1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of the 1st day of April, 1996, by
and among XXXX XXXXXX, D.D.S., P.A., a Florida professional association
("Diasti"), COAST DENTAL SERVICES, INC., a Delaware corporation ("Coast"),
XXXXXXX X. XXXXX, D.M.D., P.A., a Florida professional association ("Seller"),
EAST COAST DENTAL MANAGEMENT, INC., a Florida corporation ("East Coast"), and
XXXXXXX X. XXXXX, D.M.D., an individual ("Xxxxx").
W I T N E S S E T H:
WHEREAS, Seller is a professional dental practitioner with its
principal place of business located at 1610 International Xxxxxxxx Xxxxxxxxx,
Xxxxxxx Xxxxx, Xxxxxxx 00000 and with other business locations in Volusia and
Flagler Counties, Florida which locations are set forth on EXHIBIT A annexed
hereto and made a part hereof (the "Practice");
WHEREAS, East Coast is a corporation with its principal place of
business located at 1610 International Xxxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx,
Xxxxxxx 00000, the business and assets of which have been informally transferred
to Seller and such business and assets are also part of the Practice (unless
otherwise clearly indicated to the contrary, Seller and East Coast are
hereinafter together referred to as the Seller);
WHEREAS, Xxxxx is an individual residing at 00 Xxxxxx Xxxxxxx, Xxxxxx
Xxxxx, Xxxxxxx 00000, who is licensed to practice dentistry in the State of
Florida and is the sole owner of all of the equity interests of Seller and East
Coast;
WHEREAS, Coast offers comprehensive facilities, management assistance,
a uniform operational system and other services to professional dental
practitioners with its principal place of business at 00000 X.X. Xxxxxxx 00,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000;
WHEREAS, Diasti is a professional dental practitioner with its
principal place of business at 00000 X.X. Xxxxxxx 00, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxx 00000; and
WHEREAS, Coast and Diasti (together, the "Buying Parties") desire to
acquire and Seller desires to sell to the Buying Parties substantially all of
the assets of the Practice upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the respective covenants,
representations, warranties and agreements herein contained, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I - PURCHASE AND SALE
2
1.1 Sale of Assets. At the Closing (as defined in Section 2.1 hereof)
Seller shall (a) grant, sell, convey, assign, transfer and deliver to Coast,
upon and subject to the terms and conditions of this Agreement, all right, title
and interest of Seller in and to (i) the name "Volusia Dentalcare" and all
goodwill associated therewith, and (ii) substantially all of the assets,
properties and rights of Seller constituting the Practice or used therein
(except for accounts receivables, patient lists and patient records) as set
forth on SCHEDULE 1.1 annexed hereto and made a part hereof; and (b) grant,
sell, convey, assign, transfer and deliver to Diasti, upon and subject to the
terms and conditions of this Agreement, all right, title and interest of Seller
in and to Seller's complete patient list, including names, addresses and
telephone numbers, and patient records (such assets, properties, rights, patient
lists and patient records are collectively referred to as the "Assets"). All
Assets shall be free and clear of all mortgages, liens, pledges, security
interests, charges, claims, restrictions and encumbrances of any nature
whatsoever, except Permitted Liens (as defined in Section 3.1(i) hereof).
1.1.1 Included Assets. The Assets shall include, without limitation,
the following assets, properties and rights of Seller used directly or
indirectly in the conduct of, or generated by or constituting, the Practice,
except as otherwise expressly set forth in Section 1.1.2 hereof:
a. all machinery, equipment, tools, vehicles, furniture,
furnishings, leasehold improvements, goods, and other tangible personal
property;
b. all inventory;
c. all supplies;
d. all leases, leasehold improvements and fixtures;
e. all prepaid items, notes, and unbilled costs and fees;
f. to the extent permitted by applicable law, all rights under
any written or oral contract, agreement, lease (including rights to
security deposits unless otherwise excluded in this Agreement), plan,
instrument, registration, license, certificate of occupancy, other
permit or approval of any nature, or other document, commitment,
arrangement, undertaking, practice or authorization;
g. all rights under a patent, trademark, service xxxx, trade
name or copyright, whether registered or unregistered, and any
applications therefor;
h. all data bases used in the Practice or under development;
-2-
3
i. all rights arising out of occurrences before or after the
Closing, including without limitation all rights under express or
implied warranties relating to the Assets;
j. all information, files, records, data, plans, contracts and
recorded knowledge, including patient and supplier lists, employee
records and patient records related to the foregoing and the operation
of the Practice;
k. the names "Volusia Dentalcare," "Volusia Dental Centers"
and "East Coast Dental Management;" and
l. the rights of Seller as Plan Administrator and Xxxxx as
Plan Trustee under that certain Xxxxxxx X. Xxxxx, D.M.D., P.A. Cafeteria Plan.
1.1.2 Excluded Assets. Notwithstanding the foregoing, the Assets
shall not include any of the following:
a. cash on hand or on account;
b. the corporate seals, certificates of incorporation, minute
books, stock books, tax returns, books of account or other records
having to do with the organization of Seller as a professional
association;
c. any employee loans or advances;
d. the rights to any of Seller's claims for any federal,
state, local, or foreign tax refunds;
e. the rights which accrue or will accrue to Seller under this
Agreement;
f. accounts receivable; or
g. the security deposits held in connection with the real
estate leases at _________________ and ______________________.
1.2 The Purchase Price.
1.2.1 Purchase Price. The total purchase price to be paid by
the Buying Parties to Seller (which term as used throughout this Section 1.2.1
does not include East Coast) and to East Coast for the purchase of the Assets
and payment to Xxxxx for his entry into a covenant not to compete is One Million
Eight Hundred Thousand Dollars ($1,800,000.00) (the "Purchase Price"). The
Purchase Price shall be payable as follows: (i) at the Closing as partial
-3-
4
consideration for the purchase of Assets other than the patient list and patient
records, Coast shall pay Seller the sum of Three Hundred Thousand Dollars
($300,000.00) by wire transfer in immediately available funds to a bank account
of Seller as per written instructions of Seller given to Coast at least 24 hours
prior to the Closing; (ii) at the Closing as additional consideration for the
purchase of Assets other than the patient list and patient records, Coast shall
deliver to Seller one (1) promissory note in the aggregate principal amount of
Two Hundred Thousand Dollars ($200,000.00), substantially in the form of EXHIBIT
B annexed hereto and made a part hereof (the "Coast Note"); (iii) at the Closing
as consideration for the purchase of the patient list and patient records,
Diasti shall deliver to Seller one (1) promissory note in the aggregate
principal amount of Three Hundred Thousand Dollars ($300,000.00) substantially
in the form of EXHIBIT C annexed hereto and made a part hereof (the "Diasti
Note"), (iv) at the Closing as consideration for Shawn's entry into the covenant
not to compete, Coast shall deliver to Xxxxx two (2) promissory notes in
individual principal amounts of One Hundred Thousand Dollars ($100,000.00) and
Nine Hundred Thousand Dollars ($900,000.00) substantially in the forms of
EXHIBIT D and EXHIBIT E annexed hereto and made a part hereof (the "Xxxxx
Notes") (the Coast Note, the Diasti Note and the Xxxxx Notes are hereinafter
referred to as the "Notes").
1.2.2 Allocation of Purchase Price. The Purchase Price and the
liabilities assumed by the Buying Parties in accordance with Section 1.3 hereof
and any non-recourse liabilities to which any Asset is subject as finally
determined shall be allocated among the Assets acquired hereunder as described
on SCHEDULE 1.2.2 hereof. Each of Seller, Xxxxx, Coast and Diasti hereby
covenants and agrees that he or it will not take a position that is in any way
inconsistent with the terms of this Section 1.2.2 on any income tax return,
before any governmental agency charged with the collection of any income tax, or
in any judicial proceeding.
1.3 Assumption of Certain Liabilities and Contracts. The Buying Parties
shall not assume any responsibility or liability of any kind for any of the
debts, obligations, liabilities, expenses, taxes, contracts or commitments of
Seller, whether accrued, absolute, contingent or otherwise, except as expressly
set forth in SCHEDULE 1.3 hereto. From and after the Closing Date, the Buying
Parties agree to assume responsibility for the performance of the contracts
which are described in SCHEDULE 1.3 attached hereto and made a part hereof,
required to be performed after the Closing Date; provided, however, that the
Buying Parties shall have no responsibility to perform any such activities to
the extent not disclosed hereunder.
ARTICLE II - CLOSING, ITEMS TO BE DELIVERED,
THIRD PARTY CONSENTS AND FURTHER ASSURANCES
2.1 Closing. The closing (the "Closing") of the sale and purchase of
the Assets shall take place on April 22, 1996, at the offices of Xxxxxxxx, Loop
& Xxxxxxxx, 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000 or at
such other location as the parties shall mutually agree. The date of the Closing
is sometimes herein referred to as the "Closing Date."
-4-
5
2.2 Items to be Delivered at Closing. At the Closing and subject to the
terms and conditions herein contained:
(a) Seller shall deliver to the Buying Parties the following:
(i) such bills of sale with covenants of warranty,
assignments, endorsements, and other good and sufficient
instruments and documents of conveyance and transfer, in form
reasonably satisfactory to the Buying Parties and their
counsel, as shall be necessary and effective to transfer and
assign to and vest in the Buying Parties all of Seller's
right, title and interest in and to the Assets, including
without limitation, (A) good and valid title in and to all of
the Assets owned by Seller, (B) good and valid leasehold
interests in and to all of the Assets leased by Seller as
lessee, and (C) all of Seller's rights under all agreements,
contracts, commitments, instruments and other documents
included in the Assets to which Seller is a party or by which
it has rights on the Closing Date;
(ii) original instruments of consent or waiver duly
executed by third parties with respect to any contracts,
agreements, leases or other rights or obligations being
transferred to the Buying Parties hereunder and requiring a
consent or waiver therefore;
(iii) a duly executed copy of a Security Agreement
(the "Security Agreement") granting the Seller a security
interest in the real property leasehold interests and the
names "Volusia Dentalcare" and "Volusia Dental Centers"
transferred to Coast pursuant to this Agreement and the
patient lists and records transferred to Diasti pursuant to
this Agreement in a form to be agreed to by the parties for
the purpose of assuring that the Seller may immediately
reenter and assume the Practice upon the occurrence of an
Event of Default by Buying Parties as defined in Section 7.1
hereof; and
(iv) such other certificates and documents as the
Buying Parties or their counsel may reasonably request.
(b) Xxxxx shall deliver to the Buying Parties the following:
(i) a duly executed copy of an Employment Agreement
and Covenant Not to Compete (the "Employment Agreement), in
the form annexed hereto as EXHIBIT F which by virtue of the
substantial goodwill associated with the employment of Xxxxx
will contain a liquidated damages provision in the amount of
Five Hundred Thousand and no/100 Dollars ($500,000.00) if
Xxxxx leaves the employ of Diasti without cause or is
discharged for cause;
-5-
6
(ii) a duly executed copy of a Lease Agreement (the
"Lease Agreement), in the form annexed hereto as EXHIBIT G;
and
(iii) such other certificates and documents as the
Buying Parties or their counsel may reasonably request.
Simultaneously with delivery of the items set forth in subsections (a) and (b)
of this Section 2.2, Seller shall take all such steps as may be required to put
the Buying Parties in actual possession and operating control of the Assets.
(c) The Buying Parties shall deliver to Seller the following:
(i) the portion of the Purchase Price due at Closing;
(ii) the Coast Note;
(iii) the Diasti Note;
(iv) a duly executed copy of the Security Agreement;
and
(v) such other certificates and documents as Seller
or its counsel may reasonably request.
(d) The Buying Parties shall deliver to Xxxxx the following:
(i) the Xxxxx Notes;
(ii) a duly executed copy of the Employment
Agreement;
(iii) a duly executed copy of the Lease Agreement;
and
(iv) such other certificates and documents as Xxxxx
or his counsel may reasonably request.
2.3 Further Assurances. Seller, from time to time after the Closing and
at the Buying Parties' request, will execute, acknowledge and deliver to the
Buying Parties such other instruments of conveyance and transfer and will take
such other actions and execute and deliver such other documents, certifications
and further assurances as the Buying Parties may reasonably require in order to
vest more effectively in the Buying Parties, or to put the Buying Parties more
fully in possession of, any of the Assets. Each of the parties hereto will
cooperate with the other and execute and deliver to the other parties hereto
such other instruments and documents and take such other actions as may be
reasonably requested from time to time by any other party hereto as necessary to
carry out, evidence and confirm the intended purposes of this Agreement.
-6-
7
ARTICLE III - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. Seller hereby represents
and warrants to the Buying Parties that, except as set forth on the Schedules
attached hereto and made a part hereof, each of which exception shall
specifically identify and be limited to the relevant subsection hereof to which
it relates and shall be deemed to be a representation and warranty as if made
hereunder:
(a) Legal Power and Enforceable Obligations. Seller is a
professional association and East Coast is a corporation duly
organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation. Seller and East Coast
have the power, authority and legal right to own, lease and operate
their respective Assets, to conduct the Practice as currently
conducted, and to execute, deliver and perform this Agreement. This
Agreement and all the other documents and instruments required to be
delivered by Seller and East Coast in accordance with the provisions
hereof have been, or upon their execution and delivery will have been,
duly executed and delivered on behalf of Seller and East Coast and
constitute, or will constitute, the legal, valid and binding
obligations of Seller and East Coast, enforceable against Seller and
East Coast in accordance with their respective terms.
(b) Validity of Contemplated Transactions. The execution,
delivery and performance of this Agreement by Seller do not and will
not violate, conflict with or result in the breach of any term,
condition or provision of, or require the consent of any other person
under (i) any existing law, ordinance, or governmental rule or
regulation to which Seller is subject, (ii) any judgment, order, writ,
injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which is applicable to Seller,
(iii) the Articles of Incorporation or By-Laws of Seller, or (iv) any
mortgage, indenture, agreement, contract, commitment, lease, plan or
other instrument, document or understanding, oral or written, to which
Seller is a party, by which Seller may have rights or by which any of
the Assets may be bound or affected, or give any party with rights
thereunder the right to terminate, modify, accelerate or otherwise
change the existing rights or obligations of Seller thereunder. No
authorization, approval or consent of, and no filing with, any
governmental or regulatory official, body or authority is required in
connection with the execution, delivery or performance of this
Agreement by Seller or the sale to the Buying Parties of the Assets.
(c) No Third Party Options. There are no existing agreements
with, options or commitments to or rights of any person to acquire any
of the Assets or any interest therein.
(d) Condition of Tangible Assets. All buildings, structures,
facilities, equipment and other material items of tangible property and
assets included in the Assets are in good operating condition and
repair, subject to normal wear and maintenance, are
-7-
8
usable in the regular and ordinary course of business and conform to
all applicable laws, ordinances, codes, rules and regulations relating
to their construction, use and operation.
(e) Absence of Undisclosed Liabilities. Seller has no
liabilities or obligations with respect to the Practice, either direct
or indirect, matured or unmatured or absolute, contingent or otherwise,
except those liabilities incurred, consistently with past business
practice, in or as a result of the normal and ordinary course of
business and except for those liabilities disclosed in SCHEDULE 1.3
hereof. For purposes of this Agreement, the term "liabilities" shall
include, without limitation, any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or unfixed, known or unknown,
asserted or unasserted, xxxxxx or inchoate, liquidated or unliquidated,
secured or unsecured.
(f) Books of Account. The books, records and accounts of
Seller maintained with respect to the Practice accurately and fairly
reflect, in reasonable detail, the transactions and the assets and
liabilities of Seller with respect to the Practice. Seller has not
engaged in any transaction, maintained any bank account or used any of
the funds of Seller in the conduct of the Practice except for
transactions, bank accounts and funds which have been and are reflected
in the normally maintained books and records of the Practice.
(g) Taxes. Seller has filed all tax returns and forms required
to be filed, and has paid in full all taxes, estimated taxes, interest,
penalties, assessments and deficiencies which have become due, or will
do so prior to the Closing Date. Such returns and forms are true and
correct in all material respects, and Seller is not required to pay any
other tax except as shown on such returns. Seller is not a party to any
pending action or proceeding and, to Seller's knowledge, there is no
action or proceeding threatened by any government or authority against
Seller for the assessment or collection of any tax and no resolved
claim for assessment or collection of any tax has been asserted against
Seller. There is no pending proceeding to reduce the assessed valuation
of any portion of the Assets. Seller has delivered to the Buying
Parties a true and complete copy of its tax return for its fiscal year
ended December 31, 1994 together with all notes and schedules filed
therewith. Such tax return fairly presents the financial position of
Seller for the period covered thereby.
(h) Absence of Changes. Since December 31, 1994, Seller with
respect to the Practice has not:
(i) incurred any liabilities, other than liabilities
incurred in the ordinary course of business consistent with
past practice, or discharged or satisfied any lien or
encumbrance, or paid any liabilities, other than in the
ordinary course of business consistent with past practice, or
failed to pay or discharge when due any liabilities of which
the failure to pay or discharge has caused or will cause any
-8-
9
material damage or risk of material loss to Seller or any of
its assets or properties;
(ii) sold, encumbered, assigned or transferred any
assets or properties;
(iii) created, incurred, assumed or guaranteed any
indebtedness for money borrowed, or mortgaged, pledged or
subjected any of the Assets to any mortgage, lien, pledge,
security interest, conditional sales contract or other
encumbrance of any nature whatsoever;
(iv) made or suffered any amendment or termination of
any material agreement, contract, commitment, lease or plan to
which it is a party or by which it is bound, or canceled,
modified or waived any substantial debts or claims held by it
or waived any rights of substantial value, whether or not in
the ordinary course of business;
(v) suffered any damage, destruction or loss, whether
or not covered by insurance, materially and adversely
affecting the Practice and its related operations, assets,
properties, prospects or condition (financial or otherwise) or
suffered any repeated, recurring or prolonged shortage,
cessation or interruption of supplies or utility or other
services required to conduct the Practice;
(vi) suffered any material adverse change in the
Practice and its related operations, assets, properties,
prospects or condition (financial or otherwise);
(vii) received notice or had knowledge of any actual
or threatened labor trouble, strike or other occurrence, event
or condition of any similar character which has had or might
have an adverse effect on the Practice or its related
operations, assets, properties, prospects or condition
(financial or otherwise);
(viii) increased or decreased the salaries or other
compensation of, or made any advance (excluding advances for
ordinary and necessary business expenses) or loan to, any of
its employees or made any increase in, or any addition to,
other benefits to which any of its employees may be entitled;
(ix) changed any of the accounting principles
followed by it or the methods of applying such principles; or
(x) entered into any transaction other than in the
ordinary course of business consistent with past practice.
(i) Title to Assets. Seller has and shall transfer to the
Buying Parties at the Closing good, valid and marketable title to all
of the Assets being sold and transferred
-9-
10
hereunder, free and clear of all mortgages, liens, pledges, security
interests, charges, claims, restrictions and other encumbrances and
defects of title of any nature whatsoever, except for those liens
described in SCHEDULE 3.1(I) attached hereto and made a part hereof
("Permitted Liens").
(j) Accounts Receivable. The accounts receivable of Seller
arising from the Practice are valid and genuine, have arisen out of
bona fide performances of services in the ordinary course of business
consistent with past practice, are not subject to valid defenses,
set-offs or counterclaims.
(k) Compliance with Law; Authorizations. Seller has complied
in all material respects with, and is not in any material violation of,
any law, ordinance or governmental or regulatory rules or regulations,
whether federal, state, local or foreign, to which Seller's Practice
and its related operations, assets or properties is subject
("Regulations"). Seller owns, holds, possesses or lawfully uses in the
operation of its business all franchises, licenses, permits, easements,
rights, applications, filings, registrations and other authorizations
("Authorizations") which are material for it to conduct its Practice as
currently conducted or for the ownership and use of the assets owned or
used by Seller in the conduct of its business, free and clear of all
liens, charges, restrictions and encumbrances and in compliance with
all Regulations. All such Authorizations are listed and described in
SCHEDULE 3.1(K) attached hereto and made a part hereof. Seller is not
in default, nor has it received any notice of any claim of default,
with respect to any such Authorization. All such Authorizations are
renewable by their terms or in the ordinary course of business without
the need to comply with any special qualification procedures or to pay
any amounts other than routine filing fees. None of such Authorizations
will be adversely affected by the consummation of the transactions
contemplated hereby.
(l) Litigation. Except as disclosed in SCHEDULE 3.1(L)
attached hereto and made a part hereof, no litigation, including any
arbitration, investigation or other proceeding of or before any court,
arbitrator or governmental or regulatory official, body or authority is
pending or, to the best knowledge of Seller, threatened against Seller
or relates to the Assets or the transactions contemplated by this
Agreement, the Lease Agreement, the Employment Agreement or the
Security Agreement (the Lease Agreement, the Employment Agreement and
the Security Agreement are collectively referred to herein as the
"Related Agreements"), nor does Seller know of any reasonably likely
basis for any such litigation, arbitration, investigation or
proceeding, the result of which could adversely affect Seller, the
Assets or the transactions contemplated hereby or thereby. Seller is
not a party to or subject to the provisions of any judgment, order,
writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which may
adversely affect Seller, the Assets or the transactions contemplated
hereby.
-10-
11
(m) Labor Matters. Seller has not suffered any strike,
slowdown, picketing or work stoppage by any union or other group of
employees affecting the Practice. Seller is not a party to any
collective bargaining agreement, no such agreement determines the terms
and conditions of employment of any employee of Seller, no collective
bargaining agent has been certified as a representative of any of the
employees of Seller, and no representation campaign or election is now
in progress with respect to any of the employees of Seller. Seller has
complied and is in compliance in all material respects with all laws
and regulations relating to the employment of labor, including, without
limitation, provisions relating to wages, hours, collective bargaining,
occupational safety and health, equal employment opportunity and the
withholding of income taxes and social security contributions. Seller
has paid its employees all wages, commissions and accruals for earned
vacation, personal days and sick leave owing through the Closing Date
except as disclosed on SCHEDULE 3.1(M) attached hereto and made a part
hereof. The consummation of the transactions contemplated hereby will
not cause either of the Buying Parties to incur or suffer any liability
relating to, or obligation to pay, any severance, termination or other
payment to any person or entity and any such claim made against the
Buying Parties for reason of any termination or separation of any
employee on or before Closing, or otherwise resulting from the sale of
the Assets pursuant to this Agreement, shall be the sole responsibility
of Seller. Except as set forth in SCHEDULE 3.1(M), (i) no employee of
Seller has any contractual right to continued employment by Seller
following the consummation of the sale of the Assets pursuant to this
Agreement; and (ii) the Buying Parties shall be free to offer
employment to such employees of Seller as the Buying Parties may
determine and on such terms and conditions as the Buying Parties may
determine. Set forth in SCHEDULE 3.1(M) is an accurate and complete
list of all employees employed by Seller in the Practice showing as to
each the nature of the employee's job, years of service, the amount or
rate of compensation, all accruals of vacation, personal days, sick
leave, and any other benefits due the employee and other matters which
may be reasonably required by the Buying Parties.
(n) Availability of Documents. Seller has made available to
the Buying Parties copies of all documents including, without
limitation, all agreements, contracts, commitments, insurance policies,
leases, plans, instruments, undertakings, authorizations, permits,
licenses, trademarks, tradenames, service marks and applications
therefor listed in the Disclosure Schedule hereto or referred to
herein. Such copies are true and complete and include all amendments,
supplements and modifications thereto or waivers currently in effect
thereunder.
(o) Necessary Assets. The Assets include all rights and
property necessary to the conduct of the Practice by the Buying Parties
in the manner it is presently conducted by Seller and no property
excluded from the Assets hereof constitutes property or rights material
to the Practice.
-11-
12
(p) Conditions Affecting Seller. There is no fact, development
or threatened development with respect to the markets, products,
services, clients, patients, facilities, personnel, vendors, suppliers,
operations, assets or prospects of the Practice which are known to
Seller which would materially adversely affect the Practice or the
operations, prospects or condition (financial or otherwise) of Seller
considered as a whole, other than such conditions as may affect as a
whole the economy generally. Seller has used its best efforts to keep
available for the Buying Parties the services of the employees, agents,
patients and suppliers of Seller active in the conduct of the Practice.
Seller does not have any reason to believe that any loss of any
employee, agent, patient or supplier or other advantageous arrangement
will result because of the consummation of the transactions
contemplated hereby.
(q) Real Property. All real property (including, without
limitation, all interests in and rights to real property) and
improvements located thereon which are owned or leased by Seller and
used in connection with the Practice or included in the Assets (the
"Real Property") is listed on SCHEDULE 3.1(Q) attached hereto and made
a part hereof. The use and operation of the Real Property is in
compliance in all material respects with all applicable building code,
environmental, zoning and land use laws, and other applicable local,
state and federal laws and regulations. No portion of the Real Property
is the subject of, or affected by, any condemnation or eminent domain
proceeding or any covenant or other restriction preventing or limiting
Seller's right to convey right, title and interest in the Real Property
or to use the Real Property for the various purposes for which the Real
Property is currently being used. Seller has delivered to the Buying
Parties true and complete copies of each lease pursuant to which Seller
leases any Real Property. Each such lease is in full force and effect
and has not been assigned, modified, supplemented or amended. Neither
Seller nor the landlord under any lease is in material default of the
terms of any such lease and, to Seller's knowledge, no circumstances or
state of facts currently exist which, with the giving of notice or the
passage of time or both would permit the landlord under any lease to
terminate such lease.
(r) Completeness of Disclosure. Neither this Agreement, nor
any Schedule, Exhibit, list, certificate or other instrument or
document furnished by Seller to the Buying Parties pursuant to this
Agreement, contains any untrue statement of a material fact or omits to
state any material fact required to be stated herein or therein or
necessary to make the statements and information contained herein or
therein not misleading. Seller has not failed to disclose to the Buying
Parties any event, condition or fact which Seller knows, or has
reasonable grounds to know, which may materially adversely affect the
Assets or the operations, prospects or condition (financial or
otherwise) of the Practice.
3.2 Representations and Warranties of the Buying Parties. The Buying
Parties represent and warrant to Seller as follows:
-12-
13
(a) Corporate Existence.
(i) Diasti is a professional association duly
organized, validly existing and in good standing under the
laws of the State of Florida.
(ii) Coast is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware.
(b) Corporate Power and Authorization. Each of the Buying
Parties has the power, authority and legal right to execute, deliver
and perform this Agreement, the Notes and the Related Agreements to
which they are parties. This Agreement, the Notes and the Related
Agreements have been duly executed and delivered by the Buying Parties
and constitute legal, valid and binding obligations of the Buying
Parties enforceable against the Buying Parties in accordance with their
respective terms.
(c) Validity of Contemplated Transactions. The execution,
delivery and performance by the Buying Parties of this Agreement, the
Notes and the Related Agreements do not and will not violate, conflict
with or result in the breach of any term, condition or provision of, or
require the consent of any other party under (i) any existing law,
ordinance, or governmental rule or regulation to which either of the
Buying Parties is subject, (ii) any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental or regulatory
official, body or authority which is applicable to either of the Buying
Parties, (iii) the Certificate of Incorporation or By-Laws of Coast,
(iv) the Articles of Incorporation or By-Laws of Diasti, or (v) any
mortgage, indenture, agreement, contract, commitment, lease, plan or
other instrument, document or understanding, oral or written, to which
either of the Buying Parties is a party or by which either of the
Buying Parties is otherwise bound. No authorization, approval or
consent of, and no registration or filing with, any governmental or
regulatory official, body or authority is required in connection with
the execution, delivery and performance of this Agreement by the Buying
Parties.
(d) Financial Statements. The draft financial statements of
Coast as of December 31, 1994 and December 31, 1995 furnished to Seller
are to Coast's knowledge true and correct in all material respects,
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved and
shall present fairly the financial condition as of the dates thereof
and the results of its operations for the periods then ended. Since
December 31, 1995, there have been no changes in the assets or
liabilities or condition of business of Coast which are not set forth
in the December 31, 1995 financial statements, other than changes in
the ordinary course of business which are not materially adverse.
(e) Taxes. The Buying Parties have duly filed all required
federal, state and other tax returns and all federal, state and other
taxes, assessments and other
-13-
14
governmental charges upon the Buying Parties which are due and payable
have been paid. There are no deficiencies and taxes existing,
threatened or to the Buying Parties' knowledge existing or proposed for
any year not disclosed in the financial statements described in Section
3.2(d) above.
(f) Absence of Litigation. Neither of the Buying Parties is
involved in any actions, proceedings or investigations which may result
in any material adverse change in its business or condition and no such
action, proceeding or investigation is threatened to its knowledge.
(g) Completeness of Disclosure. Neither this Agreement, nor
any Schedule, Exhibit, list, certificate or other instrument or
document furnished by the Buying Parties to the Seller and/or Xxxxx
pursuant to this Agreement, contains any untrue statement of a material
fact or omits to state any material fact required to be stated herein
or therein or necessary to make the statements and information
contained herein or therein not misleading. The Buying Parties have not
failed to disclose to the Seller or Xxxxx any event, condition or fact
which the Buying Parties know, or have reasonable grounds to know,
which may materially adversely affect the operations, prospects or
condition (financial or otherwise) of the Buying Parties.
ARTICLE IV - CONDITIONS PRECEDENT TO THE CLOSING
4.1 Conditions Precedent to the Buying Parties' Obligations. All
obligations of the Buying Parties under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
(a) Compliance with this Agreement. Seller and Xxxxx shall
have performed and complied with all agreements and conditions required
by this Agreement to be performed or complied with by it and/or him
prior to or at the Closing.
(b) Due Diligence. The Buying Parties shall have completed to
their satisfaction a due diligence review of Seller, the Practice and
the Assets, which shall include verification that the Practice has been
run in the ordinary course since December 31, 1994, and that the
Assets, liabilities, obligations, revenues, vendor relations, patient
relations, and tax liabilities of the Seller are as represented and
anticipated by the Buying Parties. The Seller agrees to cooperate and
make available to the Buying Parties, and the Buying Parties' employees
and accountants, all of the Seller's books and records and to make
available the Seller's officers, employees and agents in assisting the
Buying Parties to complete their due diligence investigations. The
Buying Parties may conduct their due diligence investigations from the
date first above written to, and including, the Closing Date.
-14-
15
(c) No Adverse Changes. No change other than as contemplated
or permitted by this Agreement, or other than in the ordinary course,
shall have occurred with respect to the business, operations, prospects
or condition (financial or otherwise) of the Practice or any of the
Assets, which shall have been material and adverse to Seller.
(d) Consents and Approvals. The Buying Parties shall have
received those written consents and approvals necessary or desirable
for the transfer of the Assets to the Buying Parties.
(e) Removal of Liens. Seller shall have obtained valid,
binding and enforceable releases, satisfactions and discharges of all
liens, charges and encumbrances affecting the Assets except for those
liens described in SCHEDULE 3.1(I) hereof.
(f) Lease Agreement. Xxxxx shall have delivered an executed
copy of the Lease Agreement.
(g) Employment Agreement. Xxxxx shall have entered into the
Employment Agreement.
(h) Security Agreement. Seller shall have entered into the
Security Agreement.
4.2 Conditions Precedent to Seller's and Shawn's Obligations. All
obligations of Seller and Xxxxx under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
(a) Compliance with this Agreement. The Buying Parties shall
have performed and complied with all agreements and conditions required
by this Agreement to be performed or complied with by them prior to or
at the Closing.
(b) The Notes. The Buying Parties shall have entered into the
Notes.
(c) Lease Agreement. Coast shall have entered into the Lease
Agreement.
(d) Employment Agreement. Diasti shall have entered into the
Employment Agreement.
(e) Security Agreement. The Buying Parties shall have entered
into the Security Agreement.
(f) Tax Filings. Coast shall have delivered to Seller Coast's
federal and state income tax filings for the years ending December 31,
1993 and December 31, 1994.
-15-
16
4.3 Risk of Loss Prior to Closing. The risk of any loss, destruction or
other damage to the Assets, other than ordinary wear and tear, prior to the
completion of the Closing, shall be solely that of Seller.
ARTICLE V - INDEMNIFICATION
5.1 Indemnification Obligation of Seller. From and after the Closing,
Seller will reimburse, indemnify and hold harmless each of the Buying Parties
and their successors and assigns (an "Indemnified Buyer Party") against and in
respect of:
(a) any and all damages, losses, deficiencies, liabilities,
costs and expenses incurred or suffered by any Indemnified Buyer Party
that result from, relate to or arise out of:
(i) any and all liabilities and obligations of Seller
of any nature whatsoever not disclosed in this Agreement and
expressly assumed by the Buying Parties;
(ii) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings
or investigations against any Indemnified Buyer Party that
relate to Seller or the Practice in which the principal event
giving rise thereto occurred prior to the Closing Date or
which result from or arise out of any action or inaction of
Seller or any director, officer, employee, agent,
representative or subcontractor of Seller prior to the Closing
Date; or
(iii) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of
Seller or Xxxxx under this Agreement or the Related
Agreements, or from any misrepresentation in or omission from
any certificate, schedule, statement, document or instrument
furnished to the Buying Parties pursuant hereto or in
connection with the negotiation, execution or performance of
this Agreement, or the Related Agreements; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses (including, without limitation, reasonable legal
fees and expenses and court costs) incident to any of the foregoing or
to the enforcement of this Section 5.1.
Each of the Buying Parties shall have the right to set-off their
respective payment obligations under the Notes for any indemnification
obligations of Seller herein to the full extent of such indemnification
obligation and without regard to which of the Buying Parties has incurred or
suffered the loss or damage. Without limiting the foregoing, such right of
set-off shall apply to Diasti's right to recover liquidated damages from Xxxxx
pursuant to the Employment Agreement. The Seller's liability and obligation to
indemnify the Buying Parties
-16-
17
and/or the Buying Parties' right to set-off against the deferred portion of the
Purchase Price shall not commence or accrue until the Buying Parties, together
or separately, have suffered or incurred aggregate claims, losses or damages
(including costs and attorneys' fees and expenses) in excess of Ten Thousand and
No/100 Dollars ($10,000.00) in any twelve (12) month period. The Seller's
indemnification obligations set forth herein shall not include indemnification
of an Indemnified Buyer Party for such party's internal expenses relating to
employee time spent investigating and defending a matter or claim.
5.2 Indemnification Obligation Of The Buying Parties. From and after
the Closing, the Buying Parties will reimburse, indemnify and hold harmless
Seller and its successors or assigns (an "Indemnified Seller Party") against and
in respect of:
(a) any and all damages, losses, deficiencies, liabilities,
costs and expenses incurred or suffered by any Indemnified Seller Party
that result from, relate to or arise out of any misrepresentation,
breach of warranty or non-fulfillment of any agreement or covenant on
the part of the Buying Parties under this Agreement or the Related
Documents, or from any misrepresentation in or omission from any
certificate, schedule, statement, document or instrument furnished to
Seller pursuant hereto or in connection with the negotiation, execution
or performance of this Agreement or the Related Agreements; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses (including, without limitation, reasonable legal
fees and expenses) incident to any of the foregoing or to the
enforcement of this Section 5.2.
5.3 Procedure for Indemnification Claims. If at any time a claim shall
be made or threatened, or an action or proceeding shall be commenced or
threatened, against a party hereto (the "Aggrieved Party") which could result in
liability of the other party (the "Indemnifying Party") under its
indemnification obligations hereunder, the Aggrieved Party shall give to the
Indemnifying Party prompt notice of such claim, action or proceeding. Such
notice shall state the basis for the claim, action or proceeding and the amount
thereof (to the extent such amount is determinable at the time when such notice
is given) and shall permit the Indemnifying Party to assume the defense of any
such claim, action or proceeding (including any action or proceeding resulting
from any such claim). Failure by the Indemnifying Party to notify the Aggrieved
Party of its election to defend any such claim, action or proceeding within a
reasonable time shall be deemed a waiver by the Indemnifying Party of its right
to defend such claim, action or proceeding; provided, however, that the
Indemnifying Party shall not be deemed to have waived its right to contest and
defend against any claim of the Aggrieved Party for indemnification hereunder
based upon or arising out of such claim, action or proceeding.
If the Indemnifying Party assumes the defense of any such claim, action
or proceeding, the obligation of the Indemnifying Party as to such claim, action
or proceeding shall be limited
-17-
18
to taking all steps necessary in the defense or settlement thereof and, to the
extent the Indemnifying Party is liable for indemnification hereunder, to
holding the Aggrieved Party harmless from and against any and all losses,
damages and liabilities caused by or arising out of any settlement approved by
the Indemnifying Party or any judgment or award rendered in connection with such
claim, action or proceeding. The Aggrieved Party agrees to cooperate and make
available to the Indemnifying Party all books and records and such officers,
employees and agents as are reasonably necessary and useful in connection with
the defense. The Aggrieved Party may participate, at its expense, in the defense
of such claim, action or proceeding provided that the Indemnifying Party shall
direct and control the defense of such claim, action or proceeding; provided,
however, if in the reasonable opinion of the Aggrieved Party any such claim,
action or proceeding involves an issue or matter which, if adversely determined,
would have a materially adverse effect on the Aggrieved Party, then the
Aggrieved Party shall have the right to control the defense or settlement of any
such claim, action or proceeding and its reasonable costs and expenses shall be
included as a part of the indemnification obligation of the Indemnifying Party.
The Indemnifying Party shall not, with respect to any such claim, action or
proceeding, consent to the entry of any judgment or award, or enter into any
settlement, except with the prior written consent of the Aggrieved Party, which
consent shall not be unreasonably withheld; provided, however, in the case of
any such judgment, award or settlement for money, it shall be a condition
thereto that the Indemnifying Party shall acknowledge its obligation to
indemnify the Aggrieved Party pursuant to this Article V; and provided, further,
that any such judgment, award or settlement include, as an unconditional term
thereof, the release of the Aggrieved Party from all liability by the third
party claimant or plaintiff.
5.4 Payment. Upon the determination of the liability under Section 5.3
hereof, the appropriate party shall pay to the other, as the case may be, within
ten (10) days after such determination, the amount of any claim for
indemnification made hereunder. In the event that the Aggrieved Party is not
paid in full for any such claim pursuant to the foregoing provisions promptly
after the Indemnifying Party's obligation to indemnify has been determined in
accordance herewith, it shall have the right, notwithstanding any other rights
that it may have against any other person, firm or corporation, to set-off the
unpaid amount of any such claim against any amounts owed by it under this
Agreement, the Notes or the Related Agreements. The indemnification obligations
hereunder shall survive the consummation of the transactions described herein
and shall not be limited by any amount payable by the Buying Parties to Seller
under this Agreement, the Notes or the Related Agreements.
5.5 Compliance with Bulk Sales Laws. The Buying Parties and Seller
hereby waive compliance by the Buying Parties and Seller with the bulk sales law
and any other similar laws in any applicable jurisdiction in respect of the
transactions contemplated by this Agreement. Seller shall indemnify the Buying
Parties from, and hold them harmless against, any liabilities, damages, costs
and expenses resulting from or arising out of (i) the parties' failure to comply
with any of such laws in respect of the transactions contemplated by this
Agreement, or (ii) any action brought or levy made as a result thereof, other
than those liabilities which have been
-18-
19
expressly assumed, on such terms as expressly assumed, by the Buying Parties
pursuant to this Agreement.
5.6 Other Rights and Remedies Not Affected. The indemnification rights
of the parties under this Article V are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including, without
limitation the right to seek specific performance, recision or restitution, none
of which rights or remedies shall be affected or diminished hereby.
ARTICLE VI - POST CLOSING MATTERS
6.1 Survival of Representations and Warranties. The representations,
warranties and indemnifications made by the parties in this Agreement relating
to any taxes, interest, penalties, assessments or deficiencies shall survive the
Closing for the period of the applicable statute of limitations. All other
representations, warranties, agreements and obligations made by the parties in
this Agreement or in any certificate, schedule, statement, document or
instrument furnished hereunder or in connection with the negotiation, execution
and performance of this Agreement shall survive the Closing for a period of
seven years. Notwithstanding any investigation or audit conducted before or
after the Closing Date or the decision of any party to complete the Closing,
each party shall be entitled to rely upon the representations and warranties set
forth herein and therein and each such representation and warranty shall be
deemed to be material.
6.2 Discharge of Business Obligations. From the date first above
written until Closing Date, Seller shall pay and discharge, in accordance with
past practice but not less than on a timely basis, all obligations and
liabilities incurred prior to the Closing Date in respect of the Practice.
6.3 Maintenance of Books and Records. Each of Seller and the Buying
Parties shall preserve until the fifth anniversary of the Closing Date all
records possessed or to be possessed by such party relating to any of the
assets, liabilities or business of the Practice prior to the Closing Date. After
the Closing Date, each party shall provide the other party with access, upon
prior reasonable written request specifying the need therefor, during regular
business hours, to (i) the officers and employees of such party and (ii) the
books of account and records of such party, but, in each case, only to the
extent relating to the assets, liabilities or business of the Practice prior to
the Closing, and the other party and its representatives shall have the right to
make copies of such books and records; provided, however, that the foregoing
right of access shall not be exercisable in such a manner as to interfere
unreasonably with the normal operations and business of such party; and further,
provided, that, as to so much of such information as constitutes trade secrets
or confidential business information of such party, the requesting party and its
officers, directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of such party, which consent
-19-
20
shall not be unreasonably withheld, or (iii) where such information becomes
available to the public generally, or becomes generally known to competitors of
such party, through sources other than the requesting party, its affiliates or
its officers, directors or representatives.
6.4 Payments Received. Seller and the Buying Parties each agree that
after the Closing they will hold and will promptly transfer and deliver to the
other, from time to time as and when received by them, any cash, checks with
appropriate endorsements (using their best efforts not to convert such checks
into cash) or other property that they may receive on or after the Closing which
properly belongs to the other party, and will account to the other for all such
receipts. From and after the Closing, Coast shall have the right and authority
to endorse without recourse the name of Seller on any check or any other
evidences of indebtedness received by Coast on account of the Practice and the
Assets transferred to Coast hereunder.
6.5 Covenants of Buying Parties. So long as any of the Notes shall
remain unpaid or unsatisfied, unless the Seller and Xxxxx consent in writing:
(a) Financial Information.
(i) Coast shall furnish to the Seller (which term as used
throughout this Section 6.5 does not include East Coast) after the end
of each of the first eleven (11) months of each fiscal year its income
statement for such month, shall furnish after the end of each fiscal
quarter its balance sheet as of the end of such fiscal quarter, and
after the end of each fiscal year Coast shall furnish a copy of its
annual audited financial statements for such fiscal year.
(ii) Diasti shall furnish to the Seller after the end of each
fiscal year Diasti its unaudited balance sheet and income statement for
such fiscal year.
(iii) Xxxxx Xxxxxx and Xxxx Xxxxxx shall furnish to the Seller
after the end of each calendar year statements of net worth, setting
forth their respective assets and liabilities at the end of such year.
(iv) All of the foregoing financial information shall be
prepared in accordance with generally accepted accounting principles,
consistently applied throughout the periods involved and shall present
fairly the financial condition as of the dates thereof and in the case
of the Buying Parties, the results of their respective operations for
the periods then ended.
(b) Restricted Payments. Neither of the Buying Parties shall declare,
pay or make any dividend or distribution (in cash, property or obligations) on
any shares of any capital stock (now or hereafter) outstanding or purchase or
redeem any shares of their respective capital stock
-20-
21
(now or hereafter) outstanding; provided, however that the Buying Parties may
make distributions to their respective shareholders for the payment of income
taxes payable in connection with the Buying Parties' S corporation status.
(c) Notes Due Upon Sale. All payments due with respect to the Notes
shall accelerate and become immediately due and payable upon the sale of
substantially all of the assets of either of the Buying Parties not in the
ordinary course of the Buying Parties' respective businesses.
(d) Notes Due Upon Public Offering. All payments due with respect to
the Notes shall accelerate and become due and payable ninety (90) days after a
Registration Statement under the Securities Act of 1933, as amended, becomes
effective with respect to shares of common stock of Coast.
(e) Corporate Status. The Buying Parties shall remain in good standing
in their respective states of incorporation.
(f) Taxes. The Buying Parties shall pay all applicable federal, state
and local taxes when due except to the extent and so long as such taxes are
contested in good faith.
(g) Insurance. The Buying Parties shall maintain insurance covering
such risks in such form and amounts as is customary in similar businesses.
6.6 Additional Actions and Documents. From and after the Closing Date,
Seller and Xxxxx will take or cause to be taken such further actions, and
execute, deliver and file such further documents and instruments as the Buying
Parties may request from time to time to evidence transfer of the Assets to the
Buying Parties and to fully effectuate the purposes and terms of this Agreement.
ARTICLE VII - EVENTS OF DEFAULT
7.1 Events of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment. Either of the Buying Parties fails to make within
thirty (30) days of the date when due under the Notes payments of principal or
interest of any of the Notes;
(b) Representation or Warranty. Any representation or warranty by
either of the Buying Parties made in this Agreement or any of the Related
Agreements is incorrect in any material respect on or as of the date made or
deemed made (and which incorrect representation or warranty shall not be
corrected within ten (10) days of the determination thereof);
(c) Specific Defaults. Either of the Buying Parties fails to perform or
observe any term, covenant or agreement contained in Article VI hereof and such
default shall continue
-21-
22
unremedied for a period of ninety (90) days after the date upon which written
notice thereof is given to each of the Buying Parties by Seller or Xxxxx; or
(d) Insolvency; Debt To Equity Ratio.
(i) Any of the Buying Parties or guarantors of the Notes makes
an assignment for the benefit of creditors, files a voluntary petition
in bankruptcy, files any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under the present or any future federal bankruptcy act
or other applicable federal or state law (collectively, an "insolvency
proceeding");
(ii) Any of the Buying Parties or the guarantors of the Notes
admits the material allegations of a petition against it in any
insolvency proceeding or an order for relief is ordered in any
insolvency;
(iii) Any of the Buying Parties acquiesces in the appointment
of a receiver, trustee, custodian, conservator, or liquidator for
itself;
(iv) The debt to equity ratio of either of the Buying Parties
exceeds 18:1, and such default shall continue unremedied for a period
of ninety (90) days.
7.2 Remedies. If any Event of Default occurs, the Seller and/or Xxxxx
may:
(a) Declare all payments with respect to the Notes to be accelerated
and become immediately due and payable; and
(b) Exercise all rights and remedies available to the Seller and/or
Xxxxx under this Agreement, the Notes and the Related Documents or applicable
law.
ARTICLE VIII - MISCELLANEOUS
8.1 Taxes. Seller shall pay all federal, state and local sales,
documentary and other transfer taxes, if any, due as a result of the purchase,
sale or transfer of the Assets in accordance therewith whether imposed by law on
Seller or the Buying Parties and Seller shall indemnify, reimburse and hold
harmless the Buying Parties in respect of the liability for payment of or
failure to pay any such taxes or the filing of or failure to file any reports
required in connection therewith.
8.2 Expenses. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions hereof and the consummation of the
transactions contemplated hereby.
-22-
23
8.3 Contents of Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof.
It shall not be amended or modified, and no provision hereof shall be waived,
except by written instrument duly executed by each of the parties hereto. Any
and all previous agreements and understandings between or among the parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement.
8.4 Assignment and Binding Effect. This Agreement may not be assigned
by any party hereto without the prior written consent of the other parties.
Subject to the foregoing, all of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
permitted successors and assigns of the parties.
8.5 Waiver. No delay or failure on the part of either party in
exercising any right hereunder, and no partial or single exercise hereof, will
constitute a waiver of such right or of any other right hereunder.
8.6 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by overnight,
registered or certified mail, postage prepaid, as follows:
If to Coast or Diasti, to:
Coast Dental Services, Inc.
00000 X.X. Xxxxxxx 00, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxx
With a copy to:
Xxxxxxx X. Xxxxx, Esquire
Xxxxxxxx, Xxxx & Xxxxxxxx
Xxxxx 0000, Xxxxxxx Xxxxx
000 Xxxx Xxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
If to Seller or Xxxxx, to:
Xxxxxxx X. Xxxxx, D.M.D., P.A.
00 Xxxxxx Xxxxxxx
Xxxxxx Xxxxx, Xxxxxxx 00000
-23-
24
Attention: Xxxxxxx X. Xxxxx
With a copy to:
J. Xxxxx Xxxxx, Esquire
Xxxxxx & Xxxxxxx, P.A.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so personally delivered or three (3) business days after being
deposited in the U.S. mail.
8.7 Governing Law. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the State of Florida.
8.8 No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and, in the case of Article V hereof, the other Indemnified
Parties, and their heirs, executors, administrators, legal representatives,
successors and assigns, and they shall not be construed as conferring any rights
on any other persons.
8.9 Headings, Gender and "Person". All section headings contained in
this Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity.
8.10 Schedules and Exhibits. All Schedules and Exhibits referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
8.11 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
-24-
25
8.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which counterparts when taken together shall constitute but
one and the same instrument.
8.13 Rules of Construction. The rules of construction which require the
terms of an agreement to be construed most strictly against the drafter of such
an agreement are hereby waived and relinquished by each party.
8.14 Prohibition on Marketing of Seller to Third Parties;
Confidentiality of Agreement. For a period of ninety (90) days from the date
first above written, the Seller will not, directly or indirectly, participate in
any discussions or negotiations regarding, or furnish to any person any
information whatsoever with respect to the disposition of the Practice or the
Assets or any securities or other proprietary interest of Seller either by sale,
joint venture or any other business combination. Seller further agrees that
during such ninety (90) day period, none of Seller's officers, directors or
employees will undertake or continue acquisition discussions with other parties
or otherwise disclose the Buying Parties' proposal to anyone other than the duly
authorized representatives of the Seller. The parties agree not to make any
public announcement with regard to the transaction contemplated by this
Agreement without the prior written consent of the other party until after the
Closing Date.
8.15 Brokerage. Each of the parties hereto represents and warrants to
the others that no broker is entitled to any commission, or similar fee, in
connection with the making and carrying out of this Agreement, except as
described in SCHEDULE 8.15 attached hereto and made a part hereof. The
commissions or fees of any broker described in SCHEDULE 8.15 shall be the sole
responsibility of Seller.
8.16 Agent For Collection. Following the Closing Date, Coast shall act
as an agent on behalf of the Seller in collecting Seller's accounts receivable
existing at the Closing Date and described in SCHEDULE 8.16 attached hereto and
made a part hereof, and shall act as agent on behalf of Seller in paying
Seller's accounts payable existing at the Closing Date and described in SCHEDULE
8.16. In the event that the actual aggregate amount of such accounts payable is
in excess of the actual aggregate amount of such accounts receivable, the Seller
shall indemnify Coast in the amount of the excess. The determination as to
whether an amount is owed to Coast pursuant to this Section 8.16 shall be made
by Coast at its reasonable discretion ninety (90) days after the Closing Date,
and Coast shall provide the Seller with its records and calculations concerning
such excess amount owed. In the event that the actual aggregate amount of
Sellers's accounts receivable is in excess of the actual aggregate amount of
Seller's accounts payable, such excess amount shall be credited toward any
indemnification obligations of Seller under Article V hereof.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
-25-
26
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
"SELLER"
XXXXXXX X. XXXXX, D.M.D., P.A.
By:
-----------------------------
Xxxxxxx X. Xxxxx, President
"EAST COAST"
EAST COAST DENTAL MANAGEMENT, INC.
By:
-----------------------------
Xxxxxxx X. Xxxxx, President
"XXXXX"
Xxxxxxx X. Xxxxx, D.M.D.
"COAST"
COAST DENTAL SERVICES, INC.
By:
-----------------------------
Xxxxx Xxxxxx, President
"DIASTI"
XXXX XXXXXX, D.D.S., P.A.
By:
-----------------------------
Xxxx Xxxxxx, President
-26-
27
EXHIBIT "A"
1630 International Xxxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
0000 Xxxx Xxxx
Xxxx Xxxxxx, Xxxxxxx 00000
0000 Xxxxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxx 00000
000 Xxxx Xxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
0000-X Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxx 00000
000 Xxxx Xxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
28
PROMISSORY NOTE
$200,000.00 April 22, 1996
FOR VALUE RECEIVED, COAST DENTAL SERVICES, INC., a Delaware
corporation ("Maker"), hereby promises to pay XXXXXXX X. XXXXX, D.M.D., P.A.
("Payee") the principal amount of Two Hundred Thousand Dollars ($200,000.00),
together with interest thereon at a per annum rate equal to nine percent (9%).
Interest shall be computed on the basis of the actual number of days elapsed in
a year of 360 days from and including the date hereof through May 21, 1999.
Principal and interest on this Note shall be payable in twenty-four
(24) consecutive monthly installments, in arrears, on the dates and in the
amounts set forth in EXHIBIT A attached hereto, beginning on May 22, 1997. If
this Note or any installment of principal or interest hereon becomes due and
payable on Saturday, Sunday or other day on which commercial banks are
authorized or permitted to close under the laws of the State of Florida, the
maturity of this Note or such installment shall be extended to the next
succeeding business day. All payments under this Note shall be made in United
States Dollars and delivered to Payee at 00 Xxxxxx Xxxxxxx, Xxxxxx Xxxxx,
Xxxxxxx, 00000.
This Note is being delivered to Payee by Maker pursuant to that
certain Asset Purchase Agreement dated as of April 1, 1996 between Payee and
Maker (the "Purchase Agreement") and is subject to the terms and provisions
thereof. The principal amount of this Note shall be automatically and
permanently reduced by set-off in amounts determined under and in accordance
with the terms of the Purchase Agreement.
This Note is not transferable or assignable by Payee; provided,
however, that this Note may be transferred or assigned to (i) Xxxxxxx X. Xxxxx,
(ii) a revokable trust created by Xxxxxxx X. Xxxxx, or (iii) the beneficiaries
of Xxxxxxx X. Shawn's estate; provided that this Note shall not be thereafter
transferred or assigned to any other person or entity. This Note may be
prepaid in whole or in part at any time and from time to time without premium
or penalty.
29
This Note shall be governed by and construed in accordance with the
laws of the State of Florida applicable to debts and obligations incurred and
to be paid solely in such jurisdiction. This Note may not be modified or
amended and no provision hereof may be waived except by a written instrument
executed by the parties to be bound thereby.
COAST DENTAL SERVICES, INC.
By:_____________________________________
Xxxxx Xxxxxx, President
The obligations under this Note are jointly and severally
unconditionally guaranteed by XXXX XXXXXX, and XXXXX XXXXXX.
________________________________________
Xxxx Xxxxxx
________________________________________
Xxxxx Xxxxxx
-2-
30
PROMISSORY NOTE
$300,000.00 April 24, 1996
----------
FOR VALUE RECEIVED, XXXX XXXXXX, D.D.S., P.A., a Florida professional
association ("Maker"), hereby promises to pay XXXXXXX X. XXXXX, D.D.S., P.A.
("Payee") the principal amount of Three Hundred Thousand Dollars ($300,000.00),
together with interest thereon at a per annum rate equal to nine percent (9%).
Interest shall be computed on the basis of the actual number of days elapsed in
a year of 360 days from and including the date hereof through May 31, 1997.
Principal and interest on this Note shall be payable in twelve (12)
consecutive monthly installments, in arrears, on the dates and in the amounts
set forth in EXHIBIT A attached hereto, beginning on May 31, 1996. If this Note
or any installment of principal or interest hereon becomes due and payable on
Saturday, Sunday or other day on which commercial banks are authorized or
permitted to close under the laws of the State of Florida, the maturity of this
Note or such installment shall be extended to the next succeeding business day.
All payments under this Note shall be made in United States Dollars and
delivered to Payee at 00 Xxxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxx, 00000.
This Note is being delivered to Payee by Maker pursuant to that certain
Asset Purchase Agreement dated as of April 1, 1996 between Payee and Maker (the
"Purchase Agreement") and is subject to the terms and provisions thereof. The
principal amount of this Note shall be automatically and permanently reduced by
set-off in amounts determined under and in accordance with the terms of the
Purchase Agreement.
This Note is not transferable or assignable by Payee; provided,
however, that this Note may be transferred or assigned to (i) Xxxxxxx X. Xxxxx,
(ii) a revokable trust created by Xxxxxxx X. Xxxxx, or (iii) the beneficiaries
of Xxxxxxx X. Shawn's estate; provided that this Note shall not be thereafter
transferred or assigned to any other person or entity. This Note may be prepaid
in whole or in part at any time and from time to time without premium or
penalty.
31
This Note shall be governed by and construed in accordance with the
laws of the State of Florida applicable to debts and obligations incurred and to
be paid solely in such jurisdiction. This Note may not be modified or amended
and no provision hereof may be waived except by a written instrument executed by
the parties to be bound thereby.
XXXX XXXXXX, D.D.S., P.A.
By:
----------------------------------
Xxxx Xxxxxx, President
The obligations under this Note are jointly and severally
unconditionally guaranteed by XXXX XXXXXX, and XXXXX XXXXXX.
----------------------------------
Xxxx Xxxxxx
----------------------------------
Xxxxx Xxxxxx
-2-
32
PROMISSORY NOTE
$100,000.00 April 24, 1996
----------
FOR VALUE RECEIVED, COAST DENTAL SERVICES, INC., a Delaware corporation
("Maker"), hereby promises to pay XXXXXXX X. XXXXX, D.M.D. ("Payee") the
principal amount of One Hundred Thousand Dollars ($100,000.00), together with
interest thereon at a per annum rate equal to nine percent (9%). Interest shall
be computed on the basis of the actual number of days elapsed in a year of 360
days from and including the date hereof through May 31, 1999.
Principal and interest on this Note shall be payable in twenty-four
(24) consecutive monthly installments, in arrears, on the dates and in the
amounts set forth in EXHIBIT A attached hereto, beginning on May 31, 1997. If
this Note or any installment of principal or interest hereon becomes due and
payable on Saturday, Sunday or other day on which commercial banks are
authorized or permitted to close under the laws of the State of Florida, the
maturity of this Note or such installment shall be extended to the next
succeeding business day. All payments under this Note shall be made in United
States Dollars and delivered to the residence of Payee located at 00 Xxxxxx
Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxx 00000.
This Note is being delivered to Payee by Maker pursuant to that certain
Asset Purchase Agreement dated as of April 1, 1996 between Payee and Maker (the
"Purchase Agreement") and is subject to the terms and provisions thereof. The
principal amount of this Note shall be automatically and permanently reduced by
set-off in amounts determined under and in accordance with the terms of the
Purchase Agreement.
This Note is not transferable or assignable by Payee; provided,
however, that this Note may be transferred or assigned to (i) a revokable trust
created by Payee, or (ii) the beneficiaries of Payee's estate, provided that
this Note shall not be thereafter transferred or assigned to any other person or
entity. This Note may be prepaid in whole or in part at any time and from time
to time without premium or penalty.
33
This Note shall be governed by and construed in accordance with the
laws of the State of Florida applicable to debts and obligations incurred and to
be paid solely in such jurisdiction. This Note may not be modified or amended
and no provision hereof may be waived except by a written instrument executed by
the parties to be bound thereby.
COAST DENTAL SERVICES, INC.
By:
--------------------------------
Xxxxx Xxxxxx, President
The obligations under this Note are jointly and severally
unconditionally guaranteed by XXXX XXXXXX, and XXXXX XXXXXX.
--------------------------------
Xxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
-2-
34
PROMISSORY NOTE
$900,000.00 April 24, 1996
----------
FOR VALUE RECEIVED, COAST DENTAL SERVICES, INC., a Delaware corporation
("Maker"), hereby promises to pay XXXXXXX X. XXXXX, D.M.D. ("Payee") the
principal amount of Nine Hundred Thousand Dollars ($900,000.00), together with
interest thereon at a per annum rate equal to nine percent (9%). Interest shall
be computed on the basis of the actual number of days elapsed in a year of 360
days from and including the date hereof through May 31, 2003.
Principal and interest on this Note shall be payable in seventy-two
(72) consecutive monthly installments, in arrears, on the dates and in the
amounts set forth in EXHIBIT A attached hereto, beginning on May 31, 1997. If
this Note or any installment of principal or interest hereon becomes due and
payable on Saturday, Sunday or other day on which commercial banks are
authorized or permitted to close under the laws of the State of Florida, the
maturity of this Note or such installment shall be extended to the next
succeeding business day. All payments under this Note shall be made in United
States Dollars and delivered to the residence of Payee located at 00 Xxxxxx
Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxx 00000.
This Note is being delivered to Payee by Maker pursuant to that certain
Asset Purchase Agreement dated as of April 1, 1996 between Payee and Maker (the
"Purchase Agreement") and is subject to the terms and provisions thereof. The
principal amount of this Note shall be automatically and permanently reduced by
set-off in amounts determined under and in accordance with the terms of the
Purchase Agreement.
This Note is not transferable or assignable by Payee; provided,
however, that this Note may be transferred or assigned to (i) a revokable trust
created by Payee, or (ii) the beneficiaries of Payee's estate, provided that
this Note shall not be thereafter transferred or assigned to any other person or
entity. This Note may be prepaid in whole or in part at any time and from time
to time without premium or penalty.
35
This Note shall be governed by and construed in accordance with the
laws of the State of Florida applicable to debts and obligations incurred and to
be paid solely in such jurisdiction. This Note may not be modified or amended
and no provision hereof may be waived except by a written instrument executed by
the parties to be bound thereby.
COAST DENTAL SERVICES, INC.
By:
------------------------------
Xxxxx Xxxxxx, President
The obligations under this Note are jointly and severally
unconditionally guaranteed by XXXX XXXXXX, and XXXXX XXXXXX.
------------------------------
Xxxx Xxxxxx
------------------------------
Xxxxx Xxxxxx
-2-
36
EMPLOYMENT AGREEMENT AND COVENANT NOT TO COMPETE
EMPLOYMENT AGREEMENT AND COVENANT NOT TO COMPETE made as of this 1st
day of April, 1996 between XXXX XXXXXX, D.D.S., P.A., a Florida professional
association with its principal place of business at 00000 X.X. Xxxxxxx 00,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 (the "Company"), and XXXXXXX X. XXXXX,
D.M.D., residing at 00 Xxxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxx 00000 (the
"Employee").
WHEREAS, the Company and Coast Dental Services, Inc. ("Coast") have
purchased certain of the assets of the Employee's wholly-owned Florida
professional association, Xxxxxxx X. Xxxxx, D.M.D., P.A., and Employee's
wholly-owned Florida corporation, East Coast Dental Management, Inc. pursuant
to that certain Asset Purchase Agreement (the "Asset Purchase Agreement") of
even date herewith;
WHEREAS, the Employee is a dentist licensed to practice dentistry in
the State of Florida who possesses special knowledge relating to the assets
purchased pursuant to the Asset Purchase Agreement and who has developed
valuable, long-term relationships with patients to be cared for by the Company
which make him valuable to the Company and which will contribute to the
Company's future success;
WHEREAS, the Company desires to employ the Employee and the Employee
desires to serve in the employ of the Company upon the terms and conditions set
forth herein; and
WHEREAS, as consideration for and in connection with the Asset
Purchase Agreement and such employment arrangement, the parties hereto desire
to enter into a covenant not to compete.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. Employment, Acceptance and Term.
1.1 Subject to the terms and conditions of this
Agreement, the Company hereby agrees to employ the Employee, and the Employee
hereby agrees to serve the Company, as a dentist for the term set forth in
Section 1.2 below.
1.2 The term of this Agreement shall be for a one (1)
year period commencing as of April 1, 1996 and ending on March 31,
37
1997. This Agreement may be renewable by mutual agreement of the Company and
the Employee for subsequent terms of one (1) year by giving the Employee notice
of such renewal at least thirty (30) days prior to the end of any term hereof.
2. Duties and Authority.
During the term of this Agreement, the Employee shall devote his full
time and energies to the business and affairs of the Company. The Employee
shall not accept any other employment during the term of this Agreement, nor
shall he permit such personal business interests as he may have to interfere
with the performance of his duties hereunder. The Employee agrees to use his
best efforts, skill and abilities to promote the Company's interests and to
faithfully and diligently perform, to the best of his abilities, such dentistry
duties as may from time to time be assigned to him by the Company's President,
it being acknowledged by both parties hereto that the Employee shall perform
such dentistry duties in accordance with local and state customs and rules of
ethical conduct and standards of professional care. All such services shall be
rendered for and in consideration of the compensation payable to the Employee
under Section 3 hereof.
3. Compensation.
During the term of this Agreement, the Company shall pay to the
Employee, in arrears, semi-monthly payments at a rate which shall equal Three
Hundred and No/100 Dollars ($300.00) per day worked by the Employee in the
immediately preceding payment period. The Employee shall also be eligible to
participate in the Company's bonus system as described in EXHIBIT A attached
hereto and made a part hereof. All payments made hereunder as compensation
shall be subject to withholding for federal income tax purposes, FICA and other
applicable state and local taxes, if any.
4. Expenses.
The Company shall pay or reimburse the Employee for all reasonable and
necessary expenses incurred by the Employee and authorized by the Company
during the term of this Agreement in connection with the business of the
Company; provided, however, the Employee shall render to the Company a complete
and accurate accounting of all such expenses in accordance with the
substantiation requirements of Section 274 of the Internal Revenue Code of
1986, as amended. Such expenses shall include, without limitation, any
additional amounts under the Employee's professional liability insurance
policies relating to coverage of other dentists employed by the Company which
amounts are due and payable after the date hereof.
-2-
38
5. Additional Benefits.
During the term of this Agreement the Employee shall be allowed to
participate (subject to uniformly applicable requirements for participation) at
the Company's expense in any health, medical, disability, insurance or pension
plan made available by the Company for the benefit of its employees generally,
and shall be entitled to an annual vacation of two (2) weeks for the first
year hereof and three (3) weeks thereafter with full pay and allowances, to be
taken at such time or times as shall be mutually agreed between the Company and
the Employee. The Company's current employee benefit plans are described in
EXHIBIT B attached hereto and made a part hereof.
6. Normal Working Hours.
The Employee is expected to work at least thirty-five (35) hours per
week, but shall not work in excess of forty (40) hours in any one week unless
instructed to do so by the President of the Company. The working hours shall
be normally 8:30 a.m. to 5:30 p.m Monday through Saturday, but may be
determined differently by the Company from time-to- time. The Employee may
also be required to work some evenings and weekends in order to accommodate the
patients cared for by the Company.
7. Record-keeping.
The Employee shall maintain written records of his time spent working
for the Company, and shall submit such records to the Company as directed by
the Company. The Employee shall keep and maintain other records relating to
all professional services rendered in the form and manner as required by the
Company from time-to-time. The Employee shall also prepare reports, claims and
correspondence as required. All of these records and related materials shall
belong to the Company as will all dental records and other files concerning
patients of the Company.
8. At Will Employment.
8.1 The Company may terminate this contract and
employment hereunder, without cause and at any time, upon thirty (30) days'
written notice by certified or registered mail to the other party at the
address set forth above; provided, however, that the Company may terminate the
employment hereunder immediately if the Employee engages in any of the
following "for cause" conduct: (i) the Employee is convicted of a felony or
other crime involving moral turpitude; (ii) the Employee continuously or
habitually uses narcotics or alcohol to an extent which materially impairs the
Employee's performance of his duties hereunder, after ten (10) days' written
notice to the Employee by the President of the
-3-
39
Company describing such improper conduct and the failure by the Employee to
correct such conduct within such ten (10) day period; (iii) the Employee
misappropriates funds or property of the Company or any affiliate of the
Company; (iv) the Employee knowingly violates a material term of this Agreement
and such violation continues after ten (10) days' written notice to the
Employee by the President of the Company describing such violation; or (v) the
Employee engages in any other gross misconduct in the performance of, or a
material failure or refusal of the Employee to perform his duties in accordance
with this Agreement after ten (10) days' written notice to the Employee by the
President of the Company describing such improper conduct and the failure by
the Employee to correct such conduct within such ten (10) day period.
8.2 In the event that during the initial one-year term of
this Agreement the Employee terminates this Agreement without cause or is
terminated by the Company as a result of his engaging in any of the "for cause"
conduct described in Section 8.1 above, the parties agree that the Employee
shall pay liquidated damages of Five Hundred Thousand and No/100 Dollars
($500,000.00) to the Company, which the parties agree is a reasonable amount to
pay for such breach because of the resulting loss of goodwill associated with
the departure of the Employee from the Company's employ. All disputes,
differences and questions arising between the parties relating to the discharge
of the Employee based on the "for cause" conduct described in Section 8.1 above
shall be referred to mandatory, binding arbitration between the parties hereto
according to the Commercial Arbitration Rules of the American Arbitration
Association. The arbitrators determining the dispute shall be selected as
follows: one (1) arbitrator shall be appointed by the Company, one (1)
arbitrator shall be appointed by the Employee, and the arbitrators so chosen
shall, if themselves unable to agree on the issue within ten (10) days after
their appointment, choose an additional arbitrator without unnecessary delay,
and the decision in writing signed by any two (2) of them shall be final and
binding on the parties hereto. If either party fails to appoint an arbitrator
within ten (10) days after the other side shall have served written notice
thereof upon the other party, then the arbitrator so appointed by the first
party shall have power to proceed to arbitrate and determine the issue. No one
shall be nominated or act as an arbitrator who is in any way financially
interested in this Agreement or in the business affairs of either party. The
arbitrators shall also determine the parties' liabilities for expenses of such
reference, attorneys' fees and all other related costs. The decision or award
of the arbitrators may be entered as a judgment in any court of competent
jurisdiction.
9. License; Continuing Education.
At all times during the term of this Agreement, the Employee shall
keep in full force and effect his State of Florida dentist
-4-
40
license. The Employee shall participate in continuing education in order to
improve and maintain his professional skills and comply with the Florida Board
of Dentistry's continuing education requirements. The costs of maintaining the
Employee's dentist license and the tuition and registration expenses for
continuing education shall be the sole responsibility of the Employee.
10. Non-Competition.
10.1 The Employee agrees that during and until the later
of (i) two years after the termination of his employment with the Company or
(ii) five (5) years after the date first above written, the Employee shall not,
in any manner, directly or indirectly, as an officer, director, stockholder,
partner, associate, employee, consultant, owner, agent, creditor, coventurer or
otherwise be or become interested in or be associated with any other
corporation, firm, business or person engaged within Orange County, Seminole
County, Volusia County or Flagler County, Florida in the practice of dentistry
or be or become interested in or be associated with any other corporation,
firm, business or person engaged in the dental management business within any
county where Coast has a dental office; provided, however, that following the
termination of the employment relationship created by this Agreement, the
Employee may practice dentistry for a not-for-profit or charitable corporation
or governmental entity which is not in competition with the Company or Coast.
The Employee also agrees that during and until two (2) years after the date
first above written, the Employee shall not, in any manner, directly or
indirectly, as an officer, director, stockholder, partner, associate, employee,
consultant, owner, agent, creditor, coventurer or otherwise be or become
interested in or be associated with any other corporation, firm, business or
person engaged in the practice of dentistry within a three (3) mile radius of
any Coast dental office; provided, however, that following the termination of
the employment relationship created by this Agreement, the Employee may
practice dentistry for a not-for-profit or charitable corporation or
governmental entity which is not in competition with the Company or Coast.
10.2 The Employee acknowledges that his knowledge, skills
and position are unique and, therefore, that the breach by him of the
provisions of Section 10.1 shall cause irreparable harm to the Company and
Coast, which harm cannot be fully redressed by the payment of damages to the
Company or Coast. Accordingly, the Company and Coast shall be entitled, in
addition to any other right or remedy it may have, at law or in equity, to an
injunction, without the posting of any bond or other security, enjoining or
restraining the Employee from any violation or threatened violation of Section
10.1, and the Employee hereby consents to the issuance of such injunction. If
any of the rights or restrictions contained or provided for herein shall be
deemed by a court of competent
-5-
41
jurisdiction to be unenforceable by reason of the extent, duration or
geographical scope thereof or any other provision of this Agreement, the
parties hereto contemplate that the court shall reduce such extent, duration,
geographical scope or other provision and enforce this Section 10 in its
reduced form for all purposes in the manner contemplated hereby. This Section
10 shall survive the termination of this Agreement and of the Employee's
employment hereunder.
11. Confidential Information; Non-Solicitation.
11.1 The Employee agrees that he shall not at any time
(whether during the period of his employment with the Company or at any time
thereafter) use outside the scope of his employment hereunder or disclose to
any person, corporation, firm, partnership or other entity whatsoever, or to
any officer, director, stockholder, partner, associate, employee, agent or
representative of any thereof, any business plans, business methods, customer
lists, or any other confidential information or trade secrets of or relating to
the Company or its business or Coast or its business (collectively,
"Confidential Information"). The Employee acknowledges that all Confidential
Information is the exclusive property of the Company and/or Coast and the
Employee agrees to maintain the Confidential Information in strictest
confidence and use the Confidential Information solely in the performance of
his duties under this Agreement.
11.2 The Employee agrees that during the term of his
employment hereunder and for a period of two (2) years following the
termination of such employment, he shall not solicit, engage, hire, or employ
any then present employee of the Company or Coast or enter into any arrangement
with any then present employee of the Company or Coast for the purposes of
terminating such employee's employment with the Company or Coast.
11.3 The Company and Coast shall be entitled, in addition
to any other right and remedy it may have, at law or in equity, to an
injunction, without the posting of any bond or other security, enjoining or
restraining the Employee from any violation of Sections 11.1 or 11.2 hereof,
and the Employee hereby consents to the issuance of such injunction. If any of
the restrictions contained herein shall be deemed by a court of competent
jurisdiction to be unenforceable by reason of the extent, duration or
geographical scope thereof or any other provision of this Agreement, the
parties hereto contemplate that the court shall reduce such extent, duration,
geographical scope or other provision and enforce this Section 11 in its
reduced form for all purposes in the manner contemplated hereby. This Section
11 shall survive the termination of this Agreement and the Employee's
employment hereunder.
-6-
42
12. Notices.
All notices hereunder and other communications required or permitted
to be given to either party hereto shall be in writing and delivered by hand or
sent by overnight or by certified mail, return receipt requested, postage
prepaid, addressed to such party at the party's address referred to above, or
at such other address as such party may from time to time designate by written
notice to the other party hereto, given in accordance with the provisions of
this Section 12. Any such notice or other communication shall be deemed to
have been given on its date of personal delivery or three (3) business days
after being deposited in the U.S. mail.
13. Waivers.
No waiver by either party hereto of any breach of any provision of
this Agreement shall be deemed to constitute a waiver of any other breach of
such provision or a waiver of any breach of any other provision of this
Agreement.
14. Agreement Compete; Amendments.
There are no oral agreements or understandings with respect to or
affecting this Agreement and this Agreement may not be amended, supplemented,
cancelled or discharged except by a written instrument executed by the party to
be charged.
15. Non-Assignability.
The respective rights and obligations hereunder of the parties hereto
are personal to such parties and shall not be transferred or assigned by them,
in whole or in part, to any other person, firm or corporation; provided that
the Company may assign this Agreement and the benefits hereunder without the
consent of the Employee, without being relieved from any liability hereunder,
to any of its direct or indirect "affiliates" or "associates" (as such terms
are defined in Rule 405 of the Rules and Regulations promulgated under the
Securities Act of 1933).
16. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida applicable to agreements made and to be
performed entirely within such State.
17. Captions.
All captions and headings herein contained are inserted for
convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
-7-
43
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first above written.
"COMPANY"
XXXX XXXXXX, D.D.S., P.A.
_____________________________ By: ____________________________________
Xxxx Xxxxxx, President
"EMPLOYEE"
_____________________________ ________________________________________
Xxxxxxx X. Xxxxx, D.M.D.
-8-
