ASSET PURCHASE AGREEMENT

 

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                                                                     Exhibit 2.2

 

                            ASSET PURCHASE AGREEMENT

 

                                  BY AND AMONG

 

                          TLC VISION (USA) CORPORATION,

 

                          FREDERIC B. KREMER, M.D., P.C.,

 

                                       AND

 

                            FREDERIC B. KREMER, M.D.,

 

                            DATED AS OF JULY 11, 2005

 

 

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                            ASSET PURCHASE AGREEMENT

 

     THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of July

11, 2005, by and among Frederic B. Kremer, M.D., P.C., a Pennsylvania

professional corporation ("Practice"), and Frederic B. Kremer, M.D. ("Kremer")

on the one hand and TLC Vision (USA) Corporation, a Delaware corporation ("TLC")

on the other hand. TLC, Practice and Kremer are referred to collectively herein

as the "Parties."

 

                                   WITNESSETH:

 

     WHEREAS, Practice is a Pennsylvania professional corporation which owns the

assets which are used by and/or result from the practice of medicine by its

employed physicians;

 

     WHEREAS, TLC has agreed to acquire the Purchased Assets (as hereinafter

defined) pursuant to the terms of this Agreement;

 

     WHEREAS, simultaneously with the Closing of the Contemplated Transactions,

TLC, Eyes of the Future, P.C., a Pennsylvania professional corporation ("EOF"),

and Frederic B. Kremer, M.D., shall consummate a transaction pursuant to which

certain of the assets of EOF will be sold to TLC (the "EOF Transaction

Documents");

 

     WHEREAS, simultaneously with the Closing of the Contemplated Transactions,

TLC shall transfer certain assets purchased under the EOF Transaction Documents

and used in connection with EOF's ambulatory surgery center to DelVal ASC, LLC,

a Delaware limited liability company wholly owned by TLC (the "ASC LLC") and

certain of the other assets purchased under the EOF Transaction Documents and

used in connection with EOF's laser refractive facilities (the "Facilities

Assets") to TLC Management (Delaware Valley), LLC (the "Management LLC");

 

     WHEREAS, simultaneously with the Closing of the Contemplated Transactions,

Michael Aronsky, M.D., Carol Hoffman, M.D., George Pronesti, M.D. and Anthony C.

Zacchei, M.D. (collectively referred to as the "Investor Physicians") are

consummating a transaction pursuant to which the Investor Physicians shall

purchase an eighteen percent (18%) interest in the aggregate in each of the ASC

LLC and the Management LLC from TLC or an Affiliate of TLC (the "LLC Purchase

Transaction Documents"); and

 

     WHEREAS, the Parties anticipate that the transaction contemplated by this

Agreement will further certain of their business objectives;

 

     WHEREAS, the Parties desire to set forth in writing the terms and

conditions under which the transactions contemplated by this Agreement will be

consummated.

 

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set

forth herein, and other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged by the Parties, it is agreed as

follows:

 

          DEFINITIONS.

 

     "Accounts Receivable" means all accounts and any and all rights to payment

of money or other forms of consideration of any kind (whether classified under

the Uniform Commercial Code as accounts, chattel paper, general intangibles or

otherwise) for goods sold or leased or for services rendered by Practice, or any

physician, optometrist, or other Person acting in the name of and on behalf of

Practice, including, but not limited to, accounts receivable, proceeds of any

letters of credit naming Practice as beneficiary, chattel paper, insurance

proceeds related to claims made for events occurring on or prior to the Closing

date and which relate to the personal property included in the Purchased Assets,

contract rights, notes, drafts, instruments, documents, acceptances and all

other debts, obligations and liabilities of whatever form from any other Person.

 

     "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations

promulgated under the Securities Exchange Act.

 

     "Agreement" has the meaning set forth in the preface above.

 

     "Applicable Laws" has the meaning set forth in Section 3(r) below.

 

     "ASC LLC" has the meaning set forth in the preface above.

 

 

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     "Assumed Contracts" includes all of Practice's rights and interests in and

to and obligations under the following contracts and agreements:

 

          any and all leaseholds and subleaseholds in real property,

improvements, fixtures, and fittings thereon, and easements, rights-of-way, and

other appurtenances and hereditaments benefiting same (such as appurtenant

rights in and to public streets), as described on Schedule 1(a) attached hereto

(the "Real Property Leases");

 

          any and all leases or subleases of equipment or other personal

property, and rights thereunder as described on Schedule 1(b) attached hereto;

and

 

          any and all agreements, contracts, indentures, mortgages, instruments,

Security Interests, guaranties, other similar arrangements, and rights

thereunder and any other agreement or contract set forth on Schedule 1(c); and

 

     "Assumed Liabilities" has the meaning set forth in Section 2(b) below.

 

     "CHAMPUS" means the Civilian Health and Medical Program of the Uniformed

Services.

 

     "Closing" has the meaning set forth in Section 2(d) below.

 

     "Closing Date" has the meaning set forth in Section 2(d) below.

 

     "Code" means the Internal Revenue Code of 1986, as amended.

 

     "Contemplated Transactions" means all of the transactions contemplated by

this Agreement.

 

     "Delaware Limited Liability Company Act" means the Delaware Limited

Liability Company Act, as amended, Title 6, Chapter 18 of the General Laws of

the State of Delaware.

 

    "Effective Time" means 12:01 a.m. the day after the Closing Date.

 

    "Employee Benefit Plans" has the meaning set forth in Section 3(p)(i) below.

 

     "Environmental Laws" means all federal, state, and local laws, rules,

regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and

charges thereunder and other governmental requirements relating to pollution,

control of chemicals, storage and handling of petroleum products, management of

waste (including biohazardous or biomedical waste), discharges of materials into

the environment, health, safety, natural resources, and the environment,

including laws relating to emissions, discharges, releases, or threatened

releases of pollutants, contaminants, or chemical, industrial, hazardous, or

toxic materials or wastes into ambient air, surface water, ground water, or

lands or otherwise relating to the manufacture, processing, distribution, use,

treatment, storage, disposal, transport, or handling of pollutants,

contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.

 

     "EOF Transaction Documents" has the meaning set forth in the premises.

 

     "ERISA" means the Employee Retirement Income Security Act of 1974, as

amended.

 

     "Excluded Assets" means (a) the articles of incorporation, taxpayer and

other identification numbers, seals, minute books, transfer books, and other

documents relating to the organization, maintenance, and existence of Practice

as a professional corporation, (b) employment or noncompete agreements between

Practice and those licensed medical doctors and optometrists under contract with

Practice to provide medical services to Practice patients, (c) all patient

records and patient lists, (d) all insurance policies of Practice and all claims

arising thereunder and all prepaid expenses on malpractice insurance premiums,

(e) the inventories, cash, and Accounts Receivable disposed of, canceled,

expended or collected, as the case may be, by Practice after the date hereof and

prior to the Closing in the Ordinary Course of Business, (f) personal property

of individual employees which is not included on the financial statements of

Practice, (g) Practice's cash on hand as of the Closing Date, (h) Practice's

third party payor agreements, (i) all drugs owned by Practice, and (j) any

rights of Practice under this Agreement or any related document or under any

other agreement between Practice on the one hand, and TLC on the other hand

entered into on or after the date of this Agreement, (k) all Employee Benefit

Plans or other pension or profit sharing plans of Practice, (l) all interests in

real property owned by Practice (excluding leasehold or subleasehold interests),

(m) the names "Dr. Frederic B. Kremer" and "Kremer" other than the use of such

names with respect to the provision of professional ophthalmology services or

optometric professional services, refractive surgical services, eyeglasses and

other eyewear, and any other healthcare services related to diseases and surgery

of the eye; and (n) the property and assets expressly designated on Schedule

1(d).

 

 

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     "GAAP" means United States generally accepted accounting principles as in

effect from time to time.

 

     "Governmental Body" means any:

 

          (a)   Nation, state, county, city, town, burrow, village, district or

               other jurisdiction;

 

          (b)   Federal, state, local, municipal, foreign or other government;

 

          (c)   Governmental or quasi-governmental authority of any nature

               (including any agency, branch, department, board, commission,

               court, tribunal or other entity exercising governmental or

               quasi-governmental powers);

 

          (d)   Multi-national organization or body;

 

          (e)   Body exercising, or entitled or purporting to exercise, any

               administrative, executive, judicial, legislative, police,

               regulatory or taxing authority or power; or

 

          (f)   Official of any of the foregoing.

 

     "Hazardous Materials" has the meaning set forth in Section 3(s) below.

 

     "Health Care Law" means all federal, state or local laws, statutes, codes,

ordinances, regulation manuals or principles of common law relating to

healthcare regulatory matters, including without limitation (i) 42 U.S.C.

Sections 1320a-7, 7a and 7b, which are commonly referred to as the "Federal

Anti-Kickback Statute"; (ii) 42 U.S.C. Section 1395nn, which is commonly

referred to as the "Stark Statute"; (iii) 31 U.S.C Sections 3729-3733, which is

commonly referred to as the "Federal False Claims Act"; (iv) Titles XVIII and

XIX of the Social Security Act, implementing regulations and program manuals;

and (v) 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.

 

     "Indemnified Person" means any Person entitled to indemnity under this

Agreement.

 

     "Investor Physician" has the meaning set forth in the preface above.

 

     "IRS" means the Internal Revenue Service.

 

     "Knowledge" of a particular fact or other matter by an individual means the

actual knowledge of such individual. EOF shall be deemed to have Knowledge of a

particular fact or matter if Kremer, Jim Staats or Tara Hopewell has, or at any

time had, Knowledge of that fact or other matter. TLC shall be deemed to have

the Knowledge of a particular fact or matter if James C. Wachtman, Steve Rasche,

Bob Ryan, Bill Leonard or Patty Larson has, or at any time had, Knowledge of

that fact or other matter.

 

     "Liability" means with respect to any Person, any liability or obligation

of such Person of any kind, character or description, whether known or unknown,

absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated

or unliquidated, secured or unsecured, joint or several, due or to become due,

vested or unvested, executory, determined, determinable or otherwise, and

whether or not the same is required to be accrued on the financial statements of

such Person.

 

     "Loss" has the meaning set forth in Section 9(b) below.

 

     "Management LLC" means TLC Management (Delaware Valley), LLC, a Delaware

limited liability agreement and wholly owned subsidiary of TLC.

 

     "Management Co. Operating Agreement" means the Limited Liability Company

Agreement of TLC Management (Delaware Valley), LLC, as defined in the Delaware

Limited Liability Company Act.

 

     "Material Adverse Effect" or "Material Adverse Change" means any effect or

change that would be materially adverse to the business, assets, condition

(financial or otherwise), operating results, operations, or business prospects

of EOF taken as a whole except for (i) effects or changes that are generally

applicable to the industries or markets in which EOF operates; (ii) changes in

the United States or world financial markets or general economic conditions;

(iii) effects arising from war or terrorism; or (iv) the public announcement of

the Contemplated Transactions.

 

 

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     "Medicaid" means any state program pursuant to which health care providers

are paid or reimbursed for care given or goods afforded to indigent persons and

administered pursuant to a plan approved by the Centers for Medicare and

Medicaid Services under Title XIX of the Social Security Act.

 

     "Medical Waste" includes, but is not limited to, pathological waste, blood,

sharps, wastes from surgery or autopsy, dialysis waste, including contaminated

disposable equipment and supplies, cultures and stock of infectious agents and

associated biological agents, contaminated animals, isolation wastes,

contaminated equipment, laboratory waste, various other biological waste and

discarded materials contaminated with or exposed to blood, excretion or

secretion from human beings or animals, and any substance, pollutant, material

or contaminant listed or regulated under the Medical Waste Tracking Act of 1988,

42 U.S.C. Sections 6992, et seq.

 

     "Medical Waste Law" means the Medical Waste Tracking Act of 1988, as

amended, the U.S. Public Vessel Medical Waste Anti-Dumping Act of 1988, 33

U.S.C.A. Sections 2501, et seq., the Marine Protection, Research and Sanctuaries

Act of 1972, 33 U.S.C.A. Sections 1401, et seq., the Occupational Safety and

Health Act, 29 U.S.C.A. Sections 651, et seq., the United States Department of

Health and Human Services, National Institute for Occupational Self-Safety and

Health Infectious Waste Disposal Guidelines, Publication No. 88-119, all

regulations and orders issued pursuant to any of the foregoing, and any other

federal, state, regional, county, municipal or other local laws, regulations and

ordinances insofar as they purport to regulate Medical Waste or impose

requirements relating to Medical Waste.

 

     "Medicare" means any medical program established under Title XVIII of the

Social Security Act and administered by the Centers for Medicare and Medicaid

Services.

 

     "Necessary Authorizations" means, with respect to Practice, all

certificates of need, authorizations, certifications, consents, approvals,

permits, licenses, notices, accreditations and exemptions, filings and

registrations, and reports required by Applicable Laws, which are required or

necessary to the lawful ownership and operation of Practice's business.

 

     "Ordinary Course of Business" means the ordinary course of business

consistent with past custom and practice.

 

     "Parties" has the meaning set forth in the preface above.

 

     "PBGC" has the meaning set forth in Section 3(p)(ii) below.

 

     "Pennsylvania Professional Corporation Act" means the Pennsylvania

Professional Corporation Act of the State of Pennsylvania, as amended.

 

     "Permitted Encumbrances" has the meaning set in Section 2(b).

 

     "Person" means an individual, a partnership, a limited liability company, a

corporation, an association, a joint stock company, a trust, a joint venture, an

unincorporated organization, or a Governmental Body (or any department, agency,

or political subdivision thereof).

 

     "Practice" has the meaning set forth in the preface above.

 

     "Proceeding" means any action, arbitration, audit, hearing, investigation,

litigation or suit (whether civil, criminal, administrative, judicial or

investigative, whether formal or informal, whether public or private) commenced,

brought, conducted or heard by or before, or otherwise involving, any

governmental body or arbitrator.

 

     "Provider" has the meaning ascribed to it in the Services Agreement.

 

     "Provider Employment Agreement" has the meaning ascribed to it in the

Services Agreement.

 

     "Purchase Price" has the meaning set forth in Section 2(a) below.

 

     "Purchased Assets" means all of Practice's right, title, and interest in

and to the following assets of Practice owned as of the Closing Date:

 

          any and all furniture, fixtures, office furnishings, tools and similar

property, equipment and other capital assets of Practice, including but not

limited to the items described on Schedule 1(b) attached hereto;

 

          any and all inventory of supplies, janitorial and office supplies, and

other disposables and consumables on hand or under order on the Closing Date

(excluding drugs);

 

 

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          any and all intangible assets, goodwill, going concern value, service

marks and service names (whether registered or unregistered), and applications

therefore, all rights in and to internet domain names presently used by

Practice, telephone numbers presently used by Practice, all intellectual

property used in connection with the operations of Practice (including the names

"Dr. Frederic B. Kremer" and "Kremer" with respect to the provision of

professional ophthalmology services or optometric professional services,

refractive surgical services, eyeglasses and other eyewear, and any other

healthcare services related to diseases and surgery of the eye) and goodwill

associated therewith, and licenses and sublicenses granted and obtained with

respect thereto (not necessary for the practice of medicine), and rights

thereunder, remedies against infringements thereof, and rights to protection of

interests therein under the laws of all jurisdictions in which EOF operates;

 

          any and all claims, deposits, prepayments, refunds, causes of action,

choses in action, rights of recovery, rights of set off, and rights of

recoupment which have accrued as a result of the operation of business of

Practice (except any such item relating to the payment of Taxes);

 

          any and all franchises, approvals, permits, licenses (not necessary

for the practice of medicine), orders, registrations, certificates, variances,

and similar rights obtained from governments and governmental agencies which are

assignable;

 

          any and all books, records, ledgers, files, documents, correspondence,

lists, plats, architectural plans, drawings, and specifications, creative

materials, advertising and promotional materials, studies, reports, and other

printed or written materials (excluding patient medical records), and other

writings used in connection with the operations of Practice whatsoever;

 

          data processing programs, software programs, computer printouts,

databases and hardware and related items used in the conduct of the business of

Practice, including, without limitation, accounting, invoices, auditing and data

processing bases and programs;

 

          Practice's Accounts Receivable which shall be delivered to TLC upon

receipt by Practice; and

 

          all other assets, personal property, tangible and intangible personal

property used by Practice in connection with the operation of its business

(except for the Excluded Assets).

 

     The term "Purchased Assets" shall not include any specific item included

within the definition of Excluded Assets set forth herein.

 

     "Real Property Leases" has the meaning set forth within the definition of

Assumed Contracts in this Section 1.

 

     "Requisite Practice Approval" means the affirmative vote of the holders of

the requisite percentage of the shares of Practice which is required by the

Pennsylvania Professional Corporation Act to approve the transactions

contemplated by this Agreement.

 

     "Requisite TLC Approval" means the affirmative vote of a majority of the

TLC directors in favor of this Agreement.

 

     "Retained Liabilities" has the meaning ascribed to it in Section 2(b).

 

     "Securities Act" means the Securities Act of 1933, as amended.

 

     "Securities Exchange Act" means the Securities Exchange Act of 1934, as

amended.

 

     "Security Interest" means any mortgage, pledge, lien, encumbrance, charge

or other security interest other than (a) mechanic's, materialmen's or similar

lien, (b) liens for taxes not yet due and payable or for taxes that the taxpayer

is contesting in good faith through appropriate proceedings, (c) purchase money

liens and liens securing rental payments under capital lease arrangements, and

(d) other liens arising in the Ordinary Course of Business and not incurred in

connection with the borrowing of money.

 

     "Services Agreement" means that certain Service Agreement dated as of the

Closing Date by and among Management LLC and the Successor Medical Practice

attached hereto as Exhibit 1(b).

 

 

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    "Subsidiary" means any corporation with respect to which a specified Person

(or a Subsidiary thereof) owns a majority of the common stock or has the power

to vote or direct the voting of sufficient securities to elect a majority of the

directors.

 

     "Successor Medical Practice" shall mean Delaware Valley Vision Associates

Group, LLC, which is a party to the Services Agreement.

 

     "Third-Party Claim" means any claim against any Indemnified Person by a

Person that is not a party to this Agreement, whether or not involving a

Proceeding.

 

     "TLC" has the meaning set forth in the preface above.

 

     "TLC - DEL" means TLC Management (Delaware Valley), LLC, a Delaware limited

liability company and wholly owned subsidiary of TLC.

 

     "TLC - DEL Operating Agreement" means the Limited Liability Company

Agreement of TLC - DEL, as defined in the Delaware Limited Liability Company

Act.

 

          Basic Transaction.

 

          Purchase and Sale of Assets. At the Closing, on and subject to the

terms and conditions of this Agreement, Practice agrees to transfer, sell,

convey and deliver to TLC and TLC agrees to purchase, all of the Purchased

Assets and Practice agrees to assign and TLC agrees to assume or cause an

Affiliate to assume all of the Assumed Contracts for a price equal to cash in

the amount of Four Hundred Sixteen Thousand and 00/100 Dollars ($416,000) (the

"Purchase Price") to be paid or satisfied as set forth in Section 2(c).

 

          Assumption of Liabilities.

 

                TLC or an Affiliate of TLC shall assume at the Effective Time,

          and shall perform or discharge on or after the Effective Time, only

          (A) the contracts, leases, commitments, obligations and liabilities of

          Practice which are included in the definition of Assumed Contracts;

          (B) Practice's trade accounts payable and other short-term obligations

          incurred in the Ordinary Course of Business no more than thirty (30)

          days prior to the Closing Date; and (C) the Security Interests

          described on Schedule 2(b) (the "Permitted Encumbrances") (the

          foregoing (A), (B) and (C) are hereinafter collectively referred to as

          the "Assumed Liabilities"), and neither TLC nor any of its Affiliates

          shall assume any other liabilities of Practice.

 

               Other than the Assumed Liabilities, neither TLC nor any of its

          Affiliates shall be deemed to have assumed, nor shall TLC or any of

          its Affiliates assume any Liability of Practice including but not

          limited to: (A) any Liability which may be incurred by reason of any

          breach of or default under contracts, leases, commitments or

          obligations of Practice which occurred prior to the Effective Time;

          (B) any Liability for any employee benefits payable to employees of

          Practice, including, but not limited to, liabilities arising under any

          Employee Benefit Plan of Practice; (C) any Liability based upon or

           arising out of a violation of any laws by Practice, including, without

          limiting the generality of the foregoing, any such liability which may

          arise in connection with agreements, contracts, commitments or

          provision of services by Practice or any Physician Owner; (D) any

          Liability based upon or arising out of any tortious or wrongful

          actions of Practice or any Physician Owner, (E) any Liability for the

          payment of any taxes imposed by law on Practice arising from any

          activities of Practice prior to the Effective Time or by reason of the

          transactions contemplated by this Agreement; (F) any Liability for the

          payment of legal fees incurred by Practice prior to the Closing; (G)

          any term debt of Practice not included in the Permitted Encumbrances;

          or (H) any trade accounts payable not included in the Assumed

          Liabilities (collectively the "Retained Liabilities").

 

          Purchase Price. TLC shall pay the Purchase Price at the Closing in

cash, payable by wire transfer or delivery of immediately available funds.

 

          The Closing. The closing of the transaction (the "Closing") shall take

place at the offices of Blank Rome LLP, One Logan Square, Philadelphia,

Pennsylvania, commencing at 9:00 a.m. local time on July 11, 2005 (the "Closing

Date").

 

 

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          Deliveries at Closing. At the Closing, (i) TLC will deliver to

Practice the various certificates, instruments, and documents referred to in

Section 7(b) below; (ii) Practice will deliver to TLC the various certificates,

instruments, and documents referred to in Section 7(a) below.

 

          Proration. The following prorations among the Parties shall be made as

of the Closing Date, with Practice remaining liable to the extent such items

relate to any time period up to the Closing Date and TLC being liable to the

extent such items relate to periods on and after the Closing Date:

 

                Any ad valorem taxes, including, without limitation, personal

          property taxes and assessments, and other taxes, if any, on or with

          respect to the Purchased Assets,

 

               Rents, additional rents, taxes and other items payable by

          Practice under any lease, license, permit, contract or any other

          agreement or arrangement to be assigned to or assumed by TLC, and

 

               The amount of rents, taxes, and charges for sewer, water, fuel,

          telephone, electricity, and other utilities; provided, that if

          practicable, a meter reading shall be taken on the Closing Date and

          the respective obligations of the Parties determined in accordance

          with such readings.

 

     To the extent possible, the net amount of all such prorations will be

settled in cash at the Closing. If the actual expense of any of the above items

for the billing period in which the Closing Date falls is not known at the

Closing, the proration shall be made based on the expense incurred in the

previous billing cycle, for expenses billed less often than quarterly, and on

the average expense incurred in the preceding three (3) billing periods, for

expenses billed quarterly or more often.

 

          Taxes and Expenses. Practice shall be responsible for any business,

occupation, withholding or similar tax or taxes of any kind related to

Practice's business for any period prior to the Closing Date. All applicable

sales, use (excluding use taxes associated with the transfer of Purchased Assets

by TLC into or out of any State in which Practice presently operates) and

tangible taxes, documentary stamp taxes, filing and recording costs and other

transfer taxes, costs and fees relating to the transfer of title to the

Purchased Assets, and the consummation of the transactions described herein,

shall be paid by Practice.

 

          Allocation. The Parties agree to allocate the Purchase Price among the

Purchased Assets (and all other capitalizable costs) for tax purposes based upon

the book value of the assets with the excess of the Purchase Price over such

amount allocated to goodwill.

 

          Employees. As of the Closing Date, Practice shall terminate all the

employees of Practice. TLC or an Affiliate of TLC may offer to hire such

terminated employees (other than Providers) as it desires. Each Provider listed

on Schedule 2(i) to this Agreement shall become an employee of the Successor

Medical Practice and shall execute a Provider Employment Agreement. Practice

shall retain responsibility under any and all employment agreements with respect

to terminated employees. Practice hereby covenants and agrees that it will take

whatever steps are necessary to pay or fund completely or reserve completely for

any accrued benefits, where applicable, or vested accrued benefits for which

Practice or any entity might have any liability whatsoever arising from any

salary, wage, benefit, bonus, sick leave, insurance, employment tax or similar

liability of Practice to any employee or other person or entity (including,

without limitation, any Employee Benefit Plan of Practice and any liability

under employment contracts with Practice) allocable to services performed prior

to the Closing Date. Practice acknowledges that the purpose and intent of this

covenant is to assure that TLC shall have no liability whatsoever at any time in

the future with respect to any of Practice's employees during the term of their

employment by Practice, including, without limitation, any Employee Benefit Plan

of Practice.

 

          Practice shall transfer all of its patient records and inventory of

drugs to the Successor Medical Practice on the Closing Date.

 

          Representations and Warranties of Practice and Kremer. Practice and

Kremer represent and warrant to TLC that the statements contained in this

Section 3 are correct and complete as of the date of this Agreement and will be

correct and complete as of the Closing Date (as though made then and as though

the Closing Date were substituted for the date of this Agreement throughout this

Section 3).

 

 

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          Organization, Qualification, and Power. Practice is a professional

corporation duly organized, validly existing, and in good standing under the

laws of the Commonwealth of Pennsylvania. Practice is duly authorized to conduct

business and is in good standing under the laws of each jurisdiction in which

the character or location of the properties owned or the business conducted by

Practice makes such qualification necessary. Practice has the full power and

authority to carry on the business in which it is engaged and to own and use the

properties owned, leased and used by it.

 

          Ownership Interest of EOF. Schedule 3(b) sets forth the number of

shares of Practice issued and outstanding and the Person in whose name such

shares are issued. Except as set forth on Schedule 3(b), there are no other

shares, options, warrants or convertible debt of any form authorized or

outstanding.

 

          Authorization of Transaction. Subject to obtaining any required

approvals from any Governmental Body, Practice has the full power and authority

to execute and deliver this Agreement and to perform its obligations hereunder.

This Agreement constitutes the valid and legally binding obligation of Practice

and the Kremer, enforceable in accordance with its terms and conditions.

 

          Noncontravention. Neither the execution and the delivery of this

Agreement, nor the consummation of the transactions contemplated hereby, will

(i) violate any constitution, statute, regulation, rule, injunction, judgment,

order, decree, ruling, charge or other restriction of any Governmental Body,

professional regulatory organization or court to which Practice is subject or

any provision of the articles of incorporation or bylaws of Practice or (ii)

conflict with, result in a breach of, constitute a default under, result in the

acceleration of, create in any party the right to accelerate, terminate, modify,

or cancel, or require any notice under any agreement, contract, lease, license,

instrument or other arrangement to which Practice is a party or by which it is

bound or to which any of its assets is subject (or result in the imposition of

any Security Interest upon any of its assets). Practice is not required to give

any notice to, make any filing with, or obtain any authorization, consent, or

approval of any Governmental Body in order for Practice to consummate the

transactions contemplated by this Agreement.

 

          Title; Condition. Practice has, or will have on the Closing Date,

legal and beneficial title to, or leasehold interest in, all of its tangible and

intangible property free and clear of any Security Interest other than the

Permitted Encumbrances. Except for real and personal property leased to or

licensed by Practice, Practice's tangible and intangible property (other than

service marks and service names) are not subject to any lien, lease, conditional

sales agreement, option, right of first refusal or any other encumbrance or

charge other than the Permitted Encumbrances. To the Knowledge of Practice,

Practice has legal and beneficial title to its service marks and service names

free and clear of any claims of any other Person.

 

          Tangible Assets. Practice owns or leases all land, buildings,

machinery, equipment, and other tangible assets necessary for the conduct of its

business as presently conducted. Each tangible asset is free from defects has

been maintained in accordance with normal industry practice and is in operating

condition (subject to normal wear and tear).

 

          Subsidiaries and Investments. Practice does not own, directly or

indirectly, any capital stock or other equity ownership or proprietary interest

in any other corporation, partnership, association, limited liability company,

trust, joint venture or other entity.

 

          Financial Statements. Practice has delivered to TLC: (a) a combined

audited balance sheet of Practice and Eyes of the Future, P.C. ("EOF") as of

December 31, 2004 (including the notes thereto, the "Balance Sheet"), and the

related audited statements of income and cash flows for the fiscal year then

ended, including in each case the notes thereto, together with the report

thereon of Gocial Gerstein, LLC independent certified public accountants; (b)

combined audited balance sheets of Practice and EOF as of December 31 in each of

the fiscal years 2000 through 2003 and the related audited statements of income

for each of the fiscal years then ended, including in each case the notes

thereto; and (c) an unaudited balance sheet of Practice and EOF as of March 31,

2005, (the "Interim Balance Sheet") and the related statements of income for the

three (3) months then ended. Such financial statements fairly present (and the

financial statements delivered pursuant to Section 0 will fairly present) the

financial condition and the results of operations and cash flows of Practice and

EOF as of the respective dates and for the periods referred to in such financial

statements, all in accordance with GAAP, except with respect to the interim

statements which do not comply with GAAP due to the absence of notes and the

need for normal year-end adjustments. The financial

 

 

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statements referred to in this Section and delivered pursuant to Section 0

reflect and will reflect the consistent application of such accounting

principles throughout the periods involved, except as disclosed, in the case of

the audited financial statements, in the notes to such financial statements. The

financial statements have been and will be prepared from and are in accordance

with the accounting records of Practice and EOF. Practice has also delivered to

TLC copies of all letters from Practice's auditors to Practice's board of

directors thereof during the thirty-six (36) months preceding the execution of

this Agreement, together with copies of all responses thereto.

 

          No Changes Prior to Closing Date. During the period from December 31,

2004 through the date hereof Practice has not (i) incurred any liability or

obligation of any nature (whether known or unknown, asserted or unasserted,

absolute or contingent, accrued or unaccrued, liquidated or unliquidated and

whether due or to become due), except in the Ordinary Course of Business, (ii)

written off as uncollectible any notes or Accounts Receivable, except write-offs

in the Ordinary Course of Business charged to applicable reserves, (iii)

conducted its business in such a manner so as to increase its accounts payable

or so as to decrease its Accounts Receivable, other than in the Ordinary Course

of Business, (iv) granted any increase in the rate of wages, salaries, bonuses,

or other remunerations of any employee, except in the Ordinary Course of

Business, (v) canceled or waived any claims or rights of substantial value, (vi)

made any change in any method of accounting, (vii) except as provided on

Schedule 3(i), otherwise conducted its business or entered into any transaction,

except in the usual and ordinary manner and in the Ordinary Course of Business,

(viii) except as provided on Schedule 3(i), agreed, whether or not in writing,

to do any of the foregoing, or (ix) disposed of its assets other than in the

Ordinary Course of Business.

 

          Other Contracts. Schedule 3(j) lists all contracts and other

agreements, whether written or oral, to which Practice is a party, except that

agreements described in subsections (i) and (ii) may be omitted if, and only if,

such agreements involve a commitment on an annual basis in amount less than

Fifteen Thousand Dollars ($15,000), including but not limited to:

 

               any agreement for the lease of real or personal property to or

          from any Person;

 

               any agreement for the purchase or sale of supplies, products, or

           other personal property or for the furnishing or receipt of services;

 

               any agreement concerning a partnership, limited liability company

          or joint venture;

 

               any agreement with an ophthalmologist, optometrist or any other

          health care provider;

 

               any agreement under which Practice has created, incurred,

          assumed, or guaranteed any indebtedness for borrowed money, or any

          capitalized lease obligation pursuant to which it has imposed a

          Security Interest in respect of any of its assets, tangible or

          intangible;

 

               any agreement concerning confidentiality or noncompetition;

 

               any profit sharing, option, deferred compensation, severance, or

          other plan or arrangement for the benefit of Pratice's current or

          former owners, directors, partners, managers, officers, and/or

          employees;

 

               any agreement for the employment of any individual on a

           full-time, par