AMENDMENT TO BUSINESS MANAGEMENT AGREEMENT
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This Amendment to the Business Management Agreement ("Amendment") is entered
into as of August 31, 1999 by and among Xxxxxxx X. Xxxxxxx, O.D., P.A., a New
Jersey professional association doing business as Eye Drx and formerly known as
Xxxxxxx X. Xxxxxxx, O.D. and Xxxxxx X. Shack, O.D., P.A. (the "Practice"),
Vision Twenty-One, Inc., a Florida corporation (the "Company"), and Eye Drx
Retail Management, Inc. ("New Business Manager"), a Delaware corporation and
indirect, wholly-owned subsidiary of Eye Care Centers of America, Inc., a Texas
corporation ("Purchaser").
W I T N E S S E T H:
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WHEREAS, the Company and the Practice have entered into that certain
Business Management Agreement effective as of January 1, 1998 (the "Business
Management Agreement") by and among the Company and the Practice, whereby the
Company provides certain management services to the Practice;
WHEREAS, Purchaser and the Company have entered into that certain Asset
Purchase Agreement dated as of July 7, 1999 (the "Asset Purchase Agreement") by
and among Purchaser, the Company and The Complete Optical Laboratory, Ltd.,
Corp., a New Jersey corporation and a direct wholly-owned subsidiary of the
Company ("Subsidiary"), whereby Purchaser (or its designated subsidiaries) will
acquire substantially all of the assets of the Company and the Subsidiary used
in connection with its optical retail chain operations in Minnesota, Wisconsin,
North Dakota, Iowa, South Dakota and New Jersey including, without limitation,
the Business Management Agreement and the assets used by the Company in
providing services under the Business Management Agreement;
WHEREAS, Purchaser has designated the New Business Manager as its
subsidiary to acquire the assets of the Company and Subsidiary used in
connection with their respective businesses in New Jersey;
WHEREAS, pursuant to the Asset Purchase Agreement and concurrent with the
execution hereof, the Company will assign all of its rights and obligations
under the Business Management Agreement to New Business Manager whereby New
Business Manager will be the Business Manager under the Business Management
Agreement, and the Practice has consented to such assignment;
WHEREAS, the Company is a party to this Amendment solely for the purpose of
completing the assignment of the Business Management Agreement to the New
Business Manager;
WHEREAS, the New Business Manager, the Company and the Practice desire to
amend the Business Management Agreement; and
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WHEREAS, capitalized terms not otherwise defined herein shall have the
meaning ascribed to such term in the Business Management Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements of the parties hereinafter contained, the parties hereby agree as
follows:
ARTICLE I
AMENDMENT OF BUSINESS MANAGEMENT AGREEMENT
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Section 1.1 Amendment to Section 5.1. Section 5.1 of the Business
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Management Agreement shall be amended to read in its entirety as follows:
Section 5.1 Management Fee. The Practice and Business Manager agree to
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the compensation set forth herein as being paid to Business Manager in
consideration of a substantial commitment made by Business Manager hereunder and
that such fees are fair and reasonable. During the period from the date of the
Amendment until the termination of the Business Management Agreement in
accordance with Section 6.1 hereof (as amended by the Amendment), or such
earlier termination as provided in this Agreement, the Business Manager shall be
paid an amount equal to 85.7% of Adjusted Gross Revenue during such period less
the amount of the salary of Shareholder under his Employment Agreement with the
Practice (i.e., $100,000 ratably over such six month period) (the "Management
Fee"). For example, assume that for such six month period the Adjusted Gross
Revenue is $1,000,000, Practice Expenses are $150,000 and Shareholder Expenses
are $150,000 ($100,000 of which is the salary paid under Xx. Xxxxxxx' Employment
Agreement). Also assume that the Practice Expenses and Shareholder Expenses
were incurred in the ordinary course of business during the period from the date
of the Amendment until the termination of the Business Management Agreement and
are consistent with, and do not exceed, historical dollar amounts. While the
Management Fee would be $757,000 ($857,000 less $100,000), the priority of
payment of the Adjusted Gross Revenue received by the Practice would be as
follows:
1. Practice Expenses $ 200,000
2. Shareholder Expenses $ 100,000
3. Management Fee $ 700,000
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$ 1,000,000
In other words, the Practice would be required to pay Xx. Xxxxxxx his
salary and the other ordinary Practice and Shareholder Expenses before the
payment of the Management Fee. Notwithstanding any provision in this Agreement
to the contrary, the parties acknowledge that to the extent the amount of
Adjusted Gross Revenue at the end of such six-month period that would otherwise
be remaining after the payment of the Management Fee is insufficient to pay the
Shareholders Expenses and Practice Expenses incurred in the ordinary course of
business during the period from the date of the Amendment until the termination
of the Business Management Agreement (provided and to the extent that such
expenses are consistent with, and do not exceed, historical dollar
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amounts), such expenses shall be paid by the Practice before, and given priority
over, the Management Fee then due and owing. In the event that in any month
during the Term an amount of the Management Fee is not paid to the Business
Manager because of the priority given to the payment of Shareholders Expenses
and Practice Expenses pursuant to this Section, the Business Manager may recover
the unpaid Management Fee from the Practice in subsequent months from the
Adjusted Gross Revenue only to the extent available after the payment of all
expenses given priority hereunder. Notwithstanding the foregoing, any costs and
expenses incurred or relating to the period prior to the date of the Amendment
or incurred in connection with the dissolution or termination (or buyout) of
those certain partnership agreements between the Practice and certain
optometrists (the "Partnership Agreements") shall not be deemed Shareholders
Expenses or Practice Expenses entitled to priority of payment.
Section 1.2 Amendment to Section 6.1. Section 6.1 of the Business
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Management Agreement shall be amended to read in its entirety as follows:
6.1. Initial and Renewal Term. Notwithstanding any provision in this
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Agreement to the contrary, the Term of this Business Management Agreement shall
continue until February 28, 2000, at which time this Business Management
Agreement shall terminate without any further action of any party hereto, unless
(i) the Practice and the Business Manager agree in writing to extend the Term of
this Business Management Agreement for a specified time period or (ii) this
Business Management Agreement is terminated earlier as provided in Section 6.2
of this Business Management Agreement.
Section 1.3 Amendment to Section 6.3(a). Section 6.3(a) of the Business
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Management Agreement shall be amended by deleting the second to last sentence of
Section 6.3(a) and by adding a new sentence to the end of Section 6.3(a) to read
in its entirety as follows:
Notwithstanding the foregoing, upon the termination of this Business
Management Agreement for any reason, at the request of the Business Manager, the
Practice shall immediately transfer all of the goodwill, patient records,
confidential and proprietary information, payor agreements, managed care
agreements, optometric equipment (if any), rights with respect to
confidentiality and non-competition agreements and provisions, and other
intangible assets used by or in the Practice as may be designated by Business
Manager (the "Intangible Assets"), to an optometrist licensed in New Jersey (or
a professional corporation, professional limited liability company or other
entity owned by a licensed optometrist), or other person or entity to the extent
permitted by applicable law, as may be designated by Business Manager (the
"Designee"). The Designee shall not be obligated to assume any obligations of
the Practice other than performance under the provider agreements and managed
care agreements after the date of such transfers. The Practice and Business
Manager shall cooperate and use commercially reasonable efforts to obtain any
required consents in connection with such transfers of assets. The Practice
acknowledges that it has received
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adequate and sufficient consideration from Business Manager and the Company in
connection with their consent to the assignment of this Business Management
Agreement and the execution of the Amendment and such assets shall be
transferred to the Designee as provided herein for no additional consideration;
provided, however, effective upon such transfer of assets, Business Manager
shall not be entitled to recover any then unpaid Management Fee which was unpaid
due solely to the priority given to Shareholders Expenses and Practice Expenses
pursuant to Section 5.1 (as amended). Promptly upon such request, and from time
to time thereafter if requested by the Business Manager, the Practice will
execute and deliver to the Designee a xxxx of sale in substantially the form
attached hereto as Exhibit A, and such other bills of sale, endorsements,
assignments, releases, and other good and sufficient instruments of transfer,
assignment, and conveyance, in form satisfactory to Business Manager, as shall
be effective to convey to the Designee good and marketable title in and to the
Intangible Assets. Upon termination of this Agreement, the Practice shall
promptly vacate the premises provided by Business Manager hereunder. Business
Manager shall reimburse the Practice for any reasonable attorney's fees incurred
by the Practice in connection with the transfer of assets in an amount not to
exceed $2,000.
Section 1.5 Amendment to Sections 6.4 and 6.5. Sections 6.4 and 6.5 of
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the Business Management Agreement shall be deleted in its entirety.
Section 1.6 New Business Manager. The parties agree that New Business
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Manager shall be the Business Manager under the Business Management Agreement.
ARTICLE II
MISCELLANEOUS
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Section 2.1 Other Matters. The Practice acknowledges and agrees that
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neither Purchaser nor New Business Manager will assume any obligations and
liabilities under the BMA arising on or before the date of the Amendment.
Accordingly, neither Purchaser nor Business Manager shall have any obligations
or liabilities related to, arising out of the operation of the business of the
Practice or the performance of Business Manager under the BMA on or prior to the
date hereof including, without limitation, any Practice Expenses, Office
Expenses, Business Manager Expense or Shareholder Expenses. Without limiting
the generality of the foregoing, the Practice acknowledges and agrees that
neither Purchaser nor New Business Manager have assumed any obligation hereunder
with respect to the Partnership Agreements and the Practice's recourse, if any,
shall be solely against the Company to satisfy any obligations with respect
thereto. The rights of the Company and the Practice indemnification pursuant to
Section 7 of the BMA, shall not be affected by the Amendment, except as it
relates to matters that accrue on and after the date of this Agreement. The
Practice agrees that the Company is in full compliance with its obligations
under the BMA, that it has no claim against the Company for damages of any kind
in connection with the BMA and that it is unaware of any matters that would give
rise to a claim for indemnification under the BMA. The Practice also agrees to
assign to Purchaser, at the
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Closing, all of the Practice's rights under its lease agreement with Pitney
Xxxxx for certain postage meters and its lease agreement with Lucent
Technologies for the Practice's phone system and Purchaser agrees to indemnify
the Practice for any subsequent obligations thereunder.
Section 2.2 No Further Modification. Except as hereby amended or
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modified, the Business Management Agreement shall remain in full force and
effect without modification or change, and shall be binding upon and inure to
the benefit of the parties and their respective successors, heirs, devisees,
assigns, legal representatives, executors and administrators.
Section 2.3 Counterparts. This Amendment may be executed in any number
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of counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
EYE DRX RETAIL MANAGEMENT, INC.
By:_________________________________
Xxxx X. Xxxxx, Executive Vice President
XXXXXXX X. XXXXXXX, O.D. , P.A.
By:_________________________________
Xxxxxxx X. Xxxxxxx, O.D., President
VISION TWENTY-ONE, INC.
By:_________________________________
Xxxxxxxx X. Xxxxxxxx, its Chief
Executive Officer
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EXHIBIT A
XXXX OF SALE
This Xxxx of Sale (the "Xxxx of Sale") is entered into this ___ day of
____, 2000 by Xxxxxxx X. Xxxxxxx, O.D., P.A., a New Jersey professional
association doing business as Eye Drx and formerly known as Xxxxxxx X. Xxxxxxx,
O.D. and Xxxxxx X. Shack, O.D., P.A. (the "Practice") for the benefit of
__________________ ("Acquiror")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Practice desires to assign, transfer and convey to the
Acquiror certain of its assets in accordance with certain Business Management,
dated January 1, 1998 by and between the Practice and Eye Drx Retail Management,
Inc., (as successor to Vision Twenty-One, Inc.), as amended by the Amendment to
the Business Management Agreement ("Amendment") dated August 31, 1999;
NOW THEREFORE, the Practice hereby agrees as follows:
1. Transfer of Assets. For good and valuable consideration to the
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Practice in hand paid, the receipt and sufficiency of which the Practice hereby
acknowledges, the Practice hereby conveys, assigns and transfers to the Acquiror
all of its right title and interest in and to the goodwill, patient records,
confidential and proprietary information, payor agreements, managed care
agreements, optometric equipment (if any), rights with respect to
confidentiality and non-competition agreements and provisions, and other
intangible assets used by or in the Practice, including, without limitation the
assets listed on Exhibit A hereto (collectively, the "Assets").
TO HAVE AND TO HOLD the Assets unto the Acquiror and its successors and
assigns, to and for its or their use forever.
Subject to any liens that Vision Twenty-One, Inc. or Eye Drx Retail
Management, Inc. has or may have on the Assets, the Practice represents and
warrants that the Practice is the true and lawful owner of the Assets, free and
clear of any liens or other encumbrances, and that the Practice will warrant and
defend the Acquiror's rights and title in and to the Assets against each and
every person or persons whomsoever claiming or who may claim against any or all
of the Assets.
IN WITNESS WHEREOF, the Practice has caused this Xxxx of Sale to be
executed by its authorized officer as of the date first above written.
XXXXXXX X. XXXXXXX, O.D. , P.A.
By:_________________________________
Xxxxxxx X. Xxxxxxx, O.D., President
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EXHIBIT A
ASSETS
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