EXHIBIT 2.3
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MERGER AGREEMENT
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THIS MERGER AGREEMENT ("Agreement") is entered into as of the 1st day of
May, 1997, by and among XXXXX EYE CENTER, P.C. an Indiana professional
corporation (the "Corporation"); OMEGA HEALTH SYSTEMS OF INDIANA, INC., an
Indiana corporation ("Omega"); OMEGA HEALTH SYSTEMS, INC., a Delaware
corporation ("OHSI") and XXXXXX XXXXX, M.D., a citizen and resident of Indiana
("Stockholder").
W I T N E S S E T H:
WHEREAS, Corporation is an Indiana corporation, which owns certain assets
which are used by and/or result from Stockholder's practice of providing eye
care to patients;
WHEREAS, Stockholder is the sole stockholder of Corporation and is an
ophthalmologist practicing medicine in the State of Indiana;
WHEREAS, Omega is a wholly-owned subsidiary of OHSI;
WHEREAS, Corporation, Omega and Stockholder intend that the transaction
consummated pursuant to this Agreement shall qualify as a reorganization
pursuant to (beta) 368(a)(1)(A) and (beta) 368(a)(l)(E)(i) of the Internal
RevenUE CODe of 1986, as amended ("Code" or "I.R.C."); and
WHEREAS, the parties desire to set forth in writing the terms and
conditions under which said transaction will be consummated.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, it is agreed as
follows:
ARTICLE I.
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MERGER TRANSACTION
I.1 BASIC TRANSACTION (a) Subject to the terms and conditions of this
Agreement, at the closing (as defined in Section 1.1(b)(i)), Corporation shall
be merged with and into Omega in accordance with this Agreement and the separate
corporate existence of Corporation shall thereupon cease (the "Merger"). Omega
shall be the surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation"). The Merger shall have the effects specified
in Section 23-1-40, ET SEQ. of the Indiana Bus. Corp. Law (IBCL) as amended. By
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execution and delivery of this Agreement, Stockholder hereby approves the Merger
on the terms and subject to the conditions set forth herein, which approval
shall be effective as an action without a meeting pursuant to Corporation's
bylaws and the IBCL.
(b) EFFECT OF MERGER.
(i) GENERAL. If all the conditions to the Merger set forth in
ARTICLE IV shall have been fulfilled or waived in accordance herewith and
this Agreement shall not have been terminated as provided in ARTICLE XIII,
the parties hereto shall cause Articles of Merger meeting the requirements
of the IBCL to be properly executed, verified and delivered for filing in
accordance with the IBCL on the Closing Date set forth in ARTICLE III. The
Merger shall become effective upon the later of acceptance for filing of
the Articles by the Secretary of State of the State of Indiana or at such
later time which the parties hereto shall have agreed upon and designated
in the Articles of Merger in accordance with applicable law as in effect
at the time of the Merger (the "Closing"). The Surviving Corporation may,
at any time after the Closing, take any action (including executing and
delivering any document or instrument) in the name and on behalf of Omega
or the Corporation in order to carry out and effectuate the transaction
contemplated by this Agreement.
(ii) CERTIFICATE OF INCORPORATION. The Articles of Incorporation of
Omega in effect at and as of the Closing will remain the Articles of
Incorporation of the Surviving Corporation without any modification or
amendment in the Merger.
(iii) BYLAWS. The Bylaws of Omega in effect at and as of the Closing
will remain the Bylaws of the Surviving Corporation without any
modification or amendment in the Merger.
(iv) DIRECTORS AND OFFICERS. The directors and officers of Omega in
office at and as of the Closing will remain the directors and officers of
the Surviving Corporation (retaining their respective positions and terms
of office).
(v) OMEGA SHARES. Each share of common stock of Omega Health
Systems of Indiana, Inc. (the "Omega Stock") issued and outstanding at
and as of the Closing will remain issued and outstanding.
ARTICLE II.
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CONSIDERATION
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II.1 CONSIDERATION. As consideration for the Merger, all shares of common
stock of Corporation shall, without further action on the part of Stockholder,
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be exchanged (a) for cash in an amount determined by the following calculation:
(i) from the agreed upon base amount of $427,600 (ii) add an amount equal to
$150,000.00 representing the value of the Purchased Accounts Receivable listed
in Schedule 5.10.1, and (iii) subtract from the sum of (i) and (ii) the amount
of the liabilities and indebtedness assumed by the Surviving Corporation and set
forth in Schedule 5.27.1 that exceeds $175,000, and (b) for shares of voting
common stock of OHSI (the "OHSI Stock") valued at One Million One Hundred Twelve
Thousand Four Hundred Dollars ($1,112,400) to be issued to Stockholder (the
"Consideration"). Each share of OHSI Stock shall be valued at the average of the
closing price of OHSI Stock for the twenty (20) trading days immediately prior
to April 25, 1997; provided, however, the value of the OHSI Stock shall not in
any event exceed Seven Dollars ($7.00) per share. No fractional share of OHSI
Stock shall be issued. The OHSI Stock shall not be registered under the
Securities Act of 1933 (the "1933 Act") and will be restricted securities, as
defined in Rule 144(a)(3) under the 1933 Act that are not fully transferable,
except to the extent provided herein, and the certificates reflecting
Stockholder's ownership in the OHSI Stock shall bear a legend to that effect.
The amount set forth above in 2.1(ii) representing the value of the Purchased
Accounts Receivable as of March 31, 1997, is to be adjusted on or before October
1, 1997, positively or negatively, for the actual collected amount of the April
30, 1997 Purchased Accounts Receivable, and the amount set forth above in
2.1(iii) and on Schedule 5.27.1 representing the amount of the accounts payable
and other liabilities as of March 31, 1997, is to be adjusted on or before July
1, 1997, positively or negatively, for the actual amount of such accounts
payable and other liabilities of the Corporation as of April 30, 1997. The
adjusted amounts determined in accordance with the foregoing sentence shall be
paid in cash to the appropriate party (OHSI or Stockholder) on or before the
dates set forth for adjustment, respectively. Omega shall use its efforts in
good faith to collect the Purchased Accounts Receivable prior to October 1,
1997. Any cash payment made by OHSI shall be an advance to Omega and shall be
represented by a note in the same form as set out in the paragraph below.
As a part of the Consideration above, at the Closing the Surviving
Corporation shall give and deliver to OHSI a promissory note in the amount of
$175,000 in the form of Exhibit 2.1 attached hereto, and the principal and
interest payments on such note shall be a Direct Operating Expense of the Center
as such terms are defined in and pursuant to the Management Agreement of even
date between Omega and Referral Eye Center, P.C., an Indiana professional
corporation.
II.2 TAX REPORTING. The Merger shall constitute a reorganization under
I.R.C. (beta) 368(a)(1)(A) and I.R.C. (beta) 368(a)(l)(E)(I). Each of the
parties agrees to report this transaction for financial and income tax purposes
in accordance with the foregoing.
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II.3 REGISTRATION RIGHTS. The Stockholder will be entitled to "piggyback"
registration rights for unregistered OHSI Stock, on registrations under the 1933
Act, of OHSI's stock or securities, subject to the right of OHSI and its
underwriters to reduce the number of shares of OHSI Stock proposed to be
registered in view of market conditions, and OHSI shall advise the Stockholder
at least thirty (30) days prior to any proposed registration. Such underwriter's
"cutback" shall be applied proportionately to all unregistered OHSI Stock or
other securities and unregistered warrants or stock options which are requesting
registration at such time pursuant to contractual rights. The costs incurred by
OHSI in the registration of such OHSI Stock in a piggyback registration shall be
borne by OHSI, except that underwriting discounts and commissions on OHSI stock
sold by Stockholder shall be paid by the Stockholder, and any cost associated
with Stockholder's counsel are to be paid by Stockholder.
II.4 TRANSFERABILITY OF OHSI STOCK. Provided any transferee under this
subsection acknowledges any restrictions placed on the OHSI Stock, nothing in
this Agreement shall prevent the OHSI Stock from being transferred in whole, or
in part, to one or more members of Stockholder's family, to a trust established
for Stockholder's benefit or the benefit of one or more of the members of the
Stockholder's family, to a family partnership (general or limited) established
by Stockholder or one or more of the members of Stockholder's family, or to any
other entity that is owned by Stockholder or one or more of the members of
Stockholder's family.
ARTICLE III.
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THE CLOSING
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The closing of the Merger contemplated herein (the "Closing") shall take
place at such time and place as the parties hereto may agree in writing (the
"Closing Date"). The parties agree that the Closing Date shall be extended, if
required, to allow either party to fulfill any condition of this Agreement, but
in no event shall the Closing Date extend beyond April 30, 1997, unless such
extension is agreed to in writing by all of the parties.
ARTICLE IV.
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ITEMS TO BE DELIVERED AT OR PRIOR TO CLOSING
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IV.1 BY STOCKHOLDER OR CORPORATIONBY STOCKHOLDER OR CORPORATION.
Stockholder or Corporation, as applicable, shall execute and deliver on the
Closing Date:
(a) Certified resolutions of Corporation authorizing the execution of all
documents and the consummation of all transactions contemplated hereby.
(b) Articles of Merger and a Plan of Merger under the IBCL which shall be
in the form attached hereto as EXHIBIT 4.1.1(A) and EXHIBIT 4.1.1(B),
respectively.
(c) Stock certificates representing ownership of all shares of
Corporation, duly endorsed to Omega.
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(d) A Certificate, duly executed by Stockholder and the President of
Corporation, stating that, as of the Closing Date, all representations and
warranties of Stockholder and Corporation contained in this Agreement or in any
Exhibit or Schedule hereto are true and correct in all material respects, all
covenants and agreements contained in this Agreement to be performed by
Stockholder or Corporation on or prior to the Closing Date have been performed
or complied with, and all conditions to Closing contained in SECTION 4.3 hereof
have been satisfied.
(e) An opinion of counsel for the Corporation and the Stockholder dated as
of the Closing Date, in form and substance reasonably satisfactory to Omega's
counsel, and where appropriate with reliance upon a certificate from Corporation
and the Stockholder.
(f) Such other instruments as may be reasonably requested by Omega or OHSI
in order to give effect to or carry out the intent of this Agreement.
(g) A signed Contract of Employment for Center Director between Xxxx
Xxxxxx, O.D. and Omega as contemplated by Section 3.11 of the Management
Agreement between Omega and Referral Eye Center, P.C. dated as of May 1, 1997.
IV.2 BY OMEGA AND OHSI. Omega shall execute and deliver on the Closing
Date:
(a) Stock Certificates representing ownership of the OHSI Stock set
forth under SECTION 2.1.
(b) An opinion of counsel for Omega and OHSI dated as of the Closing Date,
in form and substance reasonably satisfactory to Corporation's and Stockholder's
counsel, and where appropriate with reliance upon a certificate from Omega or
OHSI.
(c) Articles of Merger and a Plan of Merger under the IBCL which shall be
in the form attached hereto as EXHIBIT 4.1.1(A) and EXHIBIT 4.1.1(B).
(d) A Certificate, duly executed by the President of Omega and OHSI,
stating that as of the Closing Date, all representations and warranties of Omega
and OHSI contained in this Agreement or in any Exhibit or Schedule hereto are
true and correct in all material respects, all covenants and agreements
contained in the Agreement to be performed by Omega and OHSI on or prior to the
Closing Date have been performed or complied with and all conditions to Closing
contained in SECTION 4.4 hereof have been satisfied.
(e) Such other instruments as may be reasonably requested by Stockholder
in order to give effect to or carry out the intent of this Agreement.
IV.3 CONDITIONS TO OMEGA'S AND OHSI'S OBLIGATIONS. Omega's and OHSI's
obligation to consummate the transaction as provided in this Agreement shall be
conditioned upon the satisfaction of the following conditions at or prior to the
Closing:
(a) DELIVERY OF DOCUMENTS. The documents and other items set forth in
SECTION 4.1 hereof shall have been executed and delivered at Closing.
(b) NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there shall be
no material adverse change in the assets or liabilities of Corporation; the
business or condition, financial, or otherwise of Corporation; or the results of
operations or prospects of Corporation as a result of any legislative or
regulatory change or revocation of any license or rights of Corporation to do
business.
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(c) TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Corporation and Stockholder contained in this Agreement, or in any
Exhibit or Schedule hereto, shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date. Corporation
and Stockholder shall have the express obligation to update all information
contained in the Exhibits and Schedules hereto so that such Exhibits and
Schedules shall be true, correct and complete as of the Closing Date.
(d) NO LITIGATION THREATENED. No action or proceeding shall have been
instituted or threatened before a court or other government body or by any
public authority to restrain or prohibit any of the transactions contemplated
hereby.
(e) OPINION OF CORPORATION'S COUNSEL. Omega shall have received an opinion
from the Corporation's and Stockholder's counsel, delivered under SECTION 4.1(E)
above.
(f) SECURITIES LAW COMPLIANCE. The issuance of the OHSI Stock to the
Stockholder will not violate the securities laws of any state or of the United
States.
(g) THIRD-PARTY CONSENTS. Omega shall have received copies of all
third-party consents required to consummate the transaction contemplated by this
Agreement.
(h) LICENSES, PERMITS, QUALIFICATION. Immediately prior to the Closing,
Stockholder and Corporation shall have all licenses and permits necessary to
operate its business.
(i) DISTRIBUTION OF ASSETS AND DISCHARGE OF LIABILITIES. Prior to the
Closing, and as a condition to Closing, Corporation shall have distributed to
Stockholder all of the assets listed on SCHEDULE 5.8 , which are not being
acquired by Omega (the "Excluded Assets"). Additionally, prior to the Closing,
Corporation shall have paid or discharged all liabilities or charges for costs
or fees owed as a result of the transactions contemplated by this Agreement.
(j) TAXES. Corporation shall have established an adequate reserve for the
payment of all taxes accrued with respect to taxable periods or portions thereof
ended as of the Closing of the Merger contemplated herein.
IV.4 CONDITIONS TO STOCKHOLDER'S AND CORPORATION'S OBLIGATIONS.
Stockholder's and Corporation's obligations to consummate the transaction as
provided in this Agreement shall be conditioned upon the satisfaction of the
following conditions at or prior to Closing:
(a) DELIVERY OF DOCUMENTS. The documents and other items set forth in
SECTION 4.2 hereof shall have been executed and delivered by Omega on the
Closing Date.
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(b) TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Omega and OHSI contained in this Agreement, or in any Exhibit or
Schedule hereto, shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made as of such date.
(c) OPINION OF OMEGA'S AND OHSI'S COUNSEL. The Corporations and
Stockholder shall have received an opinion from Omega's and OHSI's counsel,
delivered under SECTION 4.2(B) above.
(d) NO LITIGATION THREATENED. No action or proceeding shall have been
instituted or threatened before a court or other government body or by any
public authority to restrain or prohibit any of the transactions contemplated
hereby.
(e) SECURITIES LAW COMPLIANCE. the issuance of the OHSI Stock to the
Stockholder will not violate the securities laws of any state or of the
United States.
ARTICLE V.
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REPRESENTATIONS AND WARRANTIES
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OF STOCKHOLDER AND CORPORATION
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Corporation and Stockholder represent, warrant, covenant and agree with
Omega and OHSI that:
V.1 OWNERSHIP OF STOCK. Stockholder is the owner of all of the issued and
outstanding stock of Corporation, free and clear of all liens, encumbrances,
restrictions and claims of every kind. Stockholder has full legal right, power
and authority to enter into this Agreement.
V.2 EXISTENCE AND GOOD STANDING. Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana. Corporation has the power to own its property and to carry on its
business as now being conducted. Indiana is the only jurisdiction in which the
character or location of the properties owned or leased by Corporation or the
nature of the business conducted by Corporation makes such qualification
necessary.
V.3 CAPITAL STOCK. Corporation has an authorized capitalization consisting
of one thousand (1,000) shares of common stock, no par value, of which one
hundred (100) shares are issued and outstanding and no shares are held in
Corporation's treasury. All such outstanding shares of Corporation have been
duly authorized and validly issued and are fully paid and nonassessable. There
are no outstanding options, warrants, rights, calls, commitments, conversion
rights, rights of exchange, plans or other agreements of any character providing
for the purchase, issuance or sale of any shares of the capital stock of
Corporation, other than as contemplated by this Agreement.
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V.4 SUBSIDIARIES AND INVESTMENTS. Corporation does not own, directly or
indirectly, any capital stock or other equity or ownership or proprietary
interest in any other corporation, partnership, association, trust, joint
venture or other entity.
V.5 FINANCIAL STATEMENTS AND NO MATERIAL CHANGES. Corporation has
heretofore furnished Omega with unaudited financial statements dated December
31, 1995 and 1996, and unaudited financial statements of Xx. Xxxxx'x
ophthalmology practice (then operated as a sole proprietorship) dated December
31, 1994, all of which are attached hereto as SCHEDULE 5.5. Such financial
statements, including the notes thereto, except as indicated therein, were
prepared on a basis consistent with past accounting practices of Corporation and
accurately reflect the results of operations for the periods noted therein. The
balance sheets of Corporation heretofore delivered (or to be delivered) by
Corporation to Omega fairly present the financial condition of Corporation at
the respective dates thereof, and except as indicated therein, reflect all
claims against and all debts and liabilities of Corporation, fixed or
contingent, as of the respective dates thereof. Since December 31, 1996, there
has been (i) no material adverse change in the assets or liabilities, financial
or otherwise, or in the results of operations of Corporation, and (ii) no fact
or condition known to Corporation or Stockholder which exists or is contemplated
or threatened which might cause such a change in the future.
V.6 MATERIAL CONTRACTS. Except as set forth on SCHEDULE 5.6, Corporation
is not bound by (a) any agreement, contract, or commitment relating to the
employment of any person by Corporation, or any loans, deferred compensation,
incentive compensation, pension, profit sharing, retirement, or other employee
benefit plan, (b) any loan or advance to, or investment in, any other person or
entity, or any agreement, contract, or commitment relating to the making of any
such loan, advance, or investment, (c) any guarantee or other contingent
liability in respect of any indebtedness or obligation of any other person or
entity, (d) any agreement, contract, or commitment limiting the freedom of
Corporation or any of its physicians to practice medicine in any location or to
compete with any other person or entity, or (e) any other agreement, contract,
or commitment which is material to the business of Corporation. Except as set
forth in SCHEDULE 5.6, to the best of Stockholder's knowledge each contract or
agreement set forth in SCHEDULE 5.6 is in full force and effect, and there
exists no default or event of default or event, occurrence, condition, or act
which, with the giving of notice, the lapse of time, or the happening of any
other event or condition, would become a default or event of default thereunder,
which would have a material adverse effect upon Corporation. Except as set forth
in SCHEDULE 5.6, to the best of Stockholder's knowledge, Corporation has not
violated any of the terms or conditions of any contract or agreement set forth
in SCHEDULE 5.6 in any material respect, and to Stockholder's best knowledge,
all of the covenants to be performed by any other party thereto have been fully
performed.
V.7 INSURANCE. SCHEDULE 5.7.1 is a list and brief description of all
Corporation's policies or binders of fire, liability, product liability, workers
compensation, health and other forms of insurance policies or binders currently
in force insuring against risks which will remain in full force and effect at
least through the Closing Date. Except as set forth on SCHEDULE 5.7.2, neither
Corporation nor Stockholder, have, in the last three (3) years, filed a written
application for any insurance coverage which has been denied by an insurance
agency or carrier. SCHEDULE 5.7.2 also sets forth a list of all claims against
any policy or predecessor policy listed on Schedule 5.7.1 for any insured loss
in excess of Five Thousand Dollars ($5,000.00) per occurrence filed by
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Corporation, Corporation's employees or Stockholder since January 1, 1994,
including, but not limited to, workers' compensation, general liability, and
environmental liability claims. To the best of Stockholder's knowledge, neither
Corporation, Corporation's employees nor Stockholder is in material default with
respect to any provision contained in any such policy and none of them has
failed to give any notice or present any claim under any such policy in due and
timely fashion.
V.8 NO CHANGES PRIOR TO CLOSING DATE. To the best knowledge of
Stockholder, during the period from December 31, 1996, through the date hereof,
Corporation has not, and from the date hereof, Corporation shall not have (i)
incurred any liability or obligation of any nature (whether accrued, absolute,
contingent, or otherwise), except in the ordinary course of business, or except
with the prior written consent of Omega, such consent not to be unreasonably
withheld, (ii) written off as uncollectible any notes or accounts receivable,
except write-offs in the ordinary course of business charged to applicable
reserves, none of which individually or in the aggregate is material to the
Corporation, (iii) conducted its business in such a manner so as to materially
increase its accounts payable or so as to materially decrease its accounts
receivable, (iv) granted any increase in the rate of wages, salaries, bonuses,
or other remunerations of any employee, except in the ordinary course of
business, (v) cancelled or waived any claims or rights of substantial value,
(vi) made any change in any method of accounting, (vii) otherwise conducted its
business or entered into any transaction, except in the usual and ordinary
manner and in the ordinary course of business, (viii) agreed, whether or not in
writing, to do any of the foregoing, nor (ix) disposed of its assets other than
in the ordinary course of business, except for the disposition of any Excluded
Assets listed on SCHEDULE 5.8.
V.9 PRACTICE ASSETS; TITLE; CONDITION. SCHEDULE 5.9.1 contains a true and
complete list of all the non-cash assets (excluding Accounts Receivable) of the
Corporation at the Closing Date (the "Practice Assets"). Corporation has good
and marketable title to all of its Practice Assets conveyed hereunder. Except as
disclosed on SCHEDULE 5.9.2 hereto, none of such Practice Assets is subject to a
contract or other agreement of sale or subject to security interests, mortgages,
encumbrances, liens (including income, personal property and other tax liens) or
charges of any kind or character. Upon completion of the Merger, the Surviving
Corporation shall own the Practice Assets of the Corporation free and clear of
all liens and encumbrances.
V.10 ACCOUNTS RECEIVABLE. Schedule 5.10.1 contains a true and complete
list of substantially all accounts receivable of the Corporation at the Closing
Date (Purchased Accounts Receivable). All documents and agreements relating to
the Purchased Accounts Receivable that have been delivered to OHSI are true and
correct. Xxxxx P.C. has delivered to such account debtor all requested
supporting claim documents with respect to such Purchased Accounts Receivable
and all information set forth in the xxxx and supporting claim documents are to
the best of Xxxxx P.C.'s knowledge true and correct. The Purchased Accounts
Receivable are each exclusively owned by the Corporation free and clear of any
liens, security interest claims and encumbrances of any kind except as set forth
on Schedule 5.10.2; are in the aggregate payable in an amount not less than
their face amount, and are based on an actual and bonafide rendition of services
or sale of goods to the patient in the ordinary course of business, and are not
in any material amount subject to any action, suit, proceeding or pursuit
(pending or threatened) set-off, counter claim, defense, abatement, suspension,
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deferment, deductible, reduction or termination by the account debtor other than
routine adjustments made in the ordinary course of business and each account
receivable requires no further act or circumstances on the part of the
Corporation to make the Purchased Account Receivable payable by the account
debtor. The Accounts Receivable in the aggregate represent charges for services
constituting usual, customary and reasonable fees charged by the similar medical
services providers in the Corporation's community for the same or similar
service and the sale of the Purchased Accounts Receivable hereunder is in good
faith by the Corporation and without knowledge of any bankruptcy or other
payment disability of the account debtor that would in the aggregate constitute
a material reduction in the Purchased Accounts Receivable. For purposes of this
Section 5.10 "material" shall be any amount exceeding ten percent (10%) of
agreed value of the Purchased Accounts Receivable set forth in Section 2.1(ii)
of this Agreement.
V.11 LITIGATIONLITIGATION. Except as listed on SCHEDULE 5.11, to the best
of knowledge of Stockholder, there is no suit, action, proceeding at law or in
equity, arbitration, administrative proceeding or other proceeding or
investigation by any governmental entity pending, or threatened against, or
affecting the Corporation, or any of its Practice Assets, or any physician or
other health care professional associated with or employed by the Corporation,
and to the best of Stockholder's knowledge there is no basis for any of the
foregoing.
V.12 PERMITS AND LICENSES. To the best of Corporation's and Stockholder's
knowledge, Corporation and all physicians and other health care professionals
associated with or employed by Corporation have all material permits and
licenses required by all applicable laws; have made all material regulatory
filings necessary for the conduct of Corporation's business; and are not in
violation of any of said permitting or licensing requirements the violation of
which would have a materially adverse effect on Corporation. A list of such
permits and licenses is attached hereto as SCHEDULE 5.12.
V.13 AUTHORITY. (a) The execution of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary action, and this Agreement is a valid and binding agreement of
Corporation enforceable in accordance with its terms (subject to enforcement of
remedies to the discretion of the court in awarding equitable relief, and to
applicable bankruptcy, reorganization, insolvency, fraudulent conveyance,
moratorium and similar laws effecting the rights of creditors generally).
Attached hereto as SCHEDULE 5.13 is a listing of all third-party consents which
must be obtained prior to the Closing Date as required under SECTION 4.3 of this
Agreement.
(b) To the best knowledge of Stockholder, the execution and delivery of
this Agreement, the consummation of the transactions contemplated hereby, and/or
compliance by Corporation and Stockholder with any of the provisions hereof,
will not:
(i) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in
the creation of, any lien, security interest, charge or encumbrance upon
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any of the assets to be conveyed hereunder under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, agreement or other instrument or obligation to which
Corporation or Stockholder is a party, or by which either Corporation or
Stockholder or any of the assets to be conveyed hereunder is bound; or
(ii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable either to the Corporations or Stockholder or any of
the assets to be conveyed hereunder.
V.14 TAX MATTERS. Except as set forth in SCHEDULE 5.14, Corporation has
filed or caused to be filed all federal, state and local tax returns which are
required to have been filed by Corporation, including all income, excise,
franchise, and payroll tax returns, and Corporation has paid or established an
adequate reserve for all taxes accrued through the Closing and has otherwise
complied with all federal, state, local and other tax laws applicable to it.
V.15 EMPLOYEE BENEFIT PLANS. Set forth on SCHEDULE 5.15 is an accurate and
complete list of all employee benefit plans ("Employee Benefit Plans") within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), whether or not any Employee Benefit Plans are
otherwise exempt from the provisions of ERISA, established, maintained or
contributed to by the Corporation (including all employers (whether or not
incorporated) which by reason of common control are treated together with
Corporation and/or Stockholder as a single employer within the meaning of
Section 414 of the Code) since September 2, 1974.
(a) STATUS OF PLANS. Corporation has never maintained and does not now
maintain or contribute to any Employee Benefit Plan subject to ERISA which is
not in substantial compliance with ERISA, or which has incurred any accumulated
funding deficiency within the meaning of either Section 412 or 418B of ERISA, or
which has applied for or obtained a waiver from the Internal Revenue Service of
any minimum funding requirement under Section 412 of the Code or which is
subject to Title IV of ERISA. Corporation has not incurred any liability to the
Pension Benefit Guaranty Corporation ("PBGC") in connection with any Employee
Benefit Plan covering any employees of that Corporation or ceased operations at
any facility or withdrawn from any such Plan in a manner which could subject it
to liability under Section 4062(f), 4063 or 4064 of ERISA, and knows of no facts
or circumstances which might give rise to any liability of Corporation to the
PBGC under Title IV of ERISA which could reasonably be anticipated to result in
any claims being made against the Surviving Corporation by the PBGC. Corporation
has not incurred any withdrawal liability (including any contingent or secondary
withdrawal liability) within the meaning of Sections 4201 and 4202 of ERISA, to
any Employee Benefit Plan which is a Multiemployer Plan (as defined in Section
4001 of ERISA), and no event has occurred, and there exists no condition or set
of circumstances, which represent a material risk of the occurrence of any
withdrawal from or the partition, termination, reorganization or insolvency of
any Multiemployer Plan which would result in any liability to a Multiemployer
Plan.
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(b) CONTRIBUTIONS. Full payment has been made of all amounts which
Corporation is required, under applicable law or under any Employee Benefit Plan
or any agreement relating to any Employee Benefit Plan to which Corporation is a
party, to have paid as contributions thereto as of the last day of the most
recent fiscal year of such Employee Benefit Plan ended prior to the date hereof.
Corporation has made adequate provision for reserves to meet contributions that
have not been made because they are not yet due under the terms of any Employee
Benefit Plan or related agreements. Benefits under all Employee Benefit Plans
are as represented and have not been increased subsequent to the date as of
which documents have been provided.
(c) TAX QUALIFICATION. Each Employee Benefit Plan intended to be qualified
under Section 401(a) of the Code has been determined to be so qualified by the
Internal Revenue Service and nothing has occurred since the date of the last
such determination which resulted or is likely to result in the revocation of
such determination.
(d) TRANSACTIONS. Corporation has not engaged in any transaction with
respect to the Employee Benefit Plans which would subject it to a tax, penalty
or liability for prohibited transactions under ERISA or the Code nor have any of
its directors, officers or employees to the extent they or any of them are
fiduciaries with respect to such plans, breached any of their responsibilities
or obligations imposed upon fiduciaries under Title I of ERISA or would result
in any claim being made under or by or on behalf of any such plans by any party
with standing to make such claim.
(e) OTHER PLANS. Corporation presently does not maintain any employee
benefit plans or any other foreign pension, welfare or retirement benefit plans
other than those listed on SCHEDULE 5.15.
(f) DOCUMENTS. Stockholder has delivered or caused to be delivered to
Omega and its counsel true and complete copies of (i) all Employee Benefit Plans
as in effect, together with all amendments thereto which will become effective
at a later date, as well as the latest Internal Revenue Service determination
letter obtained with respect to any such Employee Benefit Plan qualified under
Section 401 or 501 of the Code, and (ii) Form 5500 for the most recent completed
fiscal year for each Employee Benefit Plan required to file such form.
V.16 THIRD-PARTY RELATIONS. Corporation and Stockholder are not aware of
any problem or disagreements with any third parties with which Corporation does
business, and Corporation and Stockholder will use their respective best efforts
from the date of this Agreement until the Closing Date to operate Corporation's
business in such a manner so as not to adversely affect the goodwill of its
patients, suppliers, employees, and other such persons or third parties with
which the Corporation does business.
V.17 LEASED PROPERTY. SCHEDULE 5.17 contains a list of all property leases
held by Corporation and, except as set forth on SCHEDULE 5.17, no material
adverse claim against, or defect in, the interest purportedly leased or given
under or by any such instrument exists, and neither the lessor nor Corporation
is in default under any of such leases, and Corporation and Stockholder are not
aware of any fact which, with notice and/or the passage of time, would
constitute such a default.
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V.18 COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in SCHEDULE
5.18, and to the best knowledge of Stockholder, the Corporation has operated in
material compliance with all material federal, state, county and municipal laws,
constitutions, ordinances, statutes, rules, regulations and orders applicable
thereto ("Applicable Laws"). No item disclosed on SCHEDULE 5.18 has a material
effect on the operations of Corporation.
V.19 EMPLOYEE COMPENSATION. Corporation has paid or discharged or will pay
or discharge or assume all liabilities for compensation and benefits to which
all employees are entitled through the Closing, including but not limited to all
salaries, wages, bonuses, incentive compensation, payroll taxes, hospitalization
and medical expenses, deferred compensation, and vacation and sick pay, as well
as any severance pay becoming due as a result of the termination of certain of
Corporation's employees.
V.20 ENVIRONMENTAL MATTERS. Corporation is in compliance in all material
respects with all federal, state and local environmental laws, rules,
regulations, standards and requirements, including, without limitation those
respecting chemical, radiographic, or biomedical wastes or any other hazardous
substances or materials, as defined in any applicable federal or state law or
regulation ("Hazardous Wastes"). Except as disclosed on SCHEDULE 5.20, any
storage, holding, release, emission, discharge, generation, processing,
disposition, handling or transportation of any Hazardous Wastes from, into or on
any portion of the clinic premises is and has been at all times in compliance in
all material respects with all federal, state and local environmental laws,
rules, regulations, standards and requirements.
V.21 FRAUD AND ABUSE. Neither Corporation nor Stockholder nor persons and
entities providing professional services for Corporation has, to the knowledge
of Corporation or Stockholder, engaged in any activities which are prohibited
under 42 U.S.C. (beta) 1320a-7b, or tHE regulations promulgated thereunder
pursuant to such statutes, or related state or local statutes or regulations, or
which are prohibited by rules of professional conduct, including but not limited
to the following:
(a) knowingly and willfully making or causing to be made a false statement
or representation of a material fact in any application for any benefit or
payment;
(b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment;
(c) failing to disclose knowledge by a claimant of the occurrence of any
event effecting 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; or
(d) knowingly and willfully soliciting or receiving any remuneration
(including any kickback, bribe, or rebate), directly or indirectly, overtly or
covertly, in cash or in kind or offering to pay or receive such remuneration (i)
in return for referring an individual to a person for the furnishing or
arranging for the furnishing or any item or service for which payment may be
made in whole or in part by Medicare or Medicaid, or (ii) in return for
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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.
V.22 FACILITY COMPLIANCE. Corporation is duly licensed and is lawfully
operated in accordance with the material requirements of all applicable material
law and has all necessary authorizations for the use and operation, all of which
are in full force and effect. To the best knowledge of Stockholder, there are no
outstanding notices of deficiencies relating to Corporation issued by any
governmental authority or third-party payor requiring conformity or compliance
with any applicable law or condition for participation of such governmental
authority or third-party payor, neither the Corporation nor Stockholder has
received notice or has any knowledge or reason to believe that such necessary
authorizations may be revoked or not renewed in the ordinary course of business.
V.23 RATES AND REIMBURSEMENT POLICIES. To the best knowledge of
Stockholder, the jurisdiction in which the Corporation is located does not
currently impose any restrictions or limitations on rates which may be charged
to private pay patients receiving services provided by Corporation. To the best
knowledge of Stockholder, Corporation has no rate appeal currently pending
before any governmental authority or any administrator of any third-party payor
program. Neither the Corporation nor Stockholder have knowledge of any
applicable law, which has been enacted, promulgated or issued within the
eighteen (18) months preceding the date of this Agreement or any such legal
requirement proposed or currently pending in the jurisdiction in which
Corporation is located, which could have a material adverse effect on
Corporation or may result in the imposition of additional Medicaid, Medicare,
charity, free care, welfare, or other discounted or government assisted patients
at Corporation or require Corporation to obtain any necessary authorization
which Corporation does not currently possess.
V.24 TRADE RELATIONS. To the best knowledge of Stockholder, there exists
no actual or threatened limitation of the business relationship of Corporation
with any material customer, supplier or landlord or with any person whose
contracts with Corporation would be material to the operations of Corporation.
To the best knowledge of Stockholder, there exists no condition or state of
facts or circumstances which (i) are likely to produce a material adverse effect
with respect to either Corporation or (ii) prevent the Surviving Corporation
from conducting its business after the consummation of the transactions
contemplated by this Agreement as such business is conducted or proposed to be
conducted.
V.25 EXHIBITS. All the facts recited in Exhibits or Schedules annexed
hereto (as updated as of the Closing Date) shall be deemed to be representations
of fact by Corporation and Stockholder as though recited in this ARTICLE V.
V.26 FULL DISCLOSURE. No representation or warranty made by the
Corporation or Stockholder in this Agreement 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 not misleading. For
purposes of this ARTICLE V, Corporation shall be presumed to have knowledge of
all matters of which the Stockholder or officers of the Corporation have
knowledge, actual or constructive.
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V.27 LIABILITIES AND INDEBTEDNESS. Attached hereto as SCHEDULE 5.27.1 is a
list of Corporation's liabilities and indebtedness existing on the Closing Date
and to be assumed by the Surviving Corporation. The liabilities and indebtedness
of the Corporation on the Closing Date not assumed are listed as Excluded Debt
on Schedule 5.27.2. Except for the indebtedness listed on Schedules 5.27.1 and
5.27.2, Corporation has no other liabilities (whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, and whether due or
to become due).
V.28 INVESTMENT INTENT. Stockholder and Corporation acknowledge that the
OHSI Stock has not been registered under the 1933 Act, and that the OHSI Stock,
except as provided for in SECTION 2.3 and SECTION 2.4, may not be sold, pledged
or otherwise transferred absent such registration, or unless an exemption from
registration is available. The Stockholder is acquiring the OHSI Stock for his
own account, for investment purposes only and not with a view to distribution of
such OHSI Stock within the meaning of Section 2(11) of the 1933 Act. The
Stockholder qualifies as an "accredited investor", as defined in Rule 501(a)
pursuant to the 1933 Act. The Stockholder has received from OHSI a copy of
OHSI's Form 10-K for 1994 and 1995, OHSI's 10-Q for the quarter ended September
30, 1996, OHSI's 8-Ks filed March 12, 1996 and September 25, 1996 and OHSI's
1994 and 1995 Annual Report to Shareholders. The Stockholder has had the
opportunity to ask questions of and receive answers from OHSI senior management
concerning OHSI and the terms and conditions of this investment by the
Stockholder. The Stockholder has had the opportunity to obtain other additional
information concerning OHSI from OHSI senior management.
ARTICLE VI.
-----------
REPRESENTATIONS AND WARRANTIES OF OMEGA AND OHSI
------------------------------------------------
Omega and OHSI represent, warrant, covenant and agree with Corporation and
Stockholder as follows:
VI.1 ORGANIZATION. Omega is a corporation duly organized, validly existing
and in good standing under the laws of the State of Indiana. OHSI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Omega and OHSI have the full power to own their
respective property, to carry on their respective businesses as presently
conducted, to enter into this Agreement and to consummate the transactions
contemplated hereby.
VI.2 AUTHORITY. Omega and OHSI have taken all necessary action to
authorize the execution, delivery and performance of this Agreement, as well as
the consummation of the transactions contemplated hereby, and at Closing Omega
and OHSI shall deliver an officer's certificate to such effect. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provisions of the charter
or the bylaws of either Omega or OHSI or any indenture, mortgage, deed of trust,
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lien, lease, agreement, arrangement, contract, instrument, license, order,
judgment or decree or result in the acceleration of any obligation thereunder to
which either Omega or OHSI is a party or by which either Omega or OHSI is bound.
VI.3 ABSENCE OF LITIGATION. No action or proceeding by or before any court
or other governmental body has been instituted or is, to the best of Omega's and
OHSI's knowledge, threatened with respect to the transactions contemplated by
this Agreement.
VI.4 SHARES. Upon delivery of the certificates representing ownership of
the OHSI Stock, such OHSI Stock will be fully paid and nonassessable.
VI.5 OMEGA HEALTH SYSTEMS, INC. Omega is a wholly-owned subsidiary of
OHSI.
VI.6 FRAUD AND ABUSE. Neither OHSI nor Omega has engaged in any activities
which are prohibited under (beta) 1320a-7b of Title 42 of the United States Code
or the regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (i) knowingly and willingly making
or causing to be made a false statement or representation of a material fact in
any application for any benefit or payment; (ii) knowingly and willfully making
or causing to be made any false statement or representation of a material fact
for use in determining rights to any benefit or payment; (iii) any failure by a
claimant to disclose knowledge 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 the intent to fraudulently secure such benefit or
payment; and (iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (A) in return for referring an individual to a person for the
furnishing or arranging for the furnishings of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid, or (B) in
return for purchasing, leasing or ordering or arranging for, or recommending,
purchasing, lease or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid.
ARTICLE VII.
------------
CONDUCT OF BUSINESS; REVIEW
---------------------------
VII.1 CONDUCT OF BUSINESS OF CORPORATION. During the period from the date
of this Agreement to the Closing Date, Corporation shall conduct its business
only in the ordinary and usual course of business, and Corporation and
Stockholder shall use their respective best efforts to preserve intact
Corporation's business organization, keep available the services of its
employees and maintain satisfactory relationships with patients and others
having business, medical or professional relationships with Corporation.
Corporation shall immediately notify Omega of any unexpected emergency or other
change in the normal course of its business or in the operation of its
properties and of any governmental complaints, investigations, hearings (or
communications indicating that the same may be contemplated), or adjudicatory
proceedings involving the business or practice of Corporation or any employee of
Corporation, and Corporation shall keep Omega fully informed of such events and
permit its representatives prompt access to all materials prepared in connection
therewith.
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VII.2 EXCLUSIVE DEALINGS. During the period from the date of this
Agreement to the Closing Date, or upon the earlier termination of this Agreement
pursuant to ARTICLE XIII, Corporation shall refrain from taking any actions,
directly or indirectly, to encourage, initiate, or engage in discussions or
negotiations with, or provide any information to, any corporation, partnership,
person, or other entity or group, other than Omega, concerning the purchase of
Corporation or its stock or assets, or any merger, joint venture or similar
transaction involving Corporation and will not enter into any such transaction.
The parties agree that any information provided will be used solely for the
purpose of evaluating the transaction contemplated herein and will be kept
confidential and not disclosed to others. If the transaction contemplated
hereunder shall fail to close for any reason, then each party will promptly
redeliver to the other all written material containing or reflecting any
information concerning Corporation, Omega or OHSI, regardless of by whom
prepared, and will not retain any copies, extracts or other reproductions in
whole or in part of such written material.
VII.3 REVIEW OF CORPORATION BY OMEGA. Omega, prior to the Closing Date,
through its representatives, may review the assets, books, and records of
Corporation as well as its financial and legal condition as Omega deems
necessary or advisable to familiarize itself with such assets and other matters;
such review shall not, however, affect the representations and warranties made
by Corporation herein and in the Exhibits and Schedules attached hereto.
Corporation shall permit Omega and its representatives to have full access to
the premises and to all books and records of Corporation during normal business
hours and to cause its officers and employees to furnish Omega with such
financial and operational data and other information with respect to the
business and assets of Corporation as Omega shall from time to time reasonably
request.
ARTICLE VIII.
------------
TRANSFERS AND FURTHER ASSURANCESS
---------------------------------
From time to time after the date hereof, at the request of a party hereto
(the "Requesting Party"), the other parties shall, without further
consideration, execute, acknowledge and deliver such further instruments of
transfer and other assurances and shall take such other action as the Requesting
Party reasonably may request in order to effectuate the Merger or any resulting
transfer of assets as a result of the Merger.
ARTICLE IX.
-----------
INDEMNIFICATION; SET-OFF
------------------------
IX.1 INDEMNIFICATION OF OMEGA AND OHSI. Corporation and Stockholder shall
indemnify, defend and hold Omega, OHSI and their respective officers, directors,
shareholders, agents, employees, representatives, successors and assigns
harmless from and against any and all damage, loss, cost, obligation, claims,
demands, assessments, judgments or liability (whether based on contract, tort,
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product liability, strict liability or otherwise), including taxes, and all
expenses (including interest, penalties and reasonable attorneys' and
accountants' fees and disbursements) incurred by any of the above-named persons,
resulting from or in connection with any one or more of the following:
(a) Misrepresentations, breach of warranties, failure to perform any
covenant or Agreement of either Corporation or Stockholder contained herein;
(b) Any liabilities or obligations of Corporation existing as of the
Closing Date which are not being specifically assumed hereunder;
(c) Any transaction, event or act that occurred on or prior to the Closing
Date that materially adversely affects the value of the Practice Assets or the
Corporation;
(d) Claims, actions or suits by employees or former employees of
Corporation based on conduct or events occurring prior to the Closing Date; or
(e) Stockholder's failure to discharge pension or benefit plan
obligations.
Omega agrees to give prompt notice to Stockholder of the assertion of any claim,
or the threat or commencement of any suit, action, proceeding or other matter in
respect of which indemnity may be sought under this SECTION 9.1. Stockholder may
participate in the defense of any such suit, action, proceeding or other matter
at Stockholder's expense. Stockholder shall not be liable under this SECTION 9.1
for any settlement effected without Stockholder's consent of any claim, suit,
action, proceeding or other matter in respect of which indemnity may be sought
under this SECTION 9.1, which consent shall not be unreasonably withheld. The
indemnity to be paid to Omega under this SECTION 9.1 may be paid in either cash,
Omega Stock, or some combination of both, at the election of the Stockholder.
For purposes of this SECTION 9.1, Omega Stock used to pay any indemnity under
this section shall be valued according to the Omega Stock's then current fair
market value, determined using the method described in Section 2.1.
Notwithstanding the foregoing, the liability of Corporation and
Stockholder, in the aggregate, under this Section 9.1 shall not exceed Two
Million Two Hundred Thousand ($2,200,000) Dollars. Also, the indemnity
obligations of Corporation and Stockholder shall not take effect until the
aggregate amount of such obligations exceeds Fifty thousand Dollars ($50,000),
at which time such indemnity obligations may be pursued for the initial $50,000,
plus any amounts exceeding $50,000.
IX.2 GENERAL INDEMNIFICATION OF STOCKHOLDER AND CORPORATION. Omega and
OHSI shall indemnify, defend and hold Corporation and its officers, directors,
Stockholder, agents, employees, representatives, successors and assigns harmless
from any and all damage, loss, cost, obligation, claims, demands, assessments,
judgments or liability (whether based on contract, tort, product liability,
strict liability or otherwise), including taxes and all expenses (including
interest, penalties and reasonable attorneys' and accountants' fees and
disbursements) incurred by any of the above-named persons, resulting from or in
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connection with misrepresentations, breach of warranties or failure to perform
any covenant or agreement of Omega or OHSI contained herein. Stockholder agrees
to give prompt notice to Omega of the assertion of any claim, or the threat or
commencement of any suit, action, proceeding or other matter in respect of which
indemnity may be sought under this SECTION 9.2. Omega or OHSI may participate in
the defense of any such suit, action, proceeding or other matter at Omega's or
OHSI's expense. Neither Omega nor OHSI shall be liable under this SECTION 9.2
for any settlement effected without Omega's or OHSI's consent of any claim,
suit, action, proceeding or other matter in respect of which indemnity may be
sought under this SECTION 9.2, which consent shall not be unreasonably withheld.
IX.3 SURVIVAL. The representations and warranties of the Corporation,
Stockholder, OHSI, and Omega contained in this Agreement and the
indemnifications contained in this ARTICLE IX shall survive the Merger through
April 30, 1999 (the "Indemnification Period"). Any matter to which an
indemnification pertains and with respect to which a claim has been asserted or
threatened following the Closing Date, and prior to the expiration of the
Indemnification Period, shall continue to be subject to the indemnifications
under this ARTICLE IX until finally terminated, settled, resolved, or
adjudicated; and all terms, conditions and stipulations of this ARTICLE IX shall
likewise continue to apply.
IX.4 SECURITY FOR INDEMNITY. The Corporation and Stockholder hereby agree
that in the event either Omega or OHSI is entitled to indemnification pursuant
to the provisions of this ARTICLE IX and either the Corporation or Stockholder
does not pay to Omega or OHSI the amount due hereunder, then Omega or OHSI shall
be entitled to exercise those rights set forth in that certain Stock Pledge and
Escrow Agreement, dated as of May 1, 1997, by and among Omega, OHSI, and
Stockholder.
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ARTICLE X.
----------
MEDIATION AND ARBITRATION
-------------------------
10.1 MEDIATION. In the event a dispute arises out of or relating to this
Agreement, or the breach thereof, and if said dispute cannot be settled through
negotiation, the parties agree to attempt in good faith to settle the dispute by
mediation under the Commercial Mediation Rules of the American Arbitration
Association. Unless the parties reach an agreement reduced to writing, this
mediation will be non-binding, but the parties must participate in good faith in
non-binding mediation, before resorting to binding arbitration.
10.2 BINDING ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or its breach, not satisfied through either
negotiation or mediation, shall be settled by binding arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction.
As soon as reasonably practical after submission of a demand for binding
arbitration, the parties shall select one arbitrator, agreeable to all parties.
This arbitrator will be selected from lists prepared by the American Arbitration
Association. From the American Arbitration Association list the parties will
submit to the American Arbitration Association a ranked list of arbitrators
which are acceptable. The highest ranking acceptable candidate will be selected
by the American Arbitration Association. If no arbitrators from the list
composed by the American Arbitration Association are acceptable by either of the
parties, the American Arbitration Association will compile a second list. This
procedure will be followed until the parties have selected an arbitrator. The
results of the arbitrator's finding will be binding on the parties.
ARTICLE XI.
-----------
EXPENSES
--------
Each of the parties shall pay their own costs and expenses incurred or to
be incurred by it in negotiating and preparing this Agreement and in Closing and
carrying out the transactions contemplated by this Agreement. Prior to the
Closing Date, Corporation shall pay or satisfy its obligation, if any, for such
expenses.
ARTICLE XII.
------------
COSTS
-----
Should any mediation or binding arbitration ("Dispute Resolution") arising
out of this Agreement be instituted by any party to this Agreement against
another party, the party prevailing in such Dispute Resolution shall be
entitled, in addition to such other damages and relief as the mediator or
arbitrator shall award, to reimbursement of reasonable attorneys' fees, costs
and other expenses incurred in the prosecution or defense of such Dispute
Resolution.
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ARTICLE XIII.
-------------
TERMINATION
-----------
Notwithstanding any of the foregoing provisions, this Agreement may be
terminated at any time prior to the Closing Date:
(a) By mutual written consent of all the parties hereto;
(b) By written notice from Omega or OHSI to Corporation if any of the
representations and warranties made by Corporation and Stockholder in this
Agreement or in the Exhibits and Schedules annexed hereto are reasonably
determined by Omega or OHSI to be untrue or inaccurate in any material respect;
or
(c) By written notice from Corporation or Stockholder to Omega if any of
the representations and warranties made by Omega or OHSI in this Agreement are
reasonably determined by Corporation to be untrue or inaccurate in any material
respect.
ARTICLE XIV.
------------
This section left blank intentionally.
ARTICLE XV.
-----------
NOTICES
-------
Any notices hereunder shall be deemed to have been given by one party to
the other if it is in writing and it is (a) delivered or tendered in person or
(b) deposited in the United States mail in a sealed envelope, with postage
prepaid in any case addressed as follows:
If to Omega or OHSI: Omega Health Systems of
Indiana, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
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with a copy to: Baker, Donelson, Bearman & Xxxxxxxx, P.C.
2000 First Tennessee Building
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
If to Corporation
or Stockholder: Xxxxxx Xxxxx, M.D.
Xxxxx Eye Center, P.C.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
with a copy to: Xx. Xxxxxxx X. Xxxxx
Mantel, Cohen, Garelick,
Reiswerg & Xxxxxxx, P.C.
Suite 800, Keystone Crossing
0000 Xxxxxxxx Xxxxxxxx Xxxx. Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
or to such other address as the party addressed shall have previously designated
by notice to the serving party, given in accordance with this ARTICLE XV.
Notices shall be deemed to have been duly given (i) on the date of delivery if
delivered personally; (ii) or on the third day after mailing if mailed as
provided above; provided, however, that a notice not given as above shall, if it
is in writing, be deemed given if and when actually received by a party.
ARTICLE XVI.
------------
AMENDMENT AND WAIVER
--------------------
The parties hereto may by mutual agreement amend this Agreement in any
respect. Any party hereto may extend the time for the performance of any of the
obligations of the other, waive any inaccuracies in representations by the other
contained in this Agreement or in any document delivered pursuant hereto, which
inaccuracies would constitute a breach of this Agreement, waive compliance by
the other with any of the covenants contained in this Agreement and performance
of any obligations by the other, and waive the fulfillment of any condition that
is precedent to the performance by the party so waiving any of its obligations
under this Agreement. Any agreement on the part of any party for any such
amendment, extension or waiver must be in writing and signed by the party
agreeing 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
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver.
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ARTICLE XVII.
-------------
EMPLOYEES - EMPLOYEE BENEFITS
-----------------------------
XVII.1 AFFECTED EMPLOYEES. "Affected Employees" shall mean employees, a
list of which is attached hereto as Schedule 17.1, of Corporation on the Closing
Date.
XVII.2 RESPONSIBILITIES. Prior to the Closing Date, Corporation agrees to
satisfy, or cause its insurance carriers to satisfy, all claims for medical,
health and hospital benefits, whether insured or otherwise (including, but not
limited to, workers compensation, life insurance, medical and disability
programs), under Corporation's employee benefit plans brought by, or in respect
of, Affected Employees and former employees of Corporation prior to the Closing
Date, in accordance with the terms and conditions of such employee benefit plans
or applicable workers compensation statutes without interruption as a result of
the employment by the Surviving Corporation of any such employees after the
Closing Date.
XVII.3 TERMINATION BENEFITS. Corporation and Stockholder shall be solely
responsible for, and shall pay or cause to be paid, severance payments and other
termination benefits, if any, to Affected Employees who may become entitled to
such benefits by reason of any events occurring prior to the Closing Date. If
any action on the part of Corporation prior to the Closing, or if the Merger
pursuant to this Agreement shall result in any liability or claim of liability
for severance payments or termination benefits, or any liability, forfeiture,
fine or other obligation by virtue of any state, federal or local law, such
liability or claim of liability shall be the sole responsibility of Stockholder,
and Stockholder shall indemnify and hold harmless the Surviving Corporation from
any losses resulting directly or indirectly from such liability or claim.
XVII.4 EMPLOYEE BENEFIT PLANS. On or prior to the Closing Date,
Stockholder shall cause the Corporation to either terminate any employee benefit
plans maintained by Corporation or cause another entity to assume their
sponsorship through merger, consolidation or transfer of plan assets as
described in (beta)414(i) of the Internal Revenue Code of 1986, AS amended.
Should the time needed to effect such termination, merger, consolidation, or
transfer extend beyond the Closing Date, any and all costs of such shall be the
sole responsibility of the Stockholder.
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ARTICLE XVIII.
--------------
MISCELLANEOUS
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XVIII.1 PRESS RELEASE. Except as required by law, neither the Corporation
nor Stockholder shall make any press releases or other public announcements
relating to this Agreement or the transactions contemplated hereby, without the
prior written consent of Omega.
XVIII.2 BINDING EFFECT. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto, their successors and assigns.
XVIII.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes any
prior agreements and understandings of the parties in connection therewith.
XVIII.4 GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana. Any mediation or
binding arbitration with respect to this Agreement shall be conducted in Grant
County, Indiana.
XVIII.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
XVIII.6 HEADINGS. The subject headings of the Articles, Sections and
subparagraphs of this Agreement are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of its
provisions.
XVIII.7 FINDERS. Each party warrants to the other that no finder or broker
has been engaged by it in this transaction and that no finder's or brokerage
fees are due to any person as a result of this Agreement.
XVIII.8 NO THIRD-PARTY BENEFIT. Except as otherwise expressly provided,
nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any person other than the parties hereto, any right,
remedy, or claim, legal or equitable, under or by reason of this Agreement or
any provision thereof.
XVIII.9 ASSIGNMENT. Neither this Agreement nor any of the rights or duties
of any party hereto may be transferred or assigned to any person except by a
written agreement executed by each of the parties hereto, except that Omega or
OHSI reserves the right to assign this Agreement to any affiliate or successor
of either Omega or OHSI.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year hereinabove first set forth.
CORPORATION: OMEGA:
XXXXX EYE CENTER, P.C. OMEGA HEALTH SYSTEMS OF
INDIANA, INC.
By: By:
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Xxxxxx Xxxxx, M.D., President Xxxxxx X. Xxxxxxx, Executive
Vice President
OHSI:
STOCKHOLDER: OMEGA HEALTH SYSTEMS, INC.
By:
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Xxxxxx Xxxxx, M.D. Xxxxxx X. Xxxxxxx, Executive
Vice President
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