ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of the 14th day of August,
1998, 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 States of California and New Mexico (the "States") and
Xxxxxxx X. Xxxxx, D.D.S., Inc., a California professional corporation (the
"PC").
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. Xxxxx owns all of the issued and outstanding shares of the PC.
C. Xx. Xxxxx owns and operates an orthodontic practice (the "Orthodontic
Practice") with offices located at 5251 and 0000 Xxxxxxx Xxx, Xxxxxx Xxxxx,
Xxxxxxxxxx (the "Orthodontic Offices") and furnishes orthodontic care to the
general public. As the owner and operator of the Orthodontic Practice, Xx. Xxxxx
is the owner of certain personal property located at the Orthodontic Offices, a
party to certain contracts relating to the Orthodontic Practice and the
beneficiary of other rights related to the Orthodontic Practice.
D. Subject to the terms and conditions of this Agreement, OMEGA, the PC and Xx.
Xxxxx have determined that it is in the best interests of each for OMEGA to
purchase from Xx. Xxxxx certain of the assets comprising the Orthodontic
Practice as provided in Section 1.1 hereof.
E. Pursuant to the terms of an asset purchase agreement executed on even date
herewith, Xx. Xxxxx shall sell the professional elements of the Orthodontic
Practice to a professional Corporation Owned by Xx. Xxxxx Xxxxxxxxxxx of
Huntington Beach, CA, "Xx. Xxxxxxxxxxx") who owns and operates an orthodontic
practice in Huntington Beach, and who is under a management agreement with an
affiliate of OMEGA.
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.
At the Closing (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:
(1) 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 Offices, located at the
Orthodontic Offices, or to the Orthodontic Practice conducted therein,
located at the Orthodontic Offices;
(2) all Contracts (as defined below in Section 2.1);
(3) all prepaid claims, prepaid taxes and other prepaid expense items
and deferred charges, credits, advance payments, security and other
deposits made by Xx. Xxxxx to any other person relating to Orthodontic
Practice;
(4) any rights of Xx. Xxxxx pertaining to any counterclaims, set-offs
or defenses he may have with respect to any of the liabilities assumed
by OMEGA; and
(5) any other rights related in any way whatsoever to the Orthodontic
Practice or the Orthodontic 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 orthodontist 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 Three Hundred Twenty Nine Thousand
Dollars ($329,00) in cash (the "Cash Component"). Additionally, as part of the
consideration for this transaction, Xx. Xxxxx shall enter into a non-competition
agreement with OMEGA and Xx. Xxxxxxxxxxx under the terms and conditions set
forth in Exhibit E. hereof, and for which $250,000 dollars shall be allocated;
and the PC shall enter into a professional consulting agreement with Xx.
Xxxxxxxxxxx under the terms and conditions set forth in Exhibit "___" hereof,
which among other terms shall require fixed minimum compensation of Eighteen
Thousand Dollars ($18,000) of which Twelve Thousand Dollars ($12,000) shall be
paid to the PC at closing.
1.2 Adjustment; Allocation.
(a) 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 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
Orthodontic Practice. As used herein, Average shall mean an average of
the gross income of the Orthodontic Practice using the last twelve
months prior to the end of the month immediately preceding the Closing.
(b) 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 at Closing. The parties agree to file
timely any information that may be required to be filed pursuant to
regulations promulgated under Section 1060(b) of the Code. The parties
further agree that they shall report the federal, state, municipal,
foreign and local and other tax consequences of the purchase and sale
hereunder in a manner consistent with the allocation determined
pursuant to this section, and that they shall not take any position
inconsistent therewith in connection with any tax return, refund claim,
litigation or otherwise.
1.3 Time and Place of Closing.
The closing of the transactions contemplated hereby (herein called the
"Closing") shall be held at the offices of Xxxxxxx X. Xxxxxxxxxx, Esq., 0 Xxxx
Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx on or before August 15, 1998, or at such
other place, date or time as may be fixed by mutual agreement of the parties.
1.4 Delivery of Records, Contracts; Transfer of Accounts.
At the Closing, Xx. Xxxxx and the PC 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 Orthodontic 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 naming Xx. Xxxxx (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. Xxxxx shall cooperate with OMEGA in the transfer of
any utility accounts for the Orthodontic Offices, so long as Xx. Xxxxx
is reimbursed for any costs incurred as a direct result of such
cooperation.
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
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.
2.2 Transfer. At the Closing, Xx. Xxxxx and the PC shall assign and transfer 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 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. 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. OMEGA
shall reimburse Xx. Xxxxx for such costs incurred as a direct result of
obtaining the aforementioned consents. There shall be no adjustment to the
purchase price for the Assets due to the inability to have any Contract
assigned.
2.3 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 the
obligations and liabilities on the part of Xx. Xxxxx and the PC under the
Contracts arising on and after the Closing and no other liabilities or
obligations (collectively, the "Assumed Liabilities").
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.
Xxxxx or the PC.
2.5 No Other Liabilities Assumed. OMEGA, the PC and Xx. Xxxxx intend that OMEGA
shall not assume or be obligated to pay, perform or discharge any of the PC's or
Xx. Xxxxx'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.
Xxxxx 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. 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 IV. COVENANTS OF XX. XXXXX
Xx. Xxxxx and the PC hereby covenants and agree with OMEGA as follows:
4.1 Conduct of Business. Between the date of this Agreement and the Closing, Xx.
Xxxxx will do the following unless OMEGA shall otherwise consent in writing:
(a) conduct the PC's 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 six percent (6%) 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. Xxxxx to
suffer the revocation, suspension or limitation of Xx. Xxxxx'x license;
and
(i) permit OMEGA and its authorized representatives to have full access
to all properties, assets, records, PC tax returns, records, contracts
and documents which pertain to the orthodontic practice 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, Xx. Xxxxx will have
obtained all assignments, authorizations, consents and permits of others
required to permit the consummation by the PC and Xx. Xxxxx of the transactions
contemplated by this Agreement. In the event any necessary authorizations have
not been received, Xx. Xxxxx 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,
Xx. Xxxxx and the PC shall give detailed written notice thereof to OMEGA to and
shall use his best efforts to prevent or promptly remedy the same.
4.4 Consummation of Agreement. Xx. Xxxxx and the PC shall use their 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. Xxxxx 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, of would been known to it prior to the date hereof, of any
of its representations and warranties contained in or referred to in this
Agreement, OMEGA shall give detailed written notice thereof to Xx. Xxxxx and the
PC and shall use its 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 the PC and Xx. Xxxxx contained in Schedule 1 shall be true and
correct as though made on and as of the Closing, and the PC and Xx. Xxxxx shall
have performed all of his obligations hereunder which by the terms hereof are to
be performed on or before the Closing.
6.2 PC. Xx. Xxxxx shall have furnished to OMEGA (i) a certificate of the State
Secretary of State as to the legal existence and professional corporation good
standing of the PC; and (ii) a copy of the resolutions adopted by the board of
directors and stockholders of PC authorizing and approving the sale of the PC.
6.3 Non-competition Agreement. Xx. Xxxxx shall have executed the non-competition
agreement attached 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. Xxxxx shall, at OMEGA's and Xx. Xxxxxxxxxxx'x request and
expense, notify all patients and obligors of the 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 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 as of 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 the PC and
the Orthodontic 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. Xxxxx
or the business of the Orthodontic Practice or in the condition of the Assets or
the prospects (financial or otherwise) of the Orthodontic 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 the PC and the Orthodontic
Practice, including location of the Orthodontic 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. XXXXX
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.
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 Non-competition Agreement. OMEGA and Xx. Xxxxxxxxxxx'x professional
Corporation shall have executed the non-competition agreement attached as
Exhibit "E"
7.3 Professional Consulting Agreement. Xx. Xxxxxxxxxxx'x professional
corporation shall have executed the Professional Consulting Agreement attached
hereto as Exhibit "___"
7.4 Escrow. Xx. Xxxxxxxxxxx and Xx. Xxxxx shall have concurrently closed escrow
at Hallmark Escrow, Mission Viejo, California, Escrow No. 10028, whereby Xx.
Xxxxxxxxxxx shall purchase a vendee's interest in real property owned by Xx.
Xxxxx, and his spouse, which real property comprises the Orthodontic Offices.
7.5 Professional Practice Assets. Xx. Xxxxxxxxxxx'x professional corporation
shall have executed all documents, including the professional practice asset
purchase agreement attached hereto as Exhibit "__" and paid all agreed
consideration to the PC in order to concurrently purchase all professional
practice assets of Xx. Xxxxx and the PC as described therein.
7.6 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 the PC and
Xx. Xxxxx is likely to result in the restraint or prohibition of the
consummation of any material transaction contemplated hereby.
ARTICLE VIII. OBLIGATIONS AFTER CLOSING
8.1 [INTENTIONALLY OMITTED]
8.2 Books and Records. OMEGA shall permit Xx. Xxxxx, his accountants and
attorneys, reasonable access to such books and records for the purpose of
preparing such tax returns of the PC, Xx. Xxxxx and the Orthodontic Practice as
may be reasonably requested after the Closing and for other proper purposes
reasonably approved by OMEGA.
8.3 License. Xx. Xxxxx shall maintain all licenses necessary to practice
orthodontics in the State of California until August 14, 1999. 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 prior to August 14, 1999.
ARTICLE IX. INDEMNIFICATION
9.1 Indemnification By Xx. Xxxxx and the PC. Subject to the limitations set
forth in Section 9.3, Xx. Xxxxx 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. Xxxxx 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 the PC and Xx. Xxxxx harmless
from and against such damages, liabilities, losses and expenses of which may be
sustained or suffered by the PC or 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.
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 Notwithstanding anything to the contrary contained in this Agreement, or any
Schedule or Exhibit hereto, in no event OMEGA, its officers, directors or
employees, or Xx. Xxxxx, or the PC of any of their respective heirs, successors,
assignees, personal representatives, directors officers, shareholders, agents 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. Xxxxx 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. Xxxxx, to:
Xx. Xxxxxxx X. Xxxxx
00000 Xxxxxxxx Xxx.
Xxxxxxxxxx Xxxxx, XX 00000
With a copy to: Xxxxxxx Xxxxxxxxxx, Esq.
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 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) constitutes 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 California and, together with the rights and
obligations of the parties hereunder, shall be construed under and governed by
the laws of such state. Subject to Section 10.12 below, the parties agree to
submit to the jurisdiction of any state or federal court located in Orange
County, California. 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. Xxxxx.
10.10 Further Assurances. Following the execution of this Agreement, Xx. Xxxxx
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.
10.12 Arbitration. In the event of any dispute arising out of, related to or
collateral with this Agreement, said dispute shall be submitted to the American
Arbitration Association for mandatory, binding arbitration in Orange County,
California, pursuant to the rules of the American Arbitration Association
("AAA") then in effect for the resolution of commercial disputes. Only one
arbitrator shall be appointed pursuant to said rules. Administrative costs and
expenses of the arbitration shall be shared equally by Omega and Xx. Xxxxx. The
parties shall be entitled to conduct discovery in accordance with the AAA rules
then in effect. The arbitrator shall, in rendering an award, consider and apply
California Law. The decision of the arbitrator shall be final and binding. The
arbitrator shall have the authority to award attorney fees and costs of
arbitration to the prevailing party. However, the arbitrator shall be bound by
the terms and conditions of this agreement and shall not be entitled to award
any form of indirect, special or consequential damages of any kind. Should any
litigation be commenced between the parties to compel arbitration (including
proceedings in trial and appellate courts) or to confirm an award of the
arbitrator (including proceedings in trial and appellate courts) or for any
other reason related to this Agreement, the party prevailing in such litigation
shall be entitled to attorneys' fees and court costs incurred in connection with
such litigation.
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: Xxxxxxx X. Xxxxx, D.D.S., President
By:___________________________
Xxxxx X. Xxxxx, Secretary
XXXXXXX X. XXXXX D.D.S.
By:___________________________
Xxxxxxx X. Xxxxx, D.D.S.
OMEGA ORTHODONTICS, INC.
By:___________________________
Printed Name: Xxxxxx X. Xxxxxxxx
Its President and Chief Executive Officer
OMEGA ORTHODONTICS, INC.
By:___________________________
Printed Name: Xxxxxx X. Xxxxxxxx
Chief Financial Officer
Exhibit A
Financial Statement
[XX. XXXXX PROVIDE]
Exhibit C
Notice
Exhibit D
XXXX OF SALE AND ASSIGNMENT
The undersigned, Xxxxxxx X. Xxxxx, D.D.S., ("Xx. Xxxxx") and Xxxxxxx X.
Xxxxx, Inc., a California Professional Corporation ("PC") 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 and its right, title and interest in and to all
of the assets of the orthodontic practice operated by Xx. Xxxxx and the PC (the
"Orthodontic Practice") at 5251 and 0000 Xxxxxxx Xxx, Xxxxxx Xxxxx, Xxxxxxxxxx,
wheresoever situated and whether or not specifically referred to herein (such
assets and rights of Xx. Xxxxx and 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 following Assets:
(a) all books, records, machinery and equipment ("Equipment"), used or
owned by the Orthodontic Practice, and all other tangible and intangible
personal property at or related to the Orthodontic Offices, located at the
Orthodontic Offices, or to the Orthodontic Practice conducted therein, located
at the Orthodontic Offices
(b) 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
Orthodontic Practice listed on the attached Exhibit Y (the "Contracts");
(c) all prepaid claims, prepaid taxes and other prepaid expense items
and deferred charges, credits, advance payments, security and other deposits
made by Xx. Xxxxx to any other person relating to the Orthodontic Practice;
(d) any rights of Xx. Xxxxx pertaining to any counterclaims, set-offs
or defenses he may have with respect to any of the liabilities assumed by OMEGA;
and
(e) any other rights related in any way whatsoever to the Orthodontic
Practice or the Orthodontic 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 orthodontist under
applicable laws or ethical rules.
Xx. Xxxxx and the PC represent that each 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, except as stated on Schedule II, attached hereto and
made a part hereof. OMEGA hereby acknowledges and agrees that it is purchasing
and accepting all of the Assets in an "AS-IS" condition as of this date, without
any representations or warranties as to the condition thereof.
OMEGA assumes and agrees to pay, perform and discharge OMEGA shall
assume and pay, perform and discharge the obligations and liabilities on the
part of Xx. Xxxxx and the PC under the Contracts arising on and after the
Closing and no other liabilities or obligations (collectively, 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. Xxxxx or
the PC.
OMEGA and Xx. Xxxxx intend that OMEGA shall not assume or be obligated
to pay, perform or discharge any of the PC's or Xx. Xxxxx'x obligations other
than the Assumed Liabilities. Except for the Assumed Liabilities, OMEGA and Xx.
Xxxxx 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 the PC, Xx. Xxxxx and OMEGA dated as of August ___, 1998.
WITNESS the execution under seal as of this ____ day of August, 1998.
XXXXXXX X. XXXXX D.D.S., INC.
By:___________________________
Xxxxxxx X. Xxxxx, D.D.S. President
By:___________________________
Xxxxx X. Xxxxx, Secretary
XXXXXXX X. XXXXX D.D.S.
By:___________________________
Xxxxxxx X. Xxxxx, D.D.S.
ACCEPTED:
OMEGA ORTHODONTICS, INC.
By: ____________________
Xxxxxx Xxxxxxxx, President
By: ____________________
Xxxxxx Xxxxxxxx, CFO
Schedule I
Excluded Assets
1. All cash in all Xx. Xxxxx and P.C. bank accounts
2. Three (3) items of furniture:
(a) "Oak wash stand" in waiting room
(b) "Oak display cabinet" in waiting room
(c) "Cherrywood antique dental cabinet" in consulting room
3. Two (2) lap-top computers (not in office)
4. Three (3) cellular telephones
5. Two (2) pagers
6. 1998 Lexus (leased by P.C.)
7. Any and all cameras and photographic equipment
8. All work-in-progress agreements with PC patients (as shown on patient
cards provided to OMEGA).
Exhibit Y
List of Contracts
None.
Schedule 1
Representations and Warranties of
Xx. Xxxxx and the PC to OMEGA
Xx. Xxxxx and the PC hereby represents and warrants to OMEGA as follows:
1. The Orthodontic Practice. The Assets of the Orthodontic Practice are
owned 100% by Xx. Xxxxx and the PC. Xx. Xxxxx and the PC have the full power to
conduct business as currently conducted by the Orthodontic Practice and to own
and lease the property he and it purports to own.
2. Authorization of Transaction. All necessary action has been taken by Xx.
Xxxxx and the PC to authorize the execution of this Agreement by Xx. Xxxxx, and
the delivery and performance of this Agreement and the transactions contemplated
hereby, and this Agreement is the valid and binding obligation of the PC and Xx.
Xxxxx, enforceable against the PC and Xx. Xxxxx 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 the PC and Xx. Xxxxx 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
the PC and Xx. Xxxxx is a party or by which either of them or the Assets are
bound; or (c) any violation of any law, regulation, administrative order or
judicial order applicable to Xx. Xxxxx, the PC 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. Xxxxx 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 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. Xxxxx, the PC 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. Xxxxx and the PC do not require the consent, waiver,
approval, authorization, exemption of or giving of notice to any governmental
authority.
5. Investigations and Licenses.
(a) Xx. Xxxxx has all necessary licenses to practice orthodontics in the
state of California.
(b) Xx. Xxxxx is not subject to any investigation, whether threatened,
current or pending, under which Xx. Xxxxx 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.
6. Financial Statement. Attached as Exhibit A to the Agreement is the
Financial Statement of the PC. To the best knowledge of Xx. Xxxxx, the Financial
Statement is complete and correct and fairly presents in all material respects
the financial position of the Orthodontic 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, the PC or Xx. Xxxxx
has good and marketable title to all of the Assets, including without
limitation, all personal property, machinery and equipment used or owned by the
Orthodontic Practice (the "Equipment"), free of liens and encumbrances (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,
except as stated on Schedule II, attached hereto and made a part hereof. OMEGA
hereby acknowledges and agrees that it is purchasing and accepting all of the
Assets in an "AS-IS" condition as of this date, without any representations or
warranties as to the condition thereof..
(b) No other practice or 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. The PC 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 the PC and Xx. Xxxxx
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.
Xxxxx, The PC 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 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 since the date of the Financial Statement, and (iii)
liabilities disclosed in Exhibit X to this Schedule. To the best knowledge of
Xx. Xxxxx 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 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 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 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 at the time of Closing; or
(iii) any obligation or liability incurred by The PC or by Xx. Xxxxx
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 pending or, to the
knowledge of Xx. Xxxxx, threatened against the Orthodontic Practice or Xx.
Xxxxx, 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 or the Orthodontic Practice,
and to the best the knowledge of Xx. Xxxxx, 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 or Xx. Xxxxx 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. Xxxxx or the Orthodontic Practice.
12. Insurance. Xx. Xxxxx has possessed occurrence professional liability
coverage for the five (5) years prior to the date of this Agreement protecting
the Orthodontic Practice and Xx. Xxxxx from any professional malpractice
liability that might arise because of the Orthodontic Practice's or Xx. Xxxxx'x
practice activities over the preceding five (5) years.
EXHIBIT X
Exceptions to Representations and
Warranties of Xx. Xxxxx to
OMEGA
XX. XXXXX AND COUNSEL PROVIDE, IF ANY
None.
Schedule 2
Representations and Warranties of
OMEGA to Xx. Xxxxx
OMEGA hereby represents and warrants to Xx. Xxxxx 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 or other legal or administrative
proceeding 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.
EXHIBIT C
NON-COMPETITION AGREEMENT
