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EXHIBIT 2.4
OPTICAL ASSET PURCHASE AGREEMENT
This Optical Asset Purchase Agreement (this "Agreement"), effective as
of September 1, 1997, is by and among CENTER OPTICAL, INC., a Florida
corporation (the "Company"), SEVER, XXXXXXXX & XXXXXXXX, M.D., P.A., a Florida
professional association (the "Practice"), XXXXX X. XXXXXXX, M.D. and XXXXXXX X.
XXXXX, M.D. (together, the "Shareholder"), and Vision Twenty-One, Inc., a
Florida corporation ("Vision 21").
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 an Optical Business (as defined
herein) through the Company.
B. Shareholder owns all of the issued and outstanding shares of capital
stock of the Company and a portion of the issued and outstanding shares of
capital stock of the Practice.
C. The Practice is a newly-formed professional association which shall
conduct an ophthalmology practice through its licensed ophthalmologists.
D. Vision 21 provides business management services and facilities for
eye care professionals and related businesses and has contemporaneously herewith
acquired all of the non-medical assets of the Practice.
E. The Company desires to sell, assign and transfer all of its Optical
Assets (as defined herein) to the Practice and all of its Non-optical Assets (as
defined herein) to Vision 21, and the Practice and Vision 21 desire to purchase,
assume and acquire such assets and assume certain liabilities of the Company in
exchange for capital stock of Vision 21 and other consideration, all as more
specifically provided herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
A G R E E M E N T
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.
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1.3. Accounts Receivable. The term "Accounts Receivable" shall have
the meaning set forth in Section 2.2(a).
1.4. Acquisition Proposal. The term "Acquisition Proposal" shall
have the meaning set forth in Section 3.29.
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. Assumed Contracts. The term "Assumed Contracts" shall have the
meaning set forth in Section 2.2(d).
1.9. Assumed Obligations. The term "Assumed Obligations" shall have
the meaning set forth in Section 2.4.
1.10. Audit. The term "Audit" shall have the meaning set forth in
Section 3.6.
1.11. 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.
1.12. 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 the Practice at the Closing.
1.13. Business Records. The term "Business Records" shall have the
meaning set forth in Section 2.2(f)
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1.14. Cash Compensation. The term "Cash Compensation" shall have the
meaning set forth in Section 3.8(a).
1.15. Claim Notice. The term "Claim Notice" shall have the meaning
set forth in Section 14.3(a).
1.16. Closing. The term "Closing" shall mean the consummation of the
transactions contemplated by this Agreement.
1.17. Closing Date. The term "Closing Date" shall mean September 15,
1997, or such other date as mutually agreed upon by the parties.
1.18. Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.19. Commitments. The term "Commitments" shall have the meaning set
forth in Section 3.12(a).
1.20. Common Stock. The term "Common Stock" or "Vision 21 Common
Stock" shall mean the common stock, par value $.001 per share, of Vision 21.
1.21. Company Balance Sheet. The term "Company Balance Sheet" shall
have the meaning set forth in Section 3.6.
1.22. Company Balance Sheet Date. The term "Company Balance Sheet
Date" shall have the meaning set forth in Section 3.6.
1.23. Compensation Plans. The term "Compensation Plans" shall have
the meaning set forth in Section 3.8(b).
1.24. Competing Optical Business. The term "Competing Optical
Business" shall have the meaning set forth in Section 16.1(b).
1.25. Competitor. The term "Competitor" shall mean any person or
entity which, individually or jointly with others, whether for its own account
or for that of any other person or entity, owns, or holds any ownership or
voting interest in any person or entity engaged in an Optical 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.
1.26. Controlled Group. The term "Controlled Group" shall have the
meaning set forth in Section 3.9(g).
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1.27. Corporation Law. The term "Corporation Law" shall mean the
statutes, regulations and laws governing business corporations and professional
associations in the State.
1.28. Damages. The term "Damages" shall have the meaning set forth
in Section 14.1.
1.29. Election Period. The term "Election Period" shall have the
meaning set forth in Section 14.3(a).
1.30. Employee Benefit Plans. The term "Employee Benefit Plans"
shall have the meaning set forth in Section 3.9(a).
1.31. Employee Policies and Procedures. The term "Employee Policies
and Procedures" shall have the meaning set forth in Section 3.8(d).
1.32. Employment Agreements. The term "Employment Agreements" shall
have the meaning set forth in Section 3.8(c).
1.33. Environmental Laws. The term "Environmental Laws" shall have
the meaning set forth in Section 3.24(a).
1.34. ERISA. The term "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
1.35. Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
1.36. Excluded Assets. The term "Excluded Assets" shall have the
meaning set forth in Section 2.3.
1.37. FBCA. The term "FBCA" shall mean the Florida Business
Corporation Act.
1.38. Financial Statements. The term "Financial Statements" shall
have the meaning set forth in Section 3.6.
1.39. GAAP. The term "GAAP" shall mean generally accepted accounting
principles, applied on a consistent basis with prior periods, set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity or other practices and procedures as may be approved by a
significant segment of the accounting profession, which are applicable to the
circumstances as of the date of the determination.
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1.40. Governmental Authority. The term "Governmental Authority"
shall mean any national, state, provincial, local or tribunal governmental,
judicial or administrative authority or agency.
1.41. Indemnified Party. The term "Indemnified Party" shall have the
meaning set forth in Section 14.3(a).
1.42. Indemnifying Party. The term "Indemnifying Party" shall have
the meaning set forth in Section 14.3(a).
1.43. Indemnity Notice. The term "Indemnity Notice" shall have the
meaning set forth in Section 14.3(d).
1.44. Insurance Policies. The term "Insurance Policies" shall have
the meaning set forth in Section 3.13.
1.45. IRS. The term "IRS" shall mean the Internal Revenue Service.
1.46. Lease Assignments. The term "Lease Assignments" shall have the
meaning set forth in Section 12.1(m).
1.47. Leased Property. The term "Leased Property" shall have the
meaning set forth in Section 2.2(c).
1.48. Material Adverse Effect. The term "Material Adverse Effect"
shall mean a material adverse effect on the Non-optical Assets and the Company's
business, operations, condition (financial or otherwise) or results of
operations, taken as a whole, considering all relevant facts and circumstances.
1.49. Non-optical Assets. The term "Non-optical Assets" shall mean
all of the assets of the Company except for the Optical Assets, as such assets
are more fully described in Section 2.2 and the Excluded Assets.
1.50. Optical Assets. The term "Optical Assets" shall mean the
Company's right, title and interest in those assets set forth on Schedule 1.50.
1.51. Optical Business. The term "Optical Business" shall mean the
sale of lenses, eyeglasses and other prescription and non-prescription eyewear.
1.52. Payors. The term "Payors" shall have the meaning set forth in
Section 3.28.
1.53. Permitted Encumbrances. The term "Permitted Encumbrances"
shall have the meaning set forth in Section 3.11(b).
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1.54. Personal Property Leases. The term "Personal Property Leases"
shall have the meaning set forth in Section 2.2(b).
1.55. Prepaid Items. The term "Prepaid Items" shall have the meaning
set forth in Section 2.2(l).
1.56. Proposed Purchase Price Adjustment. The term "Proposed
Purchase Price Adjustment" shall have the meaning set forth in Section 2.7(b).
1.57. Proprietary Rights. The term "Proprietary Rights" shall have
the meaning set forth in Section 3.14.
1.58. Public Offering. The term "Public Offering" shall mean any
underwritten public offering of Vision 21 Common Stock.
1.59. Purchase Price. The term "Purchase Price" shall mean the
consideration set forth in Section 2.5 of this Agreement.
1.60. Real Property Leases. The term "Real Property Leases" shall
have the meaning set forth in Section 2.2(c).
1.61. Registration Statement. The term "Registration Statement"
shall have the mean any S-1 Registration Statement filed by Vision 21 in
connection with a Public Offering.
1.62. 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.
1.63. SEC. The term "SEC" shall mean the Securities and Exchange
Commission.
1.64. Securities. The term "Securities" shall mean the shares of
Vision 21 Common Stock which are to be delivered to the Company under the terms
of this Agreement.
1.65. Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended.
1.66. State. The term "State" shall mean the state of incorporation
of the Company.
1.67. Tangible Personal Property. The term "Tangible Personal
Property" shall have the meaning set forth in Section 2.2(e).
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1.68. Tax Returns. The term "Tax Returns" shall have the meaning set
forth in Section 3.15(a).
1.69. Third Party Claim. The term "Third Party Claim" shall have the
meaning set forth in Section 14.3(a).
1.70. Transaction. The term "Transaction" shall mean the purchase
and sale of the Optical Assets and the Non-optical Assets and the assumption of
the Assumed Obligations pursuant to this Agreement.
1.71. Vision 21 Financial Statements. The term "Vision 21 Financial
Statements" shall have the meaning set forth in Section 5.9.
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ASSETS AND NON-OPTICAL ASSETS.
2.1. Purchase and Sale of Optical Assets. Subject to the terms and
conditions herein set forth, the Company agrees to sell, convey, assign,
transfer and deliver to the Practice, and the Practice agrees to purchase,
assume, accept and acquire, the Optical Assets owned by the Company as of the
Closing Date.
2.2. Purchase and Sale of Non-Optical Assets. Subject to the terms
and conditions herein set forth, and in reliance upon the representations and
warranties set forth herein, the Company agrees to sell, convey, assign,
transfer and deliver to Vision 21, and Vision 21 agrees to purchase, assume,
accept and acquire, the assets consisting of all the assets (other than the
Optical Assets specified in Section 2.1 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 "Non-Optical Assets"), including without
limitation the following (except to the extent that any of the following are
specifically enumerated as Excluded Assets in Section 2.3 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");
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 2.2(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
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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 2.2(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;
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 2.2(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 2.2(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 Non-optical Assets, a complete and correct list of which is set forth on
Schedule 2.1(g);
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 Non-optical 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); and
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l. All of the Company's prepaid expenses, prepaid insurance,
deposits and other similar items ("Prepaid Items").
If and to the extent the assignment of any personal property lease,
real property lease, contract, agreement, purchase order, work order,
commitment, license, permit, certificate or approval listed on the foregoing
Schedules shall require the consent of another party thereto, then (i) such
personal property lease, real property lease, contract, agreement, purchase
order, work order, commitment, license, permit, certificate or approval shall
constitute a Personal Property Lease, Real Property Lease, Assumed Contract or
License, as the case may be, only upon and subject to receipt of such consent;
(ii) such personal property lease, contract, agreement, purchase order, work
order, commitment, license, permit, certificate or approval shall not be a
Personal Property Lease, Real Property Lease, Assumed Contract or License, as
the case may be, if and for so long as the attempted assignment would constitute
a breach thereof; and (iii) the Company shall cooperate fully with Vision 21 (or
Vision 21's successor-in-interest) in seeking such consent or reasonable
arrangement designed to provide to Vision 21 (or such successor-in-interest) the
benefits, claim or rights arising thereunder.
2.3. Excluded Assets. The Company shall not sell, convey, assign,
transfer or deliver to Vision 21, and Vision 21 shall not be obligated to
purchase, accept or acquire (or make any payments or otherwise discharge any
liability or obligation of the Company with respect to), (a) life insurance
policies covering the life of any employee of the Company, (b) personal effects
listed on Schedule 2.3; 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").
2.4. Assumption of Obligations and Liabilities. At the Closing,
Vision 21 shall assume and agree to pay or perform, promptly as they become due,
only those obligations and liabilities of the Company expressly set forth on
Schedule 2.4 (the "Assumed Obligations"). Except for the Assumed Obligations,
Vision 21 shall not assume or be deemed to have assumed and shall not be
responsible for any other obligation or liability of the Company, direct or
indirect, known or unknown, absolute or contingent, including without limitation
(i) any and all obligations regarding any foreign, Federal, state or local
income, sales, use, franchise or other tax liabilities, (ii) any and all
obligations or liabilities relating to any fees or expenses of the Company's or
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, and (iii) any and all liabilities
relating to or arising from personal injuries relating to Optical Assets sold by
the Company to the Company's customers prior to the Closing Date.
2.5. 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 Non-optical Assets of the
Company to Vision 21, and the acceptance by Vision 21 of such Non-optical Assets
and the assumption of the Assumed Obligations of the Company by Vision 21,
Vision 21 shall deliver to the Company at the Closing
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the consideration (the "Purchase Price") set forth in Schedule 2.5A. The
Practice agrees that, subject to the terms and conditions of this Agreement, and
in full consideration of the aforesaid sale, transfer, conveyance, assignment
and delivery of the Optical Assets, the Practice shall deliver to the Company at
the Closing the consideration set forth in Schedule 2.5B.
2.6. 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.
2.7. 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.
2.8. Subsequent Actions. If, at any time after the Closing Date,
Vision 21 shall determine or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in Vision 21 its
right, title or interest in, to or under any of the rights, properties or assets
of the Company acquired or to be acquired by Vision 21 as a result of, or in
connection with, the Transaction, or otherwise to carry out this Agreement, the
officers and directors of Vision 21 shall, at the sole cost and expense of
Vision 21, be authorized to execute and deliver, in the name and on behalf of
the Company, such deeds, bills of sale, assignments and assurances, and to take
and do, in the name and on behalf of the Company, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
Vision 21 or otherwise to carry out this Agreement.
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2.9. Allocation of Purchase Price. The Purchase Price shall be
allocated among the Non-optical Assets and the Optical Assets as set forth on
Schedule 2.9. Each of Vision 21, the Company and the 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 2.9 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 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
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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 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 Statements. The Company has furnished to Vision 21
its unaudited balance sheet and related unaudited statements of income, retained
earnings and cash flows for its prior two (2) full fiscal years, and its
unaudited interim balance sheet for the fiscal period ended August 31, 1997 (the
"Company Balance Sheet," and the date thereof shall be referred to as the
"Company Balance Sheet Date"), and related unaudited statements of income,
retained earnings and cash flows for the period then ended (all collectively,
with the related notes thereto, the "Financial Statements"). The Financial
Statements fairly present the financial condition and results of operations of
the Company as of the dates and for the periods indicated except as otherwise
indicated in the Financial Statements. The Company and the 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 Financial Statements reflect all liabilities of the Company, accrued,
contingent or otherwise that would be required to be reflected thereon, or in
the notes thereto, prepared in accordance with GAAP, except for liabilities and
obligations incurred in the ordinary course of business since the Company
Balance Sheet Date. Except as set forth in the Financial Statements or on
Schedule 3.7, the Company is not liable upon or with respect to, or obligated in
any other way to provide funds in respect of or to guarantee or assume in any
manner, any debt, obligation or dividend of any person, corporation,
association, partnership, joint venture, trust or other entity, and the Company
does not know of any valid basis for the assertion of any other claims or
liabilities of any nature or in any amount.
3.8. Employee Matters.
a. Cash Compensation. Schedule 3.8(a) contains a complete and
accurate list of the names, titles and annual cash compensation as of the
Closing Date, including without limitation wages, salaries, bonuses
(discretionary and formula) and other cash
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compensation (the "Cash Compensation") of all employees of the Company. In
addition, Schedule 3.8(a) contains a complete and accurate description of (i)
all increases in Cash Compensation of employees of the Company during the
current fiscal year and the immediately preceding fiscal year and (ii) any
promised increases in Cash Compensation of employees of the Company that have
not yet been effected.
b. Compensation Plans. Schedule 3.8(b) contains a complete
and accurate list of all compensation plans, arrangements or practices (the
"Compensation Plans") sponsored by the Company or to which the Company
contributes on behalf of its employees, other than Employment Agreements listed
on Schedule 3.8(c) and Employee Benefit 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
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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 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
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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.
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. 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.
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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 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 by this Agreement, since the Company Balance Sheet Date,
the Company has not:
a. suffered a Material Adverse Effect, whether or not caused
by any deliberate act or omission of the Company or the 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);
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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;
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
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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.
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 Non-optical Assets. The personal
property constituting the Non-optical Assets constitute the only personal
property necessary for the conduct of the Company's business (except for the
Optical Assets). Upon consummation of the transactions contemplated hereby, such
interest in the Non-optical 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 Non-optical 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;
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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;
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 with Payors and contracts to provide optical
services and products; or
xii) 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.
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b. No Cancellation or Termination of Commitment. Except as
disclosed pursuant to this Agreement or contemplated hereby and except where
such default would not have a Material Adverse Effect on the Optical Business,
(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 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 Non-optical
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 Non-optical 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
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or processes generally available to other organizations engaged in an Optical
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 upon
consummation of the transactions contemplated hereby and the Proprietary Rights
are freely transferable. No claim has been asserted by any person to the
ownership of or for infringement by the Company of the proprietary right of any
other person, and the Company does not know of any valid basis for any such
claim. To the best knowledge of the Company and the 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.
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d. No Extension of Limitation Period. The Company has not
granted an extension to any taxing authority of the limitation period during
which any tax liability may be assessed or collected.
e. All Withholding Requirements Satisfied. All monies
required to be withheld by the Company and paid to governmental agencies for all
income, social security, unemployment insurance, sales, excise, use, and other
taxes have been collected or withheld and paid to the respective governmental
agencies.
f. Foreign Person. Neither the Company nor the 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 Non-optical Assets or the operation, business, condition (financial
or otherwise), or results of operations of the Company which (i) if successful
could, individually or in the aggregate, have a Material Adverse Effect or (ii)
could adversely affect the ability of the Company or the Shareholder to effect
the transactions contemplated
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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 Non-optical Assets, the Company or to its business, assets,
operations or employees or (b) in default with respect to any such order,
judgment, writ, injunction or decree. The Company has no knowledge of any valid
basis for any such action, proceeding or investigation. Except as set forth on
Schedule 3.18, all medical malpractice claims asserted, general liability
incidents and incident reports have been submitted to the Company's insurer
therefor. All claims made or threatened against the Company in excess of its
deductible are covered under its Insurance Policies.
3.19. Condition of Fixed Assets. All of the fixtures, structures
and equipment reflected in the Financial Statements and used by the Company in
its business, are in good condition and repair, subject to normal wear and tear,
and conform in all material respects with all applicable ordinances, regulations
and other laws, and the Company has no actual knowledge of any latent defects
therein.
3.20. Distributions and Repurchases. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since the Company Balance Sheet Date. No repurchase of any of the
Company's capital stock has been approved, effected or is pending, or is
contemplated by the Board of Directors of the Company.
3.21. Banking Relations. Set forth on Schedule 3.21 is a complete
and accurate list of all borrowing and investing arrangements that the Company
has with any bank or other financial institution, indicating with respect to
each relationship the type of arrangement maintained (such as checking account,
borrowing arrangements, safe deposit box, etc.) and the person or persons
authorized in respect thereof.
3.22. Ownership Interests of Interested Persons; Affiliations.
Except as set forth on Schedule 3.22, no officer, supervisory employee or
director of the Company, or their respective spouses, children or Affiliates,
owns directly or indirectly, on an individual or joint basis, any interest in,
has a compensation or other financial arrangement with, or serves as an officer
or director of, any customer or supplier of the Company or any organization that
has a material contract or arrangement with the Company. Except as may be
disclosed pursuant to this Agreement, neither the Company, nor any of its
directors, officers, employees or consultants, nor any Affiliate of such person
is, or within the last three (3) years was, a party to any contract, lease,
agreement or arrangement, including, but not limited to, any joint venture or
consulting agreement with any physician, hospital, pharmacy, home health agency,
organization engaged in an Optical 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.
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3.24. Environmental Matters.
a. Environmental Laws. To the best knowledge of the Company
and the Shareholder, neither the Company nor any of the Non-optical Assets
(including the leased real property described on Schedule 3.11(c)) are currently
in violation of, or subject to any existing, pending or, to the actual knowledge
of the Company threatened, investigation or inquiry by any governmental
authority or to any remedial obligations under, any federal, state or local laws
or regulations pertaining to health or the environment ("Environmental Laws"),
except for any such violations, investigations or inquiries that would not,
individually or in the aggregate, result in a Material Adverse Effect.
b. Permits. The Company is not required to obtain, and has no
knowledge of any reason Vision 21 will be required to obtain, any permits,
licenses or similar authorizations to occupy, operate or use any buildings,
improvements, fixtures and equipment owned or leased by the Company by reason of
any Environmental Laws.
c. Superfund List. To the best knowledge of the Company, none
of the Non-optical 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. Medicare and Medicaid Programs. The Company is qualified for
participation in the Medicare and Medicaid programs and is party to agreements
for such programs which are in full force and effect with no events of default
having occurred thereunder. The Company has timely filed all claims or other
reports required to be filed prior to the Closing Date with respect to the
purchase of services by third-party payors ("Payors"), including but not limited
to Medicare and Medicaid programs, except where the failure to file would not,
individually or in the aggregate, result in a Material Adverse Effect. All such
claims or reports are complete and accurate in all material respects. The
Company 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 Payor with respect thereto, except
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as has been reserved for in the Company Balance Sheet. There are no pending
appeals, overpayment determinations, adjustments, challenges, audits,
litigation, or notices of intent to reopen Medicare and/or Medicaid claims
determinations or other reports required to be filed by the Company in order to
be paid by a Payor for optical services rendered or optical products sold.
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 optical services
and sell optical products, and failure to provide quality care or products.
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 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 customer for designated optical services (as
defined in 42 U.S.C. ss.1395nn) to or providing designated optical services to a
customer 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.
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3.28. Payors. Schedule 3.28 sets forth a true, correct and complete
list of the names and addresses of each payor of the Company's services (the
"Payors") 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 Payors and none of such Payors has notified
the Company that it intends to discontinue its relationship with the Company or
to deny any claims submitted to such Payor for payment.
3.29. 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 "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. Consistent Treatment of Expenses. The Company has, in
presenting information concerning the Company's and the Practice's expenses to
Vision 21 for the purpose of determining the Company's value, separated out
those expenses which shall be borne by the Practice in a manner which is
consistent with the treatment of expenses which shall be the responsibility of
the Practice pursuant to the Business Management Agreement.
3.31. Accounts Receivable/Payable. The Accounts Receivable of the
Company relating to the ownership and operation of the Practice reflected on the
Company Balance Sheet, to the extent uncollected on the date hereof, are, and
the accounts receivable of the Company relating to the ownership and operation
of the Practice to be reflected on the books of the Company on the Closing Date
will be, valid, existing and collectible within six months from the Closing Date
(taking into consideration the allowance for doubtful accounts set forth in the
Financial Statements) using reasonably diligent collection methods taking into
account the size and nature of the receivable, and represent amounts due for
goods sold and delivered or services performed. There are not, and on the date
of Closing there will not be, any refunds, discounts, set-offs, defenses,
counterclaims or other adjustments payable or assessable with respect to the
Accounts Receivable. The Company has collected Accounts Receivable only in the
ordinary course and has not changed collection procedures or methods nor
accelerated the pace of such collection efforts in anticipation of the
transactions contemplated in this Agreement. The Company has paid accounts
payable in the ordinary course and has not changed payment procedures or methods
nor delayed the timing of such payments in anticipation of the transactions
contemplated in this Agreement.
3.32. Projections. There is no fact, development or threatened
development with respect to the markets, products, services, clients, patients,
facilities, personnel, vendors,
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suppliers, operations, assets or prospects of the Company which are known to the
Company or the Shareholder which would materially adversely affect the projected
fiscal year 1997 earnings of the Company or the Practice disclosed to Vision 21
by Shareholder, other than such conditions as may affect as a whole the economy
or the optical industry generally.
3.33. Tangible Personal Property. Except as set forth on Schedule
3.33, 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 Practice.
3.34. Leases. With respect to each of the Real Property Leases and
Personal Property Leases, except as set forth on Schedule 3.34:
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;
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.
3.35. Contract Rights. Except as set forth on Schedule 3.35, 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.
3.36. Prepaid Items. Except as set forth in Schedule 3.36, each of
the Prepaid Items may be transferred to Vision 21 without the necessity of
obtaining any consent or approval.
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3.37. Completeness of Assets. The Non-optical Assets together with
the Optical Assets, include all the properties used to conduct the business of
the Company as presently conducted.
3.38. 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 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 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, 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
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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 engaged in an
Optical 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. Vision 21 represents
and warrants 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 is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida, with all requisite corporation power and authority to carry on
the business in which it is engaged, to own the properties it owns, to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. Vision 21 is 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
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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 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,
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, since its formation.
5.4. Authorization and Validity. The execution, delivery and
performance by Vision 21 of this Agreement and the other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by Vision 21. This Agreement and each other
agreement contemplated hereby to be executed by Vision 21 have been or will be
as of the Closing Date duly executed and delivered by Vision 21 and constitute
or will constitute legal, valid and binding obligations of Vision 21,
enforceable against Vision 21 in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
5.5. Compliance. The execution and delivery of the documents
contemplated hereunder and the consummation of the transactions contemplated
thereby by Vision 21 shall not (i) violate any provision of Vision 21's
organizational documents, (ii) violate any material provision of or result in
the breach of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any material obligation under, any mortgage,
lien, lease, contract, license, instrument or any other agreement to which
Vision 21 is a party, (iii) result in the creation or imposition of any material
lien, charge, pledge, security interest or other material encumbrance upon any
property of Vision 21 or (iv) violate or conflict with any order, award,
judgment or decree or other material restriction or to the best of Vision 21's
knowledge violate or conflict with any law, ordinance or regulation to which
Vision 21 or its property is subject.
5.6. Consents. No consent, approval, order or authorization of or
registration, declaration, or filing with, any Governmental Authority or other
person is required in connection with the execution and delivery of the
documents contemplated herein by Vision 21 or the consummation by such party of
the transactions contemplated thereby, except for those consents or approvals
set forth on Schedule 5.6.
5.7. Finder's Fee. Except as disclosed on Schedule 5.7, Vision 21
has not incurred any obligation for any finder's, broker's or agent's fee in
connection with the transactions contemplated hereby.
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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 any
other way to provide funds in respect of or to guarantee or assume in any
manner, any debt, obligation or dividend of any person, corporation,
association, partnership, joint venture, trust or other entity, and Vision 21
does not know of any valid basis for the assertion of any other claims or
liabilities of any nature or in any amount.
5.11. Compliance with Laws. Vision 21 has not failed to comply with
any applicable laws, regulations and licensing requirements or failed to file
with the proper authorities any necessary statements and reports except where
the failure to so comply or file would not, individually or in the aggregate,
have a material adverse effect on the Transaction. There are no existing
violations by Vision 21 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 possesses all necessary licenses, franchises, permits and
governmental authorizations for the conduct of Vision 21's business as now
conducted and after the Closing, as contemplated in this Agreement, except for
such licenses, franchises, permits or governmental authorizations which, if not
possessed by Vision 21, would not have a material adverse effect on the business
of Vision 21. 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, Vision 21 has not received any notice from
any federal, state
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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 on the Transaction.
5.12. Insolvency Proceedings. Vision 21 is not currently under the
jurisdiction of a Federal or state court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code.
5.13. Employment of Company's Employees. Vision 21 does not
currently intend to change the existing composition or employment terms of any
of the non-professional personnel which have employment arrangements with the
Company on the effective date of this Agreement (except as is necessary for
Vision 21 to employ such individuals pursuant to the Business Management
Agreement). Vision 21 reserves the right, however, to change the number,
composition or employment terms of such non-professional personnel in the
future.
6. SECURITIES LAW MATTERS.
6.1. Investment Representations and Covenants of 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:
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"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 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
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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.
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, THE SHAREHOLDER AND THE PRACTICE. The
Company, the Shareholder, and the Practice, jointly and severally, agree that
between the date hereof and the Closing (with respect to the Company's and the
Practice's covenants, the Shareholder agrees to use his best efforts to cause
the Company and the Practice to perform):
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7.1. Consummation of Agreement. The Company, the Shareholder and
the Practice 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, the
Shareholder or the Practice 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. None of the Company, the
Shareholder or the Practice 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
and information with respect to the affairs of the Company, including, without
limitation, the Financial Statements, as Vision 21 and its representatives may
request, all for the sole purpose of permitting Vision 21 to become familiar
with the business and assets and liabilities of the Company.
7.4. Notification of Certain Matters. The Company, the Shareholder
and the Practice 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, the
Shareholder or the Practice 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, the Shareholder and the Practice shall secure all
necessary approvals and consents of landlords with respect to the real property
described on Schedule 2.2(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, the Shareholder or the Practice 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:
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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;
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
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business since the Company Balance Sheet Date and, in either case (i) or (ii)
above, only as required by the express terms of the agreement or other
instrument pursuant to which the liability or obligation was incurred.
7.9. Mortgages, Liens and Guaranties. The Company shall not,
without the prior written approval of Vision 21, enter into or assume any
mortgage, pledge, conditional sale or other title retention agreement, permit
any security interest, lien, encumbrance or claim 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, the Shareholder and the
Practice agree that from the date of this Agreement through the earlier of the
Closing Date or November 30, 1997, (a) none of the Shareholder, the Practice or
the Company nor any of their respective officers and directors shall, and the
Shareholder, the Practice and the Company shall direct and use their best
efforts to cause the Company's and the Practice's respective 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, the Practice and the
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and each will take the necessary steps to
inform the individuals or entities referred to in the first sentence hereof of
the obligations undertaken in this Section 7.10; and (c) the Shareholder, the
Practice 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, the Practice 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 to 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, the
Practice 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
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may be practical. Effective at the Closing Date, the Company shall cause the
Practice to assume all of the obligations of the Company as the sponsoring
employer and/or plan administrator of the Retirement Plan in compliance with
applicable law. Effective at the time of Closing, the Practice shall assume all
of the obligations of the Company as the sponsoring employer and/or plan
administrator of the Retirement Plan in compliance with applicable law.
Subsequent to Closing, the Company and Vision 21 shall review the
extent to which the Practice 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 Practice under Section 414(n) of the Code. If
Vision 21 and the Practice mutually agree that such qualification requirements
can be satisfied, the Practice may elect to continue the Retirement Plan and
make contributions in accordance with its terms, provided that the Practice
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, the Practice and the
Shareholder shall deliver to Vision 21 all Schedules required to be delivered by
them prior to the Closing.
8. COVENANTS OF VISION 21. Vision 21 agrees that between the date
hereof and the Closing:
8.1. Consummation of Agreement. Vision 21 shall use its best
efforts to cause the consummation of the transactions contemplated hereby in
accordance with their terms and conditions and take all corporate and other
actions necessary to approve the Transaction; provided, however, that this
covenant shall not require Vision 21 to make any expenditures that are not
expressly set forth in this Agreement or otherwise contemplated herein.
8.2. Notification of Certain Matters. Vision 21 shall promptly
inform the Company and the 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 subsequent to the date of
this Agreement and prior to the Closing Date under any agreement or commitment
entered into by Vision 21 material to Vision 21's condition (financial or
otherwise), operations, assets, liabilities or business and to which it is
subject; or (b) any material adverse change in Vision 21's condition (financial
or otherwise), operations, assets, liabilities or business.
8.3. Licenses and Permits. Vision 21 shall use its best efforts to
obtain all licenses, permits, approvals or other authorizations required under
any law, statute, rule, regulation or ordinance, or otherwise necessary or
desirable to consummate the Transaction and to conduct the intended business of
Vision 21.
8.4. Release of Shareholder From Company Liabilities. Vision 21
shall use its best efforts to obtain from third party creditors the release of
Shareholder from any personal
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liabilities relating to the Company which are identified on Schedule 8.4 and
assumed by Vision 21 pursuant to the terms of this Agreement.
8.5. Approvals of Third Parties. Vision 21 shall use its 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 COMPANY, the Practice AND THE
SHAREHOLDER. Vision 21, the Company, the Practice 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 Non-optical 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 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
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 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
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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 and Vision 21 shall
pay the costs and expenses of their own legal counsel with respect to legal
services rendered in connection with the preparation and negotiation of this
Agreement and the transactions contemplated hereby.
d. 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).
10. CONDITIONS PRECEDENT OF VISION 21. Except as may be waived in
writing by Vision 21, the obligations of Vision 21 hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following conditions
precedent:
10.1. Representations and Warranties. The representations and
warranties of the Company, the Practice 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, the Practice 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, the
Practice 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 Company Balance Sheet Date, whether
or not such change shall have been caused by the deliberate act or omission of
the Company, the Practice or the Shareholder.
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10.6. Government Approvals and Required Consents. The Company, the
Practice, the Shareholder and Vision 21 shall have obtained all necessary
government and other third-party approvals and consents (other than consents
technically required as a result of the transactions contemplated hereby under
the terms of managed care contracts to which the Company or any of its employees
are a party).
10.7. Closing Deliveries. Vision 21 shall have received all
documents and agreements, duly executed and delivered in form reasonably
satisfactory to Vision 21, referred to in Section 12.1.
10.8. Due Diligence. Vision 21 shall have completed to its
satisfaction a due diligence review of the Company, the Practice and the
Shareholder.
10.9. Financial Audit. Vision 21 shall have approved in Vision
21's sole discretion an audit of the Company and the Practice which audit shall
have been performed by an accounting firm designated by Vision 21.
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.
10.11. Exemption Under State Securities Laws. The transfer of
Vision 21's Securities to the Company 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, THE PRACTICE AND THE
SHAREHOLDER. Except as may be waived in writing by the Company, the Practice and
the Shareholder, the obligations of the Company, the Practice 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 contained herein shall be true and correct in all
respects when initially made and shall be true and correct in all material
respects as of the Closing Date.
11.2. Covenants. Vision 21 shall have performed and complied in all
material respects with all covenants and conditions required by this Agreement
to be performed and complied with by it prior to the Closing Date.
11.3. [RESERVED]
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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
Practice, the Shareholder and Vision 21 shall have obtained all necessary
government and other third-party approvals and consents (other than consents
technically required as a result of the transactions contemplated hereby under
the terms of managed care contracts to which the Company or any of its employees
are a party).
11.6. Closing Deliveries. The Company, the Practice and the
Shareholder shall have received all documents, instruments and agreements, duly
executed and delivered in form reasonably satisfactory to the Company and the
Practice, referred to in Section 12.2.
11.7. No Change in Voting or Ownership Control. There shall have
been no changes in the voting or ownership control of Vision 21 from the date
first above written to the Closing Date.
11.8. No Material Adverse Change. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities or business
of Vision 21 shall have occurred since the end of the last fiscal period
reported in the Vision 21 Financial Statements, whether or not such change shall
have been caused by the deliberate act or omission of Vision 21.
12. CLOSING DELIVERIES; ESCROW OF DOCUMENTS.
12.1. Deliveries of the Company, the Practice and the Shareholder.
At or prior to September 30, 1997, the Company, the Practice and the Shareholder
shall deliver to Vision 21, c/x Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to
Vision 21, the following, all of which shall be in a form reasonably
satisfactory to Vision 21 and shall be held by Xxxxxxxx, Loop & Xxxxxxxx, LLP in
escrow pending Closing, pursuant to an escrow agreement or letter in form and
substance mutually acceptable to the parties hereto:
a. copies of resolutions of the Boards of Directors of the
Company and the Practice 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 Secretaries of the Company and
the Practice 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, the
President of the Practice, and of the Shareholder, dated the Closing Date, as to
the truth and correctness of the representations and warranties of the Company,
the Practice and the Shareholder contained herein, on and as of the Closing
Date;
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c. a certificate of the President of the Company, the
President of the Practice, and of the Shareholder, dated the Closing Date, (i)
as to the performance of and compliance in all material respects by the Company,
the Practice 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, the Practice and the Shareholder to the Closing have been satisfied;
d. a certificate of the Secretaries of the Company and the
Practice certifying as to the incumbency of the directors and officers of each
such corporation and as to the signatures of such directors and officers who
have executed documents delivered pursuant to the Agreement on behalf of each
such corporation;
e. a certificate, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of the state of incorporation for the
Company and the Practice establishing that each of the Company and the Practice
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. [RESERVED];
g. such appropriate documents of transfer, including bills of
sale, endorsements, assignments, drafts, checks or other instruments, as to all
of the Non-optical Assets and Optical 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
Non-optical 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 2.2(c) (the "Lease Assignments"), or if desired by Vision
21, a new lease or leases between the landlords under such leases and Vision 21
in form and substance reasonably satisfactory to Vision 21; and
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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 shall deliver to the Company, the Practice and the Shareholder, c/x
Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to Vision 21, the following, all of
which shall be in a form reasonably satisfactory to the Company, the Practice
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. a copy of the resolutions of the Board of Directors of
Vision 21 authorizing (i) the execution, delivery and performance of this
Agreement, and all related documents and agreements, and (ii) the consummation
of the Transaction, certified by Vision 21's Secretary as being true and correct
copies of the originals thereof subject to no modifications or amendments;
b. a certificate of an officer of Vision 21 dated the Closing
Date as to the truth and correctness of the representations and warranties of
Vision 21 contained herein, on and as of the Closing Date;
c. a certificate of an officer of Vision 21 dated the Closing
Date, (i) as to the performance and compliance of Vision 21 with all covenants
contained herein on and as of the Closing Date, and (ii) certifying that all
conditions precedent of Vision 21 to the Closing have been satisfied;
d. a certificate, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of the State of Florida establishing
that Vision 21 is in existence, has paid all franchise or similar taxes, if any,
and, if applicable, otherwise is in good standing to transact business in such
state;
e. the executed Lease Assignments;
f. the Purchase Price; and
g. such other instrument or instruments of transfer, prepared
by the Company, the Practice or the Shareholder as shall be necessary or
appropriate, as the Company, the Practice 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
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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 Shareholder, the Practice 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 Shareholder, the Practice 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, the Practice and the Company shall deliver any further instruments
of transfer and take all reasonable action as may be necessary or appropriate to
carry out the purpose and intent of this Agreement.
13.2. Access to Books and Records. From and after the Closing Date,
at the request of any party hereto, each of the 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, the Practice and Shareholder.
Subject to the terms and conditions of this Agreement, the Company, the Practice
and the Shareholder, jointly and severally, agree to indemnify, defend and hold
Vision 21 and its 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 the Practice) arising out of or resulting from:
a. a breach of any representation, warranty or covenant of
the Company, the Practice or the Shareholder contained herein or in any schedule
or certificate delivered hereunder;
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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, the
Practice or the Company (including its subsidiaries, if any), and provided to
Vision 21 or its counsel by the Company, the Practice 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, the Practice 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, the Practice 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;
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. Subject to the terms and
conditions of this Agreement, Vision 21 hereby agrees to indemnify, defend and
hold the Company, the Practice 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 of any representation, warranty or
covenant of Vision 21 contained therein or in any schedule or certificate
delivered hereunder;
b. any liability under the Securities Act, the Exchange Act
or any other federal or state "Blue Sky" or securities law or regulation, at
common law or otherwise, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact relating to Vision 21, contained in
any preliminary prospectus, Registration Statement or any prospectus forming a
part thereof, or any amendment thereof or supplement thereto, arising out of or
based upon any omission or alleged omission to state therein a material fact
relating to Vision 21 (including its subsidiaries), required to be stated
therein or necessary to make the statements therein not misleading; and
c. any filings, reports or disclosures made pursuant to the
IRS Voluntary Compliance Resolution Program, if applicable.
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Notwithstanding anything in this Section 14.2, Vision 21 shall not be
liable for any Damages resulting from any matter not disclosed to Vision 21 by
any of the third parties 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 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
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against the person asserting the Third Party Claim or any cross-complaint
against any person. The Indemnified Party may participate in, but not control,
any defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to Section 14.3(b) and shall bear its own costs and
expenses with respect to such participation; provided, however, that if the
named parties to any such action (including any impleaded parties) include both
the Indemnifying Party and the Indemnified Party, and the Indemnified Party has
been advised by counsel that there may be one or more legal defenses available
to it that are different from or additional to those available to the
Indemnifying Party, then the Indemnified Party may employ separate counsel at
the expense of the Indemnifying Party, and upon written notification thereof,
the Indemnifying Party shall not have the right to assume the defense of such
action on behalf of the Indemnified Party; provided further that the
Indemnifying Party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Indemnified Party, which firm shall be designated in writing by the
Indemnified Party.
c. If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to defend
the Indemnified Party pursuant to Section 14.3(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 14.3(b) but fails
diligently and promptly to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings, provided, however, that
the Indemnified Party may not enter into, without the Indemnifying Party's
consent, which shall not be unreasonably withheld, any compromise or settlement
of such Third Party Claim. Notwithstanding the foregoing, if the Indemnifying
Party has delivered a written 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.
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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 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 pursuant to
Section 14.1 unless, and to the extent that,
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the aggregate amount of Damages incurred by Vision 21 shall exceed an amount
equal to two percent (2%) of the total Purchase Price; and (c) the Shareholder
shall not be required to indemnify Vision 21 with respect to a breach of a
representation, warranty or covenant for Damages in excess of the aggregate
Purchase Price received by the Shareholder (other than pursuant to a requirement
to indemnify Vision 21 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 hereunder, subject to
Vision 21's approval as set forth below, the Shareholder may satisfy such
obligation by transferring to Vision 21 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 hereunder) equal to the indemnification obligation, provided that each
of the following conditions are satisfied:
a. The Shareholder shall transfer to Vision 21 good, valid
and marketable title to the shares of Vision 21 Common Stock, free and clear of
all adverse claims, security interests, liens, claims, proxies, options,
stockholders' agreements and encumbrances;
b. The 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; 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.
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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, the Practice or the Shareholder
contained in this Agreement or in any certificate or other document executed and
delivered by the Company, the Practice or the Shareholder pursuant to this
Agreement is or becomes untrue or breached in any material respect or if the
Company, the Practice 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 or
the Practice if any representation or warranty of Vision 21 contained in this
Agreement is or becomes untrue in any material respect or if Vision 21 fails to
comply in any material respect with any covenant or agreement contained herein,
and any such misrepresentation, noncompliance or breach is not cured, waived or
eliminated within twenty (20) days after receipt or written notice thereof;
d. at any time prior to the Closing Date by the Company or
the Practice 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, the Practice and the Shareholder for all
reasonable attorneys' and accountants' fees incurred by the Company, the
Practice and the Shareholder in connection with this Agreement; provided that
Vision 21 shall only reimburse the Company, the Practice 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.
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15.2. Effect of Termination. In the event this Agreement is
terminated pursuant to Section 15.1, Vision 21, the Practice, 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, the Practice and Company Non-Competition
Covenant.
a. The Shareholder, the Practice and the Company recognize
that the covenants of the Shareholder, the Practice 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, the Practice and the Company to comply with such
covenants, Vision 21 would not have entered into this Agreement. The
Shareholder, the Practice and the Company acknowledge and agree that the
Shareholder's, the Practice's and the Company's covenants not to compete are
necessary to ensure the continuation of Vision 21's Optical Business and are
necessary to protect the reputation of Vision 21, and that irreparable and
irrevocable harm and damage will be done to Vision 21 if the Shareholder, the
Practice or the Company compete with the Optical Business or Vision 21. The
Shareholder, the Practice and the Company accordingly agree that for the periods
set forth in the Business Management Agreement the Shareholder, the Practice 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, the Practice's or the
Company's own benefit or for the benefit of any other person or entity knowingly
(A) hire, attempt to hire, contact or solicit with respect to hiring any
employee of Vision 21 (or of any of its direct or indirect subsidiaries) or (B)
induce or otherwise counsel, advise or encourage any employee of Vision 21 (or
of any of its direct or indirect subsidiaries) to leave the employment of Vision
21;
ii) act or serve, directly or indirectly, as a principal,
agent, independent contractor, consultant, director, officer, employee, employer
or advisor or in any other position or capacity with or for, or acquire a direct
or indirect ownership interest in or otherwise conduct (whether as stockholder,
partner, investor, joint venturer, or as owner of any other type of interest),
any Competing Optical Business as such term is defined herein; provided,
however, that this clause (ii) shall not prohibit the Shareholder, the Practice
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,
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partner or in any other individual or representative capacity whatsoever, either
for the Shareholder's, the Practice'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 Optical Business.
b. For the purposes of this Section 16.1, the term "Competing
Optical 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 Optical
Business within the State, or (B) provides or sells a service which is the same
or substantially similar to, or otherwise competitive with the services provided
by Vision 21's Optical Business within the State; provided, however, that
"Competing Optical Business" shall not include Vision 21, or the Shareholder's
conduct of an Optical Business within the Practice.
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, the Practice or the Company hereunder, and only
in such event, then the Shareholder, the Practice the Company and Vision 21
consent and agree to such limitation on scope, duration or territory as may be
finally adjudicated as enforceable by a court of competent jurisdiction after
the exhaustion of all appeals.
d. This covenant shall be construed as an agreement ancillary
to the other provisions of this Agreement, and the existence of any claim or
cause of action of the Shareholder, the Practice or the Company against Vision
21, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Vision 21 of this covenant; provided, however,
that the Shareholder, the Practice 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 for breach
of this covenant, the Shareholder, the Practice and the Company agree that
injunctive or other equitable relief will be available to enforce the covenants
of this provision. The Shareholder, the Practice, the Company and Vision 21
further expressly acknowledge that the damages that would result from a
violation of this non-competition covenant would be impossible to predict with
any degree of certainty, and agree that liquidated damages in the amount of the
aggregate consideration received by the Company pursuant to this Agreement is
reasonable in light of the severe harm to the Optical Business and Vision 21
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
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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, the Practice and Company Confidentiality
Covenant. From the date hereof, the Shareholder, the Practice 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 the Practice, if any, or disclose to any third party,
any material information of Vision 21, the Practice or the Company, as
appropriate (whether written or oral), including any business management or
economic studies, patient lists, proprietary forms, proprietary business or
management methods, marketing data, fee schedules, or trade secrets of Vision 21
or of the Company, as applicable, and including the terms and provisions of this
Agreement and any transaction or document executed by the parties pursuant to
this Agreement. Notwithstanding the foregoing, the Shareholder, the Practice and
the Company may disclose information that the Shareholder, the Practice or the
Company can establish (a) is or becomes generally available to and known by the
public or optical community (other than as a result of an unpermitted disclosure
directly or indirectly by the Shareholder, the Practice or the Company or their
respective Affiliates, advisors, or representatives); (b) is or becomes
available to the Shareholder, the Practice or the Company on a nonconfidential
basis from a source other than Vision 21 or its Affiliates, advisors or
representatives, provided that such source is not and was not bound by a
confidentiality agreement with or other obligation of secrecy to Vision 21 or
its Affiliates, advisors or representatives of which the Shareholder, the
Practice or the Company has knowledge; or (c) has already been or is hereafter
independently acquired or developed by the Shareholder, the Practice or the
Company without violating any confidentiality agreement with or other obligation
of secrecy to Vision 21, the Company or their respective Affiliates, advisors or
representatives. Without limiting the other possible remedies to Vision 21 for
the breach of this covenant, the Shareholder, the Practice and the Company agree
that injunctive or other equitable relief shall be available to enforce this
covenant. The Shareholder, the Practice 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,
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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, the Practice 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 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 addressed to:
Vision Twenty-One, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Chief Financial Officer
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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. Xxxxx, Esquire
If to the Company, the Practice and the Shareholder addressed to:
Center Optical, Inc.
00000 Xxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, M.D.
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
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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 and regulation of the Optical Business, 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 Non-optical Asset by Vision 21
violates any Applicable Law, then the parties hereto agree as follows: (a) the
provisions of this Section 18.8 shall govern and control; (b) if none of the
parties hereto are materially economically disadvantaged, then any Non-optical
Asset, the ownership of which violates any Applicable Law, shall be deemed to
have never been owned by Vision 21; (c) if one or more of the parties hereto is
materially economically disadvantaged, then the parties hereto agree to
negotiate in good faith such changes to the structure and terms of the
transactions provided for in this Agreement as may be necessary to make these
transactions, as restructured, lawful under applicable laws and regulations,
without materially disadvantaging either party; (d) this Agreement shall be
deemed 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 shall have the right to assign this
Agreement, at any time, to any Affiliate or direct or indirect wholly-owned
subsidiary. In the event of such assignment, Vision 21 shall remain liable
hereunder.
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, 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
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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 the Shareholder
shall have no rights as a stockholder with respect to any shares of Common Stock
until the issuance of a stock certificate evidencing such shares. Except as
otherwise provided in the Agreement, no adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to such date
any stock certificate is issued.
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 Non-optical Assets of the Company can be
better achieved through a different form of transaction without economic injury
to the Company, the Practice or the Shareholder, or delay of the consummation of
the transaction, the Company, the Practice 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, New P.c. and the Shareholder at Closing for all reasonable additional
expenses incurred by the Company, the Practice and the Shareholder as a result
of such change in form.
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[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"
CENTER OPTICAL, INC.
By:
-------------------------------- ----------------------------------
Witness , M.D., President
-----------------
--------------------------------
Witness
"PRACTICE"
SEVER, XXXXXXXX &
XXXXXXX, M.D., P.A.
By:
-------------------------------- ----------------------------------
Witness , M.D., President
-----------------
--------------------------------
Witness
"SHAREHOLDER"
-------------------------------- -------------------------------------
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
61
