AFFILIATION AGREEMENT AND ASSET PURCHASE AGREEMENT
THIS AFFILIATION AGREEMENT AND ASSET PURCHASE AGREEMENT is entered into as of
the 1st day of August, 1998, by and between Omega Orthodontics, Inc., a Delaware
corporation ("OMEGA" or "Surviving Entity"), and Xxxxxx X. Xxxx, D.D.S., M.S.
("Xx. Xxxx"), who is duly licensed to practice endodontics in the state of
Oregon (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 X.X. Xxxxxxxxxx Xxxxxxxxx, 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, excepting those assets listed on
Schedule 1 and further excepting those rights and obligations that
cannot legally or ethically be held by anyone other than a licensed
dentist or endodontist under applicable laws or ethical rules;
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) Two Hundred Fifty Five Thousand Four Hundred Forty One Dollars
($255,441) in cash (the "Cash Component");
(ii) Two Hundred Ninety Three Thousand Three Hundred Thirty Five
Dollars ($293,335) 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) Two Hundred Ninety Three Thousand Three Hundred Thirty Five
Dollars ($293,335) 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 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 effective date of this
Agreement and the Management Services Agreement between Xx. Xxxx and
OMEGA) 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 gross income 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 1:00pm EDT on May 1, 1998
at such place, as may be fixed by mutual agreement of the parties.
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 used his best
efforts to obtain all assignments, authorizations, consents and permits of
others required to permit the consummation by Xx. Xxxx of the transactions
contemplated by this Agreement. In the event any necessary authorizations have
not been received, Xx. Xxxx shall inform Omega thereof and the parties shall
meet and mutually resolve such issues.
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.
5.3 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,
OMEGA shall give detailed written notice thereof to and shall use his best
efforts to prevent or promptly remedy the same.
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.
7.6 Financial Condition. The financial condition of OMEGA shall not be
materially adversely different from the Financial Statement (10-K) filed by
OMEGA with the SEC. During the period from the date of the Financial Statement
(10-K) to the Closing, there shall not have been any material adverse change in
the financial condition, results of operations, business or prospects of OMEGA,
nor any material loss or damage to the Assets, whether or not insured, which
materially affects the ability of OMEGA to conduct its business.
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 and the Endodontic Practice as may be
reasonably requested after the Closing and for other proper purposes reasonably
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.
8.4 OMEGA hereby grants to Xx. Xxxx appropriate "piggyback" registration rights
so that in the event OMEGA registers any previously unregistered OMEGA stock
OMEGA shall cause any unregistered stock held by Xx. Xxxx to be similarly
registered.
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 Oregon 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.
9.6 Notwithstanding anything to the contrary contained in this Agreement, or any
Schedule or Exhibit hereto, in no event shall Xx. Xxxx, the New PC, OMEGA, the
MSO its officers, directors or employees be liable for any form of indirect,
special, incidental or consequential damages, whether such damages arise in
contract or tort, irrespective of fault, negligence or strict liability.
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., M.S.
0000 X.X. Xxxxxxxxxx Xxxxxxxxx
Xxxx, Xxxxxx 00000
CC:
Xxxxx X. Xxxxxxx
000 XX Xxxxxxxxxx Xxx
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 Oregon 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.
D.D.S., M.S.
Printed Name: Xxxxxx X. Xxxx, D.D.S., M.S.
OMEGA ORTHODONTICS, INC.
By:
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
$180,000 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 X.X.
Xxxxxxxxxx Xxxxxxxxx, Xxxx, Xxxxxx 00000 or other location specified by Xx. Xxxx
in writing, One Hundred Eighty Thousand Dollars ($180,000) 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 Oregon instrument, and
all rights and obligations hereunder shall be governed by the laws of the State
of Oregon
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., M.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.,
M.S. and [Insert Name of 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., M.S.
[Insert Name of New PC]
By _________________________
Xxxxxx X. Xxxx, D.D.S., M.S.
President
Exhibit D
XXXX OF SALE AND ASSIGNMENT
The undersigned, Xxxxxx X. Xxxx, D.D.S., M.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 X.X. Xxxxxxxxxx Xxxxxxxxx, 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 X.X. Xxxxxxxxxx Xxxxxxxxx, 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, excepting those assets listed on Schedule 1
and further excepting those rights and obligations that cannot legally or
ethically be held by anyone other than a licensed dentist or endodontist under
applicable laws or ethical rules.
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 __________ ___, 1998.
WITNESS the execution under seal as of this ____ day of _________,
1998.
---------------------------
Xxxxxx X. Xxxx, D.D.S., M.S.
Schedule I
Excluded Assets
1. Xxx Xxxxxx Watercolors and Prints
2. Antique Lenzkirch Clock
3. Personal Property of Non-Dental Nature
Exhibit Y
List of Contracts
1. Loan for Dental Equipment
a. #00000000 (Bank of the Cascades) 80,000
(Balance May 5, 1998) 41,070
(Balance May 5, 1998) 25,000 new loan*
Total 66,070
2. Lease of Diginal X-xxx
x. #9702530-701
b. #9702530-702
Affiliated Capital Corp.
000 Xxxxxx Xxxx.
Xxxxxxxxxx, Xxx. 00000
3. Yellow Pages 40/mo.
4. Laundry 200/mo.
5. Janitorial (Xxxx Xxxxxxx) 340/mo.
6. Seasonal Expenditures
a. Snowplowing (Xxxx Xxxxxx) variable
b. High Desert Landscaping 200/300 mo.
7. Postage Meter Rental 250/yr.
8. East Cascade Security System 250/yr.
9. Building Insurance 1747/yr.
A. DBC (Dentists Benefits Corp)
B. DBC (overhead) 460/yr.
10. U.S. Satellite Broadcasting 848/yr.
11. Lease for Office Building at 0000 X.X. Xxxxxxxxxx Xxxx., Xxxx, XX
* Currently held in account to pay for Dell Computer, Professional Business
Systems software, painting, rock work and roof repair.
Exhibit E
Draft Management Services Agreement and
Stock Put/Call Option and Successor Designation Agreement
Executed copies of even date herewith have been delivered to the parties.
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 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, to the best knowledge of Xx.
Xxxx, 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. To the best knowledge of
Xx. Xxxx 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 to the best the
knowledge of Xx. Xxxx, 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 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
XX. XXXX AND COUNSEL PROVIDE, IF ANY
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.
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 OMEGA 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 OMEGA is a party or by which its Assets are bound; or (iii) result in a
violation of any law, regulation, administrative order or judicial order
applicable to OMEGA.
5. Financial Statement. Attached as Exhibit AA to the Agreement is the
Financial Statement (10-K) of OMEGA. To the best knowledge of OMEGA, the
Financial Statement is complete and correct and fairly presents in all material
respects the financial position of OMEGA 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.
6. Absence of Undisclosed Liabilities and Changes. Except as disclosed in
Exhibit X to this Schedule, since the date of the Financial Statement (10-K)
there has not been any change in the financial condition, properties, assets,
liabilities, business or operations of OMEGA, 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 OMEGA;
7. 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 OMEGA, threatened against OMEGA, 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 OMEGA, threatened against or involving OMEGA, and there is no
basis for any of the foregoing, and there are no outstanding court orders, court
decrees, or court stipulations to which OMEGA 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 OMEGA.
