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EXHIBIT 2.5
MANAGED CARE ORGANIZATION ASSET PURCHASE AGREEMENT
This Managed Care Organization Asset Purchase Agreement (this
"Agreement"), effective as of September 1, 1997, is by and among MANAGED HEALTH
SERVICES, INC., a Florida corporation (the "Company"), XXXXXXX X. XXXXXXXX,
M.D., XXXXXX X. XXXXXXXX, M.D., XXXXX X. XXXXXXX, M.D. and XXXXXXX X. XXXXX,
M.D. (collectively, the "Shareholder"), VISION TWENTY-ONE, INC., a Florida
corporation ("Vision 21"), and VISION 21 MANAGEMENT SERVICES, INC., a Florida
corporation which is a wholly-owned subsidiary of Vision 21 (the "Subsidiary").
R E C I T A L S
A. Shareholder is a physician licensed to practice medicine in the
State (as defined herein) and currently conducts a Managed Care Business through
the Company.
B. Shareholder owns all of the issued and outstanding shares of capital
stock of the Company.
C. Vision 21 provides business management services and facilities for
eye care professionals and related businesses.
D. The Company desires to sell, assign and transfer certain of its
assets and Vision 21 and the Subsidiary desire that the Subsidiary purchase,
assume and acquire such assets and assume certain liabilities of the Company in
exchange for capital stock of Vision 21 and other consideration, all as more
specifically provided herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings set forth below:
1.1. AAA. The term "AAA" shall mean the American Arbitration
Association.
1.2. Accountants. The term "Accountants" shall mean the accounting
firm for Vision 21.
1.3. Accounts Receivable. The term "Accounts Receivable" shall have
the meaning set forth in Section 2.1(a).
1.4. Acquisition Proposal. The term "Acquisition Proposal" shall
have the meaning set forth in Section 3.29.
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1.5. Actual Knowledge. The terms "actual knowledge," "have no actual
knowledge of" or "do not actually know of" and similar phrases shall mean (a) in
the case of a natural person, the actual conscious awareness, or not, as the
context requires, of the particular fact by such person, and (b) in the case of
an entity, the actual conscious awareness, or not, as the context requires, of
the particular fact by any stockholder, director or executive officer of such
entity.
1.6. Affiliate. The term "Affiliate" with respect to any person or
entity shall mean a person or entity that directly or indirectly through one or
more intermediaries, controls, or is controlled by or is under common control
with, such person or entity.
1.7. Applicable Laws. The term "Applicable Laws" shall have the
meaning set forth in Section 18.8.
1.8. Assets. The term "Assets" shall have the meaning set forth in
Section 2.1.
1.9. Assumed Contracts. The term "Assumed Contracts" shall have the
meaning set forth in Section 2.1(d).
1.10. Assumed Obligations. The term "Assumed Obligations" shall have
the meaning set forth in Section 2.3.
1.11. Audit. The term "Audit" shall have the meaning set forth in
Section 3.6.
1.12. Best Knowledge. The terms "best knowledge," "have no knowledge
of" or "do not know of" and similar phrases shall mean (a) in the case of a
natural person, the particular fact was known, or not known, as the context
requires, to such person after diligent investigation and inquiry by such
person, and (b) in the case of an entity, the particular fact was known, or not
known, as the context requires, to any stockholder, director or executive
officer of such entity after diligent investigation and inquiry by the principal
executive officers of such entity.
1.13. Business Management Agreement. The term "Business Management
Agreement" shall mean the Business Management Agreement entered into between
Florida Eye Center, Sever & Xxxxxxx, M.D., P.A. and Sever, Xxxxxxxx & Xxxxxxxx,
M.D., P.A. at the Closing.
1.14. Business Records. The term "Business Records" shall have the
meaning set forth in Section 2.1(f).
1.15. Cash Compensation. The term "Cash Compensation" shall have the
meaning set forth in Section 3.8(a).
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1.16. Claim Notice. The term "Claim Notice" shall have the meaning
set forth in Section 14.3(a).
1.17. Closing. The term "Closing" shall mean the consummation of the
transactions contemplated by this Agreement.
1.18. Closing Date. The term "Closing Date" shall mean September 15,
1997, or such other date as mutually agreed upon by the parties.
1.19. Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.20. Commitments. The term "Commitments" shall have the meaning set
forth in Section 3.12(a).
1.21. Common Stock. The term "Common Stock" or "Vision 21 Common
Stock" shall mean the common stock, par value $.001 per share, of Vision 21.
1.22. Compensation Plans. The term "Compensation Plans" shall have
the meaning set forth in Section 3.8(b).
1.23. Competing Managed Care Business. The term "Competing Managed
Care Business" shall have the meaning set forth in Section 16.1(b).
1.24. Competitor. The term "Competitor" shall mean any person or
entity which, individually or jointly with others, whether for its own account
or for that of any other person or entity, owns, or holds any ownership or
voting interest in any person or entity engaged in Managed Care Business;
provided, however, that such term shall not include any Affiliate of Vision 21
or any entity with which Vision 21 has an agreement similar to the Business
Management Agreement in effect.
1.25. Contract Financial Information. The term "Contract Financial
Information" shall have the meaning set forth in Section 3.6.
1.26. Contract Financial Information Date. The term "Contract
Financial Information Date" shall have the meaning set forth in Section 3.6.
1.27. Controlled Group. The term "Controlled Group" shall have the
meaning set forth in Section 3.9(g).
1.28. Corporation Law. The term "Corporation Law" shall mean the
statutes, regulations and laws governing business corporations and professional
associations in the State.
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1.29. Damages. The term "Damages" shall have the meaning set forth in
Section 14.1.
1.30. Election Period. The term "Election Period" shall have the
meaning set forth in Section 14.3(a).
1.31. Employee Benefit Plans. The term "Employee Benefit Plans" shall
have the meaning set forth in Section 3.9(a).
1.32. Employee Policies and Procedures. The term "Employee Policies
and Procedures" shall have the meaning set forth in Section 3.8(d).
1.33. Employment Agreements. The term "Employment Agreements" shall
have the meaning set forth in Section 3.8(c).
1.34. Environmental Laws. The term "Environmental Laws" shall have
the meaning set forth in Section 3.24(a).
1.35. ERISA. The term "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
1.36. Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.37. Excluded Assets. The term "Excluded Assets" shall have the
meaning set forth in Section 2.2.
1.38. FBCA. The term "FBCA" shall mean the Florida Business
Corporation Act.
1.39. Financial Statements. The term "Financial Statements" shall
have the meaning set forth in Section 3.6.
1.40. GAAP. The term "GAAP" shall mean generally accepted accounting
principles, applied on a consistent basis with prior periods, set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity or other practices and procedures as may be approved by a
significant segment of the accounting profession, which are applicable to the
circumstances as of the date of the determination.
1.41. Governmental Authority. The term "Governmental Authority" shall
mean any national, state, provincial, local or tribunal governmental, judicial
or administrative authority or agency.
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1.42. Indemnified Party. The term "Indemnified Party" shall have the
meaning set forth in Section 14.3(a).
1.43. Indemnifying Party. The term "Indemnifying Party" shall have
the meaning set forth in Section 14.3(a).
1.44. Indemnity Notice. The term "Indemnity Notice" shall have the
meaning set forth in Section 14.3(d).
1.45. Insurance Policies. The term "Insurance Policies" shall have
the meaning set forth in Section 3.13.
1.46. IRS. The term "IRS" shall mean the Internal Revenue Service.
1.47. Lease Assignments. The term "Lease Assignments" shall have the
meaning set forth in Section 12.1(l).
1.48. Leased Property. The term "Leased Property" shall have the
meaning set forth in Section 2.1(c).
1.49. Managed Care Business. The term "Managed Care Business" shall
mean either offering a Third-Party Payor Program or contracting with a
Third-Party Payor Program, directly or indirectly, to arrange for the provision
of health care items or services by a panel of contracted providers, in any
manner whatsoever. Managed Care Business shall also mean the provision of
management or administrative services to any party that engages in either of the
foregoing.
1.50. Material Adverse Effect. The term "Material Adverse Effect"
shall mean a material adverse effect on the Company's business, operations,
condition (financial or otherwise) or results of operations, taken as a whole,
considering all relevant facts and circumstances.
1.51. Permitted Encumbrances. The term "Permitted Encumbrances" shall
have the meaning set forth in Section 3.11(b).
1.52. Personal Property Leases. The term "Personal Property Leases"
shall have the meaning set forth in Section 2.1(b).
1.53. Prepaid Items. The term "Prepaid Items" shall have the meaning
set forth in Section 2.1(l).
1.54. Proposed Purchase Price Adjustment. The term "Proposed Purchase
Price Adjustment" shall have the meaning set forth in Section 2.6(b).
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1.55. Proprietary Rights. The term "Proprietary Rights" shall have
the meaning set forth in Section 3.14.
1.56. Public Offering. The term "Public Offering" shall mean any
underwritten secondary public offering of Vision 21 Common Stock.
1.57. Purchase Price. The term "Purchase Price" shall mean the
consideration set forth in Section 2.4 of this Agreement.
1.58. Real Property Leases. The term "Real Property Leases" shall
have the meaning set forth in Section 2.1(c).
1.59. Recent Acquisitions. The term "Recent Acquisitions" shall mean
the acquisitions by Vision 21 of third parties which were completed in December
1996, March 1997, May 1997 and June 1997.
1.60. Registration Statement. The term "Registration Statement" shall
mean any S-1 Registration Statement filed by Vision 21 in connection with a
Public Offering.
1.61. SEC. The term "SEC" shall mean the Securities and Exchange
Commission.
1.62. Securities. The term "Securities" shall mean the shares of
Vision 21 Common Stock to be delivered to the Company under the terms of this
Agreement.
1.63. Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended.
1.64. State. The term "State" shall mean the state of incorporation
of the Company.
1.65. Tangible Personal Property. The term "Tangible Personal
Property" shall have the meaning set forth in Section 2.1(e).
1.66. Tax Returns. The term "Tax Returns" shall have the meaning set
forth in Section 3.15(a).
1.67. Third Party Claim. The term "Third Party Claim" shall have the
meaning set forth in Section 14.3(a).
1.68. Third-Party Payor Program. The term "Third Party Payor Program"
shall mean any program or arrangement under which health services are provided,
directly or indirectly, to parties that provide health benefits, including but
not limited to the federal Medicare program, the Florida Medicaid and general
assistance programs, the CHAMPUS program, and
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any program of any health maintenance organization, preferred provider
organization, physician-hospital organization, private health insurance
company, self-insured employee benefit plan or Xxxx-Xxxxxxx employee benefit
plan.
1.69. Transaction. The term "Transaction" shall mean the purchase and
sale of the Assets and the assumption of the Assumed Obligations pursuant to
this Agreement.
1.70. Vision 21 Financial Statements. The term "Vision 21 Financial
Statements" shall have the meaning set forth in Section 5.9.
2. PURCHASE AND SALE OF ASSETS.
2.1. Purchase and Sale of Assets. Subject to the terms and conditions
herein set forth, and in reliance upon the representations and warranties set
forth herein, the Company agrees to sell, convey, assign, transfer and deliver
to the Subsidiary, and the Subsidiary agrees to purchase, assume, accept and
acquire, the assets consisting of all the assets as a going concern (other than
the Assets specified in Section 2.2 hereof) owned by the Company as of the
Closing Date, of every kind, character and description, whether tangible, real,
personal, or mixed, and wheresoever located, whether carried on the books of the
Company or not carried on the books of the Company due to having been expended,
fully depreciated, or otherwise (the "Assets"), including without limitation the
following (except to the extent that any of the following are specifically
enumerated as Excluded Assets in Section 2.2 hereof) to the extent permitted by
applicable law:
a. All of the accounts receivable or other rights to receive
payment owing to the Company ("Accounts Receivable") described on Schedule
2.1(a);
b. All of the Company's rights in, to and under all leases of
supplies, instruments, equipment, furniture, machinery and other items of
tangible personal property ("Personal Property Leases"), including, without
limitation, the Personal Property Leases described on Schedule 2.1(b);
c. All of the Company's rights as a lessee in, to and under all
real property lease agreements (such real property lease agreements are
hereinafter referred to as "Real Property Leases" and the parcels of real
property in which the Company has a leasehold interest and that are subject to
the Real Property Leases are hereinafter referred to as "Leased Property"),
including, without limitation, estates created by, and rights conferred under,
the Real Property Leases described on Schedule 2.1(c), and any and all estates,
rights, titles and interests in, to and under all warehouses, storage
facilities, buildings, works, structures, fixtures, landings, constructions in
progress, improvements, betterments, installations, and additions constructed or
located on or affixed to the Leased Property;
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d. All of the Company's rights in, to and under all contracts,
agreements, insurance policies, purchase orders and commitments (the "Assumed
Contracts"), including, without limitation, the Assumed Contracts described on
Schedule 2.1(d);
e. All tangible personal property (including supplies,
instruments, equipment, furniture and machinery) owned by the Company ("Tangible
Personal Property"), including, without limitation, the Tangible Personal
Property described on Schedule 2.1(e);
f. All books and records of the Company, including, without
limitation, all credit records, payroll records, computer records, computer
programs, contracts, agreements, operating manuals, schedules of assets,
correspondence, books of account, files, papers, books and all other public and
confidential business records (together the "Business Records"), whether such
Business Records are in hard copy form or are electronically or magnetically
stored;
g. All franchises, licenses, permits, certificates, approvals
and other governmental authorizations necessary to own and operate any of the
other Assets, except as otherwise disclosed in negotiations between the parties
hereto;
h. All (i) United States and foreign patents, patent
applications, trademarks, trademark applications and registrations, service
marks, service xxxx applications and registrations, copyrights, copyright
applications and registrations and trade names of the Company; (ii) proprietary
data and technical, manufacturing know-how and information (and all materials
embodying such information) of the Company; (iii) developments, discoveries,
inventions, ideas and trade secrets of the Company; and (iv) rights to xxx for
past infringement;
i. All of the Company's right, title and interest in, to and
under all telephone numbers used by the Company, including all extensions
thereto;
j. All rights in, to and under all representations, warranties,
covenants and guaranties made or provided by third parties to or for the benefit
of the Company with respect to any of the other Assets;
k. All cash in registers or xxxxx cash drawers (which shall on
the Closing Date be at least ninety percent (90%) of the average daily cash
balance held in such locations in the twelve (12) month period preceding the
Closing Date);
l. All of the Company's prepaid expenses, prepaid insurance,
deposits and other similar items ("Prepaid Items"); and
m. All goodwill of the Company.
If and to the extent the assignment of any personal property lease,
real property lease, contract, agreement, purchase order, work order,
commitment, license, permit, certificate or approval listed on the foregoing
Schedules shall require the consent of another party thereto, then
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(i) such personal property lease, real property lease, contract, agreement,
purchase order, work order, commitment, license, permit, certificate or approval
shall constitute a Personal Property Lease, Real Property Lease, Assumed
Contract or License, as the case may be, only upon and subject to receipt of
such consent; (ii) such personal property lease, contract, agreement, purchase
order, work order, commitment, license, permit, certificate or approval shall
not be a Personal Property Lease, Real Property Lease, Assumed Contract or
License, as the case may be, if and for so long as the attempted assignment
would constitute a breach thereof; and (iii) the Company shall cooperate fully
with the Subsidiary and Vision 21 (or Vision 21's or the Subsidiary's
successor-in-interest) in seeking such consent or reasonable arrangement
designed to provide to the Subsidiary and Vision 21 (or such
successor-in-interest) the benefits, claim or rights arising thereunder.
2.2. Excluded Assets. The Company shall not sell, convey, assign,
transfer or deliver to the Subsidiary, and the Subsidiary shall not be obligated
to purchase, accept or acquire (or make any payments or otherwise discharge any
liability or obligation of the Company with respect to), (a) life insurance
policies covering the life of any employee of the Company, (b) personal effects
listed on Schedule 2.2; and (c) cash and cash equivalents in banks, certificates
of deposit, commercial paper and securities owned by the Company (but excluding
cash held in registers or xxxxx cash drawers on the Closing Date) (collectively,
the "Excluded Assets").
2.3. Assumption of Obligations and Liabilities. At the Closing, the
Subsidiary shall assume and agree to pay or perform, promptly as they become
due, only those obligations and liabilities of the Company expressly set forth
on Schedule 2.3 (the "Assumed Obligations"). Except for the Assumed Obligations,
neither Vision 21 nor the Subsidiary shall assume or be deemed to have assumed
or be responsible for any other obligation or liability of the Company, direct
or indirect, known or unknown, absolute or contingent, including without
limitation (i) any and all obligations regarding any foreign, Federal, state or
local income, sales, use, franchise or other tax liabilities, and (ii) any and
all obligations or liabilities relating to any fees or expenses of the Company's
or Shareholder's counsel, accountants or other experts incident to the
negotiation and preparation of any of the documents contemplated herein and
consummation of the transactions contemplated thereby. Neither Vision 21 nor the
Subsidiary shall assume or be deemed to have assumed or be responsible for any
obligation or liability of the Company for medical loss payments and facility
payments (incurred but not received) which are due for services rendered prior
to September 1, 1997 and not paid. An Audit will be completed to determine the
extent of medical loss payments and facility payments incurred but not received.
If the amount of such payments incurred but not received exceeds the Company's
cash on hand at August 31, 1997, the cash portion of the Purchase Price shall be
reduced by an amount equal to such excess.
2.4. Purchase Price. Vision 21 agrees that, subject to the terms and
conditions of this Agreement, and in full consideration for the aforesaid sale,
transfer, conveyance, assignment and delivery of the Assets of the Company to
the Subsidiary, and the acceptance by the Subsidiary of such Assets and the
assumption of the Assumed Obligations of the Company by the Subsidiary, Vision
21 shall deliver to the Company at the Closing the consideration (the "Purchase
Price") set forth in Schedule 2.4. The parties acknowledge that a portion of the
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Purchase Price set forth in Schedule 2.4 shall be held in escrow pursuant to the
terms of the Contingent Consideration Escrow Agreement described in Section
12.1(f) of this Agreement.
2.5. The Closing. The Closing shall take place on the Closing Date
at the offices of Xxxxxxxx, Loop & Xxxxxxxx, 000 X. Xxxxxxx Xxxxxxxxx, Xxxxx
0000, Xxxxx, Xxxxxxx 00000 or at such other location in the State as the parties
shall mutually agree.
2.6. Purchase Price Adjustments. Ernst & Young, LLP shall within
seventy-five (75) days of the Closing Date conduct an audit of the Company to
ensure that the Company has collected accounts receivable and paid accounts
payable in the ordinary course of business during the ninety (90) day period
prior to the Closing Date. In the event that the audit reveals that the Company
has (a) collected accounts receivable at an accelerated rate during such period,
or (b) paid accounts payable at a reduced or delayed rate during such period,
Vision 21 shall seek an adjustment to the Purchase Price. In the event that the
proposed adjustment materially impacts the goodwill which may be created by the
transaction, the proposed adjustment shall take into account the related impact
upon net income created by the change in amortization of such goodwill. Vision
21 shall notify the Shareholder in writing within seventy-five (75) days of the
Closing Date of its decision to seek an adjustment of the Purchase Price, the
amount of the proposed adjustment and its reasons for such decision. If the
Shareholder does not notify Vision 21 within ten (10) days of the Shareholder's
receipt of such notice that the Shareholder objects to the proposed adjustment,
then the proposed adjustment shall take place and shall be final. If the
Shareholder notifies Vision 21 within the above-described ten (10) day period
that the Shareholder objects to the proposed adjustment, then Vision 21 and the
Shareholder shall in good faith negotiate an appropriate amount of the
adjustment, if any, which should be made. During all time periods following
Vision 21's notice that it intends to adjust the Purchase Price until the
adjustment is finalized, Vision 21 shall provide to Shareholder and his
accountants full access to all relevant books, records and work papers utilized
in preparing the proposed Purchase Price adjustment. The adjustment may be
settled in cash or Vision 21 Common Stock at the Shareholder's option.
2.7. Subsequent Actions. If, at any time after the Closing Date,
Vision 21 shall determine or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Subsidiary
its right, title or interest in, to or under any of the rights, properties or
assets of the Company acquired or to be acquired by the Subsidiary as a result
of, or in connection with, the Transaction, or otherwise to carry out this
Agreement, the officers and directors of the Subsidiary shall, at the sole cost
and expense of Vision 21, be authorized to execute and deliver, in the name and
on behalf of the Company, such deeds, bills of sale, assignments and assurances,
and to take and do, in the name and on behalf of the Company, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Subsidiary or otherwise to carry out this Agreement.
2.8. Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as set forth on Schedule 2.8. Each of Vision 21, the
Subsidiary, the Company and the
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Shareholder covenants and agrees that he or it shall not take a position that is
in any way inconsistent with the terms of this Section 2.8 on any income tax
return, before any governmental agency charged with the collection of any income
tax or in any judicial proceeding.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER.
The Company and the Shareholder, jointly and severally, represent and warrant to
Vision 21 and the Subsidiary that the following are true and correct as of the
date hereof, and shall be true and correct through the Closing Date as if made
on that date; when used in this Section 3, the term "best knowledge" shall mean
in the case of the Company the best knowledge of those individuals listed on
Schedule 3:
3.1. Organization and Good Standing; Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State, with all requisite corporate power and authority to carry on the
business in which it is engaged, to own the properties it owns, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The Company is not duly qualified and licensed to do business in any other
jurisdiction. The Company does not have any assets, employees or offices in any
state other than the State. Except as set forth on Schedule 3.1, neither the
Company nor the Shareholder owns, directly or indirectly, any of the capital
stock of any other corporation or any equity, profit sharing, participation or
other interest in any corporation, partnership, joint venture or other entity
that is engaged in a business that is a Competitor.
3.2. Continuity of Business Enterprise. Except as set forth on
Schedule 3.2, and except as contemplated by this Agreement, there has not been
any sale, distribution or spin-off of significant assets of the Company or any
of its Affiliates other than in the ordinary course of business within the two
(2) year period preceding the date of this Agreement.
3.3. Authorization and Validity. The execution, delivery and
performance by the Company of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby to be performed by the Company, have been duly authorized by
the Company. This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies. The
Company has obtained, in accordance with applicable law and its Articles or
Certificate of Incorporation and Bylaws, the approval of its stockholders
necessary for the consummation of the transactions contemplated hereby.
3.4. Compliance. Except as disclosed on Schedule 3.4, the execution
and delivery of the documents contemplated hereunder and the consummation of the
transactions contemplated thereby by the Company will not (i) violate any
provision of the Company's organizational documents, (ii) violate any material
provision of or result in the breach of or entitle any party to accelerate
(whether after the giving of notice or lapse of time or both) any material
obligation under, any mortgage, lien, lease, contract, license, instrument or
any other
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agreement to which the Company is a party, (iii) result in the creation or
imposition of any material lien, charge, pledge, security interest or other
material encumbrance upon any property of the Company or (iv) violate or
conflict with any order, award, judgment or decree or other material restriction
or to the best of the Company's knowledge violate or conflict with any law,
ordinance or regulation to which the Company or its property is subject.
3.5. Consents. No consent, approval, order or authorization of or
registration, declaration, or filing with, any Governmental Authority or other
person is required in connection with the execution and delivery of the
documents contemplated herein by the Company or the consummation by such party
of the transactions contemplated thereby, except for those consents or approvals
set forth on Schedule 3.5.
3.6. Financial Information Concerning Managed Care Contracts. The
Company has furnished to Vision 21 financial information concerning the
Partnership's and the Company's respective managed care contracts in effect as
of August 31, 1997 (the "Contract Financial Information" and the date thereof
shall be referred to as the "Contract Financial Information Date"). The Contract
Financial Information is true and correct in all material respects . The Company
and the Shareholder expressly warrant that they will have prior to the Closing
fairly, accurately and completely provided all necessary information requested
in or relevant to the preparation of the audit to be conducted by the
Accountants or their designees prior to Closing (the "Audit").
3.7. Liabilities and Obligations. Except as set forth on Schedule
3.7, the Contract Financial Information reflects all liabilities and expenses of
the Company, accrued, contingent or otherwise with respect to the Company's
Managed Care Business, except for liabilities and obligations incurred in the
ordinary course of business since the Contract Financial Information Date.
Except as provided in the Contract Financial Information or on Schedule 3.7, the
Company is not liable upon or with respect to, or obligated in any other way to
provide funds in respect of or to guarantee or assume in any manner, any debt,
obligation or dividend of any person, corporation, association, partnership,
joint venture, trust or other entity, and the Company does not know of any valid
basis for the assertion of any other claims or liabilities of any nature or in
any amount.
3.8. Employee Matters.
a. Cash Compensation. Schedule 3.8(a) contains a complete and
accurate list of the names, titles and annual cash compensation as of the
Closing Date, including without limitation wages, salaries, bonuses
(discretionary and formula) and other cash compensation (the "Cash
Compensation") of all employees of the Company. In addition, Schedule 3.8(a)
contains a complete and accurate description of (i) all increases in Cash
Compensation of employees of the Company during the current fiscal year and the
immediately preceding fiscal year and (ii) any promised increases in Cash
Compensation of employees of the Company that have not yet been effected.
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b. Compensation Plans. Schedule 3.8(b) contains a complete and
accurate list of all compensation plans, arrangements or practices (the
"Compensation Plans") sponsored by the Company or to which the Company
contributes on behalf of its employees, other than Employment Agreements listed
on Schedule 3.8(c) and Employee Benefit Plans listed on Schedule 3.9(a). The
Compensation Plans include without limitation plans, arrangements or practices
that provide for performance awards, and stock ownership or stock options. The
Company has provided or made available to Vision 21 a copy of each written
Compensation Plan and a written description of each unwritten Compensation Plan.
Except as set forth on Schedule 3.8(b), each of the Compensation Plans can be
terminated or amended at will by the Company.
c. Employment Agreements. Except as set forth on Schedule
3.8(c), the Company is not a party to any employment agreement ("Employment
Agreements") with respect to any of its employees. Employment Agreements include
without limitation employee leasing agreements, employee services agreements and
non-competition agreements.
d. Employee Policies and Procedures. Schedule 3.8(d) contains a
complete and accurate list of all employee manuals and all material policies,
procedures and work-related rules (the "Employee Policies and Procedures") that
apply to employees of the Company. The Company has provided or made available to
Vision 21 a copy of all written Employee Policies and Procedures and a written
description of all material unwritten Employee Policies and Procedures.
e. Unwritten Amendments. Except as described on Schedule
3.8(b), 3.8(c), or 3.8(d), no material unwritten amendments have been made,
whether by oral communication, pattern of conduct or otherwise, with respect to
any Compensation Plans or Employee Policies and Procedures.
f. Labor Compliance. To the best knowledge of the Company and
the Shareholder, the Company has been and is in compliance with all applicable
laws, rules, regulations and ordinances respecting employment and employment
practices, terms and conditions of employment and wages and hours, except for
any such failures to be in compliance that, individually or in the aggregate,
would not result in a Material Adverse Effect, and the Company is not liable for
any arrearages of wages or penalties for failure to comply with any of the
foregoing. The Company has not, to the best of Shareholder's and the Company's
knowledge, engaged in any unfair labor practices or discriminated on the basis
of race, color, religion, sex, national origin, age, disability or handicap in
its employment conditions or practices that would, individually or in the
aggregate, result in a Material Adverse Effect. Except as set forth on Schedule
3.8(f), there are no (i) unfair labor practice charges or complaints or racial,
color, religious, sex, national origin, age, disability or handicap
discrimination charges or complaints pending or, to the actual knowledge of the
Company and the Shareholder, threatened against the Company before any federal,
state or local court, board, department, commission or agency (nor, to the best
knowledge of the Company and the Shareholder, does any valid basis therefor
exist) or (ii) existing or, to the actual knowledge of the Company, threatened
labor
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strikes, disputes, grievances, controversies or other labor troubles affecting
the Company (nor, to the best knowledge of the Company and the Shareholder, does
any valid basis therefor exist).
g. Unions. The Company has never been a party to any agreement
with any union, labor organization or collective bargaining unit. No employees
of the Company are represented by any union, labor organization or collective
bargaining unit. Except as set forth on Schedule 3.8(g), to the actual knowledge
of the Company, none of the employees of the Company has threatened to organize
or join a union, labor organization or collective bargaining unit.
h. Aliens. All employees of the Company are, to the best
knowledge of the Company, citizens of, or are authorized in accordance with
federal immigration laws to be employed in, the United States.
3.9. Employee Benefit Plans.
a. Identification. Schedule 3.9(a) contains a complete and
accurate list of all employee benefit plans (within the meaning of Section 3(3)
of ERISA sponsored by the Company or to which the Company contributes on behalf
of its employees and all employee benefit plans previously sponsored or
contributed to on behalf of its employees within the three (3) years preceding
the date hereof (the "Employee Benefit Plans"). The Company has provided or made
available to Vision 21 copies of all plan documents, determination letters,
pending determination letter applications, trust instruments, insurance
contracts, administrative services contracts, annual reports, actuarial
valuations, summary plan descriptions, summaries of material modifications,
administrative forms and other documents that constitute a part of or are
incident to the administration of the Employee Benefit Plans. In addition, the
Company has provided or made available to Vision 21 a written description of all
existing practices engaged in by the Company that constitute Employee Benefit
Plans. Except as set forth on Schedule 3.9(a) and subject to the requirements of
the Code and ERISA, each of the Employee Benefit Plans can be terminated or
amended at will by the Company. Except as set forth on Schedule 3.9(a), no
unwritten amendment exists with respect to any Employee Benefit Plan. Except as
set forth on Schedule 3.9(b)-(l), each of the following paragraphs is true and
correct.
b. Administration. To the best knowledge of the Company and the
Shareholder, each Employee Benefit Plan has been administered and maintained in
compliance with all applicable laws, rules and regulations, except where the
failure to be in compliance would not, individually or in the aggregate, result
in a Material Adverse Effect. The Company and the Shareholder have (i) made all
necessary filings with respect to such Employee Benefit Plans, including the
timely filing of Form 5500 if applicable, and (ii) made all necessary filings,
reports and disclosures pursuant to and have complied with all requirements of
the IRS Voluntary Compliance Resolution Program, if applicable, with respect to
all profit sharing retirement plans and pension plans in which employees of the
Company participate.
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c. Examinations. Except as set forth on Schedule 3.9(c), the
Company has not received any notice that any Employee Benefit Plan is currently
the subject of an audit, investigation, enforcement action or other similar
proceeding conducted by any state or federal agency.
d. Prohibited Transactions. To the best knowledge of the
Company and the Shareholder, no prohibited transactions (within the meaning of
Section 4975 of the Code or Sections 406 and 407 of ERISA) have occurred with
respect to any Employee Benefit Plans.
e. Claims and Litigation. No pending or, to the actual
knowledge of the Company and the Shareholder, threatened, claims, suits, or
other proceedings exist with respect to any Employee Benefit Plan other than
normal benefit claims filed by participants or beneficiaries.
f. Qualification. As set forth in more detail on Schedule
3.9(f), the Company has received a favorable determination letter or ruling from
the IRS for each of the Employee Benefit Plans intended to be qualified within
the meaning of Section 401(a) of the Code and/or tax-exempt within the meaning
of Section 501(a) of the Code. Except as set forth on Schedule 3.9(e), no
proceedings exist or, to the actual knowledge of the Company have been
threatened that could result in the revocation of any such favorable
determination letter or ruling.
g. Funding Status. To the best knowledge of the Company and the
Shareholder, no accumulated funding deficiency (within the meaning of Section
412 of the Code), whether or not waived, exists with respect to any Employee
Benefit Plan or any plan sponsored by any member of a controlled group (within
the meaning of Section 412(n)(6)(B) of the Code) in which the Company is a
member ("Controlled Group"). With respect to each Employee Benefit Plan subject
to Title IV of ERISA, the assets of each such plan are at least equal in value
to the present value of accrued benefits determined on an ongoing basis as of
the date hereof. The Company does not sponsor any Employee Benefit Plan
described in Section 501(c)(9) of the Code. None of the Employee Benefit Plans
are subject to actuarial assumptions.
h. Excise Taxes. Neither the Company nor any member of a
Controlled Group has any liability to pay excise taxes with respect to any
Employee Benefit Plan under applicable provisions of the Code or ERISA.
i. Multiemployer Plans. Neither the Company nor any member of a
Controlled Group is or ever has been obligated to contribute to a multiemployer
plan within the meaning of Section 3(37) of ERISA.
j. Pension Benefit Guaranty Corporation. None of the Employee
Benefit Plans are subject to the requirements of Title IV of ERISA.
k. Retirees. The Company has no obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired except
as may be required pursuant to the
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continuation of coverage provisions of Section 4980B of the Code and Sections
501 through 508 of ERISA.
l. Other Compensation. Except as set forth on Schedules 3.8(a),
3.8(b), 3.8(c), 3.8(d) and 3.9(a), neither the Company nor the Shareholder is a
party to any compensation or debt arrangement with any person relating to the
provision of health care related services other than arrangements with the
Company or the Shareholder.
3.10. Absence of Certain Changes. Except as set forth on Schedule
3.10 or as contemplated in this Agreement, since the Contract Financial
Information Date, the Company has not:
a. suffered a Material Adverse Effect, whether or not caused by
any deliberate act or omission of the Company or the Shareholder;
b. contracted for the purpose of acquiring any capital asset
having a cost in excess of $5,000 or made any single expenditure in excess of
$5,000;
c. incurred any indebtedness for borrowed money (other than
short- term borrowings in the ordinary course of business), or issued or sold
any debt securities;
d. incurred or discharged any material liabilities or
obligations except in the ordinary course of business;
e. paid any amount on any indebtedness prior to the due date,
forgiven or cancelled any claims or any debt in excess of $5,000, or released or
waived any rights or claims except in the ordinary course of business;
f. mortgaged, pledged or subjected to any security interest,
lien, lease or other charge or encumbrance any of its properties or assets
(other than statutory liens arising in the ordinary course of business or other
liens that do not materially detract from the value or interfere with the use of
such properties or assets);
g. suffered any damage or destruction to or loss of any assets
(whether or not covered by insurance) that has, individually or in the
aggregate, resulted in a Material Adverse Effect;
h. acquired or disposed of any assets having an aggregate value
in excess of $5,000, except in the ordinary course of business;
i. written up or written down the carrying value of any of its
assets, other than accounts receivable in the ordinary course of business;
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j. changed the costing system or depreciation methods of
accounting for its assets in any material respect;
k. lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, resulted in a Material
Adverse Effect;
l. increased the compensation of any director, officer, key
employee or consultant, except as disclosed on Schedule 3.8(a);
m. increased the compensation of any employee (except for
increases in the ordinary course of business consistent with past practice) or
hired any new employee who is expected to receive annualized compensation of at
least $15,000;
n. made any payments to or loaned any money to any person or
entity referred to in Section 3.22;
o. formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
p. redeemed, purchased or otherwise acquired, or sold, granted
or otherwise disposed of, directly or indirectly, any of its capital stock or
securities, or agreed to change the terms and conditions of any such capital
stock, securities or rights;
q. entered into any agreement providing for total payments in
excess of $5,000 in any twelve (12) month period with any person or group, or
modified or amended in any material respect the terms of any such existing
agreement, except in the ordinary course of business;
r. entered into, adopted or amended any Employee Benefit Plan,
except as contemplated hereby or the other agreements contemplated hereby; or
s. entered into any other commitment or transaction or
experienced any other event that would materially interfere with its performance
under this Agreement or any other agreement or document executed or to be
executed pursuant to this Agreement, or otherwise has, individually or in the
aggregate, resulted in a Material Adverse Effect.
3.11. Title; Leased Assets.
a. Real Property. The Company does not own any interest (other
than leasehold interests referred to on Schedule 3.11(c)) in real property. The
leased real property referred to on Schedule 3.11(c) constitutes the only real
property necessary for the conduct of the Company's business.
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b. Personal Property. Except as set forth on Schedule 3.11(b),
the Company and/or the Shareholder has good, valid and marketable title to all
the personal property constituting the Assets. The personal property
constituting the Assets constitute the only personal property necessary for the
conduct of the Company's business. Upon consummation of the transactions
contemplated hereby, such interest in the Assets shall be free and clear of all
security interests, liens, claims and encumbrances, other than those set forth
on Schedule 3.11(b) (the "Permitted Encumbrances") and statutory liens arising
in the ordinary course of business or other liens that do not materially detract
from the value or interfere with the use of such properties or assets.
c. Leases. A list and brief description of (i) all Real
Property Leases, and (ii) all Personal Property Leases involving rental payments
within any twelve (12) month period in excess of $12,000, in either case to
which the Company is a party, either as lessor or lessee, are set forth on
Schedule 3.11(c). All such leases are valid and, to the knowledge of the
Company, enforceable in accordance with their respective terms except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
3.12. Commitments.
a. Commitments; Defaults. Except as set forth on Schedule 3.12
or as otherwise disclosed pursuant to this Agreement, the Company is not a party
to nor bound by, nor are the Assets or the business of the Company bound by,
whether or not in writing, any of the following (collectively, "Commitments"):
i) partnership or joint venture agreement;
ii) guaranty or suretyship, indemnification or contribution
agreement or performance bond;
iii) debt instrument, loan agreement or other obligation
relating to indebtedness for borrowed money or money lent or to be lent to
another;
iv) contract to purchase real property;
v) agreement with dealers or sales or commission agents,
public relations or advertising agencies, accountants or attorneys (other than
in connection with this Agreement and the transactions contemplated hereby)
involving total payments within any twelve (12) month period in excess of $2,000
and which is not terminable on thirty (30) days' notice or without penalty;
vi) agreement relating to any material matter or
transaction in which an interest is held by a person or entity that is an
Affiliate of the Company or the Shareholder;
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vii) agreement for the acquisition of services, supplies,
equipment, inventory, fixtures or other property involving more than $2,000 in
the aggregate;
viii) powers of attorney;
ix) contracts containing non-competition covenants;
x) agreement providing for the purchase from a supplier
of all substantially all of the requirements of the Company of a particular
product or services;
xi) agreements regarding clinical research;
xii) agreements with Third-Party Payor Programs and
contracts to provide medical or health care services; or
xiii) any other agreement or commitment not made in the
ordinary course of business or that is material to the business, operations,
condition (financial or otherwise) or results of operations of the Company.
True, correct and complete copies of the written Commitments, and true, correct
and complete written descriptions of the oral Commitments, have heretofore been
delivered or made available to Vision 21. Except as set forth on Schedule 3.12
and to the Company's best knowledge, there are no existing or asserted defaults,
events of default or events, occurrences, acts or omissions that, with the
giving of notice or lapse of time or both, would constitute defaults by the
Company or, to the best knowledge of the Company, any other party to a material
Commitment, and no penalties have been incurred nor are amendments pending, with
respect to the material Commitments, except as described on Schedule 3.12. The
Commitments are in full force and effect and are valid and enforceable
obligations of the Company, and to the best knowledge of the Company, are valid
and enforceable obligations of the other parties thereto, in accordance with
their respective terms, and no defenses, off-sets or counterclaims have been
asserted or, to the best knowledge of the Company, may be made by any party
thereto (other than the Company), nor has the Company waived any rights
thereunder, except as described on Schedule 3.12. Except as set forth on
Schedule 3.12, no consents or approvals are required under the terms of any
agreement listed on Schedule 3.12 in connection with the transactions
contemplated herein, including, without limitation, the transfer of any such
agreement pursuant to this Agreement.
b. No Cancellation or Termination of Commitment. Except as
disclosed pursuant to this Agreement or contemplated hereby and except where
such action would not have a Material Adverse Effect on the Company, (i) neither
the Company nor the Shareholder has received notice of any plan or intention of
any other party to any Commitment to exercise any right to cancel or terminate
any Commitment, and the Company does not know of any fact that would justify the
exercise of such a right; and (ii) neither the Company nor the Shareholder
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currently contemplates, or has reason to believe any other person currently
contemplates, any amendment or change to any Commitment.
3.13. Insurance. The Company carries property, liability,
malpractice, workers' compensation and such other types of insurance pursuant to
the insurance policies listed and briefly described on Schedule 3.13 (the
"Insurance Policies"). The Insurance Policies are all of the insurance policies
of the Company relating to the business of the Company and the Assets. All of
the Insurance Policies are issued by insurers of recognized responsibility, and,
to the best knowledge of the Company, are valid and enforceable policies, except
as may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies. Except as
set forth in Schedule 3.13, no consent or approval is required for, and no other
impediment or restriction exists that will prohibit or limit, the transfer of
any such Insurance Policies included within the Assets in accordance with the
terms of this Agreement. All Insurance Policies shall be maintained in force
without interruption up to and including the Closing Date. True, complete and
correct copies of all Insurance Policies have been provided or made available to
Vision 21. Except as set forth on Schedule 3.13, neither the Company nor the
Shareholder has received any notice or other communication from any issuer of
any Insurance Policy cancelling such policy, materially increasing any
deductibles or retained amounts thereunder, and to the actual knowledge of the
Company, no such cancellation or increase of deductibles, retainages or premiums
is threatened. Except as set forth on Schedule 3.13, the Company does not have
any outstanding claims, settlements or premiums owed against any Insurance
Policy, and the Company has given all notices or has presented all potential or
actual claims under any Insurance Policy in due and timely fashion. Schedule
3.13 also sets forth a list of all claims under any Insurance Policy in excess
of $10,000 per occurrence filed by the Company since January 1, 1994.
3.14. Proprietary Rights and Information. Set forth on Schedule 3.14
is a true and correct description of the following ("Proprietary Rights"):
a. all trademarks, trade-names, service marks and other trade
designations, including common law rights, registrations and applications
therefor, and all patents and applications therefor currently owned, in whole or
in part, by the Company, and all licenses, royalties, assignments and other
similar agreements relating to the foregoing to which the Company is a party
(including the expiration date thereof if applicable); and
b. all agreements relating to technology, know-how or
processes that the Company is licensed or authorized to use by others (other
than technology, know-how or processes generally available to other
organizations engaged in Managed Care Business), or which it licenses or
authorizes others to use.
The Company owns or has the legal right to use the Proprietary Rights, and to
the knowledge of the Company, such ownership or use does not conflict, infringe
or violate the rights of any other person. Except as disclosed on Schedule 3.14,
no consent of any person will be required for the use thereof by Vision 21 or
the Subsidiary upon consummation of the transactions contemplated
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hereby and the Proprietary Rights are freely transferable. No claim has been
asserted by any person to the ownership of or for infringement by the Company of
the proprietary right of any other person, and the Company does not know of any
valid basis for any such claim. To the best knowledge of the Company and the
Shareholder, the Company has the right to use, free and clear of any adverse
claims or rights of others, all trade secrets, customer lists and proprietary
information required for the marketing of all merchandise and services formerly
or presently sold or marketed by it.
3.15. Taxes.
a. Filing of Tax Returns. The Company has duly and timely filed
(in accordance with any extensions duly granted by the appropriate governmental
agency, if applicable) with the appropriate governmental agencies all federal,
state, local or foreign income, excise, corporate, franchise, property, sales,
use, payroll, withholding, provider, value added and other tax returns and
reports (collectively the "Tax Returns") required to be filed by the United
States or any state or any political subdivision thereof or any foreign
jurisdiction. All such Tax Returns or reports are complete and accurate in all
material respects and properly reflect the taxes of the Company for the periods
covered thereby.
b. Payment of Taxes. Except for such items as the Company may
be disputing in good faith by proceedings in compliance with applicable law,
which are described on Schedule 3.15, (i) the Company has paid all taxes,
penalties, assessments and interest that have become due with respect to any Tax
Returns that it has filed and has properly accrued on its books and records for
all of the same that have not yet become due, and (ii) the Company is not
delinquent in the payment of any tax, assessment or governmental charge.
c. No Pending Deficiencies, Delinquencies, Assessments or
Audits. Except as set forth on Schedule 3.15, the Company has not received any
notice that any tax deficiency or delinquency has been asserted against the
Company. There is no unpaid assessment, proposal for additional taxes,
deficiency or delinquency in the payment of any of the taxes of the Company that
could be asserted by any taxing authority. There is no taxing authority audit of
the Company pending, or to the actual knowledge of the Company, threatened, and
the results of any completed audits are properly reflected in the Financial
Statements. The Company has not, to its best knowledge, violated any federal,
state, local or foreign tax law.
d. No Extension of Limitation Period. The Company has not
granted an extension to any taxing authority of the limitation period during
which any tax liability may be assessed or collected.
e. All Withholding Requirements Satisfied. All monies required
to be withheld by the Company and paid to governmental agencies for all income,
social security, unemployment insurance, sales, excise, use, and other taxes
have been collected or withheld and paid to the respective governmental
agencies.
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f. Foreign Person. Neither the Company nor the Shareholder is a
foreign person, as such term is referred to in Section 1445(f)(3) of the Code.
3.16. Compliance with Laws. The Company has complied with all
applicable laws, regulations and licensing requirements relating to the
operation of the Company and has filed with the proper authorities all necessary
statements and reports, except where the failure to so comply or file would not,
individually or in the aggregate, result in a Material Adverse Effect. There are
no existing violations by the Company of any federal, state or local law or
regulation that could, individually or in the aggregate, result in a Material
Adverse Effect. The Company possesses all necessary licenses, franchises,
permits and governmental authorizations for the conduct of the Company's
business as now conducted, all of which are listed (with expiration dates, if
applicable) on Schedule 3.16. Except as set forth on Schedule 3.16, the
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded by any such licenses, franchises, permits or government authorizations,
except for any such default, breach or violation that would not, individually or
in the aggregate, have a Material Adverse Effect. Except as set forth on
Schedule 3.16, since January 1, 1993, the Company has not received any notice
from any federal, state or other governmental authority or agency having
jurisdiction over its properties or activities, or any insurance or inspection
body, that its operations or any of its properties, facilities, equipment, or
business practices fail to comply with any applicable law, ordinance,
regulation, building or zoning law, or requirement of any public or quasi-public
authority or body, except where failure to so comply would not, individually or
in the aggregate, have a Material Adverse Effect.
3.17. Finder's Fee. Except as set forth on Schedule 3.17, the Company
has not incurred any obligation for any finder's, broker's or agent's fee in
connection with the transactions contemplated hereby.
3.18. Litigation. Except as described on Schedule 3.18 or otherwise
disclosed pursuant to this Agreement, there are no legal actions or
administrative proceedings or investigations instituted or, to the actual
knowledge of the Company or the Shareholder threatened, which affect or could
affect the operation, business, condition (financial or otherwise), or results
of operations of the Company which (i) if successful could, individually or in
the aggregate, have a Material Adverse Effect or (ii) could adversely affect the
ability of the Company or the Shareholder to effect the transactions
contemplated hereby. Neither the Company nor the Shareholder is (a) subject to
any continuing court or administrative order, judgment, writ, injunction or
decree applicable specifically to the Assets, the Company or to its business,
assets, operations or employees or (b) in default with respect to any such
order, judgment, writ, injunction or decree. The Company has no knowledge of any
valid basis for any such action, proceeding or investigation. Except as set
forth on Schedule 3.18, all medical malpractice claims asserted, general
liability incidents and incident reports have been submitted to the Company's
insurer therefor. All claims made or threatened against the Company in excess of
its deductible are covered under its Insurance Policies.
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3.19. Condition of Fixed Assets. All of the fixtures, structures and
equipment reflected in the Financial Statements and used by the Company in its
business, are in good condition and repair, subject to normal wear and tear, and
conform in all material respects with all applicable ordinances, regulations and
other laws, and the Company has no actual knowledge of any latent defects
therein.
3.20. [RESERVED]
3.21. Banking Relations. Set forth on Schedule 3.21 is a complete and
accurate list of all borrowing and investing arrangements that the Company has
with any bank or other financial institution, indicating with respect to each
relationship the type of arrangement maintained (such as checking account,
borrowing arrangements, safe deposit box, etc.) and the person or persons
authorized in respect thereof.
3.22. Ownership Interests of Interested Persons; Affiliations. Except
as set forth on Schedule 3.22, no officer, supervisory employee or director of
the Company, or their respective spouses, children or Affiliates, owns directly
or indirectly, on an individual or joint basis, any interest in, has a
compensation or other financial arrangement with, or serves as an officer or
director of, any customer or supplier of the Company or any organization that
has a material contract or arrangement with the Company. Except as may be
disclosed pursuant to this Agreement, neither the Company, nor any of its
directors, officers, employees or consultants, nor any Affiliate of such person
is, or within the last three (3) years was, a party to any contract, lease,
agreement or arrangement, including, but not limited to, any joint venture or
consulting agreement with any physician, hospital, pharmacy, home health agency,
organization engaged in Managed Care Business, or other person which is in a
position to make or influence referrals to, or otherwise generate business for,
the Company.
3.23. Investments in Competitors. Except as disclosed on Schedule
3.23, neither the Company nor the Shareholder owns directly or indirectly any
interests or has any investment in any person that is a Competitor of the
Company.
3.24. Environmental Matters.
a. Environmental Laws. To the best knowledge of the Company and
the Shareholder, neither the Company nor any of the Assets (including the leased
real property described on Schedule 3.11(c)) are currently in violation of, or
subject to any existing, pending or, to the actual knowledge of the Company
threatened, investigation or inquiry by any governmental authority or to any
remedial obligations under, any federal, state or local laws or regulations
pertaining to health or the environment ("Environmental Laws"), except for any
such violations, investigations or inquiries that would not, individually or in
the aggregate, result in a Material Adverse Effect.
b. Permits. The Company is not required to obtain, and has no
knowledge of any reason Vision 21 or the Subsidiary will be required to obtain,
any permits,
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licenses or similar authorizations to occupy, operate or use any buildings,
improvements, fixtures and equipment owned or leased by the Company by reason of
any Environmental Laws.
c. Superfund List. To the best knowledge of the Company, none
of the Assets (including the Company's leased real property described on
Schedule 3.11(c)) are on any federal or state "Superfund" list or subject to any
environmentally related liens, except such liens as would not, individually or
in the aggregate, result in a Material Adverse Effect.
3.25. Certain Payments. Neither the Company nor any director, officer
or employee of the Company acting for or on behalf of the Company, has paid or
caused to be paid, directly or indirectly, in connection with the business of
the Company:
a. to any government or agency thereof or any agent of any
supplier or customer any bribe, kick-back or other similar payment; or
b. any contribution to any political party or candidate (other
than from personal funds of directors, officers or employees not reimbursed by
their respective employers or as otherwise permitted by applicable law).
3.26. Arrangements with Third-Party Payor Programs. The Company has
complied with all legal and contractual requirements applicable to any
Third-Party Payor Program and has timely filed all claims or other reports
required to be filed prior to the Closing Date with respect to the purchase of
services by such Third-Party Payors Programs, except where the failure to file
would not, individually or in the aggregate, result in a Material Adverse
Effect. All such claims or reports are complete and accurate in all material
respects. The Company and the Shareholder have paid or have properly recorded on
the Financial Statements all actually known and undisputed refunds, discounts or
adjustments which have become due pursuant to such claims, and neither the
Company nor the Shareholder has any material liability to any Third-Party Payor
Program with respect thereto, except as has been reserved for as disclosed in
the Contract Financial Information. There are no pending appeals, overpayment
determinations, adjustments, challenges, audits, litigation, or notices of
intent to reopen claims determinations or other reports relating to any
Third-Party Payor Programs. Neither the Company, nor any of its directors,
officers, employees, consultants or the Shareholder has been convicted of, or
pled guilty or nolo contendere to, patient abuse or neglect, or any other
Medicare or Medicaid program-related offense. Neither the Company, nor its
directors, officers, the Shareholder, or to the best of the Company's knowledge,
its employees or consultants, has committed any offense which may serve as the
basis for suspension or exclusion from the Medicare and Medicaid programs,
including but not limited to, defrauding a government program, loss of a license
to provide health services, and failure to provide quality care.
3.27. Fraud and Abuse. To the best knowledge of the Company and the
Shareholder, the Company, and its officers and directors have not engaged in any
activities which are prohibited under 42 U.S.C. xx.xx. 1320-7, 7a or 7b or 42
U.S.C. ss.1395nn (subject to the exceptions set forth in such legislation), or
the regulations promulgated thereunder or pursuant
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to similar state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including but not limited to the following:
a. knowingly and willfully making or causing to be made a false
statement or representation of a material fact in any application for any
benefit or payment;
b. knowingly and willfully making or causing to be made a false
statement or representation of a material fact for use in determining rights to
any benefit or payment;
c. failure to disclose knowledge by a Medicare or Medicaid
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment on its own behalf or on behalf of another, with intent
to fraudulently secure such benefit or payment;
d. knowingly and willfully offering, paying, soliciting or
receiving any remuneration (including any kickback, bribe, or rebate), directly
or indirectly, overtly or covertly, in cash or in kind (i) in return for
referring an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by Medicare or Medicaid, or (ii) in return for purchasing, leasing, or
ordering, or arranging for or recommending purchasing, leasing, or ordering any
good, facility, service, or item for which payment may be made in whole or in
part by Medicare or Medicaid; and
e. referring a patient for designated health services (as
defined in 42 U.S.C. ss.1395nn) to or providing designated health services to a
patient upon a referral from an entity or person with which the Shareholder or
an immediate family member has a financial relationship, and to which no
exception under 42 U.S.C. ss.1395nn applies.
3.28. Third-Party Payor Programs. Schedule 3.28 sets forth a true,
correct and complete list of the names and addresses of each Third-Party Payor
Program, including any private pay patient as a single payor, of the Company's
services which accounted for more than 10% of the revenues of the Company in the
three (3) previous fiscal years. Except as set forth on Schedule 3.28, the
Company has good relations with such Third-Party Payor Program and none of such
Third-Party Payor Programs has notified the Company that it intends to
discontinue its relationship with the Company or to deny any claims submitted to
such Third-Party Payor Program for payment.
3.29. Acquisition Proposals. Except for (a) the negotiations, offers
and agreements with Vision 21 and its representatives and (b) the proposed
arrangements with Visionary Health Services, the Company has not received during
the twelve (12) month period preceding the date of this Agreement any proposal
or offer (including, without limitation, any proposal or offer of its
stockholders) with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or any equity securities of, the Company (any such proposal or offer
being hereinafter referred to as an
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"Acquisition Proposal") nor has the Company or any of its employees, agents,
representatives or stockholders engaged in any negotiations concerning, or
provided any confidential information or data to, or had any discussions with,
any person relating to an Acquisition Proposal, or otherwise facilitated any
effort or attempted to make or implement an Acquisition Proposal.
3.30. Accounts Receivable/Payable. The Accounts Receivable of the
Company relating to the ownership and operation of the Company as disclosed in
the Contract Financial Information, to the extent uncollected on the date
hereof, are, and the accounts receivable of the Company relating to the
ownership and operation of the Company to be reflected on the books of the
Company on the Closing Date will be, valid, existing and collectible within six
months from the Closing Date (taking into consideration the allowance for
doubtful accounts as disclosed in the Contract Financial Information) using
reasonably diligent collection methods taking into account the size and nature
of the receivable, and represent amounts due for goods sold and delivered or
services performed. There are not, and on the date of Closing there will not be,
any refunds, discounts, set-offs, defenses, counterclaims or other adjustments
payable or assessable with respect to the Accounts Receivable. The Company has
collected Accounts Receivable only in the ordinary course and has not changed
collection procedures or methods nor accelerated the pace of such collection
efforts in anticipation of the transactions contemplated in this Agreement. The
Company has paid accounts payable in the ordinary course and has not changed
payment procedures or methods nor delayed the timing of such payments in
anticipation of the transactions contemplated in this Agreement.
3.31. [RESERVED]
3.32. Tangible Personal Property. Except as set forth on Schedule
3.32, the Company's Tangible Personal Property is in good operating condition,
working order and repair (normal wear and tear excepted) and is fully suitable
for the uses for which it is employed in the conduct of the Company.
3.33. Leases. With respect to each of the Real Property Leases and
Personal Property Leases, except as set forth on Schedule 3.33:
(a) such lease is legal, valid, binding, enforceable and in
full force and effect;
(b) such lease will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms immediately
following the Closing;
(c) no party to such lease is in material breach or default,
and no event has occurred that, with notice or lapse of time, would constitute a
material breach or default or permit termination, modification or acceleration
thereunder;
(d) no party to such lease has repudiated in writing any
provision thereof;
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(e) there are no disputes, oral agreements or forbearance
programs in effect as to such lease; and
(f) The Company has performed and satisfied in full each
material obligation to be performed by the Company under such lease.
3.34. Contract Rights. Except as set forth on Schedule 3.34, each of
the Assumed Contracts is valid and enforceable and is in full force and effect,
and there is no material default or existing condition that, with the giving of
notice or the passage of time, would constitute such a default by any parties
thereto. The Company has performed and satisfied in full each material
obligation required to be performed by the Company under each Assumed Contract.
If services are to be provided to the Company under any of such Assumed
Contracts, such services have been and are being performed satisfactorily and in
a timely manner, substantially in accordance with the terms of such Assumed
Contract.
3.35. Prepaid Items. Except as set forth in Schedule 3.35, each of
the Prepaid Items may be transferred to the Subsidiary without the necessity of
obtaining any consent or approval.
3.36. Completeness of Assets. The Assets include all the properties
used to conduct the business of the Company as presently conducted.
3.37. Disclosure. To the best of the Company's and the Shareholder's
knowledge, no representation, warranty or statement made by the Company or the
Shareholder in this Agreement or any of the exhibits or schedules hereto, or any
agreements, certificates, documents or instruments delivered or to be delivered
to Vision 21 and the Subsidiary in accordance with this Agreement or the other
documents contemplated herein, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. The Company and the Shareholder do not
know of any fact or condition (other than general economic conditions or
legislative or administrative changes or rulings relating to health-care
delivery) which materially adversely affects, or in the future may materially
affect, the condition, properties, assets, liabilities, business, operations or
prospects of the Company which has not been set forth herein or in the Schedules
provided herewith.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The Shareholder
represents and warrants to Vision 21 and the Subsidiary that the following are
true and correct as of the date hereof, and shall be true and correct through
the Closing Date as if made on that date:
4.1. Validity; Shareholder Capacity. This Agreement and each other
agreement contemplated hereby or thereby have been, or will be as of the Closing
Date, duly executed and delivered by the Shareholder and constitute or will
constitute legal, valid and binding obligations of the Shareholder, enforceable
against the Shareholder in accordance with their respective terms,
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except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable remedies.
The Shareholder has legal capacity to enter into and perform this Agreement.
4.2. No Violation. Except as set forth on Schedule 4.2, neither the
execution, delivery or performance of this Agreement, other agreements of the
Shareholder contemplated hereby or thereby, nor the consummation of the
transactions contemplated hereby or thereby, will (a) conflict with, or result
in a violation or breach of the terms, conditions or provisions of, or
constitute a default under, any agreement, indenture or other instrument under
which the Shareholder is bound or to which any of his property or the shares of
common stock of the Company are subject, or result in the creation or imposition
of any security interest, lien, charge or encumbrance upon any of his property
or the shares of common stock of the Company or (b) to the best knowledge of the
Shareholder, violate or conflict with any judgment, decree, order, statute, rule
or regulation of any court or any public, governmental or regulatory agency or
body.
4.3. Consents. Except as may be required under the Exchange Act, the
Securities Act, the Corporation Law and state securities laws, or otherwise
disclosed pursuant to this Agreement, no consent, authorization, approval,
permit or license of, or filing with, any governmental or public body or
authority, or any other person is required to authorize, or is required in
connection with, the execution, delivery and performance of this Agreement or
the agreements contemplated hereby on the part of the Shareholder.
4.4. Certain Payments. The Shareholder has not paid or caused to be
paid, directly or indirectly, in connection with the business of the Company:
a. to any government or agency thereof or any agent of any
supplier or customer any bribe, kick-back or other similar payment; or
b. any contribution to any political party or candidate (other
than from personal funds not reimbursed by the Company or as otherwise permitted
by applicable law).
4.5. Finder's Fee. Except as set forth on Schedule 4.5, the
Shareholder has not incurred any obligation for any finder's, broker's or
agent's fee in connection with the transactions contemplated hereby.
4.6. Ownership of Interested Persons; Affiliations. Except as set
forth on Schedule 4.6, neither the Shareholder nor his spouse, children or
Affiliates, owns directly or indirectly, on an individual or joint basis, any
interest in, has a compensation or other financial arrangement with, or serves
as an officer or director of, any customer or supplier of the Company or any
organization that has a material contact or arrangement with the Company.
Neither the Shareholder nor any of his Affiliates is, or with the last three (3)
years was, a party to any contract, lease, agreement or arrangement, including,
but not limited to, any joint venture or consulting agreement with any
physician, hospital, pharmacy, home health agency, organization
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engaged in Managed Care Business or other person which is in a position to make
or influence referrals to, or otherwise generate business for, the Company.
5. REPRESENTATIONS AND WARRANTIES OF VISION 21 AND THE SUBSIDIARY.
Vision 21 and the Subsidiary, jointly and severally, represent and warrant to
the Company and the Shareholder that the following are true and correct as of
the date hereof and shall be true and correct as of the Closing Date; when used
in this Section 5, the term "best knowledge" shall mean the best knowledge of
those individuals listed on Schedule 5:
5.1. Organization and Good Standing. Vision 21 and the Subsidiary are
corporations duly organized, validly existing and in good standing under the
laws of the State of Florida, with all requisite corporation power and authority
to carry on the business in which they are engaged, to own the properties they
own, to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. Vision 21 and the Subsidiary are qualified to do business
as a foreign corporation in the jurisdictions listed on Schedule 5.1.
5.2. Capitalization. The authorized capital stock of Vision 21
consists of 50,000,000 shares of Vision 21 Common Stock, of which 8,176,258
shares are issued and outstanding, and 10,000,000 shares of Vision 21 preferred
stock, $.001 par value per share, of which no shares are issued and outstanding.
5.3. Corporate Records. The copies of the Articles of Incorporation
and Bylaws, and all amendments thereto, of Vision 21 and the Subsidiary that
have been delivered or made available to the Company and the Shareholder are
true, correct and complete copies thereof, as in effect on the date hereof. The
minute books of Vision 21 and the Subsidiary, copies of which have been
delivered or made available to the Company and the Shareholder, contain accurate
minutes of all meetings of, and accurate consents to all actions taken without
meetings by, the Board of Directors (and any committees thereof) and the
stockholders of Vision 21 and the Subsidiary, since their formation.
5.4. Authorization and Validity. The execution, delivery and
performance by Vision 21 and the Subsidiary of this Agreement and the other
agreements contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by Vision 21 and the
Subsidiary. This Agreement and each other agreement contemplated hereby to be
executed by Vision 21 and the Subsidiary have been or will be as of the Closing
Date duly executed and delivered by Vision 21 and the Subsidiary and constitute
or will constitute legal, valid and binding obligations of Vision 21 and the
Subsidiary, enforceable against Vision 21 and the Subsidiary in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies.
5.5. Compliance. The execution and delivery of the documents
contemplated hereunder and the consummation of the transactions contemplated
thereby by Vision 21 and the Subsidiary shall not (i) violate any provision of
Vision 21's or the Subsidiary's respective
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organizational documents, (ii) violate any material provision of or result in
the breach of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any material obligation under, any mortgage,
lien, lease, contract, license, instrument or any other agreement to which
Vision 21 or the Subsidiary is a party, (iii) result in the creation or
imposition of any material lien, charge, pledge, security interest or other
material encumbrance upon any property of Vision 21 or the Subsidiary, or (iv)
violate or conflict with any order, award, judgment or decree or other material
restriction or to the best of Vision 21's and the Subsidiary's knowledge violate
or conflict with any law, ordinance or regulation to which Vision 21, the
Subsidiary or their respective properties are subject.
5.6. Consents. No consent, approval, order or authorization of or
registration, declaration, or filing with, any Governmental Authority or other
person is required in connection with the execution and delivery of the
documents contemplated herein by Vision 21 and the Subsidiary or the
consummation by such parties of the transactions contemplated thereby, except
for those consents or approvals set forth on Schedule 5.6.
5.7. Finder's Fee. Except as disclosed on Schedule 5.7, neither
Vision 21 nor the Subsidiary has incurred any obligation for any finder's,
broker's or agent's fee in connection with the transactions contemplated hereby.
5.8. Capital Stock. The issuance and delivery by Vision 21 of shares
of Vision 21 Common Stock in connection with this Agreement have been duly and
validly authorized by all necessary corporate action on the part of Vision 21.
The shares of Vision 21 Common Stock to be issued in connection with this
Agreement, when issued in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable and will not have been issued in
violation of any preemptive rights, rights of first refusal or similar rights of
any of Vision 21's stockholders, or any federal or state law, including, without
limitation, the registration requirements of applicable federal and state
securities laws.
5.9. Vision 21 Financial Statements. The audited consolidated
balance sheet and related statements of income and cash flows of Vision 21 for
its prior three (3) full fiscal years, and its unaudited interim balance sheet
for the six (6) month period ending June 30, 1997, and the related unaudited
statement of income of Vision 21 for the period then ended (collectively, with
the related notes thereto, the "Vision 21 Financial Statements") (a) fairly
present the financial condition and results of operations of Vision 21, as of
the dates and for the periods indicated; and (b) have been prepared in
conformity with GAAP (subject to normal year-end adjustments and the absence of
notes for any unaudited interim financial statement), except as otherwise
indicated in the Vision 21 Financial Statements.
5.10. Liabilities and Obligations. Except as disclosed on Schedule
5.10, the Vision 21 Financial Statements shall reflect all material liabilities
of Vision 21, accrued, contingent or otherwise, that would be required to be
reflected on a balance sheet, or in the notes thereto, prepared in accordance
with GAAP. Except as set forth on Schedule 5.10 or in the Vision 21 Financial
Statements, Vision 21 is not liable upon or with respect to, or obligated in
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any other way to provide funds in respect of or to guarantee or assume in any
manner, any debt, obligation or dividend of any person, corporation,
association, partnership, joint venture, trust or other entity, and Vision 21
does not know of any valid basis for the assertion of any other claims or
liabilities of any nature or in any amount.
5.11. Compliance with Laws. Vision 21 and the Subsidiary have not
failed to comply with any applicable laws, regulations and licensing
requirements or failed to file with the proper authorities any necessary
statements and reports except where the failure to so comply or file would not,
individually or in the aggregate, have a material adverse effect on the
Transaction. There are no existing violations by Vision 21 or the Subsidiary of
any federal, state or local law or regulation that could, individually or in the
aggregate, have a material adverse effect on the Transaction. Vision 21 and the
Subsidiary possess all necessary licenses, franchises, permits and governmental
authorizations for the conduct of Vision 21's and the Subsidiary's respective
businesses as now conducted and after the Closing, as contemplated in this
Agreement, except for such licenses, franchises, permits or governmental
authorizations which, if not possessed by Vision 21 or the Subsidiary, would not
have a material adverse effect on the business of Vision 21 or the Subsidiary.
The transactions contemplated by this Agreement will not result in a default
under or a breach or violation of, or adversely affect the rights and benefits
afforded by any such licenses, franchises, permits or government authorizations,
except for any such default, breach or violation that would not, individually or
in the aggregate, have a material adverse effect on the Transaction. Since
January 1, 1993, neither Vision 21 nor the Subsidiary has received any notice
from any federal, state or other governmental authority or agency having
jurisdiction over their respective properties or activities, or any insurance or
inspection body, that their respective operations or any of their respective
properties, facilities, equipment, or business practices fail to comply with any
applicable law, ordinance, regulation, building or zoning law, or requirement of
any public or quasi-public authority or body, except where failure to so comply
would not, individually or in the aggregate, have a material adverse effect on
the Transaction.
5.12. Insolvency Proceedings. Neither Vision 21 nor the Subsidiary is
currently under the jurisdiction of a Federal or state court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
5.13. Employment of Company's Employees. Neither Vision 21 nor the
Subsidiary currently intends to change the existing composition or employment
terms of any of the non-professional personnel which have employment
arrangements with the Company on the effective date of this Agreement (except as
is necessary for Vision 21 to employ such individuals pursuant to the Business
Management Agreement). Vision 21 and the Subsidiary reserve the right, however,
to change the number, composition or employment terms of such non-professional
personnel in the future.
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6. SECURITIES LAW MATTERS.
6.1. Investment Representations and Covenants of Shareholder.
a. Shareholder understands that the Securities will not be
registered under the Securities Act or any state securities laws on the grounds
that the issuance of the Securities is exempt from registration pursuant to
Section 4(2) of the Securities Act under the Securities Act and applicable state
securities laws, and that the reliance of Vision 21 on such exemptions is
predicated in part on the Shareholder's representations, warranties, covenants
and acknowledgements set forth in this Section.
b. Except as disclosed on Schedule 6.1(b) attached hereto,
Shareholder represents and warrants that Shareholder is an "accredited investor"
or "sophisticated investor" as defined under the Securities Act and state "Blue
Sky" laws, or that Shareholder has utilized, to the extent necessary to be
deemed a sophisticated investor under the Securities Act and State "Blue Sky"
laws, the assistance of a professional advisor.
c. Shareholder represents and warrants that the Securities to be
acquired by Shareholder upon consummation of the transactions described in this
Agreement will be acquired by Shareholder for Shareholder's own account, not as
a nominee or agent, and without a view to resale or other distribution within
the meaning of the Securities Act and the rules and regulations thereunder,
except as contemplated in this Agreement, and that Shareholder will not
distribute any of the Securities in violation of the Securities Act. All
Securities shall bear a restrictive legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE
TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE ACT AND APPLICABLE
SECURITIES LAWS."
In addition, the Securities shall bear any legend required by the
securities or "Blue Sky" laws of any state where Shareholder resides as well as
any other legend deemed appropriate by Vision 21 or its counsel.
d. Shareholder represents and warrants that the address set
forth below Shareholder's name on Schedule 6.1(d) is Shareholder's principal
residence.
e. Shareholder (i) acknowledges that the Securities issued to
Shareholder at the Closing must be held indefinitely by Shareholder unless
subsequently registered under the Securities Act or an exemption from
registration is available, (ii) is aware that any routine sales of Securities
made pursuant to Rule 144 under the Securities Act may be made only in limited
amounts and in accordance with the terms and conditions of that Rule and that in
such cases where the Rule is not applicable, compliance with some other
registration
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exemption will be required, and (iii) is aware that Rule 144 is not currently
available for use by Shareholder for resale of any of the Securities to be
acquired by Shareholder upon consummation of the transactions described in this
Agreement.
f. Shareholder represents and warrants to Vision 21 that
Shareholder, either alone or together with the assistance of Shareholder's own
professional advisor, has such knowledge and experience in financial and
business matters such that Shareholder is capable of evaluating the merits and
risks of Shareholder's investment in any of the Securities to be acquired by
Shareholder upon consummation of the transactions described in this Agreement.
g. Shareholder confirms that Shareholder has had the opportunity
to ask questions of and receive answers from Vision 21 concerning the terms and
conditions of Shareholder's investment in the Securities, and the Shareholder
has received to Shareholder's satisfaction, such additional information, in
addition to that set forth herein, about Vision 21's operations and the terms
and conditions of the offering as Shareholder has requested.
h. In order to ensure compliance with the provisions of
paragraph (c) hereof, Shareholder agrees that after the Closing Shareholder will
not sell or otherwise transfer or dispose of Securities or any interest therein
(unless such shares have been registered under the Securities Act) without first
complying with either of the following conditions, the expenses and costs of
satisfaction of which shall be fully borne and paid for by Shareholder:
i) Vision 21 shall have received a written legal opinion
from legal counsel, which opinion and counsel shall be satisfactory to Vision 21
in the exercise of its reasonable judgment, or a copy of a "no-action" or
interpretive letter of the Securities and Exchange Commission specifying the
nature and circumstances of the proposed transfer and indicating that the
proposed transfer will not be in violation of any of the registration provisions
of the Securities Act and the rules and regulations promulgated thereunder; or
ii) Vision 21 shall have received an opinion from its own
counsel to the effect that the proposed transfer will not be in violation of any
of the registration provisions of the Securities Act and the rules and
regulations promulgated thereunder.
Shareholder also agrees that the certificates or instruments representing the
Securities to be issued to Shareholder pursuant to this Agreement may contain a
restrictive legend noting the restrictions on transfer described in this Section
and required by federal and applicable state securities laws, and that
appropriate "stop-transfer" instructions will be given to Vision 21's transfer
agent, if any, provided that this Section 6.1(h) shall no longer be applicable
to any Securities following their transfer pursuant to a registration statement
effective under the Securities Act or in compliance with Rule 144 or if the
opinion of counsel referred to above is to the further effect that transfer
restrictions and the legend referred to herein are no longer required in order
to establish compliance with any provisions of the Securities Act.
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i. Shareholder understands that there can be no assurance that
a Public Offering by Vision 21 will ever occur or if it does occur that it will
be successful.
j. Shareholder agrees that he shall be considered an
"affiliate" of Vision 21 for purposes of Rule 144 and agrees to the restrictions
and limitations imposed by Rule 144 on affiliates. Shareholder further agrees
that he shall be considered an affiliate of Vision 21 for Rule 144 purposes even
if he does not meet the technical definition of "affiliate" under Rule 144.
6.2. Current Public Information. At all times following the
registration of any of Vision 21's securities under the Securities Act or
Exchange Act pursuant to which Vision 21 becomes subject to the reporting
requirements of the Exchange Act, Vision 21 shall use commercially reasonable
efforts to comply with the requirements of Rule 144 under the Securities Act, as
such Rule may be amended from time to time (or any similar rule or regulation
hereafter adopted by the SEC) regarding the availability of current public
information to the extent required to enable any holder of shares of Common
Stock to sell such shares without registration under the Securities Act pursuant
to Rule 144 (or any similar rule or regulation).
7. COVENANTS OF THE COMPANY AND THE SHAREHOLDER. The Company and the
Shareholder, jointly and severally, agree that between the date hereof and the
Closing (with respect to the Company's covenants, the Shareholder agrees to use
his best efforts to cause the Company to perform):
7.1. Consummation of Agreement. The Company and the Shareholder
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions; provided,
however, that this covenant shall not require the Company or the Shareholder to
make any expenditures that are not expressly set forth in this Agreement or
otherwise contemplated herein.
7.2. Business Operations. The Company shall operate its business in
the ordinary course. The Company and the Shareholder shall use their best
efforts to preserve the business of the Company intact. Neither the Company nor
the Shareholder shall take any action that would, individually or in the
aggregate, result in a Material Adverse Effect.
7.3. Access. The Company and the Shareholder shall, at reasonable
times during normal business hours and on reasonable notice, permit Vision 21
and its authorized representatives, including without limitation, the
Accountants, reasonable access to, and make available for inspection, all of the
assets and business of the Company, including its employees, customers and
suppliers, and permit Vision 21 and its authorized representatives to inspect
and, at Vision 21's sole cost and expense, make copies of all documents, records
(other than patient medical records) and information with respect to the affairs
of the Company, including, without limitation, the Financial Statements, as
Vision 21 and its representatives may request, all for the sole purpose of
permitting Vision 21 to become familiar with the business and assets and
liabilities of the Company.
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7.4. Notification of Certain Matters. The Company and the Shareholder
shall promptly inform Vision 21 in writing of (a) any notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by the Company or the Shareholder
subsequent to the date of this Agreement and prior to the Closing Date under any
Commitment material to the Company's condition (financial or otherwise),
operations, assets, liabilities or business and to which it is subject; or (b)
any material adverse change in the Company's condition (financial or otherwise),
operations, assets, liabilities or business.
7.5. Approvals of Third Parties. As soon as practicable after the date
hereof, the Company and the Shareholder shall secure all necessary approvals and
consents of landlords with respect to the real property described on Schedule
2.1(c) to the consummation of the transactions contemplated hereby and shall use
their best efforts to secure all necessary approvals and consents of other third
parties to the consummation of the transactions contemplated hereby; provided,
however, that this covenant shall not require the Company or the Shareholder to
make any material expenditures that are not expressly set forth in this
Agreement or otherwise contemplated herein.
7.6. Employee Matters. Except as set forth in Schedule 3.8(a) or as
otherwise contemplated by this Agreement, the Company shall not, without the
prior written approval of Vision 21, except as required by law:
a. increase the cash compensation of the Shareholder or any other
employees of the Company (other than in the ordinary course of business and
consistent with past practice);
b. adopt, amend or terminate any Compensation Plan;
c. adopt, amend or terminate any Employment Agreement;
d. adopt, amend or terminate any Employee Policies and Procedures;
e. adopt, amend or terminate any Employee Benefit Plan;
f. take any action that could deplete the assets of any Employee
Benefit Plan, other than payment of benefits in the ordinary course to
participants and beneficiaries;
g. fail to pay any premium or contribution due or with respect to
any Employee Benefit Plan;
h. fail to file any return or report with respect to any Employee
Benefit Plan;
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i. institute, settle or dismiss any employment litigation except
as could not, individually or in the aggregate, result in a Material Adverse
Effect;
j. enter into, modify, amend or terminate any agreement with any
union, labor organization or collective bargaining unit; or
k. take or fail to take any action with respect to any past or
present employee of the Company that would, individually or in the aggregate,
result in a Material Adverse Effect.
7.7. Contracts. Except with Vision 21's prior written consent, the
Company shall not assume or enter into any contract, lease, license, obligation,
indebtedness, commitment, purchase or sale except in the ordinary course of
business that is material to the Company's business, nor will it waive any
material right or cancel any material contract, debt or claim.
7.8. Capital Assets; Payments of Liabilities. The Company shall not,
without the prior written approval of Vision 21 (a) acquire or dispose of any
capital asset having a fair market value of $5,000 or more, or acquire or
dispose of any capital asset outside of the ordinary course of business or (b)
discharge or satisfy any lien or encumbrance or pay or perform any obligation or
liability other than (i) liabilities and obligations reflected in the Financial
Statements or (ii) current liabilities and obligations incurred in the usual and
ordinary course of business since the Contract Financial Information Date and,
in either case (i) or (ii) above, only as required by the express terms of the
agreement or other instrument pursuant to which the liability or obligation was
incurred.
7.9. Mortgages, Liens and Guaranties. The Company shall not, without
the prior written approval of Vision 21, enter into or assume any mortgage,
pledge, conditional sale or other title retention agreement, permit any security
interest, lien, encumbrance or claim of any kind to attach to any of its assets
(other than statutory liens arising in the ordinary course of business and other
liens that do not materially detract from the value or interfere with the use of
such assets), whether now owned or hereafter acquired, or guarantee or otherwise
become contingently liable for any obligation of another, except obligations
arising by reason of endorsement for collection and other similar transactions
in the ordinary course of business, or make any capital contribution or
investment in any person.
7.10. Acquisition Proposals. The Company and the Shareholder agree that
from the date of this Agreement through the earlier of the Closing Date or
November 30, 1997, (a) neither the Shareholder nor the Company nor any of its
officers and directors shall, and the Shareholder and the Company shall direct
and use their best efforts to cause the Company's employees, agents, and
representatives not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any Acquisition Proposal or
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; (b) the Shareholder and the Company
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will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing and each will take the necessary steps to inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 7.10; and (c) the Shareholder and the
Company will notify Vision 21 immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, the Company or the
Shareholder.
7.11. Distributions and Repurchases. No distribution, payment or
dividend of any kind will be declared or paid by the Company with respect of its
capital stock, nor will any repurchase of any of the Company's capital stock be
approved or effected.
7.12. Requirements to Effect the Transaction. The Company and the
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Transaction under applicable law.
7.13. Termination of Retirement Plans. Prior to Closing, the
Shareholder shall cause the Company to take all steps necessary to discontinue
benefits accruals under any Employee Benefit Plan that is intended to be a
qualified employee retirement plan under Section 401(a) of the Code (a
"Retirement Plan") effective as of Closing or as soon thereafter as may be
practical. Effective at the time of Closing, the Company shall cause Sever,
Xxxxxxxx & Xxxxxxxx, M.D., P.A. to assume all of the obligations of the Company
as the sponsoring employer and/or plan administrator of the Retirement Plan in
accordance with applicable law.
Subsequent to Closing, the Company and Vision 21 shall review the
extent to which the Sever, Xxxxxxxx & Xxxxxxxx, M.D., P.A. can resume
contributions to the Retirement Plan without violating the qualification
requirements of Sections 410(b) and 401(a)(4) of the Code, taking into account
any employees of Vision 21 who would be "leased employees" of the Sever,
Xxxxxxxx & Xxxxxxxx, M.D., P.A. under Section 414(n) of the Code. If Vision 21
and Sever, Xxxxxxxx & Xxxxxxxx, M.D., P.A. mutually agree that such
qualification requirements can be satisfied, Sever, Xxxxxxxx & Xxxxxxxx, M.D.,
P.A. may elect to continue the Retirement Plan and make contributions in
accordance with its terms, provided that Sever, Xxxxxxxx & Xxxxxxxx, M.D., P.A.
shall agree to cover at its own expense any Vision 21 employees who are leased
employees if such coverage is required to maintain the tax-qualified status of
the Retirement Plan.
7.14. Delivery of Schedules. The Company and the Shareholder shall
deliver to Vision 21 and the Subsidiary all Schedules required to be delivered
by them prior to the Closing.
8. COVENANTS OF VISION 21 AND THE SUBSIDIARY. Vision 21 and the
Subsidiary agree that between the date hereof and the Closing:
8.1. Consummation of Agreement. Vision 21 and the Subsidiary shall
use their respective best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions and take all
corporate and other actions necessary to
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approve the Transaction; provided, however, that this covenant shall not require
Vision 21 or the Subsidiary to make any expenditures that are not expressly set
forth in this Agreement or otherwise contemplated herein.
8.2. Notification of Certain Matters. Vision 21 and the Subsidiary
shall promptly inform the Company and the Shareholder in writing of (a) any
notice of, or other communication relating to, a default or event that, with
notice or lapse of time or both, would become a default, received by Vision 21
or the Subsidiary subsequent to the date of this Agreement and prior to the
Closing Date under any agreement or commitment entered into by Vision 21 or the
Subsidiary material to Vision 21's or the Subsidiary's condition (financial or
otherwise), operations, assets, liabilities or business and to which it is
subject; or (b) any material adverse change in Vision 21's or the Subsidiary's
condition (financial or otherwise), operations, assets, liabilities or business.
8.3. Licenses and Permits. Vision 21 and the Subsidiary shall use
their respective best efforts to obtain all licenses, permits, approvals or
other authorizations required under any law, statute, rule, regulation or
ordinance, or otherwise necessary or desirable to consummate the Transaction and
to conduct the intended business of Vision 21 and the Subsidiary.
8.4. Release of Shareholder From Company Liabilities. Vision 21 and
the Subsidiary shall use their respective best efforts to obtain from third
party creditors the release of Shareholder from any personal liabilities
relating to the Company which are identified on Schedule 8.4 and assumed by the
Subsidiary pursuant to the terms of this Agreement.
8.5. Approvals of Third Parties. Vision 21 and the Subsidiary shall
use their respective best efforts to secure, as soon as practicable after the
date hereof, all necessary approvals and consents of third parties to the
consummation of the transactions contemplated hereby.
9. COVENANTS OF VISION 21, THE SUBSIDIARY, THE COMPANY AND THE
SHAREHOLDER. Vision 21, the Subsidiary, the Company and the Shareholder agree as
follows:
9.1. Amendment of Schedules. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until the Closing to
attach, supplement or amend promptly the Schedules with respect to any matter
that would have been or would be required to be set forth or described in the
Schedules in order to not materially breach any representation, warranty or
covenant of such party contained herein; provided that no amendment or
supplement to a Schedule that constitutes or reflects a material adverse change
to the Company or the Assets may be made unless Vision 21 consents to such
amendment or supplement, and no amendment or supplement to a Schedule that
constitutes or reflects a material adverse change to Vision 21 or the Subsidiary
may be made unless the Company and the Shareholder consent to such amendment or
supplement. For all purposes of this Agreement, including without limitation for
purposes of
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determining whether the conditions set forth in Sections 10.1 and 11.1 have been
fulfilled, the Schedules hereto shall be deemed to be the Schedules as amended
or supplemented pursuant to this Section 9.1. In the event that the Company is
required to amend or supplement a Schedule in accordance with this Section 9.1
and Vision 21 does not consent to such amendment or supplement, or Vision 21 or
the Subsidiary is required to amend or supplement a Schedule in accordance with
this Section 9.1 and the Company and the Shareholder do not consent, this
Agreement shall be deemed terminated by mutual consent as set forth in Section
15.1(d) or Section 15.1(e) as appropriate.
9.2. Fees and Expenses.
a. If the Transaction is consummated, Vision 21 shall pay all
costs of the Audit of the Company's Financial Statements and financial records
by the Accountants (or auditors designated by the Accountants). All items
prepared by the Accountants in connection with the Audit ("Prepared Audit
Materials") shall be for use solely by Vision 21; provided, however, that the
Company may utilize the Prepared Audit Materials solely in connection with its
review of Vision 21's calculation of the Purchase Price. The Prepared Audit
Materials shall not be deemed to include those items which customarily remain
the property of auditors such as their working papers and memos.
b. In the event the Transaction is not consummated, the Company
shall pay for or reimburse Vision 21 for one-half (1/2) of the expenses of the
Accountants in connection with the Audit. The Company and Shareholder shall not
be entitled to copies or originals of the Prepared Audit Materials until the
Company or Shareholder pays for or reimburses Vision 21 for one-half (1/2) of
the expenses of the Accountants in connection with the Audit in advance of
receiving the Prepared Audit Materials (either from Vision 21 or the
Accountants). For purposes of this Agreement, Audit expenses shall include all
expenses related to the Audit as well as all expenses incurred to present the
financial statements in accordance with GAAP and all schedules related thereto.
c. Each of the Company, the Shareholder, Vision 21 and the
Subsidiary shall pay the costs and expenses of their own legal counsel with
respect to legal services rendered in connection with the preparation and
negotiation of this Agreement and the transactions contemplated hereby.
d. Vision 21 shall pay all costs of a regulatory compliance audit
of the Company. The Company shall agree in writing that all information obtained
in connection with the regulatory compliance audit shall be made available to
Vision 21. The Company and Shareholder shall not be entitled to copies or
originals of the regulatory compliance audit materials until the Company or
Shareholder pays for or reimburses Vision 21 for such audit expenses in advance
of receiving the regulatory compliance audit materials (either from Vision 21 or
its regulatory compliance auditors).
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10. CONDITIONS PRECEDENT OF VISION 21 AND THE SUBSIDIARY. Except as may
be waived in writing by Vision 21 and the Subsidiary, the obligations of Vision
21 and the Subsidiary hereunder are subject to the fulfillment at or prior to
the Closing Date of each of the following conditions precedent:
10.1. Representations and Warranties. The representations and
warranties of the Company and the Shareholder contained herein shall have been
true and correct in all material respects when initially made and shall be true
and correct in all material respects as of the Closing Date.
10.2. Covenants. The Company and the Shareholder shall have
performed and complied in all material respects with all covenants required by
this Agreement to be performed and complied with by the Company or the
Shareholder prior to the Closing Date.
10.3. [RESERVED]
10.4. Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
10.5. No Material Adverse Change. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities or business
of the Company shall have occurred since the Contract Financial Information
Date, whether or not such change shall have been caused by the deliberate act or
omission of the Company or the Shareholder.
10.6. Government Approvals and Required Consents. The Company, the
Shareholder, Vision 21 and the Subsidiary shall have obtained all necessary
government and other third-party approvals and consents (other than consents
technically required as a result of the transactions contemplated hereby under
the terms of managed care contracts to which the Company is a party).
10.7. Closing Deliveries. Vision 21 and the Subsidiary shall have
received all documents and agreements, duly executed and delivered in form
reasonably satisfactory to Vision 21 and the Subsidiary, referred to in Section
12.1.
10.8. Due Diligence. Vision 21 shall have completed to its
satisfaction a due diligence review of the Company and the Shareholder.
10.9. Financial Audit. Vision 21 shall have approved in Vision 21's
sole discretion an Audit of the Company which Audit shall have been performed by
an accounting firm designated by Vision 21.
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10.10. Compliance Audit. At the option of Vision 21, Vision 21
shall have approved in Vision 21's sole discretion an audit of the Company for
regulatory compliance which audit.
10.11. Exemption Under State Securities Laws. The transfer of
Vision 21's Securities to the Shareholder as contemplated in this Agreement
shall qualify for one or more exemptions from registration under the State's
securities laws. Vision 21 shall pay all filing fees in connection with any
filing required to qualify the transfer of the Securities for such exemption(s).
11. CONDITIONS PRECEDENT OF THE COMPANY AND THE SHAREHOLDER. Except as
may be waived in writing by the Company and the Shareholder, the obligations of
the Company and the Shareholder hereunder are subject to fulfillment at or
prior to the Closing Date of each of the following conditions precedent:
11.1. Representations and Warranties. The representations and
warranties of Vision 21 and the Subsidiary contained herein shall be true and
correct in all respects when initially made and shall be true and correct in all
material respects as of the Closing Date.
11.2. Covenants. Vision 21 and the Subsidiary shall have performed
and complied in all material respects with all covenants and conditions
required by this Agreement to be performed and complied with by them prior to
the Closing Date.
11.3. [RESERVED]
11.4. Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
11.5. Government Approvals and Required Consents. The Company, the
Shareholder, Vision 21 and the Subsidiary shall have obtained all necessary
government and other third-party approvals and consents (other than consents
technically required as a result of the transactions contemplated hereby under
the terms of managed care contracts to which the Company is a party).
11.6. Closing Deliveries. The Company and the Shareholder shall
have received all documents, instruments and agreements, duly executed and
delivered in form reasonably satisfactory to the Company, referred to in Section
12.2.
11.7. No Change in Voting or Ownership Control. There shall have
been no changes in the voting or ownership control of Vision 21 or the
Subsidiary from the date first above written to the Closing Date.
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11.8. No Material Adverse Change. No material adverse change in
the condition (financial or otherwise), operations, assets, liabilities or
business of Vision 21 or the Subsidiary shall have occurred since the end of the
last fiscal period reported in the Vision 21 Financial Statements, whether or
not such change shall have been caused by the deliberate act or omission of
Vision 21 or the Subsidiary.
12. CLOSING DELIVERIES; ESCROW OF DOCUMENTS.
12.1. Deliveries of the Company and the Shareholder. At or prior to
September 30, 1997, the Company and the Shareholder shall deliver to Vision 21
and the Subsidiary, c/x Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to Vision 21 and
the Subsidiary, the following, all of which shall be in a form reasonably
satisfactory to Vision 21 and the Subsidiary and shall be held by Xxxxxxxx, Loop
& Xxxxxxxx, LLP in escrow pending Closing, pursuant to an escrow agreement or
letter in form and substance mutually acceptable to the parties hereto:
a. a copy of resolutions of the Board of Directors of the
Company authorizing (i) the execution, delivery and performance of this
Agreement and all related documents and agreements, and (ii) the consummation of
the Transaction, certified by the Secretary of the Company as being true and
correct copies of the originals thereof subject to no modifications or
amendments;
b. a certificate of the President of the Company, and of the
Shareholder, dated the Closing Date, as to the truth and correctness of the
representations and warranties of the Company and the Shareholder contained
herein, on and as of the Closing Date;
c. a certificate of the President of the Company, and of the
Shareholder, dated the Closing Date, (i) as to the performance of and compliance
in all material respects by the Company and the Shareholder with all covenants
contained herein on and as of the Closing Date and (ii) certifying that all
conditions precedent of the Company and the Shareholder to the Closing have been
satisfied;
d. a certificate of the Secretary of the Company certifying
as to the incumbency of the directors and officers of the Company and as to the
signatures of such directors and officers who have executed documents delivered
pursuant to the Agreement on behalf of the Company;
e. a certificate, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of the state of incorporation for the
Company establishing that the Company is in existence, has paid all franchise or
similar taxes, if any, and, if applicable, otherwise is in good standing to
transact business in its state of organization;
f. an executed Contingent Consideration Escrow Agreement in
substantially the form attached hereto as Exhibit 12.1(f);
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g. such appropriate documents of transfer, including bills of
sale, endorsements, assignments, drafts, checks or other instruments, as to all
of the Assets, and any other appropriate instruments in such reasonable or
customary form as shall be requested by Vision 21 and its counsel;
h. such instruments satisfactory to Vision 21 that all liens,
claims, pledges, security interests and other encumbrances on all of the Assets
have been released;
i. all authorizations, consents, permits and licenses
referenced in Section 3.5;
j. [RESERVED];
k. a non-foreign affidavit, as such affidavit is referred to
in Section 1445(b)(2) of the Code, of the Shareholder, signed under a penalty of
perjury and dated as of the Closing Date, to the effect that the Shareholder is
a United States citizen or a resident alien (and thus not a foreign person) and
providing the Shareholder's United States taxpayer identification number;
l. an assignment to Vision 21 of each lease for real property
described on Schedule 2.1(c) (the "Lease Assignments"), or if desired by Vision
21, a new lease or leases between the landlords under such leases and Vision 21
or the Subsidiary in form and substance reasonably satisfactory to Vision 21 and
the Subsidiary; and
m. such other instrument or instruments of transfer prepared
by Vision 21 as shall be necessary or appropriate, as Vision 21 or its counsel
shall reasonably request, to carry out and effect the purpose and intent of this
Agreement.
12.2. Deliveries of Vision 21. At or prior to September 30, 1997,
Vision 21 and the Subsidiary shall deliver to the Company and the Shareholder,
c/x Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to Vision 21 and the Subsidiary, the
following, all of which shall be in a form reasonably satisfactory to the
Company and the Shareholder and shall be held by Xxxxxxxx, Loop & Xxxxxxxx, LLP
in escrow pending Closing, pursuant to an escrow agreement or letter in form and
substance mutually acceptable to the parties hereto:
a. copies of the resolutions of the Boards of Directors of
Vision 21 and the Subsidiary authorizing (i) the execution, delivery and
performance of this Agreement, and all related documents and agreements, and
(ii) the consummation of the Transaction, certified by Vision 21's Secretary and
the Subsidiary's Secretary as being true and correct copies of the originals
thereof subject to no modifications or amendments;
b. certificates of an officer of Vision 21 and an officer of
the Subsidiary dated the Closing Date as to the truth and correctness of the
representations and warranties of Vision 21 and the Subsidiary contained herein,
on and as of the Closing Date;
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c. certificates of an officer of Vision 21 and an officer of
the Subsidiary dated the Closing Date, (i) as to the performance and compliance
of Vision 21 and the Subsidiary with all covenants contained herein on and as of
the Closing Date and (ii) certifying that all conditions precedent of Vision 21
and the Subsidiary to the Closing have been satisfied;
d. a certificate, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of the State of Florida establishing
that Vision 21 and the Subsidiary are in existence, have paid all franchise or
similar taxes, if any, and, if applicable, otherwise are in good standing to
transact business in such state;
e. the executed Contingent Consideration Escrow Agreement
described in Section 12.1(f);
f. the executed Lease Assignments;
g. the Purchase Price; and
h. such other instrument or instruments of transfer,
prepared by the Company or the Shareholder as shall be necessary or
appropriate, as the Company, the Shareholder or their counsel shall reasonable
request, to carry out and effect the purpose and intent of this Agreement.
12.3. Release of Escrow Materials. Xxxxxxxx, Loop & Xxxxxxxx,
LLP (the "Escrow Agent") shall release the agreements, certificates,
instruments, documents and other materials described in Sections 12.1 and 12.2
to the appropriate parties to effectuate the transactions contemplated in this
Agreement only after all such materials have been delivered by all applicable
parties (or the parties receiving such documents have waived in writing such
delivery requirement), the parties have completed their due diligence, the Audit
and regulatory compliance audit have been completed, and each of Vision 21, the
Subsidiary, the Shareholder and the Company shall have sent written notice to
the Escrow Agent stating that the conditions to release of the escrowed
documents have been satisfied or waived. In the event that all of Vision 21, the
Subsidiary, the Shareholder and the Company have not notified the Escrow Agent
in writing that they are satisfied with or have waived all of the conditions to
the release of the escrowed documents, the Escrow Agent shall immediately return
any consideration by Vision 21 held by it to Vision 21 and shall promptly
destroy or return the foregoing materials to the parties sending such materials.
13. POST CLOSING MATTERS.
13.1. Further Instruments of Transfer. From and after the
Closing Date, at the request of Vision 21 and at Vision 21's sole cost and
expense, the Shareholder and the Company shall deliver any further instruments
of transfer and take all reasonable action as may be necessary or appropriate to
carry out the purpose and intent of this Agreement.
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13.2. Access to Books and Records. From and after the Closing
Date, at the request of any party hereto, each of the other parties shall
reasonably cooperate in providing the requesting party with access to such other
parties' personnel who are knowledgeable concerning, and books and records which
are relevant to, the inquiry by the requesting party; provided, however, that
(a) such personnel shall be available at, and the access to such books and
records shall be granted at the responding party's business premises and during
the responding party's regular business hours, and (b) the inquiry shall be for
a legitimate business purpose, including tax filings and compliance, defending
against litigation or other claims, or for any other legitimate business
purpose. All copies of such books and records shall be at the requesting party's
expense. Each of the parties to this Agreement shall retain all books and
records with respect to the transactions contemplated herein for a minimum of
five (5) years from the Closing Date.
14. REMEDIES.
14.1. Indemnification by the Company and Shareholder. Subject to
the terms and conditions of this Agreement, the Company and the Shareholder,
jointly and severally, agree to indemnify, defend and hold Vision 21, the
Subsidiary and their respective directors, officers, employees, agents,
attorneys and affiliates harmless from and against all losses, claims,
obligations, demands, assessments, penalties, liabilities, costs, damages,
reasonable attorneys' fees and expenses (collectively, "Damages") asserted
against or incurred by such entities and individuals (including, but not limited
to, any reduction in payments to or revenues of Sever, Xxxxxxxx & Xxxxxxxx,
M.D., P.A.) arising out of or resulting from:
a. a breach of any representation, warranty or covenant of
the Company or the Shareholder contained herein or in any schedule or
certificate delivered hereunder;
b. any liability under the Securities Act, the Exchange Act
or any other federal or state "Blue Sky" or securities law or regulation, at
common law or otherwise, (i) arising out of or based upon any untrue statement
or alleged untrue statement of a material fact relating to the Shareholder or
the Company (including its subsidiaries, if any), and provided to Vision 21 or
its counsel by the Company or the Shareholder, specifically for inclusion in a
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, (ii) arising out of or based upon any
omission or alleged omission to state therein a material fact relating to the
Shareholder or the Company (including its subsidiaries, if any) required to be
stated therein or necessary to make the statements therein not misleading, and
not provided to Vision 21 or its counsel by the Company or the Shareholder,
provided, however, that such indemnity shall not inure to the benefit of Vision
21 to the extent that such untrue statement (or alleged untrue statement) was
made, in, or omission (or alleged omission) occurred in, any preliminary
prospectus, and such information was not so included by Vision 21 and properly
delivered to shareholders of Vision 21 who acquire Vision 21 Common Stock in any
Public Offering;
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c. any filings, reports or disclosures made pursuant to the
IRS Voluntary Compliance Resolution Program, if applicable; and
d. any liability arising from any alleged unlawful sale or
offer to sell or transfer any of the Common Stock by Shareholder.
14.2. Indemnification by Vision 21 and the Subsidiary. Subject to
the terms and conditions of this Agreement, Vision 21 and the Subsidiary,
jointly and severally, hereby agree to indemnify, defend and hold the Company
and the Shareholder harmless from and against all damages asserted against or
incurred by it or him arising out of or resulting from:
a. a breach by Vision 21 or the Subsidiary of any
representation, warranty or covenant of Vision 21 or the Subsidiary contained
therein or in any schedule or certificate delivered hereunder;
b. any liability under the Securities Act, the Exchange Act
or any other federal or state "Blue Sky" or securities law or regulation, at
common law or otherwise, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact relating to Vision 21 or the
Subsidiary, contained in any preliminary prospectus, Registration Statement or
any prospectus forming a part thereof, or any amendment thereof or supplement
thereto, arising out of or based upon any omission or alleged omission to state
therein a material fact relating to Vision 21 (including the Subsidiary and
Vision 21's other subsidiaries), required to be stated therein or necessary to
make the statements therein not misleading; and
c. any filings, reports or disclosures made pursuant to the
IRS Voluntary Compliance Resolution Program, if applicable.
Notwithstanding anything in this Section 14.2, neither Vision 21 nor
the Subsidiary shall be liable for any Damages resulting from any matter not
disclosed to Vision 21 by any of the third parties acquired by Vision 21 in
connection with the Recent Acquisitions.
14.3. Conditions of Indemnification. All claims for indemnification
under this Agreement shall be asserted and resolved as follows:
a. A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (and, in any event, at least ten (10) days
prior to the due date for any responsive pleadings, filings or other documents)
(i) notify the party from whom indemnification is sought (the "Indemnifying
Party") of any third-party claim or claims asserted against the Indemnified
Party ("Third Party Claim") that could give rise to a right of indemnification
under this Agreement and (ii) transmit to the Indemnifying Party a written
notice ("Claim Notice") describing in reasonable detail the nature of the Third
Party Claim, a copy of all papers served with respect to such claim (if any), an
estimate of the amount of damages attributable to the Third Party Claim and the
basis of the Indemnified Party's request for indemnification under this
Agreement. Except as set forth in Section 14.6, the failure to
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promptly deliver a Claim Notice shall not relieve the Indemnifying Party of its
obligations to the Indemnified Party with respect to the related Third Party
Claim except to the extent that the resulting delay is materially prejudicial to
the defense of such claim. Within thirty (30) days after receipt of any Claim
Notice (the "Election Period"), the Indemnifying Party shall notify the
Indemnified Party (i) whether the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Article 14 with respect to such
Third Party Claim and (ii) whether the Indemnifying Party desires, at the sole
cost and expense of the Indemnifying Party, to defend the Indemnified Party
against such Third Party Claim.
b. If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend, at its sole cost and expense, such Third Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 14.3(b). The Indemnifying
Party shall have full control of such defense and proceedings, including any
compromise or settlement thereof. The Indemnified Party is hereby authorized, at
the sole cost and expense of the Indemnifying Party (but only if the Indemnified
Party is entitled to indemnification hereunder), to file, during the Election
Period, any motion, answer or other pleadings that the Indemnified Party shall
deem necessary or appropriate to protect its interests or those of the
Indemnifying Party and not prejudicial to the Indemnifying Party (it being
understood and agreed that if an Indemnified Party takes any such action that is
prejudicial and causes a final adjudication that is adverse to the Indemnifying
Party, the Indemnifying Party shall be relieved of its obligations hereunder
with respect to such Third Party Claim). If requested by the Indemnifying Party,
the Indemnified Party agrees, at the sole cost and expense of the Indemnifying
Party, to cooperate with the Indemnifying Party and its counsel in contesting
any Third Party Claim that the Indemnifying Party elects to contest, including,
without limitation, the making of any related counterclaim against the person
asserting the Third Party Claim or any cross-complaint against any person. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to
Section 14.3(b) and shall bear its own costs and expenses with respect to such
participation; provided, however, that if the named parties to any such action
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party, and the Indemnified Party has been advised by counsel that
there may be one or more legal defenses available to it that are different from
or additional to those available to the Indemnifying Party, then the Indemnified
Party may employ separate counsel at the expense of the Indemnifying Party, and
upon written notification thereof, the Indemnifying Party shall not have the
right to assume the defense of such action on behalf of the Indemnified Party;
provided further that the Indemnifying Party shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Indemnified Party, which firm shall be designated
in writing by the Indemnified Party.
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c. If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to defend
the Indemnified Party pursuant to Section 14.3(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 14.3(b) but fails
diligently and promptly to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings, provided, however, that
the Indemnified Party may not enter into, without the Indemnifying Party's
consent, which shall not be unreasonably withheld, any compromise or settlement
of such Third Party Claim. Notwithstanding the foregoing, if the Indemnifying
Party has delivered a written notice to the Indemnified Party to the effect that
the Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article 14 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnifying Party's defense pursuant to this Section
or of the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party in
full for all costs and expenses of such litigation. The Indemnifying Party may
participate in, but not control any defense or settlement controlled by the
Indemnified Party pursuant to this Section 14.3(c), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation;
provided, however, that if the named parties to any such action (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party, and the Indemnifying Party has been advised by counsel that there may be
one or more legal defenses available to the Indemnified Party, then the
Indemnifying Party may employ separate counsel and upon written notification
thereof, the Indemnified Party shall not have the right to assume the defense of
such action on behalf of the Indemnifying Party.
d. In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of damages attributable to such claim and
the basis of the Indemnified Party's request for indemnification under this
Agreement. If the Indemnifying Party does not notify the Indemnified Party
within sixty (60) days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Party hereunder. If the Indemnifying Party has timely disputed such claim, as
provided above, such dispute shall be resolved by mediation or arbitration as
provided in Section 17.1 if the parties do not reach a settlement of such
dispute within thirty (30) days after notice of a dispute is given.
e. Payments of all amounts owing by an Indemnifying Party
pursuant to this Article 14 relating to a Third Party Claim shall be made within
thirty (30) days after the latest of (i) the settlement of such Third Party
Claim, (ii) the expiration of the period for appeal of a final adjudication of
such Third Party Claim or (iii) the expiration of the period for appeal
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of a final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement. Payments of all amounts owing by an Indemnifying
Party pursuant to Section 14.3(d) shall be made within thirty (30) days after
the later of (i) the expiration of the sixty (60) day Indemnity Notice period or
(ii) the expiration of the period for appeal, if any, of a final adjudication or
arbitration of the Indemnifying Party's liability to the Indemnified Party under
this Agreement.
14.4. Remedies Not Exclusive. The remedies provided in this
Agreement shall not be exclusive of any other rights or remedies available to
one party against the other, either at law or in equity. This Article 14
regarding indemnification shall survive Closing.
14.5. Costs, Expenses and Legal Fees. Each party hereto agrees to
pay the costs and expenses (including attorneys' fees and expenses) incurred by
the other parties in successfully (a) enforcing any of the terms of this
Agreement, or (b) proving that another party breached any of the terms of this
Agreement.
14.6. Indemnification Limitations. Notwithstanding the provisions
of Sections 14.1 and 14.2, (a) no party shall be required to indemnify another
party with respect to a breach of a representation, warranty or covenant unless
the claim for indemnification is brought within two (2) years after the Closing
Date, except that a claim for indemnification for a breach of the
representations and warranties contained in Sections 3.1, 3.2., 3.3, 3.11, 3.14,
4.3, 5.1, 5.2, 5.3, 5.4, 5.8 and 6.1 may be made at any time, and a claim for
indemnification for a breach of the representations and warranties contained in
Sections 3.9, 3.15, 3.17, 3.18, 3.24, 3.25, 3.26, 3.27, 4.1, 4.4, 4.5, 4.6, 4.7
and 5.7 may be made at any time within the applicable statute of limitations;
(b) indemnification based upon Sections 14.1(b) through (d) and 14.2(b) through
(c) may be made at any time within the applicable statute of limitations; and
(c) the Shareholder shall not be required to indemnify Vision 21 or the
Subsidiary pursuant to Section 14.1 unless, and to the extent that, the
aggregate amount of Damages incurred by Vision 21 and/or the Subsidiary shall
exceed an amount equal to two percent (2%) of the total Purchase Price; and (c)
the Shareholder shall not be required to indemnify Vision 21 or the Subsidiary
with respect to a breach of a representation, warranty or covenant for Damages
in excess of the aggregate Purchase Price received by the Shareholder (other
than pursuant to a requirement to indemnify Vision 21 or the Subsidiary under
Sections 3.26 or 3.27, or unless the breach involves an intentional breach or
fraud by the Shareholder which shall be unlimited).
14.7. Tax Benefits; Insurance Proceeds. The total amount of any
indemnity payments owed by one party to another party to this Agreement shall be
reduced by any correlative tax benefit received by the party to be indemnified
or the net proceeds received by the party to be indemnified with respect to
recovery from third parties or insurance proceeds and such correlative insurance
benefit shall be net of the insurance premium, if any, that becomes due as a
result of such claim.
14.8. Payment of Indemnification Obligation. In the event that the
Shareholder has an indemnification obligation to Vision 21 or the Subsidiary
hereunder, subject to Vision 21's
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approval as set forth below, the Shareholder may satisfy such obligation by
transferring to Vision 21 or the Subsidiary (as the case may be) such number of
shares of Vision 21 Common Stock owned by the Shareholder having an aggregate
fair market value (which is the fair market value at such time based on the last
reported sale price of Vision 21 Common Stock on a principal national securities
exchange or other exchange on which the Vision 21 Common Stock is then listed or
the last quoted ask price on any over-the-counter market through which the
Vision 21 Common Stock is then quoted on the last trading day immediately
preceding the day on which the Shareholder transfers shares of Vision 21 Common
Stock to Vision 21 or the Subsidiary hereunder) equal to the indemnification
obligation, provided that each of the following conditions are satisfied:
a. The Shareholder shall transfer to Vision 21 or the
Subsidiary good, valid and marketable title to the shares of Vision 21 Common
Stock, free and clear of all adverse claims, security interests, liens, claims,
proxies, options, stockholders' agreements and encumbrances;
b. The Shareholder shall make such representation and
warranties as to title to the stock, absences of security interests, liens,
claims, proxies, stockholders' agreements and other encumbrances and other
matters as reasonably requested by Vision 21 or the Subsidiary; and
c. The other terms and conditions of any transaction
contemplated pursuant to this Section and the effects thereof, including any
legal or tax consequences, shall be reasonably satisfactory to Vision 21 or the
Subsidiary.
15. TERMINATION.
15.1. Termination. This Agreement may be terminated and the
Transaction may be abandoned:
a. at any time prior to the Closing Date by mutual agreement
of all parties;
b. at any time prior to the Closing Date by Vision 21 if any
representation or warranty of the Company or the Shareholder contained in this
Agreement or in any certificate or other document executed and delivered by the
Company or the Shareholder pursuant to this Agreement is or becomes untrue or
breached in any material respect or if the Company or the Shareholder fails to
comply in any material respect with any covenant or agreement contained herein,
and any such misrepresentation, noncompliance or breach is not cured, waived or
eliminated within twenty (20) days after receipt of written notice thereof;
c. at any time prior to the Closing Date by the Company if
any representation or warranty of Vision 21 or the Subsidiary contained in this
Agreement is or becomes untrue in any material respect or if Vision 21 or the
Subsidiary fails to comply in any
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material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt or written notice thereof;
d. at any time prior to the Closing Date by the Company in
the event of the failure of any of the conditions precedent set forth in Article
11 of this Agreement;
e. at any time prior to the Closing Date by Vision 21 in the
event of the failure of any of the conditions precedent set forth in Article 10
of this Agreement;
f. by Vision 21 if at any time prior to the Closing Date,
Vision 21 deems termination to be advisable, provided, however, that if Vision
21 exercises its right to terminate this Agreement under this subsection, Vision
21 shall reimburse the Company and the Shareholder for all reasonable attorneys'
and accountants' fees incurred by the Company and the Shareholder in connection
with this Agreement; provided that Vision 21 shall only reimburse the Company
and the Shareholder up to an aggregate maximum amount of One Hundred Thousand
and No/100 Dollars ($100,000.00) for such fees; or
g. by Vision 21 or the Company if the Transaction shall not
have been consummated by November 30, 1997.
15.2. Effect of Termination. In the event this Agreement is
terminated pursuant to Section 15.1, Vision 21, the Subsidiary, the Company and
the Shareholder, shall each be entitled to pursue, exercise and enforce any and
all remedies, rights, powers and privileges available at law or in equity,
subject to the limitations set forth in Section 15.1. In the event of a
termination of this Agreement under the provisions of this Article 15, a party
not then in material breach of this Agreement shall stand fully released and
discharged of any and all obligations under this Agreement.
16. NON-COMPETITION AND CONFIDENTIALITY COVENANTS.
16.1. Shareholder and Company Non-Competition Covenant.
a. The Shareholder and the Company recognize that the
covenants of the Shareholder and the Company contained in this Section 16.1 are
an essential part of this Agreement and that, but for the agreement of the
Shareholder and the Company to comply with such covenants, Vision 21 and the
Subsidiary would not have entered into this Agreement. The Shareholder and the
Company acknowledge and agree that the Shareholder's and the Company's covenants
not to compete are necessary to ensure the continuation of the Subsidiary's and
Vision 21's respective Managed Care Businesses and are necessary to protect the
reputation of Vision 21 and the Subsidiary, and that irreparable and irrevocable
harm and damage will be done to Vision 21 and the Subsidiary if the Shareholder
or the Company compete with the Managed Care Businesses of Vision 21 or the
Subsidiary. The Shareholder and the Company accordingly agree
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that for the periods set forth in the Business Management Agreement the
Shareholder and the Company shall not:
i) directly or indirectly, either as principal, agent,
independent contractor, consultant, director, officer, employee, employer,
advisor, stockholder, partner or in any other individual or representative
capacity whatsoever, either for the Shareholder's or the Company's own benefit
or for the benefit of any other person or entity knowingly (A) hire, attempt to
hire, contact or solicit with respect to hiring any employee of Vision 21 (or of
the Subsidiary or of any of Vision 21's other direct or indirect subsidiaries)
or (B) induce or otherwise counsel, advise or encourage any employee of Vision
21 (or of the Subsidiary or of any of Vision 21's other direct or indirect
subsidiaries) to leave the employment of Vision 21;
ii) act or serve, directly or indirectly, as a principal,
agent, independent contractor, consultant, director, officer, employee, employer
or advisor or in any other position or capacity with or for, or acquire a direct
or indirect ownership interest in or otherwise conduct (whether as stockholder,
partner, investor, joint venturer, or as owner of any other type of interest),
any Competing Managed Care Business as such term is defined herein; provided,
however, that this clause (ii) shall not prohibit the Shareholder or the Company
from being the owner of up to 1% of any class of outstanding securities of any
company or entity if such class of securities is publicly traded; or
iii) directly or indirectly, either as principal, agent,
independent, contractor, consultant, director, officer, employee, employer,
advisor, stockholder, partner or in any other individual or representative
capacity whatsoever, either for the Shareholder's or the Company's own benefit
or for the benefit of any other person or entity, call upon or solicit any
customers or clients of the Subsidiary's and Vision 21's respective Management
Businesses;
b. For the purposes of this Section 16.1, the term "Competing
Managed Care Business" shall mean an individual, business, corporation,
association, firm, undertaking, company, partnership, joint venture,
organization or other entity that either (A) conducts a business substantially
similar to the Subsidiary's or Vision 21's respective Managed Care Businesses
within the State, or (B) provides or sells a service which is the same or
substantially similar to, or otherwise competitive with the services provided by
the Subsidiary's or Vision 21's respective Managed Care Businesses within the
State; provided, however, that "Competing Management Business" shall not include
Vision 21, the Subsidiary or the Shareholder's internal management and
administration of the Shareholder's medical practice or participation in the
management and administration of a physician group in which the Shareholder
devotes a significant amount of time to the practice of medicine.
c. Should any portion of this Section 16.1 be deemed
unenforceable because of the scope, duration or territory encompassed by the
undertakings of the Shareholder or the Company hereunder, and only in such
event, then the Shareholder, the Company, Vision 21 and the Subsidiary consent
and agree to such limitation on scope, duration or territory
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as may be finally adjudicated as enforceable by a court of competent
jurisdiction after the exhaustion of all appeals.
d. This covenant shall be construed as an agreement ancillary
to the other provisions of this Agreement, and the existence of any claim or
cause of action of the Shareholder or the Company against the Subsidiary or
Vision 21, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Vision 21 or the Subsidiary of this
covenant; provided, however, that the Shareholder and the Company shall not be
bound by this covenant and shall not be obligated to pay the liquidated damages
contemplated in this Section 16.1 if at the time of a breach of this covenant
the Business Management Agreement has already been terminated pursuant to
Section 6.2(a) or 6.2(d) thereof. Without limiting other possible remedies to
Vision 21 and the Subsidiary for breach of this covenant, the Shareholder and
the Company agree that injunctive or other equitable relief will be available to
enforce the covenants of this provision. The Shareholder, the Company, Vision 21
and the Subsidiary further expressly acknowledge that the damages that would
result from a violation of this non-competition covenant would be impossible to
predict with any degree of certainty, and agree that liquidated damages in the
amount of the aggregate consideration received by the Company pursuant to this
Agreement is reasonable in light of the severe harm to the Subsidiary's or
Vision 21's respective Managed Care Businesses which would result in the event
that a violation of this non-competition covenant were to occur. If the
Shareholder or the Company violates this non-competition covenant, Vision 21
shall, in addition to all other rights and remedies available at law or equity,
be entitled to (a) cancel the number of shares of Common Stock held by the
Shareholder or the Company or, with respect to shares of Common Stock entitled
to be received by the Shareholder or the Company, terminate its obligation to
deliver such number of shares of Common Stock, and (b) repayment by Shareholder
to Vision 21 of the fair market value as described above, of Vision 21 Common
Stock sold by Shareholder; but in no event shall Vision 21 be entitled to offset
amounts in excess of the liquidated damages sum pursuant to this Section 16.1.
The Shareholder and the Company agree to deliver to Vision 21 the certificates
representing any such shares canceled by Vision 21. Payment and satisfaction by
Shareholder shall be made within sixty (60) days of notification to Shareholder
by Vision 21 that Shareholder has violated this non-competition covenant.
16.2. Shareholder and Company Confidentiality Covenant. From the
date hereof, the Shareholder and the Company shall not, directly or indirectly,
use for any purpose, other than in connection with the performance of the
Shareholder's duties under the Shareholder's employment agreement with Sever,
Xxxxxxxx & Xxxxxxxx, M.D., P.A., or disclose to any third party, any material
information of Vision 21, the Subsidiary or the Company, as appropriate (whether
written or oral), including any business management or economic studies, patient
lists, proprietary forms, proprietary business or management methods, marketing
data, fee schedules, or trade secrets of Vision 21, the Subsidiary or of the
Company, as applicable, and including the terms and provisions of this Agreement
and any transaction or document executed by the parties pursuant to this
Agreement. Notwithstanding the foregoing, the Shareholder and the Company may
disclose information that the Shareholder or the Company can establish (a) is or
becomes generally available to and known by the public or medical community
(other than as a result of
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an unpermitted disclosure directly or indirectly by the Shareholder or the
Company or their respective Affiliates, advisors, or representatives); (b) is or
becomes available to the Shareholder or the Company on a nonconfidential basis
from a source other than Vision 21, the Subsidiary, or their respective
Affiliates, advisors or representatives, provided that such source is not and
was not bound by a confidentiality agreement with or other obligation of secrecy
to Vision 21, the Subsidiary, or their respective Affiliates, advisors or
representatives of which the Shareholder or the Company has knowledge; or (c)
has already been or is hereafter independently acquired or developed by the
Shareholder or the Company without violating any confidentiality agreement with
or other obligation of secrecy to Vision 21, the Subsidiary, the Company or
their respective Affiliates, advisors or representatives. Without limiting the
other possible remedies to Vision 21 or the Subsidiary for the breach of this
covenant, the Shareholder and the Company agree that injunctive or other
equitable relief shall be available to enforce this covenant. The Shareholder
and the Company further agree that if any restriction contained in this Section
16.2 is held by any court to be unenforceable or unreasonable, a lesser
restriction shall be enforced in its place and the remaining restrictions
contained herein shall be enforced independently of each other.
16.3. Survival. The parties acknowledge and agree that this Article
16 shall survive the Closing of the transactions contemplated herein.
17. DISPUTES.
17.1. Mediation and Arbitration. Any dispute, controversy or claim
(excluding claims arising out of an alleged breach of Article 16 of this
Agreement) arising out of this Agreement, or the breach thereof, that cannot be
settled through negotiation shall be settled (a) first, by the parties trying in
good faith to settle the dispute by mediation under the Commercial Mediation
Rules of the AAA (such mediation session to be held in Tampa, Florida, and to
commence within 15 days of the appointment of the mediator by the AAA), and (b)
if the controversy, claim or dispute cannot be settled by mediation, then by
arbitration administered by the AAA under its Commercial Arbitration Rules (such
arbitration to be held in Tampa, Florida, before a single arbitrator and to
commence within 15 days of the appointment of the arbitrator by the AAA), and
judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
18. MISCELLANEOUS.
18.1. Taxes. Shareholder and the Company shall pay all transfer
taxes, sales and other taxes and charges, imposed by the State, if any, which
may become payable in connection with the transactions and documents
contemplated hereunder. Vision 21 shall pay all transfer taxes, sales and other
taxes and charges imposed by the State of Florida, if any, which may become
payable in connection with the transactions and documents contemplated
hereunder.
18.2. Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement or any document contemplated by this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy shall be cumulative and shall be in
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addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of any one or more
remedies by any party hereto shall not constitute a waiver of the right to
pursue other available remedies.
18.3. Parties Bound. Except to the extent otherwise expressly
provided herein, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, representatives,
administrators, guardians, successors and assigns; and no other person shall
have any right, benefit or obligation hereunder.
18.4. Notices. All notices, reports, records or other
communications that are required or permitted to be given to the parties under
this Agreement shall be sufficient in all respects if given in writing and
delivered in person, by telecopy, by overnight courier or by registered or
certified mail, postage prepaid, return receipt requested, to the receiving
party at the following address:
If to Vision 21 or the Subsidiary addressed to:
Vision Twenty-One, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Chief Financial Officer
With copies to:
Xxxxxxxx, Loop & Xxxxxxxx, LLP
Post Office Box 172609
000 X. Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Facsimile No. (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esquire
If to the Company and the Shareholder addressed to:
Managed Health Services, Inc.
00000 Xxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, M.D.
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With copies to:
Xxxxxxxx, Loop & Xxxxxxxx, LLP
Post Office Box 172609
000 X. Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Facsimile No. (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Esquire
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 18.4. Notice shall be deemed given on the date
of delivery, in the case of personal delivery or telecopy, or on the delivery or
refusal date, as specified on the return receipt, in the case of overnight
courier or registered or certified mail.
18.5. Choice of Law. This Agreement shall be construed, interpreted,
and the rights of the parties determined in accordance with, the laws of the
State of Florida except with respect to matters of law concerning the internal
affairs of any corporate or partnership entity which is a party to or the
subject of this Agreement, and as to those matters the law of the state of
incorporation or organization of the respective entity shall govern.
18.6. Entire Agreement; Amendments and Waivers. This Agreement,
together with the documents contemplated by this Agreement and all Exhibits and
Schedules hereto and thereto, constitute the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof. No
supplement, modification or waiver of any of the provisions of this Agreement
shall be binding unless it shall be specifically designated to be a supplement,
modification or waiver of this Agreement and shall be executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
18.7. Confidentiality Agreements. The provisions of any prior
confidentiality agreements and letters of intent between or among Vision 21, the
Company and the Shareholder, as amended, shall terminate and cease to be of any
force or effect at and upon the Closing.
18.8. Modification Clause. It is the intention of the parties hereto
to conform strictly to applicable laws regarding the practice and regulation of
medicine, whether such laws are now or hereafter in effect, including the laws
of the United States of America, the State or any other applicable jurisdiction,
and including any subsequent revisions to, or judicial interpretations of, those
laws, in each case to the extent they are applicable to this Agreement (the
"Applicable Laws"). Accordingly, if the ownership of any Asset by the Subsidiary
violates any Applicable Law, then the parties hereto agree as follows: (a) the
provisions of this Section 18.8
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shall govern and control; (b) if none of the parties hereto are materially
economically disadvantaged, then any Asset, the ownership of which violates any
Applicable Law, shall be deemed to have never been owned by the Subsidiary; (c)
if one or more of the parties hereto is materially economically disadvantaged,
then the parties hereto agree to negotiate in good faith such changes to the
structure and terms of the transactions provided for in this Agreement as may be
necessary to make these transactions, as restructured, lawful under applicable
laws and regulations, without materially disadvantaging either party; (d) this
Agreement shall be deemed modified and amended; and (e) the parties to this
Agreement shall execute and deliver all documents or instruments necessary to
effect or evidence the provisions of this Section 18.8.
18.9. Assignment. The Agreement may not be assigned by operation of
law or otherwise except that Vision 21 and the Subsidiary shall have the right
to assign this Agreement, at any time, to any Affiliate or direct or indirect
wholly-owned subsidiary. In the event of such assignment, Vision 21 and the
Subsidiary shall remain liable hereunder.
18.10. Attorneys' Fees. Except as otherwise specifically provided
herein, if any action or proceeding is brought by any party with respect to this
Agreement or the other documents contemplated with respect to the
interpretation, enforcement or breach hereof, the prevailing party in such
action shall be entitled to an award of all reasonable costs of litigation or
arbitration, including, without limitation, attorneys' fees, to be paid by the
losing party, in such amounts as may be determined by the court having
jurisdiction of such action or proceeding or by the arbitrators deciding such
action or proceeding or as agreed to by the parties hereto.
18.11. Further Assurances. From time to time hereafter and without
further consideration, each of the parties hereto shall execute and deliver such
additional or further instruments of conveyance, assignment and transfer and
take such other actions as any of the other parties hereto may reasonably
request in order to more effectively consummate the transactions contemplated
hereunder or as shall be reasonably necessary or appropriate in connection with
the carrying out of the parties' respective obligations hereunder for the
purposes of this Agreement.
18.12. Announcements and Press Releases. Any press releases or any
other public announcements concerning this Agreement or the transactions
contemplated hereunder shall be approved in advance by Vision 21; provided,
however, that if Shareholder or the Company reasonably believes that he or it
has a legal obligation to make a press release and the consent of Vision 21
cannot be obtained, then the release may be made without such approval.
18.13. No Tax Representations. Each party acknowledges that it is
relying solely on its advisors to determine the tax consequences of the
transactions contemplated hereunder and that no representation or warranty has
been made by any party as to the tax consequences of such transactions except as
otherwise specifically set forth in this Agreement.
18.14. No Rights as Stockholder. The Company and Shareholder shall
have no rights as a stockholder with respect to any shares of Common Stock until
the issuance of a stock
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certificate evidencing such shares. Except as otherwise provided in the
Agreement, no adjustment shall be made for dividends or distributions or other
rights for which the record date is prior to such date any stock certificate is
issued.
18.15. Multiple Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
18.16. Headings. The headings of the several articles and sections
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
18.17. Severability. Each article, section and subsection of this
Agreement constitutes a separate and distinct undertaking, covenant or provision
of this Agreement. If any such provision shall finally be determined to be
unlawful, such provision shall be deemed severed from this Agreement, but every
other provision of this Agreement shall remain in full force and effect.
18.18. Form of Transaction. If after the execution hereof, Vision 21
determines that the sale of the Assets of the Company can be better achieved
through a different form of transaction without economic injury to the Company
or the Shareholder, or delay of the consummation of the transaction, the Company
and the Shareholder shall cooperate in revising the structure of the transaction
and shall negotiate in good faith to so amend this Agreement; provided, that
Vision 21 shall reimburse the Company and the Shareholder at Closing for all
reasonable additional expenses incurred by the Company and the Shareholder as a
result of such change in form.
18.19. Guaranty of Subsidiary's Obligations by Vision 21. Vision 21
hereby unconditionally guaranties all obligations of the Subsidiary to the
Company and the Shareholder contained within this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
"COMPANY"
MANAGED HEALTH SERVICES, INC.
By:
------------------------- ------------------------------
Witness , M.D., President
-------------
-------------------------
Witness
"SHAREHOLDER"
-------------------------- ----------------------------------
Witness Xxxxxxx X. Xxxxxxxx, M.D.
--------------------------
Witness
-------------------------- ----------------------------------
Witness Xxxxxx X. Xxxxxxxx, M.D.
--------------------------
Witness
-------------------------- ----------------------------------
Witness Xxxxx X. Xxxxxxx, M.D.
-------------------------- ----------------------------------
Witness
-------------------------- ----------------------------------
Witness Xxxxxxx X. Xxxxx, M.D.
--------------------------
Witness
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"VISION 21"
VISION TWENTY-ONE, INC.
By:
-------------------------- --------------------------------------
Witness Xxxxxxxx X. Xxxxxxxx, President
--------------------------
Witness
"SUBSIDIARY"
VISION 21 MANAGEMENT
SERVICES, INC.
p814X By:
-------------------------- --------------------------------------
Witness Xxxxxxxx X. Xxxxxxxx, President
--------------------------
Witness
60
