EXHIBIT 10.48
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 14th day
of January, 1998 by and among ▇▇▇▇▇▇ ▇▇▇▇▇, D.D.S., Inc., a
professional corporation (the "PC") incorporated under the laws
of the State of California (the "State"); ▇▇▇▇▇▇ ▇▇▇▇▇, D.D.S.
("▇▇. ▇▇▇▇▇") who is duly licensed to practice orthodontics in
the State; Azani Dental Services, Inc., a Delaware corporation
(the "MSO"); and Omega Orthodontics, Inc., a Delaware corporation
("OMEGA"), with reference to the following facts.
RECITALS
A. The PC owns and operates an orthodontic practice with
offices located in the facility identified in Exhibit A (the
"Orthodontic Office") and furnishes orthodontic care to the
general public through the services of ▇▇. ▇▇▇▇▇ affiliated with
the PC.
B. The PC, OMEGA 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 PC.
C. 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 services organizations such as the
MSO.
D. ▇▇. ▇▇▇▇▇ owns all of the capital stock (the "Capital
Stock") of the 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 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.
E. ▇▇. ▇▇▇▇▇ 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.
F. This Agreement is entered into in anticipation of the
execution of that certain Affiliation Agreement and Agreement and
Plan of Merger by and among the MSO, OMEGA, ▇▇. ▇▇▇▇▇, the PC and
Omega Orthodontics of Woodland Hills, Inc. (the "Affiliation
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 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 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 Office,
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 of 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 Office, 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 Office.
If the MSO desires to exercise its Put Option, the MSO shall give
written notice of such election to the 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 PC shall have the option (the "Call
Option") to require the MSO, upon termination of the Management
Services Agreement by the PC under Section 10.1 thereof, to:
(a) Sell to the PC all of the leasehold improvements,
fixtures, furniture, furnishings and equipment comprising or
located at the Orthodontic Office, 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 Office, 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 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 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 Office.
If the PC desires to exercise its Call Option, the PC shall give
written notice of such election (the "Call Option Notice") 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 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(b)(i) of the Affiliation Agreement, plus (y) the value of
that number of shares of Omega Common Stock issued to ▇▇. ▇▇▇▇▇
under Section 1.1(b)(ii) of the Affiliation Agreement, such value
to be determined by multiplying such number of shares by the
average daily closing sales price per share of Omega's Common
Stock on the Nasdaq Small Cap Market for each business day
(Monday through Friday, not including legal holidays) of the
calendar week ending on the Friday 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 PC of the Call Option under Section 3, as the
case may be, shall be at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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 at such other location and on such other date as the
parties may mutually determine. At the Closing, the PC, at its
election, shall pay cash, or a combination of cash and return of
the shares of Omega Common Stock received by ▇▇. ▇▇▇▇▇ under
Section 1.1(b)(ii) of the Affiliation Agreement, such shares to
be valued as provided for in Section 3 hereof, pursuant to
exercise by the MSO of the Put Option or the PC of the Call
Option, as the case may be. The 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
PC's records, including patient records regarding records of
collections, expenses and disbursements as kept by the MSO in
performing its obligations under the Management Services
Agreement, and the MSO may copy any or all such records.
5. Successor Designation Option.
(a) Upon termination of the Management Services
Agreement by the MSO under Section 10.2 thereof or upon
expiration of the Term of the Management Services Agreement or
upon the happening of any of the following events (each of such
termination, expiration or event being hereinafter referred to as
a "Transfer Event"), the MSO shall have the option (the
"Successor Designation Option") to designate a 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 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 PC;
(iv) if ▇▇. ▇▇▇▇▇ acts in a criminal or grossly
negligent manner with respect to the performance of professional
orthodontic services rendered or to be rendered on behalf of the
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 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, attachment or interest 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 PC's or ▇▇. ▇▇▇▇▇'▇ ability to practice orthodontics.
(c) For purposes hereof, ▇▇. ▇▇▇▇▇ shall "Retire" on
the date when ▇▇. ▇▇▇▇▇ voluntarily withdraws from the practice
of orthodontics at whatever age or for whatever reason and
notifies the 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 and address and
including information showing the qualifications and suitability
of the Designated Successor to conduct or perform professional
services on behalf of the 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) through (xiii), inclusive, 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
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 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 any such assignee.
10. Purchase Price of the Capital Stock.
(a) The purchase price ("Purchase Price") due and
payable by the Designated Successor upon exercise of the
Successor Designation Option shall be an amount equal to the
product of (a) the aggregate net amount received by the 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 (5) 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 (5) equal annual
installments commencing six months after the closing date.
(c) Purchase From ▇▇. ▇▇▇▇▇'▇ Estate.
(i) Upon the death of ▇▇. ▇▇▇▇▇ and receipt 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 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 ("Closing"),
unless extended by the parties.
11. Insurance.
(a) In order to insure the MSO's interest in the
Management Services Agreement and under this Agreement, ▇▇. ▇▇▇▇▇
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 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 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 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 B 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 PC to, and the PC shall not,
during the term of this Agreement, issue any stock, other equity,
or debt of the PC; permit any change in the composition or
respective percentage ownership of the 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 Capital 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 14, 1998, among the PC, the
holder hereof and the MSO and OMEGA (as defined
therein). The PC will mail without charge to any
holder of these shares a copy of such agreement within
five (5) days of receipt by the 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 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 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
Agreement or negotiations 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: (i)
upon the expiration of six (6) months after the termination of
the Management Services Agreement; or (ii) upon 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 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 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 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
hereto, 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 PC or ▇▇. ▇▇▇▇▇:
▇▇▇▇▇▇ ▇▇▇▇▇, D.D.S.
▇▇▇▇▇▇ ▇▇▇▇▇, D.D.S., Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the MSO:
Azani Dental Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to 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 as 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 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.
(a) General.
(i) 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 (a)(ii)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.
(ii) 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.
(b) 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 PC, ▇▇. ▇▇▇▇▇, MSO and OMEGA have
executed this Agreement as of the date first above written by
their duly authorized representatives as set forth below.
"PC"
▇▇▇▇▇▇ ▇▇▇▇▇, D.D.S., INC.
a California professional corporation
By: ______________________________
▇▇▇▇▇▇ ▇▇▇▇▇, D.D.S., President
"▇▇. ▇▇▇▇▇"
__________________________________
▇▇▇▇▇▇ ▇▇▇▇▇, D.D.S.
"MSO"
AZANI DENTAL SERVICES, INC.
a Delaware corporation
By: ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
"OMEGA"
OMEGA ORTHODONTICS, INC.,
a Delaware corporation
By:_______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President and
Chief Executive Officer
SPOUSAL JOINDER AND CONSENT
I am the spouse of ▇▇▇▇▇▇ ▇▇▇▇▇, D.D.S. ("▇▇. ▇▇▇▇▇"), the
sole Stockholder of ▇▇▇▇▇▇ ▇▇▇▇▇, D.D.S., Inc. (the "PC"). 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, made effective as of January 14,
1998, by and among Azani Dental Services, Inc., a Delaware
corporation (the "MSO"), OMEGA Orthodontics, Inc., a Delaware
corporation ("OMEGA"), ▇▇. ▇▇▇▇▇ and the PC), 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 the Stock Put/Call Option and Successor
Designation 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 the Stock Put/Call
Option and Successor Designation Agreement.
Executed this 14th day of January, 1998.
Signature:
Printed or Typed Name:___________________________
EXHIBIT A
ORTHODONTIC OFFICES
[▇▇. ▇▇▇▇▇ Attach]
EXHIBIT B
STOCK
[▇▇. ▇▇▇▇▇ attach]
EXHIBIT C
NON-COMPETITION AGREEMENT
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
(5) 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 American Arbitration Association ("AAA"), with the assistance
of the AAA, unless the parties agree otherwise in finding a
mutually acceptable mediator.
5. The PC and the MSO shall each bear 50% of the fees and
costs of the mediator and any fees and costs of the 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 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 who are not parties 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 before a qualified sole
arbitrator in accordance with the then current Commercial
Arbitration Rules of the AAA. The arbitration shall be held in
Los Angeles, California. The sole arbitrator shall be agreed
upon by the parties within twenty (20) days after either party
elects to submit any issue to arbitration or, failing that, shall
be selected by the 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.