EXHIBIT 10.47
EXHIBIT E
ANCILLARY AGREEMENT
AGREEMENT dated as of ___________, 1996 by and among Castle Dental
Centers of New York, Inc., a New York corporation ("Purchaser"), Castle Dental
Centers, Inc., a Delaware corporation ("Castle"), Xxxxx X. Xxxx D.D.S. d/b/a
American Dental Centers, X.X. Xxxx Professional Corporation, a New York
professional corporation d/b/a American Dental Centers ("Lane PC"), Lisadent
Corp. ("Lisadent") (collectively "Seller") and Xxxxx X. Xxxx D.D.S.("Xx. Xxxx"),
the sole shareholder of Lane PC and one of the shareholders of Lisadent, and
Xxxxx Xxxx, the other shareholder of Lisadent (Xx. Xxxx and Xxxxx Xxxx are
referred to collectively as the "Shareholders").
1. INTRODUCTION. Prior to the date of this Agreement, on August __,
1996, the parties hereto entered into an Asset Purchase Agreement (the "Asset
Purchase Agreement") providing for the purchase by Purchaser of certain
identified assets of Seller as more fully described therein. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto have
entered into certain additional agreements contemplated by the Asset Purchase
Agreement. The parties hereto have entered into this Agreement to document
certain additional agreements reached by them in connection with the Asset
Purchase Agreement and the other documents executed and delivered
contemporaneously herewith, and the transactions contemplated thereby. Initially
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Asset Purchase Agreement.
2. PURCHASE OF MALPRACTICE AND "TAIL" INSURANCE; ACCESS TO RECORDS. From
and after the date hereof, until Purchaser and Castle purchase or cause to be
purchased the "tail" insurance hereinafter described, Purchaser and Castle agree
to pay up to $12,000 per year for professional liability insurance for Xx. Xxxx
in an amount of $2,000,000 per claim, $6,000,000 aggregate of all claims, with a
reputable insurance company selected by Xx. Xxxx. It is expressly understood
that
the maximum annual obligation of Purchaser and Castle for such insurance is
$12,000, irrespective of actual cost. Purchaser and Castle agree that on the
earliest to occur of (i) such time as Xx. Xxxx is no longer a shareholder of
Lane PC, (ii) the Management Services Agreement by and between Purchaser and
Lane PC ("Management Services Agreement") is terminated for any reason, or (iii)
Xx. Xxxx is no longer an employee of Purchaser, notwithstanding the provisions
of the Management Services Agreement to the contrary, Castle will, irrespective
of the cost thereof, purchase or cause to be purchased malpractice "tail"
insurance in such amount and covering such risks as the malpractice insurance
carried by, or on behalf of Xx. Xxxx on the date he ceased to be a shareholder
of Lane PC or the date the Management Services Agreement terminates, whichever
occurs first.. The tail insurance shall have a coverage term of not less than 15
years.
From and after such time on the earliest to occur of (i) Xx. Xxxx is no
longer a shareholder of Lane PC, (ii) the Management Services Agreement is
terminated for any reason, or (iii) Xx. Xxxx is no longer an employee of
Purchaser, Castle will ensure that Xx. Xxxx shall have access to patient records
of patients of Lane PC for all lawful purposes for a period of not less than
seven years from the date Xx. Xxxx ceased to be a shareholder of Lane PC or the
Management Services Agreement terminated, and with respect to records pertaining
to a claim raised during such seven year period, for such longer period as is
required to resolve such claim fully, including all appeals thereof.
3. USE OF THE NAME "XXXXX X. XXXX". From and after the Closing date,
Seller and Xx. Xxxx hereby grant to the Purchaser and Castle the perpetual and
exclusive right to use and license the name "Xxxxx X. Xxxx" and all derivatives
thereof, to professional corporations or other entities providing dental
services to which the Purchaser or Castle or one of their respective affiliates
provide management services. In connection therewith, Castle and Purchaser agree
to use the name in a dignified, respectful and professional manner, and in a
manner reasonably calculated not to precipitate enforcement action by the New
York State Dental Board against Xx. Xxxx'x license.
4. INDEMNIFICATION OF XX. XXXX. From and after the Closing Date for so
long as Xx. Xxxx serves as a director of Castle, Castle agrees to maintain in
full force and effect an Indemnity Agreement with Xx. Xxxx, in substantially the
form to which other directors of Castle are parties. Additionally, for such
period as Xx. Xxxx serves as a director of Castle, Castle agrees to provide Xx.
Xxxx with the same directors' and officers' insurance coverage made available to
other directors of Castle. Castle hereby agrees to indemnify and hold Xx. Xxxx
harmless from and against any and all damages, penalties, losses, deficiencies,
costs, expenses, obligations, fines, expenditures, claims and liabilities,
including reasonable counsel fees and reasonable expenses of investigation,
defending and prosecuting litigation (collectively, the "Damages"), suffered by
Xx. Xxxx (i) as a result of, caused by or arising out of the failure of the
Purchaser to perform its obligations to Lane PC under the Management Services
Agreement after the Closing Date, including but not limited to (a) the payment
by the Purchaser on behalf of Lane PC to the Internal Revenue Service and other
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appropriate agencies of all required payroll and withholding taxes on employees
of Lane PC, and (b) the failure of Purchaser to perform any obligations assumed
by Purchaser under the Management Services Agreement in respect of pension
plans, if any, adopted by Lane PC in the future; (ii) arising out of the use of
Xx. Xxxx'x name and/or professional license (but not the loss of his
professional license) after the Closing Date, as contemplated by Section 3
hereof; (iii) in his capacity as an officer, director or shareholder of Lane PC
for liabilities of Lane PC arising after the Closing Date; and (iv) as the
result of the failure by Castle to perform any obligations of Castle to Xx. Xxxx
from and after the Closing Date contained herein or in any other agreement to
which Xx. Xxxx and Castle are parties; provided, however, that Xx. Xxxx shall
not be entitled to indemnification from Castle with respect to any matter in
which professional negligence is alleged, it being the intent of the parties
hereto that such matters be insured against by Xx. Xxxx and paid for as provided
elsewhere herein; and provided further, that to qualify for indemnification
hereunder, the Board of Directors of Castle shall have determined in good faith
that in connection with such matters for which indemnification is sought by Xx.
Xxxx hereunder, he shall have acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of Lane PC and the
Purchaser. Pending the outcome of any such action, the Company shall advance Xx.
Xxxx the costs of defense if (a) Xx. Xxxx provides an opinion of counsel
reasonably acceptable to the Company that in the opinion of such counsel, Xx.
Xxxx ultimately will be entitled to indemnification hereunder, and (b) Xx. Xxxx
provides the Company with a written undertaking to reimburse such advances if it
is not ultimately determined by a court of competent jurisdiction that Xx. Xxxx
is entitled to indemnification hereunder. To the extent that Xx. Xxxx has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to herein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
5. RESPONSIBILITY FOR LIABILITIES OF LANE PC. Xx. Xxxx hereby agrees
that all liabilities of Lane PC, not covered by malpractice insurance whether
known or unknown, liquidated or unliquidated or fixed or contingent which exist
as of the Closing Date, or which arise after the Closing Date but are based on
facts or circumstances affecting Lane PC prior to or as of the Closing Date,
other than those liabilities of Lane PC which arise solely as a result of the
consummation of the transactions contemplated by the Asset Purchase Agreement or
the Management Services Agreement or are expressly assumed by Purchaser in
Section 2.3 of the Asset Purchase Agreement, shall be for the account of Xx.
Xxxx; it being the intent of the parties that as of the Closing Date, Lane PC
shall have no liabilities of any kind whatsoever attributable to periods prior
to the Closing Date other than those contemplated by the Asset Purchase
Agreement, including Section 2.3 thereof, or the Management Services Agreement.
Xx. Xxxx hereby agrees to indemnify and hold Lane PC, Castle and the Purchaser
harmless from and against any and all damages, penalties, losses, deficien cies,
costs, expenses, obligations, fines, expenditures, claims and liabilities,
including reasonable counsel fees and reasonable expenses of investigation,
defending and prosecuting litigation
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(collectively, the "Damages"), suffered by Lane PC, Castle or Purchaser as a
result of, caused by or arising out of, the failure of Xx. Xxxx to discharge and
satisfy all of the liabilities of Lane PC attributable to periods prior to the
Closing Date, other than those contemplated by the Asset Purchase Agreement
including Section 2.3 thereof, or the Management Services Agreement, including
but not limited to, the payment by Lane PC to the Internal Revenue Service and
other appropriate agencies of all required payroll and withholding taxes on
employees of Lane PC for periods prior to the Closing Date.
6. RIGHT OF FIRST OFFER TO PURCHASE AMERICAN MEDICAL AND LIFE INSURANCE
COMPANY. Xx. Xxxx hereby grants to Purchaser and Castle a right of first offer
to purchase American Medical and Life Insurance Company ("American Medical"). At
such time as Xx. Xxxx has formulated an intention to solicit offers to purchase
American Medical from third parties, prior to soliciting any such offers,
directly or through agents, Xx. Xxxx agrees to notify Purchaser and Castle in
writing of this intent to solicit offers to purchase American Medical and to
provide the Purchaser and Castle a period of not less than 30 days to make an
offer to purchase American Medical. During such 30 day period, Purchaser, Castle
and their representatives shall have the right at their expense to conduct a due
diligence review of the business and affairs of American Medical necessary to
permit them to make an informed evaluation of the business and affairs of
American Medical. Purchaser and Castle agree to execute confidentiality
agreements in usual and customary form prior to commencing such due diligence
review.
In the event Purchaser and Castle elect, during such 30 day period to
deliver to Xx. Xxxx a written offer to purchase American Medical, Xx. Xxxx
agrees to negotiate in good faith exclusively with Purchaser and Castle for an
additional period of 30 days after receiving such written offer from Purchaser
and Castle with a view to reaching a definitive agreement for the purchase and
sale of American Medical; provided, however, that the parties are under no
obligation to reach an agreement.
7. ADDITIONAL MATTERS PERTAINING TO AMERICAN MEDICAL. Notwithstanding
anything contained in this Agreement to the contrary, with the exception of the
foregoing Section, nothing contained in this Agreement, the Asset Purchase
Agreement, the Management Services Agreement the Employment Agreement, or any
other agreement between Xx. Xxxx and the Purchaser shall be construed as giving
Purchaser, Castle or Lane PC any rights with respect to American Medical, its
assets, its business or the way in which it conducts its business, all such
matters being expressly excluded from the scope of the foregoing instruments.
During the term of the Employment Agreement and for a period of 24 months
following the termination of Xx. Xxxx'x employment by the Purchaser, Castle, the
Purchaser and Lane PC following the exercise of the option in the Option
Agreement agree not to solicit or induce any employee of American Medical to
terminate his or her employment with American Medical, accept employment with
anyone else, or to interfere in any similar manner with the business of American
Medical.
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8. LIMITATION OF RECOVERY AGAINST LANE PC. Notwithstanding anything
contained herein to the contrary, any damages payable by Lane PC in an action
brought by Purchaser or Castle against Lane PC under the Management Services
Agreement, the Option Agreement and/or any contractual relationships entered
into at or after the Closing Date between Castle or Purchaser and Lane PC shall
be limited to assets of Lane PC acquired after the Closing Date, and no recovery
with respect to any action brought in respect of such instruments shall be made
against assets owned by Lane PC, Xx. Xxxx or Xxxxx Xxxx prior to the Closing
Date or amounts paid to Lane PC, Xx. Xxxx or Xxxxx Xxxx by Purchaser in payment
for such assets.
9. EXCLUSIVE DENTAL PROFESSIONAL RELATIONSHIP. From and after the
Closing Date, Xx. Xxxx agrees that any services performed by Xx. Xxxx that
require a license to practice dentistry will be rendered and performed
exclusively through Lane PC, so long as the Management Services Agreement is in
effect.
10. CASTLE INITIAL PUBLIC OFFERING. Castle represents and warrants that
it is the entity referred to as Castle Dental Centers, Inc. in the Registration
Statement on Form S-1 filed with the Securities and Exchange Commission on
September 3, 1996, Registration No. 333-_____.
11. MISCELLANEOUS.
11.1 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors, heirs and assigns of the parties hereto.
11.2 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
11.3 HEADINGS. The headings of the Sections and paragraphs of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
11.4 MODIFICATION AND WAIVER. No amendment, modification or
alteration of the terms or provisions of this Agreement shall be binding unless
the same shall be in writing and duly executed by the parties hereto, except
that any of the terms or provisions of this Agreement may be waived in writing
at any time by the party which is entitled to the benefits of such waived terms
or provisions. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar). No delay on the part of either party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof.
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11.5 NO THIRD PARTY BENEFICIARY RIGHTS. This Agreement is not
intended to and shall not be construed to give any Person (other than the
parties signatory hereto any interest or rights (including, without limitation,
any third party beneficiary rights) with respect to or in connection with any
agreement or provision contained herein or contemplated hereby.
11.6 NOTICE. Any notice, request, instruction or other document
to be given hereunder by any party hereto to any other party shall be
sufficiently given if delivered in person or sent by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
if to Purchaser, to:
Castle Dental Centers of New York, Inc.
if to Castle, to:
Castle Dental Centers, Inc.
0000 Xxxx Xxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
with a copy to:
Xx. Xxxxxxx X. Xxxxxxxxx
Bracewell & Xxxxxxxxx, L.L.P.
South Tower Pennzoil Place
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
if to Seller or the Shareholders to:
Xxxxx X. Xxxx D.D.S. d/b/a American Dental Centers
00 Xxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx D.D.S.
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X.X. Xxxx Professional Corporation d/b/a American Dental Centers
00 Xxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx D.D.S.
Lisadent Corp.
00 Xxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx D.D.S.
Xxxxx X. Xxxx D.D.S.
00 Xxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx D.D.S.
Xxxxx Xxxx
00 Xxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx D.D.S.
with a copy to:
Xx. Xxxxxxx X. Xxxxx
Kaufmann, Feiner, Yamin,
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or at such other address for a party as shall be specified by like notice, and
such notice or communication shall be deemed to have been duly given as of the
date so delivered, mailed or sent by telecopier.
11.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regards
to conflict of law rules thereof.
11.8 SEVERABILITY. If any provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the
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transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled.
11.9 ENFORCEMENT. The parties hereto agree that the remedy at law
for any breach of this Agreement is inadequate and that should any dispute arise
concerning the sale of the Assets or any other matter hereunder, this Agreement
shall be enforceable in a court of equity by an injunction or a decree of
specific performance. Such remedies shall, however, be cumulative and
nonexclusive, and shall be in addition to any other remedies which the parties
hereto may have.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf as of the date first above written.
CASTLE DENTAL CENTERS OF NEW YORK,
INC.
By:_____________________________
Name: Xxxx X. Xxxxxx, Xx.
Title: Chief Executive Officer
CASTLE DENTAL CENTERS, INC.
By:______________________________
Name: Xxxx X. Xxxxxx, Xx.
Title: Chief Executive Officer
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XXXXX X. XXXX D.D.S. D/B/A AMERICAN
DENTAL CENTERS
By:_____________________________
Name: Xxxxx X. Xxxx D.D.S.
J.V. LANE PROFESSIONAL CORPORATION
D/B/A AMERICAN DENTAL CENTERS
--------------------------------
Name: Xxxxx X. Xxxx D.D.S.
Title: President
LISADENT CORP.
By:______________________________
Name: Xxxxx Xxxx
Title: President
----------------------------------
Xxxxx X. Xxxx D.D.S.
----------------------------------
Xxxxx Xxxx
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