SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 31, 2000
LIGHTTOUCH VEIN & LASER, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-29301 87-0575118
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
10663 Montgomery Road, Cincinnati, Ohio 45242
(Address of principal executive offices) (Zip Code)
(513) 891-8346
Registrant's telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
Exhibit index on consecutive page 2
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Item 1. Changes in Control of Registrant
Not Applicable.
Item 2. Acquisition or Disposition of Assets
On March 31, 2000, the registrant consummated the acquisition of assets
pursuant to the terms of an Asset Purchase Agreement with Harley F.
Freiberger, M.D., dba the Charleston Dermatology and Cosmetic Surgery
Center. The registrant proposes to use the purchased assets and the
services of Dr. Freiberger in its center located in Charleston, South
Carolina, known as LightTouch Vein & Laser of South Carolina, Inc.
("LightTouch-South Carolina").
The purchase price of the assets was $700,000 in the form of a
promissory note and the assumption of approximately $90,000 in
liabilities. The note and the assumed liabilities are expected to be
paid from cash flow generated by the operations of LightTouch-South
Carolina.
Item 3. Bankruptcy or Receivership
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant
Not Applicable.
Item 5. Other Events
Not Applicable.
Item 6. Resignations of Registrant's Directors
Not Applicable.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired: To be filed by
amendment
(b) Pro forma financial information: To be filed by amendment
(c) Exhibits:
<TABLE>
<CAPTION>
Regulation Consecutive
S-K Number Document Page Number
<S> <C> <C>
2.1 Asset Purchase Agreement dated March 29, 2000 4
10.1 Promissory Note dated March 29, 2000 23
10.2 National Medical Director Agreement with Harley 28
F. Freiberger, M.D. dated March 29, 2000
2
<PAGE>
10.3 South Carolina Medical Director And Administra 42
tive Services Agreement dated March 29, 2000
</TABLE>
Item 8. Change in Fiscal Year
Not applicable.
SIGNATURES
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.
LIGHTTOUCH VEIN & LASER, INC.
May 8, 2000 By:/s/ GREGORY F. MARTINI
-----------------------------
Gregory F. Martini, President
3
<PAGE>
EXHIBIT 2.1
Asset Purchase Agreement dated March 29, 2000
4
<PAGE>
THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE UNIFORM
ARBITRATION ACT, SECTION 15-48-10, ET SEQ., CODE OF LAWS OF SOUTH CAROLINA, 1976
(AS AMENDED)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
this 29 day of MARCH, 2000, by and between HARLEY F. FREIBERGER, M.D.,
individually and D/B/A THE CHARLESTON DERMATOLOGY AND COSMETIC SURGERY CENTER
("Seller"), and LIGHTTOUCH VEIN & LASER OF SOUTH CAROLINA, INC., a South
Carolina corporation ("Purchaser"), a wholly owned subsidiary of LIGHTTOUCH VEIN
& LASER, INC., a Nevada corporation ("Parent").
W I T N E S S E T H:
WHEREAS, Seller presently owns certain assets identified herein below
which are employed in connection with the operation of a cosmetic surgery center
known as "The Charleston Dermatology and Cosmetic Surgery Center" in Charleston,
South Carolina; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, all of the assets employed by Seller in connection with
its operation of the aforementioned Cosmetic Surgery Center in Charleston, South
Carolina (the "Business"), in accordance with and subject to the terms,
conditions and provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Agreement, and intending to be legally bound, Purchaser, Parent and Seller
hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS. At the closing (as defined in Section 5
of this Agreement), Seller shall sell or assign to Purchaser, and Purchaser
shall purchase from Seller, all of the rights, title and interest in and to
Seller's assets located in Charleston, South Carolina and employed in connection
with the operation of the Business, excluding, however, the Excluded Assets set
forth on SCHEDULE "A-1" (the "Assets"), including, without limitation:
(a) all personal property described on SCHEDULE "A" to this
Agreement (subject to disposals or consumption thereof in the ordinary course of
business between the date hereof and the Closing Date) or replacements thereof
and alterations thereto in the ordinary course of business between the date
hereof and the Closing Date;
(b) all governmental authorizations, licenses and permits
listed on SCHEDULE "B" to this Agreement, together with any renewals,
extensions, or modifications thereof and applications therefor (to the extent
assignable);
(c) (i) all of the written contracts, agreements, commitments,
understandings, or instruments relating to the Business, including, without
limitation, all leases, and (ii) all written
Charleston: 181928 v. 15.
<PAGE>
agreements, with employees of the Business, whether earned before or after the
Closing Date (collectively, the "Contracts") to which Seller is a party or by
which it is bound, being the contracts listed in SCHEDULE "C" to this Agreement,
except for those contracts listed on SCHEDULE "D" to this Agreement
(collectively, the "Excluded Contracts"), which are specifically excluded from
the Assets;
(d) all books and records of Seller relating to the Assets
and the Business;
(e) all patient lists and medical records relating to the
Business;
(f) all marketing and advertising materials relating to
the Business including, without limitation, all literature, displays, brochures,
photographs, slides, advertising artwork and logos;
(g) all accounts receivables and notes receivables relating to
the Business and in existence as of the Closing Date;
(h) all prepaid expenses relating to the Business and in
existence as of the Closing Date;
(i) all telephone numbers associated with the Business; and
(j) all goodwill associated with the Business.
2. ASSUMPTION OF LIABILITIES. On and after the Closing Date, Purchaser
shall pay, perform, assume, and discharge, in accordance with their respective
terms:
(a) all liabilities and obligations of Seller from and after the
Closing Date under the Contracts listed in SCHEDULE "C" to this Agreement except
for the Excluded Contracts;
(b) all liabilities and obligations of Seller from and after the
Closing Date under all equipment leases existing as of Closing Date as
identified on SCHEDULE "E" to this Agreement; and
Except as set forth herein above, Purchaser shall not assume, nor in
any manner become responsible for, any other debts, obligations or liabilities
of Seller, whether known or unknown, fixed, contingent or otherwise, including,
without limitation, any liability arising out of contract, quasi-contract or
tort, any liabilities for income, real property or other taxes, including, but
not limited to, sales, and/or use taxes relating to this transaction, of any
nature whatsoever, and any liabilities under any employment or similar
agreements.
Except with respect to the liabilities expressly assumed by Purchaser
herein above, Seller hereby agrees to indemnify and hold harmless Purchaser with
respect to any and all other debts, obligations or liabilities of Seller as set
forth in the preceding paragraph. Purchaser and Parent agree to indemnify and
hold Seller harmless with respect to (i) any and all of the assumed liabilities
<PAGE>
and (ii) any and all other liabilities and obligations of the Business arising
from and after the date of Closing.
3. PURCHASE PRICE. The aggregate purchase price for the Assets is Seven
Hundred Thousand and no/100 Dollars ($700,000.00) (the "Purchase Price"), which
shall consist of a purchase money promissory note of Purchaser to Seller in the
sum of $700,000.00 and secured by the Assets set out in Section 1 above (the
"Note"). The Note shall be payable in two (2) installments of principal, without
interest (provided no event of default exists). If the Business maintains a cash
flow of not less than $400,000.00 for the period beginning April 1, 2000 and
ending March 31, 2001, Purchaser shall pay to Seller principal as follows: (i)
the first installment of principal in the amount of $200,000.00 on or before the
date which is twelve (12) months from the Closing Date; and (ii) the second
installment of principal in the amount of $500,000.00 on or before the date
which is twenty-four (24) months from the Closing Date. For purposes of this
Agreement, cash flow shall mean net income, including facility rental income
calculated using the accrual method of accounting subject to the rules and
provisions of Generally Accepted Accounting Principles (GAAP) before income
taxes and Seller's total compensation for the period being reported. Cash flow
shall be determined by the certified public accountant for the Purchaser (the
"CPA") according to GAAP. If the CPA determines that the cash flow for the above
stated period is less than $400,000.00, then the principal repayment dates under
the Note shall automatically be extended for successive twelve (12) and
twenty-four (24) month periods, without interest (provided no event of default
exists), until the required cash flow is attained within a fiscal year.
4. PAYMENT AND ALLOCATION. The Purchase Price above shall be paid by
Purchaser, as applicable, to Seller on the Closing Date in the form of the Stock
and the Note together with the liabilities and obligations assumed under Section
2 (a) and (b). The Purchase Price shall be allocated among the Assets as
provided on SCHEDULE "F-1" attached hereto. Such allocation of the Purchase
Price shall be conclusive and binding on both Purchaser and Seller for purposes
of their federal and, where applicable, state and local income tax returns.
Purchaser and Seller each hereby covenant and agree that each will not take a
position on any such return or report, before any governmental agency or any
judicial proceeding that is in any way inconsistent with this Section 4.
5. CLOSING; REASONABLE EFFORTS The closing of the transaction contemplated
by this Agreement (the "Closing") shall take place at the offices of Seller, on
or before March 31, 2000, time being of the essence, or at such other time, date
or place upon which Purchaser and Seller shall agree in writing (the "Closing
Date"). At the Closing, concurrently with the discharge of the other party's
respective closing obligations:
5.1 SELLER'S CLOSING ITEMS. Seller shall deliver to Purchaser:
(a) A bill of sale and assignment in the form (with appropriate
insertions) attached as SCHEDULE "F" to this Agreement, and an assignment and
assumption of lease with release in the form (with appropriate insertions)
attached as SCHEDULE "G" to this Agreement, together with such consents as are
required, to effect the sale, conveyance, and transfer of good and marketable
title to the Assets from the Seller to Purchaser, free and clear of all liens,
mortgages, security interests, pledges, charges, and encumbrances, except for
Permitted Liens (as defined in Section 7(f); and
<PAGE>
(b) The opinions of counsel and certificates required by Sections
10 (a), 10 (b), and 10 (c) of this Agreement.
(c) An employment contracts with Seller, Dr. Harley F.
Freiberger, or a corporation employing him, as more fully set out in Section 6
herein.
5.2 PURCHASER'S CLOSING ITEMS. Purchaser shall deliver to Seller:
(a) The Stock certificates, the Note, the Security Agreement,
Collateral Assignment of Lease and UCC-1 Financing Statements;
(b) An instrument or instruments of assumption in the form (with
appropriate insertions) attached as SCHEDULE "G" to this Agreement to evidence
Purchaser's assumption of the liabilities to be assumed by Purchaser in
accordance with Section 2 of this Agreement;
(c) The opinion of counsel and certificates required by Sections
11(a), 11 (b), and 11 (c) of this Agreement;
(d) An employment contract with Seller, Dr. Harley F. Freiberger,
or a corporation employing him, as more fully set out in Section 6 herein.
(e) A Resolution of the Purchaser and Parent approving the
execution, delivery and performance of this Agreement and the transactions
contemplated thereby, in form and substance satisfactory to Seller and certified
by the Purchaser and Parent's secretary as of the Closing Date.
6. RETENTION OF EMPLOYEES. Purchaser shall retain all employees of Seller
at their existing compensation levels and positions. The retention of Seller's
employees shall not constitute an employment contract between Purchaser and
retained employees and Purchaser shall be free to discharge the retained
employees in accordance with existing law. Seller shall, at all times, both
prior to and after the Closing Date, be responsible for all wages and
compensation accrued as of, and arising prior to, the Closing Date. Purchaser
and Parent shall, at all times, both prior to and after the Closing Date, be
responsible for all wages and compensation arising on or after the Closing Date
of all of Seller's former employees hired and retained by Purchaser.
Purchaser and Parent shall, on or before the Closing Date, enter into an
employment contract with Seller, Harley F. Freiberger, M.D., as Medical Director
of the Parent or with a corporation employing him (the "Employment Contract").
Seller shall earn and be entitled to receive all of the first $40,000.00 of the
cash flow received by Purchaser each and every month for the first twenty-four
(24) months (or for such longer period as necessary if the Note has not been
paid in full). All of the cash flow received by Purchaser above $40,000.00 per
month up to $55,000.00 per month during such period shall be retained by
Purchaser. All of the cash flow in excess of $55,000.00 shall be shared between
Seller and Purchaser on 50/50 basis (with 50% of the additional cash flow over
$55,000.00 per month going to the account of Seller and 50% of the additional
cash flow over
<PAGE>
$55,000.00 per month going to the account of Purchaser). For purposes of this
Section, cash flow shall have the same meaning as cash flow in Section 3(b).
After such initial twenty-four (24) month period (or such longer period if the
Note referenced in Section 3(b) has not been paid in full), Seller shall be paid
a guaranteed minimum annual salary of $175,000.00, plus 50% of all of the cash
flow of the Purchaser for a term and with additional benefits to be determined
by Purchaser and Parent and Seller, Dr. Freiberger. The Employment Agreement
shall contain a non-compete clause for the term of the employment. The Note
shall be secured by the non-compete agreement so that a default in the Note will
terminate the non-compete agreement. In addition, the Employment Contract will
contain provisions for the following: (i) all business related travel and other
related expenses for travel, seminars, meetings, conferences and the like by
Seller on behalf of Purchaser and/or Parent which has been approved by Purchaser
or Parent (which approval will not be unreasonably withheld), will be paid by
Parent (excluding travel and related expenses for required Continuing Medical
Education except where Parent requests or approves attendance) and shall be
charged as an expense of the Purchaser; (ii) Seller will have a corporate credit
card issued in his name under Parent's account for all such expenses paid for by
Parent; (iii) on all such approved business and related travel, Seller shall be
entitled to travel First Class; and (iv) on all such approved business and
related travel, Seller shall be entitled to stay in hotels where any such
conferences or meetings are booked. Seller, as Medical Director, will have
influence and direct input on all aspects of the operations of Parent,
including, without limitation, quality and professionalism of such operations.
After the due date of the first installment of principal under the
Promissory Note, Seller shall be elected to the Board of Directors of Parent.
7. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants
to Purchaser and Parent, and acknowledges that Purchaser and Parent rely on such
representations and warranties in entering into and proceeding under this
Agreement, that::
(a) EXECUTION, AND DELIVERY OF THIS AGREEMENT. The execution and
delivery by Seller of this Agreement and the consummation by Seller of the
transactions contemplated hereby will not conflict with or constitute a
violation, breach, or default under any material contract, trust agreement,
mortgage, indenture, or other agreement or instrument to which Seller is a party
or by which it is bound or to which Seller or any of its properties is subject.
(b) CONSENTS. No provision of any material contract, trust
agreement, mortgage, indenture, or other agreement or instrument to which Seller
is a party or by which it is bound or to which Seller or any of its properties
is subject requires the consent or authorization of any other person or entity
as a condition precedent to the consummation of the transactions contemplated by
this Agreement. No governmental consents or authorizations are required for the
transfer of the Assets, the acquisition of Purchaser of the Business or the
operation of the Business by Purchaser.
(d) BROKERS. No person or entity is entitled to any brokerage or
finder's fee or commission or other like payment in connection with the
negotiations relating to or the transactions contemplated by this Agreement,
based on any agreement, arrangement, or understanding with Seller, or any of
Seller's respective officers, directors, agents, or employees.
<PAGE>.\
(e) CURRENT LITIGATION. To Seller's knowledge, except as set
forth in SCHEDULE "H" to this Agreement, there are no claims of any kind or any
actions, suits, or proceedings threatened or pending in any court or before any
governmental commission or agency against Seller, or against the Assets, which
are material to the Business and Seller is aware of no facts, conditions, or
circumstances that could provide a basis for any such claims, actions, suits, or
proceedings. Seller has complied in all material respects with and is not in
material violation of any order, writ, injunction, or decree of any court,
agency, or instrumentality relating to the Assets and/or the Business to
Seller's knowledge.
(f) TITLE TO ASSETS. Seller has good, marketable, fee simple
title to the Assets to be sold and conveyed by Seller to Purchaser hereunder.
The Assets constitute all of the tangible and intangible assets which are
reasonably necessary and adequate to the operation of Seller's Business as it is
presently conducted. At the time of their conveyance to Purchaser at the Closing
Date, the Assets shall be free and clear of all mortgages, pledges, security
interests, liens, charges, subleases, restrictions or encumbrances of any nature
whatsoever, except for the liens listed on SCHEDULE "I" (the "Permitted Liens").
(g) ENVIRONMENTAL MATTERS. To Seller's knowledge, Seller is in
material compliance with all applicable federal, state, and local laws, rules,
regulations, ordinances, and requirements relating to health, safety and the
protection of the environment including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 USC 9601 et seq. and
the Resource Conservation and Recovery Act, 42 USC 6901 et seq.; and to Seller's
knowledge, Seller has received all governmental licenses, permits, and
registrations (federal, state, county and local) materially necessary to operate
its Business as it has been conducted to date, including but not limited to,
those required by such laws, rules and regulations; and Seller has not received
any notice of noncompliance with any such laws, rules or regulations.
(h) TAX MATTERS. Except as set forth in SCHEDULE "J", Seller has
duly and timely filed all federal, state, local and foreign tax returns, tax
information returns, and reports required to be filed through the date of this
Agreement, and has paid or made adequate provision by reserve or accrual for
payment of all federal, state, and local income, property, sales, use, profits,
occupancy, employment, excise, customs duties or other taxes of any nature
whatsoever which have become due pursuant to such returns and reports, or
pursuant to any assessment received by it, which taxes or assessments, if not
paid by Seller, would become the liability of Purchaser, except for taxes the
validity of which Seller may be contesting in good faith in appropriate
proceedings, and Seller will file all such returns and pay all such taxes
through the Closing Date.
(i) CONTRACTS; AGREEMENTS. Except for this Agreement or any
agreement contemplated hereby, and the Contracts listed in SCHEDULE "C" and the
Excluded Contracts listed in SCHEDULE "D", Seller is not a party to or subject
to, whether written or oral, (i) any management, employment or consulting
contract or any other contract or arrangement with any employee, agent or
representative which is not by its own terms terminable at will upon thirty (30)
days written notice, without penalty, or (ii) any contract, agreement or
arrangement having, or which will have, a material, adverse effect upon the
Assets being transferred hereunder or the Business and operations of Seller,
including (but not limited to) term loan arrangements and other agreements with
creditors.
<PAGE>
(j) ABSENCE OF RECOMMENDED CORRECTIVE ACTIONS. To Seller's
knowledge, there are no presently active recommendations or requirements of any
insurance company that has issued a policy with respect to the Assets and/or
Business of Seller, nor, except as disclosed on SCHEDULE "K", is any
governmental authority requiring or recommending any work to be done or action
taken on or with respect to the Assets and/or Business of Seller, or is
requiring or recommending any equipment or facilities be installed on or other
action taken in connection with the Assets and/or the conduct of Seller's
Business.
(k) ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND WARRANTIES.
No representation or warranty of Seller contained in this Agreement, or in any
certificate, schedule, exhibit, or other document furnished pursuant hereto,
contains any untrue statement of a material fact.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT. Purchaser and
Parent represent and warrant to Seller, and acknowledges that Seller relies on
such representations and warranties in entering into and proceeding under this
Agreement, that:
(a) LEGAL STANDING. Parent is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Nevada and
any and all other jurisdictions where required by law, with full power and
authority to enter into this Agreement and all other agreements contemplated by
this Agreement and to consummate the transactions contemplated hereunder and
thereunder. Purchaser is a South Carolina corporation which is a corporation
wholly owned by Parent and duly organized, validly existing, and in good
standing under the laws of the State of South Carolina and any and all other
jurisdictions where required by law, with full power and authority to enter into
this Agreement and all other agreements contemplated by this Agreement and to
consummate the transactions contemplated hereunder and thereunder.
(b) AUTHORIZATION, EXECUTION, AND DELIVERY OF THIS AGREEMENT.
This Agreement has been duly authorized by all necessary legal action of
Purchaser and Parent and has been duly executed and delivered by Purchaser and
Parent. The execution and delivery of this Agreement by Purchaser and Parent and
the consummation of the transactions contemplated hereunder will not conflict
with or constitute a violation of any provisions of the Articles of
Incorporation or By-laws of Purchaser and Parent or conflict with or constitute
a violation, breach, or default under any material contract, trust agreement,
mortgage, indenture, or other agreement or instrument to which Purchaser or
Parent is a party or by which Purchaser or Parent is bound or to which Purchaser
or Parent or any of its properties is subject.
(c) CONSENTS. No provision of the Articles of Incorporation or
By-laws of Purchaser or Parent or of any material contract, trust agreement,
mortgage, indenture, or other agreement or instrument to which Purchaser or
Parent is a party or by which it is bound or to which Purchaser or Parent or any
of its properties is subject requires the consent or authorization of any other
person or entity as a condition precedent to the consummation of the
transactions contemplated hereby.
(d) BROKERS. No person or entity is entitled to any finder's or
brokerage fee or commission or other like payment in connection with the
transactions contemplated by this
<PAGE>
Agreement based on agreements, arrangements, or understandings with Purchaser,
or any of Purchaser's respective members, managers, agents, or employees.
(e) ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND WARRANTIES.
No representation or warranty of Purchaser contained in this Agreement, or in
any certificate, schedule, exhibit, or other document furnished pursuant hereto,
contains any untrue statement of a material fact.
(f) NO VIOLATION OF LAWS. Neither Purchaser nor Parent has not
received, nor is it aware of, any notice or citation of violation of any law,
ordinance, regulation or directive of any governmental or quasi-governmental
authority having, or claiming, jurisdiction with respect to Purchaser.
(g) TAXES. Purchaser and Parent have filed all tax returns
required to be filed by it under the laws of the United States of America, the
State of South Carolina and each State or other jurisdiction in which it is
required to do so and has paid all taxes for the periods covered by such
returns.
9. CIRCUMSTANCES PRIOR TO CLOSING. From the date of this Agreement
until the Closing Date, Purchaser shall promptly notify Seller, and Seller shall
promptly notify Purchaser, upon receipt of actual notice or knowledge of any
fact which would make any representation or warranty contained in this Agreement
untrue in any material respect.
9.1 OBLIGATIONS OF SELLER PRIOR TO CLOSING. From the date of this
agreement until the Closing Date, Seller shall use its reasonable efforts to:
(a) Afford Purchaser, its accountants, counsel, technical
advisors, and other representatives free and reasonable access during normal
business hours to the offices, equipment, facilities, records, files, contracts,
agreements, books of account, and tax returns of Seller relating to the Assets
and the Business and furnish Purchaser and Parent with all information
concerning the Assets and the Business as Purchaser shall reasonably request;
(b) Use its reasonable efforts to continue in force policies of
insurance which insure the Assets and the Business with such amounts of coverage
as are reasonably available, and continue in force all bonds, surety contracts,
or guaranties relating to the Business set forth in any schedule to this
Agreement;
(c) Not enter into any employment agreement relating to the
Business with any person unless Seller has the right to terminate such
employment agreement without liability;
(d) Not knowingly take any action or omit to take any action
which will result in the material violation by Seller of any law applicable to
this transaction or cause a material breach by Seller of any of the
representations and warranties of Seller set forth in this Agreement or any
lease, agreement, contract, or commitment to which Seller is a party;
<PAGE>
(e) Give Purchaser written notification of any material changes
taking place after the delivery of any Schedules and other documents which would
have been reflected in such documents had such changes occurred prior to the
time such documents were first delivered.
9.2 OBLIGATIONS OF PURCHASER AND PARENT PRIOR TO CLOSING. From the
date of this Agreement until the Closing Date, Purchaser and Parent shall:
(a) Not knowingly take any action or omit to take any action
which will result in the material violation by Purchaser or Parent of any law
applicable to this transaction or cause a material breach by Purchaser or Parent
of any of the representations and warranties of Purchaser or Parent set forth in
this Agreement; and
(b) Use its reasonable efforts to obtain prior to Closing all
consents by third parties and all governmental authorizations, licenses and
permits which are necessary for Purchaser or Parent's performance of this
Agreement or for Purchaser's ownership and operation of the Business following
the Closing Date.
10. CONDITIONS TO PURCHASER'S OBLIGATION. The obligation of Purchaser and
Parent to consummate on the Closing Date the transactions contemplated by this
Agreement will be subject to the satisfaction of each of the following
conditions on or prior to the Closing Date, unless waived by Purchaser and
Parent:
(a) OPINION OF COUNSEL FOR SELLER. Purchaser and Parent shall
have received the written opinion of counsel for Seller, dated the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in Section 8 of this Agreement shall be true and
correct in all material respects on and as of the Closing Date as if made on and
as of the Closing Date, except for changes resulting from the ordinary course of
Seller's Business, or as contemplated by this Agreement.
(c) PERFORMANCE OF THIS AGREEMENT. Seller shall have performed
and observed in all material respects its covenants and obligations as set forth
in this Agreement prior to or on the Closing Date.
(d) LITIGATION. There shall be no injunction, decree, or order
issued by any court, governmental agency, or authority, or any litigation
instituted by any governmental agency or authority challenging or seeking to
prohibit or enjoin any of the transactions contemplated by this Agreement.
(e) CONDITION OF ASSETS. No material portion of the Assets shall
have been damaged or destroyed by fire, flood, or other casualty which is not
covered by Seller's insurance.
(f) MATERIAL CLAIMS. No material claim shall have arisen, of
which Seller is aware, that is not adequately covered by insurance policies
maintained by Seller, and Seller shall have delivered a certificate to that
effect signed by the chief executive officer of Seller and dated as of the
Closing Date.
<PAGE>
(g) UCC OPINION. Purchaser shall have, at its own cost and
expense, obtained and received the results of a Uniform Commercial Code (UCC)
search certifying that all of the Assets are free, clear and unencumbered as of
the Closing Date.
(h) AFFIDAVIT OF TITLE. Purchaser shall have received an
Affidavit of Title from Seller, in a form satisfactory to Purchaser's counsel,
as to all of the Assets.
(i) THIRD PARTY CONSENTS. Seller shall have received all
necessary consents and approvals of third parties as may be required with
respect to any Contracts to be assumed by Purchaser.
(j) GOVERNMENTAL CONSENTS. Seller shall have received such
governmental licenses and permits as may be required for the operation of the
Business.
(k) Receipt of Purchaser's Closing Items in accordance with
Paragraph 5.1.
11. CONDITIONS TO SELLER'S OBLIGATION. The obligation of Seller to
consummate on the Closing Date the transactions contemplated by this Agreement
will be subject to the satisfaction of each of the following conditions on or
prior to the Closing Date, unless waived by Seller:
(a) OPINION OF COUNSEL FOR PURCHASER AND PARENT. Seller shall
have received the written opinion of counsel to Purchaser and Parent, dated the
Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser and Parent contained in Section 9 of this Agreement
shall be true and correct on and as of the Closing Date as if made on and as of
the Closing Date, except for changes resulting from the ordinary course of
Purchaser's business or as contemplated by this Agreement, and Purchaser and
Parent shall have delivered to Seller a certificate signed by an authorized
officer of Purchaser and Parent and dated the Closing Date.
(c) PERFORMANCE OF THIS AGREEMENT. Purchaser and Parent shall
have performed and observed in all material respects its covenants and
obligations under this Agreement prior to or on the Closing Date and Purchaser
shall have delivered to Seller a certificate signed by an authorized member of
Purchaser and Parent and dated the Closing Date.
(d) LITIGATION. There shall be no injunction, decree, or order
issued by any court, governmental agency, or authority, or any litigation
instituted by any governmental agency or authority, challenging or seeking to
prohibit or enjoin any of the transactions contemplated by this Agreement.
(e) SELLER DUE DILIGENCE. Seller has independently investigated
the restrictions and limitations on transfer with respect to the Purchaser's
Stock transferred to Seller under Section 3 (a) and is satisfied as to the
nature and quality of such Stock based on the financial information and
disclosures provided by Purchaser to Seller.
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(f) Receipt of Purchaser and Parent's Closing Items in accordance
with Paragraph 5.2.
12. ADDITIONAL COVENANTS OF SELLER AND PURCHASER. Seller and Purchaser
hereby additionally covenant as follows:
(a) Seller shall retain full liability for all existing
obligations whatsoever of Seller to third parties as of the Closing Date, except
those expressly assumed by Purchaser or Parent pursuant to Section 2 of this
Agreement, and shall hold Purchaser and Parent harmless and indemnify them from
any such liability arising from said obligations of Seller.
(b) Purchaser shall pay any and all sales and use taxes that may
arise as a result of this Agreement and the transactions contemplated herein.
(c) Seller will timely file all applicable federal, state and
local tax returns, declarations of statements with respect to all federal, state
and local income, property, sales, use, profits, occupancy, employment,
withholding, occupational license, excise or other taxes of any nature
whatsoever required to be filed that relate to the period prior to Closing, and
Seller shall pay all taxes which relate to or stem from the operation of
Seller's business prior to the Closing, including but not limited to, real
estate taxes and personal property taxes on the Assets for the current tax year
prorated between Seller and Purchaser as of the Closing Date.
(d) Purchaser will timely file all applicable federal, state and
local tax returns, declarations of statements with respect to all federal, state
and local income, property, sales, use, profits, occupancy, employment,
withholding, occupational license, excise or other taxes of any nature
whatsoever required to be filed that relate to the period after Closing, and
Purchaser shall pay all taxes which relate to or stem from the operation of
Purchaser's business after the Closing.
(e) The financial statements of the Purchaser as of December 31,
1999, together with related statements of operations and deficit and changes in
financial position for the years then ended, and the notes thereto, all of which
have been reported by Clark, Shaefer, Hackett & Co., certified public
accountants, which have been delivered to Seller, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and present fairly the financial condition of the Purchaser at the dates
indicated and the results of operations for the periods indicated.
(f) Purchaser agrees to indemnify and hold harmless Seller from
and against any and all loss, claim, damage, liability, or expense (including,
but not limited to, legal fees and any and all other expenses reasonably
incurred in investigating, preparing or defending against any litigation
commenced or threatened against any of the foregoing) arising out of or based
upon any misrepresentation made by Purchaser herein and in any financial
information and other written disclosures provided by Purchaser to Seller.
(g) Parent agrees to provide at its expense marketing and
advertising for Purchaser and agrees to spend up to $100,000.00 during the first
six (6) months following the Closing Date on marketing and advertising the
Purchaser's business in the Charleston, South
11
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Carolina market area promptly upon Seller's request. Such marketing and
advertising shall be in accordance with a written marketing plan approved by
Seller. Such expenditure shall ultimately be charged back as an expense against
Purchaser. Furthermore, Parent shall provide national advertising and marketing,
training, support, and other services necessary or desirable for the success of
the Purchaser's business in the Charleston, South Carolina market area.
(h) Purchaser and Seller shall cooperate with each other to
comply with all federal, state and local laws, rules and regulations governing
the transactions contemplated herein, including, without limitation, any and all
securities and antitrust disclosures and filings, if applicable.
13. BOOKS AND RECORDS. Seller agrees that, prior to the Closing Date,
Purchaser shall be afforded full and complete access to all of Seller's books,
records and properties relating to the Assets and the Business, and shall be
furnished with copies of management prepared financial statements for the Assets
and the Business for all periods through the Closing Date.
14. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS, GUARANTEES AND
INDEMNIFICATIONS. The parties hereto agree that the representations, warranties,
covenants, guarantees, indemnifications, and other agreements contained in this
Agreement or in any document, certificate, instrument, exhibit, or disclosure
schedule delivered in connection herewith shall survive the Closing and continue
to be binding regardless of any investigation made at any time by the parties.
Said survival is not intended to alter or extend the date as of which said
representations and warranties speak.
15. INDEMNIFICATION.
15.1 INDEMNIFICATION BY SELLER. After the Closing Date, Seller shall
indemnify and hold harmless Purchaser against and in respect of:
(a) Any damage, deficiency, or costs resulting from any
misrepresentation or breach of warranty or any nonfulfillment of any covenant or
agreement on the part of Seller under this Agreement;
(b) Any damage, deficiency, or costs arising from the within
Agreement and resulting from claims accruing prior to the Closing Date by a
person, firm, or corporation other than a party to this Agreement; and
(c) Any claim, action, suit, proceeding, demand, judgment,
assessment, cost, and expense, including reasonable counsel fees, incident to
any of the foregoing.
Seller shall reimburse Purchaser and Parent for all liabilities, damages,
deficiencies, claims, actions, suits, proceedings, demands, judgments,
assessments, costs, and expenses to which this Section 15.1 relates including,
but not limited to, reasonable attorney fees and costs of defense.
15.2 INDEMNIFICATION BY PURCHASER AND PARENT. After the Closing Date,
Purchaser and Parent shall indemnify and hold harmless Seller against and in
respect of:
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(a) Any damage, deficiency, or costs resulting from any
misrepresentation or breach of warranty or any nonfulfillment of any covenant or
agreement on the part of Purchaser or Parent under this Agreement;
(b) Any damage, deficiency, or costs arising from the within
Agreement and resulting from claims accruing after the Closing Date by a person,
firm, or corporation other than a party to this Agreement; and
(c) Any claim, action, suit, proceeding, demand, judgment,
assessment, cost, and expense, including reasonable counsel fees, incident to
any of the foregoing.
Purchaser and Parent shall reimburse Seller for any liabilities,
damages, deficiencies, claims, actions, suits, proceedings, demands, judgments,
assessments, costs, and expenses to which this Section 15.2 relates including,
but not limited to, reasonable attorney fees and costs of defense.
15.3 INDEMNIFICATION PROCEDURE. A party seeking indemnification
(the "indemnitee") shall use its reasonable efforts to minimize any liabilities,
damages, deficiencies, claims, judgments, assessments, costs, and expenses in
respect of which indemnity may be sought under this Agreement. The indemnitee
shall give prompt written notice to the party from whom indemnification is
sought (the "indemnitor") of the assertion of a claim for indemnification, but
in no event longer than (a) fifteen (15) days after service of process in the
event litigation is commenced against the indemnitee by a third party, or (b)
thirty (30) calendar days after the indemnitee becomes aware of circumstances,
not involving the commencement of litigation by a third party, which may give
rise to a claim for indemnification. No such notice of assertion of a claim
shall satisfy the requirements of this Section 15.3 unless it describes in
reasonable detail and in good faith the facts and circumstances upon which the
asserted claim for indemnification is based. The indemnitee shall consult with
the indemnitor with respect to the payment, settlement, or defense of any claim,
action, suit, proceeding, or demand. If any action or proceeding shall be
brought in connection with any liability or claim to be indemnified hereunder,
the indemnitee shall provide the indemnitor a period of thirty (30) calendar
days to decide whether to defend such liability or claim. During such period the
indemnitee shall take all necessary steps to protect the interests of itself and
the indemnitor, including the filing of necessary responsive pleadings, the
seeking of emergency relief, or other action necessary to maintain the status
quo, subject to reimbursement from the indemnitor of its expenses in doing so.
If the indemnitor determines that it shall defend such action or proceeding, the
indemnitor shall defend such action or proceeding at its expense, using counsel
selected by any insurance company insuring against any such claim and
undertaking to defend such claim, or by other counsel selected by it and
approved by the indemnitee, which approval shall not be unreasonably withheld or
delayed. The indemnitor shall keep the indemnitee fully apprised at all times as
to the status of the defense and shall consult with the indemnitee prior to
settlement of any indemnified matter. In the event the indemnitee has a claim or
claims against any third party growing out of or connected with the indemnified
matter, then upon receipt of indemnification, the indemnitee shall fully assign
to the indemnitor the entire claim or claims and the indemnitor shall thereupon
be subrogated with respect to such claim or claims of the indemnitee.
13
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16. INTERPRETATION. None of the terms, conditions, or provisions of this
Agreement shall be interpreted as establishing, constituting, or intending a
partnership or joint venture between Seller and Purchaser.
17. ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement, including the
Schedules hereto, constitutes and contains the entire agreement between the
parties hereto with respect to the transactions contemplated hereby and
supersedes any prior writing by the parties. The parties may, by mutual
agreement in writing, amend this Agreement in any respect, and any party, as to
such party, may in writing (a) extend the time for the performance of any
obligations of any other party; (b) waive any inaccuracies in representations
and warranties by any other party; (c) waive performance of any obligations by
any other party; and (d) waive the fulfillment of any condition that is
precedent to the performance by such party of any of its obligations hereunder.
No such waiver shall be deemed to constitute the waiver of any other breach of
the same or of any other term or condition of this Agreement. Any such amendment
or waiver must be signed by an officer of the parties or party to such amendment
or waiver.
18. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of the remaining
provisions.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party but all of which taken together shall constitute one and the same
agreement.
20. EXPENSES. Except as otherwise provided in this Agreement, Seller and
Parent/Purchaser shall pay their respective fees and expenses (including fees
and expenses of legal counsel, financial consultants, accountants or other
representatives) incurred in connection with the negotiation, execution, or
closing of this Agreement and the other transactions contemplated by this
Agreement.
21. NOTICES. All notices, requests, demands and other communications
required or permitted to be given or made under this Agreement will be in
writing and will be deemed to have been given on the date of delivery personally
or of deposit in the United States mail, postage pre-paid by registered or
certified mail, return receipt requested, as follows:
TO SELLER:
THE CHARLESTON DERMATOLOGY AND COSMETIC SURGERY CENTER
ATTN: HARLEY F. FREIBERGER, M.D.
WESTWOOD OFFICE PARK
29 GAMECOCK AVE.
CHARLESTON, S.C. 29407
TO PURCHASER:
LIGHT TOUCH VEIN & LASER OF SOUTH CAROLINA, INC.
ATTN: GREGORY F. MARTINI
14
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10663 MONTGOMERY ROAD
CINCINNATI OHIO 45242
WITH A COPY TO:
JAMES G. WOLTERMANN, ESQ.
ADAMS, STEPNER, WOLTERMANN & DUSING, P.L.L.C.
40 WEST PIKE STREET
P. O. BOX 861
COVINGTON, KENTUCKY 41012-0861
TO PARENT:
LIGHT TOUCH VEIN & LASER, INC.
ATTN: GREGORY F. MARTINI
10663 MONTGOMERY ROAD
CINCINNATI OHIO 45242
WITH A COPY TO:
JAMES G. WOLTERMANN, ESQ.
ADAMS, STEPNER, WOLTERMANN & DUSING, P.L.L.C.
40 WEST PIKE STREET
P. O. BOX 861
COVINGTON, KENTUCKY 41012-0861
22. THIRD PARTY RIGHTS. It is the intention of the parties that nothing in
this Agreement shall be deemed to create any right with respect to any person or
entity not a party to this Agreement.
23. PARTIES IN INTEREST; ASSIGNMENT. All covenants and agreements contained
in this Agreement by or on behalf of any of the parties to this Agreement shall
bind and inure to the benefit of their respective successors and assigns,
whether so expressed or not. No party to this Agreement may assign its rights or
delegate its obligations under this Agreement to any other person or entity
without the express prior written consent of the other party, except that
Purchaser may assign its rights and delegate its obligations to a subsidiary or
affiliated business entity of Purchaser.
24. GOVERNING LAW. This Agreement and the performance hereof will be
construed in accordance with, and governed by, the laws of the State of South
Carolina.
25. SCHEDULES. The Schedules attached to this Agreement constitute a part
of this Agreement and are incorporated herein by reference in their entirety as
if fully set forth in this Agreement at the point where first mentioned.
15
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26. SECTION HEADINGS. The section headings contained in this Agreement are
inserted as a matter of convenience and shall not affect in any way the
construction of the terms of this Agreement.
27. TIME OF ESSENCE. Time is of the essence to the performance of the
obligations set forth in this Agreement.
28. TERMINATION. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the
Closing Date:
(a) By the mutual consent of Seller and Purchaser;
(b) By either party to this Agreement if the other party to this
Agreement shall have materially breached any of the representations and
warranties of such other party set forth in this Agreement and such other party
shall have failed to cure such breach within thirty (30) calendar days after
receipt of written notice of such breach.
29. REMEDIES. Seller, Purchaser and Parent represent and acknowledge that,
because of the unique nature of the Business and the Assets, failure of either
party to carry out its obligation to perform this Agreement on the Closing Date
would cause irreparable injury; Seller, Purchaser and Parent accordingly agree
that, in addition to any other remedies available to Seller, Purchaser and
Parent, any such failure by either party to perform this Agreement shall be
subject to the remedy of specific performance.
30. FURTHER ASSURANCES. Seller, Purchaser and Parent agree to execute and
deliver all of the agreements, documents and instruments required by the terms
of this Agreement, and to execute such other agreements, documents or
instruments and take such further actions, as may be necessary or desirable to
effectuate the transactions contemplated hereby, whether prior to, at, or after
the Closing.
31. PRORATIONS. There shall be prorated between Seller and Parent/Purchaser
as of the Closing Date:
(a) all real estate taxes and installments or assessments as
shown by the latest available information at the courthouse; and
(b) all personal property taxes; and
(c) utility bills.
32. CONFIDENTIALITY. Seller and Purchaser agree that the terms of this
Agreement and related documents shall be confidential and neither Seller or
Purchaser or their officers or directors, employees, agents or affiliates shall
disclose the contents of the Agreement to any third party. Notwithstanding the
foregoing, disclosure shall be permitted as required by law including but not
limited to, requirements of Seller to disclose material portions of the terms
under federal and state securities law and or regulations.
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<PAGE>
33. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF
ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO
THE AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING,
TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT
APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN CHARLESTON, SOUTH
CAROLINA PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL 60 DAYS.
(B) RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO (I)
LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR
REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY PAYEE
OF THE PROTECTION AFFORDED TO IT BY AN APPLICABLE LAW; OR (III) LIMIT THE RIGHT
OF PAYEE HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO)
SETOFF, OR (B) TO FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL,
OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT
LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
RECEIVER. PAYEE MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
AGREEMENT. NEITHER THE EXERCISE OR SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
17
<PAGE>
IN WITNESS WHEREOF, Seller and Purchaser have caused this Asset Purchase
Agreement to be executed by their duly authorized officers as of the day, month
and year first written above.
SELLER:
HARLEY F. FREIBERGER, M.D.,
Individually and D/B/A
THE CHARLESTON DERMATOLOGY AND
COSMETIC SURGERY CENTER
BY:/s/ Harley F. Frieberger
-----------------------------
NAME: HARLEY F. FREIBERGER, M.D.
TITLE: SOLE PROPRIETOR
PURCHASER:
LIGHT TOUCH VEIN & LASER OF
SOUTH CAROLINA, INC.
BY: /s/ Harley F. Freiberger
----------------------------
NAME: /s/ Harley F. Freiberger
--------------------------
TITLE: /s/ President
--------------------------
PARENT:
LIGHT TOUCH VEIN & LASER, INC.
BY: /s/ Gregory F. Martini
----------------------------
NAME: /s/Gregor F. Martini
--------------------------
TITLE: /s/ President
--------------------------
18
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EXHIBIT 10.1
Promissory Note dated March 29, 2000
23
<PAGE>
THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE UNIFORM ARBITRATION
ACT, SECTION 15-48-10, ET SEQ., CODE OF LAWS OF SOUTH CAROLINA, 1976 (AS
AMENDED)
PROMISSORY NOTE
$700,000.00 Charleston, South Carolina
March 29, 2000
* * * * * * * * * *
FOR VALUE RECEIVED, the undersigned, LIGHTTOUCH VEIN & LASER OF SOUTH
CAROLINA, INC., a South Carolina Corporation, with an office at 10663 Montgomery
Road, Cincinnati, Ohio ("Maker"), hereby promises and agrees to pay to the order
of HARLEY F. FREIBERGER, M.D., d/b/a THE CHARLESTON DERMATOLOGY AND COSMETIC
SURGERY CENTER ("Payee") at 29 Gamecock Avenue, Charleston, South Carolina
29407, the aggregate principal sum of SEVEN HUNDRED THOUSAND AND 00/100 DOLLARS
($700,000.00), without interest thereon as hereinafter provided, in lawful money
of the United States of America, as hereinafter provided.
The principal of this Promissory Note shall bear no interest on the unpaid
balance.
Principal shall be due and payable in two (2) installments. Provided, the
business formally known as "The Charleston Dermatology and Cosmetic Surgery
Center" which has been purchased by the Maker shall maintain a cash flow, of not
less than $400,000.00 for the period beginning January 1, 2000 and ending
December 31, 2000, Maker shall pay to Payee (i) the first installment of
principal in the amount of $200,000.00 on or before the date which is twelve
(12) months from the date hereof and (ii) the second installment of principal in
the amount of $500,000.00 on or before the date which is twenty-four (24) months
from the date hereof. For purposes of this Section, cash flow shall be measured
at the end of each such twelve (12) and twenty-four (24) month period and shall
be calculated as net income, including facility rental income calculated using
the accrual method of accounting subject to the rules and provisions of
Generally Accepted Accounting Principles (GAAP) before income taxes and Payee's
total compensation for the period being reported. Cash flow shall be determined
by the certified public account (CPA) for the Maker according to GAAP. If the
CPA determines that the cash flow for the above stated period is less than
$400,000.00 then this Note shall automatically renew for successive twelve (12)
and twenty-four (24) month periods, without interest, until the required cash
flow is attained within a fiscal year (the "Maturity Date"). By way of example,
should the cash flow be less than the required $400,000.00 for the twelve (12)
month period ending 3/31/2001, but shall be at least $400,000.00 for twelve (12)
month period ending 3/31/2002, then the Principal would be due two (2)
installments on the anniversary date of this Note in 2002 and 2003.
Principal payments shall be made at the Payee's address above unless otherwise
designated by Payee in writing.
The principal balance may be prepaid at any time in whole or in part without
premium or penalty. Any and all prepayments shall be applied to the payment of
the principal of this Promissory Note
Events of Default:
This Promissory Note shall be and become immediately due and payable at the
option of Payee, without any demand or notice whatsoever, upon the occurrence of
any of the following described events, each of which shall constitute an Event
of Default:
Charleston: 181926 v.9
<PAGE>
(1) Any failure to make any payment when due of any principal installment
on this Promissory Note (whether upon demand at maturity or by
acceleration) or the failure to perform any other obligation of Maker
to Payee.
(2) The dissolution of Maker of this Promissory Note.
(3) The creation of any lien (except a lien to Payee) or the issuance of an
attachment against or seizure of any of the property of Maker.
(4) An assignment for the benefit of the creditors of, or the commencement
of any bankruptcy, receivership, insolvency, reorganization, or
liquidation proceedings by or against Maker of this Promissory Note.
(5) An event of default under any other document evidencing or securing
this Note, including, without limitation, a breach or default of any
agreement, covenant or provision under that certain Asset Purchase
Agreement dated March ___, 2000, between Maker and Payee and that
certain Security Agreement dated of even date herewith by Maker in
favor of Payee (the "Transaction Documents").
(6) Entry of a judgment against Maker.
(7) Any representation or warranty of Maker in any of the Transaction
Documents is or was untrue or misleading.
Upon the occurrence of an Event of Default herein described, Payee may, at its
option, declare this Note to be fully due and payable plus any fees and charges
and exercise any or all other remedies provided for at law or in equity. To the
extent permitted by law, any unpaid principal shall accrue interest at the rate
of 18% per annum (the "Default Rate"). The provisions for a Default Rate shall
not be deemed to extend the time for payment hereunder or to give Maker a right
to cure any default. Maker shall pay all costs of collection incurred by Payee,
including his attorney's fees, if this Promissory Note is referred to an
attorney for collection, whether or not payment is obtained before entry of
judgment. No failure on the part of Payee to exercise any of its rights
hereunder shall be deemed a waiver of any such rights or of any default.
Maker waives diligence, presentment for payment, protest, notice of dishonor and
of nonpayment and protest, and does hereby consent to any number of
forbearances, renewals or extensions of time of payment hereof or releases or
substitutions of all or any part of any security for payment hereof. Any notice
provided for in this Promissory Note shall be given by mailing such notice by
certified mail, return receipt requested, addressed to the party entitled to
such notice at the address identified in the first paragraph hereof, or to such
other address as either party hereto may designate in writing by notice to the
other party.
Maker agrees that there are no conditions or understandings that are not
expressed in this Promissory Note and the documents referred to herein.
The declaration of invalidity of any provision of this Promissory Note shall not
affect any part of the remainder of the provisions.
The provisions of this Promissory Note shall be binding upon and inure to the
benefit of Maker and Payee and their respective heirs, legal representatives,
successors and assigns.
This Promissory Note shall be interpreted and construed in accordance with and
governed by the laws of the State of South Carolina.
Time shall be of the essence.
2
<PAGE>
As security for the payment of this Note, Maker has caused to be granted to
Payee a security interest in all of the rights, title and interest in and to
Payee's former assets located in Charleston, South Carolina and employed in
connection with the operation of the Payee's former Business (as defined in the
Maker's and Payee's Asset Purchase Agreement, dated March ___, 2000) (the
"Agreement") (the "Assets"), under a separate security agreement executed
simultaneous with this Note.
In any litigation or arbitration in connection with or to enforce this Note or
any guaranty of this Note or any Transaction Documents, Borrower and any
guarantor irrevocably consent to and confer personal jurisdiction on the courts
of Charleston County, State of South Carolina or the United States courts
located within the State of South Carolina, and expressly waive any objections
as to venue in any such courts, and agree that service of process may be made on
Borrower and any guarantor by mailing a copy of the summons and complaint by
registered or certified mail, return receipt requested, to their respective
addresses. Nothing contained herein shall, however, prevent Payee from bringing
any action or exercising any rights within any other state or jurisdiction or
from obtaining personal jurisdiction by any other means available by applicable
law.
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT
LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS NOTE OR ANY RELATED NOTES OR
INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), AND THE "SPECIAL RULES"
SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL
CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. ANY PARTY TO THE NOTE MAY BRING AN ACTION, INCLUDING A SUMMARY OR
EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH
THIS NOTE APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN CHARLESTON, SOUTH
CAROLINA PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL 60 DAYS.
(B) RESERVATION OF RIGHTS. NOTHING IN THIS NOTE SHALL BE DEEMED TO (I)
LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR
REPOSE AND ANY WAIVERS CONTAINED IN THIS NOTE; OR (II) BE A WAIVER BY PAYEE OF
THE PROTECTION AFFORDED TO IT BY AN APPLICABLE LAW; OR (III) LIMIT THE RIGHT OF
PAYEE HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO)
SETOFF, OR (B) TO FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL,
OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT
LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
RECEIVER. PAYEE MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS NOTE.
NEITHER THE EXERCISE OR SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF
AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE
A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH
REMEDIES.
3
<PAGE>
IN WITNESS WHEREOF, this Note has been executed and delivered as of the
date first set forth above.
LIGHTTOUCH VEIN & LASER OF SOUTH
CAROLINA, INC., A South Carolina Corporation
By: /s/ Harley F. Friedberger
------------------------------------------
Name: /s/ H. Freiberger
Title: /s/ President
PARENT GUARANTY:
The undersigned, as the parent corporation of Maker, hereby absolutely and
unconditionally guarantees to Payee the due and punctual payment of this Note
when due, together with any and all other sums, charges and fees due hereunder
up to Twenty Thousand and no/100 Dollars ($20,000.00). The obligation of the
undersigned guarantor is a guarantee of payment and not of collection.
LIGHTTOUCH VEIN & LASER, INC., a Nevada
corporation
By: /s/ Harley F. Friedberger
------------------------------------------
Its: /s/ President
------------------------------------------
4
EXHIBIT 10.2
National Medical Director Agreement
with Harley F. Freiberger, M.D. dated March 29, 2000
28
<PAGE>
NATIONAL MEDICAL DIRECTOR AGREEMENT
(Independent Contractor)
This National Medical Director Agreement ("Agreement") is entered into as
of March ___, 2000 ("Effective Date") by and among LIGHTTOUCH VEIN & LASER,
INC., a Nevada corporation ("LightTouch") and HARLEY F. FREIBERGER, M.D.
("Medical Director").
RECITALS
A. Medical Director operates a medical practice and has entered into an
agreement to provide services for the LightTouch Center located in Charleston,
South Carolina, known as LightTouch Vein & Laser of South Carolina, Inc., a
South Carolina corporation, a wholly owned subsidiary of LightTouch (the "South
Carolina Center").
B. LightTouch engages in the business of owning laser centers and providing
certain administrative and support services concerning the day-to-day affairs of
medical practices and has established existing laser centers ("Centers") at the
sites listed on EXHIBIT A, including the South Carolina Center.
C. LightTouch desires to engage Medical Director to serve as the national
medical director on behalf of LightTouch and all of the Centers, and Medical
Director desires to serve in such capacity.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agrees as follows:
I. RESPONSIBILITIES OF MEDICAL DIRECTOR
1.1 MEDICAL DIRECTOR. Medical Director shall assume responsibility for the
quality control and professionalism of LightTouch and the Centers on a national
basis and shall appoint, if necessary, the local medical directors for each
individual Center. Medical Director and the individual local medical directors
shall assist LightTouch in the proper operation and management of the Centers.
Medical Director duties as the national medical director of the Centers shall
include the responsibilities listed on EXHIBIT B.
1.2 QUALITY ASSURANCE. Medical Director shall monitor utilization and
quality of services provided by the Centers and LightTouch, shall develop,
maintain and administer quality assurance programs and performance standards and
shall offer suggestions and requirements to remedy deficiencies in the
efficiency or the quality of medical care provided. However, Medical Director
shall not be liable or responsible for the failure of any Center to perform its
obligation or the negligence of any Center in the performance of any of its
obligations and responsibilities.
II. RESPONSIBILITIES OF LIGHTTOUCH
<PAGE>
2.1 RESPONSIBILITIES WITH REGARD TO SELECTED PATIENT-RELATED MATTERS.
(a) RECORDKEEPING. LightTouch shall assist the Centers in maintaining
patient medical records in accordance with applicable laws. Notwithstanding the
foregoing sentence, patient medical records shall be and shall remain the
property of the Centers, and the content thereof shall be solely the
responsibility of the Centers.
(b) QUALITY ASSURANCE. LightTouch shall assist the Centers, in
accordance with criteria established by the Centers and Medical Director, in the
development and implementation of appropriate quality assurance programs,
including development of performance and utilization standards, sampling
techniques for case review, and preparation of appropriately documented studies.
Notwithstanding the foregoing, LightTouch shall not perform any duties that
constitute the corporate practice of medicine.
2.2 OTHER RESPONSIBILITES.
(a) INSURANCE. Within a reasonable period of time but by no later than
the time that Medical Director becomes a director of LightTouch as provided in
Section 4.2 below, LightTouch shall obtain and maintain during the term of this
Agreement directors and officers liability insurance and all other liability
insurance in sufficient amounts to protect Medical Director from any and all
liability which he may incur in the performance of his duties hereunder.
LightTouch hereby indemnifies, defends and holds Medical Director harmless from
and against any and all liabilities, losses, claims, causes of action, damages
and costs including reasonable attorneys' fees arising from or as a result of
the performance of his duties hereunder.
(b) ACCOUNTING. LightTouch shall be solely responsible for legal,
accounting and other professional services incurred by Medical Director in the
performance of his duties hereunder. LightTouch shall be responsible for and
shall provide at its expense all accounting services in connection with the
consolidation of LightTouch and the South Carolina Center, including, without
limitation, all Securities Exchange Commission filings and reports.
III. FINANCIAL ARRANGEMENTS
3.1 COMPENSATION. As compensation for the performance by Medical
Director of the substantial services required hereunder on behalf of LightTouch,
LightTouch shall transfer to Medical Director 447,205 shares of common stock of
LightTouch having a value of One Million Eight Hundred Thousand and no/100
Dollars ($1,800,000.00) based upon the average closing price of LightTouch's
common shares for the five trading days immediately prior to the date hereof as
traded on the OTC Bulletin Board under the symbol "LTVL", said stock to be held
by an affiliate for purposes of Federal Securities Law. In addition thereto,
LightTouch shall transfer to Medical Director 124,224 shares of common stock of
LightTouch having a value of Five Hundred Thousand and no/100
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<PAGE>
Dollars ($500,000.00) as a bonus for entering into this Agreement and agreeing
to perform the duties of national medical director for LightTouch. Medical
Director understands and acknowledges that in addition to restrictions on
transfer of the foregoing shares of stock (collectively, the "Stock") required
under the Federal Securities Act of 1933, the Stock is further restricted and
subject to forfeiture in the event Medical Director fails to substantially
perform the duties of national medical director of LightTouch as set forth in
this Agreement for the Initial Term of this Agreement. In the event of a breach
in the performance of this duties during the Initial Term, Medical Director
shall forfeit and return the Stock to LightTouch. Medical Director's interest in
the Stock shall not be deemed vested until the expiration of the Initial Term.
3.2 PAID EXPENSES AND BENEFITS. LightTouch shall pay at its expense all
costs and expenses incurred by Medical Director, including travel and related
expenses and cost of attendance, for medical conferences, meetings, seminars,
meetings with prospective practices for future acquisition, and other requested
travel on behalf of LightTouch when LightTouch requests the presence of Medical
Director at any such conference or meeting and Medical Director consents to such
attendance. When any such attendance is requested by LightTouch, LightTouch will
not charge any such expense as an expense against the South Carolina Center.
LightTouch further agrees that any travel required of Medical Director in
the performance of any of Medical Director's duties shall be first class.
Furthermore, Medical Director shall be entitled to stay in any hotel in which a
conference or meeting is being held where the attendance at such conference or
meeting is required or requested by LightTouch or otherwise permitted hereunder.
Any other non-required travel and expenses shall be subject to the prior
approval of LightTouch, which approval will not be unreasonably withheld.
In order to facilitate Medical Director's travel and related expenses for
any such meetings, conferences or work on behalf of LightTouch, LightTouch shall
promptly provide to Medical Director a corporate charge or credit card on the
account of LightTouch, the expense of which will not be charged back to the
South Carolina Center.
IV. REPRESENTATIONS AND WARRANTIES
4.1 COVENANTS AND WARRANTIES OF LIGHTTOUCH. LightTouch hereby represents
and warrants to Medical Director as follows:
(a) LightTouch is and shall remain during the term of this Agreement a
corporation which is duly organized, validly existing and in good standing under
the laws of the State of Nevada, possessing full corporate power and authority
to own its properties and to conduct the business in which it engages.
(b) LightTouch has full corporate power and authority to execute and
deliver this Agreement and to engage in the transactions and obligations
contemplated by this Agreement. Upon its execution, this Agreement shall
constitute a valid and binding
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<PAGE>
obligation of LightTouch, enforceable in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, moratorium, or other similar laws
affecting generally the rights of creditors and by principles of equity. The
party executing this Agreement on behalf of LightTouch is duly authorized to do
so.
(c) The consummation of the transactions contemplated by this
Agreement will not: result in any breach of the terms, provisions or conditions
of or constitute a default under the Certificate of Incorporation, By-Laws or
other enabling or governing instruments of LightTouch or any agreement to which
LightTouch is a party or by which it is bound; or, to the best knowledge of
LightTouch, constitute a violation of any applicable law or regulation.
(d) AUTHORIZED SHARES. LightTouch has authorized 100,000,000 shares of
capital stock and 25,000,000 shares of preferred stock. Each of the shares of
Stock has been duly authorized and validly issued, is fully paid and
non-assessable and was issued by LightTouch in compliance with all applicable
federal and State securities laws and all applicable rules and regulations
thereunder.
(e) APPROVAL OF TRANSFER. LightTouch acknowledges that it has approved
the transfer of the Stock by LightTouch to Medical Director in accordance with
the requirements of all securities laws and any buy-sell agreement pertaining to
the sale of shares of stock of LightTouch.
(f) TITLE. LightTouch has good and marketable title to the Stock being
transferred to Medical Director and has the absolute right to sell, assign,
transfer and deliver such Stock to Medical Director free and clear of any
security interest, lien or encumbrance, subject, however, to certain
restrictions on transfer as set forth on the certificates.
4.2 BOARD OF DIRECTORS. LightTouch shall appoint Medical Director as a
director of the board of directors of LightTouch after the due date of the first
installment of principal under the promissory note from LightTouch to Medical
Director dated on or about the date hereof.
V. TERM AND TERMINATION
5.1 TERM. This Agreement shall commence on the Effective Date and shall
continue for a period of twelve (12) months ending on April 1, 2001, unless
sooner terminated pursuant to this Article V (the "Initial Term"). Thereafter,
this Agreement shall automatically continue in effect for additional terms of
five (5) years each, unless either party notifies the other in writing not less
than six (6) months or more than twelve (12) months prior to the expiration of
the term or any renewal term of its intent to terminate this Agreement at the
end of such term, or unless this Agreement is terminated pursuant to Section
5.2, Section 5.3 or Section 8.10 hereof. Notwithstanding the
Charleston: 182738 v.6 4
<PAGE>
foregoing, if at any time after the Initial Term, Medical Director determines
that his responsibilities hereunder are interfering with the operation of his
practice and the performance of his duties at the South Carolina Center and
LightTouch fails to provide assistance satisfactory to Medical Director at
LightTouch's expense within thirty (30) days of Medical Director's request,
Medical Director may terminate this Agreement upon the expiration of such thirty
(30) day period. If Medical Director fails to perform his obligations hereunder
and is in breach of this Agreement prior to the expiration of the Initial Term,
Medical Director shall forfeit and return all Stock received as compensation
pursuant to Section 3.1 of this Agreement.
5.2 EVENTS OF DEFAULT. Each of the following shall constitute an "Event of
Default" (the party causing such default is referred to as the "Breaching Party"
and the other party is referred to as the "Non-Breaching Party"):
(a) The Breaching Party fails to make any payment required under this
Agreement, which is not cured within ten (10) days of written notice therefor.
(b) The Breaching Party fails to observe or otherwise breaches any
material term, condition, covenant, or warranty of this Agreement, which is not
cured within sixty (60) days of written notice.
5.3 TERMINATION. Subject to the provisions of this Article V, The
Non-Breaching Party may terminate this Agreement upon the occurrence of an Event
of Default in accordance with the following:
(a) In the event of the occurrence of an Event of Default referred to
in Section 5.2(a) above, upon the expiration of ten (10) days after written
notice, which notice shall specify the amount of such payment and when it was
due, unless the amount due is paid within such ten (10) days.
(b) In the event of the occurrence of any other Event of Default, upon
the expiration of sixty (60) days after written notice, which notice shall
specify the nature and extent of such Event of Default to the Breaching Party,
unless such Event of Default is remedied within such sixty (60) days or, in the
case of an Event of Default which cannot reasonably be remedied within sixty
(60) days, unless the Breaching Party has made a good faith effort to begin to
cure such Event of Default within such sixty (60) days.
5.4 DUTIES UPON TERMINATION OR EXPIRATION OF THIS AGREEMENT.
(a) If this Agreement is terminated upon expiration of its term, or
earlier as provided in Sections 5.3 or 8.10:
(i) Neither party shall be released or discharged from any
obligation, debt or liability which has previously accrued or been incurred and
remains to be performed upon the date of termination or expiration;
Charleston: 182738 v.6 5
<PAGE>
(ii) Any sums of money owing by one party to the other shall be
paid immediately;
(iii) Medical Director shall return to LightTouch all originals
and copies of the Proprietary Information of any of the Protected Parties (as
those terms are defined in Article VI) which are in the possession of Medical
Director or any other person or entity to whom it has delivered such originals
and copies; and
(iv) Damages and any other remedies available at law or in equity
may be sought and collected by the Non-Breaching Party from the Breaching Party
in the event of a termination pursuant to Section 5.3 hereof.
(b) If this Agreement is terminated prior to the expiration of the
Initial Term, Medical Director shall forfeit and return the Stock as required in
Sections 3.1 and 5.1 of this Agreement.
VI. RESTRICTIVE COVENANTS
6.1 COVENANT REGARDING PROPRIETARY INFORMATION. In the course of the
relationship created pursuant to this Agreement, Medical Director will have
access to certain methods, trade secrets, processes, ideas, systems, procedures,
inventions, discoveries, concepts, software in various stages of development,
designs, drawings, specifications, models, data, documents, diagrams, flow
charts, research, economic and financial analysis, developments, procedures,
know-how, policy manuals, financial data, form contracts, marketing ad other
techniques, plans, materials, forms, copyrightable materials and trade
information regarding the operations of LightTouch and/or of its Affiliates
(collectively, the "Protected Parties"). The foregoing, together with the
existence and terms of this Agreement, are referred to in this Agreement as
"Proprietary Information". Medical Director shall maintain all such Proprietary
Information in strict secrecy and shall not divulge such information to any
third parties, except to its accountants, financial and legal advisors as may be
necessary for the discharge of its obligations under this Agreement. The parties
recognize that a breach of this Section 6.1 cannot be adequately compensated in
money damages and therefore agree that injunctive relief shall be available to
the Protected Parties as their respective interests may appear.
The obligations of Medical Director under this Section 6.1 shall not apply
to information: (i) which is a matter of public knowledge on or becomes a matter
of public knowledge after the Effective Date of this Agreement, other than as a
breach of the confidentiality terms of this Agreement or as a breach of the
confidentiality terms of any other agreement between Medical Director and
LightTouch or its Affiliates; or (ii) was lawfully obtained by Medical Director
on a nonconfidential basis other than in the course of performance under this
Agreement and from some entity other than LightTouch or its Affiliates or from
some person other than one employed or engaged by LightTouch or its Affiliates,
which entity or person has no obligation of confidentiality to LightTouch or its
Affiliates.
Charleston: 182738 v.6 6
<PAGE>
VII. INFORMATION AND RECORDS
7.1 OWNERSHIP OF RECORDS. At all times during and after the term of this
Agreement, including any extensions or renewals hereof, all business records,
including but not limited to, business agreements, books of account, general
administrative records and all information generated under or contained in the
management information system pertaining to LightTouch's obligations hereunder,
and other business information of any kind or nature, except for patient medical
records and Medical Director's and the South Carolina Center's Records (as
defined in Section 7.2 below), shall be and remain the sole property of
LightTouch; PROVIDED that after termination of this Agreement Medical Director
and the South Carolina Center shall be entitled to reasonable access to such
records and information, including the right to obtain copies thereof, for any
purpose related to patient care or the defense of any claim relating to patient
care or the business of LightTouch or Medical Director and the South Carolina
Center.
7.2 MEDICAL DIRECTOR'S BUSINESS AND FINANCIAL RECORDS. At all times during
and after the term of this Agreement, the financial, corporate and personnel
records and information relating exclusively to the business and activities of
Medical Director and the South Carolina Center, as distinguished from the
business and activity of LightTouch, hereinafter referred to as "Medical
Director's and the South Carolina Center's Records," shall be and remain the
sole property of Medical Director and the South Carolina Center.
7.3 ACCESS TO RECORDS. Each party shall be entitled, upon request and with
reasonable advance notice, to obtain access to all records of the other party
directly related to the performance of such party's obligations pursuant to this
Agreement; provided, however, that such right shall not allow for access to
records that must necessarily be kept confidential. Either party, at its
expense, shall have the right to make copies of any records to which it has
access pursuant to this Section.
7.4 CONFIDENTIALITY OF RECORDS. LightTouch and Medical Director shall adopt
procedures for maintaining the confidentiality of the records relating to the
operations of LightTouch and Medical Director which do not constitute
Proprietary Information, which information is not otherwise available to third
parties publicly or by law, and shall comply with all applicable federal and
state statutes and regulations relating to such records. Patient medical records
and other privileged patient information shall not be disclosed or utilized by
LightTouch or their agents or employees except as required or permitted by
applicable laws and regulations.
VIII. MISCELLANEOUS
8.1 INDEPENDENT CONTRACTOR STATUS OF PARTIES. IN THE PERFORMANCE OF THE
WORK, DUTIES AND OBLIGATIONS UNDER THIS AGREEMENT, IT IS MUTUALLY UNDERSTOOD AND
AGREED THAT EACH PARTY IS AT ALL TIMES ACTING AND PERFORMING AS AN INDEPENDENT
CONTRACTOR WITH RESPECT TO THE OTHER AND THAT NO RELATIONSHIP
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<PAGE>
OF PARTNERSHIP JOINT VENTURE OR EMPLOYMENT IS CREATED BY THIS AGREEMENT. NEITHER
PARTY, NOR ANY OTHER PERSON PERFORMING SERVICES ON BEHALF OF SUCH PARTY PURSUANT
TO THIS AGREEMENT, SHALL HAVE ANY RIGHT OR CLAIM AGAINST THE OTHER PARTY FOR
SOCIAL SECURITY BENEFITS, WORKERS' COMPENSATIONS BENEFITS, DISABILITY BENEFITS,
UNEMPLOYMENT INSURANCE BENEFITS, HEALTH BENEFITS, VACATION PAY, SICK LEAVE OR
ANY OTHER EMPLOYEE BENEFITS OF ANY KIND.
8.2 NO WAIVER. The waiver by any party to this Agreement of any breach of
any term or condition of this Agreement shall not constitute a waiver of
subsequent breaches. No waiver by any party of any provision of this Agreement
shall be deemed to constitute a waiver of any other provision.
8.3 NOTICES. If, at any time after the execution of this Agreement, it
shall become necessary or convenient for one of the parties to serve any notice,
demand or communication upon the other party, such notice, demand, or
communication shall be in writing and shall be served personally, by nationally
recognized overnight courier which provides confirmation of delivery, or by
depositing the same in the United States mail, registered or certified, return
receipt requested, postage prepaid and,
(a) If intended for Medical Director, then the notice shall be
addressed to:
29 Gamecock Avenue
Charleston, South Carolina 29407
Attn: Harley F. Freiberger, M.D.
(b) If intended for LightTouch, then the notice shall be addressed to:
LightTouch Vein & Laser, Inc.
10663 Montgomery Road
Cincinnati, Ohio 45242
Attn: Greg Martini
or to such other address as either party may have furnished to the other party
in writing as the place for the service of notice. Any notice so mailed shall be
deemed to have been given three (3) days after the same has been deposited in
the United States mail; when delivered if the same has been given personally; or
the next business day if the same has been delivered to a nationally recognized
overnight courier service.
8.4 ASSIGNMENT. Neither party may sell, transfer, assign, or otherwise
convey its rights or obligations under this Agreement without the prior written
consent of the other, which consent shall not be unreasonably withheld;
provided, however, Medical Director may assign this Agreement and all of his
rights and obligations hereunder to a
Charleston: 182738 v.6 8
<PAGE>
professional corporation or similar business entity wholly owned by Medical
Director without the prior consent of LightTouch.
8.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of this Agreement
respecting assignment, the terms, covenants and conditions contained herein
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto.
8.6 SEVERABILITY. Nothing contained in this Agreement shall be construed to
require the commission of an act contrary to law, and whenever there is any
conflict between any provision of this Agreement and any statute, law, ordinance
or regulation, the latter shall prevail. In such event, and in any case in which
any provision of this Agreement is determined to be in violation of a statute,
law, ordinance or regulation, the affected provision(s) shall be limited only to
the extent necessary to bring it within the requirements of the law and, insofar
as possible under the circumstances, to carry out the purposes of this
Agreement. The other provisions of this Agreement shall remain in full force and
effect, and the invalidity or unenforceability of any provision hereof shall not
affect the validity and enforceability of the other provisions of this
Agreement, nor the availability of all remedies in law or equity to the parties
with respect to such other provisions.
8.7 HEADINGS. The headings used in the Agreement are for convenience of
reference only and shall have no force or effect in the construction or
interpretation of the provisions of this Agreement.
8.8 TIME OF THE ESSENCE. Time is of the very essence of each and all of the
agreements, covenants and conditions of this Agreement.
8.9 GOVERNING LAW. This Agreement shall be interpreted in accordance with
and governed by the laws of the State of South Carolina, to the jurisdiction of
which each of the parties hereby submits.
8.10 CONTRACT MODIFICATIONS FOR PROSPECTIVE LEGAL EVENTS. In the event any
state or federal laws or regulations, now existing or enacted or promulgated
after the Effective Date of this Agreement, are interpreted by judicial
decision, a regulatory agency or legal counsel of both parties in such a manner
as to indicate that the structure of this Agreement may be in violation of such
laws or regulations (a "Structural Issue"), either party may terminate this
Agreement, on not less than ninety (90) days written notice to the other party,
or negotiate and enter into an amendment of the provisions of this Agreement in
such manner as to alleviate such violation. In the event that the parties are
unable to agree upon such amendment within thirty (30) days after the
determination that such amendment is necessary, a party may elect either to
terminate this Agreement, on not less than ninety (90) days written notice to
the other party.
8.11 LANGUAGE CONSTRUCTION. The language in all parts of this Agreement
shall be construed, in all cases, according to its fair meaning, and not for or
against either party
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<PAGE>
hereto. The parties acknowledge that each party and its counsel have reviewed
and revised this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.
8.12 INDEMNIFICATION. LightTouch shall indemnify, hold harmless and defend
Medical Director from and against any and all liabilities, losses, damages,
claims, causes of action, and expenses (including reasonable attorneys' fees and
disbursements (a "Medical Director Loss"), caused or asserted to have been
caused, directly or indirectly, by or as a result of the performance of medical
services or any other acts or omissions by LightTouch, and/or its partners,
agents, employees and/or subcontractors (other than Medical Director) and as a
result of the performance of Medical Director's obligations hereunder except
with respect to any Medical Director Loss which is the result of any gross
negligence or willful misconduct by Medical Director. Medical Director shall
indemnify, hold harmless and defend LightTouch, its officers, directors,
shareholders, employees, agents and independent contractors (the "LightTouch
Group") from and against any and all liabilities, losses, damages, claims,
causes of action, and expenses (including reasonable attorneys' fees and
disbursements (a "LightTouch Loss"), caused or asserted to have been caused,
directly or indirectly, by or as a result of the performance of medical services
or any other acts or omissions by Physician Group, and/or its partners, agents,
employees and/or subcontractors (other than LightTouch) during the term hereof
except with respect to any LightTouch Loss which is the result of any gross
negligence or willful misconduct by a member of the LightTouch Group.
8.13 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether written or oral, between or among parties regarding the
subject matter of this Agreement.
8.14 INCORPORATION BY REFERENCE. All exhibits and other attachments to this
Agreement are incorporated by reference into this Agreement by such reference.
8.15 AMENDMENTS ONLY IN WRITING. This Agreement may not be amended or
modified in any respect whatsoever, except by an instrument in writing signed by
the parties hereto.
8.16 COUNTERPARTS. This Agreement may be executed in on or more
counterparts, each of which shall be considered an original and all of which
shall constitute one and the same agreement. This Agreement shall not become
effective until it has been executed by all of the parties hereto.
8.17 COMMERCIAL IMPRACTICABILITY. No party to this Agreement shall be
liable for any failure to perform its obligations hereunder where such failure
results from any cause beyond that party's reasonable control, including, for
example, an act of God, labor disturbance such as a strike or walkout, war,
riot, fire, storm, accident, government regulation or interference, or
mechanical, electronic or communications failure.
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<PAGE>
8.18 ELECTION OF REMEDIES The respective rights of the parties to this
Agreement shall be cumulative. Each party shall have all other rights and
remedies consistent with this Agreement as law and equity may provide. No
exercise by any party of one right or remedy shall be deemed to be an exclusive
election of rights or remedies.
8.19 SURVIVAL. The provisions of Articles III, IV, V, VI, VII and VIII
shall survive any termination of this Agreement.
IN WITNESS WHEREOF, LightTouch and Medical Director have caused this
Agreement to be executed by their duly authorized respective officers as of the
Effective Date.
LIGHTTOUCH VEIN & LASER, INC.
By: /s/ Gregory F. Martini
--------------------------
Title: /s/ President
------------------------
/s/ Harley F. Freiberger
------------------------------
HARLEY F. FREIBERGER, M.D.
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<PAGE>
EXHIBIT 10.3
South Carolina Medical Director And
Administrative Services Agreement dated March 29, 2000
42
<PAGE>
SOUTH CAROLINA MEDICAL DIRECTOR AND
ADMINISTRATIVE SERVICES AGREEMENT
(Independent Contractor)
This South Carolina Medical Director and Administrative Services Agreement
("Agreement") is entered into as of March ___, 2000 ("Effective Date") by and
among LIGHTTOUCH VEIN & LASER OF SOUTH CAROLINA, INC., a South Carolina
corporation ("LightTouch") and Harley F. Freiberger, M.D. ("Physician").
RECITALS
A. Physician operates a medical practice and has entered into and
throughout the term of this Agreement may continue to enter into arrangements
with insurers, HMOs and other third-party payors ("Payors") to provide or
arrange for the provision of health care services to persons covered by those
Payors ("Enrollees").
B. Physician may enter into independent contractor or employment agreements
with various physicians and other health care providers and health care
professionals licensed in South Carolina ("Providers") to assist Physician in
providing or arranging for the provision of health care services to Enrollees
and other patients of Physician (collectively, "Patients") on behalf of
LightTouch.
C. LightTouch is a wholly owned subsidiary of LightTouch Vein & Laser,
Inc., a Nevada corporation ("LTVL").
D. LTVL engages in the business of owning laser centers and providing
certain administrative and support services concerning the day-to-day affairs of
medical practices and has established existing laser centers ("Centers") at the
sites listed on EXHIBIT A, including the center located at 29 Gamecock Avenue,
Charleston, South Carolina operated by LightTouch under the direction of
Physician (the "South Carolina Center").
E. LightTouch desires to engage Physician to serve as medical director of
the South Carolina Center, and Physician desires to obtain the use of the South
Carolina Center for its practice and the administrative services of LightTouch
and LTVL.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agrees as follows:
I. RESPONSIBILITIES OF PHYSICIAN
1.1 MEDICAL DIRECTOR. Physician shall assume responsibility for the
professional medical services rendered at the South Carolina Center. Physician
shall assist LightTouch in the proper operation and management of the South
Carolina Center. Physician agrees to provide professional medical services to
Patients at the South Carolina Center and provide medical direction services at
the South Carolina Center
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during the hours of operation of the South Carolina Center. Physician's duties
as medical director of the South Carolina Center shall include the
responsibilities listed on EXHIBIT B. It is understood that all of Physician's
responsibilities under this Agreement are as that of the local medical director
of LightTouch located at the South Carolina Center and are not personal
obligations of Physician. All references to Physician shall be in his capacity
as an independent contractor working as an agent for and on behalf of LightTouch
as the medical director of the South Carolina Center. Physician shall be the
president and sole director of LightTouch.
1.2 RESPONSIBILITY FOR ALL MEDICAL AND PROFESSIONAL MATTERS. All medical
and professional matters relating to the operations of the South Carolina
Center, and the performance of medical services for Patients shall be the
responsibility of Physician with the administrative support of LightTouch and
LTVL. Physician shall use and occupy the South Carolina Center exclusively for
the practice of medicine and related cosmetic procedures. Physician expressly
acknowledges that the medical practice or practices conducted at these
facilities shall be conducted solely by Physician and the Providers.
1.3 PROVIDERS. Unless otherwise agreed to by the parties, Physician shall
have complete control of the hiring, engagement, supervision evaluation, and
termination of all Providers, although at the request of Physician, LightTouch
shall consult with Physician respecting such matters. With respect to
physicians, Physician shall only employ and contract with licensed physicians
meeting applicable credentialing guidelines established by Physician. Physician
shall be responsible for the payment of salaries and wages, compensation,
payroll taxes, employee benefits, and all other taxes and charges now or
hereafter applicable to Providers and other licensed health care professional
personnel employed by Physician; provided, however, LightTouch shall reimburse
Physician for all such payments and expenses on a monthly basis. All such
reimbursements shall be paid to Physician by LightTouch promptly upon receipt of
an invoice therefor. Physician shall consult with LightTouch with regard to the
terms of contracts entered into between Physician and Providers, or other
licensed health care professional employees and the terms and conditions of
their employment or engagement as independent contractors, as applicable.
1.4 PAYOR AGREEMENTS. Physician shall continue to operate and maintain a
separate medical practice at the South Carolina Center for so long as Physician
desires for which he provided services to Enrollees which are paid, at least in
part, by third-party Payors. Physician may operate such practice in his own
name, under Charleston Dermatology and Cosmetic Surgery Center or any other
professional business entity. All fees received for such services shall be
deposited into Physician's separate account and deemed income to Physician.
Physician shall thereafter pay all of such income to LightTouch as an expense
for use of LightTouch's facilities at the South Carolina Center.
1.5 COMPLIANCE WITH LAW. Physician shall require all of the Providers at
the South Carolina Center to comply with all laws, regulations, and ethical and
professional standards applicable to the practice of medicine. Providers who are
physicians shall at all times be licensed to practice medicine in the State of
South Carolina and all others states
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at which such physician provides patients medical services at a Center.
Likewise, LightTouch shall also comply with all laws, rules, regulations and
ethical and professional standards applicable to the South Carolina Center and
the practices employed therein.
1.6 CENTERS; HOURS OF OPERATION; STAFFING. Changes in or additions to the
Centers at which Physician provides medical director services and conducts
medical practices shall require the consent of both parties which consent shall
not be unreasonably withheld. The hours of operation and the medical staffing of
the South Carolina Center shall be mutually established by the agreement of
Physician and LightTouch from time to time hereafter.
1.7 QUALITY ASSURANCE. Physician shall monitor utilization and quality of
services provided by Providers, shall develop, maintain and administer quality
assurance programs and performance standards and shall take all steps necessary
to remedy any and all deficiencies in the efficiency or the quality of medical
care provided.
1.8 PATIENT REFERRALS. The parties agree that the benefits to Physician
hereunder do not require, are not payment for, and are not in any way contingent
upon the admission, referral or any other arrangements for the provision of any
item or service offered by LightTouch or any Affiliate of LightTouch to any of
Physician's Patients in any facility or laboratory controlled, managed or
operated by LightTouch or any Affiliate of LightTouch.
1.9 PROFESSIONAL INSURANCE ELIGIBILITY. Physician shall obtain and retain
professional liability insurance. LightTouch shall reimburse Physician for all
such expenses promptly upon receipt of an invoice therefor. Physician shall
terminate any Provider who is not insurable or loses his or her insurance
eligibility. Termination shall be effective no more than thirty (30) days from
such determination. Physician shall require all Providers to participate in an
on-going risk management program. It is understood that Physician and its
Providers who are physicians shall, at all times be covered by malpractice
insurance with coverage in usual and customary amounts for practitioners of the
same profession and specialties in South Carolina and, if applicable, other
states, the expense of which shall be reimbursed by LightTouch. Physician shall
ensure that its written agreements with Providers who are physicians require
such physicians to at all times be covered by malpractice insurance in amounts
that are usual and customary for practitioners of the same profession and
specialty in South Carolina and, if applicable, other states. Such malpractice
policies shall name LightTouch as an additional insured.
II. RESPONSIBILITIES OF LIGHTTOUCH
2.1 RESPONSIBILITIES WITH REGARD TO SELECTED PATIENT-RELATED MATTERS.
(a) PATIENT RELATIONS, SCHEDULING, ETC. LightTouch shall assist
Physician in maintaining positive Patient relations by, among other things, in
conjunction with and at the direction of Physician: scheduling Patient
appointments; responding to Patient
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grievances and complaints in matters other than medical evaluation, diagnosis,
and treatment.
(b) RECORDKEEPING. LightTouch shall assist Physician is maintaining
Patient medical records in accordance with applicable laws concerning
Physician's Providers and other appropriate recipients. Notwithstanding the
foregoing sentence, Patient medical records shall be and shall remain the
property of Physician, and the content thereof shall be the responsibility of
Physician.
(c) QUALITY ASSURANCE. LightTouch shall assist Physician, in
accordance with criteria established by Physician, in the development and
implementation of appropriate quality assurance programs, including development
of performance and utilization standards, sampling techniques for case review,
and preparation of appropriately documented studies. Notwithstanding the
foregoing, LightTouch shall not perform any duties that constitute the corporate
practice of medicine.
2.2 BILLING. LightTouch shall submit on a timely basis all bills and
necessary documentation required by Patients and Payors in order to obtain
payment in connection with Physician's delivery of health care services at the
South Carolina Center or its arrangement for the delivery of such services. In
seeking such payment, LightTouch shall act as Physician's exclusive agent in
billing and collecting professional fees, charges and other amounts owed to
Physician for service rendered by it and its Providers at the South Carolina
Center. In this connection, Physician hereby appoints LightTouch, during the
term of this Agreement, as Physician's true and lawful attorney-in-fact, with
power of substitution, for the following purposes relating to the South Carolina
Center:
(i) To bill Physician's Patients on Physician's behalf and the
South Carolina Center's.
(ii) To collect accounts receivable generated by such billings on
Physician's and the South Carolina Center's behalf, including, where deemed
appropriate by LightTouch and approved in advance by Physician, settling and
compromising claims, assigning such accounts receivable to a collection agency
or the bringing of legal action against a Patient or Payor on Physician's
behalf.
(iii) To receive payments on behalf of Physician and the South
Carolina Center from Patients and Payors, to cause such payments to be deposited
into appropriate depository accounts (each such depository account, a
"Collections Account").
2.3 OTHER RESPONSIBILITES.
(a) INSURANCE. LightTouch shall obtain and maintain during the term of
this Agreement (a) property damage insurance protecting the South Carolina
Center's premises and the personal property located therein against such hazards
and in such amounts as LightTouch determines are reasonably prudent; and (b)
general liability
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insurance in such amounts as LightTouch and Physician determine are reasonably
prudent.
(b) PERSONNEL. LightTouch shall furnish the services of all personnel
other than physicians, nurses, physician assistants or other health care
professionals required for the operation of the South Carolina Center. Except as
specifically provided in this SECTION 2.3(B), LightTouch has the power to
recruit, hire, train, promote, assign, set the compensation level for, and
discharge all nonprofessional personnel. Any nonprofessional personnel employed
by LightTouch who perform patient care services shall perform such services
under the exclusive direction, supervision and control of Physician, while all
other services of LightTouch personnel shall be performed under the exclusive
direction, supervision and control of LightTouch. If Physician is dissatisfied
with the services of any personnel employed by LightTouch, Physician shall
consult with LightTouch. LightTouch shall in good faith determine whether the
performance of that employee could be brought to acceptable levels through
counsel and assistance, or whether, if requested by Physician (provided that
such employee is not an officer or senior manager of LTVL), such employee should
be removed from providing services for Physician and the South Carolina Center.
Employee assignments shall be made with the intention of assuring consistent and
continued rendering of high quality medical support service and to ensure prompt
availability and accessibility of individual medical support personnel to
physicians in order to develop constant, familiar and routine working
relationships between individual physicians and individual members of the
medical support personnel.
2.4 PROFESSIONAL DUES AND EDUCATION EXPENSES. LightTouch shall be
responsible for the cost of membership in professional associations and
continuing professional education for Physician and its Providers. Physician
shall ensure that each of its Providers participates in such continuing medical
education as is necessary for such provider to remain current with professional
licensure and community standards.
2.5 FEES FOR PROFESSIONAL SERVICES. LightTouch shall be solely responsible
for legal, accounting and other professional services incurred by Physician in
operating the South Carolina Center absent a material violation by Physician of
any provisions of this Agreement.
2.6 ACCOUNTING. LightTouch shall direct and maintain the operation of an
appropriate accounting system with respect to Physician's operation of the South
Carolina Center and shall perform all bookkeeping and accounting services
required for the operation of the South Carolina Center, including the
maintenance, custody and supervision of business records, ledgers and reports;
the establishment, administration and implementation of accounting procedures,
controls and systems.
III. FINANCIAL ARRANGEMENTS
3.1 COMPENSATION. LightTouch shall pay to Physician the amount LightTouch
collects on behalf of Physician hereunder. In recognition of the services of
Physician
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hereunder, including services as medical director, LightTouch shall pay to
Physician the compensation salary and benefits set forth below. Within
forty-five (45) days of the end of each calendar quarter and ninety (90) days of
each calendar year, LightTouch will reconcile the amount due to, or payable
from, Physician for such quarter and year, determined by comparing the amount
paid to Physician during such quarter against the actual collections by
LightTouch on Physician's behalf. Physician shall earn and be entitled to
receive all of the first $40,000.00 of the cash flow received by LightTouch each
and every month for the first twenty-four months (or for such longer period as
necessary if the Promissory Note from LightTouch to Physician dated March ___,
2000 (the "Note") has not been paid in full). All of the cash flow received by
LightTouch above $40,000.00 per month up to $55,000.00 per month during such
period shall be retained by LightTouch and distributed to its parent LTVL,
unless LTVL consents to such profits being retained by LightTouch. All of the
cash flow in excess of $55,000.00 shall be shared between Physician and
LightTouch on a 50/50 basis (with 50% of the additional cash flow over
$55,000.00 per month going to the account of Physician and 50% of the additional
cash flow over $55,000.00 per month going to the account of LightTouch). For
purposes of this Section, cash flow shall mean: Net cash flows shall be defined
as net income, including facility rental income calculated using the accrual
method of accounting subject to the rules and provisions of Generally Accepted
Accounting Principles (GAAP) before income taxes and Physician's total
compensation for the period being reported.. After such initial twenty-four (24)
month period (or such longer period if the Note has not been paid in full),
Physician shall be paid a guaranteed minimum annual salary of $175,000.00 plus
50% of all of the cash flow of LightTouch.
IV. REPRESENTATIONS AND WARRANTIES; COVENANTS
4.1 COVENANTS AND WARRANTIES OF LIGHTTOUCH. LightTouch hereby represents
and warrants to Physician as follows:
(a) LightTouch is and shall remain during the term of this Agreement a
corporation which is duly organized, validly existing and in good standing under
the laws of the State of South Carolina, possessing full corporate power and
authority to own its properties and to conduct the business in which it engages.
(b) LightTouch has full corporate power and authority to execute and
deliver this Agreement and to engage in the transactions and obligations
contemplated by this Agreement. Upon its execution, this Agreement shall
constitute a valid and binding obligation of LightTouch, enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting generally the rights of
creditors and by principles of equity. The party executing this Agreement on
behalf of LightTouch is duly authorized to do so.
(c) The consummation of the transactions contemplated by this
Agreement will not: result in any breach of the terms, provisions or conditions
of or constitute a default under the Certificate of Incorporation, By-Laws or
other enabling or governing instruments of LightTouch or any agreement to which
LightTouch is a party or
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by which it is bound; or, to the best knowledge of LightTouch, constitute a
violation of any applicable law or regulation.
V. TERM AND TERMINATION
5.1 TERM. This Agreement shall commence on the Effective Date and shall
continue for a period of ten (10) years, unless sooner terminated pursuant to
this Article V. Thereafter, this Agreement shall automatically continue in
effect for additional terms of five (5) years each, unless either party notifies
the other in writing not less than six (6) months or more than twelve (12)
months prior to the expiration of the term or any renewal term of its intent to
terminate this Agreement at the end of such term, or unless this Agreement is
terminated pursuant to Section 5.2, Section 5.3 or Section 8.10 hereof.
Notwithstanding the foregoing, if at any time Medical Director determines that
his responsibilities hereunder are interfering with the operation of his
practice and the performance of his duties at the South Carolina Center and
LightTouch fails to provide assistance satisfactory to Medical Director at
LightTouch's expense within thirty (30) days of Medical Director's request,
Medical Director may terminate this Agreement upon the expiration of such thirty
(30) day period.
5.2 EVENTS OF DEFAULT. Each of the following shall constitute an "Event of
Default" (the party causing such default is referred to as the "Breaching Party"
and the other party is referred to as the "Non-Breaching Party"):
(a) The Breaching Party fails to make any payment required under this
Agreement.
(b) The Breaching Party fails to observe or otherwise breaches any
material term, condition, covenant, or warranty of this Agreement.
5.3 TERMINATION. Subject to the provisions of this Article V, The
Non-Breaching Party may terminate this Agreement upon the occurrence of an Event
of Default in accordance with the following:
(a) In the event of the occurrence of an Event of Default referred to
in Section 5.2(a) above, upon the expiration of ten (10) days after written
notice, which notice shall specify the amount of such payment and when it was
due, unless the amount due is paid within such ten (10) days.
(b) In the event of the occurrence of any other Event of Default, upon
the expiration of sixty (60) days after written notice, which notice shall
specify the nature and extent of such Event of Default to the Breaching Party,
unless such Event of Default is remedied within such sixty (60) days or, in the
case of an Event of Default which cannot reasonably be remedied within sixty
(60) days, unless the Breaching Party has made a good faith effort to begin to
cure such Event of Default within such sixty (60) days.
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5.4 DUTIES UPON TERMINATION OR EXPIRATION OF THIS AGREEMENT.
(a) If this Agreement is terminated upon expiration of its term, or
earlier as provided in Sections 5.3 or 8.10:
(i) Neither party shall be released or discharged from any
obligation, debt or liability which has previously accrued or been incurred and
remains to be performed upon the date of termination or expiration;
(ii) Any sums of money owing by one party to the other shall be
paid immediately;
(iii) Physician shall return to LightTouch all originals and
copies of the Proprietary Information of any of the Protected Parties (as those
terms are defined in Article VI) which are in the possession of Physician or any
other person or entity to whom it has delivered such originals and copies; and
(iv) Damages and any other remedies available at law or in equity
may be sought and collected by the Non-Breaching Party from the Breaching Party
in the event of a termination pursuant to Section 5.3 hereof.
VI. RESTRICTIVE COVENANTS
6.1 COVENANT REGARDING PROPRIETARY INFORMATION. In the course of the
relationship created pursuant to this Agreement, Physician will have access to
certain methods, trade secrets, processes, ideas, systems, procedures,
inventions, discoveries, concepts, software in various stages of development,
designs, drawings, specifications, models, data, documents, diagrams, flow
charts, research, economic and financial analysis, developments, procedures,
know-how, policy manuals, financial data, form contracts, marketing ad other
techniques, plans, materials, forms, copyrightable materials and trade
information regarding the operations of LightTouch and/or of its Affiliates
(collectively, the "Protected Parties"). The foregoing, together with the
existence and terms of this Agreement, are referred to in this Agreement as
"Proprietary Information". Physician shall maintain all such Proprietary
Information in strict secrecy and shall not divulge such information to any
third parties, except as may be necessary for the discharge of its obligations
under this Agreement. Physician shall take all necessary and proper precautions
against disclosure of any Proprietary Information to unauthorized persons by any
of its officers, directors, employees or agents. All officers, directors,
employees and agents of Physician who will have access to all or any party of
the Proprietary Information may be required to execute an agreement, at the
reasonable request of LightTouch, valid under the law of the jurisdiction in
which such agreement is executed, and in a form acceptable to LightTouch and its
counsel, committing themselves to maintain the Proprietary Information in strict
confidence and not to disclose it to any unauthorized person or entity. The
Protected Parties not party to this Agreement are hereby specifically made third
party beneficiaries of this Section 6.1, with the power to enforce the
provisions hereof. Upon termination of this Agreement for any reason,
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Physician and each of its Employed Providers and Contracting Providers shall
cease all use of any of the Proprietary Information and, at the request of
LightTouch, shall execute such documents as may be necessary to evidence
Physician's abandonment of any claim thereto. The parties recognize that a
breach of this Section 6.1 cannot be adequately compensated in money damages and
therefore agree that injunctive relief shall be available to the Protected
Parties as their respective interests may appear.
The obligations of Physician under this Section 6.1 shall not apply to
information: (i) which is a matter of public knowledge on or becomes a matter of
public knowledge after the Effective Date of this Agreement, other than as a
breach of the confidentiality terms of this Agreement or as a breach of the
confidentiality terms of any other agreement between Physician and LightTouch or
its Affiliates; or (ii) was lawfully obtained by Physician on a nonconfidential
basis other than in the course of performance under this Agreement and from some
entity other than LightTouch or its Affiliates or from some person other than
one employed or engaged by LightTouch or its Affiliates, which entity or person
has no obligation of confidentiality to LightTouch or its Affiliates.
6.2 COVENANTS NOT TO COMPETE DURING THE TERM. The parties recognize that
the services to be provided by LightTouch shall be feasible only if Physician
operates an active medical practice to which Physician and Providers devote full
time and attention. During the term of this Agreement, Physician shall not
establish, operate or provide physician or other health care services at any
medical office, clinic or other health care facility providing services
substantially similar to those provided by Physician pursuant to this Agreement
anywhere other than at the Centers and as may be approved in writing by
LightTouch. Physician shall also not enter into any medical director or
management or administrative services agreement or arrangement with any person
or entity other than LightTouch or LTVL without LightTouch's prior written
approval. Provided, however, the foregoing is in no way intended from
prohibiting Physician from operating a separate medical practice at the South
Carolina Center under the trade name Charleston Dermatology and Cosmetic Surgery
Center or a similar business entity, its successors and assigns, LightTouch
acknowledges that Physician will be performing medical services separate and
apart from those which he performs on behalf of LightTouch, including, without
limitation, services performed for Enrollees for which payment is made through
third-party Payors.
6.3 COVENANT NOT TO SOLICIT. During the term of this Agreement,
Physician shall not:
(a) Directly or indirectly solicit, recruit or hire, or induce any
party to solicit, recruit or hire any person who is an employee of, or who has
entered into an independent contractor arrangement with, LightTouch or any
Affiliate of LightTouch (excluding any person who performs patient services);
(b) Directly or indirectly, whether for itself or for any other person
or entity, call upon, solicit, divert or take away, or attempt to solicit, call
upon, divert or take away any of LightTouch's customers, business, or clients;
or
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(c) Disrupt, damage, impair or interfere with the business of
LightTouch.
6.4 ENFORCEMENT. LightTouch and Physician acknowledge and agree that since
a remedy at law for any breach or attempted breach of the provisions of this
Article VI or of Article VII shall be inadequate, either party shall be entitled
to specific performance and injunctive or other equitable relief in case of any
such breach or attempted breach, in addition to whatever other remedies may
exist by law. All parties hereto also waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such injunctive or
other equitable relief. If any provision of Article VI or Article VII relating
to the restrictive period, scope of activity restricted and/or other provisions
described therein shall be declared by a court of competent jurisdiction to
exceed the maximum time period, scope of activity restricted or geographical
area such court deems reasonable and enforceable under applicable law, the time
period, scope of activity restricted and/or area of restriction held reasonable
and enforceable by the court shall thereafter be the restrictive period, scope
of activity restricted and/or the territory applicable to the restrictive
covenant provisions in this Article VI or Article VII in any respect shall not
affect the validity or enforceability of the remainder of this Article VI or
Article VII or of any other provisions of this Agreement.
VII. INFORMATION AND RECORDS
7.1 OWNERSHIP OF RECORDS. At all times during and after the term of this
Agreement, including any extensions or renewals hereof, all business records,
including but not limited to, business agreements, books of account, general
administrative records and all information generated under or contained in the
management information system pertaining to LightTouch's obligations hereunder,
and other business information of any kind or nature, except for Patient medical
records and Physician's Records (as defined in Section 7.2 below), shall be and
remain the sole property of LightTouch; PROVIDED that after termination of this
Agreement Physician shall be entitled to reasonable access to such records and
information, including the right to obtain copies thereof, for any purpose
related to patient care or the defense of any claim relating to patient care or
the business of LightTouch or Physician.
7.2 PHYSICIAN'S BUSINESS AND FINANCIAL RECORDS. At all times during and
after the term of this Agreement, the financial, corporate and personnel records
and information relating exclusively to the business and activities of
Physician, as distinguished from the business and activity of LightTouch,
hereinafter referred to as "Physician's Records," shall be and remain the sole
property of Physician.
7.3 ACCESS TO RECORDS. Each party shall be entitled, upon request and with
reasonable advance notice, to obtain access to all records of the other party
directly
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related to the performance of such party's obligations pursuant to this
Agreement; provided, however, that such right shall not allow for access to
records that must necessarily be kept confidential. Either party, at its
expense, shall have the right to make copies of any records to which it has
access pursuant to this Section.
7.4 CONFIDENTIALITY OF RECORDS. LightTouch and Physician shall adopt
procedures for maintaining the confidentiality of the records relating to the
operations of LightTouch and Physician which do not constitute Proprietary
Information, which information is not otherwise available to third parties
publicly or by law, and shall comply with all applicable federal and state
statutes and regulations relating to such records. Patient medical records and
other privileged Patient information shall not be disclosed or utilized by
Physician or LightTouch or their agents or employees except as required or
permitted by applicable laws and regulations.
VIII. MISCELLANEOUS
8.1 INDEPENDENT CONTRACTOR STATUS OF PARTIES. IN THE PERFORMANCE OF THE
WORK, DUTIES AND OBLIGATIONS UNDER THIS AGREEMENT, IT IS MUTUALLY UNDERSTOOD AND
AGREED THAT EACH PARTY IS AT ALL TIMES ACTING AND PERFORMING AS AN INDEPENDENT
CONTRACTOR WITH RESPECT TO THE OTHER AND THAT NO RELATIONSHIP OF PARTNERSHIP
JOINT VENTURE OR EMPLOYMENT IS CREATED BY THIS AGREEMENT. NEITHER PARTY, NOR ANY
OTHER PERSON PERFORMING SERVICES ON BEHALF OF SUCH PARTY PURSUANT TO THIS
AGREEMENT, SHALL HAVE ANY RIGHT OR CLAIM AGAINST THE OTHER PARTY FOR SOCIAL
SECURITY BENEFITS, WORKERS' COMPENSATIONS BENEFITS, DISABILITY BENEFITS,
UNEMPLOYMENT INSURANCE BENEFITS, HEALTH BENEFITS, VACATION PAY, SICK LEAVE OR
ANY OTHER EMPLOYEE BENEFITS OF ANY KIND.
8.2 NO WAIVER. The waiver by any party to this Agreement of any breach of
any term or condition of this Agreement shall not constitute a waiver of
subsequent breaches. No waiver by any party of any provision of this Agreement
shall be deemed to constitute a waiver of any other provision.
8.3 NOTICES. If, at any time after the execution of this Agreement, it
shall become necessary or convenient for one of the parties to serve any notice,
demand or communication upon the other party, such notice, demand, or
communication shall be in writing and shall be served personally, by nationally
recognized overnight courier which provides confirmation of delivery, or by
depositing the same in the United States mail, registered or certified, return
receipt requested, postage prepaid and,
(a) If intended for Physician, then the notice shall be addressed to:
29 Gamecock Avenue
Charleston, South Carolina 29407
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Attn: Harley F. Freiberger, M.D.
(b) If intended for LightTouch, then the notice shall be addressed to:
LightTouch Vein & Laser of South Carolina, Inc.
10663 Montgomery Road
Cincinnati, Ohio 45242
Attn: Greg Martini
or to such other address as either party may have furnished to the other party
in writing as the place for the service of notice. Any notice so mailed shall be
deemed to have been given three (3) days after the same has been deposited in
the United States mail; when delivered if the same has been given personally; or
the next business day if the same has been delivered to a nationally recognized
overnight courier service.
8.4 ASSIGNMENT. Neither party may sell, transfer, assign, or otherwise
convey its rights or obligations under this Agreement without the prior written
consent of the other, which consent shall not be unreasonably withheld;
provided, however, Physician may assign this Agreement and all of his rights and
obligations hereunder to any professional corporation or similar business entity
wholly owned by Physician without the prior consent or approval of LightTouch or
LTVL.
8.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of this Agreement
respecting assignment, the terms, covenants and conditions contained herein
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto.
8.6 SEVERABILITY. Nothing contained in this Agreement shall be construed to
require the commission of an act contrary to law, and whenever there is any
conflict between any provision of this Agreement and any statute, law, ordinance
or regulation, the latter shall prevail. In such event, and in any case in which
any provision of this Agreement is determined to be in violation of a statute,
law, ordinance or regulation, the affected provision(s) shall be limited only to
the extent necessary to bring it within the requirements of the law and, insofar
as possible under the circumstances, to carry out the purposes of this
Agreement. The other provisions of this Agreement shall remain in full force and
effect, and the invalidity or unenforceability of any provision hereof shall not
affect the validity and enforceability of the other provisions of this
Agreement, nor the availability of all remedies in law or equity to the parties
with respect to such other provisions.
8.7 HEADINGS. The headings used in the Agreement are for convenience of
reference only and shall have no force or effect in the construction or
interpretation of the provisions of this Agreement.
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8.8 TIME OF THE ESSENCE. Time is of the very essence of each and all of the
agreements, covenants and conditions of this Agreement.
8.9 GOVERNING LAW. This Agreement shall be interpreted in accordance with
and governed by the laws of the State of Ohio, to the jurisdiction of which each
of the parties hereby submits.
8.10 CONTRACT MODIFICATIONS FOR PROSPECTIVE LEGAL EVENTS. In the event any
state or federal laws or regulations, now existing or enacted or promulgated
after the Effective Date of this Agreement, are interpreted by judicial
decision, a regulatory agency or legal counsel of both parties in such a manner
as to indicate that the structure of this Agreement may be in violation of such
laws or regulations (a "Structural Issue"), either party may terminate this
Agreement, on not less than ninety (90) days written notice to the other party,
or negotiate and enter into an amendment of the provisions of this Agreement in
such manner as to alleviate such violation. In the event that the parties are
unable to agree upon such amendment within thirty (30) days after the
determination that such amendment is necessary, a party may elect either to
terminate this Agreement, on not less than ninety (90) days written notice to
the other party.
The parties agree that an amendment to accomplish the purposes set forth in
this Section 8.10 may require reorganization of Physician or LightTouch, or
both, and may require either or both parties to obtain appropriate regulatory
licenses and approvals. If (a) such reorganization or obtaining such regulatory
licenses and approvals is not reasonably possible, either party shall have the
right to terminate this Agreement on not less than ninety (90) days written
notice to the other party; or (b) such reorganization or obtaining such
regulatory licenses and approvals would require LightTouch or Physician to incur
a material economic detriment or would result in a material economic detriment
for LightTouch or Physician, LightTouch or Physician, as the case may be, shall
have the right to terminate this Agreement on not less than ninety (90) days
written notice to Physician or LightTouch, as the case may be.
In the event that either party elects to terminate this Agreement in
accordance with the provisions of this Section 8.10, LightTouch shall have the
right, exercised by the delivery of a written notice to Physician at any time
within sixty (60) days after the delivery by either party of notice of
termination of this Agreement, to require Physician to purchase from LightTouch
all of the assets used by Physician in connection with the conduct of the
medical practice at the South Carolina Center (the "Practice Assets"). In the
event that LightTouch fails to exercise such right within the first thirty (30)
days of such sixty (60) day period, Physician shall have the right, exercisable
by delivery of a written notice to LightTouch at any time during the last thirty
(30) days of such sixty (60) day period, to require LightTouch to sell to
Physician all of the Practice Assets.
If LightTouch elects to exercise the right to require Physician to purchase
the Purchase Assets from LightTouch or if Physician elects to exercise the right
to require LightTouch to sell the Purchase Assets to Physician: (a) the purchase
price for the Practice Assets shall be the balance outstanding under the Note,
if any; and (b) the
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closing for such sale of the Practice Assets shall occur on such date as is
designated in writing by LightTouch (if LightTouch elects to exercise such
right) or Physician (if Physician elects to exercise such right) which date
shall be not later than ten (10) business days after the date of delivery by
LightTouch or Physician of notice of its exercise of its right to require
Physician to purchase or to require LightTouch to sell all of the Purchase
Assets, as the case may be.
LightTouch shall have no claim against Physician, and Physician shall have
no claim against LightTouch which is based upon or arises out of a Structural
Issue.
8.11 LANGUAGE CONSTRUCTION. The language in all parts of this Agreement
shall be construed, in all cases, according to its fair meaning, and not for or
against either party hereto. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
8.12 INDEMNIFICATION. LightTouch shall indemnify, hold harmless and defend
Physician from and against any and all liabilities, losses, damages, claims,
causes of action, and expenses (including reasonable attorneys' fees and
disbursements (a "Physician Loss"), caused or asserted to have been caused,
directly or indirectly, by or as a result of the performance of medical services
or any other acts or omissions by LightTouch, and/or its partners, agents,
employees and/or subcontractors (other than Physician) and any Physician Loss
arising from or as a result of the performance of his duties as a director of
LightTouch except with respect to any Physician Loss which is the result of any
gross negligence or willful misconduct by Physician. Physician shall indemnify,
hold harmless and defend LightTouch, its officers, directors, shareholders,
employees, agents and independent contractors (the "LightTouch Group") from and
against any and all liabilities, losses, damages, claims, causes of action, and
expenses (including reasonable attorneys' fees and disbursements (a "LightTouch
Loss"), caused or asserted to have been caused, directly or indirectly, by or as
a result of the performance of medical services or any other acts or omissions
by Physician, and/or its partners, agents, employees and/or subcontractors
(other than LightTouch) during the term hereof except with respect to any
LightTouch Loss which is the result of any gross negligence or willful
misconduct by a member of the LightTouch Group.
8.13 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether written or oral, between or among parties regarding the
subject matter of this Agreement.
8.14 INCORPORATION BY REFERENCE. All exhibits and other attachments to this
Agreement are incorporated by reference into this Agreement by such reference.
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8.15 AMENDMENTS ONLY IN WRITING. This Agreement may not be amended or
modified in any respect whatsoever, except by an instrument in writing signed by
the parties hereto.
8.16 COUNTERPARTS. This Agreement may be executed in on or more
counterparts, each of which shall be considered an original and all of which
shall constitute one and the same agreement. This Agreement shall not become
effective until it has been executed by all of the parties hereto.
8.17 COMMERCIAL IMPRACTICABILITY. No party to this Agreement shall be
liable for any failure to perform its obligations hereunder where such failure
results from any cause beyond that party's reasonable control, including, for
example, an act of God, labor disturbance such as a strike or walkout, war,
riot, fire, storm, accident, government regulation or interference, or
mechanical, electronic or communications failure.
8.18 ELECTION OF REMEDIES The respective rights of the parties to this
Agreement shall be cumulative. Each party shall have all other rights and
remedies consistent with this Agreement as law and equity may provide. No
exercise by any party of one right or remedy shall be deemed to be an exclusive
election of rights or remedies.
8.19 SURVIVAL. The provisions of Articles III, IV, V, VI, VII and VIII
shall survive any termination of this Agreement.
8.20 THIRD PARTY BENEFICIARIES. Except with respect to Affiliates of
LightTouch, nothing in this Agreement shall be construed to create any duty to,
any standard of care with reference to, or any liability to any Person not a
party to this Agreement. The Affiliates of LightTouch are intended third party
beneficiaries of this Agreement.
IN WITNESS WHEREOF, LightTouch and Physician have caused this Agreement to
be executed by their duly authorized respective officers as of the Effective
Date.
LIGHTTOUCH VEIN & LASER OF
SOUTH CAROLINA, INC.
By: /s/ Dr. Freiberger
Title: /s/ President
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HARLEY F. FREIBERGER, M.D.
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