Exhibit 2.2
Asset Purchase Agreement by and among Dental Resources, Inc. and Dental Assets
Acquisition, Inc., Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxxx
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of August
10, 2001 (the "Effective Date"), is made by and among DENTAL RESOURCES, INC., a
Minnesota corporation ("Dental"), DENTAL ASSETS ACQUISITION, INC., a Minnesota
corporation ("DAA"), and XXXXXXX X. XXXXXX, XXXXXXX X. XXXXXX and XXXXX X.
XXXXXXX, all of them individual residents of Minnesota (collectively referred to
herein as the "Shareholders").
RECITALS:
WHEREAS, Xxxxxxx X. Xxxxxx currently is the President and Chief
Executive Officer of Dental, Xxxxxxx X. Xxxxxx currently is the Vice President
of Dental, and Xxxxx X. Xxxxxxx currently is the Vice President and Chief
Financial Officer of Dental; and
WHEREAS, Dental desires to sell and assign to DAA, and DAA desires to
purchase and assume from Dental, on the terms and subject to the conditions set
forth in this Agreement, substantially all of the assets and liabilities of
Dental that are primarily used in conjunction with or related to Dental's
business (the "Business") as operated by Dental on or before the merger of
Apollo Diamond, Inc. with and into Dental (the "Merger").
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements and the conditions set forth in this
Agreement, the parties hereto hereby agree as follows:
ARTICLE 1
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
1.1 Transfer of Assets. On the terms and subject to the conditions set
forth in this Agreement, Dental shall, at the "Closing" (as defined in Section
3.1 hereof), sell, transfer and assign to DAA, and DAA shall purchase and
acquire from Dental, all of Dental's right, title and interest, as of the
"Closing Date" (as defined in Section 3.1 hereof), in and to the following
assets of Dental, all of which are related to or used in conjunction with the
Business (collectively, the " Assets"):
(a) All of the equipment, machinery, furniture, fixtures, leasehold
improvements and other tangible assets used by Dental in conjunction with the
Business on the Effective Date, and any addition made thereto in the ordinary
course of the Business prior to the Closing Date;
(b) Dental's interest as lessee in all real property leases to which
Dental is a party and which are listed on Schedule 1.1(b) attached hereto;
(c) Dental's interest in all personal property leases to which Dental
is a party and which are identified in Schedule 1.1(c) hereto;
(d) All of Dental's inventories of (i) finished goods and
work-in-process, (ii) supplies and raw materials, (iii) Dental's interest, to
the extent assignable, in all orders or contracts for the purchase of such
supplies and raw materials and (iv) fuels, cleaning supplies and other
miscellaneous items primarily used in the maintenance or operation of the
Business ("Non-Product Supplies") (collectively, the "Inventory Assets");
(e) All cash, cash equivalents, accounts or notes receivable owing to
Dental as of the Closing Date;
(f) All contracts and agreements of Dental that were entered into by
Dental in the ordinary course of the Business, to the extent such contracts and
agreements are assignable;
(g) All registered and unregistered patents, trademarks, service marks,
logos, trade names (including the trade name "Dental Resources"), trade dress
and all other trademark rights, copyrights, trade secrets, know-how, recipes,
and product specifications used in the Business, and all registrations for, and
applications for registration of, any of the foregoing ("Intellectual
Property"), including, but not limited to the Intellectual Property listed on
Schedule 1.1(g), together with all of Dental's rights to use the foregoing and
all other rights of Dental in, to and under the foregoing in all countries;
(h) All of Dental's books, records and other documents and information
relating to the Business, including, without limitation, all customer, prospect,
dealer and distributor lists, sales literature, inventory records, purchase
orders and invoices, sales orders and sales order log books, customer
information, commission records, correspondence, employee personnel records,
product data, price lists, product demonstrations, quotes and bids and all
product catalogs and brochures, provided, that books, records and other
documents and information are excluded if they are related primarily to
Liabilities (as defined in Section 1.4) of Dental which are not within the
Assumed Liabilities);
(i) All permits, licenses and other governmental approvals held by
Dental related exclusively to the Assets or the Business, to the extent they are
assignable;
(j) Goodwill (including all goodwill associated with and symbolized by
the trademarks, brand names and logos identified in subsection (g) above as used
as a trademark or service xxxx, logo or corporate name used in the conduct of
the Business as now conducted) and all related intangibles which Dental uses
exclusively in the conduct of the Business; and
(k) All prepaid expenses (including, without limitation, prepaid lease
payments), deposits, rights to receive refunds, and similar claims of Dental
related primarily to the Business.
1.2 Excluded Assets. Notwithstanding the terms of Section 1.1, the
following assets shall be retained by Dental and shall not be sold, transferred
or assigned to DAA in connection with the purchase of the Assets:
(a) All corporate certificates of authority and corporate minute books
and the corporate stock record or register of Dental; and
(b) Any claims, causes of action, or other rights related to those
liabilities or obligations of Dental which are not assumed by DAA.
1.3 Assumption of Liabilities. As of the Closing Date and subject to
Section 1.4 below, DAA shall assume and agree to pay, perform or otherwise
satisfy in accordance with their terms, and to indemnify and hold Dental
harmless from and against, any obligation or liability that Dental has incurred
on or before the Closing Date, including, but not limited to, all of the
following obligations or liabilities (the "Assumed Liabilities"): (i) Dental's
obligations to be performed or satisfied on or after the Closing Date under the
leases, agreements, contracts, arrangements and licenses assigned to DAA
pursuant to Section 1.01 hereof, and (ii) Dental's accounts payable and accrual
balances related to the Business incurred in the ordinary course of business
prior to the Closing Date.
1.4 Excluded Liabilities. DAA shall not assume any of the liabilities
listed on Schedule 1.4 ("Excluded Liabilities").
ARTICLE 2
PURCHASE PRICE
2.1 Amount. The consideration given by DAA for the Assets shall consist
of
(a) DAA's assumption of the Assumed Liabilities pursuant to Section
1.3, plus
(b) a cash payment in the amount of Five Hundred Thousand Dollars
($500,000), reduced by any payments made by Dental on Excluded Liabilities on or
before the Closing Date, plus
(c) a limited recourse promissory note (the "Promissory Note") in the
principal amount of Five Hundred Seven Thousand Four Hundred Fifty Dollars
($507,450) in substantially the same form as the promissory note attached hereto
as Exhibit A.
2.2 Manner of Payment. On the Closing Date, DAA shall deliver to Dental
(a) the executed Assignment and Assumption (as defined in Section 3.2);
(b) by wire transfer (in accordance with appropriate wire transfer
instructions previously delivered by Dental to DAA), or in the form of a cashier
check or in any other form as agreed to between the parties, the cash payment
payable pursuant to Section 2.1(b), and
(b) the executed Promissory Note.
2.3 Transfer Taxes and Other Closing Costs. DAA shall pay any and all
sales, use, transfer, deed or excise taxes that shall become due and payable as
a result of the sale of the Assets as contemplated under Section 1.1, including
any sales tax assessed by governmental authorities after filing of the
applicable sales tax return or returns. DAA shall file all sales or use tax
returns and pay to the appropriate taxing authority all such tax as is required
by law to be paid in connection herewith.
2.4 Allocation of Purchase Price. At least five (5) days prior to the
Closing, DAA shall prepare an allocation of the Purchase Price among the Assets
in accordance with, and comply in all material respects with the requirements
of, Section 1060 of the Internal Revenue Code and the applicable regulations
thereunder, which allocation shall be subject to approval by Dental prior to
Closing, which approval shall not be withheld unreasonably. Dental and DAA shall
file all federal, state, and local returns and tax information on a basis that
is consistent with the allocation so agreed upon by the parties and shall
execute such other documents as may be reasonably necessary with respect to such
allocation.
ARTICLE 3
CLOSING
3.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing")
will take place at the offices of Xxxxxxxxxx & Xxxxx, P.A., 1100 International
Centre, 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx at 1 p.m., Minneapolis
time, on or before January 31, 2002, or at such other place and on such other
date as is mutually agreed upon by the parties. The date on which the Closing
occurs is referred to herein as the "Closing Date."
3.2 General Procedure. At the Closing, each party shall deliver to the
party entitled to receipt thereof the documents required to be delivered
pursuant to Article 7 hereof and such other documents, instruments and materials
(or complete and accurate copies thereof, where appropriate) as may be
reasonably required in order to effectuate the intent and provisions of this
Agreement, and all such documents, instruments and materials shall be
satisfactory in form and substance to counsel for the receiving party. The
conveyance, transfer, assignment and delivery of the Assets to DAA shall be
effected by Dental's execution and delivery of a xxxx of sale, substantially in
the form attached hereto as Exhibit B (the "Xxxx of Sale"), the assignment and
assumption of the Assumed Liabilities of Dental to DAA shall be effected by the
parties' execution and delivery of an assignment and assumption agreement,
substantially in the form attached hereto as Exhibit C (the "Assignment and
Assumption"), and such other instruments of conveyance, transfer, assignment and
delivery as DAA or Dental shall reasonably request to cause Dental to transfer,
convey, assign and deliver the Assets and Assumed Liabilities to DAA.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF DENTAL
Dental hereby represents and warrants to DAA as follows:
4.1 Organization and Qualification. Dental is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has all necessary corporate power, authority and authorizations to
operate the Business as presently conducted and to own its properties.
4.2 Authority and Consent. The execution, delivery and performance of
this Agreement by Dental and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the requisite corporate action
of Dental, and no other corporate proceedings on its part are necessary to
authorize the execution, delivery or performance of this Agreement.
4.3 Binding Obligation. This Agreement has been duly executed and
delivered by Dental and, assuming that this Agreement is the valid and binding
agreement of DAA, constitutes the valid and binding obligation of Dental,
enforceable in accordance with its terms.
4.4 Title and Condition of Assets. Dental makes no representations or
warranties regarding the existence or condition of the Assets or the status of
Dental's title in the Assets. Dental's entire right, title and interest in the
Assets is being transferred on an "AS IS, WHERE IS" basis, with any and all
faults. DENTAL MAKES NO WARRANTY OR REPRESENTATION AS TO SIZE, KIND, NUMBER,
MERCHANTABILITY, DESCRIPTION, CONDITION OR FITNESS FOR ANY PURPOSE OF ANY OF THE
ASSETS. DAA AGREES TO ACCEPT THE ASSETS IN AN "AS IS" CONDITION WITH ANY AND ALL
FAULTS.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF DAA AND THE SHAREHOLDERS
DAA and the Shareholders, jointly and severally, represent and warrant
to Dental as follows:
5.1 Incorporation and Corporate Power. DAA is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota, and has the necessary corporate power, authority and authorizations
to enter into this Agreement and perform its obligations hereunder. True and
complete copies of DAA's articles of incorporation, bylaws and any other
agreements and documents, if any, relating to the incorporation and structure of
DAA have been delivered to Dental.
5.2 Authority and Consent. The execution, delivery and performance of
this Agreement by DAA and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the requisite corporate action
of DAA, and no other corporate proceedings on its part are necessary to
authorize the execution, delivery or performance of this Agreement.
5.3 Binding Obligation. This Agreement has been duly executed and
delivered by DAA and, assuming that this Agreement is the valid and binding
agreement of Dental, constitutes the valid and binding obligation of DAA,
enforceable in accordance with its terms.
ARTICLE 6
OTHER COVENANTS AND AGREEMENTS
6.1 Conduct of the Business. In connection with the ownership and use
of the Assets, Dental agrees to observe each term set forth in this Section 6.1
and agrees that, from the date hereof until the Closing Date, unless otherwise
consented to by DAA in writing:
(a) Dental shall operate the Business and maintain the Assets only in
the ordinary course of the Business as presently conducted by Dental, in
accordance in all material respects with Dental's past custom and practice;
(b) Dental shall not, directly or indirectly, sell, pledge, dispose of
or encumber any of the Assets, except in the ordinary course of the operation of
the Business by Dental; and
(c) Dental shall not cancel or terminate its current insurance
policies, or cause any of the coverage thereunder to lapse unless,
simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage equal to or greater than the coverage under the
canceled, terminated or lapsed policies for substantially similar premiums are
in full force and effect.
6.2 Consents of Third Parties. DAA shall be responsible for obtaining
the consent of any necessary third persons or agencies to the assignment and
transfer to DAA of the Assets and Assumed Liabilities to be assigned, assumed
and transferred under the terms of this Agreement; provided, that Dental shall
cooperate in DAA's efforts to obtain such consents as necessary. DAA shall use
its best efforts to obtain such consents; provided, that until such consents are
obtained, Dental and DAA shall administer such Assets and Assumed Liabilities
for the benefit and at the expense of DAA as though such Assets and Assumed
Liabilities had been assigned to and assumed by DAA.
6.3 The Shareholders' Employment. The Shareholders acknowledge that
their employment with Dental will be terminated, and their employment contracts
with Dental will be assigned to DAA, effective as of the Closing Date. The
Shareholders acknowledge that Dental has no obligation to the Shareholders after
the Closing arising out of the Shareholders' prior employment with Dental or the
termination thereof, including any obligations with respect to severance
payments, accrued vacation, or otherwise, but except any rights of the
Shareholders existing at the time of Closing under existing employee benefit
plans of Dental. The Shareholders hereby release and forever discharge Dental,
and Dental hereby releases and forever discharges the Shareholders, from any and
all present or future claims, whether known or unknown, arising
out of the Shareholders' employment with Dental or their services to Dental as
director and/or officer or the termination of such employment and such services.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to DAA's Obligations. The obligation of DAA to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties of Dental set forth in Article 4
hereof shall be true and correct in all material respects at and as of the
Closing Date as though then made and as though the Closing Date had been
substituted for the date of this Agreement throughout such representations and
warranties, except that any such representation or warranty made as of a
specified date (other than the date hereof) shall only need to have been true on
and as of such date;
(b) Dental shall have performed in all material respects all of the
covenants and agreements required to be performed and complied with by it under
this Agreement prior to the Closing;
(c) Oakley Bank, N.A. ("Oakley"), shall have agreed to enter with DAA
into a loan agreement with customary terms and conditions, providing to DAA the
funds necessary to make the cash payment described in Section 2.1(b), and Oakley
shall have given any consent necessary under any agreement between Oakley,
Dental and/or the Shareholders or a business entity formed by all or some of the
Shareholders, respectively;
(d) Dental's shareholders shall have approved the sale of the Assets
pursuant to the terms and conditions of this Agreement;
(e) No litigation shall have been commenced in connection with the
Merger and this Asset Purchase Agreement, and
(f) On the Closing Date, Dental shall have delivered to DAA all of the
following:
(i) the Xxxx of Sale executed by Dental and such other instruments
of conveyance, transfer, assignment and delivery as DAA shall have reasonably
requested pursuant to Section 3.2 hereof;
(ii) the Assignment and Assumption executed by Dental;
(iii) a copy of the text of the resolutions adopted by the Board
of Directors of Dental and its special committee authorizing the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement, along with a certificate, executed
on behalf of Dental by its corporate secretary, certifying to DAA that such copy
is a true and complete copy of such resolutions, and that such resolutions were
duly adopted and have not been amended or rescinded;
(iv) an opinion of Xxxxxxxxxx & Xxxxx, P.A., counsel for Dental,
dated as of the Closing Date in form and scope satisfactory to DAA and its
counsel, substantially as follows:
(x) Dental is a corporation duly organized, validly existing and in good
standing under the laws of the State of Minnesota and has all necessary
corporate power, authority and authorizations to operate the Business as
presently conducted and to own its properties;
(y) The execution, delivery and performance of this Agreement by Dental and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the requisite corporate action of Dental, and no other corporate
proceedings on its part are necessary to authorize the execution, delivery or
performance of this Agreement; and
(z) This Agreement has been duly executed and delivered by Dental and, assuming
that this Agreement is the valid and binding agreement of DAA, constitutes the
valid and binding obligation of Dental, enforceable in accordance with its
terms; and
(v) such other certificates, documents and instruments as DAA
reasonably requests related to the transactions contemplated hereby.
7.2 Conditions to Dental's Obligations. The obligation of Dental to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties of DAA set forth in Article 5
hereof will be true and correct in all material respects at and as of the
Closing as though then made and as though the Closing Date had been substituted
for the date of this Agreement throughout such representations and warranties;
(b) DAA shall have performed in all material respects all the covenants
and agreements required to be performed by it under this Agreement prior to the
Closing;
(c) Dental's shareholders shall have approved the sale of the Assets
pursuant to the terms and conditions of this Agreement;
(d) No litigation shall have been commenced in connection with the
Merger and this Asset Purchase Agreement, and
(e) On the Closing Date, DAA will have delivered to Dental:
(i) a cash payment, in immediately available United States funds,
in the amount and in the form set forth in Section 2.2(a);
(ii) the Assignment and Assumption executed by DAA;
(iii) the Promissory Note;
(iv) a copy of the text of the resolutions adopted by the Board of
Governors of DAA authorizing the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement, along with a certificate, executed on behalf of DAA by its corporate
secretary, certifying to Dental that such copy is a true and complete copy of
such resolutions, and that such resolutions were duly adopted and have not been
amended or rescinded;
(v) an opinion of Xxxxxx and Xxxxxx, counsel for DAA and the
Shareholders, dated as of the Closing Date in form and scope satisfactory to
Dental and its counsel, substantially as follows:
(x) DAA is a corporation duly organized, validly existing and in good standing
under the laws of the State of Minnesota, and has the necessary corporate power,
authority and authorizations to enter into this Agreement and perform its
obligations hereunder; and
(y) The execution, delivery and performance of this Agreement by DAA and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the requisite corporate actions of DAA, and no other corporate
proceedings on its part are necessary to authorize the execution, delivery or
performance of this Agreement; and
(vi) such other certificates, documents and instruments as Dental
reasonably requests related to the transactions contemplated hereby.
(d) On the Closing Date, the Shareholders will have delivered to Dental
limited personal guarantees of the Promissory Note in substantially the form
attached hereto as Exhibit D.
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement shall terminate at any time prior to
the Closing upon the termination of the agreement underlying the Merger. This
Agreement may also be terminated at any time prior to the Closing (a) by the
mutual consent of DAA and Dental; or (b) by either DAA or Dental if the
transactions contemplated hereby have not been consummated by the end of
business on January 31, 2002.
8.2 Effect of Termination. In the event of termination of this
Agreement by either DAA or Dental as provided in Section 8.1, this Agreement
shall become void and there shall be no liability on the part of either DAA or
Dental, or their respective stockholders, officers, or directors.
ARTICLE 9
INDEMNIFICATION
9.1 Dental's Indemnity. Dental shall indemnify, defend and hold
harmless DAA against and in respect of all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, and deficiencies, including
attorneys fees but net of any insurance proceeds and tax benefits received by
DAA in connection therewith, that DAA may incur or suffer which result from any
breach of, or failure of Dental to perform, any of its representations,
warranties, covenants or agreements contained within this Agreement or on any
schedule, certificate, exhibit or other instrument furnished or to be furnished
by Dental under this Agreement.
9.2 DAA's Indemnity. DAA shall indemnify, defend and hold harmless
Dental against and in respect of all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, and deficiencies, including attorneys fees
but net of any insurance proceeds and tax benefits received by Dental in
connection therewith, that Dental may incur or suffer which result from (i) any
breach of, or failure of DAA to perform, any of their respective
representations, warranties, covenants or agreements contained within this
Agreement or on any schedule, certificate, exhibit or other instrument furnished
or to be furnished by DAA under this Agreement, or (ii) any liability or
obligation incurred by DAA after the Effective Date. There shall not be any
obligation of DAA pursuant to this Section 9.2 in regard to Excluded
Liabilities.
9.3 Notice of Indemnity. The party seeking indemnification under
Section 6.1 or 6.2 above (the "indemnified party") shall promptly notify the
party from whom indemnification is sought (the "indemnifying party") of the
existence of any claim, demand or other matter for which indemnification would
apply, and shall give the indemnifying party reasonable opportunity to defend
the same in its own name with counsel of its selection; provided that the
indemnified party shall, at all times, have the right to fully participate in
the defense at its own expense. If the indemnifying party shall, within a
reasonable time after notice, fail to
defend, the indemnified party shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle (exercising reasonable
business judgment) the claims or other matters. If the claim is one that cannot
be, by its nature, defended solely by the indemnifying party, then the
indemnified party shall make available all information and assistance that the
indemnifying party may reasonably request.
ARTICLE 10
EMPLOYEE MATTERS
10.1 Employment. As of the Closing, DAA shall offer each individual who
is full-time or part-time employed with Dental immediately prior to the Closing
("Employee") employment with DAA at a salary equal to such Employee's salary
immediately prior to the Closing and with benefits comparable to the benefits
Employee received from Dental immediately prior to the Closing. Effective as of
the Closing, DAA shall become the employer of and employ each Employee who
accepts such employment. At the Closing, DAA shall provide Dental with a list of
Employees who did not accept such employment, if any.
10.2 Employee Benefit Transition. Subject to the consent of Dental's
applicable insurers, DAA shall assume and continue the 401k-plan maintained by
Dental immediately prior to the Closing, and shall provide medical, dental,
disability and/or life insurance benefits similar to the benefits provided by
Dental immediately prior to the Closing. DAA and Dental shall cooperate in
terminating as of the Closing any benefit plan(s) that Dental chooses not to
continue after the Closing.
10.3 Compensation. Dental and DAA acknowledge and agree that all
Employees shall continue to be entitled to salary payments from Dental as well
as the benefits provided under Dental's benefit plans in respect of their
employment only up to and including the Closing Date.
ARTICLE 11
MISCELLANEOUS
11.1 Bulk Sales Laws. The parties hereby agree to waive compliance with
the provisions of all applicable bulk sales laws (if any are applicable).
11.2 Survival of Representations and Warranties. All representations,
warranties, agreements, covenants and obligations made or undertaken by the
parties in this Agreement or in any document or instrument executed and
delivered pursuant hereto shall survive the Closing hereunder and shall not
merge in the performance of any obligation by any party hereto.
11.3 Expenses. Each of the parties shall pay all costs and expenses
incurred or to be incurred by it in negotiating and preparing this Agreement and
in closing and carrying out the transaction contemplated by this Agreement.
11.4 Effect of Headings. The subject headings of the articles and
sections of this Agreement are included for purposes of convenience only, and
shall not affect the construction or interpretation of any of its provisions.
11.5 Entire Agreement; Modification; Waiver. This Agreement constitutes
the entire agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations, and understanding of the parties. No supplement, modification,
or amendment of this Agreement shall be binding unless executed in writing by
all the parties. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any
other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
11.6 Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.7 Notices. Any notice or other communication required or permitted
under this Agreement shall be in writing and shall be deemed to have been given
when received, if personally delivered or delivered by telegram, telex or
telecopy, or when deposited, if placed in the U.S. Mails for delivery by
registered or certified mail, return receipt requested, postage prepaid and
addressed to the appropriate party at the following addresses:
To Dental at: Dental Resources, Inc.
000 X Xxxxx Xxxxxx,
Xxxxxx, XX 00000
To DAA at: Dental Assets Acquisition, Inc.
XX Xxx 00
Xxxxxx, XX 00000
To the Shareholders at: c/o Dental Assets Acquisition, Inc.
XX Xxx 00
Xxxxxx, XX 00000
Addresses may be changed by written notice given pursuant to the provisions of
this paragraph; however, any such notice shall not be effective, if mailed,
until three (3) working days after depositing in the U.S. Mails or when actually
received, whichever occurs first.
11.8 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with the laws of the State of Minnesota including all
matters of construction, validity, enforcement and performance, without giving
effect to principles of conflict of laws.
11.9 Public Announcement. No press releases, announcements or other
disclosure related to this Agreement or the transactions contemplated herein
will be issued or made without the written approval of each of Dental and DAA,
except for any public disclosure which Dental or DAA in good faith believes is
required by law (in which case the disclosing party will consult with the party
prior to making such disclosure).
11.10 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their successors or
assigns, provided that, except as otherwise provided herein, the respective
rights and obligations of the parties may not be assigned without the written
consent of the parties hereto, which consent shall not be unreasonably withheld.
11.11 Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement or the alleged breach, termination or validity
hereof, including alleged fraud in the inducement, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. The proceedings shall be conducted in Minneapolis, Minnesota. In
any such proceedings, questions of substantive law shall be determined under the
laws of the State of Minnesota. The decision of the arbitrator shall be final
and shall be accorded full faith and credit and entitled to recognition and
enforcement by the courts of the United States and in the courts of all states.
The prevailing party in any such proceeding shall be entitled to recover
reasonable attorneys' fees and costs related to such proceeding from the
nonprevailing party.
11.12 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Asset
Purchase Agreement as of the day and year first above written.
DENTAL RESOURCES, INC.
By:
--------------------------
Its:
--------------------------
DENTAL ASSETS ACQUISITION, INC.
By:
---------------------------
Its:
--------------------------
SHAREHOLDERS:
-------------------------------
Xxxxxxx X. Xxxxxx.
-------------------------------
Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
Exhibits and Schedules:
Exhibit A Limited Recourse Note
Exhibit B Xxxx of Sale
Exhibit C Assignment and Assumption Agreement
Exhibit D Form of Limited Personal Guarantee
Schedules
Exhibit A
$507,450 __________, 2001 ("Issuance Date")
Minneapolis, Minnesota
LIMITED RECOURSE NOTE
For good and valuable consideration, the receipt of which is hereby
acknowledged, the undersigned, Dental Assets Acquisition, Inc., a Minnesota
corporation ("DAA"), agrees to pay to the order of Dental Resource, Inc.
("Dental"), or its registered assign ("Holder") at 000 X Xxxxx Xxxxxx, Xxxxxx,
XX 00000 or such other address provided to DAA by written notice from Holder,
the principal amount of up to Five Hundred Seven Thousand Four Hundred Fifty
Dollars ($507,450) (the "Principal Amount"), with interest accruing at an
interest rate of Five and One Half percent (5.5%) per annum from the date hereof
until this Note is paid in full, upon the terms and conditions specified below.
This Note is made in connection with that certain Asset Purchase Agreement dated
August 10, 2001, between Dental, DAA and Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx,
and Xxxxx X. Xxxxxxx (collectively referred to herein as the "Shareholders").
Payment of this Note is secured by limited personal guarantees of each of the
Shareholders, dated , 200 and attached hereto as Exhibit A.
1. Payment / Limited Recourse. On each anniversary of the Issuance Date
(or, if such anniversary is a holiday, Saturday or Sunday, on the following
business day) (the "Anniversary"), commencing on the first (1st) Anniversary and
ending on the fifth (5th) Anniversary, this Note shall be repaid in cash in five
(5) equal installments (the "Installments"), each Installment being equal and
limited to the lesser of (a) one fifth of the Principal Amount, plus all
interest accrued on the outstanding Principal Amount as of the time of payment
(the "Maximum Installment"), or (b) the value of the Sales Proceeds (as defined
in Section 4 below) from a sale of Twenty Nine Thousand Seven Hundred Forty Five
(29,745) shares of Dental common stock (the "Shares"), such amount being subject
to adjustment for stock splits or similar adjustments.
2. Prepayment. This Note may be prepaid at any time by paying to Dental
all Maximum Installments still outstanding.
3. Event of Default. All Installments outstanding shall, at the option
of Dental, become immediately due and payable upon the occurrence of any of the
following events (whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or otherwise) (individually an
"Event of Default"):
(a) if any creditor of DAA commences any foreclosure, levy, attachment
or other action or proceeding to enforce or collect a judgment owed by DAA which
is not contested in good faith, and such action or proceeding is not terminated
by DAA within fifteen (15) days through the satisfaction of the underlying
judgment; or
(b) if DAA makes an assignment for the benefit of creditors; or
(c) if any order, judgment, or decree is entered adjudicating DAA
bankrupt or insolvent; or
(d) if DAA petitions or applies to any tribunal for the appointment of
a trustee, receiver, or liquidator of DAA, or commences any proceedings relating
to DAA under any bankruptcy, reorganization, insolvency, dissolution, or
liquidation law of any jurisdiction, whether now or hereafter in effect; or
(e) if an order, judgment, or decree is entered appointing any such
trustee, receiver, or liquidator,
or approving the petition in any such proceedings, and such order, judgment, or
decree remains unstayed and in effect for more than 30 days; or
(f) if any order, judgment, or decree is entered in any proceedings
against DAA decreeing the dissolution of DAA and such order, judgment, or decree
remains unstayed and in effect for more than 30 days; or
(g) if DAA fails to pay any amount due under this Note within thirty
(30) calendar days and one or all of the Guarantors do not fulfill their
obligations under the limited personal guarantees with regard to such amount
due.
DAA shall immediately notify Dental or Holder of the occurrence of any
Event of Default of the Note described in subparagraphs (a) to (f). Upon the
occurrence of any Event of Default, DAA's liability shall be limited to the
value of the Sales Proceeds for the Shares for each Installment still
outstanding.
4. Sales Proceeds. "Sales Proceeds" mean:
(a) if the Shares are offered and sold to the public in the open market
through broker(s) and/or market maker(s): the fair market value of the Shares.
The fair market value of the Shares shall be its "market price", calculated for
purposes of Section 1 as of the date fifteen (15) calendar days prior to the
Anniversary and for purposes of Section 3 as of the date of the occurrence of
the Event of Default, respectively (the "Sale Date"), as follows:
(i) if Dental's common stock is listed on the Nasdaq National Market, Nasdaq
SmallCap Market, or an established stock exchange, then the average of the
prices of such stock at the close of the regular trading session of such market
or exchange for the ten (10) business days immediately preceding the Sale Date,
or (ii) if Dental's common stock is not so listed on the Nasdaq National Market,
Nasdaq SmallCap Market, or an established stock exchange, then the average of
the closing "bid" prices quoted by the OTC Bulletin Board, the National
Quotation Bureau, or any comparable reporting service for the ten (10) business
days immediately preceding the Sale Date; or
(b) if the Shares are sold in a private placement, the proceeds from such sale.
The Shares may be sold in a private placement only with the prior written
consent of Dental, based upon a per share value determined by the board of
directors of Dental.
5. Waiver of Notices. DAA hereby waives presentment, demand for
payment, notice of dishonor, and all other notices or demands in connection with
the delivery, acceptance, performance, default or endorsement of this Note. No
delay or failure on the part of Dental or Holder, its agents or representatives,
to collect this Note or to exercise any power or right in connection with its
collection shall operate as a waiver thereof and such rights and powers shall be
deemed continuous.
6. Amendment. No amendment, modification or waiver of any provision of
this Note shall be effective unless the same shall be in writing and signed by
Dental or Holder.
7. Governing Law. This Note shall be governed by, and interpreted and
construed in accordance with, the laws of the State of Minnesota, without
reference to the choice of law principles thereof.
IN WITNESS WHEREOF, DAA has caused this Promissory Note to be signed by
its authorized officer and dated as of the date stated above.
DENTAL ASSETS ACQUISITION, INC.
By:
--------------------------
Its:
--------------------------
Exhibit A
LIMITED PERSONAL GUARANTEE
Exhibit B
XXXX OF SALE
Dental Resources, Inc., a Minnesota corporation ("Dental"), for
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, received in accordance with the terms of that certain Asset
Purchase Agreement dated as of August 10, 2001, (the "Agreement") by and between
Dental, Dental Assets Acquisition, Inc., a Minnesota corporation ("DAA"), and
the Shareholders (as that term is defined in the Agreement), does hereby sell,
transfer, assign and convey and deliver all of Dental's right, title and
interest in, to and under any and all of the Assets (as that term is defined in
the Purchase Agreement) to DAA, its successors and assigns.
Except as expressly set forth in the Agreement, Dental makes no
representations or warranties with respect to the Assets. All terms and
conditions of this Xxxx of Sale shall be binding upon and inure to the benefit
of DAA and its successors and assigns.
IN WITNESS WHEREOF, Company has caused this Xxxx of Sale to be duly
executed as of the dates set forth below.
Dated: , 200 DENTAL RESOURCES, INC.
By:
---------------------------
Its:
---------------------------
Exhibit C
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into as of
September __, 2001, between Dental Resources, Inc., a Minnesota corporation
("Dental") and Dental Assets Acquisition, Inc., a Minnesota corporation ("DAA").
RECITALS:
A. Dental and DAA are parties to that certain Asset Purchase Agreement
dated as of August 10, 2001 (the "Purchase Agreement") pursuant to which Dental
will transfer to DAA the Assets (as defined in the Purchase Agreement).
B. As part of the transfer of the Assets, Dental desires to assign and
delegate to DAA, and DAA desires to assume Company's obligations pursuant to the
"Assumed Liabilities" (as defined in the Purchase Agreement).
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
AGREEMENTS:
1. Assignment and Delegation. Dental hereby assigns, delegates and
transfers to DAA all of Company's obligations under and to the Assumed
Liabilities, effective as of the date hereof.
2. Assumption. DAA hereby assumes and agrees to perform all of the
obligations of Dental from and after the date hereof under the Assumed
Liabilities.
3. Miscellaneous. Except as expressly set forth in the Purchase
Agreement, Dental makes no representations or warranties regarding the Assumed
Liabilities. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the parties hereto. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Minnesota.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement as of the date first above written.
DENTAL RESOURCES, INC.
By:
--------------------------
Its:
--------------------------
DENTAL ASSETS ACQUISITION, INC.
By:
--------------------------
Its:
--------------------------
Exhibit D
LIMITED PERSONAL GUARANTEE
THIS LIMITED PERSONAL GUARANTEE is given this __th day of ________,
2001, by _______________ ("Guarantor"); for the benefit of Dental Resources,
Inc. ("Dental").
RECITALS:
A. Dental Assets Acquisition, Inc., a Minnesota corporation (the "Company") is
indebted on the date hereof to Dental under a limited recourse promissory note
dated as of even date herewith (the "Promissory Note") in the principal amount
of up to Five Hundred Seven Thousand Four Hundred Fifty Dollars ($507,450); and
B. To secure payment of the Promissory Note, the Guarantor has agreed to provide
this Guarantee; and
C. The Guarantor is a shareholder of the Company and will receive a direct
financial benefit from the ability to enhance the Company credit with this
Guarantee.
NOW, THEREFORE, the Guarantor hereby covenants and agrees with Dental,
for the benefit of all who at any time become holders of the Promissory Note, as
follows:
ARTICLE I
DEFINITIONS
1. Capitalized terms used in this Guarantee shall have the meanings
given to them in the Promissory Note, unless indicated otherwise in this
Guarantee.
ARTICLE II
COVENANTS AND AGREEMENTS
2.1 The Guarantor hereby unconditionally guarantees to Dental for the
benefit of the holders from time to time of the Promissory Note the full and
prompt payment of the Installments under the Promissory Note when and as the
same shall become due.
2.2 The liability of the Guarantor under this Guarantee shall be
limited to one third of the Installments as described in the Promissory Note.
The obligations of the Guarantor under this Guarantee shall be absolute and
unconditional in any other respect and shall remain in full force and effect
until the last Installment under the Promissory Note has been paid, or until the
Promissory Note has been prepaid, according to the terms and conditions of the
Promissory Note.
2.3 The Guarantor hereby expressly waives notice from Dental or the
holders from time to time of the Promissory Note of their acceptance of or
reliance upon this Guarantee. The Guarantor agrees to pay all the costs,
expenses and fees, including all attorney's fees, which may be incurred by
Dental in enforcing or attempting to enforce this Guarantee following any
default on the part of the Guarantor.
2.4 This Guarantee is entered into by the Guarantor with Dental for the
benefit of Dental and the holders from time to time of the Promissory Note, all
of whom shall be entitled to enforce performance and observance of this
Guarantee.
2.5 The Guarantor agrees to maintain an account with Xxxxxx Xxxxxxxxx
at Equity Securities Investments, Inc. ("Equity Securities") during the term of
this Guarantee and in accordance with the terms and conditions customary for
Equity Securities' relationships with individual investors. The Guarantor agrees
that at the time this Guarantee is given he shall hold in such account a minimum
of Forty Nine Thousand Five Hundred Seventy Five (49,575) shares of Dental
common stock (the "Minimum Amount"). Such Minimum Amount will be reduced as
provided in Section 3.3 below.
ARTICLE III
PROCEDURE
3.1 The Guarantor shall provide written notice to Dental at least ten
(10) calendar days prior to the respective Anniversary, informing Dental if the
Guarantor intends to satisfy a potential obligation under this Guarantee by
selling Shares (the "Sale Notice"). If Dental receives no Sale Notice, the
Guarantor has to fulfill any obligation under this Guarantee without selling
Shares, unless Dental waives such condition in writing. If the Guarantor sends a
Sale Notice to Dental, the Guarantor may not sell any Shares and no Shares will
be released for sale pursuant to Section 3.3 below before Dental has given the
Election Notice as defined in Section 3.2 below.
3.2 If the Guarantor provides notice to Dental pursuant to Section 3.1,
Dental has to provide written notice to the Guarantor at least five (5) calendar
days before the respective Anniversary (the "Election Notice"), informing
Guarantor whether Dental in the event that Newco does not fulfill its
obligations under the Note will require the Guarantor (a) to surrender the
Shares to Dental for redemption, (b) to sell the Shares in accordance with
applicable federal and state securities laws and regulations to the public in
the open market, or (c) to sell the Shares in accordance with applicable federal
and state securities laws and regulations to a private investor, upon terms and
conditions agreed upon by Dental. Dental's choice is binding upon the Guarantor.
If Dental requires the surrender of the Shares for redemption, then such
redemption shall be effected as of the Anniversary Date. By surrendering the
Shares, the Guarantor shall have satisfied his obligations under this Guarantee.
If Dental requires the sale of the Shares either to the public in the open
market or to a private investor, the Guarantor has to transfer the Sales
Proceeds of such public or private sale, respectively, to Dental in order to
satisfy his obligations under this Guarantee.
3.3 If the Guarantor and/or Dental decided pursuant to this Article 3
that the Guarantor shall fulfill his obligations under this Guarantee by selling
Shares or by submitting Shares to Dental for redemption, Nine Thousand Nine
Hundred Fifteen (9,915) shares of Dental common stock hold by the Guarantor in
his account with Equity Securities shall be released in time for such a sale or
redemption, respectively. If Newco fulfilled its payment obligations under the
Note at the respective Anniversary so that the Guarantor did not have any
obligation under this Guarantee relating to such Anniversary, or if the
Guarantor decided to fulfill his obligations under this Guarantee without
selling Shares, then the Minimum Amount shall be reduced by Nine Thousand Nine
Hundred Fifteen (9,915) shares of Dental common stock on or about the respective
Anniversary upon fulfillment of Newco's or the Guarantor's obligations under the
terms of the Note or this Guarantee, respectively.
3.4 The Guarantor shall have the right to pay to Dental at any time one
third of the Maximum Installments still outstanding under the Note. Upon receipt
of such payment by Dental, this Guarantee shall be terminated automatically
without any further action.
ARTICLE IV
MISCELLANEOUS
4.1 No waiver, amendment, release or modification of this Guarantee
shall be established by conduct, custom or course of dealing, but may be
established solely by an instrument in writing duly executed by the Guarantor
and Dental.
4.2 This Guarantee supersedes any prior or subsequent guaranties,
agreements or understandings, written or oral, between the parties with respect
to the subject matter hereof. This Guarantee may be executed simultaneously in
several counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
4.3 The Guarantor acknowledges that this Guarantee has been executed
and delivered based on the Guarantor's own evaluation and investigation of the
condition of the Company and the Guarantor is not relying on any representation,
statement, determination or action by Dental with respect to the financial
condition of the Company. Dental shall have no duty or obligation to provide the
Guarantor with any information heretofore or hereafter received by Dental with
respect to the condition, financial or otherwise, of the Company.
4.4 The invalidity or unenforceability of any one or more phrases,
sentences, clauses or Sections in the Guarantee shall not affect the validity or
enforceability of the remaining portions of this Guarantee, or any part thereof.
IN WITNESS WHEREOF, the Guarantor has executed this Guarantee as of the
date first above written.
---------------------------
Schedule 1.1(b)
Real Property Leases
Lease Agreement dated May 8, 2001, with MNM Manufacturing, LLP, regarding the
premises located at 000 Xxxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxx
Lease Agreement dated September 17, 1990, as amended September 1, 1999, with MNM
Manufacturing, LLP, regarding the premises at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxx
Schedule 1.1(c)
Personal Property Leases
Equipment Lease Agreement dated May 15, 2001 with citicapital for copier
Schedule 1.1(g)
Intellectual Property
Trademarks:
Dental Resources
Proform (registration lapsed)
Product Names:
Proflex
Procure
Niteguard
Dual Laminate
Bleaching Laminate
License:
Wing-It Articulator System
E-Gasket
EZ Guard License
Schedule 1.4
Excluded Liabilities
(a) Legal fees and expenses charged by Xxxxxxxxxx & Xxxxx, P.A. to
Dental with regard to (i) the Merger, (ii) the proxy statement for the special
meeting of the shareholders of Dental regarding the approval of the Asset
Purchase and the Merger (the "Proxy Statement"), and (iii) the Asset Purchase
Agreement and its exhibits;
(b) Payments due under the Financial Consulting Agreement dated January
24, 2000 with Maven Securities, Inc;
(c) Accounting and auditing fees and expenses charged by Xxxxx Xxxxxxx
& Co. Ltd. to Dental and arising from or related to the Merger and the Asset
Purchase Agreement; and
(d) Expenses and fees incurred in connection with the filing of the
Proxy Statement and any other filings relating to the Merger and the Asset
Purchase Agreement with the Securities and Exchange Commission, the printing and
mailing of the Proxy Statement.
