EXHIBIT 2.14
2
AFFILIATION AGREEMENT AND ASSET PURCHASE AGREEMENT
THIS AFFILIATION AGREEMENT AND ASSET PURCHASE AGREEMENT is
entered into as of the ____day of _________________ 1997, by and
among Omega Orthodontics, Inc., a Delaware corporation ("OMEGA")
and Xxxxxxx X. Xxxxx, D.D.S. ("Xx. Xxxxx"), who is duly licensed
to practice orthodontics in the Commonwealth of Virginia (the
"State") and Xxxxxxx X. Xxxxx, D.D.S., Inc., a Virginia
professional corporation (the "PC").
RECITALS
A. OMEGA provides professional management and marketing
services to orthodontic 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 orthodontic practices, and which
services are provided directly or indirectly through management
services organizations.
B. Xx. Xxxxx owns all of the issued and outstanding shares
of the PC.
C. The PC owns and operates an orthodontic practice (the
"Orthodontic Practice") with offices located at offices located
at 00000 Xxxx Xxxxx Xxxxxx Xxxx, Xxxxx X, Xxxx Xxxxx, Xxxxxxxx
00000 (the "Orthodontic Office") and furnishes orthodontic care
to the general public. As the owner and operator of the
Orthodontic Practice, the PC is the owner of a leasehold interest
in a lease of the Orthodontic Office, the owner of certain
personal property located at the Orthodontic Office, a party to
certain contracts relating to the Orthodontic Practice and the
beneficiary of other rights related to the Orthodontic Practice.
D. OMEGA has conducted a review of the Orthodontic
Practice, and has reviewed the Orthodontic Practice's unaudited
financial statement (the "Financial Statement"), a copy of which
is attached hereto as Exhibit A . Based on its review of the
Orthodontic Practice and the Financial Statement, OMEGA has
issued the report (the "Report"), a copy of which has been
furnished to Xx. Xxxxx. Xx. Xxxxx has reviewed the Report and
OMEGA's literature, and agrees with the Report and the concepts
of OMEGA's Exceptional Practice.
E. Subject to the terms and conditions of this Agreement,
OMEGA, Xx. Xxxxx and the PC have determined that it is in the
best interests of each for OMEGA to purchase from the PC certain
of the assets comprising the Orthodontic 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 1.
ASSET PURCHASE
a. Purchase; Consideration and Payment. At the Effective
Time (as hereinafter defined) and subject to the terms and
conditions hereinafter set forth, the PC agrees to sell,
transfer, convey, assign and deliver to OMEGA, and OMEGA agrees
to purchase and acquire from the PC and take delivery of, for the
consideration hereinafter provided, all of the PC's right, title
and interest in and to all of the assets of the Orthodontic
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 the PC 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:
i. a lease of the Orthodontic Office, including all
rights and remedies (the "Lease");
ii. all books, records, machinery and equipment used
or owned by the Orthodontic Practice and all other tangible and
intangible personal property at or related to the Orthodontic
Office, whether or not located at the Orthodontic Office, or to
the Orthodontic Practice conducted therein, whether or not
located at the Orthodontic Office;
iii. all Contracts (as defined below in Section 2.1);
iv. all prepaid claims, prepaid taxes and other
prepaid expense items and deferred charges, credits, advance
payments, security and other deposits made by the PC to any other
person relating to Orthodontic Practice;
v. any rights of Xx. Xxxxx or the PC pertaining to
any counterclaims, set-offs or defenses he or it may have with
respect to any of the liabilities assumed by OMEGA; and
vi. any other rights related in any way whatsoever to
the Orthodontic Practice or the Orthodontic Office;
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 Effective Time), without any
further action on the part of any holder thereof, for an
aggregate consideration (the "Consideration") of:
(a) Two Hundred Thousand Dollars ($200,000) in
cash (the "Cash Component");
(b) Sixty-Five Thousand Dollars ($65,000) to be
represented by a promissory note (the "Purchase Note") payable to
Xx. Xxxxx (the "Note Component") in the form attached hereto as
Exhibit B; and
(c) One Hundred and Twenty Thousand Dollars
($120,000) to be represented by issuance to the PC of shares of
OMEGA common stock (the "OMEGA Stock") based upon a value per
share equal to 80% of the average daily closing sales price per
share of the OMEGA common stock for the five (5) trading days
ending on the Friday preceding the Closing Date which shall
thereupon be issued to the PC, fully paid and nonassessable (the
"Stock Component").
b. Adjustment; Allocation.
i. The Consideration is based on the value of the
Assets as determined by OMEGA from the information set forth in
the Financial Statement.
ii. 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 Orthodontic Practice which
have accrued prior to the Effective Time and which remain unpaid
as of such time (the "Accounts Payable").
iii. 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.
iv. The parties hereby agree to allocate the
Consideration among the Assets in accordance with Section 1060 of
the Internal Revenue Code of 1986, as amended, 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.
c. Time and Place of Closing. The closing of the
transactions contemplated hereby (herein called the "Closing")
shall be held immediately before the Effective Time at the
offices of Xxxxxx & Xxxxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000 on ___________, 1997, or at such
other place, date or time as may be fixed by mutual agreement of
the parties.
d. Delivery of Records, Contracts; Transfer of Accounts.
At the Closing Xx. Xxxxx and the PC shall deliver or cause to be
delivered to OMEGA:
i. All of the Assets, including without limitation,
books, records, leases, contracts, employment agreements, non-
compete agreements, commitments and rights relating to the
Orthodontic Practice, with such rights of transfer so as to allow
OMEGA of the full benefit of the same.
ii. 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. Xxxxx (and
any successor) as a co-insured or otherwise assigning to OMEGA
and its successor the full benefits thereof.
iii. Any documentation necessary for the transfer of
any of the Assets, including the Xxxx of Sale, together with any
warranty or other documentation. Xx. Xxxxx shall cooperate with
OMEGA in the transfer of any utility accounts for the Orthodontic
Office.
ARTICLE 2.
ASSUMED LIABILITIES
a. Contracts. For purposes of this Article II the term
"Contracts" shall only mean only those licenses, permits,
contracts, leases, subleases, permits, 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
Orthodontic Practice and are set forth on Exhibit Y attached
hereto.
b. Transfer. At the Closing, Xx. Xxxxx and the PC shall
assign and transfer or cause to be assigned and transferred to
OMEGA all of Xx. Xxxxx'x and the PC's 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. Xxxxx
and the PC under the Contracts accruing on and after the
Effective Time; 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. Xxxxx, the PC 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.
c. Assumption of Liabilities by OMEGA. At the Closing,
Xx. Xxxxx and the PC shall assign to OMEGA, and OMEGA shall
assume and pay, perform and discharge, and indemnify and hold Xx.
Xxxxx and the PC harmless from and against, the following
obligations and liabilities of Xx. Xxxxx and the PC, and none
other (collectively, the "Assumed Liabilities"): (i) all
obligations and liabilities on the part of the PC under the
Contracts arising on and after the Effective Time; and (ii)
liability under that certain working capital loan advanced by Mid
Am Credit Corp., Account Number 26864 to Xx. Xxxxx, provided that
OMEGA's obligations hereunder shall be limited to a loan balance
not to exceed $78,000 and OMEGA shall be obligated to repay such
loan only in the minimum installments and at such times as are
required pursuant to the terms of such loan.
d. 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. Xxxxx or the PC. OMEGA agrees
to indemnify, defend and hold Xx. Xxxxx and the PC and his or its
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.
e. No Other Liabilities Assumedtc{seq level0 \c
\*arabic|00.4 No Other Liabilities Assumed". OMEGA, Xx. Xxxxx
and the PC intend that OMEGA shall not assume or be obligated to
pay, perform or discharge any of Xx. Xxxxx'x and the PC's
obligations other than the Assumed Liabilities specified in
Section 2.3. Except for the Assumed Liabilities specified in
Section 2.3, OMEGA, Xx. Xxxxx and the PC expressly agree OMEGA is
acquiring the Assets free and clear of all liens, claims of any
kind, encumbrances and restrictions.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
The Representations and Warranties of Xx. Xxxxx and the PC
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 4.
COVENANTS OF XX. XXXXX AND THE PC
Xx. Xxxxx and the PC hereby covenant and agree with OMEGA as
follows:
a. Conduct of Business. Between the date of this
Agreement and the Closing, Xx. Xxxxx and the PC will do the
following unless OMEGA shall otherwise consent in writing:
i. conduct the PC's business only in the ordinary
course of business, and refrain from changing or introducing any
method of management or operations except in the ordinary course
of business and consistent with prior practices;
ii. 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;
iii. refrain from incurring any contingent or fixed
obligations or liabilities except those that are usual and normal
in the ordinary course of business;
iv. use their best efforts to keep available the
present employees of the PC and to preserve the goodwill of all
patients, suppliers, and others having business relations with
Xx. Xxxxx and the PC;
v. not commit or fail to commit any act which would
cause Xx. Xxxxx or the PC to suffer the revocation, suspension or
limitation of Xx. Xxxxx'x or the PC's license; and .
vi. permit OMEGA and its authorized representatives to
have full access to all of Xx. Xxxxx'x properties, assets,
records, tax returns, records, contracts and documents and those
of the PC and furnish to OMEGA or its authorized representatives
such financial and other information with respect to his and the
PC's business or properties as OMEGA may from time to time
reasonably request.
b. Authorization from Others. Prior to the Closing, Xx.
Xxxxx and the PC will have obtained all assignments,
authorizations, consents and permits of others required to permit
the consummation by Xx. Xxxxx and the PC of the transactions
contemplated by this Agreement.
c. 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, Xx. Xxxxx and the PC shall give detailed
written notice thereof to OMEGA and shall use their best efforts
to prevent or promptly remedy the same.
d. Consummation of Agreement. Xx. Xxxxx and the PC shall
use their best efforts to perform and fulfill all conditions and
obligations on Xx. Xxxxx'x or the PC's 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 5.
COVENANTS OF OMEGA
OMEGA hereby covenants and agrees with Xx. Xxxxx and the PC
as follows:
a. 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.
b. 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 6.
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.
a. Representations; Warranties; Covenants. Each of the
representations and warranties of Xx. Xxxxx and the PC contained
in Schedule 1 shall be true and correct as though made on and as
of the Closing, and Xx. Xxxxx and the PC shall have performed all
of their obligations hereunder which by the terms hereof are to
be performed on or before the Closing.
b. PC. Xx. Xxxxx shall have furnished to OMEGA: (i) a
certificate of the State Secretary of State as to the legal
existence and good standing of the PC as a professional
corporation; and (ii) a copy of the resolutions adopted by the
board of directors and stockholders of the PC authorizing and
approving the Management Services Agreement and the Stock
Put/Call Option and Successor Designation Agreement.
c. Other Agreements. Xx. Xxxxx shall have caused the 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
collectively attached hereto as Exhibit E .
d. 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.
e. Notices. Xx. Xxxxx shall, at OMEGA's 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 notices
substantially in the form collectively attached hereto as Exhibit
C.
f. Financial Condition. The financial condition of the
Orthodontic 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 Orthodontic Practice, nor any material loss or
damage to the Assets, whether or not insured, which materially
affects the ability of the Orthodontic Practice to conduct its
business. Xx. Xxxxx 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.
g. Due Diligence. OMEGA, acting in good faith and in its
sole discretion, shall be reasonably satisfied with the results
of its "Due Diligence" on the PC 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 business of the Orthodontic Practice or in the
condition or prospects (financial or otherwise) of the Assets
from the information provided prior to the date hereof. As used
herein, Due Diligence shall mean, without limitation, the results
of any matters (financial or otherwise) related to, or otherwise
deemed material by OMEGA, regarding the PC and Xx. Xxxxx,
including without limitation location of the Orthodontic Office
and its demographics, the leases, the Equipment, insurance,
licensing, malpractice issues, liabilities, compliance with laws
and regulations and health surveys.
ARTICLE 7.
CONDITIONS TO OBLIGATIONS OF XX. XXXXX AND THE PC
The obligations of Xx. Xxxxx and the PC 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.
a. 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 each of OMEGA shall have performed all of its obligations
hereunder which by the terms hereof are to be performed on or
before the Closing.
b. Other Agreements. OMEGA shall have executed and
delivered to Xx. Xxxxx and the 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
collectively attached hereto as Exhibit E.
c. 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.
Xxxxx and the PC is likely to result in the restraint or
prohibition of the consummation of any material transaction
contemplated hereby.
ARTICLE 8.
OBLIGATIONS AFTER CLOSING
a. OMEGA Exceptional Practice and the Report Suggestions.
On and after the Closing, Xx. Xxxxx agrees to cause the PC to
implement the suggestions in the Report and the concepts of
OMEGA's Exceptional Practice.
b. Books and Records. OMEGA shall permit Xx. Xxxxx, his
accountants and attorneys, reasonable access to books of the PC
and records for the purpose of preparing such tax returns of Xx.
Xxxxx as may be required after the Closing and for other proper
purposes approved by OMEGA.
c. License. Xx. Xxxxx shall maintain all licenses
necessary to practice orthodontics in the State. Xx. Xxxxx shall
not commit or fail to commit any act which would cause Xx. Xxxxx
or the PC to suffer the revocation, suspension or limitation of
Xx. Xxxxx'x or the PC's license.
ARTICLE 9.
INDEMNIFICATION.
a. Indemnification By Xx. Xxxxx and the PC. Subject to
the limitations set forth in Section 9.3, Xx. Xxxxx and the PC
jointly and severally agree to defend, indemnify and hold OMEGA
harmless from and against any damages, liabilities, losses and
expenses (including reasonable attorneys' 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. Xxxxx or the PC 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. OMEGA may at its
option recover such indemnification claims by OMEGA by set-off
against amounts of principal and interest due under the Purchase
Note, but shall not be required to recover said claims in such
manner and may proceed against Xx. Xxxxx, the PC and its
transferees in liquidation at any time or times for recovery of
indemnification claims.
b. Indemnification By OMEGA. Subject to the limitations
set forth in Section 9.3, OMEGA agrees to defend, indemnify and
hold Xx. Xxxxx harmless from and against any damages,
liabilities, losses and expenses (including reasonable attorneys'
fees) of any kind or nature whatsoever which may be sustained or
suffered by Xx. Xxxxx 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.
c. Exclusions. Notwithstanding Sections 9.1 and 9.2:
i. no indemnification shall be payable to the extent
any claim is covered by insurance; and
ii. no indemnification shall be payable with respect
to claims asserted more than five (5) years after the Closing.
d. 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.
e. Payment of Claims; Alternative Dispute Resolution.
Indemnification claims by OMEGA may be paid or otherwise
satisfied as an offset against the Purchase Note as set forth
under Section 9.1, and, in the alternative or after any such
offset, the indemnification claims (or any balance thereof) shall
be paid or otherwise satisfied by Xx. Xxxxx and the PC, or the
PC's transferees in liquidation, within 30 days after notice
thereof is given by OMEGA. In the event Xx. Xxxxx or the PC
indicates in a writing delivered to OMEGA that he or it disputes
the nature or amount of the claim, 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 Los Angeles, California 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 Xx. Xxxxx and the PC.
ARTICLE 10.
MISCELLANEOUS
a. Termination.
i. At any time prior to the Closing, this Agreement
may be terminated: (i) by mutual consent of OMEGA and the PC,
with the approval of their respective boards of directors or
members, (ii) by either OMEGA or Xx. Xxxxx and the PC 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. Xxxxx if the conditions
stated in Article VII have not been satisfied at or prior to the
Closing.
ii. Upon any such termination, all obligations of the
parties hereunder shall terminate without any further liability
of either party to the other, except that each party shall remain
obligated in respect of the provisions of Section 10.3 and 10.7
which shall survive any such termination.
b. 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.
c. 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.
d. 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. Xxxxx or the PC, to:
Xxxxxxx X. Xxxxx, D.D.S.
00000 Xxxx Xxxxx Xxxxxx Xxxx, Xxxxx X
Xxxx Xxxxx, Xxxxxxxx 00000
If to 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.
e. 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 any party hereto, have
been expressed herein or therein.
f. 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 any of the parties without the prior
written consent of all the other parties.
g. 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 any 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.
h. 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.
i. 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 consummation of the Merger
represents the fair market value of the Orthodontic Practice and
is not in any way related to or dependent upon referrals by and
between OMEGA and Xx. Xxxxx or the PC .
j. Further Assurances. Following the execution of this
Agreement, Xx. Xxxxx and the PC, on the one hand, and OMEGA, on
the other hand, each agrees:
i. 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;
ii. 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
iii. to provide the other (or its counsel) promptly
with copies of all filings made by such party with any state or
federal governmental agency in connection with this Agreement or
the transactions contemplated hereby.
k. 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.
XXXXXXX X. XXXXX, D.D.S., INC.
By: /s/ Xxxxxxx X. Xxxxx, D.D.S.
Xxxxxxx X. Xxxxx, D.D.S.,
President
/s/ Xxxxxxx X. Xxxxx, D.D.S.
Xxxxxxx X. Xxxxx, D.D.S.
OMEGA ORTHODONTICS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Its: President and Chief
Executive Officer
Duly Authorized
Exhibit A
Financial Statement
Exhibit B
Purchase Note
Exhibit C
Notices
Exhibit D
Xxxx of Sale and Assignment
XXXX OF SALE AND ASSIGNMENT
The undersigned, Xxxxxxx X. Xxxxx, D.D.S., Inc. (the "PC")
for good and valuable consideration the receipt 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 the assets of the
orthodontic practice owned and operated by the PC ("the
Orthodontic Practice") at 00000 Xxxx Xxxxx Xxxxxx Xxxx, Xxxxx X,
Xxxx Xxxxx, Xxxxxxxx 00000, wheresoever situated and whether or
not specifically referred to herein (such assets and rights of
the PC 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 assets listed on Schedule II and the
following assets:
(a) a lease at 00000 Xxxx Xxxxx Xxxxxx Xxxx, Xxxxx X, Xxxx
Xxxxx, Xxxxxxxx 00000, ("Orthodontic Office"); including all
rights and remedies (the Lease").
(b) all machinery and equipment ("Equipment"), books and
records used or owned by the Orthodontic Practice and all other
tangible and intangible personal property at or related to the
Orthodontic Office, whether or not located at the Orthodontic
Office, or to the Orthodontic Practice conducted therein, whether
or not located at the Orthodontic Office;
(c) all contracts, licenses, permits, registrations,
authorizations, leases, subleases, 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 Orthodontic
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 the PC to any other person
relating to Orthodontic Practice; .
(e) any rights of Xxxxxxx X. Xxxxx, D.D.S. ("Xx. Xxxxx") or
the PC pertaining to any counterclaims, set-offs or defenses Xx.
Xxxxx or the PC may have with respect to any of the liabilities
assumed by OMEGA; and
(f) any other rights related in any way whatsoever to the
Orthodontic Practice or the Orthodontic Office.
The PC represents that it has good and marketable title in
fee simple to all of the Assets, free and clear of liens and
encumbrances, restrictions or claims of any kind.. 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 the PC and Xx. Xxxxx harmless from and
against, the following obligations and liabilities of the PC and
Xx. Xxxxx, and none other: (a) obligations and liabilities under
the Lease and the Contracts arising on and after the Effective
Time; and (b) liability under that certain working capital loan
advanced by Mid Am Credit Corp., Account Number 26864 to Xx.
Xxxxx, provided that OMEGA's obligations hereunder shall be
limited to a loan balance not to exceed $78,000 and OMEGA shall
be obligated to repay such loan only in the minimum installments
and at such times as are required pursuant to the terms of such
loan.
The assumption by OMEGA of the Assumed Liabilities shall not
enlarge any rights or remedies of any third party under any
Contract with Xx. Xxxxx or the PC. OMEGA agrees to indemnify,
defend and hold Xx. Xxxxx and the PC and his or its 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, Xx. Xxxxx and the PC, intend that OMEGA shall not
assume or be obligated to pay, perform or discharge any of Xx.
Xxxxx'x or the PC's obligations other than the Assumed
Liabilities. Except for the Assumed Liabilities, OMEGA, Xx.
Xxxxx and the PC, expressly agree OMEGA is acquiring the Assets
free and clear of all liens, claims of any kind, encumbrances,
and restrictions.
This Xxxx of Sale and Assignment is executed and delivered
in connection with an Affiliation Agreement and asset Purchase
Agreement entered into by and between Xx. Xxxxx and the PC, on
the one hand, and OMEGA, on the other hand, dated ____________,
1997.
WITNESS the execution under seal this _____ day of ____,
1997.
XXXXXXX X. XXXXX, D.D.S., INC.
By:________________________________
____
Xxxxxxx X. Xxxxx, D.D.S.,
President
Schedule I
Excluded Assets
N/A
Schedule II
Included Assets
The included assets are listed and described in the following 27
page list of items located at the Orthodontic Offices.
EXHIBIT Y
List of Contracts
That certain lease by and between Xxxxxx X. Xxx, DDS, as tenant
and Transcontental Realty Investors, Inc., as Landlord, dated
June 30, 1993, pertaining to the premises located in The Forum,
00000-X Xxxx Xxxxx Xxxxxx, Xxxx xxxxx, Xxxxxxxx 00000.
EXHIBIT E
Draft Management Services Agreement and
Stock Put/Call Option and Successor Designation Agreement
SCHEDULE 1
Representations and Warranties of
Xx. Xxxxx and the PC to Omega
Xxxxxxx X. Xxxxx, D.D.S. ("Xx. Xxxxx ") and Xxxxxxx X.
Xxxxx, D.D.S., Inc., a Virginia corporation (the "PC") hereby
represent and warrant to Omega Orthodontics, Inc., a Delaware
corporation ("OMEGA") as follows: (all capitalized terms used
herein and not otherwise defined herein shall have the respective
meanings given to such terms in the Affiliation Agreement and
Asset Purchase Agreement, entered into as of ______________,
1997, by and between Xx. Xxxxx, the PC and OMEGA ("the
Agreement")).
1. Organization. The PC is duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Virginia.
2. The Orthodontic Practice. The Assets of the
Orthodontic Practice are owned 100% by the PC. The PC has the
full power to conduct business as currently conducted by the
Orthodontic Practice and to own and lease the property it
purports to own or lease, as the case may be. All of the
outstanding stock of the PC is owned by Xx. Xxxxx, free and clear
of all liens, claims, encumbrances or other restrictions.
3. Authorization of Transaction. All necessary action has
been taken by Xx. Xxxxx to authorize the execution of the
Agreement by Xx. Xxxxx and the PC, and the delivery and
performance of this Agreement and the transactions contemplated
thereby, and the Agreement is the valid and binding obligation of
Xx. Xxxxx and the PC, enforceable against Xx. Xxxxx and the PC in
accordance with its terms.
4. 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 by Xx. Xxxxx or the
PC 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. Xxxxx or the PC is a
party or by which the PC's assets are bound; or (d) any violation
of any law, regulation, administrative order or judicial order
applicable to Xx. Xxxxx, or his or the PC's business or assets.
5. No Conflict of Transaction With Obligations and Laws.
(a) Neither the execution, delivery and performance of
the Agreement, nor the performance of the transactions
contemplated thereby, 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. Xxxxx or
the PC 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. Xxxxx or the PC is a party or by which the PC's assets
are bound; or (iv) result in a violation of any law, regulation,
administrative order or judicial order applicable to Xx. Xxxxx or
the PC, or either of their business or 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. Xxxxx
and the PC do not require the consent, waiver, approval,
authorization, exemption of or giving of notice to any
governmental authority.
6. Investigations and Licenses.
(a) Xx. Xxxxx and the PC have all necessary licenses
to practice orthodontics in the State.
(b) Neither Xx. Xxxxx nor the PC is subject to any
investigation, whether threatened, current or pending, under
which Xx. Xxxxx or the PC may be required to forfeit or suffer
the revocation, suspension or limitation of Xx. Xxxxx'x license
to practice orthodontics and Xx. Xxxxx is not subject to any
investigation, whether threatened, current or pending by a
commercial third-party payor.
7. Financial Statement. Attached as Exhibit A to the
Agreement is the Financial Statement of the Orthodontic Practice.
To the best knowledge of Xx. Xxxxx and the PC, the Financial
Statement is complete and correct and fairly presents in all
material respects the financial position of the Orthodontic
Practice 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.
8. Property; Liens; Condition.
(a) Except as set forth on Exhibit X to this Schedule,
the PC has good and marketable title in fee simple to all of the
Assets, including without limitation, all real and personal
property, machinery and equipment used or owned by the
Orthodontic Practice (the "Equipment"), free and clear of liens,
encumbrances, restrictions or claims of any kind (the
"Property"). All the Property owned or leased by the PC 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 person owns any of the assets necessary
for the operation of the Orthodontic Practice. The Orthodontic
Practice does not operate any of its practice through any other
entities or persons.
9. Payment of Taxes. Xx. Xxxxx and the PC have 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 Assets purchased pursuant to the
Agreement shall be paid or provided for by Xx. Xxxxx and the PC
after the Closing out of the Consideration to be received upon
consummation of the Agreement.
10. Absence of Undisclosed Liabilities and Changes.
(a) As of the date of the Financial Statement, neither
Xx. Xxxxx nor the PC had any 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 Orthodontic 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, 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 Orthodontic
Practice which has not been specifically disclosed in the
Financial Statement 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 the PC
or the Orthodontic 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 the PC or the Orthodontic 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 will remain in
existence at the time of Closing; or
(iii) any obligation or liability incurred by
Xx. Xxxxx or the PC relating to the Orthodontic 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 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. Xxxxx, threatened against or
involving Xx. Xxxxx, the PC or the Orthodontic 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 Orthodontic Practice, the PC or Xx. Xxxxx is a party
which question the Agreement or affect the transactions
contemplated thereby, 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. Xxxxx, the PC or the Orthodontic Practice.
12. Insurance. Xx. Xxxxx and the PC have possessed
adequate occurrence professional liability coverage for the five
(5) years prior to the date of the Agreement protecting the
Orthodontic Practice, the PC and Xx. Xxxxx from any professional
malpractice liability that might arise because of the Orthodontic
Practice's, the PC's or Xx. Xxxxx'x practice activities over the
preceding five (5) years. Prior to the Closing, the PC shall
have obtained and shall continue to maintain, at its cost,
Occurrence Medical Malpractice Liability Insurance for Xx. Xxxxx
and the PC. The Orthodontic Practice possesses adequate
insurance coverage for its Property.
EXHIBIT X
Exceptions to Representations and
Warranties of Xx.Xxxxx, the PCc and
Orthodontic Practice to Omega
N/A
SCHEDULE 2
Representations and Warranties of
Omega to Xx. Xxxxx and the PC
Omega Orthodontics, Inc., ("OMEGA") hereby represents and
warrants to Xxxxxxx X. Xxxxx, D.D.S. ("Xx. Xxxxx") and Xxxxxxx X.
Xxxxx, D.D.S., Inc., a Virginia professional corporation (the
PC") 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 the Affiliation Agreement
and Asset Purchase Agreement, entered into as of ___________,
1997, by and between OMEGA, Xx. Xxxxx, and the PC (the
"Agreement"), and the 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 the
Agreement.
