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EXHIBIT 2.6
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement"), dated as
of September 1, 1997, is by and among RETINA ASSOCIATES SOUTHWEST, P.C., an
Arizona professional corporation (the "Company"), ▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇▇
▇▇▇▇▇, M.D. and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D. (collectively, the "Physician"), and VISION
TWENTY-ONE, INC., a Florida corporation ("Vision 21").
R E C I T A L S
A. Physician is a physician licensed to practice medicine in the State
(as defined herein) and currently employs ophthalmology employees and conducts
an ophthalmology practice through the Company and through optometrist employees
currently conducts an optometry practice through the Company.
B. Physician owns all of the issued and outstanding shares of capital
stock of the Company.
C. The Company and Vision 21 desire to effect a business combination
and merger of the Company with and into Vision 21 upon the terms and subject to
the satisfaction of the conditions precedent contained herein (the "Merger").
D. It is intended that for federal income tax purposes the Merger shall
qualify as a reorganization within the meaning of Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").
E. Vision 21 cannot acquire certain of the Company's assets because of
laws prohibiting general business corporations from engaging in the practice of
medicine or optometry, exercising control over physicians practicing medicine or
optometrists practicing optometry, or engaging in certain practices such as
fee-splitting with physicians or optometrists, and accordingly, the Company and
Vision 21 desire that the Company divest itself of such assets prior to the
Merger.
F. Prior to the Merger, the Company intends to form a new professional
corporation ("New P.C.") to which it intends to transfer its medical and
optometry business, all of its Medical Assets (as defined herein) and all of the
Excluded Liabilities (as defined herein) in exchange for all of New P.C.'s
capital stock and to distribute such stock to Physician.
G. New P.C. intends to employ the Physician and enter into a Business
Management Agreement (as defined herein) with the Company immediately prior to
the Merger; and
H. As a result of the Merger, the Surviving Corporation (as defined
herein) will acquire the medical and optometry practice management business and
all of the Nonmedical
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Assets (as herein defined) of the Company associated with such business to the
extent permitted by law and assume all of Company's obligations under the
Business Management 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. Accountants. The term "Accountants" shall mean the accounting firm
for Vision 21.
1.3. Accounts Receivable. The term "Accounts Receivable" shall have the
meaning set forth in Section 3.39.
1.4. Acquisition Proposal. The term "Acquisition Proposal" shall have
the meaning set forth in Section 3.34.
1.5. 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.
1.6. Applicable Laws. The term "Applicable Laws" shall have the meaning
set forth in Section 20.5.
1.7. Audit. The term "Audit" shall have the meaning set forth in
Section 3.9.
1.8. Business Management Agreement. The term "Business Management
Agreement" shall mean the Business Management Agreement entered into between the
Company and New P.C. prior to the Closing.
1.9. Cash Compensation. The term "Cash Compensation" shall have the
meaning set forth in Section 3.11(a).
1.10. Claim Notice. The term "Claim Notice" shall have the meaning set
forth in Section 14.3(a).
1.11. Closing. The term "Closing" shall mean the consummation of the
transactions contemplated by this Agreement.
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1.12. Closing Date. The term "Closing Date" shall mean September 15,
1997 or such other date as mutually agreed upon by the parties.
1.13. Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.14. Commitments. The term "Commitments" shall have the meaning set
forth in Section 3.15(a).
1.15. Common Stock. The term "Common Stock" or "Vision 21 Common Stock"
shall mean the common stock, par value $.001 per share, of Vision 21.
1.16. Company Balance Sheet. The term "Company Balance Sheet" shall
have the meaning set forth in Section 3.9.
1.17. Company Balance Sheet Date. The term "Company Balance Sheet Date"
shall have the meaning set forth in Section 3.9.
1.18. Company Common Stock. The term "Company Common Stock" shall mean
the common stock, par value $_____ per share, of the Company.
1.19. Compensation Plans. The term "Compensation Plans" shall have the
meaning set forth in Section 3.11(b)(ii).
1.20. Competing Management Business. The term "Competing Management
Business" shall have the meaning set forth in Section 18.1(b).
1.21. 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 practice of ophthalmology, the
practice of optometry, the operation of out patient eye surgical facilities, the
operation of refractive surgery centers and the operation of optical shops;
provided, however, that such term shall not include any Affiliate of Vision 21
or any entity with which Vision 21 has an agreement similar to the Business
Management Agreement in effect.
1.22. Controlled Group. The term "Controlled Group" shall have the
meaning set forth in Section 3.12(g).
1.23. Corporation Law. The term "Corporation Law" shall mean the
statutes, regulations and laws governing business corporations and professional
corporations in the State.
1.24. Damages. The term "Damages" shall have the meaning set forth in
Section 16.1.
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1.25. Effective Time. The term "Effective Time" shall have the meaning
set forth in Section 2.3.
1.26. Election Period. The term "Election Period" shall have the
meaning set forth in Section 15.3(a).
1.27. Employee Benefit Plans. The term "Employee Benefit Plans" shall
have the meaning set forth in Section 3.12(a).
1.28. Employee Policies and Procedures. The term "Employee Policies and
Procedures" shall have the meaning set forth in Section 3.11(d).
1.29. Employment Agreements. The term "Employment Agreements" shall
have the meaning set forth in Section 3.11(c).
1.30. Environmental Laws. The term "Environmental Laws" shall have the
meaning set forth in Section 3.27(a).
1.31. ERISA. The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.32. Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.33. Excluded Liabilities. The term "Excluded Liabilities" shall mean
(i) any and all obligations and liabilities in connection with accrued
shareholder expenses, long-term debt associated with previous liabilities of the
Company and contributions to retirement plans; and (ii) any and all obligations
or liabilities relating to any fees or expenses of the Company's or Physician's
counsel, accountants or other experts incident to the negotiation and
preparation of any of the documents contemplated herein and consummation of the
transactions contemplated thereby.
1.34. FBCA. The term "FBCA" shall mean the Florida Business Corporation
Act.
1.35. Financial Statements. The term "Financial Statements" shall have
the meaning set forth in Section 3.9.
1.36. GAAP. The term "GAAP" shall mean generally accepted accounting
principles, applied on a consistent basis with prior periods, 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.
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1.37. Governmental Authority. The term "Governmental Authority" shall
mean any national, state, provincial, local or tribunal governmental, judicial
or administrative authority or agency.
1.38. Indemnified Party. The term "Indemnified Party" shall have the
meaning set forth in Section 15.3(a).
1.39. Indemnifying Party. The term "Indemnifying Party" shall have the
meaning set forth in Section 15.3(a).
1.40. Indemnity Notice. The term "Indemnity Notice" shall have the
meaning set forth in Section 15.3(d).
1.41. Insurance Policies. The term "Insurance Policies" shall have the
meaning set forth in Section 3.16.
1.42. IRS. The term "IRS" shall mean the Internal Revenue Service.
1.43. Management Business. The term "Management Business" shall have
the meaning set forth in Section 18.1(b)(i).
1.44. Material Adverse Effect. The term "Material Adverse Effect" shall
mean a material adverse effect on the Nonmedical Assets and the Company's
business, operations, condition (financial or otherwise) or results of
operations, taken as a whole, considering all relevant facts and circumstances.
1.45. Medical Assets. The term "Medical Assets" shall mean the
Company's right, title and interest in any assets as set forth on Schedule 1.45A
which shall also be deemed to include (a) life insurance policies covering the
life of any employee of the Company, and (b) personal effects listed on Schedule
1.45B.
1.46. Merger . The term "Merger" shall have the meaning set forth in
the Recitals hereto.
1.47. Merger Consideration. The term "Merger Consideration" shall mean
the consideration set forth in Sections 2.8, 2.9 and 2.11 of this Agreement.
1.48. Nonmedical Assets. The term "Nonmedical Assets" shall mean all of
the assets of the Company except for the Medical Assets.
1.49. Optometrist Employee. The term "Optometrist Employee" shall mean
those licensed optometrists who are employees of the Company, but are not
shareholders.
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1.50. Optometrist Employment Agreement. The term "Optometrist
Employment Agreement" shall mean the Optometrist Employment Agreement to be
executed between any Optometrist Employee and New P.C.
1.51. Payors. The term "Payors" shall have the meaning set forth in
Section 3.30.
1.52. Permitted Encumbrances. The term "Permitted Encumbrances" shall
have the meaning set forth in Section 3.14(b).
1.53. Physician Employee. The term "Physician Employee" shall mean
those licensed physicians who are employees of the Company, but are not
shareholders.
1.54. Physician Employment Agreement. The term "Physician Employment
Agreement" shall mean the Physician Employment Agreement to be executed between
Physician and New P.C., and between any Physician Employee and New P.C.
1.55. Practice. The term "Practice" shall mean the ophthalmology,
optometry and all other vision related health-care practices conducted from time
to time by the Company prior to and on the Closing Date and by the New P.C.
after the Closing Date.
1.56. Professional Employee. The term "Professional Employee" shall
mean any Physician Employee or Optometrist Employee.
1.57. Proposed Merger Consideration Adjustment. The term "Proposed
Merger Consideration Adjustment" shall have the meaning set forth in Section
2.11(b).
1.58. Proprietary Rights. The term "Proprietary Rights" shall have the
meaning set forth in Section 3.17.
1.59. Public Offering. The term "Public Offering" shall mean any
underwritten secondary offering of Vision 21 Common Stock.
1.60. Recent Acquisitions. The term "Recent Acquisitions" shall mean
the acquisitions by Vision 21 of third parties which were completed in December
1996, March 1997, May 1997 and June 1997.
1.61. Registration Statement. The term "Registration Statement" shall
mean any S-1 Registration Statement filed by Vision 21 in connection with a
Public Offering.
1.62. SEC. The term "SEC" shall mean the Securities and Exchange
Commission.
1.63. Securities. The term "Securities" shall mean the shares of Vision
21 Common Stock to be delivered to Physician at the Closing.
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1.64. Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended.
1.65. State. The term "State" shall mean the State of Arizona.
1.66. Surviving Corporation. The term "Surviving Corporation" shall
have the meaning set forth in Section 2.1.
1.67. Tax Returns. The term "Tax Returns" shall have the meaning set
forth in Section 3.18(a).
1.68. Third Party Claim. The term "Third Party Claim" shall have the
meaning set forth in Section 15.3(a).
1.69. Vision 21 Financial Statements. The term "Vision 21 Financial
Statements" shall have the meaning set forth in Section 5.10.
2. THE MERGER.
2.1. The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time, the Company shall be merged with and into Vision 21 in
accordance with this Agreement and the separate corporate existence of the
Company shall thereupon cease. Vision 21 shall be the surviving corporation in
the Merger (in such capacity, hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Florida, and the separate corporate existence of Vision 21 with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have the
effects specified in the FBCA and the Corporation Law.
2.2. The Closing. The Closing shall take place on the Closing Date at
the offices of ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other location in the State as the parties shall
mutually agree.
2.3. Effective Time. If all the conditions precedent to the Merger set
forth in this Agreement shall have been fulfilled or waived in accordance
herewith and this Agreement shall not have been terminated in accordance with
the terms set forth herein, the parties hereto shall cause to be properly
executed and filed on the Closing Date, a Certificate of Merger meeting the
requirements of the FBCA and the Corporation Law. The Certificate of Merger
shall be filed with the Secretary of State of the State of Florida and of the
State in accordance with the FBCA and the Corporation Law and the Merger shall
become effective on the Closing Date, to be designated in such filings as the
effective time of the Merger (the "Effective Time").
2.4. Articles of Incorporation of Surviving Corporation. Effective at
the Effective Time, the Articles of Incorporation of Vision 21 shall be the
Articles of Incorporation of the Surviving Corporation unless and until duly
amended in accordance with its terms.
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2.5. Bylaws of Surviving Corporation. The Bylaws of Vision 21 in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation, unless and until duly amended in accordance with their terms.
2.6. Directors of the Surviving Corporation. The persons who are
directors of Vision 21 immediately prior to the Effective Time shall, from and
after the Effective Time, be the directors of the Surviving Corporation until
their successors have been elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
2.7. Officers of the Surviving Corporation. The persons who are
officers of Vision 21 immediately prior to the Effective Time shall, from and
after the Effective Time, be the officers of the Surviving Corporation and shall
hold their same respective offices until their successors have been duly elected
or appointed and qualified or until their earlier death, resignation or removal.
2.8. Conversion of Company Common Stock. The manner of converting
shares of Company Common Stock in the Merger shall be as follows:
a. As a result of the Merger and without any action on the
part of the holder thereof, all shares of Company Common Stock issued and
outstanding at the Effective Time shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall
thereafter cease to have any rights with respect to such shares of Company
Common Stock, except the right to receive upon the surrender of such
certificate, on the Closing Date, (i) validly issued, fully paid and
nonassessable shares of Vision 21 Common Stock determined in accordance with the
provisions of Exhibit 2.8(a) attached hereto; and (ii) cash in an amount set
forth on Exhibit 2.8(a) attached hereto. Notwithstanding anything contained
within Sections 2.8, 2.9, 2.10 and 2.11 of this Agreement, a portion of the
Merger Consideration described in Exhibit 2.8(a) shall be contingent
consideration which shall be held in escrow and payable pursuant to the terms
set forth in Attachment 1 to Exhibit 2.8(a).
b. Each share of Company Common Stock held in the Company's
treasury at the Effective Time, by virtue of the Merger, shall cease to be
outstanding and shall be cancelled and retired without payment of any
consideration therefor and shall cease to exist.
c. At the Effective Time, each share of Vision 21 Common Stock
issued and outstanding as of the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereto, continue unchanged and
remain outstanding as a validly issued, fully paid, nonassessable share of
Vision 21 Common Stock.
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2.9. Exchange of Certificates Representing Shares of Company Common
Stock.
a. On the Closing Date (i) the Physician, as the holder of a
certificate or certificates representing shares of Company Common Stock, upon
surrender of such certificate or certificates, shall receive, as part of the
Merger Consideration, the number of shares of Vision 21 Common Stock determined
in accordance with the provisions of Exhibit 2.8(a)(i) attached hereto; and (ii)
until the certificate or certificates representing Company Common Stock have
been surrendered by the Physician and replaced by a certificate or certificates
representing Vision 21 Common Stock, the certificate or certificates
representing Company Common Stock shall, for all purposes be deemed to evidence
ownership of the number of shares of Vision 21 Common Stock determined in
accordance with the provisions of Exhibit 2.8(a)(i) attached hereto. All shares
of Vision 21 Common Stock issuable to the Physician in the Merger shall be
deemed for all purposes to have been issued by Vision 21 at the Effective Time,
although the Merger Consideration shall not actually be paid by Vision 21 to the
Physician until the Closing Date.
b. The Physician shall deliver to Vision 21 at Closing the
certificate or certificates representing Company Common Stock owned by him, duly
endorsed in blank by the Physician, or accompanied by duly endorsed stock powers
in blank, and with all necessary transfer tax and other revenue stamps, acquired
at the Physician's expense, affixed and cancelled. The Physician agrees to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such Company Common Stock or with
respect to the stock powers accompanying any Company Common Stock. Upon such a
delivery, the Physician shall receive in exchange therefor, a certificate or
certificates representing the number of shares of Vision 21 Common Stock that
the Physician is entitled to receive pursuant to Section 2.8 hereof.
2.10. Fractional Shares. Notwithstanding any other provision herein, no
fractional shares of Vision 21 Common Stock will be issued. Fractional shares
shall be rounded up to the nearest whole number of shares.
2.11. Merger Consideration Adjustments. (a) The Merger Consideration
shall be subject to adjustment to the extent that Current Assets (as defined
herein) or Current Liabilities Assumed (as defined herein) materially differ
from the amounts customarily arising in the ordinary course of business of the
Company as of July 31, 1997. The term "Current Assets" shall mean ▇▇▇▇▇ cash,
Accounts Receivable, prepaid expenses, Inventory, supplies and other current
assets (excluding cash in banks, certificates of deposit, other cash
equivalents, current portion of capital leases and prepaid Income Taxes). The
term "Current Liabilities Assumed" shall mean the audited balances as of July
31, 1997 of trade accounts payable, accrued payroll, accrued payroll taxes,
accrued benefits, and other current liabilities (excluding notes payable,
current portion of capital leases and long-term debt and income and franchise
taxes and accrued shareholder expenses). The Merger Consideration shall be
increased or reduced to reflect the difference between the Current Assets and
Current Liabilities and the customary amounts referred to hereinabove. The
adjustment shall be settled in cash (which shall be set-off from
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moneys due New P.C. pursuant to the Business Management Agreement) or Vision 21
Common Stock as mutually agreed upon by the parties. The parties also agree that
to the extent the adjustments materially impact the goodwill created by the
transaction, there shall be an adjustment for the related impact upon net income
created by the change in amortization of such goodwill and the Merger
Consideration shall be increased or reduced to reflect the impact on net income,
settled in cash or Vision 21 Common Stock at Vision 21's option.
(b) Within sixty (60) days following the Closing Date, Vision
21 shall present to the Physician its Merger Consideration adjustment (the
"Proposed Merger Consideration Adjustment") calculated in accordance with
Section 2.11(a) hereof. The Physician shall, within thirty (30) days after the
delivery by Vision 21 of the Proposed Merger Consideration Adjustment, complete
his review thereof. In the event that the Physician believes that the Proposed
Merger Consideration Adjustment has not been prepared on the basis set forth in
Section 2.11(a) or otherwise contests any item set forth therein, the Physician
shall, on or before the last day of such 30 day period, so object to Vision 21
in writing, setting forth a specific description of the nature of the objection
and the corresponding adjustments the Physician believes should be made. If no
objection is received by Vision 21 on or before the last day of such 30 day
period, then the Proposed Merger Consideration Adjustment delivered by Vision 21
shall be final. If an objection has been made and Vision 21 and the Physician
are unable to resolve all of their disagreements with respect to the proposed
adjustments within 15 days following the delivery of the Physician's objection,
the dispute shall be submitted to arbitration as provided in Section 19.1 except
that the arbitrator shall be instructed to deliver his determination of the
dispute to the parties no later than 30 days after the arbitration hearing.
Vision 21 shall provide to the Physician and his accountants full access to all
relevant books, records and work papers utilized in preparing the Proposed
Merger Consideration Adjustment.
2.12. Subsequent Actions. If, at any time after the Effective Time, the
Surviving Corporation shall determine or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, and to effect the cancellation of all outstanding
shares of Company Common Stock in return for the consideration set forth in this
Agreement, the officers and directors of the Surviving Corporation shall, at the
sole cost and expense of the Surviving Corporation, be authorized to execute and
deliver, in the name and on behalf of the Company, such deeds, bills of sale,
assignments and assurances, and to take and do, in the name and on behalf of the
Company, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PHYSICIAN. The
Company and the Physician, jointly and severally, represent and warrant to
Vision 21 that the following are true and correct as of the date hereof, and
shall be true and
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correct through the Closing Date as if made on that date; when used in this
Section 3, the term "best knowledge" shall mean in the case of the Company the
best knowledge of those individuals listed on Schedule 3:
3.1. Organization and Good Standing; Qualification. The Company is a
professional corporation duly organized, validly existing and in good standing
under the laws of the State, 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, but it is acknowledged and understood by the Parties that
upon consummation of Merger, the Company will no longer be qualified as a
professional corporation under the Corporation Law. The Company is not duly
qualified and licensed to do business in any other jurisdiction. The Company
does not have any assets, employees or offices in any state other than the
State. Except as set forth on Schedule 3.1, neither the Company, the Physician
nor any Professional Employee owns, directly or indirectly, any of the capital
stock of any other corporation or any equity, profit sharing, participation or
other interest in any corporation, partnership, joint venture or other entity
that is engaged in a business that is a Competitor.
3.2. Capitalization. The authorized capital stock of the Company
consists of _______________ shares of Company Common Stock, of which
____________ (_____) shares are issued and outstanding. The Physician owns all
of the issued and outstanding Company Common Stock, free and clear of all
security interests, liens, adverse claims, encumbrances, equities, proxies and
shareholder agreements, except to the extent disclosed on Schedule 3.2. 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 Company in treasury. No shares of Company Common Stock of the Company
have been issued or disposed of in violation of the preemptive rights, rights of
first refusal or similar rights of any of the Company's stockholders. The
Company has 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 stockholders of the Company on any
matter.
3.3. Transactions in Capital Stock. The Company has not acquired any
capital stock of the Company within the two (2) year period preceding the
execution of this Agreement. Except as set forth on Schedule 3.3, 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 Company, and no option, warrant, call, conversion right or
commitment of any kind exists which obligates the Company to issue any of its
authorized but unissued capital stock. Except as set forth on Schedule 3.3, the
Company has 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. Neither the equity
structure of the Company nor the relative ownership of shares among any of its
stockholders has been altered or changed within the two (2) year period
preceding the date of this Agreement.
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3.4. Continuity of Business Enterprise. Except as set forth on Schedule
3.4, and except as contemplated by this Agreement, there has not been any sale,
distribution or spin-off of significant assets of the Company or any of its
Affiliates other than in the ordinary course of business within the two (2) year
period preceding the date of this Agreement.
3.5. Corporate Records. The copies of the Articles or Certificate of
Incorporation and Bylaws, and all amendments thereto, of the Company that have
been delivered or made available to Vision 21 are true, correct and complete
copies thereof, as in effect on the date hereof. The minute books of the
Company, copies of which have been delivered or made available to Vision 21,
contain accurate minutes of all meetings of, and accurate consents to all
actions taken without meetings by, the Board of Directors (and any committees
thereof) and the stockholders of the Company in the three (3) years prior to the
Closing Date, and contain all other material minutes and consents of the
directors and stockholders of the Company since its formation.
3.6. Authorization and Validity. The execution, delivery and
performance by the Company of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby to be performed by the Company, have been duly authorized by
the Company. This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company
enforceable against the Company 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
Company has obtained, in accordance with applicable law and its Articles or
Certificate of Incorporation and Bylaws, the approval of its stockholders
necessary for the consummation of the transactions contemplated hereby.
3.7. Compliance. Except as disclosed on Schedule 3.7, the execution and
delivery of the documents contemplated hereunder and the consummation of the
transactions contemplated thereby by the Company will not (i) violate any
provision of the Company's organizational documents, (ii) violate any material
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 material
obligation under, any mortgage, lien, lease, contract, license, instrument or
any other agreement to which the Company is a party, (iii) result in the
creation or imposition of any material lien, charge, pledge, security interest
or other material encumbrance upon any property of the Company or (iv) violate
or conflict with any order, award, judgment or decree or other material
restriction or to the best of the Company's knowledge violate or conflict with
any law, ordinance or regulation to which the Company or its property is
subject.
3.8. Consents. No consent, approval, order or authorization of or
registration, declaration, or filing with, any Governmental Authority or other
person is required in connection with the execution and delivery of the
documents contemplated herein by the Company or the consummation by such party
of the transactions contemplated thereby, except for those consents or approvals
set forth on Schedule 3.8.
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3.9. Financial Statements. The Company has furnished to Vision 21 its
unaudited balance sheet and related unaudited statements of income, retained
earnings and cash flows for its prior four (4) full fiscal years, and its
unaudited interim balance sheet for the fiscal period ended ________, 1997 (the
"Company Balance Sheet", and the date thereof shall be referred to as the
"Company Balance Sheet Date") and related unaudited statements of income,
retained earnings and cash flows for the period then ended (all collectively,
with the related notes thereto, the "Financial Statements"). The Financial
Statements fairly present the financial condition and results of operations of
the Company as of the dates and for the periods indicated except as otherwise
indicated in the Financial Statements. The Company and the Physician expressly
warrant that they will have prior to the Closing fairly, accurately and
completely provided all necessary information requested in or relevant to the
preparation of the audit to be conducted by the Accountants or their designees
prior to Closing (the "Audit").
3.10. Liabilities and Obligations. Except as set forth on Schedule
3.10, the Financial Statements reflect all liabilities of the Company, accrued,
contingent or otherwise that would be required to be reflected thereon, or in
the notes thereto, prepared in accordance with GAAP, except for liabilities and
obligations incurred in the ordinary course of business since the Company
Balance Sheet Date. Except as set forth in the Financial Statements or on
Schedule 3.10, the Company 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 the Company
does not know of any valid basis for the assertion of any other claims or
liabilities of any nature or in any amount.
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 Company. In addition, Schedule 3.11(a)
contains a complete and accurate description of (i) all increases in Cash
Compensation of employees of the Company during the current fiscal year and the
immediately preceding fiscal year and (ii) any promised increases in Cash
Compensation of employees of the Company that have not yet been effected.
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 Company or to which the Company
contributes 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
Company has provided or made available to Vision 21 a copy of each written
Compensation Plan and a written description of each unwritten Compensation Plan.
Except as set forth on
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Schedule 3.11(b), each of the Compensation Plans can be terminated or amended at
will by the Company.
c. Employment Agreements. Except as set forth on Schedule
3.11(c), the Company is not 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
apply to employees of the Company. The Company has provided or made available to
Vision 21 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. The Company has been and is in compliance
with all applicable laws, rules, regulations 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 Company is not liable for any arrearages of wages or penalties for
failure to comply with any of the foregoing. The Company has 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 actual knowledge of the Company and the Physician, threatened against
the Company before any federal, state or local court, board, department,
commission or agency (nor, to the knowledge of the Company and the Physician,
does any valid basis therefor exist) or (ii) existing or, to the actual
knowledge of the Company and the Physician, threatened labor strikes, disputes,
grievances, controversies or other labor troubles affecting the Company (nor, to
the best knowledge of the Company and the Physician, does any valid basis
therefor exist).
g. Unions. The Company has never been a party to any agreement
with any union, labor organization or collective bargaining unit. No employees
of the Company 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 Company, none of the employees of the Company has threatened to
organize or join a union, labor organization or collective bargaining unit.
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h. Aliens. All employees of the Company are, to the best
knowledge of the Company, citizens of, or are authorized in accordance with
federal immigration laws to be employed in, the United States.
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 Company or to which the Company contributes on behalf
of its employees and all employee benefit plans previously sponsored or
contributed to on behalf of its employees within the three (3) years preceding
the date hereof (the "Employee Benefit Plans"). The Company has provided or made
available to Vision 21 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
Company has provided or made available to Vision 21 a written description of all
existing practices engaged in by the Company 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 Company. 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. The
Company and the Physician 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 Company
participate.
c. Examinations. Except as set forth on Schedule 3.12(c), the
Company has 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. 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 Company and the Physician, threatened claims, suits, or other
proceedings exist with respect to
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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 Company has received 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 Company have been
threatened that could result in the revocation of any such favorable
determination letter or ruling.
g. Funding Status. No accumulated funding deficiency (within
the meaning of Section 412 of the Code), whether or not waived, exists with
respect to any Employee Benefit Plan or any plan sponsored by any member of a
controlled group (within the meaning of Section 412(n)(6)(B) of the Code) in
which the Company is a member ("Controlled Group"). With respect to each
Employee Benefit Plan subject to Title IV of ERISA, the assets of each such plan
are at least equal in value to the present value of accrued benefits determined
on an ongoing basis as of the date hereof. The Company does not sponsor any
Employee Benefit Plan described in Section 501(c)(9) of the Code. None of the
Employee Benefit Plans are subject to actuarial assumptions.
h. Excise Taxes. Neither the Company 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 Company 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. The Company has no 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 Schedule
3.11(a), 3.11(b), 3.11(c), 3.11(d) and 3.12(a), neither the Company, the
Physician nor any Professional Employee is a party to any compensation or debt
arrangement with any person relating to the provision of healthcare related
services other than arrangements with the Company or the Physician.
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3.13. Absence of Certain Changes. Except as set forth on Schedule 3.13
or as contemplated in this Agreement, since the Company Balance Sheet Date, the
Company has not:
a. suffered a Material Adverse Effect, whether or not caused
by any deliberate act or omission of the Company or the Physician;
b. contracted for the purpose of acquiring any capital asset
having a cost in excess of $5,000 or made any single expenditure in excess of
$5,000;
c. incurred any indebtedness for borrowed money (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 $5,000, 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 $5,000, 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);
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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 $15,000;
n. made any payments to or loaned any money to any person or
entity referred to in Section 3.25;
o. formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
p. redeemed, purchased or otherwise acquired, or sold, granted
or otherwise disposed of, directly or indirectly, any of its capital stock or
securities, or agreed to change the terms and conditions of any such capital
stock, securities or rights;
q. entered into any agreement providing for total payments in
excess of $5,000 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;
r. entered into, adopted or amended any Employee Benefit Plan,
except as contemplated hereby or the other agreements contemplated hereby; or
s. 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; Leased Assets.
a. Real Property. The Company does 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 Company's business.
b. Personal Property. Except as set forth on Schedule 3.14(b),
the Company and/or the Physician has good, valid and marketable title to all the
personal property constituting the Nonmedical Assets. The personal property
constituting the Nonmedical Assets constitute the only personal property
necessary for the conduct of the Company's business (except for the Medical
Assets). Upon consummation of the transactions contemplated hereby, such
interest in the Nonmedical Assets shall be 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.
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c. Leases. A list and brief description of (i) all leases of
real property and (ii) all leases of personal property involving rental payments
within any twelve (12) month period in excess of $12,000, in either case to
which the Company is a party, either as lessor or lessee, are set forth on
Schedule 3.14(c). All such leases are valid and, to the knowledge of the
Company, enforceable 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.
3.15. Commitments.
a. Commitments; Defaults. Except as set forth on Schedule 3.15
or as otherwise disclosed pursuant to this Agreement, the Company is not a party
to nor bound by, nor are any of the shares of Company Common Stock subject to,
nor are the Nonmedical Assets or the assets or the business of the Company bound
by, whether or not in writing, any of the following (collectively,
"Commitments"):
i) partnership or joint venture agreement;
ii) guaranty or suretyship, indemnification or
contribution agreement or performance bond;
iii) debt instrument, loan agreement or other
obligation relating to indebtedness for borrowed money or money lent or to be
lent to another;
iv) contract to purchase real property;
v) agreement 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 $2,000 and which is not terminable on thirty (30) days' notice or without
penalty;
vi) agreement relating to any material matter or
transaction in which an interest is held by a person or entity that is an
Affiliate of the Company or the Physician;
vii) agreement for the acquisition of services,
supplies, equipment, inventory, fixtures or other property involving more than
$2,000 in the aggregate;
viii) powers of attorney;
ix) contracts containing non-competition covenants;
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x) agreement providing for the purchase from a
supplier of all or substantially all of the requirements of the Company of a
particular product or services;
xi) agreements regarding clinical research;
xii) agreements with Payors and contracts to provide
medical or health care services; or
xiii) any other agreement or commitment not made in
the ordinary course of business or that is material to the business, operations,
condition (financial or otherwise) or results of operations of the Company.
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 Vision 21. Except as set forth on Schedule 3.15
and to the Company's best knowledge, there are no existing or asserted defaults,
events of default or events, occurrences, acts or omissions that, with the
giving of notice or lapse of time or both, would constitute defaults by the
Company or, to the best knowledge of the Company, any other party to a material
Commitment, and no penalties have been incurred nor are amendments pending, with
respect to the material Commitments, except as described on Schedule 3.15. The
Commitments are in full force and effect and are valid and enforceable
obligations of the Company, and to the best knowledge of the Company, are valid
and enforceable obligations of the other parties thereto, in accordance with
their respective terms, and no defenses, off-sets or counterclaims have been
asserted or, to the best knowledge of the Company, may be made by any party
thereto (other than the Company), nor has the Company waived any rights
thereunder, except as described on Schedule 3.15. Except as set forth on
Schedule 3.15, no consents or approvals are required under the terms of any
agreement listed on Schedule 3.15 in connection with the transactions
contemplated herein; including without limitation the Merger.
b. No Cancellation or Termination of Commitment. Except as
disclosed pursuant to this Agreement or contemplated hereby, and except where
such default would not have a Material Adverse Effect on the business, (i)
neither the Company nor the Physician 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 Company does not know of any fact that
would justify the exercise of such a right; and (ii) neither the Company nor the
Physician currently contemplates, or has reason to believe any other person
currently contemplates, any amendment or change to any Commitment.
3.16. Insurance. The Company, the Physician and each Professional
Employee carries property, liability, malpractice, workers' compensation and
such other types of insurance pursuant to the insurance policies listed and
briefly described on Schedule 3.16 (the "Insurance Policies"). The Insurance
Policies are all of the insurance policies of the Company, the Physician and
each Professional Employee relating to the business of the Company and the
Nonmedical Assets. All of the Insurance Policies are issued by insurers of
recognized
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responsibility, and, to the best knowledge of the Company, 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 Vision 21. Except as set forth on Schedule 3.16, neither the
Company nor the Physician has received any notice or other communication from
any issuer of any Insurance Policy cancelling such policy, materially increasing
any deductibles or retained amounts thereunder, and to the actual knowledge of
the Company, no such cancellation or increase of deductibles, retainages or
premiums is threatened. Except as set forth on Schedule 3.16, neither the
Company, the Physician nor any Professional Employee has any outstanding claims,
settlements or premiums owed against any Insurance Policy, and the Company, the
Physician and each Professional Employee has given all notices or has presented
all potential or actual claims under any Insurance Policy in due and timely
fashion. Except as set forth on Schedule 3.16, since January 1, 1994, neither
the Company, the Physician nor any Professional Employee has filed a written
application for any professional liability insurance coverage which has been
denied by an insurance agency or carrier, and the Company, the Physician and
each Professional Employee has been continuously insured for professional
malpractice claims for at least the past seven (7) years (or such shorter
periods of time that any Professional Employee has been licensed to practice
medicine). Schedule 3.16 also sets forth a list of all claims under any
Insurance Policy in excess of $10,000 per occurrence filed by the Company, the
Physician and each Professional Employee since January 1, 1994.
3.17. Proprietary Rights and Information. Set forth on Schedule 3.17 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 applications therefor currently owned, in whole or
in part, by the Company, and all licenses, royalties, assignments and other
similar agreements relating to the foregoing to which the Company is a party
(including the expiration date thereof if applicable); and
b. all agreements relating to technology, know-how or
processes that the Company is licensed or authorized to use by others (other
than technology, know-how or processes generally available to other healthcare
providers), or which it licenses or authorizes others to use.
The Company owns or has the legal right to use the Proprietary Rights, and to
the knowledge of the Company, such ownership or use does not conflict, infringe
or violate the rights of any other person. Except as disclosed on Schedule 3.17,
no consent of any person will be required for the use thereof by Vision 21 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 Company of the proprietary right of any
other person, and the Company does not know of any valid basis for any such
claim. To the best knowledge
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of the Company and the Physician, the Company has 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.
3.18. Taxes.
a. Filing of Tax Returns. The Company has duly and timely
filed (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 Company for the periods
covered thereby.
b. Payment of Taxes. Except for such items as the Company may
be disputing in good faith by proceedings in compliance with applicable law,
which are described on Schedule 3.18, (i) the Company has paid all taxes,
penalties, assessments and interest that have become due with respect to any Tax
Returns that it has filed and has properly accrued on its books and records for
all of the same that have not yet become due, and (ii) the Company is 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 3.18, the Company has not received any
notice that any tax deficiency or delinquency has been asserted against the
Company. There is no unpaid assessment, proposal for additional taxes,
deficiency or delinquency in the payment of any of the taxes of the Company that
could be asserted by any taxing authority. There is no taxing authority audit of
the Company pending, or to the actual knowledge of the Company, threatened, and
the results of any completed audits are properly reflected in the Financial
Statements. The Company has not, to its best knowledge, violated any federal,
state, local or foreign tax law.
d. No Extension of Limitation Period. The Company has not
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 Company 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 Company nor the Physician is a
foreign person, as such term is referred to in Section 1445(f)(3) of the Code.
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g. Safe Harbor Lease. None of the Nonmedical Assets
constitutes property that the Company, Vision 21, or any Affiliate of Vision 21,
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 of the Company and
none of the Nonmedical 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 Company has not at any time
consented, and the Physician will not permit the Company to elect, to have the
provisions of Section 341(f)(2) of the Code apply to it.
j. Boycotts. The Company has not 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 Company will be characterized as an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
l. S Corporation. The Company has not made an election to be
taxed as an "S" corporation under Section 1362(a) of the Code.
m. Personal Service Corporation. The Company is not a personal
service corporation subject to the provisions of Section 269A of the Code.
n. Personal Holding Company. The Company is not or has not
been a personal holding company within the meaning of Section 542 of the Code.
3.19. Compliance with Laws. The Company has not failed, and neither the
Company nor the Physician is aware of any failure by the Physician or any
Professional Employee to comply with all applicable laws, regulations and
licensing requirements relating to the operation of the Practice or failure to
file with the proper authorities all necessary statements and reports except
where the failure to so comply or file would not, individually or in the
aggregate, result in a Material Adverse Effect. There are no existing violations
by the Company, and neither the Company nor the Physician is aware of any
existing violations by the Physician or any Professional Employee of any
federal, state or local law or regulation that could, individually or in the
aggregate, result in a Material Adverse Effect. The Company, the Physician and
each Professional Employee possesses all necessary licenses, franchises, permits
and governmental authorizations for the conduct of the Company's business as now
conducted, all of which are listed (with expiration dates, if applicable) on
Schedule 3.19. Except as set forth on Schedule 3.19, 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 government authorizations, except for any such
default, breach or
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violation that would not, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth on Schedule 3.19, since January 1, 1993,
neither the Company, the Physician nor, to the knowledge of the Company based on
a certificate in writing obtained from each Professional Employee, any
Professional Employee has received any notice from any federal, state or other
governmental authority or agency having jurisdiction over its, his or her
properties or activities, or any insurance or inspection body, that its, his or
her operations or any of its, his or her properties, facilities, equipment, or
business practices fail to comply with any applicable law, ordinance,
regulation, building or zoning law, or requirement of any public or quasi-public
authority or body, except where failure to so comply would not, individually or
in the aggregate, have a Material Adverse Effect.
3.20. Finder's Fee. Except as set forth on Schedule 3.20, the Company
has not incurred any obligation for any finder's, brokers or agent's fee in
connection with the transactions contemplated hereby.
3.21. Litigation. Except as described on Section 3.21 or otherwise
disclosed pursuant to this Agreement, there are no legal actions or
administrative proceedings or investigations instituted or, to the actual
knowledge of the Company or the Physician, threatened, which affect or could
affect the outstanding shares of Company Common Stock, the Nonmedical Assets or
the operation, business, condition (financial or otherwise), or results of
operations of the Company which (i) if successful could, individually or in the
aggregate, have a Material Adverse Effect or (ii) could adversely affect the
ability of the Company or the Physician to effect the transactions contemplated
hereby. Neither the Company nor the Physician is (a) subject to any continuing
court or administrative order, judgment, writ, injunction or decree applicable
specifically to the Nonmedical Assets, the Company or to its business, assets,
operations or employees or (b) in default with respect to any such order,
judgment, writ, injunction or decree. The Company has no knowledge of any valid
basis for any such action, proceeding or investigation. Except as set forth on
Schedule 3.21, all medical malpractice claims asserted, general liability
incidents and incident reports have been submitted to the Company's insurer
therefor. All claims made or threatened against the Company in excess of its
deductible are covered under its Insurance Policies.
3.22. Condition of Fixed Assets. All of the fixtures, structures and
equipment reflected in the Financial Statements and used by the Company in its
business, are in good 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 Company has no actual knowledge of any latent defects
therein.
3.23. Distributions and Repurchases. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since the Company Balance Sheet Date. No repurchase of any of the
Company's capital stock has been approved, effected or is pending, or is
contemplated by the Board of Directors of the Company.
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3.24. Banking Relations. Set forth on Schedule 3.24 is a complete and
accurate list of all borrowing and investing arrangements that the Company has
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.) and the person or persons
authorized in respect thereof.
3.25. Ownership Interests of Interested Persons; Affiliations. Except
as set forth on Schedule 3.25, no officer, supervisory employee or director of
the Company, 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 Company or any organization that
has a material contract or arrangement with the Company. Except as may be
disclosed pursuant to this Agreement, neither the Company, nor any of its
directors, officers, employees or consultants, nor any Affiliate of such person
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 Company.
3.26. Investments in Competitors. Except as disclosed on Schedule 3.26,
neither the Company nor the Physician owns directly or indirectly any interests
or has any investment in any person that is a Competitor of the Company.
3.27. Environmental Matters.
a. Environmental Laws. To the best knowledge of the Company
and the Physician, neither the Company nor any of the Non-medical assets
(including the leased real property described on Schedule 3.14(c)) are currently
in violation of, or subject to any existing, pending or, to the actual knowledge
of the Company threatened, investigation or inquiry by any governmental
authority or to any remedial obligations under, any federal, state or local laws
or regulations pertaining to health or the environment ("Environmental Laws"),
except for any such violations, investigations or inquiries that would not,
individually or in the aggregate, result in a Material Adverse Effect.
b. Permits. The Company is not required to obtain, and has no
knowledge of any reason Vision 21 or the Surviving Corporation will be required
to obtain, any permits, licenses or similar authorizations to occupy, operate or
use any buildings, improvements, fixtures and equipment owned or leased by the
Company by reason of any Environmental Laws.
c. Superfund List. To the best knowledge of the Company, none
of the Nonmedical Assets (including the Company's leased real property described
on Schedule 3.14(c)) are on any federal or state "Superfund" list or subject to
any environmentally related liens,
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except such liens as would not, individually or in the aggregate, result in a
Material Adverse Effect.
3.28. Certain Payments. Neither the Company nor any director, officer
or employee of the Company acting for or on behalf of the Company, has paid or
caused to be paid, directly or indirectly, in connection with the business of
the Company:
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).
3.29. Medical Waste. With respect to the generation, transportation,
treatment, storage, and disposal, or other handling of medical waste, to the
best knowledge of the Company and the Physician, the Company has complied with
all material federal, state or local laws or regulations pertaining to medical
waste.
3.30. Medicare and Medicaid Programs. The Company, the Physician and
each Professional Employee is qualified for participation in the Medicaid and
Medicare programs and is party to provider agreements for such programs which
are in full force and effect with no events of default having occurred
thereunder. The Company, the Physician and each Professional Employee has timely
filed all claims or other reports required to be filed prior to the Closing Date
with respect to the purchase of services by third-party payors ("Payors"),
including but not limited to Medicare and Medicaid programs, except where the
failure to file would not, individually or in the aggregate, result in a
Material Adverse Effect. All such claims or reports are complete and accurate in
all material respects. The Company, the Physician and each Professional Employee
has paid or has properly recorded on the Financial Statements all actually known
and undisputed refunds, discounts or adjustments which have become due pursuant
to such claims, and neither the Company, the Physician nor any Professional
Employee has any material liability to any Payor with respect thereto, except as
has been reserved for in the Company 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 Company, the
Physician or any Professional Employee in order to be paid by a Payor for
services rendered. Neither the Company, nor any of its directors, officers,
employees, consultants or the Physician 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 Company, nor its directors, officers, the
Physician, or to the best of the Company's knowledge, its 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 government program, loss of a license to provide
health services, and failure to provide quality care.
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3.31. Fraud and Abuse. To the best knowledge of the Company and the
Physician, the Company, its officers and directors, the Professional Employees,
and the other persons and entities providing professional services for the
Company, have not engaged in any activities which are prohibited under 42 U.S.C.
Sections 1320-7, 7a or 7b or 42 U.S.C. Section 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. failure to disclose knowledge by a Medicare or Medicaid
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment on 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. Section 1395nn) to or providing designated health services
to a patient upon a referral from an entity or person with which the Physician
or the Professional Employee or an immediate family member has a financial
relationship, and to which no exception under 42 U.S.C. Section 1395nn applies.
3.32. Payors. Schedule 3.32 sets forth a true, correct and complete
list of the names and addresses of each Payor, including any private pay patient
as a single payor, of the Company's services which accounted for more than 10%
of the revenues of the Company in the three (3) previous fiscal years. Except as
set forth on Schedule 3.32, the Company has good relations with such Payors and
none of such Payors has notified the Company that it intends to discontinue its
relationship with the Company or to deny any claims submitted to such Payor for
payment.
3.33. Prohibitions on the Corporate Practice of Medicine. To the best
of the Company's and the Physician's knowledge, the actions, transactions or
relationships arising
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from, and contemplated by this Agreement, do not violate any law, rule or
regulation relating to the corporate practice of medicine. The Company and the
Physician accordingly agree that the Company, the Physician and New P.C. will
not, in an attempt to void or nullify any document contemplated herein or any
relationship involving Vision 21 or the Company or the Physician or New P.C.,
▇▇▇, claim, aver, allege or assert that any such document contemplated herein or
any such relationship violates any law, rule or regulation relating to the
corporate practice of medicine and expressly warrant that this Section is valid
and enforceable by Vision 21, and recognize that Vision 21 has relied upon the
statements herein in closing the transaction.
3.34. Acquisition Proposals. Except for the negotiations, offers and
agreements with Vision 21 and its representatives, the Company is not bound by
any proposal or offer (including, without limitation, any proposal or offer of
its stockholders) with respect to a merger, acquisition, consolidation or
similar transaction involving, or any purchase of all or any significant portion
of the assets or any equity securities of, the Company (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal").
3.35. Investment Company Status. The Company is not currently, nor has
it ever been, an "investment company" as that term is defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
3.36. Equal Exchange; Consistent Treatment of Expenses. Physician and
the Company believe that the fair market value of all the Company Common Stock
shall be approximately equal to the fair market value of the Merger
Consideration at the Effective Time. The Company has, in presenting information
concerning the Company's and New P.C.'s expenses to Vision 21 for the purpose of
determining the Company's value, separated out those expenses which shall be
borne by New P.C. in a manner which is consistent with the treatment of expenses
which shall be the responsibility of New P.C. pursuant to the Business
Management Agreement.
3.37. Insolvency Proceedings. The Company is not 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.
3.38. Positive Net Worth. On the Closing Date the fair market value of
the assets of the Company will equal or exceed the sum of the liabilities of the
Company plus the amount of any other liabilities to which the assets of the
Company are subject.
3.39. Accounts Receivable/Payable. The accounts receivable of the
Company relating to the ownership and operation of the Practice reflected on the
Company Balance Sheet, to the extent uncollected on the date hereof, are, and
the accounts receivable of the Company relating to the ownership and operation
of the Practice to be reflected on the books of the Company on the Closing Date
(the "Accounts Receivable") will be, valid, existing and collectible within six
months from the Closing Date (taking into consideration the allowance for
doubtful accounts set forth in the Financial Statements) using reasonably
diligent collection methods taking into
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account the size and nature of the receivable, and represent amounts due for
goods sold and delivered or services performed. 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 Company has collected Accounts Receivable only in the
ordinary course and has not changed collection procedures or methods nor
accelerated the pace of such collection efforts in anticipation of the
transactions contemplated in this Agreement. The Company has paid accounts
payable in the ordinary course and has not changed payment procedures or methods
nor delayed the timing of such payments in anticipation of the transactions
contemplated in this Agreement.
3.40. Projections. There is no fact, development or threatened
development with respect to the markets, products, services, clients, patients,
facilities, personnel, vendors, suppliers, operations, assets or prospects of
the Practice which are known to the Company or the Physician which would
materially adversely affect the projected fiscal year 1997 earnings of New P.C.
disclosed to Vision 21 by Physician, other than such conditions as may affect as
a whole the economy or the practice of medicine generally.
3.41. No Intent to Transfer Vision 21 Common Stock. Physician has no
present plan, intention, or arrangement to dispose of any of the Vision 21
Common Stock received in the Merger.
3.42. Disclosure. To the best of the Company's and the Physician's
knowledge, no representation, warranty or statement made by the Company or the
Physician in this Agreement or any of the exhibits or schedules hereto, or any
agreements, certificates, documents or instruments delivered or to be delivered
to Vision 21 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 Company and the Physician 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, properties,
assets, liabilities, business, operations or prospects of the Practice which has
not been set forth herein or in the Schedules provided herewith.
4. REPRESENTATIONS AND WARRANTIES OF THE PHYSICIAN. The Physician
represents and warrants to Vision 21 that the following are true and correct as
of the date hereof, and shall be true and correct through the Closing Date as if
made on that date:
4.1. Validity; Physician Capacity. This Agreement, the Physician
Employment Agreement, and each other agreement contemplated hereby or thereby
have been, or will be as of the Closing Date, duly executed and delivered by the
Physician and constitute or will constitute legal, valid and binding obligations
of the Physician, enforceable against the Physician 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
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remedies. The Physician has legal capacity to enter into and perform this
Agreement and his Physician Employment Agreement.
4.2. No Violation. Except as set forth on Schedule 4.2, neither the
execution, delivery or performance of this Agreement, other agreements of the
Physician contemplated hereby or thereby, 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 Physician is bound or to which any of his property or the 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 his property or the
shares of Company Common Stock or (b) to the best knowledge of the Physician,
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. Personal Holding Company. The Physician does not own the shares of
Company Common Stock, directly or indirectly, beneficially or of record, through
a personal holding company.
4.4. Transfers of the Company Common Stock. Set forth on Schedule 4.4
is a list of all transfers or other transactions involving capital stock of the
Company since January 1, 1994. All transfers of Company Common Stock by the
Physician have been made for valid business reasons and not in anticipation or
contemplation of the consummation of the transactions contemplated by this
Agreement.
4.5. Consents. Except as may be required under the Exchange Act, the
Securities Act, the Corporation Law and state securities laws, or otherwise
disclosed pursuant to this Agreement, 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 Physician.
4.6. Certain Payments. The Physician has not paid or caused to be paid,
directly or indirectly, in connection with the business of the Company:
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 Company or as otherwise permitted
by applicable law).
4.7. Finder's Fee. Except as set forth on Schedule 4.7, the Physician
has not incurred any obligation for any finder's, broker's or agent's fee in
connection with the transactions contemplated hereby.
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4.8. Ownership of Interested Persons; Affiliations. Except as set forth
on Schedule 4.8, neither the Physician nor his spouse, 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 Company or any organization that
has a material contact or arrangement with the Company. Neither the Physician
nor any of his Affiliates is, or with 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 Company.
4.9. Litigation. Except as disclosed on Schedule 4.9, there are no
claims, actions, suits, proceedings (arbitration or otherwise) or investigations
pending or, to the Physician's knowledge, threatened against the Physician at
law or at equity in any court or before or by any Governmental Authority, and,
to the Physician's knowledge, there are no, and have not been any, facts,
conditions or incidents that may result in any such actions, suits, proceedings
(arbitration or otherwise) or investigations. Except as set forth on Schedule
4.10, there have been no disciplinary, revocation or suspension proceedings or
similar types of claims, actions or proceedings, hearings or investigations
against the Physician or the Company.
4.10. Permits. To the best of the Physician's knowledge, the Physician
has all permits, licenses, orders and approvals of all Governmental Authorities
necessary to perform the services performed by the Physician in connection with
the conduct of the Practice. All such permits, licenses, orders and approvals
are in full force and effect and no suspension or cancellation of any of them is
pending or threatened. To the best of the Physician's knowledge, none of such
permits, licenses, orders or approvals will be adversely affected by the
consummation of the transactions contemplated herein. The Physician is a
participating physician, as such term is defined by the Medicare and Medicaid
programs, and the Physician has not been disciplined, sanctioned or excluded
from either the Medicare or Medicaid programs and has not been subject to any
plan of correction imposed by any professional review body.
4.11. Staff Privileges. Schedule 4.11 lists all hospitals at which the
Physician has full staff privileges. Such staff privileges have not been
revoked, surrendered, suspended or terminated, and to the Physician's knowledge,
there are no, and have not been any, facts, conditions or incidents that may
result in any such revocation, surrender, suspension or termination.
4.12. Intentions. Except as set forth on Schedule 4.12, the Physician
intends to continue practicing medicine on a full-time basis for at least the
next five (5) years with the Company and does not know of any fact or condition
that materially adversely affects, or in the future may materially adversely
affect, his ability or intention to practice medicine on a full-time basis for
the next five (5) years with the Company.
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5. REPRESENTATIONS AND WARRANTIES OF VISION 21. Vision 21 represents
and warrants to the Company and the Physician that the following are true and
correct as of the date hereof and shall be true and correct as of the Closing
Date; when used in this Section 5, the term "best knowledge" shall mean the best
knowledge of those individuals listed on Schedule 5:
5.1. Organization and Good Standing. Vision 21 is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, with all requisite corporation 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.
Vision 21 is qualified to do business as a foreign corporation in the
jurisdictions listed on Schedule 5.1.
5.2. Capitalization. The authorized capital stock of Vision 21 consists
of 50,000,000 shares of Vision 21 Common Stock, of which 8,176,258 shares are
issued and outstanding, and 10,000,000 shares of Vision 21 preferred stock,
$.001 par value per share ("Preferred Stock"), of which no shares are issued and
outstanding.
5.3. Corporate Records. The copies of the Articles of Incorporation and
Bylaws, and all amendments thereto, of Vision 21 that have been delivered or
made available to the Company and the Physician are true, correct and complete
copies thereof, as in effect on the date hereof. The minute books of Vision 21,
copies of which have been delivered or made available to the Company and the
Physician, contain accurate minutes of all meetings of, and accurate consents to
all actions taken without meetings by, the Board of Directors (and any
committees thereof) and the stockholders of Vision 21 since its formation.
5.4. Authorization and Validity. The execution, delivery and
performance by Vision 21 of this Agreement and the other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by Vision 21. This Agreement and each other
agreement contemplated hereby to be executed by Vision 21 have been or will be
as of the Closing Date duly executed and delivered by Vision 21 and constitute
or will constitute legal, valid and binding obligations of Vision 21,
enforceable against Vision 21 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.
5.5. Compliance. The execution and delivery of the documents
contemplated hereunder and the consummation of the transactions contemplated
thereby by Vision 21 shall not (i) violate any provision of Vision 21's
organizational documents, (ii) violate any material 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 material obligation under, any mortgage,
lien, lease, contract, license, instrument or any other agreement to which
Vision 21 is a party, (iii) result in the creation or imposition of any material
lien, charge, pledge, security interest or other material encumbrance upon any
property of Vision 21 or (iv) violate or conflict with any order,
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award, judgment or decree or other material restriction or to the best of Vision
21's knowledge violate or conflict with any law, ordinance or regulation to
which Vision 21 or its property is subject.
5.6. Consents. No consent, approval, order or authorization of or
registration, declaration, or filing with, any Governmental Authority or other
person is required in connection with the execution and delivery of the
documents contemplated herein by Vision 21 or the consummation by such party of
the transactions contemplated thereby, except for those consents or approvals
set forth on Schedule 5.6.
5.7. Finder's Fee. Except as disclosed on Schedule 5.7, Vision 21 has
not incurred any obligation for any finder's, broker's or agent's fee in
connection with the transactions contemplated hereby.
5.8. Capital Stock. The issuance and delivery by Vision 21 of shares of
Vision 21 Common Stock in connection with the Merger have been duly and validly
authorized by all necessary corporate action on the part of Vision 21. The
shares of Vision 21 Common Stock to be issued in connection with the Merger,
when issued in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable and will not have been issued in violation
of any preemptive rights, rights of first refusal or similar rights of any of
Vision 21's stockholders, or any federal or state law, including, without
limitation, the registration requirements of applicable federal and state
securities laws.
5.9. Continuity of Business Enterprise. It is the present intention of
Vision 21 to continue at least one significant historic business line of the
Company, or to use at least a significant portion of the Company's historic
business assets in a business, in each case within the meaning of Treasury
Regulation Section 1.368-1(d).
5.10. Vision 21 Financial Statements. The audited consolidated balance
sheet and related statements of income and cash flows of Vision 21 for its prior
three (3) full fiscal years, and its unaudited interim balance sheet for the six
month period ended June 30, 1997 and the related unaudited statement of income
of Vision 21 for the period then ended (collectively, with the related notes
thereto, the "Vision 21 Financial Statements"), (a) fairly present the financial
condition and results of operations of Vision 21 as of the dates and for the
periods indicated; and (b) have been prepared in conformity with GAAP (subject
to normal year-end adjustments and the absence of notes for any unaudited
interim financial statement), except as otherwise indicated in the Vision 21
Financial Statements.
5.11. Liabilities and Obligations. Except as disclosed on Schedule
5.11, the Vision 21 Financial Statements shall reflect all material liabilities
of Vision 21, accrued, contingent or otherwise, that would be required to be
reflected on a balance sheet, or in the notes thereto, prepared in accordance
with GAAP. Except as set forth on Schedule 5.11 or in the Vision 21 Financial
Statements, Vision 21 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
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or dividend of any person, corporation, association, partnership, joint venture,
trust or other entity, and Vision 21 does not know of any valid basis for the
assertion of any other claims or liabilities of any nature or in any amount.
5.12. Compliance with Laws. Vision 21 has not failed to comply with any
applicable laws, regulations and licensing requirements or failed to file with
the proper authorities any necessary statements and reports except where the
failure to so comply or file would not, individually or in the aggregate, have a
material adverse effect on the Merger. There are no existing violations by
Vision 21 of any federal, state or local law or regulation that could,
individually or in the aggregate, have a material adverse effect on the Merger.
Vision 21 possesses all necessary licenses, franchises, permits and governmental
authorizations for the conduct of Vision 21's business as now conducted and
after the Closing, as contemplated in this Agreement and the Business Management
Agreement, except for such licenses, franchises, permits or governmental
authorizations which, if not possessed by Vision 21, would not have a material
adverse effect on the business of Vision 21. 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 government authorizations, except for any such default,
breach or violation that would not, individually or in the aggregate, have a
material adverse effect on the Merger or the performance of the services
contemplated under the Business Management Agreement. Since January 1, 1993,
Vision 21 has not received any notice from any federal, state or other
governmental authority or agency having jurisdiction over its properties or
activities, or any insurance or inspection body, that its operations or any of
its properties, facilities, equipment, or business practices fail to comply with
any applicable law, ordinance, regulation, building or zoning law, or
requirement of any public or quasi-public authority or body, except where
failure to so comply would not, individually or in the aggregate, have a
material adverse effect on the Merger.
5.13. Insolvency Proceedings. Vision 21 is not 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.
5.14. Equal Exchange. Vision 21 believes that the fair market value of
all the Company Common Stock shall be approximately equal to the fair market
value of the Merger Consideration at the Effective Time.
5.15. Employment of Company's Employees. Vision 21 does not currently
intend to change the existing composition or employment terms of any of the
non-professional personnel which have employment arrangements with the Company
on the effective date of this Agreement (except as is necessary for Vision 21 to
employ such individuals pursuant to the Business Management Agreement). Vision
21 reserves the right, however, to change the number, composition or employment
terms of such non-professional personnel in the future.
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6. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE PHYSICIAN. The
Physician represents and warrants that, except as disclosed in the Schedules,
the following will be true and correct on the Closing Date as if made on that
date:
6.1. Organization and Good Standing; Qualification. New P.C. is a
professional corporation duly organized, validly existing and in good standing
under the laws of the State, with all requisite corporate power and authority to
carry on the business in which it intends to engage, to own the properties it
intends to own, and to execute and deliver the Business Management Agreement and
the Physician Employment Agreements and consummate the transactions and perform
the services contemplated thereby. New P.C. is duly qualified and licensed to do
business and is in good standing in all jurisdictions where the nature of its
intended business makes such qualification necessary.
6.2. Capitalization. The authorized capital stock of New P.C. consists
of __________ shares of New P.C. Common Stock, of which __________ shares are
issued and outstanding, and no shares of capital stock of New P.C. are held in
treasury. The Physician owns all of the issued and outstanding shares of New
P.C.'s common stock, free and clear of all security interests, liens, adverse
claims, encumbrances, equities, proxies and shareholders' agreements. Each
outstanding share of New P.C.'s common stock has been legally and validly issued
and is fully paid and nonassessable. 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 New P.C. No
shares of capital stock of New P.C. have been issued or disposed of in violation
of the preemptive rights, rights of first refusal or similar rights of any of
New P.C.'s stockholders.
6.3. Corporate Records. The copies of the Articles or Certificate of
Incorporation and Bylaws, and all amendments thereto, of New P.C. that have been
delivered or made available to Vision 21 are true, correct and complete copies
thereof, as in effect on the Closing Date. The minute books of New P.C., copies
of which have been delivered or made available to Vision 21, contain accurate
minutes of all meetings of, and accurate consents to all actions taken without
meetings by, the Board of Directors (and any committees thereof) and the
stockholders of New P.C. since its formation.
6.4. Authorization and Validity. The execution, delivery and
performance by New P.C. of the Business Management Agreement, the Physician
Employment Agreements, the Optometrist Employment Agreements and the other
agreements contemplated thereby, and the consummation of the transactions and
provisions of services contemplated thereby, have been duly authorized by New
P.C. The Business Management Agreement, the Physician Employment Agreements, the
Optometrist Employment Agreements and each other agreement contemplated thereby
will be as of the Closing Date duly executed and delivered by New P.C. and will
constitute legal, valid and binding obligations of New P.C. enforceable against
New P.C. 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.
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6.5. No Violation. Neither the execution, delivery or performance of
the Business Management Agreement, the Physician Employment Agreements, the
Optometrist Employment Agreements or the other agreements contemplated thereby
nor the consummation of the transactions or provision of services contemplated
thereby will (a) conflict with, or result in a violation or breach of the terms,
conditions or provisions of, or constitute a default under, the Articles or
Certificate of Incorporation or Bylaws of New P.C., or (b) to the actual
knowledge of the Physician, violate or conflict with any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental or
regulatory agency or body.
6.6. No Business, Agreements, Assets or Liabilities. New P.C. has not
commenced business since its incorporation. Other than its Articles or
Certificate of Incorporation and Bylaws, and as of the Closing Date, the
Business Management Agreement, the Physician Employment Agreements, the
Optometrist Employment Agreements, the Employee Benefit Plans and the other
contracts or agreements listed on Schedule 6.6, New P.C. is not a party to or
subject to any agreement, indenture or other instrument. New P.C. does not own
any assets (tangible or intangible) other than the consideration received upon
the issuance of shares of capital stock and New P.C. does not have any
liabilities, accrued, contingent or otherwise (known or unknown and asserted or
unasserted).
6.7. Compliance with Laws. New P.C. has complied with all applicable
laws, regulations and licensing requirements and has filed with the proper
authorities all necessary statements and reports, except where failure to so
comply or file would not, individually or in the aggregate, have a material
adverse effect on the business, operations or financial condition of New P.C.
7. SECURITIES LAW MATTERS.
7.1. Investment Representations and Covenants of Physician.
a. Physician 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 under the Securities Act and applicable state
securities laws, and that the reliance of Vision 21 on such exemptions is
predicated in part on the Physician's representations, warranties, covenants and
acknowledgements set forth in this Section.
b. Except as disclosed on Schedule 7.1(b) attached hereto,
Physician represents and warrants that Physician is an "accredited investor" or
"sophisticated investor" as defined under the Securities Act and state "Blue
Sky" laws, or that Physician has utilized, to the extent necessary to be deemed
a sophisticated investor under the Securities Act and State "Blue Sky" laws, the
assistance of a professional advisor.
c. Physician represents and warrants that the Securities to be
acquired by Physician upon consummation of the transactions described in this
Agreement will be acquired
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by Physician for Physician's own account, not as a nominee or agent, and without
a view to resale or other distribution within the meaning of the Securities Act
and the rules and regulations thereunder, except as contemplated in this
Agreement, and that Physician will not distribute any of the Securities in
violation of the Securities Act. All Securities shall bear a restrictive legend
in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE
TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE ACT AND APPLICABLE
SECURITIES LAWS."
In addition, the Securities shall bear any legend required by the
securities or "Blue Sky" laws of any state where Physician resides as well as
any other legend deemed appropriate by Vision 21 or its counsel.
d. Physician represents and warrants that the address set
forth below Physician's name on Schedule 7.1(d) is Physician's principal
residence.
e. Physician (i) acknowledges that the Securities issued to
Physician at the Closing must be held indefinitely by Physician 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, and (iii) is aware that Rule 144 is not
currently available for use by Physician for resale of any of the Securities to
be acquired by Physician upon consummation of the transactions described in this
Agreement.
f. Physician represents and warrants to Vision 21 that
Physician, either alone or together with the assistance of Physician's own
professional advisor, has such knowledge and experience in financial and
business matters such that Physician is capable of evaluating the merits and
risks of Physician's investment in any of the Securities to be acquired by
Physician upon consummation of the transactions described in this Agreement.
g. Physician confirms that Physician has had the opportunity
to ask questions of and receive answers from Vision 21 concerning the terms and
conditions of Physician's investment in the Securities, and the Physician has
received to Physician's satisfaction, such additional information, in addition
to that set forth herein, about Vision 21's operations and the terms and
conditions of the offering as Physician has requested.
h. In order to ensure compliance with the provisions of
paragraph (c) hereof, Physician agrees that after the Closing Physician will not
sell or otherwise transfer or dispose of Securities or any interest therein
(unless such shares have been registered under the
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Securities Act) without first complying with either of the following conditions,
the expenses and costs of satisfaction of which shall be fully borne and paid
for by Physician:
i) Vision 21 shall have received a written legal
opinion from legal counsel, which opinion and counsel shall be satisfactory to
Vision 21 in the exercise of its reasonable judgment, or a copy of a
"no-action" or interpretive letter of the Securities and Exchange Commission
specifying the nature and circumstances of the proposed transfer and indicating
that the proposed transfer will not be in violation of any of the registration
provisions of the Securities Act and the rules and regulations promulgated
thereunder; or
ii) Vision 21 shall have received an opinion from its
own counsel to the effect that the proposed transfer will not be in violation
of any of the registration provisions of the Securities Act and the rules and
regulations promulgated thereunder.
Physician also agrees that the certificates or instruments representing the
Securities to be issued to Physician pursuant to this Agreement may contain a
restrictive legend noting the restrictions on transfer described in this Section
and required by federal and applicable state securities laws, and that
appropriate "stop-transfer" instructions will be given to Vision 21's transfer
agent, if any, provided that this Section 7.1(h) shall no longer be applicable
to any Securities following their transfer pursuant to a registration statement
effective under the Securities Act or in compliance with Rule 144 or if the
opinion of counsel referred to above is to the further effect that transfer
restrictions and the legend referred to herein are no longer required in order
to establish compliance with any provisions of the Securities Act.
i. Physician understands that there can be no assurance that a
Public Offering by Vision 21 will ever occur or if it does occur that it will be
successful.
j. Physician agrees that he shall be considered an "affiliate"
of Vision 21 for purposes of Rule 144 and agrees to the restrictions and
limitations imposed by Rule 144 on affiliates. Physician further agrees that he
shall be considered an affiliate of Vision 21 for Rule 144 purposes even if he
does not meet the technical definition of "affiliate" under Rule 144.
7.2. Current Public Information. At all times following the
registration of any of Vision 21's securities under the Securities Act or
Exchange Act pursuant to which Vision 21 becomes subject to the reporting
requirements of the Exchange Act, Vision 21 shall use commercially reasonable
efforts to comply with the requirements of Rule 144 under the Securities Act, as
such Rule may be amended from time to time (or any similar rule or regulation
hereafter adopted by the SEC) regarding the availability of current public
information to the extent required to enable any holder of shares of Common
Stock to sell such shares without registration under the Securities Act pursuant
to Rule 144 (or any similar rule or regulation).
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8. COVENANTS OF THE COMPANY AND THE PHYSICIAN. The Company and the
Physician, jointly and severally, agree that between the date hereof and the
Closing (with respect to the Company's covenants, the Physician agrees to use
his best efforts to cause the Company to perform):
8.1. Consummation of Agreement. The Company and the Physician shall use
their best efforts to cause the consummation of the transactions contemplated
hereby in accordance with their terms and conditions; provided, however, that
this covenant shall not require the Company or the Physician to make any
expenditures that are not expressly set forth in this Agreement or otherwise
contemplated herein.
8.2. Business Operations. The Company shall operate its business in the
ordinary course. The Company and the Physician shall use their best efforts to
preserve the business of the Company intact. Neither the Company nor the
Physician shall take any action that would, individually or in the aggregate,
result in a Material Adverse Effect.
8.3. Access. The Company and the Physician shall, at reasonable times
during normal business hours and on reasonable notice, permit Vision 21 and its
authorized representatives, including without limitation, the Accountants,
reasonable access to, and make available for inspection, all of the assets and
business of the Company, including its employees, customers and suppliers, and
permit Vision 21 and its authorized representatives to inspect and, at Vision
21's sole cost and expense, make copies of all documents, records (other than
patient medical records) and information with respect to the affairs of the
Company, including, without limitation, the Financial Statements, as Vision 21
and its representatives may request, all for the sole purpose of permitting
Vision 21 to become familiar with the business and assets and liabilities of the
Company.
8.4. Notification of Certain Matters. The Company and the Physician
shall promptly inform Vision 21 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 the Company or the Physician
subsequent to the date of this Agreement and prior to the Effective Time under
any Commitment material to the Company's condition (financial or otherwise),
operations, assets, liabilities or business and to which it is subject; or (b)
any material adverse change in the Company's condition (financial or otherwise),
operations, assets, liabilities or business.
8.5. Approvals of Third Parties. As soon as practicable after the date
hereof, the Company and the Physician shall secure all necessary approvals and
consents of landlords 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; provided, however, that this covenant shall not require the
Company or the Physician to make any material expenditures that are not
expressly set forth in this Agreement or otherwise contemplated herein.
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8.6. Employee Matters. Except as set forth in Schedule 3.13 or as
otherwise contemplated by this Agreement, the Company shall not, without the
prior written approval of Vision 21, except as required by law:
a. increase the cash compensation of the Physician or any
other employees of the Company (other than in the ordinary course of business
and consistent with past practice);
b. adopt, amend or terminate any Compensation Plan;
c. adopt, amend or terminate any Employment Agreement;
d. adopt, amend or terminate any Employee Policies and
Procedures;
e. adopt, amend or terminate any Employee Benefit Plan;
f. 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;
g. fail to pay any premium or contribution due or with respect
to any Employee Benefit Plan;
h. fail to file any return or report with respect to any
Employee Benefit Plan;
i. institute, settle or dismiss any employment litigation
except as could not, individually or in the aggregate, result in a Material
Adverse Effect;
j. enter into, modify, amend or terminate any agreement with
any union, labor organization or collective bargaining unit; or
k. take or fail to take any action with respect to any past or
present employee of the Company that would, individually or in the aggregate,
result in a Material Adverse Effect.
8.7. Contracts. Except with Vision 21's prior written consent, the
Company shall not assume or enter into any contract, lease, license, obligation,
indebtedness, commitment, purchase or sale except in the ordinary course of
business that is material to the Company's business, nor will it waive any
material right or cancel any material contract, debt or claim.
8.8. Capital Assets; Payments of Liabilities. The Company shall not,
without the prior written approval of Vision 21 (a) acquire or dispose of any
capital asset having a fair market value of $5,000 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
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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
Company 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.
8.9. Mortgages, Liens and Guaranties. The Company shall not, without
the prior written approval of Vision 21, 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.
8.10. Acquisition Proposals. The Company and the Physician agree that
from the date of this Agreement through the earlier of the Closing Date or
November 30, 1997, (a) neither the Physician nor the Company nor any of its
officers and directors shall, and the Physician and the Company shall direct and
use their best efforts to cause the Company's employees, agents, and
representatives not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any Acquisition Proposal or
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; (b) the Physician and the Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing and
each will take the necessary steps to inform the individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 8.10; and (c) the Physician and the Company will notify Vision 21
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, the Company or the Physician.
8.11. Distributions and Repurchases. Except as contemplated in this
Agreement, no distribution, payment or dividend of any kind will be declared or
paid by the Company with respect of its capital stock, nor will any repurchase
of any of the Company's capital stock be approved or effected.
8.12. Requirements to Effect the Merger. The Company and the Physician
shall use their best efforts to take, or cause to be taken, all actions
necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all necessary
documents in form approved by counsel for the parties to this Agreement.
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8.13. Physician Accounts Payable and Physician Retained Equity. The
Company shall, and the Physician shall cause the Company to, pay in a timely
manner the accounts payable of the Physician. Except as contemplated in this
Agreement, the Company shall not, and the Physician shall not permit the Company
to, make payment of all or any portion of any retained equity of the Company at
any time prior to Closing.
8.14. New P.C. Spinoff. The Company shall form, organize and
incorporate New P.C. in the State and the Articles or Certificate of
Incorporation and Bylaws of New P.C. shall be in form and substance reasonably
satisfactory to Vision 21. The Company shall not permit New P.C. to commence
business until the Closing Date. On or prior to the Closing, Company shall take
all actions and execute all documents, agreements or instruments necessary to
transfer to New P.C. the Company's medical business and to transfer good,
valuable, and marketable title to all of the Company's Medical Assets in
exchange for the assumption by New P.C. of the Excluded Liabilities and the
issuance by New P.C. to the Company of all of the issued and outstanding shares
of New P.C. common stock. Prior to the Closing, the Company shall declare and
make a distribution to Physician of all of the issued and outstanding shares of
New P.C. common stock.
8.15. Licenses and Permits. The Company and the Physician shall
cooperate fully with Vision 21 to obtain all licenses, permits, approvals or
other authorizations required under any law, statute, rule, regulation or
ordinance, or otherwise necessary or desirable to provide the services of New
P.C., the Physician and the Professional Employees contemplated by the Business
Management Agreement and the Physician Employment Agreements, and to conduct the
intended business of New P.C.
8.16. Physician Employment Agreements. The Company and the Physician
shall cause, at or immediately prior to Closing, each Physician Employee (except
for those non- shareholder Physician Employees identified on Schedule 8.16) who
is then an employee of the Company and Physician agrees at or immediately prior
to Closing (i) to terminate his employment agreement, if any, with the Company
by mutual consent without any liability therefor on the part of the Company and
(ii) to enter into a new Physician Employment Agreement with New P.C. in
accordance with the terms of the Business Management Agreement.
8.17. Optometrist Employment Agreements. The Company and the Physician
shall cause, at or immediately prior to Closing, each Optometrist Employee
(except for those Optometrist Employees identified on Schedule 8.17) who is then
an employee of the Company (i) to terminate his employment agreement, if any,
with the Company by mutual consent without any liability therefor on the part of
the Company and (ii) to enter into a new Optometrist Employment Agreement with
New P.C. in accordance with the Business Management Agreement.
8.18. Termination of Retirement Plans. Prior to Closing, the Physician
shall cause the Company to take all steps necessary to discontinue benefits
accruals under any Employee
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Benefit Plan that is intended to be a qualified employee retirement plan under
Section 401(a) of the Code (a "Retirement Plan") effective as of Closing or as
soon thereafter as may be practical. Effective at the time of Closing, the
Company shall cause New P.C. to assume all of the obligations of the Company as
the sponsoring employer and/or plan administrator of the Retirement Plan in
compliance with applicable law.
Subsequent to Closing, New P.C. and Vision 21 shall review the extent
to which New P.C. can resume contributions to the Retirement Plan without
violating the qualification requirements of Sections 410(b) and 401(a)(4) of the
Code taking into account any employees of Vision 21 who would be "leased
employees" of New P.C. under Section 414(n) of the Code. If Vision 21 and New
P.C. mutually agree that such qualification requirements can be satisfied, New
P.C. may elect to continue the Retirement Plan and make contributions in
accordance with its terms, provided that New P.C. shall agree to cover at its
own expense any Vision 21 employees who are leased employees if such coverage is
required to maintain the tax-qualified status of the Retirement Plan.
8.19. Delivery of Schedules. The Company and the Physician shall
deliver to Vision 21 all Schedules required to be delivered by them prior to the
Closing.
8.20. Conversion of Company. After the transfer of the Medical Assets
of the Company to New P.C. and the assumption of the Excluded Liabilities by New
P.C. and prior to Closing, Physician shall cause the Company to take such action
and file such documents or instruments as may be necessary to convert the
Company into a general business corporation in accordance with applicable law.
8.21. Assignment of Fees for Medical and Optometry Services. On or
prior to the Closing Date, the Company shall obtain an irrevocable assignment
from all Professional Employees of any and all of their rights to receive
payment for the provision of ophthalmology or optometry services which are part
of the Accounts Receivable to the Company existing on the Closing Date, except
for those fees specified and set forth on Schedule 8.21. Each Professional
Employee shall undertake to endorse any payments received on account of such
services to the order of the Company and to take such other action as may be
necessary to confirm to the Company the rights to collect and retain for its own
account such Accounts Receivable. The Company shall cause its Professional
Employees to agree that such security interest of such lender(s) is intended to
be a first priority security interest and is superior to any right, title or
interest which may be asserted by such Professional Employees with respect to
the Accounts Receivable or the proceeds thereof. In the event that the
assignment of rights described in this Section shall be deemed, for any reason,
to be ineffective as an outright assignment, the Company shall cause each
Professional Employee to agree that such Professional Employee shall be deemed,
effective as of the Closing Date, to have granted to the Company a first
priority lien on and security interest in and to any and all interests of such
Professional Employee in any of the Accounts Receivable, and all proceeds with
respect thereto, to secure the collection by the Company of all Accounts
Receivable, and this Agreement shall be deemed to be a security agreement to the
extent necessary to give effect to the foregoing. The Company shall cause each
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Professional Employee to execute and deliver, all such financing statements as
the Company or Vision 21 may request in order to perfect such security interest.
The Company shall not suffer any Professional Employee to grant any other lien
on or security interest in or to such Accounts Receivable or any proceeds
thereof.
9. COVENANTS OF VISION 21. Vision 21 agrees that between the date
hereof and the Closing:
9.1. Consummation of Agreement. Vision 21 shall use its best efforts to
cause the consummation of the transactions contemplated hereby in accordance
with their terms and conditions and take all corporate and other actions
necessary to approve the Merger; provided, however, that this covenant shall not
require Vision 21 to make any expenditures that are not expressly set forth in
this Agreement or otherwise contemplated herein.
9.2. Efforts to Effect. Vision 21 will use its best efforts to take, or
cause to be taken, all actions necessary to effect the Merger under applicable
law, including without limitation the filing with the appropriate government
officials of all necessary documents in form approved by counsel for the parties
to this Agreement.
9.3. Notification of Certain Matters. Vision 21 shall promptly inform
the Company and the Physician 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 Vision 21 subsequent to the date of
this Agreement and prior to the Effective Time under any agreement or commitment
entered into by Vision 21 material to Vision 21's condition (financial or
otherwise), operations, assets, liabilities or business and to which it is
subject; or (b) any material adverse change in Vision 21's condition (financial
or otherwise), operations, assets, liabilities or business.
9.4. Approvals of Third Parties. Vision 21 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.
9.5. Licenses and Permits. Vision 21 shall use its best efforts to
obtain all licenses, permits, approvals or other authorizations required under
any law, statute, rule, regulation or ordinance, or otherwise necessary or
desirable to consummate the transactions or provide the services contemplated by
the Business Management Agreement and to conduct the intended business of Vision
21.
9.6. Release of Physician From Practice Liabilities. Vision 21 shall
use its best efforts to obtain from third party creditors the release of
Physician from any personal liabilities relating to the Practice which are
identified on Schedule 9.6 and assumed by Vision 21 pursuant to the terms of
this Agreement.
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10. COVENANTS OF VISION 21, THE COMPANY AND THE PHYSICIAN. Vision 21,
the Company and the Physician agree as follows (with respect to New P.C.'s
covenants, the Physician agrees to cause New P.C. to perform):
10.1. 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 materially 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 Company or the Nonmedical Assets may be made unless Vision 21 consents to
such amendment or supplement, and no amendment or supplement to a Schedule that
constitutes or reflects a material adverse change to Vision 21 may be made
unless the Company and the Physician 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 11.1 and 12.1 have been
fulfilled, the Schedules hereto shall be deemed to be the Schedules as amended
or supplemented pursuant to this Section 10.1. In the event that the Company is
required to amend or supplement a Schedule in accordance with this Section 10.1
and Vision 21 does not consent to such amendment or supplement, or Vision 21 is
required to amend or supplement a Schedule in accordance with this Section 10.1
and the Company and the Physician do not consent, this Agreement shall be deemed
terminated by mutual consent as set forth in Section 16.1(d) or Section 16.1(e)
as appropriate.
10.2. Business Management Agreement. The Company and the Physician
shall use their best efforts to cause the Business Management Agreement to be
executed and delivered by New P.C. on or prior to the Closing Date, which shall
be considered a Nonmedical Asset of the Company and shall be acquired by Vision
21 in the Merger.
10.3. Fees and Expenses.
a. If the Merger is consummated, Vision 21 shall pay all costs
of the Audit of the Company's Financial Statements and financial records by
Vision 21's Accountants (or auditors designated by Vision 21's Accountants). All
items prepared by Vision 21's Accountants in connection with the Audit
("Prepared Audit Materials") shall be for use solely by Vision 21; provided,
however, that the Company may utilize the Prepared Audit Materials solely in
connection with its review of Vision 21's calculation of the Merger
Consideration. The Prepared Audit Materials shall not be deemed to include those
items which customarily remain the property of auditors such as their working
papers and memos.
b. In the event the Merger is not consummated, the Company
shall pay for or reimburse Vision 21 for the expenses of the Accountants in
connection with the Audit. The Company and Physician shall not be entitled to
copies or originals of the Prepared Audit Materials unless the Company or
Physician pays for or reimburses Vision 21 for all expenses
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of the Accountants in connection with the Audit in advance of receiving the
Prepared Audit Materials (either from Vision 21 or its Accountants). For
purposes of this Agreement, Audit expenses shall include all expenses related to
the Audit as well as all expenses incurred to present the financial statements
in accordance with GAAP and all schedules related thereto.
c. If the Merger is consummated, Vision 21 shall pay all cost
of a medicare audit of the Company. The Company shall agree in writing that all
information obtained in connection with the Medicare audit shall be made
available to Vision 21. The Company and Physician shall not be entitled to
copies or originals of the Medicare audit material unless the Company or
Physician pays for or reimburses Vision 21 for such audit expenses in advance of
receiving the Medicare audit materials (either from Vision 21 or its
Accountants). If the Merger is not consummated, the Company shall pay for all
expenses incurred in connection with the medicare audit.
d. Each of the Company, Physician and Vision 21 shall pay the
costs and expenses of their own legal counsel with respect to legal services
rendered in connection with the preparation and negotiation of this Agreement
and the Merger contemplated hereby.
11. CONDITIONS PRECEDENT OF VISION 21. Except as may be waived in
writing by Vision 21, the obligations of Vision 21 hereunder are subject to the
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 the Company and the Physician 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.
11.2. Covenants. The Company and the Physician shall have performed and
complied in all material respects with all covenants required by this Agreement
to be performed and complied with by the Company or the Physician prior to the
Closing Date.
11.3. Legal Opinion. Counsel to the Company and the Physician shall
have delivered to Vision 21 their opinions, dated as of the Closing Date, in
form and substance substantially similar to Exhibit 11.3 which Vision 21, Vision
21's counsel, the underwriters of any Public Offering and their counsel shall be
permitted to rely upon.
11.4. 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.
11.5. No Material Adverse Change. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities or business
of the Company shall have occurred since the Company Balance Sheet Date, whether
or not such change shall have been caused by the deliberate act or omission of
the Company or the Physician.
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11.6. Government Approvals and Required Consents. The Company, the
Physician, New P.C. and Vision 21 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 Company or any of its employees are a
party).
11.7. Certification. None of the Company, the Physician or New P.C.
shall have received any notice of or been made a party to any judicial or
administrative proceeding, or threatened to so be made a party, in any action or
proceeding that seeks to deny the continued use or receipt of any necessary
permit, license, authorization, certification or approval under the Medicare and
Medicaid programs to provide ophthalmology or optometry services.
11.8. Closing Deliveries. Vision 21 shall have received all documents
and agreements, duly executed and delivered in form reasonably satisfactory to
Vision 21, referred to in Section 13.1.
11.9. Due Diligence. Vision 21 shall have completed to its satisfaction
a due diligence review of the Company and the Physician.
11.10. Financial Audit. Vision 21 shall have approved in Vision 21's
sole discretion an audit of the Company and the Practice which audit shall have
been performed by an accounting firm designated by Vision 21.
11.11. Medicare Audit. Vision 21 shall have approved in Vision 21's
sole discretion a Medicare audit of the Company and the Practice.
11.12. Exemption Under State Securities Laws. The transfer of Vision
21's Securities to the Physician as contemplated in this Agreement shall qualify
for one or more exemptions from registration under the State's securities laws.
Vision 21 shall pay all filing fees in connection with any filing required to
qualify the transfer of the Securities for such exemption(s).
11.13. Assignment of Professional Employees' Rights in Accounts
Receivable. The Company shall have caused the Professional Employees to assign
any and all of their rights with respect to Accounts Receivable to the Company
and shall cause such Professional Employees to execute such other agreements and
instruments as contemplated in Section 8.21.
12. CONDITIONS PRECEDENT OF THE COMPANY AND THE PHYSICIAN. Except as
may be waived in writing by the Company and the Physician, the obligations of
the Company and the Physician hereunder are subject to fulfillment at or prior
to the Closing Date of each of the following conditions precedent:
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12.1. Representations and Warranties. The representations and
warranties of Vision 21 contained herein shall be true and correct in all
respects when initially made and shall be true and correct in all material
respects as of the Closing Date.
12.2. Covenants. Vision 21 shall have performed and complied in all
material respects with all covenants and conditions required by this Agreement
to be performed and complied with by them prior to the Closing Date.
12.3. Legal Opinions. Counsel to Vision 21 shall have delivered to the
Company and the Physician their opinion, dated as of the Closing Date, in form
and substance substantially similar to Exhibit 12.3.
12.4. 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.
12.5. Government Approvals and Required Consents. The Company, the
Physician, New P.C. and Vision 21 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 Company or any of its employees are a
party).
12.6. Closing Deliveries. The Company, New P.C. and the Physician shall
have received all documents, instruments and agreements, duly executed and
delivered in form reasonably satisfactory to the Company, referred to in Section
13.2.
12.7. No Change in Voting or Ownership Control. There shall have been
no changes in the voting or ownership control of Vision 21 from the date first
above written to the Closing Date.
12.8. No Material Adverse Change. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities or business
of Vision 21 shall have occurred since the end of the last fiscal period
reported in the Vision 21 Financial Statements, whether or not such change shall
have been caused by the deliberate act or omission of Vision 21.
13. CLOSING DELIVERIES; ESCROW OF DOCUMENTS.
13.1. Deliveries of the Company, New P.C. and the Physician. At or
prior to September __, 1997, the Company, New P.C. and the Physician shall
deliver to Vision 21, c/▇ ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP, counsel to Vision 21,
the following, all of which shall be in a form reasonably satisfactory to Vision
21 and shall be held by ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP in escrow pending
Closing, pursuant to an escrow agreement or letter in form and substance
mutually acceptable to the parties hereto:
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a. a copy of resolutions of the Board of Directors of the
Company authorizing (i) the execution, delivery and performance of this
Agreement and all related documents and agreements, and (ii) the consummation of
the Merger, certified by the Secretary of the Company as being true and correct
copies of the originals thereof subject to no modifications or amendments;
b. a copy of resolutions of the Board of Directors of New P.C.
authorizing the execution, delivery and performance of the Business Management
Agreement, the Physician Employment Agreements, and all other documents to be
executed and delivered by New P.C. as contemplated by this Agreement, certified
by the Secretary of New P.C. as being true and correct copies of the originals
thereof subject to no modifications or amendments;
c. a certificate of the President of the Company, and of the
Physician, dated the Closing Date, as to the truth and correctness of the
representations and warranties of the Company and the Physician contained
herein, on and as of the Closing Date;
d. a certificate of the President of the Company, and of the
Physician, dated the Closing Date, (i) as to the performance of and compliance
in all material respects by the Company and the Physician with all covenants
contained herein on and as of the Closing Date and (ii) certifying that all
conditions precedent of the Company and the Physician to the Closing have been
satisfied;
e. a certificate of the Secretary of the Company and the
Secretary of New P.C. certifying as to the incumbency of the directors and
officers of each such corporation and as to the signatures of such directors and
officers who have executed documents delivered pursuant to the Agreement on
behalf of each such corporation;
f. a certificate, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of the respective states of
incorporation for the Company and New P.C. establishing that each such
corporation is in existence, has paid all franchise or similar taxes, if any,
and, if applicable, otherwise is in good standing to transact business in its
state of organization;
g. certificates, dated within ten (10) days prior to the
Closing Date, of the Secretaries of State of the states in which the Company and
New P.C. are qualified to do business, to the effect that each such corporation
is qualified to do business and, if applicable, is in good standing as a foreign
corporation in each of such states;
h. an opinion of counsel to the Company and Physicians dated
as of the Closing Date, in accordance with Section 11.3;
i. all authorizations, consents, permits and licenses
referenced in Section 3.8;
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j. the resignations of the directors and officers of the
Company as requested by Vision 21;
k. the executed Business Management Agreement in substantially
the form attached hereto as Exhibit 13.1 (k), as revised in accordance with
changes reasonably deemed necessary or advisable by legal counsel retained by
Vision 21 in the State to address regulatory and compliance issues;
l. an executed Physician Employment Agreement between New P.C.
and the Physician in substantially the form attached hereto as Exhibit 13.1 (l);
m. an executed Physician Employment Agreement between New P.C.
and each Physician Employee who is then an employee of the Company in
substantially the form attached hereto as Exhibit 13.1 (m);
n. an executed Optometrist Employment Agreement between New
P.C. and each Optometrist Employee who is then an employee of the Company in
substantially the form attached hereto as Exhibit 13.1 (n);
o. an executed Certificate of Merger necessary to effect the
Merger;
p. a non-foreign affidavit, as such affidavit is referred to
in Section 1445 (b) (2) of the Code, of the Physician, signed under a penalty of
perjury and dated as of the Closing Date, to the effect that the Physician is a
United States citizen or a resident alien (and thus not a foreign person) and
providing the Physician's United States taxpayer identification number;
q. if desired by Vision 21, a new lease or leases between the
landlords under each lease for real property described on Schedule 3.14(c) and
Vision 21 in form and substance reasonably satisfactory to Vision 21;
r. the Shares of Company Common Stock to be delivered pursuant
to Section 2.9(b); and
s. such other instrument or instruments of transfer prepared
by Vision 21 as shall be necessary or appropriate, as Vision 21 or its counsel
shall reasonably request, to carry out and effect the purpose and intent of this
Agreement.
13.2. Deliveries of Vision 21. At or prior to September __, 1997,
Vision 21 shall deliver to the Company and the Physician, c/▇ ▇▇▇▇▇▇▇▇, Loop &
▇▇▇▇▇▇▇▇, LLP, counsel to Vision 21, the following, all of which shall be in a
form reasonably satisfactory to the Company and the Physician and shall be held
by ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP in escrow pending Closing, pursuant to an
escrow agreement or letter in form and substance mutually acceptable to the
parties hereto:
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a. a copy of the resolutions of the Board of Directors of
Vision 21 authorizing (i) the execution, delivery and performance of this
Agreement, and all related documents and agreements, and (ii) the consummation
of the Merger, certified by Vision 21's Secretary as being true and correct
copies of the originals thereof subject to no modifications or amendments;
b. a certificate of an officer of Vision 21 dated the Closing
Date as to the truth and correctness of the representations and warranties of
Vision 21 contained herein, on and as of the Closing Date;
c. a certificate of an officer of Vision 21 dated the Closing
Date, (i) as to the performance and compliance of Vision 21 with all covenants
contained herein on and as of the Closing Date and (ii) certifying that all
conditions precedent of Vision 21 to the Closing have been satisfied;
d. certificates, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of the State of Florida establishing
that Vision 21 is in existence, has paid all franchise or similar taxes, if any,
and, if applicable, otherwise is in good standing to transact business in such
state;
e. certificates (or photocopies thereof), dated within ten
(10) days prior to the Closing Date, of the Secretary of State of each state in
which Vision 21 is qualified to do business, to the effect that Vision 21 is
qualified to do business and, if applicable, is in good standing as a foreign
corporation in each of such states;
f. an opinion of ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP, counsel to
Vision 21, dated as of the Closing Date, pursuant to Section 12.3;
g. the executed Lease Assignments;
h. the Merger Consideration;
i. such other instrument or instruments of transfer, prepared
by the Company or the Physician as shall be necessary or appropriate, as the
Company, the Physician or their counsel shall reasonable request, to carry out
and effect the purpose and intent of this Agreement.
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13.3. Release of Escrow Materials. ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP (the
"Escrow Agent") shall release the agreements, certificates, instruments,
documents and other materials described in Sections 13.1 and 13.2 to the
appropriate parties to effectuate the transactions contemplated in this
Agreement only after all such materials have been delivered by all applicable
parties (or the parties receiving such documents have waived in writing such
delivery requirement), the parties have completed their due diligence, the Audit
and the Medicare audit have been completed, and each of Vision 21, the Physician
and the Company shall have sent written notice to the Escrow Agent stating that
the conditions to release of the escrowed documents have been satisfied or
waived. In the event that all of Vision 21, the Physician and the Company have
not notified the Escrow Agent in writing that they are satisfied with or have
waived all of the conditions to the release of the escrowed documents, the
Escrow Agent shall immediately return any consideration by Vision 21 held by it
to Vision 21 and shall promptly destroy or return the foregoing materials to the
parties sending such materials.
14. POST CLOSING MATTERS.
14.1. Further Instruments of Transfer. From and after the Closing Date,
at the request of Vision 21 and at Vision 21's sole cost and expense, the
Physician and the Company 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.
14.2. Practice Advisory Council; Local Advisory Council; National
Appeals Council. Vision 21 and New P.C. shall establish a practice advisory
council composed of delegates from Vision 21 and New P.C. which shall advise
Vision 21 and New P.C. and determine certain issues as more fully described in
the Business Management Agreement. Vision 21 shall also establish a local
advisory council composed of delegates from certain practice groups acquired by
Vision 21 in connection with Recent Acquisitions, delegates from the Company and
delegates from Vision 21. Such delegates shall be appointed from practice groups
which are located in a market area to be identified by Vision 21 and in which
New P.C. is located. The local advisory council board shall advise Vision 21 and
the practice groups within the market area as to policy and strategy issues and
shall determine certain types of issues and disputes between Vision 21 and such
practice groups which issues and disputes are identified in the Business
Management Agreement and other management agreements entered into between Vision
21 and practice groups. New P.C. shall have the right to appoint one (1) member
to a local advisory council who shall serve an initial two (2) year term. After
the initial two-year term, election of members to the local advisory council
shall be in accordance with by-laws which shall be adopted and amended by the
local advisory council. Vision 21 shall also establish a national appeals
council which shall have, among other duties and responsibilities, the power to
adopt and amend its by-laws, to review and approve as limited herein certain
decisions of the local advisory councils, and to resolve deadlocks among the
members of such local advisory councils.
14.3. Restrictions on Transfer of Vision 21 Common Stock. Physician
shall not dispose of any of the Vision 21 Common Stock received in the Merger
(including any Vision 21 Common Stock received by the Company as contingent
consideration in connection with the
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Merger) within two (2) years of the Effective Time of the Merger if such
disposition would reduce the fair value of the Vision 21 Common Stock (with such
fair value measured as of the Effective Time of the Merger) retained by the
Physician to an amount less than fifty percent (50%) of (a) the fair value of
the Company Common Stock held by the Physician immediately before the Effective
Time of the Merger, plus (b) the value of any contingent consideration received
by the Company in connection with the Merger, unless the Physician obtains an
opinion of counsel reasonably satisfactory to Vision 21 that such transfer will
not violate the continuity of shareholder interest requirement set forth in
Treas. Reg. Section 1.388-1. In the event that Physician wishes to dispose of
any shares of Vision 21 Common Stock received in the Merger within such two (2)
year period, Physician shall provide written notice to Vision 21, not less than
ten (10) days prior to the intended date of disposition, specifying the number
of shares of which the Physician proposes to dispose.
15. REMEDIES.
15.1. Indemnification by the Physician. Subject to the terms and
conditions of this Agreement, the Physician agrees to indemnify, defend and hold
Vision 21, the Surviving Corporation and their respective directors, officers,
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 such entities and individuals
(including, but not limited to, any reduction in payments to or revenues of New
P.C.), arising out of or resulting from:
a. a breach of any representation, warranty or covenant of the
Company or the Physician contained herein or in any schedule or certificate
delivered hereunder;
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 Physician, the
Company (including its subsidiaries, if any) or New P.C., and provided to Vision
21 or its counsel by the Company or the Physician, specifically for inclusion in
a Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, (ii) arising out of or based upon any
omission or alleged omission to state therein a material fact relating to the
Physician, the Company (including its subsidiaries, if any) or New P.C. required
to be stated therein or necessary to make the statements therein not misleading,
and not provided to Vision 21 or its counsel by the Company or the Physician,
provided, however, that such indemnity shall not inure to the benefit of Vision
21 to the extent that such untrue statement (or alleged untrue statement) was
made, in, or omission (or alleged omission) occurred in, any preliminary
prospectus, and such information was not so included by Vision 21 and properly
delivered to shareholders of Vision 21 who acquire Vision 21 Common Stock in any
Public Offering;
c. any filings, reports or disclosures made pursuant to the
IRS Voluntary Compliance Resolution Program, if applicable;
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d. any failure of the Merger to qualify as a reorganization
within the meaning of Section 368(a)(1)(A) or Section 368(a)(2)(D) of the Code;
e. any liability arising from the spin off of the Company's
medical business and Medical Assets; and
f. any liability arising from any alleged unlawful sale or
offer to sell or transfer any of the Common Stock by Physician.
15.2. Indemnification by Vision 21. Subject to the terms and conditions
of this Agreement, Vision 21 hereby agrees to indemnify, defend and hold the
Physician harmless from and against all damages asserted against or incurred by
him arising out of or resulting from:
a. a breach by Vision 21 of any representation, warranty or
covenant of Vision 21 contained therein or in any schedule or certificate
delivered hereunder;
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, arising out of or based upon any untrue statement or alleged
untrue statement of a material fact relating to Vision 21, 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 Vision 21 (including its subsidiaries), required to be stated therein or
necessary to make the statements therein not misleading; and
c. any filings, reports or disclosures made pursuant to the
IRS Voluntary Compliance Resolution Program, if applicable.
Notwithstanding anything in this Section 15.2, Vision 21 shall not be
liable for any Damages resulting from any matter not disclosed to Vision 21 by
any of the third parties acquired by Vision 21 in connection with Recent
Acquisitions.
15.3. 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
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indemnification under this Agreement. Except as set forth in Section 15.6, 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 15 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 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 15.3(b). 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 15.3(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.
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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 15.3(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 15.3(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 the Indemnified Party to the effect that
the Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article 15 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 15.3(c), 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 19.1 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 15 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
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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 15.3(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.
15.4. Remedies Not Exclusive. The remedies provided in this Agreement
shall not be exclusive of any other rights or remedies available to one party
against the other, either at law or in equity. This Article 15 regarding
indemnification shall survive Closing.
15.5. 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.
15.6. Indemnification Limitations. Notwithstanding the provisions of
Sections 15.1 and 16.2, (a) no party shall be required to indemnify another
party with respect to a breach of a representation, warranty or covenant unless
the claim for indemnification is brought within two (2) years after the Closing
Date, except that a claim for indemnification for a breach of the
representations and warranties contained in Sections 3.1, 3.2, 3.3., 3.4, 3.5,
3.6, 3.14, 3.17, 3.20, 3.23, 4.1, 4.3, 4.4, 4.8, 5.1, 5.2, 5.3, 5.4, 5.6, 5.7,
6.1, 6.2, 6.3 and 6.4 may be made at any time, and a claim for indemnification
for a breach of the representations and warranties contained in Sections 3.12,
3.18, 3.21, 3.27, 3.28, 3.29, 3.30, 3.31, 3.33, 4.5, 4.7, 4.11, 5.8 and 7.1 may
be made at any time within the applicable statute of limitations; (b)
indemnification based upon Sections 15.1(b) through (f) and 15.2(b) may be made
at any time within the applicable statute of limitations; and (c) the Physician
shall not be required to indemnify Vision 21 pursuant to Section 15.1 unless,
and to the extent that, the aggregate amount of Damages incurred by Vision 21
shall exceed an amount equal to two percent (2%) of the total Merger
Consideration; and (d) the Physician shall not be required to indemnify Vision
21 with respect to a breach of a representation, warranty or covenant for
Damages in excess of the aggregate Merger Consideration received by the
Physician (other than pursuant to a requirement to indemnify Vision 21 under
Sections 3.30 and 3.31, or unless the breach involves an intentional breach or
fraud by the Physician or the Company, which shall be unlimited).
15.7. 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.
15.8. Payment of Indemnification Obligation. In the event that the
Physician has an indemnification obligation to Vision 21 hereunder, subject to
Vision 21's approval as set forth
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below, the Physician may satisfy such obligation by transferring to Vision 21
such number of shares of Vision 21 Common Stock owned by the Physician having an
aggregate fair market value (which is the fair market value at such time based
on the last reported sale price of Vision 21 Common Stock on a principal
national securities exchange or other exchange on which the Vision 21 Common
Stock is then listed or the last quoted ask price on any over-the-counter market
through which the Vision 21 Common Stock is then quoted on the last trading day
immediately preceding the day on which the Physician transfers shares of Vision
21 Common Stock to Vision 21 hereunder) equal to the indemnification obligation,
provided that each of the following conditions are satisfied:
a. The Physician shall transfer to Vision 21 good, valid and
marketable title to the shares of Vision 21 Common Stock, free and clear of all
adverse claims, security interests, liens, claims, proxies, options,
stockholders' agreements and encumbrances;
b. The Physician shall make such representation and warranties
as to title to the stock, absences of security interests, liens, claims,
proxies, stockholders' agreements and other encumbrances and other matters as
reasonably requested by Vision 21; and
c. The other terms and conditions of any transaction
contemplated pursuant to this Section and the effects thereof, including any
legal or tax consequences, shall be reasonably satisfactory to Vision 21.
16. TERMINATION.
16.1. Termination. This Agreement may be terminated and the Merger may
be abandoned:
a. at any time prior to the Closing Date by mutual agreement
of all parties;
b. at any time prior to the Closing Date by Vision 21 if any
representation or warranty of the Company or the Physician contained in this
Agreement or in any certificate or other document executed and delivered by the
Company or the Physician pursuant to this Agreement is or becomes untrue or
breached in any material respect or if the Company or the Physician 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 of written notice thereof;
c. at any time prior to the Closing Date by the Company if any
representation or warranty of Vision 21 contained in this Agreement is or
becomes untrue in any material respect or if Vision 21 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;
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d. at any time prior to the Closing Date by the Company in the
event of the failure of any of the conditions precedent set forth in Article 13
of this Agreement;
e. at any time prior to the Closing Date by Vision 21 in the
event of the failure of any of the conditions precedent set forth in Article 12
of this Agreement;
f. by Vision 21 if at any time prior to the Closing Date,
Vision 21 deems termination to be advisable, provided, however, that if Vision
21 exercises its right to terminate this Agreement under this subsection, Vision
21 shall reimburse the Company and the Physician for all reasonable attorneys'
and accountants' fees incurred by the Company and the Physician in connection
with this Agreement; provided that Vision 21 shall only reimburse the Company
and the Physician up to an aggregate maximum amount of One Hundred Thousand and
No/100 Dollars ($100,000.00) for such fees; or
g. by Vision 21 or the Company if the Merger shall not have
been consummated by October 31, 1997.
16.2. Effect of Termination. In the event this Agreement is terminated
pursuant to Section 16.1, Vision 21, the Company and the Physician, 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 15.1. In the event of a termination of this Agreement under the
provisions of this Article 16, a party not then in material breach of this
Agreement shall stand fully released and discharged of any and all obligations
under this Agreement.
17. PHYSICIAN EMPLOYMENT AGREEMENT.
17.1. Physician Employment Agreement. The parties acknowledge that in
accordance with the terms of this Agreement, Physician, as employee, and New
P.C., as employer, have entered into the Physician Employment Agreement and that
Vision 21 is entitled to enforce such Physician Employment Agreement as an
intended third party beneficiary. Physician and Vision 21 acknowledge that
Vision 21 would suffer severe harm in the event of Physician's resignation prior
to the expiration of the five (5) year term of such Physician Employment
Agreement (without first obtaining the written consent of Vision 21) or a breach
or default of Physician's obligations under such Physician Employment Agreement,
and Physician, the Company and Vision 21 agree that Vision 21 shall be entitled
to recover from Physician any and all damages incurred by Vision 21 caused by
such resignation, breach or default. Notwithstanding the foregoing, Vision 21
shall not be entitled to recover its damages caused by such resignation, breach
or default if such resignation, breach or default was caused by: (i) the death
or disability of Physician, (ii) circumstances not caused by an act or omission
of Physician and which circumstances are beyond his control, or (iii) loss of
Physician's license to practice as an ophthalmologist, unless such loss of
license is due to an act or omission of Physician. Notwithstanding the
foregoing, Physician shall have no obligation to pay the damages contemplated in
this Section 17.1 if (a) the Business Management Agreement has been
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terminated pursuant to a material breach by Vision 21, or (b) Physician cures
any such breach or default of the Physician Employment Agreement within a period
of thirty (30) days after notice from Vision 21 of such breach or default.
17.2. Survival. The parties acknowledge and agree that this Article 17
shall survive the Closing of the transactions contemplated herein.
18. NON-COMPETITION AND CONFIDENTIALITY COVENANTS.
18.1. Physician Non-Competition Covenant.
a. The Physician recognizes that the covenants of the
Physician contained in this Section 18.1 are an essential part of this Agreement
and that, but for the agreement of the Physician to comply with such covenants,
Vision 21 would not have entered into this Agreement. The Physician acknowledges
and agrees that the Physician's covenant not to compete is necessary to ensure
the continuation of the Management Business (as defined below) and is necessary
to protect the reputation of Vision 21, and that irreparable and irrevocable
harm and damage will be done to Vision 21 if the Physician competes with the
Management Business or Vision 21. The Physician accordingly agrees that for the
periods set forth in the Business Management Agreement, the Physician 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 the Physician's 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 Vision 21 (or of
any of its direct or indirect subsidiaries) or (B) induce or otherwise counsel,
advise or encourage any employee of Vision 21 (or of any of its direct or
indirect subsidiaries) to leave the employment of Vision 21;
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 Management Business as such term is
defined herein; provided, however, that this clause (ii) shall not prohibit the
Physician 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 the Physician's own benefit or
for the benefit of any other person or entity, call upon or solicit any
customers or clients of the Management Business; provided however, that the
Physician may send out a general notice to the customers or clients of the
Management Business announcing the
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termination of his arrangement with Vision 21 and may advertise in a general
manner without violating this covenant. The parties hereto acknowledge and agree
that for purposes of this Section, patients which have in the past received
medical or optometric care from the Company and/or shall in the future receive
medical or optometric care from the New P.C. are not deemed to be customers or
clients of the Management Business.
b. For the purposes of this Section 18.1, the following terms
shall have the meaning set forth below:
i) "Management Business" shall mean management and
administration of the non-medical aspects of medical, ophthalmology and
optometry practices.
ii) "Competing Management 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 Management Business within the
State, or (B) provides or sells a service which is the same or substantially
similar to, or otherwise competitive with the services provided by the
Management Business within the State; provided, however, that "Competing
Management Business" shall not include Vision 21, or the Physician's internal
management and administration of the Physician's medical practice or
participation in the management and administration of a physician group in which
the Physician devotes a significant amount of time to the practice of medicine.
c. Should any portion of this Section 18.1 be deemed
unenforceable because of the scope, duration or territory encompassed by the
undertakings of the Physician hereunder, and only in such event, then the
Physician and Vision 21 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 the Physician against Vision 21, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Vision 21 of this covenant; provided, however, that the Physician shall not be
bound by this covenant and shall not be obligated to pay the liquidated damages
contemplated in this Section 18.1 if at the time of a breach of this covenant
the Business Management Agreement has already been terminated pursuant to
Section 6.2(a) or 6.2(d) thereof. Without limiting other possible remedies to
Vision 21 for breach of this covenant, the Physician 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 Physician and Vision 21 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 the aggregate consideration received by the
Physician pursuant to this Agreement is reasonable in light of the severe harm
to the Management Business and Vision 21 which would result in the event that a
violation of this non-competition covenant were to occur. For purposes of
calculation of the
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liquidated damages contemplated in this Section and for purposes of calculation
of the liquidated damages contemplated in the Business Management Agreement and
the Physician Employment Agreement between the Physician and New P.C., the
aggregate consideration received by Physician pursuant to this Agreement shall
be in those amounts and in such form as set forth in Schedule 18.1. If the
Physician violates this non-competition covenant, Vision 21 shall, in addition
to all other rights and remedies available at law or equity, be entitled to (a)
cancel the number of shares of Common Stock held by the Physician or, with
respect to shares of Common Stock entitled to be received by the Physician,
terminate its obligation to deliver such number of shares of Common Stock valued
as set forth in Section 6.6(a) of the Business Management Agreement, and (b)
repayment by Physician to Vision 21 of any and all sums received in connection
with any shares of Vision 21 Common Stock sold by Physician; but in no event
shall Vision 21 be entitled to offset amounts in excess of the liquidated
damages sum pursuant to this Section 18.1. The Physician agrees to deliver to
Vision 21 the certificates representing any such shares canceled by Vision 21.
Payment and satisfaction by Physician shall be made within sixty (60) days of
notification to Physician by Vision 21 that Physician has violated this
non-competition covenant.
e. Notwithstanding anything contained herein, this Section
18.1 shall not be construed to (i) limit the freedom of any patient of the
Physician to choose the facility or physician from whom such patient shall
receive health-care services or (ii) limit or interfere with the Physician's
ability to exercise his professional medical judgment in treating his patients
or his ability to provide medical services to his patients.
18.2. Physician Confidentiality Covenant. From the date hereof, the
Physician shall not, directly or indirectly, use for any purpose, other than in
connection with the performance of the Physician's duties under the Physician
Employment Agreement with New P.C., or disclose to any third party, any
information of Vision 21 or the Company, as appropriate (whether written or
oral), including any business management or economic studies, patient lists,
proprietary forms, proprietary business or management methods, marketing data,
fee schedules, or trade secrets of Vision 21 or of the Company, 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 Physician may disclose information that the Physician can
establish (a) is or becomes generally available to and known by the public or
medical community (other than as a result of an unpermitted disclosure directly
or indirectly by the Physician or his Affiliates, advisors, or representatives);
(b) is or becomes available to the Physician on a nonconfidential basis from a
source other than Vision 21, the Company 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 Vision 21,
the Company or their respective Affiliates, advisors or representatives of which
the Physician has knowledge; or (c) has already been or is hereafter
independently acquired or developed by the Physician without violating any
confidentiality agreement with or other obligation of secrecy to Vision 21, the
Company or their respective Affiliates, advisors or representatives. Without
limiting the other possible remedies to Vision 21 for the breach of this
covenant, the Physician agrees that injunctive or other equitable relief shall
be available to enforce this covenant, such
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relief to be without the necessity of posting a bond, cash or otherwise. The
Physician further agrees that if any restriction contained in this Section 18.2
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.
18.3. Survival. The parties acknowledge and agree that this Article 19
shall survive the Closing of the transactions contemplated herein.
19. DISPUTES.
19.1. Mediation and Arbitration. Any dispute, controversy or claim
(excluding claims arising out of an alleged breach of Article 18 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, if the
amount in dispute is equal to or in excess of $200,000 or if the dispute is
solely of a non-monetary nature, and in Tucson, Arizona if the amount in dispute
is lower than $200,000, and in either case to commence within 15 days of the
appointment of the mediator by the AAA), and (b) if the controversy, claim or
dispute cannot be settled by mediation, then by arbitration administered by the
AAA under its Commercial Arbitration Rules (such arbitration to be held in
Tampa, Florida, if the amount in dispute is equal to or in excess of $200,000 or
if the dispute is solely of a non-monetary nature, and in Tucson, Arizona if the
amount in dispute is lower than $200,000, and in either case 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.
20. MISCELLANEOUS
20.1. Taxes. Physician shall pay all transfer taxes, sales and other
taxes and charges imposed by the State, if any, which may become payable in
connection with the transactions and documents contemplated hereunder (excluding
any of such taxes which may be attributable to services to be provided by Vision
21 under the Business Management Agreement). Vision 21 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 (excluding any of such taxes which may be attributable to
services to be provided by Vision 21 under the Business Management Agreement).
20.2. 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.
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20.3. 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.
20.4. 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:
If to Vision 21 addressed to:
Vision 21, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer
With copies to:
▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇
Post Office Box 172609
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
If to the Company and the Physician addressed to:
Retina Associates Southwest, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: __________________, M.D.
With copies to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
Sacks Tierney, P.A. Lawyers
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 20.4. Notice shall be deemed given on the date
of delivery, in the case of personal
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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.
20.5. 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.
20.6. 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.
20.7. Confidentiality Agreements. The provisions of any prior
confidentiality agreements and letters of intent between or among Vision 21, the
Company and the Physician, as amended, shall terminate and cease to be of any
force or effect at and upon the Closing.
20.8. Reformation Clause. It is the intention of the parties hereto to
conform strictly to applicable laws regarding the practice and regulation of
medicine, whether such laws are now or hereafter in effect, including the laws
of the United States of America, the State or any other applicable jurisdiction,
and including any subsequent revisions to, or judicial interpretations of, those
laws, in each case to the extent they are applicable to this Agreement (the
"Applicable Laws"). Accordingly, if the ownership of any Nonmedical Asset by
Vision 21 violates any Applicable Law, then the parties hereto agree as follows:
(a) the provisions of this section 20.8 shall govern and control; (b) if none of
the parties hereto are materially economically disadvantaged, then any
Nonmedical Asset, the ownership of which violates any Applicable Law, shall be
deemed to have never been owned by Vision 21; (c) if one or more of the parties
hereto is materially economically disadvantaged, then the parties hereto agree
to negotiate in good faith such changes to the structure and terms of the
transactions provided for in this Agreement as may be necessary to make these
transactions, as restructured, lawful under applicable laws and regulations,
without materially disadvantaging either party; (d) this Agreement shall be
deemed reformed; and (e) the parties to this Agreement shall execute and deliver
all documents or instruments necessary to effect or evidence the provisions of
this Section 20.8.
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20.9. Assignment. The Agreement may not be assigned by operation of law
or otherwise except that Vision 21 shall have the right to assign this
Agreement, at any time, to any Affiliate or direct or indirect wholly-owned
subsidiary. In the event of such assignment, Vision 21 shall remain liable
hereunder.
20.10. 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.
20.11. 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.
20.12. 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 Vision 21; provided,
however, that if Physician or the Company reasonably believes that it has a
legal obligation to make a press release and the consent of Vision 21 cannot be
obtained, then the release may be made without such approval.
20.13. 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.
20.14. No Rights as Stockholder. The Physician 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.
20.15. 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.
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20.16. 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.
20.17. 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.
20.18. Form of Transaction. If after the execution hereof, Vision 21
determines that the ownership of the Nonmedical Assets of the Company can be
better achieved through a different form of transaction without economic injury
to the Company or the Physician, or delay of the consummation of the
transaction, the Company and the Physician shall cooperate in revising the
structure of the transaction and shall negotiate in good faith to so amend this
Agreement; provided, that Vision 21 shall reimburse the Company and the
Physician at Closing for all reasonable additional expenses incurred by the
Company and the Physician as a result of such change in form.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
"COMPANY"
RETINA ASSOCIATES
SOUTHWEST, P.C.
----------------------------- By:
Witness -----------------------------------
--------------------------------, M.D.
------------------------------
Witness
"PHYSICIAN"
----------------------------- --------------------------------------
Witness ▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D.
-----------------------------
Witness
----------------------------- --------------------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇, M.D.
-----------------------------
Witness
----------------------------- --------------------------------------
Witness ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D.
-----------------------------
Witness
"VISION 21"
VISION TWENTY-ONE, INC.
By:
----------------------------- -----------------------------------
Witness ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
-----------------------------
Witness
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