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EXHIBIT 2.8
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), dated effective as
of June 1, 1997, is by and among XXXXXX-XXXXXXX EYE CENTER, LTD., an Arizona
professional corporation (the "Company"), XXXXX XXXXXXX, M.D., XXXXX X.
XXXXXXX, M.D. and XXXXX X. XXXXXX, M.D. (collectively, the "Physician"), and
VISION TWENTY-ONE, INC., a Florida corporation ("Vision 21").
R E C I T A L S
A. Physician is a physician licensed to practice medicine in the
State (as defined herein) and currently conducts an ophthalmology practice
through the Company and through optometrist employees currently conducts an
optometry practice through the Company.
B. Physician owns all of the issued and outstanding shares of
capital stock of the Company.
C. Vision 21 provides business management services and facilities
for eye care professionals and related businesses.
D. The Company desires to sell, assign and transfer all of its
assets to the extent permitted by law and Vision 21 desires to purchase, assume
and acquire such assets and assume certain liabilities of the Company in
exchange for capital stock of Vision 21 and other consideration, all as more
specifically provided herein.
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 2.1(b).
1.4. Acquisition Proposal. The term "Acquisition Proposal" shall have
the meaning set forth in Section 3.31.
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1.5. 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.
1.6. Applicable Laws. The term "Applicable Laws" shall have the
meaning set forth in Section 19.8.
1.7. Assumed Contracts. The term "Assumed Contracts" shall have the
meaning set forth in Section 2.1(e).
1.8. Assumed Obligations. The term "Assumed Obligations" shall have
the meaning set forth in Section 2.3.
1.9. Audit. The term "Audit" shall have the meaning set forth in
Section 3.6.
1.10. Business Management Agreement. The term "Business Management
Agreement" shall mean the Business Management Agreement entered into between the
Company and Vision 21 at the Closing.
1.11. Business Records. The term "Business Records" shall have the
meaning set forth in Section 2.1(g).
1.12. Cash Compensation. The term "Cash Compensation" shall have the
meaning set forth in Section 3.8(a).
1.13. Claim Notice. The term "Claim Notice" shall have the meaning set
forth in Section 14.3(a).
1.14. Closing. The term "Closing" shall mean the consummation of the
transactions contemplated by this Agreement.
1.15. Closing Date. The term "Closing Date" shall mean June 30, 1997,
or such other date as mutually agreed upon by the parties.
1.16. Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.17. Commitments. The term "Commitments" shall have the meaning set
forth in Section 3.12(a).
1.18. Common Stock. The term "Common Stock" or "Vision 21 Common Stock"
shall mean the common stock, par value $.001 per share, of Vision 21.
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1.19. Company Balance Sheet. The term "Company Balance Sheet" shall
have the meaning set forth in Section 3.6.
1.20. Company Balance Sheet Date. The term "Company Balance Sheet Date"
shall have the meaning set forth in Section 3.6.
1.21. Compensation Plans. The term "Compensation Plans" shall have the
meaning set forth in Section 3.8(b).
1.22. Competing Management Business. The term "Competing Management
Business" shall have the meaning set forth in Section 17.1(b)(ii).
1.23. 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.
1.24. Controlled Group. The term "Controlled Group" shall have the
meaning set forth in Section 3.9(g).
1.25. Corporation Law. The term "Corporation Law" shall mean the
statutes, regulations and laws governing business corporations and professional
associations in the State.
1.26. Damages. The term "Damages" shall have the meaning set forth in
Section 14.1.
1.27. Election Period. The term "Election Period" shall have the
meaning set forth in Section 14.3(a).
1.28. Employee Benefit Plans. The term "Employee Benefit Plans" shall
have the meaning set forth in Section 3.9(a).
1.29. Employee Policies and Procedures. The term "Employee Policies and
Procedures" shall have the meaning set forth in Section 3.8(d).
1.30. Employment Agreements. The term "Employment Agreements" shall
have the meaning set forth in Section 3.8(c).
1.31. Environmental Laws. The term "Environmental Laws" shall have the
meaning set forth in Section 3.24(a).
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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.
1.34. FBCA. The term "FBCA" shall mean the Florida Business Corporation
Act.
1.35. Financial Statements. The term "Financial Statements" shall have
the meaning set forth in Section 3.6.
1.36. 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.
1.37. Governmental Authority. The term "Governmental Authority" shall
mean any national, state, provincial, local or tribunal governmental, judicial
or administrative authority or agency.
1.38. Indemnified Party. The term "Indemnified Party" shall have the
meaning set forth in Section 14.3(a).
1.39. Indemnifying Party. The term "Indemnifying Party" shall have the
meaning set forth in Section 14.3(a).
1.40. Indemnity Notice. The term "Indemnity Notice" shall have the
meaning set forth in Section 14.3(d).
1.41. Insurance Policies. The term "Insurance Policies" shall have the
meaning set forth in Section 3.13.
1.42. Inventory. The term "Inventory" shall have the meaning set forth
in Section 2.1(a).
1.43. Lease Assignments. The term "Lease Assignments" shall have the
meaning set forth in Section 12.1(r).
1.44. Leased Property. The term "Leased Property" shall have the
meaning set forth in Section 2.1(d).
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1.45. IRS. The term "IRS" shall mean the Internal Revenue Service.
1.46. Management Business. The term "Management Business" shall have
the meaning set forth in Section 17.1(b)(i).
1.47. 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.
1.48. Medical Assets. The term "Medical Assets" shall have the meaning
set forth in Section 2.2.
1.49. Nonmedical Assets. The term "Nonmedical Assets" shall mean all of
the assets of the Company except for the Medical Assets, as such assets are more
fully described in Section 2.1.
1.50. Optometrist Employee. The term "Optometrist Employee" shall mean
those licensed optometrists who are employees of the Company, but are not
shareholders.
1.51. Optometrist Employment Agreement. The term "Optometrist
Employment Agreement" shall mean the Optometrist Employment Agreement to be
executed between any Optometrist Employee and the Company.
1.52. Payors. The term "Payors" shall have the meaning set forth in
Section 3.27.
1.53. Permitted Encumbrances. The term "Permitted Encumbrances" shall
have the meaning set forth in Section 3.11(b).
1.54. Personal Property Leases. The term "Personal Property Leases"
shall have the meaning set forth in Section 2.1(c).
1.55. Physician Employee. The term "Physician Employee" shall mean
those licensed physicians who are employees of the Company, but are not
shareholders.
1.56. Physician Employment Agreement. The term "Physician Employment
Agreement" shall mean the Physician Employment Agreement to be executed between
Physician and the Company, and between any Physician Employee and the Company.
1.57. 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 prior to and after the Closing Date.
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1.58. Prepaid Items. The term "Prepaid Items" shall have the meaning
set forth in Section 2.1(n).
1.59. Professional Employee. The term "Professional Employee" shall
mean any Physician Employee or Optometrist Employee.
1.60. Proposed Purchase Price Adjustment. The term "Proposed Purchase
Price Adjustment" shall have the meaning set forth in Section 2.6(b).
1.61. Proprietary Rights. The term "Proprietary Rights" shall have the
meaning set forth in Section 3.14.
1.62. Public Offering. The term "Public Offering" shall mean any
underwritten public offering of Vision 21 Common Stock, including initial and
secondary offerings.
1.63. Purchase Price. The term "Purchase Price" shall mean the
consideration set forth in Section 2.4 of this Agreement.
1.64. Real Property Leases. The term "Real Property Leases" shall have
the meaning set forth in Section 2.1(d).
1.65. Recent Acquisitions. The term "Recent Acquisitions" shall mean
the acquisitions by Vision 21 with third parties which were completed in
December 1996, March 1997 and May 1997.
1.66. Registration Statement. The term "Registration Statement" shall
mean any S-1 Registration Statement filed by Vision 21 in connection with a
Public Offering.
1.67. SEC. The term "SEC" shall mean the Securities and Exchange
Commission.
1.68. Securities. The term "Securities" shall mean the shares of Vision
21 Common Stock which shall be delivered to the Company under the terms of this
Agreement.
1.69. Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended.
1.70. State. The term "State" shall mean the State of Arizona.
1.71. Tangible Personal Property. The term "Tangible Personal Property"
shall have the meaning set forth in Section 2.1(f).
1.72. Tax Returns. The term "Tax Returns" shall have the meaning set
forth in Section 3.15(a).
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1.73. Third Party Claim. The term "Third Party Claim" shall have the
meaning set forth in Section 14.3(a).
1.74. Transaction. The term "Transaction" shall mean the purchase and
sale of the Nonmedical Assets and the assumption of the Assumed Obligations
pursuant to this Agreement.
1.75. Vision 21 Financial Statements. The term "Vision 21 Financial
Statements" shall have the meaning set forth in Section 5.9.
2. PURCHASE AND SALE OF NONMEDICAL ASSETS.
2.1. Purchase and Sale of Nonmedical Assets. Subject to the terms and
conditions herein set forth, and in reliance upon the representations and
warranties set forth herein, the Company agrees to sell, convey, assign,
transfer and deliver to Vision 21, and Vision 21 agrees to purchase, assume,
accept and acquire, the assets consisting of all the assets (other than the
Medical Assets specified in Section 2.2 hereof) owned by the Company as of the
Closing Date, of every kind, character and description, whether tangible, real,
personal, or mixed, and wheresoever located, whether carried on the books of the
Company or not carried on the books of the Company due to having been expended,
fully depreciated, or otherwise (the "Nonmedical Assets"), including without
limitation the following (except to the extent that any of the following are
specifically enumerated as Medical Assets in Section 2.2 hereof) to the extent
permitted by applicable law:
a. All of the inventory owned by the Company ("Inventory");
b. All of the accounts receivable or other rights to receive
payment owing to the Company ("Accounts Receivable");
c. All of the Company's rights in, to and under all leases of
supplies, instruments, equipment, furniture, machinery and other items of
tangible personal property ("Personal Property Leases"), including, without
limitation, the Personal Property Leases described on Schedule 2.1(c);
d. All of the Company's rights as a lessee in, to and under all
real property lease agreements (such real property lease agreements are
hereinafter referred to as "Real Property Leases" and the parcels of real
property in which the Company has a leasehold interest and that are subject to
the Real Property Leases are hereinafter referred to as "Leased Property"),
including, without limitation, estates created by, and rights conferred under,
the Real Property Leases described on Schedule 2.1(d), and any and all estates,
rights, titles and interests in, to and under all warehouses, storage
facilities, buildings, works, structures, fixtures, landings, constructions in
progress, improvements, betterments, installations, and additions constructed or
located on or affixed to the Leased Property;
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e. All of the Company's rights in, to and under all contracts,
agreements, insurance policies, purchase orders and commitments (the "Assumed
Contracts"), including, without limitation, the Assumed Contracts described on
Schedule 2.1(e);
f. All tangible personal property (including supplies,
instruments, equipment, furniture and machinery) owned by the Company ("Tangible
Personal Property"), including, without limitation, the Tangible Personal
Property described on Schedule 2.1(f);
g. All books and records of the Company, including, without
limitation, all credit records, payroll records, computer records, computer
programs, contracts, agreements, operating manuals, schedules of assets,
correspondence, books of account, files, papers, books and all other public and
confidential business records (together the "Business Records"), whether such
Business Records are in hard copy form or are electronically or magnetically
stored;
h. All franchises, licenses, permits, certificates, approvals and
other governmental authorizations necessary to own and operate any of the other
Nonmedical Assets, a complete and correct list of which is set forth on Schedule
2.1(h);
i. All (i) United States and foreign patents, patent
applications, trademarks, trademark applications and registrations, service
marks, service xxxx applications and registrations, copyrights, copyright
applications and registrations and trade names of the Company; (ii) proprietary
data and technical, manufacturing know-how and information (and all materials
embodying such information) of the Company; (iii) developments, discoveries,
inventions, ideas and trade secrets of the Company; and (iv) rights to xxx for
past infringement;
j. All of the Company's right, title and interest in, to and
under all telephone numbers used in connection with the Practice, including all
extensions thereto;
k. All rights in, to and under all representations, warranties,
covenants and guaranties made or provided by third parties to or for the benefit
of the Company with respect to any of the other Nonmedical Assets;
m. All cash in registers or xxxxx cash drawers (which shall on
the Closing Date be at least ninety percent (90%) of the average daily cash
balance held in such locations in the twelve (12) month period preceding the
Closing Date); and
n. All of the Company's prepaid expenses, prepaid insurance,
deposits and other similar items ("Prepaid Items").
If and to the extent the assignment of any personal property lease,
real property lease, contract, agreement, purchase order, work order,
commitment, license, permit, certificate or approval listed on the foregoing
Schedules shall require the consent of another party thereto, then (i) such
personal property lease, real property lease, contract, agreement, purchase
order, work order, commitment, license, permit, certificate or approval shall
constitute a Personal
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Property Lease, Real Property Lease, Assumed Contract or License, as the case
may be, only upon and subject to receipt of such consent; (ii) such personal
property lease, contract, agreement, purchase order, work order, commitment,
license, permit, certificate or approval shall not be a Personal Property Lease,
Real Property Lease, Assumed Contract or License, as the case may be, if and for
so long as the attempted assignment would constitute a breach thereof; and (iii)
the Company shall cooperate fully with Vision 21 (or Vision 21's
successor-in-interest) in seeking such consent or reasonable arrangement
designed to provide to Vision 21 (or such successor-in-interest) the benefits,
claim or rights arising thereunder.
2.2. No Sale of Medical Assets; Other Excluded Assets. The Company
shall not sell, convey, assign, transfer or deliver to Vision 21, and Vision 21
shall not be obligated to purchase, accept or acquire (or make any payments or
otherwise discharge any liability or obligation of the Company with respect to),
the Medical Assets of the Company as set forth on Schedule 2.2 and those other
assets listed on the other Schedules attached hereto which by law cannot be
acquired by Vision 21 which shall also be deemed to include (a) life insurance
policies covering the life of any employee of the Company, and (b) personal
effects listed on Schedule 2.2(b); and (c) 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 (d) those assets of which the entire costs of maintenance are deemed
to be "Practice Expenses" as defined in the Business Management Agreement.
2.3. Assumption of Obligations and Liabilities. At the Closing, Vision
21 shall assume and agree to pay or perform, promptly as they become due, only
those obligations and liabilities of the Company expressly set forth on Schedule
2.3 (the "Assumed Obligations") which shall exclude the Business Management
Agreement. Except for the Assumed Obligations, Vision 21 shall not assume or be
deemed to have assumed and shall not be responsible for any other obligation or
liability of the Company, direct or indirect, known or unknown, absolute or
contingent, including without limitation (i) any and all obligations regarding
any foreign, Federal, state or local income, sales, use, franchise or other tax
liabilities, (ii) any and all obligations or liabilities relating to any fees or
expenses of the Company's or Physicians' 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, and (iii) any
and all liabilities relating to or arising from the provision of professional
medical or optometric services (or failure to provide professional medical or
optometric services) prior to the Closing Date.
2.4. Purchase Price. Vision 21 agrees that, subject to the terms and
conditions of this Agreement, and in full consideration for the aforesaid sale,
transfer, conveyance, assignment and delivery of the Nonmedical Assets of the
Company to Vision 21, and the acceptance by Vision 21 of such Nonmedical Assets
and the assumption of the Assumed Obligations of the Company by Vision 21,
Vision 21 shall deliver to the Company at the Closing the consideration (the
"Purchase Price") set forth in Schedule 2.4A.
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2.5. 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.
2.6. Purchase Price Adjustments.
a. The Purchase Price shall be subject to adjustment to the extent
that Current Assets (as defined herein) or Current Liabilities Assumed (as
defined herein) materially differ from the amounts customarily arising in the
ordinary course of business of the Company as of May 31, 1997. The term "Current
Assets" shall mean xxxxx cash, Accounts Receivable, prepaid expenses, Inventory,
supplies and other current assets (excluding cash in banks, certificates of
deposit, other cash equivalents, current portion of capital leases and prepaid
Income Taxes). The term "Current Liabilities Assumed" shall mean the audited
balances as of May 31, 1997 of trade accounts payable, accrued payroll, accrued
payroll taxes, accrued benefits, and other current liabilities (excluding notes
payable, current portion of capital leases and long-term debt and income and
franchise taxes and accrued shareholder expenses). The adjustment shall be
settled in cash (which shall be set-off from moneys due the Company pursuant to
the Business Management Agreement) or Vision 21 Common Stock at Vision 21's
option. The parties also agree that to the extent the adjustments materially
impact the goodwill created by the transaction, there shall be an adjustment for
the related impact of net income created by the change in amortization of such
goodwill and the Purchase Price shall be increased or reduced to reflect the
impact on net income settled in cash or Vision 21 Common Stock at Vision 21's
option.
b. Within sixty (60) days following the Closing Date, Vision 21
shall present to the Physician its Purchase Price adjustment (the "Proposed
Purchase Price Adjustment") calculated in accordance with Section 2.6(a) hereof.
The Physician shall, within thirty (30) days after the delivery by Vision 21 of
the Proposed Purchase Price Adjustment, complete his review thereof. In the
event that the Physician believes that the Proposed Purchase Price Adjustment
has not been prepared on the basis set forth in Section 2.6(a) or otherwise
contests any item set forth therein, the Physician shall, on or before the last
day of such 30 day period, so object to Vision 21 in writing, setting forth a
specific description of the nature of the objection and the corresponding
adjustments the Physician believes should be made. If no objection is received
by Vision 21 on or before the last day of such 30 day period, then the Proposed
Purchase Price Adjustment delivered by Vision 21 shall be final. If an objection
has been made and Vision 21 and the Physician are unable to resolve all of their
disagreements with respect to the proposed adjustments within 15 days following
the delivery of the Physician's objection, the dispute shall be submitted to
arbitration as provided in Section 18.1 except that the arbitrator shall be
instructed to deliver his determination of the dispute to the parties no later
than 30 days after the arbitration hearing. Vision 21 shall provide to the
Physician and his accountants full access to all relevant books, records and
work papers utilized in preparing the Proposed Purchase Price Adjustment.
2.7. Subsequent Actions. If, at any time after the Closing Date, Vision
21 shall determine or be advised that any deeds, bills of sale, assignments,
assurances or any other
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actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in Vision 21 its right, title or interest in, to or under
any of the rights, properties or assets of the Company acquired or to be
acquired by Vision 21 as a result of, or in connection with, the Transaction, or
otherwise to carry out this Agreement, the officers and directors of Vision 21
shall, at the sole cost and expense of Vision 21, be authorized to execute and
deliver, in the name and on behalf of the Company, such deeds, bills of sale,
assignments and assurances, and to take and do, in the name and on behalf of the
Company, 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 Vision 21 or otherwise to carry out this
Agreement.
2.8. Allocation of Purchase Price. The Purchase Price shall be
allocated among the Nonmedical Assets as set forth on Schedule 2.8. Each of
Vision 21, the Company and the Physician covenants and agrees that he or it
shall not take a position that is in any way inconsistent with the terms of this
Section 2.8 on any income tax return, before any governmental agency charged
with the collection of any income tax or in any judicial proceeding.
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. The Company is not duly qualified and licensed to do
business in any other jurisdiction. The Company does not have any assets,
employees or offices in any state other than the State. Except as set forth on
Schedule 3.1, neither the Company, the Physician nor 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.
3.2. Continuity of Business Enterprise. Except as set forth on Schedule
3.2, and except as contemplated by this Agreement, there has not been any sale,
distribution or spin-off of significant assets of the Company or any of its
Affiliates other than in the ordinary course of business within the two (2) year
period preceding the date of this Agreement.
3.3. Authorization and Validity. The execution, delivery and
performance by the Company of this Agreement and the other agreements
contemplated hereby, and the
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consummation of the transactions contemplated hereby and thereby to be performed
by the Company, have been duly authorized by the Company. This Agreement has
been or will be by the Closing Date, duly executed by the Company and, upon
delivery, will constitute 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.
3.4. Compliance. Except as disclosed on Schedule 3.4, the execution and
delivery of the documents contemplated hereunder and the consummation of the
transactions contemplated thereby by the Company will not (i) violate any
provision of the Company'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 the Company 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 (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 or its property is
subject.
3.5. 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 such party
of the transactions contemplated thereby, except for those consents or approvals
set forth on Schedule 3.5.
3.6. Financial Statements. The Company has furnished to Vision 21 its
unaudited balance sheet and related unaudited statements of income, retained
earnings and cash flows for its prior three (3) full fiscal years, and its
unaudited interim balance sheet for the fiscal period ended April 30, 1997 (the
"Company Balance Sheet", and the date thereof shall be referred to as the
"Company Balance Sheet Date") and related unaudited statements of income,
retained earnings and cash flows for the twelve months then ended (all
collectively, with the related notes thereto, the "Financial Statements"). The
Financial Statements fairly present the financial condition and results of
operations of the Company as of the dates and for the periods indicated except
as otherwise indicated in the Financial Statements. The Company and the
Physician 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").
3.7. Liabilities and Obligations. Except as set forth on Schedule 3.7,
the Financial Statements reflect all liabilities of the Company, accrued,
contingent or otherwise that would be required to be reflected thereon, or in
the notes thereto, prepared in accordance with GAAP,
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except for liabilities and obligations incurred in the ordinary course of
business since the Company Balance Sheet Date. Except as set forth in the
Financial Statements or on Schedule 3.7, the Company 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 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.
3.8. Employee Matters.
a. Cash Compensation. Schedule 3.8(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. In addition, Schedule 3.8(a)
contains a complete and accurate description of (i) all increases in Cash
Compensation of employees of the Company during the current fiscal year and the
immediately preceding fiscal year and (ii) any promised increases in Cash
Compensation of employees of the Company that have not yet been effected.
b. Compensation Plans. Schedule 3.8(b) contains a complete and
accurate list of all compensation plans, arrangements or practices (the
"Compensation Plans") sponsored by the Company or to which the Company
contributes on behalf of its employees, other than Employment Agreements listed
on Schedule 3.8(c) and Employee Benefit Plans listed on Schedule 3.9(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 3.8(b), each of the Compensation Plans can be
terminated or amended at will by the Company.
c. Employment Agreements. Except as set forth on Schedule 3.8(c),
the Company is not 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 3.8(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. 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 3.8(b),
3.8(c), or 3.8(d), no material unwritten amendments have been made, whether by
oral
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communication, pattern of conduct or otherwise, with respect to any Compensation
Plans or Employee Policies and Procedures.
f. Labor Compliance. To the best knowledge of the Company and the
Physician, the Company has been and is 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 the Company is not liable for
any arrearages of wages or penalties for failure to comply with any of the
foregoing. The Company has not, to the best of Physician's and the Company's
knowledge, 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
3.10(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 before any federal,
state or local court, board, department, commission or agency (nor, to the best
knowledge of the Company and the Physician, does any valid basis therefor exist)
or (ii) existing or, to the actual knowledge of the Company, threatened labor
strikes, disputes, grievances, controversies or other labor troubles affecting
the Company (nor, to the best knowledge of the Company and the Physician, does
any valid basis therefor exist).
g. Unions. The Company has never been a party to any agreement
with any union, labor organization or collective bargaining unit. No employees
of the Company are represented by any union, labor organization or collective
bargaining unit. Except as set forth on Schedule 3.8(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 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.
3.9. Employee Benefit Plans.
a. Identification. Schedule 3.9(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 or to which the Company contributes on behalf
of its employees and all employee benefit plans previously sponsored or
contributed to on behalf of its 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
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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 that constitute
Employee Benefit Plans. Except as set forth on Schedule 3.9(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. Except as set forth on Schedule
3.9(a), no unwritten amendment exists with respect to any Employee Benefit Plan.
Except as set forth on Schedules 3.9(b)-(l), each of the following paragraphs is
true and correct.
b. Administration. To the best knowledge of the Company and the
Physician, 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 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 participate.
c. Examinations. Except as set forth on Schedule 3.9(c), the
Company has not 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. To the best knowledge of the Company
and the Physician, 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.
f. Qualification. As set forth in more detail on Schedule 3.9(f),
the Company has 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 3.9(e), 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. To the best knowledge of the Company and the
Physician, 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)
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in which the Company 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. The Company does not sponsor 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. Neither the Company nor 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. Neither the Company nor 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. The Company has no obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its 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 3.8(a),
3.8(b), 3.8(c), 3.8(d) and 3.9(a), neither the Company, the Physician nor 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.
3.10. Absence of Certain Changes. Except as set forth on Schedule 3.10
or as contemplated by this Agreement, since the Company Balance Sheet Date, the
Company has not:
a. suffered a Material Adverse Effect, whether or not caused by
any deliberate act or omission of the Company 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;
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e. paid any amount on any indebtedness prior to the due date,
forgiven or canceled 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 3.8(a);
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 3.22;
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
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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.
3.11. Title; Leased Assets.
a. Real Property. Except as set forth on Schedule 3.11(a), the
Company does not own any interest (other than leasehold interests referred to on
Schedule 3.11(c)) in real property. The owned and leased real property referred
to on Schedule 3.11(a) and Schedule 3.11(c), respectively, constitutes the only
real property necessary for the conduct of the Company's business.
b. Personal Property. Except as set forth on Schedule 3.11(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 business (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 3.11(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.
c. Leases. A list and brief description of (i) all Real Property
Leases and (ii) Personal Property Leases involving rental payments within any
twelve (12) month period in excess of $12,000, in either case to which the
Company is a party, either as lessor or lessee, are set forth on Schedule
3.11(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.
3.12. Commitments.
a. Commitments; Defaults. Except as set forth on Schedule 3.12 or
as otherwise disclosed pursuant to this Agreement, the Company is not a party to
nor bound by, nor are the Nonmedical Assets or the assets or the business of the
Company bound by, whether or not in writing, any of the following (collectively,
"Commitments"):
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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 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;
x) agreement providing for the purchase from a supplier of
all or substantially all of the requirements of the Company 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.
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 3.12
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
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Company 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 3.12. The
Commitments are in full force and effect and are valid and enforceable
obligations of the Company, 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), nor has the Company waived any rights
thereunder, except as described on Schedule 3.12. Except as set forth on
Schedule 3.12, no consents or approvals are required under the terms of any
agreement listed on Schedule 3.12 in connection with the transactions
contemplated herein, including, without limitation, the transfer of any such
agreement pursuant to this Agreement.
b. No Cancellation or Termination of Commitment. Except as
disclosed pursuant to this Agreement or contemplated hereby and except where
such action would not have a Material Adverse Effect on the Practice, (i)
neither the Company nor 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) neither the Company nor the
Physician currently contemplates, or has reason to believe any other person
currently contemplates, any amendment or change to any Commitment.
3.13. Insurance. The Company, 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 3.13 (the "Insurance Policies"). The Insurance
Policies are all of the insurance policies of the Company, the Physician and
each Professional Employee relating to the business of the Company 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. Except as set forth in Schedule 3.13, no
consent or approval is required for, and no other impediment or restriction
exists that will prohibit or limit, the transfer of any such Insurance Policies
included within the Nonmedical Assets in accordance with the terms of this
Agreement. 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 3.13, neither the Company nor the Physician
has received any notice or other communication from any issuer of any Insurance
Policy canceling 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 3.13, neither the Company, the Physician nor any
Professional Employee has any outstanding claims, settlements or premiums owed
against any Insurance Policy, and the Company, the Physician and each
Professional Employee has given all notices or has presented all potential or
actual claims under any
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Insurance Policy in due and timely fashion. Except as set forth on Schedule
3.13, since January 1, 1994, neither the Company, the Physician nor 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 Physician and each Professional Employee has 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 3.13 also sets forth a list of
all claims under any Insurance Policy in excess of $10,000 per occurrence filed
by the Company, the Physician and each Professional Employee since January 1,
1994.
3.14. Proprietary Rights and Information. Set forth on Schedule 3.14 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, and all licenses, royalties, assignments and other
similar agreements relating to the foregoing to which the Company is a party
(including the expiration date thereof if applicable); and
b. all agreements relating to technology, know-how or processes
that the Company is licensed or authorized to use by others (other than
technology, know-how or processes generally available to other health care
providers), or which it licenses or authorizes others to use.
The Company owns or has 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 3.14,
no consent of any person will be 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 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 has
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 it.
3.15. Taxes.
a. Filing of Tax Returns. The Company has 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
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such Tax Returns or reports are complete and accurate in all material respects
and properly reflect the taxes of the Company for the periods covered thereby.
b. Payment of Taxes. Except for such items as the Company may be
disputing in good faith by proceedings in compliance with applicable law, which
are described on Schedule 3.15, (i) the Company has paid all taxes, penalties,
assessments and interest that have become due with respect to any Tax Returns
that it has filed and has properly accrued on its books and records for all of
the same that have not yet become due, and (ii) the Company is not 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 3.15, the Company has not received any notice
that any tax deficiency or delinquency has been asserted against the Company.
There is no unpaid assessment, proposal for additional taxes, deficiency or
delinquency in the payment of any of the taxes of the Company that could be
asserted by any taxing authority. There is no taxing authority audit of the
Company 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 has not, to its best knowledge, violated any federal,
state, local or foreign tax law.
d. No Extension of Limitation Period. The Company has not granted
an extension to any taxing authority of the limitation period during which any
tax liability may be assessed or collected.
e. All Withholding Requirements Satisfied. All monies required to
be withheld by the Company 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. Neither the Company nor the Physician is a
foreign person, as such term is referred to in Section 1445(f)(3) of the Code.
3.16. Compliance with Laws. The Company has not 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, result in a Material Adverse Effect. There are no existing violations
by the Company, 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 Physician and
each Professional Employee possesses all necessary licenses, franchises, permits
and governmental authorizations for the conduct of the Company's business as now
conducted, all of which are listed (with expiration dates, if applicable) on
Schedule 3.16. Except as set forth on Schedule 3.16, the transactions
contemplated by this Agreement will not result in a default under
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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 3.16, since January 1, 1993, neither the Company nor the Physician 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. Except as set forth on Schedule 3.16, since January 1,
1993, to the knowledge of the Company based on a certificate in writing obtained
from each Professional Employee, no Professional Employee has received any
notice from any federal, state or other governmental authority or agency having
jurisdiction over his or her properties or activities, or any insurance or
inspection body, that his or her properties, facilities, equipment, or business
practices relating to, or used in connection with, the conduct of the Company's
business fail to comply with any applicable law, ordinance, regulation, 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.
3.17. Finder's Fee. Except as set forth on Schedule 3.17, the Company
has not incurred any obligation for any finder's, brokers or agent's fee in
connection with the transactions contemplated hereby.
3.18. Litigation. Except as described on Schedule 3.18 or otherwise
disclosed pursuant to this Agreement, there are no legal actions or
administrative proceedings or investigations instituted, to the actual knowledge
of the Company or the Physician, which affect or could affect the Practice, the
Nonmedical Assets or the operation, business, condition (financial or
otherwise), or results of operations of the Company 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. Neither the Company nor 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 or to its business, 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 3.18, 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 in excess of its deductible are covered under its Insurance
Policies.
3.19. Condition of Fixed Assets. All of the fixtures, structures and
equipment reflected in the Financial Statements and used by the Company in its
business, are in good condition and repair, subject to normal wear and tear, and
conform in all material respects with
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all applicable ordinances, regulations and other laws, and the Company has no
actual knowledge of any latent defects therein.
3.20. 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 Company 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.
3.21. Banking Relations. Set forth on Schedule 3.21 is a complete and
accurate list of all borrowing and investing arrangements that the Company has
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.
3.22. Ownership Interests of Interested Persons; Affiliations. Except as
set forth on Schedule 3.22, no officer, supervisory employee or director of the
Company, 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 any organization that has a material
contract or arrangement with the Company. Except as may be disclosed pursuant to
this Agreement, neither the Company, nor any of its directors, officers,
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.
3.23. Investments in Competitors. Except as disclosed on Schedule 3.23
and except for ownership of not more than 1% of any class of outstanding
securities of any company or entity if such class of securities is publicly
traded, neither the Company nor the Physician owns directly or indirectly any
interests or has any investment in any person that is a Competitor of the
Company.
3.24. Environmental Matters.
a. Environmental Laws. To the best knowledge of the Company and
the Physician, neither the Company nor any of the Nonmedical Assets (including
the leased real property described on Schedule 3.11(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 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.
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b. Permits. The Company is not required to obtain, and has no
knowledge of any reason Vision 21 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 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 leased real property described on
Schedule 3.11(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.
3.25. Certain Payments. Neither the Company nor any director, officer or
employee of the Company acting for or on behalf of the Company, has paid or
caused to be paid, directly or indirectly, in connection with the business of
the Company:
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).
3.26. 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 has complied with
all material federal, state or local laws or regulations pertaining to medical
waste.
3.27. Medicare and Medicaid Programs. The Company, the Physician and
each Professional Employee is qualified for participation in the Medicare 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 Physician and each Professional Employee has 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 Physician and 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 neither the Company, the Physician nor any Professional
Employee has any material liability to any Payor with respect thereto, except as
has been reserved for in the Company 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
Physician or any Professional Employee in order to be paid by a Payor for
services rendered.
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Neither the Company, nor any of its directors, officers, 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. Neither the Company, nor its directors, officers, the Physician, or to
the best of the Company's knowledge, its 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.
3.28. Fraud and Abuse. To the best knowledge of the Company and the
Physician, the Company, its officers and directors, the Professional Employees,
and the other persons and entities providing professional services for the
Company, 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
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.
3.29. Payors. Schedule 3.29 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
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Company's services which accounted for more than 10% of the revenues of the
Company in the three (3) previous fiscal years. Except as set forth on Schedule
3.29, the Company has good relations with such Payors and none of such Payors
has notified the Company that it intends to discontinue its relationship with
the Company or to deny any claims submitted to such Payor for payment.
3.30. 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 and the Physician
will not, in an attempt to void or nullify any document contemplated herein or
any relationship involving Vision 21, the Company or the Physician, 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 this Transaction.
3.31. Acquisition Proposals. Except for the negotiations, offers and
agreements with Vision 21 and its representatives, the Company is not bound by
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 (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal").
3.32. Consistent Treatment of Expenses. The Company has, in presenting
information concerning the Company's expenses to Vision 21 for the purpose of
determining the Company's value, separated out those expenses which shall be
borne by the Company in a manner which is consistent with the treatment of
expenses which shall be the responsibility of the Company pursuant to the
Business Management Agreement.
3.33. Accounts Receivable/Payable. The Accounts Receivable of the
Company relating to the ownership and operation of the Practice reflected on the
Company Balance Sheet, to the extent uncollected on the date hereof, are, and
the accounts receivable of the Company relating to the ownership and operation
of the Practice to be reflected on the books of the Company on the Closing Date
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, discounts, set-offs, defenses,
counterclaims or other adjustments payable or assessable with respect to the
Accounts Receivable. The Company has collected Accounts Receivable only in the
ordinary course and has 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 has paid accounts
payable in the ordinary course and has not changed payment
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procedures or methods nor delayed the timing of such payments in anticipation of
the transactions contemplated in this Agreement.
3.34. 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 disclosed to Vision 21 by Physician, other than such conditions as may
affect as a whole the economy or the practice of medicine generally.
3.35. Inventory. Except as set forth on Schedule 3.35, to the best of
the Company's and the Physician's knowledge: (i) the Inventory is in its
originally manufactured condition, fit for the use for which it was intended,
free from any known defect and in a quantity and quality usable in the ordinary
course of business; (ii) the Inventory does not contain material amounts of
items that are slow-moving, obsolete or of below-standard quality; (iii) the
qualities and quantities of Inventory are reasonable and warranted in the
present and anticipated circumstances of the Practice; and (iv) there has been
no decrease in the physical Inventory since the Company Balance Sheet Date other
than in the ordinary course of business.
3.36. Tangible Personal Property. Except as set forth on Schedule 3.36,
the Company's Tangible Personal Property is in good operating condition, working
order and repair (normal wear and tear excepted) and is fully suitable for the
uses for which it is employed in the conduct of the Practice.
3.37. Leases. With respect to each of the Real Property Leases and
Personal Property Leases, except as set forth on Schedule 3.37:
a. such lease is legal, valid, binding, enforceable and in full
force and effect;
b. such lease will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
Closing;
c. no party to such lease is in material breach or default, and no
event has occurred that, with notice or lapse of time, would constitute a
material breach or default or permit termination, modification or acceleration
thereunder;
d. no party to such lease has repudiated in writing any provision
thereof;
e. there are no disputes, oral agreements or forbearance programs
in effect as to such lease; and
f. The Company has performed and satisfied in full each material
obligation to be performed by the Company under such lease.
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3.38. Contract Rights. Except as set forth on Schedule 3.38, each of the
Assumed Contracts is valid and enforceable and is in full force and effect, and
there is no material default or existing condition that, with the giving of
notice or the passage of time, would constitute such a default by any parties
thereto. The Company has performed and satisfied in full each material
obligation required to be performed by the Company under each Assumed Contract.
If services are to be provided to the Company under any of such Assumed
Contracts, such services have been and are being performed satisfactorily and in
a timely manner, substantially in accordance with the terms of such Assumed
Contract.
3.39. Prepaid Items. Except as described on Schedule 3.13, Each of the
Prepaid Items may be transferred to Vision 21 without the necessity of obtaining
any consent or approval.
3.40. Completeness of Assets. Except for the real property owned and
utilized by the Company, the Nonmedical Assets, together with the Medical
Assets, include all the properties used to conduct the Practice as presently
conducted.
3.41. 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 in health-care delivery) which materially adversely
affects, or in the future is reasonably likely to 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.
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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
common stock of the Company 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 common stock of the Company 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. 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.
4.4. Certain Payments. The Physician has not paid or caused to be paid,
directly or indirectly, in connection with the business of the Company:
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 as otherwise permitted by
applicable law).
4.5. Finder's Fee. Except as set forth on Schedule 4.5, the Physician
has not incurred any obligation for any finder's, broker's or agent's fee in
connection with the transactions contemplated hereby.
4.6. Ownership of Interested Persons; Affiliations. Except as set forth
on Schedule 4.6, 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 any organization that
has a material contact or arrangement with the Company. 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.
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4.7. Litigation. Except as disclosed on Schedule 4.7, 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 suspension proceedings or
similar types of claims, actions or proceedings, hearings or investigations
against the Physician or the Company.
4.8. 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.
4.9. Staff Privileges. Schedule 4.9 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.
4.10. Intentions. Except as set forth on Schedule 4.10, the Physician
intends to continue practicing medicine on a full-time basis for at least the
next five (5) years with the Company and does not know of any fact or condition
that materially adversely affects, or in the future is reasonably likely to
materially adversely affect, his ability or intention to practice medicine on a
full-time basis for the next five (5) years with the Company.
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.
At or prior to Closing, Vision 21 will be qualified to do business as a foreign
corporation in the jurisdictions listed on Schedule 5.1.
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5.2. Capitalization. The authorized capital stock of Vision 21 consists
of 50,000,000 shares of Vision 21 Common Stock, of which 5,516,124 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. Immediately prior to the Closing, the authorized capital stock of
Vision 21 will consist of 50,000,000 shares of Vision 21 Common Stock, of which
5,516,124 shares will be issued and outstanding, and 10,000,000 shares of Vision
21 Preferred Stock, of which no shares will be issued and outstanding.
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 in accordance with applicable
law, its Articles of Incorporation and Bylaws. 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.
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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 this Agreement have been duly and
validly authorized by all necessary corporate action on the part of Vision 21 in
accordance with applicable law and its Articles of Incorporation and Bylaws. The
shares of Vision 21 Common Stock to be issued in connection with this Agreement,
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. 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
fiscal quarter ended March 31, 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.
5.10. Liabilities and Obligations. Except as disclosed on Schedule
5.10, 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 5.10 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.
5.11. 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 Transaction. 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
Transaction. 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
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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
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 Transaction 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 Transaction.
5.12. 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.
5.13. 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
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. SECURITIES LAW MATTERS.
6.1. 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
acknowledgments set forth in this Section.
b. Except as disclosed on Schedule 6.1(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
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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.
d. Physician represents and warrants that the address set forth
below Physician's name on Schedule 6.1(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, (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, and (iv) acknowledges and agrees that the transfer of the Securities
shall be further restricted by the "lock-up" provisions contained in the
Registration Rights Agreement in the form of Exhibit 12.1(o), whereby the
Company shall be treated as an "affiliate" of Vision 21 under Rule 144.
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.
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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.
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 6.1(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.
6.2. 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
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without registration under the Securities Act pursuant to Rule 144 (or any
similar rule or regulation).
7. 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):
7.1. 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 or the Physician to make any
expenditures that are not expressly set forth in this Agreement or otherwise
contemplated herein.
7.2. Business Operations. The Company shall operate its business in the
ordinary course. The Company and the Physician shall use all reasonable efforts
to preserve the business of the Company intact. Neither the Company nor the
Physician shall take any action that would, individually or in the aggregate,
result in a Material Adverse Effect.
7.3. Access. The Company 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, 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, 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; provided, that in conducting such inspection or investigation, neither
Vision 21 nor its agents shall interfere with or disrupt the business activities
of the Company or the Physician.
7.4. 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 or the Physician
subsequent to the date of this Agreement and prior to the Closing Date under any
Commitment material to the Company's condition (financial or otherwise),
operations, assets, liabilities or business and to which it is subject; or (b)
any material adverse change in the Company's condition (financial or otherwise),
operations, assets, liabilities or business.
7.5. Approvals of Third Parties. As soon as practicable after the date
hereof, the Company and the Physician shall use all reasonable efforts to secure
all necessary approvals and consents of landlords with respect to the real
property described on Schedule 2.1(d) to the
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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 or the Physician to make any
material expenditures that are not expressly set forth in this Agreement or
otherwise contemplated herein.
7.6. Employee Matters. Except as set forth in Schedule 3.8(a) or as
otherwise contemplated by this Agreement, the Company shall not, 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 (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;
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 that would, individually or in the aggregate,
result in a Material Adverse Effect.
7.7. Contracts. Except with Vision 21's prior written consent, the
Company shall not assume or enter into any contract, lease, license, obligation,
indebtedness, commitment,
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purchase or sale except in the ordinary course of business that is material to
the Company's business, nor will it waive any material right or cancel any
material contract, debt or claim.
7.8. Capital Assets; Payments of Liabilities. The Company shall not,
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 Company 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.
7.9. Mortgages, Liens and Guaranties. The Company shall not, 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 its assets
(other than statutory liens arising in the ordinary 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.
7.10. Acquisition Proposals. The Company and the Physician agree that
from the date of this Agreement through the earlier of the Closing Date or
September 30, 1997, (a) neither the Physician nor the Company nor any of its
officers and directors shall, and the Physician and the Company shall direct and
use their best efforts to cause the Company's 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 and the Company 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 7.10; 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 or the Physician.
7.11. Distributions and Repurchases. 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.
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7.12. Requirements to Effect the Transaction. The Company and the
Physician shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Transaction under applicable law.
7.13. Physician Accounts Payable and Physician Retained Equity. The
Company shall, and the Physician shall cause the Company, to pay in a timely
manner the accounts payable of the Physician. Except as contemplated herein, the
Company shall not, and the Physician shall not permit the Company to, make
payment of all or any portion of any retained equity of the Company at any time
prior to Closing.
7.14. Physician Employment Agreements. The Company and the Physician
shall cause, at or immediately prior to Closing, each Physician Employee (except
for those non-shareholder Physician Employees identified on Schedule 7.14) who
is then an employee of the Company and Physician agrees at or immediately prior
to Closing (i) to terminate his employment agreement, if any, with the Company
by mutual consent without any liability therefor on the part of the Company and
(ii) to enter into a new Physician Employment Agreement with the Company in
accordance with the terms of the Business Management Agreement.
7.15. Optometrist Employment Agreements. The Company and the Physician
shall cause, at or immediately prior to Closing, each Optometrist Employee who
is then an employee of the Company (i) to terminate his existing employment
agreement, if any, with the Company by mutual consent without any liability
therefor on the part of the Company and (ii) to enter into a new Optometrist
Employment Agreement with the Company in accordance with the terms of the
Business Management Agreement.
7.16. Termination of Retirement Plans. Prior to Closing, the Physician
shall cause the Company 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.
Subsequent to Closing, the Company and Vision 21 shall review the
extent to which the Company can resume contributions to the Retirement Plan
without violating the qualification requirements of Sections 410(b) and
401(a)(4) of the Code, taking into account any employees of Vision 21 who would
be "leased employees" of the Company under Section 414(n) of the Code. If Vision
21 and the Company mutually agree that such qualification requirements can be
satisfied, the Company may elect to continue the Retirement Plan and make
contributions in accordance with its terms, provided that the Company 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.
7.17. 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.
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7.18. 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 Vision 21 existing on the Closing Date, except for those fees
specified and set forth on Schedule 7.18. Each Professional Employee shall
undertake to endorse any payments received on account of such services to the
order of Vision 21 and to take such other action as may be necessary to confirm
to Vision 21 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 Vision 21 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
Vision 21 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.
8. COVENANTS OF VISION 21. Vision 21 agrees that between the date
hereof and the Closing:
8.1. 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 Transaction; 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.
8.2. 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 Closing Date under any Vision 21 Commitment
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.
8.3. 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 Transaction or provide the
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services contemplated by the Business Management Agreement and to conduct the
intended business of Vision 21.
8.4. 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 8.4 and assumed by Vision 21 pursuant to the terms of this Agreement.
9. COVENANTS OF VISION 21, THE COMPANY AND THE PHYSICIAN. Vision 21,
the Company and the Physician agree as follows:
9.1. 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 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 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 10.1 and 11.1 have been fulfilled, the
Schedules hereto shall be deemed to be the Schedules as amended or supplemented
pursuant to this Section 9.1. In the event that the Company is required to amend
or supplement a Schedule in accordance with this Section 9.1 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 9.1 and the Company and
the Physician do not consent, this Agreement shall be deemed terminated by
mutual consent as set forth in Section 15.1(d) or Section 15.1(e) as
appropriate.
9.2. Fees and Expenses.
a. If the Transaction is consummated, Vision 21 shall pay all costs
of the Audit of the Company's Financial Statements and financial records by the
Accountants (or auditors designated by Vision 21's Accountants). All items
prepared by the 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 Purchase Price. 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 Transaction is not consummated, the Company
shall pay for or reimburse Vision 21 for one-half (1/2) of all expenses of the
Accountants in
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connection with the Audit. The Company and Physician shall not be entitled to
copies or originals of the Prepared Audit Materials until the Company or
Physician pay for or reimburses Vision 21 for one-half (1/2) 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 auditor). For purposes of
this Agreement, Audit expenses shall include all expenses related to the Audit
as well as expenses incurred to present the financial statements in accordance
with GAAP and all schedules related thereto.
c. The Company shall submit to a Medicare audit. Vision 21 shall
pay all costs of the Medicare audit of the Company by Vision 21's auditors (or
auditors designated by Vision 21's auditors). All information obtained in
connection with the Medicare audit shall be made available to Vision 21.
d. Each of the Company 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.
9.3. Release of Physician From Practice Liabilities. Vision 21 shall
use its best efforts to obtain the release of the Physician from any
liabilities relating to the Practice of which the Physician and the Company are
jointly obligated which are set forth on Schedule 9.3.
10. 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:
10.1. 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.
10.2. Covenants. The Company 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 or the Physician prior to the
Closing Date.
10.3. Legal Opinion. Counsel to the Company and the Physician shall have
delivered to Vision 21 their opinions, dated as of the Closing Date, in form and
substance substantially similar to Exhibit 10.3 which Vision 21 and its counsel
shall be permitted to rely upon.
10.4. 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.
10.5. No Material Adverse Change. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities or business
of the Company shall have
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occurred since the Company Balance Sheet Date, whether or not such change shall
have been caused by the deliberate act or omission of the Company or the
Physician.
10.6. Government Approvals and Required Consents. The Company, the
Physician 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).
10.7. Certification. Neither the Company nor the Physician 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.
10.8. 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 12.1.
10.9. Due Diligence. Vision 21 shall have completed to its satisfaction
a due diligence review of the Company and the Physician.
10.10. Financial Audit. Vision 21 shall have approved in Vision 21's
sole discretion an audit of the Company and the Practice which audit shall have
been performed by an accounting firm designated by Vision 21.
10.11. Medicare Audit. Vision 21 shall have approved in Vision 21's sole
discretion a Medicare audit of the Company and the Practice.
10.12. 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).
10.13. 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 Vision 21 and
shall cause such Professional Employees to execute such other agreements and
instruments as contemplated in Section 7.18.
11. 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:
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11.1. 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.
11.2. 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 it prior to the Closing Date.
11.3. Legal Opinions. Counsel to Vision 21 shall have delivered to the
Company and the Physician their opinion, dated as of the Closing Date, in form
and substance substantially similar to Exhibit 11.3.
11.4. 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.
11.5. Government Approvals and Required Consents. The Company, the
Physician 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).
11.6. Closing Deliveries. The Company 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 12.2.
11.7. 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.
11.8. 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.
12. CLOSING DELIVERIES; ESCROW OF DOCUMENTS.
12.1. Deliveries of the Company and the Physician. At or prior to June
30, 1997, the Company 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:
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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
Transaction, 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 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;
c. 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 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;
d. a certificate of the Secretary of the Company certifying as to
the incumbency of the directors and officers of the Company and as to the
signatures of such directors and officers who have executed documents delivered
pursuant to the Agreement on behalf of the Company;
e. a certificate, dated within ten (10) days prior to the Closing
Date, of the Secretary of State of the state of incorporation for the Company
establishing that the Company 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;
f. the legal opinion of counsel to the Company and Physicians
dated as of the Closing Date in accordance with Section 10.3;
g. such appropriate documents of transfer, including bills of
sale, endorsements, assignments, drafts, checks or other instruments, as to all
of the Nonmedical Assets, and any other appropriate instruments in such
reasonable or customary form as shall be requested by Vision 21 and its counsel;
h. such instruments satisfactory to Vision 21 that all liens,
claims, pledges, security interests and other encumbrances on all of the
Nonmedical Assets have been released;
i. all authorizations, consents, permits and licenses referenced
in Section 3.5;
j. the executed Business Management Agreement in substantially the
form attached hereto as Exhibit 12.1(k), as revised in accordance with changes
reasonably deemed
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necessary or advisable by legal counsel retained by Vision 21 in the State to
address regulatory and compliance issues;
k. an executed Physician Employment Agreement between the Company
and the Physician in substantially the form attached hereto as Exhibit 12.1(l);
l. an executed Physician Employment Agreement between the Company
and each Physician Employee who is then an employee of the Company in
substantially the form attached hereto as Exhibit 12.1(m);
m. an executed Optometrist Employment Agreement between the
Company and each Optometrist Employee who is then an employee of the Company in
substantially the form attached hereto as Exhibit 12.1(n);
n. an executed Registration Rights Agreement between Vision 21 and
the Company in substantially the form attached hereto as Exhibit 12.1(o) (the
"Registration Rights Agreement");
o. 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;
p. executed Lease Agreements between Vision 21 and the Company in
substantially the form attached hereto as Exhibit 12.1(q) for the lease of the
buildings and improvements located at 000 X. 00xx Xxxxxx, Xxxx, Xxxxxxx and 000
X. Xxxxxxxx Xxxxxx, Xxxx, Xxxxxxx (the "Lease Agreements");
q. an assignment to and assumption by Vision 21 of each lease for
real property described on Schedule 2.1(d) (the "Lease Assignments"), or if
desired by Vision 21, a new lease or leases between the landlords under such
leases and Vision 21 in form and substance reasonably satisfactory to Vision 21;
and
r. 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.
12.2. Deliveries of Vision 21. At or prior to June 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:
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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
Transaction, 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 Closing Date and (ii) certifying that all
conditions precedent of Vision 21 to the Closing have been satisfied;
d. a certificate, 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. certificates (or photocopies thereof), dated within ten (10)
days prior to the Closing Date, of the Secretary of State of each state in which
Vision 21 is qualified to do business, to the effect that Vision 21 is qualified
to do business and, if applicable, is in good standing as a foreign corporation
in each of such states;
f. an opinion of Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to Vision
21, dated as of the Closing Date, pursuant to Section 11.3;
g. the executed Registration Rights Agreement;
h. the executed Lease Agreements;
i. the executed Lease Assignments;
j. appropriate assumption agreements evidencing the assumption by
Vision 21 of the Assumed Obligations; and
k. 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.
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12.3. Release of Escrow Materials. Xxxxxxxx, Loop & Xxxxxxxx, LLP shall
release the agreements, certificates, instruments, documents and other materials
described in Sections 12.1 and 12.2 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 and the Company shall have sent written notice
to Xxxxxxxx, Loop & Xxxxxxxx, LLP stating that the conditions to release of the
escrowed documents have been satisfied. In the event that the conditions to the
release of the escrowed documents are not satisfied, and each of Vision 21 and
the Company informs Xxxxxxxx, Loop & Xxxxxxxx, LLP in writing that such
conditions have not been satisfied, Xxxxxxxx, Loop & Xxxxxxxx, LLP shall
promptly return the foregoing materials to the parties sending such materials.
13. POST CLOSING MATTERS.
13.1. 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.
13.2. Practice Advisory Council; Local Advisory Council; National
Appeals Council. Vision 21 and the Company shall establish a practice advisory
council composed of delegates from Vision 21 and the Company which shall advise
Vision 21 and the Company 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 the Recent Acquisitions and from the Company. Such
delegates shall be appointed from practice groups which are located in a market
area identified by Vision 21 and in which the Company 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. The
Company 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. REMEDIES.
14.1. Indemnification by the Company and Physician. Subject to the terms
and conditions of this Agreement, the Company and the Physician, jointly and
severally, agree to
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indemnify, defend and hold Vision 21 and its directors, officers, employees and
agents 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 the Company) 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 or the Company
(including its subsidiaries, if any), 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 or the
Company (including its subsidiaries, if any) 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; and
d. any liability arising from any alleged unlawful sale or offer
to sell or transfer any of the Common Stock by Physician.
14.2. Indemnification by Vision 21. Subject to the terms and conditions
of this Agreement, Vision 21 hereby agrees to indemnify, defend and hold the
Company and the Physician harmless from and against all damages asserted against
or incurred by it or 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
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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 14.2, Vision 21 shall not be
liable for any Damages resulting from any matter not disclosed to Vision 21 by
any of the third parties to be acquired by Vision 21 in connection with the
Recent Acquisitions.
14.3. 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 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 14.6, 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 14 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.
b. 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 14.3(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
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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 14.3(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 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.
c. 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 14.3(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 14.3(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 14 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 14.3(c), and the Indemnifying Party
shall bear its own costs and
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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.
d. 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
18.1 if the parties do not reach a settlement of such dispute within thirty (30)
days after notice of a dispute is given.
e. Payments of all amounts owing by an Indemnifying Party pursuant
to this Article 14 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 14.3(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.
14.4. 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 14 regarding
indemnification shall survive Closing.
14.5. 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.
14.6. Indemnification Limitations. Notwithstanding the provisions of
Sections 14.1 and 14.2, (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
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representations and warranties contained in Sections 3.1, 3.2., 3.3, 3.11, 3.14,
4.3, 4.5, 4.7, 5.1, 5.2, 5.3, 5.4 and 6.1 may be made at any time, and a claim
for indemnification for a breach of the representations and warranties contained
in Sections 3.9, 3.15, 3.17, 3.18, 3.24, 3.25, 3.26, 3.27, 3.28, 3.30, 4.1, 4.4,
4.6, 5.6 and 5.7 may be made at any time within the applicable statute of
limitations; (b) indemnification based upon Sections 14.1(b) through (d) and
14.2(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 16.1 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 Purchase Price; and (c) 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 Purchase Price received by the Physician
(other than pursuant to a requirement to indemnify Vision 21 under Sections 3.27
or 3.28, or unless the breach involves an intentional breach or fraud by the
Physician or the Company which shall be unlimited).
14.7. 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.
14.8. 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 prior to an initial Public Offering based upon the valuation given at Closing
hereof or after any Public Offering 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
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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.
15. TERMINATION.
15.1. Termination. This Agreement may be terminated and the Transaction
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;
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 Transaction shall not have
been consummated by September 30, 1997.
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15.2. Effect of Termination. In the event this Agreement is terminated
pursuant to Section 15.1, 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 15, a party not then in material breach of this
Agreement shall stand fully released and discharged of any and all obligations
under this Agreement.
16. PHYSICIAN EMPLOYMENT AGREEMENT.
16.1. Physician Employment Agreement. The parties acknowledge that in
accordance with the terms of this Agreement, Physician, as employee, and the
Company, 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 16.1 if (a) the Business Management Agreement has 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.
16.2. Survival. The parties acknowledge and agree that this Article 16
shall survive the Closing of the transactions contemplated herein.
17. NON-COMPETITION AND CONFIDENTIALITY COVENANTS.
17.1. Physician and Company Non-Competition Covenant.
a. The Physician and the Company recognize that the covenants of
the Physician and the Company contained in this Section 17.1 are an essential
part of this Agreement and that, but for the agreement of the Physician and the
Company to comply with such covenants, Vision 21 would not have entered into
this Agreement. The Physician and the Company acknowledge and agree that the
Physician's and the Company's covenants not to compete are necessary to ensure
the continuation of the Management Business (as defined below)
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and are 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 or
the Company compete with the Management Business or Vision 21. The Physician and
the Company accordingly agree that for the periods set forth in the Business
Management Agreement the Physician and the Company 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 or the Company'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 or the Company
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 or the Company's own benefit or
for the benefit of any other person or entity, call upon or solicit any
customers or clients of the 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
and/or shall in the future receive medical or optometric care from the Company
are not deemed to be customers or clients of the Management Business.
b. For the purposes of this Section 17.1, 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,
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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
or the Company's medical practice or participation in the management and
administration of a physician group in which the Physician or the Company devote
a significant amount of time to the practice of medicine.
c. Should any portion of this Section 17.1 be deemed unenforceable
because of the scope, duration or territory encompassed by the undertakings of
the Physician or the Company hereunder, and only in such event, then the
Physician, the Company 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 or the Company 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
and the Company shall not be bound by this covenant and shall not be obligated
to pay the liquidated damages contemplated in this Section 17.1 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 and
the Company agree that injunctive or other equitable relief will be available to
enforce the covenants of this provision, such relief to be without the necessity
of posting a bond, cash or otherwise. The Physician, the Company 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 aggregate
amount of the aggregate consideration received by the Physician 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 the Company, the
aggregate consideration received by Physician and the Company pursuant to this
Agreement shall be in those amounts and in such form as set forth in Schedule
17.1. 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 the Company or, with respect to shares of Common Stock entitled to
be received by the Physician or the Company, terminate its obligation to deliver
such number of shares of Common Stock, 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 17.1. The
Physician and the Company agree
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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 17.1
shall not be construed to (i) limit the freedom of any patient of the Physician
or the Company 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.
17.2. Physician and Company Confidentiality Covenant. From the date
hereof, the Physician and the Company 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 the Company, or disclose to
any third party, any information of Vision 21 or the Company, 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 or of the
Company, 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 and the Company may
disclose information that the Physician or the Company 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 the Company or their respective Affiliates, advisors, or
representatives); (b) is or becomes available to the Physician or the Company on
a nonconfidential basis from a source other than Vision 21 or its 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
or its Affiliates, advisors or representatives of which the Physician or the
Company has knowledge; or (c) has already been or is hereafter independently
acquired or developed by the Physician or the Company without violating any
confidentiality agreement with or other obligation of secrecy to Vision 21, the
Company or their respective Affiliates, advisors or representatives. Without
limiting the other possible remedies to Vision 21 for the breach of this
covenant, the Physician and the Company agree that injunctive or other equitable
relief shall be available to enforce this covenant, such relief to be without
the necessity of posting a bond, cash or otherwise. The Physician and the
Company further agree that if any restriction contained in this Section 17.2 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.
17.3. Survival. The parties acknowledge and agree that this Article
17 shall survive the Closing of the transactions contemplated herein.
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18. DISPUTES.
18.1. Mediation and Arbitration. Any dispute, controversy or claim
(excluding claims arising out of an alleged breach of Article 17 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, if the
amount in dispute is equal to or in excess of $200,000 or if the dispute is
solely of a non-monetary nature, and in Mesa, Arizona if the amount in dispute
is lower than $200,000, and in either case 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, if the amount in dispute is equal to or in excess of $200,000 or
if the dispute is solely of a non-monetary nature, and in Mesa, Arizona if the
amount in dispute is lower than $200,000, and in either case 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.
19. MISCELLANEOUS
19.1. Taxes. Physician and the Company 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).
19.2. 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.
19.3. 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.
19.4. 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
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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
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:
Xxxxxx-Xxxxxxx Eye Center, Ltd.
000 Xxxxx 00xx Xxxxxx
Xxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, M.D.
With copies to:
Xxxxxx X. Xxxxxx
Suite 300
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile No. (000)000-0000
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 19.4. 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.
19.5. 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
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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.
19.6. Entire Agreement; Amendments and Waivers. This Agreement,
together with the documents contemplated by this Agreement and all Exhibits and
Schedules hereto and thereto, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous 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.
19.7. Confidentiality Agreements. The provisions of any prior
confidentiality agreements and letters of intent between or among Vision 21, the
Company and the Physician, as amended, shall terminate and cease to be of any
force or effect at and upon the Closing.
19.8. Reformation 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 19.8 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 reformed; and (e) the parties to this
Agreement shall execute and deliver all documents or instruments necessary to
effect or evidence the provisions of this Section 19.8.
19.9. 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.
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19.10. 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 or by the arbitrators deciding such
action or proceeding.
19.11. 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.
19.12. 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 and the
Company; provided, however, that such approval shall not be unreasonably
withheld and if any party reasonably believes that it has a legal obligation to
make a press release and the consent of the other party cannot be obtained, then
the release may be made without such approval.
19.13. 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.
19.14. 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.
19.15. 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.
19.16. 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.
19.17. Severability. Each article, section and subsection of this
Agreement constitutes a separate and distinct undertaking, covenant or provision
of this Agreement. If any such
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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.
19.18. Form of Transaction. If after the execution hereof, Vision 21
determines that the sale of the Nonmedical Assets of the Company 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 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 and the Physician at
Closing for all additional expenses incurred by the Company and the Physician as
a result of such change in form including, but not limited to any additional tax
liability incurred by the Company or Physician as a result of such change in
form.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
"COMPANY"
XXXXXX-XXXXXXX EYE CENTER, LTD.
By:
--------------------------- ---------------------------------
Witness Xxxxx X. Xxxxxx, M.D., President
---------------------------
Witness
"PHYSICIAN"
--------------------------- ------------------------------------
Witness XXXXX XXXXXXX, M.D.
--------------------------- ------------------------------------
Witness XXXXX X. XXXXXXX, M.D.
--------------------------- ------------------------------------
Witness XXXXX X. XXXXXX, M.D.
"VISION 21"
VISION TWENTY-ONE, INC.
By:
--------------------------- ---------------------------------
Witness Xxxxxxxx X. Xxxxxxxx, President
--------------------------
Witness
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