<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): August 30, 1999
VISION TWENTY-ONE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 0-22977 59-3384581
- ---------------------- --------------------- --------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
7360 BRYAN DAIRY ROAD
LARGO, FLORIDA 33777
- ------------------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 727-545-4300
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 1, 1999, Vision Twenty-One, Inc. (the "Company")
completed the sale of substantially all of the assets of its Vision World,
Stein Optical and EYE DRx retail chains to Eye Care Centers of America, Inc.
("ECCA"), a Thomas H. Lee Company (the "ECCA Transaction"). Simultaneously with
the closing, the Company and ECCA entered into a comprehensive Strategic
Alliance Agreement related to joint initiatives in managed care and the
Company's refractive surgery programs.
As consideration for the ECCA Transaction, the Company received cash
in the amount of $37.3 million (the "Proceeds") with the final price subject to
post closing adjustments. The principle followed in determining the amount of
such consideration was arms length negotiations between the parties. At closing
the Company applied $30.8 million of the Proceeds as a permanent pay down of
its credit facility, $2.8 million as a pay down under its ongoing $7.5 million
revolving credit facility, approximately $2.4 million will be applied to costs
and other obligations related to the transaction and $1.25 million was utilized
to fund an escrow agreement between the parties relative to the terms of the
ECCA Transaction. The ECCA Transaction will be accounted for as a discontinued
operation for financial reporting purposes. A copy of the Asset Purchase
Agreement is filed with this report as Exhibit 10.66 and the above description
is qualified in its entirety by reference to the complete terms and conditions
contained in the Asset Purchase Agreement.
ITEM 5. OTHER EVENTS.
AMENDMENT OF CREDIT AGREEMENT RELATED TO THE ECCA TRANSACTION. On
August 30, 1999 the Company entered into the third amendment (the "Amendment")
to its Amended and Restated Credit Agreement dated as of July 1, 1998 (the
"Credit Agreement"). The Amendment provided for the consent to the ECCA
Transaction by the Banks and Agent as parties to the Credit Agreement, revised
certain covenants and financial ratios and waived the Company's non-compliance
with certain obligations under the Credit Agreement through the date thereof. A
copy of the Amendment is filed herewith as Exhibit 10.65 and incorporated
herein by reference.
PRESS RELEASE On September 1, 1999 the Company issued a press release
announcing the completion of the sale of its retail optical chains to Eye Care
Centers of America, Inc. a copy of which is filed herewith as Exhibit 99.0 and
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information.
The pro forma financial information for the ECCA Transaction, required
pursuant to Article 11 of Regulation S-X, is as follows:
2
<PAGE> 3
INDEX TO FINANCIAL STATEMENTS
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Basis of Presentation .................................................................................. 4
Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 1998 .......... 5
Unaudited Pro Forma Consolidated Statement of Operations for the six months ended June 30, 1999 ........ 6
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1999 ........................... 7
Notes to Unaudited Pro Forma Consolidated Financial Information ........................................ 8
</TABLE>
3
<PAGE> 4
VISION TWENTY-ONE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
----------------------------------
BASIS OF PRESENTATION
Effective August 31, 1999, Vision Twenty-One, Inc. ("the Company")
disposed of substantially all of the assets, primarily consisting of accounts
receivable, inventories, equipment and other tangible and intangible assets,
and disposed of substantially all of the liabilities, primarily consisting of
accounts payable, accrued expenses and accrued compensation of its three retail
optical chains - Vision World, Stein Optical and the Eye DRx, (collectively
referred to as Retail Optical Chains) to Eye Care Centers of America.
The following unaudited pro forma consolidated financial statements
are based on the historical consolidated financial statements of the Company,
adjusted to give effect to the transaction described above. The unaudited pro
forma statements of operations of the Company for the year ended December 31,
1998 and for the six months ended June 30, 1999 give effect to the transaction
as if it had occurred January 1, 1998. The unaudited pro forma condensed
consolidated balance sheet of the Company as of June 30, 1999 gives effect to
the transaction at that date, and the application of the estimated proceeds
from the sale.
The unaudited pro forma consolidated financial statements are based on
the historical financial statements of the Company and give effect to the
disposition and related application of the estimated proceeds from the sale and
the assumptions and adjustments described in the notes thereto. The unaudited
pro forma consolidated financial information does not purport to indicate what
the results of operations or financial conditions of the Company would have
been if the transaction had been effected on the dates indicated or to project
future results of operations or financial condition of the Company. Such pro
forma financial information should be read in conjunction with the consolidated
financial statements of the Company and the notes thereto.
4
<PAGE> 5
VISION TWENTY-ONE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Historical Company Retail Optical
for the Chains for the
twelve months twelve months
ended ended Disposition Pro Forma
December 31, 1998 December 31, 1998 Adjustments Consolidated
------------------- ------------------ ------------ --------------
<S> <C> <C> <C> <C>
REVENUES:
LADS operations, net $ 109,477,913 $ 40,456,367 $ 69,021,546
Managed care 54,980,006 54,980,006
Buying group 58,959,195 58,959,195
------------------- ------------------ --------------
223,417,114 40,456,367 182,960,747
------------------- ------------------ --------------
OPERATING EXPENSES:
LADS operating expenses 86,277,417 27,251,904 59,025,513
Medical claims 42,159,210 42,159,210
Cost of buying group sales 55,926,173 55,926,173
General & administrative 27,664,447 8,999,032 18,665,415
Depreciation & amortization 6,984,129 1,612,997 5,371,132
Special items:
Restructuring and other charges 6,462,595 1,911,000 4,551,595
Start-up and software development
Costs 932,494 932,494
Merger costs 717,835 212,604 $ 505,231 (1)
------------------- ------------------ ----------- --------------
227,124,300 39,987,537 505,231 186,631,532
-------------------- ------------------ ----------- --------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (3,707,186) 468,830 (505,231) (3,670,785)
Amortization of loan fees 314,208 314,208
Interest expense 5,064,891 1,423,184 3,641,707
------------------- ------------------ ----------- --------------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (9,086,285) (954,354) (505,231) (7,626,700)
Income taxes (2,450,000) (431,000) (136,412)(1) (1,882,588)
------------------- ------------------ --------------
LOSS FROM CONTINUING OPERATIONS
AFTER INCOME TAXES $ (6,636,285) $ (523,354) $ (368,819) $ (5,744,112)
=================== ================== =========== ==============
Basic and diluted loss per common
share from continuing operations $ (0.46) $ (0.40)
Weighted average number of common 14,385,359 14,385,359
shares outstanding
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial information.
5
<PAGE> 6
VISION TWENTY-ONE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
HISTORICAL
COMPANY
FOR THE SIX MONTHS
ENDED DISPOSITION PRO FORMA
JUNE 30, 1999 ADJUSTMENTS CONSOLIDATED
------------------- ----------------- ----------------
<S> <C> <C> <C>
REVENUES:
LADS operations, net $ 44,820,758 $ 44,820,758
Managed care 28,250,458 28,250,458
Buying group 19,154,456 19,154,456
------------------ ---------------
92,225,672 92,225,672
------------------ ---------------
OPERATING EXPENSES:
LADS operating expenses 39,177,099 39,177,099
Medical claims 20,719,569 20,719,569
Cost of buying group sales 18,257,963 18,257,963
General & administrative 12,138,227 12,138,227
Depreciation & amortization 3,921,459 $ (449,549)(2) 3,471,910
Start-up costs 679,579 679,579
------------------ ---------------- ---------------
Total operating expenses 94,893,896 (449,549) 94,444,347
------------------ ---------------- ---------------
LOSS FROM CONTINUING OPERATIONS (2,668,224) 449,549 (2,218,675)
Interest expense 3,729,497 (1,440,000)(3) 2,289,497
Gain on sale of business (511,063) (511,063)
------------------ ---------------- ---------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (5,886,658) 1,889,549 (3,997,109)
Income taxes
------------------ ---------------- ---------------
LOSS FROM CONTINUING OPERATIONS AFTER INCOME TAXES $ (5,886,658) $ 1,889,549 $ (3,997,109)
=================== ================ ===============
Basic and diluted loss per common share
from continuing operations $ (0.39) $ (0.27)
Weighted average number of common
shares outstanding 15,071,244 15,071,244
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial information.
6
<PAGE> 7
VISION TWENTY-ONE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
JUNE 30, 1999
<TABLE>
<CAPTION>
HISTORICAL RETAIL OPTICAL
COMPANY CHAINS
AS OF AS OF
JUNE 30, JUNE 30, DISPOSITION PRO FORMA
1999 1999 ADJUSTMENTS CONSOLIDATED
-------------- ------------ --------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 5,383,578 $ 3,000,000(4) $ 8,383,578
Accounts receivable 16,423,680 $ (2,059,998) 14,363,682
Inventories 4,649,144 (3,347,705) 1,301,439
Prepaid expenses and other current assets 3,408,495 (223,224) 3,185,271
-------------- ------------ ------------- --------------
Total current assets 29,864,897 (5,630,927) 3,000,000 27,233,970
Fixed assets, net 17,225,714 (6,277,389) 10,948,325
Intangible assets, net 127,331,800 (23,453,179) 103,878,621
Deferred income taxes 6,300,000 6,300,000
Other assets 2,253,385 (109,796) 2,143,589
============== ============ ============= ==============
Total assets $ 182,975,796 $ (35,471,291) $ 3,000,000 $ 150,504,505
============== ============ ============= ==============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 3,619,745 $ (1,480,270) $ 2,139,475
Accrued expenses 6,257,840 (591,215) $ 1,400,000 (4)
1,000,000 (4) 8,066,625
Medical claims payable 4,696,138 4,696,138
Accrued compensation 5,769,631 (1,593,274) 4,176,357
Accrued restructuring charge 2,313,002 2,313,002
Current portion of long-term debt 2,813,048 2,813,048
Current portion of obligations under capital leases 392,372 392,372
-------------- ------------ ------------- --------------
Total current liabilities 25,861,776 (3,664,759) 2,400,000 24,597,017
Deferred rent payable 213,482 213,482
Obligations under capital leases 269,860 269,860
Long-term debt, less current maturities 76,957,062 (33,600,000)(4) 43,357,062
Deferred leasehold incentive 249,428 (249,428)
Deferred income taxes 7,512,000 7,512,000
Minority interest 346,424 346,424
Stockholders' Equity:
Common stock 15,431 15,431
Additional paid-in capital 92,186,431 92,186,431
Common stock to be issued 128,206 128,206
Deferred compensation (246,285) (246,285)
Notes receivable from officer (172,984) (172,984)
Accumulated deficit (20,345,035) 2,642,896 (5) (17,702,139)
-------------- ------------- --------------
Total stockholders' equity 71,565,764 2,642,896 74,208,660
-------------- ------------- --------------
-------------- ------------ ------------- --------------
Total liabilities and stockholders' equity $ 182,975,796 $ (3,914,187) $ (28,557,104) $ 150,504,505
============== ============ ============= ==============
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial information.
7
<PAGE> 8
VISION TWENTY-ONE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
(1) The adjustment reflects the reduced merger costs which were incurred as a
result of the acquisition of Stein Optical.
(2) Amortization of intangible assets is calculated on a straight-line method
over 25 and 30 years.
(3) The adjustment reflects the reduced interest expense on the Company's
credit facility as a result of the disposition.
Debt paydown Interest Rate Period Interest Expense
------------ ------------- ------ ----------------
$32,000,000 9.00% 1/1/99 - 6/30/99 $1,440,000
(4) The adjustment reflects the use of the estimated proceeds from the
disposition.
(5) The adjustment reflects the estimated gain on the disposition calculated
as such:
Purchase price $ 37,300,000
Net assets (31,557,104)
Accrued deal costs (1,400,000)
Accrued employee expenses (1,000,000)
Other costs paid out of proceeds (700,000)
------------
Estimated gain $ 2,642,896
============
8
<PAGE> 9
(c) Exhibits
The Exhibits to this Report are listed in the Exhibit Index set forth elsewhere
herein.
9
<PAGE> 10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
VISION TWENTY-ONE, INC.
By: /s/ Richard T. Welch
-------------------------------------
Richard T. Welch
Its: Chief Financial Officer
Dated: September 14, 1999
10
<PAGE> 11
INDEX TO EXHIBITS
-----------------
EXHIBIT
NUMBER EXHIBIT
- ------- -------
4.13* Credit Agreement dated as of January 30, 1998 among Vision
Twenty-One, Inc. the Banks Party Hereto and Bank of Montreal as
Agent.(1)
4.14* Amended and Restated Credit Agreement dated as of July 1, 1998 among
Vision Twenty-One, Inc., and the Bank of Montreal as Agent for a
consortium of banks.(2)
4.15* First Amendment to the Amended and Restated Credit Agreement dated as
of February 23, 1999 among Vision Twenty-One, Inc., the Banks party
hereto and Bank of Montreal as Agent for the Banks.(3)
4.16* Second Amendment to the Amended and Restated Credit Agreement dated
as of June 11, 1999 among Vision Twenty-One, Inc., the Banks party
hereto and Bank of Montreal as Agent for the Banks.(3)
4.17 Third Amendment to the Amended and Restated Credit Agreement dated as
of August 30, 1999 by and among Vision Twenty-One, Inc., the Banks
party hereto and Bank of Montreal as Agent for the Banks.
(The Company is not filing any instrument with respect to long-term
debt that does not exceed 10% of the total assets of the Company and
the Company agrees to furnish a copy of such instrument to the
Commission upon request.)
10.59* Credit Agreement dated as of January 30, 1998 among Vision
Twenty-One, Inc., the Banks Party Hereto and Bank of Montreal as
Agent filed as Exhibit 4.13 to this Report and incorporated herein by
reference.
10.60* Amended and Restated Credit Agreement dated as of July 1, 1998 among
Vision Twenty-One, Inc. the Banks Party Hereto and Bank of Montreal
as Agent, filed as Exhibit 4.14 to this Report and incorporated
herein by reference.
10.61* First Amendment to the Amended and Restated Credit Agreement dated as
of February 23, 1999 among Vision Twenty-One, Inc., the Banks party
hereto and Bank of Montreal as Agent for the Banks, filed as Exhibit
4.15 to this Report and incorporated herein by reference.
10.62* Second Amendment to the Amended and Restated Credit Agreement dated
as of June 11, 1999 among Vision Twenty-One, Inc., the Banks party
thereto and Bank of Montreal as Agent for the Banks, filed as Exhibit
4.16 to this Report and incorporated herein by reference.
11
<PAGE> 12
10.65 Third Amendment to the Amended and Restated Credit Agreement dated as
of August 30, 1999 by and among Vision Twenty-One, Inc., the Banks
party hereto and Bank of Montreal as Agent for the Banks, filed as
Exhibit 4.17 to this Report and incorporated herein by reference.
10.66 Asset Purchase Agreement entered into as of July 7, 1999 by and among
Eye Care Centers of America, Inc., Vision Twenty-One, Inc. and The
Complete Optical Laboratory, Ltd., Corp., a wholly owned subsidiary
of the Company.
Schedules (or similar attachments) have been omitted and the
Registrant agrees to furnish supplementally a copy of any omitted
schedule to the Securities and Exchange Commission upon request.
99.0 Press Release dated September 1, 1999 announcing the completion of the
sale of the Company's retail optical chains.
- ----------------
* Previously filed as an Exhibit in the Company filing identified in the
footnote following the Exhibit Description and incorporated herein by
reference.
(1) Form 8-K filed February 10, 1998.
(2) Form 8-K filed July 10, 1998.
(3) Form 10-K filed June 18, 1999.
12
<PAGE> 1
EXHIBIT 4.17
VISION TWENTY-ONE, INC.
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement (herein, the "Amendment") is
entered into as of August 30, 1999, among Vision Twenty-One, Inc., a Florida
corporation (the "Borrower"), the Banks party hereto, and Bank of Montreal as
Agent for the Banks.
PRELIMINARY STATEMENTS
A. The Borrower, the Banks, and the Agent are parties to an
Amended and Restated Credit Agreement, dated as of July 1, 1998, as amended
(herein, the "Credit Agreement"). All capitalized terms used herein without
definition shall have the same meanings herein as such terms have in the Credit
Agreement.
B. The Borrower has requested that the Banks consent to the
Borrower's sale of certain of its assets commonly referred to as its Retail
Group, that the proceeds of such sale be applied to certain costs and expenses
directly relating to the sale as well as to certain of the Obligations owing to
the Banks, that certain financial covenants be amended, and that certain other
modifications be made to the Credit Agreement, and the Banks have agreed to do
so as provided for in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. CONSENT TO SALE OF THE RETAIL GROUP.
The Borrower has notified the Agent and the Banks that the Borrower
and its Subsidiary, The Complete Optical Laboratory, Ltd., intend to sell
certain of their assets which constitute their Retail Group to Eye Care Centers
of America, Inc. pursuant to an Asset Purchase Agreement dated as of July 7,
1999 (the "Retail Group Purchase Agreement"), as true and correct copy of which
having heretofore been delivered by the Borrower to the Agent (such sale being
referred to herein as the "Retail Group Sale"). The Borrower hereby requests
that the Banks waive Section 8.16 of the Credit Agreement to permit the Retail
Group Sale and, by signing below, the Banks hereby agree to waive compliance
with Section 8.16 of the Credit Agreement to permit the Retail Group Sale but
only so long as the following conditions are satisfied (a) the Retail Group
Sale is consummated on or before August 31, 1999, (b) the cash payable to the
Borrower and its Subsidiary for the Retail Group at the closing, representing
the purchase price net of write-downs in the purchase price due to EBITDA
adjustments and working capital adjustments and exclusive of post-closing
purchase price adjustments, shall not be less than $34,800,000, of which (i)
$1,250,000 shall be held in escrow pursuant to Section 2.02 of the Retail Group
Purchase Agreement, provided the rights of the Borrower and its Subsidiaries to
all or any part thereof shall be subject to the Lien of the Agent pursuant to
an escrow agreement in form and substance satisfactory to the Agent, (ii) not
more than $2,455,000 of such proceeds may be applied to transaction costs and
expenses relating to the Retail Group Sale established to the reasonable
satisfaction of the Agent, including special audit fees incurred solely in
connection with such
<PAGE> 2
sale, legal fees, fairness opinion fees, advisory fees, amounts payable to
prior owners, severance payments and fees payable to the Agent, (iii)
$2,800,000 of such proceeds shall be applied to reduce Revolving Loans then
outstanding (it being acknowledged that no reduction in the Revolving Credit
Commitments is being required), and (iv) the balance of such proceeds, which
amount shall in no event be less than $28,295,000 shall be applied to the
outstanding Term Loans as follows: 17.15% of such amount to be applied to the
Term A Loans then outstanding, 23.85% of such amount to be applied to the Term
B Loans then outstanding, and 59% of such amount to be applied to the Term C
Loans then outstanding, each such payment to be applied to the remaining
principal installments due thereon in the inverse order of maturity.
The Banks acknowledge and agree that upon the Agent's receipt of the
proceeds referred to in clauses (iii) and (iv) above, the Agent is hereby
authorized and directed to (and the Agent hereby agrees to) execute and deliver
UCC-3 partial release statements in the States of Florida, Minnesota, and New
Jersey to release the Agent's Lien upon the assets sold pursuant to the Retail
Group Sale in form reasonably satisfactory to the Agent.
The Borrower acknowledges that the Agent shall have and is hereby
granted a Lien upon all amounts held in the escrow account(s) for the benefit
of the Borrower and its Subsidiaries pursuant to the Retail Group Purchase
Agreement as collateral security for the Obligations owing to the Agent and the
Banks, and hereby agrees to irrevocably direct the holder of such escrow
amounts to pay any amounts otherwise payable to the Borrower or any of its
Subsidiaries thereunder directly to the Agent for application to the Term Loans
pro rata based upon the principal balances thereof then outstanding (provided,
however, that solely for purposes of determining amounts allocable to the
holders of the Term Loans, the outstanding principal balance of the Term A
Loans shall be deemed increased by the amount of the Revolving Credit
Commitments and, as a result, the holders of the Term A Loans shall receive an
increased allocable amount of such payments and, if as a result of such
prepayment the Term A Loans are paid in full any excess otherwise allocable to
the holders of the Term A Loans shall be paid over to the Banks then holding
Revolving Credit Commitments for application to such Banks' Term B Loans), each
such payment to be applied to the remaining principal installments due thereon
in the inverse order of maturity.
SECTION 2. AMENDMENTS.
Subject to the satisfaction of the conditions precedent set forth in
Section 4 below, the Credit Agreement shall be and hereby is amended as
follows:
1.1. Section 4.2 of the Credit Agreement shall be amended and
restated in its entirety to read as follows:
Section 4.2 Collections. The Borrower shall establish and
maintain such arrangements as shall be necessary or
appropriate to assure that all proceeds of the Collateral of
the Borrower and its Material Subsidiaries are deposited (in
the same form as received) in accounts maintained with, or
under the dominion and control of, the Agent, such accounts
to constitute special restricted accounts,
-2-
<PAGE> 3
the Borrower acknowledging that the Agent has (and is hereby
granted) a lien on such accounts and all funds contained
therein to secure the Obligations. If and to the extent that
proceeds are deposited and/or maintained in one or more
accounts maintained with financial institutions other than
the Agent, except as otherwise permitted under Section
4.1(iii) above, it shall be a condition to the Borrower's or
any Material Subsidiary's right to establish and maintain
such deposit accounts at any time after September 30, 1999,
that the financial institutions maintaining such accounts
shall have delivered to the Agent blocked account agreements
satisfactory to the Agent in form and substance pursuant to
which such financial institutions acknowledge the Agent's
Lien thereon, waive any right of offset or bankers' liens
thereon (other than with respect to account maintenance
charges and returned items) and agree that, upon notice from
the Agent, the collected balances in such accounts will only
be transferred to the Agent. The Banks agree with the
Borrower that if and so long as no Default or Event of
Default has occurred or is continuing, amounts on deposit in
the accounts maintained with the Agent will (subject to the
rules and regulations of the Agent as from time to time in
effect applicable to demand deposit accounts) be made
available to the Borrower and its Material Subsidiaries for
use in the conduct of their business. Upon the occurrence of
an Event of Default, the Agent may apply the funds on deposit
in such accounts to the Obligations.
In furtherance of the requirements set forth above, the
Borrower agrees to establish and implement a cash management
system acceptable to the Agent by no later than October 31,
1999 (September 30, 1999, with respect to the 15 largest
accounts), pursuant to which all available cash and cash
equivalents held or maintained by the Borrower and its
Subsidiaries (exclusive of reasonable account balances
maintained for the account of physician practice groups) are
swept (on a periodic basis which may be as frequently as
daily, as the Agent may require) into one or more deposit
accounts subject to the Lien of the Agent as set forth above.
1.2. Upon the consummation of the Retail Group Sale, the
definition of "Permitted Acquisition" appearing in Section 5.1 of the
Credit Agreement shall be amended by striking clause (g) thereof and
inserting in its place the following:
(g) the Total Consideration paid for the
Target, when taken together with the aggregate amount of
Capital Expenditures incurred during the current fiscal year
(including other Acquisitions made by the Borrower or any of
its Subsidiaries
-3-
<PAGE> 4
during the current fiscal year), does not exceed $5,000,000
in the aggregate.
1.3. Subsection (a) of Section 8.5 (Financial Reports) of
the Credit Agreement shall be amended and restated in its entirety to
read as follows:
(a) as soon as available, and in any event
within 30 days after the last day of each calendar month
(except with respect to month-end financial statements for
June 1999, July 1999, August 1999, September 1999, as well as
for month-end financial statements for January of each year,
in which case the financial statements required by this
subsection (a) shall be delivered within 45 days after the
last day of the relevant month), a copy of the consolidated
balance sheet of the Borrower and its Subsidiaries as of the
last day of such month and the consolidated statements of
income, retained earnings and cash flow of the Borrower and
its Subsidiaries for the month and for the fiscal
year-to-date period then ended, each in reasonable detail
shown in comparative form against the Borrower's business
plan for such year, prepared by the Borrower and certified to
by the Borrower's chief financial officer, or another officer
of the Borrower reasonably acceptable to the Agent;
1.4. Upon the consummation of the Retail Group Sale,
Section 8.8 (Total Funded Debt/Adjusted EBITDA Ratio) of the Credit
Agreement shall be amended and restated in its entirety to read as
follows:
Section 8.8. Total Funded Debt/Adjusted EBITDA
Ratio. As of the last day of each fiscal quarter of the
Borrower ending during the periods specified below, the
Borrower shall not permit the Total Funded Debt/Adjusted
EBITDA Ratio as of the last day of such fiscal quarter to be
greater than or equal to:
<TABLE>
<CAPTION>
RATIO SHALL NOT BE
GREATER THAN OR EQUAL
FROM AND INCLUDING TO AND INCLUDING TO
<S> <C> <C>
July 1, 1999 September 30, 1999 4.50 to 1.0
October 1, 1999 March 31, 2000 4.00 to 1.0
April 1, 2000 September 30, 2000 3.50 to 1.0
October 1, 2000 December 31, 2000 3.00 to 1.0
January 1, 2001 and at all times thereafter 2.75 to 1.0
</TABLE>
-4-
<PAGE> 5
1.5. Upon the consummation of the Retail Group Sale,
Sections 8.10 (Interest Coverage Ratio), 8.11 (Debt Service Coverage
Ratio), and 8.12 (Capital Expenditures) of the Credit Agreement shall
be amended and restated in their entirety to read as follows:
Section 8.10. Interest Coverage Ratio. As of the
last day of each fiscal quarter of the Borrower ending during
the periods specified below, the Borrower shall maintain a
ratio of EBITDA for the four fiscal quarters of the Borrower
then ended to Interest Expense for the same four fiscal
quarters then ended of not less than:
<TABLE>
<CAPTION>
RATIO SHALL NOT
FROM AND INCLUDING TO AND INCLUDING BE LESS THAN
<S> <C> <C>
July 1, 1999 September 30, 1999 1.25 to 1.0
October 1, 1999 March 31, 2000 2.00 to 1.0
April 1, 2000 June 30, 2000 3.00 to 1.0
July 1, 2000 September 30, 2000 3.25 to 1.0
October 1, 2000 and at all times thereafter 4.00 to 1.0
</TABLE>
Section 8.11. Debt Service Coverage Ratio. As of the
last day of each fiscal quarter of the Borrower ending during
the periods specified below, the Borrower shall maintain a
ratio of (a) EBITDA for the four fiscal quarters of the
Borrower then ended less the sum of (i) Capital Expenditures
incurred during such period and (ii) cash payments made
during such period with respect to federal, state, and local
income taxes to (b) the aggregate amount of payments required
to be made by the Borrower and its Subsidiaries during the
four fiscal quarters of the Borrower then ended in respect of
all principal on all Indebtedness for Borrowed Money (whether
at maturity, as a result of mandatory sinking fund
redemption, mandatory prepayment, acceleration or otherwise)
plus Interest Expense for the same four fiscal quarter period
then ended, of not less than:
<TABLE>
<CAPTION>
RATIO SHALL NOT
FROM AND INCLUDING TO AND INCLUDING BE LESS THAN
<S> <C> <C>
July 1, 1999 September 30, 1999 .75 to 1.0
October 1, 1999 March 31, 2000 1.00 to 1.0
April 1, 2000 June 30, 2001 1.25 to 1.0
July 1, 2001 September 30, 2001 1.50 to 1.0
October 1, 2001 December 31, 2001 1.75 to 1.0
January 1, 2002 and at all time thereafter 2.00 to 1.0
</TABLE>
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<PAGE> 6
Section 8.12. Capital Expenditures. The Borrower
shall not, nor shall it permit any other Subsidiary to, incur
Capital Expenditures in an aggregate amount in excess of
$5,000,000 during any fiscal year.
1.6. Section 8.34 (Physician Advances) of the Credit
Agreement shall be amended by adding at thereof the following
additional paragraph:
The Borrower represents that as of the date of the
Third Amendment to Credit Agreement between the Borrower, the
Agent, and the Banks, the aggregate amount of advances due
from practice group physicians and related professionals and
payable to the Borrower and/or any one or more of its
Subsidiaries under management agreements between such
practice group and the Borrower and/or any one or more of its
Subsidiaries is not less than $4,000,000. The Borrower shall
on or before October 15, 1999, cause such practice groups to
repay to the Borrower not less than $2,000,000 of such
advances (such repayment of advances and application thereof
to the Revolving Loans to be established to the reasonable
satisfaction of the Agent), such amounts to be applied by the
Borrower as a prepayment of Revolving Loans then outstanding
(it being acknowledged that no reduction in the Revolving
Credit Commitments is being required). In the event the
Borrower fails to pay down the Revolving Loans out of the
proceeds of the repayment of advances due from physicians and
related professionals by at least $2,000,000 by October 15,
1999, then on October 16, 1999, there shall be due from the
Borrower a mandatory principal prepayment of the Term Loans
in the amount of $2,000,000, such amount to be applied first
to the Term A Loans until paid in full, with any excess then
to be applied to the Term B Loans until paid in full, and
then to the Term C Loans until paid in full (such prepayments
to be applied to the remaining principal installments of the
relevant Term Loans in the inverse order of maturity).
SECTION 3. WAIVERS.
The Borrower has advised the Banks that as of June 30, 1999, the
Borrower was not in compliance with 8.11 (Debt Service Coverage Ratio) of the
Credit Agreement; and that as of the
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<PAGE> 7
date of this Amendment, the Borrower continues to be in default under Section
4.2 of the Credit Agreement regarding the execution and delivery of blocked
account agreements required to be in place by July 31, 1999, and under Section
8.5(a) of the Credit Agreement regarding the delivery of its June 1999
month-end financial statements (the defaults referenced above being referred to
herein as the "Existing Defaults"). The Borrower has requested that the Banks
waive the Borrower's non-compliance with the foregoing and, by signing below,
the Required Banks hereby agree to waive the Existing Defaults for, and only
for, the periods ending on or prior to the date of this Amendment, provided
that the waivers set forth herein shall not be effective unless and until the
conditions precedent set forth in Section 4 below have been satisfied.
SECTION 4. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
4.1. The Borrower, the Agent, and the Banks shall have
executed and delivered this Amendment.
4.2. The Agent shall have received for each of the Banks
a copy of the Borrower's June 30, 1999, month-end financial statements
due under Section 8.5(a) of the Credit Agreement.
4.3. Each Material Subsidiary shall have executed its
acknowledgement and consent to this Amendment in the space provided
for that purpose below.
4.4. The Agent shall have received for each Bank the
favorable written opinion of counsel to the Borrower, in form and
substance reasonably satisfactory to the Agent.
4.5. Legal matters incident to the execution and delivery
of this Amendment shall be satisfactory to the Agent and its counsel.
SECTION 5. REPRESENTATIONS.
In order to induce the Banks to execute and deliver this Amendment,
the Borrower hereby represents to the Agent and the Banks that as of the date
hereof, and after giving effect to the amendments and waivers set forth above,
the representations and warranties set forth in Section 6 of the Credit
Agreement are and shall be and remain true and correct (except that the
representations contained in Section 6.5 shall be deemed to refer to the most
recent financial statements of the Borrower delivered to the Banks) and the
Borrower and its Subsidiaries are in compliance with all of the terms and
conditions of the Credit Agreement and the other Loan Documents and no Default
or Event of Default has occurred and is continuing or shall result after giving
effect to this Amendment.
-7-
<PAGE> 8
SECTION 6. RELEASE OF CLAIMS.
To induce the Banks and the Agent to enter into this Amendment, the
Borrower and, by signing the acknowledgement and consent referred to below,
each of its Subsidiaries hereby release, acquit, and forever discharge the
Banks and the Agent, and their officers, directors, agents, employees,
successors, and assigns, from all liabilities, claims, demands, actions, and
causes of action of any kind (if any there be), whether absolute or contingent,
due or to become due, disputed or undisputed, at law or in equity, that they
now have or ever had against the Banks and the Agent, or any one or more of
them individually, under or in connection with the Credit Agreement or any of
the other Loan Documents.
SECTION 7. MISCELLANEOUS.
7.1. The Borrower has heretofore executed and delivered to the
Agent and the Banks certain of the Collateral Documents. The Borrower hereby
acknowledges and agrees that, notwithstanding the execution and delivery of
this Amendment, the Collateral Documents remain in full force and effect and
the rights and remedies of the Agent and the Banks thereunder, the obligations
of the Borrower thereunder, and the liens and security interests created and
provided for thereunder remain in full force and effect and shall not be
affected, impaired, or discharged hereby. The Borrower hereby acknowledges and
agrees that the Loans as modified by this Amendment constitute Obligations
secured by each of the Collateral Documents. Nothing herein contained shall in
any manner affect or impair the priority of the liens and security interests
created and provided for by the Collateral Documents as to the indebtedness
which would be secured thereby prior to giving effect to this Amendment.
7.2. Except as specifically amended herein, the Credit Agreement
shall continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection
therewith, or in any certificate, letter or communication issued or made
pursuant to or with respect to the Credit Agreement, any reference in any of
such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.
7.3. In consideration of the execution and delivery of this
Amendment, the Borrower hereby agrees to pay to the Agent for the benefit of
the Banks an amendment fee equal to $80,000 (such fee to be paid to the Banks
ratably based upon the outstanding principal balance of the Term Loans owed to,
or the Revolving Credit Commitments held by, such Bank on the date of this
Amendment prior to giving effect to any prepayments contemplated hereby), such
fee to be paid on the earlier of October 16, 1999, or the date the Borrower
satisfies the requirements of the second sentence of the second paragraph of
Section 8.34 of the Credit Agreement as amended hereby. In addition, the
Borrower agrees to pay on demand all costs and expenses of or incurred by the
Agent in connection with the negotiation, preparation, execution, and delivery
of this Amendment and the other instruments and documents to be executed and
delivered in connection herewith, including the fees and expenses of counsel
for the Agent.
7.4 This Amendment may be executed in any number of counterparts,
and by the different parties on different counterpart signature pages, all of
which taken together shall
-8-
<PAGE> 9
constitute one and the same agreement. Any of the parties hereto may execute
this Amendment by signing any such counterpart and each of such counterparts
shall for all purposes be deemed to be an original. This Amendment shall be
governed by the internal laws of the State of Illinois.
[SIGNATURE PAGES TO FOLLOW]
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<PAGE> 10
This Third Amendment to Amended and Restated Credit Agreement is dated
as of the date and year first above written.
VISION TWENTY-ONE, INC.
By /s/ Richard T. Welch
Name: Richard T. Welch
Title: Chief Financial Officer
Accepted and agreed to as of the day and year last above written.
BANK OF MONTREAL, in its individual capacity
as a Bank and as Agent
By /s/ Mark F. Spencer
Name: Mark F. Spencer
Title: Managing Director
BANK ONE TEXAS, N.A.
By /s/ Stephen C. Sommer
Name: Stephen C. Sommer
Title: Vice President
PACIFICA PARTNERS I, L.P.
By: Imperial Credit Asset
Management, as its Investment
Manager
By /s/ Dean K. Kawai
Name: Dean K. Kawai
Title: Vice President
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc., as its
Investment Manager
By /s/ Charles E. LeMieux
Name: Charles E. LeMieux
Title: Assistant Vice President and CFA
S-1
<PAGE> 11
PILGRIM AMERICA HIGH INCOME INVESTMENTS LTD.
By: Pilgrim Investments, Inc., as its
Investment Manager
By /s/ Charles E. LeMieux
Name: Charles E. LeMieux
Title: Assistant Vice President and CFA
MERRILL LYNCH BUSINESS FINANCIAL SERVICES, INC.
By /s/ Jeremy M. Dhein
Name: Jeremy M. Dhein
Title: Assistant Vice President
S-2
<PAGE> 12
Acknowledgement and Consent
The undersigned, being all of the Material Subsidiaries of Vision
Twenty-One, Inc., have heretofore executed and delivered to the Agent and the
Banks one or more Guaranties and Collateral Documents. Each of the undersigned
hereby consents to the Third Amendment to Credit Agreement as set forth above
and confirms that its Guaranty and Collateral Documents, and all of its
obligations thereunder, remain in full force and effect and, without limiting
the foregoing, acknowledges and agrees that the Loans as modified therein
constitute Obligations guaranteed by, or otherwise secured by, the Loan
Documents executed by it. Each of the undersigned further agrees that the
consent of the undersigned to any further amendments to the Credit Agreement
shall not be required as a result of this consent having been obtained, except
to the extent, if any, required by the Loan Documents referred to above.
"GUARANTORS"
VISION 21 PHYSICIAN PRACTICE
MANAGEMENT COMPANY
VISION 21 OF SOUTHERN ARIZONA, INC.
VISION 21 OF SIERRA VISTA, INC.
VISION 21 MANAGEMENT SERVICES, INC.
VISION 21 MANAGED EYE CARE OF TAMPA
BAY, INC.
VISION TWENTY-ONE MANAGED EYE CARE
IPA, INC.
BBG-COA, INC.
BLOCK VISION, INC.
UVC INDEPENDENT PRACTICE ASSOCIATION,
INC.
MEC HEALTH CARE, INC.
LSI ACQUISITION, INC.
VISION TWENTY-ONE EYE SURGERY CENTERS, INC.
EYE SURGERY CENTER MANAGEMENT, INC.
VISION TWENTY-ONE REFRACTIVE CENTER,
INC.
VISION TWENTY-ONE OF WISCONSIN, INC.
By /s/ Richard T. Welch
Richard T. Welch, an authorized signatory
for each of the above-referenced entities
S-3
<PAGE> 1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of July
7, 1999 by and among Eye Care Centers of America, Inc., a Texas corporation
("Purchaser"), Vision Twenty-One, Inc., a Florida corporation (the "Company"),
and The Complete Optical Laboratory, Ltd., Corp., a New Jersey corporation and
a direct wholly-owned subsidiary of the Company (the "Subsidiary" and, together
with the Company, the "Sellers").
W I T N E S S E T H:
WHEREAS, pursuant to the Vision World Acquisition Agreement, on June
30, 1998 the Company acquired substantially all of the assets and operations of
Vision World, which engaged in the business of providing optometric services,
selling optical goods and providing other related services primarily in the
State of Minnesota (the "Minnesota Business");
WHEREAS, pursuant to the Eye Care Acquisition Agreement, on March 31,
1998 Eye Care One merged with and into the Company, after which the Company
continued to operate Eye Care One's business of providing optometric services,
selling optical goods and providing other related services primarily in the
State of Wisconsin (the "Wisconsin Business") pursuant to the Eye Care
Acquisition Agreement;
WHEREAS, on January 1, 1998, (i) pursuant to the Drx Acquisition
Agreement, the Company acquired certain of the assets of the Practice and
Elliot L. Shack, O.D., P.A., a New Jersey professional association, which
engaged in the business of providing optometric services, selling optical goods
and providing other related services primarily in the State of New Jersey and
the Company concurrently entered into the Business Management Agreement to
provide certain management services to the Practice (the Company's business
with respect to the ownership of such assets and management of the Practice
being hereinafter referred to as the "New Jersey Business") and (ii) the
Company acquired all of the outstanding capital stock of the Subsidiary
pursuant to the TCOL Stock Purchase Agreement, the Subsidiary being engaged in
the manufacture of optical lenses in New Jersey (the "Subsidiary Business");
WHEREAS, the New Jersey Business, the Minnesota Business and the
Wisconsin Business of the Company are hereinafter referred to as the "Company
Businesses" and the Company Businesses and the Subsidiary Business are
hereinafter collectively referred to as the "Acquired Businesses;"
WHEREAS, the Company desires to sell and Purchaser desires to purchase
substantially all of the assets, properties, and rights of the Company used in
the Company Businesses;
WHEREAS, the Subsidiary desires to sell and Purchaser desires to
purchase substantially all of the assets, properties, and rights of the
Subsidiary; and
WHEREAS, simultaneously with this Agreement, the Purchaser and the
Company will enter into an Agreement Regarding Strategic Alliance (the
"Strategic Agreement") whereby the Purchaser and the Company will create a
strategic alliance to facilitate the growth of its respective businesses;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements of the parties hereinafter contained, the Parties hereby agree
as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
For purposes of this Agreement, capitalized terms shall have the
meanings specified or referred to in EXHIBIT A hereto.
ARTICLE II
SALE OF ASSETS
Section 2.01 Sale of Assets.
(a) On the Closing Date, and subject to the terms and
conditions herein stated, the Company agrees to sell, transfer, assign, convey
and deliver to Purchaser, and Purchaser agrees to purchase from the Company,
all right, title and interest in and to all of the assets used in, related to
or necessary for the operation of each of the Company Businesses including,
without limitation, the following: (i) all of the goodwill and all of the
customer lists (to the extent permitted by applicable law) used in, related to
or necessary for the operation of the Company Businesses; (ii) all rights and
privileges under the Contracts and accounts of the Company Businesses
including, without limitation, the Contracts listed on EXHIBIT B-1 (with
respect to the Wisconsin Business), EXHIBIT B-2 (with respect to the Minnesota
Business) and EXHIBIT B-3 (with respect to the New Jersey Business) hereto
identified as being assumed by Purchaser (collectively such Contracts listed on
EXHIBITS B-1, B-2 AND B-3 are referred to herein as the "Company Assigned
Contracts") and the right to receive all payments, rights, and privileges of
the Company arising under the Company Assigned Contracts; (iii) all of the
trade names, service marks, trademarks, patents, trade secrets, internet
addresses, telephone numbers and other intellectual property rights, whether
registered or unregistered, used in, related to or necessary for the operation
of the Company Businesses, including, without limitation, the names "Vision
World," "Stein Optical," "EyeCare One," and "Eye Drx" and the Internet
addresses "www.visionworld.com" and "www.steinoptical.com" and the other rights
of the Company listed on Schedule 3.16; (iv) all of the prepaid expenses,
unbilled costs and fees, and accounts, notes and other receivables used in,
related to or necessary for the operation of the Company Businesses; (v) the
fixed assets, vehicles, equipment and other personal property of the Company
physically located at the offices of the Company Businesses including, without
limitation, the assets of the Company listed on EXHIBIT C-1 (with respect to
the Wisconsin Business), EXHIBIT C-2 (with respect to the Minnesota Business)
and EXHIBIT C-3 (with respect to the New Jersey Business) hereto; (vi) all of
the books and records of the Company used in, related to or necessary for the
operation of the Company Businesses; (vii) all of the supplies, inventories and
office and other supplies physically located at the offices of the Company
Businesses; (viii) to the extent permitted by applicable law, all rights of the
Company under any written or oral contract, agreement, non-competition
agreement, confidentiality agreement, lease, plan, instrument, registration,
license, certificate of occupancy, other permit or approval of any nature, or
other document, commitment, arrangement, undertaking, practice or authorization
used in, related to, or necessary for the operation of the Company Businesses;
(ix) all computer software and related licenses of the Company used in, related
to or necessary for the operation of the Company Businesses; (x) all rights or
choses in action of the Company used in, related to, or necessary for the
operation of the Company Businesses arising out of occurrences before or after
the Closing Date including, without limitation, all rights under express or
implied warranties relating to the assets of the Company used in, related to,
or necessary for the operation of the Company Businesses; and (xi) all of the
Company's right, title and interest to any other assets physically located at
the offices of the Company Businesses or any claims related thereto. The assets
described in this SECTION 2.01(A) are hereinafter collectively referred to as
the "Company Assets." Notwithstanding the foregoing, the
2
<PAGE> 3
Company shall retain and shall not transfer to Purchaser, and the term "Company
Assets" shall not include any of the following (collectively, the "Company
Excluded Assets"):
(A) any of the Company's accounts receivable relating
to Medicare or Medicaid or any of the Company's
cash or cash equivalents;
(B) any of the Company's intercompany receivables or
receivables due from employees, independent
contractors or other related parties;
(C) any Contract relating to employment or the
engagement of independent contractors (except as
expressly included in the Assigned Contracts)
including, without limitation, the Cummins
Employment Agreement;
(D) any of the other assets or Contracts listed on
EXHIBIT D-1 (with respect to the Wisconsin
Business), EXHIBIT D-2 (with respect to the
Minnesota Business) and EXHIBIT D-3 (with respect
to the New Jersey Business) hereto;
(E) any assets of the Company in the States of
Minnesota, New Jersey or Wisconsin which are not
used in, related to or necessary for the operation
of the Acquired Businesses;
(F) any computer equipment, software, licenses or
other assets primarily used at the Company's
corporate headquarters in Tampa Bay, Florida or
that is not used by the Company in connection with
the Acquired Businesses including, without
limitation, the computer software and licenses set
forth on EXHIBIT D-1, D-2, D-3 OR D-4;
(G) any of the shares of stock of, or assets owned by,
VIPA; or
(H) any rights or choses in action against the selling
parties under the Vision World Acquisition
Agreement, Eye Care Acquisition Agreement, Drx
Acquisition Agreement and TCOL Stock Purchase
Agreement (other than rights with respect to
non-competition, non-solicitation or similar
provisions, and breaches with respect thereto,
which are transferred hereunder to the extent
permitted by applicable law and the terms of such
agreements).
(b) On the Closing Date, and subject to the terms and
conditions herein stated, the Subsidiary agrees to sell, transfer, assign,
convey and deliver to Purchaser, and Purchaser agrees to purchase from the
Subsidiary, all right, title and interest in and to all of the assets of the
Subsidiary including, without limitation, the following: (i) all of the
goodwill of the Subsidiary and all of the customer lists of the Subsidiary;
(ii) all rights and privileges under the Contracts and accounts of the
Subsidiary including, without limitation, the contracts listed on EXHIBIT B-4
hereto identified as being assumed by Purchaser (collectively, the "Subsidiary
Assigned Contracts" and, together with the Company Assigned Contracts, the
"Assigned Contracts") and the right to receive all payments, rights, and
privileges of the Subsidiary arising under the Subsidiary Assigned Contracts;
(iii) all of the Subsidiary's trade names, service marks, trademarks, patents,
trade secrets, internet addresses, telephone numbers and other intellectual
property rights, whether registered or unregistered including, without
limitation, the names "The Complete Optical Laboratory, Ltd." and the other
rights of the
3
<PAGE> 4
Subsidiary listed on Schedule 3.16; (iv) all of the Subsidiary's prepaid
expenses, unbilled costs and fees, and accounts, notes and other receivables;
(v) the fixed assets, vehicles, equipment and other personal property of the
Subsidiary including, without limitation, the assets of the Subsidiary listed
on EXHIBIT C-4 hereto; (vi) all of the books and records of the Subsidiary;
(vii) all of the Subsidiary's supplies, inventories and office and other
supplies; (viii) to the extent permitted by applicable law, all rights of the
Subsidiary under any written or oral contract, agreement, non-competition
agreement, confidentiality agreement, lease, plan, instrument, registration,
license, certificate of occupancy, other permit or approval of any nature, or
other document, commitment, arrangement, undertaking, practice or
authorization; (ix) all computer software and related licenses of the
Subsidiary; (x) all rights or choses in action of the Subsidiary arising out of
occurrences before or after the Closing Date including, without limitation, all
rights under express or implied warranties relating to the other Subsidiary
Assets; and (xi) all of the Subsidiary's right, title and interest to any other
assets or claims of the Subsidiary. The assets described in this SECTION
2.01(B) are hereinafter collectively referred to as the "Subsidiary Assets."
The Company Assets and the Subsidiary Assets are hereinafter referred to herein
as the "Assets." Notwithstanding the foregoing, the Subsidiary shall retain and
shall not transfer to Purchaser, and the term "Subsidiary Assets" shall not
include, any of the following (collectively, the "Subsidiary Excluded Assets"
and, together with the Company Excluded Assets, the "Excluded Assets"):
(A) any of the Subsidiary's accounts receivable
relating to Medicare or Medicaid or any of the
Subsidiary's cash or cash equivalents;
(B) any of the Subsidiary's intercompany receivables
or receivables due from employees, independent
contractors or other related parties;
(C) any Contract relating to employment or the
engagement of independent contractors (except as
expressly included in the Assigned Contracts);
(D) any of the other assets or Contracts listed on
EXHIBIT D-4 hereto; or
(E) any computer equipment, software, licenses or
other assets primarily used at the Company's
corporate headquarters in Tampa Bay, Florida or
that is not used by the Subsidiary in connection
with the Acquired Businesses including, without
limitation, the computer software and licenses set
forth on EXHIBIT D-1, D-2, D-3 OR D-4.
Section 2.02 Purchase Price; Payment.
(a) As consideration for the purchase of the Assets,
Purchaser shall pay to the Sellers, in cash allocated between the Sellers as
set forth on EXHIBIT E hereto, the aggregate sum of Forty-Two Million Dollars
and no/100 ($42,000,000) (the "Base Price"), subject to increase or decrease,
as the case may be, by the Adjustment Amount as provided in SECTION 2.03 (as
adjusted, the "Purchase Price").
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<PAGE> 5
(b) At the Closing, Purchaser shall deliver:
(i) to the Sellers, in cash allocated between the
Sellers as set forth on EXHIBIT E-1, an amount equal to (A) the Base Price, as
increased or decreased, as the case may be, by the Estimated Adjustment Amount
as provided in SECTION 2.02(C), minus (B) the Escrow Amount delivered to the
Escrow Agent pursuant to SECTION 2.02(B)(II) (such amount determined by A-B
being referred to herein as the "Estimated Cash Payment"), by wire transfer of
immediately available funds to the accounts of the Sellers, written notice of
which accounts shall have been provided to Purchaser not less than three (3)
business day prior to the Closing.
(ii) to Southwest Bank of Texas, N.A., as escrow agent
(the "Escrow Agent"), an amount equal to One Million Two Hundred Fifty Thousand
Dollars and no/100 ($1,250,000) (the "Escrow Amount"). The Escrow Amount shall
be maintained by the Escrow Agent pursuant to the terms of an Escrow Agreement
in substantially the form of Exhibit F hereto (the "Escrow Agreement") by and
among Purchaser, the Sellers and the Escrow Agent. Of such Escrow Amount, an
amount equal to Five Hundred Thousand Dollars and no/100 ($500,000) shall be
held to satisfy the amount, if any, owed by the Sellers to Purchaser pursuant
to Section 2.03 (the "Adjustment Escrow Amount") and such Adjustment Escrow
Amount, plus the earnings thereon, shall be released to Purchaser and/or the
Sellers, as the case may be, upon final resolution of the Purchase Price
pursuant to SECTION 2.03 (provided that any undisputed portion of the
Adjustment Escrow Amount to which the Sellers or Purchaser may be entitled
shall be delivered to the Sellers or Purchaser, as the case may be, as soon as
possible after presentation by Purchaser of the drafts of Closing Date Balance
Sheets), and the remainder shall be held to satisfy indemnification claims of
Purchaser for a period of six-months following the Closing Date as more
specifically set forth in the Escrow Agreement.
The Estimated Cash Payment to be paid by Purchaser to the Sellers at
the Closing plus the Escrow Amount is hereinafter referred to as the "Estimated
Purchase Price."
(c) As soon as reasonably practical, but in no event later
than five (5) business days prior to the Closing Date, the Sellers shall in
good faith cause to be prepared and delivered to Purchaser estimated balance
sheets (as finally agreed upon by the Parties, the "Estimated Closing Date
Balance Sheets") and income statements for the period from January 1, 1999
until the Closing Date (as finally agreed upon by the Parties, the "Estimated
Closing Date Income Statements") of the Acquired Businesses, on both an
individual and consolidated basis, which shall set forth an estimate of the
Current Assets (defined as the inventory, accounts receivable and prepaid
expenses transferred to Purchaser) and the Balance Sheet Assumed Liabilities
(defined as accounts payable and accrued expenses assumed by Purchaser) as of
the Closing Date and an estimate of the EBITDA for the period from January 1,
1999 until the Closing Date, such Estimated Closing Date Balance Sheets and
Estimated Closing Date Income Statements to be calculated and prepared in
accordance with GAAP, applied on a basis consistent with past practices of
Sellers. Purchaser and the Sellers shall, after reviewing the balance sheets
and income statements prepared by the Sellers, in good faith attempt to agree
upon the Estimated Closing Date Balance Sheets and the Estimated Closing Date
Income Statements. The parties shall agree within five (5) business days as to
the Estimated Closing Date Balance Sheets and Estimated Closing Date Income
Statement or either party may terminate this Agreement (but such termination
shall not effect the rights of the parties with respect to Breaches prior to
such termination). The aggregate of the Current Assets reflected on the
Estimated Closing Date Balance Sheets shall hereinafter be referred to as the
"Estimated Current Asset Amount" and the aggregate of the Balance Sheet Assumed
Liabilities reflected in the Estimated Closing Date Balance Sheets shall
hereinafter be referred to as the "Estimated Balance Sheet Assumed Liabilities
Amount" and the estimated 1999 EBITDA Adjustment based upon the EBITDA
reflected on the Estimated Closing Date Income Statements shall hereinafter be
referred to as the "Estimated 1999 EBITDA
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<PAGE> 6
Adjustment." Based upon the Estimated Current Asset Amount and the Estimated
Balance Sheet Assumed Liabilities Amount, the parties shall calculate an
estimate of the Working Capital Amount as of the Closing Date (the "Estimated
Working Capital Amount"). For purposes of calculating the Estimated Cash
Payment due to the Sellers at the Closing pursuant to SECTION 2.02(B)(I), the
Base Price shall be (A) (i) increased by the amount by which the Estimated
Working Capital Amount exceeds Two Million Seven Hundred Thirty-Nine Thousand
Dollars and no/100 ($2,739,000), which amount has been calculated as set forth
on EXHIBIT E-2, or (ii) decreased by the amount by which the Estimated Working
Capital Amount is less than Two Million Seven Hundred Thirty-Nine Thousand
Dollars and no/100 ($2,739,000), as the case may be, and (B) decreased by the
greater of (i) the amount of the 1998 EBITDA Adjustment Amount or (ii) the
amount of the Estimated 1999 EBITDA Adjustment (the aggregate amount of such
decreases and increases, if any, being hereinafter referred to as the
"Estimated Adjustment Amount").
Section 2.03 Closing Financial Statements; Purchase Price
Adjustments.
(a) As soon as practicable following the Closing but in no
event later than sixty (60) days following the Closing Date, the Parties shall
jointly cause to be prepared and delivered audited balance sheets for the
Acquired Businesses, on a combined basis, dated as of the Closing Date (as
finally agreed upon by the Parties, the "Closing Date Balance Sheets"), and the
related statement of income (the "Closing Date Income Statements") and owners'
equity for the Acquired Businesses, on a combined basis, for the period from
January 1, 1999 and ending as of the Closing Date, of the Acquired Businesses
(as finally agreed upon by the Parties, collectively the "Closing Date
Financial Statements"). Attached to such Closing Date Financial Statements
shall be supplemental schedules which shall set forth the Current Assets and
the Balance Sheet Assumed Liabilities as of the Closing Date and the EBITDA for
the period from January 1, 1999 until the Closing Date and the related 1999
EBITDA Adjustment, such Closing Date Financial Statements to be calculated and
prepared in accordance with GAAP, applied on a basis consistent with past
practices of Sellers. The audit of the Closing Date Financial Statements shall
be performed by Ernst & Young LLP and the Parties shall jointly hire that firm.
The cost of the preparation and audit of the Closing Date Financial Statements
shall be borne one-half (1/2) by Purchaser and one-half (1/2) by the Sellers.
The aggregate of the Current Assets reflected on the Closing Date Balance
Sheets shall hereinafter be referred to as the "Current Asset Amount" and the
aggregate of the Balance Sheet Assumed Liabilities reflected on the Closing
Date Balance Sheets shall hereinafter be referred to as the "Balance Sheet
Assumed Liabilities Amount." The term "Working Capital Amount" shall mean the
amount by which the Current Assets Amount exceeds the Balance Sheet Assumed
Liabilities Amount. Notwithstanding any of the foregoing, the Prorated Personal
Property Taxes shall be reflected on the Closing Date Balance Sheets as a
Balance Sheet Assumed Liability and no amount shall be included in the
calculation of the Balance Sheet Assumed Liabilities Amount for deferred
leasehold improvements. The Sellers shall cooperate with Purchaser in the
preparation of, and, to the extent necessary, provide Purchaser access to the
information reasonably necessary to prepare, the Closing Date Financial
Statements including, without limitation, providing the accounting records,
electronic and otherwise, within thirty (30) days following the Closing. Each
Party shall have reasonable access throughout the audit to all accounting
information, workpapers and conclusions in connection with the preparation of
the Closing Date Financial Statements. On the basis of the Closing Date
Financial Statements, subject, however, to the rights of Purchaser and the
Sellers as provided in SECTIONS 2.03(B) and 2.03(C), for purposes of
calculating the Purchase Price pursuant to SECTION 2.02(A), the Base Price
shall be (A) (i) increased by the amount by which the Working Capital Amount
exceeds Two Million Seven Hundred Thirty-Nine Thousand Dollars and no/100
Dollars ($2,739,000) or (ii) decreased by the amount by which the Working
Capital Amount is less than Two Million Seven Hundred Thirty-Nine Thousand
Dollars and no/100 ($2,739,000), as the case may be, and (B) decreased by the
greater of the amount of the 1998 EBITDA Adjustment or the 1999 EBITDA
Adjustment (the aggregate amount of such decreases and
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increases, if any, being hereinafter referred to as the "Adjustment Amount").
Within the time period set forth in SECTION 2.03(C), (i) Purchaser shall pay to
the Sellers the amount, if any, by which the Purchase Price exceeds the
Estimated Purchase Price, or (ii) the Sellers shall pay to Purchaser the amount
by which the Estimated Purchase Price exceeds the Purchase Price (to be paid
out of the Adjustment Escrow Amount and thereafter directly by the Sellers to
the extent the Adjustment Escrow Amount is insufficient to pay the amount owed
by the Sellers hereunder).
(b) Within fifteen (15) days after delivery of the Closing
Date Financial Statements, either the Sellers or the Purchaser on the other
hand, may deliver a written notice (a "Financial Statements Protest Notice") to
the other party of any objections, and the basis therefor, which such party may
have to the Closing Date Financial Statements. The failure of either Party to
deliver a Financial Statements Protest Notice within the prescribed time period
(provided that such Party has been given reasonable access to the information
as contemplated in SECTION 2.03(A) above) will constitute such Party's
acceptance of the Financial Statements Balance Sheets as delivered by
Purchaser. During the fifteen (15) business days following receipt of a
Financial Statements Protest Notice, Purchaser and the Sellers shall attempt in
good faith to resolve any disagreement with respect to the Closing Date
Financial Statements and the accuracy thereof. If at the end of the period
specified in the immediately preceding sentence, Purchaser and the Sellers
shall have failed to resolve the disagreement specified in such Financial
Statements Protest Notice, the items in dispute shall be referred to Deloitte &
Touche LLP or such other nationally recognized accounting firm as may be
mutually agreed to by the Parties (the "Adjustment Arbitrator") for final
determination within forty-five (45) days. This provision for arbitration shall
be specifically enforceable by the Parties, and the determination of the
Adjustment Arbitrator in accordance with the provisions hereof shall be final
and binding upon the Parties, with no right of appeal therefrom consistent with
the provisions of SECTION 10.02. The fees and expenses of the Adjustment
Arbitrator shall be paid by the party (i.e., Purchaser, on the one hand, or the
Sellers, on the other hand) whose last proposed written offer for the
settlement of the terms in dispute prior to the commencement of such
arbitration, taken as a whole, was farther away from the final determination of
the Adjustment Arbitrator. If the final determination of the Adjustment
Arbitrator is equal to one-half of the difference between the last proposed
written offers of Purchaser, on the one hand, and the Sellers, on the other
hand, then Purchaser and the Sellers shall each pay one-half (1/2) of the fees
and expenses of the Adjustment Arbitrator.
(c) The Sellers and Purchaser agree that within ten (10)
days after the final determination of the Closing Date Financial Statements and
the amount of the Purchase Price as provided in this SECTION 2.03 (either
because no Financial Statements Protest Notice is delivered or upon receipt of
the Adjustment Arbitrator's final determination or otherwise), the Sellers
shall pay to Purchaser, or Purchaser shall pay to the Sellers, as the case may
be, the amount owed as provided in SECTION 2.03(A), together with interest on
the amount of such payment from the Closing Date until the due date at an
annual rate equal to ten percent (10%); provided, however, such interest shall
not be due on the portion of such amount paid to Purchaser from the Adjustment
Escrow Amount and in lieu thereof Purchaser shall receive the earnings on such
amount accrued in the Escrow Account. In the event that such amount is due, but
is not paid when due, simple interest shall accrue on such obligation and be
payable therewith from the due date to the day preceding the date of payment at
the annual rate equal to the lesser of eighteen percent (18%) or the maximum
rate allowed by applicable law.
(d) In the event that the EBITDA of the Acquired Businesses
for the period from January 1, 1999 until the Closing Date is less than 83% of
Planned EBITDA set forth on EXHIBIT P attached hereto, there shall be a
reduction to the Purchase Price in accordance with SECTION 2.03(A) above equal
to (A)(i) 88% of the Planned EBITDA for the period from January 1, 1999 until
the Closing Date as set forth on EXHIBIT P attached hereto, minus (ii) the
EBITDA for the period from
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January 1, 1999 until the Closing Date multiplied by (B) six and eight-tenths
(6.8) (such decrease being referred to herein as the "1999 EBITDA Adjustment").
(e) "EBITDA" shall mean and be equal to (i) the sum of all
net income of the Sellers relating to the Acquired Businesses for the subject
period as determined in accordance with GAAP plus (ii) all amounts of
interests, federal and state income taxes, depreciation and amortization of
intangibles of the Sellers relating to the Acquired Businesses (to the extent
reflected in the net income of the Sellers relating to the Acquired Businesses)
for such period as determined in accordance with GAAP plus (iii) all
Non-Recurring Charges for such period which had been included in the
calculation of the net income of the Acquired Businesses minus (iv) all
Non-Recurring Revenue and interest income for such period which had been
included in the calculation of the net income of the Acquired Businesses. In
determining the net income of the Sellers relating to the Acquired Businesses,
(i) expenses incurred at, and services provided by, the corporate offices of
the Company that are directly related to the Acquired Businesses shall be
allocated to the Acquired Businesses and included in the calculation of EBITDA
consistent with the allocation made in the Financial Statements, (ii) the
Acquired Businesses shall be charged a reasonable fee for payroll services
provided for the Businesses through the corporate offices (which Sellers
represent is the only additional service provided through the corporate offices
during 1999 that was not provided by the corporate offices during substantially
all of 1998) (iii) net income shall be determined without regard to the effect
of any restructuring charges or expenses directly related to the Subject
Transactions, the Vision World Acquisition Agreement, the Eye Care Acquisition
Agreement, the Drx Acquisition Agreement or the TCOL Stock Purchase Agreement
and (iv) net income shall be determined without giving effect to the cumulative
effect of changes in accounting principles. Set forth on EXHIBIT P hereto is
the Sellers' planned EBITDA of the Acquired Businesses for fiscal 1999, on a
monthly basis (the "Planned EBITDA").
(f) "Non-Recurring Charges" shall mean the types of charges
set forth on EXHIBIT Q. "Non-Recurring Revenues" shall mean, with respect to
EBITDA for 1998 the types of revenues set forth on EXHIBIT Q, and with respect
to EBITDA for 1999, extraordinary items and others revenues recognized by the
Acquired Businesses which were not incurred in the Ordinary Course of Business
or (ii) are not the type of revenues that will be recognized by Purchaser in
the day-to-day operation of the Acquired Businesses from and after the Closing
Date (for example, revenues from the sale of equipment or liquidation of other
assets). Notwithstanding any of the foregoing, any financial impact resulting
from modifications, revisions or adoptions of accounting policies different
from historical practices would not be deemed Non-Recurring Revenues or
Non-Recurring Charges.
(g) As soon as reasonably practical, but in no event later
than July 1, 1999, the Sellers shall in good faith cause to be prepared and
delivered to Purchaser an audited statement of operations of the Minnesota
Business for the six-month period from January 1, 1998 to June 30, 1998 (the
"Stub Period") prepared in conformance with GAAP, consistent with the owner's
past practices (the "Audited Stub Period Statement of Operations"). Purchaser
and the Sellers shall, after reviewing such statement of operations, in good
faith attempt to agree upon the related EBITDA for such period (as finally
agreed upon, the "1998 Stub EBITDA"). In the event the parties are unable to
agree upon the 1998 Stub EBITDA, such dispute shall be referred to the
Adjustment Arbitrator to resolve in accordance with the procedures set forth in
this SECTION 2.03. The "1998 EBITDA Adjustment" shall be an amount equal to (i)
the amount, if any, by which the 1998 Stub EBITDA is less than One Million Six
Hundred Fifty Thousand and no/100 ($1,650,000) multiplied by (ii) six and
eight-tenths (6.8); provided, however, if the 1998 Stub EBITDA is greater than
One Million Five Hundred Twenty-Seven Thousand and no/100 ($1,527,000), the
1998 EBITDA Adjustment shall be zero (0).
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Section 2.04 Assumption of Liabilities.
(a) Purchaser does not and shall not assume or agree to
assume, and shall not acquire or take over, the liabilities and obligations of
the Sellers of any nature, direct, contingent or otherwise, except:
(i) the obligations which arise solely out of the
actions of Purchaser with respect to its operation of the Acquired Businesses
after the Closing Date;
(ii) the Prorated Personal Property Taxes;
(iii) the accounts payable, trade payables and accrued
expenses to the extent included in the Closing Date Balance Sheet and the
schedule attached thereto (which sets forth the calculation of the Assumed
Liabilities) (collectively, the "Balance Sheet Assumed Liabilities"); and
(iv) the liabilities and obligations of the Sellers
with respect to the performance after the Closing Date under the Contracts
assigned to Purchaser hereunder to the extent expressly listed on EXHIBIT B-1,
B-2, B-3 OR B-4 hereto or, if not listed on EXHIBIT B-1, B-2, B-3 OR B-4 only
if, and to the extent that, Purchaser becomes aware of such Contract and
knowingly exercises any of its rights thereunder after the Closing Date, which
will be assumed by Purchaser at the Closing Date (all of such assumed
liabilities and obligations in this SECTION 2.04(A)(I)-(IV) being hereinafter
referred to as the "Assumed Liabilities"); provided, however, in no event shall
Purchaser assume (i) any obligations for payments owed to the Practice relating
to performance under the Business Management Agreement, or the Practice's
operations, prior to the Closing Date (ii) any obligations for payments to any
employee under an employment agreement to the extent relating to services prior
to the Closing Date, except to the extent reflected on the Closing Date Balance
Sheet and included in the calculation of the Working Capital Amount, or (iii)
any obligation or commitment of the Company to grant any stock options to any
of its employees including, without limitation, any obligation or commitment by
the Company to grant stock options to any employee whose employment agreement
has been assigned to Purchaser hereunder (e.g., any Assigned Contract).
Notwithstanding any provision in this Agreement to the contrary, in no
event will Purchaser assume any accrued liabilities or obligations under the
Collective Bargaining Agreement other than liabilities and obligations arising
from and after the Closing in the performance under such agreement.
(b) Without limiting the generality of the foregoing, it is
expressly agreed that Purchaser shall have no liability or obligation to, for,
or in respect of:
(i) any current or former employee or independent
contractor of the Sellers or the Acquired Businesses (and their dependents or
beneficiaries), except for liabilities or obligations arising solely and
directly due to the employment or engagement of any such person by Purchaser
after the Closing;
(ii) any Taxes of either of the Sellers arising or
relating to any period prior to the Closing Date or any activity of either of
the Sellers prior to or after the Closing Date except for the Prorated Personal
Property Taxes;
(iii) any of the liabilities or obligations of either
of the Sellers to the extent such liabilities or obligations are not included
as Assumed Liabilities in the schedules attached to the Closing Date Balance
Sheets or otherwise expressly set forth in clauses (i), (ii), (iv) or (v)
hereof;
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(iv) any of the liabilities or obligations of either
of the Sellers relating to the performance under the Assigned Contracts prior
to the Closing Date or relating to the performance, before or after the Closing
Date under any Contract not listed on EXHIBITS B-1, B-2, B-3 or B-4 hereto or
otherwise not expressly assumed by Purchaser pursuant to SECTION 2.04(A)(IV)
above; or
(v) any of the liabilities or obligations of either
of the Sellers relating to the Vision World Acquisition Agreement, Eye Care
Acquisition Agreement, Drx Acquisition Agreement or the TCOL Agreement
including, without limitation, any obligation to pay contingent consideration
under Section 2.5 of the Vision World Acquisition Agreement.
(c) Except with respect to obligations expressly assumed
herein in connection with the Assigned Contracts, Purchaser does not assume any
obligation, liability or payment of the Sellers or the Acquired Businesses
associated with any Employee Benefit Plan or any other employee benefit
arrangement or commitment covering employees or independent contractors of the
Acquired Businesses immediately prior to the Closing Date including, without
limitation, any continuation coverage required by COBRA group health
continuation requirements for any employee or other "Qualifying Beneficiary"
who has had a "Qualifying Event" (within the meaning of COBRA group health
continuation requirements) on or before the Closing Date.
Section 2.05 Conveyance and Transfer; Assumption. At the Closing,
and subject to the terms and conditions hereof, each of the Sellers hereby
agrees that it will execute and deliver to Purchaser and Purchaser will execute
and deliver to each of the Sellers, a Bill of Sale, Assignment and Assumption
Agreement, in the forms of EXHIBITS H-1, H-2, H-3 and H-4 hereto, and such
other bills of sale, endorsements, assignments, releases, and other good and
sufficient instruments of transfer, assignment, and conveyance, in form
satisfactory to Purchaser and its counsel, as shall be effective to convey to
Purchaser good and marketable title in and to the Assets. Simultaneously with
such delivery, the Sellers will take all steps necessary to put Purchaser in
actual possession of the Assets.
Section 2.06 Closing Date. The Closing under this Agreement (the
"Closing") shall be held on the later of (i) July 30, 1999 and (ii) the last
business day of the month in which all of the Parties' respective conditions to
Closing have been satisfied or waived (except for the conditions to be
satisfied at Closing), or such other date as the Parties may agree to in
writing and, unless otherwise indicated, the Closing shall be deemed to have
occurred and be effective as of 11:59 p.m. on such date. Such date and
effective time on which the Closing is to be effective is herein referred to as
the "Closing Date." Notwithstanding the foregoing, the Closing Date shall be no
later than August 31, 1999, unless otherwise agreed to in writing by the
parties, and the Parties will use their Best Efforts to close the transactions
contemplated hereunder as expeditiously as reasonably possible. The Closing
shall be held at the offices of Shumaker, Loop & Kendrick, LLP, 101 E. Kennedy
Boulevard, Suite 2800, Tampa, Florida 33602, at 10:00 a.m. on such date, or at
such other time and place as the Parties may agree upon in writing.
Section 2.07 Further Assurances. Each of the Sellers hereby agrees
that, from time to time, at Purchaser's request and without further
consideration, it will execute and deliver to Purchaser such other and further
instruments of conveyance, assignment and transfer and take such other action
as Purchaser may reasonably require to more effectively convey, transfer, and
assign to Purchaser, and to put Purchaser in possession of, the Assets.
Section 2.08 Allocation of Purchase Price. The Purchase Price
received by the Sellers pursuant to this Agreement shall be allocated among the
Sellers as set forth on EXHIBIT E and among the Assets of each of the Sellers
as set forth on EXHIBIT I hereto.
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Section 2.09 Taxes.
(a) Except as otherwise set forth in SECTION 2.09(B) and
except for Taxes owed by Purchaser as a result of its use of the Assets
subsequent to the Closing Date, Purchaser shall have no liability or
responsibility for any Taxes of any kind relating to or arising out of the
Subject Transactions other than sales and transfer taxes resulting from the
sale of the Assets for which Purchaser and the Sellers shall each pay one-half
(1/2) of the such sales and transfer taxes; provided, however, to the extent
such payment by Sellers or Purchaser is required by law to be paid by one
Party, the other Party shall reimburse the Party required to make such payment
for its proportionate share of such Taxes. The Sellers shall be solely
responsible for the payment of all other Taxes of any kind, arising out of the
sale, transfer, and assignment of the Assets. The Sellers shall immediately
reimburse Purchaser for any such Taxes which Purchaser is required to pay
arising out of the sale of the Assets or the operations of the Acquired
Businesses prior to the Closing.
(b) The estimated amount of personal property taxes to be
paid with respect to the Assets for calendar year 1999 shall be allocated and
paid pro rata between Purchaser, on the one hand, and the Sellers, on the other
hand. The pro-rata portion of such estimated taxes payable with respect to the
period from January 1, 1999 through the day the Closing Date (the "Prorated
Personal Property Taxes") shall be reflected on the Closing Date Balance
Sheets, included in the calculation of the Working Capital Amount and assumed
by Purchaser hereunder.
Section 2.10 Collection of Accounts Receivable; Cash Accounts.
(a) Each of the Sellers agrees that it will cooperate with
Purchaser in collecting all of the accounts receivable of each of the Sellers
transferred to Purchaser hereunder and that all payments made with respect
thereto, or by customers for services rendered by Purchaser from and after the
Closing Date, shall be paid to Purchaser, and each of the Sellers further
agrees to remit to Purchaser promptly following its receipt thereof, any such
amounts received by the Sellers. Purchaser agrees to remit to the Sellers
promptly following Purchaser's receipt thereof, any amounts received by it with
respect to the accounts receivable of the Sellers relating to Medicaid or
Medicare which are not being assigned hereunder.
(b) Immediately following the Closing, the Sellers shall
withdraw from the Bank Accounts all of the cash of the Sellers relating to the
Acquired Businesses as of the Closing Date. At the Closing, Purchaser, or one
of its designated representatives, will be designated by each Seller as an
authorized signatory on each of its bank accounts (with respect to the
Company's accounts, only those accounts related to the Company Businesses)
(collectively, the "Bank Accounts"), entitled to make withdrawals therefrom and
the Sellers will not be entitled to make withdrawals therefrom without the
consent of Purchaser and the respective banks will be so notified. At the
Closing, the funds from each Bank Account will immediately be transferred to a
bank account of the Sellers to be designated by the Sellers. Periodically after
the Closing as required by Purchaser, the funds from each Bank Account will
then immediately be transferred to a bank account of Purchaser to be designated
by Purchaser
(c) To facilitate this arrangement, each of the Sellers
hereby agrees as follows:
(i) Each Seller will authorize and direct the banks
at which the Bank Accounts are located to transfer all monies deposited in the
Bank Accounts to Purchaser in the bank account designated by Purchaser and send
all statements and other communications regarding the Bank Account to Purchaser
to facility administration of the Bank Accounts; and
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(ii) Each Seller will take no action with respect to
its Bank Accounts that is not specifically set forth in this Agreement.
Section 2.11 Maintenance of Records.
(a) All books and records transferred to Purchaser
hereunder shall be retained by Purchaser and shall be made available in San
Antonio, Texas to the Sellers for inspection and copying (at the Sellers'
expense), upon five (5) business days' prior notice, during regular business
for a period of six (6) years from and after the Closing Date; provided,
however, that the books and records transferred to Purchaser shall only be made
available to the Sellers upon a showing of a proper purpose and shall only be
available to the extent such effort does not interfere with the operations of
Purchaser or any of its Affiliates.
(b) All books and records of the Sellers relating to the
Acquired Businesses not transferred hereunder shall be retained by the Sellers
and shall be made available to Purchaser for inspection and copying (at
Purchaser's expense) upon five (5) business days' prior notice, during regular
business for a period of six (6) years from and after the Closing Date.
Section 2.12 Compliance with Bulk Sales; Tax Certificates.
(a) Purchaser hereby waives compliance by the Sellers with
the provisions of the bulk sales law of any state, and each of the Sellers
warrants and agrees to pay and discharge when due all claims of creditors which
could be asserted against Purchaser by reason of such non-compliance to the
extent such liabilities are not specifically assumed by Purchaser under this
Agreement.
(b) Each of the Sellers and Purchaser agree to cooperate to
obtain as soon as possible, the following if requested by Purchaser:
(i) With respect to the Minnesota Business and to the
extent available, a statement from the Minnesota Department of Revenue stating
that the Company is in good standing with respect to any taxes administered by
the Department of Revenue, such statement to be requested by the Company from
the taxing authority as soon a practicable after the date hereof.
(ii) With respect to the Wisconsin Business and to the
extent available, a statement from the Wisconsin Department of Revenue a
clearance certificate certifying the payment of all applicable state sales
taxes of the Sellers relating to all taxable periods through the Closing Date,
such statement to be requested by the Company from the taxing authority as soon
a practicable after the date hereof.
(iii) With respect to the New Jersey Business and to
the extent available, a New Jersey Tax Clearance Certificate from the New
Jersey Department of the Treasury, Division of Taxation certifying the payment
of all applicable state taxes of the Company relating to all taxable periods
through the Closing Date, such statement to be requested by the Company from
the taxing authority as soon a practicable after the date hereof.
(iv) With respect to the Subsidiary and to the extent
available, a New Jersey Tax Clearance Certificate from the New Jersey
Department of the Treasury, Division of Taxation, certifying the payment of all
applicable state taxes of the Subsidiary relating to all taxable periods
through the Closing Date, such statement to be requested by the Company from
the taxing authority as soon a practicable after the date hereof.
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(c) Purchaser and the Sellers shall cooperate to send
notices of the Subject Transactions to the appropriate taxing authorities that
are required or deemed by Purchaser to be desirable to protect Purchaser from
successor liability for any unpaid taxes.
Section 2.13. Termination of Cummins Employment Agreement. Effective
on the Closing Date, the Company shall terminate the Cummins Employment
Agreement upon terms mutually acceptable to the Parties. At the Closing,
Purchaser shall reimburse the Company for one-half of the payments or other
benefits expressly set forth in the settlement agreement with Dr. Cummins, not
to exceed 1/2 of the severance obligations to which Dr. Cummins would be
entitled to under the Cummins Employment Agreement if Dr. Cummins had been
terminated by the Company without cause. Purchaser shall be entitled to
participate in the discussions with the Sellers and Dr. Cummins regarding the
termination of the Cummins Employment Agreement and the other matters
contemplated in SECTION 7.12.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
Except as set forth in the disclosure schedules attached hereto (which
disclosure schedules shall specifically identify which of the Acquired
Businesses or the Practice, where applicable, and the SECTION hereof to which
such disclosure or exception applies), the Sellers, jointly and severally,
hereby represent and warrant to Purchaser as follows:
Section 3.01 Existence, Good Standing and Authority.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. The
Company has the power to own its properties and to carry on its businesses as
now being conducted. The Company is duly qualified to do business in all
jurisdiction(s) in which the character or location of the properties owned or
leased by it or the nature of the businesses conducted by it makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect on the Company Businesses. The Company has full
legal right, power and authority to execute and deliver this Agreement and the
Acquisition Documents, to perform its obligations hereunder and thereunder,
and, subject to obtaining the consents disclosed on Schedules 3.11(a), 3.11(b)
and 3.23(b) attached hereto, to sell, assign, transfer, convey and deliver the
Company Assets pursuant hereto and thereto. The Company has provided to
Purchaser true and complete copies of all of its Organizational Documents.
(b) The Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey. The
Subsidiary has the power to own its properties and to carry on its businesses
as now being conducted. The Subsidiary is duly qualified to do business in all
jurisdiction(s) in which the character or location of the properties owned or
leased by it or the nature of the businesses conducted by it makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect on the Subsidiary. The Subsidiary has full legal
right, power and authority to execute and deliver this Agreement and the
Acquisition Documents, to perform its obligations hereunder and thereunder,
and, subject to obtaining the consents disclosed on Schedules 3.11(a), 3.11(b)
and 3.23(b) attached hereto, to sell, assign, transfer, convey and deliver the
Subsidiary Assets pursuant hereto and thereto. The Subsidiary has provided to
Purchaser true and complete copies of all of its Organizational Documents.
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Section 3.02 Authorization, etc. The Board of Directors and
shareholders of each of the Sellers has taken all actions required by law, its
respective Organizational Documents or otherwise to authorize the execution and
delivery by such Seller, of this Agreement and the other Acquisition Documents
to which it is a party, and the performance of such Sellers' obligations
hereunder and thereunder. This Agreement has been duly executed and delivered
by each of the Sellers and, upon the execution and delivery of the remaining
Acquisition Documents by a duly authorized officer of the Sellers, the
remaining Acquisition Documents to which a Seller is a party will have been
duly executed and delivered by such Seller, and this Agreement is and such
other Acquisition Documents to which a Seller is a party will be, upon due
execution and delivery thereof, the legal, valid and binding obligations of
such Seller enforceable against it according to their terms.
Section 3.03 Title to Assets; Condition.
(a) The Company has good, valid and marketable title to all
of the personal property constituting the Company Assets, free and clear of all
Encumbrances, other than ad valorem taxes not yet due and payable and
Encumbrances on Schedule 3.03(a) which will be released at or prior to Closing
except as otherwise specified on Schedule 3.03(a). There is no material asset
used in, related to or necessary for the operations of the Company Businesses
which is not included in the Company Assets or licensed or leased to the
Company pursuant to one of the Company Assigned Contracts. Upon consummation of
the Subject Transactions, Purchaser will have good, valid and marketable title
to all of the personal property constituting the Company Assets, free and clear
of all Encumbrances except as otherwise specified on Schedule 3.03(a), other
than ad valorem taxes not yet due and payable and Encumbrances arising out of
its operation of the Acquired Businesses from and after the Closing.
(b) The Subsidiary has good, valid and marketable title to
all of the personal property constituting the Subsidiary Assets, free and clear
of all Encumbrances, other than ad valorem taxes not yet due and payable and
Encumbrances on Schedule 3.03(b) which will be released at or prior to Closing
except as otherwise specified on Schedule 3.03(b). There is no material asset
used in, related to or necessary for the operations of the Subsidiary Business
which is not included in the Subsidiary Assets or licensed or leased to the
Subsidiary pursuant to one of the Subsidiary Assigned Contracts. Upon
consummation of the Subject Transactions, Purchaser will have good, valid and
marketable title to all of the personal property constituting the Subsidiary
Assets, free and clear of all Encumbrances except as otherwise specified on
Schedule 3.03(a), other than ad valorem taxes not yet due and payable and
Encumbrances arising out of its operation of the Subsidiary Business.
(c) All of the tangible assets forming a part of the assets
(excluding Inventory which is covered by the representation and warranty set
forth in SECTION 3.31) are set forth on EXHIBITS C-1, C-2, C-3 AND C-4 and:
(i) are generally and materially in good operating
condition and repair, normal wear and tear excepted;
(ii) are suitable for the purpose used for by the
Sellers;
(iii) are adequate and sufficient for all current
operations of the Acquired Businesses;
(iv) conform in all material respects with all
applicable Legal Requirements; and
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(v) are directly related to the Acquired Businesses.
Section 3.04 Investments. Except as set forth on Schedule 3.04,
neither the Company (to the extent related to the Company Businesses) nor the
Subsidiary owns, directly or indirectly, any capital stock or other equity,
ownership or proprietary interest in any other Person.
Section 3.05 Financial Statements. The Sellers heretofore furnished
Purchaser with the (i) audited balance sheets of each of the Acquired
Businesses, on an individual basis or combined basis, as the case may be, dated
as of December 31, 1997 and December 31, 1998 and the related audited
statements of operations for the years then ended (provided that the statement
of operations of the Minnesota Business for the Stub Period has not been
audited as reflected in the footnote to the audited statement of operations,
but the Audited Stub Period Statement of Operations will be provided to
Purchaser prior to Closing as provided in SECTION 2.02(D)) and (ii) the
unaudited interim balance sheets of the Acquired Businesses on a combined
basis, dated as of May 31, 1999 (the "Interim Balance Sheets") and the related
unaudited interim statements of operations for the three-month period ended
March 31, 1999 (collectively, including the Audited Stub Period Statement of
Operations, the "Financial Statements"). The balance sheets of each of the
Acquired Businesses and the Practice dated as of December 31, 1998 are
hereinafter referred to as the "Balance Sheets." Except for the absence of
footnotes to the Financial Statements and normal year-end adjustments to such
interim Financial Statements, which such adjustments would not individually or
in the aggregate be material, the Financial Statements have been (or will be
with respect to the Audited Stub Period Statement of Operations) prepared from
the books and records of the Sellers in accordance with GAAP, applied on a
basis consistent with past practices of the then owner of the respective
business, and fairly present the financial condition and results of operations
of the Acquired Businesses at the respective dates thereof. The balance sheets
included in the Financial Statements reflect all claims against and all debts
and liabilities of the Acquired Businesses, fixed or contingent, as at their
respective dates. The statements of income included in the Financial Statements
do not contain any items of special or non-recurring income or any other income
not earned in the Ordinary Course of Business except as expressly specified
therein. Except as set forth on Schedule 3.05, since January 1, 1997, there has
been no change in any method of accounting or auditing practice by the Company
relating to the Company Businesses or by the Subsidiary.
Section 3.06 Insolvency.
(a) Neither the Company, nor any of its subsidiaries
(including, without limitation, the Subsidiary), is Insolvent and neither the
Company nor any of its subsidiaries will become Insolvent as a result of the
consummation of the Subject Transactions.
(b) None of the Board of Directors or officers of the
Company or any of its subsidiaries have contemplated, or have discussed,
seeking protection from creditors under any of the provisions of the Bankruptcy
Code or taking any other action which could result in any other insolvency
proceeding of any character with respect to the Company and its subsidiaries
including, without limitation, bankruptcy, receivership or reorganization. No
creditors of the Company or any of its subsidiaries have commenced or
threatened to institute proceedings against the Company or any of its
subsidiaries under the Bankruptcy Code or to take any other action which could
result in any other insolvency proceeding of any character with respect to the
Company and its subsidiaries.
(c) With respect to the representation and warranty set
forth in this SECTION 3.06, the Sellers acknowledge that Purchaser has relied
upon the information set forth in the registration statements, reports, proxy
statements and other materials (collectively "SEC Reports") filed by the
Company with the SEC since December 31, 1998 and represents and warrants that
the SEC Reports
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complied in all material respects with the applicable requirements of the
Securities Act of 1933 and the 1934 Act and the applicable rules and
regulations of the SEC promulgated thereunder, and at the time filed did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
The consolidated financial statements of the Company which are a part of the
SEC Reports have been prepared in accordance with GAAP, applied on a basis
consistent with past practices, and fairly present the financial condition and
results of operations of the businesses of the Company at the respective dates
thereof and for the periods referred to therein.
(d) The Board of Directors of the Company have approved the
Subject Transactions, subject to the receipt from Nesbitt Burns Securities Inc.
of an opinion that the consideration to be received by Sellers with respect to
its sale of the Assets is fair, from a financial point of view, to the Sellers.
Nesbitt Burns Securities Inc. has verbally assured the Board of Directors that
absent a change it will render such opinion and the Company does not have any
reason to believe that such opinion will not be delivered.
Section 3.07 Books and Records. The books of account and other
records of the Company relating to the Company Businesses, and the books of
account, minute books and stock record books of the Subsidiary, all of which
have been made available to Purchaser, are complete and correct in all material
respects and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls. The
minute books of the Subsidiary contain materially accurate and complete records
of all meetings held of, and corporate action taken by, the shareholders, the
Board of Directors, and committees of the Board of Directors, as the case may
be, of the Subsidiary since January 1, 1998, and no meeting of the
shareholders, Board of Directors, and/or committees of the Board of Directors
of the Subsidiary has been held since January 1, 1998 for which minutes have
not been prepared and are not contained in such minute books.
Section 3.08 Accounts Receivable. Schedule 3.08 sets forth a
complete list of all accounts and other receivables of the Company relating to
the Company Businesses, and of the Subsidiary and of the Practice, as of March
31, 1999, showing the amounts due and an aging analysis thereof. The accounts
and other receivables shown on Schedule 3.08 and those receivables arising
after March 31, 1999 and shown on the books and records of the Company relating
to the Company Businesses, and of the Subsidiary and of the Practice, have
arisen in the Ordinary Course of Business, are not in dispute with the
respective obligors therefor, and are collectible (except to the extent of any
provision or reserve set forth in the Balance Sheets or Closing Date Balance
Sheets), and none of such accounts receivable or other debts are subject to any
counterclaim or set-off (except to the extent of any provision or reserve set
forth in the Balance Sheets, the Interim Balance Sheets or Closing Date Balance
Sheets). There has been no material adverse change since the Balance Sheet Date
in the amount of accounts receivable of the Company relating to the Company
Businesses, or of the Subsidiary or of the Practice or other debts due or the
allowances with respect thereto, or accounts payable by the Acquired Businesses
or the Practice from that reflected in the Balance Sheets.
Section 3.09 Real Property and Leases.
(a) The Company does not own any real property which is used
in, related to or necessary for the operation of the Acquired Businesses. The
Subsidiary does not own any real property.
(b) Schedule 3.09(b) contains a true and complete list of
all real property leases (collectively, the "Leases") to which the Company or
the Subsidiary is a party which are used in,
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related to or necessary for the operation of the Acquired Businesses, in each
case specifying the name of the lessor or sublessor, the lessee, any sublessee,
the lease term, the basic annual rental and other amounts paid or payable with
respect thereto and any purchase or renewal options exercised or exercisable by
the Company or the Subsidiary, as the case may be. Except with respect to the
premises provided under the Business Management Agreement, to the Knowledge of
the Sellers, the Practice is not a party to any real property lease or
sublease. Except as set forth on Schedule 3.09(b), each of the Company, or the
Subsidiary, as the case may be, enjoys peaceful possession under each Lease,
and each Lease is in good standing and in full force and effect. Except as set
forth on Schedule 3.09(b), none of the Company, the Subsidiary, the Practice,
or to the Knowledge of the Sellers, any other party to any of the Leases, has
breached any of the Leases in any material respect or is in material default
thereunder and, no breach of or default under any of the Leases has occurred
which would prevent the exercise by the Company or the Subsidiary of any right
to renew or extend such Lease. Except as set forth on Schedule 3.09(b), subject
to receipt of any required consents or approvals, the consummation of the
Subject Transactions in accordance with this Agreement will not result in the
termination of any Lease or acceleration or increases in rent thereunder, and
immediately after the Closing, all Leases will continue in full force and
effect without the imposition of any burdensome condition or other obligation
on Purchaser or its Affiliates resulting from the consummation of the Subject
Transactions. The real property subject to the Leases is sufficient to conduct
the Acquired Businesses in the respective manner in which they are conducted on
the date hereof.
Section 3.10 Material Contracts.
(a) Set forth on Schedule 3.10, which incorporates by
reference EXHIBITS B-1, B-2, B-3 and B-4 and EXHIBITS D-1, D-2, D-3 and D-4 (to
the extent Contracts are specifically listed therein), is a complete list of
all of the following Contracts to which the Company, the Subsidiary or the
Practice is a party or by which any of them is bound, used in, related to or
necessary for the operation of the Acquired Businesses or the Practice,
provided, however, with respect to the Practice except as set forth herein,
only those Contracts relating to the operations of the Practice managed by the
Company pursuant to and including the Business Management Agreement are
required to be set forth on Schedule 3.10:
(i) all Contracts relating to the employment of any
person, and all bonus, deferred compensation, pension, profit sharing, stock
option, employee stock purchase, phantom stock, retirement and other employee
benefit plans;
(ii) all Contracts which contain restrictions with
respect to payment of dividends or any other distribution in respect of its
capital stock;
(iii) all Contracts relating to capital expenditures
in excess of $15,000;
(iv) all loans, advances to, and investments in, any
other Person, and all Contracts relating to the making of any such loan,
advance or investment;
(v) all guarantees and other contingent liabilities
with respect to any indebtedness or obligation of any other Person (other than
the endorsement of negotiable instruments for collection in the Ordinary Course
of Business);
(vi) all management services, consulting and any other
similar type contracts;
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(vii) all leases of personal property providing for
lease payments in excess of $5,000 per annum and a term of more than two years;
(viii) all Contracts materially limiting the freedom of
the Company to engage in any line of business or to compete with any other
Person;
(ix) all Contracts not entered into in the Ordinary
Course of Business;
(x) all Contracts (other than contracts relating to
capital expenditures) which involve the expenditure by the Company or the
Subsidiary, as the case may be, of more than $10,000;
(xi) any Contract with any director, officer or
employee of either of the Sellers or Contract with any Related Person of either
of the Sellers;
(xii) all Contracts which might reasonably be expected
to have a potential Material Adverse Effect on the business or operations of
either of the Sellers;
(xiii) all Contracts with Payors or contracts to
provide optometric services or health care services;
(xiv) all Contracts engaging a person to perform
services as an independent contractor and/or consultant; and
(xv) all other Contracts material to the business,
operations and assets of the Sellers or the Practice.
(b) Except as set forth on Schedule 3.10, each Contract set
forth on Schedule 3.10 is a valid and binding agreement of the Company, the
Subsidiary or the Practice, as the case may be, and in full force and effect
and enforceable in accordance with its terms. Subject to obtaining the
requisite consents set forth on Schedule 3.11(a), 3.11(b) or 3.23(b) hereto,
the enforceability of such Contracts will not be affected in any manner by the
execution and delivery of this Agreement and the consummation of the Subject
Transactions. None of the Company, the Subsidiary or the Practice has violated
any of the material terms or conditions of any of the Contracts set forth on
Schedule 3.10 to which it is a party and none of the Company, the Subsidiary or
the Practice is otherwise in material default thereof, and, to the Knowledge of
the Sellers, except as set forth on Schedule 3.10, all of the material terms
and conditions to be performed by any party thereto other than the Company, the
Subsidiary and the Practice have been fully performed and each such Contract is
free from any right of termination on the part of any party thereto. There
exists no default or event of default under any of the Contracts set forth on
Schedule 3.10 or event, occurrence, condition or act (including the purchase of
the Assets hereunder, subject to obtaining the requisite consents set forth on
Schedule 3.11(a), 3.11(b) or 3.23(b) hereto) which, with the giving of notice,
the lapse of time or the happening of any other event or condition, would
become a default or event of default thereunder. None of the parties to any of
the Contracts has given notice (written or oral) of its intent to terminate
such Contract and neither the Company nor the Subsidiary has Knowledge that any
party thereto intends to terminate any Contract prior to or following the
consummation of the Subject Transactions. There have been no amendments or
modifications to any of the Contracts except as set forth on Schedule 3.10.
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Section 3.11 No Conflict.
(a) Except as set forth on Schedule 3.11(a), 3.11(b) or
3.23(b), neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Subject Transactions will, directly
or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of either of the
Sellers, or (B) any resolution adopted by the Board of Directors or
shareholders of either of the Sellers;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the Subject Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which either of the
Sellers or any of the Assets, may be subject;
(iii) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by either of the Sellers or that
otherwise relates to the Acquired Businesses, the Practice or any of the
Assets;
(iv) to the Knowledge of the Sellers, cause Purchaser
to become subject to, or to become liable for, the payment of any Tax other
than the Prorated Personal Property Taxes;
(v) contravene, conflict with, or result in a
violation or Breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Contract; or
(vi) result in the imposition or creation of any
Encumbrance upon or with respect to any of the Assets.
(b) Except as set forth on Schedule 3.11(a), 3.11(b) or
3.23(b), neither of the Sellers is, nor will it be, required to give any notice
to or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Subject Transactions.
Section 3.12 Litigation. Except as set forth on Schedule 3.12, there
is no Proceeding by any Person, or by or before (or any investigation by) any
Governmental Body, pending, or to the Knowledge of the Sellers, threatened
against or affecting (i) either of the Sellers, the Practice, the Acquired
Businesses or the Assets which could materially and adversely affect the right
or ability of the Sellers to carry on the Acquired Businesses as now conducted,
or which could have a Material Adverse Effect upon the ability of Purchaser to
carry on the Acquired Businesses subsequent to the Closing, or (ii) the Subject
Transactions or the Sellers' ability to consummate the Subject Transactions;
and neither of the Sellers has any Knowledge of any valid basis for any such
Proceeding. None of the Company, the Subsidiary or the Practice is subject to,
or in default under, any Order entered in any Proceeding which may have an
adverse effect on Purchaser or on its ability to acquire any property or to
carry on the Acquired Businesses in any area after the Closing.
Section 3.13 Tax Returns and Payments.
(a) The Sellers have filed or caused to be filed (on a
timely basis since inception) all Tax Returns that are or were required to be
filed by or with respect to it, either separately or as a
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member of a group of corporations, pursuant to applicable Legal Requirements.
The Sellers have delivered or made available to Purchaser copies of all such
Tax Returns relating to income or franchise taxes filed since inception. The
Sellers have paid, or made provision for the payment of, all Taxes that have or
may have become due pursuant to those Tax Returns or otherwise, or pursuant to
any assessment received by either of the Sellers, except such Taxes, if any, as
are listed on Schedule 3.13(a) and are being contested in good faith and as to
which adequate reserves (determined in accordance with GAAP, applied on a basis
consistent with past practices) have been provided in the financial statements
which are a part of the SEC Reports.
(b) The Tax Returns of the Sellers subject to such Taxes
have been audited by the IRS or relevant state tax authorities or are closed by
the applicable statute of limitations for all taxable years through December
31, 1992. Schedule 3.13(b) contains a complete and accurate list of all audits
of all such Tax Returns, including a reasonably detailed description of the
nature and outcome of each audit. All deficiencies proposed as a result of such
audits have been paid, reserved against, settled, or, as described on Schedule
3.13(b), are being contested in good faith by appropriate proceedings. Schedule
3.13(b) describes all adjustments to the Tax Returns filed by the Sellers or
any group of corporations including either of the Sellers for all taxable years
since 1993, and the resulting deficiencies proposed by the IRS or relevant
state tax authorities. Except as described on Schedule 3.13(b), neither of the
Sellers has been given or been requested to give any waiver or extension (or is
or would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of either of the
Sellers or for which either of the Sellers may be liable.
(c) The charges, accruals, and reserves with respect to
Taxes on the books of the Sellers are adequate (determined in accordance with
GAAP, applied on a basis consistent with past practices) and are at least equal
to the Sellers' liability for Taxes. There exists no proposed tax assessment
against either of the Sellers except as disclosed in the financial statements
included in the SEC Reports or on Schedule 3.13(c). No consent to the
application of Section 341(f)(2) of the Code has been filed with respect to any
property or assets held, acquired, or to be acquired by the Company. All Taxes
that either of the Sellers is or was required by Legal Requirements to withhold
or collect have been duly withheld or collected and, to the extent required,
have been paid to the proper Governmental Body or other Person. None of the
material or property used by either of the Sellers is subject to a lease, other
than a "true" lease for federal income tax purposes.
Section 3.14 Liabilities. Neither of the Sellers is, and none of the
Assets are, subject to, any outstanding claims, liabilities or indebtedness,
accrued, contingent or otherwise, and whether due or to become due, except as
set forth in their respective Financial Statements or referred to in the
footnotes thereto or on Schedule 3.14, other than liabilities incurred
subsequent to the Balance Sheet Date in the Ordinary Course of Business not
involving borrowings by the Sellers or the Practice. Neither of the Sellers is
in default in respect of the terms or conditions of any indebtedness, nor do
either of the Sellers have Knowledge of any facts which, with the passage of
time, would result in any such default. The reserves reflected in the Balance
Sheets are adequate, appropriate and reasonable in accordance with GAAP,
applied on a basis consistent with past practices. Neither of the Sellers has
any Knowledge of any basis for the assertion against either of the Sellers of
any such liability not fully reflected or accrued for in the Balance Sheets.
Section 3.15 Insurance. Set forth on Schedule 3.15 is a
complete list, with a summary thereof, of all insurance policies ("Insurance
Policies") which the Sellers and the Practice maintain with respect to the
Acquired Businesses and the Practice and their respective properties or
employees, which Insurance Policies are in full force and effect. None of the
Sellers or the Practice has violated any of the terms or conditions of the
Insurance Policies and none of the Sellers or the Practice is otherwise in
default thereof. To the Knowledge of the Sellers, all of the terms and
conditions to be
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performed by the issuers of the Insurance Policies have been fully performed
and the Insurance Policies are free from and no event has occurred which would
trigger any right of termination on the part of the issuers of the Insurance
Policies to entitle the insurer to deny coverage thereunder. Since January 1,
1997, there has not been any material adverse change in the relationship of
either of the Sellers or the Practice with its insurers or in the premiums
payable pursuant to the Insurance Policies. Following the Closing, the
Insurance Policies will remain in full force and effect covering occurrences
arising prior to the Closing Date with respect to the Acquired Businesses and
their respective properties or employees. To the Knowledge of the Sellers, all
claims made or threatened against the Sellers or the Practice in excess of
their respective deductibles are covered by the Insurance Policies. Except as
set forth on Schedule 3.15, the Insurance Policies are "occurrence" policies
and not "claims made" policies.
Section 3.16 Intellectual Properties. Set forth on Schedule
3.16 are all patents, patent rights, licenses, trademarks, trademark rights,
trade names, trade name rights, service marks, service mark rights, copyrights
or similar rights used in connection with the Acquired Businesses
(collectively, "Intellectual Property Rights"), all of which are owned by the
Company or the Subsidiary, as the case may be, unless otherwise indicated on
Schedule 3.16. Except as set forth on Schedule 3.16, the Sellers have valid and
enforceable rights to utilize the Intellectual Property Rights in the Acquired
Businesses as they are presently operated, free and clear of any Encumbrances.
The Sellers are not infringing, or otherwise acting adversely to, the right of
any Person under or in respect to, any of the Intellectual Property Rights,
there is no claim by any Person pending or, to the Knowledge of the Sellers,
threatened against either of the Sellers or the Practice with respect thereto
and to the Knowledge of the Sellers there is no Person infringing upon any of
the Intellectual Property Rights. The Practice does not own any of the
intellectual property rights used in connection with the business managed by
the Company under the Business Management Agreement and uses such intellectual
property rights under the terms of the Business Management Agreement.
Section 3.17 Compliance with Laws. Except as set forth on
Schedule 3.17, the Sellers and the Practice are, and have been in compliance
with all Legal Requirements of any Governmental Body including, without
limitation, the Federal Occupational Safety and Health Act, ERISA, all Legal
Requirements relating to the safe conduct of business and all Environmental and
Safety Requirements. Except as set forth on Schedule 3.17, none of the Sellers
or the Practice have received any notice of any asserted present or past
failure of either of the Sellers or the Practice to comply with any of such
Legal Requirements.
Section 3.18 Employees.
(a) Schedule 3.18(a) contains a complete and accurate list
as of July 1, 1999 of the following information for each employee of the
Sellers who works, directly or indirectly, in any of the Acquired Businesses,
including each employee on leave of absence or layoff status, but excluding
certain of the employees of the Company performing the management services
described on Schedule 3.18(a): employer; name; job title; work location; exempt
or non-exempt status; current compensation paid or payable and any change in
compensation since December 31, 1998; vacation accrued; sick and/or personal
pay accrued; and service credited (reflected on such schedule by the
anniversary date) for purposes of vesting and eligibility to participate under
the Sellers' respective pension, retirement, profit-sharing, thrift-savings,
deferred compensation, stock bonus, stock option, cash bonus, employee stock
ownership (including investment credit or payroll stock ownership), severance
pay, insurance, medical, welfare, or vacation plan, or any other Employee
Benefit Plan. The Practice does not have any employees other than Dr. Charles
M. Cummins.
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(b) Schedule 3.18(b) contains a complete and accurate list
of the following information, to the extent applicable, for each optometrist
engaged as an independent contractor by a Seller or the Practice who works,
directly or indirectly, in any of the Acquired Businesses or the Practice,
including: name; work location; current compensation paid or payable and any
change in compensation since December 31, 1998; severance pay, and a
description of any other benefits to which such optometrists is entitled.
(c) To the Knowledge of the Sellers, no employee of, or
optometrist engaged as an independent contractor by, a Seller or the Practice
who works, directly or indirectly, in any of the Acquired Businesses or the
Practice is a party to, or is otherwise bound by, any agreement or arrangement
including, without limitation, any confidentiality, noncompetition, or
proprietary rights agreement, between such employee and any other Person
("Proprietary Rights Agreement") that in any way will:
(i) significantly interfere with the performance of
his duties as an employee of Purchaser or the Practice; or
(ii) adversely affect the ability of Purchaser to
conduct the Acquired Businesses, subsequent to the Closing, including any
Proprietary Rights Agreement with the Company or the Subsidiary by any such
employee or independent contractor.
(d) To the Knowledge of the Sellers, no key employee or
optometrist engaged as an independent contractor of the Company, the Subsidiary
or the Practice who works, directly or indirectly, in any of the Acquired
Businesses or the Practice, intends to:
(i) terminate his or her employment or independent
contractor relationship with the Company, the Subsidiary or the Practice, as
the case may be, prior to Closing; or
(ii) reject employment or engagement as an
independent contractor by Purchaser, or terminate an existing employment or
independent contractor relationship with Purchaser or the Practice, after the
Closing.
(e) Except as set forth in Schedule 3.18(e), none of the
Sellers or the Practice is a party to any employment agreement, employee
leasing agreement or employee services agreement with respect to any employee
of (i) the Company or the Subsidiary who works, directly or indirectly, in the
Acquired Businesses or (ii) the Practice.
Section 3.19 Labor Relations; Compliance; Policies.
(a) Except as set forth on Schedule 3.19, none of the
Company, the Subsidiary or the Practice is, or has ever been, a party to any
collective bargaining or other labor Contract. Since January 1, 1996, there has
not been, there is not presently pending or existing, and to the Knowledge of
the Sellers there is not threatened:
(i) any strike, slowdown, picketing, work stoppage,
or employee grievance process;
(ii) any Proceeding against or affecting the Company,
the Subsidiary or the Practice relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
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Governmental Body, or any organizational activity, or other labor or employment
dispute against or affecting the Company, the Subsidiary, the Practice or their
respective premises; or
(iii) any application for certification of a
collective bargaining agent. To the Knowledge of the Sellers, no event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute.
(b) There is no lockout of any employees by the Company or
the Subsidiary, and no such action is contemplated by the Company or the
Subsidiary.
(c) The Company (with respect to the Acquired Businesses),
the Subsidiary and the Practice have complied in all material respects with all
Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closings. None of the Company (with respect to the Acquired
Businesses), the Subsidiary or the Practice has:
(i) liabilities in connection with the payment of
any compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements;
or
(ii) unfair labor practice charges or complaints or
racial, color, religious, sex, sexual orientation, national origin, age,
disability or handicap discrimination charges or complaints pending or, to the
Knowledge of the Sellers, threatened against the Company, the Subsidiary or the
Practice.
(d) None of the Company, the Subsidiary or the Practice has
engaged in any unfair labor practices or discriminated on the basis of race,
color, religion, sex, sexual orientation, national origin, age, disability or
handicap in its employment conditions or practices.
(e) Schedule 3.19(e) contains a complete and accurate list
of all employee manuals and all material policies, procedures and work-related
rules that apply to employees of the Company or the Subsidiary who work,
directly or indirectly, in any of the Acquired Businesses (the "Employee
Policies and Procedures"). The Sellers have provided or made available to
Purchaser a copy of all written Employee Policies and Procedures and a written
description of all material unwritten Employee Policies and Procedures.
(f) All employees of, and to the Knowledge of the Sellers,
the independent contractors engaged by, the Company, the Subsidiary and the
Practice who work, directly or indirectly, in any of the Acquired Businesses or
the Practice, are citizens of, or are authorized in accordance with federal
immigration laws to be employed or engaged in, the United States.
Section 3.20 Employee Benefit Plans.
(a) List of Plans. Set forth on Schedule 3.20(a) is a
complete and accurate list of all Employee Benefit Plans established,
maintained or contributed to by the Company or the Subsidiary for employees of,
and independent contractors engaged by, the Company, the Subsidiary or the
Practice who work, directly or indirectly, in the Acquired Businesses or the
Practice at any time on or after January 1, 1998. To the Knowledge of the
Sellers, the Practice does not maintain any Employee Benefit Plans.
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(b) For purposes of this Agreement, the term "Employee
Benefit Plans" means (A) all employee benefit plans within the meaning of ERISA
Section 3(3), whether or not any such employee benefit plans are exempt from
the provisions of ERISA; and (B) all stock option plans, bonus or incentive
award plans, severance pay policies or agreements, parachute payment
arrangements, deferred compensation agreements, supplemental income
arrangements, vacation plans, and all other employee benefit plans, agreements
and arrangements not described in (A) above, which such plans cover employees
of the Company or the Subsidiary who work directly or indirectly in the
Acquired Businesses.
(c) Status of Plans. Neither the Company nor the Subsidiary
takes part in, is a party to, or has taken part in or been a party to, (i)
maintaining or contributing to any Employee Benefit Plan subject to ERISA which
is not in material compliance with ERISA and the Code, (ii) maintaining or
contributing to, at any time, a defined benefit plan within the meaning of
Section 3(35) of ERISA, (iii) maintaining or contributing to, at any time, a
multiemployer plan within the meaning of Section 3(37) of ERISA, or (iv)
maintaining or contributing to any employee benefit plans other than those
listed on Schedule 3.20(b). The assets of the Employee Benefit Plans are
adequate to pay all debts, liabilities and claims with respect to such plan to
the extent that claims have been made on or prior to the Closing Date. No
Employee Benefit Plan ever maintained by the Company or the Subsidiary has ever
provided health care or any other non-pension benefits to any employees after
their employment was terminated (other than severance pay benefits or continued
health care as required by COBRA) or has ever promised to provide such
post-termination benefits. There are no promised increases in benefits (whether
expressed, implied, oral or written) under any Employee Benefit Plan maintained
by the Company or the Subsidiary, nor are there any obligations, commitments or
understandings to continue any such Employee Benefit Plans (whether expressed,
implied, oral or written), except as required by COBRA. Each Employee Benefit
Plan maintained by the Company or the Subsidiary as of the Closing Date is
subject to termination by the Company or the Subsidiary without any further
liability or obligation on the part of the Company or the Subsidiary to make
further contributions to any such plan following such termination, and the
termination of any Employee Benefit Plan would not accelerate or increase any
benefits payable under such Employee Benefit Plan. Neither the execution and
delivery of this Agreement nor the consummation of the Subject Transactions
will (i) result in any payment to be made by the Company or the Subsidiary
(including, without limitation, severance, unemployment compensation, golden
parachute (defined in Section 280G of the Code), or otherwise) becoming due to
any employee, director or consultant, or (ii) increase any benefits otherwise
payable under any Employee Benefit Plan.
(d) Tax Qualification and Employee Benefits. Each Employee
Benefit Plan intended to be qualified under Section 401(a) of the Code has been
determined to be so qualified by the IRS and nothing has occurred since the
date of the last such determination which resulted or is likely to result in
the revocation of such determination. Full payment has been made of all amounts
which the Company, the Subsidiary is required, under applicable law or under
any Employee Benefit Plan or any agreement relating to any Employee Benefit
Plan to which the Company or the Subsidiary is a party, to have paid as
contributions thereto as of the Closing Date. Contributions to Employee Benefit
Plans that have not yet been made by the Company or the Subsidiary because they
are not yet due under the terms of the relevant Employee Benefit Plan or
related agreement are adequately reflected in the Company's financial
statements in a manner consistent with GAAP. Benefits under all Employee
Benefit Plans are as represented and have not been increased subsequent to the
date as of which documents have been provided.
(e) Transactions. There has not been any material failure by
the Company or the Subsidiary to comply with any law applicable to any Employee
Benefit Plan maintained by the Company or the Subsidiary. None of the Company
or the Subsidiary has engaged in any transaction
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with respect to the Employee Benefit Plans which would subject the Company or
the Subsidiary to a tax, penalty or liability for prohibited transactions under
ERISA or the Code (for which no exemption is available), and none of its
directors, officers or employees to the extent they or any of them are
fiduciaries with respect to such plans, has breached, in any material respect,
any of their responsibilities or obligations imposed upon fiduciaries under
Title I of ERISA or has taken or failed to take any action that would result in
any material claim being made under, by or on behalf of any such plans by any
party with standing to make such claim. To the Knowledge of Sellers, no
litigation, claim, arbitration, governmental proceeding, audit, or
investigation or other proceeding (other than those relating to routine claims
for benefits) is pending or threatened with respect to any Employee Benefit
Plan.
(f) Documents. The Company and the Subsidiary have delivered
or caused to be delivered to Purchaser and its counsel true and complete copies
of (i) all Employee Benefit Plans in effect on the date hereof together with
all amendments thereto already adopted which will become effective at a later
date, as well as the latest IRS determination letter obtained with respect to
any such Employee Benefit Plan qualified under Section 401 or 501 of the Code,
(ii) Form 5500 for the fiscal year ended December 31, 1997 for each Employee
Benefit Plan required to file such form, (iii) a current Summary Plan
Description for each Employee Benefit Plan, together with any summary of
material modifications thereto, (iv) any insurance or annuity policy (including
any fiduciary liability insurance policy) related to any Employee Benefit Plan,
and (v) the three (3) most recent summary annual reports provided to
participants for each Employee Benefit Plan.
(g) COBRA. The Company and the Subsidiary have complied in
all material respects with the Consolidated Omnibus Budget Reconciliation Act
of 1984, as amended ("COBRA"), and all of the rules and regulations promulgated
thereunder.
Section 3.21 No Changes Prior to Closing Date. Except as set forth
on Schedule 3.21, since December 31, 1998 (the "Balance Sheet Date"), except as
otherwise expressly contemplated by this Agreement, none of the Company (with
respect to the Company Businesses), the Subsidiary or, to the Knowledge of the
Sellers, the Practice has:
(a) suffered any material adverse change in its working
capital, financial condition, assets, liabilities, business or prospects,
experienced any labor difficulty or suffered any material casualty loss
(whether or not insured);
(b) incurred any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), except in the Ordinary
Course of Business;
(c) permitted any of its assets to be subjected to any
Encumbrances;
(d) paid, discharged or satisfied any material claim,
Encumbrance or liability other than those which are reflected on the Balance
Sheets or which were incurred after the Balance Sheet Date in the Ordinary
Course of Business;
(e) sold, transferred or otherwise disposed of any assets,
or relocated any of its assets then located in an office of the Acquired
Businesses (other than relocating such assets to another office of the Acquired
Businesses) except in the Ordinary Course of Business;
(f) made any capital expenditure or commitment therefor,
except in the Ordinary Course of Business;
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(g) made any distribution on any shares of its capital
stock, or redeemed, purchased or otherwise acquired any shares of its capital
stock;
(h) made any bonus or profit sharing distribution or payment
of any kind;
(i) increased its indebtedness for borrowed money, except
current borrowings from banks in the Ordinary Course of Business, or made any
loan to any Person;
(j) written down the value of any inventory or written off
as uncollectible any notes or accounts receivable, except write-offs in the
Ordinary Course of Business charged to applicable reserves, none of which
individually or in the aggregate is material to the Acquired Businesses;
(k) granted any increase in the rate of wages, salaries,
bonuses or other remuneration of any executive employee or other employees
other than as reflected on Schedules 3.18(a) and 3.18(b) ;
(l) canceled or waived any claims or rights of substantial
value;
(m) made any change in any method of accounting or auditing
practice;
(n) lost or terminated any employee, customer or supplier
that has, individually or in the aggregate, resulted in a Material Adverse
Effect to any of the Acquired Businesses or the Practice;
(o) otherwise conducted its business or entered into any
transaction except in the usual and ordinary manner and in the Ordinary Course
of Business; or
(p) agreed, whether or not in writing, to do any of the
foregoing or take any action or in action which would result in a Breach of any
of the representations and warranties set forth in this ARTICLE III.
Section 3.22 Broker's or Finder's Fees. Except for Prudential
Securities and Nesbitt Burns Securities Inc., no agent, broker, person or firm
acting on behalf of the Company or the Subsidiary is, or will be, entitled to
any commission or investment banking, broker's or finder's fees from either of
the Sellers, or from any Affiliate of either of the Sellers, in connection with
any of the Subject Transactions. No Person is entitled to any commission or
investment banking, broker's or finder's fees from Purchaser for its services
on behalf of the Company in connection with any of the Subject Transactions.
Section 3.23 Licenses, Permits, Consents and Approvals.
(a) Set forth on Schedule 3.23(a) is a list and description
of each of the Governmental Authorizations required for use or used in the
Acquired Businesses and the Practice, together with the respective expiration
or renewal date of such Governmental Authorizations, which are all Governmental
Authorizations required to conduct the Acquired Businesses and the Practice.
(b) Except as set forth on Schedule 3.23(b) and except with
respect to Governmental Authorizations that Purchaser is required to obtain to
operate the Acquired Businesses after the Closing (e.g., Governmental
Authorizations that are not assignable to Purchaser hereunder), no Consent,
notice or other action of any kind by the Company, the Subsidiary, the Practice
or
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Purchaser will be required as a result of the execution and delivery of the
Acquisition Documents or the consummation of the Subject Transactions to:
(i) avoid the loss of any Governmental Authorization
or the violation, breach or termination of, or any default under, or the
creation of any Encumbrances on any Asset pursuant to the terms of any Legal
Requirement or any Contract binding upon the Company, the Subsidiary or the
Practice or to which any such Asset may be subject; or
(ii) enable Purchaser to continue to operate the
Acquired Businesses substantially as conducted prior to the Closing Date.
(c) All such filings and consents (other than Governmental
Authorizations that Purchaser is required to obtain to operate the Acquired
Businesses after the Closing) will be duly filed, given, obtained or taken on
prior to the Closing Date and will be in full force and effect on the Closing
Date.
Section 3.24 Environmental and Health and Safety Matters.
(a) Except as set forth on Schedule 3.24:
(i) Each of the Company, the Subsidiary and, to the
Knowledge of the Sellers, the Practice is and has been in material compliance
at all times with all Environmental and Safety Requirements applicable to the
Acquired Businesses or the Practice, and the Sellers have not received any
notice, report or information regarding any liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), or any corrective,
investigatory or remedial obligations, arising under Environmental and Safety
Requirements with respect to the past or present operations or properties of
the Acquired Businesses or the Practice.
(ii) Each of the Company, the Subsidiary and the
Practice has obtained, and is and has been in material compliance at all times
with all terms and conditions of, all permits, licenses and other
authorizations required pursuant to Environmental and Safety Requirements for
the occupation of the properties of the Acquired Businesses and the conduct of
the operations of the Acquired Businesses.
(iii) None of the following exists at any property
owned or occupied by the Company, the Subsidiary or the Practice which is used
in, related to or necessary for the operations of any of the Acquired
Businesses:
(A) asbestos-containing material in any form or
condition;
(B) polychlorinated biphenyl-containing materials or
equipment; or
(C) underground storage tanks.
(iv) The Subject Transactions do not impose any
obligations under Environmental and Safety Requirements for site investigation
or cleanup or notification to or consent of any Governmental Body or Person.
(v) No facts, events or conditions relating to the
past or present properties or operations of the Acquired Businesses, the
Practice or, to the Knowledge of the Sellers, properties contiguous thereto
will (x) prevent, hinder or limit continued compliance by Purchaser with
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Environmental and Safety Requirements, (y) give rise to any corrective,
investigatory or remedial obligations on the part of Purchaser pursuant to
Environmental and Safety Requirements, or (z) give rise to any liabilities on
the part of Purchaser (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental and Safety Requirements including, without
limitation, those liabilities relating to on-site or off-site hazardous
substance releases, personal injury, property damage or natural resources
damage.
(vi) Neither of the Sellers has assumed any
liabilities or obligations of any Person under Environmental and Safety
Requirements with respect to any property used in, related to or necessary for
the operation of the Acquired Businesses.
(b) The Sellers have delivered or made available to
Purchaser true, complete and correct copies of all environmental reports,
analyses, tests or monitorings in the possession of the Company or the
Subsidiary pertaining to any property used in, related to or necessary for the
operation of the Acquired Businesses or the Practice and a true, complete and
correct list identifying all third-party facilities at which contaminants
generated in connection with the Acquired Businesses or the Practice (whether
by the Company, the Subsidiary, the Practice or any prior owner or occupant)
have been transported, treated, stored, handled or disposed within the past
five (5) years.
Section 3.25 Certain Payments. Neither the Company nor the
Subsidiary nor to the Knowledge of the Sellers, any of their respective
directors, officers, agents or employees, nor any other Person associated with
or acting for or on behalf of the Company, the Subsidiary or the Practice, has
directly or indirectly (a) made, offered or agreed to offer any contribution,
gift, bribe, rebate, payoff, influence payment, kickback, or other payment to
any Person, private or public, regardless of form, whether in money, property,
or services (i) to obtain favorable treatment in securing business or to pay
for favorable treatment for business secured, (ii) to obtain special
concessions or to pay for or special concessions already obtained, for or in
respect of the Company, the Subsidiary, the Practice or any of their respective
Affiliates, or (iii) in violation of any Legal Requirement, or (b) established
or maintained any material fund or asset that has not been recorded in the
books and records of the Company, the Subsidiary or the Practice.
Section 3.26 Relationships with Affiliates. Except as set
forth on Schedule 3.26, no Affiliate of the Company or the Subsidiary has or
has had or, to the Knowledge of the Sellers, any of the Prior Owners has, any
interest in any property (whether real, personal, or mixed and whether tangible
or intangible), used in or pertaining to any of the Acquired Businesses or the
Practice. Except as set forth on Schedule 3.26, no Affiliate of the Company or
the Subsidiary owns or has owned (of record or as a beneficial owner) or, to
the Knowledge of the Sellers, any of the Prior Owners owns (of record or as a
beneficial owner), an equity interest or any other financial or profit interest
in, a Person that has (i) had business dealings or a material financial
interest in any transaction relating to the Acquired Businesses or the Practice
other than business dealings or transactions conducted in the Ordinary Course
of Business with the Company or the Subsidiary or the Practice at substantially
prevailing market prices and on substantially prevailing market terms, or (ii)
engaged in competition with the Company or the Subsidiary or the Practice with
respect to any line of the products or services of the Acquired Businesses or
the Practice (a "Competing Business") in any market in which an Acquired
Business or the Practice currently operates except for the ownership of less
than one percent (1%) of the outstanding capital stock of any Competing
Business that is publicly traded on any recognized exchange or in the
over-the-counter market. No Affiliate of the Company or the Subsidiary or any
of the Prior Owners is a party to any Contract with, or has any claim or right
against, the Company (with respect to the Company Businesses), the Subsidiary
or the Practice.
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Section 3.27 Fraud and Abuse. None of the Company, the
Subsidiary or, to the Knowledge of the Sellers, the Practice has engaged in any
activity that is prohibited under federal Medicare and Medicaid statutes, 42
U.S.C. ss.1320a-7b, the False Claims Act, or the regulations promulgated
pursuant to such statutes, or any similar federal, state or local statutes or
regulations or which are prohibited by binding rules of professional conduct,
including, without limitation to the following:
(a) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any applications for
any benefit or payment;
(b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment;
(c) failing to disclose knowledge by a 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 secure
such benefit or payment fraudulently; and
(d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay such remuneration
(i) in return for referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment may be
made in whole or in part by Medicare, Medicaid or other applicable third party
Payors, or (ii) in return for purchasing, leasing or ordering or arranging for
or recommending the purchasing, leasing or order of any good, facility,
service, or item for which payment may be made in whole or in part by Medicare,
Medicaid or other applicable third party Payors.
Section 3.28 Year 2000 Compliance.
(a) Except as set forth on Schedule 3.28(a), each item of
software, hardware, firmware, third-party software and goods with computer
chips used by the Company in the Company Businesses or used by the Subsidiary
(collectively, the "Internal Systems"), is, or will be on the Closing Date,
Year 2000 Compliant (as hereinafter defined) through the year 2002.
(b) For purposes of this Agreement, "Year 2000 Compliant"
means that the item:
(i) functions without interruption or human
intervention with four-digit year processing on all data, input, or output
which includes an indication of date (collectively, "Date Data"), including
errors or interruptions from functions which may involve Date Data from more
than one century, leap years, or the date September 9, 1999, regardless of the
date of processing or date of Date Data;
(ii) provides results from any operation accurately
reflecting any Date Data used in the operation performed, with output in any
form, except graphics, having four digit years;
(iii) accepts two digit year Date Data in a manner
that resolves any ambiguities as to century in a defined manner; and
(iv) provides data interchange in the ISO8601:1988
standard of CCYYMMDD.
Section 3.29 Medicare and Medicaid Programs. Each of the
Company, the Subsidiary, the Practice and, to the Company's and the
Subsidiary's Knowledge, their respective professional
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employees and independent contractors is qualified for participation in the
Medicare and Medicaid 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. Each of the Company, the Subsidiary, the Practice and, to
the Knowledge of the Sellers, their respective professional employees and
independent contractors, has timely filed all claims or other reports required
to be filed prior to the Closing Date with respect to the purchase of services
by third-party payors ("Payors"), including but not limited to Medicare and
Medicaid programs, except where the failure to file would not, individually or
in the aggregate, result in a Material Adverse Effect of the Acquired
Businesses or the Practice. All such claims or reports are complete and
accurate in all material respects. Each of the Company, the Subsidiary, the
Practice and, to the Knowledge of the Sellers, their respective professional
employees and independent contractors 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 none of the
Company, the Subsidiary, the Practice or, to the Knowledge of the Sellers, any
of their professional employees or independent contractors has any material
liability to any Payor with respect thereto, except as has been reserved for in
the Closing 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 Subsidiary, the Practice or,
to the Knowledge of the Sellers, any of their respective professional employees
or independent contractors in order to be paid by a Payor for services
rendered. None of the Company's, the Subsidiary's, the Practice's or to the
Knowledge of the Sellers, any of their respective directors, officers,
employees, consultants, or independent contractors (providing optometric
services) has been convicted of, or pled guilty or nolo contendere to, patient
abuse or neglect, or any other Medicare or Medicaid program-related offense.
None of the Company's, the Subsidiary's, the Practice's or, to the Knowledge of
the Sellers, any of their respective directors, officers, shareholders,
employees, independent contractors or consultants has committed any offense
which may serve as the basis for suspension or exclusion from the Medicare and
Medicaid programs, including without limitation, defrauding a government
program, loss of a license to provide health services, and failure to provide
quality care.
Section 3.30 Payors. Schedule 3.30 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 Acquired Businesses or the
Practice which accounted for more than ten percent (10%) of the revenues of
such Acquired Business or the Practice in the three (3) previous fiscal years.
Except as set forth on Schedule 3.30, each of the Company, the Subsidiary and
the Practice does not have, and has not had, any disputes (other than
immaterial disputes arising in the Ordinary Course of Business) which have not
been resolved to the mutual satisfaction of both parties thereto, and none of
such Payors has notified the Company, the Subsidiary or the Practice that it
intends to discontinue its relationship with the Company, the Subsidiary or the
Practice or to deny any claims submitted to such Payor for payment.
Section 3.31 Inventory. Except as set forth on Schedule 3.31:
(i) the qualities and quantities of Inventory are
reasonable and adequate for the current operations of the Acquired Businesses
and materially consistent with past practices; and
(ii) there has been no material decrease in the
Inventory since the Balance Sheet Date other than in the Ordinary Course of
Business.
Section 3.32 Acquisition Agreements. Except as set forth on
Schedule 3.32, there has not been any material breach by the Company, or to the
Knowledge of the Sellers, any material breach by any other party, of any
representation, warranty, covenant or agreement under any of the Vision World
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Acquisition Agreement, the Eye Care Acquisition Agreement, the Drx Acquisition
Agreement or the TCOL Stock Purchase Agreement. Except as set forth on Schedule
3.32, all filings with, notices to, and consents of, any Governmental Body or
other third parties necessary or appropriate to consummate the transactions
contemplated by the Vision World Acquisition Agreement, the Eye Care
Acquisition Agreement, the Drx Acquisition Agreement or the TCOL Stock Purchase
Agreement have been duly filed, given, obtained or taken.
Section 3.33 Bank Accounts. Schedule 3.33 to be provided on
or before 15 days prior to Closing, sets forth an accurate and complete list
showing the name and address of each bank in which the Company (with respect to
the Company Businesses) or the Subsidiary has an account, the number of any
such account and the names of all persons authorized to draw thereon.
Section 3.34 Disclosure. To the Knowledge of the Sellers,
none of this Agreement, or any Schedule, Exhibit or certificate delivered in
accordance with the terms hereof or any document or statement in writing which
has been supplied by or on behalf of either of the Sellers in connection with
the Subject Transactions contains any untrue statement of a material fact or
omits any statement of a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. Neither the Company nor the Subsidiary
has Knowledge of any fact (other than general economic conditions or
legislative or administrative changes in health care delivery) which materially
and adversely affects the Acquired Businesses, the Practice or the properties
or assets related thereto, which has not been set forth in this Agreement or in
the Schedules, Exhibits or certificates or statements in writing furnished in
connection with the Subject Transactions.
Section 3.35 Disclaimer of Other Representations, Warranties
and Covenants. Except as expressly set forth in this Article III, Sellers make
no representations or warranties, express or implied, at law or in equity, in
respect to any of the Assets, the Assumed Liabilities or the operations of the
Acquired Businesses, including, without limitation, with respect to
merchantability or fitness for any particular purpose, and any such other
representations and warranties are expressly disclaimed.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the disclosure schedules attached hereto (which
disclosure schedules shall specifically identify the SECTION hereof to which
such disclosure or exception applies), Purchaser hereby represents and warrants
to the Sellers as follows:
Section 4.01 Existence and Good Standing of Purchaser.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas. Purchaser has the power to own
its properties and carry on its businesses as now being conducted. The
Purchaser is duly qualified to do business in all jurisdiction(s) in which the
character or location of the properties owned or leased by it or the nature of
the businesses conducted by it makes such qualification necessary, except where
the failure to be so qualified would not have a Material Adverse Effect on the
Purchaser.
Section 4.02 Power and Authority. Purchaser has the full
legal right, corporate power and authority to make, execute, deliver and
perform this Agreement, and this Agreement has been duly authorized and
approved by all required action of Purchaser. Purchaser has taken, or will take
before the Closing Date, all actions required by law, Purchaser's Articles of
Incorporation, Bylaws, or otherwise, to authorize the execution and delivery of
this Agreement and the other Acquisition
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Documents, and the performance of its obligations hereunder and thereunder.
This Agreement has been duly executed and delivered by Purchaser and, upon the
execution and delivery of the remaining Acquisition Documents by a duly
authorized officer of Purchaser, the remaining Acquisition Documents will have
been duly executed and delivered by Purchaser, and this Agreement is, and such
other Acquisition Documents will be, upon due execution and delivery thereof,
the legal, valid, and binding obligations of Purchaser enforceable against it
in accordance with the respective terms thereof.
Section 4.03 Broker's or Finder's Fees. No agent, broker,
person or firm acting on behalf of Purchaser is, or will be, entitled to any
commission or investment banking, or broker's or finder's fees from any of the
Parties, or from any Affiliate of the Parties, in connection with any of the
Subject Transactions.
Section 4.04 No Conflict.
(a) Except as set forth on Schedule 4.04 or with respect to
the HSR Act, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Subject Transactions will, directly
or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of Purchaser, or
(B) any resolution adopted by the Board of Directors or shareholders of
Purchaser as currently in effect;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the Subject Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which Purchaser may be
subject;
(iii) contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by Purchaser;
(iv) contravene, conflict with, or result in a
violation or Breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Contract to which
Purchaser is a party;
(b) Except as set forth on Schedule 4.04 or the HSR Act,
Purchaser is not required, and will not be required, to give any notice to or
obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Subject Transactions.
(c) The representations and warranties of Purchaser set
forth in the Strategic Agreement are true as of the date hereof, except to the
extent relating to the execution and delivery thereof which will be true and
correct on the Closing Date.
Section 4.05 Litigation. There is no Proceeding by any
Person, or by or before (or any investigation by) any Governmental Body,
pending, or to the Knowledge of Purchaser threatened, against or affecting the
Subject Transactions or Purchaser's ability to consummate the Subject
Transactions, and Purchaser does not know of any valid basis for any such
Proceeding.
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Section 4.06 Insolvency.
(a) Neither the Purchaser, nor any of its subsidiaries is
Insolvent and neither the Purchaser nor any of its subsidiaries will become
Insolvent as a result of the consummation of the Subject Transaction.
(b) None of the Board of Directors or officers of the
Purchaser or any of its subsidiaries have contemplated, or have discussed,
seeking protection from creditors under any of the provisions of the Bankruptcy
Code or taking any other action which could result in any other insolvency
proceeding of any character with respect to the Purchaser and its subsidiaries
including, without limitation, bankruptcy, receivership or reorganization. No
creditors of the Purchaser or any of its subsidiaries have commenced or
threatened to institute proceedings against the Purchaser or any of its
subsidiaries under the Bankruptcy Code or to take any other action which could
result in any other insolvency proceeding of any character with respect to the
Purchaser and its subsidiaries.
(c) With respect to the representation and warranty set
forth in this SECTION 4.06, the Sellers acknowledge that Purchaser has relied
upon the information set forth in the registration statements, reports and
other materials (collectively "ECCA SEC Reports") filed by the Company with the
SEC since December 31, 1998 and represents and warrants that the ECCA SEC
Reports complied in all material respects with the applicable requirements of
the Securities Act of 1933 and the 1934 Act and the applicable rules and
regulations of the SEC promulgated thereunder, and at the time filed did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
The consolidated financial statements of Purchaser which are a part of the SEC
Reports have been prepared in accordance with GAAP, applied on a basis
consistent with past practices, and fairly present the financial condition and
results of operations of the businesses of Purchaser at the respective dates
thereof and for the periods referred to therein.
Section 4.07 Acknowledgment of Seller's Disclaimer. Except as
expressly set forth in Article III, Purchaser acknowledges that Sellers make no
representations or warranties, express or implied, at law or in equity, in
respect to any of the Assets, the Assumed Liabilities or the operations of the
Acquired Businesses, including, without limitation, with respect to
merchantability or fitness for any particular purpose, and any such other
representations and warranties are expressly disclaimed.
Section 4.08 Acknowledgment of Purchaser's Financing. Purchaser
acknowledges that it has received a verbal commitment for financing all funding
required hereunder and is not aware of any current facts or circumstances that
are likely to impact such financing.
ARTICLE V
CONDUCT OF BUSINESS; REVIEW; CONFIDENTIALITY; NONCOMPETITION
Section 5.01 Conduct of Business of the Company.
(a) Except as otherwise contemplated herein, during the
period from the date of this Agreement to and including the Closing Date, the
Sellers shall conduct the Acquired Businesses only according to and including
the Ordinary Course of Business and shall use their respective Best Efforts to
preserve intact the Acquired Businesses and the Practice, keep available the
services of the officers, employees and optometrists engaged as independent
contractors of the Company, the
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Subsidiary or the Practice working directly in the Acquired Businesses or the
Practice and maintain satisfactory relationships with licensors, suppliers,
distributors, lessees, clients and others having business relationships with
any of the Acquired Businesses or the Practice.
(b) Except as otherwise contemplated herein, during the
period from the date hereof to and including the Closing Date, the Sellers
shall pay all undisputed accounts payable and other payables relating to the
Acquired Businesses or the Practice in a timely manner in the Ordinary Course
of Business.
(c) Pending the Closing and except as may be first approved
by Purchaser or as is otherwise permitted or required by this Agreement, the
Sellers will, with respect to the Acquired Businesses, and will use their Best
Efforts to cause the Practice to:
(i) maintain the Organizational Documents and other
governing documents of the Sellers in their respective forms on the date of
this Agreement;
(ii) maintain the compensation payable or to become
payable by the Sellers or the Practice to any officer, employee or agent
working directly in the Acquired Businesses or the Practice at their levels on
the date of this Agreement, except for increases in the Ordinary Course of
Business to non-exempt employees in store, doctor offices or lab locations
consistent with past practices;
(iii) refrain from making any bonus, pension,
retirement or insurance payment or arrangement to or with any employee or
independent contractor, except those that may have already been accrued, and
bonus and insurance payments in the Ordinary Course of Business;
(iv) refrain from entering into any Contract or
commitment except contracts in the Ordinary Course of Business;
(v) refrain from paying or declaring any dividends
or making any distribution in cash or in property to any of its shareholders;
(vi) refrain from creating, incurring, or assuming
any long-term or short-term debt (other than accounts payable incurred in the
Ordinary Course of Business) whether for money borrowed or otherwise;
(vii) refrain from assuming, guarantying, endorsing or
otherwise becoming liable or responsible for the obligation of any Person;
(viii) refrain from making any loans, advances or
capital contributions to, or investments in, any other Person (other than
accounts receivables arising in the Ordinary Course of Business);
(ix) refrain from making any change affecting any
bank, safe deposit or power of attorney arrangements of the Sellers or the
Practice;
(x) refrain from incurring or committing to any
capital expenditure, obligations or liabilities in respect thereof which would
exceed $5,000 on an individual basis;
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(xi) refrain from any action which may subject the
assets of the Acquired Businesses or the Practice to any Encumbrance of any
kind or character except in the Ordinary Course of Business; and
(xii) refrain from taking any action, the taking of
which, or from omitting to take any action, the omission of which, would cause
any of the representations and warranties contained in ARTICLE III to fail to
be true and correct in all respects as of the Closing Date as though made on
and as of the Closing Date.
(d) During the period from the date of this Agreement to
and including the Closing Date, the Sellers shall confer on a regular and
frequent basis with one or more designated Representatives of Purchaser to
report material operational matters and to report the general status of ongoing
operations of the Acquired Businesses and the Practice. The Sellers shall
notify Purchaser of any unexpected emergency or other change in the normal
course of their respective businesses or in the operation of their respective
properties or the business or operation of the Practice and of any Proceeding
(or communications indicating that the same may be contemplated) involving any
material property of the Acquired Businesses or the Practice, and shall keep
Purchaser fully informed of such events and permit its representatives prompt
access to all materials prepared in connection therewith. Except as otherwise
expressly permitted by this Agreement, and without limiting the generality of
the foregoing, between the date of this Agreement to and including the Closing
Date, the Sellers will not, without the prior written consent of Purchaser,
take any affirmative action, or fail to take any reasonable action within their
or its control, as a result of which any of the changes or events listed in
SECTION 3.21 hereof is likely to occur.
Section 5.02 Review of the Sellers.
(a) The Sellers shall:
(i) permit Purchaser and its Representatives to have,
after the date of execution hereof, full and complete access to the premises
and to all the properties, assets, books, records and other documents of the
Sellers relating to or used in the Acquired Businesses or the Practice to
enable Purchaser to make an examination of the business, properties, assets,
books, records and other documents of the Acquired Businesses and the Practice
as Purchaser and its Representatives may determine; and
(ii) cause the officers of the Sellers to furnish
Purchaser with such financial and operating data and other information with
respect to the Acquired Businesses and the Practice as Purchaser shall from
time to time reasonably request.
(b) Purchaser and its Representatives hereby agree to
conduct such examinations so as to not unreasonably interfere with the conduct
of the Acquired Businesses or the Practice. As part of such examination,
Purchaser and its Representatives may make such inquiries of such persons
having business relationships with either of the Sellers or the Practice
(including, without limitation, to suppliers, licensees, distributors and
customers) as Purchaser and its Representatives shall determine and the Sellers
shall cooperate fully with Purchaser and its Representatives in connection
therewith.
Section 5.03 No Negotiation. Until such time, if any, as this
Agreement is terminated pursuant to SECTION 10.01, the Sellers and their
respective Representatives will not, directly or indirectly solicit, initiate,
or encourage any inquiries or proposals from, discuss or negotiate with,
provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Purchaser)
relating to any transaction involving the sale of, or change of
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control with respect to, the Acquired Businesses or the Assets (other than in
the Ordinary Course of Business), whether by a sale of assets or stock, merger,
consolidation, business combination, or similar transaction involving the
Sellers. The Sellers will promptly communicate to Purchaser the terms of any
proposal received or the fact that the Sellers have received inquiry with
respect to, or have participated in discussions or negotiations in respect of,
any such transaction, and the identity of any Persons who initiated or
participated in such discussions or negotiations.
Section 5.04 Non-Competition.
(a) Purchaser and the Sellers agree that the Purchase Price
was fixed on the basis that the transfer of the Assets to Purchaser would
provide Purchaser with the full benefit and goodwill of the Acquired Businesses
as they existed on the Closing Date. The Sellers acknowledge that it is proper
for Purchaser to have assurance that the value of the Assets will not be
diminished by acts of the Sellers after the Closing Date. Accordingly, the
Sellers covenant and agree that they will not:
(i) commencing on the Closing Date and ending on the
fourth anniversary of the Closing Date, directly or indirectly engage in, or
own, manage, operate, or control or participate in the ownership, management,
operation or control of, or provide consulting services or financial resources
to, or act as guarantor for, any Person which is engaged in, any business which
engages in the retail sale of optical goods (including, without limitation, eye
glasses, contact lenses and sunglasses) with operations within a three (3) mile
radius of one of the stores operated or managed by any of the Acquired
Businesses as constituted on the Closing Date (the "Restricted Business");
provided, however, the Sellers may continue to provide management services to
the optometrists and ophthalmologists to whom they are providing services, and
only at the locations being serviced, as of the Closing Date, a complete list
of which has been provided to Purchaser; and provided further, the Sellers may
provide consulting, administrative and other similar services to optometrists
and ophthalmologists provided such services do not directly relate to, or
provide direction relative to, the retail sale of optical goods.
(ii) commencing on the Closing Date and ending on the
second anniversary of the Closing Date, without the prior written consent and
approval of Purchaser, directly or indirectly hire or attempt to hire for
employment or otherwise retain as a consultant or otherwise, any person any of
Purchaser's or its Affiliates respective employees, consultants, agents, or
independent contractors who are providing services with respect to the Acquired
Businesses or the Practice (for this purpose, the terms "employees,"
"consultants," "agents," and "independent contractors" shall include any
persons having such status with regard to Purchaser, its Affiliate or the
Practice, as the case may be, at any time during the six (6) months preceding
any solicitation in question); or
(iii) commencing on the Closing Date and ending on the
fourth anniversary of the Closing Date, solicit, interfere with, or endeavor to
entice away from Purchaser or any of its Affiliates or the Practice, for itself
or on behalf of any Person, any customer or supplier of the Acquired Businesses
or the Practice.
(b) The foregoing provisions shall not apply to investments
in shares of stock of a corporation traded on a national securities exchange or
on the national over-the-counter market which shall constitute less than one
percent (1%) of the outstanding shares of such stock of such corporation.
Further, the foregoing restrictions set forth in SECTION 5.04(A) shall not
prohibit the sale, whether through merger, consolidation, reorganization or
similar transaction, of all or substantially all of the stock or assets of the
Company or a material business unit of the Company to a Person engaged in the
Restricted Business, provided that (i) following such transaction, the Company
and its subsidiaries (or
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the material business unit of the Company acquired by such Person), shall
continue to be subject to the restrictions set forth in SECTION 5.04(A) and
(ii) the restrictions in SECTION 5.04(A) shall not apply to the Person
acquiring the Company or the material business unit and such parent's other
subsidiaries provided that the personnel, assets, information and other
resources of the Company and its subsidiaries (or the material business unit
acquired by such Person) are not materially used in connection with such
restricted activities. The restrictions set forth in clauses (ii) and (iii) of
SECTION 5.04(A) shall not prohibit general advertisements in newspapers or
other widely distributed publications, media or mail, whether electronic or
otherwise.
(c) The Company and the Subsidiary acknowledge that certain
of the Prior Owners entered into non-competition covenants with the Company in
connection with the acquisition by the Company of the Company Businesses and
all of the capital stock of the Subsidiary. To the extent such non-competition
covenants are not assigned to Purchaser hereunder, or Purchaser is not entitled
to enforce such non-competition agreements, the Company agrees to enforce such
non-competition agreements as may be reasonably necessary to protect the
interest of Purchaser in the Acquired Businesses.
(d) Purchaser covenants and agrees that, for the period
commencing on the date hereof and ending on the earlier of the Closing Date (if
the Subject Transactions are consummated) and the second anniversary of the
date hereof (if the Subject Transactions are not consummated), Purchaser will
not, directly or indirectly, solicit to leave his or her employment or
engagement with the Sellers any of their respective employees, consultants,
agents, or independent contractors who primarily provide services in connection
with the Acquired Businesses (for purposes of this SECTION 5.04(D), the terms
"employees," "consultants," "agents," and "independent contractors" shall
include any persons having such status with regard to either of the Sellers at
the time of execution of this Agreement or during the period from time the date
of execution of this Agreement to the date of termination of this Agreement);
provided, however the foregoing restrictions shall not prohibit general
advertisements in newspapers or other widely distributed publications, media or
mail, whether electronic or otherwise.
(e) If any of the Sellers or the Purchaser commits a breach,
or threatens to commit a breach, of any of the provisions of this SECTION 5.04
or SECTION 6.03 or 6.04, the non-breaching party shall have the right and
remedy, in addition to any others, to have the provisions of this SECTION 5.04
or SECTION 6.03 or 6.04, as the case may be, specifically enforced by the
arbitrator in accordance with SECTION 10.02 (with respect to a permanent
injunction) and any court having equity jurisdiction (with respect to a
temporary restraining order or preliminary injunction), together with an
accounting therefor, it being acknowledged and understood by the Sellers that
any such breach or threatened breach will cause irreparable injury to Purchaser
and that money damages will not provide an adequate remedy therefor.
Section 5.05 Use of Name; Change of Name. The Sellers have
transferred to Purchaser all of their respective rights to use the names
"Vision World," "Stein Optical," "EyeCare One," and "Eye Drx". The Sellers
expressly agree not to use the names "Vision World," "Stein Optical," "EyeCare
One," and "Eye Drx" or any variation thereof. Concurrent with, or immediately
following the Subject Transactions, the Sellers shall file Articles of
Abandonment and such other documents (including, without limitation, abandoning
any assumed name designations) as may be necessary to effectuate such transfer.
Section 5.06 Termination of Partnership Agreements. With
respect to those certain five partnership agreements between the Practice and
certain of the optometrists providing services in connection with the New
Jersey Business and with respect to which the Company has assumed certain
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obligations, identified on Schedules 3.04 and 3.10 hereof (the "Partnership
Agreements"), the Sellers shall be obligated to pay all amounts owed to the
optometrists under the Partnership Agreements in connection with the
dissolution or termination thereof or any buyout related thereto to the extent
required under the Partnership Agreements; provided, however, that the Sellers'
obligations under this SECTION 5.06 shall be limited to those written
obligations contained in the Partnership Agreements (which, to the Knowledge of
the Sellers' have not been orally amended) that are directly related to the
termination or dissolution thereof. Purchaser shall reimburse the Sellers
one-half of such amounts within ten (10) days of written request to Purchaser
after payment of sums by the Sellers, provided that Purchaser's aggregate
obligation hereunder shall not exceed $200,000.
Section 5.07 No Liability for Changes in the New Jersey
Business. Purchaser acknowledges and agrees that (i) the termination of the
Cummins Employment Agreement and the dissolution or termination of the
Partnership Agreements could result in an adverse affect on the New Jersey
Businesses and (ii) the Sellers shall not be liable to Purchaser for Damages to
the extent resulting from such adverse affects.
Section 5.08 Interim Financial Statements. As soon as
possible following the date hereof, but in no event later than three days prior
to the Closing Date, the Sellers shall deliver to Purchaser the unaudited
interim balance sheets of each of the Acquired Businesses, on both an
individual and combined basis, dated as of April 30, 1999, May 31, 1999, June
30, 1999 and the end of any other months thereafter ending on or before 30 days
or more prior to the Closing and the related unaudited interim statements of
operations for each one-month period ended April 30, 1999, May 31, 1999 and
June 30, 1999 and each subsequent month thereafter ending on or before 30 days
or more prior to the Closing.
ARTICLE VI
MUTUAL COVENANTS
Purchaser, on the one hand, and the Sellers, jointly and severally, on
the other hand, each covenant that:
Section 6.01 Return of Documents; Disclosure; Nonsolicitation. If
this Agreement is terminated for any reason pursuant to SECTION 10.01, (i) each
Party shall return all documents and materials and copies thereof which shall
have been furnished by or on behalf of the other Parties, (ii) each Party
hereby covenants that such Party will not disclose to any Person any
confidential or proprietary information about the other Parties or any
information regarding the Subject Transactions, except insofar as may be
necessary to assert its rights hereunder or as required by law.
Section 6.02 Cooperation. Subject to the terms and conditions
herein provided, each Party will use such Party's Best Efforts to take, or
cause to be taken, such actions, to execute and deliver, or cause to be
executed and delivered, such additional documents and instruments and to do, or
cause to be done, all things necessary, proper or advisable under the
provisions of this Agreement and applicable law to consummate and make
effective all of the Subject Transactions.
Section 6.03 Publicity. Unless the Parties mutually agree in
advance or are required by Legal Requirements, prior to the Closing, the
Parties shall keep this Agreement strictly confidential and may not make any
disclosure of this Agreement or the Subject Transactions to any Person, other
than disclosure by Purchaser as it may deem necessary or advisable in
connection with the Subject Transactions (including the financing of such
transactions). The Parties will consult with each other concerning the means by
which the Sellers' employees, customers, and suppliers and others having
dealings with the Sellers will be
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informed of the Subject Transactions, and Purchaser will have the right to be
present for any such communication. Notwithstanding anything contained herein,
the Parties agree that a public announcement or similar publicity with respect
to this Agreement approved by the Parties, which approval shall not be
unreasonably withheld by any Party, will be issued as soon as reasonably
possible and advisable following the date hereof (as may be mutually agreed by
the Parties).
Section 6.04 Confidentiality. Before and after the Closing,
each of the Parties shall, and shall cause their respective Representatives and
Affiliates to, hold in strict confidence and not use or disclose to any other
Person without the prior written consent of the other Parties, all confidential
information obtained from the other Parties in connection with the Subject
Transactions and all information relating to the Assets and the Acquired
Businesses; provided, however, that such information may be used or disclosed
(i) when required by any regulatory authorities or governmental agencies, (ii)
if required by court order or decree or applicable law, (iii) if it is publicly
available other than as a result of a breach of this Agreement, (iv) if it is
otherwise contemplated herein, or (v) by Purchaser from and after the Closing.
Section 6.05 Notification.
(a) Between the date of this Agreement and the Closing Date,
the Sellers will promptly notify Purchaser in writing if either of the Sellers
becomes aware of any fact or condition that causes or constitutes a Breach of
any of the Sellers' representations and warranties as of the date of this
Agreement, or if either of the Sellers becomes aware of the occurrence after
the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a Breach of any
such representation or warranty had such representation or warranty been made
as of the time of occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in the Schedules attached hereto if
such Schedules were dated the date of the occurrence or discovery of any such
fact or condition, the Sellers will promptly deliver to Purchaser a supplement
to such Schedule specifying such change. During the same period, the Sellers
will promptly notify Purchaser of the occurrence of any Breach of any covenant
of either of the Sellers in ARTICLE V OR VI or otherwise under this Agreement
or of the occurrence of any event that may make the satisfaction of the
conditions in ARTICLE VII OR VIII impossible or unlikely.
(b) Between the date of this Agreement and the Closing
Date, Purchaser will promptly notify the Sellers in writing if Purchaser
becomes aware of any fact or condition that causes or constitutes a Breach of
any of Purchaser's representations and warranties as of the date of this
Agreement, or if Purchaser becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Schedules attached hereto if such
Schedules were dated the date of the occurrence or discovery of any such fact
or condition, Purchaser will promptly deliver to the Sellers a supplement to
such Schedules specifying such change. During the same period, Purchaser will
promptly notify the Sellers of the occurrence of any Breach of any covenant of
Purchaser in ARTICLE VI or otherwise under this Agreement or of the occurrence
of any event that may make the satisfaction of the conditions in ARTICLE VII OR
VIII or impossible or unlikely.
Section 6.06 Required Approvals; HSR Act.
(a) As promptly as practicable after the date of this
Agreement, the Sellers will make all filings required by Legal Requirements to
be made by them in order to consummate the Subject Transactions including,
without limitation, the filing, if any, required under the HSR Act.
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Between the date of this Agreement and the Closing Date, the Sellers will (a)
cooperate with Purchaser with respect to all filings that Purchaser elects to
make or is required by Legal Requirements to make in connection with the
Subject Transactions, and (b) obtain all consents identified in Schedules
3.11(a), 3.11(b) and 3.23(b).
(b) As promptly as practicable after the date of this
Agreement, Purchaser will make all filings required by Legal Requirements to be
made by it in order to consummate the Subject Transactions including, without
limitation, the filing, if any, required under the HSR Act. Between the date of
this Agreement and the Closing Date, Purchaser shall (a) cooperate with the
Sellers with respect to all filings that the Sellers elect to make or are
required by Legal Requirements to make in connection with the Subject
Transactions, and (b) cooperate with the Sellers in obtaining all consents
identified in Schedules 3.11(a), 3.11(b) and 3.23(b).
(c) HSR Act. As soon as practicable, and in any event no
later than five (5) business days after the date hereof, each of the Parties
will file any Notification and Report Forms and related material required to be
filed by it with the Federal Trade Commission and the Antitrust Division of the
United States Department of Justice under the HSR Act with respect to the
transactions contemplated hereby, will use its reasonable efforts to obtain an
early termination of the applicable waiting period, and shall promptly make any
further filings pursuant thereto that may be necessary proper or advisable;
provided, however, that Purchaser shall not be required hereunder to divest or
hold separate any portion of its business or assets. Any filing fee(s) relating
to any filings required under the HSR Act shall be borne one-half (1/2) by
Purchaser and one-half (1/2) by the Sellers.
Section 6.07 Employees; Collective Bargaining Agreement.
(a) Concurrent with the Closing, Purchaser may, in its sole
discretion, offer employment or an independent contractor position to any of
the active employees or independent contractors set forth on Schedule 3.18(a)
or (b) as well as the employees or independent contractors hired to work
directly in the Acquired Businesses between the date hereof and the Closing
Date, (i) on an "at will basis" and upon such terms and conditions as
determined by Purchaser in its sole discretion or (i) if Purchaser desires, in
its sole discretion, under an employment agreement or independent contractor
agreement, which agreement will be on terms and conditions acceptable to
Purchaser. Except with respect to the Collective Bargaining Agreement and
certain other agreements with optometrists in the following sentence which will
be assumed by Purchaser, Purchaser shall be under no obligation to assume any
employment agreement, or agreement relating to independent contractors of the
Sellers or the Practice. Notwithstanding the foregoing, Purchaser will assume
the contracts between the Company and certain optometrists to provide services
as independent contractors to the extent such contracts are included as
Assigned Contracts and therefore such optometrists will be engaged by Purchaser
at the Closing Date.
(b) Effective as of the Closing Date, the Sellers will
terminate all of their respective employees who work directly in the Acquired
Businesses and with respect to whom Purchaser elects to offer employment or
engage as independent contractors and release such employees from any
commitments or restrictions that would prohibit them from providing their
services to Purchaser.
(c) Effective on or before the Closing Date, the Sellers
shall terminate all employment agreements or independent contractor agreements
(other than the independent contractor agreements included as Assigned
Contracts expressly assumed by Purchaser) with employees or independent
contractors that Purchaser elects to offer employment or engage as independent
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contractors pursuant to this SECTION 6.07 and release such employees or
independent contractors from any commitments or restrictions that would
prohibit them from providing their services to Purchaser.
(d) The Sellers shall remain responsible for and retain any
and all liabilities and obligations (whether statutory or contractual) relating
in any manner to their employees, former employees or independent contractors
(and their dependents and beneficiaries) arising in connection with the events
or circumstances incurred or existing on or prior to the Closing (including,
without limitation, the Subject Transactions), including with respect to any
employment agreement or collective bargaining agreement, or any state,
municipal or federal wage-hour, workmen's compensation, discrimination,
employment, benefit or labor law, statute, regulation or rule of law. The
Sellers shall remain the employer with responsibility for compliance with all
federal, state and local laws relating to benefits, healthcare continuation
coverage, closings, layoffs or reductions in force with respect to the Subject
Transactions contemplated by this Agreement.
(e) Reference is made to those certain letters dated on or
about December 31, 1998 from the Company and distributed to certain employees
of the Company relating to certain severance benefits upon termination in
connection with the reorganization of the Company (the "Severance Letters").
Prior to Closing, the Sellers shall have delivered to such employees a letter,
in a form reasonably satisfactory to Purchaser, clarifying that their severance
benefits under the Severance Letter are payable by the Company as follows: (i)
if such employee is not offered employment by Purchaser and such employee is
terminated by the Company in connection with the Subject Transactions, payable
upon such termination of employment with the Company, or (ii) if such employee
is employed by Purchaser after the Closing and is terminated by Purchaser on or
prior to December 31, 1999 (and crediting for purposes of such payment any time
worked with Purchaser as if worked for the Company), payable at the time of
such termination of employment with Purchaser. The Company shall make all
severance payments to such employees contemplated in this SECTION 6.07(E) in
accordance with the terms of the Severance Letters, it being understood that
the Company is the sponsor of the subject severance plans and shall retain
liability for any obligations or claims in connection therewith.
Notwithstanding any provision to contrary, Purchaser shall promptly reimburse
the Company for one-half of the contractual severance obligations under the
Severance Letters (but only to the extent disclosed on the disclosure
schedules) with respect to any employee hired by Purchaser and terminated by
Purchaser during the period commencing on the 90th day following the Closing
Date and ending December 31, 1999. Such reimbursement will be made within ten
(10) days of written request to Purchaser after the Sellers have made any such
payments.
Section 6.08 Accounts Receivable. Purchaser shall use its Best
Efforts to collect the accounts receivables of the Acquired Businesses on and
after the Closing Date.
Section 6.09 Releases. Purchaser shall use its Best Efforts to obtain
releases of the Sellers from all Leases and personal property leases being
assumed by Purchaser hereunder, but will not be required to pay additional sums
for such releases.
Section 6.10 Leased Space. For a period of six-months following the
Closing (or such shorter period ending upon the termination of the underlying
lease), Purchaser shall provide office space for 6 persons employed by VIPA at
a reasonable rental rate based upon a pro rata allocation (based upon square
footage) of the underlying rent of the subject property.
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ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
All obligations of Purchaser to be discharged under this Agreement at
the Closing are subject to the fulfillment, prior to or at the Closing, of each
of the following conditions, unless waived in writing by Purchaser prior to or
at the Closing:
Section 7.01 Truth of Representations and Warranties. The
representations and warranties of the Sellers contained in this Agreement or in
any Schedule delivered pursuant hereto (i) that are qualified as to
materiality, shall be true and correct when made and as of the Closing Date and
(ii) that are not qualified as to materiality, shall be true and correct in all
material respects when made and as of the Closing Date (in both cases, without
giving effect to any supplement to a Schedule delivered pursuant to this
Agreement), and the Sellers shall have each executed and delivered to Purchaser
a certificate, dated the Closing Date, to such effect.
Section 7.02 Covenants and Agreements of the Company. The
Sellers shall have caused all covenants, agreements, and conditions required by
this Agreement to be performed or complied with by them in all material
respects prior to or at the Closing to be so performed or complied with, and
the Sellers shall have each executed and delivered to Purchaser a certificate,
dated the Closing Date, to such effect.
Section 7.03 Good Standing and Tax Certificates. The Sellers
shall have delivered to Purchaser (a) copies of the Organizational Documents of
each of the Sellers, certified by the Secretary of State of the respective
jurisdictions of their incorporation and (b) certificates as to the existence,
authorization to do business and tax status of the Sellers and the Practice
certified by the appropriate authority in the respective jurisdictions of
incorporation and/or qualification in which the Sellers are qualified to do
business and conduct the Acquired Businesses.
Section 7.04 No Material Adverse Change. Prior to the Closing
Date, there shall have been no material adverse change in the assets or
liabilities, the business or condition, financial or otherwise, the results of
operations, or prospects of the Acquired Businesses or the Practice since the
Balance Sheet Date, except as set forth on Schedule 3.21 (without giving effect
to any supplement to a Schedule delivered pursuant to this Agreement) and there
shall not have been any events, circumstances or developments which, with the
passage of time, might reasonably be expected to have a Material Adverse Effect
on the Acquired Businesses, the Practice or the Assets being transferred
hereunder, and the Sellers shall have each executed and delivered to Purchaser
a certificate, dated the Closing Date, to such effect.
Section 7.05 No Litigation Threatened. No Proceeding shall have been
instituted or, to the Knowledge of the Sellers, threatened to restrain or
prohibit any of the Subject Transactions, and the Sellers shall have each
executed and delivered to Purchaser a certificate, dated the Closing Date, to
such effect.
Section 7.06 Approvals; Filings. All Consents necessary to
permit the consummation of the Subject Transactions shall have been received.
All filings (other than those, if any, which may be required to be filed,
given, obtained or taken solely by Purchaser) shall have been duly filed,
given, obtained or taken on or prior to the Closing Date and will be in full
force and effect on the Closing Date, and the Sellers shall have each executed
and delivered to Purchaser a certificate, dated the Closing Date, to such
effect.
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Section 7.07 Proceedings. All actions or proceedings to be
taken in connection with the Subject Transactions and all documents incident
thereto shall be reasonably satisfactory in form and substance to Purchaser and
its counsel and Purchaser shall have received copies of all such documents and
other evidences as it or its counsel may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
Section 7.08 Opinion of Counsel. The Sellers shall have furnished
Purchaser with a favorable opinion, dated the Closing Date, of Shumaker,
Kendrick & Loop, LLP in substantially the form of EXHIBIT J attached hereto.
Section 7.09 Key Employees and Independent Contractors. No
more than a reasonably acceptable to Purchaser number of optometrists employed
or engaged as independent contractors by the Acquired Businesses, or engaged as
independent contractors by the Practice, shall have indicated that they will
not accept Purchaser's offer of employment or engagement as an independent
contractor by Purchaser, or continue their engagement by the Practice,
following the Closing Date.
Section 7.10 Escrow Agreement. The Escrow Agent and the Sellers shall
have executed and delivered the Escrow Agreement.
Section 7.11 Leases; Landlord Estoppel Letters. The landlords, with
respect to each of the Leases, shall have delivered estoppel certificates (the
"Landlord Estoppel Certificates") each in substantially the form of EXHIBIT L
hereto, with such changes, additions and deletions reasonably acceptable to, or
required by Purchaser. Each of the Leases shall be assigned by the Company or
the Subsidiary, as the case may be, to VPI and concurrently sublet to a
subsidiary of Purchaser or an optometrist acceptable to Purchaser, each such
sublease (the "Sublease Agreements") to be in substantially the form of EXHIBIT
M hereto with such changes, additions and deletions acceptable to Purchaser. The
forms of Assignment of Lease (the "Assignments") assigning each such Lease to
VPI shall be in substantially the form of EXHIBIT N hereto with such changes,
additions and deletions acceptable to or requested by Purchaser. To the extent
required under the applicable Lease, each Landlord Estoppel Certificate shall so
reflect the landlord's consent to such assignment and concurrent sublease.
Section 7.12 Business Management Agreement; The Practice.
(a) The Business Management Agreement shall have been
amended as required by Purchaser and agreed to by the Company, and the Cummins
Employment Agreement shall have been terminated.
(b) To the extent terminated or dissolved prior to the
Closing Date, Purchaser shall have received evidence reasonably satisfactory to
it that the Partnership Agreements have been terminated (and the partnerships
created thereby dissolved).
Section 7.13 Governmental Authorizations. Purchaser shall
have obtained all Governmental Authorizations necessary or appropriate to
conduct the Acquired Businesses after the Closing unless the failure to obtain
such Governmental Authorization will not have a Material Adverse Effect on the
ability of Purchaser to operate the Businesses after the Closing.
Section 7.14 Intercompany Accounts. All accounts between the Company
and the Subsidiary, and between the Company or the Subsidiary and the Acquired
Businesses, shall have been settled or paid in full as of the Closing Date.
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Section 7.15 Fairness Opinion. An opinion that the consideration to
be received by Sellers pursuant to ARTICLE II hereof with respect to its sale
of the Assets is fair, from a financial point of view, to the Sellers, in a
form customary for fairness opinions for transactions similar to the Subject
Transactions, shall have been delivered by Nesbitt Burns Securities Inc. to the
Board of Directors of the Sellers dated as of the Closing Date, which opinion
shall not have been withdrawn.
Section 7.16 INTENTIONALLY DELETED
Section 7.17 Bank Accounts. The permitted signatories on each of the
Bank Accounts shall have been changed as instructed by Purchaser and the banks
shall have received the instructions contemplated in SECTION 2.10.
Section 7.18 Trenholme Dispute. Purchaser shall have been advised of
the status of that certain dispute between the Company and Russell Trenholme
and Takako Trenholme regarding the contingent payment under the Vision World
Acquisition Agreement and the status shall be satisfactory to Purchaser, in its
sole discretion.
Section 7.19 Stub Period; Interim Financial Statements.
(a) The Sellers shall have delivered to Purchaser the
Audited Stub Period Statement of Operations and the parties shall have agreed
upon the Stub Period EBITDA.
(b) The Sellers shall have delivered to Purchaser the
unaudited interim balance sheets of each of the Acquired Businesses on both an
individual and combined basis, dated as of April 30, 1999, May 31, 1999 and
June 30, 1999 (and the end of any month thereafter ending at least 30 days
prior to the Closing) and the related unaudited interim statements of
operations for each one-month period ended April 30, 1999, May 31, 1999 and
June 30, 1999 (and the end of any month thereafter ending at least 30 days
prior to the Closing).
ARTICLE VIII
CONDITIONS TO THE SELLERS' OBLIGATIONS
All obligations of the Sellers to be discharged under this Agreement
at the Closing are subject to the fulfillment, in all material respects, prior
to or at the Closing, of each of the following conditions, unless waived in
writing by the Sellers prior to or at the Closing:
Section 8.01 Truth of Representations and Warranties. The
representations and warranties of Purchaser contained in this Agreement (i)
that are qualified as to materiality, shall be true and correct when made and
as of the Closing Date and (ii) that are not qualified as to materiality, shall
be true and correct in all material respects when made and as of the Closing
Date (in both cases, without giving effect to any supplement to a Schedule
delivered pursuant to this Agreement), and Purchaser shall have executed and
delivered to the Sellers a certificate, dated the Closing Date, to such effect.
Section 8.02 Covenants and Agreements of Purchaser. Purchaser
shall have caused all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it in all material respects prior
to or at the Closing to be so performed or complied with, and Purchaser shall
have executed and delivered to the Sellers a certificate, dated the Closing
Date, to such effect.
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Section 8.03 No Litigation Threatened. No Proceeding shall have been
instituted or, to the Knowledge of Purchaser, threatened before a court or
other government body or by any public authority to restrain or prohibit any of
the Subject Transactions, and Purchaser shall have executed and delivered to
the Sellers a certificate, dated the Closing Date, to such effect.
Section 8.04 Approvals; Filings. All Consents, if any, necessary to
permit the consummation of the Subject Transactions shall have been received.
All filings (other than those, if any, which may be required to be filed,
given, obtained or taken solely by the Sellers) shall have been duly filed,
given, obtained or taken on or prior to the Closing Date and will be in full
force and effect on the Closing Date.
Section 8.05 Proceedings. All actions or proceedings to be taken in
connection with the Subject Transactions and all documents incident thereto,
shall be reasonably satisfactory in form and substance to the Sellers and their
counsel, and the Sellers shall have received copies of all such documents and
other evidences as it or its counsel may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
Section 8.06 Escrow Agreement. The Escrow Agent and Purchaser shall
have executed and delivered the Escrow Agreement.
Section 8.07 Agreement Regarding Strategic Alliance. The Purchaser
shall have executed the Strategic Agreement in substantially the form agreed to
by the parties on or before the date hereof.
Section 8.08 Opinion of Counsel. Purchaser shall have furnished the
Sellers with a favorable opinion, dated the Closing Date, of Cox & Smith,
Incorporated, in substantially the form to be reasonably agreed to by Sellers
and the Company.
Section 8.09 Certificate of Cummins. The Company shall have received
from Dr. Cummins a certificate certifying that the representations and
warranties relating to the Practice set forth herein are true and correct in
all respects and Dr. Cummins shall have executed all documentation required
thereunder.
Section 8.10 Fairness Opinion. An opinion that the consideration to
be received by Sellers pursuant to ARTICLE II hereof with respect to its sale
of the Assets is fair, from a financial point of view, to the Sellers, in a
form customary for fairness opinions for transactions similar to the Subject
Transactions, shall have been delivered by Nesbitt Burns Securities Inc. to the
Board of Directors of the Sellers dated as of the Closing Date, which opinion
shall not have been withdrawn.
ARTICLE IX
INDEMNIFICATION; REMEDIES
Section 9.01 Survival. Except as otherwise expressly provided herein
and subject to the time period limitations set forth in SECTION 9.05, all
representations, warranties, covenants, and obligations in this Agreement and
the Schedules attached hereto, and the certificates and documents delivered
pursuant to this Agreement, shall survive the Closing. The waiver of any
condition based upon the accuracy of any representation or warranty, or upon
the performance of or compliance with any covenant or obligation, shall only be
effective if in writing.
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Section 9.02 Indemnification and Payment of Damages by the Sellers.
(a) The Sellers, jointly and severally, will indemnify and
hold harmless Purchaser and its Representatives, shareholders, directors,
officers, controlling persons and Affiliates (collectively, the "Purchaser
Indemnified Persons") for, and will pay to the Purchaser Indemnified Persons
the amount of any actual loss, liability, claim or damage or expense (including
costs of investigation and defense and reasonable attorneys' fees), whether or
not involving a third-party claim (collectively, "Damages"), arising, directly
or indirectly, from or in connection with:
(i) any Breach of any representation or warranty
made by the Company or the Subsidiary in this Agreement or any Schedule
attached hereto, or any other certificate or document delivered by the Company
or the Subsidiary pursuant to this Agreement (without regard to any
qualification as to "materiality" or substantiality" contained in any such
representation or warranty);
(ii) any Breach by the Company or the Subsidiary of
any covenant or obligation of the Company or the Subsidiary in this Agreement
or any document executed pursuant to this Agreement;
(iii) any product sold, or any services provided by
the Company or the Subsidiary prior to the Closing Date;
(iv) any claim by any Person for investment banking,
broker's or finder's fees or commissions, investment balancing fees or similar
payments based upon any agreement or understanding alleged to have been made by
such Person with the Company or the Subsidiary (or any Person acting on its
behalf) in connection with any of the Subject Transactions.
(v) any liability or obligation of the Company or
the Subsidiary (or any of their respective predecessors relating to their
operations of the Acquired Businesses prior to the Closing Date) other than the
Assumed Liabilities;
(vi) any liability or obligation of the Sellers
arising out of the Vision World Acquisition Agreement, the Eye Care Acquisition
Agreement, the Drx Acquisition Agreement or the TCOL Stock Purchase Agreement;
(vii) the failure to make all filings with, or give all
notices to, and obtain all consents of, any Governmental Body or other third
parties required to consummate the transactions contemplated by the Vision
World Acquisition Agreement, the Eye Care Acquisition Agreement, the Drx
Acquisition Agreement or the TCOL Stock Purchase Agreement that could have a
Material Adverse Effect on the Acquired Businesses;
(viii) any liability or obligation relating to claims
by any current or former employee or independent contractor of the Company, or
the Subsidiary (or their spouses or dependents) or the Practice relating to
matters on or prior to the Closing Date or any matter for which the Sellers
have retained responsibility under SECTION 6.07, including, without limitation,
any claim for COBRA benefits arising out of their employment with the Company,
the Subsidiary or the Practice;
(ix) any environmental liabilities or obligations
with respect to the Minnesota corporate headquarters or otherwise disclosed on
Schedule 3.24;
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(x) any of the costs or expenses arising out the
failure of the Sellers to fulfill their obligations under SECTION 5.06 in
excess of the $200,000 required to be reimbursed by Purchaser thereunder;
(xi) any liability or obligation arising under the
Severance Letters except to the extent the Company is entitled to reimbursement
from Purchaser in accordance with SECTION 6.07(E);
(xii) any obligation or commitment of the Company to
grant any stock options to any of its employees including, without limitation,
any obligation or commitment by the Company to grant stock options to any
employee whose employment agreement has been assigned to Purchaser hereunder
(e.g., any Assigned Contract); and
(xiii) any of the matters described on Schedule 3.12.
(b) In determining the loss to be indemnified, any
insurance proceeds received by the Purchaser Indemnified Persons with respect
to such loss shall be taken into account, and the Company's obligation to
indemnify the Purchaser Indemnified Persons hereunder shall be reduced by the
amount of such insurance proceeds.
(c) In the event that the Company is entitled to
indemnification under the Vision World Acquisition Agreement, the Eye Care
Acquisition Agreement, the Drx Acquisition Agreement or the TCOL Stock Purchase
Agreement, the Company shall use reasonable efforts to collect the amounts owed
and such amounts shall be paid to Purchaser to satisfy any indemnification
claims by Purchaser arising out of the same or similar events or circumstances
that resulted in the indemnification claim by the Company; provided, however,
the Sellers' indemnification obligations hereunder shall be independent from
the Sellers' collection of any indemnification claims under the Vision World
Acquisition Agreement, the Eye Care Acquisition Agreement, the Drx Acquisition
Agreement or the TCOL Stock Purchase Agreement and all indemnification payments
owed by the Sellers hereunder shall be paid by the Sellers promptly without
regard to the Company's collection of any indemnity claim under such
acquisition agreements.
(d) Any amounts paid in satisfaction of an indemnification
claim under this SECTION 9.02 shall be deemed for all purposes as a decrease to
the Purchase Price.
(e) With respect to any Damages arising out of a Breach by a
Seller of a representation or warranty for which Purchaser is entitled to
indemnification hereunder and does receive full payment thereof from the
Sellers, to the extent that either of the Sellers assigned a warranty or other
chose of action to Purchaser hereunder relating to the action giving rise to
such indemnifiable claim, Purchaser shall assign such rights against a third
party to the Sellers who may pursue a cause of action against such third-party.
Section 9.03 Indemnification and Payment of Damages by Purchaser.
(a) Purchaser will indemnify and hold harmless the Sellers
and their respective Representatives, shareholders, controlling persons, and
Affiliates (collectively, the "Sellers' Indemnified Persons"), and will pay to
the Sellers' Indemnified Persons the amount of any Damages arising, directly or
indirectly, from or in connection with:
(i) any Breach of any representation or warranty made
by Purchaser in this Agreement or in any certificate delivered by Purchaser
pursuant to this Agreement (without regard
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to any qualification as to "materiality" or "substantiality" contained in any
such representation or warranty);
(ii) any Breach by Purchaser of any covenant or
obligation of Purchaser in this Agreement or any document executed pursuant to
this Agreement;
(iii) any claim by any Person for investment banking,
broker's or finder's fees or commissions, investment banking fees or similar
payments based upon any agreement or understanding alleged to have been made by
such Person with Purchaser (or any Person acting on its behalf) in connection
with any of the Subject Transactions; and
(iv) the failure of Purchaser to fully pay and
discharge any Assumed Liability in accordance with its terms to the extent due
on or after the Closing Date.
(b) In determining the loss to be indemnified, any
insurance proceeds received by the Seller Indemnified Persons with respect to
such loss shall be taken into account, and Purchaser's obligation to indemnify
the Sellers' Indemnified Persons hereunder shall be reduced by the amount of
such insurance proceeds.
(c) Any amounts paid in satisfaction of an indemnification
claim under this SECTION 9.03 shall be deemed for all purposes as an increase
to the Purchase Price.
Section 9.04 Time Limitations. If the Closing occurs, the Sellers
will have no liability with respect to any representation or warranty (other
than those in SECTIONS 3.03, 3.13, 3.20, 3.24, 3.25 AND 3.27 which shall
survive as hereinafter provided), unless on or before the second anniversary of
the Closing Date, Purchaser notifies the Sellers of a claim, specifying the
factual basis of that claim in reasonable detail to the extent then known by
Purchaser; provided, however, a claim with respect to SECTION 3.13, 3.20, 3.25
OR 3.27 may be made by Purchaser at any time prior to the expiration of the
applicable statute of limitations, including any extension thereof; and further
provided that a claim with respect to SECTION 3.03 (solely with respect to
title) or SECTION 3.24, or a claim for indemnification or reimbursement not
based upon any representation or warranty, may be made at any time. If the
Closing occurs, Purchaser will have no liability with respect to any
representation or warranty, unless on or before the second anniversary of the
Closing Date, the Sellers notify Purchaser of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by the
Sellers.
Section 9.05 Limitations on Amount.
(a) Neither Purchaser nor any of the other Purchaser
Indemnified Persons shall be entitled to seek indemnification under this
ARTICLE IX with respect to a claim for a Breach of any representation or
warranty hereunder (other than the representations or warranties of the Sellers
contained in SECTION 3.03 or the representations or warranties otherwise
qualified by materiality) until the aggregate amount of all such Damages to
which all of the Purchaser Indemnified Persons are entitled to indemnification
hereunder exceeds $350,000 (the "Basket"), at which time the Purchaser
Indemnified Persons shall be entitled to the full amount of such Damages in
excess of the Basket. Neither Purchaser nor any of the other Purchaser
Indemnified Persons shall be entitled to seek indemnification under this
ARTICLE IX with respect to a claim for a Breach of any representation or
warranty hereunder (other than the representations or warranties of the Sellers
contained in SECTION 3.03) for Damages which exceed the Purchase Price.
Notwithstanding any of the foregoing, the Parties acknowledge that the
limitations in this SECTION 9.05(A) apply only to indemnification claims with
respect to representations and warranties and that such limitations shall not
include Damages in
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connection with either of the Seller's failure to satisfy or perform any of its
covenants or obligations under this Agreement. To the extent of any Damages
that Purchaser would otherwise be entitled to indemnification hereunder but for
the Purchase Price Adjustment which satisfies such Damages claim, such amount
shall not be deemed to count against the Basket.
(b) Neither of the Sellers nor any of the other Sellers'
Indemnified Persons shall be entitled to seek indemnification under this
ARTICLE IX with respect to a claim for a Breach of any representation or
warranty hereunder (other than the representations or warranties of the
Purchaser which are qualified by materiality) until the aggregate amount of all
such Damages to which all of the Sellers' Indemnified Persons are entitled to
indemnification hereunder exceeds $350,000, at which time the Sellers'
Indemnified Persons shall be entitled to the full amount of such Damages in
excess of the Basket. Notwithstanding any of the foregoing, the Parties
acknowledge that the limitations in this SECTION 9.05(B) apply solely to
indemnification claims with respect to representations and warranties and that
such limitations shall not include Damages in connection with Purchaser's
failure to pay the Purchase Price or Purchaser's failure to satisfy or perform
any of its covenants or obligations under this Agreement.
(c) Notwithstanding the foregoing, the limitations in
SECTIONS 9.05(A) and 9.05(B) will not apply to (i) any Damages arising out of
any intentional Breach by the Party against whom such indemnification claim is
made or (ii) claims or losses arising from fraud, willful misfeasance, gross
negligence or misconduct committed by the Party against whom such
indemnification claim is made.
Section 9.06 Procedure for Indemnification -- Third Party Claims.
(a) Promptly after receipt by an indemnified party under
SECTION 9.02 or 9.03 of notice of the commencement of any Proceeding against
it, such indemnified party will, if a claim is to be made against an
indemnifying party under such section, give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying
party will not relieve the indemnifying party of any liability that it may have
to any indemnified party, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced by the indemnifying
party's failure to receive such notice.
(b) If any Proceeding referred to in SECTION 9.06(A) is
brought against an indemnified party and the indemnified party gives notice to
the indemnifying party of the commencement of such Proceeding, the indemnifying
party will be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel reasonably
satisfactory to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this ARTICLE IX for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such Proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of a Proceeding,
(i) it will be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be
effected by the indemnifying party without the indemnified party's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any
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violation of the rights of any Person by Purchaser or any of its Affiliates and
no effect on any other claims that may be made against the indemnified party,
and (B) the sole relief provided is monetary damages that are paid in full by
the indemnifying party; and (iii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims effected without
its consent. If notice is given to an indemnifying party of the commencement of
any Proceeding and the indemnifying party does not, within ten (10) days after
the indemnified party's notice is given, give notice to the indemnified party
of its election to assume the defense of such Proceeding, the indemnifying
party will be bound by any determination made in such Proceeding or any
compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding,
but the indemnifying party will not be bound by any determination of a
Proceeding so defended or any compromise or settlement effected without its
prior written consent (which may not be unreasonably withheld).
(d) The Sellers hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
Purchaser Indemnified Person for purposes of any claim that an Purchaser
Indemnified Person may have under this Agreement with respect to such
Proceeding or the matters alleged therein.
Section 9.07 Procedure for Indemnification -- Other Claims. A claim
for indemnification for any matter not involving a third-party claim may be
asserted by notice to the Party from whom indemnification is sought.
Section 9.08 Escrow. The parties acknowledge that Purchaser will be
depositing One Million Two Hundred Fifty Thousand Dollars and no/100
($1,250,000) with the Escrow Agent pursuant to SECTION 2.02(B)(II). Purchaser
may assert an indemnification claim pursuant to SECTION 9.02 against the Escrow
Amount in accordance with the terms of the Escrow Agreement.
Section 9.09 Exclusivity of Remedies. Subject to the right to
injunctive relief set forth in SECTION 5.04 hereof, the indemnification in this
Article IX shall be the exclusive remedy available to one Party against the
other, either in law or in equity, in any action seeking Damages or any other
form of monetary relief brought by any Party against another Party with respect
to any provision of this Agreement other than any claim arising from fraud or
willful misconduct. This Article IX shall survive Closing.
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination.
(a) This Agreement may, by notice given prior to or at the
Closing, be terminated:
(i) by the mutual written agreement of Purchaser and
the Sellers;
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(ii) by Purchaser, on the one hand, or the Sellers,
on the other hand, if a material Breach of any provision of this Agreement has
been committed by either of the Sellers, in the case of Purchaser, or
Purchaser, in the case of the Sellers, and such Breach has not been waived or
cured;
(iii) (A) by Purchaser, if any of the conditions
contained in ARTICLE VII has not been satisfied as of the Closing Date, or if
satisfaction of any such condition is or becomes impossible (other than through
the failure of Purchaser to comply with its obligations under this Agreement)
and Purchaser has not waived such condition on or before August 31, 1999;
(B) by the Sellers, if any of the conditions in
ARTICLE VIII has not been satisfied as of the Closing Date, or if satisfaction
of any such condition is or becomes impossible (other than through the failure
of the Sellers to comply with their respective obligations under this
Agreement) and the Sellers have not waived such condition on or before August
31, 1999; or
(iv) if the Closing shall not have occurred (other
than through the failure of any Party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) as of August 31, 1999,
or such later date as the Parties may agree upon in writing.
(b) In the event this Agreement is terminated pursuant to
this SECTION 10.01, there shall be no further obligations or liabilities on the
part of the Parties except liabilities arising out the Breach of any
representation, warranty, covenant or agreement contained herein prior to the
termination of this Agreement and nothing herein shall relieve any Party of any
liability for a Breach of this Agreement prior to the termination hereof.
Notwithstanding any provision in this Agreement to the contrary, the
liabilities and obligations set forth in SECTIONS 5.04(D), 6.01 and 6.04 and
ARTICLES IX and X (other than SECTION 10.01 thereof) shall survive any
termination of this Agreement.
Section 10.02 Arbitration. Arbitration; Waiver of Trial By Jury (a)
Any and every dispute of any nature whatsoever that may arise between the
parties, whether sounding in contract, statute, tort, fraud, misrepresentation,
discrimination or any other legal theory, including, but not limited to,
disputes relating to or involving the construction, performance or breach of
this Agreement, or any schedule, certificate or other document delivered by any
party hereto, or any other agreement between the parties, whether entered into
prior to, on, or subsequent to the date of this Agreement, or those arising
under any federal, state or local law, regulation or ordinance, shall be
determined by binding arbitration in accordance with the then-current
commercial arbitration rules of the American Arbitration Association, to the
extent such rules do not conflict with the provisions of this paragraph. If the
amount in controversy in the arbitration exceeds Two Hundred Fifty Thousand
Dollars ($250,000), exclusive of interest, attorneys' fees and costs, the
arbitration shall be conducted by a panel of three (3) neutral arbitrators.
Otherwise, the arbitration shall be conducted by a single neutral arbitrator.
The parties shall endeavor to select neutral arbitrators by mutual agreement.
If such agreement cannot be reached within thirty (30) calendar days after a
dispute has arisen which is to be decided by arbitration, any party or the
parties jointly shall request the American Arbitration Association to submit to
each party an identical panel of fifteen (15) persons. Alternate strikes shall
be made to the panel, commencing with the party bringing the claim, until the
names of three (3) persons remain, or one (1) person if the case is to be heard
by a single arbitrator. The parties may, however, by mutual agreement, request
the American Arbitration Association to submit additional panels of possible
arbitrators. The person(s) thus remaining shall be the arbitrator(s) for such
arbitration. If three (3) arbitrators are selected, the arbitrators shall elect
a chairperson to preside at all meetings and hearings. The arbitrator(s), or a
majority of them, shall have the power to determine all
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matters incident to the conduct of the arbitration, including without
limitation all procedural and evidentiary matters and the scheduling of any
hearing. The award made by a majority of the arbitrators shall be final and
binding upon the parties thereto and the subject matter. The arbitration shall
be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and
judgment upon the award rendered by the arbitrator(s) may be entered by any
court having jurisdiction thereof. The arbitrators shall have authority to
award damages, arbitration costs, attorneys' fees, declaratory relief and
permanent injunctive relief, if applicable, in accordance with the terms of
this Agreement. Unless otherwise agreed by the parties, the arbitration shall
be held in Atlanta, Georgia. This SECTION 10.02 shall not prevent either party
from seeking a temporary restraining order or temporary or preliminary
injunctive relief from a court of competent jurisdiction in order to protect
its rights under this Agreement. In the event a party seeks such injunctive
relief pursuant to this Agreement, such action shall not constitute a waiver of
the provisions of this SECTION 10.02, which shall continue to govern any and
every dispute between the parties, including without limitation the right to
damages, permanent injunctive relief and any other remedy, at law or in equity.
(b) EACH OF THE PARTIES TO THIS AGREEMENT WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY DISPUTE OF ANY NATURE WHATSOEVER THAT MAY ARISE BETWEEN
THEM, INCLUDING, BUT NOT LIMITED TO, THOSE DISPUTES RELATING TO OR INVOLVING,
IN ANY WAY THE CONSTRUCTION, PERFORMANCE OR BREACH OF THIS AGREEMENT OR ANY
OTHER AGREEMENT BETWEEN THE PARTIES, THE PROVISIONS OF ANY FEDERAL, STATE OR
LOCAL LAW, REGULATION OR ORDINANCE NOTWITHSTANDING. By execution of this
Agreement, each of the parties hereto acknowledges and agrees that he/she/it
has had an opportunity to consult with legal counsel and that he/she/it
knowingly and voluntarily waives any right to a trial by jury of any dispute
pertaining to or relating in any way to the transactions contemplated by this
Agreement, the provisions of any federal, state or local law, regulation or
ordinance notwithstanding.
Section 10.03 Expenses. Except as otherwise provided in this
Agreement, the Parties shall pay all of their own expenses relating to the
Subject Transactions including, without limitation, the fees and expenses of
their respective counsel and financial advisors; provided, however, any filing
fee(s) relating to any filings required under the HSR Act shall be borne
one-half (1/2) by Purchaser and one-half (1/2) by the Sellers.
Section 10.04 Governing Law. The interpretation and construction of
this Agreement, the Subject Transactions and all matters relating hereto, shall
be governed by the internal laws of the State of Delaware without regard to
conflict of laws principles. The Parties acknowledge that although neither of
the Sellers or Purchaser is incorporated in Delaware, Purchaser intends to
assign certain of its rights and obligations under this Agreement to one or
more of its subsidiaries that are, or will be at the time of Closing,
incorporated in Delaware.
Section 10.05 Enforcement; Service of Process. In the event any Party
shall seek enforcement of any covenant, warranty or other term or provision of
this Agreement or seek to recover damages for the breach thereof, the Party
which prevails in such proceedings shall be entitled to recover reasonable
attorneys' fees and expenses actually incurred by it in connection therewith.
The Parties agree that the service of process or any other papers upon any of
them by any of the methods specified in and in accordance with SECTION 10.07
(other than by facsimile) shall be deemed good, proper, and effective service
upon them.
Section 10.06 Captions; References. The Article and Section captions
used herein are for reference purposes only, and shall not in any way affect
the meaning or interpretation of this
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<PAGE> 53
Agreement. References to an "Article" or "Section" when used without further
attribution shall refer to the particular article or section of this Agreement.
Section 10.07 Notices. Any notice or other communications required or
permitted hereunder shall be in writing and, unless otherwise provided herein,
shall be deemed to have been duly given upon delivery in person, by facsimile,
by overnight courier or by certified or registered mail, return receipt
requested, as follows:
<TABLE>
<S> <C>
If to the Company or the Subsidiary: Vision Twenty-One, Inc.
7360 Bryan Dairy Road
Largo, Florida 33777
Attention: Theodore N. Gillette, CEO
Facsimile: (727) 547-4371
With a copy to: Shumaker, Loop & Kendrick, LLP
101 E. Kennedy Boulevard
Suite 2800
Tampa, Florida 33602
Attention: Darrell C. Smith, Esquire
Facsimile: (813) 229-1660
If to Purchaser: Eye Care Centers of America, Inc.
11103 West Avenue
San Antonio, Texas 78213-1392
Attention: Bernard W. Andrews, CEO
Facsimile: (210) 524-6996
With a copy to: Cox & Smith Incorporated
112 E. Pecan, Suite 1800
San Antonio, Texas 78205
Attention: James B. Smith, Jr.
Facsimile: (210)226-8395
</TABLE>
or at such other address or telecopy number as shall have been furnished in
writing by any such Party, except that such notice of such change shall be
effective only upon receipt. Each such notice or other communication shall be
effective when received or, if given by mail, when delivered at the address
specified in this SECTION 10.07 or on the fifth business day following the date
on which such communication is posted, whichever occurs first. Notwithstanding
any provision in this Agreement to the contrary, any notice properly delivered
to the Company shall be deemed properly delivered to the Subsidiary.
Section 10.08 Parties in Interest. This Agreement shall be binding
upon and shall inure to the benefit of the Parties and their respective
successors and permitted assigns. This Agreement may not be transferred,
assigned, pledged or hypothecated by the Sellers prior to the Closing Date.
Purchaser shall have the right, at or before the Closing Date, to designate one
or more entities to which it may assign all or part of its rights and
obligations hereunder respecting the purchase of the Assets.
Section 10.09 Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
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<PAGE> 54
Section 10.10 Entire Agreement. This Agreement, including the other
documents referred to herein which form a part hereof or any other written
agreements that the parties enter into pursuant to or relating to the Subject
Transactions, contains the entire understanding of the Parties with respect to
the subject matter contained herein and therein. This Agreement supersedes all
prior agreements and understandings between the Parties with respect to such
subject matter. All Exhibits and Schedules referred to herein and attached
hereto are incorporated herein by reference.
Section 10.11 Amendments. This Agreement may not be changed orally,
but only by an agreement in writing signed by Purchaser and the Sellers.
Section 10.12 Severability. In case any provision of this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
Section 10.13 Third Party Beneficiaries. Each Party intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the Parties.
Section 10.14 Joint Preparation. This Agreement has been prepared by
the joint efforts of the respective attorneys to each of the Parties. No
provision of this Agreement shall be construed on the basis that such Party was
the author of such provision.
Section 10.15 Waiver. The rights and remedies of the Parties are
cumulative and not alternative. Neither the failure nor any delay by any Party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one Party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other Parties; (b) no waiver
that may be given by a Party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one Party will be
deemed to be a waiver of any obligation of such Party or of the right of the
Party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
54
<PAGE> 55
IN WITNESS WHEREOF, Purchaser, the Company and the Subsidiary have
executed this Agreement to be effective as of the day and year first above
written.
"Purchaser"
EYE CARE CENTERS OF AMERICA, INC.
By: /s/ Bernard W. Andrews
-----------------------------------------
Bernard W. Andrews
Chairman and Chief Executive Officer
The "Company"
VISION TWENTY-ONE, INC.
By: /s/ Theodore N. Gillette
-----------------------------------------
Theodore N. Gillette,
President and Chief Executive Officer
The "Subsidiary"
THE COMPLETE OPTICAL LABORATORY, LTD., CORP.
By: /s/ Theodore N. Gillette
-----------------------------------------
Theodore N. Gillette
President
55
<PAGE> 56
EXHIBIT A
DEFINITIONS
"Adjustment Escrow Amount" has the meaning set forth in SECTION
2.02(B).
"Acquired Businesses" has the meaning set forth in the recitals.
"Acquisition Documents" means this Agreement, all exhibits and
schedules hereto, and all agreements contemplated herein, but excluding the
Business Management Agreement or any amendments or modifications thereto.
"Adjustment Amount" has the meaning set forth in SECTION 2.03(A).
"Adjustment Arbitrator" has the meaning set forth in SECTION 2.03(B).
"Affiliate" is used in this Agreement to indicate a relationship with
one or more persons and when used shall mean any corporation, limited liability
company or other organization of which such person is an executive officer,
manager, director, member or partner or is directly or indirectly the
beneficial owner of one percent (1%) or more of any class of equity securities
or financial interest therein; any trust or other estate in which such person
has a beneficial interest or as to which such person serves as trustee or in
any similar fiduciary capacity; any relative or spouse of such person, or any
relative of such spouse (such relative being related to the person in question
within the second degree); any director, manager or executive officer of such
person; or any person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the person specified.
"Agreement" means this Asset Purchase Agreement.
"Asset Amount" has the meaning set forth in SECTION 2.03(A).
"Assets" has the meaning set forth in SECTION 2.01.
"Assigned Contracts" has the meaning set forth in SECTION 2.01.
"Assignments" has the meaning set forth in SECTION 8.15.
"Assumed Liabilities" has the meaning set forth in SECTION 2.04.
"Assumed Liabilities Amount" has the meaning set forth in SECTION
2.03(A).
"Audited Stub Period Statement of Operations" has the meaning set
forth in SECTION 2.03(G).
"Balance Sheet" has the meaning set forth in SECTION 3.05.
"Balance Sheet Date" has the meaning set forth in SECTION 3.21.
"Balance Sheet Assumed Liabilities" has the meaning set forth in
SECTION 2.04.
"Balance Sheet Assumed Liabilities Amount" has the meaning set forth
in SECTION 2.03(A).
<PAGE> 57
"Bank Account" has the meaning set forth in SECTION 2.10(B).
"Bankruptcy Code" means Title 11 of the United States Code, 11 U.S.C.
s. 101, et seq.
"Base Price" has the meaning set forth in SECTION 2.02(A).
"Best Efforts" means the reasonable commercial efforts that a prudent
Person desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved as expeditiously as possible; provided,
however, that an obligation to use Best Efforts under this Agreement does not
require the Person subject to that obligation to take actions that would result
in a materially adverse change in the benefits of this Agreement and the
Subject Transactions to such Person.
"Breach" means that a "Breach" of a representation, warranty,
covenant, obligation, or other provision of this Agreement or any instrument
delivered pursuant to this Agreement will be deemed to have occurred if there
is or has been (a) any inaccuracy in or breach of, or any failure to perform or
comply with, such representation, warranty, covenant, obligation, or other
provision, or (b) any claim (by any Person) or other occurrence or circumstance
that is or was inconsistent with such representation, warranty, covenant,
obligation, or other provision, and the term "Breach" means any such
inaccuracy, breach, failure, claim, occurrence, or circumstance.
"Business Management Agreement" means that certain Business Management
Agreement, dated January 1, 1998, by and among the Company and Cummins PA, as
has been amended as reflected in the Schedules attached hereto.
"Closing" has the meaning set forth in SECTION 2.06.
"Closing Date" has the meaning set forth in SECTION 2.06.
"Closing Date Balance Sheets" has the meaning set forth in SECTION
2.03(A).
"Closing Date Financial Statements" has the meaning set forth in
SECTION 2.03(A)
"Closing Date Income Statements" has the meaning set forth in SECTION
2.03(A).
"COBRA" has the meaning set forth in SECTION 3.20(G).
"Code" means the Internal Revenue Code of 1986 or any successor law,
and regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"Collective Bargaining Agreement" means the Agreement between Charles
M. Cummins, O.D. - Elliot L. Shack, O.D., P.A., The Complete Optical Laboratory
Ltd. and International Union, United Automobile, Aerospace and Agricultural
Implement Workers of America Local 260.
"Company" means Vision Twenty-One, Inc., a Florida corporation.
"Company Businesses" has the meaning set forth in the recitals.
"Competing Business" has the meaning set forth in SECTION 3.26.
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<PAGE> 58
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including, without limitation, any Governmental Authorization).
"Contract" means any agreement, contract, instrument, obligation,
promise, commitment or undertaking (whether written or oral and whether express
or implied) that is legally binding.
"Cummins Employment Agreement" means that certain employment
agreement, dated January 1, 1998, by and between Dr. Cummins and the Company.
"Cummins PA" or the "Practice" means Charles M. Cummins, O.D. , P.A.,
a New Jersey professional association doing business as Drx and formerly known
as Charles M. Cummins, O.D. and Elliot L. Shack, O.D., P.A.
"Current Assets" means the inventory, accounts receivable, prepaid
expenses and accounts receivable transferred by the Sellers to Purchaser
hereunder and reflected on the Closing Date Balance Sheet.
"Damages" has the meaning set forth in SECTION 9.02.
"Date Data" has the meaning set forth in SECTION 3.28(B).
"Drx Acquisition Agreement" means that certain Asset Purchase
Agreement dated January 1, 1998 by and among Elliot L. Shack, O.D., P.A., a New
Jersey professional association, Charles M. Cummins and Elliot L. Shack, O.D.,
P.A., a New Jersey professional association, and the Company.
"EBITDA" has the meaning set forth in SECTION 2.03(E).
"ECCA SEC Reports" has the meaning set forth in SECTION 4.06.
"Employee Benefit Plans" has the meaning set forth in SECTION 3.20(B).
"Employee Policies and Procedures" has a meaning set forth in SECTION
3.19(E).
"Encumbrance" means any charge, claim, community property interest,
condition, covenant, equitable interest including any equitable servitude,
lien, option, pledge, security interest, right of first refusal, or restriction
of any kind, including any restriction on use, voting, transfer, receipt of
income, or exercise of any other attribute of ownership.
"Environmental and Safety Requirements" means all federal, state and
municipal statutes, regulations, common law and similar provisions having force
or effect of law, all orders, permits, licenses and approvals with respect to
environmental, public health and safety, occupational health and safety,
product liability and transportation including, without limitation, all such
standards of conduct or bases of obligations relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, control or
cleanup of any contaminant, waste, hazardous materials, substances, chemical
substances or mixtures, pesticides, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Escrow Agent" has the meaning set forth in SECTION 2.02(B)(II).
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<PAGE> 59
"Escrow Agreement" has the meaning set forth in SECTION 2.02(B)(II).
"Escrow Amount" has the meaning set forth in SECTION 2.02(B)(II).
"Estimated Adjustment Amount" has the meaning set forth in SECTION
2.02(C).
"Estimated Balance Sheet Assumed Liabilities Amount" has the meaning
set forth in SECTION 2.02(C).
"Estimated Cash Payment" has the meaning set forth in SECTION 2.02(B).
"Estimated Closing Date Balance Sheets" has the meaning set forth in
SECTION 2.02(C).
"Estimated Closing Date Income Statements" has the meaning set forth
in SECTION 2.02(C).
"Estimated Current Asset Amount" has the meaning set forth in SECTION
2.02(C).
"Estimated 1999 EBITDA Adjustment" has the meaning set forth in
SECTION 2.02(C).
"Estimated Purchase Price" has the meaning set forth in SECTION
2.02(B).
"Estimated Working Capital Amount" has the meaning set forth in
SECTION 2.02(C).
"Excluded Assets" has the meaning set forth in SECTION 2.01.
"Eye Care Acquisition Agreement" means that certain Agreement and Plan
of Reorganization dated March 31, 1998 by and between the Company, Eyecare One
Corp., a Delaware corporation, and Martin F. Stein, Robert L. Sowinski, Eugene
H. Edson, Stephen L. Chernoff and John C. Colman, not individually but solely
as Trustee of the John C. Colman Trust u/t/a/ August 5, 1994 and Stephen L.
Chernoff and Daniel J. Stein, not individually but solely in their capacities
as Trustees of the Daniel J. Stein Irrevocable Trust u/a/d April 3, 1996 and
Stephen L. Chernoff and Lawrence Stein, not individually but solely in their
capacities as Trustees of the Lawrence Stein Irrevocable Trust u/a/d April 5,
1996.
"Eye Care One" means Eyecare One Corp., a Delaware corporation doing
business as Stein Optical.
"Financial Statements" has the meaning set forth in SECTION 3.05.
"Financial Statements Protest Notice" has the meaning set forth in
SECTION 2.03(B).
"GAAP" means generally accepted United States accounting principles.
Whenever the term GAAP is followed by the phrase "applied on a basis consistent
with past practices" or other similar phrase, the Parties acknowledge that the
past practices also must comply with GAAP.
"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise
made available by or under the authority of any Governmental Body or pursuant
to any Legal Requirement.
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<PAGE> 60
"Governmental Body" means any:
(a) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HSR Act" means the Hart-Scott-Rodino Antitrust-Improvements Act of
1976, as amended.
"Indemnified Persons" has the meaning set forth in SECTION 9.02.
"Insolvent" means:
(i) A Person is unable to pay their debts or other
obligations as they become due; or
(ii) the aggregate fair valuation of a Person's debts
are in excess of the aggregate fair valuation of such Person's assets.
"Insurance Policies" has the meaning set forth in SECTION 3.15.
"Intellectual Property Rights" has the meaning set forth in SECTION
3.16.
"Internal Systems" has the meaning set forth in SECTION 3.28.
"Interim Balance Sheet" has the meaning set forth in SECTION 3.05.
"Inventory" shall mean all inventory used by, relating to or necessary
for the Acquired Businesses.
"IRS" means the Internal Revenue Service.
"Knowledge" means an individual will be deemed to have "Knowledge" of
a particular fact or other matter if such individual is actually aware of such
fact or other matter without independent investigation.
The Company and the Subsidiary together will be deemed to have
"Knowledge" if Theodore N. Gillette, Richard T. Welch, Richard Sanchez, Robert
Sowinski, Charles Cummins, O.D., Robert Collins, Sue Peterson, Joseph Farina,
Darrin Johnson, Cloe Malfatto, Dan Bagnall, Susan Kapall or any director of the
Company has, or at any time had, Knowledge of such fact or other matter.
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<PAGE> 61
The Purchaser will be deemed to have "Knowledge" if any individual who
is serving as a director or officer of the Purchaser has, or at any time had,
knowledge of such fact or other matter.
"Landlord Estoppel Certificates" has the meaning set forth in SECTION
7.11.
"Leases" has the meaning set forth in SECTION 3.09(B).
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"Material Adverse Effect" means, with respect to any Person, any
event, condition or change which materially and adversely affects or may
materially and adversely affect the business, financial condition, prospects,
assets or results of operations of such Person.
"Medicare" means that federal program authorized under Title XVIII of
the Social Security Act.
"Medicaid" means that federal program authorized under Title XIX of
the Social Security Act.
"Non-Recurring Charges" has the meaning set forth in SECTION 2.03(F).
"Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" means an action taken by a Person will
be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent (both in frequency and amount)
with the past practices of such Person and is taken in the ordinary course of
the normal day-to-day operations of such Person;
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of Persons
exercising similar authority); and
(c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that are
in the same line of business as such Person.
"Organizational Documents" means (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) the articles of organization and organizational agreement of a
limited liability company, (e) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a Person; and
(f) any amendment to any of the foregoing.
"Parties" means the Company, the Subsidiary and Purchaser.
"Payor" has the meaning set forth in SECTION 3.29.
6
<PAGE> 62
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Planned EBITDA" has the meaning set forth in SECTION 2.03(E).
"Practice" has the meaning set forth in the definition of Cummins PA.
"Prior Owners" shall mean Vision World, Inc., a Minnesota corporation,
Eyecare One Corp., a Delaware corporation, Elliot L. Shack, O.D., P.A., a New
Jersey professional association, Charles M. Cummins and Elliot L. Shack, O.D.,
P.A., a New Jersey professional association and each of their respective
stockholders.
"Proceeding" means any action, arbitration, audit, charge, complaint,
hearing, inquiry, investigation, litigation, or suit (whether civil or
criminal, judicial, administrative or regulatory, formal or informal, at law or
in equity) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Proprietary Rights Agreement" has the meaning set forth in SECTION
3.18(C).
"Prorated Personal Property Taxes" has the meaning set forth in
SECTION 2.09(B).
"Purchase Price" has the meaning set forth in SECTION 2.02(A)(I).
"Purchaser" means Eye Care Centers of America, Inc., a Texas
corporation.
"Purchaser Indemnified Persons" has the meaning set forth in SECTION
9.02.
"Representative" means, with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants, and
financial advisors.
"Restricted Business" has the meaning set forth in SECTION 6.04(A).
"Schedule" means any schedule delivered by the Company, the Subsidiary
or Purchaser pursuant to, and referred to in, ARTICLE III OR IV of this
Agreement.
"Sellers" means the Company and the Subsidiary.
"Sellers' Indemnified Persons" has the meaning set forth in SECTION
9.03.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning set forth in SECTION 3.34.
"Severance Letters" has the meaning set forth in SECTION 6.07(E).
"Strategic Agreement" has the meaning set forth in the recitals.
"Stub Period" has the meaning set forth in SECTION 2.03(G).
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<PAGE> 63
"Subject Transactions" means all of the transactions contemplated by
this Agreement, including:
(a) the sale of the Assets to, and the assumption of the
Assumed Liabilities hereunder;
(b) the execution, delivery, and performance of the
Acquisition Documents, including without limitation the Sublease Agreements and
the Assignments;
(c) the performance by the parties of their respective
covenants and obligations under this Agreement; and
(d) Purchaser's acquisition, ownership and exercise of
control over the Assets and the Businesses.
"Sublease Agreements" has the meaning set forth in SECTION 7.11.
"TCOL Stock Purchase Agreement" means that certain Stock Purchase
Agreement dated January 1, 1998 by and among Elliot L. Shack, O.D., P.A., a New
Jersey professional association, Charles M. Cummins, O.D. and Elliot L. Shack,
O.D., P.A., a New Jersey professional association and the Company.
"Tax" means any tax (including, without limitation, any tax on gross
income, net income, franchise, gross receipts, royalty, capital gains, value
added, sales, property, ad valorem, transfer, license, use, profits, windfall
profits, withholding on amounts paid to or by the Company, payroll, employment,
excise, severance, stamp, occupation, premium, gift, or estate), levy,
assessment, tariff, duty (including customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax-sharing agreement or any
other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Vision World" means Vision World, Inc., a Minnesota corporation.
"Vision World Acquisition Agreement" means that certain Asset Purchase
Agreement dated June 30, 1998 by and among Vision World, Inc., a Minnesota
corporation, Russell Trenholme, Takako Trenholme and the Company.
"VIPA" means Vision Insurance Plan of America, Inc.
"VPI" means Visionary Properties, Inc., a Delaware corporation.
"Working Capital Amount" has the meaning set forth in SECTION 2.03(A).
"Year 2000 Compliant" has the meaning set forth in SECTION 3.28(B).
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"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1998 EBITDA Adjustment" has the meaning set forth in SECTION 2.03(G).
"1998 Stub EBITDA" has the meaning set forth in SECTION 2.03(G).
"1999 EBITDA Adjustment" has the meaning set forth in SECTION 2.03(D).
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EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
Exhibit A Definitions
Exhibit B-1 Assigned Contracts with respect to the Wisconsin Business
Exhibit B-2 Assigned Contracts with respect to the Minnesota Business
Exhibit B-3 Assigned Contracts with respect to the New Jersey Business
Exhibit B-4 Assigned Contracts with respect to the Subsidiary
Exhibit C-1 Fixed Assets with respect to the Wisconsin Business
Exhibit C-2 Fixed Assets with respect to the Minnesota Business
Exhibit C-3 Fixed Assets with respect to the New Jersey Business
Exhibit C-4 Fixed Assets with respect to the Subsidiary
Exhibit D-1 Excluded Assets with respect to the Wisconsin Business
Exhibit D-2 Excluded Assets with respect to the Minnesota Business
Exhibit D-3 Excluded Assets with respect to the New Jersey Business
Exhibit D-4 Excluded Assets with respect to the Subsidiary
Exhibit E-1 Allocation of Purchase Price between Sellers
Exhibit E-2 Calculation of Working Capital
Exhibit F Form of Escrow Agreement
Exhibit G [INTENTIONALLY DELETED]
Exhibit H-1 Form of Bill of Sale, Assignment and Assumption Agreement (Wisconsin)
Exhibit H-2 Form of Bill of Sale, Assignment and Assumption Agreement (Minnesota)
Exhibit H-3 Form of Bill of Sale, Assignment and Assumption Agreement (New Jersey)
Exhibit H-4 Form of Bill of Sale, Assignment and Assumption Agreement (The Subsidiary)
Exhibit I Allocation of Purchase Price among Assets
Exhibit J Form of Opinion from the Company' counsel
Exhibit K [INTENTIONALLY DELETED]
Exhibit L Form of Landlord Estoppel Certificate
Exhibit M Form of Sublease Agreement
Exhibit N Form of Assignment of Lease
Exhibit O [INTENTIONALLY DELETED]
Exhibit P Planned EBITDA
Exhibit Q Non-Recurring Charges
Schedule 3.02 Title to Assets; Condition
Schedule 3.03 Existence, Good Standing and Authority
Schedule 3.04 Investments
Schedule 3.06 No Material Changes
Schedule 3.08 Accounts Receivable
Schedule 3.09 Real Property Leases
Schedule 3.10 Material Contracts
Schedule 3.11(a) Conflicts
Schedule 3.11(b) Consents
Schedule 3.14 Liabilities
Schedule 3.15 Insurance
Schedule 3.16 Intellectual Properties
Schedule 3.17 Compliance with Laws
Schedule 3.18(a) Employees
Schedule 3.18(b) Independent Contractors
Schedule 318(e) Employment Agreements
Schedule 3.20(a) Employee Benefit Plans
</TABLE>
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<TABLE>
<S> <C>
Schedule 3.21 No Changes Prior to Closing Date
Schedule 3.22 Broker's or Finder's Fees
Schedule 3.23(a) Government Authorizations
Schedule 3.23(b) Consents
Schedule 3.24 Environmental and Health and Safety Matters
Schedule 3.28(a) Year 2000 Compliance
Schedule 3.30 Payors
Schedule 3.31 Inventory
Schedule 3.32 Acquisition Agreements
Schedule 3.33 Bank Accounts
Schedule 4.04 Consents
</TABLE>
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EXHIBIT 99.0
<TABLE>
<CAPTION>
Contacts:
<S> <C> <C>
Theodore Gillette Richard Welch Heidi Hart
Chairman, President and CEO Chief Financial Officer Investor Relations
Vision Twenty-One, Inc. Vision Twenty-One, Inc. Vision Twenty-One, Inc.
727-545-4300 ext. 2103 727-545-4300 ext. 2118 727-545-4300 ext. 2124
</TABLE>
VISION TWENTY-ONE COMPLETES SALE OF THREE RETAIL OPTICAL CHAINS
TO EYE CARE CENTERS OF AMERICA
- COMPANIES ENTER INTO STRATEGIC ALLIANCE AGREEMENT-
Largo, FL - September 1, 1999 - Vision Twenty-One, Inc. (Nasdaq: EYES), a
leading provider of laser vision correction and eye care services announced
today that they have completed the sale of its retail optical chains to Eye
Care Centers of America, Inc. ("ECCA"), a Thomas H. Lee Company. Simultaneously
with closing, the companies entered into a comprehensive Strategic Alliance
Agreement related to joint initiatives in managed care and Vision Twenty-One's
refractive surgery programs.
The amount of cash received by Vision Twenty-One at closing was $37.3 million
with the final price subject to post closing adjustments. Of the proceeds
Vision Twenty-One received at closing, $30.8 million was applied as a permanent
pay down of its term debt credit facility, $2.8 million paid down under its
ongoing $7.5 million revolving credit facility, $2.4 million will be used for
costs and other obligations related to the transaction and $1.25 million was
utilized to fund an escrow agreement between the parties relative to terms
under the Agreement.
Theodore N. Gillette, Chairman, President and CEO of Vision Twenty-One stated,
"This transaction reflects another important step in de-leveraging the balance
sheet and continuing our strategic plan to focus on refractive surgery and
related vision care initiatives in our core markets. Furthermore, the strategic
alliance with ECCA opens up incremental market opportunities for developing
refractive surgery centers and contracting with local health plans."
Vision Twenty-One, Inc. is a leading national provider of laser vision
correction and eye care services with a network covering 40 markets in 27
states with an increasing focus on laser vision correction. With the physician
at the center of its operating model, the company supports affiliated
optometrists and ophthalmologists locally through networks of eye care centers,
strategic alliances with retail optical chains and exclusive contracts with
vision health plans.
The company is headquartered in Largo, Fla., and maintains regional offices in
Phoenix, Minneapolis and Newark. For more company information, visit our Web
site at www.vision21.com.
###
Statements contained in this press release that are not based on historical
fact and which are forward looking in nature. Actual results may differ
materially from the statements made as a result of various factors including,
but not limited to, certain risks, including those identified in the Company's
most recent 10-Q and in other documents filed by the Company with the U.S.
Securities and Exchange Commission (SEC).
