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EXHIBIT 2.16
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of the
1st day of April, 1998, by and among MASTER EYE CONSULTANTS, P.C., a Texas
professional corporation ("Seller"), OPTOMETRIC ASSOCIATES OF TEXAS, P.C, a
Texas professional corporation ("P.C."), VISION TWENTY-ONE, INC., a Florida
corporation ("Vision 21"), and J. R. LACEY, O.D. ( the "Optometrist").
W I T N E S S E T H:
WHEREAS, Optometrist is licensed to practice optometry in the State of
Texas, and currently conducts an optometry practice through the Seller located
at the location specified on EXHIBIT "A" attached hereto and incorporated
herein by reference (collectively "Practice");
WHEREAS, P.C. is an optometric professional corporation with its
principal place of business at 00000 X. Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxx 00000;
and
WHEREAS, Vision 21 provides business management services and
facilities for eye care professionals and related businesses; and
WHEREAS, Seller desires to sell, assign and transfer all of its
Optometric Assets (as defined herein) to the P.C. and all of its Non-Optometric
Assets (as defined herein) to the extent permitted by law to Vision 21, and
Vision 21 and the P.C. desire to purchase, assume and acquire such assets and
assume certain liabilities of the Seller in exchange for the consideration
provided herein.
NOW, THEREFORE, in consideration of the respective covenants,
representations, warranties and agreements herein contained, and intending to
be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1. Purchase and Sale of Non-Optometric Assets. Subject to the terms
and conditions herein set forth, and in reliance upon the representations and
warranties set forth herein, Seller agrees to sell, convey, assign, transfer
and deliver to Vision 21, and Vision 21 agrees to purchase, assume, accept and
acquire, all of Seller's right, title and interest in and to the assets of
Seller relating to the Practice consisting of all the assets (other than the
Optometric Assets specified in Section 1.2 hereof and the Excluded Assets
specified in Section 1.3 hereof) as set forth on SCHEDULE 1.1, of every kind,
character and description, whether tangible, real, personal, or mixed, and
wheresoever located, whether carried on the books of Seller or not carried on
the books of Seller due to having been expended, fully depreciated, or
otherwise (collectively, "Non-Optometric Assets"), and including without
limitation the following (except to the extent that any of the following are
specifically enumerated as Excluded Assets in Section 1.3 hereof) to the extent
permitted by applicable law:
(a) all machinery, equipment, tools, furniture, furnishings,
goods, and other tangible personal property;
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(b) all accounts receivable;
(c) all supplies (but not the optometric or optical supplies
described as "Optometric Assets" in Section 1.2 hereof);
(d) all leases of instruments, equipment, furniture, machinery
and other items of tangible personal property (including rights to any security
deposits with respect to such leases);
(e) all prepaid items, notes and unbilled costs and fees;
(f) to the extent permitted by applicable law, all rights under
any written or oral contract, agreement, plan, instrument, registration,
license, certificate of occupancy, other permit or approval of any nature, or
other document, commitment, arrangement, undertaking, practice or authorization
(but not the third party payor contracts described as "Optometric Assets" in
Section 1.2 hereof);
(g) all rights under any patents, trademarks, service marks,
trade names or copyrights, whether registered or unregistered, and any
applications therefor;
(h) all data bases used in the Practice or under development;
(i) all rights arising out of occurrences before or after the
Closing, including without limitation, all representations, warranties,
covenants and guaranties made or provided by third parties to or for the
benefit of Seller with respect to any of the Non-Optometric Assets;
(j) all books and records of Seller, including, without
limitation, all credit records, payroll records, computer records, computer
programs, contracts, agreements, operating manuals, schedules of assets,
correspondence, books of account, files, papers, books and all other public and
confidential business records, whether such records are in hard copy form or
are electronically or magnetically stored;
(k) all information, files, records, data, plans, contracts and
recorded knowledge, including supplier lists and employee records related to
the foregoing and the operation of the Practice;
(l) all cash in registers or xxxxx cash drawers (which shall on
the Closing Date be at least ninety percent (90%) of the average daily cash
balance held in such locations in the twelve (12) month period preceding the
Closing Date).
1.2. Purchase and Sale of Optometric Assets. Subject to the terms and
conditions herein set forth, and in reliance upon the representations and
warranties set forth herein, Seller agrees to sell, convey, assign, transfer
and deliver to the P.C. and the P.C. agrees to purchase, assume, accept and
acquire all of Seller's right, title and interest in and to the assets of
Seller consisting of all the assets (other than the Non-Optometric Assets
specified in Section 1.1 hereof and the Excluded Assets specified in Section
1.3 hereof), of every kind, character and description, whether tangible or
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intangible, and wheresoever located, whether carried on the books of Seller due
to having been expended, fully depreciated or otherwise (the "Optometric
Assets," and together with the Non-Optometric Assets, sometimes collectively
referred to as the "Assets,") including without limitation the following
(except to the extent that any of the following are specifically enumerated as
Excluded Assets in Section 1.3 hereof) to the extent permitted by applicable
law:
(a) all inventory;
(b) patient lists, including names, addresses and telephone
numbers;
(c) optometric records;
(d) all rights in employment contracts with optometrists, if any,
employed by Seller;
(e) optometric supplies, including optical supplies, drugs,
pharmaceuticals, products, substances and items;
(f) third party payor contracts (except for rights to purchased
accounts receivable);
(g) licenses, certificates of need, Medicare/Medicaid
certifications and other governmental authorizations necessary to provide
optometric services and to be paid therefor by applicable third party payors,
if transferable under applicable law;
(h) eyeglasses, lenses and other eye wear; and
(i) any other asset that legally cannot be owned by a party that
is not optometrist-owned.
1.3. Excluded Assets. Notwithstanding the foregoing, neither the
Optometric Assets nor the Non-Optometric Assets shall include any of the
following (collectively, the "Excluded Assets") which shall be retained by
Seller:
(a) life insurance policies covering the life of Optometrist or
any employee of Seller;
(b) personal effects listed on SCHEDULE 1.3;
(c) cash and cash equivalents in banks, certificates of deposit,
commercial paper and securities owned by Seller (but excluding cash held in
registers or xxxxx cash drawers on the Closing Date which shall be transferred
to Vision 21);
(d) proprietary rights to the name "Geriatric Eye Services"; and
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(e) any contingent or matured causes of action or other legal
rights against Xxxxxxx Xxxxxx and Xxxxx Xxxxx.
1.4. The Purchase Price. Vision 21 agrees that, subject to the terms
and conditions of this Agreement, and in full consideration for the aforesaid
sale, transfer, conveyance, assignment and delivery of the Non-Optometric
Assets of Seller to Vision 21, and the acceptance by Vision 21 of such
Non-Optometric Assets and the assumption by Vision 21 of those liabilities
listed on SCHEDULE 1.6 hereto, Vision 21 shall deliver to Seller at the Closing
the consideration (the "Non-Optometric Asset Purchase Price") set forth in
SCHEDULE 1.4(A) hereto. The P.C. agrees that, subject to the terms and
conditions of this Agreement, and in full consideration for the aforesaid sale,
transfer, conveyance, assignment and delivery of the Optometric Assets of
Seller to P.C., and the acceptance by P.C. of such Optometric Assets and the
execution by Seller of the Employment Agreement described in Section 2.2(b)(iv)
hereof, P.C. shall deliver to Seller at the Closing the consideration (the
"Optometric Asset Purchase Price," and together with the Non-Optometric Asset
Purchase Price, herein sometimes referred to as the "Purchase Price") set forth
in SCHEDULE 1.4(B) hereto.
1.5. Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as set forth on SCHEDULE 1.5 annexed hereto and made
a part hereof. Each of Seller, Optometrist, Vision 21 and P.C. hereby covenants
and agrees that he or it will not take a position that is in any way
inconsistent with the terms of this Section 1.5 on any income tax return,
before any governmental agency charged with the collection of any income tax or
in any judicial proceeding.
1.6. Assumption of Certain Obligations and Liabilities. From and after
the Closing Date, Vision 21 shall assume and agree to pay or perform, promptly
as they become due, only those obligations and liabilities of Seller expressly
set forth on SCHEDULE 1.6 (the "Assumed Obligations"). Except for the Assumed
Obligations, neither Vision 21 nor the P.C. shall assume or be deemed to have
assumed and shall not be responsible for any other obligation or liability of
Seller, direct or indirect, known or unknown, absolute or contingent, including
without limitation (i) any and all obligations regarding any foreign, Federal,
state or local income, sales, use, franchise or other tax liabilities, (ii) any
and all obligations or liabilities relating to any fees or expenses of Seller's
or Optometrist's counsel, accountants or other experts incident to the
negotiation and preparation of any of the documents contemplated herein and
consummation of the contemplated Transactions thereby, (iii) any and all
liabilities relating to or arising from the provision of professional
optometric services (or failure to provide professional optometric services)
prior to the Closing Date; and (iv) any and all liability for violations of the
Civil Rights Act of 1964, as amended, otherwise known as Title VII ("Title
VII") by Seller and/or Optometrist for employee, discrimination or other claims
thereunder.
1.7. Purchase Price Adjustments.
(a) Working Capital Adjustment. The Non-Optometric Asset Purchase
Price shall be subject to adjustment to the extent that Current Assets (as
defined herein) or Current Liabilities Assumed (as defined herein) materially
differ from the amounts customarily arising in the ordinary course of business
of the Seller as of November 30, 1997. The term "Current Assets"
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shall mean xxxxx cash, accounts receivable, prepaid expenses, inventory,
supplies and other current assets (excluding cash in banks, certificates of
deposit, other cash equivalents, the current portion of capital leases and
prepaid income taxes). The term "Current Liabilities Assumed" shall mean the
balances (on an accrual basis) as of November 30, 1997 of trade accounts
payable, accrued payroll, accrued payroll taxes, accrued benefits, and other
current liabilities (excluding notes payable, the current portion of capital
leases and long-term debt and income and franchise taxes and accrued
shareholder expenses). The Non-Optometric Asset Purchase Price shall be
increased or reduced to reflect the difference (on a dollar for dollar basis)
between the Current Assets and Current Liabilities and the customary amounts
referred to herein above. The adjustment shall be settled in cash, which in the
case of a reduction in the Purchase Price may be set-off from monies due the
Seller pursuant to the Business Management Agreement. The parties also agree
that to the extent the adjustments materially impact the goodwill created by
the transaction, there shall be an adjustment for the related impact upon net
income created by the change in amortization of such goodwill and the Purchase
Price shall be increased or reduced to reflect the impact on net income,
settled in cash as provided in this Section 1.7(a).
(b) Contribution/Net Income Adjustment. In addition to any
adjustments made in accordance with Section 1.7(a) of this Agreement, the
Non-Optometric Asset Purchase Price shall be subject to adjustment in the event
that the Seller's actual audited net income minus the Seller's compensation
structure minus the Seller's actual lease expense minus shareholder expenses
plus Vision 21's new compensation structure for the practice and Vision 21's
new lease expense as such items were utilized in computing the Preliminary
Practice Valuations attached as an exhibit to the letter of intent between the
parties hereto dated December 4, 1997 (the "Letter of Intent") for the calendar
year 1997 (the "Actual Contribution/Net Income Earnings") are less than the
Seller's estimated annualized net income plus shareholder expenses for the
calendar year 1997, as reflected in the Preliminary Practice Valuations set
forth in the exhibit to the Letter of Intent (the "Estimated Contribution/Net
Income Earnings"). The Non-Optometric Asset Purchase Price shall be reduced if
the Actual Contribution/Net Income Earnings are less than the Estimated
Contribution/Net Income Earnings, and in such event, the reduction in the
Purchase Price shall be by such difference times five (5). The computation of
Actual Contribution/Net Income Earnings shall not reflect non-recurring
expenses, costs and income occurring throughout the 1997 calendar year. The
adjustment shall be settled in cash which may at the option of Vision 21 be
set-off from monies due the Seller pursuant to the Business Management
Agreement. The parties also agree that to the extent the adjustments materially
impact the goodwill created by the transaction, there shall be an adjustment
for the related impact upon net income of Vision 21 created by the change in
amortization of such goodwill and the adjustment to the Non-Optometric Asset
Purchase Price shall reflect the impact on net income, settled in cash as
provided in this Section 1.7(b).
(c) Purchase Price Adjustment Procedure. Within forty-five (45)
days following the Closing Date, Vision 21 shall present to Seller its proposed
Non-Optometric Asset Purchase Price adjustment (the "Proposed Purchase Price
Adjustment") calculated in accordance with Sections 1.7(a) and (b) hereof. The
Seller shall, within fifteen (15) days after the delivery by Vision 21 of the
Proposed Purchase Price Adjustment, complete its review thereof. In the event
that the Seller believes that the Proposed Purchase Price Adjustment has not
been prepared on the basis set forth in Sections 1.7(a) and (b) or otherwise
contests any item set forth therein, the Seller shall, on or before the last
day of such 15-day period, so object to Vision 21 in writing, setting forth a
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specific description of the nature of the objection and the corresponding
adjustments the Seller believes should be made. If no objection is received by
Vision 21 on or before the last day of such 15-day period, then the Proposed
Purchase Price Adjustment delivered by Vision 21 shall be final. If an
objection has been made and Vision 21 and the Seller are unable to resolve all
of their disagreements with respect to the proposed adjustments within fifteen
(15) days following the delivery of the Seller's objection, the dispute shall
be submitted to arbitration administered by the American Arbitration
Association (the "AAA") under the AAA's Commercial Arbitration Rules (such
arbitration to be held in Austin, Texas) and the arbitrator shall be instructed
to deliver his determination of the dispute to the parties no later than
fifteen (15) days after the arbitration hearing. Vision 21 shall provide to the
Seller and its accountants full access to all relevant books, records and work
papers utilized in preparing the Proposed Purchase Price Adjustment.
ARTICLE II - CLOSING, ITEMS TO BE DELIVERED,
THIRD PARTY CONSENTS AND FURTHER ASSURANCES
2.1. Closing. The closing of the transactions contemplated in this
Agreement (the "Closing") shall take place at or prior to April __, 1998 (the
date that the Closing takes place is referred to herein as the "Closing Date")
at the office of Xxxxxxxx, Loop & Xxxxxxxx, LLP located at 000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000, or at such other location or date
as the parties hereto shall mutually agree. Notwithstanding the foregoing
language to the contrary, the effective date of Closing shall be deemed April
1, 1998.
2.2. Deliveries of the Seller, Optometrist, Vision 21 and the P.C. at
the Closing.
(a) Seller and Optometrist shall deliver to Vision 21 the
following at or prior to the Closing:
(i) such bills of sale with warranties as to title,
assignments, endorsements and other good and sufficient instruments and
documents of conveyance and transfer as shall be necessary and effective to
transfer and assign to and vest in Vision 21 all of Seller's right, title and
interest in and to the Non-Optometric Assets, including without limitation (A)
good and valid title in and to all of the Non-Optometric Assets owned by
Seller, (B) good and valid leasehold interests in and to all of the
Non-Optometric Assets leased by Seller as lessee, and (C) all of Seller's
rights under all agreements, contracts, commitments, instruments and other
documents included in the Non-Optometric Assets to which Seller is a party or
by which it has rights on the Closing Date; the aforedescribed instruments
shall include, without limitation, the Xxxx of Sale for Non-Optometric Assets
(the "Non-Optometric Asset Xxxx of Sale") in the form annexed hereto and made a
part hereof as EXHIBIT 2.2(A)(I);
(ii) original instruments of consent or waiver duly executed
by third parties with respect to any contracts, agreements, leases (other than
real property leases) or other rights or obligations being transferred to
Vision 21 hereunder and requiring a consent or waiver therefor;
(iii) duly executed UCC-3 termination statements evidencing
the release of any and all liens upon any of the Non-Optometric Assets held by
any person or entity;
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(iv) a copy of resolutions of the Board of Directors of
Seller authorizing the execution, delivery and performance of this Agreement
and all related documents and agreements and the consummation of the
transactions contemplated in this Agreement;
(v) such other certificates and documents as Vision 21 or its
counsel may reasonably request.
(b) Seller shall deliver to the P.C. the following:
(i) such bills of sale with warranties as to title,
assignments, endorsements and other good and sufficient instruments and
documents of conveyance and transfer as shall be necessary and effective to
transfer and assign to and vest in the P.C. all of Seller's right, title and
interest in and to the Optometric Assets, including without limitation (A) good
and valid title in and to all of the Optometric Assets owned by Seller, (B)
good and valid leasehold interest in and to all of the Optometric Assets leased
by Seller as lessee, and (C) all of Seller's rights under all agreements,
contracts, commitments, instruments and other documents included in the
Optometric Assets to which Seller is a party or by which he has rights on the
Closing Date; the aforedescribed instruments shall include, without limitation,
the Xxxx of Sale for Optometric Assets (the "Optometric Asset Xxxx of Sale") in
the form annexed hereto and made a part hereof as EXHIBIT 2.2(B)(I);
(ii) original instruments of consent or waiver duly executed
by third parties with respect to any contracts, agreements, leases or other
rights or obligations being transferred to the P.C. hereunder and requiring a
consent or waiver therefor;
(iii) duly executed UCC-3 termination statements evidencing
the release of any and all liens upon any of the Optometric Assets held by any
person or entity;
(iv) a duly executed Employment Agreement in the form annexed
hereto and made a part hereof as EXHIBIT 2.2(B)(IV) (the "Employment
Agreement");
(v) such other certificates and documents as the P.C. or its counsel may
reasonably request.
Simultaneously with delivery of the items set forth in subsection (a) and (b)
of this Section 2.2, Seller shall take all such steps as may be required to put
Vision 21 in actual possession and operating control of the Non-Optometric
Assets and the P.C. in actual possession and operating control of the
Optometric Assets.
(c) Vision 21 shall deliver to Seller the following at or prior
to the Closing:
(i) the Non-Optometric Asset Purchase Price;
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(ii) a copy of the resolutions of the Board of Directors of
Vision 21 authorizing the execution, delivery and performance of this Agreement
and all related documents and agreements and the consummation of the
transactions contemplated in this Agreement;
(iii) duly executed Lease Assignments or duly executed Lease
Agreements; and
(iv) such other certificates and documents as Seller or its
counsel may reasonably request.
(d) P.C. shall deliver to Seller the following:
(i) the Optometric Asset Purchase Price;
(ii) a duly executed Employment Agreement; and
(iii) such other certificates and documents as Seller or his
counsel may reasonably request.
(e) P.C. shall deliver to Vision 21 the following:
(i) a duly executed Business Management Agreement in the
form of EXHIBIT 2.2(E)(I) by and between P.C. and Vision 21 (the "Business
Management Agreement").
2.3. Further Assurances. Seller, from time to time after the Closing
and at the request of Vision 21 or the P.C., will execute, acknowledge and
deliver to Vision 21 and the P.C. such other instruments of conveyance and
transfer and will take such other actions as Vision 21 or the P.C. may
reasonably require in order to vest more effectively in Vision 21 or the P.C.,
or to put Vision 21 or the P.C. more fully in possession of, any of the Assets.
Each of the parties hereto will cooperate with the other and execute and
deliver to the other parties hereto such other instruments and documents and
take such other actions as may be reasonably requested from time to time by any
other party hereto as necessary to carry out, evidence and confirm the intended
purposes of this Agreement.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Seller and Optometrist. Seller
and Optometrist hereby jointly and severally represent and warrant to Vision 21
and the P.C. that the following are true and correct as of the date hereof, and
shall be true and correct as of the Closing Date as if made on that date,
except as set forth on the Schedules attached hereto and made a part hereof,
each of which exceptions shall specifically identify and be limited to the
relevant subsection hereof to which it relates and shall be deemed to be a
representation and warranty as if made hereunder; when used in this Section 3,
the term "best knowledge" (or words of similar import) of Seller shall mean
such knowledge as shall have been obtained through due and diligent
investigation by those individuals listed on Schedule 3:
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(a) Organization. Seller is a Texas professional corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas, with all requisite corporate power and authority to carry on the
business in which it is engaged, to own the properties it owns, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
Seller is not duly qualified and licensed to do business in any other
jurisdiction. Seller does not have any assets, employees or offices in any
state other than the State of Texas.
(b) Legal Power and Enforceable Obligations. Seller has the
power, authority and legal right to own, lease and operate the Assets, to
conduct the Practice as currently conducted, and to execute, deliver and
perform this Agreement. This Agreement and all the other documents and
instruments required to be delivered by Seller and/or Optometrist in accordance
with the provisions hereof have been, or upon their execution and delivery will
have been, duly executed and delivered on behalf of Seller and Optometrist and
constitute, or will constitute, the legal, valid and binding obligation of
Seller and Optometrist, enforceable against Seller and Optometrist in
accordance with their respective terms.
(c) No Violation. The execution, delivery and performance of this
Agreement by Seller and Optometrist do not and will not violate, conflict with
or result in the breach of any term, condition or provision of, or require the
consent of any other person under (i) any existing law, ordinance, or
governmental rule or regulation to which Seller or Optometrist is subject, (ii)
any judgment, order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority which is applicable
to either Seller or Optometrist, (iii) Seller's Articles or Certificate of
Incorporation or Bylaws, or (iv) any mortgage, indenture, agreement, contract,
commitment, lease, plan or other instrument, document or understanding, oral or
written, to which either Seller or Optometrist is a party, by which either
Seller or Optometrist may have rights, or by which any of the Assets may be
bound or affected, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of Seller or Optometrist thereunder. No authorization, approval or
consent of, and no filing with, any governmental or regulatory official, body
or authority is required in connection with the execution, delivery or
performance of this Agreement by Seller or Optometrist or the sale to Vision 21
and the P.C. of the Assets.
(d) No Third Party Options. There are no existing agreements
with, options or commitments to or rights of any person to acquire any of the
Assets or any interest therein.
(e) Condition of Tangible Assets. All buildings, structures,
facilities, equipment and other material items of tangible property and assets
included in the Assets are in good operating condition and repair, subject to
normal wear and maintenance, are usable in the regular and ordinary course of
business and conform in all material respects to all applicable laws,
ordinances, codes, rules and regulations relating to their construction, use
and operation.
(f) Absence of Undisclosed Liabilities. Seller does not have any
liabilities or obligations with respect to the Practice, either direct or
indirect, matured or unmatured or absolute, contingent or otherwise, except
those liabilities incurred, consistently with past business practice, in or as
a result of the normal and ordinary course of business and except for those
liabilities disclosed
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in SCHEDULE 1.6 hereof. For purposes of this Agreement, the term "liabilities"
shall include, without limitation, any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or unfixed, known or unknown, asserted or
unasserted, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured.
(g) Title to Assets; Required Approvals. Seller has and shall
transfer to Vision 21 and the P.C. at the Closing good, valid and marketable
title to all of the Assets being sold and transferred hereunder, free and clear
of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, except as set forth in SCHEDULE 3.1(G). Except as set forth in
SCHEDULE 3.1(G), no consent, approval, waiver or authorization is required to
be obtained by Seller from any third party with respect to the assignment to
Vision 21 or the P.C. of any contract, agreement, lease, or other right or
obligation of Seller other than pursuant to those leases the failure of which
to obtain would not, individually or in the aggregate, have a material adverse
effect upon the conduct of the Practice. Seller shall use its best efforts to
obtain all such consents, approvals, waivers and authorizations with respect to
those items disclosed on SCHEDULE 3.1(G) before and after the Closing.
(h) Taxes. Seller has filed all tax returns and forms required to
be filed with respect to the Practice, and has paid in full all taxes,
estimated taxes, interest, penalties, assessments and deficiencies which have
become due with respect to the Practice, or will do so prior to the Closing
Date. Such returns and forms are true and correct in all material respects, and
Seller is not required to pay any other tax except as shown on such returns.
Seller is not a party to any pending action or proceeding and, to Seller's
knowledge, there is no action or proceeding threatened by any government or
authority against Seller for the assessment or collection of any tax and no
resolved claim for assessment or collection of any tax has been asserted
against Seller. The Optometrist is not a "foreign person" as described in
Section 1445 of the Internal Revenue Code of 1986, as amended. There is no
pending proceeding to reduce the assessed valuation of any portion of the
Assets. Seller has delivered to Vision 21 and the P.C. a true and complete copy
of its federal and state tax returns for the years ended December 31, 1995,
1996, which tax returns are or shall be accompanied by all notes and schedules
filed therewith. Such tax returns fairly present the financial position of
Seller for the periods covered thereby.
(i) Absence of Changes. Since September 30, 1997, Seller has not:
(i) except for the electronic message board settlement,
incurred any liabilities, other than liabilities incurred in the ordinary
course of business consistent with past practice, or discharged or satisfied
any lien or encumbrance, or paid any liabilities, other than in the ordinary
course of business consistent with past practice, or failed to pay or discharge
when due any liabilities of which the failure to pay or discharge has caused or
will cause any material damage or risk of material loss to Seller or any of its
Assets or properties;
(ii) sold, encumbered, assigned or transferred any of its
Assets or properties;
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(iii) created, incurred, assumed or guaranteed any
indebtedness for money borrowed, or mortgaged, pledged or subjected any of the
Assets to any mortgage, lien, pledge, security interest, conditional sales
contract or other encumbrance of any nature whatsoever;
(iv) made or suffered any amendment or termination of any
material agreement, contract, commitment, lease or plan to which it is a party
or by which it is bound, or canceled, modified or waived any substantial debts
or claims held by it or waived any rights of substantial value, whether or not
in the ordinary course of business;
(v) suffered any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting the Practice and
its related operations, assets, properties, prospects or condition (financial
or otherwise) or suffered any repeated, recurring or prolonged shortage,
cessation or interruption of supplies or utility or other services required to
conduct the Practice;
(vi) suffered any material adverse change in the Practice
and its related operations, assets, properties, prospects or condition
(financial or otherwise);
(vii) received notice or had knowledge of any actual or
threatened labor trouble, strike or other occurrence, event or condition of any
similar character which has had or might have an adverse effect on the Practice
or its related operations, Assets, properties, prospects or condition
(financial or otherwise);
(viii) increased or decreased the salaries or other
compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its employees or made any
increase in, or any addition to, other benefits to which any of its employees
may be entitled other than in the ordinary course of business consistent with
past practice;
(ix) changed any of the accounting principles followed by it
or the methods of applying such principles; or
(x) entered into any transaction other than in the ordinary
course of business consistent with past practice.
(j) Financial Statements; Consistent Treatment of Expenses.
Seller has delivered to Vision 21 and the P.C. Seller's unaudited balance
sheets and unaudited statements of income and cash flows for the fiscal years
ended December 31, 1995, and 1996, and Seller's unaudited balance sheet and
unaudited statements of income and cash flows for the nine (9) month period
ended September 30, 1997 (collectively, the "Financial Statements"). Except as
set forth on SCHEDULE 3.1(J), the Financial Statements, including the notes
thereto, have been prepared utilizing generally accepted accounting principals
("GAAP") consistently applied by Seller in accordance with past practice
throughout the periods indicated. The Financial Statements fairly present the
financial condition and results of operation of Seller as at the respective
dates and for the periods indicated. Except as set forth on SCHEDULE 3.1(J),
the Financial Statements reflect all liabilities and
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obligations of the Seller, accrued, contingent or otherwise that would be
required to be reflected thereon, or in the notes thereto, prepared in
accordance with GAAP, except for liabilities and obligations incurred in the
ordinary course of business since September 30, 1997. For purposes of this
Agreement, the term "liabilities" shall include, without limitation, any direct
or indirect indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, fixed or unfixed,
known or unknown, asserted or unasserted, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured. Seller has, in presenting information
concerning Seller's expenses to Vision 21 for the purpose of determining the
Seller's value, separated out those expenses which shall be borne by Seller
following the acquisition contemplated in this Agreement in a manner which is
consistent with the treatment of expenses which shall be the responsibility of
Seller pursuant to the Business Management Agreement.
(k) Compliance with Law; Authorizations. Seller has complied in
all material respects with, and is not in any material violation of, any law,
ordinance or governmental or regulatory rules or regulations, whether federal,
state, local or foreign, to which Seller and the Practice and its related
operations, assets or properties are subject (collectively, the "Regulations").
Seller owns, holds, possesses or lawfully uses in the operation of the Practice
all franchises, licenses, permits, easements, rights, applications, filings,
registrations and other authorizations (collectively, the "Authorizations")
which are material for Seller to conduct the Practice as currently conducted or
for the ownership and use of the assets owned or used by Seller in the conduct
of the Practice, free and clear of all liens, charges, restrictions and
encumbrances and in compliance with all Regulations. Seller is not in default,
nor has Seller received any notice of any claim of default, with respect to any
such Authorization. All such Authorizations are renewable by their terms or in
the ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees.
None of such Authorizations will be adversely affected by the consummation of
the transactions contemplated hereby.
(l) Litigation. No litigation, including any arbitration,
investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority is pending or, to the
best knowledge of Seller and Optometrist, threatened against Seller or
Optometrist or relates to the Assets or the transactions contemplated by this
Agreement, nor does Seller or Optometrist know of any reasonably likely basis
for any such litigation, arbitration, investigation or proceeding, the result
of which could adversely affect Seller, Optometrist, the Assets or the
transactions contemplated hereby or thereby. Neither Seller nor Optometrist is
a party to or subject to the provisions of any judgment, order, writ,
injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which may adversely affect Seller,
Optometrist, the Assets or the transactions contemplated hereby.
(m) Labor Matters. Seller has not suffered any strike, slowdown,
picketing or work stoppage by any union or other group of employees affecting
the Practice. Seller is not a party to any collective bargaining agreement, no
such agreement determines the terms and conditions of employment of any
employee of Seller, no collective bargaining agent has been certified as a
representative of any of the employees of Seller, and no representation
campaign or election is now in progress with respect to any of the employees of
Seller. Seller has complied and is in compliance in all material respects with
all laws and regulations relating to the employment of labor, including,
without limitation, provisions relating to wages, hours, collective bargaining,
occupational safety
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and health, equal employment opportunity and the withholding of income taxes
and social security contributions. Seller has paid its employees all wages,
commissions and accruals for earned vacation, personal days and sick leave
owing through the Closing Date. The consummation of the transactions
contemplated hereby will not cause Vision 21 or the P.C. to incur or suffer any
liability relating to, or obligation to pay, any severance, termination or
other payment to any person or entity and any such claim made against Vision 21
or the P.C. for reason of any termination or separation of any employee on or
before Closing, or otherwise resulting from the sale of the Assets pursuant to
this Agreement, shall be the sole responsibility of Seller. No employee of
Seller has any contractual right to continued employment by Seller following
the consummation of the sale of the Assets pursuant to this Agreement and
Vision 21 and the P.C. shall be free to offer employment to such employees of
Seller as Vision 21 and the P.C. may determine and on such terms and conditions
as Vision 21 and the P.C. may determine. Set forth in SCHEDULE 3.1(M) is an
accurate and complete list of all employees employed by Seller in the Practice
showing as to each the nature of the employee's job, years of service, the
amount or rate of compensation, all accruals of vacation, personal days, sick
leave, and any other benefits due the employee and other matters which may be
reasonably required by Vision 21 and the P.C.
(n) Employee Benefit Plans. Seller neither sponsors nor maintains
any employee benefit plans except as described in SCHEDULE 3.1(N). The Seller
is not a contributing employer under any multiemployer plan (as such term is
defined in Section 3(37) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) nor has it withdrawn from participation in any such
plan after 1979. The Seller has not entered into any agreement to provide, nor
does it otherwise have any obligation to provide, any individual and/or his
designated beneficiary with any optometric, life insurance or other fringe
benefits, following his retirement or other termination of employment, other
than pension benefits payable pursuant to its employee pension benefit plans
(as such term is defined in Section 3(2) of ERISA) described in SCHEDULE
3.1(N). Any employee benefit plans (as such term is defined in Section 3(3) of
ERISA) maintained or sponsored by Seller for the benefit of Seller's employees
and described in SCHEDULE 3.1(N) are in compliance in all material respects
with the applicable provisions of ERISA and the regulations promulgated
thereunder as presently applied, and have so complied during all prior periods
during which such provisions were applicable. Seller has complied in all
material respects with the provisions of ERISA applicable to it as employer,
plan sponsor, plan administrator or fiduciary of any such employee benefit
plans with respect to any such employee benefit plans maintained by Seller or
to which Seller was obligated to contribute funds (or any other plan or
individual arrangement which may not be subject to ERISA). Seller has (i) made
all contributions required of it by law (including, without limitation, ERISA)
or contract; and (ii) is and has been in compliance with the material terms and
provisions of all such employee benefit plans. Seller has no accrued but unpaid
obligations with respect to any of such employee benefit plans except as set
forth in the Financial Statements or SCHEDULE 3.1(J).
(o) Necessary Assets. The Assets include all rights and property
necessary to the conduct of the Practice in the manner it is presently
conducted by Seller and no property excluded from the Assets hereunder
constitutes property or rights material to the Practice.
(p) Availability of Documents; Compliance with Due Diligence Requests. Seller
has made available to Vision 21 and the P.C. copies of all documents,
including, without
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limitation, all agreements, contracts, commitments, insurance policies, leases,
plans, instruments, undertakings, authorizations, permits, licenses,
trademarks, trade names, service marks and applications therefor listed in this
Agreement or in the Schedules to this Agreement. Such copies are true and
complete and include all amendments, supplements and modifications thereto or
waivers currently in effect thereunder. Prior to the Closing Date, the Seller
and Optometrist shall have provided true and correct copies to Vision 21 and
the P.C. or answered truthfully in writing all items described in Vision 21's
written due diligence list which has been provided to the Seller by Vision 21
prior to the date first above written.
(q) Conditions Affecting Seller. There is no fact, development or
threatened development with respect to the markets, products, services,
clients, patients, facilities, personnel, vendors, suppliers, operations,
Assets or prospects of the Practice which are known to Seller which would
materially adversely affect the Practice or the operations, prospects or
condition (financial or otherwise) of Seller considered as a whole, other than
such conditions as may affect as a whole the economy or the practice of
optometry generally. Seller and Optometrist have used their respective best
efforts to keep available for Vision 21 and the P.C. the services of the
employees, agents, patients and suppliers of Seller active in the conduct of
the Practice. Seller does not have any reason to believe that any loss of any
employee, agent, patient or supplier or other advantageous arrangement will
result because of the consummation of the transactions contemplated hereby.
(r) Real Property. Seller does not own any real property used in
connection with the Practice. All real property (including, without limitation,
all interests in and rights to real property) and improvements located thereon
which are leased by Seller and used in connection with the Practice or included
in the Assets (the "Real Property") are listed on SCHEDULE 3.1(R). Each lease
with respect to the Real Property is in full force and effect and has not been
assigned, modified, supplemented or amended. Neither Seller nor the landlord
under any lease is in material default of the terms of any such lease and, to
the best of Seller's and Optometrist's knowledge, no circumstances or state of
facts currently exist which, with the giving of notice or the passage of time
or both would permit the landlord under any lease to terminate such lease.
(s) Medicare and Medicaid Programs. Optometrist and, to the best
of Seller's and Optometrist's knowledge, each professional employee of the
Seller are qualified for participation in the Medicare and Medicaid programs
and the Seller is party to provider agreements for such programs which are in
full force and effect with no events of default having occurred thereunder.
Seller, Optometrist and, to the best of Seller's and Optometrist's knowledge,
each professional employee of the Seller have timely filed all claims or other
reports required to be filed prior to the Closing Date with respect to the
purchase of services by third-party payors ("Payors"), including but not
limited to Medicare and Medicaid programs, except where the failure to file
would not, individually or in the aggregate, result in a material adverse
effect. All such claims or reports are complete and accurate in all material
respects. Seller has paid or has properly recorded on the Financial Statements
all actually known and undisputed refunds, discounts or adjustments which have
become due pursuant to such claims, and, to the best of Seller's and
Optometrist's knowledge, Seller does not have any material liability to any
Payor with respect thereto, except as has been reserved for in the Seller's
Financial Statements or set forth on SCHEDULE 3.1(J). There are no pending
appeals, overpayment determinations, adjustments, challenges, audits,
litigation, or notices of intent to reopen Medicare and/or Medicaid claims
determinations or other reports required to be
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filed by Seller, Optometrist or, to the best of Seller's and Optometrist's
knowledge, a professional employee of Seller in order to be paid by a Payor for
services rendered. None of the Seller, Optometrist or any professional employee
of Seller has been convicted of, or pled guilty or nolo contendere to, patient
abuse or neglect, or any other Medicare or Medicaid program-related offense.
None of the Seller, Optometrist or, to the best of Seller's and Optometrist's
knowledge, any professional employee of the Seller has committed any offense
which may serve as the basis for suspension or exclusion from the Medicare and
Medicaid programs, including but not limited to, defrauding a government
program, loss of a license to provide health services, and failure to provide
quality care.
(t) Fraud and Abuse. None of the Seller, Optometrist nor, to the
best of Seller's and Optometrist's knowledge, any professional employee of the
Seller has engaged in any activities which are prohibited under 42 U.S.C.
xx.xx. 1320-7, 7a or 7b or 42 U.S.C. ss.1395nn (subject to the exceptions set
forth in such legislation), or the regulations promulgated thereunder or
pursuant to similar state or local statutes or regulations, or which are
prohibited by rules of professional conduct, including but not limited to the
following:
(i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment;
(ii) knowingly and willfully making or causing to be made a
false statement or representation of a material fact for use in determining
rights to any benefit or payment;
(iii) failure to disclose knowledge by a Medicare or Medicaid
claimant of the occurrence of any event affecting the initial or continued
right to any benefit or payment on the claimant's behalf or on behalf of
another, with intent to fraudulently secure such benefit or payment;
(iv) knowingly and willfully offering, paying, soliciting or
receiving any remuneration (including any kickback, bribe, or rebate), directly
or indirectly, in cash or in kind (1) in return for referring an individual to
a person for the furnishing or arranging for the furnishing of any item or
service for which payment may be made in whole or in part by Medicare or
Medicaid, or (2) in return for purchasing, leasing, or ordering, or arranging
for or recommending purchasing, leasing, or ordering any good, facility,
service, or item for which payment may be made in whole or in part by Medicare
or Medicaid; and
(v) referring a patient for designated health services (as
defined in 42 U.S.C. ss.1395nn) or providing designated health services to a
patient upon a referral from an entity or person with which Seller or an
immediate family member has a financial relationship, and to which no exception
under 42 U.S.C. ss.1395nn applies.
(u) Ownership of Competitors. Neither Seller nor the Optometrist
owns, directly or indirectly, any of the capital stock of any other corporation
or any equity, profit sharing, participation or other interest in any
corporation, partnership, joint venture or other entity that is engaged in a
business that is a competitor of Vision 21 or the Seller.
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(v) Prohibitions on the Corporate Practice of Optometry. To the
best of the Seller's and Optometrist's knowledge, the actions, transactions or
relationships arising from, and contemplated by this Agreement, do not violate
any law, rule or regulation relating to the corporate practice of optometry.
Seller and Optometrist accordingly agree that neither Seller nor Optometrist
will, in an attempt to void or nullify any document contemplated herein or any
relationship involving Vision 21, the P.C., Seller or Optometrist, xxx, claim
or assert that any such document contemplated herein or any such relationship
violates any law, rule or regulation relating to the corporate practice of
optometry and expressly warrant that this Section is valid and enforceable by
Vision 21, and recognizes that Vision 21 has relied upon the statements herein
in closing this acquisition.
(w) Commitments. Except as set forth on SCHEDULE 3.1(W) or as
otherwise disclosed pursuant to this Agreement, neither Seller nor Optometrist
(with respect to the Practice) is a party to nor bound by, nor are the Assets
bound by, whether or not in writing, any of the following (collectively,
"Commitments"):
(i) partnership or joint venture agreement;
(ii) guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(iii) debt instrument, loan agreement or other obligation
relating to indebtedness for borrowed money or money lent or to be lent to
another;
(iv) contract to purchase real property;
(v) agreement relating to any material matter or
transaction in which an interest is held by a person or entity that is an
affiliate of Seller;
(vi) agreement for the acquisition of services, supplies,
equipment, inventory, fixtures or other property, or agreements with public
relations or advertising agencies, accountants or attorneys (other than in
connection with this Agreement and the transactions contemplated hereby)
involving more than $2,000 in the aggregate;
(vii) powers of attorney;
(viii) contracts containing non-competition covenants;
(ix) agreements with Payors and contracts to provide
optometric or health care services; or
(x) any other agreement or commitment not made in the
ordinary course of business or that is material to the business, operations,
condition (financial or otherwise) or results of operations of Seller.
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Except as set forth on SCHEDULE 3.1(W) and to Seller's and Optometrist's best
knowledge, there are no existing or asserted defaults, events of default or
events, occurrences, acts or omissions that, with the giving of notice or lapse
of time or both, would constitute defaults by Seller or Optometrist or, to the
best knowledge of Seller and Optometrist, any other party to a material
Commitment, and no penalties have been incurred nor are amendments pending,
with respect to the material Commitments. The Commitments are in full force and
effect and are valid and enforceable obligations of Seller and Optometrist, and
to the best knowledge of Seller and Optometrist, are valid and enforceable
obligations of the other parties thereto, in accordance with their respective
terms, and no defenses, off-sets or counterclaims have been asserted or, to the
best knowledge of Seller and Optometrist, may be made by any party thereto
(other than Seller and Optometrist), nor has Seller or Optometrist waived any
rights thereunder. Except as set forth on SCHEDULE 3.1(W), no consents or
approvals are required under the terms of any agreement listed on SCHEDULE
3.1(W) in connection with the transactions contemplated herein, including,
without limitation, the transfer of any such agreement pursuant to this
Agreement. Except as set forth on SCHEDULE 3.1(w), neither Seller nor
Optometrist has received notice of any plan or intention of any other party to
any Commitment to exercise any right to cancel or terminate any Commitment, and
neither Seller nor Optometrist knows of any fact that would justify the
exercise of such a right.
(x) Insurance. Seller, Optometrist and each professional employee
of Seller carries property, liability, malpractice and such other types of
insurance pursuant to the insurance policies listed and briefly described on
SCHEDULE 3.1(X) (the "Insurance Policies"). The Insurance Policies are all of
the insurance policies of the Seller, Optometrist and, to the best of Seller's
and Optometrist's knowledge, each professional employee of Seller relating to
the business of Seller and the Assets. All of the Insurance Policies are issued
by insurers of recognized responsibility, and, to the best knowledge of the
Seller and Optometrist, the insurance policies are valid and enforceable
policies, except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally or the availability of
equitable remedies. Except as set forth in SCHEDULE 3.1(X), no consent or
approval is required for, and no other impediment or restriction exists that
will prohibit or limit, the transfer of any such Insurance Policies included
within the Non-Optometric Assets in accordance with the terms of this
Agreement. All Insurance Policies shall be maintained in force without
interruption up to and including the Closing Date. Neither Seller nor
Optometrist has received any notice or other communication from any issuer of
any Insurance Policy cancelling such policy, materially increasing any
deductibles or retained amounts thereunder, and to the actual knowledge of
Seller and Optometrist, no such cancellation or increase of deductibles,
retainages or premiums is threatened. Neither Seller nor Optometrist has any
outstanding claims, settlements or premiums owed against any Insurance Policy,
and Seller and Optometrist have given all notices or have presented all
potential or actual claims under any Insurance Policy in due and timely
fashion. In the three years before the effective date of this Agreement,
neither Seller nor Optometrist has filed a written application for any
professional liability insurance coverage which has been denied by an insurance
agency or carrier, and the Seller, Optometrist and each professional employee
employed by Seller have been continuously insured for professional malpractice
claims for at least the past seven (7) years (or the period of Optometrist's or
such professional employee's employment by Seller, if shorter). SCHEDULE 3.1(X)
also sets forth a list of all claims under any Insurance Policy in excess of
$10,000 per occurrence filed by Seller, Optometrist or any professional
employee employed by the Seller in the three years before the effective date of
this Agreement.
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(y) Accounts Receivable/Payable. The accounts receivable of
Seller relating to the Practice reflected on the Seller's Financial Statements
(the "Accounts Receivable"), to the extent uncollected on the date hereof, are,
and the accounts receivable of Seller relating to the ownership and operation
of the Practice to be reflected on the books of Seller on the Closing Date will
be, valid, existing and collectible within six (6) months from the Closing Date
(taking into consideration the allowance for doubtful accounts set forth in the
Financial Statements) using reasonably diligent collection methods taking into
account the size and nature of the receivable, and represent amounts due for
goods sold and delivered or services performed. To the best of Seller's and
Optometrist's knowledge, there are not, and on the date of Closing there will
not be, any refunds, discounts, set-offs, defenses, counterclaims or other
adjustments payable or assessable with respect to the Accounts Receivable.
Seller has collected Accounts Receivable only in the ordinary course and has
not changed collection procedures or methods nor accelerated the pace of such
collection efforts in anticipation of the transactions contemplated in this
Agreement. Seller has paid accounts payable in the ordinary course and has not
changed payment procedures or methods nor delayed the timing of such payments
in anticipation of the transactions contemplated in this Agreement.
(z) Intentions. The Optometrist intends to continue practicing
medicine on a full-time basis for at least the next five (5) years with the
Seller and does not know of any fact or condition that materially adversely
affects, or in the future is reasonably likely to materially adversely affect,
his ability or intention to practice optometry on a full-time basis for the
next five (5) years with the Seller.
(aa) Completeness of Disclosure. Neither this Agreement, nor any
Schedule, Exhibit, list, certificate or other instrument or document furnished
by Seller or Optometrist to Vision 21 or the P.C. pursuant to this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact required to be stated herein or therein or necessary to make the
statements and information contained herein or therein not misleading. Neither
Seller nor Optometrist has failed to disclose to Vision 21 or the P.C. any
event, condition or fact which Seller knows, or has reasonable grounds to know,
may materially adversely affect the Assets or the operations, prospects or
condition (financial or otherwise) of the Practice.
3.2. Representations and Warranties of Vision 21. Vision 21 hereby
represents and warrants to Seller and Optometrist that the following are true
and correct as of the date hereof and shall be true and correct as of the
Closing Date as if made on that date:
(a) Corporate Existence. Vision 21 is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida.
(b) Corporate Power and Authorization. Vision 21 has all
requisite power, authority and legal right to execute, deliver and perform this
Agreement, and this Agreement constitutes the legal, valid and binding
obligation of Vision 21 enforceable against Vision 21 in accordance with its
terms.
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(c) Validity of Contemplated Transactions. The execution,
delivery and performance of this Agreement by Vision 21 do not and will not
violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other party under (i) any existing
law, ordinance, or governmental rule or regulation to which Vision 21 is
subject, (ii) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to Vision 21, (iii) the Articles of Incorporation or
By-Laws of Vision 21, or (iv) any mortgage, indenture, agreement, contract,
commitment, lease, plan or other instrument, document or understanding, oral or
written, to which Vision 21 is a party or by which Vision 21 is otherwise
bound. No authorization, approval or consent of, and no registration or filing
with, any governmental or regulatory official, body or authority is required in
connection with the execution, delivery and performance of this Agreement by
Vision 21.
(d) Completeness of Disclosure. Neither this Agreement nor any
other instrument or document furnished by Vision 21 to Seller or Optometrist
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state any material fact required to be stated herein or therein or
necessary to make the statements and information contained herein or therein
not misleading.
(e) Employment of Seller's Employees. Vision 21 does not
currently intend to change the existing composition or employment terms of any
of the non-professional personnel which have employment arrangements with
Seller on the effective date of this Agreement (except as is necessary for
Vision 21 to employ such individuals pursuant to the Business Management
Agreement). Vision 21 reserves the right, however, to change the number,
composition or employment terms of such non-professional personnel in the
future.
(f) Compliance with Applicable Laws. Vision 21 is in material
compliance with all applicable laws, ordinances and regulations of any
governmental authority, including, without limitation, applicable state
corporation, insurance and health regulatory authorities and other Governmental
Authorities regulating exclusive provider organizations, preferred provider
organizations, medical utilization review organizations, medical service
organizations, lay intermediaries, secondary contractors or third-party
administrators and all Medicare and Medicaid provider agreements to which it is
a party, except where the failure to comply would not have a material adverse
effect. To the best knowledge of Vision 21, no investigation or review by any
governmental authority, including, without limitation, applicable state
corporation, insurance and health regulatory authorities, with respect to
Vision 21 is pending or threatened, nor has any governmental authority,
including, without limitation, applicable state corporation, insurance and
health regulatory authorities, indicated an intention to conduct the same,
other than those the outcome of which would not have a material adverse effect.
(g) Documents. Vision 21 has filed reports and registration
statements with the SEC (the "Purchaser Documents") since its initial public
offering. As of their respective dates, the Purchaser Documents did not contain
any untrue statements of material facts or omit to state material facts
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. As of
their respective dates, the Purchaser Documents complied in all material
respects with the applicable requirements of the
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Securities Act and the Exchange Act and the rules and regulations promulgated
under such statutes. The financial statements contained in the Purchaser
Documents, together with the notes thereto, have been prepared in accordance
with GAAP, reflect all liabilities of Vision 21 required to be stated therein
and present fairly the financial condition of Vision 21 at such date and the
results of operations and cash flows of Vision 21 for the period then ended.
The Purchaser Documents do not contain any untrue statements of material facts
or omit to state any material facts required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading as of the date hereof except for such facts as are
disclosed herein and except for the transactions contemplated hereby.
3.3. Representations and Warranties of P.C. P.C. hereby represents and
warrants to Seller that the following are true and correct as of the date
hereof and shall be true and correct as of the Closing Date as if made on that
date:
(a) Corporate Existence. P.C. is a professional corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas.
(b) Corporate Power and Authorization. P.C. has the power,
authority and legal right to execute, deliver and perform this Agreement, and
this Agreement constitutes the legal, valid and binding obligation of P.C.
enforceable against P.C. in accordance with its terms.
(c) Validity of Contemplated Transactions. The execution,
delivery and performance of this Agreement by P.C. do not and will not violate,
conflict with or result in the breach of any term, condition or provision of,
or require the consent of any other party under (i) any existing law,
ordinance, or governmental rule or regulation to which P.C. is subject, (ii)
any judgment, order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority which is applicable
to P.C., (iii) the Articles of Incorporation or By-Laws of P.C., or (iv) any
mortgage, indenture, agreement, contract, commitment, lease, plan or other
instrument, document or understanding, oral or written, to which P.C. is a
party or by which P.C. is otherwise bound. No authorization, approval or
consent of, and no registration or filing with, any governmental or regulatory
official, body or authority is required in connection with the execution,
delivery and performance of this Agreement by P.C.
(d) Completeness of Disclosure. Neither this Agreement nor any
other instrument or document furnished by P.C. to Seller pursuant to this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact required to be stated herein or therein or necessary to make
the statements and information contained herein or therein not misleading.
ARTICLE IV - CONDITIONS PRECEDENT TO THE CLOSING
4.1. Conditions Precedent to Obligations of Vision 21 and the P.C..
All obligations of Vision 21 and the P.C. under this Agreement are subject to
the fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
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(a) Compliance with this Agreement. Seller and Optometrist shall
have performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to the Closing.
(b) Due Diligence. Vision 21 and the P.C. shall have completed to
their satisfaction a due diligence review of Seller, Optometrist, the Practice
and the Assets, which shall include verification that the Practice has been run
in the ordinary course since September 30, 1997, and that the Assets,
liabilities, obligations, revenues, vendor relations and patient relations of
Seller are as represented to and anticipated by Vision 21 and the P.C. Seller
agrees to cooperate and make available to Vision 21, and the P.C. and their
employees and accountants, all of Seller's books and records and to make
available Seller's officers, employees and agents in assisting Vision 21 and
the P.C. to complete their due diligence investigations. Vision 21 and the P.C.
may conduct their due diligence investigations from the date first above
written to, and including, the Closing Date.
(c) No Adverse Changes. No change other than as contemplated or
permitted by this Agreement, or other than in the ordinary course, shall have
occurred with respect to the business, operations, prospects or condition
(financial or otherwise) of the Practice or any of the Assets, which shall have
been material and adverse to Seller.
(d) Consents and Approvals. Vision 21 and the P.C. shall have
received those written consents and approvals reasonably necessary or desirable
for the transfer of the Assets to Vision 21 and the P.C.
(e) Removal of Liens. Seller shall have obtained valid, binding
and enforceable releases, satisfactions and discharges of all liens, charges
and encumbrances affecting the Non-Optometric Assets.
(f) Employment Agreement. Optometrist and the Seller shall have
entered into the Employment Agreement.
(g) Business Management Agreement. Vision 21 and the P.C. shall
have entered into the Business Management Agreement and shall have executed the
undertakings attached as Exhibits thereto.
(h) Lease Assignments and Lease Agreements. Seller shall have
entered into the Lease Assignments or the Lease Agreements.
(i) Termination of Retirement Plans. Seller shall have taken all
steps necessary to discontinue benefits accruals under any employee benefit
plan that is intended to be a qualified employee retirement plan under Section
401(a) of the Code (a "Retirement Plan") effective as of Closing or as soon
thereafter as may be practical. Subsequent to Closing, Seller and Vision 21
shall review the extent to which Seller can resume contributions to the
Retirement Plan without violating the qualification requirements of Section
410(b) and 401(a)(4) of the Code taking into account any employees of Vision 21
who would be "leased employees" of Seller under Section 414(n) of the Code. If
Vision 21 and Seller mutually agree that such qualification requirements can be
satisfied, Seller may elect to continue the Retirement Plan and make
contributions in accordance with its
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terms, provided that Seller shall agree to cover at its own expense any Vision
21 employees who are leased employees if such coverage is required to maintain
the tax qualified status of the Retirement Plan.
4.2. Conditions Precedent to Seller's and Optometrist's Obligations.
All obligations of Seller and Optometrist under this Agreement are subject to
the fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
(a) Compliance with this Agreement. Vision 21 and the P.C. shall
have performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to or at the Closing.
(b) Employment Agreement. P.C. shall have entered into the
Employment Agreement.
(c) Lease Assignments and Lease Agreements. Vision 21 shall have
assumed the leases of real property set forth in the Lease Assignments or
entered into the Lease Agreements.
4.3. Risk of Loss Prior to Closing. The risk of any loss, destruction
or other damage to the Assets, other than ordinary wear and tear, prior to the
completion of the Closing, shall be solely that of Seller.
ARTICLE V
5.1. Investment Representations and Covenants of Seller and
Optometrist.
(a) Each of Optometrist and Seller understands that the common
stock of Vision 21 (the "Securities") which may comprise a portion of the
Non-Optometric Asset Purchase Price will not be registered under the Securities
Act of 1933, as amended (the "Securities Act"), or any state securities laws on
the grounds that the issuance of the Securities is exempt from registration
pursuant to Section 4(2) of the Securities Act and applicable state securities
laws, and that the reliance of Vision 21 on such exemptions is predicated in
part on the Seller's and Optometrist's representations, warranties, covenants
and acknowledgments set forth in this Section.
(b) Seller and Optometrist represent and warrant that Seller and
Optometrist are "accredited investors" or "sophisticated investors" as defined
under the Securities Act and state "Blue Sky" laws, or that Seller and
Optometrist have utilized, to the extent necessary to be deemed sophisticated
investors under the Securities Act and State "Blue Sky" laws, the assistance of
a professional advisor.
(c) Seller and Optometrist represent and warrant that the
Securities to be acquired by Seller upon consummation of the transactions
described in this Agreement will be acquired by Seller for Seller's own
account, not as a nominee or agent, and without a view to resale or other
distribution within the meaning of the Securities Act and the rules and
regulations thereunder, except as contemplated in this Agreement, and that
Seller will not distribute any of the
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Securities in violation of the Securities Act. All Securities shall bear a
restrictive legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR
OTHERWISE TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE ACT
AND APPLICABLE SECURITIES LAWS."
In addition, the Securities shall bear any legend required by the
securities or "Blue Sky" laws of any state where Optometrist resides as well as
any other legend deemed appropriate by Vision 21 or its counsel.
(d) Seller and Optometrist represent and warrant that the city
and state set forth below Optometrist's name on SCHEDULE 5.1(D) is where
Optometrist's principal residence is located.
(e) Seller and Optometrist (i) acknowledge that the Securities
issued to Seller at the Closing must be held indefinitely by Seller unless
subsequently registered under the Securities Act or an exemption from
registration is available, (ii) are aware that any routine sales of Securities
made pursuant to Rule 144 under the Securities Act may be made only in limited
amounts and in accordance with the terms and conditions of that Rule and that
in such cases where the Rule is not applicable, compliance with some other
registration exemption will be required, and (iii) are aware that Rule 144 is
not currently available for use by Seller for resale of any of the Securities
to be acquired by Seller upon consummation of the transactions described in
this Agreement.
(f) Seller and Optometrist represent and warrant to Vision 21
that Seller and Optometrist, either alone or together with the assistance of
Seller's and Optometrist's own professional advisor, have such knowledge and
experience in financial and business matters such that Seller and Optometrist
are capable of evaluating the merits and risks of Seller's investment in any of
the Securities to be acquired by Seller upon consummation of the transactions
described in this Agreement.
(g) Seller and Optometrist confirm that Seller and Optometrist
have had the opportunity to ask questions of and receive answers from Vision 21
concerning the terms and conditions of Seller's investment in the Securities,
and the Seller and Optometrist have received to Seller's and Optometrist's
satisfaction, such additional information, in addition to that set forth
herein, about Vision 21's operations and the terms and conditions of the
offering as Seller and Optometrist have requested.
(h) In order to ensure compliance with the provisions of
paragraph (c) hereof, Seller and Optometrist agree that after the Closing
Seller will not sell or otherwise transfer or dispose of Securities or any
interest therein (unless such shares have been registered under the Securities
Act) without first complying with either of the following conditions, the
expenses and costs of satisfaction of which shall be fully borne and paid for
by Seller:
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(i) Vision 21 shall have received a written legal opinion
from Seller's legal counsel, which opinion and counsel shall be satisfactory to
Vision 21 in the exercise of its reasonable judgment, or a copy of a
"no-action" or interpretive letter of the Securities and Exchange Commission
specifying the nature and circumstances of the proposed transfer and indicating
that the proposed transfer will not be in violation of any of the registration
provisions of the Securities Act and the rules and regulations promulgated
thereunder; or
(ii) Vision 21 shall have received an opinion from its own
counsel to the effect that the proposed transfer will not be in violation of
any of the registration provisions of the Securities Act and the rules and
regulations promulgated thereunder.
Seller and Optometrist also agree that the certificates or instruments
representing the Securities to be issued to Seller pursuant to this Agreement
may contain a restrictive legend noting the restrictions on transfer described
in this Section and required by federal and applicable state securities laws,
and that appropriate "stop-transfer" instructions will be given to Vision 21's
transfer agent, if any, provided that this Section 5.1(h) shall no longer be
applicable to any Securities following their transfer pursuant to a
registration statement effective under the Securities Act or in compliance with
Rule 144 or if the opinion of counsel referred to above is to the further
effect that transfer restrictions and the legend referred to herein are no
longer required in order to establish compliance with any provisions of the
Securities Act.
(i) Seller and Optometrist agree that they shall be considered
"affiliates" of Vision 21 for purposes of Rule 144 and agree to the
restrictions and limitations imposed by Rule 144 on affiliates. Seller and
Optometrist further agree that they shall be considered affiliates of Vision 21
for Rule 144 purposes even if they do not meet the technical definition of
"affiliate" under Rule 144.
5.2. Current Public Information. At all times following the
registration of any of Vision 21's securities under the Securities Act or
Securities Exchange Act pursuant to which Vision 21 becomes subject to the
reporting requirements of the Securities Exchange Act, Vision 21 shall use
commercially reasonable efforts to comply with the requirements of Rule 144
under the Securities Act, as such Rule may be amended from time to time (or any
similar rule or regulation hereafter adopted by the SEC) regarding the
availability of current public information to the extent required to enable any
holder of shares of the common stock of Vision 21 to sell such shares without
registration under the Securities Act pursuant to Rule 144 (or any similar rule
or regulation).
ARTICLE VI-INDEMINFICATION AND REMEDIES
6.1 Indemnification Obligation of Seller and Optometrist. From and
after the Closing, Seller and Optometrist, jointly and severally, will
reimburse, indemnify and hold harmless Vision 21 and the P.C., and their
successors and assigns (an "Indemnified Buyer Party") against and in respect
of:
(a) any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified Buyer Party that result
from, relate to or arise out of:
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(i) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or
investigations against any Indemnified Buyer Party that relate to Seller or the
Practice in which the principal event giving rise thereto occurred prior to the
Closing Date or which result from or arise out of any action or inaction of
Seller or any employee, agent, representative or subcontractor of Seller prior
to the Closing Date unless the liability has been expressly assumed by the
Indemnified Buyer Party; or
(ii) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of Seller under this
Agreement or from any misrepresentation in or omission from any certificate,
schedule, exhibit, statement, document or instrument furnished to Vision 21 or
the P.C. pursuant hereto or in connection with the negotiation, execution or
performance hereof; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses and
court costs) incident to any of the foregoing or to the enforcement of this
Section 6.1.
6.2. Indemnification Obligation Of Vision 21. From and after the
Closing, Vision 21 will reimburse, indemnify and hold harmless Seller,
Optometrist and their respective successors and assigns (an "Indemnified Seller
Party") against and in respect of:
(a) any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified Seller Party that result
from, relate to or arise out of :
(i) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or
investigations against any Indemnified Seller Party that relate to Vision 21 in
which the principal event giving rise thereto occurred subsequent to the
Closing Date or which result from or arise out of any action or inaction of
Vision 21 or any employee, agent, representative or subcontractor of Vision 21
subsequent to the Closing Date unless the liability has been expressly assumed
by the Indemnified Seller Party; or
(ii) any misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant on the part of Vision 21 under
this Agreement or from any misrepresentation in or omission from any
certificate, schedule, exhibit, statement, document or instrument furnished to
Seller pursuant hereto or in connection with the negotiation, execution or
performance hereof;
(iii) any of Seller's liabilities assumed by Vision 21 as set
forth on Schedule 1.6 of this Agreement in which the principal event giving
rise thereto occurred subsequent to the Closing Date; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses)
incident to any of the foregoing or to the enforcement of this Section 6.2.
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6.3. Indemnification Obligation of P.C. From and after the Closing,
the P.C. will reimburse, indemnify and hold harmless Seller, Optometrist and
their respective successors and assigns (an "Indemnified Seller Party") against
and in respect of:
(a) any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified Seller Party that result
from, relate to or arise out of any misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant on the part of the P.C. under this
Agreement or from any misrepresentation in or omission from any certificate,
schedule, exhibit, statement, document or instrument furnished to Seller
pursuant hereto or in connection with the negotiation, execution or performance
hereof; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses)
incident to any of the foregoing or to the enforcement of this Section 6.3.
6.4. Procedure for Indemnification Claims. If at any time a claim
shall be made or threatened, or an action or proceeding shall be commenced or
threatened, against a party hereto (the "Aggrieved Party") which could result
in liability of the other party (the "Indemnifying Party") under its
indemnification obligations hereunder, the Aggrieved Party shall give to the
Indemnifying Party prompt notice of such claim, action or proceeding. Such
notice shall state the basis for the claim, action or proceeding and the amount
thereof (to the extent such amount is determinable at the time when such notice
is given) and shall permit the Indemnifying Party to assume the defense of any
such claim, action or proceeding (including any action or proceeding resulting
from any such claim). Failure by the Indemnifying Party to notify the Aggrieved
Party of its election to defend any such claim, action or proceeding within a
reasonable time shall be deemed a waiver by the Indemnifying Party of its right
to defend such claim, action or proceeding; provided, however, that the
Indemnifying Party shall not be deemed to have waived its right to contest and
defend against any claim of the Aggrieved Party for indemnification hereunder
based upon or arising out of such claim, action or proceeding.
If the Indemnifying Party assumes the defense of any such claim,
action or proceeding, the obligation of the Indemnifying Party as to such
claim, action or proceeding shall be limited to taking all steps necessary in
the defense or settlement thereof and, to the extent the Indemnifying Party is
liable for indemnification hereunder, to holding the Aggrieved Party harmless
from and against any and all losses, damages and liabilities caused by or
arising out of any settlement approved by the Indemnifying Party or any
judgment or award rendered in connection with such claim, action or proceeding.
The Aggrieved Party agrees to cooperate and make available to the Indemnifying
Party all books and records and such officers, employees and agents as are
reasonably necessary and useful in connection with the defense. The Aggrieved
Party may participate, at its expense, in the defense of such claim, action or
proceeding provided that the Indemnifying Party shall direct and control the
defense of such claim, action or proceeding; provided, however, if in the
reasonable opinion of the Aggrieved Party any such claim, action or proceeding
involves an issue or matter which, if adversely determined, would have a
materially adverse effect on the Aggrieved Party, then the Aggrieved Party
shall have the right to control the defense or settlement of any such claim,
action or proceeding and its reasonable costs and expenses shall be included as
a part of the
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indemnification obligation of the Indemnifying Party. The Indemnifying Party
shall not, with respect to any such claim, action or proceeding, consent to the
entry of any judgment or award, or enter into any settlement, except with the
prior written consent of the Aggrieved Party, which consent shall not be
unreasonably withheld; provided, however, in the case of any such judgment,
award or settlement for money, it shall be a condition thereto that the
Indemnifying Party shall acknowledge its obligation to indemnify the Aggrieved
Party pursuant to this Article VI; and provided, further, that any such
judgment, award or settlement include, as an unconditional term thereof, the
release of the Aggrieved Party from all liability by the third party claimant
or plaintiff.
6.5. Payment; Indemnification Limitations.
(a) Payment. In the event that Seller or the Optometrist has an
indemnification obligation to Vision 21 hereunder, subject to Vision 21's
approval as set forth below, the Seller and/or Optometrist may satisfy such
obligation by transferring to Vision 21 such number of shares of Vision 21
common stock ("Vision 21 Securities") owned by the Seller and/or Optometrist
having an aggregate fair market value (based on the last reported sale price of
the Vision 21 Securities on a principal national securities exchange or other
exchange on which the Vision 21 Securities are then listed or the last quoted
ask price on any over-the-counter market through which the Vision 21 Securities
are then quoted on the last trading day immediately preceding the day on which
Seller or the Optometrist transfers shares of the Vision 21 Securities to
Vision 21 hereunder) equal to the indemnification obligation, which Vision 21
Securities shall be transferred to Vision 21 free and clear of all adverse
claims, security interests, liens, claims, proxies, options, stockholders'
agreements and encumbrances.
(b) Indemnification Limitations. Notwithstanding the provisions
of Sections 6.1, 6.2 and 6.3, (i) no party shall be required to indemnify
another party with respect to a breach of a representation, warranty or
covenant unless the claim for indemnification is brought within two (2) years
after the Closing Date, except that a claim for indemnification for a breach of
the representations and warranties contained in Sections 3.1(a), 3.1(b),
3.1(d), 3.1(g), 3.2(a) and 3.2(b) may be made at any time, and a claim for
indemnification for a breach of the representations and warranties contained in
Sections 3.1(h), 3.1(l), 3.1(n), 3.1(s), 3.1(t) and 8.14 may be made at any
time within the applicable statute of limitations; (ii) neither Seller nor the
Optometrist shall be required to indemnify Vision 21 pursuant to Section 6.1
unless, and to the extent that, the aggregate amount of damages or claims
incurred by Vision 21 shall exceed an amount equal to two percent (2%) of the
total Non-Optometric Asset Purchase Price; and (c) neither Seller nor the
Optometrist shall be required to indemnify Vision 21 with respect to a breach
of a representation, warranty or covenant for damages or claims in excess of
the aggregate Non-Optometric Asset Purchase Price received by the Seller (other
than pursuant to a requirement to indemnify Vision 21 under Sections 3.1(s) or
3.1(t), or unless the breach involves an intentional breach or fraud by Seller
or the Optometrist which shall be unlimited). Furthermore, the total amount of
any indemnity payments owed by one party to another party to this Agreement
shall be reduced by any correlative tax benefit received by the party to be
indemnified or the net proceeds received by the party to be indemnified with
respect to recovery from third parties or insurance proceeds and such
correlative insurance benefit shall be net of the insurance premium, if any,
that becomes due as a result of such claim.
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6.6. Other Rights and Remedies Not Affected. The indemnification
rights of the parties under this Article VI are independent of and in addition
to such rights and remedies as the parties may have at law or in equity or
otherwise for any misrepresentation, breach of warranty or failure to fulfill
any agreement or covenant hereunder on the part of any party hereto, including,
without limitation the right to seek an injunction against a violation of any
of the terms hereof or in aid of the exercise of any power granted hereby or by
law, the right to seek specific performance, recision or restitution, none of
which rights or remedies shall be affected or diminished hereby. All rights,
powers, options or remedies afforded to the parties either hereunder or by law
shall be cumulative and not alternative and the exercise of a party's right,
power, option or remedy shall not bar other rights, powers, options or remedies
allowed herein or by law. The indemnification obligations hereunder shall
survive the consummation of the transactions described herein. Should either
party employ an attorney or attorneys to enforce any of the provisions hereof,
or to protect its interest in any matter arising hereunder, or to recover
damages for the breach hereof, the party prevailing shall be entitled to
recover from the other party all reasonable costs, charges and expenses,
including attorney's fees, the value of time charged by paralegals and/or other
staff members operating under the supervision of an attorney, and other legal
costs, expended or incurred in connection therewith, before, during and
subsequent to any litigation, including arbitration and appellate proceedings,
bankruptcy or similar debtor/creditor proceedings, and proceedings to enforce
any indemnity agreement herein contained.
ARTICLE VII- POST CLOSING MATTERS
7.1. Survival of Representations and Warranties. All representations,
warranties, agreements and obligations made by the parties in this Agreement or
in any certificate, schedule, document or instrument furnished hereunder or in
connection with the negotiation, execution and performance of this Agreement
shall survive the Closing. Notwithstanding any investigation or audit conducted
before or after the Closing Date or the decision of any party to complete the
Closing, each party shall be entitled to rely upon the representations and
warranties set forth herein and therein and each such representation and
warranty shall be deemed to be material.
7.2. Maintenance of Books and Records. Each of Seller, Optometrist,
Vision 21 and the P.C. shall preserve until the fifth anniversary of the
Closing Date all records possessed or to be possessed by such party relating to
any of the Assets, liabilities or business of the Practice prior to the Closing
Date. After the Closing Date, Seller and Optometrist shall provide Vision 21
and the P.C. with access, upon prior reasonable written request specifying the
need therefor, during regular business hours, to (a) Seller and the employees
of Seller and (b) the books of account and records of Seller, and Vision 21 and
the P.C. and its representatives shall have the right to make copies of such
books and records at the expense of Vision 21.
7.3. Discharge of Business Obligations. From and after the Closing
Date, Seller shall pay and discharge, in accordance with past practice but not
less than on a timely basis, all obligations and liabilities incurred prior to
the Closing Date in respect of the Practice which are not assumed by Vision 21
or the P.C. pursuant to Section 1.6, unless such obligations or liabilities are
being disputed by Seller.
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7.4. Payments Received. Seller, Optometrist, Vision 21 and the P.C.
each agree that after the Closing they will hold and will promptly transfer and
deliver to the other, from time to time as and when received by them, any cash,
checks with appropriate endorsements (using their best efforts not to convert
such checks into cash) or other property that they may receive on or after the
Closing Date which properly belongs to the other party, and will account to the
other for all such receipts. From and after the Closing, Vision 21 and the P.C.
shall have the right and authority to endorse without recourse the name of
Seller on any check or any other evidences of indebtedness received by Vision
21 or the P.C. on account of the Practice and the Assets transferred to Vision
21 and the P.C. hereunder.
7.5. Audit. Vision 21 or the P.C. may cause an audit of the Financial
Statements to be conducted by Ernst & Young LLP or such other auditor of Vision
21's selection, the cost of which shall be borne by Vision 21. Except as
otherwise provided in this Section, all items prepared by Ernst & Young LLP in
connection with the audit (the "Prepared Audit Materials") shall be for use
solely by Vision 21. The Prepared Audit Materials shall not be deemed to
include those items that customarily remain the property of the auditors such
as their working papers and internal memos. Seller and Optometrist represent
and warrant to Vision 21 that the audited financial statements will not
materially differ from the unaudited financial statements. Seller and
Optometrist agree to fully cooperate with any such audit and provide any
documentation reasonably requested by the auditor in order to complete such
audit. For the purposes of this Agreement, audit expenses shall include all
expenses related to the audit as well as expenses incurred to present financial
statements in accordance with GAAP and all schedules related thereto. Should
the Seller reimburse Vision 21 for the expenses set forth herein with respect
to the audit and pay any remaining balance owed to Ernst & Young LLP, if any,
it shall be entitled to copies of the Prepared Audit Materials.
7.6. Non-Compete. As part of the consideration hereof, except as
otherwise provided herein, neither Seller nor Optometrist shall for a period of
five (5) years from the Closing Date directly or indirectly (a) engage in any
optometric practice management business or otherwise compete against Vision 21
within the State of Texas, provided, however, that this provision shall not be
deemed to prohibit Optometrist from engaging in those activities set forth on
Schedule 2.01 of the Optometrist Employment Agreement, (b) solicit the
employees of Vision 21 to become employed by Seller or Optometrist or otherwise
terminate their employment relationship with Vision 21, or (c) render advice or
assistance, or have any interest in, or provide any services to any competitor
of Vision 21; provided, however, that ownership of no more than five percent
(5%) of the stock of a publicly traded corporation engaged in a competitive
business shall not be deemed to be engaging in a competing business. Seller and
Optometrist acknowledge that violation of such covenant not to compete would
cause irreparable harm to Vision 21 which cannot be fully redressed by payment
of damages by Seller and/or Optometrist. Accordingly, Vision 21 shall be
entitled in addition to any other right or remedy it may have, at law or in
equity, to an injunction, enjoining or restraining Seller and/or Optometrist
from any violation or threatened violation of this Section. If any of the
rights or restrictions contained herein shall be deemed by a court of competent
jurisdiction to be unenforceable by reason of the extent, duration or
geographical scope thereof or any other provision of this Agreement, the
parties hereto contemplate that the court shall reduce such extent, duration,
geographical scope or other provision and enforce this Section in its reduced
form for all purposes in the manner contemplated hereby.
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7.7. Seller and Optometrist Confidentiality Covenant. From the date
hereof, the Seller and Optometrist shall not, directly or indirectly, use for
any purpose, other than in the performance of Optometrist's duties under the
Employment Agreement, or disclose to any third party, any information of Vision
21 (whether written or oral), including any business management or economic
studies, patient lists, proprietary forms, proprietary business or management
methods, marketing data, fee schedules, or trade secrets of Vision 21, and
including the terms and provisions of this Agreement and any transaction or
document executed by the parties pursuant to this Agreement. Notwithstanding
the foregoing, the Seller and Optometrist may disclose information that the
Seller or Optometrist can establish (a) is or becomes generally available to
and known by the public or optometric community (other than as a result of an
unpermitted disclosure directly or indirectly by Seller or Optometrist or their
respective Affiliates, advisors, or representatives); (b) is or becomes
available to the Seller or Optometrist on a nonconfidential basis from a source
other than Vision 21 or its Affiliates, advisors or representatives, provided
that such source is not and was not bound by a confidentiality agreement with
or other obligation of secrecy to Vision 21 or its Affiliates, advisors or
representatives of which the Seller or Optometrist has knowledge; or (c) has
already been or is hereafter independently acquired or developed by the Seller
or Optometrist without violating any confidentiality agreement with or other
obligation of secrecy to Vision 21, or its Affiliates, advisors or
representatives. Without limiting the other possible remedies to Vision 21 for
the breach of this covenant, Seller and Optometrist agree that injunctive or
other equitable relief shall be available to enforce this covenant, such relief
to be without the necessity of posting a bond, cash or otherwise. The Seller
and Optometrist further agree that if any restriction contained in this Section
7.7 is held by any court to be unenforceable or unreasonable, a lesser
restriction shall be enforced in its place and the remaining restrictions
contained herein shall be enforced independently of each other.
7.8. Release of Optometrist From Practice Liabilities. Vision 21 shall
use its best efforts to obtain from third party creditors the release of
Optometrist from any personal liabilities relating to the Practice which are
identified on SCHEDULE 1.6 and assumed by Vision 21 pursuant to the terms of
this Agreement.
7.9. Employment Agreements of Non-Shareholder Professionals. Seller
and Optometrist shall use reasonable efforts to cause all non-shareholder
optometrists, if any, employed by Seller to terminate their existing employment
agreements effective as of the Closing Date and to enter into employment
agreements to be utilized for such professionals in substantially the form of
such employment agreements attached as exhibits to the Business Management
Agreement.
7.10. Additional Actions and Documents. From and after the Closing
Date, Seller and Optometrist will take or cause to be taken such further
actions, and execute, deliver and file such further documents and instruments
as Vision 21 or the P.C. may request from time to time to evidence the transfer
of the Assets to Vision 21 and the P.C. and to fully effectuate the purposes
and terms of this Agreement.
ARTICLE VIII - MISCELLANEOUS
8.1. Taxes. Seller shall pay all state and local sales, documentary
and other transfer taxes, if any, due under Texas law as a result of the
purchase, sale or transfer of the Assets in
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accordance therewith whether imposed by law on Seller, Optometrist or Vision 21
or the P.C., and Seller shall indemnify, reimburse and hold harmless Vision 21
in respect of the liability for payment of or failure to pay any such taxes or
the filing of or failure to file any reports required in connection therewith.
Vision 21 shall pay all state and local sales, documentary and other transfer
taxes, if any, due under Florida law as a result of the purchase, sale or
transfer of the Non-Optometric Assets in accordance therewith whether imposed
by law on Seller, Optometrist or Vision 21, and Vision 21 shall indemnify,
reimburse and hold harmless Seller in respect of the liability for payment of
or failure to pay any such taxes or the filing of or failure to file any
reports required in connection therewith.
8.2. Expenses. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions hereof and the consummation of
the transactions contemplated hereby.
8.3. Contents of Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof.
It shall not be amended or modified, and no provision hereof shall be waived,
except by written instrument duly executed by each of the parties hereto. Any
and all previous agreements and understandings between or among the parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement.
8.4. Assignment and Binding Effect. This Agreement may not be assigned
by any party hereto without the prior written consent of the other parties.
Subject to the foregoing, all of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
permitted successors and assigns of the parties.
8.5. Waiver. No delay or failure on the part of either party in
exercising any right hereunder, and no partial or single exercise hereof, will
constitute a waiver of such right or of any other right hereunder.
8.6. Notices. Any notice, request, demand, waiver, consent, approval
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given only if delivered personally or sent by
overnight, registered or certified mail, postage prepaid, as follows:
If to Vision 21, to:
Vision Twenty-One, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Chief Financial Officer
With a copy to:
Xxxxxxx X. Xxxxx, Esquire
Xxxxxxxx, Xxxx & Xxxxxxxx
Xxxxx 0000, Xxxxxxx Xxxxx
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32
000 Xxxx Xxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
If to Seller or Optometrist, to:
J. R. Lacey, O.D.
00000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: J. R. Lacey, O.D., President
With a copy to:
Xxxxxx Xxxxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxx
1121 Xxxxx Xxxx Xxxxxxxx
X.X. Xxx 000000
Xxxxxx, Xxxxx 78768-4038
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as
of the date of delivery, in the case of personal delivery, or the delivery or
refusal date, as specified on the return receipt, in the case of overnight,
registered or certified mail.
8.7. Governing Law. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of Texas.
8.8. No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and, in the case of Article VI hereof, the other Indemnified
Parties, and their heirs, executors, administrators, legal representatives,
successors and assigns, and they shall not be construed as conferring any
rights on any other persons.
8.9. Headings, Gender and "Person". All section headings contained in
this Agreement are for convenience of reference only, do not form a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires. Any reference to a "person" herein shall include an
individual, firm, corporation, partnership, trust, governmental authority or
body, association, unincorporated organization or any other entity.
8.10. Schedules and Exhibits. All Schedules and Exhibits referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
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8.11. Severability. Any provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
8.12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be
an original and all of which counterparts when taken together shall constitute
but one and the same instrument.
8.13. Brokerage. Each of the parties hereto represents and warrants to
the others that no broker is entitled to any commission or similar fee in
connection with the making and carrying out of this Agreement.
8.14. Confidentiality of Agreement. The parties agree not to make any
public announcement with regard to the transactions contemplated by this
Agreement without the prior written consent of the other party until after the
Closing Date.
8.15. Reformation. It is the intention of the parties hereto to
conform strictly to applicable laws regarding the practice and regulation of
optometry, whether such laws are now or hereafter in effect, including the laws
of the United States of America, the State or any other applicable
jurisdiction, and including any subsequent revisions to, or judicial
interpretations of, those laws, in each case to the extent they are applicable
to this Agreement (the "Applicable Laws"). Accordingly, if the Practice is
required to terminate operations at any of the locations ("Terminated
Locations") owned or managed by the Practice as of the date of this Agreement
as a result of any Applicable Law, then the parties hereto agree that, if
Vision 21 is economically disadvantaged as a result thereof, and if the parties
hereto cannot negotiate in good faith such changes to the structure and terms
of the transactions provided for in this Agreement as may be necessary to make
these transactions, as restructured, lawful under applicable laws and
regulations, without materially disadvantaging Vision 21, the Practice shall
repay to Vision 21 that portion of the Purchase Price attributable to those
Terminated Locations (based upon such Terminated Locations' pro rata share of
the Practice's gross revenues from all of its locations for the calendar year
1997), minus (i) any proceeds received by Vision 21 in connection with the
termination of operations at the Terminated Locations, and (ii) the fair market
value of any tangible assets located at the Terminated Locations on the date of
this Agreement which are retained by Vision 21 despite the termination of
operations at the Terminated Locations. The parties to this Agreement shall
execute and deliver all documents or instruments necessary to effect or
evidence the provisions of this Section.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
"SELLER"
MASTER EYE CONSULTANTS, P.C.
By:
----------------------------------------
J. R. Lacey, O.D., President
"VISION 21"
VISION TWENTY-ONE, INC.
By:
----------------------------------------
Xxxx Xxxxx, as authorized agent
"P.C."
OPTOMETRIC ASSOCIATES OF TEXAS, P.C.
By:
--------------------------------------
President
-----------------------------
"OPTOMETRIST"
-------------------------------------------
J. R. Lacey, O.D.
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