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EXHIBIT 10.28
"CONFIDENTIAL TREATMENT
REQUESTED BY VISION TWENTY-ONE, INC."
AGREEMENT AND PLAN OF REORGANIZATION
DATED: DECEMBER 1, 1996
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . 12
4. REPRESENTATIONS AND WARRANTIES OF THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5. REPRESENTATIONS AND WARRANTIES OF VISION 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6. {INTENTIONALLY OMITTED} . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . 41
8. SECURITIES LAW MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9. COVENANTS OF THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10. COVENANTS OF VISION 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11. COVENANTS OF VISION 21, THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12. CONDITIONS PRECEDENT OF VISION 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13. CONDITIONS PRECEDENT OF THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14. CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
15. POST CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
16. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
17. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
18. PHYSICIAN EMPLOYMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
19. NON-COMPETITION AND CONFIDENTIALITY COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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20. DISPUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
21. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement"), dated
effective as of December 1, 1996, is by and among XX. XXXXX & ASSOCIATES,
#6950, P.A., a Florida professional association, (the "Company"), XXXX XXXXX,
O.D., (the "Optometrist"), and VISION 21, INC., a Florida corporation ("Vision
21").
R E C I T A L S
A. Optometrist is an optometrist licensed to practice
optometry in the State (as defined herein) and currently conducts an optometry
practice through the Company.
B. Optometrist owns all of the issued and outstanding shares
of capital stock of the Company.
C. The Company and Vision 21 desire to effect a business
combination and merger of the Company with and into Vision 21 upon the terms
and subject to the satisfaction of the conditions precedent contained herein
(the "Merger").
D. It is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
E. Vision 21 cannot acquire certain of the Company's assets
because of laws prohibiting general business corporations from engaging in the
practice of optometry, or exercising control over optometrists practicing
optometry, and accordingly, the Company and Vision 21 desire that the Company
divest itself of such assets prior to the Merger.
F. Prior to the Merger, the Company intends to form a new
professional corporation ("New P.C.") to which it intends to transfer its
optometric business and all of its Optometric Assets (as defined herein) in
exchange for all of New P.C.'s capital stock and to distribute such stock to
Optometrist in a transaction that will qualify for tax free treatment under
Section 355 of the Code.
G. New P.C. intends to employ the Optometrist and enter into a
Business Management Agreement (as defined herein) with the Company immediately
prior to the Merger; and
H. As a result of the Merger, the Surviving Corporation (as
defined herein) will acquire the optometry practice management business and all
of the Non-optometric Assets (as
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herein defined) of the Company associated with such business to the extent
permitted by law and assume all of Company's obligations under the Business
Management Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
1.1. AAA. The term "AAA" shall mean the American
Arbitration Association.
1.2. Accountants. The term "Accountants" shall mean
the accounting firm for Vision 21.
1.3. Accounts Receivable. The term "Accounts
Receivable" shall have the meaning set forth in Section 3.39.
1.4. Acquisition Proposal. The term "Acquisition
Proposal" shall have the meaning set forth in Section 3.34.
1.5. 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 21.5.
1.7. Audit. The term "Audit" shall have the meaning
set forth in Section 3.9.
1.8. Business. The term "Business" shall have the
meaning set forth in Section 19.1(b)(i).
1.9. Business Management Agreement. The term
"Business Management Agreement" shall mean the Business Management Agreement
entered into between the Company and New P.C. prior to the Closing.
1.10. Cash Compensation. The term "Cash Compensation"
shall have the meaning set forth in Section 3.11(a).
1.11. Claim Notice. The term "Claim Notice" shall have
the meaning set forth in Section 16.3(a).
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1.12. Closing. The term "Closing" shall mean the
consummation of the transactions contemplated by this Agreement.
1.13. Closing Date. The term "Closing Date" shall mean
December 1, 1996 or such other date as mutually agreed upon by the parties.
1.14. Code. The term "Code" shall mean the Internal
Revenue Code of 1986, as amended.
1.15. Commitments. The term "Commitments" shall have
the meaning set forth in Section 3.15(a).
1.16. Common Stock. The term "Common Stock" or "Vision
21 Common Stock" shall mean the common stock, par value $.01 per share, of
Vision 21.
1.17. Company Balance Sheet. The term "Company Balance
Sheet" shall have the meaning set forth in Section 3.9.
1.18. Company Balance Sheet Date. The term "Company
Balance Sheet Date" shall have the meaning set forth in Section 3.9.
1.19. Company Common Stock. The term "Company Common
Stock" shall mean the common stock, par value $__________ per share of the
Company.
1.20. Compensation Plans. The term "Compensation
Plans" shall have the meaning set forth in Section 3.11(b)(ii).
1.21. Competing Business. The term "Competing
Business" shall have the meaning set forth in Section 19.1(b).
1.22. 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 optometry, 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.
1.23. Confidential Information Memorandum. The term
"Confidential Information Memorandum" shall mean that certain disclosure
memorandum distributed by Vision 21 to the Company and Optometrist dated as of
September 27, 1996, and any amendments or revisions thereto.
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1.24. Controlled Group. The term "Controlled Group"
shall have the meaning set forth in Section 3.12(g).
1.25. Corporation Law. The term "Corporation Law"
shall mean the statutes, regulations and laws governing business corporations
and professional corporations in the State.
1.26. Damages. The term "Damages" shall have the
meaning set forth in Section 16.1.
1.27. Effective Time. The term "Effective Time" shall
have the meaning set forth in Section 2.3.
1.28. Election Period. The term "Election Period"
shall have the meaning set forth in Section 16.3(a).
1.29. Employee Benefit Plans. The term "Employee
Benefit Plans" shall have the meaning set forth in Section 3.12(a).
1.30. Employee Policies and Procedures. The term
"Employee Policies and Procedures" shall have the meaning set forth in Section
3.11(d).
1.31. Employment Agreements. The term "Employment
Agreements" shall have the meaning set forth in Section 3.11(c).
1.32. Environmental Laws. The term "Environmental
Laws" shall have the meaning set forth in Section 3.27(a).
1.33. ERISA. The term "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
1.34. Exchange Act. The term "Exchange Act" shall mean
the Securities Exchange Act of 1934, as amended.
1.35. FBCA. The term "FBCA" shall mean the Florida
Business Corporation Act.
1.36. Financial Statements. The term "Financial
Statements" shall have the meaning set forth in Section 3.9.
1.37. GAAP. The term "GAAP" shall mean generally
accepted accounting principles, applied on a consistent basis with prior
periods, set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board
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or in such other statements by such other entity or other practices and
procedures as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of the
determination.
1.38. Governmental Authority. The term "Governmental
Authority" shall mean any national, state, provincial, local or tribunal
governmental, judicial or administrative authority or agency.
1.39. Indemnified Party. The term "Indemnified Party"
shall have the meaning set forth in Section 16.3(a).
1.40. Indemnifying Party. The term "Indemnifying
Party" shall have the meaning set forth in Section 16.3(a).
1.41. Indemnity Notice. The term "Indemnity Notice"
shall have the meaning set forth in Section 16.3(d).
1.42. Initial Public Offering. The term "Initial
Public Offering" shall mean the potential initial underwritten public offering
of Vision 21 Common Stock contemplated by Vision 21.
1.43. Insurance Policies. The term "Insurance
Policies" shall have the meaning set forth in Section 3.16.
1.44. IRS. The term "IRS" shall mean the Internal
Revenue Service.
1.45. Material Adverse Effect. The term "Material
Adverse Effect" shall mean a material adverse effect on the Non-optometric
Assets and the Company's business, operations, condition (financial or
otherwise) or results of operations, taken as a whole, considering all relevant
facts and circumstances.
1.46. Merger . The term "Merger" shall have the
meaning set forth in the Recitals hereto.
1.47. Merger Consideration. The term "Merger
Consideration" shall mean the consideration set forth in Sections 2.8, 2.9 and
2.11 of this Agreement.
1.48. Merger Consideration Adjustment Amount. The term
"Merger Consideration Adjustment Amount" shall have the meaning set forth in
Section 2.12(c).
1.49. Non-optometric Assets. The term "Non-optometric
Assets" shall mean all of the assets of the Company except for the Optometric
Assets.
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1.50. Optometric Assets. The term "Optometric Assets"
shall mean the Company's right, title and interest in any assets as set forth
on Schedule 1.50A 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, (b) personal effects listed on Schedule 1.50B; and
those assets of which the entire cost of maintenance are deemed to be "Practice
Expenses" in the Business Management Agreement.
1.51. Optometrist Employee. The term "Optometrist
Employee" shall mean those licensed optometrists who are employees of the
Company, but are not shareholders.
1.55 Optometrist Employment Agreement. The term
"Optometrist Employment Agreement" shall mean the Optometrist Employment
Agreement to be executed between Optometrist and New P.C., and between any
Optometrist Employee and New P.C.
1.52. Payors. The term "Payors" shall have the meaning
set forth in Section 3.30.
1.53. Permitted Encumbrances. The term "Permitted
Encumbrances" shall have the meaning set forth in Section 3.14(b).
1.54. Proposed Merger Consideration Adjustment. The
term "Proposed Merger Consideration Adjustment" shall have the meaning set
forth in Section 2.11(b).
1.55. Practice. The term "Practice" shall mean the
optometry and all other vision related health-care practices conducted from
time to time by the Company prior to and on the Closing Date and by the New
P.C. after the Closing Date.
1.56. Professional Employee. The term "Professional
Employee" shall mean any Optometrist Employee.
1.57. Proprietary Rights. The term "Proprietary
Rights" shall have the meaning set forth in Section 3.17.
1.58. Registration Statement. The term "Registration
Statement" shall have the meaning set forth in Section 11.1.
1.59. Related Acquisitions. The term "Related
Acquisitions" shall mean the pending acquisitions by Vision 21 with third
parties which are expected to be completed simultaneously with this Merger.
1.60. SEC. The term "SEC" shall mean the Securities and
Exchange Commission.
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1.61. Securities. The term "Securities" shall mean the
shares of Vision 21 Common Stock to be delivered to Optometrist at the Closing.
1.62. Securities Act. The term "Securities Act" shall
mean the Securities Act of 1933, as amended.
1.63. State. The term "State" shall mean the State in
which the Company is incorporated.
1.64. Surviving Corporation. The term "Surviving
Corporation" shall have the meaning set forth in Section 2.1.
1.65. Tax Returns. The term "Tax Returns" shall have
the meaning set forth in Section 3.18(a).
1.66. Third Party Claim. The term "Third Party Claim"
shall have the meaning set forth in Section 16.3(a).
1.67. Vision 21 Financial Statements. The term "Vision
21 Financial Statements" shall have the meaning set forth in Section 5.9.
2. THE MERGER.
2.1. The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time, the Company shall be merged with and
into Vision 21 in accordance with this Agreement and the separate corporate
existence of the Company shall thereupon cease. Vision 21 shall be the
surviving corporation in the Merger (in such capacity, hereinafter referred to
as the "Surviving Corporation") and shall continue to be governed by the laws
of the State of Florida, and the separate corporate existence of Vision 21 with
all its rights, privileges, powers, immunities, purposes and franchises shall
continue unaffected by the Merger, except as set forth herein. The Merger
shall have the effects specified in the FBCA and the Corporation Law.
2.2. The Closing. The Closing shall take place on the
Closing Date at the offices of Xxxxxxxx, Loop & Xxxxxxxx, LLP, 000 X. Xxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000 or at such other location in the
State as the parties shall mutually agree.
2.3. Effective Time. If all the conditions precedent
to the Merger set forth in this Agreement shall have been fulfilled or waived
in accordance herewith and this Agreement shall not have been terminated in
accordance with the terms set forth herein, the parties hereto shall cause to
be properly executed and filed on the Closing Date, a Certificate of Merger
meeting the requirements of the FBCA and the Corporation Law. The Certificate
of Merger shall be filed with the Secretary of State of the State of Florida
and of the State in accordance
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with the FBCA and the Corporation Law and the Merger shall become effective on
the Closing Date, to be designated in such filings as the effective time of the
Merger (the "Effective Time").
2.4. Articles of Incorporation of Surviving
Corporation. Effective at the Effective Time, the Articles of Incorporation of
Vision 21 shall be the Articles of Incorporation of the Surviving Corporation
unless and until duly amended in accordance with its terms.
2.5. Bylaws of Surviving Corporation. The Bylaws of
Vision 21 in effect immediately prior to the Effective Time shall be the Bylaws
of the Surviving Corporation, unless and until duly amended in accordance with
their terms.
2.6. Directors of the Surviving Corporation. The
persons who are directors of Vision 21 immediately prior to the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving
Corporation until their successors have been elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Articles of Incorporation and Bylaws.
2.7. Officers of the Surviving Corporation. The
persons who are officers of Vision 21 immediately prior to the Effective Time
shall, from and after the Effective Time, be the officers of the Surviving
Corporation and shall hold their same respective offices until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal.
2.8. Conversion of Company Common Stock. The manner
of converting shares of Company Common Stock in the Merger shall be as follows:
a. As a result of the Merger and without
any action on the part of the holder thereof, all shares of Company Common
Stock issued and outstanding at the Effective Time shall cease to exist, and
each holder of a certificate representing any such shares of Company Common
Stock shall thereafter cease to have any rights with respect to such shares of
Company Common Stock, except the right to receive upon the surrender of such
certificate, on the Closing Date, validly issued, fully paid and nonassessable
shares of Vision 21 Common Stock determined in accordance with the provisions
of Exhibit 2.8(a) attached hereto.
b. Each share of Company Common Stock
held in the Company's treasury at the Effective Time, by virtue of the Merger,
shall cease to be outstanding and shall be cancelled and retired without
payment of any consideration therefor and shall cease to exist.
c. At the Effective Time, each share of
Vision 21 Common Stock issued and outstanding as of the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereto, continue unchanged and remain outstanding as a validly issued, fully
paid, nonassessable share of Vision 21 Common Stock.
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2.9. Exchange of Certificates Representing Shares of
Company Common Stock.
a. On the Closing Date (i) the
Optometrist, as the holder of a certificate or certificates representing shares
of Company Common Stock, upon surrender of such certificate or certificates,
shall receive, as part of the Merger Consideration, the number of shares of
Vision 21 Common Stock determined in accordance with the provisions of Exhibit
2.8(a) attached hereto; and (ii) until the certificate or certificates
representing Company Common Stock have been surrendered by the Optometrist and
replaced by a certificate or certificates representing Vision 21 Common Stock,
the certificate or certificates representing Company Common Stock shall, for
all purposes be deemed to evidence ownership of the number of shares of Vision
21 Common Stock determined in accordance with the provisions of Exhibit 2.8(a)
attached hereto. All shares of Vision 21 Common Stock issuable to the
Optometrist in the Merger shall be deemed for all purposes to have been issued
by Vision 21 at the Effective Time, although the Merger Consideration shall not
actually be paid by Vision 21 to the Optometrist until the Closing Date.
b. The Optometrist shall deliver to
Vision 21 at Closing the certificate or certificates representing Company
Common Stock owned by him, duly endorsed in blank by the Optometrist, or
accompanied by duly endorsed stock powers in blank, and with all necessary
transfer tax and other revenue stamps, acquired at the Optometrist's expense,
affixed and cancelled. The Optometrist agrees to cure any deficiencies with
respect to the endorsement of the certificates or other documents of conveyance
with respect to such Company Common Stock or with respect to the stock powers
accompanying any Company Common Stock. Upon such a delivery, the Optometrist
shall receive in exchange therefor, a certificate representing that number of
shares of Vision 21 Common Stock that the Optometrist is entitled to receive
pursuant to Section 2.8 hereof.
2.10. Fractional Shares. Notwithstanding any other
provision herein, no fractional shares of Vision 21 Common Stock will be
issued. Fractional shares shall be rounded up to the nearest whole number of
shares.
2.11. Merger Consideration Adjustments. (a) The
Merger Consideration 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 November 30, 1996. 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 November 30, 1996 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 New
P.C. pursuant to the Business Management
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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 Merger
Consideration 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 Optometrist its Merger Consideration
Adjustment (the "Proposed Merger Consideration Adjustment") calculated in
accordance with Section 2.11(a) hereof. The Optometrist shall, within thirty
(30) days after the delivery by Vision 21 of the Proposed Merger Consideration
Adjustment, complete his review thereof. In the event that the Optometrist
believes that the Proposed Purchase Price Adjustment has not been prepared on
the basis set forth in Section 2.11(a) or otherwise contests any item set forth
therein, the Optometrist 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
Optometrist 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 Merger
Consideration Adjustment delivered by Vision 21 shall be final. If an
objection has been made and Vision 21 and the Optometrist are unable to resolve
all of their disagreements with respect to the proposed adjustments within 15
days following the delivery of the Optometrist'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 Optometrist and his accountants full access to all
relevant books, records and work papers utilized in preparing the Proposed
Merger Consideration Adjustment.
2.12. Subsequent Actions. If, at any time after the
Effective Time, the Surviving Corporation shall determine or be advised that
any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, and to effect the
cancellation of all outstanding shares of Company Common Stock in return for
the consideration set forth in this Agreement, the officers and directors of
the Surviving Corporation shall, at the sole cost and expense of the Surviving
Corporation, be authorized to execute and deliver, in the name and on behalf of
the Company, 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
the Surviving Corporation or otherwise to carry out this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
Optometrist. The Company and the Optometrist, 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
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"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 corporation duly organized, validly existing and
in good standing under the laws of the State, with all requisite corporate
power and authority to carry on the business in which it is engaged, to own the
properties it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, but it is acknowledged and understood by the
Parties that upon consummation of Merger, the Company will no longer be
qualified as a professional corporation under the Corporation Law. 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
Optometrist 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. Capitalization. The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock, of which
5,465,673 shares are issued and outstanding. The Optometrist owns all of the
issued and outstanding Company Common Stock, free and clear of all security
interests, liens, adverse claims, encumbrances, equities, proxies and
shareholder agreements, except to the extent disclosed on Schedule 3.2. Each
outstanding share of Company Common Stock has been legally and validly issued
and is fully paid and nonassessable. No shares of Company Common Stock are
owned by the Company in treasury. No shares of Company Common Stock have been
issued or disposed of in violation of the preemptive rights, rights of first
refusal or similar rights of any of the Company's stockholders. The Company
has no bonds, debentures, notes or other obligations the holders of which have
the right to vote (or are convertible into or exercisable for securities having
the right to vote) with the stockholders of the Company on any matter.
3.3. Transactions in Capital Stock. The Company has
not acquired any capital stock of the Company within the two (2) year period
preceding the execution of this Agreement. Except as set forth on Schedule
3.3, there exist no options, warrants, subscriptions or other rights to
purchase, or securities convertible into or exchangeable for, any of the
authorized or outstanding securities of the Company, and no option, warrant,
call, conversion right or commitment of any kind exists which obligates the
Company to issue any of its authorized but unissued capital stock. Except as
set forth on Schedule 3.3, the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity
securities or any interests therein or to pay any dividend or make any
distribution in respect thereof. Neither the equity structure of the Company
nor the relative ownership of shares among any of its stockholders has been
altered or changed within the two (2) year period preceding the date of this
Agreement.
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3.4. Continuity of Business Enterprise. Except as set
forth on Schedule 3.4, and except as contemplated by this Agreement, there has
not been any sale, distribution or spin-off of significant assets of the
Company 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.
3.5. Corporate Records. The copies of the Articles or
Certificate of Incorporation and Bylaws, and all amendments thereto, of the
Company that have been delivered or made available to Vision 21 are true,
correct and complete copies thereof, as in effect on the date hereof. The
minute books of the Company, copies of which have been delivered or made
available to Vision 21, contain accurate minutes of all meetings of, and
accurate consents to all actions taken without meetings by, the Board of
Directors (and any committees thereof) and the stockholders of the Company in
the three (3) years prior to the Closing Date, and contain all other material
minutes and consents of the directors and stockholders of the Company since its
formation.
3.6. Authorization and Validity. The execution,
delivery and performance by the Company of this Agreement and the other
agreements contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby to be performed by the Company, have been duly
authorized by the Company. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies. The
Company has obtained, in accordance with applicable law and its Articles or
Certificate of Incorporation and Bylaws, the approval of its stockholders
necessary for the consummation of the transactions contemplated hereby.
3.7. Compliance. Except as disclosed on Schedule 3.7,
the execution and delivery of the documents contemplated hereunder 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.
3.8. Consents. No consent, approval, order or
authorization of or registration, declaration, or filing with, any Governmental
Authority or other person is required in connection with the execution and
delivery of the documents contemplated herein by the Company or the
consummation by such party of the transactions contemplated thereby, except for
those consents or approvals set forth on Schedule 3.8.
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3.9. 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
September 30, 1996 (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 Optometrist 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"). The cost of the
Audit shall be paid by Vision 21 and all materials prepared by Vision 21's
Accountants in connection with the Audit shall be solely the property of Vision
21.
3.10. Liabilities and Obligations. Except as set forth
on Schedule 3.10, 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,
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 3.10, 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.
3.11. Employee Matters.
a. Cash Compensation. Schedule 3.11(a)
contains a complete and accurate list of the names, titles and annual cash
compensation as of the Closing Date, including without limitation wages,
salaries, bonuses (discretionary and formula) and other cash compensation (the
"Cash Compensation") of all employees of the Company. In addition, Schedule
3.11(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 3.11(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 3.11(c) and Employee Benefit Plans listed on
Schedule 3.12(a). The Compensation Plans include without limitation plans,
arrangements or practices that provide for performance awards, and stock
ownership or stock options. The Company has provided or made available to
Vision 21 a copy of each written
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Compensation Plan and a written description of each unwritten Compensation
Plan. Except as set forth on Schedule 3.11(b), each of the Compensation Plans
can be terminated or amended at will by the Company.
c. Employment Agreements. Except as set
forth on Schedule 3.11(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 3.11(d) contains a complete and accurate list of all employee manuals
and all material policies, procedures and work-related rules (the "Employee
Policies and Procedures") that apply to employees of the Company. The Company
has provided or made available to Vision 21 a copy of all written Employee
Policies and Procedures and a written description of all material unwritten
Employee Policies and Procedures.
e. Unwritten Amendments. Except as
described on Schedule 3.11(b), 3.11(c), or 3.11(d), no material unwritten
amendments have been made, whether by oral communication, pattern of conduct or
otherwise, with respect to any Compensation Plans or, Employee Policies and
Procedures.
f. Labor Compliance. The Company 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 engaged in any unfair labor practices or discriminated on the
basis of race, color, religion, sex, national origin, age, disability or
handicap in its employment conditions or practices that would, individually or
in the aggregate, result in a Material Adverse Effect. Except as set forth on
Schedule 3.11(f), there are no (i) unfair labor practice charges or complaints
or racial, color, religious, sex, national origin, age, disability or handicap
discrimination charges or complaints pending or, to the actual knowledge of the
Company and the Optometrist, threatened against the Company before any federal,
state or local court, board, department, commission or agency (nor, to the
knowledge of the Company and the Optometrist, does any valid basis therefor
exist) or (ii) existing or, to the actual knowledge of the Company and the
Optometrist, threatened labor strikes, disputes, grievances, controversies or
other labor troubles affecting the Company (nor, to the best knowledge of the
Company and the Optometrist, 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 3.11(g), to the actual knowledge of the Company, none of the
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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.
3.12. Employee Benefit Plans.
a. Identification. Schedule 3.12(a)
contains a complete and accurate list of all employee benefit plans (within the
meaning of Section 3(3) of ERISA sponsored by the Company 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 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 3.12(a) and subject to the requirements of the Code and ERISA, each of
the Employee Benefit Plans can be terminated or amended at will by the Company.
Except as set forth on Schedule 3.12(a), no unwritten amendment exists with
respect to any Employee Benefit Plan. Except as set forth on Schedule
3.12(b)-(l), each of the following paragraphs is true and correct.
b. Administration. Each Employee Benefit
Plan has been administered and maintained in compliance with all applicable
laws, rules and regulations, except where the failure to be in compliance would
not, individually or in the aggregate, result in a Material Adverse Effect.
The Company and the Optometrist 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 3.12(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.
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d. Prohibited Transactions. No
prohibited transactions (within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA) have occurred with respect to any Employee
Benefit Plans.
e. Claims and Litigation. No pending or,
to the actual knowledge of the Company and the Optometrist, 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 3.12(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 3.12(f), no proceedings exist or, to the actual knowledge of
the Company have been threatened that could result in the revocation of any
such favorable determination letter or ruling.
g. Funding Status. No accumulated
funding deficiency (within the meaning of Section 412 of the Code), whether or
not waived, exists with respect to any Employee Benefit Plan or any plan
sponsored by any member of a controlled group (within the meaning of Section
412(n)(6)(B) of the Code) in which the Company 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.
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l. Other Compensation. Except as set
forth on Schedule 3.11(a), 3.11(b), 3.11(c), 3.11(d) and 3.12(a), neither the
Company, the Optometrist nor any Professional Employee is a party to any
compensation or debt arrangement with any person relating to the provision of
healthcare related services other than arrangements with the Company or the
Optometrist.
3.13. Absence of Certain Changes. Except as set forth
on Schedule 3.13 or as contemplated in 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
Optometrist;
b. contracted for the purpose of
acquiring any capital asset having a cost in excess of $5,000 or made any
single expenditure in excess of $5,000;
c. incurred any indebtedness for borrowed
money (other than short-term borrowings in the ordinary course of business), or
issued or sold any debt securities;
d. incurred or discharged any material
liabilities or obligations except in the ordinary course of business;
e. paid any amount on any indebtedness
prior to the due date, forgiven or cancelled any claims or any debt in excess
of $5,000, or released or waived any rights or claims except in the ordinary
course of business;
f. mortgaged, pledged or subjected to any
security interest, lien, lease or other charge or encumbrance any of its
properties or assets (other than statutory liens arising in the ordinary course
of business or other liens that do not materially detract from the value or
interfere with the use of such properties or assets);
g. suffered any damage or destruction to
or loss of any assets (whether or not covered by insurance) that has,
individually or in the aggregate, resulted in a Material Adverse Effect;
h. acquired or disposed of any assets
having an aggregate value in excess of $5,000, except in the ordinary course of
business;
i. written up or written down the
carrying value of any of its assets, other than accounts receivable in the
ordinary course of business;
j. changed the costing system or
depreciation methods of accounting for its assets in any material respect;
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k. lost or terminated any employee,
patient, customer or supplier that has, individually or in the aggregate,
resulted in a Material Adverse Effect;
l. increased the compensation of any
director, officer, key employee or consultant, except as disclosed on Schedule
3.11(a);
m. increased the compensation of any
employee (except for increases in the ordinary course of business consistent
with past practice) or hired any new employee who is expected to receive
annualized compensation of at least $15,000;
n. made any payments to or loaned any
money to any person or entity referred to in Section 3.25;
o. formed or acquired or disposed of any
interest in any corporation, partnership, joint venture or other entity;
p. redeemed, purchased or otherwise
acquired, or sold, granted or otherwise disposed of, directly or indirectly,
any of its capital stock or securities, or agreed to change the terms and
conditions of any such capital stock, securities or rights;
q. entered into any agreement providing
for total payments in excess of $5,000 in any twelve (12) month period with any
person or group, or modified or amended in any material respect the terms of
any such existing agreement, except in the ordinary course of business;
r. entered into, adopted or amended any
Employee Benefit Plan, except as contemplated hereby or the other agreements
contemplated hereby; or
s. entered into any other commitment or
transaction or experienced any other event that would materially interfere with
its performance under this Agreement or any other agreement or document
executed or to be executed pursuant to this Agreement, or otherwise has,
individually or in the aggregate, resulted in a Material Adverse Effect.
3.14. Title; Leased Assets.
a. Real Property. The Company does not
own any interest (other than leasehold interests referred to on Schedule
3.14(c)) in real property. The leased real property referred to on Schedule
3.14(c) constitutes the only real property necessary for the conduct of the
Company's business.
b. Personal Property. Except as set
forth on Schedule 3.14(b), the Company and/or the Optometrist has good, valid
and marketable title to all the personal property constituting the
Xxx-
00
00
optometric Assets. The personal property constituting the Non-optometric
Assets constitute the only personal property necessary for the conduct of the
Company's business (except for the Optometric Assets). Upon consummation of
the transactions contemplated hereby, such interest in the Non-optometric
Assets shall be free and clear of all security interests, liens, claims and
encumbrances, other than those set forth on Schedule 3.14(b) (the "Permitted
Encumbrances") and statutory liens arising in the ordinary course of business
or other liens that do not materially detract from the value or interfere with
the use of such properties or assets.
c. Leases. A list and brief description
of (i) all leases of real property and (ii) leases of personal property
involving rental payments within any twelve (12) month period in excess of
$12,000, in either case to which the Company is a party, either as lessor or
lessee, are set forth on Schedule 3.14(c). All such leases are valid and, to
the knowledge of the Company, enforceable in accordance with their respective
terms except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of equitable
remedies.
3.15. Commitments.
a. Commitments; Defaults. Except as set
forth on Schedule 3.15 or as otherwise disclosed pursuant to this Agreement,
the Company is not a party to nor bound by, nor are any of the shares of
Company Common Stock subject to, nor are the Non-optometric Assets or the
assets or the business of the Company bound by, whether or not in writing, any
of the following (collectively, "Commitments"):
i) partnership or joint
venture agreement;
ii) guaranty or suretyship,
indemnification or contribution agreement or performance bond;
iii) debt instrument, loan
agreement or other obligation relating to indebtedness for borrowed money or
money lent or to be lent to another;
iv) contract to purchase real
property;
v) agreement with dealers or
sales or commission agents, public relations or advertising agencies,
accountants or attorneys (other than in connection with this Agreement and the
transactions contemplated hereby) involving total payments within any twelve
(12) month period in excess of $2,000 and which is not terminable on thirty
(30) days' notice or without penalty;
vi) agreement relating to any
material matter or transaction in which an interest is held by a person or
entity that is an Affiliate of the Company or the Optometrist;
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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 optometric 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 3.15
and to the Company's best knowledge, there are no existing or asserted
defaults, events of default or events, occurrences, acts or omissions that,
with the giving of notice or lapse of time or both, would constitute defaults
by the Company or, to the best knowledge of the Company, any other party to a
material Commitment, and no penalties have been incurred nor are amendments
pending, with respect to the material Commitments, except as described on
Schedule 3.15. The Commitments are in full force and effect and are valid and
enforceable obligations of the Company, 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 3.15. Except as
set forth on Schedule 3.15, no consents or approvals are required under the
terms of any agreement listed on Schedule 3.15 in connection with the
transactions contemplated herein; including without limitation the Merger.
b. No Cancellation or Termination of
Commitment. Except as disclosed pursuant to this Agreement or contemplated
hereby, and except where such default would not have a Material Adverse Effect
on the business, (i) neither the Company nor the Optometrist 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
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Optometrist currently contemplates, or has reason to believe any other person
currently contemplates, any amendment or change to any Commitment.
3.16. Insurance. The Company, the Optometrist 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 Section 3.16 (the "Insurance
Policies"). The Insurance Policies are all of the insurance policies of the
Company, the Optometrist and each Professional Employee relating to the
business of the Company and the Non-optometric Assets. All of the Insurance
Policies are issued by insurers of recognized responsibility, and, to the best
knowledge of the Company, are valid and enforceable policies, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies. All
Insurance Policies shall be maintained in force without interruption up to and
including the Closing Date. True, complete and correct copies of all Insurance
Policies have been provided or made available to Vision 21. Except as set
forth on Schedule 3.16, neither the Company nor the Optometrist has received
any notice or other communication from any issuer of any Insurance Policy
cancelling such policy, materially increasing any deductibles or retained
amounts thereunder, and to the actual knowledge of the Company, no such
cancellation or increase of deductibles, retainages or premiums is threatened.
Except as set forth on Schedule 3.16, neither the Company, the Optometrist nor
any Professional Employee has any outstanding claims, settlements or premiums
owed against any Insurance Policy, and the Company, the Optometrist and each
Professional Employee has given all notices or has presented all potential or
actual claims under any Insurance Policy in due and timely fashion. Except as
set forth on Schedule 3.16, since January 1, 1994, neither the Company, the
Optometrist 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 Optometrist 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
optometry). Schedule 3.16 also sets forth a list of all claims under any
Insurance Policy in excess of $10,000 per occurrence filed by the Company, the
Optometrist and each Professional Employee since January 1, 1994.
3.17. Proprietary Rights and Information. Set forth on
Schedule 3.17 is a true and correct description of the following ("Proprietary
Rights"):
a. all trademarks, trade-names, service
marks and other trade designations, including common law rights, registrations
and applications therefor, and all patents and applications therefor currently
owned, in whole or in part, by the Company, 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
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or processes generally available to other healthcare 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 3.17, 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
Optometrist, 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.
3.18. 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 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 3.18, (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 3.18,
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.
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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 Optometrist is a foreign person, as such term is referred to in Section
1445(f)(3) of the Code.
g. Safe Harbor Lease. None of the
Non-optometric Assets constitutes property that the Company, Vision 21, or any
Affiliate of Vision 21, will be required to treat as being owned by another
person pursuant to the "Safe Harbor Lease" provisions of Section 168(f)(8) of
the Code prior to repeal by the Tax Equity and Fiscal Responsibility Act of
1982.
h. Tax Exempt Entity. None of the assets
of the Company and none of the Non- optometric Assets are subject to a lease to
a "tax exempt entity" as such term is defined in Section 168(h)(2) of the Code.
i. Collapsible Corporation. The Company
has not at any time consented, and the Optometrist will not permit the Company
to elect, to have the provisions of Section 341(f)(2) of the Code apply to it.
j. Boycotts. The Company has not at any
time participated in or cooperated with any international boycott as defined in
Section 999 of the Code.
k. Parachute Payments. No payment
required or contemplated to be made by the Company will be characterized as an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Code.
l. S Corporation. The Company has not
made an election to be taxed as an "S" corporation under Section 1362(a) of the
Code.
m. Personal Service Corporation. The
Company is not a personal service corporation subject to the provisions of
Section 269A of the Code.
n. Personal Holding Company. The Company
is not or has not been a personal holding company within the meaning of Section
542 of the Code.
3.19. Compliance with Laws. The Company has not
failed, and neither the Company nor the Optometrist is aware of any failure by
the Optometrist or any Professional
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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 Optometrist is aware of any existing
violations by the Optometrist 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 Optometrist 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 3.19. Except as set forth on Schedule 3.19, the transactions
contemplated by this Agreement will not result in a default under or a breach
or violation of, or adversely affect the rights and benefits afforded by any
such licenses, franchises, permits or government authorizations, except for any
such default, breach or violation that would not, individually or in the
aggregate, have a Material Adverse Effect. Except as set forth on Schedule
3.19, since January 1, 1993, neither the Company, the Optometrist nor, to the
knowledge of the Company based on a certificate in writing obtained from each
Professional Employee, any Professional Employee has received any notice from
any federal, state or other governmental authority or agency having
jurisdiction over its, his or her properties or activities, or any insurance or
inspection body, that its, his or her operations or any of its, his or her
properties, facilities, equipment, or business practices fail to comply with
any applicable law, ordinance, regulation, building or zoning law, or
requirement of any public or quasi-public authority or body, except where
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect.
3.20. Finder's Fee. Except as set forth on Schedule
3.20, the Company has not incurred any obligation for any finder's, brokers or
agent's fee in connection with the transactions contemplated hereby.
3.21. Litigation. Except as described on Section 3.21
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 Optometrist, which affect or could affect the
outstanding shares of Company Common Stock, the Non-optometric 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 Optometrist to effect the transactions
contemplated hereby. Neither the Company nor the Optometrist is (a) subject to
any continuing court or administrative order, judgment, writ, injunction or
decree applicable specifically to the Non-optometric 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 3.21, all optometric 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.
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3.22. Condition of Fixed Assets. All of the fixtures,
structures and equipment reflected in the Financial Statements and used by the
Company in its business, are in good condition and repair, subject to normal
wear and tear, and conform in all material respects with all applicable
ordinances, regulations and other laws, and the Company has no actual knowledge
of any latent defects therein.
3.23. Distributions and Repurchases. No distribution,
payment or dividend of any kind has been declared or paid by the Company on any
of its capital stock since the 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.
3.24. Banking Relations. Set forth on Schedule 3.24 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.
3.25. Ownership Interests of Interested Persons;
Affiliations. Except as set forth on Schedule 3.25, 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 optometrist, 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.
3.26. Investments in Competitors. Except as disclosed
on Schedule 3.26, neither the Company nor the Optometrist owns directly or
indirectly any interests or has any investment in any person that is a
Competitor of the Company.
3.27. Environmental Matters.
a. Environmental Laws. To the best
knowledge of the Company and the Optometrist, neither the Company nor any of
the Non-optometric assets (including the leased real property described on
Schedule 3.14(c)) are currently in violation of, or subject to any existing,
pending or, to the actual knowledge of the Company threatened, investigation or
inquiry by any governmental authority or to any remedial obligations under, any
federal, state or local laws 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 or the Surviving
Corporation will be required to obtain, any permits, licenses or similar
authorizations to occupy, operate or use any buildings, improvements, fixtures
and equipment owned or leased by the Company by reason of any Environmental
Laws.
c. Superfund List. To the best knowledge
of the Company, none of the Non- optometric Assets (including the Company's
leased real property described on Schedule 3.14(c)) are on any federal or state
"Superfund" list or subject to any environmentally related liens, except such
liens as would not, individually or in the aggregate, result in a Material
Adverse Effect.
3.28. Certain Payments. 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).
3.29. Medical Waste. With respect to the generation,
transportation, treatment, storage, and disposal, or other handling of medical
waste, to the best knowledge of the Company and the Optometrist, the Company
has complied with all material federal, state or local laws or regulations
pertaining to medical waste.
3.30. Medicare and Medicaid Programs. The Company, the
Optometrist 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 Optometrist 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
Optometrist 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 Optometrist 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
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Company, the Optometrist or any Professional Employee in order to be paid by a
Payor for services rendered. Neither the Company, nor any of its directors,
officers, employees, consultants or the Optometrist 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 Optometrist, 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.
3.31. Fraud and Abuse. To the best knowledge of the
Company and the Optometrist, 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. Section Section 1320- 7, 7a or 7b or 42 U.S.C.
Section 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. Section 1395nn) to or providing
designated health services to a patient upon a referral from an entity or
person with which the Optometrist or the Professional Employee or an immediate
family member has a financial relationship, and to which no exception under 42
U.S.C. Section 1395nn applies.
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3.32. Payors. Schedule 3.32 sets forth a true, correct
and complete list of the names and addresses of each Payor, including any
private pay patient as a single payor, of the Company's 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 3.32, 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.
3.33. Prohibitions on the Corporate Practice of
Optometry. To the best of the Company's and the Optometrist'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 optometry. The Company and the Optometrist accordingly agree that
the Company, the Optometrist and New P.C. will not, in an attempt to void or
nullify any document contemplated herein or any relationship involving Vision
21 or the Company or the Optometrist or New P.C., 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
optometry and expressly warrant that this Section is valid and enforceable by
Vision 21, and recognize that Vision 21 has relied upon the statements herein
in closing the transaction.
3.34. Acquisition Proposals. Except for the
negotiations, offers and agreements with Vision 21 and its representatives, the
Company has not received during the twelve (12) month period preceding the date
of this Agreement any proposal or offer (including, without limitation, any
proposal or offer of its stockholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") nor has the Company or any of its employees, agents, representatives
or stockholders engaged in any negotiations concerning, or provided any
confidential information or data to, or had any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitated any effort or
attempted to make or implement an Acquisition Proposal.
3.35. Investment Company Status. The Company is not
currently, nor has it ever been, an "investment company" as that term is
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
3.36. Equal Exchange; Consistent Treatment of Expenses.
Optometrist and the Company believe that the fair market value of all the
Company Common Stock shall be approximately equal to the fair market value of
the Merger Consideration at the Effective Time. The Company has, in presenting
information concerning the Company's and New P.C.'s expenses to Vision 21 for
the purpose of determining the Company's value, separated out those expenses
which shall be borne by New P.C. in a manner which is consistent with the
treatment of expenses which shall be the responsibility of New P.C. pursuant to
the Business Management Agreement.
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3.37. Insolvency Proceedings. The Company is not
currently under the jurisdiction of a Federal or state court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
3.38. Positive Net Worth. On the Closing Date the fair
market value of the assets of the Company will equal or exceed the sum of the
liabilities of the Company plus the amount of any other liabilities to which
the assets of the Company are subject.
3.39. Accounts Receivable/Payable. The accounts
receivable of the Company 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 (the "Accounts Receivable") will be, valid,
existing and collectible within six months from the Closing Date (taking into
consideration the allowance for doubtful accounts set forth in the Financial
Statements) using reasonably diligent collection methods taking into account
the size and nature of the receivable, and represent amounts due for goods sold
and delivered or services performed. There are not, and on the date of Closing
there will not be, any refunds, 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 procedures or methods nor delayed
the timing of such payments in anticipation of the transactions contemplated in
this Agreement.
3.40. Projections. There is no fact, development or
threatened development with respect to the markets, products, services,
clients, patients, facilities, personnel, vendors, suppliers, operations,
assets or prospects of the Practice which are known to the Company or the
Optometrist which would materially adversely affect the projected fiscal year
1997 earnings of New P.C. disclosed to Vision 21 by Optometrist, other than
such conditions as may affect as a whole the economy or the practice of
optometry generally.
3.41. Disclosure. To the best of the Company's and the
Optometrist's knowledge, no representation, warranty or statement made by the
Company or the Optometrist 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
Optometrist 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 may materially affect, the
condition, properties, assets, liabilities, business, operations or prospects
of the Practice which has not been set forth herein or in the Schedules
provided herewith.
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4. REPRESENTATIONS AND WARRANTIES OF THE OPTOMETRIST. The
Optometrist 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; Optometrist Capacity. This Agreement,
the Optometrist 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 Optometrist and constitute or will constitute legal, valid
and binding obligations of the Optometrist, enforceable against the Optometrist
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 Optometrist has legal
capacity to enter into and perform this Agreement and his Optometrist
Employment Agreement.
4.2. No Violation. Except as set forth on Schedule
4.2, neither the execution, delivery or performance of this Agreement, other
agreements of the Optometrist 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 Optometrist is bound or to which any of his property
or the shares of Company Common Stock are subject, or result in the creation or
imposition of any security interest, lien, charge or encumbrance upon any of
his property or the shares of Company Common Stock or (b) to the best knowledge
of the Optometrist, violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body.
4.3. Personal Holding Company. The Optometrist does
not own the shares of Company Common Stock, directly or indirectly,
beneficially or of record, through a personal holding company.
4.4. Transfers of the Company Common Stock. Set forth
on Schedule 4.4 is a list of all transfers or other transactions involving
capital stock of the Company since January 1, 1994. All transfers of Company
Common Stock by the Optometrist have been made for valid business reasons and
not in anticipation or contemplation of the consummation of the transactions
contemplated by this Agreement.
4.5. Consents. Except as may be required under the
Exchange Act, the Securities Act, the Corporation Law and state securities
laws, or otherwise disclosed pursuant to this Agreement, no consent,
authorization, approval, permit or license of, or filing with, any governmental
or public body or authority, or any other person is required to authorize, or
is required in connection with, the execution, delivery and performance of this
Agreement or the agreements contemplated hereby on the part of the Optometrist.
4.6. Certain Payments. The Optometrist has not paid
or caused to be paid, directly or indirectly, in connection with the business
of the Company:
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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).
4.7. Finder's Fee. Except as set forth on Schedule
4.7, the Optometrist has not incurred any obligation for any finder's, broker's
or agent's fee in connection with the transactions contemplated hereby.
4.8. Ownership of Interested Persons; Affiliations.
Except as set forth on Schedule 4.8, neither the Optometrist 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 Optometrist 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 optometrist, 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.
4.9. Investments in Competitors. Except as disclosed
on Schedule 4.9, the Optometrist does not own directly or indirectly any
interests or have any investment in any person that is a Competitor of the
Company.
4.10. Litigation. Except as disclosed on Schedule
4.10, there are no claims, actions, suits, proceedings (arbitration or
otherwise) or investigations pending or, to the Optometrist's knowledge,
threatened against the Optometrist at law or at equity in any court or before
or by any Governmental Authority, and, to the Optometrist'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 4.10, there have been no
disciplinary , revocation or suspension proceedings or similar types of claims,
actions or proceedings, hearings or investigations against the Optometrist or
the Company.
4.11. Permits. To the best of the Optometrist's
knowledge, the Optometrist has all permits, licenses, orders and approvals of
all Governmental Authorities necessary to perform the services performed by the
Optometrist 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
Optometrist's knowledge, none of such permits, licenses, orders or approvals
will be adversely affected by the consummation of the transactions contemplated
herein. The Optometrist is a participating optometrist, as such term is
defined by the Medicare and Medicaid programs, and
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the Optometrist 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.
4.12. Staff Privileges. Schedule 4.12 lists all
hospitals at which the Optometrist has full staff privileges. Such staff
privileges have not been revoked, surrendered, suspended or terminated, and to
the Optometrist'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.
4.13. Intentions. Except as set forth on Schedule
4.13, the Optometrist intends to continue practicing optometry 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
may materially adversely affect, his ability or intention to practice optometry
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 Optometrist 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.
5.2. Capitalization. The authorized capital stock of
Vision 21 consists of 50,000,000 shares of Vision 21 Common Stock, of which
5,465,673 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 5,465,673 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 Optometrist 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 Optometrist, 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
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consummation of the transactions contemplated hereby and thereby, have been
duly authorized by Vision 21. This Agreement and each other agreement
contemplated hereby to be executed by Vision 21 have been or will be as of the
Closing Date duly executed and delivered by Vision 21 and constitute or will
constitute legal, valid and binding obligations of Vision 21, enforceable
against Vision 21 in accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
5.5. Compliance. The execution and delivery of the
documents contemplated hereunder and the consummation of the transactions
contemplated thereby by Vision 21 shall not (i) violate any provision of Vision
21's organizational documents, (ii) violate any material provision of or result
in the breach of or entitle any party to accelerate (whether after the giving
of notice or lapse of time or both) any material obligation under, any
mortgage, lien, lease, contract, license, instrument or any other agreement to
which Vision 21 is a party, (iii) result in the creation or imposition of any
material lien, charge, pledge, security interest or other material encumbrance
upon any property of Vision 21 or (iv) violate or conflict with any order,
award, judgment or decree or other material restriction or to the best of
Vision 21's knowledge violate or conflict with any law, ordinance or regulation
to which Vision 21 or its property is subject.
5.6. Consents. No consent, approval, order or
authorization of or registration, declaration, or filing with, any Governmental
Authority or other person is required in connection with the execution and
delivery of the documents contemplated herein by Vision 21 or the consummation
by such party of the transactions contemplated thereby, except for those
consents or approvals set forth on Schedule 5.6.
5.7. Finder's Fee. Except as disclosed on Schedule
5.7, Vision 21 has not incurred any obligation for any finder's, broker's or
agent's fee in connection with the transactions contemplated hereby.
5.8. Capital Stock. The issuance and delivery by
Vision 21 of shares of Vision 21 Common Stock in connection with the Merger
have been duly and validly authorized by all necessary corporate action on the
part of Vision 21. The shares of Vision 21 Common Stock to be issued in
connection with the Merger, when issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable and will not
have been issued in violation of any preemptive rights, rights of first refusal
or similar rights of any of Vision 21's stockholders, or any federal or state
law, including, without limitation, the registration requirements of applicable
federal and state securities laws.
5.9. Continuity of Business Enterprise. It is the
present intention of Vision 21 to continue at least one significant historic
business line of the Company, or to use at least a significant portion of the
Company's historic business assets in a business, in each case within the
meaning of Treasury Regulation Section 1.368-1(d).
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5.10. Vision 21 Financial Statements; Confidential
Information Memorandum. The balance sheet of Vision 21 as of September 30,
1996 and the related statements of income of Vision 21 for the first nine (9)
months of Vision 21's 1996 fiscal year, without giving effect to the Related
Acquisitions, including the costs incurred during such fiscal year associated
with any Registration Statement, shall be contained in the Confidential
Information Memorandum to be provided to the Optometrist and the Company by
Vision 21 prior to the Closing (collectively, with the related notes thereto,
the "Vision 21 Financial Statements"). The Vision 21 Financial Statements (a)
fairly present the financial condition and results of operations of Vision 21,
without giving effect to the Related Acquisitions, 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. Subject to the foregoing and the other qualifications
contained elsewhere in this Agreement, to the best knowledge of Vision 21, the
Confidential Information Memorandum, as amended on December, 1996, is true and
correct in all material respects.
5.11. Liabilities and Obligations. Except as disclosed
on Schedule 5.19, 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 5.19 or in the Vision
21 Financial Statements, Vision 21 is not liable upon or with respect to, or
obligated in any other way to provide funds in respect of or to guarantee or
assume in any manner, any debt, obligation or dividend of any person,
corporation, association, partnership, joint venture, trust or other entity,
and Vision 21 does not know of any valid basis for the assertion of any other
claims or liabilities of any nature or in any amount.
5.12. Compliance with Laws. Vision 21 has not failed
to comply with any applicable laws, regulations and licensing requirements or
failed to file with the proper authorities any necessary statements and reports
except where the failure to so comply or file would not, individually or in the
aggregate, result in a Material Adverse Effect. There are no existing
violations by Vision 21 of any federal, state or local law or regulation that
could, individually or in the aggregate, result in a Material Adverse Effect.
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 by this Agreement. 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. 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.
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5.13. Insolvency Proceedings. Vision 21 is not
currently under the jurisdiction of a Federal or state court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
5.14. Equal Exchange. Vision 21 believes that the fair
market value of all the Company Common Stock shall be approximately equal to
the fair market value of the Merger Consideration at the Effective Time.
5.15. Employment of Company's Employees. Vision 21
does not currently intend to change the existing composition or employment
terms of any of the non-professional personnel which have employment
arrangements with the Company 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. {INTENTIONALLY OMITTED}.
7. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
OPTOMETRIST. The Optometrist represents and warrants that, except as disclosed
in the Schedules, the following will be true and correct on the Closing Date as
if made on that date:
7.1. Organization and Good Standing; Qualification.
New P.C. is a professional corporation duly organized, validly existing and in
good standing under the laws of the State, with all requisite corporate power
and authority to carry on the business in which it intends to engage, to own
the properties it intends to own, and to execute and deliver the Business
Management Agreement and the Optometrist Employment Agreements and consummate
the transactions and perform the services contemplated thereby. New P.C. is
duly qualified and licensed to do business and is in good standing in all
jurisdictions where the nature of its intended business makes such
qualification necessary.
7.2. Capitalization. The authorized capital stock of
New P.C. consists of __________ shares of New P.C. Common Stock, of which
__________ shares are issued and outstanding, and no shares of capital stock of
New P.C. are held in treasury. The Optometrist owns all of the issued and
outstanding shares of New P.C.'s common stock, free and clear of all security
interests, liens, adverse claims, encumbrances, equities, proxies and
shareholders' agreements. Each outstanding share of New P.C.'s common stock
has been legally and validly issued and is fully paid and nonassessable. There
exists no options, warrants, subscriptions or other rights to purchase, or
securities convertible into or exchangeable for, any of the authorized or
outstanding securities of New P.C. No shares of capital stock of New P.C. have
been issued or disposed of in violation of the preemptive rights, rights of
first refusal or similar rights of any of New P.C.'s stockholders.
7.3. Corporate Records. The copies of the Articles or
Certificate of Incorporation and Bylaws, and all amendments thereto, of New
P.C. that have been delivered
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or made available to Vision 21 are true, correct and complete copies thereof,
as in effect on the Closing Date. The minute books of New P.C., copies of
which have been delivered or made available to Vision 21, contain accurate
minutes of all meetings of, and accurate consents to all actions taken without
meetings by, the Board of Directors (and any committees thereof) and the
stockholders of New P.C. since its formation.
7.4. Authorization and Validity. The execution,
delivery and performance by New P.C. of the Business Management Agreement, the
Optometrist Employment Agreements, the Optometrist Employment Agreements and
the other agreements contemplated thereby, and the consummation of the
transactions and provisions of services contemplated thereby, have been duly
authorized by New P.C. The Business Management Agreement, the Optometrist
Employment Agreements, the Optometrist Employment Agreements and each other
agreement contemplated thereby will be as of the Closing Date duly executed and
delivered by New P.C. and will constitute legal, valid and binding obligations
of New P.C. enforceable against New P.C. 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.
7.5. No Violation. Neither the execution, delivery or
performance of the Business Management Agreement, the Optometrist Employment
Agreements, the Optometrist Employment Agreements or the other agreements
contemplated thereby nor the consummation of the transactions or provision of
services contemplated thereby will (a) conflict with, or result in a violation
or breach of the terms, conditions or provisions of, or constitute a default
under, the Articles or Certificate of Incorporation or Bylaws of New P.C., or
(b) to the actual knowledge of the Optometrist, violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body.
7.6. No Business, Agreements, Assets or Liabilities.
New P.C. has not commenced business since its incorporation. Other than its
Articles or Certificate of Incorporation and Bylaws, and as of the Closing
Date, the Business Management Agreement, the Optometrist Employment Agreements,
the Optometrist Employment Agreements, the Employee Benefit Plans and the other
contracts or agreements listed on Schedule 7.6, New P.C. is not a party to or
subject to any agreement, indenture or other instrument. New P.C. does not own
any assets (tangible or intangible) other than the consideration received upon
the issuance of shares of capital stock and New P.C. does not have any
liabilities, accrued, contingent or otherwise (known or unknown and asserted or
unasserted).
7.7. Compliance with Laws. New P.C. has complied with
all applicable laws, regulations and licensing requirements and has filed with
the proper authorities all necessary statements and reports, except where
failure to so comply or file would not, individually or in the aggregate, have
a material adverse effect on the business, operations or financial condition of
New P.C.
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8. SECURITIES LAW MATTERS.
8.1. Investment Representations and Covenants of
Optometrist.
a. Optometrist 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 Optometrist's
representations, warranties, covenants and acknowledgements set forth in this
Section.
b. Except as disclosed on Schedule 8.1(b)
attached hereto, Optometrist represents and warrants that Optometrist is an
"accredited investor" or "sophisticated investor" as defined under the
Securities Act and state "Blue Sky" laws, or that Optometrist 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. Optometrist represents and warrants
that the Securities to be acquired by Optometrist upon consummation of the
transactions described in this Agreement will be acquired by Optometrist for
Optometrist's own account, not as a nominee or agent, and without a view to
resale or other distribution within the meaning of the Securities Act and the
rules and regulations thereunder, except as contemplated in this Agreement, and
that Optometrist 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 Optometrist resides as well as
any other legend deemed appropriate by Vision 21 or its counsel.
d. Optometrist represents and warrants
that the address set forth below Optometrist's name on Schedule 8.1(d) is
Optometrist's principal residence.
e. Optometrist (i) acknowledges that the
Securities issued to Optometrist at the Closing must be held indefinitely by
Optometrist 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
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exemption will be required, (iii) is aware that Rule 144 is not currently
available for use by Optometrist for resale of any of the Securities to be
acquired by Optometrist 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 14.(o), whereby
Optometrist shall be treated as an "affiliate" of Vision 21 under Rule 144.
f. Optometrist represents and warrants to
Vision 21 that Optometrist, either alone or together with the assistance of
Optometrist's own professional advisor, has such knowledge and experience in
financial and business matters such that Optometrist is capable of evaluating
the merits and risks of Optometrist's investment in any of the Securities to be
acquired by Optometrist upon consummation of the transactions described in this
Agreement.
g. Optometrist confirms that Optometrist
has received and read the Confidential Information Memorandum of Vision 21
dated September 27, 1996 and the December, 1996 Supplement thereto.
Optometrist also confirms that Optometrist has had the opportunity to ask
questions of and receive answers from Vision 21 concerning the terms and
conditions of Optometrist's investment in the Securities, and the Optometrist
has received to Optometrist'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 Optometrist has requested.
h. In order to ensure compliance with the
provisions of paragraph (c) hereof, Optometrist agrees that after the Closing
Optometrist 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 Optometrist:
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
h. 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.
Optometrist also agrees that the certificates or instruments representing the
Securities to be issued to Optometrist 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
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transfer agent, if any, provided that this Section 8.1(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. Optometrist understands that although
an Initial Public Offering is contemplated by Vision 21, there are no
assurances that an Initial Public Offering will occur or if it does occur that
it will be successful.
j. Optometrist 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.
Optometrist 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.
8.2. Current Public Information. At all times
following the registration of any of Vision 21's securities under the
Securities Act or Exchange Act pursuant to which Vision 21 becomes subject to
the reporting requirements of the Exchange Act, Vision 21 shall use
commercially reasonable efforts to comply with the requirements of Rule 144
under the Securities Act, as such Rule may be amended from time to time (or any
similar rule or regulation hereafter adopted by the SEC) regarding the
availability of current public information to the extent required to enable any
holder of shares of Common Stock to sell such shares without registration under
the Securities Act pursuant to Rule 144 (or any similar rule or regulation).
9. COVENANTS OF THE COMPANY AND THE OPTOMETRIST. The Company
and the Optometrist, jointly and severally, agree that between the date hereof
and the Closing (with respect to the Company's covenants, the Optometrist
agrees to use his best efforts to cause the Company to perform):
9.1. Consummation of Agreement. The Company and the
Optometrist 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
Optometrist to make any expenditures that are not expressly set forth in this
Agreement or otherwise contemplated herein.
9.2. Business Operations. The Company shall operate
its business in the ordinary course. The Company and the Optometrist shall use
their best efforts to preserve the business of the Company intact. Neither the
Company nor the Optometrist shall take any action that would, individually or
in the aggregate, result in a Material Adverse Effect.
9.3. Access. The Company and the Optometrist shall,
at reasonable times during normal business hours and on reasonable notice,
permit Vision 21 and its authorized
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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 optometric 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.
9.4. Notification of Certain Matters. The Company and
the Optometrist 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
Optometrist subsequent to the date of this Agreement and prior to the Effective
Time 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.
9.5. Approvals of Third Parties. As soon as
practicable after the date hereof, the Company and the Optometrist shall secure
all necessary approvals and consents of landlords to the consummation of the
transactions contemplated hereby and shall use their best efforts to secure all
necessary approvals and consents of other third parties to the consummation of
the transactions contemplated hereby; provided, however, that this covenant
shall not require the Company or the Optometrist to make any material
expenditures that are not expressly set forth in this Agreement or otherwise
contemplated herein.
9.6. Employee Matters. Except as set forth in
Schedule 3.13 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
Optometrist 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;
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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.
9.7. Contracts. Except with Vision 21's prior written
consent, the Company shall not assume or enter into any contract, lease,
license, obligation, indebtedness, commitment, 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.
9.8. 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.
9.9. 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
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endorsement for collection and other similar transactions in the ordinary
course of business, or make any capital contribution or investment in any
person.
9.10. Acquisition Proposals. The Company and the
Optometrist agree that from the date of this Agreement through the earlier of
the Closing Date or January 1, 1997, (a) neither the Optometrist nor the
Company nor any of its officers and directors shall, and the Optometrist 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 Optometrist 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 9.10; and (c) the Optometrist 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 Optometrist.
9.11. Distributions and Repurchases. Except as
contemplated in this Agreement, no distribution, payment or dividend of any
kind will be declared or paid by the Company with respect of its capital stock,
nor will any repurchase of any of the Company's capital stock be approved or
effected.
9.12. Requirements to Effect the Merger. The Company
and the Optometrist shall use their best efforts to take, or cause to be taken,
all actions necessary to effect the Merger under applicable law, including
without limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
9.13. Optometrist Accounts Payable and Optometrist
Retained Equity. The Company shall, and the Optometrist shall cause the
Company, to pay in a timely manner the accounts payable of the Optometrist.
Except as contemplated in this Agreement, the Company shall not, and the
Optometrist 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.
9.14. New P.C. Spinoff. The Company shall form,
organize and incorporate New P.C. in the State and the Articles or Certificate
of Incorporation and Bylaws of New P.C. shall be in form and substance
reasonably satisfactory to Vision 21. The Company shall not permit New P.C. to
commence business until the Closing Date. On or prior to the Closing, Company
shall take all actions and execute all documents, agreements or instruments
necessary to transfer to New P.C. the Company's optometric business and to
transfer good, valuable, and marketable title to all of the Company's
Optometric Assets in exchange for the issuance by the
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New P.C. to the Company of all of the issued and outstanding shares of New P.C.
common stock. Prior to the Closing, the Company shall declare and make a
distribution to Optometrist of all of the issued and outstanding shares of New
P.C. common stock.
9.15. Licenses and Permits. The Company and the
Optometrist shall cooperate fully with Vision 21 to obtain all licenses,
permits, approvals or other authorizations required under any law, statute,
rule, regulation or ordinance, or otherwise necessary or desirable to provide
the services of New P.C., the Optometrist and the Professional Employees
contemplated by the Business Management Agreement and the Optometrist
Employment Agreements, and to conduct the intended business of New P.C.
9.16. Optometrist Employment Agreements. The Company
and the Optometrist shall cause, at or immediately prior to Closing, each
Optometrist Employee (except for those non-shareholder Optometrist Employees
identified on Schedule 9.16) who is then an employee of the Company and
Optometrist 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
Optometrist Employment Agreement with New P.C. in accordance with the terms of
the Business Management Agreement.
9.17. Termination of Retirement Plans. Prior to
Closing, the Optometrist 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. Effective at the time of Closing, the Company shall cause New P.C.
to assume all of the obligations of the Company as the sponsoring employer
and/or plan administrator of the Retirement Plan in compliance with applicable
law.
Subsequent to Closing, New P.C. and Vision 21 shall review
the extent to which New P.C. 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 New P.C. under Section 414(n) of the Code. If Vision
21 and New P.C. mutually agree that such qualification requirements can be
satisfied, New P.C. may elect to continue the Retirement Plan and make
contributions in accordance with its terms, provided that New P.C. 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.
9.18. Delivery of Schedules. The Company and the
Optometrist shall deliver to Vision 21 all Schedules required to be delivered
by them prior to the Closing.
9.19. Conversion of Company. After the transfer of the
Optometric Assets of the Company to New P.C. and prior to Closing, Optometrist
shall cause the Company to take
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such action and file such documents or instruments as may be necessary to
convert the Company into a general business corporation in accordance with
applicable law.
9.20. Assignment of Fees for 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 optometry services which are part of the Accounts
Receivable to the Company existing on the Closing Date, except for those fees
specified and set forth on Schedule 9.20. Each Professional Employee shall
undertake to endorse any payments received on account of such services to the
order of the Company and to take such other action as may be necessary to
confirm to the Company the rights to collect and retain for its own account
such Accounts Receivable. The Company shall cause its Professional Employees
to agree that such security interest of such lender(s) is intended to be a
first priority security interest and is superior to any right, title or
interest which may be asserted by such Professional Employees with respect to
the Accounts Receivable or the proceeds thereof. In the event that the
assignment of rights described in this Section shall be deemed, for any reason,
to be ineffective as an outright assignment, the Company shall cause each
Professional Employee to agree that such Professional Employee shall be deemed,
effective as of the Closing Date, to have granted to the Company a first
priority lien on and security interest in and to any and all interests of such
Professional Employee in any of the Accounts Receivable, and all proceeds with
respect thereto, to secure the collection by the Company of all Accounts
Receivable, and this Agreement shall be deemed to be a security agreement to
the extent necessary to give effect to the foregoing. The Company shall cause
each Professional Employee to execute and deliver, all such financing
statements as the Company or Vision 21 may request in order to perfect such
security interest. The Company shall not suffer any Professional Employee to
grant any other lien on or security interest in or to such Accounts Receivable
or any proceeds thereof.
10. COVENANTS OF VISION 21. Vision 21 agrees that between the
date hereof and the Closing:
10.1. Consummation of Agreement. Vision 21 shall use
its best efforts to cause the consummation of the transactions contemplated
hereby in accordance with their terms and conditions and take all corporate and
other actions necessary to approve the Merger; provided, however, that this
covenant shall not require Vision 21 to make any expenditures that are not
expressly set forth in this Agreement or otherwise contemplated herein.
10.2. Efforts to Effect. Vision 21 will use its best
efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials of all necessary documents in form approved by
counsel for the parties to this Agreement.
10.3. Notification of Certain Matters. Vision 21 shall
promptly inform the Company and the Optometrist 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,
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received by Vision 21 subsequent to the date of this Agreement and prior to the
Effective Time 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.
10.4. Approvals of Third Parties. Vision 21 shall use
its best efforts to secure, as soon as practicable after the date hereof, all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby.
10.5. Licenses and Permits. Vision 21 shall use its
best efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Business Management Agreement and to conduct the intended
business of Vision 21.
10.6. Release of Optometrist From Practice Liabilities.
Vision 21 shall use its best efforts to obtain from third party creditors the
release of Optometrist from any personal liabilities relating to the Practice
which are identified on Schedule 10.6 and assumed by Vision 21 pursuant to the
terms of this Agreement.
11. COVENANTS OF VISION 21, THE COMPANY AND THE OPTOMETRIST.
Vision 21, the Company and the Optometrist agree as follows (with respect to
New P.C.'s covenants, the Optometrist agrees to cause New P.C. to perform):
11.1. Filings; Other Action.
a. Vision 21 and the Optometrist shall
cooperate to promptly prepare and file at Vision 21's expense with the SEC, a
Registration Statement on Form S-1 (or other appropriate form) to be filed by
Vision 21 in connection with any Initial Public Offering of Vision 21
(including the prospectus constituting a part thereof, the "Registration
Statement"). Vision 21 shall obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement, and the Company and the Optometrist shall
furnish all information concerning the Company, the New P.C., the
Non-optometric Assets and the Optometrist as may be reasonably requested in
connection with any such action.
b. Each of the Company, the Optometrist
and Vision 21 represents and warrants that none of the information or documents
supplied or to be supplied by it specifically for inclusion in a Registration
Statement, by exhibit or otherwise, will, at the time the Registration
Statement and each amendment and supplement thereof, if any, becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. The Company, the
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Optometrist, and Vision 21 shall agree as to the information and documents
supplied by the Company and the Optometrist for inclusion in the Registration
Statement and shall indicate such information and documents in a letter to be
delivered at least ten (10) days prior to the initial filing of the
Registration Statement with the SEC. The Company and the Optometrist shall be
entitled to review the Registration Statement and each amendment thereto, if
any, prior to the time each becomes effective under the Securities Act.
c. The Optometrist and the Company shall,
upon request, furnish Vision 21 with all information concerning himself,
itself, their respective partners, the Company's subsidiaries, directors,
officers, and stockholders, and including financial statements with respect to
the same, any consents (and information necessary to obtain such consents) and
such other matters as may be reasonably requested by Vision 21 in connection
with the preparation of the Registration Statement and each amendment or
supplement thereto, or any other statement, filing, notice or application made
by or on behalf of each such party or any of the Company's subsidiaries to any
governmental entity in connection with the Merger, any Initial Public Offering
and the other transactions contemplated by this Agreement.
11.2. 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 Non-optometric 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 Optometrist 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 12.1 and 13.1 have been fulfilled, the Schedules hereto shall be
deemed to be the Schedules as amended or supplemented pursuant to this Section
11.2. In the event that the Company is required to amend or supplement a
Schedule in accordance with this Section 11.2 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 11.2 and the Company and the
Optometrist do not consent, this Agreement shall be deemed terminated by mutual
consent as set forth in Section 17.1(d) or Section 17.1(e) as appropriate.
11.3. Business Management Agreement. The Company and
the Optometrist shall use their best efforts to cause the Business Management
Agreement to be executed and delivered by New P.C. on or prior to the Closing
Date, which shall be considered a Non-optometric Asset of the Company and shall
be acquired by Vision 21 in the Merger.
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11.4. Fees and Expenses.
a. Vision 21 shall pay all costs of the
Audit of the Company's Financial Statements and financial records by Vision
21's auditors (or auditors designated by Vision 21's auditors). All items
prepared by Vision 21's auditors in connection with the Audit ("Prepared Audit
Materials") shall be for use solely by Vision 21; provided, however, that the
Company may utilize the Prepared Audit Materials solely in connection with its
review of Vision 21's calculation of the Merger Consideration. The Prepared
Audit Materials shall not be deemed to include those items which customarily
remain the property of auditors such as their working papers and memos.
b. In the event the Merger is not
consummated, the Company and Optometrist shall not be entitled to copies or
originals of the Prepared Audit Materials unless the Company or Optometrist
pays for or reimburses Vision 21 for all expenses of the auditor 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. 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 Merger contemplated hereby.
d. In the event that an Initial Public
Offering does not take place for any reason whatsoever, Vision 21 (but not the
Company or the Optometrist) shall have sole responsibility for the payment of
all legal fees (except as set forth in Section 11.4(c)), accounting fees
(except as set forth in Section 11.4(a)), underwriters' expenses and other
fees, costs and expenses associated solely in connection with the preparation
of any Registration Statement relating to such Initial Public Offering.
e. If any Initial Public Offering is
consummated as contemplated by this Agreement, all legal fees, audit fees,
printing costs, filing fees, blue sky fees and underwriters' discounts and fees
associated solely with the Initial Public Offering shall be paid by Vision 21
from the proceeds of the Initial Public Offering, except for those expenses,
fees and underwriters' discounts related to any shares sold by the Optometrist.
11.5. Release of Optometrist From Practice Liabilities.
Vision 21 shall use its best efforts to obtain the release of the Optometrist
from any liabilities relating to the Practice of which the Optometrist and the
Company are jointly obligated which are set forth on Schedule 11.5.
12. 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:
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12.1. Representations and Warranties. The
representations and warranties of the Company and the Optometrist 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.
12.2. Covenants. The Company and the Optometrist 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 Optometrist prior to the Closing Date.
12.3. Legal Opinion. Counsel to the Company and the
Optometrist shall have delivered to Vision 21 their opinions, dated as of the
Closing Date, in form and substance substantially similar to Exhibit 12.3 which
Vision 21, Vision 21's counsel, the underwriters of the Initial Public Offering
and their counsel shall be permitted to rely upon.
12.4. 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.
12.5. No Material Adverse Change. No material adverse
change in the condition (financial or otherwise), operations, assets,
liabilities or business of the Company shall have 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 Optometrist.
12.6. Government Approvals and Required Consents. The
Company, the Optometrist, New P.C. 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).
12.7. Certification. None of the Company, the
Optometrist or New P.C. 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 optometry or
optometry services.
12.8. 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 14.1.
12.9. Due Diligence. Vision 21 shall have completed to
its satisfaction a due diligence review of the Company and the Optometrist.
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12.10. 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
at the sole expense of Vision 21.
12.11. Medicare Audit. Vision 21 shall have approved in
Vision 21's sole discretion a Medicare audit of the Company and the Practice
which audit shall be at the sole expense of Vision 21.
12.12. Exemption Under State Securities Laws. The
transfer of Vision 21's Securities to the Optometrist 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).
12.13. Assignment of Professional Employees' Rights in
Accounts Receivable. The Company shall have caused the Professional Employees
to assign any and all of their rights with respect to Accounts Receivable to
the Company and shall cause such Professional Employees to execute such other
agreements and instruments as contemplated in Section 9.21.
13. CONDITIONS PRECEDENT OF THE COMPANY AND THE OPTOMETRIST.
Except as may be waived in writing by the Company and the Optometrist, the
obligations of the Company and the Optometrist hereunder are subject to
fulfillment at or prior to the Closing Date of each of the following conditions
precedent:
13.1. 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.
13.2. 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.
13.3. Legal Opinions. Counsel to Vision 21 shall have
delivered to the Company and the Optometrist their opinion, dated as of the
Closing Date, in form and substance substantially similar to Exhibit 13.3.
13.4. 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.
13.5. Government Approvals and Required Consents. The
Company, the Optometrist, New P.C. 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
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transactions contemplated hereby under the terms of managed care contracts to
which the Company or any of its employees are a party).
13.6. Closing Deliveries. The Company, New P.C. and
the Optometrist shall have received all documents, instruments and agreements,
duly executed and delivered in form reasonably satisfactory to the Company,
referred to in Section 14.2.
13.7. 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.
13.8. No Material Adverse Change; Delivery of Amended
Confidential Information Memorandum. 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. Vision
21 shall deliver an amended Confidential Information Memorandum updating the
information contained in the initial Confidential Information Memorandum on or
before December, 1996, and the Company and the Optometrist shall have the right
not to close the transactions contemplated in this Agreement if they determine,
based upon their review of the amended Confidential Information Memorandum,
that a material adverse change has occurred with respect to the condition
(financial or otherwise), operations, assets, liabilities or business of Vision
21.
14. CLOSING DELIVERIES; ESCROW OF DOCUMENTS.
14.1. Deliveries of the Company, New P.C. and the
Optometrist. At or prior to December 1, 1996, the Company, New P.C. and the
Optometrist shall deliver to Vision 21, c/x Xxxxxxxx, Loop & Xxxxxxxx, LLP,
counsel to Vision 21, the following, all of which shall be in a form reasonably
satisfactory to Vision 21 and shall be held by Xxxxxxxx, Loop & Xxxxxxxx, LLP
in escrow pending Closing, pursuant to an escrow agreement or letter in form
and substance mutually acceptable to the parties hereto:
a. a copy of resolutions of the Board of
Directors of the Company authorizing (i) the execution, delivery and
performance of this Agreement and all related documents and agreements, and
(ii) the consummation of the Merger, certified by the Secretary of the Company
as being true and correct copies of the originals thereof subject to no
modifications or amendments;
b. a copy of resolutions of the Board of
Directors of New P.C. authorizing the execution, delivery and performance of
the Business Management Agreement, the Optometrist Employment Agreements, and
all other documents to be executed and delivered by New P.C. as contemplated by
this Agreement, certified by the Secretary of New P.C. as being true and
correct copies of the originals thereof subject to no modifications or
amendments;
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c. a certificate of the President of the
Company, and of the Optometrist, dated the Closing Date, as to the truth and
correctness of the representations and warranties of the Company and the
Optometrist contained herein, on and as of the Closing Date;
d. a certificate of the President of the
Company, and of the Optometrist, dated the Closing Date, (i) as to the
performance of and compliance in all material respects by the Company and the
Optometrist with all covenants contained herein on and as of the Closing Date
and (ii) certifying that all conditions precedent of the Company and the
Optometrist to the Closing have been satisfied;
e. a certificate of the Secretary of the
Company and the Secretary of New P.C. certifying as to the incumbency of the
directors and officers of each such corporation and as to the signatures of
such directors and officers who have executed documents delivered pursuant to
the Agreement on behalf of each such corporation;
f. a certificate, dated within ten (10)
days prior to the Closing Date, of the Secretary of State of the respective
states of incorporation for the Company and New P.C. establishing that each
such corporation is in existence, has paid all franchise or similar taxes, if
any, and, if applicable, otherwise is in good standing to transact business in
its state of organization;
g. certificates, dated within ten (10)
days prior to the Closing Date, of the Secretaries of State of the states in
which the Company and New P.C. are qualified to do business, to the effect that
each such corporation is qualified to do business and, if applicable, is in
good standing as a foreign corporation in each of such states;
h. an opinion of counsel to the Company
and Optometrists dated as of the Closing Date, in form and substance
satisfactory to Vision 21, which Vision 21, Vision 21's counsel and the
underwriters of any Initial Public Offering and their counsel are permitted to
rely upon and which shall include an opinion, subject to normal and customary
exceptions that to the best of their knowledge the transactions and
arrangements contemplated by this Agreement are in conformity with State laws,
rules and regulations governing the practice of optometry.
i. all authorizations, consents, permits
and licenses referenced in Section 3.8;
j. the resignations of the directors and
officers of the Company as requested by Vision 21;
k. the executed Business Management
Agreement in substantially the form attached hereto as Exhibit 14.1 (k), as
revised in accordance with changes reasonably deemed necessary or advisable by
legal counsel retained by Vision 21 in the State to address regulatory and
compliance issues;
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l. an executed Optometrist Employment
Agreement between New P.C. and the Optometrist in substantially the form
attached hereto as Exhibit 14.1 (l);
m. an executed Optometrist Employment
Agreement between New P.C. and each Optometrist Employee who is then an
employee of the Company in substantially the form attached hereto as Exhibit
14.1 (m);
n. an executed Optometrist Employment
Agreement between New P.C. and each Optometrist Employee who is then an
employee of the Company in substantially the form attached hereto as Exhibit
14.1 (n);
o. an executed Registration Rights
Agreement between Vision 21 and the Optometrist in substantially the form
attached hereto as Exhibit 14.1 (o) (the "Registration Rights Agreement");
p. an executed Certificate of Merger
necessary to effect the Merger;
q. a non-foreign affidavit, as such
affidavit is referred to in Section 1445 (b) (2) of the Code, of the
Optometrist, signed under a penalty of perjury and dated as of the Closing
Date, to the effect that the Optometrist is a United States citizen or a
resident alien (and thus not a foreign person) and providing the Optometrist's
United States taxpayer identification number;
r. if desired by Vision 21, a new lease
or leases between the landlords under each lease for real property described on
Schedule 3.14(c) and Vision 21 in form and substance reasonably satisfactory to
Vision 21;
s. an executed Agreement to Continue
Practice After Transfer Event and Stock Pledge substantially in the form of
Exhibit 14.1(s); and
t. the Shares of Company Common Stock to
be delivered pursuant to Section 2.9(b);
u. 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.
14.2. Deliveries of Vision 21. At or prior to December
___, 1996, Vision 21 shall deliver to the Company and the Optometrist, 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
Optometrist 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 13.3;
g. the executed Registration Rights
Agreement;
h. the executed Lease Assignments;
i. the Shares of Vision 21 Common Stock
to be delivered pursuant to Section 2.9(a);
j. the Agreement to Continue Practice
After Transfer Event and Stock Pledge; and
k. such other instrument or instruments
of transfer, prepared by the Company or the Optometrist as shall be necessary
or appropriate, as the Company, the Optometrist or their counsel shall
reasonable request, to carry out and effect the purpose and intent of this
Agreement.
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14.3. Release of Escrow Materials. Xxxxxxxx, Loop &
Xxxxxxxx, LLP shall release the agreements, certificates, instruments,
documents and other materials described in Sections 14.1 and 14.2 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) and after counsel for the Optometrist and the Company
have sent written notice to Xxxxxxxx, Loop & Xxxxxxxx, LLP stating that the
Optometrist and the Company have reviewed the amended Confidential Information
Memorandum and have decided, based upon such review, to consummate the
transactions contemplated in this Agreement. In the event that the Optometrist
and the Company elect not to consummate the transactions contemplated in this
Agreement based upon their review of the amended Confidential Information
Memorandum, and counsel for the Optometrist and the Company informs Xxxxxxxx,
Loop & Xxxxxxxx, LLP in writing as to such decision, Xxxxxxxx, Loop & Xxxxxxxx,
LLP shall promptly return the foregoing materials to the parties sending such
materials.
15. POST CLOSING MATTERS.
15.1. 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 Optometrist 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.
15.2. Practice Advisory Council; Local Advisory
Council; National Appeals Council. Vision 21 and New P.A. shall establish a
practice advisory council composed of delegates from Vision 21 and New P.A.
which shall advise Vision 21 and New P.A. and determine certain issues as more
fully described in the Business Management Agreement. Vision 21 shall also
establish a local advisory council composed of delegates from certain practice
groups acquired by Vision 21 in connection with the Related Acquisitions. Such
delegates shall be appointed from practice groups which are located in a market
area to be identified by Vision 21 and in which New P.A. is located. The local
advisory council board shall advise Vision 21 and the practice groups within
the market area as to policy and strategy issues and shall determine certain
types of issues and disputes between Vision 21 and such practice groups which
issues and disputes are identified in the Business Management Agreement and
other management agreements entered into between Vision 21 and practice groups.
New P.A. shall have the right to appoint one (1) member to a local advisory
council who shall serve an initial two (2) year term. After the initial
two-year term, election of members to the local advisory council shall be in
accordance with by-laws which shall be adopted and amended by the local
advisory council. Vision 21 shall also establish a national appeals council
which shall have, among other duties and responsibilities, the power to adopt
and amend its by-laws, to review and approve as limited herein certain
decisions of the local advisory councils, and to resolve deadlocks among the
members of such local advisory councils.
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16. REMEDIES.
16.1. Indemnification by the Optometrist. Subject to
the terms and conditions of this Agreement, the Optometrist agrees to
indemnify, defend and hold Vision 21, the Surviving Corporation and their
respective directors, officers, members, managers, employees, agents, attorneys
and affiliates harmless from and against all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees and expenses (collectively, "Damages") asserted against or
incurred by such entities and individuals (including, but not limited to, any
reduction in payments to or revenues of New P.C.), arising out of or resulting
from:
a. a breach of any representation,
warranty or covenant of the Company or the Optometrist 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 Optometrist, the Company (including its subsidiaries, if any) or New P.C.,
and provided to Vision 21 or its counsel by the Company or the Optometrist,
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 Optometrist, the Company (including its
subsidiaries, if any) or New P.C. 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 Optometrist, 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 Initial Public Offering;
c. any filings, reports or disclosures
made pursuant to the IRS Voluntary Compliance Resolution Program, if
applicable;
d. any failure of the Merger to qualify
as a reorganization within the meaning of Section 368(a)(1)(A) of the Code or
any failure of the spin off of Company's optometric business and Optometric
Assets to qualify as a tax free spin off under Section 355 of the Code; and
e. any liability arising from any alleged
unlawful sale or offer to sell or transfer any of the Common Stock by
Optometrist.
16.2. Indemnification by Vision 21. Subject to the
terms and conditions of this Agreement, Vision 21 hereby agrees to indemnify,
defend and hold the Optometrist harmless
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from and against all damages asserted against or incurred by him arising out of
or resulting from:
a. a breach by Vision 21 of any
representation, warranty or covenant of Vision 21 contained therein or in any
schedule or certificate delivered hereunder;
b. any liability under the Securities
Act, the Exchange Act or any other federal or state "Blue Sky" or securities
law or regulation, at common law or otherwise, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact relating to
Vision 21, contained in any preliminary prospectus, Registration Statement or
any prospectus forming a part thereof, or any amendment thereof or supplement
thereto, arising out of or based upon any omission or alleged omission to state
therein a material fact relating to Vision 21 (including its subsidiaries),
required to be stated therein or necessary to make the statements therein not
misleading; and
c. any filings, reports or disclosures
made pursuant to the IRS Voluntary Compliance Resolution Program, if
applicable.
Notwithstanding anything in this Section 16.2, 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
Related Acquisitions.
16.3. 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 16.6, 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 16 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.
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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 16.3(b).
The Indemnifying Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof. The Indemnified Party is
hereby authorized, at the sole cost and expense of the Indemnifying Party (but
only if the Indemnified Party is entitled to indemnification hereunder), to
file, during the Election Period, any motion, answer or other pleadings that
the Indemnified Party shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Party and not prejudicial to the
Indemnifying Party (it being understood and agreed that if an Indemnified Party
takes any such action that is prejudicial and causes a final adjudication that
is adverse to the Indemnifying Party, the Indemnifying Party shall be relieved
of its obligations hereunder with respect to such Third Party Claim). If
requested by the Indemnifying Party, the Indemnified Party agrees, at the sole
cost and expense of the Indemnifying Party, to cooperate with the Indemnifying
Party and its counsel in contesting any Third Party Claim that the Indemnifying
Party elects to contest, including, without limitation, the making of any
related counterclaim against the person asserting the Third Party Claim or any
cross-complaint against any person. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to Section 16.3(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.
b. If the Indemnifying Party fails to
notify the Indemnified Party within the Election Period that the Indemnifying
Party elects to defend the Indemnified Party pursuant to Section 16.3(b), or if
the Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 16.3(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
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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 16 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 16.3(c), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation;
provided, however, that if the named parties to any such action (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party, and the Indemnifying Party has been advised by counsel that there may be
one or more legal defenses available to the Indemnified Party, then the
Indemnifying Party may employ separate counsel and upon written notification
thereof, the Indemnified Party shall not have the right to assume the defense
of such action on behalf of the Indemnifying Party.
c. In the event any Indemnified Party
should have a claim against any Indemnifying Party hereunder that does not
involve a Third Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice") describing in
reasonable detail the nature of the claim, an estimate of the amount of damages
attributable to such claim and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does not
notify the Indemnified Party within sixty (60) days from its receipt of the
Indemnity Notice that the Indemnifying Party disputes such claim, the claim
specified by the Indemnified Party in the Indemnity Notice shall be deemed a
liability of the Indemnifying Party hereunder. If the Indemnifying Party has
timely disputed such claim, as provided above, such dispute shall be resolved
by mediation or arbitration as provided in Section 20.1 if the parties do not
reach a settlement of such dispute within thirty (30) days after notice of a
dispute is given.
d. Payments of all amounts owing by an
Indemnifying Party pursuant to this Article 16 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 16.3(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.
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16.4. 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 16
regarding indemnification shall survive Closing.
16.5. 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.
16.6. Indemnification Limitations. Notwithstanding the
provisions of Sections 16.1 and 16.2, (a) no party shall be required to
indemnify another party with respect to a breach of a representation, warranty
or covenant unless the claim for indemnification is brought within two (2)
years after the Closing Date, except that a claim for indemnification for a
breach of the representations and warranties contained in Sections 3.1, 3.2,
3.3., 3.4, 3.5, 3.6, 3.14, 3.17, 3.20, 3.23, 4.1, 4.3, 4.4, 4.8, 5.1, 5.2, 5.3,
5.4, 5.6, 5.7, 7.1, 7.2, 7.3 and 7.4 may be made at any time, and a claim for
indemnification for a breach of the representations and warranties contained in
Sections 3.12, 3.18, 3.21, 3.27, 3.28, 3.29, 3.30, 3.31, 3.33, 4.5, 4.7, 4.11,
5.8 and 8.1 may be made at any time within the applicable statute of
limitations; (b) indemnification based upon Sections 16.1(b) through (e) and
16.2(b) may be made at any time within the applicable statute of limitations;
and (c) the Optometrist 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 Merger Consideration; and (d) the Optometrist shall not be required to
indemnify Vision 21 with respect to a breach of a representation, warranty or
covenant for Damages in excess of the aggregate Merger Consideration received
by the Optometrist (other than pursuant to a requirement to indemnify Vision 21
under Sections 3.30 and 3.31, or unless the breach involves an intentional
breach or fraud by the Optometrist or the Company, which shall be unlimited).
16.7. 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.
16.8. Payment of Indemnification Obligation. In the
event that the Optometrist has an indemnification obligation to Vision 21
hereunder, subject to Vision 21's approval as set forth below, the Optometrist
may satisfy such obligation by transferring to Vision 21 such number of shares
of Vision 21 Common Stock owned by the Optometrist having an aggregate fair
market value (which is prior to any Initial Public Offering based upon the
valuation given at Closing hereof or after an Initial 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
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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 Optometrist 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 Optometrist 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 Optometrist shall make such
representation and warranties as to title to the stock, absences of security
interests, liens, claims, proxies, stockholders' agreements and other
encumbrances and other matters as reasonably requested by Vision 21; and
c. The other terms and conditions of any
transaction contemplated pursuant to this Section and the effects thereof,
including any legal or tax consequences, shall be reasonably satisfactory to
Vision 21.
17. TERMINATION.
17.1. Termination. This Agreement may be terminated
and the Merger may be abandoned:
a. at any time prior to the Closing Date
by mutual agreement of all parties;
b. at any time prior to the Closing Date
by Vision 21 if any representation or warranty of the Company or the
Optometrist contained in this Agreement or in any certificate or other document
executed and delivered by the Company or the Optometrist pursuant to this
Agreement is or becomes untrue or breached in any material respect or if the
Company or the Optometrist 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;
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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
Optometrist for all reasonable attorneys' and accountants' fees incurred by the
Company and the Optometrist in connection with this Agreement; provided that
Vision 21 shall only reimburse the Company and the Optometrist up to an
aggregate maximum amount of One Hundred Thousand and No/100 Dollars
($100,000.00) for such fees; or
g. by Vision 21 or the Company if the
Merger shall not have been consummated by December 5, 1996.
17.2. Effect of Termination. In the event this
Agreement is terminated pursuant to Section 17.1, Vision 21, the Company and
the Optometrist, 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 16.1. In the event of a
termination of this Agreement under the provisions of this Article 17, a party
not then in material breach of this Agreement shall stand fully released and
discharged of any and all obligations under this Agreement.
18. OPTOMETRIST EMPLOYMENT AGREEMENT.
18.1. Optometrist Employment Agreement. The parties
acknowledge that in accordance with the terms of this Agreement, Optometrist,
as employee, and New P.C., as employer, have entered into the Optometrist
Employment Agreement and that Vision 21 is entitled to enforce such Optometrist
Employment Agreement as an intended third party beneficiary. Optometrist and
Vision 21 further acknowledge that Vision 21 would suffer severe harm in the
event of Optometrist's resignation from New P.C.'s practice prior to the
expiration of the five (5) year term of the Optometrist Employment Agreement
(without first obtaining the written consent of Vision 21) or a breach or
default of Optometrist's obligations under such Optometrist Employment
Agreement, and Optometrist, New P.C. and Vision 21 agree that Vision 21 shall
be entitled to recover from Optometrist 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 Optometrist, (ii) circumstances not
caused by an act or omission of Optometrist and which circumstances are beyond
his control, or (iii) the loss of Optometrist's license to practice as an
optometrist, unless such loss of license is due to an act or omission of
Optometrist. Notwithstanding the foregoing, Optometrist shall have no
obligation to pay the damages contemplated in this Section 18.1 if the Business
Management Agreement has been terminated pursuant to a material breach by
Vision 21.
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18.2. Survival. The parties acknowledge and agree that
this Article 18 shall survive the Closing of the transactions contemplated
herein.
19. NON-COMPETITION AND CONFIDENTIALITY COVENANTS.
19.1. Optometrist Non-Competition Covenant.
a. The Optometrist recognizes that the
covenants of the Optometrist contained in this Section 19.1 are an essential
part of this Agreement and that, but for the agreement of the Optometrist to
comply with such covenants, Vision 21 would not have entered into this
Agreement. The Optometrist acknowledges and agrees that the Optometrist's
covenant not to compete is necessary to ensure the continuation of the
Management Business (as defined below) and is necessary to protect the
reputation of Vision 21, and that irreparable and irrevocable harm and damage
will be done to Vision 21 if the Optometrist competes with the Management
Business or Vision 21. The Optometrist accordingly agrees that for the periods
set forth in the Business Management Agreement, the Optometrist 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 Optometrist'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 Optometrist 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 Optometrist'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 Optometrist 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 optometric care from the
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Company and/or shall in the future receive optometric care from the New P.C.
are not deemed to be customers or clients of the Management Business.
b. For the purposes of this Section 19.1,
the following terms shall have the meaning set forth below:
i) "Management Business" shall
mean management and administration of the non-optometric aspects of optometry
practices.
ii) "Competing Management
Business" shall mean an individual, business, corporation, association, firm,
undertaking, company, partnership, joint venture, organization or other entity
that either (A) conducts a business substantially similar to the Management
Business within the State, or (B) provides or sells a service which is the same
or substantially similar to, or otherwise competitive with the services
provided by the Management Business within the State; provided, however, that
"Competing Management Business" shall not include Vision 21, or the
Optometrist's internal management and administration of the Optometrist's
optometric practice or participation in the management and administration of a
optometrist group in which the Optometrist devotes a significant amount of time
to the practice of optometry.
c. Should any portion of this Section
19.1 be deemed unenforceable because of the scope, duration or territory
encompassed by the undertakings of the Optometrist hereunder, and only in such
event, then the Optometrist 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 Optometrist 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 Optometrist shall not be bound by this covenant and shall not be
obligated to pay the liquidated damages contemplated in this Section 19.1 if at
the time of a breach of this covenant the Business Management Agreement has
already been terminated pursuant to Section 6.2(a) thereof. Without limiting
other possible remedies to Vision 21 for breach of this covenant, the
Optometrist agrees 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 Optometrist and Vision 21
further expressly acknowledge that the damages that would result from a
violation of this non-competition covenant would be impossible to predict with
any degree of certainty, and agree that liquidated damages in the amount of the
aggregate consideration received by the Optometrist 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 Optometrist
Employment
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Agreement between the Optometrist and New P.C., the aggregate consideration
received by Optometrist pursuant to this Agreement shall be in those amounts
and in such form as set forth in Schedule 19.1. If the Optometrist 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 Optometrist or, with respect to shares of
Common Stock entitled to be received by the Optometrist, terminate its
obligation to deliver such number of shares of Common Stock, valued as set
forth in Section 6.6(a) of the Business Management Agreement, and (b) repayment
by Optometrist to Vision 21 of any and all sums received in connection with any
shares of Vision 21 Common Stock sold by Optometrist; but in no event shall
Vision 21 be entitled to offset amounts in excess of the liquidated damages sum
pursuant to this Section 19.1. The Optometrist agrees to deliver to Vision 21
the certificates representing any such shares canceled by Vision 21. Payment
and satisfaction by Optometrist shall be made within sixty (60) days of
notification to Optometrist by Vision 21 that Optometrist has violated this
non-competition covenant.
e. Notwithstanding anything contained
herein, this Section 19.1 shall not be construed to (i) limit the freedom of
any patient of the Optometrist to choose the facility or optometrist from whom
such patient shall receive health-care services or (ii) limit or interfere with
the Optometrist's ability to exercise his professional optometric judgment in
treating his patients or his ability to provide optometric services to his
patients.
19.2. Optometrist Confidentiality Covenant. From the
date hereof, the Optometrist shall not, directly or indirectly, use for any
purpose, other than in connection with the performance of the Optometrist's
duties under the Optometrist Employment Agreement with New P.C., 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 Optometrist may disclose
information that the Optometrist can establish (a) is or becomes generally
available to and known by the public or optometric community (other than as a
result of an unpermitted disclosure directly or indirectly by the Optometrist
or his Affiliates, advisors, or representatives); (b) is or becomes available
to the Optometrist on a nonconfidential basis from a source other than Vision
21, the Company or their respective Affiliates, advisors or representatives,
provided that such source is not and was not bound by a confidentiality
agreement with or other obligation of secrecy to Vision 21, the Company or
their respective Affiliates, advisors or representatives of which the
Optometrist has knowledge; or (c) has already been or is hereafter
independently acquired or developed by the Optometrist 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 Optometrist agrees 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 Optometrist further agrees
that if any restriction contained in this Section 19.2
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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.
19.3. Survival. The parties acknowledge and agree that
this Article 19 shall survive the Closing of the transactions contemplated
herein.
20. DISPUTES.
20.1. Mediation and Arbitration. Any dispute,
controversy or claim (excluding claims arising out of an alleged breach of
Article 19 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 Scottsdale,
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 Scottsdale, 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.
21. MISCELLANEOUS
21.1. Taxes. Optometrist 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).
21.2. Remedies Not Exclusive. No remedy conferred by
any of the specific provisions of this Agreement or any document contemplated
by this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise. The election of any one or more remedies by any party hereto
shall not constitute a waiver of the right to pursue other available remedies.
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21.3. 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.
21.4. Notices. All notices, reports, records or other
communications that are required or permitted to be given to the parties under
this Agreement shall be sufficient in all respects if given in writing and
delivered in person, by telecopy, by overnight courier or by registered or
certified mail, postage prepaid, return receipt requested, to the receiving
party at the following address:
If to Vision 21 addressed to:
Vision 21, 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 Optometrist addressed to:
Xx. Xxxxx & Associates, P.A.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxx, O.D.
With copies to:
MacFarlane, Ausley, Xxxxxxxx & XxXxxxxx
000 Xxxxx Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esquire
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or to such other address as such party may have given to the other parties by
notice pursuant to this Section 21.4. 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.
21.5. Choice of Law. This Agreement shall be
construed, interpreted, and the rights of the parties determined in accordance
with, the laws of the State of Florida except with respect to matters of law
concerning the internal affairs of any corporate or partnership entity which is
a party to or the subject of this Agreement, and as to those matters the law of
the state of incorporation or organization of the respective entity shall
govern.
21.6. 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.
21.7. Confidentiality Agreements. The provisions of
any prior confidentiality agreements and letters of intent between or among
Vision 21, the Company and the Optometrist, as amended, shall terminate and
cease to be of any force or effect at and upon the Closing.
21.8. Reformation Clause. It is the intention of the
parties hereto to conform strictly to applicable laws regarding the practice
and regulation of optometry, 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 Non-optometric Asset by Vision 21 violates any Applicable Law, then the
parties hereto agree as follows: (a) the provisions of this section 21.8 shall
govern and control; (b) if none of the parties hereto are materially
economically disadvantaged, then any Non-optometric 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
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and deliver all documents or instruments necessary to effect or evidence the
provisions of this Section 21.8.
21.9. 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.
21.10. 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.
21.11. 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.
21.12. 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,
New P.C. 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.
21.13. 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.
21.14. No Rights as Stockholder. The Optometrist 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.
68
72
21.15. 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.
21.16. 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.
21.17. Severability. Each article, section and
subsection of this Agreement constitutes a separate and distinct undertaking,
covenant or provision of this Agreement. If any such provision shall finally
be determined to be unlawful, such provision shall be deemed severed from this
Agreement, but every other provision of this Agreement shall remain in full
force and effect.
21.18. Form of Transaction. If after the execution
hereof, Vision 21 determines that the ownership of the Non-optometric Assets of
the Company can be better achieved through a different form of transaction
without economic injury to the Company or the Optometrist, or delay of the
consummation of the transaction, the Company and the Optometrist 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 Optometrist at Closing for all reasonable additional
expenses incurred by the Company and the Optometrist as a result of such change
in form.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
69
73
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
"COMPANY"
XX. XXXXX & ASSOCIATES #6950, P.A.,
a Florida professional association,
/s/ By: /s/ Xxxx Xxxxx Witness
-------------------------------------- -----------------------------------------------
Xxxx Xxxxx, O.D., President
/s/
--------------------------------------
Witness
"OPTOMETRIST"
/s/ /s/ Xxxx Xxxxx
-------------------------------------- --------------------------------------------------
Witness Xxxx Xxxxx, O.D.
/s/
--------------------------------------
Witness
"VISION 21"
VISION 21, INC.
/s/ By: /s/ Xxxxxxxx X. Xxxxxxxx Witness
-------------------------------------- -----------------------------------------------
Xxxxxxxx X. Xxxxxxxx, President
/s/
--------------------------------------
Witness
70
74
Schedule 1.47
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Optometric Assets of the Company
The following constitute the Optometric Assets:
Optometric records;
Patient lists;
Third-party payer contracts (except for rights to purchased accounts
receivable);
Licenses, certificates of need, Medicare/Medicaid certifications and
other governmental authorizations necessary to provide Professional
Eye Care Services and to be paid therefor by applicable third-party
payers; and
Any other asset that legally cannot be owned by a party that is not
optometrist-owned.
75
Schedule 3
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Individuals - Best knowledge
representations and warranties of the Company
1. Xxxx X. Xxxxx, O.D.
2. April X. Xxxxx
76
Schedule 3.1
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Capital Stock or other interest owned by the Company,
the Optometrist or any Professional Employee in any Competitor
None.
77
Schedule 3.2
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Security interests, liens, adverse claims,
encumbrances, equities, proxies or
shareholders agreements affecting Company Common Stock
None.
78
Schedule 3.3
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Options, warrants, subscriptions or other rights to
purchase stock in the Company or Company's obligation
to purchase, redeem or otherwise acquire any of its
equity securities, pay dividends or make distributions
None.
79
Schedule 3.4
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Sale, distribution, or spin-off of
significant assets of the Company or
its Affiliates within the last two years
None.
80
Schedule 3.7
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Violations or conflicts resulting from
execution, delivery and consummation
of transaction by the Company
None.
81
Schedule 3.8
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Consents required for Company from
Governmental Authority or any other persons
None.
82
Schedule 3.10
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Liabilities of the Company not
reflected in Financial Statements
None.
83
Schedule 3.11(a)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Compensation of all Employees of the Company
See attached.
* * *
[IN ACCORDANCE WITH RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
CONFIDENTIAL PORTIONS OF THIS AGREEMENT (INCLUDING THE INFORMATION ON THE CHART
CALLED FOR BY THIS SCHEDULE) HAVE BEEN OMITTED HEREFROM AND FILED SEPARATELY
WITH THE SECURITIES EXCHANGE COMMISSION.]
84
Schedule 3.11(b)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Compensation plans, arrangements or practices
sponsored by the Company or to which the Company
contributes on behalf of its employees (other
than Employment Agreements and Employee Benefit Plans)
None.
85
Schedule 3.11(c)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Employment Agreements
Xxxxxxx Xxxxxxx, O.D. (full-time)
All part-time Optometrists work on an independent contractor basis.
86
Schedule 3.11(d)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Employee Policies and Procedures
The Employee Policies and Procedures for Xx. Xxxxx & Associates #6950,
#6958 and #6966 are identical to those for Vision 21 and Xx. Xxxxxxxx'x O.D.
practices. We do not have our own individual Policies and Procedures Manual.
The manuals in each office say Vision 21 Policies and Procedures.
87
Schedule 3.11(f)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Exceptions to Labor Compliance
None.
88
Schedule 3.11(g)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Union participation of Company Employees
None.
89
Schedule 3.12(a)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Employee Benefit Plans sponsored
by the Company or to which the
Company contributes on behalf of
its Employees in the past three years
Group medical and life insurance plans
90
Schedule 3.12(c)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Employee Benefit Plan audits,
investigations or enforcement actions
None.
91
Schedule 3.12(f)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Employee Benefit Plan
determination letter or IRS ruling
Not applicable.
92
Schedule 3.13
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Changes to Company
since Balance Sheet Date
None.
93
Schedule 3.14(b)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Permitted Encumbrances
on Personal Property
None. Any liens or security interests are to be released within thirty (30)
days.
94
Schedule 3.14(c)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Real Property Leases and
Personal Property Leases
1. Real Property Lease with Visionworks.
95
Schedule 3.15
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Commitments of the Company
None.
96
Schedule 3.16
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Insurance Policies; Cancellations;
Outstanding Claims, Settlements or
Premiums Owed; Professional Liability
Insurance Denials since January 1, 1994;
and All Claims since January 1, 1994
See chart attached hereto and made a part hereof.
* * *
[IN ACCORDANCE WITH RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
CONFIDENTIAL PORTIONS OF THIS AGREEMENT (INCLUDING THE INFORMATION ON THE CHART
CALLED FOR BY THIS SCHEDULE) HAVE BEEN OMITTED HEREFROM AND FILED SEPARATELY
WITH THE SECURITIES EXCHANGE COMMISSION.]
97
XXXXX & ASSOCIATES - SCHEDULE 3.16 RE: INSURANCE
Insured Xxxx Xxxxx Xxxxxx Xxxxxx Xxxxxxx Xxxxxxx
Optometrist Optometrist Optometrist
Liability limits $5 million / $5 million $2 million / $4 million $1 million / $3 million
Professional liability Professional liability Professional liability
Expiration date 2-2-97 10-29-97 12-18-96
Retroactive N/A N/A N/A
date
Occurrence vs. Occurrence Occurrence Occurrence
Claims Made
Claims Same as Xx. Xxxxx & Xxxxxx Xxxxxx, along with None
Associates a primary care physician
and an opthamologist, is
being sued for failure to
diagnose a condition that
left an 80 year old man
blind. The opthamologist
testified that Lesser
would not have been able
to diagnose the problem at
the time that she saw the
patient.
Insured Xxxx Xxxxxx Xxxxx & Associates
Optometrist (Policy issued in name of
Xxxx X. Xxxxx, O.D.)
Liability limits $1 million / $3 million $5 million / $5 million
Professional Liability Commercial general
Expiration date 10-2-97 2-2-97
Retroactive N/A N/A
date
Occurrence vs. Occurrence Occurrence
Claims Made
Claims None Named as defendant
through vicarious
liability claim in the
Lesser suit. The
insurance company
believes that Xxxxxx
Xxxxxx is an independent
contractor, and believes
that no recovery against
the professional
association will occur.
98
Schedule 3.17
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Description of Proprietary Rights; Consents
None.
99
Schedule 3.18
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Good faith disputes over payment
of Taxes; Tax deficiency or delinquency
None.
100
Schedule 3.19
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
List of licenses, franchises, permits and
governmental authorizations for conduct of
the Company's business; Notices of Noncompliance
1. State Board License for Xxxx Xxxxx, O.D.
2. State Board License for Xxxxxx Xxxxxx, O.D.
3. State Board License for Xxxxxxx Xxxxxxx, O.D.
4. State Board License for Xxxx Xxxxxxxx Xxxxxx, X.X.
5. Dade County Occupational License Tax for Xxxx Xxxxx, O.D.
6. Dade County Occupational License Tax for Xxxxxx Xxxxxx, O.D.
7. Dade County Occupational License Tax for Xx. Xxxxx &
Associates.
8. N. Miami Beach Occupational License for Xxxx Xxxxx, O.D.
9. N. Miami Beach Occupational License for Xxxxxx Xxxxxx, O.D.
101
Schedule 3.20
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Finder's, broker's or
agent's fee owed by the Company
None.
102
Schedule 3.21
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Company Litigation
None.
103
Schedule 3.24
to Agreement and Plan of Reorganization among Xx. Xxxxx & Associates,
#6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the "Optometrist") and
Vision 21, Inc. ("Vision 21")
List of Company borrowing and investing arrangements
1. Promissory Note made by the Company and other companies in
1991 to Xxxx Xxxxxx Corporation in the original principal
amount of $387,692.00. Payable with interest at prime plus 1%
per annum in sixty (60) consecutive monthly installments
commencing February 2, 1993. This is an unsecured note. The
Optometrist shall with thirty (30) days obtain a release of
the Company and Vision 21 from any and all liability under
this note. An agreed upon amount of Vision 21 stock will be
escrowed to assure compliance with this obligation.
104
Schedule 3.25
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
Ownership Interests of
Interested Persons and Material
Affiliations in the last three years
None.
105
Schedule 3.26
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
Company Investments in Competitors
None.
106
Schedule 3.32
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
Description of and relationship with Payors
None.
107
Schedule 4.2
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
Violations or conflicts
resulting from execution, delivery or
consummation of transaction by the Optometrist
None.
108
Schedule 4.4
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
List of transfers or other
transactions involving Company
capital stock since January 1, 1994
None.
109
Schedule 4.7
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
Finder's, broker's or
agent's fees owed by the Optometrist
None.
110
Schedule 4.8
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
Optometrist Ownership of Interested
Persons and Material Affiliations
None.
111
Schedule 4.9
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
Optometrist Investments in Competitors
None.
112
Schedule 4.10
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
Optometrist Litigation
None.
113
Schedule 4.12
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
List of hospitals at which
Optometrist has full staff privileges
None.
114
Schedule 4.13
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
Exceptions to continued Optometrist
intent to practice optometry
Consistent with activity of Optometrist in prior twelve (12) months.
115
Schedule 5
to Agreement and Plan of Reorganization among Xx. Xxxxx
& Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D.
(the "Optometrist") and Vision 21, Inc. ("Vision 21")
Individuals - Best knowledge
representations and warranties of Vision 21
1. Xxxxxxxx X. Xxxxxxxx
2. Xxxxxxx X. Xxxxxxx
3. Xxxxxxx X. Xxxxx
4. Xxxxxxxx X. Xxxxxxx
116
Schedule 5.1
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Jurisdictions where Vision 21
is qualified to do business
1. Florida
2. Arizona
3. Minnesota
4. New York
117
Schedule 5.6
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Consents required for Vision 21
from Governmental Authority or other persons
None.
118
Schedule 5.7
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Finder's, brokers or
agent's fees owed by Vision 21
None.
119
Schedule 5.11
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Liabilities of Vision 21
not reflected in Financial Statements
None.
120
Schedule 7.6
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Other Contracts or
Agreements of New, P.C.
None.
121
Schedule 8.1(b)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Exception to Optometrist "accredited investor"
or "sophisticated investor" representation
None.
122
Schedule 8.1(d)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Optometrist's principal residence
[IN ACCORDANCE WITH RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
CONFIDENTIAL PORTIONS OF THIS AGREEMENT (INCLUDING THE INFORMATION ON THE CHART
CALLED FOR BY THIS SCHEDULE) HAVE BEEN OMITTED HEREFROM AND FILED SEPARATELY
WITH THE SECURITIES EXCHANGE COMMISSION.]
123
Schedule 9.16
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Non-Shareholder Optometrist
Employees not required to enter into
Optometrist Employment Agreement with New, P.C.
Part-time O.D.'s
124
Schedule 9.17
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Optometrist Employees not
required to enter into Optometrist
Employment Agreement with New, P.C.
None
125
Schedule 9.21
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Exceptions to Assignment of Fees
for Optometric and Optometry Services
from all Professional Employees of Company
None.
126
Schedule 10.6
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Personal liabilities of
Optometrist for which Vision 21 will
use best efforts to obtain release
None.
127
Schedule 11.5
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Joint personal liabilities of Optometrist
and Company to which Vision 21
will use best efforts to obtain release
None.
128
Schedule 18.1
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Liquidated damages for Optometrist
breaching Optometrist Employment Agreement
Liquidated damages for Xxxx Xxxxx, O.D., shall equal $2.77 per share
of Vision 21 common stock times 49,212 shares of Vision 21 common
stock granted to Xxxx Xxxxx, O.D., in connection with the Acquisition,
which total equals $136,317.
129
Exhibit 2.8(a)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
Share Exchange
A total of 49,212 shares of Vision 21 common stock for all of the
issued and outstanding common stock of Xx. Xxxxx & Associates, #6950, P.A.
130
Exhibit 14.1(o)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement"), dated as of
____________, 19__, is by and between Vision 21, Inc., a Florida corporation
and any successor ("Vision 21"), and ______________, O.D. with a business
address at 0000 Xxxxx Xxxxx Xxxx, Xxxxx, Xxxxxxx 00000 ("Shareholder").
1. Registration Rights.
(a) In the event that Vision 21 proposes to file a
registration statement under the Securities Act for purposes of effecting an
underwritten public offering of shares of Vision 21 common stock for cash
(including, but not limited to, a registration statement relating to a
secondary offering of Vision 21 common stock, but excluding registration
statements relating to any employee benefit plan or a corporate
reorganization), Vision 21 shall give written notice of such proposed filing to
the Shareholder at least fifteen (15) days before the anticipated filing date,
and such notice shall offer Shareholder the opportunity to register such number
of the Shareholder's shares of common stock as Shareholder may request in
writing within ten (10) days after receipt of such notice; provided, however,
that the maximum number of shares of common stock that such Shareholder may
request to include in any registration statement shall be limited as provided
in Section 1(c).
(b) In the event that (i) one (1) year has elapsed from
the date of effectiveness of the registration statement filed in connection
with an underwritten initial public offering of shares of Vision 21 common
stock, and (ii) Vision 21 receives a written request from holders holding in
the aggregate a minimum of 300,000 shares of Vision 21 common stock issued to
the founding practices described in Vision 21's Confidential Information
Memorandum dated September 27, 1996, as amended, and issued to certain
professionals owning equity interests in such founding practices (the founding
practices and professionals of such practices holding share's of common stock
of Vision 21 are collectively referred to as the "Founding Shareholders"), that
Vision 21 file a registration statement under the Securities Act effecting an
offering of shares of Vision 21 common stock; then Vision 21 shall as soon as
practicable file a registration statement at its own expense effecting a public
offering of shares of Vision 21 common stock held by Founding Shareholders, as
well as any other Vision 21 shares owned by any other shareholders which Vision
21 wishes to include in the offering (which offering may be an underwritten
offering at Vision 21's sole discretion); provided however that Vision 21 shall
be obligated to effect only one registration statement containing each
Shareholder, and Vision 21 shall be obligated to file only two (2) registration
statements in the aggregate, pursuant to this Section 1(b).
(c) The maximum aggregate number of shares of common
stock that Shareholder may request to be registered under this Agreement shall
be fifty percent (50%) of Shareholder's original shares of Vision 21 common
stock. In no event shall the total number of Shareholder's shares of common
stock that Vision 21 is obligated to register under this Agreement exceed fifty
percent (50%) of Shareholder's original shares of Vision 21 common stock, and
in no event shall Vision 21 be obligated to register more than (i) in an
initial offering, twenty-five percent (25%) of Shareholder's
131
original shares of Vision 21 common stock or (ii) in a second offering, fifty
percent (50%) of the Shareholder's original shares minus the percent of the
Shareholder's original shares that the Shareholder registered in the first
offering. The "original shares" of Vision 21 as described herein shall be
deemed to be the ___________ shares of common stock received by the Shareholder
on the date of this Agreement.
(d) Vision 21 shall have the sole and exclusive right to
select the underwriters of any public offering of shares of Vision 21 common
stock, including any public offering conducted pursuant to the demand
registration right set forth in Section 1(b) above. The use of underwriters in
any demand registration right set forth in Section 1(b) above is subject to
Vision 21's ability to engage underwriters under terms and conditions deemed
reasonable by Vision 21.
(e) If the managing underwriter of any offering advises
Vision 21 that the total number of shares of Vision 21's common stock which
Vision 21, the Shareholder and any other persons intend to include in such
offering would adversely affect the success of such offering, then the amount
of shares of common stock to be offered for the account of Shareholder shall be
reduced to the extent necessary to reduce the total number of shares of common
stock to be included in such offering to the amount recommended by such
managing underwriter.
(f) Vision 21 shall not be required to (i) reduce the
amount of shares of common stock to be offered by Vision 21 in such offering
for any reason or (ii) include any shares of common stock of Shareholder in any
public offering for which a registration statement is or is proposed to be
filed if such shares of common stock are, at the time of effectiveness of such
registration statement, eligible to be sold under Rule 144 under the Securities
Act or otherwise eligible for sale to the public without registration.
(g) Vision 21 shall have the right to extend or delay the
effectiveness of any registration statement for a period of up to ninety (90)
days if, upon the advice of counsel, such delay is advisable and in the best
interests of Vision 21 because of the existence of non-public material
information, or to allow Vision 21 to complete any pending audit of its
financial statements, any public financing plan, any pending acquisition, or to
release audited financial statements for any pending acquisition as required by
the Securities and Exchange Commission.
(h) Shareholder agrees to cooperate with Vision 21 in all
respects in connection with registration of the common stock, including timely
supplying all information and executing and returning all documents requested
by Vision 21 and its managing underwriter.
(i) Vision 21 shall not be required to include any of
Shareholder's shares of common stock in any registration statement unless
Shareholder accepts the terms of the underwriting as agreed upon between Vision
21 and its underwriters.
(j) Vision 21 shall have the right to defer the filing of
any registration statement if the Board of Directors of Vision 21 determines in
good faith that it would be seriously detrimental to Vision 21 and its
shareholders for such registration statement to be filed.
Exhibit 14.1(o) - Page 2
132
(k) This Agreement shall expire two (2) years from the
date of an initial public offering of Vision 21 common stock.
2. Covenants of Vision 21. Vision 21 hereby covenants and
agrees:
(a) To take such steps as may be necessary to comply with
the Blue Sky laws of such states as the managing underwriter may reasonably
request; provided that in no event shall Vision 21 be obligated to qualify to
do business in any state where it is not so qualified or to take any action
which would subject it to unlimited service of process in any state where it is
not at such time so subject;
(b) To use reasonable efforts to cause the registration
statement to become effective and to keep the registration statement effective
for such period as may be required under the terms of the underwriting
agreement relating thereto but no longer than for a period of forty-five (45)
days, to file such post-effective amendments as may be necessary to keep any
prospectus contained in such registration statement true and complete during
such period as the registration statement shall be effective, and to furnish
and file such other amendments, supplements, and other documents the managing
underwriter may reasonably request;
(c) To supply such numbers of prospectuses as may be
reasonably required by the managing underwriter;
(d) To pay the reasonable costs and expenses of the
registration statement including without limitation all registration and Blue
Sky filing fees, all fees and expenses of Vision 21's counsel (but not the fees
and expenses of counsel for Shareholder), all accounting costs (including costs
associated with the preparation of interim period financial statements), NASD
fees, printing costs, experts' fees, expenses, costs of post-effective
amendments, and all other usual and customary expenses in connection with the
registration statement, except for Shareholder's pro rata share of underwriting
discounts, fees, and selling commissions (calculated in the manner set forth in
Section 3(a)(ii) of this Agreement); and
(e) With respect to any registration statement filed
pursuant to this Agreement, where underwriters are utilized, to cooperate with
the underwriters to the best of its abilities and to enter into an underwriting
agreement with such underwriters containing such representations, warranties,
and covenants on the part of Vision 21 as are usual and customary in an
underwritten public sale of common stock.
3. Covenants of Shareholder.
(a) Shareholder hereby covenants and agrees:
(i) To cooperate with Vision 21 in its compliance
with all federal and state securities laws, including without limitation
providing such information and signing such documents as are necessary to
effect a registration or reasonably requested by underwriters pursuant to this
Agreement;
(ii) To pay his pro rata portion (calculated on
the basis of the ratio of the aggregate offering price attributable to the
shares of Shareholder being registered and sold in relation to the aggregate
Exhibit 14.1(o) - Page 3
133
offering price attributable to the total number of securities being registered
and sold, including securities being registered and sold by other selling
stockholders) of the underwriting discounts and selling commissions and to pay
all the fees and disbursements of his counsel; and
(iii) To the entry of stop transfer
instructions with the Company's transfer agent against the transfer of any
shares of Shareholder's Vision 21 common stock except in compliance with the
restrictions as set forth in this Section 3.
(b) Shareholder shall be considered an "affiliate" of
Vision 21 for purposes of Rule 144 under the Securities Act, even in the event
Shareholder is not technically an affiliate of Vision 21 as defined in Rule
144, and the Vision 21 common stock owned by Shareholder shall be subject to
the restrictions and limitations on resale imposed by Rule 144 on affiliates of
Vision 21. Shareholder shall not sell any of his shares of Vision 21 common
stock under Rule 144 unless Shareholder would be eligible to do so under the
provisions applicable to affiliates.
(c) In addition to the transfer restrictions otherwise
provided for herein, Shareholder shall not, whether or not Shareholder elects
to cause the registration of his shares pursuant to this Agreement, directly or
indirectly, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise dispose of any shares of Vision 21 common stock
(other than the shares covered by such registration, which may be sold in
accordance with the plan or plans of distribution described in the registration
statement) owned by Shareholder for a period of one hundred eighty (180) days
or such shorter period as negotiated by the Company following the effective
date of such registration statement without the prior written consent of Vision
21. In the event that Shareholder is a corporation, professional corporation
or professional limited liability company, Shareholder may after receiving the
written approval of Vision 21 (which approval shall not be unreasonably
withheld) transfer its shares of Vision 21 Common Stock to any of the
individuals and/or trusts described in Sections 7(a), (b) and (c) hereof. Such
transferee shall, for purposes of the transfer restrictions contained in this
Agreement, be deemed to have held such transferred shares for the same period
as Shareholder.
4. Indemnification of Shareholder.
Whenever registration with respect to any shares of Shareholder's
common stock is effected under the Securities Act pursuant hereto, Vision 21
will indemnify and hold harmless Shareholder, each underwriter, the directors,
officers, employees and agents of each underwriter, and each person, if any,
who controls each underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, (including any securities law
violations) insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based on any untrue statement or alleged omission to state
in such document a material fact required to be stated in it or necessary to
make the statements in it not misleading, provided that Vision 21 will not be
liable to Shareholder to the extent that such loss, claim, liability, expense
or damage is based on an untrue statement or omission made in reliance on and
in conformity with information furnished to Vision 21 by
Exhibit 14.1(o) - Page 4
134
Shareholder, or by Shareholder through any attorney-in-fact, expressly for
inclusion in the registration statement or any prospectus included in such
registration statement.
5. Indemnification of Vision 21.
Whenever registration with respect to any shares of Shareholder's
common stock is effected under the Securities Act pursuant hereto, Shareholder
will indemnify and hold harmless Vision 21, each of Vision 21's directors and
officers, each person who controls Vision 21 within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, each underwriter, the
directors, officers, employees and agents of each underwriter, and each person,
if any, who controls each underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or alleged untrue statement of a material fact required to be stated
in it or necessary to make the statements in it not misleading; provided that
Shareholder will not be liable except to the extent that such loss, claim,
liability, expense or damage arises from or is based upon an untrue statement
or omission or alleged untrue statement or omission made in reliance on and in
conformity with information furnished to Vision 21 by the Shareholder, or by
Shareholder through any attorney-in-fact, expressly for inclusion in the
registration statement or any prospectus included in such registration
statement.
6. Defense of Claim.
Promptly after receipt by an indemnified party of notice of the
commencement of any action, the indemnified party shall notify the indemnifying
party in writing of the commencement thereof if a claim in respect thereof is
to be made against an indemnifying party under this Agreement, but the omission
of such notice shall not relieve the indemnifying party from liability which it
may have to the indemnified party under this Agreement, except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice, and shall not relieve the indemnifying party from any liability which
it may have to any indemnified party otherwise than under this Agreement. In
case any action is brought against the indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and to the extent that it chooses, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party that it so chooses, the indemnifying party shall not be
liable for any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof; provided however that (i) if the
indemnifying party fails to take reasonable steps necessary to defend
diligently the claim within twenty (20) days after receiving notice from the
indemnified party that the indemnified party believes the indemnifying party
has failed to diligently defend such claim, or (ii) if the indemnified party
who is a defendant in any action or proceeding which is also brought against
the indemnifying party reasonably shall have concluded that there are legal
defenses available to the indemnified party which conflict with the defense
strategy of the indemnifying party, or (iii) if representation under applicable
standards of professional conduct require separate representation of the
Exhibit 14.1(o) - Page 5
135
indemnified party and the indemnifying party, then the indemnified party shall
have the right to assume or continue its own defense as set forth above and the
indemnifying party shall reimburse the indemnified party for the costs of such
defense as provided in Section 4 and 5. In no event shall the indemnifying
party be responsible for the fees of more than one firm for all indemnified
parties.
7. Non-Transferability.
The registration rights and benefits set forth herein, including
indemnification by Vision 21 are granted for the sole and personal benefit of
Shareholder and may not be transferred or assigned except for (a) gifts to
his/her family members (b) assignment to a trust controlled by the Shareholder,
(c) transfers to Shareholder;s heirs which occur by operation of law as a
result of the death of the Shareholder, or (d) if the Shareholder is a
corporation, professional corporation or professional limited liability
company, transfers or assignments to the individuals who are current equity
holders of Shareholder and by such equity holders to the individuals and/or
trusts described in subsection (i) and (ii) of this Section.
Exhibit 14.1(o) - Page 6
136
8. Survival of Indemnity.
The indemnifications provided by this Agreement shall be a continuing
right to indemnification and shall survive the registration and sale of any
securities by any person entitled to indemnification hereunder and the
expiration or termination of this Agreement.
9. Delay of Registration.
Shareholder agrees that he shall have no right to obtain or seek an
injunction restraining or otherwise delaying any registration statement filed
by Vision 21.
10. Notices.
(a) All communications under this Agreement shall be in
writing and shall be sufficient in all respects if when personally delivered
or mailed by prepaid certified or registered mail, return receipt requested,
addressed as follows:
(i) If to Vision 21, at:
Vision 21, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxxx,
Chief Executive Officer
With a copy to:
Xxxxxxx X. Xxxxx, Esquire
c/o Shumaker, Loop & Xxxxxxxx, LLP
000 X. Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
or at such other address as Vision 21 may have furnished in writing to
Shareholder at the time outstanding, or
(ii) If to Shareholder at:
_______________________
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Exhibit 14.1(o) - Page 7
137
With a copy to:
Xxxx X. Xxxxxxx, Esquire
MacFarlane, Ausley, Xxxxxxxx & XxXxxxxx
000 Xxxxx Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
(b) Any notice so addressed, when mailed by registered or
certified mail shall be deemed to be given three days after so mailed, and when
delivered by hand shall be deemed to be given immediately.
11. Counterparts.
One or more counterparts of this Agreement may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12. Governing Law.
This Agreement shall be construed in accordance with and governed by
the internal laws of the State of Florida, which shall prevail in all matters
arising under or in connection with this Agreement.
13. Headings.
The headings in this Agreement are for convenience of reference only
and shall not be deemed to alter or affect the meaning or interpretation of any
provisions hereof.
14. Stock Lettering.
The Company shall have the right to provide a legend on the shares of
stock covered hereunder reflecting the restriction described hereunder.
Exhibit 14.1(o) - Page 8
138
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date and year first above written.
"VISION 21"
VISION 21, INC.
By:
------------------------------------
Xxxxxxxx X. Xxxxxxxx, Chief
Executive Officer
"SHAREHOLDER"
-------------------------------------
Exhibit 14.1(o) - Page 9
139
Exhibit 14.1(s)
to Agreement and Plan of Reorganization among Xx. Xxxxx &
Associates, #6950, P.A. (the "Company"), Xxxx Xxxxx, O.D. (the
"Optometrist") and Vision 21, Inc. ("Vision 21")
AGREEMENT TO CONTINUE PRACTICE AFTER
TRANSFER EVENT AND STOCK PLEDGE
This Agreement to Continue Practice after Transfer Event and Stock
Pledge (the "Agreement") is made as of _________________, 19__ by and between
________________________, O.D. ("Optometrist"), an individual licensed to
practice optometry in the State of Florida (the "State") whose mailing address
is 0000 Xxxxx Xxxxx Xxxx, Xxxxx, Xxxxxxx 00000, and VISION 21, INC. ("Business
Manager"), a Florida corporation whose mailing address is 0000 Xxxxx Xxxxx
Xxxx, Xxxxx, Xxxxxxx 00000.
R E C I T A L S
A. Xx. Xxxxx & Associates, #6952, P.A. ("P.C.") is a Florida
professional association which employs optometrists.
B. Optometrist is the sole shareholder of P.C.
C. Pursuant to that certain Business Management Agreement (the
"Business Management Agreement") dated December 1, 1996, the Business Manager
provides certain services and support to the optometry practices of P.C.'s
employed optometrists.
D. Optometrist has agreed to sell all of P.C.'s shares owned by
him to the Business Manager's designee for value if certain events occur, and
the Business Manager desires its designee to purchase such shares if certain
events occur.
E. Optometrist desires to pledge all of P.C.'s shares owned by
him to secure the promise referenced in Paragraph D above and Business Manager
desires to accept such security interest.
NOW, THEREFORE, for and in consideration of the mutual agreements,
terms, covenants and conditions contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Definitions.
1.1. "Collateral" means the _____ shares of P.C. stock
owned by Optometrist consisting of all of the validly issued and
outstanding shares of P.C.
1.2. "Transferee" means an optometrist chosen by the
Business Manager who is licensed to practice optometry in the State.
140
2. Conditional Agreement to Transfer Stock. Optometrist shall
immediately transfer the Collateral to the Transferee for the Purchase Price
set forth in Section 5 below if any of the following occurs (collectively,
"Events of Transfer"):
(a) Optometrist dies,
(b) Optometrist loses his State license to practice
optometry for any reason, or
(c) Optometrist is adjudicated incompetent by any court
of law.
3. Grant of Security Interest. Optometrist grants to Business
Manager a security interest in the Collateral to secure the promise set forth
in Section 2 above.
4. Designation of Transferee. The Business Manager shall
designate the Transferee to purchase the Collateral upon an Event of Transfer.
5. Payment of Purchase Price. The purchase price for the
Collateral purchased by the Transferee (the "Purchase Price") shall be an
amount equal to the fair market value of the Collateral as of the date of the
transfer, determined by the accounting firm of Ernst & Young, LLP (or any
successor to Ernst & Young LLP) acting through the personnel at its office in
Tampa, Florida, if that firm is willing to make the determination; or, if not,
any nationally recognized firm of independent certified public accountants
agreed to by Business Manager and Optometrist (or by Optometrist's guardian or
personal representative, if an Event of Transfer occurs pursuant to Sections
2(a) or (c)). Any determination of the Collateral's fair market value by such
firm shall be deemed a final determination of the fair market value as of the
determination date and shall be conclusive upon all parties for purposes of
this Agreement as a commercially reasonable price. The Purchase Price shall be
payable by cashier's check to Optometrist or his guardian or personal
representative (as the case may be) within thirty (30) days after the Business
Manager's receipt of the accounting firm's Purchase Price determination.
6. Commercially Reasonable Disposition. The parties acknowledge
that it would be impossible to realize a commercially reasonable price in the
event of the disposition of the pledged stock by public sale and very difficult
to do so by private sale, except on the terms and conditions in Sections 4 and
5 hereto. Therefore, the parties acknowledge that a disposition of the
Collateral under Sections 4 and 5 hereto is a commercially reasonable
disposition, and agree that the determination of the Purchase Price under
Section 5 is commercially reasonable and that they will be bound by the
Purchase Price determination.
7. Term. This Agreement shall continue for as long as the
Business Management Agreement and any renewals thereof are in effect.
8. Representations and Warranties. Optometrist represents and
warrants the following:
8.1. Optometrist. There is no provision of any agreement
to which Optometrist is a party or of any law that would be
contravened by the execution, delivery, or performance of this
Agreement;
Exhibit 14.1(s) - Page 2
141
Optometrist's name and the description of the legal status of the P.C.
in the Preamble and the information contained in the Recitals hereto
are correct.
8.2. Collateral. As to each item of Collateral,
Optometrist has good title, free and clear of all claims, charges,
liens, encumbrances, restrictions, options, calls and defects of any
kind or nature whatsoever, except for the security interest granted
hereby; no other person, entity, or governmental authority has or
claims any lien or other interest in the Collateral; no adverse
financing statements are on file; and there is no litigation nor
are there any proceedings by any public body, agency, or authority
presently pending or threatened against Optometrist, the outcome of
which might materially and adversely affect the Collateral.
8.3. P.C. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require
P.C. to issue, sell, or otherwise cause to become outstanding any of
its capital stock; and there is no litigation nor are there any
proceedings by any public body, agency, or authority presently pending
or threatened against P.C. or Optometrist, the outcome of which might
materially and adversely affect the continued operations of P.C.
8.4. Survival of Warranties. All representations and
warranties shall survive the execution and delivery of this Agreement.
9. Affirmative Covenants.
9.1. No Agency and Defense Against Claims. Nothing in
this Agreement shall make Optometrist an agent of Business Manager for
any purpose whatsoever. Optometrist shall defend the Collateral
against all claims, demands, and defenses affecting Business Manager's
security interest, regardless of merit, and shall hold Business
Manager harmless therefrom, including, without limitation, holding
Business Manager harmless from all attorneys' fees and other
litigation expenses arising out of any such claims, demands, or
defenses.
9.2. Disposition and Issuances of P.C. Common Stock. P.C.
shall not, and during the term of this Agreement Optometrist shall not
cause the P.C. to issue, sell or otherwise cause to be outstanding any
additional capital stock, except for (a) sales of such stock made to
successor shareholders pursuant to Section 4.1 of the Business
Management Agreement, provided that if there shall be only one
shareholder holding the P.C.'s stock following such transfer, such
successor shareholder shall execute an agreement in substantially the
same form as this Agreement; (b) issuances of additional stock to
individuals licensed to practice optometry in the State who are
competent and capable and who are approved by Business Manager;
provided that Business Manager shall not unreasonably withhold its
approval to the sale of such additional stock to such individual, and
after the sale of such additional stock, this Agreement shall be
terminated and the Collateral pledged hereby shall be returned to
Optometrist free of the restrictions imposed by this Agreement; (c)
the transfer without consideration of such stock to a revocable trust
created by the Optometrist, provided that any and all trustees of such
trust first agrees in writing to hold such stock so transferred
subject to this Agreement; and (d) the transfer
Exhibit 14.1(s) - Page 3
142
of such stock upon the occurrence of an Event of Transfer by
any other means as determined by Optometrist and agreed to in writing
by Business Manager, which agreement shall not be unreasonably
withheld.
10. Custody and Handling of Collateral and Records.
10.1. Protection of Secured Party's Security Interest. Upon
execution of this Agreement, Optometrist shall give the Business
Manager the share certificate(s) representing the Collateral, duly
endorsed in blank or, if not endorsed in blank, Optometrist shall give
the Business Manager a duly executed stock power in blank.
10.2. No Authority to Sell. Optometrist shall not sell,
assign, pledge, hypothecate, encumber, or otherwise transfer any item
of Collateral except as expressly provided in this Agreement.
If any item of Collateral or any right therein is transferred contrary
to this Agreement, Business Manager retains a security interest in
such item and in the proceeds of such disposition.
11. Default and Remedies.
11.1. Remedies Upon Default. Upon the occurrence of any
breach of any covenant or warranty contained in this Agreement by
Optometrist and continuously thereafter until waived in writing,
Business Manager shall have the right and option to immediately sell
the Collateral to Transferee subject to a subsequent determination of
the Purchase Price to be paid later or to exercise any other remedy
available to Business Manager as a secured party under law or equity.
Optometrist acknowledges that Business Manager shall be entitled upon
any breach or threatened breach of this Agreement to the granting of a
temporary restraining order, a temporary or permanent injunction, or
any other equitable remedy which may then be available.
11.2. Construction of Rights and Remedies and Waiver of
Notice and Consent.
(a) This Section 11 applies to all rights and
remedies provided by this Agreement or at law or in equity.
(b) Unless otherwise expressly provided herein,
any right or remedy may be pursued without notice to or
further consent of Optometrist, both of which Optometrist
waives.
(c) No forbearance in exercising any right or
remedy shall operate as a waiver thereof; no forbearance in
exercising any right or remedy on any one or more occasions
shall operate as a waiver thereof on any future occasion; and
no single or partial exercise of any right or remedy shall
preclude any other exercise thereof or the exercise of any
other right or remedy.
Exhibit 14.1(s) - Page 4
143
12. Miscellaneous.
12.1. Notices. Any notices, statements, requests, demands,
consents, or other documents ("notices") shall be in writing and shall
be delivered personally, by certified mail, postage prepaid, return
receipt requested, or by overnight courier (prepaid) to the addresses
set forth in the Preamble hereof. When personally delivered, all
notices shall be deemed given when actually received. When mailed,
all notices shall be deemed given three (3) days after mailing by
certified mail and one (1) day after mailing by overnight courier.
12.2. Governing Law. This Agreement shall be construed and
interpreted under the laws of the State of Florida.
12.3. Binding Effect. This Agreement shall be binding upon
Optometrist, Optometrist's personal representatives, heirs,
successors, and assigns, as the case may be, and shall be binding upon
and inure to the benefit of Business Manager and its successors and
assigns. Optometrist may not assign this Agreement.
12.4. Amendment. This Agreement may be amended, but only
by a written amendment signed by Business Manager and Optometrist.
12.5. Severability. If any provision of this Agreement or
the application of any provision to any party or circumstance shall be
adjudged invalid or unenforceable to any extent, the remainder of this
Agreement shall not be affected thereby. Each provision of this
Agreement shall be valid and enforceable to the fullest extent
permitted by law.
12.6. Headings. The headings in this Agreement are for
convenience of reference only and shall not be used in interpreting
this Agreement.
12.7. Number; Gender. Where appropriate, the number of all
words in this Agreement shall be both singular and plural and the
gender of all pronouns shall be masculine, feminine, neuter, or any
combination thereof.
"OPTOMETRIST"
-----------------------------------
O.D.
-----------------------
"BUSINESS MANAGER"
VISION 21, INC.
Exhibit 14.1(s) - Page 5
144
By:
------------------------------------
Xxxxxxxx X. Xxxxxxxx
Its:Chief Executive Officer
Exhibit 14.1(s) - Page 6
