ASSET PURCHASE AGREEMENT
between
Gentle Dental Service Corporation,
a Washington Corporation,
and
Xxxxxx X. Xxxxxx, D.D.S,
Dated September 21, 1997
TABLE OF CONTENTS
Page
ARTICLE I
Purchase and Sale of Assets
1.01 Purchase and Sale.......................................................1
1.02 Excluded Assets.........................................................3
1.03 Assumption of Liabilities...............................................3
1.04 Purchase Price..........................................................3
1.05 Purchase Price Adjustment...............................................4
1.06 Instruments of Conveyance and Transfer..................................5
1.07 Further Assurances......................................................5
1.08 Closing.................................................................5
1.09 Sales Tax...............................................................5
1.10 Allocation of Purchase Price............................................5
ARTICLE II
Representations and Warranties of GDSC
2.01 Authorization...........................................................6
2.02 Capitalization..........................................................6
2.03 Compliance..............................................................6
2.04 Consents................................................................6
2.05 Accuracy of Representations & Warranties................................7
2.06 Employment Matters......................................................7
2.07 Financial Statements....................................................7
2.08 Absence of Certain Changes or Events....................................8
2.09 Title and Condition of Tangible Assets..................................8
2.10 Insurance...............................................................9
2.11 Taxes...................................................................9
2.12 Certain Interests......................................................10
2.13 No Restrictions........................................................10
2.14 Permits and Licenses...................................................10
2.15 Environmental Conditions...............................................10
2.16 Records................................................................11
2.17 Reliance...............................................................11
ARTICLE III
[Intentionally Omitted]
ARTICLE IV
Representations and Warranties of Kaiser
i
Page
4.01 [Intentionally Omitted]................................................11
4.02 [Intentionally Omitted]................................................11
4.03 Authority of Kaiser....................................................11
4.04 No Adverse Consequences................................................11
4.05 Brokers and Finders....................................................12
4.06 Litigation.............................................................12
4.07 Compliance with Laws...................................................12
4.08 Employment Matters.....................................................12
4.09 Financial Statements...................................................14
4.10 Receivables............................................................14
4.11 Prepaid Expenses and Other.............................................14
4.12 Personal Property......................................................14
4.13 Payables...............................................................14
4.14 Indebtedness...........................................................14
4.15 Other Liabilities......................................................14
4.16 Absence of Certain Changes or Events...................................15
4.17 Leases.................................................................15
4.18 Certain Contracts and Arrangements.....................................16
4.19 Status of Contracts and Leases.........................................16
4.20 Title and Condition of Tangible Assets.................................17
4.21 Insurance..............................................................17
4.22 Taxes..................................................................18
4.23 No Restrictions........................................................18
4.24 Permits and Licenses...................................................18
4.25 Certain Payments.......................................................18
4.26 Environmental Conditions...............................................19
4.27 Consents and Approvals.................................................19
4.28 Records................................................................19
4.29 Reliance...............................................................19
4.30 Accuracy of Representations and Warranties.............................19
ARTICLE V
Covenants of Seller
5.01 Access to Properties, Books and Records................................19
5.02 Negative Covenants.....................................................20
5.03 Affirmative Covenants..................................................21
5.04 No Negotiations With Others............................................21
5.05 [Intentionally Omitted]................................................21
5.06 Formation of Professional Corporation..................................21
5.07 Employees..............................................................21
ii
Page
ARTICLE VI
[Intentionally Omitted]
ARTICLE VII
Joint Covenants
7.01 Governmental Consents..................................................22
7.02 Best Efforts; No Inconsistent Action...................................22
ARTICLE VIII
Conditions to Obligations of GDSC
8.01 Governmental Approvals.................................................22
8.02 Consents...............................................................23
8.03 Representations, Warranties and Covenants..............................23
8.04 Adverse Proceedings....................................................24
8.05 No Adverse Change......................................................24
8.06 Support Services Agreement.............................................24
8.07 Option Agreement.......................................................24
8.08 Employment Agreements..................................................24
8.09 Closing of the Transactions............................................24
8.10 Fairness Opinion.......................................................24
8.11 Professional Corporation...............................................24
8.12 Actions Satisfactory to GDSC's Counsel.................................25
ARTICLE IX
Conditions to Obligations of Seller
9.01 Representations, Warranties and Covenants..............................24
9.02 Adverse Proceedings....................................................24
9.03 Actions Satisfactory to Seller's Counsel...............................24
iii
Page
ARTICLE X
Termination
10.01 Right of Parties to Terminate..........................................24
10.02 Effect of Termination..................................................25
ARTICLE XI
Survival; Indemnification
11.01 Survival...............................................................25
11.02 Indemnification by Seller..............................................26
11.03 Indemnification by GDSC................................................26
11.04 Indemnification Procedure..............................................27
11.05 Limitation on Indemnification Obligations..............................28
11.06 Rights Not Exclusive...................................................28
ARTICLE XII
Confidentiality; Press Releases
12.01 Confidentiality........................................................29
12.02 Press Releases.........................................................30
ARTICLE XIII
Other Provisions
13.01 Benefit and Assignment.................................................30
13.02 Entire Agreement.......................................................30
13.03 Fees and Expenses......................................................30
13.04 Amendment, Waiver, etc.................................................30
13.05 Headings...............................................................30
13.06 Governing Law..........................................................30
13.07 Notices................................................................30
13.08 Breach; Equitable Relief...............................................31
13.09 Attorneys' Fees........................................................31
13.10 Counterparts...........................................................32
iv
INDEX OF DEFINED TERMS
Term Location of Definition
---- ----------------------
401(k) Plan............................................ 5.05
Assets................................................. 1.01
Assumed Liabilities.................................... 1.04-2
Closing................................................ 1.08
Closing Date........................................... 1.08
Code................................................... 4.08-2
Contracts.............................................. 1.01-6
Current Balance Sheet.................................. 4.09-1
Damages................................................ 11.02-1
Dental Practice........................................ Introduction
ERISA.................................................. 2.06-2
ERISA Plans............................................ 4.08-2
Environmental Law...................................... 2.15-2
Financial Statements................................... 4.09-1
GDSC................................................... Introduction
GDSC Material Adverse Effect .......................... Article II Introduction
GDSC Material Adverse Change .......................... Article II Introduction
GDSC's Indemnified Persons............................. 11.02-1
Hazardous Substance.................................... 2.15-2
Kaiser................................................. Introduction
Leases................................................. 1.01-5
Material Adverse Change................................ Article IV Introduction
Material Adverse Effect................................ Article IV Introduction
Net Current Assets..................................... 1.05-3
Permits................................................ 4.24
Policies............................................... 4.21
Professional Contracts................................. 1.01-6
Professional Corporation............................... Introduction
Purchase Price......................................... 1.04
Purchase Price Adjustment.............................. 1.05-1
Real Property.......................................... 4.17
Related Documents...................................... 11.01
Returns................................................ 4.22-1
Seller................................................. Introduction
Seller's Indemnified Persons........................... 11.03-1
Tangible Personal Property............................. 4.12
Taxes.................................................. 2.11-3
Third Party Claims..................................... 11.04-1(a)
Transactions........................................... 8.10
v
LIST OF EXHIBITS
Exhibit Item First Reference
------- ---- ---------------
A Assumption Agreement 1.04-2
B Assignment and Xxxx of Sale to GDSC 1.06
C Assignment to Professional Corporation 1.06
D Support Services Agreement 8.06
E Assignable Option Agreement 8.07
F Employment Agreement 8.08
G Addendum to Employment
Agreement 8.08
H Articles and Bylaws of Professional
Corporation 5.06
LIST OF SCHEDULES
Schedule Content
-------- -------
1.02-2 Excluded Assets
1.10 Purchase Price Allocation
2.04 Consents
4.06 Litigation
4.08-2 Employee Benefits
4.08-3 Employment Manuals and Policies
4.08-4 Compensation
4.09 Financial Statements
4.10 Receivables
4.11 Prepaid Expenses and Other
4.12 Tangible Personal Property
4.13 Payables
4.14 Indebtedness
4.15 Other Liabilities
4.17 Leases
4.18 Contracts
4.21 Insurance
4.27 Consents and Approvals
vi
ASSET PURCHASE AGREEMENT
DATED: September 21, 1997
BETWEEN: GENTLE DENTAL SERVICE CORPORATION,
a Washington corporation
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000 "GDSC"
AND: Xxxxxx X. Xxxxxx, D.D.S.
0000 Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Telecopy No.: ________________ "Kaiser"
Kaiser is the sole owner of a dental practice conducted by Kaiser under the
name Indio Family Dentistry (the "Dental Practice") at 00000 Xx. Xxxxxxx Xxxx.,
Xxxxx X-0, Xxxxx, Xxxxxxxxxx 00000 (the "Practice Location"). Kaiser desires to
sell, and GDSC desires to purchase, substantially all of the assets of the
Dental Practice (the "Assets") on the terms and conditions set forth in this
Agreement. After the completion of the purchase, dental services will be
provided to the patients of the Dental Practice by a new professional
corporation (the "Professional Corporation") to be established as set forth in
this Agreement. Kaiser is referred to as "Seller" or "Kaiser" in this Agreement.
In consideration of the mutual promises and covenants contained in this
Agreement, the parties agree as follows:
ARTICLE I
Purchase and Sale of Assets
1.01 Purchase and Sale. Subject to all the terms and conditions of this
Agreement and for the consideration herein stated, on the "Closing Date," as
that term is defined in Section 1.08, Seller agrees to sell, convey, assign,
transfer and deliver to GDSC (or with respect to certain assets as specified in
Section 1.06, to the Professional Corporation), and GDSC agrees to purchase and
accept from Seller, all of the assets, properties and rights of Seller (other
than the assets specified in Section 1.02), tangible and intangible, wherever
located, that are used or useful to maintain and operate the Dental Practice,
which assets (the "Assets") shall include without limitation:
1.01-1 All patient lists, charts, files and patient records, and all
other operating data and records relating to the Dental Practice, including
without limitation financial, accounting and
1
credit records, correspondence, budgets, engineering and facility records and
other similar documents and records;
1.01-2 All other items of tangible personal property of the Seller
used in connection with or associated with the Dental Practice, including
furniture, fixtures, equipment, supplies, inventory and spare and replacement
items therefor, including without limitation all such items listed on Schedule
4.12 and all such items acquired by the Seller after the date hereof and on or
before the Closing Date, other than to the extent such items are disposed of by
the Seller prior to the Closing Date without breach of this Agreement;
1.01-3 All accounts receivable and other receivables associated with
the Dental Practice, including without limitation all receivables listed on
Schedule 4.10 and all receivables acquired after August 31, 1997 and on or
before the Closing Date, other than to the extent such receivables have been
collected by the Seller prior to the Closing Date;
1.01-4 All prepaid and deferred items relating to the Dental Practice,
including prepaid rent, insurance, taxes and unbilled charges and deposits,
including without limitation all such items listed on Schedule 4.11;
1.01-5 All leases of real or personal property used or useful in the
Dental Practice, including without limitation all leases listed on Schedule 4.17
and all leases entered into after the date hereof and on or before the Closing
Date and expressly assumed by GDSC in writing on the Closing Date as provided in
Section 1.04-2(d), other than to the extent such leases have terminated, expired
or been disposed of by the Seller prior to the Closing Date without breach of
this Agreement (collectively, the "Leases");
1.01-6 All rights, benefits and interests of the Seller under the
contracts and agreements for provision of dentistry services including without
limitation contracts with third payors, dentists or other professionals (the
"Professional Contracts") and the other contracts, agreements, commitments,
understandings, purchase orders, documents and instruments listed on Schedule
4.18 hereto and under any contracts, agreements, commitments, understandings,
purchase orders, documents or instruments entered into between the date hereof
and the Closing Date and expressly assumed by GDSC in writing on the Closing
Date as provided in Section 1.04-2(d), other than to the extent such items have
terminated, expired or been disposed of by the Seller prior to the Closing Date
without breach of this Agreement (collectively, the "Contracts");
1.01-7 All assignable rights to all telephone lines and numbers used
in the conduct of the Dental Practice; and
1.01-8 All right, title and interest in and to all trade names used in
conjunction with the Dental Practice.
1.02 Excluded Assets. The Assets shall not include the following:
1.02-1 Any lease not listed on Schedule 4.17 and any contract,
agreement, commitment, understanding, purchase order, document or instrument not
listed on Schedule 4.18,
2
unless pursuant to Section 1.04-2(d) GDSC expressly agrees in writing on the
Closing Date to assume the obligations under such lease, contract, agreement,
commitment, understanding, purchase order, document or instrument, in which case
the Seller shall assign their rights and benefits thereunder to GDSC and the
same shall be treated as a "Lease" or "Contract" for purposes of this Agreement;
and
1.02-2 The assets identified on Schedule 1.02-2.
1.03 Assumption of Liabilities. Except for the liabilities and obligations
to be assumed by GDSC pursuant to Section 1.04-2, GDSC will not assume and will
not be liable for any liabilities of the Seller, known or unknown, contingent or
absolute, accrued or other, and the Assets shall be free of all liabilities,
obligations, liens and encumbrances. Without limiting the generality of the
foregoing and except as otherwise provided above, GDSC will not be responsible
for any of the following:
1.03-1 Liabilities, obligations or debts of the Seller, whether fixed,
contingent or mixed and whether based on events occurring before or after the
Closing Date, including without limitation those based on tort, contract,
statutory or other claims or involving fines or penalties payable to any
governmental authority;
1.03-2 Liabilities, obligations or debts of the Seller for any
federal, state or local tax, including without limitation federal income taxes,
state income and excise taxes, state and local real and personal property taxes
and federal, state and local withholding and payroll taxes;
1.03-3 Liabilities or obligations of the Seller to employees for
salaries, bonuses or health and welfare benefits or with respect to any profit
sharing, stock bonus, pension, retirement, stock purchase, option, bonus or
deferred compensation plan or for any other benefits or compensation (including
without limitation accrued vacation or sick leave); and
1.03-4 Liabilities or obligations of the Seller for employee severance
payments or arrangements resulting from termination of the Seller's employees.
1.04 Purchase Price. The total purchase price for the Assets (the "Purchase
Price") shall be the following:
1.04-1 $2,924,878.00, payable by check to Kaiser on the Closing Date.
1.04-2 The assumption by GDSC on the Closing Date, pursuant to the
terms of an Assumption Agreement in substantially the form attached hereto as
Exhibit A, of the following liabilities of the Seller (the "Assumed
Liabilities"):
1.04-2(a) the accounts payable and accrued liabilities associated
with the Dental Practice identified on Schedule 4.13 in the amounts associated
with each at the Closing Date;
1.04-2(b) all liabilities of the Seller of a type identified on
Schedule 4.13 and incurred in the ordinary course of business after August 31,
1997 and on or before the Closing
3
Date (to the extent such liabilities are not paid or discharged prior to the
Closing Date), but specifically excluding any liabilities for brokers' and
attorneys' fees and other expenses of this transaction and accrued liabilities
for taxes based on the income or revenues of the Dental Practice;
1.04-2(c) all obligations of the Seller under any of the Leases
or Contracts listed on Schedule 4.17 or Schedule 4.18 hereto; and
1.04-2(d) all obligations of the Seller under any lease,
contract, agreement, commitment, understanding, purchase order, document or
instrument entered into by the Seller between the date of this Agreement and the
Closing Date that GDSC, in its sole discretion, elects on the Closing Date to
assume.
1.05 Purchase Price Adjustment. The Purchase Price may be subject to
adjustment after Closing as set forth in this Section 1.05.
1.05-1 As soon as reasonably possible after Closing, the amount of the
"Net Current Assets" (as defined in Section 1.05-3) shall be determined as
provided in Section 1.05-4. If the amount of Net Current Assets is $20,000 more
or less than $14,000, the Purchase Price shall be adjusted by the full amount of
the difference (the "Purchase Price Adjustment"). If the difference between Net
Current Assets and $14,000 does not exceed $20,000, there shall be no Purchase
Price Adjustment.
1.05-2 If the Net Current Assets are greater than $34,000, the
Purchase Price Adjustment shall be paid to Kaiser by check within 10 days after
Kaiser delivers the certificate described in Section 1.05-4. If the Net Current
Assets are less than $(6,000), the Purchase Price Adjustment shall be paid by
Kaiser to GDSC by check within 10 days after Kaiser delivers the certificate
described in Section 1.05-4.
1.05-3 "Net Current Assets" means the sum of (a) accounts receivable
of the Dental Practice, net of contractual allowances and bad debt reserve, as
of the Closing Date and (b) any prepaid expenses properly recordable on a
balance sheet for the Dental Practice as of the Closing Date reduced by the sum
of (x) the accounts payable of the Dental Practice at the Closing Date and (y)
the accrued liabilities of the Dental Practice at the Closing Date, specifically
including an accrual of payroll and payroll-related charges up to and including
the Closing Date, all as determined consistently with the accounting conventions
applied in determining the amounts set forth in paragraphs 1.05-1 and 1.05-2
above.
1.05-4 At or after the Closing Date, Kaiser shall execute and deliver
to GDSC a certificate detailing the calculation of Net Current Assets and
including as schedules thereto lists of all receivables, prepaid expenses,
payables and accrued liabilities as of the Closing Date included in the
calculation. In this certificate Kaiser shall certify the accuracy and
completeness of the schedules to the certificate and the accuracy of the
calculation of Net Current Assets.
1.06 Instruments of Conveyance and Transfer. The sale of the Assets, and
the conveyance, assignment, transfer and delivery of all of the Assets other
than the patient charts, the Professional Contracts and rights to the trade name
"Indio Family Dentistry," shall be effected by
4
the Seller's execution and delivery to GDSC, on the Closing Date, of a xxxx of
sale in substantially the form of the Assignment and Xxxx of Sale attached
hereto as Exhibit B. The conveyance, assignment, transfer and delivery of
Seller's patient charts, the Professional Contracts and the rights to the trade
name "Indio Family Dentistry" shall be effected by the Seller's execution and
delivery to the Professional Corporation, on the Closing Date, of an assignment
in substantially the form of the Assignment attached hereto as Exhibit C.
1.07 Further Assurances. The Seller agrees that, at any time and from time
to time on and after the Closing Date, he will, upon the request of GDSC and
without further consideration, take all steps reasonably necessary to place GDSC
(or the Professional Corporation, as the case may be) in possession and
operating control of the Assets and the Seller will do, execute, acknowledge and
deliver, or will cause to be done, executed, acknowledged and delivered, all
further acts, deeds, assignments, conveyances, transfers, powers of attorney or
assurances as reasonably required to sell, assign, convey, transfer, grant,
assure and confirm to GDSC (or the Professional Corporation, as the case may
be), or to aid and assist in the collection of or reducing to possession by GDSC
(or the Professional Corporation, as the case may be) of, all of the Assets, or
to vest in GDSC (or the Professional Corporation, as the case may be) good,
valid and marketable title to the Assets.
1.08 Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Stoel Rives LLP,
000 XX Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxx, effective as of the close of
business on the last day of the month in which all conditions to Closing are
satisfied (other than those conditions that by their terms are to occur at the
Closing) or at another date, time and place agreed upon in writing by the
parties (the "Closing Date").
1.09 Sales Tax. The Seller shall pay, at his sole expense, any sales tax
owing in respect of the purchase of the Assets. The Seller shall promptly file
all necessary sales tax returns and pay all sales taxes due following the
Closing Date. As soon as practicable following the Closing Date, the Seller
shall deliver to GDSC receipts from the appropriate taxing authorities showing
that all sales taxes owing have been paid.
1.10 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets in accordance with Schedule 1.10, and GDSC and the Seller shall
be bound by that allocation in reporting the transactions contemplated by this
Agreement to any governmental authority (including without limitation the
Internal Revenue Service).
ARTICLE II
Representations and Warranties of GDSC
As used in this Agreement, "GDSC Material Adverse Effect" means an adverse
effect on the business, results of operations, financial position, assets or
prospects of GDSC that would be considered material under federal securities
laws; and "GDSC Material Adverse Change" means any change that has resulted,
will result or is likely to result in a GDSC Material Adverse Effect. GDSC
represents and warrants to the Seller as follows:
5
2.01 Authorization. GDSC is a corporation, duly organized, validly existing
and in good standing under the laws of the State of Washington and has all
requisite corporate power and authority to own and operate its properties and to
carry on its business as now conducted. GDSC has taken all corporate action
necessary to authorize its execution, delivery and performance of this
Agreement. GDSC has full corporate power and authority to enter into this
Agreement and carry out the terms hereof. This Agreement has been duly executed
and delivered by GDSC and is binding upon and enforceable against GDSC in
accordance with its terms, except as enforceability may be limited or affected
by applicable bankruptcy, insolvency, reorganization, or other laws of general
application relating to or affecting creditors' rights generally and except as
enforceability may be limited by rules of law governing specific performance,
injunctive relief or other equitable remedies.
2.02 Capitalization. The authorized capital stock of GDSC consists of
50,000,000 shares of Common Stock, of which 3,144,404 shares are issued and
outstanding; and 30,000,000 shares of Preferred Stock, of which no shares are
issued and outstanding. All issued and outstanding shares of GDSC capital stock
are validly issued, fully paid and nonassessable, and have been issued without
violation of any preemptive rights. There is no subscription, option, warrant,
call, right, agreement or commitment (including any right of conversion or
exchange under any outstanding security or other instrument) relating to the
issuance by GDSC of GDSC capital stock other than outstanding options under the
GDSC 1993 Stock Incentive Plan, outstanding purchase rights under the GDSC
Employee Stock Purchase Plan and the GDSC Professional Corporation Employee
Stock Purchase Plan, warrants described in GDSC's Registration Statement on Form
SB-2 (Registration No. 333-13529) and outstanding offers and/or agreements to
acquire other dental practices or dental practice management companies in
exchange for Common Stock. The GDSC Common Stock to be issued under this
Agreement will, when issued, be duly and validly authorized and issued, fully
paid and nonassessable.
2.03 Compliance. The execution, delivery and performance of this Agreement
by GDSC, the compliance by GDSC with the provisions of this Agreement and the
consummation of the transactions described in this Agreement will not conflict
with or result in the breach of any of the terms or provisions of or constitute
a default under:
2.03-1 the articles of incorporation or bylaws of GDSC;
2.03-2 any note, indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which GDSC is a party or by which GDSC
is bound; or
2.03-3 any statute or any order, rule, regulation or decision of any
court or regulatory authority or governmental body applicable to GDSC.
2.04 Consents. No consent, approval, authorization, order, designation or
declaration of any court or regulatory authority or governmental body, federal
or other, or third person is required to be obtained by GDSC for the
consummation of the transactions described in this Agreement.
2.05 Accuracy of Representations & Warranties. None of the representations
or warranties of GDSC contains or will contain any untrue statement of any
material fact or omits or misstates a material fact necessary to make the
statements contained in this Agreement not
6
misleading. GDSC does not know of any fact that has resulted or that, in the
reasonable judgment of GDSC will result, in any material adverse change in
GDSC's business, results of operation, financial condition or prospects that has
not been set forth in this Agreement.
2.06 Employment Matters.
2.06-1 Labor Matters. GDSC is and has been in compliance with all
applicable laws regarding employment and employment practices, terms and
conditions of employment, wages and hours and is not and has not been engaged in
any unfair labor practice. There is no (1) unfair labor practice complaint
against GDSC pending before the National Labor Relations Board or any other
governmental authority, (2) labor strike, slowdown or work stoppage actually
occurring or, to the best of the knowledge of GDSC, threatened against GDSC, (3)
representation petition respecting GDSC's employees pending before the National
Labor Relations Board, or (4) grievance or any arbitration proceeding pending
arising out of or under collective bargaining agreements applicable to GDSC.
GDSC has not experienced any primary work stoppage or other organized work
stoppage involving its employees in the past two years.
2.06-2 Employee Benefits. The employee pension benefit plans (within
the meaning of Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") established and maintained by GDSC that are subject
to ERISA (the "GDSC ERISA Plans") comply with the applicable requirements of
ERISA. GDSC has received from the Internal Revenue Service a favorable
determination for each of the GDSC ERISA Plans and their related trusts that
each of the GDSC ERISA Plans is qualified under Section 401(a) of the Code and
the related trust is tax-exempt under Section 501(a) of the Code. There has been
no event subsequent to that determination that has adversely affected the tax
qualified status of the GDSC ERISA Plans or the exemption of the related trusts
other than changes in the Code that are not effective as of the Closing Date. No
"accumulated funding deficiency" as defined in Section 302(a)(2) of ERISA or
Section 412(a) of the Code exists, or has existed, with respect to any of the
GDSC ERISA Plans. The present value of all accrued benefits under each of the
GDSC ERISA Plans does not exceed the value of such plan's assets, less all
liabilities other than those attributable to accrued benefits. GDSC has no
"potential withdrawal liability," as defined in Section 4201 of ERISA. None of
the GDSC ERISA Plans, its related trusts or any trustee, investment manager or
administrator thereof has engaged in a nonexempt "prohibited transaction," as
such term is defined in Section 406 of ERISA and Section 4975 of the Code. There
are not and have not been any excess deferrals or excess contributions under any
GDSC ERISA Plan. Each GDSC ERISA Plan is and has been operated and administered
in conformance with the requirements of all applicable laws and regulations,
whether or not the GDSC ERISA Plan documents have been amended to reflect such
requirements.
2.07 Financial Statements.
2.07-1 GDSC's Annual Report to Shareholders for the year ended
December 31, 1996 contains audited balance sheets of GDSC as of December 31,
1996 and 1995, and the related audited statements of income for the years then
ended, and GDSC's Quarterly Report on Form 10-QSB for the quarter ended June 30,
1997 contains the unaudited balance sheet of GDSC as of June 30, 1997 (the "GDSC
Current Balance Sheet") and the related statement of income for the six
7
months then ended (all such balance sheets and statements collectively, the
"GDSC Financial Statements").
2.07-2 The GDSC Financial Statements present fairly
(a) the financial position of GDSC as of the dates indicated and
(b) the results of operations for the periods then ended, all in
conformity with generally accepted accounting principles applied on a consistent
basis.
2.08 Absence of Certain Changes or Events. Since the date of the GDSC
Current Balance Sheet, there has not been:
2.08-1 Any GDSC Material Adverse Change or any event, occurrence,
development or state of circumstances or facts which could reasonably be
expected to result in a GDSC Material Adverse Change;
2.08-2 Any damage, destruction or casualty loss, whether insured
against or not, to any of GDSC's assets or properties;
2.08-3 Any increase in the rate or terms of compensation payable or to
become payable by GDSC to its directors, officers or key employees; any increase
in the rate or terms of any bonus, insurance, pension or other employee benefit
plan, payment or arrangement made to, for or with any such directors, officers
or key employees; any special bonus or remuneration paid; or any written
employment contract executed or amended;
2.08-4 Any conduct of business which is outside the ordinary course of
business or not substantially in the manner that GDSC previously conducted its
business;
2.08-5 Any incurrence of any noncontract liability which, either
singly or in the aggregate is material to the business, results of operations,
financial condition or prospects of GDSC;
2.08-6 Any change in the assets, liabilities, licenses, permits or
franchises of GDSC, or in any agreement to which GDSC is a party or is bound,
which has had or reasonably could be expected to have a GDSC Material Adverse
Effect.
2.09 Title and Condition of Tangible Assets.
2.09-1 GDSC owns all of its tangible personal property except leased
property free and clear of all mortgages, pledges, security interests, claims,
charges or other encumbrances or restrictions of any kind, except
(a) liens related to obligations disclosed in the GDSC Financial
Statements or
8
(b) liens for taxes not yet due or being contested in good faith
(and for which adequate accruals or reserves have been established on the GDSC
Current Balance Sheet).
2.09-2 GDSC has good and absolute title to its tangible personal
property except leased property.
2.09-3 All of GDSC's tangible personal property has been maintained
and operated in accordance with manufacturer's specifications and prudent
industry practices, is in a good state of maintenance and repair, ordinary wear
and tear excepted, and is adequate for the conduct of GDSC's business.
2.09-4 To the knowledge of GDSC, there are no developments affecting
any of its real property or tangible personal property pending or threatened
which might materially detract from the value of such property or assets,
materially interfere with any present or intended use of any such property or
assets or materially adversely affect the marketability of such properties or
assets.
2.10 Insurance. All policies of malpractice, liability, fire, worker's
compensation and other forms of insurance insuring GDSC, its officers, directors
or employees, its assets or its operations (the "GDSC Policies") are valid,
enforceable and in full force and effect, all premiums with respect to the GDSC
Policies covering all periods up to and including the date as of which this
representation is being made have been paid and no notice of cancellation or
termination has been received with respect to any GDSC Policy. The GDSC Policies
are sufficient for compliance with all requirements of law and of agreements to
which GDSC is a party and provide insurance for the risks and in the amounts and
types of coverage usually obtained by persons using or holding similar
properties in similar businesses. GDSC has not been refused any insurance
coverage and no insurance coverage has been canceled during the five years
preceding the date of this Agreement.
2.11 Taxes.
2.11-1 Returns. GDSC has filed all federal, state and other returns,
reports and information returns required to be filed by it with respect to Taxes
(as defined below) which relate to the business, results of operations or
financial condition of GDSC (collectively, the "GDSC Returns") and has timely
paid all Taxes shown to be due on the GDSC Returns. All GDSC Returns filed are
complete and accurate in all material respects, and no additional Taxes are owed
by GDSC with respect to the periods covered by the GDSC Returns.
2.11-2 Taxes Paid or Reserved. All deficiencies in Taxes asserted or
assessments made by any taxing authority have been fully paid or finally
settled. The reserves for Taxes reflected in the GDSC Current Balance Sheet are
adequate for payment of Taxes with respect to GDSC in respect of all periods
ending on or before the date of the GDSC Current Balance Sheet. All Taxes which
GDSC has been required to collect or withhold have been withheld or collected
and, to the extent required, have been paid to the proper taxing authority.
2.11-3 Definition. "Taxes" means all taxes, charges, fees, levies or
other assessments including, without limitation, income, excise, property,
sales, use and franchise taxes,
9
imposed by the United States or any state, county, local or foreign government
or subdivision or agency thereof, and including any interest, penalties or
additions.
2.12 Certain Interests. No transaction between GDSC and any of its
directors, officers or principal shareholders of a type that would require
disclosure by GDSC under Item 404 of Regulation S-B of the Securities and
Exchange Commission has occurred since February 13, 1997, except for the entry
into a new support services agreement with a professional corporation owned
solely by Xxxx X. Xxx in connection with a recent dental practice acquisition.
2.13 No Restrictions. No power of attorney or similar authorization given
by GDSC is presently in effect or outstanding. No contract or agreement to which
GDSC is a party or is bound or to which any of its properties or assets is
subject limits the freedom of GDSC to compete in any line of business or with
any person.
2.14 Permits and Licenses. GDSC holds, and at all times has held, all
licenses, permits, franchises, easements and authorizations (collectively, "GDSC
Permits") necessary for the lawful conduct of its business pursuant to all
applicable statutes, laws, ordinances, rules and regulations of all governmental
bodies, agencies and other authorities having jurisdiction over it or any part
of its operations except where the failure to hold any GDSC Permit, singly or in
the aggregate, either alone or with the giving of notice or the passage of time
or both, would not have a GDSC Material Adverse Effect. GDSC is in compliance
with all the terms of each GDSC Permit, and there are no claims of violation by
GDSC of any GDSC Permit.
2.15 Environmental Conditions.
2.15-1 Compliance. GDSC has operated its business and maintained its
assets, including without limitation its real property, in compliance with all
Environmental Laws. All wastes generated in connection with its business are and
have been transported and disposed of off site in compliance with all
Environmental Laws. Except as otherwise required for the normal operation of a
dental practice, no Hazardous Substance is or has been generated, manufactured,
treated, stored, transported, used or otherwise handled on its real property or
in connection with its business.
2.15-2 Definitions. As used in this Agreement,
(a) "Environmental Law" means any federal, state or local
statute, ordinance or regulation pertaining to the protection of human health or
the environment and any applicable orders, judgments, decrees, permits, licenses
or other authorizations or mandates under such statutes, ordinances or
regulations, and
(b) "Hazardous Substance" means any hazardous, toxic, radioactive
or infectious substance, material or waste as defined, listed or regulated under
any Environmental Law, and includes without limitation petroleum oil and its
fractions.
2.16 Records. The books of account, minute books, stock certificate books
and stock transfer ledgers of GDSC are complete and accurate in all material
respects, and there have been no
10
transactions involving the business of GDSC which properly should have been set
forth therein and which have not been accurately so set forth.
2.17 Reliance. GDSC recognizes and agrees that, notwithstanding any
investigation by DDS, DDS is relying upon the representations and warranties
made by GDSC in this Agreement.
ARTICLE III
[Intentionally Omitted]
ARTICLE IV
Representations and Warranties of Kaiser
As used in this Agreement, "Material Adverse Effect" means a material
adverse effect on the business, results of operations, financial position,
assets or prospects of the Dental Practice, which shall in any event include any
adverse effect on the assets, revenue or net income of the Dental Practice in
excess of $20,000; and "Material Adverse Change" means any change that has
resulted, will result or is likely to result in a Material Adverse Effect.
Kaiser represents and warrants to GDSC as follows:
4.01 [Intentionally Omitted].
4.02 [Intentionally Omitted].
4.03 Authority of Kaiser. Kaiser has the power to own and lease his
properties and carry on his business as now being conducted. Kaiser is the sole
owner of the Dental Practice and no other person has a right to acquire any
interest in the Dental Practice. Kaiser has full power and authority to enter
into this Agreement and to carry out its terms. This Agreement has been duly and
validly executed and delivered by Kaiser and is binding upon and enforceable
against Kaiser in accordance with its terms, except as enforceability may be
limited or affected by applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the rights of
creditors and except as enforceability may be limited by rules of law governing
specific performance, injunctive relief or other equitable remedies.
4.04 No Adverse Consequences. Neither the execution and delivery of this
Agreement by Kaiser nor the consummation of the transactions contemplated by
this Agreement will result in the creation or imposition of any lien, charge or
encumbrance on any of Xxxxxx'x assets or properties, violate any law, judgment,
order, injunction, decree, rule, regulation or ruling of any governmental
authority applicable to Kaiser, or either alone or with the giving of notice or
the passage of time or both, conflict with, constitute grounds for termination
or acceleration of, result in the breach of the terms, conditions or provisions
of, result in the loss of any benefit to Kaiser under or constitute a default
under any agreement, instrument, license or permit to which Kaiser is a party or
by which Kaiser is bound.
11
4.05 Brokers and Finders. Kaiser has not employed any broker, finder or
agent or dealt with anyone purporting to act in such capacity or agreed to pay
any brokerage fee, finder's fee or commission with respect to the transaction
contemplated by this Agreement, except that Kaiser has employed Wedbush Xxxxxx
Securities. Any fees owing to Wedbush Xxxxxx Securities shall be paid by Kaiser
and are not a liability of GDSC.
4.06 Litigation. Except as set forth on Schedule 4.06, to the best
knowledge of Kaiser, there is no claim, litigation, proceeding or investigation
of any kind pending or threatened by or against Kaiser and there is no basis for
any such claim, litigation, proceeding or investigation.
4.07 Compliance with Laws. Kaiser has at all relevant times conducted his
business in compliance with all applicable laws and regulations. Kaiser is not
in violation of any applicable laws or regulations, other than violations which
singly or in the aggregate do not, and, with the passage of time will not, have
a Material Adverse Effect. In connection with the Dental Practice, Kaiser is not
subject to any outstanding order, writ, injunction or decree, and Kaiser has not
been charged with, or threatened with a charge of, a violation of any provision
of federal, state or local law or regulation.
4.08 Employment Matters.
4.08-1 Labor Matters.
(a) Except as set forth on Schedule 4.08-1, Kaiser is not a party
or otherwise subject to any collective bargaining or other agreement governing
the wages, hours or terms of employment of the employees working in the Dental
Practice ("Dental Practice Employees"). Kaiser is and has been in compliance
with all applicable laws regarding employment and employment practices, terms
and conditions of employment, wages and hours and are not and have not been
engaged in any unfair labor practice.
(b) There is no (1) unfair labor practice complaint against
Kaiser pending before the National Labor Relations Board or any other
governmental authority, (2) labor strike, slowdown or work stoppage actually
occurring or, to the best of the knowledge of Kaiser, threatened against Kaiser,
(3) representation petition respecting Xxxxxx'x employees pending before the
National Labor Relations Board, or (4) grievance or any arbitration proceeding
pending arising out of or under collective bargaining agreements applicable to
Kaiser.
(c) Kaiser has not experienced any work stoppage or other
organized work stoppage involving his employees in the past two years.
4.08-2 Employee Benefits. Schedule 4.08-2 lists all pension,
retirement, profit sharing, deferred compensation, bonus, commission, incentive,
life insurance, health and disability insurance, hospitalization and all other
employee benefit plans or arrangements (including, without limitation, any
contracts or agreements with trustees, insurance companies or others relating to
any such employee benefit plans or arrangements) established or maintained by
Kaiser under which Dental Practice Employees have or may have any past or
present rights or benefits, and complete and accurate copies of all those plans
or arrangements have been provided to GDSC. The employee
12
pension benefit plans (within the meaning of Section 3(2) of ERISA established
and maintained by Kaiser that are subject to ERISA are listed separately as
ERISA Plans on Schedule 4.08-2 (the "ERISA Plans"). The ERISA Plans comply with
the applicable requirements of ERISA. The Seller has received from the Internal
Revenue Service a favorable determination for each of the ERISA Plans and their
related trusts that each of the ERISA Plans is qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code") and the related trust
is tax-exempt under Section 501(a) of the Code. There has been no event
subsequent to that determination that has adversely affected the tax qualified
status of the ERISA Plans or the exemption of the related trusts other than
changes in the Code that are not effective as of the Closing Date. No
"accumulated funding deficiency" as defined in Section 302(a)(2) of ERISA or
Section 412(a) of the Code exists, or has existed, with respect to any of the
ERISA Plans. The present value of all accrued benefits under each of the ERISA
Plans does not exceed the value of such plan's assets, less all liabilities
other than those attributable to accrued benefits. Kaiser does not have any
"potential withdrawal liability," as defined in Section 4201 of ERISA. None of
the ERISA Plans, its related trusts or any trustee, investment manager or
administrator thereof has engaged in a nonexempt "prohibited transaction," as
such term is defined in Section 406 of ERISA and Section 4975 of the Code. There
are not and have not been any excess deferrals or excess contributions under any
ERISA Plan. Each ERISA Plan is and has been operated and administered in
conformance with the requirements of all applicable laws and regulations,
whether or not the ERISA Plan documents have been amended to reflect such
requirements. Seller has no obligation of any kind (whether under the terms of
the ERISA Plans or under any understanding with employees) to make payments
under, or to pay contributions to or in respect of, any plan or arrangement
listed on Schedule 4.08-2, or any other plan, agreement or other arrangement for
deferred compensation of employees, whether or not tax qualified, including,
without limitation, a single employer tax qualified plan, a tax qualified plan
of a controlled group of corporations, a multi-employer pension plan, a
nonqualified deferred compensation plan, an individual employment or
compensation agreement or a commitment to provide medical benefits to retirees.
4.08-3 Employment Agreements. Each of the Dental Practice Employees is
an "at-will" employee and, except as listed on Schedule 4.08-3, there are no
written employment, commission or compensation agreements of any kind between
Kaiser and any Dental Practice Employee. Schedule 4.08-3 lists all of Seller's
employment or supervisory manuals, employment or supervisory policies, and
written information generally provided to Dental Practice Employees (such as
applications or notices), and true and complete copies of those manuals,
policies and written information have been provided to GDSC. Kaiser has no
agreements or understandings with the Dental Practice Employees except as
reflected in the items listed in Schedules 4.08-2 and 4.08-3.
4.08-4 Compensation. Schedule 4.08-4 contains a complete and accurate
list of all Dental Practice Employees providing services at or for the Dental
Practice as of September 10, 1997, specifying their names, hire dates, the total
amount paid or payable as compensation to each such person, and the basis of
such compensation.
4.09 Financial Statements.
4.09-1 Schedule 4.09 contains the unaudited balance sheet of the
Dental Practice as of December 31, 1996 and the related unaudited statement of
income for the year then ended and
13
the unaudited balance sheet of the Dental Practice as of July 31, 1997 (the
"Current Balance Sheet") and the related unaudited statement of income for the
seven months then ended (all such balance sheets and statements collectively,
the "Financial Statements"). The Financial Statements fairly reflect all
revenues, assets, liabilities and expenses received or incurred in connection
with the Dental Practice.
4.09-2 The Financial Statements present fairly
(a) the financial position of the Dental Practice as of the dates
indicated and
(b) the results of operations for the periods then ended.
4.10 Receivables. Schedule 4.10 lists all receivables of the Dental
Practice (including accounts receivable, loans receivable and advances payable
to Kaiser) as of July 31, 1997. Each of the receivables listed on Schedule 4.10,
and each of the receivables that has arisen since July 31, 1997, has arisen only
from bona fide transactions in the ordinary course of Seller's business and is
not subject to any offset or counterclaim.
4.11 Prepaid Expenses and Other. Schedule 4.11 lists all prepaid expenses
and deferred charges of the Dental Practice reflected on the Current Balance
Sheet as well as the items included in the Other Assets line, if any, on the
Current Balance Sheet.
4.12 Personal Property. Section 1.01-1 and Schedule 4.12 together contain a
complete and accurate list of all the tangible personal property used or useful
in the Dental Practice, other than excluded assets listed in Schedule 1.02-2
("Tangible Personal Property"). With respect to each item of owned Tangible
Personal Property, Schedule 4.12 lists the estimated fair market value as of
August 31, 1997.
4.13 Payables. Schedule 4.13 lists all accounts payable and other accrued
liabilities of the Dental Practice (in whatever name held or accounted for) as
of July 31, 1997, other than payables for brokers' and attorneys' fees and other
expenses of this transaction.
4.14 Indebtedness. Schedule 4.14 lists all indebtedness incurred by,
attributable to or secured by any assets of the Dental Practice and for each
item shows the name of lender, interest rate, term, payments, seniority and
security.
4.15 Other Liabilities. Except as listed on Schedule 4.15, Kaiser does not
have, with respect to the Dental Practice, any liability or obligation (whether
absolute, accrued, contingent or other, and whether due or to become due) which
is not accrued, reserved against or disclosed in the Current Balance Sheet,
other than liabilities incurred in the ordinary course of business consistent
with past practice, which individually or in the aggregate are not material to
the Dental Practice.
4.16 Absence of Certain Changes or Events. Since the date of the Current
Balance Sheet, there has not been any Material Adverse Change or any event,
occurrence, development or
14
state of circumstances or facts which could reasonably be expected to result in
a Material Adverse Change.
4.17 Leases. Schedule 4.17 contains a complete and accurate list of all
Leases of real property used or useful in the Dental Practice, a description of
the real property covered thereby ("Real Property"), the term of each Lease and
the monthly payments under the Lease. Complete and accurate copies of all Leases
have been delivered to GDSC.
4.18 Certain Contracts and Arrangements. Schedule 4.18, which is organized
by type of agreement, contains a complete and accurate list of all Contracts of
the following types to which Kaiser is a party or by which Kaiser is bound and
which relate to or are associated with the Dental Practice:
4.18-1 any mortgage, note or other instrument or agreement relating to
the borrowing of money or the incurrence of indebtedness by Kaiser or Xxxxxx'x
guaranty of any obligation for the borrowing of money;
4.18-2 contracts, agreements, purchase orders or acknowledgment forms
for the purchase, sale, lease or other disposition of capital assets or more
than $20,000 of other equipment or materials;
4.18-3 contracts or agreements for provision of dentistry services by
the Dental Practice, which agreements are identified as the Professional
Contracts on Schedule 4.18;
4.18-4 contracts or agreements for the performance of services
relating to or concerning the Dental Practice other than the Professional
Contracts, excluding employment contracts; provided, however, that only
contracts exceeding $20,000 in annual xxxxxxxx or payments by the Dental
Practice must be listed;
4.18-5 contracts or agreements involving annual xxxxxxxx in excess of
$20,000 for the joint performance of work or services and all other joint
venture agreements relating to or concerning the Dental Practice;
4.18-6 contracts or agreements with agents, brokers, consignees, sales
representatives or distributors relating to the sale of services of the Dental
Practice; and
4.18-7 any other contract, instrument, agreement or obligation not
described on any other Schedule to which Kaiser is a party or by which Kaiser is
bound and which contains material unfulfilled obligations relating to or
concerning the Dental Practice.
Complete and accurate copies of all Contracts have been delivered to GDSC.
4.19 Status of Contracts and Leases.
4.19-1 Each of the Contracts and Leases listed on Schedules 4.17 and
4.18 is valid, binding and enforceable by Seller in accordance with its terms
and is in full force and effect. There
15
is no existing default or violation by Seller under any Contract or Lease and no
event has occurred which (whether with or without notice, lapse of time or both)
would constitute a default of Seller under any Contract or Lease. There is no
pending or threatened proceeding which would interfere with the quiet enjoyment
of any Real Property of which Kaiser is lessee or sublessee which is used in the
Dental Practice.
4.19-2 All other parties to the Contracts and Leases have consented or
prior to the Closing will have consented (where such consent is necessary) to
the consummation of the transaction contemplated by this Agreement without
requiring modification of Seller's rights or obligations under any Contract or
Lease.
4.19-3 Kaiser is not aware of any default by any other party to any
Contract or Lease or of any event which (whether with or without notice, lapse
of time or both) would constitute a default by any other party with respect to
obligations of that party under any Contract or Lease, and, to the knowledge of
Seller, there are no facts that exist indicating that any of the Contracts or
Leases may be totally or partially terminated or suspended by the other parties.
4.19-4 Kaiser is not a party to, nor bound by, any contract or
agreement relating to or concerning the Dental Practice that Seller can
reasonably foresee will result in any loss that would have a Material Adverse
Effect on Seller upon the performance thereof (including any liability for
penalties or damages, whether liquidated, direct, indirect, incidental or
consequential that would have a Material Adverse Effect), unless such contract
or agreement is terminable by Kaiser on 60 or fewer days notice at any time
without penalty.
4.20 Title and Condition of Tangible Assets.
4.20-1 Seller has good title, or the right to use, all of the Tangible
Personal Property free and clear of all mortgages, pledges, security interests,
claims, charges or other encumbrances or restrictions of any kind, except
(a) liens disclosed on the Current Balance Sheet,
(b) security interests or liens securing payment of Assumed
Liabilities,
(c) liens for taxes not yet due or being contested in good faith
(and for which adequate accruals or reserves have been established on the
Current Balance Sheet) or
(d) the leases of leased property.
4.20-2 All Tangible Personal Property is in a good state of
maintenance and repair, ordinary wear and tear excepted, and is adequate for the
conduct of the Dental Practice.
4.20-3 To the knowledge of Seller, there are no developments affecting
any of the Real Property or Tangible Personal Property pending or threatened
which might materially detract from the value of such property or assets,
materially interfere with any present or intended use of
16
any such property or assets or materially adversely affect the marketability of
such properties or assets.
4.20-4 At the Closing, GDSC will acquire good title to all the Assets,
free and clear of all mortgages, pledges, security interests, claims, charges or
other encumbrances or restrictions of any kind, except for security interests or
liens securing payment of Assumed Liabilities.
4.21 Insurance. Schedule 4.21 contains a complete and accurate list of all
policies of malpractice, liability, fire, worker's compensation and other forms
of insurance insuring the Dental Practice or its employees and its assets or
operations (the "Policies"). All the Policies are valid, enforceable and in full
force and effect, all premiums with respect to the Policies covering all periods
up to and including the date as of which this representation is being made have
been paid and no notice of cancellation or termination has been received with
respect to any Policy. The Policies are sufficient for compliance with all
requirements of law and of agreements to which Kaiser is a party and provide
insurance for the risks and in the amounts and types of coverage usually
obtained by persons using or holding similar properties in similar businesses.
There are no unresolved claims for insurance under any of the Policies. True and
complete copies of the Policies and all endorsements thereto have been delivered
to GDSC. In connection with the Dental Practice, Kaiser has not been refused any
insurance coverage and no insurance coverage has been canceled during the five
years preceding the date of this Agreement.
4.22 Taxes.
4.22-1 Returns. Kaiser has filed all federal, state and other returns,
reports and information returns required to be filed by them with respect to
Taxes which relate to the business, results of operations or financial condition
of the Dental Practice (collectively, the "Returns") and has timely paid all
Taxes shown to be due on the Returns. All Returns filed are complete and
accurate in all material respects, and no additional Taxes are owed by Kaiser
with respect to the periods covered by the Returns. Kaiser has provided GDSC
with complete and accurate copies of its Returns for 1995 and 1996.
4.22-2 Taxes Paid or Reserved. All deficiencies in Taxes asserted or
assessments made by any taxing authority have been fully paid or finally
settled. All Taxes which Kaiser has been required to collect or withhold have
been withheld or collected and, to the extent required, have been paid to the
proper taxing authority.
4.23 No Restrictions. No contract or agreement to which Kaiser is a party
or is bound or to which any of its properties or assets is subject limits the
freedom of Kaiser to compete in any line of business or with any person.
4.24 Permits and Licenses. Kaiser holds and at all times has held, all
licenses, permits, franchises, easements and authorizations (collectively,
"Permits") necessary for the lawful conduct of the Dental Practice pursuant to
all applicable statutes, laws, ordinances, rules and regulations of all
governmental bodies, agencies and other authorities having jurisdiction over it
or any part of its operations, except where the failure to hold any Permit,
singly or in the aggregate, either alone or with the giving of notice or the
passage of time or both, would not have a Material Adverse Effect.
17
Kaiser is in compliance with all the terms of each Permit, and there are no
claims of violation of any Permit.
4.25 Certain Payments. Neither Kaiser nor any other person or entity has,
directly or indirectly, on behalf of or with respect to the Dental Practice or
its operations made or received any payment that was not legal to make or
receive under federal, state or local laws of the United States or any other
country or territory.
4.26 Environmental Conditions. Seller has operated the Dental Practice and
maintained the Assets, including without limitation the Real Property, in
compliance with all Environmental Laws. All wastes generated in connection with
the Dental Practice are and have been transported and disposed of off site in
compliance with all Environmental Laws. Except as otherwise required for the
normal operation of a dental practice, no Hazardous Substance is or has been
generated, manufactured, treated, stored, transported, used or otherwise handled
on the Real Property or in connection with the Dental Practice.
4.27 Consents and Approvals. Except as set forth on Schedule 4.27, no
consent, approval or authorization of any court, regulatory authority,
governmental body, or any other entity or person not a party to this Agreement
is required for the consummation of the transactions described in this Agreement
by Seller. Seller has obtained, or shall have obtained prior to the Closing, all
consents, authorizations or approvals of any third parties required in
connection with the execution, delivery or performance of this Agreement by
Seller. Seller has made, or shall have made prior to the Closing, all
registrations or filings with any governmental authority required on his part
for the execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
4.28 Records. The books of account of the Dental Practice are complete and
accurate in all material respects, and there have been no transactions involving
the business of the Dental Practice which properly should have been set forth
therein and which have not been accurately so set forth. Complete and accurate
copies of such books have been made available to GDSC.
4.29 Reliance. Kaiser recognizes and agrees that, notwithstanding any
investigation by GDSC, GDSC is relying upon the representations and warranties
made by Seller in this Agreement.
4.30 Accuracy of Representations and Warranties. None of the
representations or warranties of Seller contains or will contain any untrue
statement of any material fact or omits or misstates a material fact necessary
to make the statements contained in this Agreement not misleading. Seller does
not know of any fact that has resulted or that, in the reasonable judgment of
Seller will result, in any material adverse change in the business, results of
operation, financial condition or prospects of the Dental Practice that has not
been set forth in this Agreement.
18
ARTICLE V
Covenants of Seller
5.01 Access to Properties, Books and Records. Prior to the Closing Date,
Seller shall, at GDSC's request, afford or cause to be afforded to the agents,
attorneys, accountants and other authorized representatives of GDSC reasonable
access during normal business hours to all employees, properties, books and
records of Seller with respect to the Dental Practice and shall permit such
persons, at GDSC's expense, to make copies of such books and records. Seller
shall deliver to GDSC monthly financial statements of the Dental Practice
promptly after they become available. GDSC shall treat, and shall cause all of
its agents, attorneys, accountants and other authorized representatives to
treat, all information obtained pursuant to this Section 5.01 as confidential in
accordance with Section 12.01 hereof. No investigation by GDSC or any of its
authorized representatives pursuant to this Section 5.01 shall affect any
representation, warranty or closing condition of any party hereto or GDSC's
rights to indemnification pursuant to Section 11.02 hereof.
5.02 Negative Covenants. Except as otherwise permitted by this Agreement or
with the prior written consent of GDSC, prior to the Closing, Seller shall not:
5.02-1 Incur additional debt for borrowed money without giving GDSC
notice within two business days thereafter;
5.02-2 Incur any obligations under leases for real or personal
property whether or not required to be capitalized under generally accepted
accounting principles, incur or increase any obligation or liability (fixed,
contingent or other, including without limitation liabilities as a guarantor or
otherwise with respect to obligations of others, but excluding debts for
borrowed money) except in the ordinary and usual course of business and
consistent with past practices, forgive or release any debt or claim, give any
waiver of any right of material value or voluntarily suffer any extraordinary
loss;
5.02-3 Declare, pay or make any distribution of money or property to
Kaiser other than ordinary distributions consistent with past practices;
5.02-4 Issue, sell, or give any option or right to purchase any
interest in the Dental Practice, or purchase, redeem or otherwise acquire or
commit to acquire, directly or indirectly, any interest in the Dental Practice:
5.02-5 Mortgage, pledge, otherwise encumber or subject to lien any of
the Dental Practice's assets or properties, tangible or intangible, or commit
itself to do any of the foregoing;
5.02-6 Except in the ordinary and usual course of its business and in
each case for fair consideration, dispose of, or agree to dispose of, any of the
Dental Practice's assets or lease or license to others, or agree so to lease or
license, any of the Dental Practice's assets;
19
5.02-7 Acquire any assets which would be material to the Dental
Practice other than assets acquired in the ordinary and usual course of business
and consistent with past practices;
5.02-8 Enter into any transaction or contract or make any commitment
to do the same, except in the ordinary and usual course of business and not
requiring the payment in any case of an amount in excess of $100,000 annually;
5.02-9 Increase the wages, salaries, compensation, pension or other
benefits payable, or to become payable by it, to any Dental Practice Employees
or agents, including without limitation any bonus payments or severance or
termination pay, other than increases in wages and salaries required by
employment arrangements existing on the date hereof or otherwise in the ordinary
and usual course of its business;
5.02-10 Implement or agree to any implementation of or amendment or
supplement to any employee profit sharing, pension, bonus, commission,
incentive, retirement, medical reimbursement, life insurance, deferred
compensation or any other employee benefit plan or arrangement for or affecting
Dental Practice Employees;
5.02-11 Change the accounting methods, policies or practices of
Seller; or
5.02-12 Agree or commit to do any of the foregoing.
5.03 Affirmative Covenants. Except as otherwise permitted by this Agreement
or as reasonably necessary or appropriate for the consummation of the
transactions contemplated by this Agreement or with the prior written consent of
GDSC, prior to the Closing Date, Seller shall:
5.03-1 Operate the Dental Practice, including collecting receivables
and paying payables, only in the ordinary course and consistent with past
practices;
5.03-2 Advise GDSC in writing of any litigation or administrative
proceeding that challenges or otherwise materially affects the transactions
contemplated hereby and of any Material Adverse Change or any event, occurrence
or circumstance which is likely to cause a Material Adverse Change;
5.03-3 When the consent of any third party to the transactions
contemplated by this Agreement is required under the terms of any contract or
agreement material to the Dental Practice to which Kaiser is a party or by which
Kaiser is bound, use his best efforts to obtain such consent on terms and
conditions not materially less favorable than those in effect on the date
hereof;
5.03-4 Use his best efforts to maintain all of the Tangible Personal
Property in good operating condition, reasonable wear and tear excepted,
consistent with past practices, and take all steps reasonably necessary to
maintain its intangible assets;
5.03-5 Not cancel or change any policy of insurance (including
self-insurance) or fidelity bond or any policy or bond providing substantially
the same coverage;
20
5.03-6 Maintain, consistent with past practices, all inventories,
spare parts, office supplies and other expendable items used or useful in the
Dental Practice;
5.03-7 Use his best efforts to retain all Dental Practice Employees;
5.03-8 Maintain his books and records in accordance with past
practices; and
5.03-9 Pay and discharge all taxes, assessments, governmental charges
and levies imposed upon him, his income or profits or upon any property
belonging to him, in all cases prior to the date on which penalties attach
thereto.
5.03-10 Comply with all laws, rules and regulations applicable to him
and the Dental Practice.
5.04 No Negotiations With Others. Except as otherwise permitted by this
Agreement or with the prior written consent of GDSC, Seller shall refrain, and
shall cause his employees and any investment banker, attorney, accountant or
other agent retained by him to refrain, from initiating or soliciting any
inquiries or making any proposals with respect to, or engaging in negotiations
concerning, or providing any confidential information or data to or having any
discussions with any person relating to, any acquisition, business combination
or purchase of all or any significant portion of the assets of, Seller. Seller
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
5.05 [Intentionally Omitted].
5.06 Formation of Professional Corporation. Prior to the Closing, Kaiser
shall cause the Professional Corporation to be formed pursuant to articles of
incorporation and bylaws in the form attached as Exhibit H and shall cause the
Professional Corporation to apply for and obtain a Certificate of Registration
and approval for use of the Professional Corporation's fictitious name, from the
California Board of Dental Examiners. The sole shareholder of the Professional
Corporation shall be a dentist holding a valid and unrestricted license to
practice dentistry in the State of California, who shall also be a full-time
employee at the Practice Location.
5.07 Employees. Effective as of the close of business on the Closing Date,
Seller shall terminate all employees of the Dental Practice. Except as expressly
assumed by GDSC under this Agreement, Seller shall be responsible for and shall
pay and discharge all obligations to such employees arising out of or in
connection with their employment prior to Closing.
21
ARTICLE VI
[Intentionally Omitted]
ARTICLE VII
Joint Covenants
GDSC and Kaiser covenant and agree that they will act in accordance with
the following:
7.01 Governmental Consents. Promptly following the execution of this
Agreement, the parties will proceed to prepare and file with the appropriate
governmental authorities any requests for approval or waiver, if any, that are
required from governmental authorities in connection with the transactions
contemplated hereby, and the parties shall diligently and expeditiously
prosecute and cooperate fully in the prosecution of such requests for approval
or waiver and all proceedings necessary to secure such approvals and waivers.
7.02 Best Efforts; No Inconsistent Action. Each party will use its best
efforts to effect the transactions contemplated by this Agreement and to fulfill
the conditions to the obligations of the other parties set forth in Article 8 or
9 of this Agreement. No party will take any action inconsistent with its
obligations under this Agreement or that could hinder or delay the consummation
of the transactions contemplated by this Agreement, except that nothing in this
Section 7.02 shall limit the rights of the parties under Articles 8, 9 and 10.
ARTICLE VIII
Conditions to Obligations of GDSC
The obligations of GDSC under Article 1 are, at its option, subject to
satisfaction, at or prior to the Closing, of each of the following conditions:
8.01 Governmental Approvals. All authorizations, consents and approvals of
all governmental agencies and authorities required to be obtained in order to
permit consummation of the transactions contemplated by this Agreement and the
operation of the Dental Practice by the Professional Corporation shall have been
obtained and be satisfactory in form and content to GDSC.
8.02 Consents. Seller shall have obtained the third-party consents required
under the terms of the Contracts and Leases, and such consents shall not have
required any change to the terms and conditions of the Contracts and Leases
other than changes consented to in writing by GDSC.
8.03 Representations, Warranties and Covenants.
8.03-1 All representations and warranties of Seller made in this
Agreement, or in any certificate delivered pursuant hereto, shall in all
material respects be true and complete on and as of the Closing Date with the
same force and effect as if made on and as of that date.
22
8.03-2 All of the terms, covenants and conditions to be complied with
and performed by Seller at or prior to the Closing shall in all material
respects have been complied with or performed thereby.
8.03-3 GDSC shall have received a certificate of Seller, dated as of
the Closing Date, to the effect that the representations and warranties of
Seller contained in this Agreement are in all material respects true and
complete on and as of the Closing Date as though made on and as of the Closing
Date and that Seller has in all material respects complied with or performed all
terms, covenants and conditions to be complied with or performed by him at or
prior to the Closing.
8.04 Adverse Proceedings. No third-party suit, action or claim or
governmental proceeding shall have been instituted or threatened against, and no
order, decree or judgment of any court, agency or other governmental authority
shall have been rendered against, GDSC or Seller to restrain or prohibit, or
obtain damages in respect of, this Agreement or the transactions contemplated by
this Agreement.
8.05 No Adverse Change. There shall not have been any Material Adverse
Change.
8.06 Support Services Agreement. The Professional Corporation shall have
executed and delivered a Support Services Agreement with GDSC in the form
attached hereto as Exhibit D.
8.07 Option Agreement. The sole shareholder of the Professional Corporation
shall have executed and delivered an Option Agreement relating to the stock of
the Professional Corporation in the form attached as Exhibit E.
8.08 Employment Agreements. Each dentist employed in the Dental Practice
shall have executed and delivered an Employment Agreement with the Professional
Corporation in the form attached hereto as Exhibit F and an Addendum to such
Employment Agreement in the form attached hereto as Exhibit G.
8.09 Closing of the Transactions. The transactions contemplated by the
following agreements (the "Transactions") shall close simultaneously with the
Closing: Asset Purchase Agreement dated September 21, 1997 by and among GDSC,
DPM, the Partners and Xxxx Xxxxxx, D.D.S.; Asset Purchase Agreement dated
September 21, 1997 by and among GDSC, DPM, the Partners and Xxxxxxxx Au, D.D.S.;
Merger Agreement dated September 21, 1997 by and among GDSC, Gentle Dental
Merger Corp., Dedicated Dental Systems, Inc. ("DDS") and the Shareholders of
DDS.
8.10 Fairness Opinion. GDSC shall have received an opinion from an
investment banking firm chosen by GDSC that the Transactions, together with the
transactions contemplated by this Agreement, are fair to GDSC and its
shareholders.
8.11 Professional Corporation. The Professional Corporation shall have been
duly incorporated and organized, and shall have obtained a Certificate of
Registration and fictitious name permit from the California Board of Dental
Examiners.
23
8.12 Actions Satisfactory to GDSC's Counsel. All actions, proceedings,
instruments and documents required to be carried out by this Agreement, or
incidental hereto, and all other relevant legal matters shall be reasonably
satisfactory to counsel for GDSC.
ARTICLE IX
Conditions to Obligations of Seller
The obligations of Seller under Article 1 are, at its option, subject to
satisfaction, at or prior to the Closing, of each of the following conditions:
9.01 Representations, Warranties and Covenants.
9.01-1 All representations and warranties of GDSC made in this
Agreement and in any certificate delivered pursuant hereto shall in all material
respects be true and complete on and as of the Closing Date with the same force
and effect as if made on and as of that date.
9.01-2 All of the terms, covenants and conditions to be complied with
and performed by GDSC on or prior to the Closing shall in all material respects
have been complied with or performed by GDSC.
9.01-3 Seller shall have received a Certificate of GDSC, dated as of
the Closing Date, executed by the President or other authorized officer of GDSC,
to the effect that the representations and warranties of GDSC contained in this
Agreement are in all material respects true and complete on and as of the
Closing Date as though made on and as of the Closing Date and that GDSC has in
all material respects complied with or performed all terms, covenants and
conditions to be complied with or performed by it at or prior to the Closing.
9.02 Adverse Proceedings. No third-party suit, action or claim or
governmental proceeding shall have been instituted or threatened against, and no
order, decree or judgment of any court, agency or other governmental authority
shall have been rendered against, GDSC or Seller to restrain or prohibit this
Agreement or the transactions contemplated by this Agreement.
9.03 Actions Satisfactory to Seller's Counsel. All actions, proceedings,
instruments and documents required to be carried out by this Agreement, or
incidental hereto, and all other relevant legal matters shall be reasonably
satisfactory to counsel for Seller.
ARTICLE X
Termination
10.01 Right of Parties to Terminate. This Agreement may be terminated:
24
10.01-1 by GDSC, if any of the authorizations, consents, approvals,
filings or registrations described in Section 8.01 hereof shall have been
denied, not permitted to go into effect or obtained on terms not reasonably
satisfactory to GDSC and all reasonable final appeals shall have been exhausted;
10.01-2 by GDSC, if Seller shall have breached any of his obligations
hereunder in a way that has resulted in a Material Adverse Effect and the breach
has continued without being cured for more than thirty (30) days;
10.01-3 by Seller, if GDSC shall have breached any of its obligations
hereunder in a way that has resulted in a GDSC Material Adverse Effect and the
breach has continued without being cured for more than thirty (30) days; or
10.01-4 by either Seller or GDSC, by written notice to the other
party, if the Closing shall not have occurred on or prior to February 28, 1998;
provided, however, that the right to terminate this Agreement under this Section
10.01-4 shall not be available to any party whose failure to fulfill or perform
any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date.
10.02 Effect of Termination. If either GDSC or Seller decides to terminate
this Agreement pursuant to Section 10.01, such party shall promptly give written
notice to the other party to this Agreement of such decision.
ARTICLE XI
Survival; Indemnification
11.01 Survival. All representations, warranties, covenants and agreements
made in this Agreement or in any schedule, certificate or assignment delivered
in accordance with this Agreement (collectively, the "Related Documents") shall
survive any investigation by or on behalf of any party, the execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and any termination or expiration of this Agreement, except that such
representations, warranties, covenants and agreements shall expire and be of no
further effect on the last day of the eighteenth (18th) full month following the
Closing Date, except as follows:
11.01-1 any claim of which notice has been given pursuant to Section
11.04 prior to the last day of the eighteenth (18th) full month following the
Closing Date shall not expire and shall continue until all damages arising from
such claim have been paid in full;
11.01-2 any claim arising from any breach or inaccuracy of any
representation or warranty in Section 4.03 or Section 4.07, or in the case of
fraud, shall not expire and shall continue without limitation; and
11.01-3 any claim arising from any breach or inaccuracy of any
representation or warranty in Section 4.22 shall expire on the expiration of all
applicable statutes of limitation.
25
11.02 Indemnification by Seller.
11.02-1 Notwithstanding any investigation by GDSC, from and after the
Closing, Seller shall indemnify, hold harmless and, to the extent provided in
Section 11.04-1, defend GDSC, its subsidiaries, shareholders, affiliates,
officers, directors, employees, agents, successors and assigns (collectively,
"GDSC's Indemnified Persons") from and against, and reimburse each of GDSC's
Indemnified Persons with respect to, any and all losses, damages, liabilities,
costs and expenses, including interest from the date of such loss to the time of
payment, penalties and reasonable attorneys' fees (collectively, "Damages")
incurred by any of GDSC's Indemnified Persons by reason of or arising out of or
in connection with:
(a) any breach or inaccuracy of any representation or warranty of
Seller made in this Agreement or any Related Document;
(b) any failure by Seller to perform any covenant required to be
performed by them pursuant to this Agreement or any Related Document; or
(c) any liability or obligation of Seller arising out of or in
connection with the ownership, use, condition, maintenance or operation of the
Dental Practice or the Assets on or prior to the Closing, in either case not
expressly assumed by GDSC in accordance with the terms of this Agreement, and
specifically including any liability to pay cash to a terminated employee on
account of accrued vacation time.
11.02-2 Any liability of Seller under this Section 11.02 or otherwise
for the breach or inaccuracy of any representation, warranty, covenant or
agreement made in this Agreement may, at the election of Seller, be satisfied by
delivery of shares of GDSC Common Stock (valued at the fair market value of such
shares at the time the liability of Seller is determined) to the GDSC
Indemnified Person.
11.03 Indemnification by GDSC.
11.03-1 Notwithstanding any investigation by Seller, from and after
the Closing, GDSC shall indemnify, hold harmless and, to the extent provided in
Section 11.04-1, defend Seller, the Professional Corporation, and their
respective partners, affiliates, officers, employees, agents, successors and
assigns (collectively, "Seller's Indemnified Persons") from and against, and
reimburse each of Seller's Indemnified Persons with respect to, any and all
Damages incurred by any of Seller's Indemnified Persons by reason of or arising
out of or in connection with:
(a) any breach or inaccuracy of any representation or warranty of
GDSC made in this Agreement or any Related Document;
(b) any failure by GDSC to perform any covenant required to be
performed by it pursuant to this Agreement or any Related Document;
(c) any liability or obligation of Seller to any third party
expressly assumed by GDSC in accordance with the terms of this Agreement; or
26
(d) any liability or obligation of GDSC arising out of or in
connection with the ownership, use, condition, maintenance or operation of the
Dental Practice or the Assets after the Closing.
11.04 Indemnification Procedure.
11.04-1 Third Party Claims.
(a) Each indemnified party shall, with reasonable promptness
after obtaining knowledge thereof, provide any indemnifying party against whom a
claim for indemnification is to be made under this Article 11 with written
notice of all third party actions, suits, proceedings, claims, demands or
assessments that may be subject to the indemnification provisions of this
Article 11 (collectively, "Third Party Claims"), including, in reasonable
detail, the basis for the claim, the nature of Damages and a good faith estimate
of the amount of Damages.
(b) Each indemnifying party shall have 15 days after its receipt
of the claim notice to notify the indemnified party in writing whether the
indemnifying party agrees that the claim is subject to this Article 11 and, if
so, whether the indemnifying party elects, jointly with any other indemnifying
party notified under Section 11.04-1(a), to undertake, conduct and control,
through counsel of its or their choosing (subject to the consent of the
indemnified party, such consent not to be withheld unreasonably) and at its or
their sole risk and expense, the good faith settlement or defense of the Third
Party Claim.
(c) If within 15 days after its receipt of the claim notice an
indemnifying party notifies the indemnified party that it elects to undertake
the good faith settlement or defense of the Third Party Claim, the indemnified
party shall cooperate reasonably with the indemnifying party in connection
therewith including, without limitation, by making available to the indemnifying
party all relevant information material to the defense of the Third Party Claim.
The indemnified party shall be entitled to participate in the settlement or
defense of the Third Party Claim through counsel chosen by the indemnified
party, at its expense, and to approve any proposed settlement that would impose
any obligation or duty on the indemnified party, which approval may, in the sole
discretion of the indemnified party, be withheld. So long as an indemnifying
party is contesting the Third Party Claim in good faith and with reasonable
diligence, the indemnified party shall not pay or settle the Third Party Claim.
Notwithstanding the foregoing, the indemnified party shall have the right to pay
or settle any Third Party Claim at any time, provided that in such event it
waives any right to indemnification therefor by the indemnifying party.
(d) If an indemnifying party does not provide notice that it
elects to undertake the good faith settlement or defense of the Third Party
Claim, or if an indemnifying party fails to contest the Third Party Claim or
undertake or approve settlement, in good faith and with reasonable diligence,
the indemnified party shall thereafter have the right to contest, settle or
compromise the Third Party Claim at its exclusive discretion, at the risk and
expense of the indemnifying party, and the indemnifying party will thereby waive
any claim, defense or argument that the indemnified party's settlement or
defense of such Third Party Claim is in any respect inadequate or unreasonable.
27
(e) A party's failure to give timely notice will not constitute a
defense, in part or in whole, to any claim for indemnification by such party,
except if, and only to the extent that, such failure results in any material
prejudice to the indemnifying party.
11.04-2 Non-Third Party Claims.
(a) Each indemnified party shall, with reasonable promptness,
deliver to any indemnifying party against whom a claim for indemnification is to
be made under this Article 11 written notice of all claims for indemnification
under this Article 11, other than Third Party Claims, including, in reasonable
detail, the basis for the claim, the nature of Damages and a good faith estimate
of the amount of Damages.
(b) Each indemnifying party shall have 30 days after its receipt
of the claim notice to notify the indemnified party in writing whether the
indemnifying party accepts liability for all or any part of the Damages
described in the claim notice. If the indemnifying party does not so notify the
indemnified party, the indemnifying party shall be deemed to accept liability
for all the Damages described in the claim notice.
(c) A party's failure to give timely notice will not constitute a
defense, in part or in whole, to any claim for indemnification by such party,
except if, and only to the extent that, such failure results in any material
prejudice to the indemnifying party.
11.05 Limitation on Indemnification Obligations. The indemnification
obligations set forth in Sections 11.02 and 11.03 shall not apply unless the
total amount of Damages incurred either by GDSC's Indemnified Persons or by
Seller (as the case may be) exceeds $100,000 in the aggregate, as a result of
all matters giving rise to rights to indemnification under those Sections. In
the event that the amount of Damages exceeds that threshold, GDSC's Indemnified
Persons or Seller (as the case may be) shall be entitled to indemnification for
the full amount of all Damages for which indemnification is to be provided under
Section 11.02 or 11.03, except that the indemnification obligations set forth in
Section 11.02 or 11.03 shall not exceed $1,250,000 under either section.
11.06 Rights Not Exclusive. An indemnified party's rights to
indemnification under this Article 11 are in addition to, and not in lieu of,
any other rights to which the indemnified party may be entitled at law or in
equity.
ARTICLE XII
Confidentiality; Press Releases
12.01 Confidentiality.
12.01-1 No information concerning Seller not previously disclosed to
the public or in the public domain that has been furnished to or obtained by
GDSC under this Agreement or in connection with the transactions contemplated
hereby shall be disclosed to any person other than in confidence to employees,
legal counsel, financial advisers or independent public accountants of
28
GDSC or used for any purpose other than as contemplated herein. If the
transactions contemplated by this Agreement are not consummated, GDSC shall hold
such information in confidence for a period of four years from the date of any
termination of this Agreement or such longer period as is required by agreement
or law, and all such information that is in writing or embodied on a diskette,
tape or other tangible medium shall be promptly returned to Seller.
12.01-2 No information concerning GDSC not previously disclosed to the
public or in the public domain that has been furnished to or obtained by Seller
under this Agreement or in connection with the transactions contemplated hereby
shall be disclosed to any person other than in confidence to the employees,
legal counsel, financial advisers or independent public accountants of Seller or
used for any purpose other than as contemplated herein. If the transactions
contemplated by this Agreement are not consummated, Seller shall hold such
information in confidence for a period of four years from the date of any
termination of this Agreement or such longer period as is required by agreement
or law, and all such information that is in writing or embodied on a diskette,
tape or other tangible medium shall be promptly returned to GDSC.
12.01-3 Notwithstanding the foregoing, such obligations of GDSC and of
Seller shall not apply to information
(a) that is, or becomes, publicly available from a source other
than GDSC or Seller, as the case may be;
(b) that was known and can be shown to have been known by GDSC at
the time of its receipt from Seller, or by Seller at the time of its receipt
from GDSC, as the case may be;
(c) that is received by GDSC from a third party without breach of
this Agreement by GDSC, or is received by Seller from a third party without
breach of this Agreement by Seller, as the case may be;
(d) that is required by law to be disclosed; or
(e) that is disclosed in accordance with the written consent of
GDSC or of Seller, as the case may be.
12.02 Press Releases. No press releases or other public announcements
concerning the transactions contemplated by this Agreement shall be made by
Seller without the prior written consent of GDSC; provided, however, that
nothing herein shall prevent a party from supplying such information or making
statements as required by governmental authority or in order for a party to
satisfy its legal obligations (prompt notice of which shall in any such case be
given to the other party or parties).
29
ARTICLE XIII
Other Provisions
13.01 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. No party hereto may voluntarily or involuntarily assign such
party's interest under this Agreement without the prior written consent of the
other parties.
13.02 Entire Agreement. This Agreement and the Schedules and Exhibits
referred to herein embody the entire agreement and understanding of the parties
and supersede any and all prior agreements, arrangements and understandings
relating to matters provided for herein.
13.03 Fees and Expenses. GDSC shall be solely responsible for all costs and
expenses incurred by it, and Seller shall be solely responsible for all costs
and expenses incurred by them, in connection with the negotiation, preparation
and performance of and compliance with the terms of this Agreement.
13.04 Amendment, Waiver, etc. The provisions of this Agreement may be
amended or waived only by an instrument in writing signed by the party against
which enforcement of such amendment or waiver is sought. Any waiver of any term
or condition of this Agreement or any breach hereof shall not operate as a
waiver of any other such term, condition or breach, and no failure to enforce
any provision hereof shall operate as a waiver of such provision or of any other
provision hereof.
13.05 Headings. The headings are for convenience only and will not control
or affect the meaning or construction of the provisions of this Agreement.
13.06 Governing Law. The construction and performance of this Agreement
will be governed by the laws of the State of California (except for the choice
of law provisions thereof).
13.07 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing; shall be
delivered personally, including by means of telecopy, or mailed by registered or
certified mail, postage prepaid and return receipt requested; shall be deemed
given on the date of personal delivery or on the date set forth on the return
receipt; and shall be delivered or mailed to the addresses or telecopy numbers
set forth on the first page of this Agreement or to such other address as any
party may from time to time direct, with copies to:
In the case of GDSC:
Stoel Rives LLP
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
30
In the case of Seller:
Xxxxx & Xxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxx
13.08 Breach; Equitable Relief. The parties acknowledge that the Dental
Practice and rights of the parties described in this Agreement are unique and
that money damages alone for breach of this Agreement would be inadequate. Any
party aggrieved by a breach of the provisions hereof may bring an action at law
or suit in equity to obtain redress, including specific performance, injunctive
relief or any other available equitable remedy. Time and strict performance are
of the essence in this Agreement.
13.09 Attorneys' Fees. If suit or action is filed by any party to enforce
the provisions of this Agreement or otherwise with respect to the subject matter
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees as fixed by the trial court and, if any appeal is taken from the
decision of the trial court, reasonable attorneys' fees as fixed by the
appellate court. For purposes of this Agreement, the term "prevailing party"
shall be deemed to include a party that successfully opposes a petition for
review filed with an appellate court.
31
13.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
GDSC: GENTLE DENTAL SERVICE CORPORATION
By: X.X. XXX XXXXXX
-------------------------------------
Title: CFO
----------------------------------
Seller:
XXXXXX X. XXXXXX
-----------------------------------------
Xxxxxx X. Xxxxxx, D.D.S.
32
