<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 22, 1996
Bio-Dental Technologies Corporation
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
1-10771 84-1104386
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Commission File Number (IRS Employer Identification No.)
11291 Sunrise Park Drive, Rancho Cordova, California 95742
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(Address of principal executive offices)
Registrant's telephone number, including area code (916) 638-8147
--------------
None
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(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2. Disposition of Assets
Assignment and Release of Rights under Exclusive License Agreement
On July 22, 1996, Bio Dental Technologies Corporation (the "Registrant")
disposed of its rights to receive royalty payments from Denticator
International, Inc. ("DII"), a former subsidiary of the Registrant, in exchange
for a $7.5 million cash payment. Prior to this transaction, the Registrant had
been receiving royalty payments from DII pursuant to an Exclusive License
Agreement, dated March 31, 1991 (the "License Agreement"), as amended by an
Extension and Modification of Exclusive License Agreement, dated April 1, 1994
(the "Modification"). The License Agreement and Modification are incorporated
herein by this reference.
On July 22, 1996, Young Innovations, Inc. ("Young") purchased substantially all
of the assets and assumed certain liabilities of DII. As part of the Young
acquisition, the Registrant transferred and conveyed to DII all of its future
royalty rights and interests under the License Agreement and Modification for a
lump sum payment of $7.5 million. Additionally, approximately $960,000 owed to
the Registrant by DII at the time of the closing for accrued royalties, notes
payable and accrued interest was converted to a "product credit" upon which the
Registrant and its affiliates can draw free product from Young and its
affiliates at a specified rate until depleted. The Registrant expects to utilize
the product credit during the next two years.
Approximately $1.3 million of the proceeds received by the Registrant was used
to prepay all of the outstanding principal and accrued and unpaid interest on
the term notes related to the Note and Warrant Purchase Agreement, dated March
29, 1996 (the "Note Agreement") among the Registrant, the State of Oregon
ZCG/PERS and the City of Stamford Fireman's Pension Fund. Approximately $2
million of the proceeds received by the Registrant was used to prepay all of the
outstanding principal and accrued and unpaid interest on the Line of Credit
Agreement, dated December 16, 1992, as amended, (the "Credit Agreement") and the
Commercial Loan Note, dated March 31, 1995, as amended, (the "Loan Note") , owed
by the Registrant to The Bank of California. The Note Agreement, the Credit
Agreement and the Loan Note are incorporated herein by this reference.
ITEM 7. Financial Statements and Exhibits
Except as otherwise indicated below, all exhibits listed below in the Exhibit
Index have previously been filed and are incorporated by this reference into
this Item 7 of Form 8-K. The exhibit marked with an asterisk (*) is attached to
this Form 8-K as an exhibit.
<PAGE> 3
EXHIBIT INDEX
10.5 Exclusive Licensing Agreement, dated March 31, 1991, by and
between the Registrant and Denticator International, Inc.,
incorporated by reference into this Item 7 by reference to
Item 7 of the Registrant's Form 8-K dated March 31, 1991.
10.16 Credit Agreement, dated December 16, 1992, by and between the
Registrant and The Bank of California, relating to a
$1,000,000 line of credit established for the Registrant at
The Bank of California, incorporated by reference into this
Item 7 by reference to Item 13 of the Registrant's Form 10-KSB
for the year ended March 31, 1993, filed by the Registrant on
June 28, 1993.
10.21 Extension and Modification of Exclusive License Agreement,
dated April 1, 1994, by and between the Registrant and
Denticator International, Inc., a California corporation,
incorporated by reference into this Item 7 by reference to
Item 13 of the Registrant's Form 10-KSB for the year ended
March 31, 1994, filed by the Registrant on July 12, 1994.
10.26 Commercial Loan Note, dated March 31, 1995, by and between the
Registrant and The Bank of California relating to a $1,000,000
note payable from the Registrant to The Bank of California,
incorporated by reference into this Item 7 by reference to
Item 13 of the Registrant's Form 10-KSB for the year ended
March 31, 1995, filed by the Registrant on July 13, 1995.
10.37 Note and Warrant Purchase Agreement among the Registrant, the
State of Oregon ZCG/PERS ("Oregon") and the City of Stamford
Fireman's Pension Fund ("Stamford") dated March 29, 1996, and
all related material thereto, relating to $1,250,000 Notes
Payable from the Registrant to Oregon and Stamford and the
issuance of common stock purchase warrants to Oregon and
Stamford, incorporated by reference into this Item 7 by
reference to Item 7 of the Registrant's Form 8-K dated March
29, 1996.
10.38* Asset Purchase Agreement, with Exhibits and Schedules thereto,
dated July 22, 1996, by and among the Registrant, Denticator
International, Inc., Jose L. Mendoza and Young Innovations,
Inc., for the purchase of certain assets and liabilities of
Denticator International, Inc. by Young Innovations, Inc. and
the Assignment and Release Agreement whereby the Registrant
transferred and conveyed to DII all of its rights and
interests under the Exclusive License Agreement, dated March
31, 1991, as amended by the Extension and Modification of
Exclusive License Agreement, dated April 1, 1994, by and
between the Registrant and Denticator International, Inc.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Bio-Dental Technologies Corporation
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(Registrant)
Date August 6, 1996
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(Signature)
Terry E. Bane, Chief Financial Officer
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<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Bio-Dental Technologies Corporation
---------------------------------------------
(Registrant)
Date August 6, 1996 /s/ Terry E. Bane
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(Signature)
Terry E. Bane, Chief Financial Officer
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<PAGE> 1
EXHIBIT 10.38
================================================================================
ASSET PURCHASE AGREEMENT
among
DENTICATOR INTERNATIONAL, INC.
BIO DENTAL TECHNOLOGIES CORP.
JOSE L. MENDOZA
and
YOUNG INNOVATIONS, INC.
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TABLE OF CONTENTS
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SUMMARY OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I-SALE OF ASSETS AND ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Assets Being Sold (the "Purchased Assets") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Furniture, Machinery and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(d) Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(e) Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(f) "Denticator" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) Governmental Licenses, Permits and Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(h) Accounts and Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(i) Deposits, Credits and Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(j) Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(k) Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(l) Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Uncompleted Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Accrued Employee Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Other Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(e) Amounts Owing to Bio Dental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.03 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.04 Absolute Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.05 Other Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.06 Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II-RELATED AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.01 Assignment and Release Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.02 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.03 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III-REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.01 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.02 Authorization, Compliance with Other Instruments and Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.03 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.04 Absence of Certain Changes and Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.05 Operation of the Business in the Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.06 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.07 Material Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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3.08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.09 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.10 Licenses, Permits and Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Title to Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.13 Employee Benefit Plans; Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.14 Litigation and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.15 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.16 Sufficiency of the Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.19 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.20 Real Property Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.21 Condition of Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.22 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.23 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV-REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.01 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.02 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V-THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.01 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.02 Instruments of Transfer, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.04 Intellectual Property Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.05 Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI-CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.01 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.02 Conditions to Obligations of Seller and Bio Dental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII-EMPLOYMENT WITH BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.01 Employment with Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.02 Accrued Vacation and Sick Pay Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.03 Workers' Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.04 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII-POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.01 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.02 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.03 Commissions and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.04 Sales, Transfer and Use Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.05 Nondisclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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8.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) By Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) By Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.07 Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.08 Set-Off of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.09 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.10 Maintenance of Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX-TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.01 Events of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.02 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE X-MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.01 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.02 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.03 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.04 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.05 Venue for Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.06 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.07 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) To Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) To Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.08 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.09 Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.12 Termination of Letter of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of July 22, 1996 among DENTICATOR
INTERNATIONAL, INC., a California corporation ("Seller"), BIO DENTAL
TECHNOLOGIES CORP., a California corporation ("Bio Dental"), JOSE L. MENDOZA
("Mendoza") and YOUNG INNOVATIONS, INC., a Missouri corporation ("Buyer").
SUMMARY OF TRANSACTION
Seller wishes to sell and Buyer wishes to purchase the business and
substantially all of the assets of Seller, subject to certain of the
liabilities of Seller.
To effect such transaction and in consideration of the mutual
covenants, representations, warranties and agreements hereinafter set forth,
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.01 Assets Being Sold (the "Purchased Assets"). Seller agrees to
sell and Buyer agrees to purchase, at the Closing (as defined in Section 5.01
hereof), all of Seller's assets as they shall exist on the Closing Date (as
defined in Section 5.01 hereof) including without limitation the following
assets:
(a) Real Property Leases. All of the right, title and
interest of Seller in, to and under the lease (the "Real Property
Lease") covering Seller's leased premises in Rancho Cordova,
California, all of which are listed in Schedule 1.01(a) hereto;
(b) Furniture, Machinery and Equipment. All the
furniture, machinery, spare parts, transportation vehicles, plant,
equipment (including, without limitation, molds), fixtures, leasehold
improvements and other fixed assets of Seller, substantially all of
which are listed in Schedule 1.01(b) hereto;
(c) Inventories. All inventories of Seller of any kind,
including, but not limited to, work-in-process, component parts,
finished goods, supplies and raw materials substantially all of which
as of March 31, 1996 are listed on Schedule 1.01(c) hereto; such
schedule updated to the Closing Date will be provided as soon as
practicable after Closing;
(d) Contracts and Commitments. Subject to the provisions
of Section 1.05 hereof, all of the right, title and interest of Seller
in, to and under all pending and executory contracts, agreements,
licenses, leases, commitments and understandings, whether oral or
written, of Seller, including, without limitation, those with respect
to (w) customer orders, (x) confidentiality and non-disclosure
agreements, including without limitation those with respect to
information relating to the business of Seller supplied to potential
purchasers of Seller, (y) the purchase of materials, supplies and
services, and
<PAGE> 6
(z) those Material Contracts as defined in Section 3.07, all of which
are listed in Schedule 1.01(d) hereto;
(e) Books and Records. All books and records material to
operating Seller, including all sales and credit records, advertising
and sales material, literature, customer lists, marketing information,
financial records, and personnel and payroll records of Seller;
(f) "Denticator". All rights to use the name
"Denticator" and any variations thereof;
(g) Governmental Licenses, Permits and Authorizations.
To the extent assignable, all governmental licenses, permits and
authorizations, if any, related to the business of Seller, a complete
list of which are set forth in Schedule 1.01(g) hereto;
(h) Accounts and Notes Receivable. All of Seller's
accounts receivable and notes receivable all of which as of March 31,
1996 are listed in Schedule 1.01(h) hereto (the "Purchased
Receivables"); such schedule updated to the Closing Date will be
provided as soon as practicable after Closing;
(i) Deposits, Credits and Prepaid Expenses. All of
Seller's deposits, credits, prepaid expenses and other current assets
as at the Closing Date, all of which are listed in Schedule 1.01(i)
hereto; such schedule updated to the Closing Date will be provided as
soon as practicable after closing;
(j) Intangible Assets. The business of Seller as a going
concern and the goodwill thereof and all intangible and intellectual
property used in connection with the business of Seller, including
without limitation, patents, trademarks, copyrighted works,
tradenames, software and customer information and lists substantially
all of which are listed in Schedule 1.01(j) hereto;
(k) Cash. Cash and cash equivalent items including,
without limitation, certificates of deposit, time deposits and
marketable securities; and
(l) Other Assets. All other assets, properties, rights
and businesses of every kind and nature owned or held by Seller or in
which Seller has an interest on the Closing Date which are used in or
related to the business of Seller, known or unknown, fixed or unfixed,
choate or inchoate, accrued, absolute, contingent or otherwise,
whether or not specifically referred to in this Agreement.
1.02 Assumed Liabilities. Buyer agrees to assume, perform and
discharge the following of Seller's liabilities (the "Assumed Liabilities"):
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(a) Accounts Payable. All of Seller's accounts payable
as at the Closing Date, all of which as of March 31, 1996 are listed
on Schedule 1.02(a) hereto; such schedule updated to the Closing Date
will be provided as soon as practicable after Closing;
(b) Uncompleted Contracts. All of Seller's obligations
with respect to the uncompleted contracts and commitments of Seller
being purchased as Purchased Assets;
(c) Accrued Employee Expenses. All of Seller's accrued
liabilities and expenses relating to compensation and benefit amounts
due to employees of Seller, all of which as of March 31, 1996 are
listed on Schedule 1.02(c) hereto; such schedule updated to the
Closing Date will be provided as soon as practicable after Closing;
(d) Other Accrued Expenses. In addition to (c) above,
all of Seller's other accrued liabilities and expenses on the books of
Seller as of the Closing Date, all of which as of March 31, 1996 are
listed on Schedule 1.02(d) hereto, and all of which have been recorded
on the books of Seller in conformity with generally accepted
accounting principles; such schedule updated to the Closing Date will
be provided as soon as practicable after Closing; and
(e) Amounts Owing to Bio Dental. All amounts owed by
Seller to Bio Dental, the full amount of which, as of March 31, 1996
is listed on Schedule 1.02(e) hereto; such schedule updated to the
Closing Date will be provided as soon as practicable after Closing.
Buyer shall not assume any liabilities or obligations of Seller except
those specifically identified as liabilities on Seller's balance sheet dated as
of the Closing Date and specifically assumed by Buyer pursuant to the
provisions of this Section 1.02, and Seller agrees to indemnify and hold
harmless Buyer with respect to any such non-assumed liabilities and obligations
in the manner provided in Section 8.06 hereof. In the event that, after
exhausting its indemnity rights against Seller, Buyer remains entitled to
indemnification for any such non-assumed liabilities or obligations, Bio
Dental and Mendoza agree to indemnify and hold harmless Buyer with respect to
any such non-assumed liabilities and obligations solely and to the limited
extent, and in the manner provided, in Section 8.08 hereof, provided, however,
that during the period in which Buyer is pursuing its indemnity rights against
Seller, Buyer shall be entitled to withhold, in amounts calculated pursuant to
Section 5.2 of the Assignment and Release Agreement (as defined below), all or
a portion of the Mendoza Payment and/or the Product Credit (as such terms are
defined in the Assignment and Release Agreement), in an amount equal to that
amount being sought from Seller pursuant to Buyer's indemnification rights,
until such rights against Seller have been exhausted.
1.03 Purchase Price. Buyer, in consideration for the purchase of
the Purchased Assets being sold pursuant to this Agreement, agrees to pay an
amount (the "Purchase Price") of $50,000, delivered to Seller at the Closing
(as defined in Section 5.01 hereof); and will assume the Assumed Liabilities.
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<PAGE> 8
1.04 Absolute Sale. Seller agrees that the sale, conveyance,
transfer and delivery of the Purchased Assets to Buyer shall be free and clear
of all title defects, liabilities, obligations, liens, encumbrances, charges
and claims of any kind, except any liabilities and obligations expressly
assumed by Buyer pursuant to Section 1.02 hereof.
1.05 Other Contracts. This Agreement shall not constitute an
agreement to assign or sublicense, as the case may be, any contracts, leases,
licenses, agreements, bids, quotations or arrangements (for purposes of this
Section 1.05 collectively called "contracts") if such attempted assignment or
sublicense, without the consent of the other party thereto, is not permitted as
a matter of law or in accordance with the terms of the contracts or would
constitute a breach of the contracts or would in any way impair the rights of
Seller or Buyer thereunder. Seller will use its best efforts to obtain, or
will assist Buyer to obtain, such consents as may be necessary or appropriate
to vest in Buyer all of Seller's right, title and interest in all such
contracts. If such consent is not obtained or if an assignment, attempted
assignment or sublicense is not so permitted or would be ineffective or would
impair Buyer's rights thereunder, Seller will cooperate with Buyer in any
reasonable arrangement designed to provide for Buyer the benefits under any
such contracts provided, however, that, except as disclosed on Schedule 1.05,
Seller will obtain consents to the assignment or sublicense of the contracts
listed in Schedule 1.01(d) hereto (including those necessary for Buyer's
continued operation of the computer system and software used by Seller) on or
prior to the Closing Date.
1.06 Bulk Sales Laws. Seller and Buyer hereby waive compliance
with the provisions of any applicable bulk sales law; provided, however, that
Seller agrees to pay and discharge when due or to contest or litigate all
claims of creditors which are asserted against Buyer or the Purchased Assets by
reason of such noncompliance (other than with respect to the Assumed
Liabilities), to indemnify, defend and hold harmless Buyer from and against any
and all such claims in the manner provided in Section 8.07 hereof, and to take
promptly all necessary action to remove any lien or encumbrance which is placed
on the Purchased Assets by reason of such noncompliance.
ARTICLE II
RELATED AGREEMENTS
Simultaneously with the Closing hereunder the following agreements
(the "Related Agreements") shall have been executed and delivered:
2.01 Assignment and Release Agreement. An agreement (the
"Assignment and Release Agreement") between Buyer and Bio Dental in the form of
Exhibit A attached hereto pursuant to which Bio Dental will sell and convey to
Buyer all of Bio Dental's rights and interests under all of its agreements with
Seller, including, but not limited to, the Exclusive License Agreement dated
March 31, 1991, as extended and amended on April 1, 1994 and as further amended
on January 19, 1996, and will release Seller and Buyer from any claims or
liabilities to Bio Dental under any of such agreements or otherwise, and Buyer
shall pay Bio Dental cash in the
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<PAGE> 9
approximate amount of $7.5 million and give Bio Dental certain credits for
future purchases of products from Buyer or its affiliates.
2.02 Employment Agreement. The Employment Agreement (the
"Employment Agreement") between Buyer and Jose L. Mendoza in the form of
Exhibit B attached hereto.
2.03 Escrow Agreement. The Escrow Agreement among Buyer, Bio
Dental and The Union Bank of California (the "Escrow Agent") in the form of
Exhibit C attached hereto pursuant to the terms of which Buyer will deposit at
Closing with the Escrow Agent cash in the amount of $100,000. The Escrow
Agreement will have a term of three (3) years, Bio Dental will be entitled to
all earnings on funds deposited under the Escrow Agreement, and the sole
purpose of the Escrow Agreement will be to provide a fund against which Buyer
may assert claims for indemnification under Article VIII hereof for breach of
Seller's Representations and Warranties contained in Section 3.22 hereof, and
any Losses (as defined in Section 8.06 hereof) which arise out of the matters
discussed in the letter of the Environmental Protection Agency to Seller dated
January 11, 1996 (the "EPA Letter").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to, and covenants with, Buyer that:
3.01 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and has the corporate power and authority to own and operate its
properties and assets (including the Purchased Assets) and to conduct its
business as it is now being conducted. Seller is duly qualified to do business
and in good standing in each jurisdiction where the nature of its business done
in such jurisdiction requires qualification; a schedule of such jurisdictions
is set forth on Schedule 3.01 hereto.
3.02 Authorization, Compliance with Other Instruments and Law.
Seller has full corporate power and authority to enter into this Agreement, the
Related Agreements and the other agreements and documents to be executed and
delivered by it at Closing as contemplated hereby (collectively, the "Closing
Documents"), to consummate the transactions contemplated hereby and thereby and
to perform its obligations hereunder and thereunder. The execution, delivery
and performance of this Agreement and the Closing Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller, and is a valid and
binding obligation of Seller enforceable in accordance with its terms and the
Closing Documents will, when executed and delivered by Seller at Closing,
constitute valid and binding obligations of Seller enforceable against Seller
in accordance with their terms. The execution, delivery and performance of
this Agreement and the Closing Documents will not (i) conflict with or result
in a breach or violation of any provision of the Certificate of
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<PAGE> 10
Incorporation or By-Laws of Seller or of any order, writ, injunction, judgment,
decree, law, statute, rule or regulation to which Seller is a party or by which
Seller or the Purchased Assets may be bound or affected; or (ii) result in a
default (or give rise to any right of termination, cancellation or
acceleration) or result in the creation of any lien, encumbrance, security
agreement, charge, pledge, equity or other claim or right of any person in or
to the Purchased Assets under the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or obligation
to which Seller is a party or by which Seller or the Purchased Assets may be
bound. All necessary authorizations of the transactions contemplated by this
Agreement required to be obtained by Seller from any Federal, state, local or
foreign government or agency shall have been obtained prior to the Closing, and
any filings, notifications or disclosures required by law or regulation of any
such government or agency shall have been made in such form as is acceptable as
filed. Buyer shall cooperate with Seller with respect to the aforesaid
filings, notifications or disclosures to the extent necessary to obtain said
authorizations. Seller will deliver to Buyer at the Closing true and complete
copies of all resolutions of its shareholders and board of directors by which
the execution, delivery and performance of this Agreement and the Closing
Documents and the consummation of the transactions contemplated hereby and
thereby were authorized, certified by the Secretary or Assistant Secretary of
Seller as of the Closing Date. Seller shall also deliver evidence satisfactory
to Buyer that any security interest or lien in any of the Purchased Assets has
been released on or prior to the Closing.
3.03 Financial Statements. Seller has previously furnished to
Buyer true and correct copies of (i) Seller's audited balance sheet as of March
31, 1996 attached hereto as Exhibit D; and (ii) the audited statement of
operations of Seller for the year ended March 31, 1996 attached hereto as
Exhibit E (collectively, the "Financial Statements"). The balance sheet
included in the Financial Statements presents fairly the financial position of
Seller as of the date thereof, and the related statements of operations
included in the Financial Statements present fairly the results of operations
of Seller for the periods covered thereby, and the Financial Statements were
prepared in conformity with generally accepted accounting principles.
3.04 Absence of Certain Changes and Events. Except as otherwise
contemplated by this Agreement, between the date of the Financial Statements
and the Closing:
(a) the business of Seller has been conducted only in the
ordinary course and substantially in the manner that such business was
heretofore conducted, and there has not been, except in the ordinary
course and consistent with past practice:
(i) any purchase or other acquisition of
property, any sale, lease or other disposition of property, or
any expenditure in excess of $10,000 in the aggregate not
disclosed on Schedule 3.04;
(ii) any incurrence of liability in excess of
$10,000 not disclosed on Schedule 3.04;
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<PAGE> 11
(iii) any encumbrance or consent to encumbrance of
any property or assets not disclosed on Schedule 3.04;
(b) Seller has not entered into any agreement or
transaction which, based upon the good faith application of its best
business knowledge and experience, has resulted or will result in a
transfer of assets for other than full and fair consideration;
(c) there has not been any undisclosed change in the
condition (financial or otherwise), assets, liabilities, business,
results of operations, licenses, permits, franchises or affairs of
Seller which has or is likely to have a material adverse effect on the
business, financial condition or results of operations of Seller;
(d) there has not been damage, destruction or casualty
loss materially and adversely affecting the business, results of
operations or financial condition of Seller;
(e) there has not been (i) any increase in the rate or
terms of compensation payable or to become payable by Seller to its
directors, officers, key employees or commission sales personnel,
except increases occurring in the ordinary course of business in
accordance with its customary practices, (ii) any increase in the rate
or terms of any bonus, insurance, pension or other employee benefit
plan, payment or arrangement made to, for or with any such directors,
officers, key employees or commission sales personnel, except
increases occurring in the ordinary course of business in accordance
with its customary practices, or (iii) any entering by Seller into any
new employment agreement or any modification of the terms of any
existing employment agreement;
(f) there has not been any entry into any agreement,
commitment or transaction (including, without limitation, any
borrowing, capital lease, capital expenditure or capital financing) by
Seller except in the ordinary course of business and consistent with
the practices of Seller in the last fiscal year and except as
otherwise disclosed on Schedule 3.04;
(g) there has not been and will not have been any change
by Seller in accounting methods, principles or practices;
(h) to the best of Seller's knowledge, there has not been
and will not have been any threatened occurrence or development
relating to the business, operations, financial condition or affairs
of Seller which would materially and adversely affect the business,
operations, financial condition or affairs of Seller.
3.05 Operation of the Business in the Ordinary Course. Since the
close of business on the date of the Financial Statements, Seller's business
has been operated, and, as of the Closing Date will have been operated, in the
ordinary course, except to the extent that Buyer has otherwise agreed, or may
prior to the Closing Date otherwise agree, in writing or as is expressly
contemplated by this Agreement. From the date hereof until the Closing, Seller
shall continue
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<PAGE> 12
to use its best efforts to preserve the goodwill of Seller's business and its
relationships with employees, customers and suppliers.
3.06 Tax Matters. There is no tax obligation of Seller which
constitutes, or may in the future constitute, a lien on the Purchased Assets,
and, if any such lien exists or arises, it will be promptly discharged by
Seller.
3.07 Material Contracts and Commitments. The Schedule hereto
entitled "Schedule 1.01(d) - Material Contracts and Commitments" constitutes a
full and complete list, as of the date hereof, of all written and oral
contracts and commitments of Seller involving aggregate obligations of Seller
in excess of $10,000 per contract or which have a remaining term, as of the
date hereof, of over six months in length of obligation on the part of Seller
("Material Contracts"). Except as indicated on Schedule 1.01(d), Seller is not
in breach or violation of, or in default under, any of the Material Contracts;
the execution of this Agreement and the consummation of the transactions
contemplated hereby will not constitute a default or breach under any of the
Material Contracts; and, except as specifically indicated in Schedule 1.01(d),
the execution of this Agreement and the consummation of the transactions
contemplated hereby will not give rise to any consent requirement under any of
the Material Contracts. All of the contracts listed on Schedule 1.01(d) are in
full force and effect and have not been modified or amended in any respect,
except as set forth on Schedule 1.01(d).
3.08 [LEFT INTENTIONALLY BLANK]
3.09 Customers. Attached as Schedule 3.09 is a list of the
customers of Seller as of the Closing Date together with a list of sales volume
to such customers during the twelve months ended March 31, 1996. Also
indicated in Schedule 3.09 are those customers with which Seller has entered
into written or oral agreements with respect to future purchases.
3.10 Licenses, Permits and Authorizations. Seller has obtained,
and will as of the Closing continue to have, all approvals, authorizations,
consents, licenses, franchises, orders, certificates and other permits of, and
has made and will have made as of the Closing all filings with, any
governmental authority, whether foreign, Federal, state or local, which are
required for the ownership of the Purchased Assets or the conduct of Seller's
business as presently conducted. A complete list of all such approvals,
authorizations, consents, licenses, franchises, orders, certificates, permits
and filings is included in Schedule 3.10 hereto.
3.11 Title to Purchased Assets. Seller has good and marketable
legal title to the Purchased Assets and shall at the Closing deliver to Buyer
good and marketable legal title to the Purchased Assets free and clear of all
title defects, liabilities, obligations, liens, mortgages, security interests,
encumbrances, claims or similar adverse interests of any kind or character
except (i) any Assumed Liabilities expressly assumed by Buyer pursuant to this
Agreement, and (ii) the title exceptions listed in Schedule 3.11 hereto. All
leases pursuant to which Seller leases any of the Purchased Assets are valid
and binding in accordance with their respective terms and there are no defaults
thereunder.
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3.12 Proprietary Rights. Seller is not, by virtue of the conduct
of Seller's business, infringing upon or making an unauthorized use of any
proprietary right or intellectual property right of any third party.
3.13 Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Schedule 3.13 hereto, the
Seller does not maintain, administer or otherwise contribute to any
"employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether
or not such plan is subject to any of the provisions of ERISA, which
covers any employee or beneficiary of any employee, whether active or
retired, of Seller (any such plan being herein referred to as an
"Employee Plan"). Except as set forth in Schedule 3.13hereto, none of
such Employee Plans is intended to be qualified under Section 401 of
the Internal Revenue Code of 1986, as from time to time amended (the
"Code"). The Seller has no commitment to create any additional
Employee Plans and Seller has no legal obligation to continue any
existing Employee Plan, except for continuation coverage under ERISA
sections 601 through 609.
(b) True and complete copies of each Employee Plan,
including all amendments thereto and related trust or other funding
agreements have been heretofore delivered to Buyer, together with a
copy of the most recent summary plan description and summary of
material modifications of each such plan.
(c) Except as set forth in Schedule 3.13, with respect to
the business of Seller (i) the Seller is in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and
is not engaged in any unfair labor practice; (ii) there is no unfair
labor practice complaint against the Seller pending before the
National Labor Relations Board or any other tribunal; (iii) there is
no labor strike, dispute, slowdown or stoppage actually pending or, to
the best of the Seller's knowledge, threatened against or affecting
the Seller; (iv) the Seller's employees are not represented by any
union or other collective bargaining unit and the Seller has received
no notice that any representation or petition respecting the employees
of Seller has been filed with the National Labor Relations Board; (v)
no grievance or any arbitration proceeding arising out of or under any
collective bargaining agreements is pending against Seller; and (vi)
the Seller has not experienced any strike or work stoppage or other
industrial dispute involving Seller's employees in the past five
years; and (vii) there are no pending notices or assertions of any
claim for monetary damages or injunctive relief by an employee, former
employee or other person for age, sex, disability or race
discrimination, worker's compensation, unemployment, breach of
contract or other employment related matters.
(d) Seller has complied in all respects with the
requirements of the Immigration Reform and Control Act of 1986, as
amended ("IRCA"), and in connection therewith has received complete
I-9 Forms from all of its current and former employees
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covered by IRCA. The Company has not knowingly hired, recruited or
referred for a fee, or continued employment of any alien who does not
have work authorization required by IRCA.
3.14 Litigation and Other Claims. Except as described in Schedule
3.14, there are no actions, suits, arbitration proceedings, claims or
proceedings related to the business or assets of Seller pending or, to the
knowledge of Seller, threatened before any foreign, Federal, state, municipal
or other court, department, commission, arbitration panel, board, bureau,
agency, body or instrumentality against Seller or affecting the Purchased
Assets at law or in equity. Seller is not a party to or subject to the
provisions of any order, writ, injunction, decree or judgment of any court or
foreign, Federal, state, municipal or other governmental or administrative
body, department, commission, board, bureau, any securities exchange or other
agency or instrumentality in connection with the ongoing operations of Seller
except as set forth in Schedule 3.14. Seller is not engaged in any arbitration
nor has submitted any disputed matter to an arbitrator in connection with the
ongoing operations of Seller except as set forth in Schedule 3.14.
3.15 No Adverse Change. Since the close of business on the date of
the Financial Statements, and except as described in the Schedules delivered
herewith, there has been no material adverse change in the financial condition,
results of operations, business or prospects of Seller.
3.16 Sufficiency of the Purchased Assets. Except as described in
Schedule 3.16, the Purchased Assets, all of which are located at Seller's
facility in Rancho Cordova, California, are sufficient to operate Seller's
business as currently operated. Neither Seller nor any of Seller's officers,
directors or affiliates is a party to any contract which is necessary in any
material respect to Seller's business other than contracts which will be
assigned to Buyer at the Closing which contracts are listed in Schedule 1.01(d)
hereto.
3.17 Compliance with Laws. Neither the Purchased Assets nor the
operations of Seller's business, as conducted at the date hereof and as will be
conducted through the Closing, violate any foreign, Federal, state or local
law, ordinance, rule or regulation.
3.18 Insurance. Seller maintains, and through the Closing will
maintain, adequate insurance insuring the Purchased Assets and the operations
of Seller's business and will maintain, through the Closing Date, general
liability coverage insuring against claims of third parties attributable to
acts of Seller Employees (as defined in Section 7.01) and for product liability
coverage. Valuations of Seller's properties for such insurance purposes are
set forth in Schedule 3.18 hereto; such policies are in full force and effect,
all premiums with respect thereto covering all periods up to and including the
Closing have been paid, and no notice of cancellation or termination has been
received with respect to any such policy which has not been replaced on
substantially similar terms prior to the date of such cancellation or
termination. The insurance policies to which the Seller is a party are
sufficient for compliance with all requirements of applicable laws and all
agreements to which Seller is a party or by which Seller
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is bound. In the three years preceding the date of this Agreement, Seller has
not been refused any insurance with respect to the Purchased Assets or the
operations of Seller or had its coverage limited by any insurance carrier to
which it has applied for any such insurance or with which it has carried
insurance.
3.19 Accounts Receivable. All accounts receivable included in the
Purchased Assets will be collected in full by Buyer net of any applicable
reserves for doubtful accounts and for allowance for trade discounts included
in the books of Seller as of the Closing Date, which reserves will be
established on the same basis and with the same assumptions as reserves for
doubtful accounts reflected on the Financial Statements were established.
Buyer will use reasonable diligence to collect the accounts receivable.
3.20 Real Property Leases. The Real Property Leases are valid and
binding upon the lessors and are in full force and effect. There are no
existing defaults by Seller under the Real Property Leases and no event has
occurred which (whether with or without notice, lapse of time, or both) would
constitute a default thereunder by Seller. Seller has delivered to Buyer a
true and complete copy of the Real Property Leases.
3.21 Condition of Purchased Assets. The Purchased Assets are
suited for the uses intended, and are in conformity with all applicable laws,
ordinances, rules and regulations. Equipment included in the Purchased Assets
is in good working order, normal wear and tear excepted.
3.22 Environmental Matters.
(a) Except as set forth in Schedule 3.22 hereto, (i)
Seller is in compliance with all environmental laws, regulations,
permits and orders applicable to it at the time of Closing, and with
all laws, regulations, permits and orders governing or relating to
asbestos removal and abatement; (ii) Seller has not transported,
stored, treated or disposed, or allowed or arranged for any third
parties to transport, store, treat or dispose, of any Hazardous
Substances or other waste to or at any location other than a site
lawfully permitted to receive such Hazardous Substances or other waste
for such purposes, or had performed, arranged for or allowed by any
method or procedure such transportation, storage, treatment or
disposal in contravention of any laws or regulations, nor has Seller
disposed, or allowed or arranged for any third parties to dispose,
Hazardous Substances or other waste upon the real property owned or
leased by Seller; (iii) there has not occurred, nor is there presently
occurring, a Release of any Hazardous Substance on, into or beneath
the surface of any parcel of real property owned or leased by Seller;
(iv) Seller has not transported or disposed, or allowed or arranged
for any third parties to transport or dispose, any Hazardous Substance
or other waste to or at a site which, pursuant to the U.S.
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA") or any similar law, (A) has been placed
on the National Priorities List or its state equivalent, or (B) the
Environmental Protection Agency or the relevant state agency has
proposed or is
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proposing to place on the National Priorities List or its state
equivalent; (v) Seller has not received notice, and has no knowledge
of any facts which could give rise to any notice, that Seller is a
potentially responsible party for a Federal or state environmental
cleanup site or for corrective action under CERCLA or any other
applicable law or regulation or notice of any other Environmental
Claim; (vi) Seller has not received any written or oral request for
information in connection with any Federal or state environmental
cleanup site and has not undertaken (or been requested to undertake)
any response or remedial actions or cleanup actions of any kind at the
request of any Federal, state or local governmental entity, or at the
request of any other person or entity; (vii) there are no laws,
regulations, ordinances, licenses, permits or orders relating to
environmental or worker safety matters requiring, as of the date of
this Agreement, any work, repairs, construction or capital
expenditures with respect to the assets or properties of Seller; and
(viii) Schedule 3.22 identifies (w) all environmental audits,
assessments or occupational health studies undertaken by Seller or its
agents or by any governmental agencies with respect to the operations
or properties of Seller; (x) the results of any ground water, soil,
air or asbestos monitoring undertaken with respect to any real
property owned or leased by Seller; (y) all written communications of
Seller with environmental agencies; and (z) all citations issued with
respect to Seller under the Occupational Safety and Health Act (29
U.S.C. Sections 651 et seq.).
(b) For the purposes of this Agreement, "Environmental
Claim" shall mean any demand, claim, governmental notice or threat of
litigation or the actual institution of any action, suit or proceeding
at any time by a person which asserts that an Environmental Condition
constitutes a violation of or otherwise gives rise to a legally
mandated liability or obligation under, any statute, ordinance,
regulation, or other governmental requirement or the common law,
including, without limitation, any such statute, ordinance,
regulation, or other governmental requirement relating to the
emission, discharge, or release of any Hazardous Substance into the
environment or the generation, treatment, storage, transportation, or
disposal of any Hazardous Substance. "Environmental Condition" shall
mean the presence on the Closing Date, whether discovered or
undiscovered on the Closing Date, in surface water, ground water,
drinking water supply, land surface, subsurface strata or ambient air
of any pollutant, contaminant, industrial solid waste or Hazardous
Substance arising out of or otherwise related to the operations or
other activities of Seller, or of any predecessor in interest or line
of business to Seller, conducted or undertaken prior to the Closing
Date. "Hazardous Substance" shall mean any substance defined in the
manner set forth in Section 101(14) of the U.S. Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, and shall include any additional substances designated under
Section 102(a) thereof. "Release" shall mean releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment.
3.23 Full Disclosure. All information furnished to Buyer in
accordance herewith is, and as of the Closing shall be, correct and complete in
all respects. No representation or
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warranty of Seller and no information, Schedule or certificate furnished or to
be furnished by or on behalf of Seller to Buyer, its affiliates or its agents
pursuant to or in connection with this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statement contained herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to, and covenants with, Seller
that:
4.01 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri.
4.02 Due Authorization. The execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action on the part of
Buyer. This Agreement has been duly executed and delivered by Buyer, and is a
valid and binding obligation of Buyer enforceable against Buyer in accordance
with its terms. The execution, delivery and performance of this Agreement will
not result in a violation of any provision of the Articles of Incorporation or
By-Laws of Buyer, or of any material contract by which it is bound, or of any
judgment or decree to which it is a party or by which it is bound. All
necessary authorizations of the transactions contemplated by this Agreement
required to be obtained by Buyer from any Federal, state, local or foreign
government or agency shall have been obtained prior to the Closing, and any
filings, notifications or disclosures required by law or regulations of such
government or agency shall have been made in such form as is acceptable as
filed. Seller shall cooperate with Buyer with respect to the aforesaid
filings, notifications or disclosures to the extent necessary to obtain said
authorizations. Buyer will deliver to Seller at the Closing true and complete
copies of all resolutions of its board of directors by which the execution,
delivery and performance of this Agreement and consummation of the transactions
contemplated hereby were authorized, certified by the Secretary or Assistant
Secretary of Buyer.
ARTICLE V
THE CLOSING
5.01 Time and Place of Closing. Upon the terms and subject to the
satisfaction or waiver of the conditions in this Agreement, the Closing of the
transactions contemplated hereby (the "Closing") shall take place on July 22,
1996 (the "Closing Date") at the offices of Armstrong, Teasdale, Schlafly &
Davis in St. Louis, Missouri or at such other time and place as the parties
hereto may agree in writing.
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5.02 Instruments of Transfer, Etc. At the Closing, Seller will
deliver to Buyer such deeds, bills of sale, instruments of assignment and other
good and sufficient instruments of transfer, executed by Seller or its
affiliates and in a form reasonably satisfactory to Buyer, as Buyer may
reasonably require to vest in Buyer all right, title and interest of Seller in
and to the Purchased Assets, and Buyer shall pay to Seller the amount, and
deliver to Seller the instruments, required of it at the Closing.
Seller shall deliver to Buyer at the Closing possession of the
Purchased Assets being sold pursuant to this Agreement and the entire right,
title and interest of Seller in and to such Purchased Assets shall pass to
Buyer at the Closing effective as of the Closing Date.
5.03 Opinions of Counsel.
(a) At the Closing, Seller and Bio Dental shall receive
an opinion or opinions from Armstrong, Teasdale, Schlafly & Davis,
Buyer's Counsel, dated the Closing Date and satisfactory in form and
substance to Seller and its counsel, to the effect that:
(i) Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Missouri;
(ii) Buyer has the corporate power and authority
to execute and deliver this Agreement and the Related
Agreements to which it is to be a party and to consummate the
transactions contemplated hereby and thereby, and the
execution and delivery of this Agreement and the Related
Agreements to which Buyer is to be a party and the
consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by requisite
corporate action taken on the part of Buyer and no other
corporate proceedings on the part of Buyer are necessary to
authorize this Agreement or the Related Agreements to which
Buyer is to be a party or to consummate the transactions
contemplated hereby and thereby; and
(iii) this Agreement and the Related Agreements to
which Buyer is to be a party have been duly and validly
executed and delivered by Buyer and, assuming this Agreement
and the Related Agreements to which Buyer is to be a party are
valid and binding obligations of the other parties thereto,
are valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of
equity (regardless of whether such enforcement is considered
in a proceeding in equity or at law).
(b) At the Closing, Buyer shall receive an opinion or
opinions from Gene N. Windham, counsel to Seller, dated the Closing
Date and satisfactory in form and substance to Buyer and its counsel,
to the effect that:
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(i) Seller is a corporation duly organized,
validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and
authority to own, lease and operate its properties and to
carry on its business as now being conducted and is duly
qualified to do business and in good standing in each
jurisdiction where the nature of its business conducted in
such jurisdiction requires such qualification;
(ii) This Agreement and the Related Agreements to
which it is to be a party have been duly and validly executed
and delivered by Seller and, assuming the Agreement and the
Related Agreements to which Seller is to be a party are valid
and binding obligations of the other parties thereto, are
valid and binding obligations of Seller, enforceable against
Seller in accordance with their terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of
equity (regardless of whether such enforcement is considered
in a proceeding in equity or at law);
(iii) Except for those approvals and consents which
have already been obtained, neither execution and delivery by
Seller of this Agreement and the Related Agreements to which
it is to be a party, the sale by Seller of the Purchased
Assets pursuant to this Agreement nor the consummation of the
other transactions contemplated by this Agreement and the
Related Agreements to which Seller is to be a party will (A)
conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-Laws (or other similar
governing documents) of the Seller, (B) require any consent,
approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority
other than those which have been made or obtained; (C) to the
best of such counsel's knowledge after reasonable
investigation, constitute a default (or give rise to any right
of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or
obligation to which Seller is a party or by which Seller or
any of its assets may be bound, except for such defaults (or
rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained; (D) to
the best of such counsel's knowledge after reasonable
investigation, result in the creation of any encumbrance,
security interest, equity or right of others upon any of the
properties or assets of Seller under any of the terms,
conditions or provisions of any agreement, instrument or
obligation to which Seller or its assets may be bound or
affected; or (E) violate any order, writ, injunction, judgment
or decree known to such counsel, to which Seller is a party,
or by which any of its assets are bound or any law, statute,
rule or regulation applicable to Seller or any of its assets;
and
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(iv) The instruments of transfer contemplated by
this Agreement, are in proper form to transfer to Buyer, all
of Seller's interest in the Purchased Assets, free and clear,
to the best of such counsel's knowledge after reasonable
investigation, of any liens, encumbrances, equities and claims
of whatever nature, except (i) those created by Buyer and (ii)
those, if any, created by failure to comply with the
California Bulk Transfer Laws.
(c) At the Closing, Buyer shall receive an opinion or
opinions from Tomlinson, Zisko, Morosoli & Maser, L.L.P., counsel to
Bio Dental, dated the Closing Date and satisfactory in form and
substance to Buyer and its counsel, to the effect that:
This Agreement, the Assignment and Release Agreement and the Escrow
Agreement have been duly and validly executed and delivered by Bio Dental and,
assuming such Agreements are valid and binding obligations of the other parties
thereto, are valid and binding obligations of Bio Dental, enforceable against
Bio Dental in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
5.04 Intellectual Property Assignments. At the Closing, Seller
shall deliver, or cause to be delivered, to Buyer, the assignment and transfers
of intellectual property referred to in Section 6.01(h).
5.05 Other Documents. At the Closing, each such party shall
deliver to the other parties such certificates of officers, governmental
Certificates of Good Standing, certified copies of By-laws, Articles of
Incorporation and minutes of proceedings, and such assumptions of liabilities
and other documents as shall reasonably be requested by another party hereto.
ARTICLE VI
CONDITIONS TO CLOSING
6.01 Conditions to Obligations of Buyer. The obligations of Buyer
under this Agreement to consummate the purchase of the Purchased Assets shall
be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions, any of which may be waived at the option of Buyer:
(a) There shall have been no material breach by Seller or
Bio Dental in the performance of its respective covenants herein.
(b) The representations and warranties of Seller
contained or referred to in this Agreement shall be true and correct
in all material respects on the Closing Date as if
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made anew as of the Closing Date (except for changes contemplated or
permitted by this Agreement).
(c) There shall have been delivered to Buyer certificates
in form reasonably satisfactory to Buyer and its counsel signed by the
Chief Executive Officer of Seller to the effect that Seller has
performed all of its covenants under this Agreement, and that all of
the representations and warranties of Seller made herein are true as
of the Closing Date.
(d) There shall not have been issued and be in effect any
injunction, order or decree from any governmental body, agency or
official authority restraining or prohibiting consummation of the
transactions contemplated by this Agreement, nor shall there have
occurred any event, development or circumstance after the date hereof
and prior to the Closing which materially and adversely affects the
business, operations or properties of Seller, including, without
limitation, any lawsuit, governmental proceeding or investigation
filed or commenced against any of the parties hereto seeking to
restrain, enjoin or modify the transactions contemplated hereby or in
which sanctions or penalties are threatened.
(e) All corporate action or other action necessary to
authorize the execution, delivery and performance of this Agreement by
Seller and the consummation of the transactions contemplated hereby
shall have been duly and validly taken, and certified copies of all
Board of Directors and stockholders resolutions authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall be delivered to Buyer.
(f) Buyer shall have received, or shall have satisfied
itself that it will receive, all consents, waivers or approvals
necessary to insure that the purchase contemplated hereby will not
give rise to a claim of default under, or any event which, with notice
or the passage of time, or both, could give rise to a material default
under, or would excuse performance by any party under, any agreement,
contract or commitment listed in Schedule 1.01(d).
(g) Buyer shall have satisfactorily completed its due
diligence investigation of Seller.
(h) Buyer shall have received from Seller, Bio Dental and
Mendoza assignments, in form satisfactory to Buyer, of all patents and
trademarks owned or used by Seller in its business.
(i) All deliveries required to be made by Seller and Bio
Dental pursuant to Article V shall have been made, and all of the
Related Agreements shall have been executed and delivered by all
parties thereto other than Buyer.
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6.02 Conditions to Obligations of Seller and Bio Dental. The
obligations of Seller and Bio Dental under this Agreement shall be subject to
fulfillment on or prior to the Closing Date of the following conditions, any of
which may be waived at the option of Seller:
(a) There shall have been no material breach by Buyer in
the performance of any of its covenants herein.
(b) The representations and warranties of Buyer contained
or referred to in this Agreement shall be true and correct in all
material respects on the Closing Date as if made anew as of the
Closing Date (except for changes contemplated or permitted by this
Agreement and representations and warranties made as of a specified
date which shall be true and correct in all material respects as of
such date).
(c) There shall have been delivered to Seller a
certificate signed by a duly authorized executive officer of Buyer to
the effect that Buyer has performed all of its covenants under this
Agreement, and that all of the representations and warranties of Buyer
made herein are true as of the Closing Date.
(d) There shall not have been issued and be in effect any
injunction or order or decree from any governmental body, agency,
official or authority restraining or prohibiting consummation of the
transactions contemplated by this Agreement.
(e) All corporate action or other action necessary to
authorize the execution, delivery and performance of this Agreement by
Buyer and the consummation of the transactions contemplated hereby
shall have been duly and validly taken, and certified copies of all
Board of Directors resolutions authorizing the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby shall be delivered to Seller.
(f) All deliveries required to be made by Buyer pursuant
to Article V shall have been made, and all of the Related Agreements
shall have been executed and delivered by all parties thereto other
than Seller.
(g) Bio Dental shall have been released from its guaranty
of Seller's obligations under the Real Property Lease.
(h) Seller shall have delivered to Bio Dental its written
agreement, and such documentation as Bio Dental shall reasonably
require, canceling all options to purchase shares of capital stock of
Bio Dental held by Seller.
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ARTICLE VII
EMPLOYMENT WITH BUYER
7.01 Employment with Buyer. Prior to or at Closing, Buyer shall
offer employment on the same terms and with the same salaries, wages and
benefits as currently in effect with Seller to those persons who are employed
by Seller on the Closing Date ("Seller Employees") who are selected by Buyer in
consultation with Mendoza. Schedule 7.01 contains a list of all Seller
Employees as of March 31, 1996. (Those employees of the Seller who accept
employment with the Buyer pursuant to this Agreement are hereinafter referred
to as the "Transferred Employees".)
7.02 Accrued Vacation and Sick Pay Liability. The Buyer shall
assume the Seller's accrued liability to Transferred Employees under the
Seller's vacation and sick pay policies as of the Closing Date.
7.03 Workers' Compensation. The Seller will retain responsibility
for all workers' compensation claims of employees of Seller other than
Transferred Employees and will retain responsibility for workers' compensation
claims of Transferred Employees pending as of the Closing Date or arising as a
result of events occurring or conditions caused on or prior to the Closing
Date. The Buyer shall be responsible for all workers' compensation claims made
by Transferred Employees after the Closing Date and arising as a result of
events occurring or conditions caused after the Closing Date.
7.04 Third Parties. The covenants of the Buyer and the Seller in
this Article VII are not intended to create any right in any Transferred
Employee or his or her heirs, executors, beneficiaries or personal
representatives.
ARTICLE VIII
POST-CLOSING COVENANTS
8.01 Expenses. Except as otherwise provided herein, Seller and
Buyer shall each bear their own costs and expenses incurred in connection with
this Agreement, the Related Agreements and the transactions contemplated hereby
and thereby. Buyer shall be responsible for fees, commissions, expenses and
reimbursements incurred by or required to be paid to its professional advisors
and Seller shall be responsible for the fees, commissions, expenses and
reimbursements incurred by or required to be paid to such Seller's professional
advisors.
8.02 Further Assurances. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its best efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the sale of the Purchased Assets and the other
transactions contemplated by this Agreement and the Related Agreements. From
time to time
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after the date hereof (including after the Closing Date if requested), Seller
and its affiliates will, at their own expense and without further
consideration, execute and deliver such documents to Buyer as Buyer may
reasonably request in order more effectively to vest in Buyer good title to the
Purchased Assets and to more effectively consummate the transactions
contemplated by this Agreement and the Related Agreements.
8.03 Commissions and Fees. Seller and Buyer each represents and
warrants to the other that no broker, finder, financial adviser or other person
is entitled to any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated hereby by reason of any action taken by the
party making such representation. Seller, on the one hand, and Buyer, on the
other hand, will pay to the other or otherwise discharge, and will indemnify
and hold the other harmless from and against, any and all claims or liabilities
for all brokerage fees, commissions and finder's fees (other than as described
above) incurred by reason of any action taken by such party.
8.04 Sales, Transfer and Use Taxes. The parties do not contemplate
that any sales, transfer or use taxes will be payable in connection with the
transactions contemplated by this Agreement and the Related Agreements.
However, to the extent such taxes are payable, all sales, transfer and use
taxes incurred in connection with this Agreement and the Related Agreements and
the transactions contemplated hereby and thereby will be borne by Seller, and
Seller will, at its own expense, file all necessary Tax Returns and other
documentation with respect to all such sales, transfer and use taxes, and, if
required by applicable law, both parties will join in the execution of any such
Tax Returns or other documentation.
8.05 Nondisclosure. Seller agrees not to use or disclose at any
time after consummation of the transactions contemplated hereby, except with
the prior written consent of an officer authorized to act in the matter by the
Board of Directors of Buyer, any trade secrets, proprietary information, or
other confidential information relating to designs, suppliers, subcontractors,
inventions, operations, marketing, bidding information, cost and pricing data,
master files or customer lists utilized by Seller in connection with its
business prior to the Closing or by Buyer or any of its affiliates (the "Buyer
Group"), or the skills, abilities and compensation of the Buyer Group's
employees, and all other similar information material to the conduct of the
Buyer Group's business, which is not presently generally known to the public;
provided, however, that this provision shall not preclude Seller from (i) the
use or disclosure of such information which presently is known generally to the
public or which subsequently comes into the public domain, other than by way of
disclosure in violation of this Agreement or in any other unauthorized fashion,
or (ii) disclosure of such information required by law or court order, provided
that prior to such disclosure required by law or court order the undersigned
will give Buyer three business days' written notice (or, if disclosure is
required to be made in less than three business days, then such notice shall be
given as promptly as practicable after determination that disclosure may be
required) of the nature of the law or order requiring disclosure and the
disclosure to be made in accordance therewith.
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8.06 Indemnification.
(a) By Seller. Seller agrees to save, defend and
indemnify Buyer against and hold it harmless from any and all claims,
liabilities, losses, damages, deficiencies, costs and expenses, of
every kind, nature and description, fixed or contingent (including,
without limitation, interest, penalties and counsel's fees and
expenses) ("Losses"), asserted against, resulting to, imposed upon or
incurred by Buyer, directly or indirectly, arising out of (i) any
breach of any representation, warranty, covenant or agreement made by
Seller under this Agreement, or (ii) any liability of Seller other
than the Assumed Liabilities or any Environmental Claim.
(b) By Buyer. Buyer agrees to save, defend and indemnify
Seller against and hold it harmless from any and all Losses arising
out of (i) any breach of any representation, warranty, covenant or
agreement made by Buyer under this Agreement or (ii) any Assumed
Liability.
8.07 Defense of Claims.
(a) Should any claim, action or proceeding by or
involving a third party arise after the Closing Date for which Seller
or Buyer is liable under the terms of this Agreement, the party which
is entitled to be indemnified with respect to such claim (the
"Indemnified Party") shall notify the party who is liable therefor
under the terms hereof (the "Indemnifying Party") within a reasonable
time after such claim, action or proceeding arises and is known to the
Indemnified Party, and if the Indemnifying Party shall admit in
writing its indemnification obligation in respect thereof, the
Indemnified Party shall give the Indemnifying Party a reasonable
opportunity:
(i) to take part in any examination of the
relevant books and records of the Indemnified Party;
(ii) to conduct any proceedings or negotiations in
connection therewith and necessary or appropriate to defend
the Indemnified Party or prosecute any claim, action,
counterclaim or other proceeding with respect thereto;
(iii) to take all other required steps or
proceedings to settle or defend any such claim, action or
proceeding; and
(iv) to employ counsel reasonably acceptable to
the Indemnified Party to contest any such claim, action or
proceeding in the name of the Indemnified Party, or otherwise.
The expenses of all proceedings, contests or lawsuits with respect to
such claims or actions shall be borne by the Indemnifying Party. If
the Indemnifying Party wishes to assume the defense of any such claim
or action, it shall give written notice to the
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Indemnified Party admitting its indemnification obligation in respect
thereof and stating that it intends to assume such defense within 15
days after notice from the Indemnified Party of such claim or action
(unless the claim or action reasonably requires a response in less
than 15 days after the notice is given to the Indemnifying Party, in
which event it shall notify the Indemnified Party at least five days
prior to such reasonably required response date), and the Indemnifying
Party shall thereafter assume the defense of any such claim or
liability, through counsel reasonably satisfactory to the Indemnified
Party; provided that the Indemnified Party may participate in such
defense at its own expense but, in any event, the Indemnifying Party
shall have the right, as long as it is actively defending any claim or
action, to control such defense. The Indemnified Party shall afford
the Indemnifying Party's counsel and other authorized representatives
reasonable access during normal business hours to all relevant books,
records, offices and other facilities and properties of the
Indemnified Party, and to the personnel of the Indemnified Party, and
shall otherwise use all reasonable efforts to cooperate with the
Indemnifying Party, such counsel and such other authorized
representatives in connection with the exercise of the rights of the
Indemnifying Party pursuant to this Section 8.07.
(b) If the Indemnifying Party shall not assume the
defense of, or if after so assuming it shall fail to actively defend,
any such claim or action, the Indemnified Party may defend against any
such claim or action in such manner as it may deem appropriate, and
the Indemnified Party may settle such claim or litigation on such
terms as it may deem appropriate, and the Indemnifying Party promptly
shall reimburse the Indemnified Party for the amount of such
settlement and for all expenses, legal and otherwise, reasonably and
necessarily incurred by the Indemnified Party in connection with the
defense against and settlement of such claim or action. If no
settlement of such claim or litigation is made, the Indemnifying Party
shall satisfy any judgment rendered with respect to such claim or in
such action, before the Indemnified Party is required to do so, and
pay all expenses, legal or otherwise, reasonably and necessarily
incurred by the Indemnified Party in the defense against such claim or
litigation.
(c) If a judgment is rendered against the Indemnified
Party in any action covered by the indemnification provisions hereof,
or any lien attaches to any of the assets of the Indemnified Party,
the Indemnifying Party immediately upon such entry or attachment shall
pay such judgment in full or discharge such lien unless, at the
Indemnifying Party's expense and direction, an appeal is taken under
which the execution of the judgment or satisfaction of the lien is
stayed. If and when a final judgment is rendered in any such action,
the Indemnifying Party shall forthwith pay such judgment or discharge
such lien before the Indemnified Party is compelled to do so.
8.08 Set-Off of Claims. Bio Dental and Mendoza each agrees that,
to the extent provided, respectively, in the Assignment and Release Agreement
and the Employment Agreement, Losses as to which Buyer is entitled to
indemnification hereunder which remain unsatisfied after Buyer has exhausted
its remedies against Seller, may be satisfied solely by reducing the amount of
the remaining credit for future purchases to which Bio Dental is entitled,
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or the amount of the remaining Noncompete Payment (as such term is defined in
the Employment Agreement) otherwise payable to Mendoza, all as set forth in
Section 5.2 of the Assignment and Release Agreement, incorporated herein by
this reference. Except as so provided in this Section 8.08, Bio Dental and
Mendoza shall not be otherwise responsible for such Losses. In the event of
any such proposed set-off, the provisions of Section 8.07 hereof shall remain
in effect and shall apply to the resolution of any claim, action or proceeding
by or involving a third party and Bio Dental and Mendoza shall be deemed to be
the "Buyer" thereunder. In such event, Bio Dental and Mendoza agree to use all
commercially reasonable efforts to cooperate with each other with respect to
any such claim, action or proceeding.
8.09 Escrow. Bio Dental agrees, to the extent provided in the
Escrow Agreement, to indemnify Buyer against Losses, asserted against,
resulting to, imposed upon or incurred by Buyer, directly or indirectly,
arising out of (i) any breach of any representation or warranty contained in
Section 3.22 of this Agreement, or (ii) out of any matter described in the EPA
Letter.
8.10 Maintenance of Insurance Policies. Seller agrees to maintain
the insurance policies set forth on Schedule 8.10 hereto following the Closing
through March, 1997, naming Seller, Buyer and Bio Dental as additional
insureds.
ARTICLE IX
TERMINATION
9.01 Events of Termination. This Agreement may be terminated and
abandoned at any time prior to the Closing:
(a) by mutual written consent of Buyer, Seller and Bio
Dental; or
(b) by either Buyer, Seller or Bio Dental if the Closing
has not occurred prior to July 31, 1996, or such later date as the
parties shall mutually approve; or
(c) by Buyer if prior to completion of the Closing there
shall have been a material breach in any of the representations,
warranties or covenants of Seller herein or by Seller if prior to
completion of the Closing there shall have been a material breach of
any of the representations, warranties or covenants of Buyer contained
herein; provided, however, that a party shall not be permitted to
terminate this Agreement based upon its own breach.
9.02 Specific Performance. The parties hereto acknowledge that
damages may be an inadequate remedy for breach of this Agreement and that the
obligations of the parties shall be specifically enforceable, but the
availability of specific performance shall in no way limit the availability of
damages.
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ARTICLE X
MISCELLANEOUS
10.01 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
10.02 No Assignment. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties, provided,
however, that without such written consent, Buyer may assign its rights
hereunder, in whole or in part, to any corporation or other entity controlled
by, controlling, or under common control with Buyer, and Bio Dental may assign
its rights hereunder to Zila, Inc., provided that no such assignment will
relieve Bio Dental of its obligations hereunder. Notwithstanding any other
provision contained herein, Buyer may pledge or grant a security interest in
any of its rights under this Agreement to any federal or state chartered
lending institution. Any attempted or purported assignment by any party other
than in accordance with this Section 10.02 shall be null and void.
10.03 Counterparts. This Agreement may be executed in any number of
counterparts, and by any party on separate counterparts, each of which as so
executed and delivered shall be deemed an original but all of which together
shall constitute one and the same instrument, and it shall not be necessary in
making proof of this Agreement as to any party hereto to produce or account for
more than one such counterpart executed and delivered by such party.
10.04 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California (without
regard to conflict of laws principles) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.
10.05 Venue for Suits. The parties agree that any action or
proceeding relating in any way to this Agreement or the Related Agreements or
the transactions contemplated hereby and thereby shall, if brought against
Seller or Bio Dental, be brought and enforced in the Municipal or Superior
Court for the County of Sacramento, California or in the United States District
Court for the Northern District of California or, if brought against Buyer, in
a Missouri State Court or United States District Court sitting in St. Louis,
Missouri, and the parties hereby waive any objection to jurisdiction or venue
in any such proceeding commenced in or removed to such courts.
10.06 Survival. The representations, warranties, covenants,
indemnities and agreements of the parties to this Agreement contained herein or
in any document delivered pursuant to or in connection herewith shall survive
the Closing for a period of two years and shall survive any investigation by
any other party; provided, however, that representations, warranties and
indemnities with respect to claims by third parties (including employees and
former employees of Seller and Federal, state or municipal governments or the
agencies thereof) shall survive the Closing for the applicable statute of
limitations periods relating to such claims.
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<PAGE> 29
10.07 Notices. All notices required to be given under the terms of
this Agreement or which any of the parties desires to give hereunder shall be
in writing and personally delivered or sent by registered or certified mail,
return receipt requested, or sent by telecopier, addressed as follows:
(a) To Seller. If to Seller addressed to:
Denticator International, Inc.
11330 Sunrise Park Drive
Rancho Cordova, California 95742
Attention: Jose Mendoza
Telecopier No.: 916-638-0319
Bio Dental Technologies Corp.
11291 Sunrise Park Drive
Rancho Cordova, California 95742
Attention: Terry Bane
Telecopier No.: 916-638-9307
and
Jose L. Mendoza
821 Valvista Way
Auburn, California 95603
(b) To Buyer. If to Buyer addressed to:
Young Innovations, Inc.
13705 Shoreline Court East
Earth City, Missouri 63045
Attention: Michael W. Eggleston
Telecopier No.: 314-344-0021
Copy to:
Armstrong, Teasdale, Schlafly & Davis
One Metropolitan Square
St. Louis, Missouri 63102-2740
Attention: John L. Gillis, Jr., Esq.
Telecopier No.: 314-621-5065
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<PAGE> 30
Any party may designate a change in address at any time upon written
notice to the other parties.
10.08 Amendment and Modification. The Agreement may be amended,
modified or supplemented only by a written instrument executed by all of the
parties.
10.09 Waiver of Compliance. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party or parties granting such waiver, but any such waiver or the failure to
insist upon strict compliance with any obligation, covenant, agreement or
condition herein, shall not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure or breach.
10.10 Interpretation. The table of contents and the article and
section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall not in any
way affect the meaning or interpretation of this Agreement. As used in this
Agreement, the term "person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization or a governmental entity or any department or agency thereof. As
used in this Agreement, the term "subsidiary", when used in reference to any
other person, shall mean any corporation of which outstanding securities having
ordinary voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person. As used in
this Agreement, the term "generally accepted accounting principles" means
generally accepted accounting principles as in effect and as applied in the
United States. As used in this Agreement, the term "affiliate" shall have the
meaning set forth in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934. When used herein, the masculine, feminine or
neuter gender and the singular or plural number shall each be deemed to include
the others whenever the context so indicates or permits.
10.11 Entire Agreement. This Agreement and the Related Agreements,
including the schedules, exhibits, documents, certificates and instruments
referred to herein and therein, embody the entire agreement and understanding
of the parties hereto in respect of any transactions contemplated by this
Agreement and the Related Agreements and supersede all prior agreements and
understandings between the parties with respect thereto.
10.12 Termination of Letter of Intent. This Agreement supersedes
and replaces in its entirety that certain letter of intent dated January 19,
1996 by and among Seller, Bio Dental and Mendoza, and such letter of intent
shall be deemed terminated by all parties thereto as of the Closing Date.
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<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
DENTICATOR INTERNATIONAL, INC.
By: /s/Jose L. Mendoza
-------------------------------
Name: Jose L. Mendoza
------------------------------
Its: President
BIO DENTAL TECHNOLOGIES CORP.
By: /s/Terry E. Bane
-------------------------------
Name: Terry E. Bane
------------------------------
Its: Chief Financial Officer
-------------------------------
/s/Jose L. Mendoza
-----------------------------------
JOSE L. MENDOZA
YOUNG INNOVATIONS, INC.
By: /s/George E. Richmond
-------------------------------
Name: George E. Richmond
------------------------------
Its: President
-------------------------------
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<PAGE> 32
EXHIBIT A
ASSIGNMENT AND RELEASE AGREEMENT
THIS ASSIGNMENT AND RELEASE AGREEMENT (this "Agreement") is made this
22nd day of July, 1996 by and among BIO DENTAL TECHNOLOGIES CORPORATION, a
California corporation ("Bio Dental"), DENTICATOR INTERNATIONAL, INC., a
Missouri corporation ("DII"), DENTICATOR INTERNATIONAL, INC., a California
corporation (the "Predecessor") and YOUNG INNOVATIONS, INC., a Missouri
corporation ("Young").
WITNESSETH
WHEREAS, Bio Dental and the Predecessor are parties to that certain
Exclusive License Agreement dated March 31, 1991, as amended by the Extension
and Modification of Exclusive License Agreement dated April 1, 1994, and as
further amended on January 19, 1996 (the Exclusive License Agreement, and all
amendments thereto being collectively referred to as the "License Agreement");
WHEREAS, Bio Dental, the Predecessor and Young have entered into that
certain Asset Purchase Agreement of even date herewith (the "Purchase
Agreement") wherein Young or DII shall purchase certain assets and assume
certain liabilities of the Predecessor; and
WHEREAS, pursuant to the terms and conditions set forth in this
Agreement, Bio Dental will sell and convey all of Bio Dental's rights,
privileges, interests and claims under the License Agreement to DII, and shall
release DII, the Predecessor and Young, and their respective affiliates, from
any claims, liabilities, demands, causes of action or suits that Bio Dental or
its affiliates may have against such parties arising out of or in any way
connected with (i) the License Agreement, or (ii) any other agreement,
contract, arrangement, occurrence or transaction, whether written or oral, of
any nature whatsoever, between such parties, other than this Agreement, and DII
and the Predecessor will similarly release Bio Dental.
NOW, THEREFORE, in consideration of the premises and the mutual
representations hereinafter set forth, the parties hereto hereby agree as
follows:
1. PURCHASE OF RIGHTS; RELEASE OF CLAIMS. Pursuant to the terms
and conditions contained herein, and to induce Young and DII to consummate the
transactions contemplated by the Purchase Agreement, Bio Dental hereby
transfers and conveys to DII all of the rights and interests of Bio Dental
under the License Agreement and Bio Dental hereby releases DII, the
Predecessor, Young and their respective officers, directors and subsidiaries
from any claims, liabilities or amounts owing to Bio Dental through the date
hereof arising out of or in any way connected with (i) the License Agreement,
or (ii) any other agreement, contract, arrangement, occurrence or transaction,
whether written or oral, of any nature whatsoever, between Bio Dental and the
Predecessor, other than (w) this Agreement, (x) the Purchase Agreement, (y)
other agreements and instruments entered into or executed pursuant to the
Purchase Agreement and (z) amounts owing by DII, the Predecessor or Young for
goods purchased from Bio Dental in the ordinary course of business. Without
limiting the foregoing, Bio Dental hereby expressly acknowledges that upon full
execution of this Agreement, Bio Dental shall not have any rights in or receive
any royalties from DII's use of the name "Denticator" or the manufacture and
distribution of products of DII or the Predecessor. The Predecessor and DII
each releases Bio Dental and its officers, directors and subsidiaries from any
claims, liabilities or amounts owing to DII through the date hereof arising out
of or in any way connected with (i) the License Agreement, or (ii) any other
agreement,
<PAGE> 33
contract, arrangement, occurrence or transaction, written or oral, of any
nature whatsoever, between Bio Dental and the Predecessor, other than (w) this
Agreement, (x) the Purchase Agreement, (y) other agreements and instruments
entered into or executed pursuant to the Purchase Agreement and (z) amounts
owing by Bio Dental to the Predecessor or DII for goods purchased from them in
the ordinary course of business. Each of Bio Dental and the Predecessor
acknowledges that Bio Dental and the Predecessor have performed fully all of
their obligations under the License Agreement.
2. PURCHASE PRICE; METHOD OF PAYMENT. In consideration of the
assignment of rights and interests and the full release described in Section 1
above, and for Bio Dental's non-compete agreement in Section 6, Young hereby
makes the following payments and provides the below- defined Product Credit:
2.1 CASH PAYMENT. Cash in the amount of Seven Million
Four Hundred Forty Nine Thousand Eighty Seven and NO/100 Dollars
($7,449,087.00) paid herewith to Bio Dental.
2.2 ESCROW PAYMENT. Cash in the amount of One Hundred
Thousand Dollars ($100,0000) paid to The Union Bank of California
("Escrow Agent") pursuant to an Escrow Agreement of even date herewith
among Bio Dental, Young and Escrow Agent, said funds to be disbursed
by the Escrow Agent according to the terms of the Escrow Agreement.
2.3 PRODUCT CREDIT. Young hereby grants a credit (the
"Product Credit") to Bio Dental that may be applied by Bio Dental or
its subsidiary The Supply House ("Supply House") (or any other
subsidiary of Bio Dental) toward future purchases of products from
Young or subsidiaries of Young. The Product Credit shall be in an
amount equal to the aggregate amounts owing to Bio Dental by the
Predecessor at the Closing Date (as defined in the Purchase
Agreement), which amounts shall be calculated (i) according to the
terms of the License Agreement, and (ii) consistent with the
calculation of the amounts owing by the Predecessor to Bio Dental as
of March 31, 1996. The Product Credit and Mendoza Payment (as defined
in Section 5.2 below) will, however, be reduced, by a ratio of fifty
percent (50%) against the Product Credit and fifty percent (50%)
against the Mendoza Payment, by the amount (if any) by which the Net
Working Capital (as defined below) of the Predecessor as reflected on
the balance sheet of the Predecessor as at the Closing Date (the
"Closing Balance Sheet") is less than $471,783.00 (the Net Working
Capital of the Predecessor at March 31, 1996). For purposes of this
provision, the term Net Working Capital means the difference between
the current assets and the current liabilities of the Predecessor
reflected on its balance sheet, adjusted, however, to (i) delete from
such balance sheet all amounts owed by Bio Dental to the Predecessor
or by the Predecessor to Bio Dental except amounts owing for goods
purchased in the ordinary course of business, and (ii) include in
current liabilities all outstanding indebtedness (whether short-term
or long-term) of Seller to Bank of California. The Closing Balance
Sheet will be prepared by Young and the Predecessor in accordance with
generally accepted accounting principles on a basis consistent with
the preparation of the balance sheet of the Predecessor as at March
31, 1996.
Bio Dental shall be provided reasonable access to the
accounting records, supporting schedules and documents of the
Predecessor. Bio Dental may review the closing financial statements
of the Predecessor, including adjustments and reserves, allowances or
accrued liabilities of any kind. If Bio Dental, after reviewing the
financial statements, corresponding accounting records, supporting
schedules and/or documents of the Predecessor, disagrees with any item
or adjustment, Bio Dental shall submit in writing its disagreement to
Young. Young shall review the facts and circumstances of the
disagreement and shall render a binding decision on the disagreement
within fifteen (15) business days.
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<PAGE> 34
3. APPLICATION OF PRODUCT CREDIT. Purchases by Bio Dental or
Supply House (or any other subsidiary of Bio Dental) from Young or its
affiliates or subsidiaries will be applied against the Product Credit at the
prevailing prices in effect at the time of the purchases. Young shall provide
to Bio Dental (i) written confirmation acknowledging application of all or a
portion of the Product Credit to a specific purchase order, and (ii) quarterly
written notification regarding the outstanding remaining balance of the Product
Credit.
4. LIMITATION ON PRODUCT CREDIT. Use of all or a portion of the
Product Credit shall not be permitted in an amount by which all shipments
exceed in any month $55,000, which is the approximate average historical
monthly shipments level to Bio Dental and Supply House from Young and its
subsidiaries over the twelve (12) month period ended March 31, 1996; provided,
however, that to the extent that the application of the Product Credit by Bio
Dental, Supply House and other subsidiaries of Bio Dental is in the aggregate
below such amount for any month, application of the Product Credit may exceed
such amount by the amount of such difference in a subsequent month. For any
such shipments to which the Product Credit cannot be applied because of the
foregoing limits, the standard wholesale terms and conditions of Young or its
subsidiary with which the order is placed shall apply. The Product Credit
shall not include freight, insurance and other charges.
5. REDUCTION IN PRODUCT CREDIT FOR INDEMNIFICATION.
5.1 EVENT OF REDUCTION. In the event that Young or a
subsidiary of Young is entitled to indemnification against Losses (as
defined therein) pursuant to Section 8.06 of the Purchase Agreement
(the "Indemnification Amount"), Young shall have the right to reduce
the then existing amount of the Product Credit by an amount calculated
pursuant to Section 5.2 hereof. Young shall also have the right to
set off against the Product Credit any amounts owing to Young or its
subsidiaries by Bio Dental or its subsidiaries. In the event that
Young exercises such right of set-off, Young shall provide written
notification to Bio Dental of such action, and of the amount of such
set-off.
5.2 CALCULATION OF AMOUNT OF SET-OFF. If, at the time
Young is entitled to reduce the Product Credit pursuant to Section
5.1, Jose L. Mendoza ("Mendoza") is still entitled to receive all or a
portion of the Three Hundred Five Thousand Dollar ($305,000) payment
described in Section 4.3 of the Employment and Noncompetition
Agreement between Mendoza and a subsidiary of Young (the "Mendoza
Payment"), then the Indemnification Amount shall be charged against
the Product Credit and the Mendoza Payment in the ratio of seventy-
five percent (75%) against the Product Credit and twenty-five percent
(25%) against the Mendoza Payment. The Indemnification Amount charged
against (i) the Mendoza Payment shall not exceed the remaining Mendoza
Payment and Mendoza's liability under this Agreement is limited to the
remaining balance of the Mendoza Payment and (ii) the Product Credit
shall not exceed the remaining Product Credit and Bio Dental's
liability is limited to the remaining balance of the Product Credit.
If a portion of the Indemnification Amount still remains unsatisfied
because the Mendoza Payment or the Product Credit has been fully
satisfied, the remaining Product Credit or Mendoza Payment,
respectively, as the case may be, shall be reduced by such amount. At
such time as the Product Credit or Mendoza Payment has been satisfied
in full and Young remains entitled to set-off pursuant to Section 8.08
of the Purchase Agreement, the remaining Mendoza Payment or Product
Credit, respectively, as the case may be, shall be reduced by one
hundred percent (100%) of the Indemnification Amount.
6. NONCOMPETITION AGREEMENT. For a period of two (2) years after
the effective date of this Agreement, Bio Dental shall not, and shall cause its
subsidiaries not to, within North America,
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<PAGE> 35
directly or indirectly, compete with Young or a subsidiary of Young in
manufacturing, licensing others to manufacture or selling under private label
any products, including prophy angles, which are the same, substantially
similar to or in direct competition with any products manufactured, sold or
distributed by the Predecessor prior to the Closing Date. Notwithstanding the
above, Bio Dental and its subsidiaries shall be permitted to (i) sell and
distribute such products manufactured by others, but not those products listed
on Schedule 6.1 hereto, which are sold under the name of Bio Dental or of any
affiliate of Bio Dental unless and to the extent Bio Dental or its affiliate
sold such products under its name pursuant to private label arrangements in
effect prior to May 31, 1996; and (ii) sell and distribute such products
pursuant to arrangements with Young or any affiliates of Young.
7. AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written instrument executed by all of the
parties hereto.
8. ASSIGNMENT. Nothing contained in this Agreement shall be
construed to permit the assignment or delegation by any party hereto of any
rights or obligations hereunder and such assignment is expressly prohibited
without the written consent of the other parties hereto. Notwithstanding the
foregoing, however, Bio Dental shall be permitted to assign its rights and
obligations hereunder to Zila, Inc. without the consent of the other parties
hereto; provided, however, that such assignment shall not relieve Bio Dental of
any of its obligations or duties hereunder nor shall such assignment affect
Young's rights hereunder including, without limitation, Young's right to reduce
the Product Credit pursuant to Section 5.1 hereof. Notwithstanding any other
provision contained herein, Young and DII may pledge or grant a security
interest in any of their rights under this Agreement to any federal or state
chartered lending institution.
9. SEVERABILITY. If any term, covenant, or condition of this
Agreement or the application thereof to any person or circumstance shall be
invalid or unenforceable, the remainder of this Agreement and the application
of any term or provision to persons and circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby, and
all other terms shall be valid and enforceable to the fullest extent permitted
by law.
10. ENTIRE AGREEMENT. This Agreement contains the entire
agreement of the parties hereto and it supersedes all prior agreements and
understandings between the parties hereto with respect thereto.
11. GOVERNING LAW. This Agreement shall be governed by the
internal laws of the State of California, without regard to conflict of law
principles.
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<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
DENTICATOR INTERNATIONAL, INC., BIO DENTAL TECHNOLOGIES CORPORATION,
a Missouri corporation a California corporation
By: /s/ George E. Richmond By: /s/ Terry E. Bane
------------------------------ --------------------------------
Name:
George E. Richmond Terry E. Bane
------------------------------ --------------------------------
Its: Its:
Vice President Chief Financial Officer
------------------------------ --------------------------------
DENTICATOR INTERNATIONAL, INC., YOUNG INNOVATIONS, INC.,
a California corporation a Missouri corporation
By: /s/ Jose L. Mendoza By: /s/ George E. Richmond
------------------------------ --------------------------------
Name: Name:
Jose L. Mendoza George E. Richmond
----------------------------- --------------------------------
Its: Its:
President President
----------------------------- --------------------------------
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<PAGE> 37
SCHEDULE 6.1
BIO DENTAL PRIVATE LABEL DISTRIBUTION - PROHIBITED PRODUCTS:
Prophy Angles
Prophy Cups
Prophy Paste
Disposable Surgical Aspirators
<PAGE> 38
EXHIBIT B
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT ("Agreement") is made
this 22nd day of July, 1996, by and between DENTICATOR INTERNATIONAL, INC., a
Missouri corporation ("Corporation") and JOSE L. MENDOZA, an individual
residing at 821 Valvista Way, Auburn, California 95603 ("Employee").
WITNESSETH:
WHEREAS, Corporation is principally engaged in the business of
manufacturing and distributing dental products, and Employee has substantial
experience in such industry, and has been the principal executive officer of
Corporation's predecessor for approximately five (5) years;
WHEREAS, Employee desires to be employed by Corporation and
Corporation desires to secure Employee's services; and
WHEREAS, employee has executed an Agreement to Assign Inventions dated
as of the date hereof, in form and in substance satisfactory to Corporation, a
copy of which is attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises herein contained, the adequacy of which is hereby
acknowledged, Corporation and Employee hereby agree as follows.
I. EMPLOYMENT
Corporation employs Employee, and Employee accepts employment by
Corporation, upon all of the terms and conditions set out in this Agreement.
II. POSITIONS AND DUTIES
2.1 POSITIONS. Employee shall serve as President and Chief Executive
Officer of Corporation during the term of this Agreement.
2.2 DUTIES, RESPONSIBILITIES AND INVOLVEMENT. Employee's duties,
responsibilities and involvement shall include, without limitation, the
supervision and oversight of the day to day operations of Corporation,
including the performance of all duties typically vested in the chief executive
officer of a corporation, all to the extent and in the manner prescribed by the
Bylaws of Corporation and the Board of Directors of Corporation. Employee
shall report to the Board of Directors of Corporation.
2.3 COMMITMENT TO CORPORATION. Employee shall devote his full
business time, attention and energies to the business of Corporation and to the
performance of his responsibilities hereunder, provided, however, that Employee
may devote a portion of his time to other business interests, so long as such
interests do not unreasonably interfere with Employee's performance of his
obligations hereunder.
<PAGE> 39
2.4 COMPLIANCE. Employee agrees to abide by the Articles of
Incorporation and By-Laws of Corporation and such reasonable directions as are
given from time to time by the Board of Directors of Corporation which are not
inconsistent with this Agreement.
III. TERM OF EMPLOYMENT
3.1 TERM. The term of Employee's employment under this Agreement
(the "Term") shall commence on July 22, 1996, and shall continue for a period
of three (3) years until midnight on July 21, 1999, unless sooner terminated as
provided in this Agreement; provided that the Term will be automatically
extended for successive one (1) year periods on each termination date unless,
at least sixty (60) days prior to such termination date, either party notifies
the other party in writing that this Agreement will be terminated on such
termination date.
IV. COMPENSATION
4.1 BASE PAY. For all services rendered by Employee to Corporation
in any capacity, Employee shall be entitled to receive compensation at the rate
determined in accordance with the provisions of the attached Schedule 4.1
("Base Pay"). Such compensation shall be payable in accordance with
Corporation's normal payroll procedures as determined from time to time by the
Board of Directors of Corporation.
4.2 WITHHOLDING. All payments of compensation shall be less such
amounts as are required to be withheld by federal, state or local law.
4.3 ADDITIONAL COMPENSATION. As consideration for the noncompetition
provisions contained in Article XII of this Agreement, Employee shall be
entitled to receive cash in the amount of, in the aggregate, Three Hundred Five
Thousand Dollars ($305,000) (the "Noncompete Payment"). Employee shall receive
the Noncompete Payment in four (4) equal installments of Seventy Six Thousand
Two Hundred Fifty Dollars ($76,250) commencing on July 22, 1996, and thereafter
on October 22, 1996, January 22, 1997 and April 22, 1997.
4.3.1 REDUCTIONS TO NONCOMPETE PAYMENT.
4.3.1.1 REDUCTION PURSUANT TO INDEMNIFICATION CLAIMS.
In the event that Young Innovations, Inc., a Missouri
corporation ("Young") or an affiliate of Young, is entitled to
receive any amounts pursuant to the indemnification provisions
contained in that certain Asset Purchase Agreement dated July
22, 1996 by and among Employee, Young, Bio Dental Technologies
Corp. ("Bio Dental") and Denticator International, Inc. (the
"Indemnification Amount"), and Employee is still entitled to
receive all or a portion of the Noncompete Payment, then, to
the extent possible, twenty-five percent (25%) of the
Indemnification Amount shall be charged against the Noncompete
Payment. The Indemnification Amount charged against the
Noncompete Payment, however, shall in no event exceed the
remaining unpaid balance of the Noncompete Payment and
Employee's liability under this Section 4.3.1.1 shall be
limited to the remaining unpaid balance of the Noncompete
Payment.
4.3.1.2 REDUCTION PURSUANT TO CHANGES IN NET WORKING
CAPITAL. In the event that the Net Working Capital (as
defined below) of Denticator International, Inc., a California
corporation and the predecessor to Corporation ("Denticator"),
as reflected on the balance sheet of Denticator dated as of
July 22, 1996, is less than
-2-
<PAGE> 40
$471,783.00 (the Net Working Capital of Denticator at March 31, 1996),
then, to the extent possible, fifty percent (50%) of such difference
shall be charged against the Noncompete Payment. For purposes of this
provision, the term Net Working Capital means the difference between
the current assets and the current liabilities of Denticator reflected
on its balance sheet, adjusted, however, to (i) delete from such
balance sheet all amounts owed by Bio Dental to Denticator or by
Denticator to Bio Dental except amounts owing for goods purchased in
the ordinary course of business, and (ii) include in current
liabilities all outstanding indebtedness (whether short-term or
long-term) of Seller to Bank of California. The amount charged
against the Noncompete Payment pursuant to this provision, however,
shall in no event exceed the remaining unpaid balance of the
Noncompete Payment and Employee's liability under this Section 4.3.1.2
shall be limited to the remaining unpaid balance of the Noncompete
Payment.
V. BONUS STOCK; INSURANCE
5.1 PERFORMANCE BASED BONUS STOCK; SHAREHOLDER AGREEMENT. Pursuant
to the terms of this Agreement, Employee shall be entitled to receive shares of
the common stock (the "Bonus Stock") of Young with a value, in the aggregate,
of Eight Hundred Thousand Dollars ($800,000), with such valuation being
measured at the time Employee becomes entitled to receive the Bonus Stock.
Prior to, and as a condition to, receiving the Bonus Stock, Employee shall have
executed a Shareholder Agreement (the "Shareholder Agreement") in substantially
the form of Exhibit B attached hereto.
5.2 RECEIPT OF BONUS STOCK. Employee shall be entitled to receive
the Bonus Stock on July 22, 1998 (the "Granting Date").
5.3 VALUATION OF SHARES. On the Granting Date, Corporation shall
perform a valuation in accordance with the following to determine the then
applicable value of the common stock of Young:
(a) If, on the Granting Date, the common stock of Young is listed
on a national securities exchange, the value of such common
stock shall be the closing price of the common stock of Young
on such exchange on the last trading date prior to the
Granting Date;
(b) If, on the Granting Date, the common stock of Young is quoted
on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the value of such common stock
shall be the last reported sale price prior to the Granting
Date;
(c) If, on the Granting Date, the common stock of Young is not
listed on a national securities exchange or quoted on NASDAQ,
but an active trading market exists with respect to such
common stock, the value of such common stock shall be the last
reported sale price in such market prior to the Granting Date;
or
(d) If neither (a), (b) or (c) above shall apply, the value of the
common stock of Young shall be determined as follows:
1. By mutual agreement between Corporation and
Employee as to the value of such common stock.
-3-
<PAGE> 41
2. If Corporation and Employee cannot reach mutual
agreement as to the value of the common stock of Young, then
an independent appraiser or valuation firm that is acceptable
to both Corporation and Employee shall be engaged to establish
the value of such common stock, and such valuation shall be
conclusive and binding upon Corporation and Employee.
3. If Corporation and Employee cannot mutually agree
to the value of the common stock of Young or as to a mutually
acceptable appraiser or valuation firm, then Corporation and
Employee shall each select a qualified independent appraiser
or valuation firm, who in turn shall select a third
independent appraiser or valuation firm who shall be
responsible for determining the value of the such common
stock, and such valuation shall be conclusive and binding upon
Corporation and Employee.
In the event that the value of the common stock of Young is determined
pursuant to Subparagraph (d) above, the costs of such valuation shall be
divided equally between Corporation and Employee.
The determination of value of the common stock of Young pursuant to
subparagraphs (a), (b) and (c) above shall be made in good faith by Young's
Board of Directors, whose decision shall be final and binding on all parties.
5.4 CALCULATION OF NUMBER OF SHARES. Employee shall be entitled to
receive that number of shares of Bonus Stock (rounded down to the nearest whole
share with Employee receiving cash in lieu of any fractional share) as
determined by dividing Eight Hundred Thousand Dollars ($800,000) by the per
share price of common stock of Young as determined pursuant to Section 5.3.
5.5 REPURCHASE BY CORPORATION. Employee shall have the right to
require Corporation to repurchase from Employee up to forty percent (40%) of
the Bonus Stock (rounded down to the nearest whole share) distributed to
Employee on the Granting Date. Employee shall provide written notice to
Corporation of Employee's intention to exercise such right at least ten (10)
days prior to the Granting date and such notice shall state what percentage of
the Bonus Stock that Corporation shall be required to repurchase. Corporation
shall, within five (5) days after the completion of the valuation pursuant to
Section 5.3 hereof, repurchase such Bonus Stock. The repurchase price of each
share of the Bonus Stock repurchased shall be the same price per share at which
the Bonus Stock was valued with respect to the Granting Date. Upon such
repurchase, Corporation shall deliver to Employee its check for the repurchased
Bonus Stock, together with a certificate for the number of shares of Bonus
Stock to be received by Employee.
5.6 RESTRICTIONS ON TRANSFER UNDER SHAREHOLDER AGREEMENT. Employee
recognizes that so long as Young is not required to file reports with the
Securities and Exchange Commission pursuant to Sections 13 or 15(d) of the
Securities and Exchange Act of 1934 (the "Exchange Act"), Employee shall be
subject to the terms and conditions of the Shareholder Agreement, and Employee
may not, except under certain circumstances, sell, transfer or otherwise
dispose of the Bonus Stock.
5.7 STOCK UNREGISTERED; SECURITIES ACT MATTERS. Employee has been
advised by Corporation that (i) the Bonus Shares have not been registered under
the Securities Act of 1933 (the "Securities Act"); (ii) the Bonus Shares may
not be sold, transferred or otherwise disposed of by Employee unless the offer
and sale of the Bonus Shares is subsequently registered under the Securities
Act or an exemption from such registration is available; (iii) there is not
currently any public market for the Bonus Shares; (iv) Rule 144 promulgated
under the Securities Act is not available to authorize
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<PAGE> 42
the sale by Employee at this time of any securities of Corporation including
the Bonus Shares and Corporation has made no representation as to the future
availability of such Rule for such a purpose; (v) when and if the Bonus Shares
may be disposed of without registration under the Securities Act in reliance on
Rule 144, such disposition can be made only in accordance with the terms and
conditions of such Rule; (vi) if the Rule 144 exemption is not available,
public offer or sale without registration will require the availability of an
exemption under the Securities Act; (vii) a restrictive legend in the form
heretofore set forth will be placed on the certificates representing the Bonus
Shares; and (viii) a notation will be made in the appropriate records of Young
indicating that the Bonus Shares are subject to restriction on transfer and, if
Young should at some time in the future engage the services of a stock transfer
agent, appropriate stop transfer restrictions will be issued to such transfer
agent with respect to the Bonus Shares.
5.8 LEGENDS. Any certificate representing Bonus Stock issued
pursuant to this Article V shall bear the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
"THIS CERTIFICATE MAY BE SOLD OR TRANSFERRED ONLY UPON
COMPLIANCE WITH THE TERMS AND CONDITIONS OF AN AGREEMENT DATED
__________, 1998, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE CORPORATION."
5.9 TERM LIFE INSURANCE. Corporation shall purchase and keep in
effect until the Granting Date a term life insurance policy on the life of
Mendoza in the amount of $800,000 (the "Policy"), with the beneficiary to be
named by Mendoza; provided, that if Mendoza does not name a beneficiary,
Mendoza's spouse shall be the beneficiary. Notwithstanding the foregoing
sentence, Corporation shall not be obligated to purchase the Policy if the life
of Mendoza is, for any reason, not insurable, or not insurable for premiums
less than $5,000 per year.
VI. FRINGE BENEFITS
Employee shall be entitled to participate with other employees of
Corporation, so long as Employee meets the applicable eligibility requirements,
in such employee fringe benefit plans as may be authorized and adopted from
time to time by the Board of Directors of Corporation. Corporation may
furnish, withdraw or modify such other benefits for Employee as the Board of
Directors of Corporation shall determine from time to time within its
discretion.
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VII. EXPENSES
Reasonable expenses incurred and paid by Employee for promoting the
business of Corporation, including expenses for transportation, promotion,
entertainment, travel, telephone, and similar items, shall be subject to
reimbursement to the extent authorized for reimbursement by Corporation in
accordance with reasonable rules and regulations adopted by the Board of
Directors. Such expenses as are so authorized for reimbursement shall be paid
for by Corporation or reimbursed to Employee upon Employee's presenting to
Corporation an itemized expense statement with respect thereto.
VIII. DEATH OF EMPLOYEE
In the event of Employee's death during the Term of this Agreement
(whether Employee is then actively engaged in the performance of services for
Corporation or is being compensated for disability), this Agreement shall
terminate immediately and Employee's estate shall be entitled to receive from
Corporation, in full satisfaction of Corporation's obligations to Employee, a
lump sum in an amount equal to the Base Pay due Employee up to the date of
Employee's death plus any portion of the Noncompete Payment that has not been
paid to Employee. In the event of Employee's death prior to the Granting Date,
Employee's estate shall not be entitled to receive any portion of the Bonus
Stock or cash in lieu of the Bonus Stock.
IX. TERMINATION OF EMPLOYMENT
9.1 TERMINATION BY CORPORATION. Corporation may terminate Employee's
employment pursuant to this Agreement as follows:
A. TERMINATION UPON DISABILITY. The Board of Directors of
Corporation may terminate Employee's employment hereunder if, as a
result of Employee's incapacity resulting from physical or mental
illness, Employee shall have been unable to perform his duties
hereunder for a period of more than sixty (60) consecutive days or one
hundred twenty (120) days, whether or not consecutive, during any
twelve-month period.
B. TERMINATION FOR CAUSE. The Board of Directors of
Corporation may terminate Employee's employment hereunder without any
prior notice for "Cause" only upon commission by Employee of a crime
of moral turpitude or the willful and continued failure by Employee to
perform his duties to Corporation, including, without limitation, the
commission by Employee of acts of gross negligence, dishonesty or
misconduct, and/or failure to comply with his obligations under this
Agreement (other than any such failure resulting from incapacity due
to mental or physical illness) after a demand in writing for
performance is delivered by the Board of Directors of Corporation,
which demand specifically identifies the manner in which the Board
believes that Employee has not substantially performed his duties to
Corporation or complied with his obligations under this Agreement.
C. EFFECT OF TERMINATION UNDER SUBSECTION (A). In the
event that Employee's employment terminates as a result of a
disability pursuant to Subsection (A) above, Corporation shall pay to
Employee or Employee's representatives, in full satisfaction of its
obligations to Employee, a lump sum payment equal to the sum of (i)
the Base Pay due Employee through the date of termination pursuant to
Subsection (A) above, (ii) any portion of the Noncompete Payment that
has not been paid to Employee and (iii) if such termination occurs
prior to the Granting Date, cash equal to $800,000 times a fraction,
the numerator of
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which is the number of days between the date of this Agreement and the
date of such termination, and the denominator of which is 730.
D. EFFECT OF TERMINATION UNDER SUBSECTION (B). In the
event that Employee's employment is terminated at any time by the
Board of Directors of Corporation pursuant to Subsection (B) above,
Corporation shall pay Employee, in full satisfaction of its
obligations to Employee, all Base Pay due Employee up through the date
such termination occurs and any portion of the Noncompete Payment that
has not been paid to Employee.
9.2 TERMINATION BY EMPLOYEE. Employee may terminate Employee's
employment pursuant to this Agreement in the event that Corporation, during the
Term of this Agreement, has failed to perform its obligations hereunder, and
has not cured such failure within sixty (60) days after written notice by
Employee of such failure.
In the event of any termination by Employee pursuant to this Section
9.2, or by Corporation other than pursuant to Article VIII or Section 9.1,
Corporation shall pay Employee as full satisfaction of its obligations to
Employee the Base Pay owed to Employee by Corporation through the date of such
termination plus a lump sum equal to the sum of the aggregate amount of (i)
Employee's Base pay for the lesser of (y) twelve (12) months, or (z) the
remainder of the Term as if the Agreement had not been so terminated; (ii) the
unpaid balance, if any, of the Noncompete Payment; and (iii) if such
termination occurs prior to the Granting Date, then either (y) cash, in lieu of
the Bonus Stock, in an amount equal to Four Hundred Thousand Dollars
($400,000), if such termination occurs during the first twelve (12) month
period of the Term, or (z) cash, in lieu of the Bonus Stock, in an amount equal
to Eight Hundred Thousand Dollars ($800,000), if such termination occurs during
the second twelve (12) month period of the Term.
In the event of any termination by Employee other than pursuant to
this Section 9.2, Corporation shall pay Employee, in full satisfaction of its
obligations to Employee, all Base Pay due Employee up through the date of such
termination.
9.3 COOPERATION BY EMPLOYEE. Following any such notice of
termination, Employee shall fully cooperate with Corporation in all matters
relating to the winding up of Employee's pending work on behalf of Corporation
and the orderly transfer of any such pending work to such other employees of
Corporation as may be designated by Corporation; and to that end, Corporation
shall be entitled to such full-time or part-time services of Employee as
Corporation may reasonably require during all or any part of the period from
the time of giving any such notice until the effective date of such
termination.
X. FILES AND RECORDS
All files, records, reports and other documents concerning customers
of Corporation or any of its Affiliates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act), including, without limitation, clients and
customers consulted, interviewed or served by Employee during the term of this
Agreement shall belong to and remain the property of Corporation or its
Affiliates.
XI. CONFIDENTIAL INFORMATION
11.1 NONDISCLOSURE BY EMPLOYEE. Employee will not, except for the
purpose of benefiting Corporation or its Affiliates, during Employee's
employment with Corporation, and Employee will not under any circumstances at
any time after termination of Employee's employment, directly or
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indirectly, use for himself or others, or disclose, communicate, divulge,
furnish to, or convey to, any other person, firm or corporation, any secret or
confidential information, knowledge or data of Corporation or its Affiliates or
that of third parties obtained by Employee during the period of his employment
with Corporation and such information, knowledge or data includes, without
limitation, the following:
(a) Secret or confidential matters of a technical nature such as,
but not limited to, methods, know-how, formulae, compositions,
processes, discoveries, manufacturing techniques, inventions,
computer programs, and similar items or research projects
involving such items;
(b) Secret or confidential matters of a business nature such as,
but not limited to, information about costs, purchasing,
profits, market, sales or customers; or
(c) Secret or confidential matters pertaining to future
developments such as, but not limited to, research and
development or future marketing or merchandising.
11.2 SURRENDER OF INFORMATION. Employee, upon termination of his
employment with Corporation, or at any other time upon Corporation's written
request, shall deliver promptly to Corporation all letters, notes, notebooks,
reports, computer programs and similar items, memoranda, lists of customers and
all other materials and copies thereof relating in any way to Corporation's or
its Affiliates' business which contain confidential information and which were
in any way obtained by Employee during the term of his employment with
Corporation which are in his possession or under his control. Employee will
not make or retain any copies of any of the foregoing and will so represent to
Corporation upon termination of his employment.
11.3 NOTIFICATION OF SUBSEQUENT EMPLOYERS. Corporation may notify
any person, firm or corporation employing Employee or evidencing an intention
to employ Employee as to the existence and provisions of this Agreement.
11.4 REMEDIES. Employee understands and acknowledges that such
confidential information or other commercial ideas mentioned herein are unique
and that the disclosure or use of such matters or any other secret or
confidential information other than in furtherance of the business of
Corporation would reasonably be expected to result in irreparable harm to
Corporation or its Affiliates and that in addition to whatever other remedies
Corporation and/or its successors or assigns may have at law or in equity,
Employee specifically covenants and agrees that, in the event of default under
or breach of this Agreement, Corporation and/or its successors and assigns
shall be entitled to apply to any court of competent jurisdiction to enjoin any
breach, threatened or actual, of the foregoing covenants and promises by
Employee, and/or to sue to obtain damages for default under or any breach of
this Agreement. In the event of default under or breach of this Agreement,
Employee hereby agrees to pay all costs of enforcement and collection of any
and all remedies and damages under this Agreement, including reasonable
attorneys' fees as determined by a court of competent jurisdiction.
XII. LIMITATION ON COMPETITION
12.1 NONCOMPETITION AGREEMENT. During the period of employment and
for a period of two (2) years after expiration or termination of this Agreement
for any reason, Employee shall not, within North America, directly or
indirectly, as an owner, employee, consultant, sole proprietor or otherwise,
individually or collectively, acquire an interest in, become an employee of, or
consultant
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<PAGE> 46
to, a person, corporation or other entity which engages in manufacturing,
marketing, licensing others to manufacture or market or otherwise engages in a
business substantially similar to that of Corporation or its Affiliates,
including, without limitation, a dental manufacturing or distribution business.
Employee agrees that the geographic area, in light of the character of the
industry, and the duration of this limitation, are reasonable under the
circumstances, considering Employee's position with Corporation and other
relevant factors.
12.2 NONSOLICITATION AGREEMENT. Employee will not, either during
employment and for a period of two (2) years after expiration or termination of
this Agreement for any reason, directly or indirectly, either for himself or
for any other person, firm, or corporation, take any action or perform any
services which are designed to or in fact does call upon, compete for, solicit,
divert, or take away, or attempt to divert or take away, any of the customers
of Corporation or its Affiliates. This prohibition includes customers existing
at the present time or past customers solicited, sold to, or served by
Corporation or its Affiliates during the lesser of (i) the period of Employee's
employment by Corporation, or (ii) two (2) years.
12.3 NON-HIRE AGREEMENT. Employee will not, either during employment
and for a period of two (2) years after expiration or termination of this
Agreement for any reason, directly or indirectly, either for himself or for any
other person, firm or corporation, induce, employ or attempt to employ any
person who is at that time, or has been within six (6) months immediately prior
thereto, employed by Corporation or its Affiliates.
12.4 REMEDIES. It is further agreed that, if Employee shall violate
the foregoing prohibitions, Corporation shall be entitled to seek specific
performance of these covenants, and Employee shall pay all costs and attorneys'
fees, as determined by a court of competent jurisdiction, incurred by
Corporation in enforcing the aforesaid covenants if Corporation is successful
in so doing after a final adjudication of the matter. If any of the foregoing
covenants is not enforceable to the full extent provided, it shall be and
remain enforceable to the extent permitted by law, and a court is authorized by
the parties to modify such covenant to make it reasonable and, as so modified,
enforce it.
12.5 TERMINATION OF PROVISIONS. Notwithstanding the provisions
hereof regarding termination of this Agreement, the provisions of this Article
XII shall remain in full force and effect (including any extensions or renewals
provided for hereunder). However, in the event that this Agreement is
terminated as a result of Corporation filing for bankruptcy, having an
involuntary bankruptcy or receivership petition filed against Corporation which
is not dismissed within sixty (60) days, ceasing operations, dissolving or
becoming insolvent, the provisions of this Article shall be null and void.
XIII. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be settled by arbitration in accordance with the
Rules of the American Arbitration Association at a mutually convenient location
agreed to by the parties or the arbitrators, and the parties hereby agree to be
bound by the results thereof. Each party shall choose one arbitrator and a
third arbitrator shall be chosen by the two arbitrators so chosen by the
parties. A judgment upon any award rendered by a majority opinion of the
arbitrators so chosen may be entered in any court having jurisdiction thereof.
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XIV. GENERAL PROVISIONS
14.1 WAIVER. The waiver by either party of a breach or violation of
any provision of this Agreement shall not operate as or be construed to be a
waiver of any subsequent breach hereof.
14.2 SEVERABILITY. Should any one or more sections of this Agreement
be found to be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining sections contained herein shall
not in any way be affected or impaired thereby. In addition, if any section
hereof is found to be partially enforceable, then it shall be enforced to that
extent.
14.3 NOTICES. Any and all notices required or permitted to be given
under this Agreement shall be sufficient if furnished in writing and personally
delivered or sent by registered or certified mail to the last known residence
address of Employee or to Corporation c/o Young at its principal office at
13705 Shoreline Court East, Earth City, Missouri 63045, or such other place as
it may subsequently designate in writing.
14.4 GOVERNING LAW. This Agreement shall be interpreted, construed
and governed according to the internal laws of the State of California.
14.5 SECTION HEADINGS. The section headings contained in this
Agreement are for convenience only and shall in no manner be construed to limit
or define the terms of this Agreement.
14.6 COUNTERPARTS. This Agreement shall be executed in two or more
counterparts, each of which shall be deemed an original and together they shall
constitute one and the same Agreement, with at least one counterpart being
delivered to each party hereto.
14.7 ASSIGNABILITY. Neither party shall have the right to assign
this Agreement without the consent of the other party.
14.8 SUCCESSORS AND ASSIGNS BOUND. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and permitted assigns.
14.9 ENTIRE AGREEMENT. This is the entire and only agreement between
the parties respecting the subject matter hereof. This Agreement may be
modified only by a written instrument executed by all parties hereto.
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<PAGE> 48
IN WITNESS WHEREOF, Corporation has caused this Agreement to be
executed by a duly authorized officer, and Employee has executed this Agreement
as of the date first written above.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
DENTICATOR INTERNATIONAL, INC.
By:
--------------------------------
Name:
------------------------------
Its: ------------------------------
EMPLOYEE:
-----------------------------------
JOSE L. MENDOZA
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ACKNOWLEDGEMENT OF LIMITED PARTICIPATION
The undersigned, Young Innovations, Inc., a Missouri corporation,
hereby acknowledges and agrees that it shall be a party to this Agreement only
with respect to Article V hereof, and hereby agrees to be bound by the terms
and conditions contained in Article V.
YOUNG INNOVATIONS, INC.
By:
--------------------------------
Name:
------------------------------
Its:
------------------------------
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SCHEDULE 4.1
This constitutes Schedule 4.1 to the Employment and Noncompetition
Agreement dated July 22, 1996 between DENTICATOR INTERNATIONAL, INC., a
Missouri corporation ("Corporation") and JOSE L. MENDOZA, an individual
residing at 821 Valvista Way, Auburn, California 95603 ("Employee").
COMPENSATION
Employee shall receive, as Base Pay, One Hundred Twenty Thousand
Dollars ($120,000.00) per year.
<PAGE> 51
EXHIBIT C
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made this 22nd day of
July, 1996 by and among YOUNG INNOVATIONS, INC., a Missouri corporation
("Young"), BIO DENTAL TECHNOLOGIES CORP., a California corporation ("Bio
Dental"), and THE UNION BANK OF CALIFORNIA (the "Escrow Agent").
WHEREAS, Young and Bio Dental are parties to that certain Asset
Purchase Agreement dated July 22, 1996 (the "Purchase Agreement"), pursuant to
which Young is purchasing substantially all of the assets of Denticator
International, Inc., a California corporation ("Denticator"), and pursuant to
which Bio Dental shall receive a portion of the consideration for selling and
conveying to Young, or a subsidiary of Young, all of Bio Dental's rights,
privileges, interests and claims under that certain Exclusive License Agreement
between Bio Dental and Denticator dated March 31, 1991, as amended.
WHEREAS, pursuant to the Purchase Agreement, Young is required to
deposit with the Escrow Agent a portion of the consideration payable to Bio
Dental; and
WHEREAS, the Escrow Agent has accepted such agency and agreed to hold
such funds in accordance with and subject to the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties hereto agree as follows:
1. Establishment of Escrow Account; Purpose.
(a) Establishment. The Escrow Agent shall establish at its
offices located at San Francisco, California an escrow account (the
"Escrow Account") and shall cause all funds deposited into the Escrow
Account to be held, invested and distributed in accordance with the
terms of this Agreement. The amount deposited into the Escrow
Account, together with any proceeds of investments thereof, that may
be held in the Escrow Account from time to time are hereinafter
referred to collectively as "Escrow Funds." The Escrow Agent shall
keep appropriate records to reflect the current value from time to
time of the Escrow Funds, including appropriate adjustments for
disbursements and income earned or losses in respect thereof.
(b) Purpose of Escrow Account. The sole purpose of the
Escrow Account is to provide a fund against which Young may assert
claims for indemnification under Article VIII of the Purchase
Agreement for (i) a breach by Seller of Seller's representations and
warranties regarding certain environmental matters contained in
Section 3.22 of the Purchase Agreement, and (ii) any Losses (as such
term is defined in the Purchase Agreement) which arise out of the
matters discussed in the letter from the Environmental Protection
Agency to Denticator dated January 11, 1996. Young shall not be
permitted to make claims against the Escrow Account for any other
matters.
2. Delivery of Escrow Funds. At Closing (as defined in the
Purchase Agreement) Young shall deliver or cause to be delivered to the Escrow
Agent in accordance with the terms of the Purchase Agreement, cash in the
amount of One Hundred Thousand Dollars ($100,000) to be deposited into the
Escrow Account.
<PAGE> 52
3. Investment of Escrow Funds. The Escrow Funds shall be
invested and reinvested by the Escrow Agent in such amounts and in such manner
as Bio Dental shall instruct the Escrow Agent from time to time in writing;
provided, however, that the Escrow Agent shall only invest the Escrow Funds in
those types of investments set forth on Exhibit A hereto. If the Escrow Agent
has not received instructions from Bio Dental prior to fifteen (15) days of the
expiration of the term of any instrument in which Escrow Funds are invested,
the Escrow Agent shall invest such Escrow Funds in instruments of the same or
of a substantially similar type as the instruments set forth on Exhibit A
hereto. Except as provided above, the Escrow Agent shall not be required to
invest any funds held hereunder unless requested by Bio Dental as provided
herein.
4. Release of Escrow Funds. The Escrow Agent shall release the
Escrow Funds as follows:
(a) Release Upon Mutual Written Instructions. Young and
Bio Dental may execute and deliver to the Escrow Agent written
instructions ("Mutual Written Instructions"), and the Escrow Agent
shall promptly upon receipt thereof disburse all or a portion of the
Escrow Funds in the Escrow Account as provided in such Mutual Written
Instructions.
(b) Release Upon Young Claim Notice. If Young shall have
delivered to the Escrow Agent one or more written notices (each a
"Young Claim Notice") stating that all or a portion of the Escrow
Funds in the Escrow Account specified in such notice or notices should
be released to Young because Young has made a claim against Bio Dental
under the Purchase Agreement for such amount or amounts, the Escrow
Agent shall retain such amount or amounts until the same are released
pursuant to subsections (c) or (e) hereof. Young shall deliver to Bio
Dental a copy of each Young Claim Notice on or prior to the date of
the delivery thereof to the Escrow Agent, and the Escrow Agent shall
also deliver a copy thereof to Bio Dental promptly after receipt from
Young.
(c) Release to Young. Unless the Escrow Agent shall have
received a Bio Dental Hold Notice as defined in Section 4(d) below
within thirty (30) days following receipt by the Escrow Agent of a
Young Claim Notice, the Escrow Agent shall promptly thereafter release
to Young such portion of the Escrow Account as is claimed by Young in
such Young Claim Notice.
(d) Bio Dental Hold Notice; Disputed Amounts. If, within
thirty (30) days of the Escrow Agent's receipt of a Young Claim Notice
pursuant to Section 4(b) above, Bio Dental shall have delivered to the
Escrow Agent written notice (a "Bio Dental Hold Notice") stating that
all or a portion of the Escrow Account specified in such Young Claim
Notice should not be released to Young, then the Escrow Agent shall
not release such disputed amounts until the occurrence of one of the
two events contemplated in Section 4(e) hereof. Bio Dental shall
deliver to Young a copy of such Bio Dental Hold Notice on or prior to
the date of the delivery thereof to the Escrow Agent and the Escrow
Agent shall also deliver a copy of such Bio Dental Hold Notice to
Young promptly after receipt thereof from Bio Dental.
(e) Release After a Bio Dental Hold Notice. In the event
that the Escrow Agent receives a Bio Dental Hold Notice as
contemplated by Section 4(d) hereof, that portion of the Escrow
Account that is in dispute as reflected in such Bio Dental Hold Notice
shall be held by the Escrow Agent until the occurrence of one of the
following events:
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<PAGE> 53
(1) receipt by the Escrow Agent of Mutual Written
Instructions signed by Young and Bio Dental instructing the
Escrow Agent to release the disputed portion of the Escrow
Funds to such party or parties and in such amount or amounts
as is specified in such Mutual Written Instructions; or
(2) receipt by the Escrow Agent of a written notice
(a "Certified Judgment Notice") from Young or Bio Dental
certifying that a final court judgment with respect to the
claim covered by Young Claim Notice is attached to such
Certified Judgment Notice, in which case the Escrow Agent
shall distribute the disputed portion of the Escrow Funds in
accordance with such judgment, unless within fifteen (15) days
of the Escrow Agent's receipt of a Certified Judgment Notice,
the Escrow Agent receives a written notice (an "Appeal
Notice") from the party not submitting such Certified Judgment
Notice stating that the judgment has or can and will be
appealed. A party delivering a Certified Judgment Notice or
an Appeal Notice shall deliver to the other party hereto a
copy thereof on or prior to the date of delivery thereof to
the Escrow Agent, and the Escrow Agent shall also deliver a
copy of each Certified Judgment Notice or Appeal Notice to the
party which did not deliver the same promptly after the Escrow
Agent's receipt thereof.
(f) Release Upon Termination of Agreement. On July 22,
1999 (the "Termination Date"), the Escrow Agent shall disburse to Bio
Dental from the Escrow Account the amount, if any, by which the
balance of the Escrow Account exceeds the aggregate amount of all
Unresolved Claims (as defined below). The Escrow Funds retained by
the Escrow Agent shall be held solely for the purpose of satisfying
the Unresolved Claims outstanding as of the Termination Date. For
purposes of this Agreement, the term "Unresolved Claims" shall mean
all claims evidenced by a Young Claim Notice as to which the Escrow
Agent has not received Mutual Written Instructions or a Certified
Judgment Notice which is not the subject of an Appeal Notice, in
either case directing release of Escrow Funds. After the Termination
Date, each time an Unresolved Claim is resolved as provided for
herein, the amount of such Unresolved Claim shall be disbursed in
accordance with the Mutual Written Instructions or the Certified
Judgment Notice reflecting such resolution.
(g) Release of Accrued Interest. The Escrow Agent shall
distribute to Bio Dental, within five (5) days after the end of each
calendar quarter, an amount equal to 100% of all amounts earned on the
Escrow Funds in the Escrow Account. All earnings on the Escrow Funds
prior to the time they are disbursed will, for all purposes of this
Escrow Agreement, be treated as Escrow Funds, and will be released
according to the terms of this Section 4.
(h) Security Interests in Escrow Fund.
(1) Except as expressly provided herein, neither
Young nor Bio Dental shall have any right, title or interest
in or possession of the Escrow Account. Therefore, neither
Young nor Bio Dental shall have the ability to pledge, convey,
hypothecate or grant a security interest in the Escrow Account
or any portion thereof unless and until such assets have been
disbursed or are required to be disbursed to such party in
accordance with this Section 4, provided, however, that Young
may pledge or grant a security interest in any of its rights
under this Agreement to any federal or state chartered lending
institution.
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<PAGE> 54
(2) Each of Young and Bio Dental acknowledges that
its interest in the Escrow Account is merely a contingent
right to payment from such Escrow Account. Each of Young and
Bio Dental further acknowledges that neither a voluntary or
involuntary case under any applicable bankruptcy, insolvency
or similar law nor the appointment of a receiver, trustee,
custodian or similar official in respect of Young or Bio
Dental (any of which is referred to herein as a "Bankruptcy
Event") shall increase its respective interest in the Escrow
Account or affect, modify, convert or otherwise change the
contingent nature of its respective right to payment from the
Escrow Account in accordance with the terms of this Agreement.
Nonetheless:
(i) if a court of competent jurisdiction
determines that Young, upon the occurrence of a
Bankruptcy Event with respect to Young, has an
interest in the Escrow Account that is greater than a
contingent right to payment from the Escrow Account
payable only in accordance with the provisions of
this Section 4, then Young shall be deemed to have
granted on the date hereof to Bio Dental a first
priority security interest in, and pledged to Bio
Dental all of its right, title and interest in the
Escrow Account. In such event, the Escrow Agent
shall be deemed to act as bailee on behalf of Bio
Dental in respect of Bio Dental's security interest
in Young's rights to the Escrow Account. The Escrow
Agent shall, upon receipt of indemnification
satisfactory to it from Bio Dental for its fees and
expenses incurred in connection with taking such
actions, take all actions as may be reasonably
requested in writing of it by Bio Dental to further
perfect the security interest granted by Young
hereunder in the Escrow Account. Such security
interest shall automatically be released with respect
to any funds properly distributed from the Escrow
Account pursuant to the terms of this Agreement; and
(ii) if a court of competent jurisdiction
determines that Bio Dental, upon the occurrence of a
Bankruptcy Event with respect to Bio Dental, has an
interest in the Escrow Account that is greater than a
contingent right to payment from the Escrow Account
payable only in accordance with the provisions of
this Section 4, then Bio Dental shall be deemed to
have granted on the date hereof to Young a first
priority security interest in, and pledged to Young
all of Bio Dental's right, title and interest in the
Escrow Account. In any such event, the Escrow Agent
shall be deemed to act as bailee on behalf of Young
in respect of Young's security interest in Bio
Dental's rights to the Escrow Account. The Escrow
Agent shall, upon receipt of indemnification
satisfactory to it from Young for its fees and
expenses incurred in connection with taking such
actions, take all actions as may be reasonably
requested in writing of it by Young to further
perfect the security interest granted by Bio Dental
hereunder in the Escrow Account. Such security
interest shall automatically be released with respect
to any funds properly distributed from the Escrow
Account pursuant to the terms of this Agreement.
(3) The parties hereto agree and acknowledge that
the establishment and maintenance of the Escrow Accounts
hereunder are intended to constitute possession of the Escrow
Accounts for the purposes of perfecting the security interests
therein created hereunder.
-4-
<PAGE> 55
5. Responsibility of the Escrow Agent. The Escrow Agent accepts
the agency created by this Agreement upon the terms and conditions hereof and
undertakes to perform such duties and only such duties as are specifically set
forth herein. No provision of this Agreement shall be construed to relieve the
Escrow Agent from liability for its own gross negligence or willful misconduct,
except that:
(a) The duties and obligations of the Escrow Agent shall
be determined solely by the express provisions of this Agreement, and
no implied covenants, duties or obligations shall be read into this
Agreement against the Escrow Agent nor shall the Escrow Agent be bound
by the provisions of any other agreements between the other parties
hereto beyond the specific terms hereof; the Escrow Agent shall not be
liable for any action taken, suffered or omitted by it in good faith
and reasonably believed by it to be authorized or within the
discretion, rights, duties, privileges or powers conferred upon it by
this Agreement; the Escrow Agent shall not be liable for any error of
judgment made in good faith by a responsible officer or officers of
the Escrow Agent, unless the Escrow Agent was grossly negligent in
ascertaining the pertinent facts or in employing such officer or
officers; and the Escrow Agent shall not be liable to any person with
respect to any action taken, omitted or suffered to be taken by it in
accordance with the provisions of this Agreement or in accordance with
the written directions of Bio Dental or Young as provided herein or of
a court of competent jurisdiction except in the case of the Escrow
Agent's gross negligence or willful misconduct.
(b) The Escrow Agent may act in reliance upon and be
protected in acting or refraining from acting upon any instrument or
signature believed to be genuine and may assume that any person
purporting to give any writing, notice, advice or instruction in
connection with the provisions hereof has been duly authorized to do
so.
(c) The Escrow Agent may consult with counsel, auditors
and other experts and any opinion of counsel or written opinion of
such auditors or other experts shall be full and complete
authorization and protection with respect to any action taken or
suffered or omitted by the Escrow Agent thereunder in good faith and
in accordance with such opinion of counsel or opinion of such auditors
or other experts within the area of their respective expertise.
(d) The Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either
directly or by or through its agents or attorneys. Nothing in this
Agreement shall be deemed to impose upon the Escrow Agent any
liability to any other person as a result of any failure of the Escrow
Agent to qualify to do business or to act as fiduciary or otherwise in
any jurisdiction other than the jurisdiction of its formation.
(e) No property held in escrow by the Escrow Agent
hereunder shall be subject to any setoff, counterclaim, recoupment,
lien or other right which the Escrow Agent may have against either of
the other parties hereto or against any other person for any reason
whatsoever.
(f) If any dispute arises between Young and Bio Dental as
to which of them is entitled to delivery of the disputed portion of
the Escrow Funds, or if the Escrow Agent is uncertain as to its
obligations hereunder, the Escrow Agent may, but shall not be
obligated to, either (i) commence an interpleader action against Young
and Bio Dental in a state or federal court located in Sacramento,
California, and deposit the disputed Escrow Funds with such court,
whereupon the Escrow Agent may apply to the court for an order
discharging it from
-5-
<PAGE> 56
all further liability to any other party to this Agreement, or (ii)
refrain from any action and continue to hold the disputed portion of
the Escrow Funds pending a resolution of the dispute by either a court
of competent jurisdiction or by a written agreement signed by Young
and Bio Dental. For the purposes of any action or proceeding
contemplated by clause (i) above, each party hereby consents to the
jurisdiction of said courts and agrees that service of process in any
such action or proceeding may be made by certified or registered mail
at the address for notices to such party provided in this Agreement.
6. Expenses; Indemnification. Young and Bio Dental each agrees
to pay one-half of any fees or expenses charged by the Escrow Agent for its
services to be performed hereunder. The Escrow Agent shall bill Bio Dental for
all such fees and expenses, and Bio Dental shall remit payment to the Escrow
Agent on behalf of the parties hereto. Upon notice from Bio Dental, Young
shall immediately reimburse Bio Dental for Young's portion of such expenses and
fees. In addition, Young and Bio Dental hereby agree jointly to indemnify the
Escrow Agent for, and to hold it harmless against, any loss, liability or
expense incurred without gross negligence or willful misconduct on the part of
the Escrow Agent, arising out of or in connection with its entering into this
Agreement and carrying out its duties hereunder, including the costs and
expenses of defending itself against any claim of liability.
7. Removal and Resignation. The Escrow Agent may at any time be
removed by the written direction of Bio Dental and Young. The Escrow Agent or
any successor escrow agent may at any time resign and be discharged of the
agency hereby created by giving written notice to each of Bio Dental and Young
specifying the date upon which it desires that such resignation shall take
effect. Such removal or resignation shall take effect on the date specified in
the notice of removal or resignation, which date shall not be earlier than 60
days after the giving of the notice of removal or resignation unless a
successor escrow agent shall have been appointed pursuant to Section 8 hereof
and shall have accepted such appointment, in which event such removal or
resignation shall take effect immediately upon the acceptance by such successor
escrow agent. Young and Bio Dental shall take prompt steps to have a successor
escrow agent appointed in the manner hereinafter provided.
8. Appointment of Successor Escrow Agent. If at any time the
Escrow Agent shall resign or be removed or if at any time a vacancy shall occur
in the office of the Escrow Agent for any other cause, a successor escrow agent
shall be appointed by a written instrument executed by Young and Bio Dental and
delivered to the Escrow Agent and the successor escrow agent. Upon acceptance
of said instrument by the successor escrow agent, the resignation or removal of
the Escrow Agent shall become effective and such successor escrow agent shall
become vested with all the rights, powers, duties and obligations of its
predecessor hereunder. If no successor escrow agent shall have been appointed
at the effective date of resignation of the Escrow Agent, the Escrow Agent or
either other party hereto shall petition a court of competent jurisdiction for
the appointment of a successor and the Escrow Agent's duties shall be purely
ministerial until such appointment is effective.
9. Termination. This Agreement shall terminate upon the release
of all Escrow Funds held in the Escrow Accounts hereunder pursuant to Section 4
hereof or upon written agreement of the parties hereto, which agreement, in the
case of the Escrow Agent, shall not be unreasonably withheld.
10. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by facsimile
transmission, or mailed by overnight delivery service or by registered or
certified mail (return receipt requested), postage prepaid, to the parties at
-6-
<PAGE> 57
the following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof):
To the Escrow Agent:
The Union Bank of California
400 California Street, 9th Floor
San Francisco, California 94104
Telecopier No.: 415-765-2636
Attention: Valerie Young
To Young:
Young Innovations, Inc.
13705 Shoreline Court East
Earth City, Missouri 63045
Telecopier No.: 314-344-0021
Attention: Chief Financial Officer
With a copy to:
Armstrong, Teasdale, Schlafly & Davis
One Metropolitan Square
St. Louis, Missouri 63102-2740
Telecopier No.: 314-621-5065
Attention: John L. Gillis, Jr., Esq.
To Bio Dental:
Bio Dental Technologies Corp.
11291 Sunrise Park Drive
Rancho Cordova, California 95742
Attention: Terry Bane
Telecopier No.: 916-638-9307
With a copy to:
William E. Zisko, Esq.
Tomlinson, Zisko, Morosoli & Maser, LLP
200 Page Mill Road, 2nd Floor
Palo Alto, California 94306
Telecopier No.: 415-324-1808
11. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Escrow Agent, Young and its affiliates and
Bio Dental and their respective successors and permitted assigns. Any
reference to a party contained in this Agreement shall be deemed to apply to
such party's successors and permitted assigns to the extent there shall be any.
Except as set forth in Section 4(h), no party hereto may assign its rights
(including, without limitation, its contingent right to payment) and
obligations hereunder without the written consent of the other parties hereto,
except
-7-
<PAGE> 58
that Bio Dental shall be permitted to assign its rights and obligations
hereunder to Zila, Inc. without the consent of the other parties hereto;
provided, however, that such assignment shall not relieve Bio Dental of any of
its obligations or duties hereunder . Any purported assignment in violation of
the provisions of this Section 11 shall be null and void.
12. Amendments and Modifications. This Agreement may not be
amended or modified in any respect without the express written consent of
Young, Bio Dental and the Escrow Agent.
13. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California without
regard to the conflict of laws principles thereof.
14. Counterparts. This Agreement may be executed in any number of
counterparts, and by any party on a separate counterpart, each of which as so
executed and delivered shall be deemed an original but all of which together
shall constitute one and the same instrument, and it shall not be necessary in
making proof of this Agreement as to any party hereto to produce or account for
more than one such counterpart executed and delivered by such party.
15. No Waiver. The failure of any party to insist, in any one or
more instances, upon the timely performance of any of the terms, covenants or
conditions of this Agreement and to exercise any right hereunder, shall not be
construed as a waiver or relinquishment of the future performance of any such
term, covenant or condition or the future exercise of such right, but the
obligations of the other parties with respect to such future performance shall
continue in full force and effect.
16. Descriptive Headings. The descriptive headings of the sections
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
IN WITNESS WHEREOF, each of the Escrow Agent, Young and Bio Dental have
caused this Agreement to be duly executed and delivered, all as of the date
first above written.
THE UNION BANK OF CALIFORNIA
By: /s/Valerie Young
-------------------------------
Name: Valerie Young
------------------------------
Its: Vice President
-------------------------------
YOUNG INNOVATIONS, INC.
By: /s/George E. Richmond
-------------------------------
Name: George E. Richmond
------------------------------
Its: Chief Financial Officer
-------------------------------
BIO DENTAL TECHNOLOGIES CORP.
By: /s/Terry E. Bane
-------------------------------
Name: Terry E. Bane
------------------------------
Its: Chief Financial Officer
-------------------------------
-8-
<PAGE> 59
EXHIBIT A
Pursuant to Section 3 of the Escrow Agreement, the Escrow Funds shall
at all times be invested and reinvested by the Escrow Agent in one or more of
the following short term investment products:
(i) obligations issued or guaranteed as to full and
timely payment by the United States of America or by any Person controlled by
or acting as an instrumentality of the United States of America pursuant to
authority granted by Congress;
(ii) Obligations issued or guaranteed by any state or
political subdivision thereof (including stripped obligations the principal of
and interest on which have been separated and offered for sale separate from
each other) if (A) such obligations are entitled to the full faith and credit
of such state or political subdivision of such state, respectively, and such
obligations provide that the state or political subdivision has the obligation
to repay, in full and on a timely basis, such obligations, and (B) such
obligations are rated not lower than the second highest category if rated as
short term obligations or not lower than the third highest category if rated as
long term obligations by Moody's Investors Service, Inc. ("Moody's") or by
Standard & Poor's Corporation ("Standard & Poor's"), each of New York, New
York, or their respective successors;
(iii) readily marketable commercial or finance paper of
corporations doing business in and incorporated under the laws of the United
States of America or any state thereof, which is rated in the highest rating
category by either Moody's or Standard & Poor's, or their respective
successors;
(iv) deposit accounts, bankers' acceptances, certificates
of deposit or bearer deposit notes in one or more banks, trust companies or
savings and loan associations (including without limitation, the Escrow Agent
or any bank affiliated with the Escrow Agent) organized under the laws of the
United States of America or any state thereof, each bank or trust company
having a reported capital and surplus of at least $500,000,000 in dollars of
the United States of America and each savings and loan association having a
reported unimpaired capital and surplus, or retained income, as the case may
be, of at least $500,000,000 in dollars of the United States of America;
(v) repurchase agreements secured fully by obligations of
the type specified in clause (i) or issued by a bank or savings and loan
association which is insured by the Federal Deposit Insurance Corporation or
the Federal Savings and Loan Insurance Corporation; and
(vi) any fund or other pooling arrangement which purchases
and holds only investments of the types described in paragraphs (i) through (v)
above.
<PAGE> 60
EXHIBIT D
DENICATOR INTERNATIONAL, INC
BALANCE SHEET
MARCH 31, 1996
ASSETS
<TABLE>
<S> <C> <C>
CURRENT ASSETS
PETTY CASH $ 200.00
CASH, BANK OF AMERICA, GEN 446.68
P/R ACCT-BANK OF CALIFORNIA 20,000.00
BANK OF CALIFORNIA 018-076725 43,937.02
ACCOUNTS RECEIVABLE 642,927.52
CLEARING ACCT, A/R FUNDS (128.60)
ALLOWANCE FOR TRADE DISCOUNTS (7,963.20)
EMPLOYEE ADVANCES (2,625.13)
ADVANCE PROFIT SHARING 1,200.00
DEFERRED COMPENSATION 11,835.00
RAW MATERIAL 109,114.73
FINISHED GOODS 49,599.61
INVENTORY OVERHEAD BURDEN 17,157.00
ALLOWANCE-OBSOLETE INVENTORY (2,935.57)
PREPAID EXPENSES (3,423.58)
DEPOSITS 835.00
PREPAID INVENTORY 5,235.00
-------------
TOTAL CURRENT ASSETS 885,411.48
FIXED ASSETS
FURNITURE & FIXTURES 12,217.55
LEASEHOLD IMPROVEMENTS 13,811.23
COMPUTER EQUIPMENT 55,577.38
WAREHOUSE EQUIPMENT 17,438.33
PRODUCTION MACHINERY 279,173.87
ACCUM DEPR - FURN & FIXTURES (6,936.76)
ACCUM DEPR - LEASEHOLD IMPR (4,087.23)
ACCUM DEPR - COMPUTER EQUIP (42,667.42)
ACCUM DEPR - WAREHOUSE EQUIP (14,065.93)
ACCUM DEPR - PRODUCTION MACH (118,893.01)
-------------
TOTAL FIXED ASSETS 191,568.91
OTHER ASSETS
ORGANIZATIONAL COSTS 6,360.01
ACCUM AMORT-ORGANIZATION COST (6,360.00)
INTANGIBLE ASSETS - PATENTS 29,708.36
INTANGIBLE ASSETS - ADA SEAL 4,000.00
INTANGIBLE ASSETS-PATENTS REC 14,513.85
AMORTIZATION-INTANGIBLE ASSETS (3,528.00)
AMORTIZATION-PATENTS (1,295.85)
-------------
TOTAL OTHER ASSETS 43,398.37
-------------
TOTAL ASSETS $1,120,378.76
=============
</TABLE>
<PAGE> 61
DENTICATOR INTERNATIONAL, INC
BALANCE SHEET
MARCH 31, 1996
LIABILITIES AND EQUITY
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 202,500.06
ACCRUED ACCTS PAYABLE 8,052.06
PROFIT SHARING PAYABLE 10,001.41
ACCRUED PAYROLL 33,918.00
ACCRUED VACATION PAY 20,604.58
TAX PAYABLE/RECEIVABLE, FED (145.00)
TAX PAYABLE/RECEIVABLE - STATE 695.00
SALES TAX PAYABLE 11.66
SALES INCENTIVES PAYABLE 20,000.00
CURRENT PORTION/BIO DENTAL 60,028.20
CURRENT PORTION L/TERN OTHER 21,823.36
ACCRUED ROYALTIES PAYABLE 459,403.48
-------------
TOTAL CURRENT LIABILITIES 836,892.81
LONG-TERM LIABILITIES
NOTE PAYABLE - BIO-DENTAL 380,325.93
NOTE PAYABLE - BANK OF CALIF 31,999.96
-------------
TOTAL LONG-TERM LIABILITIES 412,325.89
------------
TOTAL LIABILITIES 1,249,218.70
EQUITY
CAPITAL STOCK 200.00
RETAINED EARNINGS (136,334.46)
RETAINED EARNINGS-CURRENT YEAR 7,294.52
-------------
TOTAL EQUITY (128,839.94)
-------------
TOTAL LIABILITIES AND EQUITY $1,120,378.76
=============
</TABLE>
<PAGE> 62
EXHIBIT E
DENTICATOR INTERNATIONAL, INC
INCOME STATEMENT
FOR THE 12 PERIODS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
PERIOD TO DATE YEAR TO DATE
ACTUAL PERCENT ACTUAL PERCENT
<S> <C> <C> <C> <C>
REVENUE
SALES $624,804.83 101.9 % 5,659,203.87 103.8
RETURNS & ALLOWANCES (3,810.56) (.6) (104,135.83) (1.9)
SALES DISCOUNTS (7,926.72) (1.3) (103,096.58 (1.9)
----------- ----- ------------ -----
TOTAL REVENUE $613,067.55 100.0 5,451,971.46 100.0
COST OF SALES
COST OF SALES 249,312.29 40.7 2,181,260.80 40.0
PAYROLL 21,138.01 3.4 177,288.00 3.3
DIRECT LABOR (9,666.34) (1.6) .00 .0
PAYROLL TAX EXPENSE 1,703.08 .3 17,282.37 .3
EMPLOYEE BENEFITS - INSURANCE 1,187.36 .2 45,464.32 .8
WORKERS COMPENSATION INS 2,935.00 .5 16,103.75 .3
EMPLOYEE BENEFITS - OTHER .00 .0 289.00 .0
CONTRACT/TEMPORARY LABOR .00 .0 1,806.38 .0
TELEPHONE 169.51 .0 715.01 .0
SUPPLIES - OPERATING 1,365.31 .2 13,403.38 .2
SUPPLIES - SHIPPING/PACKAGING 104.44 .8 3,920.57 .1
FREIGHT IN 1,239.79 .2 6,816.58 .1
FREIGHT OUT 11,301.47 1.8 132,424.37 2.4
FREIGHT INCOME (9,392.20) (1.5) (107,182.34) (2.0)
DISCOUNTS EARNED .00 .0 (83.40) .0
INVENTORY ADJUSTMENTS 35.70 .0 .00 .0
REPAIRS/MAINTENANCE 2,761.29 .5 9,035.58 .2
EQUIPMENT LEASE EXPENSE 434.60 .1 2,982.95 .1
AUTO EXP/MILEAGE REIMBURSEMENT 111.39 .0 2,908.34 .1
MISCELLANEOUS EXPENSE .00 .0 69.60 .0
DEPRECIATION 2,969.19 .5 36,359.28 .7
----------- ----- ------------ -----
TOTAL COST OF SALES 277,709.89 45.3 2,540,764.54 46.6
----------- ----- ------------ -----
GROSS PROFIT 335,357.66 54.7 2,911,206.92 53.4
EXPENSES:
SELLING EXPENSE
PAYROLL 16,801.09 2.7 188,775.87 3.5
PAYROLL TAX EXPENSE 1,381.66 .2 16,716.15 .3
EMPLOYEE BENEFITS - INSURANCE 300.89 .0 10,177.69 .2
EMPLOYEE BENEFITS - OTHER 51.00 .0 1,433.22 .0
OUTSIDE/CONTRACT LABOR 54.25 .0 104.25 .0
TELEPHONE 444.37 .1 1,698.74 .0
SUPPLIES 122.51 .0 4,951.94 .1
POSTAGE/DELIVERY 994.91 .2 11,108.48 .2
PRINTING 768.02 .1 27,427.24 .5
ADVERTISING EXPENSE 9,953.64 1.6 130,281.95 2.4
DUES/PUBLICATIONS/SUBSCRIPTIONS 175.33 .0 2,294.38 .0
CONVENTIONS/TRADE SHOWS (2,709.25) (.4) 25,379.07 .5
SALES PROMOTIONS/INCENTIVE 11,493.44 1.9 63,069.19 1.2
ENTERTAINMENT 1,285.78 .2 7,178.85 .1
</TABLE>
<PAGE> 63
DENTICATOR INTERNATIONAL, INC
INCOME STATEMENT
FOR THE 12 PERIODS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
PERIOD TO DATE YEAR TO DATE
ACTUAL PERCENT ACTUAL PERCENT
<S> <C> <C> <C> <C>
SELLING EXPENSE (Continued)
TRAVEL $ 4,428.45 .7 % 63,773.21 1.2
TRAVEL - MEALS 3,567.71 .6 18,596.25 .3
AUTO EXP/MILEAGE REIMBURSEMENT 1,430.71 .2 8,596.85 .2
COLLECTION EXPENSE 168.00 .0 214.10 .0
BAD DEBT EXPENSE .00 .0 30.29 .0
MARKETING & SALES SAMPLES .00 .0 23.17 .0
MISCELLANEOUS EXPENSE 2,173.00 .4 4,205.73 .1
----------- ---- ---------- ----
TOTAL SELLING EXPENSE 52,885.51 8.6 586,036.62 20.7
GENERAL & ADMIN EXPENSE
PAYROLL - OFFICERS 14,642.30 2.4 144,438.23 2.6
PROFIT SHARING EXPENSE 9,173.20 1.5 46,646.86 .9
PAYROLL - ADMIN STAFF 8,340.00 1.4 86,008.67 1.6
VACATION PAY EXPENSE 2,859.01 .5 2,077.17 .0
PAYROLL TAX EXPENSE 1,990.27 .3 16,699.82 .3
EMPLOYEE BENEFITS - INSURANCE 420.23 .1 14,146.91 .3
RXNET PRESCRIPTION PLAN 445.86 .1 4,956.56 .1
WORKERS COMPENSATION INS 68.00 .0 1,621.25 .0
EMPLOYEE BENEFITS - OTHER 2,571.25 .4 16,383.56 .3
CONTRACT/TEMPORARY LABOR 11,375.75 1.9 18,239.58 .3
INSURANCE - LIABILITY 2,199.00 .4 26,420.00 .5
RENT 2,100.00 .3 25,200.00 .5
UTILITIES - GAS/ELECTRICITY 534.28 .1 6,823.69 .1
TELEPHONE 1,859.53 .3 27,521.38 .5
SUPPLIES 733.68 .1 14,770.70 .3
POSTAGE/DELIVERY 462.39 .1 8,262.00 .2
PRINTING .00 .0 659.48 .0
LEGAL 10,418.21 1.7 100,248.51 1.8
ACCOUNTING 60.00 .0 34,074.50 .6
PERSONAL PROPERTY TAX .00 .0 2,382.14 .0
DUES/SUBSCRIPTIONS 761.64 .1 10,630.14 .2
PERMITS/LICENSES/FEES 131.48 .0 4,523.22 .1
PRODUCT RESEARCH .00 .0 79,172.20 1.5
SEMINARS/TRAINING 1,209.99 .2 9,836.83 .2
ENTERTAINMENT 810.35 .1 5,335.98 .1
TRAVEL 1,045.81 .2 3,081.73 .1
AUTO EXP/MILEAGE REIMBURSEMENT 313,33 .1 3,867.54 .1
REPAIRS/MAINTENANCE 215.60 .0 3,069.38 .1
COMPUTER SERVICES & SUPPLIES 160.77 .0 13,696.43 .3
EQUIPMENT LEASE/RENTAL EXPENSE 1,745.13 .3 33,853.52 .5
BANKCARD FEES .00 .0 558.22 .0
BANK SERVICE CHARGES 384.63 .1 1,602.51 .0
BANK PAYROLL PROCESSING FEES 199.90 .0 3,284.20 .1
DONATIONS/CONTRIBUTIONS 100.00 .0 5,773.73 .1
MISCELLANEOUS EXPENSE (23.67) .0 4,497.12 .1
DEPRECIATION 1,399.46 .2 16,346.20 .3
----------- ---- ---------- ----
TOTAL GENERAL & ADMIN EXPENSE 78,707.38 12.8 796,709.96 14.6
</TABLE>
<PAGE> 64
DENTICATOR INTERNATIONAL, INC
INCOME STATEMENT
FOR THE 12 PERIODS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
PERIOD TO DATE YEAR TO DATE
ACTUAL PERCENT ACTUAL PERCENT
----------- ---- ------------ ----
<S> <C> <C> <C> <C>
TOTAL EXPENSES $131,592.89 21.5 % 1,382,746.58 25.4
----------- ---- ------------ ----
NET INCOME FROM OPERATIONS 203,764.77 33.2 1,528,460.34 28.0
OTHER INCOME & EXPENSE
ROYALTY EXPENSE - BIO DENTAL (104,221.48) (17.0) (926,835.15) (17.0)
ADDITIONAL ROYALTIES - BIO (72,785.29) (11.9) (360,548.93) (6.6)
MINIMUM ROYALTY EXPENSE (13,000.00) (2.1) (156,000.00) (2.9)
INTEREST EXPENSE - BIO DENTAL (7,754.02) (1.3) (72,178.36) (1.3)
INTEREST EXPENSE - OTHER (5,408.33) (.9) (5,408.33) (.1)
DONATIONS/CONTRIBUTIONS .00 .0 (195.05) .0
----------- ---- ------------ ----
TOTAL OTHER INCOME & EXPENSE (203,169.12) (33.1) (1,521,165.82) (27.9)
----------- ---- ------------ ----
EARNINGS BEFORE INCOME TAX 595.65 .1 7,294.52 .1
----------- ---- ------------ ----
NET INCOME (LOSS) $ 595.65 .1 % 7,294.52 .1
=========== ==== ============ ====
</TABLE>
<PAGE> 65
BILL OF SALE
This Bill of Sale ("Bill of Sale") is made, executed and delivered as
of July 22, 1996 by Denticator International, Inc., a California corporation
("Seller"), in favor of Young Innovations, Inc., a Missouri corporation
("Purchaser"), pursuant to the terms and conditions of that certain Asset
Purchase Agreement of even date herewith, by and among Seller, Purchaser, Bio
Dental Technologies Corp., a California corporation and Jose L. Mendoza (the
"Purchase Agreement"). Terms not otherwise defined herein shall have the same
meaning as set forth in the Purchase Agreement.
KNOW ALL MEN BY THESE PRESENTS that Seller, for good and valuable
consideration including that provided for in the Purchase Agreement, the
receipt and sufficiency of which is hereby acknowledged, has bargained and sold
and does hereby sell, assign, convey, transfer and deliver to Purchaser, its
successors and assigns, certain assets of Seller, including, without
limitation, the furniture, machinery, equipment, interests in a real property
lease, inventory, accounts and notes receivable, customer lists, supplier
lists, intellectual property and contractual rights of Seller, all as set forth
and as more specifically described in the Purchase Agreement (hereinafter,
collectively, the "Purchased Assets"), all pursuant to the terms and conditions
set forth in the Purchase Agreement.
Seller hereby represents and warrants to Purchaser that, except as
provided in the Purchase Agreement or the schedules to the Purchase Agreement,
it is the owner of the Purchased Assets and that the Purchased Assets are free
and clear of all liens, charges and encumbrances, and that Seller has full
right, power and authority to sell and transfer the Purchased Assets by this
Bill of Sale.
To have and to hold the Purchased Assets unto the Purchaser, and unto
its successors and assigns forever, Seller covenanting that Seller has the
lawful right to sell and dispose of same and that Seller will warrant and
defend title thereto against all claimants whomsoever.
IN WITNESS WHEREOF, Seller has caused this instrument to be signed as
of the date first set forth above.
DENTICATOR INTERNATIONAL, INC.
By: /s/Jose L. Mendoza
--------------------------------
Name: Jose L. Mendoza
Its: President
<PAGE> 66
[ARMSTRONG, TEASDALE, SCHLAFLY & DAVIS LETTERHEAD]
July 22, 1996
Denticator International, Inc.
11330 Sunrise Park Drive
Rancho Cordova, CA 95742
Bio Dental Technologies Corp.
11291 Sunrise Park Drive
Rancho Cordova, CA 95742
RE: ASSET PURCHASE AGREEMENT DATED July 22, 1996
Gentlemen:
We have acted as counsel to Young Innovations, Inc., a Missouri
corporation ("Young") and Denticator International, Inc., a Missouri
corporation ("New Denticator" and, collectively, with Young, the "Companies")
in connection with the acquisition by New Denticator of the assets of
Denticator International, Inc., a California corporation ("Old Denticator")
pursuant to the Asset Purchase Agreement dated as of July 22, 1996, by and
among Young, Old Denticator, Bio Dental Technologies Corp. and Jose L. Mendoza
(the "Agreement"). This opinion is being delivered to you pursuant to Section
5.03(a) of the Agreement.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings accorded such terms in the Agreement. In this opinion
letter, the Agreement and the documents listed on Schedule I hereto are
referred to as the "Transaction Documents" and the transactions contemplated
thereby are referred to as the "Transactions."
We have examined and relied upon originals or copies, certified or
otherwise identified to our satisfaction, of such corporate records,
agreements, documents and other instruments, and certificates or comparable
documents of public officials and the certificates of officers and
representatives of the Companies delivered to you pursuant to the Agreement and
have made such in inquiries of such officers and representatives, as we have
deemed necessary and relevant as the basis for our opinions hereinafter set
forth.
<PAGE> 67
ARMSTRONG, TEASDALE, SCHLAFLY & DAVIS
Denticator International, Inc.
Bio Dental Technologies Corp.
July 22, 1996
Page 2
In our examination, we have assumed, without independent verification,
the genuineness of all signatures (whether original or photocopies) and the
authenticity of all documents submitted to us as originals and the conformity
to authentic original documents of all documents submitted to us as certified
or photocopies. As to questions of fact material to such opinions which have
not been independently established, we have relied upon the certificates of
officers and representatives of the Companies delivered to you pursuant to the
Agreement, have examined the representations and warranties of the Companies
contained in the Agreement and have relied upon, without independent
verification, the accuracy of the relevant facts stated therein.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions stated herein, we are of the opinion that:
1. Each Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Missouri.
2. Each Company has the corporate power and authority to execute
and deliver the Transaction Documents to which it is to be a party and to
consummate the transactions contemplated thereby, and the execution and
delivery of the Transaction Documents to which each Company is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by requisite corporate action taken on the part of each
Company and no other corporate proceedings on the part of either Company are
necessary to authorize the Transaction Documents to which each Company is to be
a party or to consummate the transactions contemplated thereby.
3. The Transaction Documents to which each Company is to be a
party have been duly and validly executed and delivered by each Company and,
assuming the Transaction Documents to which each Company is to be a party are
valid and binding obligations of the other parties thereto, are valid and
binding obligations of each Company, enforceable against each Company in
accordance with their terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally, and by general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law).
The lawyers of our firm are admitted to practice in the State of
Missouri and we express no opinion other than with respect to federal law and
the laws of the State of Missouri.
<PAGE> 68
ARMSTRONG, TEASDALE, SCHLAFLY & DAVIS
Denticator International, Inc.
Bio, Dental Technologies Corp.
July 22, 1996
Page 3
This opinion is rendered only to you in connection with the matters
addressed above. This opinion may not be relied upon by you for any other
purpose, or by any other person or entity, without our prior written consent.
This opinion is rendered as of the date hereof, and we disclaim any duty to
update this opinion.
Very truly yours,
ARMSTRONG, TEASDALE, SCHLAFLY
& DAVIS
[SIG]
<PAGE> 69
[GENE N. WINDHAM LETTERHEAD]
ATTORNEY AT LAW/CPA
OPINION OF COUNSEL
I certify that I am an active member of the State Bar of California. Per the
requirements of paragraph 5.03(b) of the Asset Purchase Agreement among
DENTICATOR INTERNATIONAL, INC., BIO DENTAL TECHNOLOGIES CORPORATION, JOSE
MENDOZA and YOUNG INNOVATIONS, INC., I provide the following opinion:
(i) DENTICATOR INTERNATIONAL, INC. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted
and is duly qualified to do business and in good standing in each jurisdiction
where the nature of its business conducted in such jurisdiction requires such
qualification;
(ii) The Asset Purchase Agreement and the Related Agreements to
which it is to be a party have been duly and validly executed and delivered by
DENTICATOR INTERNATIONAL, INC. and assuming the Asset Purchase Agreement and
the Related Agreements to which DENTICATOR INTERNATIONAL, INC. is to be a party
are valid and binding obligations of the other parties thereto, are valid and
binding obligations of DENTICATOR INTERNATIONAL, INC., enforceable against
DENTICATOR INTERNATIONAL, INC. in accordance with their terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(iii) Except for those approvals and consents which have already
been obtained, neither execution and delivery by DENTICATOR INTERNATIONAL, INC.
of the Asset Purchase Agreement and the Related Agreements to which it is to be
a party, the sale by DENTICATOR INTERNATIONAL, INC. of the Purchased Assets
pursuant to the Asset Purchase Agreement nor the consummation of the other
transactions contemplated by the Asset Purchase Agreement and the Related
Agreements to which DENTICATOR INTERNATIONAL, INC. is to be a party will (A)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or By-Laws (or other similar governing documents) of DENTICATOR
INTERNATIONAL, INC, (B) require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority
other than those which have been made or
531 MERCHANT STREET FAX 707.451.3215 123 BANK STREET, SUITE E
VACAVILLE, CA 95688 1.800.447.4487 GRASS VALLEY, CA 95945
707.446.0960 916.477.2682
<PAGE> 70
Page 2
obtained; (C) to the best of my knowledge after reasonable investigation,
constitute a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or obligation
to which DENTICATOR INTERNATIONAL, INC. is a party or by which DENTICATOR
INTERNATIONAL, INC. or any of its assets may be bound, except for such defaults
(or rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained; (D) to the best of my knowledge after
reasonable investigation, result in the creation of any encumbrance, security
interest, equity or right of others upon any of the properties or assets of
DENTICATOR INTERNATIONAL, INC. under any of the terms, conditions or provisions
of any agreement, instrument or obligation to which DENTICATOR INTERNATIONAL,
INC. or its assets may be bound or affected; or (E) violate any order, writ,
injunction, judgment or decree known to me, to which DENTICATOR INTERNATIONAL,
INC. is a party, or by which any of its assets are bound or any law, statute,
rule or regulation applicable to DENTICATOR INTERNATIONAL, INC. or any of its
assets; and
(iv) The instruments of transfer contemplated by the Asset Purchase
Agreement, are in proper form to transfer to YOUNG INNOVATIONS, INC., all of
DENTICATOR INTERNATIONAL, INC.'s interest in the Purchased Assets, free and
clear, to the best of my knowledge after reasonable investigation, of any
liens, encumbrances, equities and claims of whatever nature, except (i) those
created by YOUNG INNOVATIONS, INC. and (ii) those, if any, created by failure to
comply with the California Bulk Transfer Laws.
July 19, 1996 /s/Gene N. Windham
-----------------------------------
GENE N. WINDHAM
<PAGE> 71
[TOMLINSON ZISKO MOROSOLI & MASER LLP LETTERHEAD]
July 22, 1996
Young Innovations, Inc.
13705 Shoreline Court East
Earth City, Missouri 63045
Re: Bio-Dental Technologies Corporation
Ladies and Gentlemen:
We have acted as counsel for Bio-Dental Technologies Corporation, a California
corporation (the "COMPANY"), in connection with the execution and delivery of
the Asset Purchase Agreement dated July 22, 1996 (the "AGREEMENT") by and among
the Company, Denticator International, Inc. ("DII"), Jose L. Mendoza and Young
Innovations, Inc. ("YOUNG"), the Assignment and Release Agreement dated July
22, 1996 by and among the Company, DII and Young (the "ASSIGNMENT") and the
Escrow Agreement by and among the Company, Young and Union Bank of California
(the "ESCROW AGREEMENT"). This opinion is rendered pursuant to Section 5.03(c)
of the Agreement.
In connection with the transactions contemplated by the Agreement, we have
reviewed: (i) originals or copies of the corporate records of the
Company; (ii) the Officers' Certificate attached to this letter as Attachment 1
(the "CERTIFICATE"); (iii) the Certificates of public officials attached to
this letter as Attachment 2; and (iv) such other documents as we deem necessary
or advisable for purposes of rendering this opinion.
All capitalized terms used but not otherwise defined herein have the respective
meanings given to such terms in the Agreement.
We have assumed the following for the purpose of rendering the opinions set
forth herein:
A. All signatures on all documents - and instruments submitted to us are
genuine, all natural persons who are signatories thereto have the
legal capacity to execute and deliver same, all documents and
instruments submitted to us as originals are authentic and complete,
all documents and instruments submitted to us as copies conform to the
originals and are complete and accurate, none of the aforesaid
documents has been
<PAGE> 72
Young Innovations, Inc.
July 22, 1996
Page 2
subsequently modified or terminated and none of the rights or
obligations under said documents have been waived or released.
B. The Agreement, the Assignment and the other documents and instruments
contemplated thereby submitted to us for review have been duly
authorized, executed and delivered by each party thereto (other than
the Company) and are the legal, valid and binding obligations of each
such party, enforceable against such party in accordance with their
terms.
C. With respect to matters of fact (as distinguished from matters of
law), we have also relied upon and assumed that the representations of
DII and Young set forth in the Agreement and other certificates,
instruments or agreements executed in connection therewith or
delivered to us are true, correct and complete and not misleading.
Further, with respect to certain factual matters material to our
opinions, we have relied upon the Certificate and the Certificates of
public officials.
Based upon the foregoing review and subject to the limitations and
qualifications set forth above and below, we are of the opinion that the
Agreement, Assignment and Escrow Agreement have been duly authorized, validly
executed and delivered by the Company and constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms, subject to limitations imposed under bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
of general application affecting the enforcement of creditor rights and
remedies generally and subject, as to enforceability, to general principles of
equity and principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity) and except to the extent that rights to indemnification and
contribution thereunder may be limited by applicable federal or state laws and
judicial decisions or public policies relating thereto.
We are qualified to practice law in the State of California, and we do not
purport to be experts in, or to express any opinion herein concerning, the laws
of any other jurisdiction. Our opinions expressed herein are based on
California law and we have assumed for purposes of the foregoing opinions that
a court interpreting the Agreement, the Assignment and the Escrow Agreement
would apply California law.
This opinion speaks only at and as of its date and is based solely on the facts
and circumstances known to us at and as of such date.
<PAGE> 73
Young Innovations, Inc.
July 22, 1996
Page 3
This opinion is rendered to you in connection with the Agreement and may not be
given to or relied upon by any other person or entity without our prior written
consent.
Very truly yours,
TOMLINSON ZISKO MOROSOLI & MASER LLP
[SIG]
<PAGE> 74
ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE (this "Assignment") is made this 22nd day of
July, 1996 by and between Denticator International, Inc., a California
corporation ("Assignor") and Denticator International, Inc., a Missouri
corporation ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor has entered into that certain AIREA Standard
Industrial Lease - Multi Tenant between Assignor (as lessee) and D. Benvenuti,
Jr. (as lessor) dated February 23, 1991, as amended (the "Lease"), pursuant to
which Assignor leases certain property located in Rancho Cordova, California;
WHEREAS, Assignor has entered into that certain Asset Purchase
Agreement dated July 22, 1996 by and between Assignor, Bio Technologies Corp.,
a California corporation, Young Innovations, Inc., a Missouri corporation
("Young") and Jose L. Mendoza, a copy of which is attached hereto as Exhibit A
(the "Purchase Agreement").
WHEREAS, Young has assigned all of its rights under the Purchase
Agreement to Assignee;
WHEREAS, Assignor wishes to assign all of its rights, duties and
obligations under the Lease to Assignee, and Assignee wishes to assume the
same.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Assignor hereby sells, assigns, transfers and sets over to
Assignee all of its right, title and interest in the Lease, to have and to hold
the same unto Assignee, its successors and assigns forever. Assignee in its
name or otherwise, but at Assignee's own cost, charge and expense, may enforce
the same and take all legal measures that may be proper or necessary for the
complete enjoyment of all rights under the Lease.
2. Assignee accepts this Assignment as of the day and year first
above stated, and agrees to each and agrees to assume and be bound by all of
the terms and conditions of the Lease binding on Assignor.
3. Assignee agrees that Assignor shall not be liable for, and
agrees to indemnify and hold Assignor harmless against, any loss, claims,
damages or liabilities, including reasonable attorney's fees, resulting from
any failure of Assignee to comply fully and completely with the terms,
provisions, and covenants of the Lease.
<PAGE> 75
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered, all as of the date first above written.
ASSIGNOR:
Denticator International, Inc.
By: /s/Jose L. Mendoza
--------------------------------
Name: Jose L. Mendoza
Its: President
ASSIGNEE:
Denticator International, Inc.
By: /s/George E. Richmond
-------------------------------
Name: George E. Richmond
Its: Vice President
-2-
<PAGE> 76
CONSENT TO ASSIGNMENT OF LEASE
The undersigned, James II. Copeland, successor to D. Benvenuti Jr. as
Lessor under that certain Standard Industial Lease - Multi Tenant between D.
Benvenuti Jr. as Lessor and Denticator International, Inc. as Lesse relating
to 6,541 square feet of lease space at 11330 Sunrise Park Drive, Sacramento,
California (the "Lease"), does hereby consent to the assignment of the Lease by
Denticator International, Inc., which is a California corporation, to
Denticator International, Inc., a Missouri corporation ("New Denticator") and
agrees to recognize New Denticator as Lessee under the Lease.
New Denticator hereby accepts the assignment and agrees to perform all of
the obligations of Denticator International, Inc.. a California corporation,
under the terms of the Lease.
IN WITNESS WHEREOF, this Consent has been executed this 22nd day of July,
1996.
/s/ James H. Copeland
---------------------------------
James H. Copeland, Lessor
DENTICATOR INTERNATIONAL, INC.,
a Missouri Corporation
/s/ George E. Richmond
By: -----------------------------
George E. Richmond,
Vice President
<PAGE> 77
GUARANTEE
FOR VALUE RECEIVED, AND IN CONSIDERATION OF THE GIVING OF THAT CERTAIN
LEASE BY AND BETWEEN D. BENVENUTI, JR., AS LESSOR, AND DENTICATOR
INTERNATIONAL, INC., AS LESSEE, DATED FEBRUARY 23, 1991, THE UNDERSIGNED
GUARANTEES TO THE LESSOR, ITS SUCCESSORS AND ASSIGNS, THE FULL PERFORMANCE OF
ALL THE COVENANTS, CONDITIONS AND AGREEMENTS THEREIN PROVIDED TO BE PERFORMED
AND OBSERVED BY THE LESSEE, WITHOUT REQUIRING ANY NOTICE OF NONPAYMENT,
NONPERFORMANCE OR NONOBSERVANCE, OR PROOF OF NOTICE OR DEMAND, NOR SHALL
FAILURE OF LESSOR TO ENFORCE ITS RIGHT AGAINST THE LESSEE OR CONCESSIONS MADE
BY THE LESSOR TO THE LESSEE AFFECT THE LIABILITY HEREUNDER.
YOUNG DENTAL MANUFACTURING, INC.
GUARANTOR: /s/ Michael W. Eggleston
-------------------------
DATED: 7/22/96
-----------------------------
<PAGE> 78
INDEMNIFICATION AGREEMENT
Young Dental Manufacturing Company hereby agrees to indemnify and save
harmless Bio-Dental Technologies Corp. ("Bio-Dental") against any liability,
loss, claim, cost or expense resulting from a claim by Landlord as A result of
Bio-Dental's guarantee of the obligations of Denticator International, Inc., a
California corporation ("Lessee") under that certain Lease originally between
D. Benvenuti, Jr. as Lessor and Lessee, which Lease has been assigned this date
to Denticator International, Inc., a Missouri corporation; provided, however,
that this indemnification shall apply only to any liability, loss, claim, cost
or expense arising out of transactions occurring subsequent to July 22, 1996.
Dated July 22, 1996.
YOUNG DENTAL MANUFACTURING COMPANY
By: /s/Michael W. Eggleston
-------------------------------
<PAGE> 79
ASSIGNMENT
WHEREAS, BioDental Technologies Corporation, a California corporation,
(hereinafter referred to as "ASSIGNOR"), is the owner of the entire right,
title and interest in and to the inventions and improvements disclosed in U.S.
Patent No. 5,122,220 (hereinafter the "PATENT");
AND, WHEREAS, Denticator International, Inc., a Missouri corporation,
having its principal place of business at 13705 Shoreline Court East, Earth
City, Missouri 63045 (hereinafter referred to as "ASSIGNEE"), is desirous of
acquiring all right, title and interest in and to the inventions and
improvements, and the PATENT;
NOW, THEREFORE, for one dollar ($1.00) and other good and valuable
consideration, the receipt and sufficiency of all of which is hereby
acknowledged by ASSIGNOR, ASSIGNOR has agreed to and hereby does, sell, assign
and transfer unto said ASSIGNEE the entire right, title and interest in and to
the inventions and improvements and the PATENT, including any extensions,
reissues, or reexaminations thereof, together with the right to sue for, and
recover for, any past infringements thereof; TO BE HELD AND ENJOYED by
ASSIGNEE, its successors and assigns, as fully and entirely as the same would
have been held and enjoyed by ASSIGNOR had no sale and assignment of said
interest been made.
ASSIGNOR further agrees for itself and for its successors and assigns
to execute without further consideration any further lawful documents and any
further assurances that may be deemed necessary by ASSIGNEE to secure and
enforce the rights intended to be granted to ASSIGNEE under this Assignment.
<PAGE> 80
ASSIGNOR hereby covenants for itself and for its successors and
assigns, and agrees with said ASSIGNEE, its successors and assigns, that
ASSIGNOR has granted no right or license in the PATENT, or said inventions and
improvements, to anyone except said ASSIGNEE, that prior to the execution of
this Assignment its right, title and interest in the PATENT and said inventions
and improvements had not been otherwise encumbered, and that it has not
executed and will not execute any instrument in conflict herewith.
BioDental Technologies Corporation
"ASSIGNOR"
Date: July 22, 1996 /s/ Terry E. Bane
-----------------------------------
Name: Terry E. Bane
Title: Chief Financial Officer
-2-
<PAGE> 81
ACKNOWLEDGEMENT
STATE OF Missouri )
) SS.
CITY OF St. Louis )
On this 22 day of July, 1996, before me, a Notary Public, personally
appeared Terry E. Bane to me known to be the person described in, and who
executed the foregoing assignment and acknowledged that he executed same as his
free act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal the date
and year last above written.
/s/ Carol A. Head
-----------------------------------
Notary Public
My Commission Expires: 9-23-98
CAROL A. HEAD
Notary Public-Notary Seal
STATE OF MISSOURI
St. Louis County
My Commission Expires: Sept. 23, 1998
-3-
<PAGE> 82
ASSIGNMENT
WHEREAS, BioDental Technologies Corporation, a California
corporation, having its principal place of business at Rancho Cordova,
California (hereinafter referred to as "ASSIGNOR"), is the owner of all right,
title and interest in and to the mark that is the subject of U.S. Reg. No.
1,793,277, (hereinafter "MARK"), and U.S. Reg. No. 1,793,277 (hereinafter
"REGISTRATION");
AND, WHEREAS, Denticator International, Inc., a Missouri corporation,
having its principal place of business at 13705 Shoreline Court, Earth City,
Missouri 63045 (hereinafter referred to as "ASSIGNEE"), is desirous of
acquiring all right, title and interest in and to the MARK and the
REGISTRATION;
NOW, THEREFORE, for one dollar ($1.00) and other good and valuable
consideration, the receipt and sufficiency of all of which is hereby
acknowledged by ASSIGNOR, ASSIGNOR has agreed to and hereby does, sell, assign
and transfer unto said ASSIGNEE the entire right, title and interest in and to
the MARK, together with the goodwill associated therewith, the REGISTRATION,
and the right to sue for, and recover for, any past infringements thereof; TO
BE HELD AND ENJOYED by ASSIGNEE, its successors and assigns, as fully and
entirely as the same would have been held and enjoyed by ASSIGNOR had no sale
and assignment of said interest been made.
ASSIGNOR further agrees for itself and for its successors and assigns
to execute without further consideration any further lawful documents and any
further assurances that may be deemed necessary by ASSIGNEE to secure and
enforce the rights intended to be granted to ASSIGNEE under this Assignment.
ASSIGNOR hereby covenants for itself and for its successors and
assigns, and agrees with said ASSIGNEE, its successors and assigns, that
ASSIGNOR has granted no right or
<PAGE> 83
license in the MARK or REGISTRATION, to anyone except said ASSIGNEE, that
prior to the execution of this Assignment, its right, title and interest in the
MARKS and REGISTRATIONS had not been otherwise encumbered, and that it has not
executed and will not execute any instrument in conflict herewith.
BioDental Technologies Corporation
"ASSIGNOR"
/s/ Terry E. Bane
-----------------------------------
Name: Terry E. Bane
Title: Chief Financial Office
Date: July 22, 1996
ACKNOWLEDGEMENT
STATE OF Missouri )
) SS.
CITY OF St. Louis )
On this 22nd day of July, 1996, before me, a Notary Public, personally
appeared Terry E. Bane to me known to be the Chief Financial Officer of
BioDental Technologies Corporation, and who executed the foregoing assignment
and acknowledged that he executed same as his free act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal the date
and year last above written.
/s/ Carol A. Head
-----------------------------------
Notary Public
My Commission Expires: 9-23-98
CAROL A. HEAD
Notary Public-Notary Seal
STATE OF MISSOURI
St. Louis County
My Commission Expires: Sept. 23, 1998
-2-
<PAGE> 84
ASSIGNMENT
WHEREAS, BioDental Technologies Corporation, a California corporation,
having its principal place of business at Rancho Cordova, California
(hereinafter referred to as "ASSIGNOR'), is the owner of all right, title and
interest in and to the marks identified on the attached Schedule A,
incorporated herein by reference, (hereinafter "MARKS"), and the U.S.
registrations thereon identified on the attached Schedule A (hereinafter
"REGISTRATIONS');
AND, WHEREAS, Denticator International, Inc., a Missouri corporation,
having its principal place of business at 13705 Shoreline Court, Earth City,
Missouri 63045 (hereinafter referred to as 'ASSIGNEE'), is desirous of
acquiring all right, title and interest in and to the MARKS and the
REGISTRATIONS;
NOW, THEREFORE, for one dollar ($1.00) and other good and valuable
consideration, the receipt and sufficiency of all of which is hereby
acknowledged by ASSIGNOR, ASSIGNOR has agreed to and hereby does, sell, assign
and transfer unto said ASSIGNEE the entire right, title and interest in and to
the MARKS, together with the goodwill associated therewith, the REGISTRATIONS,
and the right to sue for, and recover for, any past infringements thereof; TO
BE HELD AND ENJOYED by ASSIGNEE, its successors and assigns, as fully and
entirely as the same would have been held and enjoyed by ASSIGNOR had no sale
and assignment of said interest been made.
ASSIGNOR further agrees for itself and for its successors and assigns
to execute without further consideration any further lawful documents and any
further assurances that may be deemed necessary by ASSIGNEE to secure and
enforce the rights intended to be granted to ASSIGNEE under this Assignment.
<PAGE> 85
ASSIGNOR hereby covenants for itself and for its successors and
assigns, and agrees with said ASSIGNEE, its successors and assigns, that
ASSIGNOR has granted no right or license in the MARKS or REGISTRATIONS, to
anyone except said ASSIGNEE, that prior to the execution of this Assignment,
its right, title and interest in the MARKS and REGISTRATIONS had not been
otherwise encumbered, and that it has not executed and will not execute any
instrument in conflict herewith.
BioDental Technologies Corporation
"ASSIGNOR"
/s/ Terry E. Bane
---------------------------------------
Name: Terry E. Bane
Title: Chief Financial Officer
Date: July 22, 1996
ACKNOWLEDGEMENT
STATE OF Missouri )
) SS.
CITY OF St. Louis )
On this 22 day of July, 1996, before me, a Notary Public, personally
appeared Terry E. Bane to me known to be the Chief Financial Officer of
BioDental Technologies Corporation, and who executed the foregoing assignment
and acknowledged that he executed same as his free act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal the date and
year last above written.
/s/ Carol A. Head
---------------------------------------
Notary Public
My Commission Expires: 9-23-98
CAROL A.HEAD
Notary Public-Notary Seal
STATE OF MISSOURI
St. Louis County
My Commission Expires: Sept. 23, 1998
<PAGE> 86
SCHEDULE A
<TABLE>
<CAPTION>
TRADEMARK REG. NO. ISSUE DATE
<S> <C> <C>
THE DENTICATOR 358,971 07/26/38
PICK-A-DENT 699,916 06/21/60
TUFTEE 716,125 05/30/61
TIP-A-DENT 796,812 09/28/65
SPIREX 1,021,451 09/30/75
DENTICATOR 1,071,240 08/16/77
NEAR PERFECT 1,139,435 09/09/80
PLAQUE-AWAY 1,565,351 11/14/89
WATER-DENT 1,660,701 10/15/91
MISCELLANEOUS DESIGN 1,953,869 02/06/96
</TABLE>
-3-
<PAGE> 87
ASSIGNMENT
THIS ASSIGNMENT ("Assignment") is made this 22nd day of July, 1996 by
and between Bio Dental Technologies Corp., a California corporation
("Assignor") and Denticator International, Inc., a California corporation
("Assignee").
WITNESSETH:
WHEREAS, Assignor wishes to assign all of its rights and interests in
those assets listed on Exhibit A attached hereto (the "Assets"), and Assignee
wishes to accept such assignment.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Assignor sells, assigns, transfers and sets over to Assignee
all of its right, title and interest in and to the Assets, to have and to hold
the same unto Assignee, its successors and assigns forever.
2. Assignee accepts this assignment of the Assets as of the day
and year first above stated.
ASSIGNOR:
Bio Dental Technologies Corp.
By: /s/ Terry E. Bane
--------------------------------
Name: Terry E. Bane
Its: Chief Financial Officer
ASSIGNEE:
Denticator International, Inc.
By: /s/ Jose L. Mendoza
--------------------------------
Name: Jose L. Mendoza
Its: President
<PAGE> 88
Exhibit A
PRODUCTION EQUIPMENT AND SERIAL NUMBERS
<TABLE>
<S> <C>
Packaging Machine Srl# 4506-8367 11/89
Bowl Feeder Srl# 890296
#2 Pakcaging Machine Srl# 4506-7425 2/89
#2 Bowl Feeder Srl#890296-2
3000 1 Tool Ches Homak
Air Compresor Model #32935 (speedaire) Small one for QC
Blister Machine Srl #21
Model 1616M/ Wespac Ind. Unknown usage
1800 Toledo Scale Modle 8581 SRL# 2459929-2YC Value $1800.00
1800 PensilvanScale Modle 5600 SRL# 187421
450 AND Scale SRL# C0237685 Value $415 3/90
450 AND Scale SRL# C0208222 Value $415 3/90
450 AND Scale SRL# CO205345 Value $415 3/90
450 AND Scale SRL# C0222653 Value $415 3/90
130 Heat Sealer SRL# 871109
130 Impulse Heat Sealer SRL#/Model # FS-200 H
130 Heat Sealer No SRL #
500 Mixing Bowl Value $500.00
200 Black & Decer Drill SRL# 872306
Dayton Speedair SRL# 0687 (compresor)
Unknown SRL# 586 Halvor Foldkwikprint Co.
AC Motor Inter Edge Unknow Use, SRL# 2080
Rolaway Lader No Serial #
Polyjack, Nor SRL#
Fork Lift SRL# 44435000
1600 Quincy QE-5 Air Compresor RCVR# 110946N443688
Assembly Machine SRL# off Bowl feeder for cup & Gear 131
700 Propain Heater SRL#8923
Propain Heater SRL#8925
260 Black & Decker Work Bench Model #300 With vise
-----
12050 TOTAL
=====
2000 Shelving
</TABLE>
<PAGE> 89
[DENTICATOR LETTERHEAD]
July 22, 1996
Bio-Dental Technologies Corporation
11291 Sunrise Park Drive
Rancho Cordova, CA 95742
Re: CANCELLATION OF OPTIONS
Ladies and Gentlemen:
In accordance with Section 6.02(h) of the Asset Purchase Agreement dated
as of July 22, 1996 among Denticator International, Inc. ("SELLER"),
Bio-Dental Technologies Corporation ("BIO-DENTAL"), Jose L. Mendoza ("MENDOZA")
and Young Innovations, Inc. ("BUYER"), this letter will confirm that all
options, warrants and other rights to purchase any and all shares of
Bio-Dental's capital stock or other securities issued or to be issued by
Bio-Dental to Seller or Mendoza (the "SECURITIES") are hereby canceled and
terminated and of no further force or effect. Seller and Mendoza, jointly and
severally, represent and warrant to Bio-Dental that any Securities issued or to
be issued to Seller or Mendoza have not been sold, assigned or transferred by
either of them to any other third party and each of them has retained all
right, title and ownership interest in and to such Securities.
DENTICATOR INTERNATIONAL, INC.
By: /s/ Jose L. Mendoza
--------------------------------
Jose L. Mendoza, President
/s/ Jose L. Mendoza
--------------------------------
JOSE L. MENDOZA
