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Exhibit 10.81
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AMONG
VISION TWENTY-ONE, INC.,
OC ACQUISITION CORP.
AND
OPTICARE HEALTH SYSTEMS, INC.
DATED AS OF FEBRUARY 10, 2000
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TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS .................................................. 2
SECTION 1.01 Certain Defined Terms .......................... 2
ARTICLE II
THE MERGER ................................................... 8
SECTION 2.01 The Merger ..................................... 8
SECTION 2.02 Closing ........................................ 9
SECTION 2.03 Effective Time ................................. 9
SECTION 2.04 Effect of the Merger ........................... 9
SECTION 2.05 Articles of Incorporation; Bylaws; Directors
and Officers of Surviving Corporation ......... 9
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES ........... 10
SECTION 3.01 Conversion of Shares ........................... 10
SECTION 3.02 Exchange of Shares Other than Treasury Shares .. 11
SECTION 3.03 Stock Transfer Books ........................... 13
SECTION 3.04 No Fractional Share Certificates ............... 14
SECTION 3.05 Options to Purchase Company Common Stock ....... 14
SECTION 3.06 Unvested Stock ................................. 16
SECTION 3.07 Certain Adjustments ............................ 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY .................... 17
SECTION 4.01 Organization and Qualification; Subsidiaries ... 17
SECTION 4.02 Articles of Incorporation and Bylaws ........... 18
SECTION 4.03 Capitalization ................................. 18
SECTION 4.04 Authority Relative to This Agreement ........... 19
SECTION 4.05 No Conflict; Required Filings and Consents ..... 20
SECTION 4.06 Permits; Compliance with Laws .................. 20
SECTION 4.07 SEC Filings; Financial Statements .............. 21
SECTION 4.08 Absence of Certain Changes or Events ........... 22
SECTION 4.09 Employee Benefit Plans; Labor Matters .......... 23
SECTION 4.10 Certain Tax Matters ............................ 26
SECTION 4.11 Contracts ...................................... 26
SECTION 4.12 Litigation ..................................... 27
SECTION 4.13 Environmental Matters .......................... 28
SECTION 4.14 Intellectual Property .......................... 28
SECTION 4.15 Taxes .......................................... 30
SECTION 4.16 Insurance ...................................... 31
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SECTION 4.17 Properties ..................................... 31
SECTION 4.18 Affiliates ..................................... 32
SECTION 4.19 Opinion of Financial Advisor ................... 32
SECTION 4.20 Brokers ........................................ 32
SECTION 4.21 Florida Business Corporation Law ............... 33
SECTION 4.22 Business Activity Restriction .................. 33
SECTION 4.23 Governmental Authorizations .................... 33
SECTION 4.24 Gifts, Political Contributions,
Unrecorded Funds............................... 34
SECTION 4.25 No Dissenters' Rights .......................... 34
SECTION 4.26 Board Recommendation ........................... 34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT ..................... 34
SECTION 5.01 Organization and Qualification; Subsidiaries ... 35
SECTION 5.02 Certificate of Incorporation and Bylaws ........ 35
SECTION 5.03 Capitalization ................................. 35
SECTION 5.04 Authority Relative to This Agreement ........... 36
SECTION 5.05 No Conflict; Required Filings and Consents ..... 36
SECTION 5.06 Permits; Compliance with Laws .................. 38
SECTION 5.07 SEC Filings; Financial Statements .............. 38
SECTION 5.08 Absence of Certain Changes or Events ........... 39
SECTION 5.09 Employee Benefit Plans; Labor Matters .......... 40
SECTION 5.10 Certain Tax Matters ............................ 42
SECTION 5.11 Contracts ...................................... 43
SECTION 5.12 Litigation ..................................... 44
SECTION 5.13 Environmental Matters .......................... 44
SECTION 5.14 Insurance ...................................... 44
SECTION 5.15 Properties ..................................... 44
SECTION 5.16 Opinion of Financial Advisor ................... 45
SECTION 5.17 Brokers ........................................ 45
SECTION 5.18 No Interested Shareholders ..................... 45
SECTION 5.19 Governmental Authorizations .................... 45
SECTION 5.20 Intellectual Property .......................... 46
ARTICLE VI
COVENANTS .................................................... 46
SECTION 6.01 Conduct of Business by Company
Pending the Closing ........................... 46
SECTION 6.02 Notices of Certain Events ...................... 49
SECTION 6.03 Access to Information; Confidentiality ......... 50
SECTION 6.04 No Solicitation of Transactions ................ 50
SECTION 6.05 Tax-Free Transaction ........................... 52
SECTION 6.06 Control of Operations .......................... 52
SECTION 6.07 Further Action; Consents; Filings .............. 52
SECTION 6.08 Additional Reports ............................. 53
SECTION 6.09 Conduct of Business by Parent .................. 53
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SECTION 6.10 Post Merger Directors and Officers ............. 55
SECTION 6.11 Bank Restructuring ............................. 55
SECTION 6.12 Disposition of Practices ....................... 56
SECTION 6.13 Financing Commitments .......................... 56
SECTION 6.14 Standstill Agreement ........................... 56
SECTION 6.15 Voting ......................................... 57
SECTION 6.16 Waiver ......................................... 57
ARTICLE VII
ADDITIONAL AGREEMENTS ........................................ 57
SECTION 7.01 Registration Statement; Joint Proxy Statement .. 57
SECTION 7.02 Stockholders' Meetings ......................... 60
SECTION 7.03 Affiliates ..................................... 60
SECTION 7.04 Directors' and Officers' Indemnification
and Insurance ................................. 60
SECTION 7.05 No Shelf Registration .......................... 62
SECTION 7.06 Public Announcements ........................... 62
SECTION 7.07 AMEX Listing ................................... 62
SECTION 7.08 Blue Sky ....................................... 62
SECTION 7.09 Acquisition of Company Capital Stock ........... 62
ARTICLE VIII
CONDITIONS TO THE MERGER ..................................... 63
SECTION 8.01 Conditions to the Obligations of Each
Party to Consummate the Merger ................ 63
SECTION 8.02 Conditions to the Obligations of Company ....... 64
SECTION 8.03 Conditions to the Obligations of Parent ........ 65
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER ............................ 66
SECTION 9.01 Termination .................................... 66
SECTION 9.02 Effect of Termination .......................... 68
SECTION 9.03 Amendment ...................................... 69
SECTION 9.04 Waiver ......................................... 69
SECTION 9.05 Termination Fee; Expenses ...................... 69
ARTICLE X
GENERAL PROVISIONS ........................................... 71
SECTION 10.01 Non-Survival of Representations
and Warranties ............................... 71
SECTION 10.02 Notices ....................................... 72
SECTION 10.03 Severability .................................. 73
SECTION 10.04 Assignment; Binding Effect; Benefit ........... 73
SECTION 10.05 Incorporation of Exhibits ..................... 73
SECTION 10.06 Governing Law ................................. 73
SECTION 10.07 Waiver of Jury Trial .......................... 74
SECTION 10.08 Headings; Interpretation ...................... 74
SECTION 10.09 Counterparts .................................. 74
SECTION 10.10 Entire Agreement .............................. 74
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of February
10, 2000 (as amended, supplemented or otherwise modified from time to time,
this "Agreement"), among OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation
("Parent"), VISION TWENTY-ONE, INC., a Florida corporation ("Company"), and OC
ACQUISITION CORP., a Florida corporation and a direct wholly owned subsidiary
of Parent ("Merger Sub").
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent and Company have determined
that it is advisable and in the best interests of their respective companies
and stockholders to enter into a business combination by means of the merger of
Merger Sub with and into Company (the "Merger") and have approved and adopted
this Agreement;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, certain stockholders of
Company have granted an irrevocable proxy (referred to herein as the "Company
Stockholder Agreement") in the form attached hereto as Annex A;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Company to enter into this Agreement, certain stockholders of
Parent have granted an irrevocable proxy (referred to herein as the "Parent
Stockholder Agreement") in the form attached hereto as Annex B;
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the Florida Business Corporation Act, as
amended (the "FBCA"), Parent will acquire all of the common stock of Company
through the merger of Merger Sub with and into Company; and
WHEREAS, for United States Federal income tax purposes, it is intended
that the Merger shall qualify as a tax-free reorganization under Section 368(a)
of the Internal Revenue Code of 1986, as amended (together with the rules and
regulations promulgated thereunder, the "Code"), and that this Agreement shall
be, and hereby is, adopted as a plan of reorganization for purposes of Section
368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms
Unless the context otherwise requires, the following terms, when used
in this Agreement, shall have the respective meanings specified below (such
meanings to be equally applicable to the singular and plural forms of the terms
defined):
"Adjusted Financial Statements" shall mean the Company's month-ending
balance sheet and statements of income and changes in stockholders' equity as
of the latest practicable date no earlier than forty-five (45) days prior to
the Exchange Ratio Adjustment Date (defined below), which financial statements
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby; provided, however, that the financial
statements are subject to normal and recurring year-end adjustments and lack
footnotes and other presentation items. The "Exchange Ratio Adjustment Date"
shall be the fifth Business Day prior to the effective date of the Registration
Statement or such later date prior to the mailing of the Joint Proxy Statement
as the parties may mutually agree.
"Affiliate" shall mean, with respect to any person, any other person
that controls, is controlled by or is under common control with the first
person.
"Amex" shall mean the American Stock Exchange.
"ASCI Debt" shall mean the amount of "Contingent Consideration"
payable to American Surgicite Centers, Inc. pursuant to the Asset Purchase
Agreement dated as of September 1, 1998 among the Company and American
Surgicite Centers, Inc.
"Bank Austria" shall mean Bank Austria Creditanstaldt Corporate
Finance, Inc.
"Bank Austria Credit Agreement" shall mean the Amended and Restated
Loan and Security Agreement dated as of August 13, 1999 among the Parent,
certain of the Parent Subsidiaries and the lenders named therein, and Bank
Austria, as Agent.
"Blue Sky Laws" shall mean state securities or "blue sky" laws.
"Business Day" shall mean any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in New York.
"Company Common Stock" shall mean the common stock, par value $.001
per share, of the Company.
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"Company Disclosure Schedule" shall mean the disclosure schedule
delivered by Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"Company Intellectual Property" shall mean all patents (including,
without limitation, all U.S. and foreign patents, patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, re-examinations and extensions thereof), design rights, trademarks,
trade names and service marks (whether or not registered), trade dress,
Internet domain names, copyrights (whether or not registered) and any renewal
rights therefor, sui generis database rights, statistical models, technology,
inventions, supplier lists, trade secrets, know-how, computer software programs
or applications in both source and object code form, databases, technical
documentation of such software programs ("Technical Documentation"),
registrations and applications for any of the foregoing and all other tangible
or intangible proprietary information or materials that were material to
Company's business or are currently used in Company's business in any product,
technology or process (i) currently being or formerly manufactured, published
or marketed by Company or (ii) previously or currently under development for
possible future manufacturing, publication, marketing or other use by Company
or (iii) used by the Company.
"Company Material Adverse Effect" shall mean any change in or effect
on the business of Company and the Company Subsidiaries that, individually or
in the aggregate (taking into account all other such changes or effects), is,
or is reasonably likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of Company and the
Company Subsidiaries, taken as a whole, except to the extent that any such
change in or effect results from (i) changes in general economic conditions or
changes affecting the industry generally in which Company operates (provided
that such changes do not affect Company in a materially disproportionate
manner); (ii) changes in trading prices for the Company's common stock; (iii)
disposition of Practices (as hereinafter defined), divestiture of Corporate
Optometry and termination of managed care contracts as specifically identified
on Schedule 4.08 of the Company Disclosure Schedule; (iv) ongoing professional
fees consistent with the level of professional fees incurred by the Company
during the period from January 10, 2000 to February 9, 2000; (v) Special
Charges that cause an adjustment to the Exchange Ratio per Section 3.01 hereto;
and the net writedown of certain assets associated with business operations
which are being discontinued.
"Company Stock Plans" shall mean the Company's 1996 and 1999 Stock
Incentive Plans for employees and the Company's Stock Option Plan for
Affiliated Professionals.
"Competing Transaction" shall mean any of the following involving
Company (other than the Merger):
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, exchange, transfer or other disposition of 33%
or more of the assets of the Company and/or its subsidiaries, taken as
a whole, in a single transaction or series of
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transactions, including, but not limited to, the assets or stock
relating to MEC Healthcare Inc. ("MEC") or the Company's laser vision
division;
(iii) any tender offer or exchange offer for 33% or more of
the outstanding voting securities of the Company or the filing of a
registration statement under the Securities Act in connection
therewith;
(iv) any person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined under Section 13(d) of the Exchange Act) having been formed
that beneficially owns or has the right to acquire beneficial
ownership of, 33% or more of the outstanding voting securities of the
Company other than in connection with a Financing Transaction (as
defined below);
(v) any person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined under Section 13(d) of the Exchange Act) having been formed
that beneficially owns or has the right to acquire beneficial
ownership of, 49% or more of the outstanding voting securities of the
Company from the Company or any of the Company's Affiliates in
connection with a transaction (a "Financing Transaction") with the
purpose of the Company obtaining bonafide financing without the
investor making such financing with the intent of exercising control
over the Company and/or management of the Company other than as may be
typical of a lender in a commercial financing transaction;
"Confidentiality Agreement" shall mean the confidentiality agreement,
dated November 24, 1999, between Parent and Company.
"Corporate Optometry" shall mean an optometric practice owned or
managed by the Company as set forth on Section 6.12 of the Company Disclosure
Schedule.
"$" shall mean United States Dollars.
"DGCL" shall mean the Delaware General Corporation Law, as amended.
"Earn-out Agreement" shall mean any merger, purchase, sale or other
business combination agreement between the Company and one or more third
parties pursuant to which the Company is obligated to pay cash or issue shares
of its capital stock subsequent to the date hereof as more specifically set
forth on Attachment 4 to Schedule 4.03 of the Company Disclosure Schedule.
"Environmental Law" shall mean any Law and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Material, as in effect as of the date hereof.
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"Environmental Permit" shall mean any permit, approval, identification
number, license or other authorization required under or issued pursuant to any
applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Existing Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of July 1, 1998 among the Company, the banks party thereto
and Bank of Montreal, as Agent, as amended.
"Expenses" shall mean, with respect to any party hereto, all
documented out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants
to a party hereto and its affiliates) and internal costs at commercially
reasonable rates incurred by such party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of its obligations pursuant to this Agreement and the consummation
of the Merger, the preparation, printing, filing and mailing of the
Registration Statement and the Joint Proxy Statement, the solicitation of
stockholder approvals, the filing of HSR Act notice, if any, and all other
matters related to the transactions contemplated hereby and the closing of the
Merger.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable statute and authority within the U.S.
accounting profession), which are applicable to the circumstances as of the
date of determination.
"Governmental Entity" shall mean any United States Federal, state or
local or any foreign governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or arbitral body.
"Governmental Order" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Entity.
"Hazardous Material" shall mean (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended, together with the rules and regulations promulgated
thereunder.
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"IRS" shall mean the United States Internal Revenue Service.
"Intangible Assets" shall have the conventional accounting meaning in
compliance with GAAP.
"Knowledge" an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of or
should reasonably be aware of such fact or other matter.
A Person (other than an individual) will be deemed to have `Knowledge"
of a particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, manager, executor, or
trustee of such Person (or in any similar capacity) has, or at any time had,
Knowledge of such fact or other matter.
"Law" shall mean any Federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree, other requirement
or rule of law of the United States or any other jurisdiction, and any other
similar act or law.
"Long-Term Indebtedness and Equivalents" shall mean, as reflected in
the Adjusted Financial Statements, the aggregate of (i) all of the Company's
long-term obligations, indebtedness or other liabilities of any kind or nature,
fixed or contingent, which in accordance with GAAP would be classified as a
long-term liability on the consolidated balance sheet of the Company and the
Company Subsidiaries, including, but not limited to obligations under capital
leases and deferred rent payables, (ii) the Purchase Adjustment Debt and (iii)
Special Charges, but excluding deferred tax liabilities.
"Merger" shall have the meaning ascribed to such term in the first
Whereas clause of this Agreement.
"NNM", shall mean the NASDAQ National Market.
"Net Debt Equivalents" or "NDE" shall mean, as reflected in the
Adjusted Financial Statements, all of the Company's Long-Term Indebtedness and
Equivalents less the Company's cash, including any cash equivalents or
marketable securities and as otherwise having the conventional meaning in
compliance with GAAP.
"Net Worth" shall mean, as reflected in the Adjusted Financial
Statements, total shareholder's equity (including capital stock, additional
paid-in capital and retained earnings after deducting treasury stock) which
would appear on the balance sheet of the Company and the Company's Subsidiaries
prepared on a consolidated basis in accordance with GAAP.
"Ophthalmologist/Optometrist Employee" shall mean a licensed
ophthalmologist or optometrist employed by the Company or the Company
Subsidiaries or the Parent
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or the Parent Subsidiaries, as the case may be, or a professional corporation
to which the Company or the Company Subsidiaries or the Parent or the Parent
Subsidiaries as the case may be, provides services.
"Ophthalmology and Optometry Practices" shall mean any ophthalmology
and/or optometry practices owned or managed by the Company as set forth on
Section 6.12 of the Company Disclosure Schedule.
"Parent Common Stock" shall mean the common stock, par value $.001 per
share, of the Parent.
"Parent Disclosure Schedule" shall mean the disclosure schedule
delivered by Parent to Company prior to the execution of this Agreement and
forming a part hereof.
"Parent Material Adverse Effect" shall mean any change in or effect on
the business of Parent and the Parent Subsidiaries that, individually or in the
aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of Parent and the
Parent Subsidiaries, taken as a whole, except to the extent that any such
change in or effect results from (i) changes in general economic conditions or
changes affecting the industry generally in which Parent operates (provided
that such changes do not affect Parent in a materially disproportionate manner)
and (ii) any changes in the trading price of Parent Common Stock.
"Parent Stock Plans" shall mean Parent's Performance Stock Program and
the Employee Stock Purchase Plan.
"Person" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, limited liability partnership,
syndicate, person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association, entity or government
or political subdivision, agency or instrumentality of a government.
"Purchase Adjustment Debt" shall mean the amount which is claimed by
Eye Care Centers of America, Inc. to be owed to it through purchase price
adjustments and indemnities pursuant to the terms of the Asset Purchase
Agreement dated July 7, 1999 among the Company and Eye Care Centers of America,
Inc.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Special Charges" shall mean, as reflected in the balance sheet of the
Adjusted Financial Statements, the aggregate liability of: any one time charges
and accruals (extraordinary or otherwise) relating to matters outside of the
ordinary course of business, including but not limited to, layoffs
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and severance (including those individuals appropriately identified on Company
Disclosure Schedule 4.09), one time lease shutdowns, restructuring charges, the
net writedown of certain assets associated with business operations which are
being discontinued, the maximum amount of cash payable by the Company, or the
Parent after the Effective Time, as the case may be, which is reasonably likely
to be paid pursuant to the ASCI Debt and the Earn-out Agreements as of the
Exchange Ratio Adjustment Date, the Additional Premium Amount or the Excess
Projected Cumulative Amount (as defined in Section 7.04 (d)), as the case may
be, and any accrued and unpaid expenses incurred by the Company in connection
with obtaining or attempting to obtain such third party consent as agreed upon
by the Parent and the Company.
"Subsidiary" shall mean, with respect to any person, any corporation,
partnership, limited partnership, limited liability company, limited liability
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary of such person) owns,
directly or indirectly, a majority of the stock or other equity interests, the
holders of which are generally entitled to vote for the election of the board
of directors or other governing body of such corporation or other legal entity.
"Tangible Net Worth" or "TNW" shall mean, as reflected in the Adjusted
Financial Statements, the Company's Net Worth less Intangible Assets.
"Tax" shall mean (i) any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any Governmental Entity or taxing authority, including,
without limitation, taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; and customers' duties, tariffs
and similar charges; (ii) any liability for the payment of any amounts of the
type described in (i) as a result of being a member of an affiliated, combined,
consolidated or unitary group for any taxable period; and (iii) any liability
for the payment of amounts of the type described in (i) or (ii) as a result of
being a transferee of, or a successor in interest to, any Person or as a result
of an express or implied obligation to indemnify any person.
"Tax Return" shall mean any return, statement or form (including,
without limitation, any estimated tax reports or return, withholding tax
reports or return and information report or return) required to be filed with
respect to any Taxes.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger
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Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the FBCA, at the Effective Time (as defined
in Section 2.03), Merger Sub shall be merged with and into Company. As a result
of the Merger, the separate corporate existence of Merger Sub shall cease and
Company shall continue as the surviving corporation of the Merger as a wholly
owned subsidiary of Parent (the "Surviving Corporation").
SECTION 2.02 Closing
Unless this Agreement shall have been terminated and the Merger herein
contemplated shall have been abandoned pursuant to Section 9.01 and subject to
the satisfaction or waiver of the conditions set forth in Article VIII, the
consummation of the Merger shall take place as promptly as practicable (and in
any event within three Business Days) after satisfaction or waiver of the
conditions set forth in Article VIII, at a closing (the "Closing") to be held
at the offices of ▇▇▇▇ ▇▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another date, time or place is mutually agreed to by
Parent and Company.
SECTION 2.03 Effective Time
At and after the time of the Closing, the parties shall cause the
Merger to be consummated by filing the articles of merger (the "Certificate of
Merger") with the Department of State of the State of Florida in such form as
required by, and executed in accordance with the relevant provisions of, the
FBCA (the date and time of such filing, or such later date and time as may be
set forth therein, being the "Effective Time").
SECTION 2.04 Effect of the Merger
At the Effective Time, the effect of the Merger shall be as provided
in the applicable provisions of the FBCA. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of Company and Merger Sub shall vest
in Company as the Surviving Corporation, and all debts, liabilities and duties
of Company and Merger Sub shall become the debts, liabilities and duties of
Company as the Surviving Corporation.
SECTION 2.05 Articles of Incorporation; Bylaws; Directors and Officers
of Surviving Corporation
Unless otherwise agreed by Parent and Company before the Effective
Time, at the Effective Time:
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(a) the Articles of Incorporation and the Bylaws of Merger
Sub in effect immediately prior to the Effective Time shall be the
Articles of Incorporation and the Bylaws of the Surviving Corporation,
until thereafter amended as provided by Law and such Article of
Incorporation or Bylaws; provided, however, that Article I of the
Certificate of Incorporation of the Surviving Corporation shall be
amended to read as follows: "The name of the corporation is " " and
the bylaws shall be amended to reflect such name change;
(b) the officers of Merger Sub immediately prior to the
Effective Time shall serve in their respective offices of the
Surviving Corporation from and after the Effective Time, in each case
until their successors are elected or appointed and qualified or until
their resignation or removal; and
(c) the directors of Merger Sub immediately prior to the
Effective Time shall serve as the directors of the Surviving
Corporation from and after the Effective Time, in each case until
their successors are elected or appointed and qualified or until their
resignation or removal.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Conversion of Shares
(a) At the Effective Time, by virtue of the Merger, and
without any action on the part of Parent, Merger Sub, Company or the
holders of any of the following securities:
(i) each share of Common Stock, $.001 par value, of
Company ("Company Common Stock") issued and outstanding
immediately before the Effective Time (excluding those held
in the treasury of Company and those owned by any wholly
owned subsidiary of Company) and all rights in respect
thereof, shall, forthwith cease to exist and be converted
into and become exchangeable for the right to receive 0.402
shares (the "Exchange Ratio") of common stock, $.001 par
value, of Parent ("Parent Common Stock");
(ii) each share of Company Common Stock held in the
treasury of Company or owned by any wholly owned subsidiary
of Company immediately prior to the Effective Time shall be
canceled and retired and no shares of stock or other
securities of Parent, the Surviving Corporation or any other
corporation shall be issuable, and no payment or other
consideration shall be made, with respect thereto; and
(iii) each issued and outstanding share of capital
stock of Merger Sub shall be converted into and become one
fully paid and nonassessable share of common stock of the
Surviving Corporation.
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(b) notwithstanding anything to the contrary above, the
Exchange Ratio shall be adjusted and recalculated as of the Exchange
Ratio Adjustment Date in accordance with the following formula:
Exchange Ratio = 6,000,000 - (.25(NDE - $54 Million)) + (.125(TNW - ($56)Million))
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X
where X represents the number of outstanding shares of Company Common
Stock as of the Exchange Ratio Adjustment Date.
(c) The Exchange Ratio shall be adjusted downward to account
for the maximum amount of shares of Company Common Stock, or Parent
Common Stock after the Effective Time, as the case may be, which are
reasonably expected to be issued pursuant to the Earn-out Agreements
as of the Exchange Ratio Adjustment Date, as mutually agreed upon by
the Parent and the Company (the "Earn-out Stock Amount").
(d) The Adjusted Financial Statements and/or the Earn-out
Stock Amount shall be reasonably satisfactory to Parent. Upon receipt
by Parent of the Adjusted Financial Statements and/or the Earn-out
Stock Amount from the Company, Parent shall accept or reject the
Adjusted Financial Statements and/or the Earn-out Stock Amount by
written notice to the Company within three (3) Business Days
thereafter; failure to reject the Adjusted Financial Statements and/or
Earn-out Stock Amount, as applicable, within such period shall be
deemed conclusive acceptance of the Adjusted Financial Statements
and/or the Earn-out Stock Amount, as applicable. If Parent disputes
the Adjusted Financial Statements and/or the Earn-out Stock Amount,
the parties will attempt to resolve their differences jointly and the
Company shall provide Parent reasonable access to its appropriate
records, including but not limited to, its work papers, but if no
resolution is reached within three (3) Business Days, then the parties
agree to submit the disputed items to an independent "Big 6"
accounting firm as may be mutually agreed upon by the respective
accounting firms of Parent and the Company, for determination within
ten (10) Business Days, which determination shall be conclusive for
the purposes of this Agreement. The cost of such mutually agreed
accounting firm's determination shall be borne equally by the Company
and Parent.
SECTION 3.02 Exchange of Shares Other than Treasury Shares
(a) Exchange Agent. As of the Effective Time, Parent shall
enter into an agreement with a bank or trust company to act as
exchange agent for the Merger (the "Exchange Agent") as may be
designated by Parent.
(b) Parent to Provide Common Stock and Cash. Promptly after
the Effective Time, Parent shall make available to the Exchange Agent
for the benefit of the holder of Company Common
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Stock: (i) Certificates of Parent Common Stock ("Parent Certificates")
representing the number of whole shares of Parent Common Stock
issuable pursuant to Section 3.01(a) in exchange for shares of Company
Common Stock outstanding immediately prior to the Effective Time; (ii)
sufficient funds to permit payment in lieu of fractional shares
pursuant to Section 3.04 and (iii) any dividends or distributions to
which holders of shares of Company Common Stock may be entitled
pursuant to Section 3.07.
(c) Exchange Procedures. The Exchange Agent shall mail to
each holder of record of certificates of Company Common Stock
("Company Certificates"), whose shares were converted into the right
to receive shares of Parent Common Stock (and cash in lieu of
fractional shares pursuant to Section 3.04) promptly after the
Effective Time (and in any event no later than three Business Days
after the later to occur of the Effective Time and receipt by Parent
of a complete list from the Company of the names and addresses of its
holders of record): (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Company Certificates shall pass, only upon receipt of the Company
Certificates by the Exchange Agent, and shall be in such form and have
such other provisions as Parent may reasonably specify); and (ii)
instructions for use in effecting the surrender of the Company
Certificates in exchange for Parent Certificates (and cash in lieu of
fractional shares). Upon surrender of a Company Certificate for
cancellation to the Exchange Agent or to such other agent or agents as
may be appointed by Parent, together with such letter of transmittal,
duly completed and validly executed, and such other documents as may
be reasonably required by the Exchange Agent, the holder of such
Company Certificate shall be entitled to receive in exchange therefor
a Parent Certificate representing the number of whole shares of Parent
Common Stock that such holder has the right to receive pursuant to
this Article III and payment of cash in lieu of fractional shares
which such holder has the right to receive pursuant to Section 3.04,
and the Company Certificate so surrendered shall forthwith be
canceled. Until so surrendered, each outstanding Company Certificate
that, prior to the Effective Time, represented shares of Company
Common Stock will be deemed from and after the Effective Time, for all
corporate purposes other than the payment of dividends and
distributions, to evidence the ownership of the number of full shares
of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and the right to receive an amount in
cash in lieu of the issuance of any fractional shares in accordance
with Section 3.04. Notwithstanding any other provision of this
Agreement, no interest will be paid or will accrue on any cash payable
to holders of Company Certificates pursuant to the provisions of this
Article III.
(d) Lost, Stolen or Destroyed Company Certificates. In the
event any Company Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Company Certificates, upon the making of an
affidavit of that fact by the holder thereof, a Parent Certificate
representing such shares of Parent Common Stock (and cash in lieu of
fractional shares) as may be required pursuant to this Article III;
provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Company Certificates to indemnify Parent
against any claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to the Company
Certificates alleged to have been lost, stolen or destroyed.
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(e) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock
with a record date after the Effective Time will be paid to the holder
of any unsurrendered Company Certificate with respect to the shares of
Parent Common Stock represented thereby until the holder of record of
such Company Certificate shall surrender such Company Certificate.
Subject to the effect of applicable escheat or similar laws, following
surrender of any such Company Certificate, there shall be paid to the
record holder of the Parent Certificates issued in exchange therefor,
without interest, at the time of such surrender, the amount of any
such dividends or other distributions with a record date after the
Effective Time theretofore payable (but for the provisions of this
Section 3.02(e)) with respect to such shares of Parent Common Stock.
(f) Transfer of Ownership. If any Parent Certificate is to be
issued in a name other than that in which the Company Certificate
surrendered in exchange therefor is registered, it will be a condition
of the issuance thereof that the Company Certificate so surrendered
will be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange will have paid to Parent
or any agent designated by it any transfer or other taxes required by
reason of the issuance of a Parent Certificate for shares of Parent
Common Stock in any name other than that of the registered holder of
the Company Certificate surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has
been paid or is not payable.
(g) Termination of Exchange Agent Funding. Any portion of
funds (including any interest earned thereon) or Parent Certificates
held by the Exchange Agent which have not been delivered to holders of
Company Certificates pursuant to this Article III within six months
after the Effective Time shall promptly be paid or delivered, as
appropriate, to Parent, and thereafter holders of Company Certificates
who have not theretofore complied with the exchange procedures
outlined in and contemplated by this Section 3.02 shall thereafter
look only to Parent (subject to abandoned property, escheat and
similar laws) only as general creditors thereof for their claim for
shares of Parent Common Stock, any cash in lieu of fractional shares
of Parent Common Stock and any dividends or distributions (with a
record date after the Effective Time) with respect to Parent Common
Stock to which they are entitled.
(h) No Liability. Notwithstanding anything to the contrary in
this Section 3.02, none of the Exchange Agent, the Surviving
Corporation or any party hereto shall be liable to any person in
respect of any shares of Parent Common Stock or cash delivered to a
public official pursuant to any applicable abandoned property, escheat
or similar law.
(i) Expenses of Exchange Agent. Parent shall pay all charges
and expenses of the Exchange Agent incurred solely in connection with
the transactions contemplated by this Agreement, to the extent of
$8,500, with any and all charges and expenses above such amount being
borne by the Company.
SECTION 3.03 Stock Transfer Books
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(a) At the Effective Time, the stock transfer books of
Company shall each be closed, and there shall be no further
registration of transfers of shares of Company Common Stock thereafter
on the records of any such stock transfer books. In the event of a
transfer of ownership of shares of Company Common Stock that is not
registered in the stock transfer records of Company at the Effective
Time, a certificate or certificates representing the number of full
shares of Parent Common Stock into which such shares of Company Common
Stock shall have been converted shall be issued to the transferee
together with a cash payment in lieu of fractional shares, if any, in
accordance with Section 3.04 hereof, and a cash payment in the amount
of dividends, if any, in accordance with Section 3.02(e) hereof, if
the certificate or certificates representing such shares of Company
Common Stock is or are surrendered as provided in Section 3.02(c)
hereof, accompanied by all documents required to evidence and effect
such transfer and by evidence of payment of any applicable stock
transfer tax.
(b) Notwithstanding anything to the contrary herein,
certificates surrendered for exchange by any person constituting an
affiliate of Company shall not be exchanged until Parent shall have
received from such person an affiliate letter as provided in Section
7.03.
SECTION 3.04 No Fractional Share Certificates
No scrip or fractional share Parent Certificate shall be issued upon
the surrender for exchange of Company Certificates, and an outstanding
fractional share interest shall not entitle the owner thereof to vote, to
receive dividends or to any rights of a stockholder of Parent or of Surviving
Corporation with respect to such fractional share interest. As promptly as
practicable following the Effective Time, Parent shall deposit with the
Exchange Agent an amount in cash sufficient for the Exchange Agent to pay each
holder of Company Common Stock an amount in cash equal to the product obtained
by multiplying (i) the fractional share interest to which such holder would
otherwise be entitled (after taking into account all shares of Company Common
Stock held at the Effective Time by such holder) by (ii) the closing price for
a share of Parent Common Stock on the American Stock Exchange (the "AMEX") on
the last Business Day prior to the Effective Time. As soon as practicable after
the determination of the amount of cash, if any, to be paid to holders of
Company Common Stock with respect to any fractional share interests, the
Exchange Agent shall make available such amounts, net of any required
withholding Taxes, to such holders of Company Common Stock, subject to and in
accordance with the terms of Section 3.02 hereof.
SECTION 3.05 Options to Purchase Company Common Stock
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(a) At or prior to the Effective Time, each of Company and
Parent shall take all action necessary to cause as of the Effective
Time the assumption by Parent of, or the reissuance by Parent of
substitutes for, all of the following which remain outstanding as of
the Effective Time: (i) the options to purchase Company Common Stock
listed in the Company Disclosure Schedule, whether vested or unvested,
and issued under Company's Stock Plans; (ii) options to purchase
Company Common Stock listed in the Company Disclosure Schedule
pursuant to option agreements outside of the Company's Stock Plans;
and (iii) the warrants to purchase Company Stock listed in the Company
Disclosure Schedule and issued pursuant to warrant agreements,
(collectively, the "Outstanding Options and Warrants," and each an
"Outstanding Option" or an "Outstanding Warrant"). To the fullest
extent permitted under applicable law and the applicable stock option
agreements, the Company Stock Plans and the warrant agreements, each
of the Outstanding Options and Outstanding Warrants shall be exchanged
or substituted without any action on the part of the holder thereof
into an option or warrant to purchase shares of Company Common Stock
as of the Effective Time. The number of shares of Parent Common Stock
that the holder of an assumed or substituted Outstanding Option or
Outstanding Warrant shall be entitled to receive upon the exercise of
such option or warrant shall be the same number of shares of Company
Common Stock as the holder of such Outstanding Option or Outstanding
Warrant would have been entitled to receive pursuant to the Merger had
such holder exercised such option or warrant in full immediately prior
to the Effective Time. The price per share of Parent Common Stock
after the Effective Time shall be equal to (x) the aggregate exercise
price for the shares of Company Common Stock otherwise purchasable
pursuant to such Outstanding Option or Outstanding Warrant divided by
(y) the Exchange Ratio. Other than as set forth in the Outstanding
Options and Warrants or as contemplated by this Agreement, the
assumption and substitution of options and warrants as provided herein
shall not give the holders of such options and warrants additional
benefits or additional vesting rights which they did not have
immediately prior to the Effective Time or relieve the holders of any
obligations or restrictions applicable to their options and warrants
or the shares obtainable upon exercise of their options and warrants.
Only whole shares of Company Common Stock shall be issued upon
exercise of any Outstanding Option or Outstanding Warrant, and no
certificates or scrip representing fractional shares of Company Common
Stock and no cash in lieu of fractional shares shall be issued upon
such exercise. All fractional shares of Company Common Stock which a
holder of any Outstanding Option or Outstanding Warrant would
otherwise be entitled to receive upon exercise thereof shall be
aggregated at the time of such exercise. If a fractional share results
from such aggregation, in lieu thereof such fraction shall be rounded
up to one whole share of Company Common Stock if it is one-half or
larger and shall be rounded down to zero and canceled without any
payment or distribution with respect thereto if it is less than
one-half. Prior to the Effective Time, Company and Parent shall take
such additional actions, if any, as are necessary under applicable law
and the applicable agreements and the Company Stock Plans to assure
that each Outstanding Option and Outstanding Warrant shall, from and
after the Effective Time, represent only the right to purchase, upon
exercise, whole shares of Company Common Stock. Prior to the Effective
Time, the Board of Directors of the Company shall make the
determination that neither the Merger nor any of the other
transactions contemplated by this Agreement shall be deemed a "Change
in Control" for purposes of each of the employment agreements entered
into by the Company other than the employment agreements set forth on
Section 3.05 of the Company Disclosure Schedule.
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Except as otherwise specifically identified in Section 3.05
of the Company Disclosure Schedule, the assumption of the Outstanding
Options and Warrants in the Merger and their conversion into options
and warrants for Parent Common Stock will not result in any
accelerated vesting of those options or warrants or the shares
purchasable thereunder and the vesting schedule in effect for such
Outstanding Options and Warrants immediately prior to the Effective
Time shall remain in full force after the assumption thereof by
Parent.
It is the Parent's intention to roll such converted
Outstanding Options into options to purchase Parent Common Stock, as
described above, pursuant to either the Parent's Performance Stock
Program or, at Parent's discretion or in the event that Parent is
unable to roll such converted options into the Performance Stock
Program, then Parent will assume the Company Stock Plans. Upon such
conversion, any options granted under the Performance Stock Program to
the former holders of Outstanding Options pursuant to the Company
Stock Plans shall, except to the extent provided above, in all
respects be subject to the terms, provisions and conditions of the
Performance Stock Program and the standard form of stock option
agreement relating to such Performance Stock Program except where the
terms of the Performance Stock Program are contrary to the rights of
an option holder, whereupon in such instance the option holder will
retain his or her rights to such contrary terms; and provided further,
that such holders shall be deemed to have been granted such options as
of the date the original options were granted under the Company Stock
Plans.
(b) As soon as practicable after the Effective Time, Parent
shall file a registration statement on Form S-8 or a successor form,
under the Securities Act with respect to the shares of Parent Common
Stock subject to the Outstanding Options, to the extent that Form S-8
or successor form, is available to register the Outstanding Options,
and shall use its reasonable efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain
the current status of the prospectus or prospectuses contained
therein) for so long as the Outstanding Options remain outstanding.
SECTION 3.06 Unvested Stock
At the Effective Time, any unvested shares of Company Common Stock,
including, but not limited to, any restricted stock, awarded to employees,
directors or consultants pursuant to any of the Company's plans or arrangements
and outstanding immediately prior to the Effective Time shall be converted into
unvested shares of Parent Common Stock in accordance with the Exchange Ratio
and shall remain subject to the same terms, restrictions and vesting schedule
as in effect immediately prior to the Effective Time. All outstanding rights
which Company may hold immediately prior to the Effective Time to repurchase
unvested shares of Company Common Stock shall be assigned to the Parent in the
Merger and shall thereafter be exercisable by Parent upon the same terms and
conditions in effect immediately prior to the Effective Time, except that the
shares purchasable pursuant to such rights and the purchase price payable per
share shall be adjusted to reflect the Exchange Ratio.
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SECTION 3.07 Certain Adjustments
If between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock or Company Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, or the number of shares of Company Common Stock on a
fully diluted basis is in excess of that specified in Section 4.03 and
disclosed in Section 4.03 of the Company Disclosure Schedule (regardless of
whether such excess is a result of an additional issuance of capital stock or a
correction to such Sections), then the Exchange Ratio established pursuant to
the provisions of Section 3.01 shall be adjusted accordingly to provide to each
of Parent, on the one hand, and the holders of Company Common Stock in the
aggregate, on the other hand, the same economic effect as contemplated by this
Agreement prior to such reclassification, recapitalization, split-up,
combination, exchange, dividend or increase.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent, subject to the
exceptions specifically disclosed in writing in the Company Disclosure
Schedule, all such exceptions to be referenced to a specific representation set
forth in this Article IV or to otherwise be clearly applicable to the
representations hereof not specifically referenced, that (it being understood
that for purposes of this Article IV, unless the context otherwise requires,
the term Company shall be deemed to include all of the Company's Subsidiaries:
SECTION 4.01 Organization and Qualification; Subsidiaries
(a) Company and each directly and indirectly owned subsidiary
of Company (the "Company Subsidiaries") has been duly organized and is
validly existing and in good standing (to the extent applicable) under
the laws of the jurisdiction of its incorporation or organization, as
the case may be, and has the requisite corporate power and authority
to own, lease and operate its properties and to carry on its business
as it is now being conducted. Except as set forth in Section 4.01 of
the Company Disclosure Schedule, Company and each Company Subsidiary
is duly qualified or licensed to do business, and is in good standing
(to the extent applicable), in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for
such failure to be so qualified or licensed and in good standing that
could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) Section 4.01 of the Company Disclosure Schedule sets
forth, as of the date of this Agreement, a true and complete list of
each Company Subsidiary, together with (i) the jurisdiction of
incorporation or organization of each Company Subsidiary and the
percentage of each Company Subsidiary's outstanding capital stock or
other equity interests owned by Company or another
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Company Subsidiary and (ii) an indication of whether each Company
Subsidiary is a "Significant Subsidiary" as defined in Regulation S-X
under the Exchange Act. Except as set forth in Section 4.01 of the
Company Disclosure Schedule, neither Company nor any Company
Subsidiary owns an equity interest in any partnership or joint venture
arrangement or other business entity.
SECTION 4.02 Articles of Incorporation and Bylaws
The copies of Company's articles of incorporation and bylaws, as
amended to date, previously provided to Parent by Company are true, complete
and correct copies thereof. Such articles of incorporation and bylaws are in
full force and effect. Company is not in violation of any of the provisions of
its certificate of incorporation or bylaws.
SECTION 4.03 Capitalization
(a) The authorized capital stock of Company consists of
50,000,000 shares of Company Common Stock and 10,000,000 shares of
preferred stock ("Company Preferred Stock"). As of the date hereof,
(i) 14,939,407 shares of Company Common Stock are issued and
outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no shares of Company Common Stock are held in the
treasury of Company, (iii) no shares of Company Common Stock are held
by Company Subsidiaries, (iv) 2,400,000 shares of Company Common Stock
are reserved for future issuance pursuant to the Company Stock Plans
or pursuant to option agreements outside of the Company Stock Plans
(collectively, the "Company Stock Options"), of which, as of December
31,1999, 921,977 and 1,035,146 shares of Company Common Stock were
reserved for future issuance pursuant to unvested, outstanding and
vested, outstanding, unexercised Company Stock Options, respectively,
and (v) no shares of Company Preferred Stock are outstanding. The name
of each holder of a Company Stock Option or a warrant, the grant date
of each Company Stock Option and warrant, and the number of shares of
Company Common Stock for which each Company Stock Option or warrant,
as the case may be, is exercisable and the exercise price of each
Company Stock Option or warrant, as the case may be, and the Company
Stock Plans or other agreement that such Company Stock Options or
warrants are issuable under, are set forth in Section 4.03 of the
Company Disclosure Schedule. Except for (i) shares of Company Common
Stock issuable pursuant Company Stock Plans, and (ii) shares issuable
as specifically listed and indicated on Schedule 4.03 of the Company
Disclosure Schedule, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character obligating
Company or any Company Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Company or any Company
Subsidiary. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance prior to the Effective Time on the terms and
conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 4.03 of the Company's
Disclosure Schedule, there are no outstanding contractual obligations
of Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or any capital
stock of any Company Subsidiary. Except as set forth in Section 4.03
of the Company's Disclosure Schedule, each outstanding share of
capital stock of each Company Subsidiary is duly authorized, validly
issued, fully paid and
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nonassessable and each such share owned by Company or another Company
Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on
Company's or such other Company Subsidiary's voting rights, charges
and other encumbrances of any nature whatsoever. There are no
outstanding contractual obligations of Company or any Company
Subsidiary to provide funds to, guarantee indebtedness of, or make any
material investment (in the form of a loan, capital contribution or
otherwise) in, any Company Subsidiary or any other person, except as
set forth in Section 4.03 of the Company Disclosure Schedule.
(b) Schedule 4.03 correctly and completely sets forth each
agreement or obligation of the Company and/or any Company Subsidiary
to issue additional shares of Company Common Stock after the date
hereof if certain conditions are fulfilled, and correctly and
completely sets forth the maximum number of shares of Company Common
Stock issuable with respect to each business combination or otherwise
listed in Schedule 4.03 of the Company Disclosure Schedule and any
registration rights related to such shares. Such shares are
hereinafter called "Earn-out Company Shares."
(c) Provided that the Merger becomes effective, the terms of
each such business combination require each person entitled to receive
Earn-out Shares to accept in lieu of Company Common Stock the number
of shares of Parent Common Stock that would be issuable in the Merger
if such Company Common Stock were outstanding immediately prior to the
Effective time.
(d) The terms of each such business combination require each
person entitled to receive Earn-out Shares to accept Earn-out Shares
which have not been registered under the Securities Act and further
obligate such persons not to sell, transfer, pledge, hypothecate or
otherwise create any interest in the Earn-out Shares without such
registration or in a transaction except from the registration
requirements of the Securities Act and applicable state securities
laws.
(e) The consummation of the Merger will not trigger any
anti-dilution rights or price adjustment in connection with any
Outstanding Options and/or Warrants.
SECTION 4.04 Authority Relative to This Agreement
Company has all necessary corporate power and authority to execute and
deliver this Agreement to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement by Company and the consummation by Company of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of Company are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby and thereby (other than,
with respect to the Merger, the approval of this Agreement by the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote
with respect thereto at the Company Stockholders' Meeting (as defined in
Section 7.01), and the filing and recordation of the Certificate of Merger as
required by the FBCA). This
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Agreement has been duly executed and delivered by Company and, assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
constitute legal, valid and binding obligations of Company, enforceable against
Company in accordance with their terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally and to the effect
of general principles of equity which may limit the availability of remedies
(whether in a proceeding at law or in equity).
SECTION 4.05 No Conflict; Required Filings and Consents
(a) Except as set forth in Section 4.05 of the Company
Disclosure Schedule, the execution and delivery of this Agreement by
Company do not, and the performance by Company of its obligations
hereunder and thereunder and the consummation of the Merger will not,
(i) conflict with or violate any provision of the certificate of
incorporation or bylaws of Company or any equivalent organizational
documents of any Company Subsidiary, (ii) assuming that all filings
and notifications described in Section 4.05(b) have been made and, to
the extent applicable approved, conflict with, violate, or constitute
a default in respect of any Governmental Authorization or Law
applicable to Company or any Company Subsidiary or by which any
material property or material asset of Company or any Company
Subsidiary is bound or affected or (iii) result in any breach of or
constitute a material default (or an event which with the giving of
notice or lapse of time or both could reasonably be expected to become
a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation
of a lien or other encumbrance on any material property or asset of
Company or any Company Subsidiary pursuant to, any material note,
bond, mortgage, indenture, contract, agreement, lease, license,
Company Permit (as defined below), franchise or other instrument or
obligation.
(b) Except as set forth in Section 4.05 of the Company's
Disclosure Schedule, the execution and delivery of this Agreement by
Company do not, and the performance by Company of its obligations
hereunder and the consummation of the Merger will not, require any
material consent, approval, authorization or permit of, or filing by
Company with or notification by Company to, any Governmental Entity,
except pursuant to applicable requirements of the Exchange Act, the
Securities Act, Blue Sky Laws, the rules and regulations of the NNM,
state takeover laws, the premerger notification requirements of the
HSR Act, and the filing and recordation of the Certificate of Merger
as required by the FBCA.
SECTION 4.06 Permits; Compliance with Laws
(a) Except as set forth in Section 4.06 of the Company
Disclosure Schedule, Company and the Company Subsidiaries are in
possession of all franchises, grants, authorizations, licenses,
establishment registrations, product listings, permits, easements,
variances, exceptions, consents, certificates, identification and
registration numbers, approvals and orders of any Governmental Entity
necessary for Company or any Company Subsidiary to own, lease and
operate its properties or to offer or perform its services or to
develop, produce, store, distribute and market its products or
otherwise to carry on its business as it is now being conducted
(collectively, the "Company
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Permits"), except for Company Permits which could not reasonably be
expected to have a Company Material Adverse Effect, and, as of the
date of this Agreement, none of the Company Permits has been suspended
or canceled nor is any such suspension or cancellation pending or, to
the knowledge of Company, threatened.
(b) Neither Company nor any Company Subsidiary is in conflict
with, or in default or violation of, (i) any Law applicable to Company
or any Company Subsidiary or by which any property or asset of Company
or any Company Subsidiary is bound or affected or (ii) any Company
Permits, except for conflicts, defaults or violations which could not
reasonably be expected to have a Company Material Adverse Effect.
Section 4.06 of the Company Disclosure Schedule sets forth, as of the
date of this Agreement, all actions, proceedings, investigations or
surveys pending or, to the knowledge of Company, threatened against
Company or any Company Subsidiary or to the Company's knowledge,
without any independent investigation, pending or threatened against
any Ophthalmologist/Optometrist Employee, that could reasonably be
expected to result in the suspension or cancellation of any other
material Company Permit. Since January 1, 1998, neither Company nor
any Company Subsidiary has received from any Governmental Entity any
written notification with respect to possible conflicts, defaults or
violations of Laws.
SECTION 4.07 SEC Filings; Financial Statements
(a) Except as disclosed in Section 4.07 of the Company
Disclosure Schedule, Company has timely filed all forms, reports,
statements and documents required to be filed by it (A) with the SEC
and the NNM since November 1, 1996 (collectively, together with any
such forms, reports, statements and documents Company may file
subsequent to the date hereof until the Closing, the "Company
Reports") and (B) with any other Governmental Entities. Except as
disclosed in Section 4.07 of the Company Disclosure Schedule, each
Company Report (i) was prepared in accordance with the requirements of
the Securities Act, the Exchange Act or the rules and regulations of
the NNM, as the case may be, in substantially all respects and (ii)
did not at the time it was filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading. Except as disclosed in Section 4.07 of the Company
Disclosure Schedule, each form, report, statement and document
referred to in clause (B) of this paragraph was prepared in all
material respects in accordance with the requirements of applicable
Law. No Company Subsidiary is subject to the periodic reporting
requirements of the Exchange Act or required to file any form, report
or other document with the SEC, the NNM, any other stock exchange or
any other comparable Governmental Entity.
(b) Except as disclosed in Section 4.07 of the Company
Disclosure Schedule, each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Company
Reports was prepared in accordance with U.S. GAAP (except as may be
permitted by Form 10-Q under the Exchange Act) applied on a consistent
basis throughout the periods indicated (except as may be indicated in
the notes thereto) and each presented fairly, in all material
respects, the consolidated financial position of Company and the
consolidated Company Subsidiaries as at the
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respective dates thereof and for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring immaterial year-end
adjustments).
(c) Except as and to the extent set forth or reserved against
on the consolidated balance sheet of Company and the Company
Subsidiaries as reported in the Company Reports, including the notes
thereto, none of Company or any Company Subsidiary has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on a balance sheet
or in notes thereto prepared in accordance with U.S. GAAP, except for
immaterial liabilities or obligations incurred in the ordinary course
of business consistent with past practice since December 31, 1998, and
except as set forth in Section 4.07 of the Company Disclosure
Schedule.
SECTION 4.08 Absence of Certain Changes or Events
Except as set forth in Section 4.08 of the Company Disclosure
Schedules, since September 30, 1999, Company and the Company Subsidiaries have
conducted their businesses only in the ordinary course consistent with past
practice and, since such date, there has not been (i) any material changes in
or effect on the business, assets, liabilities, financial condition or results
of operations of Company or the Company Subsidiaries, (ii) any event that could
reasonably be expected to prevent or materially delay the performance of
Company's obligations pursuant to this Agreement and the consummation of the
Merger by Company, (iii) any material change by Company in its accounting
methods, principles or practices, (iv) any declaration, setting aside or
payment of any dividend or distribution in respect of the shares of Company
Common Stock or any redemption, purchase or other acquisition of any of
Company's securities, (v) except for changes in the ordinary course of business
consistent with past practice, any increase in the compensation or benefits or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting or repricing of stock options, stock appreciation
rights, performance awards or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any employees, officers, consultants or directors of Company
or any Company Subsidiary, (vi) any issuance or sale of any stock, notes, bonds
or other securities other than pursuant to the exercise of outstanding
securities, or entering into any agreement with respect thereto, or the
issuances of options under the Company Stock Plans, (vii) any amendment to the
Company's certificate of incorporation or bylaws, (viii) other than in the
ordinary course of business consistent with past practice, any (x) purchase,
sale, assignment or transfer of any material assets, (y) mortgage, pledge or
existence of any lien, encumbrance or charge on any material assets or
properties, tangible or intangible except for liens for Taxes not yet
delinquent, or (z) waiver of any rights of material value or cancellation or
any material debts or claims, (ix) any incurrence of any material liability
(absolute or contingent), except for current liabilities and obligations
incurred in the ordinary course of business consistent with past practice, (x)
any incurrence of any damage, destruction or similar loss, whether or not
covered by insurance, materially affecting the business or properties of
Company or
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any Company Subsidiary, or (xi) any entering into any transaction of a material
nature other than in the ordinary course of business, consistent with past
practice.
SECTION 4.09 Employee Benefit Plans; Labor Matters
(a) The Company Disclosure Schedule lists each employee
benefit fund, plan, program, arrangement and contract (including,
without limitation, any "pension" plan, fund or program, as defined in
Section 3(2) of ERISA, any "employee benefit plan", as defined in
Section 3(3) of ERISA and any plan, program, policy, arrangement or
contract providing for severance), whether currently in effect or
pursuant to which the Company or any Company Subsidiary has any
ongoing liability or obligation; medical, dental or vision benefits;
life insurance or death benefits; disability benefits, sick pay or
other wage replacement; vacation, holiday or sabbatical; pension or
profit-sharing benefits; stock options or other equity compensation;
bonus or incentive pay or other material fringe benefits) whether
written or not ("Benefit Plans"), maintained, sponsored or contributed
to or required to be contributed to by Company or any Company
Subsidiary (the "Company Benefit Plans"). With respect to each Company
Benefit Plan, Company has delivered or made available to Parent a
true, complete and correct copy of (i) such Company Benefit Plan (or,
if not written, a written summary of its material terms) and the most
recent summary plan description, if any, related to such Company
Benefit Plan, (ii) each trust agreement or other funding arrangement
relating to such Company Benefit Plan, (iii) the most recent annual
report (Form 5500) filed with the IRS with respect to such Company
Benefit Plan (and, if the most recent annual report is a Form 5500R,
the most recent Form 5500C filed with respect to such Company Benefit
Plan), (iv) the most recent actuarial report or financial statement
relating to such Company Benefit Plan and (v) the most recent
determination letter, if any, issued by the IRS with respect to such
Company Benefit Plan and any pending request for such a determination
letter. Neither Company nor any Company Subsidiary nor, to the
knowledge of Company, any other person or entity, has any express
commitment, whether legally enforceable or not, to modify, change or
terminate any Company Benefit Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
(b) Each Company Benefit Plan has been administered in all
material respects in accordance with its terms and all applicable
laws, including ERISA and the Code, and contributions required to be
made under the terms of any of the Company Benefit Plans as of the
date of this Agreement have been timely made or, if not yet due, have
been properly reflected on the most recent consolidated balance sheet
filed or incorporated by reference in the Company Reports prior to the
date of this Agreement. With respect to the Company Benefit Plans, no
event has occurred and, to the knowledge of Company, there exists no
condition or set of circumstances in connection with which Company or
any Company Subsidiary could be subject to any liability (other than
for routine benefit liabilities) under the terms of, or with respect
to, such Company Benefit Plans, ERISA, the Code or any other
applicable Law.
(c) Company on behalf of itself and each Company ERISA
Affiliate (as defined below) hereby represents that: (i) each Company
Benefit Plan which is intended to qualify under Section 401(a),
Section 401(k), Section 401(m) or Section 4975(e)(6) of the Code has
received a favorable
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determination letter from the IRS as to its qualified status, and each
trust established in connection with any Company which is intended to
be exempt from federal income taxation under Section 501(a) of the
Code has received an opinion letter from the IRS that it is so exempt
or application for same is pending that is timely filed with the IRS,
and to Company's knowledge no fact or event has occurred that is
reasonably likely to materially adversely affect the qualified status
of any such Company Benefit Plan or the exempt status of any such
trust; (ii) to Company's knowledge there has been no prohibited
transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code and other than a transaction that is exempt under a
statutory or administrative exemption) with respect to any Company
Plan that could result in liability to the Company or a Company
Subsidiary and (iii) each Company Benefit Plan can be amended,
terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability (other than (A) liability
for ordinary administrative expenses typically incurred in a
termination event or (B) if the Company Benefit Plan is pension
benefit plan subject to Part 2 of Title I of ERISA, liability for the
accrued benefits as of the date of such termination (if and to the
extent required by ERISA)) to the extent that either there are
sufficient assets set aside in a trust or insurance contract to
satisfy such liability or such liability is reflected on the most
recent consolidated balance sheet filed or incorporated by reference
in the Company Reports prior to the date of this Agreement. No suit,
administrative proceeding, action or other litigation has been
brought, or to the knowledge of Company is threatened, against or with
respect to any such Company Benefit Plan, including any audit or
inquiry by the Internal Revenue Service or United States Department of
Labor (other than routine benefits claims).
(d) No Company Benefit Plan is a multiemployer pension plan
(as defined in Section 3(37) of ERISA) or other pension plan subject
to Title IV of ERISA and neither the Company, any Company Subsidiary
nor any other trade or business (whether or not incorporated) that is
under "common control" with Company or a Company Subsidiary (within
the meaning of ERISA Section 4001) or with respect to which Company or
any Company Subsidiary could otherwise incur liability under Title IV
of ERISA (a "Company ERISA Affiliate") has sponsored or contributed to
or been required to contribute to a multiemployer pension plan or
other pension plan subject to Title IV of ERISA. No material liability
under Title IV of ERISA has been incurred by Company, any Company
Subsidiary or any Company ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to
Company or any Company Subsidiary of incurring or being subject
(whether primarily, jointly or secondarily) to a material liability
thereunder. None of the assets of Company or any Company Subsidiary
is, or may reasonably be expected to become, the subject of any lien
arising under ERISA or Section 412(n) of the Code.
(e) With respect to each Benefit Plan required to be set
forth in the Disclosure Schedule that is subject to Title IV or Part 3
of Title I of ERISA or Section 412 of the Code, (i) no reportable
event (within the meaning of Section 4043 of ERISA, other than an
event that is not required to be reported before or within 30 days of
such event) has occurred or is expected to occur, (ii) there was not
an accumulated funding deficiency (within the meaning of Section 302
of ERISA or Section 412 of the Code), whether or not waived, as of the
most recently ended plan year of such Benefit Plan; and (iii) there is
no "unfunded benefit liability" (within the meaning of Section
4001(a)(18) of ERISA).
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(f) Company has delivered to Parent true, complete and
correct copies of (i) all employment agreements with officers and all
consulting agreements of Company and each Company Subsidiary, (ii) all
severance plans, agreements, programs and policies of Company and each
Company Subsidiary with or relating to their respective employees,
directors or consultants, and (iii) all plans, programs, agreements
and other arrangements of Company and each Company Subsidiary with or
relating to their respective employees, directors or consultants which
contain "change of control" provisions, and all such plans,
agreements, programs, and policies are specifically identified as such
on Section 4.09 of the Company Disclosure Schedule. Except as set
forth on Section 4.09 of the Company Disclosure Schedule, no payment
or benefit which may be required to be made by Company or any Company
Subsidiary or which otherwise may be required to be made under the
terms of any Company Benefit Plan or other arrangement will constitute
a parachute payment under Code Section 280(G)(1), and the consummation
of the transactions contemplated by this Agreement will not, alone or
in conjunction with any other possible event (including termination of
employment), (i) entitle any current or former employee or other
service provider of Company or any Company Subsidiary to severance
benefits or any other payment, compensation or benefit (including
forgiveness of indebtedness), and the amount such severance benefit or
any other payment is indicated in Section 4.04 of the Company
Distribution Schedule except as expressly provided by this Agreement,
or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation or benefit due any such employee or service
provider.
(g) Neither Company nor any Company Subsidiary is a party to,
or has any obligations under or with respect to, any collective
bargaining or other labor union contract applicable to persons
employed by Company or any Company Subsidiary and no collective
bargaining agreement is being negotiated by Company or any Company
Subsidiary or any person or entity that may obligate the Company or
any Company Subsidiary thereunder. As of the date of this Agreement,
there is no labor dispute, strike, union organizing activity or work
stoppage against Company or any Company Subsidiary pending or, to the
knowledge of Company, threatened which may interfere with the
respective business activities of Company or any Company Subsidiary.
As of the date of this Agreement, to the knowledge of Company, none of
Company, any Company Subsidiary, or any of their respective
representatives or employees has committed any unfair labor practice
in connection with the operation of the respective businesses of
Company or any Company Subsidiary, and there is no charge or complaint
filed against Company or any Company Subsidiary by or with the
National Labor Relations Board or any comparable Governmental Entity
pending or threatened in writing.
(h) Except as required by Law, no Company Benefit Plan
provides any of the following retiree or post-employment benefits to
any person: medical, disability or life insurance benefits. To
Company's knowledge, Company and the Company ERISA Affiliates are in
compliance with (i) the requirements of the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") and the regulations
(including proposed regulations) thereunder and (ii) the applicable
requirements of the Health Insurance Portability and Accountability
Act of 1996, as amended, and the regulations (including the proposed
regulations) thereunder.
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(i) Since November 1, 1998, neither the Company nor any
Company Subsidiary has terminated any at-will employee other than
pursuant to the forms of the notice attached hereto as Schedules
4.09(i)-1, 4.09(i)-2 or 4.09(i)-3. No single termination of at-will
employees, nor any group of terminations, constitutes a violation of
any federal or state law governing the closing of any plant or
termination or winding-up of any business.
SECTION 4.10 Certain Tax Matters
Neither Company, nor to Company's knowledge, any of its affiliates,
has taken or agreed to take any action (other than actions contemplated by this
Agreement) that could be expected to prevent the Merger from constituting a
"reorganization" under Section 368 of the Code. Company is not aware of any
agreement or plan to which Company or any of its affiliates is a party or other
circumstances relating to Company or any of its affiliates that could
reasonably be expected to prevent the Merger from so qualifying as a
reorganization under Section 368 of the Code.
SECTION 4.11 Contracts
(a) Section 4.11 of the Company Disclosure Schedule sets
forth a list of all material written and oral contracts or agreements
relating to the Company or any Company Subsidiary, including without
limitation any: (i) contract resulting in a commitment or potential
commitment for expenditure or other obligation or potential
obligation, or which provides for the receipt or potential receipt,
involving in excess of One Hundred Thousand Dollars ($100,000) in any
instance, or series of related contracts that in the aggregate give
rise to rights or obligations exceeding such amount, other than
contracts ("Customer Contracts") with health plans and providers,
entered into by the Company's managed care business in the ordinary
course of business, (ii) the twelve (12) largest Customer Contracts
based upon revenues generated to the Company; (iii) indenture,
mortgage, promissory note, loan agreement, guarantee or other
agreement or commitment for the borrowing or lending of money or
encumbrance of assets involving more than One Hundred Thousand Dollars
($100,000) in each instance; (iv) agreement which restricts the
Company from engaging in any line of business or from competing with
any other person; (v) warranties made with respect to products
manufactured, packaged, distributed or sold or services provided by
the Company; (vi) any agreement which terminates, or gives another
party the right to terminate such agreement, upon the completion of
the transaction contemplated by this Agreement; or (vii) any other
contract, agreement, instrument, arrangement or commitment that is
material to the condition (financial or otherwise), results of
operation, assets, properties, liabilities, business or prospects of
the Company (collectively, and together with all other agreements
required to be disclosed on the Company Disclosure Schedule the
"Company Material Contracts"). The Company has previously furnished to
Parent true, complete and correct copies of all written agreements, as
amended, required to be listed on Section 4.11 of the Company
Disclosure Schedule.
(b) The Company Material Contracts are each in full force and
effect and are the valid and legally binding obligations of the
Company and, to the best of Company's knowledge, the other
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parties thereto, enforceable in accordance with their respective
terms, subject only to bankruptcy, insolvency or similar laws
affecting the rights of creditors generally and to general equitable
principles. Except as set forth in Section 4.11 of the Company
Disclosure Schedule, the Company has not received notice of its
default under any of the Company Material Contracts and no event has
occurred which, with the passage of time or the giving of notice or
both, would constitute a default by the Company thereunder. Except as
set forth in the Company Disclosure Schedule, to the Company's
knowledge, none of the other parties to any of the Company Material
Contracts is in default thereunder, nor has an event occurred which,
with the passage of time or the giving of notice or both would
constitute a default by such other party thereunder. Except as set
forth in Section 4.11 of the Company Disclosure Schedule, the Company
has not received notice of the pending or threatened cancellation,
revocation or termination of any of the Company Material Contracts,
nor are any of them aware of any facts or circumstances which could
reasonably be expected to lead to any such cancellation, revocation or
termination.
(c) Except as otherwise indicated on Section 4.11 of the
Company Disclosure Schedule, to the Company's knowledge, after due
inquiry, the continuation, validity and effectiveness of the Company
Material Contracts under the current terms thereof will in no way be
affected by the consummation of the transactions contemplated by this
Agreement.
(d) Section 4.11 of the Company Disclosure Schedule
specifically identifies a list of all contracts which contain any
earn-out or contingency provision with respect to issuances of Company
Common Stock and/or any cash payments by the Company or Company
Subsidiaries.
(e) Section 4.11 of the Company Disclosure Schedule
identifies all agreements which restrict the Company from engaging in
any line of business or from competing with any other person.
SECTION 4.12 Litigation
Except as set forth in Section 4.12 of the Company Disclosure
Schedule, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of Company, threatened against Company or any Company
Subsidiary, and, to the knowledge of Company, there are no existing facts or
circumstances that could reasonably be expected to result in a suit, claim,
action, proceeding or investigation. Except as set forth in Section 4.12 of the
Company Disclosure Schedule, Company is not aware of any facts or circumstances
which could reasonably be expected to result in the denial of insurance
coverage under policies issued to Company and Company Subsidiaries in respect
of such suits, claims, actions, proceedings and investigations. Except as set
forth in Section 4.12 of the Company Disclosure Schedule, neither Company nor
any Company Subsidiary is subject to any outstanding order, writ, injunction or
decree.
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SECTION 4.13 Environmental Matters
Company and the Company Subsidiaries are in compliance with all
material applicable Environmental Laws and all Company Permits required by
Environmental Laws. All past noncompliance of Company or any Company Subsidiary
with Environmental Laws or Environmental Permits has been resolved without any
pending, ongoing or future material obligation, cost or liability. Neither
Company nor any Company Subsidiary has released a Hazardous Material at, or
transported a Hazardous Material to or from, any real property currently or
formerly owned, leased or occupied by Company or any Company Subsidiary, in
violation of any Environmental Law.
SECTION 4.14 Intellectual Property
(a) Section 4.14(a) of the Company Disclosure Schedule
contains a true and complete list of Company's and the Company's
Subsidiaries patents, patent applications, registered trademarks,
trademark applications, trade names, registered service marks, service
▇▇▇▇ applications, Internet domain names, Internet domain name
applications, copyright registrations and applications and other
filings and formal actions made or taken pursuant to Federal, state,
local and foreign laws by Company to protect its interests in Company
Intellectual Property, and includes details of all due dates for
further filings, maintenance, payments or other actions falling due in
respect of Company Intellectual Property within twelve (12) months of
the Effective Time. All of Company's patents, patent applications,
registered trademarks, and trademark applications, and registered
copyrights remain in good standing with all fees and filings due as of
the date hereof. The Company has previously provided Purchaser with a
list of all other trademarks and service marks which are material to
the Company's business.
(b) Company has made all registrations that Company
(including any of its subsidiaries) is required to have made in
relation to the processing of data, and is in good standing with
respect to such registrations with all fees due as of the Effective
Time duly made.
(c) Company Intellectual Property contains only those items
and rights which are: (i) owned by Company; (ii) in the public domain;
or (iii) rightfully used by Company pursuant to a valid and
enforceable license or other agreement (the "Company Licensed
Intellectual Property"), the parties, date, term and subject matter of
each such license or other agreement (each, a "License Agreement")
being set forth on Section 4.14(c) of the Company Disclosure Schedule.
Company has all rights in Company Intellectual Property necessary to
carry out Company's current activities and, to the knowledge of the
Company, the Company's future activities to the extent such future
activities are already planned, including without limitation, to the
extent required to carry out such activities, rights to make, use,
reproduce, modify, adopt, create derivative works based on, translate,
distribute (directly and indirectly), transmit, display and perform
publicly, license, rent and lease and, other than with respect to
Company Licensed Intellectual Property, assign and sell, Company
Intellectual Property.
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(d) The reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Company
Intellectual Property, product, work, technology or process as now
used or offered or proposed for use, licensing or sale by Company does
not infringe on any patent, design right, trademark, trade name,
service ▇▇▇▇, trade dress, Internet domain name, copyright, database,
statistical model, technology, invention, supplier list, trade secret,
know-how, computer software program or application of any person,
anywhere in the World. The Company has not received notice of any
claims (i) challenging the validity, effectiveness or, other than with
respect to Company Licensed Intellectual Property, ownership by
Company of any Company Intellectual Property, or (ii) to the effect
that the use, distribution, licensing, sublicensing, sale or any other
exercise of rights in any product, work, technology or process as now
used or offered or proposed for use, licensing, sublicensing or sale
by Company or its agents or use by its customers infringes or will
infringe on any intellectual property or other proprietary or personal
right of any person. To the knowledge of Company, no such claims have
been threatened by any person, nor are there any valid grounds for any
bona fide claim of any such kind. All of the rights within Company
Intellectual Property are enforceable and subsisting. To the knowledge
of Company, there is no unauthorized use, infringement or
misappropriation of any Company Intellectual Property by any third
party, employee or former employee.
(e) Except as set forth in section 4.14 of the Company
Disclosure Schedule, Company is not, nor as a result of the execution
or delivery of this Agreement, or performance of Company's obligations
hereunder, will Company be, in violation of any material license,
sublicense, agreement or instrument to which Company is a party or
otherwise bound, nor will execution or delivery of this Agreement, or
performance of Company's obligations hereunder, cause the diminution,
termination or forfeiture of any Company Intellectual Property.
(f) Section 4.14(f) of the Company Disclosure Schedule
contains a true and complete list of all software programs which are
owned by the Company (the "Company Software Programs"). Except as set
forth in section 4.14 of the Company Disclosure Schedule, Company owns
full and unencumbered right and good, valid and marketable title to
the Company Intellectual Property and the Company Software Programs
which are material to the Company's business free and clear of all
mortgages, pledges, liens, security interests, conditional sales
agreements, encumbrances or charges of any kind.
(g) Except as set forth in Section 4.14 of the Company
Disclosure Schedule, the Company Software Programs (i) have been
designed to ensure year 2000 compatibility, which includes, but is not
limited to, date data century recognition, and calculations that
accommodate same century and multi-century formulas and date values;
(ii) operate and will operate in accordance with their specifications
prior to, during and after the calendar year 2000; and (iii) shall not
end abnormally or provide invalid or incorrect results as a result of
date data, specifically including date data which represents or
references different centuries or more than one century.
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(h) Except as set forth in Section 4.14 of the Company
Disclosure Schedule, Company Intellectual Property is free and clear
of any and all mortgages, pledges, liens, security interests,
conditional sale agreements, encumbrances or charges of any kind.
(i) Except as set forth in the Company Disclosure Schedule,
Company (including its subsidiaries) does not owe any royalties or
other payments to third parties in respect of Company Intellectual
Property. All royalties or other payments set forth in the Company
Disclosure Schedule that have accrued prior to the Effective Time have
been paid.
SECTION 4.15 Taxes
(a) Company and each of the Company Subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of
which Company or any Company Subsidiary is or has been a member, have
properly completed and timely filed all Tax Returns required to be
filed by them and have paid all Taxes shown thereon to be due. Company
has provided adequate accruals in accordance with generally accepted
accounting principles in its latest financial statements included in
the Company Reports for any Taxes that have not been paid, whether or
not shown as being due on any Tax Returns. Company and the Company
Subsidiaries have no material liability for unpaid Taxes accruing
after the date of the Company's latest financial statements included
in the Company Reports.
(b) There is (i) no material claim for Taxes that is a lien
against the property of Company or any Company Subsidiary or is being
asserted against Company or any Company Subsidiary other than liens
for Taxes not yet due and payable, (ii) no audit of any Tax Return of
Company or any Company Subsidiary being conducted by a Tax Authority;
(iii) no extension of the statute of limitations on the assessment of
any Taxes granted by Company or any Company Subsidiary and currently
in effect, and (iv) no agreement, contract or arrangement to which
Company or any Company Subsidiary is a party that may result in the
payment of any amount that would not be deductible by reason of
Section 280G or Section 404 of the Code.
(c) There has been no change in ownership of Company or any
Company Subsidiaries that has caused the utilization of any losses of
such entities to be limited pursuant to Section 382 of the Code, and
any loss carryovers reflected on the latest financial statements
included in the Company Reports are properly computed and reflected.
(d) Except as set forth in Section 4.15 of the Company
Disclosure Schedule, Company and the Company Subsidiaries have not
been and will not be required to include any material adjustment in
Taxable income for any Tax period (or portion thereof) pursuant to
Section 481 or 263A of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Merger.
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(e) Neither Company nor any Company Subsidiary has filed or
will file any consent to have the provisions of paragraph 341(f)(2) of
the Code (or comparable provisions of any state Tax laws) apply to
Company or any Company Subsidiary.
(f) Neither Company nor any Company Subsidiary is a party to
any Tax sharing or Tax allocation agreement nor does Company or any
Company Subsidiary have any liability or potential liability to
another party under any such agreement.
(g) Neither Company nor any Company Subsidiary has filed any
disclosures under Section 6662 or comparable provisions of state,
local or foreign law to prevent the imposition of penalties with
respect to any Tax reporting position taken on any Tax Return.
(h) Company and each Company Subsidiary has in its possession
receipts for any Taxes paid to foreign Tax authorities. Neither
Company nor any Company Subsidiary has ever been a "personal holding
company" within the meaning of Section 542 of the Code or a "United
Sates real property holding corporation" within the meaning of Section
897 of the Code.
SECTION 4.16 Insurance
Company and each Company Subsidiary is presently insured, and during
each of the past five calendar years has been insured, against such risks, as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. The Company reasonably believes that the
policies of fire, theft, liability, medical malpractice, director and officer,
product liability and other insurance maintained with respect to the assets or
businesses of Company and Company Subsidiaries provide adequate coverage
against loss. Section 4.16 of the Company Disclosure Schedule sets forth a
complete and correct list as of the date hereof of all insurance policies
maintained by Company or the Company Subsidiaries, and Company has delivered to
Parent complete and correct copies of all such policies, together with all
riders and amendments thereto. All such policies are in full force and effect
and all premiums due thereon have been paid to the date hereof. Company and the
Company Subsidiaries have complied in all material respects with the terms of
such policies.
SECTION 4.17 Properties
(a) Company and the Company Subsidiaries have good title,
free and clear of all material mortgages, liens, pledges, charges or
other encumbrances to all their material (individually or in the
aggregate) tangible properties and assets, real, personal or mixed,
reflected in the Company's consolidated financial statements contained
in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, as being owned by Company and the Company
Subsidiaries as of the date thereof, other than (i) any properties or
assets that have been sold or otherwise disposed of in the ordinary
course of business since the date of such financial statements, (ii)
liens disclosed in the notes to such financial statements and (iii)
liens arising in the ordinary course of business after the date of
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such financial statements. All buildings, and all fixtures, equipment
and other property and assets that are material to its business on a
consolidated basis, held under leases or sub-leases by Company or any
Company Subsidiary are held under valid instruments enforceable in
accordance with their respective terms, subject to applicable laws of
bankruptcy, insolvency or similar laws relating to creditors' rights
generally and to general principles of equity (whether applied in a
proceeding in law or equity). Substantially all of Company's and the
Company Subsidiaries' equipment in regular use has been reasonably
maintained and is in serviceable condition, reasonable wear and tear
excepted.
(b) Neither the Company nor any Company Subsidiary is
obligated as a lessee (which term as used herein includes sublessee
and similar terms) under any lease for real property, other than
Company leases related to the Practices (as defined in Section 6.12
hereof) and the leases set forth in Schedule 4.17 (the "Company
Leases").
SECTION 4.18 Affiliates
Section 4.18 of the Company Disclosure Schedule sets forth the name of
each person who is, in Company's reasonable judgment, an affiliate (as such
term is used in Rule 145 under the Securities Act.
SECTION 4.19 Opinion of Financial Advisor
PaineWebber Incorporated ("PaineWebber") has delivered to the board of
directors of Company its written opinion to the effect that, as of the date
hereof, the Exchange Ratio is fair to the holders of shares of Company Common
Stock from a financial point of view (the "▇▇▇▇▇ ▇▇▇▇▇▇ Fairness Opinion").
SECTION 4.20 Brokers
The Company has furnished to Parent or its counsel a true and complete
copy of letter agreements (the "Engagement Letters") between the Company and
its counsel and its financial advisor, such Engagement Letters being the only
agreements pursuant to which such firms would be entitled to any payment
relating to the transactions contemplated hereunder. Other than ▇▇▇▇▇ ▇▇▇▇▇▇
and as set forth in Section 4.20 of the Company Disclosure Schedule, no broker,
financial advisor or investment banker or other person is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its Subsidiaries.
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SECTION 4.21 Florida Business Corporation Law
For purposes of Section 607.0902 of the Florida Business Corporation
Law, the execution and delivery of this Agreement, the Stockholder Agreement
and the Purchase of shares of Company Common Stock or other securities issued
by the Company or by Parent and Merger Sub, including pursuant to the
Stockholder Agreement referred to in the preambles of this Agreement, will not
constitute a "control share acquisition" as defined in Section 607.0902(2) of
the Florida Business Corporation Law. Assuming Parent's representation in
Section 5.18 hereof is true, to Company's knowledge, no other state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement, , the Stockholders Agreements or the transactions
contemplated by this Agreement, and the Stockholders Agreements.
SECTION 4.22 Business Activity Restriction
Except as set forth in Section 4.21 of the Company Disclosure
Schedule, there is no non-competition or other similar agreement, commitment,
judgment, injunction, order or decree to which Company or any subsidiary of
Company is a party or subject to that has or could reasonably be expected to
have the effect of prohibiting or impairing the conduct of business by Company.
Except as set forth in Section 4.21 of the Company Disclosure Schedule, Company
has not entered into any agreement under which Company is restricted in any
material respect from selling, licensing or otherwise distributing any of its
technology or products to, or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or in any segment of the market or line of business.
SECTION 4.23 Governmental Authorizations
The Company and, to the Company's Knowledge, without any independent
investigation, each Ophthalmologist/Optometrist Employee, possesses all
necessary licenses, franchises, permits and other governmental authorizations
(collectively, "Governmental Authorizations"), including, but not limited to
all licenses, franchises, permits and authorizations for the conduct of the
Company's business as now conducted (except for those Governmental
Authorizations the failure to possess individually or in the aggregate could
not reasonably be expected to have a Company Material Adverse Effect), all of
which are listed (with expiration dates, if applicable) on Section 4.23 of the
Company Disclosure. Except as set forth in Section 4.23 of the Company
Disclosure Schedule, 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 licenses, franchises, permits or
authorizations, except for defaults, breaches or violations which individually
or in the aggregate could not reasonably be expected to have a Company Material
Adverse Effect. All licenses, franchises, permits and other authorizations are
valid and in full force and effect, except for those licenses, franchises,
permits and other Governmental Authorizations the failure to possess could not
reasonably be expected to have a Company Material Adverse Effect. The Company
and to the Company's Knowledge, without any independent investigation, each
Ophthalmologist/Optometrist Employee is currently in compliance therewith, and
the Company has not received any notice that
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any Governmental Entity is considering challenging, revoking, canceling,
restricting, conditioning or not renewing any license, franchise, permit or
other authorization, except for those licenses, franchises, permits and other
Governmental Authorizations the failure of which to possess could not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth in Section 4.23 of the Company Disclosure Schedule, the Governmental
Authorizations listed in Section 4.23 of the Company Disclosure Schedule
collectively constitute all of the Governmental Authorizations necessary to
permit the Company to lawfully conduct and operate its business in the manner
it currently conducts and operates such businesses and to permit it to own and
use its assets in the manner in which it currently owns and uses such assets.
SECTION 4.24 Gifts, Political Contributions, Unrecorded Funds
Neither the Company nor, to the Company's Knowledge without
independent investigation, any agent, Employee or independent contractor of the
Company has, in connection with the business of the Company (i) made or agreed
to make any contribution, payment, or gift to any customer, supplier, landlord,
political candidate, governmental official, official of any health plan,
patient, employee, or agent where either the contribution, payment, or gift or
the purpose thereof was illegal under any law or regulation; (ii) established
or maintained any unrecorded fund or asset for any purpose or made any false
entries on its respective books and records for any reason; (iii) made or
agreed to make any contribution, or reimbursed any political gift or
contribution made by any other Person, to any candidate for federal, state, or
local public office in violation of any law or regulation; or (iv) submitted
any claim for services rendered or reimbursement for expenses to any Person
where the services were not actually rendered or the expenses were not actually
incurred.
SECTION 4.25 No Dissenters' Rights
The Company's Common Stock is designated as a national market system
security within the meaning of Section 607.1302 of the FBCA. The Company's
Articles of Incorporation or Bylaws do not provide the holders of any class or
series of capital stock of the Company with dissenters' rights under Section
607.1302 of the FBCA or any other applicable law.
SECTION 4.26 Board Recommendation
The Board of Directors of the Company, at a meeting duly called and
held, has unanimously (i) approved this Agreement, (ii) determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
in the best interests of the stockholders of the Company and (iii) resolved
subject to its fiduciary duties under applicable law to recommend that the
stockholders of the Company adopt this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
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Parent hereby represents and warrants to Company, subject to the
exceptions specifically disclosed in the Parent Disclosure Schedule, all such
exceptions to be referenced to a specific representation set forth in this
Article V or to otherwise be clearly applicable to the representations hereof
not specifically referenced, that (it being understood that for purposes of
this Article V, unless the context otherwise requires, the term Parent shall be
deemed to include all of the Parent's Subsidiaries:
SECTION 5.01 Organization and Qualification; Subsidiaries
(a) Parent and each directly and indirectly owned subsidiary
of Parent (the "Parent Subsidiaries") has been duly organized and is
validly existing and in good standing (to the extent applicable) under
the laws of the jurisdiction of its incorporation or organization, as
the case may be, and has the requisite corporate power and authority
to own, lease and operate its properties and to carry on its business
as it is now being conducted. Except as set forth in Section 5.01 of
the Parent Disclosure Schedule, Parent and each Parent Subsidiary is
duly qualified or licensed to do business, and is in good standing (to
the extent applicable), in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for
such failure to be so qualified or licensed and in good standing that
could not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(b) Section 5.01 of the Parent Disclosure Schedule sets
forth, as of the date of this Agreement, a true and complete list of
each Parent Subsidiary, together with (i) the jurisdiction of
incorporation or organization of each Parent Subsidiary and the
percentage of each Parent Subsidiary's outstanding capital stock or
other equity interests owned by Parent or another Parent Subsidiary
and (ii) an indication of whether each Parent Subsidiary is a
"Significant Subsidiary" as defined in Regulation S-X under the
Exchange Act. Except as set forth in Section 5.01 of the Parent
Disclosure Schedule, neither Parent nor any Parent Subsidiary owns an
equity interest in any partnership or joint venture arrangement or
other business entity that is material to the business, assets,
liabilities, financial condition or results of operations of Parent
and the Parent Subsidiaries, taken as a whole.
SECTION 5.02 Certificate of Incorporation and Bylaws
The copies of each of Parent's and Merger Subs, certificate of
incorporation and bylaws previously provided to Company by Parent are true,
complete and correct copies thereof. Such certificate of incorporation and
bylaws are in full force and effect. Parent is not in violation of any of the
provisions of its certificate of incorporation or bylaws.
SECTION 5.03 Capitalization
(a) The authorized capital stock of Parent consists of
50,000,000 shares of Parent Common Stock and 5,000,000 shares of
preferred stock ("Parent Preferred Stock"). As of January 28, 2000
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(which numbers are not materially different on the date hereof), (i)
12,543,556 shares of Parent Common Stock are issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (ii) no
shares of Parent Common Stock are held in the treasury of Parent,
(iii) no shares of Parent Common Stock are held by Parent
Subsidiaries, (iv) approximately 2,007,976 shares of Parent Common
Stock are reserved for future issuance pursuant to outstanding options
and warrants to purchase Parent Common Stock ("Parent Stock Options"),
and (v) 418,803 shares of Parent Preferred Stock are outstanding.
Except as set forth in Section 5.03 of the Parent Disclosure Schedule
or shares of Parent Common Stock issuable pursuant to the Parent Stock
Plans, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character obligating Parent or any
Parent Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, Parent or any Parent Subsidiary. All shares
of Parent Common Stock subject to issuance as aforesaid, upon issuance
prior to the Effective Time on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Except as
set forth in Section 5.03 of the Parent Disclosure Schedule, there are
no outstanding contractual obligations of Parent or any Parent
Subsidiary to repurchase, redeem or otherwise acquire any shares of
Parent Common Stock or any capital stock of any Parent Subsidiary.
Except as set forth in Section 5.03 of the Parent Disclosure Schedule,
each outstanding share of capital stock of each Parent Subsidiary is
duly authorized, validly issued, fully paid and nonassessable and each
such share owned by Parent or another Parent Subsidiary is free and
clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on Parent's or such
other Parent Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever.
(b) The consummation of the Merger will not trigger any
anti-dilution rights or price adjustment in connection with any
options to purchase Parent Common Stock.
SECTION 5.04 Authority Relative to This Agreement
Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by each of Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Parent or Merger Sub are necessary
to authorize this Agreement or to consummate such transactions (other than the
approval of this Agreement and the Merger by the holders of a majority of the
outstanding shares of Parent Common Stock present at the Parent Shareholders'
Meeting and the consent of Parent as sole stockholder of Merger Sub). This
Agreement has been duly executed and delivered by each of Parent and Merger Sub
and, assuming the due authorization, execution and delivery by Company,
constitutes a legal, valid and binding obligation of each of Parent and Merger
Sub enforceable against Parent and Merger Sub in accordance with its terms.
SECTION 5.05 No Conflict; Required Filings and Consents
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(a) The execution and delivery of this Agreement by Parent
and Merger Sub does not, and the performance by Parent and Merger Sub
of their obligations hereunder and the consummation of the Merger will
not, except as set forth in Section 5.05 of the Parent Disclosure
Schedule, (i) conflict with or violate any provision of the articles
of incorporation or bylaws of Parent or any equivalent organizational
documents of any Parent Subsidiary, (ii) assuming that all consents,
approvals, authorizations and permits described in Section 5.05(b)
have been obtained and all filings and notifications described in
Section 5.05(b) have been made, conflict with or violate any Law
applicable to Parent or any other Parent Subsidiary or by which any
material property or material asset of Parent or any Parent Subsidiary
is bound or affected or (iii) result in any material breach of or
constitute a material default (or an event which with the giving of
notice or lapse of time or both could reasonably be expected to become
a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation
of a lien or other encumbrance on any material property or asset of
Parent or any Parent Subsidiary pursuant to, any Parent Material
Contract (as defined below) or Parent Permit (as defined below).
(b) The execution and delivery of this Agreement by Parent
and Merger Sub does not, and the performance by Parent and Merger Sub
of their obligations hereunder and the consummation of the Merger will
not, require any material consent, approval, authorization or permit
of, or filing by Parent with or notification by Parent to, any
Governmental Entity, except as set forth in Section 5.05 of the Parent
Disclosure Schedule or pursuant to applicable requirements of the
Exchange Act, the Securities Act, Blue Sky Laws, the rules and
regulations of the AMEX, state takeover laws, the premerger
notification requirements of the HSR Act, if any, and the filing and
recordation of the Certificate of Merger as required by the FBCA.
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SECTION 5.06 Permits; Compliance with Laws
Except as set forth in Section 5.06 of the Parent Disclosure Schedule,
Parent and the Parent Subsidiaries are in possession of all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates,
identification and registration numbers, approvals and orders of any
Governmental Entity necessary for Parent or any Parent Subsidiary to own, lease
and operate its properties or to offer or perform its services or to develop,
produce, store, distribute and market its products or otherwise to carry on its
business as it is now being conducted (collectively, the "Parent Permits")
except for Parent permits which could not reasonably be expected to have a
Parent Material Adverse Effect, and, as of the date of this Agreement, none of
the Parent Permits has been suspended or canceled nor is any such suspension or
cancellation pending or, to the knowledge of Parent, threatened. Neither Parent
nor any Parent Subsidiary is in conflict with, or in default or violation of,
(i) any Law applicable to Parent or any Parent Subsidiary or by which any
material property or asset of Parent or any Parent Subsidiary is bound or
affected or (ii) any Parent Permits, except for conflicts, defaults or
violations which could not reasonably be expected to have a Parent Material
Adverse Effect. Section 5.06 of the Parent Disclosure Schedule sets forth, as
of the date of this Agreement, all actions, proceedings, investigations or
surveys pending or, to the knowledge of Parent, threatened against Parent or
any Parent Subsidiary that could reasonably be expected to result in the
suspension or cancellation of any other material Parent Permit. Except as set
forth in Section 5.06 of the Parent Disclosure Schedule, since August 13, 1999,
neither Parent nor any Parent Subsidiary has received from any Governmental
Entity any written notification with respect to possible conflicts, defaults or
violations of Laws.
SECTION 5.07 SEC Filings; Financial Statements
(a) Parent has timely filed all forms, reports, statements
and documents required to be filed by it (A) with the SEC and the AMEX
since July 1, 1999 (collectively, together with any such forms,
reports, statements and documents Parent may file subsequent to the
date hereof until the Closing, the "Parent Reports") and (B) with any
other Governmental Entities. Each Parent Report (i) was prepared in
accordance with the requirements of the Securities Act, the Exchange
Act or the AMEX, as the case may be, substantially in all respects and
(ii) did not at the time it was filed contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading. Each form, report, statement and document referred to in
clause (B) of this paragraph was prepared in all material respects in
accordance with the requirements of applicable Law. No Parent
Subsidiary is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document
with the SEC, the AMEX, any other stock exchange or any other
comparable Governmental Entity.
(b) Except as is provided in the Parent Reports, each of the
consolidated financial statements (including, in each case, any notes
thereto) contained in the Parent Reports was prepared in accordance
with GAAP applied on a consistent basis throughout the periods
indicated (except as
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may be indicated in the notes thereto) and each presented fairly, in
all material respects, the consolidated financial position of Parent
and the consolidated Parent Subsidiaries as at the respective dates
thereof and for the respective periods indicated therein, except as
otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against
on the consolidated balance sheet of Parent and the Parent
Subsidiaries as reported in the Parent Reports, including the notes
thereto, none of Parent or any Parent Subsidiary has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on a balance sheet
or in notes thereto prepared in accordance with GAAP, except for
immaterial liabilities or obligations incurred in the ordinary course
of business consistent with past practice since June 30, 1999 that
have not had or could not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect.
(d) Parent has furnished to Company copies of the unaudited
consolidated and consolidating balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for
the months ended October 31 and November 30, 1999 for the Parent and
the Parent Subsidiaries (collectively, the "Financial Statements").
The Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby
(except as may be indicted in the notes thereto), present fairly, in
all material respects, the consolidated financial condition of the
Parent and the consolidated Parent Subsidiaries as of such dates and
the results of operations of the Parent and the Parent Subsidiaries
for such periods provided, however, that the Financial Statements are
subject to normal and recurring immaterial year-end adjustments and
lack footnotes and other presentation items.
(e) Parent has sold 3,571, 428 shares of Parent Common Stock
offered pursuant to its Registration Statement on Form S-1 declared
effective by the SEC on January 19, 2000 at purchase price of $3.50
per share. As of the date hereof, the net proceeds have been used by
Parent in the manner described in such Form S-1.
SECTION 5.08 Absence of Certain Changes or Events
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Except as set forth in Section 5.08 of the Parent Disclosure Schedule,
since September 30, 1999, Parent and the Parent Subsidiaries have conducted
their businesses only in the ordinary course consistent with past practice and,
since such date, there has not been (i) any material changes in or effect on
the business, assets, liabilities, financial condition or results of operations
of Parent or the Parent Subsidiaries, (ii) any event that could reasonably be
expected to prevent or materially delay the performance of Parent's obligations
pursuant to this Agreement and the consummation of the Merger by Parent, (iii)
any material change by Parent in its accounting methods, principles or
practices, (iv) any declaration, setting aside or payment of any dividend or
distribution in respect of the shares of Parent Common Stock or any redemption,
purchase or other acquisition of any of Parent's securities, (v) except for
changes in the ordinary course of business consistent with past practice, any
increase in the compensation or benefits or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting or repricing
of stock options, stock appreciation rights, performance awards or restricted
stock awards), stock purchase or other employee benefit plan, or any other
increase in the compensation payable or to become payable to any employees,
officers, consultants or directors of Parent or any Parent Subsidiary, (vi) any
issuance or sale of any stock, notes, bonds or other securities other than
pursuant to the exercise of outstanding securities, or entering into any
agreement with respect thereto, or the issuances of options under the Parent
Stock Plans, (vii) any amendment to the Parent's certificate of incorporation
or bylaws, (viii) other than in the ordinary course of business consistent with
past practice, any (x) purchase, sale, assignment or transfer of any material
assets, (y) mortgage, pledge or existence of any lien, encumbrance or charge on
any material assets or properties, tangible or intangible except for liens for
Taxes not yet delinquent, or (z) waiver of any rights of material value or
cancellation or any material debts or claims, (ix) any incurrence of any
material liability (absolute or contingent), except for current liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, (x) any incurrence of any damage, destruction or similar loss,
whether or not covered by insurance, materially affecting the business or
properties of Parent or any Parent Subsidiary, or (xi) any entering into any
transaction of a material nature other than in the ordinary course of business,
consistent with past practice.
SECTION 5.09 Employee Benefit Plans; Labor Matters
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(a) The Parent Disclosure Schedule lists each material
employee benefit fund, plan, program, arrangement and contract
(including, without limitation, any "pension" plan, fund or program,
as defined in Section 3(2) of ERISA, any "employee benefit plan", as
defined in Section 3(3) of ERISA and any plan, program, policy,
arrangement or contract providing for severance), whether currently in
effect or pursuant to which the Parent has any ongoing liability or
obligation; medical, dental or vision benefits; life insurance or
death benefits; disability benefits, sick pay or other wage
replacement; vacation, holiday or sabbatical; pension or
profit-sharing benefits; stock options or other equity compensation;
bonus or incentive pay or other material fringe benefits) whether
written or not ("Benefit Plans"), maintained, sponsored or contributed
to or required to be contributed to by Parent or any Parent Subsidiary
(the "Parent Benefit Plans"). With respect to each Parent Benefit
Plan, Parent has delivered or made available to Company a true,
complete and correct copy of (i) such Parent Benefit Plan (or, if not
written, a written summary of its material terms) and the most recent
summary plan description, if any, related to such Parent Benefit Plan,
(ii) each trust agreement or other funding arrangement relating to
such Parent Benefit Plan, (iii) the most recent annual report (Form
5500) filed with the IRS with respect to such Parent Benefit Plan
(and, if the most recent annual report is a Form 5500R, the most
recent Form 5500C filed with respect to such Parent Benefit Plan),
(iv) the most recent actuarial report or financial statement relating
to such Parent Benefit Plan and (v) the most recent determination
letter, if any, issued by the IRS with respect to such Parent Benefit
Plan and any pending request for such a determination letter. Neither
Parent nor any Parent Subsidiary nor, to the knowledge of Parent, any
other person or entity, has any express commitment, whether legally
enforceable or not, to modify, change or terminate any Parent Benefit
Plan, other than with respect to a modification, change or termination
required by ERISA or the Code.
(b) Except as set forth in Section 5.08 of the Parent
Disclosure Schedule, Parent has delivered to Company true, complete
and correct copies of (i) all employment agreements with officers and
all consulting agreements of Parent and each Parent Subsidiary, (ii)
all severance plans, agreements, programs and policies of Parent and
each Parent Subsidiary with or relating to their respective employees,
directors or consultants, and (iii) all plans, programs, agreements
and other arrangements of Parent and each Parent Subsidiary with or
relating to their respective employees, directors or consultants which
contain "change of control" provisions, and all such plans,
agreements, programs, and policies are specifically identified as such
on Section 5.09 of the Parent Disclosure Schedule. Except as set forth
in Section 5.09 of the Parent Disclosure Schedule, no payment or
benefit which may be required to be made by Parent or any Parent
Subsidiary or which otherwise may be required to be made under the
terms of any Parent Benefit Plan or other arrangement will constitute
a parachute payment under Code Section 280(G)(1), and the consummation
of the transactions contemplated by this Agreement will not, (i)
entitle any current or former employee or other service provider of
Parent or any Parent Subsidiary to severance benefits or any other
payment, compensation or benefit (including forgiveness of
indebtedness) or (ii) accelerate the time of payment or vesting, or
increase the amount of compensation or benefit due any such employee
or service provider.
(c) Neither Parent nor any Parent Subsidiary is a party to,
or has any obligations under or with respect to, any collective
bargaining or other labor union contract applicable to persons
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employed by Parent or any Parent Subsidiary and no collective
bargaining agreement is being negotiated by Parent or any Parent
Subsidiary or any person or entity that may obligate the Parent or any
Parent Subsidiary thereunder. As of the date of this Agreement, there
is no labor dispute, strike, union organizing activity or work
stoppage against Parent or any Parent Subsidiary pending or, to the
knowledge of Parent, threatened which may interfere with the
respective business activities of Parent or any Parent Subsidiary. As
of the date of this Agreement, to the knowledge of Parent, none of
Parent, any Parent Subsidiary, or any of their respective
representatives or employees has committed any unfair labor practice
in connection with the operation of the respective businesses of
Parent or any Parent Subsidiary, and there is no charge or complaint
filed against Parent or any Parent Subsidiary by or with the National
Labor Relations Board or any comparable Governmental Entity pending or
threatened in writing.
SECTION 5.10 Certain Tax Matters
(a) Neither Parent, nor to Parent's knowledge, any of its
affiliates, has taken or agreed to take any action (other than actions
contemplated by this Agreement) that could be expected to prevent the
Merger from constituting a "reorganization" under Section 368 of the
Code. Parent is not aware of any agreement or plan to which Parent or
any of its affiliates is a party or other circumstances relating to
Parent or any of its affiliates that could reasonably be expected to
prevent the Merger from so qualifying as a reorganization under
Section 368 of the Code.
(b) Parent and each of the Parent Subsidiaries, and any
consolidated, combined, unitary or aggregated group for Tax purposes
of which Parent or any Parent Subsidiary is or has been a member, have
properly completed and timely filed all Tax Returns required to be
filed by them and have paid all Taxes shown thereon to be due. Parent
has provided adequate accruals in accordance with generally accepted
accounting principles in its latest financial statements included in
the Parent Reports for any Taxes that have not been paid, whether or
not shown as being due on any Tax Returns. Parent and the Parent
Subsidiaries have no material liability for unpaid Taxes accruing
after the date of the Parent's latest financial statements included in
the Parent Reports.
(c) There is (i) no material claim for Taxes that is a lien
against the property of Parent or any Parent Subsidiary or is being
asserted against Parent or any Parent Subsidiary other than liens for
Taxes not yet due and payable, (ii) no audit of any Tax Return of
parent or any Parent Subsidiary being conducted by a Tax Authority;
(iii) no extension of the statute of limitations on the assessment of
any Taxes granted by Parent or any Parent Subsidiary and currently in
effect, and (iv) no agreement, contract or arrangement to which Parent
or any Parent Subsidiary is a party that may result in the payment of
any amount that would not be deductible by reason of Section 280G or
Section 404 of the Code.
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SECTION 5.11 Contracts
(a) Section 5.11 of the Parent Disclosure Schedule sets forth
a list of all material written and oral contracts or agreements
relating to the Parent, including without limitation any: (i) contract
resulting in a commitment or potential commitment for expenditure or
other obligation or potential obligation, or which provides for the
receipt or potential receipt, involving in excess of One Hundred
Thousand Dollars ($100,000) in any instance, or series of related
contracts that in the aggregate give rise to rights or obligations
exceeding such amount, other than contracts with health plans and
providers, entered into by the Parent's managed care business in the
ordinary course of business, (ii) the twelve (12) largest customer
contracts based upon revenues generated to the Parent; (iii)
indenture, mortgage, promissory note, loan agreement, guarantee or
other agreement or commitment for the borrowing or lending of money or
encumbrance of assets involving more than One Hundred Thousand Dollars
($100,000) in each instance; (iv) agreement which restricts the Parent
from engaging in any line of business or from competing with any other
person; (v) warranties made with respect to products manufactured,
packaged, distributed or sold or services provided by the Parent; (vi)
any agreement which terminates, or gives another party the right to
terminate such agreement, upon the completion of the transaction
contemplated by this Agreement; or (vii) any other contract,
agreement, instrument, arrangement or commitment that is material to
the condition (financial or otherwise), results of operation, assets,
properties, liabilities, business or prospects of the Parent
(collectively, and together with all other agreements required to be
disclosed on the Parent Disclosure Schedule the "Parent Material
Contracts"). The Parent has previously furnished to Parent true,
complete and correct copies of all written agreements, as amended,
required to be listed on Section 5.11 of the Parent Disclosure
Schedule.
(b) The Parent Material Contracts are each in full force and
effect and are the valid and legally binding obligations of the Parent
and, to the best of Parent's knowledge, the other parties thereto,
enforceable in accordance with their respective terms, subject only to
bankruptcy, insolvency or similar laws affecting the rights of
creditors generally and to general equitable principles. The Parent
has not received notice of its default under any of the Parent
Material Contracts and no event has occurred which, with the passage
of time or the giving of notice or both, would constitute a default by
the Parent thereunder. To the Parent's knowledge, none of the other
parties to any of the Parent Material Contracts is in default
thereunder, nor has an event occurred which, with the passage of time
or the giving of notice or both would constitute a default by such
other party thereunder. The Parent has not received notice of the
pending or threatened cancellation, revocation or termination of any
of the Parent Material Contracts, nor are any of them aware of any
facts or circumstances which could reasonably be expected to lead to
any such cancellation, revocation or termination.
(c) Except as otherwise indicated on Section 5.11 of the
Parent Disclosure Schedule, to the Parent's knowledge, after due
inquiry, the continuation, validity and effectiveness of the Parent
Material Contracts under the current terms thereof will in no way be
affected by the consummation of the transactions contemplated by this
Agreement.
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SECTION 5.12 Litigation
There is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of Parent, threatened against Parent or any Parent
Subsidiary, and, to the knowledge of Parent, there are no existing facts or
circumstances that could reasonably be expected to result in a suit, claim,
action, proceeding or investigation. Parent is not aware of any facts or
circumstances which could reasonably be expected to result in the denial of
insurance coverage under policies issued to Parent and Parent Subsidiaries in
respect of such suits, claims, actions, proceedings and investigations. Neither
Parent nor any Parent Subsidiary is subject to any outstanding order, writ,
injunction or decree.
SECTION 5.13 Environmental Matters
Parent and the Parent Subsidiaries are in material compliance with all
applicable Environmental Laws and all Parent Permits required by Environmental
Laws. All past noncompliance of Parent or any Parent Subsidiary with
Environmental Laws or Environmental Permits has been resolved without any
pending, ongoing or future material obligation, cost or liability. Neither
Parent nor any Parent Subsidiary has released a Hazardous Material at, or
transported a Hazardous Material to or from, any real property currently or
formerly owned, leased or occupied by Parent or any Parent Subsidiary, in
violation of any Environmental Law.
SECTION 5.14 Insurance
Parent and each Parent Subsidiary is presently insured, and during
each of the past five calendar years has been insured, against such risks, as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. The Parent reasonably believes that the
policies of fire, theft, liability, medical malpractice, director and officer,
product liability and other insurance maintained with respect to the assets or
businesses of Parent and Parent Subsidiaries provide, adequate coverage against
loss. Parent has made available to Company a complete and correct list as of
the date hereof of all insurance policies maintained by Parent or the Parent
Subsidiaries, and has made available to Company complete and correct copies of
all such policies, together with all riders and amendments thereto. All such
policies are in full force and effect and all premiums due thereon have been
paid to the date hereof. Parent and the Parent Subsidiaries have complied in
all material respects with the terms of such policies.
SECTION 5.15 Properties
Parent and the Parent Subsidiaries have good title, free and clear of
all material mortgages, liens, pledges, charges or other encumbrances to all
their material tangible properties and material assets, real, personal or
mixed, reflected in the Parent's consolidated financial statements for the
quarterly period ended September 30, 1999, as being owned by Parent and the
Parent Subsidiaries as of the date thereof, other than (i) any properties or
assets that have been sold or otherwise disposed of in the ordinary course of
business since the date of such financial statements, (ii) liens
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disclosed in the notes to such financial statements and (iii) liens arising in
the ordinary course of business after the date of such financial statements or
disclosed in Section 5.15 of the Parent Disclosure Schedule. All buildings, and
all fixtures, equipment and other property and assets that are material to its
business on a consolidated basis, held under leases or sub-leases by Parent or
any Parent Subsidiary are held under valid instruments enforceable in
accordance with their respective terms, subject to applicable laws of
bankruptcy, insolvency or similar laws relating to creditors' rights generally
and to general principles of equity (whether applied in a proceeding in law or
equity). Substantially all of Parent's and the Parent Subsidiaries' equipment
in regular use has been reasonably maintained and is in serviceable condition,
reasonable wear and tear excepted.
SECTION 5.16 Opinion of Financial Advisor
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated ("▇▇▇▇ ▇▇▇▇▇") has delivered to
the board of directors of Parent its written opinion to the effect that, as of
the date hereof, the Exchange Ratio is fair to the holders of shares of Parent
Common Stock from a financial point of view (the "▇▇▇▇ ▇▇▇▇▇ Fairness
Opinion").
SECTION 5.17 Brokers
Except as set forth on Section 5.17 of Parent Disclosure Schedule, no
broker, finder or investment banker (other than ▇▇▇▇ ▇▇▇▇▇ and ▇.▇. ▇▇▇▇▇▇
Securities, Inc.) is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger based upon arrangements made by or on
behalf of Parent. Parent has heretofore made available to Parent true, complete
and correct copies of all agreements between Parent, on the one hand, and ▇▇▇▇
▇▇▇▇▇ and/or ▇.▇. ▇▇▇▇▇▇ Securities, Inc., on the other hand, pursuant to which
such firms would be entitled to any payment relating to the Merger.
SECTION 5.18 No Interested Shareholders
To Parent's knowledge, neither the Company nor any "affiliate" or
"associate" of the Company is an "interested shareholder" as those terms are
defined in 607.0901 of the FBCA.
SECTION 5.19 Governmental Authorizations
The Parent and, to the Parent's knowledge, without any independent
investigation, each Ophthalmologist/Optometrist Employee, possesses all
necessary licenses, franchises, permits and other governmental authorizations
(collectively, "Governmental Authorizations"), including, but not limited to,
all licenses, franchises, permits and authorizations for the conduct of the
Parent's business as now conducted, except for those licenses, franchises,
permits and other governmental authorizations the failure of which to possess
could not reasonably be expected to have a Parent Material Adverse Effect.
Except as set forth in Section 5.19 of the Parent Disclosure Schedule, 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 material licenses, franchises,
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permits or authorizations, except for those licenses, franchises, permits and
other governmental authorizations the failure of which to possess could not
reasonably be expected to have a Parent Material Adverse Effect . All such
licenses, franchises, permits and other authorizations are valid and in full
force and effect, except for those licenses, franchises, permits and other
governmental authorizations the failure of which to possess could not
reasonably be expected to have a Parent Material Adverse Effect. The Parent and
to the Parent's knowledge, without any independent investigation, each
Ophthalmologist/Optometrist Employee is currently in compliance therewith, and
the Parent has not received any notice that any Governmental Entity is
considering challenging, revoking, canceling, restricting, conditioning or not
renewing any material license, franchise, permit or other authorization except
for those licenses, franchises, permits and other governmental authorizations
the failure of which to possess could not reasonably be expected to have a
Parent Material Adverse Effect.
SECTION 5.20 Intellectual Property.
The Parent and the Parent Subsidiaries have ownership of or rights to
use each patent, patent application, copyright (whether or not registered),
copyright application, trademark (whether or not registered), trademark
application, trade name, service ▇▇▇▇, and other trade secret or proprietary
intellectual property owned by or used in and material to the business of the
Parent and the Parent Subsidiaries, taken as a whole (collectively, a "Parent
Intellectual Property"). The Parent has been provided with a list of all
patents, trademarks and copyrights and applications therefor owned by or
licensed to the Parent or any Subsidiary that are material to the conduct of
the business of the Parent and the Parent Subsidiaries, taken as a whole, as
now operated. To the Parent's Knowledge, none of the previous or current
development, manufacture, marketing or distribution of products or services of
or by the Parent or any Parent Subsidiary infringes the right of any other
person, except for any such infringements that, in the aggregate, have not
resulted in, and could not reasonably be expected to result in, a Parent
Material Adverse Effect. To the Parent's Knowledge, without any independent
investigation, no other person is infringing the rights of the Parent or any
Parent Subsidiary in any such Parent Intellectual Property, except for any such
infringements that, in the aggregate, have not resulted in, and could not
reasonably be expected to result in, a Parent Material Adverse Effect. To the
best of Parent's knowledge, Parent's material software and hardware are year
2000 compliant, except to the extent noncompliance should not or could not
reasonably be expected to cause a Parent Material Adverse Effect.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business by Company Pending the Closing
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, Company shall not
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knowingly take any action a principal purpose of which is, and the reasonably
likely result of which would be, a material delay in or interference with the
consummation of the Merger.
Company agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, and except as
set forth below or as a result of entering into this Agreement, (x) the
respective businesses of Company and the Company Subsidiaries shall be
conducted only in, and Company and the Company Subsidiaries shall not take any
action except in, the ordinary course of business consistent with past practice
and (y) Company shall use all commercially reasonable efforts to keep available
the services of such of the current officers, significant employees and
consultants of Company and the Company Subsidiaries and shall use commercially
reasonable efforts to preserve the current relationships of Company and the
Company Subsidiaries with such of the corporate partners, customers, suppliers
and other persons with which Company or any Company Subsidiary has significant
business relations in order to preserve substantially intact its business
organization. By way of amplification and not limitation, neither Company nor
any Company Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the
following without the prior written consent of Parent and except as a result of
entering into this Agreement or except as set forth in Section 6.01 of the
Company Disclosure Schedule:
(a) amend or otherwise change its certificate of
incorporation or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale,
pledge, disposition, grant, transfer, lease, license or encumbrance
of, (i) any shares of capital stock of Company or any Company
Subsidiary of any class, or securities convertible into or
exchangeable or exercisable for any shares of such capital stock, or
any options, warrants or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of Company or
any Company Subsidiary, other than the issuance of shares of Company
Common Stock pursuant to the exercise of stock options theretofore
outstanding as of the date of this Agreement, or (ii) any material
property or assets of Company or any Company Subsidiary, including,
but not limited to, the property or assets of MEC, except providing
products and services in the ordinary course of business consistent
with past practice;
(c) (i) except as to business interests in new refractive
centers or ambulatory surgical centers pursuant to the Company's
business plan and after written notice to Parent, acquire (including,
without limitation, by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation, partnership, other
business organization or person or any division thereof; (ii) incur
any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person (other than Company and
Company Subsidiaries) for borrowed money or make any loans or
advances, other than routine employee loans to employees other
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than Company officers (not to exceed $1,000 to any individual),
material to the business, assets, liabilities, financial condition or
results of operations of Company and the Company Subsidiaries, taken
as a whole, other than borrowing under the Company's credit facility
for use in operating the Company in the ordinary course of business,
or to pay or discharge debt or liabilities for an amount less than
reflected or reserved against on the Company Balance Sheet; (iii)
terminate, cancel or request any material change in, or agree to any
material change in, any Company Material Contract; (iv) make or
authorize any capital expenditure, other than capital expenditures in
the ordinary course of business consistent with past practice that
have been included in the fiscal year 2000 budget ("Budget") delivered
to Parent and disclosed in writing to Parent and that are not, in the
aggregate, in excess of $75,000 for Company and the Company
Subsidiaries taken as a whole; or (v) enter into or amend any
contract, agreement, commitment or arrangement that, if fully
performed, would not be permitted under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except that any Company
Subsidiary may pay dividends or make other distributions to Company or
any other Company Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital
stock;
(f) except as contemplated herein, amend or change the period
(or permit any acceleration, amendment or change) of exercisability of
options granted under the Company Stock Plans or other options and
warrants, reprice any options or warrants, or authorize cash payments
in exchange for any Company Stock Options granted under any of such
plans;
(g) except in connection with the closing of the Practice
Dispositions, amend the terms of, repurchase, redeem or otherwise
acquire, or permit any Company Subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of any
Company Subsidiary or propose to do any of the foregoing;
(h) enter into any contract or agreement, which, if entered
into prior to the date hereof, would be a Material Contract, amend or
terminate any existing Material Contract, or take any action which
would terminate an existing Material Contract, or would give any party
to an existing Material Contract the right to terminate such Material
Contract;
(i) increase the compensation payable or to become payable to
its directors, officers, consultants or employees, except as required
by the agreements which are set forth in Section 6.01 of the Company
Disclosure Schedule, or grant any rights to severance or termination
pay to, or enter into any employment or severance agreement which
provides benefits upon a change in control of Company that would be
triggered by the Merger with, any director, officer, consultant or
other employee of Company or any Company Subsidiary who is not
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currently entitled to such benefits from the Merger, establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any director, officer, consultant or employee of Company or
any Company Subsidiary, except to the extent required by applicable
Law, or enter into or amend any contract, agreement, commitment or
arrangement between Company or any Company Subsidiary and any of
Company's directors, officers, consultants or employees;
(j) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than (x) the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against on the consolidated balance
sheet of Company and the consolidated the Company Subsidiaries dated
as of September 30, 1999 included in Company's quarterly report on
Form 10-Q for the period then ended (the "Company Balance Sheet") but
only to the extent reflected or to the extent of such reserves or (y)
incurred in the ordinary course of business since September 30, 1999
or (z) to pay or discharge any such liability for an amount less than
reflected or reserved against on the Company Balance Sheet;
(k) except for accounting changes for discontinued business
operations of the Practice Dispositions and the Corporate Optometry
businesses in accordance with GAAP, make any change with respect to
Company's accounting policies, principles, methods or procedures,
including, without limitation, revenue recognition policies, other
than as required by GAAP;
(l) make any material Tax election or settle or compromise
any material Tax liability; or
(m) except as otherwise permitted in connection with this
Agreement, authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take
any action which would make any of the representations or warranties
of Company contained in this Agreement untrue or incorrect or result
in any of the conditions to the Merger set forth herein not being
satisfied.
SECTION 6.02 Notices of Certain Events
Each of Parent and Company shall give prompt notice to the other of
(i) any notice or other communication from any person alleging that the consent
of such person is or may be required in connection with the Merger; (ii) any
notice or other communication from any Governmental Entity in connection with
the Merger; (iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting Parent or the Parent Subsidiaries or Company or the Company
Subsidiaries, respectively, or that relate to the consummation of the Merger;
(iv) the occurrence of a default or event that, with the giving of notice or
lapse of time or both, will become a default under any Parent Material Contract
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or Company Material Contract, respectively; and (v) any change that could
reasonably be expected to have a Parent Material Adverse Effect or a Company
Material Adverse Effect, respectively, or to delay or impede the ability of
either Parent or Company, respectively, to perform their respective obligations
pursuant to this Agreement and to effect the consummation of the Merger.
SECTION 6.03 Access to Information; Confidentiality
(a) Except as required pursuant to any confidentiality
agreement or similar agreement or arrangement to which Parent or
Company or any of the Parent Subsidiaries or the Company Subsidiaries
is a party or pursuant to applicable Law or the regulations or
requirements of any stock exchange or other regulatory organization
with whose rules a party hereto is required to comply, from the date
of this Agreement to the Effective Time, Parent and Company shall (and
shall cause the Parent Subsidiaries and Company Subsidiaries,
respectively, to) (i) provide to the other (and its officers,
directors, employees, accountants, consultants, legal counsel, agents
and other representatives (collectively, "Representatives")) access at
reasonable times upon prior notice to its and its subsidiaries'
officers, employees, agents, properties, offices and other facilities
and to the books and records thereof, and (ii) furnish promptly such
information concerning its and its subsidiaries' business, properties,
contracts, assets, liabilities and personnel as the other party or its
Representatives may reasonably request. All such investigations and
access shall be conducted in a manner as not to interfere unreasonably
with the business operations of the Company. No investigation
conducted pursuant to this Section 6.03 shall affect or be deemed to
modify any representation or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause
their respective Representatives to comply with, all of their
respective obligations under the Confidentiality Agreement with
respect to the information disclosed pursuant to this Section 6.03 or
pursuant to the Confidentiality Agreement.
SECTION 6.04 No Solicitation of Transactions
(a) Except as provided in Section 6.04(b) below, Company
shall not, directly or indirectly, and shall cause its Representatives
not to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing nonpublic information), any inquiries
or the making of any proposal or offer (including, without limitation,
any proposal or offer to its stockholders) that constitutes, or may
reasonably be expected to lead to, any Competing Transaction, or enter
into or maintain or continue discussions or negotiate with any person
in furtherance of such inquiries or to obtain a Competing Transaction,
or agree to or endorse any Competing Transaction, or authorize or
permit any of Company's Representatives or subsidiaries, or any
Representative retained by Company's subsidiaries, to take any such
action; provided, however, that nothing contained in this Section
6.04(a) shall prohibit the board of directors of Company (i) from
complying with Rule 14d-9 or 14e-2(a) promulgated under the Exchange
Act with regard to a tender or exchange offer not made in violation of
this Section 6.04(a) or (ii) prior to receipt of the approval by the
stockholders of Company of this Agreement and the Merger from
providing information (subject to a confidentiality
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agreement at least as restrictive as the Confidentiality Agreement) in
connection with, and negotiating, another unsolicited, bona fide
written proposal regarding a Competing Transaction that (x) Company's
board of directors shall have concluded in good faith, after
considering applicable state law, on the basis of the advice of
independent outside counsel that such action is necessary to prevent
Company's board of directors from violating its fiduciary duties to
Company's stockholders under applicable law, and with respect to which
Company's board of directors shall have determined (based upon the
advice of Company's independent financial advisors) in the proper
exercise of its fiduciary duties to Company's stockholders that the
acquiring party is capable of consummating such Competing Transaction
on the terms proposed, and (y) Company's board of directors shall have
determined in the proper exercise of its fiduciary duties to Company's
stockholders that such Competing Transaction provides greater value to
the stockholders of Company than the Merger (based upon the written
opinion of Company's independent financial advisors that such
Competing Transaction is superior from a financial point of view) (any
such Competing Transaction being referred to herein as a "Superior
Proposal"). Any violation of the restrictions set forth in this
Section 6.04(a) by any Representative of Company or any of its
Subsidiaries, whether or not such Person is purporting to act on
behalf of Company or otherwise, shall be deemed to be a breach of this
Section 6.04(a) by Company. Company shall notify Parent promptly if
any proposal or offer, or any inquiry or contact with any person with
respect thereto, regarding a Competing Transaction is made, such
notice to include the identity of the person making such proposal,
offer, inquiry or contact, and the terms of such Competing
Transaction, and shall keep Parent apprised, on a current basis, no
later than 24 hours after any change or modification of any such
Competing Transaction, of the status of such Competing Transaction and
of any modifications to the terms thereof. Company immediately shall
cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to a
Competing Transaction. Company shall not release any third party from,
or waive any provision of, any confidentiality or standstill agreement
to which it is a party.
(b) Except as permitted by this Section 6.04(b), the
Company's Board of Directors shall not (i) withdraw, modify or change
its approval or recommendation of this Agreement, or propose publicly
to withdraw, modify or change the Merger or any of the transactions
contemplated hereby, (ii) approve or recommend or publicly propose to
approve or recommend a Competing Transaction, (iii) cause the Company
to enter into any letter agreement, letter of intent, agreement in
principle or definitive agreement or similar agreement providing for a
Competing Transaction, or (iv) resolve to do any of the foregoing,
unless prior to the Company Stockholders' Meeting, the Company
receives an unsolicited proposal for a Competing Transaction and the
Board of Directors or the Company determines reasonably and in good
faith, after due investigation, that (a) such proposal is a Superior
Proposal based upon the written opinion of the Company's independent
financial advisors that such Competing Transaction is superior from a
financial point of view, (b) the Person making such Superior Proposal
is reasonably capable of consummating such Superior Proposal in a
timely fashion and (c) based upon the advice of independent outside
counsel, the failure of the Board of Directors of the Company to
withdraw or modify its approval or recommendation of this Agreement or
the Merger, or approve or recommend such Superior Proposal, would be
inconsistent with its fiduciary duties under applicable law. In such
case, the Board may withdraw or modify its
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recommendation, and approve and recommend such Superior Proposal,
provided the Board of Directors of the Company (i) at least five (5)
Business Days prior to taking such action, provides to Parent written
notice of the Company's intention to accept the Superior Proposal,
(ii) during such period, gives parent a reasonable opportunity to
propose modifications to the Merger Consideration and negotiates such
modifications in good faith with the objective of allowing Parent to
match the Superior Proposal and (iii) at the end of such period, (A)
reasonably and in good faith continues to believe that the other
proposal is a Superior Proposal, (B) simultaneously terminates this
Agreement, (C) concurrently causes the Company to enter into a
definitive acquisition agreement with respect to such Superior
Proposal and (D) concurrently pays to Parent the Termination Fee and
Parent's Expenses as provided in Section 9.05. Nothing contained in
this Section 6.04(b) shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14d-9
or Rule 14e-2(a) promulgated under the Exchange Act; provided that the
Company does not withdraw or modify its position with respect to the
Merger or approve or recommend a proposal for a Competing Transaction
except as provided in this Section 6.04(b).
SECTION 6.05 TaxFree Transaction
From and after the date of this Agreement, each party hereto shall use
all reasonable efforts to cause the Merger to qualify, and shall not knowingly
take any actions or cause any actions to be taken which could reasonably be
expected to prevent the Merger from qualifying as a "reorganization" under
Section 368(a) of the Code.
SECTION 6.06 Control of Operations
Nothing contained in this Agreement shall give Parent, directly or
indirectly, the right to control or direct the operations of Company and the
Company Subsidiaries prior to the Effective Time. Prior to the Effective Time,
Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.
SECTION 6.07 Further Action; Consents; Filings
(a) Upon the terms and subject to the conditions hereof, each
of the parties hereto shall use all reasonable efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary, proper or advisable under applicable Law
or otherwise to consummate and make effective the Merger, (ii) obtain
from any Governmental Entity any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by
Parent or Company or any of their respective subsidiaries in
connection with the authorization, execution and delivery of this
Agreement and the consummation of the Merger and (iii) make all
necessary filings, and thereafter make any other required or
appropriate submissions, with respect to this Agreement and the Merger
required under (A) the rules and regulations of the AMEX or the NNM,
as the case may be, (B) the Securities Act, the Exchange Act and any
other applicable Federal or state securities Laws, (C) the HSR Act, if
any, and (D) any other applicable Law. The parties hereto shall
cooperate and consult with each other in connection with the making of
all such filings, including by providing copies of all such documents
to the nonfiling parties and their advisors prior to filing, and none
of
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the parties shall file any such document if any of the other parties
shall have reasonably objected to the filing of such document. No
party shall consent to any voluntary extension of any statutory
deadline or waiting period or to any voluntary delay of the
consummation of the Merger at the behest of any Governmental Entity
without the consent and agreement of the other parties hereto, which
consent shall not be unreasonably withheld or delayed. The Parent
shall not be required to divest itself or the Company of any assets or
business in order to obtain approval in connection with the HSR Act or
otherwise.
(b) Each of Company and Parent will give (or will cause their
respective subsidiaries to give) any notices to third persons, and
use, and cause their respective subsidiaries to use, reasonable
efforts to obtain any consents from third persons necessary, proper or
advisable (as determined in good faith by Parent with respect to such
notices or consents to be delivered or obtained by Company) to
consummate the transactions contemplated by this Agreement.
SECTION 6.08 Additional Reports
Company and Parent shall each furnish to the other copies of any
reports of the type referred to in Sections 4.07 and 5.06, which it files with
the SEC on or after the date hereof, and Company and Parent, as the case may
be, covenant and warrant that as of the respective dates thereof, such reports
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any unaudited consolidated interim financial statements included in
such reports (including any related notes and schedules) will fairly present in
all material respects the financial position of Company and its consolidated
subsidiaries or Parent and its consolidated subsidiaries, as the case may be,
as of the dates thereof and the results of operations and changes in financial
position or other information including therein for the periods or as of the
date then ended (subject, where appropriate, to normal year-end adjustments),
in each case in accordance with past practice and U.S. GAAP consistently
applied during the periods involved (except as otherwise disclosed in the notes
thereto).
SECTION 6.09 Conduct of Business by Parent
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, Parent shall not knowingly take any action a principal purpose
of which is, and the reasonably likely result of which would be, a material
delay in or interference with the consummation of the Merger. Neither Parent
nor any Parent Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the
following without the prior written consent of Company, except as a result of
entering into or as contemplated by this Agreement or except as set forth in
Section 6.09 of the Parent Disclosure Schedule:
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(a) amend or otherwise change its certificate of
incorporation or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale,
pledge, disposition, grant, transfer, lease, license or encumbrance
of, (i) more than outstanding 20% of the shares of capital stock of
Parent or any shares of capital stock of a Parent Subsidiary of any
class, or securities convertible into or exchangeable or exercisable
for any shares of such capital stock, or any options, warrants or
other rights of any kind to acquire more than 20% of the outstanding
shares of such capital stock or any other ownership interest
(including, without limitation, any phantom interest), of Parent or
any Parent Subsidiary, other than the issuance of shares of Parent
common stock pursuant to the exercise of stock options granted
pursuant to the Parent Stock Plans, or (ii) any material property or
material assets of Parent or any Parent Subsidiary, except providing
products and services in the ordinary course of business consistent
with past practice;
(c) (i) an acquisition (including, without limitation, by
merger, consolidation, or acquisition of stock or assets) of any
interest in any corporation, partnership, other business organization
or person or any division thereof which would be considered a
"Significant Subsidiary" of the Parent (after taking into effect the
Merger); (ii) except in connection with an acquisition permitted
pursuant to the foregoing clause (i), incur any material indebtedness
for borrowed money or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person
which are material to the Parent (other than Parent and Parent
Subsidiaries) for borrowed money or make any loans or advances,
material to the business, assets, liabilities, financial condition or
results of operations of Parent and the Parent Subsidiaries, taken as
a whole, other than borrowings under the Parent's credit facility for
use in operating the business; or (iii) enter into or amend any
contract, agreement, commitment or arrangement in which the Parent is
obligated to perform and, if fully performed, would not be permitted
under this Section 6.09(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except that any Parent Subsidiary
may pay dividends or make other distributions to Parent or any other
Parent Subsidiary;
(e) reclassify, combine, split or subdivide any of its
capital stock;
(f) amend or change the period (or permit any acceleration,
amendment or change) of exercisability of options granted under the
Parent Stock Plans or other options and warrants or take any action to
reprice any such options and warrants;
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(g) authorize or enter into any formal or informal agreement
or otherwise make any commitment to do any of the foregoing or take
any action which would result in any of the conditions to the merger
set forth herein not being satisfied.
(h) take any action resulting in the delisting of Parent from
the Amex; and
(i) take any action resulting in a Parent Material Adverse
Effect.
SECTION 6.10 Post Merger Directors and Officers
The Board of Directors of Parent will take all actions necessary to
increase the number of members of the Board of Directors of Parent and to cause
three designees of the Company, with one such designee being an independent
director as determined under the new rules of the AMEX (the "Company
Nominees"), to be appointed to the Board of Directors of Parent as of the
Effective Time, each Company Nominee to hold office in accordance with the
Certificate of Incorporation and By-laws of Parent.
SECTION 6.11 Bank Restructuring
The Company and the Company's Subsidiaries will use commercially
reasonable efforts to enter into a Letter of Intent (the "Letter of Intent")
with Bank of Montreal (the "Company Bank") no later than forty-five (45) days
after the execution of this Agreement, which provides, among other things, that
each of the parties to the Existing Credit Agreement agrees to proceed in good
faith to amend the Existing Credit Agreement upon consummation of the Merger on
terms and provisions which in the aggregate are no less favorable to the
Company than those contained in Parent's existing credit facility with Bank
Austria and which are acceptable to each of Parent and the Company, and that
Parent is a third party beneficiary to the Letter of Intent, and the Company
shall use its commercially reasonable efforts to finalize the amendment in
accordance with the Letter of Intent. The Parent will use commercially
reasonable efforts to enter into a Letter of Intent (the "Bank Austria Letter
of Intent") with Bank Austria, no later than forty-five (45) days after the
execution of this Agreement, which provides, among other things, that each of
the parties to the Bank Austria Credit Agreement agrees to proceed in good
faith to amend the Bank Austria Credit Agreement upon consummation of the
Merger upon terms and provisions which are acceptable to each of Parent and the
Company, and Parent shall use its best efforts to finalize the amendment in
accordance with the Bank Austria Letter of Intent. The parties agree to
consolidate the loans into one senior credit facility with Company Bank and
Bank Austria serving as co-agents in the event the banks request the same.
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SECTION 6.12 Disposition of Practices
The Company will use its commercially reasonable efforts to (i)
complete the termination of all of its management relationships with all of its
Ophthalmology and Optometry Practices (including the Corporate Optometry
practices), including any practice that the Company is obligated under a
contract or otherwise to purchase, all of which Ophthalmology and Optometry
Practices (including the Corporate Optometry practices) are set forth in
Section 6.12 of the Company Disclosure Schedule (the "Practices"); provided,
however, that such Practices shall not include for the purposes of this Section
6.12 the Company's ▇▇▇▇▇▇▇ operation in Arizona ("▇▇▇▇▇▇▇") if the Parent and
the Company agree in writing within 45 days from the date hereof to maintain
▇▇▇▇▇▇▇ and (ii) transfer all of the assets and leases relating to the
Practices back to the Practices and cause or have an agreement which will cause
all of such Practices to assume all liabilities and obligations relating to
such Practices (collectively, the "Practice Dispositions"), on such terms which
are satisfactory to the Parent, pursuant to which the Company shall obtain
releases from the Practices containing language substantially the same as set
forth on Annex J hereto whereby the Company will be unconditionally and
irrevocably released and forever discharged from all rights, claims, demands,
obligations, liabilities and damages (collectively, the "Obligations"), whether
accrued or unaccrued, asserted or unasserted and whether known or unknown
relating to or in connection with the Company's arrangements and agreements
with the Practices which ever existed, now exist or may hereafter exist, except
with respect to any Obligations incurred after the Effective Time pursuant to
ongoing relationships with Practices approved by Parent. The Company will
cancel any options to purchase the Company's securities held by such Practices
or their stockholders, affiliates or related parties in connection with the
Practice Dispositions, effective no later than the date of the closing of such
Practice Dispositions. The net proceeds received by the Company in connection
with the Practice Dispositions will be used substantially by the Company to
reduce the amount outstanding under the Existing Credit Agreement and for
operations and the settlement of debts approved by the Company Bank and Parent.
SECTION 6.13 Financing Commitments
The Parent will use its commercially reasonable efforts to enter into
a financing commitment ("Financing Term Sheet") on or before the date that is
forty-five (45) days from the date hereof, which commitment may be subject to
the exception, among others, that the investor shall be satisfied with the 1999
year-end audited financial statements of the Company, and which commitment
involves a Financing in an amount not less than Thirty Million Dollars
($30,000,000) (the "Financing") through the issuance of equity, equity linked
or subordinated debt securities in one or more public or private transactions,
which commitment terms shall be reasonably acceptable to Parent and Company,
and Parent shall use its commercially reasonable efforts to finalize the
Financing in accordance with such commitment.
SECTION 6.14 Standstill Agreement
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The Company will use its commercially reasonable efforts to enter into
a Standstill Agreement (the "Standstill Agreement") with the Company Bank
within forty-five (45) days of the execution of this Agreement.
SECTION 6.15 Voting
Each of the stockholders who granted an irrevocable proxy pursuant to
the Company Stockholder Agreement and the Parent Stockholder Agreement, as the
case may be, will vote any shares of the Company's Common Stock held by them,
or which they have the right to vote, in favor of approval of the Merger, or
the issuance of shares in connection with the Merger, as the case may be, in
person, or by proxy.
SECTION 6.16 Waiver
The Company will use its commercially reasonable efforts to obtain, on
or before the date that is 45 days after the date of this Agreement, (i) a
release and waiver (the "Block Waiver") of all restrictions set forth in
Section 10, and any provisions related thereto, of that certain Asset Purchase
Agreement, dated June 4, 1999, among Block Vision Inc., Block Buying Group LLC
and the Company (the "Block Agreement") or (ii) a final nonappealable judgment
from a Florida court of competent jurisdiction holding that Section 10 of the
Block Agreement, and the provisions related thereto, are not enforceable
against Parent.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Registration Statement; Joint Proxy Statement
(a) As promptly as practicable after the execution of this
Agreement, Parent and Company shall jointly prepare and shall file
with the SEC a document or documents that will constitute (i) the
prospectus forming part of the registration statement on Form S-4 of
Parent (together with all amendments thereto, the "Registration
Statement"), in connection with the registration under the Securities
Act of Parent Common Stock to be issued to Company's stockholders
pursuant to the Merger and (ii) the joint proxy statement with respect
to the Merger relating to the special meetings of Company's
stockholders to be held to consider approval of this Agreement and the
Merger (the "Company Stockholders' Meeting") and of Parent's
stockholders to be held to consider approval of the issuance of Parent
Common Stock (the "Share Issuance") to Company's stockholders pursuant
to the Merger (the "Parent Stockholders' Meeting") (together with any
amendments thereto, the "Joint Proxy Statement"). Copies of the Joint
Proxy Statement shall be provided to the AMEX and the NNM in
accordance with its rules. Each of the parties hereto shall use all
reasonable efforts to cause the Registration Statement to become
effective as promptly as practicable after the date hereof, and, prior
to the effective date of the Registration Statement, the parties
hereto shall take all action
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required under any applicable Laws in connection with the issuance of
shares of Parent Common Stock pursuant to the Merger. Parent or
Company, as the case may be, shall furnish all information concerning
Parent or Company as the other party may reasonably request in
connection with such actions and the preparation of the Registration
Statement and the Joint Proxy Statement. As promptly as practicable
after the effective date of the Registration Statement, the Joint
Proxy Statement shall be mailed to the stockholders of Company and of
Parent. Each of the parties hereto shall cause the Joint Proxy
Statement to comply as to form and substance as to such party in all
material respects with the applicable requirements of (i) the Exchange
Act, (ii) the Securities Act, (iii) the rules and regulations of the
AMEX and the NNM.
(b) The Joint Proxy Statement shall include (i) the approval
of the Merger and the recommendation of the board of directors of
Company to Company's stockholders that they vote in favor of approval
of this Agreement and the Merger, subject to the right of the board of
directors of the Company to withdraw its recommendation and recommend
a Superior Proposal in compliance with Section 6.04 of this Agreement,
and (ii) the opinion of PaineWebber referred to in Section 4.19. The
Joint Proxy Statement shall include (A) the approval of the Share
Issuance and the recommendation of the board of directors of Parent to
Parent's stockholders that they vote in favor of approval of the Share
Issuance, and (B) the opinion of ▇▇▇▇ ▇▇▇▇▇ referred to in Section
5.16.
(c) No amendment or supplement to the Joint Proxy Statement
or the Registration Statement shall be made without the approval of
Parent and Company, which approval shall not be unreasonably withheld
or delayed. Each of the parties hereto shall advise the other parties
hereto, promptly after it receives notice thereof, of the time when
the Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction,
or of any request by the SEC for amendment of the Joint Proxy
Statement or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
(d) None of the information supplied by Company for inclusion
or incorporation by reference in the Registration Statement or the
Joint Proxy Statement shall, at the respective times filed with the
SEC or other regulatory agency and, in addition, (A) in the case of
the Joint Proxy Statement, at the date it or any amendments or
supplements thereto are mailed to stockholders of Parent and Company,
at the time of the Company Stockholders' Meeting, at the time of the
Parent Shareholders' Meeting and at the Effective Time and (B) in the
case of the Registration Statement, when it becomes effective under
the Securities Act and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any
event or circumstance relating to Company or any Company Subsidiary,
or their respective officers or directors, should be discovered by
Company that should be set forth in an amendment or a supplement to
the Registration Statement or the Joint Proxy Statement, Company shall
promptly inform Parent. All documents that Company is responsible for
filing with the SEC in connection with the Merger will comply as to
form in all
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material respects with the applicable requirements of the rules and
regulations of the Securities Act and the Exchange Act.
(e) None of the information supplied by Parent for inclusion
or incorporation by reference in the Registration Statement or the
Joint Proxy Statement shall, at the respective times filed with the
SEC or other regulatory agency and, in addition, (A) in the case of
the Joint Proxy Statement, at the date it or any amendments or
supplements thereto are mailed to stockholders of Parent and Company,
at the time of Company Stockholders' meeting, at the time of the
Parent Shareholders' Meeting and at the Effective Time and (B) in the
case of the Registration Statement, when it becomes effective under
the Securities Act and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. If, at any time prior to the Effective Time, any
event or circumstance relating to Parent or any Parent Subsidiary, or
their respective officers or directors, should be discovered by Parent
that should be set forth in an amendment or a supplement to the
Registration Statement or the Joint Proxy Statement, Parent shall
promptly inform Company. All documents that Parent is responsible for
filing with the SEC in connection with the Merger will comply as to
form in all material respects with the applicable requirements of the
rules and regulations of the Securities Act and the Exchange Act.
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SECTION 7.02 Stockholders' Meetings
Company shall call and hold the Company Stockholders' Meeting and
Parent shall call and hold the Parent Stockholders' Meeting as promptly as
practicable after the date hereof for the purpose of voting upon the approval
of this Agreement and the Merger or the Share Issuance, as the case may be,
pursuant to the Joint Proxy Statement, and Company and Parent shall use all
reasonable efforts to hold the Parent Stockholders' Meeting and the Company
Stockholders' Meeting on the same day and as soon as practicable after the date
on which the Registration Statement becomes effective. Nothing herein shall
prevent the Company or the Parent from adjourning or postponing the Company
Stockholders' Meeting or the Parent Stockholders' Meeting, as the case may be,
if there are insufficient shares of Company Common Stock or Parent Common
Stock, as the case may be, necessary to conduct business at their respective
meetings of the stockholders. Unless Company's board of directors has withdrawn
its recommendation of this Agreement and the Merger in compliance with Section
6.04. Company shall use all reasonable efforts to solicit from its stockholders
proxies in favor of the approval of this Agreement and the Merger pursuant to
the Joint Proxy Statement and shall take all other action necessary or
advisable to secure the vote or consent of stockholders required by the FBCA or
applicable other stock exchange requirements to obtain such approval. Parent
shall use all reasonable efforts to solicit from its stockholders proxies in
favor of the Share Issuance pursuant to the Joint Proxy Statement and shall
take all other action necessary or advisable to secure the vote or consent of
stockholders required by the FBCA or applicable stock exchange requirements to
obtain such approval. Each of the parties hereto shall take all other action
necessary or, in the opinion of the other parties hereto, advisable to promptly
and expeditiously secure any vote or consent of stockholders required by
applicable Law and such party's certificate of incorporation and bylaws to
effect the Merger.
SECTION 7.03 Affiliates
(a) Company will use reasonable efforts to obtain an executed
letter agreement substantially in the form of Annex D hereto from (i)
each person identified in Section 4.18 of the Company Disclosure
Schedule within 15 days following the execution and delivery of this
Agreement and (ii) from any person who, to the knowledge of Company,
may be deemed to have become an affiliate of Company after the date of
this Agreement and prior to the Effective Time as soon as practicable
after attaining such status. The foregoing notwithstanding, Parent
shall be entitled to place legends as specified in the Affiliate
Agreement on the certificates evidencing any of the Parent Common
Stock to be received by (i) any affiliate of Company or (ii) any
person Parent reasonably identifies (by written notice to Company) as
being a person who is an "affiliate" within the meaning of Rule 145
promulgated under the Securities Act, and to issue appropriate stop
transfer instructions to the transfer agent for such Parent Common
Stock, consistent with the terms of the Affiliate Agreement,
regardless of whether such person has executed Affiliate Agreement and
regardless of whether such person's name and address appear on Section
4.18 of the Company Disclosure Schedule.
SECTION 7.04 Directors' and Officers' Indemnification and Insurance
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(a) Parent and the Merger Sub agree that all rights to
indemnification, advancement of expenses, exculpation, limitation of
liability and any and all similar rights now existing in favor of each
present and former director, officer, employee and agent of Company
and each Company Subsidiary (collectively, the "Indemnified Parties")
as provided in the Company's present charter or by-laws in effect on
the date hereof, shall survive the Merger and shall continue in full
force and effect for a period of five years from the Effective Time,
which provisions shall not be amended, repealed or otherwise modified
for a period of five years from the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who at any
time prior to the Effective Time were directors, officers, employees
or agents of the Company, unless such modification shall be required
by law, and Parent agrees to cause the Surviving Corporation to comply
with its obligations thereunder; provided, however, that in the event
any claim or claims are asserted or made within such five-year period,
all rights to indemnification in respect to any such claim or claims
shall continue until the disposition of any and all such claims.
(b) In the event the Company or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or
Surviving Corporation or entity of such consolidation or merger or
(ii) transfers a material amount of its properties and assets to any
person in a single transaction or a series of transactions, then, and
in each such case, Parent will make or cause to be made proper
provision so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, assume the indemnification
obligations described herein for the benefit of the Indemnified
Parties as a condition to such merger, consolidation or transfer
becoming effective.
(c) The provisions of this Section 7.04 are (i) intended to
be for the benefit of, and will be enforceable by, each of the
Indemnified Parties and (ii) in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such
person may have by contract or otherwise.
(d) Parent agrees, as soon as practicable after the Effective
Time, to cause the Surviving Corporation to use commercially
reasonable efforts to purchase tail coverage, if available, for the
directors' and officers' liability insurance policies currently
maintained by Company covering a period of five years after the
Effective Time; provided, however, that in no event shall Parent be
required to expend in excess of $250,000 on the premium for such five
year tail coverage. To the extent that the premium for such tail
coverage exceeds $250,000, Surviving Corporation shall pay such
additional premium amount (the "Additional Premium Amount"). In the
event that such tail coverage is not available, the Surviving
Corporation shall have no obligation to purchase such tail coverage,
but shall maintain in effect the Company's directors' and officers'
liability insurance policies in effect as of the date hereof or, if
not available, directors' and officers' liability insurance policies
covering the directors and officers of the Company (and their
respective heirs and executors, if such coverage may be obtained at no
additional cost), with coverages and other terms substantially as
favorable to such directors and officers as is currently in effect;
provided, however, that in no event shall the Surviving Corporation be
required to expend in any one year in excess of 150% of the annual
premium currently paid by Company for such coverage, which current
premium amount
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is set forth in Section 7.04 of the Company Disclosure Schedule, and
if the premium for such coverage exceeds such amount, Parent shall
purchase a policy with the greatest coverage available for such 150%
of the annual premium; and provided, further, that the cumulative
annual premiums to be paid for such policies over a five-year period
shall be projected by Parent's insurance broker in good faith on or
prior to the Exchange Ratio Adjustment Date (the "Projected Cumulative
Amount"). (The amount by which the Projected Cumulative Amount exceeds
$250,000 is herein referred to as the "Excess Projected Cumulative
Amount".)
SECTION 7.05 No Shelf Registration
Parent shall not be required to amend or maintain the effectiveness of
the Registration Statement for the purpose of permitting resale of the shares
of Parent Common Stock received pursuant hereto by the persons who may be
deemed to be "affiliates" of Company within the meaning of Rule 145 promulgated
under the Securities Act.
SECTION 7.06 Public Announcements
The initial press release concerning the Merger shall be a joint press
release and, thereafter, Parent and Company shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or the Merger and shall not issue any such press
release or make any such public statement without the prior written approval of
the other, except to the extent required by applicable Law or the requirements
of the rules and regulations of the AMEX and the NNM, in which case the issuing
party shall use all reasonable efforts to consult with the other party before
issuing any such release or making any such public statement.
SECTION 7.07 AMEX Listing
Prior to the Effective Time, Parent shall file with the AMEX a
Notification Form for Listing of Additional Shares with respect to the Parent
Common Stock issued or issuable in connection with the Merger.
SECTION 7.08 Blue Sky
Parent shall use all reasonable efforts to obtain prior to the
Effective Time all necessary permits and approvals required under Blue Sky Laws
to permit the distribution of the shares of Parent Common Stock to be issued in
accordance with the provisions of this Agreement.
SECTION 7.09 Acquisition of Company Capital Stock
Prior to the Effective Time, neither Parent, nor any of Parent
Subsidiaries or Affiliates will, nor will they assist or encourage others to,
directly or indirectly, acquire or attempt to acquire ownership of more than
five percent (5%) of the Company's capital stock.
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Prior to the Effective Time, neither Company, nor any of Company
Subsidiaries or Affiliates will, nor will they assist or encourage others to,
directly or indirectly, acquire or attempt to acquire ownership of more than
five percent (5%) of Parent's capital stock.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party to Consummate
the Merger
The obligations of the parties hereto to consummate the Merger are
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following conditions:
(a) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC and not concluded or withdrawn;
(b) this Agreement and the Merger shall have been duly
approved by the requisite vote of stockholders of Company in
accordance with the FBCA and by the requisite vote of the stockholders
of Parent in accordance with the DGCL and the rules of the AMEX;
(c) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other
Governmental Entity shall have issued any order, which is then in
effect and has the effect of making the Merger illegal or otherwise
prohibiting its consummation;
(d) any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act or any other
applicable competition, merger control or similar Law shall have
expired or been terminated;
(e) all material consents, approvals and authorizations
legally required to be obtained to consummate the Merger shall have
been obtained from all Governmental Entities;
(f) the shares of Parent Common Stock to be issued in the
Merger shall be registered under the Securities Act and shall have
been authorized for listing on the AMEX, subject to notice of
issuance;
(g) the Parent shall have entered into an amendment to its
existing credit agreement with Bank Austria having terms substantially
in accordance with the terms outlined in the Bank Austria Letter of
Intent referred to in Section 6.11 hereof;
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(h) the Parent shall have obtained not less then $30,000,000
from the Financing pursuant to the terms contained in the Financing
Term Sheet described in Section 6.13;
(i) on or before Exchange Ratio Adjustment Date, all consents
of third parties required pursuant to the terms of any Company
Material Contract and any Parent Material Contract as a result of the
Merger shall have been obtained including those specified in Section
8.01(i) of the Parent Disclosure Schedule and 8.01(i) of the Company
Disclosure Schedule, except where the failure to obtain, individually
or in the aggregate, any such consent(s) could not reasonably be
expected to result in, individually or in the aggregate, a Company
Material Adverse Effect or Parent Material Adverse Effect, as the case
may be;
(j) ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, special counsel to Company, or
such other law firm or professional services firm reasonably
acceptable to Parent (including any "Big 6" accounting firm) shall
have issued its opinion, such opinion dated on the date of the
Closing, addressed to Company, and reasonably satisfactory to it and
the Purchaser, based upon customary representations of Company and
Parent and customary assumptions, to the effect that the Merger will
constitute a "reorganization" within the meaning of Section 368(a) of
the Code (the "Tax Opinion"), which opinion shall not have been
withdrawn or modified in any material respect; provided, however, that
if such firm does not render such opinion, this condition shall
nonetheless be deemed satisfied if such opinion, dated as of the date
of the Closing (k) The Company shall have entered into the Letter of
Intent with Company Bank within 45 days of the date of this Agreement,
is rendered by counsel to Parent or any "Big 6" accounting firm; and
(k) The Company shall have entered into the Letter of Intent
with the Company Bank within 45 days of the date of this Agreement.
SECTION 8.02 Conditions to the Obligations of Company
The obligations of Company to consummate the Merger, or to permit the
consummation of the Merger are subject to the satisfaction or, if permitted by
applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of Parent
contained in this Agreement shall be true, complete and correct in all
material respects (other than representations and warranties subject
to materiality or "material adverse effect" qualifiers which shall be
true, complete and correct in all respects) both when made and on and
as of the Effective Time as if made at and as of the Effective Time
(other than representations and warranties which address matters only
as of a certain date which shall be so true, complete and correct as
of such certain date), and Company shall have received a certificate
signed by the Chief Financial Officer of Parent on behalf of the
Parent to such effect;
(b) Parent shall have performed or complied in all material
respects with all
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covenants required by this Agreement to be performed or complied with
by it on or prior to the Effective Time and Company shall have
received a certificate signed by the Chief Financial Officer of Parent
on behalf of the Parent to that effect; and
(c) There shall have been no Parent Material Adverse Effect
since the date of this Agreement.
SECTION 8.03 Conditions to the Obligations of Parent
The obligations of Parent to consummate the Merger are subject to the
satisfaction or waiver of the following further conditions:
(a) Each of the representations and warranties of Company
contained in this Agreement shall be true, complete and correct in all
material respects, (other than representations and warranties subject
to materiality or "material adverse effect" qualifiers which shall be
true, complete and correct in all respects) both when made and on and
as of the Effective Time as if made at and as of the Effective Time
(other than representations and warranties which address matters only
as of a certain date which shall be so true, complete and correct as
of such certain date), and Parent shall have received a certificate
signed by the Chief Executive Officer on behalf of the Company of
Company to such effect;
(b) Company shall have performed or complied in all material
respects with all covenants required by this Agreement to be performed
or complied with by it on or prior to the date on which they are to be
performed as specifically set forth herein or the Effective Time, as
applicable, and Parent shall have received a certificate of the Chief
Executive Officer signed by Company on behalf of the Company to that
effect;
(c) There shall have been no Company Material Adverse Effect
since the date of this Agreement;
(d) The Parent shall have executed, by the Exchange Ratio
Adjustment Date, agreements with each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D. and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ which provide for the continuation of services
provided by them, upon terms which are satisfactory to Parent;
(e) On or before the Exchange Ratio Adjustment Date, the
officers, directors, and shareholders of Company listed on Annex E
hereto (the "Company Insiders") shall have entered into lock-up
agreements in the form set forth as Annex F hereto;
(f) The Company shall not have received any notice of default
or notice of any pending or threatened cancellation, revocation or
termination or be aware of any facts or circumstances which could
reasonably be expected to lead to any such cancellation, revocation,
or termination under any of the Company's managed care contracts
which, after giving effect to any new managed care business entered
into after the date hereof (except for
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any contracts which have been projected in any Company business plan
for year 2000, previously delivered to Parent), cause, or could
reasonably likely cause, individually or collectively, a material
adverse effect on the Company's managed care business as a stand alone
business. The determination of the overall loss of managed care
business under this Section 8.03(f) shall be made without regard to
any disclosures contained in the Company Disclosure Schedule, except
that no account shall be taken of the loss of business under any
managed care contracts specifically identified under Section 4.08 of
the Company Disclosure Schedule. The Parent shall have received a
certificate of the Chief Executive Officer of the Company to such
affect; and
(g) On or before the Exchange Ratio Adjustment Date, the
Company shall have divested all of its business and assets relating to
the Corporate Optometry practice and the Company shall have received
from all of the Corporate Optometry practices a release in
substantially the form set forth on Annex J hereto, except as the
parties may otherwise agree in writing with respect to ▇▇▇▇▇▇▇.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination
This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, notwithstanding any requisite adoption
and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards
of directors of each of Parent and Company;
(b) by either Parent or Company, if the Effective Time shall
not have occurred on or before August 31, 2000; provided, however,
that the right to terminate this Agreement under this Section 9.01(b)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement shall have principally caused, or
resulted in, the failure of the Effective Time to occur on or before
such date;
(c) by either Parent or Company, if any Governmental Order,
writ, injunction or decree preventing the consummation of the Merger
shall have been entered by any court of competent jurisdiction and
shall have become final and nonappealable;
(d) by Parent, if (i) the board of directors of Company
withdraws, modifies or changes its recommendation of this Agreement or
the Merger in a manner adverse to Parent or its stockholders, (ii) the
board of directors of Company shall have recommended to the
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stockholders of Company a Competing Transaction, (iii) the Company
fails to comply with Section 6.04, (iv) a Competing Transaction shall
have been announced or otherwise publicly known and the board of
directors of Company shall have (A) failed to recommend against
acceptance of such by its stockholders (including by taking no
position, or indicating its inability to take a position, with respect
to the acceptance by its stockholders of a Competing Transaction
involving a tender offer or exchange offer), (B) failed to reconfirm
its approval and recommendation of this Agreement and the transactions
contemplated hereby within 5 Business Days after Parent requests in
writing that such recommendation be reconfirmed or (C) determined that
such Competing Transaction was a Superior Proposal and takes any of
the actions allowed by clause (ii) of Section 6.04, or (v) the board
of directors of Company resolves to take any of the actions described
above;
(e) by Parent or Company, if (i) this Agreement and the
Merger shall fail to receive the requisite votes for approval at the
Company Stockholders' Meeting or any adjournment or postponement
thereof or (ii) if the Share Issuance shall fail to receive the
requisite votes for approval at the Parent Shareholders' Meeting or
any adjournment or postponement thereof;
(f) by Parent, upon a material breach of any representation
or warranty on the part of Company set forth in this Agreement, upon a
material breach of any covenant or agreement on the part of the
Company set forth in this Agreement or if any material representation
or warranty of Company shall have become untrue, incomplete or
incorrect in any material respect, in any case such that the
conditions set forth in Section 8.03 would not be satisfied (a
"Terminating Company Breach"); provided, however, that if such
Terminating Company Breach is curable by Company through the exercise
of its reasonable efforts within 20 days and for so long as Company
continues to exercise such reasonable efforts, Parent may not
terminate this Agreement under this Section 9.01(f) during such 20 day
period; and provided, further that the preceding proviso shall not in
any event be deemed to extend any date set forth in paragraph (b) of
this Section 9.01; or
(g) by Company, upon material breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in
this Agreement, or if any material representation or warranty of
Parent shall have become untrue, incomplete or incorrect in any
material respect, in either case such that the conditions set forth in
Section 8.02 would not be satisfied (a "Terminating Parent Breach");
provided, however, that if such Terminating Parent Breach is curable
by Parent through the exercise of its reasonable efforts within 20
days and for so long as Parent continues to exercise such reasonable
efforts, Company may not terminate this Agreement under this Section
9.01(g) during such 20 day period; and provided, further that the
preceding proviso shall not in any event be deemed to extend any date
set forth in paragraph (b) of this Section 9.01.
(h) by a party, if on or before the applicable date set forth
in Article VIII , any condition set forth in Article VIII which is
required to be met on or before such date has not
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been so met by the other party; provided, however, that if such failed
condition is curable by the other party through the exercise of its
reasonable efforts within 20 days and for so long as such other party
continues to exercise such reasonable efforts, the terminating party
may not terminate this Agreement under this Section 9.01(h); and
provided, further that the preceding proviso shall not in any event be
deemed to extend any date set forth in paragraph (b) of this Section
9.01;
(i) by the Company, pursuant to Section 6.04, in the event
the Company has complied with all the provisions of Section 6.04 and
has determined to accept a Superior Proposal; provided that the
Company shall have provided Parent with one Business Day's prior
written notice of the Company's decision to so terminate (the "Company
Termination Notice"). The Company Termination Notice shall indicate in
reasonable detail the terms and conditions of such Superior Proposal,
including, without limitation, the amount and form of the proposed
consideration and whether such Superior Proposal is subject to any
material conditions.
In the event either party shall terminate this Agreement pursuant to
Section 9.01, neither Parent nor any of Parent's Subsidiaries will,
nor will they assist or encourage others to, directly or indirectly,
for a period of two (2) years after termination of this Agreement,
acquire or attempt to acquire ownership or more than five percent (5%)
of the Company's capital stock.
The right of any party hereto to terminate this Agreement pursuant to
this Section 9.01 will remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 9.02 Effect of Termination
Except as provided in Section 9.05, in the event of termination of
this Agreement pursuant to Section 9.01 or otherwise, this Agreement shall
forthwith become void, there shall be no liability under this Agreement or
otherwise on the part of any party hereto or any of its affiliates or any of
its or their officers or directors, and all rights and obligations of each
party hereto shall cease. No termination of this Agreement shall affect the
obligation of the parties contained in the Confidentiality Agreements, which
shall survive termination of this Agreement and remain in full force and effect
in accordance with their terms.
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SECTION 9.03 Amendment
This Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective boards of directors at any time prior to the
Effective Time; provided, however, that, after the approval of this Agreement
by the stockholders of Company, no amendment may be made that changes the
amount or type of consideration into which Company common stock will be
converted pursuant to this Agreement. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.
SECTION 9.04 Waiver
At any time prior to the Effective Time, any party hereto may (a)
extend the time for or waive compliance with the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other party with any of the
agreements or conditions contained herein. Any such extension or waiver shall
be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 9.05 Termination Fee; Expenses
(a) Except as set forth in this Section 9.05, all Expenses
incurred in connection with this Agreement and the Merger shall be
paid by the party incurring such Expenses, whether or not the Merger
is consummated, except that Parent and Company each shall pay one-half
of all Expenses (other than attorney's and accountant's fees and
expenses) incurred solely for printing, filing (with the SEC) and
mailing the Registration Statement and the Joint Proxy Statement and
all SEC and other regulatory filing fees incurred in connection with
the Registration Statement and the Joint Proxy Statement and any fees
required to be paid under the HSR Act.
(b) In the event that (i) Company shall terminate this
Agreement pursuant to Section 9.01(i) or Parent shall terminate this
Agreement pursuant to Section 9.01(d) or (ii) this Agreement shall be
terminated (x) pursuant to Section 9.01(b) or (y) pursuant to Section
9.01(e)(i) as a result of the failure to obtain the requisite approval
of the Company stockholders and, in the case of either (x) or (y), (A)
at or prior to such termination, there shall exist or have been
proposed a Competing Transaction with respect to Company and (B)
within nine months after such termination, Company shall enter into a
definitive agreement with respect to any Competing Transaction or any
Competing Transaction involving Company shall be consummated, then, in
the case of (i), promptly after such termination, or in the case of
(ii), concurrently with the consummation of such Competing
Transaction, Company shall pay to Parent an amount in cash equal to
the greater of Four percent (4%) of the "total enterprise value" of
the transactions contemplated by this Agreement or as reflected in the
Superior Proposal or the Competing Transaction, as the case may be,
(the "Termination Fee") plus Parent's Expenses. For purposes of this
Section 9.05, the term "total enterprise value" shall mean the
purchase price paid or offered to be paid, as the case may be, in such
transaction, plus the amount of any indebtedness and other liabilities
of the Company assumed or
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offered to be assumed, as the case may be, in this or such Competing
Transaction, as the case may be.
(c) In the event that Parent shall terminate this Agreement
pursuant to clause (i) of Section 9.01(f), then Company shall promptly
reimburse Parent for Parent's Expenses, and if, within nine months of
such termination of this Agreement, Company shall enter into a
definitive agreement with respect to any Competing Transaction (other
than a Competing Transaction solely described in clause (v) of the
definition of such term) or any Competing Transaction (other than a
Competing Transaction solely described in clause (v) of the definition
of such term) involving Company shall be consummated, concurrently
with the consummation of such Competing Transaction (other than a
Competing Transaction solely described in clause (v) of the definition
of such term), the Company shall pay to Parent an amount in cash equal
to one-half of the Termination Fee unless Company did not have
Knowledge at the time that this Agreement was entered into that such
representation or warranty was incorrect or incomplete, in which case
Company shall not be obligated to such portion of the Termination Fee,
but shall nonetheless be obligated to pay Parent's Expenses as set
forth above.
(d) In the event that Parent shall terminate this Agreement
pursuant to clause (ii) of Section 9.01(f) (other than in connection
with a breach of Section 6.04 or Section 6.01(y) hereof, which are
provided for below), then Company shall promptly reimburse Parent for
Parent's Expenses, and if, within nine months of such termination of
this Agreement, Company shall enter into a definitive agreement with
respect to any Competing Transaction (other than a Competing
Transaction solely described in clause (v) of the definition of such
term) or any Competing Transaction (other than a Competing Transaction
solely described in clause (v) of the definition of such term)
involving Company shall be consummated, concurrently with the
consummation of such Competing Transaction (other than a Competing
Transaction solely described in clause (v) of the definition of such
term), the Company shall pay to Parent an amount in cash equal to half
of the Termination Fee.
(e) In the event that Parent shall terminate this Agreement
pursuant to clause (ii) of Section 9.01(f) in connection with a breach
of Section 6.04, then Company shall promptly reimburse Parent for
Parent's Expenses, and if, within nine months of such termination of
this Agreement, the Company shall enter into any agreement with
respect to any Competing Transaction or any Competing Transaction
involving Company shall be consummated, concurrently with the
execution of any such agreement, or if there is no agreement, upon the
consummation of such Competing Transaction, the Company shall pay to
Parent in cash the Termination Fee.
(f) In the event that Parent shall terminate this Agreement
pursuant to clause (ii) of Section 9.01(f) in connection with a breach
of Section 6.01(y), then Company shall promptly reimburse Parent for
Parent's Expenses.
(g) In the event that Parent shall terminate this Agreement
pursuant to clause (iii) of Section 9.01(f), then Company shall
promptly reimburse Parent for Parent's Expenses.
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(h) In the event that Company shall terminate this Agreement
pursuant to Section 9.01(g), then Parent shall promptly reimburse
Company for Company's Expenses.
(i) Parent, Merger Sub and Company agree that the agreements
contained in this Article IX above are reasonable, are an integral
part of the transaction contemplated by this Agreement, and are the
sole and exclusive remedies in law or in equity for a termination or
breach of this Agreement or otherwise in connection with the
transactions contemplated by this Agreement. The payments provided for
in this Section 9.05 are intended to establish liquidated damages in
the event of a termination or otherwise and are not intended as a
penalty. Accordingly, if Company or Parent fails to pay to Parent or
Company, as the case may be, any amounts due under Section 9.05(b),
Section 9.05(c), or Section 9.05(d), Company or Parent, as the case
may be, shall pay interest on such amounts at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be
made.
(j) In the event that the Company does not enter into the
Standstill Agreement within 45 days following the date hereof, the
Company shall promptly reimburse Parent for Parent's Expenses;
(k) In the event that a dispute arises in connection with
Section 9.04(c), (d) and/or (e) hereof, such dispute shall be
submitted for arbitration to the American Arbitration Association
("AAA") in New York City in accordance with the Commercial Rules of
the American Arbitration Association, provided; however, that such
arbitrators shall apply the Delaware General Corporation Law and
applicable case law thereunder to the resolution of the dispute. The
decision of the AAA shall be final and binding upon the parties, and
shall be enforceable in any court of competent jurisdiction. Nothing
in this provision shall be construed to prohibit any party hereto from
seeking interim equitable relief in a court of competent jurisdiction
pending submission of said dispute to arbitration hereunder.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 NonSurvival of Representations and Warranties
The representations and warranties in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 9.01, as the case may be.
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SECTION 10.02 Notices
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy or facsimile,
by registered or certified mail (postage prepaid, return receipt requested) or
by a nationally recognized courier service to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 10.02): (a) if to Company:
Vision Twenty-One, Inc. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Parent or Merger Sub:
OptiCare Health Systems, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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SECTION 10.03 Severability
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Merger is
not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner to the fullest extent permitted by
applicable Law in order that the Merger may be consummated as originally
contemplated to the fullest extent possible.
SECTION 10.04 Assignment; Binding Effect; Benefit
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of Law or otherwise) without the prior written consent of the other parties
hereto. Subject to the preceding sentence, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything contained in this
Agreement to the contrary, other than Section 7.04, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the
parties hereto or their respective successors and permitted assigns any rights
or remedies under or by reason of this Agreement.
SECTION 10.05 Incorporation of Exhibits
The Parent Disclosure Schedule, the Company Disclosure Schedule and
all Exhibits attached hereto and referred to herein are hereby incorporated
herein and made a part of this Agreement for all purposes as if fully set forth
herein.
SECTION 10.06 Governing Law
ANY DISPUTE OR CLAIM BASED UPON, ARISING OUT OF OR RESULTING FROM THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ITS CHOICE OF LAWS
PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY LAW OTHER THAN THAT OF
DELAWARE. COURTS WITHIN THE STATE OF DELAWARE WILL HAVE JURISDICTION OVER ALL
DISPUTES BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY;
PROVIDED, THAT THE EFFECTIVENESS AND EFFECT OF THE MERGER SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF FLORIDA. THE PARTIES HEREBY CONSENT TO AND AGREE TO
SUBMIT TO THE JURISDICTION OF SUCH COURTS. EACH OF THE PARTIES HERETO WAIVES,
AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY CLAIM
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THAT (I) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH
COURTS, (II) SUCH PARTY AND SUCH PARTY'S PROPERTY IS IMMUNE FROM ANY LEGAL
PROCESS ISSUED BY SUCH COURTS OR (III) ANY LITIGATION COMMENCED IN SUCH COURTS
IS BROUGHT IN AN INCONVENIENT FORUM OR IMPROPER VENUE.
SECTION 10.07 Waiver of Jury Trial
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED
HEREBY OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF.
SECTION 10.08 Headings; Interpretation
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any provisions of this Agreement.
SECTION 10.09 Counterparts
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
SECTION 10.10 Entire Agreement
This Agreement (including the Exhibits, the Parent Disclosure Schedule
and the Company Disclosure Schedule), together with all other agreements
entered into simultaneously herewith by the parties hereto and the
Confidentiality Agreements, constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements
and understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
OPTICARE HEALTH SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
VISION TWENTY-ONE, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
OC ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
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