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EXHIBIT 10.25
"CONFIDENTIAL TREATMENT REQUESTED
BY VISION TWENTY-ONE, INC."
ASSET PURCHASE AGREEMENT
DATED: DECEMBER 1, 1996
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TABLE OF CONTENTS
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. AAA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4. ACQUISITION PROPOSAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5. AFFILIATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6. APPLICABLE LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7. ASSUMED CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8. ASSUMED OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9. AUDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11. BUSINESS MANAGEMENT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12. BUSINESS RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13. CASH COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14. CLAIM NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.16. CLOSING DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.17. PROPOSED PURCHASE PRICE ADJUSTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.18. CODE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.19. COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.20. COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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1.21. COMPANY BALANCE SHEET. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.22. COMPANY BALANCE SHEET DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.23. COMPENSATION PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.24. COMPETING BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.25. COMPETITOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.26. CONFIDENTIAL INFORMATION MEMORANDUM. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.27. CONTROLLED GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.28. CORPORATION LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.29. DAMAGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.30. ELECTION PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.31. EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.32. EMPLOYEE POLICIES AND PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.33. EMPLOYMENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.34. ENVIRONMENTAL LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.35. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.36. EXCHANGE ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.37. FBCA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.38. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.39. GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.40. GOVERNMENTAL AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.41. INDEMNIFIED PARTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.42. INDEMNIFYING PARTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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1.43. INDEMNITY NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.44. INITIAL PUBLIC OFFERING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.45. INSURANCE POLICIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.46. INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.47. LEASE ASSIGNMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.48. LEASED PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.49. IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.50. MATERIAL ADVERSE EFFECT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.51. MEDICAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.52. NONMEDICAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.53. NOTE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.54. OPTOMETRIST EMPLOYEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.55. OPTOMETRIST EMPLOYMENT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.56. PAYORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.57. PERMITTED ENCUMBRANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.58. PERSONAL PROPERTY LEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.59. PHYSICIAN EMPLOYEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.60. PHYSICIAN EMPLOYMENT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.61. PRACTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.62. PREPAID ITEMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.63. PROFESSIONAL EMPLOYEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.64. PROPRIETARY RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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1.65. PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.66. PURCHASE PRICE ADJUSTMENT AMOUNT. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.67. REAL PROPERTY LEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.68. REGISTRATION STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.69. RELATED ACQUISITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.70. SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.71. SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.72. SECURITIES ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.73. STATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.74. TANGIBLE PERSONAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.75. TAX RETURNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.76. THIRD PARTY CLAIM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.77. TRANSACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.78. VISION 21 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. PURCHASE AND SALE OF NONMEDICAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1. PURCHASE AND SALE OF NONMEDICAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 7
2.2. NO SALE OF MEDICAL ASSETS; OTHER EXCLUDED ASSETS . . . . . . . . . . . . . . . . . . . 9
2.3. ASSUMPTION OF OBLIGATIONS AND LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 9
2.4. PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5. THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6. PURCHASE PRICE ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7. SUBSEQUENT ACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8. ALLOCATION OF PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . 11
3.1. ORGANIZATION AND GOOD STANDING; QUALIFICATION. . . . . . . . . . . . . . . . . . . . . 12
3.2. CONTINUITY OF BUSINESS ENTERPRISE. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3. AUTHORIZATION AND VALIDITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4. COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5. CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7. LIABILITIES AND OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.8. EMPLOYEE MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
A. CASH COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
B. COMPENSATION PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
C. EMPLOYMENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
D. EMPLOYEE POLICIES AND PROCEDURES. . . . . . . . . . . . . . . . . . . . . . 14
E. UNWRITTEN AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
F. LABOR COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
G. UNIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
H. ALIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.9. EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
A. IDENTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
B. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
C. EXAMINATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
D. PROHIBITED TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 16
E. CLAIMS AND LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
F. QUALIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
G. FUNDING STATUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
H. EXCISE TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
I. MULTIEMPLOYER PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
J. PENSION BENEFIT GUARANTY CORPORATION. . . . . . . . . . . . . . . . . . . . 16
K. RETIREES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
L. OTHER COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.10. ABSENCE OF CERTAIN CHANGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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3.11. TITLE; LEASED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
A. REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
B. PERSONAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
C. LEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.12. COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
A. COMMITMENTS; DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
B. NO CANCELLATION OR TERMINATION OF
COMMITMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.13. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.14. PROPRIETARY RIGHTS AND INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.15. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
A. FILING OF TAX RETURNS. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
B. PAYMENT OF TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
C. NO PENDING DEFICIENCIES, DELINQUENCIES, ASSESSMENTS
OR AUDITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
D. NO EXTENSION OF LIMITATION PERIOD. . . . . . . . . . . . . . . . . . . . . 23
E. ALL WITHHOLDING REQUIREMENTS SATISFIED. . . . . . . . . . . . . . . . . . . 23
F. FOREIGN PERSON. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.16. COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.17. FINDER'S FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.18. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.19. CONDITION OF FIXED ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.20. DISTRIBUTIONS AND REPURCHASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.21. BANKING RELATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.22. OWNERSHIP INTERESTS OF INTERESTED PERSONS; AFFILIATIONS. . . . . . . . . . . . . . . . 24
3.23. INVESTMENTS IN COMPETITORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.24. ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
A. ENVIRONMENTAL LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
B. PERMITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
C. SUPERFUND LIST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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3.25. CERTAIN PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.26. MEDICAL WASTE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.27. MEDICARE AND MEDICAID PROGRAMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.28. FRAUD AND ABUSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.29. PAYORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.30. PROHIBITIONS ON THE CORPORATE PRACTICE OF MEDICINE. . . . . . . . . . . . . . . . . . 27
3.31. ACQUISITION PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.32. CONSISTENT TREATMENT OF EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.33. ACCOUNTS RECEIVABLE/PAYABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.34. PROJECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.35. INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.36. TANGIBLE PERSONAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.37. LEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.38. CONTRACT RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.39. PREPAID ITEMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.40. COMPLETENESS OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.41. DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4. REPRESENTATIONS AND WARRANTIES OF THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . 30
4.1. VALIDITY; PHYSICIAN CAPACITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.2. NO VIOLATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.3. CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.4. CERTAIN PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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4.5. FINDER'S FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.6. OWNERSHIP OF INTERESTED PERSONS; AFFILIATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.7. INVESTMENTS IN COMPETITORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.8. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.9. PERMITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.10. STAFF PRIVILEGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.11. INTENTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5. REPRESENTATIONS AND WARRANTIES OF VISION 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.1. ORGANIZATION AND GOOD STANDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.2. CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.3. CORPORATE RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.4. AUTHORIZATION AND VALIDITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.5. COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.6. CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.7. FINDER'S FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.8. CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.9. VISION 21 FINANCIAL STATEMENTS; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.10. LIABILITIES AND OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.11. COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.12. INSOLVENCY PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.13. EMPLOYMENT OF COMPANY'S EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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6. SECURITIES LAW MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.1. INVESTMENT REPRESENTATIONS AND COVENANTS OF PHYSICIAN. . . . . . . . . . . . . . . . . 35
6.2. CURRENT PUBLIC INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7. COVENANTS OF THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.1. CONSUMMATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.2. BUSINESS OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.3. ACCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4. NOTIFICATION OF CERTAIN MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.5. APPROVALS OF THIRD PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.6. EMPLOYEE MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.7. CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.8. CAPITAL ASSETS; PAYMENTS OF LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . 39
7.9. MORTGAGES, LIENS AND GUARANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.10. ACQUISITION PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.11. DISTRIBUTIONS AND REPURCHASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.12. REQUIREMENTS TO EFFECT THE TRANSACTION. . . . . . . . . . . . . . . . . . . . . . . . 40
7.13. PHYSICIAN ACCOUNTS PAYABLE AND PHYSICIAN RETAINED EQUITY. . . . . . . . . . . . . . . 40
7.14. PHYSICIAN EMPLOYMENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.15. OPTOMETRIST EMPLOYMENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.16 TERMINATION OF RETIREMENT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.17. DELIVERY OF SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.18. ASSIGNMENT OF FEES FOR MEDICAL AND OPTOMETRY SERVICES. . . . . . . . . . . . . . . . . 41
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8. COVENANTS OF VISION 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.1. CONSUMMATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.2. NOTIFICATION OF CERTAIN MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.3. LICENSES AND PERMITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.4. RELEASE OF PHYSICIAN FROM PRACTICE LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . 42
9. COVENANTS OF VISION 21, THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.1. FILINGS; OTHER ACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2. AMENDMENT OF SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.3. FEES AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.4. RELEASE OF PHYSICIAN FROM PRACTICE LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . 45
10. CONDITIONS PRECEDENT OF VISION 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.1. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.2. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.3. LEGAL OPINION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.4. PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.5. NO MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.6. GOVERNMENT APPROVALS AND REQUIRED CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.7. CERTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.8. CLOSING DELIVERIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.9. DUE DILIGENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.10. FINANCIAL AUDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.11. MEDICARE AUDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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10.12. EXEMPTION UNDER STATE SECURITIES LAWS. . . . . . . . . . . . . . . . . . . . . . . . . 46
10.13. ASSIGNMENT OF PROFESSIONAL EMPLOYEES' RIGHTS IN ACCOUNTS RECEIVABLE. . . . . . . . . . 46
11. CONDITIONS PRECEDENT OF THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.2. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.3. LEGAL OPINIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.4. PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.5. GOVERNMENT APPROVALS AND REQUIRED CONSENTS. . . . . . . . . . . . . . . . . . . . . . 47
11.6. CLOSING DELIVERIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.7. NO CHANGE IN VOTING OR OWNERSHIP CONTROL. . . . . . . . . . . . . . . . . . . . . . . 47
11.8. NO MATERIAL ADVERSE CHANGE; DELIVERY OF AMENDED CONFIDENTIAL
INFORMATION MEMORANDUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12. CLOSING DELIVERIES; ESCROW OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.1. DELIVERIES OF THE COMPANY AND THE PHYSICIAN. . . . . . . . . . . . . . . . . . . . . . 47
12.2. DELIVERIES OF VISION 21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.3. RELEASE OF ESCROW MATERIALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13. POST CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.1. FURTHER INSTRUMENTS OF TRANSFER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.2. PRACTICE ADVISORY COUNCIL; LOCAL ADVISORY COUNCIL; NATIONAL APPEALS
COUNCIL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.1. INDEMNIFICATION BY THE COMPANY AND PHYSICIAN. . . . . . . . . . . . . . . . . . . . . 52
14.2. INDEMNIFICATION BY VISION 21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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14.3. CONDITIONS OF INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.4. REMEDIES NOT EXCLUSIVE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.5. COSTS, EXPENSES AND LEGAL FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.6. INDEMNIFICATION LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.7. TAX BENEFITS; INSURANCE PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.8. PAYMENT OF INDEMNIFICATION OBLIGATION. . . . . . . . . . . . . . . . . . . . . . . . . 56
15. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
15.1. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
15.2. EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16. PHYSICIAN EMPLOYMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.1. PHYSICIAN EMPLOYMENT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.2. SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
17. NON-COMPETITION AND CONFIDENTIALITY COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
17.1. PHYSICIAN AND COMPANY NON-COMPETITION COVENANT. . . . . . . . . . . . . . . . . . . . 59
17.2. PHYSICIAN AND COMPANY CONFIDENTIALITY COVENANT. . . . . . . . . . . . . . . . . . . . 61
17.3. SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
18. DISPUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
18.1. MEDIATION AND ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
19. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
19.1. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
19.2. REMEDIES NOT EXCLUSIVE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
19.3. PARTIES BOUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
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19.4. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
19.5. CHOICE OF LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
19.6. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . . 64
19.7. CONFIDENTIALITY AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
19.8. REFORMATION CLAUSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
19.9. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
19.10. ATTORNEYS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
19.11. FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
19.12. ANNOUNCEMENTS AND PRESS RELEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
19.13. NO TAX REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
19.14. NO RIGHTS AS STOCKHOLDER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
19.15. MULTIPLE COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
19.16. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
19.17. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
19.18. FORM OF TRANSACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), dated effective as
of December 1, 1996, is by and among XXXXXXXXX, XXXXXXXXX & XXXXXXX
OPHTHALMOLOGY ASSOCIATES, P.A., a Minnesota professional association (the
"Company"), XXXXXXX X. XXXXXXXXX, M.D., XXXXXX X. XXXXXXXXX, M.D., and XXXXX X.
XXXXXXX, M.D., (collectively, the "Physician"), and VISION 21, INC., a Florida
corporation ("Vision 21").
R E C I T A L S
A. Physician is a physician licensed to practice medicine in
the State (as defined herein) and currently conducts an ophthalmology practice
through the Company and through optometrist employees currently conducts an
optometry practice through the Company.
B. Physician owns all of the issued and outstanding shares of
capital stock of the Company.
C. Vision 21 provides business management services and
facilities for eye care professionals and related businesses.
D. The Company desires to sell, assign and transfer all of its
assets to the extent permitted by law and Vision 21 desires to purchase, assume
and acquire such assets and assume certain liabilities of the Company in
exchange for capital stock of Vision 21 and other consideration, all as more
specifically provided herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
1.1. AAA. The term "AAA" shall mean the American
Arbitration Association.
1.2. Accountants. The term "Accountants" shall mean
the accounting firm for Vision 21.
1.3. Accounts Receivable. The term "Accounts
Receivable" shall have the meaning set forth in Section 2.1(b).
1.4. Acquisition Proposal. The term "Acquisition
Proposal" shall have the meaning set forth in Section 3.31.
1
16
1.5. Affiliate. The term "Affiliate" with respect to
any person or entity shall mean a person or entity that directly or indirectly
through one or more intermediaries, controls, or is controlled by or is under
common control with, such person or entity.
1.6. Applicable Laws. The term "Applicable Laws"
shall have the meaning set forth in Section 19.8.
1.7. Assumed Contracts. The term "Assumed Contracts"
shall have the meaning set forth in Section 2.1(e).
1.8. Assumed Obligations. The term "Assumed
Obligations" shall have the meaning set forth in Section 2.3.
1.9. Audit. The term "Audit" shall have the meaning
set forth in Section 3.6.
1.10. Business. The term "Business" shall have the
meaning set forth in Section 19.1(b)(i).
1.11. Business Management Agreement. The term
"Business Management Agreement" shall mean the Business Management Agreement
entered into between the Company and Vision 21 at the Closing.
1.12. Business Records. The term "Business Records"
shall have the meaning set forth in Section 2.1(g).
1.13. Cash Compensation. The term "Cash Compensation"
shall have the meaning set forth in Section 3.8(a).
1.14. Claim Notice. The term "Claim Notice" shall have
the meaning set forth in Section 14.3(a).
1.15. Closing. The term "Closing" shall mean the
consummation of the transactions contemplated by this Agreement.
1.16. Closing Date. The term "Closing Date" shall mean
December 1, 1996, or such other date as mutually agreed upon by the parties.
1.17. Proposed Purchase Price Adjustment. The term
"Proposed Purchase Price Adjustment" shall have the meaning set forth in
Section 2.6(b).
1.18. Code. The term "Code" shall mean the Internal
Revenue Code of 1986, as amended.
2
17
1.19. Commitments. The term "Commitments" shall have
the meaning set forth in Section 3.12(a).
1.20. Common Stock. The term "Common Stock" or "Vision
21 Common Stock" shall mean the common stock, par value $.01 per share, of
Vision 21.
1.21. Company Balance Sheet. The term "Company Balance
Sheet" shall have the meaning set forth in Section 3.6.
1.22. Company Balance Sheet Date. The term "Company
Balance Sheet Date" shall have the meaning set forth in Section 3.6.
1.23. Compensation Plans. The term "Compensation
Plans" shall have the meaning set forth in Section 3.8(b).
1.24. Competing Business. The term "Competing
Business" shall have the meaning set forth in Section 17.1(b).
1.25. Competitor. The term "Competitor" shall mean any
person or entity which, individually or jointly with others, whether for its
own account or for that of any other person or entity, owns, or holds any
ownership or voting interest in any person or entity engaged in, the practice
of ophthalmology, the practice of optometry, the operation of out patient eye
surgical facilities, the operation of refractive surgery centers and the
operation of optical shops; provided, however, that such term shall not include
any Affiliate of Vision 21 or any entity with which Vision 21 has an agreement
similar to the Business Management Agreement in effect.
1.26. Confidential Information Memorandum. The term
"Confidential Information Memorandum" shall mean that certain disclosure
memorandum distributed by Vision 21 to the Company and Physician dated as of
September 27, 1996, and any amendments or revisions thereto.
1.27. Controlled Group. The term "Controlled Group"
shall have the meaning set forth in Section 3.9(f).
1.28. Corporation Law. The term "Corporation Law"
shall mean the statutes, regulations and laws governing business corporations
and professional associations in the State.
1.29. Damages. The term "Damages" shall have the
meaning set forth in Section 14.1.
1.30. Election Period. The term "Election Period"
shall have the meaning set forth in Section 16.3(a).
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1.31. Employee Benefit Plans. The term "Employee
Benefit Plans" shall have the meaning set forth in Section 3.9(a).
1.32. Employee Policies and Procedures. The term
"Employee Policies and Procedures" shall have the meaning set forth in Section
3.8(d).
1.33. Employment Agreements. The term "Employment
Agreements" shall have the meaning set forth in Section 3.8(c).
1.34. Environmental Laws. The term "Environmental
Laws" shall have the meaning set forth in Section 3.24(a).
1.35. ERISA. The term "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
1.36. Exchange Act. The term "Exchange Act" shall mean
the Securities Exchange Act of 1934, as amended.
1.37. FBCA. The term "FBCA" shall mean the Florida
Business Corporation Act.
1.38. Financial Statements. The term "Financial
Statements" shall have the meaning set forth in Section 3.6.
1.39. GAAP. The term "GAAP" shall mean generally
accepted accounting principles, applied on a consistent basis with prior
periods, set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity or other practices and procedures as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of the determination.
1.40. Governmental Authority. The term "Governmental
Authority" shall mean any national, state, provincial, local or tribunal
governmental, judicial or administrative authority or agency.
1.41. Indemnified Party. The term "Indemnified Party"
shall have the meaning set forth in Section 14.3(a).
1.42. Indemnifying Party. The term "Indemnifying
Party" shall have the meaning set forth in Section 14.3(a).
1.43. Indemnity Notice. The term "Indemnity Notice"
shall have the meaning set forth in Section 14.3(d).
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1.44. Initial Public Offering. The term "Initial
Public Offering" shall mean the potential initial underwritten public offering
of Vision 21 Common Stock contemplated by Vision 21.
1.45. Insurance Policies. The term "Insurance
Policies" shall have the meaning set forth in Section 3.13.
1.46. Inventory. The term "Inventory" shall have the
meaning set forth in Section 2.1(a).
1.47. Lease Assignments. The term "Lease Assignments"
shall have the meaning set forth in Section 11.3(j).
1.48. Leased Property. The term "Leased Property"
shall have the meaning set forth in Section 2.1(d).
1.49. IRS. The term "IRS" shall mean the Internal
Revenue Service.
1.50. Material Adverse Effect. The term "Material
Adverse Effect" shall mean a material adverse effect on the Nonmedical Assets
and the Company's business, operations, condition (financial or otherwise) or
results of operations, taken as a whole, considering all relevant facts and
circumstances.
1.51. Medical Assets. The term "Medical Assets" shall
have the meaning set forth in Section 2.2.
1.52. Nonmedical Assets. The term "Nonmedical Assets"
shall mean all of the assets of the Company except for the Medical Assets, as
such assets are more fully described in Section 2.1.
1.53. Note. The term "Note" shall mean the
subordinated promissory note, to be delivered to the Physician at the Closing.
1.54. Optometrist Employee. The term "Optometrist
Employee" shall mean those licensed optometrists who are employees of the
Company, but are not shareholders.
1.55. Optometrist Employment Agreement. The term
"Optometrist Employment Agreement" shall mean the Optometrist Employment
Agreement to be executed between any Optometrist Employee and the Company.
1.56. Payors. The term "Payors" shall have the meaning
set forth in Section 3.27.
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1.57. Permitted Encumbrances. The term "Permitted
Encumbrances" shall have the meaning set forth in Section 3.11(b).
1.58. Personal Property Leases. The term "Personal
Property Leases" shall have the meaning set forth in Section 2.1(c).
1.59. Physician Employee. The term "Physician
Employee" shall mean those licensed physicians who are employees of the
Company, but are not shareholders.
1.60. Physician Employment Agreement. The term
"Physician Employment Agreement" shall mean the Physician Employment Agreement
to be executed between Physician and the Company, and between any Physician
Employee and the Company.
1.61. Practice. The term "Practice" shall mean the
ophthalmology, optometry and all other vision related health-care practices
conducted from time to time by the Company prior to and after the Closing Date.
1.62. Prepaid Items. The term "Prepaid Items" shall
have the meaning set forth in Section 2.1(m).
1.63. Professional Employee. The term "Professional
Employee" shall mean any Physician Employee or Optometrist Employee.
1.64. Proprietary Rights. The term "Proprietary
Rights" shall have the meaning set forth in Section 3.14.
1.65. Purchase Price. The term "Purchase Price" shall
mean the consideration set forth in Section 2.4 of this Agreement.
1.66. Purchase Price Adjustment Amount. The term
"Purchase Price Adjustment Amount" shall have the meaning set forth in Section
2.6(c).
1.67. Real Property Leases. The term "Real Property
Leases" shall have the meaning set forth in Section 2.1(d).
1.68. Registration Statement. The term "Registration
Statement" shall have the meaning set forth in Section 9.1.
1.69. Related Acquisitions. The term "Related
Acquisitions" shall mean the pending acquisitions by Vision 21 with third
parties which are expected to be completed simultaneously with this
Transaction.
1.70. SEC. The term "SEC" shall mean the Securities
and Exchange Commission.
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1.71. Securities. The term "Securities" shall mean the
Note and the shares of Vision 21 Common Stock which shall be delivered to the
Company under the terms of the Note.
1.72. Securities Act. The term "Securities Act" shall
mean the Securities Act of 1933, as amended.
1.73. State. The term "State" shall mean the State in
which the Company is incorporated.
1.74. Tangible Personal Property. The term "Tangible
Personal Property" shall have the meaning set forth in Section 2.1(f).
1.75. Tax Returns. The term "Tax Returns" shall have
the meaning set forth in Section 3.15(a).
1.76. Third Party Claim. The term "Third Party Claim"
shall have the meaning set forth in Section 14.3(a).
1.77. Transaction. The term "Transaction" shall mean
the purchase and sale of the Nonmedical Assets and the assumption of the
Assumed Obligations pursuant to this Agreement.
1.78. Vision 21 Financial Statements. The term "Vision
21 Financial Statements" shall have the meaning set forth in Section 5.8.
2. PURCHASE AND SALE OF NONMEDICAL ASSETS.
2.1. Purchase and Sale of Nonmedical Assets. Subject
to the terms and conditions herein set forth, and in reliance upon the
representations and warranties set forth herein, the Company agrees to sell,
convey, assign, transfer and deliver to Vision 21, and Vision 21 agrees to
purchase, assume, accept and acquire, the assets consisting of all the assets
(other than the Medical Assets specified in Section 2.2 hereof) owned by the
Company as of the Closing Date, of every kind, character and description,
whether tangible, real, personal, or mixed, and wheresoever located, whether
carried on the books of the Company or not carried on the books of the Company
due to having been expended, fully depreciated, or otherwise (the "Nonmedical
Assets"), including without limitation the following (except to the extent that
any of the following are specifically enumerated as Medical Assets in Section
2.2 hereof) to the extent permitted by applicable law:
(a) All of the inventory owned by the Company ("Inventory");
(b) All of the accounts receivable or other rights to receive
payment owing to the Company ("Accounts Receivable");
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(c) All of the Company's rights in, to and under all leases of
supplies, instruments, equipment, furniture, machinery and other items of
tangible personal property ("Personal Property Leases"), including, without
limitation, the Personal Property Leases described on Schedule 2.1(c);
(d) All of the Company's rights as a lessee in, to and under
all real property lease agreements (such real property lease agreements are
hereinafter referred to as "Real Property Leases" and the parcels of real
property in which the Company has a leasehold interest and that are subject to
the Real Property Leases are hereinafter referred to as "Leased Property"),
including, without limitation, estates created by, and rights conferred under,
the Real Property Leases described on Schedule 2.1(d), and any and all estates,
rights, titles and interests in, to and under all warehouses, storage
facilities, buildings, works, structures, fixtures, landings, constructions in
progress, improvements, betterments, installations, and additions constructed
or located on or affixed to the Leased Property;
(e) All of the Company's rights in, to and under all contracts,
agreements, leases, insurance policies, purchase orders and commitments (the
"Assumed Contracts"), including, without limitation, the Assumed Contracts
described on Schedule 2.1(e);
(f) All tangible personal property (including supplies,
instruments, equipment, furniture and machinery) owned by the Company
("Tangible Personal Property"), including, without limitation, the Tangible
Personal Property described on Schedule 2.1(f);
(g) All books and records of the Company, including, without
limitation, all credit records, payroll records, computer records, computer
programs, contracts, agreements, operating manuals, schedules of assets,
correspondence, books of account, files, papers, books and all other public and
confidential business records (together the "Business Records"), whether such
Business Records are in hard copy form or are electronically or magnetically
stored;
(h) All franchises, licenses, permits, certificates, approvals
and other governmental authorizations necessary to own and operate any of the
other Nonmedical Assets, a complete and correct list of which is set forth on
Schedule 2.1(h);
(i) All (i) United States and foreign patents, patent
applications, trademarks, trademark applications and registrations, service
marks, service xxxx applications and registrations, copyrights, copyright
applications and registrations and trade names of the Company; (ii) proprietary
data and technical, manufacturing know-how and information (and all materials
embodying such information) of the Company; (iii) developments, discoveries,
inventions, ideas and trade secrets of the Company; and (iv) rights to xxx for
past infringement;
(j) All of the Company's right, title and interest in, to and
under all telephone numbers used in connection with the Practice, including all
extensions thereto;
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(k) All rights in, to and under all representations,
warranties, covenants and guaranties made or provided by third parties to or
for the benefit of the Company with respect to any of the other Nonmedical
Assets;
(m) All cash in registers or xxxxx cash drawers (which shall on
the Closing Date be at least ninety percent (90%) of the average daily cash
balance held in such locations in the twelve (12) month period preceding the
Closing Date); and
(n) All of the Company's prepaid expenses, prepaid insurance,
deposits and other similar items ("Prepaid Items").
If and to the extent the assignment of any personal property lease,
real property lease, contract, agreement, purchase order, work order,
commitment, license, permit, certificate or approval listed on the foregoing
Schedules shall require the consent of another party thereto, then (i) such
personal property lease, real property lease, contract, agreement, purchase
order, work order, commitment, license, permit, certificate or approval shall
constitute a Personal Property Lease, Real Property Lease, Assumed Contract or
License, as the case may be, only upon and subject to receipt of such consent;
(ii) such personal property lease, contract, agreement, purchase order, work
order, commitment, license, permit, certificate or approval shall not be a
Personal Property Lease, Real Property Lease, Assumed Contract or License, as
the case may be, if and for so long as the attempted assignment would
constitute a breach thereof; and (iii) the Company shall cooperate fully with
Vision 21 (or Vision 21's successor-in-interest) in seeking such consent or
reasonable arrangement designed to provide to Vision 21 (or such
successor-in-interest) the benefits, claim or rights arising thereunder.
2.2. No Sale of Medical Assets; Other Excluded Assets.
The Company shall not sell, convey, assign, transfer or deliver to Vision 21,
and Vision 21 shall not be obligated to purchase, accept or acquire (or make
any payments or otherwise discharge any liability or obligation of the Company
with respect to), the Medical Assets of the Company as set forth on Schedule
2.2 and those other assets listed on the other Schedules attached hereto which
by law cannot be acquired by Vision 21 which shall also be deemed to include
(a) life insurance policies covering the life of any employee of the Company,
and (b) personal effects listed on Schedule 2.2(b); and (c) cash and cash
equivalents in banks, certificates of deposit, commercial paper and securities
owned by the Company (but excluding cash held in registers or xxxxx cash
drawers on the Closing Date); and (d) those assets of which the entire costs of
maintenance are deemed to be "Practice Expenses" as defined in the Business
Management Agreement.
2.3. Assumption of Obligations and Liabilities. At
the Closing, Vision 21 shall assume and agree to pay or perform, promptly as
they become due, only those obligations and liabilities of the Company
expressly set forth on Schedule 2.3 (the "Assumed Obligations") which shall
exclude the Business Management Agreement. Except for the Assumed Obligations,
Vision 21 shall not assume or be deemed to have assumed and shall not be
responsible for any other obligation or liability of the Company, direct or
indirect, known or unknown, absolute or
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contingent, including without limitation (i) any and all obligations regarding
any foreign, Federal, state or local income, sales, use, franchise or other tax
liabilities, (ii) any and all obligations or liabilities relating to any fees
or expenses of the Company's or Physicians' counsel, accountants or other
experts incident to the negotiation and preparation of any of the documents
contemplated herein and consummation of the transactions contemplated thereby,
and (iii) any and all liabilities relating to or arising from the provision of
professional medical or optometric services (or failure to provide professional
medical or optometric services) prior to the Closing Date.
2.4. Purchase Price. Vision 21 agrees that, subject
to the terms and conditions of this Agreement, and in full consideration for
the aforesaid sale, transfer, conveyance, assignment and delivery of the
Nonmedical Assets of the Company to Vision 21, and the acceptance by Vision 21
of such Nonmedical Assets and the assumption of the Assumed Obligations of the
Company by Vision 21, Vision 21 shall deliver to the Company at the Closing the
consideration (the "Purchase Price") set forth in Schedule 2.4A which shall be
paid pursuant to a Note in substantially the form attached hereto and made a
part hereof as Exhibit 2.4B.
2.5. The Closing. The Closing shall take place on the
Closing Date at the offices of Xxxxxxxx, Loop & Xxxxxxxx, 000 X. Xxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000 or at such other location in the
State as the parties shall mutually agree.
2.6. Purchase Price Adjustments.
(a) The Purchase Price shall be subject to
adjustment to the extent that Current Assets (as defined herein) or Current
Liabilities Assumed (as defined herein) materially differ from the amounts
customarily arising in the ordinary course of business of the Company as of
November 30, 1996. The term "Current Assets" shall mean xxxxx cash, Accounts
Receivable, prepaid expenses, Inventory, supplies and other current assets
(excluding cash in banks, certificates of deposit, other cash equivalents,
current portion of capital leases and prepaid Income Taxes). The term "Current
Liabilities Assumed" shall mean the audited balances as of November 30, 1996 of
trade accounts payable, accrued payroll, accrued payroll taxes, accrued
benefits, and other current liabilities (excluding notes payable, current
portion of capital leases and long-term debt and income and franchise taxes and
accrued shareholder expenses). The adjustment shall be settled in cash (which
shall be set-off from moneys due the Company pursuant to the Business
Management Agreement) or Vision 21 Common Stock at Vision 21's option. The
parties also agree that to the extent the adjustments materially impact the
goodwill created by the transaction, there shall be an adjustment for the
related impact of net income created by the change in amortization of such
goodwill and the Purchase Price shall be increased or reduced to reflect the
impact on net income settled in cash or Vision 21 Common Stock at Vision 21's
option.
(b) Within sixty (60) days following the Closing
Date, Vision 21 shall present to the Physician its Purchase Price adjustment
(the "Proposed Purchase Price Adjustment") calculated in accordance with
Section 2.6(a) hereof. The Physician shall, within
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thirty (30) days after the delivery by Vision 21 of the Proposed Purchase Price
Adjustment, complete his review thereof. In the event that the Physician
believes that the Proposed Purchase Price Adjustment has not been prepared on
the basis set forth in Section 2.6(a) or otherwise contests any item set forth
therein, the Physician shall, on or before the last day of such 30 day period,
so object to Vision 21 in writing, setting forth a specific description of the
nature of the objection and the corresponding adjustments the Physician
believes should be made. If no objection is received by Vision 21 on or before
the last day of such 30 day period, then the Proposed Purchase Price Adjustment
delivered by Vision 21 shall be final. If an objection has been made and
Vision 21 and the Physician are unable to resolve all of their disagreements
with respect to the proposed adjustments within 15 days following the delivery
of the Physician's objection, the dispute shall be submitted to arbitration as
provided in Section 18.1 except that the arbitrator shall be instructed to
deliver his determination of the dispute to the parties no later than 30 days
after the arbitration hearing. Vision 21 shall provide to the Physician and
his accountants full access to all relevant books, records and work papers
utilized in preparing the Proposed Purchase Price Adjustment.
2.7. Subsequent Actions. If, at any time after the
Closing Date, Vision 21 shall determine or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in Vision 21 its
right, title or interest in, to or under any of the rights, properties or
assets of the Company acquired or to be acquired by Vision 21 as a result of,
or in connection with, the Transaction, or otherwise to carry out this
Agreement, the officers and directors of Vision 21 shall, at the sole cost and
expense of Vision 21, be authorized to execute and deliver, in the name and on
behalf of the Company, such deeds, bills of sale, assignments and assurances,
and to take and do, in the name and on behalf of the Company, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in Vision 21 or otherwise to carry out this Agreement.
2.8. Allocation of Purchase Price. The Purchase Price
shall be allocated among the Nonmedical Assets as set forth on Schedule 2.8.
Each of Vision 21, the Company and the Physician covenants and agrees that he
or it shall not take a position that is in any way inconsistent with the terms
of this Section 2.8 on any income tax return, before any governmental agency
charged with the collection of any income tax or in any judicial proceeding.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PHYSICIAN. The Company and the Physician, jointly and severally, represent and
warrant to Vision 21 that the following are true and correct as of the date
hereof, and shall be true and correct through the Closing Date as if made on
that date; when used in this Section 3, the term "best knowledge" shall mean in
the case of the Company the best knowledge of those individuals listed on
Schedule 3:
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3.1. Organization and Good Standing; Qualification.
The Company is a professional association duly organized, validly existing and
in good standing under the laws of the State, with all requisite corporate
power and authority to carry on the business in which it is engaged, to own the
properties it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Company is not duly qualified and
licensed to do business in any other jurisdiction. The Company does not have
any assets, employees or offices in any state other than the State. Except as
set forth on Schedule 3.1, neither the Company, the Physician nor any
Professional Employee owns, directly or indirectly, any of the capital stock of
any other corporation or any equity, profit sharing, participation or other
interest in any corporation, partnership, joint venture or other entity that is
engaged in a business that is a Competitor.
3.2. Continuity of Business Enterprise. Except as set
forth on Schedule 3.2, and except as contemplated by this Agreement, there has
not been any sale, distribution or spin-off of significant assets of the
Company or any of its Affiliates other than in the ordinary course of business
within the two (2) year period preceding the date of this Agreement.
3.3. Authorization and Validity. The execution,
delivery and performance by the Company of this Agreement and the other
agreements contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby to be performed by the Company, have been duly
authorized by the Company. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies. The
Company has obtained, in accordance with applicable law and its Articles or
Certificate of Incorporation and Bylaws, the approval of its stockholders
necessary for the consummation of the transactions contemplated hereby.
3.4. Compliance. Except as disclosed on Schedule 3.4,
the execution and delivery of the documents contemplated hereunder and the
consummation of the transactions contemplated thereby by the Company will not
(i) violate any provision of the Company's organizational documents, (ii)
violate any material provision of or result in the breach of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation under, any mortgage, lien, lease, contract,
license, instrument or any other agreement to which the Company is a party,
(iii) result in the creation or imposition of any material lien, charge,
pledge, security interest or other material encumbrance upon any property of
the Company or (iv) violate or conflict with any order, award, judgment or
decree or other material restriction or to the best of the Company's knowledge
violate or conflict with any law, ordinance or regulation to which the Company
or its property is subject.
3.5. Consents. No consent, approval, order or
authorization of or registration, declaration, or filing with, any Governmental
Authority or other person is required in connection with the execution and
delivery of the documents contemplated herein by the
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Company or the consummation by such party of the transactions contemplated
thereby, except for those consents or approvals set forth on Schedule 3.5.
3.6. Financial Statements. The Company has furnished
to Vision 21 its unaudited balance sheet and related unaudited statements of
income, retained earnings and cash flows for its prior three (3) full fiscal
years, and its unaudited interim balance sheet for the fiscal period ended
September 30, 1996 (the "Company Balance Sheet", and the date thereof shall be
referred to as the "Company Balance Sheet Date") and related unaudited
statements of income, retained earnings and cash flows for the twelve months
then ended (all collectively, with the related notes thereto, the "Financial
Statements"). The Financial Statements fairly present the financial condition
and results of operations of the Company as of the dates and for the periods
indicated except as otherwise indicated in the Financial Statements. The
Company and the Physician expressly warrant that they will have prior to the
Closing fairly, accurately and completely provided all necessary information
requested in or relevant to the preparation of the audit to be conducted by the
Accountants or their designees prior to Closing (the "Audit"). The cost of the
Audit shall be paid by Vision 21 and all materials prepared by Vision 21's
Accountants in connection with the Audit shall be solely the property of Vision
21.
3.7. Liabilities and Obligations. Except as set forth
on Schedule 3.7, the Financial Statements reflect all liabilities of the
Company, accrued, contingent or otherwise that would be required to be
reflected thereon, or in the notes thereto, prepared in accordance with GAAP,
except for liabilities and obligations incurred in the ordinary course of
business since the Company Balance Sheet Date. Except as set forth in the
Financial Statements or on Schedule 3.7, the Company is not liable upon or with
respect to, or obligated in any other way to provide funds in respect of or to
guarantee or assume in any manner, any debt, obligation or dividend of any
person, corporation, association, partnership, joint venture, trust or other
entity, and the Company does not know of any valid basis for the assertion of
any other claims or liabilities of any nature or in any amount.
3.8. Employee Matters.
a. Cash Compensation. Schedule 3.8(a)
contains a complete and accurate list of the names, titles and annual cash
compensation as of the Closing Date, including without limitation wages,
salaries, bonuses (discretionary and formula) and other cash compensation (the
"Cash Compensation") of all employees of the Company. In addition, Schedule
3.8(a) contains a complete and accurate description of (i) all increases in
Cash Compensation of employees of the Company during the current fiscal year
and the immediately preceding fiscal year and (ii) any promised increases in
Cash Compensation of employees of the Company that have not yet been effected.
b. Compensation Plans. Schedule 3.8(b)
contains a complete and accurate list of all compensation plans, arrangements
or practices (the "Compensation Plans") sponsored by the Company or to which
the Company contributes on behalf of its employees, other than Employment
Agreements listed on Schedule 3.8(c) and Employee Benefit
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Plans listed on Schedule 3.9(a). The Compensation Plans include without
limitation plans, arrangements or practices that provide for performance
awards, and stock ownership or stock options. The Company has provided or made
available to Vision 21 a copy of each written Compensation Plan and a written
description of each unwritten Compensation Plan. Except as set forth on
Schedule 3.8(b), each of the Compensation Plans can be terminated or amended at
will by the Company.
c. Employment Agreements. Except as set
forth on Schedule 3.8(c), the Company is not a party to any employment
agreement ("Employment Agreements") with respect to any of its employees.
Employment Agreements include without limitation employee leasing agreements,
employee services agreements and non-competition agreements.
d. Employee Policies and Procedures.
Schedule 3.8(d) contains a complete and accurate list of all employee manuals
and all material policies, procedures and work-related rules (the "Employee
Policies and Procedures") that apply to employees of the Company. The Company
has provided or made available to Vision 21 a copy of all written Employee
Policies and Procedures and a written description of all material unwritten
Employee Policies and Procedures.
e. Unwritten Amendments. Except as
described on Schedule 3.8(b), 3.8(c), or 3.8(d), no material unwritten
amendments have been made, whether by oral communication, pattern of conduct or
otherwise, with respect to any Compensation Plans or Employee Policies and
Procedures.
f. Labor Compliance. To the best
knowledge of the Company and the Physician, the Company has been and is in
compliance with all applicable laws, rules, regulations and ordinances
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except for any such failures to be in
compliance that, individually or in the aggregate, would not result in a
Material Adverse Effect, and the Company is not liable for any arrearages of
wages or penalties for failure to comply with any of the foregoing. The
Company has not, to the best of Physician's and the Company's knowledge,
engaged in any unfair labor practices or discriminated on the basis of race,
color, religion, sex, national origin, age, disability or handicap in its
employment conditions or practices that would, individually or in the
aggregate, result in a Material Adverse Effect. Except as set forth on
Schedule 3.10(f), there are no (i) unfair labor practice charges or complaints
or racial, color, religious, sex, national origin, age, disability or handicap
discrimination charges or complaints pending or, to the actual knowledge of the
Company and the Physician, threatened against the Company before any federal,
state or local court, board, department, commission or agency (nor, to the best
knowledge of the Company and the Physician, does any valid basis therefor
exist) or (ii) existing or, to the actual knowledge of the Company, threatened
labor strikes, disputes, grievances, controversies or other labor troubles
affecting the Company (nor, to the best knowledge of the Company and the
Physician, does any valid basis therefor exist).
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g. Unions. The Company has never been a
party to any agreement with any union, labor organization or collective
bargaining unit. No employees of the Company are represented by any union,
labor organization or collective bargaining unit. Except as set forth on
Schedule 3.8(g), to the actual knowledge of the Company, none of the employees
of the Company has threatened to organize or join a union, labor organization
or collective bargaining unit.
h. Aliens. All employees of the Company
are, to the best knowledge of the Company, citizens of, or are authorized in
accordance with federal immigration laws to be employed in, the United States.
3.9. Employee Benefit Plans.
a. Identification. Schedule 3.9(a)
contains a complete and accurate list of all employee benefit plans (within the
meaning of Section 3(3) of ERISA sponsored by the Company or to which the
Company contributes on behalf of its employees and all employee benefit plans
previously sponsored or contributed to on behalf of its employees within the
three (3) years preceding the date hereof (the "Employee Benefit Plans"). The
Company has provided or made available to Vision 21 copies of all plan
documents, determination letters, pending determination letter applications,
trust instruments, insurance contracts, administrative services contracts,
annual reports, actuarial valuations, summary plan descriptions, summaries of
material modifications, administrative forms and other documents that
constitute a part of or are incident to the administration of the Employee
Benefit Plans. In addition, the Company has provided or made available to
Vision 21 a written description of all existing practices engaged in by the
Company that constitute Employee Benefit Plans. Except as set forth on
Schedule 3.9(a) and subject to the requirements of the Code and ERISA, each of
the Employee Benefit Plans can be terminated or amended at will by the Company.
Except as set forth on Schedule 3.9(a), no unwritten amendment exists with
respect to any Employee Benefit Plan. Except as set forth on Schedule
3.9(b)-(l), each of the following paragraphs is true and correct.
b. Administration. To the best knowledge
of the Company and the Physician, each Employee Benefit Plan has been
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect. The
Company and the Physician have (i) made all necessary filings with respect to
such Employee Benefit Plans, including the timely filing of Form 5500 if
applicable, and (ii) made all necessary filings, reports and disclosures
pursuant to and have complied with all requirements of the IRS Voluntary
Compliance Resolution Program, if applicable, with respect to all profit
sharing retirement plans and pension plans in which employees of the Company
participate.
c. Examinations. Except as set forth on
Schedule 3.9(c), the Company has not received any notice that any Employee
Benefit Plan is currently the subject
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of an audit, investigation, enforcement action or other similar proceeding
conducted by any state or federal agency.
d. Prohibited Transactions. To the best
knowledge of the Company and the Physician, no prohibited transactions (within
the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA) have
occurred with respect to any Employee Benefit Plans.
e. Claims and Litigation. No pending or,
to the actual knowledge of the Company and the Physician, threatened, claims,
suits, or other proceedings exist with respect to any Employee Benefit Plan
other than normal benefit claims filed by participants or beneficiaries.
f. Qualification. As set forth in more
detail on Schedule 3.9(f), the Company has received a favorable determination
letter or ruling from the IRS for each of the Employee Benefit Plans intended
to be qualified within the meaning of Section 401(a) of the Code and/or
tax-exempt within the meaning of Section 501(a) of the Code. Except as set
forth on Schedule 3.9(e), no proceedings exist or, to the actual knowledge of
the Company have been threatened that could result in the revocation of any
such favorable determination letter or ruling.
g. Funding Status. To the best knowledge
of the Company and the Physician, no accumulated funding deficiency (within the
meaning of Section 412 of the Code), whether or not waived, exists with respect
to any Employee Benefit Plan or any plan sponsored by any member of a
controlled group (within the meaning of Section 412(n)(6)(B) of the Code) in
which the Company is a member ("Controlled Group"). With respect to each
Employee Benefit Plan subject to Title IV of ERISA, the assets of each such
plan are at least equal in value to the present value of accrued benefits
determined on an ongoing basis as of the date hereof. The Company does not
sponsor any Employee Benefit Plan described in Section 501(c)(9) of the Code.
None of the Employee Benefit Plans are subject to actuarial assumptions.
h. Excise Taxes. Neither the Company nor
any member of a Controlled Group has any liability to pay excise taxes with
respect to any Employee Benefit Plan under applicable provisions of the Code or
ERISA.
i. Multiemployer Plans. Neither the
Company nor any member of a Controlled Group is or ever has been obligated to
contribute to a multiemployer plan within the meaning of Section 3(37) of
ERISA.
j. Pension Benefit Guaranty Corporation.
None of the Employee Benefit Plans are subject to the requirements of Title IV
of ERISA.
k. Retirees. The Company has no
obligation or commitment to provide medical, dental or life insurance benefits
to or on behalf of any of its employees who
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may retire or any of its former employees who have retired except as may be
required pursuant to the continuation of coverage provisions of Section 4980B
of the Code and Sections 501 through 508 of ERISA.
l. Other Compensation. Except as set
forth on Schedule 3.8(a), 3.8(b), 3.8(c), 3.8(d) and 3.9(a), neither the
Company, the Physician nor any Professional Employee is a party to any
compensation or debt arrangement with any person relating to the provision of
healthcare related services other than arrangements with the Company or the
Physician.
3.10. Absence of Certain Changes. Except as set forth
on Schedule 3.10 or as contemplated by this Agreement, since the Company
Balance Sheet Date, the Company has not:
a. suffered a Material Adverse Effect,
whether or not caused by any deliberate act or omission of the Company or the
Physician;
b. contracted for the purpose of
acquiring any capital asset having a cost in excess of $5,000 or made any
single expenditure in excess of $5,000;
c. incurred any indebtedness for borrowed
money (other than short-term borrowings in the ordinary course of business), or
issued or sold any debt securities;
d. incurred or discharged any material
liabilities or obligations except in the ordinary course of business;
e. paid any amount on any indebtedness
prior to the due date, forgiven or cancelled any claims or any debt in excess
of $5,000, or released or waived any rights or claims except in the ordinary
course of business;
f. mortgaged, pledged or subjected to any
security interest, lien, lease or other charge or encumbrance any of its
properties or assets (other than statutory liens arising in the ordinary course
of business or other liens that do not materially detract from the value or
interfere with the use of such properties or assets);
g. suffered any damage or destruction to
or loss of any assets (whether or not covered by insurance) that has,
individually or in the aggregate, resulted in a Material Adverse Effect;
h. acquired or disposed of any assets
having an aggregate value in excess of $5,000, except in the ordinary course of
business;
i. written up or written down the
carrying value of any of its assets, other than accounts receivable in the
ordinary course of business;
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j. changed the costing system or
depreciation methods of accounting for its assets in any material respect;
k. lost or terminated any employee,
patient, customer or supplier that has, individually or in the aggregate,
resulted in a Material Adverse Effect;
l. increased the compensation of any
director, officer, key employee or consultant, except as disclosed on Schedule
3.8(a);
m. increased the compensation of any
employee (except for increases in the ordinary course of business consistent
with past practice) or hired any new employee who is expected to receive
annualized compensation of at least $15,000;
n. made any payments to or loaned any
money to any person or entity referred to in Section 3.22;
o. formed or acquired or disposed of any
interest in any corporation, partnership, joint venture or other entity;
p. redeemed, purchased or otherwise
acquired, or sold, granted or otherwise disposed of, directly or indirectly,
any of its capital stock or securities, or agreed to change the terms and
conditions of any such capital stock, securities or rights;
q. entered into any agreement providing
for total payments in excess of $5,000 in any twelve (12) month period with any
person or group, or modified or amended in any material respect the terms of
any such existing agreement, except in the ordinary course of business;
r. entered into, adopted or amended any
Employee Benefit Plan, except as contemplated hereby or the other agreements
contemplated hereby; or
s. entered into any other commitment or
transaction or experienced any other event that would materially interfere with
its performance under this Agreement or any other agreement or document
executed or to be executed pursuant to this Agreement, or otherwise has,
individually or in the aggregate, resulted in a Material Adverse Effect.
3.11. Title; Leased Assets.
a. Real Property. The Company does not
own any interest (other than leasehold interests referred to on Schedule
3.11(c)) in real property. The leased real property referred to on Schedule
3.11(c) constitutes the only real property necessary for the conduct of the
Company's business.
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b. Personal Property. Except as set
forth on Schedule 3.11(b), the Company and/or the Physician has good, valid and
marketable title to all the personal property constituting the Nonmedical
Assets. The personal property constituting the Nonmedical Assets constitute
the only personal property necessary for the conduct of the Company's business
(except for the Medical Assets). Upon consummation of the transactions
contemplated hereby, such interest in the Nonmedical Assets shall be free and
clear of all security interests, liens, claims and encumbrances, other than
those set forth on Schedule 3.11(b) (the "Permitted Encumbrances") and
statutory liens arising in the ordinary course of business or other liens that
do not materially detract from the value or interfere with the use of such
properties or assets.
c. Leases. A list and brief description
of (i) all leases of real property and (ii) leases of personal property
involving rental payments within any twelve (12) month period in excess of
$12,000, in either case to which the Company is a party, either as lessor or
lessee, are set forth on Schedule 3.11(c). All such leases are valid and, to
the knowledge of the Company, enforceable in accordance with their respective
terms except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of equitable
remedies.
3.12. Commitments.
a. Commitments; Defaults. Except as set
forth on Schedule 3.12 or as otherwise disclosed pursuant to this Agreement,
the Company is not a party to nor bound by, nor are the Nonmedical Assets or
the assets or the business of the Company bound by, whether or not in writing,
any of the following (collectively, "Commitments"):
i) partnership or joint
venture agreement;
ii) guaranty or suretyship,
indemnification or contribution agreement or performance bond;
iii) debt instrument, loan
agreement or other obligation relating to indebtedness for borrowed money or
money lent or to be lent to another;
iv) contract to purchase real
property;
v) agreement with dealers or
sales or commission agents, public relations or advertising agencies,
accountants or attorneys (other than in connection with this Agreement and the
transactions contemplated hereby) involving total payments within any twelve
(12) month period in excess of $2,000 and which is not terminable on thirty
(30) days' notice or without penalty;
vi) agreement relating to any
material matter or transaction in which an interest is held by a person or
entity that is an Affiliate of the Company or the Physician;
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vii) agreement for the
acquisition of services, supplies, equipment, inventory, fixtures or other
property involving more than $2,000 in the aggregate;
viii) powers of attorney;
ix) contracts containing
non-competition covenants;
x) agreement providing for the
purchase from a supplier of all substantially all of the requirements of the
Company of a particular product or services;
xi) agreements regarding
clinical research;
xii) agreements with Payors and
contracts to provide medical or health care services; or
xiii) any other agreement or
commitment not made in the ordinary course of business or that is material to
the business, operations, condition (financial or otherwise) or results of
operations of the Company.
True, correct and complete copies of the written Commitments, and true, correct
and complete written descriptions of the oral Commitments, have heretofore been
delivered or made available to Vision 21. Except as set forth on Schedule 3.12
and to the Company's best knowledge, there are no existing or asserted
defaults, events of default or events, occurrences, acts or omissions that,
with the giving of notice or lapse of time or both, would constitute defaults
by the Company or, to the best knowledge of the Company, any other party to a
material Commitment, and no penalties have been incurred nor are amendments
pending, with respect to the material Commitments, except as described on
Schedule 3.12. The Commitments are in full force and effect and are valid and
enforceable obligations of the Company, and to the best knowledge of the
Company, are valid and enforceable obligations of the other parties thereto, in
accordance with their respective terms, and no defenses, off-sets or
counterclaims have been asserted or, to the best knowledge of the Company, may
be made by any party thereto (other than the Company), nor has the Company
waived any rights thereunder, except as described on Schedule 3.12. Except as
set forth on Schedule 3.12, no consents or approvals are required under the
terms of any agreement listed on Schedule 3.12 in connection with the
transactions contemplated herein, including, without limitation, the transfer
of any such agreement pursuant to this Agreement.
b. No Cancellation or Termination of
Commitment. Except as disclosed pursuant to this Agreement or contemplated
hereby and except where such default would not have a Material Adverse Effect
on the Practice, (i) neither the Company nor the Physician has received notice
of any plan or intention of any other party to any Commitment to exercise any
right to cancel or terminate any Commitment, and the Company does not know of
any fact that would justify the exercise of such a right; and (ii) neither the
Company nor the
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Physician currently contemplates, or has reason to believe any other person
currently contemplates, any amendment or change to any Commitment.
3.13. Insurance. The Company, the Physician and each
Professional Employee carries property, liability, malpractice, workers'
compensation and such other types of insurance pursuant to the insurance
policies listed and briefly described on Section 3.13 (the "Insurance
Policies"). The Insurance Policies are all of the insurance policies of the
Company, the Physician and each Professional Employee relating to the business
of the Company and the Nonmedical Assets. All of the Insurance Policies are
issued by insurers of recognized responsibility, and, to the best knowledge of
the Company, are valid and enforceable policies, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies. Except as set forth in
Schedule 3.13, no consent or approval is required for, and no other impediment
or restriction exists that will prohibit or limit, the transfer of any such
Insurance Policies included within the Nonmedical Assets in accordance with the
terms of this Agreement. All Insurance Policies shall be maintained in force
without interruption up to and including the Closing Date. True, complete and
correct copies of all Insurance Policies have been provided or made available
to Vision 21. Except as set forth on Schedule 3.13, neither the Company nor
the Physician has received any notice or other communication from any issuer of
any Insurance Policy cancelling such policy, materially increasing any
deductibles or retained amounts thereunder, and to the actual knowledge of the
Company, no such cancellation or increase of deductibles, retainages or
premiums is threatened. Except as set forth on Schedule 3.13, neither the
Company, the Physician nor any Professional Employee has any outstanding
claims, settlements or premiums owed against any Insurance Policy, and the
Company, the Physician and each Professional Employee has given all notices or
has presented all potential or actual claims under any Insurance Policy in due
and timely fashion. Except as set forth on Schedule 3.13, since January 1,
1994, neither the Company, the Physician nor any Professional Employee has
filed a written application for any professional liability insurance coverage
which has been denied by an insurance agency or carrier, and the Company, the
Physician and each Professional Employee has been continuously insured for
professional malpractice claims for at least the past seven (7) years (or such
shorter periods of time that any Professional Employee has been licensed to
practice medicine). Schedule 3.13 also sets forth a list of all claims under
any Insurance Policy in excess of $10,000 per occurrence filed by the Company,
the Physician and each Professional Employee since January 1, 1994.
3.14. Proprietary Rights and Information. Set forth on
Schedule 3.14 is a true and correct description of the following ("Proprietary
Rights"):
a. all trademarks, trade-names, service
marks and other trade designations, including common law rights, registrations
and applications therefor, and all patents and applications therefor currently
owned, in whole or in part, by the Company, and all licenses, royalties,
assignments and other similar agreements relating to the foregoing to which the
Company is a party (including the expiration date thereof if applicable); and
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b. all agreements relating to technology,
know-how or processes that the Company is licensed or authorized to use by
others (other than technology, know-how or processes generally available to
other healthcare providers), or which it licenses or authorizes others to use.
The Company owns or has the legal right to use the Proprietary Rights, and to
the knowledge of the Company, such ownership or use does not conflict,
infringe or violate the rights of any other person. Except as disclosed on
Schedule 3.14, no consent of any person will be required for the use thereof by
Vision 21 upon consummation of the transactions contemplated hereby and the
Proprietary Rights are freely transferable. No claim has been asserted by any
person to the ownership of or for infringement by the Company of the
proprietary right of any other person, and the Company does not know of any
valid basis for any such claim. To the best knowledge of the Company and the
Physician, the Company has the right to use, free and clear of any adverse
claims or rights of others, all trade secrets, customer lists and proprietary
information required for the marketing of all merchandise and services formerly
or presently sold or marketed by it.
3.15. Taxes.
a. Filing of Tax Returns. The Company
has duly and timely filed (in accordance with any extensions duly granted by
the appropriate governmental agency, if applicable) with the appropriate
governmental agencies all federal, state, local or foreign income, excise,
corporate, franchise, property, sales, use, payroll, withholding, provider,
value added and other tax returns and reports (collectively the "Tax Returns")
required to be filed by the United States or any state or any political
subdivision thereof or any foreign jurisdiction. All such Tax Returns or
reports are complete and accurate in all material respects and properly reflect
the taxes of the Company for the periods covered thereby.
b. Payment of Taxes. Except for such
items as the Company may be disputing in good faith by proceedings in
compliance with applicable law, which are described on Schedule 3.15, (i) the
Company has paid all taxes, penalties, assessments and interest that have
become due with respect to any Tax Returns that it has filed and has properly
accrued on its books and records for all of the same that have not yet become
due, and (ii) the Company is not delinquent in the payment of any tax,
assessment or governmental charge.
c. No Pending Deficiencies,
Delinquencies, Assessments or Audits. Except as set forth on Schedule 3.15,
the Company has not received any notice that any tax deficiency or delinquency
has been asserted against the Company. There is no unpaid assessment, proposal
for additional taxes, deficiency or delinquency in the payment of any of the
taxes of the Company that could be asserted by any taxing authority. There is
no taxing authority audit of the Company pending, or to the actual knowledge of
the Company, threatened, and the results of any completed audits are properly
reflected in the Financial Statements. The Company has not, to its best
knowledge, violated any federal, state, local or foreign tax law.
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d. No Extension of Limitation Period.
The Company has not granted an extension to any taxing authority of the
limitation period during which any tax liability may be assessed or collected.
e. All Withholding Requirements
Satisfied. All monies required to be withheld by the Company and paid to
governmental agencies for all income, social security, unemployment insurance,
sales, excise, use, and other taxes have been collected or withheld and paid to
the respective governmental agencies.
f. Foreign Person. Neither the Company
nor the Physician is a foreign person, as such term is referred to in Section
1445(f)(3) of the Code.
3.16. Compliance with Laws. The Company has not
failed, and neither the Company nor the Physician is aware of any failure by
the Physician or any Professional Employee to comply with all applicable laws,
regulations and licensing requirements relating to the operation of the
Practice or failure to file with the proper authorities all necessary
statements and reports except where the failure to so comply or file would not,
individually or in the aggregate, result in a Material Adverse Effect. There
are no existing violations by the Company, and neither the Company nor the
Physician is aware of any existing violations by the Physician or any
Professional Employee of any federal, state or local law or regulation that
could, individually or in the aggregate, result in a Material Adverse Effect.
The Company, the Physician and each Professional Employee possesses all
necessary licenses, franchises, permits and governmental authorizations for the
conduct of the Company's business as now conducted, all of which are listed
(with expiration dates, if applicable) on Schedule 3.16. Except as set forth
on Schedule 3.16, the transactions contemplated by this Agreement will not
result in a default under or a breach or violation of, or adversely affect the
rights and benefits afforded by any such licenses, franchises, permits or
government authorizations, except for any such default, breach or violation
that would not, individually or in the aggregate, have a Material Adverse
Effect. Except as set forth on Schedule 3.16, since January 1, 1993, neither
the Company, the Physician nor, to the knowledge of the Company based on a
certificate in writing obtained from each Professional Employee, any
Professional Employee has received any notice from any federal, state or other
governmental authority or agency having jurisdiction over its, his or her
properties or activities, or any insurance or inspection body, that its, his or
her operations or any of its, his or her properties, facilities, equipment, or
business practices fail to comply with any applicable law, ordinance,
regulation, building or zoning law, or requirement of any public or
quasi-public authority or body, except where failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect.
3.17. Finder's Fee. Except as set forth on Schedule
3.17, the Company has not incurred any obligation for any finder's, brokers or
agent's fee in connection with the transactions contemplated hereby.
3.18. Litigation. Except as described on Schedule 3.18
or otherwise disclosed pursuant to this Agreement, there are no legal actions
or administrative proceedings
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or investigations instituted, to the actual knowledge of the Company or the
Physician, which affect or could affect the Practice, the Nonmedical Assets or
the operation, business, condition (financial or otherwise), or results of
operations of the Company which (i) if successful could, individually or in the
aggregate, have a Material Adverse Effect or (ii) could adversely affect the
ability of the Company or the Physician to effect the transactions contemplated
hereby. Neither the Company nor the Physician is (a) subject to any continuing
court or administrative order, judgment, writ, injunction or decree applicable
specifically to the Nonmedical Assets, the Company or to its business, assets,
operations or employees or (b) in default with respect to any such order,
judgment, writ, injunction or decree. The Company has no knowledge of any
valid basis for any such action, proceeding or investigation. Except as set
forth on Schedule 3.18, all medical malpractice claims asserted, general
liability incidents and incident reports have been submitted to the Company's
insurer therefor. All claims made or threatened against the Company in excess
of its deductible are covered under its Insurance Policies.
3.19. Condition of Fixed Assets. All of the fixtures,
structures and equipment reflected in the Financial Statements and used by the
Company in its business, are in good condition and repair, subject to normal
wear and tear, and conform in all material respects with all applicable
ordinances, regulations and other laws, and the Company has no actual knowledge
of any latent defects therein.
3.20. Distributions and Repurchases. No distribution,
payment or dividend of any kind has been declared or paid by the Company on any
of its capital stock since the Company Balance Sheet Date. No repurchase of
any of the Company's capital stock has been approved, effected or is pending,
or is contemplated by the Board of Directors of the Company.
3.21. Banking Relations. Set forth on Schedule 3.21 is
a complete and accurate list of all borrowing and investing arrangements that
the Company has with any bank or other financial institution, indicating with
respect to each relationship the type of arrangement maintained (such as
checking account, borrowing arrangements, safe deposit box, etc.) and the
person or persons authorized in respect thereof.
3.22. Ownership Interests of Interested Persons;
Affiliations. Except as set forth on Schedule 3.22, no officer, supervisory
employee or director of the Company, or their respective spouses, children or
Affiliates, owns directly or indirectly, on an individual or joint basis, any
interest in, has a compensation or other financial arrangement with, or serves
as an officer or director of, any customer or supplier of the Company or any
organization that has a material contract or arrangement with the Company.
Except as may be disclosed pursuant to this Agreement, neither the Company, nor
any of its directors, officers, employees or consultants, nor any Affiliate of
such person is, or within the last three (3) years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person which is in a position to make or influence
referrals to, or otherwise generate business for, the Company.
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3.23. Investments in Competitors. Except as disclosed
on Schedule 3.23, neither the Company nor the Physician owns directly or
indirectly any interests or has any investment in any person that is a
Competitor of the Company.
3.24. Environmental Matters.
a. Environmental Laws. To the best
knowledge of the Company and the Physician, neither the Company nor any of the
Nonmedical Assets (including the leased real property described on Schedule
3.11(c)) are currently in violation of, or subject to any existing, pending or,
to the actual knowledge of the Company threatened, investigation or inquiry by
any governmental authority or to any remedial obligations under, any federal,
state or local laws or regulations pertaining to health or the environment
("Environmental Laws"), except for any such violations, investigations or
inquiries that would not, individually or in the aggregate, result in a
Material Adverse Effect.
b. Permits. The Company is not required
to obtain, and has no knowledge of any reason Vision 21 will be required to
obtain, any permits, licenses or similar authorizations to occupy, operate or
use any buildings, improvements, fixtures and equipment owned or leased by the
Company by reason of any Environmental Laws.
c. Superfund List. To the best knowledge
of the Company, none of the Nonmedical Assets (including the Company's leased
real property described on Schedule 3.11(c)) are on any federal or state
"Superfund" list or subject to any environmentally related liens, except such
liens as would not, individually or in the aggregate, result in a Material
Adverse Effect.
3.25. Certain Payments. Neither the Company nor any
director, officer or employee of the Company acting for or on behalf of the
Company, has paid or caused to be paid, directly or indirectly, in connection
with the business of the Company:
a. to any government or agency thereof or
any agent of any supplier or customer any bribe, kick-back or other similar
payment; or
b. any contribution to any political
party or candidate (other than from personal funds of directors, officers or
employees not reimbursed by their respective employers or as otherwise
permitted by applicable law).
3.26. Medical Waste. With respect to the generation,
transportation, treatment, storage, and disposal, or other handling of medical
waste, to the best knowledge of the Company and the Physician, the Company has
complied with all material federal, state or local laws or regulations
pertaining to medical waste.
3.27. Medicare and Medicaid Programs. The Company, the
Physician and each Professional Employee is qualified for participation in the
Medicare and Medicare programs
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and is party to provider agreements for such programs which are in full force
and effect with no events of default having occurred thereunder. The Company,
the Physician and each Professional Employee has timely filed all claims or
other reports required to be filed prior to the Closing Date with respect to
the purchase of services by third-party payors ("Payors"), including but not
limited to Medicare and Medicaid programs, except where the failure to file
would not, individually or in the aggregate, result in a Material Adverse
Effect. All such claims or reports are complete and accurate in all material
respects. The Company, the Physician and each Professional Employee has paid
or has properly recorded on the Financial Statements all actually known and
undisputed refunds, discounts or adjustments which have become due pursuant to
such claims, and neither the Company, the Physician nor any Professional
Employee has any material liability to any Payor with respect thereto, except
as has been reserved for in the Company Balance Sheet. There are no pending
appeals, overpayment determinations, adjustments, challenges, audits,
litigation, or notices of intent to reopen Medicare and/or Medicaid claims
determinations or other reports required to be filed by the Company, the
Physician or any Professional Employee in order to be paid by a Payor for
services rendered. Neither the Company, nor any of its directors, officers,
employees, consultants or the Physician has been convicted of, or pled guilty
or nolo contendere to, patient abuse or neglect, or any other Medicare or
Medicaid program-related offense. Neither the Company, nor its directors,
officers, the Physician, or to the best of the Company's knowledge, its
employees or consultants, has committed any offense which may serve as the
basis for suspension or exclusion from the Medicare and Medicaid programs,
including but not limited to, defrauding a government program, loss of a
license to provide health services, and failure to provide quality care.
3.28. Fraud and Abuse. To the best knowledge of the
Company and the Physician, the Company, its officers and directors, the
Professional Employees, and the other persons and entities providing
professional services for the Company, have not engaged in any activities which
are prohibited under 42 U.S.C. Section Section 1320-7, 7a or 7b or 42 U.S.C.
Section 1395nn (subject to the exceptions set forth in such legislation), or
the regulations promulgated thereunder or pursuant to similar state or local
statutes or regulations, or which are prohibited by rules of professional
conduct, including but not limited to the following:
a. knowingly and willfully making or
causing to be made a false statement or representation of a material fact in
any application for any benefit or payment;
b. knowingly and willfully making or
causing to be made a false statement or representation of a material fact for
use in determining rights to any benefit or payment;
c. failure to disclose knowledge by a
Medicare or Medicaid claimant of the occurrence of any event affecting the
initial or continued right to any benefit or payment on its own behalf or on
behalf of another, with intent to fraudulently secure such benefit or payment;
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d. knowingly and willfully offering,
paying, soliciting or receiving any remuneration (including any kickback,
bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in
kind (i) in return for referring an individual to a person for the furnishing
or arranging for the furnishing of any item or service for which payment may be
made in whole or in part by Medicare or Medicaid, or (ii) in return for
purchasing, leasing, or ordering, or arranging for or recommending purchasing,
leasing, or ordering any good, facility, service, or item for which payment may
be made in whole or in part by Medicare or Medicaid; and
e. referring a patient for designated
health services (as defined in 42 U.S.C. Section 1395nn) to or providing
designated health services to a patient upon a referral from an entity or
person with which the Physician or the Professional Employee or an immediate
family member has a financial relationship, and to which no exception under 42
U.S.C. Section 1395nn applies.
3.29. Payors. Schedule 3.29 sets forth a true, correct
and complete list of the names and addresses of each Payor, including any
private pay patient as a single payor, of the Company's services which
accounted for more than 10% of the revenues of the Company in the three (3)
previous fiscal years. Except as set forth on Schedule 3.29, the Company has
good relations with such Payors and none of such Payors has notified the
Company that it intends to discontinue its relationship with the Company or to
deny any claims submitted to such Payor for payment.
3.30. Prohibitions on the Corporate Practice of
Medicine. To the best of the Company's and the Physician's knowledge, the
actions, transactions or relationships arising from, and contemplated by this
Agreement, do not violate any law, rule or regulation relating to the corporate
practice of medicine. The Company and the Physician accordingly agree that the
Company and the Physician will not, in an attempt to void or nullify any
document contemplated herein or any relationship involving Vision 21, the
Company or the Physician, xxx, claim, aver, allege or assert that any such
document contemplated herein or any such relationship violates any law, rule or
regulation relating to the corporate practice of medicine and expressly warrant
that this Section is valid and enforceable by Vision 21, and recognize that
Vision 21 has relied upon the statements herein in closing this Transaction.
3.31. Acquisition Proposals. Except for the
negotiations, offers and agreements with Vision 21 and its representatives, the
Company has not received during the twelve (12) month period preceding the date
of this Agreement any proposal or offer (including, without limitation, any
proposal or offer of its stockholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") nor has the Company or any of its employees, agents, representatives
or stockholders engaged in any negotiations concerning, or provided any
confidential information or data to, or had any discussions with, any person
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relating to an Acquisition Proposal, or otherwise facilitated any effort or
attempted to make or implement an Acquisition Proposal.
3.32. Consistent Treatment of Expenses. The Company
has, in presenting information concerning the Company's expenses to Vision 21
for the purpose of determining the Company's value, separated out those
expenses which shall be borne by the Company in a manner which is consistent
with the treatment of expenses which shall be the responsibility of the Company
pursuant to the Business Management Agreement.
3.33. Accounts Receivable/Payable. The Accounts
Receivable of the Company relating to the ownership and operation of the
Practice reflected on the Company Balance Sheet, to the extent uncollected on
the date hereof, are, and the accounts receivable of the Company relating to
the ownership and operation of the Practice to be reflected on the books of the
Company on the Closing Date will be, valid, existing and collectible within six
months from the Closing Date (taking into consideration the allowance for
doubtful accounts set forth in the Financial Statements) using reasonably
diligent collection methods taking into account the size and nature of the
receivable, and represent amounts due for goods sold and delivered or services
performed. There are not, and on the date of Closing there will not be, any
refunds, discounts, set-offs, defenses, counterclaims or other adjustments
payable or assessable with respect to the Accounts Receivable. The Company has
collected Accounts Receivable only in the ordinary course and has not changed
collection procedures or methods nor accelerated the pace of such collection
efforts in anticipation of the transactions contemplated in this Agreement.
The Company has paid accounts payable in the ordinary course and has not
changed payment procedures or methods nor delayed the timing of such payments
in anticipation of the transactions contemplated in this Agreement.
3.34. Projections. There is no fact, development or
threatened development with respect to the markets, products, services,
clients, patients, facilities, personnel, vendors, suppliers, operations,
assets or prospects of the Practice which are known to the Company or the
Physician which would materially adversely affect the projected fiscal year
1997 earnings of the Company disclosed to Vision 21 by Physician, other than
such conditions as may affect as a whole the economy or the practice of
medicine generally.
3.35. Inventory. Except as set forth on Schedule 3.35,
to the best of the Company's and the Physician's knowledge: (i) the Inventory
is in its originally manufactured condition, fit for the use for which it was
intended, free from any known defect and in a quantity and quality usable in
the ordinary course of business; (ii) the Inventory does not contain material
amounts of items that are slow-moving, obsolete or of below-standard quality;
(iii) the qualities and quantities of Inventory are reasonable and warranted in
the present and anticipated circumstances of the Practice; and (iv) there has
been no decrease in the physical Inventory since the Company Balance Sheet Date
other than in the ordinary course of business.
3.36. Tangible Personal Property. Except as set forth
on Schedule 3.36, the Company's Tangible Personal Property is in good operating
condition, working order and repair
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(normal wear and tear excepted) and is fully suitable for the uses for which it
is employed in the conduct of the Practice.
3.37. Leases. With respect to each of the Real
Property Leases and Personal Property Leases, except as set forth on Schedule
3.37:
(a) such lease is legal, valid, binding, enforceable
and in full force and effect;
(b) such lease will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the Closing;
(c) no party to such lease is in material breach or
default, and no event has occurred that, with notice or lapse of time, would
constitute a material breach or default or permit termination, modification or
acceleration thereunder;
(d) no party to such lease has repudiated in writing
any provision thereof;
(e) there are no disputes, oral agreements or
forbearance programs in effect as to such lease; and
(f) The Company has performed and satisfied in full
each material obligation to be performed by the Company under such lease.
3.38. Contract Rights. Except as set forth on Schedule
3.38, each of the Assumed Contracts is valid and enforceable and is in full
force and effect, and there is no material default or existing condition that,
with the giving of notice or the passage of time, would constitute such a
default by any parties thereto. The Company has performed and satisfied in
full each material obligation required to be performed by the Company under
each Assumed Contract. If services are to be provided to the Company under any
of such Assumed Contracts, such services have been and are being performed
satisfactorily and in a timely manner, substantially in accordance with the
terms of such Assumed Contract.
3.39. Prepaid Items. Except as described on Schedule
3.13, Each of the Prepaid Items may be transferred to Vision 21 without the
necessity of obtaining any consent or approval.
3.40. Completeness of Assets. The Nonmedical Assets,
together with the Medical Assets, include all the properties used to conduct
the Practice as presently conducted.
3.41. Disclosure. To the best of the Company's and the
Physician's knowledge, no representation, warranty or statement made by the
Company or the Physician in this Agreement or any of the exhibits or schedules
hereto, or any agreements, certificates, documents or instruments delivered or
to be delivered to Vision 21 in accordance with this
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Agreement or the other documents contemplated herein, contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading. The
Company and the Physician do not know of any fact or condition (other than
general economic conditions or legislative or administrative changes in
health-care delivery) which materially adversely affects, or in the future may
materially affect, the condition, properties, assets, liabilities, business,
operations or prospects of the Practice which has not been set forth herein or
in the Schedules provided herewith.
4. REPRESENTATIONS AND WARRANTIES OF THE PHYSICIAN. The
Physician represents and warrants to Vision 21 that the following are true and
correct as of the date hereof, and shall be true and correct through the
Closing Date as if made on that date:
4.1. Validity; Physician Capacity. This Agreement,
the Physician Employment Agreement, and each other agreement contemplated
hereby or thereby have been, or will be as of the Closing Date, duly executed
and delivered by the Physician and constitute or will constitute legal, valid
and binding obligations of the Physician, enforceable against the Physician in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The Physician has legal capacity to
enter into and perform this Agreement and his Physician Employment Agreement.
4.2. No Violation. Except as set forth on Schedule
4.2, neither the execution, delivery or performance of this Agreement, other
agreements of the Physician contemplated hereby or thereby, nor the
consummation of the transactions contemplated hereby or thereby, will (a)
conflict with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default under, any agreement, indenture or other
instrument under which the Physician is bound or to which any of his property
or the shares of common stock of the Company are subject, or result in the
creation or imposition of any security interest, lien, charge or encumbrance
upon any of his property or the shares of common stock of the Company or (b) to
the best knowledge of the Physician, violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body.
4.3. Consents. Except as may be required under the
Exchange Act, the Securities Act, the Corporation Law and state securities
laws, or otherwise disclosed pursuant to this Agreement, no consent,
authorization, approval, permit or license of, or filing with, any governmental
or public body or authority, or any other person is required to authorize, or
is required in connection with, the execution, delivery and performance of this
Agreement or the agreements contemplated hereby on the part of the Physician.
4.4. Certain Payments. The Physician has not paid or
caused to be paid, directly or indirectly, in connection with the business of
the Company:
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a. to any government or agency thereof or
any agent of any supplier or customer any bribe, kick-back or other similar
payment; or
b. any contribution to any political
party or candidate (other than from personal funds not reimbursed by the
Company or as otherwise permitted by applicable law).
4.5. Finder's Fee. Except as set forth on Schedule
4.5, the Physician has not incurred any obligation for any finder's, broker's
or agent's fee in connection with the transactions contemplated hereby.
4.6. Ownership of Interested Persons; Affiliations.
Except as set forth on Schedule 4.6, neither the Physician nor his spouse,
children or Affiliates, owns directly or indirectly, on an individual or joint
basis, any interest in, has a compensation or other financial arrangement with,
or serves as an officer or director of, any customer or supplier of the Company
or any organization that has a material contact or arrangement with the
Company. Neither the Physician nor any of his Affiliates is, or with the last
three (3) years was, a party to any contract, lease, agreement or arrangement,
including, but not limited to, any joint venture or consulting agreement with
any physician, hospital, pharmacy, home health agency or other person which is
in a position to make or influence referrals to, or otherwise generate business
for, the Company.
4.7. Investments in Competitors. Except as disclosed
on Schedule 4.7, the Physician does not own directly or indirectly any
interests or have any investment in any person that is a Competitor of the
Company.
4.8. Litigation. Except as disclosed on Schedule 4.8,
there are no claims, actions, suits, proceedings (arbitration or otherwise) or
investigations pending or, to the Physician's knowledge, threatened against the
Physician at law or at equity in any court or before or by any Governmental
Authority, and, to the Physician's knowledge, there are no, and have not been
any, facts, conditions or incidents that may result in any such actions, suits,
proceedings (arbitration or otherwise) or investigations. Except as set forth
on Schedule 4.10, there have been no disciplinary, revocation or suspension
proceedings or similar types of claims, actions or proceedings, hearings or
investigations against the Physician or the Company.
4.9. Permits. To the best of the Physician's
knowledge, the Physician has all permits, licenses, orders and approvals of all
Governmental Authorities necessary to perform the services performed by the
Physician in connection with the conduct of the Practice. All such permits,
licenses, orders and approvals are in full force and effect and no suspension
or cancellation of any of them is pending or threatened. To the best of the
Physician's knowledge, none of such permits, licenses, orders or approvals will
be adversely affected by the consummation of the transactions contemplated
herein. The Physician is a participating physician, as such term is defined by
the Medicare and Medicaid programs, and the Physician
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has not been disciplined, sanctioned or excluded from either the Medicare or
Medicaid programs and has not been subject to any plan of correction imposed by
any professional review body.
4.10. Staff Privileges. Schedule 4.10 lists all
hospitals at which the Physician has full staff privileges. Such staff
privileges have not been revoked, surrendered, suspended or terminated, and to
the Physician's knowledge, there are no, and have not been any, facts,
conditions or incidents that may result in any such revocation, surrender,
suspension or termination.
4.11. Intentions. Except as set forth on Schedule
4.11, the Physician intends to continue practicing medicine on a full-time
basis for at least the next five (5) years with the Company and does not know
of any fact or condition that materially adversely affects, or in the future
may materially adversely affect, his ability or intention to practice medicine
on a full-time basis for the next five (5) years with the Company.
5. REPRESENTATIONS AND WARRANTIES OF VISION 21. Vision 21
represents and warrants to the Company and the Physician that the following are
true and correct as of the date hereof and shall be true and correct as of the
Closing Date; when used in this Section 5, the term "best knowledge" shall mean
the best knowledge of those individuals listed on Schedule 5:
5.1. Organization and Good Standing. Vision 21 is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida, with all requisite corporation power and
authority to carry on the business in which it is engaged, to own the
properties it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. At or prior to Closing, Vision 21 will be
qualified to do business as a foreign corporation in the jurisdictions listed
on Schedule 5.1.
5.2. Capitalization. The authorized capital stock of
Vision 21 consists of 50,000,000 shares of Vision 21 Common Stock, of which
5,465,673 shares are issued and outstanding. Immediately prior to the Closing,
the authorized capital stock of Vision 21 will consist of 50,000,000 shares of
Vision 21 Common Stock, of which 5,465,673 shares will be issued and
outstanding.
5.3. Corporate Records. The copies of the Articles of
Incorporation and Bylaws, and all amendments thereto, of Vision 21 that have
been delivered or made available to the Company and the Physician are true,
correct and complete copies thereof, as in effect on the date hereof. The
minute books of Vision 21, copies of which have been delivered or made
available to the Company and the Physician, contain accurate minutes of all
meetings of, and accurate consents to all actions taken without meetings by,
the Board of Directors (and any committees thereof) and the stockholders of
Vision 21, since its formation.
5.4. Authorization and Validity. The execution,
delivery and performance by Vision 21 of this Agreement and the other
agreements contemplated hereby, and the
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consummation of the transactions contemplated hereby and thereby, have been
duly authorized by Vision 21. This Agreement and each other agreement
contemplated hereby to be executed by Vision 21 have been or will be as of the
Closing Date duly executed and delivered by Vision 21 and constitute or will
constitute legal, valid and binding obligations of Vision 21, enforceable
against Vision 21 in accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
5.5. Compliance. The execution and delivery of the
documents contemplated hereunder and the consummation of the transactions
contemplated thereby by Vision 21 shall not (i) violate any provision of Vision
21's organizational documents, (ii) violate any material provision of or result
in the breach of or entitle any party to accelerate (whether after the giving
of notice or lapse of time or both) any material obligation under, any
mortgage, lien, lease, contract, license, instrument or any other agreement to
which Vision 21 is a party, (iii) result in the creation or imposition of any
material lien, charge, pledge, security interest or other material encumbrance
upon any property of Vision 21 or (iv) violate or conflict with any order,
award, judgment or decree or other material restriction or to the best of
Vision 21's knowledge violate or conflict with any law, ordinance or regulation
to which Vision 21 or its property is subject.
5.6. Consents. No consent, approval, order or
authorization of or registration, declaration, or filing with, any Governmental
Authority or other person is required in connection with the execution and
delivery of the documents contemplated herein by Vision 21 or the consummation
by such party of the transactions contemplated thereby, except for those
consents or approvals set forth on Schedule 5.6.
5.7. Finder's Fee. Except as disclosed on Schedule
5.7, Vision 21 has not incurred any obligation for any finder's, broker's or
agent's fee in connection with the transactions contemplated hereby.
5.8. Capital Stock. The issuance and delivery by
Vision 21 of shares of Vision 21 Common Stock in connection with the Note have
been duly and validly authorized by all necessary corporate action on the part
of Vision 21. The shares of Vision 21 Common Stock to be issued in connection
with the Note, when issued in accordance with the terms of this Agreement, will
be validly issued, fully paid and nonassessable and will not have been issued
in violation of any preemptive rights, rights of first refusal or similar
rights of any of Vision 21's stockholders, or any federal or state law,
including, without limitation, the registration requirements of applicable
federal and state securities laws.
5.9. Vision 21 Financial Statements; Confidential
Information Memorandum. The balance sheet of Vision 21 as of September 30,
1996 and the related statements of income of Vision 21 for the first nine (9)
months of Vision 21's 1996 fiscal year, without giving effect to the Related
Acquisitions, including the costs incurred during such fiscal year associated
with any Registration Statement, shall be contained in the Confidential
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Information Memorandum to be provided to the Physician and the Company by
Vision 21 prior to the Closing (collectively, with the related notes thereto,
the "Vision 21 Financial Statements"). The Vision 21 Financial Statements (a)
fairly present the financial condition and results of operations of Vision 21,
without giving effect to the Related Acquisitions, as of the dates and for the
periods indicated; and (b) have been prepared in conformity with GAAP (subject
to normal year-end adjustments and the absence of notes for any unaudited
interim financial statement), except as otherwise indicated in the Vision 21
Financial Statements. Subject to the foregoing and the other qualifications
contained elsewhere in this Agreement, to the best knowledge of Vision 21, the
Confidential Information Memorandum, as amended on December 1996, is true and
correct in all material respects.
5.10. Liabilities and Obligations. Except as disclosed
on Schedule 5.10, the Vision 21 Financial Statements shall reflect all material
liabilities of Vision 21, accrued, contingent or otherwise, that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with GAAP. Except as set forth on Schedule 5.10 or in the Vision
21 Financial Statements, Vision 21 is not liable upon or with respect to, or
obligated in any other way to provide funds in respect of or to guarantee or
assume in any manner, any debt, obligation or dividend of any person,
corporation, association, partnership, joint venture, trust or other entity,
and Vision 21 does not know of any valid basis for the assertion of any other
claims or liabilities of any nature or in any amount.
5.11. Compliance with Laws. Vision 21 has not failed
to comply with any applicable laws, regulations and licensing requirements or
failed to file with the proper authorities any necessary statements and reports
except where the failure to so comply or file would not, individually or in the
aggregate, result in a Material Adverse Effect. There are no existing
violations by Vision 21 of any federal, state or local law or regulation that
could, individually or in the aggregate, result in a Material Adverse Effect.
Vision 21 possesses all necessary licenses, franchises, permits and
governmental authorizations for the conduct of Vision 21's business as now
conducted and after the Closing, as contemplated in this Agreement. The
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded by any such licenses, franchises, permits or government
authorizations, except for any such default, breach or violation that would
not, individually or in the aggregate, have a Material Adverse Effect. Since
January 1, 1993, Vision 21 has not received any notice from any federal, state
or other governmental authority or agency having jurisdiction over its
properties or activities, or any insurance or inspection body, that its
operations or any of its properties, facilities, equipment, or business
practices fail to comply with any applicable law, ordinance, regulation,
building or zoning law, or requirement of any public or quasi-public authority
or body, except where failure to so comply would not, individually or in the
aggregate, have a Material Adverse Effect.
5.12. Insolvency Proceedings. Vision 21 is not
currently under the jurisdiction of a Federal or state court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
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5.13. Employment of Company's Employees. Vision 21
does not currently intend to change the existing composition or employment
terms of any of the non-professional personnel which have employment
arrangements with the Company on the effective date of this Agreement (except
as is necessary for Vision 21 to employ such individuals pursuant to the
Business Management Agreement). Vision 21 reserves the right, however, to
change the number, composition or employment terms of such non-professional
personnel in the future.
6. SECURITIES LAW MATTERS.
6.1. Investment Representations and Covenants of
Physician.
a. Physician understands that the
Securities will not be registered under the Securities Act or any state
securities laws on the grounds that the issuance of the Securities is exempt
from registration pursuant to Section 4(2) of the Securities Act under the
Securities Act and applicable state securities laws, and that the reliance of
Vision 21 on such exemptions is predicated in part on the Physician's
representations, warranties, covenants and acknowledgements set forth in this
Section.
b. Except as disclosed on Schedule 6.1(b)
attached hereto, Physician represents and warrants that Physician is an
"accredited investor" or "sophisticated investor" as defined under the
Securities Act and state "Blue Sky" laws, or that Physician has utilized, to
the extent necessary to be deemed a sophisticated investor under the Securities
Act and State "Blue Sky" laws, the assistance of a professional advisor.
c. Physician represents and warrants that
the Securities to be acquired by Physician upon consummation of the
transactions described in this Agreement will be acquired by Physician for
Physician's own account, not as a nominee or agent, and without a view to
resale or other distribution within the meaning of the Securities Act and the
rules and regulations thereunder, except as contemplated in this Agreement, and
that Physician will not distribute any of the Securities in violation of the
Securities Act. All Securities shall bear a restrictive legend in
substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE
TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE ACT AND APPLICABLE
SECURITIES LAWS."
In addition, the Securities shall bear any legend required by the
securities or "Blue Sky" laws of any state where Physician resides as well as
any other legend deemed appropriate by Vision 21 or its counsel.
d. Physician represents and warrants that
the address set forth below Physician's name on Schedule 6.1(d) is Physician's
principal residence.
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e. Physician (i) acknowledges that the
Securities issued to Physician at the Closing must be held indefinitely by
Physician unless subsequently registered under the Securities Act or an
exemption from registration is available, (ii) is aware that any routine sales
of Securities made pursuant to Rule 144 under the Securities Act may be made
only in limited amounts and in accordance with the terms and conditions of that
Rule and that in such cases where the Rule is not applicable, compliance with
some other registration exemption will be required, (iii) is aware that Rule
144 is not currently available for use by Physician for resale of any of the
Securities to be acquired by Physician upon consummation of the transactions
described in this Agreement, and (iv) acknowledges and agrees that the transfer
of the Securities shall be further restricted by the "lock-up" provisions
contained in the Registration Rights Agreement in the form of Exhibit 12.1(o),
whereby the Company shall be treated as an "affiliate" of Vision 21 under Rule
144.
f. Physician represents and warrants to
Vision 21 that Physician, either alone or together with the assistance of
Physician's own professional advisor, has such knowledge and experience in
financial and business matters such that Physician is capable of evaluating the
merits and risks of Physician's investment in any of the Securities to be
acquired by Physician upon consummation of the transactions described in this
Agreement.
g. Physician confirms that Physician has
received and read the Confidential Information Memorandum of Vision 21 dated
September 27, 1996 and the December 1996 Supplement thereto. Physician also
confirms that Physician has had the opportunity to ask questions of and receive
answers from Vision 21 concerning the terms and conditions of Physician's
investment in the Securities, and the Physician has received to Physician's
satisfaction, such additional information, in addition to that set forth
herein, about Vision 21's operations and the terms and conditions of the
offering as Physician has requested.
h. In order to ensure compliance with the
provisions of paragraph (c) hereof, Physician agrees that after the Closing
Physician will not sell or otherwise transfer or dispose of Securities or any
interest therein (unless such shares have been registered under the Securities
Act) without first complying with either of the following conditions, the
expenses and costs of satisfaction of which shall be fully borne and paid for
by Physician:
i) Vision 21 shall have
received a written legal opinion from legal counsel, which opinion and counsel
shall be satisfactory to Vision 21 in the exercise of its reasonable judgment,
or a copy of a "no-action" or interpretive letter of the Securities and
Exchange Commission specifying the nature and circumstances of the proposed
transfer and indicating that the proposed transfer will not be in violation of
any of the registration provisions of the Securities Act and the rules and
regulations promulgated thereunder; or
ii) Vision 21 shall have
received an opinion from its own counsel to the effect that the proposed
transfer will not be in violation of any of the registration provisions of the
Securities Act and the rules and regulations promulgated thereunder.
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Physician also agrees that the certificates or instruments representing the
Securities to be issued to Physician pursuant to this Agreement may contain a
restrictive legend noting the restrictions on transfer described in this
Section and required by federal and applicable state securities laws, and that
appropriate "stop-transfer" instructions will be given to Vision 21's transfer
agent, if any, provided that this Section 6.1(h) shall no longer be applicable
to any Securities following their transfer pursuant to a registration statement
effective under the Securities Act or in compliance with Rule 144 or if the
opinion of counsel referred to above is to the further effect that transfer
restrictions and the legend referred to herein are no longer required in order
to establish compliance with any provisions of the Securities Act.
i. Physician understands that although an
Initial Public Offering is contemplated by Vision 21, there are no assurances
that an Initial Public Offering will occur or if it does occur that it will be
successful.
j. Physician agrees that he shall be
considered an "affiliate" of Vision 21 for purposes of Rule 144 and agrees to
the restrictions and limitations imposed by Rule 144 on affiliates. Physician
further agrees that he shall be considered an affiliate of Vision 21 for Rule
144 purposes even if he does not meet the technical definition of "affiliate"
under Rule 144.
6.2. Current Public Information. At all times
following the registration of any of Vision 21's securities under the
Securities Act or Exchange Act pursuant to which Vision 21 becomes subject to
the reporting requirements of the Exchange Act, Vision 21 shall use
commercially reasonable efforts to comply with the requirements of Rule 144
under the Securities Act, as such Rule may be amended from time to time (or any
similar rule or regulation hereafter adopted by the SEC) regarding the
availability of current public information to the extent required to enable any
holder of shares of Common Stock to sell such shares without registration under
the Securities Act pursuant to Rule 144 (or any similar rule or regulation).
7. COVENANTS OF THE COMPANY AND THE PHYSICIAN. The Company
and the Physician, jointly and severally, agree that between the date hereof
and the Closing (with respect to the Company's covenants, the Physician agrees
to use his best efforts to cause the Company to perform):
7.1. Consummation of Agreement. The Company and the
Physician shall use their best efforts to cause the consummation of the
transactions contemplated hereby in accordance with their terms and conditions;
provided, however, that this covenant shall not require the Company or the
Physician to make any expenditures that are not expressly set forth in this
Agreement or otherwise contemplated herein.
7.2. Business Operations. The Company shall operate
its business in the ordinary course. The Company and the Physician shall use
their best efforts to preserve the
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business of the Company intact. Neither the Company nor the Physician shall
take any action that would, individually or in the aggregate, result in a
Material Adverse Effect.
7.3. Access. The Company and the Physician shall, at
reasonable times during normal business hours and on reasonable notice, permit
Vision 21 and its authorized representatives, including without limitation, the
Accountants, reasonable access to, and make available for inspection, all of
the assets and business of the Company, including its employees, customers and
suppliers, and permit Vision 21 and its authorized representatives to inspect
and, at Vision 21's sole cost and expense, make copies of all documents,
records (other than patient medical records) and information with respect to
the affairs of the Company, including, without limitation, the Financial
Statements, as Vision 21 and its representatives may request, all for the sole
purpose of permitting Vision 21 to become familiar with the business and assets
and liabilities of the Company.
7.4. Notification of Certain Matters. The Company and
the Physician shall promptly inform Vision 21 in writing of (a) any notice of,
or other communication relating to, a default or event that, with notice or
lapse of time or both, would become a default, received by the Company or the
Physician subsequent to the date of this Agreement and prior to the Closing
Date under any Commitment material to the Company's condition (financial or
otherwise), operations, assets, liabilities or business and to which it is
subject; or (b) any material adverse change in the Company's condition
(financial or otherwise), operations, assets, liabilities or business.
7.5. Approvals of Third Parties. As soon as
practicable after the date hereof, the Company and the Physician shall secure
all necessary approvals and consents of landlords with respect to the real
property described on Schedule 2.1(d) to the consummation of the transactions
contemplated hereby and shall use their best efforts to secure all necessary
approvals and consents of other third parties to the consummation of the
transactions contemplated hereby; provided, however, that this covenant shall
not require the Company or the Physician to make any material expenditures that
are not expressly set forth in this Agreement or otherwise contemplated herein.
7.6. Employee Matters. Except as set forth in
Schedule 3.8(a) or as otherwise contemplated by this Agreement, the Company
shall not, without the prior written approval of Vision 21, except as required
by law:
a. increase the cash compensation of the
Physician or any other employees of the Company (other than in the ordinary
course of business and consistent with past practice);
b. adopt, amend or terminate any
Compensation Plan;
c. adopt, amend or terminate any
Employment Agreement;
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d. adopt, amend or terminate any
Employee Policies and Procedures;
e. adopt, amend or terminate any
Employee Benefit Plan;
f. take any action that could deplete the
assets of any Employee Benefit Plan, other than payment of benefits in the
ordinary course to participants and beneficiaries;
g. fail to pay any premium or
contribution due or with respect to any Employee Benefit Plan;
h. fail to file any return or report with
respect to any Employee Benefit Plan;
i. institute, settle or dismiss any
employment litigation except as could not, individually or in the aggregate,
result in a Material Adverse Effect;
j. enter into, modify, amend or terminate
any agreement with any union, labor organization or collective bargaining unit;
or
k. take or fail to take any action with
respect to any past or present employee of the Company that would, individually
or in the aggregate, result in a Material Adverse Effect.
7.7. Contracts. Except with Vision 21's prior written
consent, the Company shall not assume or enter into any contract, lease,
license, obligation, indebtedness, commitment, purchase or sale except in the
ordinary course of business that is material to the Company's business, nor
will it waive any material right or cancel any material contract, debt or
claim.
7.8. Capital Assets; Payments of Liabilities. The
Company shall not, without the prior written approval of Vision 21 (a) acquire
or dispose of any capital asset having a fair market value of $5,000 or more,
or acquire or dispose of any capital asset outside of the ordinary course of
business or (b) discharge or satisfy any lien or encumbrance or pay or perform
any obligation or liability other than (i) liabilities and obligations
reflected in the Financial Statements or (ii) current liabilities and
obligations incurred in the usual and ordinary course of business since the
Company Balance Sheet Date and, in either case (i) or (ii) above, only as
required by the express terms of the agreement or other instrument pursuant to
which the liability or obligation was incurred.
7.9. Mortgages, Liens and Guaranties. The Company
shall not, without the prior written approval of Vision 21, enter into or
assume any mortgage, pledge, conditional sale or other title retention
agreement, permit any security interest, lien, encumbrance or claim
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of any kind to attach to any of its assets (other than statutory liens arising
in the ordinary course of business and other liens that do not materially
detract from the value or interfere with the use of such assets), whether now
owned or hereafter acquired, or guarantee or otherwise become contingently
liable for any obligation of another, except obligations arising by reason of
endorsement for collection and other similar transactions in the ordinary
course of business, or make any capital contribution or investment in any
person.
7.10. Acquisition Proposals. The Company and the
Physician agree that from the date of this Agreement through the earlier of the
Closing Date or January 1, 1997, (a) neither the Physician nor the Company nor
any of its officers and directors shall, and the Physician and the Company
shall direct and use their best efforts to cause the Company's employees,
agents, and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any Acquisition
Proposal or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; (b) the Physician and the Company will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing and each will take the necessary steps to inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 7.10; and (c) the Physician and the
Company will notify Vision 21 immediately if any such inquiries or proposals
are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, the
Company or the Physician.
7.11. Distributions and Repurchases. No distribution,
payment or dividend of any kind will be declared or paid by the Company with
respect of its capital stock, nor will any repurchase of any of the Company's
capital stock be approved or effected.
7.12. Requirements to Effect the Transaction. The
Company and the Physician shall use their best efforts to take, or cause to be
taken, all actions necessary to effect the Transaction under applicable law.
7.13. Physician Accounts Payable and Physician Retained
Equity. The Company shall, and the Physician shall cause the Company, to pay
in a timely manner the accounts payable of the Physician. Except as
contemplated herein, the Company shall not, and the Physician shall not permit
the Company to, make payment of all or any portion of any retained equity of
the Company at any time prior to Closing.
7.14. Physician Employment Agreements. The Company and
the Physician shall cause, at or immediately prior to Closing, each Physician
Employee (except for those non-shareholder Physician Employees identified on
Schedule 7.14) who is then an employee of the Company and Physician agrees at
or immediately prior to Closing (i) to terminate his employment agreement, if
any, with the Company by mutual consent without any liability therefor on the
part of the Company and (ii) to enter into a new Physician Employment
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Agreement with the Company in accordance with the terms of the Business
Management Agreement.
7.15. Optometrist Employment Agreements. The Company
and the Physician shall cause, at or immediately prior to Closing, each
Optometrist Employee who is then an employee of the Company (i) to terminate
his existing employment agreement, if any, with the Company by mutual consent
without any liability therefor on the part of the Company and (ii) to enter
into a new Optometrist Employment Agreement with the Company in accordance with
the terms of the Business Management Agreement.
7.16. Termination of Retirement Plans. Prior to
Closing, the Physician shall cause the Company to take all steps necessary to
discontinue benefits accruals under any Employee Benefit Plan that is intended
to be a qualified employee retirement plan under Section 401(a) of the Code (a
"Retirement Plan") effective as of Closing or as soon thereafter as may be
practical.
Subsequent to Closing, the Company and Vision 21 shall
review the extent to which the Company can resume contributions to the
Retirement Plan without violating the qualification requirements of Sections
410(b) and 401(a)(4) of the Code, taking into account any employees of Vision
21 who would be "leased employees" of the Company under Section 414(n) of the
Code. If Vision 21 and the Company mutually agree that such qualification
requirements can be satisfied, the Company may elect to continue the Retirement
Plan and make contributions in accordance with its terms, provided that the
Company shall agree to cover at its own expense any Vision 21 employees who are
leased employees if such coverage is required to maintain the tax-qualified
status of the Retirement Plan.
7.17. Delivery of Schedules. The Company and the
Physician shall deliver to Vision 21 all schedules required to be delivered by
them prior to the Closing.
7.18. Assignment of Fees for Medical and Optometry
Services. On or prior to the Closing Date, the Company shall obtain an
irrevocable assignment from all Professional Employees of any and all of their
rights to receive payment for the provision of ophthalmology or optometry
services which are part of the Accounts Receivable to Vision 21 existing on the
Closing Date, except for those fees specified and set forth on Schedule 7.18.
Each Professional Employee shall undertake to endorse any payments received on
account of such services to the order of Vision 21 and to take such other
action as may be necessary to confirm to Vision 21 the rights to collect and
retain for its own account such Accounts Receivable. The Company shall cause
its Professional Employees to agree that such security interest of such
lender(s) is intended to be a first priority security interest and is superior
to any right, title or interest which may be asserted by such Professional
Employees with respect to the Accounts Receivable or the proceeds thereof. In
the event that the assignment of rights described in this Section shall be
deemed, for any reason, to be ineffective as an outright assignment, the
Company shall cause each Professional Employee to agree that such Professional
Employee shall be deemed, effective as of the Closing Date, to have granted to
Vision 21 a first priority lien on and security interest
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in and to any and all interests of such Professional Employee in any of the
Accounts Receivable, and all proceeds with respect thereto, to secure the
collection by Vision 21 of all Accounts Receivable, and this Agreement shall be
deemed to be a security agreement to the extent necessary to give effect to the
foregoing. The Company shall cause each Professional Employee to execute and
deliver, all such financing statements as the Company or Vision 21 may request
in order to perfect such security interest. The Company shall not suffer any
Professional Employee to grant any other lien on or security interest in or to
such Accounts Receivable or any proceeds thereof.
8. COVENANTS OF VISION 21. Vision 21 agrees that between the
date hereof and the Closing:
8.1. Consummation of Agreement. Vision 21 shall use
its best efforts to cause the consummation of the transactions contemplated
hereby in accordance with their terms and conditions and take all corporate and
other actions necessary to approve the Transaction; provided, however, that
this covenant shall not require Vision 21 to make any expenditures that are not
expressly set forth in this Agreement or otherwise contemplated herein.
8.2. Notification of Certain Matters. Vision 21 shall
promptly inform the Company and the Physician in writing of (a) any notice of,
or other communication relating to, a default or event that, with notice or
lapse of time or both, would become a default, received by Vision 21 subsequent
to the date of this Agreement and prior to the Closing Date under any Vision 21
Commitment material to Vision 21's condition (financial or otherwise),
operations, assets, liabilities or business and to which it is subject; or (b)
any material adverse change in Vision 21's condition (financial or otherwise),
operations, assets, liabilities or business.
8.3. Licenses and Permits. Vision 21 shall use its
best efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the Transaction or provide the services
contemplated by the Business Management Agreement and to conduct the intended
business of Vision 21.
8.4. Release of Physician From Practice Liabilities.
Vision 21 shall use its best efforts to obtain from third party creditors the
release of Physician from any personal liabilities relating to the Practice
which are identified on Schedule 8.4 and assumed by Vision 21 pursuant to the
terms of this Agreement.
9. COVENANTS OF VISION 21, THE COMPANY AND THE PHYSICIAN.
Vision 21, the Company and the Physician agree as follows:
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9.1. Filings; Other Action.
a. Vision 21, the Company and the
Physician shall cooperate to promptly prepare and file at Vision 21's expense
with the SEC, a Registration Statement on Form S-1 (or other appropriate form)
to be filed by Vision 21 in connection with any Initial Public Offering of
Vision 21 (including the prospectus constituting a part thereof, the
"Registration Statement"). Vision 21 shall obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement, and the Company and the Physician
shall furnish all information concerning the Company, the Nonmedical Assets and
the Physician as may be reasonably requested in connection with any such
action.
b. Each of the Company, the Physician and
Vision 21 represents and warrants that none of the information or documents
supplied or to be supplied by it specifically for inclusion in a Registration
Statement, by exhibit or otherwise, will, at the time the Registration
Statement and each amendment and supplement thereof, if any, becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. The Company, the Physician, and Vision 21 shall
agree as to the information and documents supplied by the Company and the
Physician for inclusion in the Registration Statement and shall indicate such
information and documents in a letter to be delivered at least ten (10) days
prior to the initial filing of the Registration Statement with the SEC. The
Company and the Physician shall be entitled to review the Registration
Statement and each amendment thereto, if any, prior to the time each becomes
effective under the Securities Act.
c. The Physician and the Company shall,
upon request, furnish Vision 21 with all information concerning himself,
itself, their respective partners, the Company's subsidiaries, directors,
officers, and stockholders, and including financial statements with respect to
the same, any consents (and information necessary to obtain such consents) and
such other matters as may be reasonably requested by Vision 21 in connection
with the preparation of the Registration Statement and each amendment or
supplement thereto, or any other statement, filing, notice or application made
by or on behalf of each such party or any of the Company's subsidiaries to any
governmental entity in connection with the Transaction, any Initial Public
Offering and the other transactions contemplated by this Agreement.
9.2. Amendment of Schedules. Each party hereto agrees
that, with respect to the representations and warranties of such party
contained in this Agreement, such party shall have the continuing obligation
until the Closing to attach, supplement or amend promptly the Schedules with
respect to any matter that would have been or would be required to be set forth
or described in the Schedules in order to not materially breach any
representation, warranty or covenant of such party contained herein; provided
that no amendment or supplement to a Schedule that constitutes or reflects a
material adverse change to the Company or the Nonmedical Assets may be made
unless Vision 21 consents to such amendment or supplement,
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and no amendment or supplement to a Schedule that constitutes or reflects a
material adverse change to Vision 21 may be made unless the Company and the
Physician consent to such amendment or supplement. For all purposes of this
Agreement, including without limitation for purposes of determining whether the
conditions set forth in Sections 10.1 and 11.1 have been fulfilled, the
Schedules hereto shall be deemed to be the Schedules as amended or supplemented
pursuant to this Section 9.2. In the event that the Company is required to
amend or supplement a Schedule in accordance with this Section 9.2 and Vision
21 does not consent to such amendment or supplement, or Vision 21 is required
to amend or supplement a Schedule in accordance with this Section 9.2 and the
Company and the Physician do not consent, this Agreement shall be deemed
terminated by mutual consent as set forth in Section 15.1(d) or Section 15.1(e)
as appropriate.
9.3. Fees and Expenses.
a. Vision 21 shall pay all costs of the
Audit of the Company's Financial Statements and financial records by Vision
21's auditors (or auditors designated by Vision 21's auditors). All items
prepared by Vision 21's auditors in connection with the Audit ("Prepared Audit
Materials") shall be for use solely by Vision 21; provided, however, that the
Company may utilize the Prepared Audit Materials solely in connection with its
review of Vision 21's calculation of the Purchase Price. The Prepared Audit
Materials shall not be deemed to include those items which customarily remain
the property of auditors such as their working papers and memos.
b. In the event the Transaction is not
consummated, the Company and Physician shall not be entitled to copies or
originals of the Prepared Audit Materials unless the Company or Physician pay
for or reimburses Vision 21 for all expenses of the auditor in connection with
the Audit in advance of receiving the Prepared Audit Materials (either from
Vision 21 or its auditor). For purposes of this Agreement, Audit expenses
shall include all expenses related to the Audit as well as expenses incurred to
present the financial statements in accordance with GAAP and all schedules
related thereto.
c. Each of the Company and Vision 21
shall pay the costs and expenses of their own legal counsel with respect to
legal services rendered in connection with the preparation and negotiation of
this Agreement and the transactions contemplated hereby.
d. In the event that an Initial Public
Offering does not take place for any reason whatsoever, Vision 21 (but not the
Company or the Physician) shall have sole responsibility for the payment of all
legal fees (except as set forth in Section 9.3(c)), accounting fees (except as
set forth in Section 9.3(c)), underwriters' expenses and other fees, costs and
expenses associated solely in connection with the preparation of any
Registration Statement relating to such Initial Public Offering.
e. If any Initial Public Offering is
consummated as contemplated by this Agreement, all legal fees, audit fees,
printing costs, filing fees, blue sky fees and
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underwriters' discounts and fees associated solely with the Initial Public
Offering shall be paid by Vision 21 from the proceeds of the Initial Public
Offering, except for those expenses, fees and underwriters' discounts related
to any shares sold by the Physician.
9.4. Release of Physician From Practice Liabilities.
Vision 21 shall use its best efforts to obtain the release of the Physician
from any liabilities relating to the Practice of which the Physician and the
Company are jointly obligated which are set forth on Schedule 9.4.
10. CONDITIONS PRECEDENT OF VISION 21. Except as may be waived
in writing by Vision 21, the obligations of Vision 21 hereunder are subject to
the fulfillment at or prior to the Closing Date of each of the following
conditions precedent:
10.1. Representations and Warranties. The
representations and warranties of the Company and the Physician contained
herein shall have been true and correct in all material respects when initially
made and shall be true and correct in all material respects as of the Closing
Date.
10.2. Covenants. The Company and the Physician shall
have performed and complied in all material respects with all covenants
required by this Agreement to be performed and complied with by the Company or
the Physician prior to the Closing Date.
10.3. Legal Opinion. Counsel to the Company and the
Physician shall have delivered to Vision 21 their opinions, dated as of the
Closing Date, in form and substance substantially similar to Exhibit 10.3 which
Vision 21, Vision 21's counsel, the underwriters of the Initial Public Offering
and their counsel shall be permitted to rely upon.
10.4. Proceedings. No action, proceeding or order by
any court or governmental body or agency shall have been threatened orally or
in writing, asserted, instituted or entered to restrain or prohibit the
carrying out of the transactions contemplated hereby.
10.5. No Material Adverse Change. No material adverse
change in the condition (financial or otherwise), operations, assets,
liabilities or business of the Company shall have occurred since the Company
Balance Sheet Date, whether or not such change shall have been caused by the
deliberate act or omission of the Company or the Physician.
10.6. Government Approvals and Required Consents. The
Company, the Physician and Vision 21 shall have obtained all necessary
government and other third-party approvals and consents (other than consents
technically required as a result of the transactions contemplated hereby under
the terms of managed care contracts to which the Company or any of its
employees are a party).
10.7. Certification. Neither the Company nor the
Physician shall have received any notice of or been made a party to any
judicial or administrative proceeding, or
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threatened to so be made a party, in any action or proceeding that seeks to
deny the continued use or receipt of any necessary permit, license,
authorization, certification or approval under the Medicare and Medicaid
programs to provide ophthalmology or optometry services.
10.8. Closing Deliveries. Vision 21 shall have
received all documents and agreements, duly executed and delivered in form
reasonably satisfactory to Vision 21, referred to in Section 12.1.
10.9. Due Diligence. Vision 21 shall have completed to
its satisfaction a due diligence review of the Company and the Physician.
10.10. Financial Audit. Vision 21 shall have approved
in Vision 21's sole discretion an audit of the Company and the Practice which
audit shall have been performed by an accounting firm designated by Vision 21
at the sole expense of Vision 21.
10.11. Medicare Audit. Vision 21 shall have approved in
Vision 21's sole discretion a Medicare audit of the Company and the Practice
which audit shall be at the sole expense of Vision 21.
10.12. Exemption Under State Securities Laws. The
transfer of Vision 21's Securities to the Physician as contemplated in this
Agreement shall qualify for one or more exemptions from registration under the
State's securities laws. Vision 21 shall pay all filing fees in connection
with any filing required to qualify the transfer of the Securities for such
exemption(s).
10.13. Assignment of Professional Employees' Rights in
Accounts Receivable. The Company shall have caused the Professional Employees
to assign any and all of their rights with respect to Accounts Receivable to
Vision 21 and shall cause such Professional Employees to execute such other
agreements and instruments as contemplated in Section 7.18.
11. CONDITIONS PRECEDENT OF THE COMPANY AND THE PHYSICIAN.
Except as may be waived in writing by the Company and the Physician, the
obligations of the Company and the Physician hereunder are subject to
fulfillment at or prior to the Closing Date of each of the following conditions
precedent:
11.1. Representations and Warranties. The
representations and warranties of Vision 21 contained herein shall be true and
correct in all respects when initially made and shall be true and correct in
all material respects as of the Closing Date.
11.2. Covenants. Vision 21 shall have performed and
complied in all material respects with all covenants and conditions required by
this Agreement to be performed and complied with by it prior to the Closing
Date.
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11.3. Legal Opinions. Counsel to Vision 21 shall have
delivered to the Company and the Physician their opinion, dated as of the
Closing Date, in form and substance substantially similar to Exhibit 11.3.
11.4. Proceedings. No action, proceeding or order by
any court or governmental body or agency shall have been threatened in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
11.5. Government Approvals and Required Consents. The
Company, the Physician and Vision 21 shall have obtained all necessary
government and other third-party approvals and consents (other than consents
technically required as a result of the transactions contemplated hereby under
the terms of managed care contracts to which the Company or any of its
employees are a party).
11.6. Closing Deliveries. The Company and the
Physician shall have received all documents, instruments and agreements, duly
executed and delivered in form reasonably satisfactory to the Company, referred
to in Section 12.2.
11.7. No Change in Voting or Ownership Control. There
shall have been no changes in the voting or ownership control of Vision 21 from
the date first above written to the Closing Date.
11.8. No Material Adverse Change; Delivery of Amended
Confidential Information Memorandum. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities or business
of Vision 21 shall have occurred since the end of the last fiscal period
reported in the Vision 21 Financial Statements, whether or not such change
shall have been caused by the deliberate act or omission of Vision 21. Vision
21 shall deliver an amended Confidential Information Memorandum updating the
information contained in the initial Confidential Information Memorandum on or
before December 1996, and the Company and the Physician shall have the right
not to close the transactions contemplated in this Agreement if they determine,
based upon their review of the amended Confidential Information Memorandum,
that a material adverse change has occurred with respect to the condition
(financial or otherwise), operations, assets, liabilities or business of Vision
21.
12. CLOSING DELIVERIES; ESCROW OF DOCUMENTS.
12.1. Deliveries of the Company and the Physician. At
or prior to December 24, 1996, the Company and the Physician shall deliver to
Vision 21, c/x Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to Vision 21, the
following, all of which shall be in a form reasonably satisfactory to Vision 21
and shall be held by Xxxxxxxx, Loop & Xxxxxxxx, LLP in escrow pending Closing,
pursuant to an escrow agreement or letter in form and substance mutually
acceptable to the parties hereto:
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a. a copy of resolutions of the Board of
Directors of the Company authorizing (i) the execution, delivery and
performance of this Agreement and all related documents and agreements, and
(ii) the consummation of the Transaction, certified by the Secretary of the
Company as being true and correct copies of the originals thereof subject to no
modifications or amendments;
b. a certificate of the President of the
Company, and of the Physician, dated the Closing Date, as to the truth and
correctness of the representations and warranties of the Company and the
Physician contained herein, on and as of the Closing Date;
c. a certificate of the President of the
Company, and of the Physician, dated the Closing Date, (i) as to the
performance of and compliance in all material respects by the Company and the
Physician with all covenants contained herein on and as of the Closing Date and
(ii) certifying that all conditions precedent of the Company and the Physician
to the Closing have been satisfied;
d. a certificate of the Secretary of the
Company certifying as to the incumbency of the directors and officers of each
such corporation and as to the signatures of such directors and officers who
have executed documents delivered pursuant to the Agreement on behalf of each
such corporation;
e. a certificate, dated within ten (10)
days prior to the Closing Date, of the Secretary of State of the state of
incorporation for the Company establishing that the Company is in existence,
has paid all franchise or similar taxes, if any, and, if applicable, otherwise
is in good standing to transact business in its state of organization;
f. certificates, dated within ten (10)
days prior to the Closing Date, of the Secretary of State of the states in
which the Company is qualified to do business, to the effect that the Company
is qualified to do business and, if applicable, is in good standing as a
foreign corporation in each of such states;
g. an opinion of counsel to the Company
and Physicians dated as of the Closing Date, in form and substance satisfactory
to Vision 21, which Vision 21, Vision 21's counsel and the underwriters of any
Initial Public Offering and their counsel are permitted to rely upon and which
shall include an opinion, subject to normal and customary exceptions that to
the best of their knowledge the transactions and arrangements contemplated by
this Agreement are in conformity with State laws, rules and regulations
governing the practice of medicine.
h. such appropriate documents of
transfer, including bills of sale, endorsements, assignments, drafts, checks or
other instruments, as to all of the Nonmedical Assets, and any other
appropriate instruments in such reasonable or customary form as shall be
requested by Vision 21 and its counsel;
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i. such instruments satisfactory to
Vision 21 that all liens, claims, pledges, security interests and other
encumbrances on all of the Nonmedical Assets have been released;
j. all authorizations, consents, permits
and licenses referenced in Section 3.5;
k. the executed Business Management
Agreement in substantially the form attached hereto as Exhibit 12.1 (k), as
revised in accordance with changes reasonably deemed necessary or advisable by
legal counsel retained by Vision 21 in the State to address regulatory and
compliance issues;
l. an executed Physician Employment
Agreement between the Company and the Physician in substantially the form
attached hereto as Exhibit 12.1 (l);
m. an executed Physician Employment
Agreement between the Company and each Physician Employee who is then an
employee of the Company in substantially the form attached hereto as Exhibit
12.1 (m);
n. an executed Optometrist Employment
Agreement between the Company and each Optometrist Employee who is then an
employee of the Company in substantially the form attached hereto as Exhibit
12.1 (n);
o. an executed Registration Rights
Agreement between Vision 21 and the Company in substantially the form attached
hereto as Exhibit 12.1 (o) (the "Registration Rights Agreement");
p. a non-foreign affidavit, as such
affidavit is referred to in Section 1445 (b) (2) of the Code, of the Physician,
signed under a penalty of perjury and dated as of the Closing Date, to the
effect that the Physician is a United States citizen or a resident alien (and
thus not a foreign person) and providing the Physician's United States taxpayer
identification number;
q. an assignment to Vision 21 of each
lease for real property described on Schedule 2.1(d) (the "Lease Assignments"),
or if desired by Vision 21, a new lease or leases between the landlords under
such leases and Vision 21 in form and substance reasonably satisfactory to
Vision 21; and
r. such other instrument or instruments
of transfer prepared by Vision 21 as shall be necessary or appropriate, as
Vision 21 or its counsel shall reasonably request, to carry out and effect the
purpose and intent of this Agreement.
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12.2. Deliveries of Vision 21. At or prior to December
24, 1996, Vision 21 shall deliver to the Company and the Physician, c/x
Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to Vision 21, the following, all of
which shall be in a form reasonably satisfactory to the Company and the
Physician and shall be held by Xxxxxxxx, Loop & Xxxxxxxx, LLP in escrow pending
Closing, pursuant to an escrow agreement or letter in form and substance
mutually acceptable to the parties hereto:
a. a copy of the resolutions of the Board
of Directors of Vision 21 authorizing (i) the execution, delivery and
performance of this Agreement, and all related documents and agreements, and
(ii) the consummation of the Transaction, certified by Vision 21's Secretary as
being true and correct copies of the originals thereof subject to no
modifications or amendments;
b. a certificate of an officer of Vision
21 dated the Closing Date as to the truth and correctness of the
representations and warranties of Vision 21 contained herein, on and as of the
Closing Date;
c. a certificate of an officer of Vision
21 dated the Closing Date, (i) as to the performance and compliance of Vision
21 with all covenants contained herein on and as of the Closing Date and (ii)
certifying that all conditions precedent of Vision 21 to the Closing have been
satisfied;
d. a certificate, dated within ten (10)
days prior to the Closing Date, of the Secretary of State of the State of
Florida establishing that Vision 21 is in existence, has paid all franchise or
similar taxes, if any, and, if applicable, otherwise is in good standing to
transact business in such state;
e. certificates (or photocopies thereof),
dated within ten (10) days prior to the Closing Date, of the Secretary of State
of each state in which Vision 21 is qualified to do business, to the effect
that Vision 21 is qualified to do business and, if applicable, is in good
standing as a foreign corporation in each of such states;
f. an opinion of Xxxxxxxx, Loop &
Xxxxxxxx, LLP, counsel to Vision 21, dated as of the Closing Date, pursuant to
Section 11.3;
g. the executed Registration Rights
Agreement;
h. the executed Lease Assignments;
i. the Note in the original principal
amount set forth in this Agreement;
j. the Agreement to Continue Practice
After Transfer Event and Stock Pledge; and
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k. such other instrument or instruments
of transfer, prepared by the Company or the Physician as shall be necessary or
appropriate, as the Company, the Physician or their counsel shall reasonable
request, to carry out and effect the purpose and intent of this Agreement.
12.3. Release of Escrow Materials. Xxxxxxxx, Loop &
Xxxxxxxx, LLP shall release the agreements, certificates, instruments,
documents and other materials described in Sections 12.1 and 12.2 to the
appropriate parties to effectuate the transactions contemplated in this
Agreement only after all such materials have been delivered by all applicable
parties (or the parties receiving such documents have waived in writing such
delivery requirement) and after counsel for the Physician and the Company have
sent written notice to Xxxxxxxx, Loop & Xxxxxxxx, LLP stating that the
Physician and the Company have reviewed the amended Confidential Information
Memorandum and have decided, based upon such review, to consummate the
transactions contemplated in this Agreement. In the event that the Physician
and the Company elect not to consummate the transactions contemplated in this
Agreement based upon their review of the amended Confidential Information
Memorandum, and counsel for the Physician and the Company informs Xxxxxxxx,
Loop & Xxxxxxxx, LLP in writing as to such decision, Xxxxxxxx, Loop & Xxxxxxxx,
LLP shall promptly return the foregoing materials to the parties sending such
materials.
13. POST CLOSING MATTERS.
13.1. Further Instruments of Transfer. From and after
the Closing Date, at the request of Vision 21 and at Vision 21's sole cost and
expense, the Physician and the Company shall deliver any further instruments of
transfer and take all reasonable action as may be necessary or appropriate to
carry out the purpose and intent of this Agreement.
13.2. Practice Advisory Council; Local Advisory
Council; National Appeals Council. Vision 21 and the Company shall establish a
practice advisory council composed of delegates from Vision 21 and the Company
which shall advise Vision 21 and the Company and determine certain issues as
more fully described in the Business Management Agreement. Vision 21 shall
also establish a local advisory council composed of delegates from certain
practice groups acquired by Vision 21 in connection with the Related
Acquisitions. Such delegates shall be appointed from practice groups which are
located in a market area to be identified by Vision 21 and in which the Company
is located. The local advisory council board shall advise Vision 21 and the
practice groups within the market area as to policy and strategy issues and
shall determine certain types of issues and disputes between Vision 21 and such
practice groups which issues and disputes are identified in the Business
Management Agreement and other management agreements entered into between
Vision 21 and practice groups. The Company shall have the right to appoint one
(1) member to a local advisory council who shall serve an initial two (2) year
term. After the initial two-year term, election of members to the local
advisory council shall be in accordance with by-laws which shall be adopted and
amended by the local advisory council. Vision 21 shall also establish a
national appeals council which shall have, among other duties and
responsibilities, the power to adopt and amend its by-laws,
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to review and approve as limited herein certain decisions of the local advisory
councils, and to resolve deadlocks among the members of such local advisory
councils.
14. REMEDIES.
14.1. Indemnification by the Company and Physician.
Subject to the terms and conditions of this Agreement, the Company and the
Physician, jointly and severally, agree to indemnify, defend and hold Vision 21
and its directors, officers, members, managers, employees, agents, attorneys
and affiliates harmless from and against all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees and expenses (collectively, "Damages") asserted against or
incurred by such entities and individuals (including, but not limited to, any
reduction in payments to or revenues of the Company) arising out of or
resulting from:
a. a breach of any representation,
warranty or covenant of the Company or the Physician contained herein or in any
schedule or certificate delivered hereunder;
b. any liability under the Securities
Act, the Exchange Act or any other federal or state "Blue Sky" or securities
law or regulation, at common law or otherwise, (i) arising out of or based upon
any untrue statement or alleged untrue statement of a material fact relating to
the Physician or the Company (including its subsidiaries, if any), and provided
to Vision 21 or its counsel by the Company or the Physician, specifically for
inclusion in a Registration Statement or any prospectus forming a part thereof,
or any amendment thereof or supplement thereto, (ii) arising out of or based
upon any omission or alleged omission to state therein a material fact relating
to the Physician or the Company (including its subsidiaries, if any) required
to be stated therein or necessary to make the statements therein not
misleading, and not provided to Vision 21 or its counsel by the Company or the
Physician, provided, however, that such indemnity shall not inure to the
benefit of Vision 21 to the extent that such untrue statement (or alleged
untrue statement) was made, in, or omission (or alleged omission) occurred in,
any preliminary prospectus, and such information was not so included by Vision
21 and properly delivered to shareholders of Vision 21 who acquire Vision 21
Common Stock in any Initial Public Offering;
c. any filings, reports or disclosures
made pursuant to the IRS Voluntary Compliance Resolution Program, if
applicable; and
d. any liability arising from any alleged
unlawful sale or offer to sell or transfer any of the Common Stock by
Physician.
14.2. Indemnification by Vision 21. Subject to the
terms and conditions of this Agreement, Vision 21 hereby agrees to indemnify,
defend and hold the Company and the Physician harmless from and against all
damages asserted against or incurred by it or him arising out of or resulting
from:
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a. a breach by Vision 21 of any
representation, warranty or covenant of Vision 21 contained therein or in any
schedule or certificate delivered hereunder;
b. any liability under the Securities
Act, the Exchange Act or any other federal or state "Blue Sky" or securities
law or regulation, at common law or otherwise, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact relating to
Vision 21, contained in any preliminary prospectus, Registration Statement or
any prospectus forming a part thereof, or any amendment thereof or supplement
thereto, arising out of or based upon any omission or alleged omission to state
therein a material fact relating to Vision 21 (including its subsidiaries),
required to be stated therein or necessary to make the statements therein not
misleading; and
c. any filings, reports or disclosures
made pursuant to the IRS Voluntary Compliance Resolution Program, if
applicable.
Notwithstanding anything in this Section 14.2, Vision 21 shall not be
liable for any Damages resulting from any matter not disclosed to Vision 21 by
any of the third parties to be acquired by Vision 21 in connection with the
Related Acquisitions.
14.3. Conditions of Indemnification. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
a. A party claiming indemnification under
this Agreement (an "Indemnified Party") shall promptly (and, in any event, at
least ten (10) days prior to the due date for any responsive pleadings, filings
or other documents) (i) notify the party from whom indemnification is sought
(the "Indemnifying Party") of any third-party claim or claims asserted against
the Indemnified Party ("Third Party Claim") that could give rise to a right of
indemnification under this Agreement and (ii) transmit to the Indemnifying
Party a written notice ("Claim Notice") describing in reasonable detail the
nature of the Third Party Claim, a copy of all papers served with respect to
such claim (if any), an estimate of the amount of damages attributable to the
Third Party Claim and the basis of the Indemnified Party's request for
indemnification under this Agreement. Except as set forth in Section 14.6, the
failure to promptly deliver a Claim Notice shall not relieve the Indemnifying
Party of its obligations to the Indemnified Party with respect to the related
Third Party Claim except to the extent that the resulting delay is materially
prejudicial to the defense of such claim. Within thirty (30) days after
receipt of any Claim Notice (the "Election Period"), the Indemnifying Party
shall notify the Indemnified Party (i) whether the Indemnifying Party disputes
its potential liability to the Indemnified Party under this Article 14 with
respect to such Third Party Claim and (ii) whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such Third Party Claim.
b. If the Indemnifying Party notifies the
Indemnified Party within the Election Period that the Indemnifying Party elects
to assume the defense of the Third Party Claim, then the Indemnifying Party
shall have the right to defend, at its sole cost and
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expense, such Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying Party in accordance
with this Section 14.3(b). The Indemnifying Party shall have full control of
such defense and proceedings, including any compromise or settlement thereof.
The Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Party is entitled to
indemnification hereunder), to file, during the Election Period, any motion,
answer or other pleadings that the Indemnified Party shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party and not
prejudicial to the Indemnifying Party (it being understood and agreed that if
an Indemnified Party takes any such action that is prejudicial and causes a
final adjudication that is adverse to the Indemnifying Party, the Indemnifying
Party shall be relieved of its obligations hereunder with respect to such Third
Party Claim). If requested by the Indemnifying Party, the Indemnified Party
agrees, at the sole cost and expense of the Indemnifying Party, to cooperate
with the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest, including, without limitation,
the making of any related counterclaim against the person asserting the Third
Party Claim or any cross-complaint against any person. The Indemnified Party
may participate in, but not control, any defense or settlement of any Third
Party Claim controlled by the Indemnifying Party pursuant to Section 14.3(b)
and shall bear its own costs and expenses with respect to such participation;
provided, however, that if the named parties to any such action (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party, and the Indemnified Party has been advised by counsel that there may be
one or more legal defenses available to it that are different from or
additional to those available to the Indemnifying Party, then the Indemnified
Party may employ separate counsel at the expense of the Indemnifying Party, and
upon written notification thereof, the Indemnifying Party shall not have the
right to assume the defense of such action on behalf of the Indemnified Party;
provided further that the Indemnifying Party shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm
of attorneys at any time for the Indemnified Party, which firm shall be
designated in writing by the Indemnified Party.
c. If the Indemnifying Party fails to
notify the Indemnified Party within the Election Period that the Indemnifying
Party elects to defend the Indemnified Party pursuant to Section 14.3(b), or if
the Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 14.3(b) but fails diligently and promptly to prosecute or settle the
Third Party Claim, then the Indemnified Party shall have the right to defend,
at the sole cost and expense of the Indemnifying Party (if the Indemnified
Party is entitled to indemnification hereunder), the Third Party Claim by all
appropriate proceedings, which proceedings shall be promptly and vigorously
prosecuted by the Indemnified Party to a final conclusion or settled. The
Indemnified Party shall have full control of such defense and proceedings,
provided, however, that the Indemnified Party may not enter into, without the
Indemnifying Party's consent, which shall not be unreasonably withheld, any
compromise or settlement of such Third Party Claim. Notwithstanding the
foregoing, if the Indemnifying Party has delivered a written
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notice to the Indemnified Party to the effect that the Indemnifying Party
disputes its potential liability to the Indemnified Party under this Article 14
and if such dispute is resolved in favor of the Indemnifying Party, the
Indemnifying Party shall not be required to bear the costs and expenses of the
Indemnifying Party's defense pursuant to this Section or of the Indemnifying
Party's participation therein at the Indemnified Party's request, and the
Indemnified Party shall reimburse the Indemnifying Party in full for all costs
and expenses of such litigation. The Indemnifying Party may participate in,
but not control any defense or settlement controlled by the Indemnified Party
pursuant to this Section 14.3(c), and the Indemnifying Party shall bear its own
costs and expenses with respect to such participation; provided, however, that
if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnifying Party has been advised by counsel that there may be one or more
legal defenses available to the Indemnified Party, then the Indemnifying Party
may employ separate counsel and upon written notification thereof, the
Indemnified Party shall not have the right to assume the defense of such action
on behalf of the Indemnifying Party.
d. In the event any Indemnified Party
should have a claim against any Indemnifying Party hereunder that does not
involve a Third Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice") describing in
reasonable detail the nature of the claim, an estimate of the amount of damages
attributable to such claim and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does not
notify the Indemnified Party within sixty (60) days from its receipt of the
Indemnity Notice that the Indemnifying Party disputes such claim, the claim
specified by the Indemnified Party in the Indemnity Notice shall be deemed a
liability of the Indemnifying Party hereunder. If the Indemnifying Party has
timely disputed such claim, as provided above, such dispute shall be resolved
by mediation or arbitration as provided in Section 18.1 if the parties do not
reach a settlement of such dispute within thirty (30) days after notice of a
dispute is given.
e. Payments of all amounts owing by an
Indemnifying Party pursuant to this Article 14 relating to a Third Party Claim
shall be made within thirty (30) days after the latest of (i) the settlement of
such Third Party Claim, (ii) the expiration of the period for appeal of a final
adjudication of such Third Party Claim or (iii) the expiration of the period
for appeal of a final adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement. Payments of all amounts owing by an
Indemnifying Party pursuant to Section 14.3(d) shall be made within thirty (30)
days after the later of (i) the expiration of the sixty (60) day Indemnity
Notice period or (ii) the expiration of the period for appeal, if any, of a
final adjudication or arbitration of the Indemnifying Party's liability to the
Indemnified Party under this Agreement.
14.4. Remedies Not Exclusive. The remedies provided in
this Agreement shall not be exclusive of any other rights or remedies available
to one party against the other, either at law or in equity. This Article 14
regarding indemnification shall survive Closing.
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14.5. Costs, Expenses and Legal Fees. Each party
hereto agrees to pay the costs and expenses (including attorneys' fees and
expenses) incurred by the other parties in successfully (a) enforcing any of
the terms of this Agreement, or (b) proving that another party breached any of
the terms of this Agreement.
14.6. Indemnification Limitations. Notwithstanding the
provisions of Sections 14.1 and 14.2, (a) no party shall be required to
indemnify another party with respect to a breach of a representation, warranty
or covenant unless the claim for indemnification is brought within two (2)
years after the Closing Date, except that a claim for indemnification for a
breach of the representations and warranties contained in Sections 3.1, 3.2.,
3.3, 3.11, 3.14, 3.20, 4.3, 4.5, 4.8, 5.1, 5.2, 5.3, 5.4 and 6.1 may be made at
any time, and a claim for indemnification for a breach of the representations
and warranties contained in Sections 3.9, 3.15, 3.17, 3.18, 3.24, 3.25, 3.26,
3.27, 3.28, 3.30, 4.1, 4.4, 4.6, 5.6 and 5.7 may be made at any time within the
applicable statute of limitations; (b) indemnification based upon Sections
14.1(b) through (d) and 14.2(b) may be made at any time within the applicable
statute of limitations; and (c) the Physician shall not be required to
indemnify Vision 21 pursuant to Section 16.1 unless, and to the extent that,
the aggregate amount of Damages incurred by Vision 21 shall exceed an amount
equal to two percent (2%) of the total Purchase Price; and (c) the Physician
shall not be required to indemnify Vision 21 with respect to a breach of a
representation, warranty or covenant for Damages in excess of the aggregate
Purchase Price received by the Physician (other than pursuant to a requirement
to indemnify Vision 21 under Sections 3.27 or 3.28, or unless the breach
involves an intentional breach or fraud by the Physician or the Company which
shall be unlimited).
14.7. Tax Benefits; Insurance Proceeds. The total
amount of any indemnity payments owed by one party to another party to this
Agreement shall be reduced by any correlative tax benefit received by the party
to be indemnified or the net proceeds received by the party to be indemnified
with respect to recovery from third parties or insurance proceeds and such
correlative insurance benefit shall be net of the insurance premium, if any,
that becomes due as a result of such claim.
14.8. Payment of Indemnification Obligation. In the
event that the Physician has an indemnification obligation to Vision 21
hereunder, subject to Vision 21's approval as set forth below, the Physician
may satisfy such obligation by transferring to Vision 21 such number of shares
of Vision 21 Common Stock owned by the Physician having an aggregate fair
market value (which is prior to any Initial Public Offering based upon the
valuation given at Closing hereof or after an Initial Public Offering the fair
market value at such time based on the last reported sale price of Vision 21
Common Stock on a principal national securities exchange or other exchange on
which the Vision 21 Common Stock is then listed or the last quoted ask price on
any over-the-counter market through which the Vision 21 Common Stock is then
quoted on the last trading day immediately preceding the day on which the
Physician transfers shares of Vision 21 Common Stock to Vision 21 hereunder)
equal to the indemnification obligation, provided that each of the following
conditions are satisfied:
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a. The Physician shall transfer to Vision
21 good, valid and marketable title to the shares of Vision 21 Common Stock,
free and clear of all adverse claims, security interests, liens, claims,
proxies, options, stockholders' agreements and encumbrances;
b. The Physician shall make such
representation and warranties as to title to the stock, absences of security
interests, liens, claims, proxies, stockholders' agreements and other
encumbrances and other matters as reasonably requested by Vision 21; and
c. The other terms and conditions of any
transaction contemplated pursuant to this Section and the effects thereof,
including any legal or tax consequences, shall be reasonably satisfactory to
Vision 21.
15. TERMINATION.
15.1. Termination. This Agreement may be terminate
and the Transaction may be abandoned:
a. at any time prior to the Closing Date
by mutual agreement of all parties;
b. at any time prior to the Closing Date
by Vision 21 if any representation or warranty of the Company or the Physician
contained in this Agreement or in any certificate or other document executed
and delivered by the Company or the Physician pursuant to this Agreement is or
becomes untrue or breached in any material respect or if the Company or the
Physician fails to comply in any material respect with any covenant or
agreement contained herein, and any such misrepresentation, noncompliance or
breach is not cured, waived or eliminated within twenty (20) days after receipt
of written notice thereof;
c. at any time prior to the Closing Date
by the Company if any representation or warranty of Vision 21 contained in this
Agreement is or becomes untrue in any material respect or if Vision 21 fails to
comply in any material respect with any covenant or agreement contained herein,
and any such misrepresentation, noncompliance or breach is not cured, waived or
eliminated within twenty (20) days after receipt or written notice thereof;
d. at any time prior to the Closing Date
by the Company in the event of the failure of any of the conditions precedent
set forth in Article 13 of this Agreement;
e. at any time prior to the Closing Date
by Vision 21 in the event of the failure of any of the conditions precedent set
forth in Article 12 of this Agreement;
f. by Vision 21 if at any time prior to
the Closing Date, Vision 21 deems termination to be advisable, provided,
however, that if Vision 21 exercises its right to terminate this Agreement
under this subsection, Vision 21 shall reimburse the Company and the Physician
for all reasonable attorneys' and accountants' fees incurred by the Company
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and the Physician in connection with this Agreement; provided that Vision 21
shall only reimburse the Company and the Physician up to an aggregate maximum
amount of One Hundred Thousand and No/100 Dollars ($100,000.00) for such fees;
or
g. by Vision 21 or the Company if the
Transaction shall not have been consummated by December 5, 1996.
15.2. Effect of Termination. In the event this
Agreement is terminated pursuant to Section 15.1, Vision 21, the Company and
the Physician, shall each be entitled to pursue, exercise and enforce any and
all remedies, rights, powers and privileges available at law or in equity,
subject to the limitations set forth in Section 15.1. In the event of a
termination of this Agreement under the provisions of this Article 15, a party
not then in material breach of this Agreement shall stand fully released and
discharged of any and all obligations under this Agreement.
16. PHYSICIAN EMPLOYMENT AGREEMENT.
16.1. Physician Employment Agreement. The parties
acknowledge that in accordance with the terms of this Agreement, Physician, as
employee, and the Company, as employer, have entered into the Physician
Employment Agreement and that Vision 21 is entitled to enforce such Physician
Employment Agreement as an intended third party beneficiary. Physician and
Vision 21 acknowledge that Vision 21 would suffer severe harm in the event of
Physician's resignation prior to the expiration of the five (5) year term of
such Physician Employment Agreement (without first obtaining the written
consent of Vision 21) or a breach or default of Physician's obligations under
such Physician Employment Agreement, and Physician, the Company and Vision 21
agree that Vision 21 shall be entitled to recover from Physician any and all
damages incurred by Vision 21 caused by such resignation, breach or default.
Notwithstanding the foregoing, Vision 21 shall not be entitled to recover its
damages caused by such resignation, breach or default if such resignation,
breach or default was caused by: (i) the death or disability of Physician,
(ii) circumstances not caused by an act or omission of Physician and which
circumstances are beyond his control, or (iii) loss of Physician's license to
practice as an ophthalmologist, unless such loss of license is due to an act or
omission of Physician. Notwithstanding the foregoing, Physician shall have no
obligation to pay the damages contemplated in this Section 16.1 if (a) the
Business Management Agreement has been terminated pursuant to a material breach
by Vision 21, or (b) Physician cures any such breach or default of the
Physician Employment Agreement within a period of thirty (30) days after notice
from Vision 21 of such breach or default.
16.2. Survival. The parties acknowledge and agree that
this Article 16 shall survive the Closing of the transactions contemplated
herein.
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17. NON-COMPETITION AND CONFIDENTIALITY COVENANTS.
17.1. Physician and Company Non-Competition Covenant.
a. The Physician and the Company
recognize that the covenants of the Physician and the Company contained in this
Section 17.1 are an essential part of this Agreement and that, but for the
agreement of the Physician and the Company to comply with such covenants,
Vision 21 would not have entered into this Agreement. The Physician and the
Company acknowledge and agree that the Physician's and the Company's covenants
not to compete are necessary to ensure the continuation of the Management
Business (as defined below) and are necessary to protect the reputation of
Vision 21, and that irreparable and irrevocable harm and damage will be done to
Vision 21 if the Physician or the Company compete with the Management Business
or Vision 21. The Physician and the Company accordingly agree that for the
periods set forth in the Business Management Agreement the Physician and the
Company shall not:
i) directly or indirectly,
either as principal, agent, independent contractor, consultant, director,
officer, employee, employer, advisor, stockholder, partner or in any other
individual or representative capacity whatsoever, either for the Physician's or
the Company's own benefit or for the benefit of any other person or entity
knowingly (A) hire, attempt to hire, contact or solicit with respect to hiring
any employee of Vision 21 (or of any of its direct or indirect subsidiaries) or
(B) induce or otherwise counsel, advise or encourage any employee of Vision 21
(or of any of its direct or indirect subsidiaries) to leave the employment of
Vision 21;
ii) act or serve, directly or
indirectly, as a principal, agent, independent contractor, consultant,
director, officer, employee, employer or advisor or in any other position or
capacity with or for, or acquire a direct or indirect ownership interest in or
otherwise conduct (whether as stockholder, partner, investor, joint venturer,
or as owner of any other type of interest), any Competing Management Business
as such term is defined herein; provided, however, that this clause (ii) shall
not prohibit the Physician or the Company from being the owner of up to 1% of
any class of outstanding securities of any company or entity if such class of
securities is publicly traded; or
iii) directly or indirectly,
either as principal, agent, independent, contractor, consultant, director,
officer, employee, employer, advisor, stockholder, partner or in any other
individual or representative capacity whatsoever, either for the Physician's or
the Company's own benefit or for the benefit of any other person or entity,
call upon or solicit any customers or clients of the Management Business;
provided however, that the Physician may send out a general notice to the
customers or clients of the Management Business announcing the termination of
his arrangement with Vision 21 and may advertise in a general manner without
violating this covenant. The parties hereto acknowledge and agree that for
purposes of this Section, patients which have in the past received medical or
optometric care
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from the Company and/or shall in the future receive medical or optometric care
from the Company are not deemed to be customers or clients of the Management
Business.
b. For the purposes of this Section 17.1,
the following terms shall have the meaning set forth below:
i) "Management Business" shall
mean management and administration of the non-medical aspects of medical,
ophthalmology and optometry practices.
ii) "Competing Management
Business" shall mean an individual, business, corporation, association, firm,
undertaking, company, partnership, joint venture, organization or other entity
that either (A) conducts a business substantially similar to the Management
Business within the State, or (B) provides or sells a service which is the same
or substantially similar to, or otherwise competitive with the services
provided by the Management Business within the State; provided, however, that
"Competing Management Business" shall not include Vision 21, or the Physician's
internal management and administration of the Physician's or the Company's
medical practice or participation in the management and administration of a
physician group in which the Physician or the Company devote a significant
amount of time to the practice of medicine.
c. Should any portion of this Section
17.1 be deemed unenforceable because of the scope, duration or territory
encompassed by the undertakings of the Physician or the Company hereunder, and
only in such event, then the Physician, the Company and Vision 21 consent and
agree to such limitation on scope, duration or territory as may be finally
adjudicated as enforceable by a court of competent jurisdiction after the
exhaustion of all appeals.
d. This covenant shall be construed as an
agreement ancillary to the other provisions of this Agreement, and the
existence of any claim or cause of action of the Physician or the Company
against Vision 21, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Vision 21 of this covenant;
provided, however, that the Physician and the Company shall not be bound by
this covenant and shall not be obligated to pay the liquidated damages
contemplated in this Section 17.1 if at the time of a breach of this covenant
the Business Management Agreement has already been terminated pursuant to
Section 6.2(a) thereof. Without limiting other possible remedies to Vision 21
for breach of this covenant, the Physician and the Company agree that
injunctive or other equitable relief will be available to enforce the covenants
of this provision, such relief to be without the necessity of posting a bond,
cash or otherwise. The Physician, the Company and Vision 21 further expressly
acknowledge that the damages that would result from a violation of this
non-competition covenant would be impossible to predict with any degree of
certainty, and agree that liquidated damages in the aggregate amount of the
aggregate consideration received by the Physician pursuant to this Agreement is
reasonable in light of the severe harm to the Management Business and Vision 21
which would result in the event that a violation of this non-competition
covenant were to occur. For purposes of calculation of the liquidated damages
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contemplated in this Section and for purposes of calculation of the liquidated
damages contemplated in the Business Management Agreement and the Physician
Employment Agreement between the Physician and the Company, the aggregate
consideration received by Physician and the Company pursuant to this Agreement
shall be in those amounts and in such form as set forth in Schedule 17.1. If
the Physician violates this non-competition covenant, Vision 21 shall, in
addition to all other rights and remedies available at law or equity, be
entitled to (a) cancel the number of shares of Common Stock held by the
Physician or the Company or, with respect to shares of Common Stock entitled to
be received by the Physician or the Company, terminate its obligation to
deliver such number of shares of Common Stock, valued as set forth in Section
6.6(a) of the Business Management Agreement, (b) set off all or any of such
liquidated damages sum against amounts payable under the Note held by the
Physician or the Company, and (c) repayment by Physician to Vision 21 of the
fair market value as described above, of Vision 21 Common Stock sold by
Physician; but in no event shall Vision 21 be entitled to offset amounts in
excess of the liquidated damages sum pursuant to this Section 17.1. The
Physician and the Company agree to deliver to Vision 21 the certificates
representing any such shares canceled by Vision 21 or the Note. Payment and
satisfaction by Physician shall be made within sixty (60) days of notification
to Physician by Vision 21 that Physician has violated this non-competition
covenant.
e. Notwithstanding anything contained
herein, this Section 17.1 shall not be construed to (i) limit the freedom of
any patient of the Physician or the Company to choose the facility or physician
from whom such patient shall receive health-care services or (ii) limit or
interfere with the Physician's ability to exercise his professional medical
judgment in treating his patients or his ability to provide medical services to
his patients.
17.2. Physician and Company Confidentiality Covenant.
From the date hereof, the Physician and the Company shall not, directly or
indirectly, use for any purpose, other than in connection with the performance
of the Physician's duties under the Physician Employment Agreement with the
Company, or disclose to any third party, any information of Vision 21 or the
Company, as appropriate (whether written or oral), including any business
management or economic studies, patient lists, proprietary forms, proprietary
business or management methods, marketing data, fee schedules, or trade secrets
of Vision 21 or of the Company, as applicable, and including the terms and
provisions of this Agreement and any transaction or document executed by the
parties pursuant to this Agreement. Notwithstanding the foregoing, the
Physician and the Company may disclose information that the Physician or the
Company can establish (a) is or becomes generally available to and known by the
public or medical community (other than as a result of an unpermitted
disclosure directly or indirectly by the Physician or the Company or their
respective Affiliates, advisors, or representatives); (b) is or becomes
available to the Physician or the Company on a nonconfidential basis from a
source other than Vision 21 or its Affiliates, advisors or representatives,
provided that such source is not and was not bound by a confidentiality
agreement with or other obligation of secrecy to Vision 21 or its Affiliates,
advisors or representatives of which the Physician or the Company has
knowledge; or (c) has already been or is hereafter independently acquired or
developed by the Physician or the Company without violating any confidentiality
agreement with or other
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obligation of secrecy to Vision 21, the Company or their respective Affiliates,
advisors or representatives. Without limiting the other possible remedies to
Vision 21 for the breach of this covenant, the Physician and the Company agree
that injunctive or other equitable relief shall be available to enforce this
covenant, such relief to be without the necessity of posting a bond, cash or
otherwise. The Physician and the Company further agree that if any restriction
contained in this Section 17.2 is held by any court to be unenforceable or
unreasonable, a lesser restriction shall be enforced in its place and the
remaining restrictions contained herein shall be enforced independently of each
other.
17.3. Survival. The parties acknowledge and agree that
this Article 17 shall survive the Closing of the transactions contemplated
herein.
18. DISPUTES.
18.1. Mediation and Arbitration. Any dispute,
controversy or claim (excluding claims arising out of an alleged breach of
Article 17 of this Agreement) arising out of this Agreement, or the breach
thereof, that cannot be settled through negotiation shall be settled (a) first,
by the parties trying in good faith to settle the dispute by mediation under
the Commercial Mediation Rules of the AAA (such mediation session to be held in
Tampa, Florida, if the amount in dispute is equal to or in excess of $200,000
or if the dispute is solely of a non-monetary nature, and in Minneapolis,
Minnesota if the amount in dispute is lower than $200,000, and in either case
to commence within 15 days of the appointment of the mediator by the AAA), and
(b) if the controversy, claim or dispute cannot be settled by mediation, then
by arbitration administered by the AAA under its Commercial Arbitration Rules
(such arbitration to be held in Tampa, Florida, if the amount in dispute is
equal to or in excess of $200,000 or if the dispute is solely of a non-monetary
nature, and in Minneapolis, Minnesota if the amount in dispute is lower than
$200,000, and in either case before a single arbitrator and to commence within
15 days of the appointment of the arbitrator by the AAA), and judgment on the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
19. MISCELLANEOUS
19.1. Taxes. Physician and the Company shall pay all
transfer taxes, sales and other taxes and charges, imposed by the State, if
any, which may become payable in connection with the transactions and documents
contemplated hereunder (excluding any of such taxes which may be attributable
to services to be provided by Vision 21 under the Business Management
Agreement). Vision 21 shall pay all transfer taxes, sales and other taxes and
charges imposed by the State of Florida, if any, which may become payable in
connection with the transactions and documents contemplated hereunder
(excluding any of such taxes which may be attributable to services to be
provided by Vision 21 under the Business Management Agreement).
19.2. Remedies Not Exclusive. No remedy conferred by
any of the specific provisions of this Agreement or any document contemplated
by this Agreement is intended to
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be exclusive of any other remedy, and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by any party hereto shall not constitute a
waiver of the right to pursue other available remedies.
19.3. Parties Bound. Except to the extent otherwise
expressly provided herein, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, representatives,
administrators, guardians, successors and assigns; and no other person shall
have any right, benefit or obligation hereunder.
19.4. Notices. All notices, reports, records or other
communications that are required or permitted to be given to the parties under
this Agreement shall be sufficient in all respects if given in writing and
delivered in person, by telecopy, by overnight courier or by registered or
certified mail, postage prepaid, return receipt requested, to the receiving
party at the following address:
If to Vision 21 addressed to:
Vision 21, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Chief Financial Officer
With copies to:
Xxxxxxxx, Loop & Xxxxxxxx
Post Office Box 172609
000 X. Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Facsimile No. (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esquire
If to the Company and the Physician addressed to:
Xxxxxxxxx, Xxxxxxxxx & Xxxxxxx
Ophthalmology Associates, P.A.
000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, M.D.
63
78
With copies to:
Xxxxxxxxxx & Xxxxx, P.A.
000 0xx Xxxxxx Xxxxx
0000 Xxxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxx, Esquire
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 19.4. Notice shall be deemed given on the date
of delivery, in the case of personal delivery or telecopy, or on the delivery
or refusal date, as specified on the return receipt, in the case of overnight
courier or registered or certified mail.
19.5. Choice of Law. This Agreement shall be
construed, interpreted, and the rights of the parties determined in accordance
with, the laws of the State of Florida except with respect to matters of law
concerning the internal affairs of any corporate or partnership entity which is
a party to or the subject of this Agreement, and as to those matters the law of
the state of incorporation or organization of the respective entity shall
govern.
19.6. Entire Agreement; Amendments and Waivers. This
Agreement, together with the documents contemplated by this Agreement and all
Exhibits and Schedules hereto and thereto, constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof. No supplement, modification or
waiver of any of the provisions of this Agreement shall be binding unless it
shall be specifically designated to be a supplement, modification or waiver of
this Agreement and shall be executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
19.7. Confidentiality Agreements. The provisions of
any prior confidentiality agreements and letters of intent between or among
Vision 21, the Company and the Physician, as amended, shall terminate and cease
to be of any force or effect at and upon the Closing.
19.8. Reformation Clause. It is the intention of the
parties hereto to conform strictly to applicable laws regarding the practice
and regulation of medicine, whether such laws are now or hereafter in effect,
including the laws of the United States of America, the State or any other
applicable jurisdiction, and including any subsequent revisions to, or judicial
interpretations of, those laws, in each case to the extent they are applicable
to this Agreement (the "Applicable Laws"). Accordingly, if the ownership of
any Nonmedical Asset by Vision 21 violates any Applicable Law, then the parties
hereto agree as follows: (a) the provisions of this
64
79
Section 19.8 shall govern and control; (b) if none of the parties hereto are
materially economically disadvantaged, then any Nonmedical Asset, the ownership
of which violates any Applicable Law, shall be deemed to have never been owned
by Vision 21; (c) if one or more of the parties hereto is materially
economically disadvantaged, then the parties hereto agree to negotiate in good
faith such changes to the structure and terms of the transactions provided for
in this Agreement as may be necessary to make these transactions, as
restructured, lawful under applicable laws and regulations, without materially
disadvantaging either party; (d) this Agreement shall be deemed reformed; and
(e) the parties to this Agreement shall execute and deliver all documents or
instruments necessary to effect or evidence the provisions of this Section
19.8.
19.9. Assignment. The Agreement may not be assigned by
operation of law or otherwise except that Vision 21 shall have the right to
assign this Agreement, at any time, to any Affiliate or direct or indirect
wholly-owned subsidiary. In the event of such assignment, Vision 21 shall
remain liable hereunder.
19.10. Attorneys' Fees. Except as otherwise
specifically provided herein, if any action or proceeding is brought by any
party with respect to this Agreement or the other documents contemplated with
respect to the interpretation, enforcement or breach hereof, the prevailing
party in such action shall be entitled to an award of all reasonable costs of
litigation or arbitration, including, without limitation, attorneys' fees, to
be paid by the losing party, in such amounts as may be determined by the court
having jurisdiction of such action or proceeding or by the arbitrators deciding
such action or proceeding.
19.11. Further Assurances. From time to time hereafter
and without further consideration, each of the parties hereto shall execute and
deliver such additional or further instruments of conveyance, assignment and
transfer and take such other actions as any of the other parties hereto may
reasonably request in order to more effectively consummate the transactions
contemplated hereunder or as shall be reasonably necessary or appropriate in
connection with the carrying out of the parties' respective obligations
hereunder for the purposes of this Agreement.
19.12. Announcements and Press Releases. Any press
releases or any other public announcements concerning this Agreement or the
transactions contemplated hereunder shall be approved in advance by Vision 21
and the Company; provided, however, that such approval shall not be
unreasonably withheld and if any party reasonably believes that it has a legal
obligation to make a press release and the consent of the other party cannot be
obtained, then the release may be made without such approval.
19.13. No Tax Representations. Each party acknowledges
that it is relying solely on its advisors to determine the tax consequences of
the transactions contemplated hereunder and that no representation or warranty
has been made by any party as to the tax consequences of such transactions
except as otherwise specifically set forth in this Agreement.
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80
19.14. No Rights as Stockholder. The Physician shall
have no rights as a stockholder with respect to any shares of Common Stock
until the issuance of a stock certificate evidencing such shares. Except as
otherwise provided in the Agreement, no adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to such
date any stock certificate is issued.
19.15. Multiple Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
19.16. Headings. The headings of the several articles
and sections herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
19.17. Severability. Each article, section and
subsection of this Agreement constitutes a separate and distinct undertaking,
covenant or provision of this Agreement. If any such provision shall finally
be determined to be unlawful, such provision shall be deemed severed from this
Agreement, but every other provision of this Agreement shall remain in full
force and effect.
19.18. Form of Transaction. If after the execution
hereof, Vision 21 determines that the sale of the Nonmedical Assets of the
Company can be better achieved through a different form of transaction without
economic injury to the Company or the Physician, or delay of the consummation
of the transaction, the Company and the Physician shall cooperate in revising
the structure of the transaction and shall negotiate in good faith to so amend
this Agreement; provided, that Vision 21 shall reimburse the Company and the
Physician at Closing for all reasonable additional expenses incurred by the
Company and the Physician as a result of such change in form.
[SIGNATURES ON FOLLOWING PAGE]
66
81
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
"COMPANY"
XXXXXXXXX, XXXXXXXXX & XXXXXXX
OPHTHALMOLOGY ASSOCIATES, P.A.
/s/ By:/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------ -------------------------------
Witness Xxxxxxx X. Xxxxxxxxx, President
/s/
------------------------------------
Witness
"PHYSICIAN"
/s/ /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------ ------------------------------------
Witness Xxxxxxx X. Xxxxxxxxx, M.D.
/s/ /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------ ------------------------------------
Witness Xxxxxx X. Xxxxxxxxx, M.D.
/s/ /s/ Xxxxx X. Xxxxxxx
------------------------------------ ------------------------------------
Witness Xxxxx X. Xxxxxxx, M.D.
"VISION 21"
VISION 21, INC.
/s/ By:/s/ Xxxxxxxx X. Xxxxxxxx
----------------------------------- ------------------------------------
Witness Xxxxxxxx X. Xxxxxxxx, President
/s/
-----------------------------------
Witness
67
82
Schedule 2.1(c)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Personal Property Leases
1. Banc One Leases #1000042973 for Xxxxxx'x slitlamp video system
and #1000037423 for same.
2. O.S. Leasing Lease #3785 for Mita Copier.
3. DVI Financial Services, Inc. - Lease for Yag Photodisruptor.
4. First United Leasing Corp. Lease for Sonamed A-scan.
83
Schedule 2.1(d)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Real Property Leases
1. Lease Agreement dated July 1, 1996 between Allina Health
System, as Lessor, and Xxxxxxx Xxxxxxxxx, M.D. Term: 60
months.
2. Lease Agreement dated 11/1/96 between Allina Health System for
Suite 107 of the Park Avenue Medical Office Building.
84
Schedule 2.1(e)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Assumed Contracts
None
85
Schedule 2.1(f)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Tangible Personal Property
Miscellaneous personal effects, including display cabinet contents,
Xx. Xxxxxxxxx'x desk and cabinets in storage and plaques/wall
hangings, are not included.
See attached list.
[LIST OF TANGIBLE PERSONAL PROPERTY IS OMITTED.]
86
Schedule 2.1(h)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Nonmedical Assets
None.
87
Schedule 2.2
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Medical Assets
Medical records;
Patient lists;
Third-party payer contracts (except for rights to purchased
accounts receivable);
Eyeglasses, lenses and other eyewear;
Licenses, certificates of need, Medicare/Medicaid
certifications and other governmental authorizations necessary
to provide Professional Eye Care Services and to be paid
therefor by applicable third-party payers; and
Any other asset that legally cannot be owned by a party that
is not physician-owned by Vision 21.
88
Schedule 2.2(b)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Personal Effects
Desk -- belongs to Xxxxxxx X. Xxxxxxxxx, M.D.
Bookshelves -- All Books
1 Chair
All plaques and wall hangings
All personal gifts received by the Physician
89
Schedule 2.3
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Assumed Obligations
All material obligations of the Company and the Physician except for:
1. Obligations transferred to Laser Vision Centers, Inc.
2. Obligations to Firstar Bank under the Company's line of credit
and term note.
3. Contracts for the lease of real and personal property for
which a consent to transfer has not been received.
4. Insurance contracts which require a consent to transfer and
for which such consent has not been received.
5. Third-party payor agreements.
90
Schedule 2.4A
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Purchase Price
$460,416 in cash and 455,196 shares of Vision 21 common stock payable
pursuant to a Subordinated Promissory Note
91
Schedule 2.8
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Purchase Price Allocation
To be completed after Purchase Price Adjustment
92
Schedule 3
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Individuals - Best knowledge
representations and warranties of the Company
1. Xxxxxxx X. Xxxxxxxxx, M.D.
2. Xxxxxx X. Xxxxxxxxx, M.D.
3. Xxxxx X. Xxxxxxx, M.D.
4. Xxxxxx Xxxx, Office Manager
93
Schedule 3.1
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Capital Stock or other interest owned by the
Company, the Physician or any Professional
Employee in any Competitor
1. Xx. Xxxxxxxxx owns stock and/or warrants of the following
companies:
Omega Health Systems, Inc.
Eye Care International, Inc.
Midwest Ophthalmology Consultants, Inc.
Eye Network, Inc.
Laser Vision Centers, Inc.
Midwest Eye Care Alliance
Surjijet (Midwest Surgical Services, Inc.)
Data Site (formerly Refractive Surgery Services, Inc.)
2. Xx. Xxxxxxx owns securities of the following companies:
Laser Vision Centers, Inc.
Midwest Eye Care Alliance, Inc.
Midwest Ophthalmology Consultants, Inc.
Eye Network, Inc.
Data Site
Surgijet Midwest Surgical Services, Inc.
Lasersight
3. Xx. Xxxxxxxxx owns securities of the following companies:
Midwest Eye Care Alliance, Inc.
Midwest Ophthalmology Consultants, Inc.
Eye Network, Inc.
94
Schedule 3.2
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Sale, distribution, or spin-off of
significant assets of the Company or its
Affiliates within the last two years
The Company will transfer certain of its assets to Laser Vision
Centers, Inc. pursuant to a letter of intent dated December 5, 1996.
95
Schedule 3.4
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Violations or conflicts resulting from
execution, delivery and consummation of
transaction by the Company
1. Allina Health Systems lease agreements for suites 106, 107 and
102 of the Park Avenue Medical Group Office Building.
2. Banc One Leases 1000042973 and 10000037423
3. O.S. Leasing Lease 3785
4. D.V.I. Financial Services, Inc. Lease
5. First United Leasing Corp. Lease
96
Schedule 3.5
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Consents required for Company from
Governmental Authority or any other persons
1. Allina Health Systems
2. Banc One
3. O.S. Leasing
4. DVI Financial Services, Inc.
5. First United Leasing Corp. (now Mellow First United Leasing)
6. Insurance companies which provide insurance policies to the
Company and the Physician.
97
Schedule 3.7
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Liabilities of the Company
not reflected in Financial Statements
1. See Schedule 3.10
2. Items may be reflected in financials prepared as of November
30, 1996.
98
Schedule 3.8(a)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Compensation of all Employees of the Company
Please see attached.
[IN ACCORDANCE WITH RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
CONFIDENTIAL PORTIONS OF THIS AGREEMENT (INCLUDING THE INFORMATION ON THE
ATTACHMENT CALLED FOR BY THIS SCHEDULE) HAVE BEEN OMITTED HEREFROM AND FILED
SEPARATELY WITH THE SECURITIES EXCHANGE COMMISSION.]
99
Schedule 3.8(b)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Compensation plans, arrangements or practices
sponsored by the Company or to which the Company
contributes on behalf of its
employees (other than Employment Agreements and
Employee Benefit Plans)
1. Special Compensation Addendum dated May 1, 1995 with Xxxxxxx
X. Xxxxxxxxx, M.D.
2. Agreement for Deferred Compensation dated January 1, 1993 with
Xxxxxxx X. Xxxxxxxxx, M.D.
3. Special Compensation Addendum dated May 1, 1995 with Xxxxxx X.
Xxxxxxxxx, M.D.
4. Agreement for Deferred Compensation dated January 1, 1993 with
Xxxxxx X. Xxxxxxxxx, M.D.
5. Agreement for Deferred Compensation dated May 1, 1995 with
Xxxxx X. Xxxxxxx, M.D.
100
Schedule 3.8(c)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Employment Agreements
1. Employment Agreement dated January 1, 1993 between the Company
and Xxxxxx X. Xxxxxxxxx, M.D.
2. Employment Agreement dated May 1, 1995 between the Company and
Xxxxx X. Xxxxxxx, M.D.
3. Employment Agreement dated January 1, 1993 between the Company
and Xxxxxxx Xxxxxxxxx, M.D.
4. Employment Agreement dated July 1, 1996 between the Company
and Y. Xxxxx Xxx, M.D.
101
Schedule 3.8(d)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Employee Policies and Procedures
Xxxxxxxxx, Xxxxxxxxx & Xxxxxxx Ophthalmology Associates, P.A. - Employee
Handbook.
102
Schedule 3.8(f)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Exceptions to Labor Compliance
None.
103
Schedule 3.8(g)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Union participation of Company Employees
None.
104
Schedule 3.9(a)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Employee Benefit Plans sponsored by the Company or
to which the Company contributes on behalf of its
Employees in the past three years
1. Xxxxxxxxx & Xxxxxxxxx Ophthalmology Associates, P.A. 401(k)
Pension Plan and Trust. This plan can be terminated at will
subject to compliance with 401(k) regulations.
105
Schedule 3.9(b)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Exceptions to Employee Benefit Plan Compliance
None.
106
Schedule 3.9(c)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Employee Benefit Plan audits, investigations or enforcement actions
None.
107
Schedule 3.9(d)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Employee Benefit Plan Prohibited Transactions
None.
108
Schedule 3.9(f)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Employee Benefit Plan determination letter or IRS ruling
Determination Letter dated February 24, 1993 regarding the Company's
401(k) Pension Plan and Trust.
109
Schedule 3.9(g)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Employee Benefit Plan Accumulated Funding Deficiency
The Company from time-to-time has small funding deficiencies on a
month-to-month basis (under $1,000). Any funding deficiency is made
up of the following month.
110
Schedule 3.9(h)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Employee Benefit Plan Excise Taxes
None.
111
Schedule 3.10
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Changes to Company since Balance Sheet Date
1. See the Company's financial statements as of November 30,
1996.
2. The Company purchased refractive lane for $17,000
approximately.
3. The Company has hired the following employees since September
30, 1996:
Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxxxx Xxxx,
Xxxxxxx Xxxxxx and Xxx Xxxxxxx.
112
Schedule 3.11(b)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Permitted Encumbrances on Personal Property
1. Banc One Leasing Corporation - UCC-1 Financing Statement filed
with Minnesota Secretary of State on August 5, 1996 covering
all equipment, furniture, fixtures and other personal
property.
2. Alcon Surgical, Inc. - UCC-1 Financing Statement filed with
Minnesota Secretary of State on December 26, 1995 covering
Alcon practice management system.
3. National Westminster Bank, USA - UCC-1 Financing Statement
filed with Minnesota Secretary of State on March 4, 1996
covering Laserex Systems, Inc. 3000LE Nd: Yag Photodisrupter
System.
4. Firststar Bank of Minnesota, N.A. - UCC-1 Financing Statement
filed with Minnesota Secretary of State on January 24, 1996
covering all inventory, equipment, accounts and general
intangibles.
5. Firstar MetroBank - UCC-1 Financing Statement filed with
Minnesota Secretary of State dated June 12, 1989, as amended
May 27, 1993, and as continued February 4, 1994, covering all
inventory, equipment, fixtures and general intangibles.
6. Security Bank - UCC-1 Financing Statement filed with Minnesota
Secretary of State on March 7, 1994 covering Mita 3785 Copier.
113
Schedule 3.11(c)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Real Property Leases and Personal Property Leases
1. See Schedules 2.1(c) and 2.1(d)
2. Copelco Capital, Inc. Leases Nos. 05 71790, 0-00000-0 and
0608380 9998000013. Lease 0608380 9998000013 is in dispute.
See Schedule 3.18.
114
Schedule 3.12
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Commitments of the Company
1. None that are not disclosed elsewhere.
2. Agreements with the following payors to provide medical or
health care services:
*Medica
*Minnesota Dept. of Human Services
*Health Integrated Provider Network
*Blue Cross Blue Shield of Minnesota
*Preferred One
*DHCS
*Eye Care International
*Health One
*State of Wisconsin Dept. of Health and Social Services
*Superior Vision Services, Inc.
*North Dakota Dept. of Human Services
*UCARE Minnesota
*Health Span Integrated Provider Network
3. Consulting Agreement dated September 13, 1994 with X.X. Xxxxx,
O.D., P.A.
4. Adminsitrative Services Agreement dated September 13, 1994
with X.X. Xxxxx, O.D., P.A.
115
Schedule 3.13
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Insurance Policies; Cancellations;
Outstanding Claims, Settlements or Premiums Owed;
Professional Liability Insurance
Denials since January 1, 1994; and All Claims since January 1, 1994
Consent of State Fund Mutual Insurance company, St. Xxxx Companies and
Chubb Insurance/Federal Insurance Company maybe necessary to transfer
the policies.
1. Workers' Compensation Policy No. WCA010006-00 with State Fund
Mutual Insurance Company
2. Professional Liabilty Insurance Policy No. DM06609826 with the
St. Xxxx Companies.
3. General Liability/professional office building insurance
policy No. DK06614224 with St. Xxxx Companies.
4. Fiduciary Insurance Policy No. 81377377 with Chubbs
Insurance/Federal Insurance Company.
116
Schedule 3.14
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Description of Proprietary Rights; Consents
None. Xx. Xxxxxxxxx personally owns 25 patents which are not included
in the transaction.
117
Schedule 3.15
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Good faith disputes over payment of
Taxes; Tax deficiency or delinquency
None.
118
Schedule 3.16
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
List of licenses, franchises, permits and
governmental authorizations for conduct of the Company's
business; Notices of Noncompliance
1. Xxxxxxx X. Xxxxxxxxx, M.D. - Minnesota State Board License
(No. 21444), North Dakota State Board License (No. 6996),
Texas State Board License (No. F2326), and DEA Certificate
(No. XX0000000).
2. Xxxxxx X. Xxxxxxxxx, M.D. - Minnesota State Board License (No.
30302) and DEA Certificate (No. XX0000000).
3. Xxxxx X. Xxxxxxx, M.D. - Minnesota State Board License (No.
31920), Wisconsin State Board License (No. 29723) and DEA
Certificate (No. XX0000000).
4. Xx. Xxxxx Xxx, M.D. - Minnesota State Board
License (No. 38792)
5. Xx. Xxxxx Xxxxx, X.X. - Minnesota State Board
License (No. 1751)
119
Schedule 3.17
to Asset Purchase Agreement among Lindstrom, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Finder's, broker's or agent's fee owed by the Company
None.
120
Schedule 3.18
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Company Litigation
1. Copelco Capital, f/k/a Copelco Leasing Corporation vs.
Xxxxxxxxx & Xxxxxxxxx Ophthalmology, Xxxxxx X. Xxxxxxxxx, Eye
Technology, Inc. and Xxxxxxx X. Xxxxxxxxx, Superior Court of
New Jersey, Docket No. L5484-96, filed July 3, 1996. Suit
for breach of Equipment Lease ($44,367.49 plus interest and
costs). This lease will not be transferred to Vision 21.
121
Schedule 3.21
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
List of Company borrowing and investing arrangements
1. Term Note dated December 15, 1993 in the original principal
amount of $150,000.00 given to Firstar Bank of Minnesota, N.A.
Term: 60 months. Interest rate: 1.00 percent above prime
rate. Monthly payments of $3,000.00, including interest.
Secured by security interest in all inventory and equipment.
This Note shall be paid off by the Physician.
2. Revolving Credit Note dated November 30, 1995 in the principal
amount of $100,000.00. Term: one year. Interest rate: .50
percent above prime rate. Interest only payable monthly.
Secured by security interest in all inventory and equipment.
This Note shall be paid off by the Physician.
122
Schedule 3.22
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Ownership Interests of Interested Persons
and Material Affiliations in the last
three years
1. See Schedules 3.1 and 4.6.
2. Drs. Hardten and Samuelson have employment agreements with St.
Xxxx Xxxxxx Medical Center and the Minneapolis VA Hospital.
3. Xx. Xxxxxxxxx is Chief of Staff at Xxxxxxxx Eye Institute.
4. Drs. Lindstrom and Xxxxxxx are employed by Xxxxxx & Associates
in Thief River Falls, Minnesota.
123
Schedule 3.23
to Asset Purchase Agreement among Lindstrom, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Company Investments in Competitors
See Schedule 4.6.
124
Schedule 3.29
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Description of and relationship with Payors
See attached Exhibit to Schedule 3.29
125
Schedule 3.35
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Inventory Exceptions
None.
126
Schedule 3.36
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Tangible Personal Property Exceptions
None.
127
Schedule 3.37
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Real Property Lease and Personal Property Leases Exceptions
See Schedule 3.18.
128
Schedule 3.38
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Assumed Contract Exceptions
None.
129
Schedule 4.2
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Violations or conflicts resulting from
execution, delivery or consummation of
transaction by the Physician
The Physician may be in conflict with or violation of the following:
None.
130
Schedule 4.5
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Finder's, broker's or agent's fees owed by the Physician
None.
131
Schedule 4.6
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Physician Ownership of Interested Persons and Material Affiliations
1. Xxxxxxx Xxxxxxxxx and Xx. Xxxxxxxxx own shares in RSS, a
limited liability company specializing in outcome-based
information systems available to the eye care industry.
2. Xxxxxxx Xxxxxxxxx owns shares in Autonomous Technologies
Corporation.
3. Stock Option Agreement dated May 17, 1996 between Xxxxxxx
Xxxxxxxxx (as a Director) and Laser Vision Centers.
4. Stock Option Agreement dated May 17, 1996 between Xxxxxxx
Xxxxxxxxx (as a Consultant) and Laser Vision Centers.
5. Xxxxxxx Xxxxxxxxx and wife own shares of Eye Technology, Inc.
given to them on June 13, 1995 in consideration for a release
of all obligations and liabilities arising from a License
Agreement dated April 1, 1989 and a Consulting Agreement dated
April 1, 1991.
6. See Schedule 3.22.
7. See Schedule 3.1.
8. Xx. Xxxxxxxxx has consulting arrangements with the following
companies: (or has had within 3 years):
Chiron, Ciba, Storz, Visatec, Slack, Surgijet Medical
Development Concepts, Inc., Midwest Surgical Services, Laser
Vision Centers, Inc., Alcon, Allergan, Eye Network, 3M Vision
Care, Xxxxxxxx Eye Institute, Insight Biomedical.
9. See attached list of consulting arrangements for Xx. Xxxxxxxxx
10. See attached list of affiliations for Xx. Xxxxxxx
132
Schedule 4.7
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Physician Investments in Competitors
See Schedule 4.6.
133
Schedule 4.8
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Physician Litigation
See Schedule 3.18.
134
Schedule 4.10
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
List of hospitals at which Physician has full staff privileges
1. Xxxxxxxx Eye Institute
2. St. Xxxx Xxxxxx Medical Center
3. Minneapolis VA Hospital
4. All doctors have courtesy privileges at certain other
hospitals.
5. See attached lists of hospital privileges for Drs. Hardten,
M.D. and Xxxxxxxxx, M.D.
135
Schedule 4.11
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Exceptions to continued Physician intent to practice medicine
1. Each physician practices currently, and has practiced over the
last 3 years, on the following basis:
Xx. Xxxxxxxxx - 100 days per year
Xx. Xxxxxxxxx - approximately 2 1/2 days/week excluding
vacation
Xx. Xxxxxxx - approximately 2 1/2 days/week excluding
vacation
136
Schedule 5
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Individuals - Best knowledge
representations and warranties of Vision 21
1. Xxxxxxxx X. Xxxxxxxx
2. Xxxxxxx X. Xxxxxxx
3. Xxxxxxx X. Xxxxx
4. Xxxxxxxx X. Xxxxxxx
137
Schedule 5.1
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Jurisdictions where Vision 21 is qualified to do business
1. Florida
2. Arizona
3. Minnesota
4. New York
138
Schedule 5.6
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Finder's, brokers or agent's fees owed by Vision 21
None.
139
Schedule 5.9
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Liabilities of Vision 21 not reflected in Financial Statements
None.
140
Schedule 6.1(b)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Exception to Physician "accredited
investor" or "sophisticated investor" representation
None.
141
Schedule 6.1(d)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Physician's principal residence
* * *
[IN ACCORDANCE WITH RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
CONFIDENTIAL PORTIONS OF THIS AGREEMENT (INCLUDING THE INFORMATION ON THIS
SCHEDULE) HAVE BEEN OMITTED HEREFROM AND FILED SEPARATELY WITH THE SECURITIES
EXCHANGE COMMISSION.]
142
Schedule 7.14
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Physician Employment Agreements
None
143
Schedule 7.18
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Assignment of Fees for Medical and Optometry Services
None
144
Schedule 8.4
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Personal liabilities of Physician for which
Vision 21 will use best efforts to obtain release
Personal guaranties of Physicians under the leases listed on Schedule 2.1(c).
145
Schedule 11.5
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Joint personal liabilities of Physician and
Company to which Vision 21 will use best
efforts to obtain release
See Schedule 8.4
146
Schedule 16.1
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
Liquidated damages for Physician
breaching Physician Employment Agreement
Liquidated damages for Xxxxxxx X. Xxxxxxxxx, M.D. shall equal: (i)
$230,208 in cash; plus (ii) $2.77 per share of Vision 21 common stock times
227,598 shares of Vision 21 common stock granted to Xxxxxxx X. Xxxxxxxxx, M.D.
in connection with the Transaction, which stock total equals $630,446. The
total of the foregoing liquidated damages equals $860,654.
Liquidated damages for Xxxxxx X. Xxxxxxxxx, M.D. shall equal: (i)
$76,736 in cash; plus (ii) $2.77 per share of Vision 21 common stock times
75,866 shares of Vision 21 common stock granted to Xxxxxx X. Xxxxxxxxx, M.D. in
connection with the Transaction, which stock total equals $210,149. The total
of the foregoing liquidated damages equals $286,885.
Liquidated damages for Xxxxx X. Xxxxxxx, M.D. shall equal: (i)
$153,472 in cash; plus (ii) $2.77 per share of Vision 21 common stock times
151,732 shares of Vision 21 common stock granted to Xxxxx X. Xxxxxxx, M.D. in
connection with the Transaction, which stock total equals $420,298. The total
of the foregoing liquidated damages equals $573,770.
147
Exhibit 12.1(o)
to Asset Purchase Agreement among Xxxxxxxxx, Xxxxxxxxx &
Hardten Ophthalmology Associates, P.A. (the "Company") Xxxxxxx
X. Xxxxxxxxx, M.D., Xxxxxx X. Xxxxxxxxx, M.D. and Xxxxx X.
Xxxxxxx, M.D. (collectively, the "Physician") and Vision 21,
Inc. ("Vision 21")
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement"), dated as of
____________, 19__, is by and between Vision 21, Inc., a Florida corporation
and any successor ("Vision 21"), and Xxxxxxxxx, Xxxxxxxxx & Xxxxxxx
Ophthalmology Associates, P.A. ("Shareholder").
1. Registration Rights.
(a) In the event that Vision 21 proposes to file a
registration statement under the Securities Act for purposes of effecting an
underwritten public offering of shares of Vision 21 common stock for cash
(including, but not limited to, a registration statement relating to a
secondary offering of Vision 21 common stock, but excluding registration
statements relating to any employee benefit plan or a corporate
reorganization), Vision 21 shall give written notice of such proposed filing to
the Shareholder at least fifteen (15) days before the anticipated filing date,
and such notice shall offer Shareholder the opportunity to register such number
of the Shareholder's shares of common stock as Shareholder may request in
writing within ten (10) days after receipt of such notice; provided, however,
that the maximum number of shares of common stock that such Shareholder may
request to include in any registration statement shall be limited as provided
in Section 1(c).
(b) In the event that (i) one (1) year has elapsed from
the date of effectiveness of the registration statement filed in connection
with an underwritten initial public offering of shares of Vision 21 common
stock, and (ii) Vision 21 receives a written request from holders holding in
the aggregate a minimum of 300,000 shares of Vision 21 common stock issued to
the founding practices described in Vision 21's Confidential Information
Memorandum dated September 27, 1996, as amended, and issued to certain
professionals owning equity interests in such founding practices (the founding
practices and professionals of such practices holding share's of common stock
of Vision 21 are collectively referred to as the "Founding Shareholders"), that
Vision 21 file a registration statement under the Securities Act effecting an
offering of shares of Vision 21 common stock; then Vision 21 shall as soon as
practicable file a registration statement at its own expense effecting a public
offering of shares of Vision 21 common stock held by Founding Shareholders, as
well as any other Vision 21 shares owned by any other shareholders which Vision
21 wishes to include in the offering (which offering may be an underwritten
offering at Vision 21's sole discretion); provided however that Vision 21 shall
be obligated to effect only one registration statement containing each
Shareholder, and Vision 21 shall be obligated to file only two (2) registration
statements in the aggregate, pursuant to this Section 1(b).
148
(c) The maximum aggregate number of shares of common
stock that Shareholder may request to be registered under this Agreement shall
be sixty percent (60%) of Shareholder's original shares of Vision 21 common
stock. In no event shall the total number of Shareholder's shares of common
stock that Vision 21 is obligated to register under this Agreement exceed sixty
percent (60%) of Shareholder's original shares of Vision 21 common stock, and
in no event shall Vision 21 be obligated to register more than (i) in an
initial offering, thirty percent (30%) of Shareholder's original shares of
Vision 21 common stock or (ii) in a second offering, sixty percent (60%) of the
Shareholder's original shares minus the percent of the Shareholder's original
shares that the Shareholder registered in the first offering. The "original
shares" of Vision 21 as described herein shall be deemed to be the __________
shares of common stock received by the Shareholder on the date of this
Agreement.
(d) Vision 21 shall have the sole and exclusive right to
select the underwriters of any public offering of shares of Vision 21 common
stock, including any public offering conducted pursuant to the demand
registration right set forth in Section 1(b) above. The use of underwriters in
any demand registration right set forth in Section 1(b) above is subject to
Vision 21's ability to engage underwriters under terms and conditions deemed
reasonable by Vision 21.
(e) If the managing underwriter of any offering advises
Vision 21 that the total number of shares of Vision 21's common stock which
Vision 21, the Shareholder and any other persons intend to include in such
offering would adversely affect the success of such offering, then the amount
of shares of common stock to be offered for the account of Shareholder shall be
reduced to the extent necessary to reduce the total number of shares of common
stock to be included in such offering to the amount recommended by such
managing underwriter.
(f) Vision 21 shall not be required to (i) reduce the
amount of shares of common stock to be offered by Vision 21 in such offering
for any reason or (ii) include any shares of common stock of Shareholder in any
public offering for which a registration statement is or is proposed to be
filed if such shares of common stock are, at the time of effectiveness of such
registration statement, eligible to be sold under Rule 144 under the Securities
Act or otherwise eligible for sale to the public without registration.
(g) Vision 21 shall have the right to extend or delay the
effectiveness of any registration statement for a period of up to ninety (90)
days if, upon the advice of counsel, such delay is advisable and in the best
interests of Vision 21 because of the existence of non-public material
information, or to allow Vision 21 to complete any pending audit of its
financial statements, any public financing plan, any pending acquisition, or to
release audited financial statements for any pending acquisition as required by
the Securities and Exchange Commission.
(h) Shareholder agrees to cooperate with Vision 21 in all
respects in connection with registration of the common stock, including timely
supplying all information and executing and returning all documents requested
by Vision 21 and its managing underwriter.
Exhibit 12.1(o) - Page 2
149
(i) Vision 21 shall not be required to include any of
Shareholder's shares of common stock in any registration statement unless
Shareholder accepts the terms of the underwriting as agreed upon between Vision
21 and its underwriters.
(j) Vision 21 shall have the right to defer the filing of
any registration statement if the Board of Directors of Vision 21 determines in
good faith that it would be seriously detrimental to Vision 21 and its
shareholders for such registration statement to be filed.
(k) This Agreement shall expire two (2) years from the
date of an initial public offering of Vision 21 common stock.
2. Covenants of Vision 21. Vision 21 hereby covenants and
agrees:
(a) To take such steps as may be necessary to comply with the Blue
Sky laws of such states as the managing underwriter may reasonably request;
provided that in no event shall Vision 21 be obligated to qualify to do
business in any state where it is not so qualified or to take any action which
would subject it to unlimited service of process in any state where it is not
at such time so subject;
(b) To use reasonable efforts to cause the registration statement
to become effective and to keep the registration statement effective for such
period as may be required under the terms of the underwriting agreement
relating thereto but no longer than for a period of forty-five (45) days, to
file such post-effective amendments as may be necessary to keep any prospectus
contained in such registration statement true and complete during such period
as the registration statement shall be effective, and to furnish and file such
other amendments, supplements, and other documents the managing underwriter may
reasonably request;
(c) To supply such numbers of prospectuses as may be reasonably
required by the managing underwriter;
(d) To pay the reasonable costs and expenses of the registration
statement including without limitation all registration and Blue Sky filing
fees, all fees and expenses of Vision 21's counsel (but not the fees and
expenses of counsel for Shareholder), all accounting costs (including costs
associated with the preparation of interim period financial statements), NASD
fees, printing costs, experts' fees, expenses, costs of post-effective
amendments, and all other usual and customary expenses in connection with the
registration statement, except for Shareholder's pro rata share of underwriting
discounts, fees, and selling commissions (calculated in the manner set forth in
Section 3(a)(ii) of this Agreement); and
(e) With respect to any registration statement filed pursuant to
this Agreement, where underwriters are utilized, to cooperate with the
underwriters to the best of its abilities and to enter into an underwriting
agreement with such underwriters containing such representations,
Exhibit 12.1(o) - Page 3
150
warranties, and covenants on the part of Vision 21 as are usual and customary
in an underwritten public sale of common stock.
3. Covenants of Shareholder.
(a) Shareholder hereby covenants and agrees:
(i) To cooperate with Vision 21 in its compliance with
all federal and state securities laws, including without limitation providing
such information and signing such documents as are necessary to effect a
registration or reasonably requested by underwriters pursuant to this
Agreement;
(ii) To pay his pro rata portion (calculated on the basis
of the ratio of the aggregate offering price attributable to the shares of
Shareholder being registered and sold in relation to the aggregate offering
price attributable to the total number of securities being registered and sold,
including securities being registered and sold by other selling stockholders)
of the underwriting discounts and selling commissions and to pay all the fees
and disbursements of his counsel; and
(iii) To the entry of stop transfer instructions with the
Company's transfer agent against the transfer of any shares of Shareholder's
Vision 21 common stock except in compliance with the restrictions as set forth
in this Section 3.
(b) Shareholder shall be considered an "affiliate" of Vision 21
for purposes of Rule 144 under the Securities Act, even in the event
Shareholder is not technically an affiliate of Vision 21 as defined in Rule
144, and the Vision 21 common stock owned by Shareholder shall be subject to
the restrictions and limitations on resale imposed by Rule 144 on affiliates of
Vision 21. Shareholder shall not sell any of his shares of Vision 21 common
stock under Rule 144 unless Shareholder would be eligible to do so under the
provisions applicable to affiliates.
(c) In addition to the transfer restrictions otherwise provided
for herein, Shareholder shall not, whether or not Shareholder elects to cause
the registration of his shares pursuant to this Agreement, directly or
indirectly, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise dispose of any shares of Vision 21 common stock
(other than the shares covered by such registration, which may be sold in
accordance with the plan or plans of distribution described in the registration
statement) owned by Shareholder for a period of one hundred eighty (180) days
or such shorter period as negotiated by the Company following the effective
date of such registration statement without the prior written consent of Vision
21. In the event that Shareholder is a corporation, professional corporation
or professional limited liability company, Shareholder may after receiving the
written approval of Vision 21 (which approval shall not be unreasonably
withheld) transfer its shares of Vision 21 Common Stock to any of the
individuals and/or trusts described in Sections 7(a), (b) and (c) hereof. Such
transferee
Exhibit 12.1(o) - Page 4
151
shall, for purposes of the transfer restrictions contained in this Agreement,
be deemed to have held such transferred shares for the same period as
Shareholder.
4. Indemnification of Shareholder. Whenever registration with
respect to any shares of Shareholder's common stock is effected under the
Securities Act pursuant hereto, Vision 21 will indemnify and hold harmless
Shareholder, each underwriter, the directors, officers, employees and agents of
each underwriter, and each person, if any, who controls each underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, liabilities, expenses and
damages (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
(including any securities law violations) insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading, provided that Vision 21 will not be liable to Shareholder to the
extent that such loss, claim, liability, expense or damage is based on an
untrue statement or omission made in reliance on and in conformity with
information furnished to Vision 21 by Shareholder, or by Shareholder through
any attorney-in-fact, expressly for inclusion in the registration statement or
any prospectus included in such registration statement.
5. Indemnification of Vision 21. Whenever registration with
respect to any shares of Shareholder's common stock is effected under the
Securities Act pursuant hereto, Shareholder will indemnify and hold harmless
Vision 21, each of Vision 21's directors and officers, each person who controls
Vision 21 within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, each underwriter, the directors, officers, employees and
agents of each underwriter, and each person, if any, who controls each
underwriter within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, claims,
liabilities, expenses and damages (including any and all investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted), to
which they, or any of them, may become subject under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or alleged untrue
statement of a material fact required to be stated in it or necessary to make
the statements in it not misleading; provided that Shareholder will not be
liable except to the extent that such loss, claim, liability, expense or damage
arises from or is based upon an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
furnished to Vision 21 by the Shareholder, or by Shareholder through any
attorney-in-fact, expressly for inclusion in the registration statement or any
prospectus included in such registration statement.
Exhibit 12.1(o) - Page 5
152
6. Defense of Claim. Promptly after receipt by an indemnified
party of notice of the commencement of any action, the indemnified party shall
notify the indemnifying party in writing of the commencement thereof if a claim
in respect thereof is to be made against an indemnifying party under this
Agreement, but the omission of such notice shall not relieve the indemnifying
party from liability which it may have to the indemnified party under this
Agreement, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice, and shall not relieve the
indemnifying party from any liability which it may have to any indemnified
party otherwise than under this Agreement. In case any action is brought
against the indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and to the extent that it chooses, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party that it so chooses, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided however that (i) if the indemnifying party fails to take
reasonable steps necessary to defend diligently the claim within twenty (20)
days after receiving notice from the indemnified party that the indemnified
party believes the indemnifying party has failed to diligently defend such
claim, or (ii) if the indemnified party who is a defendant in any action or
proceeding which is also brought against the indemnifying party reasonably
shall have concluded that there are legal defenses available to the indemnified
party which conflict with the defense strategy of the indemnifying party, or
(iii) if representation under applicable standards of professional conduct
require separate representation of the indemnified party and the indemnifying
party, then the indemnified party shall have the right to assume or continue
its own defense as set forth above and the indemnifying party shall reimburse
the indemnified party for the costs of such defense as provided in Section 4
and 5. In no event shall the indemnifying party be responsible for the fees of
more than one firm for all indemnified parties.
7. Non-Transferability. The registration rights and benefits set
forth herein, including indemnification by Vision 21 are granted for the sole
and personal benefit of Shareholder and may not be transferred or assigned
except for (a) gifts to his/her family members (b) assignment to a trust
controlled by the Shareholder, (c) transfers to Shareholder's heirs which occur
by operation of law as a result of the death of the Shareholder, or (d) if the
Shareholder is a corporation, professional corporation or professional limited
liability company, transfers or assignments to the individuals who are current
equity holders of Shareholder and by such equity holders to the individuals
and/or trusts described in subsection (i) and (ii) of this Section.
8. Survival of Indemnity. The indemnifications provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any securities by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
9. Delay of Registration. Shareholder agrees that he shall have
no right to obtain or seek an injunction restraining or otherwise delaying any
registration statement filed by Vision 21.
Exhibit 12.1(o) - Page 6
153
10. Notices.
(a) All communications under this Agreement shall be in
writing and shall be sufficient in all respects if when personally delivered
or mailed by prepaid certified or registered mail, return receipt requested,
addressed as follows:
(i) If to Vision 21, at:
Vision 21, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxxx, Chief
Executive Officer
With a copy to:
Xxxxxxx X. Xxxxx, Esquire
c/o Shumaker, Loop & Xxxxxxxx, LLP
000 X. Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
or at such other address as Vision 21 may have furnished in writing to
Shareholder at the time outstanding, or
(ii) If to Shareholder at:
Xxxxxxxxx, Xxxxxxxxx & Xxxxxxx
Ophthalmology Associates, P.A.
000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, M.D.
(b) Any notice so addressed, when mailed by registered or
certified mail shall be deemed to be given three days after so mailed, and when
delivered by hand shall be deemed to be given immediately.
11. Counterparts. One or more counterparts of this Agreement may
be signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument.
Exhibit 12.1(o) - Page 7
154
12. Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of Florida,
which shall prevail in all matters arising under or in connection with this
Agreement.
13. Headings. The headings in this Agreement are for convenience
of reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
14. Stock Lettering. The Company shall have the right to provide
a legend on the shares of stock covered hereunder reflecting the restriction
described hereunder.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date and year first above written.
"VISION 21"
VISION 21, INC.
By:_____________________________________
Xxxxxxxx X. Xxxxxxxx, Chief Executive
Officer
"SHAREHOLDER"
XXXXXXXXX, XXXXXXXXX & XXXXXXX
OPHTHALMOLOGY ASSOCIATES, P.A.
By:_____________________________________
Xxxxxxx X. Xxxxxxxxx, President
Exhibit 12.1(o) - Page 8
