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EXHIBIT 10.23
"CONFIDENTIAL TREATMENT
REQUESTED BY VISION TWENTY-ONE, INC."
AGREEMENT AND PLAN OF REORGANIZATION
DATED: DECEMBER 1, 1996
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . 11
4. REPRESENTATIONS AND WARRANTIES OF THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5. REPRESENTATIONS AND WARRANTIES OF VISION 21 AND THE SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . 32
6. {INTENTIONALLY OMITTED} . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . 36
8. SECURITIES LAW MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9. COVENANTS OF THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10. COVENANTS OF VISION 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11. COVENANTS OF VISION 21, THE SUBSIDIARY, THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . 46
12. CONDITIONS PRECEDENT OF VISION 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13. CONDITIONS PRECEDENT OF THE COMPANY AND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14. CLOSING DELIVERIES; ESCROW OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15. POST CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
17. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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18. PHYSICIAN EMPLOYMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
19. NON-COMPETITION AND CONFIDENTIALITY COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
20. DISPUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
21. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement"), dated
effective as of December 1, 1996, is by and among EYE INSTITUTE OF SOUTHERN
ARIZONA, P.C., an Arizona professional corporation, (the "Company"), ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, M.D. and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician"), VISION 21, INC.,
a Florida corporation ("Vision 21"), and VISION 21 OF ARIZONA, INC., a Florida
professional corporation (the "Subsidiary").
R E C I T A L S
A. Physician is a physician licensed to practice medicine in
the State (as defined herein) and currently conducts an ophthalmology practice
through the Company and through optometrist employees currently conducts an
optometry practice through the Company.
B. Physician owns all of the issued and outstanding shares of
capital stock of the Company.
C. The Company and Vision 21 desire to effect a business
combination and merger of the Company with and into Vision 21's wholly-owned
subsidiary, the Subsidiary, upon the terms and subject to the satisfaction of
the conditions precedent contained herein (the "Merger").
D. It is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section
368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as
amended (the "Code").
E. The Subsidiary cannot acquire certain of the Company's
assets because of laws prohibiting general business corporations from engaging
in the practice of medicine or optometry, or exercising control over physicians
practicing medicine or optometrists practicing optometry, and accordingly, the
Company, Vision 21 and the Subsidiary desire that the Company divest itself of
such assets prior to the Merger.
F. Prior to the Merger, the Company intends to form a new
professional corporation ("New P.C.") to which it intends to transfer its
medical and optometry business and all of its Medical Assets (as defined
herein) in exchange for all of New P.C.'s capital stock and to distribute such
stock to Physician in a transaction that will qualify for tax free treatment
under Section 355 of the Code.
G. New P.C. intends to employ the Physician and enter into a
Business Management Agreement (as defined herein) with the Company immediately
prior to the Merger; and
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H. As a result of the Merger, the Surviving Corporation (as
defined herein) will acquire the medical and optometry practice management
business and all of the Nonmedical Assets (as herein defined) of the Company
associated with such business to the extent permitted by law and assume all of
Company's obligations under the Business Management Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
1.1. AAA. The term "AAA" shall mean the American
Arbitration Association.
1.2. Accountants. The term "Accountants" shall mean
the accounting firm for Vision 21.
1.3. Accounts Receivable. The term "Accounts
Receivable" shall have the meaning set forth in Section 3.39.
1.4. Acquisition Proposal. The term "Acquisition
Proposal" shall have the meaning set forth in Section 3.34.
1.5. Affiliate. The term "Affiliate" with respect to
any person or entity shall mean a person or entity that directly or indirectly
through one or more intermediaries, controls, or is controlled by or is under
common control with, such person or entity.
1.6. Applicable Laws. The term "Applicable Laws"
shall have the meaning set forth in Section 21.5.
1.7. Audit. The term "Audit" shall have the meaning
set forth in Section 3.9.
1.8. Business. The term "Business" shall have the
meaning set forth in Section 19.1(b)(i).
1.9. Business Management Agreement. The term
"Business Management Agreement" shall mean the Business Management Agreement
entered into between the Company and New P.C. prior to the Closing.
1.10. Cash Compensation. The term "Cash Compensation"
shall have the meaning set forth in Section 3.11(a).
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1.11. Claim Notice. The term "Claim Notice" shall have
the meaning set forth in Section 16.3(a).
1.12. Closing. The term "Closing" shall mean the
consummation of the transactions contemplated by this Agreement.
1.13. Closing Date. The term "Closing Date" shall mean
December 16, 1996 or such other date as mutually agreed upon by the parties.
1.14. Proposed Merger Consideration Adjustment. The
term "Proposed Merger Consideration Adjustment" shall have the meaning set
forth in Section 2.11(b).
1.15. Code. The term "Code" shall mean the Internal
Revenue Code of 1986, as amended.
1.16. Commitments. The term "Commitments" shall have
the meaning set forth in Section 3.15(a).
1.17. Common Stock. The term "Common Stock" or "Vision
21 Common Stock" shall mean the common stock, par value $.01 per share, of
Vision 21.
1.18. Company Balance Sheet. The term "Company Balance
Sheet" shall have the meaning set forth in Section 3.9.
1.19. Company Balance Sheet Date. The term "Company
Balance Sheet Date" shall have the meaning set forth in Section 3.9.
1.20. Company Common Stock. The term "Company Common
Stock" shall mean the common stock per share of the Company.
1.21. Compensation Plans. The term "Compensation
Plans" shall have the meaning set forth in Section 3.11(b)(ii).
1.22. Competing Business. The term "Competing
Business" shall have the meaning set forth in Section 19.1(b).
1.23. Competitor. The term "Competitor" shall mean any
person or entity which, individually or jointly with others, whether for its
own account or for that of any other person or entity, owns, or holds any
ownership or voting interest in any person or entity engaged in, the practice
of ophthalmology, the practice of optometry, the operation of out patient eye
surgical facilities, the operation of refractive surgery centers and the
operation of optical shops; provided, however, that such term shall not include
any Affiliate of Vision 21 or any entity with which Vision 21 has an agreement
similar to the Business Management Agreement in effect.
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1.24. Confidential Information Memorandum. The term
"Confidential Information Memorandum" shall mean that certain disclosure
memorandum distributed by Vision 21 to the Company and Physician dated as of
September 27, 1996, and any amendments or revisions thereto.
1.25. Controlled Group. The term "Controlled Group"
shall have the meaning set forth in Section 3.12(g).
1.26. Corporation Law. The term "Corporation Law"
shall mean the statutes, regulations and laws governing business corporations
and professional corporations in the State.
1.27. Damages. The term "Damages" shall have the
meaning set forth in Section 16.1.
1.28. Effective Time. The term "Effective Time" shall
have the meaning set forth in Section 2.3.
1.29. Election Period. The term "Election Period"
shall have the meaning set forth in Section 16.3(a).
1.30. Employee Benefit Plans. The term "Employee
Benefit Plans" shall have the meaning set forth in Section 3.12(a).
1.31. Employee Policies and Procedures. The term
"Employee Policies and Procedures" shall have the meaning set forth in Section
3.11(d).
1.32. Employment Agreements. The term "Employment
Agreements" shall have the meaning set forth in Section 3.11(c).
1.33. Environmental Laws. The term "Environmental
Laws" shall have the meaning set forth in Section 3.27(a).
1.34. ERISA. The term "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
1.35. Exchange Act. The term "Exchange Act" shall mean
the Securities Exchange Act of 1934, as amended.
1.36. FBCA. The term "FBCA" shall mean the Florida
Business Corporation Act.
1.37. Financial Statements. The term "Financial
Statements" shall have the meaning set forth in Section 3.9.
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1.38. GAAP. The term "GAAP" shall mean generally
accepted accounting principles, applied on a consistent basis with prior
periods, set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity or other practices and procedures as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of the determination.
1.39. Governmental Authority. The term "Governmental
Authority" shall mean any national, state, provincial, local or tribunal
governmental, judicial or administrative authority or agency.
1.40. Indemnified Party. The term "Indemnified Party"
shall have the meaning set forth in Section 16.3(a).
1.41. Indemnifying Party. The term "Indemnifying
Party" shall have the meaning set forth in Section 16.3(a).
1.42. Indemnity Notice. The term "Indemnity Notice"
shall have the meaning set forth in Section 16.3(d).
1.43. Initial Public Offering. The term "Initial
Public Offering" shall mean the potential initial underwritten public offering
of Vision 21 Common Stock contemplated by Vision 21.
1.44. Insurance Policies. The term "Insurance
Policies" shall have the meaning set forth in Section 3.16.
1.45. IRS. The term "IRS" shall mean the Internal
Revenue Service.
1.46. Material Adverse Effect. The term "Material
Adverse Effect" shall mean a material adverse effect on the Nonmedical Assets
and the Company's business, operations, condition (financial or otherwise) or
results of operations, taken as a whole, considering all relevant facts and
circumstances.
1.47. Medical Assets. The term "Medical Assets" shall
mean the Company's right, title and interest in any assets as set forth on
Schedule 1.47A which shall also be deemed to include (a) life insurance
policies covering the life of any employee of the Company, and (b) personal
effects listed on Schedule 1.47B.
1.48. Merger . The term "Merger" shall have the
meaning set forth in the Recitals hereto.
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1.49. Merger Consideration. The term "Merger
Consideration" shall mean the consideration set forth in Sections 2.8, 2.9 and
2.11 of this Agreement.
1.50. Merger Consideration Adjustment Amount. The term
"Merger Consideration Adjustment Amount" shall have the meaning set forth in
Section 2.12(c).
1.51. Nonmedical Assets. The term "Nonmedical Assets"
shall mean all of the assets of the Company except for the Medical Assets.
1.52. Optometrist Employee. The term "Optometrist
Employee" shall mean those licensed optometrists who are employees of the
Company, but are not shareholders.
1.53. Optometrist Employment Agreement. The term
"Optometrist Employment Agreement" shall mean the Optometrist Employment
Agreement to be executed between any Optometrist Employee and New P.C.
1.54. Payors. The term "Payors" shall have the meaning
set forth in Section 3.30.
1.55. Permitted Encumbrances. The term "Permitted
Encumbrances" shall have the meaning set forth in Section 3.14(b).
1.56. Physician Employee. The term "Physician
Employee" shall mean those licensed physicians who are employees of the
Company, but are not shareholders.
1.55 Physician Employment Agreement. The term
"Physician Employment Agreement" shall mean the Physician Employment Agreement
to be executed between Physician and New P.C., and between any Physician
Employee and New P.C.
1.57. Practice. The term "Practice" shall mean the
ophthalmology, optometry and all other vision related health-care practices
conducted from time to time by the Company prior to and on the Closing Date and
by the New P.C. after the Closing Date.
1.58. Professional Employee. The term "Professional
Employee" shall mean any Physician Employee or Optometrist Employee.
1.59. Proprietary Rights. The term "Proprietary
Rights" shall have the meaning set forth in Section 3.17.
1.60. Registration Statement. The term "Registration
Statement" shall have the meaning set forth in Section 11.1.
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1.61. Related Acquisitions. The term "Related
Acquisitions" shall mean the pending acquisitions by Vision 21 with third
parties which are expected to be completed simultaneously with this Merger.
1.62. Reorganization. The term "Reorganization" shall
have the meaning set forth in Section 15.3(a).
1.63. SEC. The term "SEC" shall mean the Securities
and Exchange Commission.
1.64. Securities. The term "Securities" shall mean the
shares of Vision 21 Common Stock to be delivered to Physician at the Closing.
1.65. Securities Act. The term "Securities Act" shall
mean the Securities Act of 1933, as amended.
1.66. State. The term "State" shall mean the State in
which the Company is incorporated.
1.67. Surviving Corporation. The term "Surviving
Corporation" shall have the meaning set forth in Section 2.1.
1.68. Tax Returns. The term "Tax Returns" shall have
the meaning set forth in Section 3.18(a).
1.69. Third Party Claim. The term "Third Party Claim"
shall have the meaning set forth in Section 16.3(a).
1.70. Vision 21 Financial Statements. The term "Vision
21 Financial Statements" shall have the meaning set forth in Section 5.9.
2. THE MERGER.
2.1. The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time, the Company shall be merged with and
into the Subsidiary in accordance with this Agreement and the separate
corporate existence of the Company shall thereupon cease. The Subsidiary shall
be the surviving corporation in the Merger (in such capacity, hereinafter
referred to as the "Surviving Corporation") and shall continue to be governed
by the laws of the State of Florida, and the separate corporate existence of
the Subsidiary with all its rights, privileges, powers, immunities, purposes
and franchises shall continue unaffected by the Merger, except as set forth
herein. The Merger shall have the effects specified in the FBCA and the
Corporation Law.
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2.2. The Closing. The Closing shall take place on the
Closing Date at the offices of ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other location in the
State as the parties shall mutually agree.
2.3. Effective Time. If all the conditions precedent
to the Merger set forth in this Agreement shall have been fulfilled or waived
in accordance herewith and this Agreement shall not have been terminated in
accordance with the terms set forth herein, the parties hereto shall cause to
be properly executed and filed on the Closing Date, a Certificate of Merger
meeting the requirements of the FBCA and the Corporation Law. The Certificate
of Merger shall be filed with the Secretary of State of the State of Florida
and of the State in accordance with the FBCA and the Corporation Law and the
Merger shall become effective on the Closing Date, to be designated in such
filings as the effective time of the Merger (the "Effective Time").
2.4. Articles of Incorporation of Surviving
Corporation. Effective at the Effective Time, the Articles of Incorporation of
the Subsidiary shall be the Articles of Incorporation of the Surviving
Corporation unless and until duly amended in accordance with its terms.
2.5. Bylaws of Surviving Corporation. The Bylaws of
the Subsidiary in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation, unless and until duly amended in
accordance with their terms.
2.6. Directors of the Surviving Corporation. The
persons who are directors of the Subsidiary immediately prior to the Effective
Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation until their successors have been elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation and Bylaws.
2.7. Officers of the Surviving Corporation. The
persons who are officers of the Subsidiary immediately prior to the Effective
Time shall, from and after the Effective Time, be the officers of the Surviving
Corporation and shall hold their same respective offices until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal.
2.8. Conversion of Company Common Stock. The manner
of converting shares of Company Common Stock in the Merger shall be as follows:
a. As a result of the Merger and without
any action on the part of the holder thereof, all shares of Company Common
Stock issued and outstanding at the Effective Time shall cease to exist, and
each holder of a certificate representing any such shares of Company Common
Stock shall thereafter cease to have any rights with respect to such shares of
Company Common Stock, except the right to receive upon the surrender of such
certificate, on the Closing Date, validly issued, fully paid and nonassessable
shares of Vision 21 Common Stock determined in accordance with the provisions
of Exhibit 2.8(a) attached hereto.
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b. Each share of Company Common Stock
held in the Company's treasury at the Effective Time, by virtue of the Merger,
shall cease to be outstanding and shall be cancelled and retired without
payment of any consideration therefor and shall cease to exist.
c. At the Effective Time, each share of
the Subsidiary's common stock issued and outstanding as of the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereto, continue unchanged and remain outstanding as a validly issued, fully
paid, nonassessable share of the Subsidiary's common stock.
2.9. Exchange of Certificates Representing Shares of
Company Common Stock.
a. On the Closing Date (i) the Physician,
as the holder of a certificate or certificates representing shares of Company
Common Stock, upon surrender of such certificate or certificates, shall
receive, as part of the Merger Consideration, the number of shares of Vision 21
Common Stock determined in accordance with the provisions of Exhibit 2.8(a)
attached hereto; and (ii) until the certificate or certificates representing
Company Common Stock have been surrendered by the Physician and replaced by a
certificate or certificates representing Vision 21 Common Stock, the
certificate or certificates representing Company Common Stock shall, for all
purposes be deemed to evidence ownership of the number of shares of Vision 21
Common Stock determined in accordance with the provisions of Exhibit 2.8(a)
attached hereto. All shares of Vision 21 Common Stock issuable to the
Physician in the Merger shall be deemed for all purposes to have been issued by
Vision 21 at the Effective Time, although the Merger Consideration shall not
actually be paid by Vision 21 to the Physician until the Closing Date.
b. The Physician shall deliver to Vision
21 at Closing the certificate or certificates representing Company Common Stock
owned by him, duly endorsed in blank by the Physician, or accompanied by duly
endorsed stock powers in blank, and with all necessary transfer tax and other
revenue stamps, acquired at the Physician's expense, affixed and cancelled.
The Physician agrees to cure any deficiencies with respect to the endorsement
of the certificates or other documents of conveyance with respect to such
Company Common Stock or with respect to the stock powers accompanying any
Company Common Stock. Upon such a delivery, the Physician shall receive in
exchange therefor, a certificate representing that number of shares of Vision
21 Common Stock that the Physician is entitled to receive pursuant to Section
2.8 hereof.
2.10. Fractional Shares. Notwithstanding any other
provision herein, no fractional shares of Vision 21 Common Stock will be
issued. Fractional shares shall be rounded up to the nearest whole number of
shares.
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2.11. Merger Consideration Adjustments. (a) The
Merger Consideration shall be subject to adjustment to the extent that Current
Assets (as defined herein) or Current Liabilities Assumed (as defined herein)
materially differ from the amounts customarily arising in the ordinary course
of business of the Company as of November 30, 1996. The term "Current Assets"
shall mean ▇▇▇▇▇ cash, Accounts Receivable, prepaid expenses, Inventory,
supplies and other current assets (excluding cash in banks, certificates of
deposit, other cash equivalents, current portion of capital leases and prepaid
Income Taxes). The term "Current Liabilities Assumed" shall mean the audited
balances as of November 30, 1996 of trade accounts payable, accrued payroll,
accrued payroll taxes, accrued benefits, and other current liabilities
(excluding notes payable, current portion of capital leases and long-term debt
and income and franchise taxes). The adjustment shall be settled in cash or
Vision 21 Common Stock at Vision 21's option. The parties also agree that to
the extent the adjustments materially impact the goodwill created by the
transaction, there shall be an adjustment for the related impact upon net
income created by the change in amortization of such goodwill and the Merger
Consideration shall be increased or reduced to reflect the impact on net
income, settled in cash or Vision 21 Common Stock at Vision 21's option.
(b) Within sixty (60) days following the Closing
Date, Vision 21 shall present to the Physician its Merger Consideration
Adjustment (the "Proposed Merger Consideration Adjustment") calculated in
accordance with Section 2.11(a) hereof. The Physician shall, within thirty
(30) days after the delivery by Vision 21 of the Proposed Merger Consideration
Adjustment, complete his review thereof. In the event that the Physician
believes that the Proposed Purchase Price Adjustment has not been prepared on
the basis set forth in Section 2.11(a) or otherwise contests any item set forth
therein, the Physician shall, on or before the last day of such 30 day period,
so object to Vision 21 in writing, setting forth a specific description of the
nature of the objection and the corresponding adjustments the Physician
believes should be made. If no objection is received by Vision 21 on or before
the last day of such 30 day period, then the Proposed Merger Consideration
Adjustment delivered by Vision 21 shall be final. If an objection has been
made and Vision 21 and the Physician are unable to resolve all of their
disagreements with respect to the proposed adjustments within 15 days following
the delivery of the Physician's objection, the dispute shall be submitted to
arbitration as provided in Section 20.1 except that the arbitrator shall be
instructed to deliver his determination of the dispute to the parties no later
than 30 days after the arbitration hearing. Vision 21 shall provide to the
Physician and his accountants full access to all relevant books, records and
work papers utilized in preparing the Proposed Merger Consideration Adjustment.
2.12. Subsequent Actions. If, at any time after the
Effective Time, the Surviving Corporation shall determine or be advised that
any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, and to effect the
cancellation of all outstanding shares of Company Common Stock in return for
the consideration set forth in this Agreement, the officers and directors of
the
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Surviving Corporation shall, at the sole cost and expense of the Surviving
Corporation, be authorized to execute and deliver, in the name and on behalf of
the Company, such deeds, bills of sale, assignments and assurances, and to take
and do, in the name and on behalf of the Company, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PHYSICIAN. The Company and the Physician, jointly and severally, represent and
warrant to Vision 21 and the Subsidiary that the following are true and correct
as of the date hereof, and shall be true and correct through the Closing Date
as if made on that date; when used in this Section 3, the term "best knowledge"
shall mean in the case of the Company the best knowledge of those individuals
listed on Schedule 3:
3.1. Organization and Good Standing; Qualification.
The Company is a professional corporation duly organized, validly existing and
in good standing under the laws of the State, with all requisite corporate
power and authority to carry on the business in which it is engaged, to own the
properties it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, but it is acknowledged and understood by the
Parties that upon consummation of Merger, the Company will no longer be
qualified as a professional corporation under the Corporation Law. The Company
is not duly qualified and licensed to do business in any other jurisdiction.
The Company does not have any assets, employees or offices in any state other
than the State. Except as set forth on Schedule 3.1, neither the Company, the
Physician nor any Professional Employee owns, directly or indirectly, any of
the capital stock of any other corporation or any equity, profit sharing,
participation or other interest in any corporation, partnership, joint venture
or other entity that is engaged in a business that is a Competitor.
3.2. Capitalization. The authorized capital stock of
the Company consists of __________________ _____ shares of Company Common
Stock, of which two thousand (2,000) shares are issued and outstanding. The
Physician owns all of the issued and outstanding Company Common Stock, free and
clear of all security interests, liens, adverse claims, encumbrances, equities,
proxies and shareholder agreements, except to the extent disclosed on Schedule
3.2. Each outstanding share of Company Common Stock has been legally and
validly issued and is fully paid and nonassessable. No shares of Company
Common Stock are owned by the Company in treasury. No shares of Company Common
Stock of the Company have been issued or disposed of in violation of the
preemptive rights, rights of first refusal or similar rights of any of the
Company's stockholders. The Company has no bonds, debentures, notes or other
obligations the holders of which have the right to vote (or are convertible
into or exercisable for securities having the right to vote) with the
stockholders of the Company on any matter.
3.3. Transactions in Capital Stock. The Company has
not acquired any capital stock of the Company within the two (2) year period
preceding the execution of this Agreement. Except as set forth on Schedule
3.3, there exist no options, warrants, subscriptions
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or other rights to purchase, or securities convertible into or exchangeable
for, any of the authorized or outstanding securities of the Company, and no
option, warrant, call, conversion right or commitment of any kind exists which
obligates the Company to issue any of its authorized but unissued capital
stock. Except as set forth on Schedule 3.3, the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof. Neither the equity structure of the Company
nor the relative ownership of shares among any of its stockholders has been
altered or changed within the two (2) year period preceding the date of this
Agreement.
3.4. Continuity of Business Enterprise. Except as set
forth on Schedule 3.4, and except as contemplated by this Agreement, there has
not been any sale, distribution or spin-off of significant assets of the
Company or any of its Affiliates other than in the ordinary course of business
within the two (2) year period preceding the date of this Agreement.
3.5. Corporate Records. The copies of the Articles or
Certificate of Incorporation and Bylaws, and all amendments thereto, of the
Company that have been delivered or made available to Vision 21 are true,
correct and complete copies thereof, as in effect on the date hereof. The
minute books of the Company, copies of which have been delivered or made
available to Vision 21, contain accurate minutes of all meetings of, and
accurate consents to all actions taken without meetings by, the Board of
Directors (and any committees thereof) and the stockholders of the Company in
the three (3) years prior to the Closing Date, and contain all other material
minutes and consents of the directors and stockholders of the Company since its
formation.
3.6. Authorization and Validity. The execution,
delivery and performance by the Company of this Agreement and the other
agreements contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby to be performed by the Company, have been duly
authorized by the Company. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies. The
Company has obtained, in accordance with applicable law and its Articles or
Certificate of Incorporation and Bylaws, the approval of its stockholders
necessary for the consummation of the transactions contemplated hereby.
3.7. Compliance. Except as disclosed on Schedule 3.7,
the execution and delivery of the documents contemplated hereunder and the
consummation of the transactions contemplated thereby by the Company will not
(i) violate any provision of the Company's organizational documents, (ii)
violate any material provision of or result in the breach of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation under, any mortgage, lien, lease, contract,
license, instrument or any other agreement to which the Company is a party,
(iii) result in the creation or imposition of any
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material lien, charge, pledge, security interest or other material encumbrance
upon any property of the Company or (iv) violate or conflict with any order,
award, judgment or decree or other material restriction or to the best of the
Company's knowledge violate or conflict with any law, ordinance or regulation
to which the Company or its property is subject.
3.8. Consents. No consent, approval, order or
authorization of or registration, declaration, or filing with, any Governmental
Authority or other person is required in connection with the execution and
delivery of the documents contemplated herein by the Company or the
consummation by such party of the transactions contemplated thereby, except for
those consents or approvals set forth on Schedule 3.8.
3.9. Financial Statements. The Company has furnished
to Vision 21 its unaudited balance sheet and related unaudited statements of
income, retained earnings and cash flows for its prior three (3) full fiscal
years, and its unaudited interim balance sheet for the fiscal period ended
September 30, 1996 (the "Company Balance Sheet", and the date thereof shall be
referred to as the "Company Balance Sheet Date") and related unaudited
statements of income, retained earnings and cash flows for the nine (9) months
then ended (all collectively, with the related notes thereto, the "Financial
Statements"). The Financial Statements fairly present the financial condition
and results of operations of the Company as of the dates and for the periods
indicated except as otherwise indicated in the Financial Statements. The
Company and the Physician expressly warrant that they will have prior to the
Closing fairly, accurately and completely provided all necessary information
requested in or relevant to the preparation of the audit to be conducted by the
Accountants or their designees prior to Closing (the "Audit"). The cost of the
Audit shall be paid by Vision 21 and all materials prepared by Vision 21's
Accountants in connection with the Audit shall be solely the property of Vision
21.
3.10. Liabilities and Obligations. Except as set forth
on Schedule 3.10, the Financial Statements reflect all liabilities of the
Company, accrued, contingent or otherwise that would be required to be
reflected thereon, or in the notes thereto, prepared in accordance with GAAP,
except for liabilities and obligations incurred in the ordinary course of
business since the Company Balance Sheet Date. Except as set forth in the
Financial Statements or on Schedule 3.10, the Company is not liable upon or
with respect to, or obligated in any other way to provide funds in respect of
or to guarantee or assume in any manner, any debt, obligation or dividend of
any person, corporation, association, partnership, joint venture, trust or
other entity, and the Company does not know of any valid basis for the
assertion of any other claims or liabilities of any nature or in any amount.
3.11. Employee Matters.
a. Cash Compensation. Schedule 3.11(a)
contains a complete and accurate list of the names, titles and annual cash
compensation as of the Closing Date, including without limitation wages,
salaries, bonuses (discretionary and formula) and other cash compensation (the
"Cash Compensation") of all employees of the Company. In addition, Schedule
3.11(a) contains a complete and accurate description of (i) all increases in
Cash
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Compensation of employees of the Company during the current fiscal year and the
immediately preceding fiscal year and (ii) any promised increases in Cash
Compensation of employees of the Company that have not yet been effected.
b. Compensation Plans. Schedule 3.11(b)
contains a complete and accurate list of all compensation plans, arrangements
or practices (the "Compensation Plans") sponsored by the Company or to which
the Company contributes on behalf of its employees, other than Employment
Agreements listed on Schedule 3.11(c) and Employee Benefit Plans listed on
Schedule 3.12(a). The Compensation Plans include without limitation plans,
arrangements or practices that provide for performance awards, and stock
ownership or stock options. The Company has provided or made available to
Vision 21 a copy of each written Compensation Plan and a written description
of each unwritten Compensation Plan. Except as set forth on Schedule 3.11(b),
each of the Compensation Plans can be terminated or amended at will by the
Company.
c. Employment Agreements. Except as set
forth on Schedule 3.11(c), the Company is not a party to any employment
agreement ("Employment Agreements") with respect to any of its employees.
Employment Agreements include without limitation employee leasing agreements,
employee services agreements and non-competition agreements.
d. Employee Policies and Procedures.
Schedule 3.11(d) contains a complete and accurate list of all employee manuals
and all material policies, procedures and work-related rules (the "Employee
Policies and Procedures") that apply to employees of the Company. The Company
has provided or made available to Vision 21 a copy of all written Employee
Policies and Procedures and a written description of all material unwritten
Employee Policies and Procedures.
e. Unwritten Amendments. Except as
described on Schedule 3.11(b), 3.11(c), or 3.11(d), no material unwritten
amendments have been made, whether by oral communication, pattern of conduct or
otherwise, with respect to any Compensation Plans or Employee Policies and
Procedures.
f. Labor Compliance. The Company has
been and is in compliance with all applicable laws, rules, regulations and
ordinances respecting employment and employment practices, terms and conditions
of employment and wages and hours, except for any such failures to be in
compliance that, individually or in the aggregate, would not result in a
Material Adverse Effect, and the Company is not liable for any arrearages of
wages or penalties for failure to comply with any of the foregoing. The
Company has not engaged in any unfair labor practices or discriminated on the
basis of race, color, religion, sex, national origin, age, disability or
handicap in its employment conditions or practices that would, individually or
in the aggregate, result in a Material Adverse Effect. Except as set forth on
Schedule 3.11(f), there are no (i) unfair labor practice charges or complaints
or racial, color, religious, sex, national origin, age, disability or handicap
discrimination charges or complaints pending or, to
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the actual knowledge of the Company and the Physician, threatened against the
Company before any federal, state or local court, board, department, commission
or agency (nor, to the knowledge of the Company and the Physician, does any
valid basis therefor exist) or (ii) existing or, to the actual knowledge of the
Company and the Physician, threatened labor strikes, disputes, grievances,
controversies or other labor troubles affecting the Company (nor, to the best
knowledge of the Company and the Physician, does any valid basis therefor
exist).
g. Unions. The Company has never been a
party to any agreement with any union, labor organization or collective
bargaining unit. No employees of the Company are represented by any union,
labor organization or collective bargaining unit. Except as set forth on
Schedule 3.11(g), to the actual knowledge of the Company, none of the employees
of the Company has threatened to organize or join a union, labor organization
or collective bargaining unit.
h. Aliens. All employees of the Company
are, to the best knowledge of the Company, citizens of, or are authorized in
accordance with federal immigration laws to be employed in, the United States.
3.12. Employee Benefit Plans.
a. Identification. Schedule 3.12(a)
contains a complete and accurate list of all employee benefit plans (within the
meaning of Section 3(3) of ERISA sponsored by the Company or to which the
Company contributes on behalf of its employees and all employee benefit plans
previously sponsored or contributed to on behalf of its employees within the
three (3) years preceding the date hereof (the "Employee Benefit Plans"). The
Company has provided or made available to Vision 21 copies of all plan
documents, determination letters, pending determination letter applications,
trust instruments, insurance contracts, administrative services contracts,
annual reports, actuarial valuations, summary plan descriptions, summaries of
material modifications, administrative forms and other documents that
constitute a part of or are incident to the administration of the Employee
Benefit Plans. In addition, the Company has provided or made available to
Vision 21 a written description of all existing practices engaged in by the
Company that constitute Employee Benefit Plans. Except as set forth on
Schedule 3.12(a) and subject to the requirements of the Code and ERISA, each of
the Employee Benefit Plans can be terminated or amended at will by the Company.
Except as set forth on Schedule 3.12(a), no unwritten amendment exists with
respect to any Employee Benefit Plan. Except as set forth on Schedule
3.12(b)-(l), each of the following paragraphs is true and correct.
b. Administration. Each Employee Benefit
Plan has been administered and maintained in compliance with all applicable
laws, rules and regulations, except where the failure to be in compliance would
not, individually or in the aggregate, result in a Material Adverse Effect.
The Company and the Physician have (i) made all necessary filings with respect
to such Employee Benefit Plans, including the timely filing of Form 5500 if
applicable, and (ii) made all necessary filings, reports and disclosures
pursuant to and have
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complied with all requirements of the IRS Voluntary Compliance Resolution
Program, if applicable, with respect to all profit sharing retirement plans and
pension plans in which employees of the Company participate.
c. Examinations. Except as set forth on
Schedule 3.12(c), the Company has not received any notice that any Employee
Benefit Plan is currently the subject of an audit, investigation, enforcement
action or other similar proceeding conducted by any state or federal agency.
d. Prohibited Transactions. No
prohibited transactions (within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA) have occurred with respect to any Employee
Benefit Plans.
e. Claims and Litigation. No pending or,
to the actual knowledge of the Company and the Physician, threatened claims,
suits, or other proceedings exist with respect to any Employee Benefit Plan
other than normal benefit claims filed by participants or beneficiaries.
f. Qualification. As set forth in more
detail on Schedule 3.12(f), the Company has received a favorable determination
letter or ruling from the IRS for each of the Employee Benefit Plans intended
to be qualified within the meaning of Section 401(a) of the Code and/or
tax-exempt within the meaning of Section 501(a) of the Code. Except as set
forth on Schedule 3.12(f), no proceedings exist or, to the actual knowledge of
the Company have been threatened that could result in the revocation of any
such favorable determination letter or ruling.
g. Funding Status. No accumulated
funding deficiency (within the meaning of Section 412 of the Code), whether or
not waived, exists with respect to any Employee Benefit Plan or any plan
sponsored by any member of a controlled group (within the meaning of Section
412(n)(6)(B) of the Code) in which the Company is a member ("Controlled
Group"). With respect to each Employee Benefit Plan subject to Title IV of
ERISA, the assets of each such plan are at least equal in value to the present
value of accrued benefits determined on an ongoing basis as of the date hereof.
The Company does not sponsor any Employee Benefit Plan described in Section
501(c)(9) of the Code. None of the Employee Benefit Plans are subject to
actuarial assumptions.
h. Excise Taxes. Neither the Company nor
any member of a Controlled Group has any liability to pay excise taxes with
respect to any Employee Benefit Plan under applicable provisions of the Code or
ERISA.
i. Multiemployer Plans. Neither the
Company nor any member of a Controlled Group is or ever has been obligated to
contribute to a multiemployer plan within the meaning of Section 3(37) of
ERISA.
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j. Pension Benefit Guaranty Corporation.
None of the Employee Benefit Plans are subject to the requirements of Title IV
of ERISA.
k. Retirees. The Company has no
obligation or commitment to provide medical, dental or life insurance benefits
to or on behalf of any of its employees who may retire or any of its former
employees who have retired except as may be required pursuant to the
continuation of coverage provisions of Section 4980B of the Code and Sections
501 through 508 of ERISA.
l. Other Compensation. Except as set
forth on Schedule 3.11(a), 3.11(b), 3.11(c), 3.11(d) and 3.12(a), neither the
Company, the Physician nor any Professional Employee is a party to any
compensation or debt arrangement with any person relating to the provision of
healthcare related services other than arrangements with the Company or the
Physician.
3.13. Absence of Certain Changes. Except as set forth
on Schedule 3.13 or as contemplated in this Agreement, since the Company
Balance Sheet Date, the Company has not:
a. suffered a Material Adverse Effect,
whether or not caused by any deliberate act or omission of the Company or the
Physician;
b. contracted for the purpose of
acquiring any capital asset having a cost in excess of $5,000 or made any
single expenditure in excess of $5,000;
c. incurred any indebtedness for borrowed
money (other than short-term borrowings in the ordinary course of business), or
issued or sold any debt securities;
d. incurred or discharged any material
liabilities or obligations except in the ordinary course of business;
e. paid any amount on any indebtedness
prior to the due date, forgiven or cancelled any claims or any debt in excess
of $5,000, or released or waived any rights or claims except in the ordinary
course of business;
f. mortgaged, pledged or subjected to any
security interest, lien, lease or other charge or encumbrance any of its
properties or assets (other than statutory liens arising in the ordinary course
of business or other liens that do not materially detract from the value or
interfere with the use of such properties or assets);
g. suffered any damage or destruction to
or loss of any assets (whether or not covered by insurance) that has,
individually or in the aggregate, resulted in a Material Adverse Effect;
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h. acquired or disposed of any assets
having an aggregate value in excess of $5,000, except in the ordinary course of
business;
i. written up or written down the
carrying value of any of its assets, other than accounts receivable in the
ordinary course of business;
j. changed the costing system or
depreciation methods of accounting for its assets in any material respect;
k. lost or terminated any employee,
patient, customer or supplier that has, individually or in the aggregate,
resulted in a Material Adverse Effect;
l. increased the compensation of any
director, officer, key employee or consultant, except as disclosed on Schedule
3.11(a);
m. increased the compensation of any
employee (except for increases in the ordinary course of business consistent
with past practice) or hired any new employee who is expected to receive
annualized compensation of at least $15,000;
n. made any payments to or loaned any
money to any person or entity referred to in Section 3.25;
o. formed or acquired or disposed of any
interest in any corporation, partnership, joint venture or other entity;
p. redeemed, purchased or otherwise
acquired, or sold, granted or otherwise disposed of, directly or indirectly,
any of its capital stock or securities, or agreed to change the terms and
conditions of any such capital stock, securities or rights;
q. entered into any agreement providing
for total payments in excess of $5,000 in any twelve (12) month period with any
person or group, or modified or amended in any material respect the terms of
any such existing agreement, except in the ordinary course of business;
r. entered into, adopted or amended any
Employee Benefit Plan, except as contemplated hereby or the other agreements
contemplated hereby; or
s. entered into any other commitment or
transaction or experienced any other event that would materially interfere with
its performance under this Agreement or any other agreement or document
executed or to be executed pursuant to this Agreement, or otherwise has,
individually or in the aggregate, resulted in a Material Adverse Effect.
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3.14. Title; Leased Assets.
a. Real Property. The Company does not
own any interest (other than leasehold interests referred to on Schedule
3.14(c)) in real property. The leased real property referred to on Schedule
3.14(c) constitutes the only real property necessary for the conduct of the
Company's business.
b. Personal Property. Except as set
forth on Schedule 3.14(b), the Company and/or the Physician has good, valid and
marketable title to all the personal property constituting the Nonmedical
Assets. The personal property constituting the Nonmedical Assets constitute
the only personal property necessary for the conduct of the Company's business
(except for the Medical Assets). Upon consummation of the transactions
contemplated hereby, such interest in the Nonmedical Assets shall be free and
clear of all security interests, liens, claims and encumbrances, other than
those set forth on Schedule 3.14(b) (the "Permitted Encumbrances") and
statutory liens arising in the ordinary course of business or other liens that
do not materially detract from the value or interfere with the use of such
properties or assets.
c. Leases. A list and brief description
of (i) all leases of real property and (ii) leases of personal property
involving rental payments within any twelve (12) month period in excess of
$12,000, in either case to which the Company is a party, either as lessor or
lessee, are set forth on Schedule 3.14(c). All such leases are valid and, to
the knowledge of the Company, enforceable in accordance with their respective
terms except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of equitable
remedies.
3.15. Commitments.
a. Commitments; Defaults. Except as set
forth on Schedule 3.15 or as otherwise disclosed pursuant to this Agreement,
the Company is not a party to nor bound by, nor are any of the shares of
Company Common Stock subject to, nor are the Nonmedical Assets or the assets or
the business of the Company bound by, whether or not in writing, any of the
following (collectively, "Commitments"):
i) partnership or joint
venture agreement;
ii) guaranty or suretyship,
indemnification or contribution agreement or performance bond;
iii) debt instrument, loan
agreement or other obligation relating to indebtedness for borrowed money or
money lent or to be lent to another;
iv) contract to purchase real
property;
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v) agreement with dealers or
sales or commission agents, public relations or advertising agencies,
accountants or attorneys (other than in connection with this Agreement and the
transactions contemplated hereby) involving total payments within any twelve
(12) month period in excess of $2,000 and which is not terminable on thirty
(30) days' notice or without penalty;
vi) agreement relating to any
material matter or transaction in which an interest is held by a person or
entity that is an Affiliate of the Company or the Physician;
vii) agreement for the
acquisition of services, supplies, equipment, inventory, fixtures or other
property involving more than $2,000 in the aggregate;
viii) powers of attorney;
ix) contracts containing
non-competition covenants;
x) agreement providing for the
purchase from a supplier of all or substantially all of the requirements of the
Company of a particular product or services;
xi) agreements regarding
clinical research;
xii) agreements with Payors and
contracts to provide medical or health care services; or
xiii) any other agreement or
commitment not made in the ordinary course of business or that is material to
the business, operations, condition (financial or otherwise) or results of
operations of the Company.
True, correct and complete copies of the written Commitments, and true, correct
and complete written descriptions of the oral Commitments, have heretofore been
delivered or made available to Vision 21 and the Subsidiary. Except as set
forth on Schedule 3.15 and to the Company's best knowledge, there are no
existing or asserted defaults, events of default or events, occurrences, acts
or omissions that, with the giving of notice or lapse of time or both, would
constitute defaults by the Company or, to the best knowledge of the Company,
any other party to a material Commitment, and no penalties have been incurred
nor are amendments pending, with respect to the material Commitments, except as
described on Schedule 3.15. The Commitments are in full force and effect and
are valid and enforceable obligations of the Company, and to the best knowledge
of the Company, are valid and enforceable obligations of the other parties
thereto, in accordance with their respective terms, and no defenses, off-sets
or counterclaims have been asserted or, to the best knowledge of the Company,
may be made by any party thereto (other than the Company), nor has the Company
waived any rights thereunder, except as described on Schedule 3.15. Except as
set forth on Schedule 3.15, no consents or
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approvals are required under the terms of any agreement listed on Schedule 3.15
in connection with the transactions contemplated herein; including without
limitation the Merger.
b. No Cancellation or Termination of
Commitment. Except as disclosed pursuant to this Agreement or contemplated
hereby, and except where such default would not have a Material Adverse Effect
on the business, (i) neither the Company nor the Physician has received notice
of any plan or intention of any other party to any Commitment to exercise any
right to cancel or terminate any Commitment, and the Company does not know of
any fact that would justify the exercise of such a right; and (ii) neither the
Company nor the Physician currently contemplates, or has reason to believe any
other person currently contemplates, any amendment or change to any Commitment.
3.16. Insurance. The Company, the Physician and each
Professional Employee carries property, liability, malpractice, workers'
compensation and such other types of insurance pursuant to the insurance
policies listed and briefly described on Schedule 3.16 (the "Insurance
Policies"). The Insurance Policies are all of the insurance policies of the
Company, the Physician and each Professional Employee relating to the business
of the Company and the Nonmedical Assets. All of the Insurance Policies are
issued by insurers of recognized responsibility, and, to the best knowledge of
the Company, are valid and enforceable policies, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies. All Insurance Policies
shall be maintained in force without interruption up to and including the
Closing Date. True, complete and correct copies of all Insurance Policies have
been provided or made available to Vision 21. Except as set forth on Schedule
3.16, neither the Company nor the Physician has received any notice or other
communication from any issuer of any Insurance Policy cancelling such policy,
materially increasing any deductibles or retained amounts thereunder, and to
the actual knowledge of the Company, no such cancellation or increase of
deductibles, retainages or premiums is threatened. Except as set forth on
Schedule 3.16, neither the Company, the Physician nor any Professional Employee
has any outstanding claims, settlements or premiums owed against any Insurance
Policy, and the Company, the Physician and each Professional Employee has given
all notices or has presented all potential or actual claims under any Insurance
Policy in due and timely fashion. Except as set forth on Schedule 3.16, since
January 1, 1994, neither the Company, the Physician nor any Professional
Employee has filed a written application for any professional liability
insurance coverage which has been denied by an insurance agency or carrier, and
the Company, the Physician and each Professional Employee has been continuously
insured for professional malpractice claims for at least the past seven (7)
years (or such shorter periods of time that any Professional Employee has been
licensed to practice medicine). Schedule 3.16 also sets forth a list of all
claims under any Insurance Policy in excess of $10,000 per occurrence filed by
the Company, the Physician and each Professional Employee since January 1,
1994.
3.17. Proprietary Rights and Information. Set forth on
Schedule 3.17 is a true and correct description of the following ("Proprietary
Rights"):
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a. all trademarks, trade-names, service
marks and other trade designations, including common law rights, registrations
and applications therefor, and all patents and applications therefor currently
owned, in whole or in part, by the Company, and all licenses, royalties,
assignments and other similar agreements relating to the foregoing to which the
Company is a party (including the expiration date thereof if applicable); and
b. all agreements relating to technology,
know-how or processes that the Company is licensed or authorized to use by
others (other than technology, know-how or processes generally available to
other healthcare providers), or which it licenses or authorizes others to use.
The Company owns or has the legal right to use the Proprietary Rights, and to
the knowledge of the Company, such ownership or use does not conflict,
infringe or violate the rights of any other person. Except as disclosed on
Schedule 3.17, no consent of any person will be required for the use thereof by
Vision 21 upon consummation of the transactions contemplated hereby and the
Proprietary Rights are freely transferable. No claim has been asserted by any
person to the ownership of or for infringement by the Company of the
proprietary right of any other person, and the Company does not know of any
valid basis for any such claim. To the best knowledge of the Company and the
Physician, the Company has the right to use, free and clear of any adverse
claims or rights of others, all trade secrets, customer lists and proprietary
information required for the marketing of all merchandise and services formerly
or presently sold or marketed by it.
3.18. Taxes.
a. Filing of Tax Returns. The Company
has duly and timely filed (in accordance with any extensions duly granted by
the appropriate governmental agency, if applicable) with the appropriate
governmental agencies all federal, state, local or foreign income, excise,
corporate, franchise, property, sales, use, payroll, withholding, provider,
value added and other tax returns and reports (collectively the "Tax Returns")
required to be filed by the United States or any state or any political
subdivision thereof or any foreign jurisdiction. All such Tax Returns or
reports are complete and accurate in all material respects and properly reflect
the taxes of the Company for the periods covered thereby.
b. Payment of Taxes. Except for such
items as the Company may be disputing in good faith by proceedings in
compliance with applicable law, which are described on Schedule 3.18, (i) the
Company has paid all taxes, penalties, assessments and interest that have
become due with respect to any Tax Returns that it has filed and has properly
accrued on its books and records for all of the same that have not yet become
due, and (ii) the Company is not delinquent in the payment of any tax,
assessment or governmental charge.
c. No Pending Deficiencies,
Delinquencies, Assessments or Audits. Except as set forth on Schedule 3.18,
the Company has not received any notice that any tax deficiency or delinquency
has been asserted against the Company. There is no unpaid
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assessment, proposal for additional taxes, deficiency or delinquency in the
payment of any of the taxes of the Company that could be asserted by any taxing
authority. There is no taxing authority audit of the Company pending, or to
the actual knowledge of the Company, threatened, and the results of any
completed audits are properly reflected in the Financial Statements. The
Company has not, to its best knowledge, violated any federal, state, local or
foreign tax law.
d. No Extension of Limitation Period.
The Company has not granted an extension to any taxing authority of the
limitation period during which any tax liability may be assessed or collected.
e. All Withholding Requirements
Satisfied. All monies required to be withheld by the Company and paid to
governmental agencies for all income, social security, unemployment insurance,
sales, excise, use, and other taxes have been collected or withheld and paid to
the respective governmental agencies.
f. Foreign Person. Neither the Company
nor the Physician is a foreign person, as such term is referred to in Section
1445(f)(3) of the Code.
g. Safe Harbor Lease. None of the
Nonmedical Assets constitutes property that the Company, Vision 21, or any
Affiliate of Vision 21, will be required to treat as being owned by another
person pursuant to the "Safe Harbor Lease" provisions of Section 168(f)(8) of
the Code prior to repeal by the Tax Equity and Fiscal Responsibility Act of
1982.
h. Tax Exempt Entity. None of the assets
of the Company and none of the Nonmedical Assets are subject to a lease to a
"tax exempt entity" as such term is defined in Section 168(h)(2) of the Code.
i. Collapsible Corporation. The Company
has not at any time consented, and the Physician will not permit the Company to
elect, to have the provisions of Section 341(f)(2) of the Code apply to it.
j. Boycotts. The Company has not at any
time participated in or cooperated with any international boycott as defined in
Section 999 of the Code.
k. Parachute Payments. No payment
required or contemplated to be made by the Company will be characterized as an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Code.
l. S Corporation. The Company has not
made an election to be taxed as an "S" corporation under Section 1362(a) of the
Code.
m. Personal Service Corporation. The
Company is not a personal service corporation subject to the provisions of
Section 269A of the Code.
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n. Personal Holding Company. The Company
is not or has not been a personal holding company within the meaning of Section
542 of the Code.
3.19. Compliance with Laws. The Company has not
failed, and neither the Company nor the Physician is aware of any failure by
the Physician or any Professional Employee to comply with all applicable laws,
regulations and licensing requirements relating to the operation of the
Practice or failure to file with the proper authorities all necessary
statements and reports except where the failure to so comply or file would not,
individually or in the aggregate, result in a Material Adverse Effect. There
are no existing violations by the Company, and neither the Company nor the
Physician is aware of any existing violations by the Physician or any
Professional Employee of any federal, state or local law or regulation that
could, individually or in the aggregate, result in a Material Adverse Effect.
The Company, the Physician and each Professional Employee possesses all
necessary licenses, franchises, permits and governmental authorizations for the
conduct of the Company's business as now conducted, all of which are listed
(with expiration dates, if applicable) on Schedule 3.19. Except as set forth
on Schedule 3.19, the transactions contemplated by this Agreement will not
result in a default under or a breach or violation of, or adversely affect the
rights and benefits afforded by any such licenses, franchises, permits or
government authorizations, except for any such default, breach or violation
that would not, individually or in the aggregate, have a Material Adverse
Effect. Except as set forth on Schedule 3.19, since January 1, 1993, neither
the Company, the Physician nor, to the knowledge of the Company based on a
certificate in writing obtained from each Professional Employee, any
Professional Employee has received any notice from any federal, state or other
governmental authority or agency having jurisdiction over its, his or her
properties or activities, or any insurance or inspection body, that its, his or
her operations or any of its, his or her properties, facilities, equipment, or
business practices fail to comply with any applicable law, ordinance,
regulation, building or zoning law, or requirement of any public or
quasi-public authority or body, except where failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect.
3.20. Finder's Fee. Except as set forth on Schedule
3.20, the Company has not incurred any obligation for any finder's, brokers or
agent's fee in connection with the transactions contemplated hereby.
3.21. Litigation. Except as described on Section 3.21
or otherwise disclosed pursuant to this Agreement, there are no legal actions
or administrative proceedings or investigations instituted, to the actual
knowledge of the Company or the Physician threatened, which affect or could
affect the outstanding shares of Company Common Stock, the Nonmedical Assets
or the operation, business, condition (financial or otherwise), or results of
operations of the Company which (i) if successful could, individually or in the
aggregate, have a Material Adverse Effect or (ii) could adversely affect the
ability of the Company or the Physician to effect the transactions contemplated
hereby. Neither the Company nor the Physician is (a) subject to any continuing
court or administrative order, judgment, writ, injunction or decree applicable
specifically to the Nonmedical Assets, the Company or to its business, assets,
operations or employees or (b) in default with respect to any such order,
judgment, writ, injunction or decree.
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The Company has no knowledge of any valid basis for any such action, proceeding
or investigation. Except as set forth on Schedule 3.21, all medical
malpractice claims asserted, general liability incidents and incident reports
have been submitted to the Company's insurer therefor. All claims made or
threatened against the Company in excess of its deductible are covered under
its Insurance Policies.
3.22. Condition of Fixed Assets. All of the fixtures,
structures and equipment reflected in the Financial Statements and used by the
Company in its business, are in good condition and repair, subject to normal
wear and tear, and conform in all material respects with all applicable
ordinances, regulations and other laws, and the Company has no actual knowledge
of any latent defects therein.
3.23. Distributions and Repurchases. No distribution,
payment or dividend of any kind has been declared or paid by the Company on any
of its capital stock since the Company Balance Sheet Date. No repurchase of
any of the Company's capital stock has been approved, effected or is pending,
or is contemplated by the Board of Directors of the Company.
3.24. Banking Relations. Set forth on Schedule 3.24 is
a complete and accurate list of all borrowing and investing arrangements that
the Company has with any bank or other financial institution, indicating with
respect to each relationship the type of arrangement maintained (such as
checking account, borrowing arrangements, safe deposit box, etc.) and the
person or persons authorized in respect thereof.
3.25. Ownership Interests of Interested Persons;
Affiliations. Except as set forth on Schedule 3.25, no officer, supervisory
employee or director of the Company, or their respective spouses, children or
Affiliates, owns directly or indirectly, on an individual or joint basis, any
interest in, has a compensation or other financial arrangement with, or serves
as an officer or director of, any customer or supplier of the Company or any
organization that has a material contract or arrangement with the Company.
Except as may be disclosed pursuant to this Agreement, neither the Company, nor
any of its directors, officers, employees or consultants, nor any Affiliate of
such person is, or within the last three (3) years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person which is in a position to make or influence
referrals to, or otherwise generate business for, the Company.
3.26. Investments in Competitors. Except as disclosed
on Schedule 3.26, neither the Company nor the Physician owns directly or
indirectly any interests or has any investment in any person that is a
Competitor of the Company.
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3.27. Environmental Matters.
a. Environmental Laws. To the best
knowledge of the Company and the Physician, neither the Company nor any of the
Non-medical assets (including the leased real property described on Schedule
3.14(c)) are currently in violation of, or subject to any existing, pending or,
to the actual knowledge of the Company threatened, investigation or inquiry by
any governmental authority or to any remedial obligations under, any federal,
state or local laws or regulations pertaining to health or the environment
("Environmental Laws"), except for any such violations, investigations or
inquiries that would not, individually or in the aggregate, result in a
Material Adverse Effect.
b. Permits. The Company is not required
to obtain, and has no knowledge of any reason Vision 21 or the Surviving
Corporation will be required to obtain, any permits, licenses or similar
authorizations to occupy, operate or use any buildings, improvements, fixtures
and equipment owned or leased by the Company by reason of any Environmental
Laws.
c. Superfund List. To the best knowledge
of the Company, none of the Nonmedical Assets (including the Company's leased
real property described on Schedule 3.14(c)) are on any federal or state
"Superfund" list or subject to any environmentally related liens, except such
liens as would not, individually or in the aggregate, result in a Material
Adverse Effect.
3.28. Certain Payments. Neither the Company nor any
director, officer or employee of the Company acting for or on behalf of the
Company, has paid or caused to be paid, directly or indirectly, in connection
with the business of the Company:
a. to any government or agency thereof or
any agent of any supplier or customer any bribe, kick-back or other similar
payment; or
b. any contribution to any political
party or candidate (other than from personal funds of directors, officers or
employees not reimbursed by their respective employers or as otherwise
permitted by applicable law).
3.29. Medical Waste. With respect to the generation,
transportation, treatment, storage, and disposal, or other handling of medical
waste, to the best knowledge of the Company and the Physician, the Company has
complied with all material federal, state or local laws or regulations
pertaining to medical waste.
3.30. Medicare and Medicaid Programs. The Company, the
Physician and each Professional Employee is qualified for participation in the
Medicare and Medicare programs and is party to provider agreements for such
programs which are in full force and effect with no events of default having
occurred thereunder. The Company, the Physician and each Professional Employee
has timely filed all claims or other reports required to be filed prior to
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the Closing Date with respect to the purchase of services by third-party payors
("Payors"), including but not limited to Medicare and Medicaid programs, except
where the failure to file would not, individually or in the aggregate, result
in a Material Adverse Effect. All such claims or reports are complete and
accurate in all material respects. The Company, the Physician and each
Professional Employee has paid or has properly recorded on the Financial
Statements all actually known and undisputed refunds, discounts or adjustments
which have become due pursuant to such claims, and neither the Company, the
Physician nor any Professional Employee has any material liability to any Payor
with respect thereto, except as has been reserved for in the Company Balance
Sheet. There are no pending appeals, overpayment determinations, adjustments,
challenges, audits, litigation, or notices of intent to reopen Medicare and/or
Medicaid claims determinations or other reports required to be filed by the
Company, the Physician or any Professional Employee in order to be paid by a
Payor for services rendered. Neither the Company, nor any of its directors,
officers, employees, consultants or the Physician has been convicted of, or
pled guilty or nolo contendere to, patient abuse or neglect, or any other
Medicare or Medicaid program-related offense. Neither the Company, nor its
directors, officers, the Physician, or to the best of the Company's knowledge,
its employees or consultants, has committed any offense which may serve as the
basis for suspension or exclusion from the Medicare and Medicaid programs,
including but not limited to, defrauding a government program, loss of a
license to provide health services, and failure to provide quality care.
3.31. Fraud and Abuse. To the best knowledge of the
Company and the Physician, the Company, its officers and directors, the
Professional Employees, and the other persons and entities providing
professional services for the Company, have not engaged in any activities which
are prohibited under 42 U.S.C. Section Section 1320-7, 7a or 7b or 42 U.S.C.
Section 1395nn (subject to the exceptions set forth in such legislation), or
the regulations promulgated thereunder or pursuant to similar state or local
statutes or regulations, or which are prohibited by rules of professional
conduct, including but not limited to the following:
a. knowingly and willfully making or
causing to be made a false statement or representation of a material fact in
any application for any benefit or payment;
b. knowingly and willfully making or
causing to be made a false statement or representation of a material fact for
use in determining rights to any benefit or payment;
c. failure to disclose knowledge by a
Medicare or Medicaid claimant of the occurrence of any event affecting the
initial or continued right to any benefit or payment on its own behalf or on
behalf of another, with intent to fraudulently secure such benefit or payment;
d. knowingly and willfully offering,
paying, soliciting or receiving any remuneration (including any kickback,
bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in
kind (i) in return for referring an individual to a person for the furnishing
or arranging for the furnishing of any item or service for which payment may be
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made in whole or in part by Medicare or Medicaid, or (ii) in return for
purchasing, leasing, or ordering, or arranging for or recommending purchasing,
leasing, or ordering any good, facility, service, or item for which payment may
be made in whole or in part by Medicare or Medicaid; and
e. referring a patient for designated
health services (as defined in 42 U.S.C. Section 1395nn) to or providing
designated health services to a patient upon a referral from an entity or
person with which the Physician or the Professional Employee or an immediate
family member has a financial relationship, and to which no exception under 42
U.S.C. Section 1395nn applies.
3.32. Payors. Schedule 3.32 sets forth a true, correct
and complete list of the names and addresses of each Payor, including any
private pay patient as a single payor, of the Company's services which
accounted for more than 10% of the revenues of the Company in the three (3)
previous fiscal years. Except as set forth on Schedule 3.32, the Company has
good relations with such Payors and none of such Payors has notified the
Company that it intends to discontinue its relationship with the Company or to
deny any claims submitted to such Payor for payment.
3.33. Prohibitions on the Corporate Practice of
Medicine. To the best of the Company's and the Physician's knowledge, the
actions, transactions or relationships arising from, and contemplated by this
Agreement, do not violate any law, rule or regulation relating to the corporate
practice of medicine. The Company and the Physician accordingly agree that the
Company, the Physician and New P.C. will not, in an attempt to void or nullify
any document contemplated herein or any relationship involving Vision 21, the
Subsidiary or the Company or the Physician or New P.C., ▇▇▇, claim, aver,
allege or assert that any such document contemplated herein or any such
relationship violates any law, rule or regulation relating to the corporate
practice of medicine and expressly warrant that this Section is valid and
enforceable by Vision 21 and the Subsidiary, and recognize that Vision 21 and
the Subsidiary have relied upon the statements herein in closing the
transaction.
3.34. Acquisition Proposals. Except for the
negotiations, offers and agreements with Vision 21 and its representatives, the
Company has not received during the twelve (12) month period preceding the date
of this Agreement any proposal or offer (including, without limitation, any
proposal or offer of its stockholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") nor has the Company or any of its employees, agents, representatives
or stockholders engaged in any negotiations concerning, or provided any
confidential information or data to, or had any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitated any effort or
attempted to make or implement an Acquisition Proposal.
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3.35. Investment Company Status. The Company is not
currently, nor has it ever been, an "investment company" as that term is
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
3.36. Equal Exchange; Consistent Treatment of Expenses.
Physician and the Company believe that the fair market value of all the Company
Common Stock shall be approximately equal to the fair market value of the
Merger Consideration at the Effective Time. The Company has, in presenting
information concerning the Company's and New P.C.'s expenses to Vision 21 for
the purpose of determining the Company's value, separated out those expenses
which shall be borne by New P.C. in a manner which is consistent with the
treatment of expenses which shall be the responsibility of New P.C. pursuant to
the Business Management Agreement.
3.37. Insolvency Proceedings. The Company is not
currently under the jurisdiction of a Federal or state court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
3.38. Positive Net Worth. On the Closing Date the fair
market value of the assets of the Company will equal or exceed the sum of the
liabilities of the Company plus the amount of any other liabilities to which
the assets of the Company are subject.
3.39. Accounts Receivable/Payable. The accounts
receivable of the Company relating to the ownership and operation of the
Practice reflected on the Company Balance Sheet, to the extent uncollected on
the date hereof, are, and the accounts receivable of the Company relating to
the ownership and operation of the Practice to be reflected on the books of the
Company on the Closing Date (the "Accounts Receivable") will be, valid,
existing and collectible within six months from the Closing Date (taking into
consideration the allowance for doubtful accounts set forth in the Financial
Statements) using reasonably diligent collection methods taking into account
the size and nature of the receivable, and represent amounts due for goods sold
and delivered or services performed. There are not, and on the date of Closing
there will not be, any refunds, discounts, set-offs, defenses, counterclaims or
other adjustments payable or assessable with respect to the Accounts
Receivable. The Company has collected Accounts Receivable only in the ordinary
course and has not changed collection procedures or methods nor accelerated the
pace of such collection efforts in anticipation of the transactions
contemplated in this Agreement. The Company has paid accounts payable in the
ordinary course and has not changed payment procedures or methods nor delayed
the timing of such payments in anticipation of the transactions contemplated in
this Agreement.
3.40. Projections. There is no fact, development or
threatened development with respect to the markets, products, services,
clients, patients, facilities, personnel, vendors, suppliers, operations,
assets or prospects of the Practice which are known to the Company or the
Physician which would materially adversely affect the projected fiscal year
1997 earnings of New P.C. disclosed to Vision 21 by Physician, other than such
conditions as may affect as a whole the economy or the practice of medicine
generally.
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3.41. Disclosure. To the best of the Company's and the
Physician's knowledge, no representation, warranty or statement made by the
Company or the Physician in this Agreement or any of the exhibits or schedules
hereto, or any agreements, certificates, documents or instruments delivered or
to be delivered to Vision 21 and the Subsidiary in accordance with this
Agreement or the other documents contemplated herein, contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading. The
Company and the Physician do not know of any fact or condition (other than
general economic conditions or legislative or administrative changes in
health-care delivery) which materially adversely affects, or in the future may
materially affect, the condition, properties, assets, liabilities, business,
operations or prospects of the Practice which has not been set forth herein or
in the Schedules provided herewith.
4. REPRESENTATIONS AND WARRANTIES OF THE PHYSICIAN. The
Physician represents and warrants to Vision 21 and the Subsidiary that the
following are true and correct as of the date hereof, and shall be true and
correct through the Closing Date as if made on that date:
4.1. Validity; Physician Capacity. This Agreement,
the Physician Employment Agreement, and each other agreement contemplated
hereby or thereby have been, or will be as of the Closing Date, duly executed
and delivered by the Physician and constitute or will constitute legal, valid
and binding obligations of the Physician, enforceable against the Physician in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The Physician has legal capacity to
enter into and perform this Agreement and his Physician Employment Agreement.
4.2. No Violation. Except as set forth on Schedule
4.2, neither the execution, delivery or performance of this Agreement, other
agreements of the Physician contemplated hereby or thereby, nor the
consummation of the transactions contemplated hereby or thereby, will (a)
conflict with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default under, any agreement, indenture or other
instrument under which the Physician is bound or to which any of his property
or the shares of Company Common Stock are subject, or result in the creation or
imposition of any security interest, lien, charge or encumbrance upon any of
his property or the shares of Company Common Stock or (b) to the best knowledge
of the Physician, violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body.
4.3. Personal Holding Company. The Physician does not
own the shares of Company Common Stock, directly or indirectly, beneficially or
of record, through a personal holding company.
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4.4. Transfers of the Company Common Stock. Set forth
on Schedule 4.4 is a list of all transfers or other transactions involving
capital stock of the Company since January 1, 1994. All transfers of Company
Common Stock by the Physician have been made for valid business reasons and not
in anticipation or contemplation of the consummation of the transactions
contemplated by this Agreement.
4.5. Consents. Except as may be required under the
Exchange Act, the Securities Act, the Corporation Law and state securities
laws, or otherwise disclosed pursuant to this Agreement, no consent,
authorization, approval, permit or license of, or filing with, any governmental
or public body or authority, or any other person is required to authorize, or
is required in connection with, the execution, delivery and performance of this
Agreement or the agreements contemplated hereby on the part of the Physician.
4.6. Certain Payments. The Physician has not paid or
caused to be paid, directly or indirectly, in connection with the business of
the Company:
a. to any government or agency thereof or
any agent of any supplier or customer any bribe, kick-back or other similar
payment; or
b. any contribution to any political
party or candidate (other than from personal funds not reimbursed by the
Company or as otherwise permitted by applicable law).
4.7. Finder's Fee. Except as set forth on Schedule
4.7, the Physician has not incurred any obligation for any finder's, broker's
or agent's fee in connection with the transactions contemplated hereby.
4.8. Ownership of Interested Persons; Affiliations.
Except as set forth on Schedule 4.8, neither the Physician nor his spouse,
children or Affiliates, owns directly or indirectly, on an individual or joint
basis, any interest in, has a compensation or other financial arrangement with,
or serves as an officer or director of, any customer or supplier of the Company
or any organization that has a material contact or arrangement with the
Company. Neither the Physician nor any of his Affiliates is, or with the last
three (3) years was, a party to any contract, lease, agreement or arrangement,
including, but not limited to, any joint venture or consulting agreement with
any physician, hospital, pharmacy, home health agency or other person which is
in a position to make or influence referrals to, or otherwise generate business
for, the Company.
4.9. Investments in Competitors. Except as disclosed
on Schedule 4.9, the Physician does not own directly or indirectly any
interests or have any investment in any person that is a Competitor of the
Company.
4.10. Litigation. Except as disclosed on Schedule
4.10, there are no claims, actions, suits, proceedings (arbitration or
otherwise) or investigations pending or, to the
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Physician's knowledge, threatened against the Physician at law or at equity in
any court or before or by any Governmental Authority, and, to the Physician's
knowledge, there are no, and have not been any, facts, conditions or incidents
that may result in any such actions, suits, proceedings (arbitration or
otherwise) or investigations. Except as set forth on Schedule 4.10, there have
been no disciplinary, revocation or suspension proceedings or similar types of
claims, actions or proceedings, hearings or investigations against the
Physician or the Company.
4.11. Permits. To the best of the Physician's
knowledge, the Physician has all permits, licenses, orders and approvals of all
Governmental Authorities necessary to perform the services performed by the
Physician in connection with the conduct of the Practice. All such permits,
licenses, orders and approvals are in full force and effect and no suspension
or cancellation of any of them is pending or threatened. To the best of the
Physician's knowledge, none of such permits, licenses, orders or approvals will
be adversely affected by the consummation of the transactions contemplated
herein. The Physician is a participating physician, as such term is defined by
the Medicare and Medicaid programs, and the Physician has not been disciplined,
sanctioned or excluded from either the Medicare or Medicaid programs and has
not been subject to any plan of correction imposed by any professional review
body.
4.12. Staff Privileges. Schedule 4.12 lists all
hospitals at which the Physician has full staff privileges. Such staff
privileges have not been revoked, surrendered, suspended or terminated, and to
the Physician's knowledge, there are no, and have not been any, facts,
conditions or incidents that may result in any such revocation, surrender,
suspension or termination.
4.13. Intentions. Except as set forth on Schedule
4.13, the Physician intends to continue practicing medicine on a full-time
basis for at least the next five (5) years with the Company and does not know
of any fact or condition that materially adversely affects, or in the future
may materially adversely affect, his ability or intention to practice medicine
on a full-time basis for the next five (5) years with the Company.
5. REPRESENTATIONS AND WARRANTIES OF VISION 21 AND THE
SUBSIDIARY. Vision 21 and the Subsidiary, jointly and severally, represent and
warrant to the Company and the Physician that the following are true and
correct as of the date hereof and shall be true and correct as of the Closing
Date; when used in this Section 5, the term "best knowledge" shall mean the
best knowledge of those individuals listed on Schedule 5:
5.1. Organization and Good Standing. Vision 21 and
the Subsidiary are corporations duly organized, validly existing and in good
standing under the laws of the State of Florida, with all requisite corporation
power and authority to carry on the business in which they are engaged, to own
the properties they own, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. At or prior to Closing,
Vision 21 and the Subsidiary will be qualified to do business as a foreign
corporation in the jurisdictions listed on Schedule 5.1.
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5.2. Capitalization. The authorized capital stock of
Vision 21 consists of 50,000,000 shares of Vision 21 Common Stock, of which
5,465,673 shares are issued and outstanding. Immediately prior to the Closing,
the authorized capital stock of Vision 21 will consist of 50,000,000 shares of
Vision 21 Common Stock, of which 5,465,673 shares will be issued and
outstanding.
5.3. Corporate Records. The copies of the Articles of
Incorporation and Bylaws, and all amendments thereto, of Vision 21 and the
Subsidiary that have been delivered or made available to the Company and the
Physician are true, correct and complete copies thereof, as in effect on the
date hereof (provided, however, that the Articles of Incorporation and Bylaws
of the Subsidiary shall be in effect on the Closing Date). The minute books of
Vision 21 and the Subsidiary, copies of which have been delivered or made
available to the Company and the Physician, contain accurate minutes of all
meetings of, and accurate consents to all actions taken without meetings by,
the Board of Directors (and any committees thereof) and the stockholders of
Vision 21 and the Subsidiary, since their formation.
5.4. Authorization and Validity. The execution,
delivery and performance by Vision 21 and the Subsidiary of this Agreement and
the other agreements contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by
Vision 21 and the Subsidiary. This Agreement and each other agreement
contemplated hereby to be executed by Vision 21 and the Subsidiary have been or
will be as of the Closing Date duly executed and delivered by Vision 21 and the
Subsidiary and constitute or will constitute legal, valid and binding
obligations of Vision 21 and the Subsidiary, enforceable against Vision 21 and
the Subsidiary in accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
5.5. Compliance. The execution and delivery of the
documents contemplated hereunder and the consummation of the transactions
contemplated thereby by Vision 21 and the Subsidiary shall not (i) violate any
provision of Vision 21's or the Subsidiary's organizational documents, (ii)
violate any material provision of or result in the breach of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation under, any mortgage, lien, lease, contract,
license, instrument or any other agreement to which Vision 21 or the Subsidiary
is a party, (iii) result in the creation or imposition of any material lien,
charge, pledge, security interest or other material encumbrance upon any
property of Vision 21 or the Subsidiary or (iv) violate or conflict with any
order, award, judgment or decree or other material restriction or to the best
of Vision 21's and the Subsidiary's knowledge violate or conflict with any law,
ordinance or regulation to which Vision 21 or the Subsidiary or their
respective property is subject.
5.6. Consents. No consent, approval, order or
authorization of or registration, declaration, or filing with, any Governmental
Authority or other person is required in connection with the execution and
delivery of the documents contemplated herein by
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Vision 21 and the Subsidiary or the consummation by such parties of the
transactions contemplated hereby, except for those consents or approvals set
forth on Schedule 5.6.
5.7. Finder's Fee. Except as disclosed on Schedule
5.7, neither Vision 21 nor the Subsidiary has incurred any obligation for any
finder's, broker's or agent's fee in connection with the transactions
contemplated hereby.
5.8. Capital Stock. The issuance and delivery by
Vision 21 of shares of Vision 21 Common Stock in connection with the Merger
have been duly and validly authorized by all necessary corporate action on the
part of Vision 21. The shares of Vision 21 Common Stock to be issued in
connection with the Merger, when issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable and will not
have been issued in violation of any preemptive rights, rights of first refusal
or similar rights of any of Vision 21's stockholders, or any federal or state
law, including, without limitation, the registration requirements of applicable
federal and state securities laws.
5.9. Continuity of Business Enterprise. It is the
present intention of the Subsidiary to continue at least one significant
historic business line of the Company, or to use at least a significant portion
of the Company's historic business assets in a business, in each case within
the meaning of Treasury Regulation Section 1.368- 1(d).
5.10. Vision 21 Financial Statements; Confidential
Information Memorandum. The balance sheet of Vision 21 as of September 30,
1996 and the related statements of income of Vision 21 for the first nine (9)
months of Vision 21's 1996 fiscal year, without giving effect to the Related
Acquisitions, including the costs incurred during such fiscal year associated
with any Registration Statement, shall be contained in the Confidential
Information Memorandum to be provided to the Physician and the Company by
Vision 21 prior to the Closing (collectively, with the related notes thereto,
the "Vision 21 Financial Statements"). The Vision 21 Financial Statements (a)
fairly present the financial condition and results of operations of Vision 21,
without giving effect to the Related Acquisitions, as of the dates and for the
periods indicated; and (b) have been prepared in conformity with GAAP (subject
to normal year-end adjustments and the absence of notes for any unaudited
interim financial statement), except as otherwise indicated in the Vision 21
Financial Statements. Subject to the foregoing and the other qualifications
contained elsewhere in this Agreement, to the best knowledge of Vision 21, the
Confidential Information Memorandum, as amended on December 17, 1996, is true
and correct in all material respects.
5.11. Liabilities and Obligations. Except as disclosed
on Schedule 5.11, the Vision 21 Financial Statements shall reflect all material
liabilities of Vision 21, accrued, contingent or otherwise, that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with GAAP. Except as set forth on Schedule 5.11 or in the Vision
21 Financial Statements, Vision 21 is not liable upon or with respect to, or
obligated in any other way to provide funds in respect of or to guarantee or
assume in any manner, any debt, obligation or dividend of any person,
corporation, association, partnership, joint venture,
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trust or other entity, and Vision 21 does not know of any valid basis for the
assertion of any other claims or liabilities of any nature or in any amount.
5.12. Compliance with Laws. Vision 21 and the
Subsidiary have not failed to comply with any applicable laws, regulations and
licensing requirements or failed to file with the proper authorities any
necessary statements and reports except where the failure to so comply or file
would not, individually or in the aggregate, result in a Material Adverse
Effect. There are no existing violations by Vision 21 or the Subsidiary of any
federal, state or local law or regulation that could, individually or in the
aggregate, result in a Material Adverse Effect. Vision 21 and the Subsidiary
possess all necessary licenses, franchises, permits and governmental
authorizations for the conduct of Vision 21's and the Subsidiary's respective
businesses as now conducted and after the Closing, as contemplated by this
Agreement. The transactions contemplated by this Agreement will not result in
a default under or a breach or violation of, or adversely affect the rights and
benefits afforded by any such licenses, franchises, permits or government
authorizations, except for any such default, breach or violation that would
not, individually or in the aggregate, have a Material Adverse Effect. Since
January 1, 1993, Vision 21 and the Subsidiary have not received any notice from
any federal, state or other governmental authority or agency having
jurisdiction over their respective properties or activities, or any insurance
or inspection body, that their respective operations or any of their respective
properties, facilities, equipment, or business practices fail to comply with
any applicable law, ordinance, regulation, building or zoning law, or
requirement of any public or quasi-public authority or body, except where
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect.
5.13. Insolvency Proceedings. Neither Vision 21 nor
the Subsidiary are currently under the jurisdiction of a Federal or state court
in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
5.14. Equal Exchange. Vision 21 and the Subsidiary
believe that the fair market value of all the Company Common Stock shall be
approximately equal to the fair market value of the Merger Consideration at the
Effective Time.
5.15. Employment of Company's Employees. Neither
Vision 21 nor the Subsidiary currently intends to change the existing
composition or employment terms of any of the non-professional personnel which
have employment arrangements with the Company on the effective date of this
Agreement (except as is necessary for the Subsidiary and/or Vision 21 to employ
such individuals pursuant to the Business Management Agreement). The
Subsidiary and Vision 21 reserve the right, however, to change the number,
composition or employment terms of such non-professional personnel in the
future.
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6. {INTENTIONALLY OMITTED}.
7. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
PHYSICIAN. The Physician represents and warrants that, except as disclosed in
the Schedules, the following will be true and correct on the Closing Date as if
made on that date:
7.1. Organization and Good Standing; Qualification.
New P.C. is a professional corporation duly organized, validly existing and in
good standing under the laws of the State, with all requisite corporate power
and authority to carry on the business in which it intends to engage, to own
the properties it intends to own, and to execute and deliver the Business
Management Agreement and the Physician Employment Agreements and consummate the
transactions and perform the services contemplated thereby. New P.C. is duly
qualified and licensed to do business and is in good standing in all
jurisdictions where the nature of its intended business makes such
qualification necessary.
7.2. Capitalization. The authorized capital stock of
New P.C. consists of __________ shares of New P.C. Common Stock, of which
__________ shares are issued and outstanding, and no shares of capital stock of
New P.C. are held in treasury. The Physician owns all of the issued and
outstanding shares of New P.C.'s common stock, free and clear of all security
interests, liens, adverse claims, encumbrances, equities, proxies and
shareholders' agreements. Each outstanding share of New P.C.'s common stock
has been legally and validly issued and is fully paid and nonassessable. There
exist no options, warrants, subscriptions or other rights to purchase, or
securities convertible into or exchangeable for, any of the authorized or
outstanding securities of New P.C. No shares of capital stock of New P.C. have
been issued or disposed of in violation of the preemptive rights, rights of
first refusal or similar rights of any of New P.C.'s stockholders.
7.3. Corporate Records. The copies of the Articles or
Certificate of Incorporation and Bylaws, and all amendments thereto, of New
P.C. that have been delivered or made available to Vision 21 and the Subsidiary
are true, correct and complete copies thereof, as in effect on the Closing
Date. The minute books of New P.C., copies of which have been delivered or
made available to Vision 21 and the Subsidiary, contain accurate minutes of all
meetings of, and accurate consents to all actions taken without meetings by,
the Board of Directors (and any committees thereof) and the stockholders of New
P.C. since its formation.
7.4. Authorization and Validity. The execution,
delivery and performance by New P.C. of the Business Management Agreement, the
Physician Employment Agreements, the Optometrist Employment Agreements and the
other agreements contemplated thereby, and the consummation of the transactions
and provisions of services contemplated thereby, have been duly authorized by
New P.C. The Business Management Agreement, the Physician Employment
Agreements, the Optometrist Employment Agreements and each other agreement
contemplated thereby will be as of the Closing Date duly executed and delivered
by New P.C. and will constitute legal, valid and binding obligations of New
P.C. enforceable against New P.C. in accordance with their respective terms,
except as may be limited by applicable bankruptcy,
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insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies.
7.5. No Violation. Neither the execution, delivery or
performance of the Business Management Agreement, the Physician Employment
Agreements, the Optometrist Employment Agreements or the other agreements
contemplated thereby nor the consummation of the transactions or provision of
services contemplated thereby will (a) conflict with, or result in a violation
or breach of the terms, conditions or provisions of, or constitute a default
under, the Articles or Certificate of Incorporation or Bylaws of New P.C., or
(b) to the actual knowledge of the Physician, violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body.
7.6. No Business, Agreements, Assets or Liabilities.
New P.C. has not commenced business since its incorporation. Other than its
Articles or Certificate of Incorporation and Bylaws, and as of the Closing
Date, the Business Management Agreement, the Physician Employment Agreements,
the Optometrist Employment Agreements, the Employee Benefit Plans and the other
contracts or agreements listed on Schedule 7.6, New P.C. is not a party to or
subject to any agreement, indenture or other instrument. New P.C. does not own
any assets (tangible or intangible) other than the consideration received upon
the issuance of shares of capital stock and New P.C. does not have any
liabilities, accrued, contingent or otherwise (known or unknown and asserted or
unasserted).
7.7. Compliance with Laws. New P.C. has complied with
all applicable laws, regulations and licensing requirements and has filed with
the proper authorities all necessary statements and reports, except where
failure to so comply or file would not, individually or in the aggregate, have
a material adverse effect on the business, operations or financial condition of
New P.C.
8. SECURITIES LAW MATTERS.
8.1. Investment Representations and Covenants of
Physician.
a. Physician understands that the
Securities will not be registered under the Securities Act or any state
securities laws on the grounds that the issuance of the Securities is exempt
from registration pursuant to Section 4(2) of the Securities Act under the
Securities Act and applicable state securities laws, and that the reliance of
Vision 21 on such exemptions is predicated in part on the Physician's
representations, warranties, covenants and acknowledgements set forth in this
Section.
b. Except as disclosed on Schedule 8.1(b)
attached hereto, Physician represents and warrants that Physician is an
"accredited investor" or "sophisticated investor" as defined under the
Securities Act and state "Blue Sky" laws, or that Physician has utilized, to
the extent necessary to be deemed a sophisticated investor under the Securities
Act and State "Blue Sky" laws, the assistance of a professional advisor.
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c. Physician represents and warrants that
the Securities to be acquired by Physician upon consummation of the
transactions described in this Agreement will be acquired by Physician for
Physician's own account, not as a nominee or agent, and without a view to
resale or other distribution within the meaning of the Securities Act and the
rules and regulations thereunder, except as contemplated in this Agreement, and
that Physician will not distribute any of the Securities in violation of the
Securities Act. All Securities shall bear a restrictive legend in
substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE
TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE ACT AND APPLICABLE
SECURITIES LAWS."
In addition, the Securities shall bear any legend required by the
securities or "Blue Sky" laws of any state where Physician resides as well as
any other legend deemed appropriate by Vision 21 or its counsel.
d. Physician represents and warrants that
the address set forth below Physician's name on Schedule 8.1(d) is Physician's
principal residence.
e. Physician (i) acknowledges that the
Securities issued to Physician at the Closing must be held indefinitely by
Physician unless subsequently registered under the Securities Act or an
exemption from registration is available, (ii) is aware that any routine sales
of Securities made pursuant to Rule 144 under the Securities Act may be made
only in limited amounts and in accordance with the terms and conditions of that
Rule and that in such cases where the Rule is not applicable, compliance with
some other registration exemption will be required, (iii) is aware that Rule
144 is not currently available for use by Physician for resale of any of the
Securities to be acquired by Physician upon consummation of the transactions
described in this Agreement, and (iv) acknowledges and agrees that the transfer
of the Securities shall be further restricted by the "lock-up" provisions
contained in the Registration Rights Agreement in the form of Exhibit 14.1(o),
whereby Physician shall be treated as an "affiliate" of Vision 21 under Rule
144.
f. Physician represents and warrants to
Vision 21 that Physician, either alone or together with the assistance of
Physician's own professional advisor, has such knowledge and experience in
financial and business matters such that Physician is capable of evaluating the
merits and risks of Physician's investment in any of the Securities to be
acquired by Physician upon consummation of the transactions described in this
Agreement.
g. Physician confirms that Physician has
received and read the Confidential Information Memorandum of Vision 21 dated
September 27, 1996 and the December 17, 1996 Supplement thereto. Physician
also confirms that Physician has had the opportunity to ask questions of and
receive answers from Vision 21 concerning the terms and
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conditions of Physician's investment in the Securities, and the Physician has
received to Physician's satisfaction, such additional information, in addition
to that set forth herein, about Vision 21's operations and the terms and
conditions of the offering as Physician has requested.
h. In order to ensure compliance with the
provisions of paragraph (c) hereof, Physician agrees that after the Closing
Physician will not sell or otherwise transfer or dispose of Securities or any
interest therein (unless such shares have been registered under the Securities
Act) without first complying with either of the following conditions, the
expenses and costs of satisfaction of which shall be fully borne and paid for
by Physician:
i) Vision 21 shall have
received a written legal opinion from legal counsel, which opinion and counsel
shall be satisfactory to Vision 21 in the exercise of its reasonable judgment,
or a copy of a "no-action" or interpretive letter of the Securities and
Exchange Commission specifying the nature and circumstances of the proposed
transfer and indicating that the proposed transfer will not be in violation of
any of the registration provisions of the Securities Act and the rules and
regulations promulgated thereunder; or
ii) Vision 21 shall have
received an opinion from its own counsel to the effect that the proposed
transfer will not be in violation of any of the registration provisions of the
Securities Act and the rules and regulations promulgated thereunder.
Physician also agrees that the certificates or instruments representing the
Securities to be issued to Physician pursuant to this Agreement may contain a
restrictive legend noting the restrictions on transfer described in this
Section and required by federal and applicable state securities laws, and that
appropriate "stop-transfer" instructions will be given to Vision 21's transfer
agent, if any, provided that this Section 8.1(h) shall no longer be applicable
to any Securities following their transfer pursuant to a registration statement
effective under the Securities Act or in compliance with Rule 144 or if the
opinion of counsel referred to above is to the further effect that transfer
restrictions and the legend referred to herein are no longer required in order
to establish compliance with any provisions of the Securities Act.
i. Physician understands that although an
Initial Public Offering is contemplated by Vision 21, there are no assurances
that an Initial Public Offering will occur or if it does occur that it will be
successful.
j. Physician agrees that he shall be
considered an "affiliate" of Vision 21 for purposes of Rule 144 and agrees to
the restrictions and limitations imposed by Rule 144 on affiliates. Physician
further agrees that he shall be considered an affiliate of Vision 21 for Rule
144 purposes even if he does not meet the technical definition of "affiliate"
under Rule 144.
8.2. Current Public Information. At all times
following the registration of any of Vision 21's securities under the
Securities Act or Exchange Act pursuant to which
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Vision 21 becomes subject to the reporting requirements of the Exchange Act,
Vision 21 shall use commercially reasonable efforts to comply with the
requirements of Rule 144 under the Securities Act, as such Rule may be amended
from time to time (or any similar rule or regulation hereafter adopted by the
SEC) regarding the availability of current public information to the extent
required to enable any holder of shares of Common Stock to sell such shares
without registration under the Securities Act pursuant to Rule 144 (or any
similar rule or regulation).
9. COVENANTS OF THE COMPANY AND THE PHYSICIAN. The Company
and the Physician, jointly and severally, agree that between the date hereof
and the Closing (with respect to the Company's covenants, the Physician agrees
to use his best efforts to cause the Company to perform):
9.1. Consummation of Agreement. The Company and the
Physician shall use their best efforts to cause the consummation of the
transactions contemplated hereby in accordance with their terms and conditions;
provided, however, that this covenant shall not require the Company or the
Physician to make any expenditures that are not expressly set forth in this
Agreement or otherwise contemplated herein.
9.2. Business Operations. The Company shall operate
its business in the ordinary course. The Company and the Physician shall use
their best efforts to preserve the business of the Company intact. Neither the
Company nor the Physician shall take any action that would, individually or in
the aggregate, result in a Material Adverse Effect.
9.3. Access. The Company and the Physician shall, at
reasonable times during normal business hours and on reasonable notice, permit
Vision 21 and its authorized representatives, including without limitation, the
Accountants, reasonable access to, and make available for inspection, all of
the assets and business of the Company, including its employees, customers and
suppliers, and permit Vision 21 and its authorized representatives to inspect
and, at Vision 21's sole cost and expense, make copies of all documents,
records (other than patient medical records) and information with respect to
the affairs of the Company, including, without limitation, the Financial
Statements, as Vision 21 and its representatives may request, all for the sole
purpose of permitting Vision 21 to become familiar with the business and assets
and liabilities of the Company.
9.4. Notification of Certain Matters. The Company and
the Physician shall promptly inform Vision 21 in writing of (a) any notice of,
or other communication relating to, a default or event that, with notice or
lapse of time or both, would become a default, received by the Company or the
Physician subsequent to the date of this Agreement and prior to the Effective
Time under any Commitment material to the Company's condition (financial or
otherwise), operations, assets, liabilities or business and to which it is
subject; or (b) any material adverse change in the Company's condition
(financial or otherwise), operations, assets, liabilities or business.
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9.5. Approvals of Third Parties. As soon as
practicable after the date hereof, the Company and the Physician shall secure
all necessary approvals and consents of landlords to the consummation of the
transactions contemplated hereby and shall use their best efforts to secure all
necessary approvals and consents of other third parties to the consummation of
the transactions contemplated hereby; provided, however, that this covenant
shall not require the Company or the Physician to make any material
expenditures that are not expressly set forth in this Agreement or otherwise
contemplated herein.
9.6. Employee Matters. Except as set forth in
Schedule 3.13 or as otherwise contemplated by this Agreement, the Company shall
not, without the prior written approval of Vision 21, except as required by
law:
a. increase the cash compensation of the
Physician or any other employees of the Company (other than in the ordinary
course of business and consistent with past practice);
b. adopt, amend or terminate any
Compensation Plan;
c. adopt, amend or terminate any
Employment Agreement;
d. adopt, amend or terminate any
Employee Policies and Procedures;
e. adopt, amend or terminate any
Employee Benefit Plan;
f. take any action that could deplete the
assets of any Employee Benefit Plan, other than payment of benefits in the
ordinary course to participants and beneficiaries;
g. fail to pay any premium or
contribution due or with respect to any Employee Benefit Plan;
h. fail to file any return or report
with respect to any Employee Benefit Plan;
i. institute, settle or dismiss any
employment litigation except as could not, individually or in the aggregate,
result in a Material Adverse Effect;
j. enter into, modify, amend or terminate
any agreement with any union, labor organization or collective bargaining unit;
or
k. take or fail to take any action with
respect to any past or present employee of the Company that would, individually
or in the aggregate, result in a Material Adverse Effect.
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9.7. Contracts. Except with Vision 21's prior written
consent, the Company shall not assume or enter into any contract, lease,
license, obligation, indebtedness, commitment, purchase or sale except in the
ordinary course of business that is material to the Company's business, nor
will it waive any material right or cancel any material contract, debt or
claim.
9.8. Capital Assets; Payments of Liabilities. The
Company shall not, without the prior written approval of Vision 21 (a) acquire
or dispose of any capital asset having a fair market value of $5,000 or more,
or acquire or dispose of any capital asset outside of the ordinary course of
business or (b) discharge or satisfy any lien or encumbrance or pay or perform
any obligation or liability other than (i) liabilities and obligations
reflected in the Financial Statements or (ii) current liabilities and
obligations incurred in the usual and ordinary course of business since the
Company Balance Sheet Date and, in either case (i) or (ii) above, only as
required by the express terms of the agreement or other instrument pursuant to
which the liability or obligation was incurred.
9.9. Mortgages, Liens and Guaranties. The Company
shall not, without the prior written approval of Vision 21, enter into or
assume any mortgage, pledge, conditional sale or other title retention
agreement, permit any security interest, lien, encumbrance or claim of any kind
to attach to any of its assets (other than statutory liens arising in the
ordinary course of business and other liens that do not materially detract from
the value or interfere with the use of such assets), whether now owned or
hereafter acquired, or guarantee or otherwise become contingently liable for
any obligation of another, except obligations arising by reason of endorsement
for collection and other similar transactions in the ordinary course of
business, or make any capital contribution or investment in any person.
9.10. Acquisition Proposals. The Company and the
Physician agree that from the date of this Agreement through the earlier of the
Closing Date or January 1, 1997, (a) neither the Physician nor the Company nor
any of its officers and directors shall, and the Physician and the Company
shall direct and use their best efforts to cause the Company's employees,
agents, and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any Acquisition
Proposal or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; (b) the Physician and the Company will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing and each will take the necessary steps to inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 9.10; and (c) the Physician and the
Company will notify Vision 21 immediately if any such inquiries or proposals
are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, the
Company or the Physician.
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9.11. Distributions and Repurchases. Except as
contemplated in this Agreement, no distribution, payment or dividend of any
kind will be declared or paid by the Company with respect of its capital stock,
nor will any repurchase of any of the Company's capital stock be approved or
effected.
9.12. Requirements to Effect the Merger. The Company
and the Physician shall use their best efforts to take, or cause to be taken,
all actions necessary to effect the Merger under applicable law, including
without limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
9.13. Physician Accounts Payable and Physician Retained
Equity. The Company shall, and the Physician shall cause the Company to, pay
in a timely manner the accounts payable of the Physician. Except as
contemplated in this Agreement, the Company shall not, and the Physician shall
not permit the Company to, make payment of all or any portion of any retained
equity of the Company at any time prior to Closing.
9.14. New P.C. Spinoff. The Company shall form,
organize and incorporate New P.C. in the State and the Articles or Certificate
of Incorporation and Bylaws of New P.C. shall be in form and substance
reasonably satisfactory to Vision 21. The Company shall not permit New P.C. to
commence business until the Closing Date. On or prior to the Closing, Company
shall take all actions and execute all documents, agreements or instruments
necessary to transfer to New P.C. the Company's medical business and to
transfer good, valuable, and marketable title to all of the Company's Medical
Assets in exchange for the issuance by the New P.C. to the Company of all of
the issued and outstanding shares of New P.C. common stock. Prior to the
Closing, the Company shall declare and make a distribution to Physician of all
of the issued and outstanding shares of New P.C. common stock.
9.15. Licenses and Permits. The Company and the
Physician shall cooperate fully with Vision 21 to obtain all licenses, permits,
approvals or other authorizations required under any law, statute, rule,
regulation or ordinance, or otherwise necessary or desirable to provide the
services of New P.C., the Physician and the Professional Employees contemplated
by the Business Management Agreement and the Physician Employment Agreements,
and to conduct the intended business of New P.C.
9.16. Physician Employment Agreements. The Company and
the Physician shall cause, at or immediately prior to Closing, each Physician
Employee (except for those non-shareholder Physician Employees identified on
Schedule 9.16) who is then an employee of the Company and Physician agrees at
or immediately prior to Closing (i) to terminate his employment agreement, if
any, with the Company by mutual consent without any liability therefor on the
part of the Company and (ii) to enter into a new Physician Employment Agreement
with New P.C. in accordance with the terms of the Business Management
Agreement.
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9.17. Optometrist Employment Agreements. The Company
and the Physician shall cause, at or immediately prior to Closing, each
Optometrist Employee (except for those Optometrist Employees identified on
Schedule 9.16) who is then an employee of the Company (i) to terminate his
employment agreement, if any, with the Company by mutual consent without any
liability therefor on the part of the Company and (ii) to enter into a new
Optometrist Employment Agreement with New P.C. in accordance with the Business
Management Agreement.
9.18. Termination of Retirement Plans. Prior to
Closing, the Physician shall cause the Company to take all steps necessary to
discontinue benefits accruals under any Employee Benefit Plan that is intended
to be a qualified employee retirement plan under Section 401(a) of the Code (a
"Retirement Plan") effective as of Closing or as soon thereafter as may be
practical. Effective at the time of Closing, the Company shall cause New P.C.
to assume all of the obligations of the Company as the sponsoring employer
and/or plan administrator of the Retirement Plan in compliance with applicable
law.
Subsequent to Closing, New P.C. and Vision 21 shall review
the extent to which New P.C. can resume contributions to the Retirement Plan
without violating the qualification requirements of Sections 410(b) and
401(a)(4) of the Code taking into account any employees of Vision 21 or the
Subsidiary who would be "leased employees" of New P.C. under Section 414(n) of
the Code. If Vision 21 and New P.C. mutually agree that such qualification
requirements can be satisfied, New P.C. may elect to continue the Retirement
Plan and make contributions in accordance with its terms, provided that New
P.C. shall agree to cover at its own expense any Vision 21 or Subsidiary
employees who are leased employees if such coverage is required to maintain the
tax-qualified status of the Retirement Plan.
9.19. Delivery of Schedules. The Company and the
Physician shall deliver to Vision 21 and the Subsidiary all Schedules required
to be delivered by them prior to the Closing.
9.20. Conversion of Company. After the transfer of the
Medical Assets of the Company to New P.C. and prior to Closing, Physician shall
cause the Company to take such action and file such documents or instruments as
may be necessary to convert the Company into a general business corporation in
accordance with applicable law.
9.21. Assignment of Fees for Medical and Optometry
Services. On or prior to the Closing Date, the Company shall obtain an
irrevocable assignment from all Professional Employees of any and all of their
rights to receive payment for the provision of ophthalmology or optometry
services which are part of the Accounts Receivable to the Company existing on
the Closing Date, except for those fees specified and set forth on Schedule
9.21. Each Professional Employee shall undertake to endorse any payments
received on account of such services to the order of the Company and to take
such other action as may be necessary to confirm to the Company the rights to
collect and retain for its own account such Accounts Receivable. The Company
shall cause its Professional Employees to agree that such security interest of
such
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lender(s) is intended to be a first priority security interest and is superior
to any right, title or interest which may be asserted by such Professional
Employees with respect to the Accounts Receivable or the proceeds thereof. In
the event that the assignment of rights described in this Section shall be
deemed, for any reason, to be ineffective as an outright assignment, the
Company shall cause each Professional Employee to agree that such Professional
Employee shall be deemed, effective as of the Closing Date, to have granted to
the Company a first priority lien on and security interest in and to any and
all interests of such Professional Employee in any of the Accounts Receivable,
and all proceeds with respect thereto, to secure the collection by the Company
of all Accounts Receivable, and this Agreement shall be deemed to be a security
agreement to the extent necessary to give effect to the foregoing. The Company
shall cause each Professional Employee to execute and deliver, all such
financing statements as the Company or Vision 21 may request in order to
perfect such security interest. The Company shall not suffer any Professional
Employee to grant any other lien on or security interest in or to such Accounts
Receivable or any proceeds thereof.
9.22. Transfer of Ambulatory Surgical Center Line of
Business. Prior to the Closing Date, the Company shall transfer (in a form
acceptable to Vision 21) all of the Company's right, title and interest in the
ambulatory surgical center assets and business of the Company to a newly-formed
professional corporation (which shall not be New P.C.) which shall be
wholly-owned by Physician, and the Company and/or the Physician shall cause
such newly- formed professional corporation to assume all obligations and
liabilities relating to such ambulatory surgical center business. The assets
to be transferred and the liabilities and obligations to be assumed with
respect to such ambulatory surgical business are listed on Schedule 9.22. The
Company shall cause any and all payments received with respect to such transfer
to be paid directly to Physician and not to the Company or New P.C.
10. COVENANTS OF VISION 21. Vision 21 and the Subsidiary agree
that between the date hereof and the Closing:
10.1. Consummation of Agreement. Vision 21 and the
Subsidiary shall use their best efforts to cause the consummation of the
transactions contemplated hereby in accordance with their terms and conditions
and take all corporate and other actions necessary to approve the Merger;
provided, however, that this covenant shall not require Vision 21 or the
Subsidiary to make any expenditures that are not expressly set forth in this
Agreement or otherwise contemplated herein.
10.2. Efforts to Effect. Vision 21 and the Subsidiary
will use their best efforts to take, or cause to be taken, all actions
necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
10.3. Notification of Certain Matters. Vision 21 and
the Subsidiary shall promptly inform the Company and the Physician in writing
of (a) any notice of, or other communication relating to, a default or event
that, with notice or lapse of time or both, would
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become a default, received by Vision 21 or the Subsidiary subsequent to the
date of this Agreement and prior to the Effective Time under any Vision 21
Commitment material to Vision 21's condition (financial or otherwise),
operations, assets, liabilities or business and to which it is subject; or (b)
any material adverse change in Vision 21's condition (financial or otherwise),
operations, assets, liabilities or business.
10.4. Approvals of Third Parties. Vision 21 and the
Subsidiary shall use their best efforts to secure, as soon as practicable after
the date hereof, all necessary approvals and consents of third parties to the
consummation of the transactions contemplated hereby.
10.5. Licenses and Permits. Vision 21 and the
Subsidiary shall use their best efforts to obtain all licenses, permits,
approvals or other authorizations required under any law, statute, rule,
regulation or ordinance, or otherwise necessary or desirable to consummate the
transactions or provide the services contemplated by the Business Management
Agreement and to conduct the intended business of Vision 21 and the Subsidiary.
10.6. Release of Physician From Practice Liabilities.
Vision 21 and the Subsidiary shall use their best efforts to obtain from third
party creditors the release of Physician from any personal liabilities relating
to the Practice which are identified on Schedule 10.6 and assumed by the
Subsidiary pursuant to the terms of this Agreement.
11. COVENANTS OF VISION 21, THE SUBSIDIARY, THE COMPANY AND THE
PHYSICIAN. Vision 21, the Subsidiary, the Company and the Physician agree as
follows (with respect to New P.C.'s covenants, the Physician agrees to cause
New P.C. to perform):
11.1. Filings; Other Action.
a. Vision 21, the Subsidiary and the
Physician shall cooperate to promptly prepare and file at Vision 21's expense
with the SEC, a Registration Statement on Form S-1 (or other appropriate form)
to be filed by Vision 21 in connection with any Initial Public Offering of
Vision 21 (including the prospectus constituting a part thereof, the
"Registration Statement"). Vision 21 and the Subsidiary shall obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement, and the Company and
the Physician shall furnish all information concerning the Company, the New
P.C., the Nonmedical Assets and the Physician as may be reasonably requested in
connection with any such action.
b. Each of the Company, the Physician,
Vision 21 and the Subsidiary represents and warrants that none of the
information or documents supplied or to be supplied by it specifically for
inclusion in a Registration Statement, by exhibit or otherwise, will, at the
time the Registration Statement and each amendment and supplement thereof, if
any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
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Company, the Physician, Vision 21 and the Subsidiary shall agree as to the
information and documents supplied by the Company and the Physician for
inclusion in the Registration Statement and shall indicate such information and
documents in a letter to be delivered at least ten (10) days prior to the
initial filing of the Registration Statement with the SEC. The Company and the
Physician shall be entitled to review the Registration Statement and each
amendment thereto, if any, prior to the time each becomes effective under the
Securities Act.
c. The Physician and the Company shall,
upon request, furnish Vision 21 and the Subsidiary with all information
concerning himself, itself, their respective partners, the Company's
subsidiaries, directors, officers, and stockholders, and including financial
statements with respect to the same, any consents (and information necessary to
obtain such consents) and such other matters as may be reasonably requested by
Vision 21 in connection with the preparation of the Registration Statement and
each amendment or supplement thereto, or any other statement, filing, notice or
application made by or on behalf of each such party or any of the Company's
subsidiaries to any governmental entity in connection with the Merger, any
Initial Public Offering and the other transactions contemplated by this
Agreement.
11.2. Amendment of Schedules. Each party hereto agrees
that, with respect to the representations and warranties of such party
contained in this Agreement, such party shall have the continuing obligation
until the Closing to attach, supplement or amend promptly the Schedules with
respect to any matter that would have been or would be required to be set forth
or described in the Schedules in order to not materially breach any
representation, warranty or covenant of such party contained herein; provided
that no amendment or supplement to a Schedule that constitutes or reflects a
material adverse change to the Company or the Nonmedical Assets may be made
unless Vision 21 consents to such amendment or supplement, and no amendment or
supplement to a Schedule that constitutes or reflects a material adverse change
to Vision 21 may be made unless the Company and the Physician consent to such
amendment or supplement. For all purposes of this Agreement, including without
limitation for purposes of determining whether the conditions set forth in
Sections 12.1 and 13.1 have been fulfilled, the Schedules hereto shall be
deemed to be the Schedules as amended or supplemented pursuant to this Section
11.2. In the event that the Company is required to amend or supplement a
Schedule in accordance with this Section 11.2 and Vision 21 does not consent to
such amendment or supplement, or Vision 21 is required to amend or supplement a
Schedule in accordance with this Section 11.2 and the Company and the Physician
do not consent, this Agreement shall be deemed terminated by mutual consent as
set forth in Section 17.1(d) or Section 17.1(e) as appropriate.
11.3. Business Management Agreement. The Company and
the Physician shall use their best efforts to cause the Business Management
Agreement to be executed and delivered by New P.C. on or prior to the Closing
Date, which shall be considered a Nonmedical Asset of the Company and shall be
acquired by the Subsidiary in the Merger.
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11.4. Fees and Expenses.
a. Vision 21 shall pay all costs of the
Audit of the Company's Financial Statements and financial records by Vision
21's auditors (or auditors designated by Vision 21's auditors). All items
prepared by Vision 21's auditors in connection with the Audit ("Prepared Audit
Materials") shall be for use solely by Vision 21; provided, however, that the
Company may utilize the Prepared Audit Materials solely in connection with its
review of Vision 21's calculation of the Merger Consideration. The Prepared
Audit Materials shall not be deemed to include those items which customarily
remain the property of auditors such as their working papers and memos.
b. In the event the Merger is not
consummated, the Company and Physician shall not be entitled to copies or
originals of the Prepared Audit Materials unless the Company or Physician pays
for or reimburses Vision 21 for all expenses of the auditor in connection with
the Audit in advance of receiving the Prepared Audit Materials (either from
Vision 21 or its auditor). For purposes of this Agreement, Audit expenses
shall include all expenses related to the Audit as well as expenses incurred to
present the financial statements in accordance with GAAP and all schedules
related thereto.
c. Each of the Physician and Vision 21
shall pay the costs and expenses of their own legal counsel with respect to
legal services rendered in connection with the preparation and negotiation of
this Agreement and the Merger contemplated hereby.
d. In the event that an Initial Public
Offering does not take place for any reason whatsoever, Vision 21 (but not the
Company or the Physician) shall have sole responsibility for the payment of all
legal fees (except as set forth in Section 11.4(c)), accounting fees (except as
set forth in Section 11.4(a)), underwriters' expenses and other fees, costs and
expenses associated solely in connection with the preparation of any
Registration Statement relating to such Initial Public Offering.
e. If any Initial Public Offering is
consummated as contemplated by this Agreement, all legal fees, audit fees,
printing costs, filing fees, blue sky fees and underwriters' discounts and fees
associated solely with the Initial Public Offering shall be paid by Vision 21
from the proceeds of the Initial Public Offering, except for those expenses,
fees and underwriters' discounts related to any shares sold by the Physician.
12. CONDITIONS PRECEDENT OF VISION 21 AND THE SUBSIDIARY.
Except as may be waived in writing by Vision 21 and the Subsidiary, the
obligations of Vision 21 and the Subsidiary hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following conditions
precedent:
12.1. Representations and Warranties. The
representations and warranties of the Company and the Physician contained
herein shall have been true and correct in all
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material respects when initially made and shall be true and correct in all
material respects as of the Closing Date.
12.2. Covenants. The Company and the Physician shall
have performed and complied in all material respects with all covenants
required by this Agreement to be performed and complied with by the Company or
the Physician prior to the Closing Date.
12.3. Legal Opinion. Counsel to the Company and the
Physician shall have delivered to Vision 21 and the Subsidiary their opinions,
dated as of the Closing Date, in form and substance substantially similar to
Exhibit 12.3 which Vision 21, the Subsidiary, Vision 21's and the Subsidiary's
counsel, the underwriters of the Initial Public Offering and their counsel
shall be permitted to rely upon.
12.4. Proceedings. No action, proceeding or order by
any court or governmental body or agency shall have been threatened orally or
in writing, asserted, instituted or entered to restrain or prohibit the
carrying out of the transactions contemplated hereby.
12.5. No Material Adverse Change. No material adverse
change in the condition (financial or otherwise), operations, assets,
liabilities or business of the Company shall have occurred since the Company
Balance Sheet Date, whether or not such change shall have been caused by the
deliberate act or omission of the Company or the Physician.
12.6. Government Approvals and Required Consents. The
Company, the Physician, New P.C., Vision 21 and the Subsidiary shall have
obtained all necessary government and other third-party approvals and consents
(other than consents technically required as a result of the transactions
contemplated hereby under the terms of managed care contracts to which the
Company or any of its employees are a party).
12.7. Certification. None of the Company, the
Physician or New P.C. shall have received any notice of or been made a party to
any judicial or administrative proceeding, or threatened to so be made a party,
in any action or proceeding that seeks to deny the continued use or receipt of
any necessary permit, license, authorization, certification or approval under
the Medicare and Medicaid programs to provide ophthalmology or optometry
services.
12.8. Closing Deliveries. Vision 21 and the Subsidiary
shall have received all documents and agreements, duly executed and delivered
in form reasonably satisfactory to Vision 21 and the Subsidiary, referred to in
Section 14.1.
12.9. Due Diligence. Vision 21 shall have completed to
its satisfaction a due diligence review of the Company and the Physician.
12.10. Financial Audit. Vision 21 shall have approved
in Vision 21's sole discretion an audit of the Company and the Practice which
audit shall have been performed by an accounting firm designated by Vision 21
at the sole expense of Vision 21.
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12.11. Medicare Audit. Vision 21 shall have approved in
Vision 21's sole discretion a Medicare audit of the Company and the Practice
which audit shall be at the sole expense of Vision 21.
12.12. Exemption Under State Securities Laws. The
transfer of Vision 21's Securities to the Physician as contemplated in this
Agreement shall qualify for one or more exemptions from registration under the
State's securities laws. Vision 21 shall pay all filing fees in connection
with any filing required to qualify the transfer of the Securities for such
exemption(s).
12.13. Assignment of Professional Employees' Rights in
Accounts Receivable. The Company shall have caused the Professional Employees
to assign any and all of their rights with respect to Accounts Receivable to
the Company and shall cause such Professional Employees to execute such other
agreements and instruments as contemplated in Section 9.21.
12.14. Transfer of Ambulatory Surgical Center Line of
Business. The Company shall have transferred all of its ambulatory surgical
center line of business to a newly-created professional corporation as
contemplated in Section 9.22 hereof.
13. CONDITIONS PRECEDENT OF THE COMPANY AND THE PHYSICIAN.
Except as may be waived in writing by the Company and the Physician, the
obligations of the Company and the Physician hereunder are subject to
fulfillment at or prior to the Closing Date of each of the following conditions
precedent:
13.1. Representations and Warranties. The
representations and warranties of Vision 21 and the Subsidiary contained herein
shall be true and correct in all respects when initially made and shall be true
and correct in all material respects as of the Closing Date.
13.2. Covenants. Vision 21 and the Subsidiary shall
have performed and complied in all material respects with all covenants and
conditions required by this Agreement to be performed and complied with by them
prior to the Closing Date.
13.3. Legal Opinions. Counsel to Vision 21 and the
Subsidiary shall have delivered to the Company and the Physician their opinion,
dated as of the Closing Date, in form and substance substantially similar to
Exhibit 13.3.
13.4. Proceedings. No action, proceeding or order by
any court or governmental body or agency shall have been threatened in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
13.5. Government Approvals and Required Consents. The
Company, the Physician, New P.C., Vision 21 and the Subsidiary shall have
obtained all necessary government and other third-party approvals and consents
(other than consents technically required as a result
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of the transactions contemplated hereby under the terms of managed care
contracts to which the Company or any of its employees are a party).
13.6. Closing Deliveries. The Company, New P.C. and
the Physician shall have received all documents, instruments and agreements,
duly executed and delivered in form reasonably satisfactory to the Company,
referred to in Section 14.2.
13.7. No Change in Voting or Ownership Control. There
shall have been no changes in the voting or ownership control of Vision 21 from
the date first above written to the Closing Date.
13.8. No Material Adverse Change; Delivery of Amended
Confidential Information Memorandum. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities or business
of Vision 21 shall have occurred since the end of the last fiscal period
reported in the Vision 21 Financial Statements, whether or not such change
shall have been caused by the deliberate act or omission of Vision 21. Vision
21 shall deliver an amended Confidential Information Memorandum updating the
information contained in the initial Confidential Information Memorandum on or
before December 17, 1996, and the Company and the Physician shall have the
right not to close the transactions contemplated in this Agreement if they
determine, based upon their review of the amended Confidential Information
Memorandum, that a material adverse change has occurred with respect to the
condition (financial or otherwise), operations, assets, liabilities or business
of Vision 21.
14. CLOSING DELIVERIES; ESCROW OF DOCUMENTS.
14.1. Deliveries of the Company, New P.C. and the
Physician. At or prior to December 24, 1996, the Company, New P.C. and the
Physician shall deliver to Vision 21 and the Subsidiary, c/▇ ▇▇▇▇▇▇▇▇, Loop &
▇▇▇▇▇▇▇▇, LLP, counsel to Vision 21 and the Subsidiary, the following, all of
which shall be in a form reasonably satisfactory to Vision 21 and the
Subsidiary and shall be held by ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP in escrow
pending Closing, pursuant to an escrow agreement or letter in form and
substance mutually acceptable to the parties hereto:
a. a copy of resolutions of the Board of
Directors of the Company authorizing (i) the execution, delivery and
performance of this Agreement and all related documents and agreements, and
(ii) the consummation of the Merger, certified by the Secretary of the Company
as being true and correct copies of the originals thereof subject to no
modifications or amendments;
b. a copy of resolutions of the Board of
Directors of New P.C. authorizing the execution, delivery and performance of
the Business Management Agreement, the Physician Employment Agreements, and all
other documents to be executed and delivered by New P.C. as contemplated by
this Agreement, certified by the Secretary of New P.C. as being true and
correct copies of the originals thereof subject to no modifications or
amendments;
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c. a certificate of the President of the
Company, and of the Physician, dated the Closing Date, as to the truth and
correctness of the representations and warranties of the Company and the
Physician contained herein, on and as of the Closing Date;
d. a certificate of the President of the
Company, and of the Physician, dated the Closing Date, (i) as to the
performance of and compliance in all material respects by the Company and the
Physician with all covenants contained herein on and as of the Closing Date and
(ii) certifying that all conditions precedent of the Company and the Physician
to the Closing have been satisfied;
e. a certificate of the Secretary of the
Company and the Secretary of New P.C. certifying as to the incumbency of the
directors and officers of each such corporation and as to the signatures of
such directors and officers who have executed documents delivered pursuant to
the Agreement on behalf of each such corporation;
f. a certificate, dated within ten (10)
days prior to the Closing Date, of the Secretary of State of the respective
states of incorporation for the Company and New P.C. establishing that each
such corporation is in existence, has paid all franchise or similar taxes, if
any, and, if applicable, otherwise is in good standing to transact business in
its state of organization;
g. certificates, dated within ten (10)
days prior to the Closing Date, of the Secretaries of State of the states in
which the Company and New P.C. are qualified to do business, to the effect that
each such corporation is qualified to do business and, if applicable, is in
good standing as a foreign corporation in each of such states;
h. an opinion of counsel to the Company
and Physicians dated as of the Closing Date, in form and substance satisfactory
to Vision 21 and the Subsidiary, which Vision 21, the Subsidiary, Vision 21's
and the Subsidiary's counsel and the underwriters of any Initial Public
Offering and their counsel are permitted to rely upon and which shall include
an opinion, subject to normal and customary exceptions, that to the best of
their knowledge the transactions and arrangements contemplated by this
Agreement are in conformity with State laws, rules and regulations governing
the practice of medicine.
i. all authorizations, consents, permits
and licenses referenced in Section 3.8;
j. the resignations of the directors and
officers of the Company as requested by Vision 21;
k. the executed Business Management
Agreement in substantially the form attached hereto as Exhibit 14.1 (k), as
revised in accordance with changes reasonably deemed necessary or advisable by
legal counsel retained by Vision 21 and the Subsidiary in the State to address
regulatory and compliance issues;
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l. an executed Physician Employment
Agreement between New P.C. and the Physician in substantially the form attached
hereto as Exhibit 14.1 (l);
m. an executed Physician Employment
Agreement between New P.C. and each Physician Employee who is then an employee
of the Company in substantially the form attached hereto as Exhibit 14.1 (m);
n. an executed Optometrist Employment
Agreement between New P.C. and each Optometrist Employee who is then an
employee of the Company in substantially the form attached hereto as Exhibit
14.1 (n);
o. an executed Registration Rights
Agreement between Vision 21 and the Physician in substantially the form
attached hereto as Exhibit 14.1 (o) (the "Registration Rights Agreement");
p. an executed Certificate of Merger
necessary to effect the Merger;
q. a non-foreign affidavit, as such
affidavit is referred to in Section 1445 (b) (2) of the Code, of the Physician,
signed under a penalty of perjury and dated as of the Closing Date, to the
effect that the Physician is a United States citizen or a resident alien (and
thus not a foreign person) and providing the Physician's United States taxpayer
identification number;
r. if desired by Vision 21, a new lease
or leases between the landlords under each lease for real property described on
Schedule 3.14(c) and Vision 21 or the Subsidiary in form and substance
reasonably satisfactory to Vision 21 and the Subsidiary;
s. the Shares of Company Common Stock to
be delivered pursuant to Section 2.9(b); and
t. such other instrument or instruments
of transfer prepared by Vision 21 as shall be necessary or appropriate, as
Vision 21 or its counsel shall reasonably request, to carry out and effect the
purpose and intent of this Agreement.
14.2. Deliveries of Vision 21 and the Subsidiary. At
or prior to December 24, 1996, Vision 21 and the Subsidiary shall deliver to
the Company and the Physician, c/▇ ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP, counsel to
Vision 21, the following, all of which shall be in a form reasonably
satisfactory to the Company and the Physician and shall be held by ▇▇▇▇▇▇▇▇,
Loop & ▇▇▇▇▇▇▇▇, LLP in escrow pending Closing, pursuant to an escrow agreement
or letter in form and substance mutually acceptable to the parties hereto:
a. a copy of the resolutions of the Board
of Directors of Vision 21 authorizing (i) the execution, delivery and
performance of this Agreement, and all
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related documents and agreements, and (ii) the consummation of the Merger,
certified by Vision 21's Secretary as being true and correct copies of the
originals thereof subject to no modifications or amendments;
b. a copy of the resolutions of the Board
of Directors of the Subsidiary authorizing (i) the execution, delivery and
performance of this Agreement, and all related documents and agreements, and
(ii) the consummation of the Merger, certified by the Subsidiary's Secretary as
being true and correct copies of the originals thereof subject to no
modifications or amendments;
c. a certificate of an officer of Vision
21 dated the Closing Date as to the truth and correctness of the
representations and warranties of Vision 21 contained herein, on and as of the
Closing Date;
d. a certificate of an officer of the
Subsidiary dated the Closing Date as to the truth and correctness of the
representations and warranties of the Subsidiary contained herein, on and as of
the Closing Date;
e. a certificate of an officer of Vision
21 dated the Closing Date, (i) as to the performance and compliance of Vision
21 with all covenants contained herein on and as of the Closing Date and (ii)
certifying that all conditions precedent of Vision 21 to the Closing have been
satisfied;
f. a certificate of an officer of the
Subsidiary dated the Closing Date, (i) as to the performance and compliance of
the Subsidiary with all covenants contained herein on and as of the Closing
Date and (ii) certifying that all conditions precedent of the Subsidiary to the
Closing have been satisfied;
g. certificates, dated within ten (10)
days prior to the Closing Date, of the Secretary of State of the State of
Florida establishing that Vision 21 and the Subsidiary are in existence, have
paid all franchise or similar taxes, if any, and, if applicable, otherwise are
in good standing to transact business in such state;
h. certificates (or photocopies thereof),
dated within ten (10) days prior to the Closing Date, of the Secretary of State
of each state in which Vision 21 and the Subsidiary are qualified to do
business, to the effect that Vision 21 and the Subsidiary are qualified to do
business and, if applicable, are in good standing as a foreign corporation in
each of such states;
i. an opinion of ▇▇▇▇▇▇▇▇, Loop &
▇▇▇▇▇▇▇▇, LLP, counsel to Vision 21, dated as of the Closing Date, pursuant to
Section 13.3;
j. the executed Registration Rights
Agreement;
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k. the executed Lease Assignments;
l. the Shares of Vision 21 Common Stock
to be delivered pursuant to Section 2.9(a); and
m. such other instrument or instruments
of transfer, prepared by the Company or the Physician as shall be necessary or
appropriate, as the Company, the Physician or their counsel shall reasonable
request, to carry out and effect the purpose and intent of this Agreement.
14.3. Release of Escrow Materials. ▇▇▇▇▇▇▇▇, Loop &
▇▇▇▇▇▇▇▇, LLP shall release the agreements, certificates, instruments,
documents and other materials described in Sections 14.1 and 14.2 to the
appropriate parties to effectuate the transactions contemplated in this
Agreement only after all such materials have been delivered by all applicable
parties (or the parties receiving such documents have waived in writing such
delivery requirement) and after counsel for the Physician and the Company have
sent written notice to ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP stating that the
Physician and the Company have reviewed the amended Confidential Information
Memorandum and have decided, based upon such review, to consummate the
transactions contemplated in this Agreement. In the event that the Physician
and the Company elect not to consummate the transactions contemplated in this
Agreement based upon their review of the amended Confidential Information
Memorandum, and counsel for the Physician and the Company informs ▇▇▇▇▇▇▇▇,
Loop & ▇▇▇▇▇▇▇▇, LLP in writing as to such decision, ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇,
LLP shall promptly return the foregoing materials to the parties sending such
materials.
15. POST CLOSING MATTERS.
15.1. Further Instruments of Transfer. From and after
the Closing Date, at the request of Vision 21 and at Vision 21's sole cost and
expense, the Physician and the Company shall deliver any further instruments of
transfer and take all reasonable action as may be necessary or appropriate to
carry out the purpose and intent of this Agreement.
15.2. Practice Advisory Council; Local Advisory
Council; National Appeals Council. Vision 21 and New P.A. shall establish a
practice advisory council composed of delegates from Vision 21 and New P.A.
which shall advise Vision 21 and New P.A. and determine certain issues as more
fully described in the Business Management Agreement. Vision 21 shall also
establish a local advisory council composed of delegates from certain practice
groups acquired by Vision 21 in connection with the Related Acquisitions. Such
delegates shall be appointed from practice groups which are located in a market
area to be identified by Vision 21 and in which New P.A. is located. The local
advisory council board shall advise Vision 21 and the practice groups within
the market area as to policy and strategy issues and shall determine certain
types of issues and disputes between Vision 21 and such practice groups which
issues and disputes are identified in the Business Management Agreement and
other management agreements entered into between Vision 21 and practice groups.
New
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P.A. shall have the right to appoint one (1) member to a local advisory council
who shall serve an initial two (2) year term. After the initial two-year term,
election of members to the local advisory council shall be in accordance with
by-laws which shall be adopted and amended by the local advisory council.
Vision 21 shall also establish a national appeals council which shall have,
among other duties and responsibilities, the power to adopt and amend its
by-laws, to review and approve as limited herein certain decisions of the local
advisory councils, and to resolve deadlocks among the members of such local
advisory councils.
15.3. Acquisition of Ambulatory Surgical Center Line of
Business. In the event that the newly- created professional corporation
referred to in Section 9.22 hereof (i) terminates its contractual arrangement
with Medivision, Inc., or its successors or assigns relating to the ambulatory
surgical center line of business (the "ASC Business") which shall be
transferred to such newly-created professional corporation pursuant to Section
9.22, (ii) obtains an independent ambulatory surgical center license, and (iii)
obtains a Medicare certification; then the Physician shall cause such
professional corporation to transfer to New P.C. and New P.C. shall acquire all
of the assets relating to the ASC Business, which transfer shall be conducted
in a tax deferred manner. Following such transfer all revenues and expenses
relating to the ASC Business shall be covered by the Business Management
Agreement and all operations of the ASC Business shall be governed by the
Business Management Agreement. The consideration to be paid by Vision 21 (or,
at the option of Vision 21, the Surviving Corporation) with respect to the
transfer of the ASC Business is set forth in Schedule 15.3. The parties agree
to execute all documents reasonably requested by any party hereto to effectuate
the transactions contemplated in this Section 15.3, and the parties agree that
the acquisition relating to such transfer shall contain representations,
warranties and covenants not to compete in substantially the same form as set
forth in this Agreement. Following the Closing Date and until the acquisition
of the ASC Business, such business shall not be subject to the Business
Management Agreement and none of Vision 21's or the Surviving Corporation's
facilities, equipment, furniture, personnel or other assets or resources shall
be used by or in furtherance of such ASC Business. New P.C.'s and Physician's
obligation to transfer the ASC Business and Vision 21's obligation to acquire
the ASC Business shall terminate if such transfer is not effected within
eighteen (18) months of the Closing Date; provided that during such
eighteen-month period, New P.C. shall not transfer the ASC Business to any
other party, and after such eighteen-month period, Vision 21 shall have a right
of first refusal to acquire the ASC Business upon the same terms and conditions
offered by any legitimate potential transferee. Physician agrees to indemnify,
defend and hold Vision 21, the Surviving Corporation and their respective
directors, officers, members, managers, employees, agents, attorneys and
affiliates harmless from and against all losses, claims, obligations, demands,
assessments, penalties, liabilities, costs, damages, reasonable attorneys' fees
and expenses asserted against or incurred by such entities and individuals
arising out of or resulting from the ASC Business (an "ASC Claim"), whether or
not (i) the transfer of the ASC Business is consummated, (ii) any party had
knowledge of the basis of such ASC Claim, and (iii) such ASC Claim was
incurred or asserted before or after the Closing Date of this Agreement.
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16. REMEDIES.
16.1. Indemnification by the Physician. Subject to the
terms and conditions of this Agreement, the Physician agrees to indemnify,
defend and hold Vision 21, the Surviving Corporation and their respective
directors, officers, members, managers, employees, agents, attorneys and
affiliates harmless from and against all losses, claims, obligations, demands,
assessments, penalties, liabilities, costs, damages, reasonable attorneys' fees
and expenses (collectively, "Damages") asserted against or incurred by such
entities and individuals (including, but not limited to, any reduction in
payments to or revenues of New P.C.), arising out of or resulting from:
a. a breach of any representation,
warranty or covenant of the Company or the Physician contained herein or in any
schedule or certificate delivered hereunder;
b. any liability under the Securities
Act, the Exchange Act or any other federal or state "Blue Sky" or securities
law or regulation, at common law or otherwise, (i) arising out of or based upon
any untrue statement or alleged untrue statement of a material fact relating to
the Physician, the Company (including its subsidiaries, if any) or New P.C.,
and provided to Vision 21 or its counsel by the Company or the Physician,
specifically for inclusion in a Registration Statement or any prospectus
forming a part thereof, or any amendment thereof or supplement thereto, (ii)
arising out of or based upon any omission or alleged omission to state therein
a material fact relating to the Physician, the Company (including its
subsidiaries, if any) or New P.C. required to be stated therein or necessary to
make the statements therein not misleading, and not provided to Vision 21 or
its counsel by the Company or the Physician, provided, however, that such
indemnity shall not inure to the benefit of Vision 21 to the extent that such
untrue statement (or alleged untrue statement) was made, in, or omission (or
alleged omission) occurred in, any preliminary prospectus, and such information
was not so included by Vision 21 and properly delivered to shareholders of
Vision 21 who acquire Vision 21 Common Stock in any Initial Public Offering;
c. any filings, reports or disclosures
made pursuant to the IRS Voluntary Compliance Resolution Program, if
applicable;
d. any failure of the Merger to qualify
as a reorganization within the meaning of Section 368(a)(1)(A) or Section
368(a)(2)(D) of the Code or any failure of the spin off of the Company's
medical business and Medical Assets to qualify as a tax free spin off under
Section 355 of the Code;
e. any ASC Claim described in
Section 15.3 of this Agreement; and
f. any liability arising from any alleged
unlawful sale or offer to sell or transfer any of the Common Stock by
Physician.
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16.2. Indemnification by Vision 21 and the Subsidiary.
Subject to the terms and conditions of this Agreement, Vision 21 and the
Subsidiary, jointly and severally, hereby agree to indemnify, defend and hold
the Physician harmless from and against all damages asserted against or
incurred by him arising out of or resulting from:
a. a breach by Vision 21 or the
Subsidiary of any representation, warranty or covenant of Vision 21 or the
Subsidiary contained therein or in any schedule or certificate delivered
hereunder;
b. any liability under the Securities
Act, the Exchange Act or any other federal or state "Blue Sky" or securities
law or regulation, at common law or otherwise, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact relating to
Vision 21 or the Subsidiary, contained in any preliminary prospectus,
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, arising out of or based upon any
omission or alleged omission to state therein a material fact relating to
Vision 21 (including the Subsidiary and Vision 21's other subsidiaries),
required to be stated therein or necessary to make the statements therein not
misleading; and
c. any filings, reports or disclosures
made pursuant to the IRS Voluntary Compliance Resolution Program, if
applicable.
Notwithstanding anything in this Section 16.2, Vision 21 and the
Subsidiary shall not be liable for any Damages resulting from any matter not
disclosed to Vision 21 by any of the third parties to be acquired by Vision 21
in connection with the Related Acquisitions.
16.3. Conditions of Indemnification. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
a. A party claiming indemnification under
this Agreement (an "Indemnified Party") shall promptly (and, in any event, at
least ten (10) days prior to the due date for any responsive pleadings, filings
or other documents) (i) notify the party from whom indemnification is sought
(the "Indemnifying Party") of any third-party claim or claims asserted against
the Indemnified Party ("Third Party Claim") that could give rise to a right of
indemnification under this Agreement and (ii) transmit to the Indemnifying
Party a written notice ("Claim Notice") describing in reasonable detail the
nature of the Third Party Claim, a copy of all papers served with respect to
such claim (if any), an estimate of the amount of damages attributable to the
Third Party Claim and the basis of the Indemnified Party's request for
indemnification under this Agreement. Except as set forth in Section 16.6, the
failure to promptly deliver a Claim Notice shall not relieve the Indemnifying
Party of its obligations to the Indemnified Party with respect to the related
Third Party Claim except to the extent that the resulting delay is materially
prejudicial to the defense of such claim. Within thirty (30) days after
receipt of any Claim Notice (the "Election Period"), the Indemnifying Party
shall notify the Indemnified Party (i) whether the Indemnifying Party disputes
its potential liability to the
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Indemnified Party under this Article 16 with respect to such Third Party Claim
and (ii) whether the Indemnifying Party desires, at the sole cost and expense
of the Indemnifying Party, to defend the Indemnified Party against such Third
Party Claim.
If the Indemnifying Party notifies the
Indemnified Party within the Election Period that the Indemnifying Party elects
to assume the defense of the Third Party Claim, then the Indemnifying Party
shall have the right to defend, at its sole cost and expense, such Third Party
Claim by all appropriate proceedings, which proceedings shall be prosecuted
diligently by the Indemnifying Party to a final conclusion or settled at the
discretion of the Indemnifying Party in accordance with this Section 16.3(b).
The Indemnifying Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof. The Indemnified Party is
hereby authorized, at the sole cost and expense of the Indemnifying Party (but
only if the Indemnified Party is entitled to indemnification hereunder), to
file, during the Election Period, any motion, answer or other pleadings that
the Indemnified Party shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Party and not prejudicial to the
Indemnifying Party (it being understood and agreed that if an Indemnified Party
takes any such action that is prejudicial and causes a final adjudication that
is adverse to the Indemnifying Party, the Indemnifying Party shall be relieved
of its obligations hereunder with respect to such Third Party Claim). If
requested by the Indemnifying Party, the Indemnified Party agrees, at the sole
cost and expense of the Indemnifying Party, to cooperate with the Indemnifying
Party and its counsel in contesting any Third Party Claim that the Indemnifying
Party elects to contest, including, without limitation, the making of any
related counterclaim against the person asserting the Third Party Claim or any
cross-complaint against any person. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to Section 16.3(b) and shall bear its own
costs and expenses with respect to such participation; provided, however, that
if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party, and upon written
notification thereof, the Indemnifying Party shall not have the right to assume
the defense of such action on behalf of the Indemnified Party; provided further
that the Indemnifying Party shall not, in connection with any one such action
or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Indemnified Party, which firm shall be designated
in writing by the Indemnified Party.
b. If the Indemnifying Party fails to
notify the Indemnified Party within the Election Period that the Indemnifying
Party elects to defend the Indemnified Party pursuant to Section 16.3(b), or if
the Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 16.3(b) but fails diligently and promptly to prosecute or settle the
Third Party Claim, then the Indemnified Party shall have the right to defend,
at the sole cost and expense of the Indemnifying Party (if the Indemnified
Party is entitled to indemnification
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hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified
Party to a final conclusion or settled. The Indemnified Party shall have full
control of such defense and proceedings, provided, however, that the
Indemnified Party may not enter into, without the Indemnifying Party's consent,
which shall not be unreasonably withheld, any compromise or settlement of such
Third Party Claim. Notwithstanding the foregoing, if the Indemnifying Party
has delivered a written notice to the Indemnified Party to the effect that the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article 16 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnifying Party's defense pursuant to this Section
or of the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party in
full for all costs and expenses of such litigation. The Indemnifying Party may
participate in, but not control any defense or settlement controlled by the
Indemnified Party pursuant to this Section 16.3(c), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation;
provided, however, that if the named parties to any such action (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party, and the Indemnifying Party has been advised by counsel that there may be
one or more legal defenses available to the Indemnified Party, then the
Indemnifying Party may employ separate counsel and upon written notification
thereof, the Indemnified Party shall not have the right to assume the defense
of such action on behalf of the Indemnifying Party.
c. In the event any Indemnified Party
should have a claim against any Indemnifying Party hereunder that does not
involve a Third Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice") describing in
reasonable detail the nature of the claim, an estimate of the amount of damages
attributable to such claim and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does not
notify the Indemnified Party within sixty (60) days from its receipt of the
Indemnity Notice that the Indemnifying Party disputes such claim, the claim
specified by the Indemnified Party in the Indemnity Notice shall be deemed a
liability of the Indemnifying Party hereunder. If the Indemnifying Party has
timely disputed such claim, as provided above, such dispute shall be resolved
by mediation or arbitration as provided in Section 20.1 if the parties do not
reach a settlement of such dispute within thirty (30) days after notice of a
dispute is given.
d. Payments of all amounts owing by an
Indemnifying Party pursuant to this Article 16 relating to a Third Party Claim
shall be made within thirty (30) days after the latest of (i) the settlement of
such Third Party Claim, (ii) the expiration of the period for appeal of a final
adjudication of such Third Party Claim or (iii) the expiration of the period
for appeal of a final adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement. Payments of all amounts owing by an
Indemnifying Party pursuant to Section 16.3(d) shall be made within thirty (30)
days after the later of (i) the expiration of the sixty (60) day Indemnity
Notice period or (ii) the expiration of the period for appeal, if any, of
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a final adjudication or arbitration of the Indemnifying Party's liability to
the Indemnified Party under this Agreement.
16.4. Remedies Not Exclusive. The remedies provided in
this Agreement shall not be exclusive of any other rights or remedies available
to one party against the other, either at law or in equity. This Article 16
regarding indemnification shall survive Closing.
16.5. Costs, Expenses and Legal Fees. Each party
hereto agrees to pay the costs and expenses (including attorneys' fees and
expenses) incurred by the other parties in successfully (a) enforcing any of
the terms of this Agreement, or (b) proving that another party breached any of
the terms of this Agreement.
16.6. Indemnification Limitations. Notwithstanding the
provisions of Sections 16.1 and 16.2, (a) no party shall be required to
indemnify another party with respect to a breach of a representation, warranty
or covenant unless the claim for indemnification is brought within two (2)
years after the Closing Date, except that a claim for indemnification for a
breach of the representations and warranties contained in Sections 3.1, 3.2,
3.3., 3.4, 3.5, 3.6, 3.14, 3.17, 3.20, 3.23, 4.1, 4.3, 4.4, 4.8, 5.1, 5.2, 5.3,
5.4, 5.6, 5.7, 7.1, 7.2, 7.3 and 7.4 may be made at any time, and a claim for
indemnification for a breach of the representations and warranties contained in
Sections 3.12, 3.18, 3.21, 3.27, 3.28, 3.29, 3.30, 3.31, 3.33, 4.5, 4.7, 4.11,
5.8 and 8.1 may be made at any time within the applicable statute of
limitations; (b) indemnification based upon Sections 16.1(b) through (f) and
16.2(b) may be made at any time within the applicable statute of limitations;
and (c) the Physician shall not be required to indemnify Vision 21 and the
Subsidiary pursuant to Section 16.1 unless, and to the extent that, the
aggregate amount of Damages incurred by Vision 21 shall exceed an amount equal
to two percent (2%) of the total Merger Consideration; and (d) the Physician
shall not be required to indemnify Vision 21 and the Subsidiary with respect to
a breach of a representation, warranty or covenant for Damages in excess of the
aggregate Merger Consideration received by the Physician (other than pursuant
to a requirement to indemnify Vision 21 and the Subsidiary under Sections 3.30
and 3.31, or unless the breach involves an intentional breach or fraud by the
Physician or the Company, which shall be unlimited).
16.7. Tax Benefits; Insurance Proceeds. The total
amount of any indemnity payments owed by one party to another party to this
Agreement shall be reduced by any correlative tax benefit received by the party
to be indemnified or the net proceeds received by the party to be indemnified
with respect to recovery from third parties or insurance proceeds and such
correlative insurance benefit shall be net of the insurance premium, if any,
that becomes due as a result of such claim.
16.8. Payment of Indemnification Obligation. In the
event that the Physician has an indemnification obligation to Vision 21 or the
Subsidiary hereunder, subject to Vision 21's approval as set forth below, the
Physician may satisfy such obligation by transferring to Vision 21 or the
Subsidiary (as the case may be) such number of shares of Vision 21 Common Stock
owned by the Physician having an aggregate fair market value (which is prior
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to any Initial Public Offering based upon the valuation given at Closing hereof
or after an Initial Public Offering the fair market value at such time based on
the last reported sale price of Vision 21 Common Stock on a principal national
securities exchange or other exchange on which the Vision 21 Common Stock is
then listed or the last quoted ask price on any over-the-counter market through
which the Vision 21 Common Stock is then quoted on the last trading day
immediately preceding the day on which the Physician transfers shares of Vision
21 Common Stock to Vision 21 or the Subsidiary hereunder) equal to the
indemnification obligation, provided that each of the following conditions are
satisfied:
a. The Physician shall transfer to Vision
21 or the Subsidiary good, valid and marketable title to the shares of Vision
21 Common Stock, free and clear of all adverse claims, security interests,
liens, claims, proxies, options, stockholders' agreements and encumbrances;
b. The Physician shall make such
representation and warranties as to title to the stock, absences of security
interests, liens, claims, proxies, stockholders' agreements and other
encumbrances and other matters as reasonably requested by Vision 21 or the
Subsidiary; and
c. The other terms and conditions of any
transaction contemplated pursuant to this Section and the effects thereof,
including any legal or tax consequences, shall be reasonably satisfactory to
Vision 21 and the Subsidiary.
17. TERMINATION.
17.1. Termination. This Agreement may be terminated
and the Merger may be abandoned:
a. at any time prior to the Closing Date
by mutual agreement of all parties;
b. at any time prior to the Closing Date
by Vision 21 if any representation or warranty of the Company or the Physician
contained in this Agreement or in any certificate or other document executed
and delivered by the Company or the Physician pursuant to this Agreement is or
becomes untrue or breached in any material respect or if the Company or the
Physician fails to comply in any material respect with any covenant or
agreement contained herein, and any such misrepresentation, noncompliance or
breach is not cured, waived or eliminated within twenty (20) days after receipt
of written notice thereof;
c. at any time prior to the Closing Date
by the Company if any representation or warranty of Vision 21 or the Subsidiary
contained in this Agreement is or becomes untrue in any material respect or if
Vision 21 or the Subsidiary fails to comply in any material respect with any
covenant or agreement contained herein, and any such
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misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt or written notice thereof;
d. at any time prior to the Closing Date
by the Company in the event of the failure of any of the conditions precedent
set forth in Article 13 of this Agreement;
e. at any time prior to the Closing Date
by Vision 21 in the event of the failure of any of the conditions precedent set
forth in Article 12 of this Agreement;
f. by Vision 21 if at any time prior to
the Closing Date, Vision 21 deems termination to be advisable, provided,
however, that if Vision 21 exercises its right to terminate this Agreement
under this subsection, Vision 21 shall reimburse the Company and the Physician
for all reasonable attorneys' and accountants' fees incurred by the Company and
the Physician in connection with this Agreement; provided that Vision 21 shall
only reimburse the Company and the Physician up to an aggregate maximum amount
of One Hundred Thousand and No/100 Dollars ($100,000.00) for such fees; or
g. by Vision 21 or the Company if the
Merger shall not have been consummated by December 24, 1996.
17.2. Effect of Termination. In the event this
Agreement is terminated pursuant to Section 17.1, Vision 21, the Subsidiary,
the Company and the Physician, shall each be entitled to pursue, exercise and
enforce any and all remedies, rights, powers and privileges available at law or
in equity, subject to the limitations set forth in Section 16.1. In the event
of a termination of this Agreement under the provisions of this Article 17, a
party not then in material breach of this Agreement shall stand fully released
and discharged of any and all obligations under this Agreement.
18. PHYSICIAN EMPLOYMENT AGREEMENT.
18.1. Physician Employment Agreement. The parties
acknowledge that in accordance with the terms of this Agreement, Physician, as
employee, and the Company, as employer, have entered into the Physician
Employment Agreement and that Vision 21 is entitled to enforce such Physician
Employment Agreement as an intended third party beneficiary. Physician and
Vision 21 acknowledge that Vision 21 would suffer severe harm in the event of
Physician's resignation prior to the expiration of the five (5) year term of
such Physician Employment Agreement (without first obtaining the written
consent of Vision 21) or a breach or default of Physician's obligations under
such Physician Employment Agreement, and Physician, the Company and Vision 21
agree that Vision 21 shall be entitled to recover from Physician any and all
damages incurred by Vision 21 caused by such resignation, breach or default.
Notwithstanding the foregoing, Vision 21 shall not be entitled to recover its
damages caused by such resignation, breach or default if such resignation,
breach or default was caused by: (i) the death or disability of Physician,
(ii) circumstances not caused by an act or omission of Physician and which
circumstances are beyond his control, or (iii) loss of Physician's license
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to practice as an ophthalmologist, unless such loss of license is due to an act
or omission of Physician. Notwithstanding the foregoing, Physician shall have
no obligation to pay the damages contemplated in this Section 18.1 if (a) the
Business Management Agreement has been terminated pursuant to a material breach
by Vision 21, or (b) Physician cures any such breach or default of the
Physician Employment Agreement within a period of thirty (30) days after notice
from Vision 21 of such breach or default.
18.2. Survival. The parties acknowledge and agree that
this Article 18 shall survive the Closing of the transactions contemplated
herein.
19. NON-COMPETITION AND CONFIDENTIALITY COVENANTS.
19.1. Physician Non-Competition Covenant.
a. The Physician recognizes that the
covenants of the Physician contained in this Section 19.1 are an essential part
of this Agreement and that, but for the agreement of the Physician to comply
with such covenants, Vision 21 and the Subsidiary would not have entered into
this Agreement. The Physician acknowledges and agrees that the Physician's
covenant not to compete is necessary to ensure the continuation of the
Management Business (as defined below) and is necessary to protect the
reputation of Vision 21 and the Subsidiary, and that irreparable and
irrevocable harm and damage will be done to Vision 21 and the Subsidiary if the
Physician competes with the Management Business, Vision 21 or the Subsidiary.
The Physician accordingly agrees that for the periods set forth in the Business
Management Agreement, the Physician shall not:
i) directly or indirectly,
either as principal, agent, independent contractor, consultant, director,
officer, employee, employer, advisor, stockholder, partner or in any other
individual or representative capacity whatsoever, either for the Physician's
own benefit or for the benefit of any other person or entity knowingly (A)
hire, attempt to hire, contact or solicit with respect to hiring any employee
of Vision 21 (or of the Subsidiary or any of Vision 21's other direct or
indirect subsidiaries) or (B) induce or otherwise counsel, advise or encourage
any employee of Vision 21 (or of the Subsidiary or any of Vision 21's other
direct or indirect subsidiaries) to leave the employment of Vision 21 or the
Subsidiary;
ii) act or serve, directly or
indirectly, as a principal, agent, independent contractor, consultant,
director, officer, employee, employer or advisor or in any other position or
capacity with or for, or acquire a direct or indirect ownership interest in or
otherwise conduct (whether as stockholder, partner, investor, joint venturer,
or as owner of any other type of interest), any Competing Management Business
as such term is defined herein; provided, however, that this clause (ii) shall
not prohibit the Physician from being the owner of up to 1% of any class of
outstanding securities of any company or entity if such class of securities is
publicly traded; or
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iii) directly or indirectly,
either as principal, agent, independent, contractor, consultant, director,
officer, employee, employer, advisor, stockholder, partner or in any other
individual or representative capacity whatsoever, either for the Physician's
own benefit or for the benefit of any other person or entity, call upon or
solicit any customers or clients of the Management Business; provided however,
that the Physician may send out a general notice to the customers or clients of
the Management Business announcing the termination of his arrangement with the
Subsidiary and Vision 21 and may advertise in a general manner without
violating this covenant. The parties hereto acknowledge and agree that for
purposes of this Section, patients which have in the past received medical or
optometric care from the Company and/or shall in the future receive medical or
optometric care from the New P.C. are not deemed to be customers or clients of
the Management Business.
b. For the purposes of this Section 19.1,
the following terms shall have the meaning set forth below:
i) "Management Business" shall
mean management and administration of the non-medical aspects of medical,
ophthalmology and optometry practices.
ii) "Competing Management
Business" shall mean an individual, business, corporation, association, firm,
undertaking, company, partnership, joint venture, organization or other entity
that either (A) conducts a business substantially similar to the Management
Business within the State, or (B) provides or sells a service which is the same
or substantially similar to, or otherwise competitive with the services
provided by the Management Business within the State; provided, however, that
"Competing Management Business" shall not include Vision 21, the Subsidiary, or
the Physician's internal management and administration of the Physician's
medical practice or participation in the management and administration of a
physician group in which the Physician devotes a significant amount of time to
the practice of medicine.
c. Should any portion of this Section
19.1 be deemed unenforceable because of the scope, duration or territory
encompassed by the undertakings of the Physician hereunder, and only in such
event, then the Physician, Vision 21 and the Subsidiary consent and agree to
such limitation on scope, duration or territory as may be finally adjudicated
as enforceable by a court of competent jurisdiction after the exhaustion of all
appeals.
d. This covenant shall be construed as an
agreement ancillary to the other provisions of this Agreement, and the
existence of any claim or cause of action of the Physician against the
Subsidiary or Vision 21, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Subsidiary and Vision
21 of this covenant; provided, however, that the Physician shall not be bound
by this covenant and shall not be obligated to pay the liquidated damages
contemplated in this Section 19.1 if at the time of a breach of this covenant
the Business Management Agreement has already been terminated pursuant to
Section 6.2(a) thereof. Without limiting other possible remedies to the
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Subsidiary and Vision 21 for breach of this covenant, the Physician agrees that
injunctive or other equitable relief will be available to enforce the covenants
of this provision, such relief to be without the necessity of posting a bond,
cash or otherwise. The Physician, the Subsidiary and Vision 21 further
expressly acknowledge that the damages that would result from a violation of
this non-competition covenant would be impossible to predict with any degree of
certainty, and agree that liquidated damages in the amount of the aggregate
consideration received by the Physician pursuant to this Agreement is
reasonable in light of the severe harm to the Management Business, the
Subsidiary and Vision 21 which would result in the event that a violation of
this non-competition covenant were to occur. For purposes of calculation of
the liquidated damages contemplated in this Section and for purposes of
calculation of the liquidated damages contemplated in the Business Management
Agreement and the Physician Employment Agreement between the Physician and New
P.C., the aggregate consideration received by Physician pursuant to this
Agreement shall be in those amounts and in such form as set forth in Schedule
19.1. If the Physician violates this non-competition covenant, Vision 21
shall, in addition to all other rights and remedies available at law or equity,
be entitled to (a) cancel the number of shares of Common Stock held by the
Physician or, with respect to shares of Common Stock entitled to be received by
the Physician, terminate its obligation to deliver such number of shares of
Common Stock, valued as set forth in Section 6.6(a) of the Business Management
Agreement, and (b) repayment by Physician to Vision 21 of any and all sums
received in connection with any shares of Vision 21 Common Stock sold by
Physician; but in no event shall Vision 21 be entitled to offset amounts in
excess of the liquidated damages sum pursuant to this Section 19.1. The
Physician agrees to deliver to Vision 21 the certificates representing any such
shares canceled by Vision 21. Payment and satisfaction by Physician shall be
made within sixty (60) days of notification to Physician by Vision 21 that
Physician has violated this non-competition covenant.
e. Notwithstanding anything contained
herein, this Section 19.1 shall not be construed to (i) limit the freedom of
any patient of the Physician to choose the facility or physician from whom such
patient shall receive health-care services or (ii) limit or interfere with the
Physician's ability to exercise his professional medical judgment in treating
his patients or his ability to provide medical services to his patients.
19.2. Physician Confidentiality Covenant. From the
date hereof, the Physician shall not, directly or indirectly, use for any
purpose, other than in connection with the performance of the Physician's
duties under the Physician Employment Agreement with New P.C., or disclose to
any third party, any information of the Subsidiary, Vision 21 or the Company,
as appropriate (whether written or oral), including any business management or
economic studies, patient lists, proprietary forms, proprietary business or
management methods, marketing data, fee schedules, or trade secrets of the
Subsidiary, Vision 21 or of the Company, as applicable, and including the terms
and provisions of this Agreement and any transaction or document executed by
the parties pursuant to this Agreement. Notwithstanding the foregoing, the
Physician may disclose information that the Physician can establish (a) is or
becomes generally available to and known by the public or medical community
(other than as a result of an unpermitted disclosure directly or indirectly by
the Physician or his Affiliates, advisors, or
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representatives); (b) is or becomes available to the Physician on a
nonconfidential basis from a source other than the Subsidiary or Vision 21, the
Company or their respective Affiliates, advisors or representatives, provided
that such source is not and was not bound by a confidentiality agreement with
or other obligation of secrecy to the Subsidiary or Vision 21, the Company or
their respective Affiliates, advisors or representatives of which the Physician
has knowledge; or (c) has already been or is hereafter independently acquired
or developed by the Physician without violating any confidentiality agreement
with or other obligation of secrecy to the Subsidiary, Vision 21, the Company
or their respective Affiliates, advisors or representatives. Without limiting
the other possible remedies to the Subsidiary and Vision 21 for the breach of
this covenant, the Physician agrees that injunctive or other equitable relief
shall be available to enforce this covenant, such relief to be without the
necessity of posting a bond, cash or otherwise. The Physician further agrees
that if any restriction contained in this Section 19.2 is held by any court to
be unenforceable or unreasonable, a lesser restriction shall be enforced in its
place and the remaining restrictions contained herein shall be enforced
independently of each other.
19.3. Survival. The parties acknowledge and agree that
this Article 19 shall survive the Closing of the transactions contemplated
herein.
20. DISPUTES.
20.1. Mediation and Arbitration. Any dispute,
controversy or claim (excluding claims arising out of an alleged breach of
Article 19 of this Agreement) arising out of this Agreement, or the breach
thereof, that cannot be settled through negotiation shall be settled (a) first,
by the parties trying in good faith to settle the dispute by mediation under
the Commercial Mediation Rules of the AAA (such mediation session to be held in
Tampa, Florida, if the amount in dispute is equal to or in excess of $200,000
or if the dispute is solely of a non-monetary nature, and in Tucson, Arizona if
the amount in dispute is lower than $200,000, and in either case to commence
within 15 days of the appointment of the mediator by the AAA), and (b) if the
controversy, claim or dispute cannot be settled by mediation, then by
arbitration administered by the AAA under its Commercial Arbitration Rules
(such arbitration to be held in Tampa, Florida, if the amount in dispute is
equal to or in excess of $200,000 or if the dispute is solely of a non-monetary
nature, and in Tucson, Arizona if the amount in dispute is lower than $200,000,
and in either case before a single arbitrator and to commence within 15 days of
the appointment of the arbitrator by the AAA), and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
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21. MISCELLANEOUS
21.1. Taxes. Physician shall pay all transfer taxes,
sales and other taxes and charges imposed by the State, if any, which may
become payable in connection with the transactions and documents contemplated
hereunder (excluding any of such taxes which may be attributable to services to
be provided by Vision 21 under the Business Management Agreement). Vision 21
shall pay all transfer taxes, sales and other taxes and charges imposed by the
State of Florida, if any, which may become payable in connection with the
transactions and documents contemplated hereunder (excluding any of such taxes
which may be attributable to services to be provided by Vision 21 under the
Business Management Agreement).
21.2. Remedies Not Exclusive. No remedy conferred by
any of the specific provisions of this Agreement or any document contemplated
by this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise. The election of any one or more remedies by any party hereto
shall not constitute a waiver of the right to pursue other available remedies.
21.3. Parties Bound. Except to the extent otherwise
expressly provided herein, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, representatives,
administrators, guardians, successors and assigns; and no other person shall
have any right, benefit or obligation hereunder.
21.4. Notices. All notices, reports, records or other
communications that are required or permitted to be given to the parties under
this Agreement shall be sufficient in all respects if given in writing and
delivered in person, by telecopy, by overnight courier or by registered or
certified mail, postage prepaid, return receipt requested, to the receiving
party at the following address:
If to Vision 21 and the Subsidiary addressed to:
Vision 21, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer
With copies to:
▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇
Post Office Box 172609
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
68
72
If to the Company and the Physician addressed to:
The Eye Institute of Southern Arizona, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
With copies to:
Sacks Tierney, P.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 21.4. Notice shall be deemed given on the date
of delivery, in the case of personal delivery or telecopy, or on the delivery
or refusal date, as specified on the return receipt, in the case of overnight
courier or registered or certified mail.
21.5. Choice of Law. This Agreement shall be
construed, interpreted, and the rights of the parties determined in accordance
with, the laws of the State of Florida except with respect to matters of law
concerning the internal affairs of any corporate or partnership entity which is
a party to or the subject of this Agreement, and as to those matters the law of
the state of incorporation or organization of the respective entity shall
govern.
21.6. Entire Agreement; Amendments and Waivers. This
Agreement, together with the documents contemplated by this Agreement and all
Exhibits and Schedules hereto and thereto, constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof. No supplement, modification or
waiver of any of the provisions of this Agreement shall be binding unless it
shall be specifically designated to be a supplement, modification or waiver of
this Agreement and shall be executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
21.7. Confidentiality Agreements. The provisions of
any prior confidentiality agreements and letters of intent between or among
Vision 21, the Company and the Physician, as amended, shall terminate and cease
to be of any force or effect at and upon the Closing.
69
73
21.8. Reformation Clause. It is the intention of the
parties hereto to conform strictly to applicable laws regarding the practice
and regulation of medicine, whether such laws are now or hereafter in effect,
including the laws of the United States of America, the State or any other
applicable jurisdiction, and including any subsequent revisions to, or judicial
interpretations of, those laws, in each case to the extent they are applicable
to this Agreement (the "Applicable Laws"). Accordingly, if the ownership of
any Nonmedical Asset by the Subsidiary violates any Applicable Law, then the
parties hereto agree as follows: (a) the provisions of this section 21.8 shall
govern and control; (b) if none of the parties hereto are materially
economically disadvantaged, then any Nonmedical Asset, the ownership of which
violates any Applicable Law, shall be deemed to have never been owned by the
Subsidiary; (c) if one or more of the parties hereto is materially economically
disadvantaged, then the parties hereto agree to negotiate in good faith such
changes to the structure and terms of the transactions provided for in this
Agreement as may be necessary to make these transactions, as restructured,
lawful under applicable laws and regulations, without materially disadvantaging
either party; (d) this Agreement shall be deemed reformed; and (e) the parties
to this Agreement shall execute and deliver all documents or instruments
necessary to effect or evidence the provisions of this Section 21.8.
21.9. Assignment. The Agreement may not be assigned by
operation of law or otherwise except that Vision 21 and the Subsidiary shall
have the right to assign this Agreement, at any time, to any Affiliate or
direct or indirect wholly-owned subsidiary. In the event of such assignment,
Vision 21 and the Subsidiary shall remain liable hereunder.
21.10. Attorneys' Fees. Except as otherwise
specifically provided herein, if any action or proceeding is brought by any
party with respect to this Agreement or the other documents contemplated with
respect to the interpretation, enforcement or breach hereof, the prevailing
party in such action shall be entitled to an award of all reasonable costs of
litigation or arbitration, including, without limitation, attorneys' fees, to
be paid by the losing party, in such amounts as may be determined by the court
having jurisdiction of such action or proceeding or by the arbitrators deciding
such action or proceeding.
21.11. Further Assurances. From time to time hereafter
and without further consideration, each of the parties hereto shall execute and
deliver such additional or further instruments of conveyance, assignment and
transfer and take such other actions as any of the other parties hereto may
reasonably request in order to more effectively consummate the transactions
contemplated hereunder or as shall be reasonably necessary or appropriate in
connection with the carrying out of the parties' respective obligations
hereunder for the purposes of this Agreement.
21.12. Announcements and Press Releases. Any press
releases or any other public announcements concerning this Agreement or the
transactions contemplated hereunder shall be approved in advance by Vision 21,
New P.C. and the Company; provided, however, that such approval shall not be
unreasonably withheld and if any party reasonably believes that
70
74
it has a legal obligation to make a press release and the consent of the other
party cannot be obtained, then the release may be made without such approval.
21.13. No Tax Representations. Each party acknowledges
that it is relying solely on its advisors to determine the tax consequences of
the transactions contemplated hereunder and that no representation or warranty
has been made by any party as to the tax consequences of such transactions
except as otherwise specifically set forth in this Agreement.
21.14. No Rights as Stockholder. The Physician shall
have no rights as a stockholder with respect to any shares of Common Stock
until the issuance of a stock certificate evidencing such shares. Except as
otherwise provided in the Agreement, no adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to such
date any stock certificate is issued.
21.15. Multiple Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
21.16. Headings. The headings of the several articles
and sections herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
21.17. Severability. Each article, section and
subsection of this Agreement constitutes a separate and distinct undertaking,
covenant or provision of this Agreement. If any such provision shall finally
be determined to be unlawful, such provision shall be deemed severed from this
Agreement, but every other provision of this Agreement shall remain in full
force and effect.
21.18. Form of Transaction. If after the execution
hereof, Vision 21 determines that the ownership of the Nonmedical Assets of the
Company can be better achieved through a different form of transaction without
economic injury to the Company or the Physician, or delay of the consummation
of the transaction, the Company and the Physician shall cooperate in revising
the structure of the transaction and shall negotiate in good faith to so amend
this Agreement; provided, that Vision 21 shall reimburse the Company and the
Physician at Closing for all reasonable additional expenses incurred by the
Company and the Physician as a result of such change in form.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
71
75
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
"COMPANY"
EYE INSTITUTE OF SOUTHERN
ARIZONA, P.C.
/s/
--------------------------------- By:
Witness ------------------------------------
---------------------,--------------
/s/
---------------------------------
Witness
"PHYSICIAN"
/s/ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------- ---------------------------------
Witness ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
/s/
---------------------------------
Witness
/s/ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------- ---------------------------------
Witness ▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
/s/
---------------------------------
Witness
72
76
"VISION 21"
VISION 21, INC.
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
"SUBSIDIARY'
VISION 21 OF ARIZONA, INC.
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
/s/
--------------------------------
Witness
/s/
--------------------------------
Witness
73
77
Schedule 1.47A
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Medical Assets of the Company
The following constitute the Medical Assets:
Medical records,
Patient lists;
Third-party payer contracts (except for rights to purchased
accounts receivable);
Eyeglasses, lenses and other eyewear;
Licenses, certificates of need, Medicare/Medicaid
certifications and other governmental authorizations necessary
to provide Professional Eye Care Services and to be paid
therefor by applicable third-party payers; and
Any other asset that legally cannot be owned by a party that
is not physician-owned.
78
Schedule 1.47B
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Personal Effects
None.
79
Schedule 3
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Individuals - Best knowledge
representations and warranties of the Company
1. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
2. ▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
3. Office Manager
80
Schedule 3.1
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21") ("Vision 21")
Capital Stock or other interest owned by the
Company, the Physician or any Professional
Employee in any Competitor
None.
81
Schedule 3.2
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21") ("Vision 21")
Security interests, liens, adverse claims, encumbrances,
equities, proxies or shareholders agreements affecting Company
Common Stock
1. Buy-Sell/Stock Redemption Agreement dated November 30, 1983
among Southern Eye Institute of Southern Arizona, P.C.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D., as amended by
First Amendment dated March 20, 1992.
82
Schedule 3.3
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Options, warrants, subscriptions or other
rights to purchase stock in the Company or
Company's obligation
to purchase, redeem or otherwise acquire any
of its equity securities, pay dividends or
make distributions
1. Buy-Sell/Stock Redemption Agreement dated November 30, 1983
among Southern Eye Institute of Southern Arizona, P.C.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D., as amended by
First Amendment dated March 20, 1992.
83
Schedule 3.4
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Sale, distribution, or spin-off of
significant assets of the Company or
its Affiliates within the last two years
None.
84
Schedule 3.7
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Violations or conflicts resulting from
execution, delivery and consummation
of transaction by the Company
None.
85
Schedule 3.8
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Consents required for Company from
Governmental Authority or any other persons
Physician Professional Services Agreement with Eye Specialists
of Arizona Network (Noncompete clause at Section 2).
86
Schedule 3.9(a)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employee Benefit Plans sponsored by the
Company or to which the Company contributes on
behalf of its Employees in the past three years
Cash or deferred 401(k) profit sharing plan
Group medical and life insurance plans
87
Schedule 3.9(b)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Exceptions to Employee Benefit Plan Compliance
None.
88
Schedule 3.9(c)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employee Benefit Plan audits,
investigations or enforcement actions
None.
89
Schedule 3.9(d)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employee Benefit Plan Prohibited Transactions
None.
90
Schedule 3.9(f)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employee Benefit Plan determination letter or IRS ruling
None.
91
Schedule 3.9(g)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employee Benefit Plan Accumulated Funding Deficiency
Not applicable.
92
Schedule 3.9(h)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employee Benefit Plan Excise Taxes
None.
93
Schedule 3.10
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Liabilities of the Company not
reflected in Financial Statements
None.
94
Schedule 3.11(a)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Compensation of All Employees of the Company
* * *
[IN ACCORDANCE WITH RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
CONFIDENTIAL PORTIONS OF THIS AGREEMENT (INCLUDING THE INFORMATION ON THE CHART
CALLED FOR BY THIS SCHEDULE) HAVE BEEN OMITTED HEREFROM AND FILED SEPARATELY
WITH THE SECURITIES EXCHANGE COMMISSION.]
95
Schedule 3.11(b)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Compensation plans, arrangements or practices
sponsored by the Company or to which the
Company contributes on behalf of its
employees (other
than Employment Agreements and Employee Benefit Plans)
1. Medical Reimbursement Plan dated December 1, 1983, as amended
January 1, 1993 and January 1, 1995
Participation requirements: full time employees
Maximum reimbursement: $3,000.00
96
Schedule 3.11(c)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employment Agreements
1. Employment Agreement dated December 1, 1983 between the
Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
2. Employment Agreement dated December 1, 1983 between the
Company and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
3. Employment Agreement dated July 5, 1994 between the Company
and ▇▇▇▇ ▇▇▇▇▇▇▇, M.D.
4. Consulting Agreement dated December, 1990 with Medivision,
Inc.
5. Affiliation Agreement dated November 18, 1985 with Medivision,
Inc.
97
Schedule 3.11(d)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employee Policies and Procedures
See attached.
[EMPLOYEE POLICIES AND PROCEDURES WHICH WERE ATTACHED TO THIS
SCHEDULE HAVE BEEN OMITTED.]
98
Schedule 3.11(f)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Exceptions to Labor Compliance
None.
99
Schedule 3.11(g)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Union participation of Company Employees
None.
100
Schedule 3.12(a)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employee Benefit Plans sponsored
by the Company or to which the
Company contributes on behalf of
its Employees in the past three years
1. The Eye Institute of Southern Arizona, P.C. 401(k) Profit
Sharing Plan & Trust, dated January 1, 1996.
101
Schedule 3.12(c)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employee Benefit Plan audits,
investigations or enforcement actions
None.
102
Schedule 3.12(f)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Employee Benefit Plan
determination letter or IRS ruling
See attached.
[IRS DETERMINATION LETTERS AND/OR RULINGS HAVE BEEN OMITTED.]
103
Schedule 3.13
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Changes to Company
since Balance Sheet Date
None.
104
Schedule 3.14(b)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Permitted Encumbrances
on Personal Property
None.
105
Schedule 3.14(c)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Real Property Leases and
Personal Property Leases
1. Lease of Real Property dated December 1, 1983 between Kuskat
Investment Company, an Arizona general partnership, as Lessor,
and the Company, as Lessee, covering medical building premises
(6,650 square feet) located at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇.
Term expires - April 28, 2014.
2. Lease of Personal Property dated December 1, 1983 between
Kuskat Investment Company, an Arizona general partnership, as
Lessor, and the Company, as Lessee, covering equipment.
Term expires - November 30, 1999.
3. Medivision, Inc. Facility Sublease and Equipment Lease in
effect as of October 26, 1994.
106
Schedule 3.15
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Commitments of the Company
None.
▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Schedule 3.16: Insurance
Insured ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D. ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. Eye Institute of Southern
Arizona, P.C.
----------------------------------------------------------------------------------------------------------------------------------
Liability limits: o $3 million/ $5 million $3 million/ $5 million $3 million/ $5 million COMPREHENSIVE GENERAL
(Diagnosis & treatment) (Diagnosis & treatment) (Diagnosis & treatment) LIABILITY
COVERAGE HELD BY
o $100,000/$100,000 o $100,000/$100,000 o $100,000/$100,000 BUILDING OWNER.
(Injuries to patients and third (Injuries to patients and (Injuries to patients and o $3 million/
parties; peer review) third parties; peer review) third parties; peer review) $5 million group policy
o $0/$0 (PHYSICAL HARM BY OPERATION o $0/$0 (PHYSICAL HARM BY o $0/$0 (PHYSICAL HARM BY (PROFESSIONAL LIABILITY
OF PROFESSIONAL PREMISES) OPERATION OF PROFESSIONAL OPERATION OF PROFESSIONAL COVERAGE)
o (Special limits for PREMISES) PREMISES) o ENDORSEMENT INCLUDES
cosmetic/aesthetic) o (Special limits for o (Special limits for VICARIOUS LIABILITY
cosmetic/aesthetic) cosmetic/aesthetic) COVERAGE
FOR THREE
PHYSICIAN MEMBERS.
------------------------------------------------------------------------------------------------------------------------------------
Expiration date 9-1-97 9-1-97 9-1-97 9-1-97
------------------------------------------------------------------------------------------------------------------------------------
Retroactive date 7-1-84 7-4-94 7-1-84 7-1-84
-----------------------------------------------------------------------------------------------------------------------------------
Occurrence vs. Claims Claims made plus tail. Claims made plus tail. Claims made plus tail. Claims made plus tail.
Made
------------------------------------------------------------------------------------------------------------------------------------
Claims 74 YR. OLD MALE ALLEGED THAT ▇▇. ▇▇▇▇ N/A 54 yr. old female alleged that N/A
FAILED TO SUPERVISE OPTOMETRIST Dr.'s delay in diagnosing
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (INSURANCE FOR fungal keratitis contributed
HIM?), who diagnosed patient and to need for corneal transplant
prescribed meds outside the scope of and decrease in visual acuity.
his license on 3-7-91. Settled for ▇▇▇▇▇▇ paid $160,000 cash
$55,250. judgment or settlement 1-20-93.
Patient sued for malpractice: cataract
diagnosis and treatment
(dismissed 7-25-95)
108
Schedule 3.17
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Description of Proprietary Rights; Consents
None.
109
Schedule 3.18
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Good faith disputes over payment
of Taxes; Tax deficiency or delinquency
None.
110
Schedule 3.19
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
List of licenses, franchises, permits and
governmental authorizations for conduct of
the Company's business; Notices of Noncompliance
1. Arizona Department of Health Services, Health Care Institution
License, Outpatient Surgical Center, No. OSC-18 (Medivision,
Inc., d/b/a Eye Institute of Southern Arizona)
Effective Date: June 1, 1995, Termination Date: May 31, 1997
2. Department of Health and Human Services, Health Care Financing
Administration, CLIA Laboratory Certificate of Waiver (CLIA
No. 03DO532620) Effective Date: June 24, 1995, Termination
Date: June 23, 1997
3. Arizona Corporation Commission, Business Corporation Annual
Report and Certificate of Disclosure (Corporate File No.
0509908.2)
4. Arizona Board of Medical Examiners Licenses for ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ (No. 9969), ▇▇▇▇▇ ▇▇▇▇▇▇ (No. 12771) and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(No. 22587) and DEA Certificates
5. Accreditation Association for Ambulatory Health Care, Inc.
(granted July 2, 1993)
111
Schedule 3.20
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Finder's, broker's or
agent's fee owed by the Company
None.
112
Schedule 3.21
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Company Litigation
None.
113
Schedule 3.24
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
List of Company borrowing and investing arrangements
None.
114
Schedule 3.25
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Ownership Interests of
Interested Persons and Material
Affiliations in the last three years
None.
115
Schedule 3.26
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Company Investments in Competitors
None.
116
Schedule 3.32
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Description of and relationship with Payors
1. Subcontract Agreements dated April 1, 1996 between Eye Care &
Surgery Center and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. and between ▇▇▇▇▇
▇▇▇▇▇▇ to provide ophthalmology services to CIGNA members.
2. Affiliation Agreements dated July 14, 1996 between Eye
Specialists of Arizona Network and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. and
between ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. to render general ophthalmology
services and care.
117
Schedule 4.2
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Violations or conflicts
resulting from execution, delivery or
consummation of transaction by the Physician
None.
118
Schedule 4.4
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
List of transfers or other
transactions involving Company
capital stock since January 1, 1994
None.
119
Schedule 4.7
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Finder's, broker's or
agent's fees owed by the Physician
None.
120
Schedule 4.8
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Physician Ownership of Interested
Persons and Material Affiliations
1. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. are each parties
in Kuskat Investment Company, an Arizona general partnership,
which leases real and personal property to the Company.
121
Schedule 4.9
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Physician Investments in Competitors
None.
122
Schedule 4.10
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Physician Litigation
None.
123
Schedule 4.12
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
List of hospitals at which
Physician has full staff privileges
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
FULL STAFF PRIVILEGES
St. Joseph's Hospital
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
El Dorado Hospital
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Tucson Medical Center
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
Courtesy Staff Privileges
at all of the above hospitals
124
Schedule 4.13
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Exceptions to continued Physician
intent to practice medicine
None.
125
Schedule 5
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Individuals - Best knowledge
representations and warranties of Vision 21
1. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
2. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
3. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
4. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
126
Schedule 5.1
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Jurisdictions where Vision 21
is qualified to do business
1. Florida
2. Arizona
3. Minnesota
4. New York
127
Schedule 5.6
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Consents required for Vision 21
from Governmental Authority or other persons
None.
128
Schedule 5.7
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Finder's, brokers or
agent's fees owed by Vision 21
None.
129
Schedule 5.11
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Liabilities of Vision 21
not reflected in Financial Statements
None.
130
Schedule 7.6
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Other Contracts or
Agreements of New, P.C.
None.
131
Schedule 8.1(b)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Exception to Physician "accredited investor"
or "sophisticated investor" representation
None.
132
Schedule 8.1(d)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Physician's principal residence
[IN ACCORDANCE WITH RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
CONFIDENTIAL PORTIONS OF THIS AGREEMENT (INCLUDING THE INFORMATION ON THE CHART
CALLED FOR BY THIS SCHEDULE) HAVE BEEN OMITTED HEREFROM AND FILED SEPARATELY
WITH THE SECURITIES EXCHANGE COMMISSION.]
133
Schedule 9.16
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Non-Shareholder Physician
Employees not required to enter into
Physician Employment Agreement with New, P.C.
Status of Employment Agreement between The Eye Institute of Southern
Arizona, P.C. and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D. to be reviewed at time of
execution of transaction.
134
Schedule 9.17
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Optometrist Employees not
required to enter into Optometrist
Employment Agreement with New, P.C.
None.
135
Schedule 9.21
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Exceptions to Assignment of Fees
for Medical and Optometry Services
from All Professional Employees of Company
None.
136
Schedule 9.22
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Ambulatory Surgical Center Transferred
Assets and Assumed
Liabilities
See attached list and agreed upon values.
137
Schedule 10.6
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Personal liabilities of
Physician for which Vision 21 will
use best efforts to obtain release
None.
138
Schedule 11.5
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Joint Personal liabilities of
Physician and Company for which Vision 21 will
use best efforts to obtain release
None.
139
Schedule 15.3
to Agreement and Plan of Reorganization among Eye Institute of Southern
Arizona, P.C. (the "Company"),
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and
Vision 21, Inc. ("Vision
21")
Consideration for Transfer of Ambulatory Surgical Center
Assets and Assumption of Liabilities
As full consideration for the transfer of assets to the New P.C. and
the assumption of liabilities by the New P.C. relating to the ambulatory
surgical line of business described in Sections 9.22 and 15.3 of the Agreement
and Plan of Reorganization (the "Agreement"), Vision 21, Inc. shall pay to the
shareholders of the newly-created professional corporation described in Section
9.22 of the Agreement Two Hundred Ten Thousand Three Hundred and Two (210,302)
shares of Vision 21, Inc. common stock (the "ASC Consideration"). The ASC
Consideration shall be increased or decreased (effected through corresponding
increases or decreases in the number of shares of stock of Vision 21, Inc. to
be paid to the shareholders of the newly-created professional corporation) to
the same extent that: (i) the aggregate value of the transferred assets minus
the aggregate amount of the assumed liabilities as of the effective date of the
closing of the transfer of such ambulatory surgical center assets to the New
P.C. and the assumption of such liabilities by the New P.C. (the "ASC Transfer
Date") differ from (ii) the aggregate value of the transferred assets minus the
aggregate amount of the assumed liabilities as set forth on Schedule 9.22. If
the shareholders of the newly-created professional corporation and Vision 21,
Inc. cannot agree as to the value of the transferred assets and the amount of
the assumed liabilities as of the ASC Transfer Date, such value and amount
shall be determined by the accounting firm of Ernst & Young LLP, any successor
thereof, or such other big six accounting firm agreed to by the parties. If
Ernst & Young LLP or its successor or replacement acts as an arbitrator of a
valuation issue described in this Schedule 15.3, Ernst & Young LLP (or its
successor or replacement) shall act as an impartial and independent arbitrator.
The parties hereby waive and release and agree to indemnify and hold harmless
Ernst & Young LLP (and its successor or replacement) from and for any and all
claims, demands, liabilities, losses, damages, costs and expenses relating to
its determinations made in good faith as described in this Schedule 15.3 and
agree to execute any documents reasonably requested by Ernst & Young LLP (or
its successor or replacement) to effectuate the same. In the event that the
ASC Consideration is reduced or increased in accordance with this Schedule
15.3, the Vision 21, Inc. common stock to be subtracted from or added to the
ASC Consideration shall be valued at (i) its market price at the end of trading
on the ASC Transfer Date if the stock is then publicly traded, or (ii) the
value determined by the parties or the arbitrator in accordance with the
mediation and arbitration procedures described in Section 20.1 of the
Agreement.
140
Schedule 18.1
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Liquidated damages for Physician
breaching Physician Employment Agreement
Liquidated damages for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. shall equal $2.77 per
share of Vision 21 common stock times 297,459 shares of Vision 21 common stock
granted to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. in connection with the Merger, which total
equals $823,961.
Liquidated damages for ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. shall equal $2.77 per share
of Vision 21 common stock times 297,459 shares of Vision 21 common stock
granted to ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. in connection with the Merger, which total equals
$823,961.
141
Exhibit 2.8(a)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
Share Exchange
A total of 594,918 shares of Vision 21 common stock for all of the
issued and outstanding common stock of Eye Institute of Southern Arizona, P.C.
142
Exhibit 14.1(o)
to Agreement and Plan of Reorganization among Eye Institute of
Southern Arizona, P.C. (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
and ▇▇▇▇▇ ▇▇▇▇▇▇, M.D. (together, the "Physician") and Vision
21, Inc. ("Vision 21")
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement"), dated as of December
1, 1996, is by and between Vision 21, Inc., a Florida corporation and any
successor ("Vision 21"), and __________________, M.D. ("Shareholder").
1. Registration Rights.
(a) In the event that Vision 21 proposes to file a
registration statement under the Securities Act for purposes of effecting an
underwritten public offering of shares of Vision 21 common stock for cash
(including, but not limited to, a registration statement relating to a
secondary offering of Vision 21 common stock, but excluding registration
statements relating to any employee benefit plan or a corporate
reorganization), Vision 21 shall give written notice of such proposed filing to
the Shareholder at least fifteen (15) days before the anticipated filing date,
and such notice shall offer Shareholder the opportunity to register such number
of the Shareholder's shares of common stock as Shareholder may request in
writing within ten (10) days after receipt of such notice; provided, however,
that the maximum number of shares of common stock that such Shareholder may
request to include in any registration statement shall be limited as provided
in Section 1(c).
(b) In the event that (i) one (1) year has elapsed from
the date of effectiveness of the registration statement filed in connection
with an underwritten initial public offering of shares of Vision 21 common
stock, and (ii) Vision 21 receives a written request from holders holding in
the aggregate a minimum of 300,000 shares of Vision 21 common stock issued to
the founding practices described in Vision 21's Confidential Information
Memorandum dated September 27, 1996, as amended, and issued to certain
professionals owning equity interests in such founding practices (the founding
practices and professionals of such practices holding share's of common stock
of Vision 21 are collectively referred to as the "Founding Shareholders"), that
Vision 21 file a registration statement under the Securities Act effecting an
offering of shares of Vision 21 common stock; then Vision 21 shall as soon as
practicable file a registration statement at its own expense effecting a public
offering of shares of Vision 21 common stock held by Founding Shareholders, as
well as any other Vision 21 shares owned by any other shareholders which Vision
21 wishes to include in the offering (which offering may be an underwritten
offering at Vision 21's sole discretion); provided however that Vision 21 shall
be obligated to effect only one registration statement containing each
Shareholder, and Vision 21 shall be obligated to file only two (2) registration
statements in the aggregate, pursuant to this Section 1(b).
(c) The maximum aggregate number of shares of common
stock that Shareholder may request to be registered under this Agreement shall
be sixty percent (60%) of
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Shareholder's original shares of Vision 21 common stock. In no event shall the
total number of Shareholder's shares of common stock that Vision 21 is
obligated to register under this Agreement exceed sixty percent (60%) of
Shareholder's original shares of Vision 21 common stock, and in no event shall
Vision 21 be obligated to register more than (i) in an initial offering, thirty
percent (30%) of Shareholder's original shares of Vision 21 common stock or
(ii) in a second offering, sixty percent (60%) of the Shareholder's original
shares minus the percent of the Shareholder's original shares that the
Shareholder registered in the first offering. The "original shares" of Vision
21 as described herein shall be deemed to be the _____________ shares of common
stock received by the Shareholder on the date of this Agreement.
(d) Vision 21 shall have the sole and exclusive right to
select the underwriters of any public offering of shares of Vision 21 common
stock, including any public offering conducted pursuant to the demand
registration right set forth in Section 1(b) above. The use of underwriters in
any demand registration right set forth in Section 1(b) above is subject to
Vision 21's ability to engage underwriters under terms and conditions deemed
reasonable by Vision 21.
(e) If the managing underwriter of any offering advises
Vision 21 that the total number of shares of Vision 21's common stock which
Vision 21, the Shareholder and any other persons intend to include in such
offering would adversely affect the success of such offering, then the amount
of shares of common stock to be offered for the account of Shareholder shall be
reduced to the extent necessary to reduce the total number of shares of common
stock to be included in such offering to the amount recommended by such
managing underwriter.
(f) Vision 21 shall not be required to (i) reduce the
amount of shares of common stock to be offered by Vision 21 in such offering
for any reason or (ii) include any shares of common stock of Shareholder in any
public offering for which a registration statement is or is proposed to be
filed if such shares of common stock are, at the time of effectiveness of such
registration statement, eligible to be sold under Rule 144 under the Securities
Act or otherwise eligible for sale to the public without registration.
(g) Vision 21 shall have the right to extend or delay the
effectiveness of any registration statement for a period of up to ninety (90)
days if, upon the advice of counsel, such delay is advisable and in the best
interests of Vision 21 because of the existence of non-public material
information, or to allow Vision 21 to complete any pending audit of its
financial statements or any public financing plan.
(h) Shareholder agrees to cooperate with Vision 21 in all
respects in connection with registration of the common stock, including timely
supplying all information and executing and returning all documents requested
by Vision 21 and its managing underwriter.
Exhibit 14.1(o) - Page 2
144
(i) Vision 21 shall not be required to include any of
Shareholder's shares of common stock in any registration statement unless
Shareholder accepts the terms of the underwriting as agreed upon between Vision
21 and its underwriters.
(j) Vision 21 shall have the right to defer the filing of
any registration statement if the Board of Directors of Vision 21 determines in
good faith that it would be seriously detrimental to Vision 21 and its
shareholders for such registration statement to be filed.
(k) This Agreement shall expire two (2) years from the
date of an initial public offering of Vision 21 common stock.
2. Covenants of Vision 21. Vision 21 hereby covenants and
agrees:
(a) To take such steps as may be necessary to comply with the Blue
Sky laws of such states as the managing underwriter may reasonably request;
provided that in no event shall Vision 21 be obligated to qualify to do
business in any state where it is not so qualified or to take any action which
would subject it to unlimited service of process in any state where it is not
at such time so subject;
(b) To use reasonable efforts to cause the registration statement
to become effective and to keep the registration statement effective for such
period as may be required under the terms of the underwriting agreement
relating thereto but no longer than for a period of forty-five (45) days, to
file such post-effective amendments as may be necessary to keep any prospectus
contained in such registration statement true and complete during such period
as the registration statement shall be effective, and to furnish and file such
other amendments, supplements, and other documents the managing underwriter may
reasonably request;
(c) To supply such numbers of prospectuses as may be reasonably
required by the managing underwriter;
(d) To pay the reasonable costs and expenses of the registration
statement including without limitation all registration and Blue Sky filing
fees, all fees and expenses of Vision 21's counsel (but not the fees and
expenses of counsel for Shareholder), all accounting costs (including costs
associated with the preparation of interim period financial statements), NASD
fees, printing costs, experts' fees, expenses, costs of post-effective
amendments, and all other usual and customary expenses in connection with the
registration statement, except for Shareholder's pro rata share of underwriting
discounts, fees, and selling commissions (calculated in the manner set forth in
Section 3(a)(ii) of this Agreement); and
(e) With respect to any registration statement filed pursuant to
this Agreement, where underwriters are utilized, to cooperate with the
underwriters to the best of its abilities and to enter into an underwriting
agreement with such underwriters containing such representations,
Exhibit 14.1(o) - Page 3
145
warranties, and covenants on the part of Vision 21 as are usual and customary
in an underwritten public sale of common stock.
3. Covenants of Shareholder.
(a) Shareholder hereby covenants and agrees:
(i) To cooperate with Vision 21 in its compliance with
all federal and state securities laws, including without limitation providing
such information and signing such documents as are necessary to effect a
registration or reasonably requested by underwriters pursuant to this
Agreement;
(ii) To pay his pro rata portion (calculated on the basis
of the ratio of the aggregate offering price attributable to the shares of
Shareholder being registered and sold in relation to the aggregate offering
price attributable to the total number of securities being registered and sold,
including securities being registered and sold by other selling stockholders)
of the underwriting discounts and selling commissions and to pay all the fees
and disbursements of his counsel; and
(iii) To the entry of stop transfer instructions with the
Company's transfer agent against the transfer of any shares of Shareholder's
Vision 21 common stock except in compliance with the restrictions as set forth
in this Section 3.
(b) Shareholder shall be considered an "affiliate" of Vision 21
for purposes of Rule 144 under the Securities Act, even in the event
Shareholder is not technically an affiliate of Vision 21 as defined in Rule
144, and the Vision 21 common stock owned by Shareholder shall be subject to
the restrictions and limitations on resale imposed by Rule 144 on affiliates of
Vision 21. Shareholder shall not sell any of his shares of Vision 21 common
stock under Rule 144 unless Shareholder would be eligible to do so under the
provisions applicable to affiliates.
(c) In addition to the transfer restrictions otherwise provided
for herein, Shareholder shall not, whether or not Shareholder elects to cause
the registration of his shares pursuant to this Agreement, directly or
indirectly, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise dispose of any shares of Vision 21 common stock
(other than the shares covered by such registration, which may be sold in
accordance with the plan or plans of distribution described in the registration
statement) owned by Shareholder for a period of one hundred eighty (180) days
or such shorter period as negotiated by the Company following the effective
date of such registration statement without the prior written consent of Vision
21. In the event that Shareholder is a corporation, professional corporation
or professional limited liability company, Shareholder may after receiving the
written approval of Vision 21 (which approval shall not be unreasonably
withheld) transfer its shares of Vision 21 Common Stock to any of the
individuals and/or trusts described in Sections 7(a), (b) and (c) hereof. Such
transferee
Exhibit 14.1(o) - Page 4
146
shall, for purposes of the transfer restrictions contained in this Agreement,
be deemed to have held such transferred shares for the same period as
Shareholder.
4. Indemnification of Shareholder. Whenever registration with
respect to any shares of Shareholder's common stock is effected under the
Securities Act pursuant hereto, Vision 21 will indemnify and hold harmless
Shareholder, each underwriter, the directors, officers, employees and agents of
each underwriter, and each person, if any, who controls each underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, liabilities, expenses and
damages (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
(including any securities law violations) insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading, provided that Vision 21 will not be liable to Shareholder to the
extent that such loss, claim, liability, expense or damage is based on an
untrue statement or omission made in reliance on and in conformity with
information furnished to Vision 21 by Shareholder, or by Shareholder through
any attorney-in- fact, expressly for inclusion in the registration statement or
any prospectus included in such registration statement.
5. Indemnification of Vision 21. Whenever registration with
respect to any shares of Shareholder's common stock is effected under the
Securities Act pursuant hereto, Shareholder will indemnify and hold harmless
Vision 21, each of Vision 21's directors and officers, each person who controls
Vision 21 within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, each underwriter, the directors, officers, employees and
agents of each underwriter, and each person, if any, who controls each
underwriter within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, claims,
liabilities, expenses and damages (including any and all investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted), to
which they, or any of them, may become subject under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or alleged untrue
statement of a material fact required to be stated in it or necessary to make
the statements in it not misleading; provided that Shareholder will not be
liable except to the extent that such loss, claim, liability, expense or damage
arises from or is based upon an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
furnished to Vision 21 by the Shareholder, or by Shareholder through any
attorney-in-fact, expressly for inclusion in the registration statement or any
prospectus included in such registration statement.
Exhibit 14.1(o) - Page 5
147
6. Defense of Claim. Promptly after receipt by an indemnified
party of notice of the commencement of any action, the indemnified party shall
notify the indemnifying party in writing of the commencement thereof if a claim
in respect thereof is to be made against an indemnifying party under this
Agreement, but the omission of such notice shall not relieve the indemnifying
party from liability which it may have to the indemnified party under this
Agreement, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice, and shall not relieve the
indemnifying party from any liability which it may have to any indemnified
party otherwise than under this Agreement. In case any action is brought
against the indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and to the extent that it chooses, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party that it so chooses, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided however that (i) if the indemnifying party fails to take
reasonable steps necessary to defend diligently the claim within twenty (20)
days after receiving notice from the indemnified party that the indemnified
party believes the indemnifying party has failed to diligently defend such
claim, or (ii) if the indemnified party who is a defendant in any action or
proceeding which is also brought against the indemnifying party reasonably
shall have concluded that there are legal defenses available to the indemnified
party which conflict with the defense strategy of the indemnifying party, or
(iii) if representation under applicable standards of professional conduct
require separate representation of the indemnified party and the indemnifying
party, then the indemnified party shall have the right to assume or continue
its own defense as set forth above and the indemnifying party shall reimburse
the indemnified party for the costs of such defense as provided in Section 4
and 5. In no event shall the indemnifying party be responsible for the fees of
more than one firm for all indemnified parties.
7. Non-Transferability. The registration rights and benefits set
forth herein, including indemnification by Vision 21 are granted for the sole
and personal benefit of Shareholder and may not be transferred or assigned
except for (a) gifts to his/her family members (b) assignment to a trust
controlled by the Shareholder, (c) transfers to Shareholder;s heirs which occur
by operation of law as a result of the death of the Shareholder, or (d) if the
Shareholder is a corporation, professional corporation or professional limited
liability company, transfers or assignments to the individuals who are current
equity holders of Shareholder and by such equity holders to the individuals
and/or trusts described in subsection (i) and (ii) of this Section.
8. Survival of Indemnity. The indemnifications provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any securities by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
9. Delay of Registration. Shareholder agrees that he shall have
no right to obtain or seek an injunction restraining or otherwise delaying any
registration statement filed by Vision 21.
Exhibit 14.1(o) - Page 6
148
10. Notices.
(a) All communications under this Agreement shall be in
writing and shall be sufficient in all respects if when personally delivered
or mailed by prepaid certified or registered mail, return receipt requested,
addressed as follows:
(i) If to Vision 21, at:
Vision 21, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chief Executive Officer
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
c/o Shumaker, Loop & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or at such other address as Vision 21 may have furnished in writing to
Shareholder at the time outstanding, or
(ii) If to Shareholder at:
Eye Institute of Southern Arizona, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: __________________, M.D.
Exhibit 14.1(o) - Page 7
149
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
Sacks Tierney P.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(b) Any notice so addressed, when mailed by registered or
certified mail shall be deemed to be given three days after so mailed, and when
delivered by hand shall be deemed to be given immediately.
11. Counterparts. One or more counterparts of this Agreement may
be signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument.
12. Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of Florida,
which shall prevail in all matters arising under or in connection with this
Agreement.
13. Headings. The headings in this Agreement are for convenience
of reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
14. Stock Lettering. The Company shall have the right to provide
a legend on the shares of stock covered hereunder reflecting the restriction
described hereunder.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date and year first above written.
"VISION 21"
VISION 21, INC.
By:
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief
Executive Officer
Exhibit 14.1(o) - Page 8
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"SHAREHOLDER"
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Signature of Shareholder
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Print Name of Shareholder
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Print Address of Shareholder
Exhibit 14.1(o) - Page 9