EXHIBIT 2.11
29
AFFILIATION AGREEMENT AND ASSET PURCHASE AGREEMENT
THIS AFFILIATION AGREEMENT AND ASSET PURCHASE AGREEMENT is
entered into as of the 1st day of January 1998, by and between
Omega Orthodontics, Inc., a Delaware corporation ("OMEGA" or
"Surviving Entity"), and Xxxxxx X. Xxxx, D.D.S. ("Xx. Xxxx"), who
is duly licensed to practice endodontics in the state of Nevada
(the "State").
RECITALS
A. OMEGA provides professional management and marketing
services to orthodontic and other dental specialty practices in
the United States, which services include providing practice
management systems, office space, equipment, furnishings and
active administrative personnel necessary for the operation of
such practices, and which services are provided directly or
indirectly through management service organizations.
B. Xx. Xxxx owns and operates an endodontic practice (the
"Endodontic Practice") with offices located at 0000 Xxxxxxxx
Xxxxxx, Xxxxx 0, Xxxx, Xxxxxx 00000 (the "Endodontic Offices")
and furnishes endodontic care to the general public. As the
owner and operator of the Endodontic Practice, Xx. Xxxx is the
owner of a leasehold interest in a lease of the Endodontic
Offices, the owner of certain personal property located at the
Endodontic Offices, a party to certain contracts relating to the
Endodontic Practice and the beneficiary of other rights related
to the Endodontic Practice.
C. OMEGA has conducted a review of the Endodontic
Practice, and has reviewed the Endodontic Practice's financial
statement (the "Financial Statement"), a copy of which is
attached hereto as Exhibit A . Based on its review of the
Endodontic Practice and the Financial Statement, OMEGA has issued
the report (the "Report"), a copy of which has been furnished to
Xx. Xxxx. Xx. Xxxx has reviewed the Report and OMEGA's
literature, and agrees with the Report and the concepts of
OMEGA's Exceptional Practice.
D. Subject to the terms and conditions of this Agreement,
OMEGA and Xx. Xxxx have determined that it is in the best
interests of each for OMEGA to purchase from Xx. Xxxx certain of
the assets comprising the Endodontic Practice as provided in
Section 1.1 hereof.
NOW, THEREFORE, in consideration of the foregoing recitals
and the mutual promises contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged to the full satisfaction of the parties
hereto, the parties hereto agree as follows:
ARTICLE I. ASSET PURCHASE
1.1 Purchase; Consideration and Payment.
(a) At the Closing (as hereinafter defined) and subject to
the terms and conditions hereinafter set forth, Xx. Xxxx agrees
to sell, transfer, convey, assign and deliver to OMEGA, and OMEGA
agrees to purchase and acquire from Xx. Xxxx and take delivery
of, for the consideration hereinafter provided, all of Xx.
Xxxx'x right, title and interest in and to all of the assets of
the Endodontic Practice, wheresoever situated and whether or not
specifically referred to herein or in any instrument of
conveyance delivered pursuant hereto (such assets and rights of
Xx. Xxxx are collectively referred to as the "Assets"), excepting
therefrom the assets listed on Schedule I to the Xxxx of Sale
and Assignment (the "Xxxx of Sale") attached hereto as Exhibit D
(the "Excluded Assets"), and including without limitation the
following Assets:
(1) a lease of the Endodontic Offices, including all rights
and remedies (the "Lease");
(2) all books, records, machinery and equipment used or
owned by the Endodontic Practice and all other tangible and
intangible personal property at or related to the Endodontic
Offices, whether or not located at the Endodontic Offices, or to
the Endodontic Practice conducted therein, whether or not located
at the Endodontic Offices;
(3) all Contracts (as defined below in Section 2.1);
(4) all prepaid claims, prepaid taxes and other prepaid
expense items and deferred charges, credits, advance payments,
security and other deposits made by Xx. Xxxx to any other person
relating to Endodontic Practice;
(5) any rights of Xx. Xxxx pertaining to any counterclaims,
set-offs or defenses he may have with respect to any of the
liabilities assumed by OMEGA; and
(6) any other rights related in any way whatsoever to the
Endodontic Practice or the Endodontic Offices;
free and clear of any liens, encumbrances, restrictions or claims
of any kind (other than those liens, encumbrances, restrictions
and claims expressly disclosed to OMEGA and affirmatively
accepted by OMEGA prior to the Closing), without any further
action on the part of any holder thereof, for an aggregate
consideration (the "Consideration") of:
(i) Five Hundred Fifty Thousand Dollars ($550,000) in
cash (the "Cash Component");
(ii) Three Hundred Seventy Four Thousand, Four Hundred
Dollars ($374,400) to be represented by a promissory note
(the "Purchase Note") payable to Xx. Xxxx (the "Note
Component") in the form attached hereto as Exhibit B; and
(iii) Six Hundred Twenty Thousand Dollars ($620,000) to
be represented by issuance to Xx. Xxxx of shares of
unregistered OMEGA common stock ("OMEGA Stock") based on a
value per share equal to the lesser of (a) $3.75 or (b) the
average of the closing prices for OMEGA Stock on The Nasdaq
SmallCap Market for each business day (Monday through
Friday, not including any legal holidays) of the calendar
week ending the Friday immediately preceding the Closing
(the "Stock Component"), which shall thereupon be issued to
Xx. Xxxx, fully paid and nonassessable.
1.2 Adjustment; Allocation.
(a) The Consideration is based on the value of the Assets
as mutually determined by the parties from the information set
forth in the Financial Statement.
(b) The Consideration shall be subject to adjustments at
Closing for: (i) prepaid and underpaid rent and other lease
obligations, if the leases are to be continued after Closing, as
well as for other agreed normal and customary prepaid and
underpaid expenses; (ii) any accrued but unpaid salaries, bonuses
and other compensation, fringe and health insurance benefits,
employment or payroll taxes and related employment obligations;
and (iii) any accounts payable of the Endodontic Practice which
have accrued prior to the Closing and which remain unpaid as of
such time (the "Accounts Payable") in excess of an amount equal
to one-half (1/2) of one "Average" month of gross income from the
Endodontic Practice. As used herein, Average shall mean an
average of the Accounts Payable of the Endodontic Practice using
the last twelve months prior to the end of the month immediately
preceding the Closing.
(c) The adjustments to the Consideration, if any, shall be
applied in the following order of priority; first to the Cash
Component, second, to the Note Component, and the balance, if
any, to the Stock Component.
(d) The parties hereby agree to allocate the Consideration
among the Assets in accordance with Section 1060 of the Internal
Revenue Code (the "Code") on the basis of the fair market value
of the Assets as of the Closing, which allocation shall be
reduced to writing and acknowledged by the parties hereto within
thirty (30) days following the Closing. The parties agree to
file timely any information that may be required to be filed
pursuant to regulations promulgated under Section 1060(b) of the
Code. The parties further agree that they shall report the
federal, state, municipal, foreign and local and other tax
consequences of the purchase and sale hereunder in a manner
consistent with the allocation determined pursuant to this
section, and that they shall not take any position inconsistent
therewith in connection with any tax return, refund claim,
litigation or otherwise.
1.3 Time and Place of Closing. The closing of the
transactions contemplated hereby (herein called the "Closing")
shall be held at the offices of Xxxxxxxx & Xxxx LLP, Xxx Xxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 at 9:00 a.m. Eastern Standard
Time on January 15, 1998 or at such other place, date or time as
may be fixed by mutual agreement of the parties; provided,
however, that in no event shall the Closing date be extended
beyond January 31, 1998.
1.4 Delivery of Records, Contracts; Transfer of Accounts.
At the Closing, Xx. Xxxx shall deliver or cause to be delivered
to OMEGA:
(a) all of the Assets, including without limitation, books,
records, leases, contracts, employment agreements, non-compete
agreements, commitments and rights relating to the Endodontic
Practice, with such rights of transfer so as to allow OMEGA the
full benefit of the same.
(b) Evidence of malpractice insurance coverage for the
current and five (5) prior years, and if applicable, evidence of
so-called "tail" insurance for such period naming Xx. Xxxx (and
any successor) as a co-insured or otherwise assigning to OMEGA
and its successor the full benefits thereof.
(c) any documentation necessary for the transfer of any of
the Assets, including the Xxxx of Sale, together with any
warranty or other documentation. Xx. Xxxx shall cooperate with
OMEGA in the transfer of any utility accounts for the Endodontic
Offices.
ARTICLE II. ASSUMED LIABILITIES
2.1 Contracts For purposes of this Article II the term
"Contracts" shall mean only those leases, licenses, permits,
contracts, subleases, registrations, authorizations, commitments,
purchase orders, contracts to purchase materials, contracts to
perform or receive services (including work in process) and
supplies, and all other agreements (whether written or oral)
that relate to the Endodontic Practice and are set forth on
Exhibit Y attached hereto.
2.2 Transfer. At the Closing, Xx. Xxxx shall assign and
transfer to OMEGA all of Xx. Xxxx'x right, title and interest in
and to the Contracts and OMEGA shall assume and agree to perform
all obligations and liabilities on the part of Xx. Xxxx under the
Contracts accruing on and after the Closing; provided that to the
extent that the assignment of any Contract is not permitted
without the consent of the other party or parties to such
Contract, this Agreement shall not constitute an agreement to
assign such Contract if such consent is not given; and provided
further that Xx. Xxxx and OMEGA, as appropriate, shall use all
reasonable efforts to obtain such consents, it being understood
that such reasonable efforts shall not include any requirement to
offer or grant financial accommodations to any third party.
2.3 Assumption of Liabilities by OMEGA. At the Closing,
Xx. Xxxx shall assign to OMEGA, and OMEGA shall assume and pay,
perform and discharge, and indemnify and hold Xx. Xxxx harmless
from and against, the following obligations and liabilities of
Xx. Xxxx, and none other (collectively, the "Assumed
Liabilities"): all obligations and liabilities on the part of Xx.
Xxxx under the Contracts arising on and after the Closing.
2.4 No Enlargement. The assumption by OMEGA of the
Assumed Liabilities shall not enlarge any rights or remedies of
any third party under any Contract with Xx. Xxxx. OMEGA agrees
to indemnify, defend and hold Xx. Xxxx and his employees,
harmless from and against any and all liability, loss, cost,
damage and/or expense (including, without limitation, reasonable
attorneys' fees and costs) pertaining to the Assumed Liabilities.
2.5 No Other Liabilities Assumed. OMEGA and Xx. Xxxx
intend that OMEGA shall not assume or be obligated to pay,
perform or discharge any of Xx. Xxxx'x obligations other than the
Assumed Liabilities specified in Section 2.3. Except for the
Assumed Liabilities specified in Section 2.3, OMEGA and Xx. Xxxx
expressly agree OMEGA is acquiring the Assets free and clear of
all liens, claims and encumbrances.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Representations and Warranties of Xx. Xxxx in the
attached Schedule 1 are hereby incorporated as if fully set forth
herein. The Representations and Warranties of OMEGA in the
attached Schedule 2 are hereby incorporated as if fully set forth
herein. Capitalized words and expressions used in this Agreement
and which are defined in said Schedules 1 and 2 shall have the
same meaning as they are given therein.
ARTICLE IV. COVENANTS OF XX. XXXX
Xx. Xxxx hereby covenants and agrees with OMEGA as follows:
4.1 Conduct of Business. Between the date of this
Agreement and the Closing, he will do the following unless OMEGA
shall otherwise consent in writing:
(a) conduct his business only in the ordinary course,
and refrain from changing or introducing any method of management
or operations except in the ordinary course of business and
consistent with prior practices;
(b) refrain from making any purchase, sale or
disposition of any asset or property other than in the ordinary
course of business, from purchasing any capital asset costing
more than $1,000 and from mortgaging, pledging, subjecting to a
lien or otherwise encumbering any of the Assets;
(c) refrain from incurring any contingent or fixed
obligations or liabilities except those that are usual and normal
in the ordinary course of business;
(d) refrain from offering patients discounts of five
percent (5%) or more for prepayments of fees for service;
(e) refrain from selling, assigning or otherwise
transferring accounts receivable to any bank, finance company or
other third party;
(f) maintain accounts payable at levels consistent
with past practices;
(g) use his best efforts to keep available his present
employees and to preserve the goodwill of all patients,
suppliers, and others having business relations with him;
(h) not commit or fail to commit any act which would
cause Xx. Xxxx to suffer the revocation, suspension or limitation
of Xx. Xxxx'x license; and
(i) permit OMEGA and its authorized representatives to
have full access to all his properties, assets, records, tax
returns, records, contracts and documents and furnish to OMEGA or
its authorized representatives such financial and other
information with respect to his business or properties as OMEGA
may from time to time reasonably request.
4.2 Authorization from Others. Prior to the Closing, he
will have obtained all assignments, authorizations, consents and
permits of others required to permit the consummation by Xx. Xxxx
of the transactions contemplated by this Agreement.
4.3 Breach of Representations and Warranties. Promptly
upon becoming aware of the actual, impending or threatened
occurrence of any event which would cause or constitute a breach,
or would have caused or constituted a breach had such event
occurred or been known to them prior to the date hereof, of any
of their representations and warranties contained in or referred
to in this Agreement, he shall give detailed written notice
thereof to and shall use his best efforts to prevent or promptly
remedy the same.
4.4 Consummation of Agreement. He shall use his best
efforts to perform and fulfill all conditions and obligations on
his or its part to be performed and fulfilled under this
Agreement, to the end that the transactions contemplated by this
Agreement shall be fully carried out.
ARTICLE V. COVENANTS OF OMEGA.
OMEGA hereby covenants and agrees with Xx. Xxxx as follows:
5.1 Authorization from Others. Prior to the Closing, it
will have obtained all authorizations, consents and permits of
others required to permit the consummation by it of the
transactions contemplated by this Agreement.
5.2 Consummation of Agreement. It shall use its best
efforts to perform and fulfill all conditions and obligations on
its part to be performed or fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement
shall be fully carried out.
ARTICLE VI. CONDITIONS TO OBLIGATIONS OF OMEGA
The obligations of OMEGA to consummate this Agreement and
the transactions contemplated hereby are subject to the condition
that on or before the Closing the actions required by this
Article VI will have been accomplished.
6.1 Representations; Warranties; Covenants. Each of the
representations and warranties of Xx. Xxxx contained in Schedule
1 shall be true and correct as though made on and as of the
Closing, and Xx. Xxxx shall have performed all of his obligations
hereunder which by the terms hereof are to be performed on or
before the Closing.
6.2 New PC. Xx. Xxxx shall have formed a new professional
entity (the "New PC") under the laws of the State in order to
commence the practice of endodontics through the New PC. Xx.
Xxxx shall have furnished (i) a certificate of the State
Secretary of State as to the legal existence and professional
corporation good standing of New PC; and (ii) a copy of the
resolutions adopted by the board of directors and stockholders of
New PC authorizing and approving the Management Services
Agreement and the Stock Put/Call Option and Successor Designation
Agreement.
6.3 Other Agreements. Xx. Xxxx shall have executed and
delivered, or shall have caused the New PC to execute and
deliver, to OMEGA a Management Services Agreement and a Stock
Put/Call Option and Successor Designation Agreement, each having
substantially the terms and conditions of the forms hereof
collectively attached hereto as Exhibit E .
6.4 [INTENTIONALLY OMITTED]
6.5 Absence of Certain Litigation. There shall not be any
injunction, restraining order or order of any nature issued by
any court of competent jurisdiction which directs that this
Agreement or any material transaction contemplated hereby shall
not be consummated as herein provided, or suit, action or other
proceeding which in the reasonable opinion of counsel for OMEGA
is likely to result in the restraint or prohibition of the
consummation of any material transaction contemplated hereby.
6.6 Notices. Xx. Xxxx shall, at OMEGA's request and
expense, notify all patients and obligors of accounts receivable,
and third party payors and others designated by OMEGA of the
asset purchase and the other transactions contemplated hereunder
pursuant to notice in a form mutually acceptable to the parties
and which is comparable in scope to the form attached hereto as
Exhibit C.
6.7 Financial Condition. The financial condition of the
Endodontic Practice shall not be materially adversely different
from the Financial Statement, as determined by OMEGA. During
the period from the date of the Financial Statement to the
Closing, there shall not have been any material adverse change in
the financial condition, results of operations, business or
prospects of the Endodontic Practice, nor any material loss or
damage to the Assets, whether or not insured, which materially
affects the ability of the Endodontic Practice to conduct its
business. Xx. Xxxx shall have delivered to OMEGA a certificate,
dated the date of Closing, to the foregoing effect, and further
to the effect that there are no Accounts Payable or other
liabilities as of the date of Closing that are not reflected on
the Financial Statement other than those which have been
disclosed in writing to and accepted in writing by OMEGA and
which incurred since the date of the Financial Statement in the
ordinary course of business.
6.8 Due Diligence. OMEGA, acting in good faith and in its
sole discretion, shall be reasonably satisfied with the results
of its "Due Diligence" on Xx. Xxxx and the Endodontic Practice as
not reflecting any data or information which individually or in
the aggregate, if previously disclosed, would have indicated that
there was a material adverse change in the professional status of
Xx. Xxxx or the business of the Endodontic Practice or in the
condition of the Assets or the prospects (financial or otherwise)
of the Endodontic Practice from the information provided prior to
the date hereof. As used herein, Due Diligence shall mean,
without limitation, the results of any investigations or analyses
conducted by or on behalf of OMEGA (financial or otherwise)
related to, or otherwise deemed material by OMEGA, regarding Xx.
Xxxx and the Endodontic Practice, including location of the
Endodontic Offices and its demographics, the leases, the
Equipment, insurance, licensing, malpractice issues, liabilities,
compliance with laws and regulations and health surveys.
ARTICLE VII. CONDITIONS TO OBLIGATIONS OF XX. XXXX
The obligations of Xx. Xxxx to consummate this Agreement
and the transactions contemplated hereby are subject to the
condition that on or before the Closing the actions required by
this Article VII will have been accomplished.
7.1 Representations; Warranties; Covenants. Each of the
representations and warranties of OMEGA contained in Schedule 2
shall be true and correct as though made on and as of the Closing
and OMEGA shall have performed all of its obligations hereunder
which by the terms hereof are to be performed on or before the
Closing.
7.2 [INTENTIONALLY OMITTED]
7.3 Other Agreements. OMEGA shall have executed and
delivered to Xx. Xxxx and New PC a Management Services Agreement
and a Stock Put/Call Option and Successor Designation Agreement,
each having substantially the terms and conditions of the forms
hereof collectively attached hereto as Exhibit E.
7.4 [INTENTIONALLY OMITTED]
7.5 Absence of Certain Litigation. There shall not be any
injunction, restraining order or order of any nature issued by
any court of competent jurisdiction which directs that this
Agreement or any material transaction contemplated hereby shall
not be consummated as herein provided, or suit, action or other
proceeding which in the reasonable opinion of counsel for Xx.
Xxxx is likely to result in the restraint or prohibition of the
consummation of any material transaction contemplated hereby.
ARTICLE VIII. OBLIGATIONS AFTER CLOSING.
8.1 OMEGA Exceptional Practice and the Report Suggestions.
On and after the Closing, Xx. Xxxx agrees to cause the New PC to
implement the suggestions in the Report and the concepts of
OMEGA's Exceptional Practice.
8.2 Books and Records. OMEGA shall permit Xx. Xxxx, his
accountants and attorneys, reasonable access to such books and
records for the purpose of preparing such tax returns of Xx. Xxxx
as may be required after the Closing and for other proper
purposes approved by OMEGA.
8.3 License. Xx. Xxxx shall maintain all licenses
necessary to practice endodontics in the State. Xx. Xxxx shall
not commit or fail to commit any act which would cause Xx. Xxxx
or the New PC to suffer the revocation, suspension or limitation
of Xx. Xxxx'x or the New PC's license.
ARTICLE IX. INDEMNIFICATION.
9.1 Indemnification By Xx. Xxxx. Subject to the
limitations set forth in Section 9.3, Xx. Xxxx agrees to defend,
indemnify and hold OMEGA harmless from and against any damages,
liabilities, losses and expenses (including reasonable counsel
fees) of any kind or nature whatsoever which may be sustained or
suffered by OMEGA based upon a breach of any representation,
warranty or covenant made by Xx. Xxxx in this Agreement or in any
exhibit, certificate, schedule or financial statement delivered
hereunder, or by reason of any claim, action or proceeding
asserted or instituted growing out of any matter or thing covered
by such representations, warranties or covenants.
9.2 Indemnification By OMEGA. Subject to the limitations
set forth in Section 9.3, OMEGA agrees to defend, indemnify and
hold Xx. Xxxx harmless from and against any damages, liabilities,
losses and expenses (including reasonable counsel fees) of any
kind or nature whatsoever which may be sustained or suffered by
Xx. Xxxx based upon a breach of any representation, warranty or
covenant made by OMEGA in this Agreement or in any exhibit,
certificate, schedule or financial statement delivered hereunder,
or by reason of any claim, action or proceeding asserted or
instituted growing out of any matter or thing covered by such
representations, warranties or covenants.
9.3 Exclusions. Notwithstanding Sections 9.1 and 9.2:
(a) no indemnification shall be payable to the extent
any claim is covered by insurance; and
(b) no indemnification shall be payable with respect
to claims asserted more than five (5) years after the Closing.
9.4 Notice: Defense of Claims. Prompt written notice of
each claim for indemnification hereunder shall be given to the
other party, specifying the amount and nature of the claim, and
of any matter which in the opinion of the claimant is likely to
give rise to an indemnification claim. The indemnifying party
shall have the right to participate at its own expense in the
defense of any such matter or its settlement. If, in the opinion
of the indemnified party, its financial condition or business
would not be impaired thereby, such party may authorize the
indemnifying party to take over the defense of such matter so
long as such defense is expeditious. Failure to give notice of a
matter which may give rise to an indemnification claim shall not
affect the rights of any party to collect such claim from the
other party or its transferees in liquidation.
9.5 Payment of Claims; Alternative Dispute Resolution.
Indemnification claims by either party shall be paid or otherwise
satisfied within 30 days after notice thereof is given by the
party seeking indemnification. In the event the indemnifying
party indicates in a writing delivered to the other party that he
or it disputes the nature or amount of the claim, in which event
the dispute upon the election of any party hereto after said
30-day period shall be referred to the American Arbitration
Association to be settled by alternative dispute resolution in
Boston, Massachusetts in accordance with the commercial
alternative dispute resolution rules of said Association, with
the fees and expenses thereof to be borne 50% by OMEGA and 50% by
the New PC and Xx. Xxxx.
ARTICLE X. MISCELLANEOUS.
10.1 Termination.
(a) At any time prior to the Closing, this Agreement may be
terminated (i) by mutual consent of the parties with the approval
of their respective board of directors or members, (ii) by either
if there has been a material misrepresentation, breach of
warranty or breach of covenant by the other party in its
representations, warranties and covenants set forth herein,
(iii) by OMEGA if the conditions stated in Article VI have not
been satisfied at or prior to the Closing, or (iv) by Xx. Xxxx if
the conditions stated in Article VII have not been satisfied at
or prior to the Closing.
(b) [INTENTIONALLY OMITTED]
10.2 Survival of Warranties and Other Obligations. All
representations, warranties, agreements, covenants and
obligations herein or in any schedule, exhibit, certificate or
financial statement delivered by either party to the other party
incident to the transactions contemplated hereby are material,
shall be deemed to have been relied upon by the other party and
shall survive the Closing regardless of any investigation and
shall not merge in the performance of any obligation by either
party hereto.
10.3 Fees and Expenses. Each of the parties will bear its
or his own expenses in connection with the negotiation and the
consummation of the transactions contemplated by this Agreement.
10.4 Notices. Any notice or other communication in
connection with this Agreement shall be deemed to be delivered if
in writing (or in the form of a telegram or facsimile
transmission) addressed as provided below and if either
(a) actually delivered at said address, or (b) in the case of a
letter, three business days shall have elapsed after the same
shall have been deposited in the United States mail, postage
prepaid and registered or certified, return receipt requested, or
sent by reputable overnight courier:
If to Xx. Xxxx, to:
Xxxxxx X. Xxxx, D.D.S.
0000 Xxxxxxxx Xxxxxx - Xxxxx 0
Xxxx, Xxxxxx 00000
If to the OMEGA, to:
Omega Orthodontics, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
and in any case at such other address as the addressee shall have
specified by written notice. All periods of notice shall be
measured from the date of delivery thereof.
10.5 Entire Agreement. This Agreement (including all
exhibits or schedules appended to this Agreement and all
documents delivered pursuant to the provisions of this Agreement,
all of which are hereby incorporated herein by reference)
together with the Management Services Agreement and the Stock
Put/Call Option and Successor Designation Agreement (including
all exhibits and schedules thereto), taken together, constitute
the entire agreement between the parties, and all promises,
representations, understandings, warranties and agreements with
reference to the subject matter hereof and inducements to the
making of this Agreement relied upon by my party hereto, have
been expressed herein or therein.
10.6 Binding Agreement, Successors. This Agreement shall be
binding upon, and shall be enforceable by and inure to the
benefit of, the parties named herein and their respective
successors and assigns; provided, however, that this Agreement
may not be assigned by either of the parties without the prior
written consent of the other party which will not be unreasonably
withheld.
10.7 Confidentiality. As used herein, "Confidential
Information" means any information or data that a party has
acquired from another party that is confidential or not otherwise
available to the public, whether oral or written, including
without limitation any analyses, computations, studies or other
documents prepared from such information or data by or for the
directors, officers, employees, agents or representatives of such
party (collectively, the "Representatives"), but excluding
information or data which (i) became available to the public
other than as a result of such party's violation of this
Agreement, (ii) became available to such party from a source
other than the other party if that source was not bound by a
confidentiality agreement with such other party and such source
lawfully obtained such information or data, or (iii) is required
to be disclosed by applicable law, provided that promptly after
being compelled to disclose any such information or data, the
party being so compelled shall provide prompt notice thereof to
the other party so that such other party may seek a protective
order or other appropriate remedy. Each party covenants and
agrees that it and its Representatives shall keep confidential
and shall not disclose all Confidential Information, except to
its Representatives and lenders who need to know such information
and agree to keep it confidential. Each party shall be
responsible for any breach of this provision by its
Representatives. In the event that the Closing does not occur,
each party will promptly return to the other all copies of such
other party's Confidential Information.
10.8 Governing Law; Severability. This Agreement shall be
deemed a contract made under the laws of the State of Delaware
and, together with the rights and obligations of the parties
hereunder, shall be construed under and governed by the laws of
such state. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability
of any other provision hereof.
10.9 Referrals. Nothing in this Agreement shall be
construed as an offer or payment to the other party or any
affiliate of the other party of any cash or other remuneration
whether directly or indirectly, overtly or covertly, specifically
for patient referrals or for recommending or arranging the
purchase, lease or order of any item or service. The
Consideration to be received upon the Closing represents the fair
market value of the Assets and is not in any way related to or
dependent upon referrals by and between OMEGA and Xx. Xxxx.
10.10 Further Assurances. Following the execution of
this Agreement, Xx. Xxxx and OMEGA each agrees:
(a) to deliver such other instruments of title,
certificates, consents, endorsements, assignments, assumptions
and other documents or instruments, in form reasonably acceptable
to the party requesting the same and its counsel, as may be
reasonably necessary to carry out and/or to comply with the terms
of this Agreement, and the transactions contemplated herein;
(b) to confer on a regular basis with the other, report on
material operational matters and promptly advise the other orally
or in writing of any change or event resulting in or which,
insofar as can reasonably be foreseen could result in, a material
adverse effect on such party or which would cause or constitute a
material breach of any of the representations, warranties or
covenants of such party contained herein; and
(c) to provide the other (or its counsel) promptly with
copies of all filings made by such party with any state or
federal governmental entity in connection with this Agreement or
the transactions contemplated hereby.
10.11 Counterparts; Section Headings; Gender. This
Agreement may be executed, accepted and delivered in any number
of counterparts, but all counterparts shall together constitute
but one and the same instrument. The underlined section headings
are inserted for convenience of reference only and are not to be
construed as part of this Agreement. The use of the masculine or
neuter gender includes each of the other genders.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the date set forth above by their
duly authorized representatives.
/s/ Xxxxxx X. Xxxx D.D.S.
Printed Name: Xxxxxx X. Xxxx, D.D.S.
OMEGA ORTHODONTICS, INC.
By:/s/ Xxxxxx X. Xxxxxxxx
Printed Name: Xxxxxx X. Xxxxxxxx
Its President and Chief Executive Officer
Duly Authorized
Exhibit A
Financial Statement
[XX. XXXX PROVIDE]
Exhibit B
NON-NEGOTIABLE PROMISSORY NOTE
$374,400.00 Acton, California
_________ ___, 1998
FOR VALUE RECEIVED, Omega Orthodontics, Inc., a Delaware
corporation ("Omega"), promises to pay to Xx. Xxxxxx X. Xxxx
("Xx. Xxxx") at 0000 Xxxxxxxx Xxxxxx - Xxxxx 0, Xxxx, Xxxxxx
00000 or other location specified by Xx. Xxxx in writing, Three
Hundred Seventy Four Thousand Four Hundred Dollars ($374,400.00)
together with interest on any and all principal amounts, such
interest to be at the rate of 8.0% per annum and payable monthly
on the first day of each month, beginning with the first month
following the date of this Note.
1. Payments. Payments of principal under this Note shall
be due and payable in 48 equal monthly installments, beginning on
the first day of the first month following the date of this Note.
In any event, the balance of principal remaining unpaid shall be
due and payable on the first day of the 48th month following the
date of this Note.
Payments of interest on the outstanding principal balance of
this Note shall be due and payable on the first day of each of
the first 48 months following the date of this Note. Interest
shall accrue in arrears and shall be computed on the basis of a
360-day year and a 30-day month.
Both principal and interest are payable in lawful money of
the United States of America.
2. Acceleration/Events of Default. At the option of Xx.
Xxxx, the entire unpaid principal balance hereunder with interest
then outstanding shall become immediately due and payable upon
the occurrence of any of the following events of default
(hereinafter "Events of Default") which are not cured in
accordance with the provisions of Section 3: (i) failure to pay
principal when due on this Note; (ii) failure to pay any interest
on this Note 30 days after payment is due; (iii) failure to
perform any other covenant of Omega under this Note, and such
failure continues for 60 days after written notice by the holder;
and (iv) the making of an assignment for the benefit of
creditors, trust mortgage or composition with creditors or other
arrangement of similar import by or the commencement of any
proceedings under any bankruptcy or insolvency law, now or
hereafter enacted, by or against, Omega or any endorser.
3. Omega's Right to Cure. Notwithstanding the foregoing,
Omega shall at minimum have the right: (i) to cure monetary
defaults hereunder or under any instrument, document or
undertaking given or entered into in connection herewith within
15 calendar days after the Event of Default; and (ii) to cure non-
monetary defaults hereunder or under any such instrument,
document or undertaking within 30 calendar days after the Event
of Default, in which event, this Note and the loan evidenced
hereby shall be reinstated. The time periods provided herein for
cure shall be concurrent with and not consecutive to any other
grace periods which may be provided in or with respect to any
obligation having the benefit of this provision.
4. Voluntary Prepayment. Omega may prepay this Note in
whole or in part at any time without penalty or premium, upon
written notice to Xx. Xxxx.
5. Expenses. Omega agrees to pay all expenses, including
reasonable attorney's fees, which Xx. Xxxx may incur in effecting
collection of this Note upon default or at maturity.
6. Delays. Xx. Xxxx shall not, by any act, delay,
omission or otherwise, be deemed to have waived any of his rights
or remedies hereunder unless such waiver be in writing and signed
by Xx. Xxxx. A delay, omission or waiver on one occasion shall
not be deemed a waiver or bar on any future occasion of the same
or any other right.
7. Certain Waivers. Omega hereby (i) waives presentment,
demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or
enforcement of this Note, except as specifically provided herein
with respect to notices of non-monetary default; (ii) waives all
suretyship defenses; and (iii) assents to any extension or
postponement of the time of payment or any other indulgence or
forbearance and to the addition or release of any other party
primarily or secondarily liable.
8. Remedies. Omega hereby acknowledges and agrees that no
remedy of Xx. Xxxx under this Note is intended to be exclusive of
any other remedy, and each and every remedy given hereunder now
or hereafter existing at law or in equity by statute or other
provision of law may be exercised in any order or manner without
waiving rights and may be exercised cumulatively.
9. Notices. Notices to Omega shall be deemed given when
delivered in hand to Omega, or one (1) day after being sent by
receipted commercial, overnight courier or five (5) days after
being mailed by certified mail, postage prepaid, return receipt
requested, to Omega at 0000 Xxxxxx Xxxx Xxxx, Xxxxx, Xxxxxxxxxx
00000 or other address of which Omega shall have notified Xx.
Xxxx in writing.
10. Governing Law. This Note shall be deemed to be a
California instrument, and all rights and obligations hereunder
shall be governed by the laws of the State of California.
INTENTIONALLY LEFT BLANK
This instrument has been duly executed by an officer of
Omega duly authorized, and shall take effect upon the date and
year first above written.
WITNESS: OMEGA ORTHODONTICS, INC.
________________________ By:_________________________
Xxxxxx X. Xxxxxxxx,
President
Exhibit C
Notice
__________________, 1998
[Name and address
of Patient/Account Debtor/Third Party Payors/Others]
Re: Xx. Xxxxxx X. Xxxx, D.D.S.
Ladies and Gentlemen:
I am pleased to inform you that my practice has become
affiliated with Omega Orthodontics, Inc., a nationwide dental
specialty practice management company. My affiliation with
Omega affords me the opportunity to provide my patients with
professional billing, collection and other management systems,
thereby permitting me to continue to focus on providing quality
endodontic care.
Commencing immediately and until further notice from Omega
and myself, I direct you to pay all amounts owing and payable
to Xxxxxx X. Xxxx, D.D.S. and [New PC] in the manner and to the
place specified in any notice Omega sends to you. In addition,
I consent to the provisions of any such notice from Omega to you.
Thank you for your cooperation; should you have any
questions, please contact the undersigned.
Very truly yours,
___________________________
Xxxxxx X. Xxxx, D.D.S.
[New PC]
By _________________________
Xxxxxx X. Xxxx, D.D.S.,
President
Exhibit D
XXXX OF SALE AND ASSIGNMENT
XXXX OF SALE AND ASSIGNMENT
The undersigned, Xxxxxx X. Xxxx, D.D.S., ("Xx. Xxxx") for
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, hereby sells, assigns, transfers,
delivers and conveys to Omega Orthodontics, Inc., a Delaware
corporation, having a usual place of business in Acton,
California ("OMEGA"), all of his right, title and interest in
and to all of the assets of the endodontic practice operated by
Xx. Xxxx (the "Endodontic Practice") at 0000 Xxxxxxxx Xxxxxx,
Xxxxx 0, Xxxx, Xxxxxx 00000, wheresoever situated and whether or
not specifically referred to herein (such assets and rights of
Xx. Xxxx are collectively referred to as the "Assets"), excepting
therefrom the assets listed on Schedule I (the "Excluded
Assets"), attached hereto and made a part hereof, and including
without limitation, the following Assets:
(a) a lease at 0000 Xxxxxxxx Xxxxxx, Xxxxx 0, Xxxx, Xxxxxx
00000 (the "Endodontic Offices"), including all rights and
remedies (the "Lease");
(b) all books, records, machinery and equipment
("Equipment"), used or owned by the Endodontic Practice, and all
other tangible and intangible personal property at or related to
the Endodontic Offices, whether or not located at the Endodontic
Offices, or to the Endodontic Practice conducted therein, whether
or not located at the Endodontic Offices
(c) all leases, licenses, permits, contracts, subleases,
registrations, authorizations, commitments, purchase orders,
contracts to purchase materials, contracts to perform or receive
services (including work in process) and supplies, and all other
agreements (whether written or oral) relating to the Endodontic
Practice listed on the attached Exhibit Y (the "Contracts");
(d) all prepaid claims, prepaid taxes and other prepaid
expense items and deferred charges, credits, advance payments,
security and other deposits made by Xx. Xxxx to any other person
relating to the Endodontic Practice;
(e) any rights of Xx. Xxxx pertaining to any counterclaims,
set-offs or defenses he may have with respect to any of the
liabilities assumed by OMEGA; and
(f) any other rights related in any way whatsoever to the
Endodontic Practice or the Endodontic Offices.
Xx. Xxxx represents that he has good and marketable title in
fee simple to all of the Assets, free of liens and encumbrances.
All of the Assets are in good repair, have been well maintained,
substantially conform with all applicable ordinances, regulations
and zoning or other laws. The Equipment is in good working
order.
OMEGA assumes and agrees to pay, perform and discharge, and
indemnify and hold Xx. Xxxx harmless from and against, the
following obligations and liabilities of Xx. Xxxx, and none
other: (a) obligations and liabilities under the Lease and the
Contracts arising on and after the Closing and any and all
claims, liabilities, losses, costs, damages or expenses
(including reasonable attorneys' fees and expenses) resulting
from or arising out of ownership of the Assets or the operation
and maintenance of the Endodontic Practice, or caused by or
occurring upon the Assets, on and after the Closing (the "Assumed
Liabilities").
The assumption by OMEGA of the Assumed Liabilities shall not
enlarge any rights or remedies of any third party under any
Contract with Xx. Xxxx. OMEGA agrees to indemnify, defend and
hold Xx. Xxxx and his employees, harmless from and against any
and all liability, loss, cost, damage and/or expense (including,
without limitation, reasonable attorneys' fees and costs)
pertaining to the Assumed Liabilities.
OMEGA and Xx. Xxxx intend that OMEGA shall not assume or be
obligated to pay, perform or discharge any of Xx. Xxxx'x
obligations other than the Assumed Liabilities. Except for the
Assumed Liabilities, OMEGA and Xx. Xxxx expressly agree that
OMEGA is acquiring the Assets free and clear of all liens, claims
and encumbrances.
This Xxxx of Sale and Assignment is executed and delivered
in connection with the Affiliation Agreement and Asset Purchase
Agreement entered into by and between Xx. Xxxx and OMEGA dated as
of January 1, 1998.
WITNESS the execution under seal as of this 1st day of
January, 1998.
___________________________
Xxxxxx X. Xxxx
Schedule I
Excluded Assets
[XX. XXXX PROVIDE]
Exhibit Y
List of Contracts
[XX. XXXX PROVIDE]
Exhibit E
Draft Management Services Agreement and
Stock Put/Call Option and Successor Designation Agreement
[DRAFTS ATTACHED]
Schedule 1
Representations and Warranties of
Xx. Xxxx to OMEGA
Xx. Xxxx hereby represents and warrants to OMEGA as follows:
1. The Endodontic Practice. The Assets of the Endodontic
Practice are owned 100% by Xx. Xxxx. Xx. Xxxx has the full
power to conduct business as currently conducted by the
Endodontic Practice and to own and lease the property he purports
to own.
2. Authorization of Transaction. All necessary action has
been taken by Xx. Xxxx to authorize the execution of this
Agreement by Xx. Xxxx, and the delivery and performance of this
Agreement and the transactions contemplated hereby, and this
Agreement is the valid and binding obligation of Xx. Xxxx,
enforceable against Xx. Xxxx in accordance with its terms.
3. Present Compliance with Obligations and Laws. Except as
disclosed on Exhibit X attached to this Schedule, there is not:
(a) a default in the performance of any obligation, agreement or
condition of any debt instrument from Xx. Xxxx which (with or
without the passage of time or the giving of notice) affords to
any person the right to accelerate any material indebtedness or
terminate any right; (b) a default of or breach of (with or
without the passage of time or the giving of notice) any other
contract to which Xx. Xxxx is a party or by which he or the
Assets are bound; or (c) any violation of any law, regulation,
administrative order or judicial order applicable to Xx. Xxxx,
the Endodontic Practice or the Assets.
4. No Conflict of Transaction with Obligations and Laws.
(a) Neither the execution, delivery and performance of this
Agreement, nor the performance of the transactions contemplated
hereby, will: (i) conflict with or constitute (with or without
the passage of time or the giving of notice) a breach of, or
default under, any debt instrument to which Xx. Xxxx is a party,
or give any person the right to accelerate any indebtedness or
terminate any right; (ii) constitute (with or without the passage
of time or giving of notice) a default under or breach of any
other agreement, instrument or obligation to which Xx. Xxxx is a
party or by which he or the Assets are bound; or (iii) result in
a violation of any law, regulation, administrative order or
judicial order applicable to Xx. Xxxx, the Endodontic Practice or
the Assets.
(b) Except as disclosed on the attached Exhibit X to this
Schedule, the execution, delivery and performance of this
Agreement and the transactions contemplated hereby by Xx. Xxxx do
not require the consent, waiver, approval, authorization,
exemption of or giving of notice to any governmental authority.
5. Investigations and Licenses.
(a) Xx. Xxxx has all necessary licenses to practice
endodontics in the State.
(b) Xx. Xxxx is not subject to any investigation, whether
threatened, current or pending, under which Xx. Xxxx may be
required to forfeit or suffer the revocation, suspension or
limitation of Xx. Xxxx'x license to practice endodontics and Xx.
Xxxx is not subject to any investigation, whether threatened,
current or pending by a commercial third-party payor.
6. Financial Statement. Attached as Exhibit A to the
Agreement is the Financial Statement of the Endodontic Practice.
To the best knowledge of Xx. Xxxx, the Financial Statement is
complete and correct and fairly presents in all material respects
the financial position of the Endodontic Practice as at the date
of such statement and the results of its operations for the
period then ended, in accordance with generally accepted
accounting principles consistently applied throughout the periods
covered thereby for the periods covered thereby.
7. Property; Liens; Condition.
(a) Except as set forth on Exhibit X to this Schedule, Xx.
Xxxx has good and marketable title in fee simple to all of the
Assets, including without limitation, all personal property,
machinery and equipment used or owned by the Endodontic Practice
(the "Equipment"), free of liens and encumbrances (the
"Property"). All the Property owned or leased by Xx. Xxxx is in
good repair, has been well maintained, substantially conforms
with all applicable ordinances, regulations and zoning or other
laws. The Equipment is in good working order.
(b) No other practice or person owns any of the assets
necessary for the operation of the Endodontic Practice. The
Endodontic Practice does not operate any of its practice through
any other entities or persons.
9. Payment of Taxes. Xx. Xxxx has filed all federal, state
and local income, excise or franchise tax returns, real estate
and personal property tax returns, sales and use tax returns and
other tax returns required to be filed and has paid all taxes
owing except taxes which have not yet accrued or otherwise become
due for which adequate provision has been made in the Financial
Statement. All transfer, excise or other taxes payable by reason
of the purchase of the Assets pursuant to this Agreement shall be
paid or provided for by Xx. Xxxx after the Closing out of the
Consideration to be received upon consummation of this Agreement.
10. Absence of Undisclosed Liabilities and Changes.
(a) As of the date of the Financial Statement, Xx. Xxxx had
no liabilities of any nature, whether accrued, absolute,
contingent or otherwise (including without limitation liabilities
as guarantor or otherwise with respect to obligations of others,
or liabilities for taxes due or then accrued or to become due)
relating to the Endodontic Practice, except (i) liabilities
stated or adequately reserved against on the Financial Statement,
(ii) liabilities not in excess of $5,000 arising in the ordinary
course of business since the date of the Financial Statement, and
(iii) liabilities disclosed in Exhibit X to this Schedule. There
is no fact which materially adversely affects, or may in the
future (so far as can now be reasonably foreseen) materially
adversely affect, the business, properties, operations or
condition of the Endodontic Practice which has not been
specifically disclosed herein or in Exhibit X to this Schedule.
(b) Except as disclosed in Exhibit X to this Schedule,
since the date of the Financial Statement there has not been:
(i) any change in the financial condition, properties,
assets, liabilities, business or operations of Xx. Xxxx or the
Endodontic Practice, which change by itself or in conjunction
with all other such changes, whether or not arising in the
ordinary course of business, has been materially adverse with
respect to Xx. Xxxx or the Endodontic Practice;
(ii) any mortgage, encumbrance or lien placed on any
of the Property, or the property subject to any lease, or which
remains in existence on the date hereof or at the time of
Closing; or
(iii) any obligation or liability incurred by Xx. Xxxx
relating to the Endodontic Practice other than obligations and
liabilities incurred in the ordinary course of business and
disclosed on Exhibit X attached to this Schedule.
11. Litigation. Except for matters described on Exhibit X
to this Schedule, there is no action, suit, claim, proceeding or
investigation pending or, to the knowledge of Xx. Xxxx,
threatened against the Endodontic Practice or Xx. Xxxx, at law or
in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality or governmental inquiry pending or, to the
knowledge of Xx. Xxxx, threatened against or involving Xx. Xxxx
or the Endodontic Practice, and there is no basis for any of the
foregoing, and there are no outstanding court orders, court
decrees, or court stipulations to which the Endodontic Practice
or Xx. Xxxx is a party which question this Agreement or affect
the transactions contemplated hereby, or which will result in any
materially adverse change in the business, properties,
operations, prospects, assets or in the condition, financial or
otherwise, of Xx. Xxxx or the Endodontic Practice.
12. Insurance. Xx. Xxxx has possessed [adequate]
occurrence professional liability coverage for the five (5) years
prior to the date of this Agreement protecting the Endodontic
Practice and Xx. Xxxx from any professional malpractice liability
that might arise because of the Endodontic Practice's or Xx.
Xxxx'x practice activities over the preceding five (5) years.
Prior to the Closing, the New PC shall have obtained and shall
continue to maintain, at its cost, Occurrence Medical Malpractice
Liability Insurance for Xx. Xxxx and the New PC. The Endodontic
Practice possesses adequate insurance coverage for its Property.
EXHIBIT X
Exceptions to Representations and
Warranties of Xx. Xxxx to
OMEGA
NONE
Schedule 2
Representations and Warranties of
OMEGA to Xx. Xxxx
OMEGA hereby represents and warrants to Xx. Xxxx as follows:
1. Organization of OMEGA. That it is a corporation duly
organized, validly existing and in good standing under the laws
of Delaware with full corporate power to own or lease its
properties and to conduct its business in the manner and in the
places where such properties are owned or leased or such business
is conducted by it.
2. Authorization of Transaction. All necessary action,
corporate or otherwise, has been taken by it to authorize the
execution, delivery and performance of this Agreement, and this
Agreement is a valid and binding obligation of it enforceable
against it in accordance with its terms, subject to laws of
general application affecting creditor's rights generally.
3. Litigation. There is no litigation pending or, to its
knowledge, threatened against it which would prevent or hinder
the consummation of the transactions contemplated by this
Agreement.
