Exhibit 10.11
STOCK PUT/CALL OPTION AND SUCCESSOR DESIGNATION AGREEMENT
This Stock Put/Call Option and Successor Designation Agreement (the
"Agreement") is made effective as of this ____ day of ________, 1997 by and
among _____________, Inc., a professional corporation (the "New PC")
incorporated under the laws of the State of Texas (the "State"); Xxxx X.
Xxxxxxx, D.D.S., Inc. ("Xx. Xxxxxxx") who is duly licensed to practice
orthodontics in the State; Omega Orthodontics, Inc., a Delaware corporation
("OMEGA"); and Omega Orthodontics of Austin, Inc., a Delaware corporation (the
"MSO"), which is a wholly-owned subsidiary of OMEGA, with reference to the
following facts.
RECITALS
A. OMEGA is an orthodontic practice management company and has expertise in
managing orthodontic practices including practice management systems, office
space, equipment, furnishings and active administrative personnel necessary for
the operation of orthodontic practices and providing high quality healthcare
management services to orthodontic practices, directly or indirectly through
management service organizations such as the MSO.
B. OMEGA holds all of the capital stock of the MSO pursuant to that certain
Affiliation Agreement and Agreement and Plan of Merger (the "Affiliation
Agreement") dated as of __________, 1997 by and among OMEGA, Xx. Xxxxxxx, Xxxx
X. Xxxxxxx, D.D.S., M.S., Inc., a Texas professional corporation, and the MSO.
C. The New PC owns and operates an orthodontic practice with offices
located in the facility identified in Exhibit A (the "Orthodontic Offices") and
furnishes orthodontic care to the general public through the services of Xx.
Xxxxxxx affiliated with the New PC.
D. The New PC and the MSO have entered into that certain Management
Services Agreement (the "Management Services Agreement") dated as of even date
herewith for the management by the MSO of the non-orthodontic business affairs
of the New PC.
E. Xx. Xxxxxxx owns all of the capital stock (the "Capital Stock") of the
New PC and desires to provide for successor ownership upon the occurrence of
certain events. When used in this Agreement, the term "Capital Stock" shall mean
all of Xx. Xxxxxxx'x right, title, interest and estate in and to all of the
issued and outstanding stock in the New PC, including any stock hereafter issued
and any rights to any additional stock and any preemptive rights, warrants and
instruments of like effect, as set forth on Exhibit B.
F. As a condition of entering into the Management Services Agreement, Xx.
Xxxxxxx has agreed to grant to the MSO, and the MSO desires to acquire from Xx.
Xxxxxxx certain rights, including but not limited to, the right to designate the
successor purchaser (the "Designated Successor") of all or any part of the
issued and outstanding Capital Stock upon the occurrence of certain events. In
addition, under the Management Services Agreement, upon termination thereof,
each of the New PC and the MSO were granted certain rights to be set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the New PC, Xx.
Xxxxxxx, the MSO and OMEGA agree as follows:
1. Defined Terms. The capitalized words and expressions used in this
Agreement, but which are not defined herein shall, unless the context otherwise
requires, have the same meaning as they are given in the Management Services
Agreement.
2. Put Option. The MSO shall have the option (the "Put Option") to require
the New PC, upon termination of the Management Services Agreement by the MSO
under Section 10.2 thereof or upon expiration of the Term of the Management
Services Agreement, to:
(a) Purchase from the MSO at book value all of the leasehold
improvements, fixtures, furniture, furnishings and equipment comprising or
located at the Orthodontic Offices, including all replacements and
additions thereto made by the MSO pursuant to the performance of its
obligations under the Management Services Agreement and all other assets,
including inventory and supplies and intangibles, set forth on the balance
sheet as at the end of the month immediately preceding the date of such
termination or expiration prepared in accordance with GAAP (the "Balance
Sheet") to reflect operations of the MSO in respect of the Orthodontic
Offices, including depreciation, amortization and other adjustments of such
assets shown on such Balance Sheet; and
(b) Purchase, by obtaining an assignment from the MSO, at book value,
the right to receive payments for breach of the restrictive covenants
provided for in Section 3.7 of the Management Services Agreement and in the
applicable Employment Agreement with Xx. Xxxxxxx contemplated thereunder,
and any goodwill and other intangible assets set forth on the Balance
Sheet, reflecting amortization or depreciation of the restrictive
covenants, and any goodwill and other intangible assets; and
(c) Assume all debt and all contracts, payables and leases which are
obligations of the MSO and which relate solely to the performance of its
obligations under the Management Services Agreement or the properties
subleased in respect of the Orthodontic Offices.
If the MSO desires to exercise its Put Option, the MSO shall give written notice
of such election to the New PC and Xx. Xxxxxxx at least twenty (20) calendar
days prior to the date specified in such notice as the date for the closing of
the Put Option. Any exercise of the Put Option by the MSO shall be made by an
aggregate payment of the amounts computed under Clauses (a) and (b) of this
Section 2 (collectively, the "Put Price").
3. Call Option. The New PC shall have the option (the "Call Option") to
require the MSO, upon termination of the Management Services Agreement by the
New PC under Section 10.1
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thereof, to:
(a) Sell to the New PC all of the leasehold improvements, fixtures,
furniture, furnishings and equipment comprising or located at the
Orthodontic Offices, including all replacements and additions thereto made
by the MSO pursuant to the performance of its obligations under the
Management Services Agreement and all other assets, including inventory and
supplies and intangibles, set forth on the Balance Sheet to reflect
operations of the MSO in respect of the Orthodontic Offices, including
depreciation, amortization and other adjustments of such assets shown on
such Balance Sheet; and
(b) Assign to, or grant a waiver in favor of, the New PC, the right to
receive payments for breach of the restrictive covenants provided for in
Section 3.7 of the Management Services Agreement and in the applicable
Employment Agreement with Xx. Xxxxxxx contemplated thereunder, and any
goodwill and other intangible assets set forth on the Balance Sheet,
reflecting amortization or depreciation of the restrictive covenants, and
any goodwill and other intangible assets; and
(c) Assign to the New PC (which it shall assume) all debt and all
contracts, payables and leases which are obligations of the MSO and which
relate solely to the performance of its obligations under the Management
Services Agreement or the properties subleased in respect of the
Orthodontic Offices.
If the New PC desires to exercise its Call Option, the New PC shall give written
notice of such election to the MSO at least twenty (20) calendar days prior to
the date specified in such notice as the date for the closing of the Call
Option. Any exercise of the Call Option by the New PC shall be made by an
aggregate payment to the MSO of an amount equal to the sum of (x) the amount of
cash paid to Xx. Xxxxxxx under Section 2.1(b)(i) of the Affiliation Agreement,
plus (y) an amount equal to the value of the option granted to Xx. Xxxxxxx under
Section 2.1(b)(ii) of the Affiliation Agreement (the "Option"). The Option shall
be value at an amount equal to the difference, if any, between the Average
Market Value Price (as defined below in this Section 3) of OMEGA Stock and IPO
Price (as defined in Section 2.1(b)(i) of the Affiliation Agreement), multiplied
by the number of shares of Omega Common Stock granted in the Option. The Average
Market Value Price shall be determined by averaging the last sales (or closing)
price for Omega's Common Stock on Nasdaq (or a national securities exchange) for
each of the sixty (60) trading days immediately preceding the date the Call
Option Notice is delivered to the MSO (collectively, the "Call Price").
4. Closing and Delivery. The closing ("Closing") of the exercise by the MSO
of the Put Option under Section 2 or of the exercise by the New PC of the Call
Option under Section 3, as the case may be, shall be at the offices of Xxxxxxxx
& Xxxx, Xxx Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 on the date specified for
such Closing in the written notice of election to exercise such Put Option or
Call Option, as the case may be, or on such other date as the parties may
mutually determine. At the Closing, the New PC, at its election shall pay cash,
or a combination of cash and a cancellation of the Option, such Option to be
valued as provided for in Section 3 hereof, for the repurchased assets, whether
the Put Price pursuant to exercise by the MSO
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of the Put Option or the Call Price pursuant to exercise by the New PC of the
Call Option, as the case may be. The New PC and Xx. Xxxxxxx shall execute such
documents as may be required by the MSO to assume the liabilities set forth in
Section 2(c) or 3(c), as the case may be, and shall use their respective best
efforts to remove the MSO from any liability with respect to such repurchased
assets and with respect to any property leased or subleased by the MSO. From and
after any such Closing, each party shall provide to the other parties reasonable
access to books and records then owned by it to permit such requesting party to
satisfy reporting and contractual obligations which may be required of it. In
addition, following any such Closing, the MSO or its designee shall have
reasonable access during normal business hours to the New PCs records, including
patient records regarding records of collections, expenses and disbursements as
kept by the MSO in performing its obligations under the Management Services
Agreement, and the MSO may copy any or all such records.
5. Successor Designation Option.
(a) Upon termination of the Management Services Agreement by the MSO under
Section 10.2 thereof or upon expiration of the Term of the Management Services
Agreement or upon the happening of any of the following events (each of such
termination, expiration or event being hereinafter referred to as a "Transfer
Event"), the MSO shall have the option (the "Successor Designation Option") to
designate a successor orthodontist or successor orthodontists, which person or
persons must be duly licensed orthodontists in the State or otherwise permitted
by law to be a shareholder in a professional corporation in the State, to
purchase (the "Designated Successor") all or any portion of the Capital Stock
then held by Xx. Xxxxxxx:
(i) the death of Xx. Xxxxxxx;
(ii) if Xx. Xxxxxxx is determined to be permanently disabled so as to
be unable to render any professional services on behalf of the New PC, as
determined in accordance with paragraph (b) of this Section 5 below;
(iii) if Xx. Xxxxxxx voluntarily terminates his employment without
first proposing and obtaining the MSO's approval of a proposed qualified
successor orthodontist reasonably acceptable to the MSO on behalf of the
New PC;
(iv) if Xx. Xxxxxxx acts in a criminally or grossly negligent manner
with respect to the performance of professional orthodontic services
rendered or to be rendered on behalf of the New PC;
(v) if Xx. Xxxxxxx becomes hospitalized for alcohol or drug abuse;
(vi) if Xx. Xxxxxxx is convicted of a felony;
(vii) if Xx. Xxxxxxx loses his license or is otherwise determined to
be disqualified from rendering services as an orthodontist for the New PC
by the applicable dental or other
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comparable regulatory board of the State;
(viii) if Xx. Xxxxxxx'x shares of Capital Stock are or are to be
transferred voluntarily or by operation of law to any person who is a
"disqualified person," as defined in the professional corporation statute
of the Laws of the State;
(ix) if Xx. Xxxxxxx voluntarily files a petition under any bankruptcy
or insolvency law or a petition for the appointment of a receiver, or makes
an assignment for the benefit of creditors;
(x) if Xx. Xxxxxxx is subjected involuntarily to such a petition or
assignment, or any creditor or other persons obtains an attachment or other
legal or equitable interest in any shares of the Capital Stock of Xx.
Xxxxxxx and such involuntary petition, assignment or attachment is not
discharged within sixty (60) days after creation;
(xi) if Xx. Xxxxxxx is required to transfer any shares of Capital
Stock by reason of a judgment, court order or decree or by operation of
law;
(xii) if Xx. Xxxxxxx retires within the meaning of Paragraph (c) of
this Section 5; or
(xiii) if Xx. Xxxxxxx desires to sell any of his shares of Capital
Stock to another orthodontist as contemplated under Section 6 hereof.
(b) For purposes hereof, "permanent disability" means any illness, injury,
disease or condition, whether mental or physical, which, for a continuous period
of thirty (30) days, (i) prevents Xx. Xxxxxxx from performing his duties
competently and adequately as determined by the MSO, or (ii) substantially
impairs the New PC's or Xx. Xxxxxxx'x ability to practice orthodontics.
(c) For purposes hereof, "Retirement" of Xx. Xxxxxxx shall occur on the
date when Xx. Xxxxxxx voluntarily withdraws from the practice of orthodontics at
whatever age or for whatever reason and notifies the New PC that he desires to
be regarded as "Retired" and fails to have first proposed and obtained the MSO's
approval of a qualified successor orthodontist reasonably acceptable to the MSO.
6. Successor Designation Option Exercise. Except as otherwise provided
herein, upon exercise of the Successor Designation Option, the Designated
Successor may purchase all or any part of the Capital Stock. The failure of the
MSO to exercise this Successor Designation Option as to all of the Capital Stock
at any one time shall not limit the MSO's right to exercise the Successor
Designation Option with respect to any remaining Capital Stock at any time
during the term of this Agreement. The Successor Designation Option shall also
be exercisable by the MSO as provided in Section 8 below.
7. Exercise Notice. Any exercise of the Successor Designation Option shall
be accompanied by a written notice (the "Successor Designation Exercise Notice")
to Xx. Xxxxxxx (or
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his successor or representative), specifying the name, address and information
showing the qualifications and suitability of the Designated Successor to
conduct or perform professional services on behalf of the New PC and number of
shares of Capital Stock of Xx. Xxxxxxx as to which the Successor Designation
Option is being exercised. Upon the MSO's exercise of the Successor Designation
Option in respect of any event described in Section 5(a)(iii) or (x) as to all
of the shares of Capital Stock of Xx. Xxxxxxx, Xx. Xxxxxxx shall execute a
Non-Competition Agreement in the form attached hereto as Exhibit C. The MSO may,
at any time, cancel any Successor Designation Exercise Notice sent by it
hereunder.
8. Right of First Refusal and Sale of Stock. If Xx. Xxxxxxx desires to sell
any of the Capital Stock to another orthodontist (a "Purchaser"), he shall first
give notice to the MSO of his intent to sell such Capital Stock ("Notice of
Sale"), giving to the MSO such information as shall be reasonably requested by
it to ascertain the qualifications and suitability of the Purchaser to conduct
or to perform professional services on behalf of the New PC and the terms and
conditions of such proposed sale to the Purchaser. Upon receipt of such Notice,
the Successor Designation Option of the MSO shall become exercisable for a
period of three (3) months, provided however, that the exercise price and terms
of purchase of the Capital Stock shall be no less favorable to Xx. Xxxxxxx than
those set forth in the Notice of Sale. In the event the Successor Designation
Option is not exercised during such three (3) month period, Xx. Xxxxxxx may sell
the Capital Stock to the Purchaser, with the consent of the MSO, which consent
shall not be unreasonably withheld, upon the terms and conditions set forth in
the Notice of Sale, provided however, that such sale shall be conditioned: (i)
upon the Purchaser joining in this Agreement and entering into an employment
agreement with the New PC on such terms and conditions as may be approved by the
MSO, and (ii) upon Xx. Xxxxxxx executing a Non-Competition Agreement in the form
attached hereto as Exhibit C.
9. Assignment of the Successor Designation Option The Successor Designation
Option may be assigned by the MSO or any assignee of the MSO to OMEGA or to a
duly licensed orthodontist, by a written assignment, signed by both the MSO and
the assignee. When the context so requires in this Agreement, the term "MSO"
shall be deemed to refer to an assignee holding an assignment of the Successor
Designation Option with respect to such Capital Stock, and the terms "party" and
"parties" shall be deemed to include that assignee.
10. Purchase Price of the Capital Stock. (a) The purchase price ("Purchase
Price") due and payable by the Designated Successor upon exercise of the
Successor Designation Option shall be an amount equal to the product of (a) the
aggregate net amount received by the New PC pursuant to Article 6 and Schedule 3
of the Management Services Agreement for the twelve (12) calendar months
immediately preceding the month in which the Successor Designation Exercise
Notice is delivered to Xx. Xxxxxxx (or his successor or representative)
multiplied by (b) a fraction, the numerator of which is the number of shares of
the Capital Stock to be purchased and the denominator of which is the total
number of shares of the Capital Stock outstanding at the time of such purchase.
(b) Payment of Purchase Price. The Purchase Price upon exercise of the
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Successor Designation Option shall be paid by the Designated Successor executing
a nonrecourse, negotiable promissory note, secured by the Capital Stock of Xx.
Xxxxxxx. The note shall be for a term of five years, with interest payable
quarterly in arrears at the mid-term Applicable Federal Rate with monthly
compounding published by the Internal Revenue Service from time to time in
accordance with Section 1274(d) of the Internal Revenue Code of 1986, as amended
(the "Code") or any successor provision of the Code, provided however, that the
Designated Successor shall be permitted to prepay such note at any time.
Principal shall be payable in five equal annual installments commencing six
months after the closing date.
(c) Purchase From Xx. Xxxxxxx'x Estate.
(i) Upon the death of Xx. Xxxxxxx and receipt of notice of a Successor
Designation Exercise Notice, Xx. Xxxxxxx'x personal representative shall
apply for and obtain any necessary court approval or confirmation of the
sale of Xx. Xxxxxxx'x shares of Capital Stock pursuant to this Agreement.
The representative of the estate of Xx. Xxxxxxx shall make complete
application for court approval on the date which is the later of forty-five
days after Xx. Xxxxxxx'x death or twenty days after such Designated
Successor is found. The representative of the estate and the Designated
Successor shall diligently pursue completion of such sale as soon after the
date of death as practicable.
(ii) The death of Xx. Xxxxxxx'x spouse, if any, shall not be
considered the death of Xx. Xxxxxxx for purposes of this Agreement.
(iii) The estate of Xx. Xxxxxxx shall bear, and hold the New PC
harmless from, all costs and expenses incurred as a result of securing any
court orders, court decrees, court approvals or inheritance tax clearances
required to enable the estate of Xx. Xxxxxxx to transfer to the Designated
Successor full legal and equitable title, free of all inheritance and other
transfer taxes, to the Capital Stock of Xx. Xxxxxxx.
(d) Other Purchases. Except for purchases of Capital Stock upon exercise of
the Successor Designation Option pursuant to Section 5(a)(i) hereof, all other
purchases of Capital Stock pursuant to such Option shall close thirty (30) days
after the date of any Successor Designation Exercise Notice ("Closing"), unless
extended by the parties.
11. Insurance.
(a) In order to insure the MSO's interest in the Management Services
Agreement and under this Agreement, Xx. Xxxxxxx hereby consents to the
acquisition and maintenance in force of a disability insurance policy and a life
insurance policy on Xx. Xxxxxxx ("Insurance Policies"). The life insurance
policy may be in an aggregate face amount of up to three times Xx. Xxxxxxx'x
income, as shown on the W-2 Form prepared by the New PC for the most recent
calendar year. Xx. Xxxxxxx agrees, at the election of the MSO, to take whatever
actions are necessary to facilitate the acquisition of any such Insurance Policy
by the MSO.
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(b) The Insurance Policies shall name the New PC as sole owner and
beneficiary of such policies.
(c) As long as the Insurance Policies provided for herein are in full force
and effect, the MSO shall pay all premiums falling due on all such policies
issued to it subject to this Agreement.
(d) No insurance company that has issued or shall issue an Insurance Policy
or Policies to the MSO as permitted under this Agreement shall be under any
obligation with respect to the performance of the terms and conditions of this
Agreement. Any such company shall be bound only by the terms of the Insurance
Policy or Policies which it has issued or shall hereafter issue and shall have
no liability except as set forth in its policies.
12. Representations. The New PC and Xx. Xxxxxxx each represent and warrant
to the MSO and OMEGA that as of the day and year first above written and during
the term of this Agreement, Exhibit A is a true and complete listing of the
Capital Stock, as revised from time to time pursuant to this Agreement.
13. Restriction on Transfer.
(a) Except to the extent and in the manner provided in this Agreement or
with the express prior written consent of the MSO which may be granted or
withheld in its absolute discretion, Xx. Xxxxxxx shall not sell, assign,
transfer, pledge or otherwise dispose (including by gift or otherwise) of any of
his shares of the Capital Stock.
(b) Issuance of Stock; Change in Ownership; Mergers and Consolidation.
Without the prior written consent of the MSO, Xx. Xxxxxxx shall not permit the
New PC to, and the New PC shall not, during the term of this Agreement, issue
any stock, other equity, or debt of the New PC; permit any change in the
composition or respective percentage ownership of the New PC; merge, consolidate
or otherwise reorganize with or into any other corporation, partnership, trade,
business, or the like; amend or otherwise modify its articles of incorporation
or bylaws; dissolve; or enter into any agreement with any person to do any of
the foregoing without the prior written consent of the MSO.
14. Delivery of Stock Power. Upon the execution of this Agreement, Xx.
Xxxxxxx shall execute and deliver to the MSO, a sufficient number of assignments
separate from certificates, endorsed in blank to cover all of the Capital Stock
(the "Stock Power") held of record or beneficially owned by Xx. Xxxxxxx. Upon
execution of this Agreement, Xx. Xxxxxxx shall deliver to the MSO all
certificates heretofore issued representing all of the shares of Capital Stock
held of record or beneficially owned by Xx. Xxxxxxx. Each such certificate shall
have affixed to the back of the certificate a legend substantially as follows:
"The rights of any holder of any share evidenced by this certificate,
including the right to dispose of the securities represented by this
certificate or any interest therein, are subject to
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and restricted by a certain Stock Put/Call Option and Successor Designation
Agreement, dated, 1997, among the New PC, the holder hereof and the MSO and
OMEGA (as defined therein). The New PC will mail without charge to any
holder of these shares a copy of such agreement within five (5) days of
receipt by the New PC of a written request therefor."
Upon any exercise of the Successor Designation Option by the MSO, the MSO
(and/or the Designated Successor) shall be authorized to complete the Stock
Powers, attach them to the certificates and tender the same to the transfer
agent for the New PC for reissuance in the name of the Designated Successor.
Upon any termination of this Agreement without exercise of the Successor
Designation Option, the MSO shall return all such Stock Powers to Xx. Xxxxxxx.
15. Confidentiality. The parties shall use all good faith efforts to keep
the contents of this Agreement and all other aspects of the negotiations
preceding execution of this Agreement confidential. Unless required by law, the
New PC, Xx. Xxxxxxx, and the MSO and OMEGA shall not disclose the contents of
this Agreement or the negotiations leading to this Agreement to third parties
without the prior written consent of the other parties. The MSO shall ensure
that all of the assignees likewise comply with the obligations of
confidentiality imposed by this Section, except that the MSO and the assignees
may disclose the contents of such to the extent required by law or otherwise to
their respective agents, representatives, contractors, and employees to the
extent necessary to exercise their respective rights or perform their respective
obligations hereunder.
16. Term. The term of this Agreement shall commence as of the day and year
first above written and shall terminate upon the termination of the Management
Services Agreement or the exercise (and consummation of the transaction provided
for upon such exercise) of the Put Option, the Call Option or the Successor
Designation Option as to all of the Capital Stock, as the case may be (the
"Term").
17. General
(a) Compliance with Law. The New PC and Xx. Xxxxxxx shall comply with all
applicable requirements of applicable state law and regulations, and other
licensing and accreditation authorities.
(b) Relationship of Parties. In the exercise of their respective rights and
the performance of their respective obligations under this Agreement, the New PC
and Xx. Xxxxxxx on the one hand and OMEGA and the MSO (or any assignee of the
MSO) on the other hand are acting in the capacity of the grantor and grantee of
an option to purchase or to designate the purchase of shares of Capital Stock
and nothing in this Agreement is intended nor shall be construed to create an
employer/employee, partnership, joint venture or a landlord/tenant relationship
between or among the parties.
(c) Assignment. Notwithstanding any other provision of this Agreement,
neither this Agreement nor the rights and duties of this Agreement may be
assigned or delegated by
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the New PC or Xx. Xxxxxxx without the prior written consent of the MSO and
OMEGA. This Agreement binds the successors, heirs, and authorized assignees of
the parties.
(d) Counterparts. This Agreement, and any amendments thereto, may be
executed in counterparts, each of which shall constitute an original document,
but which together shall constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. Any notices required or permitted to be given hereunder by any
party to another shall be in writing and shall be deemed delivered upon personal
delivery, twenty-four (24) hours following deposit with a courier for overnight
delivery or seventy two (72) hours following deposit in the U.S. Mail,
registered or certified mail, postage prepaid, return-receipt requested,
addressed to the parties at the following addresses or to such other addresses
as the parties may hereafter specify in writing:
If to the New PC
or Xx. Xxxxxxx: Xxxx X. Xxxxxxx, D.D.S.
0000 Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
If to MSO or OMEGA: Omega Orthodontics, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx, XX 00000
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State.
(h) Amendment. This Agreement may be amended at any time by agreement of
the parties, provided that any amendment shall be in writing and executed by the
parties.
(i) Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, (i) the parties shall
amend this Agreement in order to carry out the intent and essential business
purposes of this Agreement as closely possible within the requirements of
applicable provisions of Law as determined by such a court, and (ii) the
remaining provisions will nevertheless continue in full force and effect.
(j) Fees and Expenses. The New PC, Xx. Xxxxxxx and the MSO and OMEGA each
shall bear their own expenses, including, without limitation, attorneys' and
accountants' fees, incurred in connection with the preparation of this Agreement
and the transactions contemplated hereby.
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(k) Exhibits and Schedules. All attachments and schedules attached to this
Agreement are incorporated herein by this reference and all references herein to
"Agreement" shall mean this Agreement together with all such exhibits and
schedules.
(l) Time of Essence. Time is expressly made of the essence of this
Agreement in each and every provision hereof of which time of performance is a
factor.
(m) Attorneys' Fees. Should any of the parties hereto institute any action
or proceeding to enforce this Agreement or any provision hereof (including
without limitation, arbitration), or for damages by reason of any alleged breach
of this Agreement or of any provision hereof, or for a declaration of rights
hereunder (including, without limitation, by means of arbitration), the
prevailing party in any such action or proceeding shall be entitled to receive
from the other party all costs and expenses, including, without limitation,
reasonable attorneys' fees, incurred by the prevailing party in connection with
such action or proceeding.
(n) Further Assurances. The parties shall take such actions and execute and
deliver such further documentation as may reasonably be required in order to
give effect to the transactions contemplated by this Agreement and the
intentions of the parties hereto.
(o) Rights Cumulative. The various rights and remedies herein granted to
the respective parties hereto shall be cumulative and in addition to any other
rights any such party may be entitled to under law. The exercise of one or more
rights or remedies by a party shall not impair the right of such party to
exercise any other right or remedy, at law or equity.
18. Alternative Dispute Resolution.
18.1 General.
(a) If a dispute arises under this Agreement which cannot be resolved
informally by the parties, any party may invoke the procedures set forth in
Exhibit D hereto and the parties agree to use these procedures, except paragraph
(b) of this Section 18, prior to any party pursuing other available remedies.
The parties will meet and attempt in good faith to resolve any controversy or
claim arising out of or relating to this Agreement.
(b) Notwithstanding anything in this Section 18 to the contrary, nothing in
this Section 18 shall preclude any party from seeking a preliminary injunction
or other provisional relief, either prior to or during the proceeding provided
for in this section, if in its judgment such action is necessary to avoid
irreparable damage or to preserve the status quo.
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IN WITNESS WHEREOF, the New PC, Xx. Xxxxxxx, MSO and OMEGA have executed
this Agreement as of the date first above written by their duly authorized
representatives as set forth below.
"NEW PC"
___________________, INC.,
a Texas corporation
By:
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Xxxx X. Xxxxxxx, D.D.S., President
XX. XXXXXXX
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Xxxx X. Xxxxxxx, D.D.S.
"MSO"
OMEGA ORTHODONTICS
OF AUSTIN, INC.
a Delaware corporation
By:
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Xxxxxx X. Xxxxxxxx, President
"OMEGA"
OMEGA ORTHODONTICS, INC.,
a Delaware corporation
By:
---------------------------------------
Xxxxxx X. Xxxxxxxx, President and
Chief Executive Officer
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SPOUSAL JOINDER AND CONSENT
I am the spouse of Xxxx X. Xxxxxxx, D.D.S., the sole Stockholder of
______________, Inc. To the extent that I have any interest in any of the
Capital Stock (as that term is defined in the Stock Put/Call Option and
Successor Designation Agreement), I hereby join in such Agreement and agree to
be bound by its terms and conditions to the same extent as my spouse. I have
read the Stock Put/Call Option and Successor Designation Agreement, understand
its terms and conditions, and to the extent that I have felt it necessary, I
have retained independent legal counsel to advise me concerning the legal effect
of this Stock Put/Call Option Agreement and this Spousal Joinder and Consent.
I understand and acknowledge that each of the MSO and OMEGA is significantly
relying on the validity and accuracy of this Spousal Joinder and Consent in
entering into this Stock Put/Call Option and Successor Designation Option
Agreement.
Executed this _________ day of _________________________ , 1997.
Signature:
Printed or Typed Name:
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EXHIBIT A
ORTHODONTIC OFFICES
[Xx. Xxxxxxx Attach]
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EXHIBIT B
STOCK
[Xx. Xxxxxxx attach]
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EXHIBIT C
NON-COMPETITION AGREEMENT
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EXHIBIT D
ALTERNATIVE DISPUTE RESOLUTION PROCEDURES
A. Method of Invoking ADR Procedures
1. These procedures may be invoked by any party to an agreement which
incorporates these procedures by giving written notice to the other of the
dispute and designating a person with decision-making authority (the
"representative") to act on behalf of the disputing party regarding the dispute.
The other party shall be required to respond to the disputing party's notice
within five (5) business days by designating in writing its own representative.
A party may choose more than one person to represent it. If a party appoints
only one representative, one or more of its officers may nonetheless attend such
meetings.
2. The parties, each acting through its representative, shall meet at a
mutually acceptable time and place within five business days after the
non-disputing party designates its representative to the other. At that meeting,
the parties shall attempt in good faith to negotiate a resolution of the
dispute, or failing that, to agree on a method for resolving the claim or
dispute.
3. If, within ten (10) business days after the first meeting or within such
longer period of time as the parties may mutually agree, the parties have not
succeeded in negotiating a resolution of the claim or dispute or agreeing on a
dispute resolution mechanism, they shall submit the dispute to mediation in
accordance with the procedures set forth herein.
4. The parties will jointly appoint a mutually acceptable mediator to
mediate the dispute. If the parties are unable to agree on a mutually acceptable
mediator within five (5) days after the conclusion of the negotiations described
in paragraph 3 above, then the parties shall select a neutral third party from
either the Center for Public Resources, New York, New York ("CPR") Panels of
Neutrals, the American Arbitration Association ("AAA") or the Association of
Attorney Neutrals ("AAN"), with the assistance of such organization, unless the
parties agree otherwise in finding a mutually acceptable mediator.
5. Acquisition shall bear 50% and the New PC and Xx. Xxxxxxx shall bear 50%
of the fees and costs of the mediator and any fees and costs of CPR, AAA or AAN.
6. The parties agree to participate in good faith in the mediation and
negotiations related thereto for a period of thirty (30) days from appointment
of a mediator by any of the parties or the CPR, AAA or AAN.
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B. Mediation procedures
1. The mediator shall be neutral and impartial.
2. The mediator shall control the procedural aspects of the mediation. The
parties will cooperate fully with the mediator.
(a) The mediator is free to meet and communicate separately with each
party.
(b) The mediator will decide when to hold joint meetings with the parties
and when to hold separate meetings. There shall be no stenographic
record of any meeting. Formal rules of evidence will not apply.
(c) The mediator may request that there be no direct communication between
the parties or between their attorneys without the concurrence of the
mediator.
3. Each party may be represented by more than one person, e.g., one or more
of its officers and an attorney. Each party will have a representative fully
authorized to negotiate a settlement of the dispute present.
4. The process will be conducted expeditiously.
5. The mediator will not transmit information received from any party to
another party or any third person unless authorized to do so by the party
transmitting the information.
6. The entire process is confidential. The parties and the mediator will
not disclose information regarding the process, including settlement terms, to
third persons, unless the parties otherwise agree. The process shall be treated
as a compromise negotiation for purposes of the Federal Rules of Evidence and
state rules of evidence.
7. The parties will refrain from pursuing administrative and/or judicial
remedies during the mediation process, except as otherwise expressly provided in
the agreement which incorporates these procedures.
8. Unless all parties and the mediator otherwise agree in writing,
(a) The mediator will be disqualified as a witness, consultant or expert
in any pending or future investigation, action or proceeding relating
to the subject matter of the mediation (including any investigation,
action or proceeding which involves persons not party to this
mediation); and
(b) The mediator and any documents and information in the mediator's
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possession will not be subpoenaed in any such investigation, action or
proceeding, and all parties will oppose any effort to have the
mediator and documents subpoenaed.
9. If the dispute goes into arbitration, the mediator shall not serve as an
arbitrator, unless the parties and the mediator otherwise agree in writing.
10. The mediator, if a lawyer, may freely express views to the parties on
the legal issues of the dispute.
11. The mediator shall not be liable for any act or omission in connection
with the mediation.
12. The mediator may withdraw at any time by written notice to the parties
(i) for overriding personal reasons, (ii) if the mediator believes that a party
is not acting in good faith, or (iii) if the mediator concludes that further
mediation efforts would not be useful.
C. Binding Arbitration
If the parties do not resolve the dispute through mediation within the
period provided in Part A above, the parties shall submit the matter to binding
arbitration before AAA, AAN or CPR, to a qualified sole arbitrator in accordance
with the then current CPR Rules for Non-Administered Arbitration of Business
Disputes or comparable AAA or AAN rules. The sole arbitrator shall be agreed
upon by the parties within twenty (20) days after either party elects to submit
any issue to arbitration or, failing that, shall be selected by the organization
to whom the parties selected for arbitration. A qualified arbitrator is one who
is familiar with the principal subject matter of the issues to be arbitrated
such as by way of example, healthcare services industry matters, management
consulting services generally or business law/corporate matters generally.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction. The arbitrator shall not have the authority to award
multiple, punitive or consequential damages under any circumstances. If the
party initially raising the dispute to be resolved is New PC or Xx. Xxxxxxx, the
arbitration shall be held in Boston, Massachusetts, and if the party initially
raising the dispute to be resolved is the MSO or OMEGA, the arbitration shall be
held in Austin, Texas.
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