Exhibit 2.3
AGREEMENT AND PLAN OF MERGER
By and Among
TRUVISION, INC.
and
TLC WILDCARD CORP.
and
TLC VISION CORPORATION
and
TLC VISION (USA) CORPORATION
and
LINDSAY T. ATWOOD
October 27, 2005
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THIS AGREEMENT AND PLAN OF MERGER is made October 27, 2005 by and
among TruVision, Inc., a Utah corporation (the "Company"), TLC Wildcard Corp., a
Utah corporation ("Mergersub"), TLC Vision Corporation, a New Brunswick
corporation ("TLC Canada"), TLC Vision (USA) Corporation, a Delaware corporation
("TLC") and Lindsay T. Atwood, by and on behalf of each Shareholder (the
"Shareholders' Representative"). Capitalized terms used herein and not defined
in the specific Section in which they are used shall have the meanings assigned
to such terms in Annex A hereof.
WITNESSETH:
WHEREAS, the Company is engaged in the business of offering to managed
care companies, insurance providers, and corporate employers discount programs
related to laser vision correction and other health services (such activities
and all incidental or related businesses of the Company, including contact lens,
hearing aids, cosmetic dentistry and surgery, carried on by the Company and the
TruVision Subsidiaries being herein referred to as the "Business");
WHEREAS, the Company desires to merge with Mergersub and Mergersub
desires to merge with and into the Company, with the Company being the surviving
corporation, upon and subject to the terms and conditions set forth below;
WHEREAS, as a result of the Merger, upon the Effective Time all of the
outstanding shares of the capital stock of the Company shall be converted into
the right to receive cash and, in certain circumstances, TLC Shares (as defined
herein), as provided in this Agreement;
WHEREAS, the parties hereto acknowledge that the Merger will be a
taxable transaction and will not qualify as a tax-deferred reorganization under
Section 368(a) of the Code;
WHEREAS, the Board of Directors of Mergersub and the Board of
Directors of the Company have each determined that the Merger is in the best
interests of their respective shareholders and have each duly adopted
resolutions approving this Agreement and the transactions contemplated hereby;
and
WHEREAS, Shareholders holding, in the aggregate, more than 80% of the
outstanding Shares (as defined herein), have each delivered to TLC Canada, TLC
and Mergersub that certain support agreement whereby they agree to vote such
shares in favor of the Merger and to enter into certain other agreements
contemplated by this Agreement, including the Indemnification Agreement (as
defined herein).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth and intending to be legally
bound, the Parties hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.01 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, on the Closing Date, and in accordance with the
URBCA, TLC Canada, TLC and the Company shall cause Mergersub to be merged with
the Company (the "Merger"). Upon the Effective Time, the separate existence of
Mergersub shall cease, and the Company shall continue as the Surviving
Corporation.
Section 1.02 Effect of the Merger. The Merger shall have the effects
set forth in this Agreement and Section 1106 of the URBCA. Without limiting the
generality of the foregoing, and subject thereto, upon the Effective Time, all
the assets, properties, rights, privileges and powers of Mergersub and the
Company shall vest in the Surviving Corporation and all debts, liabilities and
duties of Mergersub and the Company shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 1.03 Consummation of the Merger. On the Closing Date, the
Company and Mergersub will cause to be filed articles of merger (the "Articles
of Merger") with the Utah Department of
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Commerce, Division of Corporations & Commercial Code (the "Division") and make
all other filings or recordings required by law in connection with the Merger.
The Merger shall become effective at such time as the Articles of Merger are
duly filed with the Division or at such later time as is specified in the
Articles of Merger (the "Effective Time").
Section 1.04 Charter; Bylaws; Directors and Officers. The articles of
incorporation of the Surviving Corporation from and after the Effective Time
shall be the articles of incorporation of the Company immediately prior to the
Effective Time unless amended pursuant to the Articles of Merger and thereafter
amended in accordance with the provisions thereof and as provided by applicable
law. The bylaws of the Surviving Corporation from and after the Effective Time
shall be the bylaws of the Company as in effect immediately prior to the
Effective Time. The initial directors and officers of the Surviving Corporation
on and after the Effective Time shall be the directors and officers,
respectively, of Mergersub immediately prior to the Effective Time, in each case
until their respective successors are duly elected and qualified.
Section 1.05 Conversion of Shares. By virtue of the Merger and without
any action on the part of the Shareholders, at the Effective Time, (i) all of
the Shares (other than the Dissenting Shares) shall be converted into the right
to receive cash and TLC Shares, on the terms and conditions set forth in this
Agreement; and (ii) all of the outstanding Options not exercised prior to the
Closing Date, if any, shall be cancelled, in accordance with the terms and
conditions set forth in Article II of this Agreement.
Section 1.06 Conversion of Mergersub Capital Stock. Each share of
common stock of Mergersub outstanding immediately prior to the Effective Time,
shall be converted into and become one fully paid and nonassessable share of
redeemable preferred stock of the Surviving Corporation.
Section 1.07 Further Assurances. On and after the Effective Time, each
of the Parties to this Agreement shall from time to time, at the request of any
of the other Parties, promptly execute such instruments and take such other
actions as the requesting Party may reasonably request to vest, perform or
confirm, of record or otherwise, in the Surviving Corporation, its respective
rights, title or interest in, to or under any of the rights, privileges, powers,
properties or assets of Mergersub, or otherwise to evidence or implement the
transactions contemplated by this Agreement.
Section 1.08 Tax Consequences. It is intended that the Merger will be
a taxable transaction and that the Merger shall not constitute a reorganization
described in Section 368(a) of the Code. The Parties shall treat all
transactions contemplated hereby consistently with such intention.
ARTICLE II
MERGER CONSIDERATION
Section 2.01 Initial Merger Consideration.
(a) At or at any time following the Effective Time, TLC shall
deliver, or cause to be delivered, and a Shareholder shall be entitled to
receive, upon surrender to TLC of one or more certificates representing Shares
and a duly executed election form and transmittal letter in the form attached
hereto as Exhibit A (an "Election Form"), subject to Section 2.01(c) and Section
2.01(d) hereof and to the terms of the Indemnification Agreement and Escrow
Agreement, cash consideration equal to such Shareholder's Percentage Interest
multiplied by the Initial Merger Consideration.
(b) A Shareholder may elect to receive up to twenty percent (20%)
of the Initial Merger Consideration to which the Shareholder is entitled in TLC
Shares, in lieu of cash, provided that such Shareholder has submitted a duly
completed Election Form to TLC no later than the Effective Time; provided,
however, that no Shareholder who is not an "accredited investor" as defined in
Rule 501(a) of Regulation D under the U.S. Securities Act (a "Non-Accredited
Investor") may elect to receive TLC Shares. Unless a Shareholder has
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submitted a duly completed Election Form prior to the Effective Time, such
Shareholder shall be deemed to have elected to receive one hundred percent
(100%) of the Initial Merger Consideration to which he is entitled in cash.
(c) For purposes of determining the number of TLC Shares to be
delivered to an Electing Shareholder as part of the Initial Merger
Consideration, the value of the TLC Shares shall be $6.13 per share, being the
average closing price of TLC Shares on NASDAQ for the five (5) trading days
prior to the date hereof.
(d) At the Closing, pursuant to the Escrow Agreement, TLC shall
deposit with the Escrow Agent (as defined in the Escrow Agreement) a portion of
the Initial Merger Consideration equal to:
(i) a cash amount equal to twenty five percent (25%) of the
total Initial Merger Consideration (together with all earnings thereon,
collectively, the "Indemnity Escrow Deposit"); and
(ii) a cash amount equal to twenty-five percent (25%) of the
Required Net Assets (the "Closing Adjustment Escrow Amount" and, together
with all earnings thereon, collectively, the "Closing Adjustment Escrow
Deposit").
(e) The Indemnity Escrow Deposit shall be held, invested and
disbursed as provided in the Indemnification Agreement and the Escrow Agreement.
The Closing Adjustment Escrow Deposit shall be held, invested and disbursed as
provided in Section 2.09(c) and the Escrow Agreement.
Section 2.02 Initial Merger Consideration Adjustment.
(a) Closing Adjustment.
(i) The Company shall prepare and deliver to TLC and
Mergersub two (2) Business Days before the Closing Date a statement setting
forth a good faith estimate of the amount of the Net Assets as of the close
of business on the Closing Date, which amount (and the amount of each
component thereof) shall be consistent with past practice, ("Estimated Net
Assets").
(ii) If the Estimated Net Assets are less than one million
eight hundred and twenty thousand dollars ($1,820,000) (the "Required Net
Assets"), the Initial Merger Consideration shall be decreased by the amount
of such deficiency. If the Estimated Net Assets are more than the Required
Net Assets, the Initial Merger Consideration shall be increased by the
amount of such excess.
(b) Post-Closing Adjustment.
As promptly as practicable following the Closing Date, but in no
event later than forty-five (45) days thereafter, TLC shall cause the Surviving
Corporation to prepare and deliver to the Shareholders' Representative a
consolidated balance sheet of the Company as of the Closing Date (the "Closing
Balance Sheet") specifying the amount of Net Assets on such date ("Closing Net
Assets"), which Closing Balance Sheet shall be prepared in good faith and in
accordance with GAAP on a basis consistent with the Balance Sheet, except that
such Closing Balance Sheet shall accrue for Taxes, and the Initial Merger
Consideration shall be adjusted pursuant to the procedures set forth in Section
2.09.
Section 2.03 Additional Consideration.
(a) TLC shall deliver to the Shareholders on or prior to January
31, 2007, additional consideration ("Year One Consideration") equal to
sixty-five percent (65%) of the amount, if any, by which the Actual Revenue
Collected for the period commencing on the Closing Date and ending on December
31, 2006 ("Year One") exceeds six million dollars ($6,000,000). Year One
Consideration shall be payable by TLC to each
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Shareholder in an amount equal to such Shareholder's Percentage Interest
multiplied by the total Year One Consideration and shall be payable in cash.
(b) TLC shall deliver to the Shareholders on or prior to January
31, 2008, additional consideration ("Year Two Consideration") equal to (i) forty
percent (40%) of the amount, if any, by which the Actual Revenue Collected for
the period commencing January 1, 2007 and ending December 31, 2007 ("Year Two")
exceeds seven million dollars ($7,000,000), less (ii) sixty-five percent (65%)
of the amount of any refunds paid by the Surviving Corporation during Year Two
related to Actual Revenue Collected during Year One. Total Year Two
Consideration shall be payable by TLC to each Shareholder in an amount equal to
such Shareholder's Percentage Interest multiplied by the Year Two Consideration
and shall be payable in cash.
(c) TLC shall deliver to the Shareholders on or prior to April
30, 2009, additional consideration ("Year Three Consideration") equal to (i)
twenty percent (20%) of the amount, if any, by which the Actual Revenue
Collected for the period commencing January 1, 2008 and ending December 31, 2008
("Year Three") exceeds nine million dollars ($9,000,000), less (ii) an amount
equal to the sum of (A) sixty-five percent (65%) of the amount of any refunds
paid by the Surviving Corporation during Year Three related to Actual Revenue
Collected during Year One that is not deducted pursuant to Section 2.03(b), (B)
forty percent (40%) of the amount of any refunds paid by the Surviving
Corporation during Year Three related to Actual Revenue Collected during Year
Two and (C) twenty percent (20%) of the amount of any refunds paid by the
Surviving Corporation during the period commencing January 1, 2009 and ending
March 31, 2009 related to Actual Revenue Collected during Year Three. Year Three
Consideration shall be payable by TLC to each Shareholder in an amount equal to
such Shareholder's Percentage Interest multiplied by the total Year Three
Consideration and shall be payable in cash.
(d) At or prior to delivery by TLC of the Year One Consideration,
Year Two Consideration or Year Three Consideration, or, in the event that no
such consideration is payable by TLC, prior to the date by which TLC would have
had to deliver such consideration had it been payable, TLC shall deliver a
statement (the "Additional Consideration Statement") to each Shareholder setting
out the calculation in detail reasonably satisfactory to the Shareholder
Representative of whether such consideration is or is not payable and the amount
of any such consideration.
(e) TLC Canada and TLC agree that at the TLC Owned Centers, they
shall implement appropriate procedures to screen all TLC direct to consumer
walk-in patients and refer those who are members of Contracted Health Plans and
Employer Groups to the Surviving Corporation for booking of the appointment or
assist such patients to book appointments through the Surviving Corporation. TLC
Canada and TLC acknowledge and agree that, regardless if a patient is screened
and referred to the Surviving Corporation as required by this Section 2.03(e),
all revenue collected by TLC Canada, TLC, the Surviving Corporation, any
TruVision Subsidiary or any of their Affiliates from TLC direct to consumer
walk-in patients who are members of Contracted Health Plans and Employer Groups
and who receive refractive eye surgery (including, without limitation, LASIK) at
a TLC Owned Center shall be treated as Actual Revenue Collected for purposes of
this Agreement. TLC Canada and TLC shall maintain complete and accurate books
and records regarding the screening and referral of all TLC direct to consumer
walk-in patients. The Shareholders' Representative, or a duly appointed
representative of the Shareholders' Representative, shall have the right,
subject to patient confidentiality laws, including but not limited to HIPAA, to
review TLC Canada's and TLC's books and records pertaining to the screening and
referral of TLC direct to consumer walk-in patients at any time upon five (5)
days' prior written notice to TLC. If, upon inspection of such books and
records, it is determined that TLC Canada and TLC have referred to the Surviving
Corporation less than ninety five percent (95%) of the TLC designated walk-in
patients who are members of Contracted Health Plans and Employer Groups, the
Shareholders' Representative shall be entitled to be reimbursed by TLC for all
of his reasonable costs and expenses incurred in connection with such review
and, in any event, the revenue credit for each patient not so referred to the
Surviving Corporation shall be included within the calculation of Actual Revenue
Collected.
Section 2.04 Delivery of Consideration. No consideration payable
pursuant to this Article II shall be delivered to a Shareholder until such
Shareholder has surrendered the certificate(s) representing such Shareholder's
Shares (or a duly executed affidavit of lost certificate), together with a duly
executed Election Form.
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Cash consideration payable pursuant to this Article II shall be paid by wire
transfer to a single account specified by the Shareholders' Representative, on
behalf of all Shareholders.
Section 2.05 Issuance of Surviving Corporation Common Stock. In
exchange for and in consideration of the payment of the Initial Merger
Consideration and the Additional Consideration, as may be adjusted pursuant to
Section 2.02 or Section 2.09 hereof, the Surviving Corporation will issue to
TLC, at the Effective Time, one thousand (1,000) fully paid and nonassessable
shares of common stock of the Surviving Corporation.
Section 2.06 No Fractional Shares. No Shareholder will be entitled to
receive fractional TLC Shares in connection with the payment of any amounts
owing hereunder. Fractional TLC Shares will, at the sole option of TLC Canada,
be rounded up to the nearest number of whole TLC Shares or be paid to the
Shareholder in cash equal to the value of such fractional share.
Section 2.07 Legend.
(a) Each certificate representing TLC Shares delivered hereunder
shall contain upon its face or upon the reverse side thereof a legend to the
following effect:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR QUALIFIED FOR
DISTRIBUTION TO THE PUBLIC IN CANADA UNDER THE SECURITIES LAWS OF THE PROVINCES
AND TERRITORIES OF CANADA. THE HOLDER THEREOF, BY ACQUIRING SUCH SHARES, AGREES
FOR THE BENEFIT OF THE CORPORATION THAT SUCH SHARES MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY: (A) PURSUANT TO THE EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, OR
PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B)
IF OUTSIDE THE UNITED STATES, IN ACCORDANCE WITH THE REQUIREMENT OF APPLICABLE
SECURITIES LAWS OF THE PROVINCES AND TERRITORIES OF CANADA. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE AND
QUOTED FOR TRADING ON THE NASDAQ NATIONAL MARKET SYSTEM, HOWEVER, THE SAID
SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF THE TORONTO STOCK EXCHANGE
SINCE THEY ARE NOT FREELY TRANSFERABLE AND CONSEQUENTLY, DELIVERY OF THIS
CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON
THE TORONTO STOCK EXCHANGE. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF
WHICH WILL CONSTITUTE "GOOD DELIVERY" ON THE TORONTO STOCK EXCHANGE, MAY BE
OBTAINED FROM CIBC MELLON TRUST COMPANY OR MELLON INVESTOR SERVICES, LLC UPON
DELIVERY OF THIS CERTIFICATE AND AN OPINION, ADDRESSED TO CIBC MELLON TRUST OR
MELLON INVESTOR SERVICES, LLC AND THE CORPORATION, OF COUNSEL OF RECOGNIZED
STANDING REASONABLY SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT THE SALE
OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 144
UNDER THE SECURITIES ACT.
(b) The legend set forth in this Section 2.07 shall be removed by
delivery of substitute certificate(s) without such legend (i) with respect to
TLC Shares that have been registered pursuant to the U.S. Securities Act or (ii)
with respect to TLC Shares that have been sold in reliance on and in accordance
with Rule 144 if the holder has delivered to TLC Canada and the transfer agent
an opinion of counsel, of recognized standing reasonably satisfactory to TLC
Canada, to the effect that such legend is no longer required under applicable
requirements of the U.S. Securities Act or state or provincial securities laws.
TLC Canada may instruct its transfer agent to withhold the transfer of any TLC
Shares disposed of by the Electing Shareholder pursuant to Rule 144, but upon
receipt of evidence of compliance with Rule 144 in accordance with the
foregoing, shall instruct the transfer agent to effectuate such transfer.
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Section 2.08 No Rights as Shareholder. At the Effective Time, holders
of Shares shall cease to be, and shall have no rights as, shareholders of the
Company. After the Effective Time, there shall be no further registrations of
transfers of Shares.
Section 2.09 Resolution of Closing Balance Sheet and Additional
Consideration Disputes.
(a) The Shareholders' Representative, on behalf of the
Shareholders, shall have thirty (30) days following receipt of the Closing
Balance Sheet or an Additional Consideration Statement during which either (i)
to notify TLC of acceptance by the Shareholders' Representative, on behalf of
the Shareholders, of the amount of Closing Net Assets or Additional
Consideration, as the case may be, or (ii) to notify TLC of any dispute by the
Shareholders' Representative, on behalf of the Shareholders, as to the amount of
Closing Net Assets or Additional Consideration, as the case may be, which notice
shall set forth in reasonable detail the basis for and amount of such dispute.
If the Shareholders' Representative shall so notify TLC of acceptance by the
Shareholders of the amount of Closing Net Assets or Additional Consideration
within such thirty (30) day period, the Closing Balance Sheet or the Additional
Consideration Statement, as the case may be, shall constitute the "Final Closing
Balance Sheet", or the "Final Additional Consideration Statement", as the case
may be, and the date of delivery of such notice shall constitute the "Final
Adjustment Date". If the Shareholders' Representative shall fail either to so
notify TLC either of acceptance or dispute by the Shareholders of the amount of
Closing Net Assets or Additional Consideration, as the case may be, within such
thirty (30) day period, the Closing Balance Sheet or Additional Consideration
Statement, as the case may be, shall be deemed to have been accepted by the
Shareholders' Representative, on behalf of the Shareholders, and shall
constitute the "Final Closing Balance Sheet" or "Final Additional Consideration
Statement", as the case may be, and the last day of such thirty (30) day period
shall constitute the "Final Adjustment Date". If the Shareholders'
Representative shall so notify TLC of any dispute as to the amount of the
Closing Net Assets or Additional Consideration within such thirty (30) day
period, TLC shall, in the case of the Closing Net Assets, deliver the amount of
the Closing Adjustment Escrow Deposit not subject to the dispute to the
Shareholders (by the delivery to each Shareholder of such Shareholder's share of
such undisputed amount based on their Percentage Interests) within five (5)
Business Days of TLC's receipt of such notice, and the Shareholders'
Representative and TLC shall cooperate in good faith to resolve such dispute as
promptly as possible, and if TLC and the Shareholders' Representative, on behalf
of the Shareholders, are able to resolve such dispute (as evidenced by a written
notice acknowledged by each of TLC and the Shareholders' Representative) within
thirty (30) days of the Shareholders' Representatives' delivery of the notice of
such dispute as provided herein (the "Resolution Period"), then the date of such
acknowledgement that such dispute has been resolved shall constitute the "Final
Adjustment Date" and the Closing Balance Sheet, as modified in respect of the
amount of Closing Net Assets and in accordance with such dispute resolution,
shall constitute the "Final Closing Balance Sheet", in the case of a dispute
concerning the Closing Net Assets, and the Additional Consideration Statement,
as modified in respect of the amount of Additional Consideration and in
accordance with such dispute resolution, shall constitute the "Final Additional
Consideration Statement", in the case of a dispute concerning Additional
Consideration.
(b) In the event that TLC and the Shareholders' Representative
shall be unable to resolve any such dispute of the amount of Closing Net Assets
or Additional Consideration, as the case may be, within the Resolution Period,
then such dispute shall be submitted to (i) Ernst & Young LLP, and if such firm
refuses to accept such engagement then (ii) such other nationally recognized
independent accounting firm chosen by mutual agreement of TLC and the
Shareholders' Representative, acting in good faith (the firm which accepts the
engagement, the "Independent Auditor") within fifteen (15) days after the
expiration of the Resolution Period (such submission to the Independent Auditor
being referred to herein as to the "Dispute Audit"). If TLC and the
Shareholders' Representative are unable to agree on the Independent Auditor,
then TLC and the Shareholders' Representative shall each have the right to
request the American Arbitration Association to appoint the Independent Auditor.
In connection with the Dispute Audit, TLC and the Shareholders' Representative
shall execute, if requested by the Independent Auditor, a reasonable engagement
letter. All fees and expenses incurred by the Independent Auditor in connection
with the Dispute Audit shall be borne by the unsuccessful party in the Dispute
Audit and, with respect to a dispute concerning the Closing Balance Sheet or the
Year One Consideration for which TLC, Mergersub or the Surviving Corporation is
the successful party, such fees and expenses shall be first paid from cash
proceeds in the Closing Adjustment Escrow Deposit or the Indemnity Escrow
Amount, as applicable, and to the extent there are insufficient funds to repay
the Independent Auditor in full, such fees and expenses shall, at the sole
option of the Shareholders' Representative, be paid in cash by the Shareholders
pro rata based on their
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Percentage Interests or set-off against any payment of Additional Consideration
owing to the Shareholders, on a pro rata basis based on their Percentage
Interests. The Independent Auditor shall act as an expert and not as an
arbitrator to determine, based solely on presentations by TLC and the
Shareholders, and not by independent review, only those issues in dispute
between TLC and the Shareholders' Representative regarding the amount of Closing
Net Assets or Additional Consideration, as the case may be. The Independent
Auditor's determination shall be requested to be made within twenty (20) days of
its selection, shall be set forth in a written statement (the "Auditor's
Determination Statement") delivered to TLC and the Shareholders' Representative
and shall be final, binding and conclusive on TLC and the Shareholders and shall
constitute an arbitral award upon which a judgment may be entered by a court of
competent jurisdiction. The Closing Balance Sheet, as modified by the Auditor's
Determination Statement, shall constitute the "Final Closing Balance Sheet", in
the case of a dispute concerning the Closing Net Assets, the Additional
Consideration Statement, as modified by the Auditor's Determination Statement,
shall constitute the "Final Additional Consideration Statement", in the case of
a dispute concerning Additional Consideration, and the date of delivery of the
Auditor's Determination Statement shall constitute the "Final Adjustment Date".
(c) In the case of a dispute concerning Closing Net Assets, if
(a) Estimated Net Assets were greater than the Net Assets reflected on the Final
Closing Balance Sheet ("Final Net Assets"), the amount of such deficiency shall
be returned to TLC from the Closing Adjustment Escrow Account and the balance
remaining in the Closing Adjustment Escrow Deposit after such payment shall be
released to the Shareholders by the delivery to each Shareholder of such
Shareholder's Percentage Interest of such remaining balance; or (b) Estimated
Net Assets were less than the Final Net Assets, then all amounts remaining in
the Closing Adjustment Escrow Deposit shall be released to the Shareholders by
the delivery to each Shareholder of such Shareholder's Percentage Interest of
the remaining amount of the Closing Adjustment Escrow Deposit and, to the extent
of any remaining deficiency after the release of such amounts, TLC shall pay to
each Shareholder such Shareholder's Percentage Interest of the aggregate amount
of such deficiency in cash.
(d) In the case of a dispute concerning Additional Consideration,
any amounts owing to Shareholders as a result of the Final Additional
Consideration Statement in excess of any Additional Consideration actually paid
to Shareholders shall be paid by TLC to each Shareholder in a cash amount equal
to such Shareholder's Percentage Interest of the aggregate amount of such
excess.
(e) At any time prior to the Final Adjustment Date, TLC Canada
and TLC shall, at the request of the Shareholders' Representative, on reasonable
prior notice from the Shareholders' Representative and during normal business
hours, afford the Shareholders' Representative and his accountants and other
representatives timely access to the books and records, personnel and properties
of TLC Canada, TLC, the Surviving Corporation and the TruVision Subsidiaries and
otherwise reasonably cooperate with the Shareholders' Representative in
connection with his evaluation of the amount of Closing Net Assets or Additional
Consideration, as the case may be.
(f) Any payment required pursuant to this Section 2.09 (i) shall
bear interest from and after the Closing Date, in the case of a dispute
concerning the Closing Net Assets, and from and after the date that the
Additional Consideration was due pursuant to Section 2.03 hereof, in the case of
a dispute concerning Additional Consideration, until paid, at the per annum rate
equal to the prime rate as reported in the Wall Street Journal, as in effect
from time to time, on the basis of a three hundred sixty (360) day year and the
actual number of days elapsed and (ii) shall be made, together with applicable
interest (net of any applicable Canadian withholding taxes), in cash within five
(5) Business Days of the Final Adjustment Date.
(g) The Shareholders' Representative shall be reimbursed by the
Shareholders for any reasonable out of pocket costs and expenses incurred by the
Shareholders' Representative in connection with any actions taken pursuant to
this Section 2.09 and any such reimbursement for this purpose shall be paid out
of any cash amounts to be released to Shareholders from the Closing Adjustment
Escrow Deposit or, in the case of a dispute involving the Year One
Consideration, the Indemnity Escrow Amount. To the extent such funds are
insufficient to repay the Shareholders' Representative in full, each Shareholder
shall pay a cash amount to the Shareholders' Representative equal to such
Shareholder's pro rata share (based on such Shareholder's Percentage Interest)
of the remaining amount for which the Shareholders' Representative is entitled
to be reimbursed.
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Section 2.10 Dissenters' Rights.
(a) Notwithstanding anything in this Agreement to the contrary,
Shares that are issued and outstanding immediately prior to the Effective Time
and which are held by Shareholders that have complied with Section 1321 of the
URBCA and have delivered, consistent with Section 1323 of the URBCA, a written
demand for appraisal for such shares in the manner provided in Section 1301 of
the URBCA and who shall not have effectively withdrawn or lost such right to
appraisal during the period of time during which they may withdraw their rights
to appraisal under Section 1301 et seq. of the URBCA (the "Dissenting Shares")
shall not be entitled to receive their Percentage Interest of the Initial Merger
Consideration and shall be entitled only to the rights afforded by Section 1301
et. seq. of the URBCA. Each holder of Dissenting Shares who becomes entitled to
payment for such shares pursuant to Section 1301 et seq. of the URBCA shall
receive payment therefor from the Surviving Corporation in accordance with the
URBCA; provided, however, that if such holder of Dissenting Shares shall have
effectively withdrawn such holder's demand for appraisal of such shares or lost
such holder's right to appraisal and payment of such shares under Section 1301
of the URBCA, such holder shall forfeit the right to appraisal of such shares,
and each such share shall thereupon be deemed to have been converted, as of the
Effective Time, into and represent only the right to receive payment of the
Initial Merger Consideration, as provided in Section 2.01.
(b) The Company shall give TLC Canada and TLC (i) prompt notice
of any written demand for appraisal, any withdrawal of any such demand for
appraisal, and any other instrument served pursuant to Section 1301 et seq. of
the URBCA and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under Section
1301 et. seq. of the URBCA. The Company shall not, except with the prior written
consent of TLC Canada and TLC, voluntarily make any payment with respect to any
demand for appraisal or offer to settle or settle any such demand.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise set forth in the Disclosure Schedule attached
hereto as Exhibit B (which may include a schedule corresponding to a Section for
which a schedule is not expressly required pursuant to this Article III, and
which Disclosure Schedule may, subject to Section 7.03(a)(xv), be updated by the
Company at any time up to forty-eight (48) hours prior to the Closing Date to
reflect any changes or events which have occurred since the date hereof), which
identifies the section number to which such disclosure relates, the Company
hereby represents and warrants to TLC Canada, TLC and Mergersub that, as of the
date hereof:
Section 3.01 Organization and Qualification. The Company is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has full corporate power and authority to
own its properties and to conduct the businesses in which it is now engaged.
Schedule 3.01 of the Disclosure Schedule contains a complete list of all
subsidiaries of the Company and their respective jurisdictions of organization.
Schedule 3.01 of the Disclosure Schedule contains a list of every jurisdiction
in which the Company and the TruVision Subsidiaries are qualified to do business
and the Company and the TruVision Subsidiaries are in good standing in each such
jurisdiction, and such jurisdictions are the only jurisdictions wherein the
failure to qualify or to be in good standing would reasonably be expected to
result in a Material Adverse Effect. Each of the TruVision Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has full corporate power and authority to
own its properties and to conduct the business in which it is now engaged. Other
than the TruVision Subsidiaries, all of the issued and outstanding capital stock
of which is owned beneficially and of record by the Company, free and clear of
all Liens, the Company does not have any subsidiaries, own any capital stock or
other equity interest, directly or indirectly, in any other Person, nor have any
agreement with any Person to acquire any such capital stock or other equity
interest. Accurate and complete copies of the charters, including all amendments
thereto and restatements thereof, and by-laws of each of the Company and the
TruVision Subsidiaries and of the corporate minutes and the stock record books
of each of the Company and the TruVision Subsidiaries have been delivered to
TLC.
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Section 3.02 Authority. The execution and delivery by the Company of
this Agreement and each Transaction Document required to be executed and
delivered by the Company pursuant hereto, the performance by the Company of its
covenants and agreements hereunder and thereunder and the consummation by the
Company of the Transactions have been duly authorized by all necessary corporate
action of the Company, including any required approvals of the Company's
securityholders, except for the approval contemplated by Section 7.02(a) hereof.
This Agreement and each Transaction Document required to be executed and
delivered by the Company pursuant hereto, upon execution and delivery by the
Company, will constitute a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms except to the
extent limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application related to the enforcement of
creditors' rights generally and (b) general principles of equity, and except
that enforcement of rights to indemnification and contribution contained herein
or therein may be limited by applicable federal or state laws or the public
policy underlying such laws, regardless of whether enforcement is considered in
a proceeding in equity or at law (collectively, the "Equitable Exceptions").
Section 3.03 No Legal Bar; Conflicts.
(a) Neither the execution and delivery of this Agreement or any
Transaction Document required to be executed and delivered by the Company
pursuant hereto, nor the consummation of the Transactions by the Company (i)
violates or will violate any provision of the articles of incorporation or
by-laws of the Company or any statute, ordinance, regulation, order, judgment or
decree of any court or other Governmental Authority applicable to the Company or
any other Permit (excluding any such statute, ordinance, regulation, order,
judgment or decree adopted or which will take effect after the Closing Date),
(ii) to the knowledge of the Company, will be in violation of any statute,
ordinance, regulation, order, judgment or decree currently proposed by any court
or Governmental Authority or scheduled to take effect after the Closing Date, or
(iii) conflicts with or will conflict with or results in or will result in any
breach or modification of any of the terms of or constitutes or will constitute
a default under or results in or will result in the termination of or the
creation of any Lien on any of the Shares or any of the assets or property of
the Company, acceleration right or other right pursuant to the terms of any
Contract or Permit or will in any way affect the continuation or validity of any
Contract or Permit.
(b) Except for the filing of the Articles of Merger, no consents,
approvals or authorizations of, registrations, declarations or filings with or
notices to, any Governmental Authority or any other Person (including pursuant
to the terms of any Contract, Permit or otherwise) are required in connection
with the execution and delivery of this Agreement or any Transaction Document
required to be executed and delivered by the Company pursuant hereto, or the
consummation of the Transactions by the Company.
Section 3.04 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 120,000,000 shares of common stock and
20,000,000 shares of preferred stock, of which 2,355,042 shares of common stock
and no preferred stock are issued and outstanding. The Shares constitute all of
the outstanding shares of capital stock of all classes of the Company. All of
the issued and outstanding Shares have been duly authorized, validly issued and
fully paid and are non-assessable. Schedule 3.04(a) of the Disclosure Schedule
is a complete and accurate list of all holders of capital stock of the Company
and the respective number of Shares held by each such holder.
(b) Except as identified on Schedule 3.04(b) of the Disclosure
Schedule, there are no outstanding subscriptions, warrants, options, calls,
commitments or other rights or agreements to which the Company is subject to or
bound relating to the issuance, sale, transfer or redemption of Shares or other
securities of the Company. No shares of capital stock or other securities of the
Company are reserved for any purpose other than as identified on Schedule
3.04(b) of the Disclosure Schedule.
Section 3.05 Financial Statements. The Company has delivered to TLC
(a) the Company's audited balance sheets as at December 31, 2003 and December
31, 2004 and the related audited statements of income, retained earnings and
cash flows for the twelve (12) month periods then ended (collectively, the
"Annual
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Financial Statements"); and (b) the Company's balance sheet as at August 31,
2005 (the "Interim Balance Sheet") and the related statements of income,
retained earnings, and cash flows for the eight (8) month period then ended (the
"Interim Financial Statements" and collectively with the Annual Financial
Statements, the "Financial Statements"). The Financial Statements are complete
and correct in all material respects, have been prepared from the books and
records of the Company and in accordance with GAAP consistently applied
throughout the periods indicated and fairly present in all material respects the
financial condition of the Company as at the respective dates and the results of
its operations for the periods covered thereby; provided, however, that the
Interim Financial Statements do not include notes or an auditor's opinion and
are subject to year end adjustments (which consist only of normal recurring
accruals).
Section 3.06 Liabilities. Except (a) to the extent set forth in or
reserved against in the Interim Balance Sheet, (b) as set forth in Schedule 3.06
of the Disclosure Schedule, (c) for current liabilities (determined in
accordance with GAAP) incurred since the Interim Balance Sheet Date in the
Ordinary Course of Business and (d) for liabilities arising under the Contracts
and other liabilities arising under contracts in the Ordinary Course of
Business, the Company has no liabilities or obligations of any nature, whether
absolute, accrued, known or unknown, contingent or otherwise, or which
constitute a material contingency or material commitment required to be
disclosed as a note to the annual audited financial statements of the Company
under GAAP There are no Off-Balance Sheet Arrangements which are currently or at
any point may be binding on the Company.
Section 3.07 Accounts Receivable. All accounts receivable of the
Company which are reflected in the Interim Balance Sheet, and all such accounts
receivable which shall have arisen since the Interim Balance Sheet Date are
valid and shall have arisen only from bona fide arm's-length transactions in the
Ordinary Course of Business. All accounts receivable are fully and correctly
reflected on the Interim Financial Statements or, with respect to accounts
receivable arising after the Interim Balance Sheet Date, on the books and
records of the Company, in each case in accordance with GAAP and consistent with
past practices.
Section 3.08 Absence of Certain Changes. Subsequent to the Interim
Balance Sheet Date, there has not been with respect to the Company any (a)
event, circumstance or change related to the Business that has had or would
reasonably be expected to have a Material Adverse Effect; (b) material damage or
destruction (whether or not insured) affecting the assets, properties, business
or operations; (c) labor dispute or threatened labor dispute involving any key
employee; (d) actual or threatened dispute with any material customer or
supplier or actual or threatened loss of business from any material customer or
supplier or any event or circumstance which would reasonably be expected to
result in any such dispute or loss of business in each case which involved or
which would reasonably be expected to involve amounts in excess of $25,000
individually; (e) changes in the methods or procedures for billing or collection
of customer accounts or recording of customer accounts receivable or reserves
for doubtful accounts; (f) sale, assignment or transfer of any of the assets of
the Company with a net book value or fair market value in excess of $25,000,
except in the Ordinary Course of Business; (g) cancellation of any debts or
waivers of any claims or rights in each case with a value in excess of $25,000;
(h) agreements or commitments for capital expenditures in excess of $25,000
(individually or $75,000 in the aggregate) for repairs or additions to property,
plant, equipment or tangible capital assets; (i) change in any method of
accounting or accounting principles; (j) increase in the compensation,
commission, bonus or other direct or indirect remuneration payable or to become
payable to any salesman, distributor, agent or employee other than increases in
salary to its employees in the Ordinary Course of Business; (k) incurrence of
any Liens with respect to any assets of the Business other than in the Ordinary
Course of Business; (l) Contracts entered into requiring the payment by the
Company of $25,000 or more individually; (m) addition to or modification of any
of the employee benefit plans, arrangements or practices; (n) agreement or
commitment to do any of the foregoing; or (o) issuance of Company Indebtedness.
Section 3.09 No Dividends, Loans, etc.
(a) Except as set forth in Schedule 3.09 of the Disclosure
Schedule, subsequent to December 31, 2004, the Company has not (i) declared or
paid any dividend (whether in cash, in property or otherwise), made any other
distribution of any kind in respect of its capital stock, or made any other
payment to a Shareholder; or (ii) purchased, redeemed or otherwise acquired or
disposed of or issued any shares of capital stock
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or any notes, bonds or other securities of any kind and has no obligation
(contingent or otherwise) to do any of the foregoing, except for the issuance of
Shares pursuant to the terms of warrants, options, calls, commitments or other
rights or agreements to which the Company is subject to or bound relating to the
issuance, sale, transfer or redemption of Shares or other securities of the
Company listed in Schedule 3.04 hereto. The Company has no obligation
(contingent or otherwise) to pay any dividends or make any other distribution of
any kind.
(b) The Company has paid on a timely basis (i) all amounts due
and payable under Company Indebtedness, leases and other contractual obligations
and (ii) all other amounts due and payable to any Persons except where the
failure to pay, individually or in the aggregate, did not or would not
reasonably be expected to have a Material Adverse Effect.
Section 3.10 Books, Records and Controls.
(a) The books and records of the Company are complete and correct
in all material respects and have been maintained in accordance with good
business practices in all material respects and accurately reflect the basis for
the financial position and results of operations of the Company set forth in the
Financial Statements. True and complete copies of all of such books and records
have been made available for inspection by TLC.
(b) The Company maintains proper and adequate internal accounting
controls which provide reasonable assurance that (i) transactions of the Company
are executed with management's authorization; (ii) transactions are recorded as
necessary to permit preparation of the Company's financial statements; and (iii)
accounts, notes and other receivables and inventory are recorded accurately, and
proper and adequate procedures are implemented to effect the collection thereof
on a current and timely basis.
Section 3.11 Real Property Owned or Leased.
(a) The Company does not own any real property. A list and
description of all real property leased to the Company is set forth on Schedule
3.11 of the Disclosure Schedule (the "Real Property"). All such leased Real
Property is held subject to written leases which are set forth and identified on
Schedule 3.13 of the Disclosure Schedule, and which are valid and enforceable in
accordance with their respective terms (subject to the Equitable Exceptions),
and there are no existing defaults or events of default, or, to the Company's
knowledge, events which with notice or lapse of time or both would constitute
defaults, thereunder on the part of the Company. To the Company's knowledge,
there has not been any default or a writing claiming or purporting or alleging
default or, to the Company's knowledge, state of facts which with notice or
lapse of time or both would constitute a default on the part of any other party
in the performance of any obligation to be performed or paid by such other party
under any lease referred to on Schedule 3.13 of the Disclosure Schedule. The
Company has not received any written or, to the Company's knowledge, oral notice
to the effect that any lease referred to on Schedule 3.13 of the Disclosure
Schedule will not be renewed at the termination of the term thereof or that any
such lease will be renewed only at a substantially higher rent.
(b) The Company has not received any written notice of, nor is it
aware of, any material violation of any laws, rules, regulations or ordinances
relating to the Real Property or requesting or requiring the performance by the
Company of any repairs, alterations or other work to be performed in order so to
comply.
Section 3.12 Title to Assets; Condition of Property.
(a) The Company has good, valid and marketable title to all of
its properties and assets, real, personal and mixed, tangible and intangible,
including the properties and assets reflected in the Interim Balance Sheet
(except for assets leased under leases identified on Schedule 3.13 of the
Disclosure Schedule, and except for accounts receivable collected upon and
Inventory disposed of since the Interim Balance Sheet Date in the Ordinary
Course of Business), free and clear of all Liens except for the Liens listed on
Schedule 3.12 of the
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Disclosure Schedule securing certain equipment used by the Company and described
thereon (the "Permitted Equipment Liens") and Permitted Encumbrances.
(b) All of the equipment and other tangible assets used in the
operation of the Business are in good operating condition and repair, normal
wear and tear excepted, are suitable for the purposes for which they presently
are being used and constitute all of the equipment and other tangible assets
necessary to operate the Business as presently conducted. Except with respect to
assets leased pursuant to valid leases identified on Schedule 3.13 of the
Disclosure Schedule, the Company owns all the properties and assets necessary to
the conduct of the Business, which properties and assets are located at or on
the Real Property.
Section 3.13 Contracts. Set forth on Schedule 3.13(a) of the
Disclosure Schedule (collectively, the "Contracts") is a correct and complete
list of all (written and, to the Company's knowledge, oral) contracts,
agreements, licenses and leases to which the Company is a party or by which the
Company or any of the assets or properties of the Company is subject to or bound
which:
(i) relate to the employment of any Person by the Company,
which is not cancelable by the Company without penalty or other financial
obligation within 60 days, or any Benefit Plan;
(ii) contain restrictions with respect to payment of
dividends or any other distribution in respect of the Company's securities;
(iii) relate to capital expenditures, other than contracts,
agreements or commitments not exceeding $25,000 individually, or $75,000 in
the aggregate;
(iv) relate to or evidence any loan or other indebtedness
(other than accounts receivable from trade debtors in the Ordinary Course
of Business) or advance to (other than travel allowances and other
reasonable business expenses to its employees), or investment in, any
Person or any agreement, contract or commitment relating to the making of
any such loan, advance or investment;
(v) relate to or evidence any guarantee in respect of any
indebtedness or obligation of any Person;
(vi) are with any Governmental Authority;
(vii) are with customers or clients of the Company pursuant
to which (on an individual basis) the Company received revenue in excess of
$25,000 or paid amounts in excess of $25,000 during the twelve (12) month
period ended on August 31, 2005;
(viii) are management service or consulting contracts
(including any employee lease or outsourcing arrangement) pursuant to which
the Company is the "client" or the party being counseled and which require
payments by the Company in excess of $25,000;
(ix) relate to the purchase, sale, lease or disposal of any
assets or other securities of the Company (other than in the Ordinary
Course of Business);
(x) are (other than as set forth in item (i) above) between
the Company, on the one hand, and any of the Shareholders or any other
Affiliate, on the other hand, or are material contracts with employees
(including any officer, director, agent or consultant);
(xi) (other than as set forth in clauses (i) - (x), above)
involve annual base payments by or to the Company of $25,000 or more and
are not cancelable without penalty within thirty (30) days; or
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(xii) are otherwise material to the Company or the Business.
(b) Except as has not had or would not reasonably be expected to
have a Material Adverse Effect, the Company is not in default under any Contract
and no claim of such a default has been made in writing and, to the Company's
knowledge, no event has occurred which with the giving of notice or the lapse of
time or both would constitute a default under any Contract. To the knowledge of
the Company, no other party to any Contract is in default thereunder, except
where such default has not had or would not reasonably be expected to have a
Material Adverse Effect. The Company has provided to TLC true and complete
copies of each written Contract and Schedule 3.13 of the Disclosure Schedule
contains true and complete written descriptions of each oral Contract. Each of
the Contracts is in full force and effect and is a legal, valid and binding
obligation of the Company, and to the knowledge of the Company, each other party
thereto, subject in each case to the Equitable Exceptions.
Section 3.14 Customers and Suppliers. There exists no actual or, to
the Company's knowledge, threatened, or facts which might reasonably be
anticipated to result in, a termination, cancellation or material limitation of,
or any material modification or change in, the business relationships of the
Company with any customers pursuant to which the Company received at least
$25,000 of revenues during the twelve (12) month period ended September 30, 2005
or with any supplier, healthcare provider, managed care company or insurance
company (commonly referred to as "Suppliers") to which the Company paid $25,000
or more during the twelve (12) month period ended September 30, 2005. There
exists no condition or state of facts or circumstances known to the Company
involving customers or Suppliers of or to the Company which would reasonably be
expected to have a Material Adverse Effect on the Business after the
consummation of the Transactions. Except as set forth in Schedule 3.14 of the
Disclosure Schedule, since September 30, 2005, the Company has not granted or
modified any terms to or with any of its customers, including pricing, payment
or delivery terms, to the extent such term or modified term is more favorable to
such customers or Suppliers than is consistent with the Company's past
practices.
Section 3.15 Conduct of Business; Allowances. The Company is not
restricted from conducting the Business in any manner or location by agreement
or court decree. The Company has no obligation outside of the Ordinary Course of
Business to make allowances to any customers. The Business is conducted entirely
through the Company and the TruVision Subsidiaries and neither the Company nor
any of the TruVision Subsidiaries conducts any business other than the Business.
Section 3.16 Taxes.
(a) The Company has filed or caused to be filed on a timely basis
all United States federal income Tax Returns and all other Tax Returns required
to be filed by it and has paid all taxes, including income, gross receipts,
capital stock, profits, stamp, occupation, transfer, value added, excise,
franchise, sales, use, property (whether real, personal or mixed), employment,
unemployment, disability, withholding, social security and workers' compensation
taxes and estimated income and franchise tax payments, and interest, penalties,
fines, costs and assessments (collectively, "Taxes"), due and payable with
respect to the periods covered by such Tax Returns (whether or not reflected
thereon) and has timely withheld and paid over to the appropriate taxing
authority all Taxes which it is required to withhold from amounts paid or owing
to any employee, shareholder, creditor or other third party. All Tax Returns
filed by or on behalf of the Company are true, complete and correct in all
material respects and have been prepared in compliance with all applicable law.
No deficiency in Taxes of the Company for any period has been asserted by any
taxing authority which remains unpaid at the date hereof. No Tax Return is under
audit or examination by any taxing authority, and no notice of such an audit or
examination has been received by the Company and no written claim has ever been
made by a Governmental Authority in a jurisdiction where the Company does not
file Tax Returns that it is or may be subject to taxation by that jurisdiction.
There is no deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by the Company. Each
deficiency resulting from any completed audit or examination relating to Taxes
by any taxing authority has been timely paid. No issues relating to Taxes were
raised by the relevant taxing authority in any completed audit or examination
that would reasonably be expected to recur in a later taxable period. The
Company has not agreed to the extension of the statute of limitations with
respect to any Tax Returns or periods. There are no assessments relating to the
Company's Tax Returns pending or threatened. The Company has
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delivered to TLC true and complete copies of the federal and state income (or
franchise) Tax Returns filed by the Company for the past three (3) years. Except
with respect to the TruVision Subsidiaries, the Company is not, and has never
been, the common parent or a member of any affiliated group of corporations
filing a consolidated federal income Tax Return, and is not a party to any tax
sharing agreement or other arrangement pursuant to which it would be liable for
the Taxes of any third-party.
(b) The accrual for Taxes in the Financial Statements accurately
reflects the total amount of all unpaid Taxes, whether or not disputed and
whether or not presently due and payable, of the Company as of the close of the
periods covered by the Financial Statements. Adequate accruals and reserves have
been made in the Financial Statements and the books and records of the Company
for the payment of all unpaid federal, state, local and other Taxes of the
Company for all periods through the Closing Date, whether or not yet due and
payable and whether or not disputed by the Company, and nothing has occurred
subsequent to the dates of such Financial Statements or such accruals or
reserves in such books and records which make such accruals and reserves
inadequate.
(c) The Company is not a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
(d) The Company has not engaged in a transaction that is a
"reportable transaction" pursuant to Treasury Regulation Section 1.6011-4(b).
(e) There are no Liens for unpaid Taxes on the assets of the
Company, except Liens for current Taxes not yet due and payable and for which
adequate reserves are reflected on the Balance Sheet of the Company.
(f) The Company will not be required to include in a taxable
period ending after the Effective Time taxable income attributable to income
that accrued (for purposes of the financial statements of the Company) in a
prior taxable period but was not recognized for tax purposes in any prior
taxable period, nor is the Company required to make any adjustment, as a result
of or pursuant to, the installment method of accounting, the completed contract
method of accounting, the long-term contract method of accounting, the cash
method of accounting or Section 481(a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by the Company.
(g) The Company has complied with all applicable statutes, laws,
ordinances, rules and regulations relating to the payment and withholding of
taxes (including withholding of taxes pursuant to Sections 1441, 1442, 3121 and
3402 of the Code and similar provisions under any other provision of state,
local or foreign law) and has, within the time and the manner prescribed by law,
withheld from and paid over to the proper Governmental Authorities all amounts
required to be so withheld and paid over under applicable laws.
(h) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" (in each case, within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355(e) of the Code (A) in the two years prior
to the date of this Agreement or (B) in a distribution that could otherwise
constitute part of a "plan" or "series of related transaction" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
Section 3.17 Compliance with Applicable Law; Permits; Authorizations.
(a) General. The Company is not in default under, nor has it
failed to comply with or is otherwise in violation of, any law, statute,
ordinance, regulation or any order, judgment or decree of any court or other
Governmental Authority, except where such default or failure to comply
(individually or in the aggregate) would not reasonably be expected to result in
a Material Adverse Effect. The Company has not received any written notification
of any asserted present or past failure to comply with any of the foregoing
which has not been resolved in the time period required thereunder.
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(b) Permits. Set forth on Schedule 3.17(b) of the Disclosure
Schedule, is a complete and accurate list of all material permits, licenses,
approvals, franchises, notices and authorizations issued by any Governmental
Authority (collectively the "Permits"), held by the Company. The Permits set
forth on Schedule 3.17(b) of the Disclosure Schedule are all the Permits
required for the conduct of the Business, except for such Permits the absence of
which would not reasonably be expected to have a Material Adverse Effect. All of
the Permits set forth on Schedule 3.17(b) of the Disclosure Schedule are in full
force and effect and the Company has not engaged in any activity which would
cause or permit revocation or suspension of any such Permit and no action or
proceeding looking to or contemplating the revocation or suspension of any such
Permit is pending or, to the knowledge of the Company, threatened. There are no
existing defaults or events of default or events or states of fact which with
notice or lapse of time or both would constitute a default by the Company under
any Permit. The consummation of the Transactions shall in no way affect the
continuation, validity or effectiveness of the Permits set forth on Schedule
3.17(b) of the Disclosure Schedule, or require the consent of any Governmental
Authority.
(c) Environmental.
(i) The Company has duly complied with, and the Business is
conducted and has been conducted in compliance with, all Environmental
Laws.
(ii) The Company has not received written notice of, nor
does the Company know of any facts which would reasonably be expected to
give rise to, any Environmental Claim made or threatened against or
affecting the Company.
(iii) The Company has not generated, treated, transported,
stored, recycled, discharged, emitted, disposed of or released any
Hazardous Substances, arranged for the generation, treatment, transport,
storage, recycling, discharge, emission, disposal or release of any
Hazardous Substances, which would reasonably be expected to give rise to
any liability or corrective or remedial obligation under any Environmental
Laws.
(d) Healthcare. With respect to the Business:
(i) The Company has complied, and is in compliance, with all
material federal, state or local laws, statutes, codes, or ordinances
relating to healthcare regulatory matters, including without limitation (A)
42 U.S.C. Sections 1320a-7, 7a and 7b, which are commonly referred to as
the "Federal Anti-Kickback Statute"; (B) 42 U.S.C. Section 1395nn, which is
commonly referred to as the "Stark Statute"; (C) 31 U.S.C Sections
3729-3733, which is commonly referred to as the "Federal False Claims Act";
(D) Titles XVIII and XIX of the Social Security Act, implementing
regulations and program manuals; and (E) 42 U.S.C. Sections 1320d-1320d-8
and 42 C.F.R. Sections 160, 162 and 164, which is commonly referred to as
HIPAA (the foregoing hereinafter collectively referred to as "Healthcare
Laws") applicable to the Company's operations. The Company has maintained
all records required to be maintained in connection with the Medicare and
Medicaid programs established under Titles XVIII and XIX of the Social
Security Act, the Civilian and Medical Program of the Uniform Services (the
"CHAMPUS Program"), and the Tricare Program and such other similar federal,
state or local reimbursement or governmental programs for which the Company
is eligible (the foregoing hereinafter referred to collectively as the
"Governmental Programs") as required by applicable Healthcare Laws, the
failure of which to maintain has had or would reasonably be expected to
have a Material Adverse Effect.
(ii) Without limiting the foregoing, neither the Company,
nor, to the knowledge of the Company, any of the Shareholders, has engaged
in any activities that are prohibited under 42 U.S.C. Sections 1320a-7,
1320a-7a, 1220a-7b, 1395nn, and 1396b, 31 U.S.C. Sections 3729-3733, the
federal CHAMPUS/TRICARE statute, or any other federal or state statutes
related to false or fraudulent claims, the regulations promulgated pursuant
to such statutes, or any related state or local statutes or regulations,
including the following:
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(a) knowingly and willfully making or causing to be made
any false statement or representation of material fact
in any application for any benefit or payment;
(b) knowingly and willfully making or causing to be made
any false statement or representation of a material
fact for use in determining rights to any benefit or
payment;
(c) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or
continued right to any benefit or payment on its own
behalf or on behalf of another, with intent to
fraudulently secure such benefit or payment; or
(d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate),
directly or indirectly, overtly or covertly, in cash or
in kind or offering to pay or receive such remuneration
in return for (1) referring an individual for the
furnishing or arranging for the furnishing of any item
or service for which payment may be made in whole or in
part by any Governmental Programs, or (2) purchasing,
leasing, or ordering or arranging for or recommending
the purchasing, leasing or ordering of any good,
facility, service or item for which payment may be made
in whole or in part by a Governmental Program.
(iii) Schedule 3.17(d)(iii) of the Disclosure Schedule lists
all financial relationships (whether or not memorialized in writing) that
the Company has with any physician or an immediate family member of a
physician which is material to the Company's operations. For purposes of
this Section 3.17(d), the term "financial relationship" has the meaning set
forth in 42 U.S.C. Section 1395nn.
(iv) The Company is certified for participation and
reimbursement and qualified as a participating provider under the
Governmental Programs and Private Programs set forth on Schedule
3.17(d)(iv) of the Disclosure Schedule. The Company has current provider
numbers and provider agreements for such Governmental Programs and for any
such Private Programs as are set forth on Schedule 3.17(d)(iv) of the
Disclosure Schedule. There are no pending appeals, overpayment
determinations, challenges, audits, litigation, or notices of intent to
open Governmental Programs' claim determinations or other reports required
to be filed by the Company, except for such appeals of individual claim
denials that occur in the Ordinary Course of Business. The Company has not
received any notice indicating that its qualification as a participating
provider may be terminated or withdrawn nor has any reason to believe that
such qualification may be terminated or withdrawn. The Company has timely
filed all claims or other reports required to be filed with respect to the
purchase of products or services by third-party payors (including
Governmental Programs and Private Programs), and all such claims or reports
are complete and accurate in all material respects. The Company has no
liability to any payor with respect thereto, except for liabilities
incurred in the Ordinary Course of Business.
(v) To the knowledge of the Company, no shareholder or
employee of the Company:
(a) has been convicted of or charged with any violations of
law related to Medicare, Medicaid, any other Federal
Health Care Program (as defined in 42 U.S.C. Section
1320a-7b(f)), or any other Governmental Program;
(b) has been convicted of, charged with, or investigated
for any violation of law related to fraud, theft,
embezzlement, breach of
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fiduciary responsibility, financial misconduct,
obstruction of an investigation, or controlled
substances;
(c) is excluded, suspended or debarred from participation,
or is otherwise ineligible to participate, in any
Governmental Program or has committed any violation of
law which is reasonably expected to serve as the basis
for any such exclusion, suspension, debarment or other
ineligibility; or
(d) has violated or is presently in violation of any
Healthcare Laws.
Section 3.18 Intellectual Property.
(a) Schedule 3.18(a) of the Disclosure Schedule sets out an
accurate and complete list of all registrations and applications to register the
Company's trademarks, patents and copyrights and the serial numbers therefor
including the countries in which same are registered and/or applied for and all
the domain names owned or used by the Company. With respect to the Company's
Software, Schedule 3.18(a) of the Disclosure Schedule sets out all Software that
has been developed by or for, or is being developed by or for the Company and
that is being used or is proposed to be used by the Company ("Company
Software"), identifying for each Company Software program: (i) a description of
the functionality of the Software and the purpose for which the Company uses it;
(ii) all hardware and operating system software required to operate the
Software; (iii) whether any entities other than the Company use the Software;
(iv) the identity of the authors of the Software, their relationship to the
Company and whether the authors' rights were conveyed to the Company as a work
for hire or by way of assignment; (v) the location and status of the Source Code
Materials for the Software; and (vi) if a registration or application for
registration of any Intellectual Property Rights exists for the Software, or any
portion thereof, the registration or application number, title and current
status of any such registration or application.
(b) Schedule 3.18(b) of the Disclosure Schedule sets out an
accurate and complete list and brief description of all the Intellectual
Property, other than Shrink Wrap Software, owned by Persons other than the
Company and which the Company uses or intends to use for the operation of its
Business as presently conducted or as reasonably proposed to be conducted
("Licensed IP"). The Company is licensed or otherwise possesses valid rights to
use all the Licensed IP that is required to conduct the Company's Business as
presently conducted.
(c) To the knowledge of the Company, all Intellectual Property
Rights in the Company-owned Intellectual Property and Company Software
(collectively, the "Company IP") are valid, subsisting and enforceable and the
Company is the sole and exclusive legal and beneficial owner of, has good and
marketable title to, and owns all right, title and interest in and to all the
Company IP and all Intellectual Property Rights therein, free and clear of all
Liens and has the unencumbered right to transfer, assign or license all
Intellectual Property Rights in the Company IP and the consummation of the
Transactions will not alter or impair such rights. The Company further has the
sole right to bring actions for infringement of any Intellectual Property Rights
comprising or embodied in the Company IP.
(d) The Company has not received any written notice or claim,
challenging the Company's sole and exclusive ownership of the Company IP or
questioning the validity or enforceability of any Intellectual Property Rights
in the Company IP, nor, to the knowledge of the Company, is there a reasonable
basis for any such claim.
(e) Except as would not reasonably be expected to have a Material
Adverse Effect, the Company has taken commercially reasonable measures to comply
with all applicable legal requirements relating to applications and
registrations in which it holds Intellectual Property Rights in the United
States, and has taken all commercially reasonable steps to enforce the
Intellectual Property Rights in the Company IP in the United States against all
Persons who, to the knowledge of the Company, are or have infringed or otherwise
violated such rights.
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(f) To the knowledge of the Company, the past and/or present
conduct of the Business has not and does not infringe, violate, misappropriate
or otherwise conflict with the Intellectual Property Rights of any Person. The
Company is not a party to any action or proceeding, nor to its knowledge, has it
been threatened with an action or proceeding, that alleges infringement,
violation, misappropriation or other conflict with any Intellectual Property
Rights of any Person.
(g) To the knowledge of the Company, no Person has infringed,
violated or misappropriated any Intellectual Property Rights of the Company in
or to any Company IP.
(h) The Company maintains IT Documentation for the most current
releases or versions of all Company IP and Licensed IP and for all earlier
releases or versions thereof currently being used or supported by the Company.
All Company IP and Licensed IP conforms to and performs in all material respects
in accordance with the applicable IT Documentation and specifications therefor
and in accordance with the relevant specifications provided to the Company's
current and prospective clients and end users. To the knowledge of the Company,
no Company IP or Licensed IP contains any computer virus or other code, design,
routine or instructions that may be used to modify, replicate, distort, delete,
damage or disable any Software or hardware, and the Company has taken reasonable
steps to ensure that its Software is free from any such viruses or codes. The
Company has in place commercially reasonable disaster recovery plans, procedures
and facilities and has taken all reasonable steps to safeguard all Company IP
and Licensed IP that is material to the Business and to restrict unauthorized
access thereto.
(i) Schedule 3.18(i) of the Disclosure Schedule sets forth a
complete and accurate list of all licenses and similar agreements or
arrangements presently in effect or which are executory pursuant to which the
Company grants to any Person or is granted any right to develop, manufacture,
import, export, use, reproduce, sub-license, sell, offer for sale, modify,
support, maintain, update, enhance or otherwise exploit any Company IP or
Licensed IP. All such agreements relating to the Company IP or Licensed IP are
enforceable and in full force and effect and neither the Company nor any
licensor or licensee is in material default of its obligations thereunder. All
the Licensed IP licensed under each such agreement will continue to be
enforceable by the Company after the Closing. There are no outstanding claims
or, to the knowledge of the Company, threatened disputes or disagreements with
respect to any such licenses and agreements and neither the entering into nor
the performance of this Agreement breaches any duty or obligation owed to any
party to the licenses and agreements identified on Schedule 3.18(i) of the
Disclosure Schedule.
(j) The Company IP, the Licensed IP and the Shrink Wrap Software
licensed to the Company comprise all Intellectual Property necessary to conduct
the Business as currently conducted. Neither the execution of this Agreement nor
the consummation of the Transactions shall in any way affect the continuation,
validity or effectiveness of any such Company IP and/or Licensed IP or any
contract, agreement, license or other Intellectual Property Rights identified on
Schedule 3.18(a) and 3.18(b) of the Disclosure Schedule or require the consent,
waiver, approval, authorization of, notice to, or designation, registration,
declaration or filing with, any party or third-party in respect of any such
Intellectual Property Rights, contract, agreement, license or other right.
Section 3.19 Compensation. Identified on Schedule 3.19 of the
Disclosure Schedule is a complete and accurate list of (a) all agreements,
plans, arrangements or commitments with employees, shareholders, consultants,
independent contractors, sales representatives, agents or any family members of
any of the foregoing, with regard to compensation, benefits or perquisites, (b)
all full-time and part-time employees and their respective positions, job
categories and salaries, and (c) any arrangements pursuant to which any of the
persons listed in (a) or (b) provide services to any other Person. All bonuses
heretofore required to be paid to employees have been paid in full to such
employees. Neither the execution of this Agreement nor the consummation of the
Transactions shall result in any liability to the Company or TLC for severance
pay or similar payment requirements to any employee, sales representative,
independent contractor, consultant, distributor, agent or Affiliate of the
Company. No employee of the Company has received any payment of any kind for
services rendered to or on behalf of the Company from any Person other than
payments made by the Company to the employee in compliance with all applicable
laws and regulations (including laws relating to withholding with respect to
wages, salaries and other payments to employees) and which payments are fully
reflected in the books, records and financial statements of the Company.
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Section 3.20 Employee Benefit Plans. Except as identified on Schedule
3.20 of the Disclosure Schedule, the Company does not maintain or sponsor, or
contribute to, any pension, profit-sharing, savings, bonus, incentive or
deferred compensation, severance pay, medical, life insurance, welfare or other
employee benefit plan. All pension, profit-sharing, savings, bonus, incentive or
deferred compensation, severance pay, medical, life insurance, welfare or other
employee benefit plans within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (hereinafter referred to as
"ERISA"), in which any of the Company's employees participate (such plans and
related trusts, insurance and annuity contracts, funding media and related
agreements and arrangements being hereinafter referred to as the "Benefit
Plans") comply in all material respects with all requirements of ERISA, the
Code, and with all other applicable law, and the Company has not taken or failed
to take any action with respect to the Benefit Plans which would reasonably be
expected to create any material liability on the part of the Company, TLC or the
Surviving Corporation. Each "fiduciary" (within the meaning of Section 3(21)(A)
of ERISA) as to each Benefit Plan has complied in all material respects with all
requirements of ERISA and all other applicable laws in respect of each such
Benefit Plan. The Company has furnished to TLC copies of all Benefit Plans and
all financial statements, actuarial reports and annual reports and returns filed
with the Internal Revenue Service with respect to such Benefit Plans for the
three (3) plan years prior to the date hereof, and shall furnish TLC with copies
of any of the foregoing so filed after the date hereof. Such financial
statements and actuarial reports and annual reports and returns are and shall be
true, correct and complete in all material respects and none of the actuarial
assumptions underlying such documents have changed since the respective dates
thereof. In addition:
(a) The Company does not maintain, sponsor or contribute to, and
has never withdrawn from, maintained, sponsored or contributed to a "defined
benefit plan" (within the meaning of Section 3(35) of ERISA) or a "multiemployer
plan" (within the meaning of Section 3(37) of ERISA);
(b) Each Benefit Plan intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service as to its qualification under Section 401(a) of the
Code;
(c) No "prohibited transaction" (within the meaning of Section
406 of ERISA or Section 4975(c) of the Code) has occurred with respect to any
Benefit Plan;
(d) No provision of any Benefit Plan or of any agreement, and no
act or omission of the Company in any way limits, impairs, modifies or otherwise
affects the right of the Company or TLC unilaterally to amend or terminate any
Benefit Plan after the Closing, subject to the requirements of applicable law;
(e) There are no contributions which are or hereafter will be
required to be made to trusts in connection with any Benefit Plan that would
constitute a "defined contribution plan" (within the meaning of Section 3(34) of
ERISA);
(f) Other than claims in the ordinary course for benefits with
respect to the Benefit Plans, there are no actions, suits or claims (including
claims for income Taxes, interest, penalties, fines or excise Taxes with respect
thereto) pending with respect to any Benefit Plan, or, to the knowledge of the
Company, any circumstances (including arising out of the operation or
termination of any Benefit Plan) which might give rise to any such action, suit
or claim (including claims for income Taxes, interest, penalties, fines or
excise Taxes with respect thereto);
(g) All reports, returns and similar documents with respect to
the Benefit Plans required to be filed with any Governmental Authority have been
so filed on or before their due date;
(h) The Company has no obligation to provide health or other
welfare benefits to former, retired or terminated employees, except as
specifically required under Section 4980B of the Code or Section 601 of ERISA.
The Company has complied in all material respects with the notice and
continuation requirements of Section 4980B of the Code and Section 601 of ERISA;
and
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(i) The Company is not a party to any agreement, contract or
arrangement that would result, separately or in the aggregate, in any payment
(whether or not in connection with any termination of employment or otherwise)
of any "excess parachute payment" within the meaning of Section 280G of the
Code.
Section 3.21 Labor Relations. There have been no violations of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives, in each case applicable to the Company, with respect to the
employment of individuals by, or the employment practices or work conditions of,
the Company, or the terms and conditions of employment or wages and hours. There
are no charges of unfair labor or employment practices or other material
employee-related complaints pending or, to the knowledge of the Company,
threatened against the Company. There is no strike, picketing, slowdown or work
stoppage or organizational attempt pending or, to the Company's knowledge,
threatened against or involving the Company or the Business. No issue with
respect to union representation is pending or, to the knowledge of the Company,
threatened with respect to the employees of the Company. No union or collective
bargaining unit or other labor organization has ever been certified or
recognized by the Company as the representative of any of the employees of the
Company. The Company has complied with the Workers Adjustment and Retraining
Notification Act to the extent applicable to the Company.
Section 3.22 Finders' Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of the Company who might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.
Section 3.23 Insurance. The Company maintains insurance policies,
including professional liability insurance with respect to refractive eye
surgery (including, without limitation, LASIK) and the Company's refractive eye
surgery centers (including, without limitation, LASIK centers), that are
adequate and customary for companies engaged in businesses similar to the
Business. Such policies are in full force and effect, all premiums due thereon
have been paid in full and the Company has complied in all material respects
with the provisions of such policies. A complete and accurate list of all
insurance policies of the Company is set forth on Schedule 3.23 of the
Disclosure Schedule, including a complete list of all deductibles, self insured
levels and retained liabilities applicable to such policies. There are no
written notices of any pending or threatened termination or premium increases
with respect to any of such policies. The Company has not had any casualty loss
or other occurrence which may give rise to any claim of any kind not covered by
insurance and the Company is not aware of any occurrence which would reasonably
be expected to give rise to any claim of any kind not covered by insurance. No
third party has filed any claim against the Company for personal injury,
property damage or other occurrence of a kind for which liability insurance is
generally available and which is not fully insured. All pending claims against
the Company covered by insurance have been reported to the insurance carrier on
a timely basis and are listed on Schedule 3.23 of the Disclosure Schedule.
Section 3.24 Power of Attorney; Bank Accounts. The Company has not
granted any power of attorney (revocable or irrevocable) to any Person for any
purpose whatsoever. Set forth on Schedule 3.24 of the Disclosure Schedule is a
complete and accurate list of (a) the name of each institution in which the
Company has a bank account, securities account, safe-deposit box, lockbox
account or any other account, the title and number of such accounts and the
names of all Persons authorized to draw thereon or have access thereto and (b)
all marketable securities and all other notes or other obligations evidenced by
written instruments and attributable to, or utilized in, any aspect of the
Business and reflected in the Financial Statements or thereafter acquired by the
Company.
Section 3.25 Litigation; Disputes. Except as set forth on Schedule
3.25 of the Disclosure Schedule, there are no claims, disputes, actions, suits,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company. To the knowledge of the Company,
there is no reasonable basis for any such claim, dispute, action, suit,
investigation or proceeding arising from any event which has occurred within the
two (2) year period immediately prior to the date hereof. The Company is not in
default in respect of any judgment, order, writ, injunction or decree of any
Governmental Authority.
Section 3.26 Insider Interests; Intercompany Transactions. Except as
set forth on Schedule 3.26 of the Disclosure Schedule, no present, or to the
knowledge of the Company, former shareholder,
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officer or director of the Company or Affiliate of the Company or any immediate
or other family member of any such person or any Person in which any such person
is an officer, director, principal, partner or stockholder (a) is presently a
party to any transaction or arrangement with the Company (other than for
services as officers, directors or employees of the Company in the Ordinary
Course of Business); (b) owns any interest in any of the assets or properties of
the Company (other than an indirect interest through their ownership of the
Shares); (c) owns any interest in, controls or is an employee, officer, director
or agent of, or consultant to, any other entity which is a competitor, supplier,
customer, vendor, landlord or tenant of the Company; (d) is indebted or liable
to, owns any interest in, or owns, holds or has guaranteed any obligation or
debt of the Company; or (e) has acquired from or sold or transferred to the
Company any assets or properties owned, leased or used by the Company. There is
no contract or other agreement (written or oral) in effect between the Company,
on the one hand, and any Shareholder or family member thereof or any Affiliate
of any such Shareholder or family member, on the other hand; and the Company has
no outstanding obligation or liability of any kind (contingent, unknown or
otherwise and other than compensation for services not yet due and payable and
reimbursement of expenses, in each case, arising in the Ordinary Course of
Business) to any such Shareholder, family member or Affiliate.
Section 3.27 Absence of Sensitive Payments. Neither the Company nor
any of its directors, officers, agents, or employees has made or has agreed to
make:
(a) any contributions, payments or gifts of funds or property to
any governmental official, employee or agent where either the payment or the
purpose of such contribution, payment or gift was or is illegal under the laws
of the United States, any state thereof, or any jurisdiction (foreign or
domestic); or
(b) any contribution or expenditure, or has reimbursed any
political gift or contribution or expenditure made by any other Person to
candidates for public office, whether federal, state or local (foreign or
domestic) where such contributions were or would be a violation of applicable
law.
Section 3.28 Disclosure; No Other Representations. No representation
or warranty made under this Agreement (subject to any exceptions set forth in
the Disclosure Schedule), the Indemnification Agreement, the Escrow Agreement or
the certificate required to be delivered by the Company pursuant to Section
7.03(e) (the "Company Documents"), excluding any annexes, exhibits and schedules
thereto and subject to the exceptions set forth in the Disclosure Schedule) and
none of the information furnished by the Company set forth in this Agreement
(subject to the exceptions set forth in the Disclosure Schedule) contains any
untrue statement of fact or omits to state any fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading. Except for the representations and warranties contained in
the Company Documents (excluding any annexes, exhibits and schedules thereto and
subject to any exceptions set forth in the Disclosure Schedule), neither the
Company, any Shareholder nor any other Person acting on behalf of the Company or
any of the Shareholders, makes or has made any representation or warranty,
express or implied. The Company has not made any representation or warranty,
expressed or implied, as to the accuracy or completeness of any information
regarding the Company or otherwise, other than those representations and
warranties expressly made in the Company Documents (excluding any annexes,
exhibits and schedules thereto and subject to the exceptions set forth in the
Disclosure Schedule), and the Company will not have or be subject to any
liability to TLC, Mergersub or any other Person resulting from TLC's,
Mergersub's or their representatives' use of any financial information,
projections, budgets or any other document or information, other than as set
forth in those representations and warranties expressly made by the Company to
TLC and Mergersub in the Company Documents (excluding any annexes, exhibits and
schedules thereto and subject to the exceptions set forth in the Disclosure
Schedule). EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THE COMPANY DOCUMENTS
(EXCLUDING ANY ANNEXES, EXHIBITS AND SCHEDULES THERETO AND SUBJECT TO THE
EXCEPTIONS SET FORTH IN THE DISCLOSURE SCHEDULE), THE COMPANY MAKES NO
REPRESENTATIONS OR WARRANTIES TO TLC OR MERGERSUB, EXPRESS OR IMPLIED, WITH
RESPECT TO THE COMPANY OR ITS BUSINESS, OPERATIONS, PROPERTIES, AND LIABILITIES
OR OBLIGATIONS, WHETHER ARISING BY STATUTE OR OTHERWISE IN LAW INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR OTHERWISE.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TLC AND MERGERSUB
TLC Canada, TLC and Mergersub hereby jointly and severally represent
and warrant to the Company and the Shareholders that, as of the date hereof:
Section 4.01 Organization. Mergersub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Utah and is
wholly-owned by TLC. TLC Canada is a corporation duly continued, validly
existing and in good standing under the laws of the Province of New Brunswick.
TLC is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and is a direct wholly-owned subsidiary
of TLC Canada. Each of TLC Canada and TLC is qualified to do business and in
good standing in each of the jurisdictions wherein the failure to qualify or to
be in good standing would reasonably be expected to have a material adverse
effect on the businesses, properties, assets, condition (financial or other),
results of operations and/or prospects of TLC Canada or TLC.
Section 4.02 Authority. Each of TLC Canada, TLC and Mergersub has the
corporate power and authority to execute and deliver this Agreement and each of
the other Transaction Documents to which it is a party and to perform and
consummate the Transactions. The execution and delivery by each of TLC Canada,
TLC and Mergersub of this Agreement and each Transaction Document required to be
executed and delivered by each of TLC Canada, TLC and Mergersub pursuant hereto,
the performance by TLC Canada, TLC and Mergersub of their covenants and
agreements hereunder and thereunder and the consummation by TLC Canada, TLC and
Mergersub of the Transactions have been duly authorized by all necessary
corporate action. This Agreement and each of the other Transaction Documents to
which each of TLC Canada, TLC and Mergersub is a party have been or will be duly
executed and delivered by TLC Canada, TLC and Mergersub, as the case may be.
This Agreement and such Transaction Documents required to be executed and
delivered by each of TLC Canada, TLC and Mergersub pursuant hereto, upon
execution and delivery by TLC Canada, TLC and Mergersub, as applicable, will
constitute valid and legally binding obligations of TLC Canada, TLC and
Mergersub, as the case may be, enforceable against them in accordance with their
terms except to the extent limited by the Equitable Exceptions.
Section 4.03 No Legal Bar; Conflicts.
(a) Neither the execution and delivery of this Agreement nor any
other Transaction Document required to be executed and delivered by TLC Canada,
TLC or Mergersub, nor the consummation of the Transactions by TLC Canada, TLC
and Mergersub, (i) violates or will violate any provision of the charter or
by-laws of TLC Canada, TLC or Mergersub or any statute, ordinance, regulation,
order, judgment or decree of any court or other Governmental Authority
applicable to TLC Canada, TLC or Mergersub, (ii) to the knowledge of TLC Canada,
TLC and Mergersub, will be in violation of any statute, ordinance, regulation,
order, judgment or decree currently proposed by any court or Governmental
Authority or scheduled to take effect after the Closing Date or (iii) conflicts
with or will conflict with or results in or will result in any material breach
or modification of any of the terms of or constitutes or will constitute a
material default under or results in or will result in the termination of or the
creation of any material Lien on any of the assets or property of TLC Canada,
TLC and Mergersub.
(b) Except as contemplated by the Registration Rights Agreement
and for the filing of the Articles of Merger and the approval of the Toronto
Stock Exchange for the listing of the TLC Shares to be issued pursuant hereto,
no consents, approvals or authorizations of, or registrations, declarations or
filings with or notices to any Governmental Authority or any other Person are
required in connection with the execution and delivery of this Agreement or any
Transaction Document required to be executed and delivered by TLC Canada, TLC or
Mergersub pursuant hereto, or the consummation of the Transactions by TLC
Canada, TLC or Mergersub.
Section 4.04 Litigation. As of the date hereof, there is no action,
suit, proceeding or investigation before any court or other Governmental
Authority pending or, to TLC Canada's, TLC's or Mergersub's knowledge,
threatened, to which TLC Canada, TLC or Mergersub is a party, that questions TLC
Canada's, TLC's or Mergersub's right to enter into, or could reasonably be
expected to prohibit TLC Canada, TLC
104
or Mergersub from entering into, this Agreement or the other Transaction
Documents to which it is a party or to consummate the Transactions.
Section 4.05 Financing. TLC has sufficient funds available to it,
without requiring the prior consent, approval or other discretionary action of
any third party, to pay the Initial Merger Consideration and the expected
amounts of Additional Consideration to the Shareholders pursuant to this
Agreement and to pay all fees and expenses incurred by TLC Canada, TLC and
Mergersub in connection with the Transactions, and to satisfy any other payment
obligations that may arise in connection with, or may be required in order to
consummate, the Transactions.
Section 4.06 No Prior Activities. Mergersub has not incurred and will
not incur any liabilities or obligations, except those incurred in connection
with its organization and with the negotiation of this Agreement and the
performance hereof, and the consummation of the Transactions. Except as
contemplated by this Agreement, Mergersub has not engaged in any business
activities of any type or kind whatsoever, or entered into any agreements or
arrangements with any person or entity, or become subject to or bound by any
obligation or undertaking. As of the date hereof, all of the issued and
outstanding capital stock of Mergersub is owned beneficially and of record by
TLC Canada and TLC, free and clear of all Liens, except for Liens arising
pursuant to TLC's existing credit facilities.
Section 4.07 Hart-Scott-Rodino Act. The "acquiring person," as such
term is defined in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), has valued the Shares in good faith as required under
the HSR Act and Rule 801.10 promulgated by the Federal Trade Commission under
the HSR Act, and, based on such valuation, has determined that no filing under
the HSR Act is required in connection with the Merger.
Section 4.08 TLC Shares. The TLC Shares to be issued pursuant to this
Agreement, when issued and delivered, will be duly authorized, validly issued,
fully paid and nonassessable and free and clear of any Liens, preemptive rights
or rights of first refusal. The TLC Shares, when issued and delivered, will be
issued and delivered in compliance with all applicable securities laws and the
laws of Governmental Authorities.
Section 4.09 SEC Information Furnished; Sarbanes-Oxley; Nasdaq Listing
Standards. For the period from September 30, 2004, TLC Canada has timely filed
with the Securities and Exchange Commission (the "SEC") those material filings
and reports required pursuant to the Securities Exchange Act of 1934, as amended
(the "SEC Documents"). As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the U.S. Securities
Exchange Act of 1934, as amended, and the U.S. Securities Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to the SEC
Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of TLC Canada included in the SEC Documents (i) were prepared in
accordance with the books and records of TLC Canada; (ii) were prepared in
accordance with GAAP, consistently applied except as otherwise permitted by Form
10-Q, and comply as to form with all applicable accounting requirements and with
the rules and regulations of the SEC; (iii) reflect all necessary adjustments
and accruals (subject to normal year-end audit adjustments in the case of
unaudited interim financial statements) and otherwise fairly present TLC
Canada's consolidated financial condition and the results of its operations and
cash flows at the relevant dates thereof and for the periods covered thereby in
accordance with GAAP; (iv) contain and reflect adequate provisions for all
liabilities for all Taxes, federal, state, local or foreign, with respect to the
periods then ended; and (v) with respect to contracts and commitments for the
sale of goods or the provision of services by TLC Canada, contain and reflect
adequate reserves for all losses and costs and expenses in excess of expected
receipts. There has been no change in TLC Canada's accounting policies or the
methods of making accounting estimates or changes in estimates that are material
to TLC Canada's financial statements or estimates except as described in the
notes thereto. Except as set forth in the SEC Documents, since December 31,
2004, TLC Canada has not suffered any material change in its financial
condition, results, operations or prospects. TLC Canada has complied, and is in
compliance, in all material respects with the requirements of the Sarbanes-Oxley
Act of 2002 and all NASDAQ listing standards.
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ARTICLE V
ADDITIONAL COVENANTS AND
AGREEMENTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
Section 5.01 Publicity. The Company covenants and agrees that any and
all publicity (whether written or oral) and notices to third-parties concerning
the Transactions shall be subject to the prior written approval of TLC, which
approval shall not be unreasonably withheld or delayed; provided, however that
the Company may make any disclosure necessary or appropriate for compliance with
federal or state laws (in which case, the Company shall advise TLC and provide
it with a copy of any such disclosure prior to release). The Company shall
assist TLC in informing the personnel and management of the Company of the
change in the ownership of the Company; provided that such communications shall
be made only by or with the prior approval of TLC.
Section 5.02 Conduct of Business Pending Merger. The Company agrees
that between the date hereof and the Closing Date, the Business shall be
conducted only in, and the Company shall not take any action except in, the
Ordinary Course of Business, as set forth in this Section 5.02 or as set forth
in Schedule 5.02 of the Disclosure Schedule. The Company shall preserve
substantially intact the business organization of the Company, keep available
the services of the current officers, directors, employees and consultants of
the Company, and use commercially reasonable efforts to preserve the current
relationships of the Company with customers, licensors, licensees and other
Persons with which the Company has significant business relations and where the
loss of any such relationship would, either individually or in the aggregate,
have a Material Adverse Effect on the Business. Except as otherwise provided in
this Section 5.02, the Company agrees that, prior to the Closing Date, it will
not incur any liability (including compensation paid to officers, directors or
employees or dividends to Shareholders) that is at variance with past practices,
is not reasonable or is not in the Ordinary Course of Business. The Company
agrees that, prior to the Closing Date, it will not issue any additional Shares
or other securities of the Company, including securities convertible into Shares
or other securities of the Company, except for the issuance of Shares pursuant
to the terms of warrants, options, calls, commitments or other rights or
agreements to which the Company is subject to or bound relating to the issuance,
sale, transfer or redemption of Shares or other securities of the Company listed
in Schedule 3.04 hereto. Notwithstanding anything to the contrary in this
Agreement, except Section 2.02(a)(ii) hereof,
(a) the Company shall be entitled to pay dividends to the
Shareholders in the aggregate amount of up to $1.50 per Share;
(b) the Company shall be entitled to pay bonuses to its employees
in the aggregate amount of up to $400,000; and
(c) the Company and the TruVision Subsidiaries shall be entitled
to enter into definitive agreements with the consortium of Blue Cross Blue
Shield health plans who are parties to those certain startup agreements with the
Company and one or more TruVision Subsidiaries made as of September 29, 2005,
copies of which have been provided to TLC, which definitive agreements will be
services agreements pursuant to which the Company and one or more TruVision
Subsidiaries will arrange to provide enrollees of Blue Cross Blue Shield plans
with access to discounted hearing instruments, laser eye surgery, contact
lenses, cosmetic surgery, cosmetic dental and related items and services through
the Company's and TruVision Subsidiaries' network of providers; provided that
the form of such definitive agreements shall be acceptable to TLC, acting
reasonably.
(d) the Company and the TruVision Subsidiaries shall be entitled
to enter into definitive agreements, acceptable to TLC acting reasonably, with
each of the following companies, each of which with whom the Company is
currently negotiating the terms and conditions of such definitive agreements:
(i) Wal-Mart (for LASIK services);
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(ii) Excellus Blue Cross Blue Shield of Rochester, Central
New York and Utica-Watertown (for LASIK and contact services);
(iii) CareFirst Blue Cross Blue Shield of Maryland, Delaware
and Washington D.C. (for cosmetic surgery and dental services);
(iv) Blue Cross Blue Shield Northern Alliance Region 19/25,
Medicare Advantage & Part D Iowa, Minnesota, North Dakota, South Dakota,
Nebraska, Montana and Wyoming (for LASIK, contact, hearing, cosmetic
surgery and dental services);
(v) Arkansas Blue Cross Blue Shield (for hearing and
cosmetic surgery services);
(vi) Blue Cross Blue Shield of Illinois, New Mexico and
Texas (for hearing services);
(vii) Blue Cross Blue Shield of New Mexico (for LASIK and
contact services);
(viii) Blue Cross of Idaho (for cosmetic surgery services);
(ix) Blue Cross Blue Shield of Florida (for cosmetic surgery
services);
(x) Wellpoint, Inc. RFP Discount Hearing Services (for
Indiana, Ohio, Kentucky, New Hampshire, Maine, Connecticut, Colorado,
Missouri, Georgia, Wisconsin, California and Nevada);
(xi) Horizon Blue Cross Blue Shield of New Jersey RFI
Discount Hearing and Cosmetic Services;
(xii) Blue Cross Blue Shield Michigan RFI Discount Vision
Services; and
(xiii) Wellmark, Inc. Blue Cross Blue Shield of Iowa and
South Dakota (for LASIK, contacts, hearing and cosmetic surgery services).
Section 5.03 Certain Filings. The Company shall make all filings with
Governmental Authorities that are required to be made by the Company to carry
out the Transactions.
Section 5.04 Notice of Changes. The Company shall notify TLC, as soon
as reasonably practicable after learning thereof, of any circumstance, event,
condition, change or development or any set of circumstances, events,
conditions, changes or developments occurring after the date hereof and prior to
the Closing Date, which has or have or would reasonably be expected to have a
Material Adverse Effect.
Section 5.05 Options. Prior to the Closing Date and in accordance with
applicable law and the terms and conditions of all applicable Contracts and
plans and arrangements, the Company shall have taken, or caused to be taken,
such action necessary to terminate all options, warrants and other rights to
purchase or otherwise be issued capital stock of the Company which have not been
exercised prior to the Closing Date.
Section 5.06 Further Assurances. The Company agrees to execute and
deliver such additional documents and instruments, and perform such additional
acts, as TLC and Mergersub reasonably may
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request to effectuate or carry out and perform all the terms, provisions and
conditions of this Agreement and the Transactions and to effectuate the intent
and purposes hereof.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS OF TLC AND MERGERSUB
Section 6.01 Publicity. TLC Canada, TLC and Mergersub covenant and
agree that any and all publicity, whether by TLC Canada, TLC, Mergersub or any
of their Affiliates, and notices made prior to the Closing Date to third parties
concerning the Transactions shall be subject to the prior written approval of
the Company, which approval shall not be unreasonably withheld or delayed;
provided, however, that TLC Canada may make any public disclosure necessary or
appropriate for compliance with federal or state laws or the rules and
regulations of any securities market on which its securities trade (in which
case TLC Canada shall advise the Company and provide it with a copy of any such
disclosure prior to release). TLC Canada, TLC and Mergersub shall cooperate with
the Company in making communications informing the personnel and management of
the Company of the change in the ownership of the Company, and no such
communications shall be made without the prior approval of the Company, which
approval shall not be unreasonably withheld or delayed.
Section 6.02 Brokers and Finders. The Company shall have no obligation
to pay any fees, expenses or other compensation to any Person engaged or
retained by TLC Canada, TLC or Mergersub in connection with this Agreement and
the Transactions; any such fees, expenses and other compensation shall be the
sole responsibility of TLC and Mergersub.
Section 6.03 Certain Filings. TLC Canada, TLC and Mergersub shall make
or cause to be made all filings with Governmental Authorities that are required
to be made by TLC Canada, TLC and Mergersub to carry out the Transactions. TLC
Canada, TLC and Mergersub agree to assist the Company in making all such
filings, applications and notices as may be necessary or desirable in order to
obtain the authorization, approval or consent of any Governmental Authority
which reasonably may be required or which the Company reasonably may request in
connection with the consummation of the Transactions.
Section 6.04 Further Assurances. TLC Canada, TLC and Mergersub agree
to execute and deliver such additional documents and instruments, and perform
such additional acts, as the Company reasonably may request to effectuate or
carry out and perform all the terms, provisions and conditions of this Agreement
and the Transactions and to effectuate the intent and purposes hereof.
Section 6.05 Workers Adjustment and Retraining Notification Act. TLC
Canada, TLC and Mergersub shall comply with the Workers Adjustment and
Retraining Notification Act to the extent applicable to the Surviving
Corporation.
Section 6.06 Listing of TLC Shares. TLC Canada shall take all action
reasonably necessary to cause the TLC Shares to be approved for listing on the
Toronto Stock Exchange, subject only to notice of issuance and the satisfaction
of the standard filing requirements and payment of requisite filing fees, and to
be quoted on NASDAQ.
Section 6.07 Tax Matters. The following provisions shall govern the
allocation of responsibility between (A) TLC and the Surviving Corporation and
(B) the Shareholders and the Shareholders' Representative, for certain tax
matters following the Closing Date:
(a) Straddle Period. In the case of any taxable period that
includes (but does not end on) the Closing Date (a "Straddle Period"), the
amount of any Taxes based on or measured by income or receipts of the Company
for the period ending on the Closing Date shall be determined based on an
interim closing of the books as of the close of business on the Closing Date
(and for such purpose, the taxable period of any partnership or other
pass-through entity in which the Company holds a beneficial interest shall be
deemed to terminate at such time) and the amount of other Taxes of the Company
for a Straddle Period which relate to the
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period ending on the Closing Date shall be deemed to be the amount of such Tax
for the entire taxable period multiplied by a fraction the numerator of which is
the number of days in the taxable period ending on the Closing Date and the
denominator of which is the number of days in such Straddle Period.
(b) Short Period. The Shareholder Representative shall prepare or
cause to be prepared on a basis consistent with past practice all Tax Returns
for the Surviving Corporation for the periods ending on the Closing Date. TLC
shall have the opportunity to review, comment upon and suggest changes or
corrections to information with respect to the Surviving Corporation set forth
in any Tax Return prepared by the Shareholder Representative prior to the filing
thereof.
(c) Responsibility for Filing Tax Returns. Except for the period
referred to in Section 6.07(b), TLC shall prepare or caused to be prepared and
file or caused to be filed all Tax Returns for the Surviving Corporation. TLC
shall permit the Shareholders' Representative to review and comment on each such
Tax Return described in the preceding sentence, to the extent that such Tax
Return includes a Tax liability for any period, through the Closing Date, at
least fifteen (15) days prior to filing and shall make all such revisions to
such Income Tax Returns as are reasonably requested by the Shareholders'
Representative, but only to the extent such revisions would not result in any
additional liability for Tax to the Surviving Corporation or TLC.
(d) Refunds and Tax Benefits. Any income Tax refunds that are
received by TLC or the Surviving Corporation, and any amounts credited against
Tax to which TLC or the Surviving Corporation become entitled, that relate to
Tax periods or portions thereof ending on or before the Closing Date shall be
for the account of the Shareholders, and TLC shall pay over to the Shareholders'
Representative for the benefit of the Shareholders (on a pro rata basis in
accordance with each Shareholder's Percentage Interest) any such refund or the
amount of any such credit within fifteen (15) days after receipt or entitlement
thereto. In addition, to the extent that a claim for refund or a proceeding
results in a payment or credit against income Tax by a taxing authority to TLC
or the Surviving Corporation of any amount accrued on the Closing Balance Sheet,
TLC or the Surviving Corporation shall pay such amount to the Shareholders'
Representative for the benefit of the Shareholders (on a pro rata basis in
accordance with each Shareholder's Percentage Interest) within fifteen (15) days
after receipt or entitlement thereto.
(e) Cooperation on Tax Matters. TLC, the Surviving Corporation
and the Shareholders' Representative shall cooperate fully, as and to the extent
reasonably requested by any other Party, in connection with the filing of Tax
Returns pursuant to this Section 6.07 and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other Party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. The
Surviving Corporation and the Shareholders' Representative, on behalf of the
Shareholders, agree (A) to retain all books and records with respect to Tax
matters pertinent to the Surviving Corporation relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by TLC or the Shareholders'
Representative, any extensions thereof) of the respective taxable periods, and
to abide by all record retention agreements entered into with any taxing
authority, and (B) to give the other Party reasonable written notice prior to
transferring, destroying or discarding any such books and records.
(f) Tax Controversies; Assistance and Cooperation.
(i) In the event that after the Closing Date any taxing
authority informs the Surviving Corporation of any notice of proposed audit,
claim, assessment or other dispute concerning an amount of Taxes with respect to
which the Shareholders may incur liability under this Agreement or the
Indemnification Agreement, the Surviving Corporation shall promptly notify the
Shareholders' Representative of such matter. Such notice shall contain factual
information (to the extent known) describing any asserted Tax liability in
reasonable detail and shall be accompanied by copies of any notice or other
documents received from any Tax authority with respect to such matter.
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(ii) The Surviving Corporation shall control any audits,
disputes, administrative, judicial or other proceedings related to Taxes;
provided, however, in the event an adverse determination may result in the
Shareholders having to indemnify another Party for any amount of Taxes under
this Agreement or the Indemnification Agreement, the Shareholders'
Representative shall be entitled to participate, directly at their own expense,
or through a representative, in such proceedings. For the purposes of this
Section 6.07, the term "participate" shall include (A) participation in
conferences, meetings or proceedings with any taxing authority, (B)
participation in appearances before any court or tribunal, and (C) participation
in submission and determination of the content of the documentation, protests,
memorandum of fact and law, briefs, and the conduct of oral arguments and
presentations.
(iii) After the Closing Date, the Surviving Corporation
shall not settle any Tax liability or compromise any claim with respect to
Taxes, which settlement or compromise may affect the liability for Taxes of the
Shareholders hereunder (or right to tax benefit hereunder or under the
Indemnification Agreement), without the Shareholders' Representative's prior
written consent, which consent shall not be unreasonably withheld or delayed.
(iv) Each Party shall bear its own expenses incurred in
connection with audits or other administrative judicial proceedings relating to
Taxes for which such Party is liable under this Agreement or the Indemnification
Agreement.
ARTICLE VII
CLOSING
Section 7.01 Time and Place of Closing. The closing of the
Transactions (the "Closing") shall be held at 9:00 a.m. (St. Louis time) on
November 7, 2005, or such other date as the Parties may mutually agree (the
"Closing Date"), at the offices of TLC, provided that the Closing Date shall not
be later than November 10, 2005.
Section 7.02 Conditions to the Obligations of Each Party. The
respective obligations of TLC Canada, TLC, Mergersub and the Company to
consummate the Merger are subject to the satisfaction, on or before the Closing
Date, of the following conditions:
(a) this Agreement shall have been approved by Shareholders
holding at least ninety-eight percent (98%) of the outstanding Shares in
accordance with Utah law and any applicable waiting period under such law shall
have expired and the Company shall have complied with all provisions of the
URBCA applicable to dissenters' rights for which compliance is required on or
prior to the Effective Time;
(b) no order of any Governmental Authority shall have been
rendered having the effect of making any of the Transactions illegal, or
otherwise restricting or prohibiting the consummation of any of the
Transactions;
(c) no claims, disputes, actions, suits, investigations or
proceedings shall be pending or threatened relating to the Transactions or which
would reasonably be likely to materially and adversely affect TLC's ability to
pay the Additional Consideration;
(d) all consents, actions or approvals required in connection
with the Transactions shall have been obtained; and
(e) the TLC Shares to be delivered to Electing Shareholders
hereunder shall have been conditionally approved for listing in the Toronto
Stock Exchange subject only to notice of issuance and the satisfaction of the
standard filing requirements and payment of requisite filing fees and shall be
quoted on NASDAQ.
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Section 7.03 Conditions to the Obligations of TLC Canada, TLC and
Mergersub. The respective obligations of TLC Canada, TLC and Mergersub 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 Canada, TLC and Mergersub and may be waived by
TLC on behalf of itself, TLC Canada and Mergersub and any one or more of which,
if not satisfied or waived, will relieve TLC and Mergersub of any obligation
under this Agreement):
(a) the Company shall have delivered to TLC Canada, TLC and
Mergersub:
(i) the escrow agreement in the form attached hereto as
Exhibit C (the "Escrow Agreement") executed on behalf of the Shareholders;
(ii) duly completed Election Forms from Shareholders holding
at least ninety-eight percent (98%) of the outstanding Shares as of the
Closing Date;
(iii) the indemnification agreement (the "Indemnification
Agreement") in the form attached hereto as Exhibit D executed by
Shareholders holding at least ninety-eight percent (98%) of the outstanding
Shares as of the Closing Date;
(iv) consents required by the Shareholders or the Company
pursuant to any Contract or from any Governmental Authority as a result of
the entering into and performance of this Agreement and the Transaction
Documents;
(v) evidence of the resignations of each of the directors
and officers of the Company;
(vi) assignments of the patents referred to in Schedule
3.13(a)(x) of the Disclosure Schedule from Lindsay T. Atwood to the
Company, in a form satisfactory to TLC, acting reasonably;
(vii) invention assignment agreements executed by the
employees of the Company referred to in Schedule 3.18(c) of the Disclosure
Schedule in a form satisfactory to TLC, acting reasonably;
(viii) the employment and non-competition agreement in the
form attached hereto as Exhibit E executed by Lindsay T. Atwood;
(ix) the employment and non-competition agreements in the
form attached hereto as Exhibit F executed by John Nielson, Wade Leatham,
Becky Chase, Larry Gadd, Roxy Shrader and Daniel Ede (collectively, with
the employment and non-competition agreement in (vi) above, the "Employment
Agreements");
(x) a consulting and non-competition agreement with Scott
Frazier on such terms as are acceptable to TLC (the "Consulting
Agreement");
(xi) evidence of extended reporting professional liability
insurance coverage covering the Business for all periods prior to the
Closing Date for a five year term on a claims made basis;
(xii) a true and correct copy of the register of holders of
capital stock of the Company showing each Shareholder's Percentage
Interest;
(xiii) the statement required by Section 2.02(a)(i);
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(xiv) an opinion of Snell & Wilmer L.L.P., counsel to the
Company, dated the Closing Date, in a form acceptable to TLC and its
counsel, acting reasonably;
(xv) at least forty-eight (48) hours prior to the Closing,
an updated Disclosure Schedule to reflect only changes or events which have
occurred after the date hereof and which shall be acceptable to TLC, acting
reasonably; and
(xvi) all documents reasonably requested by TLC Canada, TLC
and Mergersub relating to the existence of the Company, and the due
authorization and consummation of the Transactions and all other actions
and proceedings taken at or before the Closing in connection with the
performance by the Company of its obligations under this Agreement, which
documents shall be in form and substance reasonably satisfactory to TLC
Canada, TLC and Mergersub;
(b) the employment agreement between the Company and Lindsay T.
Atwood shall have been terminated without any further liability of the Company
or the Surviving Corporation;
(c) no claims, disputes, actions, suits, investigations or
proceedings shall be pending or threatened relating to the Company;
(d) notwithstanding any of the representations and warranties of
the Company contained herein, there shall not be, and there shall not have
occurred since the date hereof, 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, a Material
Adverse Effect; and
(e) the Company shall have performed all of its obligations
hereunder required to be performed by it at or prior to the Closing Date and the
representations and warranties of the Company contained in this Agreement shall
be true and correct at and as of the Closing Date, and TLC shall have received a
certificate signed by an executive officer of the Company to the foregoing
effect.
Section 7.04 Conditions to the Obligations of the Company. The
obligations of the Company 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 the Company and may be
waived by the Company and any one or more of which, if not satisfied or waived,
will relieve the Company of any obligation under this Agreement):
(a) TLC Canada, TLC and Mergersub, as applicable, shall have
delivered to the Company:
(i) the Initial Merger Consideration;
(ii) he Escrow Agreement;
(iii) the Indemnification Agreement;
(iv) the Employment Agreements executed by the Surviving
Corporation;
(v) the registration rights agreement in the form attached
hereto as Exhibit G (the "Registration Rights Agreement");
(vi) the Consulting Agreement executed by the Surviving
Corporation;
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(vii) at least forty-eight (48) hours prior to the Closing,
a list of the TLC Owned Centers (the "Center List"); and
(viii) an opinion of Torys LLP, counsel to TLC and
Mergersub, dated the Closing Date, in a form acceptable to the Company and
its counsel, acting reasonably.
(b) all documents reasonably requested by the Company relating to
the existence of TLC Canada, TLC and Mergersub, and the due authorization and
consummation of the Transactions and all other actions and proceedings taken at
or before the Closing in connection with the performance by TLC Canada, TLC and
Mergersub of their obligations under this Agreement, which documents shall be in
form and substance reasonably satisfactory to the Company; and
(c) TLC Canada, TLC and Mergersub shall have performed all of
their respective obligations hereunder required to be performed by them at or
prior to the Effective Time and the representations and warranties of TLC
Canada, TLC and Mergersub contained in this Agreement shall be true and correct
at and as of the Closing Date as if made on and as of such date, and the Company
shall have received a certificate signed by an executive officer of each of TLC
Canada, TLC and Mergersub to the foregoing effect.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses. Except as otherwise specifically provided
herein, each Party shall pay its own expenses incidental to negotiations,
preparation of agreements and the Closing.
Section 8.02 Notices. All notices, requests or instructions hereunder
shall be in writing and delivered personally, sent by telecopy, sent by Federal
Express or other nationally recognized overnight carrier, or sent by registered
or certified mail, postage prepaid, as follows:
(a) If to the Company:
TruVision, Inc.
859 West South Jordan Parkway
2nd Floor
South Jordan, UT 84095
Attention: Lindsay T. Atwood
Telephone: (801) 676-1100
Facsimile: (801) 302-9101
with a copies to:
Lindsay T. Atwood, as the Shareholders' Representative
859 West South Jordan Parkway
2nd Floor
South Jordan, UT 84095
Telephone: (801) 676-1100
Facsimile: (801) 302-9101
113
Snell & Wilmer L.L.P.
15 West South Temple
Suite 1200
Gateway Tower West
Salt Lake City, UT 84101
Attention: John G. Weston, Esq.
Telephone (801) 257-1931
Facsimile: (801) 257-1800
(b) If to TLC Canada, TLC or Mergersub:
TLC Vision Corporation
540 Maryville Centre Drive
Suite 200
St. Louis, MO 63141
Attention: Brian Andrew, General Counsel
Telephone: (314) 523-8205
Telecopy No.: (314) 434-7251
with a copy to:
Torys LLP
237 Park Avenue
New York, New York 10017
Attention: Andrew J. Beck, Esq.
Telecopy No.: (212) 682-0200
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied or by overnight courier, and five (5) Business
Days after the date of mailing, if mailed by registered or certified mail.
Section 8.03 Entire Agreement. This Agreement (including the Annexes,
Exhibits and Schedules) and the documents referred to herein contain the entire
agreement among the Parties with respect to the Transactions and supersede all
prior agreements, understandings, negotiations and discussions, whether written
or oral, of the Parties, and no amendment or modification hereof shall be
effective unless in writing and signed by the Party against which it is sought
to be enforced.
Section 8.04 Severability. If one or more of the provisions of this
Agreement are held to be unenforceable under applicable law, such provisions
shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable in
accordance with its terms.
Section 8.05 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the Parties.
(b) No Party may assign any of its rights, interests or obligations
under this Agreement without the written approval of the Company in the case of
TLC Canada, TLC or Mergersub, and TLC in the case of the Company; provided,
however, that (A) TLC Canada, TLC and Mergersub may assign any and all of their
rights
114
and interests hereunder (i) to any Affiliate; (ii) in connection with a sale of
all or substantially all of the assets of TLC Canada, TLC or Mergersub, as the
case may be, or any of their corporate parents, or direct or indirect
consolidated subsidiaries; or (iii) to any bank or other financial institution
which has extended credit to TLC Canada, TLC or Mergersub or any of their
Affiliates, provided that, in each case, such assignment will not relieve TLC
Canada or TLC of their obligations hereunder and (B) a Shareholder may assign
any and all of such Shareholder's rights and interests hereunder to one or more
other Shareholders with the prior written consent of TLC and the consent of the
other Shareholders shall not be required for such assignment. Any attempted
assignment in violation of this Section 8.05(b) shall be null and void.
Section 8.06 Governing Law. The validity of this Agreement and of any
of its terms or provisions, as well as the rights and duties of the Parties
under this Agreement, shall be construed pursuant to and in accordance with the
laws of the State of Utah, without regard to the conflicts of laws provisions
thereof.
Section 8.07 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. Any counterpart or other
signature hereupon or upon a Transaction Document delivered by facsimile shall
be deemed for all purposes as constituting good and valid execution and delivery
of this Agreement or the Transaction Document, as applicable, by such Party.
Section 8.08 Effect of Investigations. Any due diligence review, audit
or other investigation or inquiry undertaken or performed by or on behalf of any
Party shall not limit, qualify, modify or amend the representations, warranties
and covenants of, and indemnities by, any other Party made or undertaken
pursuant to this Agreement and the Transaction Documents, irrespective of the
knowledge and information received (or which should have been received)
therefrom by such Party.
Section 8.09 Waivers. The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No breach of any term, covenant,
representation or warranty contained in this Agreement shall be effective unless
in writing, and no waiver in any one or more instances shall be deemed to be a
further or continuing waiver of any such breach in other instances or a waiver
of any other breach of any other term, covenant, representation or warranty.
Section 8.10 No Third-Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the Parties and their permitted
assigns and the Shareholders and nothing herein, whether express or implied, is
intended to or shall confer upon any other Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 8.11 Construction. Unless the context otherwise requires:
(a)"or" is not exclusive; (b) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP; (c) terms defined in this
Agreement in their singular or plural forms have correlative meanings when used
herein in their plural or singular forms, respectively; (d) pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require; (e) any date specified for any action that
is not a Business Day shall be deemed to mean the first Business Day after such
date; (f) a reference to a Person includes its successors and permitted assigns;
(g) the word "including" shall mean "including without limitation"; (h) except
where otherwise expressly provided, all references herein to dollar amounts
shall mean United States dollars; (i) any reference to any federal, state, local
or foreign statute or law shall be to such statute or law as amended at the
applicable time, and shall be deemed also to refer to all rules and regulations
promulgated thereunder at the applicable time; and (j) the inclusion of headings
and a table of contents in this Agreement is for convenience of reference only
and shall not affect the construction or interpretation hereof.
Section 8.12 Preparation of Document. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties and no presumption or burden
of proof shall rise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.
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Section 8.13 Shareholders' Representative. Each of the Parties
understands and acknowledges that the Shareholders will appoint Lindsay T.
Atwood as the Shareholders' Representative after the date of this Agreement and
before the Closing Date. Accordingly, this Agreement shall become binding upon
and enforceable against and by the Shareholders and the Shareholders'
Representative at such time as the Shareholders have appointed Lindsay T. Atwood
as the Shareholders' Representative.
Section 8.14 Termination Fee.
(a) In the event that the Closing does not occur on or before
November 10, 2005 due to the failure of TLC Canada, TLC or Mergersub to perform
in any material respect any of their obligations contemplated by this Agreement
required to be performed by them prior to the Closing, TLC shall, on or prior to
November 18, 2005, pay to the Company, by certified check or wire transfer (in
accordance with wire instructions provided by the Company) a termination fee
equal to Five Hundred Thousand Dollars ($500,000).
(b) In the event that the Closing does not occur on or before
November 10, 2005 due to the failure of the Company or any of the Shareholders
to perform in any material respect any of their obligations contemplated by this
Agreement required to be performed by them prior to the Closing, the Company
shall, on or prior to November 18, 2005, pay to TLC, by certified check or wire
transfer (in accordance with wire instructions provided by TLC) a termination
fee equal to Five Hundred Thousand Dollars ($500,000).
* * *
IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of
the date first above written.
TRUVISION, INC.
By /s/ Lindsay T. Atwood
-------------------------------------
Name: Lindsay T. Atwood
Title: Chief Executive Officer
TLC WILDCARD CORP.
By /s/ James C. Wachtman
-------------------------------------
Name: James C. Wachtman
Title: President and Chief Executive
Officer
TLC VISION CORPORATION
By /s/ James C. Wachtman
-------------------------------------
Name: James C. Wachtman
Title: President and Chief Executive
Officer
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TLC VISION (USA) CORPORATION
By /s/ James C. Wachtman
-------------------------------------
Name: James C. Wachtman
Title: President and Chief Executive
Officer
SHAREHOLDERS' REPRESENTATIVE
/s/ Lindsay T. Atwood
- ------------------------------------- ----------------------------------------
Witness Lindsay T. Atwood
117
Annex A
DEFINITIONS
Definitions. Capitalized terms used in this Agreement shall have the
following meanings:
"ACTUAL REVENUE COLLECTED" shall mean, with respect to a particular period,
the following:
(a) the revenue collected by TLC Canada, TLC or any of their
subsidiaries (including the Surviving Corporation) from members of Contracted
Health Plans or Employer Groups receiving refractive eye surgery (including,
without limitation, LASIK) at TLC Owned Centers (other than centers which, as of
the date hereof, are owned by Liberty Vision Centers LLC or any other Affiliate
of the Company or Lindsay T. Atwood), but excluding revenue collected for
retreatments and co-management fees collected;
(b) the revenue collected by TLC Canada, TLC or any of their
subsidiaries (including the Surviving Corporation) for members of Contracted
Health Plans or Employer Groups referred by the Surviving Corporation or any
TruVision Subsidiary and receiving refractive eye surgery, including, without
limitation, LASIK at TLC Canada's customers using its roll-on roll-off or fixed
access laser services who have contracts with the Company, the Surviving
Corporation or any of the TruVision Subsidiaries as a discount provider of
refractive eye surgery, including, without limitation, LASIK to Contracted
Health Plans or Employer Groups, but excluding revenue collected for
retreatments, amounts paid to the practice or surgeon, and blade, cone,
key-card, royalty and other costs related to medical supplies;
(c) the deposit paid for refractive eye surgery by members of
Contracted Health Plans or Employer Groups to the Surviving Corporation or any
TruVision Subsidiary when the refractive eye surgery, including, without
limitation, LASIK appointment is booked;
(d) revenue collected by the Surviving Corporation or any
TruVision Subsidiary, less cost of goods sold, from contact lens sales;
(e) revenue collected by the Surviving Corporation or any
TruVision Subsidiary from refractive eye surgery (including, without limitation,
LASIK) retreatment warranty sales, less amounts paid to healthcare providers;
(f) revenue collected by the Surviving Corporation or any
TruVision Subsidiary from hearing aid sales, hearing aid accessory sales and
hearing aid battery sales, less the cost of batteries and excluding revenue
collected for replacement hearing aids under warranty; and
(g) deposits collected by the Surviving Corporation or any
TruVision Subsidiary from cosmetic surgery and cosmetic dentistry bookings;
Notwithstanding the above, the parties agree that refractive eye surgery shall
not include cataract surgery or any procedure that is covered by Medicare or
Medicaid. In addition, all direct costs of intraocular lens surgery and all
direct costs of future refractive eye surgery technologies shall be deducted
when calculating revenue collected.
and further provided that, Actual Revenue Collected shall exclude:
(a) any refunds, except, in the case of Year Two and Year Three,
refunds related to Actual Revenue Collected during a prior period (other than
reserves for refunds and warranties included on the Closing Balance Sheet);
(b) sales tax; and
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(c) any increase (as of the date hereof) in royalties or key
cards payable to laser manufacturers.
"ADDITIONAL CONSIDERATION" shall mean Year One Consideration, Year Two
Consideration or Year Three Consideration, as the case may be.
"ADDITIONAL CONSIDERATION STATEMENT" shall have the meaning set forth in
Section 2.03(d).
"AFFILIATE" shall mean, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person. For the purposes of
this definition, "control" when 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 the
ownership, directly or indirectly, of more than 10% of the voting or equity
securities or other interests of any such Person and/or by contract or
otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"AGREEMENT" shall mean this Agreement and Plan of Merger, including the
preamble, recitals and all Exhibits and Schedules, and all amendments or
restatements, as permitted, and the expressions "hereof", "herein", "hereto",
"hereunder", "hereby" and similar expressions refer to this Agreement and Plan
of Merger; and unless otherwise indicated, references to "preamble", "recitals",
"Article ", "Section", "Exhibit" or "Schedule" mean the preamble, recitals or
the specified Article , Section, Exhibit or Schedule of this Agreement.
"ANNUAL FINANCIAL STATEMENTS" shall have the meaning set forth in Section
3.05.
"ARTICLES OF MERGER" shall have the meaning set forth in Section 1.03.
"AUDITOR'S DETERMINATION STATEMENT" shall have the meaning set forth in
Section 2.09(b).
"BALANCE SHEET" shall mean the audited consolidated balance sheet of the
Company as of the close of business on December 31, 2004.
"BENEFIT PLANS" shall have the meaning set forth in Section 3.20.
"BUSINESS" shall have the meaning set forth in the recitals.
"BUSINESS DAY" shall mean a day other than a Saturday or Sunday or other
day on which commercial banks in New York, New York are authorized or required
by law to close.
"CENTER LIST" shall have the meaning set forth in Section 7.04(a)(vii).
"CHAMPUS PROGRAM" shall have the meaning set forth in Section 3.17(d)(i).
"CLOSING" shall have the meaning set forth in Section 7.01.
"CLOSING ADJUSTMENT ESCROW AMOUNT" shall have the meaning set forth in
Section 2.01(d).
"CLOSING ADJUSTMENT ESCROW DEPOSIT" shall have the meaning set forth in
Section 2.01(d).
"CLOSING BALANCE SHEET" shall have the meaning set forth in Section
2.02(b).
"CLOSING DATE" shall have the meaning set forth in Section 7.01.
"CLOSING NET ASSETS" shall have the meaning set forth in Section 2.02(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
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"COMPANY" shall mean TruVision, Inc. and, with respect to Article III
(other than Section 3.01, Section 3.02 and Section 3.04(a)) and Article V shall
also mean, the TruVision Subsidiaries.
"COMPANY INDEBTEDNESS" shall mean, at any time, any obligations and
liabilities created, issued or incurred by the Company or any of the TruVision
Subsidiaries for borrowed money, including bank loans, mortgages, notes payable,
capital lease obligations, guarantees of indebtedness of others and loans from
the Shareholders, and all principal, interest, fees, prepayment penalties or
other amounts due or owing with respect thereto.
"COMPANY IP" shall have the meaning set forth in Section 3.18(c).
"COMPANY SOFTWARE" shall have the meaning set forth in Section 3.18(a).
"CONSULTING AGREEMENT" shall have the meaning set forth in Section
7.03(a)(x).
"CONTRACTED HEALTH PLANS OR EMPLOYER GROUPS" shall mean health plans or
employer groups that have contracts with the Company, the Surviving Corporation
or Laser Eye Surgery, Inc. under which the Company, the Surviving Corporation or
Laser Eye Surgery, Inc. arrange to provide discount refractive eye surgery,
including, without limitation, LASIK, to members of such health plans or
employer groups.
"CONTRACTS" shall have the meaning set forth in Section 3.13(a).
"DISCLOSURE SCHEDULE" shall mean the disclosure schedule of the Company
attached hereto as Exhibit B.
"DISPUTE AUDIT" shall have the meaning set forth in Section 2.09(b).
"DISSENTING SHARES" shall have the meaning set forth in Section 2.10(a).
"DIVISION" shall have the meaning set forth in Section 1.03.
"EFFECTIVE TIME" shall have the meaning set forth in Section 1.03.
"ELECTING SHAREHOLDERS" shall mean Shareholders who have duly elected to
receive TLC Shares pursuant to a duly completed Election Form but shall in no
case include Non-Accredited Investors.
"ELECTION FORM" shall have the meaning set forth in Section 2.01(a).
"EMPLOYMENT AGREEMENT" shall have the meaning set forth in Section 7.03(a).
"ENVIRONMENTAL CLAIM" shall mean any notice or claim by any Person alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resource damages, property
damages, personal injuries or penalties) arising out of, based on or resulting
from (a) the generation, treatment, storage, transportation or recycling of any
Hazardous Substance or the presence, or release, discharge, disposal or emission
into the environment, of any Hazardous Substance at the Real Property or any
other real property, whether or not presently or formerly owned or leased by the
Company or any Affiliate of the Company; or (b) any violation, or alleged
violation, of any Environmental Laws.
"ENVIRONMENTAL LAWS" shall mean applicable federal, state, local and
foreign laws, rules and regulations relating to environmental health and safety
matters, the pollution or protection of the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) or the
protection of human health and safety from environmental hazards, including
laws, rules and regulations relating to emissions, discharges, releases or
threatened releases of Hazardous Substances, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
"EQUITABLE EXCEPTIONS" shall have the meaning set forth in Section 3.02.
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"ERISA" shall have the meaning set forth in Section 3.20.
"ESCROW AGREEMENT" shall have the meaning set forth in Section 7.03(a)(i).
"ESTIMATED NET ASSETS" shall have the meaning set forth in Section
2.02(a)(i).
"FINAL ADDITIONAL CONSIDERATION STATEMENT" shall have the meaning set forth
in Section 2.09.
"FINAL ADJUSTMENT DATE" shall have the meaning set forth in Section 2.09.
"FINAL CLOSING BALANCE SHEET" shall have the meaning set forth in Section
2.09.
"FINAL NET ASSETS" shall have the meaning set forth in Section 2.09(c).
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.05.
"GAAP" shall mean United States generally accepted accounting principles,
as in effect from time to time, consistently applied.
"GOVERNMENTAL AUTHORITY" shall mean the collective reference to any court,
tribunal, government, or governmental or administrative agency, authority or
instrumentality, federal, state or local, or domestic or foreign, or any
arbitrator having competent jurisdiction over the matter or matters in question.
"GOVERNMENTAL PROGRAMS" shall have the meaning set forth in Section
3.17(d)(i).
"HAZARDOUS SUBSTANCES" shall mean (1) any chemical, compound, material or
substance that is defined, listed in, or otherwise classified pursuant to, any
of the Environmental Laws as a "hazardous substance", "hazardous material",
"hazardous waste", "toxic substance" or "toxic pollutant", (2) petroleum,
natural gas, natural gas liquids, liquefied natural gas, synthetic gas usable
for fuel and drilling fluids, produced waters, and other wastes associated with
the exploration, development or production of crude oil, natural gas or
geothermal resources and (3) any "medical waste" as defined in any of the
Environmental Laws or the disposition of which is regulated by any Environmental
Laws.
"HEALTHCARE LAWS" shall have the meaning set forth in Section 3.17(d)(i).
"INDEMNIFICATION AGREEMENT" shall have the meaning set forth in Section
7.03(a)(iii).
"INDEMNITY ESCROW DEPOSIT" shall have the meaning set forth in Section
2.01(d)(i).
"INDEPENDENT AUDITOR" shall have the meaning set forth in Section 2.09(b).
"INITIAL MERGER CONSIDERATION" shall mean seventeen million five hundred
thousand dollars ($17,500,000), as adjusted pursuant to Section 2.02.
"INTELLECTUAL PROPERTY" shall mean, collectively, in the United States and
anywhere in the world, (a) all inventions (whether patentable or unpatentable
and whether or not reduced to practice), all improvements and modifications
thereto, and all patents and pending applications for patents; (b) all
registered trademarks, registered service marks, trademark and service mark
applications, and unregistered trademarks and service marks, trade dress, logos,
trade names, fictitious names, brand names, brand marks, domain names, URL's and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith; (c)all works
of authorship, copyrights, mask works, and all derivative works thereof, and all
applications, registrations, and renewals in connection therewith; (d) all trade
secrets and confidential or proprietary business information, including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, industrial
designs, package designs, website content, drawings, specifications, advertising
formats, customer and supplier lists, pricing and cost information, and business
and marketing plans and proposals; (e) all Software, including data, text,
information, layouts, graphics, user interface elements and designs,
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"look and feel" characteristics, computer databases and related IT
Documentation, and all modifications, enhancements, updates and new versions
thereof; (f) all copies and tangible embodiments of the above (in whatever form
or medium whether now known or hereafter developed); and (g) any other similar
intellectual property rights, in each case used in the Business.
"INTELLECTUAL PROPERTY RIGHTS" shall mean any common law principle or
statutory provision which may provide a right in any item of Intellectual
Property, including common law trademark rights, trademark applications and
registrations, patents, pending patent applications, copyrights and
registrations and pending applications therefor.
"INTERIM BALANCE SHEET" shall have the meaning set forth in Section 3.05.
"INTERIM BALANCE SHEET DATE" shall mean September 30, 2005.
"INTERIM FINANCIAL STATEMENTS" shall have the meaning set forth in Section
3.05.
"INVENTORY" shall mean all items of inventories reflected on the Interim
Balance Sheet, or thereafter acquired by the Company (and not subsequently
disposed of in the Ordinary Course of Business).
"IT DOCUMENTATION" shall mean instructions, manuals, notes, charts or other
information, including Source Code Materials and training materials, relating to
the use, implementation, integration, set-up, configuration, operation,
maintenance or support of hardware, software or content, in any form or medium.
"KNOWLEDGE" when used with respect to the Company or any TruVision
Subsidiary shall mean actual knowledge of any of Lindsay T. Atwood, Scott
Frazier, John Nielson, Wade Leatham, Becky Chase, Larry Gadd, Roxy Shrader and
Daniel Ede.
"LASIK" shall mean Laser In Situ Keratomileusis.
"LICENSED IP" shall have the meaning specified in Section 3.18(b).
"LIENS" shall mean all liens, mortgages, charges, security interests,
covenants, easements, restrictions, adverse claims or other encumbrances of any
kind whatsoever and howsoever arising.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
businesses, properties, assets, condition (financial or other), results of
operations and/or prospects of the Company and/or the Business, taken as a
whole.
"MERGER" shall have the meaning set forth in Article I.
"MERGERSUB" shall have the meaning set forth in the preamble.
"NASDAQ" shall mean the Nasdaq National Market System.
"NET ASSETS" shall mean the difference between the total amount of assets
and the total amount of liabilities of the Company computed in accordance with
GAAP on a basis consistent with the Balance Sheet, provided that the amounts of
goodwill, intangible assets and deferred income taxes for purposes of such
calculation shall be equal to the amounts of such items recorded on the
Company's balance sheet as of August 31, 2005.
"NON-ACCREDITED INVESTOR" shall have the meaning set forth in Section
2.01(a).
"OFF-BALANCE SHEET ARRANGEMENTS" shall mean all "off-balance sheet
arrangements" as defined in Item 303(a)(4)(ii)of Regulation S-K under the U.S.
Securities Act.
"OPTIONS" shall mean the warrants, options, calls, commitments or other
rights or agreements to which the Company is subject to or bound relating to the
issuance, sale, transfer or redemption of Shares or other securities of the
Company listed in Section 3.04 of the Disclosure Schedule.
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"ORDINARY COURSE OF BUSINESS" shall mean the ordinary course of business of
the Company, consistent with past practice.
"PARTICIPATE", as used in Section 6.07, shall have the meaning set forth in
Section 6.07(f)(ii).
"PARTY" shall mean each of the parties to this Agreement.
"PERCENTAGE INTEREST" shall mean, with respect to a particular Shareholder,
the percentage of all outstanding Shares of the Company held by such Shareholder
immediately prior to the Effective Time.
"PERMITS" shall have the meaning set forth in Section 3.17(b).
"PERMITTED ENCUMBRANCES" means (a) liens for Taxes and other governmental
charges and assessments which are not yet due and payable, (b) liens of
landlords and liens of carriers, warehousemen, mechanics and materialmen and
other like liens arising in the Ordinary Course of Business for sums not yet due
and payable, or (c) other liens or imperfections on property which are not
material in amount or do not materially detract from the value or the existing
use of the property affected by such lien or imperfection.
"PERMITTED EQUIPMENT LIENS" shall have the meaning set forth in Section
3.12(a).
"PERSON" shall mean any individual, partnership, venture, unincorporated
association, organization, syndicate, corporation, limited liability company or
other entity, trust, or trustee, executor, administrator or other legal or
personal representative, or Governmental Authority.
"REAL PROPERTY" shall have the meaning set forth in Section 3.11.
"REGISTRATION RIGHTS AGREEMENT" shall have the meaning set forth in Section
7.04(a)(v).
"REQUIRED NET ASSETS" shall have the meaning set forth in Section
2.02(a)(ii).
"RESOLUTION PERIOD" shall have the meaning set forth in Section 2.09(a).
"RULE 144" shall mean Rule 144 of the U.S. Securities Act.
"SEC" shall have the meaning set forth in Section 4.09.
"SEC DOCUMENTS" shall have the meaning set forth in Section 4.09.
"SHAREHOLDERS" mean the holders of Shares.
"SHAREHOLDERS' REPRESENTATIVE" shall have the meaning set forth in the
preamble of this Agreement.
"SHARES" mean shares of common stock of the Company.
"SHRINK WRAP SOFTWARE" means Software that has not been customized and that
is generally commercially available to TLC in the form used by the Company in
the Business through or in consumer retail stores, from the Software licensors
or from the Internet pursuant to "shrink wrap" or "click through" licenses.
"SOFTWARE" shall mean computer programs, operating systems, applications,
interfaces, applets, software scripts, macros, firmware, development tools, and
other instructions or sets of instructions for hardware or software to follow,
including SQL and other query languages, hypertext markup language ("html"),
wireless markup language, xml and other computer markup languages, wheresoever
or howsoever maintained or embodied, in object, source or other code.
"SOURCE CODE MATERIALS" shall mean the non-executable, human readable
version of Software wheresoever or howsoever maintained or embodied which is
capable of being translated into a machine-readable and executable form of
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Software derived from the source code version of the program following
compilation or assembly, with instructions, programmer specifications, notes,
explanations and other documentation, including general flow-charts, input and
output layouts, field descriptions, volumes and sort sequences, data
dictionaries, file layouts, calculation formulae, details of all algorithms and
all Software or developer's tools required to compile and generate a
machine-readable and acceptable form of the Software from the source code.
"STRADDLE PERIOD" shall have the meaning set forth in Section 6.07(a).
"SUPPLIERS" shall have the meaning set forth in Section 3.14.
"SURVIVING CORPORATION" shall mean the Company following the Effective
Time.
"TAX RETURNS" shall mean any return, report, document, statement or form
required to be filed with respect to any Taxes (including any schedules required
to be attached thereto), including information returns, claims for refund,
amended returns and declarations of estimated Tax.
"TAXES" shall have the meaning set forth in Section 3.16(a).
"TLC" shall have the meaning set forth in the preamble.
"TLC OWNED CENTERS" shall mean TLC Canada's, or TLC's or their
subsidiaries', direct or indirect, wholly owned or majority owned refractive eye
surgery centers (including, without limitation, LASIK surgery centers),
including, without limitation, the centers identified on the Center List. TLC
Canada shall update the Center List to include or exclude, as the case may be,
additional wholly owned and majority owned refractive eye surgery centers
(including, without limitation, LASIK surgery centers) which are opened or
acquired, or closed or disposed of, as the case may be, by TLC Canada, TLC or
any of their subsidiaries from time to time following the date hereof and
deliver a copy of the Center List, as updated, to the Shareholders'
Representative.
"TLC SHARES" shall mean common shares in the capital of TLC Canada.
"TRANSACTION DOCUMENTS" shall mean, collectively, the agreements,
instruments, Articles of Mergers and other documents delivered pursuant hereto
or otherwise in connection herewith.
"TRANSACTIONS" shall mean, collectively, the transactions contemplated by
this Agreement and the Transaction Documents.
"TREASURY REGULATIONS" shall mean the permanent and temporary regulations
of the United States Department of the Treasury promulgated under the Code, as
such regulations may be lawfully changed from time to time (including
corresponding provisions of succeeding regulations).
"TRUVISION SUBSIDIARIES" shall mean the subsidiaries listed in Schedule
3.01 of the Disclosure Schedule.
"URBCA" shall mean the Utah Revised Business Corporation Act.
"U.S. SECURITIES ACT" shall mean the United States Securities Act of 1933,
as amended.
"YEAR ONE" shall have the meaning set forth in Section 2.03(a).
"YEAR ONE CONSIDERATION" shall have the meaning set forth in Section
2.03(a).
"YEAR TWO" shall have the meaning set forth in Section 2.03(b).
"YEAR TWO CONSIDERATION" shall have the meaning set forth in Section
2.03(b).
"YEAR THREE" shall have the meaning set forth in Section 2.03(c).
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"YEAR THREE CONSIDERATION" shall have the meaning set forth in Section
2.03(c).
EXHIBITS
- --------
Exhibit A Form of Election Form
Exhibit B Disclosure Schedule
Exhibit C Form of Escrow Agreement
Exhibit D Form of Indemnification Agreement
Exhibit E Form of Employment Agreement
Exhibit F Form of Non-Competition Agreement
Exhibit G Form of Registration Rights Agreement
SCHEDULES
- ---------
Schedule 3.01 Organization and Qualification
Schedule 3.04 Capitalization
Schedule 3.06(b) Liabilities
Schedule 3.09 Dividends, Loans, etc.
Schedule 3.11 Real Property
Schedule 3.12 Liens
Schedule 3.13(a) Contracts
Schedule 3.13(b) Plan Contracts
Schedule 3.14 Customers and Suppliers
Schedule 3.17(b) Permits
Schedule 3.17(d)(iii) Financial Relationships
Schedule 3.17(d)(iv) Governmental Programs and Private Programs
Schedule 3.18(a) Registered Intellectual Property
Schedule 3.18(b) Licensed Intellectual Property
Schedule 3.18(i) Licenses Granted to Others
Schedule 3.19 Compensation
Schedule 3.20 Employee Benefit Plans
Schedule 3.23 Insurance
Schedule 3.24 Power of Attorney; Bank Accounts
Schedule 3.25 Litigation
Schedule 3.26 Insider Interests; Intercompany Transactions
* The schedules and exhibits to the agreement have been omitted pursuant to
Rule 601(a)(2) of Regulation S-K. Copies of the omitted material will be
furnished to the Securities and Exchange Commission or its staff upon
request.
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