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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MARCH 24, 2000
AVESIS INCORPORATED
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(Exact name of registrant as specified in its charter)
DELAWARE 0-15304 86-0349350
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3724 NORTH THIRD STREET, SUITE 300, PHOENIX, AZ 85012
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(Address of principal executive offices) (Zip Code)
(602) 241-3400
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(Registrant's telephone number, including area code)
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ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
On March 24, 2000 Avesis Incorporated (the "Company") purchased substantially
all of the assets of Southern States Eye Care, LLC ("SSEC"), including but not
limited to the name "Southern States Eye Care", service marks, trade marks,
trade names, current client contracts, provider contracts and managed care
contracts. The acquisition was made pursuant to the Agreement by and between
Southern States Eye Care, LLC, Philip E. Johnson, R. Whitman Lord, Larry Forth,
Brent Layton, Michael McQuaig and Avesis Incorporated, a copy of which is
attached as Exhibit 2.1. The aggregate purchase price for the acquisition,
determined through arms-length negotiations between the parties, was $250,000
and 350,000 shares of the Company's Common Stock. The Company used its working
capital to finance the purchase. The acquisition of SSEC will broaden the
Company's client base and increase the Company's vision provider network in
Georgia, Alabama and North Carolina. The Company intends to use the acquired
assets to continue SSEC's current lines of business, which the Company will
operate out of its corporate headquarters in Phoenix, Arizona.
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EXHIBIT INDEX
Incorporated by
Exhibit No. Exhibit Reference from the:
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2.1 Agreement by and between Southern Filed herewith
States Eye Care, LLC, Philip E. Johnson,
R. Whitman Lord, Larry Forth, Brent
Layton, Michael McQuaig and Avesis
Incorporated
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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.
AVESIS INCORPORATED
By: /s/ Joel H. Alperstein
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Joel H. Alperstein
Treasurer and Chief Financial Officer
Date: April 7, 2000.
AGREEMENT
BY AND BETWEEN
SOUTHERN STATES EYE CARE, LLC,
PHILIP E. JOHNSON,
R. WHITMAN LORD,
LARRY FORTH,
BRENT LAYTON,
MICHAEL MCQUAIG
AND
AVESIS INCORPORATED
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TABLE OF CONTENTS
Page
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EXPLANATORY STATEMENT...................................................... 1
1. Recitals............................................................... 2
2. Purchase And Sale...................................................... 2
2.1. Included Assets................................................... 2
2.2. Excluded Assets................................................... 3
2.3. Preparation Of Schedule Of The Assets............................. 3
3. Purchase Price......................................................... 3
4. Payment Of Purchase Price.............................................. 4
5. Stock Registration..................................................... 5
6. Liabilities............................................................ 6
7. Contracts.............................................................. 6
8. Operations Pending Closing............................................. 6
9. Announcement........................................................... 8
10. Access To Books, Records, Personnel And The Assets .................... 8
11. Closing................................................................ 9
12. Warranties Of The Seller and The Members............................... 9
12.1. Authority........................................................ 10
12.2. Title............................................................ 10
12.3. Claims........................................................... 11
12.4. Operations....................................................... 11
12.5. Tax Payments..................................................... 11
12.6. Other Agreements................................................. 11
12.7. Retirement Plans................................................. 12
12.8. Subsequent Liabilities........................................... 12
12.9. Employment Agreements............................................ 12
12.10. Other Agreements................................................ 12
12.11. Financial Statements............................................ 12
12.12. Tax Returns and Reports. ...................................... 14
12.13. No Restrictions................................................. 14
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12.14. Indemnity....................................................... 14
12.15. Compensation.................................................... 14
12.16. Insurance....................................................... 14
12.17. Security Interests.............................................. 15
12.18. Disputes........................................................ 15
12.19. Wages Current................................................... 15
12.20. Suits........................................................... 15
12.21. Consents And Approvals Of Governmental Authorities.............. 15
12.22. Absence Of Events............................................... 15
12.23. Customers and Suppliers......................................... 15
12.24. Intellectual Property........................................... 16
12.25. Disclosure...................................................... 16
12.26. Survival........................................................ 16
12.27. Investment Intent .............................................. 16
13. Warranties Of The Buyer................................................ 18
13.1. Authority....................................................... 18
13.2. Claims.......................................................... 18
13.3. Operations...................................................... 18
13.4. Tax Payments.................................................... 18
13.5. Other Agreements................................................ 19
13.6. Financial Statements............................................ 19
13.7. No Restrictions................................................. 19
13.8. Indemnity....................................................... 19
13.9. Suits........................................................... 20
13.10. Consents And Approvals Of Governmental Authorities.............. 20
13.11. Absence Of Events............................................... 20
13.12. Disclosure...................................................... 20
13.13. Survival........................................................ 20
14. Adjustments............................................................ 20
15. Risk Of Loss........................................................... 21
16. Consents, Best Efforts and Cooperation................................. 21
17. Attorney's, Accountant's and Broker's Fees............................. 22
18. Conditions Precedent To Buyer's Obligation To Close.................... 23
18.1. Consents........................................................ 23
18.2. Due Diligence................................................... 23
18.3. Suits........................................................... 23
18.4. Counsel......................................................... 24
18.5. Releases........................................................ 24
18.6. Volume.......................................................... 24
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18.7. Tax Clearance Certificates...................................... 24
18.8. Representations and Warranties.................................. 24
18.9. Compliance With Conditions...................................... 24
18.10. Misrepresentations.............................................. 24
18.11. Loss Or Damage.................................................. 24
18.12. Contracts....................................................... 25
18.13. Approval........................................................ 25
19. Conditions Precedent To Seller's Obligation To Close................... 25
19.1. Payment.......................................................... 25
19.2. Representations and Warranties................................... 25
19.3. Suits............................................................ 25
19.4. Counsel.......................................................... 25
19.5. Conditions....................................................... 25
19.6. Misrepresentations............................................... 25
20. Restrictive Covenant of the Members.................................... 26
21. Remedy for Breach...................................................... 27
22. Compliance With Bulk Transfer Statute.................................. 28
22.1. List of Creditors................................................ 28
22.2. Supplemental List of Creditors................................... 28
22.3. Affidavit........................................................ 29
22.4. Litigate, Compromise, Etc........................................ 29
23. Section And Subsection Headings........................................ 29
24. Multiple Counterparts.................................................. 29
25. Governing Law.......................................................... 29
26. Notices................................................................ 30
27. Binding Agreement...................................................... 31
28. Severability........................................................... 31
29. Final Agreement........................................................ 31
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AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of this 24th day of ___March,
2000, by and between SOUTHERN STATES EYE CARE, LLC, a Georgia limited liability
company (the "Seller"), AVESIS INCORPORATED, a Delaware corporation (the
"Buyer"), PHILIP E. JOHNSON, O.D. ("Johnson"), R. WHITMAN LORD, O.D. ("Lord"),
MICHAEL MCQUAIG, O.D. ("McQuaig"), LARRY FORTH, O.D. ("Forth") and BRENT LAYTON
("Layton"), (Johnson, Lord, McQuaig, Forth and Layton are collectively referred
to as the "Members").
EXPLANATORY STATEMENT
A. The Seller is engaged in the business of managed eye care (the
"Business").
B. The Seller desires to sell to the Buyer and the Buyer desires to
purchase from the Seller those assets of the Seller which are more particularly
described in this Agreement.
C. It is the intention of the parties that upon consummation of the
transaction contemplated by this Agreement, the Buyer shall be in a position to
operate the Business as a going concern.
AGREEMENT
NOW, THEREFORE, in consideration of these premises, the restrictive
covenant of the Members as set forth herein, and other good and valuable
consideration paid by the Buyer to the Seller, and by the Seller to the Buyer,
the adequacy and sufficiency of which is hereby acknowledged, the parties,
intending to be bound hereby, agree, covenant, promise and warrant as follows:
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DEFINITIONS
TERM SECTION
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Assets 2.1.
Business Explanatory Statement A
Buyer Opening Paragraph
Cash Consideration 3.
Closing 11.
Delay Notice 5.
First Cash Installment 4.
Liabilities 2.1.
Members Opening Paragraph
Promissory Note 4.
Purchase Price 3.
Restrictive Term 18.
Second Cash Installment 4.
Stock Consideration 3.
1. RECITALS. The Explanatory Statement set forth above, the Definitions set
forth above, and the Exhibits and Schedules attached to this Agreement are
incorporated herein by this reference and made a substantive part of this
Agreement.
2. PURCHASE AND SALE.
2.1. INCLUDED ASSETS. The Seller agrees to sell to the Buyer and the
Buyer agrees to purchase from the Seller, subject to the terms and conditions
set forth in this Agreement, at and for the Purchase Price set forth in Section
3. of this Agreement, substantially all of the assets of the Seller, wherever
located, including but not limited to the name "Southern States Eye Care",
service marks, trade marks, trade names, current client contracts, provider
contracts and managed care contracts and all records relating thereto, general
intangibles, copyrights, those records of the Seller described in Section 10.
hereof, supplies, customer lists, supplier lists, computer software, goodwill,
covenant not to compete, and all other assets of the Business to allow the Buyer
to operate the Business as a going concern (the "Assets"), free and clear of all
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liens, liabilities, charges, security interests, claims, obligations,
indebtedness and encumbrances of every kind, nature and description whatsoever
(the "Liabilities"). The parties agree that all supplier and customer lists will
be delivered in intangible form via e-mail.
2.2. EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained herein, there shall be excluded from the purchase and sale hereunder
all cash or cash equivalents, insurance policies, stock warrants of Web.
Healthy, and all personal property of the Members.
2.3. PREPARATION OF SCHEDULE OF THE ASSETS. Attached to this Agreement
as Schedule 2.3. is a Schedule of the Assets, prepared by the Seller and the
Buyer, which sets forth in reasonable detail all the Assets being purchased and
sold hereunder. The Schedule of the Assets shall set forth in reasonable detail
the kinds or types of property (e.g., furniture), the quantity, the term of
property, a brief description identifying each item of property, the value
thereof, and the location of each item of property.
3. PURCHASE PRICE. The purchase price for the Assets being sold and
purchased hereunder shall consist of stock consideration consisting of three
hundred fifty thousand (350,000) shares of the common stock of the Buyer (the
"Stock Consideration") and cash consideration of Two Hundred Fifty Thousand
Dollars ($250,000.00) (the "Cash Consideration"). The Stock Consideration and
the Cash Consideration shall constitute the Purchase Price, subject to
adjustment as hereinafter provided in this Agreement. At the Closing the Seller
agrees to deliver to the Buyer all the managed care contracts and provider
contracts of the Seller as set forth on Schedule 2.3., and to have obtained the
consents of such providers, persons, and entities to assign the contracts to the
Buyer. Notwithstanding the foregoing, the Purchase Price shall be decreased if
the Seller fails to assign any of its client contracts and provider agreements
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of which it is a participant as of January 17, 2000, as of the date hereof, and
as of the date of Closing in substantially their same form. The failure to
assign any client contract and/or provider agreement shall cause a pro rata
reduction in the Purchase Price based upon the gross revenue derived from the
unassigned client contracts and provider agreements as compared to the Seller's
gross revenue as of January 17, 2000. The reduction in the Purchase Price shall
reduce the Cash Consideration and the Stock Consideration, pro rata
(collectively the "Purchase Price").
4. PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid as follows:
The Stock Consideration shall be paid at Closing. The Cash Consideration shall
be paid in two equal installments as follows: one-half (1/2) of the Cash
Consideration, or $125,000, shall be paid at the Closing (the "First Cash
Installment"). The remainder of the Cash Consideration, or $125,000 (the "Second
Cash Installment"), shall be paid six months after the Closing pursuant to the
terms of a promissory note of the Buyer (the "Promissory Note") attached hereto
as Exhibit 4. At the Closing the Second Cash Installment shall be paid to Robert
A. Rombro as escrow agent to be held in escrow by him until the due date of
payment pursuant to the Escrow Agreement attached hereto as Exhibit 4A. The
parties agree to indemnify Robert A. Rombro for all loss, cost and expense, and
agree to reimburse him with regard to same, with regard to the escrow and the
escrow funds. The Second Cash Installment shall be offset by and reduced by the
claims expense paid after the date of Closing with dates of service prior to the
date of Closing, and any claims in excess of the Second Cash Installment shall
be reimbursed by the Seller and the Members to the Buyer as provided in Section
12.14. hereof. Interest shall accrue on the unpaid principal balance of the
Second Cash Installment at the rate of five percent (5%) per annum. To the
extent payable, the First Cash Installment and the Second Cash Installment shall
be paid by wire transfer.
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5. STOCK REGISTRATION. The Members of the Seller shall have the right to
register their shares of common stock of the Buyer received pursuant to the
transaction contemplated by this Agreement, and to participate in the sale of
their shares pro rata with the other insiders of the Buyer in the event of a
secondary offering (except for shares registered for options on a Form S-8 or
Form SB-2, executive compensation, or a transaction on Form S-4 or Form S-8).
Notwithstanding the foregoing, no registration is necessary within 120 days
after the effectiveness of a registration statement filed in connection with an
underwritten public offering of securities of the Buyer or within one year of
the effectiveness of a registration statement filed in connection with a prior
Registration, if the Buyer delivers written notice (the "Delay Notice") to the
selling Members that it has determined that such action would not be in the best
interests of the Buyer or its stockholders, provided that the Buyer may not
delay the filing of such registration statement for more than 120 consecutive
days and that after the termination of such 120 consecutive day period may not
deliver another Delay Notice for at least one year, or if the company has
effected (or is in the process of effecting) the Registration pursuant to the
provisions of this Section 5. The right to cause the Buyer to register shares of
the Buyer's stock under this Agreement may be assigned to a transferee of any
Member to the extent that such transferee or assignee is a member of the
immediate family of the Member, or a trust, limited partnership or other estate
planning entity for the benefit of any such persons. The provisions of this
Section 5 shall terminate on the earliest of: (a) one (1) year following the
date of Closing, or (b) when the Members are able to sell the stock within one
year under Rule 144.
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6. LIABILITIES. The Assets purchased by the Buyer shall be free and clear
of all the Liabilities. The Buyer shall not assume any of the Liabilities of the
Seller or take any of the Assets subject to the Liabilities, direct or indirect,
matured, unmatured or contingent. The Liabilities of the Seller applicable to
the Assets being sold hereunder shall be paid in full by the Seller as they come
due as a result of this transaction.
7. CONTRACTS. The Buyer will assume those client contracts, managed care
contracts and provider agreements of the Seller listed on and attached to
Schedule 7 entitled "Contracts Assumed" and which are assigned to the Buyer.
8. OPERATIONS PENDING CLOSING. The Seller and the Members agree to conduct
and operate the Business prior to the Closing in all respects as the Business
has been conducted heretofore and agree, pending the Closing, not to make any
material changes in the Seller's Business or working force or the terms and
conditions of its working force, except such changes as are necessary for the
proper conduct of the Business. The Seller and the Members agree to make no
increase in the compensation payable or to become payable to any employee, agent
or independent contractor of the Seller, nor to make any bonus payment or
arrangement to or with any employee, agent, or independent contractor of the
Seller during the time between the execution of this Agreement and the Closing,
except as currently in effect or in the ordinary conduct of its business
consistent with prior practice. No contract or commitment shall be entered into
by or on behalf of the Seller which extends beyond the date of the Closing,
except normal commitments necessary for the ordinary operation of the Business,
unless such extraordinary commitments are first approved by the Buyer in
writing.
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During the period from the date hereof to the Closing, except as otherwise
expressly provided herein, the Seller shall operate its Business only in the
ordinary course of business. The Seller shall use its reasonable best efforts to
preserve intact the present organization of the Business, keep available the
services of the present officers and employees of the Business and preserve
relationships with customers, suppliers, licensors, licensees, contractors,
distributors and others having business dealings with the Business. Without
limiting the generality of the foregoing, from the date hereof the Seller shall
not, without the prior written consent of the Buyer to the extent related to the
Business: (i) sell, lease, encumber, transfer or dispose of any assets or rights
or acquire any assets or rights which would be included in the Assets, unless in
the ordinary course of business, (ii) fail to collect any accounts receivables
or fail to pay any accounts payable, other than in the ordinary course of
business, (iii) enter into any material commitment or transaction unless in the
ordinary course of business, (iv) permit any Asset to suffer any liability
thereupon, (v) enter into or offer to enter into any employment or consulting
agreement with any person outside the ordinary course of business, unless
terminable at will by the Buyer, (vi) make any capital expenditures outside the
ordinary course of business, (vii) enter into, amend or terminate any material
contract, except in the ordinary course of business, (viii) enter into any
transaction or any contract with any affiliate, other than transactions on arm's
- -length terms in the ordinary course of business, or (ix) authorize, or commit
or agree to take, any of the foregoing actions.
At the time of the Closing, possession of the Assets shall be given to the
Buyer as the same existed on the date of the signing of the Letter of Intent
(i.e., January 17, 2000), on the date of the signing of this Agreement and the
date of Closing, and as were used by the Seller in the Business, delivered by
the Seller to the Buyer in order that the Buyer may commence and continue the
operation of the Business in an orderly manner with the least interruption and
inconvenience possible.
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9. ANNOUNCEMENT. The parties agree that none of them shall make any
disclosure or public announcement (other than to its attorneys, advisors and
accountants) through the public media or otherwise regarding this transaction
prior to the Closing, without the prior approval of the other party, except as
provided by law or by the Federal Securities and Exchange Commission. It is the
intention of the parties to make a public announcement following the execution
of this Agreement, and the parties shall cooperate with each other in preparing
and issuing such announcement.
10. ACCESS TO BOOKS, RECORDS, PERSONNEL AND THE ASSETS. At any time up to
and including the date of Closing, the Buyer and the Seller shall have the
right, either alone or with any accountant, attorney or other advisor or
representative of its choosing, to examine and review the books of account and
business records of the other, including, but not limited to, income, payroll,
sales and property tax returns, general ledgers, financial statements (including
balance sheets, income statements and cash flow analyses), payroll records, bank
statements, customer lists, client contracts, provider agreements, the Assets,
personnel records, supplier lists, and other assets and records of the other.
Such inspection or inspections shall be at such times and such places as shall
be mutually agreeable to the parties. At the Closing, copies of all such books
and records of the Seller shall be attached to this Agreement as Schedule 10.
The Seller agrees that disclosures on any public documents and records
shall be deemed to have been disclosed to the Sellers, regardless of whether the
Seller has reviewed such documents and records. Each party agrees that it will
not disclose or use any proprietary or confidential information obtained from
the other party other than in connection with the transaction contemplated by
this Agreement. If the transaction contemplated by this Agreement is not
consummated, each party agrees that it will promptly return any and all
documents, contracts or other proprietary or confidential information to the
disclosing party.
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11. CLOSING. The Closing shall take place on or about March 23, 2000, or
upon removal and satisfaction of the conditions precedent to Closing as set
forth in Sections 18. and 19. hereof, whichever shall last occur. If the
conditions precedent are not met by April 1, 2000, this Agreement shall be null
and void, unless the Buyer waives the satisfaction and removal of the conditions
precedent, set forth in Section 18. hereof, or agrees to an extension, or the
Seller waives the satisfaction and removal of the conditions precedent set forth
in Section 19. hereof or agrees to an extension. The Closing shall be held by
and through facsimile exchange, United States Mail, or overnight delivery
service such as Federal Express or United Parcel Service.
11.1. At the Closing, the Buyer shall pay the Purchase Price to the
Seller for the Assets. At the Closing the Buyer shall pay the Stock
Consideration and the First Cash Installment to the Seller, and shall deliver to
the Seller the Promissory Note for the Second Cash Installment, as may be
adjusted as provided above.
11.2. At the Closing, the Seller shall execute, acknowledge, seal and
deliver to the Buyer a Bill of Sale covering all the Assets herein sold to the
Buyer, to the end that all such Assets shall be delivered, assigned and conveyed
by the Seller to the Buyer free and clear of the Liabilities. A copy of the Bill
of Sale is attached hereto as Exhibit 11.2. In addition, the Seller shall
deliver an assignment of all the managed care contracts, provider contracts and
client contracts set forth on Schedule 7.
11.3. At the Closing, the Seller shall deliver the Schedule of Assets,
tax clearance certificates, and Certificate of Good Standing.
12. WARRANTIES OF THE SELLER AND THE MEMBERS. In addition to the warranties
and representations made by the Seller and the Members elsewhere in this
Agreement, the Seller and the Members jointly and severally warrant and
represent to the Buyer that as of the date hereof and as of the date of the
Closing:
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12.1. AUTHORITY. That the Seller is a limited liability company duly
organized, validly existing and incorporated in the State of Georgia, and in
good standing under the laws of Georgia; that it has the requisite power and
authority to make the within sale, to transfer the Assets, to execute, deliver
and perform this Agreement and all of the documents and instruments required to
be executed and delivered by the Seller, and to carry out the transactions and
perform its obligations contemplated by this Agreement, and that the within sale
has been duly authorized and approved by its Board of Directors and its Members.
This Agreement has been duly executed and delivered by the Seller and is the
legal, valid and binding obligation of the Seller enforceable according to its
terms except as such enforcement may be limited by bankruptcy, insolvency or
similar laws now or hereafter in effect relating to creditors rights, and that
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding my be brought. Attached hereto as Exhibit 12.1.1. is
a Certificate of Good Standing of the Seller dated within thirty (30) days of
the date of Closing. Attached hereto as Exhibit 12.1.2. are resolutions of the
Board of Directors of the Seller and resolutions of the Members of the Seller
authorizing, approving, adopting and ratifying the transactions contemplated by
this Agreement and the Seller's performance of its obligations hereunder. The
Members are the record and beneficial owners of all the issued and outstanding
membership interests of the Seller, free and clear of all Liabilities. Each
Member has good and marketable title to his or its membership interests in the
Seller.
12.2. TITLE. That the Seller has good and marketable title to the
Assets herein sold to the Buyer, and that the same are free of any Liabilities.
The Assets consist of all assets being used in the Business other than the
excluded assets. No part of the Business is operated or conducted through any
individual or entity other than the Seller.
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12.3. CLAIMS. That there are no claims, liabilities, judgments, liens,
actions, investigations or proceedings, including any law suits, existing or
threatened, against the Seller, or pertaining to, arising out of or in
connection with the Business or the Assets, except as provided in Schedule 12.3.
attached hereto.
12.4. OPERATIONS. That the Seller has not operated the Business in
violation of any law, statute, ordinance, regulation, order of any court or
other applicable governmental authority, or licensing agency, or that such
violations, if any, do not materially adversely affect the Business or the
Assets being sold and purchased herein.
12.5. TAX PAYMENTS. That the Seller is current in the payment of all
Federal, State and Local taxes, including but not limited to income, social
security, withholding, medicare, employment, sales, real and personal property,
unemployment insurance and other income, sales and payroll taxes to all cities,
counties, and State and Federal governments. All taxes which the Seller is or
was required by law to withhold or collect have been withheld or collected, and
have been timely paid to the proper taxing authorities to the extent due and
payable.
12.6. OTHER AGREEMENTS. That the consummation of the transaction
contemplated by this Agreement, the execution, delivery and performance of this
Agreement by the Seller, and compliance with the provisions hereof, will not
conflict with, or result in the breach of, the terms, conditions or provisions
of, or constitute a breach or default under: the Charter or Operating Agreement
of the Seller; or of any note, debenture, mortgage, loan agreement or other
instrument to which the Seller is a party, or by or to which either is bound; or
result in the creation or imposition of any lien, charge or encumbrance of any
kind whatsoever on any of the Assets or property being acquired by the Buyer
under this Agreement or against or with respect to the Buyer's stock; or violate
or contravene any statute, rule, regulation, order or decree by which the
Seller, the Business or the Assets is bound or require any filing, permit,
consent or approval of any governmental agency; or accelerate or terminate any
obligation under any of the foregoing.
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12.7. RETIREMENT PLANS. That there are no pension, profit sharing,
retirement or other employee benefit plans with any past or present employees of
the Seller which are not terminable at the time of Closing.
12.8. SUBSEQUENT LIABILITIES. That they will not incur any liabilities
on behalf of the Seller between the date hereof and the date of Closing and have
not incurred any liabilities on behalf of the Seller since January 1, 1999,
except in the ordinary course of business consistent with prior practice, and
that they will comply with the provisions of Section 8. hereof.
12.9. EMPLOYMENT AGREEMENTS. That there are no written or oral
agreements of employment with any employee, agent or independent contractor of
the Seller which are not terminable at will.
12.10. OTHER AGREEMENTS. That there are no contracts or commitments of
the Seller known to them other than those specifically set forth on Schedule
12.10 attached hereto that will affect the consummation of the transaction
contemplated by this Agreement.
12.11. FINANCIAL STATEMENTS. That all balance sheets, profit and loss
statements, financial statements, Federal and State income tax, sales tax and
payroll tax returns, and books and records of the Seller, for the current year
and all prior years of the Seller, are true and complete (except that the
financial statements are true and complete in all material respects) as of the
date hereof and the date of Closing and accurately reflect the financial
condition and position of the Seller as of the dates therein and the results of
the operations and cash flows of the Seller for the respective periods
indicated, and that there has not been any change in the Seller's financial
condition, assets, liabilities or business since the dates of those statements,
other than those changes incurred in the ordinary course of business consistent
with prior practice. The Seller has delivered or will deliver to the Buyer true
and complete copies of the Seller's unaudited financial statements including
balance sheets, statements of operations and retained earnings, and statements
of changes in financial position, as of and for the years ended December 31,
1997, December 31, 1998, December 31, 1999, and for the periods ended the last
day of each month for each month in 2000 (collectively, the "Financial
Statements"), and Federal income tax returns for the years ended December 31,
1997 and December 31, 1998 (the "Tax Returns"). The Financial Statements are
attached hereto as Schedule 12.11.1. and the Tax Returns are attached hereto as
Schedule 12.11.2.
The Seller agrees to provide the Buyer with a copy of its 1999 Federal
income tax return on or before its due date, and to provide the Buyer with a
copy of each monthly financial statement for each month in 2000.
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The Financial Statements are true and correct in all material respects
and fairly present the financial condition of the Seller as of the respective
dates thereof and the results of operations of the Seller for the periods then
ended applied on a consistent basis throughout the periods involved.
12.12. TAX RETURNS AND REPORTS. That the Seller is not delinquent in
the filing of any tax reports and returns, that any and all tax reports and
returns of any nature whatsoever required to be filed by it by law to the date
hereof and the date of Closing have been timely filed. All of the tax returns
and reports of the Seller required by law to be filed on or before the date
hereof have been duly and timely filed and all taxes shown as due thereon have
been timely paid. There are in effect no waivers of any applicable statute of
limitations related to such returns. No liability for any tax will be imposed
upon the Seller or the Assets or the Business with respect to any period before
the Closing Date for which there is not an adequate reserve. The provisions of
this Section shall include, without limiting the generality of this Section, all
reports, returns, and payments due under all Federal, State, or Local laws or
regulations relating to income, sales, use and withholding taxes, withholding
obligations, unemployment insurance, Social Security, workers' compensation and
other obligations of the same or of a similar nature. The Seller is not subject
to any open audit in respect of its taxes, no deficiency assessment or proposed
adjustment for taxes is pending, and the Seller and the Members have no
knowledge of any liability, whether or not proposed, for any tax with respect to
any period through the date hereof to be imposed upon any of the Seller's
properties or assets for which there is not an adequate reserve.
12.13. NO RESTRICTIONS. That there is no restriction or limitation, by
way of contract, judicial decree or otherwise, enforceable against the Seller
which would prohibit or restrict the Seller from consummating the transaction
contemplated by this Agreement.
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12.14. INDEMNITY. That they will, jointly and severally, indemnify,
protect and hold harmless the Buyer, jointly and severally, its successors,
assigns, members, officers and employees (collectively the "Successors") from
and against any and all liabilities, damages, deficiencies, taxes (income,
sales, property, employment or otherwise, including those which have accrued),
fines, penalties, interest, claims, threats, suits, actions, proceedings,
demands, losses, costs and expenses (including reasonable attorney's fees) of
any kind, nature or description imposed upon, incurred or suffered by the Buyer
and/or the Successors relating to the Business: (a) which are attributable to,
the basis for which occurred during, or otherwise arise out of or in connection
with the period prior to the date of Closing; or (b) which arise out of or in
connection with any: (i) acts or omissions or alleged acts or omissions of the
Seller or the Members, or (ii) breaches of or defaults under or alleged breaches
of or defaults under any covenant, promise, representation, warranty, condition,
obligation, contract, agreement, document, instrument, or commitment made or
entered into by the Seller or the Members or which the Seller or the Members are
a party or are subject to or bound; or (iii) claims, actions, suits,
proceedings, made, instituted or threatened with respect to any of the
foregoing. No indemnification shall be made on account of any unlawful act. The
Seller and the Members shall reimburse the Buyer and the Successors, on demand,
in respect of any liability, damage, cost, deficiency or expense (including
reasonable attorney's fees) to which the foregoing indemnities relate.
12.15. COMPENSATION. That there will be no increase in the
compensation paid or payable by the Seller to any of its employees, independent
contractors or agents without the prior written consent of the Buyer.
12.16. INSURANCE. That all policies of insurance covering the Business
and the Assets of the Seller are in full force and effect, and will be until the
Closing and such insurance is sufficient in scope, type and amount to cover any
claim or action that may be filed or taken against the Seller. Attached hereto
as Exhibit 12.16. are copies of all insurance policies that insure the Seller
and its business. The Seller agrees to acquire a professional liability "tail"
policy covering any acts, errors or omissions of the Seller and all persons
performing services in connection with the Seller through or on behalf of the
Seller which occurred prior to the Closing. The policy obtained shall name the
Buyer as an additional insured. The policy shall be obtained from a commercial
insurer doing business in the State of Georgia reasonably satisfactory to the
Buyer, and shall contain coverage limits in the amount not less than One Million
Dollars ($1,000,000.00) per claim and One Million Dollars ($1,000,000.00) in the
aggregate.
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12.17. SECURITY INTERESTS. That there are no recorded security
interests in and to any of the Assets and the Business, and any recorded
security interests in and to any and all of the Assets, the Business or other
properties being sold and purchased herein shall be satisfied, released and
terminated as of the date of Closing.
12.18. DISPUTES. That they shall remain liable on all disputes, errors
and omissions involving the Business and the Assets which occurred prior to or
which are attributable to or which arose from the period prior to the date of
Closing.
12.19. WAGES CURRENT. That the Seller is current in all wages,
bonuses, and benefits and other sums to its employees, agents and independent
contractors. There have been no wage or salary increases since January 1, 1999,
and none has been promised or contemplated in the future.
12.20. SUITS. Except as set forth on Schedule 12.20. attached hereto,
there is no suit, action, proceeding or governmental investigation pending or
threatened against or concerning, involving or affecting, directly or
indirectly, the Seller, the Assets or the Business, and none has been instituted
or threatened.
12.21. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent,
approval, permission, determination, waiver or authorization of, or declaration,
filing, or registration with, any governmental or regulatory authority is
required to be made or obtained by the Seller in connection with the execution,
delivery, and performance of this Agreement.
12.22. ABSENCE OF EVENTS. Since January 1, 1999, the Seller has not:
suffered any material adverse change to the Business or the Assets; permitted or
allowed the Business or the Assets to be subject to any Liabilities other than
in the ordinary course of business consistent with prior practice; created or
incurred any liability other than in the ordinary course of business consistent
with prior practice; sold or transferred any of the Business or the Assets;
entered into or agreed to enter into any agreement to sell or otherwise dispose
of the Business or any of the Assets; done anything to impact negatively the
Business or the Assets; or lost any of its book of business or customers except
in the ordinary course of business consistent with prior practice.
12.23. CUSTOMERS AND SUPPLIERS. That to the best of their knowledge,
they enjoy good working relationships with all of their clients and providers.
They have no knowledge or basis for knowledge that any clients or providers have
terminated doing business with the Seller or intend or have threatened to
terminate doing business with the Seller, or that any client contract or
provider agreement is not fully assignable to the Buyer without the consent of
the managed care organization or provider, as applicable.
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12.24. INTELLECTUAL PROPERTY. The Seller possesses all intellectual
property necessary for the conduct of the Business. Schedule 12.24. attached
hereto sets forth an accurate listing of all Intellectual Property. None of the
Intellectual Property is the subject of any action, suit, proceeding or claim
that is pending, or to the knowledge of the Seller and the Members, threatened
which accuses the Seller of infringing or violating any intellectual property
rights of any third party, or accuses the Seller of breaching any contract.
12.25. DISCLOSURE. No representation or warranty by the Seller and the
Members in this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary to make
the statements herein not misleading. There is no fact known to the Seller or
the Members that materially adversely affects, or that might in the future
materially adversely affect, the Business or the Assets, that has not been set
forth in this Agreement.
12.26. SURVIVAL. That all the warranties, covenants, agreements and
representations made by the Sellers in this Agreement shall be continuing
warranties, covenants, agreements and representations, and shall survive the
consummation and settlement of the transaction contemplated herein and the
execution of all instruments and documents necessary to carry out the
transactions contemplated herein for four and one-half (4 1/2) years after the
date of Closing.
12.27. INVESTMENT INTENT.
12.27.1. Each Member has sufficient knowledge and experience in
financial and business matters to enable him or it to evaluate the merits and
risks of the transactions contemplated by this Agreement or has relied for
advice on a qualified purchaser representative as defined in Rule 501 under the
Securities Act of 1933, as amended.
12.27.2. Each Member has been given access to information
requested by such Member regarding the Buyer, including the opportunity to ask
questions of and receive answers from the officers of the Buyer concerning the
present and proposed activities of the Buyer and to obtain the information which
such Member deems necessary or advisable in order to evaluate the merits and
risks of the transactions contemplated by this Agreement, and each Member has
made his or its own independent investigation of the Buyer and the merits and
risks of the transactions contemplated by this Agreement.
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12.27.3. Each Member is acquiring the Buyer's Stock for his or
its own account, for investment purposes, and not with a present view to resale
or for distribution of all or any portion of the Buyer's Stock.
12.27.4. Each Member understands that the Buyer's Stock has not
been, and will not be, registered under the Securities Act of 1933, as amended,
as of the Closing or under any state securities laws, is being offered and sold
in reliance upon Federal and State exemptions for transactions not involving any
public offering, and a "stop transfer" order will be placed on the certificates
representing shares of the Buyer's Stock issued hereunder, and such certificates
will bear a legend in substantially the following form, as well as any other
legend that may be required by applicable law.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR THE SECURITIES LAWS OF ANY STATE (THE "STATE LAWS"), BUT
HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS THEREFROM. NO TRANSFER OF
THESE SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND THE
APPROPRIATE STATE LAWS, UNLESS THE ISSUER HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE SUCH
REGISTRATION.
12.27.5. Each Member further represents that:
12.27.5.1. Such Member has been provided with the
information specified in Rule 502(b)(2)(ii)(B) and (C) under the Securities Act
of 1933 as amended, and has had the opportunity to obtain additional information
as desired in order to evaluate the merits and risks inherent in holding the
Buyer's Stock;
12.27.5.2. Such Member has not been offered the Buyer's
Stock by any form of general advertising or general solicitation; and
12.27.5.3. Such Member is able to bear the economic risk and
lack of liquidity inherent in holding the Buyer's Stock.
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13. WARRANTIES OF THE BUYER. The Buyer warrants and represents to the
Seller that as of the date hereof and as of the date of the Closing subject,
however, to any public filings and public disclosures:
13.1. AUTHORITY. That the Buyer is a corporation duly organized,
validly existing and incorporated in the State of Delaware, and in good standing
under the laws of Delaware; that it has the requisite power and authority to
make the within purchase, to carry out the transactions and perform its
obligations contemplated by this Agreement. This Agreement has been duly
executed and delivered by the Buyer and is the legal, valid and binding
obligation of the Buyer enforceable according to its terms except as such
enforcement may be limited by bankruptcy, insolvency or similar laws now or
hereafter in effect relating to creditors rights, and that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding my be brought. Attached hereto as Exhibit 13.1.1. is a
Certificate of Good Standing of the Buyer dated within thirty (30) days of the
date of Closing. Attached hereto as Exhibit 13.1.2. are resolutions of the Board
of Directors of the Buyer authorizing, approving, adopting and ratifying the
transactions contemplated by this Agreement and the Buyer's performance of its
obligations hereunder.
13.2. CLAIMS. That there are no claims, liabilities, judgments, liens,
actions, investigations or proceedings, including any law suits, existing or
threatened, against the Buyer except as provided in Schedule 13.2.
13.3. OPERATIONS. That the Buyer has not operated its business in
violation of any law, statute, ordinance, regulation, order of any court or
other applicable governmental authority, or licensing agency.
13.4. TAX PAYMENTS. That the Buyer is current in the payment of all
Federal, State and Local taxes, including but not limited to income, social
security, withholding, medicare, employment, sales, real and personal property,
unemployment insurance and other income, sales and payroll taxes to all cities,
counties, and State and Federal governments. All taxes which the Buyer is or was
required by law to withhold or collect have been withheld or collected, and have
been timely paid to the proper taxing authorities to the extent due and payable.
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13.5. OTHER AGREEMENTS. That the consummation of the transaction
contemplated by this Agreement, and compliance with the provisions hereof, will
not conflict with, or result in the breach of, the terms, conditions or
provisions of, or constitute a breach or default under, the Articles of
Incorporation or By-Laws of the Buyer or result in the creation or imposition of
any lien, charge or encumbrance of any kind whatsoever on any of its assets; or
violate or contravene any statute, rule, regulation, order or decree by which
the Buyer is bound or require any filing, permit, consent or approval of any
governmental agency.
13.6. FINANCIAL STATEMENTS. That all balance sheets, profit and loss
statements, financial statements, Federal and State income tax, sales tax and
payroll tax returns, and books and records of the Buyer, for the current year
and all prior fiscal years of the Buyer, are true and complete (except that the
financial statements are true and complete in all material respects) as of the
date hereof and the date of Closing and accurately reflect the financial
condition and position of the Buyer as of the dates therein, and that there has
not been any material change in the Buyer's financial condition, assets,
liabilities or business since the dates of those statements, other than those
changes incurred in the ordinary course of business consistent with prior
practice.
13.7. NO RESTRICTIONS. That there is no restriction or limitation, by
way of contract, judicial decree or otherwise, enforceable against the Buyer
which would prohibit or restrict it from consummating the transaction
contemplated by this Agreement.
13.8. INDEMNITY. That it will indemnify, protect and hold harmless the
Seller, its successors, assigns, members, officers and employees (collectively
the "Successors") from and against any and all liabilities, damages,
deficiencies, taxes (income, sales, property, employment or otherwise, including
those which have accrued), fines, penalties, interest, claims, threats, suits,
actions, proceedings, demands, losses, costs and expenses (including reasonable
attorney's fees) of any kind, nature or description imposed upon, incurred or
suffered by the Seller and/or the Successors which are attributable to, the
basis for which occurred during, or otherwise arise out of or in connection with
the period subsequent to the date of Closing. No indemnification shall be made
on account of any unlawful act.
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13.9. SUITS. Except as set forth on Schedule 13.9. attached hereto,
there is no suit, action, proceeding or governmental investigation pending or
threatened against or concerning, involving or affecting, directly or
indirectly, the Buyer, and none has been instituted or threatened.
13.10. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent,
approval, or authorization of, or declaration, filing, or registration with, any
governmental or regulatory authority is required to be made or obtained by the
Buyer in connection with the execution, delivery, and performance of this
Agreement.
13.11. ABSENCE OF EVENTS. Since January 1, 1999, the Buyer has not
suffered any material adverse change to its business.
13.12. DISCLOSURE. No representation or warranty by the Buyer in this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the statements
herein not misleading. There is no fact known to the Buyer that materially
adversely affects, or that might in the future materially adversely affect the
transaction contemplated in this Agreement.
13.13. SURVIVAL. That all the warranties, covenants, agreements and
representations made by the Buyer in this Agreement shall be continuing
warranties, covenants, agreements and representations, and shall survive the
consummation and settlement of the transaction contemplated herein and the
execution of all instruments and documents necessary to carry out the
transactions contemplated herein for four and one-half (4 1/2) years after the
date of Closing.
14. ADJUSTMENTS. At the time of the Closing, the parties shall adjust
between them, on a pro rata basis, all of the following: Seller's licenses,
prepaid expenses which the Buyer utilizes and receives credit for, and any other
transferable permits and licenses for the Business, insurance premiums (if such
insurance policies are assigned and assumed by the Buyer) and employees' (other
than the Members) salaries, wages and commissions to the extent that any such
salaries, wages or commissions, or portions thereof, are for services rendered
to the Seller prior to the Closing. Any and all expense incurred and accrued
prior to the Closing shall be paid for by the Seller prior to the Closing and
shall be the responsibility of the Seller, and any and all expenses incurred
after the Closing shall be the responsibility of the Buyer. The cost of all
documentary stamps and of transfer, recording, conveyancing and other similar
taxes, when applicable and where required with regard to the transaction
contemplated herein, shall be paid equally by the Buyer and the Seller.
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Seller's monthly capitation revenue and fee for service revenue shall be
pro rated to the applicable party. For example, if Closing occurs on March 10,
2000, capitation revenue and fee for service revenue shall be allocated 10/31 to
the Seller and 21/31 to the Buyer. Claims received after the Closing with dates
of service prior to the Closing shall be paid by the Buyer, provided, however,
that if any such claims are paid by the Buyer, the amount paid by the Buyer
shall be offset against the Second Cash Installment and any amounts in excess of
the Second Cash Installment shall be reimbursed by the Seller and the Members to
the Buyer as provided in Section 12.14. hereof.
15. RISK OF LOSS. Pending the Closing, all the Assets and other properties
being sold and purchased herein shall be held at the risk of the Seller until
legal title has passed and possession given.
16. CONSENTS, BEST EFFORTS AND COOPERATION. Wherever in this Agreement
provision is made for the approval or consent of any party hereto to consummate
the Closing, it is agreed that such approval or consent shall not be
unreasonably withheld. Wherever in this Agreement provision is made for a
condition precedent to settlement of the transactions contemplated hereby, it is
agreed that each party hereto shall diligently work to cause such condition
precedent to be completed by the time prescribed herein for the Closing of the
transactions contemplated hereby.
Each party agrees, without additional consideration, to execute and deliver
such further instruments and take such other action as may be necessary to
effectuate the transaction contemplated by this Agreement. If any party to this
Agreement shall have in its possession any asset or right which should have been
delivered to the other, such other party shall promptly deliver such asset or
right to the other.
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Upon the terms and subject to the conditions of this Agreement, each of the
parties hereto shall use all reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transaction contemplated by this Agreement as promptly as practicable
including, but not limited to, (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the transactions
contemplated by this Agreement and the taking of such commercially reasonable
actions as are necessary to obtain any requisite approvals, consents, orders,
exemptions or waiver by any third party or governmental entity and (ii) using
all reasonable efforts to cause the satisfaction of all conditions to Closing.
Each party shall promptly consult with the other with respect to, provide any
necessary information with respect to and provide the other (or its counsel)
copies of, all filings made by such party with any governmental entity or any
other information supplied by such party to a governmental entity in connection
with this Agreement and the transaction contemplated by this Agreement. No party
will take any action that would prevent the satisfaction of any condition to
Closing set forth herein. Each party hereto shall promptly inform the others of
any communication from any governmental entity regarding the transaction
contemplated by this Agreement. If any party or affiliate thereof receives a
request for additional documentary material form any such governmental entity
with respect to the transaction contemplated by this Agreement, then such party
will endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request.
17. ATTORNEY'S, ACCOUNTANT'S AND BROKER'S FEES. Each party shall bear its
own costs for all attorneys and/or accountants retained in connection with the
transactions contemplated herein. Each party hereto represents, as to itself and
its affiliates, that no agent, broker, investment banker, financial firm or
other firm or person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with the transaction
contemplated by this Agreement, except for Richter Investment Corporation whose
fee shall be the sole responsibility of and shall be paid by the Buyer.
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18. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. The Buyer shall
have no obligation to consummate the transactions provided by this Agreement and
thus to close hereunder (but the Buyer shall be entitled to consummate the
transaction provided hereby, to close and to waive any failure on the Seller's
or Members' part to comply with any condition below set forth, or close and
adjust the Purchase Price as herein provided), unless at or before the Closing
each and every one of the following conditions shall have been fully met and
complied with:
18.1. CONSENTS. The Buyer shall have obtained the consents of third
parties necessary to consummate the transaction contemplated by this Agreement.
18.2. DUE DILIGENCE. The Buyer shall have completed its due diligence
investigation, including but not limited to a complete review of the Seller's
books and records, as described in Section 10. hereof. The Buyer shall have
reviewed client contracts and provider agreements and each such contract and
agreement shall be specifically assigned to the Buyer. After completion of its
due diligence investigation, the Buyer shall inform the Seller that it has
completed its due diligence investigation and whether it is satisfied with the
Business, the transaction, and the results of its due diligence investigation.
If the Buyer is dissatisfied with all or any part of the due diligence
investigation, the Buyer shall have the right to terminate this Agreement by
giving written notice thereof to the Seller, and this Agreement shall
immediately terminate, and shall be null and void and of no effect. The Buyer
will act reasonably in determining whether it is satisfied with the Business,
the transaction, and the results of its due diligence investigation.
18.3. SUITS. Except as set forth on Schedule 18.3. and subject to
approval by the Buyer, no suit, action, proceeding, or governmental
investigation against or involving, directly or indirectly, the Seller, the
members, or any of the Assets, shall have been instituted or threatened, or have
been instituted or threatened as of the date of Closing.
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18.4. COUNSEL. The transactions contemplated in and by this Agreement,
and the form and substance of all documents used and delivered, shall be
reasonably satisfactory to counsel for the Buyer.
18.5. RELEASES. The consents and releases of all creditors of the
Seller shall have been obtained.
18.6. VOLUME. Except for the loss of business of Grady Health Care,
the Business of the Seller shall not have decreased from January 1, 1999, to the
date of Closing, and there shall have been no material adverse change to the
Business since January 1, 1999.
18.7. TAX CLEARANCE CERTIFICATES. The Seller shall have furnished to
the Buyer tax clearance certificates issued by the State of Georgia that the
Seller and the Members are current in all Georgia taxes.
18.8. REPRESENTATIONS AND WARRANTIES. Each of the representations
and/or warranties of the Seller and the Members set forth in this Agreement
shall be true and accurate in all material respects. The execution of this
Agreement by the Seller and the Members shall constitute a certificate to that
effect.
18.9. COMPLIANCE WITH CONDITIONS. The Seller and the Members shall
have performed and complied with all agreements, covenants and/or conditions
required by this Agreement to be performed and complied with by the Seller and
the Members prior to or at the Closing.
18.10. MISREPRESENTATIONS. The Buyer shall not have discovered any
material misrepresentation or material omission in the performance of any of the
agreements, covenants, representations and/or warranties of the Seller or the
Members contained in this Agreement.
18.11. LOSS OR DAMAGE. From the date of this Agreement to the date of
Closing, no material loss or damage shall have been sustained to the Assets
being purchased and sold hereunder, whether or not insured, and no material
adverse change in the Business and the Assets shall have accrued since January
1, 1999.
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18.12. CONTRACTS. The provider agreements and managed care agreements
set forth on Exhibit 7 shall have been assigned to the Buyer and the consents
for those entities to the assignment of the provider agreements and managed care
agreements to the Buyer shall have been obtained.
18.13. APPROVAL. The approval of the Board of Directors of the Buyer
shall have been obtained, and the approval of the Board of Directors and the
Members of the Seller shall have been obtained.
19. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. The Seller shall
have no obligation to consummate the transaction provided by this Agreement and
to close hereunder (but the Seller shall be entitled to consummate the
transaction provided hereby, to close and to waive any failure on the Buyer's
part to comply with the conditions set forth below) unless at or before Closing
each and every one of the following conditions shall have been fully met and
complied with:
19.1. PAYMENT. At the Closing the Seller shall have received the Stock
Consideration, the First Cash Installment, and the Promissory Note for the
Second Cash Installment.
19.2. REPRESENTATIONS AND WARRANTIES. Each of the representations
and/or warranties of the Buyer set forth in this Agreement shall be true and
correct in all material respects.
19.3. SUITS. Except as set forth in Schedule 19.3. no suit, action, or
governmental investigation which materially affects the business of the Buyer
shall have been instituted or threatened.
19.4. COUNSEL. The transactions contemplated in this Agreement, and
the form and substance of all documents used and delivered, shall be reasonably
satisfactory to counsel for the Seller.
19.5. CONDITIONS. The Buyer shall have performed and complied with all
agreements, covenants, and/or conditions required by this Agreement to be
performed or complied with by the Buyer prior to or at Closing.
19.6. MISREPRESENTATIONS. The Seller shall not have discovered any
material misrepresentation or material omission in the performance of any of the
agreements, covenants, representations and/or warranties of the Buyer contained
in this Agreement.
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20. RESTRICTIVE COVENANT OF THE MEMBERS. In consideration of this
Agreement, the Seller and the Members agree that for three (3) years from the
date of Closing (the "Restrictive Term") they will not:
20.1. Engage, directly or indirectly, as an individual, lender, owner,
proprietor, consultant, stockholder, director, officer, partner, member, agent,
employee, manager or representative, or have an interest, direct or indirect, in
any business that competes with the Business or any business that is similar or
comparable to the Business in the Southeastern, Southern and Mid-Atlantic States
of the United States, specifically including the States of Maryland, Delaware,
Pennsylvania, New Jersey, New York, Virginia, West Virginia, Tennessee,
Kentucky, North Carolina, South Carolina, Georgia, Florida, Alabama, Arkansas,
Mississippi and Louisiana. The foregoing restrictive covenant shall not extend
to the practice of optometry. Each Member who is an optometrist (as well as any
optometric office owned by such optometrist) is not restricted from
participating as a provider in any managed vision care plan, and each may remain
as provider under the contracts being sold to the Buyer (provided that the
provider contracts with the Members contain terms and provisions that are no
more favorable to the Members than are provider contracts with non-Members). It
is also understood that any Member who is an optometrist may also arrange,
manage, or own vision care plans that are designed primarily to bring patients
into their privately owned practices or clinics. Furthermore, each Member who is
an optometrist may sell his optometrist practice to a third party.
20.2. As an individual, lender, owner, proprietor, consultant,
stockholder, director, officer, partner, member, agent, employee, manager, or
representative, directly or indirectly, accept, solicit or attempt to accept or
solicit business from any client or provider with whom the Seller or the Members
did business at any time during the five (5) year period preceding the date of
Closing or with whom the Buyer does business during the Restrictive Term.
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20.3. Directly or indirectly, accept or solicit for employment or
employ for its, their or his own benefit or for another's benefit, or attempt to
solicit for employment or attempt to employ for its, his, or their own benefit
or for another's benefit, any employee of the Buyer or any employee of the
Seller who was an employee of the Seller at any time between January 1, 1999,
and the date of Closing, or persuade any such person to leave the Buyer's employ
or to become employed by any person or entity other than the Buyer; nor shall
the Seller and/or the Members urge, directly or indirectly, or persuade or
attempt to persuade any customer, referrer of customers, contractor,
subcontractor, or provider (past or present), or any potential customer,
referrer of customers, contractor, subcontractor, or provider to cease or
discontinue, in whole or in part, doing business with the Buyer or not to do
business with the Buyer, or to reduce the amount of business such person or
entity does with the Buyer.
20.4. The provisions contained in Section 20. hereof are cumulative.
The Seller and the Members severally agree to indemnify and hold harmless the
Buyer from all damages and costs relating to the enforcement of Section 20.
incurred by the Buyer arising out of the Seller's or Member's breach or
threatened breach of Section 20. Nothing in this Agreement shall be construed as
prohibiting the Buyer from pursuing any other remedies available to it for a
breach or threatened breach of Section 20. The provisions of Section 20. shall
survive the termination of this Agreement. It is the intention of the parties
that if any restrictive covenant in the Agreement is determined to be overly
broad, such provision shall be deemed modified to the extent necessary in order
that any such provision or position thereof shall be legally enforceable to the
full extent permitted by law, and any court having jurisdiction over the matter
shall enforce it to the maximum extent permitted under law as to area and
duration.
21. REMEDY FOR BREACH. In the event of a breach of any or all of the
covenants in Section 20. of this Agreement, the parties agree that because a
violation of any or all of those provisions could cause irreparable injury to
the Buyer and financial loss to the Buyer which cannot be measured adequately,
and because there is no adequate remedy at law for such violations, the Buyer
shall have the right to enjoin the Seller and the Members in a court of equity
restraining such breach or threatened breach, in addition to any other remedies
available to it at law or in equity which may be appropriate to enforce this
Agreement.
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22. COMPLIANCE WITH BULK TRANSFER STATUTE. For the purpose of complying
with the applicable bulk sale provisions of the Georgia Uniform Commercial Code,
the Seller shall provide an Affidavit or an Indemnification, at or before
settlement:
22.1. LIST OF CREDITORS. Furnish the Buyer with a List of Creditors
then existing. Such List of Creditors shall be signed and sworn to or affirmed
by the Seller and shall include the names and business addresses of all persons,
corporations, partnerships or other entities, who have claims against the
Seller, whether such claims are business or personal, contingent or disputed,
matured or unmatured, secured or unsecured, liquidated or unliquidated, in tort
or in contract or by statute, law, ordinance or administrative decree, with the
amount of indebtedness due and owing or claimed, when known, to each. In
addition, the List of Creditors shall contain the names of all persons who are
known to the Seller to assert claims against the Seller, even if such claims are
disputed or contingent. Included in this List of Creditors shall be the names of
all persons who have made claims of any nature, including personal injury claims
against the Seller, even if such claims are covered by insurance. Such List of
Creditors shall be a current list of all such creditors as of the time of
delivery of such list, and shall be attached as Exhibit 22.1. The Seller
acknowledges that it is responsible for the completeness and accuracy of the
List of Creditors, that the Buyer has no knowledge of any creditors of the
Seller or the amounts of their respective claims, and that the Buyer is,
therefore, relying solely upon the Seller for the completeness and accuracy of
the List of Creditors.
22.2. SUPPLEMENTAL LIST OF CREDITORS. Within ten days after the
Closing, the Seller shall prepare and furnish to the Buyer a Supplemental List
of Creditors setting forth any and all such creditors who were not included in
the List of Creditors provided for in paragraph 22.1. above, who became
creditors or whose claim became known to the Seller from the date the List of
Creditors provided for in paragraph 22.1. above is submitted to the Buyer,
through and including the time of ten days after the Closing, to be attached as
Exhibit 22.2.
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22.3. AFFIDAVIT. The List of Creditors and Supplemental List of
Creditors provided for above shall be in the form of an affidavit signed and
sworn to by the Seller and by the President and the General Manager of the
Seller in their corporate capacities in the Seller. A copy of the Affidavit is
attached hereto as Exhibit 22.3.
22.4. LITIGATE, COMPROMISE, ETC. The Seller and the Members may, at
its sole cost and expense, litigate or otherwise compromise, settle or resolve
any claim made or assessed against the Seller provided, however, that if any
such litigation and/or other resolution shall create any liability in the Buyer,
the Seller and the Members agree to indemnify and save the Buyer harmless from
any or all costs, expenses, damages or liabilities, including attorneys' fees
which may, by reason of any claim of any creditor, be made or assessed against
the Buyer. The Buyer shall cooperate with the Seller in connection herewith,
including but not limited to, the making of former employees of the Seller
available to testify and allowing the Seller to use and/or copy the Seller's
records in the Buyer's possession.
23. SECTION AND SUBSECTION HEADINGS. The section and subsection headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
24. MULTIPLE COUNTERPARTS. More than one copy of this Agreement may be
executed by the parties hereto, each of which shall have the same force and
effect when signed by all of the parties hereto.
25. GOVERNING LAW. It is the intention of the parties hereto that all
questions with respect to the construction of this Agreement and the rights and
liabilities of the parties hereto shall be determined in accordance with the
laws of the State of Delaware.
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26. NOTICES. No consent, demand, designation, notice, opinion, request,
waiver or other communication to be made under this Agreement shall be effective
unless it be in writing and (a) personally delivered, (b) delivered by Federal
Express or United Parcel Service next day express service, or (c) mailed by
Certified Mail, Return Receipt Requested. Any such notice shall be addressed to
the addressee as follows:
26.1. If to the Seller or the Members:
Dr. Phil Johnson
Southern States Eye Care
Suite 845
3455 Peachtree Industrial Boulevard
Duluth, Georgia 30096
with a copy to:
Laura T. Marsh, Esquire
Franklin, Taulbee, Rushing, Brogdon,
Snipes & Marsh, P.C.
P.O. Box 327
12 Siebald Street
Statesboro, Georgia 30459
26.2. If to the Buyer:
Mr. Alan S. Cohn
Avesis, Incorporated
10324 South Dolfield Drive
Owings Mills, Maryland 21117
with a copy to:
Robert A. Rombro, Esquire
Robert A. Rombro, P.A.
22 Light Street
Suite 402
Baltimore, Maryland 21202
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Such notices shall be effective as of the date received or the date that
receipt of such notice is rejected or refused.
27. BINDING AGREEMENT. This Agreement shall inure to the benefit of and be
binding on and enforceable against each of the parties' respective successors
and assigns.
28. SEVERABILITY. If any provision of this Agreement is held to be invalid
or unenforceable, all other provisions shall nevertheless continue in full force
and effect.
29. FINAL AGREEMENT. This Agreement (and the Exhibits attached hereto, the
terms of which are incorporated herein by reference) contains the final and
entire agreement between the parties hereto, and neither they nor their agents
shall be bound by any terms, conditions or representations not herein written.
This Agreement may only be altered or amended by a written agreement signed by
the parties.
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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals as of the day and year first above written, such Agreement to be executed
and their respective corporate seals to be affixed and attested, as of the day
and year first above written.
ATTEST/WITNESS: SOUTHERN STATES EYE CARE, LLC
[SEAL] By: /s/ Philip E. Johnson [SEAL]
- --------------------- ----------------------------------------
,SECRETARY PHILIP E. JOHNSON, PRESIDENT
/s/ Philip E. Johnson [SEAL]
- --------------------- ----------------------------------------
PHILIP E. JOHNSON
/s/ R. Whitman Lord [SEAL]
- --------------------- ----------------------------------------
R. WHITMAN LORD
/s/ Michael McQuaig [SEAL]
- --------------------- ----------------------------------------
MICHAEL MCQUAIG
/s/ Larry Forth [SEAL]
- --------------------- ----------------------------------------
LARRY FORTH
/s/ Brent Layton [SEAL]
- --------------------- ----------------------------------------
BRENT LAYTON
AVESIS INCORPORATED
/s/ Neal A. Kempler [SEAL] By: /s/ Alan S. Cohn [SEAL]
- -------------------------- ----------------------------------------
NEAL KEMPLER, SECRETARY ALAN S. COHN, PRESIDENT
