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EXHIBIT 10.68
LETTER OF INTENT
BY AND AMONG VISION TWENTY-ONE, INC. (THE "COMPANY"),
MEDEQUITY INVESTORS PARTNERS, LLC ("MEDEQUITY"),
CHASE VISION TWENTY-ONE PARTNERS, LLC ("CHASE"),
PEACHTREE VISION TWENTY-ONE PARTNERS, LLC ("PEACHTREE") AND
CHASE VENTURE CAPITAL ASSOCIATES, L.P. ("CVCA")
I. PURPOSE
Among other things, to enter into a binding letter of intent which
sets forth the terms upon which MedEquity, CVCA, Chase and Peachtree
(collectively the "Investors") will purchase equity securities of the Company.
II. SALE AND PURCHASE OF PREFERRED STOCK
Issuer: The Company
Type of Security: $35,000,000 Series A Senior Convertible
Preferred Stock (the "Preferred Stock")
Economic Terms of the
Preferred Stock: At any time before redemption, the
Preferred Stock shall be convertible into
common stock of the Company at the option
of the holders of the Preferred Stock,
subject to adjustment upon the occurrence
of certain events (see Conversion Feature
and Anti-Dilution Provisions). The
Preferred Stock will rank senior to any
other capital stock of the Company.
Conversion Feature: The conversion price per share of Preferred
Stock (the "Conversion Price") will be set
at $6.50 and shall be subject to certain
adjustments as outlined below and in
Anti-Dilution Provisions.
It is the intent of the parties that the
Company shall repurchase as soon as
reasonably practical after closing
3,000,000 shares of common stock pursuant
to its practice management divestiture
plan. If, by December 31, 2000, the Company
has not reduced the number of its
outstanding shares of common stock (on a
fully diluted basis) by at least 3,000,000
shares pursuant to such plan, the Company
will be obligated to adjust the Conversion
Price for shares of Preferred Stock based
on a pro-rata formula which takes into
account the number of outstanding shares
the Company reduces through practice
management divestitures and the relative
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percentage ownership interest in the
Company the aggregate number of shares of
Preferred Stock would have initially
represented if the number of outstanding
shares at Closing had been 3,000,000 shares
less.
Upon conversion of the Preferred Stock, the
Company will pay cash in lieu of fractional
shares based on the prevailing fair market
value of the common stock.
Dividend: The Preferred Stock shall receive a
dividend of 9.0% per annum. The dividend
will accrue or be payable in cash, at the
option of the Company on a quarterly basis.
Liquidation Preference: In the event of a liquidation of the
Company, the holders of the Preferred Stock
shall be entitled to receive, in preference
to the holders of Common Stock, a
Liquidation Preference equal to the
Original Issue Price plus any accrued but
unpaid dividends in the form of
consideration utilized. For the purpose of
this provision, a liquidation shall
include, at the option of the holders of
the Preferred Stock, the disposition of
substantially all of the assets of the
Company, whether by sale, merger or other
reorganization or by a sale of over 50% of
the ownership of the Company.
Use of Proceeds: General corporate purposes including
property and equipment, working capital,
acquisitions, payment of fees and expenses
and potentially the buyback of certain
amounts of the Company's outstanding common
stock, the terms and conditions of which
are to be as agreed to by the parties.
Registration Requirements: The holders of the Preferred Stock, as a
group, will have two demand registrations
on form S-1 and unlimited demand
registrations on form S-3 of their Common
Stock (upon conversion of the Preferred
Stock) exercisable at any time after the
Closing Date. The Company will be required
to use its best efforts to file a
registration statement on the shares within
30 days after the demand date. It is
provided that the Company shall not be
required to effect a registration of common
stock where the value of such stock is less
than $1,500,000. On one or more occasions,
the Company may suspend or delay
registration in the event of material
non-public information or where the Board
of Directors, in good faith, determines
same will be materially detrimental to the
Company; provided, however, that all such
suspensions or delays shall not exceed
customary limitations. The holders of the
Preferred Stock will also have unlimited
senior piggyback rights that would be
subject to customary underwriters cutbacks.
Reasonable expenses will be paid by the
Company.
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Corporate Governance: The holders of the Preferred Stock shall
designate and elect such number of
directors and shall have such other rights
as shall be set forth in a Board of
Director transition plan reasonably
acceptable to the Investors; provided
however that the holders of Preferred Stock
shall be entitled to designate and elect a
minimum of two directors to the Board. The
Directors appointed by the holders will
have the right to any compensation and
option or warrant packages offered to other
members of the Board of Directors,
representation on the Compensation
Committee on the Board of Directors, and
the reasonable payment of expenses related
to attending board meetings and customary
indemnification offered to all members of
the Board of Directors.
Anti-Dilution: Standard weighted average adjustment
provisions for sales of equity at prices
below the Conversion Price, determined on a
weighted average basis, provided, however,
no adjustment (a) for issuances of equity
by the Company in connection with mergers
or acquisitions transactions or (b) if the
Company issues options under option plans
approved by the Board at prices below fair
market value.
Mandatory Redemption: If not converted, the Preferred Stock is
fully redeemable at the Investors' option
at face value plus any accrued and unpaid
dividends at any time after December 31,
2005.
Professional Fees and
Expenses: Upon closing, a closing fee of 1.0% of the
Issue Price plus the reasonable
professional fees and expenses incurred
(including, without limitation, fees for
any Xxxx-Xxxxx-Xxxxxx filings) by the
Investors in connection with this offering
will be paid out of the gross proceeds from
the offering.
Representations and
Warranties: The Company will make certain
representations and warranties customary
for transactions of this type.
Affirmative Covenants: The Company will agree to certain
Affirmative Covenants and information
rights customary for transactions of this
type.
Negative Covenants: The Company will agree to certain
Negative Covenants including, but not
necessarily limited to:
(a) Limitations on the declaration or
payment of dividends on the Common Stock or
repurchase of any Common Stock (except for
certain agreed upon repurchases of Common
Stock);
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(b) Limitations on the issuance of any
equity security that is pari passu with, or
senior to, the Preferred Stock and
limitations on the incurrence of additional
indebtedness; and
(c) Limitations on amendments of the
Corporate Charter or Bylaws that are
materially adverse to the holders of the
Preferred Stock.
Voting Rights: The holders of the Preferred Stock will
vote with the Common as a single class on
an as-converted basis and, in addition,
shall have the right to vote as a class on
the following:
(a) Any material sale of the Company's
assets where the Board of Directors has
made the determination that the assets are
core to the Company's business, and any
sale of substantially all of the Company's
business;
(b) Any consolidation or merger unless the
Company is the surviving entity and the
shareholders of the Company immediately
prior to the transaction continue to hold
more than 50% of the stock after the
transaction;
(c) Liquidation or winding up of the
Company;
(d) Replacement of Xxxxxxxx X. Xxxxxxxx on
the Company's Senior Management Team.
On any occasion, if one of the two
representatives to the Board of Directors
appointed by the holder of the Preferred
Stock votes in favor of any of the above,
it will be deemed to be approved by the
class.
Right of Participation: If the Company privately sells any equity
securities in the future, the holders of
the Preferred Stock shall have the right to
purchase a pro-rata amount of such
securities, so long as the investors retain
25% of the original preferred shares still
outstanding.
Transactions with Affiliates: The Company will not enter into any
transactions with any affiliate unless
conducted on an arm's length basis.
Governing Law: Massachusetts.
Closing Documents: The transaction is subject to completion of
closing documents reasonably acceptable to
all parties, including but not limited to
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Preferred Stock Purchase Agreement and
Registration Rights Agreement (together the
"Transaction Documents").
Conditions Precedent
to Closing: The Investors' obligations to consummate
the transaction shall be subject to
satisfaction of the following conditions:
(a) The consummation of the transaction and
the terms of the Preferred Stock, including
without limitation the Conversion Price and
any adjustments thereto, shall not be
subject to the approval of the shareholders
of the Company.
(b) Any waiting period applicable to the
transaction under the Xxxx-Xxxxx-Xxxxxx Act
shall have terminated or expired;
(c) The Company's results for the fiscal
quarter ended September 30, 1999 shall not
be materially different than the business
plan as delivered by the Company;
(d) There shall have been no developments
in the business of the Company or any
Subsidiary which in the reasonable opinion
of the Purchasers would be likely to have a
material adverse effect on the business,
properties, prospects, operations or
financial condition of the Company and its
Subsidiaries, taken as a whole (a "Material
Adverse Effect");
(e) A reasonable determination by the
Investors that all outstanding litigation,
other than the existing shareholder class
action of XxXxxxx v. Vision Twenty-One,
Inc. et al, individually or in the
aggregate, would not result in a Material
Adverse Effect.
(f) The delivery of an amendment to the
Company's primary bank facility on terms
substantially the same form as those set
forth in the term sheet delivered to the
Investors on October 21, 1999.
The determination of whether the
aforementioned conditions to closing have
been satisfied shall be at the reasonable
discretion, severally, of MedEquity
Investors Partners, LLC, Chase Equity
Associates, L.P., Chase Venture Capital
Associates, L.P., General Electric Capital
Corporation and The Xxxxxxxx Fund.
Information Flow: The Investors will be free to disclose any
and all information so acquired to its
agents, advisors, representatives, etc. and
potential sources of financing for the
transaction, as it deems necessary,
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provided that they acknowledge that they
are bound by Vision Twenty-One's
Confidentiality Agreement.
Non-Disclosure of Terms: The Company agrees that the terms of this
letter of intent and any subsequent
revisions of terms will remain confidential
for a period of one year from the date of
this term sheet, except as might be
necessary according to applicable
securities law or, provided further, that
the Company may disclose terms hereof to
its agents, advisors or representatives.
Confidentiality: The Confidentiality Agreement previously
executed by the parties shall remain in
full force and effect.
Public Announcements: Except as required by law or stock exchange
regulation, the Investors, the Company and
their respective representatives will not
publicly disclose the existence of this
Letter of Intent or make known publicly any
facts related to the proposed transaction
without the prior consent of the other
parties.
Prior Term Sheet: This Letter of Intent shall supersede the
term sheet entered into the parties on
August 26, 1999.
Closing: The parties shall use their reasonable best
efforts to close the transaction no later
than November 15, 1999.
Term: This Letter of Intent shall terminate in
its entirety and be of no further force and
effect as of November 30, 1999.
Agreed to this 22nd day of October, 1999.
VISION TWENTY-ONE, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Chief Financial Officer
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MEDEQUITY INVESTORS
PARTNERS, LLC
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Manager
CHASE VISION TWENTY-ONE
PARTNERS, LLC
By: MedEquity Investors, LLC
its Managing Member
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Manager
PEACHTREE VISION TWENTY-ONE
PARTNERS, LLC
By: MedEquity Investors, LLC
its Managing Member
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Manager
CHASE VENTURE CAPITAL
ASSOCIATES, L.P. by
By: Chase Capital Partners,
its General Partner
By: /s/
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Name: Xxxxxxxx X. Xxxxxx
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Title: Executive Partner
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