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Exhibit 2.1
STOCK PURCHASE AGREEMENT
Dated as of August 15, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, INC.,
VISIONWORKS HOLDINGS, INC.
and
THE SELLERS NAMED HEREIN
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions ............................................................................ 1
1.1 Defined Terms ................................................................. 1
1.2 Other Definitions ............................................................. 8
ARTICLE II
Sale and Purchase of Shares; Cancellation of Options ................................... 8
2.1 Sale and Purchase of the Shares. .............................................. 8
2.2 Purchase Price ................................................................ 8
2.3 Closing ....................................................................... 9
2.4 Price Adjustment .............................................................. 10
2.5 Option Cancellation ........................................................... 13
2.6 Co-Investment Rights .......................................................... 13
ARTICLE III
Representations and Warranties ......................................................... 13
3.1 Representations and Warranties of the Sellers ................................. 13
3.2 Representations and Warranties of Purchaser ................................... 28
ARTICLE IV
Conditions to Closing .................................................................. 29
4.1 Conditions to the Obligations of Purchaser .................................... 29
4.2 Conditions to the Obligations of the Sellers .................................. 31
ARTICLE V
Covenants .............................................................................. 32
5.1 Maintenance of Business and Preservation of Permits and Services. ............. 32
5.2 Interim Operations of the Company ............................................. 32
5.3 Access by Purchaser ........................................................... 34
5.4 Consents and Best Efforts ..................................................... 34
5.5 Notification of Certain Matters ............................................... 35
5.6 No Mergers, Consolidations, Sale of Stock, Etc ................................ 35
5.7 Publicity ..................................................................... 35
5.8 Filing Tax Return ............................................................. 35
5.9 Severance Payments ............................................................ 35
5.10 Sale-Leaseback Obligation Clarification Letter ................................ 35
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5.11 Further Assurances ............................................................ 36
ARTICLE VI
Taxes .................................................................................. 36
6.1 Tax Periods Ending on or Before the Closing Date .............................. 36
6.2 Tax Periods Beginning Before and Ending After the Closing Date ................ 37
6.3 Cooperation on Tax Matters .................................................... 37
6.4 Tax Sharing Agreements ........................................................ 37
6.5 Certain Taxes ................................................................. 38
ARTICLE VII
Survival and Indemnification ........................................................... 38
7.1 Survival of Representations, Warranties and Covenants ......................... 38
7.2 Indemnification by the Sellers ................................................ 38
7.3 Other Limitations on Indemnification .......................................... 39
7.4 Method of Asserting Claims, Etc ............................................... 40
7.5 Other Remedies ................................................................ 41
ARTICLE VIII
Miscellaneous .......................................................................... 42
8.1 Payment of Expenses ........................................................... 42
8.2 Waiver of Conditions .......................................................... 42
8.3 Seller Representatives ........................................................ 42
8.4 Termination ................................................................... 42
8.5 Schedules ..................................................................... 43
8.6 Counterparts .................................................................. 43
8.7 Governing Law ................................................................. 43
8.8 Notices ....................................................................... 43
8.9 Entire Agreement, etc. ........................................................ 44
8.10 Injunctive Relief ............................................................. 45
8.11 Captions ...................................................................... 45
8.12 Termination of Company Shareholders Agreement ................................. 45
Exhibits
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A-1 Form of ▇▇▇▇▇▇ Release
A-2 Form of Trademark Security Release Agreement
B Form of Escrow Agreement
C Form of Opinion of Counsel to the Company and the Sellers
D Form of Consulting and Non-Competition Agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Schedules
Schedule 2.1
Schedule 3.1(c)
Schedule 3.1(j)
Schedule 3.1(k)
Schedule 3.1(m)
Schedule 3.1(o)
Schedule 3.1(p)
Schedule 3.1(q)
Schedule 3.1(r)
Schedule 3.1(t)
Schedule 3.1(u)
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of August 15,
1996, among Eye Care Centers of America, Inc., a Texas corporation (the
"Purchaser"), Visionworks Holdings, Inc., a Florida corporation (the "Company"),
and the holders of the outstanding shares of common stock, no par value ("Common
Stock"), of the Company identified on Schedule 2.1 under the caption "Sellers"
(the "Sellers").
WHEREAS, the Sellers collectively own all of the issued and outstanding
capital stock of the Company; and
WHEREAS, the Company owns all of the issued and outstanding capital
stock of Visionworks, Inc., a Florida corporation, and Visionworks Properties,
Inc., a Florida corporation; and
WHEREAS, the Sellers desire to sell and transfer to Purchaser and
Purchaser desires to purchase from the Sellers, 100% of the outstanding shares
of Common Stock (the "Shares"), as more specifically provided herein;
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
Definitions
1.1 Defined Terms. For purposes of this Agreement, including the
Exhibits and Schedules hereto, the following terms have the meanings assigned to
them:
"Accrued Tax Amount" has the meaning specified in Section 2.3
of the Escrow Agreement.
"Actions" has the meaning specified in Section 3.1(p).
"Adjustment Date" has the meaning specified in Section 2.4(e).
"Adjusted Net Worth" has the meaning specified in Section
2.4(d).
"Affiliate" shall mean a Person that directly or indirectly
through one or more intermediaries controls, is controlled by
or is under common control with the Person specified. For
purposes of this definition and as used elsewhere in this
Agreement, the term "control" (including the terms
"controlling," "controlled
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by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to (i) vote 50%
or more of the voting securities of such Person or (ii) direct
or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
"Agreement" means this Stock Purchase Agreement and includes
the Exhibits and Schedules hereto.
"Applicable Laws" means any federal, state, local or foreign
statute, law or ordinance, or any regulation, rule or order of
any Governmental Authority.
"Asset Purchase Agreement" means the Asset Purchase Agreement
dated February 3, 1994 by and among Visionworks, Inc., Eckerd
Corporation and P.C.V., Inc., as amended by the First
Amendment to Asset Purchase Agreement dated March 29, 1994.
"Business Day" means any day other than a Saturday, Sunday or
day on which banks are required or authorized to close in The
City of New York.
"Claim Notice" has the meaning specified in Section 7.4(a).
"Closing" has the meaning specified in Section 2.3(a).
"Closing Balance Sheet" has the meaning specified in Section
2.4(a).
" Closing Date" has the meaning specified in Section 2.3(a).
"Closing Financial Statements Date" has the meaning specified
in Section 2.4(a).
" Closing Time" means the time the Closing actually occurs on
the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
" Common Stock" means the shares of Common Stock, no par
value, of the Company.
"Company" means Visionworks Holdings, Inc., a Florida
corporation.
"Contract" means any written or unwritten agreement, lease,
contract, note, purchase order, order, mortgage, indenture,
commitment, arrangement or other similar obligation.
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"Credit Agreement" means the Credit Agreement, dated as of
March 29, 1994, between the Company and the Lenders, as it may
have been amended from time to time.
"CGW" means CGW Southeast Partners I, L.P.
"Director" has the meaning specified in Section 3. 1(o).
"Employee" has the meaning specified in Section 3.1(o).
"Encumbrance" means any lien, charge, encumbrance, security
interest, equity, beneficial interest of others, option,
warrant, call, restriction (other than restrictions on resale
without registration arising under federal or state securities
laws) or claim of third party rights of any nature.
"Environmental Law" shall mean any law, regulation, order,
decree, opinion, common law or agency policy or requirement
relating to the protection of the environment, hazardous or
toxic materials, wastes or human health and safety.
"ERISA" has the meaning specified in Section 3.1(o).
"ERISA Affiliate" has the meaning specified in Section 3.1(o).
"ERISA Affiliate Plan" has the meaning specified in Section
3.1(o).
"Ernst & Young" means Ernst & Young LLP, independent
accountants to Purchaser.
"Escrow Agreement" means the Escrow Agreement, to be dated as
of the Closing Date, by and among Purchaser, the Sellers and
NationsBank (the "Escrow Agent").
"Escrowed Indemnification Amount" means $3,000,000.
"Escrowed Indemnification Fund" means the fund controlled by
the Escrow Agent and created pursuant to the Escrow Agreement
into which the Escrowed Indemnification Amount shall be
deposited at the Closing.
"Escrowed Price Adjustment Amount" means $2,000,000.
"Escrowed Price Adjustment Fund" means the fund controlled by
the Escrow Agent and created pursuant to the Escrow Agreement
into which the Escrowed Price Adjustment Amount is deposited
at Closing.
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"Escrowed Severance Amount" means $1,500,000.
"Escrowed Severance Fund" means the fund controlled by the
Escrow Agent and created pursuant to the Escrow Agreement into
which the Escrowed Severance Amount is deposited at Closing.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any federal, state, local or
foreign court, tribunal, governmental department, agency,
board or commission, regulatory authority or other
governmental body or instrumentality.
"Hazardous Substance" shall mean any substance that is listed,
classified or regulated pursuant to any Environmental Law
including any petroleum products, asbestos, radon,
polychlorinated biphenyls and any mixture or material
containing such substances.
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Financial, Inc.
"▇▇▇▇▇▇ Obligation" means, as of the Closing Time, (a) the
principal amount of, and interest accrued on, the indebtedness
of the Company outstanding under the Credit Agreement,
including any modifications, refundings, renewals or
extensions of any such indebtedness and (b) all fees
(including, without limitations all prepayment fees), charges,
expenses, reimbursements and indemnification obligations and
other amounts payable thereunder.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and all applicable regulations
promulgated thereunder.
"Indemnified Party" has the meaning specified in Section
7.2(a).
"Indemnifying Party" means the individual Seller or the
Sellers, collectively, from whom indemnification is claimed by
an Indemnified Party pursuant to Section 7.2.
"Independent Firm" has the meaning specified in Section
2.4(c).
"Insurance Policies" has the meaning specified in Section
3.1(t).
"Intellectual Property Rights" has the meaning specified in
Section 3.l(r).
"Interest Rate" means eight percent on an annualized basis.
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"Interim Balance Sheet" has the meaning specified in Section
3.1(1).
"Interim Financial Statements" has the meaning specified in
Section 3.1(1).
"KPMG" means KPMG Peat Marwick LLP, independent accountants to
the Company.
"Lenders" means ▇▇▇▇▇▇ and all other lenders, if any, under
the Credit Agreement.
"Losses" has the meaning specified in Section 7.2(a).
"Management Bonus Amount" means up to $1,000,000.
"Material Adverse Effect" means a material adverse effect on
the financial condition, properties, business, prospects or
results of operations of the Company and the Subsidiaries,
taken as a whole, or on the ability of the parties hereto to
consummate the transactions contemplated hereby.
"Material Contract" has the meaning specified in Section
3.1(k).
"NationsBank" means NationsBank, N.A. (South), a national
banking association.
"Net Worth" means, with respect to the Company and the
Subsidiaries, total stockholders' equity as set forth in the
Closing Balance Sheet and determined on a basis consistent
with the Audited Financial Statements or as finally determined
pursuant to Section 2.4.
"Note Purchase Agreement" means the Note Purchase Agreement,
dated as of October 31, 1991, between JEC Facilities Funding
II, Inc. and Teachers Insurance and Annuity Association of
America, as it may have been amended from time to time.
"Notice Period" has the meaning specified in Section 7.4(a).
"Option" means each outstanding option, whether or not vested,
to purchase Common Stock, all of which are listed on Schedule
3.1(c).
"Optionholder" means each person listed on Schedule 3.1(c) as
a holder of Options.
"Option Amount" has the meaning specified in Section 2.5.
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"Optionholders Amount" means the aggregate Option Amounts.
"PBGC" has the meaning specified in Section 3.1(o).
"Pension Plan" has the meaning specified in Section 3.1(o).
"Permits" means all licenses, permits, orders, consents,
approvals, registrations, authorizations, qualifications and
filings with and under all federal, state, local or foreign
laws (including Environmental Laws) and governmental or
regulatory bodies and all industry or other non-governmental
self-regulatory organizations.
"Person" means an individual, corporation, partnership, trust,
unincorporated organization, government or any agency or
political subdivision thereof or any other entity that may be
treated as a person under applicable law.
"Plans" has the meaning specified in Section 3.1(o).
"Pro Rata Share" means with respect to any Seller, a fraction
the numerator of which is the number of Shares specified
opposite such Seller's name in Schedule 2.1 and the
denominator of which is 1,000,000.
"Purchaser" means Eye Care Centers of America, Inc., a Texas
corporation.
"Purchaser's Objection" has the meaning specified in Section
2.4(b).
"Related Person" of a Seller means a Person who is a relative
of such Seller, that is controlled by such Seller, in which
such Seller has a material economic interest, or with whom
Seller has arrangements or understandings relating to
transactions between such Person and the Company or any
Subsidiary.
"Releases" has the meaning specified in Section 2.3(b).
"Required Lease Consents" has the meaning specified in Section
3.1(f).
"Sale-Leaseback Lease" means the Lease Agreement dated as of
March 31, 1989, as amended and restated as of October 31, 1991
between JEC Facilities Funding II, Inc., as Lessor, and ▇▇▇▇
▇▇▇▇▇▇ Corporation, as Lessee, as amended by Amendment No. 1
thereto dated as of June 14, 1993 and as it may have been
further amended from time to time.
"Sale-Leaseback Obligation" means the amount, as of February
1, 1999, of Visionworks, Inc.'s obligation to purchase the
Sale-Leaseback Stores (as defined in
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the Asset Purchase Agreement) pursuant to Section 1.4(c) of
the Asset Purchase Agreement, which amount is $9,979,302.
"Sale-Leaseback Obligation Clarification Letter" has the
meaning specified in Section 5.10.
"Sale-Leaseback Sublease" means the Sublease dated as of March
29, 1994 between Eckerd Corporation and Visionworks, Inc.
subleasing property leased pursuant to the Sale-Leaseback
Lease, as it may have been amended from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers Amount" means the Total Consideration less the sum of
the Sale/Leaseback Obligation, the ▇▇▇▇▇▇ Obligation, the
Escrowed Severance Amount, the Management Bonus Amount and the
Optionholders Amount.
"Seller Representatives" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇.
"Shares" has the meaning specified in the recitals to this
Agreement.
"Shortfall" means the dollar amount, if any, by which Trigger
Net Worth is greater than Adjusted Net Worth.
"Subsidiary" means any Person in which the Company directly or
indirectly beneficially owns more than 50% of the outstanding
capital stock or other ownership interest, or has the right to
elect a majority of the board of directors or other body
performing similar functions.
"Target Net Worth" means, if the Closing Financial Statements
Date is (a) August 31, 1996, $11,210,000, (b) September 28,
1996, $11,270,000 or (c) November 2, 1996, $11,6659000.
"Tax Return" means any return, declaration, report, claim for
refund, information return or other statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"Taxes" means all federal, state, local or foreign income,
gross receipts, windfall profits, severance, property,
production, sales, use, license, excise, franchise,
employment, withholding or similar taxes, duties, imposts,
fees or other governmental charges imposed on the income,
properties, or operations of the Company or any Subsidiary,
including any additions, penalties and interest in respect
thereof and any interest with respect of such additions or
penalties, whether due or to become due and whether or not
contested.
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"Third Party Claim Notice" has the meaning specified in
Section 7.4(a).
"Threshold" has the meaning specified in Section 7.2(b).
"Total Consideration" means $61,500,000.
"Trigger Net Worth" means Target Net Worth less $500,000.
"Trust Indenture and Security Agreement" means the Trust
Indenture and Security Agreement, dated as of October 31, 1991
between JEC Facilities Funding II, Inc. and the trustees named
therein, as it may be amended from time to time.
"Year-End Financial Statements" has the meaning specified in
Section 3.1(1).
1.2 Other Definitions. Capitalized terms not otherwise defined in
Section 1.1 hereof shall have the respective meanings assigned to them elsewhere
in this Agreement. The words "he", "him" and "his" as used herein shall be
deemed to refer equally to the female gender.
ARTICLE II
Sale and Purchase of Shares; Cancellation of Options
2.1 Sale and Purchase of the Shares. Subject to the terms and
conditions hereof, and based upon the representations, warranties, covenants and
agreements set forth herein, each Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase from each Seller, the number of Shares held by such
Seller (or with respect to which such Seller has the power to sell or cause the
sale) as set forth opposite such Seller's name on Schedule 2.1, in each case
free and clear of all Encumbrances, for the consideration described in Section
2.2.
2.2 Purchase Price.
(a) In consideration of the sale of the Shares Purchaser
shall pay to the Sellers the Sellers Amount, subject to adjustment as provided
in Section 2.4 and subject to the amounts to be paid on the Closing Date to the
Escrow Agent as provided in Section 2.3(b).
(b) A portion of the Total Consideration shall be deemed
allocated and paid as follows:
(i) immediately prior to the Closing Time,
Purchaser shall pay to the Sellers and
Sellers shall contribute to the capital of
the Company for the purpose of repayment in
full of the ▇▇▇▇▇▇ Obligation, in the manner
contemplated by Section 2.3(b), an amount
equal to the ▇▇▇▇▇▇ Obligation;
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(ii) immediately prior to the Closing Time,
Purchaser shall pay to the Sellers and the
Sellers shall contribute to the capital of
the Company for the purpose of providing
consideration to the Optionholders for
cancellation of their Options, an amount
equal to the Optionholders Amount.
2.3 Closing.
(a) Subject to the terms and conditions herein set forth,
the closing of the sale and purchase of the Shares hereunder (the "Closing")
shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 A.M. on September 15, 1996, or, whether earlier or later
than such date, the first date on which the conditions precedent set forth in
Article IV (other than those conditions designating instruments, opinions,
certificates or other documents to be delivered at the Closing) shall have been
satisfied or waived, or at such other place, time or date as the Purchaser and
the Seller Representatives may agree in writing (the "Closing Date").
(b) On the Closing Date, Purchaser shall pay, by
certified or official bank check or checks payable in New York Clearinghouse
(next day) funds, except in the case of any individual payment in excess of
$500,000, which shall be made by wire transfer of immediately available (same
day) funds, the following amounts in the order specified below:
(i) to ▇▇▇▇▇▇, the amount of the ▇▇▇▇▇▇
Obligation to such account as ▇▇▇▇▇▇ may
specify not less than two Business Days
prior to the Closing Date; and Sellers shall
simultaneously deliver to Purchaser (a) a
certificate of the Lenders, in form and
substance satisfactory to Purchaser,
evidencing the satisfaction in full of all
the Company's obligations (for payment or
otherwise) under the Credit Agreement and
the related credit and security documents
and (b) instruments of release, in the form
of Exhibits A-1 and A-2 (the "Releases"),
duly executed by ▇▇▇▇▇▇, for itself and as
Agent for the Lenders, of any and all
Encumbrances securing indebtedness under the
Credit Agreement;
(ii) to the appropriate recipients thereof, and
in the individual amounts thereof, all as
indicated in payment instructions delivered
by the Seller Representatives to the
Purchaser at least two Business Days prior
to the Closing Date, the Management Bonus
Amount;
(iii) to the Optionholders, the Optionholders
Amount;
(iv) to the Escrow Agent, the Escrowed Severance
Amount for deposit into the Escrowed
Severance Fund;
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(v) to the Escrow Agent, the Escrowed Price
Adjustment Amount for deposit into the
Escrowed Price Adjustment Fund;
(vi) to the Escrow Agent, the Escrowed
Indemnification Amount for deposit into the
Escrowed Indemnification Fund;
(vii) to each Seller, such Seller's Pro Rata Share
of the Sellers Amount remaining after
subtracting the payments to the Escrow Agent
pursuant to subparagraphs (v) and (vi)
above.
(c) Simultaneously with the transactions contemplated by
Section 2.3(b), the Sellers shall deliver to Purchaser certificates evidencing
all of the Shares, duly endorsed in blank, in proper form for transfer with all
requisite stock transfer stamps attached.
(d) At or prior to the Closing Date, the Purchaser and
each Seller shall sign an Escrow Agreement with NationsBank, substantially in
the form of Exhibit B. The Escrowed Price Adjustment Fund shall secure the
obligation of the Sellers to pay to Purchaser amounts due to Purchaser, if any,
upon any adjustment of the Sellers Amount in accordance with Section 2.4(e) and,
accordingly, shall be used to pay amounts due to Purchaser and to make certain
payments, if any, to the Sellers, all as provided in Section 2.4(e); the
Escrowed Indemnification Fund shall be used to satisfy claims made by Purchaser
or other Indemnified Parties for indemnification hereunder, if any, and to make
certain payments, if any, to the Sellers, all as provided in Article VII; and
the Escrowed Severance Fund shall secure the post-closing obligation of the
Company to make payments in respect of the termination of certain employees of
the Company as contemplated in Section 5.9 and, accordingly, shall be used to
pay amounts due to the Purchaser or the Sellers, as the case may be, in
accordance with Section 5.9 and the Escrow Agreement. Such Escrow Agreement
shall provide that the Escrowed Price Adjustment Amount, the Escrowed
Indemnification Amount and the Escrowed Severance Amount delivered to the Escrow
Agent at Closing shall be invested by the Escrow Agent in (a) a money market
mutual fund investing solely in short term United States Treasury obligations or
(b) such other investment grade interest-bearing obligations (including discount
bills or notes) identified in a joint instruction of the Purchaser and the
Seller Representatives, and earnings on such investments shall become part of
the Escrowed Price Adjustment Fund, the Escrowed Indemnification Fund or the
Escrowed Severance Fund, as the case may be. At any time of determination, the
Escrowed Price Adjustment Fund, the Escrowed Indemnification Fund and the
Escrowed Severance Fund shall be the balances of the respective accounts
maintained by the Escrow Agent for the purposes set forth in this paragraph (d)
in accordance with the Escrow Agreement.
2.4 Price Adjustment.
(a) Within 60 days after the Closing Date, the Sellers shall
deliver or cause to be delivered to Purchaser a consolidated balance sheet (the
"Closing Balance Sheet") of the
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Company and the Subsidiaries as of the close of business on the last day of the
fiscal month end just prior to the Closing Date (the "Closing Financial
Statements Date"), and consolidated statements of earnings, stockholder's equity
and cash flows for the fiscal year to date through the Closing Financial
Statements Date, together with notes thereto (collectively with the Closing
Balance Sheet, the "Closing Financial Statements") which (i) shall set forth the
Net Worth as of the Closing Financial Statements Date (such Net Worth not to be
adjusted for any of the Closing Date transactions referred to in Section 2.2 or
2.3), (ii) be prepared in accordance with generally accepted accounting
principles applied on a basis consistent with the principles and practices used
in the preparation of the Year-End Financial Statements, (iii) be prepared in a
manner that does not increase any deferred tax asset set forth in the Interim
Balance Sheet or create any deferred tax asset not set forth in the Interim
Balance Sheet, and (iv) include an unqualified audit opinion thereon by KPMG.
Purchaser accepts, for purposes of the calculation of the Sellers Amount
adjustment provided for in this Section 2.4, the principles, practices and
methodologies used in the preparation of the Year-End Financial Statements.
(b) Purchaser shall cause KPMG to have access to the
records and personnel of the Company reasonably requested by them for purposes
of preparing or auditing the Closing Financial Statements. Ernst & Young shall
have the right to take such reasonable steps as they deem necessary to calculate
the Net Worth of the Company and the Subsidiaries as of the close of business on
the Closing Financial Statements Date and to review the procedures and materials
(including work papers) employed by KPMG in connection therewith. Not later than
30 days after receipt of the Closing Financial Statements, Purchaser shall
deliver to the Seller Representatives a written notice ("Purchaser's
Objection"), setting forth any items with which Purchaser disagrees and a
description of the basis for such disagreement.
(c) In the event that Purchaser delivers a Purchaser's
Objection to the calculation of the Net Worth of the Company and the
Subsidiaries set forth in the Closing Balance Sheet, the Seller Representatives
shall negotiate in good faith with Purchaser, and Purchaser hereby agrees to
negotiate in good faith with the Seller Representatives, for a period of 30 days
after receipt of such Purchaser's Objection, to seek to resolve their
differences with respect to the Closing Balance Sheet. If Purchaser and the
Seller Representatives are unable to resolve all of such disagreements within
such 30-day period, then no later than seven days following such 30-day period
they shall refer their remaining differences to Price Waterhouse LLP or another
internationally recognized firm of independent public accountants having no
material relationship with Purchaser, Company, any Seller or any of their
respective Affiliates, as to which the Seller Representatives and Purchaser
mutually agree (the "Independent Firm") who shall, acting as experts and not as
arbitrators, determine, only with respect to the remaining differences so
submitted, whether and to what extent, if any, the Net Worth, as derived from
the Closing Balance Sheet, requires adjustment. The parties shall instruct the
Independent Firm to deliver its written determination to Purchaser and the
Seller Representatives no later than the twentieth day after the remaining
differences underlying the Purchaser's Objection are referred to the Independent
Firm. The Independent Firm's determination of Net Worth shall be conclusive
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and binding upon Purchaser and Sellers absent manifest error. The fees and
disbursements of the Independent Firm shall be shared equally by Purchaser and
Sellers. Purchaser and Sellers shall (and Purchaser shall cause the Company to)
make readily available to the Independent Firm all relevant books and records
and any work papers (including those of the parties' respective accountants)
relating to the Closing Balance Sheet and all other items reasonably requested
by the Independent Firm.
(d) The "Adjusted Net Worth" shall be the Net Worth
included in (i) the Closing Balance Sheet as delivered by the Sellers in the
event that (x) no Purchaser's Objection is delivered to the Seller
Representatives during the 30-day period specified above or (y) Seller
Representatives and Purchaser so agree, (ii) the Closing Balance Sheet, as
adjusted in accordance with the Purchaser's Objection, in the event that the
Seller Representatives do not dispute Purchaser's Objection within the 30-day
period following receipt by the Seller Representatives of Purchaser's Objection,
or (iii) the Closing Balance Sheet, as adjusted by either (x) the agreement of
the Seller Representatives and Purchaser or (y) the Independent Firm.
(e) The Sellers Amount shall be adjusted downward and an
adjustment payment required pursuant to this Section 2.4(e) only if Adjusted Net
Worth is less than Trigger Net Worth. Subject to the Escrow Agent's obligation
to pay Accrued Tax Amounts in accordance with Section 2.3 of the Escrow
Agreement, on a date following the Closing Date and not later than five Business
Days following final determination of the Adjusted Net Worth in accordance with
Section 2.4(d) (the "Adjustment Date"), (i) if Adjusted Net Worth equals or
exceeds Trigger Net Worth, the Escrow Agent shall pay to each Seller his Pro
Rata Share of the Escrowed Price Adjustment Fund; or (ii) if Adjusted Net Worth
is less than Trigger Net Worth, then (x) if the Shortfall is less than or equal
to the Escrowed Price Adjustment Amount, the amount of the Shortfall (together
with actual interest, capital gains and other income accrued on such amount
while in escrow) shall be paid by the Escrow Agent to Purchaser and the balance
of the Escrowed Price Adjustment Fund shall be paid by the Escrow Agent to the
Sellers in accordance with their respective Pro Rata Shares or (y) if the amount
of the Shortfall exceeds the Escrowed Price Adjustment Amount, the amount by
which the Shortfall exceeds the Escrowed Price Adjustment Amount (together with
interest thereon at the Interest Rate from the Closing Date to the Adjustment
Date) shall be paid to Purchaser by the Sellers in accordance with their
respective Pro Rata Shares and the Escrowed Price Adjustment Fund shall be paid
by the Escrow Agent to Purchaser. Any amount owing pursuant to this Section
2.4(e) shall be paid on the Adjustment Date to the Sellers or Purchaser, as the
case may be, by certified or official bank check or checks payable in New York
Clearing House (next day) funds. Except with respect to Accrued Tax Amounts
(which shall be paid by the Escrow Agent at the times specified in the Escrow
Agreement without any instruction), Purchaser and the Seller Representatives
shall jointly instruct the Escrow Agent with respect to the disposition of the
Escrowed Price Adjustment Amount. In the absence of agreement on such a joint
instruction, the Escrow Agent shall be authorized to pay such amount as
instructed by the Independent Firm.
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(f) No adjustment or other action taken pursuant to this
Section 2.4 shall affect the rights and obligations of the parties under this
Agreement or with respect to the transactions contemplated hereby other than to
the extent directly related to the determination of the Adjusted Net Worth.
2.5 Option Cancellation. On the Closing Date and immediately
prior to the Closing Time, each Option shall, without any action on the part of
the holder thereof, and whether or not then exercisable, be converted into the
right to receive an amount in cash (the "Option Amount"), if any, equal to the
product of (x) $39.62 minus the current exercise price per Share of such Option
and (y) the number of Shares subject to such Option on the Closing Date, payable
to the holder thereof without interest thereon, and such Option will be canceled
and retired and shall cease to exist; provided, that the Company shall be
entitled to withhold, in accordance with applicable law, from any such cash
payment any amounts required to be withheld under applicable law. The Company
shall use its best efforts to obtain the consent of each Optionholder to the
foregoing treatment of the Options and to take any other action reasonably
necessary to effectuate the foregoing provisions. The $39.62 amount referred to
above was calculated on the assumption that the ▇▇▇▇▇▇ Obligation will be
$7,500,000 at the Closing Time. To the extent the ▇▇▇▇▇▇ Obligation at the
Closing Time differs from $7,500,000 such that a recalculation of the option
cash out price would differ from $39.62, Seller Representatives shall so notify
Purchaser at least two Business Days prior to the Closing Date and shall, at
such time, notify Purchaser of the amount of the ▇▇▇▇▇▇ Obligation and the new
option cash out price.
2.6 Co-Investment Rights. The Purchaser agrees that each Seller
shall have the right, by written notice given to Purchaser at least 20 Business
Days prior to the Closing Date, to purchase, on the same terms and conditions as
any affiliate of ▇▇▇▇▇ Capital Management Incorporated, up to such Seller's Pro
Rata Share of shares, having an aggregate purchase price of $1,500,000, of
common stock of Purchaser to be issued at or prior to the Closing for the
purposes of financing, in part, the purchase of the Shares from Sellers. To the
extent that any Seller shall not give notice of the exercise of any portion of
such co-investment right, each of the other Sellers who has given notice of the
full exercise of his or her co-investment right, in compliance with the terms of
this Section 2.6, may by written notice given at least 10 Business Days prior to
the Closing Date purchase the shares of the Purchaser subject to such
unexercised portion up to its pro rata share determined by dividing its Pro Rata
Share by the aggregate Pro Rata Shares of all Sellers who have fully exercised
such co-investment right.
ARTICLE III
Representations and Warranties
3.1 Representations and Warranties of the Sellers. The Sellers
hereby represent and warrant as follows:
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(a) Authority of Sellers. Each Seller has full legal
capacity and, in the case of each Seller who is a trustee or other fiduciary,
has full and appropriate power as a trustee or other fiduciary, to execute,
deliver and perform this Agreement and the Escrow Agreement and to sell and
deliver his or her respective Shares to Purchaser as contemplated hereby.
(b) Organization and Authority. Each of the Company and
the Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has the full
power and authority (corporate and other) to carry on its business as it is now
being conducted, to enter into this Agreement and the Escrow Agreement and to
perform its obligations hereunder and thereunder. Each of the Company and the
Subsidiaries is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned, leased or operated by it makes such
licensing or qualification necessary except where the failure to be so qualified
or licensed would not have a Material Adverse Effect. The Company has all
necessary power (corporate or other) to execute and deliver this Agreement and
the Escrow Agreement and to perform its obligations hereunder and thereunder and
all necessary corporate action has been taken by the Company to authorize the
transactions contemplated hereby and thereby.
(c) Authorized Capital. No capital stock of the Company
has been issued subsequent to February 3, 1996. The authorized capital stock of
the Company consists of 2,000,000 shares of Common Stock, of which 1,000,000
shares are issued and outstanding. All of the issued and outstanding shares of
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable. Except as disclosed on Schedule 3.1(c), there are no preemptive
rights nor any outstanding subscriptions, options, warrants, rights (including
without limitation, stock appreciation rights), convertible securities or other
agreements or commitments of any character of the Company or any Seller relating
to the issued or unissued capital stock of the Company. The Company has not
repurchased or otherwise acquired any shares of Common Stock since February 3,
1996. Schedule 3.1(c) lists the name of each Optionholder and the number of
options to purchase Common Stock held by each such Optionholder.
(d) The Shares. Each Seller is the record and beneficial
owner of the number of Shares identified to such Seller on Schedule 2.1, free
and clear of any Encumbrances. Upon delivery of the Shares by each Seller
hereunder to Purchaser at the Closing pursuant to this Agreement, good and valid
title to such Shares, free and clear of all Encumbrances, will pass to the
Purchaser.
(e) Agreements. Each of this Agreement and the Escrow
Agreement has been duly executed and delivered by the Company and each Seller
and constitutes a valid and binding obligation of the Company and each Seller,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
moratorium and similar laws of general applicability affecting creditors' rights
and to general equity principles. In the case of CGW, the execution, delivery
and
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performance of this Agreement by such Seller have been duly authorized by all
necessary action on the part of such Seller. Each of this Agreement and the
Escrow Agreement will be binding (i) upon the heirs, successors, assigns and
personal representatives, if any, of each Seller and (ii) upon the successors or
distributees, if any, of each Seller which is a trust.
(f) Consents and Approvals. Except for the filing of
premerger notification reports under the HSR Act and the consents of third
parties required pursuant to the terms of the leases listed on Schedule 3.l(k)
(such consents being the "Required Lease Consents"), no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Authority or any other Person, is required to be made or obtained by any Seller,
the Company or any Subsidiary in connection with the execution, delivery and
performance of this Agreement or the Escrow Agreement and the consummation of
the transactions contemplated hereby and thereby. The Required Lease Consents
are indicated on Schedule 3.l(k).
(g) Non-contravention. The execution and delivery of this
Agreement and the Escrow Agreement by the Sellers do not, and the consummation
by the Sellers of the transactions contemplated hereby or thereby on their part
will not, constitute or result in (i) a breach or violation of, or a default
under, the Restated Certificate of Incorporation or By-Laws of the Company or
any Subsidiary or any declaration of trust or any fiduciary duty of any trustee
to any Seller that is a trust or (ii) subject to obtaining the Required Lease
Consents, a requirement for consent pursuant to, a breach or violation of, a
default under, or the acceleration of or the creation of an Encumbrance on
assets of the Company or any Subsidiary (with or without the giving of notice or
the lapse of time) pursuant to, (A) any provision of any Contract, or (B) any
law, rule, ordinance or regulation or judgment, decree, order, award or
governmental or non-governmental Permit, in either case to which the Company,
any Subsidiary or any Seller, is a party, is otherwise subject or by which any
of them or their respective properties or assets is bound; or (iii) any change
in the rights or obligations of any party under any of such Contracts.
(h) Compliance with Law.
(i) The Company and the Subsidiaries have
operated and are operating in compliance
with all Applicable Laws (including
Environmental Laws), except where the
failure to comply has not had and would not
have, individually or in the aggregate, a
Material Adverse Effect. Neither the Company
nor any Subsidiary has received any written
notice to the effect that, or otherwise been
advised that, it is not operating in
compliance with any Applicable Laws. Each
license, sublease or other agreement between
the Company or any Subsidiary and a doctor
of optometry or a professional corporation
of a doctor of optometry complies with
Applicable Laws and neither the Company nor
any Subsidiary is, nor is any other party
thereto, in default under any such agreement
except where such
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defaults, individually or in the aggregate,
would not have a Material Adverse Effect.
(ii) The Company and the Subsidiaries hold all
Permits necessary for the ownership and
conduct of the respective businesses of the
Company and such Subsidiaries in the manner
now conducted, and such Permits are in full
force and effect except where the failure to
hold any Permits, individually or in the
aggregate, would not have a Material Adverse
Effect. The consummation of the transactions
contemplated by this Agreement will not
result in any revocation, cancellation,
suspension or non-renewal of any such
Permit, and there are no pending or
threatened suits, proceedings or
investigations with respect to revocation,
cancellation, suspension or non-renewal
thereof and there has occurred no event
which (whether with notice or lapse of time
or both) would result in such a revocation,
cancellation, suspension or non-renewal
thereof except where such revocations,
cancellations, suspensions or non-renewals,
individually or in the aggregate, would not
have a Material Adverse Effect.
(i) Title to Properties; Absence of Encumbrances, etc.
Each of the Company and the Subsidiaries has good and, in the case of owned real
property, marketable title to, or a valid and binding leasehold interest in, all
of the properties and assets owned or leased by the Company or any Subsidiary
free and clear of any Encumbrances, except for: (i) any Encumbrances reflected
in the Year-End Financial Statements; (ii) any Encumbrances incurred or created
since February 3, 1996 in the ordinary and usual course of business consistent
with past practice and which, alone or in the aggregate, would not have a
Material Adverse Effect; (iii) any Encumbrances for taxes, assessments and other
governmental charges not yet due and payable or due but not delinquent or being
contested in good faith by appropriate proceedings; and (iv) any mechanics',
workmen's, repairmen's, warehousemen's, carriers' or other like liens and
encumbrances arising in the ordinary and usual course of business consistent
with past practice or being contested in good faith by appropriate proceedings.
(j) Subsidiaries and Affiliates. Schedule 3.1(j) contains
a complete and correct list of each Subsidiary, together with (i) their
respective jurisdictions of incorporation and (ii) the respective authorized and
outstanding capital stock of each. All outstanding shares of capital stock of
the Subsidiaries have been duly and validly authorized and issued and are fully
paid and nonassessable. The Company owns all of the issued and outstanding
capital stock of each Subsidiary, free and clear of any Encumbrance or agreement
with respect thereto, including, without limitation, any agreement,
understanding or restriction affecting the voting rights or other incidents of
record or beneficial ownership pertaining to such shares. There are no
preemptive rights nor any outstanding subscriptions, options, warrants, rights,
convertible
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securities or other agreements or commitments of any character giving any person
a right to subscribe for or acquire any capital stock or other equity interest
of any Subsidiary.
(k) Contracts and Commitments.
(i) Except as set forth in Schedule 3.1(k),
neither the Company nor any Subsidiary is a
party to or bound by:
(A) any lease of real property for
which the Company or any Subsidiary is
obligated to pay rent;
(B) any agreement for the purchase or
lease of materials, supplies, goods,
services, equipment or other assets that
provides for either (A) annual payments by
the Company and the Subsidiaries of $25,000
($150,000 for inventory purchase agreements)
or more or (B) aggregate payments by the
Company and the Subsidiaries of $100,000
($150,000 for inventory purchase agreements)
or more;
(C) any sales, distribution or other
similar agreement providing for the sale by
the Company or any Subsidiary of materials,
supplies, goods, services, equipment or
other assets that provides for either (A)
payments to the Company and the Subsidiaries
of $25,000 or more in any one year or (B)
aggregate payments to the Company and the
Subsidiaries of $100,000 or more;
(D) any material partnership, joint
venture or other similar agreement;
(E) any agreement relating to (A) the
acquisition of any business or substantially
all of the assets of any business or (B) the
disposition of all or substantially all of
the assets of the Company and/or any of the
Subsidiaries (whether by merger, sale of
stock, sale of assets or otherwise);
(F) any agreement relating to
indebtedness for borrowed money or the
deferred purchase price of property (in
either case, whether incurred, assumed,
guaranteed or secured by any asset);
(G) any material license, franchise or
similar agreement;
(H) any material agency, dealer, sales
representative, marketing or other similar
agreement;
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(I) any agreement that limits the
freedom of the Company or any Subsidiary in
any material respect to compete in any line
of business or with any Person or in any
area or which would so limit the freedom of
the Company or any Subsidiary after the
Closing Date;
(J) any agreement with any director,
officer or employee of the Company or any
Subsidiary; or
(K) any other agreement, commitment,
arrangement or plan not made in the ordinary
course of business that is material to the
Company and the Subsidiaries taken as a
whole.
(ii) Each Contract required to be disclosed in
Schedule 3.1(k) (each, a "Material
Contract") is, except as disclosed in
Schedule 3.1(k), a valid and binding
agreement of the Company or a Subsidiary, as
the case may be, and, assuming due
authorization of parties other than the
Company or such Subsidiary, as the case may
be, is in full force and effect and is a
valid and binding obligation of the Company
or such Subsidiary, enforceable in
accordance with its terms, subject to
bankruptcy, insolvency, moratorium and
similar laws of general applicability
affecting creditors' rights and to general
equity principles. Neither the Company nor
any Subsidiary is, nor is any other party
thereto, in default or breach in any
material respect under the terms of any
Material Contract. True and complete copies
of the Asset Purchase Agreement, the
Sale-Leaseback Lease, the Sale-Leaseback
Sublease, the Note Purchase Agreement and
the Trust Indenture and Security Agreement
have been previously provided to Purchaser
and, to the knowledge of Sellers, the
Sale-Leaseback Lease, the Note Purchase
Agreement and the Trust Indenture and
Security Agreement are in full force and
effect. There are no amendments, waivers or
other modifications to any of such contracts
or to any of the Material Contracts which
have not been provided to Purchaser. At the
time when Visionworks, Inc. is required to
satisfy the Sale Leaseback Obligation in
accordance with the terms of the Asset
Purchase Agreement, there shall be no Early
Termination Rent (as defined in the Asset
Purchase Agreement by reference to the
Sale-Leaseback Lease) due as a result of the
satisfaction of such Sale-Leaseback
Obligations. The Sale-Leaseback Obligation
valued as of the date hereof is $11,259,209.
The Sale-Leaseback obligation as of February
1, 1999 will be $9,979,302. With respect to
the agreements relating to indebtedness for
borrowed money or the
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deferred purchase price of property (in
either case, whether incurred, assumed,
guaranteed or secured by any asset) listed
on Schedule 3.1(k), the true amounts of such
indebtedness outstanding is noted on
Schedule 3.1(k). The ▇▇▇▇▇▇ Obligation will
be no less than, as of (i) August 31, 1996,
$7,500,000, (ii) September 27, 1996,
$7,000,000 and (iii) November 2, 1996,
$6,500,000.
(l) Financial Information. The Purchaser has received
true and complete copies of the audited consolidated balance sheets of the
Company as at February 3, 1996 and January 28, 1995 and the audited consolidated
statements of earnings, stockholders' equity and cash flows, for the years then
ended, together with the notes thereto (such balance sheets and statements,
collectively, the "Year-End Financial Statements") and the unaudited
consolidated balance sheet (the "Interim Balance Sheet") and statements of
earnings, stockholders' equity and cash flows, as at and for the period ended
June 29, 1996 (collectively, the "Interim Financial Statements"). The Year-End
Financial Statements and Interim Financial Statements fairly present the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the respective dates thereof or for the periods then ended, and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, subject, in the case of the
Interim Financial Statements, to normal year-end adjustments. The Closing
Balance Sheet will fairly present the Net Worth of the Company and its
consolidated Subsidiaries as at the Closing Financial Statements Date and will
be prepared in accordance with generally accepted accounting principles applied
on a basis consistent with the balance sheet included in the Year-End Financial
Statements.
(m) Absence of Certain Changes. Except as set forth in
Schedule 3.1(m) or in the Interim Financial Statements, since February 3, 1996,
the Company and each Subsidiary has conducted its business only in, and has not
engaged in any material transaction other than in, the ordinary and usual course
of its business consistent with past practice and there has not been:
(i) any material adverse change in the financial
condition, properties, business, prospects or results
of operations of the Company and the Subsidiaries,
taken as a whole;
(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to the
capital stock of the Company or any Subsidiary;
(iii) any sale, assignment or transfer of any of the assets
of the Company or any of the Subsidiaries which has
had or would have a Material Adverse Effect;
(iv) any loan, advance or capital contribution to, or
investment in, any Person or any waiver or compromise
by the Company or any Subsidiary of any
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right or any debt owed to it, in any such case that
is not in the ordinary course of business;
(v) any change by the Company or any Subsidiary in
accounting principles, practices or methods or in
cash management practices;
(vi) any Encumbrance (except contractual landlord's liens
and statutory and other non-consensual liens) on any
assets of the Company or its Subsidiaries which has
had, or if foreclosed would have, a Material Adverse
Effect;
(vii) any increase subsequent to February 3, 1996 in the
compensation of any officer or director of the
Company or any Subsidiary or any employee whose total
compensation in 1995 exceeded $100,000, or any
resignation, retirement or termination of employment
of any such officer, director or employee;
(viii) issuance by the Company or any Subsidiary of, or
commitment of the Company or any Subsidiary to issue,
any shares of capital stock or obligations or
securities convertible into or exchangeable for
shares of capital stock;
(ix) amendment, cancellation or termination of any license
or other instrument material to the Company or any
Subsidiary;
(x) failure to operate the business of the Company and
its Subsidiaries in the ordinary course or to use
reasonable efforts to preserve the business intact,
to keep available to Purchaser the services of the
key employees of the Company and the Subsidiaries,
and to preserve for Purchaser the goodwill of the
Company's and the Subsidiaries' suppliers, customers
and others having business relations with them,
except where such failures, individually or in the
aggregate, would not have a Material Adverse Effect;
(xi) revaluation by the Company of any of its assets,
including without limitation, writing off notes or
accounts receivable other than in the ordinary course
of business;
(xii) damage, destruction or loss adversely affecting the
properties of the Company, except where such damage,
destruction or loss would not have a Material Adverse
Effect after taking into account any insurance
proceeds payable to or actually received by the
Company or any Subsidiary;
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(xiii) indebtedness incurred by the Company or any
Subsidiary for borrowed money or any commitment to
borrow money entered into by the Company or any
Subsidiary, or any loans made or agreed to be made by
the Company or any Subsidiary, other than in the
ordinary course of business consistent with Past
practices;
(xiv) (a) any event that has given rise to any liability of
the Company or any Subsidiary, whether accrued,
absolute, contingent, determined, determinable or
otherwise, which is reasonably expected to exceed
$100,000 ($150,000 for inventory purchase
obligations), or (b) any increase or decrease in the
amount of or any change in the assumptions
underlying, or methods of calculating, any
contingency or other reserves;
(xv) changes or developments in federal or state laws,
regulations, judicial decisions, or administrative
orders or decisions, affecting the business of the
Company or any Subsidiary as conducted on the date
hereof, other than any such changes that would not
have, individually or in the aggregate, a Material
Adverse Effect;
(xvi) any material agreement, arrangement or understanding
entered into by the Company or any Subsidiary, on the
one hand, with any Seller or Related Person of a
Seller, on the other hand; or
(xvii) any other event or condition (other than events or
conditions in the capital or other markets in which
the Company and the Subsidiaries operate) or action
or omission of the Company or any Subsidiary which
would have a Material Adverse Effect.
(n) Absence of Undisclosed Liabilities. Except as set
forth or provided for in the Year-End Financial Statements or the Interim
Financial Statements, which have heretofore been delivered to the Purchaser,
there are no obligations or liabilities (other than obligations and liabilities
arising in the ordinary course of business subsequent to the date of such
Interim Financial Statements), whether or not accrued, contingent or otherwise,
(i) of the Company or any Subsidiary or (ii) of any of their respective
directors, officers, employees or agents, if such obligations or liabilities
would give rise to indemnification obligations on the part of the Company or any
Subsidiary, in each case including, without limitation, any such obligations or
liabilities relating to any facts or circumstances of which the Sellers are
aware that could result in any claims against or obligations or liabilities of
the Company or any Subsidiary.
(o) Employee Benefits.
(i) Schedule 3.1(o) contains a complete and accurate list
of all existing bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings,
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employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, severance,
welfare and fringe benefit plans, employment or
severance agreements and all similar arrangements in
which any employee or former employee (an "Employee")
or director or former director (a "Director") of the
Company or any Subsidiary participates or to which
any such Employee or Director is a party (the
"Plans"). Except as set forth in Schedule 3.1(o),
neither the Company nor any Subsidiary has any
commitment to create any additional material Plan or
to modify or change any existing Plan in a material
respect.
(ii) Except as set forth in Schedule 3.1(o), each Plan has
been operated and administered in all material
respects in accordance with its terms and with
applicable law, including, but not limited to, the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code and all filings,
disclosures and notices required by ERISA or the Code
(including notices under Section 4980B of the Code)
have been timely made. Each Plan which is an
"employee pension benefit plan" within the meaning of
Section 3(2) of ERISA (a "Pension Plan") and which is
intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter
from the Internal Revenue Service for "TRA" (as
defined in Rev. Proc. 93-39), or will file for such a
determination letter prior to the expiration of the
remedial amendment period for such Plan, and the
Company is not aware of any circumstances likely to
result in revocation of any such favorable
determination letter. There is no material pending
or, to the best knowledge of the Company, threatened
legal action, suit or claim relating to the Plans.
Neither the Company nor any Subsidiary has engaged in
a transaction with respect to any Plan that, assuming
the taxable period of such transaction expired as of
the date hereof, would reasonably be expected to
subject the Company or any Subsidiary to a tax or
penalty imposed by either Section 4975 of the Code or
Section 502(i) of ERISA in an amount which would be
material.
(iii) No material liability under Title IV of ERISA has
been or is expected to be incurred by the Company or
any Subsidiary with respect to any ongoing, frozen or
terminated "single-employer plan", within the meaning
of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or any
single-employer plan of any entity (all "ERISA
Affiliate") which is considered one employer with the
Company under Section 4001(b) of ERISA or Section
414(b) or (c) of the Code (an "ERISA Affiliate
Plan"). None of the Company, the Subsidiaries or any
ERISA Affiliate contributes to, sponsors or
maintains, or have ever contributed to, sponsored or
maintained, a single employer plan, any Pension Plan
subject to Section 412 of the Code or Section 302 of
ERISA, or any ERISA
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Affiliate Plan, as the case may be. None of the
Company, the Subsidiaries or any ERISA Affiliate
contributes to or have ever contributed to or been
required to contribute to a "multiemployer plan"
(within the meaning of Section 3(37) of ERISA) under
Title IV of ERISA.
(iv) All contributions required to be made under the terms
of any Plan have been timely made or have been
reflected in the Financial Statements.
(v) Except as set forth on Schedule 3.1(o), neither the
Company nor any Subsidiary has any obligations to
provide retiree health and life benefits under any
Plan, other than benefits mandated by Section 4980B
of the Code. To the knowledge of the Company, there
has been no communication to Employees by the Company
that would reasonably be expected to promise or
guarantee such Employees retiree health or life
benefits on a permanent basis.
(vi) Except as set forth on Schedule 3.l(o), the Company
and the Subsidiaries do not maintain any Plans
covering foreign Employees. All Plans covering
foreign Employees comply in all respects with
Applicable Law. The Company and its Subsidiaries have
no material unfunded liabilities with respect to any
Plan which covers foreign Employees.
(vii) With respect to each Plan, the Company has provided
or made available to the Purchaser, if applicable,
true and complete copies of existing: (A) Plan
documents and amendments thereto; (B) trust
instruments and insurance contracts; (C) Forms 5500
filed with the Internal Revenue Service; (D) most
recent actuarial report and financial statement; (E)
most recent summary plan description; (F) forms filed
with the PBGC (other than for premium payments); (G)
most recent determination letter issued by the
Internal Revenue Service; (H) any Form 5310 or Form
5330 filed with the Internal Revenue Service; and (I)
most recent nondiscrimination tests performed under
ERISA and the Code (including 401(k) and 401(m)
tests).
(viii) Except as set forth on Schedule 3.1(o), the
consummation of the transactions contemplated by this
Agreement would not reasonably be expected to (A)
entitle any Employee, or Director to severance pay or
similar compensation, (B) result in the vesting or
acceleration of any benefits under any Plan or (C)
result in any material increase in benefits under any
Plan.
(p) Litigation. Except as disclosed in Schedule 3.1(p) or
the Year-End Financial Statements, there is no action, order, writ, injunction,
judgment or decree outstanding
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or suit, litigation, proceeding, labor dispute (other than routine grievance
procedures), arbitral action, investigation, lawsuit or reported claim
(collectively, "Actions") pending or threatened against or relating to (i) the
Company or any Subsidiary, (ii) any Benefit Plan or any fiduciary or
administrator thereof or (iii) the transactions contemplated by this Agreement,
except for Actions which, if resolved adversely to the Company or a Subsidiary,
would not have a Material Adverse Effect. Neither the Company nor any Subsidiary
is in default with respect to any judgment, order, writ, injunction or decree of
any court or governmental agency, and there are no unsatisfied judgments against
the Company or any Subsidiary.
(q) Taxes. Except as set forth in Schedule 3.1(q),
(i) (A) All Tax Returns required to be filed by the
Company or any Subsidiary have been timely and
properly filed, (B) all such Tax Returns are correct
and complete, (C) all Taxes shown or required to be
shown to be as due on such Tax Returns have been paid
in full or properly provided for in the books and
financial statements of the Company and its
Subsidiaries, (D) each of the Tax Returns referred to
in clause (A) has been examined by the Internal
Revenue Service or the appropriate state, local or
foreign taxing authority or the period for assessment
of the Taxes in respect of which such Tax Returns
were required to be filed has expired, (E) all Tax
deficiencies asserted in writing and assessments made
by a federal, state, local or foreign taxing
authority have been paid in full or provided for on
the books and financial statements of the Company or
its Subsidiaries (including, without limitation, any
liability for Taxes arising out of the inclusion of
the Company and the Subsidiaries in any consolidated
U.S. federal Tax Return), (F) no disputes or claims
concerning any Tax liability of the Company or any
Subsidiaries have been (i) raised by any taxing
authority in writing or (ii) otherwise become known
(on the basis of personal contact with any agent of
such taxing authority) to any of the Sellers or the
Directors and officers (or Employees responsible for
Tax matters) of the Company and its Subsidiaries, (G)
no claim has ever been made by an authority in a
jurisdiction where any of the Company and its
Subsidiaries does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction, (H)
no settlement has been made or agreed to in a
currently pending examination of any of the Tax
Returns referred to in clause (A), and (I) no waiver
of a statute of limitation has been given or
requested by or with respect to any Taxes of the
Company or any Subsidiary, and neither the Company
nor any Subsidiary has agreed to any extension of
time with respect to a Tax assessment or deficiency
or currently benefits from any extension of time
within which to file any Tax Return. An accurate copy
of each income Tax Return referred to in clause (A)
(as well as any examination reports or
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statements of deficiencies assessed or agreed to with
respect to any Taxes) has been made available to
Purchaser.
(ii) As a result of Purchaser's purchase of the Shares or
any terminations of employment in connection with
such purchase, neither the Company nor any Subsidiary
or the Purchaser will be obligated to make a payment
to an individual that would be a "parachute payment"
to a "disqualified individual" as those terms are
defined in Section 28OG of the Code (without regard
to whether such payment is reasonable compensation
for personal services performed or to be performed in
the future).
(iii) The Company and each Subsidiary will have withheld
any Tax required to be withheld under applicable law
and regulations at any time prior to the Closing, and
such withholdings will have either been paid to the
proper Governmental Authority or set aside in
accounts for such purpose.
(iv) There are no Encumbrances relating or attributable to
Taxes with respect to, or connected with, the assets
of the Company or any Subsidiary, other than any
liens for current Taxes not yet due and payable.
(v) Neither the Company nor any Subsidiary has filed a
consent under Code Section 341(f) concerning
collapsible corporations.
(vi) Neither the Company nor any Subsidiary has been a
United States real property holding corporation
within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code
Section 897(c)(1)(A)(ii).
(vii) Neither the Company nor any Subsidiary (a) is a party
to any Tax allocation or sharing agreement, (b) has
been a member of an Affiliated Group filing a
consolidated federal income Tax Return (other than a
group the common parent of which was the Company) or
(c) has any liability for the Taxes of any Person
(other than any of the Company and the Subsidiaries)
under Reg. Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(viii) The accrued but unpaid Taxes of the Company and the
Subsidiaries (A) do not exceed the amount accrued or
reserved with respect to Tax liabilities (other than
any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set
forth on the face of the Interim Financial
Statements, (B) do not exceed the amount referred to
in clause (A) as adjusted for the passage of time
through the Closing Date in accordance with the past
custom and practice of the Company and the
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Subsidiaries in filing their Tax Returns and (C) will
not, as of the Closing Date, exceed the amount
accrued or reserved with respect to Tax liabilities
set forth on the Closing Balance Sheet (other than
any reserve for deferred Taxes established to reflect
timing differences between book and Tax income).
(r) Intellectual Property. All of the Company's and the
Subsidiaries' registrations of trademarks and of other marks, trade names or
other trade rights, and all pending applications for any such registrations and
all of the Company's and the Subsidiaries' patents and copyrights and all
pending applications therefor; all other trademarks and other marks, trade names
and other trade rights and all other trade secrets, designs, plans,
specifications and other proprietary rights, whether or not registered
(collectively, "Intellectual Property Rights") are listed in Schedule 3.1(r).
The Company and the Subsidiaries have valid and enforceable rights (i) under the
trade name license agreement referred to in item 1 of Schedule 3.1(r), to the
trade name "Eckerd Optical" and (ii) to the servicemark and trade name
"Visionworks" referred to in item 2 of Schedule 3.1(r). The Intellectual
Property Rights listed in Schedule 3.1(r) constitute all material Intellectual
Property Rights used in the business of the Company and the Subsidiaries. No
Person, other than the Company or any Subsidiary, has a right to receive a
royalty or similar payment in respect of any Intellectual Property Rights
pursuant to any contractual arrangements entered into by the Company or any
Subsidiary, and no Person, other than the Company or any Subsidiary, otherwise
has a right to receive a royalty or similar payment in respect of any such
Intellectual Property Rights. Except as disclosed in Schedule 3.1(r), the
Company and the Subsidiaries have no licenses granted by or to them or other
agreements to which they are a party, relating in whole or in part to any of the
Intellectual Property Rights. The Company's and any Subsidiary's use of the
Intellectual Property Rights is not infringing upon or otherwise violating the
rights of any third party in or to such Intellectual Property Rights, and no
proceedings have been instituted against or notices received by the Company or
any Subsidiary that are presently outstanding alleging that the Company's and
such Subsidiary's use of its Intellectual Property Rights infringes upon or
otherwise violates any rights of a third party in or to such Intellectual
Property Rights.
(s) Environmental Matters.
(i) the Company and each Subsidiary has complied at all
times with all applicable Environmental Laws;
(ii) no property (including soils, groundwater, surface
water, buildings or other features) owned or operated
by the Company or any Subsidiary is contaminated
with, or has had any release of, any Hazardous
Substances;
(iii) no property (including soils, groundwater, surface
water, buildings or other features) formerly owned or
operated by the Company or any
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Subsidiary has been contaminated with Hazardous
Substances during such period of ownership or
operation;
(iv) neither the Company nor any Subsidiary is subject to
liability for any Hazardous Substance disposal or
contamination on any third party property;
(v) neither the Company nor any Subsidiary has received
any notice, demand, letter, claim or request for
information indicating that the Company or any
Subsidiary may be in violation of or subject to
liability under any Environmental Law;
(vi) neither the Company nor any Subsidiary is subject to
any order, decree, injunction or other arrangement
with any Governmental Authority or any indemnity or
other agreement with any third party arising under
any Environmental Law or relating to Hazardous
Substances;
(vii) none of the properties owned or operated by the
Company or any Subsidiary contains any underground
storage tanks, asbestos containing material, lead
products, or polychlorinated biphenyls;
(viii) neither the Company nor any Subsidiary has engaged in
any activities involving the generation, use,
handling or disposal of any Hazardous Substances.
(ix) there are no circumstances or conditions involving
the Company or any Subsidiary that could reasonably
be expected to result in any claims, liabilities,
investigations, costs or restrictions on the
ownership, use, or transfer of any property pursuant
to any Environmental Law.
(t) Insurance. The Company and each Subsidiary has
maintained, and at the date hereof has in effect, such policies of motor
vehicle, property, casualty, workers' compensation, general liability and other
insurance, including without limitation group insurance and any other life,
health, disability or other insurance for the benefit of employees or their
dependents or both (the "Insurance Policies"), as are required by law and are
adequate and appropriate with respect to their respective businesses. Neither
the Company nor any Subsidiary has given or received any notices of cancellation
or nonpayment of the premiums for such Insurance Policies and the premiums due
thereon have been fully paid. Schedule 3.1(t) lists all material Insurance
Policies of the Company and the Subsidiaries.
(u) Accounts Receivable and Reserves. Except as set forth
on Schedule 3.1(u), all accounts receivable reflected on the Interim Balance
Sheet and accrued since the date thereof represent bona fide sales actually made
in the ordinary course of business or other
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transactions actually made, and are current and fully collectible net of any
collateral or reserves for doubtful accounts shown on the Interim Balance Sheet
(which reserves are adequate and were determined consistent with past practice).
All notes receivable reflected on the Interim Balance Sheet are current and
fully collectible net of any reserves shown on the Interim Balance Sheet (which
reserves are adequate and were determined consistent with past practice). Except
as set forth in Schedule 3.1(u), all such account and note receivables are
reflected in the Interim Balance Sheet or were accrued since the date thereof in
accordance with generally accepted accounting principles applied on a consistent
basis. Except as set forth on Schedule 3.1(u), no objection, claim or offset has
been made by any Person regarding any such receivables. Except for charges
against and additions to the reserve against doubtful receivables in the
ordinary course of business, there has been no release or write-down of any
reserves carried on the balance sheet included in the Year-End Financial
Statements subsequent to February 3, 1996. Reserves have been established and
utilized subsequent to February 3, 1996 only in the ordinary course on a basis
consistent with past practice.
(v) Severance. All obligations of the Company or any
Subsidiary for severance or other payments, including with respect to accrued
vacation, to any Director or Employee arising out of the transactions
contemplated hereby (whether arising on, before or after the date of this
Agreement) do not exceed in the aggregate $1,500,000.
(w) Brokers and Finders. No Person is or will be entitled
to receive from the Purchaser, the Company or any of its Subsidiaries, or their
respective directors, officers, employees or agents any investment banking,
financing, brokerage, finder's, breakup, termination or similar fee or
commission in connection with the transactions contemplated by this Agreement on
account of services rendered to any Seller or the Company or any Subsidiary.
(x) Disclosure. No representation or warranty of the
Sellers contained in this Agreement (including the Schedules hereto) contains
any untrue statement of a material fact, or omits to state any material fact
which is required to be stated therein or necessary in order to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading.
3.2 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to the Sellers that:
(a) Corporate Authority. Purchaser has the requisite
power and authority (corporate and other) and has taken all corporate action
necessary in order to execute and deliver this Agreement and the Escrow
Agreement and to consummate the transactions contemplated on its part hereby and
thereby. Each of this Agreement and the Escrow Agreement is a valid and binding
agreement of Purchaser enforceable against Purchaser in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
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(b) Corporate Organization. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas.
(c) Consents and Approvals. Other than the filing of
notification reports under the HSR Act, no consent, approval or authorization
of, or declaration, filing or registration with, any Governmental Authority or
any other Person, is required to be made or obtained by Purchaser in connection
with the execution and delivery of this Agreement or the Escrow Agreement by
Purchaser and the consummation by Purchaser of the transactions contemplated
hereby and thereby.
(d) Non-contravention. The execution and delivery of this
Agreement and the Escrow Agreement by Purchaser do not, and the consummation by
Purchaser of the transactions contemplated hereby and thereby on its part will
not, constitute or result in (i) a breach or violation of, or a default under,
the Certificate of Incorporation or By-Laws of Purchaser; (ii) a breach or
violation of, or a default under, any provision of (A) any Contract or (B) any
law, rule, ordinance or regulation or judgment, decree, order, award or
governmental or non-governmental Permit, in either case to which Purchaser or
its properties or assets is subject.
(e) Securities Act. Purchaser is purchasing the Shares
for its own account and not with a view to any distribution or resale of the
Shares in any manner that would be in violation of the Securities Act.
(f) Brokers and Finders. No Person is or will be entitled
to receive from the Sellers, the Company or any of its Subsidiaries, or their
respective directors, officers, employees or agents any investment banking,
financing, brokerage, finder's, breakup, termination or similar fee or
commission in connection with the transactions contemplated by this Agreement on
account of services rendered to Purchaser.
ARTICLE IV
Conditions to Closing
4.1 Conditions to the Obligations of Purchaser. The obligation of
Purchaser to consummate the purchase of the Shares under this Agreement shall be
subject to the satisfaction or waiver by Purchaser prior to or at the Closing of
each of the following conditions precedent:
(a) Representations, Warranties and Covenants. All
representations and warranties of the Sellers contained in this Agreement shall
be true and correct in all material respects at and as of the Closing Date as if
such representations and warranties were made at and as of the Closing Date;
provided, however, that for purposes of determining the satisfaction of the
condition contained in this Section 4.1(a), no effect shall be given to any
exception or qualification in such representations and warranties relating to
materiality or a Material Adverse Effect, and such representations and
warranties shall be deemed to be true and correct in all
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material respects only if the failure or failures of such representations and
warranties to be so true and correct without regard to materiality and Material
Adverse Effect exceptions or qualifications do not represent in the aggregate a
Material Adverse Effect; and the Company and the Sellers shall have performed
all agreements and covenants required hereby to be performed by the Company and
the Sellers, respectively, prior to or at the Closing Date. There shall be
delivered to Purchaser certificates of the Company and the Sellers to the
foregoing effect.
(b) Consents. All consents (including, without
limitation, all consents relating to leases of real property), approvals and
waivers from Governmental Authorities and other Persons necessary to permit
Purchaser to consummate the transactions contemplated hereby or necessary to
avoid a breach of, default under or termination of any Material Contract or
Permit of the Company or any Subsidiary shall have been obtained.
(c) Tender of All Shares. Notwithstanding the several
nature of the sale obligations of the Sellers, each Seller shall have tendered
to Purchaser at the Closing all of the Shares identified to such Seller in
Schedule 2.1 (it being understood that Purchaser shall not be obligated to
purchase any Shares unless all of the Shares are purchased).
(d) No Injunction. No injunction, temporary restraining
order, judgment or other order or decree of any Governmental Authority shall
have been issued or been entered and be in effect, nor shall any statute, rule
or regulation have been enacted or promulgated and be in effect, which could
prevent, materially delay or materially burden the transactions contemplated by
this Agreement nor shall there be pending or threatened any material litigation
or other proceeding with respect to the sale and purchase of the Shares.
(e) Opinion of Company's and Sellers' Counsel.
Shackleford, Farrior, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Company and the
Sellers, shall have delivered to Purchaser an opinion, dated the Closing Date,
substantially in the form of Exhibit C.
(f) Certificates. The Company shall furnish Purchaser
with such certificates of its chief executive officer and others and the Sellers
shall furnish Purchaser with such other certificates to evidence compliance with
the conditions set forth in this Article IV as may be reasonably requested by
Purchaser.
(g) HSR Act. The applicable waiting period, including any
extension thereof, under the HSR Act shall have expired or been terminated.
(h) Escrow Agreement. The Escrow Agreement shall have
been executed and delivered by the Escrow Agent, Purchaser and each Seller.
(i) Consulting and Non-Competition Agreement. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ shall have entered into a five-year consulting and non-competition
agreement substantially in the form of Exhibit D.
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(j) Repayment of ▇▇▇▇▇▇ Obligation. To the extent
sufficient funds have been provided by Purchaser, the ▇▇▇▇▇▇ Obligation shall
have been paid in full; the Lenders shall have released all Encumbrances
securing indebtedness under the Credit Agreement; and the Lenders shall have
delivered to the Company and Purchaser the certificate and the Releases
contemplated by Section 2.3(b).
(k) Financing. Purchaser shall have obtained from one or
more banks or other financial institutions term loans or other debt facilities
in an aggregate amount of not less than $45,000,000 to finance the acquisition
of the Shares hereunder.
(l) Transfer Taxes. The Sellers shall have paid, or
caused to be paid, all stock transfer and other transfer taxes required to be
paid in connection with the sale and delivery to Purchaser of the Shares owned
by Sellers, and shall have caused all appropriate stock transfer tax stamps to
be affixed to the certificate or certificates representing the Shares so sold
and delivered.
(m) FIRPTA Certificates. Either (i) each of the Sellers
shall have delivered to Purchaser a valid certification described in Treas. Reg.
Section 1.1445-2(b)(2) or (ii) the Sellers shall have delivered to Purchaser a
statement, issued by the Company no more than 30 days prior to the Closing Date,
that satisfies the requirements of Treas. Reg. Section 1.1445-2(c)(3).
(n) Optionholder Consents. The Sellers shall furnish the
Purchaser with consents executed by each Optionholder consenting to the payment
of the Optionholders Amount as contemplated hereunder; and all Options shall
have been canceled.
(o) Severance Schedule. The Sellers shall have furnished
to the Purchaser a schedule of severance payments to be made by the Company and
such schedule shall be reasonably satisfactory to Purchaser.
4.2 Conditions to the Obligations of the Sellers. The obligations
of the Sellers to consummate the sale of the Shares under this Agreement shall
be subject to the satisfaction prior to or at the Closing of each of the
following conditions precedent:
(a) Representations, Warranties and Covenants. All
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date as if
such representations and warranties were made at and as of the Closing Date and
Purchaser shall have performed all agreements and covenants required hereby to
be performed by Purchaser prior to or at the Closing Date. There shall be
delivered to the Sellers a certificate (signed by the President or a Vice
President of Purchaser) to the foregoing effect.
(b) Consents. All consents, approvals and waivers from
Governmental Authorities and other Persons necessary to permit the Sellers to
consummate the transactions
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contemplated hereby or necessary to avoid a breach of, default under or
termination of any Material Contract or Permit of the Company or any Subsidiary
shall have been obtained.
(c) No Injunction. No injunction, temporary restraining
order, judgment or other order or decree of any Governmental Authority shall
have been issued or been entered and be in effect, nor shall any statute, rule
or regulation have been enacted or promulgated and be in effect, which could
prevent, materially delay or materially burden the transactions contemplated by
this Agreement nor shall there be pending or threatened any material litigation
or other proceeding with respect to the sale and purchase of the Shares.
(d) Certificates. Purchaser shall furnish the Sellers
with such certificates of its chief executive officer and others to evidence
compliance with the conditions set forth in this Article IV as may be reasonably
requested by the Seller Representatives.
(e) HSR Act. The applicable waiting period, including any
extension thereof, under the HSR Act shall have expired or been terminated.
ARTICLE V
Covenants
5.1 Maintenance of Business and Preservation of Permits and
Services. The Sellers shall use their best efforts to cause the Company and the
Subsidiaries, and the Company shall use its best efforts, to diligently carry on
the business of the Company and the Subsidiaries in the ordinary course
consistent with past practice (including, without limitation, past practice
relating to cash management). The Sellers shall use their best efforts to cause
the Company and each Subsidiary and the Company shall use its best efforts, to
(i) preserve, protect and maintain all rights, properties and other assets
necessary to permit the Company and each Subsidiary to conduct its business as
presently conducted, (ii) to preserve their Material Contracts and material
Permits in full force and effect, (iii) keep available the services of their
present officers, employees, consultants and agents, (iv) maintain their present
suppliers and customers and (v) preserve their goodwill. Sellers shall use their
best efforts to prevent the Company and any Subsidiary from, and neither the
Company nor any Subsidiary shall, close any of the retail stores currently in
operation.
5.2 Interim Operations of the Company. Following the date hereof
and prior to the Closing (unless Purchaser shall otherwise agree in writing),
the Company agrees that, and each Seller shall use all of his power, authority
and discretion in respect of the Company and each Subsidiary to ensure that:
(a) the Company shall not (i) sell or pledge or agree to
sell or pledge any stock owned by it in any Subsidiary; (ii) amend its
Certificate of Incorporation or By-Laws; (iii) split, combine or reclassify the
outstanding shares of capital stock of the Company; or (iv) declare, set
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aside or pay any dividend payable in cash, stock or property with respect to any
class of capital stock;
(b) neither the Company nor any Subsidiary shall (i)
issue, sell, pledge, dispose of or encumber any shares of, or securities
convertible or exchangeable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of, capital stock of any class of the
Company or any Subsidiary or any other property or assets; (ii) except in the
ordinary course of its business as conducted prior to the date hereof, transfer,
lease, license, guarantee, sell, dispose of or create any Encumbrance with
respect to any assets or incur or modify any indebtedness or other liability;
(iii) acquire directly or indirectly by repurchase or otherwise any shares of
the capital stock of the Company or any Subsidiary; (iv) authorize any capital
expenditures in excess of $50,000 in the aggregate; (v) except with respect to a
sublease agreement with Doctor ▇▇▇▇▇▇ at the ▇▇▇▇▇▇▇▇ Pines, Florida store
proposed to be entered into (if such sublease agreement is on customary terms),
enter into any new sublease or management or consulting agreement with any
Person, including without limitation any doctor of optometry or professional
corporation of a doctor of optometry; (vi) enter into or renew any lease or
other commitment to be performed over a period exceeding one year where the
present value of payments to be made thereunder exceeds, individually or in the
aggregate, $50,000, (vii) make any acquisition of, or investment in, assets or
stock of any other Person except in the ordinary course of business; or (viii)
enter into any other transaction with a third party involving assets or
consideration having a value in excess of $50,000;
(c) neither the Company nor any Subsidiary shall (i)
other than as contemplated in Section 5.9 hereof, grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any Employee or Director or other Person; (ii) increase the compensation payable
by the Company or any Subsidiary to any member of senior management of the
Company or, except for normal periodic increases in the ordinary course of
business, increase the compensation payable by the Company or any Subsidiary to
any other Employee; or (iii) establish, amend, adopt, enter into, or make any
new (or accelerate or otherwise modify any existing) grants or awards under, any
Plan or award any bonus to any Employee or consultant;
(d) neither the Company nor any Subsidiary shall settle
or compromise any material claims or litigation or modify, amend or terminate
any of its Material Contracts or waive, release or assign any material rights or
claims;
(e) neither the Company nor any Subsidiary shall make any
tax election or permit any insurance policy naming it as a beneficiary or a loss
payee to be canceled or terminated;
(f) the Company shall not write down or charge (without
simultaneously reprovisioning) any reserve;
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(g) the Purchaser shall be given reasonable prior notice
of any proposed action or affirmative decision that is material or potentially
material to the Company or any Subsidiary;
(h) no action or omission shall occur, or decision be
made, in each case that is or would be material or potentially material to the
Company or any Subsidiary, as to which Purchaser has objected; and
(i) neither the Company nor any Subsidiary shall
authorize or enter into an agreement to do any of the foregoing.
5.3 Access by Purchaser. Seller shall allow Purchaser during
regular business hours through Purchaser's employees, agents and
representatives, to make such investigation of the business, properties, books
and records of the Company and the Subsidiaries, and to conduct such examination
of their condition, as Purchaser reasonably deems necessary or advisable to
familiarize itself with such business, properties, books, records, condition and
other matters, and to verify the representations and warranties of the Sellers
hereunder. No investigation by Purchaser or other information received by
Purchaser shall operate as a waiver or otherwise affect any representation,
warranty or other agreement given or made by the Sellers hereunder.
5.4 Consents and Best Efforts. As soon as practicable after
execution and delivery of this Agreement (and in no event more than 15 days
after the date hereof), Purchaser and the Sellers shall make all filings
required under the HSR Act. In addition, Purchaser and the Sellers will promptly
furnish all information as may be required by the Federal Trade Commission and
the Department of Justice under the HSR Act in order that the requisite
approvals for the purchase and sale of the Shares pursuant hereto, and the
transactions contemplated hereby, be obtained or to cause any applicable waiting
periods to expire. The Company, the Sellers and Purchaser will, as soon as
practicable (and in no event more than 15 days after the date hereof), commence
to take all other action required to obtain as promptly as practicable all other
necessary consents, approvals, authorizations and agreements of, and to give all
notices and make all other filings with, any third parties, including
Governmental Authorities, necessary to authorize, approve or permit the
consummation of the transactions contemplated hereby, and to obtain, from each
Optionholder a consent to the payment of the Optionholders Amount as
contemplated hereunder, and the Company, Purchaser and the Sellers shall
cooperate with each other with respect thereto. In addition, subject to the
terms and conditions herein provided, each of the parties hereto covenants and
agrees to use its reasonable best efforts to take, or cause to be taken, all
action or do, or cause to be done, all things necessary, proper or appropriate
to consummate and make effective the transactions contemplated hereby and to
cause the fulfillment of the parties' obligations hereunder. Purchaser and the
Sellers further agree that, subject to the terms and conditions of this
Agreement, each of Purchaser and the Sellers shall use reasonable best efforts
to cause the Closing to occur by September 30, 1996 or as promptly thereafter as
practicable.
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5.5 Notification of Certain Matters. The Sellers and the Company
shall C give prompt notice to Purchaser, and Purchaser shall give prompt notice
to the Seller Representatives, of (i) the occurrence, or failure to occur, of
any event which occurrence or failure- would be likely to cause any
representation or warranty contained in this Agreement and required to be made
by the notifying party to be untrue or inaccurate in any material respect any
time from the date hereof to the Closing Date and (ii) any material failure of
the Company, Purchaser or any Seller, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder, and each party shall use all reasonable efforts to remedy such
failure.
5.6 No Mergers, Consolidations, Sale of Stock, Etc. Neither the
Company nor any Seller will, directly or indirectly, enter into negotiations
relating to the sale or exchange of any Shares or the capital stock of any
Subsidiary, the merger of the Company or any Subsidiary with, or the direct or
indirect disposition of a significant amount of the Company's or any
Subsidiary's assets or business to any Person other than Purchaser or its
Affiliates or provide any assistance or any information to or otherwise
cooperate with any Person in connection with any such inquiry, proposal or
transaction. In the event that the Company or any Seller receives a solicited or
unsolicited offer for such a transaction or obtains information that such an
offer is likely to be made, the Company or such Seller will provide Purchaser
with notice thereof as soon as practical after receipt thereof, including the
identity of the prospective purchaser or soliciting party.
5.7 Publicity. Between the date hereof and the Closing (or, if
the Closing does not occur, the date this Agreement is terminated), Purchaser,
the Company and the Seller Representatives agree to consult with each other and
to coordinate the issuance of any press release or similar public announcement
or communication, written or oral, in respect of the transactions contemplated
by this Agreement; provided, however, that no party shall be restrained, after
consultation with the others, from making such disclosure as it shall be advised
by counsel is required by Applicable Laws.
5.8 Filing Tax Return. Sellers agree to cause the Company to file
prior to the Closing Date all required Tax Returns for the Company's fiscal year
ended February 3, 1996.
5.9 Severance Payments. Purchaser agrees with Sellers that
Purchaser shall cause the Company, on and after the Closing Date, to make
severance payments, which, when aggregated with any payments by the Purchaser or
the Company for accrued vacation, shall not exceed $1,500,000 in the aggregate,
to certain employees of the Company in accordance with the Term Sheet for
Severance and Accrued Vacation Payments dated the date hereof and delivered by
Sellers to the Purchaser.
5.10 Sale-Leaseback Obligation Clarification Letter. Sellers agree
to provide to Purchaser, at least ten Business Days prior to the Closing Date, a
letter (the "Sale-Leaseback Obligation Clarification Letter") executed by an
executive officer of Eckerd Corporation, in form and substance reasonably
satisfactory to Purchaser, to the effect that the purchase price for
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any Sale-Leaseback Stores (as defined in the Sale Leaseback Lease) subject to
mandatory purchase on February 1, 1999 (or within 10 days thereafter) pursuant
to the terms of Section 1.4(c) of the Asset Purchase Agreement shall equal only
the amount shown ($9,979,302 in the aggregate) on Schedule 1.4(c) attached to
the First Amendment to Asset Purchase Agreement dated March 29, 1994 and shall
not include any Early Termination Rent (as defined in the Sale-Leaseback Lease)
or any other amounts due pursuant to the Sale-Leaseback Lease, the Trust
Indenture and Security Agreement, the notes issued thereunder, or any notes
issued in a refinancing thereof. Should Sellers not timely produce the
Sale-Leaseback Obligation Clarification Letter in accordance with the terms of
the prior sentence, Sellers agree that $275,000 of the Sellers Amount (after
deducting payments to be made by Purchaser to the Escrow Agent for deposit into
the Escrow Funds (as defined in the Escrow Agreement)) shall be deposited by
Purchaser into a separate escrow account to pay for such Early Termination Rent
or any other amounts due (other than the amount shown ($9,979,302 in the
aggregate) on Schedule 1.4(c) of the First Amendment to Asset Purchase Agreement
dated March 29, 1994) under the Sale-Leaseback Lease, the Trust Indenture and
Security Agreement, the notes issued thereunder, or any notes issued in a
refinancing thereof, in connection with the mandatory purchase of the
Sale-Leaseback Stores. Sellers and Purchasers agree that normal transaction
expenses (i.e., real estate transfer taxes, counsel fees, etc.) shall not be
reimbursed by any payments out of the aforementioned escrow account. Such escrow
will terminate and any remaining funds therein will be paid to Sellers on the
last Business Day of March 1999.
5.11 Further Assurances. Subject to the terms and conditions
hereof, the parties hereto agree to use their respective best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper and advisable under Applicable Laws to consummate the purchase
and sale of the Shares on the terms provided hereunder. In case at any time
after the Closing any further action is necessary, proper or advisable to carry
out the purposes of this Agreement, as soon as reasonably practicable the
parties hereto shall take all such action to effectuate such purposes.
ARTICLE VI
Taxes
6.1 Tax Periods Ending on or Before the Closing Date. The
Purchaser shall request that KPMG prepare and file or cause to be filed all Tax
Returns required to be filed after the Closing Date for the Company and the
Subsidiaries in respect of the period beginning on February 4, 1996 and ending
on the Closing Date. The Company and KPMG shall deliver a copy of each such Tax
Return and any schedules, work papers and other documentation then available
that are relevant to the preparation of such Tax Return to Purchaser and to such
accountants as Purchaser may designate for their review and approval, which may
not be unreasonably withheld, not less than 30 days prior to the date on which
such Tax Return is required to be filed. If Purchaser objects to any items
reflected on such Tax Returns, KPMG and Purchaser shall attempt to resolve the
disagreement. If the parties are unable to resolve the
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disagreement, the dispute shall be referred to Price Waterhouse LLP or another
internationally recognized firm of independent public accountants having no
material relationship with Purchaser, Company, any Seller or any of their
respective Affiliates, as to which the Seller Representatives and Purchaser
mutually agree, whose determination shall be binding upon the parties. The fees
and expenses of Price Waterhouse LLP shall be borne equally by the Sellers and
Purchaser.
6.2 Tax Periods Beginning Before and Ending After the Closing
Date. Purchaser shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of the Company and the Subsidiaries for Tax periods which
begin before the Closing Date and end after the Closing Date.
6.3 Cooperation on Tax Matters.
(a) Purchaser, the Company and the Subsidiaries and the
Sellers shall cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns pursuant to this
Section and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. The Company and the Subsidiaries and the
Sellers agree (A) to retain all books and records with respect to Tax matters
pertinent to the Company and the Subsidiaries relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Purchaser or Sellers, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, the Company and
the Subsidiaries or Sellers, as the case may be, shall allow the other party to
take possession of such books and records.
(b) Purchaser and the Sellers further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any Governmental Authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
(c) Purchaser and the Sellers further agree, upon
request, to provide the other party with all information that either party may
be required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
6.4 Tax Sharing Agreements. Any tax sharing or similar agreements
with respect to or involving the Company and the Subsidiaries shall be
terminated as of the Closing Date and,
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after the Closing Date, the Company and the Subsidiaries shall not be bound
thereby or have any liability thereunder.
6.5 Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any New York
State and City real property transfer and gains taxes and any similar taxes
imposed in other states or political subdivisions thereof), shall be paid by the
Sellers when due; the Sellers will, at their own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees; and, if required by
applicable law, Purchaser will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
ARTICLE VII
Survival and Indemnification
7.1 Survival of Representations, Warranties and Covenants. All
representations and warranties of the parties contained in this Agreement,
including any Schedules made a part hereof, and any covenants or other
agreements the performance of which is specified to occur on or prior to the
Closing or the Closing Date, shall survive the Closing hereunder for a period of
two years following the Closing Date, except for (a) the representations and
warranties set forth in Section 3.1(1) (relating to Financial Information),
which shall survive until the date that is 90 days after the completion of the
annual audit of the Company for the fiscal year ending in January 1997, (b) the
representations and warranties set forth in Section 3.1(q) (relating to Taxes),
which shall survive for a period of three years following the Closing Date,
except to the extent that any inaccuracy in the representations and warranties
set forth in Section 3.1(q) relates, or relate, to (i) a false or fraudulent
return with intent to evade tax (within the meaning of Section 6501(c)(1) of the
Code), (ii) a willful attempt in any manner to defeat or evade tax (within the
meaning of Section 6501(c)(2) of the Code), (iii) the failure to file a return
or (iv) a substantial omission described in Section 6501(e) of the Code, in
which case Section 3.1(q) shall survive until the expiration (with valid
extensions) of the applicable statute(s) of limitations and (c) the
representations and warranties set forth in Sections 3.1(a), 3.1(c), 3.1(d) and
3.1(g), which shall survive indefinitely. Any covenant or other agreement herein
any portion of the performance of which may or is specified to occur after the
Closing shall survive the Closing hereunder indefinitely or for such lesser
period of time as may be specified therein.
7.2 Indemnification by the Sellers.
(a) Indemnification. Each Seller, severally, based on
such Seller's Pro Rata Share, and not jointly, agrees to indemnify and hold
harmless Purchaser and each of its officers, directors, subsidiaries,
affiliates, controlling persons, successors and permitted assigns, and the
Company and the Subsidiaries (each of the foregoing being an "Indemnified
Party"), from and against any and all direct and indirect costs, claims,
judgments, assessments, deficiencies,
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penalties and interest, damages, losses, liabilities, and expenses (including,
without limiting the generality of the foregoing, reasonable attorneys' fees and
disbursements), together with any costs or expenses incurred to investigate the
same or enforce the provisions hereof (collectively, "Losses"), arising out of,
based upon, relating to or resulting from (i) the inaccuracy of any
representation and warranty by the Company or the Sellers set forth herein or in
any closing certificate delivered by the Company or any Seller or (ii) the
failure by the Sellers or the Company to perform any covenant contained in this
Agreement; provided, however, that to the extent that the representations and
warranties contained in Sections 3.1(a), (d), (e), (f) and (g) relate solely
to a Seller in its individual (or fiduciary) capacity, such Seller severally
indemnities and holds harmless the Indemnified Persons for all Losses arising
out of, based upon, relating to or resulting from, the inaccuracy of any such
representation and warranty only insofar as it relates solely to such Seller in
its individual (or fiduciary) capacity.
(b) Limitations on Indemnification. The Sellers shall not
indemnify or hold harmless the Indemnified Parties, and no Indemnified Party
shall seek reimbursement or indemnification from the Sellers for, Losses that
arise out of or result from any of the events or conditions set forth in Section
7.2(a) unless such Losses aggregate more than $300,000 (the "Threshold") (except
in the case of Losses arising out of, based upon, relating to or resulting from
the inaccuracy of any representation and warranty set forth in Section 3.1(q)
(relating to Taxes), in which case the Threshold shall equal $0) but then shall
be entitled to full recovery for all such Losses if such threshold is exceeded.
Subject to Section 7.5, the Sellers shall have no obligation to pay to the
Indemnified Parties more than $3,000,000 for any such Losses. With respect to
any inaccuracy of the representations and warranties set forth in Section 3.1(s)
(relating to Environmental Laws), Purchaser agrees to cause the Company to first
pursue any available remedies under the indemnity provisions of the Asset
Purchase Agreement. Any Loss arising from the inaccuracy of any representations
and warranties set forth in Section 3.1(s) shall be mitigated (on a dollar for
dollar basis) by any payment received from Eckerd Corporation pursuant to such
indemnity with respect to a claim relating to such representations and
warranties.
(c) No Contribution. None of the Sellers shall have any
right to seek contribution from any Indemnified Party with respect to all or any
part of the Sellers' indemnification obligations under this Section 7.2.
7.3 Other Limitations on Indemnification. The parties agree that
(a) no Indemnified Party may recover under Section 7.2(a)
any Losses relating to an event or condition in respect of which an adjustment
to the Share Purchase Price for the fall amount of such Losses shall have been
made pursuant to Section 2.4 of this Agreement;
(b) Losses shall be calculated net of any recoveries from
third parties properly allocable to such Losses and received by the Indemnified
Party; and
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(c) all Losses subject to indemnification hereunder shall
be determined net of any cash tax benefit actually realized by the Indemnified
Party or including any tax liability incurred by the Indemnified Party, as the
case may be, resulting from such Losses.
7.4 Method of Asserting Claims, Etc.
(a) All claims for indemnification by any Indemnified
Party hereunder shall be asserted and resolved as set forth in this Section 7.4.
In the event that any written claim or written demand for which an Indemnifying
Party would be liable to any Indemnified Party hereunder is asserted against or
sought to be collected from any Indemnified Party by a third party, such
Indemnified Party shall promptly, but in no event more than 15 days following
such Indemnified Party's receipt of such claim or demand, notify the
Indemnifying Party of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not in any
manner prejudice the right of the Indemnified Party to indemnification to the
fullest extent provided hereunder) (the "Third Party Claim Notice") and in the
event that an Indemnified Party shall assert a claim for indemnity under this
Article VII not including a third party claim, the Indemnified Party shall
notify the Indemnifying Party promptly following its discovery of the facts or
circumstances giving rise thereto (together, with a Third Party Claim Notice, a
"Claim Notice"); provided, that no such notice need be provided to the
Indemnifying Party if the applicable Threshold has not been exceeded and will
not be exceeded by such claim or demand; and provided, further, that the failure
to notify on the part of the Indemnified Party in the manner set forth herein
shall not foreclose any rights otherwise available to such Indemnified Party
hereunder, except to the extent that the Indemnifying Party is materially
prejudiced by such failure to notify. The Indemnifying Party shall have 30 days
from the personal delivery or mailing of the Third Party Claim Notice (except
that such a period shall be decreased to a time 10 days before a scheduled
appearance date in a litigated matter) (the "Notice Period") to notify the
Indemnified Party (i) whether or not the Indemnifying Party disputes the
liability of the Sellers to the Indemnified Party hereunder with respect to such
claim or demand and (ii) whether or not it desires to defend the Indemnified
Party against such claim or demand, which it shall not be entitled to do until
the Threshold is exceeded. All costs and expenses incurred by the Indemnifying
Party in defending such claim or demand shall be a liability of, and shall be
paid by, the Indemnifying Party; provided, however, that the amount of such
expenses shall be a liability of the Indemnifying Party subject to the
limitations set forth in Section 7.2(b). In the event that the Indemnifying
Party notifies the Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against such claim or demand, which it shall not be
entitled to do until the Threshold is exceeded and except as hereinafter
provided, the Indemnifying Party shall have the right to defend the Indemnified
Party by appropriate proceedings and by counsel reasonably acceptable to the
Indemnified Party, provided that the Indemnifying Party proceeds in good faith,
expeditiously and diligently. If any Indemnified Party desires to participate
in, but not control, any such defense or settlement as to which the Indemnifying
Party has assumed the defense in accordance with the foregoing, it may do so at
its sole cost and expense. The Indemnified Party shall not settle a claim or
demand without the consent of the Indemnifying Party. The Indemnifying Party
shall not, without the prior written
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consent of the Indemnified Party, settle, compromise or offer to settle or
compromise any such claim or demand (including, without limitation, in
connection with any audit, adjustment or assessment relating to Taxes) on a
basis that (i) would result in the imposition of a consent order, injunction or
decree which would restrict the future activity or conduct of, or (ii) would
otherwise have a Material Adverse Effect on, the Indemnified Party or any
subsidiary or Affiliate thereof. If the Indemnifying Party elects not to defend
the Indemnified Party against such claim or demand, whether by not giving the
Indemnified Party timely notice as provided above or otherwise, then the amount
of any such claim or demand, or, if the same be contested by the Indemnified
Party, then that portion of any such claim or demand as to which such defense is
unsuccessful (and all reasonable costs and expenses pertaining to such defense)
shall be the liability of the Indemnifying Party hereunder, subject to the
limitations set forth in Section 7.2(b). To the extent the Indemnifying Party
shall control or participate in the defense or settlement of any third party
claim or demand, the Indemnified Party will give to the Indemnifying Party and
its counsel reasonable access to all business records and other documents
relevant to such defense or settlement, and shall permit them upon reasonable
request to consult with the employees and counsel of the Indemnified Party. The
Indemnified Party shall use its best efforts in the defense of all such claims,
and in connection therewith shall be entitled to reimbursement by the
Indemnifying Party of expenses directly related to efforts undertaken at the
specific request of the Indemnifying Party.
(b) In the event that an Indemnified Party shall assert a
claim under Section 7.2(a) for indemnification by the Sellers (or any individual
Seller), whether including a third party claim or otherwise, such claim shall be
governed by the procedures set forth in Section 7.4(a) and subject to the
limitations set forth in Section 7.2(b) and, if made prior to the second
anniversary (third anniversary for claims arising out of, based upon, relating
to or resulting from the inaccuracy of any representation and warranty set forth
in Section 3.1(q) (relating to Taxes)) of the Closing Date, (i) shall be
asserted against the Escrowed Indemnification Fund (in accordance with the terms
of the Escrow Agreement) to the extent of any amounts then remaining and not
then deliverable in respect of or reserved against another claim hereunder, by
the additional delivery of the Claim Notice to the Escrow Agent and (ii) to the
extent such claim otherwise satisfies the terms and conditions for reimbursement
under the Escrow Agreement, shall be paid from such Escrowed Indemnification
Fund then available.
7.5 Other Remedies. The indemnification provisions of this
Article VII shall constitute the exclusive remedy for any post-Closing claims
for the events or conditions set forth in Section 7.2(a) (and such claims shall
be payable solely from the Escrowed Indemnification Fund), except for claims
arising (i) out of any breach of the provisions of this Article VII or the
Escrow Agreement and (ii) under Applicable Law for any act or omission
constituting fraud or fraudulent misrepresentation by any party hereto
(including, without limitation, those acts or omissions referred to in Section
7.1(b)(i), (ii)2(iii) and (iv)).
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ARTICLE VIII
Miscellaneous
8.1 Payment of Expenses. Except as expressly provided in Sections
2.4(c), 4.1(1) and 6.1, whether or not the transactions contemplated by this
Agreement shall be consummated, each party hereto shall pay all of his or its
own out-of-pocket and other expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incident to preparing for, entering into and
carrying out this Agreement; provided, however, that the Company shall pay all
such out-of-pocket and other expenses reasonably incurred by Sellers (including
the reasonable prepaid fees of KPMG relating to KPMG's preparation of Tax
Returns as contemplated in Section 6.1) to the extent that they have been
accrued and paid prior to the Closing Date. Purchaser shall pay the fees and
expenses of KPMG in connection with KPMG's audit of the Closing Financial
Statements to the extent that such fees and expenses do not exceed the lesser of
(a) customary audit fees consistent with KPMG's past practice with the Company
and (b) $38,750.
8.2 Waiver of Conditions. The conditions to each party's
obligations to consummate the transactions contemplated hereby are for the sole
benefit of such party and may be waived by such party in whole or in part to the
extent permitted by Applicable Laws. Any such waiver shall be valid only if set
forth in a written instrument signed on behalf of such party.
8.3 Seller Representatives. The Seller Representatives are hereby
appointed by each Seller to act for the Sellers in connection with the
transactions contemplated by this Agreement, and any action under or in respect
of this Agreement taken by any one or more of the Seller Representatives shall
be binding upon all the Sellers, and any such action taken by one of the Seller
Representatives shall be binding upon the other, and any such action may be
relied on by Purchaser as a duly authorized action taken on behalf of, and
binding upon, all Sellers. Each Seller agrees that any payment due to a Seller
made by the Purchaser or the Escrow Agent to a Seller Representative shall
discharge the obligation of the Purchaser and/or the Escrow Agent to such
Seller.
8.4 Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned:
(a) by the Purchaser, within seven Business Days after
the date of this Agreement, if, during such period, the Purchaser shall have
determined that the Visionworks, Inc. Lease Summary provided to the Purchaser by
the Sellers is inaccurate in any material respect, including, without
limitation, any material inaccuracy as to the terms of any lease described in
such Lease Summary;
(b) by either the Sellers or Purchaser, by written notice
to the other party or parties, if the conditions to such parties' obligations
set forth in Article IV have not been or could not be satisfied on or before
October 31, 1996 (unless waived by the party entitled to the benefit
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thereof) except that, where such failure to so satisfy the conditions set forth
in Article IV results solely from the failure to satisfy the conditions set
forth in Sections 4.1(b) or 4.2(b), such date shall be extended to November 30,
1996; or
(c) by mutual agreement of Purchaser and the Seller
Representatives;
in either case, without liability of any party hereto; provided, however, that
nothing herein shall relieve any party from liability for any breach of this
Agreement prior to such termination and no party shall be released from
liability hereunder if this Agreement is terminated and the transactions
abandoned by reason of (i) willful failure of such party to have performed its
obligations hereunder, or (ii) any knowing misrepresentation made by such party
of any matter set forth herein; and provided further that, notwithstanding any
termination of this Agreement, the provisions of Sections 5.7 (Publicity) and
8.1 (Expenses) shall continue in full force and effect. In the event that this
Agreement shall be terminated by Purchaser pursuant to clause (a) above solely
as a result of the failure of the condition set forth in Section 4.1(k) to be
satisfied, Purchaser shall pay to the Sellers $1,000,000, which payment shall be
the sole and exclusive remedy of the Sellers hereunder for the failure of such
condition.
8.5 Schedules. The inclusion of any matter in any Schedule to
this Agreement shall be deemed to be an inclusion for all purposes of this
Agreement, including each representation and warranty to which it may relate.
8.6 Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
8.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
8.8 Notices. Any notice, request, instruction or other document
to be given hereunder shall be in writing and shall be given by hand delivery,
courier service, facsimile transmission or telex (with confirmation of receipt)
at the following addresses, or at such other addresses as the parties may
designate by written notice in the manner aforesaid:
If to Purchaser:
Eye Care Centers of America, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With copies to:
▇▇▇▇▇ Capital Management Incorporated
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Sellers:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Shackleford, Farrior, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
CGW Southeast Partners 1, L.P.
Twelve ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
8.9 Entire Agreement, etc. This Agreement (i) constitutes the
entire agreement, and supersedes all other prior agreements, understandings,
representations and warranties, both written and oral, among the parties, with
respect to the subject matter hereof; (ii) shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, successors and
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permitted assigns and, in the case of each Seller which is a trust, upon the
successors or distributees thereof; (iii) is for the benefit only of such
parties and is not intended to create any obligations to, or rights in respect
of, any other persons or entities other than Indemnified Parties; and (iv) shall
not be assignable by operation of law or otherwise, except to any Person or
Persons directly or indirectly controlling, controlled by or under common
control with Purchaser that has or together have a net worth at least equal to
that of Purchaser at the time of such assignment; provided, however, that, after
the Closing Date, Purchaser may assign its interest in this Agreement to any
Person.
8.10 Injunctive Relief. The Sellers and Purchaser acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement, this being in addition to any
other remedy to which they may be entitled by law or equity.
8.11 Captions. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
8.12 Termination of Company Shareholders Agreement. By execution
hereof, each Seller agrees to the termination, effective as of the Closing Date,
of the Shareholders Agreement, dated as of March 28, 1994, relating to the
ownership by the Sellers of the Shares, in compliance with Section 10.1 thereof
and, notwithstanding anything to the contrary contained in such Shareholder's
Agreement, each Seller hereby consents to the transactions contemplated by this
Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the date first
hereinabove written.
EYE CARE CENTERS OF AMERICA, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President/C.E.O.
VISIONWORKS HOLDINGS, INC.
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
SELLERS
CGW SOUTHEAST PARTNERS, I.L.P.
As General Partner
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Managing Director
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
1996 IRREVOCABLE TRUST
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Trustee
for the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, 1996
Irrevocable Trust
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Trustee
for the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, 1996
Irrevocable Trust
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Trustee
for the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, 1996
Irrevocable Trust
SUNBANK/SOUTH FLORIDA N.A. AND ▇▇▇▇
▇. ▇▇▇▇▇▇ AS CO-SUCCESSOR TRUSTEES
FOR ▇▇▇▇ ▇. ▇▇▇▇ UNDER AGREEMENT
DATED DECEMBER 17, 1993, IRREVOCABLE
SunBank/South Florida National
Association, as Co-Successor
Trustee:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Trust Officer
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Co-Successor Trustee
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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