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AGREEMENT OF PURCHASE AND SALE
By and Between
PRINCETON MEDICAL MANAGEMENT NORTHEAST, INC.
and
VALLEY FORGE DENTAL ASSOCIATES, INC.
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TABLE OF CONTENTS
SECTION PAGE
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Recitals............................................... 1
I Purchase and Sale of the Assets........................ 1
II Representations, Warranties, Covenants
and Agreements of the Seller......................... 5
III Representations, Warranties, Covenants
and Agreements of the Purchaser...................... 19
IV Additional Covenants of the Seller and
the Purchaser........................................ 20
V Closing................................................ 23
VI Conditions to the Seller's Obligation to
Close................................................ 23
VII Conditions to the Purchaser's
Obligation to Close.................................. 25
VIII Indemnification........................................ 27
IX Brokers and Finders.................................... 30
X Transfer of Name....................................... 30
XI Miscellaneous.......................................... 30
Signatures............................................. 34
SCHEDULES
I. EXCLUDED ASSETS
II. ASSUMED LIABILITIES
III. CONTINGENT PAYMENTS
IV. ALLOCATION OF PURCHASE PRICE
EXHIBITS
A. FORM OF PROMISSORY NOTE
B. CERTAIN CONSENTS, LINES, CONTRACTS, PERMITS AND
OTHER MATTERS
C. FINANCIAL STATEMENTS
D. CERTAIN EMPLOYEES OF THE BUSINESS
E. EMPLOYEE BENEFIT PLANS
F. INTELLECTUAL PROPERTY RIGHTS
G. BANK ACCOUNTS
H-1. FORM OF EMPLOYMENT AGREEMENT - XXXXXXXX XXXX,
D.D.S.
H-2. FORM OF MODIFICATION AGREEMENT
I. FORM OF ASSIGNMENT OF LEASE
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PRINCETON DENTAL MANAGEMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Under the terms of the transaction, the Company issued a warrant to
purchase 100 shares of Series B Preferred Stock. The Series B Preferred
Stock entitles Amsterdam Equities Limited (Amsterdam), after the
occurrence of an event of default, to elect a Class B director who would
have super-majority voting powers on the Company's Board of Directors.
The Convertible Debt and Preferred Stock may be converted into common
stock of the Company, at the sole option of the Investor Group, at
various conversion rates as set forth in the conversion formula
contained in the Financing Arrangements. Conversion pursuant to such
conversion formula would result in a conversion price per share of the
Company's common stock significantly below present market levels.
In addition, pursuant to the terms of the Financing Arrangements, the
Company issued to the holders of the Convertible Debt and the Preferred
Stock warrants to purchase shares of common stock at an exercise price
of $.50 per share (subsequently reduced to $.05 per share, subject to
adjustment, under the terms of the Modification Agreement). The Investor
Group may exercise the warrants only upon the occurrence of an event of
default under the terms of certain minimum financial goals, as defined
in the Financing Arrangements. As of December 31, 1997, the Company was
in default under the Financing Agreement and the stated financial goals
were not met, and, accordingly, the default warrants are exercisable by
the Investor Group upon payment of the exercise price. Should the
Company cure the default and meet the minimum financial goals, the
default warrants would not be exercisable. The cumulative effect of the
issuance of shares pursuant to the default warrant and conversion of all
Convertible Debt and Preferred Stock could result in ownership by the
Investor Group of approximately 85% of the Company's total issued and
outstanding common stock. To date, the Investor Group has taken no steps
to exercise these default warrants.
In August 1996, the Company entered into a Letter Agreement by and among
the Company, Xx. Xxxxxxx X. Xxxxxxxx, a former President of the Company;
the former Consultants to the Company, certain directors of the Company
and the Investor Group. Under the Letter Agreement, the Series B
Preferred Stock was amended to be immediately effective and Class B
Preferred Stock was issued to Amsterdam. The Class B Preferred Stock
entitled Amsterdam to elect a Director to the Board of Directors of the
Company who would have super majority voting powers. In effect, the
Class B director appointed by Amsterdam shall have the number of votes
on the Board of Directors as the current Board currently holds, plus one
vote. The amendment and activation of the Class B Preferred Stock
occurred upon the satisfaction of the following two conditions: (i)
delivery to the Company of a notice, pursuant to which the Investor
Group would convert an aggregate amount of $700,000 of currently
outstanding Convertible Debt and Preferred Stock into the Company's
Common Stock in accordance with the contractual terms of the Financing
Arrangements and (ii) upon the advance to the Company of an additional
$200,000 pursuant to the Financing Arrangements.
(continued)
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PRINCETON DENTAL MANAGEMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In connection with the issuance of the Class B Preferred Stock, the
provision of additional funding and conversion of debt, the Consultants
and certain directors of the Company agreed to forfeit, on a pro rata
basis, an aggregate amount of 60,000 options and warrants to purchase
the Company's Common Stock.
Pursuant to a Modification Agreement (Modified Agreement) entered into
between the Investor Group and the Company dated July 1, 1997, the
Investor Group agreed, conditioned upon continued listing by the Company
on the Nasdaq SmallCap Market and similar concessions by another
significant Company creditor, to waive all accumulated and ongoing
interest and/or dividends on the Convertible Debt/Preferred Stock for
the period from January 1, 1997 through December 31, 1997.
The Convertible Debt is secured by substantially all assets of the
Company and requires the Company to comply with certain financial and
non-financial debt covenants.
At December 31, 1997, the Company was in violation of certain debt
covenants. As such, the Company has classified the Convertible Debt as a
current liability. To date, the Investor Group has not made formal claim
under the debt covenant violation.
(15) GOING CONCERN
As shown in the accompanying consolidated financial statements, the
Company has incurred minimal profit and recurring losses from operations
resulting in cash flow problems. Additionally, the Company is in default
with regards to the Convertible Debt. To date, the Investor Group has
not demanded payment. These factors raise doubt about the Company's
ability to continue as a going concern.
Management has instituted a cost reduction program, has sold
economically inefficient practices and is emphasizing operational
efficiencies. In addition, the Financing Arrangements (Note 14), could,
at the discretion of the Investor Group, provide adequate funds for
working capital, debt refinancing and future acquisitions. Additional
funding from the Investor Group, however, cannot be assured.
(16) SUBSEQUENT EVENT
During fiscal year 1997, the Company failed to meet certain financial
covenants related to the Financing Arrangements which has resulted in
the ability of the Investor Group to exercise warrants to purchase
approximately 1,000,000 shares of common stock at approximately $.05 per
share effective January 1, 1998 (Note 14). To date, the Investor Group
has not formally indicated an intent to exercise these warrants.
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EXHIBIT 10.58
ALLONGE AND FIFTH AMENDMENT TO ACQUISITION
PROMISSORY NOTE
This Allonge and Fifth Amendment to Acquisition Promissory Note
("Amendment") is made effective as of the 25th day of August, 1997 between
Princeton Dental Management Corporation, a Delaware corporation ("PDMC"), Xxxxx
Dental Midwest, Inc. ("Xxxxx") (PDMC and Xxxxx are hereinafter collectively
referred to as the "Maker"), and the Constituent Shareholders of the Delaware
corporation formerly known as Xxxxx Dental, Inc. (the Constituent Shareholders
are collectively referred to as the "Holder").
RECITALS
A. Maker has previously executed in favor of Holder that certain
Acquisition Promissory Note dated December 31, 1993 in the initial principal
amount of $1,350,000.00, as subsequently amended ("Acquisition Promissory
Note").
B. Maker and Holder desire to further amend the Acquisition Promissory
Note to reflect certain agreements reached by Maker and Holder.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Unless otherwise defined herein, all capitalized terms used
herein which are defined in the Acquisition Promissory Note shall have the
meanings assigned to them in the Acquisition Promissory Note.
2. Effective immediately, the presently outstanding principal
amount of the Acquisition Promissory Note is reduced by Xxx Xxxxxxx xxx Xxxxx
Xxxxxxxx Xxxxxx Xxxxxx Dollars (US $150,000.00). In full and final consideration
for such reduction and forgiveness of debt, PDMC agrees to proceed to
immediately issue 53,381 shares of PDMC Common Stock (the "Stock") to the
Constituent Shareholders. The Stock shall not be registered under the Securities
Act of 1933 or any state securities laws, and shall be restricted stock issued
pursuant to an applicable exemption from registration. The Stock shall be an
aggregate of 53,381 shares, but shall otherwise be issued to such individuals
and in such amounts as shall be set forth in a written direction provided to
PDMC and executed on behalf of the Constituent Shareholders with due
authorization.
3. The existing Section 20 of the Acquisition Promissory Note
is amended and restated in its entirety as follows:
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"20. Principal-Only Payments/Waiver of Interest.
Notwithstanding anything contained in this Note to the contrary, the Maker shall
be required to make payments of principal only for the period from July 1, 1997
through June 30, 1998 (the "Waiver Period"). Interest payments shall be waived
during the Waiver Period and interest shall not accrue during the Waiver Period.
Provided, however, that the parties acknowledge that this Amendment is being
entered into, in part, in consideration of a waiver, subject to certain terms
and conditions, of accrued and ongoing interest by Amsterdam Equities Limited
and Xxxxx Xxxxxxx Xxxxxx (and certain entities related to Xx. Xxxxxx) for the
period from January 1, 1997 through December 31, 1997 ("Group Interest Waiver"),
and, in the event that the Group Interest Waiver fails to occur, than, in such
event, the Holder may, upon thirty (30) days written notice to the Maker,
declare this Amendment terminated effective as of the effective date of such
notice."
Except as specifically amended by this Amendment, the Acquisition
Promissory Note shall remain in full force and effect.
This Amendment may be executed in counterparts.
IN WITNESS WHEREOF, the parties have executed this Allonge and Fifth
Amendment to Acquisition Promissory Note as of the date first written above.
PRINCETON DENTAL MANAGEMENT CORPORATION
By:___________________________________
Xxxxx Xxxxxxx Xxxxxx, CEO
XXXXX DENTAL MIDWEST, INC.
By:___________________________________
Xxxx Xxxxxxxx, President
CONSTITUENT SHAREHOLDERS
By: ______________________
Their: Authorized Representative
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STATE OF MICHIGAN)
COUNTY OF _____ )
I, ________________________, a Notary Public in and for the County and
State aforesaid, DO HEREBY CERTIFY that Xxxx Xxxxxxxx, personally known to me to
be the President of Xxxxx Dental Midwest, Inc., appeared before me this day in
person and acknowledged that as such officer he signed and delivered such
instrument as his free and voluntary act and with due authorization, and as the
free and voluntary act of the Company, for the uses and purposes therein set
forth.
Given under my hand and seal this ___ day of August, 1997.
________________________
NOTARY PUBLIC
My Commission expires __________.
STATE OF ILLINOIS)
COUNTY OF XXXX )
I, ______________________, a Notary Public in and for the County and
State aforesaid, DO HEREBY CERTIFY that Xxxxx Xxxxxxx Xxxxxx, personally known
to me to be the Chairman of the Board and CEO of Princeton Dental Management
Corporation, appeared before me this day in person and acknowledged that he
signed and delivered such instrument as his free and voluntary act and with due
authorization, and as the free and voluntary act of the Company, for the uses
and purposes therein set forth.
Given under my hand and seal this ___ day of August, 1997.
________________________
NOTARY PUBLIC
My Commission expires __________.
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STATE OF MICHIGAN)
COUNTY OF _____ )
I, ________________________, a Notary Public in and for the County and
State aforesaid, DO HEREBY CERTIFY that _____________, personally known to me to
be one of the Constituent Shareholders, appeared before me this day in person
and acknowledged that as such officer he signed and delivered such instrument as
his free and voluntary act and with due authorization, and as the free and
voluntary act and with due authorization of a majority in interest of the
Constituent Shareholders, for the uses and purposes therein set forth.
Given under my hand and seal this ___ day of August, 1997.
________________________
NOTARY PUBLIC
My Commission expires __________.
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EXHIBIT 10.59
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT made as of the 1st day of May, 1997 by and between
Princeton Medical Management Northeast, Inc., a Florida corporation (the
"Seller"), and Valley Forge Dental Associates, Inc., a Delaware corporation (the
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller, together with Century Dental Center, P.C., a
Pennsylvania professional corporation ("Century Dental"), is engaged in the
business of operating and managing a dental practice under the name "Century
Dental Center" which provides dental services and related activities at one (1)
facility in the city of Springfield in the Commonwealth of Pennsylvania (such
activities being hereinafter referred to as the "Business"); and
WHEREAS, the Purchaser (or its designee) desires to acquire from the
Seller certain assets of the Seller described in Section I(C)(i) hereof (the
"Assets") and to assume certain liabilities and contractual obligations of the
Seller as described in Section I(C)(ii) hereof (the "Assumed Liabilities"), and
the Seller desires to sell or assign the Assets and to assign the Assumed
Liabilities to the Purchaser (or its designee), on the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, and intending to be legally
bound, the parties hereto hereby agree as follows:
SECTION I
PURCHASE AND SALE OF THE ASSETS
A. Purchase and Sale of the Assets. Subject to the terms and
conditions of this Agreement and on the basis of the representations,
warranties, covenants and agreements herein contained, at the Closing (as
hereinafter defined):
(i) The Seller agrees to sell, assign and convey to the
Purchaser (or its designee), and the Purchaser (or its designee) agrees to
purchase, acquire and accept from the Seller, the Assets.
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(ii) The Seller agrees to assign to the Purchaser (or its
designee) and the Purchaser (or its designee) agrees to accept and assume from
the Seller, the Assumed Liabilities. The Purchaser (and its designee) shall not
assume and shall have no responsibility with respect to, and shall be
indemnified by the Seller against any and all liabilities or obligations of the
Seller, other than the Assumed Liabilities.
B.Purchase Price. The purchase price (the "Purchase Price")
for the Assets is (i) $355,109.38 and (ii) the contingent payments, if earned
(the "Contingent Payments"), provided for in Section I(D) hereof. The Purchase
Price payable at the Closing shall be made by (a) delivery to the Seller of
$234,585.87 in immediately available funds by means of a wire transfer to an
account designated by the Seller, (b) at the direction of the Seller, delivery
to First Republic Bank ("First Republic") of $61,655.25 in immediately available
funds by means of a wire transfer to an account designated by First Republic,
(c) at the direction of the Seller, delivery to Xxxxxxxx X. Xxxx, D.D.S., P.C.
f/k/a Century Dental Center I, P.C. ("Century") of $29,434.13 in immediately
available funds by means of a wire transfer to an account designated by Century
and (d) delivery of an 8% promissory note of the Purchaser in the principal
amount of $29,434.13 in the form of Exhibit A attached hereto.
C. Assets; Assumed Liabilities.
(i) The Assets shall consist of all assets, business,
contract rights, patient records, financial books and financial records, other
books and records and good will, of every kind and nature, real, personal, and
mixed, tangible and intangible, wherever located, of the Seller used in or in
any way related to the Business as conducted by the Seller, including, but not
limited to, inventory and supplies, prepaid expenses, deposits, tradenames,
trademarks, patents, copyrights, inventions, books and records, patient files,
and all other agreements and arrangements necessary for the uninterrupted and
continuing operation of the Business, except for the assets listed in Schedule I
hereto (the "Excluded Assets").
(ii) The Assumed Liabilities shall consist of and shall be
limited solely to the obligations and liabilities of the Seller incurred in
connection with the Business listed in Schedule II hereto. The Purchaser (and
its designee) shall not assume, shall have no responsibility with respect to,
and shall be indemnified, by the Seller against any liabilities or obligations
of the Seller or the
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Business, except for the Assumed Liabilities set forth in Schedule II hereto.
The Seller shall remain liable for, and shall pay when due, any and all
obligations and liabilities of the Seller and the Business other than the
Assumed Liabilities.
(iii) It is specifically understood and agreed that the
Assumed Liabilities shall not include (a) liabilities of the Seller or the
Business for expenses incurred or accrued, at any time, in connection with the
transactions contemplated by this Agreement or in any other connection not in
the ordinary course of business, (b) liabilities of the Seller or the Business
for federal, state and municipal income, sales, franchise and other taxes,
including any interest, penalties and assessments thereon, and (c) liabilities
of the Seller or the Business arising out of or relating to any governmental or
private payor claims, returns, invoices, cost reports, late filings or billing
practices which relate to any period prior to the date of Closing. Neither the
Purchaser nor any designee of the Purchaser assuming the Assumed Liabilities
shall assume any liabilities of the Seller or the Business in connection with
any understanding or agreement, whether written or oral, with respect to any
retirement plan, including, but not limited to, any profit sharing, 401(k) or
defined benefit plan (as defined in Section 414(j) of the Internal Revenue Code
of 1986, as amended (the "Code").
D. Contingent Payments. Each of the Seller and the Purchaser
acknowledges and agrees that since the Business has a short operating history,
the full value of the Business on the date of the Closing is difficult to
ascertain with any degree of certainty on the date of Closing. Accordingly, the
parties to this Agreement agree that it is appropriate to provide for the
Contingent Payments set forth in this Section I(D) to reflect more accurately
the full value of the Business on the date of Closing. Subject to the conditions
set forth herein and in Schedule III hereto, within thirty (30) days after May
31, 1997 and, May 31, 1998, the Purchaser shall deliver to the Seller, the
Contingent Payments, if any, payable with respect to the twelve-month periods
ending May 31, 1997 and May 31, 1998, respectively. The amount of the Contingent
Payments payable to the Seller with respect to each such twelve-month period
(each, a "Contingent Period") (i) shall be based upon the achievement by the
Contingent Payment Business (as hereinafter defined) of targeted "net operating
revenues" (as hereinafter defined) during such Contingent Period and (ii) shall
be determined in accordance with the provisions hereof and Schedule III hereto.
Each of the Contingent Payments, if earned, shall be made by delivery to
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the Seller of bank checks payable to the order of the Seller in such amounts of
cash as is determined in accordance with Schedule III hereto.
E. Computation of Net Operating Revenues. The Purchaser shall,
within thirty (30) days after the end of each Contingent Period, compute the
amount of the net operating revenues of the Contingent Payment Business for such
Contingent Period. The amount so computed shall be the net operating revenues
for purposes of determining whether or not Contingent Payments shall be due and
payable. Notwithstanding the determination of net operating revenues for any
applicable period by the Purchaser, the Seller shall receive the information
upon which such determination was made, and shall, in the event of a dispute as
to the amount or method of calculation of such net operating revenues have the
right to review all work papers relating to the determination of net operating
revenues. For purposes of this Agreement, (i) "net operating revenues" of the
Contingent Payment Business shall mean gross charges billed for all services
provided by the Contingent Payment Business, including capitation revenues
pursuant to prepaid dental plans (or, in the event that all or substantially all
of the assets and business of the Contingent Payment Business, shall have been
transferred to another entity or entities, the allocable portion of the gross
charges of such other entity or entities attributable to the Contingent Payment
Business) during the applicable Contingent Period less any necessary adjustments
to reflect patient refunds and amounts which are determined to be uncollectible
at the time of billing (contractual allowances) or in the future (billing
errors) as determined in accordance with generally accepted accounting
principles consistent with the Purchaser's accounting practices.
For purposes of Sections I(D) and I(E) hereof and Schedule III
hereto, the term "Contingent Payment Business" shall mean the operations,
services and activities of the Business as operated by the Purchaser (or its
designee) combined with the operations of any related professional corporation
managed by the Purchaser (or its designee) as such operations relate to the
Business.
F. Allocation. The Purchase Price (including the Assumed
Liabilities) shall be allocated as set forth in Schedule IV hereto. The parties
hereto agree that the allocation of the Purchase Price is intended to comply
with the allocation method required by Section 1060 of the Code. The parties
shall cooperate to comply with all substantive and procedural requirements of
Section 1060 of the Code and any regulations thereunder, and the allocation
shall be
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adjusted if, and to the extent, necessary to comply with the requirements of
Section 1060 of the Code. Neither the Purchaser nor the Seller will take or
permit any affiliated person to take, for federal, state or local income tax
purposes, any position inconsistent with the allocation set forth in Schedule IV
hereto, or, if applicable, such adjusted allocation. Each of the Purchaser and
the Seller agrees that each of them shall attach to its tax returns for the tax
year in which the Closing shall occur an information statement on Form 8594,
which shall be completed in accordance with allocations set forth in Schedule IV
hereto.
G. Assignment. The parties hereto agree that the Purchaser may
designate one or more direct or indirect wholly owned subsidiaries of the
Purchaser to acquire the Assets and to assume the Assumed Liabilities; provided,
however, that the Purchaser's payment obligations hereunder shall not be
affected by any such designations by the Purchaser.
SECTION II
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE SELLER
The Seller hereby represents and warrants to, and covenants
and agrees with, the Purchaser, as of the date hereof and as of the date of the
Closing, that:
A. Organization and Qualification. The Seller is duly
organized, validly existing and in good standing under the laws of the State of
Florida, is duly qualified to do business in the Commonwealth of Pennsylvania,
and has full corporate power and authority to own its properties and to conduct
the Business. The Seller has full power, authority and legal right and all
necessary approvals, permits, licenses and authorizations to own its properties
and to conduct the Business and to enter into and consummate the transactions
contemplated under this Agreement, except for such approvals, permits, licenses
and authorizations, the absence of which would not have a material adverse
effect on the business, financial condition, operations or prospects of the
Business taken as a whole (a "Material Adverse Effect"). The copies of the
certificate of incorporation and by-laws of the Seller which have been delivered
to the Purchaser are complete and correct.
B. Authority. The execution and delivery of this Agreement by
the Seller, the performance by the Seller of its covenants and agreements
hereunder and the
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consummation by the Seller of the transactions contemplated hereby have been
duly authorized by all necessary corporate action. This Agreement constitutes a
valid and legally binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally or by general principles of equity.
C. No Legal Bar; Conflicts. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
violates any provision of the certificate of incorporation or by-laws of the
Seller or any statute, ordinance, regulation, order, judgment or decree of any
court or governmental agency or board, or conflicts with or will result in any
breach of any of the terms of or constitute a default under or result in the
termination of or the creation of any lien pursuant to the terms of any contract
or agreement to which the Seller is a party or by which the Seller or any of the
Assets is bound, except where such violation, conflict, breach, default,
termination, or lien creation would not have a Material Adverse Effect. No
consents, approvals or authorizations of, or filings with, any governmental
authority or any other person or entity are required in connection with the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the operation of the Business by the Purchaser (or its
designee) subsequent to the Closing, except for required consents, if any, to
assignment of contracts, leases and other agreements as set forth in Exhibit B.
D. Financial Statements; No Undisclosed Liabilities. The
Seller has delivered to the Purchaser the balance sheets of the Business as of
December 31, 1995 and December 31, 1994, and the income statements for the
six-month period ended March 31, 1997, the nine-month period ended September 30,
1996, and the twelve-month period ended December 31, 1995 and December 31, 1994,
which financial statements (collectively, the "Financial Statements") were
internally prepared. The Financial Statements are true and correct in all
material respects and have been prepared in accordance with generally accepted
accounting principles applied consistently throughout the periods involved. The
Financial Statements fully and fairly present the financial condition of the
Business as at the dates thereof and the results of the operations of the
Business for the periods indicated. Except to the extent set forth in or
provided for in the Financial Statements or as identified in Exhibit B, and
except for current liabilities incurred in
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the ordinary course of business consistent with past practices (and not
materially different in type or amount), the Seller, with respect to the
Business, has no liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, whether due or to become due, whether
properly reflected under generally accepted accounting principles as a liability
or a charge or reserve against an asset or equity account, and whether the
amount thereof is readily ascertainable or not. The Seller is not aware of any
material omissions in the Financial Statements. A true and correct copy of the
Financial Statements is attached hereto as Exhibit C.
E. Absence of Certain Changes. Except as set forth in Exhibit
B, subsequent to March 31, 1997, there has not been any (i) adverse or
prospective adverse change in the condition of the Business, financial or
otherwise, or in the results of the operations of the Seller, in connection with
the Business which has or could reasonably be expected to result in a Material
Adverse Effect; (ii) damage or destruction (whether or not insured) affecting
the properties or business operations of the Seller, in connection with the
Business, or the Assets; (iii) labor dispute or, to the best of the knowledge of
the Seller, threatened labor dispute involving any of the employees of the
Business, or any resignations, or to the best of the knowledge of the Seller,
threatened resignations of dentists, orthodontists, or other professional
employees, or notice that dentists, orthodontists, or other professional
employees intend to take leaves of absence, with or without pay; (iv) actual or,
to the best of the knowledge of the Seller, threatened disputes pertaining to
the Business with any major accounts or referral sources of the Business, or
actual or, to the best of the knowledge of the Seller, threatened loss of
business from any of the major accounts or referral sources of the Business,
except where such disputes or losses would not have a Material Adverse Effect;
(v) changes in the methods or procedures for billing or collection of customer
accounts or recording of customer accounts receivable or reserves for doubtful
accounts with respect to the Business; or (vi) other event or condition, known
to the Seller or which in the exercise of reasonable diligence should be known
to the Seller, not disclosed in this Agreement pertaining to and adversely
affecting the Assets or the Business.
F. No Dividends, Loans, Etc. Except as set forth in Exhibit B,
subsequent to March 31, 1997, the Seller has not, except in the normal course of
business, paid or discharged any outstanding indebtedness. Subsequent to March
31, 1997, the Seller, in connection with the Business,
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has paid all normal and recurring installments (i) of bank indebtedness, (ii)
under leases and contractual obligations and (iii) of other amounts due and
payable to any persons. Subsequent to March 31, 1997, the Seller has not, in the
conduct of the Business, incurred any bank indebtedness, entered into any
leases, loan agreements or contracts, obligations or arrangements for the
payment of money or property to any person, or permitted any liens or
encumbrances to attach to any of its assets.
G. Real Property Owned or Leased. A list and brief description
of all real property owned by or leased to or by the Seller in connection with
the Business or in which the Sellers in the conduct of the Business, has any
interest is set forth in Exhibit B. All such leased real property is held
subject to written leases or other agreements (a description of which, including
the expiration date of all leases, is set forth in Exhibit B) which are valid
and effective in accordance with their respective terms, and there are no
existing defaults or events of default, or events which with notice or lapse of
time or both would constitute defaults, thereunder on the part of the Seller in
the conduct of the Business, except for such defaults, if any, which would not
have a Material Adverse Effect. The Seller has no knowledge of any default or
claimed or purported or alleged default or state of facts which with notice or
lapse of time or both would constitute a default on the part of any other party
in the performance of any obligation to be performed or paid by such other party
under any lease referred to in Exhibit B, except where the failure to have good
and valid title would not have a Material Adverse Effect. The Seller has not
received any written or oral notice to the effect that any lease will not be
renewed at the termination of the term thereof or that any such lease will be
renewed only at a substantially higher rent.
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H. Title to Assets; Condition of Property. The Seller has good
and valid title to the Assets owned by it (in the case of owned real property
and the improvements thereon, good and marketable title in fee simple)
including, without limitation, the properties and assets reflected in the
Financial Statements (except for assets leased under leases set forth in Exhibit
B, inventory and other assets sold or retired and accounts receivable collected
upon, since March 31, 1997 in the ordinary course of business consistent with
past practices), free and clear of all liens, charges, encumbrances, security
interests or claims whatsoever, except as set forth in Exhibit B. The Seller has
the right, power and authority to sell and transfer the Assets owned by it to
the Purchaser (or its designee), and upon such transfer the Purchaser (or its
designee) will acquire good and marketable title to the Assets, free and clear
of all liens, charges, encumbrances, security interests or claims whatsoever,
except as set forth in Exhibit B. The properties and assets of the Seller
include all properties and assets used in the operations of the Business as
currently conducted. All such properties and assets of the Seller are in good
condition and repair, consistent with their respective ages, and have been
maintained and serviced in accordance with the normal practices of the Seller.
None of such properties or assets is subject to any liens, charges, encumbrances
or security interests, except as set forth in Exhibit B. None of such properties
or assets (including the Assets) (or uses to which they are put) fails to
conform with any applicable agreement, law, ordinance or regulation in a manner
which could reasonably be expected to have a Material Adverse Effect or is
likely to be material to the operation of the Business.
I. Taxes. The Seller has filed or caused to be filed on a
timely basis, all federal, state, local, foreign and other tax returns, reports
and declarations (collectively, "Tax Returns") required to be filed by the
Seller in connection with the Business except for those Tax Returns required to
be filed for the taxable year ending December 31, 1996 for which the Seller has
timely filed an extension request. All Tax Returns filed by the Seller on behalf
of the Business are true, complete and correct in all material respects. The
Seller has paid all income, estimated, excise, franchise, gross receipts,
capital stock, profits, stamp, occupation, sales, use, transfer, value added,
property (whether real, personal or mixed), employment, unemployment,
disability, withholding, social security, workers' compensation and other taxes,
and interest, penalties, fines, costs and assessments
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(collectively, "Taxes"), due and payable with respect to the periods covered by
such Tax Returns (whether or not reflected thereon). There are no tax liens on
any of the properties or assets, real, personal or mixed, tangible or
intangible, of the Seller in connection with the Business. Since March 31, 1997,
the Seller in connection with the Business has not incurred any tax liability
other than in the ordinary course of business. Except as set forth in Exhibit B,
no Tax Return of the Seller in connection with the Business has ever been
audited. No deficiency in Taxes for any period has been asserted by any taxing
authority which remains unpaid at the date hereof (the results of any settlement
being set forth on Exhibit B hereto), no written inquiries or notices have been
received by the Seller in connection with the Business from any taxing authority
with respect to possible claims for Taxes and the Seller knows of no reason to
believe that such an inquiry or notice is pending or threatened, and there is no
basis for any additional claims or assessments for Taxes. The Seller in
connection with the Business has not agreed to the extension of the statute of
limitations with respect to any Tax Return or tax period. The Seller has
delivered to the Purchaser copies of the federal and state income or franchise
or other type of Tax Returns filed by the Seller in connection with the Business
for the past three years and for all other past periods as to which the
appropriate statute of limitations has not lapsed.
J. Permits; Compliance with Applicable Law.
(i) General. The Seller is not in default under any, and has
complied with all, statutes, including the Americans with Disabilities Act,
ordinances, regulations, orders, judgments and decrees of any court or
governmental entity or agency, relating to the Business or the Assets as to
which a default or failure to comply might have a Material Adverse Effect on the
Business or the Assets. The Seller has no knowledge of any basis for assertion
of any violation of the foregoing or for any claim for compensation or damages
or otherwise arising out of any violation of the foregoing. The Seller has not
received any notification of any asserted present or past failure to comply with
any of the foregoing which has not been satisfactorily responded to in the time
period required thereunder.
(ii) Permits. Set forth in Exhibit B is a complete and
accurate list of all permits, licenses, approvals, franchises and authorizations
issued by governmental entities or other regulatory authorities, federal, state
or local (collectively the "Permits"), held
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by the Seller in connection with the Business. The Permits set forth in Exhibit
B are all the Permits required for the conduct of the Business. All the Permits
set forth in Exhibit B are in full force and effect, and the Seller has not
engaged in any activity which would cause or permit revocation or suspension of
any such Permit, and no action or proceeding looking to or contemplating the
revocation or suspension of any such Permit is pending or, to the best of the
knowledge of the Seller, threatened. There are no existing defaults or events of
default or events or state of facts which with notice or lapse of time or both
would constitute a material default by the Seller under any such Permit. The
Seller has no knowledge of any default or claimed or purported or alleged
default or state of facts which with notice or lapse of time or both would
constitute a default on the part of any party in the performance of any
obligation to be performed or paid by any party under any Permit set forth in
Exhibit B. Except as set forth in Exhibit B, the consummation of the
transactions contemplated hereby will in no way affect the continuation,
validity or effectiveness of the Permits set forth in Exhibit B or require the
consent of any person.
(iii) Environmental. (a) To the best of the knowledge of the
Seller, the Seller in connection with the Business, has duly complied with, and
the real estate owned by it or subject to the leases listed in Exhibit B and the
improvements thereon, and all other real estate leased by the Seller in
connection with the Business, and the improvements thereon (all such owned or
leased real estate hereinafter referred to collectively as the "Premises") are
in compliance with, the provisions of all federal, state and local
environmental, health and safety laws, codes and ordinances and all rules and
regulations promulgated thereunder, except where the failure to so comply would
not have a Material Adverse Effect.
(b) To the best of the knowledge of the Seller, the
Seller in connection with the Business has been issued, and will maintain until
the date of the Closing, all required federal, state and local permits,
licenses, certificates and approvals relating to (i) air emissions, (ii)
discharges to surface water or ground water, (iii) noise emissions, (iv) solid
or liquid waste disposal, (v) the use, generation, storage, transportation or
disposal of toxic or hazardous substances or wastes (intended hereby and
hereafter to include any and all such materials listed in any federal, state or
local law, code or ordinance and all rules and regulations promulgated
thereunder, as hazardous or potentially hazardous), or (vi) other environmental,
health and safety matters.
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(c) The Seller has not received any notice of, and
knows of no facts which might constitute violations of, any federal, state or
local environmental, health or safety laws, codes or ordinances, and any rules
or regulations promulgated thereunder, which relate to the use, ownership or
occupancy of any of the Premises owned, leased or occupied by the Seller in
connection with the Business. The Seller is not in violation of any
rights-of-way or restrictions affecting any of the Premises or any rights
appurtenant thereto.
(iv) Medicare, Medicaid and CHAMPUS. The Business has had no
net revenues from the Medicare, Medicaid and CHAMPUS programs during the
calendar years 1994, 1995, 1996, and the first four (4) months of 1997.
K. Licenses. The Seller does not produce or distribute any
product nor does it perform any service under a proprietary license granted by
another entity and it has not licensed its rights in any current or planned
products, designs or services to any other entities. The Seller has the right to
use all computer software, including all property rights constituting part of
that computer software, used in connection with the Business (the "Computer
Software"). A list of all written licenses pertaining to the Computer Software
is set forth in Exhibit B (the "Licenses"). The Seller does not have any
knowledge that any of the Licenses may not be valid or enforceable by the Seller
or that the use of the Computer Software or any of the Licenses may infringe
upon or conflict with the rights of any third party. The Seller has not granted
any licenses to use the Computer Software or any sub-licenses with respect to
any of the Licenses.
L. Inventories. The inventories and equipment of the Seller in
connection with the Business are in all material respects merchantable and fully
usable in the ordinary course of business.
M. Contractual and Other Obligations. Set forth in Exhibit B
is a list and brief description of all (i) contracts, agreements, licenses,
leases, arrangements (written or oral) and other documents to which the Seller
in connection with the Business is a party or by which the Seller in connection
with the Business is bound (including, in the case of loan agreements, a
description of the amounts of any outstanding borrowings thereunder and the
collateral, if any, for such borrowings); (ii) obligations and liabilities of
the Seller in connection with the Business pursuant to uncompleted orders for
the purchase of
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materials, supplies, equipment and services for the requirements of the Business
with respect to which the remaining obligation of the Seller in connection with
the Business is in excess of $7,500; and (iii) material contingent obligations
and liabilities of the Seller in connection with the Business (all of the
foregoing being hereinafter referred to as the "Contracts.") The Seller is not
in material default in the performance of any covenant or condition under any
Contract and no claim of such a default has been made and, to the best of the
knowledge of the Seller, no event has occurred which with the giving of notice
or the lapse of time would constitute a default under any covenant or condition
under any Contract, except where such default would not have a Material Adverse
Effect. The Seller is not a party to any Contract which would terminate or be
adversely affected by the consummation of the transactions contemplated by this
Agreement. The Seller in connection with the Business is not a party to any
Contract expected to be performed at a loss. Originals or true, correct and
complete copies of all written Contracts have been provided to the Purchaser.
N. Compensation. Set forth in Exhibit D attached hereto is a
list of all written or oral agreements between the Business and each person
employed by or independently contracting with the Business with regard to
compensation, whether individually or collectively, and set forth in Exhibit D
is a list of all employees or independent contractors of the Business entitled
to receive annual compensation in excess of $35,000 and their respective
positions, job categories and salaries. The transactions contemplated by this
Agreement will not result in any liability for severance pay to any employee or
independent contractor of the Business. The Business has not informed any
employee or independent contractor providing services to the Business that such
person will receive any increase in compensation or benefits or any ownership
interest in the Business.
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O. Employee Benefit Plans. Except as set forth in Exhibit E
attached hereto, neither the Seller nor its parent corporation (the "Parent")
maintains or sponsors, nor are they required to make contributions to, any
pension, profit-sharing, savings, bonus, incentive or deferred compensation,
severance pay, medical, life insurance, welfare or other employee benefit plan.
All pension, profit-sharing, savings, bonus, incentive or deferred compensation,
severance pay, medical, life insurance, welfare or other employee benefit plans
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (hereinafter referred to as "ERISA"), in which the
employees of the Business participate (such plans and related trusts, insurance
and annuity contracts, funding media and related agreements and arrangements
being hereinafter referred to as the "Benefit Plans") comply with all
requirements of the Department of Labor (the "DOL") and the Internal Revenue
Service, and with all other applicable law, and neither the Seller nor the
Parent has taken or failed to take any action with respect to the Benefit Plans
which might create any liability on the part of the Seller or the Purchaser.
Each "fiduciary" (within the meaning of Section 3(21)(A) of ERISA) as to each
Benefit Plan has complied in all respects with the requirements of ERISA and all
other applicable laws in respect of each such Benefit Plan. The Seller has
furnished to the Purchaser copies or accurate summaries of all Benefit Plans and
all financial statements, actuarial reports and annual reports and returns filed
with the Internal Revenue Service with respect to such Benefit Plans for a
period of three years prior to the date hereof. Such financial statements,
actuarial reports and annual reports and returns are true and correct in all
respects, and none of the actuarial assumptions underlying such documents have
changed since the respective dates thereof. In addition:
(i) Each Benefit Plan intended to qualify under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service as to its qualification under Section 401(a) of the
Code;
(ii) Neither the Seller nor the Parent maintains, sponsors
or contributes to (nor are required to contribute to) and has never withdrawn
from, maintained, sponsored or contributed to (nor has ever been required to
contribute to) a "defined benefit plan" (within the meaning of Section 3(35) of
ERISA), or a "multiemployer plan" (within the meaning of Section 3(37) of
ERISA);
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(iii) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated herein will result in the
withdrawal (partially or totally within the meaning of ERISA) from any Benefit
Plan, or in any withdrawal or other liability of any nature to the Seller, the
Parent or the Purchaser under any Benefit Plan;
(iv) No "prohibited transaction" (within the meaning of
Section 406 of ERISA or Section 4975(c) of the Code) has occurred with respect
to any Benefit Plan;
(v) No provision of any Benefit Plan or of any agreement,
and no act or omission of the Seller or the Parent in any way limits, impairs,
modifies or otherwise affects the right of the Seller or the Parent to amend any
Benefit Plan, subject to the requirements of applicable law;
(vi) There are no contributions which are or hereafter will
be required to have been made to trusts on behalf of the employees of the
Business in connection with any Benefit Plan that would constitute a "defined
contribution plan" (within the meaning of Section 3(34) of ERISA);
(vii) Other than claims in the ordinary course for benefits
with respect to the Benefit Plans, there are no actions, suits or claims
(including claims for income Taxes, interest, penalties, fines or excise Taxes
with respect thereto) pending with respect to any Benefit Plan, or any
circumstances which might give rise to any such action, suit or claim (including
claims for income Taxes, interest, penalties, fines or excise Taxes with respect
thereto);
(viii) All reports, returns and similar documents with
respect to the Benefit Plans required to be filed with any governmental agency
have been so filed; and
(ix) Neither the Seller nor the Parent has any obligation to
provide health or other welfare benefits to former, retired or terminated
employees, except as specifically required under Section 4980B of the Code or
Section 601 of ERISA. The Seller and the Parent has complied with the notice and
continuation requirements of Section 4980B of the Code and Section 601 of ERISA
and the regulations thereunder.
The Seller agrees that it will or cause the Parent
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to, as of the Closing, fully vest all employees of the Business who become
employees of the Purchaser as a result of the transactions contemplated herein
in their account balances under the Plan.
P. Labor Relations. There have been no violations of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives with respect to the employment of individuals by, or the
employment practices or work conditions of the Business, or with respect to the
terms and conditions of employment, wages and hours, which violations would
have, either individually or in the aggregate, a Material Adverse Effect. The
Business is not engaged in any unfair labor practice or other unlawful
employment practice and there are no charges of unfair labor practices or other
employee-related complaints pending or, to the best of the knowledge of the
Seller, threatened against the Business or before the National Labor Relations
Board, the Equal Employment Opportunity Commission, the Occupational Safety and
Health Review Commission, the Department of Labor or any other federal, state,
local or other governmental authority. There is no strike, picketing, slowdown
or work stoppage or organizational attempt pending or, to the best of the
knowledge of the Seller, threatened against or involving the Business. No issue
with respect to union representation is pending or, to the best of the knowledge
of the Seller, threatened with respect to the employees of the Business. No
union or collective bargaining unit or other labor organization has ever been
certified or recognized by Business as the representative of any of the
employees of the Business.
Q. Increases in Compensation or Benefits. Except as set forth
in Exhibit D, subsequent to March 31, 1997, there have been no increases in the
compensation payable or to become payable to any of the employees involved in
the Business and there have been no payments or provisions for any awards,
bonuses, stock options, loans, profit sharing, pension, retirement or welfare
plans or similar or other disbursements or arrangements for or on behalf of such
employees (or related parties thereof), in each case, other than pursuant to
currently existing plans or arrangements, if any, set forth in Exhibit E;
provided, however, that in no event was any such increase in compensation or any
such payment or provision made with respect to any employees earning in excess
of $20,000 per annum. All commissions heretofore earned and all bonuses
heretofore granted to employees involved in the Business have been paid in full
to such employees. The vacation policy of the Business is set forth in Exhibit
E. Except as
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set forth in Exhibit D, no employee involved in the Business is entitled to
vacation time in excess of three weeks during the current calendar year and no
employee involved in the Business has any accrued vacation or sick time with
respect to any prior period.
R. Insurance. The Seller maintains insurance policies covering
all of its assets and properties and the various occurrences which may arise in
connection with the operation of the Business. Such policies are in full force
and effect and all premiums due thereon prior to or on the date of the Closing
have been paid in full. The Seller has complied in all respects with all the
provisions of such policies. A complete list of the insurance policies
maintained by the Seller with regard to the Business is set forth in Exhibit B.
There are no notices of any pending or, to the best of the knowledge of the
Seller, threatened termination or premium increases with respect to any of such
policies. The Seller has not had any material casualty loss or occurrence which
may give rise to any claim of any kind not covered by insurance and the Seller
is not aware of any occurrence which may give rise to any claim of any kind not
covered by insurance. To the best of the knowledge of the Seller, no third party
has filed any claim against the Seller for personal injury or property damage of
a kind for which liability insurance is generally available which is not fully
insured, subject only to the standard deductible. All claims against or
involving the Business covered by insurance have been reported to the insurance
carrier on a timely basis.
S. Conduct of Business. The Seller is not restricted from
conducting the Business in any location by agreement or court decree.
T. Allowances. The Seller has no obligation to make allowances
to any of its customers or patients, except allowances which are consistent with
its past practices.
U. Patents, Trademarks, etc. Set forth in Exhibit F attached
hereto is a list and brief description of all of the patents, registered and
common law trademarks, service marks, tradenames, copyrights, licenses and other
similar rights of the Seller in connection with the Business and applications
for each of the foregoing. The Seller owns all right, title and interest in and
to all such proprietary rights. To the best of the knowledge of the Seller, the
proprietary rights listed are all such rights necessary to the conduct of the
Business as currently conducted by the Seller; no adverse claims have been made
and no dispute has arisen with respect to any of the said proprietary rights;
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and the operations of the Business and the use by the Seller of such proprietary
rights do not involve infringement or claimed infringement of any patent,
trademark, service xxxx, tradename, copyright, license or similar right.
V. Power of Attorney. The Seller in connection with the
Business has not granted any power of attorney (revocable or irrevocable) to any
person, firm or corporation for any purpose whatsoever.
W. Use of Names. All names under which the Business is
currently conducted are listed in Exhibit F. Except for Century Dental Center I,
P.C. and Century Dental Center II, P.C., there are no other persons or
businesses conducting businesses similar to those of the Seller in the
Commonwealth of Pennsylvania having the right to use or using any of the names
set forth in Exhibit F or any variants of such names; and no other person or
business has ever attempted to restrain the Seller from using such names or any
variants thereof.
X. Accounts Payable, Indebtedness, Etc. The accounts and notes
payable and accrued expenses reflected in the Financial Statements, and the
accounts and notes payable and accrued expenses incurred by the Seller in
connection with the Business subsequent to the date of the Financial Statements,
are in all respects valid claims that arose in the ordinary course of business.
Since March 31, 1997, the accounts and notes payable, accrued expenses and debt
of the Seller in connection with the Business have been paid in a manner
consistent with past practice.
Y. No Foreign Person. The Seller is not a foreign person
within the meaning of Section 1445(b)(2) of the Code.
Z. Licensure, etc. Each individual employed or contracted with
by the Seller in connection with the Business to provide professional services
is licensed to provide such services and is otherwise in compliance with all
federal, state and local laws, rules and regulations relating to such
professional licensure. Each individual now or formerly employed or contracted
with by the Seller in connection with the Business to provide professional
services was duly licensed to provide such services during all periods prior to
the Closing when such employee or independent contractor provided such services
on behalf of the Seller. The Seller in connection with the Business is in
compliance with all relevant state laws and precedents relating to the corporate
practice of the learned or licensed professions, and there are no material
claims,
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disputes, actions, suits, proceedings or investigations currently pending, or,
to the best of the knowledge of the Seller, threatened or filed or commenced
against or affecting the Business or any such licensed professional providing
services to the Seller on the date of the Closing relating to such laws and
precedents, and no such material claim, dispute, action, suit, proceeding or
investigation has been filed or commenced during the five-year period preceding
the date of this Agreement, and the Seller is not aware of any basis for such a
valid claim. To the best of the knowledge of the Seller, the acquisition of the
Assets by the Purchaser (or its designee) as contemplated by this Agreement will
not affect the ability of the Purchaser to operate the Business as heretofore
operated in compliance with all applicable laws provided that the Purchaser
complies with all applicable laws regarding the corporate practice of dentistry.
AA. Books and Records. The books and records of the Business
are in all material respects complete and correct, have been maintained in
accordance with good business practices and accurately reflect the basis for the
financial position and results of operations of the Business set forth in the
Financial Statements. All of such books and records, including true and complete
copies of all material written Contracts, have been made available for
inspection by the Purchaser and its representatives.
BB. Litigation; Disputes. Except as set forth in Exhibit B,
there are no claims, disputes, actions, suits, investigations or proceedings
pending or, to the best of the knowledge of the Seller, threatened against or
affecting the Business or the Assets. Except as set forth in Exhibit B, no such
claim, dispute, action, suit, proceeding or investigation has been pending or,
to the best of the knowledge of the Seller, threatened during the five-year
period preceding the date of this Agreement. There is no basis for any such
claim, dispute, action, suit, investigation or proceeding. The Seller has no
knowledge of any default under any such action, suit or proceeding. The Seller
in the conduct of the Business is not in default in respect of any judgment,
order, writ, injunction or decree of any court or of any federal, state,
municipal or other government department, commission, bureau, agency or
instrumentality or any arbitrator.
CC. Location of Seller and Assets. Set forth in Exhibit B is
each location (specifying state, county and city) where the Seller in connection
with the Business, (i) has a place of business, (ii) owns or leases real
property and (iii) owns or leases any other property, including
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inventory, equipment and furniture.
DD. Bank Accounts. Set forth in Exhibit G attached hereto is a
list of all bank accounts maintained in the name of the Seller in connection
with the Business, and a brief description of the persons having power to sign
with respect to each such account.
EE. Disclosure. No representation or warranty made under any
Section hereof and none of the information furnished by the Seller set forth
herein, in the exhibits hereto or in any document delivered by the Seller to the
Purchaser, or any authorized representative of the Purchaser, pursuant to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
SECTION III
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE PURCHASER
The Purchaser hereby represents and warrants to, and covenants
and agrees with, the Seller, as of the date hereof and as of the date of the
Closing, that:
A. Organization and Qualification. The Purchaser is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to purchase the Assets.
B. Authority. The execution and delivery of this Agreement by
the Purchaser, the performance by the Purchaser of its covenants and agreements
hereunder and the consummation by the Purchaser of the transactions contemplated
hereby have been duly authorized by all necessary corporate action. This
Agreement constitutes a valid and legally binding obligation of the Purchaser,
enforceable against it in accordance with its terms.
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C. No Legal Bar; Conflicts. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
violates any provision of the certificate of incorporation or by-laws of the
Purchaser or any statute, ordinance, regulation, order, judgment or decree of
any court or governmental agency or board, or conflicts with or will result in
any breach of any of the terms of or constitute a default under or result in the
termination of or the creation of any lien pursuant to the terms of any contract
or agreement to which the Purchaser is a party or by which the Purchaser or any
of its assets is bound.
SECTION IV
ADDITIONAL COVENANTS OF THE
SELLER AND THE PURCHASER
A. Correspondence, Etc. The Seller covenants and agrees that,
subsequent to the Closing, it will deliver to the Purchaser, promptly after the
receipt thereof, all inquiries, correspondence and other materials received by
it from any person or entity relating to the Business.
B. Books and Records. Each of the Purchaser and the Seller
covenants and agrees that, subsequent to the Closing, it shall give the other
party reasonable access to the historical financial books and records and
patient files of the Business (subject to applicable laws regarding
confidentiality of such patient files), to the extent such books and records and
files are not included in the Assets, for a period of five years from the date
of the Closing. Each of the Purchaser and the Seller shall retain all such books
and records and files in substantially their condition at the time of the
Closing. None of such books and records and files shall be destroyed without the
prior written approval of the other party or without first offering such books
and records and files to the other party.
C. Discharge of Obligations. The Seller covenants and agrees,
subsequent to the Closing, to pay promptly and to otherwise fulfill and
discharge all obligations and liabilities of the Seller in connection with the
Business which are not Assumed Liabilities hereunder when due and payable and
otherwise prior to the time at which any of such obligations or liabilities
could in any way result in or give rise to a claim against the Assets, the
Business or the Purchaser, result in the imposition of any lien, charge or
encumbrance on any of the Assets, or adversely affect the Purchaser's title to
or use of any of
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the Assets including, without limitation, any and all sales, use, transfer,
corporate, payroll and/or business and mercantile taxes, penalties and interest
owned to the Commonwealth of Pennsylvania and/or Xxxxxx Township, and processing
fees required by that certain Real Property Lease (the "Lease") listed under
"Real Property" in Exhibit B hereto for the facility located at 000 Xxxxx Xxxxx
Xxxx, Xxxxxxxxxxx, Xxxxxxxxxxxx, (the "Facility") in connection with the
Assignment of Lease to be entered into between the Purchaser and the Seller on
the date of the Closing for the Facility (the "Assignment of Lease").
D. Delivery of Funds. Subsequent to the Closing, the Seller
shall deliver on a daily basis any funds and any checks except for those checks
which relate to pre-closing receivables (as hereinafter defined), notes, drafts
and other instruments for the payment of money, duly endorsed to the Purchaser,
received by the Seller comprising payment of any amounts due from customers of
the Business or others for services rendered by the Business, including pursuant
to any provider agreements constituting part of the Assets.
E. Collection of Accounts Receivable. The Purchaser covenants
and agrees to act as collection agent on behalf of the Seller with respect to
the accounts receivable of the Business which were outstanding on the date of
the Closing (the "pre-closing receivables") and the Purchaser further covenants
and agrees to use its reasonable best efforts to collect such pre-closing
receivables for a reasonable period of time not to exceed one (1) year from the
date hereof or such shorter time upon the mutual agreement of the Seller and the
Purchaser.
The Seller covenants and agrees to pay to the Purchaser a fee
equal to ten percent (10%) of the pre-closing receivables collected by the
Purchaser to compensate the Purchaser for the services rendered with respect to
the collection of the pre-closing receivables by the Purchaser.
F. Post-Closing Third Party Consents. In the event that any
third party consents which the Seller is required to obtain (including consent
to the Assignment of Lease) are not obtained prior to Closing and the Closing
nonetheless occurs, the Seller hereby covenants to use such party's best efforts
to obtain such consents within 30 days following the Closing.
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G. Pass Through of Rights and Obligations. In the event that
the Seller is unable to obtain the necessary consents set forth in Exhibit B
hereto prior to the Closing and the Closing nevertheless occurs, the Seller
agrees that until such time as such consents are obtained or in the event the
Seller is unable to obtain such consents, the Seller shall pass through to the
Purchaser the benefits and the obligations arising under the agreements listed
under "Real Property", "Contracts" and "Provider Source Contracts" in Exhibit B
hereto as if such agreements were assigned to the Purchaser (or its designee)
pursuant to this Agreement. The Purchaser agrees that such pass through of
rights and obligations shall satisfy all obligations of the Seller to obtain the
necessary consents set forth in Exhibit B.
H. Assignment of Lease. The Purchaser covenants and agrees
that within ten (10) business days of receiving written notice from Xxxxxx XYZ
Associates (the "Landlord") that the Landlord consents to the Assignment of
Lease, the Purchaser shall pay to the Seller (i) $7,542 in immediately available
funds, which amount shall represent the security deposit under the Lease, less
fifteen percent (15%), and (ii) the Purchaser's pro rata share (from the date of
the Closing) of the rental payment under the Lease for the month of May, 1997.
In the event that the Landlord's consent is not granted on or before May 31,
1997, the Purchaser may elect to pay to the Seller the rental payment for the
month of June, and, in such event, the Seller covenants and agrees to timely pay
to the Landlord the monthly rental payment for the month of June. In the event
that the Landlord does not consent to the Assignment of Lease, each of the
Purchaser and the Seller covenants and agrees that the Purchaser (or its
designee) and the Seller shall enter into a sublease for the Facility.
SECTION V
CLOSING
A. Time and Place of Closing. The closing of the purchase and
sale of the Assets as set forth herein (the "Closing") shall be held on May 20,
1997 at such location or in such manner as is mutually agreed upon by the
parties.
B. Delivery of Assets. Delivery of the Assets shall be made by
the Seller to the Purchaser (or its designee) at the Closing by delivering such
deeds, bills of sale, assignments and other instruments of conveyance and
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transfer, and such powers of attorney, as shall be effective to vest in the
Purchaser (or its designee) title to or other interest in, and the right to full
custody and control of, the Assets, free and clear of all liens, charges,
encumbrances and security interests whatsoever.
C. Tax Matters. All transfer, documentary, stamp,
registration, value added, sales, use and other such taxes and fees (including
any penalties and interest) incurred in connection with this Agreement shall be
borne and paid by the Seller when due, and the Seller will, at its own expense,
file all necessary tax returns and other documentation with respect to all such
taxes and fees.
D. Assumption of Liabilities. At the Closing, the Purchaser
(or its designee) shall deliver to the Seller such instruments as shall be
sufficient to effect the assumption by the Purchaser (or its designee) of the
Assumed Liabilities.
E. Contracts and Books. At the Closing, the Seller shall make
available to the Purchaser the Contracts and the books and records of the
Business constituting a part of the Assets.
F. Additional Steps. At the Closing, the Seller shall take all
steps required to put the Purchaser (or its designee) in actual possession and
control of the Assets.
SECTION VI
CONDITIONS TO THE SELLER'S OBLIGATIONS TO CLOSE
The obligations of the Seller to sell the Assets and otherwise
consummate the transactions contemplated by this Agreement at the Closing are
subject to the following conditions precedent, any or all of which may be waived
by the Seller in its sole discretion, and each of which the Purchaser hereby
agrees to use its best efforts to satisfy at or prior to the Closing:
A. No Litigation. No action, suit or proceeding against the
Seller or the Purchaser relating to the consummation of any of the transactions
contemplated by this Agreement or any governmental action seeking to delay or
enjoin any such transactions shall be pending or threatened.
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B. Representations and Warranties. The representations and
warranties made by the Purchaser herein shall be correct as of the date of the
Closing in all respects with the same force and effect as though such
representations and warranties had been made as of the date of the Closing, and
on the date of the Closing, the Purchaser shall deliver to the Seller a
certificate dated the date of the Closing to such effect. All the terms,
covenants and conditions of this Agreement to be complied with and performed by
the Purchaser on or before the date of the Closing shall have been duly complied
with and performed in all respects, and, on the date of the Closing, the
Purchaser shall deliver to the Seller a certificate dated the date of the
Closing to such effect.
C. Other Certificates. The Seller shall have received such
additional certificates, instruments and other documents, in form and substance
satisfactory to it and its counsel, as it shall have reasonably requested in
connection with the transactions contemplated hereby.
D. Employment Agreement and Modification Agreement. The
Purchaser (or its designee) and Xxxxxxxx Xxxx ("Xxxx") shall have entered into
an employment agreement in the form of Exhibit H attached hereto (the
"Employment Agreement") and a consent to assignment and modification agreement
in the form of Exhibit H-2 attached hereto (the "Modification Agreement").
E. Assumption of Liabilities. The Seller shall have received
evidence, in form and substance satisfactory to it and its counsel, of the
assumption of the Assumed Liabilities listed in Schedule II hereto.
SECTION VII
CONDITIONS TO THE PURCHASER'S OBLIGATION TO CLOSE
The obligation of the Purchaser to purchase the Assets and
otherwise consummate the transactions contemplated by this Agreement at the
Closing is subject to the following conditions precedent, any or all of which
may be waived by the Purchaser in its sole discretion, and each of which the
Seller hereby agree to use its best efforts to satisfy at or prior to the
Closing:
A. Opinion of Counsel. The Purchaser shall have received an
opinion of Xxxxxx & Xxxxxx, Attorneys at Law, counsel for the Seller, delivered
to the Purchaser pursuant
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to the instructions of the Seller, dated the date of the Closing, in form and
substance satisfactory to the Purchaser and its counsel, Messrs. Xxxxxx &
Xxxxxx, to the effect that:
(i) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida,
and is duly qualified to do business in the Commonwealth of
Pennsylvania. The Seller has full corporate power and authority to own
its properties and to conduct the businesses in which it is now
engaged.
(ii) This Agreement has been duly authorized, executed and
delivered by the Seller and constitutes the valid and legally binding
obligation of the Seller, enforceable against the Seller in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting creditors'
rights generally or by general principles of equity.
(iii) Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, violates
any provision of the articles of incorporation or by-laws of the
Seller. To the knowledge of such counsel, based solely upon a
representation from the Seller, neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated
thereby, violates any statute, ordinance, regulation, order, judgment
or decree of any court or governmental agency or conflicts with or
will result in any breach of any of the terms of or constitute a
default under or result in the termination of or the creation of any
lien pursuant to the terms of any contract or agreement (related to
the Business) to which the Seller is a party or by which the Seller or
the Assets (as such term is defined in the Agreement) is bound.
(iv) The deeds, bills of sale, assignments and other
instruments of transfer of ownership delivered by the Seller have been
duly executed and delivered and are valid and binding in accordance
with their terms. To the knowledge of such counsel, based solely upon
a representation of the Seller, the deeds, bills of sale, assignments
and other instruments of transfer of ownership delivered by the Seller
are sufficient to convey to the Purchaser (or its designee) all the
right, title and interest of the Seller in and to the Assets, free and
clear of any liens, charges, security
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interest or claims whatsoever except for those liens set forth in
Exhibit B.
(v) To the knowledge of such counsel, based solely upon
representation of the Seller there are no claims, disputes, actions,
suits or proceedings pending or threatened against the Seller with
regard to the Business or the Assets.
B. No Litigation. No action, suit or proceeding against the
Seller or the Purchaser relating to the consummation of any of the transactions
contemplated by this Agreement nor any governmental action seeking to delay or
enjoin any such transactions shall be pending or threatened.
C. Representations and Warranties. The representations and
warranties made by the Seller herein shall be correct as of the date of the
Closing in all respects with the same force and effect as though such
representations and warranties had been made as of the date of the Closing, and
on the date of the Closing, the Seller shall deliver to the Purchaser a
certificate dated the date of the Closing to such effect. All the terms,
covenants and conditions of this Agreement to be complied with and performed by
the Seller on or before the date of the Closing shall have been duly complied
with and performed in all respects, and on the date of the Closing, the Seller
shall deliver to the Purchaser a certificate dated the date of the Closing to
such effect.
D. Other Certificates. The Purchaser shall have received such
other certificates, instruments and other documents, in form and substance
satisfactory to the Purchaser and counsel for the Purchaser, as it shall have
reasonably requested in connection with the transactions contemplated hereby.
E. Sale of All the Assets. All of the Assets of the Business,
with the exception of the Excluded Assets, shall be sold to the Purchaser (or
its designee) at the Closing.
F. Third Party Consents. The Purchaser shall have received all
necessary consents of third parties under the contracts, agreements, leases and
other instruments of the Business, which consents shall not provide for the
acceleration of any liabilities or any other detriment to the Purchaser or the
Business.
G. Malpractice Insurance. The Seller shall present evidence
satisfactory to the Purchaser that each
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professional employed by the Business shall have malpractice insurance in such
amounts as are necessary and customary for such professionals.
H. Employment Agreement and Modification Agreement. The
Purchaser (or its designee) and Xxxx shall have entered into the Employment
Agreement and Modification Agreement.
I. Governmental Licenses and Permits. The Purchaser (and its
designee) have obtained all required authorizations, permits and licenses
required for it to operate the Business.
J. Assignment of Lease. The Purchaser (or its designee) and
the Seller shall have entered into the Assignment of Lease.
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SECTION VIII
INDEMNIFICATION
A. Indemnification by the Seller. The Seller shall indemnify
and hold harmless the Purchaser from and against all losses, claims, taxes,
assessments, demands, damages, liabilities, obligations, costs and/or expenses
(hereinafter referred to collectively as the "Purchaser's Damages"), including,
without limitation, Purchaser's Counsel Expenses (as hereinafter defined),
sustained or incurred by the Purchaser (or its designee) in any action, claim or
proceeding (i) between the Purchaser and the Seller or (ii) between the
Purchaser and any third party or (iii) otherwise (a) arising out of or relating
to the breach of any of the obligations, covenants or provisions of, or the
inaccuracy of any of the representations or warranties made by the Seller herein
or (b) arising out of or relating to any liabilities or obligations of the
Seller which are not Assumed Liabilities including, without limitation, any and
all sales, use, transfer, corporate, payroll, and/or business and mercantile
taxes, penalties, and interest, owed to the Commonwealth of Pennsylvania and/or
Xxxxxx Township, and any and all fees incurred in connection with the Assignment
of Lease. For purposes hereof, "Purchaser's Counsel Expenses" shall mean
reasonable fees and disbursements of counsel howsoever sustained or incurred by
the Purchaser (or its designee), including, without limitation, in any action or
proceeding between the Purchaser and any third party. In addition to the right
of the Purchaser to indemnification hereunder, the Purchaser shall have the
right from time to time to set off the amount of any of the Purchaser's Damages
that the Purchaser is entitled to indemnification thereof against any Contingent
Payments. In the event that the Purchaser exercises its right under this Section
VIII(A) to set off the amount of any of the Purchaser's Damages against any
Contingent Payment and the Seller disputes the validity of the Purchaser's
Damages, the Purchaser agrees to place such disputed amount in an escrow account
to be held by Xxxxxx & Xxxxxx until the dispute is resolved pursuant to the
terms of this Section VIII(A) and Section XI(F) hereof. Any amounts set off by
the Purchaser which are later awarded to the Seller in accordance with Section
XI(F) hereof shall accrue interest at a rate of 8% per annum from the time of
any such set off and shall include reasonable fees and disbursements of counsel
incurred by the Seller.
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B. Indemnification by the Purchaser. The Purchaser shall
indemnify and hold harmless the Seller from and against any and all losses,
claims, assessments, demands, damages, liabilities, obligations, costs and/or
expenses (hereinafter referred to collectively as the "Seller's Damages"; the
Seller's Damages and the Purchaser's Damages are sometimes referred to herein as
the "Damages"), including, without limitation, Seller's Counsel Expenses (as
hereinafter defined) sustained or incurred by the Seller in any action or
proceeding between (i) the Seller and the Purchaser or (ii) the Seller and any
third party or (iii) otherwise (a) by reason of the breach of any of the
obligations, covenants or provisions of, or the inaccuracy of any of the
representations or warranties made by, the Purchaser herein, or (b) arising out
of or relating to any liabilities or obligations which are Assumed Liabilities.
For purposes hereof, "Seller's Counsel Expenses" shall mean reasonable fees and
disbursements of counsel howsoever sustained or incurred by the Seller,
including, without limitation, in any action or proceeding between the Seller
and the Purchaser or in any action or proceeding between the Seller and a third
party.
C. Procedure for Indemnification. In the event that any party
hereto shall incur (or anticipates that it may incur in the case of third party
claims) any Damages in respect of which indemnity may be sought by such party
pursuant to this Section VIII, the party indemnified hereunder (the
"Indemnitee") shall notify the party or parties providing indemnification (the
"Indemnitor") promptly; in the case of third party claims, such notice shall in
any event be given within thirty (30) days of the filing or assertion of any
claim against the Indemnitee stating the nature and basis of such claim;
provided, however, that any delay or failure to notify any Indemnitor of any
claim shall not relieve it from any liability except to the extent that the
Indemnitor demonstrates that the defense of such action is materially prejudiced
by such delay or failure to notify. In the case of third party claims, the
Indemnitor shall, within ten (10) days of receipt of notice of such claim,
notify the Indemnitee of its intention to assume the defense of such claim at
its own expense. If the Indemnitor shall not assume the defense of any such
claim or litigation resulting therefrom, the Indemnitee may defend against any
such claim or litigation in such manner as it may deem appropriate and the
Indemnitee may settle such claim or litigation on such terms as it may deem
appropriate. In the event that a dispute arises concerning the obligation of the
Indemnitor to assume the defense of a claim, or a dispute arises concerning a
claim hereunder which does not involve a third party claim, or in
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the event that there is any other dispute relating to indemnification, the
parties shall submit any such dispute to arbitration pursuant to Section XI(F)
hereof; provided, however, that the parties agree to negotiate in good faith for
a period of at least sixty (60) days prior to initiating arbitration to resolve
any dispute. If it shall be finally determined that the Indemnitor failed to
assume the defense of any claim for which the Indemnitor is liable to the
Indemnitee for Damages, then the expense of defending the claim shall be borne
by the Indemnitor. Payment of the Damages shall be made within ten (10) days of
a final determination of a claim.
A final determination of a claim shall be (i) a judgment of
any court determining the validity of a disputed claim, if no appeal is pending
from such judgment or if the time to appeal therefrom has elapsed, (ii) an award
of any arbitration determining the validity of such disputed claim, it there is
not pending any motion to set aside such award or if the time within which to
move to set such award aside has elapsed, (iii) a written termination of the
dispute with respect to such claim signed by all of the parties thereto or their
attorneys, (iv) a written acknowledgement of the Indemnitor that he or it no
longer disputes the validity of such claim, or (v) such other evidence of final
determination of a claim as shall be acceptable to the parties.
SECTION IX
BROKERS AND FINDERS
A. The Seller's Obligations. The Purchaser shall not have any
obligation to pay any fee or other compensation to any person, firm or
corporation dealt with by the Seller in connection with this Agreement and the
transactions contemplated hereby and the Seller hereby agrees to indemnify and
save the Purchaser (or its designee) harmless from any liability, damage, cost
or expense arising from any claim for any such fee or other compensation.
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B. The Purchaser's Obligations. The Seller shall not have any
obligation to pay any fee or other compensation to any person, firm or
corporation dealt with by the Purchaser in connection with this Agreement and
the transactions contemplated hereby and the Purchaser agrees to indemnify and
save the Seller harmless from any liability, damage, cost or expense arising
from any claim for any such fee or other compensation.
SECTION X
TRANSFER OF NAME
At the Closing, the Seller shall deliver to the Purchaser a
written consent duly executed by the Seller evidencing its consent to the use by
the Purchaser and any subsidiaries, affiliated companies or assigns of the
Purchaser of the name "Century Dental" and all variants thereof.
SECTION XI
MISCELLANEOUS
A. Notices. All notices, requests or instructions hereunder
shall be in writing and delivered personally, sent by telecopy or sent by
registered or certified mail, postage prepaid, as follows:
(1) If to the Seller:
c/o Princeton Dental Management Corp.
0000 Xxxx 000 Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx, Attorneys at Law
000 X. XxXxxxx #0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
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(3) If to the Purchaser:
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered or telecopied, and five business days after the date of
mailing, if mailed.
B. Survival of Representations. Each representation, warranty,
covenant and agreement of the parties hereto herein contained shall survive the
Closing, notwithstanding any investigation at any time made by or on behalf of
any party hereto, for a period of two (2) years from the date of the Closing;
except (a) for covenants and agreements to be performed subsequent to the
Closing and (b) that nothing in the foregoing shall be deemed to diminish any
Indemnitor's indemnification obligations to an Indemnitee respecting (i) claims
for Damages made prior to the date which is two (2) years after the date of the
Closing or (ii) claims for Damages based on breaches of Sections II(I) or II(J)
and common law fraud, which shall survive for the duration of the applicable
statutes of limitations periods governing third party claims made with respect
to such liabilities.
C. Entire Agreement. This Agreement and the documents referred
to herein contain the entire agreement among the parties hereto with respect to
the transactions contemplated hereby, and no modification hereof shall be
effective unless in writing and signed by the party against which it is sought
to be enforced.
D. Further Assurances. Each of the parties hereto shall use
such party's best efforts to take such
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actions as may be necessary or reasonably requested by the other parties hereto
to carry out and consummate the transactions contemplated by this Agreement.
E. Expenses. Each of the parties hereto shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
F. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or any breach hereof, shall, be settled by
arbitration in accordance with the rules of the American Arbitration Association
then in effect and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitration shall be held
in Chicago, Illinois.
G. Regulatory Matters. The Seller agrees that if as a result
of a regulatory change or for any other reason, the Purchaser shall determine
that it is necessary or desirable to restructure the manner in which the
Business is conducted or the manner in which services are provided, the Seller
shall, upon 30 days' prior written notice of the Purchaser, assist the Purchaser
to take promptly all necessary steps (as set forth in such notice) to carry out
such restructuring. The expenses related to such restructuring shall be borne by
the Purchaser.
H. Invalidity. Should any provision of this Agreement be held
by a court or arbitration panel of competent jurisdiction to be enforceable only
if modified, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties
hereto with any such modification to become a part hereof and treated as though
originally set forth in this Agreement. The parties further agree that any such
court or arbitration panel is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing such unenforceable
provision from this Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending provision, adding
additional language to this Agreement, or by making such other modifications as
it deems warranted to carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The parties expressly
agree that this Agreement as modified by such court or arbitration panel shall
be binding upon and enforceable against each of them. In any event, should one
or more of the provisions of this Agreement be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect
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any other provisions hereof, and if such provision or provisions are not
modified as provided above, this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been set forth herein.
I. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Seller and
the Purchaser, respectively.
J. Governing Law. The validity of this Agreement and of any of
its terms or provisions, as well as the rights and duties of the parties under
this Agreement, shall be construed pursuant to and in accordance with the laws
of the Commonwealth of Pennsylvania.
K. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
* * *
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IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
PRINCETON MEDICAL MANAGEMENT
NORTHEAST, INC.
By____________________________
Name:
Title:
45
37
VALLEY FORGE DENTAL
ASSOCIATES, INC.
By____________________________
Name:
Title:
46
Schedule I
EXCLUDED ASSETS
1. Accounts Receivable of the Business outstanding on or prior to the date
of Closing.
2. Cash.
47
Schedule II
LIABILITIES TO BE ASSUMED
1. Acquisition Promissory Note dated March 31, 1993 payable to Cendent
Associates Limited Partnership in the current outstanding amount of
$91,089.38.
2. Real Property Lease dated November 7, 1991, between Xxxxxx XYZ
Associates and Century Dental Centers I, P.C., as amended by Letter
Agreement dated March 24, 1993, by and among Xxxxxx XYZ Associates,
Century Dental Center I, P.C. and Princeton Medical Management
Northeast, Inc. and as assigned to Princeton Medical Management
Northeast, Inc. on March 31, 1993.
3. Independent Contractor Agreement originally dated March 31, 1993, and
as amended July 1, 1993 and December 2, 1994 and as extended on
December 7, 1995 and as amended May 19, 1997 by and between Princeton
Medical Management Northeast, Inc., Century Dental Center I, P.C. and
Xxxxxxxx Xxxx, D.D.S.
4. Independent Contractor Agreement by and between Xx. Xxxxxx X. Xxxxxx
and Century Dental Center, P.C.
5. Independent Contractor Agreement by and between Xxxxxxx X. Xxxxxxx,
D.M.D. and Century Dental Center, P.C.
6. Provider Source Contracts listed in Exhibit B, number 11.
48
Schedule III
CONTINGENT PAYMENTS
The Target 100% net operating revenues and Contingent Payments
are as follows:
(1) Contingent Period Ending May 31, 1997:
Target 100% net operating
revenues $500,000
Target 100% Contingent Payments $ 90,000
(2) Contingent Period Ending May 31, 1998:
Target 100% net operating
revenues $550,000
Target 100% Contingent Payments $ 50,000
The aggregate amount of the Contingent Payments payable to the
Seller shall be determined by multiplying the Target 100% Contingent Payments
for the applicable Contingent Period by the Contingent Multiplier (as
hereinafter defined) for such Contingent Period.
The "Contingent Multiplier" shall be equal to the lesser of
(i) 100%, and (ii) a fraction, expressed as a percentage, the numerator of which
shall be the net operating revenues of the Company for the applicable Contingent
Period calculated in accordance with Sections I(D) and (E) and the denominator
of which shall be the "Target 100% net operating revenues" set forth above for
such Contingent Period.
Notwithstanding anything else in this Agreement to the
contrary, the Purchaser shall have no obligation to make the Contingent Payments
provided for in Section I(D) with respect to any Contingent Period if the net
operating revenues of the Company are less than 90% of the Contingent Target
100% therefor for any such Contingent Period. The maximum Contingent Payments
for any Contingent Period shall be 100% of the Target 100% Contingent Payments
for such Contingent Period.
49
Schedule IV
ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated to the Assets in accordance with
the following:
1. to fixed assets at their fair market value;
2. to accounts receivable at their net collectible value;
3. to cash in an amount equal to the aggregate amount thereof;
and
4. remainder to goodwill.
50
EXHIBIT B
CERTAIN CONSENTS, LIENS,
CONTRACTS, PERMITS AND OTHER MATTERS
1. Required Consents.
All Contracts or Leases marked with an asterisk in Sections (2) and (5)
require a prior written consent for assignment.
2. Real Property.
(a) Owned:
(b) Leased:
(1) Lessor: Xxxxxx XYZ Associates
Lessee: Century Dental Centers I,
P.C., assigned to Princeton
Medical Management Northeast,
Inc. by Letter Agreement dated
March 24, 1993
Date: November 7, 1991, as amended
Xxxxx 00, 0000
Xxxx: 10 Years plus options
Premises: 000 Xxxxx Xxxxx Xxxx,
Xxxxxxxxxxx, XX
Square Feet: 2820
Rental
(Annual):
Year Base Operating Total
---- ---- --------- -----
1992 $59,246 $4,005 $63,431
1993-1994 $54,990 $4,005 $58,995
1995-1997 $62,040 $4,005 $66,045
1998-2001 $64,155 XXX XXX
Assignment: Not assignable without prior written
consent of lessor, which may not be
unreasonably withheld or delayed. Sale
of 51% of the value of the assets of
lessee is deemed an assignment.
Options are not assignable. Request
for approval of assignment requires
$500 processing fee except first
request does not.
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2
3. Liens.
==================================================================================================================
Debtor Secured Collateral Date filed No./Jurisdiction
Party
------------------------------------------------------------------------------------------------------------------
Century Dental Centers I, First Executive Bank Blanket lien on assets Date filed: 1/6/92
P.C. File No.: 92-51
Jurisdiction: Delaware
County, PA
Continuation
filed: 8/16/96
File No.: 96-202001
------------------------------------------------------------------------------------------------------------------
Century Dental Centers, First Executive Bank Oral Scan Computer Date filed: 6/16/92
P.C. Imaging System File No.: 92-1465
Continuation
filed: 8/16/96
File No.: 96-202002
------------------------------------------------------------------------------------------------------------------
Xxxxxxxx Xxxxx Xxxx United States All property and rights Federal Tax Liens
Century Dental Centers
(1) Lien No.: 403521
Lien Date: 12/18/92
Amount: $100,723.84
(2) Lien No.: 403522
Lien Date: 12/18/92
Amount: $5,622.63
(3) Lien No.: 404354
Lien Date: 7/22/93
Amount: $5,819.48
(4) Lien No.: 404817
Lien Date: 1/11/94
Amount: $42,675.48
(5) Lien No.: 404818
Lien Date: 1/11/94
Amount: $84,362.65
------------------------------------------------------------------------------------------------------------------
Princeton Medical Century Dental Center I, Blanket lien on assets Date filed: 4/6/93
Management Northeast, P.C. File No.: 93-708
Inc. Cendent Associates Jurisdiction: Delaware
Limited Partnership County, PA
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Princeton Medical Century Dental Center I, Blanket lien on assets Date filed: 4/6/93
Management Northeast, P.C. File No.: 21811616
Inc. Jurisdiction: State of Delaware
==================================================================================================================
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4. Litigation.
(a) Xx. Xxxxxxxx X. Xxxx d/b/a Century Dental
Centers I & II v. United States
Case No.: 93-CV-5877
Filed: 11/5/93, E.D.P.A.
Status: Judgment in favor of United States in
the amount of $250,000 entered
7/11/96
(b) Century Dental Centers Inc. x. Xxxx Telephone
PA
Case No.: 91-018028
Filed: 11/27/91, Delaware Common Pleas
Court, PA
Status: Award of arbitrators entered in favor of
Xxxx Telephone in the amount of
$7,000 on counterclaim. Order to
satisfy award filed 5/7/93.
(c) Century Dental Centers v. Xxxxxxx Xxxxx
Case No.: 95-050061
Filed: 0/0/00, Xxxxxxxx Xxxxxx Xxxxx
Xxxxx, XX
Status: Release executed by Xxxxxxx Xxxxx on
June 20, 1996
5. Contracts.
(a) Independent Contractor Agreement by and between Xx. Xxxxxx
X. Xxxxxx and Century Dental Centers for an open-ended
term with 180 days written notice required for
termination.
(b) Independent Contractor Agreement by and between Century
Dental Centers, P.C. and Xxxxxxx X. Xxxxxxx, D.M.D.
effective August 2, 1995 for one year term; automatically
renewed for successive one year periods, unless terminated
upon 30 days written notice.
(c) Independent Contractor Agreement originally dated March
31, 1993, and as amended July 1, 1993 and December 2, 1994
and as extended on December 7, 1995 and May 15, 1997 by
and between Princeton Medical Management Northeast, Inc.,
Century Dental Center I, P.C. and Xxxxxxxx Xxxx, D.D.S.
Not assignable by
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Century without Princeton's prior written approval.
Princeton may assign its interest to a purchaser of the
dental practice without Century's prior written consent.
(d) Security Agreement and Collateral Assignment of Lease
dated as of March 31, 1993 by and between Princeton
Medical Management Northeast, Century Dental Centers I,
P.C. and Cendent Associates Limited Partnership
(e) Guaranty dated as of March 31, 1993 by and between
Princeton Dental Management Corporation and Century Dental
Centers I, P.C., Cendent Associates Limited Partnership,
and Xxxxxxxx Xxxx
(f) Revolving Sales Agreement dated December 29, 1995 by and
between Norwest Financial CDC and Century Dental Center
6. Loans.
7. Insurance.
Insured Carrier Coverage Policy No.
------- ------- -------- ----------
Century Dental Centers State Workmen's Insurance Workers' 03611065
Fund Compensation
Princeton Medical St. Xxxx Fire & Marine Professional FK06402164/
Management Northeast Insurance Company Office/ FK06401861
Commercial
General
Liability
8. Vehicles.
9. Promissory Notes
(a) Note payable to Century Dental Centers I, P.C.
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(b) Note payable to Cendent Associates Limited Partnership
10. Computer Software Matters
11. Provider Source Contracts
1. Between Insurance Dentists of America and Xxxxxxxx Xxxx, and between
IDOA and Xxxxx Xxxxxxxxx, approved November 22, 1994. Either party has
right to terminate for any reason upon 60 days written notice to the
other. Either party may terminate for cause upon 15 days prior written
notice. Agreement may not be assigned by Dentist without prior written
consent of IDOA.
2. Between The Guardian and Xxxxxxxx Xxxx, approved November 23, 1994,
and between The Guardian and Xxxxx Xxxxxxxxx, approved January 5,
1995. One year term from the date contract was signed. Renewed
automatically for subsequent 12 month periods unless terminated by
either party. Either party may terminate for cause if violation of the
Agreement is not remedied within 30 days. Either party may terminate
without cause by giving written notice to the other party at least 30
days prior to date of termination. Dentist may not assign without the
prior written consent of The Guardian.
3. Between Prudential Dental Network and Century Dental Center (Xxxxxx
Xxxxxx and Xxxxx Xxxxxxxxx as participating providers) effective
January 3, 1994. May be terminated without cause by either party by
giving 30 days written notice.
4. United Concordia Site Application completed by Xxxxxxxx Xxxx and
Provider Credential Applications completed by Xxxxx Xxxxxxxxx, Xxxxxx
Xxxxxx, Xxxxxxx Xxxxxxx.
5. Primary Dentist Agreement between U.S. Healthcare, Dental Plan, Inc.
("Dental Plan") and Xxxxxxx Xxxxxxx. May be terminated by
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either party by written notice given at least 90 days in advance of
such termination. May not be assigned without the written consent of
Dental Plan.
6. Specialist Dental Agreement between U.S. Healthcare Dental Plans, Inc.
("Dental Plans") and Xx. Xxxxxxxxx effective July 26, 1994. Continues
in effect unless terminated by either party upon 90 days written
notice. May not be assigned without the written consent of Dental
Plans.
7. Primary Dentist Agreement plus addendum between Health Maintenance
Organization of Pennsylvania, Inc. ("HMO") and Xx. Xxxxxx X. Xxxxxx.
May be terminated by either party by written notice given at least 90
days in advance of such termination. May not be assigned without the
written consent of HMO.
8. Primary Dentist Agreement between U.S. Healthcare, Dental Plan, Inc.
("Dental Plan") and Xx. Xxxxxx X. Xxxxxx. May be terminated by either
party by written notice given at least 90 days in advance of such
termination. May not be assigned without the written consent of Dental
Plan.
9. Primary Dentist Agreement plus Addendum between Health Maintenance
Organization of Pennsylvania, Inc. ("HMO") and Dr. Xxxxxxxx Xxxx. May
be terminated by either party by written notice given at least 90 days
in advance of such termination. May not be assigned without the
written consent of HMO.
10. Primary Dentist Agreement between U.S. Healthcare, Dental Plan, Inc.
("Dental Plan") and Dr. Xxxxxxxx Xxxx. May be terminated by either
party by written notice given at least 90 days in advance of such
termination. May not be assigned without the written consent of Dental
Plan.
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11. Primary Dentist Agreement plus addendum between Health Maintenance
Organization of Pennsylvania, Inc. and Dr. Xxxxxxx Xxxxxxx. May be
terminated by either party by written notice given at least 90 days in
advance of such termination. May not be assigned without the written
consent of HMO.
12. Independent Dentist Listing Agreement dated December 2, 1994 between
Dental Directory Services, Inc. ("DDS") and Xxxxxxxx Xxxx. May be
terminated by either party upon not less than 60 days prior written
notice. May not be assigned without prior written consent of DDS.
13. Independent Dentist Listing Agreement dated December 2, 1994 between
Dental Directory Services, Inc. ("DDS") and Xxxxx Xxxxxxxxx. May be
terminated by either party upon not less than 60 days prior written
notice. May not be assigned without prior written consent of DDS.
14. Independent Dentist Listing Agreement dated December 2, 1994 between
Dental Directory Services, Inc. ("DDS") and Xxxxxx X. Xxxxxx. May be
terminated by either party upon not less than 60 days prior written
notice. May not be assigned without prior written consent of DDS.
15. Provider Agreement between Countrywide Dental Program and Xxxxxxxx
Xxxx. In effect for 1 year and then automatically renewed subject to
cancellation by either party without cause upon 60 days written
notice. May not be assigned without prior written consent.
16. Dental Care Agreement dated October 12, 1995 between xxx Xxxxxxxxxx'
Benefit Fund Dental Plan and Xxxxxx X. Xxxxxx. Withdrawal from the
Agreement must be made in writing within 30 days notice.
17. Dental Care Agreement dated October 12, 1995 between xxx Xxxxxxxxxx'
Benefit Fund Dental Plan and Xxxxxxxx Xxxx. Withdrawal from the
Agreement must be made in writing within 30 days notice of
termination.
18. Dental Care Agreement dated September 13, 1994
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between Xx. Xxxxx X. Xxxxxx, Xx. Xxxx Xxxxxx, Dr. Xxxxxxxx Xxxx, and
Xx. Xxxxxx Xxxxxx and xxx Xxxxxxxxxx Health and Welfare Fund.
Withdrawal from the Agreement must be made in writing within 30 days
notice of termination.
19. Agreement and Amendment dated September 6, 1994 between Blue Cross and
Blue Shield of New Jersey, Inc. and Xx. Xxxxxx Xxxxxx. May be
cancelled by giving 30 days notice.
20. Agreement and Amendment dated September 6, 1994 between Blue Cross and
Blue Shield of New Jersey, Inc. and Xxxxxxxx Xxxx. May be cancelled by
giving 30 days notice.
21. Agreement and Amendment dated September 6, 1994 between Blue Cross and
Blue Shield of New Jersey, Inc. and Xxxxx Xxxxxxxxx.
12. Business Locations.
(a) 000 Xxxxx Xxxxx Xxxx
Xxxxxxxxxxx, XX
58
EXHIBIT C
FINANCIAL STATEMENTS
See attached.
59
EXHIBIT D
CERTAIN EMPLOYEES OF THE BUSINESS
1. Employees and Independent Contractors of the Business earning in excess of
$35,000 per year:
Annual Salary/
Employee Name Employee Type Date of Hire Compensation
Xxxxxxxx Xxxx, D.D.S. Dentist 6/96 30% of collections
plus $18,000
Quality Control
Services plus 20%
of quarterly
operating profits
up to $30,000 and
25% of quarterly
operating profits
greater than
$30,000*
Xxxxxxx X. Xxxxxxx, D.M.D. Dentist 8/9/95 20% of Net
Production
Xxxxxx X. Xxxxxx, D.D.S. Dentist 7/18/89 20% of Gross
Production or
60
Annual Salary/
Employee Name Employee Type Date of Hire Compensation
$25/hour which ever
is greater
Dr. Xxxxx Xxxxxxx Oral Surgeon 40% of Net
Production
Dr. Xx Xxxxxxxxx Periodontist 4/1/93 60% of TMJ
production
50% of periodontal
net production
*Bonus is disputed by the Seller
2. Increases in compensation since March 31, 1997:
See attached.
3. Agreements between the Business and employees.
None.
4. Employees entitled to more than three weeks vacation during the current
calendar year:
See attached.
5. Bonuses granted to employees which have not yet been paid in full:
None.
6. Terminated Employees:
None.
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EXHIBIT E
EMPLOYEE BENEFIT PLANS
1. Princeton Dental Management Corporation 401(K) Plan (Plan #001) (effective
7/1/94)
2. Princeton Dental Management Corporation Employee Benefit Plan (Group Health
Plan)
62
EXHIBIT F
INTELLECTUAL PROPERTY RIGHTS
1. The name "Century Dental".
63
EXHIBIT G
BANK ACCOUNTS
Persons with
Bank Account No. Type of Account Signature Authority
---- ----------- --------------- -------------------
PNC Bank 00-0000-0000 Business Checking Xxxxxxxx Xxxx, D.D.S.,
Xxxxxxx Xxxxxxxxx and
Xxx Xxxxxxx
Xxxxxx Bank NA 0-000-000 Business Checking
First of America 00-0000000-0 Business Checking Xxxxxxxx Xxxx, D.D.S.,
Xxxxxxxx Xxxxxxx
and Xxx Xxxxxxx
