Exhibit 2.6
AFFILIATION AGREEMENT AND AGREEMENT AND PLAN OF MERGER
THIS AFFILIATION AGREEMENT AND AGREEMENT AND PLAN OF MERGER is entered
into as of the 25th day of February, 1997, by and among Omega Orthodontics,
Inc., a Delaware corporation ("OMEGA"); Xxxxx X. Xxxxx, D.M.D., M.S. ("Xx.
Xxxxx"), who is duly licensed to practice orthodontics in the state of Nevada
(the "State"); Xxxxx X. Xxxxx, LLC, a Nevada limited liability company (the
"Orthodontic Entity"); and Omega Orthodontics of Elko, Inc., a Delaware
corporation to be formed and to become a wholly owned subsidiary of OMEGA
("Acquisition" and sometimes referred to herein as the "Surviving Entity") (and
which shall have joined herein by subsequently executing this Agreement).
RECITALS
A. OMEGA provides professional management and marketing services to
orthodontic practices in the United States, which services include providing
practice management systems, office space, equipment, furnishings and active
administrative personnel necessary for the operation of orthodontic practices,
and which services are provided directly or indirectly through management
service organizations.
B. The Orthodontic Entity owns and operates an orthodontic practice with
offices located at 000 00xx Xxxxxx, Xxxx, Xxxxxx (the "Orthodontic Offices") and
furnishes orthodontic care to the general public through the services of Xx.
Xxxxx affiliated with the Orthodontic Entity.
C. Xx. Xxxxx presently holds 100% of the membership interests of
the Orthodontic Entity (the issued and outstanding interests is hereafter
referred to herein as the "Interests").
D. Xx. Xxxxx owns all of the Interests, and desires to convert the
Orthodontice Entity to a general purpose entity under the laws of the State
and to form a new professional corporation or entity to continue his
orthodontic practice at the Orthodontic Offices.
E. OMEGA has conducted a review of the Orthodontic Entity, and has
reviewed the Orthodontic Entity's unaudited financial and operations statement
provided by Xx. Xxxxx (the "Financial Statement"), a copy of which is attached
hereto as Exhibit A . Based on its review of the Orthodontic Entity and the
Financial Statement, OMEGA has issued the report (the "Report"), a copy of which
has been furnished to the Orthodontic Entity. The Orthodontic Entity and Xx.
Xxxxx have reviewed the Report and OMEGA's literature, and agree with the Report
and the concepts of OMEGA's Exceptional Practice.
F. Subject to the terms and conditions of this Agreement, OMEGA and Xx.
Xxxxx have determined that it is in the best interests of each to effect a
merger of the Orthodontic Entity with and into Acquisition (the "Merger") as
provided in Section 2.1 hereof.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged to the full
satisfaction of the parties hereto, the parties hereto agree as follows:
ARTICLE I. ENTITY FORMATION AND CONVERSION
1.1 At the Closing (as defined in Section 2.3 hereof), Xx. Xxxxx shall
cause the Orthodontic Entity's operating agreement and articles of organization
to be amended to convert the Orthodontic Entity into a general purpose entity
under the laws of the State.
1.2 Xx. Xxxxx shall form a new professional entity (the "New PC") under
the laws of the State and, in accordance with the terms of this Agreement,
commence the practice of orthodontics through the New PC.
1.3 OMEGA shall form Acquisition and shall cause Acquisition to join in
this Agreement by subsequently executing this Agreement where indicated below.
ARTICLE II. MERGER
2.1 Merger; Consideration and Payment.
(a) At the Effective Time (as hereinafter defined) and subject to the
terms and conditions hereinafter set forth, the parties hereto agree to cause
the Merger to be consummated by filing with the Delaware Secretary of State and
the State Secretary of State (if required) a Certificate of Merger (the
"Certificate of Merger") in the form required by applicable law, duly executed
and acknowledged by the Surviving Entity, and taking all such further actions as
may be required by law to make the Merger effective. The Merger shall become
effective upon the filing of the Certificate of Merger with the Delaware
Secretary of State and the State Secretary of State (if required) (the
"Effective Time"), and Acquisition will be the surviving entity.
(b) At the Effective Time, the Interests of Orthodontic Entity outstanding
immediately prior to the Effective Time shall, on such date, by virtue of the
Merger and upon surrender to OMEGA of the certificates therefor, duly endorsed
and transferable, free and clear of any liens, encumbrances, restrictions or
claims of any kind (other than those liens, encumbrances, restirctions and
claims expressly disclosed to OMEGA and affirmatively accepted by OMEGA prior to
the Effective Time), without any further action on the part of any holder
thereof, be converted into the right to receive an aggregate consideration (the
"Consideration") of:
(i) Three Hundred Thirty Three Thousand, Five Hundred Sixty Seven
Dollars ($333,567) in cash (the "Cash Component");
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(ii) Three Hundred Thirty Three Thousand, Five Hundred Sixty Seven
Dollars ($333,567) to be represented by a promissory note (the "Purchase
Note") payable to Xx. Xxxxx (the "Note Component") in the form attached
hereto as Exhibit B; and
(iii) Three Hundred Thirty Three Thousand, Five Hundred Seventy
($333,570) Dollars to be represented by issuance to Xx. Xxxxx of shares of
OMEGA common stock ("OMEGA Stock") based on a value per share equal to
100% of the IPO Price (as defined below in Section 2.3) (the "Stock
Component"), which shall thereupon be issued to Xx. Xxxxx, fully paid and
nonassessable.
(c) At the Effective Time, each share of stock of Acquisition outstanding
immediately prior to the Effective Time shall, on such date, by virtue of the
Merger and without any action on the part of any holder thereof, continue and
shall be held by OMEGA.
2.2 Adjustment and Audit.
(a) The Consideration is based on the value of the Interests as determined
by OMEGA from the information set forth in the Financial Statement. At OMEGA's
option, OMEGA will cause an audit (the "Audit") of the Financial Statement and
the books and records of the Orthodontic Entity to be completed prior to Closing
to confirm the accuracy and completeness of the information in the Financial
Statement.
(b) The Consideration shall be subject to adjustments at Closing for: (i)
prepaid and underpaid rent and other lease obligations, if the leases are to be
continued after Closing, as well as for other agreed normal and customary
prepaid and underpaid expenses; (ii) any accrued but unpaid salaries, bonuses
and other compensation, fringe and health insurance benefits, employment or
payroll taxes and related employment obligations and (iii) any accounts payable
of the Orthodontic Entity which have accrued prior to the Effective Time and
which remain unpaid as of such time (the "Accounts Payable") in excess of an
amount equal to one-half (1/2) of one "Average" month of gross income from the
Orthodontic Entity. As used herein, Average shall mean an average of the
Accounts Payable of the Orthodontic Entity using the last twelve months prior to
the end of the month immediately preceding the Effective Time.
(c) The adjustments to the Consideration, if any, shall be applied in the
following order of priority; first to the Cash Component, second, to the Note
Component, and the balance, if any, to the Stock Component.
2.3 Time and Place of Closing. The closing of the transactions
contemplated hereby (herein called the "Closing") shall be held immediately
before the Effective Time at the offices of Xxxxxxxx & Xxxx, Xxx Xxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000 on the date of the closing of OMEGA's initial public
offering of its securities (the "IPO Closing") pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act")
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("IPO"), or at such other place, date or time as may be fixed by mutual
agreement of the parties; provided, however, that in no event shall the Closing
date be extended beyond June 30, 1997. On or before the IPO Closing, OMEGA will
notify the Orthodontic Entity of the projected IPO Closing Date determined by
OMEGA, in its sole discretion. As used herein "IPO Price" shall mean the initial
offering price to the public of OMEGA Stock as reflected on the cover page of
its Prospectus under the Securities Act for the IPO.
2.4 Filing Certificate of Merger. Contemporaneous with the Closing, the
duly executed Certificate(s) of Merger shall be filed with the Delaware
Secretary of State and the State Secretary of State (if required).
2.5 Delivery of Records, Contracts, Interests. At the Closing Xx.
Xxxxx shall deliver or cause to be delivered to OMEGA:
(a) all of the Orthodontic Entity's minute books, membership interest
records and other company books and records and the Orthodontic Entity's leases,
contracts, employment agreements, non-compete agreements, commitments and
rights, with such consents to the Merger as are necessary to assure Acquisition
and OMEGA of the full benefit of the same.
(b) Evidence of malpractice insurance coverage for the current and five
(5) prior years, and if applicable, evidence of so-called "tail" insurance for
such period naming the Orthodontic Entity (and any successor by merger) as a
co-insured or otherwise assigning to the Orthodontic Entity and its successor by
merger the full benefits thereof.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Representations and Warranties of Xx. Xxxxx and the Orthodontic Entity
in the attached Schedule 1 are hereby incorporated as if fully set forth herein.
The Representations and Warranties of OMEGA and Acquisition in the attached
Schedule 2 are hereby incorporated as if fully set forth herein. Capitalized
words and expressions used in this Agreement and which are defined in said
Schedules 1 and 2 shall have the same meaning as they are given therein.
ARTICLE IV. COVENANTS OF XX. XXXXX
AND THE ORTHODONTIC ENTITY
Xx. Xxxxx and the Orthodontic Entity hereby covenant and agree with
OMEGA and Acquisition as follows:
4.1 Conduct of Business. Between the date of this Agreement and the
Closing, they will do the following unless OMEGA shall otherwise consent in
writing:
(a) conduct its business only in the ordinary course, and refrain from
changing or
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introducing any method of management or operations except in the ordinary course
of business and consistent with prior practices;
(b) refrain from making any purchase, sale or disposition of any asset or
property other than in the ordinary course of business, from purchasing any
capital asset costing more than $1,000 and from mortgaging, pledging, subjecting
to a lien or otherwise encumbering any of the Interests, the Property or other
assets of the Orthodontic Entity;
(c) refrain from incurring any contingent or fixed obligations or
liabilities except those that are usual and normal in the ordinary course of
business;
(d) refrain from making any change or incurring any obligation to make a
change in its operating agreement (certified copies of which are attached hereto
as Exhibit D) or authorized or issued membership interests, except as
contemplated by this Agreement;
(e) refrain from declaring, setting aside or paying any dividend or making
any other distribution in respect of membership interests, or making any direct
or indirect redemption, purchase or other acquisition of membership interest, of
the Orthodontic Entity;
(f) use its best efforts to keep intact its business organization, to keep
available its present officers, agents and employees and to preserve the
goodwill of all patients, suppliers, and others having business relations with
it;
(g) not commit or fail to commit any act which would cause Xx. Xxxxx
or the Orthodontic Entity to suffer the revocation, suspension or limitation of
Xx. Xxxxx'x or the Orthodontic Entity's license.
(h) permit OMEGA or Acquisition and its authorized representatives to have
full access to all its properties, assets, records, tax returns, company
records, contracts and documents and furnish to OMEGA or its authorized
representatives such financial and other Information with respect to its
business or properties as OMEGA may from time to time reasonably request.
4.2 Authorization from Others. Prior to the Closing, they will have
obtained all assignments, authorizations, consents and permits of others
required to permit the consummation by Xx. Xxxxx and the Orthodontic Entity of
the transactions contemplated by this Agreement.
4.3 Breach of Representations and Warranties. Promptly upon becoming aware
of the actual, impending or threatened occurrence of any event which would cause
or constitute a breach, or would have caused or constituted a breach had such
event occurred or been known to them prior to the date hereof, of any of their
representations and warranties contained in or referred to in this Agreement,
they shall give detailed written notice thereof to OMEGA and Acquisition and
shall use their best efforts to prevent or promptly remedy the same.
4.4 Consummation of Agreement. Each shall use his or its best efforts to
perform and
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fulfill all conditions and obligations on his or its part to be performed and
fulfilled under this Agreement, to the end that the transactions contemplated by
this Agreement shall be fully carried out.
ARTICLE V. COVENANTS OF OMEGA AND ACQUISITION.
OMEGA and Acquisition each hereby covenants and agrees with Xx. Xxxxx and
the Orthodontic Entity as follows:
5.1 Authorization from Others. Prior to the Closing, each will have
obtained all authorizations, consents and permits of others required to permit
the consummation by it of the transactions contemplated by this Agreement.
5.2 Consummation of Agreement. Each shall use its best efforts to perform
and fulfill all conditions and obligations on its part to be performed or
fulfilled under this Agreement, to the end that the transactions contemplated by
this Agreement shall be fully carried out.
ARTICLE VI. CONDITIONS TO OBLIGATIONS OF OMEGA AND ACQUISITION
The obligations of OMEGA and Acquisition to consummate this Agreement and
the transactions contemplated hereby are subject to the condition that on or
before the Closing the actions required by this Article 6 will have been
accomplished.
6.1 Representations; Warranties; Covenants. Each of the representations
and warranties of the Orthodontic Entity and Xx. Xxxxx contained in Schedule 1
shall be true and correct as though made on and as of the Closing, and Xx. Xxxxx
and the Orthodontic Entity shall have performed all of his or its obligations
hereunder which by the terms hereof are to be performed on or before the
Closing.
6.2 New PC. Xx. Xxxxx shall have formed the New PC under the laws of the
State in order to commence the practice of orthodontics through the New PC. Xx.
Xxxxx shall have furnished (i) a certificate of the State Secretary of State as
to the legal existence and professional corporation good standing of New PC; and
(ii) a copy of the resolutions adopted by the board of directors and
stockholders of New PC authorizing and approving the Management Services
Agreement and the Stock Put/Call Option and Successor Designation Agreement.
6.3 Other Agreements. Xx. Xxxxx shall have executed and delivered,
or shall have caused the New PC to execute and deliver, to Acquisition a
Management Services Agreement and a Stock Put/Call Option and Successor
Designation Agreement, each having substantially the terms and conditions of
the forms hereof collectively attached hereto as Exhibit E .
6.4 Initial Public Offering. OMEGA shall have completed the IPO.
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6.5 Absence of Certain Litigation. There shall not be any injunction,
restraining order or order of any nature issued by any court of competent
jurisdiction which directs that this Agreement or any material transaction
contemplated hereby shall not be consummated as herein provided, or suit, action
or other proceeding which in the reasonable opinion of counsel for OMEGA or
Acquisition is likely to result in the restraint or prohibition of the
consummation of any material transaction contemplated hereby.
6.6 Notices. The Orthodontic Entity shall, at Acquisition's expense,
notify all patients and obligors of accounts receivable, and third party payors
and others designated by OMEGA of the Merger and the other transactions
contemplated hereunder pursuant to notices substantially in the form
collectively attached hereto as Exhibit C.
6.7 Financial Condition. The financial condition of the Orthodontic Entity
shall not be materially adversely different from the Financial Statement, as
determined by OMEGA and Acquisition. During the period from the date of the
Financial Statement to the Closing, there shall not have been any material
adverse change in the financial condition, results of operations, business or
prospects of the Orthodontic Entity, nor any material loss or damage to its
assets, whether or not insured, which materially affects the ability of
Orthodontic Entity to conduct its business. The Orthodontic Entity shall have
delivered to OMEGA a certificate, dated the date of Closing, to the foregoing
effect, and further to the effect that there are no Accounts Payable or other
liabilities as of the date of Closing that are not reflected on the Financial
Statement other than those which have been disclosed in writing to and accepted
in writing by OMEGA and Acquisition and which incurred since the date of the
Financial Statement in the ordinary course of business.
6.8 Due Diligence. OMEGA, acting in good faith and in its sole discretion,
shall be reasonably satisfied with the results of its "Due Diligence" on Xx.
Xxxxx and the Orthodontic Entity as not reflecting any data or information which
individually or in the aggregate, if previously disclosed, would have indicated
that there was a material adverse change in the business of the Orthodontic
Entity or in the condition or prospects (financial or otherwise) of the assets,
properties, operations, patients, employees or equipment of the business of the
Orthodontic Entity from the information provided prior to the date hereof. As
used herein, Due Diligence shall mean, without limitation, the results of the
Audit of the Financial Statement and of all other matters (financial or
otherwise) related to, or otherwise deemed material by OMEGA or Acquisition,
regarding Xx. Xxxxx and the Orthodontic Entity, including location of the
Orthodontic Offices and its demographics, the leases, the Equipment, insurance,
licensing, malpractice issues, liabilities, compliance with laws and regulations
and health surveys.
ARTICLE VII. CONDITIONS TO OBLIGATIONS OF THE
ORTHODONTIC ENTITY AND XX. XXXXX
The obligations of the Orthodontic Entity and Xx. Xxxxx to consummate this
Agreement and the transactions contemplated hereby are subject to the condition
that on or before the
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Closing the actions required by this Article 7 will have been accomplished.
7.1 Representations; Warranties; Covenants. Each of the representations
and warranties of OMEGA and Acquisition contained in Schedule 2 shall be true
and correct as though made on and as of the Closing and each of OMEGA and
Acquisition shall have performed all of its obligations hereunder which by the
terms hereof are to be performed on or before the Closing.
7.2 Acquisition. OMEGA shall have formed Acquisition and shall have caused
Acquisition to join in this Agreement.
7.3 Other Agreements. OMEGA and Acquisition shall have executed and
delivered to Xx. Xxxxx and New PC a Management Services Agreement and a Stock
Put/Call Option and Successor Designation Agreement, each having substantially
the terms and conditions of the forms hereof collectively attached hereto as
Exhibit E.
7.4 Initial Public Offering. OMEGA shall have completed the IPO.
7.5 Absence of Certain Litigation. There shall not be any injunction,
restraining order or order of any nature issued by any court of competent
jurisdiction which directs that this Agreement or any material transaction
contemplated hereby shall not be consummated as herein provided, or suit, action
or other proceeding which in the reasonable opinion of counsel for Xx. Xxxxx is
likely to result in the restraint or prohibition of the consummation of any
material transaction contemplated hereby.
ARTICLE VIII. OBLIGATIONS AFTER CLOSING.
8.1 OMEGA Exceptional Practice and the Report Suggestions. On and after
the Closing, Xx. Xxxxx agrees to cause the New PC to implement the suggestions
in the Report and the concepts of OMEGA's Exceptional Practice.
8.2 Books and Records. OMEGA and Acquisition shall permit Xx. Xxxxx, his
accountants and attorneys, reasonable access to such books and records for the
purpose of preparing such tax returns of Xx. Xxxxx as may be required after the
Closing and for other proper purposes approved by OMEGA and Acquisition.
8.3 License. Xx. Xxxxx shall maintain all licenses necessary to
practice orthodontics in the State. Xx. Xxxxx shall not commit or fail to
commit any act which would cause Xx. Xxxxx or the New PC to suffer the
revocation, suspension or limitation of Xx. Xxxxx'x or the New PC's license.
ARTICLE IX. INDEMNIFICATION.
9.1 Indemnification By Xx. Xxxxx. Subject to the limitations set forth in
Section 9.3, Xx. Xxxxx agrees to defend, indemnify and hold each of OMEGA and
Acquisition harmless from
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and against any damages, liabilities, losses and expenses (including reasonable
counsel fees) of any kind or nature whatsoever which may be sustained or
suffered by OMEGA or Acquisition based upon a breach of any representation,
warranty or covenant made by the Orthodontic Entity or Xx. Xxxxx in this
Agreement or in any exhibit, certificate, schedule or financial statement
delivered hereunder, or by reason of any claim, action or proceeding asserted or
instituted growing out o any matter or thing covered by such representations,
warranties or covenants. OMEGA and Acquisition may at their option recover such
indemnification claims by OMEGA or Acquisition by set-off against amounts of
principal and interest due under the Purchase Note, but shall not be required to
recover said claims in such manner and may proceed against Xx. Xxxxx and his
transferees in liquidation at any time or times for recovery of indemnification
claims.
9.2 Indemnification By OMEGA and Acquisition. Subject to the limitations
set forth in Section 9.3, OMEGA and Acquisition, jointly and severally, each
agrees to defend, indemnify and hold Xx. Xxxxx harmless from and against any
damages, liabilities, losses and expenses (including reasonable counsel fees) of
any kind or nature whatsoever which may be sustained or suffered by Xx. Xxxxx
based upon a breach of any representation, warranty or covenant made by OMEGA or
Acquisition in this Agreement or in any exhibit, certificate, schedule or
financial statement delivered hereunder, or by reason of any claim, action or
proceeding asserted or instituted growing out of any matter or thing covered by
such representations, warranties or covenants.
9.3 Exclusions. Notwithstanding Sections 9.1 and 9.2:
(a) no indemnification shall be payable to the extent any claim is covered
by insurance; and
(b) no indemnification shall be payable with respect to claims asserted
more than five (5) years after the Closing.
9.4 Notice: Defense of Claims. Prompt written notice of each claim for
indemnification hereunder shall be given to the other party, specifying the
amount and nature of the claim, and of any matter which in the opinion of the
claimant is likely to give rise to an indemnification claim. The indemnifying
party shall have the right to participate at its own expense in the defense of
any such matter or its settlement. If, in the opinion of the indemnified party,
its financial condition or business would not be impaired thereby, such party
may authorize the indemnifying party to take over the defense of such matter so
long as such defense is expeditious. Failure to give notice of a matter which
may give rise to an indemnification claim shall not affect the rights of any
party to collect such claim from the other party or its transferees in
liquidation.
9.5 Payment of Claims; Alternative Dispute Resolution. Indemnification
claims by OMEGA or Acquisition may be paid or otherwise satisfied as an offset
against the Purchase Note as set forth under Section 9.1, and, in the
alternative or after any such offset, the indemnification claims (or any balance
thereof) shall be paid or otherwise satisfied by Xx. Xxxxx, or Xx. Xxxxx'x
transferees in liquidation, within 30 days after notice thereof is given by
OMEGA or Acquisition.
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In the event Xx. Xxxxx indicates in a writing delivered to
OMEGA and Acquisition that he disputes the nature or amount of the claim, in
which event the dispute upon the election of any party hereto after said 30-day
period shall be referred to the American Arbitration Association to be settled
by alternative dispute resolution in Boston, Massachusetts in accordance with
the commercial alternative dispute resolution rules of said Association, with
the fees and expenses thereof to be borne 50% by Acquisition and 50% by the New
PC and Xx. Xxxxx.
ARTICLE X. MISCELLANEOUS.
10.1 Termination.
(a) At any time prior to the Closing, this Agreement may be terminated (i)
by mutual consent of the parties with the approval of their respective board of
directors or members, (ii) by either if there has been a material
misrepresentation, breach of warranty or breach of covenant by the other party
in its representations, warranties and covenants set forth herein, (iii) by
OMEGA or Acquisition if the conditions stated in Article VI have not been
satisfied at or prior to the Closing, or (iv) by Xx. Xxxxx if the conditions
stated in Article VII have not been satisfied at or prior to the Closing.
(b) If the IPO is not successfully completed within six (6) months of this
Agreement, this Agreement may be terminated by OMEGA or Xx. Xxxxx upon written
notice to the other party, and if so terminated, all obligations of the parties
hereunder shall terminate without any further liability of either party to the
other, except that each party shall remain obligated in respect of the
provisions of Section 10.3 and 10.7 which shall survive any such termination.
10.2 Survival of Warranties and Other Obligations. All representations,
warranties, agreements, covenants and obligations herein or in any schedule,
exhibit, certificate or financial statement delivered by either party to the
other party incident to the transactions contemplated hereby are material, shall
be deemed to have been relied upon by the other party and shall survive the
Closing regardless of any investigation and shall not merge in the performance
of any obligation by either party hereto.
10.3 Fees and Expenses. Each of the parties will bear its or his own
expenses in connection with the negotiation and the consummation of the
transactions contemplated by this Agreement.
10.4 Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing (or in the form of a
telegram or facsimile transmission) addressed as provided below and if either
(a) actually delivered at said address, or (b) in the case of a letter, three
business days shall have elapsed after the same shall have been deposited in the
United States mail, postage prepaid and registered or certified, return receipt
requested, or sent by reputable overnight courier:
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If to Xx. Xxxxx and the Orthodontic Entity, to:
Xxxxx X. Xxxxx, D.M.D., M.S.
000 00xx Xxxxxx
Xxxx, Xxxxxx 00000
If to the OMEGA or Acquisition, to:
Omega Orthodontics, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
and in any case at such other address as the addressee shall have specified by
written notice. All periods of notice shall be measured from the date of
delivery thereof.
10.5 Entire Agreement. This Agreement (including all exhibits or schedules
appended to this Agreement and all documents delivered pursuant to the
provisions of this Agreement, all of which are hereby incorporated herein by
reference) together with the Management Services Agreement and the Stock
Put/Call Option and Successor Designation Agreement (including all exhibits and
schedules thereto), taken together, constitute the entire agreement between the
parties, and all promises, representations, understandings, warranties and
agreements with reference to the subject matter hereof and inducements to the
making of this Agreement relied upon by my party hereto, have been expressed
herein or therein.
10.6 Binding Agreement, Successors. This Agreement shall be binding upon,
and shall be enforceable by and inure to the benefit of, the parties named
herein and their respective successors and assigns; provided, however, that this
Agreement may not be assigned by any of the parties without the prior written
consent of all the other parties.
10.7 Confidentiality. As used herein, "Confidential Information" means any
information or data that a party has acquired from another party that is
confidential or not otherwise available to the public, whether oral or written,
including without limitation any analyses, computations, studies or other
documents prepared from such information or data by or for the directors,
officers, employees, agents or representatives of such party (collectively, the
"Representatives"), but excluding information or data which (i) became available
to the public other than as a result of such party's violation of this
Agreement, (ii) became available to such party from a source other than the
other party if that source was not bound by a confidentiality agreement with
such other party and such source lawfully obtained such information or data, or
(iii) is required to be disclosed by applicable law, provided that promptly
after being compelled to disclose any such information or data, the party being
so compelled shall provide prompt notice thereof to the other
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party so that such other party may seek a protective order or other appropriate
remedy. Each party covenants and agrees that it and its Representatives shall
keep confidential and shall not disclose all Confidential Information, except to
its Representatives and lenders who need to know such information and agree to
keep it confidential. Each party shall be responsible for any breach of this
provision by its Representatives. In the event that the Closing does not occur,
each party will promptly return to the other all copies of such other party's
Confidential Information.
10.8 Governing Law; Severability. This Agreement shall be deemed a
contract made under the laws of the State of Delaware and, together with the
rights and obligations of the parties hereunder, shall be construed under and
governed by the laws of such state. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision hereof.
10.9 Referrals. Nothing in this Agreement shall be construed as an offer
or payment to the other party or any affiliate of the other party of any cash or
other remuneration whether directly or indirectly, overtly or covertly,
specifically for patient referrals or for recommending or arranging the
purchase, lease or order of any item or service. The Consideration to be
received upon consummation of the Merger represents the fair market value of the
Orthodontic Entity and is not in any way related to or dependent upon referrals
by and between OMEGA, Acquisition and Xx. Xxxxx.
10.10 Further Assurances. Following the execution of this Agreement, Xx.
Xxxxx, the Orthodontic Entity, OMEGA and Acquisition each agrees:
(a) to deliver such other instruments of title, certificates, consents,
endorsements, assignments, assumptions and other documents or instruments, in
form reasonably acceptable to the party requesting the same and its counsel, as
may be reasonably necessary to carry out and/or to comply with the terms of this
Agreement, and the transactions contemplated herein;
(b) to confer on a regular basis with the other, report on material
operational matters and promptly advise the other orally or in writing of any
change or event resulting in or which, insofar as can reasonably be foreseen
could result in, a material adverse effect on such party or which would cause or
constitute a material breach of any of the representations, warranties or
covenants of such party contained herein; and
(c) to provide the other (or its counsel) promptly with copies of all
filings made by such party with any state or federal governmental entity in
connection with this Agreement or the transactions contemplated hereby.
10.11 Counterparts; Section Headings; Gender. This Agreement may be
executed, accepted and delivered in any number of counterparts, but all
counterparts shall together constitute but one and the same instrument. The
underlined section headings are inserted for convenience of reference only and
are not to be construed as part of this Agreement. The use of the masculine or
neuter gender includes each of the other genders.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
/s/ Xxxxx X. Xxxxx D.M.D., M.S.
------------------------------------------
Printed Name: Xxxxx X. Xxxxx, D.M.D., X.X.
Xxxxx X. Xxxxx, LLC
By: /s/ Xxxxx X. Xxxxx
-------------------------------------------
Printed Name: Xxxxx X. Xxxxx, D.M.D., M.S.
Its President
Duly Authorized
OMEGA ORTHODONTICS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Printed Name: Xxxxxx X. Xxxxxxxx
Its President and Chief Executive Officer
Duly Authorized
JOINDER
Omega Orthodontics of Elko, Inc. hereby joins in this Agreement as if an
original signator hereto.
Omega Orthodontics of Elko, Inc.
By:___________________________________
Printed Name:______________________
Its _______________________________
Duly Authorized
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Exhibit A
Financial Statement
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Exhibit B
Purchase Note
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Exhibit C
Notices
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Exhibit D
Orthodontic Entity's Certificate of Organization and Operating Agreement
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Exhibit E
Draft Management Services Agreement and
Stock Put/Call Option and Successor Designation Agreement
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Schedule 1
Representations and Warranties of
Xx. Xxxxx and Orthodontic Entity to OMEGA and Acquisition
Each of the Orthodontic Entity and Xx. Xxxxx hereby represents and
warrants to OMEGA and Acquisition as follows:
1. Organization and Qualification of the Orthodontic Entity. The
Orthodontic Entity is a duly formed and organized limited liability company
under the laws of the State. The Orthodontic Entity is a legally existing
limited liability company under the State Limited Liability Company Act (the
"Act") and no event has occurred which alone or after the passage of time would
result in the dissolution of the Orthodontic Entity. The Orthodontic Entity has
the full power to conduct business as currently conducted by the Orthodontic
Entity and to own and lease the property it purports to own. The copies of any
articles of organization or operating agreements, as defined in the Act, of the
Orthodontic Entity which are currently in effect, and all amendments thereto
(collectively, the "Operating Agreement"), certified by Xx. Xxxxx, attached
hereto as Exhibit D are complete and correct.
2. Authorization of Transaction. All necessary action, company or
otherwise, has been taken by the Orthodontic Entity to authorize the execution
of the Agreement by Xx. Xxxxx, and the delivery and performance of this
Agreement and the transactions contemplated hereby, and the Agreement is the
valid and binding obligation of the Orthodontic Entity and Xx. Xxxxx,
enforceable against the Orthodontic Entity and Xx. Xxxxx in accordance with its
terms.
3. Present Compliance with Obligations and Laws. Except as disclosed on
Exhibit X attached to this Schedule, there is not: (a) any violation of the
Articles or Operating Agreement; (b) a default in the performance of any
obligation, agreement or condition of any debt instrument from Xx. Xxxxx or the
Orthodontic Entity which (with or without the passage of time or the giving of
notice) affords to any person the right to accelerate any material indebtedness
or terminate any right; (c) a default of or breach of (with or without the
passage of time or the giving of notice) any other contract to which Xx. Xxxxx
or the Orthodontic Entity is a party or by which their assets are bound; or (d)
any violation of any law, regulation, administrative order or judicial order
applicable to Xx. Xxxxx or the Orthodontic Entity, or their business or assets.
4. No Conflict of Transaction With Obligations and Laws.
(a) Neither the execution, delivery and performance of this Agreement, nor
the performance of the transactions contemplated hereby, will: (i) constitute a
breach or violation of Orthodontic Entity's Articles or Operating Agreement;
(ii) conflict with or constitute (with or without the passage of time or the
giving of notice) a breach of, or default under, any debt instrument to which
Xx. Xxxxx or the Orthodontic Entity is a party, or give any person the right to
accelerate any indebtedness or terminate any right; (iii) constitute (with or
without the passage of time or giving of notice) a default under or breach of
any other agreement, instrument or
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obligation to which the Orthodontic Entity or Xx. Xxxxx is a party or by which
their assets are bound; or (iv) result in a violation of any law, regulation,
administrative order or judicial order applicable to the Orthodontic Entity, Xx.
Xxxxx, their business or assets.
(b) Except as disclosed on the attached Exhibit X to this Schedule, the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby by the Orthodontic Entity do not require the consent,
waiver, approval, authorization, exemption of or giving of notice to any
governmental authority.
5. Investigations and Licenses.
(a) The Orthodontic Entity and Xx. Xxxxx have all necessary licenses
to practice orthodontics in the State.
(b) Neither the Orthodontic Entity nor Xx. Xxxxx are subject to any
investigation, whether threatened, current or pending, under which the
Orthodontic Entity or Xx. Xxxxx may be required to forfeit or suffer the
revocation, suspension or limitation of Xx. Xxxxx'x or the Orthodontic Entity's
license to practice orthodontics and neither the Orthodontic Entity nor Xx.
Xxxxx is subject to any investigation, whether threatened, current or pending by
a commercial third-party payor.
6. Financial Statement. Attached as Exhibit A to the Agreement is the
Financial Statement of the Orthodontic Entity. To the best knowledge of Xx.
Xxxxx, the Financial Statement is complete and correct and fairly presents in
all material respects the financial position of the Orthodontic Entity as at the
date of such statements and the results of its operations for the period then
ended, in accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby for the periods covered thereby.
7. Capitalization and the Interests. The authorized capital of the
Orthodontic Entity consists of the Interests. All of the Interests have been
validly issued and are fully paid and non-assessable. There are no options,
warrants, rights or other agreements or commitments obligating the
Orthodontic Entity or Xx. Xxxxx to issue or sell the Interests and there are
no pre-emptive rights with respect to any Interests. Xx. Xxxxx is the
beneficial and record owner of the Interests. Xx. Xxxxx has good title to
the Interests, free and clear of any liens, encumbrances or restrictions of
any kind. The Interests are not subject to any voting or similar agreement.
8. Property; Liens; Condition.
(a) Except as set forth on Exhibit X to this Schedule, the Orthodontic
Entity has good and marketable title in fee simple to all of its owned real and
personal property, including without limitation, all machinery and equipment
used or owned by the Orthodontic Entity (the "Equipment") free of liens and
encumbrances (the "Property"). All the Property owned or leased by the
Orthodontic Entity is in good
repair, has been well maintained, substantially conforms with all applicable
ordinances, regulations and zoning or other laws. The Equipment is in good
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working order.
(b) No other entity or person owns any of the assets necessary for the
operation of the Orthodontic Entity. The Orthodontic Entity does not operate any
of its practice through any other entities or persons.
9. Payment of Taxes. The Orthodontic Entity has filed all federal, state
and local income, excise or franchise tax returns, real estate and personal
property tax returns, sales and use tax returns and other tax returns required
to be filed and has paid all taxes owing except taxes which have not yet accrued
or otherwise become due for which adequate provision has been made in the
Financial Statement. All transfer, excise or other taxes payable by reason of
the Merger pursuant to the Agreement shall be paid or provided for by the
Orthodontic Entity after the Closing out of the Consideration to be received
upon consummation of the Merger.
10. Absence of Undisclosed Liabilities and Changes.
(a) As of the date of the Financial Statement, the Orthodontic Entity had
no liabilities of any nature, whether accrued, absolute, contingent or otherwise
(including without limitation liabilities as guarantor or otherwise with respect
to obligations of others, or liabilities for taxes due or then accrued or to
become due), except (i) liabilities stated or adequately reserved against on the
Financial Statement, (ii) liabilities not in excess of $5,000 arising in the
ordinary course of business since the date of the Financial Statement, and (iii)
liabilities disclosed in Exhibit X to this Schedule. There is no fact which
materially adversely affects, or may in the future (so far as can now be
reasonably foreseen) materially adversely affect, the business, properties,
operations or condition of the Orthodontic Entity which has not been
specifically disclosed herein or in Exhibit X to this Schedule.
(b) Except as disclosed in Exhibit X to this Schedule, since the date of
the Financial Statement there has not been:
(i) any change in the financial condition, properties, assets,
liabilities, business or operations of the Orthodontic Entity, which
change by itself or in conjunction with all other such changes, whether or
not arising in the ordinary course of business, has been materially
adverse with respect to the Orthodontic Entity;
(ii) any mortgage, encumbrance or lien placed on any of the
Interests or the Property, or the property subject to any lease, or which
remains in existence on the date hereof or at the time of Closing; or
(iii) any obligation or liability incurred by the Orthodontic Entity
other than obligations and liabilities incurred in the ordinary course of
business and disclosed on Exhibit X attached to this Schedule.
11. Litigation. Except for matters described on Exhibit X to this
Schedule, there is no
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action, suit, claim, proceeding or investigation pending or, to the knowledge of
the Orthodontic Entity or Xx. Xxxxx, threatened against the Orthodontic Entity
or Xx. Xxxxx, at law or in equity, or before or by any Federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality or governmental inquiry pending or, to the knowledge of the
Orthodontic Entity or Xx. Xxxxx, threatened against or involving Xx. Xxxxx or
the Orthodontic Entity, and there is no basis for any of the foregoing, and
there are no outstanding court orders, court decrees, or court stipulations to
which the Orthodontic Entity or Xx. Xxxxx is a party which question this
Agreement or affect the transactions contemplated hereby, or which will result
in any materially adverse change in the business, properties, operations,
prospects, assets or in the condition, financial or otherwise, of Xx. Xxxxx or
the Orthodontic Entity.
12. Insurance. The Orthodontic Entity has possessed adequate occurrence
Professional liability coverage for the five (5) years prior to the date of this
Agreement protecting the Orthodontic Entity and Xx. Xxxxx from any professional
malpractice liability that might arise because of the Orthodontic Entity's or
Xx. Xxxxx'x practice activities over the preceding five (5) years. Prior to the
Closing, the New PC shall have obtained and shall continue to maintain, at its
cost, Occurrence Medical Malpractice Liability Insurance for Xx. Xxxxx and the
New PC. The Orthodontic Entity possesses adequate insurance coverage for its
Property.
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EXHIBIT X
Exceptions to Representations and
Warranties of Xx. Xxxxx and
Orthodontic Entity to OMEGA and Acquisition
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Schedule 2
Representations and Warranties of
OMEGA and Acquisition to Xx. Xxxxx and Orthodontic Entity
Each of OMEGA and Acquisition hereby represents and warrants to
Orthodontic Entity and Xx. Xxxxx as follows:
1. Organization of OMEGA. That it is a corporation duly organized, validly
existing and in good standing under the laws of Delaware with full corporate
power to own or lease its properties and to conduct its business in the manner
and in the places where such properties are owned or leased or such business is
conducted by it.
2. Authorization of Transaction. All necessary action, corporate or
otherwise, has been taken by it to authorize the execution, delivery and
performance of this Agreement, and this Agreement is a valid and binding
obligation of it enforceable against it in accordance with its terms, subject to
laws of general application affecting creditor's rights generally.
3. Litigation. There is no litigation pending or, to its knowledge,
threatened against it which would prevent or hinder the consummation of the
transactions contemplated by this Agreement.
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