EXHIBIT 2.9
2
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AFFILIATION AGREEMENT AND ASSET PURCHASE AGREEMENT
THIS AFFILIATION AGREEMENT AND ASSET PURCHASE AGREEMENT is
entered into as of the 29th day of December 1997 by and between
Omega Orthodontics, Inc., a Delaware corporation ("OMEGA" or
"Surviving Entity"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S. ("▇▇. ▇▇▇▇▇▇▇"),
who is duly licensed to practice orthodontics in the state of
Georgia (the "State").
RECITALS
A. OMEGA provides professional management and marketing
services to orthodontic practices in the United States, which
services include providing practice management systems, office
space, equipment, furnishings and active administrative personnel
necessary for the operation of orthodontic practices, and which
services are provided directly or indirectly through management
service organizations.
B. ▇▇. ▇▇▇▇▇▇▇ owns and operates an orthodontic practice
(the "Orthodontic Practice") with offices located at ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Orthodontic Offices") and
furnishes orthodontic care to the general public. As the owner
and operator of the Orthodontic Practice, ▇▇. ▇▇▇▇▇▇▇ is the
owner of a leasehold interest in leases of the Orthodontic
Offices, the owner of certain personal property located at the
Orthodontic Offices, a party to certain contracts relating to the
Orthodontic Practice and the beneficiary of other rights related
to the Orthodontic Practice.
C. OMEGA has conducted a review of the Orthodontic
Practice, and has reviewed the Orthodontic Practice's financial
statement (the "Financial Statement"), a copy of which is
attached hereto as Exhibit A . Based on its review of the
Orthodontic Practice and the Financial Statement, OMEGA has
issued the report (the "Report"), a copy of which has been
furnished to ▇▇. ▇▇▇▇▇▇▇. ▇▇. ▇▇▇▇▇▇▇ has reviewed the Report
and OMEGA's literature, and agrees with the Report and the
concepts of OMEGA's Exceptional Practice.
D. Subject to the terms and conditions of this Agreement,
OMEGA and ▇▇. ▇▇▇▇▇▇▇ have determined that it is in the best
interests of each for OMEGA to purchase from ▇▇. ▇▇▇▇▇▇▇ certain
of the assets comprising the Orthodontic Practice as provided in
Section 1.1 hereof.
NOW, THEREFORE, in consideration of the foregoing recitals
and the mutual promises contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged to the full satisfaction of the parties
hereto, the parties hereto agree as follows:
ARTICLE I. ASSET PURCHASE
1.1 Purchase; Consideration and Payment.
(a) At the Closing (as hereinafter defined) and subject to
the terms and conditions hereinafter set forth, ▇▇. ▇▇▇▇▇▇▇
agrees to sell, transfer, convey, assign and deliver to OMEGA,
and OMEGA agrees to purchase and acquire from ▇▇. ▇▇▇▇▇▇▇ and
take delivery of, for the consideration hereinafter provided, all
of ▇▇. ▇▇▇▇▇▇▇'▇ right, title and interest in and to all of the
assets of the Orthodontic Practice, wheresoever situated and
whether or not specifically referred to herein or in any
instrument of conveyance delivered pursuant hereto (such assets
and rights of ▇▇. ▇▇▇▇▇▇▇ are collectively referred to as the
"Assets"), excepting therefrom the assets listed on Schedule I
to the ▇▇▇▇ of Sale and Assignment (the "▇▇▇▇ of Sale") attached
hereto as Exhibit D (the "Excluded Assets"), and including
without limitation the following Assets:
(1) leases of the Orthodontic Offices, including all
tenant's rights and remedies (the "Leases");
(2) all books, records, machinery and equipment used or
owned by the Orthodontic Practice and all other tangible and
intangible personal property at or related to the Orthodontic
Offices, whether or not located at the Orthodontic Offices, or to
the Orthodontic Practice conducted therein, whether or not
located at the Orthodontic Offices;
(3) all Contracts (as defined below in Section 2.1);
(4) all prepaid claims, prepaid taxes and other prepaid
expense items and deferred charges, credits, advance payments,
security and other deposits made by ▇▇. ▇▇▇▇▇▇▇ to any other
person relating to Orthodontic Practice;
(5) any rights of ▇▇. ▇▇▇▇▇▇▇ pertaining to any
counterclaims, set-offs or defenses he may have with respect to
any of the liabilities assumed by OMEGA; and
(6) any other rights related in any way whatsoever to the
Orthodontic Practice or the Orthodontic Offices;
free and clear of any liens, encumbrances, restrictions or claims
of any kind (other than those liens, encumbrances, restrictions
and claims expressly disclosed to OMEGA and affirmatively
accepted by OMEGA prior to the Closing), without any further
action on the part of any holder thereof, for an aggregate
consideration (the "Consideration") of:
(i) Two Hundred Thirty Three Thousand, Three Hundred
Thirty Four Dollars ($233,334) in cash (the "Cash
Component"), such Cash Component to be paid by wire transfer
to such account as ▇▇. ▇▇▇▇▇▇▇ shall specify prior to the
Closing (as defined below);
(ii) Two Hundred Thirty Three Thousand, Three Hundred
Thirty Three Dollars ($233,333) to be represented by a
promissory note (the "Purchase Note") payable to ▇▇. ▇▇▇▇▇▇▇
(the "Note Component") in the form attached hereto as
Exhibit B and secured by a security agreement in a form
mutually agreeable to the parties; and
(iii) Two Hundred Thirty Three Thousand, Three Hundred
Thirty Three Dollars ($233,333) to be represented by
issuance to ▇▇. ▇▇▇▇▇▇▇ of shares of OMEGA common stock
("OMEGA Stock") based on a value per share equal to the
average of the closing prices for OMEGA Stock on The Nasdaq
SmallCap Market for each business day (Monday through
Friday, not including legal holidays) of the calendar week
ending the Friday immediately preceding the Closing (the
"Stock Component"), which shall thereupon be issued to ▇▇.
▇▇▇▇▇▇▇, fully paid and nonassessable.
1.2 Adjustment; Allocation.
(a) The Consideration is based on the value of the Assets
as determined by OMEGA from the information set forth in the
Financial Statement.
(b) The Consideration shall be subject to adjustments at
Closing for: (i) prepaid and underpaid rent and other lease
obligations, if the leases are to be continued after Closing, as
well as for other agreed normal and customary prepaid and
underpaid expenses; (ii) any accrued but unpaid salaries, bonuses
and other compensation, fringe and health insurance benefits,
employment or payroll taxes and related employment obligations;
and (iii) any accounts payable of the Orthodontic Practice which
have accrued prior to the Closing and which remain unpaid as of
such time (the "Accounts Payable") in excess of an amount equal
to one-half (1/2) of one "Average" month of gross income from the
Orthodontic Practice. As used herein, Average shall mean an
average of the Accounts Payable of the Orthodontic Practice using
the last twelve months prior to the end of the month immediately
preceding the Closing.
(c) The adjustments to the Consideration, if any, shall be
applied in the following order of priority; first to the Cash
Component, second, to the Note Component, and the balance, if
any, to the Stock Component.
(d) The parties hereby agree to allocate the Consideration
among the Assets in accordance with Section 1060 of the Internal
Revenue Code (the "Code") on the basis of the fair market value
of the Assets, as of the Closing (which fair market value the
parties agree is equal to the book value of the Assets), which
allocation shall be reduced to writing and acknowledged by the
parties hereto within thirty (30) days following the Closing.
The parties agree to file timely any information that may be
required to be filed pursuant to regulations promulgated under
Section 1060(b) of the Code. The parties further agree that they
shall report the federal, state, municipal, foreign and local and
other tax consequences of the purchase and sale hereunder in a
manner consistent with the allocation determined pursuant to this
section, and that they shall not take any position inconsistent
therewith in connection with any tax return, refund claim,
litigation or otherwise.
1.3 Time and Place of Closing. The closing of the
transactions contemplated hereby (herein called the "Closing")
shall be held at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 9:00 a.m. Eastern Standard
Time on December 29, 1997 or at such other place, date or time as
may be fixed by mutual agreement of the parties; provided,
however, that in no event shall the Closing date be extended
beyond January 31, 1998.
1.4 Delivery of Records, Contracts; Transfer of Accounts.
At the Closing, ▇▇. ▇▇▇▇▇▇▇ shall deliver or cause to be
delivered to OMEGA:
(a) all of the Assets, including without limitation, books,
records, leases, contracts, employment agreements, non-compete
agreements, commitments and rights relating to the Orthodontic
Practice, with such rights of transfer so as to allow OMEGA the
full benefit of the same.
(b) Evidence of malpractice insurance coverage for the
current and five (5) prior years, and if applicable, evidence of
so-called "tail" insurance for such period naming ▇▇. ▇▇▇▇▇▇▇
(and any successor) as a co-insured or otherwise assigning to
OMEGA and its successor the full benefits thereof.
(c) any documentation necessary for the transfer of any of
the Assets, including the ▇▇▇▇ of Sale, together with any
warranty or other documentation. ▇▇. ▇▇▇▇▇▇▇ shall cooperate
with OMEGA in the transfer of any utility accounts for the
Orthodontic Offices.
ARTICLE II. ASSUMED LIABILITIES
2.1 Contracts For purposes of this Article II the term
"Contracts" shall mean only those leases, licenses, permits,
contracts, subleases, registrations, authorizations, commitments,
purchase orders, contracts to purchase materials, contracts to
perform or receive services (including work in process) and
supplies, and all other agreements (whether written or oral)
that relate to the Orthodontic Practice and are set forth on
Exhibit Y attached hereto.
2.2 Transfer. At the Closing, ▇▇. ▇▇▇▇▇▇▇ shall assign and
transfer to OMEGA all of ▇▇. ▇▇▇▇▇▇▇'▇ right, title and interest
in and to the Contracts and OMEGA shall assume and agree to
perform all obligations and liabilities on the part of ▇▇.
▇▇▇▇▇▇▇ under the Contracts accruing on and after the Closing;
provided that to the extent that the assignment of any Contract
is not permitted without the consent of the other party or
parties to such Contract, this Agreement shall not constitute an
agreement to assign such Contract if such consent is not given;
and provided further that ▇▇. ▇▇▇▇▇▇▇ and OMEGA, as appropriate,
shall use all reasonable efforts to obtain such consents, it
being understood that such reasonable efforts shall not include
any requirement to offer or grant financial accommodations to any
third party.
2.3 Assumption of Liabilities by OMEGA. At the Closing,
▇▇. ▇▇▇▇▇▇▇ shall assign to OMEGA, and OMEGA shall assume and
pay, perform and discharge, and indemnify and hold ▇▇. ▇▇▇▇▇▇▇
harmless from and against, the following obligations and
liabilities of ▇▇. ▇▇▇▇▇▇▇, and none other (collectively, the
"Assumed Liabilities"): all obligations and liabilities on the
part of ▇▇. ▇▇▇▇▇▇▇ under the Contracts arising on and after the
Closing.
2.4 No Enlargement. The assumption by OMEGA of the Assumed
Liabilities shall not enlarge any rights or remedies of any third
party under any Contract with ▇▇. ▇▇▇▇▇▇▇. OMEGA agrees to
indemnify, defend and hold ▇▇. ▇▇▇▇▇▇▇ and his employees,
harmless from and against any and all liability, loss, cost,
damage and/or expense (including, without limitation, reasonable
attorneys' fees and costs) pertaining to the Assumed Liabilities.
2.5 No Other Liabilities Assumed. OMEGA and ▇▇. ▇▇▇▇▇▇▇
intend that OMEGA shall not assume or be obligated to pay,
perform or discharge any of ▇▇. ▇▇▇▇▇▇▇'▇ obligations other than
the Assumed Liabilities specified in Section 2.3. Except for the
Assumed Liabilities specified in Section 2.3, OMEGA and ▇▇.
▇▇▇▇▇▇▇ expressly agree OMEGA is acquiring the Assets free and
clear of all liens, claims and encumbrances.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Representations and Warranties of ▇▇. ▇▇▇▇▇▇▇ in the
attached Schedule 1 are hereby incorporated as if fully set forth
herein. The Representations and Warranties of OMEGA in the
attached Schedule 2 are hereby incorporated as if fully set forth
herein. Capitalized words and expressions used in this Agreement
and which are defined in said Schedules 1 and 2 shall have the
same meaning as they are given therein.
ARTICLE IV. COVENANTS OF ▇▇. ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ hereby covenants and agrees with OMEGA as
follows:
4.1 Conduct of Business. Between the date of this
Agreement and the Closing, he will do the following unless OMEGA
shall otherwise consent in writing:
(a) conduct his business only in the ordinary course,
and refrain from changing or introducing any method of management
or operations except in the ordinary course of business and
consistent with prior practices;
(b) refrain from making any purchase, sale or
disposition of any asset or property other than in the ordinary
course of business, from purchasing any capital asset costing
more than $1,000 and from mortgaging, pledging, subjecting to a
lien or otherwise encumbering any of the Assets;
(c) refrain from incurring any contingent or fixed
obligations or liabilities except those that are usual and normal
in the ordinary course of business;
(d) refrain from offering patients discounts of five
percent (5%) or more for prepayments of fees for service;
(e) refrain from selling, assigning or otherwise
transferring accounts receivable to any bank, finance company or
other third party;
(f) maintain accounts payable at levels consistent
with past practices;
(g) use his best efforts to keep available his present
employees and to preserve the goodwill of all patients,
suppliers, and others having business relations with him;
(h) not commit or fail to commit any act which would
cause ▇▇. ▇▇▇▇▇▇▇ to suffer the revocation, suspension or
limitation of ▇▇. ▇▇▇▇▇▇▇'▇ license; and
(i) permit OMEGA and its authorized representatives to
have full access to all his properties, assets, records, tax
returns, records, contracts and documents and furnish to OMEGA or
its authorized representatives such financial and other
information with respect to his business or properties as OMEGA
may from time to time reasonably request.
4.2 Authorization from Others. Prior to the Closing, he
will have obtained all assignments, authorizations, consents and
permits of others required to permit the consummation by ▇▇.
▇▇▇▇▇▇▇ of the transactions contemplated by this Agreement.
4.3 Breach of Representations and Warranties. Promptly
upon becoming aware of the actual, impending or threatened
occurrence of any event which would cause or constitute a breach,
or would have caused or constituted a breach had such event
occurred or been known to them prior to the date hereof, of any
of their representations and warranties contained in or referred
to in this Agreement, he shall give detailed written notice
thereof to and shall use his best efforts to prevent or promptly
remedy the same.
4.4 Consummation of Agreement. He shall use his best
efforts to perform and fulfill all conditions and obligations on
his or its part to be performed and fulfilled under this
Agreement, to the end that the transactions contemplated by this
Agreement shall be fully carried out.
ARTICLE V. COVENANTS OF OMEGA.
OMEGA hereby covenants and agrees with ▇▇. ▇▇▇▇▇▇▇ as
follows:
5.1 Authorization from Others. Prior to the Closing, it
will have obtained all authorizations, consents and permits of
others required to permit the consummation by it of the
transactions contemplated by this Agreement.
5.2 Consummation of Agreement. It shall use its best
efforts to perform and fulfill all conditions and obligations on
its part to be performed or fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement
shall be fully carried out.
ARTICLE VI. CONDITIONS TO OBLIGATIONS OF OMEGA
The obligations of OMEGA to consummate this Agreement and
the transactions contemplated hereby are subject to the condition
that on or before the Closing the actions required by this
Article VI will have been accomplished.
6.1 Representations; Warranties; Covenants. Each of the
representations and warranties of ▇▇. ▇▇▇▇▇▇▇ contained in
Schedule 1 shall be true and correct as though made on and as of
the Closing, and ▇▇. ▇▇▇▇▇▇▇ shall have performed all of his
obligations hereunder which by the terms hereof are to be
performed on or before the Closing.
6.2 New PC. ▇▇. ▇▇▇▇▇▇▇ shall have formed a new
professional entity (the "New PC") under the laws of the State in
order to commence the practice of orthodontics through the New
PC. ▇▇. ▇▇▇▇▇▇▇ shall have furnished (i) a certificate of the
State Secretary of State as to the legal existence and
professional corporation good standing of New PC at the Closing
or within 15 days thereafter; and (ii) a copy of the resolutions
adopted by the board of directors and stockholders of New PC
authorizing and approving the Management Services Agreement and
the Stock Put/Call Option and Successor Designation Agreement.
6.3 Other Agreements. ▇▇. ▇▇▇▇▇▇▇ shall have executed and
delivered, or shall have caused the New PC to execute and
deliver, to OMEGA a Management Services Agreement and a Stock
Put/Call Option and Successor Designation Agreement, each having
substantially the terms and conditions of the forms hereof
collectively attached hereto as Exhibit E .
6.4 [INTENTIONALLY OMITTED]
6.5 Absence of Certain Litigation. There shall not be any
injunction, restraining order or order of any nature issued by
any court of competent jurisdiction which directs that this
Agreement or any material transaction contemplated hereby shall
not be consummated as herein provided, or suit, action or other
proceeding which in the reasonable opinion of counsel for OMEGA
is likely to result in the restraint or prohibition of the
consummation of any material transaction contemplated hereby.
6.6 Notices. ▇▇. ▇▇▇▇▇▇▇ shall, at OMEGA's request and
expense, notify all patients and obligors of accounts receivable,
and third party payors and others designated by OMEGA, of the
Asset purchase and the other transactions contemplated hereunder
pursuant to notices in a form mutually acceptable to the parties
and which is comparable in scope to the form attached hereto as
Exhibit C.
6.7 Financial Condition. The financial condition of the
Orthodontic Practice shall not be materially adversely different
from the Financial Statement, as determined by OMEGA. During
the period from the date of the Financial Statement to the
Closing, there shall not have been any material adverse change in
the financial condition, results of operations, business or
prospects of the Orthodontic Practice, nor any material loss or
damage to the Assets, whether or not insured, which materially
affects the ability of the Orthodontic Practice to conduct its
business. ▇▇. ▇▇▇▇▇▇▇ shall have delivered to OMEGA a
certificate, dated the date of Closing, to the foregoing effect,
and further to the effect that there are no Accounts Payable or
other liabilities as of the date of Closing that are not
reflected on the Financial Statement other than those which have
been disclosed in writing to and accepted in writing by OMEGA and
which incurred since the date of the Financial Statement in the
ordinary course of business.
6.8 Due Diligence. OMEGA, acting in good faith and in its
sole discretion, shall be reasonably satisfied with the results
of its "Due Diligence" on ▇▇. ▇▇▇▇▇▇▇ and the Orthodontic
Practice as not reflecting any data or information which
individually or in the aggregate, if previously disclosed, would
have indicated that there was a material adverse change in the
professional status of ▇▇. ▇▇▇▇▇▇▇ or the business of the
Orthodontic Practice or in the condition of the Assets or the
prospects (financial or otherwise) of the Orthodontic Practice
from the information provided prior to the date hereof. As used
herein, Due Diligence shall mean, without limitation, the results
of any investigations or analyses conducted by or on behalf of
OMEGA (financial or otherwise) related to, or otherwise deemed
material by OMEGA, regarding ▇▇. ▇▇▇▇▇▇▇ and the Orthodontic
Practice, including location of the Orthodontic Offices and its
demographics, the leases, the Equipment, insurance, licensing,
malpractice issues, liabilities, compliance with laws and
regulations and health surveys.
ARTICLE VII. CONDITIONS TO OBLIGATIONS OF ▇▇. ▇▇▇▇▇▇▇
The obligations of ▇▇. ▇▇▇▇▇▇▇ to consummate this Agreement
and the transactions contemplated hereby are subject to the
condition that on or before the Closing the actions required by
this Article VII will have been accomplished.
7.1 Representations; Warranties; Covenants. Each of the
representations and warranties of OMEGA contained in Schedule 2
shall be true and correct as though made on and as of the Closing
and OMEGA shall have performed all of its obligations hereunder
which by the terms hereof are to be performed on or before the
Closing.
7.2 [INTENTIONALLY OMITTED]
7.3 Other Agreements. OMEGA shall have executed and
delivered to ▇▇. ▇▇▇▇▇▇▇ and New PC a Management Services
Agreement and a Stock Put/Call Option and Successor Designation
Agreement, each having substantially the terms and conditions of
the forms hereof collectively attached hereto as Exhibit E.
7.4 [INTENTIONALLY OMITTED]
7.5 Absence of Certain Litigation. There shall not be any
injunction, restraining order or order of any nature issued by
any court of competent jurisdiction which directs that this
Agreement or any material transaction contemplated hereby shall
not be consummated as herein provided, or suit, action or other
proceeding which in the reasonable opinion of counsel for ▇▇.
▇▇▇▇▇▇▇ is likely to result in the restraint or prohibition of
the consummation of any material transaction contemplated hereby.
ARTICLE VIII. OBLIGATIONS AFTER CLOSING.
8.1 OMEGA Exceptional Practice and the Report Suggestions.
On and after the Closing, ▇▇. ▇▇▇▇▇▇▇ agrees to cause the New PC
to implement the suggestions in the Report and the concepts of
OMEGA's Exceptional Practice.
8.2 Books and Records. OMEGA shall permit ▇▇. ▇▇▇▇▇▇▇, his
accountants and attorneys, reasonable access to such books and
records for the purpose of preparing such tax returns of ▇▇.
▇▇▇▇▇▇▇ as may be required after the Closing and for other proper
purposes approved by OMEGA.
8.3 License. ▇▇. ▇▇▇▇▇▇▇ shall maintain all licenses
necessary to practice orthodontics in the State. ▇▇. ▇▇▇▇▇▇▇
shall not commit or fail to commit any act which would cause ▇▇.
▇▇▇▇▇▇▇ or the New PC to suffer the revocation, suspension or
limitation of ▇▇. ▇▇▇▇▇▇▇'▇ or the New PC's license.
ARTICLE IX. INDEMNIFICATION.
9.1 Indemnification By ▇▇. ▇▇▇▇▇▇▇. Subject to the
limitations set forth in Section 9.3, ▇▇. ▇▇▇▇▇▇▇ agrees to
defend, indemnify and hold OMEGA harmless from and against any
damages, liabilities, losses and expenses (including reasonable
counsel fees) of any kind or nature whatsoever which may be
sustained or suffered by OMEGA based upon a breach of any
representation, warranty or covenant made by ▇▇. ▇▇▇▇▇▇▇ in this
Agreement or in any exhibit, certificate, schedule or financial
statement delivered hereunder, or by reason of any claim, action
or proceeding asserted or instituted growing out of any matter or
thing covered by such representations, warranties or covenants.
OMEGA may at its option recover such indemnification claims by
OMEGA by set-off against amounts of principal and interest due
under the Purchase Note, but shall not be required to recover
said claims in such manner and may proceed against ▇▇. ▇▇▇▇▇▇▇
and his transferees in liquidation at any time or times for
recovery of indemnification claims.
9.2 Indemnification By OMEGA. Subject to the limitations
set forth in Section 9.3, OMEGA agrees to defend, indemnify and
hold ▇▇. ▇▇▇▇▇▇▇ harmless from and against any damages,
liabilities, losses and expenses (including reasonable counsel
fees) of any kind or nature whatsoever which may be sustained or
suffered by ▇▇. ▇▇▇▇▇▇▇ based upon a breach of any
representation, warranty or covenant made by OMEGA in this
Agreement or in any exhibit, certificate, schedule or financial
statement delivered hereunder, or by reason of any claim, action
or proceeding asserted or instituted growing out of any matter or
thing covered by such representations, warranties or covenants.
9.3 Exclusions. Notwithstanding Sections 9.1 and 9.2:
(a) no indemnification shall be payable to the extent
any claim is covered by insurance; and
(b) no indemnification shall be payable with respect
to claims asserted more than five (5) years after the Closing.
9.4 Notice: Defense of Claims. Prompt written notice of
each claim for indemnification hereunder shall be given to the
other party, specifying the amount and nature of the claim, and
of any matter which in the opinion of the claimant is likely to
give rise to an indemnification claim. The indemnifying party
shall have the right to participate at its own expense in the
defense of any such matter or its settlement. If, in the opinion
of the indemnified party, its financial condition or business
would not be impaired thereby, such party may authorize the
indemnifying party to take over the defense of such matter so
long as such defense is expeditious. Failure to give notice of a
matter which may give rise to an indemnification claim shall not
affect the rights of any party to collect such claim from the
other party or its transferees in liquidation.
9.5 Payment of Claims; Alternative Dispute Resolution.
Indemnification claims by OMEGA may be paid or otherwise
satisfied as an offset against the Purchase Note as set forth
under Section 9.1, and, in the alternative or after any such
offset, the indemnification claims (or any balance thereof) shall
be paid or otherwise satisfied by ▇▇. ▇▇▇▇▇▇▇, or ▇▇. ▇▇▇▇▇▇▇'▇
transferees in liquidation, within 30 days after notice thereof
is given by OMEGA. In the event ▇▇. ▇▇▇▇▇▇▇ indicates in a
writing delivered to OMEGA that he disputes the nature or amount
of the claim, in which event the dispute upon the election of any
party hereto after said 30-day period shall be referred to the
American Arbitration Association to be settled by alternative
dispute resolution in Boston, Massachusetts in accordance with
the commercial alternative dispute resolution rules of said
Association, with the fees and expenses thereof to be borne 50%
by OMEGA and 50% by the New PC and ▇▇. ▇▇▇▇▇▇▇.
ARTICLE X. MISCELLANEOUS.
10.1 Termination.
(a) At any time prior to the Closing, this Agreement may be
terminated (i) by mutual consent of the parties with the approval
of their respective board of directors or members, (ii) by either
if there has been a material misrepresentation, breach of
warranty or breach of covenant by the other party in its
representations, warranties and covenants set forth herein,
(iii) by OMEGA if the conditions stated in Article VI have not
been satisfied at or prior to the Closing, or (iv) by ▇▇. ▇▇▇▇▇▇▇
if the conditions stated in Article VII have not been satisfied
at or prior to the Closing.
(b) [INTENTIONALLY OMITTED]
10.2 Survival of Warranties and Other Obligations. All
representations, warranties, agreements, covenants and
obligations herein or in any schedule, exhibit, certificate or
financial statement delivered by either party to the other party
incident to the transactions contemplated hereby are material,
shall be deemed to have been relied upon by the other party and
shall survive the Closing regardless of any investigation and
shall not merge in the performance of any obligation by either
party hereto.
10.3 Fees and Expenses. Each of the parties will bear its
or his own expenses in connection with the negotiation and the
consummation of the transactions contemplated by this Agreement.
10.4 Notices. Any notice or other communication in
connection with this Agreement shall be deemed to be delivered if
in writing (or in the form of a telegram or facsimile
transmission) addressed as provided below and if either
(a) actually delivered at said address, or (b) in the case of a
letter, three business days shall have elapsed after the same
shall have been deposited in the United States mail, postage
prepaid and registered or certified, return receipt requested, or
sent by reputable overnight courier:
If to ▇▇. ▇▇▇▇▇▇▇, to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the OMEGA, to:
Omega Orthodontics, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and in any case at such other address as the addressee shall have
specified by written notice. All periods of notice shall be
measured from the date of delivery thereof.
10.5 Entire Agreement. This Agreement (including all
exhibits or schedules appended to this Agreement and all
documents delivered pursuant to the provisions of this Agreement,
all of which are hereby incorporated herein by reference)
together with the Management Services Agreement and the Stock
Put/Call Option and Successor Designation Agreement (including
all exhibits and schedules thereto), taken together, constitute
the entire agreement between the parties, and all promises,
representations, understandings, warranties and agreements with
reference to the subject matter hereof and inducements to the
making of this Agreement relied upon by my party hereto, have
been expressed herein or therein.
10.6 Binding Agreement, Successors. This Agreement shall
be binding upon, and shall be enforceable by and inure to the
benefit of, the parties named herein and their respective
successors and assigns; provided, however, that this Agreement
may not be assigned by either of the parties without the prior
written consent of the other party.
10.7 Confidentiality. As used herein, "Confidential
Information" means any information or data that a party has
acquired from another party that is confidential or not otherwise
available to the public, whether oral or written, including
without limitation any analyses, computations, studies or other
documents prepared from such information or data by or for the
directors, officers, employees, agents or representatives of such
party (collectively, the "Representatives"), but excluding
information or data which (i) became available to the public
other than as a result of such party's violation of this
Agreement, (ii) became available to such party from a source
other than the other party if that source was not bound by a
confidentiality agreement with such other party and such source
lawfully obtained such information or data, or (iii) is required
to be disclosed by applicable law, provided that promptly after
being compelled to disclose any such information or data, the
party being so compelled shall provide prompt notice thereof to
the other party so that such other party may seek a protective
order or other appropriate remedy. Each party covenants and
agrees that it and its Representatives shall keep confidential
and shall not disclose all Confidential Information, except to
its Representatives and lenders who need to know such information
and agree to keep it confidential. Each party shall be
responsible for any breach of this provision by its
Representatives. In the event that the Closing does not occur,
each party will promptly return to the other all copies of such
other party's Confidential Information.
10.8 Governing Law; Severability. This Agreement shall be
deemed a contract made under the laws of the State of Delaware
and, together with the rights and obligations of the parties
hereunder, shall be construed under and governed by the laws of
such state. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability
of any other provision hereof.
10.9 Referrals. Nothing in this Agreement shall be
construed as an offer or payment to the other party or any
affiliate of the other party of any cash or other remuneration
whether directly or indirectly, overtly or covertly, specifically
for patient referrals or for recommending or arranging the
purchase, lease or order of any item or service. The
Consideration to be received upon the Closing represents the fair
market value of the Assets and is not in any way related to or
dependent upon referrals by and between OMEGA and ▇▇. ▇▇▇▇▇▇▇.
10.10 Further Assurances. Following the execution of this
Agreement, ▇▇. ▇▇▇▇▇▇▇ and OMEGA each agrees:
(a) to deliver such other instruments of title,
certificates, consents, endorsements, assignments, assumptions
and other documents or instruments, in form reasonably acceptable
to the party requesting the same and its counsel, as may be
reasonably necessary to carry out and/or to comply with the terms
of this Agreement, and the transactions contemplated herein;
(b) to confer on a regular basis with the other, report on
material operational matters and promptly advise the other orally
or in writing of any change or event resulting in or which,
insofar as can reasonably be foreseen could result in, a material
adverse effect on such party or which would cause or constitute a
material breach of any of the representations, warranties or
covenants of such party contained herein; and
(c) to provide the other (or its counsel) promptly with
copies of all filings made by such party with any state or
federal governmental entity in connection with this Agreement or
the transactions contemplated hereby.
10.11 Counterparts; Section Headings; Gender. This
Agreement may be executed, accepted and delivered in any number
of counterparts, but all counterparts shall together constitute
but one and the same instrument. The underlined section headings
are inserted for convenience of reference only and are not to be
construed as part of this Agreement. The use of the masculine or
neuter gender includes each of the other genders.
INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the date set forth above by their
duly authorized representatives.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S.
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S.
OMEGA ORTHODONTICS, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its President and Chief Executive Officer
Duly Authorized
Exhibit A
Financial Statement
[▇▇. ▇▇▇▇▇▇▇ PROVIDE]
Exhibit B
NON-NEGOTIABLE PROMISSORY NOTE
$233,333.00 Acton, California
_________ ___, 199__
FOR VALUE RECEIVED, Omega Orthodontics, Inc., a Delaware
corporation ("Omega"), promises to pay to ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇.
▇▇▇▇▇▇▇") at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or
other location specified by ▇▇. ▇▇▇▇▇▇▇ in writing, Two Hundred
Thirty Three Thousand Three Hundred Thirty Three Dollars
($233,333.00) together with interest on any and all principal
amounts, such interest to be at the rate of 8.5% per annum and
payable monthly on the first day of each month, beginning with
the first month following the date of this Note.
1. Payments. Payments of principal under this Note shall
be due and payable in 48 equal monthly installments, beginning on
the first day of the 13th month following the date of this Note.
In any event, the balance of principal remaining unpaid shall be
due and payable on the first day of the 60th month following the
date of this Note.
Payments of interest on the outstanding principal balance of
this Note shall be due and payable on the first day of each of
the first 60 months following the date of this Note. Interest
shall accrue in arrears and shall be computed on the basis of a
360-day year and a 30-day month.
Both principal and interest are payable in lawful money of
the United States of America.
2. Acceleration/Events of Default. At the option of ▇▇.
▇▇▇▇▇▇▇, the entire unpaid principal balance hereunder with
interest then outstanding shall become immediately due and
payable upon the occurrence of any of the following events of
default (hereinafter "Events of Default") which are not cured in
accordance with the provisions of Section 3: (i) failure to pay
principal when due on this Note; (ii) failure to pay any interest
on this Note 30 days after payment is due; (iii) failure to
perform any other covenant of Omega under this Note, and such
failure continues for 60 days after written notice by the holder;
and (iv) the making of an assignment for the benefit of
creditors, trust mortgage or composition with creditors or other
arrangement of similar import by or the commencement of any
proceedings under any bankruptcy or insolvency law, now or
hereafter enacted, by or against, Omega or any endorser.
3. Omega's Right to Cure. Notwithstanding the foregoing,
Omega shall at minimum have the right: (i) to cure monetary
defaults hereunder or under any instrument, document or
undertaking given or entered into in connection herewith within
15 calendar days after the Event of Default; and (ii) to cure non-
monetary defaults hereunder or under any such instrument,
document or undertaking within 30 calendar days after the Event
of Default, in which event, this Note and the loan evidenced
hereby shall be reinstated. The time periods provided herein for
cure shall be concurrent with and not consecutive to any other
grace periods which may be provided in or with respect to any
obligation having the benefit of this provision.
4. Voluntary Prepayment. Omega may prepay this Note in
whole or in part at any time without penalty or premium, upon
written notice to ▇▇. ▇▇▇▇▇▇▇.
5. Expenses. Omega agrees to pay all expenses, including
reasonable attorney's fees, which ▇▇. ▇▇▇▇▇▇▇ may incur in
effecting collection of this Note upon default or at maturity.
6. Delays. ▇▇. ▇▇▇▇▇▇▇ shall not, by any act, delay,
omission or otherwise, be deemed to have waived any of his rights
or remedies hereunder unless such waiver be in writing and signed
by ▇▇. ▇▇▇▇▇▇▇. A delay, omission or waiver on one occasion
shall not be deemed a waiver or bar on any future occasion of the
same or any other right.
7. Certain Waivers. Omega hereby (i) waives presentment,
demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or
enforcement of this Note, except as specifically provided herein
with respect to notices of non-monetary default; (ii) waives all
suretyship defenses; and (iii) assents to any extension or
postponement of the time of payment or any other indulgence or
forbearance and to the addition or release of any other party
primarily or secondarily liable.
8. Remedies. Omega hereby acknowledges and agrees that no
remedy of ▇▇. ▇▇▇▇▇▇▇ under this Note is intended to be exclusive
of any other remedy, and each and every remedy given hereunder
now or hereafter existing at law or in equity by statute or other
provision of law may be exercised in any order or manner without
waiving rights and may be exercised cumulatively.
9. Notices. Notices to Omega shall be deemed given when
delivered in hand to Omega, or one (1) day after being sent by
receipted commercial, overnight courier or five (5) days after
being mailed by certified mail, postage prepaid, return receipt
requested, to Omega at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ or other address of which Omega shall have notified ▇▇.
▇▇▇▇▇▇▇ in writing.
10. Governing Law. This Note shall be deemed to be a
Georgia instrument, and all rights and obligations hereunder
shall be governed by the laws of the State of Georgia.
This instrument has been duly executed by an officer of
Omega duly authorized, and shall take effect upon the date and
year first above written.
WITNESS: OMEGA ORTHODONTICS, INC.
________________________
By:_________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President
Exhibit C
Notice
__________________, 1998
[Name and address
of Patient/Account Debtor/Third Party Payors/Others]
Re: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S.
Ladies and Gentlemen:
I am pleased to inform you that my practice has become
affiliated with Omega Orthodontics, Inc., a nationwide
orthodontic practice management company. My affiliation with
Omega affords me the opportunity to provide my patients with
professional billing, collection and other management systems,
thereby permitting me to continue to focus on providing quality
orthodontic care.
Commencing immediately and until further notice from Omega
and myself, I direct you to pay all amounts owing and payable
to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S. and [New PC] in the manner and to the
place specified in any notice Omega sends to you. In addition,
I consent to the provisions of any such notice from Omega to you.
Thank you for your cooperation; should you have any
questions, please contact the undersigned.
Very truly yours,
___________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S.
[New PC]
By _________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S.,
President
Exhibit D
▇▇▇▇ OF SALE AND ASSIGNMENT
▇▇▇▇ OF SALE AND ASSIGNMENT
The undersigned, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S., ("▇▇. ▇▇▇▇▇▇▇")
for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, hereby sells, assigns,
transfers, delivers and conveys to Omega Orthodontics, Inc., a
Delaware corporation, having a usual place of business in Acton,
California ("OMEGA"), all of his right, title and interest in
and to all of the assets of the orthodontic practice operated by
▇▇. ▇▇▇▇▇▇▇ (the "Orthodontic Practice") at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, wheresoever situated and whether or not
specifically referred to herein (such assets and rights of ▇▇.
▇▇▇▇▇▇▇ are collectively referred to as the "Assets"), excepting
therefrom the assets listed on Schedule I (the "Excluded
Assets"), attached hereto and made a part hereof, and including
without limitation, the following Assets:
(a) leases at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Orthodontic Offices"), including all tenant's rights and
remedies (the "Leases");
(b) all books, records, machinery and equipment
("Equipment"), used or owned by the Orthodontic Practice, and all
other tangible and intangible personal property at or related to
the Orthodontic Offices, whether or not located at the
Orthodontic Offices, or to the Orthodontic Practice conducted
therein, whether or not located at the Orthodontic Offices
(c) all leases, licenses, permits, contracts, subleases,
registrations, authorizations, commitments, purchase orders,
contracts to purchase materials, contracts to perform or receive
services (including work in process) and supplies, and all other
agreements (whether written or oral) relating to the Orthodontic
Practice listed on the attached Exhibit Y (the "Contracts");
(d) all prepaid claims, prepaid taxes and other prepaid
expense items and deferred charges, credits, advance payments,
security and other deposits made by ▇▇. ▇▇▇▇▇▇▇ to any other
person relating to the Orthodontic Practice;
(e) any rights of ▇▇. ▇▇▇▇▇▇▇ pertaining to any
counterclaims, set-offs or defenses he may have with respect to
any of the liabilities assumed by OMEGA; and
(f) any other rights related in any way whatsoever to the
Orthodontic Practice or the Orthodontic Offices.
▇▇. ▇▇▇▇▇▇▇ represents that he has good and marketable title
in fee simple to all of the Assets, free of liens and
encumbrances. All of the Assets are in good repair, have been
well maintained, substantially conform with all applicable
ordinances, regulations and zoning or other laws. The Equipment
is in good working order.
OMEGA assumes and agrees to pay, perform and discharge, and
indemnify and hold ▇▇. ▇▇▇▇▇▇▇ harmless from and against, the
following obligations and liabilities of ▇▇. ▇▇▇▇▇▇▇, and none
other: (a) obligations and liabilities under the Lease and the
Contracts arising on and after the Closing and any and all
claims, liabilities, losses, costs, damages or expenses
(including reasonable attorneys' fees and expenses) resulting
from or arising out of ownership of the Assets or the operation
and maintenance of the Orthodontic Practice, or caused by or
occurring upon the Assets, on and after the Closing (the "Assumed
Liabilities").
The assumption by OMEGA of the Assumed Liabilities shall not
enlarge any rights or remedies of any third party under any
Contract with ▇▇. ▇▇▇▇▇▇▇. OMEGA agrees to indemnify, defend and
hold ▇▇. ▇▇▇▇▇▇▇ and his employees, harmless from and against any
and all liability, loss, cost, damage and/or expense (including,
without limitation, reasonable attorneys' fees and costs)
pertaining to the Assumed Liabilities.
OMEGA and ▇▇. ▇▇▇▇▇▇▇ intend that OMEGA shall not assume or
be obligated to pay, perform or discharge any of ▇▇. ▇▇▇▇▇▇▇'▇
obligations other than the Assumed Liabilities. Except for the
Assumed Liabilities, OMEGA and ▇▇. ▇▇▇▇▇▇▇ expressly agree that
OMEGA is acquiring the Assets free and clear of all liens, claims
and encumbrances.
This ▇▇▇▇ of Sale and Assignment is executed and delivered
in connection with the Affiliation Agreement and Asset Purchase
Agreement entered into by and between ▇▇. ▇▇▇▇▇▇▇ and OMEGA dated
__________ __, 199__.
WITNESS the execution under seal this ___ day of
___________, 199__.
___________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Schedule I
Excluded Assets
1. Personal library
2. Personal two drawer file cabinet
3. Personal 386 computer, laser jet printer, and ink jet
printer -- not linked to OPMS
office management system
4. 1920's Coca Cola cooler used for orthodontic appliance
storage
5. Plaques exhibiting dental license, degrees, awards,
expressions of appreciation
6. Assembled documentation and records of cases presented for
American Board
of Orthodontics certification
7. Personal family photographs
Exhibit Y
List of Contracts
1. Computer maintenance agreement OPMS orthodontic software
company -- $1,225.00
annual software company
2. BMK grounds maintenance agreement -- landlord contracts for
shrubs and lawn
service -- $41.68 monthly
3. All current contracts to provide orthodontic services
Exhibit E
Management Services Agreement and
Stock Put/Call Option and Successor Designation Agreement
Executed copies of even date herewith have been delivered to the
parties.
Schedule 1
Representations and Warranties of
▇▇. ▇▇▇▇▇▇▇ to OMEGA
▇▇. ▇▇▇▇▇▇▇ hereby represents and warrants to OMEGA as
follows:
1. The Orthodontic Practice. The Assets of the
Orthodontic Practice are owned 100% by ▇▇. ▇▇▇▇▇▇▇. ▇▇. ▇▇▇▇▇▇▇
has the full power to conduct business as currently conducted by
the Orthodontic Practice and to own and lease the property he
purports to own.
2. Authorization of Transaction. All necessary action has
been taken by ▇▇. ▇▇▇▇▇▇▇ to authorize the execution of this
Agreement by ▇▇. ▇▇▇▇▇▇▇, and the delivery and performance of
this Agreement and the transactions contemplated hereby, and this
Agreement is the valid and binding obligation of ▇▇. ▇▇▇▇▇▇▇,
enforceable against ▇▇. ▇▇▇▇▇▇▇ in accordance with its terms.
3. Present Compliance with Obligations and Laws. Except as
disclosed on Exhibit X attached to this Schedule, there is not:
(a) a default in the performance of any obligation, agreement or
condition of any debt instrument from ▇▇. ▇▇▇▇▇▇▇ which (with or
without the passage of time or the giving of notice) affords to
any person the right to accelerate any material indebtedness or
terminate any right; (b) a default of or breach of (with or
without the passage of time or the giving of notice) any other
contract to which ▇▇. ▇▇▇▇▇▇▇ is a party or by which he or the
Assets are bound; or (c) any violation of any law, regulation,
administrative order or judicial order applicable to ▇▇. ▇▇▇▇▇▇▇,
the Orthodontic Practice or the Assets.
4. No Conflict of Transaction with Obligations and Laws.
(a) Neither the execution, delivery and performance of this
Agreement, nor the performance of the transactions contemplated
hereby, will: (i) conflict with or constitute (with or without
the passage of time or the giving of notice) a breach of, or
default under, any debt instrument to which ▇▇. ▇▇▇▇▇▇▇ is a
party, or give any person the right to accelerate any
indebtedness or terminate any right; (ii) constitute (with or
without the passage of time or giving of notice) a default under
or breach of any other agreement, instrument or obligation to
which ▇▇. ▇▇▇▇▇▇▇ is a party or by which he or the Assets are
bound; or (iii) result in a violation of any law, regulation,
administrative order or judicial order applicable to ▇▇. ▇▇▇▇▇▇▇,
the Orthodontic Practice or the Assets.
(b) Except as disclosed on the attached Exhibit X to this
Schedule, the execution, delivery and performance of this
Agreement and the transactions contemplated hereby by ▇▇. ▇▇▇▇▇▇▇
do not require the consent, waiver, approval, authorization,
exemption of or giving of notice to any governmental authority.
5. Investigations and Licenses.
(a) ▇▇. ▇▇▇▇▇▇▇ has all necessary licenses to practice
orthodontics in the State.
(b) ▇▇. ▇▇▇▇▇▇▇ is not subject to any investigation,
whether threatened, current or pending, under which ▇▇. ▇▇▇▇▇▇▇
may be required to forfeit or suffer the revocation, suspension
or limitation of ▇▇. ▇▇▇▇▇▇▇'▇ license to practice orthodontics
and ▇▇. ▇▇▇▇▇▇▇ is not subject to any investigation, whether
threatened, current or pending by a commercial third-party payor.
6. Financial Statement. Attached as Exhibit A to the
Agreement is the Financial Statement of the Orthodontic Practice.
To the best knowledge of ▇▇. ▇▇▇▇▇▇▇, the Financial Statement is
complete and correct and fairly presents in all material respects
the financial position of the Orthodontic Practice as at the date
of such statement and the results of its operations for the
period then ended, in accordance with generally accepted
accounting principles consistently applied throughout the periods
covered thereby for the periods covered thereby.
7. Property; Liens; Condition.
(a) Except as set forth on Exhibit X to this Schedule, ▇▇.
▇▇▇▇▇▇▇ has good and marketable title in fee simple to all of
the Assets, including without limitation, all personal property,
machinery and equipment used or owned by the Orthodontic Practice
(the "Equipment"), free of liens and encumbrances (the
"Property"). All the Property owned or leased by ▇▇. ▇▇▇▇▇▇▇ is
in good repair, has been well maintained, substantially conforms
with all applicable ordinances, regulations and zoning or other
laws. The Equipment is in good working order.
(b) No other practice or person owns any of the assets
necessary for the operation of the Orthodontic Practice. The
Orthodontic Practice does not operate any of its practice through
any other entities or persons.
9. Payment of Taxes. ▇▇. ▇▇▇▇▇▇▇ has filed all federal,
state and local income, excise or franchise tax returns, real
estate and personal property tax returns, sales and use tax
returns and other tax returns required to be filed and has paid
all taxes owing except taxes which have not yet accrued or
otherwise become due for which adequate provision has been made
in the Financial Statement. All transfer, excise or other taxes
payable by reason of the purchase of the Assets pursuant to this
Agreement shall be paid or provided for by ▇▇. ▇▇▇▇▇▇▇ after the
Closing out of the Consideration to be received upon consummation
of this Agreement.
10. Absence of Undisclosed Liabilities and Changes.
(a) As of the date of the Financial Statement, ▇▇. ▇▇▇▇▇▇▇
had no liabilities of any nature, whether accrued, absolute,
contingent or otherwise (including without limitation liabilities
as guarantor or otherwise with respect to obligations of others,
or liabilities for taxes due or then accrued or to become due)
relating to the Orthodontic Practice, except (i) liabilities
stated or adequately reserved against on the Financial Statement,
(ii) liabilities not in excess of $5,000 arising in the ordinary
course of business since the date of the Financial Statement, and
(iii) liabilities disclosed in Exhibit X to this Schedule. There
is no fact which materially adversely affects, or may in the
future (so far as can now be reasonably foreseen) materially
adversely affect, the business, properties, operations or
condition of the Orthodontic Practice which has not been
specifically disclosed herein or in Exhibit X to this Schedule.
(b) Except as disclosed in Exhibit X to this Schedule,
since the date of the Financial Statement there has not been:
(i) any change in the financial condition, properties,
assets, liabilities, business or operations of ▇▇. ▇▇▇▇▇▇▇ or
the Orthodontic Practice, which change by itself or in
conjunction with all other such changes, whether or not arising
in the ordinary course of business, has been materially adverse
with respect to ▇▇. ▇▇▇▇▇▇▇ or the Orthodontic Practice;
(ii) any mortgage, encumbrance or lien placed on any
of the Property, or the property subject to any lease, or which
remains in existence on the date hereof or at the time of
Closing; or
(iii) any obligation or liability incurred by ▇▇.
▇▇▇▇▇▇▇ relating to the Orthodontic Practice other than
obligations and liabilities incurred in the ordinary course of
business and disclosed on Exhibit X attached to this Schedule.
11. Litigation. Except for matters described on Exhibit X
to this Schedule, there is no action, suit, claim, proceeding or
investigation pending or, to the knowledge of ▇▇. ▇▇▇▇▇▇▇,
threatened against the Orthodontic Practice or ▇▇. ▇▇▇▇▇▇▇, at
law or in equity, or before or by any Federal, state, municipal
or other governmental department, commission, board, bureau,
agency or instrumentality or governmental inquiry pending or, to
the knowledge of ▇▇. ▇▇▇▇▇▇▇, threatened against or involving
▇▇. ▇▇▇▇▇▇▇ or the Orthodontic Practice, and there is no basis
for any of the foregoing, and there are no outstanding court
orders, court decrees, or court stipulations to which the
Orthodontic Practice or ▇▇. ▇▇▇▇▇▇▇ is a party which question
this Agreement or affect the transactions contemplated hereby, or
which will result in any materially adverse change in the
business, properties, operations, prospects, assets or in the
condition, financial or otherwise, of ▇▇. ▇▇▇▇▇▇▇ or the
Orthodontic Practice.
12. Insurance. ▇▇. ▇▇▇▇▇▇▇ has possessed adequate
occurrence professional liability coverage for the five (5) years
prior to the date of this Agreement protecting the Orthodontic
Practice and ▇▇. ▇▇▇▇▇▇▇ from any professional malpractice
liability that might arise because of the Orthodontic Practice's
or ▇▇. ▇▇▇▇▇▇▇'▇ practice activities over the preceding five (5)
years. Prior to the Closing, the New PC shall have obtained and
shall continue to maintain, at its cost, Occurrence Medical
Malpractice Liability Insurance for ▇▇. ▇▇▇▇▇▇▇ and the New PC.
The Orthodontic Practice possesses adequate insurance coverage
for its Property.
EXHIBIT X
Exceptions to Representations and
Warranties of ▇▇. ▇▇▇▇▇▇▇ and
Orthodontic Practice to OMEGA
NONE
Schedule 2
Representations and Warranties of
OMEGA to ▇▇. ▇▇▇▇▇▇▇
OMEGA hereby represents and warrants to ▇▇. ▇▇▇▇▇▇▇ as
follows:
1. Organization of OMEGA. That it is a corporation duly
organized, validly existing and in good standing under the laws
of Delaware with full corporate power to own or lease its
properties and to conduct its business in the manner and in the
places where such properties are owned or leased or such business
is conducted by it.
2. Authorization of Transaction. All necessary action,
corporate or otherwise, has been taken by it to authorize the
execution, delivery and performance of this Agreement, and this
Agreement is a valid and binding obligation of it enforceable
against it in accordance with its terms, subject to laws of
general application affecting creditor's rights generally.
3. Litigation. There is no litigation pending or, to its
knowledge, threatened against it which would prevent or hinder
the consummation of the transactions contemplated by this
Agreement.