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EXHIBIT 10.20
STOCK PURCHASE AGREEMENT
BETWEEN
FIRST NEW ENGLAND DENTAL CENTERS, INC.,
AND
THE OWNERS OF THE ISSUED AND OUTSTANDING
CAPITAL STOCK OF
XXXXXXXXX & XXXXXXX, P.C.:
XXXXX XXXXXXXXX, D.D.S.
XXXXXX XXXXXXX, D.M.D.
Dated as of November 12, 1996
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of November 12,
1996, by and among FIRST NEW ENGLAND DENTAL CENTERS, INC., a Delaware
corporation ("FNEDC") and XXXXX XXXXXXXXX, D.D.S. ("Xxxxxxxxx") and XXXXXX
XXXXXXX, D.M.D., P.C. ("Xxxxxxx"), the undersigned shareholders (the
"Shareholders") of XXXXXXXXX & XXXXXXX, P.C. (the "Company").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of the management of
dental services (the "Business");
WHEREAS, FNEDC intends to acquire all of the outstanding common stock
of the Company at the Closing (defined in Section 5.1);
WHEREAS, immediately prior to the Closing, the Company intends to amend
its Articles of Organization to become a general business corporation under
Massachusetts General Laws, Chapter 156B.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
GENERAL TERMS
I.1. Consideration. On the Closing Date and subject to Section 1.2
hereof, each issued and outstanding share of common stock of the Company
("Company Stock") shall be converted into and exchanged for the right to receive
Eight Hundred Sixty-Four Thousand Eight Hundred Forty-Three Dollars ($864,843),
to be paid to the Shareholders as follows:
(i) convertible promissory notes, each substantially in the
form set forth in Exhibit 1.1(i), in the principal aggregate amount of
Two Hundred Thousand Dollars ($200,000), as follows: (A) One Hundred
Thousand Dollars ($100,000) to Xxxxxxxxx, and (B) One Hundred Thousand
Dollars ($100,000) to Xxxxxxx (the "Convertible Notes");
(ii) the aggregate sum of One Hundred Eighty-Seven Thousand
Five Hundred Dollars ($187,500), to be paid by FNEDC on the Closing
Date, by bank check or wire transfer, as follows: (A) Ninety Three
Thousand Seven Hundred Fifty Dollars ($93,750) to Xxxxxxxxx, and (B)
Ninety Three Thousand Seven Hundred Fifty Dollars ($93,750) to Xxxxxxx
(collectively, the "Funds");
(iii) promissory notes (the "Promissory Notes"), each
substantially in the form set forth at Exhibit 1.1(iii), in the
principal aggregate amount
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of One Hundred Eighty-Seven Thousand Five Hundred Dollars ($187,500),
as follows: (A) Ninety-Three Thousand Seven Hundred and Fifty Dollars
($93,750) to Xxxxxxxxx, and (B) Ninety-Three Thousand Seven Hundred and
Fifty Dollars ($93,750) to Xxxxxxx;
(iv) the aggregate sum of Two Hundred and Twenty-Five Thousand
Dollars ($225,000), to be paid by FNEDC on behalf of the Company to
Bank of Braintree on the Closing Date, by wire transfer, which,
together with the amounts paid to Bank of Braintree by the Shareholders
on or before the Closing Date, shall be in full satisfaction of the
Company's obligations to Bank of Braintree (the "Bank of Braintree
Loan"); and
(v) the aggregate sum of Sixty-Four Thousand Eight Hundred
Forty-Three Dollars ($64,843) as reimbursement of Shareholders by FNEDC
for trade payables assumed, to be paid by bank check, as follows: (A)
Thirty-Two Thousand Four Hundred Twenty-One and Fifty Cents Dollars
($32,421.50) to Xxxxxxxxx, and (B) Thirty-Two Thousand Four Hundred
Twenty-One and Fifty Cents Dollars ($32,421.50) to Xxxxxxx (such amount
together with the Promissory Notes, the Convertible Notes and the
Funds, the "Cash Component")
I.2. Delivery of Certificates and Consideration.
(a) Delivery of Company Stock Certificates. At the Closing, the
Shareholders shall deliver to FNEDC all certificates which represent shares of
Company Stock.
(b) Delivery of Closing Consideration. At the Closing, FNEDC shall
issue and deliver to the Shareholders the Convertible Notes and Promissory Notes
to which the Shareholders shall be entitled pursuant to Section 1.1 hereof.
FNEDC shall also pay the Cash Component to the Shareholders as provided in
Section 1.1(b) above.
I.3. Tax Liability. If the Company has a liability with respect to any
taxes for any period prior to the Closing Date, then the amount of such tax
liability (the "Tax Liability") shall be added to the Group Productivity Target
set forth at Exhibit B in the Shareholders' Dental Employment Agreements
(defined below) for the first full contract year of such agreement. The Parties
agree that, in accordance with APB Opinion 16 and for accounting purposes only,
the Closing shall be deemed to have occurred and take effect on October 1, 1996.
I.4. Pre-paid Expenses. At the Closing, FNEDC shall reimburse the
Shareholders for the pre-paid expenses set forth on Schedule 1.4 attached
hereto.
I.5. Withdrawal of Cash. Except for amounts necessary to pay any
outstanding checks of the Company drawn upon the Company's bank accounts, the
Shareholders shall be entitled to withdraw the remainder of all funds from said
accounts on the Closing Date.
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I.6. Accounts Payable. The Shareholders shall assume the responsibility
for timely payment of all of the accounts payable of the Company accruing prior
to the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
II.1. Representations and Warranties of FNEDC.
FNEDC hereby represents and warrants to the Shareholders that
each of the statements contained in this Section 2.1 is true and correct in all
respects as of the date hereof and will be true and correct at and as of the
Closing.
(a) Organization, Power and Standing. FNEDC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with all requisite corporate power and authority to own its properties
and to carry on its business as such business is now conducted and presently
proposed to be conducted. The copies of FNEDC's Certificate of Incorporation and
by-laws, as amended through the date hereof, that have been delivered to the
Shareholders by FNEDC, are complete and correct as of the date of this Agreement
and will continue in effect without further amendment through the Closing.
(b) Power and Authority Relative to Transaction. FNEDC has full
corporate power and authority and has taken all required action necessary to
permit it to execute and deliver this Agreement and to perform all of the
obligations contained herein, and to execute, deliver and perform all of the
obligations contained in all other instruments or agreements required hereby or
incident or collateral hereto, and none of such actions conflicts with or
violates any provision of law known to FNEDC or of the Certificate of
Incorporation or Bylaws of FNEDC, or violates or constitutes a default under or
will result in any breach of any agreement, indenture, deed of trust, mortgage,
instrument, lease, order, judgment, writ, injunction, decree, license or permit
of any court or governmental or regulatory body applicable to FNEDC or by which
FNEDC or its assets may be bound.
(c) Valid and Binding Obligation. This Agreement constitutes, and
each other instrument or agreement to be executed and delivered by FNEDC under
this Agreement will constitute, the valid and legally binding obligation of
FNEDC, enforceable against it in accordance with their respective terms, subject
to applicable bankruptcy, insolvency and other general laws affecting the rights
and remedies of creditors, except that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(d) Required Consents. No consent, order, approval,
authorization, declaration or filing including, without limitation, any consent,
approval or authorization of or declaration or filing with any governmental
authority, is required on the part of FNEDC for or in connection with the
execution and delivery of this Agreement.
(e) No Brokers. FNEDC has not dealt with any broker, finder or
similar
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agent with respect to the transactions contemplated by this Agreement and FNEDC
is not under any obligation to pay any broker's fee, finder's fee or commission
in connection with the transactions contemplated by this Agreement.
(f) Litigation. Except as described on the attached Schedule
2.1(f), there is no litigation, proceeding or investigation pending or, to the
best of FNEDC's knowledge, threatened (nor, to the best of FNEDC's knowledge, is
there any basis therefor) against FNEDC or affecting any of its properties,
rights or assets or against any officer or employee which relates to the affairs
of FNEDC or the right of any officer or employee to participate in the business
of FNEDC and which is reasonably likely to result in any material adverse change
in the business or condition (financial or otherwise), prospects, assets or
liabilities of FNEDC or which relates to the FNEDC Stock or the transactions
contemplated by this Agreement, in any court or before any authority or
governmental entity including, without limitation, actions, proceedings or
investigations with respect to any alleged violation by FNEDC of any law,
statute, ordinance, regulation, order, policy or guideline of any governmental
entity.
(g) Capitalization. FNEDC's entire authorized capital stock
consists of 10,000,000 shares of FNEDC Common Stock, $.01 par value per share.
As of the date of execution of this Agreement, an aggregate total of 4,773,588
shares of FNEDC Common Stock are issued and presently outstanding. Subject to
the accuracy and completeness of the representations made, and the information
provided by others in connection with the issuance of FNEDC Common Stock, all of
the outstanding FNEDC Common Stock has been issued in full compliance with all
applicable securities laws. FNEDC has no outstanding options, warrants,
conversion rights, exchange privileges or other commitments to issue or to
acquire any shares of its capital stock or any securities or obligations
convertible or exchangeable into shares of its capital stock except as set forth
in Schedule 2.1(g).
(h) Qualification to Do Business. FNEDC is duly qualified to do
business in Massachusetts and in all other jurisdictions in which failure to so
qualify would have a material adverse effect on FNEDC.
(i) Compliance with Laws. FNEDC is not in material violation of
any Federal, state or local statute, ordinance, judgment, decree, order or
governmental rule, regulation, policy or guideline applicable to FNEDC in a
manner which could materially and adversely affect its condition (financial or
otherwise) or the transactions contemplated by this Agreement.
(j) Financial Statements. The unaudited financial statements of
FNEDC which have been provided to the Shareholders in connection with the
transactions contemplated by this Agreement (a) fairly present the financial
position and results of operations of FNEDC as of the respective dates thereof,
subject to the absence of year end adjustments and footnotes; (b) are in
accordance with the books and records of FNEDC; and (c) are prepared in
accordance with a modified cash basis of accounting consistently applied. FNEDC
has no debts, liabilities or obligations of any nature whatsoever which are not
disclosed on such financial statements.
(k) Investigation. The Shareholders have made available to FNEDC
written
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information which they have requested and have answered to FNEDC's satisfaction
all inquiries made by them; provided, however, that no such information or
answers shall in any way mitigate, limit or qualify the Shareholders'
representations and warranties set forth in, respectively, Sections 2.2 and 2.3
hereof, nor minimize FNEDC's reliance on such representations and warranties as
a condition to entering into this Agreement.
(l) Disclosure. Neither the representations and warranties of
FNEDC contained in this Agreement nor the financial or other information
included in the Schedules hereto, nor any other document, certificate or written
statement furnished to the Shareholders by FNEDC in connection herewith contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein complete
and not misleading as of the dates thereof in light of the circumstances in
which they were made. There is no fact presently known to FNEDC which may (so
far as FNEDC can now reasonably foresee) materially adversely affect the
business, operations, affairs, prospects or condition of FNEDC or its property
or assets which has not been set forth in this Agreement or in a document,
certificate or written statement furnished to the Shareholders by FNEDC pursuant
hereto.
II.2. Representations and Warranties Concerning the Company.
The Shareholders hereby represent and warrant to FNEDC that each
of the statements contained in this Section 2.2 (including the Schedules hereto)
is true and correct as of the date of this Agreement and will be true and
correct at and as of the Closing.
(a) Organization, Power and Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of The Commonwealth of Massachusetts with all requisite corporate power and
authority to own its properties and engage in the business in which it is
currently engaged (except that upon conversion to a general business corporation
under M.G.L. 156B, the Company shall no longer be authorized to engage in the
practice of dentistry). The copies of the Company's Articles of Organization and
by-laws, as amended through the date hereof, that have been delivered to FNEDC
by the Company are complete and correct as of the date of this Agreement and
will continue in effect without further amendment (except to convert the Company
to a general business corporation) through the Closing.
(b) Subsidiaries and Interest in Other Entities. The Company has
no subsidiaries nor does it, directly or indirectly, own or have the right to
acquire any equity interest in any other corporation, partnership, joint venture
or other business organization, except as provided herein. The Company has not
made any investment in or advance of cash or other extension of credit to any
company, entity or individual.
(c) Capitalization. The Company's entire authorized capital stock
consists of 20,000 shares of common stock, no par value per share (the "Company
Stock"), of which 1,000 shares are issued and presently outstanding and held by
Xxxxx Xxxxxxxxx, D.D.S. and 1,000 shares are issued and presently outstanding
and held by Xxxxxx Xxxxxxx, D.M.D.
All of the outstanding stock of the Company has been issued in
full compliance
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with all applicable securities laws. The Company has no outstanding options,
warrants, conversion rights, exchange privileges or other commitments to issue
or to acquire any shares of its capital stock or any securities or obligations
convertible or exchangeable into shares of its capital stock except as set forth
in Schedule 2.2(c).
(d) Qualification to do Business. The Company is duly qualified
to do business in Massachusetts and in all other jurisdictions in which the
failure to so qualify would have a material adverse effect on the Company.
(e) Financial Statements. Schedule 2.2(e) hereto includes: the
unaudited 1995 financial statements of the Company and the Profit and Loss and
Balance Sheets as of September 30, 1996. The financial information included in
Schedule 2.2(e) is collectively referred to as the "Financial Information." The
Financial Information is complete and accurate and fairly presents the financial
condition of the Company at the dates indicated and the results of its operation
for the periods indicated, subject to year-end adjustments and footnote
disclosures, and was prepared in accordance with the books and records of the
Company and in conformity with an accrual basis of accounting, consistently
applied.
(f) Absence of Undisclosed Liabilities. Except for current
liabilities incurred in the ordinary and usual course of business since
September 30, 1996, the costs incurred in connection with the transactions
contemplated hereby, and liabilities reflected in the Schedules to this
Agreement, the Company has no liabilities, whether absolute, accrued, contingent
or otherwise and whether due or to become due, except as and to the extent
reflected or reserved against in the Financial Information. Except for those
liabilities set forth in Schedule 2.2(f) and accounts payable incurred in the
ordinary and usual course of business since September 30, 1996, the Company
shall not have any liabilities as of the Closing Date.
(g) Title to Properties, Etc.. Except as set forth in the
Financial Information or as listed on Schedule 2.2(g), the Company is the sole
owner of, and has good, valid and marketable title to, all of its properties and
assets, real and personal, including all those reflected in the Financial
Information (except for such assets as may have been since sold or otherwise
disposed of in the ordinary course of business), and all trademarks, copyrights,
and service marks used in connection with the Business. None of such properties
is subject to any mortgage, pledge, lien, conditional sale agreement, security
interest, encumbrance or other charge except:
(i) liens, encumbrances and leases incurred or made in the
ordinary course of business which do not materially impair the
usefulness of such properties and assets in the conduct of the business
of the Company (but excluding liens securing payment of indebtedness);
(ii) liens from nondelinquent taxes, assessments or
governmental charges or levies; and
(iii) as specifically set forth on Schedule 2.2(g).
The Company enjoys peaceful and undisturbed possession under the leases set
forth on
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Schedule 2.2(g). All such leases are valid, subsisting and in full
force and effect, and there are no uncured defaults of the Company under such
leases. The assets and properties of the Company, including those obtained
pursuant to said leases, are adequate to conduct the operations currently
conducted and presently proposed to be conducted by the Company. Except as set
forth in Schedule 2.2(g), all machinery, equipment and other assets of the
Company are in good repair, reasonable wear and tear excepted, have been well
maintained and, to the best of the Shareholders' knowledge, conform in all
material respects to all applicable ordinances, regulations and zoning or other
laws, and such machinery and equipment is in good working order. There is no
pending or, to the best of the Shareholders' knowledge, threatened condemnation
of any such property. Except as set forth in Schedule 2.2(g), the leasehold or
other interest of the Company in such real property is not subject or
subordinate to any security interest, lien or mortgage, except with respect to
liens described in Subsections 2.2(g)(i) and (ii) above. The lease for the
Company's premises has not been amended and neither the landlord nor the Company
is in default thereunder. To the best of the Shareholders' knowledge, the use of
the Company's premises by the Company and the occupancy and operation thereof by
the Company are in compliance in all material respects with all applicable
Federal, state and local laws, ordinances and regulations, including without
limitation Federal and state safety, health, environmental protection and
hazardous waste laws, regulations, standards and ordinances.
(h) Conduct of Business; Absence of Material Adverse Changes.
Since October 1, 1996, except as otherwise required pursuant to this Agreement,
the Business has been conducted only in the usual and ordinary course, and there
has been (i) no sale, transfer or other disposition of any of the Company's
material assets or capital stock; (ii) no encumbrance placed upon the Company's
assets or stock; (iii) no other event or condition known to the Shareholders
which materially and adversely affects, or which is reasonably likely to
materially and adversely affect, the Business or the condition (financial or
other), prospects, assets or liabilities of the Company; and (iv) no free
service, premium or gift offered as an inducement to existing or prospective
patients (other than charitable care provided in accordance with the Company's
policy regarding uncompensated care).
In particular, and without limiting the generality of the foregoing,
since October 1, 1996 the Shareholders have not permitted the Company to do any
of the following, except as otherwise contemplated herein:
(i) change its method of management or operations;
(ii) amend its Articles of Organization or By-Laws;
(iii) terminate the services of any employee, consultant or
agent of the Company;
(iv) increase the compensation payable or to become payable to
any officer, director, employee or agent of the Company or make or
enter into any bonus payment arrangement with any officer, director,
employee, or agent, or hire or engage any additional management
personnel or consultants for the business of the Company, except as
disclosed in Schedule 2.2(l) or in connection with the transactions
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contemplated hereunder;
(v) directly or indirectly redeem, purchase or otherwise
acquire or dispose of any properties or assets except in the ordinary
course of business;
(vi) subject any of its properties or assets to any mortgage,
pledge, security interest or lien;
(vii) directly or indirectly redeem, purchase or otherwise
acquire any of its outstanding capital stock;
(viii) incur any indebtedness for borrowed money, make any
loans or advances to any individual, firm or corporation or assume,
guarantee or endorse, or otherwise become responsible for the
obligation of any other individual, firm or corporation, except in the
ordinary course of business;
(ix) modify, amend, cancel or terminate any existing agreement
material to its business, including the making of any substantial
prepayment on any existing obligation, except in the ordinary course of
business;
(x) make any material change in the accounting methods or
practices employed by the Company as at the date hereof in respect of
the business of the Company;
(xi) enter into any contract or commitment involving in any
instance aggregate payment by the Company of more than $1,000 or
extending beyond the Closing Date, except in connection with the
transactions contemplated hereby or in the usual and ordinary course of
business consistent with past practice;
(xii) declare or pay any dividend or distribution in respect
of its capital stock, either in cash, kind or in shares of stock or
issue or authorize any securities of the Company or grant stock
options, warrants or other rights to acquire shares of its stock or
securities convertible into or exchangeable for shares of its stock;
(xiii) take any other action which would materially adversely
affect or detract from the value of the Company or the Company Stock,
including without limitation cancelling any debts or claims;
(xiv) waive any rights of material value or modify, amend,
alter or terminate any Material Contract; and/or
(xv) directly or indirectly offer, solicit or entertain offers
for or take any other action with a view to the sale of all or any
substantial part of the assets, capital stock or business of the
Company.
(i) Tax Returns and Payments. The Company has prepared in good
faith and filed when due, or timely obtained extensions of time for filing, all
tax returns required by
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law to be filed, and has paid when due all taxes, assessments and other
governmental charges (whether or not shown on any tax return), including without
limitation, all estimated tax payments imposed upon any of its properties,
assets or income. To the best of the Shareholders' knowledge, the Company has no
liability for any Federal, state or local taxes not yet paid which relate to
prior taxable years, except the 1995 tax year and the portion of the 1996 tax
year preceding the Closing. To the best of the Shareholders' knowledge, all such
tax returns are correct and complete in all material respects and no income tax
return nor any corporation excise tax return of the Company has ever been
audited. The Company has never filed a consent under Section 341(f) of the Code.
The Company has not executed any waiver or consent that would have the effect of
extending any applicable statute of limitations in respect of any of its tax
liabilities. To the best of the Shareholders' knowledge, the charges, accruals
and reserves on the books of the Company in respect of taxes for all fiscal
periods are adequate, and there is no unpaid assessment or any basis for the
assessment of any material amount of additional taxes for any period or partial
period preceding the Closing. Except as set forth on Schedule 2.2(i), neither
the Internal Revenue Service nor any other taxing authority has asserted or
threatened to assert, or is now asserting or threatening to assert, against the
Company any deficiency or claim for additional taxes or interest thereon or
penalties in connection therewith. The Company has withheld from its employees'
or its other payees' gross compensation and has paid over to appropriate
governmental authorities all tax and other withholdings required by applicable
law.
(j) Compliance with Laws. The Company is not in material
violation of any Federal, state or local statute, ordinance, judgment, decree,
order or governmental rule, regulation, policy or guideline applicable to the
Company in a manner which could materially and adversely affect its condition
(financial or otherwise), the transactions contemplated by this Agreement or the
Business.
(k) Insurance. The Company is insured under the insurance
policies listed in Schedule 2.2(k), all of which are valid and in full force.
Except as otherwise indicated on Schedule 2.2(k), all liability insurance
policies are on an "occurrence" basis. All premiums due to date under such
policies have been paid, and no default exists thereunder. To the best of the
Shareholders' knowledge, the insurance listed in Schedule 2.2(k) is in amounts
adequate to cover losses on physical assets.
(l) Employees and Compensation.
(i) The Company is not in violation of any applicable Federal,
state or local laws or regulations with respect to employment,
employment practices, or the terms and conditions of employment, wages
and hours in a manner which could materially and adversely affect its
condition (financial or otherwise). None of the Company's employees is
represented by any union, and there is no labor strike, slowdown,
stoppage, organizational effort, dispute or proceeding by or with any
employee or former employee of the Company or any labor union pending
or threatened against the Company.
(ii) There are no employment or consulting contracts or
arrangements (other than those terminable at will) with any employees
or consultants of or associated
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with the Company, except as described on Schedule 2.2(l) hereto.
Schedule 2.2(l) also sets forth a true and complete list of all
employees of and consultants to the Company, showing date of hire,
hourly rate or salary or other basis of compensation, each bonus,
hourly rate increase and/or salary increase granted since November 1,
1996 (or committed to be granted in connection with the transactions
contemplated hereunder), and job function.
(m) Employee Benefits. Schedule 2.2(m) contains a complete and accurate
list of each plan, arrangement, understanding, practice or commitment, formal or
informal, firm or contingent, written or oral, currently sponsored, maintained
or contributed to by the Company which covers, or which at any time prior to the
Closing Date covered, any of the current or former officers, employees or
independent contractors of the Company or its predecessors and providing any of
the following benefits: bonus, stock bonus, profit sharing, pension, retirement,
life insurance, medical, hospitalization, dental, vision, disability, vacation,
workers' compensation, deferred or incentive compensation, severance benefits
and including, without limitation, each "employee pension benefit plan" (within
the meaning of Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended (hereinafter "ERISA")) and "employee welfare benefit plan"
(within the meaning of Section 3(1) of ERISA) (collectively, the "Plans").
Except as disclosed on Schedule 2.2(m):
(i) The Company and the Shareholders have not engaged in any
transactions which would, directly or indirectly, subject any Plan, its
related trust or the Company to a tax or penalty imposed under Section
4975 of the Code or Section 502(i) of ERISA;
(ii) The Company and the Shareholders have performed all their
material obligations under the Plans and have not violated the
provisions of any of the Plans and, to the best knowledge of the
Company and the Shareholders, no other party is in violation thereof;
(iii) Each Plan is in compliance in all material respects with
all applicable requirements prescribed by all statutes (including,
without limitation, ERISA and the Code), orders, governmental rules and
regulations;
(iv) All payments required to be made to each Plan as of the
Closing Date have been timely and completely made;
(v) There is no suit, action, dispute, claim, arbitration or
legal, administrative or other proceeding or governmental investigation
pending, or to the best knowledge of the Company, threatened, alleging
any breach of the terms of any Plan or of any fiduciary duties
thereunder or violation of any applicable law with respect to any Plan;
(vi) Subject to applicable requirements of ERISA, neither any
provision of any Plan nor any agreement with any employee nor any
representation or course of conduct by or on behalf of the Company
would prevent the amendment or termination after the Closing Date of
any Plan without liability to the Company;
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(vii) There are no benefits or severance obligations of the
Company that will arise as a result of the transactions contemplated
hereunder;
(viii) No Plan which is an "employee welfare benefit plan"
provides for continuing benefits or coverage, including but not limited
to medical, health or life insurance, to an employee or former employee
following termination of employment with the Company other than that
either required by Section 4980B of the Code and Sections 601 through
609 of ERISA (or similar provisions of state law), or provided in
accordance with the conversion feature of the Plan.
(ix) Each Plan which is a "group health plan" (within the
meaning of Section 4980(B)(a)(2) of the Code) is in material compliance
with the applicable requirements under Section 4980B of the Code and
Sections 601 through 609 of ERISA;
(x) No Plan is, or forms part of, a "multiple employer welfare
arrangement" (within the meaning of Section 3(40) of ERISA), a
"multiemployer plan" (within the meaning of Section 4001(a)(3) of
ERISA) or a "voluntary employees' beneficiary association" (within the
meaning of Section 501(c)(9) of the Code);
(xi) With respect to each Plan which is a self-insured
"employee welfare benefit plan," no claims have been made pursuant to
any such Plan that have not yet been paid and, to the best knowledge of
the Company, no injury, sickness or other medical condition has been
incurred with respect to which claims may be made pursuant to any such
Plan; and
(xii) All reports, forms and other documents with respect to
any Plan required to be filed with any government entity or to be
disclosed to Plan participants and their beneficiaries have been timely
filed or disclosed, as the case may be, and are accurate in all
material respects.
(n) Material Contracts. Schedule 2.2(n) hereto sets forth a complete
and accurate list and compilation of all material:
(i) Contracts with respect to the provision of health care
services, including all contracts between third party payors and the
Company or the Shareholders;
(ii) Licenses, leases, contracts and other arrangements with
respect to any material property of the Company;
(iii) Contracts (written or unwritten) with respect to which
the Company has any liability or obligation, contingent or otherwise,
involving more than $1,000 or which may otherwise have any continuing
effect after the Closing Date, or which place any material limitation
on the method of conducting or the scope of the Business;
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(iv) Contracts of the Company with directors, officers,
employees, agents and/or consultants of the Company or the spouses or
relatives of such persons;
(v) Compensation arrangements for all employees and
consultants including rates of pay and other benefits and the amounts
of compensation and other benefits accrued as of a recent date;
(vi) Agreements, contracts or instruments relating to the
borrowing of money, or the guaranty of any obligation for the borrowing
of money;
(vii) Contracts between officers, directors or employees of
the Company and any other person or entity which purport to restrict
the Company's business activities or use of information in the
Business, including without limitation any covenant not to compete;
(viii) All agreements relating to any securities of the
Company or rights in connection therewith; and
(ix) Any contracts, leases or other agreements referred to in
any other Schedule hereunder, and any other material contracts,
instruments, commitments, plans or arrangements of the Company.
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All the foregoing are herein called "Material Contracts." Schedule 2.2(n)
includes with respect to each Material Contract the names of the parties, the
date thereof, its title or other general description. Copies of all written
Material Contracts have been delivered to FNEDC or FNEDC's counsel. Each
Material Contract sets forth the entire arrangement and understanding between
the Company and the respective third parties with respect to the subject matter
thereof and, except as indicated in such Schedule, there have been no amendments
or side or supplemental arrangements to or in respect of any Material Contract.
The Company has furnished to FNEDC true and correct copies of all Material
Contracts as currently in effect, and will furnish any further information that
FNEDC may reasonably request in connection therewith. Each Material Contract is
valid and in full force and effect, and the Company has performed all material
obligations required to be performed by it thereunder. The Company is not in
material default under or in material breach or material violation of (x) its
Articles of Organization or Bylaws, or (y) any Material Contract, or (z) any
other agreement, decree, order, statute or governmental rule or regulation
applicable to it in a manner which would materially and adversely affect its
condition, the transactions contemplated by this Agreement or the Business, and
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in the violation of any law,
decree or order known to the Company or in any default, breach or violation of
the Company's Articles of Organization or Bylaws, or any Material Contract to
which the Company is a party or by which it is bound. To the best of the
Shareholders' knowledge, there is no event which has occurred or existing
condition which constitutes, or with notice or lapse of time or both, would
constitute a default under any Material Contract or would cause the acceleration
of any obligation of any party thereto, or give rise to any right of termination
or cancellation or cause the creation of any lien or encumbrance on any asset of
the Company. To the best of the Shareholders' knowledge, no third party is in
default under any material provision of any Material Contract. The Shareholders
have no knowledge that the parties to any Material Contract will not fulfill
their obligations thereunder in all material respects. There is no term of any
Material Contract which now or in the future may, so far as the Shareholders can
now reasonably foresee, materially adversely affect the Business or the
business, operations, affairs, prospects or condition of the Company.
(o) Books and Records. All corporate actions of the Company's
board of directors and the Shareholders have been duly authorized in accordance
in all material respects with applicable law and the Articles of Organization
and Bylaws of the Company, and has been duly and accurately recorded in the
Company's minute books in all material respects. The general ledgers and books
of the Company and all of its other books, accounts and records are in all
material respects complete and correct and have been maintained in accordance in
all material respects with good business practice and all applicable laws and
regulations.
(p) Banking Relationships. All of the arrangements which the
Company has with any banking institution are completely and accurately described
in Schedule 2.2(p) indicating with respect to each such arrangement the type of
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereto. The
Company has no outstanding powers of attorney of any kind.
(q) Required Consents, Etc. Except as described in Schedule
2.2(q) hereto,
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to the best of the Shareholders' knowledge, no consent, approval, authorization,
declaration or filing, including without limitation any consent, approval or
authorization of or declaration or filing with any governmental authority, is
required on the part of the Company in connection with the execution and
delivery of this Agreement or exchange of Company Stock pursuant hereto.
(r) Licenses and Permits. Schedule 2.2(r) hereto sets forth a
complete and accurate list of all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities held by
the Company which are in effect and which in any way relate to the Business
(collectively, the "Authorizations"). To the best of the Shareholders'
knowledge, the Authorizations constitute all licenses, permits, consents,
approvals and authorizations required for the conduct of the Business, and no
suspension or cancellation of any Authorization is threatened. To the best of
the Shareholders' knowledge, all of the Authorizations are in full force and
effect and are valid and enforceable in accordance with their terms. To the best
of the Shareholders' knowledge, there exists no fact or circumstance which
constitutes, or with the passage of time or giving of notice or both would
constitute, a default under any Authorization or permit any governmental or
other authority to cancel or terminate any Authorization.
(s) Accounts Receivable. Except as set forth on Schedule
2.2(s), the accounts receivable of the Company as of the Closing will be valid
and enforceable claims, collectible in the ordinary course of business (subject
to (i) allowances set forth in the subject contracts, (ii) non-collectible
accounts in the ordinary course, and (iii) the reserves for bad debts reflected
in the Financial Information) and, to the best of the Shareholders' knowledge,
subject to no set-off or counterclaim. Notwithstanding the foregoing,
Shareholders represent and warrant that at least $150,000 of the Company's
accounts receivable are fully collectible. The Company has no accounts or loans
receivable from any person, firm or corporation which is affiliated with the
Company or from any director, officer or employee of the Company. All accounts
receivable arose out of bona fide transactions in the ordinary course of
business.
(t) Litigation. Except as set forth on Schedule 2.2(t), there
is no litigation, proceeding or investigation pending or, to the best of the
Shareholders' knowledge, threatened (nor, to the best of the Shareholders'
knowledge, is there any basis therefor) against the Company or affecting any of
its properties, rights or assets or against any officer or employee which
relates to the affairs of the Company or the right of any officer or employee to
participate in the business of the Company and which is reasonably likely to
result in any material adverse change in the Business or in the business or
condition (financial or otherwise), prospects, assets or liabilities of the
Company or which relates to the Company Stock or the transactions contemplated
by this Agreement, in any court or before any authority or governmental entity
including, without limitation, actions, proceedings or investigations with
respect to any alleged violation by the Company of any law, statute, ordinance,
regulation, order, policy or guideline of any governmental entity.
(u) No Brokers. The Company has not dealt with any broker,
finder or similar agent with respect to the transactions contemplated by the
Agreement and the Company is not under any obligation to pay any broker's fee,
finder's fee or commission in connection with the transactions contemplated by
this Agreement.
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(v) Disclosure. Neither the representations and warranties of
the Shareholders contained in this Agreement nor the financial or other
information included in the Schedules hereto, nor any other document,
certificate or written statement furnished to FNEDC by or on behalf of the
Shareholders or the Company in connection herewith contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein and therein complete and not misleading as of
the dates thereof in light of the circumstances in which they were made. There
is no fact presently known to the Shareholders which may (so far as the
Shareholders or the Company can now reasonably foresee) materially adversely
affect the Business or the business, operations, affairs, prospects or condition
of the Company or its property or assets which has not been set forth in this
Agreement or in a document, certificate or written statement furnished to FNEDC
by the Shareholders or by the Company pursuant hereto.
(w) No Offer. Neither of the Shareholders has not, directly or
indirectly, offered, solicited offers for or sold, assigned, pledged or
otherwise transferred any Company Stock prior to the Closing. Neither the
Shareholders nor the Company have, directly or indirectly, through any officer,
director, agent or otherwise, (i) solicited, initiated or encouraged submission
of proposals or offers from any person other than FNEDC relating to any
acquisition or purchase of any of the Company Stock and/or the assets of the
Company, or any equity interest in the Company or any equity investment, merger,
consolidation or business combination with the Company, or (ii) participated in
any discussions or negotiations regarding, or furnished to any other person, any
non-public information with respect to, or otherwise cooperated in any way with,
or assisted or participated, facilitated or encouraged, any effort or attempt by
any other person to do or seek any of the foregoing.
II.3. Representations and Warranties Concerning the Shareholders.
The Shareholders hereby represent and warrant to FNEDC that
each of the statements contained in this Section 2.3 is true and correct as of
the date of this Agreement and will be true and correct at and as of the
Closing:
(a) Title. The Shareholders have good, marketable and
unencumbered title to, and full right, power and authority to sell, transfer,
assign and deliver such Company Stock as herein agreed subject only to pledges
of said stock which will be satisfied on the Closing Date; and FNEDC will on the
Closing Date, acquire good and marketable title to such Company Stock, free and
clear of any liens, encumbrances, restrictions on transfer, charges or claims.
(b) Due Issuance. The shares of Company Stock owned by the
Shareholders are validly issued, fully paid and nonassessable.
(c) Validity and Enforceability. This Agreement is, and each
of the other agreements and instruments of the Shareholders contemplated hereby
are the valid and binding obligations of the Shareholders, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency and
other general laws affecting the rights and remedies of creditors, except that
the remedy of specific performance and injunctive and other forms of
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equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought; and the execution
and performance of this Agreement and such other agreements and instruments
including, without limitation, the Shareholders' Dental Employment Agreements
(defined in Section 4.1(d) below), will not result in any violation of or be in
conflict with or constitute a default under any contract, agreement, instrument,
judgment, decree or order to which either Shareholder is a party or by which
either Shareholder may be bound.
(d) No Brokers. The Shareholders have not dealt with any
broker, finder or similar agent with respect to the transactions contemplated by
the Agreement and the Shareholders are not under any obligation to pay any
broker's fee, finder's fee or commission in connection with the transactions
contemplated by this Agreement.
(e) Dental Practice. The Shareholders conduct their dental
practice exclusively through the Company, and the Company has good, marketable
and, subject to any exceptions set forth in Section 2.2(g), unencumbered title
to all assets used by the Shareholders in connection with their dental practice.
(f) Experience. Each Shareholder has carefully reviewed the
representations concerning FNEDC contained in this Agreement, and have made
detailed inquiry concerning FNEDC, its business and its personnel; the officers
of FNEDC have made available to each Shareholder any and all written information
which he has requested and has answered to each Shareholder's satisfaction all
inquiries made by him; each Shareholder has such knowledge and experience in
financial and business matters and in the affairs of FNEDC that he is capable of
evaluating the risks and merits of his investment in FNEDC and is able
financially to bear the risks thereof.
(g) Authority. The Shareholders have full power and authority
to enter into and to perform this Agreement in accordance with its terms.
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ARTICLE III
ADDITIONAL COVENANTS AND AGREEMENTS
III.1. FNEDC's Access to Information. The Shareholders shall cause the
Company to permit FNEDC and its counsel, accountants and other representatives
full and free access, upon reasonable notice and during normal business hours,
throughout the period prior to the Closing, to all of the properties, books,
contracts, commitments, records, officers and personnel of the Company and shall
furnish FNEDC during such period all such information concerning the business
activities of the Company as FNEDC or its counsel, accountants or other
representatives may reasonably request. If the transactions contemplated by this
Agreement are not consummated, all confidential or proprietary information
furnished by the Shareholders or the Company shall be kept in strict confidence
and shall not be used or disclosed by any recipient, and FNEDC shall cause each
such recipient to return to the Company all copies of documents or records
furnished hereunder. No investigation or findings of FNEDC shall diminish or
affect the representations and warranties of the Shareholders in this Agreement
or relieve the Shareholders of any of their obligations hereunder.
III.2. Shareholders' Consents and Approvals. The Shareholders shall use
their best efforts to obtain all governmental and regulatory approvals and
actions necessary to consummate the transactions contemplated hereby which are
required to be obtained by applicable law or regulations.
III.3. Assignment of Intellectual Property and Other Documents. In the
event that Shareholder has ownership rights, title or interest in any
intellectual property, or is a party in his individual capacity to any
contracts, agreements, or other documents ("Other Documents") intended to be
transferred to FNEDC pursuant to the Closing, Shareholder hereby conveys,
transfers and assigns any and all of such right, title and interest in and to
said intellectual property and Other Documents and will take whatever action
necessary for FNEDC to effect transfer or assignment of the same as of the
Closing or as soon as possible thereafter.
III.4. Employee Stock Options. To the extent permitted by law, FNEDC
will grant options, to those persons identified in Schedule 3.4, to purchase
such amounts of FNEDC Common Stock and on such terms as set forth in Schedule
3.4 (the "Options").
ARTICLE IV
CONDITIONS TO CLOSING
IV.1. Conditions Precedent to FNEDC's Obligations. The obligation of
FNEDC to consummate the transactions contemplated by this Agreement is expressly
subject to the fulfillment or express written waiver of the following conditions
on or prior to the Closing Date:
(a) Representations and Warranties True; Obligations
Performed. Each of the representations and warranties contained in Sections 2.2
and 2.3 of this Agreement shall be
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true and correct in all material respects at and as of the Closing Date, except
as otherwise specifically provided for herein. The Shareholders shall have
performed, on or before the Closing Date, all obligations under this Agreement
which by the terms hereof are to be performed by the Shareholders on or before
the Closing Date.
(b) Delivery of Certificates. The Shareholders shall have
delivered to FNEDC certificates representing the Company Stock, duly endorsed
for transfer or with duly executed stock powers attached.
(c) Required Consents. All consents and waivers, in form and
substance satisfactory to FNEDC and its counsel, necessary to consummate the
Closing and the other transactions contemplated hereby shall have been obtained
by the Shareholders.
(d) Dental Employment Agreements. Each of the Shareholders
shall have executed and delivered an employment agreement between himself and
Xxxxxx and Xxxxxx, D.M.D., P.C. (together with any successor thereto, the
"P.C.") in the form attached hereto as Exhibit 4.1(d) (the "Dental Employment
Agreements").
(e) Filing of Restated Articles of Organization. The
Shareholders shall have caused to be filed Restated Articles of Organization of
the Company in the form attached hereto as Exhibit 4.1(e).
(f) Lease(s). The Company shall have delivered a fully
executed Assignment and Assumption Agreement attached hereto as Exhibit 4.1(f)
with respect to the lease attached as Exhibit 4.1(f) (the "Lease") of the real
property located at 00 Xxxxxx Xxxx Xxxx, Xxxxxxxxx, XX 00000 (the "Location"),
dated as of the Closing Date, by and among the Company, FNEDC and Ten Forbes
Associates, L.P. (the "Assumption Agreement"), in form reasonably satisfactory
to FNEDC and its counsel.
(g) Legal Opinion from Counsel for the Shareholders. FNEDC
shall have received the written opinion of Xxxxxx, Xxxx & Xxxxxxx, counsel for
the Company, dated the Closing Date and in a form reasonably satisfactory to
FNEDC's counsel.
(h) Delivery of Other Instruments. The Shareholders shall have
delivered instruments of conveyance for the Other Documents and such other
certificates, consents, instruments or agreements as may be reasonably requested
by FNEDC or its counsel.
(i) Termination of Plan. The Company shall terminate the Plans
listed in Schedule 4.1(i) effective on or before the Closing Date.
IV.2. Conditions Precedent to the Company's Obligations. The obligation
of the Company to consummate the transactions contemplated by this Agreement is
expressly subject to the fulfillment or written waiver of the following
conditions on or prior to the Closing Date:
(a) Representations and Warranties True; Obligations
Performed. Each of the representations and warranties of FNEDC contained in
Section 2.1 shall be true and correct in all material respects at and as of the
Closing, except as otherwise specifically provided for
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herein. FNEDC shall have performed, on or before the Closing Date, all
obligations under this Agreement which by the terms hereof are to be performed
by FNEDC on or before the Closing Date.
(b) Required Consents. All consents and waivers, in form and
substance satisfactory to the Shareholders and their counsel, necessary to
consummate the Closing and the other transactions contemplated hereby, shall
have been obtained by FNEDC.
(c) Employment. The P.C. shall have executed and delivered to
the Shareholders their Dental Employment Agreement. The P.C. shall have offered
employment or independent contractor arrangements as of the Closing Date, on the
terms set forth on Schedule 4.2(c), to all of the Company's dentists who are not
Shareholders.
(d) Legal Opinion from Counsel to FNEDC. The Shareholders
shall have received the written opinion of Lyne, Xxxxxxxxx & Xxxxxx, counsel to
FNEDC, dated the Closing Date and in a form reasonably satisfactory to
Shareholders' counsel.
(e) Discharge of Guarantees. The Shareholders shall have
received written evidence of the discharge of all of their obligations as
guarantors of the Company's obligations under the Lease, effective as of the
Closing Date (the "Discharge").
ARTICLE V
CLOSING AND DELIVERIES
V.1. Date and Place of Closing. The consummation of the transactions
contemplated hereby (the "Closing") shall be held at 10:00 a.m. on November 12,
1996 at the offices of XxXxxxxxx, Will & Xxxxx, or at such other time and place
as the parties may mutually agree in writing (the "Closing Date").
V.2. Deliveries at Closing by the Shareholders. At the Closing,
provided FNEDC has duly performed its obligations hereunder, the Shareholders
shall deliver or cause to be delivered to FNEDC the following:
(a) Certificates representing the Company Stock, duly endorsed
for transfer or with duly executed stock powers attached, and free of any liens,
encumbrances, restrictions on transfer, charges or claims;
(b) Certified copies of resolutions duly adopted by (i) the
Company's Board of Directors, and (ii) the Shareholders, approving and
authorizing the transactions provided for in this Agreement, the execution
hereof and the performance of all acts required to be performed by the Company
hereunder, accompanied by an appropriate certificate of incumbency;
(c) Instruments of transfer, in form reasonably satisfactory
to FNEDC and its counsel, to convey all the Shareholders' right, title and
interest in and to any trademarks
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and Other Documents; and
(d) All consents of any person or entity, whether or not a
party to this Agreement, which are necessary to effectuate the transfer of the
Company Stock, the assignment of the Other Documents, and the consummation of
the transactions contemplated by this Agreement.
V.3. Deliveries by FNEDC. At the Closing, provided the Shareholders and
the Company have fully performed all of their respective obligations hereunder,
FNEDC shall deliver or cause to be delivered to or on behalf of the Shareholders
the following:
(a) The Convertible Notes;
(b) Certified or bank checks in the amount of Ninety Three
Thousand Seven Hundred Fifty ($93,750) each to Xxxxxxxxx and Xxxxxxx;
(c) The Promissory Notes;
(d) A certified copy of resolutions duly adopted by FNEDC's
Board of Directors approving and authorizing the transactions provided for in
this Agreement, the execution hereof and the performance of all acts required to
be performed by FNEDC hereunder, accompanied by an appropriate certificate of
incumbency;
(e) All consents of any person or any entity, whether or not a
party to this Agreement, which are necessary to effectuate the issuance of the
Convertible Notes and Promissory Notes and the consummation of the transactions
contemplated by this Agreement; and
(f) Certified or bank checks each payable to Xxxxxxxxx and
Xxxxxxx, in the amount of $32,421.50, as reimbursement for trade payables of
Seller assumed by the Shareholders as set forth on Schedule 2.2(f).
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(g) Certified or bank checks each payable to Xxxxxxxxx and
Xxxxxxx, in the amount of $12,557, as reimbursement for the pre-paid expenses
set forth on Schedule 1.4.
(h) The Discharge.
ARTICLE VI
POST-CLOSING MATTERS
VI.1. Further Assurances. Following the Closing Date, the Shareholders
will execute and deliver to FNEDC such documents and take such other actions, at
the Shareholders' expense, as FNEDC may reasonably request in order to vest in
FNEDC good, valid and marketable title to the Company Stock.
VI.2. Employment and Benefits-Related Matters.
(a) FNEDC shall retain the right to amend in any respect or to
terminate in whole or in part any Plan in accordance with the provisions of such
Plan and applicable law.
(b) Nothing contained in this Agreement shall obligate or commit FNEDC
or the P.C. to continue any Plan with respect to services after the Closing Date
or to maintain in effect any such Plan or any similar plan or any level or type
of benefit except as may be provided to the contrary in this Section 6.2.
(c) The Shareholders shall cooperate and remain responsible financially
for fulfilling all reporting, disclosure and other administrative duties for the
Plans that relate to periods prior to the Closing Date. Any failure by the
Shareholders to fulfill these duties shall be subject to the indemnification
provisions under Section 8.2(b) below.
(d) The Shareholders shall provide to FNEDC copies of any
correspondence relating to the Plans and shall inform FNEDC of any
communications with a government agency, including but not limited to the
Internal Revenue Service and the U.S. Department of Labor, regarding the Plans.
(e) Upon the Closing, employees of the Company who are not dentists
shall become employees of FNEDC and employees of the Company who are dentists
and who accept the P.C.'s offer of employment shall become employees of the P.C.
Employees of FNEDC and dentists who do not have separate employment contracts
shall be employed at a rate of base compensation equal to their base
compensation, and with the same employee benefits as they have, with the Company
immediately prior to the Closing Date, such benefits to be maintained for one
year after the Closing Date, at which time such employees shall receive standard
FNEDC employee benefits, provided, however, that such employees shall have the
option to immediately receive those FNEDC benefits which are comparable or
better, than their current benefits. FNEDC and the P.C. shall be entitled in the
ordinary course of their businesses to prospectively alter the compensation, and
benefit programs they offer to their respective employees. The terms and
conditions of the employment of dentists with separate written employment
contracts with the P.C. shall be governed by the provisions of such contracts.
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Service by Company employees prior to the Closing Date shall be considered
service with the P.C. or FNEDC, as applicable, for all relevant purposes under
compensation and benefit plans and programs provided by FNEDC or the P.C.,
including, without limitation, credit for eligibility, vesting, benefit accrual,
participation, level of benefits and optional forms of payment. During the first
year of employment following the Closing Date, the employment of Company
employees at FNEDC and dentists without written employment contracts at the P.C.
may not be terminated except for cause. For purposes of this Section 6.2(e),
"for cause" shall mean the commission of any act of embezzlement, fraud, larceny
or theft, substantial and continuing neglect or inattention to duties, willful
misconduct, gross negligence or incompetence, moral turpitude or abuse of
alcohol or drugs, permanent disability so as to be unable to perform duties, or
conviction of a felony.
(f) Accrued Payroll obligations and related pre-paid expenses to be
allocated to the parties as set forth in Schedule 2.2(f) hereto.
(g) Each Plan of the Company listed in Schedule 2.2(m) in force
immediately prior to the Closing Date and not to be terminated pursuant to
Section 4.1(i) shall be continued by FNEDC (and participated in by the P.C.)
after the Closing Date until such time as FNEDC may amend, replace or terminate
the Plan in the ordinary course of its business. With regard to any change in
insured medical benefits, to the extent that replacement medical insurance
cannot be obtained for certain employees for any reason, FNEDC shall make
reasonable arrangements for continued insured medical coverage under existing
arrangements or individual policies issued to such employees at an employee cost
(as a percentage of insurance premiums) not greater than the cost of insured
medical benefits (as a percentage of insurance premiums) immediately prior to
the Closing Date. Any new medical insurance provided by FNEDC during the current
policy term shall take into account amounts paid by employees toward any
deductible and maximum out-of-pocket limitations under the Company's prior
medical insurance coverage.
(h) Any former employees of the Company or their dependents receiving
health continuation coverage under a Company Plan as of the Closing, or becoming
eligible for such coverage due to a qualifying event occurring on or before the
Closing, shall continue to receive such coverage (including coverage for
pre-existing conditions to the same extent available under the Company's
existing plan) after the Closing Date through health benefit plans maintained by
FNEDC (or its affiliates) as set forth in their original election notice except
if such coverage has been terminated for all FNEDC employees.
(i) Employees of the Company (other than the Shareholders) who accept
employment with the FNEDC shall be entitled to cash in accrued but unused
vacation days, in a manner consistent with the Company's customary practice,
which have accrued prior to the Closing Date or are earned through the first
anniversary thereof.
(j) All decisions concerning the hiring, termination and/or salary
levels of FNEDC and P.C. employees at the Location, as well as all material
changes in operations, including UCR fees and hours of operation at the Location
shall be subject to mutual agreement of FNEDC and the Shareholders.
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VI.3. Medicare/Medicaid. Until such time as the Promissory Note is paid
in full, the Shareholders shall not refer any Medicare or Medicaid beneficiaries
to FNEDC, the P.C. or any of their affiliates for any dental services, x-rays,
laboratory services, prosthetic devices or other designated health services (as
that term is defined in the 42 U.S.C. Section 1395nn) covered by Medicare or
Medicaid.
VI.4. Computer Equipment. Notwithstanding anything to the contrary in
this Agreement, the Shareholders shall receive title to and ownership of the
computer equipment currently used at the Location, as described on the attached
Schedule 6.4 (the "Computer Equipment"). Shareholders agree to the extent
permitted by any applicable agreements and licenses, to permit FNEDC and/or the
P.C. to use on a royalty-free basis, and to use their good faith efforts to
obtain, at the expense of FNEDC, any required consents for such use, of any
software and data currently used by Shareholders in connection with the
Practice. Shareholders agree to leave such Computer Equipment at the Location
rent-free until May 30, 1997. For so long as FNEDC or the P.C. uses the Computer
Equipment, FNEDC and the P.C. agree to maintain such Computer Equipment in good
condition and pay all reasonable maintenance and repair costs and to pay for all
licensing costs.
VI.5. Marketing. For so long as each Shareholder is employed at the
Location, all marketing and promotional activities of FNEDC or the P.C. in
connection with the Location shall be subject to mutual agreement of FNEDC or
the P.C., as the case may be, and the Shareholders, shall be comparable with the
Company's historical level of such activities and shall conform to FNEDC's plans
to promote reasonable growth. Not in limitation of the foregoing, FNEDC shall
not erect or otherwise place any signage or other materials referring to "First
New England Dental Centers, Inc.", "Xxxxxx and Xxxxxx, D.M.D., P.C." or any
abbreviations or variations thereof at the Location except with the
Shareholders' consent, such consent not to be unreasonably withheld.
VI.6. P.C.'s Obligations. FNEDC guarantees to the Shareholders the
prompt and complete payment or performance by the P.C., when and as due, of the
P.C.'s obligations to the Shareholders arising from the transactions
contemplated by this Agreement, including without limitation the terms of the
Shareholders' Dental Employment Agreements.
VI.7. Shareholders' Obligations. The Shareholders shall assume and pay
all accounts payable incurred by the Company through the Closing Date.
VI.8. Access to Records. Shareholders agree to provide FNEDC and its
auditors with access to all of Company's books and records for fiscal years 1993
through and including 1996.
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VI.9. No Other Locations. FNEDC and the P.C. shall not employ any
former employee of the Company outside the Location or relocate the practice
from the Location without the prior written consent of the Shareholders, which
consent shall not be unreasonably withheld.
VI.10. Location of Assets. FNEDC and the P.C. shall not remove from the
Location any assets owned by the Company as of the Closing Date without the
Shareholders' prior written consent, which consent shall not be unreasonably
withheld.
VI.11. Insurance. FNEDC shall maintain property and business insurance
coverage on the Location's premises, contents, operations and other assets with
reputable, licensed insurers and in amounts not less than those maintained by
the Company as of the Closing Date. FNEDC shall promptly replace or restore any
Location assets damaged or destroyed after the Closing Date.
VI.12. Right of First Refusal. (a) For so long as either Shareholder is
employed at the Location, in the event that FNEDC shall decide to sell, transfer
or otherwise dispose of the assets formerly owned or leased by the Company
(except for a sale or transfer to an affiliate of FNEDC or the P.C.), alone,
apart and separate from any other assets of FNEDC, then Shareholders shall have
a right of first refusal to purchase such assets in accordance with this Section
6.12. Shareholders shall have seven (7) days from the date of written notice by
FNEDC to notify FNEDC of their election to exercise the right to purchase the
assets pursuant to this Section 6.12 (the "Notice"). Subject to the
determination of Fair Market Value in accordance with Subsection (b),
Shareholders shall have twenty (20) days from the date of the Notice to enter
into a purchase and sale agreement, at Fair Market Value and upon customary and
commercially reasonable terms. "Fair Market Value" shall mean the fair market
value of the assets of the Company as of the date of the Notice.
(b) Notwithstanding anything to the contrary in Subsection (a), if
Shareholders and FNEDC cannot agree upon the Fair Market Value within twenty
(20) days of delivery of the Notice, Shareholders or FNEDC may refer the matter
to appraisal in accordance with the following:
(i) The parties shall endeavor in good faith to agree, within
seven (7) days of the last day of the 20-day period, upon a sole
appraiser to conduct the appraisal. Such appraiser shall conduct an
appraisal of the Fair Market Value of the assets within twenty (20)
days of his/her selection, which appraisal shall be binding on the
parties.
(ii) If the parties cannot agree upon a sole appraiser within
seven (7) days of the last day of the 20-day period referred to above,
each of the Shareholders and FNEDC will select an appraiser and the two
appraisers will select a third appraiser. The three appraisers shall be
known as the "Appraisal Panel". If either FNEDC or Shareholders fail to
elect an appraiser within the aforementioned 7-day period, the
appraiser selected by the other party shall perform the appraisal
within twenty (20) days, and said appraisal shall be binding upon all
of the parties.
(iii) Each appraiser will be qualified by education,
experience or training to
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render a decision in the matters submitted.
(iv) If an Appraisal Panel is selected, within twenty (20)
days of the selection of the third appraiser, each of FNEDC's appraiser
and Shareholders' appraiser having conducted such investigation as they
deem necessary regarding the valuation of the assets, will submit the
Fair Market Value which it believes is accurate (the "Submitted
Valuation"), to the third appraiser.
(v) Within ten (10) days after the third appraiser has
received the Submitted Valuations (or immediately if the Submitted
Valuations are within 10% of the Submitted Valuation which is greater),
such appraiser will render a decision determining the Fair Market
Value, as follows: if the Submitted Valuations are within ten percent
(10%) of the Submitted Valuation which is the greater of the two, then
the Fair Market Value shall be the average of the Submitted Valuations.
If the Submitted Valuations diverge by more than ten percent (10%) of
the Submitted Valuation which is the greater of the two, then the third
appraiser shall determine the Fair Market Value by selecting one of the
Submitted Valuations. The appraiser's decision shall be binding on the
parties.
(vi) Once Fair Market Value has been established by appraisal,
Shareholders shall have fifteen (15) days to enter into a purchase and
sale agreement, at Fair Market Value and upon other customary and
commercially reasonable terms.
The Closing on such purchase and sale agreement shall take
place within fifteen (15) days of the date of execution of the purchase
and sale agreement, unless otherwise agreed to by the parties, which
agreement shall not be unreasonably withheld by the parties.
(c) If the assets to be transferred or sold include the Lease and
Shareholders exercise their right of first refusal hereunder, at their option
FNEDC shall assign the Lease for the Location to the Shareholders, and the
amount of any accrued but unpaid lease payments, through the date of assignment
to Shareholders, shall be deducted from the purchase price for the assets. The
amount of any accrued but unmade payments under the Lease, Promissory Notes,
Convertible Notes and Dental Employment Agreements shall be deducted from the
purchase price for the assets.
(d) If: (a) Shareholders do not exercise their right of first refusal
hereunder, or (b) the purchase and sale agreement is not executed or the Closing
does not occur within the specified time periods through no fault of FNEDC, then
FNEDC may sell, transfer or otherwise dispose of such assets to a third party at
FNEDC's discretion.
ARTICLE VII
NON-COMPETITION AGREEMENT AND NON-SOLICITATION AGREEMENT
VII.1. Non-Solicitation. Subject to the provisions set forth in Article
IX hereof, during the term of the Dental Employment Agreement, and for a period
of three (3) years after the
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date of termination or expiration thereof, the Shareholders shall not, without
the express written consent of FNEDC or the P.C., (a) solicit for employment,
verbally or in writing, or otherwise seek to hire, any employee of the FNEDC or
the P.C., nor (b) solicit business or attempt to solicit business from any
patient or former patient of the Company, FNEDC or the P.C. at the Location.
VII.2. Non-Compete. Subject to the provisions set forth in Article IX
hereof, the parties shall be bound by the following non-competition covenants:
(a) During the term of the Dental Employment Agreement and for
a period of three (3) years after the date of termination or expiration thereof,
neither of the Shareholders shall, without the express written consent of the
FNEDC or P.C., (i) engage in any dental practice or activity within a five (5)
mile radius of the Location that competes with FNEDC or the P.C.; or (ii)
directly or indirectly own, manage, operate, control or participate either
directly or indirectly in the ownership, management, operation or control of any
dental practice or specialty dental care facility, however organized, which has
any location within five (5) miles of the Location radius and which competes
with the FNEDC or the P.C. in the provision of dental and/or other health care
services. Notwithstanding the foregoing, in the event either Shareholder
terminates his Dental Employment Agreement due to Qualifying Breach, as defined
in Section 10 thereof, then this Section 7.2 shall, from and after such
termination, be of no force and effect with respect to the terminating
Shareholder.
(b) During the term of either Shareholder's Dental Employment
Agreement, FNEDC and P.C. shall not, without the prior written consent of the
Shareholders, own, manage, operate, control or participate in the ownership,
management, operation or control of any dental practice within a five (5) mile
radius of the Location.
(c) If any part of this Section 7.2 should be determined by a
court of competent jurisdiction to be unreasonable in nature, duration,
geographic area, or scope, then this Agreement is intended to and shall extend
only for such period of time, in such area and with respect to such activity, as
is determined by said court to be reasonable.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
VIII.1. Survival. The Shareholders and FNEDC agree that (i) the
covenants, representations and warranties contained in this Agreement shall
survive for a period of one year from the Closing Date, except that the
representations, warranties and covenants contained in Section 2.2(i) shall
survive until the applicable tax statutes of limitations relating thereto shall
have run, (ii) the representations, warranties and covenants contained in
Section 2.2(m) shall survive indefinitely, (iii) the provisions of Article VII
shall survive the Closing Date for the period specified therein; (iv) the
provisions of this Article VIII shall survive the Closing Date for an indefinite
period, and (v) the provisions of Article IX shall survive for so long as the
Shareholders are employed by the P.C.
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VIII.2. Indemnification of FNEDC. (a) The Shareholders agree to
indemnify FNEDC and hold it harmless against and in respect of any and all
payments, damages, claims, demands, losses, expenses, costs, obligations and
liabilities, including reasonable attorneys' fees (i) which arise or result from
or are related to any breach or failure of the Shareholders to perform any of
their representations and warranties, commitments, obligations, covenants or
conditions hereunder, (ii) which result from the operations of the Company or
any actions of the Shareholders, the Company or its employees or agents taken
prior to the Closing Date and which become known to FNEDC or the P.C. any time
prior to the second anniversary of the Closing Date; or (iii) which result from
the failure of the transfer and assignment of the Company Stock, the trademarks
and the Other Documents from the Shareholders to FNEDC to cause FNEDC to acquire
good and marketable title to all of the issued and outstanding Company Stock,
the trademarks and the Other Documents, free and clear of any liens,
encumbrances, restrictions on transfer, charges or claims unless such failure is
caused by the action of FNEDC.
(b) The Shareholders shall indemnify and hold harmless FNEDC, the P.C.,
and each of their respective affiliates, directors, officers, employees and
agents, and each of the heirs, executors, successors and assigns of any of the
foregoing, from and against any and all losses, liabilities, claims, damages,
obligations, payments, costs and expenses including, without limitation,
attorneys' fees, arising out of or relating in any manner to (i) the
establishment or administration of any Plan prior to the Closing Date; (ii) the
Shareholders' failure to fulfill their post-Closing duties under Section 6.2
above; or (iii) any audit of a Plan performed by any governmental unit,
including but not limited to the Internal Revenue Service and the U.S.
Department of Labor, relating to periods prior to the Closing Date.
(c) Shareholders' aggregate liability under Subsections 8.2 (a) and (b)
shall be limited to $400,000.
VIII.3. Indemnification of the Shareholders. FNEDC agrees to indemnify,
defend and hold harmless the Shareholders against and in respect of any and all
payments, damages, claims, demands, losses, expenses, costs, obligations and
liabilities (including reasonable attorneys' fees) which (a) arise or result
from or are related to any breach or failure of FNEDC to perform any of its
representations and warranties, commitments, obligations, covenants or
conditions hereunder, or (b) arise or result from any actions of FNEDC, its
employees, directors, officers, or agents (other than the Shareholders) taken
after the Closing Date, or (c) arise or result from the inability of the
Shareholders to obtain consents to assignment and release of personal guarantees
of, the agreements, obligations and leases set forth on Schedule 8.3 hereto;
including but not limited to any penalty, charge or assessment against the
Shareholders; provided, that (i) the Shareholders shall use their best efforts
to obtain such consents; (ii) FNEDC's obligation hereunder shall exclude claims
by the Shareholders based on lost time or profit; and (iii) in the event that
the Shareholders still have been unable to obtain the consent(s) with respect to
any such lease(s) as of the thirtieth day following the Effective Time, then
FNEDC shall promptly pay all of the outstanding amounts due through the
expiration date(s) thereof under the lease(s) for which a consent (including
release of personal guarantees) has not been obtained.
VIII.4. Procedure for Indemnification. Any party making a claim for
indemnification
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hereunder (the "Indemnitee") shall notify the indemnifying party
(the "Indemnifying Party") of the claim in writing, describing the claim, the
amount thereof, and the basis therefor. The Indemnifying Party shall respond to
each such claim within 30 days of receipt of such notice. No action shall be
taken pursuant to the provisions of this Agreement or otherwise by the
Indemnitee until the later of (a) the expiration of the 30-day response period
(unless reasonably necessary to protect the rights of the Indemnitee), or (b) 30
days following the receipt of a response within such 30-day period by the
Indemnitee requesting an opportunity to cure the matter giving rise to
indemnification (and, in such event, the amount of such claim for
indemnification shall be reduced to the extent so cured within such 30-day cure
period). If such demand is based on a claim by a third party, the Indemnifying
Party shall have the right to assume the entire control of the defense,
compromise or settlement thereof, including at its own expense, employment of
counsel reasonably satisfactory to the Indemnitee, and, in connection therewith,
the Indemnitee shall cooperate fully to make available to the Indemnifying Party
all pertinent information under its control. No claim for indemnification
resulting from the breach or falsity or any of the representations or warranties
set forth herein or in any certificate or other instrument delivered pursuant
hereto shall be made after a date on which such representation, warranty or
agreement shall have expired under the provisions of Section 10.1 hereof.
ARTICLE IX
TERMINATION OF AGREEMENT
(a) The post-Closing occurrence of any of the following conditions or
events shall be deemed a "Termination Event":
(i) FNEDC or P.C. ceases all of its operations for more than
thirty (30) consecutive days; or
(ii) FNEDC or P.C. fails generally to pay its debts as they become
due ("Insolvency") and such Insolvency is not cured within
forty-five (45) days following the earlier of its occurrence
or the filing of a petition for debtor's relief or a
confession of Insolvency made by FNEDC in any administrative,
judicial or regulatory proceeding; or
(iii) FNEDC or the P.C. makes an assignment for the benefit of its
creditors, or voluntarily files a petition in bankruptcy which
is not dismissed within sixty (60) days following the filing
thereof; or
(iv) an involuntary filing of a petition in bankruptcy with respect
to FNEDC or the P.C. is made and not dismissed within sixty
(60) days following notice thereof to FNEDC or the P.C., as
the case may be; or
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(v) the net book value (including goodwill) of FNEDC, determined
in accordance with generally accepted accounting principles
and as reflected in any financial statements of FNEDC, is less
than $250,000; or
(vi) the accounts payable at the location of FNEDC or the P.C. at
which the Shareholders provide services are more than
forty-five (45) days old or FNEDC or the P.C. has failed to
meet timely its payroll commitments with respect to the
employees at such location; provided, however, that FNEDC
shall have forty-five (45) days from the date of receipt of
written notice to cure such Termination Event; or
(vii) FNEDC fails to make payments when due under the Convertible
Notes or Promissory Notes, and such failure is not cured
within fifteen (15) days of written notice thereof.
(b) Upon the occurrence of a Termination Event, Shareholders (assuming
that they are employed by the P.C. at such time), at the Shareholders' option,
may require that within seven (7) business days following the occurrence of a
Termination Event, FNEDC and the P.C. shall vacate and surrender the Location,
and the rights of FNEDC under the Assumption Agreement shall be deemed
terminated or, as applicable, shall be assigned to the Shareholders. FNEDC shall
also give or cause the P.C. to give, each former employee of the Company who is
then employed by FNEDC or the P.C. an option to terminate his/her employment
with FNEDC or the P.C. without penalty, and shall permit the Shareholders to
recruit such individual(s) for employment by the Shareholders. FNEDC shall, at
the Shareholders' option, transfer, or cause the P.C. or any affiliate of FNEDC
to transfer, to the Shareholders or their designees all of the assets formerly
owned and/or leased by the Company which are then owned and/or leased by FNEDC,
the P.C. or any such affiliate, for the depreciated book value of all fixed
assets, excluding intangible assets, at such time; provided, however, that if
the Shareholders are eligible to elect, and so elect, to cause FNEDC to assign
the lease for the Location to the Shareholders, then the amount of any accrued
but unpaid lease payments, through the date of assignment to the Shareholders,
shall be offset from such purchase price; and provided further, that if the
Termination Event is for the reason set forth in paragraph (a)(vii) above, the
amount of any accrued but unmade payments under the Promissory Notes,
Convertible Notes and Dental Employment Agreements shall be offset from such
purchase price; and provided further, if the Termination Event is for reasons
set forth in paragraphs (a)(iii) or (a)(iv) above, the Shareholders may
repurchase the tangible assets only. FNEDC shall cause the P.C. to transfer to
the Shareholders copies of the dental records of any patient who authorizes
transfer of his/her dental records to the Shareholders. Upon the election by the
Shareholders to exercise their rights under this Article IX, Shareholders'
Dental Employment Agreements will be deemed terminated, and without limiting the
foregoing, the Shareholders shall be released from the non-competition and
non-solicitation covenants set forth at Sections 7 and 8 of the Dental
Employment Agreements and Article VII hereof.
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ARTICLE X
CONFIDENTIAL INFORMATION
The parties hereby acknowledge the confidential nature of this
Agreement and the transactions contemplated hereby. Except as otherwise required
by law, the parties agree to hold in confidence all financial information and
other confidential data and information acquired from one another, and shall not
use or divulge to third parties any such data or information. No party shall
make any announcement or otherwise disclose any information concerning the
transactions contemplated by this Agreement to any person (other than such
party's employees, attorneys and consultants on a need-to-know basis) without
the consent of the other party. This Article X shall survive the termination of
this Agreement for any reason.
ARTICLE XI
MISCELLANEOUS
XI.1. Notices. All notices to a party hereunder shall be deemed to have
been adequately given if delivered in person or mailed, certified mail, return
receipt requested, to such party at its address set forth below (or such other
address as it may from time to time designate in writing to the other parties
hereto):
To the Shareholders:
Xxxxx Xxxxxxxxx, D.D.S.
00 Xxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
and/or
Xxxxxx Xxxxxxx, D.M.D.
00 Xxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxx Xxxxxxx, Esq.
Xxxxxx, Xxxx & Xxxxxxx
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
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32
To FNEDC:
First New England Dental Centers, Inc.
00 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: President
with a copy to:
Xxxxxxx X. Xxxx, Esq.
XxXxxxxxx, Will & Xxxxx
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
XI.2. No Waiver. No failure to exercise and no delay in exercising, on
the part of FNEDC or the Shareholders, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The rights provided
are cumulative and not exclusive of any rights provided by law.
XI.3. Amendments and Waivers. This Agreement may be modified or amended
only by a writing signed by each party hereto. No waiver of any term or
provision hereof shall be effective unless in writing signed by the party
waiving such term or provision.
XI.4. Governing Law; Headings. This Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts. The
descriptive headings of the several Articles and Sections hereof are for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
XI.5. No Assignment. None of the parties hereto may assign this
Agreement or any of their respective rights or obligations hereunder without
first obtaining the prior written consent of the other parties hereto.
XI.6. Binding Effect and Benefits; Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
heirs, successors and assigns. FNEDC agrees to cause any entity that acquires
all or substantially all of FNEDC's assets to assume FNEDC's obligations
hereunder, unless assumption of such obligations is expressly waived in writing
by the Shareholders, and further agrees that in the event of a merger,
consolidation or change of control between FNEDC and a third party FNEDC will
not exclude its obligations hereunder from such merger, consolidation or change
of control.
XI.7. Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior discussions, understandings and agreements concerning
the matters covered hereby.
XI.8. Counterparts. This Agreement may be executed in two or more
counterparts,
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all of which taken together shall constitute one and the same instrument, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
XI.9. Transfer Taxes. All stock transfer taxes, if any, incident to the
sale of the Company Stock shall be paid by the Shareholders.
XI.10. Arbitration. Any disputes arising among the parties to this
Agreement shall be settled by binding arbitration in accordance with the
Arbitration Rules of the American Arbitration Association. In the event that a
dispute arises which requires arbitration under this Section 11.10, the parties
shall attempt to agree upon one arbitrator to resolve such dispute. In the event
that the parties are unable to agree upon an arbitrator within 14 days, then
each party shall choose one arbitrator and the arbitrators chosen by the parties
shall choose a single arbitrator who shall resolve such dispute. Each party
shall bear its respective costs of the arbitration. The award so rendered shall
be final and the prevailing party in any such arbitration shall be entitled to
have the arbitrators' award enforced by any court of competent jurisdiction.
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IN WITNESS WHEREOF, the undersigned have set their hands and seals as
of the date first set forth above.
------------------------------
XXXXX XXXXXXXXX, D.D.S.
------------------------------
XXXXXX XXXXXXX, D.M.D.
FIRST NEW ENGLAND DENTAL CENTERS,
INC.
By: ------------------------------
Xxxxxx Xxxxxxx, President
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SCHEDULES AND EXHIBITS
----------------------
Schedules
---------
Schedule 1.4 Pre-paid Expenses
Schedule 2.1(f) FNEDC Litigation
Schedule 2.1(g) Capitalization
Schedule 2.2(c) Company Commitments with Respect to Capital Stock
Schedule 2.2(e) Financial Information
Schedule 2.2(f) Company Liabilities
Schedule 2.2(g) Title Exceptions
Schedule 2.2(i) Tax Deficiencies and/or Claims
Schedule 2.2(k) Insurance
Schedule 2.2(l) Employees and Compensation
Schedule 2.2(m) Employee Benefits
Schedule 2.2(n) Material Contracts
Schedule 2.2(p) Banking Relationships
Schedule 2.2(q) Consents
Schedule 2.2(r) Authorizations
Schedule 2.2(s) Exceptions to Accounts Receivable
Schedule 2.2(t) Company Litigation
Schedule 3.4 Stock Options
Schedule 4.1(i) Termination of Plans
Schedule 4.2(c) Employment Terms for non-Shareholders Dentists
Schedule 6.4 Computer Equipment to be Retained by Shareholders
Schedule 8.3 Consents to Assignment
Exhibits
--------
Exhibit 1.1(i) Convertible Promissory Notes
Exhibit 1.1(iii) Promissory Notes
Exhibit 4.1(d) Dental Employment Agreements
Exhibit 4.1(e) Restated Articles of Organization
Exhibit 4.1(f) Assignment and Assumption Agreement/Lease
36
SCHEDULE 1.4
Prepaid Expenses
See attached.
37
SCHEDULE 2.1(g)
Capitalization
As of November 12, 1996, there were outstanding options and warrants to
purchase 724,800 shares of FNEDC Common Stock.
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38
SCHEDULE 2.1(f)
FNEDC Litigation
1. On October 29, 1996, Periodontology Associates, Ltd.
("Periodontology") and Xxxxxxx X. Xxxxx, D.D.S. (collectively, the "Plaintiffs")
commenced an action in the State of Rhode Island Superior Court against First
New England Dental Centers, Inc. ("First Dental") and Xxxxxx and Xxxxxx, D.M.D.,
P.C. ("Xxxxxx and Watkin") seeking unspecified damages. In Count One, the
complaint alleges that Periodontology and First Dental entered into a valid and
enforceable contract whereby First Dental would purchase Periodontology, and
that First Dental has breached the contract by refusing to proceed with the
purchase under the terms of the contract. In Count Two, the complaint further
alleges that on June 18, 1996, Xx. Xxxxx and Xxxxxx and Xxxxxx entered into a
valid and enforceable employment agreement under which Xxxxxx and Watkin agreed
to employ Xx. Xxxxx. Moreover, the complaint alleges that Xxxxxx and Watkin has
failed and refused to employ Xx. Xxxxx under the terms of their agreement. The
defendants will file an answer denying the material allegations of the complaint
and raising appropriate affirmative defenses. Alternatively, the defendants may
move to dismiss the complaint for failure to state a claim upon which relief can
be granted.
2. Crow and Xxxxx, P.C. former counsel to FNEDC, brought an action
against FNEDC seeking damages in the amount of $39,510.25 for legal services
rendered. The matter is still pending.
39
SCHEDULE 2.2(c)
Commitments with Respect to Capital Stock
None.
40
SCHEDULE 2.2(e)
Financial Information
The following were previously provided by the Shareholders to FNEDC::
1. 1995 year end Balance Sheet of the Company
2. 1995 year end Profit and Loss of the Company
3. Balance Sheet of the Company as of September 30, 1996
4. Profit and Loss of the Company as of September 30, 1996
5. 1994 Mass and Federal Corporate Tax return of the Company
6. 1993 Mass and Federal Corporate Tax return of the Company
7. 1995 year end Payroll Service tax and payroll records of the Company
41
SCHEDULE 2.2(f)
Company Liabilities
1. Accounts Payable as of the Closing Date to be assumed by the Shareholders.
2. Accrued Payroll for the non-dentist employees through November 1, 1996 to
be assumed by the Shareholders. All Accrued Payroll for non-dentist
employees after November 1, 1996 will be assumed by FNEDC.
3. Accrued Payroll (less prepaid draws, if any) and related prepaid expenses
for all dentists and specialists employed by the Company from October 1,
1996 through the Closing Date to be assumed by FNEDC and paid on or before
November 15, 1996.
42
SCHEDULE 2.2(g)
Title Exceptions
1. The Company leases its principal office space in Braintree, MA under a
Lease Agreement with Ten Forbes Associates, L.P. which space is also
subject to a mortgage between Ten Forbes Associates, L.P. and the lenders.
2. The Braintree Savings Bank holds a security interest in certain of the
Company's assets in connection with the indebtedness described below. This
Security interest will be released at Closing.
3. The computer equipment listed on Schedule 6.4 hereto will be owned by the
shareholders as of the Closing.
Long Term Debt
The Company has guaranteed the obligations of the Shareholders under a
Promissory Note dated October 6, 1994 to Braintree Savings Bank in the principal
amount of $160,000 pursuant to the terms of a Loan and Security Agreement of
such date and under a Promissory Note dated February 22, 1993 to Braintree
Savings Bank in the principal amount of $170,000 pursuant to the terms of a Loan
and Security Agreement of such date. All such indebtedness will be repaid at
closing.
43
SCHEDULE 2.2(i)
Tax Deficiencies and/or Claims
To the best of the Company's knowledge, the Internal Revenue Service has not
asserted, nor has it threatened to assert, any deficiency or claim for
additional taxes, interest, or penalties against the Company.
44
SCHEDULE 2.2(k)
Insurance
See attached.
45
SCHEDULE 2.2(l)
Employees and Compensation
See attached.
See Schedule 2.2(f) with respect to accrued payroll and prepaid
expense obligations.
See also Schedule 2.2(c)
Consultants: Xxxxxx, Xxxx & Xxxxxxx
Xxxx xx Xxxxxx & Co.
Xxxxx Xxxxxx, Esq.
46
SCHEDULE 2.2(m)
Benefit Plans
Section 125 Pro Plan (Cafeteria Plan)
Medical Insurance (Major Medical and Hospitalization)
Dental Benefits (Professional Treatment Services)
Childcare Benefits
Sick Leave Policy
Leaves of Absence Policy
Vacation Policy
Holiday Policy
Workers' Compensation Plan
Pay in Lieu of Notice Policy
Educational Benefits
2.2(m)(iii) Formal summary plan descriptions may not have been prepared,
distributed and filed for plans subject to ERISA.
2.2(m)(xii) Formal summary plan descriptions may not have been prepared,
distributed and filed for plans subject to ERISA.
47
SCHEDULE 2.2(n)
Material Contracts
1. Lease with Ten Forbes Associates, L.P. dated 12/23/92.
2. Service Agreement with Technical and Logistical Consultants, Inc. dated
8.1.96.
3. NEIC Electronic Insurance Submission Agreement dated 1/93.
4. Agreements for indebtedness listed on Schedule 2.2(g) hereto.
5. Catering Agreement for holiday party (approximately $1,000).
6. Copier Maintenance Agreement with Konica dated 10/96.
7. BRS Computing, Inc. Software Subscription Service Agreement dated
10/28/96.
8. Health Insurance contract with Blue Cross Blue Shield of Massachusetts for
employee health benefits.
9. National Waste Management, Inc. contract dated 8/1/96 for disposal of
medical waste.
10. License for software with BRS Computing, Inc. dated August 18, 1988.
11. See Schedule 2.2(l).
12. Water cooler lease with Magic Mountain Water Coolers, Inc.
13. Agreement with employees for closing of office between December 24, 1996
and December 29, 1996 and for vacation time for certain employees from
November 25-27, 1996.
14. Other contracts.
- Pager: current contract expires May 1997 $195.81 per year.
- Nynex Call Answering: $12.00/mo. No obligation
- Holiday Party: December 14, 1996.
- Canali Catering approx. $1,000.00
- Full Time Staff $200.00
- Part Time Staff $100.00
- Xx. Xxxxxxxxx $500.00
- Staff Holiday Bonus: $2,200.00
- Magic Mountain Water Coolers, Inc.: $36.65/mo. (invoice attached)
- Yankee Dental Convention
- Office Closed January 23, 24, and 25 to attend Convention
- Staff to be reimbursed per Employee Manual
48
SCHEDULE 2.2(n)
Material Contracts (continued)
- Vacation Time Approved
- Xx. Xxxxxxx: November 25, 26, and 27, 1996
- Xxxxxx Xxxxxxx: November 25, 26, and 27, 1996
- Annual Summer Xxxx Out: Approximately $700.00
15. Nynex Information Resources dated 8/9/96.
49
SCHEDULE 2.2(p)
Banking Arrangements
The Company has two checking accounts with Braintree Savings Bank
(Account Nos. 00000000 and 00000000).
50
SCHEDULE 2.2(q)
Consents
1. Technical and Logistical Consultants contract listed on Schedule 2.2(n).
2. Lease with Ten Forbes Associates, L.P. listed on Schedule 2.2(n).
3. Software license with BRS Computing, Inc. listed on Schedule 2.2(n).
51
SCHEDULE 2.2(r)
Authorizations
Licenses
See attached.
52
SCHEDULE 2.2(s)
Exceptions to Accounts Receivable
None.
53
SCHEDULE 2.2(t)
Litigation
None.
54
SCHEDULE 3.4
Stock Options
Number of Exercisable
Exercise Price Option Shares Until
-------------- ------------- -----
Xxxxx Xxxxxxxxx $10.00 per share 8,000 November 12, 2006
Xxxxxxx Xxxxx $10.00 per share 2,500 November 12, 2006
Xxxx Xxxxxxx $10.00 per share 4,500 November 12, 2006
55
SCHEDULE 4.1(i)
Termination of Plans
None.
56
SCHEDULE 4.2(c)
Employment Terms for non-Shareholder Dentists
See attached.
The dentists listed on the attached page are not entitled to those
benefits listed on Schedule 2.2(m).
57
SCHEDULE 6.4
Computer Equipment to be Retained by Shareholders
See attached.
58
SCHEDULE 8.3
Consents to Assignment
1. Guaranties and mortgages relating to the indebtedness listed on Schedule
2.2(g) hereto.
2. Guaranties and other obligations relating to the Lease with Ten Forbes
Associates, L.P. listed on Schedule 2.2(n) hereto.
59
EXHIBIT 1.1(i)
Convertible Promissory Notes
60
EXHIBIT 1.1(iii)
Promissory Notes
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61
EXHIBIT 4.1(d)
Dental Employment Agreements
62
EXHIBIT 4.1(e)
Restated Articles of Organization
63
EXHIBIT 4.1(f)
Assignment and Assumption Agreement/Lease
64
TABLE OF CONTENTS
Page
----
ARTICLE I - GENERAL TERMS..................................................................... 1
1.1. Consideration........................................................... 1
1.2. Delivery of Certificates and Consideration.............................. 2
1.3. Tax Liability........................................................... 2
1.4. Pre-paid Expenses....................................................... 2
1.5. Withdrawal of Cash...................................................... 3
1.6. Accounts Payable........................................................ 3
ARTICLE II - REPRESENTATIONS AND WARRANTIES................................................... 3
2.1. Representations and Warranties of FNEDC ................................ 3
(a) Organization, Power and Standing .................................. 3
(b) Power and Authority Relative to Transaction........................ 3
(c) Valid and Binding Obligation ...................................... 3
(d) Required Consents ................................................. 4
(e) No Brokers ........................................................ 4
(f) Litigation ........................................................ 4
(g) Capitalization .................................................... 4
(h) Qualification to Do Business ...................................... 4
(i) Compliance with Laws .............................................. 4
(j) Financial Statements .............................................. 5
(k) Investigation ..................................................... 5
(l) Disclosure ........................................................ 5
2.2. Representations and Warranties Concerning the Company................... 5
(a) Organization, Power and Standing .................................. 5
(b) Subsidiaries and Interest in Other Entities ....................... 6
(c) Capitalization ................................................... 6
(d) Qualification to do Business ..................................... 6
(e) Financial Statements .............................................. 6
(f) Absence of Undisclosed Liabilities ................................ 6
(g) Title to Properties, Etc .......................................... 6
(h) Conduct of Business; Absence of Material Adverse Changes ......... 7
(i) Tax Returns and Payments .......................................... 9
(j) Compliance with Laws .............................................. 9
(k) Insurance ......................................................... 10
(l) Employees and Compensation ........................................ 10
(m) Employee Benefits ................................................. 10
(n) Material Contracts ................................................ 12
(o) Books and Records ................................................. 13
(p) Banking Relationships ............................................. 14
(q) Required Consents, Etc ............................................ 14
(r) Licenses and Permits .............................................. 14
(s) Accounts Receivable ............................................... 14
(t) Litigation ........................................................ 00
-x-
00
(x) No Brokers ........................................................ 15
(v) Disclosure ........................................................ 15
(w) No Offer .......................................................... 15
2.3. Representations and Warranties Concerning the Shareholders.............. 15
(a) Title ............................................................. 15
(b) Due Issuance ...................................................... 16
(c) Validity and Enforceability ....................................... 16
(d) No Brokers ........................................................ 16
(e) Dental Practice ................................................... 16
(f) Experience ........................................................ 16
(g) Authority ......................................................... 16
ARTICLE III - ADDITIONAL COVENANTS AND AGREEMENTS ............................................ 17
3.1. FNEDC's Access to Information........................................... 17
3.2. Shareholders' Consents and Approvals.................................... 17
3.3. Assignment of Intellectual Property and Other Documents................. 17
3.4. Employee Stock Options.................................................. 17
ARTICLE IV - CONDITIONS TO CLOSING............................................................ 17
4.1. Conditions Precedent to FNEDC's Obligations............................. 17
(a) Representations and Warranties True; Obligations Performed ........ 18
(b) Delivery of Certificates .......................................... 18
(c) Required Consents ................................................. 18
(d) Dental Employment Agreements ...................................... 18
(e) Filing of Restated Articles of Organization ....................... 18
(f) Lease(s) .......................................................... 18
(g) Legal Opinion from Counsel for the Shareholders ................... 18
(h) Delivery of Other Instruments ..................................... 18
4.2. Conditions Precedent to the Company's Obligations....................... 19
(a) Representations and Warranties True; Obligations Performed ........ 19
(b) Required Consents ................................................. 19
(c) Employment ........................................................ 19
(d) Legal Opinion from Counsel to FNEDC ............................... 19
(e) Discharge of Guarantees ........................................... 19
ARTICLE V - CLOSING AND DELIVERIES............................................................ 19
5.1. Date and Place of Closing............................................... 19
5.2. Deliveries at Closing by the Shareholders............................... 19
5.3. Deliveries by FNEDC..................................................... 20
ARTICLE VI - POST-CLOSING MATTERS............................................................. 21
6.1. Further Assurances...................................................... 21
6.2. Employment and Benefits-Related Matters................................. 21
6.3. Medicare/Medicaid....................................................... 23
6.4. Computer Equipment...................................................... 23
6.5. Marketing............................................................... 23
6.6. P.C.'s Obligations...................................................... 23
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66
6.7. Shareholders' Obligations............................................... 23
6.8. Access to Records....................................................... 23
6.9. No Other Locations...................................................... 24
6.10. Location of Assets...................................................... 24
6.11. Insurance............................................................... 24
6.12. Right of First Refusal.................................................. 24
ARTICLE VII - NON-COMPETITION AGREEMENT AND NON-SOLICITATION
AGREEMENT............................................................................ 26
7.1. Non-Solicitation........................................................ 26
7.2. Non-Compete............................................................. 26
ARTICLE VIII - SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION 26
8.1. Survival................................................................ 26
8.2. Indemnification of FNEDC................................................ 27
8.3. Indemnification of the Shareholders..................................... 27
8.4. Procedure for Indemnification........................................... 28
ARTICLE IX.................................................................................... 28
TERMINATION OF AGREEMENT...................................................................... 28
ARTICLE X..................................................................................... 30
CONFIDENTIAL INFORMATION...................................................................... 30
ARTICLE XI - MISCELLANEOUS ................................................................... 30
11.1. Notices................................................................. 30
11.2. No Waiver............................................................... 31
11.3. Amendments and Waivers.................................................. 31
11.4. Governing Law; Headings................................................. 31
11.5. No Assignment........................................................... 31
11.6. Binding Effect and Benefits; Assigns.................................... 31
11.7. Entire Agreement........................................................ 32
11.8. Counterparts............................................................ 32
11.9. Transfer Taxes.......................................................... 32
11.10. Arbitration............................................................. 32
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