EXHIBIT 2
================================================================================
ASSET PURCHASE AGREEMENT
BY
AND
AMONG
OPTICARE HEALTH SYSTEMS, INC.
PRIMEVISION HEALTH, INC.
AND
OPTOMETRIC EYE CARE CENTER, P.A.
Effective as of August 1, 2002
================================================================================
TABLE OF CONTENTS
Page
----
1. DEFINITIONS..............................................................................................1
1.1 DEFINITIONS.....................................................................................1
-----------
1.2 INTERPRETATION..................................................................................7
--------------
2. SALE OF ASSETS AND CERTAIN RELATED MATTERS...............................................................8
2.1 SALE OF PURCHASED ASSETS........................................................................8
------------------------
2.2 EXCLUDED ASSETS.................................................................................9
---------------
2.3 ASSUMED LIABILITIES.............................................................................9
-------------------
2.4 EXCLUDED LIABILITIES...........................................................................10
--------------------
2.5 PURCHASE PRICE.................................................................................11
--------------
2.6 EFFECTIVE DATE BALANCE SHEET; PURCHASE PRICE ADJUSTMENT........................................13
-------------------------------------------------------
2.7 UNDERSTANDING REGARDING PARENT'S COMMON STOCK..................................................15
---------------------------------------------
3. CLOSING.................................................................................................15
3.1 CLOSING........................................................................................15
-------
3.2 ACTIONS OF SELLER AT CLOSING...................................................................15
----------------------------
3.3 ACTIONS OF BUYER AT CLOSING....................................................................17
---------------------------
3.4 Intentionally Omitted..........................................................................20
3.5 ADDITIONAL ACTS................................................................................20
---------------
4. REPRESENTATIONS AND WARRANTIES OF SELLER................................................................20
4.1 INCORPORATION, QUALIFICATION AND CAPACITY......................................................20
-----------------------------------------
4.2 CORPORATE POWERS; CONSENTS; ABSENCE OF CONFLICTS WITH OTHER AGREEMENTS, ETC....................20
---------------------------------------------------------------------------
4.3 FINANCIAL INFORMATION..........................................................................21
---------------------
4.4 XXXXX AND XXXXXX NOTES.........................................................................21
----------------------
4.5 MEDICARE PARTICIPATION.........................................................................22
----------------------
4.6 EMPLOYEE BENEFIT PLANS.........................................................................22
----------------------
4.7 EMPLOYEES AND EMPLOYEE RELATIONS...............................................................24
--------------------------------
4.8 LITIGATION OR PROCEEDINGS......................................................................25
-------------------------
4.9 TAX LIABILITIES................................................................................26
---------------
4.10 ENVIRONMENTAL MATTERS..........................................................................26
---------------------
4.11 ABSENCE OF CHANGES.............................................................................28
------------------
4.12 LEGAL COMPLIANCE...............................................................................29
----------------
4.13 ACCOUNTS RECEIVABLE............................................................................29
-------------------
4.14 TITLE TO ASSETS................................................................................29
---------------
4.15 RIGHT TO TERMINATE PROFESSIONAL SERVICES AND SUPPORT AGREEMENT.................................29
--------------------------------------------------------------
4.16 BINDING EFFECT.................................................................................29
--------------
4.17 DISCLAIMER OF CERTAIN WARRANTIES...............................................................30
--------------------------------
4. 18 FULL DISCLOSURE; EFFECT OF SCHEDULES...........................................................30
------------------------------------
5. REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................30
5.1 INCORPORATION, QUALIFICATION AND CAPACITY......................................................30
-----------------------------------------
5.2 CORPORATE POWERS; CONSENTS; ABSENCE OF CONFLICTS WITH OTHER AGREEMENTS, ETC....................30
---------------------------------------------------------------------------
5.3 TITLE TO PARENT'S SHARES.......................................................................31
------------------------
i
5.4 LITIGATION.....................................................................................31
----------
5.5 CONSENTS.......................................................................................31
--------
5.6 BINDING EFFECT.................................................................................31
--------------
5.7 MEDICARE PARTICIPATION.........................................................................31
----------------------
5.8 LEGAL COMPLIANCE...............................................................................32
----------------
4.17 DISCLAIMER OF CERTAIN WARRANTIES...............................................................32
--------------------------------
5.9 FULL DISCLOSURE; EFFECT OF SCHEDULES...........................................................32
------------------------------------
6. Intentionally Omitted...................................................................................32
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER............................................................32
7.1 COMPLIANCE WITH COVENANTS......................................................................32
-------------------------
7.2 MATERIAL ADVERSE EFFECT........................................................................32
-----------------------
7.3 OPINION OF SELLER'S COUNSEL....................................................................32
---------------------------
7.4 PRE-CLOSING CONFIRMATIONS......................................................................33
-------------------------
7.5 ACTION/PROCEEDING..............................................................................33
-----------------
7.6 INSTRUMENTS OF TRANSFER........................................................................33
-----------------------
7.7 REPRESENTATIONS AND WARRANTIES.................................................................33
------------------------------
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER...........................................................34
8.1 COMPLIANCE WITH COVENANTS......................................................................34
-------------------------
8.2 OPINION OF BUYER'S COUNSEL.....................................................................34
--------------------------
8.3 ACTION/PROCEEDING..............................................................................34
-----------------
8.4 PRE-CLOSING CONFIRMATIONS......................................................................34
-------------------------
8.5 FAIRNESS OPINION...............................................................................34
----------------
8.6 REPRESENTATIONS AND WARRANTIES.................................................................34
------------------------------
9. TRANSITIONAL ARRANGEMENTS...............................................................................35
9.1 Intentionally Omitted..........................................................................35
9.2 EMPLOYEES......................................................................................35
---------
10. ADDITIONAL AGREEMENTS...................................................................................37
10.1 TERMINATION OF PROFESSIONAL SERVICES AND SUPPORT AGREEMENT.....................................37
-----------------------------------------------------------
10.2 ALLOCATION OF PURCHASE PRICE...................................................................37
----------------------------
10.3 Intentionally Omitted..........................................................................37
10.4 POST-CLOSING ACCESS TO INFORMATION.............................................................37
----------------------------------
10.5 LEASE AGREEMENT................................................................................37
---------------
10.6 BUYER'S AND DRS. XXXXXX AND XXXXXXX'X NON-COMPETITION OBLIGATIONS..............................38
-----------------------------------------------------------------
10.7 REPRODUCTION OF DOCUMENTS......................................................................38
-------------------------
10.8 COOPERATION ON TAX MATTERS.....................................................................38
--------------------------
10.9 CONSENTED ASSIGNMENT...........................................................................38
--------------------
10.10 SELLER'S NON-COMPETITION OBLIGATIONS...........................................................38
------------------------------------
10.11 PARTICIPATION IN MANAGED CARE PANELS...........................................................39
------------------------------------
10.12 MUTUAL RELEASE AGREEMENT.......................................................................39
------------------------
10.13 RESIGNATIONS OF DRS. XXXXXXX AND XXXXXX........................................................39
---------------------------------------
10.14 TECHNOLOGY TRANSITION AGREEMENT................................................................39
-------------------------------
10.15 RELEASE AND TERMINATION OF SECURITY AND GUARANTY AGREEMENTS....................................39
-----------------------------------------------------------
10.16 GUARANTY OF SELLER'S PERFORMANCE BY PARENT.....................................................39
------------------------------------------
10.17 COOPERATION OF XX. XXXXXX AND OTHER PERSONNEL..................................................40
---------------------------------------------
10.18 NOTIFICATION OF NORTH CAROLINA BOARD OF OPTOMETRY..............................................40
-------------------------------------------------
ii
10.19 TAIL INSURANCE.................................................................................40
--------------
10.20 REIMBURSEMENT OF HEALTH INSURANCE COSTS.........................................................
--------------------------------------
11. INDEMNIFICATION.........................................................................................42
11.1 INDEMNIFICATION BY SELLER......................................................................42
-------------------------
11.2 INDEMNIFICATION BY BUYER.......................................................................42
------------------------
11.3 LIMITATION.....................................................................................43
----------
11.4 LIMITATION ON LIABILITY........................................................................43
-----------------------
11.5 NOTICE AND CONTROL OF LITIGATION...............................................................43
--------------------------------
11.6 SURVIVAL.......................................................................................44
--------
11.7 EXCLUSIVE REMEDY...............................................................................44
----------------
11.8 TREATMENT OF PAYMENTS..........................................................................44
---------------------
12. GENERAL.................................................................................................44
12.1 EFFECTIVE DATE.................................................................................44
--------------
12.2 CONSENTS, APPROVALS AND DISCRETION.............................................................44
----------------------------------
12.3 Intentionally Omitted..........................................................................44
12.4 CHOICE OF LAW; JURISDICTION; INJUNCTIVE RELIEF.................................................44
----------------------------------------------
12.5 BENEFIT, ASSIGNMENT............................................................................45
-------------------
12.6 ACCOUNTING DATE................................................................................45
---------------
12.7 NO BROKERAGE...................................................................................45
------------
12.8 COST OF TRANSACTION............................................................................45
-------------------
12.9 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY..........................................................46
-------------------------------------
12.10 WAIVER OF BREACH...............................................................................46
----------------
12.11 NOTICE.........................................................................................47
------
12.12 SEVERABILITY...................................................................................48
------------
12.13 NO INFERENCES..................................................................................48
-------------
12.14 DIVISIONS AND HEADINGS.........................................................................48
----------------------
12.15 NO THIRD-PARTY BENEFICIARIES...................................................................48
----------------------------
12.16 TAX AND MEDICARE ADVICE AND RELIANCE...........................................................48
------------------------------------
12.17 ENTIRE AGREEMENT; AMENDMENT....................................................................48
---------------------------
iii
LIST OF SCHEDULES
Schedule 1.1A NCOP Facilities
Schedule 1.1B Intellectual Property
Schedule 1.1C Leased Real Property
Schedule 2.1 License Agreements
Schedule 2.2 Excluded Assets
Schedule 2.3 Assumed Liabilities
Schedule 4.2 Approvals (Seller)
Schedule 4.3 Financial Information
Schedule 4.4 Xxxxx and Xxxxxx Notes
Schedule 4.5 Medicare Participation
Schedule 4.6 Employee Benefit Plans
Schedule 4.7 Employees and Employee Relations
Schedule 4.8 Litigation (Seller)
Schedule 4.9 Tax Liabilities
Schedule 4.10 Environmental Matters
Schedule 4.11 Absence of Changes
Schedule 4.12 Legal Compliance (Seller)
Schedule 5.2 Approvals (Buyer)
Schedule 5.4 Litigation (Buyer)
Schedule 5.5 Consents
Schedule 5.8 Legal Compliance (Buyer)
Schedule 9.2 Employees
Schedule 10.2 Purchase Price Allocation
LIST OF EXHIBITS
Exhibit A General Xxxx of Sale and Assignment
Exhibit B Assignment and Assumption of Assumed Contracts
Exhibit C Assignment of Trademarks
Exhibit D Buying Group Agreement
Exhibit E Lease Agreement
Exhibit F Mutual Release Agreement
Exhibit G Assumption Agreement
Exhibit H Resignations of Drs. Xxxxxx and Xxxxxxx
Exhibit I Non-Competition Agreement of Seller
Exhibit J Technology Transition Agreement
Exhibit K Downpayment Escrow Agreement
Exhibit L Escrow Agreement
Exhibit M Xxxxx Note
Exhibit N Xxxxxx Note
iv
Exhibit O Cancellation and Termination of Professional Services and Support Agreement
Exhibit P Release of Optometric Eye Care Center, P.A.
Exhibit Q Non-Competition Agreement of Buyer
Exhibit R Promissory Note
Exhibit S Security Agreement
Exhibit T Personal Guaranty
v
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into this 12th day of August 2002, to be effective as of the 1st day of August
2002 (the "Effective Date"), by and among OPTICARE HEALTH SYSTEMS, INC., a
Delaware corporation ("Parent"), PRIMEVISION HEALTH, INC., a Delaware
corporation and a wholly owned subsidiary of Parent ("Seller"), and OPTOMETRIC
EYE CARE CENTER, P.A., a North Carolina professional corporation ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller, a wholly owned subsidiary of Parent, purchased the
NCOP Facilities (as defined herein) from the Buyer on the Original Purchase Date
(as defined herein);
WHEREAS, since the Original Purchase Date, Seller has owned the NCOP
Facilities;
WHEREAS, Buyer entered into that certain Professional Services and
Support Agreement (as defined herein) with Seller for, among other things, the
administration of certain contractual agreements and obligations;
WHEREAS, Seller desires to sell, and Buyer desires to purchase, subject
to the terms and conditions of this Agreement, the Purchased Assets (as defined
herein), which constitute substantially all of the assets of Seller (other than
Excluded Assets (as defined herein)) held or used in the business or operation
of the NCOP Facilities;
WHEREAS, subject to the terms and conditions of this Agreement, Buyer
has agreed to assume certain Assumed Liabilities (as defined herein) of the
Seller; and
WHEREAS, Seller and Buyer desire to terminate, subject to the terms and
conditions of this Agreement, the Professional Services and Support Agreement;
NOW, THEREFORE, for and in consideration of the premises, and the
agreements, covenants, representations and warranties hereinafter set forth, and
other good and valuable consideration, the receipt and adequacy of which are
forever acknowledged and confessed, the parties hereto agree as follows:
1. DEFINITIONS.
1.1 DEFINITIONS. As used herein the terms below shall have the
following meanings:
"ADVERTISING FUND" means that certain account into which licensees of
the Buyer deposit funds to be used for joint advertising and marketing efforts.
"AFFILIATE" means, as to the Person in question, any Person that
directly or indirectly controls, is controlled by, or is under common control
with, the Person in question and any successors or assigns of such Persons; and
the term "control" means possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person whether
through ownership of voting securities or membership interests, by contract or
otherwise. Any reference to an Affiliate of Seller or Parent shall not include
the Buyer or Palisade Concentrated Equity Partnership, L.P. (or any Affiliate of
Palisade Concentrated Equity Partnership, L.P. other than Seller and Parent and
any direct or indirect subsidiary of either).
"AGENCY RECEIVABLES" has the meaning set forth in Section 2.1 hereto.
"AGREEMENT" means this Agreement as amended or supplemented together
with all Exhibits and Schedules attached or delivered with respect hereto or
expressly incorporated herein by reference.
"APPROVAL" means any approval, authorization, consent, notice,
qualification or registration, or any extension, modification, amendment or
waiver of any of the foregoing, of or from, or any notice, statement, filing or
other communication to be filed with or delivered to, any Governmental Entity or
any other Person.
"ASSUMED CONTRACTS" has the meaning set forth in Section 2.1 hereof.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.3.
"ASSUMPTION AGREEMENT" means the Assumption Agreement attached hereto
as Exhibit G.
"BUYER" has the meaning set forth in the Preamble hereto.
"BUYER INDEMNIFIED PARTIES" has the meaning set forth in Section 11.1.
"BUYER'S NEW 401(k) PLAN" has the meaning set forth in Section 4.6.
"CASH CONSIDERATION" has the meaning set forth in Section 2.5.
"CLOSING" has the meaning set forth in Section 3.1 hereto.
"CLOSING DATE" has the meaning set forth in Section 3.1.
"CODE" has the meaning set forth in Section 9.2.
2
"CONFIDENTIAL INFORMATION" means all information of any kind concerning
Seller and Parent, obtained directly or indirectly from Seller or Parent, in
connection with the transactions contemplated by this Agreement except
information (i) ascertainable or obtained from public or published information,
(ii) received from a third party which Buyer did not know or had reason to know
was/is under an obligation to Seller or Parent to keep such information
confidential, (iii) which is or becomes known to the public (other than through
a breach of this Agreement), or (iv) which was in Buyer's possession prior to
disclosure thereof to Buyer in connection herewith.
"CONTINUATION COVERAGE REQUIREMENTS" has the meaning set forth in
Section 9.2(e).
"D&O POLICIES" has the meaning set forth in Section 2.2.
"DOWNPAYMENT" means the cash and the shares of Parent common stock
previously deposited into escrow by Drs. Xxxxxx and Xxxxxxx pursuant to the
Downpayment Escrow Agreement, dated as of May 14, 2002, attached hereto as
Exhibit K.
"DOWNPAYMENT ESCROW AGENT" means the escrow agent identified in the
Downpayment Escrow Agreement attached hereto as Exhibit K by and among Drs.
Xxxxxxx and Xxxxxx, Parent and T. Xxxxxxx Xxxxxx, PLLC as escrow agent, or any
successor escrow agent thereto.
"DRS. XXXXXX AND XXXXXXX" means Xxxxx X.X. Xxxxxx, O.D. and X. Xxxxx
Xxxxxxx, X.X., each of whom is a principal of the Buyer.
"EFFECTIVE DATE" means August 1, 2002.
"EFFECTIVE DATE BALANCE SHEET" has the meaning set forth in Section
2.6(a).
"ENCUMBRANCE" means any claim, charge, easement, encumbrance, security
interest, mortgage, lien, pledge or restriction, whether imposed by agreement,
Law, equity or otherwise.
"ENVIRONMENTAL DAMAGES" means all claims, judgments, damages (including
punitive damages), losses, penalties, fines, interest, fees, liabilities
(including strict liability), encumbrances, liens, costs, and expenses of
investigation and defense of any claim, whether or not such claim is ultimately
defeated, and of any good faith settlement or judgment, of whatever kind or
nature, contingent or otherwise, matured or unmatured, foreseeable or
unforeseeable, including, without limitation, reasonable attorneys' fees and
disbursements and consultants' fees, any of which are incurred at any time as a
result of the existence of any contaminants or hazardous substances or wastes or
the noncompliance with Environmental Laws with respect to the period from the
Original Purchase Date through the Effective Date.
3
"ENVIRONMENTAL LAWS" means all Laws related to pollution or the
environment, including but not limited to the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, 42 U.S.C. (ss.) 9601, et
seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. (ss.)
9601, et seq., the Clean Air Act, 42 U.S.C. (ss.) 7401, the Occupational Safety
and Health Act, 29 U.S.C. (ss.) 600, et seq., and all other laws and regulations
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, chemicals, pesticides, or industrial, infectious,
toxic or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or otherwise relating to the processing, generation, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, infectious, toxic, or hazardous
substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ESCROW AGREEMENT" means the Escrow Agreement attached hereto as
Exhibit L.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.2.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.4.
"FURNITURE AND EQUIPMENT" means all equipment (including mobile
equipment), vehicles, furniture or furnishings held or used by Seller in the
business or operation of the NCOP Facilities.
"GAAP" shall mean generally accepted accounting principles and
practices accepted in the United States applied on a consistent basis.
"GOVERNMENTAL ENTITY" means any government or any agency, bureau,
board, directorate, commission, court, department, official, political
subdivision, tribunal or other instrumentality or contractor of any government,
whether federal, state or local, domestic or foreign to the extent such
contractor exercises governmental powers.
"GOVERNMENT PROGRAMS" means the federal Medicare, all applicable state
Medicaid and CHAMPUS and successor programs.
"HAZARDOUS MATERIALS" shall mean any hazardous, infectious or toxic
substance or waste (as defined by any applicable Environmental Laws) or any
chemicals, pollutants, petroleum products or oil.
"HISTORICAL FINANCIAL STATEMENTS" has the meaning set forth in Section
4.3.
"INDEMNIFIED PARTY" has the meaning set forth in Section 11.(a).
4
"INDEMNIFYING PARTY" has the meaning set forth in Section 11.(a).
"INTELLECTUAL PROPERTY" shall mean the trademarks, service marks, trade
names, slogans, logos, or other commercially distinctive designations associated
with the business or operation of the NCOP Facilities, all registrations and
applications therefor, and all goodwill associated therewith; and the Internet
domain names and/or registrations therefor associated with the business or
operation of the NCOP Facilities; which are listed on Schedule 1.1B.
"LAW" means any constitutional provision, statute, ordinance or other
law, rule, regulation or interpretation and any order of any Governmental
Entity.
"LEASED REAL PROPERTY" means all real property subject to a leasehold
estate and described on Schedule 1.1C hereto, together with all deposits and
prepaid rental payments related thereto.
"LEASE AGREEMENT" has the meaning set forth in Section 10.5 hereof.
"LEASES" means all leases of personal property included in the
Purchased Assets.
"LIABILITY ESCROW ACCOUNT" means one of the accounts referred to in the
Escrow Agreement, to be funded by the Purchase Price Adjustment Holdback
Deposit.
"MATERIAL ADVERSE EFFECT" means any change or effect that is materially
adverse to the business, properties, assets, condition (financial or otherwise),
or results of operations of the business of the NCOP Facilities, taken as a
whole, other than any change, circumstance or effect resulting from performance
by a party of its obligations under this Agreement and the transactions
contemplated hereby.
"MONTHLY NET LICENSE REVENUE" has the meaning set forth in Section
2.5(f).
"NCOP FACILITIES" shall mean all professional optometry practice
locations and retail optometry locations owned or operated by Seller or Parent
or any Affiliate of either in the State of North Carolina, including without
limitation those facilities listed on Schedule 1.1A.
"NET WORKING CAPITAL" shall mean, with respect to the Effective Date
Balance Sheet, an amount equal to (a) current assets less (b) current
liabilities, as reflected in accordance with GAAP on the Effective Date Balance
Sheet.
"NET WORKING CAPITAL ADJUSTMENT AMOUNTS" means the $100,000 to be
deposited by Seller and the $200,000 to be deposited by Buyer at Closing into
the Net Working Capital Escrow Account pursuant to Section 2.6(f).
"NET WORKING CAPITAL ESCROW ACCOUNT" means certain of the accounts
referred to in the Escrow Agreement.
5
"OBJECTION NOTICE" has the meaning set forth in Section 2.6(a).
"OECCPA PLAN" has the meaning set forth in Section 4.6.
"ORIGINAL PURCHASE DATE" means July 1, 1996, the date on which the
Seller originally purchased the NCOP Facilities from Drs. Xxxxxx and Xxxxxxx and
Buyer.
"PARENT" has the meaning set forth in the preamble hereto.
"PAYABLE TAX ITEMS" has the meaning set forth in Section 4.9(b).
"PERSON" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"PERMITTED ENCUMBRANCES" means: (i) any lien for taxes not yet due and
payable, (ii) any lease obligations assumed in writing by Buyer, (iii) any lease
obligations of Buyer which were not expressly assumed in writing by Seller, (iv)
easements and other restrictions of record that do not materially interfere with
the operations of the Purchased Assets in a manner consistent with the current
use by Seller, and (v) any Encumbrances that do not materially interfere with
the operations of the Purchased Assets in a manner consistent with the current
use by Seller.
"PLANS" has the meaning set forth in Section 4.6(a).
"PROFESSIONAL SERVICES AND SUPPORT AGREEMENT" means that certain
Professional Services and Support Agreement between Consolidated Eye Care, Inc.
(a predecessor corporation of Seller) and Buyer dated August 10, 1999.
"PURCHASED ASSETS" has the meaning set forth in Section 2.1.
"PURCHASE PRICE" has the meaning set forth in Section 2.5.
"PURCHASE PRICE ADJUSTMENT HOLDBACK DEPOSIT" means $100,000 in cash to
be deposited at Closing by Buyer into the Liability Escrow Account pursuant to
Section 2.5(e).
"RETURNS" has the meaning set forth in Section 4.9(a).
"ROLL-FORWARD BALANCE SHEET" has the meaning set forth in Section 4.3.
"ROLL-FORWARD BALANCE SHEET DATE" has the meaning set forth in Section
4.3.
"SELLER" has the meaning set forth in the Preamble hereto.
6
"SELLER'S 401(k) PLAN" has the meaning set forth in Section 4.6.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section 11.2.
"STOCK CONSIDERATION" has the meaning set forth in Section 2.5.
"SURVIVAL PERIOD" has the meaning set forth in Section 11.
"XXXXX AND XXXXXX NOTES" means the long-term notes payable by Buyer to
Messrs. Xxxxx and Xxxxxx, copies of which are attached hereto as Exhibits M and
N, respectively.
"TRANSFERRED EMPLOYEES" has the meaning set forth in Section 9.2.
1.2. INTERPRETATION. In this Agreement, unless the context otherwise
requires:
(a) references to this Agreement are references to this
Agreement and to the Schedules (as hereinafter defined);
(b) references to Sections are references to sections of
this Agreement;
(c) references to any party to this Agreement shall
include references to its respective successors and permitted assigns;
(d) references to a judgment shall include references to
any order, writ, injunction, decree, determination or award of any court or
tribunal; and
(e) the terms "hereof," "herein," "hereby," and derivative
or similar words will refer to this entire Agreement;
(f) references to any document (including this Agreement)
are references to that document as amended, consolidated or supplemented by the
parties from time to time;
(g) references to any Law are references to that Law as of
the Closing Date and shall also refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise;
(h) the word "including" means including without
limitation;
(i) references to time are references to Eastern Standard
or Daylight time (as in effect on the applicable day) unless otherwise specified
herein; and
(j) the gender of all words herein include the masculine,
feminine and neuter, and the number of all words herein include the singular and
plural.
7
2. SALE OF ASSETS AND CERTAIN RELATED MATTERS
2.1 SALE OF PURCHASED ASSETS. Subject to the terms and conditions
of this Agreement, Seller and Parent and any Affiliate of either agree to sell,
convey, transfer and deliver to Buyer and Buyer agrees to purchase as of the
Effective Date, substantially all of the assets, whether real, personal or
mixed, tangible or intangible, other than the Excluded Assets (as hereinafter
defined), owned or leased by Seller or Parent or any Affiliate of either on the
Effective Date and held or used in the business or operation of the NCOP
Facilities, including without limitation the following items (collectively, the
"Purchased Assets"): (i) leasehold title to the Leased Real Property, (ii) all
Furniture and Equipment, (iii) all supplies and inventory held or used in the
business or operation of the NCOP Facilities, (iv) assumable prepaid expenses,
claims for refunds related to any Assumed Liability or other liability reflected
on the Effective Date Balance Sheet and rights to offset in respect thereof, (v)
to the extent assignable under applicable Law, all financial, patient and
medical staff records held or used by Seller or Parent or any Affiliate of
either in the business or operation of the NCOP Facilities, (vi) all of the
interest of Seller and Parent and any Affiliate of either in all commitments,
contracts, leases and agreements outstanding in respect of the Purchased Assets
(collectively, the "Assumed Contracts"), (vii) accounts, notes and other
receivables, (viii) all licenses, certificates of need, accreditations and
permits to the extent assignable which are held or used by Seller or Parent or
any Affiliate of either and relate to the ownership, development and business or
operation of the NCOP Facilities or other Purchased Assets (including any
pending or approved Approvals regarding any NCOP Facility), (ix) all right,
title, and interest of Seller and Parent and any Affiliate of either in the name
"Optometric Eye Care Center" (provided, however, nothing herein shall be
interpreted to prevent Seller or Parent or any Affiliate of either from using
any name as a trademark, service xxxx, corporate name, trade name, domain name,
or any other indication of source or origin, so long as such name is not
confusingly similar to the name "Optometric Eye Care Center", and provided
further that Seller and Parent agree not to use the name "Eye Care Center" as a
part of an Internet domain name); in the domain names "xxxxxxxxxxxxx.xxx",
"xxxx.xxx", and "xxxxxxxx.xxx"; and all other Intellectual Property, including
without limitation all goodwill associated therewith and the right to secure in
Buyer's own name any registrations or other protections that may be available in
the Intellectual Property, (x) all computer hardware and equipment held or used
by Seller or Parent or any Affiliate of either in the business or operation of
the NCOP Facilities, subject to the terms of the Technology Transition Agreement
attached as Exhibit J, (xi) any insurance proceeds related to the NCOP
Facilities currently due, (xii) all working capital (exclusive of cash and cash
equivalents, subject to Sections 2.1(xv) and (xvi) hereof), (xiii) all right,
title and interest of Seller and Parent in all license agreements and other
contracts between Seller or Parent or any Affiliate of either and third parties
granting licenses for the name "Optometric Eye Care Center", all of which are
listed in Schedule 2.1, (xiv) to the extent not included in any of the
foregoing, any assets reflected on the Effective Date Balance Sheet, (xv) the
cash balance of the Advertising Fund as of the Effective Date, and (xvi) xxxxx
cash on hand as of the Effective Date at the NCOP Facilities. Seller shall be
permitted, at its expense, to retain copies or originals (as set
8
forth in Section 2.2) of all records that it reasonably determines may be
required by Seller in the future.
Except as otherwise provided herein, Seller and Parent and any Affiliate of
either shall convey good and marketable title to the Purchased Assets and all
parts thereof to Buyer free and clear of all Encumbrances, except for Permitted
Encumbrances.
2.2 EXCLUDED ASSETS. Notwithstanding anything herein to the
contrary, the following assets are not intended by the parties to be a part of
the sale and purchase contemplated hereunder and are excluded from the Purchased
Assets: (i) any records which by Law Seller and Parent are required to retain in
its possession, provided that Buyer may, at its expense, and to the extent
permitted by Law, retain copies of such records to the extent such records
relate to the operation of the NCOP Facilities, (ii) all corporate records and
minute books of Seller and Parent, (iii) cash and cash equivalents, including
deposits in banks and securities (excluding, however, the Advertising Fund and
xxxxx cash on hand at the NCOP Facilities as of the Effective Date), (iv) any
and all rights of Seller and Parent or any of their respective officers and
directors under any directors and officers liability insurance policies carried
by Seller (the "D&O Policies"), or any other liability policy, and any deposits,
rights to refund, or other amounts due under any D&O Policy or liability policy,
(v)claims for tax refunds, other than claims for tax refunds with respect to the
Buyer; (vi) any claims against any Person in connection with the Seller's
ownership interest in the NCOP Facilities; (vi) any rights of Seller and Parent
under this Agreement or any other agreement between Buyer and Seller and/or
Parent entered into on or after the date of this Agreement and all records
relating to the transactions contemplated by this Agreement; and (vii) rights to
settlement and retroactive adjustments, if any, for periods ending after the
Original Purchase Date and prior to the Effective Date arising from or against
the U.S. Government under the terms of the Medicare program, or the Civilian
Health and Medical Program of the Uniformed Services and against any state under
its Medicaid program and against any third-party payor programs that settle on a
basis other than an individual claim basis ("Agency Receivables"). With respect
to the assets described above in Section 2.2(vii), Buyer agrees to execute such
documents as Seller may reasonably request in connection the prosecution of such
settlements or adjustments.
2.3 ASSUMED LIABILITIES. Upon and subject to the terms, conditions
and limitations set forth in this Agreement and the Assumption Agreement
referenced in Section 3.3(e), as of the Effective Date, Buyer agrees to assume,
pay, perform and discharge when due only those liabilities, indebtedness and
obligations of Seller specified on Schedule 2.3 that have been incurred or
accrued in compliance with the terms of this Agreement, and no others
(collectively, the "Assumed Liabilities"). Other than the Assumed Liabilities,
Buyer is not assuming and shall not be or become obligated or liable for any
liability, indebtedness or obligation of Seller or Parent or any Affiliate of
9
either of any nature whatsoever, whether now or hereafter existing, due or to
become due, absolute or contingent, or otherwise, and after the Closing Date,
Seller or Parent, as applicable, will pay, perform and discharge when due all of
the liabilities, indebtedness and obligations of Seller and Parent and any
Affiliate of either other than the Assumed Liabilities. It is expressly
understood and agreed by Seller and Buyer that the Purchase Price set forth in
Section 2.5 is based on Assumed Liabilities which do not exceed, in the
aggregate, $2,650,000. In the event the Assumed Liabilities exceed, in the
aggregate, $2,650,000, then the Purchase Price shall be reduced, dollar for
dollar, by the amount by which Assumed Liabilities exceeds $2,650,000. The
values of the Assumed Liabilities shall be those reflected or set forth in the
Effective Date Balance Sheet. If the Assumed Liabilities as reflected in the
Effective Date Balance Sheet, as finally determined in accordance with the
procedures set forth in Section 2.6(a) hereof, exceed $2,650,000, then Seller
shall, within fifteen (15) days of the final determination of the Effective Date
Balance Sheet, pay to Buyer an amount equal to the amount by which such Assumed
Liabilities exceed $2,650,000.
2.4 EXCLUDED LIABILITIES. Except as expressly provided to the
contrary in Section 2.3 above, Buyer is not obligated to pay or assume, and none
of the Purchased Assets shall be or become liable for or subject to, any
liability of Seller or Parent or any Affiliate of either (other than Assumed
Liabilities), including the following, whether fixed or contingent, recorded or
unrecorded, known or unknown (collectively, the "Excluded Liabilities"):
(a) any obligation or liability accruing, arising out of, or
relating to acts or omissions of Seller or Parent or any Affiliate of either
prior to the Effective Date, including any acts or omissions in connection with
(i) any Assumed Contract, (ii) the NCOP Facilities, (iii) the Purchased Assets
or (iv) any Medicare, Medicaid or other third-party payor programs, including
recapture or recoupment of previously paid or reimbursed expenses;
(b) any obligation or liability accruing, arising out of, or
relating to any act or omission by Seller or Parent or any Affiliate of either
after the Effective Date;
(c) (i) any federal, state or local tax obligations of Seller or
Parent or any Affiliate of either in respect of periods prior to the Effective
Date, including any income tax, any franchise tax, any tax recapture and any
sales and/or use tax, (ii) those federal, state or local income tax obligations
or liabilities resulting from the consummation of the transactions contemplated
by this Agreement, and (iii) 50% of any state and local recording fees, transfer
taxes, and recording taxes which may arise upon the consummation of the
transactions contemplated herein that Seller is obligated by Law to pay and 50%
of such tax obligations and liabilities that neither Seller nor Buyer is
obligated by Law to pay;
(d) except as specifically provided herein, any liability or
obligation for severance with respect to those employees not hired by Buyer as
of the Effective Date, together with any obligation or liability for claims by
or on behalf of Seller's employees relating to periods prior to the Effective
Date, including liability for any pension, profit sharing, deferred
compensation, or any other employee health and welfare benefit plans, liability
for any EEOC claim, wage and hour claim, unemployment compensation claim or
workers' compensation claim, and liability for all employee wages and benefits,
including accrued
10
vacation, sick leave and holiday pay and taxes or other liability related
thereto in respect of Seller's employees;
(e) any obligation or liability accruing, arising out of or
relating to any federal state or local investigations of, or actions against
Seller or any of its Affiliates or any of their employees, staff, agents,
vendors or representatives with respect to acts or omissions after the Original
Purchase Date and prior to the Effective Date;
(f) any civil or criminal obligation or liability accruing,
arising out of, or relating to any acts or omissions of Seller or Parent or
their respective directors, officers, employees, agents and Affiliates claimed
to violate any Laws during the period after the Original Purchase Date and prior
to the Effective Date ;
(g) any liabilities or obligations existing on the Effective Date
which are required to be reflected on a balance sheet prepared in accordance
with GAAP and which are not reflected on the Effective Date Balance Sheet;
(h) any liability or obligation under any litigation or other
dispute related to the Purchased Assets and existing or arising after the
Original Purchase Date and prior to the Effective Date or arising after the
Closing Date but related to any period after the Original Purchase Date and
prior to the Effective Date;
(i) Any liabilities or obligations relating to Environmental
Damages, whether or not disclosed in any Schedule to this Agreement; and
(j) any other liability relating to the NCOP Facilities or
Purchased Assets occurring after the Original Purchase Date and prior to the
Effective Date and not expressly assumed by Buyer pursuant to Section 2.3.
2.5 PURCHASE PRICE. In consideration of the sale of the Purchased
Assets and the termination of the Professional Services and Support Agreement,
and for other good and valuable consideration, Buyer agrees to pay an aggregate
purchase price (plus the Assumed Liabilities) as follows: (i) $4,200,000 in
cash, subject to adjustments as set forth in this Section 2.5 and Sections 2.4
and 2.6 (the "Cash Consideration"), (ii) a Promissory Note in the form of
Exhibit R attached hereto, having a maximum aggregate principal amount of
$1,000,000 (subject to the prepayment discount described below) (the "Promissory
Note"), and (iii) 1,321,010 shares of Parent common stock owned beneficially by
Drs. Xxxxxx and Xxxxxxx or the Buyer (the "Stock Consideration", and together
with the Promissory Note, the Cash Consideration, and the Assumed Liabilities,
the "Purchase Price"), with the Cash Consideration, the Promissory Note and the
Stock Consideration paid as follows:
(a) At the Closing, Buyer shall deliver to Seller in immediately
available funds by wire transfer to an account that has been designated in
writing by Seller at least one business day prior to the Closing Date
$4,055,000.
11
(b) At the Closing, $25,000 in cash and 300,000 shares of Parent
common stock that Buyer deposited into escrow pursuant to the Downpayment Escrow
Agreement attached hereto as Exhibit K shall be released to Seller by written
instruction pursuant to the Downpayment Escrow Agreement.
(c) At the Closing, 1,021,010 shares of Parent common stock
beneficially owned by Drs. Xxxxxx and Xxxxxxx or the Buyer shall be transferred
to Seller with a certificate or certificates evidencing such shares, duly
endorsed for transfer to Seller, or a duly executed stock power transferring
such shares to Seller.
(d) At the Closing, $20,000 owed by Seller to Buyer in full
satisfaction of legal fees incurred by Buyer in connection with all past,
present or future proceedings before the North Carolina Board of Optometry
concerning the NCOP Facilities shall constitute a payment of $20,000 of the
Purchase Price.
(e) At the Closing, Buyer shall deposit the Purchase Price
Adjustment Holdback Deposit into the Liability Escrow Account in accordance with
the terms of the Escrow Agreement.
(f) At the Closing, Buyer shall execute and deliver to Seller a
subordinated, secured Promissory Note in the form of Exhibit R attached hereto,
having a maximum aggregate principal amount of $1,000,000 (subject to the
prepayment discount described below) and bearing simple interest at the rate of
six percent (6%) per annum. Principal and interest shall be paid under the
Promissory Note as follows: The first payment shall be made on September 15,
2002 in respect of, and in an amount equal to, the Monthly Net License Revenue
(as defined below) for the month of August; the second payment shall be made on
January 15, 2003 in respect of, and in an amount equal to, the Monthly Net
License Revenue for the month of December, 2002; thereafter, the accrued and
unpaid interest, and principal, if applicable, shall be paid in consecutive
monthly installments on the 15th day of each calendar month in an amount equal
to the Monthly Net License Revenue for the preceding calendar month until all
principal and interest is paid in full. The parties acknowledge and agree that
no payments shall be due in respect of Monthly Net License Revenue for the
months of September, October and November, 2002, but simple interest shall
continue to accrue on the outstanding principal balance. If not sooner paid, the
entire remaining principal and accrued and unpaid interest shall be due and
payable on August 1, 2007. For the purposes hereof, the term "Monthly Net
License Revenue" shall mean fifty percent (50%) of the monthly license revenue
derived by Buyer from its license agreements with the licensees listed in
Schedule 2.1 (which Schedule shall be attached to the Promissory Note in the
form of an exhibit which shall from time to time be updated to reflect the
termination and/or cancellation of any existing license agreements as well as
the commencement of any new license agreements, if any), less all direct costs
(which costs Buyer agrees shall not exceed five percent (5%) of total monthly
license revenue). The Promissory Note may be pre-paid at a discount (plus
accrued but unpaid interest) in accordance with the following schedule:
12
Days After Closing Date Discount Payment Amount
----------------------- -----------------------
1-60 $875,000
61-180 $912,500
181-360 $925,000
361-540 $950,000
541-720 $975,000
There shall be no prepayment penalty. The Promissory Note shall be subordinated
to all indebtedness owed by Buyer to Southern Bank on terms satisfactory to
Southern Bank. Buyer's obligations under the Promissory Note shall be secured
pursuant to the terms of a Security Agreement in the form of Exhibit S attached
hereto, and Buyer's payment and performance of the Promissory Note shall be
jointly and severally guaranteed by Drs. Xxxxxx and Xxxxxxx pursuant to the
terms of a Personal Guaranty in the form of Exhibit T attached hereto. In the
event of a default in payment under the Promissory Note, Seller shall have the
right to offset payments due to Xxxxxxx-Xxxxxx Investment Company under the
Lease Agreement, which offsets shall constitute payments under the Promissory
Note to the extent such offsets are asserted.
Seller shall have the right to conduct an audit of Buyer's books and
records pertaining to the calculation of Monthly Net License Revenue twice per
annum. Buyer agrees to permit Seller or its representatives, at the expense of
Seller, to examine or audit such books and records and make copies thereof in
connection with any such permitted audit during normal business hours upon ten
(10) days' prior written notice.
2.6 EFFECTIVE DATE BALANCE SHEET; PURCHASE PRICE ADJUSTMENT.
-------------------------------------------------------
(a) Within twenty-five (25) days after the Closing Date, Seller
shall prepare and deliver to Buyer a balance sheet that reflects the financial
position of the NCOP Facilities and the Purchased Assets and sets forth Seller's
computation of the Net Working Capital as of the opening of business on the
Effective Date (the "Effective Date Balance Sheet"). The Effective Date Balance
Sheet shall be prepared in accordance with GAAP, except as otherwise set forth
in this Agreement. Buyer shall have a period of twenty-five (25) days after
receipt of such Effective Date Balance Sheet to review it and to make any
objections to the Effective Date Balance Sheet that the Buyer may have in
writing to the Seller pursuant to an objection notice (the "Objection Notice").
Such Objection Notice must specify in reasonable detail (to the extent such
information is available to Buyer) any objections Buyer may have to the items
set forth (or omitted) in the Effective Date Balance Sheet. If no Objection
Notice is delivered by Buyer to Seller within the 25-day period, then the
Effective Date Balance Sheet shall be deemed to be accepted and approved by the
Buyer. If an Objection Notice(s) is delivered to the Seller by the Buyer within
the 25-day period, then the Buyer and the Seller shall attempt to resolve the
matter or matters in dispute. If such dispute(s) cannot be resolved by the Buyer
and the Seller within twenty-five (25) days after the delivery of any Objection
Notice to Seller, then the specific matter(s) in dispute shall be
13
submitted to the Raleigh, North Carolina office of Xxxxx Xxxxxxxx LLP (the
"Independent Accountants"), which firm shall render its opinion as to such
matters within thirty (30) days after the expiration of the 25-day dispute
resolution period. Based on that opinion, the Independent Accountants shall send
to the Buyer and the Seller a written determination of the matters in dispute
and a written determination of the Net Working Capital based upon such opinion,
whereupon the confirmed or revised Effective Date Balance Sheet shall be final
and binding upon the Buyer and the Seller. Any amount due to the Buyer or to the
Seller, as the case may be, pursuant to an adjustment relating to Net Working
Capital as described in Sections 2.6(b) or 2.6(c), below, shall be paid, to the
extent of funds available therefor, by the Escrow Agent out of the Net Working
Capital Escrow Account, pursuant to the terms of the Escrow Agreement. If the
amount of such payment pursuant to the Escrow Agreement is insufficient, the
Buyer or the Seller, as the case may be, shall, within fifteen (15) days of
final determination of the Effective Date Balance Sheet, pay such remaining
amount required to be paid pursuant to the provisions of Section 2.6(b) or
2.6(c), as applicable. All costs, fees and expenses charged or incurred by the
Independent Accountants, if any, shall be borne equally by the Buyer and the
Seller.
In preparing the Effective Date Balance Sheet, costs and expenses
coming due or payable after the Effective Date but relating, in whole or in
part, to periods before the Effective Date shall be prorated to reflect the
proportionate amounts which relate to the periods before and after the Effective
Date and only amounts that relate to the period before the Effective Date shall
be included in the Effective Date Balance Sheet.
(b) NET WORKING CAPITAL LESS THAN $600,000. If the Effective Date
Balance Sheet reflects Net Working Capital that is less than $600,000, then the
Purchase Price shall be reduced, dollar for dollar, by the amount by which Net
Working Capital reflected on the Balance Sheet is less than $600,000.
(c) NET WORKING CAPITAL MORE THAN $850,000. If the Effective Date
Balance Sheet reflects Net Working Capital that is more than $850,000, then the
Purchase Price shall be increased, dollar for dollar, by the amount by which Net
Working Capital reflected on the Balance Sheet is more than $850,000.
(d) NO ADJUSTMENT TO PURCHASE PRICE. If the Effective Date Balance
Sheet reflects Net Working Capital that is at least $600,000 and no more than
$850,000, then, except as provided in Section 2.3, there shall be no adjustment
to the Purchase Price based on the amount of Net Working Capital.
(e) BUSINESS OPERATED FOR BENEFIT OF BUYER. During the period
between the Effective Date and the actual Closing Date, the business of the NCOP
Facilities shall be operated by Seller in all respects for the benefit of Buyer.
Any withdrawals or sweeps of funds relating to the NCOP Facilities during the
period between the Effective Date and the day immediately preceding the Closing
Date (reduced by payroll costs, fees or other items paid at the direction of
Buyer on the Buyer's behalf) shall be restored to Buyer by payment at
14
Closing. Any withdrawals or sweeps of funds relating to the NCOP Facilities on
the Closing Date shall be restored to Buyer by wire payment within three (3)
business days of the Closing Date.
(f) NET WORKING CAPITAL ADJUSTMENT AMOUNT. On the Closing Date,
each of Buyer and Seller shall deposit the applicable Net Working Capital
Adjustment Amount into the Net Working Capital Escrow Account in order to
provide a source for payment of Purchase Price adjustments determined pursuant
to this Section 2.6.
(g) UNDERSTANDING REGARDING O.D. VACATION/PAID TIME OFF. At
Closing, Buyer agrees to assume as an Assumed Liability the accrued
vacation/paid time off for the O.D.'s employed by Buyer, the amount of which at
Closing the parties acknowledge and agree is $125,000 ("O.D. PTO"). The parties
acknowledge and agree that the amount of the O.D. PTO set forth in the preceding
sentence is accurate and shall not be contested by any party to this Agreement
or any Affiliate of such party, whether by arbitration pursuant to Section
2.6(a) or otherwise. The parties further acknowledge and agree that the O.D. PTO
shall not be reflected on the Effective Date Balance Sheet, and shall not affect
the calculation of Net Working Capital.
2.7 UNDERSTANDING REGARDING PARENT'S COMMON STOCK. The parties
acknowledge and agree that no fluctuations in the value of Parent's common stock
shall have any impact on any of the other components of the Purchase Price.
3. CLOSING.
3.1 CLOSING. The consummation of the sale and purchase of the
Purchased Assets and the other transactions contemplated by and described in
this Agreement (the "Closing") shall take place at the offices of Xxxxxx Xxxxxx
& Xxxxx, P.A., 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx, at
10:00 a.m. local time on August __, 2002 or at such other date and/or at such
other location as the parties hereto may mutually designate in writing (the
"Closing Date").
3.2 ACTIONS OF SELLER AT CLOSING. At the Closing and unless
otherwise waived in writing by Buyer, Seller shall deliver to Buyer the
following:
(a) Assignments, fully executed by Seller in recordable form
assigning to Buyer leasehold title to any Leased Real Property;
(b) A General Xxxx of Sale and Assignment in the form of Exhibit
A, duly executed by Seller, conveying to Buyer title to all tangible assets
which are a part of the Purchased Assets and valid title to all intangible
assets which are a part of the Purchased Assets, free and clear of all
Encumbrances other than the Assumed Liabilities and the Permitted Encumbrances;
15
(c) An Assignment and Assumption of Assumed Contracts in the form
of Exhibit B, fully executed by Seller, conveying Seller's interest in the
Leases and Assumed Contracts to Buyer;
(d) A certificate of Chief Executive Officer of Seller dated as of
the Closing Date certifying that the conditions set forth in Section 7.1 and 7.7
have been satisfied;
(e) Secretary's Certificates of Seller and Parent dated as of the
Closing Date certifying as to (i) the incumbency of the respective officers of
Seller and Parent, (ii); the accuracy and effectiveness of the By-laws of Seller
and Parent, and (iii) the accuracy and effectiveness of the resolutions of the
respective boards of directors and, if necessary, shareholders of Seller and
Parent, authorizing and approving the respective performance of Seller and
Parent of the transactions contemplated hereby and the execution and delivery of
this Agreement and the documents described herein;
(f) Certificates of existence of Seller and Parent from their
respective states of organization dated not more than thirty (30) days prior to
Closing;
(g) The opinion of Seller's counsel dated as of the Closing Date
as described in and provided by Section 7.3 hereof;
(h) Copies of third-party consents and approvals provided in
Section 7.4(b);
(i) An Assignment of Trademarks in the form of Exhibit C, fully
executed by Seller;
(j) A Buying Group Agreement in the form of Exhibit D, fully
executed by Seller;
(k) A Lease Agreement in the form of Exhibit E, fully executed by
Seller;
(l) A Mutual Release Agreement in the form of Exhibit F, fully
executed by Seller and its Affiliates and their respective officers and
directors identified therein;
(m) A Technology Transition Agreement in the form of Exhibit J,
fully executed by Seller;
(n) UCC termination statements in a form reasonably acceptable to
Buyer terminating all security interests in the Purchased Assets that are in
existence prior to the Closing Date;
(o) A Cancellation and Termination of Professional Services and
Support Agreement in the form of Exhibit O, fully executed by Seller;
16
(p) A Release of Optometric Eye Care Center, P.A. in the form of
Exhibit P, fully executed by CapitalSource;
(q) A Non-Competition Agreement of Seller in the form of Exhibit I,
fully executed by Seller and Parent;
(r) Such other instruments and documents as are reasonably
necessary to satisfy the conditions precedent to Buyer's obligations hereunder;
(s) An Escrow Agreement in the form of Exhibit L, fully executed by
Seller;
(t) An amount equal to $100,000 into the Net Working Capital
Escrow Account in accordance with Section 2.6(f) hereof;
(u) A certificate of insurance naming Buyer as an additional
insured, or other evidence satisfactory to Buyer that such insurance coverage
has been obtained, in accordance with Section 10.19 hereof;
(v) $141,234 in immediately available funds by wire transfer to an
account that has been designated in writing by Buyer at least one business day
prior to the Closing Date, which shall constitute payment in full for the
Seller's obligation for the cost of certain O.D. bonuses in accordance with
Section 10.20 hereof;
(w) A resolution of the board of directors of Parent approving the
plan-to-plan transfer of the account balances of the Transferred Employees from
Seller's 401(k) Plan to the OECCPA Plan as described in Section 9.2 hereof;
(x) A Subordination or Intercreditor Agreement in form satisfactory
to the parties thereto fully executed by Buyer, Drs. Xxxxxx and Xxxxxxx,
Southern Bank, Parent, and Titan Capital, LLC;
(y) Such other instruments and documents as Buyer reasonably deems
necessary to effect the transactions contemplated hereby; and
(z) [$286,589] in immediately available funds by wire transfer to
an account that has been designated in writing by Buyer at least one business
day prior to the Closing Date, which shall constitute payment towards the
Seller's obligation to Operate the Business for Benefit of the Buyer in
accordance with Section 2.6(e) hereof.
3.3 ACTIONS OF BUYER AT CLOSING. At the Closing and unless
otherwise waived in writing by Seller, Buyer shall deliver to Seller the
following:
(a) The payment described in Section 2.5(a) hereof;
17
(b) Written instructions to the Downpayment Escrow Agent directing
the release to Seller of the $25,000 cash portion of the Downpayment;
(c) Written instructions to the Downpayment Escrow Agent directing
the release to the Seller of the certificate or certificates representing the
300,000 shares of Parent common stock previously deposited into escrow pursuant
to the Downpayment Escrow Agreement attached hereto as Exhibit K, as
appropriate, together with duly executed stock powers or other documents of
transfer;
(d) A Buying Group Agreement in the form of Exhibit D, fully
executed by Buyer;
(e) An Assumption Agreement in the form of Exhibit G, fully
executed by Buyer, pursuant to which Buyer shall assume the future payment and
performance of the Assumed Liabilities as herein provided;
(f) A certificate of the President of Buyer dated as of the
Closing Date certifying that the conditions set forth in Sections 8.1 and 8.6
have been satisfied;
(g) Secretary's Certificate of Buyer dated as of the Closing Date
certifying as to (i) the incumbency of the officers of Buyer, (ii); the accuracy
and effectiveness of the By-laws of Buyer, and (iii) the accuracy and
effectiveness of the resolutions of the board of directors and, if necessary,
shareholders of Buyer, authorizing and approving Buyer's performance of the
transactions contemplated hereby and the execution and delivery of this
Agreement and the documents described herein;
(h) A certificate of existence of Buyer from its state of
organization or incorporation, dated not more than thirty (30) days prior to
Closing;
(i) The opinion of Buyer's counsel dated as of the Closing Date as
described in and provided by Section 8.2;
(j) The resignations of Drs. Xxxxxx and Xxxxxxx from their
employment with Parent, in the form of Exhibit H;
(k) A Mutual Release Agreement in the form of Exhibit F, fully
executed by Buyer and the officers and directors identified therein, including
Drs. Xxxxxx and Xxxxxxx;
(l) A Non-Competition Agreement of Buyer in the form of Exhibit Q,
fully executed by Buyer and Drs. Xxxxxxx and Xxxxxx;
(m) A Technology Transition Agreement in the form of Exhibit J,
fully executed by Buyer;
18
(n) A Promissory Note in the form of Exhibit R, fully executed by
Buyer;
(o) A Security Agreement in the form of Exhibit S, fully executed
by Buyer, and the Uniform Commercial Code financing statements delivered
pursuant thereto;
(p) A Personal Guaranty in the form of Exhibit T, fully executed by
Drs. Xxxxxx and Xxxxxxx;
(q) A certificate or certificates representing the shares of Parent
common stock referred to in Section 2.5(c) hereof, together with documents of
transfer;
(r) An Escrow Agreement in the form of Exhibit L, fully executed by
Buyer;
(s) A Lease Agreement in the form of Exhibit E, fully executed by
Xxxxxxx-Xxxxxx Investment Company;
(t) An amount equal to $200,000 into the Net Working Capital Escrow
Account in accordance with Section 2.6(f) hereof;
(u) The Purchase Price Adjustment Holdback Deposit into the
Liability Escrow Account in accordance with Section 2.5(e) hereof;
(v) $6,854 in immediately available funds by wire transfer to an
account that has been designated in writing by Seller at least one business day
prior to the Closing Date, in accordance with the terms of the Technology
Transition Agreement attached hereto as Exhibit J;
(w) $17,011 in immediately available funds by wire transfer to an
account that has been designated in writing by Seller at least one business day
prior to the Closing Date, which shall constitute payment in full for Buyer's
share of the cost of acquiring the professional liability "tail" insurance
coverage in accordance with Section 10.19 hereof;
(x) A resolution of the board of directors of Buyer approving the
plan-to-plan transfer of the account balances of the Transferred Employees from
Seller's 401(k) Plan to the OECCPA Plan as described in Section 9.2 hereof;
(y) A notice from Buyer to the Transferred Employees describing
the plan-to-plan transfer of the account balances of the Transferred Employees
from Seller's 401(k) Plan to the OECCPA Plan as described in Section 9.2 hereof;
(z) A Subordination or Intercreditor Agreement in form satisfactory
to the parties thereto fully executed by Buyer, Drs. Xxxxxx and Xxxxxxx,
Southern Bank, Parent, and Titan Capital, LLC;
19
(aa) Such other instruments and documents as are reasonably
necessary to satisfy the conditions precedent to Seller's obligations hereunder;
and
(bb) Such other instruments and documents as Seller reasonably deems
necessary to effect the transactions contemplated hereby.
3.4 Intentionally Omitted.
3.5 ADDITIONAL ACTS. From time to time after Closing, Seller and
its Affiliates shall execute and deliver such other instruments of conveyance
and transfer, and take such other actions as Buyer reasonably may request, to
more effectively convey and transfer full right, title and interest to, vest in,
and place Buyer in legal and actual possession of, any and all of the Purchased
Assets. In the case of Assumed Contracts and rights which cannot be transferred
effectively without the consent of third parties, Buyer and Seller shall use
reasonable efforts to obtain such consents promptly. Upon reasonable request by
Buyer, Seller shall also furnish Buyer with such information and documents in
its possession or under its control, or which Seller can reasonably execute or
cause to be executed, as will enable Buyer to prosecute any and all petitions,
applications, claims and demands relating to or constituting a part of the
Purchased Assets.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller and Parent, jointly and severally represent and warrant to Buyer
that, except as set forth on the section of the Disclosure Schedule that
corresponds to the representation and warranty in question, the following set
forth in this Article 4 is true and correct as of the Effective Date and as of
the Closing Date:
4.1 INCORPORATION, QUALIFICATION AND CAPACITY. Seller is a
corporation duly organized and validly existing under the Laws of its state of
organization. Seller is duly authorized, qualified and licensed under all
applicable Laws of any Governmental Entity having jurisdiction over the
operations of the NCOP Facilities and the Purchased Assets, to own its
properties and conduct its business in the place and manner now conducted,
except where such failure to do so would not have, in the aggregate, a Material
Adverse Effect. The execution and delivery by Seller of the Agreement and
documents described herein, the performance by Seller of its obligations under
the Agreement and documents described herein and the consummation by Seller of
the transactions contemplated by the Agreement and documents described herein
have been duly and validly authorized and approved by all necessary corporate
actions on the part of the Seller, including, the unanimous approval of its
board of directors, none of which actions have been modified or rescinded and
all of which actions remain in full force and effect.
4.2 CORPORATE POWERS; CONSENTS; ABSENCE OF CONFLICTS WITH OTHER
AGREEMENTS, ETC. The execution, delivery and performance by Seller of the
Agreement and
20
documents described herein and the consummation by Seller of the transactions
contemplated by the Agreement and documents described herein, as applicable, to
the knowledge of Seller:
(a) are not in contravention or violation of the terms of Seller's
articles or certificate of incorporation, bylaws or other organizational
documents, as applicable;
(b) except as set forth on Schedule 4.2(b), do not require any
Approval of or filing or registration with, or other action by, any Governmental
Entity or any other Person to be made or sought by Seller or any of its
respective Affiliates; and
(c) except for Approvals set forth in Schedule 4.2(b), and for
other matters set forth on Schedule 4.2(c), will not conflict with, or result in
any material violation of or material default under (with or without notice or
lapse of time or both), or give rise to a right of termination, cancellation,
acceleration or augmentation of any obligation or to loss of a benefit under, or
result in the creation of any Encumbrance (other than Permitted Encumbrances)
upon any of the Purchased Assets or NCOP Facilities under: (i) any contract,
agreement or other instrument to which Seller or any of its Affiliates is a
party, which is in effect on the Effective Date and which was entered into after
the Original Purchase Date, applicable to any of the NCOP Facilities or
Purchased Assets, or (ii) any Law applicable to any of the NCOP Facilities or
Purchased Assets.
4.3 FINANCIAL INFORMATION. Schedule 4.3 hereto contains the
following financial statements and financial information of the NCOP Facilities
(the "Historical Financial Statements"):
(a) unaudited balance sheet (the "Roll-Forward Balance Sheet")
dated as of June 30, 2002 (the "Roll-Forward Balance Sheet Date") reflecting the
operations of the NCOP Facilities; and
(b) audited balance sheets and income statements of Parent for the
years ended December 31, 2000 and 2001.
The financial statements included in the Historical Financial
Statements are true, complete and accurate in all material respects, fairly
present in all material respects the financial condition and results of
operations of the NCOP Facilities for the periods covered, and have been
prepared in accordance with GAAP, applied on a consistent basis throughout the
periods indicated except as disclosed on Schedule 4.3.
4.4 XXXXX AND XXXXXX NOTES. To the knowledge of Seller, except as
set forth on Schedule 4.4, there exists no material default or event of default,
or facts or circumstances which, with the passage of time, would constitute a
material default or event of default, under or pursuant to the terms of any
agreements or documents governing the Xxxxx and Xxxxxx Notes.
21
4.5 MEDICARE PARTICIPATION.
-----------------------
(a) Except as set forth on Schedule 4.5(a), there is not pending,
nor to the knowledge of Seller, threatened, any proceeding or investigation
under the Government Programs involving or potentially affecting Seller, any of
the NCOP Facilities or any of the Purchased Assets after the Original Purchase
Date. There are no claims, actions or appeals pending before any commission,
board or agency, including any fiscal intermediary or carrier, Governmental
Entity or the Administrator of the Health Care Financing Administration, with
respect to any Government Program claims filed on behalf of or potentially
affecting Seller or any of the NCOP Facilities, after the Original Purchase Date
and on or before the date of this Agreement.
(b) To the knowledge of Seller, all billing practices of Seller
with respect to the NCOP Facilities to all third party payors, including the
Government Programs and private insurance companies, have been true, fair and
correct in all material respects and in material compliance with all applicable
Laws, regulations and policies of such third party payors and Government
Programs, and neither Seller nor the NCOP Facilities have received notice that
they have been billed for or received any payment or reimbursement in excess of
amounts allowed by Law, except for customary adjustments or disallowances which
occur in the ordinary course of business as part of the billing resolution
process, which determinations are being appealed or settled and which are not
material in amount, either individually or in the aggregate.
4.6 EMPLOYEE BENEFIT PLANS.
-----------------------
(a) Schedule 4.6 contains a true and complete list of all the
following agreements, plans or other arrangements, covering any employee of the
NCOP Facilities, which are presently in effect or will have been in effect at
any time after the Original Purchase Date and prior to the Effective Date: (i)
employee benefit plans within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"); and (ii) any other
employee benefit plan, program, policy, or arrangement, whether written or
unwritten, formal or informal, which Seller has maintained, currently maintains,
or to which it has any outstanding present or future obligations to contribute
or other liability, whether voluntary, contingent or otherwise (collectively,
the "Plans") For all purposes of this Agreement, the term "Plan" shall not
include the Optometric Eye Care Center, P.A. 401(k) Plan (the "OECCPA Plan").
(b) The Purchased Assets are not subject to a lien imposed under
ERISA Section 4068.
(c) Seller never has had and currently has no obligation to
contribute to any multi-employer plan, as defined in ERISA Section 3(37), with
respect to the Purchased Assets.
22
(d) There are no actions, audits or claims pending or to the
knowledge of Seller threatened against Seller with respect to Seller's
maintenance of the Plans, other than routine claims for benefits.
(e) Seller has complied in all material respects with the
continuation coverage requirements of Section 1001 of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), and ERISA Sections 601
through 608.
(f) Each Plan has been administered and operated in compliance in
all material respects with its terms and the applicable requirements of ERISA
and the Code, including the reporting and disclosure requirements.
(g) All contributions required to have been made by Seller to any
Plan pursuant to the applicable provisions of the Code or ERISA or by the terms
of any Plan have been made within the time prescribed by such provisions of the
Code and ERISA and all other contributions which relate to all periods prior to
July 31, 2002 have been accrued on the Effective Date Sheet and Historical
Financial Statements including the obligation to provide matching contributions
and there has been no event since July 31, 2002 which would require additional
accruals (other than accruals in the ordinary course).
(h) Except as set forth on Schedule 4.6, there are no pending or,
to the knowledge of Seller, threatened claims of any employees of the NCOP
Facilities against or otherwise involving any of the Plans (other than routine
claims for benefits).
(i) The Historical Financial Statements reflect in all material
respects all employee benefit liabilities in a manner satisfying the
requirements of FAS 87, 88 and 112, if and to the extent applicable.
(j) The OptiCare 401(k) Retirement Plan and Trust (the "Seller's
401(k) Plan") is a standardized prototype plan and Seller is not aware of
anything that would cause Seller's 401(k) Plan not to qualify under Section
401(a) of the Code.
(k) With respect to the Plans, neither Seller nor, to the
knowledge of Seller, any other Person, including any fiduciary, has engaged in
any "prohibited transaction" (as defined in Section 4975 of the Code or Section
406 of ERISA), which could subject Seller or any Person whom Seller has an
obligation to indemnify, to any material tax or penalty imposed under Section
4975 of the Code or Sections 409 or 502 of ERISA.
(l) With respect to the Plans, no event has occurred and no
condition exists that would subject Seller or Buyer to any material tax under
Code Sections 4971, 4972, 4977 or 4979 or to a material fine or penalty under
ERISA Section 502(c) or under any other applicable sections of the Code or
ERISA.
(m) Except as set forth on Schedule 4.6, Seller (i) does not
currently maintain, contribute to nor is Seller required to contribute to any
plan subject to Title IV of ERISA,
23
(ii) has not at any time incurred or expects to incur any liability to the
Pension Benefit Guaranty Corporation or otherwise under Title IV of ERISA, or
(iii) has not at any time incurred or expects to incur liability in connection
with an "accumulated funding deficiency" within the meaning of Section 412 of
the Code, whether or not waived.
(n) Except as set forth on Schedule 4.6, or as would otherwise
apply in connection with a termination of employment with Seller, and except for
any vesting that may be required under Seller's 401(k) Plan, the transactions
contemplated by this Agreement will not (i) entitle any employees of the NCOP
Facilities to severance pay, unemployment compensation, or other similar
payments under any Plan, Law or agreement, (ii) result in any payments
(including parachute payments) under any Plan, Law or agreement becoming due to
any employees of the NCOP Facilities, (iii) terminate or modify or give a third
party a right to terminate or modify the provisions or terms of any employment
agreement, or (iv) cause Seller's 401(k) Plan not to qualify under Section
401(a) of the Code.
(o) Except for Assumed Liabilities and all obligations of Buyer
pursuant to Section 9.2 hereof, it is expressly understood and agreed by Seller
and Buyer that Buyer will not be assuming any Plan in connection with the
transactions contemplated hereby and that Seller will remain liable for all
benefits and other amounts due to current or former employees of the NCOP
Facilities under all Plans. Seller has timely made or accrued all required
matching contributions to Seller's 401(k) Plan for all periods up to and
including the period ending the Effective Date and all other accrued liabilities
arising in connection with any employee benefit program, including without
limitation, accrued but unpaid vacation, severance, wages, salaries and bonuses
are reflected on the Effective Date Balance Sheet.
(p) At all times after the Original Purchase Date and prior to the
Effective Date, matching funds have been contributed by Seller within 30
calendar days after employee contributions were made.
4.7 EMPLOYEES AND EMPLOYEE RELATIONS.
(a) Except as set forth on Schedule 4.7, no changes in the basis
for remuneration of employees of the NCOP Facilities have been made, promised or
authorized by Seller since the Roll-Forward Balance Sheet Date, except in the
ordinary and usual course. Except as set forth on Schedule 4.7, Seller has no
written employment contract with any Person whomsoever relating to the NCOP
Facilities. Other than general understandings which may exist for employment at
will, no oral promises have been made, and no oral understandings have been
entered into, between Seller, and any employee involved in any of the NCOP
Facilities regarding changes in compensation, promotion or any other change in
status, except as set forth on Schedule 4.7.
(b) Except as set forth on Schedule 4.7, (i) there is no pending
or, to the knowledge of Seller, threatened employee strike, work stoppage or
labor disputes, (ii) no union representation question exists with respect to any
employees of Seller, and to the
24
knowledge of Seller, no demand has been made for recognition by a labor
organization by or with respect to any employees of Seller, no union organizing
activities by or with respect to any employees of Seller are taking place, and
none of the employees of Seller is represented by any labor union or
organization, (iii) no collective bargaining agreement exists or is currently
being negotiated by Seller, (iv) there is no unfair practice claim against
Seller before the National Labor Relations Board, or any strike, dispute,
slowdown, or stoppage pending or to the knowledge of Seller threatened against
or involving the NCOP Facilities, (v) Seller is in material compliance with all
Laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours, (vi) to the knowledge of Seller, Seller is not
engaged in any unfair labor practices, (vii) there are no pending or, to the
knowledge of Seller, threatened EEOC claims, wages and hour claims, unemployment
compensation claims, workers' compensation claims or the like, and (viii) except
as otherwise provided in this Agreement, Buyer will not be subjected to any
claim or Liability for severance pay as a result of the consummation of the
transactions contemplated by this Agreement up to and including the Closing
Date.
4.8 LITIGATION OR PROCEEDINGS.
--------------------------
(a) Schedule 4.8 contains an accurate list and will be amended at
the Closing to contain a summary description of all material litigation or
proceedings which were commenced after the Original Purchase Date with respect
to the NCOP Facilities and the Purchased Assets to which Seller is currently a
party. Except as set forth in Schedule 4.8, Seller is not in violation under any
order of any court or federal, state, municipal or other Governmental Entity
wherever located. Except as set forth on Schedule 4.8, there are no claims,
actions, suits, proceedings or investigations pending or to Seller's knowledge
threatened against Seller with respect to the NCOP Facilities or the Purchased
Assets, at law or in equity, or before or by any federal, state, municipal or
other Governmental Entity wherever located, which, if adversely determined,
would have a Material Adverse Effect on the NCOP Facilities.
(b) Other than as set forth on Schedule 4.8, Seller is not subject
to any judgment, order or decree and to the knowledge of Seller there are no
legal impediments to the operation of the NCOP Facilities in the ordinary and
usual course upon the transfer of such NCOP Facilities by Seller, except by
reason of any Approvals set forth on Schedule 4.2.
(c) Except as set forth in Schedule 4.8, Seller has not engaged in
any transaction with respect to the NCOP Facilities or the Purchased Assets
that, to the knowledge of Seller, could reasonably be expected to subject Seller
(or any successor in interest) to any avoidance action. Without limiting the
generality of the foregoing, Seller has not (i) received any payments from its
or their account debtors outside the ordinary and usual course, (ii) acquired or
sold any asset other than for reasonably equivalent value or (iii) conducted any
business with any debtor-in-possession or bankrupt estate other than in the
ordinary and usual course.
25
4.9 TAX LIABILITIES. Except as set forth in Schedule 4.9:
(a) All material tax returns, including income tax returns,
employee payroll tax returns, employee unemployment tax returns and franchise
tax returns, for periods after the Original Purchase Date and prior to and
including the Effective Date which are required to be filed by Seller with
respect to the NCOP Facilities or Purchased Assets (collectively "Returns") have
been filed or will be filed within the time and in the manner provided by Law
(including any valid extensions thereof), and all Returns are or will be true
and correct in all material respects.
(b) Except as set forth in Schedule 4.9, all material federal,
state, and county and local income, franchise, property, sales, use and all
other taxes (including the employer and employee's portion of withholding
taxes), penalties, interest, and any other statutory additions which have become
or are due with respect to the NCOP Facilities, Seller's employees employed in
connection with the NCOP Facilities, and Purchased Assets and any material
assessments received by Seller after the Original Purchase Date with respect
thereto (collectively "Payable Tax Items"), have been or by the Closing Date
will be paid, withheld, or properly accrued for, as applicable, regarding any
period ended on or prior to the Effective Date whether shown on such returns or
not;
(c) There are no tax liens on any of the Purchased Assets other
than liens for taxes not yet due; and
(d) No material claim or investigation is pending or to the
knowledge of Seller threatened, by any state, local or other jurisdiction
alleging that Seller has a duty to file tax returns and pay taxes or is
otherwise subject to the taxing authority of any jurisdiction with respect to
the NCOP Facilities, Seller's employees employed in connection with the NCOP
Facilities, and the Purchased Assets, nor has Seller received any written notice
or questionnaire from any jurisdiction which suggests or asserts that Seller may
have a duty to file such returns and pay such taxes, or otherwise is subject to
the taxing authority of such jurisdiction with respect to the NCOP Facilities,
Seller's employees employed in connection with the NCOP Facilities, and the
Purchased Assets.
4.10 ENVIRONMENTAL MATTERS.
(a) Since the Original Purchase Date, Seller and Parent and any
Affiliate of either has complied and is in material compliance (with respect to
each of the NCOP Facilities) with, all Environmental Laws, provided, however,
that no representation is being made with respect to any properties the leases
of which were not expressly assumed in writing by Seller or which were entered
into by Buyer for any NCOP Facilities.
(b) To the knowledge of Seller or Parent or any Affiliate of
either, neither Seller or Parent or any Affiliate of either has any liability
under any Environmental Law with respect to any of the NCOP Facilities, nor is
Seller or Parent or any Affiliate of either responsible for
26
any liability of any other Person under any Environmental Law with respect to
any of the NCOP Facilities arising out of (i) the current or past presence,
release or threatened release of Hazardous Materials originating on or from any
of the NCOP facilities during Seller's or Parent's period of ownership; (ii) the
off-site disposal or treatment of Hazardous Materials originating on or from any
of the NCOP Facilities during Seller's or Parents' period of ownership of the
NCOP Facilities; (iii) any violation by Seller or Parent or any Affiliate of
either of any Environmental Laws involving Hazardous Materials at any part of
the NCOP Facilities or arising from Seller's or Parent's activities during
Seller's or Parent's period of ownership; notwithstanding the preceding, (a) no
representations are made for any date prior to the Original Purchase Date and
(b) no representation is being made with respect to any properties the leases of
which were not expressly assumed by Seller in writing or were entered into by
Buyer for any NCOP Facilities. There are no pending or, to the knowledge of
Seller or Parent or any Affiliate of either, threatened actions, suits, orders,
claims, legal proceedings or other proceedings arising out of Environmental
Laws, and neither Seller, nor any partner, officer, director or shareholder of
Seller or any Affiliate has received any written notice of any complaint, order,
directive, citation, notice of responsibility, notice of potential
responsibility, or information request from any Governmental Entity or any other
Person or knows any fact(s) which might reasonably form the basis for any such
actions or notices arising out of or attributable to: (i) the presence, release
or threatened release, disposal or treatment at any time since the Original
Purchase Date, of Hazardous Materials.
(c) To the knowledge of Seller or Parent or any Affiliate of
either, Seller and Parent and any Affiliate of either have been duly issued, and
currently have and will maintain through the Closing Date, all Approvals
required under any Environmental Law with respect to any of the NCOP Facilities,
if any; provided, however, (i) no representation is being made for any date
prior to the Original Purchase Date and (ii) no representation is being made
with respect to properties the lease of which were not expressly assumed by
Seller in writing or were entered into by Buyer for any NCOP Facilities. A true
and complete list of such Approvals, all of which are valid and in full force
and effect, is set out in Schedule 4.2. Except in accordance with such
Approvals, since the Original Purchase Date, there has been no release of
material regulated by such Approvals at, or under, or from any of the NCOP
Facilities, except as set forth in Schedule 4.10.
(d) To the knowledge of Seller or Parent or any Affiliate of
either, except as set forth in Schedule 4.10, the NCOP facilities contain no
underground improvements, including treatment or storage tanks, or underground
piping associated with such tanks, used currently or in the past for the
management of Hazardous Materials, and no portion of the NCOP Facilities is or
has been used as a dump or a landfill or consists of or contains filled in land
or wetlands; provided, however, (i) no representation is being made for any date
prior to the Original Purchase Date and (ii)no representation is being made with
respect to properties the leases of which were not expressly assumed by Seller
in writing or were entered into by Buyer for any NCOP Facilities.
27
(e) Seller or Parent or any Affiliate of either will promptly
furnish to Buyer written notice of any release or of any actions or notices
described in this Section 4.10.
4.11 ABSENCE OF CHANGES. Except as set forth in Schedule 4.11,
since the Roll-Forward Balance Sheet Date, there has not been any transaction or
occurrence in which Seller, in connection with the NCOP Facilities and Purchased
Assets has:
(a) suffered any Material Adverse Effect with respect to the NCOP
Facilities;
(b) suffered any damage, destruction or loss with respect to or
affecting any of the Purchased Assets or NCOP Facilities which has had a
Material Adverse Effect;
(c) except as otherwise consented to by Buyer in writing, written
down or written up the value of any inventory (including write-downs by reason
of shrinkage or markdowns,), determined as collectible any material account
receivable or any portion thereof which was previously considered uncollectible,
or written off as uncollectible any material account receivable or any portion
thereof;
(d) except as otherwise consented to by Buyer in writing, disposed
of or permitted to lapse any right to the use of any Intellectual Property,
except in the ordinary course of business consistent with past practice;
(e) except as otherwise consented to by Buyer in writing, made any
significant capital expenditure or commitment in excess of $25,000 for additions
to property, plant, equipment, intangible, or capital assets or for any other
purpose, other than for emergency repairs or replacement;
(f) except as otherwise consented to by Buyer in writing, sold,
transferred, or otherwise disposed of any of the Purchased Assets except in the
ordinary course of business consistent with past practice;
(g) except as otherwise consented to by Buyer in writing, granted
or incurred any obligation for any increase in the compensation of any officer
or employee of the Seller (including, without limitation, any increase pursuant
to any bonus, pension, profit-sharing, retirement, or other plan or commitment)
except for merit raises to employees in the ordinary course of business
consistent with past practice;
(h) except as otherwise consented to by Buyer in writing, made any
change in any method of accounting or accounting principle, practice, or policy;
(i) except as otherwise consented to by Buyer in writing, taken
any other action unless in the ordinary course of business and consistent with
past practice or provided for or otherwise disclosed in this Agreement or the
Schedules hereto; or
28
(j) except as otherwise consented to by Buyer in writing, agreed,
so as to legally bind the Seller whether in writing or otherwise, to take any of
the actions set forth in this Section 4.11 and not otherwise permitted by this
Agreement.
4.12 LEGAL COMPLIANCE. Except as set forth on Schedule 4.12, since
the Original Purchase Date, Seller and its Affiliates have complied in all
material respects with all applicable Laws relating to the operation of the NCOP
Facilities, including without limitation the rules and regulations of the North
Carolina Board of Optometry, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure to so comply. Seller
acknowledges the existence of a pending North Carolina Board of Optometry
proceeding.
4.13 ACCOUNTS RECEIVABLE. All accounts receivable (including,
without limitation, Agency Receivables) of Seller are reflected properly on its
books and records, are valid receivables subject to no setoffs or counterclaims,
are current and collectible, and will be collected in accordance with their
terms at their recorded amounts, subject only to the reserve for bad debts set
forth in the Roll-Forward Balance Sheet.
4.14 TITLE TO ASSETS. Seller and Parent and any Affiliate of either
have and shall convey to Buyer at Closing and as of the Effective Date good and
marketable title to, or a valid leasehold interest in, the properties and assets
held or used by Seller and Parent and any Affiliate of either in the business or
operation of the NCOP Facilities, located thereon, or shown on the Effective
Date Balance Sheet or acquired after the date thereof, free and clear of all
Encumbrances, except for Permitted Encumbrances. Without limiting the generality
of the foregoing, Seller and Parent and any Affiliate of either have and shall
convey to Buyer at Closing and as of the Effective Date good and marketable
title to all of the Purchased Assets, free and clear of all Encumbrances or
restrictions on transfer, except for Permitted Encumbrances. None of the
Purchased Assets have ever been owned by any of the following entities:
PrimeVision Central, Inc., PrimeVision East, Inc., PrimeVision of Delaware,
Inc., PrimeVision of Arkansas, Inc., PrimeVision of Kentucky, Inc., PrimeVision
of Missouri, Inc., PrimeVision of Ohio, Inc., PrimeVision of Tennessee, Inc., or
PrimeVision of Xxxxxx P.A., PrimeVision of Indiana, Inc., PrimeVision of
Maryland, Inc., PrimeVision of New Jersey, Inc., PrimeVision West, Inc.,
PrimeVision - Kinston P.A.
4.15 RIGHT TO TERMINATE PROFESSIONAL SERVICES AND SUPPORT
AGREEMENT. Seller is under no restriction, and has placed no encumbrance which
shall not have been released as of the Effective Date upon the revenue stream
generated by the Professional Services and Support Agreement, which would
prevent Seller from canceling and terminating the Professional Services and
Support Agreement, and Seller has the ability to cancel and terminate the
Professional Services and Support Agreement without restriction.
4.16 BINDING EFFECT. This Agreement and all other agreements to
which Seller and Parent will become a party hereunder are and will constitute
the valid and legally binding
29
obligations of Seller and Parent and are and will be enforceable against Seller
and Parent in accordance with the respective terms hereof and thereof, subject
to the effect of bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance and similar Laws relating to or affecting creditors' rights generally
and court decisions with respect thereto, and subject to the application of
equitable principles and the discretion of the court (regardless of whether the
enforceability is considered in a proceeding in equity or at law).
4.17 DISCLAIMER OF WARRANTY. WITH THE EXCEPTION OF THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, PARENT AND
SELLER MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY NATURE, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND PARENT AND SELLER HEREBY EXPRESSLY DISCLAIM ANY AND ALL OTHER WARRANTIES OR
REPRESENTATIONS.
4.18 FULL DISCLOSURE; EFFECT OF SCHEDULES. This Agreement and the
statements, certificates, Schedules and all other documents and information
furnished in writing to Buyer and Buyer's representatives by Seller and Seller's
representatives pursuant to this Agreement do not and will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made and to be made in this Agreement or such other
documents not misleading.
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller the following as of the
Effective Date and as of the Closing Date:
5.1 INCORPORATION, QUALIFICATION AND CAPACITY. Buyer is a
professional corporation duly organized and validly existing under the Laws of
the State of North Carolina. Buyer is duly authorized, qualified and licensed
under all applicable Laws of any Governmental Entity having jurisdiction over
its operations, to own properties and conduct its business in the place and
manner now conducted. The execution and delivery by Buyer of the Agreement and
documents described herein, the performance by Buyer of its obligations under
the Agreement and documents described herein and the consummation by Buyer of
the transactions contemplated by the Agreement and documents described herein
have been duly and validly authorized and approved by all necessary corporate
actions on the part of the Buyer, including the approval of its board of
directors, none of which actions have been modified or rescinded and all of
which actions remain in full force and effect.
5.2 CORPORATE POWERS; CONSENTS; ABSENCE OF CONFLICTS WITH OTHER
AGREEMENTS, ETC. The execution, delivery and performance of this Agreement by
Buyer and all other agreements referenced in or ancillary hereto to which Buyer
is a party and the consummation of the transactions contemplated herein by
Buyer, to the knowledge of Buyer:
30
(a) are within its corporate powers and are not in contravention
of the terms of Buyer's articles or certificate of incorporation or bylaws or
other organizational documents and have been approved by all requisite corporate
action;
(b) except as set forth on Schedule 5.2(b), do not require any
Approval of or filing or registration with, or other action by, any Governmental
Entity or any other Person to be made or sought by Buyer or any of its
respective Affiliates; and
(c) will neither conflict with nor result in any material breach
or contravention of, (i) any contract, agreement or instrument to which Buyer is
a party or by which Buyer is bound or (ii) any order, decree, Law or regulation
applicable to Buyer.
5.3 TITLE TO PARENT'S SHARES. Buyer and/or its Affiliates own the
Stock Consideration free and clear of all liens, security interests and
encumbrances, and no third party has any rights in respect of the Stock
Consideration.
5.4 LITIGATION. Except as described in Schedule 5.4, there is no
litigation pending which questions the validity or enforceability of this
Agreement or seeks to enjoin the consummation of any of the transactions
contemplated hereby or the ability of Buyer to operate the NCOP Facility after
the Closing Date.
5.5 CONSENTS. Except as set forth in Schedule 5.5, no action,
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental or judicial authority is required in connection
with the execution, delivery or performance of this Agreement by Buyer or the
consummation by Buyer of the transactions contemplated hereby, except for any
consents, assignments and novations necessary to transfer to Buyer the rights
and obligations of Seller under the Purchased Assets.
5.6 BINDING EFFECT. This Agreement and all other agreements to
which Buyer will become a party hereunder are and constitutes the valid and
binding obligations of Buyer enforceable against it in accordance with the
respective terms hereof and thereof, subject to the effect of bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and similar Laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto, and subject to the application of equitable principles and the
discretion of the court (regardless of whether the enforceability is considered
in a proceeding in equity or at law).
5.7 MEDICARE PARTICIPATION. To the knowledge of Buyer, all billing
practices of Buyer to all third party payors, including the Government Programs
and private insurance companies, have been true, fair and correct in all
material respects and in material compliance with all applicable material Laws,
regulations and policies of such third party payors and Government Programs in
all material respects.
31
5.8 LEGAL COMPLIANCE. Except as set forth on Schedule 5.8, to the
knowledge of Buyer, Buyer has complied in all material respects with the rules
and regulations of the North Carolina Board of Optometry. However, Buyer
acknowledges the existence of a pending North Carolina Board of Optometry
proceeding.
5.9 DISCLAIMER OF WARRANTY. WITH THE EXCEPTION OF THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER
MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY NATURE, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND BUYER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES OR
REPRESENTATIONS.
5.10 FULL DISCLOSURE; EFFECT OF SCHEDULES. This Agreement and the
statements, certificates, Schedules and all other documents and information
furnished in writing to Seller and Seller's representatives by Buyer and Buyer's
representatives pursuant to this Agreement do not and will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made and to be made in this Agreement or such other
documents not misleading.
6. Intentionally Omitted.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.
The obligations of Buyer hereunder are, at the option of Buyer, subject
to the satisfaction, on or prior to the Closing Date, of the following
conditions unless waived in writing by Buyer:
7.1 COMPLIANCE WITH COVENANTS. Seller shall have in all material
respects performed all obligations and complied with all covenants and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing Date.
7.2 MATERIAL ADVERSE EFFECT. Since the Roll-Forward Balance Sheet
Date, there shall have been no event, action or condition that would have a
Material Adverse Effect on the NCOP Facilities, the Purchased Assets or the
business of Seller.
7.3 OPINION OF SELLER'S COUNSEL. Buyer shall have received from
counsel to Seller opinions dated as of the Closing Date and addressed to Buyer,
in form and substance satisfactory to Buyer, to the effect that: (i) Seller is a
corporation duly organized and validly existing under the Laws of the state of
its organization; (ii) Seller has full power and authority to make, execute,
deliver and perform this Agreement, and all corporate and other proceedings
required to be taken by Seller to authorize the execution, delivery and
performance of this Agreement, and to sell, convey, assign, transfer and deliver
the Purchased Assets as herein contemplated have all been duly and properly
taken; and (iii) this
32
Agreement constitutes the valid and binding obligation of Seller, enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance and similar Laws relating to
or affecting creditor's rights generally and court decisions with respect
thereto, and subject to the application of equitable principles and the
discretion of the court (regardless of whether the enforceability is considered
in a proceeding in equity or at law).
7.4 PRE-CLOSING CONFIRMATIONS. Buyer shall have obtained
documentation or other evidence reasonably satisfactory to Buyer that Seller
has:
(a) received all required Approvals, consents, waivers and
authorizations from all Governmental Entities whose approval is required to
consummate the transactions herein contemplated, except for any such approvals
the failure of which to obtain would not have a Material Adverse Effect; and
(b) received all Approvals required from third parties in order to
assign the leasehold interests with respect to all Leased Real Property and all
Assumed Contracts, except for any such Approvals the failure of which to obtain
would not have a Material Adverse Effect;
7.5 ACTION/PROCEEDING. No court or any other Governmental Entity
shall have issued an order restraining or prohibiting the transactions herein
contemplated and no litigation shall be pending in which any Governmental Entity
seeks to prohibit the transactions herein contemplated or otherwise seeks a
remedy which would materially and adversely affect the ability of Buyer to enjoy
the full use and enjoyment of the Purchased Assets.
7.6 INSTRUMENTS OF TRANSFER. Seller shall have the authority and
capacity to, and shall be legally permitted to, and shall have furnished to
Buyer, in form reasonably acceptable to Buyer, bills of sale, assignments or
other instruments of transfer necessary or appropriate to transfer to and
effectively vest in Buyer all of Seller's right, title and interest in and to
the Purchased Assets, in proper statutory form for recording if such recording
is necessary or appropriate.
7.7 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Seller contained in this Agreement shall be true and correct
when made and true and correct in all material respects at and as of the Closing
Date with the same effect as though made at and as of the Closing Date. The
Seller shall have delivered to Buyer certificates of the Seller signed by an
officer of Seller familiar with the transactions contemplated by this Agreement,
dated the Closing Date, to the effect set forth above in Sections 7.1, 7.2, 7.4,
7.5 and 7.7.
33
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
The obligations of Seller hereunder are subject to the satisfaction, on
or prior to the Closing Date, of the following conditions unless waived in
writing by Seller:
8.1 COMPLIANCE WITH COVENANTS. Buyer shall have in all material
respects performed all obligations and complied with all covenants and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing Date.
8.2 OPINION OF BUYER'S COUNSEL. Seller shall have received from
counsel to Buyer an opinion dated as of the Closing Date and addressed to
Seller, in form and substance satisfactory to Seller, to the effect that: (i)
Buyer is a corporation duly organized and validly existing under the Laws of the
State of North Carolina; and (ii) Buyer has full power and authority to make,
execute, deliver and perform this Agreement, and all corporate proceedings
required to be taken by Buyer to authorize the execution, delivery and
performance of this Agreement, and to purchase and receive the Purchased Assets
as herein contemplated have all been duly and properly taken.
8.3 ACTION/PROCEEDING. No proceeding that affects the Purchased
Assets and to which any federal or state governmental body or agency thereof or
any official thereof (in such person's official capacity) is a party shall be
pending and no court or any other Governmental Entity shall have issued an order
restraining or prohibiting the transactions herein contemplated.
8.4 PRE-CLOSING CONFIRMATIONS. Seller shall have obtained
documentation or other evidence reasonably satisfactory to Seller that Buyer has
received approval from all Governmental Entities whose approval is required to
consummate the transactions herein contemplated, except for any such approvals
the failure to obtain would not have a Material Adverse Effect;
8.5 FAIRNESS OPINION. Seller shall have received a fairness
opinion from an investment banker or other financial advisor chosen by the board
of directors of Seller in form and substance satisfactory to the board of
directors of Seller that the consideration to be paid is fair from a financial
point of view and such opinion shall not have been withdrawn or modified in a
manner unsatisfactory to Seller prior to Closing. All fees, costs and expenses
associated with the fairness opinion shall be borne by Seller and shall be paid
in full at or prior to Closing.
8.6 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyer contained in this Agreement shall be true and correct
when made and true and correct in all material respects at and as of the Closing
Date with the same effect as though made at and as of the Closing Date. Buyer
shall have delivered to Seller certificates of the Buyer signed by an officer of
Buyer familiar with the transactions contemplated by this Agreement, dated the
Closing Date, to the effect set forth above in Sections 8.1, 8.3, 8.4 and 8.6.
34
9. TRANSITIONAL ARRANGEMENTS.
9.1 Intentionally Omitted.
9.2 EMPLOYEES.
(a) Buyer shall offer employment, effective as of the Effective
Date, to all currently active employees of Seller at the NCOP Facilities as of
Closing whose names, positions and aggregate compensation are set forth on
Schedule 9.2. The term "Transferred Employees" as used in this Agreement means
any employee of Seller who accepts employment with Buyer as of the Effective
Date. All Transferred Employees will be retained as employees-at-will. Unless
otherwise agreed, any employee who is on disability leave shall be retained by
Seller. All Transferred Employees shall be given credit for service with Seller
for purposes of accrued vacations and for all other purposes under all employee
benefit plans, programs, policies and arrangements of Buyer or any affiliate of
Buyer.
(b) Seller shall retain liability for all claims incurred by the
employees of the NCOP Facilities (and their enrolled dependents) under the Plans
prior to the Effective Date (subject to this Section 9.2). Buyer shall be liable
for all claims of such individuals incurred on or after the Effective Date. For
purposes of medical claims, claims shall be deemed to have been incurred on the
date on which each medical or other treatment or service was rendered, not the
date of the inception of the related illness or injury or the date of submission
of a claim related thereto.
(c) Effective as of the Effective Date, Buyer shall assume all
liability under or relating to the OECCPA Plan which Seller may have had
pursuant to the Professional Services and Support Agreement or otherwise, if
any. Without limiting the generality of the foregoing, Buyer shall be
responsible for all funding and administrative obligations with respect to the
OECCPA Plan and for all reports required to be filed after the Effective Date
with respect to the OECCPA Plan. Effective as of the Effective Date, Buyer
shall, subject to the terms of the OECCPA Plan, cause all Transferred Employees
to be eligible to be covered under the OECCPA Plan or under a tax qualified Code
Section 401(k) plan newly adopted by Buyer or an affiliate of Buyer as of the
Effective Date ("Buyer's New 401(k) Plan"). Effective as of the Effective Date,
all Transferred Employees shall cease to participate in Seller's 401(k) Plan. As
soon as practicable following the Effective Date, but subject to all IRS notice
requirements (if any), Seller shall cause the account balances of all
Transferred Employees under Seller's 401(k) Plan to be transferred in a
plan-to-plan transfer to the OECCPA Plan and/or Buyer's New 401(k) Plan
(depending on which the Transferred Employee is eligible to participate in) and
Buyer shall cause such transfer to be accepted by the OECCPA Plan and Buyer's
New 401(k) Plan. Such transfer of account balances shall be made in cash,
provided that such transfer shall include an in-kind transfer of notes
representing outstanding participant loans from Seller's 401(k) Plan. The amount
of such account balances shall be determined as of the date of such transfer,
provided that the amount
35
of assets (and the attendant liabilities) so transferred shall satisfy Section
414(l) of the Code as of the date of transfer.
(d) As of the Effective Date, all Transferred Employees shall
cease active participation in all Plans. Seller shall have no liability under
the Plans with respect to events occurring on or after the Effective Date (or
with respect to any Assumed Liabilities) or under any employee benefit plans,
programs, policies or arrangements of Buyer or any affiliate of Buyer. Except
with respect to any liabilities which are included in the Assumed liabilities
and any liability in connection with Buyer's obligations under this Section 9.2,
Seller shall indemnify and hold harmless the Buyer Indemnified Parties from and
against any and all liabilities and obligations whatsoever, including, but not
limited to, reasonable attorneys' fees and expenses, with respect to the Plans,
including the operation and activities of any Plan prior to the Effective Date
or the acts or omissions of Seller under this Section 9.2. Buyer shall indemnify
and hold harmless the Seller Indemnified Parties from and against any and all
liabilities and obligations whatsoever, including, but not limited to,
reasonable attorneys' fees and expenses, arising on or after the Effective Date
in connection with the Transferred Employees, including, without limitation, all
liabilities and obligations with respect to (i) notices, payments, fines or
assessments pursuant to any Laws with respect to the employment, discharge or
layoff of any Transferred Employees as of or after the Effective date,
including, but not limited to, such liability as arises under the Worker
Adjustment and Retraining Notification Act, (ii) any employee benefit plans,
programs, policies or arrangements of Buyer or any affiliate of Buyer, including
the operation and activities of any such employee benefit plans, programs,
policies or arrangements, and (iii) the acts or omissions of Buyer under this
Section 9.2.
(e) With respect to all group health plans, Seller shall retain
full responsibility and liability for compliance with the continuation health
care coverage requirements of Code Section 4980B and ERISA Section 601-608 (the
"Continuation Coverage Requirements") for all qualifying events that occur
before the Effective Date within the meaning of Section 4980B(f)(3) of the Code
and Section 603 of ERISA. After the Effective Date, Seller shall continue to
comply with the Continuation Coverage Requirements with respect to any employee
of the NCOP Facilities who is not a Transferred Employee. Buyer shall be fully
responsible for, and shall comply with, the Continuation Coverage Requirements
with respect to all qualifying events occurring on or after the Effective Date
with respect to Transferred Employees and their dependents (provided, however,
that Seller shall remain liable for obligations with respect to qualifying
events arising out of the transactions contemplated by this Agreement with
respect to employees who are not Transferred Employees), and shall maintain a
medical benefit plan which shall be effective as of the Effective Date with
respect to Transferred Employees and their dependents. Seller shall indemnify
and hold Buyer harmless from and against any costs, expenses, losses, damages,
and liabilities incurred or suffered by Buyer directly or indirectly, including,
but not limited to, reasonable attorneys' fees and expenses, which relate to
continuation coverage and arise as a result of any act or omission of Seller
with respect to its obligations under this Section 9.2. Buyer shall indemnify
and hold the Seller Indemnified Parties harmless from and against any costs,
36
expenses, losses, damages and liabilities incurred or suffered by any Seller
Indemnified Party directly or indirectly, including, but not limited to,
reasonable attorneys' fees and expenses, which relate to continuation coverage
and arise as a result of any act or omission by Buyer with respect to its
obligations under this Section 9.2.
10. ADDITIONAL AGREEMENTS.
10.1 TERMINATION OF PROFESSIONAL SERVICES AND SUPPORT AGREEMENT.
Notwithstanding any other provision of the Professional Services and Support
Agreement to the contrary, the parties hereby agree that the Professional
Services and Support Agreement shall be terminated effective as of 12:01 a.m. on
the Effective Date. Without limiting the generality of the foregoing, all
agreements, covenants, representations and warranties contained in the
Professional Services and Support Agreement, which survive the termination of
the Professional Services and Support Agreement pursuant to Section 11(e)
thereof or any other provisions thereof, shall be terminated effective as of
12:01 a.m. on the Effective Date. It is expressly understood and agreed by Buyer
and Seller that, upon termination of the Professional Services and Support
Agreement, neither party shall have any continuing obligation or liability
thereunder to the other.
10.2 ALLOCATION OF PURCHASE PRICE. The allocation of Purchase Price
among the Purchased Assets shall be in accordance with Schedule 10.2 hereto. The
parties agree that any tax returns or other tax information they may file or
cause to be filed with any Governmental Entity shall be prepared and filed
consistently with such allocation. In this regard, the parties agree that, to
the extent required, they will each properly prepare and timely file Form 8594
in accordance with Section 1060 of the Code.
10.3 Intentionally Omitted.
10.4 POST-CLOSING ACCESS TO INFORMATION. Buyer acknowledges that
subsequent to the Closing, Seller may need access to information or documents in
the control or possession of Buyer relating to the Purchased Assets or the NCOP
Facilities for purposes of concluding the transactions contemplated herein and
for audits, investigations, compliance with governmental requirements,
regulations and requests, and the prosecution or defense of third-party claims.
Accordingly, Buyer agrees that, at the sole cost and expense of Seller, it will
make available to Seller and its agents, independent auditors and/or
Governmental Entities such documents and information as may be available
relating to the Purchased Assets and NCOP Facilities in respect of periods prior
to Closing and will permit Seller to make copies of such documents and
information.
10.5 LEASE AGREEMENT. As an inducement to Buyer to enter into this
Agreement and as a condition precedent to Buyer's obligation to consummate the
transactions contemplated herein, at the Closing, Seller agrees to execute and
deliver to Buyer a Lease Agreement in the form of Exhibit E attached hereto,
with respect to the premises located at 110 and 000 Xxxxxxx Xxxxx, Xxxxx Xxxxx,
Xxxxx Xxxxxxxx (the "Lease Agreement").
37
10.6 BUYER'S AND DRS. XXXXXX AND XXXXXXX'X NON-COMPETITION
OBLIGATIONS. As an inducement to Seller to enter into this Agreement, and as a
condition precedent to Seller's obligation to consummate the transactions
contemplated herein, at the Closing, Buyer agrees to execute and deliver, and
agrees to cause Drs. Xxxxxxx and Xxxxxx to execute and deliver to Seller a
Non-Competition Agreement of Buyer in the form of Exhibit Q attached hereto.
10.7 REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating hereto, including (a) consents, waivers and modifications which may
hereafter be executed, (b) the documents delivered at the Closing, and (c)
financial statements, certificates and other information previously or hereafter
furnished to Seller or to Buyer, may, subject to the provisions of Section
12.9(b) here, be reproduced by Seller and by Buyer by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process.
10.8 COOPERATION ON TAX MATTERS. Following the Closing, the parties
shall cooperate fully with each other and shall make available to the other, as
reasonably requested and at the expense of the requesting party, and to any
taxing authority, all information, records or documents relating to tax
liabilities or potential tax liabilities of Seller for all periods on or prior
to the Closing and any information which may be relevant to determining the
amount payable under this Agreement, and shall preserve all such information,
records and documents (to the extent a part of the Purchased Assets delivered to
Buyer at Closing) at least until the expiration of any applicable statute of
limitations or extensions thereof.
10.9 CONSENTED ASSIGNMENT. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any claim, right, contract, license, lease, commitment, sales order or
purchase order if an attempted assignment thereof without the consent of another
party thereto would be considered a breach thereof or in any material way affect
the rights of Seller thereunder, unless such consent is obtained. If such
consent is not obtained, or if an attempted assignment would be ineffective or
would materially affect Seller's rights thereunder so that Buyer would not in
fact receive all such rights, Seller shall upon the request of Buyer cooperate
in any reasonable arrangement designed to provide for Buyer the benefits under
any such claim, right, contract, license, lease, commitment, sales order or
purchase order, including enforcement of any and all rights of Seller against
the other party or parties thereto arising out of the breach or cancellation by
such other party or otherwise.
10.10 SELLER'S NON-COMPETITION OBLIGATIONS. As an inducement to
Buyer to enter into this Agreement, and as a condition precedent to Buyer's
obligation to consummate the transactions contemplated herein, at the Closing,
Seller and Parent agree to execute and deliver to Buyer a Non-Competition
Agreement of Seller in the form of Exhibit I attached hereto.
38
10.11 PARTICIPATION IN MANAGED CARE PANELS. As an inducement to
Buyer to enter into this Agreement, Seller agrees that Buyer, Drs. Xxxxxx and
Xxxxxxx and the existing and future licensees of Buyer (the existing licensees
are listed in Schedule 2.1) shall, subsequent to the Closing, have the
opportunity to be a participating provider in managed care contracts maintained
by Seller and/or Parent and to participate at prevailing rates provided Buyer
meets all credentialing standards. Buyer agrees that employees of Seller and
Parent will be entitled to annual eye exams at Buyer's facilities at the
prevailing managed care rates for as long as Buyer is a managed care
participating provider.
10.12 MUTUAL RELEASE AGREEMENT. At the Closing, Seller and Parent
and their Affiliates and certain of their respective officers and directors and
Buyer agree to, and Buyer agrees to cause Drs. Xxxxxx and Xxxxxxx to, execute
and deliver to each other a Mutual Release Agreement in the form of Exhibit F
attached hereto. The Mutual Release Agreement shall provide, among other things,
for the mutual release of certain claims arising or accruing prior to the
Closing Date and an agreement among the parties not to disparage one another.
10.13 RESIGNATIONS OF DRS. XXXXXXX AND XXXXXX. At the Closing, Buyer
and Seller agree that the employment relationship between Parent and Drs.
Xxxxxxx and Xxxxxx shall be terminated, with no liability on the part of Parent
or Seller pursuant thereto notwithstanding anything to the contrary contained in
their employment agreements. Buyer agrees to cause Drs. Xxxxxxx and Xxxxxx to
deliver to Seller and Parent at Closing their respective resignations, each in
the form of Exhibit H attached hereto.
10.14 TECHNOLOGY TRANSITION AGREEMENT. At the Closing, Buyer and
Seller agree to execute and deliver to each other a Technology Transition
Agreement in the form of Exhibit J attached hereto, and Buyer agrees to pay
Seller at Closing an amount equal to $6,854 in order to reimburse Seller for
certain costs incurred in excess of the IS Separation Costs (as defined in the
Technology Transition Agreement). The parties acknowledge and agree that
payments made in accordance with the terms of the Technology Transition
Agreement will not be reflected on the Effective Date Balance Sheet.
10.15 RELEASE OF BUYER FROM SECURITY AND GUARANTY AGREEMENTS. At the
Closing, Seller shall deliver to Buyer a Release of Optometric Eye Care Center,
P.A. in the form of Exhibit P attached hereto, fully executed by CapitalSource
Finance LLC ("CapitalSource"), which shall provide, among other things, for the
release of Buyer from the Guaranty and the Security Agreement by and between,
among others, Buyer and Bank Austria Creditanstalt Corporate Finance, Inc.,
which were assigned to CapitalSource pursuant to that certain Assignment and
Assumption Agreement dated January 25, 2002.
10.16 GUARANTY OF SELLER'S PERFORMANCE BY PARENT. In order to induce
Buyer to enter into this Agreement, Parent hereby unconditionally jointly and
severally guarantees the performance by Seller of this Agreement in its entirety
and specifically, but without limitation thereto, any and all monetary
obligation of Seller arising under Section 11 hereof (the "Guaranteed
Obligations"), as if Parent were Seller. Guarantor agrees that Buyer may,
39
from time to time, extend or modify the time, manner, place or terms of payment
without notice to or further consent from Guarantor. Guarantor hereby waives and
releases all rights, demands and defenses Guarantor may have with respect to
Buyer and the collection of the Guaranteed Obligations, including, without
limitation, any law(s) that require Buyer to first pursue payment from Seller or
any other persons or entities prior to making demand upon Guarantor with respect
to the Guaranteed Obligations, including, without limitation, N.C.G.S.(ss.)(ss.)
26-7, et seq. Furthermore, Guarantor hereby waives any notices regarding this
Agreement or this guaranty, including, without limitation, notice of default or
demand for payment.
10.17 COOPERATION OF XX. XXXXXX AND OTHER PERSONNEL.
(a) At Closing and subsequent to Closing, Xx. Xxxxxx agrees to
supply, and permit reasonable access, to Seller all books and records, including
electronic files and e-mail communications in his possession or obtained in the
future regarding Seller's Health Services Organizations.
(b) Buyer agrees to permit Seller to have reasonable access to
Xxxxxxxx Xxxx and Xxxx Xxxxx subsequent to Closing, including whatever access is
reasonably necessary to cause the Effective Date Balance Sheet to be prepared.
The parties acknowledge and agree that any assistance provided to Seller or
Parent by Xx. Xxxx in connection with the preparation of the Effective Date
Balance Sheet shall not alter the responsibilities of the parties set forth in
Section 2.6.
10.18 NOTIFICATION OF NORTH CAROLINA BOARD OF OPTOMETRY. Seller and
Buyer will continue to cooperate with the North Carolina Board of Optometry in
providing information regarding the transactions described in this Agreement.
10.19 TAIL INSURANCE. Seller and Parent will (a) purchase perpetual
"tail insurance" in an amount equal to the level of coverage maintained during
the period preceding the Closing (exclusive of umbrella coverage), which is
$1,000,000 per occurrence and $3,000,000 in the aggregate, to cover professional
negligence, professional liability claims and other liabilities for which Seller
or Parent is indemnifying Buyer pursuant to Section 11.1 of this Agreement, and
(b) maintain for a period of at least four (4) years following the Effective
Date director and officer liability insurance in the minimum amount equal to the
level of coverage applicable to current directors of Parent. Seller and Parent
shall supply evidence satisfactory to Buyer that such insurance coverage has
been obtained. Buyer agrees to pay Seller at Closing an amount equal to $17,011,
which shall constitute reimbursement in full to Seller for one half the cost of
acquiring the professional liability "tail" insurance coverage described in this
Section 10.19(a).
10.20 PAYMENT OF CERTAIN O.D. BONUSES. At Closing, Seller agrees to
pay bonuses in the amounts of $65,556.30 to Xxxxx Xxxxx, O.D. and $75,677.96 to
Xxxxxx Xxxxx, O.D., by way of credits to a payroll account or other method
agreed upon by the parties hereto prior
40
to Closing. The parties acknowledge and agree that the accrued bonuses payable
to Xxx Xxxxxxxx, O.D. in the amount of $16,084.25, Xxxx Xxxxx, O.D. in the
amount of $6,700.81, and Xxx Xxxxx, O.D. in the amount of $7,095.42 shall
constitute Assumed Liabilities hereunder (and be reflected on the Effective Date
Balance Sheet). The parties further acknowledge and agree that the amounts of
the bonuses to be paid by Seller or assumed by Buyer as set forth in this
Section 10.20 are accurate and shall not be contested by any party to this
Agreement or any Affiliate of such party, whether by arbitration pursuant
Section 2.6(a) or otherwise.
10.21 USE OF TRADEMARKS/SERVICE MARKS.
(a) On the Closing Date (subject, however, to Section 2.1(ix)),
Buyer, its officers, directors, employees, agents, servants, Affiliates,
successors and assigns and each of them agree that, throughout the world, in
connection with the trademarks, service marks, designations, and trade names
"OptiCare Health Systems, Inc." and "PrimeVision Health, Inc.," and any logos
with respect thereto (collectively, the "OptiCare Marks") and/or in connection
with any other trademark, service xxxx, tag line, trade name, domain name,
corporate name or designation that is confusingly similar to the OptiCare Marks,
they shall not use, license, render services, offer for sale, sell, distribute
products, register, register as a domain name, use on or in connection with
advertising and promotional materials, advertise and/or promote a trade name,
corporate name, tag line, domain name, trademark, service xxxx, and/or any other
designation of origin including the OptiCare Marks and/or any designation that
is confusingly similar to the OptiCare Marks.
(b) On the Closing Date, Seller and Parent, their officers,
directors, employees, agents, servants, Affiliates, successors and assigns and
each of them agree that, throughout the world, in connection with the trademark,
service xxxx, designation, and trade name "Optometric Eye Care Center" and the
registered trademark with respect to its logo (the "Buyer Marks") and/or in
connection with any other trademark, service xxxx, tag line, trade name, domain
name, corporate name or designation that is confusingly similar to the Buyer
Marks, they shall not use, license, render services, offer for sale, sell,
distribute products, register, register as a domain name, use on or in
connection with advertising and promotional materials, advertise and/or promote
a trade name, corporate name, tag line, domain name, trademark, service xxxx,
and/or any other designation of origin including the Buyer Marks and/or any
designation that is confusingly similar to the Buyer Marks.
10.22 TERMINATION OF USE OF ELECTRONIC SIGNATURE OF PARENT
EMPLOYEES. Within one (1) day after the Closing Date, Buyer will cease use of
the electronic or automated signature of any Parent or Seller employee in check
writing or other financial document preparation.
41
11. INDEMNIFICATION.
11.1 INDEMNIFICATION BY SELLER. From and after the Closing Date,
Seller and Parent jointly and severally shall indemnify and hold harmless Buyer,
its subsidiaries and Affiliates, and its and their respective officers,
directors, principals, attorneys, agents employees or other representatives
(collectively, "Buyer Indemnified Parties") from and against any and all losses,
liabilities, damages, costs (including court costs and costs of appeal) and
expenses (including reasonable attorneys' fees) that such Buyer Indemnified
Party incurs as a result of, or with respect to (i) any inaccuracy in any of the
representations or warranties made by Seller in this Agreement or in any
agreement or instrument contemplated hereby, (ii) any material breach or
non-fulfillment of any covenants or other agreements made by Seller in this
Agreement, or any agreement or instrument contemplated hereby, (iii) any of the
Excluded Liabilities, (iv) any of the litigation or proceedings listed in
Schedule 4.8, or any breach of the representations provided in Section 4.8, and
(v) the use, operation or ownership of the NCOP Facilities and Purchased Assets
subsequent to the Original Purchase Date, except as otherwise provided herein.
In the event of litigation or other proceedings in which Seller and Parent
indemnifies Buyer, Seller and Parent agree to consult with Buyer and, in the
event such litigation or other proceeding involves or results in an adverse
effect on Buyer, Seller and Parent will obtain Buyer's consent to any settlement
or material action to be taken in connection therewith, which consent shall not
be unreasonably withheld.
11.2 INDEMNIFICATION BY BUYER. From and after the Closing Date,
Buyer shall indemnify and hold harmless Seller, its subsidiaries and Affiliates,
and its and their respective officers, directors, principals, attorneys, agents
employees or other representatives (collectively, "Seller Indemnified Parties")
from and against any and all losses, liabilities, damages, costs (including
court costs and costs of appeal) and expenses (including reasonable attorneys'
fees) that such Seller Indemnified Party incurs as a result of, or with respect
to (i) any inaccuracy in any of the representations or warranties made by Buyer
in this Agreement or in any agreement or instrument contemplated hereby, (ii)
any material breach or non-fulfillment of any of the covenants or other
agreements made by Buyer in this Agreement or in any agreement or instrument
contemplated hereby, (iii) any of the Assumed Liabilities and (iv) the use,
operation or ownership of any of the NCOP Facilities and Purchased Assets after
the Closing Date. In the event of litigation or other proceedings in which Buyer
indemnifies a Seller Indemnified Party, Buyer agrees to consult with Seller and
Parent and, in the event such litigation or other proceeding involves or results
in an adverse effect on Seller or Parent, Buyer will obtain Seller's consent to
any settlement or material action to be taken in connection therewith, which
consent shall not be unreasonably withheld.
42
11.3 LIMITATION. The respective liability of Seller and Parent (on
the one hand) and Buyer (on the other) for indemnification under Section 11.1(i)
or 11.2(i) shall be limited to an amount equal to the Purchase Price, with the
exception of liability associated with a breach of the representations and
warranties set forth in Sections 4.5, 4.9, 4.10, and 5.7, as to which there will
be no such cap.
11.4 LIMITATION ON LIABILITY. If on the Closing Date either party
(the "first party") has actual knowledge of the untruth, inaccuracy or breach of
any representation or warranty by any other party contained in, or such other
party's breach of or failure to comply with, any covenant or obligation under
this Agreement or the other agreements referred to herein (specifically
excluding, however, Seller's and Parent's representations and warranties
concerning the Historical Financial Statements, including the Roll-Forward
Balance Sheet, made in Section 4.3), then any liability, obligation, claim,
loss, cost, damage and expense, including reasonable attorney's fees and
disbursements, arising out of or resulting therefrom shall not be included as
part of losses of the first party and the other party shall have no obligation
to indemnify the first party therefor. The parties acknowledge and agree that
for purposes of this Section 11.4, the knowledge of Drs. Xxxxxx and Xxxxxxx
shall not be attributable to Seller or Parent.
11.5 NOTICE AND CONTROL OF LITIGATION.
(a) If any claim or liability is asserted in writing against a
Person entitled to indemnification under this Section 11 (the "Indemnified
Party') which would give rise to a claim under this Section 11, the Indemnified
Party shall notify the Person giving the indemnity ("Indemnifying Party") in
writing of the same within seven business days of receipt of such written
assertion of a claim or liability, provided, however; that the failure to
provide such notice as so indicated shall not affect the Indemnifying Party's
obligation to indemnify and the Indemnifying Party shall have no remedy by
reason of such failure except to the extent of any actual prejudice. The
Indemnifying Party shall have the right to defend any such claim, select the
counsel and control the defense, settlement and prosecution of any litigation.
If the Indemnifying Party, within ten days after notice of such claim, fails to
defend such claim, the Indemnified Party will (upon further notice to the
Indemnifying Party) have the right to undertake the defense, compromise or
settlement of such claim on behalf of and for the account and risk of the
Indemnifying Party; provided however that such claim shall not be compromised or
settled without the consent of the Indemnifying Party, which consent shall not
be unreasonably withheld.
(b) The Indemnified Party shall cooperate in all reasonable
respects with the Indemnifying Party in the investigation, trial and defense of
any lawsuit or action that may be subject to this Section 11 and any appeal
arising therefrom; provided however that the Indemnified Party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action any appeal arising therefrom. The parties shall cooperate with each other
in any notifications to insurers.
43
11.6 SURVIVAL. The representations and warranties contained in or
made pursuant to Articles 4 and 5 other than Sections 4.1, 4.5, 4.9, 4.10, 4.14,
5.1, and 5.7 of this Agreement shall survive the Closing until three years after
the Closing; the representations and warranties contained in or made pursuant to
Sections 4.1, 4.5, 4.9, 4.10, 5.1 and 5.7 of this Agreement shall survive the
Closing for a period of six years; and the representations and warranties
contained in or made pursuant to Section 4.14 of this Agreement shall survive
the Closing indefinitely (in either case referred to herein as the respective
"Survival Period").
11.7 EXCLUSIVE REMEDY. The representations and warranties contained
in or made pursuant to this Agreement shall be terminated and extinguished upon
the end of the Survival Period. Thereafter, none of Seller, Buyer or any
shareholder, partner, officer, director, principal or Affiliate of any of the
preceding shall be subject to any liability of any nature whatsoever with
respect to any such representation or warranty. Moreover, the sole and exclusive
remedy for any breach or inaccuracy, or alleged breach or inaccuracy, of any
representation and warranty made by Seller, Buyer or any other Person whatsoever
shall be the remedies provided by this Section 11.
11.8 TREATMENT OF PAYMENTS. All payments made pursuant to this
Section 11 shall be treated as adjustments to the Purchase price for the
Purchased Assets.
12. GENERAL.
12.1 EFFECTIVE DATE. The obligations of the parties hereunder, and
the effectiveness of this Agreement, are subject to the receipt of the approval
of the North Carolina Board of Optometry, in written form reasonably
satisfactory to each of Seller and Buyer. The parties will cooperate and take
all reasonable steps (without obligation to make any payment or concession to
any third party) necessary to obtain, as promptly as practicable, all such
approvals.
12.2 CONSENTS, APPROVALS AND DISCRETION. Except as herein expressly
provided to the contrary, whenever this Agreement requires any consent or
approval to be given by either party or either party must or may exercise
discretion, the parties agree that such consent or approval shall not be
unreasonably withheld or delayed and such discretion shall be reasonably
exercised.
12.3 Intentionally Omitted.
12.4 CHOICE OF LAW; JURISDICTION; INJUNCTIVE RELIEF.
(a) To the extent permitted by applicable Law, the parties agree that
this Agreement shall be governed by and construed in accordance with the Laws of
the State of New York, without giving effect to any choice or conflict of law
provision or rule thereof.
44
(b) The parties hereby agree that any action, suit or proceeding
arising out of or relating to the interpretation, enforcement or performance of
this Agreement or any agreement or instrument contemplated hereby may be brought
in the state or federal courts located in the Eastern District of North
Carolina, and the parties hereby expressly consent to the jurisdiction of such
courts for the purposes of any such suit, action or proceeding. The parties
expressly waive any objection to personal jurisdiction in the courts described
above, to venue being proper in those courts, and to those courts being an
inconvenient forum.
(c) In the event of a breach of any party's obligation to consummate
this Agreement or breach of any covenant by any party to this Agreement, the
non-breaching party shall be entitled to enforce this Agreement as to such
matters by injunctive relief and by specific performance, such relief to be
without the necessity of posting a bond, cash or otherwise (unless required by
applicable Law).
12.5 BENEFIT, ASSIGNMENT. Subject to provisions herein to the
contrary, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective legal representatives, successors and
assigns; provided, however, that no party may assign this Agreement without the
prior written consent of the other party, which consent shall not be
unreasonably withheld.
12.6 ACCOUNTING DATE. The transactions contemplated hereby shall be
effective for accounting purposes as of 12:01 a.m. on the Effective Date, unless
otherwise agreed in writing by Seller and Buyer. The parties will use
commercially reasonable efforts to cause the Closing to be effective as 12:01
a.m. on the Effective Date, with equitable adjustments made to the Purchase
Price necessary to give effect to the foregoing.
12.7 NO BROKERAGE. Seller and Buyer represent to each other that no
broker has in any way been contracted in connection with the transactions
contemplated hereby. Each of Seller and Buyer agrees to indemnify the other
party from and against all loss, cost, damage or expense arising out of claims
for fees or commissions of brokers employed or alleged to have been employed by
such indemnifying party.
12.8 COST OF TRANSACTION. Whether or not the transactions
contemplated hereby shall be consummated and except as otherwise provided
herein, the parties agree as follows: (i) Seller will pay the fees, expenses,
and disbursements of Seller and its agents, representatives, accountants, and
counsel incurred in connection with the subject matter hereof and any amendment
hereto (including any fines imposed upon Seller or Parent by the North Carolina
Board of Optometry in connection with the currently pending proceeding and any
expenses incurred in connection therewith, including attorney's fees); and (ii)
Buyer shall pay the fees, expenses and disbursements of Buyer and its agents,
representatives, accountants and counsel incurred in connection with the subject
matter hereof and any amendments hereto (including any fines imposed upon Buyer
or Drs. Xxxxxx and Xxxxxxx by the North Carolina Board of Optometry in
connection with the currently pending proceeding and any expenses incurred in
connection therewith, including attorney's fees other than the
45
credit to the Purchase Price referred to in Section 2.6(d) hereof). Seller and
Buyer shall share equally the costs of any recording fees for any documents to
be recorded, and any and all sales, transfer, or recording taxes incurred in
connection with the transfer or conveyance of the Purchased Assets to Buyer.
12.9 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY.
(a) This Agreement and the terms hereof shall be kept confidential
except as may, in the reasonable judgment of any party hereto be required by any
applicable Law, including any federal securities Laws. If any party hereto
concludes that disclosure is required, it shall provide each other party with a
reasonable opportunity to discuss the nature of the requirement and to review
the disclosure before it is made. The party making the disclosure shall have the
right to make the disclosure in a manner satisfactory in terms and in substance
to such party in its sole and absolute discretion to the extent it has been
advised by its counsel that such form and content of the disclosure is required.
Except as otherwise provided herein, each party hereto shall not otherwise
disclose to any Person the nature or progress of the transactions contemplated
pursuant to this Agreement or the contents of any information provided to such
party in anticipation of such transactions.
(b) It is understood by the parties hereto that the information,
documents and instruments delivered to Buyer by Seller or Seller's agents and
the information, documents and instruments delivered to Seller by Buyer or
Buyer's agents are of a confidential and proprietary nature. Each of the parties
hereto agrees that both prior and subsequent to Closing they will maintain the
confidentiality of all such Confidential Information, documents or instruments
delivered to them by each of the other parties hereto or their agents in
connection with the negotiation of this Agreement or in compliance with the
terms, conditions and covenants hereof and only disclose such information,
documents and instruments to their duly authorized officers, directors,
representatives and agents. Each of the parties hereto further agrees that if
the transactions contemplated hereby are not consummated, they will return all
such documents and instruments and all copies thereof in their possession to the
other party to this Agreement. Each of the parties hereto recognizes that any
breach of this section would result in irreparable harm to the other parties to
this Agreement and their Affiliates and that therefore either Seller or Buyer
shall be entitled to an injunction to prohibit any such breach or anticipated
breach, without the necessity of posting a bond, cash or otherwise, in addition
to all of their other legal and equitable remedies. Nothing in this section,
however, shall prohibit the use of such Confidential Information, documents or
information for the purpose of securing financing to enable Buyer to effect the
purchase pursuant hereto or such governmental filings as in the mutual opinion
of Buyer's and Seller's counsel are (i) required by Law or governmental
regulations or (ii) otherwise appropriate.
12.10 WAIVER OF BREACH. The waiver by either party of any breach or
violation of any provision of this Agreement shall not operate as, or be
construed to constitute, a waiver of any subsequent breach of the same or other
provision hereof.
46
12.11 NOTICE. Any notice, demand or communication required,
permitted, or desired to be given hereunder shall be deemed effectively given
when personally delivered, when received by telegraphic or other electronic
means (including telecopy and telex) or overnight courier, or five (5) days
after being deposited in the United States mail, with postage prepaid thereon,
certified or registered mail, return receipt requested, addressed as follows:
SELLER: PrimeVision Health, Inc.
000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
Attn: President
Facsimile: (000) 000-0000
with a required copy to: Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
PARENT: OptiCare Health Systems, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: President and General Counsel
Facsimile: (000) 000-0000
With a required copy to: Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
BUYER: Optometric Eye Care Center, P.A.
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xx. Xxxxx Xxxxxx
Facsimile: (000) 000-0000
with a required copy to: Xxxxxx Xxxxxx & Xxxxx, P.A.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: D. Xxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
47
or to such other address, and to the attention of such other person or officer
as any party may designate.
12.12 SEVERABILITY. In the event any provision of this Agreement is
held to be invalid, illegal or unenforceable for any reason and in any respect,
such invalidity, illegality, or unenforceability shall in no event affect,
prejudice or disturb the validity of the remainder of this Agreement unless
doing so would result in an interpretation of this Agreement that is manifestly
unjust.
12.13 NO INFERENCES. Inasmuch as this Agreement is the result of
negotiations between sophisticated parties of equal bargaining power represented
by counsel, no inference in favor of, or against, either party shall be drawn
from the fact that any portion of this Agreement has been drafted by or on
behalf of such party.
12.14 DIVISIONS AND HEADINGS. The divisions of this Agreement into
sections and subsections and the use of captions and headings in connection
therewith are solely for convenience and shall have no legal effect in
construing the provisions of this Agreement.
12.15 NO THIRD-PARTY BENEFICIARIES. Except as may otherwise be
expressly provided herein, the terms and provisions of this Agreement are
intended solely for the benefit of Buyer and Seller and their respective
permitted successors or assigns and it is not the intention of the parties to
confer, and this Agreement shall not confer, third-party beneficiary rights upon
any other Person.
12.16 TAX AND MEDICARE ADVICE AND RELIANCE. Except as expressly
provided in this Agreement, none of the parties (nor any of the parties'
respective counsel, accountants or other representatives) has made or is making
any representations to any other party (or to any other party's counsel
accountants or other representatives) concerning the consequences of the
transactions contemplated hereby under applicable tax Laws or under the Laws
governing the Medicare program. Each party has relied solely upon the tax and
Medicare advice of its own employees or of representatives engaged by such party
and not on any such advice provided by any other party hereto.
12.17 ENTIRE AGREEMENT; AMENDMENT.
(a) This Agreement supersedes all previous contracts and
constitutes the entire agreement of whatsoever kind or nature existing between
or among the parties representing the within subject matter and no party shall
be entitled to benefits other than those specified herein. As between or among
the parties, no oral statement or prior written material not specifically
incorporated herein shall be of any force and effect. The parties specifically
acknowledge that in entering into and executing this Agreement the parties rely
solely upon the representations and agreements contained in this Agreement and
no others. All prior representations or agreements, whether written or verbal
not expressly incorporated herein are superseded unless and until made in
writing and signed by all parties hereto. This
48
Agreement may be executed in two or more counterparts, each and all of which
shall be deemed an original and all of which together shall constitute but one
and the same instrument. It shall not be a condition to the effectiveness of
this Agreement that each party shall have signed the same counterpart. Copies of
counterpart signature pages executed by an authorized individual that are
received via facsimile shall have the same force and effect as an original
signature page.
(b) At any time up to three (3) business days prior to the Closing
Date, Seller may provide Buyer in writing with amendments and additions relating
to any information set forth in the Schedules. All references herein to the
Schedules shall refer to the Schedules as so amended and supplemented.
[Signature page follows.]
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in multiple originals by their authorized officers, all as of the
Effective Date.
SELLER: PRIMEVISION HEALTH, INC.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxx
----------------------------------
Title: Chief Executive Officer
---------------------------------
PARENT: OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxx
----------------------------------
Title: Chief Executive Officer
---------------------------------
BUYER: OPTOMETRIC EYE CARE CENTER, P.A.
By: /s/ Xxxxx X.X. Xxxxxx
------------------------------------
Name: Xxxxx X.X. Xxxxxx
----------------------------------
Title: President
---------------------------------
[Signature page to Asset Purchase Agreement]
50
