SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Date of Report (date of earliest event reported): August 7, 1996
NYER MEDICAL GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida 000-20175 01-0469607
(State or other (Commission (IRS Employer
jurisdiction of file Number) Identification No.)
incorporation)
1292 Hammond Street, Bangor, Maine 04401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (207) 942-5273
N/A
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
(a) On August 7, 1996, Nyer Medical Group, Inc. (the
"Company" acquired 80% of the outstanding capital stock of D.A.W.,
Inc. ("D.A.W.") and F.M.T. Franchise Company, Inc. (collectively
the "Companies") from Mark A. Dumouchel, David Dumouchel, Lucille
Curry, Donato Mazzola and Wayne Gunter (collectively the
"Sellers"). The Companies presently are primarily engaged in the
operation of nine pharmacies in Massachusetts. The Company paid an
aggregate of $1,325,000 (subject to a reduction of up to $100,000
in the event that the net pre-tax income of the pharmacy chain is
less than $300,000 during the first 12 months). Additionally, the
Company issued an aggregate of 20,000 shares of its common stock to
the Sellers coupled with a guarantee that the shares will have a
fair market value of $175,000 two years after the closing.
Day-to-day operating control of the Pharmacy chain will remain
with the Sellers (other than Ms. Currie), each of whom together
with Ms. Currie's husband entered into renewable five year
employment agreements with D.A.W. Of the cash consideration,
$1,000,000 will be used for working capital and to expand the
business of the Companies; the remaining $325,000 and the 20,000
shares of common stock were received by the Sellers. The cash paid
came from the existing cash balances of the Company. No portion of
the purchase price was borrowed by the Company. There is no
material relationship between the Sellers and the Company, or any
of its affiliates, any officers or director of the Company, or any
associate of any such officer or director. However, David
Dumouchel was appointed to the Board of Directors of the Company
and two of the four directors of the Companies are designees of the
Company.
(b) Not applicable.
Item 5. Other Events.
In July 1996, in order to raise additional equity capital, the
Company agreed to sell up to 600,000 units under Regulation S of
the Securities Act at $10 per unit (the "Units") or better. Each
Unit consists of one share of common sock and one warrant. Each
warrant may be exercised to purchase an additional share for $13.00
subject to the limitation that not the total number of warrants
exercisable cannot exceed 25% of the number of shares held by the
owner 90 days after the closing of the offering. If all Units are
sold, the Company will pay $300,000 and issue 30,000 warrants
exercisable at $11.00 per share to a foreign broker as a selling
commission. Thus, warrants to purchase up to 150,000 additional
shares at $13.00 per share will be outstanding. Assuming the sale
of all units and exercise of all warrants (including those issued
to the foreign broker), an additional 780,000 shares will be
outstanding and the Company will receive gross proceeds of
$7,950,000. To date, 170,000 Units have been sold at $10.70 per
Unit.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired. It is
impracticable to provide the required financial statements for the
acquired businesses at the time of filing this report on Form 8-K.
Such financial statements will be filed as soon as practicable but
not later than 60 days after this report on Form 8-K is required to
be filed.
(b) Pro-Forma Financial Information. It is impracticable to
provide the required financial statements for the acquired
businesses at the time of filing this report on Form 8-K. Such
financial statements will be filed as soon as practicable but not
later than 60 days after this report on Form 8-K is required to be
filed.
(c) Exhibits.
Exhibit No.
2. Stock Exchange Agreement.
2.1 Shareholders' Agreement.
2.2 Service Agreement.
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, thereunto duly authorized.
NYER MEDICAL GROUP, INC.
(Registrant)
By (Signature and Title): /S/ Karen L. Wright
Karen L. Wright, Treasurer
(Duly Authorized Officer)
Date: August 22, 1996
2. Stock Exchange Agreement.
STOCK EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
THIS STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION (the
"Agreement") entered into as of this 5th day of August, 1996, by
and among Nyer Medical Group, Inc., a Florida corporation (the
"Buyer"), Mark A. Dumouchel, David Dumouchel, Lucille Curry,
Michael Curry, Donato Mazzola and Wayne Gunter (collectively the
"Sellers"), being the owners of record of all the issued and
outstanding shares of D.A.W., Inc. ("D.A.W."), a Massachusetts
corporation and F.M.T. Franchise Company, Inc. ("F.M.T."), a
Massachusetts corporation (collectively the "Companies"). The
Buyer, the Sellers, D.A.W., F.M.T. and the Companies are referred
to collectively herein as the "Parties".
WHEREAS, the Sellers in the aggregate own 100% of the
outstanding capital stock of the Companies.
WHEREAS, Nyer wishes to acquire and the Sellers wish to
transfer 80% of the issued and outstanding capital stock of the
Companies in a transaction intended to qualify as a reorganization
with in the meaning of the Internal Revenue Code 368(a)(i)(B), as
amended.
WHEREAS, this Agreement provides for various rights and
responsibilities.
NOW, THEREFORE, in consideration of the mutual promises made
herein, and in consideration of the representations, warranties,
and covenants contained herein, the Parties adopt this plan of
reorganization and agree as follows:
1. Definitions.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable
attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of
the regulations promulgated under the Securities Exchange Act
of 1934.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Financial Statements" has the meaning set forth
in Section 3(b).
"Class A Shares" means the Class A Common Stock, no par
value, of FMT.
"Class B Shares" means the Class B Common Stock, no par
value, of FMT.
"Closing" has the meaning set forth in Section 2(c)
below.
"Closing Date" has the meaning set forth in Section 2(c)
below.
"Common Stock" has the meaning in Section 2(b) hereof.
"Companies" includes F.M.T., D.A.W. and all of their
Subsidiaries as defined unless otherwise clear from the
context and has the meaning set forth in the preface above.
"Employee Benefit Plan" means any (a) non-qualified
deferred compensation or retirement plan or arrangement which
is an Employee Pension Benefit Plan, (b) qualified defined
contribution retirement plan or arrangement which is an
Employee Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Benefit
Plan (including any multi-employer Plan), or (d) Employee
Welfare Benefit Plan or material fringe benefit plan or
program.
"Employee Pension Benefit Plan" has the meaning set forth
in ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth
in ERISA Section 3(1).
"Environmental, Health, and Safety Laws" means the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, and the Occupational Safety and Health Act of
1970, each as amended, together with all other laws (including
rules, regulations, codes, plans injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal,
state, local, and foreign governments (and all agencies
thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants,
or chemical, industrial, hazardous, or toxic materials or
water into ambient air, surface water, ground water, or lands
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"Fair Market Value" means the average closing price of
the Buyer's common stock as reported by Nasdaq for the five
trading days ending three days prior to the measuring date.
"Financial Statements" has the meaning set forth in
Section 4(f) below.
"F.M.T." includes all of its subsidiaries and has the
meaning set forth in the preface above.
"Form 10-KSB" shall mean the Form 10-KSB of the Buyer
for the year ended December 31, 1995 which has been filed with
the Securities and Exchange Commission.
"Form 10-QSB" shall mean the Form 10-QSB of the Buyer
for the quarter ended March 31, 1996 which has been filed with
the Securities and Exchange Commission.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Indemnified Party" has the meaning set forth in Section
8(d) below.
"Indemnifying Party" has the meaning set forth in Section
8(d) below.
"Knowledge" means actual knowledge after reasonable
investigation.
"Liability" means any liability (whether known or
unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet
contained within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set
forth in Section 4(f) below.
"Most Recent Fiscal Month End" has the meaning set forth
in Section 4(f) below.
"Ordinary Course of Business" means the ordinary course
of business consistent with past custom and practice
(including with respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a
corporation, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political
subdivision thereof).
"Purchase Price" has the meaning set forth in Section
2(b) below.
"Securities Act" means the Securities Act of 1933, as
amended.
"SEC" shall mean the Securities and Exchange Commission.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than
(a) mechanic's, materialmen's, and similar liens, (b) liens
for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing
rental payments under capital lease arrangements, and (d)
other liens arising in the Ordinary Course of Business and not
incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Shares" means any shares of the common stock, no par
value, of D.A.W. and F.M.T. except as separately referred to
in this Agreement including any Schedule.
"Subsidiary" means any corporation with respect to which
a specified Person (or a Subsidiary thereof) owns a majority
of the common stock or has the power to vote or direct the
voting of sufficient securities to elect a majority of the
directories.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim
for refund, or information or statement relating to Taxes,
including any schedule or attachment thereto, and including
any amendment thereof.
"Third Party Claim" has the meaning set forth in Section
8(d) below.
2. Transactions.
(a)Basic Transaction. On and subject to the terms and
conditions of this Agreement for the consideration as
provided, the Buyer agrees to (i) exchange with the Sellers
shares of common stock ("Common Stock") of the Buyer in
exchange for 80% of the Shares of D.A.W. and 80% of the Class
A Shares of F.M.T.; (ii) purchase from F.M.T. 100% of the
Class B Shares; and (iii) contribute certain capital to D.A.W.
The number of Shares being exchanged and retained by each
Seller is listed on Schedule 2(a) hereto, together with the
number of Class B Shares being sold to Nyer by F.M.T.
(b)Consideration. The Buyer agrees to: (i) transfer
to the Sellers at the Closing: (A) an aggregate of 19,500
shares of Common Stock in exchange for 80% of the Shares of
D.A.W.; and (B) 500 shares of Common Stock in exchange for 80%
of the Class A Shares of F.M.T.; (ii) contribute to D.A.W. at
the Closing $200,000 in capital; and (iii) pay to F.M.T. at
the Closing $800,000 in consideration of 100% of the Class B
Shares. The exchanges identified in Subsections 2(b)(i)(A)
and (B) together with the payments provided for in the
remainder of Section 2(b) are hereinafter referred to
collectively as the "Purchase Price," which Purchase Price
shall be allocated among the Sellers and the Companies as set
forth in Schedule 2(b) hereof.
(c)The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take
place as of 12:01 a.m., Boston time, on August 5, 1996.
(d)Deliveries at the Closing. At the Closing, (i) the
Sellers shall deliver to the Buyer the various certificates,
instruments, and documents referred to in Section 7(a) below,
(ii) the Buyer shall deliver to the Sellers the various
certificates, instruments, and documents referred to in
Section 7(b) below, (iii) F.M.T. shall together deliver to the
Buyer stock certificates for the Class B Shares as reflected
on Schedule 2(a), and (iv) the Buyer shall deliver to each of
the Sellers and the Companies the consideration specified in
Section 2(b) above.
(e)Guarantee of Common Stock. If the Fair Market Value
of the Common Stock transferred to the Sellers is not an
aggregate of $175,000 as of the second anniversary of the
Closing Date, the Buyer guarantees to the Sellers that it
shall promptly, but in no event later than 15 business days
following the second anniversary of the Closing Date, at
Buyer's election (i) pay the difference to the Sellers on a
pro-rata basis, (ii) issue additional shares of Common Stock
to the Sellers on a pro-rata basis, or (iii) repurchase all of
the shares of Common Stock held by the Sellers for an
aggregate of $175,000. In the event that the Buyer elects to
issue additional shares of Common Stock as provided in (ii)
above, the Common Stock shall be covered by an effective
Registration Statement permitting the public sale of such
Common Stock. The Buyer shall give notice to the Sellers of
its election within 10 days following the second anniversary
of the Closing Date.
(f)Adjustment to Purchase Price. In the event that for
the 12-month period beginning on the day following the Closing
Date and ending on the first anniversary of the Closing Date,
D.A.W.'s net income before provision for income taxes is not
at least $300,000, the Purchase Price shall be adjusted by the
Companies reducing the consideration received by them by an
aggregate of 100,000 times one minus a fraction in which the
numerator is the amount of actual net income per share before
provision for income taxes for the above period and the
denominator is 300,000. Provided, however, that in no event
shall the adjustment to the purchase price exceed an aggregate
of $100,000. The actual amount to be paid by the Buyer to
D.A.W. and F.M.T. shall be in proportion to the consideration
received by them as set forth in Schedule 2(b). In the event
that the D.A.W.'s net income before provision for income taxes
is $0 or D.A.W. sustains a net loss for the above period, the
amount to be paid to the Buyer shall be $100,000. Any
adjustment shall be paid by the Companies to the Buyer within
five business days after receipt by the Buyer and the
Companies of the D.A.W. income statement which shall, at the
option of the Buyer, be either (i) audited, or (ii) any
unaudited income statement shall be compiled from the
financial statements used by the Buyer in its Form 10-KSB and
Form 10-QSB filed with the SEC except to the extent that the
income statement is partially based upon periods, a portion of
which are less than a full fiscal quarter, in which event the
same accounting principles shall govern the preparation for
such periods. The cost of such audit, if any, shall be borne
by D.A.W.
(g)Third Party Payers. In the event a Pharmacy
Performance Review or Audit is conducted prior to August 5,
1998, as referenced in Schedule 4(h) hereto, which results by
final determination after exhaustion of all rights of appeal
in D.A.W. being obligated for payment of amounts received
prior to the Closing for periods prior to the Closing, in
excess (the "Excess Liability") of $100,000, plus an amount by
which D.A.W.'s net income before provision for income taxes
exceeds $300,000, for each 12 month period beginning on the
day following the: (i) Closing Date and ending on the first
anniversary; or (ii) first anniversary and ending on the
second anniversary, then Nyer shall be entitled to receive
pro-rata from the Sellers an amount of Shares of the
Companies, allocated equally among each of the Companies and
each class of the stock of the Companies, in an amount equal
to the Excess Liability. The value of the Shares to be
determined in accordance with the procedures set forth in
Section 9(b) of the Shareholders' Agreement attached hereto as
Exhibit D.
3. Representations and Warranties Concerning the Trans-
action.
(a)Representations and Warranties of the Sellers. Each
of the Sellers represents and warrants to the Buyer that to
its Knowledge the statements contained in this Section 3(a)
are correct and complete as of the date of this Agreement and
shall be correct and complete as of the Closing Date.
(i)Authorization of Transaction. Sellers have
the full power and authority to execute and deliver this
Agreement and to perform his obligations hereunder.
Subject to execution, delivery and authorization of the
other parties hereto, this Agreement constitutes the
valid and legally binding obligation of each Seller,
enforceable in accordance with its terms and conditions.
Such Seller need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval
of any government or governmental agency in order to
consummate the transactions contemplated by this
Agreement.
(ii)Non-Contravention. Neither the execution and
the delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will (A) violate
any statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which
such Seller is subject or, (B) conflict with, result in
a breach of, constitute a default under, result in the
acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any
notice under, any agreement, contract, lease, license,
instrument, or other arrangement to which such Seller is
a party or by which he or it is bound or to which any of
his or its assets is subject.
(iii)Brokers' Fees. Sellers have no Liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could
become liable or obligated.
(iv)Investment. Sellers (A) understand that the
Common Stock has not been, and will not be, registered
under the Securities Act, or under any state securities
laws, and are being offered and transferred in reliance
upon federal and state exemptions for transactions not
involving any public offering, (B) are acquiring the
Common Stock solely for their own accounts for investment
purposes, and not with a view to the distribution
thereof, (C) are sophisticated investors with knowledge
and experience in business and financial matters, (D)
have received the Buyer's Form 10-KSB for the year ended
December 31, 1995 ("Form 10-KSB") and Form 10-QSB for the
quarter ended March 31, 1995 ("Form 10-QSB") and have had
the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks
inherent in holding the Common Stock, and (E) are able to
bear the economic risk and lack of liquidity inherent in
holding the Common Stock. Notwithstanding any change
which may be made by the SEC to Rule 144 reducing the
holding period for restricted securities to less than two
years, Sellers agree that they shall not offer, sell,
hypothecate or otherwise dispose of any of the shares of
Common Stock acquired by them for a period of two years
following the Closing Date.
(v)Shares. Sellers hold of record and own
beneficially the number of Shares of the Companies set
forth next to their name in Schedule 4(b), free and clear
of any restrictions on transfer (other than any
restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Sellers are not parties
to any option, warrant, purchase right, or other contract
or commitment that could require such Sellers to sell,
transfer, or otherwise dispose of any capital stock of
the Companies (other than this Agreement). Sellers are
not parties to any voting trust, proxy, or other
agreement or understanding with respect to the voting of
any capital stock of the Companies except as provided on
Schedule 4(b).
Except for the Companies listed on Schedule 4(b), none of
the Sellers own any interest in any business engaged in
the pharmacy or health care business on either a retail
or wholesale basis.
(b)Representations and Warranties of the Buyer. The
Buyer represents and warrants to the Sellers that the
statements contained in this Section 3(b) are to its
Knowledge correct and complete as of the date of this
Agreement and will be correct and complete as of the
Closing Date.
(i)Organization of the Buyer. The Buyer is a
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation. The Buyer is duly authorized to conduct
business and is in good standing under the laws of each
jurisdiction where such qualification is required. The
Buyer has full corporate power and authority and all
licenses, permits, and authorizations necessary to carry
on the businesses in which it is engaged and to own and
use the properties owned and used by it. The Buyer has
delivered to the Sellers correct and complete copies of
the charter and bylaws of the Buyer (as amended to date).
The Company is not in default under or in violation of
any provision of its charge or bylaws.
(ii)Authorization of Transaction. The Buyer has
the full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
Subject to execution, delivery and authorization of the
other Parties hereto, this Agreement constitutes the
valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms and conditions.
The Buyer need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval
of any government or governmental agency in order to
consummate the transactions contemplated by this
Agreement.
(iii)Non-Contravention. Neither the execution and
the delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will (A) violate
any statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which
the Buyer is subject or, (B) conflict with, result in a
breach of, constitute a default under, result in the
acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any
notice under, any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a
party or by which it is bound or to which any of its
assets is subject.
(iv)Brokers' Fees. The Buyer has no Liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions
contemplated by this Agreement for which the Seller could
become liable or obligated.
(v)Investment. The Buyer (A) understands that
the Shares have not been, and will not be, registered
under the Securities Act, or under any state securities
laws, and are being offered and transferred in reliance
upon federal and state exemptions for transactions not
involving any public offering, (B) is acquiring the
Shares solely for its own account for investment
purposes, and not with a view to the distribution
thereof, (C) is a sophisticated investor with knowledge
and experience in business and financial matters, has had
the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks
inherent in holding the Shares, and (D) is able to bear
the economic risk and lack of liquidity inherent in
holding the Shares.
(vi)Title to Assets. The Buyer has good and
marketable title to, or a valid leasehold interest in,
the properties and assets used by it, located on its
premises, or shown in its Form 10-QSB or acquired after
the date thereof, free and clear of all Security
Interests, except for properties and assets disposed of
in the Ordinary Course of Business since March 31, 1996
or except as disclosed in the Form 10-KSB or Form 10-QSB.
(vii)Capitalization.
(A)The authorized capital stock of the
Buyer consists of 10,000,000 shares of common
stock, 2,000 shares of Class A Preferred Stock and
300,000 shares of Class B Preferred Stock, of which
3,108,293 shares, 2,000 shares and 300,000 shares,
respectively, were outstanding as of July 9, 1996.
All of the issued and outstanding shares of common
stock are validly issued and are fully paid, non-
assessable and free of preemptive rights.
(B)Except as disclosed in the Form 10-KSB,
Form 10-QSB or as set forth on Schedule 3(b)
hereof, as of the date hereof, there are (1) no
outstanding subscriptions, options, calls,
contracts, commitments, understandings,
restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under
any outstanding security, instrument or other
agreement and also including any rights plan or
other anti-takeover agreement, obligating the Buyer
or any subsidiary of the Buyer to issue, deliver or
sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of the Buyer
or obligating the Buyer or any subsidiary of the
Buyer to grant, extend or enter into any agreement
or commitment, and (2) no voting trusts, proxies or
other agreements or understandings to which the
Buyer or any Subsidiary of the Buyer is a party or
is bound with respect to the voting of any shares
of capital stock of the Buyer. The shares of the
Buyer's common stock issued to the Sellers will be
as of the Closing duly authorized, validly issued,
fully paid and non-assessable and free of
preemptive rights.
(viii)Subsidiaries. Each Subsidiary of the Buyer
is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and
has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its
business as it is now being conducted except where any
failure would not have a material adverse effect on the
Buyer. Each Subsidiary of the Buyer is qualified to do
business, and is in good standing, in each jurisdiction
in which the properties owned, leased or operated by it
or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be
so qualified and in good standing would not, when taken
together with all such other failures, have a material
adverse effect on the Buyer. All of the outstanding
shares of capital stock of each Subsidiary of the Buyer
are validly issued, fully paid, non-assessable and free
of preemptive rights, and are owned by the Buyer, free
and clear of any liens, claims or encumbrances except as
set forth on Schedule 3(b). Except as disclosed on
Schedule 3(b) hereof, there are no subscriptions,
options, warrants, rights, calls, contracts, voting
trusts, proxies or other commitments, understandings,
restrictions or arrangements relating to the issuance,
sale, voting, transfer ownership or other rights with
respect to any shares of capital stock of any Subsidiary
of the Buyer, including any right of conversion or
exchange under any outstanding security, instrument or
agreement.
(ix)Reports and Financial Statements. Since June
1992, the Buyer has filed with the SEC all forms,
statements, reports and documents (including all
exhibits, amendments and supplements thereto) required
to be filed by it under each of the Securities Act, the
Securities Exchange Act of 1934 and the respective rules
and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with all
applicable requirements of the appropriate act and the
rules and regulations thereunder. The Buyer has
previously delivered to the Sellers copies of its Annual
Report on Form 10-KSB for the fiscal year ended
December 31, 1995 and its Form 10-QSB. As of their
respective dates, the Form 10-KSB and the Form 10-QSB
did not contain any untrue statement of a material
fact or omit to state a material fact required to be
stated therein or necessary to make the statements
therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial
statements of the Buyer included in such reports
(collectively, the "Buyer's Financial Statements")
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis
(except as may be indicated therein or in the notes
thereto) and fairly present the financial position of
the Buyer and its Subsidiaries as of the dates thereof
and the results of operations and changes in financial
position for the periods then ended, subject, in the
case of the unaudited interim financial statements, to
normal year-end and audit adjustments and any other
adjustments described therein.
(x)Absence of Undisclosed Liabilities. Except
as disclosed in the Form 10-QSB, neither the Buyer nor
any of its Subsidiaries had at March 31, 1996, or has
incurred since that date, any Liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of
any nature, except: (A) Liabilities, obligations or
contingencies (1) which are accrued or reserved against
in the Buyer's Financial Statements or reflected in the
notes thereto, or (2) which were incurred after
March 31, 1996 and were incurred in the Ordinary Course
of Business and consistent with past practices;
(B) Liabilities, obligations or contingencies which
(1) would not, in the aggregate, have a material adverse
effect on Buyer, or (2) have been discharged or paid in
full prior to the date hereof; and (C) Liabilities and
obligations which are of a nature not required to be
reflected in the consolidated financial statements of
Buyer and its Subsidiaries prepared in accordance with
generally accepted accounting principles consistently
applied and which were incurred in the Ordinary Course
of Business.
(xi)Absence of Certain Changes or Events. Since
the date of the Form 10-QSB, there has not been any
material adverse change in the business, operations,
properties, assets, liabilities, condition (financial or
other), results of operations or prospects of the Buyer
and its Subsidiaries, taken as a whole, including as a
result of any change in capital structure, employee
compensation arrangement (including severance rights and
benefit plans), accounting method or applicable law.
(xii)Material Agreements. Since January 1, 1996,
the Buyer has not entered into any material agreements
which were not filed as exhibits to the Form 10-KSB or
Form 10-QSB.
(xiii)Form 8-Ks. Since January 1, 1996, the Buyer
has not filed with the SEC any reports on Form 8-K.
4. Representations and Warranties Concerning the Companies.
The Sellers and the Companies represent and warrant to
the Buyer that the statements contained in this Section
4 are, to their Knowledge, except that the Representations
and Warranties set forth in Subsections 4(k)(iii) and
4(k)(x) are to Sellers and the Companies actual
knowledge, correct and complete as of the date of this
Agreement and will be correct and complete as of the
Closing Date.
(a)Organization, Qualification, and Corporate Power.
The Companies are corporations duly organized, validly
existing, and in good standing under the laws of the
jurisdiction of their incorporation. The Companies are duly
authorized to conduct business and are in good standing under
the laws of each jurisdiction where such qualification is
required. The Companies have full corporate power and
authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which they are engaged
and to own and use the properties owned and used by them.
Schedule 4(a) lists the directors and officers of each of the
Companies and their Subsidiaries. The Sellers have delivered
to the Buyer correct and complete copies of the charter and
bylaws of each of the Companies and their Subsidiaries (as
amended to date). The minute books (containing the records of
meetings of the stockholders, the board of directors, and any
committees of the board of directors), the stock certificate
books, and the stock record books of each of the Companies and
their Subsidiaries are correct and complete. None of the
Companies are in default under or in violation of any
provision of its charter or bylaws.
(b)Capitalization. The entire authorized capital stock
of D.A.W. consists of 7,500 Shares of which 2,500 Shares are
issued and outstanding and 5,000 Shares are held in treasury.
The entire authorized capital stock of F.M.T. consists of (a)
20,000 Shares of Class A, of which 2,500 Shares are issued and
outstanding and 17,500 Shares are held in treasury; and (b)
3,000 Shares of Class B of which 1,000 Shares are issued and
outstanding and 1,000 Shares are held in treasury. All of the
issued and outstanding Shares have been duly authorized, are
validly issued, fully paid, and non-assessable, and are held
of record by the respective Sellers as set forth in Schedule
4(b). Following the Closing, Shares of the Companies shall be
outstanding and will be held of record as reflected on
Schedule 4(b). There are no outstanding or authorized
options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or
commitments that could require the Companies to issue, sell,
or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar
rights with respect to the Companies. Neither D.A.W. nor
F.M.T. has a subsidiary. The stockholders of D.A.W. and
F.M.T. have not elected to be taxed under Subchapter S of the
Internal Revenue Code.
(c)Non-Contravention. Except as reflected on Schedule
4(c), neither the execution and the delivery of this
Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which any of the Companies are subject or any
provision of the charter or bylaws of any of the Companies, or
(ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the
Companies are a party or by which any are bound or to which
any of their assets are subject (or result in the imposition
of any Security Interest upon any of their assets). Except as
reflected on Schedule 4(c), the Companies do not need to give
any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d)Brokers' Fees. The Companies have no Liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated
by this Agreement.
(e)Title to Assets. The Companies have good and
marketable title to, or a valid leasehold interest in, the
properties and assets used by them, located on their premises,
or shown on the Most Recent Balance Sheet or acquired after
the date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance
Sheet, and further except as disclosed on Schedule 4(e).
(f)Financial Statements. Attached hereto as Schedule
4(f) are the following financial statements (collectively the
"Financial Statements"): audited consolidated balance sheets
and statements of income, changes in stockholders' equity, and
cash flow as of and for the fiscal year ended June 30, 1995
for the Companies; and audited consolidated balance sheets and
statements of income, changes in stockholders' equity, and
cash flow (the "Most Recent Financial Statements") as of and
for the nine months ended March 31, 1996 (the "Most Recent
Fiscal Month End") for the Companies. The Financial
Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis through the
periods covered thereby, present fairly the financial
condition of the Companies as of such dates and the results of
operations of the Companies for such periods, are correct and
complete, and are consistent with the books and records of the
Companies (which books and records are correct and complete).
(g)Events Subsequent to Most Recent Fiscal Month End.
Since the Most Recent Fiscal Month End, there has not been any
material adverse change in the business, financial condition,
operations, results of operations, or future prospects of the
Companies. Without limiting the generality of the foregoing,
since that date the Companies have not except as set forth on
Schedule 4(g):
(i)sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii)entered into any agreement, contract, lease,
or license (or series of related agreements, contracts,
leases, and licenses) either involving more than $5,000
or outside the Ordinary Course of Business;
(iii)imposed any Security Interest upon any of its
assets, tangible or intangible;
(iv)made any capital expenditure (or series of
related capital expenditures) either involving more
than $5,000 or outside the Ordinary Course of Business;
(v)made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any
other Person (or series of related capital investments,
loans, and acquisitions) either involving more than
$5,000 or outside the Ordinary Course of Business;
(vi)issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease
obligation either involving more than $5,000 in the
aggregate;
(vii)delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary
Course of Business:
(viii)cancelled, compromised, waived, or released
any right or claim (or series of related rights and
claims) either involving more than $5,000 or outside
the Ordinary Course of Business;
(ix)made or authorized any change in the charter
or bylaws of the Companies or their Subsidiaries;
(x)issued, sold, or otherwise disposed of any of
its capital stock, or granted any options, warrants, or
other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital
stock;
(xi)declared, set aside, or paid any dividend or
made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock;
(xii)experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(xiii)made any loan to, or entered into any other
transaction with, any of their directors, officers,
stockholders and employees outside the Ordinary Course
of Business. Any loan to and transactions with any
directors, officers or stockholders of D.A.W. or F.M.T.
in the Ordinary Course of Business since the Most
Recent Fiscal Month End are reflected on Schedule 4(g)
and any loans to or transactions with any employees of
D.A.W. or F.M.T. in excess of $1,000 since the Most
Recent Fiscal Month End are also reflected on Schedule
4(g);
(xiv)entered into any employment contract or
collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or
agreement;
(xv)granted any increase in the base compensation
of any of its directors, officers, and employees outside
the Ordinary Course of Business or paid any bonus
compensation to any of its directors, officers, and
employees;
(xvi)adopted, amended, modified, or terminated any
bonus profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of
its directors, officers, and employees (or taken any
such action with respect to any other Employee Benefit
Plan);
(xvii) made any other change in employment terms for
any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xviii) made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of
Business;
(xix)been involved in any other material
occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business;
(xx)closed any store owned or operated by them;
and
(xxi)received any deposits or prepayments for
goods or services outside the Ordinary Course of
Business.
Since the Most Recent Fiscal Month End, no party has
accelerated, terminated, modified, or cancelled any agreement,
contract, lease or license (or series of related agreements,
contracts, leases, and licenses) involving more than $5,000 to
which the Companies is a party or by which any is bound.
(h)Undisclosed Liabilities. Except as disclosed on
Schedule 4(h), the Companies have no Liabilities (and there is
no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand
against any of them giving rise to any Liability), except for
(i) Liabilities set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto), and (ii)
Liabilities set forth on Schedule 4(h) hereto.
(i)Legal Compliance. Each of the Companies and their
Affiliates has complied in all material respects with all
applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments
(and all agencies thereof), and no action, suit, proceedings,
hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against any of them
alleging any failure so to comply.
(j)Tax Matters.
(i)Except as provided on Schedule 4(j), the
Companies have filed all Tax Returns that they were
required to file. All such Tax Returns were correct and
complete in all material respects. All Taxes owed by the
Companies have been paid. The Companies are not
currently the beneficiaries of any extension of time
within which to file any Tax Return. No claim has ever
been made by an authority in a jurisdiction where any of
the Companies do not file Tax Returns that any is or may
be subject to taxation by that jurisdiction. There are
no Security Interests on any of the assets of any of the
Companies that arose in connection with any failure (or
alleged failure) to pay any Tax.
(ii)Except as provided on Schedule 4(j), the
Companies have withheld and paid all Taxes required to
have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(iii)The Companies do not expect any authority to
assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim
concerning any Tax Liability of any of the Companies
either (A) claimed or raised by any authority in writing,
or (B) as to which the Sellers or the Companies have
Knowledge based upon personal contact with any agent of
such authority. Schedule 4(j) lists all federal, state
and local income Tax Returns filed by any of the
Companies for taxable periods ended on or after June 30,
1992, indicates those Tax Returns that have been audited,
and indicates those Tax Returns that currently are the
subject of audit. The Sellers have delivered to the
Buyer correct and complete copies of all federal income
Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of the
Companies since June 30, 1992.
(iv)The Companies have not waived any statute of
limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or
deficiency.
(v)The unpaid Taxes of the Companies (A) did
not, as of the Most Recent Fiscal Month End, exceed the
reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the
Most Recent Balance Sheet (rather than in any notes
thereto), and (B) do not exceed that reserve as adjusted
for the passage of time through the Closing Date in
accordance with the past custom and practice of the
Companies in filing their Tax Returns.
(k)Real Property. Schedule 4(k) lists and describes
briefly all real property leased or subleased to any of the
Companies. The Sellers have delivered to the Buyer correct
and complete copies of the leases and subleases listed in
Schedule 4(k). With respect to each lease and sublease
listed:
(i)the lease or sublease is legal, valid,
binding, enforceable, and in full force and effect;
(ii)except as described on Schedule 4(k), the
lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the
transactions contemplated hereby;
(iii)none of the Companies is in breach or default
and to the Sellers' and the Companies' actual knowledge,
no other party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration
thereunder;
(iv)none of the Companies has repudiated any
provision in the lease or sublease and to the Sellers'
and the Companies' Knowledge, no other party to the lease
or sublease has repudiated any provision thereof;
(v)there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or
sublease;
(vi)with respect to each sublease, the
representations and warranties set forth in subsections
(i) through (v) above are true and correct with respect
to the underlying lease;
(vii)the Companies have not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(viii)all facilities leased or subleased thereunder
have received all approvals of governmental authorities
(including licenses and permits) required in connection
with the operation thereof and have been operated, and
maintained in all material respects in accordance with
applicable laws, rules, and regulations;
(ix)all facilities leased or subleased thereunder
are supplied with utilities and other services necessary
for the operation of said facilities; and
(x)to the actual knowledge of the Sellers and
the Companies, the owner of the facility leased or
subleased has good and marketable title to the parcel of
real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except
installments of special easements not yet delinquent and
recorded easements, covenants, and other restrictions
which do not impair the current use, occupancy, or value,
or the marketability of title, of the property subject
thereto.
(l)Tangible Assets. The Companies own or lease all
buildings, machinery, equipment, and other tangible assets
necessary for the conduct of their businesses as presently
conducted. Each such tangible asset is free from defects
(patent and latent), has been maintained in accordance with
normal industry practice, is in good operating condition and
repair (subject to normal wear and tear), and is suitable for
the purposes for which it presently is used.
(m)Inventory. The inventory of the Companies is
merchantable and fit for the purpose for which it was procured
or manufactured, and no material portion of which is
slow-moving, obsolete, damaged, or defective, subject only to
the reserve for inventory writedown set forth on the face of
the Most Recent Balance Sheet (rather than in any notes
thereto) as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice
of the Companies except as set forth on Schedule 4(m).
(n)Contracts. Schedule 4(n) lists the following
contracts and other agreements (oral or written) to which any
of the Companies are a party:
(i)any agreement (or group of related
agreements) for the lease of personal property to or from
any Person providing for lease payments in excess of
$5,000 per annum;
(ii)any agreement (or group of related
agreements) for the purchase or sale of inventory or
goods sold in the Ordinary Course of Business or
otherwise, the performance of which will extend over a
period of more than one year, result in a loss to the
Companies or involve consideration in excess of $5,000;
(iii)any agreement concerning a partnership or
joint venture;
(iv)any agreement (or group of related
agreements) under which it has created, incurred,
assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of
$5,000 or under which it has imposed a Security Interest
on any of its assets, tangible or intangible;
(v)any agreement concerning confidentiality or
non-competition;
(vi)any agreement with any of the Sellers and
their Affiliates;
(vii)any profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation,
severance, or other plan or arrangement for the benefit
of its current or former directors, officers, and
employees;
(viii)any collective bargaining agreement;
(ix)any agreement for the employment of any
individual on a full-time, part-time, consulting, or
other basis providing annual compensation in excess of
$30,000 or providing severance benefits;
(x)any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xi)any agreement under which the consequences of
a default or termination could have a material adverse
effect on the business, financial condition, operations,
results of operations, or future prospects of the
Companies; or
(xii)any other agreement (or group of related
agreements) the performance of which involves considera-
tion in excess of $5,000.
The Sellers have delivered to the Buyer a correct and complete
copy of each written agreement listed on Schedule 4(n) (as
amended to date) and a written summary setting forth the terms
and conditions of each oral agreement referred to on Schedule
4(n). With respect to each such agreement: (A) the agreement
is legal, valid, binding, enforceable, and in full force and
effect; (B) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby except as provided in Schedule 4(n); (C)
to the Sellers' and the Companies' Knowledge, no party is in
breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default, or
permit termination, modification, or acceleration, under the
agreement; and (D) to the Sellers' and the Companies'
Knowledge, no party has repudiated any provision of the
agreement.
(o)Notes and Accounts Receivable. All notes and
accounts receivable of the Companies are reflected properly on
its books and records, are valid receivables subject to no
set-offs or counterclaims, are current and collectible, and to
the Sellers' and the Companies' Knowledge will be collected in
accordance with their terms at their recorded amounts, subject
only to the reserve for bad debts set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto)
as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the
Companies.
(p)Powers of Attorney. There are no outstanding powers
of attorney executed on behalf of any of the Company and/or
F.M.T. or their Subsidiaries.
(q)Insurance. Schedule 4(q) sets forth the following
information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to
which the Company and/or F.M.T. or their Subsidiaries are a
party, a named insured, or otherwise the beneficiary of
coverage at any time:
(i)the name, address, and telephone number of
the agent;
(ii)the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii)the policy number and the period of coverage;
(iv)the scope (including an indication of whether
the coverage is on a claims made, occurrence, or other
basis) and amount (including a description of how
deductibles and ceilings are calculated and operate) of
coverage; and
(v)a description of any retroactive premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is
legal, valid, binding, enforceable, and in full force and
effect; (B) the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby; (C) except as provided on Schedule 4(q),
the Companies are not in breach or default (including with
respect to the payment of premiums or the giving of notices),
and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy;
and (D) except as provided in Schedule 4(q), no party to the
policy has repudiated any provision thereof. Schedule 4(q)
describes any self-insurance arrangements affecting the
Companies.
(r)Litigation. Schedule 4(r) sets forth each instance
in which the Company and/or F.M.T. or their Subsidiaries (i)
is subject to any outstanding injunction, judgment, order,
decree or ruling, or (ii) is a party or is threatened to be
made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions,
suits, proceedings, hearings, and investigations set forth in
Schedule 4(r) could result in any material adverse change in
the business, financial condition, operations, results of
operations, or future prospects of the Companies except as
disclosed on Schedule 4(r). None of the Sellers has any
reason to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against
the Companies.
(s)Product Liability. The Companies have no Liability
(and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
or demand against any of them giving rise to any Liability)
arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product
sold (including prescription drugs formulated) by the
Companies.
(t)Employees. No executive, key employee, or group of
employees has any plans to terminate employment with the
Companies. The Companies are not a party to or bound by any
collective bargaining agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. The Companies have not
committed any unfair labor practice. None of the Sellers or
the Companies have any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any
labor union with respect to employees of the Companies.
(u)Employee Benefits. The Companies maintain no
Employee Benefit Plan, except medical and dental benefits.
(v)Guaranties. The Companies are not a guarantor or
are otherwise liable for any Liability or obligation
(including indebtedness) of any other Person.
(w)Contingent Liabilities. The Companies have no
contingent liabilities to any Person.
(x)Environment, Health, and Safety. The Companies and
their Affiliates have complied in all material respects with
all Environmental, Health, and Safety Laws, and no action,
suit, proceeding, hearing, investigation, inquiry, charge,
complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure to so
comply.
(y)Americans With Disabilities Act of 1990. The
Companies have complied with the Americans With Disabilities
Act of 1990, and no action, suit, proceeding, hearing,
investigation, inquiry, charge, complaint, claim, demand, or
notice has been filed or commenced against it alleging any
failure to so comply.
(z)Related Party Transactions. Except as disclosed on
Schedule 4(z) and for employment agreements with the Companies
which shall be superseded at the Closing by the employment
agreements annexed as Exhibit C, none of the Sellers or their
Affiliates are, directly or indirectly, engaged in any
business or other transaction with the Companies. The term
"indirectly" includes but is not limited to any parent, spouse
or child as well as any corporate or other entity. None of
the Sellers and their Affiliates, directly or indirectly, owns
any asset, tangible or intangible, which is used in the
business of D.A.W. or F.M.T.
(aa)Disclosure. The representations and warranties
contained in this Section 4 do not contain any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements and information
contained in this Section 4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows
with respect to the period between the execution of this
Agreement and the Closing.
(a)General. Each of the Parties will use his or its
best efforts to take all action and to do all things necessary
in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but
not waiver, of the closing conditions set forth in Section 7
below).
(b)Notices and Consents. As identified on Schedule
5(b), the Sellers will cause the Companies and their
Subsidiaries to give any notices to third parties, and will
cause them to use their best efforts to obtain any third-party
consents, that the Buyer may request in connection with the
matters referred to in Section 4 above. Each of the Parties
will give any notices to, make any filings with, and use its
best efforts to obtain any authorizations, consents, and
approvals of governments and governmental agencies required in
order to consummate the transactions contemplated hereby.
(c)Operation of Business. The Sellers will not cause
or permit the Companies to engage in any practice, take any
action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the
foregoing, the Sellers will not cause or permit the Companies
to (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem,
purchase, or otherwise acquire any of its capital stock, or
(ii) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described in Section
4(g) above.
(d)Preservation of Business. The Sellers will cause
the Companies to keep their business and properties
substantially intact, including its present operations,
physical facilities, and relationships with lessors,
suppliers, customers, and employees.
(e)Full Access. The Companies will permit,
representatives of the Buyer to have full access to all
premises, properties. personnel, books, records (including Tax
records), contracts, and documents of or pertaining to the
Companies.
(f)Exclusivity. None of the Sellers will (i) solicit,
initiate, or encourage the submission of any proposal or offer
from any Person relating to the acquisition of any capital
stock or any substantial portion of the assets of the
Companies (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any
discussions or negotiations regarding, furnish any information
with respect to, assist or participate in, or facilitate in
any other manner any effort or attempt by any Person to do or
seek any of the foregoing. None of the Sellers will vote
their Shares in favor of any such acquisition structured as a
merger, consolidation, or share exchange. The Sellers will
notify the Buyer immediately if any Person makes any proposal,
offer, inquiry, or contact with respect to any of the
foregoing.
6. Post-Closing Covenants. The Parties agree as follows
with respect to the period following the Closing.
(a)General. In case at any time after the Closing any
further action is necessary to carry out the purposes of this
Agreement, each of the Parties will take such further action
(including the execution and delivery of such further
instruments and documents) as any other Party may request, all
at the sole cost and expense of the requesting Party (unless
the requesting Party is entitled to indemnification therefor
under Section 8 below). The Sellers acknowledge and agree
that from and after the Closing the Buyer will be entitled to
possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating
to the Companies.
(b)Covenant Not to Compete. For a period of two years
from and after the Closing Date, none of the Sellers will,
except as permitted by written employment agreements with the
Company, engage directly or indirectly in any business that is
competitive with any business that the Companies conduct as of
the Closing Date in any county in which the Companies conduct
business; provided, however, that no owner of less than 2% of
the outstanding stock of any publicly traded corporation shall
be deemed to engage solely by reason thereof in any of its
businesses. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this
Section 6(b) is invalid or unenforceable, the Parties agree
that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be
appealed.
7. Conditions to Obligation to Closing.
(a)Conditions to Obligation of the Buyer. The obliga-
tion of the Buyer to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i)the representations and warranties set forth
in Section 3(a) and Section 4 above shall be true and
correct in all material respects at and as of the Closing
Date;
(ii)the Sellers shall have performed and complied
with all of their covenants hereunder in all material
respects through the Closing;
(iii)the Companies shall have procured all of the
third party consents specified in Section 5(b) above;
(iv)no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial
or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitration tribunal
wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation
of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation,
(C) affect adversely the right of the Buyer to own the
Shares and to control the Companies, or (D) affect
adversely the right of the Companies to own their assets
and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in
effect);
(v)the Sellers shall have delivered to the Buyer
a certificate to the effect that each of the conditions
specified above in Section 7(a)(i)-(iv) is satisfied in
all respects;
(vi)the Buyer shall have received from counsel to
the Sellers an opinion concerning the matters listed on
Exhibit A-1 in form and substance satisfactory to the
Buyer and dated as of the Closing Date;
(vii)The Buyer and D.A.W. shall have entered into
a Service Agreement in the form annexed as Exhibit B;
and
(viii)all actions to be taken by the Sellers and
the Companies in connection with consummation of the
transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the
Buyer.
(b)Conditions to Obligation of the Sellers. The
obligation of the Sellers to consummate the transactions
to be performed by them in connection with the Closing
is subject to satisfaction of the following conditions:
(i)the representations and warranties set forth
in Section 3(b) above shall be true and correct in all
material respects at and as of the Closing Date;
(ii)the Buyer shall have performed and complied
with all of its covenants hereunder in all material
respects through the Closing;
(iii)no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial
or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitration
tribunal wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated
by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(iv)the Buyer shall have delivered to the Sellers
a certificate to the effect that each of the conditions
specified above in Section 7(b)(i)-(iii) is satisfied in
all respects;
(v)the Sellers shall have received from counsel
to the Buyer an opinion concerning the matters listed on
Exhibit A-2 satisfactory in form and substance to the
Sellers and dated as of the Closing Date;
(vi)Mark Dumouchel, David Dumouchel, Michael
Curry, Wayne Gunter and Donato Mazzola shall have entered
into employment agreements with the Company in the form
annexed hereto as Exhibit C;
(vii)The Buyer and the Company shall have entered
into a Service Agreement in the form annexed as Exhibit
B;
(viii)The Buyer and the Sellers shall enter into a
Shareholders' Agreement in the form annexed hereto as
Exhibit D; and
(ix)All actions to be taken by the Buyer in
connection with consummation of the transactions contem-
plated hereby and all certificates, opinions,
instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably
satisfactory in form and substance to each of the
Sellers.
8. Remedies For Breaches of This Agreement.
(a)Survival of Representations and Warranties. All of
the representations and warranties of the Buyer and the
Sellers and the Companies shall survive the Closing hereunder
and continue in full force and effect for a period of two
years thereafter.
(b)Merger of Prior Representations. Neither the
Companies nor Sellers shall be liable or bound in any way for
any verbal or written statements, representations, or
information other than as contained in this Agreement. It is
understood and agreed that all prior and contemporaneous
representations, statements, understandings and agreements,
oral or written, between the parties are merged in this
Agreement, which alone fully and completely expresses their
agreement, and that the same is entered into after full
investigation, neither party relying on any statement or
representation not embodied in this Agreement made by the
other.
(c)Indemnification Provisions for Benefit of the Buyer.
In the event any of the Sellers breaches (or in the event any
third party alleges facts that, if true, would mean any of the
Sellers has breached) any of their representations,
warranties, and covenants contained herein, then each of the
Sellers agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer
through and after the date of the claim for indemnification
resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).
(d)Indemnification Provisions for Benefit of the
Sellers. In the event the Buyer breaches (or in the event any
third party alleges facts that, if true, would mean the Buyer
has breached) any of its representations, warranties, and
covenants contained herein, then the Buyer agrees to indemnify
each of the Sellers from and against the entirety of any
Adverse Consequences the Seller may suffer through and after
the date of the claim for indemnification resulting from,
arising out of, relating to, in the nature of, or caused by
the breach (or the alleged breach).
(e)Matters Involving Third Parties.
(i)If any third party shall notify any Party
(the "Indemnified Party") with respect to any matter (a
"Third Party Claim") which may give rise to a claim for
indemnification against any other Party (the "Indemni-
fying Party") under this Section 8, then the Indemnified
Party shall promptly notify each Indemnifying Party
hereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party thereby is prejudiced.
(ii)Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party
Claim with counsel of its choice reasonably satisfactory
to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within 10
days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim.
(iii)So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in
accordance with Section 8(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of
the Third Party Claim, (B) the Indemnified Party will not
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without
the prior written consent of the Indemnifying Party (not
to be withheld unreasonably), and (C) the Indemnifying
Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party
Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv)In the event the condition in Section
8(d)(ii) above is or becomes unsatisfied, however, (A)
the Indemnified Party may defend against, and consent to
the entry of any judgment or enter into any settlement of
his or her own Liability with respect to, the Third Party
Claim in any manner it reasonably may deem appropriate
(and the Indemnified Party need not consult with, or
obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically
for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and
(C) the Indemnifying Parties will remain responsible for
any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 8.
(f)Determination of Adverse Consequences. The Parties
shall take into account the time cost of money (using the
Applicable Rate as the discount rate) in determining
Adverse Consequences for purposes of this Section 8.
(g)Other Indemnification Provisions. The foregoing
indemnification provisions are in addition to, and not in
derogation of, any statutory, equitable, or common law remedy
any Party may have for breach of representation, warranty, or
covenant. Each of the Sellers hereby agrees that he will not
make any claim for indemnification against the Companies by
reason of the fact that he was a director, officer, employee,
or agent of the Companies or was serving at the request of the
Companies as a partner, trustee, director, officer, employee,
or agent of another entity (whether such claim is for
judgments, damages, penalties, fines, costs, amounts paid in
settlement, losses, expenses, or otherwise and whether such
claim is pursuant to any statute, charter document, bylaw,
agreement, or otherwise) with respect to any action, suit,
proceeding, complaint, claim, or demand brought by the Buyer
against such Seller (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this Agreement,
applicable law, or otherwise).
9. Nature of Certain Obligations.
(a)The covenants of each of the Sellers in Section 2(a)
above concerning the sale of his or her Shares to the Buyer
and the representations and warranties of each of the Sellers
in Section 3(a) above concerning the transaction are several
obligations. This means that the particular Seller making the
representation, warranty, or covenant will be solely
responsible to the extent provided in Section 8 above for any
Adverse Consequences the Buyer may suffer as a result of any
breach thereof.
(b)The remainder of the representations, warranties,
and covenants in this Agreement are joint and several
obligations. This means that each Seller and the Companies
will be responsible to the extent provided in Section 8 above
for the entirety of any Adverse Consequences the Buyer may
suffer as a result of any breach thereof.
10. Separability of Provisions. If any provision of this
Agreement shall be held or deemed to be, or shall in fact be,
invalid, inoperative or unenforceable because of the conflict of
such provision with any constitution, statute, rule of public
policy or for any other reason, such circumstance shall not have
the effect of rendering any other provision of this Agreement
invalid, inoperative or unenforceable, but this Agreement shall
be reformed and construed as if such invalid, inoperative or
unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and
enforceable to the maximum extent permitted.
11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
The execution of this Agreement may be by actual or facsimile
signature.
12. Benefit. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal
representatives, successors and assigns.
13. Notices and Addresses. All notices, offers, acceptance
and any other acts under this Agreement (except payment) shall
be in writing, and shall be sufficiently given if delivered to
the addressees in person, by Federal Express or similar
receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as
follows:
Sellers:
F.M.T. Mr. Mark A. Dumouchel
D.A.W. Mr. David Dumouchel
c/o Eaton Apothecary
264 R. Washington Street
Wellesley Hills, MA 02181
Facsimile (617) 237-7278
with a copy to: Gayle Ehrlich, Esq.
Sullivan & Worcester, LLP
One Post Office Square
Boston, MA 02109
Facsimile (617) 338-2880
The Buyer: Mr. Samuel Nyer, President
Nyer Medical Group, Inc.
1292 Hammond Street
Bangor, ME 04401
Facsimile (207) 989-1101
with a copy to: Michael D. Harris, Esq.
Cohen, Chernay, Norris,
Weinberger & Harris
712 U.S. Highway One
North Palm Beach, FL 33408
Facsimile (407) 845-0108
or to such other address as either of them, by notice to the other
may designate from time to time. The transmission confirmation
receipt from the sender's facsimile machine shall be conclusive
evidence of successful facsimile delivery, provided such facsimile
is concurrently transmitted within an original by Federal Express
or similar receipted delivery. Time shall be counted to, or from,
as the case may be, the delivery in person or by mailing.
14. Attorney's Fees. In the event that there is any
controversy or claim arising out of or relating to this Agreement,
or to the interpretation, breach or enforcement thereof, and any
action or proceeding including an arbitration proceeding is
commenced to enforce the provisions of this Agreement, the
prevailing party shall be entitled to an award by the court or
arbitrator, as appropriate, of reasonable attorney's fees, costs
and expenses.
15. Oral Evidence. This Agreement constitutes the entire
Agreement between the parties and supersedes all prior oral and
written agreements between the parties hereto with respect to the
subject matter hereof. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally,
except by a statement in writing signed by the party or parties
against which enforcement or the change, waiver discharge or
termination is sought.
16. Additional Documents. The parties hereto shall execute
such additional instruments as may be reasonably required by their
counsel in order to carry out the purpose and intent of this
Agreement and to fulfill the obligations of the parties hereunder.
17. Governing Law. This Agreement and any dispute,
disagreement, or issue of construction or interpretation arising
hereunder whether relating to its execution, its validity, the
obligations provided herein or performance shall be governed or
interpreted according to the internal laws of the State of
Massachusetts without regard to choice of law considerations.
18. Arbitration. Except for any action seeking equitable
relief as a result of an alleged violation by a Seller of Section
6(b) hereof, any controversy, dispute or claim arising out of or
relating to this Agreement, or its interpretation, application,
implementation, breach or enforcement which the parties are unable
to resolve by mutual agreement, shall be settled by submission by
either party of the controversy, claim or dispute to binding
arbitration in Boston, Massachusetts (unless the parties agree in
writing to a different location), before three arbitrators in
accordance with the rules of the American Arbitration Association
then in effect. In any such arbitration proceeding the parties
agree to provide all discovery deemed necessary by the
arbitrators. The decision and award made by the arbitrators shall
be final, binding and conclusive on all parties hereto for all
purposes, and judgment may be entered thereon in any court having
jurisdiction thereof.
19. Section or Paragraph Headings. Section headings herein
have been inserted for reference only and shall not be deemed to
limit or otherwise affect, in any matter, or be deemed to
interpret in whole or in part any of the terms or provisions of
this Agreement.
20. Equitable Relief.
(a)The Buyer and the Sellers recognize that the Buyer
who would not purchase the Shares of the Companies for the
consideration stated unless the Sellers agree to not compete
with the Company as provided in Section 6(b) and the Buyer is
relying on such agreement. The Parties further agree that in
the event that any Seller competes with the Companies in
violation of Section 6(b), it will not be possible to
reasonably ascertain the damages to be sustained by the Buyer
or the Company. Accordingly, both the Buyer and the Company,
severally or jointly, shall be entitled to institute and
prosecute proceedings in any court of competent jurisdiction
and enjoin any Seller from breaching the provisions of Section
6(b) hereof. In such action, neither the Buyer nor the
Companies shall be required to plead or prove irreparable harm
or lack of an adequate remedy at law. Nothing contained in
this Section 20(a) shall be construed to prevent the Buyer or
the Companies from seeking such other remedy in arbitration
pursuant to Section 18 in case of any breach of this Agreement
by any Seller.
(b)Any proceeding or action must be commenced in state
or federal courts in Boston, Massachusetts. The Sellers
irrevocably and unconditionally submit to the personal
jurisdiction of such courts and agree to take any and all
future action necessary to submit to the jurisdiction of such
courts. The Sellers irrevocably waive any objection that they
now have or hereafter may have to the laying of venue of any
suit, action or proceeding brought in any such court and
further irrevocably waive any claim that any such suit, action
or proceeding brought in any such court has been brought in an
inconvenient forum. Final judgment against any such Seller in
any such suit shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment, a certified or true
copy or which shall be conclusive evidence of the fact and the
amount of any liability of such Seller therein described, or
by appropriate proceedings under any applicable treaty or
otherwise.
IN WITNESS WHEREOF the parties hereto have set their hand and
seals as of the date first above written.
WITNESSES: BUYER:
NYER MEDICAL GROUP, INC.
By: /S/ Samuel Nyer
Samuel Nyer
THE SELLERS:
/S/ Mark A. Dumouchel
Mark A. Dumouchel
/S/ David Dumouchel
David Dumouchel
/S/ Lucille Curry
Lucille Curry
/S/ Michael Curry
Michael Curry
/S/ Donato Mazzola
Donato Mazzola
/S/ Wayne Gunter
Wayne Gunter
THE COMPANY:
D.A.W., Inc.
By: /S/ Mark A. Dumouchel
Mark A. Dumouchel, President
F.M.T. FRANCHISE COMPANY, INC.
By: /S/ David Dumouchel
David Dumouchel, President
STOCK EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
EXHIBIT A-1
OPINION OF THE SELLERS' COUNSEL
EXHIBIT A-1
TO
STOCK EXCHANGE AGREEMENT AND
PLAN OF REORGANIZATION
Opinion of Sellers' Counsel shall be in the form as that attached
hereto as Attachment A-1.
ATTACHMENT A-1
EXHIBIT A-1 TO STOCK EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
Opinion of Sellers' Counsel should include the following opinions:
(c) Each of D.A.W., F.M.T. and the Subsidiaries is a corporation
duly incorporated and organized, validly existing and in good
standing under the laws of its state of incorporation, with
perpetual corporate existence. Each of the Company, F.M.T.
and the Subsidiaries has full corporate power and authority
and all licenses, permits, and authorization necessary to
carry on the businesses in which each is engaged and to own
and use the properties owned and used by each of them. To our
knowledge, after due inquiry, neither the Company, F.M.T. nor
the Subsidiaries has an equity interest in any other firm,
partnership, association, joint venture or other entity. Each
of the Company, F.M.T. and the Subsidiaries is duly qualified
to transact business as a foreign corporation and is in good
standing under the laws of such jurisdiction where the
location of such corporation's properties or the character of
its operations makes such qualification necessary except where
any such failure to be so qualified or in good standing would
not have a material adverse effect on such corporation.
(d) The execution, delivery and performance by the Company and
F.M.T. of the Agreement and other agreements referred to
therein and the consummation by the Company and F.M.T. of the
transactions contemplated thereby are within each
corporation's corporate powers, has been duly authorized by
all necessary corporate action and to our knowledge does not
conflict with or result in a breach of any of the terms or
provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default)
under, require a consent under, or result in the creation or
imposition of any lien, security interest, charge or
encumbrance upon any of the properties or assets of such
corporations pursuant to the terms of any material agreement
or instrument to which any of such corporations is a party or
to which any of the property or assets of any of such
corporations is subject, or violate the certificate of
incorporation or by-laws of any such corporation or any
license, permit, judgment, decree, order, statute, rule or
regulation applicable to any such corporation or of their
properties or businesses.
(e) To our knowledge, no material default exists in the due
performance or observance of any term, covenant or condition
or any material contracts, agreements or instruments to which
the Company, F.M.T. or the Subsidiaries is a party or by which
the Company, F.M.T. or the Subsidiaries is bound or to which
any of its property is subject; such contracts, agreements and
instruments are in full force and effect in accordance with
their respective terms; and no other party to any contract,
agreement or instrument has instituted or, to the best of our
knowledge, after due inquiry, threatened any action or
proceeding wherein the Company, F.M.T. or any Subsidiary would
or might be alleged to be in default thereunder.
(f) Except as may arise under the Blue Sky laws of any state, no
authorization, approval, consent, waiver or other action or
consideration by, and no notice to or filing with, any
governmental authority or regulatory body or other Person is
required for the due execution, delivery and performance by
the Company, F.M.T. or the Subsidiaries in accordance with the
Agreement and agreements referred to therein.
(g) Assuming due authorization and power, where appropriate, and
execution and delivery by the Buyer, the Agreement is the
legal, valid and binding obligation of the Company and of
F.M.T. enforceable against each of them in accordance with
their respective terms except as enforceability may be limited
by general equitable principles including the right of
specific performance and as may be limited under any
applicable bankruptcy, insolvency or reorganization or other
laws generally affecting the enforcement of creditors' rights
from time to time in effect. The Agreement has been duly
executed and delivered by the Company and F.M.T.
(h) The authorized capital stock of each of the Company and F.M.T.
is as referred to in the financial statements as Schedule 4(f)
to the Agreement. As of the date hereof, all of the shares of
common stock of the Company, F.M.T. and the Subsidiaries which
are issued and outstanding have been duly authorized and are
validly issued and fully paid and non-assessable and are held
by the parties referred on Schedule 6 to this opinion. To our
knowledge, after due inquiry, there are no outstanding
options, warrants or other rights requiring any of the
Company, F.M.T. or any Subsidiary to issue, and no
commitments, plans or arrangements of the Company, F.M.T. or
any Subsidiary to issue any shares of capital stock of the
Company, F.M.T. or any Subsidiary or any securities
convertible into or exchangeable for such capital stock.
There are no registration rights with respect to any capital
stock of the Company, F.M.T. or any Subsidiary.
(i) The common stock of the Company and F.M.T. being sold to the
Buyer has been duly authorized and is validly issued, fully
paid and non-assessable. No holder of any of the shares of
common stock of the Company or F.M.T. will be subject to
personal liability by reason of being such a holder of such
common stock and none of the shares of common stock are
subject to the preemptive rights of any shareholder of such
corporations.
(j) After due inquiry, neither the Company, F.M.T. or the
Subsidiaries (i) is subject to any outstanding injunction,
judgment, order, decree or ruling, or (ii) is a party or is
threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator except
as set forth in Schedule 4(r) to the Agreement. None of the
actions, suits, proceedings, hearings, and investigations set
forth in Schedule 4(r) to the Agreement could result in any
material adverse change in the business, financial condition,
operations, results of operations, or future prospects of the
Company, F.M.T. or the Subsidiaries.
9. In the course of our representation of the Company, F.M.T.,
the Subsidiaries and the Sellers, nothing has come to our
attention to lead us to believe that any of the
representations and warranties of the Sellers are not true and
correct and/or omit to state any material facts necessary to
make the statements made, in light of the circumstances under
which they are made, not misleading.
STOCK EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
EXHIBIT A-2
OPINION OF THE BUYERS' COUNSEL
ATTACHMENT A-2
August 5, 1996
D.A.W., Inc.
F.M.T. Franchise Co., Inc.
c/o Eaton Apothecary
264 R. Washington Street
Wellesley Hills, MA 02181
Mr. Mark Dumouchel
1 Green Valley Road
Medway, MA 02053
Mr. Donato Mazzola
17 Gilbert Street
W. Newton, MA 02165
<PAGE>
Mr. David Dumouchel
3 Comstock Lane
Topsfield, MA 10983
Mrs. Lucille Curry
32 Ledgeview Drive
Norwood, MA 02062
Mr. Wayne Gunter
1 Sandlewood Lane
Methuen, MA 01844Lady and Gentlemen:
This letter is furnished to you pursuant to Section 7(b)(v) of
that certain Stock Exchange Agreement and Plan of Reorganization
dated August 5, 1996 (the "Agreement"), among Nyer Medical Group,
Inc., a Florida corporation (the "Buyer"), Mark A. Dumouchel, David
Dumouchel, Lucille Curry, Donato Mazzola and Wayne Gunter
(collectively the "Sellers"), D.A.W., Inc., a Massachusetts
corporation and F.M.T. Franchise Co., Inc., a Massachusetts
corporation (collectively the "Companies"). Capitalized terms used
but not otherwise defined herein shall have the meanings ascribed
to such terms in the Agreement. We have acted as counsel for the
Buyer in connection with the preparation, negotiation, execution
and delivery of the Agreement and the Buyer's common stock.
In connection with this opinion, we have examined originals,
or copies certified or otherwise identified to our satisfaction, as
being true copies of the following, each dated this date unless
otherwise therein indicated of:
(1) the following:
(a)the Agreement;
(b)the other agreements referred to in the Agreement;
and
(c)any other documents delivered at the Closing by the
Parties pursuant to the Agreement.
(2) certificates of the Secretary of the State of Maine and
the State of Florida, each dated July 25, 1996, attesting to the
continued corporate existence and good standing and qualification
to do business, respectively, of the Buyer.
(3) An Officer's Certificate, from the President of the Buyer
as to certain matters; and
(4) The corporate minutes of the Buyer.
In addition, we have examined the originals, or copies
certified to our satisfaction, of such other corporate records of
the Buyer, certificates of public officials and of officers of the
Buyer, and agreements, instruments and other documents, as we have
deemed necessary as a basis for the opinions expressed below. As
to questions of fact material to such opinions, we have, when
relevant facts were not independently established by us, relied, to
the extent we deemed appropriate, upon certificates of the Buyer or
its officers.
We have assumed the genuineness of all signatures and the
authenticity of all items submitted to us as originals, the legal
capacity of natural persons, and the conformity of originals of all
items submitted to us as copies. In making our examination of
documents executed by entities other than the Buyer, we have
assumed that each such entity has the power, authority and legal
right to enter into and perform all of its obligations thereunder
and we have assumed the due authorization, execution and delivery
of such documents by each such entity.
We are qualified to practice law in the State of Florida and
we do not purport to be experts on any laws other than the laws of
the State of Florida and the federal laws of the United States of
America.
Based upon the foregoing and upon such investigation as we
have deemed necessary, we are of the following opinion:
1. The Buyer is a corporation duly incorporated and organized,
validly existing and in good standing under the laws of its
state of incorporation, with perpetual corporate existence.
The Buyer has full corporate power and authority and all
licenses, permits, and authorization necessary to carry on the
businesses in which it is engaged and to own and use the
properties owned and used by it. To our knowledge, after due
inquiry, the Buyer does not have an equity interest in any
other firm, partnership, association, joint venture or other
entity except as disclosed in its Form 10-QSB for the quarter
ended March 31, 1996. The Company is duly qualified to
transact business as a foreign corporation and is in good
standing under the laws of such jurisdiction where the
location of its properties or the character of its operations
makes such qualification necessary except where any such
failure to be so qualified or in good standing would not have
a material adverse effect it.
2. The execution, delivery and performance by the Buyer of the
Agreement and other agreements referred to therein and the
consummation by the Buyer of the transactions contemplated
thereby is within its corporate powers, has been duly
authorized by all necessary corporate action and to our
knowledge does not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would
constitute a default) under, require a consent under, or
result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of its properties or
assets pursuant to the terms of any material agreement or
instrument to which it is a party or to which any of its
property or assets is subject, or violate its certificate of
incorporation or by-laws or any license, permit, judgment,
decree, order, statute, rule or regulation applicable to it or
of its property or business.
3. Except as may arise under the Blue Sky laws of any state, no
authorization, approval, consent, waiver or other action or
consideration by, and no notice to or filing with, any
governmental authority or regulatory body or other Person is
required for the due execution, delivery and performance by
the Buyer in accordance with the Agreement and agreements
referred to therein.
4. Assuming due authorization and power, where appropriate, and
execution and delivery by the other parties, the Agreement is
the legal, valid and binding obligation of the Buyer
enforceable against it in accordance with its respective terms
except as enforceability may be limited by general equitable
principles including the right of specific performance and as
may be limited under any applicable bankruptcy, insolvency or
reorganization or other laws generally affecting the
enforcement of creditors' rights from time to time in effect.
The Agreement has been duly executed and delivered by the
Buyer.
5. The authorized capital stock of the Buyer as of June 25, 1996
is as referred to in Section 3 (b)(ii) of the Agreement.
6. The common stock of the Buyer being sold to the Sellers has
been duly authorized and is validly issued, fully paid and
non-assessable. No Seller will be subject to personal
liability by reason of being a holder of the common stock of
the Buyer and none of such shares of common stock are subject
to the preemptive rights of any shareholder of the Buyer.
7. After due inquiry, the Buyer is not (i) subject to any
outstanding injunction, judgment, order, decree or ruling, or
(ii) a party or is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before
any arbitrator which could result in any material adverse
change in the business, financial condition, operations,
results of operations, or future prospects of the Buyer.
8. In the course of our representation of the Buyer, nothing has
come to our attention to lead us to believe than any of the
representations and warranties of the Buyer are not true and
correct and or omit to state any material facts necessary to
make the statements made, in light of the circumstances under
which they are made, not misleading.
9. Based solely upon the investment letters and receipts executed
by each of the Sellers, the shares of common stock of the
Buyer transferred pursuant to the Agreement are exempt from
registration under the Securities Act of 1933 pursuant to
Section 4(2) and Rule 506 thereunder.
This opinion letter is being furnished to the Companies and
the Sellers for their use and the use of their counsel and may
be relied upon only by such parties and their counsel. No other
use or distribution of this opinion letter may be made without
our prior written consent.
STOCK EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
between
Nyer Medical Group, Inc., ( Buyer)
and
Mark A. Dumouchel, David Dumouchel, Lucille Curry, Michael Curry,
Donato Mazzola and Wayne Gunter (collectively, Sellers)
and
D.A.W., Inc. ( D.A.W.) and F.M.T. Franchise Company, Inc. ( F.M.T.)
collectively, Companies)
SELLERS AND COMPANIES DISCLOSURE SCHEDULES
SCHEDULE 2(a)
D.A.W.
No. of Shares
No. of Shares Transferred No of Shares
Seller Held to Nyer Retained
Mark Dumouchel 500 400 100
David Dumouchel 500 400 100
Lucille Curry 500 400 100
Wayne Gunter 500 400 100
Donato Mazzola 500 400 100
F.M.T. Class A Shares
No. of Shares
No. of Shares Transferred No of Shares
Seller Held to Nyer Retained
Mark Dumouchel 500 400 100
David Dumouchel 500 400 100
Michael Curry 500 400 100
Wayne Gunter 500 400 100
Donato Mazzola 500 400 100
F.M.T. Class B Shares
No. of Shares
No. of Shares Transferred Transferred
Seller Held to Nyer
F.M.T. 1,000 1,000
STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
SCHEDULE 2(b)
2(b)(i)(A) -Allocation of 19,500 shares of Common Stock of the Buyer in exchange
of 80% of the shares of D.A.W.
Amount to Receive
Seller in Transfer
Mark Dumouchel 3,900
David Dumouchel 3,900
Lucille Curry 3,900
Wayne Gunter 3,900
Donato Mazzola 3,900
2(b)(i)(B) -Allocation of 500 shares of Common Stock of the Buyer in exchange
of 80% of the shares of F.M.T.
Amount to Receive
Seller in Transfer
Mark Dumouchel 100
David Dumouchel 100
Michael Curry 100
Wayne Gunter 100
Donato Mazzola 100
2(b)(ii) -$200,000 to D.A.W. at Closing; and
2(b)(iii) -$800,000 to F.M.T. at the Closing in exchange of 80% of the Class
B Shares of F.M.T.
Schedule 4(a) Directors and Officers of each of the Companies
D.A.W.
Mark Dumouchel President, Treasurer and Director
David Dumouchel V.P. and Director
Wayne Gunter V.P. and Director
Donato Mazzola V.P. and Director
Michael Curry Secretary and Director
F.M.T.
David Dumouchel President and Director
Mark Dumouchel V.P., Treasurer and Director
Michael Curry V.P. and Director
Wayne Gunter V.P. and Director
Donato Mazzola V/P. and Director
Schedule 4(b) Capitalization
Ownership of shares of common stock of D.A.W. and F.M.T.
D.A.W.
Mark Dumouchel 500 shares
David Dumouchel 500 shares
Lucille Curry 500 shares
Wayne Gunter 500 shares
Donato Mazzola 500 shares
F.M.T.
Mark Dumouchel 500 shares of Class A
David Dumouchel 500 shares of Class A
Michael Curry 500 shares of Class A
Wayne Gunter 500 shares of Class A
Donato Mazzola 500 shares of Class A
Ownership of Shares after the Closing Date
D.A.W.
Mark Dumouchel 100 shares
David Dumouchel 100 shares
Lucille Curry 100 shares
Wayne Gunter 100 shares
Donato Mazzola 100 shares
Buyer 2,000 shares
F.M.T.
Class A
Mark Dumouchel 100 shares
David Dumouchel 100 shares
Michael Curry 100 shares
Wayne Gunter 100 shares
Donato Mazzola 100 shares
Buyer 2,000 shares
Class B
Buyer 800 shares
Sellers 200 shares
Schedule 4(c) Non-Contravention
The execution and delivery of the Agreement or the consummation
of the transaction will violate the following statutes, rules, orders,
etc. :
None
The execution and delivery of the Agreement or the consummation of the
transaction will conflict with, result in a breach of, constitute
a default under, result in acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any
notice under the following agreements, contracts, leases, licenses or
other agreements :
See assignability provisions of items I.1, 4, 15, 16, and 20 and III.3
and cross default provisions of I.15-22 and III.3 on List of Documents
Provided to Buyer attached hereto as part of Schedule 4(n).
Schedule 4(e) Title to Assets
The Companies have good and marketable title or a valid leasehold
interest in all properties and assets, except their assets are subject to
the following security agreements:
1) Security agreement with James W. Daly executed in connection
with note described in notes to financial statements. (all
assets)
2) Security agreements with McKesson Drug Company, Inc.
executed in connection with notes described in notes to
financial statements. (all assets)
3) Security agreement with Donald Blogett executed in connection
with notes described in notes to financial statements.
(inventory and proceeds of two Marblehead stores and Salem
store pari passu with Eileen Dumouchel)
4) Security agreement with Eileen Dumouchel executed in
connection with note described in notes to financial
statements. (inventory and proceeds of two Marblehead stores
and Salem store pari passu with Donald Blodgett)
5) Security agreement with Woodman Drug Co., Inc. executed in
connection with note described in notes to financial
statements. (inventory and proceeds of Danvers store pari passu
with Merchant Apothecary, inc.)
6) Security agreement with Merchant Apothecary, Inc. executed
in connection with note described in notes to financial
statements. (inventory and proceeds of Danvers store pari
passu with Woodman Drug Co., Inc.)
7) Security agreement with Three S Pharmacy, Inc. executed in
connection with note described in notes to financial
statements. (inventory and proceeds of Westwood store.)
Schedule 4(f) Financial Statements
Financial Statements of the Companies
Attached
Schedule 4(g) Material adverse changes with respect to the Companies since
March 31, 1996:
(i) Sale, lease, transfer or assignment of any assets other than in
ordinary course of business
None
(ii) Agreement, contract, lease or license involving more than $5,000
or outside ordinary course of business
a) Lease between Crosby Realty Trust, as Landlord, and D.A.W.,
as Tenant, for the relocation of the Atlantic Avenue,
Marblehead store to 122 Washington Street, Marblehead.
b) See (iv) below.
(iii) Imposition of any Security Interest on any assets
None
(iv) Capital expenditures involving more than $5,000 or outside
ordinary course of business
Agreement with Design Advantage for improvement and expansion of
Dorchester store, total value of contract approximately $50,000.
(v) Capital investment, loan to or acquisition of securities or
assets of any other Person involving more than $5,000 or
outside ordinary course of business
None
(vi) Issuance of any note, bond or other debt security or creation
of any guarantee involving more than $5,000 in the aggregate
None
(vii) Delay or postponement of payment of accounts payable or other
liabilities outside ordinary course of business
None
(viii) Cancellation, compromise, waiver or release of any rights or
claims involving more than $5,000 or outside ordinary course
of business
None
(ix) Changes in the charter or by-laws of the Companies or their
Subsidiaries
None
(x) Issuance, sale or disposition of any of its capital stock, or
grant of options, warrants or other rights to purchase its
capital stock
None
(xi) Declaration or payment of any dividends or any distribution
with respect to its capital stock or redemption, purchase
or other acquisition of its capital stock
None
(xii) Any damage, destruction or loss to its property
One delivery vehicle stolen on July 5, 1996, subsequently
recovered by police.
(xiii) Any transactions with its directors, officers or employees
outside the ordinary course of business
None
Any transactions with directors, officers or shareholders
in the ordinary course of business
None
Any transactions with employees in excess of $1,000.
None
(xiv) Creation or modification employment contracts or
collective bargaining agreement
None
(xv) Increase in compensation of any directors, officers or
employees outside ordinary course of business or payment
of any bonus
None
(xvi) Adoption, amendment or termination of any profit-sharing
plan or similar commitment
None
(xvii) Changes in employment terms for any directors, officers
or employees outside ordinary course of business
None
(xviii) Pledge of any charitable or other capital contribution
outside ordinary course of business
None
(xix) Involvement in any other material event or transaction
outside the ordinary course of business
None
(xx) Closing of any store owned or operated by the Companies
None
(xxi) Receipt of any deposits or prepayments for goods or
services outside ordinary course of business
None
Schedule 4(h)
Liabilities that have arisen since March 31, 1996.
There may exist potential liability as the result of Pharmacy
Performance Review or Audit conducted on behalf of a third party
payor of prescription benefits either under a group insurance
policy or Massachusetts Medicaid agency, the nature of which
may be that current and future payments may be denied to offset
or recover past payments received by D.A.W.
Schedule 4(j)
Tax Matters
All federal, state and local Tax Returns filed by any of the
Companies for taxable periods ended on or after June
30, 1992, indicating which have been or currently
are a subject of an audit
Attached
All Tax Returns that the Companies have failed to file
There are presently taxes due to both the Internal Revenue
Service and the Massachusetts Department of Revenue as detailed
in the notes to the financial statements. The respective
amortization schedules for these taxes have been provided
separately.
All Taxes that have not been properly withheld and paid by the
Companies:
None
Schedule 4(k)
Real Property
Brief description of all leases and subleases of all real
property
1) Lease dated December 22, 1988 between Prime Realty Trust
II, as Landlord, and Dumouchel Apothecary of Waltham, Inc.
( D.A.W.) d/b/a Eaton Apothecary, as Tenant, for property
located at 47 Elm Street, Danvers, MA 01923.
2) Lease dated April 1, 1995 between Goode Management Inc.,
as Landlord, and D.A.W., for property located at 683 High
Street, Westwood, MA 02090.
3) Lease dated March 5, 1991 between Crosby Realty Trust, as
Landlord, and Mark Dumouchel, as Tenant, for property
located at 111 Canal Street, Salem, MA 01970. Lease was
assigned to D.A.W. on June 20, 1996.
4) Lease between Crosby Realty Trust, as Landlord and D.A.W.,
Inc., as Tenant, for property located at 122 Washington
Street, Marblehead, MA 01945.
5) Lease dated January 31, 1991 between 31-35 Atlantic Avenue
Corporation, as successor-in-interest to Agnes L. McNulty,
as Landlord, and D.A.W., as Tenant, for property located
at 31 Atlantic Avenue, Marblehead, MA 01945. Tenant is
planning to sublease this location.
6) Lease dated March 23, 1995 between Edwaar Realty Trust,
as Landlord and D.A.W., as Tenant, for property located
at 241 Humphrey Street, Marblehead, MA 01945.
7) Lease dated February 25, 1991, between Abbott Estates, as
Landlord and Dumouchel Apothecary, Inc., as Tenant, for
property located at 264 & 266 Washington Street,
Wellesley, MA 02181.
8) Lease dated December 1993 between Newton Lodge of the
Elks #1327 BPOE, as Landlord and Michael Curry d/b/a Eaton
Apothecary, as Tenant, for property located at 425 Centre
Street, Newton, MA 02158.
9) Lease dated August 13, 1995 between Angus Realty
Corporation, as Landlord and D.A.W. d/b/a Eaton
Apothecary, as Tenant, for property located at 1077
Osgood Street, North Andover, MA 01845.
10) Companies to enter into a lease for property at 533
Columbia Road, Dorchester, MA. Property is currently
owned by Eileen Dumouchel. Property is approximately
2,250 square feet and rent shall be $3,000 per month.
Leases or subleases that will not continue to be valid and enforceable
following the consummation of the Transaction:
None.
Schedule 4(m)
Inventory of the Companies that is not merchantable, unfit for
the purpose for which it was procured and/or manufactured or
obsolete, damaged or defective:
Some expired inventory accumulates in the regular course of
business. This inventory is returned to either the wholesaler
or the manufacturer for full or partial credit, depending on the
manufacturer's policy. The effect of this is recorded as part
of cost of goods sold.
Schedule 4(n)
Contracts
List of the following types of agreements to which either of the
Companies is a party:
(i) Lease of personal property in excess of $5,000 per year
a) Equipment leases for copiers with Northern Business
Machines.
b) Equipment lease for copiers with Duplitron.
c) Equipment lease for QS1 Pharmacy Computer System with
Business Credit Leasing.
(ii) Agreement for purchase or sale of inventory or goods sold in
ordinary course of business, performance of which will extend for
longer than 1 year, result in a loss to the Companies or involve
consideration in excess of $5,000
Sales Agreement with James Daly, Inc., dated June 1994, to
purchase primary requirements of inventory at all stores except
Newton and Westwood.
Security agreements with McKesson Drug, Inc. include provisions to
purchase primary requirement of inventory at Newton and Westwood
stores.
Oral agreement with American Greeting, Inc. ( AGI), whereby AGI
shall be the principal vendor of greeting cards at Westwood and
Danvers stores from August 1995 to August 2000.
Exclusive purchase and supply agreement with The Hudson Group,
whereby Eaton Apothecary agrees to purchase all of its books and
periodicals from Hudson for a period of 3 years.
(iii) Partnership or joint venture agreements
None
(iv) Agreement of guaranty in excess of $5,000 or under which a Security
Interest is imposed on any of the Companies assets
1) Security agreement between D.A.W. and James W. Daly, dated
June 1994, executed in connection with promissory notes
described in notes to financial statements. (all assets)
2) Security agreements between D.A.W. and McKesson, dated
July 5, 1994, executed in connection with promissory notes
described in notes to financial statements. (all assets)
3) Security agreement, between D.A.W. and Donald Blodgett
dated June 1994, executed in connection with notes described
in notes to financial statements. (inventory and proceeds of
two Marblehead stores and Salem store pari passu with Eileen
Dumouchel)
4) Security agreement between D.A.W. and Eileen Dumouchel,
dated June 1994, executed in connection with a promissory
note of even date described in notes to financial statements.
(inventory and proceeds of two Marblehead stores and Salem
store pari passu with Donald Blodgett)
5) Security agreement between Woodman Drug Co., Inc. and
D.A.W., dated January 8, 1995, executed in connection with a
promissory note of even date described in notes to financial
statements. (inventory and proceeds of Danvers store pari
passu with Merchant Apothecary, Inc.)
6) Security Agreement between Merchant Apothecary, Inc. and
Dumouchel Apothecary, dated November 1, 1994, executed in
connection with a promissory note of even date described in
notes to financial statements. (inventory and proceeds of
Danvers store pari passu with Woodman Drug Co., Inc.)
7) Security Agreement between Three S Pharmacy, Inc. and
D.A.W., dated August 14, 1995, executed in connection with
note described in notes to financial statements. (inventory
and proceeds of Westwood store.)
(v) Confidentiality or non-competition agreements
1) Non-competition provision contained in a purchase agreement
between Merchant Apothecary, Inc., its shareholders and
D.A.W., dated November 1, 1994, whereby Merchant and its
shareholders agreed not to participate in any retail pharmacy
or health and beauty aids business within 5 mile radius of 36
Maple Avenue, Danvers, for a period of 3 years.
2) Non-competition provision contained in a purchase agreement
between Woodman Drug Co., Inc., its shareholders and D.A.W.,
dated January 8, 1995, whereby Woodman and its shareholders
agreed not to participate in any retail pharmacy or health and
beauty aids business within 5 mile radius of 1 Elm Street,
Danvers for a period of 3 years.
3) Non-competition provision in an agreement between Three S
Pharmacy, Inc. and D.A.W., dated August 1, 1995, whereby
Three S agreed not to compete in the operation of retail drug
store in Westwood for a period of 5 years.
4) Non-competition provision in a purchase agreement with
Jenrick Corp. not to open a drug store within 5 miles of 57
Dodge Street, Beverly, MA until July 1, 1997.
5) Non-competition provision contained in an agreement with Rite
Aid of Massachusetts, Inc. , dated October 14, 1994, whereby
D.A.W. agreed not to participate in any retail pharmacy or
health and beauty aids business within 3 miles of 222 Main
Street, Townsend, MA for a period of 5 years.
6) Non-competition covenants contained in equipment leases with
Northern Business Machines, Inc., whereby Eaton Apothecary
shall not engage in the business of photocopying or provide
photocopy services to the public within a 25-mile radius.
(vi) Agreements with any Sellers or their Affiliates
None
(vii) Profit sharing, stock option or similar plan or agreement
None
(viii) Collective bargaining agreement
None
(ix) Employment agreement for compensation in excess of $30,000
per year or providing severance benefits
None
(x) Agreements under which Companies loaned or advanced any
money to any director, officer or employee outside ordinary
course of business
None
(xi) Any agreement the termination or default of which could
have a material adverse effect on the Companies
None
(xii) Any other agreement involving consideration in excess of
$5,000
Consulting contract with Paul Dumouchel to provide health
insurance coverage for life as well as four season
tickets to New England Patriots games, at no expense to
Paul Dumouchel.
Oral agreement with Eileen Dumouchel obligating D.A.W.
to include her in any group insurance coverage, at no
expense to Eileen Dumouchel.
Numerous agreements exist between D.A.W. and various
third party payors (copies not provided).
Any of the above agreements that will not continue to be
valid and enforceable following the consummation of the
Transaction:
See Schedule 4(c)
Schedule 4(q)
List of all insurance policies to which the Companies are a
party, a named insured or otherwise a beneficiary
A. General Liability policy
(i) name, address, telephone number of agent
Gary Nagle
Fred O. Johnson Co., 555 Washington Street, Wellesley, MA
(617) 235-0502
(ii) name of insurer, policyholder and each covered insured
Insurer: Continental Insurance Company
Insured: Dumouchel Apothecary of Waltham, Inc.
Strand Pharmacy, Inc.
Eaton Apothecary, Inc.
(iii) policy number and period of coverage
Policy #:11BC08071397-96
Coverage period:7/28/95-7/28/96 (Currently being
renewed)
(iv) scope and amount of coverage
Liability coverage: Occurrence Basis
$1,000,000 occurrence basis
$1,000,000 premises
$1,000,000 products & completed operations
$1,000,000 total aggregate limit
$ 50,000 fire legal liability
$ 5,000 medical payments
$5,000,000 umbrella policy
No deductibles on liability claims
(v) any retroactive premium adjustments or other loss-sharing
arrangements
None
B. Workers-Compensation policy
(i) name, address, telephone number of agent
First Cardinal Corporation
1A Pine West Plaza
Albany, NY 12205
1-800-438-0160
(ii) name of insurer, policyholder and each covered
insured
Insurer: Massachusetts Retail Merchants
Workers-Compensation Trust
Insured: Dumouchel Apothecary of Waltham, Inc.
(iii) policy number and period of coverage
Policy #:624-03
Coverage period:1/1/96-1/1/97
(iv) scope and amount of coverage
Workers-Compensation:
In accordance with Massachusetts law
Employers-Liability:
Bodily injury by accident - $100,000 / accident
Bodily injury by disease - $100,000/employee
$500,000 policy limit
(v) any retroactive premium adjustments or other
loss-sharing arrangements
None
Companies are in breach or default of the
following policies:
None.
Policies which have been repudiated (in whole or
part) by any party thereto:
None
Schedule 4(r) Litigation
Injunctions, judgments, decrees or rulings against
Companies
None
Pending or threatened litigation against the
Companies:
a) C.A. No. 95-00136, Suffolk Superior Court;
Companies are represented by Latronico &
Whitestone. Copies of complaint, answer and
amended complaint are attached hereto.
b) Potential litigation between Eaton Apothecary
and Northern Business Machines. See
correspondence attached.
Any of the foregoing that could have a material
adverse effect on the Companies:
a) Potential loss would be covered by an
insurance policy.
Schedule 4(z) Related party transactions
Direct or indirect ownership by Sellers or their Affiliates of any assets
used in the business by the Companies or direct or indirect engagement by
Sellers or their Affiliates in any transaction with the Companies
Mark Dumouchel owns a vehicle used by the Dorchester store as
a delivery vehicle. Ownership will be transferred to D.A.W.
Schedule 5(b) Third party consents to the Transaction requested by Buyer
Consents of Landlord
1. Angus Realty Corp. -
1077 Osgood Street, Andover, MA
2. J. Arthur Booras, Jr. and Frances J. Booras, Trustees -
47 Elm Street, Danvers, MA
3. Goode Management, Inc. -
683 High Street, Westwood, MA
4. Crosby Realty Trust -
111 Canal Street, Salem, MA
122 Washington Street, Marblehead, MA
5. Newton Lodge of Elks, #1327 BPOE -
425 Center Street, Newton, MA
6. 31-35 Atlantic Avenue Corporation -
31 Atlantic Avenue, Marblehead, MA
7. Edwaar Realty Trust -
241 Humphrey Street, Marblehead, MA
8. Abbott Estates -
264 & 266 Washington Street, Wellesley, MA
Consent of Insurer
1. Consent by Gary Nagle, as representative of Continental
Insurance Company.
EXHIBITS TO THE AGREEMENT
Exhibit A -- Matters to be Addressed by Opinion of Seller's Counsel
Exhibit B -- Matters to be Addressed by Opinion of Buyer's Counsel
Exhibit B-1 -- Form of Service Agreement
Exhibit C -- Form of Employment Agreements
Exhibit D -- Form of Shareholders' Agreement
STOCK EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
EXHIBIT B
SERVICE AGREEMENT
SERVICE AGREEMENT
THIS AGREEMENT entered into as of this 5th day of August,
1996, by and between NYER MEDICAL GROUP, INC. (the "Company") and
D.A.W., INC. (the "Operating Company").
WHEREAS, the Company is a publicly-held corporation
responsible for complying with the reporting provisions of the
Securities Exchange Act of 1934 (the "Exchange Act"); and
WHEREAS, the Operating Company is engaged in the business of
owning and operating retail pharmacies in Massachusetts (the
"Business"); and
WHEREAS, the Operating Company would like to contract for the
benefit of the experience, assistance, and services of the Company
under the terms and conditions hereinafter set forth, and the
Company is willing and desirous of providing such benefits and
services to the Operating Company.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements of the parties hereto, it is agreed as
follows:
1. Duties. The Operating Company hereby contracts with
the Company for the Company to assist in the management, supervision and
operation of the Business as may from time to time be requested by the Operating
Company by rendering to the Business the services herein contemplated. The
Company shall make available to the Operating Company, upon request by the
Operating Company, the following services:
(a)The Company shall provide such assistance to the
Operating Company's bookkeeping and record-keeping as may be
reasonably necessary for the Company to comply with its
responsibilities under the Exchange Act.
(b)Based upon raw data supplied by the Operating
Company, the Company shall supply monthly, quarterly and
annual financial statements and reports.
(c)The Company shall supply such financial systems and
internal controls reasonably necessary for the Operating
Company to implement and which are reasonably necessary for
the Company to comply with the requirements of the Exchange
Act.
(d)The Company shall provide or make available to the
Operating Company all necessary professional services relating
to the Company's obligations under the Exchange Act. The
Company is authorized to employ and contract with any and all
professionals reasonably necessary for the performance of its
obligations hereunder.
2. Term. The term of this Agreement shall commence on the
date of its execution and shall expire at such time as the Company shall no
longer own a majority of the capital stock of the Operating Company.
3. Authority of the Company. The Company shall have full
power and authority to take all actions and do all things necessary or reason-
ably proper to provide the services specified in Section 1 above. General
overall policies, however, shall be established and controlled by the board of
directors of the Operating Company. Specifically, the day to day management of
the Operating Company shall be directed by its Management team comprised of Mark
Dumouchel, David Dumouchel, Michael Curry, Donato Mazzola and Wayne Gunter.
4. Payments by the Operating Company. For the services
outlined in this Agreement, the Operating Company shall pay to the Company a
fee equal to one-third of one percent of the Operating Company' net sales for
the prior fiscal quarter which sum shall be payable 15 days following the
conclusion of each fiscal quarter. If the net sales for any applicable fiscal
quarter are later adjusted, an appropriate payment or credit shall be made forth
with. Additionally, the Operating Company shall promptly reimburse the Company
for the additional legal, auditing and accounting fees attributable to the
Operating Company. In addition, the Operating Company shall reimburse the
Company for any other out-of-pocket expenses reasonably incurred by the Company
in performing its duties pursuant to this Agreement.
5. Operating Policies. The Company recognizes and agrees
that the broad general operating policies of the Operating Company and the
Business must necessarily be determined exclusively by the board of directors
of the Operating Company notwithstanding any contrary provision which may
appear herein. The Company shall faithfully and efficiently implement and carry
out those policies under direction and at the request of the Chief Executive
Officer of the Operating Company.
6. Employees of the Company. The persons providing
services to the Operating Company on behalf of the Company pursuant to this
Agreement are employees of the Company and not of the Operating Company.
These employees are under the complete control, supervision and direction of
the Company.
7. Separability of Provisions. If any provision of this
Agreement shall be held or deemed to be, or shall in fact be, invalid,
inoperative or unenforceable because of the conflict of such provision with any
constitution, statute, rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering any other provision of this
Agreement invalid, inoperative or unenforceable, but this Agreement shall be
reformed and construed as if such invalid, inoperative or unenforceable
provision had never been contained herein and such provision reformed so that
it would be valid, operative and enforceable to the maximum extent permitted.
8. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
9. Benefit. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their legal representatives,
successors and assigns.
10. Notices and Addresses. All notices, offers, acceptance
and any other acts under this Agreement (except payment) shall be in writing,
and shall be sufficiently given if delivered to the addressees in person, by
Federal Express or similar receipted delivery, by facsimile delivery or, if
mailed, postage prepaid, by certified mail, return receipt requested, as
follows:
OPERATING COMPANY: D.A.W., Inc.
264 R. Washington Street
Wellesley Hills, MA 02181
Facsimile (617) 237-7278
with a copy to: Gayle Ehrlich, Esq.
Sullivan & Worcester, LLP
One Post Office Square
Boston, MA 02109
Facsimile (617) 338-2880
COMPANY Mr. Samuel Nyer, President
Nyer Medical Group, Inc.
1292 Hammond Street
Bangor, ME 04401
Facsimile (207) 989-1101
with a copy to: Michael D. Harris, Esq.
Cohen, Chernay, Norris,
Weinberger & Harris
712 U.S. Highway One
North Palm Beach, FL 33408
Facsimile (407) 845-0108
or to such other address as either of them, by notice to the other
may designate from time to time. The transmission confirmation
receipt from the sender's facsimile machine shall be conclusive
evidence of successful facsimile delivery, provided such facsimile
is concurrently transmitted with an original by Federal Express or
similar receipted delivery. Time shall be counted to, or from, as
the case may be, the delivery in person or by mailing.
11. Attorney's Fees. In the event that there is any
controversy or claim arising out of or relating to this Agreement,
or to the interpretation, breach or enforcement thereof, and any
action or proceeding including an arbitration proceeding is
commenced to enforce the provisions of this Agreement, the
prevailing party shall be entitled to an award by the court or
arbitrator, as appropriate, of reasonable attorney's fees, costs
and expenses.
12. Governing Law. This Agreement and any dispute,
disagreement, or issue of construction or interpretation arising
hereunder whether relating to its execution, its validity, the
obligations provided herein or performance shall be governed or
interpreted according to the internal laws of the Commonwealth of
Massachusetts without regard to choice of law considerations.
13. Oral Evidence. This Agreement constitutes
the entire Agreement between the parties and supersedes all prior oral
and written agreements between the parties hereto with respect to the
subject matter hereof. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally,
except by a statement in writing signed by the party or parties
against which enforcement or the change, waiver discharge or
termination is sought.
14. Section or Paragraph Headings. Section headings
herein have been inserted for reference only and shall not be deemed to
limit or otherwise affect, in any matter, or be deemed to interpret
in whole or in part any of the terms or provisions of this Agreement.
15. Arbitration. Any controversy, dispute or claim
arising out of or relating to this Agreement, or its interpretation,
application, implementation, breach or enforcement which the
parties are unable to resolve by mutual agreement, shall be settled
by submission by either party of the controversy, claim or dispute
to binding arbitration in Boston, Massachusetts (unless the parties
agree in writing to a different location), before a single
arbitrator in accordance with the rules of the American Arbitration
Association then in effect. In any such arbitration proceeding the
parties agree to provide all discovery deemed necessary by the
arbitrator. The decision and award made by the arbitrator shall be
final, binding and conclusive on all parties hereto for all
purposes, and judgment may be entered thereon in any court having
jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
WITNESSES: OPERATING COMPANY:
D.A.W., INC.
By: /s/
Mark A. Dumouchel, President
COMPANY:
NYER MEDICAL GROUP, INC.
By: /s/
Samuel Nyer, President
STOCK EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
EXHIBIT C
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 5th day of
August 1996, among D.A.W., Inc. ("D.A.W."), a Massachusetts
corporation, F.M.T. Franchise Company, Inc. ("F.M.T."), a
Massachusetts corporation (D.A.W. together with F.M.T. and any
subsidiaries now existing or hereafter incorporated, collectively
the "Companies"), Nyer Medical Group, Inc. ("Nyer") and
(the "Employee").
WHEREAS, the Companies are presently primarily engaged in the
operation of pharmacies in Massachusetts;
WHEREAS, F.M.T. was formed for the purpose of developing
franchise arrangements of the Eaton Apothecary business; and
WHEREAS, the Companies are desirous of employing the Employee
to render certain services in connection with the business of the
Companies and the Employee is desirous of entering into such
employment.
NOW, THEREFORE, in consideration of the mutual covenants and
promises set forth herein, the parties hereto agree as follows:
1. Undertakings of Nyer. Nyer has contemporaneously
herewith paid to the Employee $65,000 in consideration of the
Employee's undertakings pursuant to Section 7(a) hereof and in
further consideration of the undertakings of other employees
constituting the Management Team (defined below) who will provide
similar efforts to those set forth in Section 4(b) hereof, has
delivered to Sullivan & Worcester, LLP ("Sullivan & Worcester") 20%
of the outstanding shares of Class B Common Stock of F.M.T. (the
"Class B Shares"). Nyer shall have neither any obligations nor any
rights in regard to any provisions of this Agreement except for the
undertakings set forth in this Section 1.
2. Term of Employment.
(a)Term. The Companies hereby employ
the Employee, and the Employee hereby accepts employment with
the Companies, for a period commencing on the date first written
above and ending five years thereafter. However, this Agreement
shall be renewable on the same terms (except for this provision)
for an additional five-year term at the sole option of the
Employee by the giving of notice to the Companies not less than
30 days prior to the expiration of the initial term.
(b)Operational Control. The day-to-day operations of
the Companies shall be managed and directed by those persons
listed on Schedule 2(b), which Schedule includes the Employee
(such persons collectively, the "Management Team").
3. Duties.
(a)General Duties. The Employee shall serve as
____________________ of the Companies with duties, authority
and responsibilities that are consistent with the Employee's
duties, authority and responsibilities as of the date of this
Agreement. The Employee shall also perform substantially
similar services of the Companies as may be necessary upon the
request of Companies' president or its board of directors.
The Employee shall use his best efforts to perform his duties,
exercise his authority and discharge his responsibilities
pursuant to this Agreement competently, carefully and
faithfully. In determining whether or not the Employee has
used his best efforts hereunder, the Employee's and the
Companies' delegation of authority and all surrounding
circumstances shall be taken into account.
(b)Devotion of Time. Subject to the last sentence of
this Section 3(b) the Employee shall devote all of his time,
attention and energies during normal business hours (exclusive
of periods of sickness and disability and of such normal
holiday and vacation periods as have been established by the
Companies) to the affairs of the Companies The Employee shall
not enter the employ of or serve as a consultant to, or in any
way perform any services with or without compensation to, any
other persons, business or organization without the prior
consent of the board of directors of the Companies; provided,
that the Employee shall be permitted to devote a limited
amount of his time, without compensation, to professional,
charitable or similar organizations and to oversee personal
investments.
(c)Adherence to Inside Information Policies. The
Employee acknowledges that Nyer, the principal shareholder of
the Companies, is publicly-held and, as a result, has
implemented inside information policies designed to preclude
its employees and those of its subsidiaries from violating the
federal securities laws by trading on material, non-public
information or passing such information on to others in breach
of any duty owed to Nyer or its subsidiaries including the
Companies. The Employee shall promptly execute any agreement
generally distributed by Nyer to its employees requiring such
employees to abide by its inside information policies.
4. Compensation.
(a)Salary. D.A.W. agrees to pay the Employee a salary
of $65,000 per year, payable in accordance with D.A.W.'s
customary payroll practices. The salary shall be adjusted on
each July 1st starting July 1, 1998 based upon the increase in
the Consumer Price Index (the "Index") (all urban consumers)
published by the Bureau of Labor Statistics, Atlanta, Georgia.
For purposes of adjusting the annual salary, the salary for the
immediately completed 12-month period shall be multiplied by a
fraction consisting of the U.S. City Average for all items
(1982-84 = 100) for the last day of June prior to making the
adjustment, divided by the U.S. City Average for all items
(1982-84 = 100) for June of the prior 12-month period. By way
of example, effective on July 1, 1998, the Executive's new
salary shall be $65,000 times a fraction in which the numerator
is the Index for June 1998 and the denominator is June 1997.
In the event that the methodology in computing the Index is
changed or the Bureau of Labor Statistics ceases publishing the
Index, then the intent of the parties to this Agreement is that
a comparable widely recognized price index be utilized to
determine the annual increase in cost of living.
(b)In consideration of the Employee's diligent efforts
on behalf of F.M.T. in pursuing the development, growth and
general business of F.M.T., the Employee shall, with each of the
other members of the Management Team, on each of the first
through fifth anniversary of this Agreement, providing the
Employee is then in the employment of D.A.W., receive an
aggregate amount of Class B equal to at 4% of the Class B Shares
outstanding. In order to assure the prompt distribution to the
Employee of the Class B Shares, Nyer has caused a certificate
representing 20% of the outstanding Class B Shares to be
deposited with the Companies' counsel, Sullivan & Worcester,
together with an Escrow Agreement and Instructions authorizing
Sullivan & Worcester to distribute 20% of the Class B Shares
represented by the deposited certificate on each of the first
through fifth anniversaries of this Agreement to Employee, or
if Employee is no longer in the employment of D.A.W., to such
members of the Management Team who are so employed.
(c)Bonus. During the term of this Agreement, as
further consideration for the services to be rendered pursuant
to its Agreement, D.A.W. shall pay the Employee an annual bonus
equal to his pro-rata share of 10% of the Companies' annual
pre-tax net operating income in excess of $450,000 (the "Bonus
Pool") distributed among members of the Management Team
employed by D.A.W. during any portion of an applicable 12-month
period pro-rated for less than full 12-month periods. If one
or more of the other members of the Management Team is no longer
employed by D.A.W. and D.A.W. employs any new employees who
receive a portion of the Bonus Pool, the Employee's pro-rata
portion shall be reduced provided, however, that in no event
shall the Employee's bonus be less than 2% of the Companies'
aggregate annual pretax net operating income in excess of
$450,000. Such bonus shall be paid within 10 days of receipt
of the Companies' annual audited financial statements, or
if none are prepared, within 10 days of receipt by Nyer of its
annual consolidated audited financial statements. In this
latter event, the Companies' annual financial statements shall
be reviewed and derived from the audited consolidated financial
statements of Nyer before inter-company adjustments.
5. Other Benefits. At all times during the term of this
Agreement:
(a)Health and Dental Medical Coverage. The Employee
shall be entitled to receive, at D.A.W.'s sole expense, medical
and dental insurance coverage consistent with D.A.W.'s policy
and plans as in existence on December 15, 1995. However, should
D.A.W. in the future find it necessary or advisable to change
its medical and dental plans it shall have the ability to do
so providing such change affects all employees of D.A.W. and
not just the Employee.
(b)Life Insurance Coverage. D.A.W. shall, at its sole
expense, maintain term life insurance policies on the life of
the Employee in the aggregate amount of $800,000, including,
a separate single policy in the amount of $300,000, which policy
the Employee's designee shall be the owner and beneficiary.
(c)Automobile Insurance and Non-Accountable Allowance.
D.A.W. shall provide to the Employee, at D.A.W.'s sole expense,
full insurance coverage on the Employee's personal vehicle
consistent with the coverage in effect on the Employee's vehicle
as of the date hereof. In addition, D.A.W. shall pay to the
Employee a non-accountable allowance of $300 per month as
reimbursement for the use of his personal vehicle for any
business purposes which may be required of him during his
employment with D.A.W.
(d)Vacation. During each 12-month period of this
Agreement, the Employee shall be entitled to two weeks paid
vacation including those vacations set forth on Schedule 5(d)
hereof.
(e)Other Benefits. D.A.W. shall provide such other
additional vacation and sick leave, as is provided by Nyer to
its management personnel. Such additional benefits currently
comprise those benefits set forth on Schedule 5(e) hereof.
6. Termination.
(a)Termination for Cause. the Companies may terminate
the Employee's employment pursuant to the terms of this
Agreement at any time for cause by giving written notice of
termination. Such termination will become effective upon the
giving of such notice. Upon any termination for cause, the
Employee shall have no right to compensation, or reimbursement
under Section 4 or to participate in any employee benefit
programs under Section 5 for any period subsequent to the
effective date of termination. For purposes of this Section
6(a), "cause" shall mean: (i) the Employee is convicted of a
misdemeanor involving moral turpitude or a felony; (ii) the
Employee, in carrying out his duties hereunder, has acted with
ordinary negligence, gross negligence or intentional
misconduct resulting, in any case, in material harm to the
Companies, except for a dispensing error; (iii) the Employee
misappropriates Companies' funds or otherwise defrauds the
Companies; (iv) the Employee breaches his fiduciary duty to
the Companies resulting in profit to him, directly or
indirectly; (v) the Employee materially breaches any agreement
with the Companies; (vi) the Employee breaches any provision
of Section 7 or Section 8; (vii) the Employee fails to
competently perform his duties under Section 3, except for a
dispensing error; (viii) the Employee suffers from alcoholism
or drug addiction or otherwise repeatedly uses prescription or
illegal drugs in any form except strictly in accordance with
the orders of a physician or dentist; or (ix) the Employee
fails to comply with Section 3(c) or otherwise breaches any
written agreement to comply with Nyer's inside information
policies. In the case of the occurrence of item (vii), the
Employee shall be entitled to 60 days' notice and an
opportunity to cure the cause.
(b)Death or Disability. Except for the conditions and
obligations contained in this Section 6(b), this Agreement and
the obligations of the Companies hereunder will terminate upon
the death or disability of the Employee. For purposes of this
Section 6(b), disability shall mean four consecutive months in
any 12-month period the Employee is incapable of substantially
fulfilling the duties set forth in Section 3 because of
physical, mental or emotional incapacity resulting from
injury, sickness or disease. However, the references in
Section 6(a)(viii) above shall not be deemed a "disability" as
defined in this Section 6(b).
Upon termination by death or disability, D.A.W. will pay
the Employee or his legal representative, as the case may be
his annual salary at such time pursuant to Section 4(a) and
(b) through the date of such termination of employment. Such
sum shall be paid upon the same terms and conditions as if
this Agreement were in full force and effect.
(c)Continuing Effect. Notwithstanding any termination
of the Employee's employment at the end of the Term or
otherwise, as provided in this Section 6 or otherwise, the
provisions of Sections 7, 8 and 9 of this Agreement shall
remain in full force and effect, except as specifically
provided in Section 7(d) hereof.
7. Non-Competition Agreement.
(a)Competition With The Companies. In consideration of
the receipt of $65,000 from Nyer, during the first five-year
term of this Agreement until termination of his employment and
for a period of 12 months commencing on the date of
termination, the Employee, directly or indirectly, in
association with or as a stockholder, director, officer,
consultant, employee, partner, joint venturer, member or
otherwise of or through any person, firm, corporation,
partnership, association or other entity, will not compete
with the Companies in the offer, sale or marketing of products
or services that are competitive with the products or services
offered by the Companies, within any county in which the
Companies are then engaged in the offer and sale of
competitive products or services; provided, however, the
foregoing shall not prevent the Employee from accepting
employment with an enterprise engaged in two or more lines of
business, one of which is the same or similar to the
Companies' business (the "Prohibited Business") if the
Employee's employment is totally unrelated to the Prohibited
Business; provided, further, the foregoing shall not prohibit
the Employee from owning up to two percent of the securities
of any publicly-traded enterprise provided the Employee is not
an employee, director, officer, consultant to such enterprise
or otherwise reimbursed for services rendered to such
enterprise. After the first five-year term of this Agreement,
the 12-month non-compete provision shall be reduced to six
months commencing on the date of termination.
(b)Solicitation of Customers. During the period in
which the provisions of Section 7(a) shall be in effect, the
Employee, directly or indirectly, will not seek Prohibited
Business from any Customer (as defined below) on behalf of any
enterprise or business other than the Companies, refer
Prohibited Business from any Customer to any enterprise or
business other than the Companies or receive commissions based
on sales or otherwise relating to the Prohibited Business from
any Customer, or any enterprise or business other than the
Companies. For purposes of this Section 7(b), the term -
"Customer" means any person for whom the Companies or any of
its subsidiaries sold prescriptions during the 24-month period
prior to the date of termination of employment.
(c)Limitation. Notwithstanding anything herein to the
contrary, if (i) the Employee voluntarily terminates his
employment with the Companies or the Companies terminates the
Employee's employment with the Companies, and (ii) both of the
designees of Nyer have not voted to elect one of the five
members of the Management Team to be the Chief Executive
Officer of D.A.W. and any affiliates thereof, the provisions
of this Section 7 shall not be enforceable.
8. Nondisclosure of Confidential Information. The
Employee acknowledges that during his employment he will learn
and will have access to confidential information regarding the
Companies and its subsidiaries, including without limitation
(i) confidential or secret plans, programs, documents,
agreements or other material relating to the business, services
or activities of the Companies and its affiliates and (ii) trade
secrets, market reports, customer investigations, customer lists
and other similar information that is proprietary information
of the Companies or its affiliates (collectively referred to as
"Confidential Information"). The Employee acknowledges that
such Confidential Information as is acquired and used by the
Companies is a special, valuable and unique asset. All records,
files, materials and confidential information obtained by the
Employee in the course of his employment with the Companies are
confidential and proprietary and shall remain the exclusive
property of the Companies or its affiliates, as the case may be.
The Employee will not, except in connection with and as required
by his performance of his duties under this Agreement, for any
reason use for his own benefit or the benefit of any person or
entity with which he may be associated or disclose any such
Confidential Information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever
without the prior written consent of the board of directors of
the Companies, unless such Confidential Information
previously shall have become public knowledge through no action
by or omission of the Employee.
9. Equitable Relief.
(a)the Companies and the Employee recognize that the
services to be rendered under this Agreement by the Employee
are special, unique and of extraordinary character, and that
in the event of the breach by the Employee of the terms and
conditions of this Agreement or if the Employee, without the
prior consent of the board of directors of the Companies shall
leave his employment for any reason and take any action in
violation of Section 7 or Section 8, the Companies will be
entitled to institute and prosecute proceedings in any court
of competent jurisdiction referred to in Section 9(b) below,
to enjoin the Employee from breaching the provisions of
Section 7 or Section 8. In such action, the Companies will
not be required to plead or prove irreparable harm or lack of
an adequate remedy at law or post a bond. Nothing contained
in this Section 9 shall be construed to prevent either party
from seeking such other remedy in arbitration pursuant to
Section 9 in case of any breach of this Agreement by the
other.
(b)Any proceeding or action must be commenced in state
or federal courts in Boston, Massachusetts. The Employee and
the Companies irrevocably and unconditionally submit to the
personal jurisdiction of such courts and agree to take any and
all future action necessary to submit to the jurisdiction of
such courts. The Employee and the Companies irrevocably waive
any objection that they now have or hereafter may have to the
laying of venue of any suit, action or proceeding brought in
any such court and further irrevocably waive any claim that
any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. Final judgment
against the Employee or the Companies in any such suit shall
be conclusive and may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy or which shall
be conclusive evidence of the fact and the amount of any
liability of the Employee or the Companies therein described,
or by appropriate proceedings under any applicable treaty or
otherwise.
10. Severability.
(a) The Employee expressly agrees that the character,
duration and geographical scope of the provisions set forth in
this Agreement are reasonable in light of the circumstances as
they exist on the date hereof. Should a decision, however, be
made at a later date by a court of competent jurisdiction that
the character, duration or geographical scope of such
provisions is unreasonable, then it is the intention and the
agreement of the Employee and the Companies that this
Agreement shall be construed by the court in such a manner as
to impose only those restrictions on the Employee's conduct
that are reasonable in the light of the circumstances and as
are necessary to assure to the Companies the benefits of this
Agreement. If, in any judicial proceeding, a court shall
refuse to enforce all of the separate covenants deemed
included herein because taken together they are more extensive
than necessary to assure to the Companies the intended
benefits of this Agreement, it is expressly understood and
agreed by the parties hereto that the provisions of this
Agreement that, if eliminated, would permit the remaining
separate provisions to be enforced in such proceeding shall be
deemed eliminated, for the purposes of such proceeding, from
this Agreement.
(b) If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative or
unenforceable because of the conflict of such provision with
any constitution, statute, rule of public policy or for any
other reason, such circumstance shall not have the effect of
rendering any other provision of this Agreement invalid,
inoperative or unenforceable, but this Agreement shall be
reformed and construed as if such invalid, inoperative or
unenforceable provision had never been contained herein and
such provision reformed so that it would be valid, operative
and enforceable to the maximum extent permitted.
11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument. The execution of this Agreement may be by actual
or facsimile signature.
12. Benefit. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their legal
representatives, successors and assigns.
13. Notices and Addresses. All notices, offers, acceptance
and any other acts under this Agreement (except payment) shall
be in writing, and shall be sufficiently given if delivered to
the addresses in person, by Federal Express or similar receipted
delivery, by facsimile delivery promptly confirmed by first
class mail or, if mailed, postage prepaid, by certified mail,
return receipt requested, as follows:
EMPLOYEE:
c/o D.A.W., Inc.
264 R. Washington Street
Wellesley Hills, MA 02181
Facsimile: (617) 237-7278
COMPANIES: D.A.W., Inc.
F.M.T. Franchise Company, Inc.
264 R. Washington Street
Wellesley Hills, MA 02181
Facsimile: (617) 237-7278
with copies to: Gayle Ehrlich, Esq.
Sullivan & Worcester, LLP
One Post Office Square
Boston, MA 02109
Facsimile: (617) 338-2880
Nyer Medical Group, Inc.
1292 Hammond Street
Bangor, ME 04401
Facsimile: (207) 989-1101
Michael D. Harris, Esq.
Cohen, Chernay, Norris,
Weinberger & Harris, P.A.
712 U.S. Highway One
North Palm Beach, FL 33408
Facsimile: (407) 845-0108
or to such other address as either of them, by notice to the other
may designate from time to time. Time shall be counted to, or
from, as the case may be, (i) the delivery in person or by Federal
Express or similar receipted delivery, (ii) the actual receipt of
facsimiles, or (iii) three (3) business days after mailing.
14. Attorney's Fees. In the event that there is any
controversy or claim arising out of or relating to this Agreement,
or to the interpretation, breach or enforcement thereof, and any
action or proceeding including an arbitration proceeding is
commenced to enforce the provisions of this Agreement, the
prevailing party shall be entitled to an award by the court or
arbitrator, as appropriate, of reasonable attorney's fees, costs
and expenses.
15. Governing Law. This Agreement and any dispute,
disagreement, or issue of construction or interpretation arising
hereunder whether relating to its execution, its validity, the
obligations provided herein or performance shall be governed or
interpreted according to the internal laws of the Commonwealth of
Massachusetts without regard to choice of law considerations.
16. Oral Evidence. This Agreement constitutes the entire
Agreement between the parties and supersedes all prior oral and
written agreements between the parties hereto with respect to the
subject matter hereof. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally,
except by a statement in writing signed by the party or parties
against which enforcement or the change, waiver discharge or
termination is sought.
17. Additional Documents. The parties hereto shall execute
such additional instruments as may be reasonably required by their
counsel in order to carry out the purpose and intent of this
Agreement and to fulfill the obligations of the parties hereunder.
18. Section or Paragraph Headings. Paragraph headings
herein have been inserted for reference only and shall not be deemed to
limit or otherwise affect, in any matter, or be deemed to interpret
in whole or in part any of the terms or provisions of this
Agreement.
19. Arbitration. Except for a claim for equitable relief,
any controversy, dispute or claim arising out of or relating to
this Agreement, or its interpretation, application, implementation,
breach or enforcement which the parties are unable to resolve by
mutual agreement, must be settled by submission by either party of
the controversy, claim in dispute to binding arbitration in Boston,
Massachusetts (unless the parties agree in writing to a different
location), before a single arbitrator in accordance with the rules
of the American Arbitration Association then in effect. In any
such arbitration proceeding, the parties agree to provide all
discovery deemed necessary by the arbitrator. The decision to
award made by the arbitrator shall be final, binding and conclusive
in all parties hereto for all purposes, and judgement may be
entered thereon in any court having jurisdiction thereof.
20. Termination of Prior Agreement. The prior employment
agreement between the Companies and the Employee is terminated and
neither party has any liability to the other except accrued salary
due the Employee since the date of D.A.W.'s most recent payroll.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
WITNESSES: EMPLOYEE:
By: ____________________
COMPANIES:
D.A.W., INC.
By:
Mark Dumouchel, President
F.M.T. FRANCHISE COMPANY, INC.
By:
David Dumouchel, President
NYER MEDICAL GROUP, INC.
By:
Samuel Nyer, President
EMPLOYMENT AGREEMENT
SCHEDULE 2(b)
EMPLOYMENT AGREEMENT
SCHEDULE 2(b)
The Management Team will consist of the following individuals:
Mark Dumouchel
David Dumouchel
Michael Curry
Wayne Gunter
David Mazzola
EMPLOYMENT AGREEMENT
SCHEDULE 5(d)
EMPLOYMENT AGREEMENT
SCHEDULE 5(d)
The following individuals have accrued one (1) week of vacation as
of August 5, 1996:
Mark Dumouchel
David Dumouchel
Michael Curry
Wayne Gunter
David Mazzola
EMPLOYMENT AGREEMENT
SCHEDULE 5(e)
STOCK EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
EXHIBIT D
SHAREHOLDERS' AGREEMENT
SHAREHOLDERS' AGREEMENT
THIS AGREEMENT, entered into as of this 5th day of August,
1996, by and between Nyer Medical Group, Inc. ("Nyer"), Mark A.
Dumouchel, David Dumouchel, Lucille Curry, Michael Curry, Donato
Mazzola and Wayne Gunter (collectively the "Shareholders"); and
D.A.W., Inc. ("D.A.W.") and F.M.T. Franchise Co., Inc. ("F.M.T")
(D.A.W. and F.M.T. collectively the "Companies").
WHEREAS, Nyer entered into a Stock Exchange Agreement and Plan
of Reorganization as of August 5, 1996, by and among Nyer, the
Shareholders and the Companies, whereby Nyer acquired by exchange
with the Sellers 80% of the issued and outstanding Stock of each of
D.A.W. and Class A Common Stock of F.M.T. and acquired by purchase
100% of the Class B Common Stock of F.M.T.; and
WHEREAS, Nyer and the Shareholders wish to provide for
continuity of management and control of F.M.T. and D.A.W. and to
set forth the relative rights, duties and obligations of the
parties.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, it
is agreed as follows:
1. Board of Directors - F.M.T. and D.A.W. Nyer and the
Shareholders hereby agree that for so long as the Shareholders
collectively own 5% or more of the issued and outstanding Common
Stock of F.M.T. or D.A.W., the number of members to serve on the
board of directors of that company (either F.M.T. or D.A.W. or
both) in which the Shareholders own at least 5% of the issued and
outstanding Common Stock shall be set at five, and Nyer and the
Shareholders further agree that two board members shall be
designated by Nyer and shall be a Nyer employee, officer or
director, two board members shall be designated by the
Shareholders, and the fifth member shall be jointly selected by
Nyer and the Shareholders. Nyer and the Shareholders agree that
the fifth board member shall have no affiliation with either Nyer
or the Shareholders. Nyer and the Shareholders agree to vote all
their shares of the Companies (the "Shares") for these purposes at
all annual and special meetings of the shareholders and in any
action by written consent.
2. Board of Directors - Nyer. For so long as the
Shareholders' collectively own 5% or more of the Shares of F.M.T.
and D.A.W. and Nyer owns any F.M.T. or D.A.W. Shares, Nyer shall
appoint and take all reasonable action to elect one person
designated by the Shareholders to Nyer's board of directors.
3. Term of this Agreement. This Agreement shall commence
as of the date of execution and shall remain in force for so long as any of
the Shareholders own Shares of either D.A.W. or F.M.T.
4. Shares Subject to Agreement. All Shares of F.M.T. and
of D.A.W. owned of record or beneficially or hereafter acquired by Nyer shall
be subject to this Agreement. Except as specifically provided in this
Agreement, F.M.T. and D.A.W. shall have no obligation to recognize the
ownership, beneficial or otherwise, of any such Shares that are sold, assigned
or transferred whether voluntarily, by will, laws of descent and distribution,
by court order, by operation of law or otherwise, unless and until such
transferee agrees to be bound by the provisions of this Agreement.
5. Extraordinary Transactions. Nyer and the Shareholders
shall not vote any of their Shares of D.A.W. or of F.M.T. in favor
of, nor consent to, (i) any merger of F.M.T. or D.A.W. unless 80%
of the Board of Directors vote for such merger as the case may be
into another entity or a merger of such entity into F.M.T. or
D.A.W., (ii) the sale of all or substantially all of the assets of
F.M.T. or D.A.W. as the case may be unless 80% of the Board of
Directors vote for such sale, or (iii) any other extraordinary
transactions including F.M.T. or D.A.W. unless 60% of the Board of
Directors vote in favor of such extraordinary transaction.
6. Operations. The day-to-day operations of D.A.W. and
F.M.T. shall be managed by the Shareholders. The Shareholders are
hereby irrevocably authorized and directed to take all actions that
they deem appropriate or advisable to manage the day-to-day
operations of D.A.W. and F.M.T. Nyer shall not take any action to
cause, or through its inaction allow, the revocation of such
authorization. Nyer, its successors and assigns, shall not take
part in or interfere with the management of the day-to-day
operations of D.A.W. or F.M.T. Notwithstanding the foregoing, the
business and affairs of D.A.W. and F.M.T. shall be managed under
the direction of the board of directors. The policies and powers
customarily exercised by a board of directors shall be exercised by
the respective board of directors of D.A.W. and F.M.T. In addition
to those matters customarily reserved to the board of directors,
the respective board of directors of D.A.W. and F.M.T. shall have
the exclusive authority with respect the following matters:
(i) Spending of any portion of the $800,000 received by
F.M.T. from Nyer pursuant to a Stock Exchange
Agreement and Plan of Reorganization, for purposes
of acquisition, expansion or improvement of
D.A.W.'s or F.M.T.'s businesses (either existing
stores or acquisition or construction of new
stores) or similar purposes;
(ii) The entry of D.A.W. or F.M.T. into any agreement or
transaction or related series of agreements or
transactions involving the sum of $10,000 or more
except in the ordinary course of business;
(iii) Any agreement in which D.A.W. or F.M.T. is a party
by the terms of which may last for one year or more
except in the ordinary course of business and
except for continuing obligations imposed by
existing agreements, attached hereto as Schedule
6(iii), relating to medical and dental expenses of
Paul Dumouchel and Eileen Dumouchel;
(iv) The organization of any new subsidiaries or the
entry into any joint ventures, partnerships, or
other similar relationships with third parties;
(v) All matters relating to the Employment Agreements
of the officers of D.A.W. or F.M.T. including the
amendment of such Employment Agreements, and any
direct or indirect transaction between D.A.W. or
F.M.T. and officers of D.A.W. or F.M.T. or their
family members. As used in this Agreement, the
term "family members" shall mean the spouses,
parents, children, grandchildren, and fathers-in-
law, mothers-in-law or brothers or sisters-in-law
or any entity or partnership controlled by or under
common control with such persons.;
(vi) Any sale of assets of D.A.W. or F.M.T. except in
the ordinary course of business;
(vii) The purchase or sale of securities by D.A.W. or
F.M.T.;
(viii) The issuance by D.A.W. or F.M.T. of any promissory
notes to banks or any other parties;
(ix) The opening of any bank and money market accounts
for D.A.W. or F.M.T. Provided, however, the
officers of D.A.W. and F.M.T. shall have the
exclusive authority to execute checks and other
instruments with regard to the funds of such bank
and money market accounts except for the $800,000
received by F.M.T. from Nyer which shall require
two signatures, one of which shall be of a person
designated by Nyer and one of which shall be of a
person designated by the Shareholders;
(x) The issuance of any guarantees by D.A.W. or F.M.T.;
and
(xi) The establishment of any committees of the
respective board of directors of D.A.W. or F.M.T.
additionally, in the event that the Commonwealth of
Massachusetts adopts legislation permitting close
corporations to restrict the authority of a board of
directors, such legislation shall not apply to D.A.W.
and F.M.T. without the unanimous consent of the holders
of all outstanding Shares. Each of Nyer and the
Shareholders shall cause its designees to D.A.W.'s and
F.M.T.'s board of directors to act in good faith in
exercising his authority.
7. Right of First Refusal of Shareholders.
(a)If Nyer intends or proposes to sell, transfer or
otherwise dispose of all or any Shares of D.A.W. or of F.M.T.
Shares in which it has any interest to any person or entity
who is not a Shareholder (a "Transfer"), Nyer shall advise
each of the Shareholders by written notice (the
"Notification") of such intention or proposal, not less than
60 days prior to the intended or proposed date of Transfer.
The Notification shall specify all the terms and conditions of
the intended or proposed Transfer, including without
limitation, the number of Shares of D.A.W. and/or of F.M.T.
proposed to be Transferred (the "Offered Shares"), the price
per Offered Share, terms of payment, and the name of the
person or entity to whom it intends or proposes to Transfer
the Offered Shares (the "Proposed Purchaser"). The
Notification shall constitute an offer to sell all of the
Offered Shares to the Shareholders upon the terms and
conditions of the intended or proposed Transfer.
(b)Each of the Shareholders shall have the right to
purchase or otherwise acquire all (but not less than all) of
the Offered Shares, upon the terms and conditions of the
intended or proposed Transfer, by notice (the "Acceptance
Notice") to Nyer and the other Shareholders given within 20
days from the date of receipt of the Notification. In the
event that more than one of the Shareholders desires to
purchase or otherwise acquire the Offered Shares, they shall
purchase or otherwise acquire the Offered Shares pro-rata in
accordance with their percentage interests in each of D.A.W.
and F.M.T., or in such other manner as they may agree in
writing, with proportionate rights of oversubscription.
(c)In the event one or more of the Shareholders shall
so elect to purchase all of the Offered Shares, the Acceptance
Notice shall, when taken in conjunction with the Notification,
constitute a valid and legally binding purchase and sale
agreement, and payment shall be made upon the terms and
conditions of the intended or proposed Transfer (or on such
other terms and conditions as the parties may otherwise agree
upon in writing).
(d)If the Shareholders fail to accept the offer to
purchase all of the Offered Shares within the period
specified, Nyer shall be free for a period of 90 days (or such
shorter period as Nyer may specify) to Transfer the Offered
Shares to the Proposed Purchaser upon the terms and conditions
of the intended or proposed Transfer as set forth in the
Notification.
(e)If Nyer fails to transfer the Offered Shares within
the period and in accordance with the provisions specified in
this Section 7, then, the transfer of such Offered Shares
shall once again be subject to the rights of first refusal set
forth in this Section 7.
8. Co-Sale Rights of the Shareholders. If Nyer receives a
bona fide offer, or acceptance of an offer by Nyer, from a
Proposed Purchaser for the sale of all or any portion of Nyer's
Shares of D.A.W. and/or of F.M.T., Nyer shall deliver written
notice thereof to the Shareholders in conjunction with the
Notification delivered pursuant to Section 7 hereof, stating
the name of the Proposed Purchaser and the amount per Share of
D.A.W. and/or F.M.T. which the Proposed Purchaser has offered
to pay. Each Shareholder may, within twenty (20) days after
receipt of the Notification, deliver to Nyer written notice of
its election to sell up to such Shareholder's Transferable
Percentage of its Shares of D.A.W. and/or of F.M.T. to such
Proposed Purchaser on the same terms and conditions as Nyer
(the "Shareholders Notice"). Nyer shall not accept any offer
from a Proposed Purchaser unless (i) such Proposed Purchaser
is willing to purchase Shares of D.A.W. and/or F.M.T.
from the Shareholders in such amounts and on such terms as may
be necessary to comply with this Section 8 and the Shareholders
Notice, or (ii) Nyer is willing to purchase Shares of D.A.W.
and/or F.M.T. from the Shareholders in such amounts and on such
terms as may be necessary to comply with this Section 8 and the
Shareholders' Notice on behalf of the Proposed Purchaser in
connection with Nyer's sale of Shares of D.A.W. and/or F.M.T. to
the Proposed Purchaser. Provided however, if Nyer shall agree to
sell 50% or more of the Shares of D.A.W. or F.M.T.,
"Transferable Percentage" shall mean the number of Shares of
D.A.W. or of F.M.T., as the case may be, representing all or
such portion of the Shareholders' interest as the Shareholder
may wish.
9. Shareholders' Put Right. At such time as: (i) Nyer has
caused Mark Dumouchel, David Dumouchel, Michael Curry, Donato
Mazzola or Wayne Gunter (the "Employee") to be no longer employed
by D.A.W., (ii) the second term of the Employment Agreement has
expired, or (iii) such Employee has died, then in the event of
the occurrence of any of items (i) through (iii) above, such
Employee shall have the right to require Nyer to purchase all
or any portion of such Employee's Shares of F.M.T. and D.A.W.,
as follows:
(a)Such Employee shall deliver a notice (a "Put
Notice") to D.A.W., F.M.T. and Nyer stating therein his or her
request that Nyer purchase the number of D.A.W. and F.M.T.
Shares stated therein for (i) until the fifth anniversary of
the Employment Agreement between the Companies and each of the
Employees, or in the case of Lucille Curry, Michael Curry,
their book value as reflected on the books and records of
D.A.W. and F.M.T.; and (ii) for all other periods, their fair
market value, as determined pursuant to this Section 8.
(b)Such Employee and Nyer shall negotiate in good faith
to determine the purchase price of the D.A.W. and the F.M.T.
Shares (the "Agreed Value") and, if they cannot determine an
Agreed Value within 15 days after the date of the Put Notice,
they shall, within 15 days thereafter each appoint a single
Qualified Appraiser (as defined below). Within 10 days after
the two Qualified Appraisers are appointed, the two Qualified
Appraisers shall appoint a third Qualified Appraiser. The
three Qualified Appraisers shall, within 10 days following the
date of the last Qualified Appraiser is appointed, appraise
each of D.A.W.'s and F.M.T.'s property and business as a going
concern, and thereupon determine the value of the D.A.W. and
F.M.T. Shares to be sold by the Employee, in each case, by
multiplying the value of the appropriate property and business
by a fraction, in which the numerator is the number of D.A.W.
or F.M.T. Shares as applicable, being sold by such Employee,
and the denominator is the total number of D.A.W. or F.M.T.
Shares, as applicable, issued and outstanding as of the date
of determination. Such value, when so determined, shall be
the appraised value (the "Appraised Value") of such D.A.W.
Shares and F.M.T. Shares. Each Qualified Appraiser shall have
access to such D.A.W. and F.M.T. books and records as he or
she shall request in order to determine the Appraised Value.
(c)The Put Notice and the applicable valuation of the
Agreed Value or the Appraised Value shall constitute a valid
and legally binding purchase and sale agreement, and payment
in immediately available funds and the delivery of appropriate
instruments of transfer shall be made within 30 days following
the determination of the purchase price at the registered
office of D.A.W. (or such other location as the parties shall
agree upon).
(d)For purposes of this Section 8, the term "Qualified
Appraiser" shall mean an appraiser who is not in control of,
controlled by or under common control with any Employee
regardless as to whether such person still owns any Shares of
D.A.W., F.M.T. or Nyer and is qualified to appraise closely-
held entities in the retail pharmacy business, and who has
been actively engaged in the appraisal of such assets for a
period of not less than three years immediately preceding his
or her appointment hereunder.
10. Restrictions on Transfer. Except as provided above in
Section 8 and 9, the Shares of F.M.T. and D.A.W. owned by the
Shareholders shall not be sold, hypothecated, pledged or
otherwise transferred except by operation of law for a period
of five years from the date of this Agreement. These
restrictions shall be inapplicable to:
(a)Transfers of Shares between a Shareholder and the
trustees of a trust revocable by him alone;
(b)Transfers of Shares between a Shareholder and his
spouse or one or more of his issue;
(c)Transfers of Shares between a Shareholder and his
guardian or conservator;
(d)Transfers of Shares of a deceased Shareholder to his
executor(s) or administrator(s) or to trustee(s) under his
will; provided that such Shares in the hands of each such
transferee shall remain subject to this Agreement; and
(e)Transfers of any Shares among Shareholders.
11. Legend to be Placed on all Stock Certificates. The
parties agree that all certificates for shares issued by F.M.T.
and D.A.W. and any replacement or re-issuance thereof shall bear
the following restrictive legend:
"The shares represented by this stock certificate are
subject to the provisions of a Shareholders' Agreement
dated August 5, 1996, a copy of which is maintained in
the Company's offices."
12. Separability of Provisions. If any provision of this
Agreement shall be held or deemed to be, or shall in fact be,
invalid, inoperative or unenforceable because of the conflict of
such provision with any constitution or statute or rule of
public policy or for any other reason, such circumstance shall
not have the effect of rendering any other provision of this
Agreement invalid, inoperative or unenforceable, but this
Agreement shall be reformed and construed as if such invalid,
inoperative or unenforceable provision has never been contained
herein and such provision reformed so that it would be valid,
operative and enforceable to the maximum extent permitted.
13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
The execution of this Agreement may be by actual or facsimile
signature.
14. Benefit. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their legal
representatives, successors and assigns. All references to Nyer
and its affiliates shall refer to any such parties and all
references to the Shareholders shall refer to any such parties
who become bound by this Agreement as provided in Section 4
hereof.
15. Notices and Addresses. All notices, offers, acceptance
and any other acts under this Agreement (except payment) shall
be in writing, and shall be sufficiently given if delivered to
the addressees in person, by Federal Express or similar
receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as
follows:
Shareholders: Mr. Mark A. Dumouchel
Mr. David Dumouchel
c/o D.A.W., Inc.
264 R. Washington Street
Wellesley Hills, MA 02181
Facsimile (617) 237-7278
with a copy to: Gayle Ehrlich, Esq.
Sullivan & Worcester, LLP
One Post Office Square
Boston, MA 02109
Facsimile (617) 338-2880
The Buyer: Mr. Samuel Nyer, President
Nyer Medical Group, Inc.
1292 Hammond Street
Bangor, ME 04401
Facsimile (207) 989-1101
with a copy to: Michael D. Harris, Esq.
Cohen, Chernay, Norris,
Weinberger & Harris
712 U.S. Highway One
North Palm Beach, FL 33408
Facsimile (407) 845-0108
or to such other address as either of them, by notice to the other
may designate from time to time. The transmission confirmation
receipt from the sender's facsimile machine shall be conclusive
evidence of successful facsimile delivery, provided such facsimile
is concurrently transmitted within an original by Federal Express
or similar receipted delivery. Time shall be counted to, or from,
as the case may be, the delivery in person or by mailing.
16. Attorney's Fees. In the event that there is any
controversy or claim arising out of or relating to this Agreement,
or to the interpretation, breach or enforcement thereof, and any
action or proceeding including an arbitration proceeding is
commenced to enforce the provisions of this Agreement, the
prevailing party shall be entitled to an award by the court or
arbitrator, as appropriate, of reasonable attorney's fees, costs
and expenses.
17. Oral Evidence. This Agreement constitutes the entire
Agreement between the parties and supersedes all prior oral and
written agreements between the parties hereto with respect to the
subject matter hereof. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally,
except by a statement in writing signed by the party or parties
against which enforcement or the change, waiver discharge or
termination is sought.
18. Governing Law. This Agreement and any dispute,
disagreement, or issue of construction or interpretation arising
hereunder whether relating to its execution, its validity, the
obligations provided herein or performance shall be governed or
interpreted according to the internal laws of the Commonwealth of
Massachusetts without regard to choice of law considerations.
19. Section or Paragraph Headings. Section headings herein
have been inserted for reference only and shall not be deemed to
limit or otherwise affect, in any matter, or be deemed to interpret
in whole or in part any of the terms or provisions of this
Agreement.
20. Arbitration. Any controversy, dispute or claim arising
out of or relating to this Agreement, or its interpretation,
application, implementation, breach or enforcement which the
parties are unable to resolve by mutual agreement, shall be settled
by submission by either party of the controversy, claim or dispute
to binding arbitration in Boston, Massachusetts (unless the parties
agree in writing to a different location), before a single
arbitrator in accordance with the rules of the American Arbitration
Association then in effect. In any such arbitration proceeding the
parties agree to provide all discovery deemed necessary by the
arbitrator. The decision and award made by the arbitrator shall be
final, binding and conclusive on all parties hereto for all
purposes, and judgment may be entered thereon in any court having
jurisdiction thereof.
21. Cash Management Systems. The business of D.A.W. and
F.M.T. shall be operated pursuant to policies set by their boards
of directors. Both D.A.W. and F.M.T. shall maintain their own cash
management systems (which may consolidated together) separate and
apart from any cash management system of Nyer.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
WITNESSES: NYER:
NYER MEDICAL GROUP, INC.
By:
Samuel Nyer, President
THE SHAREHOLDERS:
Mark A. Dumouchel
David Dumouchel
Lucille Curry
Michael Curry
Donato Mazzola
Wayne Gunter
D.A.W., INC.
By:
Mark A. Dumouchel, President
F.M.T. FRANCHISE CO., INC.
By:
David Dumouchel, President
STOCK EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
SCHEDULE 3(b)
STOCK EXCHANGE AGREEMENT AND
PLAN OF REORGANIZATION
SCHEDULE 3(b)
(vii) Capitalization.None
(viii) Subsidiaries.
Name of Percentage or
Name of Subsidiary Shareholder No. of Shares
ADCO Surgical Nyer Medical Group, Inc. 100%
Supply, Inc.
ADCO South Medical Nyer Medical Group, Inc. 100%
Supplies, Inc.
Anton Investments, Inc. Nyer Medical Group, Inc. 80%
Michael Anton 20%
Conway Associates, Inc. Nyer Medical Group, Inc. 80%
Michael Anton 20%
Genetic Vectors, Inc. Nyer Medical Group, Inc. 1,279,920 Shares
Mead McCabe, Sr. and 319,980 Shares
Marigrace McCabe
Others 100,000 Shares
Nyle Home Health Nyer Medical Group, Inc. 90%
Supplies, Inc. H. Gary Parker, M.D. 10%
There is an agreement to issue 75,000 options of Genetic Vectors,
Inc. ("Vectors") to James Joyce and discussions are underway to issue
additional options to officers and directors of Vectors.
Additionally, Vectors has entered into a letter of intent with
Shamrock Partners, Ltd. ("Shamrock") to sell 400,000 shares of common
stock subject to a 15% over-allotment option. The letter of intent
also requires Vectors to issue to Shamrock and its designees, warrants
to purchase an additional 40,000 shares of common stock of Vectors.
STOCK EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
SCHEDULE 5(b)
STOCK EXCHANGE AGREEMENT AND
PLAN OF REORGANIZATION
SCHEDULE 5(b)
LANDLORD CONSENTS
Lease Locations:
1077 Osgood Street
North Andover, MA
31 Atlantic Avenue
Marblehead, MA
122 Washington St.
Essex County
Marblehead, MA
111 Canal Street
Salem, MA
425 Center Street
Newton, MA
264 and 266 Washington St.
Wellesley Hills, MA
241 Humphrey Street
Marblehead, MA
683 High Street
Westwood, MA
47 Elm Street
Danvers, MA
ESTOPPEL CERTIFICATES
Lease Locations:
1077 Osgood Street
North Andover, MA
31 Atlantic Avenue
Marblehead, MA
122 Washington St.
Essex County
Marblehead, MA
111 Canal Street
Salem, MA
425 Center Street
Newton, MA
264 and 266 Washington St.
Wellesley Hills, MA
241 Humphrey Street
Marblehead, MA
683 High Street
Westwood, MA
47 Elm Street
Danvers, MA
