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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated March 31, 1998, is by and
between VISION TWENTY-ONE, INC., a Florida corporation ("Vision Twenty-One"),
EYECARE ONE CORP., a Delaware corporation (the "Company"), and XXXXXX X. XXXXX,
XXXXXX X. XXXXXXXX, XXXXXX X. XXXXX, XXXXXXX X. XXXXXXX, and XXXX X. XXXXXX, not
individually but solely as Trustee of the Xxxx X. Xxxxxx Trust u/t/a dated
August 5, 1994, and XXXXXXX X. XXXXXXX and XXXXXX X. XXXXX, not individually but
solely in their capacities as Trustees of the Xxxxxx X. Xxxxx Irrevocable Trust
u/a/d April 3, 1996 and XXXXXXX X. XXXXXXX and XXXXXXXX XXXXX, not individually
but solely in their capacities as Trustees of the Xxxxxxxx Xxxxx Irrevocable
Trust u/a/d April 5, 1996 (individually, a "Stockholder" and collectively, the
"Stockholders").
R E C I T A L S
WHEREAS, the Stockholders own all of the issued and outstanding shares of
capital stock of the Company.
WHEREAS, the Company and Vision Twenty-One desire to effect a business
combination and merger of the Company with and into Vision Twenty-One upon the
terms and subject to the satisfaction of the conditions precedent contained
herein (the "Merger").
WHEREAS, it is intended that for 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").
WHEREAS, certain of the Stockholders ("VIPA Stockholders") also own all
of the issued and outstanding shares of capital stock of Vision Insurance Plan
of America, Inc., a Wisconsin corporation ("VIPA").
WHEREAS, simultaneously with the consummation of this transaction, the
VIPA Stockholders, VIPA, Vision Twenty-One and Vision Twenty-One of Wisconsin,
Inc., a wholly-owned subsidiary of Vision Twenty-One, desire to effect a stock
purchase of VIPA upon the terms and subject to the satisfaction of the
conditions precedent contained in that certain Stock Purchase Agreement between
VIPA, Vision Twenty-One, Inc., Vision Twenty-One of Wisconsin, Inc., VIPA and
its stockholders (the "Stock Purchase Agreement").
WHEREAS, for financial and accounting reporting purposes, it is intended
that the transactions described herein and in the Stock Purchase Agreement be
accounted for as a pooling of interests (the "Pooling of Interests").
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:
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1. DEFINITIONS. In addition to the definitions set forth herein, 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. Active Stockholders. The term "Active Stockholders" shall mean
Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and
Xxxxxx X. Xxxxx, not individually but solely in their capacities as Trustees of
the Xxxxxx X. Xxxxx Irrevocable Trust u/a/d April 3, 1996 and Xxxxxxx X. Xxxxxxx
and Xxxxxxxx Xxxxx, not individually but solely in their capacities as Trustees
of the Xxxxxxxx Xxxxx Irrevocable Trust u/a/d April 5, 1996.
1.3. 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.
1.4. Balance Sheet Date. The term "Balance Sheet Date" shall have
the meaning set forth in Section 3.9.
1.5. Cash Compensation. The term "Cash Compensation" shall have the
meaning set forth in Section 3.11(a).
1.6. Claim Notice. The term "Claim Notice" shall have the meaning
set forth in Section 14.3(a).
1.7. Closing. The term "Closing" shall mean the consummation of the
transactions contemplated by this Agreement.
1.8. Closing Date. The term "Closing Date" shall mean March 31,
1998, or such other date as mutually agreed upon by the parties.
1.9. Closing Date Balance Sheet. The term "Closing Date Balance
Sheet" shall have the meaning set forth in Section 2.11(a).
1.10. Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.11. Common Stock. The term "Common Stock" or "Vision Twenty-One
Common Stock" shall mean the common stock of Vision Twenty-One.
1.12. Company Common Stock. The term "Company Common Stock" shall
mean the common stock of the Company.
1.13. Compensation Plans. The term "Compensation Plans" shall have
the meaning set forth in Section 3.11(b).
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1.14. 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 or the
operation of retail optical stores; provided, however, that such term shall not
include any Affiliate of Vision Twenty-One.
1.15. Controlled Group. The term "Controlled Group" shall have the
meaning set forth in Section 3.12(j).
1.16. Corporation Law. The term "Corporation Law" shall mean the
statutes, regulations and laws governing business corporations and professional
corporations in the State of Delaware.
1.17. Effective Time. The term "Effective Time" shall have the
meaning set forth in Section 2.3.
1.18. Election Period. The term "Election Period" shall have the
meaning set forth in Section 14.3(a).
1.19. Employee Benefit Plans. The term "Employee Benefit Plans"
shall have the meaning set forth in Section 3.12(a).
1.20. Employee Policies and Procedures. The term "Employee Policies
and Procedures" shall have the meaning set forth in Section 3.11(d).
1.21. Employment Agreements. The term "Employment Agreements" shall
have the meaning set forth in Section 3.11(c).
1.22. Environmental Damages. The term "Environmental Damages" shall
mean all claims, judgments, damages, losses, penalties, fines, liabilities
(including strict liability), encumbrances, liens, costs and expenses of
investigation and defense of any claim, whether or not such claim is ultimately
defeated, and of any good faith settlement of judgment, of whatever kind or
nature, contingent or otherwise, matured or unmatured, foreseeable or
unforeseeable, including without limitation reasonable attorneys' fees and
disbursements and consultants' fees, any of which are incurred at any time as a
result of:
(i) the existence prior to the Closing Date of Hazardous
Material upon, about, beneath the Property or migrating or threatening to
migrate to or from the Property, or the existence of a violation of
Environmental Requirements pertaining to the Property; or
(ii) the release or threatened release of Hazardous
Material upon, about, beneath Off-Site Locations or the existence of a violation
of Environmental Requirements pertaining to the Off-Site Location for which the
Company is a potentially responsible party regardless of whether the existence
of such Hazardous Material or the violation of Environmental Requirements arose
prior to the present ownership or operation of the Property.
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1.23. Environmental Requirements. The term "Environmental
Requirements" shall mean all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, plans, authorizations,
concessions, franchises and similar items of all governmental agencies,
departments, commissions, boards, bureaus or instrumentalities of the United
States, states and political subdivisions thereof and all applicable judicial,
administrative and regulatory decrees, judgments and orders relating to the
protection of human health or the environment.
1.24. ERISA. The term "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
1.25. Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
1.26. FBCA. The term "FBCA" shall mean the Florida Business
Corporation Act.
1.27. Financial Statements. The term "Financial Statements" shall
have the meaning set forth in Section 3.9.
1.28. GAAP. The term "GAAP" shall mean generally accepted
accounting principles, applied on a consistent basis with prior periods, as set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity or other practices and procedures as may be
approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of the determination.
1.29. Governmental Authority. The term "Governmental Authority"
shall mean any national, state, provincial, local or tribunal governmental,
judicial or administrative authority or agency.
1.30. Hazardous Material. The term "Hazardous Material" shall mean
any substance:
(i) the presence of which requires investigation or
remediation under any Environmental Requirement; or
(ii) which is defined as a "solid waste," "hazardous
waste," "hazardous substance," "pollutant" or "contaminant" under any federal,
state or local statute, regulation, rule or ordinance or amendments thereto
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. ss.9601 et seq.) and/or the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.); or
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(iii) the presence of which, under any Environmental
Requirement poses a hazard to the health or safety of persons on or about the
Property.
1.31. Indemnifying Party. The term "Indemnifying Party" shall have
the meaning set forth in Section 14.3(a).
1.32. Indemnity Notice. The term "Indemnity Notice" shall have the
meaning set forth in Section 14.3(c).
1.33. Insurance Policies. The term "Insurance Policies" shall have
the meaning set forth in Section 3.17.
1.34. IRS. The term "IRS" shall mean the Internal Revenue Service.
1.35. Material Adverse Effect. The term "Material Adverse Effect"
shall mean a material adverse effect on the business, operations, condition
(financial or otherwise) or results of operations of any party, considering all
relevant facts and circumstances.
1.36. Merger. The term "Merger" shall have the meaning set forth
in the recitals hereto.
1.37. Net Worth. The term "Net Worth" shall have the meaning set
forth in Section 2.11(a).
1.38. Off-Site Location. The term "Off-Site Location" shall mean
any site or facility to which Hazardous Material generated on the Property prior
to the Closing Date was transported for recycling, reuse, treatment, storage or
disposal.
1.39. Optometrist Employee. The term "Optometrist Employee" shall
mean those licensed optometrists who are employees but not stockholders of the
Company.
1.40. Payors. The term "Payors" shall have the meaning set forth
in Section 3.27.
1.41. Pooling of Interests. The term "Pooling of Interests" shall
have the meaning set forth in the recitals hereto.
1.42. Property. The term "Property" shall mean all real property
owned, leased or used by the Company.
1.43. Proprietary Rights. The term "Proprietary Rights" shall have
the meaning set forth in Section 3.18.
1.44. Purchaser Documents. The term "Purchaser Documents" shall
have the meaning set forth in Section 5.11.
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1.45. Registration Rights Agreement. The term "Registration Rights
Agreement" shall have the meaning set forth in Section 12.1(k).
1.46. SEC. The term "SEC" shall mean the Securities and Exchange
Commission.
1.47. Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended.
1.48. Stockholder Employee. The term "Stockholder Employee" shall
mean Xxxxxx X. Xxxxxxxx.
1.49. Stockholder Employment Agreement. The term "Stockholder
Employment Agreement" shall mean the Stockholder Employment Agreement to be
executed between Vision Twenty-One and Stockholder Employee.
1.50. Surviving Corporation. The term "Surviving Corporation"
shall have the meaning set forth in Section 2.1.
1.51. Third Party Claim. The term "Third Party Claim" shall have
the meaning set forth in Section 14.3(a).
1.52. Valuation Price. The term "Valuation Price" shall have the
meaning set forth in Section 2.8(a).
2. MERGER; CLOSING.
2.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined herein), the Company shall be
merged with and into Vision Twenty-One in accordance with this Agreement and the
separate corporate existence of the Company shall thereupon cease. Vision
Twenty-One 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 Twenty-One 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 as the parties shall
mutually agree.
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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, 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 of Delaware in
accordance with the FBCA and the Corporation Law, respectively, 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 Twenty-One 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 Twenty-One
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 Twenty-One 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 Twenty-One 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 consideration for the Company Common Stock, Vision
Twenty-One shall pay to the Stockholders at the Closing the aggregate value of
Ten Million Six Hundred Thousand Dollars ($10,600,000) less the aggregate amount
of outstanding long-term indebtedness (the net result of which is the "Merger
Consideration"). The Merger Consideration shall consist of shares of Vision
Twenty-One Common Stock to be delivered to the Stockholders in proportion to
their respective ownership of the Company Common Stock as set forth on Schedule
2.8(a). The aggregate number of shares of Vision Twenty-One Common Stock to be
delivered shall be that whole number equal to (but not greater than) the Merger
Consideration divided by $9.46 (the "Valuation Price"). The Merger Consideration
is subject to adjustment as set forth in Section 2.11.
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b. As a result of the Merger and without any action on the
part of the holders of Company Common Stock, all shares of Company Common Stock
issued and outstanding at the Effective Time shall cease to exist, and the
holders of certificates 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 Twenty-One Common Stock in accordance with Section 2.8(a).
c. 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.
d. At the Effective Time, each share of Vision Twenty-One
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 thereof, continue
unchanged and remain outstanding as a validly issued, fully paid and
nonassessable share of Vision Twenty-One Common Stock.
2.9. Exchange of Certificates Representing Shares of Company Common
Stock.
a. Each Stockholder shall deliver to Vision Twenty-One at
Closing the certificate or certificates representing Company Common Stock owned
by him, duly endorsed in blank by such Stockholder, or accompanied by duly
endorsed stock powers in blank, and with all necessary transfer tax and other
revenue stamps, acquired at such Stockholder's expense, affixed and cancelled.
Each Stockholder 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.
b. On the Closing Date each Stockholder, as the holder of a
certificate or certificates representing shares of Company Common Stock, upon
surrender of such certificate or certificates to Vision Twenty-One, shall
receive the number of shares of Vision Twenty-One Common Stock which represents
his pro rata share of the Merger Consideration determined in accordance with the
provisions of Section 2.8(a). Until the certificate or certificates representing
Company Common Stock have been surrendered by each Stockholder and replaced by
certificates representing Vision Twenty-One Common Stock, the certificates
representing Company Common Stock shall, for all purposes be deemed to evidence
ownership of the number of shares of Vision Twenty-One Common Stock payable to
the Stockholders in accordance with the provisions of Section 2.8(a). All shares
of Vision Twenty-One Common Stock issuable to the Stockholders in the Merger
shall be deemed for all purposes to have been issued by Vision Twenty-One at the
Effective Time, although the Merger Consideration shall not actually be paid by
Vision Twenty-One to the Stockholders until the Closing Date.
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2.10. Fractional Shares. Notwithstanding any other provision herein, no
fractional shares of Vision Twenty-One Common Stock will be issued. Fractional
shares shall be rounded down to the nearest whole number of shares.
2.11. Closing Date Balance Sheet.
a. Within forty-five (45) days following the Closing Date,
Vision Twenty-One shall cause to be prepared and delivered to the Company a
balance sheet which shall set forth the assets and the liabilities of the
Company as at the Closing Date (the "Closing Date Balance Sheet"). The Closing
Date Balance Sheet shall be prepared in accordance with GAAP and in the same
manner and utilizing the same procedures in which the balance sheet of the
Company as at December 31, 1997 was prepared. The Closing Date Balance Sheet
shall be prepared by Ernst & Young. Upon completion of the Closing Date Balance
Sheet, Vision Twenty-One shall calculate the net worth of the Company as of the
Closing Date (the "Net Worth") by subtracting the liabilities (excluding the
pre-Closing distributions from the Company to the Stockholders consistent with
past practices for income taxes payable by the Stockholders attributable to the
Company's Subchapter S income tax items for the 1997 tax year and for the period
from January 1, 1998 through the Closing Date) shown on the Closing Date Balance
Sheet from the assets shown on the Closing Date Balance Sheet. Vision Twenty-One
shall deliver such calculation and the Closing Date Balance Sheet to the
Company. The Company shall have the right, upon prior notice thereof, to have a
designated representative present at any physical inventory conducted in
connection with the preparation of the Closing Date Balance Sheet.
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b. The Company shall, within thirty (30) days after receipt of
the Closing Date Balance Sheet and the Net Worth calculation, complete its
review thereof. In the event the Company determines that the Closing Date
Balance Sheet has not been prepared on the basis set forth in Section 2.11(a)
hereof or otherwise objects to the calculations used in the preparation thereof,
the Company shall, on or before the last day of such thirty (30) day period, so
inform Vision Twenty-One in writing setting forth detailed description of the
basis of the Company's determination and the adjustments to the Closing Date
Balance Sheet and Net Worth calculation that the Company believes should be
made. If no objection is received from the Company within such thirty (30) day
period, the Net Worth, as calculated by Vision Twenty-One, shall be final. If
Vision Twenty-One and the Company are unable to resolve all of their
disagreements with respect to the proposed adjustments set forth in the
Company's objection within fifteen (15) days after receipt by Vision Twenty-One
of the Company's objection, they shall refer any disagreements to Ernst & Young,
the cost of which shall be shared equally by Vision Twenty-One and the Company.
If Ernst & Young cannot resolve the disagreement to the satisfaction of both
Vision Twenty-One and the Company within fifteen (15) days after such
disagreement has been submitted to it for resolution, Vision Twenty-One and the
Company shall refer the disagreements to binding arbitration using a nationally
recognized accounting firm not otherwise engaged by either Vision Twenty-One or
the Company. The cost of such arbitration proceeding shall be shared equally by
Vision Twenty-One and the Company and the proceedings shall be conducted in
accordance with the rules of the AAA. The parties agree to afford each other
access to all books and records of the Company reasonably necessary to prepare
and review the Closing Date Balance Sheet.
2.12. Adjustments to the Purchase Price. The Merger Consideration shall
be subject to adjustment on a dollar for dollar basis to the extent that the Net
Worth, as determined pursuant to Section 2.11, differs by more than five percent
(5%) from the net worth of the Company reflected on the Company's audited
balance sheet at December 31, 1997. The adjustment shall be settled promptly
after the determination hereof by the delivery of that whole number of shares of
Vision Twenty-One Common Stock equal to (but not greater than) the amount of the
adjustment divided by the Valuation Price.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS.
The Company and the Active Stockholders, jointly and severally, represent and
warrant to Vision Twenty-One that the following are true and correct on the date
hereof; when used in this Section 3, the term "best knowledge" (or words of
similar import) of the Company shall mean such actual knowledge as shall have
been obtained through due and diligent investigation by those individuals listed
on Schedule 3:
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3.1. Organization and Good Standing; Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with all requisite corporate power and authority to
carry on the business in which it is engaged, to own the properties it owns, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The Company is duly qualified and licensed to do business
in each jurisdiction in which the character or location of the properties owned
or leased by it or the practice of the business conducted by it makes such
qualification necessary. Except as set forth on Schedule 3.1, the Company does
not own, 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.
3.2. Capitalization. The authorized capital stock of the Company
consists of 10,000 shares of Company Common Stock, of which 9,772 shares are
issued and outstanding. The Stockholders own all of the issued and outstanding
Company Common Stock. Each outstanding share of Company Common Stock has been
legally and validly issued and is fully paid and nonassessable except as set
forth in Section 180.0622(2)(b) of the Wisconsin Statutes and the cases decided
pursuant thereto and except as set forth on Schedule 3.2. 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.
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.
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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 Twenty-One 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
Twenty-One, 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. Governmental Consents. Except for any Uniform Commercial Code
termination statements required to be filed in order to comply with
representations set forth in Section 3.14, no filing or registration with, or
authorization, consent, license, permit or approval of, any Governmental
Authority, is required in connection with the execution and delivery of the
documents contemplated herein by the Company or for the consummation by the
Company of the transactions contemplated by this Agreement.
3.7. 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
all necessary corporate action of the Company (including the approval of its
board of directors and stockholders). This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against it 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.
3.8. No Conflict. Except as disclosed on Schedule 3.8, the execution
and delivery of this Agreement and the documents contemplated hereunder and the
consummation of the transactions contemplated hereby and thereby by the Company
will not (i) violate any provision of the Company's Articles or Certificate of
Incorporation or Bylaws, (ii) violate any 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 obligation under, any mortgage, lien, lease, material
contract, license, permit, instrument or any other material agreement to which
the Company is a party, (iii) result in the creation or imposition of any lien,
charge, pledge, security interest or other encumbrance upon any property of the
Company, or (iv) violate or conflict with any order, award, judgment or decree
or other restriction or conflict with any law, ordinance, rule or regulation to
which the Company or its property is subject or by which the Company or its
property may be bound or affected, except for those which would not have a
Material Adverse Effect.
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3.9. Financial Statements. The Company has delivered to Vision
Twenty-One its audited balance sheet at December 31, 1996 and 1997, and related
audited statements of income, retained earnings and cash flows for the fiscal
years ended December 31, 1995, 1996 and 1997, and the related notes thereto (the
"Financial Statements"). All of the Financial Statements are complete and
correct in all material respects , have been prepared in accordance with GAAP,
and fairly present in all material respects the financial position of the
Company at the dates and for the periods indicated. The Financial Statements
reflect all property and assets used in the business of the Company in a manner
consistent with past practices. No statement of income on the Financial
Statements contains any extraordinary or nonrecurring item or expense and none
of the Financial Statements reflects any revaluation of assets (except as
specified therein). Since December 31, 1997 (the "Balance Sheet Date") there has
been no Material Adverse Effect upon the assets or liabilities or in the
business or condition, financial or otherwise, or the results of operations or
prospects of the Company, and, to the best knowledge of the Company and the
Active Stockholders, no fact or condition exists or is contemplated or
threatened which might cause such a change in the future. To the best knowledge
of the Company and the Active Stockholders, the Company's books and records for
its interim fiscal periods are auditable, and the Stockholders covenant and
agree to cooperate with Vision Twenty-One and its auditors in the preparation of
audited financial statements for such interim fiscal periods.
3.10. No Undisclosed Liabilities. 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, in accordance with GAAP, except for liabilities and
obligations incurred in the ordinary course of business since the Balance Sheet
Date and which will not, in the aggregate, have a Material Adverse Effect.
Except as set forth in the Financial Statements or on Schedule 3.10, the Company
is not liable for or obligated in any 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. The
Company has paid all accrued employee wages as of the Closing Date.
b. Compensation Plans. Schedule 3.11(b) contains a complete
and accurate list of all compensation plans, arrangements or practices (the
"Compensation
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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 Twenty-One a copy of each written
Compensation Plan, including all amendments to date, 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, employee services, consulting 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
currently apply to employees of the Company. The Company has provided or made
available to Vision Twenty-One a copy of all written Employee Policies and
Procedures, including all amendments to date, and a written description of all
material unwritten Employee Policies and Procedures.
e. 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 and no such charges or complaints are pending or, to the best
knowledge of the Company and the Active Stockholders, threatened against the
Company before any federal, state or local court, board, department, commission
or agency (nor, to the best knowledge of the Company and the Active
Stockholders, does any valid basis therefor exist). No labor strikes, disputes,
grievances, controversies or other labor troubles affecting the Company are
pending or threatened (nor, to the best knowledge of the Company and the Active
Stockholders, does any valid basis therefor exist).
f. 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(f), to the best knowledge
of the Company and the Active Stockholders, none of the employees of the Company
has threatened to organize or join a union, labor organization or collective
bargaining unit.
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g. Aliens. All employees of the Company are, to the best
knowledge of the Company and the Active Stockholders, citizens of, or are
authorized in accordance with federal immigration laws to be employed in, the
United States, except as set forth in Schedule 3.11(g).
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 Twenty-One 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. 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.
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 has (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 has 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. The Company has not received any notice that
any Employee Benefit Plan is currently the subject of an audit, investigation,
enforcement action or other similar proceeding conducted by any state or federal
agency.
d. Prohibited Transactions. To the best of the Company's
knowledge, 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 best of the
Company's knowledge, threatened claims, suits, or other proceedings exist with
respect to any Employee Benefit Plan other than normal benefit claims filed by
participants or beneficiaries.
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f. Qualification. As set forth in more detail on Schedule
3.12(f), the Company 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 best of the Company's knowledge, have been
threatened that could result in the revocation of any such favorable
determination letter or ruling.
g. Multiemployer Plans. Neither the Company nor any member of
a controlled group (within the meaning of Section 412(n)(6)(B) of the Code) is
or ever has been obligated to contribute to a multiemployer plan within the
meaning of Section 3(37) of ERISA.
h. Pension Benefit Guaranty Corporation. None of the Employee
Benefit Plans are subject to the requirements of Title IV of ERISA.
i. Retirees. The Company does not have any 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.
j. 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.
k. 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 of ERISA.
3.13. Absence of Certain Changes. Except as set forth on Schedule 3.13
or as contemplated in this Agreement, since the Balance Sheet Date, the Company
has not:
a. suffered a Material Adverse Effect;
b. contracted for the purpose of acquiring any capital asset
having a cost in excess of $20,000 or made any single expenditure for a capital
asset in excess of $20,000;
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c. incurred any indebtedness for borrowed money in excess of
$20,000 (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 canceled any claims or any debt in excess of $20,000, 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 $20,000, except in the ordinary course of business;
i. written up or written down the carrying value of any of its
assets, other than accounts receivable in the ordinary course of business;
j. changed the costing system or depreciation methods of
accounting for its assets in any material respect;
k. lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, resulted in a Material
Adverse Effect;
l. increased the compensation of any director, officer, key
employee or consultant, except as disclosed on Schedule 3.11(a);
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 $20,000;
n. formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
o. redeemed, purchased or otherwise acquired, or sold, granted
or otherwise disposed of, directly or indirectly, any of its capital stock, paid
any dividend or made any distribution or payment on any of its capital stock, or
agreed to change the terms and conditions of any such capital stock;
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p. entered into any agreement providing for total payments in
excess of $20,000 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 whereupon the sum of total
payments shall not exceed $20,000 in any twelve (12) month period;
q. 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; or
r. to the best knowledge of the Company and the Active
Stockholders, engaged in any activity, entered into any transaction or failed to
take any action which would prohibit the Pooling of Interests method of
accounting for the transactions contemplated herein.
3.14. Title to Assets and Properties.
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 as currently
conducted.
b. Personal Property. Except as set forth on Schedule 3.14(b),
the Company has good, valid and marketable title to all of its assets and
properties, free and clear of all security interests, liens, claims and
encumbrances. The assets and properties of the Company are adequate for the
conduct of the Company's business in the manner in which it is currently
conducted and contemplated to be conducted by the Company.
c. Leases. Schedule 3.14(c) sets forth a true, correct and
complete 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. All such leases are valid and enforceable in
accordance with their respective terms and no event has occurred which, to the
best knowledge of the Company and the Active Stockholders, with the giving of
notice, the lapse of time or both, would constitute an event of default
thereunder, including the execution of this Agreement or the consummation of the
transactions contemplated hereby.
3.15. 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, taken as a whole, in good operating 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.
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3.16. Contracts.
a. Contracts; Defaults. Except as set forth on Schedule 3.16,
the Company is not a party to or bound by, nor are any of the shares of Company
Common Stock or any of the Company's assets or properties subject to, or bound
by, whether or not in writing, any of the following:
(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 $20,000 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
officer, director, employee, stockholder or Affiliate of the Company or any
Stockholder;
(vii) agreement for the acquisition of services,
supplies, equipment, inventory, fixtures or other property involving more than
$20,000 in the aggregate, except in the ordinary course of business;
(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 an contracts to provide
optometric or health care services;
(xiii) agreements with Optometrist Employees to
provide eye care services on behalf of the Company; or
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(xiv) any other agreement or commitment in excess of
$20,000 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.
b. True, correct and complete copies of the written Contracts,
and true, correct and complete written descriptions of the oral Contracts, have
heretofore been delivered or made available to Vision Twenty-One. There are no
existing events of default or events, occurrences, acts or omissions that, with
the giving of notice or lapse of time or both, would constitute a default by the
Company or, to the best knowledge of the Company and the Active Stockholders,
any other party to a material Contract, and no penalties have been incurred nor
are amendments pending, with respect to the material Contracts. The Contracts
are in full force and effect and are valid and enforceable obligations of the
Company (except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally or the availability of
equitable remedies), and, to the best knowledge of the Company and the Active
Stockholders, are valid and enforceable obligations of the other parties
thereto, in accordance with their respective terms and, except as set forth on
Schedule 3.16(b), no defenses, off-sets or counterclaims have been asserted, nor
has the Company waived any material rights thereunder. The Company has not
received notice of any plan or intention of any other party to any Contracts to
exercise any right to cancel or terminate such Contracts, and the Company does
not know of any fact that would justify the exercise of such a right. Except as
set forth on Schedule 3.16(b), no consents or approvals are required under the
terms of any Contracts in connection with the transactions contemplated herein;
including, without limitation, the Merger.
3.17. Insurance. The Company carries property, liability, malpractice,
workers' compensation and such other types of insurance pursuant to the
insurance policies listed and briefly described on Schedule 3.17 (the "Insurance
Policies"). 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. 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 Twenty-One. Except as set forth on Schedule 3.17, the Company has not
received any notice or other communication from any issuer of any Insurance
Policy canceling such policy, materially increasing any deductibles or retained
amounts thereunder, and to the best knowledge of the Company, no such
cancellation or increase of deductibles, retainages or premiums is threatened.
Except as set forth on Schedule 3.17, the Company has no outstanding claims,
settlements or premiums owed against any Insurance Policy, and the Company has
given all notices or has presented all potential or actual claims under any
Insurance Policy in due and timely fashion. The Company and each Optometrist
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
Optometrist Employee has been licensed to practice optometry or been employed by
the Company, whichever is shorter). Schedule 3.17 also sets forth a list of all
claims under any Insurance Policy in excess of $10,000 per occurrence filed by
the Company since its inception. The Company has established and maintains all
required insurance company
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reserves in all of those states that it is required to do so and has established
and maintains all required deposits and bonds as are necessary in such state.
3.18. Proprietary Rights and Information. Set forth on Schedule 3.18 is
a true and correct description of the following ("Proprietary Rights"):
a. all trademarks, trade-names, service marks and other trade
designations, including common law rights, registrations and applications
therefor, and all patents and applications therefor currently owned, in whole or
in part, by the Company, and all licenses, royalties, assignments and other
similar agreements relating to the foregoing to which the Company is a party
(including the expiration date thereof if applicable); and
b. all agreements relating to technology, know-how or
processes that the Company is licensed or authorized to use by others (other
than technology, know-how or processes generally available to other healthcare
providers), or which it licenses or authorizes others to use.
c. The Company owns or has the legal right to use the
Proprietary Rights, and to the best knowledge of the Company, such ownership or
use does not conflict, infringe or violate the rights of any other person. No
consent of any person will be required for the use thereof by Vision Twenty-One
upon consummation of the transactions contemplated hereby and the Proprietary
Rights are freely transferable. 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.
3.19. Taxes.
a. Filing of Tax Returns. The Company has duly and timely
filed and prior to the Closing Date will duly and timely file (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 3.19, (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.
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c. No Pending Deficiencies, Delinquencies, Assessments or
Audits. Except as set forth on Schedule 3.19, the Company has not received any
notice that any tax deficiency or delinquency has been asserted against the
Company. There is no taxing authority audit of the Company pending, or to the
best knowledge of the Company, threatened, and the results of any completed
audits are properly reflected in the Financial Statements.
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. Tax Sharing Agreements. The Company is not a party to any
tax sharing agreement with any other person or entity.
g. Foreign Person. Neither the Company nor any Stockholder is
a foreign person, as such term is referred to in Section 1445(f)(3) of the Code.
h. Safe Harbor Lease. None of the assets or properties of the
Company constitutes property that the Company, Vision Twenty-One, or any
Affiliate of Vision Twenty-One, 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.
i. Tax Exempt Entity. None of the assets of the Company are
subject to a lease to a "tax exempt entity" as such term is defined in Section
168(h)(2) of the Code.
j. Collapsible Corporation. The Company has not at any time
consented, and the Stockholders will not permit the Company to elect, to have
the provisions of Section 341(f)(2) of the Code apply to it.
k. Boycotts. The Company has not at any time participated in
or cooperated with any international boycott as defined in Section 999 of the
Code.
l. 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.
3.20. Governmental Authorizations. To the best knowledge of the Company
and the Active Stockholders, the Company and each Optometrist Employee possess
all necessary licenses, franchises, permits and other governmental
authorizations, including, but not limited to all licenses, franchises, permits
and
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authorizations for the conduct of the Company's business as now conducted, all
of which are listed (with expiration dates, if applicable) on Schedule 3.20,
except where the failure to possess such licenses, franchises, permits or
authorizations would not have a Material Adverse Effect. Except as set forth on
Schedule 3.20, 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
authorizations, except where such default, breach or violation would not have a
Material Adverse Effect. To the best knowledge of the Company and the Active
Stockholders, all such licenses, franchises, permits and other authorizations
are valid and in full force and effect, the Company is currently in material
compliance therewith and the Company has not received any notice that any
governmental authority is considering challenging, revoking, canceling,
restricting, conditioning or not renewing any such license, franchise, permit or
other authorization.
3.21. Compliance with Applicable Laws. Except as disclosed in Schedule
3.21, the Company and, to the best knowledge of the Company and the Active
Stockholders, each Optometrist Employee are in material compliance with all
applicable laws, ordinances and regulations of any Governmental Authority,
including, without limitation, applicable state corporation, insurance and
health regulatory authorities and other Governmental Authorities regulating
exclusive provider organizations, preferred provider organizations, medical
utilization review organizations, medical service organizations, lay
intermediaries, secondary contractors or third-party administrators and all
Medicare and Medicaid provider agreements to which they are a party, except
where the failure to comply would not have a Material Adverse Effect. Except as
disclosed in Schedule 3.21, to the best knowledge of the Company and the Active
Stockholders, no investigation or review by any Governmental Authority,
including, without limitation, applicable state corporation, insurance and
health regulatory authorities, with respect to the Company or any of Optometrist
Employees is pending or threatened, nor has any Governmental Authority,
including, without limitation, applicable state corporation, insurance and
health regulatory authorities, indicated an intention to conduct the same, other
than those the outcome of which would not have a Material Adverse Effect.
3.22. Litigation. Except as described on Section 3.22, the Company is
not a party to nor has it been notified of, any legal actions or administrative
proceedings or investigations which, if adversely determined, could have a
Material Adverse Effect on the Company Common Stock, the assets, operations,
business, condition (financial or otherwise), or results of operation of the
Company or adversely affect the ability of the Company or any Stockholder to
effect the transactions contemplated hereby. Neither the Company nor any
Stockholder is subject to or in default of any court or administrative order,
judgment, writ, injunction or decree applicable to the Company or to its
business, assets, operations or employees. All claims asserted, general
liability incidents and incident reports have been submitted to the Company's
insurer therefor. All claims made or threatened against the Company in excess of
its deductible are covered under its Insurance Policies.
3.23. Ownership Interests of Interested Persons. Except as set forth on
Schedule 3.23, no non-shareholder officer or director, and no employee of the
Company,
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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 non-shareholder directors or
officers, nor its 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.
3.24. Investments in Competitors. Except as disclosed on Schedule 3.24,
the Company does not own, directly or indirectly, any interest or have any
investment in any person or entity that is a Competitor of the Company.
3.25. Environmental Matters. Except as set forth on Schedule 3.25, the
use, maintenance and operation of the Property, and all activities and conduct
of business related thereto, have at all times complied with all Environmental
Requirements. No Hazardous Material has been generated at the Property or
transported to an Off-Site Location. The Company has not received written notice
or other communication concerning any alleged violation of Environmental
Requirements, whether or not corrected to the satisfaction of the appropriate
authority, nor notice or other communication concerning alleged liability for
Environmental Damages both in connection with the Property and in connection
with an Off-Site Location and there exists no writ, injunction, decree, order or
judgment outstanding, nor any lawsuit, claim, proceeding, citation, directive,
summons or investigation, pending or, to the best knowledge of the Company,
threatened, relating to the ownership, use, maintenance or operation of the
Property or Off-Site Location by any person, or from alleged violation of
Environmental Requirements, or from the suspected presence of Hazardous Material
on the Property.
3.26. Certain Payments. Neither the Company, nor any director, officer,
employee or stockholder 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 to any government or agency thereof or any agent of any
supplier or customer any bribe, kick-back or other similar payment or any
contribution to any political party or candidate (other than from personal funds
of directors, officers or employees not reimbursed by the Company or as
otherwise permitted by applicable law).
3.27. Medicare and Medicaid Programs. The Company is qualified for
participation in the Medicare and Medicare programs and is a party to provider
agreements for such programs which are in full force and effect with no events
of default having occurred thereunder. The Company and each Optometrist Employee
has timely filed all claims or other reports required to be filed on or before
the date hereof, and will timely file all claims and reports required to be
filed on or 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,
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individually or in the aggregate, result in a Material Adverse Effect. All such
filed claims or reports are, and all such claims and reports to be filed on or
before the Closing Date will be, complete and accurate in all material respects.
To the best of the Company's and the Active Stockholder's knowledge, the Company
and each Optometrist Employee has paid or properly recorded on the Financial
Statements all known and undisputed refunds, discounts or adjustments which have
become due pursuant to such claims, and neither the Company nor any Optometrist
Employee has any material liability to any Payor with respect thereto, except as
has been reserved for in the Financial Statements. There are no pending appeals,
overpayment determinations, adjustments, challenges, audits, litigation, or
notices of intent to reopen Medicare and/or Medicaid claims determinations or
other reports required to be filed by the Company, any Stockholder or
Optometrist Employee in order to be paid by a Payor for services rendered.
Neither the Company nor the Stockholders or any of the Company's directors,
officers, employees or consultants, has been convicted of, or pled guilty or
nolo contendere to, patient abuse or neglect, or any other Medicare or Medicaid
program-related offense. To the best knowledge of the Company and the Active
Stockholders, neither the Company nor any of its directors, officers, employees
consultants, or Stockholders 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 federal, state or local government
program, loss of a license to provide health services, and failure to provide
quality care.
3.28. Fraud and Abuse. To the best knowledge of the Company and the
Active Stockholders, neither the Company, nor any of its officers, directors,
Stockholders, Optometrist Employees, or other persons and entities providing
professional services for the Company has engaged in any activities which are
prohibited under 42 U.S.C. xx.xx. 1320-7, 7a or 7b or 42 U.S.C. ss.1395nn
(subject to the exceptions set forth in such legislation), or the regulations
promulgated thereunder or pursuant to similar state or local statutes or
regulations, or which are prohibited by rules of professional conduct, including
but not limited to the following:
a. knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment;
b. knowingly and willfully making or causing to be made a
false statement or representation of a material fact for use in determining
rights to any benefit or payment;
c. failing 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,
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or ordering, or arranging for or recommending purchasing, leasing, or ordering
any good, facility, service, or item for which payment may be made in whole or
in part by Medicare or Medicaid; and
e. referring a patient for designated health services (as
defined in 42 U.S.C. ss.1395nn) to or providing designated health services to a
patient upon a referral from an entity or person with which any Stockholder or
Optometrist Employee or an immediate family member has a financial relationship,
and to which no exception under 42 U.S.C. ss.1395nn applies.
3.29. Insolvency Proceedings. The Company is not, nor has it ever been,
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.
3.30. Positive Net Worth. On the date hereof the book value of the
assets of the Company equals or exceeds, and on the Closing Date will equal or
exceed, the sum of the liabilities of the Company .
3.31. Accounts Receivable/Payable.
a. The accounts receivable of the Company, to the extent
uncollected on the date hereof, are, and the accounts receivable of the Company
relating to the operation of the Company to be reflected on the books of the
Company on the Closing Date will be, valid, existing and collectible (subject to
the allowance for doubtful accounts set forth in the Financial Statements) using
reasonably diligent collection methods and represent amounts due for goods sold
and delivered or services performed. To the best knowledge of the Company and
the Active Stockholders, 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 any of the Company's accounts
receivable. The Company has collected its 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.
b. Since the Balance Sheet Date, the Company has not changed
any material principle or practice with respect to the recordation of accounts
receivable or the calculation of reserves therefor, or any material collection,
discount or write-off policy or procedure. The Company is in compliance with the
material terms and conditions of all third-party payor arrangements relating to
its accounts receivable.
3.32. Finder's Fee. The Company has not incurred any obligation for any
finder's, brokers or agent's fee in connection with the transactions
contemplated hereby.
3.33. Disclosure. To the best of the Company's and the Active
Stockholders' knowledge, no representation, warranty or statement made by the
Company
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or the Stockholders 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 Twenty-One in accordance herewith or the 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 Stockholders 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
(financial or otherwise), properties, assets, liabilities, business, operations
or prospects of the Company, which has not been set forth herein or in the
Schedules provided herewith.
3.34. Distributions. Except for pre-Closing distributions from the
Company to the Stockholders consistent with past practices for income taxes
payable by the Stockholders attributable to the Company's Subchapter S income
tax items for the 1997 tax year and for the period from January 1,1998 through
the Closing Date, 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.
3.35. Payors. Schedule 3.35 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 3.35, 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.
3.36. Prohibitions on the Corporate Practice of Optometry. To the best
of the Company's and the Active Stockholders' knowledge, the actions,
transactions or relationships arising from and contemplated by this Agreement do
not violate any Wisconsin law, rule or regulation relating to the corporate
practice of optometry. The Company and the Stockholders accordingly agree that
the Company and the Stockholders will not, in an attempt to void or nullify any
document contemplated herein or any relationship involving Vision Twenty-One or
the Company or the Stockholders, 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 Twenty-One, and
recognize that Vision Twenty-One has relied upon the statements herein in
closing the transaction.
3.37. Equal Exchange. The Stockholders 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.
3.38. Banking Relations. Set forth on Schedule 3.38 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
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arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereof.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each Stockholder
represents and warrants to Vision Twenty-One as to himself only that the
following are true and correct as of the date hereof :
4.1. Stock Ownership. The Stockholder 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, as reflected on Schedule 4.1 as owned by him.
4.2. Validity; Capacity. This Agreement and each other agreement to be
executed in connection herewith has been duly executed and delivered by the
Stockholder, and all such agreements constitute legal, valid and binding
obligations of such Stockholder, enforceable against the Stockholder 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. Each Stockholder has the legal capacity
to enter into and perform this Agreement and such other agreements to which it
is a party.
4.3. No Violation. Except as set forth on Schedule 4.3, neither the
execution, delivery or performance of this Agreement or the other agreements to
be executed by the Stockholders, 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 such Stockholder
is bound or to which any of his 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 shares of Company Common Stock or (b) to the best
knowledge of such Stockholder, violate or conflict with any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental or
regulatory agency or body.
4.4. Personal Holding Company. Such Stockholder does not own his shares
of Company Common Stock, directly or indirectly, beneficially or of record,
through a personal holding company.
4.5. Transfers of the Company Common Stock. Set forth on Schedule 4.5
is an accurate and complete list of all transfers or other transactions
involving capital stock of the Company made by such Stockholder since January 1,
1996. All transfers of Company Common Stock by such Stockholder have been made
for valid business reasons and not in anticipation or contemplation of the
consummation of the transactions contemplated by this Agreement.
4.6. 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
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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 Stockholder.
4.7. Certain Payments. Such Stockholder has not paid or caused to be
paid, directly or indirectly, in connection with the business of the Company, to
any government or agency thereof or any agent of any supplier or customer any
bribe, kick-back or other similar payment; or 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).
4.8. Finder's Fee. Such Stockholder has not incurred any obligation
for any finder's, broker's or agent's fee in connection with the transactions
contemplated hereby.
4.9. Ownership of Interested Persons; Affiliations. Except as set
forth on Schedule 4.9, neither such Stockholder 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 such Stockholder 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.
4.10. Investments in Competitors. Such Stockholder does not own
directly or indirectly any interests or have any investment in any person that
is a Competitor of the Company.
4.11. Litigation. Except as set forth on Schedule 4.11, there are no
claims, actions, suits, proceedings (arbitration or otherwise) or investigations
pending or, to the best of such Stockholder's knowledge, threatened against such
Stockholder at law or at equity in any court or before or by any Governmental
Authority, and, to such Stockholder'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. There have been no
disciplinary , revocation or suspension proceedings or similar types of claims,
actions or proceedings, hearings or investigations against the Stockholder.
5. REPRESENTATIONS AND WARRANTIES OF VISION TWENTY-ONE. Vision Twenty-One
represents and warrants to the Company and the Stockholders that the following
are true and correct on the date hereof; when used in this Section 5, the term
"best knowledge" (or words of similar import) shall mean such knowledge, as
shall have been obtained after conducting due and diligent inquiry, of those
individuals listed on Schedule 5:
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5.1. Organization and Good Standing; Qualification. Vision Twenty-One
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida, with 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. Vision Twenty-One is duly qualified and licensed to do
business in each jurisdiction in which the character or location of the
properties owned or leased by Vision Twenty-One or the practice of the
businesses conducted by Vision Twenty-One makes such qualification necessary,
except where the failure to do so would not have a Material Adverse Effect.
5.2. Subsidiaries. Except as set forth on Schedule 5.2, Vision
Twenty-One does not own, 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. With respect to
each corporation that is owned, directly or indirectly, beneficially or of
record by Vision Twenty-One (each, a "Vision Twenty-One Subsidiary"), Schedule
5.2 sets forth a true, correct and complete list of (i) the name and
jurisdiction of incorporation of each Vision Twenty-One Subsidiary, (ii) the
jurisdiction in which each Vision Twenty-One Subsidiary is qualified or licensed
to do business as a foreign corporation, (iii) the authorized capital stock of
each Vision Twenty-One Subsidiary, (iv) the number of shares of each class
thereof issued and outstanding, and (v) the number of shares and percentage of
outstanding capital stock owned by Vision Twenty-One. All outstanding shares of
capital stock of each Vision Twenty-One Subsidiary have been duly authorized and
validly issued, are fully paid and non-assessable, and are owned by Vision
Twenty-One free and clear of all liens, pledges, security interests,
restrictions, voting trusts or other encumbrances of any nature whatsoever.
5.3. Capitalization. The authorized capital stock of Vision Twenty-One
consists of 50,000,000 shares of Common Stock and 10,000,000 shares of preferred
stock, of which 12,282,913 shares of Common Stock (excluding contingent shares)
are issued and outstanding as of March 26, 1998. Options and warrants to acquire
an additional 2,062,214 shares of Vision Twenty-One Common Stock are
outstanding. The issuance and delivery of the shares of Common Stock to be
issued by Vision Twenty-One in connection with this Agreement have been duly and
validly authorized by all necessary corporate action on the part of Vision
Twenty-One. The Common Stock being transferred by Vision Twenty-One hereunder
shall be free and clear of all liens, pledges, restrictions, voting trusts,
security interests or other encumbrances of any nature whatsoever, except as set
forth herein or in the Registration Rights Agreement between the Stockholders
and Vision Twenty-One. Each outstanding share of Common Stock and the shares to
be issued hereunder have been legally and validly issued and are fully paid and
nonassessable. No shares of Common Stock have been, and the shares of Common
Stock to be issued pursuant to this Agreement will not be, issued or disposed of
in violation of the preemptive rights, rights of first refusal or similar rights
of any of Vision Twenty-One's stockholders.
5.4. Consents. Except as disclosed on Schedule 5.4, no filing or
registration with, or authorization, consent or approval of, any Governmental
Authority or
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other person is required in connection with the execution and delivery of this
Agreement or the other agreements to be executed and delivered in connection
herewith by Vision Twenty-one or the consummation of the transactions
contemplated hereby or thereby.
5.5. Authorization and Validity. The execution, delivery and
performance by Vision Twenty-One of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby to be performed by Vision Twenty-One, have been duly
authorized by Vision Twenty-One. This Agreement and the other agreements
contemplated hereby to be executed by Vision Twenty-One have been duly executed
and delivered by Vision Twenty-One and constitute the legal, valid and binding
obligation of Vision Twenty-One, enforceable against Vision Twenty-One 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.
5.6. No Conflict. The execution and delivery of this Agreement and the
documents contemplated hereunder and the consummation of the transactions
contemplated hereby and thereby by Vision Twenty-One will not (i) violate any
provision of Vision Twenty-One's Articles of Incorporation or By-Laws, (ii)
violate any 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
obligation under, any mortgage, lien, lease, material contract, license, permit,
instrument or any other material agreement to which Vision Twenty-One is a
party, (iii) result in the creation or imposition of any lien, charge, pledge,
security interest or other encumbrance upon any property of Vision Twenty-One,
or (iv) violate or conflict with any order, award, judgment or decree or other
restriction or any law, ordinance, rule or regulation to which Vision Twenty-One
or its property is subject or by which Vision Twenty-One or its property may be
bound or affected.
5.7. Governmental Authorizations. To the best knowledge of Vision
Twenty-One, Vision Twenty-One and the Vision Twenty-One Subsidiaries possess all
necessary licenses, franchises, permits and other governmental authorizations,
including, but not limited to all licenses, franchises, permits and
authorizations for the conduct of Vision Twenty-One's and the Vision Twenty-One
Subsidiaries' businesses as now conducted, all of which are listed (with
expiration dates, if applicable) on Schedule 5.7, except where the failure to
possess such licenses, franchises, permits or authorizations would not have a
Material Adverse Effect. Except as set forth on Schedule 5.7, 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 authorizations, except where such default,
breach or violation would not have a Material Adverse Effect. All such licenses,
franchises, permits and other authorizations are valid and in full force and
effect, Vision Twenty-One and the Vision Twenty-One Subsidiaries are currently
in material compliance therewith and neither Vision Twenty-One nor any Vision
Twenty-One Subsidiary has received any notice that any governmental authority is
considering challenging, revoking, canceling, restricting, conditioning or not
renewing any such license, franchise, permit or other authorization, except as
set forth on Schedule 5.7.
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5.8. Compliance with Applicable Laws. Except as disclosed in Schedule
5.8, Vision Twenty-One and each of the Vision Twenty-One Subsidiaries are in
material compliance with all applicable laws, ordinances and regulations of any
Governmental Authority, including, without limitation, applicable state
corporation, insurance and health regulatory authorities and other Governmental
Authorities regulating exclusive provider organizations, preferred provider
organizations, medical utilization review organizations, medical service
organizations, lay intermediaries, secondary contractors or third-party
administrators and all Medicare and Medicaid provider agreements to which it is
a party, except where the failure to comply would not have a Material Adverse
Effect. Except as disclosed in Schedule 5.8, to the best knowledge of Vision
Twenty-One, no investigation or review by any Governmental Authority, including,
without limitation, applicable state corporation, insurance and health
regulatory authorities, with respect to Vision Twenty-One or any of the Vision
Twenty-One Subsidiaries is pending or threatened, nor has any Governmental
Authority, including, without limitation, applicable state corporation,
insurance and health regulatory authorities, indicated an intention to conduct
the same, other than those the outcome of which would not have a Material
Adverse Effect.
5.9. Finder's Fee. Vision Twenty-One has not incurred any obligation
for any finder's, broker's or agent's fee in connection with the transactions
contemplated hereby.
5.10. Securities. The Vision Twenty-One Common Stock to be issued to
the Stockholders, when issued, will be duly and validly issued, fully paid and
nonassessable.
5.11. Documents. Vision Twenty-One has furnished the Company with a
true and complete copy of each report and registration statement filed by it
with the SEC (the "Purchaser Documents") since its initial public offering,
which are all the documents that it was required to file with the SEC since such
date. As of their respective dates, the Purchaser Documents did not contain any
untrue statements of material facts or omit to state material facts required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the Purchaser Documents complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and the rules
and regulations promulgated under such statutes. The financial statements
contained in the Purchaser Documents, together with the notes thereto, have been
prepared in accordance with GAAP, reflect all liabilities of Vision Twenty-One
required to be stated therein and present fairly the financial condition of
Vision Twenty-One at such date and the results of operations and cash flows of
Vision Twenty-One for the period then ended. The Purchaser Documents do not
contain any untrue statements of material facts or omit to state any material
facts required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading as of
the date hereof except for such facts as are disclosed herein and except for the
transactions contemplated hereby.
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5.12. Equal Exchange. Vision Twenty-One 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.
6. SECURITIES LAW MATTERS.
6.1. Investment Representations and Covenants. Each Stockholder
severally represents, warrants and covenants as follows:
a. Such Stockholder understands that the Vision Twenty-One
Common Stock will not be registered under the Securities Act or any state
securities laws on the grounds that the issuance of the Vision Twenty-One Common
Stock is exempt from registration pursuant to Section 4(2) of the Securities Act
and applicable state securities laws, and that the reliance of Vision Twenty-One
on such exemptions is predicated in part on the Stockholder's representations,
warranties, covenants and acknowledgments set forth in this Section.
b. Such Stockholder represents and warrants that he is an
"accredited investor" or "sophisticated investor" as defined under the
Securities Act and state "Blue Sky" laws, or that such Stockholder 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. Such Stockholder represents and warrants that the Vision
Twenty-One Common Stock to be acquired by the Stockholder upon consummation of
the transactions described in this Agreement will be acquired by the Stockholder
for his 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, and that the Stockholder will not distribute any of the
Vision Twenty-One Common Stock in violation of the Securities Act. All Vision
Twenty-One Common Stock 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 Vision Twenty-One Common Stock shall bear any legend
required by the securities or "Blue Sky" laws of any state where the Stockholder
resides as well as any other legend deemed appropriate by Vision Twenty-One or
its counsel.
d. Such Stockholder (i) acknowledges that the Vision
Twenty-One Common Stock issued to it at the Closing must be held indefinitely by
it unless subsequently registered under the Securities Act or an exemption from
registration is available, (ii) is aware that any routine sales of Vision
Twenty-One Common Stock made
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pursuant to Rule 144 under the Securities Act may be made only in limited
amounts and in accordance with the terms and conditions of that Rule and that in
such cases where the Rule is not applicable, compliance with some other
registration exemption will be required, (iii) is aware that Rule 144 is not
immediately available for use for resale of any of the Vision Twenty-One Common
Stock to be acquired by the Stockholder upon consummation of the transactions
described in this Agreement, and (iv) acknowledges and agrees that the
registration of the Vision Twenty-One Common Stock shall be subject to the terms
and provisions of the Registration Rights Agreement.
e. Such Stockholder represents and warrants to Vision
Twenty-One that Stockholder, either alone or together with the assistance of
Stockholder's own professional advisor, has such knowledge and experience in
financial and business matters such that Stockholder is capable of evaluating
the merits and risks of an investment in the Vision Twenty-One Common Stock and
is able to sustain a complete loss of such investment.
f. Such Stockholder confirms that he has had the opportunity
to ask questions of and receive answers from Vision Twenty-One concerning the
terms and conditions of his investment in the Vision Twenty-One Common Stock,
and that he has received, to his satisfaction, such information about Vision
Twenty-One's operations as he has requested.
g. Such Stockholder agrees that it will not sell or otherwise
transfer or dispose of the Vision Twenty-One Common Stock or any interest
therein (unless such shares have been registered under the Securities Act or
after two years pursuant to Rule 144) without first complying with either of the
following conditions:
(i) Vision Twenty-One shall have received a written
legal opinion from legal counsel, which opinion and counsel shall be
satisfactory to Vision Twenty-One in the exercise of its reasonable judgment, or
a copy of a "no-action" or interpretive letter of the SEC specifying the nature
and circumstance of the proposed transfer, in either instance indicating or
opining, as the case may be, that the proposed transfer will not be in violation
of any of the registration provisions of the Securities Act and the rules and
regulations promulgated thereunder; or
(ii) Vision Twenty-One 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.
Such Stockholder acknowledges and agrees that the certificates or instruments
representing the Vision Twenty-One Common Stock to be issued to Stockholder
pursuant to this Agreement shall 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 Twenty-One's transfer agent in the event
such provisions and applicable federal and state securities laws are not
complied with by the Company.
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7. INTENTIONALLY OMITTED.
8. INTENTIONALLY OMITTED.
9. COVENANTS OF VISION TWENTY-ONE AND THE COMPANY. Vision Twenty-One
and the Company agree as follows:
9.1. Fees and Expenses. Vision Twenty-One shall pay the costs and
expenses of its advisors and the reasonable and customary expenses of the
Company and Stockholders with respect to the negotiation and consummation of
this Agreement and the transactions contemplated herein.
9.2. Tax Matters.
a. Returns. The Company shall duly and timely file all Tax
Returns for the Company that are required to be filed on or before the Closing
Date and shall duly and timely pay all taxes shown on such Tax Returns to be
due. Vision Twenty-One shall duly and timely file the Company's final S
corporation income tax returns, provided, however, that such returns shall not
be filed without the consent of Stockholders, which shall not be unreasonably
withheld. Vision Twenty-One shall provide the Stockholders reasonable access to
the books and records of the Company to allow the Stockholders to review such
tax returns.
b. Audits. The Stockholders will allow Vision Twenty-One and
its counsel to participate, at their expense, in any audits of the federal,
state or local income tax returns of the Company relating to a period prior to
Closing. The Stockholders will not settle any such audit without the prior
written consent of Vision Twenty-One, which shall not be unreasonably withheld.
Vision Twenty-One will allow the Stockholders and their counsel to participate
in any matters relating to a federal, state or local tax return relating to a
period prior to Closing and will not settle any such matter without the consent
of the Stockholders, which shall not be unreasonably withheld. Vision Twenty-One
shall not amend any tax return of the Company relating to a period prior to
Closing without the consent of the Stockholders. Vision Twenty-One shall provide
the Stockholders reasonable access to the books and records of the Company for
any tax matters relating to the tax periods prior to Closing.
c. Reorganization Treatment. The parties intend that for
income tax purposes the Merger shall qualify as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code and Vision Twenty-One shall report
the transactions contemplated hereunder as such on any tax return and shall take
no action that results in the Merger not qualifying as a reorganization within
the meaning of Section 368(a)(1)(A) of the Code.
9.3. Rule 144. Vision Twenty-One covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations promulgated by the SEC thereunder to the extent
required from time to time to
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enable the Company to sell the Vision Twenty-One Common Stock without
registration under the Securities Act within the limitations of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule 144 may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the SEC.
10. INTENTIONALLY OMITTED.
11. INTENTIONALLY OMITTED.
12. CLOSING DELIVERIES.
12.1. Deliveries of The Company. At Closing, the Company shall deliver
or cause to be delivered to Vision Twenty-One the following, all of which shall
be in a form reasonably satisfactory to Vision Twenty-One:
a. a copy of resolutions of the Board of Directors of the
Company authorizing the execution, delivery and performance of this Agreement
and all other documents and agreements to be executed in connection herewith,
certified by the Secretary of the Company as being a true and correct copy of
the original thereof subject to no modifications or amendments;
b. Intentionally omitted.
c. Intentionally omitted.
d. a certificate of the Secretary of the Company certifying as
to the incumbency of the directors and officers of each such corporation as to
the signatures of such directors and officers who have executed documents
pursuant to the Agreement on behalf of the Company.
e. a certificate, dated within fifteen (15) days prior to the
Closing Date, of the Secretary of State of Delaware certifying that the Company
is in existence, has paid all franchise or similar taxes and is in good standing
to transact business;
f. certificates, dated within fifteen (15) days prior to the
Closing Date, of the Secretaries of State of the states in which the Company is
qualified to do business, if any, to the effect that the Company is qualified to
do business and in good standing as a foreign corporation in each of such
states;
g. if applicable, all authorizations, consents, permits and
licenses referenced in Section 3.6;
h. a new lease or leases or assignments of existing leases
between the landlords under each lease for real property described on Schedule
3.14(c) and Vision Twenty-One in form and substance reasonably satisfactory to
Vision Twenty-One;
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i. an executed Stockholder Employment Agreement between Vision
Twenty-One and Stockholder Employee in substantially the form attached hereto as
Exhibit 12.1(i) ("Stockholder Employment Agreement");
j. an executed Registration Rights Agreement between Vision
Twenty-One and the Stockholders in substantially the form attached hereto as
Exhibit 12.1(k) (the "Registration Rights Agreement");
k. an executed Certificate of Merger necessary to effect the
Merger;;
l. certificates representing Company Common Stock, together
with stock powers duly executed by the Stockholders.
m. such other instrument or instruments of transfer prepared
by Vision Twenty-One as shall be necessary or appropriate, as Vision Twenty-One
or its counsel shall reasonably request, to carry out and effect the purpose and
intent of this Agreement.
12.2. Deliveries of Vision Twenty-One. At Closing, Vision Twenty-One
shall deliver to the Company the following, all of which shall be in a form
reasonably satisfactory to the Company:
a. a copy of the resolutions of the Board of Directors of
Vision Twenty-One authorizing the execution, delivery and performance of this
Agreement and all other documents and agreements to be executed in connection
herewith, certified by the Secretary of Vision Twenty-One as being true and
correct copies of the originals thereof subject to no modifications or
amendments;
b. a certificate of the Secretary of the Company certifying as
to the incumbency of the directors and officers of each such corporation as to
the signatures of such directors and officers who have executed documents
pursuant to the Agreement on behalf of the Company.
c. a certificate, dated within fifteen (15) days prior to the
Closing Date, of the Secretary of State of the State of Florida establishing
that Vision Twenty-One is in existence, and is in good standing to transact
business in such state;
d. certificates, dated within fifteen (15) days prior to the
Closing Date, of the Secretaries of State of the states in which Vision
Twenty-One is qualified to do business, if any, to the effect that Vision
Twenty-One is qualified to do business and in good standing as a foreign
corporation in each of such states;
e. the executed Stockholder Employment Agreement;
f. the executed Registration Rights Agreement; and
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g. stock certificates representing the Vision Twenty-One
Common Stock.
13. POST CLOSING MATTERS.
13.1. 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.
13.2. Disclosure. From and after the Closing, at the request of Vision
Twenty-One, the Stockholders agree to provide all information which Vision
Twenty-One may from time to time request concerning the Company and the
transactions contemplated hereby for inclusion in any registration statement or
other filing made by Vision Twenty-One under the Securities Act or the Exchange
Act at no additional cost to Vision Twenty-One. The Stockholders covenant and
agree that all such information shall be true and correct when made and shall
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein contained not misleading.
13.3. Audited Financial Statements. From and after the Closing, at the
request of Vision Twenty-One, the Company agrees to cooperate fully in the
preparation of any audited financial statements of the Company and to request
its auditor to consent to the inclusion thereof in any registration statement or
other filing made by Vision Twenty-One under the Securities Act or the Exchange
Act.
13.4. Survival of Representations and Warranties. All representations,
warranties, agreements and obligations made by the parties in this Agreement or
in any certificate, schedule, document or instrument furnished hereunder or in
connection with the negotiation, execution and performance of this Agreement
shall survive the Closing. Each party shall be entitled to rely upon the
representations and warranties set forth herein and therein (except in the event
that a breach of a representation or warranty is discovered by the claiming
party in the course of due diligence prior to the Closing Date) and each such
representation and warranty shall be deemed to be material.
13.5. Leases; Assignment. Within ninety (90) days from the Closing
Date, the Company shall use its best efforts to obtain any required consents
from the landlords to the real property leases. The Company shall not be liable
for any damages resulting from such assignments or from the refusal of any
landlord to grant such consents.
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14. REMEDIES.
14.1. Indemnification by the Stockholders. Subject to the terms and
conditions of this Agreement, (i) the Active Stockholders, jointly in proportion
to the respective percentages set forth on Schedule 14.1 as to Article 3 and
(ii) all Stockholders severally as to their own representations and warranties
set forth in Article 4, agree to indemnify, defend and hold Vision Twenty-One
and its directors, officers, members, managers, employees, agents, attorneys and
affiliates harmless from and against all losses, claims, obligations, demands,
assessments, penalties, liabilities, costs, actual or reasonably ascertainable
damages which are not merely speculative but specifically excluding lost profits
and multiple of earnings (except in the event of fraud), reasonable attorneys'
fees and expenses (collectively, "Damages") asserted against or incurred by
Vision Twenty-One or any of such individuals or entities (including, but not
limited to, any reduction in payments to or revenues of Vision Twenty-One),
arising out of or resulting from:
a. a breach of any representation, warranty or covenant of the
Company or the Stockholders contained herein or in any schedule or certificate
delivered hereunder;
b. any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses and
court costs) incident to any of the foregoing or to the enforcement of this
Section 14.1.
14.2. Indemnification by Vision Twenty-One. Subject to the terms and
conditions of this Agreement, Vision Twenty-One hereby agrees to indemnify,
defend and hold the Stockholders harmless from and against all Damages asserted
against or incurred by the Stockholders arising out of or resulting from:
a. a breach by Vision Twenty-One of any representation,
warranty or covenant of Vision Twenty-One contained therein or in any schedule
or certificate delivered hereunder;
b. Vision Twenty-One's failure to satisfy any liability of the
Company arising from events or occurrences after the Closing Date; or
c. 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 Twenty-One, 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 Twenty-One, required to be stated therein or necessary to
make the statements therein not misleading or as a result of the sale to the
Stockholders of any of any Vision Twenty-One Common Stock, unless such liability
arises
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from or relates to any breach of the Stockholders' representations and
warranties contained in Section 6 hereof.
d. any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses and
court costs) incident to any of the foregoing or to the enforcement of this
Section 14.2.
14.3. Conditions of Indemnification. All claims for indemnification
under this Agreement shall be asserted and resolved as follows:
a. A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (and, in any event, at least ten (10) days
prior to the due date for any responsive pleadings, filings or other documents)
(i) notify the party from whom indemnification is sought (the "Indemnifying
Party") of any third-party claim or claims asserted against the Indemnified
Party ("Third Party Claim") that could give rise to a right of indemnification
under this Agreement and (ii) transmit to the Indemnifying Party a written
notice ("Claim Notice") describing in reasonable detail the nature of the Third
Party Claim, a copy of all papers served with respect to such claim (if any), an
estimate of the amount of damages attributable to the Third Party Claim and the
basis of the Indemnified Party's request for indemnification under this
Agreement. Except as set forth in Section 14.6, the failure to promptly deliver
a Claim Notice shall not relieve the Indemnifying Party of its obligations to
the Indemnified Party with respect to the related Third Party Claim except to
the extent that the resulting delay is materially prejudicial to the defense of
such claim. Within thirty (30) days after receipt of any Claim Notice (the
"Election Period"), the Indemnifying Party shall notify the Indemnified Party
(i) whether the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article 14 with respect to such Third Party Claim
and (ii) whether the Indemnifying Party desires, at the sole cost and expense of
the Indemnifying Party, to defend the Indemnified Party against such Third Party
Claim.
If the Indemnifying Party notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, such Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 14.3. 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
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sole cost and expense of the Indemnifying Party, to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, including, without limitation, the making
of any related counterclaim against the person asserting the Third Party Claim
or any cross-complaint against any person. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to Section 14.3(b) and shall bear
its own costs and expenses with respect to such participation; provided,
however, that if the named parties to any such action (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party, and upon written
notification thereof, the Indemnifying Party shall not have the right to assume
the defense of such action on behalf of the Indemnified Party; provided further
that the Indemnifying Party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Indemnified Party, which firm shall be designated in writing by the
Indemnified Party.
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 14.3(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 14.3(b) but fails
diligently and promptly to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings, provided; however, that
the Indemnified Party may not enter into, without the Indemnifying Party's
consent, which shall not be unreasonably withheld, any compromise or settlement
of such Third Party Claim. Notwithstanding the foregoing, if the Indemnifying
Party has delivered a written notice to the Indemnified Party to the effect that
the Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article 14 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnifying Party's defense pursuant to this Section
or of the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party in
full for all costs and expenses of such litigation. The Indemnifying Party may
participate in, but not control any defense or settlement controlled by the
Indemnified Party pursuant to this Section 14.3(b), 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
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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 17.1 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 14 relating to a Third Party Claim shall be made within
thirty (30) days after the latest of (i) the settlement of such Third Party
Claim, (ii) the expiration of the period for appeal of a final adjudication of
such Third Party Claim or (iii) the expiration of the period for appeal of a
final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement. Payments of all amounts owing by an Indemnifying
Party pursuant to Section 14.3(d) shall be made within thirty (30) days after
the later of (i) the expiration of the sixty (60) day Indemnity Notice period or
(ii) the expiration of the period for appeal, if any, of a final adjudication or
arbitration of the Indemnifying Party's liability to the Indemnified Party under
this Agreement.
14.4. Exclusivity of Remedies. The remedies provided in this Agreement
shall be exclusive of any other rights or remedies available to one party
against the other, either at law or in equity; provided however such remedies
shall not be exclusive as to any claim based on fraud or any claim under Section
16 of this Agreement. This Article 14 regarding indemnification shall survive
Closing.
14.5. Costs, Expenses and Legal Fees. Each party hereto agrees to pay
the costs and expenses (including reasonable attorneys' fees and expenses)
incurred by the other parties in successfully (a) enforcing any of the terms of
this Agreement, or (b) proving that another party breached any of the terms of
this Agreement.
14.6. Indemnification Limitations. Notwithstanding the provisions of
Sections 14.1 and 14.2, no party shall be required to indemnify another party
with respect to a breach of a representation, warranty unless the notice of
claim for indemnification is delivered within two (2) years after the Closing
Date, except that a claim for indemnification for a breach of the
representations and warranties contained in Section 3.1, 3.2, 3.7 and 3.14 may
be made at any time, and a claim for indemnification for a breach of the
representations and warranties contained in Sections 3.19, 3.27 and 3.28 may be
made at any time within the applicable statute of limitations.
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Furthermore, the Stockholders shall not be required to indemnify Vision
Twenty-One pursuant to Section 14.1 for Damages unless the aggregate amount of
Damages incurred by Vision Twenty-One shall exceed One Hundred Thousand Dollars
($100,000) (the "Basket Amount"), after which the Stockholders or the Active
Shareholders, as the case may be, shall be obligated to indemnify Vision
Twenty-One from the first dollar of Vision Twenty-One's Damages in excess of the
Basket Amount, except that the Stockholders' total monetary obligation to
indemnify Vision Twenty-One pursuant to Section 14.1 for Damages shall be capped
at Five Hundred Thousand Dollars ($500,000.00) (the "Cap Amount") (with each
Stockholder being liable only to his pro rata share of the Cap Amount), other
than pursuant to a requirement to indemnify Vision Twenty-One under Sections
3.27 and 3.28, or unless the breach involves an intentional breach or fraud by
the Company or any of the Stockholders, in which case each Stockholder's
liability shall be unlimited.
14.7. Tax Benefits; Insurance Proceeds. The total amount of any
indemnity payments owed by one party to another party to this Agreement shall be
reduced by any correlative tax benefit received by the party to be indemnified
or the net proceeds received by the party to be indemnified with respect to
recovery from third parties or insurance proceeds and such correlative insurance
benefit shall be net of the insurance premium, if any, that becomes due as a
result of such claim.
15. NON-COMPETITION AND CONFIDENTIALITY COVENANTS.
15.1. The Stockholders' Non-Competition Covenant. The Stockholders
recognize that their covenants contained in this Article 15.1 are an essential
part of this Agreement and that, but for the agreement of the Stockholders to
comply with such covenants, Vision Twenty-One would not have entered into this
Agreement. The Stockholders acknowledge and agree that their covenants not to
compete are necessary to ensure the continuation of the optical and optometric
business of the Company, and that irreparable and irrevocable harm and damage
will be done to Vision Twenty-One if the Stockholders compete with Vision
Twenty-One after the Closing Date. Accordingly, and as part of the consideration
hereof, except for the Stockholder's ownership interest in and operation of
Vision Insurance Plan of America and except for the employment agreement between
Xxxxxx X. Xxxxxxxx and Vision Twenty-One, none of the Stockholders shall for a
period of five (5) years from the Closing Date 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: (a) engage in any medical or optometric
practice management business within the State of Wisconsin; (b) engage in the
conduct of a retail optical business within the State of Wisconsin; (c) engage
in the conduct of an optometry business within twenty (20) miles of any office
location of the Company existing on the Closing Date; (d) solicit the employees
of Vision Twenty-One to become employed by any Stockholder or otherwise
terminate their employment relationship with Vision Twenty-One; (e) render
advice or assistance, or have any interest in, or provide any services to any
competitor of the Company or, in the case of Xxxxxx X. Xxxxxxxx, Vision
Twenty-One; provided, however, that ownership of no more than five percent (5%)
of the stock of a publicly traded corporation engaged in a competitive business
shall not be deemed to be engaging in a competing business; or (f)
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call upon or solicit any customers or clients of the Company or Vision
Twenty-One for the purpose of providing medical or optometric practice
management services, retail optical sales or services, or optometric services.
15.2. The Stockholders' Confidentiality Covenant. From the date hereof,
none of the Stockholders shall, directly or indirectly, use for any purpose, or
disclose to any third party, any information of Vision Twenty-One, any of its
Affiliates or the Company (whether written or oral), including any business
management or economic studies, customer lists, proprietary forms, proprietary
business or management methods, marketing data, operational methods or
procedures, fee schedules or trade secrets of Vision Twenty-One, any of its
Affiliates or the Company, 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 Stockholders may disclose
information that they can establish (a) is or becomes generally available to and
known by the public or health community (other than as a result of an
unpermitted disclosure directly or indirectly by the Stockholders); (b) is or
becomes available to the Stockholders on a nonconfidential basis from a source
other than Vision Twenty-One provided that such source is not and was not bound
by a confidentiality agreement with or other obligation of secrecy to Vision
Twenty-One or the Company; or (c) is required to be disclosed by any federal or
state law, rule or regulation or by any applicable judgment, order or decree or
any court or governmental body or agency having jurisdiction in the premises.
15.3. Remedies for Breach of Restrictive Covenants. Each of the
Stockholders acknowledges that violation of the restrictive covenants contained
in Sections 15.1 and 15.2 would cause irreparable harm to Vision Twenty-One
which cannot be fully redressed by payment of damages by the Stockholders.
Accordingly, Vision Twenty-One shall be entitled in addition to any other right
or remedy it may have, at law or in equity, to an injunction, enjoining or
restraining a Stockholder from any violation or threatened violation of Sections
15.1 and 15.2. If any of the rights, remedies or restrictions contained in this
Article 15 shall be deemed by a court of competent jurisdiction to be
unenforceable by reason of the extent, duration or geographical scope thereof or
any other provision of this Agreement, the parties hereto contemplate that the
court shall reduce such extent, duration, geographical scope or other provision
and enforce this Article 15 in its reduced form for all purposes in the manner
contemplated hereby. The restrictive covenants contained in this Article 15
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 Stockholders
against Vision Twenty-One, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Vision Twenty-One of the
restrictive covenants contained in this Article 15.
15.4. Survival. The parties acknowledge and agree that this Article 16
shall survive the Closing of the transactions contemplated herein.
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16. DISPUTES.
16.1. Mediation and Arbitration. Any dispute, controversy or claim
(excluding claims arising out of an alleged breach of Article 15 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 Milwaukee, Wisconsin, and
to commence within 15 days of the appointment of the mediator by the AAA), and
(b) if the dispute, controversy or claim cannot be settled by mediation, then by
arbitration administered by the AAA under its Commercial Arbitration Rules (such
arbitration to be held in Milwaukee, Wisconsin, 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.
17. MISCELLANEOUS
17.1. Taxes. The Stockholders shall pay all transfer taxes, sales and
other taxes and charges imposed by the States of Delaware and Wisconsin, if any,
which may become payable in connection with the transactions and documents
contemplated hereunder. Vision Twenty-One 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.
17.2. 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 (except pursuant to Section 14 hereof).
17.3. 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 Twenty-One addressed to:
Vision Twenty-One, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Facsimile No. (000)000-0000
Attn: Xxxxxxx X. Xxxxx, Chief Financial Officer
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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 addressed to:
EyeCare One Corporation
0000 Xxxxx 00xx Xxxxxx, Xxxxx 0000X
Xxxx Xxxxx, Xxxxxxxxx 00000
Facsimile No. (000)000-0000
Attn: Xxxxxx X. Xxxxxxxx, President
With copies to:
Xxxxxxx & Xxxx, S.C.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile No. (000)000-0000
Attn: Xxxxxxx Xxxxxxx
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 18.3. 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.
17.4. Choice of Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Wisconsin without giving effect to its
conflicts of laws.
17.5. 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 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.
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17.6. Assignment. This Agreement may not be assigned by operation of
law or otherwise except that Vision Twenty-One shall have the right to assign
this Agreement, at any time, to any Affiliate or direct or indirect wholly-owned
subsidiary provided that Vision Twenty-One shall remain primarily liable under
this Agreement in the event of such assignment.
17.7. 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.
17.8. Announcements and Press Releases. Any press releases or any
other public announcements by any party hereto concerning this Agreement or the
transactions contemplated hereunder shall be approved in advance by the other
parties hereto; provided, however, that Vision Twenty-One may make such
disclosures as are required under federal and state securities laws in the
opinion of counsel to Vision Twenty-One and Vision Twenty-One will provide
copies of any announcements and press releases to the other parties hereto prior
to general disclosure.
17.9. 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.
17.10. 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.
17.11. 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.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
EYECARE ONE CORP.
By: /s/
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________________, President
By: /s/
-------------------------------------------
________________, Secretary
STOCKHOLDERS
/s/ Xxxxxx X. Xxxxx
----------------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxx
----------------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxxx, individually
/s/ Xxxx X. Xxxxxx
----------------------------------------------
Xxxx X. Xxxxxx, as Trustee of the
Xxxx X. Xxxxxx Trust u/t/a dated
August 5, 1994
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxxx, as Trustee of the
Xxxxxx X. Xxxxx Irrevocable Trust
u/a/d April 3, 1996
/s/ Xxxxxx X. Xxxxx
----------------------------------------------
Xxxxxx X. Xxxxx, as Trustee of the Xxxxxx
X. Xxxxx Irrevocable Trust u/a/d April 3, 1996
48
49
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxxx, as Trustee of the
Xxxxxxxx Xxxxx Irrevocable Trust u/a/d
April 5, 1996
/s/ Xxxxxxxx Xxxxx
----------------------------------------------
Xxxxxxxx Xxxxx, as Trustee of the Xxxxxxxx
Xxxxx Irrevocable Trust u/a/d April 5, 1996
VISION TWENTY-ONE, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxxxx X. Xxxxxxxx, President
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxx, Secretary
49
