EXHIBIT 10.36
20
STOCK PUT/CALL OPTION AND SUCCESSOR DESIGNATION AGREEMENT
This Stock Put/Call Option and Successor Designation
Agreement (the "Agreement") is made effective as of this 1st day
of January, 1998 by and among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, P.C., a
professional corporation (the "New PC") incorporated under the
laws of the State of South Dakota (the "State"); ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
D.D.S. ("▇▇. ▇▇▇▇▇▇▇▇▇") who is duly licensed to practice
orthodontics in the State; Omega Orthodontics, Inc., a Delaware
corporation ("OMEGA"); and Omega Orthodontics of Watertown, Inc.,
a Delaware corporation (the "MSO"), which is a wholly-owned
subsidiary of OMEGA, with reference to the following facts.
RECITALS
A. OMEGA is an orthodontic practice management company and
has expertise in managing orthodontic practices including
practice management systems, office space, equipment, furnishings
and active administrative personnel necessary for the operation
of orthodontic practices and providing high quality healthcare
management services to orthodontic practices, directly or
indirectly through management service organizations such as the
MSO.
B. OMEGA acquired certain assets of ▇▇. ▇▇▇▇▇▇▇▇▇ pursuant
to that certain Affiliation Agreement and Asset Purchase
Agreement (the "Affiliation Agreement") dated as of January 1,
1998 by and among OMEGA and ▇▇. ▇▇▇▇▇▇▇▇▇.
C. The New PC owns and operates an orthodontic practice
with offices located in the facility identified in Exhibit A (the
"Orthodontic Offices") and furnishes orthodontic care to the
general public through the services of ▇▇. ▇▇▇▇▇▇▇▇▇ affiliated
with the New PC.
D. The New PC and the MSO have entered into that certain
Management Services Agreement (the "Management Services
Agreement") dated as of even date herewith for the management by
the MSO of the non-orthodontic business affairs of the New PC.
E. ▇▇. ▇▇▇▇▇▇▇▇▇ owns all of the capital stock (the
"Capital Stock") of the New PC and desires to provide for
successor ownership upon the occurrence of certain events. When
used in this Agreement, the term "Capital Stock" shall mean all
of ▇▇. ▇▇▇▇▇▇▇▇▇'▇ right, title, interest and estate in and to
all of the issued and outstanding stock in the New PC, including
any stock hereafter issued and any rights to any additional stock
and any preemptive rights, warrants and instruments of like
effect, as set forth on Exhibit B.
F. As a condition of entering into the Management Services
Agreement, ▇▇. ▇▇▇▇▇▇▇▇▇ has agreed to grant to the MSO, and the
MSO desires to acquire from ▇▇. ▇▇▇▇▇▇▇▇▇ certain rights,
including but not limited to, the right to designate the
successor purchaser (the "Designated Successor") of all or any
part of the issued and outstanding Capital Stock upon the
occurrence of certain events. In addition, under the Management
Services Agreement, upon termination thereof, each of the New PC
and the MSO were granted certain rights to be set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual promises contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the New PC, ▇▇. ▇▇▇▇▇▇▇▇▇, the MSO and OMEGA
agree as follows:
1. Defined Terms. The capitalized words and expressions
used in this Agreement, but which are not defined herein shall,
unless the context otherwise requires, have the same meaning as
they are given in the Management Services Agreement.
2. Put Option. The MSO shall have the option (the "Put
Option") to require the New PC, upon termination of the
Management Services Agreement by the MSO under Section 10.2
thereof or upon expiration of the Term of the Management Services
Agreement, to:
(a) Purchase from the MSO at book value all of the
leasehold improvements, fixtures, furniture, furnishings and
equipment comprising or located at the Orthodontic Offices,
including all replacements and additions thereto made by the
MSO pursuant to the performance of its obligations under the
Management Services Agreement and all other assets,
including inventory and supplies and intangibles, set forth
on the balance sheet as at the end of the month immediately
preceding the date of such termination or expiration
prepared in accordance with GAAP (the "Balance Sheet") to
reflect operations of the MSO in respect of the Orthodontic
Offices, including depreciation, amortization and other
adjustments of such assets shown on such Balance Sheet; and
(b) Purchase, by obtaining an assignment from the MSO,
at book value, the right to receive payments for breach of
the restrictive covenants provided for in Section 3.7 of the
Management Services Agreement and in the applicable
Employment Agreement with ▇▇. ▇▇▇▇▇▇▇▇▇ contemplated
thereunder, and any goodwill and other intangible assets set
forth on the Balance Sheet, reflecting amortization or
depreciation of the restrictive covenants, and any goodwill
and other intangible assets; and
(c) Assume all debt and all contracts, payables and
leases which are obligations of the MSO and which relate
solely to the performance of its obligations under the
Management Services Agreement or the properties subleased in
respect of the Orthodontic Offices.
If the MSO desires to exercise its Put Option, the MSO shall give
written notice of such election to the New PC and ▇▇. ▇▇▇▇▇▇▇▇▇
at least twenty (20) calendar days prior to the date specified in
such notice as the date for the closing of the Put Option. Any
exercise of the Put Option by the MSO shall be made by an
aggregate payment of the amounts computed under Clauses (a) and
(b) of this Section 2 (collectively, the "Put Price").
3. Call Option. The New PC shall have the option (the
"Call Option") to require the MSO, upon termination of the
Management Services Agreement by the New PC under Section 10.1
thereof, to:
(a) Sell to the New PC all of the leasehold
improvements, fixtures, furniture, furnishings and equipment
comprising or located at the Orthodontic Offices, including
all replacements and additions thereto made by the MSO
pursuant to the performance of its obligations under the
Management Services Agreement and all other assets,
including inventory and supplies and intangibles, set forth
on the Balance Sheet to reflect operations of the MSO in
respect of the Orthodontic Offices, including depreciation,
amortization and other adjustments of such assets shown on
such Balance Sheet; and
(b) Assign to, or grant a waiver in favor of, the New
PC, the restrictive covenants provided for in Section 3.7 of
the Management Services Agreement and in the applicable
Employment Agreement with ▇▇. ▇▇▇▇▇▇▇▇▇ contemplated
thereunder, and any goodwill and other intangible assets set
forth on the Balance Sheet, reflecting amortization or
depreciation of the restrictive covenants, and any goodwill
and other intangible assets; and
(c) Assign to the New PC (which it shall assume) all
debt and all contracts, payables and leases which are
obligations of the MSO and which relate solely to the
performance of its obligations under the Management Services
Agreement or the properties subleased in respect of the
Orthodontic Offices.
If the New PC desires to exercise its Call Option, the New PC
shall give written notice of such election to the MSO at least
twenty (20) calendar days prior to the date specified in such
notice as the date for the closing of the Call Option. Any
exercise of the Call Option by the New PC shall be made by an
aggregate payment to the MSO of an amount equal to the sum of
(x) the amount of cash paid to ▇▇. ▇▇▇▇▇▇▇▇▇ under Section
1.1(a)(i) of the Affiliation Agreement, plus (y) the original
principal amount of the Purchase Note issued to ▇▇. ▇▇▇▇▇▇▇▇▇
under Section 1.1(a)(ii) of the Affiliation Agreement, plus (z)
the value of that number of shares of Omega Common Stock issued
to ▇▇. ▇▇▇▇▇▇▇▇▇ under Section 1.1(a)(iii) of the Affiliation
Agreement, such value to be determined by multiplying such number
of shares by the average of the last sales (or closing) price for
Omega's Common Stock on Nasdaq (or a national securities
exchange) for each of the sixty (60) trading days immediately
preceding the date the Call Option Notice is delivered to the MSO
(collectively, the "Call Price").
4. Closing and Delivery. The closing ("Closing") of the
exercise by the MSO of the Put Option under Section 2 or of the
exercise by the New PC of the Call Option under Section 3, as the
case may be, shall be at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on the date specified
for such Closing in the written notice of election to exercise
such Put Option or Call Option, as the case may be, or on such
other date as the parties may mutually determine. At the Closing,
the New PC shall pay cash, or, with the consent of ▇▇. ▇▇▇▇▇▇▇▇▇,
a combination of cash, forgiveness of amounts due to ▇▇.
▇▇▇▇▇▇▇▇▇ under the Purchase Note and/or return of the shares of
Omega Common Stock received by ▇▇. ▇▇▇▇▇▇▇▇▇ under Section
1.1(a)(iii) of the Affiliation Agreement, such shares to be
valued as provided for in Section 3 hereof, for the repurchased
assets, whether the Put Price pursuant to exercise by the MSO of
the Put Option or the Call Price pursuant to exercise by the New
PC of the Call Option, as the case may be. The New PC and ▇▇.
▇▇▇▇▇▇▇▇▇ shall execute such documents as may be required by the
MSO to assume the liabilities set forth in Section 2(c) or 3(c),
as the case may be, and shall use their respective best efforts
to remove the MSO from any liability with respect to such
repurchased assets and with respect to any property leased or
subleased by the MSO. From and after any such Closing, each
party shall provide to the other parties reasonable access to
books and records then owned by it to permit such requesting
party to satisfy reporting and contractual obligations which may
be required of it. In addition, following any such Closing, the
MSO or its designee shall have reasonable access during normal
business hours to the New PCs records, including patient records
regarding records of collections, expenses and disbursements as
kept by the MSO in performing its obligations under the
Management Services Agreement, and the MSO may copy any or all
such records.
5. Successor Designation Option.
(a) Upon termination of the Management Services Agreement
by the MSO under Section 10.2 thereof or upon expiration of the
Term of the Management Services Agreement or upon the happening
of any of the following events (each of such termination,
expiration or event being hereinafter referred to as a "Transfer
Event"), the MSO shall have the option (the "Designated Successor
Option") to designate a Designated Successor to purchase all or
any portion of the Capital Stock then held by ▇▇. ▇▇▇▇▇▇▇▇▇:
(i) the death of ▇▇. ▇▇▇▇▇▇▇▇▇;
(ii) if ▇▇. ▇▇▇▇▇▇▇▇▇ is determined to be permanently
disabled so as to be unable to render any professional
services on behalf of the New PC, as determined in
accordance with paragraph (b) of this Section 5 below;
(iii) if ▇▇. ▇▇▇▇▇▇▇▇▇ voluntarily terminates his
employment without first proposing and obtaining the MSO's
approval of a proposed qualified successor orthodontist
reasonably acceptable to the MSO on behalf of the New PC;
(iv) if ▇▇. ▇▇▇▇▇▇▇▇▇ acts in a criminally or grossly
negligent manner with respect to the performance of
professional orthodontic services rendered or to be rendered
on behalf of the New PC;
(v) if ▇▇. ▇▇▇▇▇▇▇▇▇ becomes hospitalized for alcohol
or drug abuse;
(vi) if ▇▇. ▇▇▇▇▇▇▇▇▇ is convicted of a felony;
(vii) if ▇▇. ▇▇▇▇▇▇▇▇▇ loses his license or is
otherwise determined to be disqualified from rendering
services as an orthodontist for the New PC by the applicable
dental or other comparable regulatory board of the State;
(viii) if ▇▇. ▇▇▇▇▇▇▇▇▇'▇ shares of Capital Stock are
or are to be transferred voluntarily or by operation of law
to any person who is a "disqualified person," as defined in
the professional corporation statute of the Laws of the
State;
(ix) if ▇▇. ▇▇▇▇▇▇▇▇▇ voluntarily files a petition
under any bankruptcy or insolvency law or a petition for the
appointment of a receiver, or makes an assignment for the
benefit of creditors;
(x) if ▇▇. ▇▇▇▇▇▇▇▇▇ is subjected involuntarily to such
a petition or assignment, or any creditor or other persons
obtains an attachment or other legal or equitable interest
in any shares of the Capital Stock of ▇▇. ▇▇▇▇▇▇▇▇▇ and such
involuntary petition, assignment or attachment is not
discharged within sixty (60) days after creation;
(xi) if ▇▇. ▇▇▇▇▇▇▇▇▇ is required to transfer any
shares of Capital Stock by reason of a judgment, court order
or decree or by operation of law;
(xii) if ▇▇. ▇▇▇▇▇▇▇▇▇ retires within the meaning of
Paragraph (c) of this Section 5; or
(xiii) if ▇▇. ▇▇▇▇▇▇▇▇▇ desires to sell any of his
shares of Capital Stock to another orthodontist as
contemplated under Section 8 hereof.
(b) For purposes hereof, "permanent disability" means any
illness, injury, disease or condition, whether mental or
physical, which, for a continuous period of thirty (30) days, (i)
prevents ▇▇. ▇▇▇▇▇▇▇▇▇ from performing his duties competently and
adequately as determined by the MSO, or (ii) substantially
impairs the New PC's or ▇▇. ▇▇▇▇▇▇▇▇▇'▇ ability to practice
orthodontics.
(c) For purposes hereof, "Retirement" of ▇▇. ▇▇▇▇▇▇▇▇▇
shall occur on the date when ▇▇. ▇▇▇▇▇▇▇▇▇ voluntarily withdraws
from the practice of orthodontics at whatever age or for whatever
reason and notifies the New PC that he desires to be regarded as
"Retired" and fails to have first proposed and obtained the MSO's
approval of a qualified successor orthodontist reasonably
acceptable to the MSO.
6. Successor Designation Option Exercise. Except as
otherwise provided herein, upon exercise of the Successor
Designation Option, the Designated Successor may purchase all or
any part of the Capital Stock. The failure of the MSO to
exercise this Successor Designation Option as to all of the
Capital Stock at any one time shall not limit the MSO's right to
exercise the Successor Designation Option with respect to any
remaining Capital Stock at any time during the term of this
Agreement. The Successor Designation Option shall also be
exercisable by the MSO as provided in Section 8 below.
7. Exercise Notice. Any exercise of the Successor
Designation Option shall be accompanied by a written notice (the
"Successor Designation Exercise Notice") to ▇▇. ▇▇▇▇▇▇▇▇▇ (or his
successor or representative), specifying the name, address and
information showing the qualifications and suitability of the
Designated Successor to conduct or perform professional services
on behalf of the New PC and number of shares of Capital Stock of
▇▇. ▇▇▇▇▇▇▇▇▇ as to which the Successor Designation Option is
being exercised. Upon the MSO's exercise of the Successor
Designation Option in respect of any event described in Section
5(a)(iii) or (x) as to all of the shares of Capital Stock of ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇ shall execute a Non-Competition
Agreement in the form attached hereto as Exhibit C. The MSO may,
at any time, cancel any Successor Designation Exercise Notice
sent by it hereunder.
8. Right of First Refusal and Sale of Stock. If ▇▇.
▇▇▇▇▇▇▇▇▇ desires to sell any of the Capital Stock to another
orthodontist (a "Purchaser"), he shall first give notice to the
MSO of his intent to sell such Capital Stock ("Notice of Sale"),
giving to the MSO such information as shall be reasonably
requested by it to ascertain the qualifications and suitability
of the Purchaser to conduct or to perform professional services
on behalf of the New PC and the terms and conditions of such
proposed sale to the Purchaser. Upon receipt of such Notice, the
Successor Designation Option of the MSO shall become exercisable
for a period of three (3) months, provided however, that the
exercise price and terms of purchase of the Capital Stock shall
be no less favorable to ▇▇. ▇▇▇▇▇▇▇▇▇ than those set forth in the
Notice of Sale. In the event the Successor Designation Option is
not exercised during such three (3) month period, ▇▇. ▇▇▇▇▇▇▇▇▇
may sell the Capital Stock to the Purchaser, with the consent of
the MSO, which consent shall not be unreasonably withheld, upon
the terms and conditions set forth in the Notice of Sale,
provided however, that such sale shall be conditioned: (i) upon
the Purchaser joining in this Agreement and entering into an
employment agreement with the New PC on such terms and conditions
as may be approved by the MSO, and (ii) upon ▇▇. ▇▇▇▇▇▇▇▇▇
executing a Non-Competition Agreement in the form attached hereto
as Exhibit C.
9. Assignment of the Successor Designation Option The
Successor Designation Option may be assigned by the MSO or any
assignee of the MSO to OMEGA or to a duly licensed orthodontist,
by a written assignment, signed by both the MSO and the assignee.
When the context so requires in this Agreement, the term "MSO"
shall be deemed to refer to an assignee holding an assignment of
the Successor Designation Option with respect to such Capital
Stock, and the terms "party" and "parties" shall be deemed to
include
10. Purchase Price of the Capital Stock.
(a) The purchase price ("Purchase Price") due and
payable by the Designated Successor upon exercise of the
Successor Designation Option shall be an amount equal to the
product of (a) the aggregate net amount received by the New PC
pursuant to Article 6 and Schedule 3 of the Management Services
Agreement for the twelve (12) calendar months immediately
preceding the month in which the Successor Designation Exercise
Notice is delivered to ▇▇. ▇▇▇▇▇▇▇▇▇ (or his successor or
representative) multiplied by (b) a fraction, the numerator of
which is the number of shares of the Capital Stock to be
purchased and the denominator of which is the total number of
shares of the Capital Stock outstanding at the time of such
purchase.
(b) Payment of Purchase Price. The Purchase Price
upon exercise of the Successor Designation Option shall be paid
by the Designated Successor executing a nonrecourse, negotiable
promissory note, secured by the Capital Stock of ▇▇. ▇▇▇▇▇▇▇▇▇.
The note shall be for a term of five years, with interest payable
quarterly in arrears at the mid-term Applicable Federal Rate with
monthly compounding published by the Internal Revenue Service
from time to time in accordance with Section 1274(d) of the
Internal Revenue Code of 1986, as amended (the "Code") or any
successor provision of the Code, provided however, that the
Designated Successor shall be permitted to prepay such note at
any time. Principal shall be payable in five equal annual
installments commencing six months after the closing date.
(c) Purchase From ▇▇. ▇▇▇▇▇▇▇▇▇'▇ Estate.
(i) Upon the death of ▇▇. ▇▇▇▇▇▇▇▇▇ and receipt
of notice of a Successor Designation Exercise Notice, ▇▇.
▇▇▇▇▇▇▇▇▇'▇ personal representative shall apply for and obtain
any necessary court approval or confirmation of the sale of ▇▇.
▇▇▇▇▇▇▇▇▇'▇ shares of Capital Stock pursuant to this Agreement.
The representative of the estate of ▇▇. ▇▇▇▇▇▇▇▇▇ and the
Designated Successor shall complete such sale as soon after the
date of death as practicable, but no later than 180 days after
such event.
(ii) The death of ▇▇. ▇▇▇▇▇▇▇▇▇'▇ spouse, if any,
shall not be considered the death of ▇▇. ▇▇▇▇▇▇▇▇▇ for purposes
of this Agreement.
(iii) The estate of ▇▇. ▇▇▇▇▇▇▇▇▇ shall bear, and
hold the New PC harmless from, all costs and expenses incurred as
a result of securing any court orders, court decrees, court
approvals or inheritance tax clearances required to enable the
estate of ▇▇. ▇▇▇▇▇▇▇▇▇ to transfer to the Designated Successor
full legal and equitable tax-free title to the Capital Stock of
▇▇. ▇▇▇▇▇▇▇▇▇.
(d) Other Purchases. Except for purchases of Capital
Stock upon exercise of the Successor Designation Option pursuant
to Section 5(a)(i) hereof, all other purchases of Capital Stock
pursuant to such Option shall close thirty (30) days after the
date of any Successor Designation Exercise Notice, unless
extended by the parties.
11. Insurance.
(a) In order to insure the MSO's interest in the
Management Services Agreement and under this Agreement, ▇▇.
▇▇▇▇▇▇▇▇▇ hereby consents to the acquisition and maintenance in
force of a disability insurance policy and a life insurance
policy on ▇▇. ▇▇▇▇▇▇▇▇▇ ("Insurance Policies"). The life
insurance policy may be in an aggregate face amount of up to
three times ▇▇. ▇▇▇▇▇▇▇▇▇'▇ income, as shown on the W-2 Form
prepared by the New PC for the most recent calendar year. ▇▇.
▇▇▇▇▇▇▇▇▇ agrees, at the election of the MSO, to take whatever
actions are necessary to facilitate the acquisition of any such
Insurance Policy by the MSO.
(b) The Insurance Policies shall name the New PC as
sole owner and beneficiary of such policies.
(c) As long as the Insurance Policies provided for
herein are in full force and effect, the MSO shall pay all
premiums falling due on all such policies issued to it subject to
this Agreement.
(d) No insurance company that has issued or shall
issue an Insurance Policy or Policies to the MSO as permitted
under this Agreement shall be under any obligation with respect
to the performance of the terms and conditions of this Agreement.
Any such company shall be bound only by the terms of the
Insurance Policy or Policies which it has issued or shall
hereafter issue and shall have no liability except as set forth
in its policies.
12. Representations. The New PC and ▇▇. ▇▇▇▇▇▇▇▇▇ each
represent and warrant to the MSO and OMEGA that as of the day and
year first above written and during the term of this Agreement,
Exhibit A is a true and complete listing of the Capital Stock, as
revised from time to time pursuant to this Agreement.
13. Restriction on Transfer.
(a) Except to the extent and in the manner provided in
this Agreement or with the express prior written consent of the
MSO which may be granted or withheld in its absolute discretion,
▇▇. ▇▇▇▇▇▇▇▇▇ shall not sell, assign, transfer, pledge or
otherwise dispose (including by gift or otherwise) of any of his
shares of the Capital Stock.
(b) Issuance of Stock; Change in Ownership; Mergers
and Consolidation. Without the prior written consent of the MSO,
▇▇. ▇▇▇▇▇▇▇▇▇ shall not permit the New PC to, and the New PC
shall not, during the term of this Agreement, issue any stock,
other equity, or debt of the New PC; permit any change in the
composition or respective percentage ownership of the New PC;
merge, consolidate or otherwise reorganize with or into any other
corporation, partnership, trade, business, or the like; amend or
otherwise modify its articles of incorporation or bylaws;
dissolve; or enter into any agreement with any person to do any
of the foregoing without the prior written consent of the MSO.
14. Delivery of Stock Power. Upon execution of this
Agreement, ▇▇. ▇▇▇▇▇▇▇▇▇ shall execute and deliver to the MSO, a
sufficient number of assignments separate from certificates,
endorsed in blank to cover all of the Stock (the "Stock Power")
held of record or beneficially owned by ▇▇. ▇▇▇▇▇▇▇▇▇. Upon
execution of this Agreement, ▇▇. ▇▇▇▇▇▇▇▇▇ shall deliver to the
MSO all certificates heretofore issued representing all of the
shares of Capital Stock held of record or beneficially owned by
▇▇. ▇▇▇▇▇▇▇▇▇. Each such certificate shall have affixed to the
back of the certificate a legend substantially as follows:
"The rights of any holder of any share evidenced by this
certificate, including the right to dispose of the
securities represented by this certificate or any interest
therein, are subject to and restricted by a certain Stock
Put/Call Option and Successor Designation Agreement, dated
January 1, 1998, among the New PC, the holder hereof and the
MSO and OMEGA (as defined therein). The New PC will mail
without charge to any holder of these shares a copy of such
agreement within five (5) days of receipt by the New PC of a
written request therefor."
Upon any exercise of the Successor Designation Option by the
MSO, the MSO (and/or the Designated Successor) shall be
authorized to complete the Stock Powers, attach them to the
certificates and tender the same to the transfer agent for the
New PC for reissuance in the name of the Designated Successor.
Upon any termination of this Agreement without exercise of the
Successor Designation Option, the MSO shall return all such Stock
Powers to ▇▇. ▇▇▇▇▇▇▇▇▇.
15. Confidentiality. The parties shall use all good faith
efforts to keep the contents of this Agreement and all other
aspects of the negotiations preceding execution of this Agreement
confidential. Unless required by law, the New PC, ▇▇. ▇▇▇▇▇▇▇▇▇,
and the MSO and OMEGA shall not disclose the contents of this
Agreement or the negotiations leading to this Agreement to third
parties without the prior written consent of the other parties.
The MSO shall ensure that all of the assignees likewise comply
with the obligations of confidentiality imposed by this Section,
except that the MSO and the assignees may disclose the contents
of such to the extent required by law or otherwise to their
respective agents, representatives, contractors, and employees to
the extent necessary to exercise their respective rights or
perform their respective obligations hereunder.
16. Term. The term of this Agreement shall commence as of
the day and year first above written and shall terminate upon the
termination of the Management Services Agreement or the exercise
(and consummation of the transaction provided for upon such
exercise) of the Put Option, the Call Option or the Successor
Designation Option as to all of the Capital Stock, as the case
may be (the "Term").
17. General
(a) Compliance with Law. The New PC and ▇▇. ▇▇▇▇▇▇▇▇▇
shall comply with all applicable requirements of applicable state
law and regulations, and other licensing and accreditation
authorities.
(b) Relationship of Parties. In the exercise of their
respective rights and the performance of their respective
obligations under this Agreement, the New PC and ▇▇. ▇▇▇▇▇▇▇▇▇ on
the one hand and OMEGA and the MSO (or any assignee of the MSO)
on the other hand are acting in the capacity of the grantor and
grantee of an option to purchase or to designate the purchase of
shares of Capital Stock and nothing in this Agreement is intended
nor shall be construed to create an employer/employee,
partnership, joint venture or a landlord/tenant relationship
between or among the parties.
(c) Assignment. Notwithstanding any other provision
of this Agreement, neither this Agreement nor the rights and
duties of this Agreement may be assigned or delegated by the New
PC or ▇▇. ▇▇▇▇▇▇▇▇▇ without the prior written consent of the MSO
and OMEGA. This Agreement binds the successors, heirs, and
authorized assignees of the parties.
(d) Counterparts. This Agreement, and any amendments
thereto, may be executed in counterparts, each of which shall
constitute an original document, but which together shall
constitute one and the same instrument.
(e) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
(f) Notices. Any notices required or permitted to be
given hereunder by any party to another shall be in writing and
shall be deemed delivered upon personal delivery, twenty-four
(24) hours following deposit with a courier for overnight
delivery or seventy two (72) hours following deposit in the U.S.
Mail, registered or certified mail, postage prepaid, return-
receipt requested, addressed to the parties at the following
addresses or to such other addresses as the parties may hereafter
specify in writing:
If to the New PC
or ▇▇. ▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇, D.D.S.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
If to MSO or OMEGA: Omega Orthodontics, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(g) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State.
(h) Amendment. This Agreement may be amended at any
time by agreement of the parties, provided that any amendment
shall be in writing and executed by the parties.
(i) Severability. If any provision of this Agreement
is held by a court of competent jurisdiction to be invalid or
unenforceable, (i) the parties shall amend this Agreement in
order to carry out the intent and essential business purposes of
this Agreement as closely possible within the requirements of
applicable provisions of Law as determined by such a court, and
(ii) the remaining provisions will nevertheless continue in full
force and effect.
(j) Fees and Expenses. The New PC, ▇▇. ▇▇▇▇▇▇▇▇▇ and
the MSO and OMEGA each shall bear their own expenses, including,
without limitation, attorneys' and accountants' fees, incurred in
connection with the preparation of this Agreement and the
transactions contemplated hereby.
(k) Exhibits and Schedules. All attachments and
schedules attached to this Agreement are incorporated herein by
this reference and all references herein to "Agreement" shall
mean this Agreement together with all such exhibits and
schedules.
(l) Time of Essence. Time is expressly made of the
essence of this Agreement in each and every provision hereof of
which time of performance is a factor.
(m) Attorneys' Fees. Should any of the parties hereto
institute any action or proceeding to enforce this Agreement or
any provision hereof (including without limitation, arbitration),
or for damages by reason of any alleged breach of this Agreement
or of any provision hereof, or for a declaration of rights
hereunder (including, without limitation, by means of
arbitration), the prevailing party in any such action or
proceeding shall be entitled to receive from the other party all
costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred by the prevailing party in connection
with such action or proceeding.
(n) Further Assurances. The parties shall take such
actions and execute and deliver such further documentation as may
reasonably be required in order to give effect to the
transactions contemplated by this Agreement and the intentions of
the parties hereto.
(o) Rights Cumulative. The various rights and
remedies herein granted to the respective parties hereto shall be
cumulative and in addition to any other rights any such party may
be entitled to under law. The exercise of one or more rights or
remedies by a party shall not impair the right of such party to
exercise any other right or remedy, at law or equity.
18. Alternative Dispute Resolution.
18.1 General.
(a) If a dispute arises under this Agreement which cannot
be resolved informally by the parties, any party may invoke the
procedures set forth in Exhibit D hereto and the parties agree to
use these procedures, except paragraph (b) of this Section 18,
prior to any party pursuing other available remedies. The
parties will meet and attempt in good faith to resolve any
controversy or claim arising out of or relating to this
Agreement.
(b) Notwithstanding anything in this Section 18 to the
contrary, nothing in this Section 18 shall preclude any party
from seeking a preliminary injunction or other provisional
relief, either prior to or during the proceeding provided for in
this section, if in its judgment such action is necessary to
avoid irreparable damage or to preserve the status quo.
18.2 Waiver of Jury. With respect to any dispute
arising under or in connection with this Agreement or any related
agreement, as to which legal action nevertheless occurs, each
party hereby irrevocably waives all rights it may have to demand
a jury trial. This waiver is knowingly, intentionally and
voluntarily made by the parties and each party acknowledges that
no person acting on behalf of the other party has made any
representation of fact to induce this waiver of trial by jury or
in any way modified or nullified its effect. The parties each
further acknowledge that it has been represented (or has had the
opportunity to be represented) in the signing of this Agreement
and in the making of this waiver by independent legal counsel,
selected of its own free will, and that it has had the
opportunity to discuss this waiver with counsel. Each party
further acknowledges that it has read and understands the meaning
and ramifications of this waiver provision.
IN WITNESS WHEREOF, the New PC, ▇▇. ▇▇▇▇▇▇▇▇▇, MSO and OMEGA
have executed this Agreement as of the date first above written
by their duly authorized representatives as set forth below.
"NEW PC"
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, P.C.,
a South Dakota corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
▇▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, D.D.S.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, D.D.S.
"MSO"
OMEGA ORTHODONTICS OF WATERTOWN, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
"OMEGA"
OMEGA ORTHODONTICS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President and
Chief Executive Officer
SPOUSAL JOINDER AND CONSENT
I am the spouse of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, D.D.S., the sole
Stockholder of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, P.C. To the extent that I
have any interest in any of the Capital Stock (as that term is
defined in the Stock Put/Call Option and Successor Designation
Agreement), I hereby join in such Agreement and agree to be bound
by its terms and conditions to the same extent as my spouse. I
have read the Stock Put/Call Option and Successor Designation
Agreement, understand its terms and conditions, and to the extent
that I have felt it necessary, I have retained independent legal
counsel to advise me concerning the legal effect of this Stock
Put/Call Option Agreement and this Spousal Joinder and Consent.
I understand and acknowledge that each of the MSO and OMEGA is
significantly relying on the validity and accuracy of this
Spousal Joinder and Consent in entering into this Stock Put/Call
Option and Successor Designation Option Agreement.
Executed this day of December, 1997.
Signature:
Printed or Typed Name:
EXHIBIT A
ORTHODONTIC OFFICES
The office space and related leasehold improvements
constituting the Orthodontic Offices is located at ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
EXHIBIT B
STOCK
[▇▇. ▇▇▇▇▇▇▇▇▇ attach]
EXHIBIT C
NON-COMPETITION AGREEMENT
[Omega to provide]
EXHIBIT D
ALTERNATIVE DISPUTE RESOLUTION PROCEDURES
A.Method of Invoking ADR Procedures
1. These procedures may be invoked by any party to an
agreement which incorporates these procedures by giving written
notice to the other of the dispute and designating a person with
decision-making authority (the "representative") to act on behalf
of the disputing party regarding the dispute. The other party
shall be required to respond to the disputing party's notice
within five (5) business days by designating in writing its own
representative. A party may choose more than one person to
represent it. If a party appoints only one representative, one
or more of its officers may nonetheless attend such meetings.
2. The parties, each acting through its representative,
shall meet at a mutually acceptable time and place within five
business days after the non-disputing party designates its
representative to the other. At that meeting, the parties shall
attempt in good faith to negotiate a resolution of the dispute,
or failing that, to agree on a method for resolving the claim or
dispute.
3. If, within ten (10) business days after the first
meeting or within such longer period of time as the parties may
mutually agree, the parties have not succeeded in negotiating a
resolution of the claim or dispute or agreeing on a dispute
resolution mechanism, they shall submit the dispute to mediation
in accordance with the procedures set forth herein.
4. The parties will jointly appoint a mutually acceptable
mediator to mediate the dispute. If the parties are unable to
agree on a mutually acceptable mediator within five (5) days
after the conclusion of the negotiations described in paragraph 3
above, then the parties shall select a neutral third party from
the Center for Public Resources, New York, New York ("CPR")
Panels of Neutrals or the American Arbitration Association
("AAA"), with the assistance of CPR or AAA, unless the parties
agree otherwise in finding a mutually acceptable mediator.
5. The New PC and the MSO shall each bear 50% of the fees
and costs of the mediator and any fees and costs of CPR or AAA.
6. The parties agree to participate in good faith in the
mediation and negotiations related thereto for a period of thirty
(30) days from appointment of a mediator by any of the parties or
the CPR or AAA.
B. Mediation procedures
1. The mediator shall be neutral and impartial.
2. The mediator shall control the procedural aspects of
the mediation. The parties will cooperate fully with the
mediator.
(a) The mediator is free to meet and
communicate separately with each party.
(b) The mediator will decide when to hold
joint meetings with the parties and when to hold
separate meetings. There shall be no stenographic
record of any meeting. Formal rules of evidence
will not apply.
(c) The mediator may request that there be
no direct communication between the parties or
between their attorneys without the concurrence of
the mediator.
3. Each party may be represented by more than one person,
e.g., one or more of its officers and an attorney. Each party
will have a representative fully authorized to negotiate a
settlement of the dispute present.
4. The process will be conducted expeditiously.
5. The mediator will not transmit information received
from any party to another party or any third person unless
authorized to do so by the party transmitting the information.
6. The entire process is confidential. The parties and
the mediator will not disclose information regarding the process,
including settlement terms, to third persons, unless the parties
otherwise agree. The process shall be treated as a compromise
negotiation for purposes of the Federal Rules of Evidence and
state rules of evidence.
7. The parties will refrain from pursuing administrative
and/or judicial remedies during the mediation process, except as
otherwise expressly provided in the agreement which incorporates
these procedures.
8. Unless all parties and the mediator otherwise agree in
writing,
(a) The mediator will be disqualified as a
witness, consultant or expert in any pending or
future investigation, action or proceeding
relating to the subject matter of the mediation
(including any investigation, action or proceeding
which involves persons not party to this
mediation); and
(b) The mediator and any documents and
information in the mediator's possession will not
be subpoenaed in any such investigation, action or
proceeding, and all parties will oppose any effort
to have the mediator and documents subpoenaed.
9. If the dispute goes into arbitration, the mediator
shall not serve as an arbitrator, unless the parties and the
mediator otherwise agree in writing.
10. The mediator, if a lawyer, may freely express views to
the parties on the legal issues of the dispute.
11. The mediator shall not be liable for any act or
omission in connection with the mediation.
12. The mediator may withdraw at any time by written notice
to the parties (i) for overriding personal reasons, (ii) if the
mediator believes that a party is not acting in good faith, or
(iii) if the mediator concludes that further mediation efforts
would not be useful.
C. Binding Arbitration
If the parties do not resolve the dispute through mediation
within the period provided in Part A above, the parties shall
submit the matter to binding arbitration in Boston, Massachusetts
before a qualified sole arbitrator in accordance with the then
current CPR Rules for Non-Administered Arbitration of Business
Disputes or comparable AAA rules. The sole arbitrator shall be
agreed upon by the parties within twenty (20) days after either
party elects to submit any issue to arbitration or, failing that,
shall be selected by CPR or AAA A qualified arbitrator is one
who is familiar with the principal subject matter of the issues
to be arbitrated such as by way of example, healthcare services
industry matters, management consulting services generally or
business law/corporate matters generally. Judgment upon the award
rendered by the arbitrator may be entered in any court having
jurisdiction. The arbitrator shall not have the authority to
award multiple, punitive or consequential damages under any
circumstances.
