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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
DATED: AS OF DECEMBER 1, 1997
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), effective December 1,
1997, is by and among VISION TWENTY-ONE, INC., a Florida corporation (the
"Purchaser"), MEC Health Care, Inc. ("MEC"), a Maryland corporation, LSI
Acquisition, Inc. ("LSI"), a New Jersey corporation (collectively the "Acquired
Companies") and LaserSight Incorporated, a Delaware corporation (the
"Stockholder").
R E C I T A L S
A. Stockholder owns all of the issued and outstanding shares of
capital stock of the Acquired Companies.
B. Purchaser desires to purchase from the Stockholder, and the
Stockholder desires to sell to Purchaser, all of the issued and outstanding
capital stock of the Acquired Companies, pursuant to and in accordance with this
Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below:
1.1. AAA. The term "AAA" shall mean the American
Arbitration Association.
1.2. Accounts Receivable. The term "Accounts Receivable"
shall have the meaning set forth in Section 3.35.
1.3. Affiliate. The term "Affiliate" with respect to any
person or entity shall mean a person or entity that directly or indirectly
through one or more intermediaries, controls, or is controlled by or is under
common control with, such person or entity.
1.4. Assets. The term "Assets" shall mean all of the
assets of the Acquired Companies, except as otherwise provided in this
Agreement.
1.5. Business. The term "Business" shall have the meaning
set forth in Section 16.1(b)(i).
1.6. Cash Compensation. The term "Cash Compensation" shall
have the meaning set forth in Section 3.11(a).
1.7. Claim Notice. The term "Claim Notice" shall have the
meaning set forth in Section 14.3(a).
1.8. Closing. The term "Closing" shall mean the
consummation of the
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transactions contemplated by this Agreement.
1.9. Closing Date. The term "Closing Date" shall mean
December 30, 1997, or such other date as mutually agreed upon by the parties.
1.10. Code. The term "Code" shall mean the Internal Revenue
Code of 1986, as amended.
1.11. Commitments. The term "Commitments" shall have the
meaning set forth in Section 3.16(a).
1.12. Common Stock. The term "Common Stock" shall mean the
common stock, par value $.01 per share, of Purchaser.
1.13. Company. The term "Company" shall also mean the
"Acquired Companies."
1.14. Company Balance Sheet Date. The term "Company Balance
Sheet Date" shall have the meaning set forth in Section 3.9.
1.15. Company Common Stock. The term "Company Common Stock"
shall mean the common stock of the Acquired Companies.
1.16. Compensation Plans. The term "Compensation Plans"
shall have the meaning set forth in Section 3.11(b).
1.17. Competing Business. The term "Competing Business"
shall have the meaning set forth in Section 16.1(b)(ii).
1.18. Competitor. The term "Competitor" shall mean any
person or entity which, individually or jointly with others, whether for its own
account or for that of any other person or entity, owns or holds any ownership
or voting interest in any person or entity engaged in the business of providing
management services to eye care professionals and of providing managed care
services to health maintenance organizations, preferred provider organizations
and other third party payor entities.
1.19. Controlled Group. The term "Controlled Group" shall
have the meaning set forth in Section 3.12(g).
1.20. Damages. The term "Damages" shall have the meaning
set forth in Section 14.1.
1.21. Effective Date. The term "Effective Date" shall mean
12:01 a.m. on December 1, 1997.
1.22. Election Period. The term "Election Period" shall
have the meaning set forth in Section 14.3(a).
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1.23. Employee Benefit Plans. The term "Employee Benefit
Plans" shall have the meaning set forth in Section 3.12(a).
1.24. Employee Policies and Procedures. The term "Employee
Policies and Procedures" shall have the meaning set forth in Section 3.11(d).
1.25. Employment Agreements. The term "Employment
Agreements" shall have the meaning set forth in Section 3.11(c).
1.26. Environmental Damages. The term "Environmental
Damages" shall mean all claims, judgments, damages, losses, penalties, fines,
liabilities (including strict liability), encumbrances, liens, costs and
expenses of investigation and defense of any claim, whether or not such claim is
ultimately defeated, and of any good faith settlement of judgment, of whatever
kind or nature, contingent or otherwise, matured or unmatured, foreseeable or
unforeseeable, including without limitation reasonable attorneys' fees and
disbursements and consultants' fees, any of which are incurred at any time as a
result of:
(i) the existence prior to the Closing Date of
Hazardous Material upon, about, beneath the Property or migrating or threatening
to migrate to or from the Property, or the existence of a violation of
Environmental Requirements pertaining to the Property; or
(ii) the release or threatened release of
Hazardous Material upon, about, beneath Off-Site Locations or the existence of a
violation of Environmental Requirements pertaining to the Off-Site Location for
which the Seller or the Seller is a potentially responsible party regardless of
whether the existence of such Hazardous Material or the violation of
Environmental Requirements arose prior to the present ownership or operation of
the Property.
1.27. Environmental Requirements. The term "Environmental
Requirements" shall mean all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, plans, authorizations,
concessions, franchises and similar items of all governmental agencies,
departments, commissions, boards, bureaus or instrumentalities of the United
States, states and political subdivisions thereof and all applicable judicial,
administrative and regulatory decrees, judgments and orders relating to the
protection of human health or the environment.
1.28. ERISA. The term "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
1.29. Escrow Agent. The term "Escrow Agent" shall mean
Xxxxxxxx, Loop & Xxxxxxxx, LLP, an Ohio professional limited liability
partnership.
1.30. Escrow Agreement. The term "Escrow Agreement" shall
mean any Escrow Agreement entered into among the Stockholder, Purchaser and the
Escrow Agent at the Closing.
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1.31. Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
1.32. Financial Statements. The term "Financial Statements"
shall have the meaning set forth in Section 3.9.
1.33. GAAP. The term "GAAP" shall mean generally accepted
accounting principles, applied on a consistent basis with prior periods, as set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity or other practices and procedures as may be
approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of the determination.
1.34. Governmental Authority. The term "Governmental
Authority" shall mean any national, state, provincial, local or tribunal
governmental, judicial or administrative authority or agency.
1.35. Hazardous Material. The term "Hazardous Material"
shall mean any substance:
(i) the presence of which requires investigation
or remediation under any Environmental Requirement; or
(ii) which is defined as a "solid waste,"
"hazardous waste," "hazardous substance," "pollutant" or "contaminant" under any
federal, state or local statute, regulation, rule or ordinance or amendments
thereto including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. ss.9601 et seq.) and/or the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.); or
(iii) the presence of which, under any
Environmental Requirement poses a hazard to the health or safety of persons on
or about the Property; or
(iv) which contains petroleum, including crude
oil or any fraction thereof.
1.36. Indemnified Party. The term "Indemnified Party" shall
have the meaning set forth in Section 14.3(a).
1.37. Indemnifying Party. The term "Indemnifying Party"
shall have the meaning set forth in Section 14.3(a).
1.38. Indemnity Notice. The term "Indemnity Notice" shall
have the meaning set forth in Section 14.3(d).
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1.39. Insurance Policies. The term "Insurance Policies"
shall have the meaning set forth in Section 3.17.
1.40. IRS. The term "IRS" shall mean the Internal Revenue
Service.
1.41. Material Adverse Effect. The term "Material Adverse
Effect" shall mean a material adverse effect on the Assets and the Acquired
Companies' business, operations, condition (financial or otherwise) or results
of operations, taken as a whole, considering all relevant facts and
circumstances.
1.42. Off-Site Location. The term "Off-Site Location" shall
mean any site or facility to which Hazardous Material generated on the Property
prior to the Closing Date was transported for recycling, reuse, treatment,
storage or disposal.
1.43. Permitted Encumbrances. The term "Permitted
Encumbrances" shall have the meaning set forth in Section 3.14(b).
1.44. Property. The term "Property" shall mean all real
property owned, leased or used by the Acquired Companies.
1.45. Proposed Stock Purchase Consideration Adjustment. The
term "Proposed Stock Purchase Consideration Adjustment" shall have the meaning
set forth in Section 2.5.
1.46. Proprietary Rights. The term "Proprietary Rights"
shall have the meaning set forth in Section 3.18.
1.47. SEC. The term "SEC" shall mean the Securities and
Exchange Commission.
1.48. Securities. The term "Securities" shall mean the
shares of Common Stock of Purchaser to be delivered to the Stockholder and the
Escrow Agent at the Closing.
1.49. Securities Act. The term "Securities Act" shall mean
the Securities Act of 1933, as amended.
1.50. Stock. The term "Stock" shall have the meaning set
forth in Section 2.1.
1.51. Stock Distribution Agreement. The term "Stock
Distribution Agreement" shall mean the Stock Distribution Agreement entered into
between the Stockholder and the Purchaser.
1.52. Stock Purchase Consideration. The term "Stock
Purchase
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Consideration" shall mean the consideration set forth in Section 2.3 of this
Agreement.
1.53. Stock Purchase Consideration Adjustment Amount. The
term "Stock Purchase Consideration Adjustment Amount" shall have the meaning set
forth in Section 2.5(a).
1.54. Subsidiaries. The term "Subsidiaries" shall mean the
subsidiaries, if any, of the Acquired Companies identified on Schedule 3.2.
1.55. Tax Returns. The term "Tax Returns" shall have the
meaning set forth in Section 3.19.
1.56. Third Party Claim. The term "Third Party Claim" shall
have the meaning set forth in Section 14.3(a).
2. PURCHASE AND SALE OF STOCK.
2.1. Purchase of Stock. Upon and subject to the terms and
conditions of this Agreement, Purchaser agrees to purchase and accept delivery
from the Stockholder of, and the Stockholder agrees to sell, assign, transfer
and deliver to Purchaser, at the Closing, all of the issued and outstanding
shares of common stock of the Acquired Companies (collectively, the "Stock"),
free and clear of all liens, pledges, security interests, claims, charges,
restrictions, equities or encumbrances of any kind whatsoever.
2.2. The Closing. The Closing shall take place on the
Closing Date at the offices of Xxxxxxxx, Loop & Xxxxxxxx, LLP, 000 X. Xxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000 or at such other location as the
parties shall mutually agree.
2.3. Stock Purchase Consideration. As consideration for
the Stock, Purchaser, at the Closing, shall pay to the Stockholder, the
aggregate sum of Thirteen Million Dollars ($13,000,000) (the "Stock Purchase
Consideration"), subject to adjustment as set forth in Section 2.5, in the
following manner:
a. Cash. The sum of Six Million Five Hundred
Thousand Dollars ($6,500,000) shall be delivered to the Stockholder by wire
transfer of immediately available funds to such account or accounts as shall be
designated by the Stockholder prior to Closing.
b. Common Stock. Eight Hundred Twelve Thousand
Five Hundred (812,500) shares of Common Stock which shares shall be subject to
the terms of the Stock Distribution Agreement and the Escrow Agreement.
c. Additional Shares. Within five business days
of the Closing Date, the Purchaser shall deliver to the Stockholder such
additional positive number of shares of Common Stock (the "Additional Shares")
equal to the difference between (i) that number of shares equal to Six Million
Five Hundred Thousand Dollars ($6,500,000)
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divided by the average closing price, as quoted on the NASDAQ National Market
System, for the five business days immediately preceding the Closing Date (the
"Valuation Price") less (ii) 812,500. The Additional Shares shall be subject to
the terms of the Stock Distribution Agreement.
2.4. Fractional Shares. Notwithstanding any other
provision herein, no fractional shares of Common Stock will be issued.
Fractional shares shall be rounded down to the nearest whole number of shares.
2.5. Stock Purchase Consideration Adjustments.
a. A portion of the Common Stock component of
Stock Purchase Consideration consisting of One Hundred Twenty-Five Thousand
(125,000) shares of Common Stock, plus such additional positive number of shares
of Common Stock equal to the difference between (i) that number of shares equal
to One Million Dollars ($1,000,000) divided by the Valuation Price less (ii)
125,000 (collectively, the "Adjustment Shares") shall be subject to the Escrow
Agreement and to adjustment on a dollar for dollar basis as follows (such
adjustment to be referred to as the "Stock Purchase Consideration Adjustment
Amount"):
(i) Shareholder shall return to
Purchaser that number of Adjustment Shares equal to the December Operating
Results (as defined herein) divided by the Valuation Price. For purposes hereof,
"December Operating Results" shall mean the sum of the operating profits of the
Acquired Companies for the month of December 1997 (which shall be calculated in
accordance with GAAP, consistently applied and in accordance with the
Stockholder's past practices, excluding amortization of goodwill), the total of
which shall be reduced by cash receipts from the month of December 1997 which
were not utilized to reduce the Stockholder's revolving loan with Foothill
Capital Corporation, provided that in no event will the adjustment contemplated
by this Section 2.5(a)(i) result in the Purchaser having to issue any additional
Common Stock; and
(ii) if the aggregate Net Working
Capital (as defined herein) of the Acquired Companies reflected on the Financial
Statements as of the Company Balance Sheet Date (as defined in Section 3.9) is
more negative than negative $180,000, then the Stockholder shall return to
Purchaser that number of Adjustment Shares equal to the negative dollar amount
in excess of $180,000 divided by the Valuation Price. For purposes hereof, Net
Working Capital shall be calculated on an aggregate basis including LSI and MEC
and is the total current assets of LSI and MEC reflected on the Financial
Statements as of the Company Balance Sheet Date less the total current
liabilities of LSI and MEC reflected on the Financial Statements as of the
Company Balance Sheet Date;
(iii) if the aggregate Net Worth (as
defined herein) of the Acquired Companies reflected on the Financial Statements
as of the Company Balance Sheet Date is less then zero, then the Stockholder
shall return to Purchaser that number of Adjustment Shares equal to the amount
less than zero divided by the Valuation Price.
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For purposes hereof, Net Worth shall be calculated on an aggregate basis
including LSI and MEC and shall be as reflected on the Financial Statements as
of the Company Balance Sheet Date; and
(iv) such other adjustments as the
Stockholder and the Purchaser shall mutually agree to in writing.
b. Within ninety (90) days following the
Closing Date, the Stockholder shall present to the Purchaser its proposed Stock
Purchase Consideration Adjustment Amount (the "Proposed Stock Purchase
Consideration Adjustment") calculated in accordance with Section 2.5(a) hereof
and consistent with historical practices and operations. The Purchaser shall,
within thirty (30) days after the delivery by Stockholder of the Proposed Stock
Purchase Consideration Adjustment, complete their review thereof. In the event
that the Purchaser believes that the Proposed Stock Purchase Consideration
Adjustment has not been prepared on the basis set forth above or otherwise
contests any item set forth therein, the Purchaser shall, on or before the last
day of such 30 day period, so object to Stockholder and Escrow Agent in writing,
setting forth a specific description of the nature of the objection and the
corresponding adjustments the Purchaser believes should be made. If no objection
is received by Stockholder on or before the last day of such 30 day period, then
the Proposed Stock Purchase Consideration Adjustment delivered by Stockholder
shall be final. If an objection has been made and Stockholder and Purchaser are
unable to resolve all of their disagreements with respect to the proposed
adjustments within 15 days following the delivery of the Purchaser's objection,
the dispute shall be submitted to arbitration as provided in Section 17.1 except
that the arbitrator shall be instructed to deliver his determination of the
number of Adjustment Shares to be delivered to the Stockholder to the parties
and the Escrow Agent no later than 30 days after the arbitration hearing. If the
Stockholder and the Purchaser are able to resolve any such disagreements, they
shall jointly notify the Escrow Agent in writing as to the number of Adjustment
Shares to be delivered to the Stockholder. Stockholder shall provide to the
Purchaser and its accountants full access to all relevant books, records and
work papers utilized in preparing the Proposed Stock Purchase Consideration
Adjustment and the Financial Statements.
3. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED
COMPANIES AND THE STOCKHOLDER. The Acquired Companies and the Stockholder,
jointly and severally, represent and warrant to Purchaser that the following are
true and correct on the date hereof, and shall be true and correct as of the
Closing Date as if made on that date; when used in this Section 3, the term
"best knowledge" (or words of similar import) shall mean such knowledge as shall
have been obtained through due and diligent investigation by those individuals
listed on Schedule 3:
3.1. Organization and Good Standing; Qualification. Each
of the Acquired Companies and the Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, with all requisite corporate power and authority to carry on the
business in which it is engaged, to own the
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properties it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Each of the Acquired Companies and the
subsidiaries is duly qualified and licensed to do business in each jurisdiction
in which the character or location of the properties owned or leased by the
Acquired Companies or the subsidiaries or the practice of the businesses
conducted by the Acquired Companies or the subsidiaries makes such qualification
necessary or desirable, except where the failure to be so qualified would not
have a Material Adverse Effect.
3.2. Subsidiaries. Except as set forth on Schedule 3.2,
the Acquired Companies do not own, directly or indirectly, any of the capital
stock of any other corporation or any equity, profit sharing, participation or
other interest in any corporation, partnership, joint venture or other entity
(each, a "Subsidiary").
3.3. Capitalization. The authorized capital stock of MEC
and LSI consist, respectively, of 5,000 and 1,000 shares of Company Common
Stock, of which 500 and 1,000 shares, respectively, are issued and outstanding.
As of the Closing Date, the Stockholder owns all of the issued and outstanding
Company Common Stock in the amounts set forth on Schedule 3.3, free and clear of
all liens, pledges, restrictions, voting trusts or other security interests,
encumbrances of any nature whatsoever. Each outstanding share of Company Common
Stock has been legally and validly issued and is fully paid and nonassessable.
No shares of Company Common Stock are owned by the Acquired Companies in
treasury. No shares of Company Common Stock have been issued or disposed of in
violation of the preemptive rights, rights of first refusal or similar rights of
the Stockholder. The Acquired Companies have no bonds, debentures, notes or
other obligations the holders of which have the right to vote (or are
convertible into or exercisable for securities having the right to vote) with
the Stockholder on any matter.
3.4. Transactions in Capital Stock. Except as set forth on
Schedule 3.4, there exist no options, warrants, subscriptions or other rights to
purchase, or securities convertible into or exchangeable for, any of the
authorized or outstanding securities of the Acquired Companies, and no option,
warrant, call, conversion right or commitment of any kind exists which obligates
the Acquired Companies to issue any of its authorized but unissued capital
stock. Except as set forth on Schedule 3.4, the Acquired Companies have no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof.
3.5. Corporate Records. Copies of the Certificate of
Incorporation and Bylaws, and all amendments thereto, of the Acquired Companies
have been delivered or made available to Purchaser and are true, correct and
complete copies thereof, as in effect on the date hereof. The minute books of
the Acquired Companies and the Subsidiaries, copies of which have been delivered
or made available to Purchaser, contain all material minutes and consents of the
directors and stockholders of the Acquired Companies and the Subsidiaries since
owned by Stockholder.
3.6. Governmental Consents. Except as disclosed in
Schedule 3.6, no
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filing or registration with, or authorization, consent or approval of, any
Governmental Entity, to the best knowledge of the Acquired Companies, is
necessary for the consummation of the transactions contemplated by this
Agreement.
3.7. Authorization and Validity. The Acquired Companies
have the corporate power and authority to execute this Agreement and carry out
its obligations hereunder. The execution, delivery and performance by the
Acquired Companies of this Agreement and the other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby and thereby
to be performed by the Acquired Companies, have been duly authorized by the
Acquired Companies. This Agreement has been duly executed and delivered by the
Acquired Companies and constitutes the legal, valid and binding obligation of
the Acquired Companies, enforceable against the Acquired Companies in accordance
with its terms, except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally or the availability of
equitable remedies. The Acquired Companies have obtained, in accordance with
applicable law and its Certificates of Incorporation and Bylaws, the approval of
its stockholders necessary for the consummation of the transactions contemplated
hereby.
3.8. No Conflict. Except as disclosed on Schedule 3.8, the
execution and delivery of the documents contemplated hereunder and the
consummation of the transactions contemplated thereby by the Acquired Companies
will not (i) violate any provision of the Acquired Companies' organizational
documents, (ii) violate any provision of or result in the breach of or entitle
any party to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, any mortgage, lien, lease, material contract,
license, permit, instrument or any other material agreement to which the
Acquired Companies or the Subsidiaries is a party, (iii) result in the creation
or imposition of any lien, charge, pledge, security interest or other
encumbrance upon any property of the Acquired Companies or the Subsidiaries, or
(iv) violate or conflict with any order, award, judgment or decree or other
restriction or conflict with any law, ordinance, rule or regulation to which the
Acquired Companies or its property is subject except for those which would not
have a Material Adverse Effect.
3.9. Financial Statements. Purchaser has received the
Stockholder's audited consolidated balance sheets and related audited
consolidated statements of operations and accumulated deficits and of cash flows
of the Stockholder at December 31, 1996 and 1995 and the reports thereon of KPMG
Peat Marwick LLP and the unaudited balance sheets and income statements for each
of the Acquired Companies at December 31, 1996 and 1995 and for the ten month
period ending October 31, 1997 (collectively the "Company Balance Sheets"). The
Company Balance Sheets reflect all adjustments, including normal recurring
accruals, considered necessary for a fair presentation of the financial position
of the Acquired Companies, subject to normal year end adjustments. The Company
Balance Sheets related to the period ended December 31, 1996 and 1995 were the
underlying financial statements utilized in connection with preparing the
Stockholder's consolidated statements of operations.
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The Stockholder will also furnish to Purchaser the unaudited interim
balance sheet at November 30, 1997 of each of the Acquired Companies and related
unaudited statements of operations for the fiscal period then ended by January
15, 1998 (the unaudited interim balance sheet and related statement of
operations at November 30, 1997 shall be referred to as the "Financial
Statements"). All of the Financial Statements are complete and correct, have
been prepared on a basis consistent with past practices, and fairly present the
separate financial positions of each of the Acquired Companies at the date
thereof. The Financial Statements reflect all property and assets used in the
business of the Acquired Companies in a manner consistent with past practices.
No statement of income on the Financial Statements contains any extraordinary or
nonrecurring item or expense and none of the Financial Statements reflects any
revaluation of assets (except as specified therein). Since November 30, 1997
(the "Company Balance Sheet Date") there has been no material adverse change in
the assets or liabilities or in the business or condition, financial or
otherwise, or the results of operations or prospects of the Acquired Companies
or the Subsidiaries, whether as a result of any legislative or regulatory
change, revocation of any license, litigation, administrative action, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation or act of God or other public force or otherwise, except as
disclosed and consented to by Purchaser; and to the best knowledge, information
and belief of the Acquired Companies and the Stockholder, no fact or condition
exists or is contemplated or threatened which might cause such a change in the
future.
3.10. No Undisclosed Liabilities. Except as set forth on
Schedule 3.10, the Financial Statements reflect all liabilities of the Acquired
Companies and the Subsidiaries, accrued, contingent or otherwise that would be
required to be reflected thereon, or in the notes thereto, in accordance with
GAAP, except for liabilities and obligations incurred in the ordinary course of
business since the Acquired Companies Balance Sheet Date. Except as set forth in
the Financial Statements or on Schedule 3.10, each of the Acquired Companies and
the Subsidiaries is not liable upon or with respect to, or obligated in any
other way to provide funds in respect of or to guarantee or assume in any
manner, any debt, obligation or dividend of any person, corporation,
association, partnership, joint venture, trust or other entity, and neither the
Acquired Companies nor the Stockholder know of any valid basis for the assertion
of any other claims or liabilities of any nature or in any amount.
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3.11. Employee Matters.
a. Cash Compensation. Schedule 3.11(a) contains
a complete and accurate list of the names, titles and annual cash compensation
as of the Closing Date, including without limitation wages, salaries, bonuses
(discretionary and formula) and other cash compensation (the "Cash
Compensation") of all employees of the Acquired Companies and the Subsidiaries.
In addition, Schedule 3.11(a) contains a complete and accurate description of
(i) all increases in Cash Compensation of employees of the Acquired Companies
and the Subsidiaries during the current fiscal year and the immediately
preceding fiscal year and (ii) any promised increases in Cash Compensation of
employees of the Acquired Companies and the Subsidiaries that have not yet been
effected, other than in the reasonable and ordinary course of business.
b. Compensation Plans. Schedule 3.11(b)
contains a complete and accurate list of all compensation plans, arrangements or
practices (the "Compensation Plans") sponsored by the Acquired Companies or to
which the Acquired Companies contribute on behalf of its employees, other than
Employment Agreements listed on Schedule 3.11(c) and Employee Benefit Plans
listed on Schedule 3.12(a). The Compensation Plans include without limitation
plans, arrangements or practices that provide for performance awards, and stock
ownership or stock options. The Acquired Companies have provided or made
available to Purchaser a copy of each written Compensation Plan and a written
description of each unwritten Compensation Plan. Except as set forth on Schedule
3.11(b), each of the Compensation Plans can be terminated or amended at will by
the Acquired Companies.
c. Employment Agreements. Except as set forth
on Schedule 3.11(c), neither the Acquired Companies nor the Subsidiaries are a
party to any employment agreement ("Employment Agreements") with respect to any
of its employees. Employment Agreements include without limitation employee
leasing agreements, employee services agreements and non-competition agreements.
d. Employee Policies and Procedures. Schedule
3.11(d) contains a complete and accurate list of all employee manuals and all
material policies, procedures and work-related rules (the "Employee Policies and
Procedures") that currently apply to employees of the Acquired Companies. The
Acquired Companies have provided or made available to Purchaser a copy of all
written Employee Policies and Procedures and a written description of all
material unwritten Employee Policies and Procedures.
e. Unwritten Amendments. Except as described on
Schedule 3.11(b), 3.11(c) or 3.11(d), no material unwritten amendments have been
made, whether by oral communication, pattern of conduct or otherwise, with
respect to any Compensation Plans or, Employee Policies and Procedures.
f. Labor Compliance. Each of the Acquired
Companies and the Subsidiaries have been and is in compliance with all
applicable laws, rules, regulations
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and ordinances respecting employment and employment practices, terms and
conditions of employment and wages and hours, except for any such failures to be
in compliance that, individually or in the aggregate, would not result in a
Material Adverse Effect, and the Acquired Companies are not liable for any
arrearages of wages or penalties for failure to comply with any of the
foregoing. Each of the Acquired Companies and the Subsidiaries have not engaged
in any unfair labor practices or discriminated on the basis of race, color,
religion, sex, national origin, age, disability or handicap in its employment
conditions or practices that would, individually or in the aggregate, result in
a Material Adverse Effect. Except as set forth on Schedule 3.11(f), there are no
(i) unfair labor practice charges or complaints or racial, color, religious,
sex, national origin, age, disability or handicap discrimination charges or
complaints pending or, to the best knowledge of the Acquired Companies and the
Stockholder, threatened against the Acquired Companies or the Subsidiaries
before any federal, state or local court, board, department, commission or
agency (nor, to the best knowledge of the Acquired Companies and the
Stockholder, does any valid basis therefor exist) or (ii) existing or, to the
best knowledge of the Acquired Companies and the Stockholder, threatened labor
strikes, disputes, grievances, controversies or other labor troubles affecting
the Acquired Companies (nor, to the best knowledge of the Acquired Companies and
the Stockholder, does any valid basis therefor exist).
g. Unions. Each of the Acquired Companies and
the Subsidiaries have never been a party to any agreement with any union, labor
organization or collective bargaining unit. No employees of the Acquired
Companies or the Subsidiaries are represented by any union, labor organization
or collective bargaining unit. Except as set forth on Schedule 3.11(g), to the
actual knowledge of the Acquired Companies, none of the employees of the
Acquired Companies or the Subsidiaries have threatened to organize or join a
union, labor organization or collective bargaining unit.
h. Aliens. All employees of the Acquired
Companies and the Subsidiaries are, to the best knowledge of the Acquired
Companies, citizens of, or are authorized in accordance with federal immigration
laws to be employed in, the United States.
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3.12. Employee Benefit Plans.
a. Identification. Schedule 3.12(a) contains a
complete and accurate list of all employee benefit plans (within the meaning of
Section 3(3) of ERISA sponsored by the Acquired Companies and the Subsidiaries
or to which the Acquired Companies and the Subsidiaries contributes on behalf of
their employees and all employee benefit plans previously sponsored or
contributed to on behalf of their employees since the date the Acquired
Companies have been owned by the Stockholder (the "Employee Benefit Plans"). The
Acquired Companies have provided or made available to Purchaser copies of all
plan documents, determination letters, pending determination letter
applications, trust instruments, insurance contracts, administrative services
contracts, annual reports, actuarial valuations, summary plan descriptions,
summaries of material modifications, administrative forms and other documents
that constitute a part of or are incident to the administration of the Employee
Benefit Plans. In addition, the Acquired Companies have provided or made
available to Purchaser a written description of all existing practices engaged
in by the Acquired Companies and the Subsidiaries that constitute Employee
Benefit Plans. Except as set forth on Schedule 3.12(a) and subject to the
requirements of the Code and ERISA, each of the Employee Benefit Plans can be
terminated or amended at will by the Acquired Companies. Except as set forth on
Schedule 3.12(a), no unwritten amendment exists with respect to any Employee
Benefit Plan. Except as set forth on Schedule 3.12(b)-(l), each of the following
paragraphs is true and correct.
b. Administration. Each Employee Benefit Plan
has been administered and maintained in compliance with all applicable laws,
rules and regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect. To the
best of the knowledge of the Acquired Companies, the Acquired Companies and the
Subsidiaries have (i) made all necessary filings with respect to such Employee
Benefit Plans, including the timely filing of Form 5500 if applicable, and (ii)
made all necessary filings, reports and disclosures pursuant to and have
complied with all requirements of the IRS Voluntary Compliance Resolution
Program, if applicable, with respect to all profit sharing retirement plans and
pension plans in which employees of the Acquired Companies and the Subsidiaries
participate.
c. Examinations. Except as set forth on
Schedule 3.11(c), the Acquired Companies have not received any notice that any
Employee Benefit Plan is currently the subject of an audit, investigation,
enforcement action or other similar proceeding conducted by any state or federal
agency.
d. Prohibited Transactions. To the best of the
knowledge of the Acquired Companies, no prohibited transactions (within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA) have
occurred with respect to any Employee Benefit Plans.
e. Claims and Litigation. No pending or, to the
actual knowledge of the Acquired Companies and the Stockholder, threatened
claims, suits, or other
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proceedings exist with respect to any Employee Benefit Plan other than normal
benefit claims filed by participants or beneficiaries.
f. Qualification. As set forth in more detail
on Schedule 3.12(f), the Stockholder has applied for a favorable determination
letter or ruling from the IRS for each of the Employee Benefit Plans intended to
be qualified within the meaning of Section 401(a) of the Code and/or tax-exempt
within the meaning of Section 501(a) of the Code. Except as set forth on
Schedule 3.12(f), no proceedings exist or, to the actual knowledge of the
Acquired Companies and the Stockholder have been threatened that could result in
the revocation of any such favorable determination letter or ruling.
g. Funding Status. Neither the Stockholder nor
any member of a controlled group with the Stockholder (within the meaning of
Section 412(n)(6)(B)) sponsors any plans which (1) are subject to the minimum
funding requirements of Code Section 412 or ERISA Section 302 or (2) are subject
to Title IV of ERISA assumptions.
h. Excise Taxes. To the best of the knowledge
of the Acquired Companies, neither the Acquired Companies nor any member of a
Controlled Group has any liability to pay excise taxes with respect to any
Employee Benefit Plan under applicable provisions of the Code or ERISA.
i. Multiemployer Plans. Neither the Acquired
Companies nor any member of a Controlled Group is or ever has been obligated to
contribute to a multiemployer plan within the meaning of Section 3(37) of ERISA.
j. Pension Benefit Guaranty Corporation. None
of the Employee Benefit Plans are subject to the requirements of Title IV of
ERISA.
k. Retirees. Neither the Acquired Companies nor
any of the Subsidiaries has any obligation or commitment to provide medical,
dental or life insurance benefits to or on behalf of any of its employees who
may retire or any of its former employees who have retired except as may be
required pursuant to the continuation of coverage provisions of Section 4980B of
the Code and Sections 501 through 508 of ERISA.
l. Other Compensation. Except as set forth on
Schedules 3.11(a), 3.11(b), 3.11(c), 3.11(d) and 3.12(a), neither the Acquired
Companies nor the Subsidiaries is a party to any compensation or debt
arrangement with any person relating to the provision of health care related
services.
3.13. Absence of Certain Changes. Except as set forth on
Schedule 3.13 or as contemplated in this Agreement, since the Acquired Companies
Balance Sheet Date, the Acquired Companies and the Subsidiaries have not:
a. suffered a Material Adverse Effect, whether
or not caused by any deliberate act or omission of the Acquired Companies or the
Subsidiaries;
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b. contracted for the purpose of acquiring any
capital asset having a cost in excess of $20,000 or made any single expenditure
for a capital asset in excess of $20,000;
c. incurred any indebtedness for borrowed money
in excess of $20,000 (other than short-term borrowings in the ordinary course of
business), or issued or sold any debt securities;
d. incurred or discharged any material
liabilities or obligations except in the ordinary course of business;
e. paid any amount on any indebtedness prior to
the due date, forgiven or cancelled any claims or any debt in excess of $20,000,
or released or waived any rights or claims except in the ordinary course of
business;
f. mortgaged, pledged or subjected to any
security interest, lien, lease or other charge or encumbrance any of its
properties or assets (other than statutory liens arising in the ordinary course
of business or other liens that do not materially detract from the value or
interfere with the use of such properties or assets);
g. suffered any damage or destruction to or
loss of any assets (whether or not covered by insurance) that has, individually
or in the aggregate, resulted in a Material Adverse Effect;
h. acquired or disposed of any assets having an
aggregate value in excess of $20,000, except in the ordinary course of business;
i. written up or written down the carrying
value of any of its assets, other than accounts receivable in the ordinary
course of business;
j. changed the costing system or depreciation
methods of accounting for its assets in any material respect;
k. lost or terminated any employee, patient,
customer or supplier that has, individually or in the aggregate, resulted in a
Material Adverse Effect;
l. increased the compensation of any director,
officer, key employee or consultant, except as disclosed on Schedule 3.11(a);
m. increased the compensation of any employee
(except for increases in the ordinary course of business consistent with past
practice) or hired any new employee who is expected to receive annualized
compensation of at least $20,000;
n. formed or acquired or disposed of any
interest in any corporation, partnership, joint venture or other entity;
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o. redeemed, purchased or otherwise acquired,
or sold, granted or otherwise disposed of, directly or indirectly, any of its
capital stock, paid any dividend or made any distribution or payment on any of
its capital stock, or agreed to change the terms and conditions of any such
capital stock;
p. entered into any agreement providing for
total payments in excess of $20,000 in any twelve (12) month period with any
person or group, or modified or amended in any material respect the terms of any
such existing agreement, except in the ordinary course of business whereupon the
sum of total payments shall not exceed $20,000 in any twelve (12) month period;
q. entered into, adopted or amended any
Employee Benefit Plan, except as contemplated hereby or the other agreements
contemplated hereby; or
r. entered into any other commitment or
transaction or experienced any other event that would materially interfere with
its performance under this Agreement or any other agreement or document executed
or to be executed pursuant to this Agreement, or otherwise has, individually or
in the aggregate, resulted in a Material Adverse Effect.
3.14. Title to Assets and Properties.
a. Real Property. The Acquired Companies and
the Subsidiaries do not own any interest (other than leasehold interests
referred to on Schedule 3.14(c)) in real property. The leased real property
referred to on Schedule 3.14(c) constitutes the only real property necessary for
the conduct of the Acquired Companies' business.
b. Personal Property. Except as set forth on
Schedule 3.14(b), the Acquired Companies and/or the Subsidiaries have valid and
marketable title to all the personal property constituting the Assets. The
personal property constituting the Assets is adequate for the conduct of the
Acquired Companies's and the Subsidiaries businesses in the manner in which they
are currently conducted and contemplated to be conducted by the Stockholder.
Upon consummation of the transactions contemplated hereby, such interest in the
Assets shall be transferred to Purchaser free and clear of all security
interests, liens, claims and encumbrances, other than those set forth on
Schedule 3.14(b) (the "Permitted Encumbrances") and statutory liens arising in
the ordinary course of business or other liens that do not materially detract
from the value or interfere with the use of such properties or assets.
c. Leases. Schedule 3.14(c) sets forth a true,
correct and complete list and brief description of (i) all leases of real
property, and (ii) leases of personal property involving rental payments within
any twelve (12) month period in excess of $12,000, in either case to which the
Acquired Companies or the Subsidiaries is a party, either as lessor or lessee,
are set forth on Schedule 3.14(c). To the best
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knowledge of the Acquired Companies, all such leases are valid and enforceable
in accordance with their respective terms and no event has occurred which, with
the giving of notice, the lapse of time or both, would constitute an event of
default thereunder, including the execution of this Agreement or the
consummation of the transactions contemplated hereby.
3.15. Condition of Fixed Assets. Except as set forth in
Schedule 3.15, all of the fixtures, structures, machinery and equipment
reflected in the Financial Statements and used by the Acquired Companies and the
Subsidiaries in its business are in good operating condition and repair, subject
to normal wear and tear, and conform in all material respects with all
applicable ordinances, regulations and other laws, and the Acquired Companies
have no actual knowledge of any latent defects therein.
3.16. Commitments.
a. Commitments; Defaults. Except as set forth
on Schedule 3.16 or as otherwise disclosed pursuant to this Agreement, neither
the Acquired Companies nor any of the Subsidiaries is a party to nor bound by,
nor are any of the shares of Company Common Stock subject to, nor are the Assets
or the businesses of the Acquired Companies or the Subsidiaries bound by,
whether or not in writing, any of the following (collectively, "Commitments"):
i) partnership or joint venture
agreement;
ii) guaranty or suretyship,
indemnification or contribution agreement or performance bond;
iii) debt instrument, loan agreement or
other obligation relating to indebtedness for borrowed money or money lent or to
be lent to another;
iv) contract to purchase real property;
v) agreements or arrangements with eye
care professionals;
vi) agreements with suppliers of eye
care and related products;
vii) agreement with dealers or sales or
commission agents, public relations or advertising agencies, accountants or
attorneys (other than in connection with this Agreement and the transactions
contemplated hereby) involving total payments within any twelve (12) month
period in excess of $20,000 and which is not terminable on thirty (30) days'
notice or without penalty;
viii) agreement relating to any material
matter or
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transaction in which an interest is held by a person or entity that is an
Affiliate of the Acquired Companies or the Stockholder;
ix) agreement for the acquisition of
services, supplies, equipment, inventory, fixtures or other property involving
more than $20,000 in the aggregate, except in the ordinary course of business.
x) powers of attorney;
xi) contracts containing
non-competition covenants;
xii) agreement providing for the
purchase from a supplier of all or substantially all of the requirements of the
Acquired Companies of a particular product or services, except as is consistent
with the Acquired Companies previous purchasing history and which does not
involve more than a twelve month commitment on behalf of the Acquired Companies;
xiii) agreements with health maintenance
organizations, preferred provider organization, managed care entities and
similar entities; or
xiv) any other agreement or commitment
in excess of $20,000 not made in the ordinary course of business or that is
material to the business, operations, condition (financial or otherwise) or
results of operations of the Acquired Companies.
True, correct and complete copies of the written Commitments, and true, correct
and complete written descriptions of the oral Commitments, have heretofore been
delivered or made available to Purchaser. To the best knowledge of the Acquired
Companies and the Stockholder, there are no existing events of default or
events, occurrences, acts or omissions that, with the giving of notice or lapse
of time or both, would constitute defaults by the Acquired Companies or any of
the Subsidiaries or, to the best knowledge of the Acquired Companies and the
Stockholder, any other party to a material Commitment, and no penalties have
been incurred nor are amendments pending, with respect to the material
Commitments. The Commitments are in full force and effect and are valid and
enforceable obligations of the Acquired Companies or the Subsidiaries, and to
the best knowledge of the Acquired Companies and the Stockholder, are valid and
enforceable obligations of the other parties thereto, in accordance with their
respective terms, and no defenses, off-sets or counterclaims have been asserted,
nor has the Acquired Companies waived any material rights thereunder. No
consents or approvals are required under the terms of any Commitment in
connection with the transactions contemplated herein.
b. No Cancellation or Termination of
Commitment. Except as disclosed pursuant to this Agreement and except where such
default would not have a Material Adverse Effect, (i) neither the Acquired
Companies nor the Subsidiaries has received notice of any plan or intention of
any other party to any Commitment to exercise any right to cancel or terminate
any Commitment, and the Acquired Companies do not
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know of any fact that would justify the exercise of such a right; and (ii)
neither the Acquired Companies nor the Subsidiaries currently contemplates, or
has reason to believe any other person currently contemplates, any amendment or
change to any Commitment.
3.17. Insurance. The Acquired Companies and the
Subsidiaries carry property, liability, malpractice, workers' compensation and
such other types of insurance pursuant to the insurance policies listed and
briefly described on Section 3.17 (the "Insurance Policies"). The Insurance
Policies are all of the insurance policies of the Acquired Companies and the
Subsidiaries relating to the business of the Acquired Companies and the Assets.
All of the Insurance Policies are issued by insurers of recognized
responsibility and, to the best knowledge of the Acquired Companies, are valid
and enforceable policies, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. All Insurance Policies shall be maintained
in force without interruption up to and including the Closing Date. True,
complete and correct copies of all Insurance Policies have been provided or made
available to Purchaser. Except as set forth on Schedule 3.17, neither the
Acquired Companies nor the Subsidiaries has received any notice or other
communication from any issuer of any Insurance Policy cancelling such policy,
materially increasing any deductibles or retained amounts thereunder, and to the
best knowledge of the Acquired Companies and the Stockholder, no such
cancellation or increase of deductibles, retainages or premiums is threatened.
Except as set forth on Schedule 3.17, neither the Acquired Companies nor any of
the Subsidiaries has any outstanding claims, settlements or premiums owed
against any Insurance Policy, and the Acquired Companies have given all notices
or has presented all potential or actual claims under any Insurance Policy in
due and timely fashion. Schedule 3.17 also sets forth a list of all claims under
any Insurance Policy in excess of $10,000 per occurrence filed by the Acquired
Companies since the Acquired Companies have been owned by the Stockholder.
3.18. Proprietary Rights and Information. Set forth on
Schedule 3.18 is a true and correct description of the following ("Proprietary
Rights"):
a. all trademarks, trade names, service marks
and other trade designations, including common law rights, registrations and
applications therefor, and all patents and copyrights and applications therefor
currently owned, in whole or in part, by the Acquired Companies or the
Subsidiaries, and all licenses, royalties, assignments and other similar
agreements relating to the foregoing to which the Acquired Companies or the
Subsidiaries is a party (including the expiration date thereof if applicable);
and
b. all agreements relating to technology,
know-how or processes that the Acquired Companies and the Subsidiaries are
licensed or authorized to use by others (other than technology, know-how or
processes generally available to other lens grinding businesses), or which it
licenses or authorizes others to use.
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The Acquired Companies and the Subsidiaries own or have the legal right to use
the Proprietary Rights, and to the best knowledge of the Acquired Companies and
the Stockholder such ownership or use does not conflict, infringe or violate the
rights of any other person. Except as disclosed on Schedule 3.18, no consent of
any person will be required for the use of any Proprietary Rights by Purchaser
upon consummation of the transactions contemplated hereby and the Proprietary
Rights are freely transferable. No claim has been asserted by any person to the
ownership of or for infringement by the Acquired Companies or the Subsidiaries
of the proprietary right of any other person, and the Acquired Companies do not
know of any valid basis for any such claim. To the best knowledge of the
Acquired Companies and the Stockholder, the Acquired Companies and the
Subsidiaries have the right to use, free and clear of any adverse claims or
rights of others, all trade secrets, customer lists and proprietary information
required for the marketing of all merchandise and services formerly or presently
sold or marketed by it.
3.19. Taxes.
a. Filing of Tax Returns. Each of the Acquired
Companies and the Subsidiaries have duly and timely filed and prior to the
Closing Date will duly and timely file (in accordance with any extensions duly
granted by the appropriate governmental agency, if applicable) with the
appropriate governmental agencies all federal, state, local or foreign income,
excise, corporate, franchise, property, sales, use, payroll, withholding,
provider, value added and other tax returns and reports (collectively the "Tax
Returns") required to be filed by the United States or any state or any
political subdivision thereof or any foreign jurisdiction. All such Tax Returns
or reports are complete and accurate in all material respects and properly
reflect the taxes of the Acquired Companies and the Subsidiaries for the periods
covered thereby.
b. Payment of Taxes. Except for such items as
the Acquired Companies or the Subsidiaries may be disputing in good faith by
proceedings in compliance with applicable law, which are described on Schedule
3.19, (i) the Acquired Companies and the Subsidiaries have paid all taxes,
penalties, assessments and interest that have become due with respect to any Tax
Returns that they have filed and have properly accrued on their books and
records for all of the same that have not yet become due, and (ii) the Acquired
Companies and the Subsidiaries are not delinquent in the payment of any tax,
assessment or governmental charge.
c. No Pending Deficiencies, Delinquencies,
Assessments or Audits. Except as set forth on Schedule 3.19, neither the
Acquired Companies nor the Subsidiaries have received any notice that any tax
deficiency or delinquency has been asserted against the Acquired Companies or
any of the Subsidiaries. There is no unpaid assessment, proposal for additional
taxes, deficiency or delinquency in the payment of any of the taxes of the
Acquired Companies or any of the Subsidiaries that could be asserted by any
taxing authority. There is no taxing authority audit of the Acquired Companies
or any of the Subsidiaries pending, or to the best knowledge of the Acquired
Companies and the Stockholder, threatened, and the results of any completed
audits are properly reflected in the Financial Statements. The Acquired
Companies and the Subsidiaries have not violated any federal, state, local or
foreign tax law.
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d. No Extension of Limitation Period. Neither
the Acquired Companies nor the Subsidiaries have granted an extension to any
taxing authority of the limitation period during which any tax liability may be
assessed or collected.
e. All Withholding Requirements Satisfied. All
monies required to be withheld by the Acquired Companies and the Subsidiaries
and paid to governmental agencies for all income, social security, unemployment
insurance, sales, excise, use and other taxes have been collected or withheld
and paid to the respective governmental agencies.
f. Foreign Person. Neither the Acquired
Companies, any of the Subsidiaries nor the Stockholder is a foreign person, as
such term is referred to in Section 1445(f)(3) of the Code.
g. Safe Harbor Lease. None of the Assets
constitutes property that the Acquired Companies, the Subsidiaries, Purchaser,
or any Affiliate of Purchaser, will be required to treat as being owned by
another person pursuant to the "Safe Harbor Lease" provisions of Section
168(f)(8) of the Code prior to repeal by the Tax Equity and Fiscal
Responsibility Act of 1982.
h. Tax Exempt Entity. None of the Assets are
subject to a lease to a "tax exempt entity" as such term is defined in Section
168(h)(2) of the Code.
i. Collapsible Corporation. The Acquired
Companies and the Subsidiaries have not at any time consented, and the
Stockholder will not permit the Acquired Companies nor the Subsidiaries to
elect, to have the provisions of Section 341(f)(2) of the Code apply to any of
them.
j. Boycotts. Neither the Acquired Companies nor
the Subsidiaries have at any time participated in or cooperated with any
international boycott as defined in Section 999 of the Code.
k. Parachute Payments. No payment required or
contemplated to be made by the Acquired Companies or the Subsidiaries will be
characterized as an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Code.
l. S Corporation. Neither the Acquired
Companies nor the Subsidiaries have made an election to be taxed as an "S"
corporation under Section 1362(a) of the Code.
m. Personal Service Corporation. Neither the
Acquired Companies nor the Subsidiaries are a personal service corporation
subject to the provisions of Section 269A of the Code.
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n. Personal Holding Company. Neither the
Acquired Companies nor the Subsidiaries are or has been a personal holding
company within the meaning of Section 542 of the Code.
o. Tax Sharing Agreements. Neither the Acquired
Companies nor the Subsidiaries are party to any tax sharing agreement with any
other person or entity.
p. Section 338 Election. Purchaser may elect
under Section 338(g) and Section 338(h)(10) of the Internal Revenue Code of
1986, as amended (the "Code"), after the Closing Date to adjust the tax basis in
the assets of the Acquired Companies pursuant to Section 338(a) of the Code. The
Stockholder agrees that, after the Closing Date, at Purchaser's request, it
shall join with Purchaser in a timely election made pursuant to Sections 338(g)
and 338(h)(10) of the Code, and the Stockholder and Purchaser agree, at
Purchaser's option, to make any elections comparable to the elections under
Sections 338(g) and 338(h)(10) under any applicable state or local laws. The
Stockholder agrees to take all steps necessary to perfect a joint election under
Section 338(h)(10) of the Code pursuant to the procedures specified in Treas.
Reg. Section 1.338(h)(10)-1(d)(2), including executing an Internal Revenue
Service Form 8023 and agreeing to the amount of and allocation of the Deemed
Sale Price determined by the Purchaser pursuant to the procedures specified in
Treas. Reg. Section 1.338(h)(10)-1(f). Stockholder agrees to pay all taxes which
result from the election contemplated by this Section 3.19(p).
3.20. Governmental Authorizations. The Acquired Companies
and the Subsidiaries possess all necessary licenses, franchises, permits and
other governmental authorizations, including, but not limited to all licenses,
franchises, permits and authorizations for the conduct of the Acquired
Companies' and the Subsidiaries' businesses as now conducted, all of which are
listed (with expiration dates, if applicable) on Schedule 3.20. Except as set
forth on Section 3.20, the transactions contemplated by this Agreement will not
result in a default under or a breach or violation of, or adversely affect the
rights and benefits afforded by any such licenses, franchises, permits or
authorizations which, singly or in the aggregate, would not have a Material
Adverse Effect. All such licenses, franchises, permits and other authorizations
are valid and in full force and effect, the Acquired Companies and the
Subsidiaries are in current compliance therewith and neither the Acquired
Companies nor any Subsidiary have received any notice that any governmental
authority is considering challenging, revoking, cancelling, restricting,
conditioning or not renewing any such license, franchise, permit or other
authorization.
3.21. Compliance with Applicable Laws. The Acquired
Companies and each of the Subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities material to the
business of the Acquired Companies or such Subsidiary, as the case may be,
including, without limitation, applicable state corporation, insurance and
health regulatory authorities, and other Governmental Entities regulating
exclusive provider organizations, preferred provider organizations, medical
utilization review organizations, medical service organizations, lay
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intermediaries, secondary contractors, or third party administrators (the
"Company Permits"). The Acquired Companies and the Subsidiaries are in current
compliance with the terms of the Acquired Companies Permits, except for such
failures to comply which, singly or in the aggregate, would not have a Material
Adverse Effect. Except as disclosed in Section 3.21, the Acquired Companies and
each of the Subsidiaries are in compliance with all laws, including applicable
Medicare and Medicaid laws, ordinances and regulations of any Governmental
Entity, including, without limitation, applicable state corporation, insurance
and health regulatory authorities and other Governmental Entities regulating
exclusive provider organizations, preferred provider organizations, medical
utilization review organizations, medical service organizations, lay
intermediaries, secondary contractors or third-party administrators and all
Medicare and Medicaid provider agreements to which it is a party, except where
the failure to comply would not have a Material Adverse Effect. Except as
disclosed in Section 3.21, to the best knowledge of the Acquired Companies and
the Stockholder, no investigation or review by any Governmental Entity,
including, without limitation, applicable state corporation, insurance and
health regulatory authorities with respect to the Acquired Companies or any of
the Subsidiaries is pending, or threatened, nor has any Governmental Entity,
including, without limitation, applicable state corporation, insurance and
health regulatory authority indicated an intention to conduct the same, other
than those the outcome of which would not be material to the business of the
Acquired Companies or such Subsidiary, as the case may be.
3.22. Litigation. Except as described on Section 3.22 or
otherwise disclosed pursuant to this Agreement, the Acquired Companies have not
been notified of any legal actions or administrative proceedings or
investigations which affect or could affect the Acquired Companies Common Stock,
the Assets or the operation, business, condition (financial or otherwise), or
results of operations of the Acquired Companies or the Subsidiaries which (i) if
successful could, individually or in the aggregate, have a Material Adverse
Effect or (ii) could adversely affect the ability of the Acquired Companies to
effect the transactions contemplated hereby. Neither the Acquired Companies nor
the Subsidiaries are (a) subject to any continuing court or administrative
order, judgment, writ, injunction or decree applicable specifically to the
Assets, the Acquired Companies or to its business, assets, operations or
employees, or (b) in default with respect to any such order, judgment, writ,
injunction or decree. Neither the Acquired Companies nor the Stockholder have
any knowledge of any valid basis for any such action, proceeding or
investigation. Except as set forth on Schedule 3.22, all claims asserted,
general liability incidents and incident reports have been submitted to the
Acquired Companies' insurer therefor. All claims made or threatened against the
Acquired Companies or the Subsidiaries in excess of its deductible are covered
under its Insurance Policies.
3.23. Banking Relations. Set forth on Schedule 3.23 is a
complete and accurate list of all borrowing and investing arrangements that the
Acquired Companies and the Subsidiaries have with any bank or other financial
institution, indicating with respect to each relationship the type of
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.), the location thereof and the person or persons authorized in
respect thereof.
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3.24. Ownership Interests of Interested Persons;
Affiliations. Except as set forth on Schedule 3.24, no officer, supervisory
employee or director of the Acquired Companies or the Subsidiaries, or their
respective spouses, children or Affiliates, owns directly or indirectly, on an
individual or joint basis, any interest in, has a compensation or other
financial arrangement with, or serves as an officer or director of, any customer
or supplier of the Acquired Companies or the Subsidiaries or any organization
that has a material contract or arrangement with the Acquired Companies or the
Subsidiaries.
3.25. Investments in Competitors. Except as disclosed on
Schedule 3.25, the Acquired Companies do not own directly or indirectly any
interests or have any investment in any person that is a Competitor of the
Acquired Companies or the Subsidiaries.
3.26. Environmental Matters.
a. Except as set forth on Schedule 3.26,
neither the Acquired Companies nor the Subsidiaries have, in violation of any
Environmental Requirement, engaged in or permitted any operations or activities
upon, or any use or occupancy of the Property, or any portion thereof, for the
purpose of or in any way involving the handling, manufacture, treatment,
storage, use, generation, release, discharge, refining, dumping or disposal of
any Hazardous Materials (whether legal or illegal, accidental or intentional)
on, under, in or about the Property, or transported any Hazardous Materials to,
from or across the Property, nor, to the best knowledge of the Acquired
Companies and the Stockholder, are any Hazardous Materials presently
constructed, deposited, stored or otherwise located on, under, in or about the
Property, nor, to the best knowledge of the Acquired Companies and the
Stockholder, have any Hazardous Materials migrated from the Property upon or
beneath other properties have any Hazardous Materials migrated or threatened to
migrate from other properties upon, about or beneath the Property.
b. Except as set forth on Schedule 3.26, for so
long as the Acquired Companies or the Subsidiaries have owned or used the
Property, the use, maintenance and operation of the Property, and all activities
and conduct of business related thereto, have at all times complied in all
material respects with all Environmental Requirements.
c. Neither the Acquired Companies nor the
Subsidiaries have received written notice or other communication concerning any
alleged violation of Environmental Requirements, whether or not corrected to the
satisfaction of the appropriate authority, nor notice or other communication
concerning alleged liability for Environmental Damages both in connection with
the Property and in connection with an Off-Site Location and there exists no
writ, injunction, decree, order or judgment outstanding, nor any lawsuit, claim,
proceeding, citation, directive, summons or investigation, pending or, to the
best knowledge of the Acquired Companies and the Stockholder, threatened,
relating to the ownership, use, maintenance or operation of the Property or
Off-Site Location by any person, or from alleged violation of Environmental
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Requirements, or from the suspected presence of Hazardous Material on the
Property.
d. Except as set forth on Schedule 3.26, for so
long as the Acquired Companies or the Subsidiaries have owned or used the
Property, no Hazardous Material has been generated at the Property and
transported to an Off-Site Location.
e. To the best knowledge of the Acquired
Companies, any underground tanks located on the Property (i) currently are being
and to the best knowledge of the Acquired Companies and the Stockholder always
have been operated in compliance in all material respects with all applicable
Environmental Requirements, and (ii) are covered by a current and effective
Certificate of Coverage.
3.27. Certain Payments. Neither the Acquired Companies, the
Subsidiaries nor any director, officer or employee of the Acquired Companies or
the Subsidiaries acting for or on behalf of the Acquired Companies, have paid or
caused to be paid, directly or indirectly, in connection with the business of
the Acquired Companies or the Subsidiaries:
a. to any government or agency thereof or any
agent of any supplier or customer any bribe, kick-back or other similar payment;
or
b. any contribution to any political party or
candidate (other than from personal funds of directors, officers or employees
not reimbursed by their respective employers or as otherwise permitted by
applicable law).
3.28. Medicare and Medicaid Programs. The Acquired
Companies and the Subsidiaries are qualified for participation in the Medicare
and Medicare programs and are party to provider agreements for such programs
which are in full force and effect with no events of default having occurred
thereunder. The Acquired Companies and the Subsidiaries have timely filed all
claims or other reports required to be filed on or before the date hereof, and
will timely file all claims and reports required to be filed on or prior to the
Closing Date, with respect to the purchase of services by third-party payors
("Payors"), including but not limited to Medicare and Medicaid programs, except
where the failure to file would not, individually or in the aggregate, result in
a Material Adverse Effect. All such filed claims or reports are, and all such
claims and reports to be filed on or before the Closing Date will be, complete
and accurate in all material respects. The Acquired Companies and the
Subsidiaries have paid or have properly recorded on the Financial Statements all
actually known and undisputed refunds, discounts or adjustments which have
become due pursuant to such claims, and neither the Acquired Companies nor the
Subsidiaries have any material liability to any Payor with respect thereto,
except as has been reserved for in the Acquired Companies Balance Sheet. There
are no pending appeals, overpayment determinations, adjustments, challenges,
audits, litigation, or notices of intent to reopen Medicare and/or Medicaid
claims determinations or other reports required to be filed by the Acquired
Companies or the Subsidiaries in order to be paid by a Payor for services
rendered. Neither the Acquired Companies, the Subsidiaries, nor any of its
directors, officers, employees, consultants or
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the Stockholder has been convicted of, or pled guilty or nolo contendere to,
patient abuse or neglect, or any other Medicare or Medicaid program-related
offense. Neither the Stockholder, the Acquired Companies, the Subsidiaries, nor
their respective directors, officers, employees or consultants, has committed
any offense which may serve as the basis for suspension or exclusion from the
Medicare and Medicaid programs, including but not limited to, defrauding a
federal, state or local government program, loss of a license to provide health
services, and failure to provide quality care.
3.29. Fraud and Abuse. Neither the Acquired Companies, the
Subsidiaries, nor their respective officers and directors have engaged in any
activities which are prohibited under 42 U.S.C. xx.xx. 1320-7, 7a or 7b or 42
U.S.C. ss.1395nn (subject to the exceptions set forth in such legislation), or
the regulations promulgated thereunder or pursuant to similar state or local
statutes or regulations, or which are prohibited by rules of professional
conduct, including but not limited to the following:
a. knowingly and willfully making or causing to
be made a false statement or representation of a material fact in any
application for any benefit or payment;
b. knowingly and willfully making or causing to
be made a false statement or representation of a material fact for use in
determining rights to any benefit or payment;
c. failing to disclose knowledge by a Medicare
or Medicaid claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment on its own behalf or on behalf of
another, with intent to fraudulently secure such benefit or payment;
d. knowingly and willfully offering, paying,
soliciting or receiving any remuneration (including any kickback, bribe, or
rebate), directly or indirectly, overtly or covertly, in cash or in kind (i) in
return for referring an individual to a person for the furnishing or arranging
for the furnishing of any item or service for which payment may be made in whole
or in part by Medicare or Medicaid, or (ii) in return for purchasing, leasing,
or ordering, or arranging for or recommending purchasing, leasing, or ordering
any good, facility, service, or item for which payment may be made in whole or
in part by Medicare or Medicaid; and
e. referring a patient for designated health
services (as defined in 42 U.S.C. ss.1395nn) to or providing designated health
services to a patient upon a referral from an entity or person with which the
Stockholder or an immediate family member has a financial relationship, and to
which no exception under 42 U.S.C. ss.1395nn applies.
3.30. Customers and Suppliers. Schedule 3.30 sets forth a
true, correct and complete list of the names and addresses of each payor which
has contracted with the Acquired Companies and the Subsidiaries, which accounted
for more than 3% of the
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revenues of the Acquired Companies or any Subsidiary in the three (3) previous
fiscal years and each material supplier of the Acquired Companies or any
Subsidiary. Except as set forth on Schedule 3.30, the Acquired Companies and the
Subsidiaries have good relations with their payors and suppliers and no material
customer or supplier has notified the Acquired Companies or any Subsidiary that
it intends to discontinue its relationship with the Acquired Companies or such
Subsidiary.
3.31. [RESERVED]
3.32. Investment Company Status. Neither the Acquired
Companies nor any of the Subsidiaries is currently, or has ever been, an
"investment company" as that term is defined in Section 368(a)(2)(F)(iii) and
(iv) of the Code.
3.33. Insolvency Proceedings. Neither the Acquired
Companies nor any of the Subsidiaries are currently under the jurisdiction of a
Federal or state court in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
3.34. Positive Net Worth. On the Closing Date the book
value of the assets of the Acquired Companies and the Subsidiaries will equal or
exceed the sum of the liabilities of the Acquired Companies and the
Subsidiaries.
3.35. Accounts Receivable/Payable.
a. The accounts receivable of the Acquired
Companies and the Subsidiaries relating to the operation of the Acquired
Companies reflected on the Acquired Companies Balance Sheet, to the extent
uncollected on the date hereof, are, and the accounts receivable of the Acquired
Companies and the Subsidiaries relating to the operation of the Acquired
Companies to be reflected on the books of the Acquired Companies on the Closing
Date (the "Accounts Receivable") will be, valid, existing and collectible
(taking into consideration the allowance for doubtful accounts set forth in the
Financial Statements) using reasonably diligent collection methods taking into
account the size and nature of the receivable, and represent amounts due for
goods sold and delivered or services performed. The Acquired Companies are in
compliance with all third party payor and eye care professional arrangements
relating to the Accounts Receivable. There are not, and on the date of Closing
there will not be, any refunds, discounts, set-offs, defenses, counterclaims or
other adjustments payable or assessable with respect to the Accounts Receivable.
The Acquired Companies and the Subsidiaries have collected Accounts Receivable
only in the ordinary course and has not changed collection procedures or methods
nor accelerated the pace of such collection efforts in anticipation of the
transactions contemplated in this Agreement. The Acquired Companies and the
Subsidiaries have paid accounts payable in the ordinary course and has not
changed payment procedures or methods nor delayed the timing of such payments in
anticipation of the transactions contemplated in this Agreement.
b. Since the Acquired Companies Balance Sheet
Date, neither the Acquired Companies nor any of the Subsidiaries have changed
any material principle
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or practice with respect to the recordation of accounts receivable or the
calculation of reserves therefor, or any material collection, discount or
write-off policy or procedure. The Acquired Companies and each of the
Subsidiaries are in compliance with the material terms and conditions of all
third-party payor arrangements relating to its accounts receivable. Without
limiting the generality of the foregoing, each of the Acquired Companies and the
Subsidiaries, are in compliance with all Medicare and Medicaid provider
agreements to which it is a party.
3.36. Insurance Reserves. The Acquired Companies
have established and maintains all required insurance company reserves in all of
those states that it is required to do so and has established and maintains all
required deposits and bonds as are necessary in such state.
3.37. Finder's Fee. Except as set forth on
Schedule 3.37, neither the Acquired Companies nor the Stockholder have incurred
any obligation for any finder's, brokers or agent's fee in connection with the
transactions contemplated hereby.
3.38. Projections. There is no fact, development
or threatened development with respect to the markets, products, services,
customers, facilities, personnel, vendors, suppliers, operations, assets or
prospects of the Acquired Companies or the Subsidiaries which are known to the
Acquired Companies or the Stockholder which would materially adversely affect
the projected fiscal year 1997 earnings of the Acquired Companies and the
Subsidiaries disclosed to Purchaser by the Stockholder, other than such
conditions as may affect as a whole the economy.
3.39. Disclosure. To the best of the Acquired
Companies's and the Stockholder's knowledge, no representation, warranty or
statement made by the Acquired Companies or the Stockholder in this Agreement or
any of the exhibits or schedules hereto, or any agreements, certificates,
documents or instruments delivered or to be delivered to Purchaser in accordance
with this Agreement or the other documents contemplated herein, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading. The
Acquired Companies and the Stockholder do not know of any fact or condition
(other than general economic conditions or legislative or administrative changes
in health care delivery) which materially adversely affects, or in the future
may materially affect, the condition (financial or otherwise), properties,
assets, liabilities, business, operations or prospects of the Acquired Companies
or the Subsidiaries, which has not been set forth herein or in the Schedules
provided herewith.
3.40. Managed Care Contracts. On December 1, 1997,
the number of enrollees covered under the MEC's managed care contracts as
reported by the clients of MEC is substantially as set forth in Schedule 3.40.
As of October 31, 1997, the per member per month fee payable to MEC was
increased to $1.21 in connection with the agreement between MEC and Free State
which relates to a Medicare HMO product. MEC has not received any written or
verbal notice from the discounted fee for service eye
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care providers who contract with MEC that such eye care providers are
terminating their relationship with MEC as a result of MEC's recently announced
reduction in reimbursement for cataract surgeries and YAG procedures which will
be effective January 1, 1998.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to Purchaser that the following are true and
correct on the date hereof, and shall be true and correct as of the Closing Date
as if made on that date:
4.1. Organization; Stockholder Authority. The Stockholder
is a corporation duly organized, validly existing and in good standing under the
laws of Delaware with all requisite corporate power and authority to carry on
the business in which it is engaged, to own the properties it owns, to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by the Stockholder of this
Agreement and the other agreements contemplated hereby and the consummation of
the transactions contemplated hereby and thereby to be performed by the
Stockholder have been duly authorized by the Stockholder. This Agreement and
each other agreement contemplated hereby have been, or will be as of the Closing
Date, duly executed and delivered by the Stockholder and constitute or will
constitute legal, valid and binding obligations of the Stockholder, enforceable
against the Stockholder in accordance with their respective terms, except as may
be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
4.2. No Violation. Except as set forth on Schedule 4.2,
neither the execution, delivery or performance of this Agreement or the other
agreements to be executed and delivered by the Stockholder in connection
herewith, nor the consummation of the transactions contemplated hereby or
thereby, will (a) conflict with, or result in a violation or breach of the
terms, conditions or provisions of, or constitute a default under, any
agreement, indenture or other instrument under which the Stockholder is bound or
to which any of their property or shares of Company Common Stock are subject, or
result in the creation or imposition of any security interest, lien, charge or
encumbrance upon any of their property or shares of Company Common Stock or (b)
to the best knowledge of the Stockholder, violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body.
4.3. Consents. Except as set forth on Schedule 4.3, no
consent, authorization, approval, permit or license of, or filing with, any
governmental or public body or authority, or any other person is required to
authorize, or is required in connection with, the execution, delivery and
performance of this Agreement or the agreements contemplated hereby on the part
of the Stockholder.
4.4. Certain Payments. The Stockholder has not paid or
caused to be paid, directly or indirectly, in connection with the business of
the Acquired Companies or the Subsidiaries:
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a. to any government or agency thereof or any
agent of any supplier or customer any bribe, kick-back or other similar payment;
or
b. any contribution to any political party or
candidate (other than from personal funds not reimbursed by the Acquired
Companies or as otherwise permitted by applicable law).
4.5. Ownership of Interested Persons; Affiliations. Except
as set forth on Schedule 4.5, neither the Stockholder nor its Affiliates, owns
directly or indirectly, any interest in, has a compensation or other financial
arrangement with, or serves as an officer or director of, any customer or
supplier of the Acquired Companies or any organization that has a material
contract or arrangement with the Acquired Companies. Neither the Stockholder nor
any of their Affiliates is, or within the last three (3) years was, a party to
any contract, lease, agreement or arrangement, including, but not limited to,
any joint venture or consulting agreement with any physician, hospital,
pharmacy, home health agency or other person which is in a position to make or
influence referrals to, or otherwise generate business for, the Acquired
Companies.
4.6. Investments in Competitors. Except as disclosed on
Schedule 4.6, the Stockholder does not own directly or indirectly any interests
or have any investment in any person that is a Competitor of the Acquired
Companies.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to the Acquired Companies and the Stockholder that the
following are true and correct on the date hereof and shall be true and correct
as of the Closing Date as if made on such date; when used in this SECTION 5, the
term "best knowledge" (or words of similar import) shall mean such knowledge, as
shall have been obtained after conducting due and diligent inquiry, of those
individuals listed on Schedule 5:
5.1. Organization and Good Standing; Qualification. Each
of the Purchaser and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, with all requisite corporate power and authority to carry on the
business in which it is engaged, to own the properties it owns, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
Each of the Purchaser and its subsidiaries is duly qualified and licensed to do
business in each jurisdiction in which the character or location of the
properties owned or leased by Purchaser or its subsidiaries or the practice of
the businesses conducted by Purchaser or its subsidiaries makes such
qualification necessary or desirable, except where the failure to be so
qualified would not have a Material Adverse Effect.
5.2. Subsidiaries. Except as set forth on Schedule 5.2,
Purchaser does not own, directly or indirectly, any of the capital stock of any
other corporation or any equity, profit sharing, participation or other interest
in any corporation, partnership, joint
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venture or other entity. With respect to each corporation that is owned,
directly or indirectly, beneficially or of record by Purchaser (each, a
"Purchaser Subsidiary"), Schedule 5.2 sets forth a true, correct and complete
list of (i) the name and jurisdiction of incorporation of each Purchaser
Subsidiary, (ii) the jurisdiction in which each Purchaser Subsidiary is
qualified or licensed to do business as a foreign corporation, (iii) the
authorized capital stock of each Purchaser Subsidiary, (iv) the number of shares
of each class thereof issued and outstanding, and (v) the number of shares and
percentage of outstanding capital stock owned by Purchaser. All outstanding
shares of capital stock of each Purchaser Subsidiary have been duly authorized
and validly issued, are fully paid and non-assessable, and are owned by
Purchaser free and clear of all liens, pledges, security interests,
restrictions, voting trusts or other encumbrances of any nature whatsoever.
5.3. Capitalization. The authorized capital stock of
Purchaser consists of 50,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, of which 11,830,166 shares of Common Stock were issued and
outstanding on December 29, 1997. Schedule 5.3 sets forth an accurate and
complete list of all outstanding options and warrants to acquire shares of
Common Stock. The issuance and delivery of the shares of Common Stock to be
issued by Purchaser in connection with this Agreement have been duly and validly
authorized by all necessary corporate action on the part of Purchaser. The
Common Stock being transferred by Purchaser hereunder shall be free and clear of
all liens, pledges, restrictions, voting trusts, security interests or other
encumbrances of any nature whatsoever, except as set forth herein, or in the
Stock Distribution Agreement. Each outstanding share of Common Stock and the
shares to be issued hereunder have been legally and validly issued and are fully
paid and nonassessable. No shares of Common Stock have been, and the shares of
Common Stock to be issued pursuant to this Agreement will not be, issued or
disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of Purchaser's stockholders.
5.4. Governmental Consents. Except as disclosed on
Schedule 5.4, no filing or registration with, or authorization, consent or
approval of, any Governmental Entity, to the best knowledge of Purchaser, is
necessary for the consummation of the transactions contemplated by this
Agreement.
5.5. Authorization and Validity. Purchaser has the
corporate power and authority to execute this Agreement and carry out its
obligations hereunder. The execution, delivery and performance by Purchaser of
this Agreement and the other agreements contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby to be performed
by Purchaser, have been duly authorized by Purchaser. This Agreement and the
other agreements contemplated hereby to be executed by Purchaser have been, or
will be as of the Closing, duly executed and delivered by Purchaser and
constitute the legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
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5.6. No Conflict. The execution and delivery of this
Agreement and the documents contemplated hereunder and the consummation of the
transactions contemplated thereby by Purchaser will not (i) violate any
provision of Purchaser's organizational documents, (ii) violate any provision of
or result in the breach of or entitle any party to accelerate (whether after the
giving of notice or lapse of time or both) any obligation under, any mortgage,
lien, lease, material contract, license, permit, instrument or any other
material agreement to which Purchaser or the Purchaser Subsidiaries is a party,
(iii) result in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any property of Purchaser or the Purchaser
Subsidiaries, or (iv) violate or conflict with any order, award, judgment or
decree or other restriction or any law, ordinance, rule or regulation to which
Purchaser or its property is subject except for those which would not have a
Material Adverse Effect.
5.7. Finder's Fee. Except as disclosed on Schedule 5.7,
Purchaser has not incurred any obligation for any finder's, broker's or agent's
fee in connection with the transactions contemplated hereby.
5.8. Purchaser Documents. Purchaser has furnished the
Acquired Companies and the Stockholder with a true and complete copy of each
report and registration statement filed by it with the SEC (the "Purchaser
Documents") since its initial public offering, which are all the documents that
it was required to file with the SEC since such date. As of their respective
dates, the Purchaser Documents did not contain any untrue statements of material
facts or omit to state material facts required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. As of their respective dates, the Purchaser Documents
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations promulgated
under such statutes. The financial statements contained in the Purchaser
Documents, together with the notes thereto, have been prepared in accordance
with GAAP, reflect all liabilities of Purchaser required to be stated therein
and present fairly the financial condition of Purchaser at such date and the
results of operations and cash flows of Purchaser for the period then ended. The
Purchaser Documents do not contain any untrue statements of material facts or
omit to state any material facts required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading as of the date hereof except for such facts as are
disclosed herein and except for the transactions contemplated hereby.
5.9 Physician Dispute. The Stockholder has notified
Purchaser and Purchaser has acknowledged the existence of a dispute among the
Stockholder, LSI, Xxxxxxx Xxxxx, M.D. and Xxxxxxx Xxxxx, M.D. in connection with
the Service Agreement effective July 1, 1996 between LSI and Northern New Jersey
Eye Institute, P.A. (the "Service Agreement"). Purchaser has had an opportunity
to discuss such dispute with all relevant parties.
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5.10 Governmental Authorizations. Purchaser possesses all
necessary licenses, franchises, permits and other governmental authorizations,
including, but not limited to all licenses, franchises, permits and
authorizations for the conduct of the Purchaser's businesses as now conducted,
all of which are listed (with expiration dates, if applicable) on Schedule 5.10.
Except as set forth on Section 5.10, the transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded by any such licenses,
franchises, permits or authorizations which, singly or in the aggregate, would
not have a Material Adverse Effect. All such licenses, franchises, permits and
other authorizations are valid and in full force and effect, the Purchaser is in
current compliance therewith and has not received any notice that any
governmental authority is considering challenging, revoking, cancelling,
restricting, conditioning or not renewing any such license, franchise, permit or
other authorization.
5.11 Compliance with Applicable Laws. Purchaser holds all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities material to the business of the Purchaser including,
without limitation, applicable state corporation, insurance and health
regulatory authorities, and other Governmental Entities regulating exclusive
provider organizations, preferred provider organizations, medical utilization
review organizations, medical service organizations, lay intermediaries,
secondary contractors, or third party administrators (the "Purchaser Permits").
The Purchaser is in current compliance with the terms of the Purchaser Permits,
except for such failures to comply which, singly or in the aggregate, would not
have a Material Adverse Effect. Except as disclosed in Section 5.11, the
Purchaser is in compliance with all laws, including applicable Medicare and
Medicaid laws, ordinances and regulations of any Governmental Entity, including,
without limitation, applicable state corporation, insurance and health
regulatory authorities and other Governmental Entities regulating exclusive
provider organizations, preferred provider organizations, medical utilization
review organizations, medical service organizations, lay intermediaries,
secondary contractors or third-party administrators and all Medicare and
Medicaid provider agreements to which it is a party, except where the failure to
comply would not have a Material Adverse Effect. Except as disclosed in Section
5.11, to the best knowledge of the Purchaser, no investigation or review by any
Governmental Entity, including, without limitation, applicable state
corporation, insurance and health regulatory authorities with respect to the
Purchaser is pending, or threatened, nor has any Governmental Entity, including,
without limitation, applicable state corporation, insurance and health
regulatory authority indicated an intention to conduct the same, other than
those the outcome of which would not be material to the business of the
Purchaser.
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6. SECURITIES LAW MATTERS.
6.1. Investment Representations and Covenants. Subject to
the terms of the Stock Distribution Agreement, the Stockholder represents,
warrants and covenants as follows:
a. The Stockholder understands that the
Securities will not be registered under the Securities Act or any state
securities laws on the grounds that the issuance of the Securities is exempt
from registration pursuant to Section 4(2) of the Securities Act and applicable
state securities laws, and that the reliance of Purchaser on such exemptions is
predicated in part on the Stockholder's representations, warranties, covenants
and acknowledgements set forth in this Section.
b. The Stockholder represents and warrants that
the Securities to be acquired by it upon consummation of the transactions
described in this Agreement will be acquired by the Stockholder for its own
account, not as a nominee or agent, and without a view to resale or other
distribution within the meaning of the Securities Act and the rules and
regulations thereunder, and that the Stockholder will not distribute any of the
Securities in violation of the Securities Act.
c. The Stockholder (i) acknowledges that the
Securities issued to it at the Closing must be held indefinitely by it unless
subsequently registered under the Securities Act or an exemption from
registration is available, (ii) is aware that any routine sales of Securities
made pursuant to Rule 144 under the Securities Act may be made only in limited
amounts and in accordance with the terms and conditions of that Rule and that in
such cases where the Rule is not applicable, compliance with some other
registration exemption will be required, (iii) is aware that Rule 144 is not
currently available for use for resale of any of the Securities to be acquired
by Stockholder upon consummation of the transactions described in this
Agreement, and (iv) acknowledges and agrees that the transfer of the Securities
shall be further restricted by provisions contained in the Stock Distribution
Agreement.
d. The Stockholder represents and warrants to
Purchaser that it has such knowledge and experience in financial and business
matters such that it is capable of evaluating the merits and risks of an
investment in the Securities and is able to sustain a complete loss of such
investment.
e. The Stockholder confirms that it has had the
opportunity to ask questions of and receive answers from Purchaser concerning
the terms and conditions of its investment in the Securities, and that it has
received, to its satisfaction, such information about Purchaser's operations as
it has requested.
f. In order to ensure compliance with the
provisions of paragraph (c) hereof, the Stockholder agrees that after the
Closing it will not sell or otherwise transfer or dispose of any of the
Securities or any interest therein except in compliance with the terms of the
Stock Distribution Agreement.
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g. The Stockholder acknowledges and agrees that
the certificates or instruments representing the Securities to be issued to it
pursuant to this Agreement shall contain a restrictive legend noting the
restrictions on transfer described in this Section and required by federal and
applicable state securities laws, and that appropriate "stop-transfer"
instructions will be given to Purchaser's transfer agent in the event such
provisions and applicable federal and state securities laws are not complied
with by any Stockholder.
h. The Stockholder represents and warrants that
Stockholder is an "accredited investor" as defined under the Securities Act and
state "Blue Sky" laws.
i. The Stockholder acknowledges that it has
received the Purchaser Documents described in Section 5.8 and has had an
opportunity to review the Purchaser Documents.
7. COVENANTS OF THE ACQUIRED COMPANIES AND THE STOCKHOLDER. The
Acquired Companies and the Stockholder, jointly and severally, agree that
between the date hereof and the Closing (with respect to the Acquired Companies'
covenants, the Stockholder agrees to use its best efforts to cause the Acquired
Companies to perform):
7.1. Consummation of Agreement. The Acquired Companies and
the Stockholder shall use their reasonable best efforts to cause the
consummation of the transactions contemplated hereby in accordance with their
terms and conditions.
7.2. Business Operations. The Acquired Companies and the
Subsidiaries shall operate their businesses in the ordinary course and
substantially in the manner conducted as of the date hereof. The Acquired
Companies and the Stockholder shall use their reasonable best efforts to
preserve the business of the Acquired Companies and the Subsidiaries intact, to
keep available to Purchaser the services of their officers, agents and
independent contractors and to preserve for Purchaser their relationships with
their suppliers, licensees, distributors, eye care professionals, customers and
others having business relationships with it. Neither the Acquired Companies nor
the Stockholder shall take any action that would, individually or in the
aggregate, result in a Material Adverse Effect.
7.3. Access. The Acquired Companies and the Stockholder
shall, at reasonable times during normal business hours and on reasonable
notice, permit Purchaser and its authorized representatives, access to, and make
available for inspection, all of the assets and properties of the Acquired
Companies and the Subsidiaries, including their employees, customers and
suppliers, and permit Purchaser and its authorized representatives to inspect
and, at Purchaser's sole cost and expense, make copies of all documents, records
and information with respect to the affairs of the Acquired Companies and the
Subsidiaries as Purchaser and its representatives may request.
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7.4. Notification of Certain Matters. The Acquired
Companies and the Stockholder shall promptly inform Purchaser in writing of (a)
any notice of, or other communication relating to, a default or event that, with
notice or lapse of time or both, would become a default, received by any of them
subsequent to the date of this Agreement and prior to the Closing Date under any
Commitment material to the Acquired Companies' condition (financial or
otherwise), operations, assets, liabilities or business and to which it is
subject; or (b) any material adverse change in the Acquired Companies' condition
(financial or otherwise), operations, assets, liabilities or business.
7.5. Approvals of Third Parties. As soon as practicable
after the date hereof, the Acquired Companies and the Stockholder shall secure
all necessary approvals and consents of Governmental Authorities to the
consummation of the transactions contemplated hereby and shall use their best
efforts to secure all necessary approvals and consents of other third parties to
the consummation of the transactions contemplated hereby.
7.6. Employee Matters. Except as set forth in Schedule
3.11 or as otherwise contemplated by this Agreement, the Acquired Companies
shall not, without the prior written approval of Purchaser, except as required
by law or in the ordinary course of business:
a. increase the cash compensation of any
directors, officers or employees of the Acquired Companies or the Subsidiaries
(other than in the ordinary course of business and consistent with past
practice);
b. adopt, amend or terminate any (i)
Compensation Plan; (ii) Employment Agreement; (iii) Employee Policies and
Procedures; or (iv) Employee Benefit Plan;
c. take any action that could deplete the
assets of any Employee Benefit Plan, other than payment of benefits in the
ordinary course to participants and beneficiaries;
d. fail to pay any premium or contribution due
or with respect to any Employee Benefit Plan;
e. fail to file any return or report with
respect to any Employee Benefit Plan;
f. institute, settle or dismiss any employment
litigation except as could not, individually or in the aggregate, result in a
Material Adverse Effect;
g. enter into, modify, amend or terminate any
agreement with any union, labor organization or collective bargaining unit; or
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h. take or fail to take any action with respect
to any past or present employee of the Acquired Companies or the Subsidiaries
that would, individually or in the aggregate, result in a Material Adverse
Effect.
7.7. Contracts. The Acquired Companies shall not, without
the prior written approval of Purchaser, assume or enter into any contract,
lease, license, obligation, indebtedness, commitment, purchase or sale in excess
of $20,000, except in the ordinary course of business nor shall it waive any
material right or cancel any material contract, debt or claim, nor shall it
alter any Commitment in any material respect.
7.8. Capital Assets; Payments of Liabilities. The Acquired
Companies shall not, without the prior written approval of Purchaser (a) acquire
or dispose of any capital asset having a fair market value of $20,000 or more,
or acquire or dispose of any capital asset outside of the ordinary course of
business or (b) discharge or satisfy any lien or encumbrance or pay or perform
any obligation or liability other than (i) liabilities and obligations reflected
in the Financial Statements or (ii) current liabilities and obligations incurred
in the usual and ordinary course of business since the Acquired Companies
Balance Sheet Date and, in either case (i) or (ii) above, only as required by
the express terms of the agreement or other instrument pursuant to which the
liability or obligation was incurred.
7.9. Mortgages, Liens and Guaranties. The Acquired
Companies shall not, without the prior written approval of Purchaser, enter into
or assume any mortgage, pledge, conditional sale or other title retention
agreement, permit any security interest, lien, encumbrance or claim of any kind
to attach to any of its assets (other than statutory liens arising in the
ordinary course of business and other liens that do not materially detract from
the value or interfere with the use of such assets), whether now owned or
hereafter acquired, or guarantee or otherwise become contingently liable for any
obligation of another, except obligations arising by reason of endorsement for
collection and other similar transactions in the ordinary course of business, or
make any capital contribution or investment in any person.
7.10. [RESERVED]
7.11. Distributions and Repurchases. No distribution,
payment or dividend of any kind will be declared or paid by the Acquired
Companies with respect of its capital stock, nor will any repurchase of any of
the Acquired Companies' capital stock be approved or effected.
7.12. Stock Options. All outstanding options to purchase or
acquire shares of Company Common Stock shall be cancelled and any agreements
with respect to such options shall be terminated.
7.13. Retained Equity. The Acquired Companies shall not,
and the Stockholder shall not permit the Acquired Companies to, make payment of
all or any portion of any retained equity of the Acquired Companies at any time
prior to Closing.
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7.14. Termination of Retirement Plans. Prior to Closing,
the Stockholder shall cause the Acquired Companies to take all steps necessary
to discontinue benefit accruals under any Employee Benefit Plan and to terminate
their participation in all such plans effective as of Closing or as soon
thereafter as may be practical.
7.15. Delivery of Schedules. The Acquired Companies and the
Stockholder shall deliver to Purchaser all Schedules required to be delivered by
them prior to the Closing.
7.16. Approval of Lender and Release. The Acquired
Companies and the Stockholder shall secure the consent and approval of its
senior lender, Foothill Capital Corporation, to the transactions contemplated
hereby and the release of all liens held by such lender on the assets and
capital stock of the Acquired Companies.
8. COVENANTS OF PURCHASER. Purchaser agrees that between the date
hereof and the Closing:
8.1. Consummation of Agreement. Purchaser shall use its
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and conditions.
8.2. Approvals of Third Parties. Purchaser shall use its
best efforts to secure, as soon as practicable after the date hereof, all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby.
8.3. Access. Purchaser shall, at reasonable times during
normal business hours and on reasonable notice, permit Stockholder and its
authorized representatives, access to, and make available for inspection, all of
the assets and properties of Purchaser, including their employees, customers and
suppliers, and permit Stockholder and its authorized representatives to inspect
and, at Stockholder's sole cost and expense, make copies of all documents,
records and information with respect to the affairs of the Purchaser as
Stockholder and its representatives may request.
8.4. Notification of Certain Matters. Purchaser shall
promptly inform Purchaser in writing of (a) any notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by any of them subsequent to the date
of this Agreement and prior to the Closing Date under any obligation material to
the Purchaser's condition (financial or otherwise), operations, assets,
liabilities or business and to which it is subject; or (b) any material adverse
change in the Purchaser's condition (financial or otherwise), operations,
assets, liabilities or business.
8.5. 401(k) Contributions. If pursuant to the terms of the
Stockholder's 401(k) plan the Stockholder matches contributions made by the
Stockholders' employees pursuant to such plan, then the Stockholder shall give
the Purchaser written notice of the
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amount of such matching contribution and the Purchaser shall reimburse the
Stockholder for such matching contributions related to 1997 for those employees
of the Acquired Companies who were participating in such plan prior to the
Closing Date. The Stockholder represents and the Purchaser acknowledges that the
amount of the matching contributions through November 30, 1997 is $22,876.92. In
the event any of such contributions reimbursed by the Purchaser are forfeited by
an employee of the Acquired Companies, the Stockholder agrees to reimburse the
Purchaser for the amount paid by it promptly upon the forfeiture thereof.
9. COVENANTS OF PURCHASER, THE ACQUIRED COMPANIES AND THE
STOCKHOLDER. Purchaser, the Acquired Companies and the Stockholder agree as
follows:
9.1. Amendment of Schedules. Each party hereto agrees
that, with respect to the representations and warranties of such party contained
in this Agreement, such party shall have the continuing obligation until the
Closing to attach, supplement or amend promptly the Schedules with respect to
any matter that would have been or would be required to be set forth or
described in the Schedules in order to not breach any representation, warranty
or covenant of such party contained herein; provided that no amendment or
supplement to a Schedule that constitutes or reflects a material adverse change
to the Acquired Companies or the Assets may be made unless Purchaser consents to
such amendment or supplement, and no amendment or supplement to a Schedule that
constitutes or reflects a material adverse change to Purchaser may be made
unless the Acquired Companies and the Stockholder consent to such amendment or
supplement. For all purposes of this Agreement, including without limitation for
purposes of determining whether the conditions set forth in Sections 10.1 and
11.1 have been fulfilled, the Schedules hereto shall be deemed to be the
Schedules as amended or supplemented pursuant to this Section 9.1. In the event
that the Acquired Companies are required to amend or supplement a Schedule in
accordance with this Section 9.1 and Purchaser does not consent to such
amendment or supplement, or Purchaser is required to amend or supplement a
Schedule in accordance with this Section 9.1 and the Acquired Companies and the
Stockholder do not consent, this Agreement shall be deemed terminated by mutual
consent as set forth in Section 15.1(d) or Section 15.1(e) as appropriate.
9.2. Fees and Expenses. Each of the parties shall pay the
costs and expenses of their own advisors with respect to legal, accounting and
other professional services rendered in connection with the preparation,
negotiation and consummation of this Agreement, provided, however, all such
costs and expenses incurred by the Acquired Companies shall be paid for by the
Stockholder.
9.3. Tax Matters.
a. Returns. The Acquired Companies and the
Subsidiaries shall duly and timely file all Tax Returns required to be filed on
or before the Closing Date and duly and timely pay all taxes shown on such Tax
Returns to be due.
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b. Tax Sharing Agreements. Any tax sharing
agreement between the Acquired Companies or any of the Subsidiaries and any
other party shall be terminated as of the Closing Date and shall have no further
effect for any taxable year (whether the current year, a future year or a past
year).
c. Audits. The Stockholder will allow Purchaser
and its counsel to participate, at their expense, in any audits of the
consolidated federal income tax returns of the Acquired Companies and the
Subsidiaries. The Stockholder will not settle any such audit without the prior
written consent of Purchaser.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. Except as
may be waived in writing by Purchaser, the obligations of Purchaser hereunder
are subject to the fulfillment at or prior to the Closing Date of each of the
following conditions precedent:
10.1. Representations and Warranties. The representations
and warranties of the Acquired Companies and the Stockholder contained herein
shall have been true and correct in all material respects when initially made
and shall be true and correct in all material respects as of the Closing Date.
10.2. Covenants. The Acquired Companies and the Stockholder
shall have performed and complied with all covenants required by this Agreement
to be performed and complied with by the Acquired Companies or the Stockholder
prior to the Closing Date.
10.3. Proceedings. No action, proceeding or order by any
court or governmental body or agency shall have been threatened orally or in
writing, asserted, instituted or entered to restrain or prohibit the carrying
out of the transactions contemplated hereby.
10.4. No Material Adverse Change. No material adverse
change in the condition (financial or otherwise), operations, assets,
liabilities or business of the Acquired Companies shall have occurred since the
Acquired Companies Balance Sheet Date, whether or not such change shall have
been caused by the deliberate act or omission of the Acquired Companies or the
Stockholder. For purposes hereof, the termination of the employment relationship
of Xxxxxxx Xxxxx, M.D. and Xxxxxxx Xxxxx, M.D. with Northern New Jersey Eye
Institute, P.A. will not be considered a material adverse change.
10.5. Government Approvals and Required Consents. The
Acquired Companies, the Stockholder and Purchaser shall have obtained all
necessary government and other third-party approvals and consents (other than
consents technically required as a result of the transactions contemplated
hereby under the terms of managed care contracts to which the Acquired Companies
or any of its employees are a party).
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10.6. Closing Deliveries. Purchaser shall have received all
documents and agreements, duly executed and delivered in form reasonably
satisfactory to Purchaser, referred to in Section 12.1.
10.7. Exemption Under Securities Laws. The transfer of
Purchaser's Securities to the Stockholder as contemplated in this Agreement
shall qualify for one or more exemptions from registration under state and
federal securities laws. Purchaser shall pay all filing fees in connection with
any filing required to qualify the transfer of the Securities for such
exemption(s).
10.8. Approval of Purchaser's Board of Directors. Purchaser
shall have received the approval of its Board of Directors.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED COMPANIES
AND THE STOCKHOLDER. Except as may be waived in writing by the Acquired
Companies and the Stockholder, the obligations of the Acquired Companies and the
Stockholder hereunder are subject to fulfillment at or prior to the Closing Date
of each of the following conditions precedent:
11.1. Representations and Warranties. The representations
and warranties of Purchaser contained herein shall be true and correct in all
material respects when initially made and shall be true and correct in all
material respects as of the Closing Date.
11.2. Covenants. Purchaser shall have performed and
complied with all covenants and conditions required by this Agreement to be
performed and complied with by it prior to the Closing Date.
11.3. Proceedings. No action, proceeding or order by any
court or governmental body or agency shall have been threatened in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
11.4. Government Approvals and Required Consents. The
Acquired Companies the Stockholder and Purchaser shall have obtained all
necessary government and other third-party approvals and consents (other than
consents technically required as a result of the transactions contemplated
hereby under the terms of managed care contracts to which the Acquired Companies
or any of its employees are a party).
11.5. Closing Deliveries. The Acquired Companies and the
Stockholder shall have received all documents, instruments and agreements, duly
executed and delivered in form reasonably satisfactory to the Acquired
Companies, referred to in Section 12.2.
11.6. No Material Adverse Change. No material adverse
change in the condition (financial or otherwise), operations, assets,
liabilities or business of the Purchaser shall have occurred since the Effective
Date, whether or not such change shall
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have been caused by the deliberate act or omission of Purchaser.
11.7. Consent of Lender. The Acquired Companies and
Stockholder shall have received the approval of its senior lender, Foothill
Capital Corporation and a release of all of such lender's liens against the
Acquired Companies.
11.8. Approval of Stockholder's Board of Directors. The
Stockholder shall have received the approval of its Board of Directors.
12. CLOSING DELIVERIES.
12.1. Deliveries of the Acquired Companies and the
Stockholder. At Closing, the Acquired Companies or the Stockholder, as
appropriate, shall deliver to Purchaser the following, all of which shall be in
a form reasonably satisfactory to Purchaser:
a. certificates representing all of the issued
and outstanding shares of Company Common Stock, duly endorsed in blank by the
Stockholder or accompanied by duly endorsed stock powers in blank, with all
necessary transfer tax and other revenue stamps, acquired at the Stockholder's
expense, affixed and cancelled. The Stockholder agrees to cure any deficiencies
with respect to the endorsement of the certificates or other documents of
conveyance with respect to the Acquired Companies Common Stock or with respect
to the stock powers accompanying any Company Common Stock;
b. a copy of resolutions of the Boards of
Directors of the Acquired Companies authorizing the execution, delivery and
performance of this Agreement and all other documents and agreements to be
executed in connection herewith, certified by the Secretary of the Acquired
Companies as being true and correct copies of the originals thereof subject to
no modifications or amendments;
c. a certificate of an officer of the Acquired
Companies and the Stockholder, dated the Closing Date, certifying the truth and
accuracy of their respective representations and warranties contained herein, on
and as of the Closing Date;
d. a certificate of an officer of the Acquired
Companies and the Stockholder, dated the Closing Date certifying (i) the
performance of and compliance by them with all covenants contained herein on and
as of the Closing Date and (ii) that all conditions precedent of the Acquired
Companies and the Stockholder to the Closing have been satisfied;
e. a certificate of an officer of the Acquired
Companies dated the Closing Date, certifying the incumbency and signatures of
each officer who has executed documents delivered pursuant to the Agreement on
behalf of the Acquired Companies;
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f. a certificate, dated within fifteen (15)
days prior to the Closing Date, of the Secretary of State of the state of
incorporation for the Acquired Companies and each of the Subsidiaries
establishing that such corporations are in existence, have paid all franchise or
similar taxes, and are in good standing to transact business in their respective
states of organization;
g. certificates, if applicable, dated within
fifteen (15) days prior to the Closing Date, of the Secretaries of State of the
states in which the Acquired Companies and each of the Subsidiaries are
qualified to do business, to the effect that such corporations are qualified to
do business and in good standing as foreign corporations in each of such states;
h. an opinion of counsel to the Acquired
Companies and Stockholder, dated as of the Closing Date, in substantially the
form attached hereto as Exhibit 12.1(h), (which may be relied upon by Purchaser,
its counsel and its underwriters in connection with any registration statement
filed by Purchaser);
i. if applicable, all authorizations, consents,
permits and licenses referenced in Section 3.6;
j. the resignations of the directors and
officers of the Acquired Companies and each of the Subsidiaries effective
immediately upon Closing;
k. an executed Stock Distribution Agreement
between Purchaser and the Stockholder in substantially the form attached hereto
as Exhibit 12.1(k);
l. an executed Escrow Agreement, if applicable,
in substantially the form attached hereto as Exhibit 12.1(l);
m. an executed Employment Agreement between
Purchaser and each of Xxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxx in
substantially the form attached hereto as Exhibit 12.1(m);
n. a new lease or leases or assignments of
existing leases between the landlords under each lease for real property
described on Schedule 3.15(c) and Purchaser in form and substance reasonably
satisfactory to Purchaser;
o. the consent of Foothill Capital Corporation
to the transaction and its release of all liens on the assets and capital stock
of the Acquired Companies;
p. a termination agreement executed between the
Stockholder and each of Xxxx Xxxxxx, O.D., Xxxxx Xxxxxx and Xxxxxx Xxxxx, O.D.,
which termination agreement shall terminate such individuals' employment
agreements with the Stockholder and permit such individuals to participate in
the Business; and
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q. such other instrument or instruments of
transfer prepared by Purchaser as shall be necessary or appropriate, as
Purchaser or its counsel shall reasonably request, to carry out and effect the
purpose and intent of this Agreement.
12.2. Deliveries of Purchaser. At Closing, Purchaser shall
deliver to the Stockholder the following, all of which shall be in a form
reasonably satisfactory to the Stockholder:
a. the Stock Purchase Consideration;
b. a copy of the resolutions of the Board of
Directors of Purchaser authorizing the execution, delivery and performance of
this Agreement and all other documents and agreements to be executed in
connection herewith, certified by the Secretary of Purchaser as being true and
correct copies of the originals thereof subject to no modifications or
amendments;
c. a certificate of an officer of Purchaser,
dated the Closing Date, certifying the truth and accuracy of the representations
and warranties of Purchaser contained herein, on and as of the Closing Date;
d. a certificate of an officer of Purchaser,
dated the Closing Date, certifying (i) the performance and compliance by
Purchaser with all covenants contained herein on and as of the Closing Date and
(ii) that all conditions precedent of Purchaser to the Closing have been
satisfied;
e. a certificate of an officer of Purchaser,
dated the Closing Date, certifying the incumbency and signatures of each officer
who has executed documents delivered pursuant to the Agreement on behalf of
Purchaser;
f. a certificate, dated within fifteen (15)
days prior to the Closing Date, of the Secretary of State of the State of
Florida establishing that Purchaser is in existence, has paid all franchise or
similar taxes, if any, and is in good standing to transact business in such
state;
g. certificates, dated within fifteen (15) days
prior to the Closing Date, of the Secretary of State of each state in which
Purchaser is qualified to do business, to the effect that Purchaser is qualified
to do business and is in good standing as a foreign corporation in each of such
states;
h. an opinion of Xxxxxxxx, Loop & Xxxxxxxx,
LLP, counsel to Purchaser, dated as of the Closing Date, in substantially the
form attached hereto as Exhibit 12.2(h);
i. an executed Stock Distribution Agreement;
j. an executed Escrow Agreement, if applicable;
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k. an executed Employment Agreement between
Purchaser and each of Xxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxx; and
l. such other instrument or instruments of
transfer, prepared by the Acquired Companies or the Stockholder as shall be
necessary or appropriate, as the Acquired Companies, the Stockholder or their
counsel shall reasonable request, to carry out and effect the purpose and intent
of this Agreement.
13. POST CLOSING MATTERS.
13.1. Further Instruments of Transfer. From and after the
Closing Date, at the request of Purchaser and at the Stockholder's sole cost and
expense, the Stockholder shall deliver any further instruments of transfer and
take all reasonable action as may be necessary or appropriate to carry out the
purpose and intent of this Agreement.
13.2. Disclosure. From and after the Closing, at the
request of Purchaser, the Stockholder agrees to provide all information which
Purchaser may from time to time request concerning themselves, the Acquired
Companies and the transactions contemplated hereby for inclusion in any
registration statement or other filing made by Purchaser under the Securities
Act or the Exchange Act at no additional cost to Purchaser. The Stockholder
covenants and agrees that all such information shall be true and correct when
made and shall not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein
contained not misleading.
13.3. Accountants' Consent. From and after the Closing, at
the request of Purchaser, the Stockholder agrees to request KPMG Peat Marwick
LLP to consent to the inclusion of the financial statements of the Acquired
Companies and the Subsidiaries for the fiscal years ended December 31, 1995,
1996 and 1997 in any registration statement or other filing made by Purchaser
under the Securities Act or the Exchange Act; provided, however, the Stockholder
shall not be responsible for any fees of KPMG Peat Marwick LLP with respect to
any work performed on any such financial statements, which specifically relates
to the inclusion of such financial statements in any such registration statement
or other filing made by Purchaser.
13.4. Release of Stockholder Guaranty. Within the ninety
(90) day period immediately following the Closing Date, Purchaser agrees to use
its reasonable best efforts to assist Stockholder in obtaining a release of
Stockholder's guarantee of that certain Master Lease Agreement between Hillside
Finance International LLC and LSI dated June 27, 1996, including Purchaser's
agreement to provide a guarantee of such obligation.
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14. REMEDIES.
14.1. Indemnification by the Stockholder. Subject to the
terms and conditions of this Agreement, the Stockholder agrees to indemnify,
defend and hold Purchaser and its directors, officers, members, managers,
employees, agents, attorneys and affiliates harmless from and against all
losses, claims, obligations, demands, assessments, penalties, liabilities,
costs, damages, reasonable attorneys' fees and expenses (collectively,
"Damages") asserted against or incurred by Purchaser or any of such individuals
(including, but not limited to, any reduction in payments to or revenues of the
Acquired Companies), arising out of or resulting from:
a. a breach of any representation, warranty or
covenant of the Acquired Companies or the Stockholder contained herein or in any
schedule or certificate delivered hereunder, disregarding for purposes hereof
any materiality qualifications contained therein to the extent such materiality
qualifications, when taken as a whole, represent a material breach of this
Agreement by the Acquired Companise or the Stockholder;
b. any liability under the Securities Act, the
Exchange Act or any other federal or state "Blue Sky" or securities law or
regulation, at common law or otherwise, (i) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact relating to the
Stockholder, the Acquired Companies or the Subsidiaries and provided to
Purchaser or its counsel by them specifically for inclusion in a registration
statement or any prospectus forming a part thereof, or any amendment thereof or
supplement thereto, or any other filing made pursuant to the Exchange Act, or
(ii) arising out of or based upon any omission or alleged omission to state
therein a material fact relating to the Stockholder, the Acquired Companies or
the Subsidiaries required to be stated therein or necessary to make the
statements therein not misleading, and not provided to Purchaser or its counsel
by the Acquired Companies or the Stockholder;
c. any liability arising from any alleged
unlawful sale or offer to sell or transfer any of the Common Stock by the
Stockholder; or
d. notwithstanding anything herein to the
contrary, any liability arising from any claim by Northern New Jersey Eye
Institute, P.A. or any stockholder of or physician employed by Northern New
Jersey Eye Institute, P.A. that such entity, stockholder or physician was
fraudulently induced into entering into the Services Agreement, and any
liability incurred or arising from any breach by the Acquired Companies of the
Services Agreement and which breach arose on or before the Closing Date, and any
liability incurred or arising from the unenforceability of the Services
Agreement due to actions or inactions by the Stockholder or the Acquired
Companies which occurred on or before the Closing Date.
14.2. Indemnification by Purchaser. Subject to the terms
and conditions of this Agreement, Purchaser hereby agrees to indemnify, defend
and hold the Stockholder
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harmless from and against all Damages asserted against or incurred by them
arising out of or resulting from:
a. a breach by Purchaser of any representation,
warranty or covenant of Purchaser contained therein or in any schedule or
certificate delivered hereunder;
b. except as specifically set forth herein,
Purchaser's failure to satisfy obligations and liabilities of the Acquired
Companies; and
c any liability under the Securities Act, the
Exchange Act or any other federal or state "Blue Sky" or securities law or
regulation, at common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact relating to Purchaser,
contained in any preliminary prospectus, registration statement or any
prospectus forming a part thereof, or any amendment thereof or supplement
thereto, arising out of or based upon any omission or alleged omission to state
therein a material fact relating to Purchaser (including the subsidiaries),
required to be stated therein or necessary to make the statements therein not
misleading.
14.3. Conditions of Indemnification. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
a. A party claiming indemnification under this
Agreement (an "Indemnified Party") shall promptly (and, in any event, at least
ten (10) days prior to the due date for any responsive pleadings, filings or
other documents) (i) notify the party from whom indemnification is sought (the
"Indemnifying Party") of any third-party claim or claims asserted against the
Indemnified Party ("Third Party Claim") that could give rise to a right of
indemnification under this Agreement and (ii) transmit to the Indemnifying Party
a written notice ("Claim Notice") describing in reasonable detail the nature of
the Third Party Claim, a copy of all papers served with respect to such claim
(if any), an estimate of the amount of damages attributable to the Third Party
Claim and the basis of the Indemnified Party's request for indemnification under
this Agreement. Except as set forth in Section 14.6, the failure to promptly
deliver a Claim Notice shall not relieve the Indemnifying Party of its
obligations to the Indemnified Party with respect to the related Third Party
Claim except to the extent that the resulting delay is materially prejudicial to
the defense of such claim. Within thirty (30) days after receipt of any Claim
Notice (the "Election Period"), the Indemnifying Party shall notify the
Indemnified Party (i) whether the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Article 16 with respect to such
Third Party Claim and (ii) whether the Indemnifying Party desires, at the sole
cost and expense of the Indemnifying Party, to defend the Indemnified Party
against such Third Party Claim.
If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend, at its sole cost and expense, such Third Party Claim by all
appropriate proceedings, which proceedings
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shall be prosecuted diligently by the Indemnifying Party to a final conclusion
or settled at the discretion of the Indemnifying Party in accordance with this
Section 14.3. The Indemnifying Party shall have full control of such defense and
proceedings, including any compromise or settlement thereof. The Indemnified
Party is hereby authorized, at the sole cost and expense of the Indemnifying
Party (but only if the Indemnified Party is entitled to indemnification
hereunder), to file, during the Election Period, any motion, answer or other
pleadings that the Indemnified Party shall deem necessary or appropriate to
protect its interests or those of the Indemnifying Party and not prejudicial to
the Indemnifying Party (it being understood and agreed that if an Indemnified
Party takes any such action that is prejudicial and causes a final adjudication
that is adverse to the Indemnifying Party, the Indemnifying Party shall be
relieved of its obligations hereunder with respect to such Third Party Claim).
If requested by the Indemnifying Party, the Indemnified Party agrees, at the
sole cost and expense of the Indemnifying Party, to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, including, without limitation, the making
of any related counterclaim against the person asserting the Third Party Claim
or any cross-complaint against any person. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to Section 14.3(b) and shall bear
its own costs and expenses with respect to such participation; provided,
however, that if the named parties to any such action (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party, and upon written
notification thereof, the Indemnifying Party shall not have the right to assume
the defense of such action on behalf of the Indemnified Party; provided further
that the Indemnifying Party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Indemnified Party, which firm shall be designated in writing by the
Indemnified Party.
b. If the Indemnifying Party fails to notify the
Indemnified Party within the Election Period that the Indemnifying Party elects
to defend the Indemnified Party pursuant to Section 14.3(b), or if the
Indemnifying Party elects to defend the Indemnified Party pursuant to Section
14.3(b) but fails diligently and promptly to prosecute or settle the Third Party
Claim, then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party (if the Indemnified Party is entitled
to indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings, provided, however, that
the Indemnified Party may not enter into, without the Indemnifying Party's
consent, which shall not be unreasonably withheld, any compromise or settlement
of such Third Party Claim. Notwithstanding the foregoing, if the Indemnifying
Party has delivered a written notice to
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the Indemnified Party to the effect that the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article 14 and if such
dispute is resolved in favor of the Indemnifying Party, the Indemnifying Party
shall not be required to bear the costs and expenses of the Indemnifying Party's
defense pursuant to this Section or of the Indemnifying Party's participation
therein at the Indemnified Party's request, and the Indemnified Party shall
reimburse the Indemnifying Party in full for all costs and expenses of such
litigation. The Indemnifying Party may participate in, but not control any
defense or settlement controlled by the Indemnified Party pursuant to this
Section 14.3(b), and the Indemnifying Party shall bear its own costs and
expenses with respect to such participation; provided, however, that if the
named parties to any such action (including any impleaded parties) include both
the Indemnifying Party and the Indemnified Party, and the Indemnifying Party has
been advised by counsel that there may be one or more legal defenses available
to the Indemnified Party, then the Indemnifying Party may employ separate
counsel and upon written notification thereof, the Indemnified Party shall not
have the right to assume the defense of such action on behalf of the
Indemnifying Party.
c. In the event any Indemnified Party should have a
claim against any Indemnifying Party hereunder that does not involve a Third
Party Claim, the Indemnified Party shall transmit to the Indemnifying Party a
written notice (the "Indemnity Notice") describing in reasonable detail the
nature of the claim, an estimate of the amount of damages attributable to such
claim and the basis of the Indemnified Party's request for indemnification under
this Agreement. If the Indemnifying Party does not notify the Indemnified Party
within sixty (60) days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Party hereunder. If the Indemnifying Party has timely disputed such claim, as
provided above, such dispute shall be resolved by mediation or arbitration as
provided in Section 18.1 if the parties do not reach a settlement of such
dispute within thirty (30) days after notice of a dispute is given.
d. Payments of all amounts owing by an Indemnifying
Party pursuant to this Article 14 relating to a Third Party Claim shall be made
within thirty (30) days after the latest of (i) the settlement of such Third
Party Claim, (ii) the expiration of the period for appeal of a final
adjudication of such Third Party Claim or (iii) the expiration of the period for
appeal of a final adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement. Payments of all amounts owing by an
Indemnifying Party pursuant to Section 14.3(d) shall be made within thirty (30)
days after the later of (i) the expiration of the sixty (60) day Indemnity
Notice period or (ii) the expiration of the period for appeal, if any, of a
final adjudication or arbitration of the Indemnifying Party's liability to the
Indemnified Party under this Agreement.
14.4. Exclusivity of Remedies. The remedies provided in this
Agreement shall be exclusive of any other rights or remedies available to one
party against the other, either at law or in equity; provided however such
remedies shall not be exclusive as to any claim based on fraud or any claim
under Section 16 of this Agreement. This Article 14 regarding indemnification
shall survive Closing.
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14.5. Costs, Expenses and Legal Fees. Each party hereto
agrees to pay the costs and expenses (including attorneys' fees and expenses)
incurred by the other parties in successfully (a) enforcing any of the terms of
this Agreement, or (b) proving that another party breached any of the terms of
this Agreement.
14.6. Indemnification Limitations. Notwithstanding the
provisions of Sections 14.1 and 14.2, no party shall be required to indemnify
another notice of party with respect to a breach of a representation, warranty
or covenant unless the notice of claim for indemnification is delivered within
eighteen (18) months after the Closing Date, except that a claim for
indemnification for a breach of the representations and warranties contained in
Sections 3.3 and 4.1, may be made at any time, and a claim for indemnification
for a breach of the representations and warranties contained in Section 3.19 may
be made at any time within the applicable statute of limitations.
14.7. Tax Benefits; Insurance Proceeds. The total amount of
any indemnity payments owed by one party to another party to this Agreement
shall be reduced by any correlative tax benefit received by the party to be
indemnified or the net proceeds received by the party to be indemnified with
respect to recovery from third parties or insurance proceeds and such
correlative insurance benefit shall be net of the insurance premium, if any,
that becomes due as a result of such claim.
14.8. Indemnification Basket. No duty of indemnification
shall arise under Section 14 of this Agreement unless and until the amount of
Damages of the Indemnified Party exceeds one percent (1%) of the aggregate Stock
Purchase Consideration and then such liability shall be limited to Damages in
aggregate in excess of one percent (1%) of the aggregate Stock Purchase
Consideration.
15. TERMINATION.
15.1. Termination. This Agreement may be terminated:
a. at any time prior to the Closing Date by
mutual written agreement of all parties;
b. at any time prior to the Closing Date by
Purchaser, by written notice to the Stockholder, if any representation or
warranty of the Acquired Companies or the Stockholder contained in this
Agreement or in any certificate or other document executed and delivered by the
Acquired Companies or the Stockholder pursuant to this Agreement is or becomes
untrue or breached in any material respect or if the Acquired Companies or the
Stockholder fail to comply in any material respect with any covenant or
agreement contained herein, and any such misrepresentation, noncompliance or
breach is not cured, waived or eliminated within twenty (20) days after receipt
of written notice thereof;
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c. at any time prior to the Closing Date by the
Stockholder, by written notice to Purchaser, if any representation or warranty
of Purchaser contained in this Agreement is or becomes untrue in any material
respect or if Purchaser fails to comply in any material respect with any
covenant or agreement contained herein, and any such misrepresentation,
noncompliance or breach is not cured, waived or eliminated within twenty (20)
days after receipt or written notice thereof;
d. by Purchaser, by written notice to the
Stockholder, in the event the conditions precedent set forth in Article 11 of
this Agreement have not been satisfied or waived by December 31, 1997;
e. by the Stockholder, by written notice to the
Purchaser, in the event the conditions precedent set forth in Article 10 of this
Agreement have not been satisfied or waived by December 31, 1997; or
f. by either party, by written notice to the
other, if the Closing shall not have occurred on or prior to ten business days
following the satisfaction or waiver of all conditions precedent to Closing.
15.2. Effect of Termination. In the event this Agreement is
terminated pursuant to Section 15.1, this Agreement shall be null and void and
of no further force and effect except that Purchaser, the Acquired Companies and
the Stockholder shall each be entitled to pursue, exercise and enforce any and
all remedies, rights, powers and privileges available at law or in equity,
subject to the limitations set forth in Section 14.1.
16. NON-COMPETITION AND CONFIDENTIALITY COVENANTS.
16.1. The Stockholder's Non-Competition Covenant.
a. The Stockholder recognizes that their
covenants contained in this Section 16.1 are an essential part of this Agreement
and that, but for the agreement of the Stockholder to comply with such
covenants, Purchaser would not have entered into this Agreement. The Stockholder
acknowledges and agrees that their covenant not to compete is necessary to
ensure the continuation of the Business (as defined below) and is necessary to
protect the reputation of Purchaser, and that irreparable and irrevocable harm
and damage will be done to Purchaser if the Stockholder competes with Purchaser.
The Stockholder accordingly agrees that for a period of five (5) years from the
Closing Date, it shall not:
i) directly or indirectly, either as
principal, agent, independent contractor, consultant, director, officer,
employee, employer, advisor, stockholder, partner or in any other individual or
representative capacity whatsoever, either for their own benefit or for the
benefit of any other person or entity knowingly (A) hire, attempt to hire,
contact or solicit with respect to hiring any employee of Purchaser (or of any
of its direct or indirect subsidiaries) or (B) induce or otherwise counsel,
advise or encourage any employee of Purchaser (or of any of its direct or
indirect subsidiaries) to leave the employment of Purchaser;
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ii) act or serve, directly or
indirectly, as a principal, agent, independent contractor, consultant, director,
officer, employee, employer or advisor or in any other position or capacity with
or for, or acquire a direct or indirect ownership interest in or otherwise
conduct (whether as stockholder, partner, investor, joint venturer, or as owner
of any other type of interest), any Competing Business as such term is defined
herein; provided, however, that this clause (ii) shall not prohibit Stockholder
from being the owner of up to 1% of any class of outstanding securities of any
company or entity if such class of securities is publicly traded; or
iii) directly or indirectly, either as
principal, agent, independent, contractor, consultant, director, officer,
employee, employer, advisor, stockholder, partner or in any other individual or
representative capacity whatsoever, either for their own benefit or for the
benefit of any other person or entity, call upon or solicit any customers or
clients of the Business for the purpose of providing management services to eye
care professionals or providing managed care services to third party payors or
eye care professionals.
b. For the purposes of this Section 16.1, the
following terms shall have the meanings set forth below:
i) "Business" shall mean providing
management services to eye care professionals and providing managed care
services to third party payors or eye care professionals.
ii) "Competing Business" shall mean an
individual, business, corporation, association, firm, undertaking, company,
partnership, joint venture, organization or other entity that either (A)
conducts a business substantially similar to the Business within any State where
the Acquired Companies or the Subsidiaries engage in business, or (B) provides
or sells a service which is the same or substantially similar to, or otherwise
competitive with the services provided by the Business within any State where
the Acquired Companies or the Subsidiaries engage in business.
c. Should any portion of this Section 16.1 be
deemed unenforceable because of the scope, duration or territory encompassed by
the undertakings of the Stockholder hereunder, and only in such event, then the
Stockholder and Purchaser consent and agree to such limitation on scope,
duration or territory as may be finally adjudicated as enforceable by a court of
competent jurisdiction after the exhaustion of all appeals.
d. This covenant shall be construed as an
agreement ancillary to the other provisions of this Agreement, and the existence
of any claim or cause of action of a Stockholder against Purchaser, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Purchaser of this covenant. Without limiting other possible
remedies to Purchaser for breach of this covenant, the Stockholder
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agrees that injunctive or other equitable relief will be available to enforce
the covenants of this provision, such relief to be without the necessity of
posting a bond, cash or otherwise. The Stockholder and Purchaser further
expressly acknowledge that the damages that would result from a violation of
this non-competition covenant would be impossible to predict with any degree of
certainty, and agree that liquidated damages in the amount of Stock Purchase
Consideration is reasonable in light of the severe harm to the Business and
Purchaser which would result in the event that a violation of this
non-competition covenant were to occur.
16.2. The Stockholder's Confidentiality Covenant. From the
date hereof, the Stockholder shall not, directly or indirectly, use for any
purpose, or disclose to any third party, any information of Purchaser or the
Acquired Companies, as appropriate (whether written or oral), including any
business management or economic studies, customer lists, proprietary forms,
proprietary business or management methods, marketing data, fee schedules, or
trade secrets of Purchaser or of the Acquired Companies, as applicable, and
including the terms and provisions of this Agreement and any transaction or
document executed by the parties pursuant to this Agreement. Notwithstanding the
foregoing, the Stockholder may disclose information that they can establish (a)
is or becomes generally available to and known by the public or optometric
community (other than as a result of an unpermitted disclosure directly or
indirectly by the Stockholder or its Affiliates, advisors or representatives);
(b) is or becomes available to such Stockholder on a nonconfidential basis from
a source other than Purchaser, the Acquired Companies or their respective
Affiliates, advisors or representatives, provided that such source is not and
was not bound by a confidentiality agreement with or other obligation of secrecy
to Purchaser, the Acquired Companies or their respective Affiliates, advisors or
representatives of which such Stockholder has knowledge; or (c) has already been
or is hereafter independently acquired or developed by such Stockholder without
violating any confidentiality agreement with or other obligation of secrecy to
Purchaser, the Acquired Companies or their respective Affiliates, advisors or
representatives. Without limiting the other possible remedies to Purchaser for
the breach of this covenant, the Stockholder agrees that injunctive or other
equitable relief shall be available to enforce this covenant, such relief to be
without the necessity of posting a bond, cash or otherwise. The Stockholder
further agrees that if any restriction contained in this Section 16.2 is held by
any court to be unenforceable or unreasonable, a lesser restriction shall be
enforced in its place and the remaining restrictions contained herein shall be
enforced independently of each other.
16.3. Survival. The parties acknowledge and agree that this
Article 16 shall survive the Closing of the transactions contemplated herein.
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17. DISPUTES.
17.1. Mediation and Arbitration. Any dispute, controversy
or claim (excluding claims arising out of an alleged breach of Article 16 of
this Agreement) arising out of this Agreement, or the breach thereof, that
cannot be settled through negotiation shall be settled (a) first, by the parties
trying in good faith to settle the dispute by mediation under the Commercial
Mediation Rules of the AAA (such mediation session to be held in Tampa, Florida,
and to commence within 15 days of the appointment of the mediator by the AAA),
administered by the AAA under its Commercial Arbitration Rules (such arbitration
to be held in Tampa, Florida, before a single arbitrator and to commence within
15 days of the appointment of the arbitrator by the AAA), and judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
18. MISCELLANEOUS
18.1. Taxes. The Stockholder shall pay all transfer taxes,
sales and other taxes and charges, if any, which may become payable in
connection with the transactions and documents contemplated hereunder.
Notwithstanding the foregoing, Purchaser shall pay all transfer taxes, sales and
other taxes and charges imposed by the State of Florida, if any, which may
become payable in connection with the transactions and documents contemplated
hereunder.
18.2. Remedies Not Exclusive. No remedy conferred by any of
the specific provisions of this Agreement or any document contemplated by this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. The election of any one or more remedies by any party hereto shall
not constitute a waiver of the right to pursue other available remedies.
18.3. Parties Bound. Except to the extent otherwise
expressly provided herein, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, representatives,
administrators, guardians, successors and assigns; and no other person shall
have any right, benefit or obligation hereunder.
18.4. Notices. All notices, reports, records or other
communications that are required or permitted to be given to the parties under
this Agreement shall be sufficient in all respects if given in writing and
delivered in person, by telecopy, by overnight courier or by registered or
certified mail, postage prepaid, return receipt requested, to the receiving
party at the following address:
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If to Purchaser addressed to:
Vision Twenty-0ne, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx
With copies to:
Xxxxxxxx, Loop & Xxxxxxxx
Post Office Box 172609
000 X. Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Facsimile No. (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esquire
If to the Acquired Companies or the Stockholder addressed to:
LaserSight Incorporated
00000 Xxxxxxxx Xxxx
Xx. Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Chief Executive Officer
With copies to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
Xxx Xxxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Facsimile No. (000) 000-0000
Attn: Xxxx Xxxxxxxxx, Esquire
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 18.4. Notice shall be deemed given on the date
of delivery, in the case of personal delivery or telecopy, or on the delivery or
refusal date, as specified on the return receipt, in the case of overnight
courier or registered or certified mail.
18.5. Choice of Law. This Agreement shall be construed,
interpreted, and the rights of the parties determined in accordance with, the
laws of the State of Florida except with respect to matters of law concerning
the internal affairs of any corporate or partnership entity which is a party to
or the subject of this Agreement, and as to those matters the law of the state
of incorporation or organization of the respective entity shall govern.
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18.6. Entire Agreement; Amendments and Waivers. This
Agreement, together with the documents contemplated by this Agreement and all
Exhibits and Schedules hereto and thereto, constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof. No supplement, modification or waiver
of any of the provisions of this Agreement shall be binding unless it shall be
specifically designated to be a supplement, modification or waiver of this
Agreement and shall be executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
18.7. Confidentiality Agreements. The provisions of any
prior confidentiality agreements and letters of intent between or among
Purchaser, the Acquired Companies and the Stockholder, as amended, shall
terminate and cease to be of any force or effect at and upon the Closing.
18.8. Assignment. This Agreement may not be assigned by
operation of law or otherwise except that Purchaser shall have the right to
assign this Agreement, at any time, to any Affiliate or direct or indirect
wholly-owned subsidiary.
18.9. Attorneys' Fees. Except as otherwise specifically
provided herein, if any action or proceeding is brought by any party with
respect to this Agreement or the other documents contemplated with respect to
the interpretation, enforcement or breach hereof, the prevailing party in such
action shall be entitled to an award of all reasonable costs of litigation or
arbitration, including, without limitation, attorneys' fees, to be paid by the
losing party, in such amounts as may be determined by the court having
jurisdiction of such action or proceeding or by the arbitrators deciding such
action or proceeding.
18.10. Further Assurances. From time to time hereafter and
without further consideration, each of the parties hereto shall execute and
deliver such additional or further instruments of conveyance, assignment and
transfer and take such other actions as any of the other parties hereto may
reasonably request in order to more effectively consummate the transactions
contemplated hereunder or as shall be reasonably necessary or appropriate in
connection with the carrying out of the parties' respective obligations
hereunder for the purposes of this Agreement.
18.11. Announcements and Press Releases. Any press releases
or any other public announcements concerning this Agreement or the transactions
contemplated hereunder shall be approved in advance by Purchaser and the
Stockholder; provided, however, that such approval shall not be unreasonably
withheld and if any party reasonably believes that it has a legal obligation to
make a press release and the consent of the other party cannot be obtained, then
the release may be made without such approval.
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18.12. No Tax Representations. Each party acknowledges that
it is relying solely on its advisors to determine the tax consequences of the
transactions contemplated hereunder and that no representation or warranty has
been made by any party as to the tax consequences of such transactions except as
otherwise specifically set forth in this Agreement.
18.13. No Rights as Stockholder. The Stockholder shall have
no rights as a stockholder with respect to any shares of Common Stock until the
issuance of a stock certificate evidencing such shares. Except as otherwise
provided in the Agreement, no adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to such date
any stock certificate is issued.
18.14. Multiple Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
18.15. Headings. The headings of the several articles and
sections herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
18.16. Severability. Each article, section and subsection of
this Agreement constitutes a separate and distinct undertaking, covenant or
provision of this Agreement. If any such provision shall finally be determined
to be unlawful, such provision shall be deemed severed from this Agreement, but
every other provision of this Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
MEC HEALTH CARE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
(Name)
Vice President
----------------------------------
(Title)
LSI ACQUISITION, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
(Name)
President and CEO
----------------------------------
(Title)
LASERSIGHT INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
(Name)
President and CEO
----------------------------------
(Title)
VISION TWENTY-ONE, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
(Name)
Chief Financial Officer
----------------------------------
(Title)
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