direct or indirect ownership interest in or otherwise conduct
(whether as stockholder, partner, investor, joint venturer, or as owner of any
other type of interest), any Competing Management Business as such term is
defined herein; provided, however, that this clause (ii) shall not prohibit the
Physician from being the owner of up to 1% of any class of outstanding
securities of any company or entity if such class of securities is publicly
traded; or
iii) directly or indirectly, either as principal,
agent, independent, contractor, consultant, director, officer, employee,
employer, advisor, stockholder, partner or in any other individual or
representative capacity whatsoever, either for the Physician's own benefit or
for the benefit of any other person or entity, call upon or solicit any
customers or clients of the
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Management Business; provided however, that the Physician may send out a general
notice to the customers or clients of the Management Business announcing the
termination of his arrangement with Vision 21 and may advertise in a general
manner without violating this covenant. The parties hereto acknowledge and agree
that for purposes of this Section, patients which have in the past received
medical or optometric care from the Company or the Partnership and/or shall in
the future receive medical or optometric care from the New P.A. are not deemed
to be customers or clients of the Management Business.
b. For the purposes of this Section 18.1, the
following terms shall have the meaning set forth below:
i) "Management Business" shall mean management
and administration of the non-medical aspects of medical, ophthalmology and
optometry practices.
ii) "Competing Management Business" shall mean
an individual, business, corporation, association, firm, undertaking, company,
partnership, joint venture, organization or other entity that either (A)
conducts a business substantially similar to the Management Business within the
State, or (B) provides or sells a service which is the same or substantially
similar to, or otherwise competitive with the services provided by the
Management Business within the State; provided, however, that "Competing
Management Business" shall not include Vision 21, or the Physician's internal
management and administration of the Physician's medical practice or
participation in the management and administration of a physician group in which
the Physician devotes a significant amount of time to the practice of medicine.
c. Should any portion of this Section 18.1 be deemed
unenforceable because of the scope, duration or territory encompassed by the
undertakings of the Physician hereunder, and only in such event, then the
Physician and Vision 21 consent and agree to such limitation on scope, duration
or territory as may be finally adjudicated as enforceable by a court of
competent jurisdiction after the exhaustion of all appeals.
d. This covenant shall be construed as an agreement ancillary to
the other provisions of this Agreement, and the existence of any claim or cause
of action of the Physician against Vision 21, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Vision 21 of this covenant; provided, however, that the Physician shall not be
bound by this covenant and shall not be obligated to pay the liquidated damages
contemplated in this Section 18.1 if at the time of a breach of this covenant
the Business Management Agreement has already been terminated pursuant to
Section 6.2(a) or 6.2(d) thereof. Without limiting other possible remedies to
Vision 21 for breach of this covenant, the Physician agrees that injunctive or
other equitable relief will be available to enforce the covenants of this
provision. The Physician and Vision 21 further expressly acknowledge that the
damages that would result from a violation of this non-competition covenant
would be impossible to predict with any degree of certainty, and agree that
liquidated damages in the amount of the aggregate consideration received by the
Physician
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pursuant to this Agreement is reasonable in light of the severe harm to the
Management Business and Vision 21 which would result in the event that a
violation of this non-competition covenant were to occur. For purposes of
calculation of the liquidated damages contemplated in this Section and for
purposes of calculation of the liquidated damages contemplated in the Business
Management Agreement and the Physician Employment Agreement between the
Physician and New P.A., the aggregate consideration received by Physician
pursuant to this Agreement shall be in those amounts and in such form as set
forth in Schedule 18.1. If the Physician violates this non-competition covenant,
Vision 21 shall, in addition to all other rights and remedies available at law
or equity, be entitled to (a) cancel the number of shares of Common Stock held
by the Physician or, with respect to shares of Common Stock entitled to be
received by the Physician, terminate its obligation to deliver such number of
shares of Common Stock valued as set forth in Section 6.6(a) of the Business
Management Agreement, and (b) repayment by Physician to Vision 21 of the fair
market value as described above of Vision 21 Common Stock sold by Physician; but
in no event shall Vision 21 be entitled to offset amounts in excess of the
liquidated damages sum pursuant to this Section 18.1. The Physician agrees to
deliver to Vision 21 the certificates representing any such shares canceled by
Vision 21. Payment and satisfaction by Physician shall be made within sixty (60)
days of notification to Physician by Vision 21 that Physician has violated this
non-competition covenant.
e. Notwithstanding anything contained herein, this
Section 18.1 shall not be construed to (i) limit the freedom of any patient of
the Physician to choose the facility or physician from whom such patient shall
receive health-care services or (ii) limit or interfere with the Physician's
ability to exercise his professional medical judgment in treating his patients
or his ability to provide medical services to his patients.
18.2. Physician Confidentiality Covenant. From the date hereof, the
Physician shall not, directly or indirectly, use for any purpose, other than in
connection with the performance of the Physician's duties under the Physician
Employment Agreement with New P.A., or disclose to any third party, any material
information of Vision 21, the Company or the Partnership, as appropriate
(whether written or oral), including any business management or economic
studies, patient lists, proprietary forms, proprietary business or management
methods, marketing data, fee schedules, or trade secrets of Vision 21, of the
Company or of the Partnership, as applicable, and including the terms and
provisions of this Agreement and any transaction or document executed by the
parties pursuant to this Agreement. Notwithstanding the foregoing, the Physician
may disclose information that the Physician can establish (a) is or becomes
generally available to and known by the public or medical community (other than
as a result of an unpermitted disclosure directly or indirectly by the Physician
or his Affiliates, advisors, or representatives); (b) is or becomes available to
the Physician on a nonconfidential basis from a source other than Vision 21, the
Company, the Partnership or their respective Affiliates, advisors or
representatives, provided that such source is not and was not bound by a
confidentiality agreement with or other obligation of secrecy to Vision 21, the
Company, the Partnership or their respective Affiliates, advisors or
representatives of which the Physician has knowledge; or (c) has already been or
is hereafter independently acquired or developed by the Physician without
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violating any confidentiality agreement with or other obligation of secrecy to
Vision 21, the Company, the Partnership or their respective Affiliates, advisors
or representatives. Without limiting the other possible remedies to Vision 21
for the breach of this covenant, the Physician agrees that injunctive or other
equitable relief shall be available to enforce this covenant. The Physician
further agrees that if any restriction contained in this Section 18.2 is held by
any court to be unenforceable or unreasonable, a lesser restriction shall be
enforced in its place and the remaining restrictions contained herein shall be
enforced independently of each other.
18.3. Survival. The parties acknowledge and agree that this Article
18 shall survive the Closing of the transactions contemplated herein.
19. DISPUTES.
19.1. Mediation and Arbitration. Any dispute, controversy or claim
(excluding claims arising out of an alleged breach of Article 18 of this
Agreement) arising out of this Agreement, or the breach thereof, that cannot be
settled through negotiation shall be settled (a) first, by the parties trying in
good faith to settle the dispute by mediation under the Commercial Mediation
Rules of the AAA (such mediation session to be held in Tampa, Florida and to
commence within 15 days of the appointment of the mediator by the AAA), and (b)
if the controversy, claim or dispute cannot be settled by mediation, then by
arbitration administered by the AAA under its Commercial Arbitration Rules (such
arbitration to be held in Tampa, Florida before a single arbitrator and to
commence within 15 days of the appointment of the arbitrator by the AAA), and
judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
20. MISCELLANEOUS
20.1. Taxes. Physician shall pay all transfer taxes, sales and other
taxes and charges imposed by the State, if any, which may become payable in
connection with the transactions and documents contemplated hereunder (excluding
any of such taxes which may be attributable to services to be provided by Vision
21 under the Business Management Agreement). Vision 21 shall pay all transfer
taxes, sales and other taxes and charges imposed by the State of Florida, if
any, which may become payable in connection with the transactions and documents
contemplated hereunder (excluding any of such taxes which may be attributable to
services to be provided by Vision 21 under the Business Management Agreement).
20.2. Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement or any document contemplated by this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. The election of any one or more remedies by any party hereto shall
not constitute a waiver of the right to pursue other available remedies.
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20.3. Parties Bound. Except to the extent otherwise expressly
provided herein, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, representatives,
administrators, guardians, successors and assigns; and no other person shall
have any right, benefit or obligation hereunder.
20.4. Notices. All notices, reports, records or other communications
that are required or permitted to be given to the parties under this Agreement
shall be sufficient in all respects if given in writing and delivered in person,
by telecopy, by overnight courier or by registered or certified mail, postage
prepaid, return receipt requested, to the receiving party at the following
address:
If to Vision 21 addressed to:
Vision Twenty-One, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Chief Financial Officer
With copies to:
Xxxxxxxx, Loop & Xxxxxxxx, LLP
Post Office Box 172609
000 X. Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Facsimile No. (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esquire
If to the Company and the Physician addressed to:
Florida Eye Center, Sever & Xxxxxxx, M.D., P.A.
00000 Xxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, M.D.
With copies to:
Xxxxxxxx, Loop & Xxxxxxxx, LLP
Post Office Box 172609
000 X. Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Facsimile No. (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Esquire
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or to such other address as such party may have given to the other parties by
notice pursuant to this Section 20.4. Notice shall be deemed given on the date
of delivery, in the case of personal delivery or telecopy, or on the delivery or
refusal date, as specified on the return receipt, in the case of overnight
courier or registered or certified mail.
20.5. Choice of Law. This Agreement shall be construed, interpreted,
and the rights of the parties determined in accordance with, the laws of the
State of Florida except with respect to matters of law concerning the internal
affairs of any corporate or partnership entity which is a party to or the
subject of this Agreement, and as to those matters the law of the state of
incorporation or organization of the respective entity shall govern.
20.6. Entire Agreement; Amendments and Waivers. This Agreement,
together with the documents contemplated by this Agreement and all Exhibits and
Schedules hereto and thereto, constitute the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof. No
supplement, modification or waiver of any of the provisions of this Agreement
shall be binding unless it shall be specifically designated to be a supplement,
modification or waiver of this Agreement and shall be executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
20.7. Confidentiality Agreements. The provisions of any prior
confidentiality agreements and letters of intent between or among Vision 21, the
Company, the Partnership and the Physician, as amended, shall terminate and
cease to be of any force or effect at and upon the Closing.
20.8. Modification Clause. It is the intention of the parties hereto
to conform strictly to applicable laws regarding the practice and regulation of
medicine, whether such laws are now or hereafter in effect, including the laws
of the United States of America, the State or any other applicable jurisdiction,
and including any subsequent revisions to, or judicial interpretations of, those
laws, in each case to the extent they are applicable to this Agreement (the
"Applicable Laws"). Accordingly, if the ownership of any Nonmedical Asset by
Vision 21 violates any Applicable Law, then the parties hereto agree as follows:
(a) the provisions of this Section 20.8 shall govern and control; (b) if none of
the parties hereto are materially economically disadvantaged, then any
Nonmedical Asset, the ownership of which violates any Applicable Law, shall be
deemed to have never been owned by Vision 21; (c) if one or more of the parties
hereto is materially economically disadvantaged, then the parties hereto agree
to negotiate in good faith such changes to the structure and terms of the
transactions provided for in this Agreement as may be necessary to make these
transactions, as restructured, lawful under applicable laws and regulations,
without materially disadvantaging either party; (d) this Agreement shall be
deemed modified and amended; and (e) the
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parties to this Agreement shall execute and deliver all documents or instruments
necessary to effect or evidence the provisions of this Section 20.8.
20.9. Assignment. The Agreement may not be assigned by operation of
law or otherwise except that Vision 21 shall have the right to assign this
Agreement, at any time, to any Affiliate or direct or indirect wholly-owned
subsidiary. In the event of such assignment, Vision 21 shall remain liable
hereunder.
20.10. Attorneys' Fees. Except as otherwise specifically provided
herein, if any action or proceeding is brought by any party with respect to this
Agreement or the other documents contemplated with respect to the
interpretation, enforcement or breach hereof, the prevailing party in such
action shall be entitled to an award of all reasonable costs of litigation or
arbitration, including, without limitation, attorneys' fees, to be paid by the
losing party, in such amounts as may be determined by the court having
jurisdiction of such action or proceeding, by the arbitrators deciding such
action or proceeding or as agreed to be the parties hereto.
20.11. Further Assurances. From time to time hereafter and without
further consideration, each of the parties hereto shall execute and deliver such
additional or further instruments of conveyance, assignment and transfer and
take such other actions as any of the other parties hereto may reasonably
request in order to more effectively consummate the transactions contemplated
hereunder or as shall be reasonably necessary or appropriate in connection with
the carrying out of the parties' respective obligations hereunder for the
purposes of this Agreement.
20.12. Announcements and Press Releases. Any press releases or any
other public announcements concerning this Agreement or the transactions
contemplated hereunder shall be approved in advance by Vision 21; provided,
however, that if Physician or the Company reasonably believes that he or it has
a legal obligation to make a press release and the consent of Vision 21 cannot
be obtained, then the release may be made without such approval.
20.13. No Tax Representations. Each party acknowledges that it is
relying solely on its advisors to determine the tax consequences of the
transactions contemplated hereunder and that no representation or warranty has
been made by any party as to the tax consequences of such transactions except as
otherwise specifically set forth in this Agreement.
20.14. No Rights as Stockholder. The Physician shall have no rights
as a stockholder with respect to any shares of Common Stock until the issuance
of a stock certificate evidencing such shares. Except as otherwise provided in
the Agreement, no adjustment shall be made for dividends or distributions or
other rights for which the record date is prior to such date any stock
certificate is issued.
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20.15. Multiple Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
20.16. Headings. The headings of the several articles and sections
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
20.17. Severability. Each article, section and subsection of this
Agreement constitutes a separate and distinct undertaking, covenant or provision
of this Agreement. If any such provision shall finally be determined to be
unlawful, such provision shall be deemed severed from this Agreement, but every
other provision of this Agreement shall remain in full force and effect.
20.18. Form of Transaction. If after the execution hereof, Vision 21
determines that the ownership of the Nonmedical Assets of the Company and the
Partnership can be better achieved through a different form of transaction
without economic injury to the Company or the Physician, or delay of the
consummation of the transaction, the Company and the Physician shall cooperate
(and the Company shall use its best efforts to cause the Partnership to
cooperate) in revising the structure of the transaction and shall negotiate in
good faith to so amend this Agreement; provided, that Vision 21 shall reimburse
the Company, the Partnership and the Physician at Closing for all reasonable
additional expenses incurred by the Company, the Partnership and the Physician
as a result of such change in form.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
"COMPANY"
FLORIDA EYE CENTER, SEVER &
XXXXXXX, M.D., P.A.
By: Witness
------------------------- --------------------------
, M.D., President
----------------
-------------------------
Witness
"PHYSICIAN"
By: Witness
------------------------- --------------------------
Xxxxxxx X. Xxxxx, M.D.
-------------------------
Witness
By: Witness
------------------------- --------------------------
Xxxxx X. Xxxxxxx, M.D.
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Witness
-70-
71
"VISION 21"
VISION TWENTY-ONE, INC.
By: Witness
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Xxxxxxxx X. Xxxxxxxx, President
------------------------
Witness
-71-
