EXHIBIT 10.80
MEMBER INTERESTS PURCHASE AGREEMENT
Dated as of ____________ ___, 199__
By and Among
Castle Dental Centers of Texas, Inc.,
Castle Dental Centers, Inc.,
▇▇▇▇ ▇. ▇▇▇▇▇▇, D.D.S., P.C.,
SW Dental Associates, LC,
▇▇▇▇ ▇▇▇▇▇▇▇, D.D.S.
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS.............................. 1
1.1 DEFINITIONS.............................................. 1
ARTICLE II
THE TRANSACTION............................ 5
2.1 PURCHASE AND SALE OF MEMBER INTERESTS.................... 5
2.2 EXCLUDED ASSETS.......................................... 5
2.3 ASSUMPTION OF OBLIGATIONS................................ 6
2.4 NONASSIGNABLE CONTRACTS AND LEASES....................... 6
2.5 CLOSING.................................................. 7
ARTICLE III
PAYMENT OF PURCHASE PRICE....................... 7
3.1 AMOUNT; ALLOCATION; DELIVERY............................. 7
3.2 AGENCY RELATIONSHIP...................................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SWD
AND THE MEMBER............................. 8
4.1 BROKER'S OR FINDER'S FEES................................ 8
4.2 EXISTENCE AND GOOD STANDING.............................. 8
4.3 AUTHORIZATION AND VALIDITY OF AGREEMENT.................. 8
4.4 MEMBER INTERESTS......................................... 9
4.5 CONSENTS AND APPROVALS; NO VIOLATIONS.................... 9
4.6 SUBSIDIARIES AND AFFILIATES.............................. 9
4.7 FINANCIAL STATEMENTS: NO MATERIAL ADVERSE CHANGE......... 9
4.8 BOOKS AND RECORDS........................................ 10
4.9 TITLE TO PROPERTIES; ENCUMBRANCES; CONDITION............. 10
4.10 REAL PROPERTY............................................ 10
4.11 LEASES................................................... 10
4.12 MATERIAL CONTRACTS....................................... 10
4.13 PERMITS.................................................. 11
4.14 LITIGATION............................................... 11
4.15 TAXES.................................................... 11
4.16 INSURANCE................................................ 12
4.17 INTELLECTUAL PROPERTIES.................................. 12
4.18 COMPLIANCE WITH LAWS..................................... 12
4.19 EMPLOYMENT RELATIONS..................................... 13
4.20 EMPLOYEE BENEFIT PLANS................................... 13
4.21 ENVIRONMENTAL LAWS AND REGULATIONS....................... 13
4.22 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC................... 13
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4.23 COMPENSATION OF EMPLOYEES................................ 14
4.24 PAYORS................................................... 14
4.25 ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE.................... 14
4.26 SOLVENCY................................................. 14
4.27 DISCLOSURE............................................... 15
4.28 INVESTMENTS.............................................. 15
4.29 COPIES OF DOCUMENTS...................................... 15
4.30 INVESTMENT REPRESENTATIONS............................... 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
PURCHASER, CASTLE PC AND CASTLE.................... 16
5.1 BROKER'S OR FINDER'S FEES................................ 16
5.2 EXISTENCE AND GOOD STANDING OF THE CASTLE ENTITIES;
POWER AND AUTHORITY...................................... 16
5.3 NO VIOLATIONS............................................ 16
5.4 CAPITAL STOCK............................................ 17
5.5 LITIGATION............................................... 17
5.6 COMPLIANCE WITH LAWS..................................... 17
5.7 FINANCIAL STATEMENTS..................................... 17
ARTICLE VI
CONDITIONS TO SWD'S AND THE MEMBER'S OBLIGATIONS............ 18
6.1 TRUTH OF REPRESENTATIONS AND WARRANTIES.................. 18
6.2 NO LITIGATION THREATENED................................. 18
6.3 CONSIDERATION............................................ 18
6.4 GOVERNMENTAL APPROVALS................................... 18
6.5 PROCEEDINGS.............................................. 18
6.6 GOOD STANDING CERTIFICATES............................... 18
6.7 EMPLOYMENT AGREEMENTS.................................... 18
6.8 PURCHASE OF EQUIPMENT.................................... 19
6.9 REGISTRATION RIGHTS AGREEMENT............................ 19
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE CASTLE ENTITIES............ 19
7.1 TRUTH OF REPRESENTATIONS AND WARRANTIES.................. 19
7.2 DOCUMENTS OF CONVEYANCE.................................. 19
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7.3 GOVERNMENTAL APPROVALS................................... 19
7.4 GOOD STANDING CERTIFICATES............................... 19
7.5 TRANSFER OF DENTAL ASSETS................................ 19
7.6 UPDATES TO CERTAIN SCHEDULES............................. 19
ARTICLE VIII
COVENANTS OF SWD AND THE MEMBER.................... 19
8.1 COOPERATION BY SWD....................................... 20
8.2 REVIEW OF THE ASSETS..................................... 20
8.3 FURTHER ASSURANCES....................................... 20
ARTICLE IX
COVENANTS OF THE CASTLE ENTITIES.................... 20
9.1 COOPERATION BY THE CASTLE ENTITIES....................... 20
9.2 BOOKS AND RECORDS; PERSONNEL............................. 20
9.3 FURTHER ASSURANCES....................................... 21
ARTICLE X
SURVIVAL AND INDEMNIFICATION...................... 21
10.1 INDEMNIFICATION OF SWD................................... 21
10.2 INDEMNIFICATION OF THE CASTLE ENTITIES................... 21
10.3 DEMANDS.................................................. 22
10.4 RIGHT TO CONTEST AND DEFEND.............................. 22
10.5 COOPERATION.............................................. 23
10.6 RIGHT TO PARTICIPATE..................................... 23
10.7 PAYMENT OF DAMAGES....................................... 23
10.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF SWD AND
THE MEMBER............................................... 23
10.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE CASTLE
ENTITIES................................................. 23
ARTICLE XI
MISCELLANEOUS............................. 23
11.1 ENTIRE AGREEMENT......................................... 23
11.2 SUCCESSORS AND ASSIGNS................................... 24
11.3 COUNTERPARTS............................................. 24
11.4 HEADINGS................................................. 24
11.5 MODIFICATION AND WAIVER.................................. 24
11.6 NO THIRD PARTY BENEFICIARY RIGHTS........................ 24
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11.7 SALES AND TRANSFER TAXES................................. 24
11.8 EXPENSES................................................. 24
11.9 NOTICE................................................... 25
11.10 GOVERNING LAW............................................ 25
11.11 CONFIDENTIALITY; PUBLICITY............................... 25
11.12 CONSENT TO JURISDICTION.................................. 26
11.13 SEVERABILITY............................................. 26
11.14 ENFORCEMENT.............................................. 26
11.15 ALLOCATION OF RISK....................................... 26
SCHEDULES
Schedule A Assets
Schedule B Dental Assets
Schedule 2.2(c) Excluded Contracts
Schedule 4.6 Asset Owned by Third Parties which are Used in the
Business
Schedule 4.7 Financial Statements
Schedule 4.10 Real Property
Schedule 4.11 Leased Personal Property
Schedule 4.12 Material Contracts and Proposals
Schedule 4.13 Permits
Schedule 4.14 Litigation
Schedule 4.16 Insurance Policies
Schedule 4.17 Intellectual Property
Schedule 4.21 Environmental Matters
Schedule 4.23 Employee Compensation
Schedule 4.24 Payors
Schedule 5.7 Castle Dental Financial Statement
EXHIBITS
Exhibit A Form of Employment Agreement
Exhibit B Form of Consulting Agreement
Exhibit C Form of Certificate of Designation of Series B
Convertible Preferred Stock
Exhibit D Registration Rights Agreement
Exhibit E Leased Equipment to be Purchased
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MEMBER INTERESTS PURCHASE AGREEMENT
This MEMBER INTERESTS PURCHASE AGREEMENT, dated as of ____________ ____,
1997, is entered into by and among Castle Dental Centers of Texas, Inc., a Texas
corporation ("Purchaser"), Castle Dental Centers, Inc., a Delaware corporation,
▇▇▇▇ ▇. ▇▇▇▇▇▇, D.D.S., P.C., a Texas professional corporation ("Castle PC"), SW
Dental Associates, LC, a Texas limited liability company ("SWD"), ▇▇▇▇ ▇▇▇▇▇▇▇,
D.D.S., the majority interest holder of SWD (the "Member"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇., the minority interest holder of SWD ("▇▇▇▇▇▇▇").
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into that certain Option
Agreement for the Purchase and Sale of Businesses, dated March __, 1997 (the
"Option Agreement"), pursuant to which the Member and ▇▇▇▇▇▇▇ granted to
Purchaser an option to purchase all of the capital stock and member interests of
SWD (the "Option");
WHEREAS, Purchaser wishes to exercise the Option and purchase all of the
capital stock and member interests business of SWD, which purchase the parties
hereto have agreed shall be on the terms and subject to the conditions set forth
below.
NOW, THEREFORE, for the mutual covenants and other consideration described
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto covenant and
agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms have the meanings set
forth below (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"ACCOUNTS RECEIVABLE": all notes and accounts receivable of SWD.
"ACCOUNTS PAYABLE": all notes and accounts payable of SWD.
"AFFILIATE": with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person.
"AGREEMENT": this Member Interests Purchase Agreement, as amended from
time to time as provided herein.
"ASSETS": means the assets of SWD, excluding the Dental Assets and the
Excluded Assets, including but not limited to the assets described on Schedule A
attached hereto, which is incorporated herein by reference.
"ASSUMED OBLIGATIONS": as defined in Section 2.3 hereof.
"BOOKS AND RECORDS": all books, records, books of account, files and data
(including customer and supplier lists), certificates and other documents
related to the conduct of the Business, including personnel records and files.
"BUSINESS": the practice management of dentistry, including dental
specialty care and all other management and related activities currently
conducted by SWD.
"CASTLE": means Castle Dental Centers, Inc., a Delaware corporation.
"CASTLE ENTITIES": means Castle PC, Castle and Purchaser, collectively.
"CASTLE PC": as defined in the preamble of this Agreement.
"CLOSING": as defined in Section 2.5 hereof.
"CLOSING DATE": means the date the Closing occurs, as contemplated in
Section 2.5 hereof.
"CODE": the Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"COMMON STOCK": means the common stock, par value $.001 per share, of
Castle.
"CONVERTIBLE PREFERRED STOCK": means the Series B Convertible Preferred
Stock, par value $.001 per share, of Castle, having substantially the rights and
preferences set forth in Exhibit C hereto.
"DENTAL ASSETS": means the assets described on Schedule B and any and all
other assets of SWD, the ownership or operation of which requires a license to
practice dentistry.
"ENCUMBRANCES": liens, security interests, options, rights of first
refusal, easements, mortgages, charges, debentures, indentures, deeds of trust,
rights-of-way, restrictions, agreements, encroachments, licenses, leases,
permits, security agreements, or any other encumbrances and other restrictions
or limitations on use of real or personal property or irregularities in title
thereto that would have a Material Adverse Effect.
"ENVIRONMENTAL CLAIM": any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violations, investigations or proceedings relating in any way to any
Environmental Law (for purposes of this definition, "Claims") or any permit
issued under any such Environmental Law, including without limitation (i) any
and all Claims by
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governmental or regulatory authorities for enforcement, cleanup, removal,
remedial or other actions or for damages pursuant to any applicable
Environmental Law and (ii) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW": any federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law, in each case as
amended and now in effect, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to Hazardous Materials, the environment or health relating to
or arising from environmental conditions, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended 42 U.S.C. ss. 9601 ET SEQ.; the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. ss. 1801 ET SEQ.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. ss. 6901 ET SEQ.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. ss. 1251 ET SEQ.; the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 ET SEQ.; the Clean Air Act, 42 U.S.C.
ss. 7401 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. ss. 3808 ET SEQ.; the
Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 ET SEQ.; and relevant state and
local laws.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated and rulings issued thereunder. Section
references to ERISA are to ERISA as in effect at the date of this Agreement and
any subsequent provisions of ERISA substituted therefor.
"EXCLUDED ASSETS": as defined in Section 2.2 hereof.
"EXCLUDED CONTRACTS": as defined in Schedule A hereto.
"EXECUTION DATE": means the date the Option Agreement was executed.
"FINANCIAL STATEMENTS": as defined in Section 4.7 hereof.
"GAAP": generally accepted accounting principles consistently applied.
"HAZARDOUS MATERIALS": (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(ii) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants" or "pollutants," or words of similar import
under any applicable Environmental Law; and (iii) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by a
governmental authority.
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"INTELLECTUAL PROPERTY": domestic and foreign patents, patent
applications, registered and unregistered trademarks, service marks, trade names
and logos, registered and unregistered copyrights, computer programs, data
bases, trade secrets and proprietary information relating to the conduct of the
Business.
"MATERIAL ADVERSE EFFECT": material adverse effect on the assets,
liabilities, Business, condition (financial or otherwise), results or operations
or prospects of SWD or its Affiliates.
"MEMBER INTERESTS": means all of the issued and outstanding capital stock
and member interests of SWD.
"PERMITS": as defined in Section 4.13 hereof.
"PERMITTED ENCUMBRANCES": as defined in Section 4.9 hereof.
"PERSON": any individual, partnership, joint venture, corporation, trust,
unincorporated organization, government or other department or agency thereof or
other entity.
"PLANS": as defined in Section 4.20 hereof.
"PRE-CLOSING PERIODS": as defined in Section 4.15(a) hereof.
"PURCHASE PRICE": as defined in Section 3.1 hereof.
"PURCHASER": Castle Dental Centers of Texas, Inc., a Texas corporation.
"RETURNS": as defined in Section 4.15(a) hereof.
"RELEASE": disposing, discharging, injecting, spilling, leaking, leaching,
dumping, emitting, escaping, emptying, seeping, placing and the like, into or
upon any land or water or air, or otherwise entering into the environment.
"ROUND ROCK LEASE": means the lease dated as of August 1, 1997, between
Socrates Retail Joint Venture and Purchaser, covering the premises described as
▇▇▇ ▇▇, ▇▇▇▇▇ ▇, replat of ▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇.
"SWD": as defined in the preamble of this Agreement.
"TAX": any net income, alternative or add-on minimum tax, advance,
corporation, gross income, gross receipts, sales, use, AD VALOREM, franchise,
profits, license, value added, withholding, payroll, employment, excise, stamp
or occupation tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty imposed by any
governmental authority with respect thereto, and any liability for such amounts
as a result either of being a member of an affiliated group or of a contractual
obligation to indemnify any other entity.
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"WEIGHTED AVERAGE PRICE PER SHARE": means the weighted average price per
share at which Castle issued or sold Common Stock to any person (whether for
cash, for property or on completion for services rendered) between the Execution
Date and the Closing Date, determined by computing the quotient of (A) the
aggregate value of consideration received by Castle from any Common Stock issued
or sold by Castle between the Execution Date and the Closing Date, divided by
(B) the total number of shares of Common Stock issued by Castle in all
transactions occurring between the Execution Date and the Closing Date[,
provided, however, that there shall be excluded from all calculations of the
Weighted Average Price Per Share (i) the first issuance of shares of Common
Stock occurring after the Execution Date to any Person other than an Affiliate
or stockholder of Castle] [or] [delete proviso if the offering has been
completed that was needed to fund the option payment] and (ii) any private
placement of Common Stock to any Affiliate of Castle or to any Person that is a
Castle Stockholder on or before the Execution Date, the gross proceeds of which
do not exceed $2,000,000, and which is effected for the purpose of financing
Castle's initial obligations under the Option Agreement.
ARTICLE II
THE TRANSACTION
2.1 PURCHASE AND SALE OF MEMBER INTERESTS. Subject to the terms and
conditions of this Agreement, Purchaser agrees to purchase from the Member, and
the Member agrees to sell, convey, transfer, assign and deliver, and cause to be
sold, conveyed, transferred, assigned and delivered, to Purchaser, on the
Closing Date, against the receipt by the Member of the consideration specified
in Section 3.1 hereof, the Member Interests free and clear of any Encumbrances.
2.2 EXCLUDED ASSETS. Notwithstanding the purchase by Purchaser of the
Member Interests, the following assets shall not constitute a part of the
Business on the Closing Date and shall be transferred by SWD to Member
immediately prior to the Closing (the "Excluded Assets"), or after the Closing
Date by SWD or its successor in interest in the event that (and within 10 days
after) SWD receives possession of the Excluded Assets described in subsections
(b) or (c) below after the Closing Date:
(a) cash, cash equivalents, deposits, advance payments, securities,
letters of credit naming SWD as account party, certificates of deposit, notes,
drafts, checks and similar instruments in excess of an aggregate of $60,000;
(b) Tax refunds related to the Business received or receivable by
SWD or the Member relating to Taxes paid by SWD or the Member for all periods
prior to the Closing Date; and
(c) any asset listed on Schedule 2.2(c).
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2.3 ASSUMPTION OF OBLIGATIONS.
(a) Upon (and when due after) the sale of the Member Interests by
Member to Purchaser, Member shall cause the following liabilities of SWD to be
discharged and satisfied in full: all obligations of SWD arising prior to the
Execution Date for conduct occurring prior to the Execution Date, for (A)
personal injury claims against SWD, (B) liabilities for torts or malpractice,
including without limitation employee claims (if any) for personal injury or
sexual harassment, (C) obligations owed to the Internal Revenue Service or any
other taxing authority, (D) Environmental Claims, and (E) Accounts Payable,
accrued liabilities and long term debt exceeding, in aggregate, $250,000, except
as set forth in Section 2.3(b) hereof.
(b) Notwithstanding the terms of Section 2.3(a) hereof, or any
indemnity or reimbursement obligation contained herein or any other provision
hereof, the parties hereto agree that (i) all liabilities, indebtedness and
obligations incurred by SWD in connection with the completion of the leasehold
improvements and the equipment purchases for the Round Rock Lease as have been
mutually agreed to by SWD and Purchaser as being necessary for the practice of
dentistry, as SWD currently conducts such practice, are liabilities incurred in
the ordinary course of business of SWD that all parties hereto agree constitute
a part of the liabilities to be discharged by SWD (and not by the Member) when
due, including after the Closing Date if so due then, (ii) all liabilities,
indebtedness and obligations under leases of real property to which SWD is a
party before, on or after the date of this Agreement, constitute obligations to
be discharged by SWD (and not Member) on or after the Closing Date, and (iii)
all Accounts Payable, long term debt, and all other liabilities, indebtedness
and obligations, known and unknown, contingent or liquidated, of SWD arising
after the Execution Date on account of conduct of SWD occurring after the
Execution Date, shall constitute obligations to be paid, satisfied and
discharged by SWD (and not by Member) when due, including after the Closing Date
if so due then (collectively, the "Assumed Obligations").
2.4 NONASSIGNABLE CONTRACTS AND LEASES. In the case of any contracts of
SWD with respect to which a consent to assignment is required for a change in
ownership of SWD and such consent has not been obtained on or before the Closing
Date, the Member agrees to use its best efforts to obtain, or cause to be
obtained, after the Closing Date, any written consents necessary to convey to
Purchaser the benefit thereof. The Castle Entities shall cooperate with the
Member, in such manner as may be reasonably requested, in connection therewith,
including without limitation, active participation in visits to and meetings,
discussions and negotiations with all Persons with the authority to grant or
withhold consent to assignment with respect to any such contract. Purchaser,
Castle, and Castle PC jointly and severally covenant and agree to indemnify and
hold harmless SWD and Member and their officers, directors, employees and
Affiliates from and against any loss, damage, costs or expenses (including
reasonable costs of defense and attorney's fees) arising out of any such
contract as a result of acts or omissions occurring on or after the Closing
Date, or any failure by the Castle Entities to fulfill their obligations under
this Section 2.4.
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2.5 CLOSING. The closing of the transactions contemplated hereby (the
"Closing") shall take place after the execution hereof at the time at which the
conditions to Closing set forth in Articles VI and VII hereof have been
satisfied or waived. The Closing shall take place on the Closing Date at 9:00
a.m. at the offices of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., South Tower Pennzoil
Place, Suite 2900, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other
place, date and time as may be mutually agreed upon by the parties.
ARTICLE III
PAYMENT OF PURCHASE PRICE
3.1 AMOUNT; ALLOCATION; DELIVERY. Purchaser, Castle and Castle PC jointly
and severally agree to pay to Member the following (the "Purchase Price"):
(a) a total of $3,650,000 in cash on the Closing Date by wire
transfer of immediately available funds to an account or accounts previously
identified by Member, which reflects total cash consideration of $5,150,000,
credited and reduced by (i) the $1,000,000 paid by Purchaser to Member upon
execution of the Option Agreement, and (ii) the $500,000 paid by Purchaser to
the Member as nonrefundable ▇▇▇▇▇▇▇ money pursuant to a letter agreement dated
September 11, 1996, among certain of the parties hereto; and
(b) the number of shares of Convertible Preferred Stock determined
by dividing $1,550,000 by the lower of (i) the Weighted Average Price Per Share
at which Castle has sold Common Stock; PROVIDED, that in the event that Castle
issues or sells Common Stock, to any Affiliate of Castle or to any Person that
is a Castle Stockholder on or before the Execution Date, at any time between the
Execution Date and the Closing Date (other than a private placement of Common
Stock the gross proceeds of which do not exceed $2,000,000, and which is
effected in part for the purpose of financing Castle's initial obligations under
the Option Agreement), then the amount to be used in lieu of the foregoing
Weighted Average Price Per Share in this clause (i) shall instead be the lowest
price per share of Common Stock at which Castle sold or issued Common Stock at
any time between the Execution Date and the Closing Date, or (ii) $8.00. Such
shares shall be issued on the Closing Date in the name of ▇▇▇▇ ▇▇▇▇▇▇▇, D.D.S.,
or such other name as Member may designate. If Castle has not sold Common Stock
to any Person at any time between the Execution Date and the Closing, the
denominator used in the above computation shall be $8.00.
(c) Computations made in accordance with this Section 3.1 shall be
subject to appropriate adjustments for stock splits, stock dividends or other
recapitalizations of Castle.
(d) Immediately following the Closing, the Member shall deposit a
portion of the Purchase Price equal to $400,000 in a segregated,
interest-bearing bank account, certificate of deposit, treasury ▇▇▇▇ or other
similar investment grade instrument or account, such instrument or account to be
maintained by the Member for
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one year following the Closing for the satisfaction of valid indemnity claims
(if any) of Purchaser.
3.2 AGENCY RELATIONSHIP. In the event that, following the Closing Date,
the Member receives any funds, documents or instruments which constitute or are
delivered in respect of Assets of SWD, the Member agrees to hold such funds,
documents or instruments in trust for the Castle Entities and as the Castle
Entities' agent therefor.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SWD
AND THE MEMBER
As an inducement to the Purchaser, Castle and Castle PC to enter into and
perform this Agreement, SWD and the Member, jointly and severally, hereby
represent and warrant to Purchaser, Castle and Castle PC as of the Execution
Date (and not as of the Closing Date or as of any other date) as follows:
4.1 BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm acting on
behalf of SWD or the Member is, or will be, entitled to any fee, commission or
broker's or finder's fees in connection with this Agreement or any of the
transactions contemplated hereby.
4.2 EXISTENCE AND GOOD STANDING. SWD is a limited liability company duly
organized and validly existing under the laws of the State of Texas. SWD has the
full power and authority to own, lease and operate its property and to carry on
the Business as now being conducted and to own or lease the Assets owned or
leased by it. SWD is duly qualified or licensed to do business in each
jurisdiction in which the character or location of the properties owned or
leased by SWD or the nature of the business conducted by SWD makes such
qualification necessary and the absence of which would have a Material Adverse
Effect.
4.3 AUTHORIZATION AND VALIDITY OF AGREEMENT. SWD and the Member have full
power and authority to execute and deliver this Agreement, to perform their
respective obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by SWD and the
consummation by it of the transactions contemplated hereby, have been duly
authorized and approved by the Managers and the members of SWD, and no other
action on the part of SWD or its members is necessary to authorize the
execution, delivery and performance of this Agreement by SWD and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by SWD and the Member and is a valid and binding
obligation of each of SWD and the Member enforceable against each in accordance
with its terms, except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
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4.4 MEMBER INTERESTS. The member interests of SWD are divided into 1,000
shares, 970 of which are owned by the Member and 30 of which are owned by ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇. The Member and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. hold licenses to practice
dentistry in the State of Texas.
4.5 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution, delivery and
performance of this Agreement by SWD and the Member and the consummation by SWD
and the Member of the transactions contemplated hereby will not, with or without
the giving of notice or the lapse of time or both: (a) violate, conflict with,
or result in a breach or default under any provision of the organizational
documents of SWD; (b) to the knowledge of SWD and the Member, violate any
statute, ordinance, rule, regulation, order, judgment, or decree of any court or
of any governmental or regulatory body, agency or authority applicable to SWD or
the Member or by which any of their respective properties or assets may be
bound; (c) to the knowledge of SWD and the Member, require any filing by SWD or
the Member with, or require SWD or the Member to obtain any permit, consent, or
approval of, or require SWD or the Member to give any notice to, any
governmental or regulatory body, agency or authority; or (d) result in a
violation or breach by SWD or the Member of, conflict with, constitute (with or
without due notice or lapse of time or both) a default by SWD or the Member (or
give rise to any right of termination, cancellation, payment or acceleration)
under or result in the creation of any Encumbrance upon any of the properties or
assets of SWD or the Member under any of the terms, conditions, or provisions of
any note, bond, mortgage, indenture, license, franchise, permit, agreement,
lease, franchise agreement or other instrument or obligation to which SWD or the
Member is a party, or by which any of their respective properties or assets may
be bound, except for such violations, consents, breaches, defaults,
terminations, and accelerations which would not have a Material Adverse Effect.
4.6 SUBSIDIARIES AND AFFILIATES. SWD has no subsidiaries. Except as set
forth on Schedule 4.6, all of the Assets used in the Business are owned by SWD.
4.7 FINANCIAL STATEMENTS: NO MATERIAL ADVERSE CHANGE. Attached hereto as
Schedule 4.7 is the balance sheet of SWD as of the date shown thereon (the
"Balance Sheet Date") and the statements of operations and cash flows for the
year then ended (collectively, the "Financial Statements"). The Financial
Statements fairly present in all material respects the financial position of SWD
at the date thereof and the results of operations of SWD and its cash flows for
the period indicated. Between the Balance Sheet Date and the Execution Date
there was no material adverse change in the assets or liabilities, or in the
business or condition, financial or otherwise, or in the results of operations
of SWD.
To SWD's and Member's knowledge, as of the date hereof, other than
as (a) disclosed on the Financial Statements, or (b) incurred since the Balance
Sheet Date in the ordinary course of business, SWD has no direct or indirect
indebtedness, liability, claim, deficiency, obligation or responsibility, known
or unknown, fixed or contingent, liquidated or unliquidated, accrued, absolute
or otherwise.
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4.8 BOOKS AND RECORDS. SWD has previously made available to the Castle
Entities true, correct and complete copies of its articles of organization and
regulations, and all amendments to each. The minute books of SWD, as previously
made available to the Castle Entities and its representatives, contain accurate
records in all material respects of the meetings of the Members and the Managers
of SWD.
4.9 TITLE TO PROPERTIES; ENCUMBRANCES; CONDITION. Except for properties
and assets reflected in the Financial Statements or acquired since the Balance
Sheet Date which have been sold or otherwise disposed of in the ordinary course
of business, SWD has good and valid title to the Assets, in each case subject to
no Encumbrances, except for (a) Encumbrances consisting of easements, permits
and other restrictions or limitations on the use of real property or
irregularities in title thereto that do not materially detract from the value
of, or materially impair the use of, such property by SWD in the operation of
the Business, (b) Encumbrances for current taxes, assessments or governmental
charges or levies on property not yet due or delinquent, (c) Encumbrances
created by any of the Castle Entities, including but not limited to Encumbrances
created in accordance with the provisions of this Agreement; and, (d)
Encumbrances relating to Assumed Obligations (liens of the type described in
clauses (a), (b), (c) and (d) above or hereinafter sometimes referred to as
"Permitted Encumbrances"). SWD has heretofore furnished the Castle Entities with
a fixed asset ledger which sets forth all fixed assets owned by SWD as of the
Balance Sheet Date. SWD and the Member are not aware of any defects in such
assets that would have a Material Adverse Effect on the ability of the Castle
Entities to use such assets in the Business, ordinary wear and tear excepted.
4.10 REAL PROPERTY. Schedule 4.10 identifies all interests in real
property used by SWD in the Business, including leases, and includes the name of
the record title holder thereof. To SWD's and the Member's knowledge, all of the
buildings, structures and appurtenances situated on the real property owned or
leased by SWD are in such an operating condition, and in a state of maintenance
and repair, subject to ordinary wear and tear, as is necessary for the operation
of the Assets in the Business. The real property had adequate rights of ingress
and egress for operation of the Business in the ordinary course. To SWD's and
the Member's knowledge, no condemnation or similar proceeding is pending or
threatened which would preclude or impair the use of any such property, except
where such proceeding would not have a Material Adverse Effect.
4.11 LEASES. Schedule 4.11 contains an accurate and complete list of all
personal property leases to which SWD is a party (as lessee or lessor) and a
description of all such leases to which SWD is a party as lessee. Each lease set
forth in Schedule 4.11 is in full force and effect, and no event has occurred
that with the giving of notice, the passage of time or both would constitute a
default by SWD thereunder.
4.12 MATERIAL CONTRACTS. Except as set forth in Schedule 4.12, the
contracts to which SWD is a party do not include (a) any agreement, contract or
commitment relating to the employment of any person by SWD, (b) any agreement,
indenture or other instrument which contains restrictions with respect to
payment of profits, dividends or any other distributions, (c) any agreement,
contract or commitment relating to capital expenditures in excess of $5,000, (d)
any loan or advance to, or
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investment in, any Person or any agreement, contract or commitment relating to
the making of any such loan, advance or investment, (e) any guarantee or other
contingent liability in respect of any indebtedness or obligation of any Person,
(f) any management service, consulting or any other similar type contract, (g)
any agreement, contract or commitment limiting the freedom of SWD to engage in
any line of business or to compete with any Person, (h) any agreement, contract
or commitment which involves $5,000 or more and is not cancelable without
penalty within 30 days, or (i) any other agreement, contract, or commitment
which would have a Material Adverse Effect. Also set forth in Schedule 4.12 is a
list of all proposals submitted by SWD to any third party that, if accepted by
such third party, would require disclosure on Schedule 4.12. Except where it
would not have a Material Adverse Effect, each contract or agreement set forth
in Schedule 4.12 is in full force and effect and there exists no default or
event of default or event, occurrence, condition or act (including the purchase
of the Member Interests hereunder) which, with the giving of notice, the lapse
of time or the happening of any other event or condition, would become a default
or event of default by SWD thereunder.
4.13 PERMITS. Schedule 4.13 attached hereto lists all of the governmental
and other third party permits (including occupancy permits), licenses, consents
and authorizations ("Permits") required, to the knowledge of SWD and the Member,
in connection with the use, operation or ownership of the Assets and the conduct
of the Business as currently conducted, except for Permits which, if not
obtained or in effect, would not have a Material Adverse Effect. SWD holds all
of the Permits listed on Schedule 4.13, and none is presently subject to
revocation or challenge. Except as set forth on Schedule 4.13, none of such
Permits will be subject to revocation or termination as a result of the
transactions contemplated hereby.
4.14 LITIGATION. Except as set forth on Schedule 4.14, there is no action,
suit, proceeding at law or in equity, arbitration or administrative or other
proceeding by or before (or any investigation by) any governmental or other
instrumentality or agency, pending, or, to the knowledge of SWD and the Member,
threatened, against or affecting the properties, rights or goodwill of SWD, the
Member, or employees of SWD, and SWD and the Member do not know of any valid
basis for any such action, proceeding or investigation. There are no such suits,
actions, claims, proceedings or investigations pending or to the knowledge of
SWD and the Member threatened, seeking to prevent or challenge the transactions
contemplated by this Agreement. Purchaser will assume no liability whatsoever
with respect to any matter described on Schedule 4.14. There have been no
actions, suits, disciplinary proceedings and investigations undertaken by the
Dental Board of the State of Texas or other body regulating the activities of
dentists, against Member that could reasonably be expected to have a Material
Adverse Effect.
4.15 TAXES.
(a) All returns and reports for Taxes for all taxable years or
periods that end on or before the Execution Date and, with respect to any
taxable year or period beginning before the Closing Date ("Pre-Closing
Periods"), which are required to be filed by or with respect to SWD
(collectively, the "Returns"), have been or will be
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filed when due in a timely fashion and such Returns as filed are or will be
accurate in all material respects.
(b) There is no material action, suit, proceeding, investigation,
audit, or claim now pending or, to the knowledge of SWD or the Member,
threatened by any authority regarding any Taxes relating to SWD for any
Pre-Closing Period.
(c) There are no liens or security interests on any of the assets of
SWD that arose in connection with any failure (or alleged failure) to pay any
Taxes;
(d) There are no agreements for the extension or waiver of the time
for assessment of any Taxes relating to SWD for any Pre-Execution Date period
and SWD has not been requested to enter into any such agreement or waiver;
(e) All Taxes relating to SWD which SWD is required by law to
withhold or collect have been duly withheld or collected, and have been timely
paid over to the proper authorities to the extent due and payable; and,
(f) SWD is not now nor has ever been a party to any Tax allocation
or sharing agreement that could result in any liability to the Castle Entities.
4.16 INSURANCE. Set forth in Schedule 4.16 is a complete list of insurance
policies that SWD maintains with respect to its Business and properties that are
included in the Assets or on its employees. Such policies are in full force and
effect and are free from any right of termination on the part of the insurance
carriers. In the judgment of SWD, such policies, with respect to their amounts
and types of coverage, are adequate to insure against risks to which SWD and its
property and assets are normally exposed in the operation of the Business,
subject to customary deductibles and policy limits.
4.17 INTELLECTUAL PROPERTIES. Schedule 4.17 sets forth all material
Intellectual Property used in the Business and the owner of such Intellectual
Property. The operation of the Business as conducted by SWD as of the Closing
Date requires no rights under Intellectual Property other than rights under
Intellectual Property listed on Schedule 4.17 and rights granted to SWD pursuant
to agreements listed on Schedule 4.17. SWD owns all right, title and interest in
the Intellectual Property listed in Schedule 4.17. No litigation is pending or,
to the knowledge of SWD or the Member, threatened wherein SWD is accused of
infringing or otherwise violating the Intellectual Property rights of another,
or of breaching a contract conveying rights under Intellectual Property.
4.18 COMPLIANCE WITH LAWS. To the knowledge of SWD and the Member, SWD is
in compliance in all material respects with all applicable laws, regulations,
orders, judgments and decrees applicable to the Business.
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4.19 EMPLOYMENT RELATIONS.
(a) To the knowledge of SWD and the Member, SWD is not and has not
engaged in any unfair labor practice; (b) to the knowledge of SWD and the
Member, no representation question exists respecting the employees of SWD; (c)
SWD has not been notified of any grievance that might have a Material Adverse
Effect and no arbitration proceeding arising out of or under any collective
bargaining agreement is pending; and (d) no collective bargaining agreement is
currently being negotiated by SWD.
4.20 EMPLOYEE BENEFIT PLANS. SWD has delivered to the Castle Entities true
and complete copies of all employee benefit plans, policies, programs and
arrangements and all related contracts, agreements and other descriptions
thereof with respect to the employee benefits provided to the employees of the
Business prior to the Closing Date (the "Plans"). Each of the Plans has, to the
knowledge of SWD and the Member, been maintained in compliance with its terms
and the requirements of all applicable laws. None of the Plans are subject to
Title IV of ERISA or the minimum funding obligations of Section 412 of the Code,
and SWD and any entity required to be aggregated therewith pursuant to Section
414(b) or (c) of the code have no liability under Title IV of ERISA or under
Section 412(f) or 412(n) of the Code.
4.21 ENVIRONMENTAL LAWS AND REGULATIONS. Except as set forth on Schedule
4.21 and except where it would not have a Material Adverse Effect (a) Hazardous
Materials have not been generated, used, treated or stored on, or transported to
or from, any of SWD's business locations by SWD, its authorized agents or its
independent contractors (including suppliers), (b) Hazardous Materials have not
been Released or disposed of by SWD, its authorized agents or its independent
contractors (including suppliers) on any of SWD's business locations except such
Releases which do not violate any Environmental Laws, (c) SWD is, to its and the
Member's knowledge, in compliance with all applicable Environmental Laws and the
requirements of any Permits issued under such Environmental Laws with respect to
any of SWD's business locations, (d) there are no pending or, to the knowledge
of SWD and the Member, threatened Environmental Claims against SWD or any of
SWD's business locations, (e) there are no facts or circumstances, conditions,
pre-existing conditions or occurrences on any of SWD's business locations known
to SWD or the Member that could reasonably be anticipated (1) to form the basis
of an Environmental Claim against SWD or any of SWD's business locations, or (2)
to cause such of SWD's business locations to be subject to any restrictions on
the ownership, occupancy use or transferability of such of SWD's business
locations under any Environmental Law, and (f) SWD has not in the ordinary
course of business transported or stored Hazardous Materials.
4.22 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC. Except for relationships with
Affiliates, SWD does not possess, directly or indirectly, any financial interest
in, and no member of SWD serves as a director, officer or employee of, any
corporation, firm, association or business organization which is a supplier,
customer, lessor, lessee, or competitor of SWD.
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4.23 COMPENSATION OF EMPLOYEES. Set forth in Schedule 4.23 is an accurate
and complete list showing the names of all persons whose compensation from SWD
collectively for the fiscal year ended on the Balance Sheet Date exceeded an
annualized rate of $40,000, together with a statement of the full amount paid or
payable to each such person for services rendered during the current fiscal year
to the Execution Date.
4.24 PAYORS. Schedule 4.24 sets forth the ten largest payors of SWD for
the most recently completed fiscal year. The relationship of SWD with each of
such payors as of the date of this Agreement is a good commercial working
relationship and, except as set forth on Schedule 4.24, no significant payor has
canceled or otherwise terminated or, to the knowledge of SWD or the Member
threatened to cancel or otherwise terminate its relationship with SWD within the
last three years.
4.25 ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE. The Accounts Receivable
reflected on the balance sheet included in the Financial Statements are
collectible in the ordinary course of business, net of the reserves established
with respect thereto. There has been no change since the Balance Sheet Date
(other than in the ordinary course of business) in the amount of the Accounts
Receivable or other fees or debts due to SWD or the allowances with respect
thereto, or Accounts Payable by SWD, from that reflected in the Balance Sheet.
4.26 SOLVENCY. SWD is not entering into this Agreement with actual intent
to hinder, delay or defraud creditors. Immediately prior to the Execution Date:
(a) the present fair salable value of the Assets of SWD (on a going
concern basis) will exceed the liability of SWD on its debts (including its
contingent obligations);
(b) SWD has not incurred, nor does it intend to or believe that it
will incur, debts (including contingent obligations) beyond its ability to pay
such debts as such debts mature (taking into account the timing and amounts of
cash to be received from any source, and of amounts to be payable on or in
respect of debts); and the amount of cash available to SWD after taking into
account all other anticipated uses of funds is anticipated to be sufficient to
pay all such amounts on or in respect of debts, when such amounts are required
to be paid; and,
(c) SWD will have sufficient capital with which to conduct its
Business, and the property of SWD does not constitute unreasonably small capital
with which to conduct its Business.
For purposes of this Section 4.26 "debt" means any liability or a
(i) right to payment whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured; or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such a right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
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4.27 DISCLOSURE. None of this Agreement, the Financial Statements, any
Schedule, Exhibit or certificate attached hereto or delivered in accordance with
the terms hereof contains any untrue statement of a material fact, or omits any
statement of a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made.
4.28 INVESTMENTS. The Assets do not include any capital stock or other
equity ownership or proprietary interest in any other corporation, partnership,
association, trust, joint venture or other entity.
4.29 COPIES OF DOCUMENTS. SWD has caused to be made available for
inspection and copying by the Castle Entities and their advisers, true, complete
and correct copies of all documents referred to in this Article IV or in any
Schedule attached hereto. Any document referred to in this Article IV or in any
Schedule attached hereto that is provided or made available to any Castle Entity
shall be deemed to have been provided to all of the Castle Entities.
4.30 INVESTMENT REPRESENTATIONS.
(a) The Member understands that the Convertible Preferred Stock and
the Common Stock into which shares of Convertible Preferred Stock are
convertible (collectivley, the "Stock") conveyed hereby have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"). The Member
also understands that the Stock is being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part upon
its representations contained in this Agreement.
(b) The Member, in consultation with its accountants, attorneys and
financial advisors, has the requisite experience in evaluating and investing in
private placement transactions of securities so that it is capable of evaluating
the benefits and risks of its investment in Castle and has the capacity to
protect its own interests. The Member understands that he must bear the economic
risk of this investment indefinitely unless the Stock is registered pursuant to
the Securities Act, or an exemption from registration is available. The Member
also understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow it to transfer all or any portion of the Stock under the
circumstances, in the amounts or at the times it might propose.
(c) The Member is acquiring the Stock for his own account for
investment only, and not with a view towards distribution.
(d) The Member represents that by reason of its business or
financial experience, he has the capacity to protect his own interests in
connection with the transactions contemplated in this Agreement.
(e) The Member represents that he is an accredited investor within
the meaning of Regulation D under the Securities Act.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
PURCHASER, CASTLE PC AND CASTLE
Purchaser, Castle PC and Castle, jointly and severally, represent and
warrant to SWD and the Member as follows:
5.1 BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm acting on
behalf of the Castle Entities is, or will be, entitled to any fee, commission or
broker's or finder's fee in connection with this Agreement or any of the
transactions contemplated hereby.
5.2 EXISTENCE AND GOOD STANDING OF THE CASTLE ENTITIES; POWER AND
AUTHORITY. Purchaser and Castle are corporations duly organized, validly
existing and in good standing under the laws of the States of Texas and
Delaware, respectively. Castle PC is a professional corporation duly organized,
validly existing and in good standing under the laws of the State of Texas. Each
of the Castle Entities has full corporate power and authority to make, execute,
deliver and perform this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been duly
authorized and approved by all required corporate action of each of the Castle
Entities. This Agreement has been duly executed and delivered by each of the
Castle Entities and is a valid and binding obligation of each of the Castle
Entities enforceable against each of the Castle Entities in accordance with its
terms, except to the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles.
5.3 NO VIOLATIONS. The execution, delivery and performance of this
Agreement by each of the Castle Entities and the consummation by each of the
Castle Entities of the transactions contemplated hereby will not, with or
without the giving of notice or the lapse of time or both; (a) violate, conflict
with, or result in a breach or default under any provision of the charter
document or by-laws of any of the Castle Entities; (b) to the knowledge of any
of the Castle Entities, violate any statute, ordinance, rule, regulation, order,
judgment or decree of any court or of any governmental or regulatory body,
agency or authority applicable to any of the Castle Entities or by which any of
their respective properties or assets may be bound; (c) to the knowledge of any
of the Castle Entities, require any filing by any of the Castle Entities with,
or require any of the Castle Entities to obtain any permit, consent or approval
of, or require any of the Castle Entities to give any notice to, any
governmental or regulatory body, agency or authority or any third party; or (d)
result in a violation or breach by any of the Castle Entities of, conflict with,
constitute (with or without due notice or lapse of time or both) a default by
any of the Castle Entities (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Encumbrance upon any of the properties or assets of any of the Castle Entities
pursuant to, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, lease, franchise
agreement or other instrument or obligation to which any of the Castle Entities
is a party, or by which they
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or any of their respective properties or assets may be bound, except in the case
of Subsections 5.3(b), (c), and (d), for such violations, consents, breaches,
defaults, terminations and accelerations which in the aggregate would not have a
Material Adverse Effect.
5.4 CAPITAL STOCK. The authorized capital stock of Castle consists solely
of 30,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock,
$.001 par value per share ("Preferred Stock"). All of the shares of Convertible
Preferred Stock delivered pursuant to Section 3.1 hereof have been duly and
validly authorized and, following the Closing, will be validly issued, fully
paid, nonassessable and free of any liens or encumbrances.
5.5 LITIGATION. There is no action, suit, proceeding at law or in equity,
arbitration or administrative or other proceeding by or before (or any
investigation by) any governmental or other instrumentality or agency, pending,
or, to the knowledge of any of the Castle Entities, threatened, against or
affecting the properties, rights or goodwill of any of the Castle Entities or
their respective employees, except where such proceeding would not have a
material adverse effect on the assets, liabilities, business, condition
(financial or otherwise), results of operations or prospects of any of the
Castle Entities, and none of the Castle Entities knows of any valid basis for
any such action, proceeding or investigation. There are no such proceedings
pending or, to the knowledge of any of the Castle Entities, threatened, seeking
to prevent or challenge the transactions contemplated by this Agreement.
5.6 COMPLIANCE WITH LAWS. To the knowledge of each of the Castle Entities,
each of the Castle Entities are in compliance with all applicable laws,
regulations, orders, judgments and decrees applicable to their respective
business, except where any noncompliance would not have a material adverse
effect on the assets, liabilities, business, condition (financial or otherwise),
results of operations or prospects of any of the Castle Entities.
5.7 FINANCIAL STATEMENTS. Attached hereto as Schedule 5.7 are the most
recent available audited financial statements of Castle as of the date of the
audited balance sheet and for the year then ended, and the most recent available
unaudited financial statements of Castle as of the date of the unaudited balance
sheet and for the year-to-date period then ended (the "Castle Financial
Statements"). The Castle Financial Statements are complete and correct in all
material respects and present fairly in accordance with generally accepted
accounting principles consistently applied, the financial condition of Castle
and the results of operations of Castle as of the dates thereof and for the
periods indicated. Since the date of the most recent balance sheet attached
hereto as part of Schedule 5.7, there has been no material adverse change in the
assets or liabilities, or in the business or condition, financial or otherwise,
or in the results of operations of Castle.
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ARTICLE VI
CONDITIONS TO SWD'S AND THE MEMBER'S OBLIGATIONS
The obligations of SWD and the Member under this Agreement to sell, or
cause to be sold, the Member Interests and to consummate the other transactions
contemplated hereby shall be subject to the satisfaction (or waiver by the party
entitled to performance) on or prior to the Closing Date of all of the following
conditions:
6.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Castle Entities contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date, and the Castle Entities shall have delivered to SWD and the
Member on the Closing Date a certificate of an authorized officer of each of the
Castle Entities, dated the Closing Date, to such effect.
6.2 NO LITIGATION THREATENED. No action or proceedings shall have been
instituted before a court or other governmental body or by any public authority
to restrain or prohibit any of the transactions contemplated hereby, and each of
the Castle Entities shall have delivered to SWD and the Member a certificate of
an authorized officer of each of the Castle Entities, dated the Closing Date, to
such effect to the best knowledge of such officer.
6.3 CONSIDERATION. The Member shall have received the consideration
described in Section 3.1.
6.4 GOVERNMENTAL APPROVALS. All governmental consents and approvals, if
any, necessary to permit the consummation of the transactions contemplated by
this Agreement shall have been received by the parties hereto.
6.5 PROCEEDINGS. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to SWD and the Member and
their counsel, and SWD and the Member shall have received copies of all such
documents and other evidence as its or its counsel may reasonably request in
order to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
6.6 GOOD STANDING CERTIFICATES. SWD shall have received good standing and
corporate existence certificates respecting each of the Castle Entities.
6.7 EMPLOYMENT AGREEMENTS. The Member and ▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have
received an Employment Agreement and a Consulting Agreement, respectively,
substantially in the form of Exhibits A and B, respectively, executed by
Purchaser.
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6.8 PURCHASE OF EQUIPMENT. Purchaser shall have executed and delivered,
simultaneously herewith, an agreement to purchase the equipment owned by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and described on Exhibit E for a purchase price of at least $209,000.
6.9 REGISTRATION RIGHTS AGREEMENT. The Member shall have received a
Registration Rights Agreement, substantially in the form of Exhibit D hereto,
executed by Castle.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE CASTLE ENTITIES
The obligations of the Purchaser, Castle and Castle PC under this
Agreement are subject to the satisfaction or waiver by the Castle Entities, on
or prior to the Closing Date, of all of the following conditions:
7.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of SWD and the Member contained herein shall be true and correct in
all material respects on and as of the Execution Date.
7.2 DOCUMENTS OF CONVEYANCE. The Purchaser shall have received from SWD
the Stock certificates evidencing the Member Interests, together with a blank
stock power for same.
7.3 GOVERNMENTAL APPROVALS. All governmental consents and approvals, if
any, necessary to permit the consummation of the transactions contemplated by
this Agreement shall have been received.
7.4 GOOD STANDING CERTIFICATES. Purchaser shall have received good
standing and corporate existence certificates respecting SWD.
7.5 TRANSFER OF DENTAL ASSETS. SWD shall have transferred good and valid
title to the Dental Assets to Castle PC, free and clear of all Encumbrances
except Permitted Encumbrances.
7.6 UPDATES TO CERTAIN SCHEDULES. SWD shall have provided to Purchaser
updates to Schedules 4.11, 4.12 and 4.14 hereof for the period from the
Execution Date to the Closing Date; PROVIDED HOWEVER, that such updates shall
not be deemed to be representations or warranties of SWD, the Member or ▇▇▇▇▇▇▇
and shall not change the date as of which the representations and warranties of
SWD and the Member herein are made, which date shall be only on and as of the
Execution Date.
ARTICLE VIII
COVENANTS OF SWD AND THE MEMBER
SWD and the Member hereby covenant and agree with the Castle Entities as
follows:
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8.1 COOPERATION BY SWD. SWD and the Member shall use their reasonable best
efforts to cooperate with the Castle Entities to secure all necessary consents,
approvals, authorizations, exemptions and waivers from third parties as shall be
required in order to enable SWD and the Member to effect the transactions
contemplated on its or his part hereby, and SWD and the Member shall otherwise
use their reasonable best efforts to cause the consummation of such transactions
in accordance with the terms and conditions hereof and to cause all conditions
contained in this Agreement over which it has control to be satisfied.
8.2 REVIEW OF THE ASSETS. Each of the Castle Entities acknowledges that it
has, prior to the Closing Date, through its representatives or Affiliates,
reviewed (a) the Assets, (b) the complete working papers of SWD's certified
public accountants used in their preparation of financial statements for SWD and
(c) the Books and Records of SWD and to otherwise review the financial and legal
condition of SWD as the Castle Entities deem necessary or advisable to
familiarize themselves with the Business and related matters; such review shall
not, however, affect the representations and warranties made by SWD and the
Member hereunder or the remedies of the Castle Entities for breaches of those
representations and warranties.
8.3 FURTHER ASSURANCES. At any time or from time to time after the Closing
Date, SWD and the Member shall, at the reasonable request of the Castle Entities
and at the Castle Entities' expense, execute and deliver any further instruments
or documents and take all such further action as the Castle Entities may
reasonably request in order to consummate and make effective the sale of the
Member Interests.
ARTICLE IX
COVENANTS OF THE CASTLE ENTITIES
Each of the Castle Entities, jointly and severally, hereby covenants and
agrees with SWD and the Member as follows:
9.1 COOPERATION BY THE CASTLE ENTITIES. Each of the Castle Entities will
use its reasonable best efforts, and will cooperate with SWD and the Member, to
secure all necessary consents, approvals, authorizations, exemptions and waivers
from third parties as shall be required in order to enable the Castle Entities
to effect the transactions contemplated on its part hereby, and each of the
Castle Entities will otherwise use its reasonable best efforts to cause the
consummation of such transactions in accordance with the terms and conditions
hereof and to cause all conditions contained in this Agreement over which it has
control to be satisfied.
9.2 BOOKS AND RECORDS; PERSONNEL. At all times after the Closing Date, the
Castle Entities shall allow Member and any agents of Member, upon reasonable
advance notice to the Castle Entities, access to all Books and Records of SWD
which are transferred to the Castle Entities in connection herewith, to the
extent necessary or desirable in anticipation of, or preparation for, existing
or future litigation, employment matters, tax returns or audits of SWD or the
Member, or reports to or filings with governmental agencies, during normal
working hours at the principal places
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of business of the respective Castle Entities or at any location where such
Books and Records are stored, and Member shall have the right, at Member's sole
cost, to make copies of any such Books and Records.
9.3 FURTHER ASSURANCES. At any time or from time to time after the Closing
Date, the Castle Entities shall, at the request of the Member and at Member's
expense, execute and deliver any further instruments or documents and take all
such further action as Member may reasonably request in order to consummate and
make effective the sale of the Member Interests.
ARTICLE X
SURVIVAL AND INDEMNIFICATION
10.1 INDEMNIFICATION OF SWD. The Castle Entities, jointly and severally,
for a period of one year after the Closing Date, shall indemnify and hold SWD,
the Member and ▇▇▇▇▇▇▇, and their respective Affiliates (the "SWD Indemnitees"),
harmless from and against any and all damages (including exemplary damages and
including reasonable counsel fees and reasonable expenses of investigation,
defending and prosecuting litigation (collectively, the "Damages"), suffered by
any SWD Indemnitee as a result of, caused by, arising out of, or in any way
relating to (a) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of any of the Castle Entities under this
Agreement or any misrepresentation in or omission from any list, schedule,
certificate, or other instrument furnished or to be furnished to SWD or the
Member by any of the Castle Entities pursuant to the terms of this Agreement or
(b) any liability or obligation (other than those for which any of the Castle
Entities is being indemnified by SWD and the Member hereunder) which pertains to
the ownership, operation or conduct of the Business or Assets arising from any
acts, omissions, events, conditions or circumstances occurring on or after the
Execution Date.
10.2 INDEMNIFICATION OF THE CASTLE ENTITIES. The Member shall, for a
period of one year after the Closing Date, indemnify and hold the Castle
Entities and their respective Affiliates (the "Castle Indemnitees") harmless
from and against any and all Damages suffered by any Castle Indemnitee as a
result of, caused by, arising out of, or in any way relating to (a) any
misrepresentation, breach of warranty, or nonfulfillment of any agreement or
covenant on the part of SWD or the Member under this Agreement or any
misrepresentation in or omission from any list, schedule, certificate, or other
instrument furnished or to be furnished to the Castle Entities by SWD or the
Member pursuant to the terms of this Agreement, (b) any liability or obligation
(other than those for which SWD and the Member are being indemnified by the
Castle Entities hereunder) which pertains to the ownership, operation or conduct
of the Business or Assets arising from any acts, omissions, events, conditions
or circumstances occurring before the Execution Date; or (c) any Claim (as
hereinafter defined) brought against any Castle Indemnitee by or on behalf of
Monarch Dental, TA Associates or their respective Affiliates, as a result of,
relating to or in any way connected with prior dealings or relationships between
SWD or the Member and Monarch Dental, TA Associates or their respective
Affiliates (a "Monarch Claim"); provided, however, that
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except with respect to a Monarch Claim, the Castle Entities shall not be
entitled to make any recovery by way of indemnification for the initial $50,000
of the Castle Entities' claims for indemnification, and the Castle Entities'
aggregate recovery for indemnification shall never in any event exceed $650,000.
10.3 DEMANDS. Each indemnified party hereunder agrees that promptly upon
its discovery of facts giving rise to a claim for indemnity under the provisions
of this Agreement, including receipt by it of notice of any demand, assertion,
claim, action or proceeding, judicial or otherwise, by any third party (such
third party actions being collectively referred to herein as the "Claim"), with
respect to any matter as to which it claims to be entitled to indemnity under
the provisions of this Agreement, it will give prompt notice thereof in writing
to the indemnifying party, together with a statement of such information
respecting any of the foregoing as it shall have. Such notice shall include a
formal demand for indemnification under this Agreement. The indemnifying party
shall not be obligated to indemnify the indemnified party with respect to any
Claim if the indemnified party knowingly failed to notify the indemnifying party
thereof in accordance with the provisions of this Agreement in sufficient time
to permit the indemnifying party or its counsel to defend against such matter
and to make a timely response thereto including, without limitation, any
responsive motion or answer to a complaint, petition, notice or other legal,
equitable or administrative process relating to the Claim, only insofar as such
knowing failure to notify the indemnifying party has actually resulted in
prejudice or damage to the indemnifying party. Any claim for indemnification
hereunder (except with respect to a Monarch Claim, which shall have no
expiration period) shall be made within one year after the Closing Date.
10.4 RIGHT TO CONTEST AND DEFEND. The indemnifying party shall be entitled
at its cost and expense to contest and defend by all appropriate legal
proceedings any Claim with respect to which it is called upon to indemnify the
indemnified party under the provisions of this Agreement; provided, that notice
of the intention so to contest shall be delivered by the indemnifying party to
the indemnified party within 20 days from the date of receipt by the
indemnifying party of notice by the indemnified party of the assertion of the
Claim. Any such contest may be conducted in the name and on behalf of the
indemnifying party or the indemnified party as may be appropriate. Such contest
shall be conducted by reputable counsel employed by the indemnifying party, but
the indemnified party shall have the right but not the obligation to participate
in such proceedings and to be represented by counsel of its own choosing at its
sole cost and expense. The indemnifying party shall have full authority to
determine all action to be taken with respect thereto; provided, however, that
the indemnifying party will not have the authority to subject the indemnified
party to any obligation whatsoever, other than the performance of purely
ministerial tasks or obligations not involving material expense. If the
indemnifying party does not elect to contest any such Claim, the indemnifying
party shall be bound by the result obtained with respect thereto by the
indemnified party. At any time after the commencement of the defense of any
Claim, the indemnifying party may request the indemnified party to agree in
writing to the abandonment of such contest or to the payment or compromise by
the indemnified party of the asserted Claim, whereupon such action shall be
taken unless the indemnified party determines that the contest should be
continued, and so notifies the indemnifying party in writing within 15 days of
such request from the indemnifying
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party. If the indemnified party determines that the contest should be continued,
the indemnifying party shall be liable hereunder only to the extent of the
amount that the other party to the contested Claim had agreed unconditionally to
accept in payment or compromise as of the time the indemnifying party made its
request therefor to the indemnified party.
10.5 COOPERATION. If requested by the indemnifying party, the indemnified
party agrees to cooperate with the indemnifying party and its counsel in
contesting any Claim that the indemnifying party elects to contest or, if
appropriate, in making any counterclaim against the person asserting the Claim,
or any cross-complaint against any person, and the indemnifying party will
reimburse the indemnified party for any expenses incurred by it in so
cooperating. At no cost or expense to the indemnified party, the indemnifying
party shall cooperate with the indemnified party and its counsel in contesting
any Claim.
10.6 RIGHT TO PARTICIPATE. The indemnified party agrees to afford the
indemnifying party and its counsel the opportunity to be present at, and to
participate in, conferences with all persons, including governmental
authorities, asserting any Claim against the indemnified party or conferences
with representatives of or counsel for such persons.
10.7 PAYMENT OF DAMAGES. The indemnifying party shall pay to the
indemnified party in immediately available funds any amounts to which the
indemnified party may become entitled by reason of the provisions of this
Agreement, such payment to be made within five days after any such amounts are
finally determined either by mutual agreement of the parties hereto or pursuant
to the final unappealable judgment of a court of competent jurisdiction.
10.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF SWD AND THE MEMBER. The
representations and warranties of SWD and the Member which are made as of the
Execution Date pursuant to Article IV hereof shall survive for a period of one
year from the Closing Date, at which time such representations and warranties
shall be without further force and effect. Such survival of such representations
and warranties shall not change the date as of which such representations and
warranties are made, which date shall be only on and as of the Execution Date.
10.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE CASTLE ENTITIES.
The representations and warranties of the Castle Entities shall survive for a
period of one year from the Closing Date, at which time such representations and
warranties shall be without further force and effect.
ARTICLE XI
MISCELLANEOUS
11.1 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto), the Option Agreement (including the Exhibits and Schedules
thereto), and the Management Services Agreement, dated March __, 1997, between
Purchaser and SWD,
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set forth the entire understanding of the parties with respect to the subject
matter hereof. Any previous agreements or understandings (whether oral or
written) between the parties regarding the subject matter hereof, including that
certain letter agreement dated September 11, 1996 (the "September Letter"), are
merged into and superseded by this Agreement. Pursuant to the September Letter,
Purchaser paid to SWD $500,000 (the "Non-Refundable Payment"), and (i) such
payment is nonrefundable by SWD to Purchaser (and decreases and is a credit
against any amounts payable by Purchaser in connection with this Agreement), and
(ii) the Option Agreement (including the Exhibits and Schedules thereto)
constitutes a restructure of the various terms contemplated by the September
Letter.
11.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors of
the parties hereto; provided that this Agreement, including the representations
and warranties herein, may not be assigned by SWD or the Member without the
prior written consent of Purchaser or by any of the Castle Entities to any
Person without the prior written consent of Member.
11.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
11.4 HEADINGS. The headings of the Articles, Sections and paragraphs of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
11.5 MODIFICATION AND WAIVER. No amendment, modification or alteration of
the terms or provisions of this Agreement shall be binding unless the same shall
be in writing and duly executed by the parties hereto, except that any of the
terms or provisions of this Agreement may be waived in writing at any time by
the party which is entitled to the benefits of such waived terms or provisions.
No waiver of any of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provision hereof (whether or not similar). No
delay on the part of either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.
11.6 NO THIRD PARTY BENEFICIARY RIGHTS. This Agreement is not intended to
and shall not be construed to give any Person (other than the parties signatory
hereto any interest or rights (including, without limitation, any third party
beneficiary rights) with respect to or in connection with any agreement or
provision contained herein or contemplated hereby.
11.7 SALES AND TRANSFER TAXES. Purchaser shall be responsible for and pay
all applicable sales, stamp, transfer, documentary, use, registration, filing
and other taxes and fees (including any penalties and interest) that may become
due or payable in connection with this Agreement and the transactions
contemplated hereby.
11.8 EXPENSES. Except as otherwise provided in this Agreement or in that
certain letter agreement, dated December 26, 1996, between SWD and Purchaser,
SWD,
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the Member and the Castle Entities shall each pay all costs and expenses
incurred by them or on their behalf in connection with this Agreement and the
transactions contemplated hereby.
11.9 NOTICE. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be sufficiently
given if delivered in person or sent by telecopier or registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
if to any of the Castle Entities, to:
Castle Dental Centers of Texas, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
with a copy to:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P.
South Tower Pennzoil Place
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
if to SWD or the Member to:
▇▇▇▇ ▇▇▇▇▇▇▇, D.D.S.
Southwest Dental Associates, L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
or at such other address for a party as shall be specified by like notice, and
such notice or communication shall be deemed to have been duly given as of the
date so delivered, mailed or sent by telecopier.
11.10 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regards to conflict of
law rules thereof.
11.11 CONFIDENTIALITY; PUBLICITY. The terms and conditions of this
Agreement shall not be disclosed by any party hereto without the prior written
consent of the
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other parties; provided, however, that the Castle Entities may disclose such
information as is required to comply with the requirements of its lenders and
investors and to comply with applicable securities laws. No party hereto shall
issue any press release or make any other public statement, in each case
relating to or connected with or arising out of this Agreement or the matters
contained herein, without obtaining the prior approval of the other parties
hereto to the contents and the manner of presentation and publication thereof.
11.12 CONSENT TO JURISDICTION. Any judicial proceeding brought against any
of the parties to this Agreement on any dispute arising out of this Agreement or
any matter related hereto shall be brought in any federal or state court located
in ▇▇▇▇▇▇ County, Texas, and, by execution and delivery of this Agreement, each
of the parties to this Agreement accepts for itself the exclusive jurisdiction
of the aforesaid courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement.
11.13 SEVERABILITY. If any provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled.
11.14 ENFORCEMENT. The parties hereto agree that the remedy at law for any
breach of this Agreement is inadequate and that should any dispute arise
concerning the sale of the Member Interests or any other matter hereunder, this
Agreement shall be enforceable in a court of equity by an injunction or a decree
of specific performance. Such remedies shall, however, be cumulative and
nonexclusive, and shall be in addition to any other remedies which the parties
hereto may have.
11.15 ALLOCATION OF RISK. Purchaser, Castle and Castle PC shall purchase
such insurance as Purchaser, Castle and Castle PC may desire to cover such risks
of ownership of SWD as Purchaser, Castle and Castle PC may incur in connection
with the ownership thereof after the date hereof arising as a result of the
acquisition of Member's capital stock and member interests in SWD. Purchaser,
Castle and Castle PC have agreed hereby (i) to succeed to the ownership of SWD,
and Purchaser, Castle and Castle PC acknowledge the risks inherent therein
(including the risks associated with the purchase of SWD with representations
and warranties that are made as of a date prior to the Closing Date) and the
need for adequate insurance of loss on account of torts, malpractice claims,
workmen's compensation claims, property damage and other risks of operation of a
dental practice, whether or not similar to any of the foregoing, (ii) that the
risks arising from changes, occurring between the Execution Date and the Closing
Date, in the business, financial condition, profitability, prospects, legal and
regulatory matters and limitations, asset condition, and all other risks
associated with adverse changes occurring between the Execution Date and the
Closing
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Date in the business, financial condition or results of operations of SWD, are
risks that have been assumed by the Purchaser, Castle and Castle PC as a
negotiated part of the bargain of the parties hereto, (iii) that the Purchaser,
Castle and Castle PC have decided that the Purchaser is to purchase the stock
and interests in SWD from the Member based on the representations and warranties
set forth in this Agreement as of the Execution Date (with no requirement for
updates to the representations and warranties of the Member or SWD through the
Closing Date for changes in the relevant representations and warranties), and
the Purchaser, Castle and Castle PC and their affiliates have agreed that the
Purchaser is to purchase such stock and interests subject only to the conditions
set forth herein, the effect of which is that (A) the Purchaser, Castle and
Castle PC, and their affiliates, thereby assume the risk that the business,
profitability, prospects, financial condition, asset condition or results of
operations of SWD may change materially and adversely between the Execution Date
and the Closing Date (the date that the Purchaser purchases such stock and
interests pursuant to this Agreement), and (B) the representations and
warranties of SWD, being limited to the Execution Date, may not be true and
correct on a subsequent date, including the Closing Date, but the fact that such
representations and warranties are not true and correct in any respect on the
Closing Date shall not entitle or allow the Purchaser, Castle or Castle PC to
make any claim for damages, rescission, restitution, indemnity, reimbursement or
any other claim, against the Member.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf as of the date first above written.
CASTLE DENTAL CENTERS OF TEXAS, INC.
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: President
CASTLE DENTAL CENTERS, INC.
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: President
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▇▇▇▇ ▇. ▇▇▇▇▇▇, D.D.S., P.C.
By:
Name:
Title:
SW DENTAL ASSOCIATES, LC
By:
Name: ▇▇▇▇ ▇▇▇▇▇▇▇, D.D.S.
Title: President
▇▇▇▇ ▇▇▇▇▇▇▇, D.D.S.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
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SCHEDULE A
ASSETS
The Assets shall include but are not limited to the following categories
of assets:
1. real property, if any, including leasehold interests, described
in Schedule 4.10 attached hereto together with all buildings, facilities,
fixtures and other leasehold improvements thereon and all easements,
rights-of-way, transferable licenses and permits and other appurtenances
thereof;
2. plant, machinery, equipment, operating equipment, tools,
supplies, inventories, furniture, fixtures, furnishings and other fixed assets
owned or leased and used or held for use in the conduct of the Business
(including the equipment leased to SWD by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ listed on Exhibit E
hereto, which equipment shall be purchased by Purchaser from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
concurrently herewith by separate conveyance for a purchase price of $209,000);
3. contracts listed on Schedules 4.11 and 4.12, documents,
instruments, insurance and indemnity policies and general intangibles of SWD,
including the name "S W Dental Associates", "Southwest Dental Associates" and
derivatives thereof, and goodwill associated therewith;
4. Accounts Receivable as of the Closing Date;
5. all non-professional licenses and permits (to the extent
transferable), registrations and authorizations, proprietary information,
methods, know- how, designs, processes, procedures, goodwill and all rights to
other Intellectual Property used in the Business;
6. Books and Records;
7. any rights pertaining to any counterclaims, set-offs or defenses
it may have with respect to any Assumed Obligations;
8. all prepaid claims, prepaid taxes, prepaid insurance premiums and
other prepaid expense items;
9. to the extent transferable, third-party indemnities, policies of
insurance, fidelity, surety or similar bonds and the coverage afforded thereby
relating to the Assets; and
10. cash in the aggregate amount of $60,000.
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SCHEDULE B
DENTAL ASSETS
The Dental Assets shall include the following categories of assets:
1. each dentist employment contract, managed care contract,
insurance or third party reimbursement agreement; and
2. all other assets of SWD, the ownership or operation of which
requires a license to practice dentistry.
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