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EXHIBIT 10.18
STOCK PURCHASE AGREEMENT
BY AND AMONG
FIRST NEW ENGLAND DENTAL CENTERS, INC.,
AND
XXXX XXXXXX, D.D.S.
AND
XXXXXX XXXXXXX, D.D.S.,
THE OWNERS OF THE ISSUED AND OUTSTANDING
CAPITAL STOCK OF
XX. XXXXXX SOUTH STREET CORP., P.A.
FERRY STREET DENTAL ASSOCIATES, P.A.
XX. X. XXXXXX GROUP DENTAL ASSOCIATES, P.A.
GROUP DENTAL ASSOCIATES OF TOMS RIVER, P.A.
GROUP DENTAL ASSOCIATES OF EAST BRUNSWICK, P.A.
RIDGE DENTAL CENTER, P.A.
57TH STREET DENTAL CENTER, P.A.
XX. XXXXXX AND ASSOCIATES, P.A. AND
DOCTOR'S DENTURE SERVICE, P.A.,
Dated as of August __, 1997
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SCHEDULES AND EXHIBITS
Schedules
Schedule 1.1 Allocation of Purchase Price
Schedule 2.1(d) FNEDC Required Consents
Schedule 2.1(f) FNEDC Litigation
Schedule 2.2(d) Capitalization
Schedule 2.2(e) Debts, Liabilities or Obligations
Schedule 2.2(f) Unfunded Liabilities
Schedule 2.2(g) Title Exceptions and Leases
Schedule 2.2(h) Compensation
Schedule 2.2(i) Tax Deficiencies and/or Claims
Schedule 2.2(j) Permits
Schedule 2.2(k) Insurance
Schedule 2.2(l) Employees and Compensation
Schedule 2.2(m) Employee Benefits
Schedule 2.2(n) Material Contracts
Schedule 2.2(o) Books and Records
Schedule 2.2(p) Banking Relationships
Schedule 2.2(q) Companies' Required Consents
Schedule 2.2(r) Bad Debt Reserve
Schedule 2.2(s) Company Litigation
Schedule 2.3(f) Litigation (Shareholders)
Schedule 2.3(h) Outside Practices (Shareholders)
Schedule 3.4 Automobile Leases
Schedule 3.5 Equipment Leases
Schedule 3.6 Xxxxxxx Agreement
Schedule 3.7 Consulting Arrangement with Xxxx Xxxxxx
Exhibits
Exhibit A Escrow Agreement
Exhibit B Amended Certificates of Incorporation
Exhibit C Xxxx Xxxxxx Employment Agreement
Exhibit D Assignment and Assumption Agreement
Exhibit E Xxxxxx Leases
Exhibit F Legal Opinion of Cole, Schotz, Meisel, Xxxxxx
and Xxxxxxx, P.C.
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TABLE OF CONTENTS
Page
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ARTICLE I
PURCHASE AND SALE.................................................................... 2
1.1. Purchase Price......................................................... 2
1.2. Purchase Price Adjustment Option....................................... 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES....................................................... 7
2.1. Representations and Warranties of FNEDC................................ 7
(a) Organization, Power and Standing.............................. 7
(b) Power and Authority Relative
to Transaction................................................ 7
(c) Valid and Binding Obligation.................................. 7
(d) Required Consents............................................. 8
(e) No Brokers.................................................... 8
(f) Litigation.................................................... 8
(g) Solvency...................................................... 8
(h) Compliance with Laws.......................................... 8
(i) Disclosure.................................................... 8
2.2. Representations and Warranties Concerning
the Companies.......................................................... 9
(a) Organization, Power and Standing.............................. 9
(b) Qualification to do Business.................................. 9
(c) Subsidiaries and Interest in
Other Entities................................................ 9
(d) Capitalization................................................ 9
(e) Certain Outstanding Liabilities............................... 10
(g) Title to Properties, Etc...................................... 10
(h) Conduct of Business; Absence of
Material Adverse Changes...................................... 11
(i) Tax Returns and Payments...................................... 14
(j) Compliance with Laws.......................................... 14
(k) Insurance..................................................... 15
(l) Employees and Compensation.................................... 16
(m) Employee Benefits............................................. 16
(n) Material Contracts............................................ 18
(o) Books and Records............................................. 20
(p) Banking Relationships......................................... 20
(q) Required Consents, Etc........................................ 20
(r) Accounts Receivable........................................... 20
(s) Litigation.................................................... 21
(t) No Medicare Payment Program Providers......................... 21
(u) No Brokers.................................................... 21
(v) Disclosure.................................................... 21
(w) No Offer...................................................... 21
2.3. Representations and Warranties
Concerning the Shareholders............................................ 22
(a) Title......................................................... 22
(b) Due Issuance.................................................. 22
(c) Power and Authority Relative to Transaction................... 22
(d) Valid and Binding Obligation.................................. 22
(e) Required Consents............................................. 22
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(f) Litigation.................................................... 23
(g) No Brokers.................................................... 23
(h) Dental Practice............................................... 23
(i) No Offer...................................................... 23
(j) Disclosure.................................................... 23
ARTICLE III
ADDITIONAL COVENANTS AND AGREEMENTS.................................................. 24
3.1. FNEDC's Access to Information.......................................... 24
3.2. Notices and Consents; Governmental Approvals........................... 24
3.3. Assignment of Intellectual Property
and Other Documents.................................................... 25
3.4. Assumption of Certain Automobile
Leases by Xxxx Xxxxxx.................................................. 25
3.5. Indemnification of Xxxx Xxxxxx by the
P.C. With Respect to Certain Equipment
Leases Assumed by the P.C.............................................. 25
3.6. Space Arrangement with Xxxxxxx......................................... 25
3.7. Consulting Arrangement with Xxxx Xxxxxx................................ 26
3.8. Operation of Business.................................................. 26
3.9. Preservation of Business............................................... 26
3.10. Notice of Developments................................................. 26
3.11. Insurance.............................................................. 26
3.12. Further Assurances..................................................... 27
3.13. Survival of Covenants.................................................. 27
3.14. Break-Up Fee........................................................... 27
3.15. Subchapter S Elections................................................. 28
ARTICLE IV
CONDITIONS TO CLOSING................................................................ 28
4.1. Conditions Precedent to FNEDC's Obligations............................ 28
(a) Representations and Warranties True;
Obligations Performed......................................... 28
(b) Delivery of Certificates...................................... 28
(c) Filing of Amended Certificates of
Incorporation................................................. 28
(d) Escrow Agreement.............................................. 29
(e) Employment Agreement with Xxxx Xxxxxx......................... 29
(f) Leases........................................................ 29
(g) Xxxxxx Leases................................................. 29
(h) Equipment Leases.............................................. 29
(i) Legal Opinion from Counsel for
the Shareholders.............................................. 29
(j) Delivery of Other Instruments................................. 29
(k) Termination of Plans.......................................... 30
(l) Required Consents............................................. 30
(m) DPO Stock Purchase Agreement.................................. 30
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4.2. Conditions Precedent to the Obligations
of the Shareholders.................................................... 30
(a) Representations and Warranties
True; Obligations Performed................................... 30
(b) Deposit....................................................... 30
(c) Required Consents............................................. 30
(d) Escrow Agreement.............................................. 30
(e) Employment Agreement with Dr. Xxxx Xxxxxx..................... 31
(f) Assumption Agreements......................................... 31
(g) Equipment Lease Assignments................................... 31
(h) Xxxxxx Leases................................................. 31
(i) Legal Opinion from Counsel to FNEDC........................... 31
(j) DPO Stock Purchase Agreement.................................. 31
(k) Delivery of Financial Statements.............................. 31
ARTICLE V
CLOSING AND DELIVERIES............................................................... 31
5.1. Date and Place of Closing.............................................. 31
5.2. Deliveries at Closing by the Shareholders.............................. 31
5.3. Deliveries by FNEDC.................................................... 32
ARTICLE VI
POST-CLOSING MATTERS................................................................. 33
6.1. Further Assurances..................................................... 33
6.2. Employment and Benefits-Related Matters................................ 33
6.3. Access to Records...................................................... 34
ARTICLE VII
NON-COMPETITION AGREEMENT AND NON-SOLICITATION
AGREEMENT............................................................................ 34
7.1. Non-Solicitation....................................................... 34
7.2. Non-Compete............................................................ 34
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION......................................... 35
8.1. Survival............................................................... 35
8.2. Indemnification of FNEDC............................................... 35
8.3. Indemnification of the Shareholders.................................... 36
8.4. Procedure for Indemnification.......................................... 37
8.5. Limitations on Indemnity Obligations................................... 37
8.6. Exclusive Remedy for Certain Indemnity Claims. ....................... 38
8.7. Indemnity Payments by the Shareholders
to be Treated as Purchase Price Adjustments............................ 38
ARTICLE IX
TERMINATION OF AGREEMENT............................................................. 38
ARTICLE X
CONFIDENTIAL INFORMATION............................................................. 39
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ARTICLE XI
MISCELLANEOUS........................................................................ 40
11.1. Notices................................................................ 40
11.2. No Waiver.............................................................. 41
11.3. Amendments and Waivers................................................. 41
11.4. Governing Law; Headings................................................ 41
11.5. No Assignment.......................................................... 41
11.6. Binding Effect and Benefits; Assigns................................... 41
11.7. Entire Agreement....................................................... 41
11.8. Counterparts........................................................... 41
11.9. Transfer Taxes......................................................... 42
11.10. Submission to Jurisdiction............................................. 42
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EXHIBIT B
Amended Certificates of Incorporation
To be provided under separate cover.
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of August ___,
1997, by and among FIRST NEW ENGLAND DENTAL CENTERS, INC., a Delaware
corporation ("FNEDC"), and XXXX XXXXXX, D.D.S. ("Xxxx Xxxxxx"), and XXXXXX
XXXXXXX, D.D.S. ("Xxxxxxx"), the undersigned shareholders (singularly, a
"Shareholder" or collectively, the "Shareholders") of all of the issued and
outstanding shares of capital stock of Xx. Xxxxxx South Street Corp., P.A.,
Ferry Street Dental Associates, P.A., Xx. X. Xxxxxx Group Dental Associates,
P.A., Group Dental Associates of Toms River, P.A., Group Dental Associates of
East Brunswick, P.A., Ridge Dental Center, P.A., 57th Street Dental Center,
P.A., Xx. Xxxxxx and Associates, P.A., and Doctor's Denture Service, P.A.
(singularly, a "Company" or collectively, the "Companies"). FNEDC and the
Shareholders are sometimes hereinafter referred to each as a "Party" and
collectively as the "Parties". For purposes of Article VIII hereof only, on the
Closing Date (defined in Section 5.1), each of FNEDC of New Jersey, Inc., a New
Jersey corporation ("FNEDC of NJ") and a to-be-formed New Jersey professional
association potentially named First Dental Associates, P.A. (the "P.C."), shall
join as parties to this Agreement.
W I T N E S S E T H:
WHEREAS, the Companies are engaged in the business of providing dental
services (the "Business");
WHEREAS, FNEDC intends to acquire all of the issued and outstanding
capital stock of the Companies at the Closing (defined in Section 5.1);
WHEREAS, immediately prior to the Closing, each Company intends to
amend its respective Certificate of Incorporation to become a general business
corporation under the New Jersey Business Corporation Act;
WHEREAS, simultaneously with and subject to the execution of this
Agreement, FNEDC of NJ, and the Shareholders, as shareholders of all of the
issued and outstanding shares of capital stock of Group Dental Health
Administrators, Inc., a New Jersey corporation that is licensed to operate a
dental plan organization in the State of New Jersey ("GHA"), are entering into a
Stock Purchase Agreement dated of even date herewith (the "DPO Stock Purchase
Agreement");
NOW THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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ARTICLE I
PURCHASE AND SALE
1.1. Purchase Price. Subject to Section 1.2 below and the conditions
precedent set forth in Sections 4.1 and 4.2 below, based upon the
representations and warranties made herein, and in full consideration of the
Shareholders' performance of this Agreement and the sale, assignment, transfer,
conveyance and delivery to FNEDC of each share of the issued and outstanding
capital stock of the Companies (collectively, the "Stock"), FNEDC shall perform
its obligations hereunder and shall deliver and pay to the Shareholders Four
Million Two Hundred Thousand Dollars ($4,200,000) (the "Purchase Price") or the
Adjusted Purchase Price (defined in Section 1.1(e) or (f)), if applicable. The
Parties agree that the Purchase Price (or the Adjusted Purchase Price, if
applicable) shall be allocated in the manner set forth in the attached Schedule
1.1 and that each Party shall report this transaction on all applicable federal
and state income tax returns in accordance with such allocation. The Purchase
Price shall be due and payable at Closing (except as otherwise described in
Section 1.1 (a) below) by wire transfer of immediately available funds as
follows:
(a) A "non-refundable" deposit (which deposit shall be subject
to return in the limited circumstances described hereinafter) of One Hundred
Seventy-Five Thousand Dollars ($175,000) to be delivered to one or more accounts
designated by the Shareholders upon the execution and delivery of this Agreement
and the DPO Stock Purchase Agreement (the "Deposit");
In the event (i) FNEDC terminates this Agreement
in accordance with Article IX hereof or FNEDC of NJ terminates the DPO Stock
Purchase Agreement in accordance with Article IX thereof and the Shareholders
are unable to terminate either this Agreement in accordance with Article IX
hereof or the Stock Purchase Agreement in accordance with Article IX thereof, or
(ii) the Shareholders fail to make good faith commercially reasonable efforts to
fulfill the closing conditions set forth in Section 4.1 hereof by the Closing
Date (defined below in Section 5.1) and FNEDC delivers a written notice to the
Shareholders certifying that they are otherwise ready and able to close and
stating its election to terminate this Agreement, then the Shareholders shall
return the Deposit to FNEDC in accordance with Article IX hereof;
In the event (i) the Shareholders terminate this
Agreement in accordance with Article IX hereof or terminate the DPO Stock
Purchase Agreement in accordance with Article IX thereof, or (ii) FNEDC is
unable to, or elects not to, fulfill the closing conditions set forth in Section
4.2 hereof by the Closing Date and the Shareholders deliver a written notice to
FNEDC stating their election to terminate this Agreement, then the Shareholders
shall be entitled to retain the Deposit;
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(b) Five Hundred Thousand Dollars ($500,000), together with
the Five Hundred Thousand Dollars ($500,000) to be delivered by FNEDC of NJ
pursuant to Section 1.1(b) of the DPO Stock Purchase Agreement (collectively,
the "Escrowed Funds," which funds shall not be divisible but rather handled as
one source of funds under the terms of the Escrow Agreement (defined in this
Section below)) to Fleet Bank, N.A., the Escrow Agent, in accordance with the
escrow agreement dated the date hereof, attached hereto as Exhibit A, by and
among FNEDC, FNEDC of NJ, the Shareholders and the Escrow Agent (the "Escrow
Agreement"); and
(c) Three Million Five Hundred Twenty-Five Thousand Dollars
($3,525,000), or the balance of the Adjusted Purchase Price, if applicable, to
one or more accounts designated by the Shareholders.
The Escrowed Funds will be released to the Shareholders in accordance with the
terms and conditions of the Escrow Agreement.
1.2. Purchase Price Adjustment Option. The Purchase Price set forth in
Section 1.1 shall be subject to adjustment as follows:
(a) No earlier than thirty (30) days nor later than twenty
(20) days prior to the Closing Date, FNEDC's independent accountants shall
prepare and deliver to the Shareholders a statement of revenues of the Companies
and GHA for the period commencing January 1, 1997 and ending on the date thirty
(30) days prior to the Closing Date (the "Draft Statement of Revenues"). It is
agreed that FNEDC's independent accountants shall prepare the Draft Statement of
Revenues in accordance with generally accepted accounting principles; provided
however, that FNEDC's independent accountants will not consolidate the revenues
of the Companies and GHA in the Draft Statement of Revenues. It is further
agreed that the comparable statement of revenues for the Companies and GHA, as
prepared in accordance with generally accepted accounting principles, for
calendar year 1996 was Five Million Seven Hundred Thousand Dollars ($5,700,000).
(b) The Shareholders shall deliver to FNEDC within ten (10)
days after receiving the Draft Statement of Revenues a detailed statement
describing their objections (setting forth in detail the revenue amount proposed
as an adjustment thereto and the basis for such objection), if any, thereto.
Failure of the Shareholders so to object to the Draft Statement of Revenues
shall constitute acceptance thereof, whereupon the Draft Statement of Revenues
shall be deemed to be the "Closing Statement of Revenues". FNEDC and the
Shareholders shall use reasonable efforts to resolve any such objections, but if
they do not reach a final resolution within ten (10) days after the Shareholders
have delivered their statement of objections, FNEDC and the Shareholders shall
settle the disagreement by submitting
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the dispute within fourteen (14) days after the expiration of the ten (10) day
period established above to resolve any objections, to a panel of three (3)
arbitrators in New York, New York that are experienced in professional financial
audits of this nature, such arbitration to be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect on the date of the Shareholders' statement of objections. The arbitrators
shall, within thirty (30) days after the dispute is submitted for arbitration,
determine and report to the Parties a statement of revenues included in the
Draft Statement of Revenues, the revenue amount proposed as an adjustment and
the revenue amount determined by the arbitrators. The Draft Statement of
Revenues then shall be adjusted with respect to the items identified in the
Shareholders' statement of objections or by the arbitrators (and any
corresponding items requiring adjustment as a result) to the extent not
presented consistently with generally accepted accounting principles as
determined by the arbitrators and, as so adjusted, shall be the Closing
Statement of Revenues. Any decision by arbitrators appointed and acting pursuant
to this Section 1.2(b) shall be final and binding upon the Parties, absent fraud
or manifest error, and judgment may be entered thereon, upon the application of
any Party, by any court having competent jurisdiction.
(c) During the period of any dispute referred to above, the
Shareholders shall, and shall cause the Companies and GHA to, give FNEDC, its
accountants and the arbitrators full access to books, records, facilities and
employees of the Companies and GHA; provided, however, that any such access
shall be allowed only in such manner as not to interfere unreasonably with the
operation of the business of the Companies and GHA.
(d) Each Party shall bear the cost of preparing and presenting
its case, with the cost of arbitration to be shared equally by the Parties.
(e) If the aggregate revenues of the Companies and GHA
presented in the Closing Statement of Revenues, projected on an annualized basis
assuming a 365-day calendar year (which calculation will be made by multiplying
the revenues presented in the Closing Statement of Revenues by the quotient of
365 divided by the number of calendar days elapsed during the period commencing
January 1, 1997 and ending on the date thirty (30) days prior to the Closing
Date (the "1997 Annualized Revenues")), are less than Five Million Dollars
($5,000,000)("Initial Sales Trigger"), the Parties may elect to consummate the
transactions contemplated in this Agreement at an adjusted Purchase Price equal
to the excess of (i) the Purchase Price over (ii) the amount (the "Proportionate
Deficit Amount") resulting from the product of (A) the sum of the Deficiency (as
defined in the Escrow Agreement) and the excess of Five Million Seven Hundred
Thousand Dollars ($5,700,000) over the 1997 Annualized Revenues,
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and (B) a fraction whose numerator is the Purchase Price and whose denominator
is Five Million Seven Hundred Thousand Dollars ($5,700,000), (the "Adjusted
Purchase Price") as follows:
ADJUSTED PURCHASE PRICE =
PURCHASE PRICE - PROPORTIONATE DEFICIT AMOUNT ("PDA")
WHERE PDA = [DEFICIENCY + ($5.7M - 1997 XXX. REV.)]
X (PURCHASE PRICE/$5.7)
No later than ten (10) days following the determination of the Closing
Statement of Revenues, FNEDC may deliver written notice to the Shareholders
stating its desire to consummate the transactions contemplated in this
Agreement, all in accordance with the terms and conditions set forth herein with
the exception of the reduction of the Purchase Price to the Adjusted Purchase
Price and the extension of the Closing Date as described below ("FNEDC's
Offer"). The Shareholders shall have five (5) days following the day in which
they received FNEDC's Offer ("Response Period") to accept FNEDC's Offer.
In the event the Shareholders accept FNEDC's Offer, FNEDC will have the
right to close the transactions contemplated by this Agreement no later than
thirty (30) days following the date on which FNEDC receives written notice of
the Shareholders' acceptance of FNEDC's Offer (the "Option Period"). In the
event the Shareholders accept FNEDC's Offer, but FNEDC shall be unable to, or
elects not to, fulfill the closing conditions set forth in Section 4.2 hereof
within the Option Period, then the Shareholders shall be entitled to retain the
One Hundred Seventy-Five Thousand Dollars ($175,000) Deposit; provided, however,
that if (i) FNEDC terminates this Agreement in accordance with Article IX hereof
or FNEDC of NJ terminates the DPO Stock Purchase Agreement in accordance with
Article IX thereof, or (ii) the Shareholders shall be unable to, or elect not
to, fulfill their closing conditions set forth in Section 4.1 hereof within the
Option Period, then the Shareholders shall return promptly the One Hundred
Seventy-Five Thousand Dollars ($175,000) Deposit to FNEDC by wire transfer of
immediately available funds; provided, that an appropriate officer of FNEDC will
certify to the Shareholders that FNEDC was timely ready and able to close.
In the event the Shareholders (i) deliver written notice to FNEDC
within the Response Period stating their election not to accept FNEDC's Offer,
or (ii) fail to deliver written notice to FNEDC in response to FNEDC's Offer
within the Response Period, then the Shareholders shall be entitled to retain
Thirty-Seven Thousand Five Hundred Dollars ($37,500) of the Deposit but shall
promptly return One Hundred Thirty-Seven Thousand Five Hundred Dollars
($137,500) of the Deposit to FNEDC by wire transfer of
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immediately available funds; provided, that an appropriate officer of FNEDC will
certify to the Shareholders that FNEDC was timely ready and able to close.
In the event FNEDC (i) fails to deliver written notice to the
Shareholders within ten (10) days following the date on which FNEDC receives the
Closing Statement of Revenues or (ii) delivers written notice to the
Shareholders within such period stating its decision not to consummate the
transactions contemplated herein, and the Shareholders deliver written notice to
FNEDC within the Response Period stating their desire to consummate the
transactions contemplated herein at the Adjusted Purchase Price no later than
thirty (30) days following the date on which FNEDC receives such written notice
(the "Shareholders' Offer"), then the Shareholders shall be entitled to retain
Eighty-Seven Thousand Five Hundred Dollars ($87,500) of the Deposit but shall
promptly return Eighty-Seven Thousand Five Hundred Dollars ($87,500) of the
Deposit to FNEDC by wire transfer of immediately available funds; provided, that
an appropriate officer of FNEDC will certify to the Shareholders that FNEDC was
timely ready and able to close.
In the event FNEDC (i) fails to deliver written notice to the
Shareholders within ten (10) days following the date on which FNEDC receives the
Closing Statement of Revenues, or (ii) delivers written notice to the
Shareholders within such period stating its decision not to consummate the
transactions contemplated herein, and the Shareholders (i) deliver written
notice to FNEDC within the Response Period stating their election not to accept
FNEDC's Offer, or (ii) fail to deliver written notice to FNEDC in response to
FNEDC's Offer within the Response Period, then the Shareholders shall be
entitled to retain Thirty-Seven Thousand Five Hundred Dollars ($37,500) of the
Deposit but shall promptly return One Hundred Thirty-Seven Thousand Five Hundred
Dollars ($137,500) of the Deposit to FNEDC by wire transfer of immediately
available funds; provided, that an appropriate officer of FNEDC will certify to
the Shareholders that FNEDC was timely ready and able to close.
Any adjustment to the Purchase Price in this Section 1.2 shall
not be deemed to be a loss for purposes of Article VIII hereof. For purposes of
calculating the Proportionate Deficit Amount as of the Closing Date, the
Deficiency shall be deemed to be zero.
(f) When and if a Deficiency is determined pursuant to the terms of the
Escrow Agreement, the Proportionate Deficit Amount and the Adjusted Purchase
Price shall be redetermined. In the event that there is not an Initial Sales
Trigger (i.e., 1997 Annualized Revenues are not less than $5 million) and a
Deficiency is determined pursuant to the Escrow Agreement, the purchase price of
the Stock shall be the Adjusted Purchase Price; provided, however, for purposes
of the calculation of the
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Proportionate Deficit Amount, the 1997 Annualized Revenues shall be deemed to be
equal to Five Million Seven Hundred Thousand Dollars ($5,700,000). In the event
that the determination of a Deficiency causes the Purchase Price or the Adjusted
Purchase Price, as the case may be, to be reduced from the Purchase Price or the
Adjusted Purchase Price calculated at the Closing Date, the Shareholders shall
be deemed to have repaid, such excess consideration by the distribution of the
Deficiency to FNEDC pursuant to the Escrow Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of FNEDC.
FNEDC hereby represents and warrants to the Shareholders that each of
the statements contained in this Section 2.1 is true and correct in all respects
as of the date hereof and will be true and correct at and as of the Closing.
(a) Organization, Power and Standing. FNEDC is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware with all requisite power to own and operate its properties and
to carry on its business as such business is now conducted. FNEDC is duly
qualified to do business as a foreign corporation in the State of New Jersey and
in all jurisdictions in which failure to so qualify would have a material
adverse effect on FNEDC.
(b) Power and Authority Relative to Transaction. FNEDC has
full corporate power and authority and has taken all required action necessary
to permit it to execute and deliver this Agreement and to perform all of the
obligations contained herein, and to execute, deliver and perform all of the
obligations contained in all other instruments or agreements required hereby or
incident or collateral hereto (collectively with this Agreement, the "Operative
Documents"), and none of such actions conflicts with or violates any provision
of law known to FNEDC or of the Certificate of Incorporation or Bylaws of FNEDC,
or violates or constitutes a default under or will result in any breach of any
agreement, indenture, deed of trust, mortgage, instrument, lease, order,
judgment, writ, injunction, decree, license or permit of any court or
governmental or regulatory body applicable to FNEDC or by which FNEDC or its
assets may be bound.
(c) Valid and Binding Obligation. The Operative Documents
constitute valid and legally binding obligations of FNEDC, enforceable against
it in accordance with their respective terms, subject to applicable bankruptcy,
insolvency and other general laws affecting the rights and remedies of
creditors,
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except that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(d) Required Consents. Except as set forth on Schedule 2.1(d)
hereto, no consent, order, approval, authorization, declaration or filing
including, without limitation, any consent, approval or authorization of or
declaration or filing with any governmental authority, is required on the part
of FNEDC for or in connection with the execution and delivery of the Operative
Documents.
(e) No Brokers. FNEDC has not dealt with any broker, finder or
similar agent with respect to the transactions contemplated by this Agreement
and FNEDC is not under any obligation to pay any broker's fee, finder's fee or
commission in connection with the transactions contemplated by this Agreement.
(f) Litigation. Schedule 2.1(f) sets forth each instance in
which FNEDC (i) is subject to any outstanding injunction, judgment, order,
decree, ruling or charge, or (ii) is a party or, to the knowledge of FNEDC and
any directors and officers (and employees with responsibility for litigation
matters) of FNEDC, is threatened to be made a party, to any action, suit,
proceeding, hearing or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator, which in each case would materially
adversely affect FNEDC's ability to perform its obligations under the Operative
Documents.
(g) Solvency. FNEDC is financially solvent and, subject to
receiving the net proceeds from its proposed initial public offering, FNEDC will
have the financial ability to close the transaction contemplated herein in
accordance with the terms and conditions hereof. Upon such Closing, FNEDC will
have the financial ability at all times through the expiration of the escrow
term (as defined in the Escrow Agreement) to continue the operation of the
Business of the Companies and GHA.
(h) Compliance with Laws. To its best knowledge, FNEDC holds
all permits, registrations, orders and authorizations of governmental
authorities necessary or appropriate to consummate the transactions contemplated
hereby.
(i) Disclosure. Neither the representations and warranties of
FNEDC contained in this Agreement, nor the other information included in the
Schedules hereto, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein complete and not misleading as of the dates thereof in light of the
circumstances in which they were made.
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16
2.2. Representations and Warranties Concerning the Companies.
Each of the Shareholders hereby jointly and severally
represents and warrants to FNEDC, each Shareholder with respect to only those
Companies in which he owns or has previously owned, directly or indirectly, or
has the power to vote or dispose of, any shares of capital stock of such
Company, that each of the statements contained in this Section 2.2 (including
the Schedules hereto) is true and correct as of the date of this Agreement and
will be true and correct at and as of the Closing.
(a) Organization, Power and Standing. Each Company is a
corporation duly organized, validly existing and in good corporate and tax
standing under the laws of the State of New Jersey. Each Company has the power
and authority to own its properties and engage in the business in which it is
currently engaged (except that immediately prior to the Closing, upon conversion
to a general business corporation under the New Jersey Business Corporation Act
(the "Business Corporation Act"), each Company shall no longer be authorized to
engage in the practice of dentistry). The copy of each Company's Certificate of
Incorporation and Bylaws, each as amended through the date hereof, that has been
delivered to FNEDC by each Company is complete and correct as of the date of
this Agreement and will continue in effect without further amendment (except to
convert such Company to a general business corporation under the Business
Corporation Act) through the Closing.
(b) Qualification to do Business. Each Company is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction where the failure to so qualify would have a
material adverse effect on such Company.
(c) Subsidiaries and Interest in Other Entities. No Company
has any subsidiary nor does it, directly or indirectly, own or have the right to
acquire any equity interest in any other corporation, partnership, joint venture
or other business organization, except as provided herein. No Company has made
any investment in or advance of cash or other extension of credit to any
company, entity or individual. Other than the Shareholders, there is no entity
and/or individual controlling, controlled by or under control with any Company,
nor is there any entity or person which on or prior to the Closing Date is or
was a member of the same controlled group or affiliated service group or was
under common control with any Company within the respective meanings of Sections
414(b), (m) and (c) of the Internal Revenue Code of 1986, as amended (the
"Code").
(d) Capitalization. The number of authorized shares of capital
stock, the number of shares of capital stock presently issued and outstanding,
the par value per share of capital stock
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17
and the beneficial owners of such issued and outstanding shares of capital stock
of each Company are set forth in Schedule 2.2(d). All of the outstanding shares
of capital stock of each Company have been issued in full compliance with all
applicable securities laws. No Company has any outstanding options, warrants,
conversion rights, exchange privileges or other commitments to issue or to
acquire any shares of its capital stock or any securities or obligations
convertible or exchangeable into shares of its capital stock except as set forth
in Schedule 2.2(d).
(e) Certain Outstanding Liabilities. Except as set forth on
Schedule 2.2(e), no Shareholder has any debts, liabilities or obligations of any
nature whatsoever which are related to the Business or the assets of the
Companies. To each Shareholder's best knowledge, no Company has any debts,
liabilities or obligations which have arisen after December 31, 1996 outside of
such Company's ordinary course of business (and to the Shareholders' best
knowledge, there is no present basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
any Company giving rise to any liability), except as set forth on Schedule
2.2(e).
(f) Unfunded Liabilities. Without in any way limiting the
representation and warranty set forth in Section 2.2(e) above, no Company has
any unfunded liabilities in connection with any workers' compensation,
employers' liability, or group health plan except as described in Schedule
2.2(f). The matters described in Schedule 2.2(f) will not, individually or in
the aggregate, have any material adverse effect upon the business or operations
of any Company or FNEDC.
(g) Title to Properties, Etc.. Except as listed on Schedule
2.2(g), each Company is the sole owner of, and has good, valid and marketable
title to, all of its properties and assets, real and personal, and all
trademarks, copyrights, and service marks used in connection with the Business.
None of such properties is subject to any mortgage, pledge, lien, conditional
sale agreement, security interest, encumbrance or other charge except:
(i) liens, encumbrances and leases incurred or made in the
ordinary course of business which do not materially impair the
usefulness of such properties and assets in the conduct of the business
of each Company (but excluding liens securing payment of indebtedness);
(ii) liens from nondelinquent taxes, assessments or
governmental charges or levies; and
(iii) as specifically set forth on Schedule 2.2(g).
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18
Each Company enjoys peaceful and undisturbed possession under the leases set
forth on Schedule 2.2(g). All such leases are valid, subsisting and in full
force and effect, and there are no uncured defaults of any Company under such
leases. The assets and properties of each Company, including those obtained
pursuant to said leases, are adequate to conduct the operations currently
conducted and presently proposed to be conducted by each Company. Except as
otherwise specifically provided, the Shareholders make no representation or
warranty concerning or relating to the condition, repair or maintenance of the
machinery and equipment of each Company. Except as set forth in Schedule 2.2(g),
however, no Company and none of the Shareholders has received any written notice
from any federal, state or local governmental agency that any machinery,
equipment or other assets of each Company fails to conform in all material
respects to all applicable ordinances, regulations and zoning or other laws.
There is no pending or, to the best of the Shareholders' knowledge, threatened
condemnation of any such property. Except as set forth in Schedule 2.2(g), the
leasehold or other interest of each Company in such real property is not subject
or subordinate to any recorded security interest, lien or mortgage, except with
respect to liens described in Subsections 2.2(g)(i) and (ii) above, and the
Shareholders are not aware of any security interest, lien, mortgage or other
encumbrance whatsoever on the Companies' leasehold or other interests. Except as
set forth in Schedule 2.2(g), the lease for each Company's premises has not been
amended (except for those leases between Xxxx Xxxxxx and the P.C. (as identified
in Section 3.3 hereof) that may be amended as contemplated by Section 4.1(g)
hereof) and neither the landlord, to each Shareholder's best knowledge, nor any
Company is in default thereunder. No Company and neither of the Shareholders has
received any written notice from any federal, state or local government agency
and that the use of each Company's premises by such Company and the occupancy
and operation thereof by such Company fails to comply in all material respects
with all applicable federal, state and local laws, ordinances and regulations,
including without limitation federal and state safety, health, environmental
protection and hazardous waste laws, regulations, standards and ordinances.
(h) Conduct of Business; Absence of Material Adverse Changes.
Since December 31, 1996, except as otherwise required pursuant to this
Agreement, the Business has been conducted only in the usual and ordinary
course, and there has been (i) no sale, transfer or other disposition of any of
the material assets or capital stock of any Company; (ii) no encumbrance placed
upon any Company's assets or stock; (iii) no other event or condition known to
the Shareholders which materially and adversely affects, or which is reasonably
likely to materially and adversely affect, the Business or the condition
(financial or other), prospects, assets or liabilities of any Company; and (iv)
no free service, premium or gift offered as an inducement to existing or
prospective patients (other than charitable care provided in
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19
accordance with any Company's policy regarding uncompensated care) that
materially and adversely affects, or which is reasonably likely to materially
and adversely affect, the Business or the condition (financial or other),
prospects, assets or liabilities of any Company.
In particular, and without limiting the generality of the foregoing,
since December 31, 1996, the Shareholders have not permitted any Company to do
any of the following, except as otherwise contemplated herein:
(i) change its method of management or operations;
(ii) amend its Certificate of Incorporation or Bylaws;
(iii) terminate the services of any employee, consultant or
agent of such Company;
(iv) increase the compensation payable or to become payable to
any officer, director, employee or agent of such Company or make or
enter into any bonus payment arrangement with any officer, director,
employee, or agent, or hire or engage any additional management
personnel or consultants for the business of such Company, except as
disclosed in Schedule 2.2(h) or in connection with the transactions
contemplated hereunder;
(v) make any loan to, or enter into any other transaction
with, any of its directors, officers and employees outside of the
Company's ordinary course of business;
(vi) adopt, amend, modify or terminate any bonus,
profit-sharing, incentive, severance or other plan, contract or
commitment for the benefit of any of its directors, officers and
employees (or take any such action with respect to any of its employee
benefit plans);
(vii) directly or indirectly redeem, purchase or otherwise
acquire or dispose of any properties or assets except in the ordinary
course of business;
(viii) subject any of its properties or assets to any
mortgage, pledge, security interest or lien;
(ix) directly or indirectly redeem, purchase or otherwise
acquire any of its outstanding capital stock;
(x) incur any indebtedness for borrowed money, make any loans
or advances to any individual, firm or corporation or assume, guarantee
or endorse, or otherwise become responsible for, the obligation of any
other individual,
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20
firm or corporation, except in the ordinary course of business;
(xi) modify, amend, cancel or terminate any existing agreement
material to its business, including the making of any substantial
prepayment on any existing obligation, except in the ordinary course of
business;
(xii) make any material change in the accounting methods or
practices employed by such Company as at the date hereof in respect of
the business of such Company;
(xiii) delay or postpone the payment of its accounts payable
and other liabilities outside its ordinary course of business;
(xiv) enter into any contract or commitment involving in any
instance aggregate payment by such Company of more than $10,000 or
extending beyond the Closing Date, except in connection with the
transactions contemplated hereby or in the usual and ordinary course of
business consistent with past practice;
(xv) declare or pay any dividend or distribution in respect of
its capital stock, either in cash, in kind or in shares of stock (other
than dividends or distributions that are consistent in nature and
amount with each Company's past dividends or distributions during such
Company's last five (5) fiscal years; provided, however, that subject
to the final sentence of this Section 2.2(h), the Shareholders may
cause the Companies to distribute to the Shareholders all cash in the
Companies' respective bank accounts on or before the Closing Date), or
issue or authorize any securities of the Company or grant stock
options, warrants or other rights to acquire shares of its stock or
securities convertible into or exchangeable for shares of its stock;
(xvi) take any other action which would materially adversely
affect or detract from the value of such Company or the capital stock
of such Company, including without limitation cancelling any debts or
claims;
(xvii) waive any rights of material value or modify, amend,
alter or terminate any Material Contract (defined in 2.2(n) below);
(xviii) grant any license or sublicense of any of its rights
under or with respect to any of its intellectual property; and/or
(xix) directly or indirectly offer, solicit or entertain
offers for or take any other action with a view to
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21
the sale of all or any substantial part of the assets, capital stock or
business of such Company.
Furthermore, the Shareholders have permitted the Companies and GHA to
continue to pay any liabilities which are outstanding and due, consistent with
past practice and within forty-five (45) days of receipt of evidence that each
such outstanding liability is due and payable.
(i) Tax Returns and Payments. Each Company has prepared in
good faith and filed when due, or timely obtained extensions of time for filing,
all tax returns required by law to be filed, and has paid when due all taxes,
assessments and other governmental charges (whether or not shown on any tax
return), including without limitation all estimated tax payments imposed upon
any of its properties, assets or income. To the best of the Shareholders'
knowledge, no Company has any liability for any federal, state or local taxes
not yet paid which relate to prior taxable years, except the portion of the 1997
tax year preceding the Closing. To the best of the Shareholders' knowledge, all
such tax returns are correct and complete in all material respects and no income
tax return nor any corporation excise tax return of any Company has ever been
audited except as otherwise set forth on Schedule 2.2(i), which schedule sets
forth in reasonable detail the nature and scope of each disclosed audit. No
Company has ever filed a consent under Section 341(f) of the Code. No Company
has executed any waiver or consent that would have the effect of extending any
applicable statute of limitations in respect of any of its tax liabilities. To
the best of the Shareholders' knowledge, the charges, accruals and reserves on
the books of each Company in respect of taxes for all fiscal periods are
adequate, and there is no unpaid assessment or any basis for the assessment of
any material amount of additional taxes for any period or partial period
preceding Closing. Except as set forth on Schedule 2.2(i), neither the Internal
Revenue Service nor any other taxing authority has asserted or threatened to
assert, or is now asserting or threatening to assert, against any Company any
deficiency or claim for additional taxes or interest thereon or penalties in
connection therewith. Each Company has withheld from its employees or its other
payees gross compensation and has paid over to appropriate governmental
authorities all tax and other withholdings required by applicable law. If any
Company has any liability arising from or related to any taxes for any period
prior to the Closing, the Shareholders shall be fully and solely responsible for
the payment of such tax liabilities. Each Shareholder agrees to indemnify FNEDC
in accordance with Section 8.2 hereof for any liability of any Company relating
to or arising from any taxes for any period prior to the Closing; provided that
it is agreed and acknowledged that any indemnity claim made by FNEDC hereunder
shall neither be subject to the basket nor be included in the cap as set forth
in Section 8.5 hereof.
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22
(j) Compliance with Laws. Except as set forth on Schedule
2.2(j) hereto, to each Shareholder's best knowledge, each Company presently
holds all permits, licenses, consents, certificates, approvals, qualifications,
registrations, orders and authorizations of governmental authorities
(collectively, "Permits") necessary or appropriate for the conduct of the
Business and the consummation of the transactions contemplated hereby, and all
such Permits are listed on Schedule 2.2(j). To the best of the Shareholders'
knowledge, the Permits constitute all such permits, licenses, consents,
certificates, approvals, qualifications, registrations, orders and
authorizations of governmental authorities required for the conduct of the
Business, and no suspension or cancellation of any Permit is threatened. To the
best of the Shareholders' knowledge, all of the Permits are in full force and
effect and are valid and enforceable in accordance with their terms. To the best
of the Shareholders' knowledge, there exists no fact or circumstance which
constitutes, or with the passage of time or giving of notice or both would
constitute, a default under any Permit or allow any governmental or other
authority to cancel or terminate any Permit. No Company and none of the
Shareholders has received any notice from any federal, state or local
governmental agency, and no Company and none of the Shareholders has any
knowledge or reason to believe that any Company's operation of the Business
violates any federal, state or local law, regulation, order or restriction that
materially and adversely affects or which is reasonably likely to materially and
adversely affect, the Business, or the condition (financial or other),
prospects, assets or liabilities of any Company. Except as set forth on Schedule
2.2(j) hereto, to each Shareholder's best knowledge, each Company has operated
the Business in full compliance with all applicable laws, including all laws and
regulations relating to payment and claims for health care services, employment,
occupational safety and health, and environmental matters. Except as set forth
on Schedule 2.2(j) hereto, to each Shareholder's best knowledge, at all times
prior to the filing contemplated by Section 4.1(c) hereof, no Company is in
material violation of any federal, state or local statute, ordinance, judgment,
decree, order or governmental rule, regulation, policy or guideline applicable
to such Company in a manner which could materially and adversely affect its
condition (financial or otherwise), the transactions contemplated by this
Agreement or the Business.
(k) Insurance. Each Company has continuously maintained for
the entire period of time the Business has been in existence, and continues to
maintain, property, general liability, professional liability and workers'
compensation insurance covering the operations of the Business through the
current insurance policies listed in Schedule 2.2(k) hereto or through
comparable insurance policies previously in effect. All such current policies
are in full force and effect, all premiums due thereon have been paid, and at
all times prior to the filing
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23
contemplated by Section 4.1(c) hereof, each Company has complied in all material
respects with the provisions of such policies. Each Company and each
dentist-employee of each Company currently maintains in full force and effect an
individual professional liability insurance policy with liability limits of at
least $1 million per occurrence and $3 million aggregate except as provided on
Schedule 2.2(k). Except as otherwise indicated on Schedule 2.2(k), all liability
insurance policies are on an "occurrence" basis. The insurance listed in
Schedule 2.2(k) is in amounts adequate to cover losses on physical assets.
(l) Employees and Compensation.
(i) To each Shareholder's best knowledge, no Company is in
violation of any applicable federal, state or local laws or regulations
with respect to employment, employment practices, or the terms and
conditions of employment, wages and hours in a manner which could
materially and adversely affect its condition (financial or otherwise).
None of any Company's employees is represented by any union, and there
is no labor strike, slowdown, stoppage, organizational effort, dispute
or proceeding by or with any employee or former employee of any Company
or any labor union pending or threatened against any Company.
(ii) To each Shareholder's best knowledge, there are no
employment or consulting contracts or arrangements (other than those
terminable at will) with any employees or consultants of or associated
with any Company, except as described on Schedule 2.2(l) hereto.
Schedule 2.2(l) also sets forth a true and complete list of all
employees of and consultants to each Company, showing date of hire,
hourly rate or salary or other basis of compensation, each bonus,
hourly rate increase and/or salary increase granted since December 31,
1996 (or committed to be granted in connection with the transactions
contemplated hereunder), and job function.
(m) Employee Benefits. Schedule 2.2(m) contains a complete and accurate
list of each plan, arrangement, understanding, practice or commitment, formal or
informal, firm or contingent, written or oral, currently sponsored, maintained
or contributed to by any Company which covers, or which at any time prior to the
Closing covered, any of the current or former officers, employees or independent
contractors of such Company or its predecessors and providing any of the
following benefits: bonus, stock bonus, profit sharing, pension, retirement,
life insurance, medical, hospitalization, dental, vision, disability, vacation,
workers' compensation, deferred or incentive compensation, severance benefits
and including, without limitation, each "employee pension benefit plan" (within
the meaning of Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended (hereinafter "ERISA")) and "employee welfare benefit plan"
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(within the meaning of Section 3(1) of ERISA) (collectively, the "Plans").
Except as disclosed on Schedule 2.2(m):
(i) No Company and no Shareholder has engaged in any
transactions which would, directly or indirectly, subject any Plan, its
related trust or any Company to a tax or penalty imposed under Section
4975 of the Code or Section 502(i) of ERISA;
(ii) Each Company and each Shareholder has performed all its
or his respective material obligations under the Plans and has not
violated the provisions of any of the Plans and, to the best knowledge
of each Company and each Shareholder, no other party is in violation
thereof;
(iii) Each Plan is in compliance in all material respects with
all applicable requirements prescribed by all statutes (including,
without limitation, ERISA and the Code), orders, governmental rules and
regulations;
(iv) All payments required to be made to each Plan as of the
Closing have been timely and completely made;
(v) There is no suit, action, dispute, claim, arbitration or
legal, administrative or other proceeding or governmental investigation
pending, or to the best knowledge of any Company or either Shareholder,
is threatened, alleging any breach of the terms of any Plan or of any
fiduciary duties thereunder or violation of any applicable law with
respect to any Plan;
(vi) Subject to applicable requirements of ERISA, neither any
provision of any Plan nor any agreement with any employee nor any
representation or course of conduct by or on behalf of any Company
would prevent the amendment or termination after the Closing of any
Plan without liability to such Company;
(vii) There are no benefits or severance obligations of any
Company that will arise as a result of the transactions contemplated
hereunder;
(viii) No Plan which is an "employee welfare benefit plan"
provides for continuing benefits or coverage, including but not limited
to medical, health or life insurance, to any employee or former
employee following termination of employment with any Company other
than that either required by Section 4980B of the Code and Sections 601
through 609 of ERISA (or similar provisions of state law), or provided
in accordance with the conversion feature of the Plan.
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25
(ix) Each Plan which is a "group health plan" (within the
meaning of Section 4980(B)(a)(2) of the Code) is in material compliance
with the applicable requirements under Section 4980B of the Code and
Sections 601 through 609 of ERISA;
(x) No Plan is, or forms part of, a "multiple employer welfare
arrangement" (within the meaning of Section 3(40) of ERISA), a
"multiemployer plan" (within the meaning of Section 4001(a)(3) of
ERISA) or a "voluntary employees' beneficiary association" (within the
meaning of Section 501(c)(9) of the Code);
(xi) With respect to each Plan which is a self-insured
"employee welfare benefit plan," no claims have been made pursuant to
any such Plan that have not yet been paid and, to the best knowledge of
each Company and the Shareholders, no injury, sickness or other medical
condition has been incurred with respect to which claims may be made
pursuant to any such Plan; and
(xii) All reports, forms and other documents with respect to
any Plan required to be filed with any government entity or to be
disclosed to Plan participants and their beneficiaries have been timely
filed or disclosed, as the case may be, and are accurate in all
material respects.
(n) Material Contracts. Schedule 2.2(n) hereto sets forth a complete
and accurate list and compilation of all material:
(i) Contracts with respect to the provision of health
care services, including all contracts between third
party payors and any Company or any Shareholder;
(ii) Licenses, leases, contracts and other arrangements
with respect to any material property of any Company;
(iii) Contracts (written or unwritten) with respect to
which any Company has any liability or obligation,
contingent or otherwise, involving more than $10,000
or which may otherwise have any continuing effect
after the Closing, or which place any material
limitation on the method of conducting or the scope
of the Business;
(iv) Contracts of any Company with directors, officers,
employees, agents and/or consultants of the Company
or the spouses or relatives of such persons;
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26
(v) Compensation arrangements for all employees and
consultants including rates of pay and other
benefits and the amounts of compensation and other
benefits accrued as of a recent date;
(vi) Agreements, contracts or instruments relating to
the borrowing of money, or the guaranty of any
obligation for the borrowing of money;
(vii) Contracts between officers, directors or employees of
any Company and any other person or entity which
purport to restrict any Company's business activities
or use of information in the Business, including
without limitation any covenant not to compete;
(viii) All agreements relating to any securities of any
Company or rights in connection therewith; and
(ix) Any contracts, leases or other agreements referred to
in any other Schedule hereunder, and any other
material contracts, instruments, commitments, plans
or arrangements of any Company.
All the foregoing are herein called "Material Contracts." Schedule 2.2(n)
includes with respect to each Material Contract the names of the parties, the
date thereof, its title or other general description. Copies of all written
Material Contracts have been delivered to FNEDC or its counsel or accountants.
Each Material Contract sets forth the entire arrangement and understanding
between the respective Company and the respective third parties with respect to
the subject matter thereof and, except as indicated in such Schedule, there have
been no amendments or side or supplemental arrangements to or in respect of any
Material Contract. Each Company has furnished to FNEDC true and correct copies
of all Material Contracts as currently in effect, and will furnish any further
information that FNEDC may reasonably request in connection therewith. Each
Material Contract is valid and in full force and effect, and each Company has
performed all material obligations required to be performed by it thereunder.
Prior to the filing contemplated by Section 4.1(c) hereof, no Company was at any
time or is in material default under or in material breach or material violation
of (a) its Certificate of Incorporation or Bylaws, or (b) to each Shareholder's
best knowledge, any Material Contract, or (c) any other agreement, indenture,
deed of trust, mortgage, instrument, lease, order, judgment, writ, injunction,
decree, license, permit, statute, rule or regulation of any court or
governmental or regulatory body applicable to it in a manner which would
materially and adversely affect its condition, the transactions contemplated by
this Agreement or the Business, and the execution and delivery of the Operative
Documents and the consummation of the transactions contemplated thereby will not
result in the
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27
violation of any law, decree or order known to such Company or in any default,
breach or violation of such Company's Certificate of Incorporation or Bylaws, or
any Material Contract to which such Company is a party or by which it is bound.
Except as set forth on Schedule 2.2(n) and the filings contemplated by Section
4.1(c) hereof, to the best of the Shareholders' knowledge, there is no event
which has occurred or existing condition which constitutes, or with notice or
lapse of time or both, would constitute a default under any Material Contract or
would cause the acceleration of any obligation of any party thereto, or give
rise to any right of termination or cancellation or cause the creation of any
lien or encumbrance on any asset of any Company. To the best of the
Shareholders' knowledge, no third party is in default under any material
provision of any Material Contract. None of the Shareholders has any knowledge
that the parties to any Material Contract will not fulfill their obligations
thereunder in all material respects. There is no term of any Material Contract
that materially adversely affects the Business or the business, operations,
affairs, prospects or conditions of any Company.
(o) Books and Records. As of the Closing Date, all past
actions and authorizations of each Company's board of directors and shareholders
since the date of each Company's respective incorporation have been fully and
validly ratified. Except as detailed in Schedule 2.2(o) hereto, the general
ledgers and books of each Company and all of such Company's other books,
accounts and records are identified on Schedule 2.2(o), constitute all such
ledgers, books, accounts and records of each Company, are complete and correct
in all material respects.
(p) Banking Relationships. All of the arrangements which any
Company has with any banking institution are completely and accurately described
in Schedule 2.2(p), indicating with respect to each such arrangement the type of
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereto. No
Company has any outstanding powers of attorney of any kind.
(q) Required Consents, Etc. Except as described in Schedule
2.2(q) hereto, to the best of the Shareholders' knowledge, no consent, approval,
authorization, declaration or filing, including without limitation any consent,
approval or authorization of or declaration or filing with any governmental
authority, is required on the part of any Company in connection with the
execution and delivery of the Operative Documents.
(r) Accounts Receivable. To the best of the Shareholders'
knowledge, all notes and accounts receivable of each Company are reflected
properly on its books and records. Except as set forth on Schedule 2.2(r), no
Company has any accounts or loans receivable from any person, firm or
corporation
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which is affiliated with such Company or from any director, officer or employee
of such Company. All accounts receivable of each Company arose out of bona fide
transactions in its ordinary course of business.
(s) Litigation. Except as set forth on Schedule 2.2(s), there
is no litigation, proceeding or investigation pending or, to the best of the
Shareholders' knowledge, threatened (nor, to the best of the Shareholders'
knowledge, is there any basis therefor) against any Company or affecting any of
its properties, rights or assets or against any officer or employee which
relates to the affairs of any Company or the right of any officer or employee to
participate in the business of any Company and which is reasonably likely to
result in any material adverse change in the Business or in the business or
condition (financial or otherwise), prospects, assets or liabilities of any
Company or which relates to the Stock or the transactions contemplated by this
Agreement, in any court or before any authority or governmental entity
including, without limitation, actions, proceedings or investigations with
respect to any alleged violation by any Company of any law, statute, ordinance,
regulation, order, policy or guideline of any governmental entity.
(t) No Medicare Payment Program Providers. None of the
dentists rendering services to patients of the Companies at the Companies'
locations are participating providers in the Medicare payment program.
(u) No Brokers. No Company has dealt with any broker, finder
or similar agent with respect to the transactions contemplated by the Agreement
and no Company is under any obligation to pay any broker's fee, finder's fee or
commission in connection with the transactions contemplated by this Agreement.
(v) Disclosure. Neither the representations and warranties of
each Company and each Shareholder contained in this Agreement nor the financial
or other information included in the Schedules hereto contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein complete and not
misleading as of the dates thereof in light of the circumstances in which they
were made. There is no fact presently known to the Shareholders which will (so
far as the Shareholders or any Company can now reasonably foresee) materially
adversely affect the Business or the operations and/or affairs of any Company.
(w) No Offer. During the periods (i) commencing on January 15,
1997 and continuing through July 15, 1997, and (ii) commencing on the execution
date of this Agreement and continuing through the earlier of December 15, 1997
or the Closing Date, no Company has, directly or indirectly, through any
officer, director, agent or otherwise, (i) solicited, initiated or
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encouraged submission of proposals or offers from any person other than FNEDC
relating to any acquisition or purchase of any of the stock and/or the assets of
any Company, or any equity interest in any Company or any equity investment,
merger, consolidation or business combination with any Company, or (ii)
participated in any discussions or negotiations regarding, or furnished to any
other person, any non-public information with respect to, or otherwise
cooperated in any way with, or assisted or participated, facilitated or
encouraged, any effort or attempt by any other person to do or seek any of the
foregoing.
2.3. Representations and Warranties Concerning the
Shareholders.
Each Shareholder hereby severally, but not jointly, represents
and warrants to FNEDC that each of the statements contained in this Section 2.3
is true and correct as to himself as of the date of this Agreement and will be
true and correct at and as of the Closing:
(a) Title. Such Shareholder has good, marketable and
unencumbered title to, and full right, power and authority to sell, transfer,
assign and deliver the Stock; and FNEDC will on the Closing Date, acquire good
and marketable title to such Stock, free and clear of any liens, encumbrances,
restrictions on transfer, charges or claims.
(b) Due Issuance. The shares of Stock owned by such
Shareholder are validly issued, fully paid and nonassessable.
(c) Power and Authority Relative to Transaction. Such
Shareholder has full power and authority and has taken all required action
necessary to permit him to execute and deliver the Operative Documents, and none
of such actions conflicts with or violates any provision of law known to him or
violates or constitutes a default under or will result in any breach of any
agreement, indenture, deed of trust, mortgage, instrument, lease, order,
judgment, writ, injunction, decree, license or permit of any court or
governmental or regulatory body applicable to him.
(d) Valid and Binding Obligations. The Operative Documents
constitute the valid and legally binding obligations of such Shareholder,
enforceable against him in accordance with their respective terms, subject to
applicable bankruptcy, insolvency and other general laws affecting the rights
and remedies of creditors, except that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(e) Required Consents. No consent, order, approval,
authorization, declaration or filing including, without limitation, any consent,
approval or authorization of or
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declaration or filing with any governmental authority, is required on the part
of such Shareholder for or in connection with the execution and delivery of the
Operative Documents.
(f) Litigation. Schedule 2.3(f) sets forth each instance in
which such Shareholder (i) is subject to any outstanding injunction, judgment,
order, decree, ruling or charge or (ii) is a party or, to the knowledge of such
Shareholder, is threatened to be made a party to any action, suit, proceeding,
hearing or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction or
before any arbitrator, which in each case would materially adversely affect the
Shareholder's ability to perform his obligations under the Operative Documents.
(g) No Brokers. Such Shareholder has not dealt with any
broker, finder or similar agent with respect to the transactions contemplated by
the Agreement and such Shareholder is not under any obligation to pay any
broker's fee, finder's fee or commission in connection with the transactions
contemplated by this Agreement.
(h) Dental Practice. Except as set forth in Schedule 2.3(h),
such Shareholder conducts his dental practice exclusively through the Companies,
and the Companies have good, marketable and, subject to any exceptions set forth
in Section 2.2(h), unencumbered title to all assets used by such Shareholder in
connection with his dental practice.
(i) No Offer. During the periods (i) commencing on January 15,
1997 and through July 15, 1997, and (ii) commencing on the execution date of
this Agreement and through the earlier of December 15, 1997 or the Closing Date,
no Shareholder has, directly or indirectly, offered, solicited offers for or
sold, assigned, pledged or otherwise transferred any of the Stock prior to the
Closing. No Shareholder has, directly or indirectly, through any agent or
otherwise, (i) solicited, initiated or encouraged submission of proposals or
offers from any person other than FNEDC relating to any acquisition or purchase
of any of the stock and/or the assets of any Company, or any equity interest in
any Company or any equity investment, merger, consolidation or business
combination with any Company, or (ii) participated in any discussions or
negotiations regarding, or furnished to any other person, any non-public
information with respect to, or otherwise cooperated in any way with, or
assisted or participated, facilitated or encouraged, any effort or attempt by
any other person to do or seek any of the foregoing.
(j) Disclosure. Neither the representations and warranties of
such Shareholder contained in this Agreement, nor the other information included
in the Schedules hereto contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained
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herein and therein complete and not misleading as of the dates thereof in light
of the circumstances in which they were made.
ARTICLE III
ADDITIONAL COVENANTS AND AGREEMENTS
3.1. FNEDC's Access to Information. The Shareholders shall cause each
Company to permit FNEDC and its counsel, accountants and other representatives
full and free access, upon reasonable notice and during normal business hours
without interference to business operations, throughout the period prior to the
Closing, to all of the properties, books, contracts, commitments, records
(including financial and tax records for fiscal years 1993 through and including
1996 and any 1997 interim period prior to Closing), officers and personnel of
each Company and shall furnish to FNEDC during such period all such information
concerning the business activities of each Company as FNEDC or its counsel,
accountants or other representatives may reasonably request. FNEDC agrees to pay
the reasonable out-of-pocket expenses incurred in providing this information.
FNEDC further agrees that it will not communicate with employees of the
Companies or GHA without the prior approval of Xxxx Xxxxxx. If the transactions
contemplated by this Agreement are not consummated, all confidential or
proprietary information furnished by the Shareholders or any Company shall be
kept in strict confidence in accordance with Article X hereof and shall not be
used or disclosed by any recipient, and FNEDC shall cause each such recipient to
return to such Company all copies of documents or records furnished hereunder.
No investigation or findings of FNEDC shall diminish or affect the
representations and warranties of the Shareholders in this Agreement or relieve
the Shareholders of any of their obligations hereunder; provided, however, that
FNEDC shall promptly disclose to the Shareholders the results of any
investigation by FNEDC which reveals information that is likely to materially
adversely affect the Shareholders.
3.2. Notices and Consents; Governmental Approvals. The Shareholders
shall use their good faith commercially reasonable efforts to obtain, and shall
cooperate with FNEDC to obtain, all governmental and regulatory approvals and
actions necessary to consummate the transactions contemplated hereby which are
required to be obtained by applicable law or regulations. The Shareholders will
cause each Company to give any notices to third parties, and will use their good
faith commercially reasonable efforts to obtain any third party consents that
FNEDC reasonably may request in connection with the matters referred to in
Section 2.1(d) above and/or to effect transfers of the contracts and agreements
described in Schedule 2.2(n); provided however, that during the Escrow Period
(as defined in the Escrow Agreement) the Shareholders shall not be required to
give any notice or obtain
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any consent to transfer from any employer which is a party to any dental plan
contract with the Company as of the closing. Each of the Parties will give any
required notices, make any filings with, and use its or his, as the case may be,
good faith commercially reasonable efforts to obtain any governmental approvals
in connection with the matters referred to in Sections 2.1(d), 2.2(j) and 2.3(e)
above.
3.3. Assignment of Intellectual Property and Other Documents. In the
event that any Shareholder has ownership rights, title or interest in any
intellectual property, or is a party in his individual capacity to any
contracts, agreements, or other documents ("Other Documents") intended to be
transferred to FNEDC or the P.C., pursuant to the Closing, such Shareholder
hereby conveys, transfers and assigns any and all of such right, title and
interest in and to said intellectual property and Other Documents and will take
whatever action necessary for FNEDC or the P.C. to effect transfer or assignment
of the same as of the Closing or as soon as possible thereafter.
3.4. Assumption of Certain Automobile Leases by Xxxx Xxxxxx. Prior to
the Closing, the Shareholders shall cause Xx. X. Xxxxxx Group Dental Associates,
P.A. to convey, transfer and assign to Xxxx Xxxxxx any and all of their
respective right, title and interest in and to the Automobile Leases described
on the attached Schedule 3.4 (the "Automobile Leases"). The Shareholders will
take whatever action is necessary to effect the transfer or assignment of the
Automobile Leases to Xxxx Xxxxxx prior to the Closing.
3.5. Indemnification of Xxxx Xxxxxx by the P.C. With Respect to Certain
Equipment Leases Assumed by the P.C. Schedule 3.5 attached hereto sets forth
certain leases for equipment used by the Companies in the Business ("Equipment
Leases") for which Xxxx Xxxxxx, the son of Xxxx Xxxxxx and a dentist employed by
one or more of the Companies ("Xxxx Xxxxxx"), is liable as a party to the lease
or as a guarantor. Upon Closing, the Shareholders shall use their best efforts
to cause Xxxx Xxxxxx and each Company that is a party to an Equipment Lease
(each a "Lessee") to take whatever action is necessary to effect the transfer or
assignment of such Equipment Lease to the P.C. and to obtain the approval or
consent of the lessor to convey, transfer and assign to the P.C. any and all of
such Lessee's right, title and interest in and to such Equipment Lease. The P.C.
hereby agrees to indemnify, defend and hold harmless Xxxx Xxxxxx in accordance
with the terms and conditions of the Xxxx Xxxxxx Employment Agreement as defined
in Section 4.1(e) hereof.
3.6. Space Arrangement with Xxxxxxx. The Parties' agreement with
Xxxxxxx is set forth on the attached Schedule 3.6 (the "Xxxxxxx Space
Agreement").
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3.7. Consulting Arrangement with Xxxx Xxxxxx. The Parties' agreement
with Xxxx Xxxxxx is set forth on the attached Schedule 3.7.
3.8. Operation of Business. No Shareholder will permit any Company to
engage in any practice, take any action, or enter into any transaction outside
of its ordinary course of business. Without limiting the generality of the
foregoing, the Shareholders will ensure that no Company will, at any time prior
to Closing, (i) declare, set aside or pay any dividend or make any distribution
with respect to its capital stock (other than dividends and distributions that
are consistent in nature and amount with such Company's last five (5) fiscal
years; provided, however, that subject to the final sentence of Section 2.2(h),
the Shareholders may cause the Companies to distribute to the Shareholders all
cash in the Companies' respective bank accounts on or before the Closing Date),
or redeem, purchase or otherwise acquire any of its capital stock, or (ii)
otherwise engage in any practice, take any action, or enter into any transaction
of the sort described in Section 2.2(h) above.
3.9. Preservation of Business. Prior to Closing, the Shareholders will
use their good faith commercially reasonable efforts to ensure that each Company
will keep the Business and properties substantially intact, including its
present operations, physical facilities, working conditions and relationships
with lessors, licensors, suppliers, customers and employees.
3.10. Notice of Developments. The Shareholders on one hand, and FNEDC,
on the other, will give prompt written notice to the other of any material
adverse development prior to Closing which causes or is likely to cause a breach
of any of their, his or its own, as the case may be, representations and
warranties in Sections 2.1, 2.2 and 2.3 above. No disclosure by any Party
pursuant to this Section 3.10, however, shall be deemed to amend or supplement
the Schedules or to prevent or cure any misrepresentation, breach of warranty or
breach of covenant.
3.11. Insurance. Each Shareholder will use his good faith commercially
reasonable efforts to ensure that at all times prior to the Closing Date each
Company and each dentist-employee of each Company will continue to maintain in
full force and effect an individual professional liability insurance policy with
liability limits of at least $1 million per occurrence and $3 million aggregate.
If any of the foregoing insurance is on a "claims-made" basis, each Shareholder
will use his good faith commercially reasonable efforts to ensure that each
Company will prior to Closing obtain, at its expense, malpractice tail
insurance, in form and substance acceptable to FNEDC, to insure against general,
professional and directors and officers liability claims made on or after
Closing resulting from or arising out of events occurring in the Business prior
to Closing.
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Such tail policies shall name FNEDC as a named insured thereunder.
3.12. Further Assurances. The Shareholders on one hand, and FNEDC, on
the other, both before and after the Closing, upon the request from time to time
of the other, and without further consideration, will do each and every act and
thing as may be necessary or reasonably requested to consummate the transactions
contemplated hereby (including, without limitation, the orderly transfer to
FNEDC of the Stock), including without limitation by executing, acknowledging
and delivering assurances, assignments and other documents and instruments,
furnishing information and copies of documents, books and records (including
without limitation tax records); filing reports, returns, applications, filings
and other documents and instruments with governmental authorities; and
cooperating with the other in exercising any right or pursuing any claim,
whether by litigation or otherwise, other than rights and claims running against
the party from whom or which such cooperation is requested.
3.13. Survival of Covenants. The covenants contained in Sections 3.5,
3.6, 3.7, 3.12 and 3.13 shall survive the Closing.
3.14. Break-Up Fee. Each Shareholder hereby agrees that, during the
applicable Break-Up Fee Period as defined below, in the event of a sale, merger,
consolidation or other disposition of all or a majority of the assets or stock
of any Company or GHA, to, with or into a third party other than an affiliate of
FNEDC, another Company, GHA or a Shareholder, or in the event any Company
otherwise combines or forms a partnership with a third party other than an
affiliate of FNEDC, another Company, GHA or a Shareholder, then FNEDC would be
irreparably harmed. Accordingly, in the event of any such sale, merger,
consolidation or other combination (a "Transaction"), within the applicable
Break-Up Fee Period set forth below, each Shareholder hereby agrees that he
shall be jointly and severally liable to FNEDC for liquidated damages in the
aggregate amount of One Million Dollars ($1,000,000) under this Agreement and
the DPO Stock Purchase Agreement, which liquidated damages shall be due and
payable to FNEDC immediately upon the consummation of any such sale, merger,
consolidation or other combination.
In the event (i) FNEDC terminates this Agreement in accordance
with Article IX hereof or FNEDC of NJ terminates the DPO Stock Purchase
Agreement in accordance with Article IX thereof and the Shareholders are unable
to terminate either this Agreement in accordance with Article IX hereof or the
Stock Purchase Agreement in accordance with Article IX thereof, or (ii) the
Shareholders fail to make good faith commercially reasonable efforts to fulfill
the closing conditions set forth in Section 4.1 hereof by the Closing Date and
FNEDC delivers a written notice to the Shareholders stating its election to
terminate this Agreement, then the Break-Up Fee Period shall commence as of the
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Closing Date and expire no earlier than six (6) months from such date.
In the event (i) the Shareholders terminate this Agreement in
accordance with Article IX hereof, or (ii) FNEDC is unable to, or elects not to,
fulfill the closing conditions set forth in Section 4.2 hereof by the Closing
Date and the Shareholders deliver a written notice to FNEDC stating their
election to terminate this Agreement, then the Break-Up Fee Period shall
terminate as of the date of such notice.
3.15. Subchapter S Elections. FNEDC agrees to use commercially
reasonable efforts to make a Section 1377(a)(2) election in a timely manner for
each Company that exists as of the Closing Date for federal income tax purposes
as a Subchapter S corporation in order to close the books of such Company as of
the Closing Date. Each Shareholder hereby agrees to provide reasonable
assistance, upon and in accordance with the reasonable request of FNEDC, to
effect FNEDC's filing of the Subchapter S elections described herein above.
ARTICLE IV
CONDITIONS TO CLOSING
4.1. Conditions Precedent to FNEDC's Obligations. The obligation of
FNEDC to consummate the transactions contemplated by this Agreement is expressly
subject to the fulfillment or express written waiver of the following conditions
on or prior to the Closing Date:
(a) Representations and Warranties True; Obligations
Performed. Each of the representations and warranties contained in Sections 2.2,
2.3 and 2.4 of this Agreement shall be true and correct in all material respects
at and as of the Closing Date, except as otherwise specifically provided for
herein. The Shareholders shall have performed, on or before the Closing Date,
all obligations under this Agreement which by the terms hereof are to be
performed respectively by each Shareholder on or before the Closing Date.
(b) Delivery of Certificates. The Shareholders shall have
delivered to FNEDC certificates representing the Stock, duly endorsed for
transfer or with duly executed stock powers attached.
(c) Filing of Amended Certificates of Incorporation. The
Shareholders shall have caused each Company to file an Amended Certificate of
Incorporation in the form attached hereto as Exhibit B.
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(d) Escrow Agreement. The Shareholders shall have executed and
delivered the Escrow Agreement.
(e) Employment Agreement with Xxxx Xxxxxx. The Shareholders
shall have caused the execution and delivery of an employment agreement among
Xxxx Xxxxxx, the P.C. and GHA (the "Xxxx Xxxxxx Employment Agreement") attached
hereto as Exhibit C.
(f) Leases. The Shareholders shall have caused each Company to
deliver a fully executed Assignment and Assumption Agreement in the form
attached hereto as Exhibit D with respect to each lease set forth on Schedule
2.2(g) for which consent to transfer is required, dated as of the Closing Date,
by and among such Company, the P.C. and the respective landlord (collectively,
the "Assumption Agreements").
(g) Xxxxxx Leases. Xxxx Xxxxxx shall have executed and
delivered a lease by and between Xxxx Xxxxxx and the P.C. for the premises
located at (i) 000 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx, (ii) 000 Xxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxxxx, and (iii) 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxx
Xxxxxx, in the form attached hereto as Exhibit E ((i)-(iii), collectively, the
"Xxxxxx Leases").
(h) Equipment Leases. The Shareholders shall have caused each
Company and the respective lessor to deliver: (i) a fully executed assignment of
each equipment lease described in Section 2.2(n) hereof, including but not
limited to those equipment leases listed on Schedule 3.5 for which Xxxx Xxxxxx
is liable as a party to the lease or as a guarantor, in a form reasonably
acceptable to FNEDC and dated as of the Closing Date, by and among such Company,
the P.C. and the respective lessor (collectively, the "Equipment Lease
Assignments"); and (ii) an executed consent to transfer from any lessors in form
and substance reasonably satisfactory to FNEDC with respect to each lease in
which the Companies are not lessees; provided, however, that failure by the
Shareholders to obtain and deliver any such executed Equipment Lease Assignments
and/or consents to transfer after good faith commercially reasonable efforts to
do so shall not affect the Shareholders' rights, if any, to retain all or any
portion of the Deposit.
(i) Legal Opinion from Counsel for the Shareholders. FNEDC
shall have received the written opinion of Cole, Schotz, Meisel, Xxxxxx and
Xxxxxxx, P.C., counsel for the Shareholders, Xxxx Xxxxxx and the Companies,
dated the Closing Date and substantially in the form attached hereto as Exhibit
F.
(j) Delivery of Other Instruments. The Shareholders shall have
delivered instruments of conveyance for the Other Documents and such other
certificates, consents, instruments or agreements as may be reasonably requested
by FNEDC or its counsel.
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(k) Termination of Plans. The Shareholders shall have caused
the Companies to terminate the Plans listed in Schedule 2.2(m) effective on or
before the Closing Date.
(l) Required Consents. All consents and waivers (except for
consents from lessors for assignment to the P.C. of certain equipment leases
described in Section 2.2(n) hereof, including but not limited to those equipment
leases listed on Schedule 3.5, that are not obtained as of the Closing Date;
provided that the Shareholders have used their best efforts to obtain such
consents), in form and substance satisfactory to FNEDC and its counsel,
necessary or appropriate to (1) consummate the Closing and the other
transactions contemplated hereby, and (2) for the continued operation of the
Business of each Company on substantially the same basis as operating currently
and without the imposition of materially adverse conditions on such Business
shall have been obtained by the Shareholders.
(m) DPO Stock Purchase Agreement. The DPO Stock Purchase
Agreement shall have been executed and delivered by the Shareholders.
4.2. Conditions Precedent to the Obligations of the Shareholders. The
obligation of each Shareholder to consummate the transactions contemplated by
this Agreement is expressly subject to the fulfillment or written waiver of the
following conditions on or prior to the Closing Date:
(a) Representations and Warranties True; Obligations
Performed. Each of the representations and warranties of FNEDC contained in
Section 2.1 shall be true and correct in all material respects at and as of the
Closing, except as otherwise specifically provided for herein. FNEDC shall have
performed, on or before the Closing Date, all obligations under this Agreement
which by the terms hereof are to be performed by FNEDC on or before the Closing
Date.
(b) Deposit. FNEDC shall have delivered the Deposit in
accordance with Section 1.1(a) hereof.
(c) Required Consents. All consents and waivers, in form and
substance satisfactory to the Shareholders and their counsel, necessary to
consummate the Closing and the other transactions contemplated hereby, shall
have been obtained by FNEDC.
(d) Escrow Agreement. FNEDC and FNEDC of NJ shall have
executed and delivered the Escrow Agreement.
(e) Employment Agreement with Dr. Xxxx Xxxxxx. FNEDC shall
have caused the P.C. to execute and deliver the Xxxx Xxxxxx Employment
Agreement.
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(f) Assumption Agreements. FNEDC shall have caused the P.C. to
execute and deliver the Assumption Agreements.
(g) Equipment Lease Assignments. FNEDC shall have caused the
P.C. to execute and deliver the Equipment Lease Assignments.
(h) Xxxxxx Leases. FNEDC shall have caused the P.C. to execute
and deliver the Xxxxxx Leases.
(i) Legal Opinion from Counsel to FNEDC. The Shareholders
shall have received the written opinion of XxXxxxxxx, Will and Xxxxx, counsel to
FNEDC, dated the Closing Date and in a form reasonably satisfactory to
Shareholders' counsel.
(j) DPO Stock Purchase Agreement. The DPO Stock Purchase
Agreement shall have been closed by FNEDC of NJ. FNEDC shall cause each of FNEDC
of NJ and the P.C. on the date of closing to have signed counterpart signature
pages to this Agreement and the DPO Stock Purchase Agreement.
(k) Delivery of Financial Statements. FNEDC shall have
delivered to the Shareholders copies of the financial statements prepared
according to generally accepted accounting principals by FNEDC's independent
accountants for the Companies and GHA.
ARTICLE V
CLOSING AND DELIVERIES
5.1. Date and Place of Closing. Subject to Section 1.2, to the extent
applicable, if at all, the consummation of the transactions contemplated hereby
(the "Closing") shall be held at the offices of XxXxxxxxx, Will & Xxxxx, 00
Xxxxxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx Xxxx, Xxx Xxxx at 10:00 a.m. on the
earlier of (i) the tenth (10th) day after the closing date of FNEDC's proposed
initial public offering, or (ii) December 15, 1997, or at such other time and
place as the parties may mutually agree in writing (the "Closing Date").
5.2. Deliveries at Closing by the Shareholders. At the Closing,
provided FNEDC has duly performed its obligations hereunder, the Shareholders
shall deliver or cause to be delivered to FNEDC the following:
(a) Certificates representing the Stock, duly endorsed for
transfer or with duly executed stock powers attached, and free of any liens,
encumbrances, restrictions on transfer, charges or claims;
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(b) Certified copies of resolutions duly adopted by each
Company's (i) Board of Directors, and (ii) shareholders, approving and
authorizing the transactions provided for in the Operative Documents, the
execution thereof and the performance of all acts required to be performed by
each Company thereunder, accompanied by an appropriate certificate of
incumbency;
(c) Certified copies of resolutions duly adopted by each
Company's (i) Board of Directors, and (ii) shareholders, ratifying all actions
and authorizations of each Company's board of directors and shareholders since
the date of each Company's respective incorporation, accompanied by an
appropriate certificate of incumbency;
(d) A copy of each Company's (i) Certificate of Incorporation,
and (ii) Bylaws, each as amended as of the Closing Date and certified by the
Secretary of such Company, a Certificate of Good Standing of each Company issued
as of a recent date by the Secretary of State of the State of New Jersey and a
Tax Clearance Certificate of each Company issued as of a recent date by the New
Jersey Department of Taxation;
(e) Instruments of transfer, in form reasonably satisfactory
to FNEDC and its counsel, to convey all of the Shareholders' right, title and
interest in and to any trademarks and Other Documents; and
(f) All consents of any person or entity, whether or not a
party to this Agreement, which are necessary to effectuate the transfer of the
Stock, the assignment of the Other Documents, and the consummation of the
transactions contemplated by this Agreement.
5.3. Deliveries by FNEDC. At the Closing, provided each Shareholder and
each Company has fully performed all of his or its respective obligations
hereunder, FNEDC shall deliver or cause to be delivered to or on behalf of the
Shareholders the following:
(a) The Purchase Price minus the Deposit;
(b) A certified copy of resolutions duly adopted by FNEDC's
Board of Directors approving and authorizing the transactions provided for in
the Operative Documents, the execution thereof and the performance of all acts
required to be performed by FNEDC thereunder, accompanied by an appropriate
certificate of incumbency; and
(c) A copy of FNEDC's (i) Certificate of Incorporation, and
(ii) Bylaws, each as amended as of the Closing Date and certified by the
Secretary of FNEDC, and a Certificate of Good Standing of FNEDC issued as of a
recent date by the Secretary of State of the State of Delaware.
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(d) All consents of any person or any entity, whether or not a
party to this Agreement, which are necessary to effectuate the consummation of
the transactions contemplated by this Agreement.
(e) Counterpart signature pages to this Agreement and the DPO
Stock Purchase Agreement by each of FNEDC of NJ and the P.C.
ARTICLE VI
POST-CLOSING MATTERS
6.1. Further Assurances. Following the Closing Date, the Shareholders
will execute and deliver to FNEDC such documents and take such other actions, at
the Shareholders' expense, as FNEDC may reasonably request in order to vest in
FNEDC good, valid and marketable title to the Stock.
6.2. Employment and Benefits-Related Matters.
(a) FNEDC shall retain the right to amend in any respect or to
terminate in whole or in part any Plan in accordance with the provisions of such
Plan and applicable law.
(b) Nothing contained in this Agreement shall obligate or commit FNEDC
to continue any Plan with respect to services after the Closing Date or to
maintain in effect any such Plan or any similar plan or any level or type of
benefit except as may be provided to the contrary in this Section 6.2.
(c) The Shareholders shall cooperate and remain responsible financially
for fulfilling all reporting, disclosure and other administrative duties of any
Shareholder or any Company for the Plans that relate to periods prior to the
Closing Date. Any failure by the Shareholders to fulfill these duties shall be
subject to the indemnification provisions under Section 8.2(b) below.
(d) The Shareholders shall provide to FNEDC copies of any
correspondence relating to the Plans and shall inform FNEDC of any
communications with a government agency, including but not limited to the
Internal Revenue Service and the U.S. Department of Labor, regarding the Plans.
(e) Upon the Closing, FNEDC and the P.C. will make offers of employment
to all employees of the Companies upon such terms and conditions as FNEDC or the
P.C., as the case may be, may determine. Employees of each Company who are not
dentists shall become employees of FNEDC and employees of each Company who are
dentists and who accept offers of employment shall become employees of the P.C.
Such employees shall receive standard FNEDC or P.C. employee benefits, as the
case may be. FNEDC and
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the P.C. shall be entitled in the ordinary course of their respective businesses
to prospectively alter the compensation, and benefit programs they offer to
their respective employees. The terms and conditions of the employment of
dentists with separate written employment contracts with the P.C. shall be
governed by the provisions of such contracts.
6.3. Access to Records. The Shareholders and FNEDC shall each cooperate
with the other after the Closing Date by providing without additional
consideration (except as set forth below) and promptly upon request, copies of
such records and other information regarding the Business and the assets of the
Companies and GHA as may reasonably be requested from time to time by the other
Parties as necessary for the preparation or audit of federal, state and local
income and other tax returns, third party reimbursement filings, audits
(including those by third party payors), third party disputes, refund claims and
other valid business purposes. All such requests for information shall be made
upon reasonable notice, and such information shall be made available during
normal business hours (unless otherwise agreed to by the Parties) and in such
manner as to avoid unnecessary disruption of the Party providing the
information. The Party requesting such information shall pay the reasonable
out-of-pocket expenses of the Party providing such information.
ARTICLE VII
NON-COMPETITION AGREEMENT AND NON-SOLICITATION AGREEMENT
7.1. Non-Solicitation. Subject to the provisions set forth in Article
IX hereof, for a period of three (3) years following the Closing Date, neither
Xxxx Xxxxxx nor Xxxxxxx (related to orthodontic work only) shall, without the
express written consent of FNEDC:
(a) solicit any persons who are at any time patients of the
Business, nor suggest, request or direct that any such patients request that
medical records be copied or otherwise removed or transferred from FNEDC's
office, nor remove or copy any medical records or patient or mailing lists; or
(b) hire, seek to hire or assist in hiring any employee, agent
or independent contractor of the Business or FNEDC or induce or seek to induce,
or take action which results in the termination of employment or other
arrangements between the Business or FNEDC and such employee, agent or
independent contractor or otherwise interferes with such employment or
arrangements; provided that Xxxxxxx may continue to employ his two (2)
assistants as of the execution date hereof.
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7.2. Non-Compete. Subject to the provisions set forth in Article IX
hereof, Xxxx Xxxxxx shall be bound by the following non-competition covenants:
(a) For a period of three (3) years following the Closing
Date, Xxxx Xxxxxx shall not, without the express written consent of the FNEDC
(i) engage in any dental practice or activity within a fifteen (15) mile radius
("Non-Compete Area") of any present locations of any Company ("the Locations")
that competes with FNEDC; or (ii) directly or indirectly own, manage, operate,
control or participate either directly or indirectly in the ownership,
management, operation or control of (A) any dental practice or specialty dental
care facility, however organized, within the Non-Compete Area, (B) any dental
plan organization or similar health maintenance organization within the State of
New Jersey, and (C) any laboratory or other facility within the State of New
Jersey that provides any services or manufacturers any products that compete,
directly or indirectly, with the products and/or services manufactured or
provided by Doctor's Denture Service, P.A.
(b) If any part of this Section 7.2 should be determined by a
court of competent jurisdiction to be unreasonable in nature, duration,
geographic area, or scope, then this Agreement is intended to and shall extend
only for such period of time, in such area and with respect to such activity, as
is determined by said court to be reasonable.
(c) Notwithstanding Section 7.2(a) above, during the three (3)
year period following the Closing, Xxxx Xxxxxx will be free to pursue whatever
activities he desires, provided that such other activities do not (i) materially
interfere with his obligations to provide consulting services to FNEDC as set
forth in Schedule 3.7, or violate the provisions of this Section 7.2.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
8.1. Survival. The Shareholders and FNEDC agree that (i) the covenants,
representations and warranties contained in this Agreement shall survive for a
period of two (2) years from the Closing Date, except that the representations,
warranties and covenants contained in Section 2.2(i) shall survive until the
applicable tax statutes of limitations relating thereto shall have run, (ii) the
representations, warranties and covenants contained in Section 2.2(m) shall
survive indefinitely, (iii) the provisions of Article VII shall survive the
Closing Date for the period specified therein; and (iv) the provisions of this
Article VIII shall survive the Closing Date for an indefinite period.
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8.2. Indemnification of FNEDC. (a) Each Shareholder agrees to jointly
and severally indemnify and hold FNEDC and its affiliates and their respective
directors, officers and employees (collectively, "FNEDC Indemnitees") from and
against (a) any and all payments, damages, claims, demands, losses, expenses,
costs, obligations and liabilities, including reasonable attorneys' fees, which
may be asserted against or sustained or incurred by the FNEDC Indemnitees in
connection with, arising out of or related to: (i) any inaccuracy in,
misrepresentation or breach of any of the representations, warranties,
agreements, commitments, obligations, covenants or conditions made by any
Company or any Shareholder under this Agreement, including the Schedules hereto
other than Schedule 3.6; (ii) any actions of the Shareholders, any Company or
its employees or agents taken prior to the Closing Date (with the exception of
liabilities of any Company incurred by such Company in the ordinary course of
business); (iii) the establishment or administration of any Plan prior to the
Closing Date; (iv) the Shareholders' failure to fulfill their post-Closing
duties under Section 6.2 above; (v) any audit of a Plan performed by any
governmental unit, including but not limited to the Internal Revenue Service and
the U.S. Department of Labor, relating to periods prior to the Closing Date; or
(vi) the failure of the transfer and assignment of the Stock, the trademarks and
the Other Documents from the Shareholders to FNEDC to cause FNEDC to acquire
good and marketable title to the Stock, the trademarks and the Other Documents,
free and clear of any liens, encumbrances, restrictions on transfer, charges or
claims unless such failure is caused by the action of FNEDC or its affiliates
and agents; and (b) any and all costs and expenses (including, but not limited
to, reasonable legal expenses) incurred by the FNEDC Indemnitees in connection
with the enforcement of their respective rights hereunder.
8.3. Indemnification of the Shareholders. FNEDC and, from and after the
Closing Date, each of FNEDC of NJ and the P.C., jointly and severally agree to
indemnify and hold the Shareholders, their employees and agents and, with
respect to clause (a)(ii) below, Xxxxxx Xxxxxx, and with respect to clause
(a)(iii) below, Xxxx Xxxxxx (collectively, "Shareholder Indemnitees"), from and
against (a) any and all payments, damages, claims, demands, losses, expenses,
costs, obligations and liabilities, including reasonable attorneys' fees, which
may be asserted against or sustained or incurred by the Shareholder Indemnitees:
(i) in connection with, arising out of or related to any inaccuracy in,
misrepresentation or breach of any of the representations, warranties,
agreements, commitments, obligations, covenants or conditions made by FNEDC
under this Agreement, including the Schedules hereto other than Schedule 3.6;
(ii) any financial obligation arising post-Closing out of Xxxxxx Xxxxxx'x
guaranty of the obligations of any Company or GHA under any real estate or
equipment lease assumed by or assigned to FNEDC, FNEDC of NJ or the P.C.; (iii)
any financial obligation
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arising post-Closing out of leases where Xxxx Xxxxxx is guarantor or lessor
under any equipment lease as provided in Section 11 of the Xxxx Xxxxxx
Employment Agreement; (iv) arising or resulting from any actions of FNEDC
(including acts or omissions by any Shareholder that are committed at the
direction of FNEDC and/or the P.C. or are required pursuant to such
Shareholder's respective arrangement with FNEDC) taken after the Closing Date;
or (v) any liability arising from the filing of the Amended Certificates of
Incorporation pursuant to Section 4.1(c); and (b) any and all costs and expenses
(including, but not limited to, reasonable legal expenses) incurred by the
Shareholder Indemnitees in connection with the enforcement of their respective
rights hereunder.
8.4. Procedure for Indemnification. Any party making a claim for
indemnification hereunder (the "Indemnitee") shall notify the indemnifying party
(the "Indemnifying Party") of the claim in writing, describing the claim, the
amount thereof, and the basis therefor. The Indemnifying Party shall respond to
each such claim within 30 days of receipt of such notice. No action shall be
taken pursuant to the provisions of this Agreement or otherwise by the
Indemnitee until the later of (a) the expiration of the 30-day response period
(unless reasonably necessary to protect the rights of the Indemnitee), or (b) 30
days following the receipt of a response within such 30-day period by the
Indemnitee requesting an opportunity to cure the matter giving rise to
indemnification (and, in such event, the amount of such claim for
indemnification shall be reduced to the extent so cured within such 30-day cure
period). If such demand is based on a claim by a third party, the Indemnifying
Party shall have the right to assume the entire control of the defense,
compromise or settlement thereof, including at its own expense, employment of
counsel reasonably satisfactory to the Indemnitee, and, in connection therewith,
the Indemnitee shall cooperate fully to make available to the Indemnifying Party
all pertinent information under its control. No claim for indemnification
resulting from the breach or falsity or any of the representations or warranties
set forth herein or in any certificate or other instrument delivered pursuant
hereto shall be made after a date on which such representation, warranty or
agreement shall have expired under the provisions of Section 10.1 hereof.
8.5. Limitations on Indemnity Obligations. The Indemnifying Party shall
have no obligation to pay any claim for indemnification hereunder unless and
until the aggregate amount of all such claims arising under both this Agreement
and the DPO Stock Purchase Agreement exceeds Fifty Thousand Dollars ($50,000)
(the "Threshold Indemnity Amount"). In the event the aggregate amount of all
claims for which an Indemnified Party seeks indemnification hereunder exceeds
the Threshold Indemnity Amount, the Indemnifying Party shall be liable for the
entire indemnity amount with respect to such aggregated claims, including the
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Threshold Indemnity Amount. Notwithstanding any other provision of this Article
VIII, the maximum aggregate amount that either FNEDC, on one hand, or the
Shareholders, on the other hand, shall be obligated to pay as indemnity under
this Agreement and the DPO Stock Purchase Agreement shall be the product of Four
Million Dollars ($4,000,000) and a fraction the numerator of which is the sum of
the Purchase Price or the Adjusted Purchase Price, if any, for each of this
Agreement and the DPO Stock Purchase Agreement and the denominator of which is
Five Million Seven Hundred Thousand Dollars ($5,700,000).
8.6. Exclusive Remedy for Certain Indemnity Claims. Each Party
acknowledges and agrees that its sole and exclusive remedy with respect to any
and all claims relating to the subject matter of this Agreement, including the
Schedules hereto other than Schedule 3.6, shall be pursuant to the
indemnification provisions set forth in this Article VIII; provided, however,
that the Shareholders acknowledge and agree that FNEDC shall be entitled to
obtain injunctive relief with respect to the enforcement of the non-competition
and non-solicitation covenants set forth in Article VII; and further provided
that nothing in this Article VIII shall prevent the Parties from obtaining any
remedy specifically provided for in this Agreement including arbitration of
purchase price adjustments, refund or partial refund of the Deposit,
indemnification by the Shareholders for any tax liability of the Companies as
set forth in Section 2.2(i), liquidated damages during the Break-Up Fee Period,
certain provisions as set forth in Article IX below, and certain provisions as
set forth in Sections 9 and 11 of Schedule 3.6 attached hereto.
8.7. Indemnity Payments by the Shareholders to be Treated as Purchase
Price Adjustments. The Parties agree that indemnity payments made by the
Shareholders in respect of their indemnity obligations under this Article VIII,
if any, shall be treated as proportional purchase price adjustments under this
Agreement and the DPO Stock Purchase Agreement.
ARTICLE IX
TERMINATION OF AGREEMENT
Notwithstanding anything in this Agreement to the contrary, this
Agreement and the obligations of the parties hereunder may be terminated
immediately upon written notice given on or prior to Closing Date as follows:
(a) by written consent of FNEDC and the Shareholders;
(b) by FNEDC if (i) any Shareholder has breached or violated
any material provision of this Agreement or failed to
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perform any material covenant or agreement to be performed by such Shareholder
under this Agreement, and (ii) FNEDC has given such Shareholder reasonably
specific written notice of such breach or violation, and (iii) such Shareholder
has failed to cure such breach or violation within a reasonable period time (not
to exceed 30 days) after the giving of notice;
(c) by the Shareholders if (i) FNEDC has breached or violated
any material provision of this Agreement or failed to perform any material
covenant or agreement to be performed by FNEDC under the terms of this
Agreement, and (ii) the Shareholders have given FNEDC reasonably specific
written notice of such breach or violation, and (iii) FNEDC has failed to cure
such breach or violation within a reasonable period of time (not to exceed 30
days) after the giving of notice; and
(d) by either Party if this Agreement and the DPO Stock
Purchase Agreement do not both close by December 15, 1997.
In the event this Agreement shall be terminated pursuant to the
provisions of this Article IX, all rights and obligations of the Parties
hereunder shall terminate without any liability of the Shareholders, on one
hand, and FNEDC, on the other, except for (i) any liability of any party then in
breach, (ii) the respective obligations of the parties pursuant to Article X
herein, (iii) in accordance with the provisions of Section 1.2 hereof, the
Shareholders may be required to return all or a portion of the Deposit to FNEDC,
and (iv) in the event that the Shareholders shall be required to deliver the
Deposit to FNEDC by wire transfer of immediately available funds no later than
ten (10) days following the date of notice of termination and the Shareholders'
obligations pursuant to Sections 3.14 and 3.15 hereof shall survive.
ARTICLE X
CONFIDENTIAL INFORMATION
The Parties hereby acknowledge the confidential nature of this
Agreement and the transactions contemplated hereby. Neither any Shareholder on
the one hand, nor FNEDC, on the other hand, shall at any time from and after the
execution of this Agreement, directly or indirectly, without the prior written
consent of the Shareholders or FNEDC, as the case may be, disclose or use, in
any way harmful to the business, operations, assets, prospects or condition of
the Companies or FNEDC, as the case may be, or any of their affiliates, or
otherwise contrary to the interests of such other party or their affiliates, any
confidential information involving or relating to the Companies or FNEDC, as the
case may be, or any of their affiliates or any business, venture or other
activity of the Companies or FNEDC, as the case may be, past, present or future,
actual or prospective; provided,
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however, that such confidential information shall not include any information
which (A) is already in a party's possession, or (B) becomes generally available
to the public other than as a result of disclosure in violation hereof by the
receiving party or its directors, officers, employees, agents or advisors; or
(C) becomes available to a party on a non-confidential basis from a source other
than another party or its affiliates, directors, officers, employees or agents;
and provided, further, that the provisions of this Article X shall not prohibit
any disclosure required by law in connection with any Governmental Approval or
judicial or administrative proceeding or inquiry, pursuant to any applicable
regulatory requirements including disclosure required by any statute, rule or
regulation, by generally accepted accounting principles, or for purposes of
correcting any information contained in any public medium. This Article X shall
survive the Closing or termination of this Agreement for any reason whatsoever,
as applicable, for an unlimited period of time.
ARTICLE XI
MISCELLANEOUS
11.1. Notices. All notices to a Party hereunder shall be deemed to have
been adequately given if delivered in person or mailed, certified mail, return
receipt requested, to such Party at its address set forth below (or such other
address as it may from time to time designate in writing to the other parties
hereto):
To the Shareholders: Xxxx Xxxxxx, D.D.S.
00 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxxxx, D.D.S.
00 Xxx Xxxxx
Xxxxx Xxxxxxxx, XX 00000
with a copy to: Cole, Schotz, Meisel, Xxxxxx,
Xxxxxxx, P.C.
Court Plaza North, 00 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxx, Esq.
To FNEDC: First New England Dental Centers,
Inc.
00 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: President
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with a copy to: Xxxxxxx X. Xxxx, Esq.
XxXxxxxxx, Will & Xxxxx
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
11.2. No Waiver. No failure to exercise and no delay in exercising, on
the part of FNEDC or the Shareholders, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The rights provided
are cumulative and not exclusive of any rights provided by law.
11.3. Amendments and Waivers. This Agreement may be modified or amended
only by a writing signed by each Party hereto. No waiver of any term or
provision hereof shall be effective unless in writing signed by the Party
waiving such term or provision.
11.4. Governing Law; Headings. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts without regard to the conflict of law principles thereof. The
descriptive headings of the several Articles and Sections hereof are for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
11.5. No Assignment. None of the parties hereto may assign this
Agreement or any of their respective rights or obligations hereunder without
first obtaining the prior written consent of the other parties hereto; provided,
however, that FNEDC may (i) assign any or all of its rights and interests
hereunder to one or more of its affiliates, including FNEDC of NJ, or to the
P.C., and (ii) designate one or more of its affiliates or the P.C. to perform
its obligations hereunder.
11.6. Binding Effect and Benefits; Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
heirs, successors and assigns. FNEDC agrees to cause any entity that acquires
all or substantially all of FNEDC's assets to assume FNEDC's obligations
hereunder, unless assumption of such obligations is expressly waived in writing
by the Shareholders, and further agrees that in the event of a merger,
consolidation or change of control between FNEDC and a third party FNEDC will
not exclude its obligations hereunder from such merger, consolidation or change
of control.
11.7. Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior
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discussions, understandings and agreements concerning the matters covered
hereby.
11.8. Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
11.9. Transfer Taxes. All stock transfer taxes, if any, incident to the
sale of the Stock shall be paid by the Shareholders.
11.10. Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in the State of New Jersey in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other Party with respect thereto. Any
Party may make service on the other Party by sending or delivering a copy of the
process to the Party to be served at the address for the giving of notices in
Section 11.1 above. Nothing in this Section 11.10, however, shall affect the
right of any Party to serve legal process in any other manner permitted by law
or in equity. Each Party agrees that a final judgment in any action or
proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law or in equity.
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IN WITNESS WHEREOF, the undersigned have set their hands and seals as
of the date first set forth above.
FIRST NEW ENGLAND DENTAL CENTERS,
INC.
By: ____________________________
Xxxxxx X. Xxxxxxx
Executive Vice President
____________________________
Xxxx X. Xxxxxx, D.D.S.
____________________________
Xxxxxx Xxxxxxx, D.D.S.
