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EXHIBIT 2
LASER VISION CENTERS, INC.
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TLC LASER EYE CENTERS INC.
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TLC ACQUISITION II CORP.
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AGREEMENT AND PLAN OF MERGER
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August 25, 2001
[TORYS LOGO]
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TABLE OF CONTENTS
ARTICLE 1.
INTERPRETATION
1.1. Definitions......................................................................................... 1
1.2. Interpretation Not Affected by Headings, etc........................................................ 9
1.3. Number, etc......................................................................................... 9
1.4. Date For Any Action................................................................................. 9
1.5. Entire Agreement.................................................................................... 9
1.6. Currency............................................................................................ 9
1.7. Knowledge........................................................................................... 10
ARTICLE 2.
THE MERGER
2.1. The Merger.......................................................................................... 10
2.2. Effect of Merger.................................................................................... 11
2.3. Surrender and Payment............................................................................... 11
2.4. Adjustments......................................................................................... 13
2.5. Fractional Shares................................................................................... 13
ARTICLE 3.
THE SURVIVING CORPORATION
3.1. Certificate of Incorporation........................................................................ 13
3.2. Bylaws.............................................................................................. 14
3.3. Directors and Officers.............................................................................. 14
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF LVCI
4.1. Corporate Existence and Power....................................................................... 14
4.2. Corporate Authorization............................................................................. 14
4.3. Governmental Authorization.......................................................................... 15
4.4. Non-Contravention................................................................................... 15
4.5. Capitalization...................................................................................... 15
4.6. Subsidiaries........................................................................................ 16
4.7. SEC Filings and Financial Statements................................................................ 17
4.8. Joint Proxy Statement/Prospectus; Registration Statement............................................ 18
4.9. Absence of Certain Changes.......................................................................... 18
4.10. No Undisclosed Material Liabilities................................................................. 20
4.11. Personal Property................................................................................... 20
4.12. Accounts Receivable................................................................................. 21
4.13. Contracts........................................................................................... 21
4.14. Litigation.......................................................................................... 22
4.15. Taxes............................................................................................... 22
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4.16. Tax Free Merger..................................................................................... 23
4.17. Intellectual Property............................................................................... 24
4.18. Employee Benefit Plans.............................................................................. 24
4.19. Environmental Matters............................................................................... 27
4.20. Employees........................................................................................... 27
4.21. Non-Arm's Length Transactions....................................................................... 28
4.22. Canadian Competition Act............................................................................ 28
4.23. Compliance with Laws................................................................................ 28
4.24. Finders' Fees....................................................................................... 29
4.25. Opinion of Financial Advisor........................................................................ 29
4.26. Vote Required....................................................................................... 29
4.27. Compliance with Health Care Requirements............................................................ 29
4.28. Medicare Participation/Accreditation................................................................ 29
4.29. Exclusion........................................................................................... 30
4.30. Federal Health Care Programs........................................................................ 30
4.31. Third-Party Payment................................................................................. 30
4.32. Billing............................................................................................. 31
4.33. Reimbursement Matters............................................................................... 31
4.34. Representations Complete............................................................................ 31
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF TLC AND MERGER SUBSIDIARY
5.1. Corporate Existence and Power....................................................................... 31
5.2. Corporate Authorization............................................................................. 32
5.3. Governmental Authorization.......................................................................... 32
5.4. Non-Contravention................................................................................... 32
5.5. Capitalization...................................................................................... 33
5.6. Subsidiaries........................................................................................ 34
5.7. Canadian Securities Law and TLC Financial Statements................................................ 35
5.8. SEC Filings and Financial Statements................................................................ 36
5.9. Joint Proxy Statement/Prospectus; Registration Statement............................................ 37
5.10. Absence of Certain Changes.......................................................................... 37
5.11. No Undisclosed Material Liabilities................................................................. 39
5.12. Personal Property................................................................................... 39
5.13. Contracts........................................................................................... 39
5.14. Litigation.......................................................................................... 40
5.15. Taxes............................................................................................... 40
5.16. Tax Free Merger..................................................................................... 41
5.17. Intellectual Property............................................................................... 43
5.18. Employee Benefit Plans.............................................................................. 43
5.19. Environmental Matters............................................................................... 46
5.20. Employees........................................................................................... 46
5.21. Non-Arm's Length Transactions....................................................................... 47
5.22. Compliance with Laws................................................................................ 47
5.23. Finders' Fees....................................................................................... 47
5.24. Opinion of Financial Advisor........................................................................ 48
5.25. Votes Required...................................................................................... 48
5.26. Interim Operations of Merger Subsidiary............................................................. 48
5.27. Authorization for TLC Common Shares................................................................. 48
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5.28. Compliance with Health Care Requirements............................................................ 48
5.29. Medicare Participation/Accreditation................................................................ 49
5.30. Exclusion........................................................................................... 50
5.31. Federal Health Care Programs........................................................................ 50
5.32. Third-Party Payment................................................................................. 50
5.33. Billing; Gratuitous Payments........................................................................ 50
5.34. Reimbursement Matters............................................................................... 50
5.35. Accounts Receivable................................................................................. 51
5.36. Representations Complete............................................................................ 51
ARTICLE 6.
COVENANTS OF LVCI
6.1. Conduct of LVCI..................................................................................... 51
6.2. Stockholder Meeting................................................................................. 53
6.3. Other Offers........................................................................................ 53
6.4. Notices of Certain Events........................................................................... 54
6.5. Affiliates.......................................................................................... 55
6.6. Employee Stock Options.............................................................................. 55
ARTICLE 7.
COVENANTS OF TLC AND MERGER SUBSIDIARY
7.1. Conduct of TLC and Merger Subsidiary................................................................ 56
7.2. TLC Stockholder Meeting............................................................................. 57
7.3. Obligations of Merger Subsidiary.................................................................... 58
7.4. NASDAQ and TSE Listing.............................................................................. 58
7.5. Notice of Certain Events............................................................................ 58
7.6. Replacement Options................................................................................. 58
ARTICLE 8.
COVENANTS OF TLC, MERGER SUBSIDIARY AND LVCI
8.1. Corporate Governance................................................................................ 59
8.2. TLC Name Change..................................................................................... 59
8.3. Commercially Reasonable Best Efforts................................................................ 59
8.4. Certain Filings..................................................................................... 60
8.5. Public Announcements................................................................................ 61
8.6. Further Assurances.................................................................................. 61
8.7. Preparation of the Joint Proxy Statement/Prospectus and Registration Statements..................... 61
8.8. Access to Information............................................................................... 62
8.9. Mutual Standstill................................................................................... 64
8.10. Directors' and Officers' Insurance.................................................................. 64
8.11. Closing Matters..................................................................................... 65
ARTICLE 9.
CONDITIONS TO THE MERGER
9.1. Conditions to the Obligations of Each Party......................................................... 65
9.2. Additional Conditions to the Obligations of TLC and Merger Subsidiary............................... 67
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9.3. Conditions to the Obligations of LVCI............................................................... 68
ARTICLE 10.
TERMINATION
10.1. Termination......................................................................................... 69
10.2. Termination by LVCI................................................................................. 70
10.3. Termination by TLC.................................................................................. 70
10.4. Effect of Termination............................................................................... 70
ARTICLE 11.
MISCELLANEOUS
11.1. Notices............................................................................................. 71
11.2. Survival of Representations and Warranties.......................................................... 72
11.3. Amendments and Waiver............................................................................... 72
11.4. Further Assurances.................................................................................. 73
11.5. Public Statements................................................................................... 73
11.6. Severability........................................................................................ 73
11.7. Fees and Expenses................................................................................... 73
11.8. Successors and Assigns.............................................................................. 73
11.9. No Third Party Beneficiaries........................................................................ 74
11.10. Governing Law....................................................................................... 74
11.11. Counterparts; Effectiveness......................................................................... 74
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* The Table of Contents is not a part of this Agreement.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 25, 2001, among Laser
Vision Centers, Inc., a Delaware corporation ("LVCI"), TLC Laser Eye Centers
Inc., an Ontario corporation ("TLC"), and TLC Acquisition II Corp., a Delaware
corporation and a wholly owned subsidiary of TLC ("Merger Subsidiary");
WHEREAS, the Boards of Directors of each of TLC, Merger Subsidiary and
LVCI have determined that it is advisable and in the best interests of their
respective companies and their stockholders to consummate the strategic business
combination transaction provided for herein in which, subject to the terms and
conditions set forth herein, Merger Subsidiary will merge (the "Merger") with
and into LVCI, so that the newly created LVCI is the surviving corporation in
the Merger;
WHEREAS, for U.S. federal income tax purposes, the parties intend that
the Merger shall qualify as a Reorganization;
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a purchase; and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1.
INTERPRETATION
1.1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
1.1.1. "Accounts Receivable" means all accounts receivable, trade
receivables, notes receivable and other receivables, which in any case
are payable as a result of goods sold or services provided, or billed
for.
1.1.2. "Acquisition Proposal" means any merger, amalgamation, take-over
bid, sale of more than 50% of the consolidated assets of LVCI (or any
lease, long-term supply agreement or other arrangement having the same
economic effect as a sale of assets comprising more than 50% of the
consolidated assets of LVCI), liquidation, sale of shares or rights or
interests therein or thereto constituting greater than 15% of the LVCI
Common Shares outstanding on the date hereof (or if after the date
hereof LVCI issues LVCI Common Shares in connection with the
acquisition of ClearVision Laser Centers, Inc., 15% of the LVCI Common
Shares outstanding on the date of such issuance) or similar
transactions involving LVCI, or a proposal to do so, excluding the
Merger.
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1.1.3. "Action" means any action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority or
arbitrator.
1.1.4. "Affiliate" means, with respect to any Person, any other Person
controlling, controlled by, or under common control with such Person.
For purposes of this Agreement, the term "control" (including, with
correlative meanings, the terms "controlled by" and "under common
control with" as used with respect to any Person) means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of such Person whether through ownership
of voting securities, by contract or otherwise.
1.1.5. "Average TLC Trading Price" shall mean the average of the daily
closing price per share of TLC Common Shares on NASDAQ for the 10
consecutive trading days prior to the Closing Date.
1.1.6. "Business Day" shall mean each day on which banking institutions
in both of Toronto, Canada and St. Louis, Missouri are not authorized
or required to close.
1.1.7. "Canadian GAAP" shall mean Canadian generally accepted
accounting principles in effect at that time and applied on a basis
consistent with past periods.
1.1.8. "Closing" means the consummation of the Merger and the other
transactions contemplated hereby.
1.1.9. "Closing Date" shall have the meaning set forth in Section
2.1.3.
1.1.10. "Code" shall mean the U.S. Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations promulgated
thereunder.
1.1.11. "Conversion Number" shall have the meaning set forth in Section
2.2.2.
1.1.12. "Delaware Law" shall mean the General Corporation Law of the
State of Delaware.
1.1.13. "Effective Time" shall have the meaning set forth in Section
2.1.3.
1.1.14. "Employee Plan" shall mean any "employee benefit plan", within
the meaning of Section 3(3) of ERISA, whether or not subject to ERISA,
and any employment, consulting, termination, severance, retention,
change in control, deferred or incentive compensation, stock option or
other equity based, vacation or other fringe benefit plan, program,
policy, arrangement, agreement or commitment.
1.1.15. "Environmental Laws" means any Laws governing or relating to
pollution, protection of human health or the Environment, air
emissions, water discharges, hazardous or toxic substances, solid or
hazardous waste, or occupational health and safety, or any similar Law
of foreign jurisdictions where LVCI or its Subsidiaries, on the one
hand, and TLC or its Subsidiaries, on the other hand, respectively, do
business,
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including without limitation the U.S. Federal Water Pollution Control
Act, the U.S. Clean Air Act, the U.S. Solid Waste Disposal Act as
amended by the Resource Conservation and Recovery Act (RCRA), the
Hazardous Materials Transportation Act (HMTA), the Federal Insecticide,
Fungicide, and Rodenticide Act (FIFRA), the U.S. Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), as
amended by the Superfund Amendment and Reauthorization Act (SARA), the
U.S. Emergency Planning and Community Right-To-Know Act (EPCRA), the
U.S. Toxic Substances Control Act (TSCA), the U.S. Safe Drinking Water
Act (SDWA), and the U.S. Occupational Safety and Health Act (OSHA), all
as amended, and the rules and regulations thereunder as interpreted by
Governmental Authorities.
1.1.16. "ERISA" shall mean the U.S. Employee Retirement Income Security
Act of 1974, as amended, and the regulations promulgated thereunder and
published interpretations of any Governmental Authority with respect
thereto.
1.1.17. "Exchange Act" shall mean the U.S. Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
1.1.18. "Exchange Agent" shall have the meaning set forth in Section
2.3.1.
1.1.19. "Exchange Filing Requirements" shall have the meaning set forth
in section 5.7.1.
1.1.20. "Executive Officers" shall have the meaning set forth in
Section 1.7.
1.1.21. "FTC" shall have the meaning set forth in Section 8.4.2.
1.1.22. "Eye Surgery Consultant" means any eye surgeon who performs
laser vision correction or cataract surgery using an LVCI or TLC, as
applicable, excimer laser or who performs such services at an LVCI
Facility or TLC Facility, as applicable.
1.1.23. "GAAP" means U.S. generally accepted accounting principles in
effect at the time and applied on a basis consistent with past periods.
1.1.24. "Goldman" shall have the meaning set forth in Section 4.24.
1.1.25. "Governmental Authority" means any court, administrative agency
or commission or other foreign or domestic federal, state, provincial
or local governmental authority or instrumentality.
1.1.26. "HSR Act" shall have the meaning set forth in Section 4.3.
1.1.27. "Information" shall have the meaning set forth in Section
8.8.1.
1.1.28. "Intellectual Property Rights" shall mean all proprietary,
license and other rights in and to: (A) trademarks, service marks,
brand names, trade dress, trade names, words, symbols, color schemes
and other indications of origin; (B) patents, patent
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applications, inventors' certificates and invention disclosures; (C)
trade secrets and other confidential or non-public business
information, including ideas, formulas, compositions, discoveries and
improvements, know-how, manufacturing and production processes and
techniques, and research and development information; (D) drawings,
specifications, plans, proposals and technical data; analytical models,
investment and lending strategies and records, financial and other
products; financial, marketing and business data, pricing and cost
information; business and marketing plans and customer and supplier
lists and information; in each case whether patentable, copyrightable
or not; (E) computer programs and databases, in each case whether
patentable, copyrightable or not, and all documentation therefor; (F)
writings and other works of authorship, including marketing materials,
brochures, training materials, including all copyrights and moral
rights related to each of the foregoing; (G) mask works; (H) rights to
limit the use or disclosure of confidential information by any Person;
(I) registrations of, and applications to register, any of the
foregoing with any Governmental Authority and any renewals or
extensions thereof; (J) the goodwill associated with each of the
foregoing; and (K) any claims or causes of action arising out of or
related to any infringement or misappropriation of any of the
foregoing; in each case in any jurisdiction.
1.1.29. "Interested Third Party" shall have the meaning set forth in
Section 6.3.2.1.
1.1.30. "Joint Proxy Statement/Prospectus" shall have the meaning set
forth in Section 4.8.
1.1.31. "Laws" means all statutes, regulations, statutory rules,
principles of law, orders, decrees, codes, published policies and
guidelines, and terms and conditions of any grant of approval, permits,
authority or license of any court, Governmental Authority, statutory
body or self-regulatory authority (including the TSE or NASDAQ) and the
term "applicable" with respect to such Laws and in the context that
refers to one or more Persons, means that such Laws apply to such
Person or Persons or its or their business, undertaking, property or
securities and emanate from a Person having jurisdiction over the
Person or Persons or its or their business, undertaking, property or
securities.
1.1.32. "Liability" means any debt, obligation, duty or liability of
any nature (including any undisclosed, unfixed, unliquidated,
unsecured, unmatured, unaccrued, unasserted, contingent, conditional,
inchoate, implied, vicarious, joint, several or secondary liability),
regardless of whether such debt, obligation, duty or liability would be
required to be disclosed on a balance sheet prepared in accordance with
GAAP or Canadian GAAP, as applicable.
1.1.33. "Licenses" shall have the meaning set forth in Section 4.23.
1.1.34. "Liens" shall mean any charge, mortgage, pledge, security
interest, restriction, claim, lien, or encumbrance.
1.1.35. "LVCI 10-K" shall have the meaning set forth in Section 4.7.1.
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1.1.36. "LVCI Affiliate" shall have the meaning set forth in Section
6.5.
1.1.37. "LVCI Benefit Arrangement" shall have the meaning set forth in
Section 4.18.7.
1.1.38. "LVCI Board" shall mean the Board of Directors of LVCI.
1.1.39. "LVCI Common Shares" shall have the meaning set forth in
Section 2.2.2.
1.1.40. "LVCI Disclosure Letter" means that certain letter dated as of
August 25, 2001 and delivered by LVCI to TLC.
1.1.41. "LVCI Employee Plans" shall have the meaning set forth Section
4.18.1.
1.1.42. "LVCI Facility" shall have the meaning set forth in Section
4.28.
1.1.43. "LVCI Financial Statements" shall have the meaning set forth in
Section 4.7.4.
1.1.44. "LVCI Intellectual Property Rights" shall have the meaning set
forth in Section 4.17.1.
1.1.45. "LVCI Material Adverse Change" means any change, either
individually or in the aggregate, that is materially adverse to the
business, financial condition or results of operations of LVCI and its
Subsidiaries taken as a whole.
1.1.46. "LVCI Material Adverse Effect" means any effect, either
individually or in the aggregate, that is materially adverse to the
business, financial condition or results of operations of LVCI and its
Subsidiaries taken as a whole.
1.1.47. "LVCI Material Contract" shall have the meaning set forth in
Section 4.13.
1.1.48. "LVCI Nominees" shall have the meaning set forth in Section
8.1.3.
1.1.49. "LVCI Preferred Shares" shall have the meaning set forth in
Section 4.5.1.
1.1.50. "LVCI SEC Filings" shall have the meaning set forth in Section
4.7.1.
1.1.51. "LVCI Securities" shall have the meaning set forth in Section
4.5.1.
1.1.52. "LVCI Stock Options" shall have the meaning set forth in
Section 4.5.1.
1.1.53. "LVCI Stockholder Meeting" shall have the meaning set forth in
Section 6.2.1.
1.1.54. "LVCI Voting Debt" shall have the meaning set forth in Section
4.5.2.
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1.1.55. "Merger" shall have the meaning set forth in the recitals to
this Agreement.
1.1.56. "Merger Consideration" shall have the meaning set forth in
Section 2.2.2.
1.1.57. "Merger Subsidiary" shall have the meaning set forth in the
first paragraph of this Agreement.
1.1.58. "Merger Subsidiary Common Shares" shall have the meaning set
forth in Section 2.1.1.
1.1.59. "NASD" shall mean the National Association of Securities
Dealers, Inc.
1.1.60. "NASDAQ" shall mean the Nasdaq National Market Inc.
1.1.61. "New Certificates" shall have the meaning set forth in Section
2.3.1.
1.1.62. "Old Certificates" shall have the meaning set forth in Section
2.3.1.
1.1.63. "Ontario Act" shall mean the Securities Act (Ontario), as
amended and the rules, policies and regulations promulgated or issued
thereunder.
1.1.64. "Order" means any order, judgment, injunction, decree,
determination or award by any Governmental Authority or arbitrator.
1.1.65. "Permit" means any permit, license, certificate (including a
certificate of occupancy and a certificate of need), registration,
authorization, consent, or approval issued by a Governmental Authority.
1.1.66. "Permitted Liens" means (a) Liens for Taxes that are not yet
due and payable or that are being contested in good faith by
appropriate proceedings and as to which adequate reserves have been
established in accordance with GAAP or Canadian GAAP, as the case may
be, (b) workers', repairmens' and similar Liens imposed by Law that
have been incurred in the ordinary course of business and consistent
with past practice which in the aggregate do not have or are not
reasonably expected to have an LVCI Material Adverse Effect or TLC
Material Adverse Effect, as the case may be, (c) Liens and other title
defects, easements, encroachments and encumbrances that do not,
individually or in the aggregate, materially impair the value or
continued use of the property (as currently used) to which they relate,
(d) the rights of others to customer deposits which in the aggregate do
not have or are not reasonably expected to have an LVCI Material
Adverse Effect or a TLC Material Adverse Effect, as the case may be,
and (e) any of the Liens described in the foregoing clauses (a) through
(d) of this definition incurred in the ordinary course of business and
consistent with past practice, after the date hereof which in the
aggregate do not have or is not reasonably expected to have an LVCI
Material Adverse Effect or a TLC Material Adverse Effect, as the case
may be.
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1.1.67. "Person" or "person" shall mean any individual, bank,
corporation, limited liability company, partnership, association,
joint-stock company, business trust or unincorporated organization.
1.1.68. "Registration Statement" shall have the meaning set forth in
Section 4.8.
1.1.69. "Reorganization" shall have the meaning given to such term in
Section 368(a) of the Code.
1.1.70. "Replacement Options" shall have the meaning set forth in
Section 7.6.
1.1.71. "SEC" shall mean the U.S. Securities and Exchange Commission.
1.1.72. "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
1.1.73. "SG Cowen" shall have the meaning set forth in Section 5.23.
1.1.74. "Subsidiary" and "Significant Subsidiary" shall have the
meanings ascribed to them in Rule 1-02 of Regulation S-X of the SEC.
"Subsidiary of" any Person means (i) any corporation or other entity of
which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are directly or indirectly owned by such
Person and (ii) any partnership of which such Person is a general
partner.
1.1.75. "Superior Proposal" means an unsolicited bona fide written
Acquisition Proposal that the LVCI Board determines in good faith,
after consultation with financial and legal advisors, would, if
consummated in accordance with its terms, result in a transaction more
favourable to LVCI's shareholders than the transaction contemplated by
this Agreement.
1.1.76. "Surviving Corporation" shall have the meaning set forth in
Section 2.1.2.
1.1.77. "Taxes" shall mean all taxes, charges, fees, levies or other
assessments, however denominated, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, goods
and services, capital, transfer, franchise, profits, license,
withholding, payroll, employment, employer health, excise, estimated,
severance, stamp, occupation, property or other taxes, custom duties,
fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Closing Date.
1.1.78. "Tax Returns" means all returns, declarations, reports,
information returns and statements required to be filed with any taxing
authority relating to Taxes (including any attached schedules),
including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
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1.1.79. "TLC 10-K" shall have the meaning set forth in Section 5.8.1
1.1.80. "TLC Benefit Arrangement" shall have the meaning set forth in
Section 5.18.7.
1.1.81. "TLC Board" shall mean the Board of Directors of TLC.
1.1.82. "TLC Common Shares" shall have the meaning set forth in Section
2.2.2.
1.1.83. "TLC Disclosure Documents" shall have the meaning set forth in
section 5.7.1.
1.1.84. "TLC Disclosure Letter" means that certain letter dated as of
August 25, 2001 and delivered by TLC to LVCI.
1.1.85. "TLC Employee Plans" shall have the meaning set forth in
Section 5.18.1.
1.1.86. "TLC Facility" shall have the meaning set forth in Section
5.29.
1.1.87. "TLC Financial Statements" shall have the meaning set forth in
Section 5.8.2.
1.1.88. "TLC Intellectual Property Rights" shall have the meaning set
forth in Section 5.17.1.
1.1.89. "TLC Material Adverse Change" means any change, either
individually or in the aggregate, that is materially adverse to the
business, financial condition or results of operations of TLC and its
Subsidiaries taken as a whole.
1.1.90. "TLC Material Adverse Effect" means any effect, either
individually or in the aggregate, that is materially adverse to the
business, financial condition or results of operations of TLC and its
Subsidiaries taken as a whole.
1.1.91. "TLC Material Contract" shall have the meaning set forth in
Section 5.13.
1.1.92. "TLC Rights" shall have the meaning set forth in Section 5.5.1.
1.1.93. "TLC Rights Plan" shall have the meaning set forth in Section
5.5.1.
1.1.94. "TLC SEC Filings" shall have the meaning set forth in Section
5.8.1.
1.1.95. "TLC Securities" shall have the meaning set forth in Section
5.5.1.
1.1.96. "TLC Stock Option Plan" means the TLC Amended and Restated
Stock Option Plan incorporated by reference to Exhibit 4(a) to TLC's
registration statement on Form S-8 filed with the SEC on December 31,
1997, as amended.
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1.1.97. "TLC Stockholder Meeting" shall have the meaning set forth in
Section 5.25.
1.1.98. "TLC Voting Debt" shall have the meaning set forth in Section
5.5.2.
1.1.99. "TSE" shall mean The Toronto Stock Exchange.
1.2. INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Agreement into Articles, Sections, and other
portions and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation hereof. Unless otherwise
indicated, all references to an "Article", "Section" or "Schedule" followed by a
number and/or a letter refer to the specified Article, Section or Schedule of
this Agreement. The terms "this Agreement", "hereof", "herein" and "hereunder"
and similar expressions refer to this Agreement (including the Schedules hereto)
and not to any particular Article, Section or other portion hereof and include
any agreement or instrument supplementary or ancillary hereto.
1.3. NUMBER, ETC.
Unless the context otherwise requires, words importing the singular
shall include the plural and vice versa and words importing any gender shall
include all genders. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation".
1.4. DATE FOR ANY ACTION
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action shall
be required to be taken on the next succeeding day which is a Business Day.
1.5. ENTIRE AGREEMENT
This Agreement and the agreements and other documents referred to
herein constitute the entire agreement among the parties hereto pertaining to
the terms of the Merger and the other transactions contemplated hereby and
supersede all other prior agreements (including any term sheets and
confidentiality agreements), understandings, negotiations and discussions,
whether oral or written, between the parties hereto with respect to the Merger
and the other transactions contemplated by this Agreement.
1.6. CURRENCY
Unless otherwise specified, all references in this Agreement to
"dollars" or "$" shall mean U.S. dollars.
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1.7. KNOWLEDGE
In this Agreement, references to "to the knowledge of" means the actual
knowledge of any of the Executive Officers of LVCI or TLC, as the case may be,
after reasonable inquiry, and such Executive Officers shall make such inquiry as
is reasonable in the circumstances. For purposes of this Section 1.7, "Executive
Officers" in the case of LVCI means the Chief Executive Officer, the President
and Chief Operating Officer, the Chief Financial Officer and the General
Counsel, and in the case of TLC means the Chief Executive Officer, the President
and
Chief Operating Officer, the Acting Chief Financial Officer, any permanently
appointed Chief Financial Officer and the General Counsel.
ARTICLE 2.
THE MERGER
2.1. THE MERGER
2.1.1. Immediately prior to the Effective Time, TLC shall contribute
the Merger Consideration to Merger Subsidiary in exchange for common
stock of Merger Subsidiary (the "Merger Subsidiary Common Shares").
2.1.2. At the Effective Time, Merger Subsidiary shall be merged with
and into LVCI in accordance with Delaware Law, whereupon the separate
existence of Merger Subsidiary shall cease, and LVCI shall survive and
continue to exist as a Delaware corporation (the "Surviving
Corporation").
2.1.3. As soon as practicable and in any event no later than the later
of (a) the last day of the month and (b) five Business Days after
satisfaction (or, to the extent permitted hereunder, waiver) of all
conditions to the Merger, LVCI and Merger Subsidiary will cause to be
filed a certificate of merger with the Secretary of State of the State
of Delaware and make all other filings or recordings required by Law in
connection with the Merger. The Closing of the Merger will take place
at the offices of Torys, Suite 3000, Maritime Life Tower, Box 270, TD
Centre, Toronto, Ontario, M5K 1N2, or such other place as the parties
may agree. The Merger shall become effective at such time as the
certificate of merger is duly filed with the Secretary of State of the
State of Delaware or at such later time as is specified in the
certificate of merger (the "Effective Time"). The date of the Closing
is referred to herein as the "Closing Date".
2.1.4. The Merger shall have the effects prescribed by Delaware Law.
Without limiting the generality of the foregoing, and subject thereto,
from and after the Effective Time, the Surviving Corporation shall
possess all the assets (except for the Merger Consideration which the
LVCI stockholders and others are entitled to receive), rights,
privileges, powers and franchises and be subject to all of the
liabilities, restrictions, disabilities and duties of LVCI and Merger
Subsidiary, all as provided under Delaware Law.
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2.2. EFFECT OF MERGER
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
party or stockholder:
2.2.1. each issued and outstanding share of Merger Subsidiary Common
Shares shall be converted into and become one fully-paid and
non-assessable share of common stock of the Surviving Corporation;
2.2.2. each share of common stock of LVCI ("LVCI Common Shares")
outstanding immediately prior to the Effective Time (other than (i)
LVCI Common Shares held by LVCI and (ii) LVCI Common Shares held by TLC
or Merger Subsidiary) shall be converted into the right to receive 0.95
(the "Conversion Number") of a fully paid and non-assessable common
share of TLC (a "TLC Common Share", which term shall also include the
associated TLC Rights). The Conversion Number shall be subject to
adjustment as provided in Section 2.4. The TLC Common Shares to be
received pursuant to this Section 2.2.2 are referred to herein as the
"Merger Consideration"; and
2.2.3. each LVCI Common Share held by LVCI, TLC or Merger Subsidiary
shall be cancelled and extinguished without any consideration therefor.
2.3. SURRENDER AND PAYMENT
2.3.1. Prior to the Effective Time, TLC shall appoint an agent
reasonably acceptable to LVCI (the "Exchange Agent") for the purpose of
exchanging certificates representing LVCI Common Shares ("Old
Certificates"). As of the Effective Time, Merger Subsidiary shall
deposit with the Exchange Agent for the benefit of the holders of LVCI
Common Shares for exchange in accordance with this Section 2.3, through
the Exchange Agent, certificates representing the TLC Common Shares
issuable pursuant to Section 2.2 in exchange for outstanding LVCI
Common Shares ("New Certificates").
2.3.2. Promptly after the Effective Time, TLC will send, or will cause
the Exchange Agent to send, to each holder of LVCI Common Shares at the
Effective Time a letter of transmittal reasonably acceptable to LVCI
for use in exchanging such holder's Old Certificates for the New
Certificates (which shall specify that the delivery shall be effected,
and risk of loss and title shall pass, only upon proper delivery of the
Old Certificates to the Exchange Agent).
2.3.3. Each holder of LVCI Common Shares that have been converted into
a right to receive TLC Common Shares, upon surrender to the Exchange
Agent of Old Certificates, together with a properly completed letter of
transmittal covering such Old Certificates, shall receive in exchange
therefor (a) that number of whole TLC Common Shares which such holder
has the right to receive pursuant to Section 2.2; (b) cash in lieu of
fractional shares pursuant to Section 2.5; and (c) any dividends or
distributions the payout date for which shall have occurred, and the
Old Certificates so surrendered shall be cancelled. Until so
surrendered, each Old Certificate shall, after the Effective Time,
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represent for all purposes, only the right to receive upon such
surrender the New Certificates representing TLC Common Shares, cash in
lieu of any fractional TLC Common Shares as contemplated by this
Section 2.3 and Section 2.5 and any dividends or distributions.
2.3.4. If any TLC Common Shares are to be issued to a Person other than
the registered holder of the LVCI Common Shares represented by the Old
Certificates surrendered in exchange therefor, it shall be a condition
to such issuance that the Old Certificates shall be properly endorsed
or otherwise be in proper form for transfer and that the Person
requesting such issuance shall pay to the Exchange Agent any transfer
tax or other taxes required as a result of such issuance to a Person
other than the registered holder of such LVCI Common Shares or
establish to the reasonable satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
2.3.5. At the Effective Time, holders of LVCI Common Shares shall cease
to be, and shall have no rights as, stockholders of LVCI, other than
the right to receive any dividend or other distribution with respect to
such LVCI Common Shares with a record date occurring prior to the
Effective Time and the consideration provided under this Article 2.
After the Effective Time, there shall be no further registration of
transfers of LVCI Common Shares. If, after the Effective Time, Old
Certificates are presented to the Surviving Corporation, they shall be
cancelled and exchanged for New Certificates as provided for, and in
accordance with the procedures set forth, in this Article 2.
2.3.6. Any New Certificates made available to the Exchange Agent
pursuant to Section 2.3.1 that remain unclaimed by the holders of LVCI
Common Shares six months after the Effective Time shall be returned to
TLC, upon demand, and any such holder who has not exchanged his or her
LVCI Common Shares in accordance with this Section 2.3 prior to that
time shall thereafter look only to TLC to exchange such LVCI Common
Shares. Notwithstanding the foregoing, the Surviving Corporation and
TLC shall not be liable to any holder of LVCI Common Shares for any
amount paid, or any TLC Common Shares delivered to a public official
pursuant to applicable abandoned property Laws. Any TLC Common Shares
or amounts remaining unclaimed by holders of LVCI Common Shares two
years after the Effective Time (or such earlier date immediately prior
to such time as such amounts would otherwise escheat to or become
property of any Governmental Authority) shall, to the extent permitted
by applicable Law, become the property of TLC free and clear of any
claims or interest of any Person previously entitled thereto.
2.3.7. No dividends or other distributions on TLC Common Shares shall
be paid to the holder of any unsurrendered Old Certificates until such
Old Certificates are surrendered as provided in this Section. Upon such
surrender, there shall be paid, without interest, to the Person in
whose name the New Certificates representing the TLC Common Shares into
which such shares were converted are registered, all dividends and
other distributions paid in respect of such TLC Common Shares on a date
subsequent to, and in respect of a record date after, the Effective
Time.
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2.3.8. If any Old Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Old Certificate to be lost, stolen or destroyed and the
posting by such person of a bond in such reasonable amount as TLC may
direct as indemnity against any claim that may be made against it or
the Surviving Corporation with respect to such Old Certificate, TLC
shall, in exchange for such lost, stolen or destroyed Old Certificate,
deliver or cause the Exchange Agent to deliver a New Certificate in
respect thereof pursuant to this Section 2.3.
2.4. ADJUSTMENTS
If, at any time during the period between the date of this Agreement
and the Effective Time, the outstanding TLC Common Shares or LVCI Common Shares
are changed into a different number of shares, by reason of any
reclassification, recapitalization, stock split or combination, reverse stock
split, consolidation, exchange or readjustment of shares, stock dividend or
similar transaction with a record date (or where there is no record date,
effective date) during such period, the Conversion Number shall be appropriately
adjusted.
2.5. FRACTIONAL SHARES
No fractional TLC Common Shares shall be issued in the Merger. All
fractional TLC Common Shares that a holder of LVCI Common Shares would otherwise
be entitled to receive as a result of the Merger shall be aggregated and if a
fractional share results from such aggregation, such holder shall be entitled to
receive, in lieu thereof, an amount (in U.S. dollars) in cash (without interest)
determined by multiplying the Average TLC Trading Price by the fraction of a TLC
Common Share to which such holder would otherwise have been entitled.
Alternatively, the Surviving Corporation shall have the option of instructing
the Exchange Agent to aggregate all fractional TLC Common Shares, sell such
shares in the public market and distribute to holders of LVCI Common Shares a
pro rata portion of the proceeds of such sale. No such cash in lieu of
fractional TLC Common Shares shall be paid to any holder of LVCI Common Shares
until Old Certificates are surrendered and exchanged in accordance with Section
2.3.
ARTICLE 3.
THE SURVIVING CORPORATION
3.1. CERTIFICATE OF INCORPORATION
Effective immediately following the Merger, the certificate of
incorporation of Merger Subsidiary, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until amended in accordance with applicable Law; provided, however,
that the certificate of incorporation of the Surviving Corporation shall be
amended to read: "The name of the corporation is Laser Vision Centers, Inc."
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3.2. BYLAWS
Effective immediately following the Merger, the bylaws of Merger
Subsidiary in effect at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable Law.
3.3. DIRECTORS AND OFFICERS
From and after the Effective Time, until the earlier of their
resignation or removal or until their respective successors are duly elected or
appointed and qualified in accordance with applicable Law, (i) the directors of
Merger Subsidiary at the Effective Time shall be the directors of the Surviving
Corporation, and (ii) the officers of Merger Subsidiary at the Effective Time
shall be the officers of the Surviving Corporation.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF LVCI
LVCI represents and warrants to TLC and Merger Subsidiary that, and
acknowledges that TLC and Merger Subsidiary are relying upon such
representations and warranties in connection with the matters contemplated by
this Agreement:
4.1. CORPORATE EXISTENCE AND POWER
LVCI and each of its Subsidiaries is a corporation or other entity duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation or organization, has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure to so qualify
would not have or reasonably be expected to have, individually or in the
aggregate, an LVCI Material Adverse Effect. LVCI has heretofore delivered or
made available to TLC true and complete copies of the certificate of
incorporation and bylaws or other constating documents as currently in effect
for LVCI and each of its Subsidiaries.
4.2. CORPORATE AUTHORIZATION
LVCI has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by LVCI of this Agreement and the consummation of the
Merger by LVCI are within LVCI's corporate powers and, except for any required
approval by LVCI's stockholders in connection with the Merger, have been duly
authorized by all necessary corporate action on the part of LVCI. This Agreement
has been duly executed and delivered by LVCI and constitutes a valid and binding
obligation of LVCI.
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4.3. GOVERNMENTAL AUTHORIZATION
The execution, delivery and performance by LVCI of this Agreement and
the consummation of the Merger by LVCI require no action by or in respect of, or
filing with, any Governmental Authority other than (i) the filing of a
certificate of merger in accordance with Delaware Law and (ii) compliance with
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act") and the Exchange Act, except where the failure of any
action to be taken by any Governmental Authority or filing to be made would not
have or reasonably be expected to have, individually or in the aggregate, an
LVCI Material Adverse Effect or prevent consummation of the Merger or the
transactions contemplated hereby.
4.4. NON-CONTRAVENTION
Except as disclosed in the LVCI Disclosure Letter, the execution,
delivery and performance by LVCI of this Agreement and the consummation of the
Merger by LVCI do not and will not (i) contravene or conflict with the
certificate of incorporation or bylaws of LVCI, (ii) assuming compliance with
the matters referred to in Section 4.3, contravene or conflict with or
constitute a violation of any provision of any Law or Order binding upon or
applicable to LVCI or any of its Subsidiaries, (iii) constitute a default under
or give rise to a right of termination, cancellation or acceleration of any
right or obligation of LVCI or any of its Subsidiaries or to a loss of any
benefit to which LVCI or any of its Subsidiaries is entitled under any provision
of any LVCI Material Contract or other material agreement or other instrument
binding upon LVCI or any of its Subsidiaries or any license, franchise, Permit
or other similar authorization held by LVCI or any of its Subsidiaries, or (iv)
result in the creation or imposition of any Lien on any material asset of LVCI
or any of its Subsidiaries, except for any occurrences or results referred to in
clauses (ii), (iii) and (iv) which would not have or reasonably be expected to
have, individually or in the aggregate, an LVCI Material Adverse Effect or
prevent consummation of the transactions contemplated hereby.
4.5. CAPITALIZATION
4.5.1. The entire authorized capital stock of LVCI consists of (i)
50,000,000 shares of common stock and (ii) 1,000,000 shares of
preferred stock, par value $0.01 per share, issuable in series ("LVCI
Preferred Shares"). As of August 23, 2001, there were outstanding: (a)
25,888,487 LVCI Common Shares, (b) no LVCI Preferred Shares, (c)
options to purchase an aggregate of 7,779,490 LVCI Common Shares, at
the exercise prices and in the amounts listed in the LVCI Disclosure
Letter, of which 687,675 were granted under the LVCI 1990 Incentive
Stock Option Plan, 382,835 were granted under the LVCI 1990
Non-Qualified Stock Option Plan and 1,790,462 were granted under the
LVCI 2000 Incentive Stock Plan, and (d) warrants to purchase an
aggregate of 3,758,518 LVCI Common Shares to other Persons pursuant to
the LVCI 1994 Non-Qualified Warrant Plan, at the exercise prices and in
the amounts listed in the LVCI Disclosure Letter (the items in (c) and
(d) being referred to collectively as the "LVCI Stock Options"). In
addition, an aggregate of 975,750 LVCI Common Shares have been reserved
for issuance under LVCI's equity based incentive plans and an aggregate
of
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2,201,200 LVCI Common Shares have been reserved as consideration for
acquisitions previously disclosed in the LVCI SEC Filings. All
outstanding shares of capital stock of LVCI have been duly authorized
and validly issued and are fully paid and non-assessable and free of
pre-emptive rights. Except as set forth in this Section 4.5.1 or the
LVCI Disclosure Letter, there are outstanding as of the date hereof (i)
no shares of capital stock or other voting securities of LVCI, (ii) no
securities of LVCI convertible into or exchangeable for shares of
capital stock or voting securities of LVCI and (iii) no options,
warrants or other rights to acquire from LVCI, and, no obligation of
LVCI to issue any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities
of LVCI (the items in clauses (i), (ii) and (iii) being referred to
collectively as the "LVCI Securities"). Except as disclosed in the LVCI
Disclosure Letter, between the date hereof and the Effective Time, no
LVCI Securities will be issued. Except as set forth in the LVCI
Disclosure Letter, LVCI has not issued, granted or awarded any phantom
stock, stock appreciation rights, or any similar instruments to any
Person. There are no outstanding obligations of LVCI or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any LVCI
Securities.
4.5.2. No bonds, debentures, notes or other evidences of indebtedness
having the right to vote (or convertible into securities having the
right to vote) on any matters on which stockholders may vote ("LVCI
Voting Debt") that were issued by LVCI are outstanding. Except as set
forth in this Section 4.5 and the LVCI Disclosure Letter, there are
outstanding (A) no shares of capital stock, LVCI Voting Debt or other
voting securities of LVCI, (B) no securities of LVCI or any Subsidiary
of LVCI convertible into or exchangeable for shares of capital stock,
LVCI Voting Debt or other voting securities of LVCI or any Subsidiary
of LVCI, and (C) no options, warrants, calls, rights (including
pre-emptive rights), commitments or agreements pursuant to which LVCI
or any Subsidiary of LVCI is obligated to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold,
purchased, redeemed or acquired, additional shares of capital stock or
any LVCI Voting Debt or other voting securities of LVCI or of any
Subsidiary of LVCI or obligating LVCI or any Subsidiary of LVCI to
grant, extend or enter into any such option, warrant, call, right,
commitment or agreement, except in the case of Subsidiaries where such
event would not be or would not reasonably be expected to be an LVCI
Material Adverse Change.
4.5.3. Except as disclosed in the LVCI Disclosure Letter, there are not
as of the date hereof and there will not be at the Effective Time any
stockholder agreements, voting trusts or other agreements or
understandings to which LVCI is a party or by which it is bound
relating to the voting of any shares of the capital stock of LVCI which
will limit in any way the granting of proxies by or on behalf of or
from, or the casting of votes by, LVCI stockholders with respect to the
Merger.
4.6. SUBSIDIARIES
4.6.1. LVCI has provided to TLC the name and jurisdiction of
incorporation or organization of each Subsidiary of LVCI. Except as
disclosed in the LVCI Disclosure
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Letter, all of the issued and outstanding shares of capital stock of
each Subsidiary of LVCI have been duly authorized and validly issued
and are fully paid and non-assessable and are owned by LVCI.
4.6.2. Except as disclosed in the LVCI Disclosure Letter, all of the
outstanding capital stock or other ownership interests, as applicable,
of each Subsidiary of LVCI which is owned by LVCI, directly or
indirectly, is owned free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other
ownership interests, as applicable, but excluding rights of first
refusal among share or equity holders of the Subsidiary). There are no
outstanding obligations of LVCI or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding securities in
any LVCI Subsidiary.
4.6.3. Except for shares of the Subsidiaries of LVCI and as disclosed
in the LVCI Disclosure Letter, LVCI does not own, directly or
indirectly, any shares of stock or other equity or long term debt
securities of any corporation or have any equity interest in any
Person.
4.7. SEC FILINGS AND FINANCIAL STATEMENTS
4.7.1. LVCI has delivered or made available to TLC: (i) its annual
report on Form 10-K for the fiscal year ended April 30, 2001 (the "LVCI
10-K"), (ii) its current reports on Form 8-K dated January 12, 2001,
June 14, 2001 and August 9, 2001, (iii) its proxy statement relating to
the annual meeting of stockholders held on November 10, 2000, and (iv)
all of its other reports, statements, schedules and registration
statements filed by LVCI with the SEC since July 1, 1998 and, in each
case, all materials incorporated therein by reference or filed
therewith as exhibits (the filings referred to in clauses (i) through
(iv) above and the materials referred to above, in each case delivered
or made available to TLC prior to the date hereof, being hereinafter
referred to as the "LVCI SEC Filings").
4.7.2. As of its filing or amendment date or with respect to any proxy
statements included in the LVCI SEC Filings, as of the date it was
first mailed to LVCI stockholders, each such report or statement filed
pursuant to the Exchange Act complied as to form and content in all
material respects with the requirements of the Exchange Act, except as
disclosed in the LVCI Disclosure Letter, and did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading.
4.7.3. Each such registration statement and any amendment thereto filed
pursuant to the Securities Act included in the LVCI SEC Filings, as of
the date such statement or amendment became effective, complied as to
form in all material respects with the Securities Act and did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they
were made, not misleading.
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4.7.4. The financial statements of LVCI, including the notes thereto,
included in the LVCI SEC Filings (the "LVCI Financial Statements")
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of applicable
Governmental Authorities and the SEC with respect thereto as of their
respective filing dates, and have been prepared in accordance with GAAP
(except as may be indicated in the notes thereto or, in the case of
unaudited statements included in quarterly reports on Form 10-Q, as
permitted by Form 10-Q of the SEC). The LVCI Financial Statements
present fairly the consolidated financial position and results of
operations of LVCI and its Subsidiaries at the dates presented, subject
to year-end adjustments and the absence of notes thereto) and reflect
appropriate and adequate reserves in respect of contingent liabilities,
if any, of LVCI and its Subsidiaries on a consolidated basis. There has
been no change in LVCI accounting policies, except as described in the
notes to the LVCI Financial Statements, since July 1, 1998.
4.7.5. All documents that LVCI is responsible for filing with NASDAQ or
any Governmental Authority in connection with the Merger will comply as
to form and content in all material respects with the applicable
provisions of the Securities Act, the Exchange Act and Exchange Filing
Requirements.
4.8. JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT
None of the information supplied by LVCI for inclusion in (a) the joint
proxy statement relating to the LVCI Stockholder Meeting and the TLC Stockholder
Meeting (also constituting the prospectus in respect of TLC Common Shares to be
exchanged for LVCI Common Shares in the Merger) (the "Joint Proxy
Statement/Prospectus"), to be filed by LVCI and TLC with the SEC, and any
amendments or supplements thereto, or (b) the Registration Statement on Form S-4
(the "Registration Statement") to be filed by TLC with the SEC in connection
with the Merger, and any amendments or supplements thereto, will, at the
respective times such documents are filed, and, in the case of the Joint Proxy
Statement/Prospectus, at the time the Joint Proxy Statement/Prospectus or any
amendment or supplement thereto is first mailed to stockholders of LVCI and of
TLC, at the time of the LVCI Stockholder Meeting and the TLC Stockholder Meeting
and at the Effective Time, and, in the case of the Registration Statement, when
it becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. All documents that LVCI is responsible for filing with the
SEC in connection with the Merger will comply in all material respects with the
applicable provisions of the Exchange Act, the Securities Act and state
securities Laws.
4.9. ABSENCE OF CERTAIN CHANGES
Except as contemplated hereby or as described or provided for in any
LVCI SEC Filing or as disclosed in the LVCI Disclosure Letter, since April 30,
2001, LVCI and its Subsidiaries have conducted their business in all material
respects in the ordinary course consistent with past practices and there has not
been:
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4.9.1. any event, occurrence or development or state of circumstances
or facts, which affects or relates to LVCI or any of its Subsidiaries
which has had or would reasonably be expected to have an LVCI Material
Adverse Effect;
4.9.2. any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of LVCI,
or any repurchase, redemption or other acquisition by LVCI or any of
its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, LVCI or any of its
Subsidiaries;
4.9.3. any amendment of any term of any outstanding security of LVCI or
any of its Subsidiaries;
4.9.4. any claim or threatened claim against LVCI or one or more of its
Subsidiaries in respect of one or more LVCI Material Contracts where
the Liability of LVCI or one or more of its Subsidiaries exceeds, or
could reasonably be expected to exceed, individually or in the
aggregate, $1,000,000;
4.9.5. any material sale, lease or other disposition of any of the
assets of LVCI or any of its Subsidiaries, other than assets sold,
leased or otherwise disposed of in the ordinary course of business
consistent with past practices which would not, in the aggregate, have
or reasonably be expected to have an LVCI Material Adverse Effect;
4.9.6. any material purchase or lease of any assets by LVCI or any of
its Subsidiaries, other than assets purchased or leased in the ordinary
course of business consistent with past practices;
4.9.7. any change in any method of accounting or accounting practices
by LVCI or any of its Subsidiaries, except for any such change required
by reason of a concurrent change in GAAP or to conform a Subsidiary's
accounting policies and practices to those of LVCI;
4.9.8. except for contractual obligations existing on the date hereof,
any (i) grant of any severance or termination pay to any director,
officer or employee of LVCI (other than as disclosed in the LVCI
Disclosure Letter), (ii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of LVCI or
any of its Subsidiaries except in the ordinary course of business
consistent with past practices with persons who are not executive
officers, (iii) increase in benefits payable under any existing
severance or termination pay policies or employment agreements, (iv)
increase in compensation, bonus or other benefits payable to directors,
officers or employees of LVCI or any of its Subsidiaries, other than in
the ordinary course of business consistent with past practices or (v)
acceleration of the exercisability or vesting of any options, as the
case may be;
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4.9.9. any actual or, to the knowledge of LVCI, threatened suspension
or cancellation of any Permit held by LVCI or any Subsidiary other than
those the suspension or cancellation of which would not have or
reasonably be expected to have, individually or in the aggregate, an
LVCI Material Adverse Effect;
4.9.10. to the knowledge of LVCI, any change in any federal or state
Law applicable to LVCI or any of its Subsidiaries or in the
interpretation or application thereof, which individually or in the
aggregate has had or would reasonably be expected to have an LVCI
Material Adverse Effect;
4.9.11. to the knowledge of LVCI, any Action brought against or
threatened against LVCI or any of its Subsidiaries by any Governmental
Authority which has had or would reasonably be expected to have,
individually or in the aggregate, an LVCI Material Adverse Effect;
4.9.12. to the knowledge of LVCI, any Action, brought or threatened by
any Governmental Authority which has had or would reasonably be
expected to have, individually or in the aggregate, an LVCI Material
Adverse Effect; or
4.9.13. any agreement or commitment by LVCI or any of its Subsidiaries
to take any action described in Section 4.9.
4.10. NO UNDISCLOSED MATERIAL LIABILITIES
Except as disclosed in the LVCI Disclosure Letter or as disclosed in
any LVCI SEC Filing, (i) there are no Liabilities of LVCI or any of its
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and (ii) there is no existing condition,
situation or set of circumstances which, individually or in the aggregate, have
or would reasonably be expected to have an LVCI Material Adverse Effect, other
than in the case of either (i) or (ii):
4.10.1. Liabilities disclosed or provided for in LVCI's audited
consolidated balance sheet dated as of April 30, 2001 included in the
LVCI 10-K;
4.10.2. Liabilities incurred in the ordinary course of business
consistent with past practices since April 30, 2001, which in the
aggregate are not material to LVCI and its Subsidiaries taken as a
whole; and
4.10.3. Liabilities under this Agreement.
4.11. PERSONAL PROPERTY
4.11.1. Subject to Permitted Liens, except as set forth in the LVCI
Disclosure Letter, LVCI or its Subsidiaries have marketable and
indefeasible title to all personal property owned by LVCI or its
Subsidiaries and used in the conduct of their business, other than (A)
property that has been disposed of in the ordinary course of business,
and
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(B) property that has been disposed of in transactions disclosed to TLC
in the LVCI Disclosure Letter, except for property where the failure to
have such marketable and indefeasible title would not, individually or
in the aggregate, have or reasonably be expected to have an LVCI
Material Adverse Effect.
4.11.2. Except as disclosed in the LVCI Disclosure Letter, (i) to the
knowledge of LVCI, all of the leases of leased personal property used
in the business conducted by LVCI and its Subsidiaries are valid and
binding and in full force and effect and (ii) there has been no
material breach of any such lease by LVCI or its Subsidiaries or, to
the knowledge of LVCI, any other Person, which breach has not been
cured or waived except for any breaches of leases the absence of which
would not have or reasonably be expected to have an LVCI Material
Adverse Effect.
4.12. ACCOUNTS RECEIVABLE
Except as disclosed in the LVCI Disclosure Letter, all Accounts
Receivable of LVCI and its Subsidiaries reflected on the balance sheet included
in the LVCI 10-K as of April 30, 2001 and all Accounts Receivable of LVCI and
its Subsidiaries generated after April 30, 2001 that are reflected in the
accounting records of LVCI and its Subsidiaries as of the Closing Date represent
or will represent valid obligations arising from sales actually made or services
actually performed or billed for in the ordinary course of business, except to
the extent reflected in the allowances for doubtful accounts in the LVCI
Financial Statements. In the reasonable judgement of management of LVCI, all
Accounts Receivable not paid prior to the Closing Date are current and
collectible in the ordinary course of business, except to the extent reflected
in the allowances for doubtful accounts in the LVCI Financial Statements. The
allowances for doubtful accounts reflected in the LVCI Financial Statements have
been determined consistent with past practices and in accordance with GAAP.
Except as set forth in the LVCI Disclosure Letter or as would not otherwise have
or reasonably be expected to have an LVCI Material Adverse Effect, LVCI and its
Subsidiaries have good and valid title to the Accounts Receivable free and clear
of all Liens except Permitted Liens.
4.13. CONTRACTS
Except for (i) purchase orders, invoices, confirmations and similar
documents involving the purchase or sale of goods or services for less than
$1,000,000 over a period of 12 months or less, (ii) leases of personal property,
(iii) LVCI Benefit Arrangements, and (iv) contracts relating to intercompany
obligations, the following contracts (A) to which LVCI or any of its
Subsidiaries is a party or (B) by which any of the assets of LVCI or any of its
Subsidiaries are bound are "LVCI Material Contracts": (1) contracts which
individually or in the aggregate pertain to the borrowing of money in amounts in
excess of $1,000,000; (2) contracts creating Liens other than Permitted Liens;
(3) contracts creating guarantees in amounts that, individually or in the
aggregate, exceed $1,000,000; (4) contracts relating to material employment or
consulting services; (5) contracts relating to any single capital expenditure by
LVCI or any of its Subsidiaries in excess of $1,000,000 or aggregate capital
expenditures in excess of $5,000,000; (6) contracts for the purchase or sale of
real property, any business or line of business or for any
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merger or consolidation; (7) joint venture or partnership agreements; (8)
contracts that individually require by their respective terms after the date
hereof the payment or receipt of $1,000,000 or more; (9) any agreement involving
derivatives, hedging or futures under which the obligations of LVCI or any of
its Subsidiaries could reasonably be expected to exceed $1,000,000; (10) any
contract that limits the freedom of LVCI or its Subsidiaries to compete in any
line of business or to conduct business in any geographic location; and (11) any
contract for the purchase or sale of all or substantially all of the assets or
stock of any company or operating division. To the knowledge of LVCI, all LVCI
Material Contracts are valid and binding and in full force and effect. Except as
disclosed in the LVCI Disclosure Letter, there has been no material breach of
any contract by LVCI or its Subsidiaries or, to the knowledge of LVCI, any other
Person, which breach has not been cured or waived. LVCI has made available to
TLC true and complete copies of the LVCI Material Contracts.
4.14. LITIGATION
Except as described in any LVCI SEC Filing or as disclosed in the LVCI
Disclosure Letter, there is no Action pending against, or to the knowledge of
LVCI, threatened against LVCI or any of its Subsidiaries or any of their
respective assets that is not covered by insurance. Those Actions that are
pending against, or are, to the knowledge of LVCI, threatened against LVCI or
any of its Subsidiaries or any of their respective assets would not have or
reasonably be expected to have, individually or in the aggregate, an LVCI
Material Adverse Effect. Neither LVCI nor any of its Subsidiaries is in
violation of any Order.
4.15. TAXES
4.15.1. LVCI and its Subsidiaries have timely filed all Tax Returns
required to be filed with any tax authority when due in accordance with
all applicable Laws except where the failure to do so would not have or
reasonably be expected to have, individually or in the aggregate, an
LVCI Material Adverse Effect, and such Tax Returns are complete and
correct;
4.15.2. Except as disclosed in the LVCI SEC Filings, no deficiency in
payment of any Taxes for any period has been asserted by any taxing
authority which remains unsettled at the date hereof except for
deficiencies which would not have or reasonably be expected to have,
individually or in the aggregate, an LVCI Material Adverse Effect;
4.15.3. LVCI is not liable and it is not reasonably likely that LVCI
will be liable for any Taxes not heretofore paid or reserved against in
LVCI's April 30, 2001 financial statements except those incurred in the
ordinary course of business consistent with past practices, or which
would not have or reasonably be expected to have, individually or in
the aggregate, an LVCI Material Adverse Effect;
4.15.4. There are no Actions now pending or made or, to the knowledge
of LVCI, threatened against LVCI in respect of any Taxes, except as
would not have or reasonably be expected to have an LVCI Material
Adverse Effect. Neither LVCI nor any Subsidiary
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has received any written notification that any material issues have
been raised (and are currently pending) by the United States Internal
Revenue Service or any other taxing authority, including, without
limitation, any sales tax authority, in connection with any Tax
Returns;
4.15.5. There are no agreements, waivers or other arrangements
providing for any extension of time with respect to the filing of any
Tax Return or other document or the payment of any Taxes by LVCI or the
period for any assessment or reassessment of Taxes; and
4.15.6. LVCI has withheld from each amount paid by LVCI, or otherwise
collected, or credited to any person the amount of Taxes required to be
withheld therefrom and has remitted such Taxes to the proper tax or
other Governmental Authorities within the time required under
applicable Laws.
4.16. TAX FREE MERGER
4.16.1. Following the Merger, the Surviving Corporation will hold at
least 90 percent of the fair market value of the net assets, and at
least 70 percent of the fair market value of the gross assets, held by
LVCI prior to the Merger. For purposes of this representation, amounts
used by LVCI to pay reorganization expenses and all redemptions,
distributions and payments, in cash or property, made by LVCI in
connection with the Merger shall be included as assets of LVCI prior to
the Merger.
4.16.2. LVCI has no plan or intention to issue additional shares of its
stock that would result in TLC losing control of LVCI within the
meaning of Section 368(c) of the Code. At the time of the Merger, LVCI
will not have outstanding any warrants, options, convertible
securities, or any other type of right pursuant to which any Person
could acquire stock in LVCI that, if exercised or converted, would
affect TLC's acquisition or retention of such control.
4.16.3. There is no intercorporate indebtedness existing between TLC
and LVCI or between Merger Subsidiary and LVCI.
4.16.4. LVCI is not an investment company as such term is defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
4.16.5. LVCI is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
4.16.6. On the date of the Merger, the fair market value of the assets
of LVCI will exceed the sum of LVCI's liabilities plus the amount of
liabilities, if any, to which the assets are subject.
4.16.7. LVCI agrees to treat the Merger as a Reorganization. This
Agreement is intended to constitute a "plan of reorganization" within
the meaning of Section 1.368-2(g)
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of the income tax regulations promulgated under the Code. LVCI has not
knowingly taken any action that would jeopardize the qualification of
the Merger as a Reorganization. During the period from the date of this
Agreement through the Effective Time, unless all parties hereto shall
otherwise agree in writing, LVCI shall not knowingly take or fail to
take any action which action or failure would jeopardize the
qualification of the Merger as a Reorganization. LVCI shall cause one
or more of its responsible officers to execute and deliver certificates
to confirm the accuracy of certain relevant facts as may be reasonably
requested by counsel in connection with the preparation and delivery of
the tax opinion described in Section 9.1.8.
4.17. INTELLECTUAL PROPERTY
4.17.1. LVCI and its Subsidiaries own or are licensed to use all
Intellectual Property Rights currently used in the business of LVCI or
its Subsidiaries or necessary to conduct the business of LVCI and its
Subsidiaries as currently conducted (the "LVCI Intellectual Property
Rights") other than as would not have or reasonably be expected to have
an LVCI Material Adverse Effect.
4.17.2. Except as set forth in the LVCI Disclosure Letter, LVCI and its
Subsidiaries are not required to pay any royalties, fees or other
amounts to any Person in connection with the use of the LVCI
Intellectual Property Rights.
4.17.3. LVCI and its Subsidiaries have good and valid title to all LVCI
Intellectual Property Rights owned by any of them and valid and
enforceable license rights to all LVCI Intellectual Property Rights
used under license, free and clear, to the knowledge of LVCI, of all
Liens, and other than as set forth in the LVCI Disclosure Letter, to
the knowledge of LVCI, all LVCI Intellectual Property Rights are in
full force and effect and will remain in full force and effect
immediately following the Effective Time other than as would not have
or reasonably be expected to have an LVCI Material Adverse Effect.
4.17.4. Except as disclosed in the LVCI SEC Filings, neither LVCI nor
any of its Subsidiaries: (A) has been notified or is otherwise aware of
any actual or threatened adverse proceeding of any Person pertaining to
any challenge to the scope, validity or enforceability of, or LVCI's
ownership of, any of the LVCI Intellectual Property Rights; (B) is the
subject of any claim of infringement or misappropriation by LVCI or any
of its Subsidiaries of any third party Intellectual Property Rights; or
(C) has any claim for infringement or misappropriation of, or breach of
any license or agreement involving, any of the LVCI Intellectual
Property Rights.
4.18. EMPLOYEE BENEFIT PLANS
4.18.1. "LVCI Employee Plans" shall mean each "employee benefit plan",
as defined in Section 3(3) of ERISA, which (i) is subject to any
provision of ERISA and (ii) is maintained, administered or contributed
to by LVCI or any affiliate and covers any employee or former employee
of LVCI or any affiliate or under which LVCI or any
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affiliate has any Liability. The LVCI Disclosure Letter contains a
complete and correct list of each Employee Plan. With respect to each
LVCI Employee Plan, true and complete copies have been made available
to TLC of: (i) the plan document or agreement or, with respect to any
LVCI Employee Plan that is not in writing, a written description of the
terms thereof; (ii) the trust agreement, insurance contract or other
documentation of any related funding arrangement; (iii) the summary
plan description; (iv) the most recent required Internal Revenue
Service Form 5500, including all schedules thereto; (v) any material
communication to or from any Governmental Authority, including a
written description of any material oral communication; and (vi) all
amendments or modifications to any such document. For purposes of this
Section 4.18.1, "affiliate" of any Person means other Person which,
together with such Person, would be treated as a single employer under
Section 414 of the Code.
4.18.2. No LVCI Employee Plan individually or collectively constitutes
a "defined benefit plan" as defined in Section 3(35) of ERISA.
4.18.3. No LVCI Employee Plan or LVCI Benefit Arrangement constitutes a
"multi-employer plan", as defined in Section 3(37) of ERISA, and no
LVCI Employee Plan is maintained in connection with any trust described
in Section 501(c)(9) of the Code. No LVCI Employee Plan is subject to
Title IV of ERISA. Neither LVCI nor any of its affiliates has incurred,
nor has reason to expect to incur, any Liability under Title IV of
ERISA arising in connection with the termination of, or complete or
partial withdrawal from, any plan previously covered by Title IV of
ERISA that would have, or reasonably be expected to have, individually
or in the aggregate, an LVCI Material Adverse Effect.
4.18.4. Nothing done or omitted to be done and no transaction or
holding of any asset under or in connection with any LVCI Employee Plan
has or will make LVCI or any of its Subsidiaries or any officer or
director of LVCI or any of its Subsidiaries subject to any Liability
under Title I of ERISA or liable for any Tax pursuant to Section 4975
of the Code that would have, or reasonably be expected to have,
individually or in the aggregate, an LVCI Material Adverse Effect.
4.18.5. Each LVCI Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a
part thereof is exempt from Tax pursuant to Section 501(a) of the Code,
and each LVCI Employee Plan has been maintained in material compliance
with its terms and with the requirements prescribed by any and all
statutes, Orders, final rules and final regulations, including but not
limited to ERISA and the Code, which are applicable to such LVCI
Employee Plan.
4.18.6. Except as disclosed in the LVCI Disclosure Letter, there is no
contract, agreement, plan or arrangement covering any employee or
former employee of LVCI or any affiliate that, individually or
collectively, could give rise to the payment of any amount that would
not be deductible pursuant to the terms of Section 280G of the Code.
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4.18.7. "LVCI Benefit Arrangement" shall mean each employment,
severance or other similar contract, arrangement or policy and each
plan or arrangement (written or oral) providing for compensation,
bonus, profit-sharing, stock option, stock purchase, stock appreciation
or other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured arrangements),
health or medical benefits, disability benefits, workers' compensation,
supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, health
or medical insurance or other benefits, but excluding any health,
medical, pension or other benefit plan that is provided to employees by
a Governmental Authority) which (i) is not an LVCI Employee Plan, (ii)
is entered into, maintained or contributed to, as the case may be, by
LVCI or any of its affiliates and (iii) covers any employee or former
employee of LVCI or any of its affiliates. Copies or descriptions of
the LVCI Benefit Arrangements have been made available to TLC. Each
LVCI Benefit Arrangement has been maintained in compliance with its
terms and with the requirements prescribed by any and all Laws that are
applicable to such LVCI Benefit Arrangement.
4.18.8. Except as disclosed in the LVCI Disclosure Letter, the
transactions contemplated hereby will not result in any Liability for
severance pay to any employee or accelerate the exercisability or
vesting of any LVCI options, warrants, stock appreciation rights,
phantom stock awards or any similar instruments as the case may be, nor
will any employee be entitled to any payment solely by reason of such
transactions.
4.18.9. All contributions required to be made to trusts in connection
with any LVCI Employee Plan that would constitute a "defined
contribution plan" (within the meaning of Section 3(34) of ERISA) have
been made in a timely manner in compliance with applicable law and
regulations.
4.18.10. Other than claims in the ordinary course for benefits with
respect to LVCI Employee Plans or LVCI Benefit Arrangements, there are
no Actions (including claims for Taxes, interest, penalties or fines)
pending with respect to any LVCI Employee Plan or LVCI Benefit
Arrangement, or any circumstances which might give rise to any such
Action (including claims for any Taxes, interest, penalties or fines).
4.18.11. All reports, returns and similar documents with respect to the
LVCI Employee Plans or LVCI Benefit Arrangements required to be filed
with any Governmental Authority have been so filed by the due date for
such filings.
4.18.12. LVCI does not provide, nor has it made any current or past
commitment to provide, post-retirement health or medical benefits for
retired employees of LVCI or its Subsidiaries, except as specifically
required under Section 4980B of the Code or Section 601 of ERISA. LVCI
has substantially complied with the notice and continuation
requirements of Section 4980B of the Code and Section 601 of ERISA and
the regulations thereunder.
4.18.13. There has been no amendment to, written interpretation or
announcement (whether or not written) by LVCI or any of its Affiliates
relating to, or change in
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employee participation or coverage under, any LVCI Employee Plan or
LVCI Benefit Arrangement which in the aggregate would increase the per
employee expense of maintaining such LVCI Employee Plan or LVCI Benefit
Arrangement above the level of the expense incurred on a per employee
basis in respect thereof for the fiscal year ended on April 30, 2001
except to the extent, with respect to all employees, that such increase
results from premium increases in the normal course or as would not
have, or reasonably be expected to have, individually or in the
aggregate, an LVCI Material Adverse Effect.
4.19. ENVIRONMENTAL MATTERS
All operations of LVCI and its Subsidiaries have been conducted, and
are now, in compliance with all Environmental Laws. Except as LVCI has publicly
disclosed in documents filed with the SEC since July 1, 1998, LVCI is not aware
that it or any Subsidiary is subject to:
4.19.1. any Action which relates to environmental, health or safety
matters or any investigation or evaluation concerning environmental,
health or safety matters; or
4.19.2. any demand or notice with respect to the breach of, or
Liability under, any Environmental Laws and LVCI is not aware of facts
or circumstances that could reasonably be expected to result in any
such Action to which it or any Subsidiary would be subject and which
could reasonably be expected to result in an LVCI Material Adverse
Effect.
4.20. EMPLOYEES
4.20.1. There is no collective bargaining or other labour union
agreement applicable to any employees of LVCI or any of its
Subsidiaries. Neither LVCI nor any of its Subsidiaries are required to
recognize any labour union or employee association representing its
employees or any agent having bargaining rights for its employees and
neither LVCI nor any of its Subsidiaries have any knowledge, after
appropriate enquiry, of any threatened attempts to organize or
establish any labour union or employee association with respect to its
employee. No material work stoppage or material labour dispute against
LVCI or any of its Subsidiaries in connection with their businesses is
pending or, to the knowledge of LVCI, threatened and, to the knowledge
of LVCI, there is no related organizational activity by any employees
of LVCI or any of its Subsidiaries. Neither LVCI nor any of its
Subsidiaries has, except as set forth in the LVCI Disclosure Letter,
received any written notice of any material unfair labour practice in
connection with the business, and no such complaints are pending before
the National Labor Relations Board or other similar Governmental
Authority.
4.20.2. LVCI has complied in all material respects with all Laws
applicable to it relating to employment, including those relating to
wages, hours, collective bargaining, occupational health and safety,
workers' hazardous materials, employment standards, pay equity and
workers' compensation. There are no outstanding charges or complaints
against LVCI relating to unfair labour practices or discrimination or
under any legislation
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33
relating to employees. LVCI has paid in full all material amounts owing
under applicable occupational health and safety legislation, and to the
knowledge of LVCI, there are no circumstances that would permit a
penalty assessment under such legislation. There are no Orders
requiring LVCI to comply outstanding under applicable occupational
health and safety legislation, except where such Order would not have
or reasonably be expected to have an LVCI Material Adverse Effect.
4.21. NON-ARM'S LENGTH TRANSACTIONS
4.21.1. None of LVCI or its Subsidiaries has made any payment or loan
to, or has borrowed any monies from or is otherwise indebted to, any officer,
director, employee or stockholder of such company or any Person not dealing with
it at arm's length or any Affiliate of the foregoing, except as disclosed in the
LVCI Disclosure Letter and except for usual compensation paid in the ordinary
course of business consistent with past practices.
4.21.2. Except as disclosed in the LVCI Disclosure Letter and except
for contracts made solely between LVCI and its Subsidiaries and except for
consulting contracts or contracts of employment, none of LVCI or its
Subsidiaries is a party to any contract with any officer, director, employee or
shareholder of such company or any Person not dealing with it at arm's length or
any Affiliate of any of the foregoing.
4.22. CANADIAN COMPETITION ACT
The aggregate value of the assets in Canada of LVCI and its
Subsidiaries, determined in accordance with the Competition Act (Canada), does
not exceed $35 million Canadian dollars. The aggregate gross annual revenues
from sales in or from Canada generated by those assets, determined in accordance
with the Competition Act (Canada), does not exceed $35 million Canadian dollars.
4.23. COMPLIANCE WITH LAWS
Except as described or provided for in any LVCI SEC Filing or as
disclosed in the LVCI Disclosure Letter, neither LVCI nor any of its
Subsidiaries is in violation of, or has violated, any applicable provisions of
any Laws, other than violations which would not have or reasonably be expected
to have, individually or in the aggregate, an LVCI Material Adverse Effect.
Except as described or provided for in any LVCI SEC Filing or as disclosed in
the LVCI Disclosure Letter, LVCI and its Subsidiaries have obtained and maintain
in effect all Permits, accreditations, approvals, and consents (collectively,
the "Licenses") required by any Governmental Authority to properly and legally
operate or conduct the businesses in which LVCI and its Subsidiaries are
engaged, other than those Licenses the absence of which would not have or
reasonably be expected to have, individually or in the aggregate, an LVCI
Material Adverse Effect. Except as described or provided for in any LVCI SEC
Filing or as disclosed in the LVCI Disclosure Letter, LVCI is not in default or
in violation of the terms of any of the Licenses and none of the Licenses are
subject to pending revocation or cancellation, other than with respect to
Licenses, the loss of
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which would not have or reasonably be expected to have, individually or in the
aggregate, an LVCI Material Adverse Effect.
4.24. FINDERS' FEES
Except for Goldman, Sachs & Co. ("Goldman"), there is no investment
banker, broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of LVCI or any of its Subsidiaries who might be
entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
4.25. OPINION OF FINANCIAL ADVISOR
LVCI has received the opinion of Goldman to the effect that, as of the
date of such opinion, the Conversion Number is fair to LVCI's stockholders from
a financial point of view.
4.26. VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
LVCI Common Shares is the only vote of the holders of any class or series of
LVCI's capital stock necessary in order for LVCI to perform its obligations
under this Agreement and consummate the transactions contemplated hereby.
4.27. COMPLIANCE WITH HEALTH CARE REQUIREMENTS
4.27.1. To the knowledge of LVCI, LVCI and each Subsidiary is, to the
extent applicable to their operations, (i) eligible to receive payment
under Titles XVIII and XIX of the Social Security Act, and (ii) in
compliance with the conditions of participation in the Medicare and
Medicaid programs, except where such inability in the case of item (i)
or non-compliance in the case of item (ii) does not have and is not
reasonably likely to have, individually or in the aggregate, an LVCI
Material Adverse Effect.
4.27.2. LVCI and each Subsidiary are not required to file cost reports
and other claims and governmental filings with respect to Medicare and
Medicaid programs.
4.27.3. To the knowledge of LVCI, neither LVCI, its Subsidiaries, nor
any of their current or former directors, officers, managers, agents,
employees or other persons acting on behalf of them, has offered, paid,
solicited or received any remuneration in order to obtain or maintain
business, which offer, payment, solicitation, or receipt is in
violation of Law, except where such violation does not have and is not
likely to have, individually or in the aggregate, an LVCI Material
Adverse Effect.
4.28. MEDICARE PARTICIPATION/ACCREDITATION
To the extent applicable to their operations, all health care
facilities owned or operated by LVCI or any Subsidiary (each, an "LVCI
Facility") have any required certificate of need and are
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35
in substantial compliance with the conditions of participation of such programs
and certificate, except where the failure to be so certified, to have such
agreements, or to be in such compliance does not have and is not reasonably
likely to have, individually or in the aggregate, an LVCI Material Adverse
Effect. Neither LVCI nor any Subsidiary has received notice from any
Governmental Authority, fiscal intermediary, carrier or similar entity which
enforces or administers the statutory or regulatory provisions in respect to any
governmental health care program of any pending or threatened investigations,
and to the knowledge of LVCI, no such investigations are pending, threatened or
imminent, which will have or are reasonably expected to have, individually or in
the aggregate, an LVCI Material Adverse Effect. All returns, cost reports and
other filings made by LVCI or any Subsidiary with Medicare, Medicaid or any
other governmental health care program or third party payor are complete and
accurate except where the failure to be so complete and accurate is not
reasonably likely to have, individually or in the aggregate, an LVCI Material
Adverse Effect. No adjustment or disallowance in any such costs reports and
other requests for payment, including adjustments or disallowances for late
filings, has been made or, to the knowledge of LVCI, threatened by any federal
or state agency or instrumentality or other provider reimbursement entities
relating to Medicare or Medicaid or by any third party payor which individually
or in the aggregate would have or reasonably be expected to have an LVCI
Material Adverse Effect, and, to the knowledge of LVCI, there is no basis for
any successful claims or requests for recovery of overpayments from any such
agency, instrumentality, entity or third party payor except for any such claims
or requests which are not reasonably likely to have, individually or in the
aggregate, an LVCI Material Adverse Effect.
4.29. EXCLUSION
To the knowledge of LVCI, neither LVCI nor any Subsidiary employs or
contracts with any person who has been excluded from participation in a Federal
Health Care Program (as defined in 42 U.S.C. ss. 1320a-7b(f)) where such action
could reasonably serve as a basis for LVCI's or any Subsidiary's suspension or
exclusion from the Medicare or any state Medicaid program.
4.30. FEDERAL HEALTH CARE PROGRAMS
Neither LVCI nor any Subsidiary nor any of their officers, directors,
agents or managing employees: (a) has had a civil monetary penalty assessed
against him/her/it under Section 1128A of the Social Security Act or any
regulations promulgated thereunder; (b) has been excluded from participation
under any federal health care program (as defined in 42 U.S.C. ss. 1320a-7b(f));
or (c) has been convicted (as that term is defined in 42 C.F.R. ss. 1001.2) of
any of the categories of offenses as described in the Social Security Act
Section 1128(a) and (b)(1),(2),(3) or any regulations promulgated thereunder.
4.31. THIRD-PARTY PAYMENT
LVCI and each Subsidiary has a valid contract to participate as a
provider of services in and under those third-party payment programs in which it
operates. To the knowledge of LVCI, no Action is pending to suspend, limit,
terminate, or revoke the status of LVCI or any Subsidiary
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as a provider in any such program, and neither LVCI nor any Subsidiary has been
provided notice by any such third-party payor of its intention to suspend,
limit, terminate, revoke, or fail to renew any contractual arrangement with LVCI
or any Subsidiary as a participating provider of services in whole or in part
except where any such Actions or notices are not reasonably likely to have,
individually or in the aggregate, an LVCI Material Adverse Effect.
4.32. BILLING
Except as set forth in the LVCI Disclosure Letter, all billing by, or
on behalf of, any of LVCI or any Subsidiary to third-party payors, including,
but not limited to, Medicare, Medicaid and private insurance companies has been
true and correct in all material respects.
4.33. REIMBURSEMENT MATTERS
Except as disclosed in the LVCI Disclosure Letter, for the previous
three years, LVCI and its Subsidiaries have not received any written notice of
denial of payment or overpayment of a material nature from a U.S. federal health
care program or any other third party reimbursement source (inclusive of managed
care organizations) with respect to items or services provided by LVCI and/or
any Subsidiary, other than those which have been finally resolved in any
settlement for an amount less than $100,000.
4.34. REPRESENTATIONS COMPLETE
None of the representations or warranties made by LVCI herein or in the
LVCI Disclosure Letter, when all such documents are read together in their
entirety, contains any untrue statement of a material fact, or omits to state
any material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF TLC AND MERGER SUBSIDIARY
TLC and Merger Subsidiary, jointly and severally, represent and warrant
to LVCI as follows and acknowledge that LVCI is relying upon such
representations and warranties in connection with the matters contemplated by
this Agreement:
5.1. CORPORATE EXISTENCE AND POWER
TLC and each of its Subsidiaries (including Merger Subsidiary) is a
corporation duly organized, validly existing and in good standing under the Laws
of its province or other jurisdiction of incorporation or organization, has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the business it is
conducting, or the
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operation, ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the failure to
be so qualified would not have or reasonably be expected to have, individually
or in the aggregate, a TLC Material Adverse Effect. TLC has heretofore delivered
to LVCI true and complete copies of TLC's articles of incorporation and bylaws
as currently in effect.
5.2. CORPORATE AUTHORIZATION
TLC and Merger Subsidiary have all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by TLC and Merger
Subsidiary of this Agreement and the consummation of the Merger by TLC and
Merger Subsidiary are within each of TLC and Merger Subsidiary's corporate
powers and, except for any required approvals by TLC's stockholders in
connection with the Merger, have been duly authorized by all necessary corporate
action on the part of TLC and Merger Subsidiary. This Agreement has been duly
executed and delivered by TLC and Merger Subsidiary and constitutes a valid and
binding obligation of TLC and Merger Subsidiary.
5.3. GOVERNMENTAL AUTHORIZATION
The execution, delivery and performance by TLC and Merger Subsidiary of
this Agreement and the consummation of the Merger by Merger Subsidiary require
no action by or in respect of, or filing with, any Governmental Authority other
than (i) the filing of a certificate of merger in accordance with Delaware Law;
(ii) the filing of articles of amendment of TLC to amend the name of TLC to "TLC
Vision Corporation"; (iii) the filing of articles of continuance of TLC under
the Laws of the Province of New Brunswick and the authorization of the
continuance of TLC in accordance with the Laws of the Province of Ontario; (iv)
compliance with any applicable requirements of the HSR Act, the Exchange Act and
the Securities Act; (v) compliance with any applicable requirements of the
Ontario Act; (vi) compliance with the listing requirements of the NASD; (vii)
the filing with, and approval by the TSE and NASDAQ of the conditional listing
application and satisfaction of the conditions contained therein and the
approval by the TSE of the increase in the number of shares authorized for
issuance under the TLC Stock Option Plan and other matters in connection with
the Replacement Options (including, if applicable, approval of a new stock
option plan of TLC relating thereto); and (vii) compliance with any applicable
state securities or Blue Sky laws, except where the failure of any action to be
taken by any Governmental Authority or filing to be made would not have or
reasonably be expected to have, individually or in the aggregate, a TLC Material
Adverse Effect or prevent consummation of the Merger or the transactions
contemplated hereby.
5.4. NON-CONTRAVENTION
The execution, delivery and performance by TLC and Merger Subsidiary of
this Agreement and the consummation of the Merger by Merger Subsidiary do not
and will not (i) contravene or conflict with the articles of incorporation or
bylaws of TLC or Merger Subsidiary (except for the appointment of the LVCI
Nominees, which is conditional upon an amendment
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being made to the articles of TLC to increase the size of the TLC Board), (ii)
assuming compliance with the matters referred to in Section 5.3, contravene or
conflict with or constitute a violation of any provision of any Law or Order
binding upon or applicable to TLC or any of its Subsidiaries, (iii) constitute a
default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of TLC or any of its Subsidiaries or to
a loss of any benefit to which TLC or any of its Subsidiaries is entitled under
any provision of any TLC Material Contract or other material agreement or other
instrument binding upon TLC or any of its Subsidiaries or any License,
franchise, Permit or other similar authorization held by TLC or any of its
Subsidiaries, or (iv) result in the creation or imposition of any Lien on any
material asset of TLC or any of its Subsidiaries, except for any occurrences or
results referred to in clauses (ii), (iii) and (iv) which would not have or
reasonably be expected to have, individually or in the aggregate, a TLC Material
Adverse Effect or prevent consummation of the transactions contemplated hereby.
5.5. CAPITALIZATION
5.5.1. The entire authorized capital stock of TLC consists of an
unlimited number of TLC Common Shares. As of July 31, 2001, there were
outstanding: (a) 38,048,748 TLC Common Shares (with attached common
share purchase rights (the "TLC Rights") in accordance with TLC's
Shareholder Rights Plan (the "TLC Rights Plan") evidenced by the
Shareholder Rights Plan Agreement dated as of September 21, 1999,
between TLC and CIBC Mellon Trust Company), (b) warrants to purchase
100,000 TLC Common Shares at an exercise price of Cdn.$18.80 per share,
and (c) employee and other stock options issued pursuant to the TLC
Stock Option Plan or otherwise to purchase an aggregate of 2,798,001
TLC Common Shares. In addition, an aggregate of 500,000 TLC Common
Shares have been reserved for issuance under TLC's Share Purchase Plan,
an aggregate of 2,317,999 have been reserved for issuance under the TLC
Stock Option Plan and an aggregate of 457,497 TLC Common Shares have
been reserved for issuance as compensation for doctors as previously
disclosed in the TLC SEC Filings. All outstanding shares of capital
stock of TLC have been duly authorized and validly issued and are fully
paid and non-assessable and free of pre-emptive rights. Except as set
forth in this Section 5.5.1, there are outstanding as of the date
hereof (i) no shares of capital stock or other voting securities of
TLC, (ii) no securities of TLC convertible into or exchangeable for
shares of capital stock or voting securities of TLC, and (iii) no
options, warrants or other rights to acquire from TLC, and, no
obligation of TLC to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of TLC (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "TLC Securities"). Except as disclosed
in the TLC Disclosure Letter, between the date hereof and the Effective
Time, no TLC Securities will be issued. TLC has not issued, granted or
awarded any phantom stock, stock appreciation rights or any similar
instruments to any Person. There are no outstanding obligations of TLC
or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any TLC Securities. The TLC Common Shares to be exchanged for LVCI
Common Shares in the Merger have been duly authorized and allotted and
when issued and delivered in accordance with the terms of this
Agreement, will have been validly issued and will be
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39
fully paid and non-assessable and the issuance thereof is not subject
to any pre-emptive or other similar right. All of the Replacement
Options have been or will be, prior to the Effective Time, duly
authorized and the TLC Common Shares issuable on the exercise of the
Replacement Options have been or will be, prior to the Effective Time,
duly authorized and allotted and when issued in accordance with the
terms of this Agreement and the Replacement Options will have been or
will be, prior to the Effective Time, validly issued and will be fully
paid and non-assessable and the issuance thereof is not subject to any
pre-emptive or other rights. TLC Common Shares issuable upon the
exercise of the Replacement Options will be conditionally listed on the
TSE and NASDAQ, subject only to notice of issuance. The transactions
contemplated hereby will not by themselves result in the TLC Rights
under the TLC Rights Plan becoming exercisable.
5.5.2. No bonds, debentures, notes or other evidence of indebtedness of
TLC having the right to vote (or convertible into securities having the
right to vote) on any matters on which stockholders may vote (the "TLC
Voting Debt") are outstanding. Except as set forth in this Section 5.5,
there are outstanding (A) no shares of capital stock, TLC Voting Debt
or other voting securities of TLC, (B) no securities of TLC or any
Subsidiary of TLC convertible into or exchangeable for shares of
capital stock, TLC Voting Debt or other voting securities of TLC or any
Subsidiary of TLC, and (C) no options, warrants, calls, rights
(including pre-emptive rights), commitments or agreements pursuant to
which TLC or any Subsidiary of TLC is obligated to issue, deliver,
sell, purchase, redeem or acquire, or cause to be issued, delivered,
sold, purchased, redeemed or acquired, additional shares of capital
stock or any TLC Voting Debt or other voting securities of TLC or of
any Subsidiary of TLC or obligating TLC or any Subsidiary of TLC to
grant, extend or enter into any such option, warrant, call, right,
commitment or agreement, except in the case of Subsidiaries where such
event would not be or would not reasonably be expected to be a TLC
Material Adverse Change.
5.5.3. There are not as of the date hereof and there will not be at the
Effective Time any stockholder agreements, voting trusts or other
agreements or understandings to which TLC is a party or by which it is
bound relating to the voting of any shares of the capital stock of TLC
which will limit in any way the granting of proxies by or on behalf of
or from, or the casting of votes by, TLC stockholders with respect to
the Merger.
5.6. SUBSIDIARIES
5.6.1. TLC has provided to LVCI the name and jurisdiction of
incorporation or organization of each Subsidiary of TLC. Except as
disclosed in the TLC Disclosure Letter, the issued and outstanding
shares of capital stock of each Subsidiary of TLC have been duly
authorized and validly issued and are fully paid and non-assessable and
are owned by TLC.
5.6.2. Except as disclosed in the TLC Disclosure Letter, all of the
outstanding capital stock or other ownership interests, as applicable,
of each Subsidiary of TLC which is owned by TLC, directly or
indirectly, is owned free and clear of any Lien and free of
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any other limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests, as applicable, but excluding rights of first
refusal among share or equity holders of the Subsidiaries). There are
no outstanding obligations of TLC or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding securities in
any Subsidiary of TLC.
5.6.3. Except for shares of the Subsidiaries of TLC and as disclosed in
the TLC Disclosure Letter, TLC does not own, directly or indirectly,
any shares of stock or other equity or long term debt securities of any
corporation or have any equity interest in any Person.
5.7. CANADIAN SECURITIES LAW AND TLC FINANCIAL STATEMENTS
5.7.1. TLC is a reporting issuer under the Ontario Act, is not on the
list of defaulting reporting issuers maintained under the Ontario Act,
and has delivered or made available to LVCI a true and complete copy of
each quarterly, annual or other form, report, filing or document filed
by TLC with the Governmental Authorities under the Ontario Act, or
under the rules, policies, listing agreements or other requirements of
the TSE or any other stock exchange on which any of TLC's securities
are listed and posted for trading ("Exchange Filing Requirements"),
since July 1, 1998, which are all the forms, reports, filings or
documents (other than preliminary material) that TLC was required to
file with the Governmental Authorities under the Ontario Act, or
pursuant to Exchange Filing Requirements, since July 1, 1998. TLC will
deliver to LVCI a true and complete copy of each quarterly, annual or
other report or filing filed by TLC with the Governmental Authorities
under the Ontario Act, or Exchange Filing Requirements, subsequent to
the date of this Agreement and prior to the Closing Date. All of such
forms, reports, filings or documents filed prior to the date of this
Agreement are hereinafter referred to as the "TLC Disclosure
Documents". TLC has not filed any confidential material change reports
still maintained on a confidential basis. TLC is in compliance in all
material respects with applicable securities Laws of Ontario and other
applicable jurisdictions of Canada.
5.7.2. As of their respective filing dates, the TLC Disclosure
Documents complied in all material respects with the requirements of
the Ontario Act, all other applicable Laws, and Exchange Filing
Requirements. As of their respective filing dates, none of the TLC
Disclosure Documents contained any untrue statement of a material fact
or omitted 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.
5.7.3. As of their respective filing dates, the financial statements of
TLC prepared in accordance with Canadian GAAP, including the notes
thereto, included in the TLC Disclosure Documents complied as to form
in all material respects with applicable accounting requirements and
with the published rules and regulations of applicable Governmental
Authorities and the Ontario Securities Commission with respect thereto
as of their respective filing dates, and have been prepared in
accordance with Canadian
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GAAP (except as may be indicated in the notes thereto or, in the case
of unaudited statements, included in quarterly reports). Such financial
statements present fairly the consolidated financial position and
results of operations of TLC and its Subsidiaries at the dates
presented, subject to year-end adjustments and the absence of notes
thereto) and reflect appropriate and adequate reserves in respect of
contingent liabilities, if any, of TLC and its Subsidiaries on a
consolidated basis. There has been no change in TLC accounting
policies, except as described in the notes to such financial
statements, since July 1, 1998.
5.8. SEC FILINGS AND FINANCIAL STATEMENTS
5.8.1. TLC has delivered or made available to LVCI (i) its annual
report on Form 10-K for the fiscal year ended May 31, 2001 (the "TLC
10-K"), (ii) its proxy statement relating to the annual meeting of
stockholders held on October 26, 2000, and (iii) all of its other
reports, statements, schedules and registration statements filed by TLC
with the SEC since July 1, 1998, and in each case all materials
incorporated therein by reference or filed therewith as exhibits (the
filings referred to in clauses (i) through (iii) above and the
materials referred to above, in each case delivered or made available
to LVCI prior to the date hereof, being hereinafter referred to as the
"TLC SEC Filings").
5.8.2. The financial statements of TLC prepared in accordance with
GAAP, including the notes thereto, included in the TLC SEC Filings (the
"TLC Financial Statements") complied as to form in all material
respects with applicable accounting requirements and with the published
rules and regulations of applicable Governmental Authorities and the
SEC with respect thereto as of their respective filing dates, and have
been prepared in accordance with GAAP (except as may be indicated in
the notes thereto or, in the case of unaudited statements included in
quarterly reports on Form 10-Q, as permitted by Form 10-Q of the SEC).
The TLC Financial Statements present fairly the consolidated financial
position and results of operations of TLC and its Subsidiaries at the
dates presented, subject to year-end adjustments and the absence of
notes thereto) and reflect appropriate and adequate reserves in respect
of contingent liabilities, if any, of TLC and its Subsidiaries. There
has been no change in TLC accounting policies, except as described in
the notes to the TLC Financial Statements, since July 1, 1998.
5.8.3. As of its filing date or with respect to any proxy statements
included in the TLC SEC Filings, as of the date it was first mailed to
TLC stockholders, each such report or statement filed pursuant to the
Exchange Act complied as to form and content in all material respects
with the requirements of the Exchange Act, and did not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading.
5.8.4. Each registration statement and any amendment thereto filed
pursuant to the Securities Act included in the TLC SEC Filings, as of
the date such statement or amendment became effective, complied as to
form and content in all material respects with the Securities Act and
did not contain any untrue statement of a material fact or omit
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42
to state any material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances in
which they were made, not misleading.
5.8.5. All documents that TLC is responsible for filing with the TSE,
NASDAQ or any Governmental Authority in connection with the Merger will
comply as to form and content in all material respects with the
applicable provisions of the Securities Act, the Exchange Act, the
Ontario Act and Exchange Filing Requirements.
5.9. JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT
None of the information supplied by TLC for inclusion in (a) the Joint
Proxy Statement/Prospectus to be filed by LVCI and TLC with the SEC and any
amendments or supplements thereto, or (b) the Registration Statement to be filed
by TLC with the SEC in connection with the Merger, and any amendments or
supplements thereto, will, at the respective times such documents are filed,
and, in the case of the Joint Proxy Statement/Prospectus, at the time the Joint
Proxy Statement/Prospectus or any amendment or supplement thereto is first
mailed to stockholders of LVCI and of TLC and at the time of the LVCI
Stockholder Meeting and the TLC Stockholder Meeting and at the Effective Time,
and, in the case of the Registration Statement, when it becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
All documents that TLC is responsible for filing with the SEC in connection with
the Merger will comply as to form and content in all material respects with the
applicable provisions of the Exchange Act, the Securities Act and state
securities Laws.
5.10. ABSENCE OF CERTAIN CHANGES
Except as contemplated hereby or as described or provided for in any
TLC SEC Filing or as disclosed in the TLC Disclosure Letter, since May 31, 2001,
TLC and its Subsidiaries have conducted their business in all material respects
in the ordinary course consistent with past practices and there has not been:
5.10.1. any event, occurrence or development or state of circumstances
or facts, which affects or relates to TLC, which has had or would
reasonably be expected to have a TLC Material Adverse Effect;
5.10.2. any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of TLC,
or any repurchase, redemption or other acquisition by TLC or any of its
Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, TLC or any of its
Subsidiaries;
5.10.3. any amendment of any term of any outstanding security of TLC
or any of its Subsidiaries;
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5.10.4. any claim or threatened claim against TLC or one or more of
its Subsidiaries in respect of one or more TLC Material Contracts where
the Liability of TLC or one or more of its Subsidiaries exceeds, or
could reasonably be expected to exceed, individually or in the
aggregate, $1,000,000;
5.10.5. any purchase or lease of any assets by TLC or any of its
Subsidiaries, other than assets purchased or leased in the ordinary
course of business consistent with past practices;
5.10.6. any change in any method of accounting or accounting practices
by TLC or any of its Subsidiaries, except for any such change required
by reason of a concurrent change in GAAP or Canadian GAAP or to conform
a Subsidiary's accounting policies and practices to those of TLC;
5.10.7. any material sale, lease or other disposition of any of the
assets of TLC or any of its Subsidiaries, other than assets sold,
leased or otherwise disposed of in the ordinary course of business
consistent with past practices which would not, in the aggregate, have
or reasonably be expected to have a TLC Material Adverse Effect;
5.10.8. except for contractual obligations existing on the date hereof
and as provided in the TLC Disclosure Letter, any (i) grant of any
severance or termination pay to any director, officer or employee of
TLC other than in the ordinary course of business, (ii) entering into
of any employment, deferred compensation or other similar agreement (or
any amendment to any such existing agreement) with any director,
officer or employee of TLC or any of its Subsidiaries except in the
ordinary course of business consistent with past practices with persons
who are not executive officers, (iii) increase in benefits payable
under any existing severance or termination pay policies or employment
agreements, (iv) increase in compensation, bonus or other benefits
payable to directors, officers or employees of TLC or any of its
Subsidiaries, other than in the ordinary course of business consistent
with past practices or (v) acceleration of the exercisability or
vesting of any options, as the case may be;
5.10.9. any actual or, to the knowledge of TLC, threatened suspension
or cancellation of any Permit held by TLC or any Subsidiary other than
those the suspension or cancellation of which would not have or
reasonably be expected to have, individually or in the aggregate, a TLC
Material Adverse Effect;
5.10.10. to the knowledge of TLC, any change in any federal or state
Law applicable to TLC or any of its Subsidiaries, or in the
interpretation or application thereof, which individually or in the
aggregate has had or would reasonably be expected to have a TLC
Material Adverse Effect;
5.10.11. to the knowledge of TLC, any Action, brought against or
threatened against TLC or any of its Subsidiaries by any Governmental
Authority which has had or would reasonably be expected to have,
individually or in the aggregate, a TLC Material Adverse Effect;
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5.10.12. to the knowledge of TLC, any Action brought or threatened by
Governmental Authority which has had or would reasonably be expected to
have, individually or in the aggregate, a TLC Material Adverse Effect;
or
5.10.13. any agreement or commitment by TLC or any of its Subsidiaries
to take any actions described in this Section 5.10.
5.11. NO UNDISCLOSED MATERIAL LIABILITIES
Except as disclosed in any TLC SEC Filing, (i) there are no Liabilities
of TLC or any of its Subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and (ii) there is
no existing condition, situation or set of circumstances which, individually or
in the aggregate, have or would reasonably be expected to have a TLC Material
Adverse Effect, other than in the case of either (i) or (ii):
(a) Liabilities disclosed or provided for in TLC's audited
consolidated balance sheet dated as of May 31, 2001;
(b) Liabilities incurred in the ordinary course of business
consistent with past practices since May 31, 2001, which in the
aggregate are not material to TLC or its Subsidiaries taken as a
whole; and
(c) Liabilities under this Agreement.
5.12. PERSONAL PROPERTY
5.12.1. Subject to Permitted Liens, TLC or its Subsidiaries have
marketable and indefeasible title to all personal property owned by TLC
or its Subsidiaries and used in the conduct of their business, other
than property that has been disposed of in the ordinary course of
business, except for property where the failure to have such marketable
and indefeasible title would not, individually or in the aggregate,
have or reasonably be expected to have a TLC Material Adverse Effect.
5.12.2. (i) To the knowledge of TLC all of the leases of leased
personal property used in the business conducted by TLC and its
Subsidiaries are valid and binding and in full force and effect and
(ii) there has been no material breach of any such lease by TLC or its
Subsidiaries or, to the knowledge of TLC, any other Person, which
breach has not been cured or waived except for any breaches of leases
the absence of which would not have or reasonably be expected to have a
TLC Material Adverse Effect.
5.13. CONTRACTS
Except for (i) purchase orders, invoices, confirmations and similar
documents involving the purchase or sale of goods or services for less than
$1,000,000 over a period of 12 months or less, (ii) leases of personal property,
(iii) TLC Benefit Arrangements, and (iv) contracts relating to intercompany
obligations, the following contracts (A) to which TLC or any of its Subsidiaries
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is a party or (B) by which any of the assets of TLC or any of its Subsidiaries
are bound are "TLC Material Contracts": (1) contracts which, individually or in
the aggregate, pertain to the borrowing of money in amounts in excess of
$1,000,000; (2) contracts creating Liens other than Permitted Liens; (3)
contracts creating guarantees in amounts that, individually or in the aggregate,
exceed $1,000,000; (4) contracts relating to material employment or consulting
services; (5) contracts relating to any single capital expenditure by TLC or any
of its Subsidiaries in excess of $1,000,000 or aggregate capital expenditures in
excess of $5,000,000; (6) contracts for the purchase or sale of real property,
any business or line of business or for any merger or consolidation; (7) joint
venture or partnership agreements; (8) contracts that individually require by
their respective terms after the date hereof the payment or receipt of
$1,000,000 or more; (9) any agreement involving derivatives, hedging or futures
under which the obligations of TLC or any of its Subsidiaries could reasonably
be expected to exceed $1,000,000; (10) any contract that limits the freedom of
TLC or its Subsidiaries to compete in any line of business or to conduct
business in any geographic location; or (11) any contract for the purchase or
sale of all or substantially all of the assets or stock of any company or
operating division. To the knowledge of TLC, all TLC Material Contracts are
valid and binding and in full force and effect. There has been no material
breach of any contract by TLC or its Subsidiaries or, to the knowledge of TLC,
any other Person, which breach has not been cured or waived. TLC has made
available to LVCI true and complete copies of the TLC Material Contracts.
5.14. LITIGATION
Except as described in any TLC SEC Filing or as disclosed in the TLC
Disclosure Letter, there is no Action pending against, or, to the knowledge of
TLC, threatened against TLC or any of its Subsidiaries or any of their
respective assets that is not covered by insurance. Those Actions that are
pending against, or are, to the knowledge of TLC, threatened against TLC or any
of its Subsidiaries or any of their respective assets would not have or
reasonably be expected to have, individually or in the aggregate, a TLC Material
Adverse Effect. Neither TLC nor any of its Subsidiaries is in violation of any
Order.
5.15. TAXES
5.15.1. TLC and its Subsidiaries have timely filed all Tax Returns
required to be filed with any tax authority when due in accordance with
all applicable Laws except where the failure to do so would not have or
reasonably be expected to have, individually or in the aggregate, a TLC
Material Adverse Effect, and such Tax Returns, are complete and
correct;
5.15.2. No deficiency in payment of any Taxes for any period has been
asserted by any taxing authority which remains unsettled at the date
hereof except for deficiencies which would not have or reasonably be
expected to have, individually or in the aggregate, a TLC Material
Adverse Effect;
5.15.3. TLC is not liable and it is not reasonably likely that TLC will
be liable for any Taxes not heretofore paid or reserved against in the
TLC May 31, 2001 financial
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46
statements except those incurred in the ordinary course of business
consistent with past practice, or which would not have or reasonably be
expected to have, individually or in the aggregate, a TLC Material
Adverse Effect;
5.15.4. Canadian federal income tax assessments have been issued to TLC
covering all past periods up to and including its fiscal year ended May
31, 2000. There are no Actions now pending or made or, to the knowledge
of TLC, threatened against TLC in respect of any Taxes except as would
not have, or reasonably be expected to have a TLC Material Adverse
Effect. Neither TLC nor any Subsidiary has received any written
notification that any material issues have been raised (and are
currently pending) by the Canada Customs and Revenue Agency, the United
States Internal Revenue Service or any other taxing authority,
including, without limitation, any sales tax authority, in connection
with any Tax Returns;
5.15.5. There are no agreements, waivers or other arrangements
providing for any extension of time with respect to the filing of any
Tax Return or other document or the payment of any Taxes by TLC or the
period for any assessment or reassessment of Taxes (except that in the
United States subsidiaries of TLC have filed extensions of the deadline
for filing Tax Returns for the year ended May 31, 2001). Only the
fiscal years of TLC subsequent to May 31, 1996 remain open for
reassessment for additional Canadian federal income Taxes; and
5.15.6. TLC has withheld from each amount paid by TLC, or otherwise
collected, or credited to any person the amount of Taxes required to be
withheld therefrom or collected by TLC and has remitted such Taxes to
the proper tax or other Governmental Authorities within the time
required under applicable Laws.
5.16. TAX FREE MERGER
5.16.1. Following the Merger, the Surviving Corporation will hold at
least 90 percent of the fair market value of the net assets and at
least 70 percent of the fair market value of the gross assets held by
Merger Subsidiary prior to the Merger (excluding the Merger
Consideration).
5.16.2. TLC will acquire LVCI Common Shares solely in exchange for TLC
Common Shares, and in the Merger, LVCI Common Shares representing
control of LVCI as defined in Section 368(c) of the Code, will be
exchanged solely for TLC Common Shares.
5.16.3. Prior to the Merger, TLC will be in control of Merger
Subsidiary within the meaning of Section 368(c) of the Code.
5.16.4. TLC has no plan or intention as part of the plan of the Merger
to cause the Surviving Corporation to issue after the Effective Time
additional shares of stock that would result in TLC losing control of
the Surviving Corporation within the meaning of Section 368(c) of the
Code or any warrants, options, convertible securities, or any other
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type of right pursuant to which any person could acquire stock in the
Surviving Corporation that, if exercised or converted, would affect
TLC's acquisition or retention of control of the Surviving Corporation,
as defined in Section 368(c) of the Code.
5.16.5. TLC has no plan or intention to re-acquire any of the TLC
Common Shares issued in the Merger.
5.16.6. TLC has no plan or intention to liquidate the Surviving
Corporation, to merge the Surviving Corporation with or into another
corporation or to sell or otherwise dispose of the Surviving
Corporation stock except for transfers of stock to a corporation
controlled by TLC.
5.16.7. TLC will cause the Surviving Corporation to attach to a timely
filed U.S. income tax return for the taxable year in which the Merger
occurs the statement required by Section 1.367(a)-3(c)(6) of the
Treasury regulations issued under Section 367(a) of the Code.
5.16.8. Following the Merger, the Surviving Corporation will continue
LVCI's historic business or use a significant portion of its historic
business assets in a business.
5.16.9. Merger Subsidiary will have no liabilities assumed by the
Surviving Corporation and will not transfer to the Surviving
Corporation in the Merger any assets subject to liabilities.
5.16.10. There is no intercorporate indebtedness existing between TLC
and LVCI or between Merger Subsidiary and LVCI.
5.16.11. Except as provided in Section 10.4 of this Agreement, TLC and
Merger Subsidiary will pay their respective expenses incurred in
connection with the Merger.
5.16.12. Neither TLC nor Merger Subsidiary is an investment company as
such term is defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
5.16.13. TLC agrees to treat the Merger as a Reorganization. This
Agreement is intended to constitute a "plan of reorganization" within
the meaning of Section 1.368-2(g) of the income tax regulations
promulgated under the Code. Neither TLC nor Merger Subsidiary has
knowingly taken any action that would jeopardize the qualification of
the Merger as a Reorganization. During the period from the date of this
Agreement through the Effective Time, unless all parties hereto shall
otherwise agree in writing, neither TLC nor Merger Subsidiary shall
knowingly take or fail to take any action which action or failure would
jeopardize the qualification of the Merger as a Reorganization. TLC
shall cause one or more of its responsible officers to execute and
deliver certificates to confirm the accuracy of certain relevant facts
as may be reasonably requested by counsel in connection with the
preparation and delivery of the tax opinion described in Section 9.1.8.
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5.16.14. Following the Effective Time, TLC shall use its commercially
reasonable best efforts, and shall cause the Surviving Corporation to
use its commercially reasonable best efforts, to conduct its business
and the Surviving Corporation's business in a manner which would not
jeopardize the characterization of the Merger as a Reorganization.
5.17. INTELLECTUAL PROPERTY
5.17.1. TLC and its Subsidiaries own or are licensed to use all
Intellectual Property Rights currently used in the business of TLC or
its Subsidiaries or necessary to conduct the business of TLC and its
Subsidiaries as currently conducted or currently anticipated to be
conducted (the "TLC Intellectual Property Rights") other than as would
not have or reasonably be expected to have a TLC Material Adverse
Effect.
5.17.2. Except as set forth in the TLC Disclosure Letter, TLC and its
Subsidiaries are not required to pay any royalties, fees or other
amounts to any Person in connection with the use of the TLC
Intellectual Property Rights.
5.17.3. TLC and its Subsidiaries have good and valid title to all TLC
Intellectual Property Rights owned by any of them and valid and
enforceable license rights to all TLC Intellectual Property Rights used
under license, free and clear, to the knowledge of TLC, of all Liens,
and other than as set forth in the TLC Disclosure Letter, to the
knowledge of TLC, all TLC Intellectual Property Rights are in full
force and effect and will remain in full force and effect immediately
following the Effective Time other than as would not have or reasonably
be expected to have a TLC Material Adverse Effect.
5.17.4. Neither TLC nor any of its Subsidiaries: (A) has been notified
or is otherwise aware of any actual or threatened adverse proceeding of
any Person pertaining to any challenge to the scope, validity or
enforceability of, or TLC's ownership of, any of the TLC Intellectual
Property Rights; (B) is the subject of any claim of infringement or
misappropriation by TLC or any of its Subsidiaries of any third party
Intellectual Property Rights; or (C) has any claim for infringement or
misappropriation of, or breach of any license or agreement involving,
any of the TLC Intellectual Property Rights.
5.18. EMPLOYEE BENEFIT PLANS
5.18.1. "TLC Employee Plans" shall mean each U.S.-based "employee
benefit plan", as defined in Section 3(3) ERISA, which is subject to
any provision of ERISA and each Canadian based employee benefit plant
that is maintained, administered or contributed to by TLC or any
affiliate and covers any employee or former employee of TLC or any
affiliate or under which TLC or any affiliate has any Liability. The
TLC Disclosure Letter contains a complete and correct list of each TLC
Employee Plan. With respect to each TLC Employee Plan, true and
complete copies have been made available to LVCI of: (i) the plan
document or agreement or, with respect to any TLC Employee Plan that is
not in writing, a written description of the terms thereof; (ii) the
trust agreement, insurance contract or other documentation of any
related funding
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arrangement; (iii) the summary plan description; (iv) the most recent
required Internal Revenue Service Form 5500, including all schedules
thereto; (v) any material communication to or from any Governmental
Authority, including a written description of any oral communication;
and (vi) all amendments or modifications to any such document. For
purposes of this Section 5.18.1, "affiliate" of any Person means other
Person which, together with such Person, would be treated as a single
employer under Section 414 of the Code.
5.18.2. No TLC Employee Plan individually or collectively constitutes a
"defined benefit plan" as defined in Section 3(35) of ERISA or
applicable Canadian legislation.
5.18.3. No TLC Employee Plan or TLC Benefit Arrangement constitutes a
"multi-employer plan", as defined in Section 3(37) of ERISA or in the
applicable Canadian pension benefit legislation, and no TLC Employee
Plan is maintained in connection with any trust described in Section
501(c)(9) of the Code. No TLC Employee Plan is subject to Title IV of
ERISA. Neither TLC nor any of its affiliates has incurred, nor has
reason to expect to incur, any Liability under Title IV of ERISA
arising in connection with the termination of, or complete or partial
withdrawal from, any plan previously covered by Title IV of ERISA that
would have, or reasonably be expected to have, individually or in the
aggregate, a TLC Material Adverse Effect.
5.18.4. Nothing done or omitted to be done and no transaction or
holding of any asset under or in connection with any TLC Employee Plan
has or will make TLC or any of its Subsidiaries or any officer or
director of TLC or any of its Subsidiaries subject to any Liability
under Title I of ERISA or liable for any Tax pursuant to Section 4975
of the Code that would have, or reasonably be expected to have,
individually or in the aggregate, a TLC Material Adverse Effect.
5.18.5. Each TLC Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a
part thereof is exempt from Tax pursuant to Section 501(a) of the Code,
and each TLC Employee Plan has been maintained in material compliance
with its terms and with the requirements prescribed by any and all
statutes, Orders, final rules and final regulations, including but not
limited to applicable Canadian pension legislation, ERISA and the Code,
which are applicable to such TLC Employee Plan.
5.18.6. There is no contract, agreement, plan or arrangement covering
any employee or former employee of TLC or any affiliate that,
individually or collectively, could give rise to the payment of any
amount that would not be deductible pursuant to the terms of Section
280G of the Code.
5.18.7. "TLC Benefit Arrangement" shall mean each employment, severance
or other similar contract, arrangement or policy and each plan or
arrangement (written or oral) providing for compensation, bonus,
profit-sharing, stock option, stock purchase, stock appreciation or
other forms of incentive or deferred compensation, vacation
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benefits, insurance coverage (including any self-insured arrangements),
health or medical benefits, disability benefits, workers' compensation,
supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, health
or medical insurance or other benefits, but excluding any health,
medical, pension or other benefit plan that is provided to employees by
a Governmental Authority) which (i) is not a TLC Employee Plan, (ii) is
entered into, maintained or contributed to, as the case may be, by TLC
or any of its affiliates and (iii) covers any employee or former
employee of TLC or any of its affiliates. Copies or descriptions of the
TLC Benefit Arrangements have been made available to LVCI. Each TLC
Benefit Arrangement has been maintained in compliance with its terms
and with the requirements prescribed by any and all Laws that are
applicable to such TLC Benefit Arrangement.
5.18.8. The transactions contemplated hereby will not result in any
Liability for severance pay to any employee or accelerate the
exercisability or vesting of any TLC options, warrants, stock
appreciation rights, phantom stock awards or any similar instruments as
the case may be, nor will any employee be entitled to any payment
solely by reason of such transactions.
5.18.9. All contributions required to be made to trusts in connection
with any TLC Employee Plan that would constitute a "defined
contribution plan" (within the meaning of Section 3(34) of ERISA or
applicable Canadian pension benefit legislation) have been made in a
timely manner in compliance with applicable law and regulations.
5.18.10. Other than claims in the ordinary course for benefits with
respect to TLC Employee Plans or TLC Benefit Arrangements, there are no
Actions (including claims for any Taxes, interest, penalties or fines)
pending with respect to any TLC Employee Plan or TLC Benefit
Arrangement, or any circumstances which might give rise to any such
Action (including claims for any Taxes, interest, penalties, or fines).
5.18.11. All reports, returns and similar documents with respect to the
TLC Employee Plans or TLC Benefit Arrangements required to be filed
with any Governmental Authority have been so filed by the due date for
such filings.
5.18.12. TLC does not provide, nor has it made any current or past
commitment to provide, post-retirement health or medical benefits for
retired employees of TLC or its Subsidiaries, except as specifically
required under Section 4980B of the Code or Section 601 of ERISA. TLC
has substantially complied with the notice and continuation
requirements of Section 4980B of the Code and Section 601 of ERISA and
the regulations thereunder.
5.18.13. There has been no amendment to, written interpretation or
announcement (whether or not written) by TLC or any of its Affiliates
relating to, or change in employee participation or coverage under, any
TLC Employee Plan or TLC Benefit Arrangement which in the aggregate
would increase the per employee expense of maintaining such TLC
Employee Plan or TLC Benefit Arrangement above the level of the expense
incurred on a per employee basis in respect thereof for the fiscal year
ended on May 31, 2001
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except to the extent, with respect to all employees, that such increase
results from premium increases in the normal course or as would not
have, or reasonably be expected to have, individually or in the
aggregate, a TLC Material Adverse Effect.
5.19. ENVIRONMENTAL MATTERS
All operations of TLC and its Subsidiaries have been conducted, and are
now, in compliance with all Environmental Laws. Except as TLC has publicly
disclosed in documents filed with the SEC since July 1, 1998, TLC is not aware
that it or any Subsidiary is subject to:
5.19.1. any Action which relates to environmental, health or safety
matters or any investigation or evaluation concerning environmental,
health or safety matters; or
5.19.2. any demand or notice with respect to the breach of, or
Liability under, any Environmental Laws and TLC is not aware of facts
or circumstances that could reasonably be expected to result in any
such Action which it or any Subsidiary would be subject and which could
reasonably be expected to result in a TLC Material Adverse Effect.
5.20. EMPLOYEES
5.20.1. There is no collective bargaining or other labour union
agreement or employee association applicable to any employees of TLC or
any of its Subsidiaries. Neither TLC nor any of its Subsidiaries has
made any commitment to, or conducted any negotiation with, any labour
union or employee association with respect to any future agreement or
arrangement. Neither TLC nor any of its Subsidiaries are required to
recognize any labour union or employee association representing its
employees or any agent having bargaining rights for its employees. No
material work stoppage or material labour dispute against TLC or any of
its Subsidiaries in connection with their businesses is pending or, to
the knowledge of TLC, threatened and, to the knowledge of TLC, there is
no related organizational activity by any employees of TLC or any of
its Subsidiaries. Neither TLC nor any of its Subsidiaries has, except
as set forth in the TLC Disclosure Letter, received any written notice
of any material unfair labour practice in connection with the business,
and no such complaints are pending before the National Labor Relations
Board or other similar Governmental Authority.
5.20.2. TLC has complied in all material respects with all Laws
applicable to it relating to employment, including those relating to
wages, hours, collective bargaining, occupational health and safety,
workers' hazardous materials, employment standards, pay equity and
workers' compensation. Except as disclosed in the TLC Disclosure
Letter, there are no outstanding charges or complaints against TLC
relating to unfair labour practices or discrimination or under any
legislation relating to employees. TLC has paid in full all material
amounts owing under the Workplace Safety and Insurance Act (Ontario) or
comparable legislation, and to the knowledge of TLC, there are no
circumstances that would permit a penalty reassessment under such
legislation.
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There are no Orders requiring TLC to comply outstanding under the
Occupational Health and Safety Act (Ontario) or comparable legislation,
except where such Order would not have or reasonably be expected to
have a TLC Material Adverse Effect.
5.21. NON-ARM'S LENGTH TRANSACTIONS
5.21.1. None of TLC or its Subsidiaries has made any payment or loan
to, or has borrowed any monies from or is otherwise indebted to, any
officer, director, employee or stockholder of such company or any
Person not dealing with it at arm's length or any Affiliate of the
foregoing, except as disclosed in the TLC Disclosure Letter and except
for usual compensation paid in the ordinary course of business
consistent with past practices.
5.21.2. Except as disclosed in the TLC 10-K and except for contracts
made solely between TLC and its Subsidiaries and except for consulting
contracts or contracts of employment, none of TLC or its Subsidiaries
is a party to any contract with any officer, director, employee or
shareholder of such company or any Person not dealing with it at arm's
length or any Affiliate of any of the foregoing.
5.22. COMPLIANCE WITH LAWS
Except as described or provided for in any TLC SEC Filing or as
disclosed in the TLC Disclosure Letter, neither TLC nor any of its Subsidiaries
is in violation of, or has violated, any applicable provisions of any Laws,
other than violations which would not have or reasonably be expected to have,
individually or in the aggregate, a TLC Material Adverse Effect. Except as
described or provided for in any TLC SEC Filing or as disclosed in the TLC
Disclosure Letter, TLC and its Subsidiaries have obtained and maintain in effect
all Licenses required by any Governmental Authority to properly and legally
operate or conduct the business in which TLC and its Subsidiaries are engaged,
other than those Licenses the absence of which would not have or reasonably be
expected to have, individually or in the aggregate, a TLC Material Adverse
Effect. Except as described or provided for in any TLC SEC Filing or as
disclosed in the TLC Disclosure Letter, TLC is not in default or in violation of
the terms of any of the Licenses and none of the Licenses are subject to pending
revocation or cancellation, other than with respect to Licenses, the loss of
which would not have or reasonably be expected to have, individually or in the
aggregate, a TLC Material Adverse Effect.
5.23. FINDERS' FEES
Except for SG Cowen Securities Corporation ("SG Cowen"), whose fees
will be paid by TLC, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of TLC
or any of its Subsidiaries who might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.
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5.24. OPINION OF FINANCIAL ADVISOR
TLC has received the opinion of SG Cowen to the effect that, as of the
date of such opinion, the Conversion Number is fair to TLC from a financial
point of view.
5.25. VOTES REQUIRED
The only votes of the holders of any class or series of TLC's capital
stock necessary in order for TLC to perform its obligations under this Agreement
and the transactions contemplated hereby are the affirmative vote of the holders
of the following percentages of TLC Common Shares represented in person or by
proxy at the meeting of stockholders of TLC (such meeting, including the
adjournments thereof, the "TLC Stockholder Meeting"), (i) at least 50% in
respect of this Agreement and the transactions contemplated herein; (ii) at
least 66 2/3% in respect of the change of the name of TLC to "TLC Vision
Corporation"; (iii) at least 66 2/3% in respect of the continuance of TLC in the
Province of New Brunswick; (iv) at least 66 2/3% in respect of the resolution to
increase the size of the TLC Board to eleven (11) directors; (v) at least 50% in
respect of the adoption of new by-laws for TLC; and (vi) at least 50%
(excluding, if required by applicable Laws, the holders of TLC Common Shares who
are insiders (as defined in the Ontario Act) of TLC to whom shares may be issued
pursuant to the TLC Stock Option Plan or their associates (as defined in the
Ontario Act), in respect of the resolution to increase the number of options
available for issuance under the TLC Stock Option Plan and, if applicable, the
resolution to grant the Replacement Options (and, if applicable, approval of a
new stock option plan for TLC relating thereto) and all matters in connection
therewith.
5.26. INTERIM OPERATIONS OF MERGER SUBSIDIARY
Merger Subsidiary was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
and has conducted its operations only as contemplated hereby.
5.27. AUTHORIZATION FOR TLC COMMON SHARES
Prior to the Closing Date, TLC will have taken all necessary action to
permit it to issue the number of TLC Common Shares to be issued pursuant to the
terms of this Agreement including those issuable upon the exercise of
Replacement Options. TLC Common Shares issued pursuant to the terms of this
Agreement, including those issuable upon the exercise of the Replacement
Options, will, when issued, be validly issued, fully paid and non-assessable and
no Person will have any pre-emptive right to subscription or purchase in respect
thereof. Such TLC Common Shares will be conditionally listed on the TSE and
NASDAQ, subject only to notice of issuance.
5.28. COMPLIANCE WITH HEALTH CARE REQUIREMENTS
5.28.1. To TLC's knowledge, TLC and each Subsidiary is, to the extent
applicable to their operations, (i) eligible to receive payment under
Titles XVIII and XIX of the
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Social Security Act, (ii) in compliance with the conditions of
participation in the Medicare program, except where such inability in
the case of item (i) or non-compliance in the case of item (ii) does
not have and is not reasonably likely to have, individually or in the
aggregate, a TLC Material Adverse Effect.
5.28.2. Except as disclosed in the TLC Disclosure Letter, TLC and each
Subsidiary are not required to file cost reports and other claims and
governmental filings with respect to Medicare and Medicaid programs.
5.28.3. To the knowledge of TLC, neither TLC, its Subsidiaries, nor any
of their current or former directors, officers, managers, agents,
employees or other persons acting on behalf of them, has offered, paid,
solicited or received any remuneration in order to obtain or maintain
business, which offer, payment, solicitation, or receipt is in
violation of Law, except where such violation does not have and is not
likely to have, individually or in the aggregate, a TLC Material
Adverse Effect.
5.29. MEDICARE PARTICIPATION/ACCREDITATION
To the extent applicable to their operations, all health care
facilities owned or operated by TLC or any Subsidiary (each, a "TLC Facility")
have any required certificate of need and are in substantial compliance with the
conditions of participation of such programs and certificate, except where the
failure to be so certified, to have such agreements, or to be in such compliance
does not have and is not reasonably likely to have, individually or in the
aggregate, a TLC Material Adverse Effect. Neither TLC nor any Subsidiary has
received notice from any Governmental Authority, fiscal intermediary, carrier or
similar entity which enforces or administers the statutory or regulatory
provisions in respect to any governmental health care program of any pending or
threatened investigations, and to the knowledge of TLC, no such investigations
are pending, threatened or imminent, which will have or are reasonably expected
to have, individually or in the aggregate, a TLC Material Adverse Effect. All
returns, cost reports and other filings made by TLC or any Subsidiary with
Medicare, Medicaid or any other governmental health care program or third party
payor are complete and accurate except where the failure to be so complete and
accurate is not reasonably likely to have, individually or in the aggregate, a
TLC Material Adverse Effect. No adjustment or disallowance in any such costs
reports and other requests for payment, including adjustments or disallowances
for late filings, has been made or, to the knowledge of TLC, threatened by any
federal or state agency or instrumentality or other provider reimbursement
entities relating to Medicare or Medicaid or by any third party payor which
individually or in the aggregate would have or reasonably be expected to have a
TLC Material Adverse Effect, and, to the knowledge of TLC, there is no basis for
any successful claims or requests for recovery of overpayments from any such
agency, instrumentality, entity or third party payor except for any such claims
or requests which are not reasonably likely to have, individually or in the
aggregate, a TLC Material Adverse Effect.
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5.30. EXCLUSION
To the knowledge of TLC, neither TLC nor any Subsidiary employs or
contracts with any person who has been excluded from participation in a Federal
Health Care Program (as defined in 42 U.S.C. ss. 1320a-7b(f)) where such action
could reasonably serve as a basis for TLC's or any Subsidiary's suspension or
exclusion from the Medicare or any state Medicaid program.
5.31. FEDERAL HEALTH CARE PROGRAMS
To the knowledge of TLC, neither TLC nor any Subsidiary nor any of
their officers, directors, agents or managing employees: (a) has had a civil
monetary penalty assessed against him/her/it under Section 1128A of the Social
Security Act or any regulations promulgated thereunder; (b) has been excluded
from participation under any federal health care program (as defined in 42
U.S.A. ss. 1320a-7b(f)); or (c) has been convicted (as that term is defined in
42 C.F.R. ss. 1001.2) of any of the categories of offenses as described in the
Social Security Act Section 1128(a) and (b)(1), (2), (3) or any regulations
promulgated thereunder.
5.32. THIRD-PARTY PAYMENT
TLC and each Subsidiary has a valid contract to participate as a
provider of services in and under those third-party payment programs in which it
operates. To the knowledge of TLC, no Action is pending to suspend, limit,
terminate, or revoke the status of TLC or any Subsidiary as a provider in any
such program, and neither TLC nor any Subsidiary has been provided notice by any
such third-party payor of its intention to suspend, limit, terminate, revoke, or
fail to renew any contractual arrangement with TLC or any Subsidiary as a
participating provider of services in whole or in part, except where any such
Actions or notices are not reasonably likely to have, individually or in the
aggregate, a TLC Material Adverse Effect.
5.33. BILLING; GRATUITOUS PAYMENTS
All billing by, or on behalf of, any of TLC or any Subsidiary to
third-party payors, including, but not limited to, Medicare, Medicaid and
private insurance companies has been true and correct in all material respects.
5.34. REIMBURSEMENT MATTERS
For the previous three years, neither TLC nor its Subsidiaries have
received any written notice of denial of payment or overpayment of a material
nature from a U.S. federal health care program or any other third party
reimbursement source (inclusive of managed care organizations) with respect to
items or services provided by TLC and/or any Subsidiary, other than those which
have been finally resolved in any settlement for an amount less than $100,000.
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5.35. ACCOUNTS RECEIVABLE
All Accounts Receivable of TLC and its Subsidiaries reflected on the
balance sheet included in the TLC 10-K as of May 31, 2001 and all Accounts
Receivable of TLC and its Subsidiaries generated after May 31, 2001 that are
reflected in the accounting records of TLC and its Subsidiaries as of the
Closing Date represent or will represent valid obligations arising from sales
actually made or services actually performed or billed for in the ordinary
course of business, except to the extent reflected in the allowances for
doubtful accounts in the TLC Financial Statements. In the reasonable judgment of
management of TLC, all Accounts Receivable not paid prior to the Closing Date
are current and collectible in the ordinary course of business, except to the
extent reflected in the allowances for doubtful accounts in the TLC
Financial Statements. The allowances for doubtful accounts reflected in the TLC
Financial Statements have been determined consistent with past practices and in
accordance with GAAP. Except as would not otherwise have or reasonably be
expected to have a TLC Material Adverse Effect, TLC and its Subsidiaries have
good and valid title to the Accounts Receivable free and clear of all Liens
except Permitted Liens.
5.36. REPRESENTATIONS COMPLETE
None of the representations or warranties made by TLC herein or in the
TLC Disclosure Letter, when all such documents are read together in their
entirety, contains any untrue statement of a material fact, or omits to state
any material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE 6.
COVENANTS OF LVCI
6.1. CONDUCT OF LVCI
Except as expressly contemplated by this Agreement or as described or
provided for in any LVCI SEC Filing or as disclosed in writing by LVCI prior to
the date of this Agreement, from the date hereof until the earlier to occur of
the Effective Time and the termination of this Agreement, LVCI and its
Subsidiaries shall conduct their business in the ordinary course consistent with
past practices and shall use their commercially reasonable best efforts to
preserve intact their business organizations and relationships with third
parties and to keep available the services of their present officers and
employees. Except as otherwise approved in writing by TLC or as expressly
contemplated by this Agreement, and without limiting the generality of the
foregoing, from the date hereof until the Effective Time:
6.1.1. LVCI and its Subsidiaries will not adopt or propose any change
in their articles of incorporation or bylaws;
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6.1.2. LVCI shall not authorize or propose, or enter into any
agreement, arrangement or understanding (or permit any Subsidiary to do
so) with respect to (a) any acquisition of businesses, assets or
securities the value of the consideration for which (including assumed
debt or other obligations) would exceed $5,000,000 individually
(including in a series of related transactions) (excluding any
transactions previously consented to in writing by TLC), or (b) any
disposition of businesses, assets or securities the value of the
consideration for which (including assumed debt or other obligations)
would exceed $5,000,000 individually (including in a series of related
transactions) (excluding any transactions previously consented to in
writing by TLC);
6.1.3. LVCI will not declare or pay any dividends or make any
distributions on its issued and outstanding capital stock, in cash,
stock, property or otherwise;
6.1.4. LVCI will not, and will not permit any of its Subsidiaries to,
(i) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of capital stock of LVCI or any of its
Subsidiaries or any options, warrants, calls, conversion privileges or
rights of any kind to acquire shares of LVCI or any of its Subsidiaries
(except as disclosed in the LVCI Disclosure Letter or pursuant to the
exercise of stock options or currently outstanding rights under
existing compensation-related share issuance plans), (ii) split,
combine or reclassify any LVCI Securities or securities of a Subsidiary
or (iii) repurchase, redeem or otherwise acquire any LVCI Securities or
any securities of a Subsidiary;
6.1.5. LVCI will not, and will not permit any of its Subsidiaries to,
take or agree to commit to take any action that would make any
representation and warranty of LVCI hereunder inaccurate in any
material respect at, or as of any time prior to, the Effective Time;
6.1.6. LVCI will not create, incur, assume or suffer to exist, any
indebtedness for borrowed money in excess of $1,000,000 (including
capital lease obligations), other than (i) indebtedness existing as of
the date of this Agreement, (ii) borrowings under existing credit lines
in the ordinary course of business, consistent with past practices, and
(iii) intercompany indebtedness among LVCI and its Subsidiaries arising
in the ordinary course of business, consistent with past practice;
6.1.7. LVCI will not make any capital expenditure (including, without
limitation, expenditures for property, plant and equipment) or
appropriations or commitments with respect thereto other than as
contemplated by the LVCI projections provided to TLC or additional
expenditures, appropriations or commitments which do not exceed an
aggregate of $1,000,000; and
6.1.8. LVCI will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing.
Notwithstanding the foregoing, TLC shall be deemed to have consented to the
transactions involving LVCI listed in the LVCI Disclosure Letter.
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6.2. STOCKHOLDER MEETING
6.2.1. LVCI shall use its best efforts to cause a meeting of its
stockholders to be duly called and held as soon as reasonably
practicable, but in no event later than the 50th day following the date
on which the Registration Statement is declared effective under the
Securities Act (such meeting, including any adjournments thereof, the
"LVCI Stockholder Meeting"), for the purpose of voting on the approval
and adoption of this Agreement, the Merger and the other transactions
contemplated hereby, and any other item of business required by or
consented to in writing by TLC acting reasonably.
6.2.2. If an Acquisition Proposal has been proposed to LVCI or
announced within 10 Business Days prior to the date of the LVCI
Stockholder Meeting, unless the LVCI Board has determined that the
Acquisition Proposal is not a Superior Proposal, LVCI shall adjourn or
delay the LVCI Stockholder Meeting for a period, which shall be not
less than five Business Days, determined by the LVCI Board to be
reasonably necessary to fulfill its fiduciary duties as advised by
counsel and to satisfy all applicable Laws.
6.2.3. The LVCI Board shall, unless otherwise required in accordance
with their fiduciary duties as advised by its legal and financial
advisors, recommend approval and adoption of this Agreement and the
Merger by LVCI's stockholders. In connection with such meeting, LVCI
will, subject to the foregoing, use its commercially reasonable best
efforts to obtain the necessary approvals by its stockholders of the
matters (including the solicitation of proxies to be voted at the LVCI
Stockholder Meeting) referred to above in this Section 6.2 and such
other matters as are required by Delaware Law, and will otherwise
comply with all legal requirements applicable to such meetings.
6.3. OTHER OFFERS
6.3.1. LVCI shall not, directly or indirectly, through any officer,
director, employee, representative or agent of LVCI or any of its
subsidiaries, solicit, initiate or knowingly encourage (including by
way of furnishing any written non-public information or entering into
any form of agreement, arrangement or understanding) the initiation of
any inquiries or proposals regarding an Acquisition Proposal.
6.3.2. Nothing shall prevent the LVCI Board from considering,
negotiating or discussing an unsolicited possible Acquisition Proposal,
subject to the following:
6.3.2.1. LVCI shall not furnish any written non-public
information and/or access to the books and records of LVCI to a
Person who proposes an Acquisition Proposal in respect of LVCI
(an "Interested Third Party") until the Interested Third Party
and LVCI execute a confidentiality agreement;
6.3.2.2. LVCI shall furnish to TLC the name of any Interested
Third Party within five days after such party executes a
confidentiality agreement with LVCI,
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unless LVCI and Interested Third Party shall have terminated
negotiations prior to such time;
6.3.2.3. subject to the other provisions of this Agreement, LVCI
shall have no obligation to advise TLC of any information
submitted or made available to an Interested Third Party pursuant
to this Section 6.3;
6.3.2.4. LVCI shall not furnish or disclose to any Person, in
writing or otherwise, any non-public information regarding TLC,
regarding the combined business of TLC and LVCI or provided by
TLC;
6.3.2.5. LVCI shall not, unless required by the LVCI Board in
accordance with its fiduciary duties as advised by its legal and
financial advisors, withdraw or modify in a manner adverse to TLC
the approval or recommendation of the LVCI Board of this
Agreement and the Merger as described in Section 6.2;
6.3.2.6. LVCI shall furnish to TLC a written summary of the
material terms (including the consideration offered, the
conditions to completion, the other parties thereto and any
termination or similar fees payable in connection therewith) of
an Acquisition Proposal that is determined by the LVCI Board at
such time to be reasonably likely to constitute the final and
most favourable proposal by such Interested Third Party, such
summary to be furnished by the end of the fifth day following
such determination by the LVCI Board unless LVCI and the
Interested Third Party shall have terminated negotiations prior
to such time; and
6.3.2.7. LVCI shall not approve or recommend any Acquisition
Proposal or cause LVCI to enter into a written agreement (other
than a confidentiality agreement) for an Acquisition Proposal
unless and until the LVCI Board shall have determined that the
Acquisition Proposal is a Superior Proposal.
6.3.3. LVCI shall ensure that its officers and directors and its
Subsidiaries and their officers and directors and any financial
advisors or other advisors or representatives retained by it are aware
of the provisions of this Section 6.3, and it shall be responsible for
any breach of this Section 6.3 by its financial advisors or other
advisors or representatives.
6.4. NOTICES OF CERTAIN EVENTS
LVCI shall promptly notify TLC of:
6.4.1. any notice or other communication from any Person alleging that
the consent of such Person (or another Person) is or may be required in
connection with the transactions contemplated by this Agreement;
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6.4.2. any LVCI Material Adverse Change or any material change in the
business, financial condition or results of operations of LVCI and its
Subsidiaries taken as a whole;
6.4.3. any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this
Agreement; and
6.4.4. any Actions commenced or, to the knowledge of LVCI, threatened
against, relating to or involving or otherwise affecting LVCI or any of
its Subsidiaries which, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 4.14 or
which relate to the consummation of the transactions contemplated by
this Agreement, or of any event or circumstance which would cause any
of LVCI's representations and warranties contained herein to be
incorrect in any material respect.
6.5. AFFILIATES
To ensure that the issuance of TLC Common Shares in the Merger complies
with the Securities Act, prior to the Effective Time, LVCI shall cause to be
delivered to TLC a list identifying each Person who might at the time of the
LVCI Stockholder Meeting be deemed to be an "affiliate" of LVCI for purposes of
Rule 145 under the Securities Act (each, an "LVCI Affiliate"). LVCI shall use
its best efforts to obtain from each Person who is identified as a possible LVCI
Affiliate prior to the Effective Time an agreement providing that such person
will not offer to sell, sell or otherwise dispose of any TLC Common Shares
issued to such Person in the Merger in violation of the Securities Act.
6.6. EMPLOYEE STOCK OPTIONS
6.6.1. LVCI shall use its commercially reasonable best efforts to cause
the directors and officers of LVCI and its Subsidiaries listed on the
LVCI Disclosure Letter to consent to the repricing of the LVCI Stock
Options as provided in Section 6.6.2 and conversion of the LVCI Stock
Options as provided for in Section 7.6.
6.6.2. LVCI shall take all steps required to reprice the LVCI Stock
Options set forth on the LVCI Disclosure Letter which are outstanding
as of the date hereof to a price of $8.688 per TLC Common Share
immediately following the Effective Time, and such repricing shall be
effective immediately prior to Closing.
6.6.3. LVCI agrees that TLC may, before or after the Effective Time,
reprice all or any of the TLC Stock Options disclosed in the TLC
Disclosure Letter in the manner disclosed in the TLC Disclosure Letter,
subject to the receipt of all necessary approvals including any
required stockholder approvals.
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ARTICLE 7.
COVENANTS OF TLC AND MERGER SUBSIDIARY
7.1. CONDUCT OF TLC AND MERGER SUBSIDIARY
Except as expressly contemplated by this Agreement or as described or
provided for in any TLC SEC Filing or as described in writing by TLC prior to
the date of this Agreement, from the date hereof until the earlier to occur of
the Effective Time and the termination of this Agreement, TLC and its
Subsidiaries shall conduct their business in the ordinary course consistent with
past practice and shall use their commercially reasonable best efforts to
preserve intact their business organizations and relationships with third
parties and to keep available the services of their present officers and
employees. Except as otherwise approved in writing by LVCI or as expressly
contemplated by this Agreement, and without limiting the generality of the
foregoing, from the date hereof until the Effective Time:
7.1.1. TLC, its Subsidiaries and Merger Subsidiary will not adopt or
propose any change in their articles of incorporation or bylaws;
7.1.2. TLC shall not authorize or propose, or enter into any agreement,
arrangement or understanding (or permit any Subsidiary to do so) with
respect to (a) any acquisition of businesses, assets or securities the
value of the consideration for which (including assumed debt or other
obligations) would exceed $5,000,000 individually (including in a
series of related transactions) (excluding any transactions previously
consented to in writing by LVCI), or (b) any disposition of businesses,
assets or securities the value of the consideration for which
(including assumed debt or other obligations) would exceed $5,000,000
individually (including in a series of related transactions) (excluding
any transactions previously consented to in writing by LVCI);
7.1.3. TLC will not declare or pay any dividends or make any
distributions on its issued and outstanding capital stock in cash,
stock, property or otherwise;
7.1.4. TLC will not, and will not permit any of its Subsidiaries to,
(i) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of capital stock of TLC or any of its
Subsidiaries or any options, warrants, calls, conversion privileges or
rights of any kind to acquire shares of TLC or any of its Subsidiaries
(except as disclosed in the TLC Disclosure Letter or pursuant to the
exercise of stock options or currently outstanding rights under
existing compensation-related share issuance plans), (ii) split,
combine or reclassify any TLC Common Shares or any securities of a
Subsidiary or (iii) repurchase, redeem or otherwise acquire any TLC
Securities or any securities of a Subsidiary;
7.1.5. TLC will not, and will not permit any of its Subsidiaries to,
take or agree or commit to take any action that would make any
representation and warranty of TLC or Merger Subsidiary hereunder
inaccurate in any material respect at, or as of any time prior to, the
Effective Time;
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7.1.6. TLC will not create, incur, assume or suffer to exist, any
indebtedness for borrowed money in excess of $1,000,000 (including
capital lease obligations), other than (i) indebtedness existing as of
the date of this Agreement, (ii) borrowings under existing credit lines
in the ordinary course of business, consistent with past practices, and
(iii) intercompany indebtedness among TLC and its Subsidiaries arising
in the ordinary course of business, consistent with past practice;
7.1.7. TLC will not make any capital expenditure (including, without
limitation, expenditures for property, plant and equipment) or
appropriations or commitments with respect thereto other than as
contemplated by the TLC projections provided to LVCI or additional
expenditures, appropriations or commitments which do not exceed an
aggregate of $1,000,000; and
7.1.8. TLC will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing.
Notwithstanding the foregoing, LVCI shall be deemed to have consented to the
transactions involving TLC listed in the TLC Disclosure Letter.
7.2. TLC STOCKHOLDER MEETING
7.2.1. TLC shall use its best efforts to cause the TLC Stockholder
Meeting to be duly called and held as soon as reasonably practicable,
but in no event later than the 50th day after the date on which the
Registration Statement is declared effective under the Securities Act
for the purpose of (i) voting on the approval and adoption of this
Agreement, the Merger and the other transactions contemplated hereby,
(ii) the change of name of TLC, (iii) the adoption of new by-laws, (iv)
the continuance of TLC under the Laws of the Province of New Brunswick,
(v) the increase in the size of the TLC Board, (vi) the increase in the
number of shares reserved for issuance under the TLC Stock Option Plan,
(vii) if applicable, the issuance of the Replacement Options and all
matters in connection therewith, (viii) the election of directors and
(ix) any other item of business necessary to be conducted at an annual
meeting of stockholders or required by or consented in writing by LVCI
acting reasonably.
7.2.2. The TLC Board shall recommend approval and adoption of this
Agreement and the Merger and the items set out above by TLC's
stockholders. In connection with such meeting, TLC will, subject to the
foregoing, use its commercially reasonable best efforts to obtain the
necessary approvals by its stockholders of the matters referred to
(including the solicitation of proxies to be voted at the TLC
Stockholder Meeting) above in this Section 7.2 and such other matters
as are required by Ontario Law, and will otherwise comply with all
legal requirements applicable to such meetings.
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7.3. OBLIGATIONS OF MERGER SUBSIDIARY
TLC will take all action necessary to cause Merger Subsidiary to
perform its obligations under this Agreement and to consummate the Merger on the
terms and conditions set forth in this Agreement.
7.4. NASDAQ AND TSE LISTING
TLC shall use its commercially reasonable best efforts to cause the TLC
Common Shares to be issued in the Merger and those to be issued upon the
exercise of the Replacement Options to be conditionally approved for listing on
the TSE and on NASDAQ prior to the Effective Time.
7.5. NOTICE OF CERTAIN EVENTS
Each of TLC and Merger Subsidiary shall promptly notify LVCI in writing
of:
7.5.1. any notice or other communication from any Person alleging that
the consent of such Person (or other Person) is or may be required in
connection with the transactions contemplated by this Agreement;
7.5.2. any TLC Material Adverse Change or any material change in the
business, financial condition or results of operation of TLC and its
Subsidiaries taken as a whole;
7.5.3. any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this
Agreement; and
7.5.4. any Actions commenced or, to its knowledge, threatened against,
relating to or involving or otherwise affecting it or any of its
Subsidiaries which, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 5.14 or
which relate to the consummation of the transactions contemplated by
this Agreement.
7.6. REPLACEMENT OPTIONS
At Closing, each outstanding LVCI Stock Option shall become an option
to acquire TLC Common Stock (the "Replacement Options") with the following terms
and conditions: (i) the Replacement Options shall be exercisable to purchase the
number of TLC Common Shares that the corresponding LVCI Stock Options were
exercisable to purchase multiplied by the Conversion Number; (ii) the exercise
price of the Replacement Options shall be the exercise price(s) of the
corresponding LVCI Stock Options, giving effect to the repricing of options
provided for in Section 6.6.2; and (iii) the unexpired term, vesting schedule
and other material terms and conditions of the Replacement Options will be the
same as that of the LVCI Stock Options (as if the Merger had not taken place).
The Replacement Options may be issued under a new stock option plan to be
established by TLC.
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ARTICLE 8.
COVENANTS OF TLC, MERGER SUBSIDIARY AND LVCI
8.1. CORPORATE GOVERNANCE
8.1.1. The parties agree that the corporate governance and related
arrangements respecting TLC set out in Schedule 8.1 will become
effective upon the completion of the Merger.
8.1.2. In order to give effect to the foregoing, the TLC Board has
passed a resolution (a) that stockholder approval be sought to amend
the articles of TLC to increase the maximum number of directors of TLC
to 15 and (b) that, upon the increase in the maximum number of
directors and conditional upon the consummation of the Merger in
accordance with this Agreement, the number of directors of TLC be set
at 11.
8.1.3. At the TLC stockholder meeting, management of TLC shall nominate
for election as directors of TLC, such election to be conditional upon
the increase in the size of the TLC Board and upon consummation of the
Merger in accordance with this Agreement, the following four
individuals currently on the LVCI Board: John K. Klobnak, James M.
Garvey, Richard Lindstrom, M.D., and David S. Joseph (the "LVCI
Nominees").
8.1.4. Subject to stockholder approval, the by-laws of TLC following
consummation of the Merger in accordance with this Agreement will
include (i) a by-law providing that management of TLC shall nominate
the LVCI Nominees for re-election as directors of TLC at the next
annual meeting of stockholders of TLC following the TLC Stockholders
Meeting at which the Merger is approved, such directors to hold office
for a term of one year or until such earlier time as their successors
are elected or appointed or such directors have resigned in accordance
with this Agreement or otherwise, (ii) a by-law providing that the head
office of TLC will remain in Mississauga, Ontario and the head office
for TLC's U.S. operations will be located in St. Louis, Missouri, and
(iii) such other matters as are required by the Laws of New Brunswick
and as are required by LVCI and TLC, each acting reasonably.
8.2. TLC NAME CHANGE
At or prior to the Effective Time, TLC shall change its corporate name
to "TLC Vision Corporation", provided, however, that the approval shall have
been obtained therefor.
8.3. COMMERCIALLY REASONABLE BEST EFFORTS
Subject to the terms and conditions of this Agreement, each party
agrees to use its commercially reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause
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to be done, all things necessary, proper or advisable under applicable Laws and
regulations to consummate the transactions contemplated by this Agreement.
8.4. CERTAIN FILINGS
8.4.1. LVCI and TLC shall cooperate with one another (a) in connection
with the preparation of the Registration Statement and Joint Proxy
Statement/Prospectus, and (b) in determining whether any action by or
in respect of, or filing with, any Governmental Authority is required,
or any actions, consents, approvals or waivers are required to be
obtained from parties to any Material Contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (c)
in seeking any such actions, consents, approvals or waivers or making
any such filings, furnishing information required in connection
therewith or with the Registration Statement and Joint Proxy
Statement/Prospectus and seeking timely to obtain any such actions,
consents, approvals or waivers.
8.4.2. Without limiting the generality of Section 8.4.1, as soon as
practicable, each of TLC and LVCI shall file with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") a premerger notification form and
any supplemental information (other than privileged information) which
may be requested in connection therewith pursuant to the HSR Act, which
filings and supplemental information will comply in all material
respects with the requirements of the HSR Act. Each of TLC and LVCI
shall cooperate fully with the other in connection with the preparation
of such filings and shall use best efforts to respond to any requests
for supplemental information from the FTC or the Antitrust Division and
to obtain early termination of any waiting period applicable to the
Merger under the HSR Act. Any and all filing fees required to be paid
in connection with the premerger notification pursuant to the HSR Act
shall be borne and paid equally by LVCI and TLC.
8.4.3. Following the Effective Date of the Merger, TLC and LVCI shall
to the extent necessary in a timely and expeditious manner make all
postmerger filings as are necessary with the SEC, the TSE and NASDAQ
and in this regard, TLC shall take all reasonable steps and make all
necessary filings and pay such fees as are required in accordance with
the conditional listing approval of the TSE and NASDAQ in order to
obtain as expeditiously as possible final listing approval for the TLC
Common Shares issued in connection with this transaction or to be
issued in connection with the exercise of the Replacement Options.
8.4.4. Each of LVCI and TLC agree to cooperate and use their
commercially reasonable best efforts to contest and resist any Action,
and to have vacated, lifted, reversed or overturned any Order (whether
temporary, preliminary or permanent) that is in effect and that
restricts, prevents or prohibits the consummation of the Merger or any
other transactions contemplated by this Agreement, including, without
limitation, by vigorously pursuing all available avenues of
administration and judicial appeal and all available legislative
action. Notwithstanding any other provision of this Agreement to the
contrary, each of LVCI and TLC also agree, if requested by the other,
to take any and all
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actions as are or may be required by Governmental Authorities as a
condition to the granting of any approvals required in order to permit
the consummation of the Merger or the other transactions contemplated
hereby or as may be required to avoid, lift, vacate or reverse any
legislative, administrative or judicial action which would otherwise
cause any condition to closing not to be satisfied, unless any such
actions individually or in the aggregate would be onerous to the
combined operations of TLC and LVCI.
8.5. PUBLIC ANNOUNCEMENTS
TLC and LVCI will consult with each other before issuing any press release or
making any public statement with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by applicable Law or any
listing agreement with any national securities exchange or interdealer quotation
system, will not issue any such press release or make any such public statement
prior to such consultation.
8.6. FURTHER ASSURANCES
At and after the Effective Time, the officers and directors of the
Surviving Corporation will be authorized to execute and deliver, in the name and
on behalf of LVCI or Merger Subsidiary, any deeds, bills of sale, assignments,
assurances, instruments or other documents and to take and do, in the name and
on behalf of LVCI or Merger Subsidiary, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of LVCI acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger.
8.7. PREPARATION OF THE JOINT PROXY STATEMENT/PROSPECTUS AND REGISTRATION
STATEMENTS
8.7.1. TLC and LVCI shall promptly prepare and file with the SEC a
preliminary version of the Joint Proxy Statement/Prospectus and will
use their commercially reasonable best efforts to respond to the
comments of the SEC in connection therewith and to furnish all
information required to prepare the definitive Joint Proxy
Statement/Prospectus and to file any amendments or supplements thereto
as may be required by applicable Law. After receiving comments from the
SEC, TLC shall promptly file with the SEC the Registration Statement
containing the Joint Proxy Statement/Prospectus. Each of TLC and LVCI
shall use its commercially reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. TLC shall also take any
action (other than qualifying to do business in any jurisdiction in
which it is not now so qualified or filing a general consent to service
of process in any jurisdiction) required to be taken under any
applicable state securities Laws in connection with the issuance of TLC
Common Shares in the Merger and LVCI shall furnish all information
concerning LVCI and the holders of LVCI Common Shares as may be
reasonably requested in connection with any such action. Promptly after
the effectiveness of the Registration Statement, LVCI and TLC will each
cause the Joint Proxy Statement/Prospectus to be mailed to its
stockholders, and if necessary, after the definitive Joint Proxy
Statement/Prospectus shall have been mailed,
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promptly circulate amended, supplemented or supplemental proxy
materials and, if required in connection therewith, re-solicit proxies.
8.7.2. TLC shall prepare and file a registration statement on Form S-8
in order to register under the Securities Act the TLC Common Shares to
be issued from time to time after the Effective Time upon the exercise
of the Replacement Options, and shall use reasonable commercial efforts
to cause such registration statement to become effective at or prior to
the Effective Time and to maintain the effectiveness of such
registration for the period of time that the Replacement Options remain
outstanding and may be exercised.
8.8. ACCESS TO INFORMATION
8.8.1. Subject to Section 8.8.2 to and including Section 8.8.10 and
applicable Laws, upon reasonable notice, each of TLC and LVCI shall
(and shall cause each of its Subsidiaries to) afford the
representatives of the other party hereto access, during normal
business hours from the date hereof and until the earlier of the
Closing Date or the termination of this Agreement, to its properties,
books, contracts and records as well as to its management personnel,
and, during such period, each party shall (and shall cause each of its
Subsidiaries to) furnish promptly to the other party all information
concerning its business, properties and personnel as such party may
reasonably request (the "Information").
8.8.2. The Information will be kept strictly confidential and shall
not, without the prior written consent of the disclosing party, be
disclosed by the receiving party, or by its representatives, in any
manner whatsoever, in whole or in part, and shall not be used by the
receiving party or its representatives other than in connection with
the Merger. Moreover, the receiving party agrees to reveal the
Information only to its representatives who have a reasonable need to
know the Information for the purposes of evaluating the Merger, who are
informed by the receiving party of the confidential nature of the
Information and who have agreed to act in accordance with the terms and
conditions of this Agreement. Notwithstanding such agreement, the
receiving party shall continue to be responsible for any breach of this
Agreement by its representatives and shall indemnify and save the
disclosing party harmless from any breach by any of the receiving
party's representatives.
8.8.3. The receiving party shall keep a record of the Information
furnished to it, in any medium other than oral, and the location of
such Information. All copies of the Information, except for that
portion of the Information which consists of analyses, compilations,
forecasts, studies or other documents prepared by the receiving party
or its representatives will be returned to the disclosing party
immediately upon its request. That portion of the Information which
consists of analyses, compilations, forecasts, studies or other
documents prepared by the receiving party or its representatives, will
be destroyed upon the disclosing party's request and any oral
Information will continue to be subject to the terms of this Agreement.
Upon the request of the disclosing party, the receiving party shall
provide a certificate certifying as to the complete return and
destruction of all Information in accordance with the terms of this
paragraph.
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8.8.4. The receiving party shall keep all of the Information disclosed
or delivered to it, whether electronically stored or in a tangible
form, segregated from all of its property and in a safe and secure
environment and will use commercially reasonable best efforts to
protect and keep safe all of the Information disclosed from any loss,
harm, theft, unauthorized use, tampering, sabotage, unauthorized
duplication, destruction, addition, deletion, damage or interference
whatsoever.
8.8.5. The receiving party acknowledges that the Information is
confidential and a valuable asset of the disclosing party and all
right, title and interest in and to the Information (including all
Intellectual Property) is and at all time shall remain the exclusive
property of the disclosing party.
8.8.6. The receiving party acknowledges that other than as contained in
this Agreement none of the disclosing party, its representatives or any
of its or their respective affiliates makes any express or implied
representation or warranty as to the accuracy or completeness of the
Information.
8.8.7. If the receiving party or anyone to whom the receiving party
transmits the Information pursuant to this Agreement becomes legally
compelled to disclose any of the Information, the receiving party will
provide the disclosing party with prompt notice so that the disclosing
party may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. If such
protective order or other remedy is not obtained or the disclosing
party waives compliance with the provisions of this Agreement, the
receiving party will furnish only that portion of the Information which
it is advised, by written opinion of counsel, addressed to the
receiving party and to the disclosing party, is legally required and
will exercise its best efforts to obtain reliable assurance that
confidential treatment will be accorded the Information.
8.8.8. The parties each acknowledge that disclosure of any Information
may cause significant damage and harm to a disclosing party, its
Affiliates, Subsidiaries and shareholders and that remedies at law may
be inadequate to protect against breach of this Agreement, and the
parties hereby in advance agree to the granting of injunctive relief in
favour of the disclosing party without proof of actual damages, in
addition to any other remedy the disclosing party may be entitled to.
8.8.9. The parties acknowledge that certain information may be
competitively sensitive and that disclosure thereof shall be limited to
that which is reasonably necessary for the purpose of (i) preparing
submissions or applications in order to obtain any appropriate
regulatory approvals, (ii) preparing the Joint Proxy
Statement/Prospectus, and (iii) avoiding conflicts.
8.8.10. The provisions of Sections 8.8.2 to and including Section 8.8.8
and this Section 8.8.10 shall survive the termination of this
Agreement.
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8.9. MUTUAL STANDSTILL
From the date hereof until the Closing Date or the termination of this
Agreement, each of LVCI and TLC agrees that it will not, otherwise than pursuant
to this Agreement, the Merger and the transactions contemplated hereby and
thereby or with the prior approval of the other, which approval may be given on
such terms as the other may determine:
8.9.1. in any manner acquire, agree to acquire or make any proposal or
offer to acquire, directly or indirectly, any securities or property of
the other;
8.9.2. propose or offer to enter into, directly or indirectly, any
merger or business combination involving the other or to purchase,
directly or indirectly, a material portion of the assets of the other;
8.9.3. directly or indirectly, solicit, or participate or join with any
Person in the solicitation of any proxies to vote, to seek or advise or
to influence any Person with respect to the voting of any voting
securities of the other;
8.9.4. otherwise act alone or in concert with others to seek to control
or to influence the management, board of directors or policies of the
other;
8.9.5. make any public or private disclosure of any consideration,
intention, plan or arrangement inconsistent with any of the foregoing;
or
8.9.6. advise, assist or encourage any of the foregoing or work in
concert with others in respect of the foregoing.
For the purpose of this Section 8.9, each reference to LVCI or TLC
shall include its Subsidiaries and its successors. The termination of this
Agreement shall also terminate any other agreements between the parties which
have an effect similar to this Section 8.9, including, for greater certainty,
(i) the letter dated November 16, 1999 between TLC and Goldman, on behalf of
LVCI, and (ii) the mutual confidentiality and non-disclosure agreement effective
as of February 1, 2000 between LVCI and TLC.
8.10. DIRECTORS' AND OFFICERS' INSURANCE
8.10.1. After the Effective Time, TLC will provide, or cause to be
provided, such coverage to the officers and directors of LVCI and its
Subsidiaries who shall continue as officers and directors of TLC and
its Subsidiaries to the same extent that TLC provides or causes to be
provided such coverage to the other officers and directors of TLC and
its Subsidiaries.
8.10.2. For a period of six (6) years after the Effective Time, TLC and
LVCI agree that Surviving Corporation shall cause to be maintained in
effect the current policies of directors' and officers' liability
insurance maintained by LVCI, copies of which have been provided to
TLC, covering past or future claims with respect to periods before the
Effective Time (provided that TLC and LVCI agree that Surviving
Corporation may
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substitute therefor policies with coverage no less favourable to such
directors and officers with respect to claims arising from facts or
events which occurred before the Effective Time).
8.10.3. The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the LVCI
Certificate of Incorporation and By-Laws on the date of this Agreement
and shall not be amended, repealed or otherwise modified for a period
of six (6) years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who on or prior
to the Effective Time were directors, officers, employees or agents of
LVCI, unless such modification is required by applicable Law.
8.10.4. This Section 8.10 shall survive the consummation of the Merger,
is intended to benefit LVCI, the Surviving Corporation and each
indemnified party, shall be binding, jointly and severally, on all
successors and assigns of the Surviving Corporation and TLC, and shall
be enforceable by the indemnified parties.
8.11. CLOSING MATTERS
Each of LVCI, Merger Subsidiary and TLC shall deliver, at the closing
of the transactions contemplated hereby, such customary certificates,
resolutions and other closing documents as may be required by the other parties
hereto, acting reasonably.
ARTICLE 9.
CONDITIONS TO THE MERGER
9.1. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY
The respective obligations of LVCI, TLC and Merger Subsidiary to
consummate the Merger are subject to the satisfaction, on or before the Closing
Date, of the following conditions:
9.1.1. this Agreement shall have been approved by the affirmative vote
of the holders of a majority of the outstanding LVCI Common Shares in
accordance with Delaware Law;
9.1.2. (a) each of the Agreement and the new by-laws of TLC shall have
been approved by at least 50% of the votes cast by the holders of TLC
Common Shares represented at the TLC Stockholder Meeting, (b) each of
the change of name of TLC, the continuance of TLC under the Laws of the
Province of New Brunswick, and the increase in the size of the TLC
Board shall have been approved by at least 66 2/3% of the votes cast by
the holders of TLC Common Shares represented at the TLC Stockholder
Meeting and (c) each of the increase in the number of options available
under the TLC Stock Option Plan and, if applicable, the grant of the
Replacement Options (including, if applicable,
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approval of a new stock option plan of TLC relating thereto) amendments
relating thereto shall have been approved by at least 50% of the votes
cast by the holders of TLC Common Shares represented at the Meeting
(excluding, if required by applicable Laws, the holders of TLC Common
Shares who are insiders (as defined in the Ontario Act) of TLC to whom
shares may be issued pursuant to the TLC Share Option Plan or their
associates (as defined in the Ontario Act);
9.1.3. all required waiting periods under the HSR Act shall have
expired or been terminated and any other appropriate regulatory
approvals shall have been obtained;
9.1.4. no provision of any applicable Law and no final, unappealable
Order of a court of competent jurisdiction shall restrain or prohibit
the consummation of the Merger or the other transactions contemplated
by this Agreement;
9.1.5. the Registration Statement shall have been declared effective
and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and be in effect and no proceedings
for such purpose shall be pending before the SEC;
9.1.6. the registration statement on Form S-8 in respect of the
Replacement Options shall have become effective and no stop order
suspending the effectiveness of such registration statement shall have
been issued and be in effect and no proceedings for such purpose shall
be pending before the SEC;
9.1.7. the TLC Common Shares to be issued in the Merger and those to be
issued on the exercise of Replacement Options shall have been
conditionally approved for listing on the TSE and NASDAQ subject only
to notice of issuance and the satisfaction of the standard filing
requirements and payment of requisite filing fees;
9.1.8. TLC and LVCI shall have received an opinion from Thompson Coburn
LLP, counsel to LVCI, based upon certain factual representations of
LVCI, TLC and Merger Subsidiary reasonably requested by such counsel,
dated the Closing Date, to the effect that the Merger will be treated
for federal income tax purposes as a Reorganization in which no gain or
loss is recognized by LVCI Stockholders as a result of the Merger
(except with respect to LVCI Stockholders who receive cash in lieu of
fractional shares) in form and substance reasonably satisfactory to
LVCI and TLC;
9.1.9. LVCI shall have obtained from Goldman, a written opinion of a
type customary in transactions similar to those contemplated hereby, to
the effect that the Conversion Number is fair to LVCI's stockholders
from a financial point of view, and such opinion shall not have been
withdrawn;
9.1.10. LVCI shall cause to be delivered within two Business Days
before the date on which the Registration Statement is declared
effective, to TLC and Merger Subsidiary, a comfort letter from
PriceWaterhouseCoopers LLP, auditors of LVCI, in respect of the LVCI
Financial Statements, in form and content satisfactory to TLC, acting
reasonably.
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9.1.11. TLC shall cause to be delivered within two Business Days before
the date on which the Registration Statement is declared effect, to
LVCI, a comfort letter from Ernst & Young LLP, auditors of TLC, in
respect of the TLC Financial Statements, in form and content
satisfactory to LVCI, acting reasonably.
9.1.12. TLC shall have obtained from SG Cowen, the opinion of SG Cowen
referred to in Section 5.24 to the effect that the Conversion Number is
fair to TLC from a financial point of view, and such opinion shall not
have been withdrawn; and
9.1.13. this Agreement shall not have been terminated pursuant to
Article 10.
9.2. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF TLC AND MERGER SUBSIDIARY
The respective obligations of TLC and Merger Subsidiary to consummate
the Merger are also subject to the satisfaction, on or before the Closing Date,
of the following further conditions precedent (each of which is for the
exclusive benefit of TLC and Merger Subsidiary and may be waived by TLC on
behalf of itself and Merger Subsidiary and any one or more of which, if not
satisfied or waived, will relieve TLC and Merger Subsidiary of any obligation
under this Agreement):
9.2.1. LVCI shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Closing Date, the representations and warranties of LVCI contained in
this Agreement that are qualified by materiality or LVCI Material
Adverse Effect or LVCI Material Adverse Change shall be true and
correct and the representations and warranties of LVCI contained in
this Agreement that are not so qualified shall be true and correct in
all material respects at and as of the Closing Date, and TLC shall have
received a certificate signed by an executive officer of LVCI to the
foregoing effect;
9.2.2. the LVCI Board shall have adopted all necessary resolutions, and
all other necessary corporate action shall have been taken by LVCI and
its Subsidiaries, to permit the consummation of the Merger;
9.2.3. notwithstanding any of the representations and warranties of
LVCI contained herein (and the information set out in any of the
corresponding Schedules and the LVCI Disclosure Letter), there shall
not be, and there shall not have occurred since the date of this
Agreement, any circumstance, event, condition, change or development or
any set of circumstances, events, conditions, changes or developments,
which, in the reasonable judgment of TLC, has or have or would
reasonably be expected to have, individually or in the aggregate, an
LVCI Material Adverse Effect or an LVCI Material Adverse Change; and
9.2.4. the LVCI Board shall have made and shall not have modified or
amended, in any material respect, prior to the LVCI Stockholder
Meeting, an affirmative recommendation that the holders of the LVCI
Common Shares approve this Agreement and the Merger.
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9.3. CONDITIONS TO THE OBLIGATIONS OF LVCI
The obligation of LVCI to consummate the Merger is also subject to the
satisfaction, on or before the Closing Date, of the following further conditions
precedent (each of which is for the exclusive benefit of LVCI and may be waived
by LVCI and any one or more of which, if not satisfied or waived, will relieve
LVCI of any obligation under this Agreement):
9.3.1. TLC and Merger Subsidiary shall have performed in all material
respects all of their respective obligations hereunder required to be
performed by them at or prior to the Effective Time, the
representations and warranties of TLC and Merger Subsidiary contained
in this Agreement qualified by materiality or by TLC Material Adverse
Effect or TLC Material Adverse Change shall be true and correct and the
representations and warranties of TLC contained in this Agreement that
are not so qualified shall be true and correct in all material respects
at and as of the Closing Date as if made on and as of such date, and
LVCI shall have received a certificate signed by an executive officer
of each of TLC and Merger Subsidiary to the foregoing effect;
9.3.2. each of the boards of directors of TLC and Merger Subsidiary
shall have adopted all necessary resolutions, and all other necessary
corporate action shall have been taken by each of TLC and Merger
Subsidiary and their subsidiaries, to permit the consummation of the
Merger and the issue of the TLC Common Shares contemplated thereby and
the issue of TLC Common Shares upon the exercise from time to time of
the Replacement Options;
9.3.3. all necessary approvals shall have been received by LVCI and
TLC, respectively, to reprice the options as provided in Section 6.6.2
and, as applicable, grant the Replacement Options, as provided in
Section 7.6;
9.3.4. notwithstanding any of the representations and warranties of TLC
and Merger Subsidiary contained herein (and the information set out in
any of the corresponding schedules and the TLC Disclosure Letter) there
shall not be, and there shall not have occurred since the date of this
Agreement, any circumstance, event, condition, change or development or
any set of circumstances, events, conditions, changes or developments,
which, in the reasonable judgment of LVCI has or have or would
reasonably be expected to have, individually or in the aggregate, a TLC
Material Adverse Effect or a TLC Material Adverse Change; and
9.3.5. the board of directors of TLC shall have made and shall not have
modified or amended, in any material respect, prior to the TLC
Stockholder Meeting, an affirmative recommendation that the holders of
the TLC Common Shares approve the Merger.
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ARTICLE 10.
TERMINATION
10.1. TERMINATION
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Closing (notwithstanding any approval of this Agreement by the
stockholders of LVCI or TLC):
10.1.1. by mutual written consent of LVCI and TLC;
10.1.2. by either LVCI or TLC, if the Merger has not been consummated
by December 31, 2001 or such later date as the parties may agree in
unity (provided that the right to terminate this Agreement under this
clause shall not be available to any party whose failure to fulfill any
of its obligations under this Agreement has been the cause of or
resulted in the failure to consummate the Merger by such date);
10.1.3. by either LVCI or TLC, if there shall be any applicable Law
that makes the consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree of a court
of competent jurisdiction shall restrain or prohibit the consummation
of the Merger, and such judgment, injunction, order or decree shall
become final and non-appealable;
10.1.4. by either LVCI or TLC, if the stockholder approvals referred to
in Section 9.1.1 or 9.1.2 shall not have been obtained by reason of the
failure to obtain the requisite vote upon a vote at a duly held meeting
of stockholders or at any adjournment thereof;
10.1.5. by either LVCI or TLC, if (i) the closing price of TLC Common
Shares on NASDAQ at any time after the date hereof is less than $2.15,
or (ii) the closing price of LVCI Common Shares on NASDAQ at any time
after the date hereof is less than $1.50; and
10.1.6. by either LVCI or TLC (the "Terminating Party") if (x) there
has been a breach by the other party of any representation or warranty
contained in this Agreement which would have or would be reasonably
likely to have a TLC Material Adverse Effect or LVCI Material Adverse
Effect, as the case may be, or (y) there has been a material breach of
any of the covenants or agreements set forth in this Agreement on the
part of the other party, which breach is not curable or, if curable, is
not cured within 30 days after written notice of such breach is given
by the Terminating Party to the other party, or (z) LVCI has
recommended or entered into a written agreement (other than a
confidentiality agreement) for an Acquisition Proposal.
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10.2. TERMINATION BY LVCI
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Closing by action of the LVCI Board in writing, if (i) LVCI is
not in breach of Section 6.3, (ii) the Merger shall not have been approved by
the LVCI stockholders, and (iii) the LVCI Board authorizes LVCI, subject to
complying with the terms of this Agreement, to enter into a written agreement
(other than a confidentiality agreement) concerning a transaction that
constitutes a Superior Proposal and LVCI promptly notifies TLC in writing that
it intends to enter into such an agreement.
10.3. TERMINATION BY TLC
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Closing by TLC in writing, if the LVCI Board shall have
withdrawn or adversely modified its approval or recommendation of the Merger or
if the LVCI Board recommends or enters into a written agreement (other than a
confidentiality agreement) for a Superior Proposal.
10.4. EFFECT OF TERMINATION
10.4.1. In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article 10, no party to this
Agreement shall have any liability or further obligation to any other
party hereunder except that (a) the agreements contained in Section
11.7 shall survive the termination hereof, (b) the parties shall be
liable for any wilful breaches hereof, and (c) if (i) LVCI shall have
entered into a written Agreement (other than a confidentiality
agreement) for an Acquisition Proposal; (ii) LVCI has terminated this
Agreement in accordance with Section 10.2; or (iii) TLC has terminated
this Agreement in accordance with Section 10.3 as a result of (A) LVCI
withdrawing or adversely modifying its approval or recommendation of
the Merger as a result of a Superior Proposal or (B) LVCI recommending
or entering into a written agreement (other than a confidentiality
agreement) for a Superior Proposal, then LVCI shall pay to TLC an
amount equal to $3,000,000 in immediately available funds designated by
TLC.
10.4.2. The payment in clause (c) of Section 10.4.1 shall be due three
(3) Business Days after the date (x) in the case of an event in (i) of
clause (c), on which the LVCI Board enters into an agreement for a
Superior Proposal; (y) in the case of an event in (ii) of clause (c),
on which this Agreement is terminated by the LVCI Board; and (z) in the
case of an event in (iii) of clause (c), on which this Agreement is
terminated by the TLC Board.
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ARTICLE 11.
MISCELLANEOUS
11.1. NOTICES
All notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given,
if to TLC or Merger Subsidiary, to:
TLC Laser Eye Centers Inc.
5280 Solar Drive
Suite 300
Mississauga, Ontario
L4W 5M8
Telephone: (905) 602-2020 ex. 3900
Telecopy: (905) 602-7956
Attention: Chief Executive Officer
with a copy to:
Torys
P.O. Box 270
79 Wellington Street West
Maritime Life Tower, Suite 3000
Toronto, Ontario
M5K 1N2
Telephone: (416) 865-0040
Telecopy: (416) 865-7380
Attention: David Chaikof
if to LVCI, to:
Laser Vision Centers, Inc.
540 Maryville Center Drive
Suite 200
St. Louis, MO
63141
Telephone: (314) 523-8201
Telecopy: (314) 434-7251
Attention: Chief Executive Officer
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with a copy to:
Thompson Coburn LLP
One Firstar Plaza
St. Louis, Missouri
63101-1693
Telephone: (314) 552-6000
Telecopy: (314) 552-7000
Attention: Thomas A. Litz
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate confirmation is received or (ii) if given by any other means, when
delivered at the address specified in this Section.
11.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Except as otherwise provided in this Agreement, the representations,
warranties, agreements and covenants contained herein and in any certificate or
other writing delivered pursuant hereto shall not survive the Effective Time
except Section 6.4, Section 7.5, Section 7.6 and Article 2.
11.3. AMENDMENTS AND WAIVER
11.3.1. Any provision of this Agreement may be amended or waived prior
to the Closing, if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by TLC, Merger Subsidiary and
LVCI or, in the case of a waiver, by the party against whom the waiver
is to be effective; provided that (i) any waiver or amendment shall be
effective against a party only if the board of directors of such party
approves such waiver and (ii) after the adoption of this Agreement by
the stockholders of LVCI or TLC, no such amendment or waiver shall,
without further approval of such stockholders and each party's board of
directors, alter or change (x) the amount or kind of consideration to
be received in exchange for any shares of capital stock of LVCI, (y)
any term of the certificate of incorporation of the Surviving
Corporation, or (z) any of the terms or conditions of this Agreement if
such alteration or change would adversely affect the holders of any
shares of capital stock of LVCI.
11.3.2. No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law.
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11.4. FURTHER ASSURANCES
Each party hereto shall, from time to time, and at all times hereafter,
at the request of the other parties hereto, but without further consideration,
do all such further acts and execute and deliver all such further documents and
instruments as shall be reasonably required in order to fully perform and carry
out the terms and intent hereof.
11.5. PUBLIC STATEMENTS
LVCI and TLC agree to consult with each other as to the general nature
of any news releases or public statements with respect to this Agreement or the
Merger, and to use their respective reasonable efforts not to issue any news
releases or public statements inconsistent with the results of such
consultations. Subject to applicable Laws, each party shall use its reasonable
efforts to enable the other parties to review and comment on all such news
releases prior to the release thereof.
11.6. SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
11.7. FEES AND EXPENSES
11.7.1. Except as otherwise provided in this Section, all costs and
expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
11.7.2. LVCI and TLC shall each pay one-half of all costs and expenses
related to printing, filing and mailing the Registration Statement and
the Joint Proxy Statement/Prospectus and all SEC and other regulatory
filing fees.
11.8. SUCCESSORS AND ASSIGNS
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the prior written consent of
the other parties hereto.
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11.9. NO THIRD PARTY BENEFICIARIES
Nothing in this Agreement expressed or implied, is intended to confer
upon any person, other than the parties hereto, or their respective successors,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement. Notwithstanding the foregoing, (a) the LVCI Nominees shall be third
party beneficiaries with respect to TLC's obligations to nominate them for
election to the TLC Board at TLC's annual meeting in 2002; and (b) LVCI's
directors and officers shall be third party beneficiaries of TLC's obligations
under Section 8.10.
11.10. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by
the law of the State of New York (except insofar as mandatory provisions of
Delaware law are applicable), without regard to the conflicts of law principles
thereof.
11.11. COUNTERPARTS; EFFECTIVENESS
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. Counterparts may be executed either in
original or faxed form and the parties adopt any signatures of the parties,
provided, however, that any party providing its signature in faxed form shall
promptly forward to the other parties an original of the signed copy of this
Agreement which was so faxed. This Agreement shall become effective when each
party hereto shall have received by fax or otherwise counterparts hereof signed
by all of the other parties hereto.
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
LASER VISION CENTERS, INC.
By: /s/ John J. Klobnak
---------------------------
Name: John J. Klobnak
Title: Chief Executive Officer
By: /s/ Robert W. May
---------------------------
Name: Robert W. May
Title: Secretary
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TLC LASER EYE CENTERS INC.
By: /s/ Elias Vamvakas
---------------------------
Name: Elias Vamvakas
Title: Chief Executive Officer
By: /s/ Lloyd Fiorini
---------------------------
Name: Lloyd Fiorini
Title: General Counsel/Secretary
TLC ACQUISITION II CORP.
By: /s/ Elias Vamvakas
---------------------------
Name: Elias Vamvakas
Title: Chief Executive Officer
By: /s/ Lloyd Fiorini
---------------------------
Name: Lloyd Fiorini
Title: Secretary
81
SCHEDULE 8.1
GOVERNANCE ARRANGEMENTS
1. Name: On the Closing Date, TLC will be renamed "TLC Vision
Corporation".
2. Directors: For the first year following the completion of the Merger,
the board of directors shall consist of eleven (11)
directors, of which, subject to stockholder approval, four
(4) shall consist of the LVCI Nominees. At the first
anniversary of the completion of the Merger, the
Vice-Chairman will resign from the TLC Board and one member
of the TLC Board, other than the LVCI Nominees, will also
resign, following which the size of the TLC Board will be
reduced to nine (9) directors. Management of TLC will
nominate the LVCI Nominees for election to the TLC Board at
TLC's annual meeting of stockholders in 2002. For so long
as they serve on the TLC Board, the LVCI Nominees then
serving on the TLC Board shall be entitled to fair
representation on each committee of the TLC Board.
3. Management: Following the completion of the Merger, the senior
management of TLC following the consummation of the Merger
shall be comprised of the following persons:
Chairman and Chief - Chairman and Chief Executive
Executive Officer Officer of TLC
Vice-Chairman - Chairman and Chief Executive
Officer of LVCI
President and Chief - President and Chief Operating
Operating Officer officer of LVCI
Chief Financial Officer - Chief Financial Officer of
LVCI
Co-General Counsels - General Counsel of TLC and
General Counsel of LVCI
4. Offices: The head office for TLC following the consummation of the
Merger will remain in Mississauga, Ontario, and the head
office for its United States operations will be located in
St. Louis, Missouri.
5. Super-Majority: In the first year following the completion of the Merger,
approval of any changes in the senior management listed
above may only be made with approval of 80% or more of the
TLC Board. To give effect to the foregoing, the employment
agreements entered into by TLC with the senior management
listed above shall provide, at a minimum, that in the first
year following completion of the Merger the agreements can
only be terminated with approval of 80% or more of the TLC
Board.