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STOCK PURCHASE AGREEMENT
AMONG
LASER VISION CENTERS, INC.
AND
THE SHAREHOLDERS OF REFRACTIVE SURGICAL RESOURCES, INC.
DATED AS OF SEPTEMBER 1, 1998
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TABLE OF CONTENTS
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1. CERTAIN DEFINITIONS.....................................................1
2. PURCHASE AND SALE OF COMPANY SHARES.....................................3
2.1 BASIC TRANSACTION..............................................3
2.2 PURCHASE PRICE.................................................3
2.3 CHIRON/BAUSCH AND LOMB PAYOFF AMOUNT...........................4
3. ADDITIONAL CONSIDERATION................................................4
3.1 DESCRIPTION....................................................4
3.2 INSTALLMENT PAYMENTS...........................................4
3.3 ADJUSTMENTS TO INSTALLMENT PAYMENTS............................4
3.4 REPORTS AND DISPUTES...........................................5
4. CLOSING AND TERMINATION.................................................6
4.1 CLOSING........................................................6
5. REPRESENTATIONS AND WARRANTIES OF THE MAJOR
SHAREHOLDERS............................................................6
5.1 ORGANIZATION, EXISTENCE AND GOOD STANDING OF THE COMPANY.......6
5.2 CAPITAL STOCK OF THE COMPANY...................................7
5.3 SUBSIDIARIES...................................................7
5.4 FINANCIAL STATEMENTS...........................................7
5.5 ACCOUNTS AND NOTES RECEIVABLE..................................8
5.6 PERMITS AND INTANGIBLES........................................8
5.7 TAX MATTERS....................................................8
5.8 ASSETS AND PROPERTIES.........................................10
5.9 REAL PROPERTY LEASES, OPTIONS.................................11
5.10 ENVIRONMENTAL LAWS AND REGULATIONS............................11
5.11 CONTRACTS.....................................................13
5.12 NO VIOLATIONS.................................................13
5.13 GOVERNMENT CONTRACTS..........................................14
5.14 CONSENTS......................................................14
5.15 LITIGATION AND RELATED MATTERS................................14
5.16 COMPLIANCE WITH LAWS..........................................14
5.17 INTELLECTUAL PROPERTY RIGHTS..................................14
5.18 EMPLOYEE BENEFIT PLANS........................................16
5.19 EMPLOYEES; EMPLOYEE RELATIONS.................................17
5.20 INSURANCE.....................................................18
5.21 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC........................19
5.22 BUSINESS RELATIONS............................................19
5.23 OFFICERS AND DIRECTORS........................................19
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5.24 BANK ACCOUNTS AND POWERS OF ATTORNEY..........................19
5.25 ABSENCE OF CERTAIN CHANGES OR EVENTS..........................20
5.26 TERMINATION OF PLANS..........................................20
5.27 MICROKERATOMES................................................20
(B) REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.....................20
5.28 AUTHORITY AND OWNERSHIP.......................................20
5.29 PREEMPTIVE RIGHTS.............................................21
5.30 VALIDITY OF OBLIGATIONS.......................................21
5.31 ABSENCE OF CLAIMS AGAINST THE COMPANY.........................21
6. REPRESENTATIONS OF LVCI................................................21
6.1 DUE ORGANIZATION..............................................21
6.2 VALIDITY OF OBLIGATIONS.......................................21
6.3 NO CONFLICTS..................................................21
6.4 NO OUTSIDE RELIANCE; KNOWLEDGE REGARDING REPRESENTATIONS......22
7. ADDITIONAL CLOSING DELIVERIES TO THE SHAREHOLDERS......................22
7.1 OPINION OF COUNSEL............................................22
7.2 EMPLOYMENT AGREEMENTS.........................................22
7.3 BROKER RELEASE................................................22
8. ADDITIONAL CLOSING DELIVERIES TO LVCI..................................23
8.1 REPAYMENT OF INDEBTEDNESS.....................................23
8.2 SHAREHOLDER RELEASES..........................................23
8.3 TERMINATION OF RELATED PARTY AGREEMENTS.......................23
8.4 OPINIONS OF COUNSEL...........................................23
8.5 EMPLOYMENT AGREEMENTS.........................................23
8.6 NONCOMPETITION AGREEMENTS.....................................23
8.7 BROKER RELEASE................................................23
8.8 RELEASE OF FINANCING STATEMENTS...............................23
8.9 GOOD STANDING CERTIFICATES....................................24
8.10 FAIRNESS OPINION..............................................24
9. COVENANTS OF THE PARTIES...............................................24
9.1 DISTRIBUTIONS.................................................24
9.2 PREPARATION AND FILING OF TAX RETURNS.........................24
9.3 COMPANY NAME..................................................25
9.4 COVENANTS OF THE COMPANY AND THE SHAREHOLDERS CONCERNING
TERMINATION OF S ELECTION.....................................25
10. INDEMNIFICATION........................................................29
10.1 LVCI LOSSES...................................................30
10.2 EMPLOYEE COMPENSATION AND BENEFITS............................30
10.3 SHAREHOLDER LOSSES............................................30
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10.4 NOTICE OF LOSS................................................31
10.5 RIGHT TO DEFEND...............................................31
10.6 COOPERATION...................................................32
10.7 RECOUPMENT AND DISPUTE RESOLUTION.............................33
10.8 LIMITATIONS ON INDEMNIFICATION................................35
10.9 EXCLUSIVITY OF REMEDIES.......................................35
11. SECURITIES ACT REPRESENTATIONS AND TRANSFER RESTRICTIONS
......................................................................36
12. GENERAL................................................................36
12.1 COOPERATION...................................................36
12.2 SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS
AND WARRANTIES................................................36
12.3 SUCCESSORS AND ASSIGNS........................................37
12.4 ENTIRE AGREEMENT..............................................37
12.5 COUNTERPARTS..................................................37
12.6 BROKERS AND AGENTS............................................37
12.7 EXPENSES......................................................37
12.8 NOTICES.......................................................38
12.9 ARBITRATION...................................................38
12.10 GOVERNING LAW.................................................39
12.11 EXERCISE OF RIGHTS AND REMEDIES...............................39
12.12 REFORMATION AND SEVERABILITY..................................39
12.13 REMEDIES CUMULATIVE...........................................39
12.14 INTERPRETATION................................................39
ANNEX I ....................................................................41
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STOCK PURCHASE AGREEMENT
This agreement (the "Agreement") entered into as of September 1, 1998, by
and among LASER VISION CENTERS, INC., a Delaware corporation ("LVCI"), and
XXXXXXXX X. XXXXXX, XXXXXX X. XXXXXX, XXXX X. XXXXX, XXXX X. XXXXXXX, and XX.
XXXXXXX X. XXXXXXXXX (the "Major Shareholders"), and the other shareholders of
Refractive Surgical Resources, Inc., a Minnesota corporation, listed on the
signature pages hereof (the "Other Shareholders and collectively with the Major
Shareholders, the "Shareholders"). LVCI and the Shareholders are referred to
collectively herein as the "Parties."
RECITALS
The Shareholders in the aggregate own all of the outstanding capital stock
of Refractive Surgical Resources, Inc., a Minnesota corporation ("Company").
This Agreement contemplates a transaction in which LVCI will purchase from
the Shareholders, and the Shareholders will sell to LVCI, all of the outstanding
capital stock of the Company in return for cash and the LVCI Note.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. CERTAIN DEFINITIONS
"Additional Consideration" shall have the meaning ascribed to such term in
Section 3.1 hereof.
"Agencies" shall have the meaning ascribed to such term in Section 5.15 hereof.
"Agreement" shall mean this Stock Purchase Agreement.
"Allocation Statement" shall have the meaning ascribed to such term in Section
9.4(h)(ii) hereof.
"Basket" shall have the meaning ascribed to such term in Section 10.8 hereof.
"Business Day" shall mean any day of the year (other than a Saturday or Sunday)
on which national banking institutions in the City of St. Louis in the State of
Missouri are open to the public for conducting business and are not required or
authorized to close.
"Charter Documents" shall have the meaning ascribed to such term in Section 5.1
hereof.
"Closing" shall have the meaning ascribed to such term in Section 4.1 hereof.
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"Closing Date" shall mean the date hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended
"Company" shall mean Refractive Surgical Resources, Inc., a Minnesota
corporation.
"Company Proposed Adjustment" shall have the meaning ascribed to such term in
Section 9.4 (f) hereof.
"Company Stock" shall have the meaning ascribed to such term in Section 2.1
hereof.
"Contracts" shall have the meaning ascribed to such term in Section 5.11(a)
hereof.
"Employment Agreements" shall have the meaning ascribed to such term in Section
7.2 hereof.
"Environmental Requirements" shall have the meaning ascribed to such term in
Section 5.10(b) hereof.
"Equitable Exceptions" shall mean enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, (ii) the remedy of specific performance and injunctive relief
are subject to certain equitable defenses and to the discretion of the court
before which any proceedings may be brought and (iii) rights to indemnification
hereunder may be limited under applicable securities laws.
"Financial Statements" shall have the meaning ascribed to such term in Section
5.4 hereof.
"GAAP" shall mean Generally Accepted Accounting Principles.
"Hazardous Substances" shall have the meaning ascribed to such term in Section
5.10(b) hereof.
"Intellectual Property" shall have the meaning ascribed to such term in Section
5.17(a) hereof.
"Liens" shall have the meaning ascribed to such term in Section 5.29 hereof.
"LVCI Losses" shall have the meaning ascribed to such term in Section 10.1(b)
hereof.
"LVCI Note" shall have the meaning ascribed to such term in Section 2.2 hereof.
"Material Adverse Effect" shall have the meaning ascribed to such term in
Section 5.1 hereof.
"Material Permits" shall have the meaning ascribed to such term in Section 5.6
hereof.
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"Plans" shall have the meaning ascribed to such term in Section 5.18 hereof.
"Proposed Adjustment" shall have the meaning ascribed to such term in Section
9.4(e) hereof.
"Purchase Price" shall have the meaning ascribed to such term in Section 2.2
hereof.
"Real Property Leases" shall have the meaning ascribed to such term in Section
5.9 hereof.
"Recoupment Arbitrator" shall have the meaning ascribed to such term in Section
10.7(a) hereof.
"Section 338(h)(10) Elections" shall have the meaning ascribed to such term in
Section 9.4(h)(i) hereof.
"Shareholder Losses" shall have the meaning ascribed to such term in Section
10.3(b) hereof.
"Subject Property" shall have the meaning ascribed to such term in Section
5.10(b) hereof.
"Tax Returns" shall have the meaning ascribed to such term in Section 5.7(a)
hereof.
"Taxes" shall have the meaning ascribed to such term in Section 5.7(a) hereof.
"Third Party Intellectual Property" shall have the meaning ascribed to such term
in Section 5.17(a) hereof.
2. PURCHASE AND SALE OF COMPANY SHARES
2.1 BASIC TRANSACTION. On and subject to the terms and conditions of this
Agreement, concurrently with the execution and delivery hereof, LVCI agrees to
purchase and has purchased from each of the Shareholders, and each of the
Shareholders agrees to sell to and has sold to LVCI, all of his or her capital
stock in the Company ("Company Stock") for the consideration specified below in
this Section 2.
2.2 PURCHASE PRICE. LVCI hereby pays to the Shareholders in the aggregate
maximum total consideration of $3,300,000, subject to adjustment pursuant to
Section 3.3 hereof (the "Purchase Price"), consisting of (i) cash in the amount
of $1,000,000 (less the amount of the Chiron/Bausch and Lomb payoff set forth in
Section 2.3 hereof) payable by wire transfer or delivery of LVCI checks at
Closing, (ii) LVCI's non-interest bearing promissory notes in the aggregate
principal amount of $500,000 due and payable on February 28, 1999 to the
Shareholders in accordance with their ownership of the Company as reflected on
ANNEX I (the "LVCI Notes"), substantially in the form of Exhibit A attached
hereto, which shall be and has been delivered at Closing, and (iii) Additional
Consideration of up to $1,800,000 payable in installments and subject to
reduction as more particularly described in
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Section 3 hereof. The Shareholders acknowledge that amounts payable to them
under the LVCI Notes and as Additional Consideration may be subject to reduction
pursuant to Section 10.7 in satisfaction of the Shareholders' indemnification
obligations. The Purchase Price has been allocated among the Shareholders in
accordance with the instructions set forth on ANNEX I.
2.3 CHIRON/BAUSCH AND LOMB PAYOFF AMOUNT. The Major Shareholders represent
and warrant that the amount owed by the Company to Chiron/Bausch and Lomb equals
$532,472, and LVCI has paid at Closing this amount to Chiron/Bausch and Lomb out
of the Purchase Price proceeds.
3. ADDITIONAL CONSIDERATION
3.1 DESCRIPTION. On and subject to the terms and conditions of this
Section, LVCI and the Company agree to pay to the Shareholders additional
consideration not to exceed $1,800,000 in cash (the "Additional Consideration").
3.2 INSTALLMENT PAYMENTS. Payment of the Additional Consideration shall be
made in three installments (the "Installment Payments"), each of which shall not
exceed $600,000 in aggregate amount. Each Installment Payment shall consist of
individual payment by check to each Shareholder in the percentages set forth in
ANNEX I attached hereto (which percentages have been agreed to by the
Shareholders). The first Installment Payment shall be forwarded to the
Shareholders entitled thereto by U.S. mail or Federal Express post-marked no
later than July 31, 1999. The second Installment Payment shall be forwarded to
the Shareholders entitled thereto by U.S. mail or Federal Express post-marked no
later than July 31, 2000. The third Installment Payment shall be forwarded to
the Shareholders entitled thereto by U.S. mail or Federal Express post-marked no
later than October 30, 2000.
3.3 ADJUSTMENTS TO INSTALLMENT PAYMENTS.
a. To the extent that the audited book value of the Company on the
Closing Date is less than $100,000 (prior to accrual of the Company's costs
incurred in connection with the negotiation and establishment of this Agreement
and the accomplishment of all transactions contemplated hereunder) as shown on
the Company's August 31, 1998 financial statements (the "Closing Date Financial
Statement"), the first Installment Payment (or, to the extent necessary, the
second and third Installment Payments) of $600,000 shall be reduced on a
dollar-for-dollar basis. To the extent that the audited book value of the
Company on the Closing Date is more than $100,000, LVCI shall pay to the
Shareholders promptly after delivery of the Closing Date Financial Statements
$.50 for every $1.00 of excess up to a maximum payment of $36,000. Any such
payments shall be made in accordance with the Shareholders' percentage interest
at the date hereof.
b. To the extent that the total indebtedness of the Company (relating
to borrowed funds) is greater that $0 on the Closing Date as shown on the
Closing Date Financial
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Statement, the first Installment Payment (or, to the extent necessary, the
second and third Installments Payment) of $600,000 shall be reduced on a
dollar-for-dollar basis. For purposes of this paragraph, total indebtedness
shall not include any indebtedness to Chiron/Bausch and Lomb which has been
provided for under the escrow arrangements described in Section 2.3.
3.4 REPORTS AND DISPUTES.
(a) The Company shall within thirty business days after the Closing
Date deliver to each Shareholder a schedule setting forth the computation of any
reduction and a copy of the financial information used in making such
computation. The Company's computation of any reduction under this Section 3
shall be conclusive and binding upon the parties hereto unless, within thirty
business days following the Shareholders' receipt of the aforedescribed payment
and information, Shareholders who formerly held at least of a majority of the
Company Stock notify LVCI in writing (the "Shareholders' Notice") that they
disagree with the Company's computation of the reduction. Such notice by the
Shareholders shall include a schedule setting forth the Shareholders'
computation of the reduction, together with a copy of any financial information,
other than that previously supplied by the Company to the Shareholders, used in
making the Shareholders' computation.
(b) The Shareholders' computation of the reduction under this Section 3
shall be conclusive and binding upon the parties hereto unless, within thirty
business days following LVCI's receipt of the Shareholders' Notice, LVCI
notifies the Shareholders in writing that it disagrees with the Shareholders'
computation of the reduction. If LVCI disagrees with the Shareholders'
computation of the reduction, LVCI and the Shareholders providing such
Shareholders' Notice shall request a national firm of independent certified
public accountants mutually agreeable to LVCI and such Shareholders to compute
the amount of the reduction as promptly as possible, which computation shall be
conclusive and binding upon LVCI and all of the Shareholders. In the event that
LVCI and the Shareholders providing such Shareholders' Notice cannot agree on
such a national firm of independent certified public accountants, then the name
of the national accounting firms, exclusive of any such firm which is rendering
or has within the past three years rendered services to LVCI, the Company or the
Major Shareholders or their Affiliates, shall be selected by lottery until one
such firm is willing to compute the disputed reduction for purposes of this
Agreement. In the event that either LVCI's or the Shareholders' computation is
deemed substantially correct by such national accounting firm, then the party
who challenged such computation shall exclusively bear the costs associated with
retaining the national accounting firm. If neither LVCI's nor the Shareholders'
computation is deemed substantially correct, then the expenses of any
computation by any such national accounting firm selected by LVCI and the
Shareholders to resolve computational disputes hereunder shall be borne equally
by LVCI and the Shareholders.
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4. CLOSING AND TERMINATION
4.1 CLOSING. The consummation of the transactions contemplated hereby (the
"Closing") has occurred on the Closing Date concurrent with the execution and
delivery hereof. On the Closing Date, all transactions contemplated by this
Agreement, including the delivery of shares, and the delivery by wire transfers
or by certified checks in amounts equal to the aggregate cash portion of the
consideration that the Shareholders shall be entitled to receive at the Closing,
has occurred and is deemed to be completed.
5. REPRESENTATIONS AND WARRANTIES OF THE MAJOR SHAREHOLDERS
(A) REPRESENTATIONS AND WARRANTIES OF THE MAJOR SHAREHOLDERS
Each of the Major Shareholders, jointly and severally, represent and warrant
that all of the following representations and warranties with respect to the
Company and its business and operations set forth in this Section 5(A) are true
and correct at the time of the Closing.
5.1 ORGANIZATION, EXISTENCE AND GOOD STANDING OF THE COMPANY. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the state or jurisdiction of its incorporation or organization with all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. The Company is duly
qualified or licensed as a foreign corporation or other applicable entity and in
good standing in each jurisdiction in which the character or location of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except where the failure to be so duly
qualified or licensed would not have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise), of the
Company, taken as a whole (a "Material Adverse Effect"). Set forth on Schedule
5.1 is a list of the jurisdictions in which the Company is qualified or licensed
to do business as a foreign corporation. Set forth on Schedule 5.1 is a listing
of all names of all predecessor companies for the past five (5) years of the
Company, including the names of any entities from whom the Company previously
acquired material assets. In addition, set forth on Schedule 5.1 is a complete
list of all the names under which the Company does or has done business. Except
as disclosed in Schedule 5.1, the Company has not been a subsidiary or division
of another corporation or a part of an acquisition which was later rescinded.
True, complete and correct copies of the Articles of Incorporation of the
Company certified by the Secretary of State or other appropriate entity of the
applicable state or jurisdiction of incorporation or organization as of the date
not more than thirty (30) days prior to the Closing and of the By-laws of the
Company have been delivered to LVCI (the "Charter Documents"). Except as set
forth on Schedule 5.1 the minute books of the Company, as heretofore made
available to LVCI, are correct and complete in all material respects.
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5.2 CAPITAL STOCK OF THE COMPANY. The Company's authorized, issued and
outstanding capital stock is as set forth in Schedule 5.2. All of the Company
Stock has been validly issued and is fully paid and nonassessable and no holder
thereof is entitled to any preemptive rights (except any statutory preemptive
rights, which the Shareholders hereby waive). There are no outstanding
conversion or exchange rights, subscriptions, options, warrants or other
arrangements or commitments obligating the Company to issue any shares of
capital stock or other securities or to purchase, redeem or otherwise acquire
any shares of capital stock or other securities, or to pay any dividend or make
any distribution in respect thereof, except as set forth on Schedule 5.2.
5.3 SUBSIDIARIES. The Company has not previously and does not presently
own, of record or beneficially, or control directly or indirectly, any capital
stock, securities convertible into capital stock or any other equity interest in
any corporation, association or business entity nor is the Company, directly or
indirectly, a participant in any joint venture, partnership or other
non-corporate entity.
5.4 FINANCIAL STATEMENTS.
(a) The Company has previously furnished to LVCI a preliminary draft of
the audited balance sheet of the Company as of April 30, 1998, and the related
statements of operations for the fiscal year then ended, as prepared by
PriceWaterhouseCoopers, certified public accountants, without their opinion or
notes to Financial Statements, together with the Company's compiled balance
sheet and management's statements of operations and shareholders' equity for the
three-month period ended July 31, 1998 (collectively, the "Financial
Statements", attached hereto as Schedule 5.4). The Financial Statements present
fairly and accurately the financial position and results of operations of the
Company as of the indicated dates and for the indicated periods.
(b) Except to the extent (and not in excess of the amounts) reflected
in the July 31, 1998 balance sheet included in the Financial Statements or as
disclosed on Schedule 5.4, the Company has no liabilities or obligations
(including, without limitation, Taxes payable and deferred Taxes and interest
accrued since April 30, 1998) required to be reflected in the Financial
Statements (or the notes thereto) in accordance with sound and accurate
accounting principles other than current liabilities incurred in the ordinary
course of business, consistent with past practice, subsequent to December 31,
1997.
(c) The books and records of the Company are true and correct in all
material respects and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of internal controls.
Except as required by GAAP and except as described in Schedule 5.4, since the
inception of the business of the Company, there has not been any material change
in the accounting methods or practices of the Company.
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(d) Except as expressly provided in this Section 5.4 or Section 5.5, no
representation is being made by the Shareholders with respect to the achievement
of, or likelihood of achieving, results of any projections provided to LVCI. The
Major Shareholders do, however, represent that to the best of their knowledge,
the information utilized in preparing the projections is reasonable under the
circumstances.
5.5 ACCOUNTS AND NOTES RECEIVABLE. Set forth on Schedule 5.5 is an accurate
list of the accounts and notes receivable of the Company, as of August 31, 1998,
and including receivables from and advances to employees and the Shareholders.
Except as set forth on Schedule 5.5, notes and accounts receivable of the
Company are reflected properly on its books and records, are valid receivables
subject to no setoffs or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject only
to the reserve for bad debts set forth on the face of the Financial Statements
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Company,
or on the Closing Date Financial Statements. In the event any such accounts or
notes are deemed uncollectible by the Company, LVCI shall so notify the Major
Shareholders, and shall afford the Major Shareholders the opportunity to collect
such account or note on behalf of the Company.
5.6 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations, including permits, titles
(including, without limitation, motor vehicle titles and current registrations),
fuel permits, licenses, franchises, certificates owned or held by the Company,
the absence of any of which would have a Material Adverse Effect (the "Material
Permits"). An accurate list and summary description is set forth on Schedule 5.6
hereto of all such Material Permits. The Material Permits are valid, and the
Company has not received any notice that any governmental authority intends to
cancel, terminate or not renew any such Material Permit. The Company has
conducted and is conducting its business in compliance with the requirements,
standards, criteria and conditions set forth in applicable permits, licenses,
orders, approvals, variances, rules and regulations and is not in violation of
any of the foregoing except where such noncompliance or violation would not have
a Material Adverse Effect. Except as specifically provided on Schedule 5.6 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 to the Company by, any such Material Permits.
5.7 TAX MATTERS.
(a) The Company has filed all income tax returns required to be filed
by the Company and all returns, reports and forms of other Taxes (as defined
below) required to be filed by the Company, and has paid or provided for all
Taxes shown to be due on such returns and all such returns are accurate and
correct in all material respects. True copies of federal and state income tax
returns of the Company for each of the fiscal years from its inception through
December 31, 1997 have been delivered to LVCI. Except as set forth on Schedule
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5.7, (i) no action or proceeding for the assessment or collection of any Taxes
is pending against the Company and no notice of any claim for Taxes, whether
pending or threatened, has been received; (ii) no deficiency, assessment or
other formal claim for any Taxes has been asserted or made against the Company
that has not been fully paid or finally settled; (iii) no issue has been
formally raised by any taxing authority in connection with an audit or
examination of any return of Taxes; and, (iv) no claim has been made by a taxing
authority in a jurisdiction where the Company does not file Tax Returns that the
Company is or may be subject to taxation by that jurisdiction. No federal, state
or foreign income tax returns of the Company have been examined, and there are
no outstanding Tax rulings or closing agreements or waivers extending the
applicable statutory periods of limitation for such Taxes or otherwise having
continuing effect for any period. All Taxes that the Company has been required
to collect or withhold have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority. Set forth on Schedule
5.7 is a list of all jurisdictions in which the Company is required to file Tax
Returns, and the type of Tax Return that is required to be filed. No Taxes will
be assessed on or after the Closing Date against the Company for any tax period
ending on or prior to the Closing Date other than for Taxes disclosed on
Schedule 5.7. The Company has timely filed all information returns or reports,
including forms 1099, that are required to be filed and has accurately reported
all information required to be included on such returns or reports. For purposes
of this Agreement, "Taxes" shall mean all taxes, charges, fees, levies or other
assessments including, without limitation, income, excise, property,
withholding, sales and franchise taxes, imposed by the United States, or any
state, county, local or foreign government or subdivision or agency thereof, and
including any interest, penalties or additions attributable thereto; and "Tax
Returns" means all returns or reports, including accompanying schedules, with
respect to Taxes.
(b) The Company is not a party to any Tax allocation or sharing
agreement.
(c) None of the assets of the Company constitutes tax-exempt bond
financed property or tax-exempt use property, within the meaning of Section 168
of the Code. The Company is not a party to any "safe harbor lease" that is
subject to the provisions of Section 168(f)(8) of the Code as in effect prior to
the Tax Reform Act of 1986, or to any "long-term contract" within the meaning of
Section 460 of the Code.
(d) The Company is not a "consenting corporation" within the meaning of
Section 341(f)(1) of the Code, or comparable provisions of any state statutes,
and none of the assets of the Company are subject to an election under Section
341(f) of the Code or comparable provisions of any state statutes. Other than in
connection with the transactions contemplated under this Agreement, the Company
has not filed an election under Section 338(g) or Section 338(h)(10) of the Code
or caused a deemed election under Section 338(e) thereof.
(e) The Company is not a party to any joint venture, partnership or
other arrangement that is treated as a partnership for federal income Tax
purposes.
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(f) There are no accounting method changes of the Company that could
give rise to an adjustment under Section 481 of the Code for periods after the
Closing Date.
(g) The Company has substantial authority for the treatment of, or has
disclosed (in accordance with Section 6662(d)(2)(B)(ii) of the Code) on its
Federal income returns, all positions taken therein that could give rise to a
substantial understatement of Federal income tax within the meaning of Section
6662(d) of the Code.
(h) The Company has not been a member of an affiliated group filing a
consolidated federal, state or local income Tax return and does not have any
liability for the Taxes of another person (i) under Section 1.1502-6 of the
Treasury regulations (or any similar provision of state, local or foreign law),
(ii) as a transferee or successor, (iii) by contract or (iv) otherwise.
(i) The Company is not, and has not been at any time, a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code.
5.8 ASSETS AND PROPERTIES.
(a) REAL PROPERTY. The Company does not own or hold, and has never held
or owned, any interest in real property other than as set forth in Schedule 5.9.
(b) PERSONAL PROPERTY. Except as set forth on Schedule 5.8 and except
for inventory and supplies disposed of or consumed, and accounts receivable
collected or written off, and cash utilized, all in the ordinary course of
business consistent with past practice, the Company owns all of its inventory,
equipment and other personal property (both tangible and intangible) reflected
on the latest balance sheet included in the Financial Statements or acquired
since July 31, 1998, free and clear of any Liens, except for statutory Liens for
current taxes, assessments or governmental charges or levies on property not yet
due and payable.
(c) CONDITION OF PROPERTIES. Except as set forth on Schedule 5.8, the
leasehold estates that are the subject of the Real Property Leases (as defined
in Section 5.9) and the tangible personal property owned or leased by the
Company are in good operating condition and repair, ordinary wear and tear and
repairs and maintenance excepted; and none of the Major Shareholders have any
knowledge of any condition not disclosed herein of any such leasehold estate or
tangible personal property that would affect the fair market value, use or
operation of any leasehold estate or tangible personal property, or otherwise
have a Material Adverse Effect.
(d) COMPLIANCE. The continued use and occupancy of the leasehold
estates that are the subject of the Real Property Leases as currently operated,
used and occupied will not violate any zoning, building, health, flood control,
fire or other law, ordinance, order or
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regulation or any restrictive covenant. There are no violations of any federal,
state, county or municipal law, ordinance, order, regulation or requirement
affecting any portion of the leasehold estates that are the subject of the Real
Property Leases and no written notice of any such violation has been issued by
any governmental authority.
5.9 REAL PROPERTY LEASES, OPTIONS. Schedule 5.9 sets forth a list
(summarizing the parties, lessor addresses, monthly rentals, square footages,
the terms and any extensions and the function of any such property) and copies
of (i) all leases and subleases under which the Company is lessor or lessee or
sublessor or sublessee of any real property, together with all amendments,
supplements, nondisturbance agreements, brokerage and commission agreements and
other agreements pertaining thereto ("Real Property Leases"); (ii) all options
held by the Company or contractual obligations on the part of the Company to
purchase or acquire any interest in real property; and (iii) all options granted
by the Company or contractual obligations on the part of the Company to sell or
dispose of any interest in real property. Copies of all Real Property Leases and
such options and contractual obligations have been delivered to LVCI. The
Company has not assigned any Real Property Leases or any such options or
obligations. There are no Liens on the interest of the Company in the Real
Property Leases, except for (i) Liens for taxes and assessments not yet due and
payable and (ii) those matters set forth on Schedule 5.9. The Real Property
Leases and options and contractual obligations listed on Schedule 5.9 are in
full force and effect and constitute binding obligations of the Company and the
other parties thereto, subject to Equitable Exceptions and (x) there are no
defaults thereunder and (y) no event has occurred and is continuing that with
notice, lapse of time or both would constitute a default by the Company or, to
the best knowledge of the Major Shareholders, by any other party thereto.
5.10 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) (i) During the occupancy and operation of the "Subject Property"
(as defined below) by the Company, the operations of the Subject Property, and
any use, storage, treatment, disposal or transportation of "Hazardous
Substances" (as defined below) that has occurred in, on or under the Subject
Property prior to the date of this Agreement have been in compliance with
"Environmental Requirements" (as defined below);
(ii) the Company has obtained and holds all necessary permits,
licenses, approvals, consents and authorizations required under applicable
Environmental Requirements and is in full compliance with all terms, conditions
and provisions of the same;
(iii) during the occupancy and operation of the Subject Property
by the Company, no release, leak, discharge, spill, disposal or emission of
Hazardous Substances by the Company or its agents has occurred in, on, from or
under the Subject Property in a quantity or manner that violates or requires
further investigation or remediation under Environmental Requirements or as
required by any Agency (as defined in Section 5.15 hereof);
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(iv) the Subject Property, to the best knowledge of the Major
Shareholders, is free of Hazardous Substances as of the date hereof); except for
the presence of small quantities of Hazardous Substances utilized by the Company
or other tenants of the Subject Property in the ordinary course of their
business;
(v) to the best knowledge of the Major Shareholders, there is no
pending or threatened litigation or administrative investigation or proceeding
concerning the Subject Property or the Company involving Hazardous Substances or
Environmental Requirements;
(vi) to the best knowledge of the Major Shareholders, there are no
above-ground or underground storage tank systems or asbestos-containing
materials located at the Subject Property;
(vii) except as set forth on Schedule 5.10, the Company has never
owned, operated or leased any real property other than the Subject Property;
(viii) the Company's current or past transportation to or disposal
at any off-site location of any Hazardous Substances from property now or
formerly owned, operated or leased by the Company at the time of the Company's
ownership, operation or lease thereof was conducted in full compliance with
applicable Environmental Requirements; and
(ix) the Major Shareholders are not aware of any facts, conditions
or circumstances that could reasonably be expected to form the basis for a claim
against the Company, the Shareholders, or any successor in interest to the
Company relating to the Company's compliance or failure to comply with any
Environmental Requirements.
(b) DEFINITIONS. As used in this Agreement, the following terms shall
have following meanings:
"Environmental Requirements" means all laws, statutes, rules,
regulations, ordinances, permits, guidance documents, judgments, decrees,
orders, agreements and other restrictions and requirements (whether now or
hereafter in effect) of any governmental authority, including, without
limitation, federal, state and local authorities, relating to the regulation or
protection of human health and safety, worker health and safety, natural
resources, conservation, the environment, or the storage, treatment, disposal,
transportation, handling or other management of industrial or solid waste,
hazardous waste, hazardous or toxic substances or chemicals, or pollutants.
"Hazardous Substance" means (i) any "hazardous substance" as defined in
ss.101(14) of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended from time to time (42 U.S.C. xx.xx. 9601 et
seq.) ("CERCLA") or any regulations promulgated thereunder, or the Occupational
Safety and Health Act of 1970, as
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amended from time to time (29 U.S.C. ss. 651 et seq.), or any regulations
promulgated thereunder; (ii) petroleum and petroleum by-products, asbestos and
asbestos-containing materials, polychlorinated biphenyls and pesticides; or
(iii) any additional substances or materials that have been or are currently
classified or considered to be pollutants, hazardous or toxic under
Environmental Requirements.
"Subject Property" means all property subject to the Real
Property Leases and any properties listed on Schedules 5.9 and 5.10.
5.11 CONTRACTS.
(a) Set forth on Schedule 5.11(a) is a summary and copies of all
contracts, agreements, arrangements and commitments (whether oral or written) to
which the Company is a party or by which its assets or business are bound (the
following, "Contracts") that relate to (i) the sale, lease or other disposition
by the Company of all or any substantial part of its business or assets (other
than in the ordinary course of business), (ii) the purchase or lease by the
Company of a substantial amount of assets (other than in the ordinary course of
business), (iii) the supply by the Company of any customer's requirements for
any item or the purchase by the Company of its requirements for any item or of a
vendor's output of any item, (iv) lending or advancing funds by the Company, (v)
borrowing of funds or guaranteeing the borrowing of funds by any other person,
whether under an indenture, note, loan agreement or otherwise, (vi) any
transaction or matter with any affiliate of the Company, (vii) noncompetition,
(viii) licenses and grants to or from the Company relating to any intangible
property listed on Schedule 5.17, (ix) the acquisition by the Company of any
operating business or the capital stock of any person since December 31, 1997,
or (x) any other matter that is material to the business, assets or operations
of the Company.
(b) Except as set forth on Schedule 5.11(b), each Contract is in full
force and effect on the date hereof, the Company is not in default under any
Contract in any material respect, the Company has not given or received notice
of any default under any Contract, and, to the best knowledge of the Major
Shareholders, no other party to any Contract is in default thereunder.
(c) To the knowledge of the Major Shareholders, the Company is not a
party to any material agreement, the performance of which could reasonably be
likely to have a Material Adverse Effect.
5.12 NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other agreements and documents contemplated hereby by the
Shareholders and the consummation of the transactions contemplated hereby will
not (i) violate any provision of any Charter Document, (ii) violate any statute,
rule, regulation, order or decree of any public body or authority by which the
Company or the Shareholders or its or their respective properties or assets are
bound, or (iii) result in a violation or breach of, or constitute a default
under, or
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result in the creation of any encumbrance upon, or create any rights of
termination, cancellation or acceleration in any person with respect to any
Contract or any Material Permit of the Company.
5.13 GOVERNMENT CONTRACTS. The Company is not now and has not been a party
to any governmental contract.
5.14 CONSENTS. Except as set forth on Schedule 5.14, no consent,
approval or other authorization of any governmental authority or under any
Contract or other agreement or commitment to which the Shareholders are parties
is required as a result of or in connection with the execution or delivery of
this Agreement and the other agreements and documents to be executed by the
Shareholders or the consummation by the Shareholders of the transactions
contemplated hereby.
5.15 LITIGATION AND RELATED MATTERS. Set forth on Schedule 5.15 is a
list of all actions, suits, proceedings, investigations or grievances pending
against the Company, or, to the best knowledge of the Major Shareholders,
threatened against the Company, the business or any property or rights of the
Company, at law or in equity, before or by any arbitration board or panel, court
or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign ("Agencies"). None
of the actions, suits, proceedings or investigations listed on Schedule 5.15
either (i) would, if adversely determined, have a Material Adverse Effect or
(ii) would, if adversely determined, affect the right or ability of the Company
to carry on its business substantially as now conducted. The Company is not
subject to any continuing court or Agency order, writ, injunction or decree
applicable specifically to its business, operations or assets or its employees,
nor is the Company in default with respect to any order, writ, injunction or
decree of any court or Agency with respect to its assets, business, operations
or employees. Schedule 5.15 lists (x) all worker's compensation claims
outstanding against the Company as of the date hereof and (y) all actions, suits
or proceedings filed by or outstanding against the Company, or in which the
Company is named as a party, since December 31, 1997.
5.16 COMPLIANCE WITH LAWS. The Company is in compliance with all
applicable laws, regulations (including federal, state and local procurement
regulations), orders, judgments and decrees except where the failure to so
comply would not have a Material Adverse Effect.
5.17 INTELLECTUAL PROPERTY RIGHTS.
(a) Schedule 5.17 lists the domestic and foreign trade names,
trademarks, service marks, trademark registrations and applications, service
xxxx registrations and applications, patents, patent applications, patent
licenses, software licenses and copyright registrations and applications owned
by the Company or used thereby in the operation of its business (collectively,
the "Intellectual Property"), which Schedule indicates (i) the term and
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exclusivity of its rights with respect to the Intellectual Property and (ii)
whether each item of Intellectual Property is owned or licensed by the Company,
and if licensed, the licensor and the license fees therefor. Unless otherwise
indicated on Schedule 5.17, the Company has the right to use and license the
Intellectual Property, and the consummation of the transactions contemplated
hereby will not result in the loss or material impairment of any rights of the
Company in the Intellectual Property. Each item constituting part of the
Intellectual Property has been, to the extent indicated on Schedule 5.17,
registered with, filed in or issued by, as the case may be, the United States
Patent and Trademark Office or such other government entity, domestic or
foreign, as is indicated on Schedule 5.17; all such registrations, filings and
issuances remain in full force and effect; and all fees and other charges with
respect thereto are current. Except as stated on Schedule 5.17, there are no
pending proceedings or adverse claims made or, to the best knowledge of the
Major Shareholders, threatened against the Company with respect to the
Intellectual Property; there has been no litigation commenced or threatened in
writing within the past five (5) years with respect to the Intellectual Property
or the rights of the Company therein; and the Major Shareholders have no
knowledge that (i) the Intellectual Property or the use thereof by the Company
conflicts with any trade names, trademarks, service marks, trademark or service
xxxx registrations or applications, patents, patent applications, patent
licenses or copyright registrations or applications of others ("Third Party
Intellectual Property"), or (ii) such Third Party Intellectual Property or its
use by others or any other conduct of a third party conflicts with or infringes
upon the Intellectual Property or its use by the Company.
(b) To the best knowledge of the Major Shareholders, the Intellectual
Property is designed to be used prior to, during and after the year 2000 A.D.,
and will operate during each such time period without error relating to date
data, including without limitation any error relating to or the product of date
data that represents or references different centuries or more than one century.
Without limiting the generality of the foregoing, the Intellectual Property will
not abnormally end or provide invalid or incorrect results as a result of date
data, including without limitation date data that represents or references
different centuries or more than one century; the Intellectual Property has been
designed to ensure year 2000 compatibility, including without limitation date
data century recognition, calculations that accommodate same century and
multi-century formulas and date value, and date data interface values that
reflect the century, and includes "year 2000 capabilities." For the purpose of
this Section 5.17, "year 2000 capabilities" shall mean that the Intellectual
Property will (i) manage and manipulate data involving dates, including single
century formulas and multi-century formulas and will not cause an abnormally
ending scenario within the application or generate incorrect values or invalid
results involving such dates; (ii) provide that all date-related user interface
functionalities and data fields include the indication of century; and (iii)
provide that all date-related data interface functionalities include the
indication of century. To the best knowledge of the Major Shareholders, none of
the Company's vendors or suppliers lack "year 2000 capabilities".
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5.18 EMPLOYEE BENEFIT PLANS. Each employee benefit, stock or compensation
plan, including without limitation employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained or contributed to by the Company or any of its Group
Members (as defined below) (collectively, the "Plans") is listed on Schedule
5.18, is in compliance with applicable law, in all material respects, and has
been administered and operated in accordance with its terms. Each Plan that is
intended to be "qualified" within the meaning of Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service (the
"IRS") and no event has occurred and no condition exists that could be expected
to result in the revocation of any such determination. No event that constitutes
a "reportable event" (within the meaning of Section 4043(b) of ERISA) for which
the 30-day notice requirement has not been waived by the Pension Benefit
Guaranty Corporation (the "PBGC") has occurred with respect to any Plan. Except
as set forth on Schedule 5.18, no Plan is subject to Title IV of ERISA, and
neither the Company nor any Group Member has made any contributions to or
participated in any "multiple employer plan" (within the meaning of the Code or
ERISA) or "multi-employer plan" (as defined in Section 4001(a)(3) of ERISA).
Full payment has been made of all amounts that the Company was required under
the terms of the Plans to have paid as contributions to such Plans on or prior
to the date hereof (excluding any amounts not yet due) and all amounts properly
accrued to date as liabilities of the Company that have not been paid have been
properly recorded on the Financial Statements, and no Plan that is subject to
Part 3 of Subtitle B of Title I of ERISA has incurred any "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived. The Company has not and, to the best knowledge of
the Major Shareholders, no other "disqualified person" or "party in interest"
(within the meaning of Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively) has engaged in any transactions in connection with any Plan
that could be expected to result in the imposition of a material penalty
pursuant to Section 502(i) of ERISA, damages pursuant to Section 409 of ERISA or
a tax pursuant to Section 4975(a) of the Code. No material claim, action,
proceeding, or litigation has been made, commenced or, to the knowledge of the
Major Shareholders, threatened with respect to any Plan (other than for benefits
payable in the ordinary course and PBGC insurance premiums). No Plan or related
trust owns any securities in violation of Section 407 of ERISA. Neither the
Company nor any Group Member has incurred any liability or taken any action, and
the Major Shareholders have no knowledge of any action or event, that could
cause it to incur any liability (i) under Section 412 of the Code or Title IV of
ERISA with respect to any "single employer plan" (within the meaning of Section
4001(a)(15) of ERISA), (ii) on account of a partial or complete withdrawal
(within the meaning of Section 4205 and 4203 of ERISA, respectively) with
respect to any "multi-employer plan" (within the meaning of Section 3(37) of
ERISA), (iii) on account of unpaid contributions to any such multi-employer
plan, or (iv) to provide health benefits or other non-pension benefits to
retired or former employees, except as specifically required by Section 4980B(f)
of the Code. Except as set forth on Schedule 5.18, neither the execution and
delivery of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will (i) entitle any current or former employee
of the Company to severance pay, unemployment compensation or any similar
payment, (ii)
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accelerate the time of payment or vesting, or increase the amount of, any
compensation due to any such employee or former employee, or (iii) directly or
indirectly result in any payment made or to be made to or on behalf of any
person to constitute a "parachute payment" (within the meaning of Section 280G
of the Code). For purposes of this Agreement, "Group Member" shall mean any
member of any "affiliated service group" as defined in Section 414(m) of the
Code that includes the Company, any member of any "controlled group of
corporations" as defined in Section 1563 of the Code that includes the Company
or any member of any group of "trades or businesses under common control" as
defined by Section 414(c) of the Code that includes the Company.
5.19 EMPLOYEES; EMPLOYEE RELATIONS.
(a) Schedule 5.19 sets forth (i) the name and current annual salary (or
rate of pay) and other compensation (including, without limitation, normal
bonus, profit-sharing and other compensation) now payable by the Company to each
employee whose current total annual compensation or estimated compensation is
$25,000 or more, (ii) any increase committed by the Company to become effective
after the date of this Agreement in the total compensation or rate of total
compensation payable by the Company to each such person, (iii) any increase
committed by the Company to become payable after the date of this Agreement by
the Company to employees other than those specified in clause (i) of this
Section 5.19(a), (iv) all presently outstanding loans and advances (other than
routine travel advances and other routine business expense advances of less than
$10,000 to be repaid or formally accounted for within sixty (60) days) made by
the Company to, or made to the Company by, any director, officer or employee,
(v) all other transactions between the Company and any director or officer
thereof since December 31, 1997, (vi) the terms and conditions of any and all
employment agreements, whether written or oral, entered into by the Company and
(vii) except for accruals in the ordinary course consistent with past practice,
all accrued but unpaid vacation pay owing to any officer or employee that is not
disclosed on the Financial Statements.
(b) Except as disclosed on Schedule 5.19, the Company is not a party
to, or bound by, the terms of any collective bargaining agreement, and the
Company has not experienced any material labor difficulties during the last five
(5) years. Except as set forth on Schedule 5.19, there are no labor disputes
existing, or to the best knowledge of the Major Shareholders, threatened
involving, by way of example, strikes, work stoppages, slowdowns, picketing, or
any other interference with work or production, or any other concerted action by
employees. No charges or proceedings before the National Labor Relations Board,
or similar agency, exist, or to the best knowledge of the Major Shareholders,
are threatened.
(c) The relationships enjoyed by the Company with its employees are
good and except as set forth in Schedule 5.19(c), the Major Shareholders have no
knowledge of any facts that would indicate that the employees of the Company
will not continue in the employ thereof following the Closing on a basis similar
to that existing on the date of this Agreement.
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Except for normal difficulties in the present job market, since December 31,
1997, the Company has not experienced any material difficulties in obtaining any
qualified personnel necessary for the operations of its business and, to the
best knowledge of the Major Shareholders, no such shortage of qualified
personnel is threatened or pending which would have a Material Adverse Effect on
the Company. Except as disclosed on Schedule 5.19, the Company is not a party to
any employment contract with any individual or employee, either express or
implied. No legal proceedings, charges, complaints or similar actions exist
under any federal, state or local laws affecting the employment relationship
including, but not limited to: (i) anti-discrimination statutes such as Title
VII of the Civil Rights Act of 1964, as amended (or similar state or local laws
prohibiting discrimination because of race, sex, religion, national origin, age,
disability and the like); (ii) the Fair Labor Standards Act or other federal,
state or local laws regulating hours of work, wages, overtime and other working
conditions; (iii) requirements imposed by federal, state or local government
contracts such as those imposed by Executive Order 11246; (iv) state laws with
respect to tortious employment conduct, such as slander, harassment, false
light, invasion of privacy, negligent hiring or retention, intentional
infliction of emotional distress, assault and battery, or loss of consortium; or
(v) the Occupational Safety and Health Act, as amended, as well as any similar
state laws, or other regulations respecting safety in the workplace; and to the
best knowledge of the Major Shareholders, no proceedings, charges, or complaints
are threatened under any such laws or regulations and no facts or circumstances
exist that would give rise to any such proceedings, charges, complaints, or
claims. The Company is not subject to any settlement or consent decree with any
present or former employee, employee representative or any government or Agency
relating to claims of discrimination or other claims in respect to employment
practices and policies; and no government or Agency has issued a judgment,
order, decree or finding with respect to the labor and employment practices
(including practices relating to discrimination) of the Company. Since
inception, the Company has not incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state laws; and the
Company has not laid off more than ten percent (10%) of its employees at any
single site of employment in any ninety (90) day period during the twelve (12)
month period ending June 30, 1998.
(d) The Company is in compliance in all material respects with the
provisions of the Americans with Disabilities Act.
5.20 INSURANCE. Schedule 5.20 contains an accurate list of the policies and
contracts (including insurer, named insured, type of coverage, limits of
insurance, required deductibles or co-payments, annual premiums and expiration
date) for fire, casualty, liability and other forms of insurance maintained by,
or for the benefit of, the Company. All such policies are in full force and
effect. Neither the Company nor the Major Shareholders have received any notice
of cancellation or non-renewal, or of significant premium increases with respect
to any such policy. Except as disclosed on Schedule 5.20 no pending claims made
by or on behalf of the Company under such policies have been denied or are being
defended against third parties
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under a reservation of rights by an insurer thereof. All premiums due prior to
the date hereof for periods prior to the date hereof with respect to such
policies have been timely paid.
5.21 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC. Except as disclosed in
Schedule 5.21, no shareholder, officer, director or affiliate of the Company
possesses, directly or indirectly, any financial interest in, or is a director,
officer, employee or affiliate of, any corporation, firm, association or
business organization that is a client, supplier, customer, lessor, lessee or
competitor of the Company. Ownership of securities of a corporation whose
securities are registered under the Securities Exchange Act of 1934 not in
excess of five percent (5%) of any class of such securities shall not be deemed
to be a financial interest for purposes of this Section 5.21.
5.22 BUSINESS RELATIONS. Schedule 5.22 contains an accurate list and
copies of contracts of all significant customers and suppliers of the Company
(i.e., (i) those customers representing five percent (5%) or more of the
Company's revenues for the twelve (12) months ended December 31, 1997 or those
ten (10) largest revenue-generating customers and (ii) those suppliers
representing five percent (5%) or more of the Company's operating expenses for
the twelve (12) months ended December 31, 1997 or those ten (10) suppliers with
the largest aggregate invoice amounts submitted to the Company with respect to
such period). Except as set forth on Schedule 5.22, to the best knowledge of the
Major Shareholders, no customer or supplier of the Company has or will cease to
do business therewith after the consummation of the transactions contemplated
hereby, which cessation would have a Material Adverse Effect, and no customer or
supplier will cease to do business with the Company nor will the terms of any
Contract change or be modified in any material respect as a result of the change
of ownership of the Company as a result of the Closing. Except as set forth on
Schedule 5.22 since inception, the Company has not experienced any difficulties
in obtaining any inventory items necessary to the operation of its business,
and, to the best knowledge of the Major Shareholders, no such shortage of supply
of inventory items is threatened or pending. The Company is not required to
provide any bonding or other financial security arrangements in any material
amount in connection with any transactions with any of its customers or
suppliers.
5.23 OFFICERS AND DIRECTORS. Set forth on Schedule 5.23 is a list of the
current officers and directors of the Company.
5.24 BANK ACCOUNTS AND POWERS OF ATTORNEY. Schedule 5.24 sets forth each
bank, savings institution and other financial institution with which the Company
has an account or safe deposit box and the names of all persons authorized to
draw thereon or to have access thereto. Each person holding a power of attorney
or similar grant of authority on behalf of the Company is identified on Schedule
5.24. Except as disclosed on such Schedule, the Company has not given any
revocable or irrevocable powers of attorney to any person, firm, corporation or
organization relating to its business for any purpose whatsoever.
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5.25 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on Schedule
5.25 or as otherwise contemplated by this Agreement, since December 31, 1997,
there has not been (a) any damage, destruction or casualty loss to the physical
properties of the Company (whether or not covered by insurance), (b) any event
or circumstance that would have a Material Adverse Effect, (c) any entry into
any transaction, commitment or agreement (including, without limitation, any
borrowing) material to the Company, except Contracts or transactions,
commitments or agreements in the ordinary course of business consistent with
past practice, (d) any declaration, setting aside or payment of any dividend or
other distribution in cash, stock or property with respect to the capital stock
or other securities of the Company, any repurchase, redemption or other
acquisition by the Company of any capital stock or other securities, or any
agreement, arrangement or commitment by the Company to do so, (e) any increase
that is material in the compensation payable or to become payable by the Company
to its directors, officers, employees or agents or any increase in the rate or
terms of any bonus, pension or other employee benefit plan, payment or
arrangement made to, for or with any such directors, officers, employees or
agents, except as set forth on Schedule 5.25(f) any sale, transfer or other
disposition of, or the creation of any Lien upon, any part of the assets of the
Company, tangible or intangible, except for sales of inventory and use of
supplies, collections of accounts receivables in the ordinary course of business
consistent with past practice and cash utilized, or any cancellation or
forgiveness of any debts or claims by the Company, (g) any change in the
relations of the Company with or loss of its customers or suppliers, or any loss
of business or increase in the cost of inventory items or change in the terms
offered to customers, which would have a Material Adverse Effect, (h) any
capital expenditure (including any capital leases) or commitment therefor by the
Company in excess of $10,000, or (i) any actions, suits, proceedings,
investigations or grievances initiated or, to the best knowledge of the Major
Shareholders, threatened relating to the Company's products or services.
5.26 TERMINATION OF PLANS. The Company has effected the termination of
each of its Plans.
5.27 MICROKERATOMES At Closing the Company owns a minimum of twenty-one
(21) ACS and twelve (12) Hansatome microkeratomes, all of which are in condition
consistent with the representations and warranties contained in Section 5.8(c).
(B) REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
Each Shareholder severally represents and warrants that the representations
and warranties in this Section 5(B) as they apply to him or her are true and
correct at the time of the Closing.
5.28 AUTHORITY AND OWNERSHIP. The Shareholder has the full legal right,
power and authority to enter into this Agreement. The Shareholder owns
beneficially (subject to any community property interest of his or her spouse)
and of record the shares of the Company
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Stock set forth opposite such Shareholder's name on ANNEX I. Such shares of the
Company Stock owned by the Shareholder are owned free and clear of any and all
liens, mortgages, security interests, encumbrances, pledges, charges, adverse
claims, options, rights or restrictions of any character whatsoever ("Liens")
other than standard state and federal and other applicable securities laws and
private offering restrictions. The Shareholder has owned such shares of Company
Stock since the date set forth on ANNEX I.
5.29 PREEMPTIVE RIGHTS. The Shareholder does not have, or hereby
waives, any preemptive or other right to acquire shares of the Company Stock
that the Shareholder has or may have had.
5.30 VALIDITY OF OBLIGATIONS. This Agreement has been duly executed and
delivered and is the legal, valid and binding obligation of Shareholder subject
to Equitable Exceptions.
5.31 ABSENCE OF CLAIMS AGAINST THE COMPANY. The Shareholder does not
have any claims against the Company other than as disclosed herein.
6. REPRESENTATIONS OF LVCI
LVCI represents and warrants that all of the following representations
and warranties in this Section 6 are true and correct at the time of the
Closing.
6.1 DUE ORGANIZATION. LVCI is duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is duly authorized
and qualified under all applicable laws, regulations and ordinances of public
authorities to carry on its businesses in the places and in the manner as now
conducted except for where the failure to be so authorized or qualified would
not have a material adverse effect on its business, operations, affairs,
properties, assets or condition (financial or otherwise).
6.2 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement,
the LVCI Note, the Employment Agreements, and the Noncompetition Agreements, by
LVCI and the performance by LVCI of the transactions contemplated herein or
therein have been duly and validly authorized by the Board of Directors of LVCI,
and this Agreement, the LVCI Note, the Employment Agreements, and the
Noncompetition Agreements, have each been duly and validly authorized by all
necessary corporate action, duly executed and delivered and are the legal, valid
and binding obligations of LVCI, enforceable against such party thereto in
accordance with their respective terms, subject to the Equitable Exceptions.
LVCI has full corporate power, capacity and authority to execute this Agreement,
the LVCI Note, the Employment Agreements and the Noncompetition Agreements.
6.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, and the other agreements and documents contemplated hereby, the
consummation of any
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transactions herein referred to or contemplated by and the fulfillment of the
terms hereof and thereof will not:
(a) Conflict with, or result in a breach or violation of the
Certificate of Incorporation or By-laws of LVCI;
(b) Conflict with, or result in a material default (or would constitute
a default but for any requirement of notice or lapse of time or both) under any
material document, agreement or other instrument to which LVCI is a party, or
violate or result in the creation or imposition of any lien, charge or
encumbrance on any of LVCI's properties pursuant to (i) any law or regulation to
which LVCI or any of its property is subject, or (ii) any judgment, order or
decree to which LVCI is bound or any of its property is subject; or
(c) Result in termination or any impairment of any material permit,
license, franchise, contractual right or other authorization of LVCI.
6.4 NO OUTSIDE RELIANCE; KNOWLEDGE REGARDING REPRESENTATIONS. LVCI has
not relied on and is not relying upon any statement or representation not made
in this Agreement or in a Schedule hereto. As of the date hereof, LVCI is not
aware of any inaccuracy or misstatement in, or breach of, any representation or
warranty of the Shareholders contained herein.
7. ADDITIONAL CLOSING DELIVERIES TO THE SHAREHOLDERS
Concurrently with the Closing, LVCI has delivered to the Shareholders the
following:
7.1 OPINION OF COUNSEL. The Shareholders have received an opinion from
Dankenbring, Greiman, Xxxxxxxxx & Xxxxxxxx, P.C., counsel for LVCI, dated the
Closing Date, in the form annexed hereto as Exhibit B.
7.2 EMPLOYMENT AGREEMENTS. LVCI has executed and delivered to certain
Shareholders Employment Agreements in substantially the forms attached hereto as
Exhibit C (the "Employment Agreements").
7.3 BROKER RELEASE. Simultaneous with the Closing, each broker, agent or
attorney identified on Schedule 12.6 has executed and delivered to the
Shareholders an instrument dated the Closing Date in such form as is reasonably
satisfactory to the Major Shareholders releasing the Company and the
Shareholders from any and all claims of such broker, agent or attorney with
respect to fees, commissions and other amounts and expenses thereof that may be
payable thereto in connection with the transactions set forth in this Agreement.
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8. ADDITIONAL CLOSING DELIVERIES TO LVCI
Concurrently with the Closing, the Shareholders have delivered, or have
caused to be delivered, to LVCI the following:
8.1 REPAYMENT OF INDEBTEDNESS. Evidence satisfactory to LVCI that the
Shareholders have repaid the Company in full all amounts owing by the
Shareholders to the Company.
8.2 SHAREHOLDER RELEASES. Each of the Shareholders have delivered to
LVCI an instrument dated the Closing Date in substantially the form of Exhibit D
releasing the Company from any and all claims of the Shareholder against the
Company and any obligations of the Company to the Shareholder, except for items
specifically identified on Schedule 8.2 as being claims of or obligations to
such Shareholder and continuing obligations to such Shareholder relating to his
or her employment by the Company.
8.3 TERMINATION OF RELATED PARTY AGREEMENTS. Evidence satisfactory to
LVCI that all existing agreements between the Company and the Shareholders or
business or personal affiliates of the Company or the Shareholders and all
existing bonus and incentive plans and compensation arrangements of the Company
and its Shareholders, other than those set forth on Schedule 8.3, have been
canceled or terminated.
8.4 OPINIONS OF COUNSEL. LVCI has received an opinion from counsel to
the Shareholders, dated the Closing Date, in the form annexed hereto as Exhibit
E.
8.5 EMPLOYMENT AGREEMENTS. Each of the Shareholders continuing employment
with the Company has executed and delivered to LVCI his Employment Agreement.
8.6 NONCOMPETITION AGREEMENTS. Certain of the Shareholders have
executed and delivered to LVCI Noncompetition Agreements with LVCI in
substantially the forms attached hereto as Exhibit F (the "Noncompetition
Agreements").
8.7 BROKER RELEASE. Simultaneous with the Closing, each broker or agent
identified on Schedule 12.6 has executed and delivered to LVCI an instrument
dated the Closing Date in such form as is reasonably satisfactory to LVCI
releasing the Company and LVCI from any and all claims of such broker or agent
with respect to fees, commissions and other amounts and expenses thereof that
may be payable thereto in connection with the transactions set forth in this
Agreement.
8.8 RELEASE OF FINANCING STATEMENTS. The Company has obtained and
prepared for filing in the appropriate jurisdictions within two (2) business
days following the Closing Termination Statements properly executed by any
parties holding a security interest or other
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encumbrance with respect to each of the Company, the Company Stock or the assets
of the Company as identified by lien searches conducted with respect thereto.
8.9 GOOD STANDING CERTIFICATES. The Company has delivered to LVCI a
certificate, dated as of a date not more than twenty (20) days prior to the
Closing Date, duly issued by the appropriate governmental authority in the state
or other jurisdiction of its incorporation or organization showing that it is in
good standing.
8.10 FAIRNESS OPINION. In addition, LVCI has received, if requested by
LVCI at its own request, a favorable opinion from X.X. Xxxxxxx & Sons, Inc., as
to the fairness of the transactions contemplated by this Agreement from a
financial point of view.
9. COVENANTS OF THE PARTIES
9.1 DISTRIBUTIONS. Immediately prior to Closing, the Company will
distribute to the Shareholders in accordance with their proportionate ownership
interests in the Company, an amount equal to 40% of the estimated net taxable
income of the Company for the Short S Year ending on the Closing Date (the "S
Distribution"). As soon as practicable after the Company's federal income tax
return for the Short S Year has been prepared and filed, LVCI shall notify the
Shareholders of the actual amount of net taxable income shown on such return.
Within ten (10) days after such notice, LVCI shall pay the Shareholders the
excess of 40% of the actual net taxable income for the Short S Year over the
amount of the S Distribution. Likewise, in the event the S Distribution exceeds
40% of such net taxable income, the Shareholders shall pay the excess to LVCI
within ten (10) days after such notice.
9.2 PREPARATION AND FILING OF TAX RETURNS.
(a) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any return, amended
return or claim for refund, determining a liability for Taxes or a right to
refund of Taxes or in conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing copies of all
relevant portions of relevant returns, together with relevant accompanying
schedules and relevant work papers, relevant documents relating to rulings or
other determinations by taxing authorities and relevant records concerning the
ownership and tax basis of property, which such party may possess. Each party
shall make its employees or agents reasonably available on a mutually convenient
basis at its cost to provide explanation of any documents or information so
provided. Subject to the preceding sentence, each party required to file returns
pursuant to this Agreement shall bear all costs of filing such returns.
(b) The Shareholders shall have responsibility for the conduct of any
audit of the Company of any taxable period ending on or prior to the Closing
Date; provided however, that in the event that the Shareholders receive notice
of a claim from the Internal
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Revenue Service or any other taxing authority the Shareholders shall promptly,
but in any event within five (5) business days, notify LVCI and the Company of
such claim and of any action taken or proposed to be taken. In the event LVCI
and the Company wishes to participate in such audit they may do so at their own
cost and expense.
9.3 COMPANY NAME. Each Shareholder acknowledges and agrees that the name
"Refractive Surgical Resources, Inc." or any derivations thereof are
important elements of the Company's business and goodwill and covenants that
following the Closing Date he or she will not conduct a business utilizing the
above-described name without the prior written consent of the Company.
9.4 COVENANTS OF THE COMPANY AND THE SHAREHOLDERS CONCERNING TERMINATION
OF S ELECTION.
(a) DEFINITIONS. The following terms, as used herein, have the
following meanings when used hereinafter:
"C Corporation Period" means the period commencing on the S Termination
Date.
"S Corporation Period" means, as to the Company, the period commencing
on the effective date of its S election and ending on the date immediately
preceding the S Termination Date.
"S Corporation Taxable Income" means the taxable income of the Company
from all sources during the S Corporation Period.
"S Short Year" means that portion of the S Termination Year of the
Company as defined in Section 1362(c)(1)(A) of the Code.
"S Termination Date" means the date on which the S corporation status
of the Company is terminated pursuant to Section 1362(d)(2) of the Code and
handled in accordance with Section 1362(e)(6)(D) and (e)(5) of the Code.
"S Termination Year" has the meaning set forth in Section 1362(e)(4) of
the Code.
(b) TERMINATION OF S ELECTION; S TERMINATION YEAR
(i) Termination of S Status. The Company made a valid election
under Section 1362(a) of the Code to be taxed in accordance with the provisions
of Subchapter S of the Code, for its tax year beginning April 11, 1997 (the "S
Election"). The Shareholders
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acknowledge that the Closing will terminate the Company's S Election pursuant to
Section 1362(d)(2) of the Code.
(ii) Effective Date. The S Termination Date shall be on the
Closing Date.
(iii) S Termination Year. The fiscal year in which the S
corporation status of the Company is terminated will be an S Termination Year
with respect to the Company for federal income tax purposes, as defined in
Section 1362(e)(4) of the Code.
(iv) S Short Year. The S Short Year of the Company shall be that
portion of its S Termination Year beginning on the initial day of its fiscal
year and ending on the day immediately preceding the S Termination Date. For
federal income tax purposes, the Company will be treated as an S corporation
during its S Short Year.
(c) ALLOCATION OF INCOME.
(i) Allocation Election. Tax items shall be allocated to the S
Short Year pursuant to normal tax accounting rules (that is, the "closing of the
books method") rather than by the pro rata allocation method contained in
Section 1362(e)(2) of the Code.
(ii) Filing of Tax Returns. In respect to the foregoing
allocation, and subject to review by the Shareholders prior to filing upon
written request, the Company shall cause to be prepared, at its expense, and
shall timely file all tax returns for the S Short Year required by federal,
state and local law and, when appropriate, shall allocate the tax items to the S
Short Year pursuant to normal tax accounting rules (that is, the "closing of the
books method") rather than the pro rata allocation method contained in Section
1362(e)(2) of the Code.
(d) LIABILITY FOR TAXES INCURRED DURING S CORPORATION YEARS INCLUDING
S SHORT YEAR. The Shareholders shall pay (and shall indemnify, defend and hold
harmless the Company from and against liability with respect to) any and all
Taxes that are imposed on the Shareholders or the Company and attributable to
the taxable income of the Company, for all taxable periods (or that portion of
any period including the S Short Year) during which the Company was an S
corporation, including but not limited to, any taxable income of the Company
recognized as a result of the Closing; provided, however, that notwithstanding
the foregoing the Company shall pay (and shall indemnify, defend and hold
harmless the Shareholders from and against liability with respect to) any and
all Taxes that are imposed on the Shareholders or the Company and attributable
to the taxable income of the Company from and after the Closing other than any
Taxes imposed as a result of the Closing. The Shareholders shall pay any and all
Taxes that are imposed on the Shareholders or the Company
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as a result of the Company's S Election being treated as invalid or ineffective
for any reason or such election being revoked or terminated prior to the S
Termination Date.
(e) If any Shareholder receives notice of an intention by a taxing
authority to audit any return of the Shareholder that includes any item of
income, gain, deduction, loss or credit reported by the Company with respect to
the S Corporation Period that the Shareholder has reason to believe may affect
the Company's tax returns during the C Corporation Period, the Shareholder shall
inform LVCI and the Company, in writing, of the audit promptly after receipt of
such notice. If the Shareholder receives notice from a taxing authority of any
proposed adjustment for which LVCI may be required to indemnify hereunder (a
"Proposed Adjustment"), the Shareholder shall give notice to LVCI and the
Company of the Proposed Adjustment promptly after receipt of such notice from a
taxing authority. Upon receipt of such notice from the Shareholder, LVCI may
request that the Shareholder contest such Proposed Adjustment and the
Shareholder shall permit LVCI to participate in (but not to control) such
proceedings. If LVCI requests that any Proposed Adjustment be contested, then
the Shareholder shall, at LVCI's expense, contest the Proposed Adjustment or at
the option of LVCI permit LVCI to contest the Proposed Adjustment (including
pursuing all administrative and judicial appeals and processes). LVCI shall pay
to such Shareholder all reasonable costs and expenses (including reasonable
attorneys' and accountants' fees) that the Shareholder may incur in contesting
such Proposed Adjustments. No Shareholder shall make, accept or enter into a
settlement or other compromise, with respect to any Taxes indemnified hereunder,
or forego or terminate any proceeding undertaken hereunder without the consent
of LVCI, which consent shall not be unreasonably withheld. The Shareholders will
reasonably assist if LVCI contests any Proposed Adjustment.
(f) If the Company receives notice of an intention by a taxing
authority to audit any return of the Company that includes any item of income,
gain, deduction, loss or credit reported by the Company with respect to the
period after the Closing during which the Company is a C corporation that the
Company has reason to believe may affect the Shareholders' tax returns during
the S Corporation Period, the Company shall inform the Shareholders, in writing,
of the audit promptly after receipt of such notice. If the Company receives
notice from a taxing authority of any proposed adjustment for which an
Indemnifying Shareholder may be required to indemnify the Company hereunder (a
"Company Proposed Adjustment"), the Company shall give notice to the
Shareholders of the Company Proposed Adjustment promptly after receipt of such
notice from a taxing authority. Upon receipt of such notice from the Company,
the Shareholders may, by in turn giving prompt written notice to the Company,
request that the Company contest such Company Proposed Adjustment. If any
Shareholder requests that any Company Proposed Adjustment be contested, then the
Company shall contest the Company Proposed Adjustment (including pursuing all
administrative and judicial appeals and processes) at the requesting
Shareholder's expense and shall permit such Shareholder to participate in (but
not to control) such proceeding.
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(g) The Company, LVCI and the Shareholders shall cooperate fully with
each other in all matters relating to Taxes and in the determination of amounts
payable hereunder. In the case of disagreement as to the course of action to be
pursued in dealing with taxing authorities (including, without limitation,
matters with respect to preparation and filing of tax returns, conduct of
audits, and proceedings in courts), the decision of the party (LVCI and the
Company, on the one hand, or the Shareholders, on the other hand) who will
economically benefit from or be burdened by the course of action (or in the case
both parties benefit and/or are burdened, the decision of the party with the
greatest benefit or burden) shall control.
(h) (i) The Shareholders shall cooperate with LVCI in taking such
actions necessary and appropriate (including timely filing such forms, tax
returns, elections, schedules and other documents as may be required), at LVCI'S
cost and expense, to effect and preserve a timely Section 338(h)(10) election in
accordance with the requirements of Section 338 of the Code and the Treasury
Regulations promulgated thereunder (and any corresponding elections under state
or local tax law) (collectively, the "Section 338(h)(10) Elections"), and
Shareholders and LVCI shall report the sale of the Shares pursuant to this
Agreement consistently with the Section 338(h)(10) Elections and shall take no
position contrary thereto or inconsistent therewith in any Tax Return, any
discussion with or proceeding before any taxing authority, or otherwise. The
Shareholders shall pay, and LVCI shall reimburse the Shareholders for, any and
all Taxes imposed on the Company attributable to the making of the Section
338(h)(10) Elections. LVCI shall provide the Shareholders with five (5) copies
of an Internal Revenue Form 8023, "Corporate Qualified Stock Purchases,"
completed as reasonably agreed by the parties and the Shareholders shall duly
execute and deposit with LVCI such copies not later than thirty (30) days after
receipt from LVCI. LVCI shall be responsible for the preparation and filing of
all forms and documents required in connection with the Section 338(h)(10)
Elections and shall provide the Shareholders with copies of (i) any necessary
corrections, amendments or supplements to such Form 8023 as reasonably agreed to
by the parties or as necessary to conform to the allocation of the Purchase
Price as described herein, (ii) all attachments required to be filed therewith
pursuant to applicable Treasury Regulations, and (iii) any comparable forms and
attachments with respect to any applicable state or local elections being made
pursuant to the Section 338(h)(10) Elections. At the request of LVCI, the
Shareholders shall execute and deliver to LVCI within ten (10) days after a
request therefor by LVCI such documents or forms as are required by any tax laws
to complete properly the Section 338(h)(10) Elections. The Shareholders and LVCI
shall cooperate fully with each other and make available to each other such Tax
data and other information as may be reasonably required by such Shareholders or
LVCI in order to timely file the Section 338(h)(10) Elections and any other
required statements or schedules. The Shareholders shall (x) promptly execute
and deliver to the LVCI any amendments subsequent to the filing of the Section
338(h)(10) Elections to Form 8023 (and any comparable state and local forms) and
attachments which are required to be filed under applicable law and are
reasonably requested by LVCI, (y) take such additional steps as reasonably
requested by LVCI to comply with all of the requirements of Section 338(h)(10)
of the Code and the Treasury Regulations thereunder,
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and (z) take no action which is inconsistent with the requirements for filing
the Section 338(h)(10) Election under the Code and the applicable Treasury
Regulations.
(ii) In addition, as soon as practicable after the Closing Date,
but in no event later than the date ninety (90) days prior to the due date of
the Form 8023, LVCI shall provide to Shareholders a proposed statement (the
"Allocation Statement") allocating the total of the Purchase Price, and any
other payments pursuant to this Agreement that are properly treated as
additional Purchase Price for tax purposes, among the different assets of the
Company. Shareholders shall not unreasonably withhold their consent to such
allocation. Shareholders and LVCI shall attempt, in good faith, to resolve any
disagreement as to the allocation of the Purchase Price. If Shareholders and
LVCI are unable to reach an agreement, Shareholders and LVCI shall mutually
agree to the appointment of a nationally recognized accounting firm to resolve
any disagreement, whose determination shall be final and binding on the parties.
If the Shareholders and LVCI are unable to agree on the appointment of a
nationally recognized accounting firm, Shareholders and LVCI each shall
designate such a firm, and such designated firms shall select a third firm to
resolve the disagreement. The fees of such accounting firm shall be borne fifty
percent (50%) by the Shareholders and fifty percent (50%) by LVCI.
9.5 Release of Personal Guaranties. LVCI shall take such action as it
deems commercially reasonable to effect the release of any personal guaranties
by the Shareholders under the Contracts after the Closing Date. In the event
LVCI is not able to effect the release of any personal guaranty on terms that it
deems commercially reasonable, LVCI agrees to indemnify and hold harmless any
Shareholder from any claims arising from such personal guarantee pursuant to
Article 10 hereof.
9.6 Winding Down of Plans. LVCI agrees to cause RSR to make accrued
contributions reflected on the Closing Date Financial Statement to RSR's 401(k)
plan and Money Purchase Plan and to take such action as may be required by
applicable laws or regulations and the terms of such Plans as a result of RSR's
termination of such Plans, effective immediately prior to the Closing Date,
including causing the Company to make distributions to the participants therein
as required thereby, provided that nothing herein shall limit LVCI's rights to
indemnification arising from any breach of the representations and warranties
contained in Section 5.18 hereof.
10. INDEMNIFICATION
The Shareholders and LVCI each make the following covenants that are
applicable to them, respectively.
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10.1 LVCI LOSSES.
(a) Each of the Shareholders severally, but not jointly, agrees to
indemnify and hold harmless LVCI and the Company, and their respective
directors, officers, employees, representatives, agents and attorneys from,
against and in respect of any and all LVCI Losses (as defined below) suffered,
sustained, incurred or required to be paid by any of them by reason of (i) any
representation or warranty made by the Major Shareholders in or pursuant to
Article 2 and Article 5, Part A of this Agreement (including, without
limitation, the representations and warranties contained in any certificate
delivered pursuant hereto) or by such Shareholder pursuant to Article 5, Part B
being untrue or incorrect in any material respect; (ii) the items described in
Schedule 5.7 or Schedule 5.15 hereof except in any instance and to the extent
LVCI Losses result from the negligence or misconduct of LVCI or the Company
occurring after the Closing, but only to the extent any such Losses exceed any
reserves therefore on the financial statements or; (iii) any failure by the
Shareholder to observe or perform his or her covenants and agreements set forth
in this Agreement or in any other agreement or document executed by him or her
in connection with the transactions contemplated hereby.
(b) "LVCI Losses" shall mean all damages (including, without
limitation, amounts paid in settlement with the Shareholders' consent, which
consent may not be unreasonably withheld), losses, obligations, liabilities,
claims, deficiencies, costs and expenses (including, without limitation,
reasonable attorneys' fees), penalties, fines, interest and monetary sanctions,
including, without limitation, reasonable attorneys' fees and costs incurred to
comply with injunctions and other court and Agency orders, and other costs and
expenses incident to any suit, action, investigation, claim or proceeding or to
establish or enforce the rights of LVCI and the Company or such other persons to
indemnification hereunder.
10.2 EMPLOYEE COMPENSATION AND BENEFITS. Each of the Shareholders jointly
and severally, but not jointly, agrees to indemnify and hold LVCI and the
Company, and their respective directors, officers, employees, representatives,
agents and attorneys harmless from and against any and all LVCI Losses arising
from claims made by employees of the Company, regardless of when made, for
wages, salaries, bonuses, pension, workmen's compensation, medical insurance,
disability, vacation, severance, pay in lieu of notice, sick benefits or other
compensation or benefit arrangements to the extent the same are based on
employment service rendered to the Company prior to the Closing Date or injury
or sickness occurring prior to the Closing Date (collectively, "Employee
Claims"), except to the extent such Employee Claims arise from the Company's
failure to pay any amounts accrued with respect to such Employee Claims on the
Company's Financial Statements or to fulfill its obligations under Section 9.6.
10.3 SHAREHOLDER LOSSES.
(a) LVCI agrees to indemnify and hold harmless the Shareholders, and
their respective representatives, agents, attorneys, successors and assigns
from, against and in
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respect of any and all Shareholder Losses (as defined below) suffered,
sustained, incurred or required to be paid by any of them by reason of (i) any
representation or warranty made by LVCI in or pursuant to this Agreement
(including, without limitation, the representations and warranties contained in
any certificate delivered pursuant hereto) being untrue or incorrect in any
material respect; (ii) any failure by LVCI to observe or perform its covenants
and agreements set forth in this Agreement or any other agreement or document
executed by it or the Company in connection with the transactions contemplated
hereby; or (iii) any liability arising from or based upon the operation of the
Company subsequent to the Closing Date other than as a result of the breach of a
representation or warranty set forth in Section 5 hereof, except in any instance
and to the extent Shareholder Losses result from the negligence or misconduct of
the Shareholders, or any of them, prior to the Closing Date.
(b) "Shareholder Losses" shall mean all damages (including, without
limitation, amounts paid in settlement with the consent of LVCI and the Company,
which consent may not be reasonably withheld), losses, obligations, liabilities,
claims, deficiencies, costs and expenses (including, without limitation,
reasonable attorneys' fees), penalties, fines, interest and monetary sanctions,
including, without limitation, reasonable attorneys' fees and costs incurred to
comply with injunctions and other court and Agency orders, and other costs and
expenses incident to any suit, action, investigation, claim or proceeding or to
establish or enforce the right of the Shareholders or such other persons to
indemnification hereunder.
10.4 NOTICE OF LOSS. Except to the extent set forth in the next sentence, a
party to the Agreement will not have any liability under the indemnity
provisions of this Agreement with respect to a particular matter unless a notice
setting forth in reasonable detail the breach or other matter which is asserted
has been given to the Indemnifying Party (as defined below) and, in addition, if
such matter arises out of a suit, action, investigation, proceeding or claim by
a third party ("Third Party Claim"), such notice is given promptly, but in any
event within ten (10) days after the Indemnified Party (as defined below) is
given notice of the Third Party Claim. Notwithstanding the preceding sentence,
failure of the Indemnified Party to give notice hereunder shall not release the
Indemnifying Party from its obligations under this Section 10, except to the
extent the Indemnifying Party is actually prejudiced by such failure to give
notice. With respect to LVCI Losses, the Shareholders shall be the Indemnifying
Party and LVCI and its directors, officers, employees, representatives, agents
and attorneys shall be the Indemnified Party. With respect to Shareholder
Losses, LVCI shall be the Indemnifying Party and the Shareholders and their
representatives, agents, attorneys, successors and assigns shall be the
Indemnified Party.
10.5 RIGHT TO DEFEND.
(a) The Indemnifying Person shall be entitled to assume and control
the defense of such Third Party Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnified Person
within ten (10) business days of the receipt of such notice from the Indemnified
Person; provided, however, that LVCI shall have the right to
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control the defense to the extent of any Third Party Claim seeking equitable
relief or remedial action. Notwithstanding the foregoing, if there exists, under
applicable standards of professional conduct a conflict between the positions of
such parties on any significant issue that would make it inappropriate in the
reasonable judgment of counsel for the Indemnified Person, for the same counsel
to represent both the Indemnified Person and the Indemnifying Person, the
Indemnified Person shall be entitled to retain its own counsel at the
Indemnifying Person's sole expense, provided that the Indemnifying Person shall
not be required to pay for more than one such counsel for all Indemnified
Persons in connection with such Third Party Claim. If the Indemnifying Person
elects not to defend or otherwise deal with any Third Party Claim which relates
to any Losses indemnified against hereunder, fails to notify the Indemnified
Person of its election as provided herein or contests its obligation to
indemnify the Indemnified Person against such Losses, the Indemnified Person may
defend against, negotiate, settle or otherwise deal with such Third Party Claim,
provided that any payment made by the Indemnified Person with respect to such
Third Party Claim shall not, in and of itself establish that the Third Party
Claim is subject to indemnification or determine the amount of Losses with
respect thereto. If the Indemnified Person defends any Third Party Claim, then
the Indemnifying Person shall reimburse the Indemnified Person for the expenses
of defending such Claim upon submission of periodic bills.
(b) No such Third Party Claim may be settled by the Indemnifying
Person without the prior written consent of the Indemnified Person (which
consent shall not be unreasonably withheld if the Indemnified Person would not
be unduly prejudiced); except that a Third Party Claim which does not involve
allegations of criminal or fraudulent conduct by the Indemnified Person and
seeks only nonexemplary damages against the Indemnified Person may be settled by
the Indemnifying Person if such settlement involves a complete release of the
Indemnified Person from liability. Each Shareholder agrees for purposes hereof
that the persons who previously held a majority of the Company Stock (or their
successors and assigns) are authorized to act as agent for the Shareholders and
shall be permitted to direct the defense of any LVCI Losses and to settle or
otherwise resolve any LVCI Losses without the consent of any other Shareholders
(including, without limitation, resolving any issues relating to recoupment
under Section 10.7), and that any action taken by such persons shall be binding
on all of the Shareholders, provided that such persons shall not be entitled to
defend, settle or resolve any LVCI Losses against a Shareholder arising from any
representation or warranty made by such Shareholder pursuant to Article 5, Part
B.
10.6 COOPERATION. Each of LVCI, the Company, and the Shareholders, and each
of their affiliates, successors and assigns shall cooperate with each other in
the defense of any suit, action, investigation, proceeding or claim by a third
party and, during normal business hours, shall afford each other access to their
books and records and employees relating to such suit, action, investigation,
proceeding or claim and shall furnish each other all such further information
that they have the right and power to furnish as may reasonably be necessary to
defend such suit, action, investigation, proceeding or claim, including, without
limitation,
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reports, studies, correspondence and other documentation relating to
Environmental Protection Agency, Occupational Safety and Health Administration,
and Equal Employment Opportunity Commission matters.
10.7 RECOUPMENT AND DISPUTE RESOLUTION.
(a) LVCI shall have the option of recouping all or any part of any
Losses it may suffer and for which it has a right to indemnification hereunder
by (i) notifying the Shareholders in writing that LVCI intends to reduce the
principal amount outstanding under each of its LVCI Notes; and (ii) reducing the
principal amount outstanding under such LVCI Notes unless the Shareholder, (in
the case of a claim under Article 5, Part B) or persons who previously held a
majority of the Company Stock (or their successors and assigns) acting as agent
for the Shareholders (in the case of any other claims against the Shareholders)
objects to such reduction as provided herein. In the case of any such objection,
LVCI shall pay over to the Escrow Agent under an Escrow Agreement in
substantially the form attached as Exhibit H an amount equal to such claimed
principal reduction. The terms of such Escrow Agreement are hereby approved and
ratified in all respects by the Shareholders and each of the Shareholders agrees
to be bound by its terms. Such amount shall be paid to the Escrow Agent at such
time or times as the principal reduction amount would otherwise have become due
and payable to the Shareholders.
In the case of any Third Party Claim giving rise to Losses, the amount
of which is uncertain, LVCI shall notify the Shareholders of its reasonable good
faith estimate of the amount of Losses it could ultimately expect to pay with
respect to such Claim and pay over to the Escrow Agent such amount at the time
such amount would otherwise be due. The written notice shall specify the
general, factual basis for such claim and the amount by which the LVCI Notes are
to be reduced (or in the case of a Third Party Claim giving rise to Losses, the
amount of which is uncertain, the amount to be placed in Escrow). If the
Shareholders have any objection to the reduction (or in the case of a Third
Party Claim giving rise to Loses, the amount of which is uncertain, the amount
to be placed in Escrow), the Shareholders shall have 30 days to make such
investigation of the claim as Shareholders deem necessary or desirable. For the
purposes of such investigation, LVCI agrees to make available to Shareholders or
their authorized representatives the information relied upon by LVCI to
substantiate the reduction. If LVCI and Shareholders do not agree within such 30
day period, either as to the reduction or the amount to be placed in escrow, the
matter shall be submitted to arbitration in accordance with the arbitration
rules of the American Arbitration Association then in effect. Within such 30 day
period, the parties shall jointly select a single arbitrator (the "Recoupment
Arbitrator"), the selection of which will not be unreasonably withheld by either
party, who shall have substantial experience with respect to the substance of
the matters in dispute and shall have the authority to hold hearings and to
render a decision in accordance with the arbitration rules of the American
Arbitration Association. The Recoupment Arbitrator shall settle any remaining
dispute by selecting the position of the party that the Arbitrator determines,
in its sole discretion, to be the most correct. The determination of the
Recoupment Arbitrator shall be
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set forth in writing, delivered to each of LVCI and the Shareholders and shall
be conclusive and binding on the parties and shall be non-appealable. The party
whose position is not chosen by the Recoupment Arbitrator shall pay all expenses
of the Recoupment Arbitrator.
(b) To the extent LVCI does not recoup, pursuant to Section 10.7(a),
any Loss it may suffer and for which it has a right to indemnification
hereunder, LVCI shall have the option of recouping all or any part of such
Losses by (i) notifying the Shareholders in writing at least 30 days prior to
the making of any Installment Payment hereunder that LVCI intends to reduce the
amount of any Additional Consideration otherwise payable to the Shareholders;
and (ii) reducing the amount of Additional Consideration unless the Shareholder
(in the case of a claim under Article 5, Part B) or persons who previously held
a majority of the Company Stock (or their successors and assigns) acting as
agent for the Shareholders (in the case of any other claims against the
Shareholders) objects to such reduction as provided herein. In the case of any
such objection, LVCI shall pay over to the Escrow Agent an amount equal to such
reduction. In the case of any Third Party Claim giving rise to Losses the amount
of which is uncertain, LVCI shall notify the Shareholders of its reasonable good
faith estimate of the amount of Losses it could ultimately expect to pay with
respect to such Claim and pay over to the Escrow Agent such amount. Such amounts
shall be paid to the Escrow Agent at such time or times as the Installment
Payment(s) would otherwise have become due and payable to the Shareholders. Any
amount of the Additional Consideration not in dispute shall be paid in
accordance with Section 3. The written notice shall specify the general, factual
basis for such claim and the amount the Additional Consideration is to be
reduced (or in the case of a Third Party Claim giving rise to Losses, the amount
of which is uncertain, the amount to be placed in Escrow). If the Shareholders
have any objection to the reduction (or in the case of a Third Party Claim
giving rise to Losses, the amount of which is uncertain, the amount to be placed
in Escrow), the Shareholders shall have 30 days to make such investigation of
the claim as Shareholders deem necessary or desirable. For the purposes of such
investigation, LVCI agrees to make available to Shareholders or their authorized
representatives the information relied upon by LVCI to substantiate the
reduction. If LVCI and Shareholders do not agree within such 30 day period,
either as to the reduction or the amount to be placed in escrow, the matter
shall be submitted to arbitration in accordance with the arbitration rules of
the American Arbitration Association then in effect. Within such 30 day period,
the parties shall jointly select a single arbitrator (the "Recoupment
Arbitrator"), the selection of which will not be unreasonably withheld by either
party, who shall have substantial experience with respect to the substance of
the matters in dispute and shall have the authority to hold hearings and to
render a decision in accordance with the arbitration rules of the American
Arbitration Association. The Recoupment Arbitrator shall settle any remaining
dispute by selecting the position of the party that the Arbitrator determines,
in its sole discretion, to be the most correct. The determination of the
Recoupment Arbitrator shall be set forth in writing, delivered to each of LVCI
and the Shareholders and shall be conclusive and binding on the parties and
shall be non-appealable. The party whose position is not chosen by the
Recoupment Arbitrator shall pay all expenses of the Recoupment Arbitrator.
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10.8 LIMITATIONS ON INDEMNIFICATION.
(a) An indemnifying party shall not have any liability under Section
10.1 hereof unless the aggregate amount of Losses to the indemnified parties
finally determined to arise thereunder exceeds $33,000 (the "Basket") and, in
such event the indemnifying party shall be required to pay the entire amount of
such Losses in excess of the Basket.
(b) The maximum amount of Losses which the Shareholders shall be
liable under Section 10.1 hereof shall not exceed $2,300,000.
(c) Notwithstanding any other provision hereof, no Shareholder shall
be liable for more than his or her pro rata share of LVCI Losses. For purposes
hereof, a Shareholder's pro rata share of LVCI Losses shall equal his or her
percentage ownership of Company Stock immediately prior to the Closing. Each
Shareholder further agrees that the Shareholder shall be responsible for the
Shareholder's share of LVCI Losses, but only his share of LVCI Losses,
regardless of whether LVCI proceeds directly against the Shareholder or
exercised its right of recoupment under Section 10.7. Each Shareholder further
agrees that if any of the other Shareholders have paid more that their share of
LVCI Losses, by reason of LVCI's right of recoupment under Section 10.7 or
otherwise, the other Shareholders will have a right of contribution from such
Shareholder to the point that such Shareholder has paid his share of LVCI
Losses. Each Shareholder further agrees, upon written notice from one or more
other Shareholders to promptly pay to the other Shareholders any amounts due
hereunder. In the event it becomes necessary to enforce the right of
contribution provided hereunder, each Shareholder further agrees that the
Shareholders with a right of contribution shall be entitled to reasonable
attorney's fees and reimbursement of other costs associated with enforcement of
their right of contribution.
(d) The amount of any Loss shall be net of any amounts recovered
(regardless of time) or recoverable with diligent effort by the Indemnified
Party under insurance policies with respect to such Loss and shall be on an
"After-Tax Basis." For purposes hereof "After-Tax Basis" shall mean an amount
which, after subtraction of the amount of all Taxes payable by the recipient
thereof as a result of the receipt or accrual of such payment, and after taking
into account (i) the increase of all Taxes payable by such recipient for all
affected taxable years as a result of the event or occurrence giving rise to
such payment and (ii) the reduction of Taxes payable by the recipient for all
taxable years ending on or before the end of the taxable year in which such
payment is made as a result of the event or occurrence giving rise to such
payment, shall be sufficient as of the date of payment to compensate the
recipient for the event or occurrence giving rise to such payment.
10.9 EXCLUSIVITY OF REMEDIES. LVCI hereby acknowledges and agrees that,
except with respect to claims based upon breach of covenant or agreement (with
respect to which equitable relief would be available as provided herein or in
the Employment Agreements or Noncompetition Agreements), the sole and exclusive
remedy by LVCI and the Company, and
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their respective directors, officers, employees, representatives, agents and
attorneys with respect to any and all claims relating to the subject matters of
this Agreement shall be pursuant to the indemnification provisions set forth in
Article 10.
11. SECURITIES ACT REPRESENTATIONS AND TRANSFER RESTRICTIONS
[This Section intentionally left blank.]
12. GENERAL
12.1 COOPERATION. The Company, the Shareholders and LVCI shall each deliver
or cause to be delivered to the other at such other times and places after the
Closing Date as shall be reasonably agreed to, such additional instruments as
the other may reasonably request for the purpose of carrying out this Agreement.
The Company will cooperate and use its reasonable efforts to have the present
officers, directors and employees thereof cooperate with LVCI on and after the
Closing Date in furnishing information, evidence, testimony and other assistance
in connection with any Tax return filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to all
periods prior to the Closing Date.
12.2 SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES.
(a) COVENANTS AND AGREEMENTS. All covenants and agreements made
hereunder or pursuant hereto or in connection with the transactions contemplated
hereby shall survive the Closing and shall continue in full force and effect
thereafter according to their terms without limit as to duration, except as
otherwise expressly provided herein.
(b) REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained herein shall survive the Closing and shall continue in full
force and effect until August 1, 2000, except that (a) the representations and
warranties contained in Section 5.7 hereof shall survive until the earlier of
(i) the expiration of the applicable periods (including any extensions) of the
respective statutes of limitation applicable to the payment of the Taxes to
which such representations and warranties relate without an assertion of a
deficiency in respect thereof by the applicable taxing authority or (ii) the
completion of the final audit and determination by the applicable taxing
authority and final disposition of any deficiency resulting therefrom, (b) the
representations and warranties contained in Section 5.10 shall survive for a
period of five (5) years following the Closing, (c) the representations and
warranties contained in Section 5.18 shall survive until the expiration of the
applicable period of the statutes of limitations applicable to ERISA matters,
and (d) the representations and warranties contained in Sections 5.1, 5.2, and
5.29 and Sections 6.1, 6.2 and 6.3 shall survive indefinitely.
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(c) CLAIMS MADE PRIOR TO EXPIRATION. No claim under Article 10 for
breach of a representation or warranty shall be made after the representation or
warranty expires. Notwithstanding the foregoing, the termination of a survival
period shall not affect the rights of an Indemnified Party in respect of any
claim made by any party with specificity, in good faith and in writing to the
Indemnifying Party in accordance with Sections 10.4 and 12.8 hereof prior to the
expiration of the applicable survival period.
12.3 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LVCI, and the heirs and legal representatives of the Shareholders.
12.4 ENTIRE AGREEMENT. This Agreement (including the schedules and exhibits
attached hereto) and the documents delivered pursuant hereto constitute the
entire agreement and understanding among the Shareholders and LVCI, and
supersede any prior agreement and understanding relating to the subject matter
of this Agreement. This Agreement, upon execution, constitutes a valid and
binding agreement of the parties hereto enforceable in accordance with its terms
and this Agreement and the Exhibits hereto may be modified or amended only by a
written instrument executed by the Shareholders and LVCI.
12.5 COUNTERPARTS. This Agreement may be executed simultaneously in two (2)
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
12.6 BROKERS AND AGENTS. Except as disclosed on Schedule 12.6, each party
represents and warrants that it employed no broker or agent in connection with
this transaction and agrees to indemnify the other against all loss, cost,
damages or expense arising out of claims for fees or commissions of brokers
employed or alleged to have been employed by such indemnifying party.
12.7 EXPENSES. LVCI will pay the fees, expenses and disbursements of LVCI
and its agents, representatives, accountants and counsel incurred in connection
with the subject matter of this Agreement and any amendments thereto, including
all costs and expenses incurred in the performance and compliance with all
conditions to be performed by LVCI under this Agreement. Except as otherwise
specifically provided in this Agreement, the Shareholders will pay from personal
funds and not from the funds of the Company, any fees, expenses and
disbursements of its agents, representatives, accountants, counsel and other
business advisors incurred in connection with the subject matter of this
Agreement. Except as otherwise stated in Section 9.4(h)(i) hereof, the
Shareholders acknowledge that they, and not the Company or LVCI, will pay all
Taxes due upon receipt of the consideration payable to the Shareholders pursuant
to Section 2 hereof, and all sales, use, real property, transfer, recording,
gains, stock transfer and other similar fees in connection with the transactions
contemplated by this Agreement.
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12.8 NOTICES. All notices of communication required or permitted hereunder
shall be in writing and may be given by (a) depositing the same in United States
mail, addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, (b) delivering the same in person to an
officer or agent of such party, or (c) telecopying the same with electronic
confirmation of receipt.
(i) If to LVCI, addressed to them at:
Laser Vision Centers, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attn: Xxxxxx X. May
with copies to:
Xxxxxxxxxxx Xxxxxxx Xxxxxxxxx & Xxxxxxxx, P.C.
000 Xxxxx Xxxxxxx Xxxxxx, 0xx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxxxx, Esq.
(ii) If to the Shareholders, addressed thereto at the address
set forth on ANNEX I, with copies to such counsel as set forth below.
(iii) If to the Company, addressed to:
Refractive Surgical Resources, Inc.
00000 Xxxxxxx Xxx., Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telecopy No.:
Attn:
with copies to:
Faegre & Xxxxxx, LLP
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxx Xxxx, Esq.
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 12.8 from time to time.
12.9 ARBITRATION. Any unresolved dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three (3) arbitrators in St. Louis, Missouri in
accordance with the rules of the
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American Arbitration Association then in effect. The arbitrators shall not have
the authority to add to, detract from, or modify any provision hereof nor to
award punitive damages to any injured party. A decision by a majority of the
arbitration panel shall be final and binding. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. Except as otherwise
specifically provided in this Agreement, the direct expense of any arbitration
proceeding shall be borne equally by the Shareholders on the one hand, and LVCI
and the Company, on the other hand.
12.10 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Missouri.
12.11 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
12.12 REFORMATION AND SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
12.13 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
12.14 INTERPRETATION. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof. The Schedules and Exhibits referred
to herein shall be construed with and as an integral part of this Agreement.
Disclosure of any fact or item in any Schedule referenced in a particular
section of this Agreement, shall, should the existence of the fact or item or
its content be relevant to any other section of this Agreement, be deemed to be
disclosed with respect to that other section whether or not an explicit
cross-reference appears, provided that the disclosure is sufficient to
reasonably inform LVCI of the information required to be disclosed by such other
section.
[BALANCE OF THIS PAGE INtENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LASER VISION CENTERS, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
-----------------------------------
Title: CEO
----------------------------------
THE SHAREHOLDERS:
/s/ Xxxx X. Xxxxx
----------------------------------------
Xxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxxx
----------------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxxx X. Xxxxxx
/s/ Xx. Xxxxxxx X. Xxxxxxxxx
----------------------------------------
Xx. Xxxxxxx X. Xxxxxxxxx
/s/ Xx. Xxxxx Xxxxxxxx
----------------------------------------
Xx. Xxxxx Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxx Xxxxxxxxxx
-----------------------------------------
Xxxx Xxxxxxxxxx
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ANNEX I
TO THAT CERTAIN STOCK PURCHASE AGREEMENT
DATED AS OF September 1, 1998 BY AND AMONG
LASER VISION CENTERS, INC. AND
THE SHAREHOLDERS OF REFRACTIVE SURGICAL RESOURCES, INC.
SHAREHOLDERS OF REFRACTIVE SURGICAL RESOURCES, INC.:
Percentage
Interest in Note
Payments and
Number of Shares Date(s) of Percent Cash at Additional
Name and Address of Common Stock Acquisition Interest Closing Consideration
---------------- --------------- ----------- -------- ------- -------------
Xxxx X. Xxxxx
[Address] 21,000 05/01/97 21.000 $467,528 0
Xxxxxx X. Xxxxxx
[Address] 21,000 05/01/97 21.000 0 26.5823%
Xxxx X. Xxxxxxx
[Address] 21,000 05/01/97 21.000 0 26.5823%
Xxxxxxxx X. Xxxxxx
[Address] 21,000 05/01/97 21.000 0 26.5823%
Xx. Xxxxxxx X. Xxxxxxxxx
[Address] 6,675 05/01/97 6.675 0 8.4494%
Xx. Xxxxx Xxxxxxxx
[Address] 6,675 05/01/97 6.675 0 8.4494%
Xxxxx X. Xxxxxxxx
[Address] 1,719 05/01/97 1.719 0 2.17584%
Xxxxx X. Xxxxxxx
[Address] 743 05/01/97 0.743 0 .9405%
Xxxx Xxxxxxxxxx
[Address] 188 05/01/97 0.188 0 .2380%
41
