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EXHIBIT 10.14
ASSIGNMENT AND RELEASE AGREEMENT
THIS ASSIGNMENT AND RELEASE AGREEMENT (this "Agreement") is made this 22nd
day of July, 1996 by and among BIO DENTAL TECHNOLOGIES CORPORATION, a
California corporation ("Bio Dental"), DENTICATOR INTERNATIONAL, INC., a
Missouri corporation ("DII"), DENTICATOR INTERNATIONAL, INC., a California
corporation (the "Predecessor") and YOUNG INNOVATIONS, INC., a Missouri
corporation ("Young").
WITNESSETH
WHEREAS, Bio Dental and the Predecessor are parties to that certain Exclusive
License Agreement dated March 31, 1991, as amended by the Extension and
Modification of Exclusive License Agreement dated April 1, 1994, and as further
amended on January 19, 1996 (the Exclusive License Agreement, and all
amendments thereto being collectively referred to as the "License Agreement");
WHEREAS, Bio Dental, the Predecessor and Young have entered into that certain
Asset Purchase Agreement of even date herewith (the "Purchase Agreement")
wherein Young or DII shall purchase certain assets and assume certain
liabilities of the Predecessor; and
WHEREAS, pursuant to the terms and conditions set forth in this Agreement,
Bio Dental will sell and convey all of Bio Dental's rights, privileges,
interests and claims under the License Agreement to DII, and shall release DII,
the Predecessor and Young, and their respective affiliates, from any claims,
liabilities, demands, causes of action or suits that Bio Dental or its
affiliates may have against such parties arising out of or in any way connected
with (i) the License Agreement, or (ii) any other agreement, contract,
arrangement, occurrence or transaction, whether written or oral, of any nature
whatsoever, between such parties, other than this Agreement, and DII and the
Predecessor will similarly release Bio Dental.
NOW, THEREFORE, in consideration of the premises and the mutual
representations hereinafter set forth, the parties hereto hereby agree as
follows:
1. PURCHASE OF RIGHTS; RELEASE OF CLAIMS. Pursuant to the terms and
conditions contained herein, and to induce Young and DII to consummate the
transactions contemplated by the Purchase Agreement, Bio Dental hereby
transfers and conveys to DII all of the rights and interests of Bio Dental
under the License Agreement and Bio Dental hereby releases DII, the
Predecessor, Young and their respective officers, directors and subsidiaries
from any claims, liabilities or amounts owing to Bio Dental through the date
hereof arising out of or in any way connected with (i) the License Agreement,
or (ii) any other agreement, contract, arrangement, occurrence or transaction,
whether written or oral, of any nature whatsoever, between Bio Dental and the
Predecessor, other than (w) this Agreement, (x) the Purchase Agreement, (y)
other agreements and instruments entered into or executed pursuant to the
Purchase Agreement and (z) amounts owing by DII, the Predecessor or Young for
goods purchased from Bio Dental in the ordinary course of business. Without
limiting the foregoing, Bio Dental hereby expressly acknowledges that upon full
execution of this Agreement, Bio Dental shall not have any rights in or receive
any royalties from DII's use of the name "Denticator" or the manufacture and
distribution of products of DII or the Predecessor. The Predecessor and DII
each releases Bio Dental and its officers, directors and subsidiaries from any
claims, liabilities or amounts owing to DII through the date hereof arising out
of or in any way connected with (i) the License Agreement, or (ii) any other
agreement,
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contract, arrangement, occurrence or transaction, written or oral, of any
nature whatsoever, between Bio Dental and the Predecessor, other than (w) this
Agreement, (x) the Purchase Agreement, (y) other agreements and instruments
entered into or executed pursuant to the Purchase Agreement and (z) amounts
owing by Bio Dental to the Predecessor or DII for goods purchased from them in
the ordinary course of business. Each of Bio Dental and the Predecessor
acknowledges that Bio Dental and the Predecessor have performed fully all of
their obligations under the License Agreement.
2. PURCHASE PRICE; METHOD OF PAYMENT. In consideration of the assignment of
rights and interests and the full release described in Section 1 above, and for
Bio Dental's non-compete agreement in Section 6, Young hereby makes the
following payments and provides the below-defined Product Credit:
2.1 CASH PAYMENT. Cash in the amount of Seven Million Four Hundred Forty
Nine Thousand Eighty Seven and NO/100 Dollars ($7,449,087.00) paid herewith
to Bio Dental.
2.2 ESCROW PAYMENT. Cash in the amount of One Hundred Thousand Dollars
($100,0000) paid to The Union Bank of California ("Escrow Agent") pursuant to
an Escrow Agreement of even date herewith among Bio Dental, Young and Escrow
Agent, said funds to be disbursed by the Escrow Agent according to the terms
of the Escrow Agreement.
2.3 PRODUCT CREDIT. Young hereby grants a credit (the "Product Credit")
to Bio Dental that may be applied by Bio Dental or its subsidiary The Supply
House ("Supply House") (or any other subsidiary of Bio Dental) toward future
purchases of products from Young or subsidiaries of Young. The Product
Credit shall be in an amount equal to the aggregate amounts owing to Bio
Dental by the Predecessor at the Closing Date (as defined in the Purchase
Agreement), which amounts shall be calculated (i) according to the terms of
the License Agreement, and (ii) consistent with the calculation of the
amounts owing by the Predecessor to Bio Dental as of March 31, 1996. The
Product Credit and Xxxxxxx Payment (as defined in Section 5.2 below) will,
however, be reduced, by a ratio of fifty percent (50%) against the Product
Credit and fifty percent (50%) against the Xxxxxxx Payment, by the amount (if
any) by which the Net Working Capital (as defined below) of the Predecessor
as reflected on the balance sheet of the Predecessor as at the Closing Date
(the "Closing Balance Sheet") is less than $471,783.00 (the Net Working
Capital of the Predecessor at March 31, 1996). For purposes of this
provision, the term Net Working Capital means the difference between the
current assets and the current liabilities of the Predecessor reflected on
its balance sheet, adjusted, however, to (i) delete from such balance sheet
all amounts owed by Bio Dental to the Predecessor or by the Predecessor to
Bio Dental except amounts owing for goods purchased in the ordinary course of
business, and (ii) include in current liabilities all outstanding
indebtedness (whether short-term or long-term) of Seller to Bank of
California. The Closing Balance Sheet will be prepared by Young and the
Predecessor in accordance with generally accepted accounting principles on a
basis consistent with the preparation of the balance sheet of the Predecessor
as at March 31, 1996.
Bio Dental shall be provided reasonable access to the accounting records,
supporting schedules and documents of the Predecessor. Bio Dental may review
the closing financial statements of the Predecessor, including adjustments
and reserves, allowances or accrued liabilities of any kind. If Bio Dental,
after reviewing the financial statements, corresponding accounting records,
supporting schedules and/or documents of the Predecessor, disagrees with any
item or adjustment, Bio Dental shall submit in writing its disagreement to
Young. Young shall review the facts and circumstances of the disagreement
and shall render a binding decision on the disagreement within fifteen (15)
business days.
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3. APPLICATION OF PRODUCT CREDIT. Purchases by Bio Dental or Supply House
(or any other subsidiary of Bio Dental) from Young or its affiliates or
subsidiaries will be applied against the Product Credit at the prevailing
prices in effect at the time of the purchases. Young shall provide to Bio
Dental (i) written confirmation acknowledging application of all or a portion
of the Product Credit to a specific purchase order, and (ii) quarterly written
notification regarding the outstanding remaining balance of the Product Credit.
4. LIMITATION ON PRODUCT CREDIT. Use of all or a portion of the Product
Credit shall not be permitted in an amount by which all shipments exceed in any
month $55,000, which is the approximate average historical monthly shipments
level to Bio Dental and Supply House from Young and its subsidiaries over the
twelve (12) month period ended March 31, 1996; provided, however, that to the
extent that the application of the Product Credit by Bio Dental, Supply House
and other subsidiaries of Bio Dental is in the aggregate below such amount for
any month, application of the Product Credit may exceed such amount by the
amount of such difference in a subsequent month. For any such shipments to
which the Product Credit cannot be applied because of the foregoing limits, the
standard wholesale terms and conditions of Young or its subsidiary with which
the order is placed shall apply. The Product Credit shall not include freight,
insurance and other charges.
5. REDUCTION IN PRODUCT CREDIT FOR INDEMNIFICATION.
5.1 EVENT OF REDUCTION. In the event that Young or a subsidiary of Young
is entitled to indemnification against Losses (as defined therein) pursuant
to Section 8.06 of the Purchase Agreement (the "Indemnification Amount"),
Young shall have the right to reduce the then existing amount of the Product
Credit by an amount calculated pursuant to Section 5.2 hereof. Young shall
also have the right to set off against the Product Credit any amounts owing
to Young or its subsidiaries by Bio Dental or its subsidiaries. In the event
that Young exercises such right of set-off, Young shall provide written
notification to Bio Dental of such action, and of the amount of such set-off.
5.2 CALCULATION OF AMOUNT OF SET-OFF. If, at the time Young is entitled
to reduce the Product Credit pursuant to Section 5.1, Xxxx X. Xxxxxxx
("Xxxxxxx") is still entitled to receive all or a portion of the Three
Hundred Five Thousand Dollar ($305,000) payment described in Section 4.3 of
the Employment and Noncompetition Agreement between Xxxxxxx and a subsidiary
of Young (the "Xxxxxxx Payment"), then the Indemnification Amount shall be
charged against the Product Credit and the Xxxxxxx Payment in the ratio of
seventy-five percent (75%) against the Product Credit and twenty-five percent
(25%) against the Xxxxxxx Payment. The Indemnification Amount charged
against (i) the Xxxxxxx Payment shall not exceed the remaining Xxxxxxx
Payment and Xxxxxxx'x liability under this Agreement is limited to the
remaining balance of the Xxxxxxx Payment and (ii) the Product Credit shall
not exceed the remaining Product Credit and Bio Dental's liability is limited
to the remaining balance of the Product Credit. If a portion of the
Indemnification Amount still remains unsatisfied because the Xxxxxxx Payment
or the Product Credit has been fully satisfied, the remaining Product Credit
or Xxxxxxx Payment, respectively, as the case may be, shall be reduced by
such amount. At such time as the Product Credit or Xxxxxxx Payment has been
satisfied in full and Young remains entitled to set- off pursuant to Section
8.08 of the Purchase Agreement, the remaining Xxxxxxx Payment or Product
Credit, respectively, as the case may be, shall be reduced by one hundred
percent (100%) of the Indemnification Amount.
6. NONCOMPETITION AGREEMENT. For a period of two (2) years after the
effective date of this Agreement, Bio Dental shall not, and shall cause its
subsidiaries not to, within North America,
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directly or indirectly, compete with Young or a subsidiary of Young in
manufacturing, licensing others to manufacture or selling under private label
any products, including prophy angles, which are the same, substantially
similar to or in direct competition with any products manufactured, sold or
distributed by the Predecessor prior to the Closing Date. Notwithstanding the
above, Bio Dental and its subsidiaries shall be permitted to (i) sell and
distribute such products manufactured by others, but not those products listed
on Schedule 6.1 hereto, which are sold under the name of Bio Dental or of any
affiliate of Bio Dental unless and to the extent Bio Dental or its affiliate
sold such products under its name pursuant to private label arrangements in
effect prior to May 31, 1996; and (ii) sell and distribute such products
pursuant to arrangements with Young or any affiliates of Young.
7. AMENDMENT AND MODIFICATION. This Agreement may be amended, modified or
supplemented only by a written instrument executed by all of the parties
hereto.
8. ASSIGNMENT. Nothing contained in this Agreement shall be construed to
permit the assignment or delegation by any party hereto of any rights or
obligations hereunder and such assignment is expressly prohibited without the
written consent of the other parties hereto. Notwithstanding the foregoing,
however, Bio Dental shall be permitted to assign its rights and obligations
hereunder to Zila, Inc. without the consent of the other parties hereto;
provided, however, that such assignment shall not relieve Bio Dental of any of
its obligations or duties hereunder nor shall such assignment affect Young's
rights hereunder including, without limitation, Young's right to reduce the
Product Credit pursuant to Section 5.1 hereof. Notwithstanding any other
provision contained herein, Young and DII may pledge or grant a security
interest in any of their rights under this Agreement to any federal or state
chartered lending institution.
9. SEVERABILITY. If any term, covenant, or condition of this Agreement or
the application thereof to any person or circumstance shall be invalid or
unenforceable, the remainder of this Agreement and the application of any term
or provision to persons and circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby, and all other
terms shall be valid and enforceable to the fullest extent permitted by law.
10. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties hereto and it supersedes all prior agreements and understandings
between the parties hereto with respect thereto.
11. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the State of California, without regard to conflict of law principles.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
DENTICATOR INTERNATIONAL, INC., BIO DENTAL TECHNOLOGIES
CORPORATION,
a Missouri corporation a California corporation
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxx
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Name: Xxxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxx
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Its: Vice President Its: Chief Financial Officer
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DENTICATOR INTERNATIONAL, INC., YOUNG INNOVATIONS, INC.,
a California corporation a Missouri corporation
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxxx
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Its: President Its: President
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SCHEDULE 6.1
BIO DENTAL PRIVATE LABEL DISTRIBUTION - PROHIBITED PRODUCTS:
Prophy Angles
Prophy Cups
Prophy Paste
Disposable Surgical Aspirators
