AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AMONG
VISION TWENTY-ONE, INC.,
OC ACQUISITION CORP.
AND
OPTICARE HEALTH SYSTEMS, INC.
DATED AS OF FEBRUARY 10, 2000
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS..............................................................................................2
SECTION 1.01 Certain Defined Terms......................................................................2
ARTICLE II
THE MERGER...............................................................................................8
SECTION 2.01 The Merger.................................................................................8
SECTION 2.02 Closing....................................................................................9
SECTION 2.03 Effective Time.............................................................................9
SECTION 2.04 Effect of the Merger.......................................................................9
SECTION 2.05 Articles of Incorporation; Bylaws; Directors and Officers of Surviving Corporation.........9
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES......................................................10
SECTION 3.01 Conversion of Shares......................................................................10
SECTION 3.02 Exchange of Shares Other than Treasury Shares.............................................11
SECTION 3.03 Stock Transfer Books......................................................................13
SECTION 3.04 No Fractional Share Certificates..........................................................14
SECTION 3.05 Options to Purchase Company Common Stock..................................................14
SECTION 3.06 Unvested Stock............................................................................16
SECTION 3.07 Certain Adjustments.......................................................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY...............................................................17
SECTION 4.01 Organization and Qualification; Subsidiaries..............................................17
SECTION 4.02 Articles of Incorporation and Bylaws......................................................17
SECTION 4.03 Capitalization............................................................................17
SECTION 4.04 Authority Relative to This Agreement......................................................19
SECTION 4.05 No Conflict; Required Filings and Consents................................................19
SECTION 4.06 Permits; Compliance with Laws.............................................................20
SECTION 4.07 SEC Filings; Financial Statements.........................................................21
SECTION 4.08 Absence of Certain Changes or Events......................................................21
SECTION 4.09 Employee Benefit Plans; Labor Matters.....................................................22
SECTION 4.10 Certain Tax Matters.......................................................................25
SECTION 4.11 Contracts.................................................................................25
SECTION 4.12 Litigation................................................................................27
SECTION 4.13 Environmental Matters.....................................................................27
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SECTION 4.14 Intellectual Property.....................................................................27
SECTION 4.15 Taxes.....................................................................................29
SECTION 4.16 Insurance.................................................................................30
SECTION 4.17 Properties................................................................................30
SECTION 4.18 Affiliates................................................................................31
SECTION 4.19 Opinion of Financial Advisor..............................................................31
SECTION 4.20 Brokers...................................................................................32
SECTION 4.21 Florida Business Corporation Law..........................................................32
SECTION 4.22 Business Activity Restriction.............................................................32
SECTION 4.23 Governmental Authorizations...............................................................32
SECTION 4.24 Gifts, Political Contributions, Unrecorded Funds..........................................33
SECTION 4.25 No Dissenters' Rights.....................................................................33
SECTION 4.26 Board Recommendation.......................................................................33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT................................................................34
SECTION 5.01 Organization and Qualification; Subsidiaries..............................................34
SECTION 5.02 Certificate of Incorporation and Bylaws...................................................34
SECTION 5.03 Capitalization............................................................................35
SECTION 5.04 Authority Relative to This Agreement......................................................35
SECTION 5.05 No Conflict; Required Filings and Consents................................................36
SECTION 5.06 Permits; Compliance with Laws.............................................................36
SECTION 5.07 SEC Filings; Financial Statements.........................................................37
SECTION 5.08 Absence of Certain Changes or Events......................................................38
SECTION 5.09 Employee Benefit Plans; Labor Matters.....................................................39
SECTION 5.10 Certain Tax Matters.......................................................................40
SECTION 5.11 Contracts.................................................................................41
SECTION 5.12 Litigation................................................................................42
SECTION 5.13 Environmental Matters.....................................................................42
SECTION 5.14 Insurance.................................................................................42
SECTION 5.15 Properties................................................................................42
SECTION 5.16 Opinion of Financial Advisor..............................................................43
SECTION 5.17 Brokers...................................................................................43
SECTION 5.18 No Interested Shareholders................................................................43
SECTION 5.19 Governmental Authorizations...............................................................43
SECTION 5.20 Intellectual Property.....................................................................44
ARTICLE VI
COVENANTS...............................................................................................44
SECTION 6.01 Conduct of Business by Company Pending the Closing........................................44
SECTION 6.02 Notices of Certain Events.................................................................47
SECTION 6.03 Access to Information; Confidentiality....................................................47
SECTION 6.04 No Solicitation of Transactions...........................................................48
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SECTION 6.05 Tax-Free Transaction......................................................................50
SECTION 6.06 Control of Operations.....................................................................50
SECTION 6.07 Further Action; Consents; Filings.........................................................50
SECTION 6.08 Additional Reports........................................................................51
SECTION 6.09 Conduct of Business by Parent.............................................................51
SECTION 6.10 Post Merger Directors and Officers........................................................52
SECTION 6.11 Bank Restructuring........................................................................53
SECTION 6.12 Disposition of Practices..................................................................53
SECTION 6.13 Financing Commitments.....................................................................54
SECTION 6.14 Standstill Agreement......................................................................54
SECTION 6.15 Voting....................................................................................54
SECTION 6.16 Waiver....................................................................................54
ARTICLE VII
ADDITIONAL AGREEMENTS...................................................................................55
SECTION 7.01 Registration Statement; Joint Proxy Statement.............................................55
SECTION 7.02 Stockholders' Meetings....................................................................57
SECTION 7.03 Affiliates................................................................................57
SECTION 7.04 Directors' and Officers' Indemnification and Insurance....................................57
SECTION 7.05 No Shelf Registration.....................................................................59
SECTION 7.06 Public Announcements......................................................................59
SECTION 7.07 AMEX Listing..............................................................................59
SECTION 7.08 Blue Sky..................................................................................59
SECTION 7.09 Acquisition of Company Capital Stock......................................................59
ARTICLE VIII
CONDITIONS TO THE MERGER................................................................................60
SECTION 8.01 Conditions to the Obligations of Each Party to Consummate the Merger......................60
SECTION 8.02 Conditions to the Obligations of Company..................................................61
SECTION 8.03 Conditions to the Obligations of Parent...................................................62
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER.......................................................................63
SECTION 9.01 Termination...............................................................................63
SECTION 9.02 Effect of Termination.....................................................................65
SECTION 9.03 Amendment.................................................................................65
SECTION 9.04 Waiver....................................................................................66
SECTION 9.05 Termination Fee; Expenses.................................................................66
ARTICLE X
GENERAL PROVISIONS......................................................................................68
SECTION 10.01 Non-Survival of Representations and Warranties...........................................68
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SECTION 10.02 Notices..................................................................................68
SECTION 10.03 Severability.............................................................................69
SECTION 10.04 Assignment; Binding Effect; Benefit......................................................69
SECTION 10.05 Incorporation of Exhibits................................................................70
SECTION 10.06 Governing Law............................................................................70
SECTION 10.07 Waiver of Jury Trial.....................................................................70
SECTION 10.08 Headings; Interpretation.................................................................70
SECTION 10.09 Counterparts.............................................................................71
SECTION 10.10 Entire Agreement.........................................................................71
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of February
10, 2000 (as amended, supplemented or otherwise modified from time to time, this
"Agreement"), among OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation
("Parent"), VISION TWENTY-ONE, INC., a Florida corporation ("Company"), and OC
ACQUISITION CORP., a Florida corporation and a direct wholly owned subsidiary of
Parent ("Merger Sub").
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent and Company have determined
that it is advisable and in the best interests of their respective companies and
stockholders to enter into a business combination by means of the merger of
Merger Sub with and into Company (the "Merger") and have approved and adopted
this Agreement;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, certain stockholders of
Company have granted an irrevocable proxy (referred to herein as the "Company
Stockholder Agreement") in the form attached hereto as Annex A;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Company to enter into this Agreement, certain stockholders of
Parent have granted an irrevocable proxy (referred to herein as the "Parent
Stockholder Agreement") in the form attached hereto as Annex B;
WHEREAS, upon the terms and subject to the conditions of this Agreement
and in accordance with the Florida Business Corporation Act, as amended (the
"FBCA"), Parent will acquire all of the common stock of Company through the
merger of Merger Sub with and into Company; and
WHEREAS, for United States Federal income tax purposes, it is intended
that the Merger shall qualify as a tax-free reorganization under Section 368(a)
of the Internal Revenue Code of 1986, as amended (together with the rules and
regulations promulgated thereunder, the "Code"), and that this Agreement shall
be, and hereby is, adopted as a plan of reorganization for purposes of Section
368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms
Unless the context otherwise requires, the following terms, when used
in this Agreement, shall have the respective meanings specified below (such
meanings to be equally applicable to the singular and plural forms of the terms
defined):
"Adjusted Financial Statements" shall mean the Company's month-ending
balance sheet and statements of income and changes in stockholders' equity as of
the latest practicable date no earlier than forty-five (45) days prior to the
Exchange Ratio Adjustment Date (defined below), which financial statements have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby; provided, however, that the financial statements
are subject to normal and recurring year-end adjustments and lack footnotes and
other presentation items. The "Exchange Ratio Adjustment Date" shall be the
fifth Business Day prior to the effective date of the Registration Statement or
such later date prior to the mailing of the Joint Proxy Statement as the parties
may mutually agree.
"Affiliate" shall mean, with respect to any person, any other person
that controls, is controlled by or is under common control with the first
person.
"Amex" shall mean the American Stock Exchange.
"ASCI Debt" shall mean the amount of "Contingent Consideration" payable
to American Surgicite Centers, Inc. pursuant to the Asset Purchase Agreement
dated as of September 1, 1998 among the Company and American Surgicite Centers,
Inc.
"Bank Austria" shall mean Bank Austria Creditanstaldt Corporate
Finance, Inc.
"Bank Austria Credit Agreement" shall mean the Amended and Restated
Loan and Security Agreement dated as of August 13, 1999 among the Parent,
certain of the Parent Subsidiaries and the lenders named therein, and Bank
Austria, as Agent.
"Blue Sky Laws" shall mean state securities or "blue sky" laws.
"Business Day" shall mean any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in New York.
"Company Common Stock" shall mean the common stock, par value $.001 per
share, of the Company.
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"Company Disclosure Schedule" shall mean the disclosure schedule
delivered by Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"Company Intellectual Property" shall mean all patents (including,
without limitation, all U.S. and foreign patents, patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, re-examinations and extensions thereof), design rights, trademarks,
trade names and service marks (whether or not registered), trade dress, Internet
domain names, copyrights (whether or not registered) and any renewal rights
therefor, sui generis database rights, statistical models, technology,
inventions, supplier lists, trade secrets, know-how, computer software programs
or applications in both source and object code form, databases, technical
documentation of such software programs ("Technical Documentation"),
registrations and applications for any of the foregoing and all other tangible
or intangible proprietary information or materials that were material to
Company's business or are currently used in Company's business in any product,
technology or process (i) currently being or formerly manufactured, published or
marketed by Company or (ii) previously or currently under development for
possible future manufacturing, publication, marketing or other use by Company or
(iii) used by the Company.
"Company Material Adverse Effect" shall mean any change in or effect on
the business of Company and the Company Subsidiaries that, individually or in
the aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of Company and the
Company Subsidiaries, taken as a whole, except to the extent that any such
change in or effect results from (i) changes in general economic conditions or
changes affecting the industry generally in which Company operates (provided
that such changes do not affect Company in a materially disproportionate
manner); (ii) changes in trading prices for the Company's common stock; (iii)
disposition of Practices (as hereinafter defined), divestiture of Corporate
Optometry and termination of managed care contracts as specifically identified
on Schedule 4.08 of the Company Disclosure Schedule; (iv) ongoing professional
fees consistent with the level of professional fees incurred by the Company
during the period from January 10, 2000 to February 9, 2000; (v) Special Charges
that cause an adjustment to the Exchange Ratio per Section 3.01 hereto; and the
net writedown of certain assets associated with business operations which are
being discontinued.
"Company Stock Plans" shall mean the Company's 1996 and 1999 Stock
Incentive Plans for employees and the Company's Stock Option Plan for Affiliated
Professionals.
"Competing Transaction" shall mean any of the following involving
Company (other than the Merger):
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, exchange, transfer or other disposition of 33%
or more of the assets of the Company and/or its subsidiaries, taken as
a whole, in a single transaction or series of
3
transactions, including, but not limited to, the assets or stock
relating to MEC Healthcare Inc. ("MEC") or the Company's laser vision
division;
(iii) any tender offer or exchange offer for 33% or more of
the outstanding voting securities of the Company or the filing of a
registration statement under the Securities Act in connection
therewith;
(iv) any person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined under Section 13(d) of the Exchange Act) having been formed
that beneficially owns or has the right to acquire beneficial ownership
of, 33% or more of the outstanding voting securities of the Company
other than in connection with a Financing Transaction (as defined
below);
(v) any person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined under Section 13(d) of the Exchange Act) having been formed
that beneficially owns or has the right to acquire beneficial ownership
of, 49% or more of the outstanding voting securities of the Company
from the Company or any of the Company's Affiliates in connection with
a transaction (a "Financing Transaction") with the purpose of the
Company obtaining bonafide financing without the investor making such
financing with the intent of exercising control over the Company and/or
management of the Company other than as may be typical of a lender in a
commercial financing transaction;
"Confidentiality Agreement" shall mean the confidentiality agreement,
dated November 24, 1999, between Parent and Company.
"Corporate Optometry" shall mean an optometric practice owned or
managed by the Company as set forth on Section 6.12 of the Company Disclosure
Schedule.
"$" shall mean United States Dollars.
"DGCL" shall mean the Delaware General Corporation Law, as amended.
"Earn-out Agreement" shall mean any merger, purchase, sale or other
business combination agreement between the Company and one or more third parties
pursuant to which the Company is obligated to pay cash or issue shares of its
capital stock subsequent to the date hereof as more specifically set forth on
Attachment 4 to Schedule 4.03 of the Company Disclosure Schedule.
"Environmental Law" shall mean any Law and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Material, as in effect as of the date hereof.
4
"Environmental Permit" shall mean any permit, approval, identification
number, license or other authorization required under or issued pursuant to any
applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Existing Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of July 1, 1998 among the Company, the banks party thereto
and Bank of Montreal, as Agent, as amended.
"Expenses" shall mean, with respect to any party hereto, all documented
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) and internal costs at commercially reasonable rates
incurred by such party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of its
obligations pursuant to this Agreement and the consummation of the Merger, the
preparation, printing, filing and mailing of the Registration Statement and the
Joint Proxy Statement, the solicitation of stockholder approvals, the filing of
HSR Act notice, if any, and all other matters related to the transactions
contemplated hereby and the closing of the Merger.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable statute and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Governmental Entity" shall mean any United States Federal, state or
local or any foreign governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or arbitral body.
"Governmental Order" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Entity.
"Hazardous Material" shall mean (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, together with the rules and regulations promulgated
thereunder.
5
"IRS" shall mean the United States Internal Revenue Service.
"Intangible Assets" shall have the conventional accounting meaning in
compliance with GAAP.
"Knowledge" an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of or
should reasonably be aware of such fact or other matter.
A Person (other than an individual) will be deemed to have `Knowledge"
of a particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, manager, executor, or
trustee of such Person (or in any similar capacity) has, or at any time had,
Knowledge of such fact or other matter.
"Law" shall mean any Federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree, other requirement or
rule of law of the United States or any other jurisdiction, and any other
similar act or law.
"Long-Term Indebtedness and Equivalents" shall mean, as reflected in
the Adjusted Financial Statements, the aggregate of (i) all of the Company's
long-term obligations, indebtedness or other liabilities of any kind or nature,
fixed or contingent, which in accordance with GAAP would be classified as a
long-term liability on the consolidated balance sheet of the Company and the
Company Subsidiaries, including, but not limited to obligations under capital
leases and deferred rent payables, (ii) the Purchase Adjustment Debt and (iii)
Special Charges, but excluding deferred tax liabilities.
"Merger" shall have the meaning ascribed to such term in the first
Whereas clause of this Agreement.
"NNM", shall mean the NASDAQ National Market.
"Net Debt Equivalents" or "NDE" shall mean, as reflected in the
Adjusted Financial Statements, all of the Company's Long-Term Indebtedness and
Equivalents less the Company's cash, including any cash equivalents or
marketable securities and as otherwise having the conventional meaning in
compliance with GAAP.
"Net Worth" shall mean, as reflected in the Adjusted Financial
Statements, total shareholder's equity (including capital stock, additional
paid-in capital and retained earnings after deducting treasury stock) which
would appear on the balance sheet of the Company and the Company's Subsidiaries
prepared on a consolidated basis in accordance with GAAP.
"Ophthalmologist/Optometrist Employee" shall mean a licensed
ophthalmologist or optometrist employed by the Company or the Company
Subsidiaries or the Parent or the Parent
6
Subsidiaries, as the case may be, or a professional corporation to which the
Company or the Company Subsidiaries or the Parent or the Parent Subsidiaries as
the case may be, provides services.
"Ophthalmology and Optometry Practices" shall mean any ophthalmology
and/or optometry practices owned or managed by the Company as set forth on
Section 6.12 of the Company Disclosure Schedule.
"Parent Common Stock" shall mean the common stock, par value $.001 per
share, of the Parent.
"Parent Disclosure Schedule" shall mean the disclosure schedule
delivered by Parent to Company prior to the execution of this Agreement and
forming a part hereof.
"Parent Material Adverse Effect" shall mean any change in or effect on
the business of Parent and the Parent Subsidiaries that, individually or in the
aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of Parent and the
Parent Subsidiaries, taken as a whole, except to the extent that any such change
in or effect results from (i) changes in general economic conditions or changes
affecting the industry generally in which Parent operates (provided that such
changes do not affect Parent in a materially disproportionate manner) and (ii)
any changes in the trading price of Parent Common Stock.
"Parent Stock Plans" shall mean Parent's Performance Stock Program and
the Employee Stock Purchase Plan.
"Person" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, limited liability partnership,
syndicate, person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association, entity or government
or political subdivision, agency or instrumentality of a government.
"Purchase Adjustment Debt" shall mean the amount which is claimed by
Eye Care Centers of America, Inc. to be owed to it through purchase price
adjustments and indemnities pursuant to the terms of the Asset Purchase
Agreement dated July 7, 1999 among the Company and Eye Care Centers of America,
Inc.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Special Charges" shall mean, as reflected in the balance sheet of the
Adjusted Financial Statements, the aggregate liability of: any one time charges
and accruals (extraordinary or otherwise) relating to matters outside of the
ordinary course of business, including but not limited to, layoffs
7
and severance (including those individuals appropriately identified on Company
Disclosure Schedule 4.09), one time lease shutdowns, restructuring charges, the
net writedown of certain assets associated with business operations which are
being discontinued, the maximum amount of cash payable by the Company, or the
Parent after the Effective Time, as the case may be, which is reasonably likely
to be paid pursuant to the ASCI Debt and the Earn-out Agreements as of the
Exchange Ratio Adjustment Date, the Additional Premium Amount or the Excess
Projected Cumulative Amount (as defined in Section 7.04 (d)), as the case may
be, and any accrued and unpaid expenses incurred by the Company in connection
with obtaining or attempting to obtain such third party consent as agreed upon
by the Parent and the Company.
"Subsidiary" shall mean, with respect to any person, any corporation,
partnership, limited partnership, limited liability company, limited liability
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary of such person) owns,
directly or indirectly, a majority of the stock or other equity interests, the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
"Tangible Net Worth" or "TNW" shall mean, as reflected in the Adjusted
Financial Statements, the Company's Net Worth less Intangible Assets.
"Tax" shall mean (i) any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Entity or taxing authority, including, without
limitation, taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value-added or gains taxes; license,
registration and documentation fees; and customers' duties, tariffs and similar
charges; (ii) any liability for the payment of any amounts of the type described
in (i) as a result of being a member of an affiliated, combined, consolidated or
unitary group for any taxable period; and (iii) any liability for the payment of
amounts of the type described in (i) or (ii) as a result of being a transferee
of, or a successor in interest to, any Person or as a result of an express or
implied obligation to indemnify any person.
"Tax Return" shall mean any return, statement or form (including,
without limitation, any estimated tax reports or return, withholding tax reports
or return and information report or return) required to be filed with respect to
any Taxes.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger
8
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the FBCA, at the Effective Time (as defined in
Section 2.03), Merger Sub shall be merged with and into Company. As a result of
the Merger, the separate corporate existence of Merger Sub shall cease and
Company shall continue as the surviving corporation of the Merger as a wholly
owned subsidiary of Parent (the "Surviving Corporation").
SECTION 2.02 Closing
Unless this Agreement shall have been terminated and the Merger herein
contemplated shall have been abandoned pursuant to Section 9.01 and subject to
the satisfaction or waiver of the conditions set forth in Article VIII, the
consummation of the Merger shall take place as promptly as practicable (and in
any event within three Business Days) after satisfaction or waiver of the
conditions set forth in Article VIII, at a closing (the "Closing") to be held at
the offices of Xxxx Xxxxxxx, P.C., 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, unless another date, time or place is mutually agreed to by Parent
and Company.
SECTION 2.03 Effective Time
At and after the time of the Closing, the parties shall cause the
Merger to be consummated by filing the articles of merger (the "Certificate of
Merger") with the Department of State of the State of Florida in such form as
required by, and executed in accordance with the relevant provisions of, the
FBCA (the date and time of such filing, or such later date and time as may be
set forth therein, being the "Effective Time").
SECTION 2.04 Effect of the Merger
At the Effective Time, the effect of the Merger shall be as provided in
the applicable provisions of the FBCA. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of Company and Merger Sub shall vest in
Company as the Surviving Corporation, and all debts, liabilities and duties of
Company and Merger Sub shall become the debts, liabilities and duties of Company
as the Surviving Corporation.
SECTION 2.05 Articles of Incorporation; Bylaws; Directors and Officers
of Surviving Corporation
Unless otherwise agreed by Parent and Company before the Effective
Time, at the Effective Time:
(a) the Articles of Incorporation and the Bylaws of Merger Sub
in effect immediately prior to the Effective Time shall be the Articles
of Incorporation and the Bylaws of the Surviving Corporation, until
thereafter amended as provided by Law and such Article of
9
Incorporation or Bylaws; provided, however, that Article I of the
Certificate of Incorporation of the Surviving Corporation shall be
amended to read as follows: "The name of the corporation is " "
and the bylaws shall be amended to reflect such name change;
(b) the officers of Merger Sub immediately prior to the
Effective Time shall serve in their respective offices of the Surviving
Corporation from and after the Effective Time, in each case until their
successors are elected or appointed and qualified or until their
resignation or removal; and
(c) the directors of Merger Sub immediately prior to the
Effective Time shall serve as the directors of the Surviving
Corporation from and after the Effective Time, in each case until their
successors are elected or appointed and qualified or until their
resignation or removal.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Conversion of Shares
(a) At the Effective Time, by virtue of the Merger, and
without any action on the part of Parent, Merger Sub, Company or the
holders of any of the following securities:
(i) each share of Common Stock, $.001 par value, of Company
("Company Common Stock") issued and outstanding immediately before the
Effective Time (excluding those held in the treasury of Company and
those owned by any wholly owned subsidiary of Company) and all rights
in respect thereof, shall, forthwith cease to exist and be converted
into and become exchangeable for the right to receive 0.402 shares (the
"Exchange Ratio") of common stock, $.001 par value, of Parent ("Parent
Common Stock");
(ii) each share of Company Common Stock held in the treasury
of Company or owned by any wholly owned subsidiary of Company
immediately prior to the Effective Time shall be canceled and retired
and no shares of stock or other securities of Parent, the Surviving
Corporation or any other corporation shall be issuable, and no payment
or other consideration shall be made, with respect thereto; and
(iii) each issued and outstanding share of capital stock of
Merger Sub shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) notwithstanding anything to the contrary above, the
Exchange Ratio shall be
10
adjusted and recalculated as of the Exchange Ratio Adjustment Date in
accordance with the following formula:
Exchange Ratio = 6,000,000 - (.25 (NDE-$54 Million)) + (.125(TNW-($56) Million))
----------------------------------------------------------------
X
where X represents the number of outstanding shares of Company Common
Stock as of the Exchange Ratio Adjustment Date.
(c) The Exchange Ratio shall be adjusted downward to account
for the maximum amount of shares of Company Common Stock, or Parent
Common Stock after the Effective Time, as the case may be, which are
reasonably expected to be issued pursuant to the Earn-out Agreements as
of the Exchange Ratio Adjustment Date, as mutually agreed upon by the
Parent and the Company (the "Earn-out Stock Amount").
(d) The Adjusted Financial Statements and/or the Earn-out
Stock Amount shall be reasonably satisfactory to Parent. Upon receipt
by Parent of the Adjusted Financial Statements and/or the Earn-out
Stock Amount from the Company, Parent shall accept or reject the
Adjusted Financial Statements and/or the Earn-out Stock Amount by
written notice to the Company within three (3) Business Days
thereafter; failure to reject the Adjusted Financial Statements and/or
Earn-out Stock Amount, as applicable, within such period shall be
deemed conclusive acceptance of the Adjusted Financial Statements
and/or the Earn-out Stock Amount, as applicable. If Parent disputes the
Adjusted Financial Statements and/or the Earn-out Stock Amount, the
parties will attempt to resolve their differences jointly and the
Company shall provide Parent reasonable access to its appropriate
records, including but not limited to, its work papers, but if no
resolution is reached within three (3) Business Days, then the parties
agree to submit the disputed items to an independent "Big 6" accounting
firm as may be mutually agreed upon by the respective accounting firms
of Parent and the Company, for determination within ten (10) Business
Days, which determination shall be conclusive for the purposes of this
Agreement. The cost of such mutually agreed accounting firm's
determination shall be borne equally by the Company and Parent.
SECTION 3.02 Exchange of Shares Other than Treasury Shares
(a) Exchange Agent. As of the Effective Time, Parent shall enter into
an agreement with a bank or trust company to act as exchange agent for the
Merger (the "Exchange Agent") as may be designated by Parent.
(b) Parent to Provide Common Stock and Cash. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for the
benefit of the holder of Company Common Stock: (i) Certificates of Parent Common
Stock ("Parent Certificates") representing the number of whole shares of Parent
Common Stock issuable pursuant to Section 3.01(a) in exchange for shares of
Company Common Stock outstanding immediately prior to the Effective Time; (ii)
sufficient
11
funds to permit payment in lieu of fractional shares pursuant to Section 3.04
and (iii) any dividends or distributions to which holders of shares of Company
Common Stock may be entitled pursuant to Section 3.07.
(c) Exchange Procedures. The Exchange Agent shall mail to each holder
of record of certificates of Company Common Stock ("Company Certificates"),
whose shares were converted into the right to receive shares of Parent Common
Stock (and cash in lieu of fractional shares pursuant to Section 3.04) promptly
after the Effective Time (and in any event no later than three Business Days
after the later to occur of the Effective Time and receipt by Parent of a
complete list from the Company of the names and addresses of its holders of
record): (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Company Certificates shall pass,
only upon receipt of the Company Certificates by the Exchange Agent, and shall
be in such form and have such other provisions as Parent may reasonably
specify); and (ii) instructions for use in effecting the surrender of the
Company Certificates in exchange for Parent Certificates (and cash in lieu of
fractional shares). Upon surrender of a Company Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly completed and validly
executed, and such other documents as may be reasonably required by the Exchange
Agent, the holder of such Company Certificate shall be entitled to receive in
exchange therefor a Parent Certificate representing the number of whole shares
of Parent Common Stock that such holder has the right to receive pursuant to
this Article III and payment of cash in lieu of fractional shares which such
holder has the right to receive pursuant to Section 3.04, and the Company
Certificate so surrendered shall forthwith be canceled. Until so surrendered,
each outstanding Company Certificate that, prior to the Effective Time,
represented shares of Company Common Stock will be deemed from and after the
Effective Time, for all corporate purposes other than the payment of dividends
and distributions, to evidence the ownership of the number of full shares of
Parent Common Stock into which such shares of Company Common Stock shall have
been so converted and the right to receive an amount in cash in lieu of the
issuance of any fractional shares in accordance with Section 3.04.
Notwithstanding any other provision of this Agreement, no interest will be paid
or will accrue on any cash payable to holders of Company Certificates pursuant
to the provisions of this Article III.
(d) Lost, Stolen or Destroyed Company Certificates. In the event any
Company Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Company
Certificates, upon the making of an affidavit of that fact by the holder
thereof, a Parent Certificate representing such shares of Parent Common Stock
(and cash in lieu of fractional shares) as may be required pursuant to this
Article III; provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Company Certificates to indemnify Parent against any claim
that may be made against Parent, the Surviving Corporation or the Exchange Agent
with respect to the Company Certificates alleged to have been lost, stolen or
destroyed.
(e) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Common Stock with a record date after
the Effective Time will be paid to the
12
holder of any unsurrendered Company Certificate with respect to the shares of
Parent Common Stock represented thereby until the holder of record of such
Company Certificate shall surrender such Company Certificate. Subject to the
effect of applicable escheat or similar laws, following surrender of any such
Company Certificate, there shall be paid to the record holder of the Parent
Certificates issued in exchange therefor, without interest, at the time of such
surrender, the amount of any such dividends or other distributions with a record
date after the Effective Time theretofore payable (but for the provisions of
this Section 3.02(e)) with respect to such shares of Parent Common Stock.
(f) Transfer of Ownership. If any Parent Certificate is to be issued in
a name other than that in which the Company Certificate surrendered in exchange
therefor is registered, it will be a condition of the issuance thereof that the
Company Certificate so surrendered will be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange will have
paid to Parent or any agent designated by it any transfer or other taxes
required by reason of the issuance of a Parent Certificate for shares of Parent
Common Stock in any name other than that of the registered holder of the Company
Certificate surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(g) Termination of Exchange Agent Funding. Any portion of funds
(including any interest earned thereon) or Parent Certificates held by the
Exchange Agent which have not been delivered to holders of Company Certificates
pursuant to this Article III within six months after the Effective Time shall
promptly be paid or delivered, as appropriate, to Parent, and thereafter holders
of Company Certificates who have not theretofore complied with the exchange
procedures outlined in and contemplated by this Section 3.02 shall thereafter
look only to Parent (subject to abandoned property, escheat and similar laws)
only as general creditors thereof for their claim for shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions (with a record date after the Effective Time) with
respect to Parent Common Stock to which they are entitled.
(h) No Liability. Notwithstanding anything to the contrary in this
Section 3.02, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to any person in respect of any shares of Parent Common
Stock or cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(i) Expenses of Exchange Agent. Parent shall pay all charges and
expenses of the Exchange Agent incurred solely in connection with the
transactions contemplated by this Agreement, to the extent of $8,500, with any
and all charges and expenses above such amount being borne by the Company.
SECTION 3.03 Stock Transfer Books
(a) At the Effective Time, the stock transfer books of Company shall
each be closed, and there shall be no further registration of transfers of
shares of
13
Company Common Stock thereafter on the records of any such stock transfer books.
In the event of a transfer of ownership of shares of Company Common Stock that
is not registered in the stock transfer records of Company at the Effective
Time, a certificate or certificates representing the number of full shares of
Parent Common Stock into which such shares of Company Common Stock shall have
been converted shall be issued to the transferee together with a cash payment in
lieu of fractional shares, if any, in accordance with Section 3.04 hereof, and a
cash payment in the amount of dividends, if any, in accordance with Section
3.02(e) hereof, if the certificate or certificates representing such shares of
Company Common Stock is or are surrendered as provided in Section 3.02(c)
hereof, accompanied by all documents required to evidence and effect such
transfer and by evidence of payment of any applicable stock transfer tax.
(b) Notwithstanding anything to the contrary herein, certificates
surrendered for exchange by any person constituting an affiliate of Company
shall not be exchanged until Parent shall have received from such person an
affiliate letter as provided in Section 7.03.
SECTION 3.04 No Fractional Share Certificates
No scrip or fractional share Parent Certificate shall be issued upon
the surrender for exchange of Company Certificates, and an outstanding
fractional share interest shall not entitle the owner thereof to vote, to
receive dividends or to any rights of a stockholder of Parent or of Surviving
Corporation with respect to such fractional share interest. As promptly as
practicable following the Effective Time, Parent shall deposit with the Exchange
Agent an amount in cash sufficient for the Exchange Agent to pay each holder of
Company Common Stock an amount in cash equal to the product obtained by
multiplying (i) the fractional share interest to which such holder would
otherwise be entitled (after taking into account all shares of Company Common
Stock held at the Effective Time by such holder) by (ii) the closing price for a
share of Parent Common Stock on the American Stock Exchange (the "AMEX") on the
last Business Day prior to the Effective Time. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of Company
Common Stock with respect to any fractional share interests, the Exchange Agent
shall make available such amounts, net of any required withholding Taxes, to
such holders of Company Common Stock, subject to and in accordance with the
terms of Section 3.02 hereof.
SECTION 3.05 Options to Purchase Company Common Stock
(a) At or prior to the Effective Time, each of Company and Parent shall
take all action necessary to cause as of the Effective Time the assumption by
Parent of, or the reissuance by Parent of substitutes for, all of the following
which remain outstanding as of the Effective Time: (i) the options to purchase
Company Common Stock listed in the Company Disclosure Schedule, whether vested
or unvested, and issued under Company's Stock Plans; (ii) options to purchase
Company Common Stock listed in the Company Disclosure Schedule pursuant to
option agreements outside of the Company's Stock Plans; and (iii) the warrants
to purchase Company Stock listed in the Company Disclosure Schedule and issued
pursuant to warrant agreements, (collectively, the "Outstanding Options and
Warrants," and each an "Outstanding Option" or an "Outstanding Warrant"). To the
fullest extent permitted under applicable law and the applicable stock option
14
agreements, the Company Stock Plans and the warrant agreements, each of the
Outstanding Options and Outstanding Warrants shall be exchanged or substituted
without any action on the part of the holder thereof into an option or warrant
to purchase shares of Company Common Stock as of the Effective Time. The number
of shares of Parent Common Stock that the holder of an assumed or substituted
Outstanding Option or Outstanding Warrant shall be entitled to receive upon the
exercise of such option or warrant shall be the same number of shares of Company
Common Stock as the holder of such Outstanding Option or Outstanding Warrant
would have been entitled to receive pursuant to the Merger had such holder
exercised such option or warrant in full immediately prior to the Effective
Time. The price per share of Parent Common Stock after the Effective Time shall
be equal to (x) the aggregate exercise price for the shares of Company Common
Stock otherwise purchasable pursuant to such Outstanding Option or Outstanding
Warrant divided by (y) the Exchange Ratio. Other than as set forth in the
Outstanding Options and Warrants or as contemplated by this Agreement, the
assumption and substitution of options and warrants as provided herein shall not
give the holders of such options and warrants additional benefits or additional
vesting rights which they did not have immediately prior to the Effective Time
or relieve the holders of any obligations or restrictions applicable to their
options and warrants or the shares obtainable upon exercise of their options and
warrants. Only whole shares of Company Common Stock shall be issued upon
exercise of any Outstanding Option or Outstanding Warrant, and no certificates
or scrip representing fractional shares of Company Common Stock and no cash in
lieu of fractional shares shall be issued upon such exercise. All fractional
shares of Company Common Stock which a holder of any Outstanding Option or
Outstanding Warrant would otherwise be entitled to receive upon exercise thereof
shall be aggregated at the time of such exercise. If a fractional share results
from such aggregation, in lieu thereof such fraction shall be rounded up to one
whole share of Company Common Stock if it is one-half or larger and shall be
rounded down to zero and canceled without any payment or distribution with
respect thereto if it is less than one-half. Prior to the Effective Time,
Company and Parent shall take such additional actions, if any, as are necessary
under applicable law and the applicable agreements and the Company Stock Plans
to assure that each Outstanding Option and Outstanding Warrant shall, from and
after the Effective Time, represent only the right to purchase, upon exercise,
whole shares of Company Common Stock. Prior to the Effective Time, the Board of
Directors of the Company shall make the determination that neither the Merger
nor any of the other transactions contemplated by this Agreement shall be deemed
a "Change in Control" for purposes of each of the employment agreements entered
into by the Company other than the employment agreements set forth on Section
3.05 of the Company Disclosure Schedule.
Except as otherwise specifically identified in Section 3.05 of the
Company Disclosure Schedule, the assumption of the Outstanding Options and
Warrants in the Merger and their conversion into options and warrants for Parent
Common Stock will not result in any accelerated vesting of those options or
warrants or the shares purchasable thereunder and the vesting schedule in effect
for such Outstanding Options and Warrants immediately prior to the Effective
Time shall remain in full force after the assumption thereof by Parent.
It is the Parent's intention to roll such converted Outstanding Options
into options to purchase Parent Common Stock, as described above, pursuant to
either the Parent's Performance
15
Stock Program or, at Parent's discretion or in the event that Parent is unable
to roll such converted options into the Performance Stock Program, then Parent
will assume the Company Stock Plans. Upon such conversion, any options granted
under the Performance Stock Program to the former holders of Outstanding Options
pursuant to the Company Stock Plans shall, except to the extent provided above,
in all respects be subject to the terms, provisions and conditions of the
Performance Stock Program and the standard form of stock option agreement
relating to such Performance Stock Program except where the terms of the
Performance Stock Program are contrary to the rights of an option holder,
whereupon in such instance the option holder will retain his or her rights to
such contrary terms; and provided further, that such holders shall be deemed to
have been granted such options as of the date the original options were granted
under the Company Stock Plans.
(b) As soon as practicable after the Effective Time, Parent shall file
a registration statement on Form S-8 or a successor form, under the Securities
Act with respect to the shares of Parent Common Stock subject to the Outstanding
Options, to the extent that Form S-8 or successor form, is available to register
the Outstanding Options, and shall use its reasonable efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as the Outstanding Options remain outstanding.
SECTION 3.06 Unvested Stock
At the Effective Time, any unvested shares of Company Common Stock,
including, but not limited to, any restricted stock, awarded to employees,
directors or consultants pursuant to any of the Company's plans or arrangements
and outstanding immediately prior to the Effective Time shall be converted into
unvested shares of Parent Common Stock in accordance with the Exchange Ratio and
shall remain subject to the same terms, restrictions and vesting schedule as in
effect immediately prior to the Effective Time. All outstanding rights which
Company may hold immediately prior to the Effective Time to repurchase unvested
shares of Company Common Stock shall be assigned to the Parent in the Merger and
shall thereafter be exercisable by Parent upon the same terms and conditions in
effect immediately prior to the Effective Time, except that the shares
purchasable pursuant to such rights and the purchase price payable per share
shall be adjusted to reflect the Exchange Ratio.
SECTION 3.07 Certain Adjustments
If between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock or Company Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, or the number of shares of Company Common Stock on a
fully diluted basis is in excess of that specified in Section 4.03 and disclosed
in Section 4.03 of the Company Disclosure Schedule (regardless of whether such
excess is a result of an additional issuance of capital stock or a correction to
such Sections), then the Exchange Ratio established pursuant to the provisions
of
16
Section 3.01 shall be adjusted accordingly to provide to each of Parent, on the
one hand, and the holders of Company Common Stock in the aggregate, on the other
hand, the same economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange, dividend or
increase.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent, subject to the
exceptions specifically disclosed in writing in the Company Disclosure Schedule,
all such exceptions to be referenced to a specific representation set forth in
this Article IV or to otherwise be clearly applicable to the representations
hereof not specifically referenced, that (it being understood that for purposes
of this Article IV, unless the context otherwise requires, the term Company
shall be deemed to include all of the Company's Subsidiaries:
SECTION 4.01 Organization and Qualification; Subsidiaries
(a) Company and each directly and indirectly owned subsidiary of
Company (the "Company Subsidiaries") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted. Except as
set forth in Section 4.01 of the Company Disclosure Schedule, Company and each
Company Subsidiary is duly qualified or licensed to do business, and is in good
standing (to the extent applicable), in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failure to be
so qualified or licensed and in good standing that could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(b) Section 4.01 of the Company Disclosure Schedule sets forth, as of
the date of this Agreement, a true and complete list of each Company Subsidiary,
together with (i) the jurisdiction of incorporation or organization of each
Company Subsidiary and the percentage of each Company Subsidiary's outstanding
capital stock or other equity interests owned by Company or another Company
Subsidiary and (ii) an indication of whether each Company Subsidiary is a
"Significant Subsidiary" as defined in Regulation S-X under the Exchange Act.
Except as set forth in Section 4.01 of the Company Disclosure Schedule, neither
Company nor any Company Subsidiary owns an equity interest in any partnership or
joint venture arrangement or other business entity.
SECTION 4.02 Articles of Incorporation and Bylaws
The copies of Company's articles of incorporation and bylaws, as
amended to date, previously provided to Parent by Company are true, complete and
correct copies thereof. Such articles of
17
incorporation and bylaws are in full force and effect. Company is not in
violation of any of the provisions of its certificate of incorporation or
bylaws.
SECTION 4.03 Capitalization
(a) The authorized capital stock of Company consists of 50,000,000
shares of Company Common Stock and 10,000,000 shares of preferred stock
("Company Preferred Stock"). As of the date hereof, (i) 14,939,407 shares of
Company Common Stock are issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (ii) no shares of Company Common Stock are
held in the treasury of Company, (iii) no shares of Company Common Stock are
held by Company Subsidiaries, (iv) 2,400,000 shares of Company Common Stock are
reserved for future issuance pursuant to the Company Stock Plans or pursuant to
option agreements outside of the Company Stock Plans (collectively, the "Company
Stock Options"), of which, as of December 31,1999, 921,977 and 1,035,146 shares
of Company Common Stock were reserved for future issuance pursuant to unvested,
outstanding and vested, outstanding, unexercised Company Stock Options,
respectively, and (v) no shares of Company Preferred Stock are outstanding. The
name of each holder of a Company Stock Option or a warrant, the grant date of
each Company Stock Option and warrant, and the number of shares of Company
Common Stock for which each Company Stock Option or warrant, as the case may be,
is exercisable and the exercise price of each Company Stock Option or warrant,
as the case may be, and the Company Stock Plans or other agreement that such
Company Stock Options or warrants are issuable under, are set forth in Section
4.03 of the Company Disclosure Schedule. Except for (i) shares of Company Common
Stock issuable pursuant Company Stock Plans, and (ii) shares issuable as
specifically listed and indicated on Schedule 4.03 of the Company Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character obligating Company or any Company
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, Company or any Company Subsidiary. All shares of Company Common
Stock subject to issuance as aforesaid, upon issuance prior to the Effective
Time on the terms and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 4.03 of the Company's Disclosure
Schedule, there are no outstanding contractual obligations of Company or any
Company Subsidiary to repurchase, redeem or otherwise acquire any shares of
Company Common Stock or any capital stock of any Company Subsidiary. Except as
set forth in Section 4.03 of the Company's Disclosure Schedule, each outstanding
share of capital stock of each Company Subsidiary is duly authorized, validly
issued, fully paid and nonassessable and each such share owned by Company or
another Company Subsidiary is free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
Company's or such other Company Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever. There are no outstanding contractual
obligations of Company or any Company Subsidiary to provide funds to, guarantee
indebtedness of, or make any material investment (in the form of a loan, capital
contribution or otherwise) in, any Company Subsidiary or any other person,
except as set forth in Section 4.03 of the Company Disclosure Schedule.
18
(b) Schedule 4.03 correctly and completely sets forth each agreement or
obligation of the Company and/or any Company Subsidiary to issue additional
shares of Company Common Stock after the date hereof if certain conditions are
fulfilled, and correctly and completely sets forth the maximum number of shares
of Company Common Stock issuable with respect to each business combination or
otherwise listed in Schedule 4.03 of the Company Disclosure Schedule and any
registration rights related to such shares. Such shares are hereinafter called
"Earn-out Company Shares."
(c) Provided that the Merger becomes effective, the terms of each such
business combination require each person entitled to receive Earn-out Shares to
accept in lieu of Company Common Stock the number of shares of Parent Common
Stock that would be issuable in the Merger if such Company Common Stock were
outstanding immediately prior to the Effective time.
(d) The terms of each such business combination require each person
entitled to receive Earn-out Shares to accept Earn-out Shares which have not
been registered under the Securities Act and further obligate such persons not
to sell, transfer, pledge, hypothecate or otherwise create any interest in the
Earn-out Shares without such registration or in a transaction except from the
registration requirements of the Securities Act and applicable state securities
laws.
(e) The consummation of the Merger will not trigger any anti-dilution
rights or price adjustment in connection with any Outstanding Options and/or
Warrants.
SECTION 4.04 Authority Relative to This Agreement
Company has all necessary corporate power and authority to execute and
deliver this Agreement to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement by Company and the consummation by Company of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby and thereby (other than, with
respect to the Merger, the approval of this Agreement by the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote with
respect thereto at the Company Stockholders' Meeting (as defined in Section
7.01), and the filing and recordation of the Certificate of Merger as required
by the FBCA). This Agreement has been duly executed and delivered by Company
and, assuming the due authorization, execution and delivery by the other parties
hereto and thereto, constitute legal, valid and binding obligations of Company,
enforceable against Company in accordance with their terms, subject to the
effect of any applicable bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity which may limit the
availability of remedies (whether in a proceeding at law or in equity).
SECTION 4.05 No Conflict; Required Filings and Consents
19
(a) Except as set forth in Section 4.05 of the Company Disclosure
Schedule, the execution and delivery of this Agreement by Company do not, and
the performance by Company of its obligations hereunder and thereunder and the
consummation of the Merger will not, (i) conflict with or violate any provision
of the certificate of incorporation or bylaws of Company or any equivalent
organizational documents of any Company Subsidiary, (ii) assuming that all
filings and notifications described in Section 4.05(b) have been made and, to
the extent applicable approved, conflict with, violate, or constitute a default
in respect of any Governmental Authorization or Law applicable to Company or any
Company Subsidiary or by which any material property or material asset of
Company or any Company Subsidiary is bound or affected or (iii) result in any
breach of or constitute a material default (or an event which with the giving of
notice or lapse of time or both could reasonably be expected to become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any material property or asset of Company or any Company
Subsidiary pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, Company Permit (as defined below), franchise or other
instrument or obligation.
(b) Except as set forth in Section 4.05 of the Company's Disclosure
Schedule, the execution and delivery of this Agreement by Company do not, and
the performance by Company of its obligations hereunder and the consummation of
the Merger will not, require any material consent, approval, authorization or
permit of, or filing by Company with or notification by Company to, any
Governmental Entity, except pursuant to applicable requirements of the Exchange
Act, the Securities Act, Blue Sky Laws, the rules and regulations of the NNM,
state takeover laws, the premerger notification requirements of the HSR Act, and
the filing and recordation of the Certificate of Merger as required by the FBCA.
SECTION 4.06 Permits; Compliance with Laws
(a) Except as set forth in Section 4.06 of the Company Disclosure
Schedule, Company and the Company Subsidiaries are in possession of all
franchises, grants, authorizations, licenses, establishment registrations,
product listings, permits, easements, variances, exceptions, consents,
certificates, identification and registration numbers, approvals and orders of
any Governmental Entity necessary for Company or any Company Subsidiary to own,
lease and operate its properties or to offer or perform its services or to
develop, produce, store, distribute and market its products or otherwise to
carry on its business as it is now being conducted (collectively, the "Company
Permits"), except for Company Permits which could not reasonably be expected to
have a Company Material Adverse Effect, and, as of the date of this Agreement,
none of the Company Permits has been suspended or canceled nor is any such
suspension or cancellation pending or, to the knowledge of Company, threatened.
(b) Neither Company nor any Company Subsidiary is in conflict with, or
in default or violation of, (i) any Law applicable to Company or any Company
Subsidiary or by which any property or asset of Company or any Company
Subsidiary is bound or affected or (ii) any Company Permits, except for
conflicts, defaults or violations which could not reasonably be expected to have
20
a Company Material Adverse Effect. Section 4.06 of the Company Disclosure
Schedule sets forth, as of the date of this Agreement, all actions, proceedings,
investigations or surveys pending or, to the knowledge of Company, threatened
against Company or any Company Subsidiary or to the Company's knowledge, without
any independent investigation, pending or threatened against any
Ophthalmologist/Optometrist Employee, that could reasonably be expected to
result in the suspension or cancellation of any other material Company Permit.
Since January 1, 1998, neither Company nor any Company Subsidiary has received
from any Governmental Entity any written notification with respect to possible
conflicts, defaults or violations of Laws.
SECTION 4.07 SEC Filings; Financial Statements
(a) Except as disclosed in Section 4.07 of the Company Disclosure
Schedule, Company has timely filed all forms, reports, statements and documents
required to be filed by it (A) with the SEC and the NNM since November 1, 1996
(collectively, together with any such forms, reports, statements and documents
Company may file subsequent to the date hereof until the Closing, the "Company
Reports") and (B) with any other Governmental Entities. Except as disclosed in
Section 4.07 of the Company Disclosure Schedule, each Company Report (i) was
prepared in accordance with the requirements of the Securities Act, the Exchange
Act or the rules and regulations of the NNM, as the case may be, in
substantially all respects and (ii) did not at the time it was filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.
Except as disclosed in Section 4.07 of the Company Disclosure Schedule, each
form, report, statement and document referred to in clause (B) of this paragraph
was prepared in all material respects in accordance with the requirements of
applicable Law. No Company Subsidiary is subject to the periodic reporting
requirements of the Exchange Act or required to file any form, report or other
document with the SEC, the NNM, any other stock exchange or any other comparable
Governmental Entity.
(b) Except as disclosed in Section 4.07 of the Company Disclosure
Schedule, each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company Reports was prepared in
accordance with U.S. GAAP (except as may be permitted by Form 10-Q under the
Exchange Act) applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each presented fairly, in
all material respects, the consolidated financial position of Company and the
consolidated Company Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring
immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Company and the Company Subsidiaries as reported
in the Company Reports, including the notes thereto, none of Company or any
Company Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in notes thereto prepared in accordance with
U.S. GAAP, except for immaterial
21
liabilities or obligations incurred in the ordinary course of business
consistent with past practice since December 31, 1998, and except as set forth
in Section 4.07 of the Company Disclosure Schedule.
SECTION 4.08 Absence of Certain Changes or Events
Except as set forth in Section 4.08 of the Company Disclosure
Schedules, since September 30, 1999, Company and the Company Subsidiaries have
conducted their businesses only in the ordinary course consistent with past
practice and, since such date, there has not been (i) any material changes in or
effect on the business, assets, liabilities, financial condition or results of
operations of Company or the Company Subsidiaries, (ii) any event that could
reasonably be expected to prevent or materially delay the performance of
Company's obligations pursuant to this Agreement and the consummation of the
Merger by Company, (iii) any material change by Company in its accounting
methods, principles or practices, (iv) any declaration, setting aside or payment
of any dividend or distribution in respect of the shares of Company Common Stock
or any redemption, purchase or other acquisition of any of Company's securities,
(v) except for changes in the ordinary course of business consistent with past
practice, any increase in the compensation or benefits or establishment of any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting or repricing
of stock options, stock appreciation rights, performance awards or restricted
stock awards), stock purchase or other employee benefit plan, or any other
increase in the compensation payable or to become payable to any employees,
officers, consultants or directors of Company or any Company Subsidiary, (vi)
any issuance or sale of any stock, notes, bonds or other securities other than
pursuant to the exercise of outstanding securities, or entering into any
agreement with respect thereto, or the issuances of options under the Company
Stock Plans, (vii) any amendment to the Company's certificate of incorporation
or bylaws, (viii) other than in the ordinary course of business consistent with
past practice, any (x) purchase, sale, assignment or transfer of any material
assets, (y) mortgage, pledge or existence of any lien, encumbrance or charge on
any material assets or properties, tangible or intangible except for liens for
Taxes not yet delinquent, or (z) waiver of any rights of material value or
cancellation or any material debts or claims, (ix) any incurrence of any
material liability (absolute or contingent), except for current liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, (x) any incurrence of any damage, destruction or similar loss, whether
or not covered by insurance, materially affecting the business or properties of
Company or any Company Subsidiary, or (xi) any entering into any transaction of
a material nature other than in the ordinary course of business, consistent with
past practice.
SECTION 4.09 Employee Benefit Plans; Labor Matters
(a) The Company Disclosure Schedule lists each employee benefit fund,
plan, program, arrangement and contract (including, without limitation, any
"pension" plan, fund or program, as defined in Section 3(2) of ERISA, any
"employee benefit plan", as defined in Section 3(3) of ERISA and any plan,
program, policy, arrangement or contract providing for severance), whether
currently in effect or pursuant to which the Company or any Company Subsidiary
has any ongoing liability
22
or obligation; medical, dental or vision benefits; life insurance or death
benefits; disability benefits, sick pay or other wage replacement; vacation,
holiday or sabbatical; pension or profit-sharing benefits; stock options or
other equity compensation; bonus or incentive pay or other material fringe
benefits) whether written or not ("Benefit Plans"), maintained, sponsored or
contributed to or required to be contributed to by Company or any Company
Subsidiary (the "Company Benefit Plans"). With respect to each Company Benefit
Plan, Company has delivered or made available to Parent a true, complete and
correct copy of (i) such Company Benefit Plan (or, if not written, a written
summary of its material terms) and the most recent summary plan description, if
any, related to such Company Benefit Plan, (ii) each trust agreement or other
funding arrangement relating to such Company Benefit Plan, (iii) the most recent
annual report (Form 5500) filed with the IRS with respect to such Company
Benefit Plan (and, if the most recent annual report is a Form 5500R, the most
recent Form 5500C filed with respect to such Company Benefit Plan), (iv) the
most recent actuarial report or financial statement relating to such Company
Benefit Plan and (v) the most recent determination letter, if any, issued by the
IRS with respect to such Company Benefit Plan and any pending request for such a
determination letter. Neither Company nor any Company Subsidiary nor, to the
knowledge of Company, any other person or entity, has any express commitment,
whether legally enforceable or not, to modify, change or terminate any Company
Benefit Plan, other than with respect to a modification, change or termination
required by ERISA or the Code.
(b) Each Company Benefit Plan has been administered in all material
respects in accordance with its terms and all applicable laws, including ERISA
and the Code, and contributions required to be made under the terms of any of
the Company Benefit Plans as of the date of this Agreement have been timely made
or, if not yet due, have been properly reflected on the most recent consolidated
balance sheet filed or incorporated by reference in the Company Reports prior to
the date of this Agreement. With respect to the Company Benefit Plans, no event
has occurred and, to the knowledge of Company, there exists no condition or set
of circumstances in connection with which Company or any Company Subsidiary
could be subject to any liability (other than for routine benefit liabilities)
under the terms of, or with respect to, such Company Benefit Plans, ERISA, the
Code or any other applicable Law.
(c) Company on behalf of itself and each Company ERISA Affiliate (as
defined below) hereby represents that: (i) each Company Benefit Plan which is
intended to qualify under Section 401(a), Section 401(k), Section 401(m) or
Section 4975(e)(6) of the Code has received a favorable determination letter
from the IRS as to its qualified status, and each trust established in
connection with any Company which is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received an opinion letter from
the IRS that it is so exempt or application for same is pending that is timely
filed with the IRS, and to Company's knowledge no fact or event has occurred
that is reasonably likely to materially adversely affect the qualified status of
any such Company Benefit Plan or the exempt status of any such trust; (ii) to
Company's knowledge there has been no prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code and other than a transaction
that is exempt under a statutory or administrative exemption) with respect to
any Company Plan that could result in liability to the Company or a Company
Subsidiary and (iii) each Company Benefit Plan can be amended, terminated or
otherwise discontinued after the
23
Effective Time in accordance with its terms, without liability (other than (A)
liability for ordinary administrative expenses typically incurred in a
termination event or (B) if the Company Benefit Plan is pension benefit plan
subject to Part 2 of Title I of ERISA, liability for the accrued benefits as of
the date of such termination (if and to the extent required by ERISA)) to the
extent that either there are sufficient assets set aside in a trust or insurance
contract to satisfy such liability or such liability is reflected on the most
recent consolidated balance sheet filed or incorporated by reference in the
Company Reports prior to the date of this Agreement. No suit, administrative
proceeding, action or other litigation has been brought, or to the knowledge of
Company is threatened, against or with respect to any such Company Benefit Plan,
including any audit or inquiry by the Internal Revenue Service or United States
Department of Labor (other than routine benefits claims).
(d) No Company Benefit Plan is a multiemployer pension plan (as defined
in Section 3(37) of ERISA) or other pension plan subject to Title IV of ERISA
and neither the Company, any Company Subsidiary nor any other trade or business
(whether or not incorporated) that is under "common control" with Company or a
Company Subsidiary (within the meaning of ERISA Section 4001) or with respect to
which Company or any Company Subsidiary could otherwise incur liability under
Title IV of ERISA (a "Company ERISA Affiliate") has sponsored or contributed to
or been required to contribute to a multiemployer pension plan or other pension
plan subject to Title IV of ERISA. No material liability under Title IV of ERISA
has been incurred by Company, any Company Subsidiary or any Company ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to Company or any Company Subsidiary of incurring or
being subject (whether primarily, jointly or secondarily) to a material
liability thereunder. None of the assets of Company or any Company Subsidiary
is, or may reasonably be expected to become, the subject of any lien arising
under ERISA or Section 412(n) of the Code.
(e) With respect to each Benefit Plan required to be set forth in the
Disclosure Schedule that is subject to Title IV or Part 3 of Title I of ERISA or
Section 412 of the Code, (i) no reportable event (within the meaning of Section
4043 of ERISA, other than an event that is not required to be reported before or
within 30 days of such event) has occurred or is expected to occur, (ii) there
was not an accumulated funding deficiency (within the meaning of Section 302 of
ERISA or Section 412 of the Code), whether or not waived, as of the most
recently ended plan year of such Benefit Plan; and (iii) there is no "unfunded
benefit liability" (within the meaning of Section 4001(a)(18) of ERISA).
(f) Company has delivered to Parent true, complete and correct copies
of (i) all employment agreements with officers and all consulting agreements of
Company and each Company Subsidiary, (ii) all severance plans, agreements,
programs and policies of Company and each Company Subsidiary with or relating to
their respective employees, directors or consultants, and (iii) all plans,
programs, agreements and other arrangements of Company and each Company
Subsidiary with or relating to their respective employees, directors or
consultants which contain "change of control" provisions, and all such plans,
agreements, programs, and policies are specifically identified as such on
Section 4.09 of the Company Disclosure Schedule. Except as set forth on Section
4.09 of the Company Disclosure Schedule, no payment or benefit which may be
required to be made by Company or any Company Subsidiary or which otherwise may
be required to be made under the
24
terms of any Company Benefit Plan or other arrangement will constitute a
parachute payment under Code Section 280(G)(1), and the consummation of the
transactions contemplated by this Agreement will not, alone or in conjunction
with any other possible event (including termination of employment), (i) entitle
any current or former employee or other service provider of Company or any
Company Subsidiary to severance benefits or any other payment, compensation or
benefit (including forgiveness of indebtedness), and the amount such severance
benefit or any other payment is indicated in Section 4.04 of the Company
Distribution Schedule except as expressly provided by this Agreement, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation or benefit due any such employee or service provider.
(g) Neither Company nor any Company Subsidiary is a party to, or has
any obligations under or with respect to, any collective bargaining or other
labor union contract applicable to persons employed by Company or any Company
Subsidiary and no collective bargaining agreement is being negotiated by Company
or any Company Subsidiary or any person or entity that may obligate the Company
or any Company Subsidiary thereunder. As of the date of this Agreement, there is
no labor dispute, strike, union organizing activity or work stoppage against
Company or any Company Subsidiary pending or, to the knowledge of Company,
threatened which may interfere with the respective business activities of
Company or any Company Subsidiary. As of the date of this Agreement, to the
knowledge of Company, none of Company, any Company Subsidiary, or any of their
respective representatives or employees has committed any unfair labor practice
in connection with the operation of the respective businesses of Company or any
Company Subsidiary, and there is no charge or complaint filed against Company or
any Company Subsidiary by or with the National Labor Relations Board or any
comparable Governmental Entity pending or threatened in writing.
(h) Except as required by Law, no Company Benefit Plan provides any of
the following retiree or post-employment benefits to any person: medical,
disability or life insurance benefits. To Company's knowledge, Company and the
Company ERISA Affiliates are in compliance with (i) the requirements of the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") and the
regulations (including proposed regulations) thereunder and (ii) the applicable
requirements of the Health Insurance Portability and Accountability Act of 1996,
as amended, and the regulations (including the proposed regulations) thereunder.
(i) Since November 1, 1998, neither the Company nor any Company
Subsidiary has terminated any at-will employee other than pursuant to the forms
of the notice attached hereto as Schedules 4.09(i)-1, 4.09(i)-2 or 4.09(i)-3. No
single termination of at-will employees, nor any group of terminations,
constitutes a violation of any federal or state law governing the closing of any
plant or termination or winding-up of any business.
25
SECTION 4.10 Certain Tax Matters
Neither Company, nor to Company's knowledge, any of its affiliates, has
taken or agreed to take any action (other than actions contemplated by this
Agreement) that could be expected to prevent the Merger from constituting a
"reorganization" under Section 368 of the Code. Company is not aware of any
agreement or plan to which Company or any of its affiliates is a party or other
circumstances relating to Company or any of its affiliates that could reasonably
be expected to prevent the Merger from so qualifying as a reorganization under
Section 368 of the Code.
SECTION 4.11 Contracts
(a) Section 4.11 of the Company Disclosure Schedule sets forth a list
of all material written and oral contracts or agreements relating to the Company
or any Company Subsidiary, including without limitation any: (i) contract
resulting in a commitment or potential commitment for expenditure or other
obligation or potential obligation, or which provides for the receipt or
potential receipt, involving in excess of One Hundred Thousand Dollars
($100,000) in any instance, or series of related contracts that in the aggregate
give rise to rights or obligations exceeding such amount, other than contracts
("Customer Contracts") with health plans and providers, entered into by the
Company's managed care business in the ordinary course of business, (ii) the
twelve (12) largest Customer Contracts based upon revenues generated to the
Company; (iii) indenture, mortgage, promissory note, loan agreement, guarantee
or other agreement or commitment for the borrowing or lending of money or
encumbrance of assets involving more than One Hundred Thousand Dollars
($100,000) in each instance; (iv) agreement which restricts the Company from
engaging in any line of business or from competing with any other person; (v)
warranties made with respect to products manufactured, packaged, distributed or
sold or services provided by the Company; (vi) any agreement which terminates,
or gives another party the right to terminate such agreement, upon the
completion of the transaction contemplated by this Agreement; or (vii) any other
contract, agreement, instrument, arrangement or commitment that is material to
the condition (financial or otherwise), results of operation, assets,
properties, liabilities, business or prospects of the Company (collectively, and
together with all other agreements required to be disclosed on the Company
Disclosure Schedule the "Company Material Contracts"). The Company has
previously furnished to Parent true, complete and correct copies of all written
agreements, as amended, required to be listed on Section 4.11 of the Company
Disclosure Schedule.
(b) The Company Material Contracts are each in full force and effect
and are the valid and legally binding obligations of the Company and, to the
best of Company's knowledge, the other parties thereto, enforceable in
accordance with their respective terms, subject only to bankruptcy, insolvency
or similar laws affecting the rights of creditors generally and to general
equitable principles. Except as set forth in Section 4.11 of the Company
Disclosure Schedule, the Company has not received notice of its default under
any of the Company Material Contracts and no event has occurred which, with the
passage of time or the giving of notice or both, would constitute a default by
the Company thereunder. Except as set forth in the Company Disclosure Schedule,
to the Company's knowledge, none of the other parties to any of the Company
Material Contracts is in
26
default thereunder, nor has an event occurred which, with the passage of time or
the giving of notice or both would constitute a default by such other party
thereunder. Except as set forth in Section 4.11 of the Company Disclosure
Schedule, the Company has not received notice of the pending or threatened
cancellation, revocation or termination of any of the Company Material
Contracts, nor are any of them aware of any facts or circumstances which could
reasonably be expected to lead to any such cancellation, revocation or
termination.
(c) Except as otherwise indicated on Section 4.11 of the Company
Disclosure Schedule, to the Company's knowledge, after due inquiry, the
continuation, validity and effectiveness of the Company Material Contracts under
the current terms thereof will in no way be affected by the consummation of the
transactions contemplated by this Agreement.
(d) Section 4.11 of the Company Disclosure Schedule specifically
identifies a list of all contracts which contain any earn-out or contingency
provision with respect to issuances of Company Common Stock and/or any cash
payments by the Company or Company Subsidiaries.
(e) Section 4.11 of the Company Disclosure Schedule identifies all
agreements which restrict the Company from engaging in any line of business or
from competing with any other person.
SECTION 4.12 Litigation
Except as set forth in Section 4.12 of the Company Disclosure Schedule,
there is no suit, claim, action, proceeding or investigation pending or, to the
knowledge of Company, threatened against Company or any Company Subsidiary, and,
to the knowledge of Company, there are no existing facts or circumstances that
could reasonably be expected to result in a suit, claim, action, proceeding or
investigation. Except as set forth in Section 4.12 of the Company Disclosure
Schedule, Company is not aware of any facts or circumstances which could
reasonably be expected to result in the denial of insurance coverage under
policies issued to Company and Company Subsidiaries in respect of such suits,
claims, actions, proceedings and investigations. Except as set forth in Section
4.12 of the Company Disclosure Schedule, neither Company nor any Company
Subsidiary is subject to any outstanding order, writ, injunction or decree.
SECTION 4.13 Environmental Matters
Company and the Company Subsidiaries are in compliance with all
material applicable Environmental Laws and all Company Permits required by
Environmental Laws. All past noncompliance of Company or any Company Subsidiary
with Environmental Laws or Environmental Permits has been resolved without any
pending, ongoing or future material obligation, cost or liability. Neither
Company nor any Company Subsidiary has released a Hazardous Material at, or
transported a Hazardous Material to or from, any real property currently or
formerly owned, leased or occupied by Company or any Company Subsidiary, in
violation of any Environmental Law.
27
SECTION 4.14 Intellectual Property
(a) Section 4.14(a) of the Company Disclosure Schedule contains a true
and complete list of Company's and the Company's Subsidiaries patents, patent
applications, registered trademarks, trademark applications, trade names,
registered service marks, service xxxx applications, Internet domain names,
Internet domain name applications, copyright registrations and applications and
other filings and formal actions made or taken pursuant to Federal, state, local
and foreign laws by Company to protect its interests in Company Intellectual
Property, and includes details of all due dates for further filings,
maintenance, payments or other actions falling due in respect of Company
Intellectual Property within twelve (12) months of the Effective Time. All of
Company's patents, patent applications, registered trademarks, and trademark
applications, and registered copyrights remain in good standing with all fees
and filings due as of the date hereof. The Company has previously provided
Purchaser with a list of all other trademarks and service marks which are
material to the Company's business.
(b) Company has made all registrations that Company (including any of
its subsidiaries) is required to have made in relation to the processing of
data, and is in good standing with respect to such registrations with all fees
due as of the Effective Time duly made.
(c) Company Intellectual Property contains only those items and rights
which are: (i) owned by Company; (ii) in the public domain; or (iii) rightfully
used by Company pursuant to a valid and enforceable license or other agreement
(the "Company Licensed Intellectual Property"), the parties, date, term and
subject matter of each such license or other agreement (each, a "License
Agreement") being set forth on Section 4.14(c) of the Company Disclosure
Schedule. Company has all rights in Company Intellectual Property necessary to
carry out Company's current activities and, to the knowledge of the Company, the
Company's future activities to the extent such future activities are already
planned, including without limitation, to the extent required to carry out such
activities, rights to make, use, reproduce, modify, adopt, create derivative
works based on, translate, distribute (directly and indirectly), transmit,
display and perform publicly, license, rent and lease and, other than with
respect to Company Licensed Intellectual Property, assign and sell, Company
Intellectual Property.
(d) The reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Company Intellectual
Property, product, work, technology or process as now used or offered or
proposed for use, licensing or sale by Company does not infringe on any patent,
design right, trademark, trade name, service xxxx, trade dress, Internet domain
name, copyright, database, statistical model, technology, invention, supplier
list, trade secret, know-how, computer software program or application of any
person, anywhere in the World. The Company has not received notice of any claims
(i) challenging the validity, effectiveness or, other than with respect to
Company Licensed Intellectual Property, ownership by Company of any Company
Intellectual Property, or (ii) to the effect that the use, distribution,
licensing, sublicensing, sale or any other exercise of rights in any product,
work, technology or process as now used or offered or proposed for use,
licensing, sublicensing or sale by Company or its agents or use by its customers
infringes
28
or will infringe on any intellectual property or other proprietary or personal
right of any person. To the knowledge of Company, no such claims have been
threatened by any person, nor are there any valid grounds for any bona fide
claim of any such kind. All of the rights within Company Intellectual Property
are enforceable and subsisting. To the knowledge of Company, there is no
unauthorized use, infringement or misappropriation of any Company Intellectual
Property by any third party, employee or former employee.
(e) Except as set forth in section 4.14 of the Company Disclosure
Schedule, Company is not, nor as a result of the execution or delivery of this
Agreement, or performance of Company's obligations hereunder, will Company be,
in violation of any material license, sublicense, agreement or instrument to
which Company is a party or otherwise bound, nor will execution or delivery of
this Agreement, or performance of Company's obligations hereunder, cause the
diminution, termination or forfeiture of any Company Intellectual Property.
(f) Section 4.14(f) of the Company Disclosure Schedule contains a true
and complete list of all software programs which are owned by the Company (the
"Company Software Programs"). Except as set forth in section 4.14 of the Company
Disclosure Schedule, Company owns full and unencumbered right and good, valid
and marketable title to the Company Intellectual Property and the Company
Software Programs which are material to the Company's business free and clear of
all mortgages, pledges, liens, security interests, conditional sales agreements,
encumbrances or charges of any kind.
(g) Except as set forth in Section 4.14 of the Company Disclosure
Schedule, the Company Software Programs (i) have been designed to ensure year
2000 compatibility, which includes, but is not limited to, date data century
recognition, and calculations that accommodate same century and multi-century
formulas and date values; (ii) operate and will operate in accordance with their
specifications prior to, during and after the calendar year 2000; and (iii)
shall not end abnormally or provide invalid or incorrect results as a result of
date data, specifically including date data which represents or references
different centuries or more than one century.
(h) Except as set forth in Section 4.14 of the Company Disclosure
Schedule, Company Intellectual Property is free and clear of any and all
mortgages, pledges, liens, security interests, conditional sale agreements,
encumbrances or charges of any kind.
(i) Except as set forth in the Company Disclosure Schedule, Company
(including its subsidiaries) does not owe any royalties or other payments to
third parties in respect of Company Intellectual Property. All royalties or
other payments set forth in the Company Disclosure Schedule that have accrued
prior to the Effective Time have been paid.
SECTION 4.15 Taxes
(a) Company and each of the Company Subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which Company or any
Company Subsidiary is or has been
29
a member, have properly completed and timely filed all Tax Returns required to
be filed by them and have paid all Taxes shown thereon to be due. Company has
provided adequate accruals in accordance with generally accepted accounting
principles in its latest financial statements included in the Company Reports
for any Taxes that have not been paid, whether or not shown as being due on any
Tax Returns. Company and the Company Subsidiaries have no material liability for
unpaid Taxes accruing after the date of the Company's latest financial
statements included in the Company Reports.
(b) There is (i) no material claim for Taxes that is a lien against the
property of Company or any Company Subsidiary or is being asserted against
Company or any Company Subsidiary other than liens for Taxes not yet due and
payable, (ii) no audit of any Tax Return of Company or any Company Subsidiary
being conducted by a Tax Authority; (iii) no extension of the statute of
limitations on the assessment of any Taxes granted by Company or any Company
Subsidiary and currently in effect, and (iv) no agreement, contract or
arrangement to which Company or any Company Subsidiary is a party that may
result in the payment of any amount that would not be deductible by reason of
Section 280G or Section 404 of the Code.
(c) There has been no change in ownership of Company or any Company
Subsidiaries that has caused the utilization of any losses of such entities to
be limited pursuant to Section 382 of the Code, and any loss carryovers
reflected on the latest financial statements included in the Company Reports are
properly computed and reflected.
(d) Except as set forth in Section 4.15 of the Company Disclosure
Schedule, Company and the Company Subsidiaries have not been and will not be
required to include any material adjustment in Taxable income for any Tax period
(or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger.
(e) Neither Company nor any Company Subsidiary has filed or will file
any consent to have the provisions of paragraph 341(f)(2) of the Code (or
comparable provisions of any state Tax laws) apply to Company or any Company
Subsidiary.
(f) Neither Company nor any Company Subsidiary is a party to any Tax
sharing or Tax allocation agreement nor does Company or any Company Subsidiary
have any liability or potential liability to another party under any such
agreement.
(g) Neither Company nor any Company Subsidiary has filed any
disclosures under Section 6662 or comparable provisions of state, local or
foreign law to prevent the imposition of penalties with respect to any Tax
reporting position taken on any Tax Return.
(h) Company and each Company Subsidiary has in its possession receipts
for any Taxes paid to foreign Tax authorities. Neither Company nor any Company
Subsidiary has ever been a "personal
30
holding company" within the meaning of Section 542 of the Code or a "United
Sates real property holding corporation" within the meaning of Section 897 of
the Code.
SECTION 4.16 Insurance
Company and each Company Subsidiary is presently insured, and during
each of the past five calendar years has been insured, against such risks, as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. The Company reasonably believes that the
policies of fire, theft, liability, medical malpractice, director and officer,
product liability and other insurance maintained with respect to the assets or
businesses of Company and Company Subsidiaries provide adequate coverage against
loss. Section 4.16 of the Company Disclosure Schedule sets forth a complete and
correct list as of the date hereof of all insurance policies maintained by
Company or the Company Subsidiaries, and Company has delivered to Parent
complete and correct copies of all such policies, together with all riders and
amendments thereto. All such policies are in full force and effect and all
premiums due thereon have been paid to the date hereof. Company and the Company
Subsidiaries have complied in all material respects with the terms of such
policies.
SECTION 4.17 Properties
(a) Company and the Company Subsidiaries have good title, free
and clear of all material mortgages, liens, pledges, charges or other
encumbrances to all their material (individually or in the aggregate)
tangible properties and assets, real, personal or mixed, reflected in
the Company's consolidated financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998, as being owned by Company and the Company Subsidiaries as of
the date thereof, other than (i) any properties or assets that have
been sold or otherwise disposed of in the ordinary course of business
since the date of such financial statements, (ii) liens disclosed in
the notes to such financial statements and (iii) liens arising in the
ordinary course of business after the date of such financial
statements. All buildings, and all fixtures, equipment and other
property and assets that are material to its business on a consolidated
basis, held under leases or sub-leases by Company or any Company
Subsidiary are held under valid instruments enforceable in accordance
with their respective terms, subject to applicable laws of bankruptcy,
insolvency or similar laws relating to creditors' rights generally and
to general principles of equity (whether applied in a proceeding in law
or equity). Substantially all of Company's and the Company
Subsidiaries' equipment in regular use has been reasonably maintained
and is in serviceable condition, reasonable wear and tear excepted.
(b) Neither the Company nor any Company Subsidiary is
obligated as a lessee (which term as used herein includes sublessee and
similar terms) under any lease for real property, other than Company
leases related to the Practices (as defined in Section 6.12 hereof) and
the leases set forth in Schedule 4.17 (the "Company Leases").
31
SECTION 4.18 Affiliates
Section 4.18 of the Company Disclosure Schedule sets forth the name of
each person who is, in Company's reasonable judgment, an affiliate (as such term
is used in Rule 145 under the Securities Act.
SECTION 4.19 Opinion of Financial Advisor
PaineWebber Incorporated ("PaineWebber") has delivered to the board of
directors of Company its written opinion to the effect that, as of the date
hereof, the Exchange Ratio is fair to the holders of shares of Company Common
Stock from a financial point of view (the "Xxxxx Xxxxxx Fairness Opinion").
SECTION 4.20 Brokers
The Company has furnished to Parent or its counsel a true and complete
copy of letter agreements (the "Engagement Letters") between the Company and its
counsel and its financial advisor, such Engagement Letters being the only
agreements pursuant to which such firms would be entitled to any payment
relating to the transactions contemplated hereunder. Other than Xxxxx Xxxxxx and
as set forth in Section 4.20 of the Company Disclosure Schedule, no broker,
financial advisor or investment banker or other person is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its Subsidiaries.
SECTION 4.21 Florida Business Corporation Law
For purposes of Section 607.0902 of the Florida Business Corporation
Law, the execution and delivery of this Agreement, the Stockholder Agreement and
the Purchase of shares of Company Common Stock or other securities issued by the
Company or by Parent and Merger Sub, including pursuant to the Stockholder
Agreement referred to in the preambles of this Agreement, will not constitute a
"control share acquisition" as defined in Section 607.0902(2) of the Florida
Business Corporation Law. Assuming Parent's representation in Section 5.18
hereof is true, to Company's knowledge, no other state takeover statute or
similar statute or regulation applies or purports to apply to the Merger, this
Agreement, , the Stockholders Agreements or the transactions contemplated by
this Agreement, and the Stockholders Agreements.
SECTION 4.22 Business Activity Restriction
Except as set forth in Section 4.21 of the Company Disclosure Schedule,
there is no non-competition or other similar agreement, commitment, judgment,
injunction, order or decree to which Company or any subsidiary of Company is a
party or subject to that has or could reasonably be expected to have the effect
of prohibiting or impairing the conduct of business by Company. Except as set
forth in Section 4.21 of the Company Disclosure Schedule, Company has not
entered
32
into any agreement under which Company is restricted in any material respect
from selling, licensing or otherwise distributing any of its technology or
products to, or providing services to, customers or potential customers or any
class of customers, in any geographic area, during any period of time or in any
segment of the market or line of business.
SECTION 4.23 Governmental Authorizations
The Company and, to the Company's Knowledge, without any independent
investigation, each Ophthalmologist/Optometrist Employee, possesses all
necessary licenses, franchises, permits and other governmental authorizations
(collectively, "Governmental Authorizations"), including, but not limited to all
licenses, franchises, permits and authorizations for the conduct of the
Company's business as now conducted (except for those Governmental
Authorizations the failure to possess individually or in the aggregate could not
reasonably be expected to have a Company Material Adverse Effect), all of which
are listed (with expiration dates, if applicable) on Section 4.23 of the Company
Disclosure. Except as set forth in Section 4.23 of the Company Disclosure
Schedule, 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 licenses, franchises, permits or authorizations, except
for defaults, breaches or violations which individually or in the aggregate
could not reasonably be expected to have a Company Material Adverse Effect. All
licenses, franchises, permits and other authorizations are valid and in full
force and effect, except for those licenses, franchises, permits and other
Governmental Authorizations the failure to possess could not reasonably be
expected to have a Company Material Adverse Effect. The Company and to the
Company's Knowledge, without any independent investigation, each
Ophthalmologist/Optometrist Employee is currently in compliance therewith, and
the Company has not received any notice that any Governmental Entity is
considering challenging, revoking, canceling, restricting, conditioning or not
renewing any license, franchise, permit or other authorization, except for those
licenses, franchises, permits and other Governmental Authorizations the failure
of which to possess could not reasonably be expected to have a Company Material
Adverse Effect. Except as set forth in Section 4.23 of the Company Disclosure
Schedule, the Governmental Authorizations listed in Section 4.23 of the Company
Disclosure Schedule collectively constitute all of the Governmental
Authorizations necessary to permit the Company to lawfully conduct and operate
its business in the manner it currently conducts and operates such businesses
and to permit it to own and use its assets in the manner in which it currently
owns and uses such assets.
SECTION 4.24 Gifts, Political Contributions, Unrecorded Funds
Neither the Company nor, to the Company's Knowledge without independent
investigation, any agent, Employee or independent contractor of the Company has,
in connection with the business of the Company (i) made or agreed to make any
contribution, payment, or gift to any customer, supplier, landlord, political
candidate, governmental official, official of any health plan, patient,
employee, or agent where either the contribution, payment, or gift or the
purpose thereof was illegal under any law or regulation; (ii) established or
maintained any unrecorded fund or asset for any purpose or made any false
entries on its respective books and records for any reason; (iii) made or
33
agreed to make any contribution, or reimbursed any political gift or
contribution made by any other Person, to any candidate for federal, state, or
local public office in violation of any law or regulation; or (iv) submitted any
claim for services rendered or reimbursement for expenses to any Person where
the services were not actually rendered or the expenses were not actually
incurred.
SECTION 4.25 No Dissenters' Rights
The Company's Common Stock is designated as a national market system
security within the meaning of Section 607.1302 of the FBCA. The Company's
Articles of Incorporation or Bylaws do not provide the holders of any class or
series of capital stock of the Company with dissenters' rights under Section
607.1302 of the FBCA or any other applicable law.
SECTION 4.26 Board Recommendation
The Board of Directors of the Company, at a meeting duly called and
held, has unanimously (i) approved this Agreement, (ii) determined that this
Agreement and the transactions contemplated hereby, including the Merger, are in
the best interests of the stockholders of the Company and (iii) resolved subject
to its fiduciary duties under applicable law to recommend that the stockholders
of the Company adopt this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Company, subject to the
exceptions specifically disclosed in the Parent Disclosure Schedule, all such
exceptions to be referenced to a specific representation set forth in this
Article V or to otherwise be clearly applicable to the representations hereof
not specifically referenced, that (it being understood that for purposes of this
Article V, unless the context otherwise requires, the term Parent shall be
deemed to include all of the Parent's Subsidiaries:
SECTION 5.01 Organization and Qualification; Subsidiaries
(a) Parent and each directly and indirectly owned subsidiary of Parent
(the "Parent Subsidiaries") has been duly organized and is validly existing and
in good standing (to the extent applicable) under the laws of the jurisdiction
of its incorporation or organization, as the case may be, and has the requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Except as set forth in
Section 5.01 of the Parent Disclosure Schedule, Parent and each Parent
Subsidiary is duly qualified or licensed to do business, and is in good standing
(to the extent applicable), in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except for such failure to be so
qualified or licensed and in good standing that could not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse
34
Effect.
(b) Section 5.01 of the Parent Disclosure Schedule sets forth, as of
the date of this Agreement, a true and complete list of each Parent Subsidiary,
together with (i) the jurisdiction of incorporation or organization of each
Parent Subsidiary and the percentage of each Parent Subsidiary's outstanding
capital stock or other equity interests owned by Parent or another Parent
Subsidiary and (ii) an indication of whether each Parent Subsidiary is a
"Significant Subsidiary" as defined in Regulation S-X under the Exchange Act.
Except as set forth in Section 5.01 of the Parent Disclosure Schedule, neither
Parent nor any Parent Subsidiary owns an equity interest in any partnership or
joint venture arrangement or other business entity that is material to the
business, assets, liabilities, financial condition or results of operations of
Parent and the Parent Subsidiaries, taken as a whole.
SECTION 5.02 Certificate of Incorporation and Bylaws
The copies of each of Parent's and Merger Subs, certificate of
incorporation and bylaws previously provided to Company by Parent are true,
complete and correct copies thereof. Such certificate of incorporation and
bylaws are in full force and effect. Parent is not in violation of any of the
provisions of its certificate of incorporation or bylaws.
SECTION 5.03 Capitalization
(b) The authorized capital stock of Parent consists of 50,000,000 shares of
Parent Common Stock and 5,000,000 shares of preferred stock ("Parent Preferred
Stock"). As of January 28, 2000 (which numbers are not materially different on
the date hereof), (i) 12,543,556 shares of Parent Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
no shares of Parent Common Stock are held in the treasury of Parent, (iii) no
shares of Parent Common Stock are held by Parent Subsidiaries, (iv)
approximately 2,007,976 shares of Parent Common Stock are reserved for future
issuance pursuant to outstanding options and warrants to purchase Parent Common
Stock ("Parent Stock Options"), and (v) 418,803 shares of Parent Preferred Stock
are outstanding. Except as set forth in Section 5.03 of the Parent Disclosure
Schedule or shares of Parent Common Stock issuable pursuant to the Parent Stock
Plans, there are no options, warrants or other rights, agreements, arrangements
or commitments of any character obligating Parent or any Parent Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in,
Parent or any Parent Subsidiary. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance prior to the Effective Time on the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Except as
set forth in Section 5.03 of the Parent Disclosure Schedule, there are no
outstanding contractual obligations of Parent or any Parent Subsidiary to
repurchase, redeem or otherwise acquire any shares of Parent Common Stock or any
capital stock of any Parent Subsidiary. Except as set forth in Section 5.03 of
the Parent Disclosure Schedule, each outstanding share of capital stock of each
Parent Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by Parent or another Parent Subsidiary
is free and
35
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on Parent's or such other Parent
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever.
(c) The consummation of the Merger will not trigger any anti-dilution rights or
price adjustment in connection with any options to purchase Parent Common Stock.
SECTION 5.04 Authority Relative to This Agreement
Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by each of Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate such transactions (other than the
approval of this Agreement and the Merger by the holders of a majority of the
outstanding shares of Parent Common Stock present at the Parent Shareholders'
Meeting and the consent of Parent as sole stockholder of Merger Sub). This
Agreement has been duly executed and delivered by each of Parent and Merger Sub
and, assuming the due authorization, execution and delivery by Company,
constitutes a legal, valid and binding obligation of each of Parent and Merger
Sub enforceable against Parent and Merger Sub in accordance with its terms.
SECTION 5.05 No Conflict; Required Filings and Consents
(a) The execution and delivery of this Agreement by Parent and Merger
Sub does not, and the performance by Parent and Merger Sub of their obligations
hereunder and the consummation of the Merger will not, except as set forth in
Section 5.05 of the Parent Disclosure Schedule, (i) conflict with or violate any
provision of the articles of incorporation or bylaws of Parent or any equivalent
organizational documents of any Parent Subsidiary, (ii) assuming that all
consents, approvals, authorizations and permits described in Section 5.05(b)
have been obtained and all filings and notifications described in Section
5.05(b) have been made, conflict with or violate any Law applicable to Parent or
any other Parent Subsidiary or by which any material property or material asset
of Parent or any Parent Subsidiary is bound or affected or (iii) result in any
material breach of or constitute a material default (or an event which with the
giving of notice or lapse of time or both could reasonably be expected to become
a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any material property or asset of Parent or any Parent Subsidiary
pursuant to, any Parent Material Contract (as defined below) or Parent Permit
(as defined below).
(b) The execution and delivery of this Agreement by Parent and Merger
Sub does not, and the performance by Parent and Merger Sub of their obligations
hereunder and the consummation of the Merger will not, require any material
consent, approval, authorization or permit of, or filing by
36
Parent with or notification by Parent to, any Governmental Entity, except as set
forth in Section 5.05 of the Parent Disclosure Schedule or pursuant to
applicable requirements of the Exchange Act, the Securities Act, Blue Sky Laws,
the rules and regulations of the AMEX, state takeover laws, the premerger
notification requirements of the HSR Act, if any, and the filing and recordation
of the Certificate of Merger as required by the FBCA.
SECTION 5.06 Permits; Compliance with Laws
Except as set forth in Section 5.06 of the Parent Disclosure Schedule,
Parent and the Parent Subsidiaries are in possession of all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates,
identification and registration numbers, approvals and orders of any
Governmental Entity necessary for Parent or any Parent Subsidiary to own, lease
and operate its properties or to offer or perform its services or to develop,
produce, store, distribute and market its products or otherwise to carry on its
business as it is now being conducted (collectively, the "Parent Permits")
except for Parent permits which could not reasonably be expected to have a
Parent Material Adverse Effect, and, as of the date of this Agreement, none of
the Parent Permits has been suspended or canceled nor is any such suspension or
cancellation pending or, to the knowledge of Parent, threatened. Neither Parent
nor any Parent Subsidiary is in conflict with, or in default or violation of,
(i) any Law applicable to Parent or any Parent Subsidiary or by which any
material property or asset of Parent or any Parent Subsidiary is bound or
affected or (ii) any Parent Permits, except for conflicts, defaults or
violations which could not reasonably be expected to have a Parent Material
Adverse Effect. Section 5.06 of the Parent Disclosure Schedule sets forth, as of
the date of this Agreement, all actions, proceedings, investigations or surveys
pending or, to the knowledge of Parent, threatened against Parent or any Parent
Subsidiary that could reasonably be expected to result in the suspension or
cancellation of any other material Parent Permit. Except as set forth in Section
5.06 of the Parent Disclosure Schedule, since August 13, 1999, neither Parent
nor any Parent Subsidiary has received from any Governmental Entity any written
notification with respect to possible conflicts, defaults or violations of Laws.
SECTION 5.07 SEC Filings; Financial Statements
(a) Parent has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC and the AMEX since July 1,
1999 (collectively, together with any such forms, reports, statements and
documents Parent may file subsequent to the date hereof until the Closing, the
"Parent Reports") and (B) with any other Governmental Entities. Each Parent
Report (i) was prepared in accordance with the requirements of the Securities
Act, the Exchange Act or the AMEX, as the case may be, substantially in all
respects and (ii) did not at the time it was filed contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. Each form,
report, statement and document referred to in clause (B) of this paragraph was
prepared in all material respects in accordance with the requirements of
applicable Law. No Parent Subsidiary is subject to the periodic reporting
requirements of the
37
Exchange Act or required to file any form, report or other document with the
SEC, the AMEX, any other stock exchange or any other comparable Governmental
Entity.
(b) Except as is provided in the Parent Reports, each of the
consolidated financial statements (including, in each case, any notes thereto)
contained in the Parent Reports was prepared in accordance with GAAP applied on
a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto) and each presented fairly, in all material respects, the
consolidated financial position of Parent and the consolidated Parent
Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Parent and the Parent Subsidiaries as reported in
the Parent Reports, including the notes thereto, none of Parent or any Parent
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with GAAP, except for
immaterial liabilities or obligations incurred in the ordinary course of
business consistent with past practice since June 30, 1999 that have not had or
could not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
(d) Parent has furnished to Company copies of the unaudited
consolidated and consolidating balance sheets and statements of income, changes
in stockholders' equity, and cash flow as of and for the months ended October 31
and November 30, 1999 for the Parent and the Parent Subsidiaries (collectively,
the "Financial Statements"). The Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicted in the notes thereto), present
fairly, in all material respects, the consolidated financial condition of the
Parent and the consolidated Parent Subsidiaries as of such dates and the results
of operations of the Parent and the Parent Subsidiaries for such periods
provided, however, that the Financial Statements are subject to normal and
recurring immaterial year-end adjustments and lack footnotes and other
presentation items.
(e) Parent has sold 3,571, 428 shares of Parent Common Stock offered
pursuant to its Registration Statement on Form S-1 declared effective by the SEC
on January 19, 2000 at purchase price of $3.50 per share. As of the date hereof,
the net proceeds have been used by Parent in the manner described in such Form
S-1.
SECTION 5.08 Absence of Certain Changes or Events
Except as set forth in Section 5.08 of the Parent Disclosure Schedule,
since September 30, 1999, Parent and the Parent Subsidiaries have conducted
their businesses only in the ordinary course consistent with past practice and,
since such date, there has not been (i) any material changes in or effect on the
business, assets, liabilities, financial condition or results of operations of
Parent or the Parent Subsidiaries, (ii) any event that could reasonably be
expected to prevent or materially delay
38
the performance of Parent's obligations pursuant to this Agreement and the
consummation of the Merger by Parent, (iii) any material change by Parent in its
accounting methods, principles or practices, (iv) any declaration, setting aside
or payment of any dividend or distribution in respect of the shares of Parent
Common Stock or any redemption, purchase or other acquisition of any of Parent's
securities, (v) except for changes in the ordinary course of business consistent
with past practice, any increase in the compensation or benefits or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting or repricing of stock options, stock appreciation
rights, performance awards or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any employees, officers, consultants or directors of Parent or
any Parent Subsidiary, (vi) any issuance or sale of any stock, notes, bonds or
other securities other than pursuant to the exercise of outstanding securities,
or entering into any agreement with respect thereto, or the issuances of options
under the Parent Stock Plans, (vii) any amendment to the Parent's certificate of
incorporation or bylaws, (viii) other than in the ordinary course of business
consistent with past practice, any (x) purchase, sale, assignment or transfer of
any material assets, (y) mortgage, pledge or existence of any lien, encumbrance
or charge on any material assets or properties, tangible or intangible except
for liens for Taxes not yet delinquent, or (z) waiver of any rights of material
value or cancellation or any material debts or claims, (ix) any incurrence of
any material liability (absolute or contingent), except for current liabilities
and obligations incurred in the ordinary course of business consistent with past
practice, (x) any incurrence of any damage, destruction or similar loss, whether
or not covered by insurance, materially affecting the business or properties of
Parent or any Parent Subsidiary, or (xi) any entering into any transaction of a
material nature other than in the ordinary course of business, consistent with
past practice.
SECTION 5.09 Employee Benefit Plans; Labor Matters
(a) The Parent Disclosure Schedule lists each material employee benefit
fund, plan, program, arrangement and contract (including, without limitation,
any "pension" plan, fund or program, as defined in Section 3(2) of ERISA, any
"employee benefit plan", as defined in Section 3(3) of ERISA and any plan,
program, policy, arrangement or contract providing for severance), whether
currently in effect or pursuant to which the Parent has any ongoing liability or
obligation; medical, dental or vision benefits; life insurance or death
benefits; disability benefits, sick pay or other wage replacement; vacation,
holiday or sabbatical; pension or profit-sharing benefits; stock options or
other equity compensation; bonus or incentive pay or other material fringe
benefits) whether written or not ("Benefit Plans"), maintained, sponsored or
contributed to or required to be contributed to by Parent or any Parent
Subsidiary (the "Parent Benefit Plans"). With respect to each Parent Benefit
Plan, Parent has delivered or made available to Company a true, complete and
correct copy of (i) such Parent Benefit Plan (or, if not written, a written
summary of its material terms) and the most recent summary plan description, if
any, related to such Parent Benefit Plan, (ii) each trust agreement or other
funding arrangement relating to such Parent Benefit Plan, (iii) the most recent
annual report (Form 5500) filed with the IRS with respect to such Parent Benefit
Plan (and, if the most recent annual report is a Form 5500R, the most recent
Form 5500C filed with respect to such Parent Benefit Plan), (iv) the most recent
actuarial report or financial statement relating to such Parent Benefit Plan
39
and (v) the most recent determination letter, if any, issued by the IRS with
respect to such Parent Benefit Plan and any pending request for such a
determination letter. Neither Parent nor any Parent Subsidiary nor, to the
knowledge of Parent, any other person or entity, has any express commitment,
whether legally enforceable or not, to modify, change or terminate any Parent
Benefit Plan, other than with respect to a modification, change or termination
required by ERISA or the Code.
(b) Except as set forth in Section 5.08 of the Parent Disclosure
Schedule, Parent has delivered to Company true, complete and correct copies of
(i) all employment agreements with officers and all consulting agreements of
Parent and each Parent Subsidiary, (ii) all severance plans, agreements,
programs and policies of Parent and each Parent Subsidiary with or relating to
their respective employees, directors or consultants, and (iii) all plans,
programs, agreements and other arrangements of Parent and each Parent Subsidiary
with or relating to their respective employees, directors or consultants which
contain "change of control" provisions, and all such plans, agreements,
programs, and policies are specifically identified as such on Section 5.09 of
the Parent Disclosure Schedule. Except as set forth in Section 5.09 of the
Parent Disclosure Schedule, no payment or benefit which may be required to be
made by Parent or any Parent Subsidiary or which otherwise may be required to be
made under the terms of any Parent Benefit Plan or other arrangement will
constitute a parachute payment under Code Section 280(G)(1), and the
consummation of the transactions contemplated by this Agreement will not, (i)
entitle any current or former employee or other service provider of Parent or
any Parent Subsidiary to severance benefits or any other payment, compensation
or benefit (including forgiveness of indebtedness) or (ii) accelerate the time
of payment or vesting, or increase the amount of compensation or benefit due any
such employee or service provider.
(c) Neither Parent nor any Parent Subsidiary is a party to, or has any
obligations under or with respect to, any collective bargaining or other labor
union contract applicable to persons employed by Parent or any Parent Subsidiary
and no collective bargaining agreement is being negotiated by Parent or any
Parent Subsidiary or any person or entity that may obligate the Parent or any
Parent Subsidiary thereunder. As of the date of this Agreement, there is no
labor dispute, strike, union organizing activity or work stoppage against Parent
or any Parent Subsidiary pending or, to the knowledge of Parent, threatened
which may interfere with the respective business activities of Parent or any
Parent Subsidiary. As of the date of this Agreement, to the knowledge of Parent,
none of Parent, any Parent Subsidiary, or any of their respective
representatives or employees has committed any unfair labor practice in
connection with the operation of the respective businesses of Parent or any
Parent Subsidiary, and there is no charge or complaint filed against Parent or
any Parent Subsidiary by or with the National Labor Relations Board or any
comparable Governmental Entity pending or threatened in writing.
SECTION 5.10 Certain Tax Matters
(a) Neither Parent, nor to Parent's knowledge, any of its affiliates,
has taken or agreed to take any action (other than actions contemplated by this
Agreement) that could be expected to prevent the Merger from constituting a
"reorganization" under Section 368 of the Code. Parent is not aware
40
of any agreement or plan to which Parent or any of its affiliates is a party or
other circumstances relating to Parent or any of its affiliates that could
reasonably be expected to prevent the Merger from so qualifying as a
reorganization under Section 368 of the Code.
(b) Parent and each of the Parent Subsidiaries, and any consolidated,
combined, unitary or aggregated group for Tax purposes of which Parent or any
Parent Subsidiary is or has been a member, have properly completed and timely
filed all Tax Returns required to be filed by them and have paid all Taxes shown
thereon to be due. Parent has provided adequate accruals in accordance with
generally accepted accounting principles in its latest financial statements
included in the Parent Reports for any Taxes that have not been paid, whether or
not shown as being due on any Tax Returns. Parent and the Parent Subsidiaries
have no material liability for unpaid Taxes accruing after the date of the
Parent's latest financial statements included in the Parent Reports.
(c) There is (i) no material claim for Taxes that is a lien against the
property of Parent or any Parent Subsidiary or is being asserted against Parent
or any Parent Subsidiary other than liens for Taxes not yet due and payable,
(ii) no audit of any Tax Return of parent or any Parent Subsidiary being
conducted by a Tax Authority; (iii) no extension of the statute of limitations
on the assessment of any Taxes granted by Parent or any Parent Subsidiary and
currently in effect, and (iv) no agreement, contract or arrangement to which
Parent or any Parent Subsidiary is a party that may result in the payment of any
amount that would not be deductible by reason of Section 280G or Section 404 of
the Code.
SECTION 5.11 Contracts
(a) Section 5.11 of the Parent Disclosure Schedule sets forth a list of
all material written and oral contracts or agreements relating to the Parent,
including without limitation any: (i) contract resulting in a commitment or
potential commitment for expenditure or other obligation or potential
obligation, or which provides for the receipt or potential receipt, involving in
excess of One Hundred Thousand Dollars ($100,000) in any instance, or series of
related contracts that in the aggregate give rise to rights or obligations
exceeding such amount, other than contracts with health plans and providers,
entered into by the Parent's managed care business in the ordinary course of
business, (ii) the twelve (12) largest customer contracts based upon revenues
generated to the Parent; (iii) indenture, mortgage, promissory note, loan
agreement, guarantee or other agreement or commitment for the borrowing or
lending of money or encumbrance of assets involving more than One Hundred
Thousand Dollars ($100,000) in each instance; (iv) agreement which restricts the
Parent from engaging in any line of business or from competing with any other
person; (v) warranties made with respect to products manufactured, packaged,
distributed or sold or services provided by the Parent; (vi) any agreement which
terminates, or gives another party the right to terminate such agreement, upon
the completion of the transaction contemplated by this Agreement; or (vii) any
other contract, agreement, instrument, arrangement or commitment that is
material to the condition (financial or otherwise), results of operation,
assets, properties, liabilities, business or prospects of the Parent
(collectively, and together with all other agreements required to be disclosed
on the Parent
41
Disclosure Schedule the "Parent Material Contracts"). The Parent has previously
furnished to Parent true, complete and correct copies of all written agreements,
as amended, required to be listed on Section 5.11 of the Parent Disclosure
Schedule.
(b) The Parent Material Contracts are each in full force and effect and
are the valid and legally binding obligations of the Parent and, to the best of
Parent's knowledge, the other parties thereto, enforceable in accordance with
their respective terms, subject only to bankruptcy, insolvency or similar laws
affecting the rights of creditors generally and to general equitable principles.
The Parent has not received notice of its default under any of the Parent
Material Contracts and no event has occurred which, with the passage of time or
the giving of notice or both, would constitute a default by the Parent
thereunder. To the Parent's knowledge, none of the other parties to any of the
Parent Material Contracts is in default thereunder, nor has an event occurred
which, with the passage of time or the giving of notice or both would constitute
a default by such other party thereunder. The Parent has not received notice of
the pending or threatened cancellation, revocation or termination of any of the
Parent Material Contracts, nor are any of them aware of any facts or
circumstances which could reasonably be expected to lead to any such
cancellation, revocation or termination.
(c) Except as otherwise indicated on Section 5.11 of the Parent
Disclosure Schedule, to the Parent's knowledge, after due inquiry, the
continuation, validity and effectiveness of the Parent Material Contracts under
the current terms thereof will in no way be affected by the consummation of the
transactions contemplated by this Agreement.
SECTION 5.12 Litigation
There is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of Parent, threatened against Parent or any Parent
Subsidiary, and, to the knowledge of Parent, there are no existing facts or
circumstances that could reasonably be expected to result in a suit, claim,
action, proceeding or investigation. Parent is not aware of any facts or
circumstances which could reasonably be expected to result in the denial of
insurance coverage under policies issued to Parent and Parent Subsidiaries in
respect of such suits, claims, actions, proceedings and investigations. Neither
Parent nor any Parent Subsidiary is subject to any outstanding order, writ,
injunction or decree.
SECTION 5.13 Environmental Matters
Parent and the Parent Subsidiaries are in material compliance with all
applicable Environmental Laws and all Parent Permits required by Environmental
Laws. All past noncompliance of Parent or any Parent Subsidiary with
Environmental Laws or Environmental Permits has been resolved without any
pending, ongoing or future material obligation, cost or
42
liability. Neither Parent nor any Parent Subsidiary has released a Hazardous
Material at, or transported a Hazardous Material to or from, any real property
currently or formerly owned, leased or occupied by Parent or any Parent
Subsidiary, in violation of any Environmental Law.
43
SECTION 5.14 Insurance
Parent and each Parent Subsidiary is presently insured, and during each
of the past five calendar years has been insured, against such risks, as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. The Parent reasonably believes that the
policies of fire, theft, liability, medical malpractice, director and officer,
product liability and other insurance maintained with respect to the assets or
businesses of Parent and Parent Subsidiaries provide, adequate coverage against
loss. Parent has made available to Company a complete and correct list as of the
date hereof of all insurance policies maintained by Parent or the Parent
Subsidiaries, and has made available to Company complete and correct copies of
all such policies, together with all riders and amendments thereto. All such
policies are in full force and effect and all premiums due thereon have been
paid to the date hereof. Parent and the Parent Subsidiaries have complied in all
material respects with the terms of such policies.
SECTION 5.15 Properties
Parent and the Parent Subsidiaries have good title, free and clear of
all material mortgages, liens, pledges, charges or other encumbrances to all
their material tangible properties and material assets, real, personal or mixed,
reflected in the Parent's consolidated financial statements for the quarterly
period ended September 30, 1999, as being owned by Parent and the Parent
Subsidiaries as of the date thereof, other than (i) any properties or assets
that have been sold or otherwise disposed of in the ordinary course of business
since the date of such financial statements, (ii) liens disclosed in the notes
to such financial statements and (iii) liens arising in the ordinary course of
business after the date of such financial statements or disclosed in Section
5.15 of the Parent Disclosure Schedule. All buildings, and all fixtures,
equipment and other property and assets that are material to its business on a
consolidated basis, held under leases or sub-leases by Parent or any Parent
Subsidiary are held under valid instruments enforceable in accordance with their
respective terms, subject to applicable laws of bankruptcy, insolvency or
similar laws relating to creditors' rights generally and to general principles
of equity (whether applied in a proceeding in law or equity). Substantially all
of Parent's and the Parent Subsidiaries' equipment in regular use has been
reasonably maintained and is in serviceable condition, reasonable wear and tear
excepted.
SECTION 5.16 Opinion of Financial Advisor
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated ("Xxxx Xxxxx") has delivered to
the board of directors of Parent its written opinion to the effect that, as of
the date hereof, the Exchange Ratio is fair to the holders of shares of Parent
Common Stock from a financial point of view (the "Xxxx Xxxxx Fairness Opinion").
SECTION 5.17 Brokers
Except as set forth on Section 5.17 of Parent Disclosure Schedule, no
broker, finder or
44
investment banker (other than Xxxx Xxxxx and X.X. Xxxxxx Securities, Inc.) is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent. Parent
has heretofore made available to Parent true, complete and correct copies of all
agreements between Parent, on the one hand, and Xxxx Xxxxx and/or X.X. Xxxxxx
Securities, Inc., on the other hand, pursuant to which such firms would be
entitled to any payment relating to the Merger.
SECTION 5.18 No Interested Shareholders
To Parent's knowledge, neither the Company nor any "affiliate" or
"associate" of the Company is an "interested shareholder" as those terms are
defined in 607.0901 of the FBCA.
SECTION 5.19 Governmental Authorizations
The Parent and, to the Parent's knowledge, without any independent
investigation, each Ophthalmologist/Optometrist Employee, possesses all
necessary licenses, franchises, permits and other governmental authorizations
(collectively, "Governmental Authorizations"), including, but not limited to,
all licenses, franchises, permits and authorizations for the conduct of the
Parent's business as now conducted, except for those licenses, franchises,
permits and other governmental authorizations the failure of which to possess
could not reasonably be expected to have a Parent Material Adverse Effect.
Except as set forth in Section 5.19 of the Parent Disclosure Schedule, 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 material licenses, franchises, permits or authorizations, except
for those licenses, franchises, permits and other governmental authorizations
the failure of which to possess could not reasonably be expected to have a
Parent Material Adverse Effect . All such licenses, franchises, permits and
other authorizations are valid and in full force and effect, except for those
licenses, franchises, permits and other governmental authorizations the failure
of which to possess could not reasonably be expected to have a Parent Material
Adverse Effect. The Parent and to the Parent's knowledge, without any
independent investigation, each Ophthalmologist/Optometrist Employee is
currently in compliance therewith, and the Parent has not received any notice
that any Governmental Entity is considering challenging, revoking, canceling,
restricting, conditioning or not renewing any material license, franchise,
permit or other authorization except for those licenses, franchises, permits and
other governmental authorizations the failure of which to possess could not
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 5.20 Intellectual Property.
The Parent and the Parent Subsidiaries have ownership of or rights to
use each patent, patent application, copyright (whether or not registered),
copyright application, trademark (whether or not registered), trademark
application, trade name, service xxxx, and other trade secret or proprietary
intellectual property owned by or used in and material to the business of the
Parent and the Parent Subsidiaries, taken as a whole (collectively, a "Parent
Intellectual Property"). The Parent has been provided with a list of all
patents, trademarks and copyrights and applications therefor owned by or
45
licensed to the Parent or any Subsidiary that are material to the conduct of the
business of the Parent and the Parent Subsidiaries, taken as a whole, as now
operated. To the Parent's Knowledge, none of the previous or current
development, manufacture, marketing or distribution of products or services of
or by the Parent or any Parent Subsidiary infringes the right of any other
person, except for any such infringements that, in the aggregate, have not
resulted in, and could not reasonably be expected to result in, a Parent
Material Adverse Effect. To the Parent's Knowledge, without any independent
investigation, no other person is infringing the rights of the Parent or any
Parent Subsidiary in any such Parent Intellectual Property, except for any such
infringements that, in the aggregate, have not resulted in, and could not
reasonably be expected to result in, a Parent Material Adverse Effect. To the
best of Parent's knowledge, Parent's material software and hardware are year
2000 compliant, except to the extent noncompliance should not or could not
reasonably be expected to cause a Parent Material Adverse Effect.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business by Company Pending the Closing
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, Company shall not knowingly take any action a principal purpose
of which is, and the reasonably likely result of which would be, a material
delay in or interference with the consummation of the Merger.
Company agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, and except as
set forth below or as a result of entering into this Agreement, (x) the
respective businesses of Company and the Company Subsidiaries shall be conducted
only in, and Company and the Company Subsidiaries shall not take any action
except in, the ordinary course of business consistent with past practice and (y)
Company shall use all commercially reasonable efforts to keep available the
services of such of the current officers, significant employees and consultants
of Company and the Company Subsidiaries and shall use commercially reasonable
efforts to preserve the current relationships of Company and the Company
Subsidiaries with such of the corporate partners, customers, suppliers and other
persons with which Company or any Company Subsidiary has significant business
relations in order to preserve substantially intact its business organization.
By way of amplification and not limitation, neither Company nor any Company
Subsidiary shall, between the date of this Agreement and the Effective Time,
directly or indirectly, do, or agree to do, any of the following without the
prior written consent of Parent and except as a result of entering into this
Agreement or except as set forth in Section 6.01 of the Company Disclosure
Schedule:
(a) amend or otherwise change its certificate of incorporation
or bylaws or equivalent organizational documents;
46
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale,
pledge, disposition, grant, transfer, lease, license or encumbrance of,
(i) any shares of capital stock of Company or any Company Subsidiary of
any class, or securities convertible into or exchangeable or
exercisable for any shares of such capital stock, or any options,
warrants or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without
limitation, any phantom interest), of Company or any Company
Subsidiary, other than the issuance of shares of Company Common Stock
pursuant to the exercise of stock options theretofore outstanding as of
the date of this Agreement, or (ii) any material property or assets of
Company or any Company Subsidiary, including, but not limited to, the
property or assets of MEC, except providing products and services in
the ordinary course of business consistent with past practice;
(c) (i) except as to business interests in new refractive
centers or ambulatory surgical centers pursuant to the Company's
business plan and after written notice to Parent, acquire (including,
without limitation, by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation, partnership, other business
organization or person or any division thereof; (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person (other than Company and
Company Subsidiaries) for borrowed money or make any loans or advances,
other than routine employee loans to employees other than Company
officers (not to exceed $1,000 to any individual), material to the
business, assets, liabilities, financial condition or results of
operations of Company and the Company Subsidiaries, taken as a whole,
other than borrowing under the Company's credit facility for use in
operating the Company in the ordinary course of business, or to pay or
discharge debt or liabilities for an amount less than reflected or
reserved against on the Company Balance Sheet; (iii) terminate, cancel
or request any material change in, or agree to any material change in,
any Company Material Contract; (iv) make or authorize any capital
expenditure, other than capital expenditures in the ordinary course of
business consistent with past practice that have been included in the
fiscal year 2000 budget ("Budget") delivered to Parent and disclosed in
writing to Parent and that are not, in the aggregate, in excess of
$75,000 for Company and the Company Subsidiaries taken as a whole; or
(v) enter into or amend any contract, agreement, commitment or
arrangement that, if fully performed, would not be permitted under this
Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except that any Company Subsidiary
may pay dividends or make other distributions to Company or any other
Company Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
47
(f) except as contemplated herein, amend or change the period
(or permit any acceleration, amendment or change) of exercisability of
options granted under the Company Stock Plans or other options and
warrants, reprice any options or warrants, or authorize cash payments
in exchange for any Company Stock Options granted under any of such
plans;
(g) except in connection with the closing of the Practice
Dispositions, amend the terms of, repurchase, redeem or otherwise
acquire, or permit any Company Subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of any
Company Subsidiary or propose to do any of the foregoing;
(h) enter into any contract or agreement, which, if entered
into prior to the date hereof, would be a Material Contract, amend or
terminate any existing Material Contract, or take any action which
would terminate an existing Material Contract, or would give any party
to an existing Material Contract the right to terminate such Material
Contract;
(i) increase the compensation payable or to become payable to
its directors, officers, consultants or employees, except as required
by the agreements which are set forth in Section 6.01 of the Company
Disclosure Schedule, or grant any rights to severance or termination
pay to, or enter into any employment or severance agreement which
provides benefits upon a change in control of Company that would be
triggered by the Merger with, any director, officer, consultant or
other employee of Company or any Company Subsidiary who is not
currently entitled to such benefits from the Merger, establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any director, officer, consultant or employee of Company or
any Company Subsidiary, except to the extent required by applicable
Law, or enter into or amend any contract, agreement, commitment or
arrangement between Company or any Company Subsidiary and any of
Company's directors, officers, consultants or employees;
(j) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than (x) the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against on the consolidated balance
sheet of Company and the consolidated the Company Subsidiaries dated as
of September 30, 1999 included in Company's quarterly report on Form
10-Q for the period then ended (the "Company Balance Sheet") but only
to the extent reflected or to the extent of such reserves or (y)
incurred in the ordinary course of business since September 30, 1999 or
(z) to pay or discharge any such liability for an amount less than
reflected or reserved against on the Company Balance Sheet;
(k) except for accounting changes for discontinued business
operations of the Practice Dispositions and the Corporate Optometry
businesses in accordance with GAAP, make any change with respect to
Company's accounting policies, principles, methods or procedures,
including, without limitation, revenue recognition policies, other than
as required by GAAP;
48
(l) make any material Tax election or settle or compromise any
material Tax liability; or
(m) except as otherwise permitted in connection with this
Agreement, authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any
action which would make any of the representations or warranties of
Company contained in this Agreement untrue or incorrect or result in
any of the conditions to the Merger set forth herein not being
satisfied.
SECTION 6.02 Notices of Certain Events
Each of Parent and Company shall give prompt notice to the other of (i)
any notice or other communication from any person alleging that the consent of
such person is or may be required in connection with the Merger; (ii) any notice
or other communication from any Governmental Entity in connection with the
Merger; (iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting Parent or the Parent Subsidiaries or Company or the Company
Subsidiaries, respectively, or that relate to the consummation of the Merger;
(iv) the occurrence of a default or event that, with the giving of notice or
lapse of time or both, will become a default under any Parent Material Contract
or Company Material Contract, respectively; and (v) any change that could
reasonably be expected to have a Parent Material Adverse Effect or a Company
Material Adverse Effect, respectively, or to delay or impede the ability of
either Parent or Company, respectively, to perform their respective obligations
pursuant to this Agreement and to effect the consummation of the Merger.
SECTION 6.03 Access to Information; Confidentiality
(a) Except as required pursuant to any confidentiality agreement or
similar agreement or arrangement to which Parent or Company or any of the Parent
Subsidiaries or the Company Subsidiaries is a party or pursuant to applicable
Law or the regulations or requirements of any stock exchange or other regulatory
organization with whose rules a party hereto is required to comply, from the
date of this Agreement to the Effective Time, Parent and Company shall (and
shall cause the Parent Subsidiaries and Company Subsidiaries, respectively, to)
(i) provide to the other (and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively,
"Representatives")) access at reasonable times upon prior notice to its and its
subsidiaries' officers, employees, agents, properties, offices and other
facilities and to the books and records thereof, and (ii) furnish promptly such
information concerning its and its subsidiaries' business, properties,
contracts, assets, liabilities and personnel as the other party or its
Representatives may reasonably request. All such investigations and access shall
be conducted in a manner as not to interfere unreasonably with the business
operations of the Company. No investigation conducted pursuant to this Section
6.03 shall affect or be deemed to modify any representation or warranty made in
this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement with respect to
49
the information disclosed pursuant to this Section 6.03 or pursuant to the
Confidentiality Agreement.
SECTION 6.04 No Solicitation of Transactions
(a) Except as provided in Section 6.04(b) below, Company shall not,
directly or indirectly, and shall cause its Representatives not to, directly or
indirectly, solicit, initiate or encourage (including by way of furnishing
nonpublic information), any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction, or enter into or maintain or continue discussions or negotiate with
any person in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or authorize or
permit any of Company's Representatives or subsidiaries, or any Representative
retained by Company's subsidiaries, to take any such action; provided, however,
that nothing contained in this Section 6.04(a) shall prohibit the board of
directors of Company (i) from complying with Rule 14d-9 or 14e-2(a) promulgated
under the Exchange Act with regard to a tender or exchange offer not made in
violation of this Section 6.04(a) or (ii) prior to receipt of the approval by
the stockholders of Company of this Agreement and the Merger from providing
information (subject to a confidentiality agreement at least as restrictive as
the Confidentiality Agreement) in connection with, and negotiating, another
unsolicited, bona fide written proposal regarding a Competing Transaction that
(x) Company's board of directors shall have concluded in good faith, after
considering applicable state law, on the basis of the advice of independent
outside counsel that such action is necessary to prevent Company's board of
directors from violating its fiduciary duties to Company's stockholders under
applicable law, and with respect to which Company's board of directors shall
have determined (based upon the advice of Company's independent financial
advisors) in the proper exercise of its fiduciary duties to Company's
stockholders that the acquiring party is capable of consummating such Competing
Transaction on the terms proposed, and (y) Company's board of directors shall
have determined in the proper exercise of its fiduciary duties to Company's
stockholders that such Competing Transaction provides greater value to the
stockholders of Company than the Merger (based upon the written opinion of
Company's independent financial advisors that such Competing Transaction is
superior from a financial point of view) (any such Competing Transaction being
referred to herein as a "Superior Proposal"). Any violation of the restrictions
set forth in this Section 6.04(a) by any Representative of Company or any of its
Subsidiaries, whether or not such Person is purporting to act on behalf of
Company or otherwise, shall be deemed to be a breach of this Section 6.04(a) by
Company. Company shall notify Parent promptly if any proposal or offer, or any
inquiry or contact with any person with respect thereto, regarding a Competing
Transaction is made, such notice to include the identity of the person making
such proposal, offer, inquiry or contact, and the terms of such Competing
Transaction, and shall keep Parent apprised, on a current basis, no later than
24 hours after any change or modification of any such Competing Transaction, of
the status of such Competing Transaction and of any modifications to the terms
thereof. Company immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to a Competing Transaction. Company shall not release any third party from, or
waive any provision of, any confidentiality or standstill agreement to which it
is a party.
50
(b) Except as permitted by this Section 6.04(b), the Company's Board of
Directors shall not (i) withdraw, modify or change its approval or
recommendation of this Agreement, or propose publicly to withdraw, modify or
change the Merger or any of the transactions contemplated hereby, (ii) approve
or recommend or publicly propose to approve or recommend a Competing
Transaction, (iii) cause the Company to enter into any letter agreement, letter
of intent, agreement in principle or definitive agreement or similar agreement
providing for a Competing Transaction, or (iv) resolve to do any of the
foregoing, unless prior to the Company Stockholders' Meeting, the Company
receives an unsolicited proposal for a Competing Transaction and the Board of
Directors or the Company determines reasonably and in good faith, after due
investigation, that (a) such proposal is a Superior Proposal based upon the
written opinion of the Company's independent financial advisors that such
Competing Transaction is superior from a financial point of view, (b) the Person
making such Superior Proposal is reasonably capable of consummating such
Superior Proposal in a timely fashion and (c) based upon the advice of
independent outside counsel, the failure of the Board of Directors of the
Company to withdraw or modify its approval or recommendation of this Agreement
or the Merger, or approve or recommend such Superior Proposal, would be
inconsistent with its fiduciary duties under applicable law. In such case, the
Board may withdraw or modify its recommendation, and approve and recommend such
Superior Proposal, provided the Board of Directors of the Company (i) at least
five (5) Business Days prior to taking such action, provides to Parent written
notice of the Company's intention to accept the Superior Proposal, (ii) during
such period, gives parent a reasonable opportunity to propose modifications to
the Merger Consideration and negotiates such modifications in good faith with
the objective of allowing Parent to match the Superior Proposal and (iii) at the
end of such period, (A) reasonably and in good faith continues to believe that
the other proposal is a Superior Proposal, (B) simultaneously terminates this
Agreement, (C) concurrently causes the Company to enter into a definitive
acquisition agreement with respect to such Superior Proposal and (D)
concurrently pays to Parent the Termination Fee and Parent's Expenses as
provided in Section 9.05. Nothing contained in this Section 6.04(b) shall
prohibit the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act;
provided that the Company does not withdraw or modify its position with respect
to the Merger or approve or recommend a proposal for a Competing Transaction
except as provided in this Section 6.04(b).
SECTION 6.05 Tax-Free Transaction
From and after the date of this Agreement, each party hereto shall use
all reasonable efforts to cause the Merger to qualify, and shall not knowingly
take any actions or cause any actions to be taken which could reasonably be
expected to prevent the Merger from qualifying as a "reorganization" under
Section 368(a) of the Code.
SECTION 6.06 Control of Operations
Nothing contained in this Agreement shall give Parent, directly or
indirectly, the right to control or direct the operations of Company and the
Company Subsidiaries prior to the Effective Time. Prior to the Effective Time,
Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.
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SECTION 6.07 Further Action; Consents; Filings
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all reasonable efforts to (i) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the Merger, (ii) obtain from any Governmental Entity any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by Parent or Company or any of their respective
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Merger and (iii) make all necessary
filings, and thereafter make any other required or appropriate submissions, with
respect to this Agreement and the Merger required under (A) the rules and
regulations of the AMEX or the NNM, as the case may be, (B) the Securities Act,
the Exchange Act and any other applicable Federal or state securities Laws, (C)
the HSR Act, if any, and (D) any other applicable Law. The parties hereto shall
cooperate and consult with each other in connection with the making of all such
filings, including by providing copies of all such documents to the nonfiling
parties and their advisors prior to filing, and none of the parties shall file
any such document if any of the other parties shall have reasonably objected to
the filing of such document. No party shall consent to any voluntary extension
of any statutory deadline or waiting period or to any voluntary delay of the
consummation of the Merger at the behest of any Governmental Entity without the
consent and agreement of the other parties hereto, which consent shall not be
unreasonably withheld or delayed. The Parent shall not be required to divest
itself or the Company of any assets or business in order to obtain approval in
connection with the HSR Act or otherwise.
(b) Each of Company and Parent will give (or will cause their
respective subsidiaries to give) any notices to third persons, and use, and
cause their respective subsidiaries to use, reasonable efforts to obtain any
consents from third persons necessary, proper or advisable (as determined in
good faith by Parent with respect to such notices or consents to be delivered or
obtained by Company) to consummate the transactions contemplated by this
Agreement.
SECTION 6.08 Additional Reports
Company and Parent shall each furnish to the other copies of any
reports of the type referred to in Sections 4.07 and 5.06, which it files with
the SEC on or after the date hereof, and Company and Parent, as the case may be,
covenant and warrant that as of the respective dates thereof, such reports will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Any
unaudited consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present in all material
respects the financial position of Company and its consolidated subsidiaries or
Parent and its consolidated subsidiaries, as the case may be, as of the dates
thereof and the results of operations and changes in financial position or other
information including therein for the periods or as of the date then ended
(subject, where appropriate, to normal year-end adjustments), in each case in
accordance
52
with past practice and U.S. GAAP consistently applied during the periods
involved (except as otherwise disclosed in the notes thereto).
SECTION 6.09 Conduct of Business by Parent
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, Parent shall not knowingly take any action a principal purpose
of which is, and the reasonably likely result of which would be, a material
delay in or interference with the consummation of the Merger. Neither Parent nor
any Parent Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the following
without the prior written consent of Company, except as a result of entering
into or as contemplated by this Agreement or except as set forth in Section 6.09
of the Parent Disclosure Schedule:
(a) amend or otherwise change its certificate of incorporation
or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale,
pledge, disposition, grant, transfer, lease, license or encumbrance of,
(i) more than outstanding 20% of the shares of capital stock of Parent
or any shares of capital stock of a Parent Subsidiary of any class, or
securities convertible into or exchangeable or exercisable for any
shares of such capital stock, or any options, warrants or other rights
of any kind to acquire more than 20% of the outstanding shares of such
capital stock or any other ownership interest (including, without
limitation, any phantom interest), of Parent or any Parent Subsidiary,
other than the issuance of shares of Parent common stock pursuant to
the exercise of stock options granted pursuant to the Parent Stock
Plans, or (ii) any material property or material assets of Parent or
any Parent Subsidiary, except providing products and services in the
ordinary course of business consistent with past practice;
(c) (i) an acquisition (including, without limitation, by
merger, consolidation, or acquisition of stock or assets) of any
interest in any corporation, partnership, other business organization
or person or any division thereof which would be considered a
"Significant Subsidiary" of the Parent (after taking into effect the
Merger); (ii) except in connection with an acquisition permitted
pursuant to the foregoing clause (i), incur any material indebtedness
for borrowed money or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person
which are material to the Parent (other than Parent and Parent
Subsidiaries) for borrowed money or make any loans or advances,
material to the business, assets, liabilities, financial condition or
results of operations of Parent and the Parent Subsidiaries, taken as a
whole, other than borrowings under the Parent's credit facility for use
in operating the business; or (iii) enter into or amend any contract,
agreement, commitment or arrangement in which the Parent is obligated
to perform and, if fully performed, would not be permitted under this
Section 6.09(c);
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(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except that any Parent Subsidiary
may pay dividends or make other distributions to Parent or any other
Parent Subsidiary;
(e) reclassify, combine, split or subdivide any of its capital
stock;
(f) amend or change the period (or permit any acceleration,
amendment or change) of exercisability of options granted under the
Parent Stock Plans or other options and warrants or take any action to
reprice any such options and warrants;
(g) authorize or enter into any formal or informal agreement
or otherwise make any commitment to do any of the foregoing or take any
action which would result in any of the conditions to the merger set
forth herein not being satisfied.
(h) take any action resulting in the delisting of Parent from
the Amex; and
(i) take any action resulting in a Parent Material Adverse
Effect.
SECTION 6.10 Post Merger Directors and Officers
The Board of Directors of Parent will take all actions necessary to
increase the number of members of the Board of Directors of Parent and to cause
three designees of the Company, with one such designee being an independent
director as determined under the new rules of the AMEX (the "Company Nominees"),
to be appointed to the Board of Directors of Parent as of the Effective Time,
each Company Nominee to hold office in accordance with the Certificate of
Incorporation and By-laws of Parent.
SECTION 6.11 Bank Restructuring
The Company and the Company's Subsidiaries will use commercially
reasonable efforts to enter into a Letter of Intent (the "Letter of Intent")
with Bank of Montreal (the "Company Bank") no later than forty-five (45) days
after the execution of this Agreement, which provides, among other things, that
each of the parties to the Existing Credit Agreement agrees to proceed in good
faith to amend the Existing Credit Agreement upon consummation of the Merger on
terms and provisions which in the aggregate are no less favorable to the Company
than those contained in Parent's existing credit facility with Bank Austria and
which are acceptable to each of Parent and the Company, and that Parent is a
third party beneficiary to the Letter of Intent, and the Company shall use its
commercially reasonable efforts to finalize the amendment in accordance with the
Letter of Intent. The Parent will use commercially reasonable efforts to enter
into a Letter of Intent (the "Bank Austria Letter of Intent") with Bank Austria,
no later than forty-five (45) days after the execution of this Agreement, which
provides, among other things, that each of the parties to the Bank Austria
Credit Agreement agrees to proceed in good faith to amend the Bank Austria
Credit Agreement upon consummation of the Merger upon terms and provisions which
are acceptable to
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each of Parent and the Company, and Parent shall use its best efforts to
finalize the amendment in accordance with the Bank Austria Letter of Intent. The
parties agree to consolidate the loans into one senior credit facility with
Company Bank and Bank Austria serving as co-agents in the event the banks
request the same.
SECTION 6.12 Disposition of Practices
The Company will use its commercially reasonable efforts to (i)
complete the termination of all of its management relationships with all of its
Ophthalmology and Optometry Practices (including the Corporate Optometry
practices), including any practice that the Company is obligated under a
contract or otherwise to purchase, all of which Ophthalmology and Optometry
Practices (including the Corporate Optometry practices) are set forth in Section
6.12 of the Company Disclosure Schedule (the "Practices"); provided, however,
that such Practices shall not include for the purposes of this Section 6.12 the
Company's Xxxxxxx operation in Arizona ("Xxxxxxx") if the Parent and the Company
agree in writing within 45 days from the date hereof to maintain Xxxxxxx and
(ii) transfer all of the assets and leases relating to the Practices back to the
Practices and cause or have an agreement which will cause all of such Practices
to assume all liabilities and obligations relating to such Practices
(collectively, the "Practice Dispositions"), on such terms which are
satisfactory to the Parent, pursuant to which the Company shall obtain releases
from the Practices containing language substantially the same as set forth on
Annex J hereto whereby the Company will be unconditionally and irrevocably
released and forever discharged from all rights, claims, demands, obligations,
liabilities and damages (collectively, the "Obligations"), whether accrued or
unaccrued, asserted or unasserted and whether known or unknown relating to or in
connection with the Company's arrangements and agreements with the Practices
which ever existed, now exist or may hereafter exist, except with respect to any
Obligations incurred after the Effective Time pursuant to ongoing relationships
with Practices approved by Parent. The Company will cancel any options to
purchase the Company's securities held by such Practices or their stockholders,
affiliates or related parties in connection with the Practice Dispositions,
effective no later than the date of the closing of such Practice Dispositions.
The net proceeds received by the Company in connection with the Practice
Dispositions will be used substantially by the Company to reduce the amount
outstanding under the Existing Credit Agreement and for operations and the
settlement of debts approved by the Company Bank and Parent.
SECTION 6.13 Financing Commitments
The Parent will use its commercially reasonable efforts to enter into a
financing commitment ("Financing Term Sheet") on or before the date that is
forty-five (45) days from the date hereof, which commitment may be subject to
the exception, among others, that the investor shall be satisfied with the 1999
year-end audited financial statements of the Company, and which commitment
involves a Financing in an amount not less than Thirty Million Dollars
($30,000,000) (the "Financing") through the issuance of equity, equity linked or
subordinated debt securities in one or more public or private transactions,
which commitment terms shall be reasonably acceptable to Parent and Company, and
Parent shall use its commercially reasonable efforts to finalize the Financing
in accordance with such commitment.
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SECTION 6.14 Standstill Agreement
The Company will use its commercially reasonable efforts to enter into
a Standstill Agreement (the "Standstill Agreement") with the Company Bank within
forty-five (45) days of the execution of this Agreement.
SECTION 6.15 Voting
Each of the stockholders who granted an irrevocable proxy pursuant to
the Company Stockholder Agreement and the Parent Stockholder Agreement, as the
case may be, will vote any shares of the Company's Common Stock held by them, or
which they have the right to vote, in favor of approval of the Merger, or the
issuance of shares in connection with the Merger, as the case may be, in person,
or by proxy.
SECTION 6.16 Waiver
The Company will use its commercially reasonable efforts to obtain, on
or before the date that is 45 days after the date of this Agreement, (i) a
release and waiver (the "Block Waiver") of all restrictions set forth in Section
10, and any provisions related thereto, of that certain Asset Purchase
Agreement, dated June 4, 1999, among Block Vision Inc., Block Buying Group LLC
and the Company (the "Block Agreement") or (ii) a final nonappealable judgment
from a Florida court of competent jurisdiction holding that Section 10 of the
Block Agreement, and the provisions related thereto, are not enforceable against
Parent.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Registration Statement; Joint Proxy Statement
(a) As promptly as practicable after the execution of this Agreement,
Parent and Company shall jointly prepare and shall file with the SEC a document
or documents that will constitute (i) the prospectus forming part of the
registration statement on Form S-4 of Parent (together with all amendments
thereto, the "Registration Statement"), in connection with the registration
under the Securities Act of Parent Common Stock to be issued to Company's
stockholders pursuant to the Merger and (ii) the joint proxy statement with
respect to the Merger relating to the special meetings of Company's stockholders
to be held to consider approval of this Agreement and the Merger (the "Company
Stockholders' Meeting") and of Parent's stockholders to be held to consider
approval of the issuance of Parent Common Stock (the "Share Issuance") to
Company's stockholders pursuant to the Merger (the "Parent Stockholders'
Meeting") (together with any amendments thereto, the "Joint Proxy Statement").
Copies of the Joint Proxy Statement shall be provided to the AMEX and the NNM in
accordance with its rules. Each of the parties hereto shall use all reasonable
efforts to cause the Registration Statement to become effective as promptly as
practicable after the date hereof,
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and, prior to the effective date of the Registration Statement, the parties
hereto shall take all action required under any applicable Laws in connection
with the issuance of shares of Parent Common Stock pursuant to the Merger.
Parent or Company, as the case may be, shall furnish all information concerning
Parent or Company as the other party may reasonably request in connection with
such actions and the preparation of the Registration Statement and the Joint
Proxy Statement. As promptly as practicable after the effective date of the
Registration Statement, the Joint Proxy Statement shall be mailed to the
stockholders of Company and of Parent. Each of the parties hereto shall cause
the Joint Proxy Statement to comply as to form and substance as to such party in
all material respects with the applicable requirements of (i) the Exchange Act,
(ii) the Securities Act, (iii) the rules and regulations of the AMEX and the
NNM.
(b) The Joint Proxy Statement shall include (i) the approval of the
Merger and the recommendation of the board of directors of Company to Company's
stockholders that they vote in favor of approval of this Agreement and the
Merger, subject to the right of the board of directors of the Company to
withdraw its recommendation and recommend a Superior Proposal in compliance with
Section 6.04 of this Agreement, and (ii) the opinion of PaineWebber referred to
in Section 4.19. The Joint Proxy Statement shall include (A) the approval of the
Share Issuance and the recommendation of the board of directors of Parent to
Parent's stockholders that they vote in favor of approval of the Share Issuance,
and (B) the opinion of Xxxx Xxxxx referred to in Section 5.16.
(c) No amendment or supplement to the Joint Proxy Statement or the
Registration Statement shall be made without the approval of Parent and Company,
which approval shall not be unreasonably withheld or delayed. Each of the
parties hereto shall advise the other parties hereto, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop
order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or of any request by the SEC for amendment of the Joint Proxy Statement or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
(d) None of the information supplied by Company for inclusion or
incorporation by reference in the Registration Statement or the Joint Proxy
Statement shall, at the respective times filed with the SEC or other regulatory
agency and, in addition, (A) in the case of the Joint Proxy Statement, at the
date it or any amendments or supplements thereto are mailed to stockholders of
Parent and Company, at the time of the Company Stockholders' Meeting, at the
time of the Parent Shareholders' Meeting and at the Effective Time and (B) in
the case of the Registration Statement, when it becomes effective under the
Securities Act and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event or circumstance relating to Company or any Company
Subsidiary, or their respective officers or directors, should be discovered by
Company that should be set forth in an amendment or a supplement to the
Registration Statement or the Joint Proxy Statement, Company shall promptly
inform Parent. All documents that Company is responsible for filing with the SEC
in connection with the Merger will comply as to form in all
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material respects with the applicable requirements of the rules and regulations
of the Securities Act and the Exchange Act.
(e) None of the information supplied by Parent for inclusion or
incorporation by reference in the Registration Statement or the Joint Proxy
Statement shall, at the respective times filed with the SEC or other regulatory
agency and, in addition, (A) in the case of the Joint Proxy Statement, at the
date it or any amendments or supplements thereto are mailed to stockholders of
Parent and Company, at the time of Company Stockholders' meeting, at the time of
the Parent Shareholders' Meeting and at the Effective Time and (B) in the case
of the Registration Statement, when it becomes effective under the Securities
Act and at the Effective Time, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If, at any time prior to the Effective Time, any
event or circumstance relating to Parent or any Parent Subsidiary, or their
respective officers or directors, should be discovered by Parent that should be
set forth in an amendment or a supplement to the Registration Statement or the
Joint Proxy Statement, Parent shall promptly inform Company. All documents that
Parent is responsible for filing with the SEC in connection with the Merger will
comply as to form in all material respects with the applicable requirements of
the rules and regulations of the Securities Act and the Exchange Act.
SECTION 7.02 Stockholders' Meetings
Company shall call and hold the Company Stockholders' Meeting and
Parent shall call and hold the Parent Stockholders' Meeting as promptly as
practicable after the date hereof for the purpose of voting upon the approval of
this Agreement and the Merger or the Share Issuance, as the case may be,
pursuant to the Joint Proxy Statement, and Company and Parent shall use all
reasonable efforts to hold the Parent Stockholders' Meeting and the Company
Stockholders' Meeting on the same day and as soon as practicable after the date
on which the Registration Statement becomes effective. Nothing herein shall
prevent the Company or the Parent from adjourning or postponing the Company
Stockholders' Meeting or the Parent Stockholders' Meeting, as the case may be,
if there are insufficient shares of Company Common Stock or Parent Common Stock,
as the case may be, necessary to conduct business at their respective meetings
of the stockholders. Unless Company's board of directors has withdrawn its
recommendation of this Agreement and the Merger in compliance with Section 6.04.
Company shall use all reasonable efforts to solicit from its stockholders
proxies in favor of the approval of this Agreement and the Merger pursuant to
the Joint Proxy Statement and shall take all other action necessary or advisable
to secure the vote or consent of stockholders required by the FBCA or applicable
other stock exchange requirements to obtain such approval. Parent shall use all
reasonable efforts to solicit from its stockholders proxies in favor of the
Share Issuance pursuant to the Joint Proxy Statement and shall take all other
action necessary or advisable to secure the vote or consent of stockholders
required by the FBCA or applicable stock exchange requirements to obtain such
approval. Each of the parties hereto shall take all other action necessary or,
in the opinion of the other parties hereto, advisable to promptly and
expeditiously secure any vote or consent of stockholders required by applicable
Law and such party's certificate of incorporation and bylaws to effect the
Merger.
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SECTION 7.03 Affiliates
(a) Company will use reasonable efforts to obtain an executed letter
agreement substantially in the form of Annex D hereto from (i) each person
identified in Section 4.18 of the Company Disclosure Schedule within 15 days
following the execution and delivery of this Agreement and (ii) from any person
who, to the knowledge of Company, may be deemed to have become an affiliate of
Company after the date of this Agreement and prior to the Effective Time as soon
as practicable after attaining such status. The foregoing notwithstanding,
Parent shall be entitled to place legends as specified in the Affiliate
Agreement on the certificates evidencing any of the Parent Common Stock to be
received by (i) any affiliate of Company or (ii) any person Parent reasonably
identifies (by written notice to Company) as being a person who is an
"affiliate" within the meaning of Rule 145 promulgated under the Securities Act,
and to issue appropriate stop transfer instructions to the transfer agent for
such Parent Common Stock, consistent with the terms of the Affiliate Agreement,
regardless of whether such person has executed Affiliate Agreement and
regardless of whether such person's name and address appear on Section 4.18 of
the Company Disclosure Schedule.
SECTION 7.04 Directors' and Officers' Indemnification and Insurance
(a) Parent and the Merger Sub agree that all rights to indemnification,
advancement of expenses, exculpation, limitation of liability and any and all
similar rights now existing in favor of each present and former director,
officer, employee and agent of Company and each Company Subsidiary
(collectively, the "Indemnified Parties") as provided in the Company's present
charter or by-laws in effect on the date hereof, shall survive the Merger and
shall continue in full force and effect for a period of five years from the
Effective Time, which provisions shall not be amended, repealed or otherwise
modified for a period of five years from the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who at any time
prior to the Effective Time were directors, officers, employees or agents of the
Company, unless such modification shall be required by law, and Parent agrees to
cause the Surviving Corporation to comply with its obligations thereunder;
provided, however, that in the event any claim or claims are asserted or made
within such five-year period, all rights to indemnification in respect to any
such claim or claims shall continue until the disposition of any and all such
claims.
(b) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or Surviving Corporation or entity
of such consolidation or merger or (ii) transfers a material amount of its
properties and assets to any person in a single transaction or a series of
transactions, then, and in each such case, Parent will make or cause to be made
proper provision so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, assume the indemnification
obligations described herein for the benefit of the Indemnified Parties as a
condition to such merger, consolidation or transfer becoming effective.
(c) The provisions of this Section 7.04 are (i) intended to be for the
benefit of, and will be enforceable by, each of the Indemnified Parties and (ii)
in addition to, and not in substitution for, any
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other rights to indemnification or contribution that any such person may have by
contract or otherwise.
(d) Parent agrees, as soon as practicable after the Effective Time, to
cause the Surviving Corporation to use commercially reasonable efforts to
purchase tail coverage, if available, for the directors' and officers' liability
insurance policies currently maintained by Company covering a period of five
years after the Effective Time; provided, however, that in no event shall Parent
be required to expend in excess of $250,000 on the premium for such five year
tail coverage. To the extent that the premium for such tail coverage exceeds
$250,000, Surviving Corporation shall pay such additional premium amount (the
"Additional Premium Amount"). In the event that such tail coverage is not
available, the Surviving Corporation shall have no obligation to purchase such
tail coverage, but shall maintain in effect the Company's directors' and
officers' liability insurance policies in effect as of the date hereof or, if
not available, directors' and officers' liability insurance policies covering
the directors and officers of the Company (and their respective heirs and
executors, if such coverage may be obtained at no additional cost), with
coverages and other terms substantially as favorable to such directors and
officers as is currently in effect; provided, however, that in no event shall
the Surviving Corporation be required to expend in any one year in excess of
150% of the annual premium currently paid by Company for such coverage, which
current premium amount is set forth in Section 7.04 of the Company Disclosure
Schedule, and if the premium for such coverage exceeds such amount, Parent shall
purchase a policy with the greatest coverage available for such 150% of the
annual premium; and provided, further, that the cumulative annual premiums to be
paid for such policies over a five-year period shall be projected by Parent's
insurance broker in good faith on or prior to the Exchange Ratio Adjustment Date
(the "Projected Cumulative Amount"). (The amount by which the Projected
Cumulative Amount exceeds $250,000 is herein referred to as the "Excess
Projected Cumulative Amount".)
SECTION 7.05 No Shelf Registration
Parent shall not be required to amend or maintain the effectiveness of
the Registration Statement for the purpose of permitting resale of the shares of
Parent Common Stock received pursuant hereto by the persons who may be deemed to
be "affiliates" of Company within the meaning of Rule 145 promulgated under the
Securities Act.
SECTION 7.06 Public Announcements
The initial press release concerning the Merger shall be a joint press
release and, thereafter, Parent and Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or the Merger and shall not issue any such press release or
make any such public statement without the prior written approval of the other,
except to the extent required by applicable Law or the requirements of the rules
and regulations of the AMEX and the NNM, in which case the issuing party shall
use all reasonable efforts to consult with the other party before issuing any
such release or making any such public statement.
SECTION 7.07 AMEX Listing
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Prior to the Effective Time, Parent shall file with the AMEX a
Notification Form for Listing of Additional Shares with respect to the Parent
Common Stock issued or issuable in connection with the Merger.
SECTION 7.08 Blue Sky
Parent shall use all reasonable efforts to obtain prior to the
Effective Time all necessary permits and approvals required under Blue Sky Laws
to permit the distribution of the shares of Parent Common Stock to be issued in
accordance with the provisions of this Agreement.
SECTION 7.09 Acquisition of Company Capital Stock
Prior to the Effective Time, neither Parent, nor any of Parent
Subsidiaries or Affiliates will, nor will they assist or encourage others to,
directly or indirectly, acquire or attempt to acquire ownership of more than
five percent (5%) of the Company's capital stock.
Prior to the Effective Time, neither Company, nor any of Company
Subsidiaries or Affiliates will, nor will they assist or encourage others to,
directly or indirectly, acquire or attempt to acquire ownership of more than
five percent (5%) of Parent's capital stock.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party to Consummate
the Merger
The obligations of the parties hereto to consummate the Merger are
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following conditions:
(a) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC and not concluded or withdrawn;
(b) this Agreement and the Merger shall have been duly
approved by the requisite vote of stockholders of Company in accordance
with the FBCA and by the requisite vote of the stockholders of Parent
in accordance with the DGCL and the rules of the AMEX;
(c) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other
Governmental Entity shall have issued any order, which is then in
effect and has the effect of making the Merger illegal or otherwise
prohibiting its consummation;
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(d) any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act or any other
applicable competition, merger control or similar Law shall have
expired or been terminated;
(e) all material consents, approvals and authorizations
legally required to be obtained to consummate the Merger shall have
been obtained from all Governmental Entities;
(f) the shares of Parent Common Stock to be issued in the
Merger shall be registered under the Securities Act and shall have been
authorized for listing on the AMEX, subject to notice of issuance;
(g) the Parent shall have entered into an amendment to its
existing credit agreement with Bank Austria having terms substantially
in accordance with the terms outlined in the Bank Austria Letter of
Intent referred to in Section 6.11 hereof;
(h) the Parent shall have obtained not less then $30,000,000
from the Financing pursuant to the terms contained in the Financing
Term Sheet described in Section 6.13;
(i) on or before Exchange Ratio Adjustment Date, all consents
of third parties required pursuant to the terms of any Company Material
Contract and any Parent Material Contract as a result of the Merger
shall have been obtained including those specified in Section 8.01(i)
of the Parent Disclosure Schedule and 8.01(i) of the Company Disclosure
Schedule, except where the failure to obtain, individually or in the
aggregate, any such consent(s) could not reasonably be expected to
result in, individually or in the aggregate, a Company Material Adverse
Effect or Parent Material Adverse Effect, as the case may be;
(j) Xxxxxxxx, Loop & Xxxxxxxx, special counsel to Company, or
such other law firm or professional services firm reasonably acceptable
to Parent (including any "Big 6" accounting firm) shall have issued its
opinion, such opinion dated on the date of the Closing, addressed to
Company, and reasonably satisfactory to it and the Purchaser, based
upon customary representations of Company and Parent and customary
assumptions, to the effect that the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code (the
"Tax Opinion"), which opinion shall not have been withdrawn or modified
in any material respect; provided, however, that if such firm does not
render such opinion, this condition shall nonetheless be deemed
satisfied if such opinion, dated as of the date of the Closing (k) The
Company shall have entered into the Letter of Intent with Company Bank
within 45 days of the date of this Agreement, is rendered by counsel to
Parent or any "Big 6" accounting firm; and
(k) The Company shall have entered into the Letter of Intent
with the Company Bank within 45 days of the date of this Agreement.
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SECTION 8.02 Conditions to the Obligations of Company
The obligations of Company to consummate the Merger, or to permit the
consummation of the Merger are subject to the satisfaction or, if permitted by
applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of Parent
contained in this Agreement shall be true, complete and correct in all
material respects (other than representations and warranties subject to
materiality or "material adverse effect" qualifiers which shall be
true, complete and correct in all respects) both when made and on and
as of the Effective Time as if made at and as of the Effective Time
(other than representations and warranties which address matters only
as of a certain date which shall be so true, complete and correct as of
such certain date), and Company shall have received a certificate
signed by the Chief Financial Officer of Parent on behalf of the Parent
to such effect;
(b) Parent shall have performed or complied in all material
respects with all covenants required by this Agreement to be performed
or complied with by it on or prior to the Effective Time and Company
shall have received a certificate signed by the Chief Financial Officer
of Parent on behalf of the Parent to that effect; and
(c) There shall have been no Parent Material Adverse Effect
since the date of this Agreement.
SECTION 8.03 Conditions to the Obligations of Parent
The obligations of Parent to consummate the Merger are subject to the
satisfaction or waiver of the following further conditions:
(a) Each of the representations and warranties of Company
contained in this Agreement shall be true, complete and correct in all
material respects, (other than representations and warranties subject
to materiality or "material adverse effect" qualifiers which shall be
true, complete and correct in all respects) both when made and on and
as of the Effective Time as if made at and as of the Effective Time
(other than representations and warranties which address matters only
as of a certain date which shall be so true, complete and correct as of
such certain date), and Parent shall have received a certificate signed
by the Chief Executive Officer on behalf of the Company of Company to
such effect;
(b) Company shall have performed or complied in all material
respects with all covenants required by this Agreement to be performed
or complied with by it on or prior to the date on which they are to be
performed as specifically set forth herein or the Effective Time, as
applicable, and Parent shall have received a certificate of the Chief
Executive Officer signed by Company on behalf of the Company to that
effect;
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(c) There shall have been no Company Material Adverse Effect
since the date of this Agreement;
(d) The Parent shall have executed, by the Exchange Ratio
Adjustment Date, agreements with each of Xxxxxxx Xxxxxxxxx, M.D. and
Xxxxx X. Xxxxxx which provide for the continuation of services provided
by them, upon terms which are satisfactory to Parent;
(e) On or before the Exchange Ratio Adjustment Date, the
officers, directors, and shareholders of Company listed on Annex E
hereto (the "Company Insiders") shall have entered into lock-up
agreements in the form set forth as Annex F hereto;
(f) The Company shall not have received any notice of default
or notice of any pending or threatened cancellation, revocation or
termination or be aware of any facts or circumstances which could
reasonably be expected to lead to any such cancellation, revocation, or
termination under any of the Company's managed care contracts which,
after giving effect to any new managed care business entered into after
the date hereof (except for any contracts which have been projected in
any Company business plan for year 2000, previously delivered to
Parent), cause, or could reasonably likely cause, individually or
collectively, a material adverse effect on the Company's managed care
business as a stand alone business. The determination of the overall
loss of managed care business under this Section 8.03(f) shall be made
without regard to any disclosures contained in the Company Disclosure
Schedule, except that no account shall be taken of the loss of business
under any managed care contracts specifically identified under Section
4.08 of the Company Disclosure Schedule. The Parent shall have received
a certificate of the Chief Executive Officer of the Company to such
affect; and
(g) On or before the Exchange Ratio Adjustment Date, the
Company shall have divested all of its business and assets relating to
the Corporate Optometry practice and the Company shall have received
from all of the Corporate Optometry practices a release in
substantially the form set forth on Annex J hereto, except as the
parties may otherwise agree in writing with respect to Xxxxxxx.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite adoption and
approval of this Agreement, as follows:
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(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and Company;
(b) by either Parent or Company, if the Effective Time shall
not have occurred on or before August 31, 2000; provided, however, that
the right to terminate this Agreement under this Section 9.01(b) shall
not be available to any party whose failure to fulfill any obligation
under this Agreement shall have principally caused, or resulted in, the
failure of the Effective Time to occur on or before such date;
(c) by either Parent or Company, if any Governmental Order,
writ, injunction or decree preventing the consummation of the Merger
shall have been entered by any court of competent jurisdiction and
shall have become final and nonappealable;
(d) by Parent, if (i) the board of directors of Company
withdraws, modifies or changes its recommendation of this Agreement or
the Merger in a manner adverse to Parent or its stockholders, (ii) the
board of directors of Company shall have recommended to the
stockholders of Company a Competing Transaction, (iii) the Company
fails to comply with Section 6.04, (iv) a Competing Transaction shall
have been announced or otherwise publicly known and the board of
directors of Company shall have (A) failed to recommend against
acceptance of such by its stockholders (including by taking no
position, or indicating its inability to take a position, with respect
to the acceptance by its stockholders of a Competing Transaction
involving a tender offer or exchange offer), (B) failed to reconfirm
its approval and recommendation of this Agreement and the transactions
contemplated hereby within 5 Business Days after Parent requests in
writing that such recommendation be reconfirmed or (C) determined that
such Competing Transaction was a Superior Proposal and takes any of the
actions allowed by clause (ii) of Section 6.04, or (v) the board of
directors of Company resolves to take any of the actions described
above;
(e) by Parent or Company, if (i) this Agreement and the Merger
shall fail to receive the requisite votes for approval at the Company
Stockholders' Meeting or any adjournment or postponement thereof or
(ii) if the Share Issuance shall fail to receive the requisite votes
for approval at the Parent Shareholders' Meeting or any adjournment or
postponement thereof;
(f) by Parent, upon a material breach of any representation or
warranty on the part of Company set forth in this Agreement, upon a
material breach of any covenant or agreement on the part of the Company
set forth in this Agreement or if any material representation or
warranty of Company shall have become untrue, incomplete or incorrect
in any material respect, in any case such that the conditions set forth
in Section 8.03 would not be satisfied (a "Terminating Company
Breach"); provided, however, that if such Terminating Company Breach is
curable by Company through the exercise of its reasonable efforts
within 20 days and for so long as Company continues to exercise such
reasonable efforts, Parent may not terminate this Agreement under this
Section 9.01(f) during such 20
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day period; and provided, further that the preceding proviso shall not
in any event be deemed to extend any date set forth in paragraph (b) of
this Section 9.01; or
(g) by Company, upon material breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any material representation or warranty of Parent
shall have become untrue, incomplete or incorrect in any material
respect, in either case such that the conditions set forth in Section
8.02 would not be satisfied (a "Terminating Parent Breach"); provided,
however, that if such Terminating Parent Breach is curable by Parent
through the exercise of its reasonable efforts within 20 days and for
so long as Parent continues to exercise such reasonable efforts,
Company may not terminate this Agreement under this Section 9.01(g)
during such 20 day period; and provided, further that the preceding
proviso shall not in any event be deemed to extend any date set forth
in paragraph (b) of this Section 9.01.
(h) by a party, if on or before the applicable date set forth
in Article VIII , any condition set forth in Article VIII which is
required to be met on or before such date has not been so met by the
other party; provided, however, that if such failed condition is
curable by the other party through the exercise of its reasonable
efforts within 20 days and for so long as such other party continues to
exercise such reasonable efforts, the terminating party may not
terminate this Agreement under this Section 9.01(h); and provided,
further that the preceding proviso shall not in any event be deemed to
extend any date set forth in paragraph (b) of this Section 9.01;
(i) by the Company, pursuant to Section 6.04, in the event the
Company has complied with all the provisions of Section 6.04 and has
determined to accept a Superior Proposal; provided that the Company
shall have provided Parent with one Business Day's prior written notice
of the Company's decision to so terminate (the "Company Termination
Notice"). The Company Termination Notice shall indicate in reasonable
detail the terms and conditions of such Superior Proposal, including,
without limitation, the amount and form of the proposed consideration
and whether such Superior Proposal is subject to any material
conditions.
In the event either party shall terminate this Agreement pursuant to
Section 9.01, neither Parent nor any of Parent's Subsidiaries will, nor
will they assist or encourage others to, directly or indirectly, for a
period of two (2) years after termination of this Agreement, acquire or
attempt to acquire ownership or more than five percent (5%) of the
Company's capital stock.
The right of any party hereto to terminate this Agreement pursuant to
this Section 9.01 will remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 9.02 Effect of Termination
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Except as provided in Section 9.05, in the event of termination of this
Agreement pursuant to Section 9.01 or otherwise, this Agreement shall forthwith
become void, there shall be no liability under this Agreement or otherwise on
the part of any party hereto or any of its affiliates or any of its or their
officers or directors, and all rights and obligations of each party hereto shall
cease. No termination of this Agreement shall affect the obligation of the
parties contained in the Confidentiality Agreements, which shall survive
termination of this Agreement and remain in full force and effect in accordance
with their terms.
SECTION 9.03 Amendment
This Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective boards of directors at any time prior to the
Effective Time; provided, however, that, after the approval of this Agreement by
the stockholders of Company, no amendment may be made that changes the amount or
type of consideration into which Company common stock will be converted pursuant
to this Agreement. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 9.04 Waiver
At any time prior to the Effective Time, any party hereto may (a)
extend the time for or waive compliance with the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other party with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
SECTION 9.05 Termination Fee; Expenses
(a) Except as set forth in this Section 9.05, all Expenses incurred in
connection with this Agreement and the Merger shall be paid by the party
incurring such Expenses, whether or not the Merger is consummated, except that
Parent and Company each shall pay one-half of all Expenses (other than
attorney's and accountant's fees and expenses) incurred solely for printing,
filing (with the SEC) and mailing the Registration Statement and the Joint Proxy
Statement and all SEC and other regulatory filing fees incurred in connection
with the Registration Statement and the Joint Proxy Statement and any fees
required to be paid under the HSR Act.
(b) In the event that (i) Company shall terminate this Agreement
pursuant to Section 9.01(i) or Parent shall terminate this Agreement pursuant to
Section 9.01(d) or (ii) this Agreement shall be terminated (x) pursuant to
Section 9.01(b) or (y) pursuant to Section 9.01(e)(i) as a result of the failure
to obtain the requisite approval of the Company stockholders and, in the case of
either (x) or (y), (A) at or prior to such termination, there shall exist or
have been proposed a Competing Transaction with respect to Company and (B)
within nine months after such
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termination, Company shall enter into a definitive agreement with respect to any
Competing Transaction or any Competing Transaction involving Company shall be
consummated, then, in the case of (i), promptly after such termination, or in
the case of (ii), concurrently with the consummation of such Competing
Transaction, Company shall pay to Parent an amount in cash equal to the greater
of Four percent (4%) of the "total enterprise value" of the transactions
contemplated by this Agreement or as reflected in the Superior Proposal or the
Competing Transaction, as the case may be, (the "Termination Fee") plus Parent's
Expenses. For purposes of this Section 9.05, the term "total enterprise value"
shall mean the purchase price paid or offered to be paid, as the case may be, in
such transaction, plus the amount of any indebtedness and other liabilities of
the Company assumed or offered to be assumed, as the case may be, in this or
such Competing Transaction, as the case may be.
(c) In the event that Parent shall terminate this Agreement pursuant to
clause (i) of Section 9.01(f), then Company shall promptly reimburse Parent for
Parent's Expenses, and if, within nine months of such termination of this
Agreement, Company shall enter into a definitive agreement with respect to any
Competing Transaction (other than a Competing Transaction solely described in
clause (v) of the definition of such term) or any Competing Transaction (other
than a Competing Transaction solely described in clause (v) of the definition of
such term) involving Company shall be consummated, concurrently with the
consummation of such Competing Transaction (other than a Competing Transaction
solely described in clause (v) of the definition of such term), the Company
shall pay to Parent an amount in cash equal to one-half of the Termination Fee
unless Company did not have Knowledge at the time that this Agreement was
entered into that such representation or warranty was incorrect or incomplete,
in which case Company shall not be obligated to such portion of the Termination
Fee, but shall nonetheless be obligated to pay Parent's Expenses as set forth
above.
(d) In the event that Parent shall terminate this Agreement pursuant to
clause (ii) of Section 9.01(f) (other than in connection with a breach of
Section 6.04 or Section 6.01(y) hereof, which are provided for below), then
Company shall promptly reimburse Parent for Parent's Expenses, and if, within
nine months of such termination of this Agreement, Company shall enter into a
definitive agreement with respect to any Competing Transaction (other than a
Competing Transaction solely described in clause (v) of the definition of such
term) or any Competing Transaction (other than a Competing Transaction solely
described in clause (v) of the definition of such term) involving Company shall
be consummated, concurrently with the consummation of such Competing Transaction
(other than a Competing Transaction solely described in clause (v) of the
definition of such term), the Company shall pay to Parent an amount in cash
equal to half of the Termination Fee.
(e) In the event that Parent shall terminate this Agreement pursuant to
clause (ii) of Section 9.01(f) in connection with a breach of Section 6.04, then
Company shall promptly reimburse Parent for Parent's Expenses, and if, within
nine months of such termination of this Agreement, the Company shall enter into
any agreement with respect to any Competing Transaction or any Competing
Transaction involving Company shall be consummated, concurrently with the
execution of any such agreement, or if there is no agreement, upon the
consummation of such Competing Transaction, the Company shall pay to Parent in
cash the Termination Fee.
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(f) In the event that Parent shall terminate this Agreement pursuant to
clause (ii) of Section 9.01(f) in connection with a breach of Section 6.01(y),
then Company shall promptly reimburse Parent for Parent's Expenses.
(g) In the event that Parent shall terminate this Agreement pursuant to
clause (iii) of Section 9.01(f), then Company shall promptly reimburse Parent
for Parent's Expenses.
(h) In the event that Company shall terminate this Agreement pursuant
to Section 9.01(g), then Parent shall promptly reimburse Company for Company's
Expenses.
(i) Parent, Merger Sub and Company agree that the agreements contained
in this Article IX above are reasonable, are an integral part of the transaction
contemplated by this Agreement, and are the sole and exclusive remedies in law
or in equity for a termination or breach of this Agreement or otherwise in
connection with the transactions contemplated by this Agreement. The payments
provided for in this Section 9.05 are intended to establish liquidated damages
in the event of a termination or otherwise and are not intended as a penalty.
Accordingly, if Company or Parent fails to pay to Parent or Company, as the case
may be, any amounts due under Section 9.05(b), Section 9.05(c), or Section
9.05(d), Company or Parent, as the case may be, shall pay interest on such
amounts at the prime rate of Citibank, N.A. in effect on the date such payment
was required to be made.
(j) In the event that the Company does not enter into the Standstill
Agreement within 45 days following the date hereof, the Company shall promptly
reimburse Parent for Parent's Expenses;
(k) In the event that a dispute arises in connection with Section
9.04(c), (d) and/or (e) hereof, such dispute shall be submitted for arbitration
to the American Arbitration Association ("AAA") in New York City in accordance
with the Commercial Rules of the American Arbitration Association, provided;
however, that such arbitrators shall apply the Delaware General Corporation Law
and applicable case law thereunder to the resolution of the dispute. The
decision of the AAA shall be final and binding upon the parties, and shall be
enforceable in any court of competent jurisdiction. Nothing in this provision
shall be construed to prohibit any party hereto from seeking interim equitable
relief in a court of competent jurisdiction pending submission of said dispute
to arbitration hereunder.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations and Warranties
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The representations and warranties in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
9.01, as the case may be.
SECTION 10.02 Notices
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy or facsimile,
by registered or certified mail (postage prepaid, return receipt requested) or
by a nationally recognized courier service to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 10.02):
(a) if to Company:
Vision Twenty-One, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxxx, Loop & Xxxxxxxx, LLP
000 X. Xxxxxxx Xxxx.
Xxxxx 0000
Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
(b) if to Parent or Merger Sub:
OptiCare Health Systems, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxx Xxxxxxx, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
SECTION 10.03 Severability
70
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Merger is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner to the fullest extent permitted by
applicable Law in order that the Merger may be consummated as originally
contemplated to the fullest extent possible.
SECTION 10.04 Assignment; Binding Effect; Benefit
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of Law or otherwise) without the prior written consent of the other parties
hereto. Subject to the preceding sentence, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything contained in this
Agreement to the contrary, other than Section 7.04, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective successors and permitted assigns any rights or
remedies under or by reason of this Agreement.
SECTION 10.05 Incorporation of Exhibits
The Parent Disclosure Schedule, the Company Disclosure Schedule and all
Exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part of this Agreement for all purposes as if fully set forth herein.
SECTION 10.06 Governing Law
ANY DISPUTE OR CLAIM BASED UPON, ARISING OUT OF OR RESULTING FROM THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ITS CHOICE OF LAWS
PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY LAW OTHER THAN THAT OF
DELAWARE. COURTS WITHIN THE STATE OF DELAWARE WILL HAVE JURISDICTION OVER ALL
DISPUTES BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY; PROVIDED,
THAT THE EFFECTIVENESS AND EFFECT OF THE MERGER SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF FLORIDA. THE PARTIES HEREBY CONSENT TO AND AGREE TO SUBMIT TO THE
JURISDICTION OF SUCH COURTS. EACH OF THE PARTIES HERETO WAIVES, AND AGREES NOT
TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY CLAIM THAT (I) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION
OF SUCH
71
COURTS, (II) SUCH PARTY AND SUCH PARTY'S PROPERTY IS IMMUNE FROM ANY LEGAL
PROCESS ISSUED BY SUCH COURTS OR (III) ANY LITIGATION COMMENCED IN SUCH COURTS
IS BROUGHT IN AN INCONVENIENT FORUM OR IMPROPER VENUE.
SECTION 10.07 Waiver of Jury Trial
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED
HEREBY OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF.
SECTION 10.08 Headings; Interpretation
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
SECTION 10.09 Counterparts
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
SECTION 10.10 Entire Agreement
This Agreement (including the Exhibits, the Parent Disclosure Schedule
and the Company Disclosure Schedule), together with all other agreements entered
into simultaneously herewith by the parties hereto and the Confidentiality
Agreements, constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Xxxx Xxxxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chairman, President and CEO
VISION TWENTY-ONE, INC.
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
Title: Board Chairman
OC ACQUISITION CORP.
By: /s/ Xxxx Xxxxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxxxx
Title: President
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