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EXHIBIT 2.7
MASTER ASSET PURCHASE AGREEMENT
This Master Asset Purchase Agreement ("Agreement") is entered into as
of August ________ 22, 1998, by and among Eye Care Centers of America, Inc., a
Texas corporation ("Purchaser"), Xxxx X. Xxxx, O.D. ("Xxxx"), Xx. Xxxx Xxxx &
Associates, PLLC, a Kentucky professional limited liability company wholly-owned
by Xxxx ("Doctor"), the Companies (as defined on EXHIBIT B hereto) and the
Owners (as defined on EXHIBIT B hereto) who are signatories to this Agreement;
W I T N E S S E T H:
WHEREAS, the Companies are engaged in the business of providing
optometric and ophthalmologic services, selling optical goods and providing
other related services in Kentucky, Tennessee, Indiana and Missouri (the
"Business");
WHEREAS, the Companies desire to sell and Purchaser, or its Designee,
desires to purchase substantially all of the assets, properties, and rights of
each of the Companies, except for the goodwill, and patient records and certain
other assets of DBVW, DV, ECA, ESC and VLK;
WHEREAS, the Companies desire to sell and Doctor desires to purchase
the goodwill patient records and certain other asset of DBVW, DV, ECA, ESC and
VLK ; and
WHEREAS, simultaneously with, and as a condition to, the consummation
of the Subject Transactions, (i) Doctor will enter into a Retail Business
Management Agreement with Visionary Retail Management, Inc., a Delaware
corporation and subsidiary of Purchaser ("VRMI"), (ii) Doctor will enter into a
Professional Business Management Agreement with Visionary MSO, Inc., a Delaware
corporation ("VMSO"), and (iii) Visionary Properties, Inc., a Delaware
corporation and wholly-owned subsidiary of Purchaser ("VPI"), will be assigned
all of the real property leases of the Companies and will concurrently sublet
the premises subject thereto to Doctor;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements of the parties hereinafter contained, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, capitalized terms shall have the
meanings
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specified or referred to in EXHIBIT A hereto.
ARTICLE II
SALE OF ASSETS
2.01 SALE OF ASSETS. (a) On the Closing Date, and subject to the
terms and conditions herein stated, each of the Companies agrees to sell,
transfer, assign, convey and deliver to Purchaser or its Designee, and Purchaser
agrees to purchase or cause its Designee to purchase from such Company, all
right, title and interest in and to all of the assets of such Company including,
but not limited to, the following: (i) all of the goodwill of BE, BSC, OP, AVA
and ESC and all of the customer lists (to the extent not deemed patient records
by applicable law) of each Company; (ii) all of the Contracts and accounts of
such Company including, without limitation, the contracts listed on EXHIBIT C-1
hereto identified as being assumed by Purchaser or its Designee (collectively,
the "Assigned Contracts") and the right to receive all payments, rights, and
privileges of the Company arising under the Assigned Contracts; (iii) all of
such Company's trade names, service marks, trademarks, patents, trade secrets
and other intellectual property rights (including applications with respect
thereto), whether registered or unregistered;" (iv) all of such Company's
prepaid expenses, unbilled costs and fees, and accounts, notes and other
receivables and proceeds from such receivables, provided, however that with
respect to the accounts receivable relating to services provided by the Company
prior to the Closing Date relating to Medicare and Medicaid (the "Medicare and
Medicaid Receivables"), only the rights to the proceeds therefrom are being
transferred and assigned hereunder, to be collected by Purchaser on behalf of
the Companies as contemplated in SECTION 2.12(b); (v) the fixed assets,
vehicles, equipment and other personal property of such Company related to,
associated with or used by the Business including, without limitation the assets
of such Company listed on EXHIBIT D hereto; (vi) all of the books and records of
such Company; (vii) all of such Company's supplies, inventories and office and
other supplies; (viii) to the extent permitted by applicable law, all rights of
such Company under any written or oral contract, agreement, lease, plan,
instrument, registration, license, certificate of occupancy, other permit or
approval of any nature, or other document, commitment, arrangement, undertaking,
practice or authorization; (ix) all computer software and related licenses of
such Company; (x) all rights or choses in action of such Company arising out of
occurrences before or after the Closing Date, including, without limitation, all
rights under express or implied warranties relating to the Assets; and (xi) all
of such Company's right, title and interest to any other assets or claims
related to, associated with, or used by the Business. The assets described in
this SECTION 2.01 are hereinafter collectively referred to as the "Assets."
Notwithstanding the foregoing, the Companies shall retain and shall not transfer
to Purchaser or its Designee, and the term "Assets" shall not include any of the
Doctor's Assets, any of the Companies' accounts receivable relating to Medicare
or Medicaid, employee personnel records, employee receivables (amounts owed by
employees or former employees of the Companies), cash and cash equivalents or
any of the other assets listed on EXHIBIT E hereto (collectively, the "Excluded
Assets").
(b) On the Closing Date, and subject to the terms and
conditions herein stated, each of the Companies referred to below agrees to
sell, transfer, assign, convey and deliver to Doctor, and Doctor agrees to
purchase from such Company, all right, title and interest in and to (i) the
goodwill and
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patient records of DBVW, DV, ECA, ESC and VLK, (ii) all of the Contracts of such
Company listed on EXHIBIT C-2 hereto and identified as being assumed by Doctor
(collectively, the "Doctor's Assigned Contracts") and the right to receive all
payments, rights, and privileges of the Company arising under the Doctor's
Assigned Contracts, (iii) all of such Company's rights to the names "Xx. Xxxxx'x
VisionWorld", "Dr.'s ValuVision", "Vision for Less of Kentucky" and "The Eye
Surgery Center"; (iv) the membership interests in Suburban Excimer Laser Center,
PLLC and First Look, LLC, and (v) the books and records relating solely to the
assets listed in clauses (i) through (iv) above (collectively, the "Doctor's
Assets").
2.02 PURCHASE PRICE; PAYMENT.
a. (i) As consideration for the purchase of the Assets, Purchaser, or
its Designee, shall pay to the Companies, in cash, the aggregate sum of
Thirty Two Million Nine Hundred Thousand Dollars ($32,900,000) (the
"Base Price"), subject to increase or decrease, as the case may be, by
the Adjustment Amount as provided in SECTION 2.03 (as adjusted, the
"Purchase Price"), the Purchase Price to be allocated among the
Companies in accordance with their respective percentages as set forth
on EXHIBIT J.
(ii) As consideration for the purchase of the Doctor's Assets, Doctor
shall pay to the Companies, in cash, the aggregate sum of One Hundred
Thousand Dollars ($100,000) (the "Doctor's Purchase Price"), the
Doctor's Purchase Price to be allocated among the Companies in
accordance with their respective percentages as set forth on EXHIBIT J.
The Doctor's Purchase Price shall be paid by Doctor to such Companies
at Closing.
(b) At the Closing, Purchaser shall deliver or cause its Designee to
deliver:
(i) to the Companies, in accordance with their respective
percentages set forth on EXHIBIT J, an amount equal to (A) the Base
Price, as increased or decreased, as the case may be, by the Estimated
Adjustment Amount as provided in SECTION 2.02(c), MINUS (B) the Escrow
Amount delivered to the Escrow Agent pursuant to SECTION 2.02(b)(ii)
(such amount being referred to herein as the "Estimated Cash Payment"),
by wire transfer of immediately available funds to the accounts of the
Companies, written notice of which accounts shall have been provided to
Purchaser not less than one (1) business day prior to the Closing.
(ii) to Xxxxxxxxx Xxxx xx Xxxxx, X.X., Xxxxxxx, Xxxxx, as escrow
agent (the "Escrow Agent"), an amount equal to One Million Dollars
($1,000,000) (the "Escrow Amount"). The Escrow Amount shall be
maintained by the Escrow Agent pursuant to the terms of an Escrow
Agreement in substantially the form of EXHIBIT F attached hereto (the
"Escrow Agreement") by and among Purchaser, the Sellers' Representative
(on behalf of the Companies) and the Escrow Agent.
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The Estimated Cash Payment to be paid by Purchaser, or its Designees,
to the Companies at the Closing PLUS the Escrow Amount is hereinafter referred
to as the "Estimated Purchase Price."
(c) As soon as reasonably practical, but in no event later than five
(5) business days prior to the Closing Date, the Companies shall in good faith
cause to be prepared and delivered to Purchaser an estimated consolidated
balance sheet (as finally agreed upon by the parties, the "Estimated Closing
Date Balance Sheet") of the Companies, which shall set forth an estimate of the
Assets, the Doctor's Assets, the Assumed Liabilities and the Doctor's Assumed
Liabilities as of the Closing Date, such Estimated Closing Date Balance Sheet to
be calculated and prepared in accordance with GAAP. Purchaser and the Sellers'
Representative shall, after reviewing the consolidated balance sheet prepared by
the Companies, in good faith attempt to agree upon the Estimated Closing Date
Balance Sheet. The aggregate of the Assets and Doctor's Assets reflected on the
Estimated Closing Date Balance Sheet shall hereinafter be referred to as the
"Estimated Asset Amount" and the aggregate of the Assumed Liabilities and
Doctor's Assumed Liabilities reflected in the Estimated Closing Date Balance
Sheet shall hereinafter be referred to as the "Estimated Assumed Liabilities
Amount." For purposes of calculating the Estimated Cash Payment due to the
Companies at the Closing pursuant to SECTION 2.02(b), the Base Price shall
be (A) (i) increased by the amount by which the Estimated Asset Amount exceeds
$5,691,715 or (ii) decreased by the amount by which the Estimated Asset Amount
is less than $5,691,715 and (B) decreased by the amount of the Estimated Assumed
Liabilities Amount (the aggregate amount of such decreases and increases, if
any, being hereinafter referred to as the "Estimated Adjustment Amount").
2.03 CLOSING FINANCIAL STATEMENTS; PURCHASE PRICE ADJUSTMENTS.
(a) As soon as practicable following the Closing but in no
event later than forty-five (45) days following the Closing Date, Purchaser
shall cause to be prepared and delivered to the Sellers' Representative an
audited consolidated balance sheet dated as of the Closing Date (as finally
agreed upon by the parties, the "Closing Date Balance Sheet"), and the related
statement of income and owners' equity for the period from January 1, 1998 and
ending as of the Closing Date (as finally agreed upon by the parties, the
"Closing Date Financial Statements") of the Companies, attached to such Closing
Date Balance Sheet shall be supplemental schedules which shall set forth the
Assets, the Doctor's Assets, the Assumed Liabilities and the Doctor's Assumed
Liabilities, such Closing Date Balance Sheet to be calculated and prepared in
accordance with GAAP. The audit of the Closing Date Financial Statements shall
be performed by Welenken Xxxxxxxxxx & Co. The cost of the preparation and audit
of the Closing Date Financial Statements shall be borne equally by Purchaser, on
one hand, and the Companies and the Owners, on the other hand. The aggregate of
the Assets and Doctor's Assets reflected on the Closing Date Balance Sheet shall
hereinafter be referred to as the "Asset Amount" and the aggregate of the
Assumed Liabilities and Doctor's Assumed Liabilities shall hereinafter be
referred to as the "Assumed Liabilities Amount;" provided, however, for purposes
of calculating (A) the Asset Amount, (i) the Medicaid and Medicare Receivables
(and the bad debt allowance with respect thereto) shall be included in such
calculation although only the rights to the proceeds therefrom are being
transferred hereunder and (ii) the pre-opening store oranizationalorganizational
costs and expenses currently capitalized on the books of the Companies will be
written off (i.e., not included in the Asset Amount) and (B) the Assumed
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Liabilities Amount, the amounts on the Closing Date Balance Sheet with respect
to lease obligations and the deferred rent liability shall be excluded from such
calculation and the amount of deferred revenue relating to warranty obligations
used to calculate the Assumed Liabilities Amount shall be 27.5% of the amount of
deferred revenue amount reflected on the Closing Date Balance Sheet.
Notwithstanding any of the foregoing, the Prorated Personal Property Taxes shall
be reflected on the Closing Date Balance Sheet. The Companies and the Owners
shall cooperate with Purchaser in the preparation of, and, to the extent
necessary, provide Purchaser access to the information reasonably necessary to
prepare, the Closing Date Financial Statements. On the basis of the Closing Date
Balance Sheet, subject, however, to the rights of Purchaser and the Companies as
provided in SECTIONS 2.03(b) and 2.03(c), for purposes of calculating the
Purchase Price pursuant to SECTION 2.02(a), the Base Price shall be shall be (A)
(i) increased by the amount by which the Asset Amount exceeds $5,691,715 or (ii)
decreased by the amount by which the Asset Amount is less than $5,691,715 and
(B) decreased by the amount of the Assumed Liabilities Amount (the aggregate
amount of such decreases and increases, if any, being hereinafter referred to as
the "Adjustment Amount"). Within the time period set forth in SECTION 2.03(c),
(i) Purchaser shall pay, or cause its Designee to pay, to the Companies, in
accordance with their respective percentages set forth on EXHIBIT J, the amount,
if any, by which the Purchase Price exceeds the Estimated Purchase Price, or
(ii) the Companies, jointly and severally, shall pay, and the Owners, jointly
and severally, shall cause the Companies to pay, to Purchaser or its Designee,
as the case may be, the amount by which the Estimated Purchase Price exceeds the
Purchase Price.
(b) Within ten (10) business days after Purchaser's delivery
of the Closing Date Balance Sheet, the Sellers' Representative may deliver a
written notice (a "Balance Sheet Protest Notice") to Purchaser of any
objections, and the basis therefor, which the Companies may have to the Closing
Date Balance Sheet. The failure of the Sellers' Representative to deliver a
Balance Sheet Protest Notice within the prescribed time period will constitute
the Companies' and the Owners' acceptance of the Closing Date Balance Sheet as
delivered by Purchaser. During the ten (10) business days following Purchaser's
receipt of a Balance Sheet Protest Notice, Purchaser and the Sellers'
Representative shall attempt to resolve any disagreement with respect to the
Closing Date Balance Sheet and the accuracy thereof. If at the end of the period
specified in the immediately preceding sentence, Purchaser and the Sellers'
Representative shall have failed to resolve the disagreement specified in such
Balance Sheet Protest Notice, the items in dispute shall be referred to Deloitte
& Touche, L.L.P. or such other "Big Six" accounting firm as may be mutually
agreed to by the parties (the "Adjustment Arbitrator") for final determination
within forty-five (45) days. This provision for arbitration shall be
specifically enforceable by the parties, and the determination of the Adjustment
Arbitrator in accordance with the provisions hereof shall be final and binding
upon Purchaser, the Owners and the Companies, with no right of appeal therefrom.
The fees and expenses of the Adjustment Arbitrator shall be paid by the party
(i.e., Purchaser, on the one hand, or the Companies, on the other hand) whose
last proposed written offer for the settlement of the terms in dispute prior to
the commencement of such arbitration, taken as a whole, was farther away from
the final determination of the Adjustment Arbitrator. If the final determination
of the Adjustment Arbitrator is equal to one-half of the difference between the
last proposed written offers of Purchaser, on the one hand, and the Sellers'
Representative, on the other hand, then Purchaser and the Companies shall each
pay one-half of the fees and expenses of the Adjustment Arbitrator.
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(c) The Companies and Purchaser agree that within ten (10)
days after the final determination of the Closing Date Balance Sheet and the
amount of the Purchase Price as provided in this SECTION 2.03 (either because no
Balance Sheet Protest Notice is delivered or upon receipt of the Adjustment
Arbitrator's final determination or otherwise), the Companies shall pay to
Purchaser or its Designee, or Purchaser or its Designee shall pay to the
Companies, in accordance with their respective percentages set forth on EXHIBIT
J, as the case may be, the amount owed as provided in SECTION 2.03(a). In the
event that such amount is due, but is not paid when due, simple interest shall
accrue on such obligation and be payable therewith from the due date to the day
preceding the date of payment at the annual rate equal to the lesser of 12% or
the maximum rate allowed by applicable law.
2.04 ASSUMPTION OF LIABILITIES. (a) Purchaser does not and shall not
assume or agree to assume, and shall not acquire or take over, the liabilities
and obligations of any of the Companies of any nature, direct, contingent or
otherwise, except (i) the obligations which arise out of the actions of
Purchaser (or its Designee) from and after the transfer of the Assets to
Purchaser (or its Designee), (ii) the Prorated Personal Property Taxes and (iii)
the liabilities and obligations of the Companies expressly set forth on EXHIBIT
G-1 hereto or with respect to the performance under the Assigned Contracts
listed on EXHIBIT C-1 hereto from and after the Closing Date which will be
assumed by Purchaser, or its Designee, at the Closing (all of such assumed
liabilities being hereinafter referred to as the "Assumed Liabilities"). Doctor
does not and shall not assume or agree to assume, and shall not acquire or take
over, the liabilities and obligations of any of the Companies of any nature,
direct, contingent or otherwise, except the obligations which arise out of the
actions of Doctor from and after the transfer of the Doctor's Assets to Doctor
and the liabilities and obligations of the Companies expressly set forth on
EXHIBIT G-2 hereto or with respect to the performance under the Doctor's
Assigned Contracts listed on EXHIBIT C-2 hereto from and after the Closing Date
which will be assumed by Doctor at the Closing (the "Doctor's Assumed
Liabilities"). Without limiting the generality of the foregoing, it is expressly
agreed that none of Purchaser, any of its Designees or Doctor shall have any
liability to, for, or in respect of (i) any employees of any of the Companies,
except for liabilities and obligations arising solely out of the employment of
such persons by Purchaser (or its Designee) or Doctor, as the case may be, after
the Closing Date or which are reflected on the Closing Date Balance Sheet and
are part of the Assumed Liabilities or (ii) any Taxes of any of the Companies
arising or relating to any period prior to the Closing Date or any activity of
the Companies prior to or after the Closing Date except for the Prorated
Personal Property Taxes or unless otherwise expressly set forth on EXHIBIT G-1
OR G-2, respectively, or (iii) any of the liabilities or obligations of any of
the Companies to the extent such liabilities or obligations are not included as
Assumed Liabilities or Doctor's Assumed Liabilities in the schedules attached to
the Closing Date Balance Sheet, arise out of the warranty obligations assumed by
Purchaser or do not relate to the performance under the Assigned Contracts or
Doctor's Assigned Contracts from and after the Closing Date.
2.05 CONVEYANCE AND TRANSFER; ASSUMPTION. (a) At the Closing, and
subject to the terms and conditions hereof, each of the Companies hereby agrees
that it will execute and deliver to Purchaser or its Designee, and Purchaser
will, or cause its Designee to, execute and deliver to the Company, a Xxxx of
Sale, Assignment and Assumption Agreement, in the form of EXHIBIT I-1 hereto,
and such other bills of sale, endorsements, assignments, releases, and other
good and sufficient instruments of transfer, assignment, and conveyance, in form
satisfactory to Purchaser and its counsel, as shall be
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effective to convey to Purchaser or its Designee, as the case may be, good title
in and to the Assets. Simultaneously with such delivery, the Company will take
all steps necessary to put Purchaser or its Designee, as the case may be, in
actual possession of the Assets.
(b) At the Closing, and subject to the terms and conditions hereof,
each of the Companies owning any of the Doctor's Assets hereby agree that it
will execute and deliver to Doctor, and Doctor will execute and deliver to such
Company, a Xxxx of Sale, Assignment and Assumption Agreement, in the form of
EXHIBIT I-2 hereto, and such other bills of sale, endorsements, assignments,
releases, and other good and sufficient instruments of transfer, assignment, and
conveyance, in form satisfactory to Doctor and its counsel, as shall be
effective to convey to Doctor good title in and to the Doctor's Assets.
Simultaneously with such delivery, each such Company will take all steps
necessary to put Doctor in actual possession of the Doctor's Assets.
2.06 CLOSING DATE. The Closing under this Agreement (the "Closing")
shall be held on the later of (i) September 18, 1998 and (ii) the third business
day after all of the Purchaser's, Doctor's and the Companies' conditions to
Closing have been satisfied or waived (except for the conditions to be satisfied
at the Closing), or such other date as Purchaser, Doctor and the Companies may
agree to in writing. Such date on which the Closing is to be held is herein
referred to as the "Closing Date." The Closing shall be held at the offices of
Xxxxxxxxxx Xxxx & XxXxxxxx XXXX, 0000 National City Tower, 000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, at 10:00 A.M. on such date, or at such
other time and place as Purchaser and the Companies may agree upon in writing.
2.07 FURTHER ASSURANCES. (a) Each of the Companies hereby agrees
that, from time to time, at Purchaser's request and without further
consideration, each Company will execute and deliver to Purchaser or its
Designee such other and further instruments of conveyance, assignment and
transfer and take such other action as Purchaser may reasonably require to more
effectively convey, transfer, and assign to Purchaser or its Designee, as the
case may be, and to put Purchaser or its Designee, as the case may be, in
possession of, the Assets.
(b) Each of DBVW, DV, ECA, ESC and VLK hereby agree that, from
time to time, at Doctor's request and without further consideration, each
Company will execute and deliver to Doctor such other and further instruments of
conveyance, assignment and transfer and take such other action as Doctor may
reasonably require to more effectively convey, transfer, and assign to Doctor
and to put Doctor in possession of, the Doctor's Assets.
2.08 ALLOCATION OF PURCHASE PRICE. The Purchase Price and the
Doctor's Purchase Price received by each of the Companies pursuant to this
Agreement shall be (i) allocated among the Companies in accordance with their
respective percentage interest as set forth on EXHIBIT J hereto and (ii)
allocated among the Assets and the Doctor's Assets, all as set forth on
EXHIBIT J hereto.
2.09 TAXES.
(a) Except as set forth in SECTION 2.09(b) and except for
Taxes owed by Purchaser
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or its Designee as a result of its use of the Assets subsequent to the Closing
Date, and Taxes owed by Doctor as a result of its use of the Doctor's Assets
subsequent to the Closing Date, none of Purchaser, any of its Designees or
Doctor shall have any liability or responsibility for any Taxes of any kind
relating to or arising out of the transactions contemplated by this Agreement
other than sales tax resulting from the sale of the Assets and Doctor's Assets
contemplated herein for which Purchaser or Doctor, as the case may be, shall be
liable. The Companies shall be solely responsible for the payment of all other
Taxes of any kind, arising out of the sale, transfer, and assignment of the
Assets and the Doctor's Assets. The Companies shall immediately reimburse
Purchaser, its Designee and Doctor for any such Taxes which such party is
required to pay arising out of the sale of the Assets or Doctor's Assets or the
operations of the Business prior to the Closing.
(b) The estimated amount of personal property taxes to be paid
with respect to the Assets and Doctor's Assets for calendar year 1998 shall be
allocated pro rata between Purchaser and the Companies based on the amount of
personal property taxes paid by the Companies with respect to the Assets for
calendar year 1997. The pro-rata portion of such estimated taxes payable with
respect to the period from January 1, 1998 through the day immediately preceding
the Closing Date (the "Prorated Personal Property Taxes") shall be reflected on
the Closing Date Balance Sheet and assumed by Purchaser hereunder. In calendar
year 1997, the Companies paid $18,053.97 in personal property taxes with respect
to the Assets and Doctor' Assets.
2.10 APPOINTMENT OF SELLERS' REPRESENTATIVE.
(a) The Companies and the Owners hereby appoint Xx. Xxxxx X.
Xxxxx as their representative (the "Sellers' Representative"). The Sellers'
Representative shall have full power and authority to take all actions necessary
or permitted to effectuate the transactions contemplated hereby, to undertake
the defense or settlement of any claims for which any Company or Owner may be
required to indemnify Purchaser, Doctor or any other party hereunder, or be
indemnified by Purchaser or Doctor hereunder, to waive any or all of the
conditions precedent set forth in ARTICLE IX on behalf of any of the Companies
or the Owners, and to take all such other actions provided in this Agreement to
be taken by the Sellers' Representative (and any other actions reasonably
related or ancillary thereto), including the power to execute and deliver the
Escrow Agreement, the closing certificates contemplated in ARTICLES VIII and X
and such other documents as may be necessary for the foregoing purposes.
(b) The Companies and the Owners also irrevocably authorize
the Sellers' Representative to be the recipient of any notice required to be
given or made by Purchaser or Doctor to any of the Companies or Owners
hereunder, and any notice received by the Sellers' Representative shall be
deemed for all purposes to be received by all of the Companies and Owners.
(c) All decisions and actions by the Sellers' Representative,
including any agreement between the Sellers' Representative and Purchaser or
Doctor relating to any defense or settlement of any claims for which any of the
Companies or any of the Owners may be required to indemnify Purchaser or Doctor
hereunder, any decision, action or agreement to be made or taken hereunder or
any other action provided herein to be taken by the Sellers' Representative
shall be binding upon all of the Companies and
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the Owners, and none of the Companies or Owners shall have the right as between
such Company or Owner and Purchaser or Doctor to object, dissent, protest or
otherwise contest the same.
(d) The provisions of this SECTION 2.10 shall be binding upon
the heirs, executors, administrators, personal representatives, successors and
assigns of each of the Companies and the Owners.
(e) The Companies and the Owners agree that the Sellers'
Representative shall have no liability (whether direct or indirect, in contract,
tort or otherwise) to the Companies or Owners for or in connection with actions
taken or omitted in its capacity as Sellers' Representative, except for his
gross negligence or willful misconduct.
2.11 EMPLOYEES OF THE COMPANIES. (a) Concurrent with the Closing,
Purchaser (or its Designee) or Doctor, shall offer employment, on an "at will
basis" (other than employees executing employment agreements) to all of the
active employees of the Companies set forth on SCHEDULE 3.18, as well as the
employees hired by the Companies between the date hereof and the Closing Date to
which Purchaser has consented (which consent shall not be unreasonably
withheld), except for the employees identified on EXHIBIT H attached hereto, and
up to ten (10) other employees of the Companies to be determined by Purchaser
between the date hereof and the Closing Date with respect to which Purchaser
shall notify the Sellers' Representative, none of whom will be offered
employment by Purchaser (or its Designee) or Doctor.
(b) The Companies shall, and the Owners shall cause the
Companies to, terminate all of their employees effective as of the Closing Date
and provide notice at the time of such termination of COBRA Benefits, and
Purchaser shall be entitled to review such notices regarding such COBRA
Benefits. The Companies shall, and the Owners shall cause the Companies to,
cooperate with Purchaser to provide such COBRA benefits as Purchaser deems
appropriate to the employees of the Companies who are not employed by Purchaser
or Doctor and former employees of the Companies who may be entitled to COBRA
benefits.
c. The Companies shall, and the Owners shall cause the
Companies to, make all required payments to employees and former employees of
the Companies, and their respective spouses and dependents, under the
self-insured health benefit plans maintained by the Companies with respect to
claims incurred by such persons prior to the Closing, or thereafter to the
extent covered by such plans.
2.12 COLLECTION OF ACCOUNTS RECEIVABLE. (a) GENERAL. Each of the
Companies agrees that it will cooperate with Purchaser in collecting all of the
accounts receivables of such Companies transferred to Purchaser (or its
Designee) hereunder and that all payments made with respect thereto, or by
customers for services rendered by Purchaser (or its Designee) or Doctor from
and after the Closing Date shall be paid to Purchaser (or its Designee) or
Doctor, as the case may be, and each of the Companies further agrees to remit to
Purchaser (or its Designee) or Doctor, as the case may be, promptly following
its receipt thereof, any such amounts received by such Company. Purchaser and
Doctor agree to remit to
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the Companies promptly following Purchaser (or its Designee) or Doctor's, as the
case may be, receipt thereof, any amounts received by it with respect to the
accounts receivables of any Company relating to Medicaid or Medicare which are
not being assigned hereunder.
(b) MEDICAID AND MEDICARE RECEIVABLES. The parties acknowledge
and agree that the Companies shall retain ownership of the accounts receivable
of the Companies with respect to services covered by Medicaid and Medicare
Receivables and such receivables are not being assigned hereunder. Purchaser (or
its Designee) shall be entitled to all of the proceeds received by the Companies
with respect to the Medicaid and Medicare Receivables and the Companies covenant
and agree to remit to Purchaser (or its Designee) the proceeds from such
receivables immediately upon receipt thereof, subject to the terms hereof.
Each of the Companies hereby appoint the Designee as its agent to xxxx
and collect, on behalf of such Company, the Medicaid and Medicare Receivables,
such services to be provided at no cost to the Companies. In connection with the
billing and collection, each Company shall, with the assistance of Purchaser,
establish a bank account (each, a "Bank Account") in such Company's name at a
bank (the "Bank") designated by Purchaser and each Company agrees that
Purchaser, or one of its designated representatives, will be designated by such
Company as an authorized signatory on such account, entitled to make withdrawals
therefrom. All collections generated with respect to the Medicaid and Medicare
Receivables will be deposited in the respective Bank Account of the Company that
owns the related receivable. The funds from each Bank Account will then
immediately be transferred to a bank account of Purchaser, or its Designee, to
be designated by Purchaser. To comply with the applicable federal reimbursement
rules, the parties acknowledge and agree that (i) the Bank is neither providing
financing to any of the Companies nor acting on behalf of another party in
connection with the provision of financing to any of the Companies and (ii) each
of the Companies has sole control over its respective Bank Account and the Bank
is subject only to the respective Company's instruction regarding such Bank
Account.
Each Company hereby authorizes the Purchaser and its Designee to take
all appropriate actions necessary to xxxx, in such Company's name, all fees
relating to such Medicaid and Medicare Receivables and to ensure that
collections generated from such recievables are directly remitted to, or
deposited in, such Company's Bank Account including, without limitation, filing
appropriate claim forms with Medicare and Medicaid and communicating with
administrative agencies regarding such claims.
To facilitate this billing and collection arrangement, each of the
Companies hereby agree as follows:
(i) Each Company will authorize and direct the Bank to transfer
on a daily basis all monies deposited in its Bank Account to the
Purchaser or its Designee in the bank account designated by Purchaser
and send all statements and other communications regarding its Bank
Account to Purchaser to facility administration of the Bank Account.
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(ii) Each Company will take no action with respect to its Bank
Accounts that is not specifically set forth in this Agreement.
(iii) Each Company agrees to execute any all other documents
necessary to allow Purchaser and its Designee to take any action or
perform any billing and collection service set forth in this SECTION
2.12(b).
2.13 MAINTENANCE OF RECORDS. (a) All books and records transferred to
Purchaser or Doctor hereunder shall be retained by Purchaser or Doctor, as the
case may be, and shall be made available in Louisville, Kentucky to the
Companies for inspection and copying (at the Companies' expense), upon five
business days' prior notice, during regular business hours or such other times
convenient to Purchaser or Doctor, as the case may be, for a period of five (5)
years from and after the Closing Date; provided that such inspection and copying
is for a proper purpose and does not interfere with the operations of Purchaser,
Doctor or any of its Affiliates.
(b) All books and records of the Companies relating to the
Business not transferred hereunder shall be retained by the Companies or the
Owners and shall be made available to Purchaser and Doctor for inspection and
copying (at Purchaser's and Doctor's expense) upon reasonable notice for a
period of five (5) years from and after the Closing Date.
2.14 COMPLIANCE WITH BULK SALES; OTHER TAXES. (a) Purchaser and
Doctor hereby waive compliance by the Companies with the provisions of the Bulk
Sales Law of any state, and the Companies warrant and agree to, and the Owners
covenant and agree to cause the Companies to, pay and discharge when due all
claims of creditors which could be asserted against Purchaser (or its Designee)
or Doctor by reason of such non-compliance to the extent such liabilities are
not specifically assumed by Purchaser or Doctor under this Agreement.
(b) The Companies agree, and the Owners agree to cause the
Companies to, deliver to Purchaser as soon as possible after the Closing, the
following:
(i) With respect to each of the Companies with operations in
Kentucky, a Statement of Tax Due from the Revenue Cabinet of Kentucky
for such Company (the payment of such taxes to be coordinated with
Purchaser to the extent assumed by Purchaser hereunder), such statement
to be requested by the Companies from the Revenue Cabinet as soon as
practicable after the date hereof;
(ii) With respect to each of the Companies with operations in
Tennessee, a statement from the Department of Revenue of Tennessee
stating that the taxes have been paid or that no taxes are due for such
Company (the payment of such taxes to be coordinated with Purchaser to
the extent assumed by Purchaser hereunder), such statement to be
requested by the Companies from the Department of Revenue as soon as
practicable.
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(iii) With respect to each of the Companies with operations in
Missouri, a receipt from the Director of Revenue of Missouri showing
payment of the tax due, or certificate from the Director of Revenue of
Missouri stating that no tax is due (the payment of such taxes to be
coordinated with Purchaser to the extent assumed by Purchaser
hereunder), such statement to be requested by the Companies from the
Director of Revenue as soon as practicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND OWNERS
The Companies and the Owners, jointly and severally, represent and
warrant as follows:
3.01 AUTHORIZATION, ETC. The Owners are the record and beneficial
owners of all of the outstanding shares of capital stock or membership
interests, as the case may be, in the Companies as set forth on EXHIBIT B
hereto. Each Owner has full legal right, power and authority to execute and
deliver this Agreement and each of the Acquisition Documents and to perform all
of the obligations of such Owner hereunder and thereunder. Each of the Companies
has full legal right, power and authority to execute and deliver this Agreement
and the Acquisition Documents, to perform its obligations hereunder and
thereunder, and, subject to obtaining the consents disclosed on SCHEDULES
3.11(a), 3.11(b) AND 3.23 attached hereto, to sell, assign, transfer, convey and
deliver its Assets and its Doctor's Assets pursuant hereto and thereto. The
Managers or Board of Directors, as the case may be, of each of the Companies has
taken, or will take before the Closing Date, all actions required by law, its
respective Articles of Organization, Articles of Incorporation, Operating
Agreement, By-Laws or other similar governing documents or otherwise to
authorize the execution and delivery of this Agreement and the other Acquisition
Documents, and the performance of its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by the Companies and the Owners
and upon the execution and delivery of the remaining Acquisition Documents by a
duly authorized officer of each of the Companies and the Owners (with respect to
each such document to which it is a party), the remaining Acquisition Documents
will have been duly executed and delivered by each of the Companies and the
Owners (with respect to each such document to which it is a party), and this
Agreement is and such other Acquisition Documents will be, upon due execution
and delivery thereof, the legal, valid, and binding obligations of each of the
Companies and the Owners (with respect to each such document to which it is a
party) enforceable against each of them according to their terms.
3.02 TITLE TO ASSETS. The Companies have good and marketable title to
all of the Assets and the Doctor's Assets, free and clear of all Encumbrances,
other than leases set forth on EXHIBIT C-1 AND C-2 attached hereto and ad
valorem taxes not yet due and payable and Encumbrances on SCHEDULE 3.02 which
will be released at or prior to the Closing. There is no material asset used or
required by the Companies in the conduct of the Business which is not included
in the Assets or the Doctor's Assets or licensed or leased to it pursuant to one
of the Assigned Contracts or the Doctor's Assigned Contracts.
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All of the tangible assets forming a part of the Assets and the Doctor's Assets
are in good operating condition and repair, normal wear and tear excepted
consistent with past practices, are suitable for the purpose used, are adequate
and sufficient for all current operations of the Companies and are directly
related to the Business.
3.03 EXISTENCE, GOOD STANDING AND AUTHORITY. Each of the Companies is
a company duly organized or incorporated, validly existing and in good standing
under the laws of its jurisdiction of organization or incorporation. Each of the
Companies has the power to own its properties and to carry on its businesses as
now being conducted. Each Company is duly qualified to do business in all
jurisdiction(s) in which the character or location of the properties owned or
leased by it or the nature of the businesses conducted by it makes such
qualification necessary. Each Company has provided to Purchaser true and
complete copies of all of the Organizational Documents for such Company.
3.04 INVESTMENTS. Except as set forth on SCHEDULE 3.04, none of the
Companies owns, directly or indirectly, any capital stock or other equity,
ownership or proprietary interest in any other corporation, partnership,
association, trust, joint venture or other entity.
3.05 FINANCIAL STATEMENTS. The Companies have heretofore furnished
Purchaser with the (i) audited consolidated balance sheets of the Companies
dated as of December 31, 1996 and December 31, 1997 and the related statements
of operations for the years then ended and (ii) the unaudited interim
consolidated balance sheets of the Companies dated as of June 30, 1998 (the
"Interim Balance Sheet") and the related unaudited interim consolidated
statements of operations for the 6-month period ended June 30, 1998
(collectively, the "Financial Statements"). The consolidated balance sheet of
the Companies dated as of December 31, 1997 is hereinafter referred to as the
"Balance Sheet." Except for the absence of footnotes to the Financial Statements
and normal year-end adjustments to such interim Financial Statements, which such
adjustments would not individually or in the aggregate be material, the
Financial Statements have been prepared from the books and records of the
Companies in accordance with GAAP and fairly present the financial position of
the Companies at the respective dates thereof. The consolidated balance sheets
included in the Financial Statements reflect all claims against and all debts
and liabilities of the Companies, fixed or contingent, as at their respective
dates, except that the Interim Balance Sheet only includes those liabilities
required to be shown based upon tax accounting concepts.
3.06 NO MATERIAL CHANGES. Since December 31, 1997 (the "Balance Sheet
Date") and except as reflected on SCHEDULE 3.06 hereto or on the Interim Balance
Sheet, there has been (a) no material adverse change in the assets or
liabilities, or in the business or condition, financial or otherwise, or in the
results of operations, or prospects, of the Companies, and (b) no material
change in the assets or liabilities, or in the business or condition, financial
or otherwise, or in the results of operations, or prospects, of the Companies
except in the Ordinary Course of Business and no fact or condition exists or is
contemplated, or, to the Knowledge of the Companies or Owners, threatened, which
might cause such a material change in the future. The statements of income
included in the Financial Statements do not contain any items of special or
non-recurring income or any other income not earned in the Ordinary Course of
Business except as expressly specified therein.
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3.07 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other records of the Companies, all of which have been made
available to Purchaser, are complete and correct in all material respects and
have been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. The minute books of the
Companies contain accurate and complete records of all meetings held of, and
corporate action taken by, the shareholders, the members, the Board of
Directors, Board of Managers and committees of the Board of Directors and Board
of Managers, as the case may be, of the Companies, and no meeting of any such
members, Board of Directors, Board of Managers and committees of the Board of
Directors and Board of Managers, has been held for which minutes have not been
prepared and are not contained in such minute books.
3.08 ACCOUNTS RECEIVABLE. SCHEDULE 3.08 sets forth a summary of, and
the Companies have previously delivered to Purchaser a detailed list of all,
accounts and other receivables of the Companies as of the Balance Sheet Date,
showing the amounts due and an aging analysis thereof. The accounts and other
receivables shown on SCHEDULE 3.08 and the lists provided to Purchaser and those
receivables arising after the Balance Sheet Date and shown on the books and
records of the Companies have arisen in the Ordinary Course of Business, are not
in dispute with the respective obligors therefor, and none of such accounts
receivable or other debts are subject to any counterclaim or set-off except to
the extent of any provision or reserve set forth in the Balance Sheet or the
Closing Date Balance Sheet, as the case may be. There has been no material
adverse change since the Balance Sheet Date in the amount of accounts receivable
or other debts due or the allowances with respect thereto, or accounts payable
by any of the Companies from that reflected in the Balance Sheet.
3.09 REAL PROPERTY AND LEASES. (a) None of the Companies owns, or has
ever owned, any real property.
(b) SCHEDULE 3.09(b) contains a true and complete list of all
real property leases (collectively, the "Leases") (i) to which any of the
Companies is a party, (ii) to be acquired by or assigned to any of the Companies
prior to the Closing Date or, (iii) into which any of the Companies has agreed
to enter or has an option to enter, or into which any of the Companies will have
agreed to enter or will have an option to enter, as the case may be, prior to
the Closing Date, in each case specifying the name of the lessor or sublessor,
the lease term, the basic annual rental and other amounts paid or payable with
respect thereto and any purchase options exercised or exercisable by any of the
Companies. Except as set forth on SCHEDULE 3.09(b), the Companies enjoy peaceful
possession under each Lease, and each Lease is in good standing and in full
force and effect. None of the Companies, or to the Knowledge of the Companies
and the Owners, any other party to any Lease has breached such Lease or is in
default thereunder and no breach of or default under any Lease has occurred
which would prevent the exercise by a Company of any right to renew or extend
such Lease. Subject to receipt of any required consents or approvals, the
consummation of the Subject Transactions in accordance with this Agreement will
not result in the termination of any Lease, and immediately after the Closing,
all Leases will continue in full force and effect without the imposition of any
burdensome condition or other obligation on Purchaser, its Designee or its
Affiliates resulting from the consummation of the Subject Transactions.
3.10 MATERIAL CONTRACTS. Set forth on SCHEDULE 3.10, which
incorporates by reference Exhibits
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C-1 and C-2, is a complete list of all of the following Contracts to which any
of the Companies is a party or by which they, or any of them, is bound: (a) all
Contracts relating to the employment of any person, and all bonus, deferred
compensation, pension, profit sharing, stock option, employee stock purchase,
phantom stock, retirement and other employee benefit plans; (b) all Contracts
which contain restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock; (c) all Contracts relating to
capital expenditures; (d) all loans, advances to, and investments in, any other
Person, and all Contracts relating to the making of any such loan, advance or
investment; (e) all guarantees and other contingent liabilities with respect to
any indebtedness or obligation of any other Person (other than the endorsement
of negotiable instruments for collection in the Ordinary Course of Business);
(f) all management services, consulting and any other similar type contracts;
(g) all leases of personal property; (h) all Contracts limiting the freedom of
any of the Companies to engage in any line of business or to compete with any
other Person; (i) all Contracts not entered into in the Ordinary Course of
Business; (j) all Contracts which involve the expenditure by a Company of more
than $10,000; (k) any Contract with any manager, director, officer or employee
of any of the Companies, or Contract with any Related Person of any of the
Companies or Owners; (l) all Contracts which might reasonably be expected to
have a potential adverse impact on the business or operations of the Companies;
and (m) all other Contracts material to the business, operations, Assets or
Doctor's Assets of the Companies. Each Contract set forth on SCHEDULE 3.10 is a
valid and binding agreement of the Company that is a party thereto and in full
force and effect and enforceable in accordance with its terms. Subject to
obtaining the requisite consents set forth on SCHEDULE 3.11(a), 3.11(b) OR 3.23
hereto, the enforceability of such Contracts will not be affected in any manner
by the execution and delivery of this Agreement and the consummation of the
Subject Transactions. None of the Companies has violated any of the material
terms or conditions of any of the Contracts set forth on SCHEDULE 3.10 or is
otherwise in default thereof, and, to the Knowledge of the Companies and the
Owners, all of the material terms and conditions to be performed by any party
thereto other than the Company that is a party thereto have been fully performed
and each such Contract is free from any right of termination on the part of any
party thereto. There exists no default or event of default under any of the
Contracts set forth on SCHEDULE 3.10 or event, occurrence, condition or act
(including the purchase of the Assets and the Doctor's Assets hereunder, subject
to obtaining the requisite consents set forth on SCHEDULE 3.11(a), 3.11(b) OR
3.23 hereto) which, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a default or event of
default thereunder. None of the parties to any of the Contracts has given notice
(written or oral) of its intent to terminate such Contract and none of the
Companies or Owners has any reason to believe that any party intends to
terminate any Contract prior to or following the consummation of the Subject
Transactions. There have been no amendments or modifications to any of the
Contracts set forth on SCHEDULE 3.10 which would make any of the information
disclosed herein inaccurate or incomplete. Copies of all such modifications and
amendments have been made available to Purchaser by the Companies.
3.11 NO CONFLICT. (a) Except as set forth on SCHEDULE 3.11(a) OR
3.23, neither the execution and delivery of this Agreement nor the consummation
or performance of any of the Subject Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents of any of the Companies, or
(B) any resolution adopted by the Board
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of Directors, Board of Managers, shareholders or members of any of the
Companies;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the right to challenge any of
the Subject Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which a Company, Owner, or any of the
Assets or the Doctor's Assets, may be subject;
(iii) contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by any Company or that otherwise relates to the
Business or any of the Assets or the Doctor's Assets;
(iv) cause Purchaser to become subject to, or to become
liable for, the payment of any Tax other than sales Taxes;
(v) contravene, conflict with, or result in a violation
or Breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Contract; or
(vi) result in the imposition or creation of any
Encumbrance upon or with respect to any of the Assets or the Doctor's Assets.
(b) Except as set forth on SCHEDULE 3.11(b) OR SCHEDULE 3.02,
none of the Companies or Owners is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Subject
Transactions.
3.12 LITIGATION. Except as set forth on SCHEDULE 3.12, there is no
Proceeding by any Person, or by or before (or any investigation by) any
Governmental Body, pending, or to the Knowledge of the Companies and the Owners
threatened, against or affecting (i) any of the Companies, the Business, the
Assets or the Doctor's Assets which could materially and adversely affect the
right or ability of any of the Companies to carry on the Business as now
conducted, or which could have a Material Adverse Effect upon the ability of
Purchaser and the Doctor to carry on the Business of the Companies subsequent to
the Closing, or (ii) the Subject Transactions; and none of the Companies or
Owners knows of any valid basis for any such Proceeding. None of the Companies
is subject to any Order entered in any Proceeding which may have an adverse
effect on Purchaser or Doctor or on their ability to acquire any property or to
carry on the Business in any area after the Closing.
3.13 TAX RETURNS AND PAYMENTS. All of the Tax Returns and reports of
each of the Companies or respecting the operations of a Company required by law
to be filed on or before the date hereof have been duly and timely filed and all
Taxes shown as due thereon have been paid. There are in effect no waivers of any
applicable statute of limitations related to such returns. No liability for any
Tax will be imposed upon the Assets or the Doctor's Assets or any of the
Companies or its respective other assets
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with respect to any period before the Closing Date for which there is not an
adequate reserve reflected in the Balance Sheet. The provisions of this SECTION
3.13 shall include, without limiting the generality of this section, all
reports, returns, and payments due under all federal, state, or local laws or
regulations relating to income, sales, use and withholding taxes, withholding
obligations, unemployment insurance, Social Security, workers' compensation and
other obligations of the same or of a similar nature. Except as set forth on
SCHEDULE 3.13, none of the Companies is subject to any open audit in respect of
its Taxes, no deficiency assessment or proposed adjustment for Taxes is pending,
and none of the Companies or Owners has any knowledge of any liability, whether
or not proposed, for any Tax with respect to any period through the date hereof
to be imposed upon any of its properties or assets for which there is not an
adequate reserve reflected in its Balance Sheet.
3.14 LIABILITIES. None of the Companies has, and none of the Assets
or the Doctor's Assets is subject to, any outstanding claims, liabilities or
indebtedness, accrued, contingent or otherwise, and whether due or to become
due, except as set forth in the Financial Statements or referred to in the
footnotes thereto or on SCHEDULE 3.14, other than liabilities incurred
subsequent to the Balance Sheet Date in the Ordinary Course of Business not
involving borrowings by any of the Companies. None of the Companies is in
default in respect of the terms or conditions of any indebtedness, nor does any
of the Companies or Owners have Knowledge of any facts which, with the passage
of time, would result in any such default. The reserves reflected in the Balance
Sheet are adequate, appropriate and reasonable in accordance with GAAP. None of
the Companies or Owners has any Knowledge of any basis for the assertion against
the Companies of any such liability not fully reflected or accrued for in the
Balance Sheet.
3.15 INSURANCE. Each of the Companies has maintained, and as of the
date hereof has in effect, such policies of motor vehicle, property, casualty,
workers' compensation, malpractice, general liability and other insurance,
including, without limitation group insurance and other life health, disability
or other insurance for the benefit of employees or their dependents or both as
are required by law and are adequate and appropriate with respect to their
respective businesses. Set forth on SCHEDULE 3.15 is a complete list, with a
summary thereof, of all insurance policies ("Insurance Policies") which the
Companies maintain with respect to the Business and their respective properties
or employees, which Insurance Policies are in full force and effect. None of the
Companies has violated any of the terms or conditions of the Insurance Policies
or is otherwise in default thereof, all of the terms and conditions to be
performed by the issuers of the Insurance Policies have been fully performed and
the Insurance Policies are free from any right of termination on the part of the
issuers thereof. Since January 1, 1996, there has not been any material adverse
change in the relationship of a Company with its insurers or in the premiums
payable pursuant to the Insurance Policies. Except as set forth on SCHEDULE
3.15, the Insurance Policies are "occurrence" policies and not "claims made"
policies.
3.16 INTELLECTUAL PROPERTIES. Set forth on SCHEDULE 3.16 are all
patents, patent rights, licenses, trademarks, trademark rights, trade names,
trade name rights, service marks, service xxxx rights, copyrights or similar
rights (collectively, "Intellectual Property Rights") used by each Company in
connection with the conduct of its respective business. Except as set forth on
SCHEDULE 3.16, each Company has valid and enforceable rights to utilize its
respective Intellectual Property Rights in its
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business as is presently operated, free and clear of any Encumbrances. None of
the Companies is infringing, or otherwise acting adversely to, the right of any
Person under or in respect to, any Intellectual Property Right, there is no
claim by any Person pending or, to the Companies' and Owners' Knowledge,
threatened against any Company with respect thereto and to the Knowledge of the
Company and the Owners there is no Person infringing upon any Intellectual
Property Rights utilized by any of the Companies.
3.17 COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 3.17, each
Company is, and has been since January 1, 1992, in compliance with all Legal
Requirements of any Governmental Body including, but not limited to, the Federal
Occupational Safety and Health Act, ERISA, all Legal Requirements relating to
the safe conduct of business and all Environmental and Safety Requirements.
Except as set forth on SCHEDULE 3.17, none of the Companies has received any
notice of any asserted present or past failure of any of the Companies to comply
with any of such Legal Requirements.
3.18 EMPLOYEES.
(a) SCHEDULE 3.18 contains a complete and accurate list of the
following information for each employee, officer, manager or director of each of
the Companies, including each employee on leave of absence or layoff status:
employer; name; job title; work location; exempt or non-exempt status; current
compensation paid or payable and any change in compensation since December 31,
1997; vacation accrued; sick and/or personal pay accrued; and service credited
(reflected on such schedule by the anniversary date) for purposes of vesting and
eligibility to participate under the Companies' pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock ownership (including investment credit or
payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, or any other Employee Benefit Plan.
(b) No employee, officer, manager or director of any Company
is a party to, or is otherwise bound by, any agreement or arrangement,
including, without limitation, any confidentiality, noncompetition, or
proprietary rights agreement, between such employee, officer, manager or
director and any other Person ("Proprietary Rights Agreement") that in any way
will adversely affect (i) the performance of his duties as an employee of
Purchaser (or its Designee) or Doctor, or (ii) the ability of Purchaser (or its
Designee) and Doctor to conduct the Business, subsequent to the Closing,
including any Proprietary Rights Agreement with a Company by any such employee,
officer, manager or director. To the Companies' and Owners' Knowledge, no
director, manager, officer, or other key employee of a Company intends to (i)
terminate his employment with one of the Companies prior to Closing or (ii)
reject employment by Purchaser (or its Designee) or Doctor, as the case may be.
3.19 LABOR RELATIONS; COMPLIANCE. Except as set forth on SCHEDULE
3.19, none of the Companies is, or ever has been, a party to any collective
bargaining or other labor Contract. Since January 1, 1995, there has not been,
there is not presently pending or existing, and to the Companies' and Owners'
Knowledge there is not threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any Proceeding against or affecting
any of the Companies relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters,
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including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, or
any comparable Governmental Body, or any organizational activity, or other labor
or employment dispute against or affecting any of the Companies or their
respective premises, or (c) any application for certification of a collective
bargaining agent. To the Companies' and Owners' Knowledge, no event has occurred
or circumstance exists that could provide the basis for any work stoppage or
other labor dispute. There is no lockout of any employees by any of the
Companies, and no such action is contemplated by any of the Companies. Each
Company has complied in all respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closings. None of the
Companies has any liabilities in connection with the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.20 EMPLOYEE BENEFIT PLANS.
(a) LIST OF PLANS. Set forth on SCHEDULE 3.20 is a complete
and accurate list of all Employee Benefit Plans established, maintained or
contributed to by any of the Companies (including, without limitation, for this
purpose and for the purpose of all of the representations in this SECTION 3.20,
all entities (whether or not incorporated) which by reason of common control or
affiliation are treated together with a Company as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the Code) at any time during the
five (5) year period ending on the Closing Date.
For purposes of this Agreement, the term "Employee Benefit
Plans" means (A) all employee benefit plans within the meaning of ERISA Section
3(3), whether or not any such employee benefit plans are exempt from the
provisions of ERISA; and (B) all stock option plans, bonus or incentive award
plans, severance pay policies or agreements, parachute payment arrangements,
deferred compensation agreements, supplemental income arrangements, vacation
plans, and all other employee benefit plans, agreements and arrangements not
described in (A) above.
(b) STATUS OF PLANS. None of the Companies takes part in or is
a party to, or has ever taken part in or been a party to, (i) maintaining or
contributing to any Employee Benefit Plan subject to ERISA which is not in
compliance with ERISA and the Code, (ii) maintaining or contributing to, at any
time, a defined benefit plan within the meaning of Section 3(35) of ERISA, (iii)
maintaining or contributing to, at any time, a multiemployer plan within the
meaning of Section 3(37) of ERISA, or (iv) maintaining or contributing to any
employee benefit plans other than those listed on SCHEDULE 3.20. The assets of
the Employee Benefit Plans are adequate to pay all debts, liabilities and claims
with respect to such plan to the extent that claims have been made on or prior
to the Closing Date. No Employee Benefit Plan ever maintained by any Company has
ever provided health care or any other non-pension benefits to any employees
after their employment was terminated (other than as required by COBRA) or has
ever promised to provide such post-termination benefits. There are no promised
increases in benefits (whether expressed, implied, oral or written) under any
Employee Benefit Plan maintained by any Company, nor are there any obligations,
commitments or understandings to continue any such Employee Benefit Plans
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(whether expressed, implied, oral or written), except as required by COBRA. Each
Employee Benefit Plan maintained by a Company as of the Closing Date is subject
to termination by such Company without any further liability or obligation on
the part of such Company to make further contributions to any such plan
following such termination, and the termination of any Employee Benefit Plan
would not accelerate or increase any benefits payable under such Employee
Benefit Plan. Except as set forth on SCHEDULE 3.20, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment to be made by any of the Companies
(including, without limitation, severance, unemployment compensation, golden
parachute (defined in Section 280G of the Code), or otherwise) becoming due to
any employee, director or consultant, or (ii) increase any benefits otherwise
payable under any Employee Benefit Plan.
(c) TAX QUALIFICATION AND EMPLOYEE BENEFITS. Each Employee
Benefit Plan intended to be qualified under Section 401(a) of the Code has been
determined to be so qualified by the IRS and nothing has occurred since the date
of the last such determination which resulted or is likely to result in the
revocation of such determination. Full payment has been made of all amounts
which any Company is required, under applicable law or under any Employee
Benefit Plan or any agreement relating to any Employee Benefit Plan to which any
Company is a party, to have paid as contributions thereto as of the Closing
Date. Each Company has made adequate provision for reserves to meet
contributions that have not been made because they are not yet due under the
terms of any Employee Benefit Plan or related agreements. Benefits under all
Employee Benefit Plans are as represented and have not been increased subsequent
to the date as of which documents have been provided.
(d) TRANSACTIONS. There has not been any failure of any party
to comply with any law applicable to any Employee Benefit Plan maintained by any
of the Companies. None of the Companies has engaged in any transaction with
respect to the Employee Benefit Plans which would subject any of the Companies
to a tax, penalty or liability for prohibited transactions under ERISA or the
Code, or for any other reason, and none of its directors, managers, officers or
employees to the extent they or any of them are fiduciaries with respect to such
plans, has breached any of their responsibilities or obligations imposed upon
fiduciaries under Title I of ERISA or has taken or failed to take any action
that would result in any claim being made under, by or on behalf of any such
plans by any party with standing to make such claim. No litigation, claim,
arbitration, governmental proceeding, audit, or investigation or other
proceeding (other than those relating to routine claims for benefits) is pending
or threatened with respect to any Employee Benefit Plan.
(e) DOCUMENTS. The Companies have delivered or caused to be
delivered to Purchaser and its counsel true and complete copies of (i) all
Employee Benefit Plans as in effect for the Companies, together with all
amendments thereto which will become effective at a later date, as well as the
latest IRS determination letter obtained with respect to any such Employee
Benefit Plan qualified under Section 401 or 501 of the Code, (ii) Form 5500 for
the three (3) most recent completed fiscal years for each Employee Benefit Plan
required to file such form, (iii) a current Summary Plan Description for each
Employee Benefit Plan, together with any summary of material modifications
thereto, (iv) any insurance or annuity policy (including any fiduciary liability
insurance policy) related to any Employee Benefit Plan, and (v) the three (3)
most recent Summary Annual Reports provided to participants for each
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Employee Benefit Plan.
(f) COBRA. The Companies have complied with the Consolidated
Omnibus Budget Reconciliation Act of 1984, as amended ("COBRA"), and all of the
rules and regulations promulgated thereunder.
3.21 NO CHANGES PRIOR TO CLOSING DATE. Except as set forth on
SCHEDULE 3.21, since the Balance Sheet Date, except as otherwise expressly
contemplated by this Agreement, none of the Companies has (a) suffered any
material adverse change in its working capital, financial condition, assets,
liabilities, business or prospects, experienced any labor difficulty or suffered
any material casualty loss (whether or not insured); (b) incurred any liability
or obligation of any nature (whether accrued, absolute, contingent or
otherwise), except in the Ordinary Course of Business; (c) permitted any of its
assets to be subjected to any Encumbrances; (d) paid, discharged or satisfied
any claim, Encumbrance or liability other than those which are reflected on the
Balance Sheets or which were incurred after the Balance Sheet Date in the
Ordinary Course of Business; (e) sold, transferred or otherwise disposed of any
assets except in the Ordinary Course of Business; (f) made any capital
expenditure or commitment therefor, except in the Ordinary Course of Business;
(g) made any distribution on any shares of its capital stock (other than normal
distributions consistent with past practices not exceeding $45,600 in any weekly
period), or redeemed, purchased or otherwise acquired any shares of its capital
stock; (h) made any bonus or profit sharing distribution or payment of any kind;
(i) increased its indebtedness for borrowed money, except current borrowings
from banks in the Ordinary Course of Business, or made any loan to any Person;
(j) written down the value of any inventory or written off as uncollectible any
notes or accounts receivable, except write-offs in the Ordinary Course of
Business, none of which individually or in the aggregate is material to the
Company; (k) granted any increase in the rate of wages, salaries, bonuses or
other remuneration of any executive employee or other employees; (l) canceled or
waived any claims or rights of substantial value; (m) made any change in any
method of accounting or auditing practice (other than the write-off of
preopening store organizational costs expenses); (n) otherwise conducted its
business or entered into any transaction except in the usual and ordinary manner
and in the Ordinary Course of Business; or (o) agreed, whether or not in
writing, to do any of the foregoing or take any action or in action which would
result in a Breach of any of the representations and warranties set forth in
this ARTICLE III.
3.22 BROKER'S OR FINDER'S FEES. Except as set forth on SCHEDULE 3.22,
no agent, broker, person or firm acting on behalf of any Company or Owner is, or
will be, entitled to any commission or broker's or finder's fees from any of the
parties hereto, or from any Affiliate of the parties hereto, in connection with
any of the Subject Transactions. No Person set forth on SCHEDULE 3.22 hereto is
entitled to any commission or broker's or finder's fees from Purchaser or Doctor
for its services on behalf of a Company or an Owner in connection with any of
the Subject Transactions.
3.23 LICENSES, PERMITS, CONSENTS AND APPROVALS. Set forth on SCHEDULE
3.23 is each Governmental Authorizations required for use or used in the
Companies' respective businesses, together with the respective expiration or
renewal date of such Governmental Authorization, which such Governmental
Authorizations are all Governmental Authorizations required to conduct the
Companies'
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respective businesses. Except as set forth on SCHEDULE 3.23, no Consent, notice
or other action of any kind by any of the Companies, Owners or Purchaser will be
required as a result of the consummation of the Subject Transactions (a) to
avoid the loss of any Governmental Authorization or the violation, breach or
termination of, or any default under, or the creation of any Encumbrances on any
asset of any of the Companies pursuant to the terms of, any Legal Requirement or
any Contract binding upon a Company or to which any such asset may be subject or
(b) to enable Purchaser (or its Designee) and Doctor to continue the businesses
of the Companies substantially as conducted prior to the Closing Date. All such
filings and consents will be duly filed, given, obtained or taken on prior to
the Closing Date and will be in full force and effect on the Closing Date.
3.24 ENVIRONMENTAL AND HEALTH AND SAFETY MATTERS.
(a) Except as set forth on SCHEDULE 3.24, TO THE KNOWLEDGE OF
THE OWNERS AND THE COMPANIES:
(i) The Companies are and have been in compliance at
all times with all applicable Environmental and Safety Requirements, and none of
the Companies has received any notice, report or information regarding any
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
or any corrective, investigatory or remedial obligations, arising under
Environmental and Safety Requirements with respect to the past or present
operations or properties of its business.
(ii) Each Company has obtained, and is and has been in
compliance at all times with all terms and conditions of, all permits, licenses
and other authorizations required pursuant to Environmental and Safety
Requirements for the occupation of the properties of its business and the
conduct of its operations.
(iii) None of the following exists at any property owned
or occupied by any of the Companies: asbestos-containing material in any form or
condition; polychlorinated biphenyl-containing materials or equipment; or
underground storage tanks.
(iv) The transactions contemplated by this Agreement do
not impose any obligations under Environmental and Safety Requirements for site
investigation or cleanup or notification to or consent of any Governmental Body
or third parties.
(v) No facts, events or conditions relating to the past
or present properties or operations of the business of any of the Companies or,
to the Companies' and the Owners' Knowledge, properties contiguous thereto will
(x) prevent, hinder or limit continued compliance by Purchaser with
Environmental and Safety Requirements, (y) give rise to any corrective,
investigatory or remedial obligations on the part of Purchaser pursuant to
Environmental and Safety Requirements, or (z) give rise to any liabilities on
the part of Purchaser (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental and Safety Requirements, including, without
limitation, those liabilities relating to on-site or off-site hazardous
substance releases, personal injury, property damage or natural resources
damage.
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(vi) None of the Companies has assumed any liabilities
or obligations of any third party under Environmental and Safety Requirements.
(b) The Companies have delivered or made available to
Purchaser true, complete and correct copies of all environmental reports,
analyses, tests or monitorings in the possession of the Companies pertaining to
any property owned or operated in connection with the Business and a true,
complete and correct list identifying all third party facilities at which
contaminants generated in connection with the Business (whether by a Company or
any prior owner or occupant) have been transported, treated, stored, handled or
disposed within the past five years.
3.25 CERTAIN PAYMENTS. None of the Companies or any of their
respective directors, managers, officers, agents or employees, nor any other
Person associated with or acting for or on behalf of the Company, has directly
or indirectly (a) made, offered or agreed to offer any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of any Company or
any Affiliate of a Company, or (iv) in violation of any Legal Requirement, or
(b) established or maintained any material fund or asset that has not been
recorded in the books and records of the Companies.
3.26 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth on
SCHEDULE 3.26, neither any Owner nor any Related Person of any Owner or any
Company has, or has had, any interest in any property (whether real, personal,
or mixed and whether tangible or intangible), used in or pertaining to the
Business. Neither any Owner nor any Related Person of any Owner or any Company,
is, or has owned (of record or as a beneficial owner) an equity interest or any
other financial or profit interest in, a Person that has (i) had business
dealings or a material financial interest in any transaction with a Company
other than business dealings or transactions conducted in the Ordinary Course of
Business with such Company at substantially prevailing market prices and on
substantially prevailing market terms, or (ii) engaged in competition with a
Company with respect to any line of the products or services of a Company (a
"Competing Business") in any market presently served by a Company except for the
ownership of less than one percent of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in the
over-the-counter market. Neither any Owner nor any Related Person of any Owner
or any Company is a party to any Contract with, or has any claim or right
against, the Company.
3.27 FRAUD AND ABUSE. None of the Companies or any of the Owners has
engaged in any activities that are prohibited under federal Medicare and
Medicaid statutes, 42 U.S.C. ss.1320a-7b, the False Claims Act, or the
regulations promulgated pursuant to such statutes, or any similar federal, state
or local statutes or regulations or which are prohibited by binding rules of
professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any applications for any
benefit or payment;
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(b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment;
(c) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent to secure such
benefit or payment fraudulently; and
(d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bride or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay such remuneration (i)
in return for referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment may be
made in whole or in part by Medicare, Medicaid or other applicable third party
payors, or (ii) in return for purchasing, leasing or ordering or arranging for
or recommending the purchasing, leasing or order of any good, facility, service,
or item for which payment may be made in whole or in part by Medicare, Medicaid
or other applicable third party payors.
3.28 YEAR 2000 COMPLIANCE. Except as set forth on SCHEDULE 3.28, to
the Knowledge of Xx. Xxxxx, Xxxx, Xxxx Xxxxxxx, Xxxxx Xxxxxx and/or Xxxx
Xxxxxxxx, the Companies' software, whether owned or leased, is designed to be
used prior to, during and after the calendar year 2000 A.D., and such software
will operate during each such time without error relating to the date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
3.29. HSR CERTIFICATE. As of the date of this Agreement, Xx. Xxxxx
and Xxxx Xxxxx are not aware of any facts or circumstances that would prevent or
impair their ability to execute and deliver at Closing the certificate relating
to the HSR Act as contemplated in SECTION 8.16.
ARTICLE IV
REPRESENTATIONS OF DOCTOR AND XXXX
Doctor and Xxxx represent and warrant as follows:
4.01 EXISTENCE AND GOOD STANDING OF DOCTOR; LICENSING. Doctor is a
professional limited liability company duly organized, validly existing and in
good standing under the laws of the Commonwealth of Kentucky. Xxxx is licensed
to practice optometry in Kentucky, Tennessee, Indiana and, if required by law is
or will be as of the Closing, licensed to practice optometry in Missouri. Xxxx
owns, beneficially and of record, all of the ownership interest in Doctor and
there are no preemptive rights nor any outstanding options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans or other
agreements of any character providing for the purchase, issuance or sale of any
ownership or other interest in Doctor, other than as contemplated by this
Agreement.
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4.02 POWER AND AUTHORITY.
(a) Xxxx has the legal right, power and authority to make,
execute, deliver and perform this Agreement. This Agreement has been duly
executed and delivered by Xxxx and, upon the execution and delivery of the
remaining Acquisition Documents by Xxxx (to which he is a party), such remaining
Acquisition Documents will have been duly executed and delivered by Xxxx, and
this Agreement is, and such other Acquisition Documents will be, upon due
execution and delivery thereof, the legal, valid, and binding obligations of
Xxxx enforceable against him in accordance with the respective terms thereof.
(b) Doctor has the legal right, power and authority to make,
execute, deliver and perform this Agreement, and this Agreement has been duly
authorized and approved by all required action of Doctor. Doctor has taken, or
will take before the Closing Date, all actions required by law, Doctor's
Articles of Organization, Operating Agreement, or otherwise, to authorize the
execution and delivery of this Agreement and the other Acquisition Documents,
and the performance of its obligations hereunder and thereunder. This Agreement
has been duly executed and delivered by Doctor and, upon the execution and
delivery of the remaining Acquisition Documents by a duly authorized officer of
Doctor, the remaining Acquisition Documents will have been duly executed and
delivered by Doctor, and this Agreement is, and such other Acquisition Documents
will be, upon due execution and delivery thereof, the legal, valid, and binding
obligations of Doctor enforceable against it in accordance with the respective
terms thereof.
4.03 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting on behalf of Doctor or Xxxx is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Affiliate
of the parties hereto, in connection with any of the Subject Transactions.
4.04 NO CONFLICT. (a) Neither the execution and delivery of this
Agreement nor the consummation or performance of any of the Subject Transactions
will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents of Doctor, or (B) any
resolution adopted by the Board of Directors or members of Doctor as currently
in effect;
(ii) contravene, conflict with, or result in a violation
or Breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Contract to which Xxxx or Doctor is a
party;
(b) Neither Xxxx or Doctor is required, or will be required,
to give any notice to or
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obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Subject
Transactions.
4.05 LITIGATION. There is no Proceeding by any Person, or by or
before (or any investigation by) any Governmental Body, pending, or to the
Knowledge of Doctor or Xxxx threatened, against or affecting the Subject
Transactions or Doctor's or Lynn's ability to consummate the Subject
Transactions, and neither Xxxx nor Doctor know of any valid basis for any such
Proceeding.
4.06 LICENSING, ETC. Doctor and Xxxx represent and warrants that (i)
Doctor and Xxxx has knowledge and information with respect to the Companies and
has been afforded full access to the books and records of the Companies, (iii)
Doctor and Xxxx have the ability to evaluate and bear the risk of its investment
in the Doctor's Assets and (iv) Doctor and Xxxx have consulted with legal
counsel and has a good faith belief that the Subject Transactions do not
contravene, conflict with, or result in a violation of, or give any Governmental
Body or other person the right to challenge any of the Subject Transactions or
to exercise any remedy or obtain any relief under, any Legal Requirement or any
Order to which Doctor or Xxxx, or any of the assets owned, or to be owned, or
used by Doctor or Xxxx, may be subject.
ARTICLE V
REPRESENTATIONS OF PURCHASER
Subject to the provisions of ARTICLE VIII, Purchaser represents and
warrants as follows:
5.01 EXISTENCE AND GOOD STANDING OF PURCHASER. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas.
5.02 POWER AND AUTHORITY. Purchaser has the legal right, corporate
power and authority to make, execute, deliver and perform this Agreement, and
this Agreement has been duly authorized and approved by all required action of
Purchaser. Purchaser has taken, or will take before the Closing Date, all
actions required by law, Purchaser's Articles of Incorporation, Bylaws, or
otherwise, to authorize the execution and delivery of this Agreement and the
other Acquisition Documents, and the performance of its obligations hereunder
and thereunder. This Agreement has been duly executed and delivered by Purchaser
and, upon the execution and delivery of the remaining Acquisition Documents by a
duly authorized officer of Purchaser, the remaining Acquisition Documents will
have been duly executed and delivered by Purchaser, and this Agreement is, and
such other Acquisition Documents will be, upon due execution and delivery
thereof, the legal, valid, and binding obligations of Purchaser enforceable
against it in accordance with the respective terms thereof.
5.03 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting on behalf of Purchaser is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or
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from any Affiliate of the parties hereto, in connection with any of the Subject
Transactions.
5.04 NO CONFLICT. (a) Neither the execution and delivery of this
Agreement nor the consummation or performance of any of the Subject Transactions
will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents of Purchaser, or (B) any
resolution adopted by the Board of Directors or shareholders of Purchaser as
currently in effect;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the right to challenge any of
the Subject Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which Purchaser may be subject;
(iii) contravene, conflict with, or result in a violation
or Breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Contract to which Purchaser is a party;
(b) Except as set forth on SCHEDULE 5.04(b), Purchaser is not
required, and will not be required, to give any notice to or obtain any Consent
from any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Subject Transactions.
5.05 LITIGATION. There is no Proceeding by any Person, or by or
before (or any investigation by) any Governmental Body, pending, or to the
Knowledge of Purchaser threatened, against or affecting the Subject Transactions
or Purchaser's ability to consummate the Subject Transactions, and Purchaser
does not know of any valid basis for any such Proceeding.
ARTICLE VI
CONDUCT OF BUSINESS; REVIEW; CONFIDENTIALITY; NONCOMPETITION
6.01 CONDUCT OF BUSINESS OF THE COMPANIES. During the period from the
date of this Agreement to the Closing Date, the Owners shall cause the Companies
to, and the Companies shall, conduct the operations of the Companies only
according to their respective Ordinary Course of Business and to use their
respective Best Efforts to preserve intact the business organizations of the
Companies, keep available the services of managers, officers and employees of
each of the Companies and maintain satisfactory relationships with licensors,
suppliers, distributors, lessees, clients and others having business
relationships with any of the Companies. During the period from the date hereof
to and including the Closing Date, the Companies shall, and the Owners shall
cause the Companies to, pay all accounts payable and other payables of the
Companies in a timely manner consistent with past practices. Notwithstanding the
immediately preceding sentence, pending the Closing and except as may be first
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approved by Purchaser or as is otherwise permitted or required by this
Agreement, the Owners will cause the Companies to, and the Companies will, (a)
cause their respective Articles of Incorporation, Articles of Organization,
By-Laws and/or Operating Agreement and other governing documents to be
maintained in their form on the date of this Agreement, (b) maintain the
compensation payable or to become payable by any of the Companies to any
officer, employee or agent at their levels on the date of this Agreement, except
for increases to non-salary store personnel consistent with past practices, and
increases to salary personnel consistent with past practices not to exceed the
increase in the CPI during the preceding 12-month period, (c) refrain from
making any bonus, pension, retirement or insurance payment or arrangement to or
with any such persons except those that may have already been accrued, and bonus
and insurance payments in the Ordinary Course of Business and consistent with
the past practice of such Company, (d) refrain from entering into any contract
or commitment except contracts in the Ordinary Course of Business, (e) refrain
from paying or declaring any dividends or making any distribution in cash or in
property to any of its shareholders or members (other than cash distributions
consistent with past practices not exceeding $45,600 per weekly period), (f)
refrain from creating, incurring, or assuming any long-term or short-term debt
(other than accounts payable incurred in the Ordinary Course of Business
consistent with past practices) whether for money borrowed or otherwise, (g)
refrain from assuming, guarantying, endorsing or otherwise becoming liable or
responsible for the obligation of any Person, (h) refrain from making any loans,
advances or capital contributions to, or investments in, any other Person (other
than accounts receivables arising in the Ordinary Course of Business), (i)
refrain from making any change affecting any bank, safe deposit or power of
attorney arrangements of a Company, (j) refrain from incurring or committing to
any capital expenditure, obligations or liabilities in respect thereof which in
the aggregate exceed or would exceed $10,000 on a cumulative basis, (k) refrain
from any action which may subject the assets of any Company to any Encumbrance
of any kind or character except in such Company's Ordinary Course of Business,
and (l) refrain from taking any action, the taking of which, or from omitting to
take any action, the omission of which, would cause any of the representations
and warranties contained in ARTICLE III to fail to be true and correct in all
respects as of the Closing Date as though made on and as of the Closing Date.
During the period from the date of this Agreement to the Closing Date, the
Owners shall cause the Companies to, and the Companies shall, confer on a
regular and frequent basis with one or more designated Representatives of
Purchaser to report material operational matters and to report the general
status of ongoing operations of the Companies. The Owners shall cause the
Companies to, and the Companies shall, notify Purchaser of any unexpected
emergency or other change in the normal course of any of their respective
businesses or in the operation of any of their respective properties and of any
Proceeding (or communications indicating that the same may be contemplated),
involving any material property of any Company, and to keep Purchaser fully
informed of such events and permit its representatives prompt access to all
materials prepared in connection therewith. Except as otherwise expressly
permitted by this Agreement, and without limiting the generality of the
foregoing, between the date of this Agreement and the Closing Date, the Owners
will cause the Companies not to, and the Companies will not, without the prior
written consent of Purchaser, take any affirmative action, or fail to take any
reasonable action within their or its control, as a result of which any of the
changes or events listed in SECTION 3.21 hereof is likely to occur.
6.02 REVIEW OF THE COMPANIES. The Owners shall cause the Companies
to, and the Companies shall (i) permit Purchaser, Doctor and their respective
Representatives to have, after the date of execution hereof, full and complete
access to the premises and to all the properties, assets, books, records and
other
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documents of the Companies to enable Purchaser and Doctor to make an examination
of the business, properties, assets, books, records and other documents of the
Companies as Purchaser, Doctor and their respective Representatives may
determine and (ii) cause the officers of the Companies to furnish Purchaser and
Doctor with such financial and operating data and other information with respect
to the business and properties of the Companies as Purchaser or Doctor shall
from time to time reasonably request. Purchaser, Doctor and their respective
Representatives hereby agree to conduct such examinations so as to not
unreasonably interfere with the conduct of the Companies' businesses. As part of
such examination, Purchaser, Doctor and their respective Representatives may
make such inquiries of such persons having business relationships with any
Company (including but not limited to suppliers, licensees, distributors and
customers) as Purchaser, Doctor and their respective Representatives shall
determine and the Owners shall cause the Companies to, and the Companies shall,
cooperate fully with Purchaser, Doctor and their respective Representatives in
connection therewith.
6.03 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to SECTION 12.01, the Owners will not, and will cause the
Companies and their respective Representatives not to, and none of the Companies
will, directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
Person (other than Purchaser) relating to any transaction involving the sale of
the Business or the Assets (other than in the Ordinary Course of Business), or
any of the capital stock or ownership interest in any Company, or any merger,
consolidation, business combination, or similar transaction involving any
Company. The Companies and the Owners will promptly communicate to Purchaser the
terms of any proposal received or the fact that any Company or any Owner has
received inquiry with respect to, or have participated in discussions or
negotiations in respect of, any such transaction, and the identity of any
Persons who initiated or participated in such discussions or negotiations.
6.04 NON-COMPETITION. (a) Purchaser, Doctor, the Companies and the
Owners agree that the Purchase Price and the Doctor's Purchase Price were fixed
on the basis that the transfer of the Assets to Purchaser and the Doctor's
Assets to Doctor would provide Purchaser and Doctor with the full benefit and
good will of the Companies as it existed on the Closing Date. The Companies and
the Owners acknowledge that it is proper for Purchaser and Doctor to have
assurance that the value of the Assets and the Doctor's Assets will not be
diminished by acts of the Companies or the Owners after the Closing Date.
Accordingly, Xx. Xxxxx Xxxxx is executing a Non-Competition Agreement and each
of the Companies and Owners (other than Xx. Xxxxx and Xxxx) covenants and agrees
that, commencing on the Closing Date and ending on the fifth anniversary of the
Closing Date, it will not (i) directly or indirectly compete with, or own,
manage, operate, or control or participate in the ownership, management,
operation or control of, or provide consulting services or financial resources
to, or act as guarantor for, any business, firm, corporation, partnership,
person, proprietorship or other entity which is conducting any business which
competes with the business of any of the Companies as constituted on the Closing
Date, or as constituted thereafter before the fifth anniversary of the Closing
Date to the extent reflecting a reasonable extension of a Company's line or
lines of business as constituted on the Closing Date (the "Restricted Business")
in any part of the geographic areas consisting of each of the counties in
Kentucky, Indiana, Tennessee and Missouri in which a store of a Company is
located as of the Closing Date, and
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each county contiguous to each such county, (ii) employ or directly or
indirectly solicit to leave his or her employment or engagement with Purchaser,
Doctor or any of their respective Affiliates any of their respective employees,
consultants, agents, or independent contractors (for this purpose, the terms
"employees," "consultants," "agents," and "independent contractors" shall
include any persons having such status with regard to such company at any time
during the twelve (12) months preceding any solicitation in question), or (iii)
solicit, interfere with, or endeavor to entice away from Purchaser, Doctor or
any of their respective Affiliates, for itself or on behalf of any Person, any
customer or supplier of the Restricted Business of Purchaser, Doctor or any of
their respective Affiliates. The foregoing provisions shall not apply to
investments in shares of stock of a corporation traded on a national securities
exchange or on the national over-the-counter market which shall constitute less
than one percent of the outstanding shares of such stock of such corporation.
(b) If any Company or Owner commits a breach, or threatens to
commit a breach, of any of the provisions of this SECTION 6.04 OR SECTION 7.03
OR 7.04, Purchaser and Doctor shall have the right and remedy, in addition to
any others, to have the provisions of this SECTION 6.04 OR SECTION 7.03 OR 7.04,
as the case may be, specifically enforced by any court having equity
jurisdiction, together with an accounting therefor, it being acknowledged and
understood by the Companies and the Owners that any such breach or threatened
breach will cause irreparable injury to Purchaser and Doctor and that money
damages will not provide an adequate remedy therefor.
6.05 USE OF NAME; CHANGE OF NAME. (a) The Company has transferred to
Doctor all of its right to use the names "Xxxxx", "Xx. Xxxxx", "Xx. Xxxxx'x
VisionWorld" and "Dr.'s ValuVision." The Owners and the Companies expressly
agree not to use such names, or any variation thereof, in connection with any
Restricted Business. Concurrent with, or immediately following the Subject
Transactions, the Companies shall, and the Owners shall cause the Companies to,
change each of their names to a name substantially different from the names
"Xxxxx", "Xx. Xxxxx", "Xx. Xxxxx'x VisionWorld" and "Dr.'s ValuVision" and file
Articles of Amendment to its Articles of Organization and such other documents
(including, without limitation, abandoning any assumed name designations) as may
be necessary to effectuate such name changes.
(b) Xx. Xxxxx X. Xxxxx consents to, and grants to Purchaser
(and its Designee) and Doctor, perpetual and exclusive right to use the names
"Xxxxx" and "Xx. Xxxxx" in connection with operation of their respective
businesses, and any line of business similar thereto in which Purchaser (and its
Designee) and/or Doctor may hereinafter engage; PROVIDED, HOWEVER, that Xx.
Xxxxx X. Xxxxx shall be permitted to use the name "Xxxxx Industries" in
connection with the activities expressly permitted in the Non-Competition
Agreement. Such right to use the names shall be assignable to any Affiliate of
Purchaser. Without limiting the generality of SECTION 6.05(b) above, Xx. Xxxxx
expressly agrees not to use the name "Xxxxx" or "Xx. Xxxxx" or any variation
thereof, in connection with any substantially similar business which competes
with the business of Purchaser or Doctor as constituted on the Closing Date or
as constituted thereafter to the extent reflecting a reasonable extension of
Purchaser's (and its Affiliates) or Doctor's line or lines of business as
constituted on the Closing Date.
6.06 PROCEDURE WITH RESPECT TO PROVIDER CONTRACTS. Between the date
of this Agreement and
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the Closing, the Companies, Purchaser and Doctor shall cooperate, as may be
requested by Purchaser in its sole discretion, in (i) notifying each of the
other parties to the provider agreements listed on SCHEDULE 3.10 to which a
Company is a party, that such agreement will be assigned to Doctor, (ii) with
respect to each agreement listed on SCHEDULE 3.10 to which an optometrist is a
party, in notifying the other party to such agreement that the optometrist will
be employed by Doctor after the Closing (iii) notifying each of the insurance
companies or similar entity to whom a Company has a billing relationship that
Doctor has purchased the Business and (iv) providing such party with the
employer identification number of Doctor and such other information as may be
requested by such party for the purpose of admitting Doctor, or its optometrists
as a provider under the plans which are the subject of such provider agreements.
6.07 WRITE-OFF OF PRE-OPENING COSTS. Prior to Closing, the Companies
will write-off all of the pre-opening store organizational costs and expenses.
ARTICLE VII
MUTUAL COVENANTS
Purchaser, Xxxx, Doctor, the Owners and the Companies each covenant
that:
7.01 RETURN OF DOCUMENTS AND DISCLOSURE. If this Agreement is
terminated for any reason pursuant to SECTION 12.01, each party shall return all
documents and materials and copies thereof which shall have been furnished by or
on behalf of the other party, and each party hereby covenants that such party
will not disclose to any Person any confidential or proprietary information
about the other party or any information regarding the transactions contemplated
hereby, except insofar as may be necessary to assert its rights hereunder or as
required by law.
7.02 COOPERATION. Subject to the terms and conditions herein
provided, each party hereto will use such party's Best Efforts to take, or cause
to be taken, such actions, to execute and deliver, or cause to be executed and
delivered, such additional documents and instruments and to do, or cause to be
done, all things necessary, proper or advisable under the provisions of this
Agreement and applicable law to consummate and make effective all of the Subject
Transactions.
7.03 PUBLICITY. Unless the parties mutually agree in advance or are
required by Legal Requirements, prior to the Closing, the Owners shall, and
shall cause the Companies to, and the Companies shall, and Purchaser and Doctor
shall, keep this Agreement strictly confidential and may not make any disclosure
of this Agreement or the Subject Transactions to any Person, other than
disclosure by Purchaser as it may deem necessary or advisable in connection with
the Subject Transactions (including the financing of such transactions). The
Owners, the Companies, Purchaser and Doctor will consult with each other
concerning the means by which the Companies' employees, customers, and suppliers
and others having dealings with the Companies will be informed of the Subject
Transactions, and Purchaser and Doctor will have the right to be present for any
such communication. Any public announcement or similar publicity with respect to
this Agreement or the Subject Transactions after the
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Closing will be issued, if at all, at such time and in such manner as the
parties mutually determine.
7.04 CONFIDENTIALITY. Before and after the Closing, each of the
parties to this Agreement shall, and shall cause its respective Representatives
and affiliated parties to, hold in strict confidence and not use or disclose to
any other party without the prior written consent of the other party, all
confidential information obtained from the other parties in connection with the
transactions contemplated hereby and all information relating to the Assets, the
Doctor's Assets and the Business; provided, however, that such information may
be used or disclosed (i) when required by any regulatory authorities or
governmental agencies, (ii) if required by court order or decree or applicable
law, (iii) if it is publicly available other than as a result of a breach of
this Agreement, (iv) if it is otherwise contemplated herein, or (v) by Purchaser
or Doctor from and after the Closing.
7.05 NOTIFICATION. (a) Between the date of this Agreement and the
Closing Date, the Owners and the Companies will promptly notify Purchaser and
Doctor in writing if any of the Owners or any of the Companies becomes aware of
any fact or condition that causes or constitutes a Breach of any of the
Companies' or the Owners' representations and warranties as of the date of this
Agreement, or if any Company or any Owner becomes aware of the occurrence after
the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a Breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in the Schedules attached hereto if
such Schedules were dated the date of the occurrence or discovery of any such
fact or condition, the Owners and the Companies will promptly deliver to
Purchaser and Doctor a supplement to such Schedule specifying such change.
During the same period, the Companies and the Owners will promptly notify
Purchaser and Doctor of the occurrence of any Breach of any covenant of any
Company or any Owner in ARTICLE VI OR ARTICLE VII or of the occurrence of any
event that may make the satisfaction of the conditions in ARTICLE VIII, IX OR X
impossible or unlikely.
(b) Between the date of this Agreement and the Closing Date,
Purchaser will promptly notify the Sellers' Representative in writing if
Purchaser becomes aware of any fact or condition that causes or constitutes a
Breach of any of Purchaser's representations and warranties as of the date of
this Agreement, or if Purchaser becomes aware of the occurrence after the date
of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Schedules attached hereto if such
Schedules were dated the date of the occurrence or discovery of any such fact or
condition, Purchaser will promptly deliver to the Sellers' Representative a
supplement to such Schedules specifying such change. During the same period,
Purchaser will promptly notify the Sellers' Representative of the occurrence of
any Breach of any covenant of Purchaser in ARTICLE VI or ARTICLE VII or of the
occurrence of any event that may make the satisfaction of the conditions in
ARTICLE VIII, IX or X impossible or unlikely.
(c) Between the date of this Agreement and the Closing Date,
Doctor and Xxxx will promptly notify the Sellers' Representative and Purchaser
in writing if Doctor or Xxxx becomes aware
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of any fact or condition that causes or constitutes a Breach of any of Doctor's
or Lynn's representations and warranties as of the date of this Agreement, or if
Doctor or Xxxx becomes aware of the occurrence after the date of this Agreement
of any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition require
any change in the Schedules attached hereto if such Schedules were dated the
date of the occurrence or discovery of any such fact or condition, Doctor and
Xxxx will promptly deliver to the Sellers' Representative and Purchaser a
supplement to such Schedules specifying such change. During the same period,
Doctor and Xxxx will promptly notify the Sellers' Representative and Purchaser
of the occurrence of any Breach of any covenant of Doctor or Xxxx in ARTICLE VI
or ARTICLE VII or of the occurrence of any event that may make the satisfaction
of the conditions in ARTICLE VIII, IX or X impossible or unlikely.
7.06 REQUIRED APPROVALS. (a) As promptly as practicable after the
date of this Agreement, the Owners will, and will cause the Companies to, and
the Companies will, make all filings required by Legal Requirements to be made
by them in order to consummate the Subject Transactions, including, without
limitation, the filing, if any, required under the HSR Act. Between the date of
this Agreement and the Closing Date, the Owners will, and will cause the
Companies to, and the Companies will, (a) cooperate with Purchaser, Doctor and
Xxxx with respect to all filings that Purchaser, Doctor or Xxxx elects to make
or is required by Legal Requirements to make in connection with the Subject
Transactions, and (b) cooperate with Purchaser, Doctor and Xxxx in obtaining all
consents identified in SCHEDULES 3.11(a), 3.11(b) AND 3.23.
(b) As promptly as practicable after the date of this
Agreement, Purchaser will make all filings required by Legal Requirements to be
made by it in order to consummate the Subject Transactions, including, without
limitation, the filing, if any, required under the HSR Act.. Between the date of
this Agreement and the Closing Date, Purchaser shall (a) cooperate with the
Owners and the Companies with respect to all filings that the Owners and the
Companies elect to make or are required by Legal Requirements to make in
connection with the Subject Transactions, and (b) cooperate with the Owners and
the Companies in obtaining all consents identified in SCHEDULES 3.11(a), 3.11(b)
AND 3.23.
(c) As promptly as practicable after the date of this
Agreement, Doctor and Xxxx will make all filings required by Legal Requirements
to be made by it in order to consummate the Subject Transactions, including,
without limitation, the filing, if any, required under the HSR Act.. Between the
date of this Agreement and the Closing Date, Doctor and Xxxx shall (a) cooperate
with Purchaser, the Owners and the Companies with respect to all filings that
Purchaser, the Owners or the Companies elect to make or are required by Legal
Requirements to make in connection with the Subject Transactions, and (b)
cooperate with the Owners and the Companies in obtaining all consents identified
in SCHEDULES 3.11(a), 3.11(b) AND 3.23.
7.07 COLLECTION OF ACCOUNTS RECEIVABLE. Following the Closing,
Purchaser and Doctor will use commercially reasonable efforts to collect the
accounts receivable of the Companies acquired by them hereunder.
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7.08 RELEASES. Purchaser will use commercially reasonable efforts to
obtain releases of the Owners from all Leases and personal property leases being
assumed by Purchaser (or its Designee) hereunder and identified on the attached
Schedules as being guaranteed by Xxxxx or any of the other Owners.
7.09 LETTER OF CREDIT. Purchaser or Doctor shall secure a letter of
credit in the amount of $40,000 (or make other reasonably satisfactory
arrangements) securing the obligation of Doctor with respect to its membership
with Suburban Excimer Laser Center, LLC so as to cause the release of the
$40,000 letter of credit currently provided by Xx. Xxxxx.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
All obligations of Purchaser to be discharged under this Agreement at
the Closing are subject to the fulfillment, prior to or at the Closing, of each
of the following conditions, unless waived in writing by Purchaser prior to or
at the Closing:
8.01 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Owners, the Companies, Doctor and Xxxx contained in this
Agreement or in any Schedule delivered pursuant hereto (i) that are qualified as
to materiality, shall be true and correct when made and as of the Closing Date
and (ii) that are not qualified as to materiality, shall be true and correct in
all material respects when made and as of the Closing Date (in both cases,
without giving effect to any supplement to a Schedule delivered pursuant to this
Agreement), and each of the Owners (or the Sellers' Representative on their
behalf), the Companies, Doctor and Xxxx shall have delivered to Purchaser a
certificate, dated the Closing Date, to such effect.
8.02 COVENANTS AND AGREEMENTS OF THE OWNERS, THE COMPANY AND DOCTOR.
The Owners, the Companies, Doctor and Xxxx shall have caused all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by them in all material respects prior to or at the Closing to be
so performed or complied with. The Companies, the Owners (or the Sellers'
Representative on their behalf), Doctor and Xxxx shall have each executed and
delivered to Purchaser a certificate, dated the Closing Date, to such effect.
8.03 GOOD STANDING AND TAX CERTIFICATES. The Companies, Doctor and
Xxxx shall have delivered to Purchaser (a) copies of the articles of
incorporation or organization (or other comparable document) of each Company and
Doctor, including all amendments thereto, certified by the respective Secretary
of State of the state of incorporation or organization and (b) certificates as
to the existence, authorization to do business and tax status (to the extent
available from the respective tax authorities) of each Company and Doctor
certified by the appropriate authority in the jurisdiction of incorporation,
organization and/or qualification in which such Company or Doctor, as the case
may be, is qualified to do business.
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8.04 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall have been no material adverse change in the assets or liabilities, the
business or condition, financial or otherwise, the results of operations, or
prospects of the Companies since the Balance Sheet Date, except as set forth on
SCHEDULE 3.06 (without giving effect to any supplement to a Schedule delivered
pursuant to this Agreement) and there shall not have been any events,
circumstances or developments which, with the passage of time, might reasonably
be expected to have a Material Adverse Effect on the Business of the Companies
being transferred hereunder, and the Owners (or the Sellers' Representative on
their behalf) and the Companies shall have each delivered to Purchaser a
certificate, dated the Closing Date, to such effect.
8.05 NO LITIGATION THREATENED. No Proceeding shall have been
instituted or, to the Knowledge of any of the Companies, the Owners, Doctor or
Xxxx, threatened to restrain or prohibit any of the Subject Transactions, and
each of the Owners (or the Sellers' Representative on their behalf), the
Companies, Doctor and Xxxx shall have delivered to Purchaser a certificate,
dated the Closing Date, to such effect.
8.06 APPROVALS; FILINGS. All Consents necessary to permit the
consummation of the Subject Transactions shall have been received. All filings
(other than those, if any, which may be required to be filed, given, obtained or
taken solely by Purchaser) shall have been duly filed, given, obtained or taken
on or prior to the Closing Date and will be in full force and effect on the
Closing Date. Each of the Owners (or the Sellers' Representative on their
behalf), the Companies, Doctor and Xxxx shall have delivered to Purchaser a
certificate, dated the Closing Date, to such effect.
8.07 PROCEEDINGS. All actions or proceedings to be taken in
connection with the Subject Transactions and all documents incident thereto
shall be reasonably satisfactory in form and substance to Purchaser and its
counsel and Purchaser shall have received copies of all such documents and other
evidences as it or its counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
8.08 OPINION OF COUNSEL. The Companies and Owners shall have
furnished Purchaser with a favorable opinion, dated the Closing Date, of
Xxxxxxxxxx Xxxx & XxXxxxxx PLLC in substantially the form of EXHIBIT K attached
hereto.
8.09 NONCOMPETITION AGREEMENTS. Xx. Xxxxx X. Xxxxx shall have
executed and delivered to Purchaser the Non-Competition Agreement (the
"Non-Competition Agreement") in substantially the form of EXHIBIT M attached
hereto pursuant to which Xx. Xxxxx will agree not to compete for a period of
five years in exchange for aggregate payments of $2,000,000 over such period.
8.10 ESCROW AGREEMENT. The Escrow Agent and the Sellers'
Representative shall have executed and delivered the Escrow Agreement.
8.11 LEASE AGREEMENTS. The owners of the store premises at Market and
1st Street, Louisville
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shall have executed and delivered to Purchaser the triple net leases for the
store premises located at Market and 0xx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx (with a
rent of $9688,000 per annum) and Xxxxxxx 000, Xxxxxxxxxxx, Xxxxxxx (with a rent
of $240,000 per annum), respectively, in substantially the form of EXHIBIT N-1
attached hereto, each of which shall be for a term of 10 years with two options
to extend the term for an additional five years. Wesleyan Group and Xxxxx Four,
the owners of the two corporate office premises located at Xxxxxxx 000,
Xxxxxxxxxxx, Xxxxxxx occupied by the Company, shall have executed and delivered
to Purchaser the leases for such premises in substantially the forms of EXHIBIT
N-2 attached hereto (with a rental of $4,166 per month for the premises attached
to the store and $3,000 per month for the premises next door to the store ),
each with a term of six-months with two options to extend the term for an
additional six-months.
8.12 MANAGEMENT SERVICES AGREEMENTS. Doctor shall have executed the
Retail Business Management Services Agreement in substantially the form of
EXHIBIT O hereto and the Professional Business Management Agreement in
substantially the form of EXHIBIT P hereto and Doctor and Xxxx shall have
executed employment agreement contemplated in such Management Agreements.
8.13 DOCTORS' CONDITIONS. All of the conditions to Doctor's
obligations hereunder as set forth in ARTICLE X shall have been satisfied or, if
consented to by Purchaser, waived.
8.14 LEASES; LANDLORD ESTOPPEL LETTERS. With respect to each of the
Leases, the landlords, and each instance where a Company occupies the premises
under a sublease, the primary landlord, shall have delivered estoppel
certificates (the "Landlord Estoppel Certificates") each in substantially the
form of EXHIBIT Q attached hereto, with such changes, additions and deletions
acceptable to Purchaser. Each of the Leases shall be assigned to VPI and
concurrently sublet to Doctor, each such sublease (the "Sublease Agreement") to
be in substantially the form of EXHIBIT R attached hereto with such changes,
additions and deletions acceptable to Purchaser. The form of Assignment (the
"Assignments") assigning each such Lease to VPI shall be in substantially the
form of EXHIBIT S attached hereto with such changes, additions and deletions
acceptable to Purchaser. Each Landlord Estoppel Certificate shall so reflect the
landlord's and primary landlord's (where applicable) consent to such assignment
and concurrent sublease.
8.15 OPTION TO PURCHASE THE PROFESSIONAL CORPORATION. Xxxx shall have
executed and delivered to Purchaser the Right Agreement (the "Right Agreement")
in the form of EXHIBIT T attached hereto granting an affiliate of Purchaser the
right to designate one or more Persons who shall be entitled to exercise an
option to purchase all of membership interests in Doctor.
8.16 HSR CERTIFICATE. Each of Xx. Xxxxx X. Xxxxx and Xxxx Xxxxx shall
have executed and delivered a certificate, in substantially the form attached
hereto as EXHIBIT L, with respect to their total assets so as to permit a
computation as to the requirement to file under the HSR Act.
8.17 MANAGEMENT AGREEMENT. Any management agreement or similar
agreement between any Company and any of the other Companies or Owners shall be
terminated at or prior to Closing.
8.18 TRADENAME OPTION AGREEMENT. Doctor shall have executed and
delivered the Tradename
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Option Agreement in the form of EXHIBIT U hereto.
8.19 ACKNOWLEDGMENTSTERMINATION AND RELEASES. The Companies shall
have delivered to Purchaser a written acknowledgment from Xxxx, Xxxxxxx Xxxxx
Xxxxxx, Xxxx Xxxxxxx and Xx. Xxxxxxxx to the effect that neither Purchaser (or
its Designee) or Doctor has any liability or obligation with respect to any
phantom interest agreement, employment agreement or other Contract between a
Company or Xx. Xxxxx and such person as a result of the consummation of the
Subject Transactions.
8.20 RELEASE OF LIENS. Each of the Encumbrances on the Assets and the
Doctor's Assets shall have been released and Purchaser shall have been provided
evidence reasonably satisfactory to it, of such releases.
8.21 TERMINATION OF 401K PLAN. The Companies shall have terminated
their 401K plan prior to Closing and provided evidence to Purchaser of the same.
ARTICLE IX
CONDITIONS TO THE COMPANIES' AND THE OWNERS' OBLIGATIONS
All obligations of the Companies and the Owners to be discharged under
this Agreement at the Closing are subject to the fulfillment, in all material
respects, prior to or at the Closing, of each of the following conditions,
unless waived in writing by the Companies and the Owners prior to or at the
Closing:
9.01 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser and Doctor contained in this Agreement (i) that are
qualified as to materiality, shall be true and correct when made and as of the
Closing Date and (ii) that are not qualified as to materiality, shall be true
and correct in all material respects when made and as of the Closing Date (in
both cases, without giving effect to any supplement to a Schedule delivered
pursuant to this Agreement), and Purchaser, Xxxx and Doctor shall have each
delivered to the Companies a certificate, dated the Closing Date, to such
effect.
9.02 COVENANTS AND AGREEMENTS OF PURCHASER. Purchaser and Doctor
shall have caused all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it in all material respects prior
to or at the Closing to be so performed or complied with. Purchaser, Xxxx and
Doctor shall have each executed and delivered to the Companies a certificate,
dated the Closing Date, to such effect.
9.03 NO LITIGATION THREATENED. No Proceeding shall have been
instituted or, to the Knowledge of Purchaser, threatened before a court or other
government body or by any public authority to restrain or prohibit any of the
Subject Transactions.
9.04 APPROVALS; FILINGS. All Consents, if any, necessary to permit
the consummation of the
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Subject Transactions shall have been received. All filings (other than those, if
any, which may be required to be filed, given, obtained or taken solely by the
Companies or the Owners) shall have been duly filed, given, obtained or taken on
or prior to the Closing Date and will be in full force and effect on the Closing
Date.
9.05 PROCEEDINGS. All actions or proceedings to be taken in
connection with the Subject Transactions and all documents incident thereto,
shall be reasonably satisfactory in form and substance to the Companies and
their respective counsel, and the Companies shall have received copies of all
such documents and other evidences as they or their counsel may reasonably
request in order to establish the consummation of such transactions and the
taking of all proceedings in connection therewith.
9.06 NON-COMPETITION AGREEMENTS. Purchaser or its Designee shall have
executed and delivered to Xx. Xxxxx Xxxxx the Non-Competition Agreement.
9.07 ESCROW AGREEMENT. The Escrow Agent and Purchaser shall have
executed and delivered the Escrow Agreement.
ARTICLE X
CONDITIONS TO THE DOCTOR'S OBLIGATIONS
All obligations of Doctor to be discharged under this Agreement at the
Closing are subject to the fulfillment, in all material respects, prior to or at
the Closing, of each of the following conditions, unless waived in writing by
Doctor and Purchaser prior to or at the Closing:
10.01 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Owners and the Companies contained in this Agreement or in any
Schedule delivered pursuant hereto (i) that are qualified as to materiality,
shall be true and correct when made and as of the Closing Date and (ii) that are
not qualified as to materiality, shall be true and correct in all material
respects when made and as of the Closing Date (in both cases, without giving
effect to any supplement to a Schedule delivered pursuant to this Agreement),
and each of the Owners (or the Sellers' Representative on their behalf) and the
Companies shall have delivered to Doctor a certificate, dated the Closing Date,
to such effect.
10.02 COVENANTS AND AGREEMENTS OF THE OWNERS AND THE COMPANY. The
Owners and the Companies shall have caused all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by them
in all material respects prior to or at the Closing to be so performed or
complied with. The Companies and the Owners (or the Sellers' Representative on
their behalf)shall have each executed and delivered to Purchaser a certificate,
dated the Closing Date, to such effect.
10.03 GOOD STANDING AND TAX CERTIFICATES. The Companies shall have
delivered to Doctor (a) copies of the articles of incorporation or organization
(or other comparable document) of each Company and Doctor, including all
amendments thereto, certified by the respective Secretary of State
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of the state of incorporation or organization and (b) certificates as to the
existence, authorization to do business and tax status of each Company certified
by the appropriate authority in the jurisdiction of incorporation, organization
and/or qualification in which such Company is qualified to do business.
10.04 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall have been no material adverse change in the assets or liabilities, the
business or condition, financial or otherwise, the results of operations, or
prospects of the Companies since the Balance Sheet Date, except as set forth on
SCHEDULE 3.06 (without giving effect to any supplement to a Schedule delivered
pursuant to this Agreement) and there shall not have been any events,
circumstances or developments which, with the passage of time, might reasonably
be expected to have a Material Adverse Effect on the Business of the Companies
being transferred hereunder, and the Owners (or the Sellers' Representative on
their behalf) and the Companies shall have each delivered to Purchaser a
certificate, dated the Closing Date, to such effect.
10.05 NO LITIGATION THREATENED. No Proceeding shall have been
instituted or, to the Knowledge of any of the Companies or Owners, threatened to
restrain or prohibit any of the Subject Transactions, and each of the Owners (or
the Sellers' Representative on their behalf) and the Companies shall have
delivered to Doctor a certificate, dated the Closing Date, to such effect.
10.06 APPROVALS; FILINGS. All Consents necessary to permit the
consummation of the Subject Transactions shall have been received. All filings
(other than those, if any, which may be required to be filed, given, obtained or
taken solely by Doctor) shall have been duly filed, given, obtained or taken on
or prior to the Closing Date and will be in full force and effect on the Closing
Date. Each of the Owners (or the Sellers' Representative on their behalf) and
the Companies shall have each delivered to Doctor a certificate, dated the
Closing Date, to such effect.
10.07 PROCEEDINGS. All actions or proceedings to be taken in
connection with the Subject Transactions and all documents incident thereto
shall be reasonably satisfactory in form and substance to Purchaser and its
counsel and Doctor shall have received copies of all such documents and other
evidences as it or its counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
10.08 OPINION OF COUNSEL. The Companies and Owners shall have
furnished Doctor with a favorable opinion, dated the Closing Date, of Xxxxxxxxxx
Xxxx & XxXxxxxx PLLC in substantially the form of EXHIBIT K attached hereto.
10.09 MANAGEMENT SERVICES AGREEMENTS. VRMI and VMSO shall have
executed the Retail Business Management Agreement and the Professional Business
Management Agreement, respectively.
10.10 GOVERNMENTAL AUTHORITIZATIONSAUTHORIZATIONS. Doctor and
Purchaser (or its Designee) shall have obtained all Governmental Authorizations
necessary or appropriate to conduct the Business after the Closing, including
without limitation, the Medicare and Medicaid provider numbers to conduct
business in Kentucky, Tennessee, Indiana and Missouri.
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ARTICLE XI
INDEMNIFICATION; REMEDIES
11.01 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE.
Except as otherwise expressly provided herein and subject to the time period
limitations set forth in SECTION 11.05, all representations, warranties,
covenants, and obligations in this Agreement and the Schedules attached hereto,
and the certificates delivered pursuant to this Agreement, shall survive the
Closing. The right of any party hereto to indemnification, payment of Damages or
other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect to,
or any Knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based upon the accuracy of any representation or warranty, or upon the
performance of or compliance with any covenant or obligation, will not affect
the right of any party hereto to indemnification, payment of Damages, or other
remedy based on such representations, warranties, covenants, and obligations.
11.02 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE COMPANIES AND THE
OWNERS. The Companies and the Owners, jointly and severally, will indemnify and
hold harmless Purchaser, Xxxx, Doctor, the Designees and their respective
Representatives, shareholders, members, directors, officers, controlling persons
and Affiliates (collectively, the "Indemnified Persons") for, and will pay to
the Indemnified Persons the amount of any loss, liability, claim or damage or
expense (including costs of investigation and defense and reasonable attorneys'
fees), whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by any
Owner or Company in this Agreement or any Schedule attached hereto, or any other
certificate or document delivered by any Company or any Owner pursuant to this
Agreement (without regard to any qualification as to "materiality" or
substantiality" contained in any such representation or warranty);
(b) any Breach by any Company or any Owner of any covenant or
obligation of any Company or any Owner in this Agreement;
(c) any product sold, or any services provided by any Company
prior to the Closing Date;
(d) any claim by any Person for broker's or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with any Company or any Owner (or any
Person acting on its or their behalf) in connection with any of the transactions
contemplated hereby.
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(e) any Breach by any Owner of any covenant or obligation of
such Owner in the Non-Competition Agreements;
(f) any liability or obligation of any Company other than the
Assumed Liabilities and Doctor's Assumed Liabilities;
g. any liability or obligation arising out of the Vision 100
Program] to the extent it relates to the period prior to the Closing Date;
h. any liability or obligation relating to the self-insured
health insurance program of the Companies (including, without limitation, any
claims of employees or their spouses and dependents relating to claims) for
claims incurred on or after the Closing Date; and
i. any of the matters described on Schedules 3.06, 3.12, 3.14
(other the Assumed LiabitiesLiabilities and Doctor's Assumed Liabilities) and
3.17.
In determining the loss to be indemnified, any insurance proceeds
received by Purchaser or Doctor shall be taken into account.
11.03 INDEMNIFICATION AND PAYMENT OF DAMAGES BY PURCHASER. Purchaser
will indemnify and hold harmless the Companies, the Owners and their respective
Representatives, shareholders, controlling persons, and Affiliates, and will pay
to the Companies, the Owners and their respective Representatives, shareholders,
controlling persons, and Affiliates the amount of any Damages arising, directly
or indirectly, from or in connection with (a) any Breach of any representation
or warranty made by Purchaser in this Agreement or in any certificate delivered
by Purchaser pursuant to this Agreement, (b) any Breach by Purchaser or any of
its Affiliates of any covenant or obligation of Purchaser in this Agreement or
any document executed pursuant to this Agreement, (c) any claim by any Person
for broker's or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such Person with
Purchaser (or any Person acting on its behalf) in connection with any of the
transactions contemplated hereby or (d) any claim by an Person relating to the
failure of Purchaser or its Designee to satisfy any of the Assumed Liabilities
or perform from and after the Closing Date under any of the Assigned Contracts.
11.04 INDEMNIFICATION AND PAYMENT OF DAMAGES BY DOCTOR. Doctor and
Xxxx, jointly and severally, will indemnify and hold harmless the Companies, the
Owners, Purchaser and their respective Representatives, shareholders,
controlling persons, and Affiliates, and will pay to the Companies, the Owners,
Purchaser and their respective Representatives, shareholders, controlling
persons, and Affiliates the amount of any Damages arising, directly or
indirectly, from or in connection with (a) any material Breach of any
representation or warranty made by Doctor or Xxxx in this Agreement or in any
certificate delivered by Doctor or Xxxx pursuant to this Agreement, (b) any
material Breach by Doctor or Xxxx of any covenant or obligation of Doctor or
Xxxx in this Agreement, (c) any claim by any Person for broker's or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Doctor or Xxxx (or
any Person acting on its behalf) in connection with any of the transactions
contemplated hereby or (d) any claim by an Person relating to the failure of
Doctor to satisfy any of the Doctor's Assumed Liabilities or perform from and
after the Closing Date under any of the Doctor's Assigned Contracts.
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11.05 TIME LIMITATIONS. If the Closing occurs, the Companies and the
Owners will have no liability with respect to any representation or warranty
(other than those in the first sentence of SECTION 3.02 and SECTIONS 3.13, 3.20,
3.25 AND 3.27), unless on or before the first anniversary of the Closing Date,
Purchaser, Xxxx or Doctor notifies the Sellers' Representative of a claim,
specifying the factual basis of that claim in reasonable detail to the extent
then known by Purchaser, Xxxx or Doctor, as the case may be; PROVIDED, HOWEVER,
a claim with respect to SECTIONS 3.13, 3.20, 3.25 AND 3.27 may be made by
Purchaser, Xxxx or Doctor at any time prior to the expiration of the applicable
statute of limitations, including any extension thereof; and further provided
that a claim with respect to the first sentence of SECTION 3.02, or a claim for
indemnification or reimbursement not based upon any representation or warranty,
may be made at any time. If the Closing occurs, Purchaser will have no liability
with respect to any representation or warranty, unless on or before the first
anniversary of the Closing Date, the Sellers' Representative notifies Purchaser
of a claim specifying the factual basis of that claim in reasonable detail to
the extent then known by the Sellers' Representative. If the Closing occurs,
Doctor and Xxxx will have no liability with respect to any representation or
warranty (other than a representation or warranty made by Xxxx as an Owner)
unless on or before the first anniversary of the Closing Date, the Sellers'
Representative or Purchaser, as the case may be, notifies Doctor or Xxxx of a
claim specifying the factual basis of that claim in reasonable detail to the
extent then known by the Sellers' Representative or Purchaser, as the case may
be.
11.06 LIMITATIONS ON AMOUNT -- THE COMPANIES AND THE OWNERS. (a)
Notwithstanding anything in SECTION 11.02 to the contrary, the Companies' and
the Owners' indemnification liability hereunder with respect to claims for
Breaches of the representations or warranties of any Company or any Owner
contained in ARTICLE III shall in the aggregate not exceed an amount equal to
the Purchase Price.
(b) None of Purchaser, Xxxx, Doctor or any of the other
Indemnified Persons shall be entitled to seek indemnification under this ARTICLE
XI with respect to a claim for a Breach of any representation or warranty
hereunder (other than the representations or warranties of the Companies and the
Owners contained in the first sentence of SECTION 3.02) until the aggregate
amount of all such Damages to which all of the Indemnified Persons are entitled
to indemnification hereunder exceeds $100,000, at which time the Indemnified
Persons shall be entitled to the full amount of such Damages.
(c) Notwithstanding the foregoing, the limitations in SECTIONS
11.06(a) and 11.06(b) will not apply (i) to any Breach of any of the Companies'
and Owners' representations and warranties of which any Company or any Owner had
Knowledge at any time prior to the date on which such representation and
warranty is made or any intentional Breach by any Company or any Owner or (ii)
claims or losses arising from fraud, willful misfeasance, gross negligence or
misconduct committed by any Company or any Owner.
11.07 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under
SECTION 11.02, 11.03 or 11.04 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under such section, give notice to the indemnifying party of
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the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to receive such notice.
(b) If any Proceeding referred to in SECTION 11.07(a) is
brought against an indemnified party and the indemnified party gives notice to
the indemnifying party of the commencement of such Proceeding, the indemnifying
party will be entitled to participate in such Proceeding and, to the extent that
it wishes (unless (i) the indemnifying party is also a party to such Proceeding
and the indemnified party determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to provide
reasonable assurance to the indemnified party of its financial capacity to
defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel reasonably
satisfactory to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this ARTICLE XI for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such Proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of a Proceeding,
(i) it will be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of Legal Requirements or any
violation of the rights of any Person by Purchaser or Doctor or any of their
respective Affiliates and no effect on any other claims that may be made against
the indemnified party, and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
(10) days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(d) The Companies and the Owners hereby consent to the
non-exclusive jurisdiction of any court in which a Proceeding is brought against
any Indemnified Person for purposes of any claim that an Indemnified Person may
have under this Agreement with respect to such Proceeding or the
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matters alleged therein.
11.08 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
11.09 ESCROW. The parties acknowledge that Purchaser will be
depositing $1,000,000 with the Escrow Agent pursuant to SECTION 2.02(b)(ii).
Purchaser may assert an indemnification claim pursuant to SECTION 11.02 against
the Escrow Amount in accordance with the terms of the Escrow Agreement. The
parties agree that Doctor shall have the right to give notice of an
indemnification claim against the Companies or Owners pursuant to SECTION 11.02
to Purchaser and direct Purchaser to assert a claim against the Escrow Amount on
Doctor's behalf. Such notice shall specify the information required by SECTION
11.07 AND 11.08 and detail the amount of the indemnification claim and the facts
which form the basis for such indemnification claim. To the extent such claim,
damage, loss, liability, deficiency or expense is fixed or liquidated in amount,
the notice shall so state and to the extent the amount of such claim is not
fixed or liquidated, the notice shall so state. Purchaser shall have no duty or
obligation to evaluate the merits or the validity of such indemnification claim.
Upon receipt of such notice, Purchaser shall have the right and authority, but
not the obligation, to assert such indemnification claim against the Escrow
Amount in accordance with the terms of the Escrow Agreement. Purchaser shall
immediately deliver to Doctor all amounts so received from the Escrow Amount
with respect to such indemnification claims. All disputes with respect to such
indemnification claims shall be resolved between the Sellers' Representative and
Doctor in accordance with the terms of this Agreement. Notwithstanding any
provision herein to the contrary, Doctor may only assert rights to the Escrow
Amount through Purchaser, and Doctor's rights shall be limited as set forth
herein and by the Escrow Amount, if any, not subject to Pending Claims (as
defined in the Escrow Agreement) at the time such claim is made against the
Escrow Amount by Purchaser on behalf of Doctor.
11.10 INDEMNIFICATION CLAIMS BY DOCTOR. In the event that Doctor or
Xxxx receives payment from the Companies or Owners (or directly from the Escrow
Amount) with respect to an indemnification claim pursuant to SECTION 11.02,
Doctor shall, (i) to the extent such indemnification payment is needed by Doctor
to operate its business in the ordinary course, use such amounts as working
capital of Doctor, and (ii) to the extent such payment is not required to be
used as working capital pursuant to clause (i) of this SECTION 11.10, use the
amount of such indemnification payment to offset the principal balance of the
loan obtained by Doctor to finance his acquisition of the Doctor's Assets.
ARTICLE XII
MISCELLANEOUS
12.01 TERMINATION. (a) This Agreement may, by notice given prior to or
at the Closing, be terminated:
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(i) by the mutual written agreement of Purchaser and
the Sellers' Representative;
(ii) by either Purchaser, Doctor or the Sellers'
Representative on behalf of the Companies and the Owners, if a material Breach
of any provision of this Agreement has been committed by the other party and
such Breach has not been waived or cured;
(iii) (a) by Purchaser, if any of the conditions
contained in ARTICLE VIII has not been satisfied as of the Closing Date, or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Purchaser to comply with its obligations under this Agreement)
and Purchaser has not waived such condition on or before December 1, 1998, (b)
by the Sellers' Representative, if any of the conditions in ARTICLE IX has not
been satisfied as of the Closing Date, or if satisfaction of such a condition is
or becomes impossible (other than through the failure of any Company or any
Owner to comply with their obligations under this Agreement) and the Sellers'
Representative has not waived such condition on or before December 1, 1998; or
(c) by the Doctor, if any of the conditions in ARTICLE X has not been satisfied
as of the Closing Date, or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Doctor to comply with its
obligations under this Agreement) and Doctor and Purchaser has not waived such
condition on or before December 1, 1998; or
(iv) if the Closing shall not have occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) as of December 1, 1998, or such
later date as the parties may agree upon in writing.
(b) Nothing in this SECTION 12.01 shall relieve any party of
any liability for a Breach of this Agreement prior to the termination hereof.
12.02 [INTENTIONALLY OMITTED]
12.03 EXPENSES. The parties hereto shall pay all of their own expenses
relating to the Subject Transactions, including, without limitation, the fees
and expenses of their respective counsel and financial advisors; provided,
however, any filing fee(s) relating any filings required under the HSR Act shall
be borne one-half (1/2) by Purchaser and one-half (1/2) by the Companies and
Purchaser agrees to pay the reasonable attorneys' fees of Xxxx and Doctor in
connection with the negotiation and consummation of the Subject Transactions.
12.04 GOVERNING LAW. The interpretation and construction of this
Agreement, the Subject Transactions and all matters relating hereto, shall be
governed by the internal laws of the State of Texas without regard to conflict
of laws principles.
12.05 ENFORCEMENT; SERVICE OF PROCESS. In the event either party shall
seek enforcement of any covenant, warranty or other term or provision of this
Agreement or seek to recover damages for the Breach thereof, the party which
prevails in such proceedings shall be entitled to recover reasonable
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attorneys' fees and expenses actually incurred by it in connection therewith.
The parties hereto agree that the service of process or any other papers upon
any of them by any of the methods specified in and in accordance with SECTION
12.07 hereto (other than by facsimile) shall be deemed good, proper, and
effective service upon them.
12.06 CAPTIONS; REFERENCES. The Article and Section captions used
herein are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement. References to an "Article" or
"Section" when used without further attribution shall refer to the particular
article or section of this Agreement.
12.07 NOTICES. Any notice or other communications required or
permitted hereunder shall be in writing and, unless otherwise provided herein,
shall be deemed to have been duly given upon delivery in person, by facsimile,
by overnight courier or by certified or registered mail, return receipt
requested, as follows:
If to the Owners or the Companies: 0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: XX. XXXXX X. XXXXX
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxxx Xxxx & XxXxxxxx PLLC
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
If to Doctor or Xxxx: Xxxx X. Xxxx, O.D.
0000 Xxxxxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxx
With a copy to: Xxxxxx & Xxxx
Kentucky Home Life Building
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Facsimile: (000) 000-0000
If to Purchaser: Eye Care Centers of America, Inc.
00000 Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxx,
President
Facsimile: (000) 000-0000
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With a copy to: Xxx & Xxxxx Incorporated
000 X. Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx, Xx.
Facsimile: (000)000-0000
or at such other address or telecopy number as shall have been furnished in
writing by any such party, except that such notice of such change shall be
effective only upon receipt. Each such notice or other communication shall be
effective when received or, if given by mail, when delivered at the address
specified in this SECTION 12.07 or on the fifth business day following the date
on which such communication is posted, whichever occurs first.
12.08 PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. This Agreement may not be transferred, assigned, pledged
or hypothecated by any party hereto except that Purchaser shall have the right,
at or before the Closing, to designate one or more entities to which it may
assign all or part of its rights and obligations hereunder respecting the
purchase of the Assets (collectively, the "Designees" and individually a
"Designee").
12.09 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
12.10 ENTIRE AGREEMENT. This Agreement, including the other documents
referred to herein which form a part hereof or any other written agreements that
the parties enter into pursuant to or relating to the transactions contemplated
by this Agreement, contains the entire understanding of the parties hereto with
respect to the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter. All Exhibits and Schedules referred to herein
and attached hereto are incorporated herein by reference. The parties
acknowledge and agree that the non-competition provisions set forth in SECTION
6.04 of this Agreement are independent of the similar obligations of Xx. Xxxxx
X. Xxxxx set forth in the Non-Competition Agreement.
12.11 AMENDMENTS. This Agreement may not be changed orally, but only
by an agreement in writing signed by Purchaser and the Sellers' Representative.
12.12 SEVERABILITY. In case any provision of this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
12.13 THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto.
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12.14 JOINT PREPARATION. This Agreement has been prepared by the joint
efforts of the respective attorneys to each of the parties. No provision of this
Agreement shall be construed on the basis that such party was the author of such
provision.
NEXT PAGE IS SIGNATURE PAGE
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IN WITNESS WHEREOF, Purchaser, the Companies and the Owners have
executed this Agreement to be effective as of the day and year first above
written.
"Purchaser"
EYE CARE CENTERS OF AMERICA, INC.
By:
Title:
"Xxxx"
___________________________________
Xxxx Xxxx, O.D.
"Doctor"
XX. XXXX XXXX & ASSOCIATES, PLLC
By:
Title:
The "Companies"
XX. XXXXX'X VISION WORLD, PLLC
By:
Title:
DOCTOR'S VALUVISION, PLLC
By:
Title:
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XXXXX ENTERPRISES, LLC
By:
Title:
XXXXX SERVICE COMPANY, LLC
By:
Title:
EYE CARE ASSOCIATES, PLLC
By:
Title:
OPTICAL PROCESSORS, LLC
By:
Title:
AMERICAN VISION ADMINISTRATORS, LLC
By:
Title:
THE EYE SURGERY CENTER, P.S.C.
By:
Title:
VISION FOR LESS OF KENTUCKY, INC.
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By:
Title:
"Owners"
Xxxxx X. Xxxxx, O.D.
Xxxx X. Xxxx, O.D.
____________________________________
Xxxx Xxxxx
XXXX XXXXX REVOCABLE TRUST
By:
Title:
Morrisine Xxxxx
ESTATE OF XXX X. XXXXX
By:
Title:
XXXXXX X. XXXXX, TRUSTEE U/T/A
DATED 5/30/89 FBO EMORI X. XXXXX
By:
Title:
XXXXXX X. XXXXX, TRUSTEE U/T/A
DATED 5/30/89 FBO XXXXXXXX X. XXXXX
By:
Title:
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XXXXX X. XXXXX REVOCABLE TRUST
U/T/A Dated February 22, 1990
By: ________________________________
Xxxxx X. Xxxxx, Trustee
XXXXX XXXXX IRREVOCABLE TRUST-
ELLEN'S TRUST
By: Bank One Kentucky, Trustee
By: ________________________________
Title: _____________________________
52
