UNITED STATES
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) December 27, 2004
Florida 000-32563 650710392 -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 4878 Ronson Court, San Diego, CA 92111 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) |
Registrant's telephone number, including area code: (858) 243-2615
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 - Financial Information
Item 2.01 Completion of Acquisition or Disposition of Assets.
Business
On December 27, 2004, the Company acquired both Union Dental Corp, a Florida corporation ("Union Dental") and Direct Dental Services, Inc., a Florida corporation ("DDS"), through a share exchange and reorganization (the "Acquisition"), pursuant to which Union Dental and DDS became wholly-owned subsidiaries of the Company, and acquired (i) all of the issued and outstanding shares of common stock of Union Dental and DDS in exchange for an aggregate of 17,500,000 shares of authorized, but theretofore unissued, shares of common stock, $0.0001 par value, of the Company and 1,000,000 shares of preferred stock with each share of preferred stock providing voting rights equal to 15 shares of the Company's common stock (there are no dividend, redemption, liquidation or conversion rights applicable to these shares of preferred stock), (ii) all of the issued and outstanding options to purchase Union Dental capital stock in exchange for an aggregate of 3,452,250 options to purchase common stock of the Company, constituting approximately 68% of the capital stock of the Company. Prior to the closing of the Acquisition, the existing shareholders of the Company surrendered 69% of the shares of common stock, thus reducing the issued and outstanding shares of Common Stock of the Company from 32,284,831 shares to 10,000,000 shares.
Union Dental acquired substantially all of the assets (except the patient list) of a dental practice referred to as George D. Green D.D.S., P.A. in Coral Springs, Florida, where it employs twelve (12) full time employees and one part time employee. The Coral Springs office is comprised of a licensed dentist, a licensed associate dentist, two hygienists, four nurses, two office managers, a Union Dental insurance specialist and a Union Dental administrative director.
DDS is a Florida corporation that operates a network of duly licensed dental providers (the "Dental Referral") who provide dental services through the network to union members in accordance with arrangements between UDC and various unions. The Company currently has contracts with local unions, such as Communications Workers of America ("CWA"), International Brotherhood of Electrical Workers ("IBEW") and General Electric's International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers - Communications Workers of America ("IUE-CWA"). Members of the Dental Network are assigned "areas of exclusivity" established by DDS which grants the Dental Network provider primary responsibility to provide for the general dentistry and specialist services required by covered union members. DDS's Network dentists accept as payment in full for covered services the scheduled amount payable by the applicable union sponsored dental benefit plan together with a co-payment from the covered union member. The co-payment to be paid by the union member is generally substantially lower than the scheduled co-payment set forth in the applicable dental benefit plan, resulting in significant savings to the union member.
Item 4.01 Changes In Registrant's Certifying Accountant
(a) (i) Lawrence Scharfman ("Scharfman"), by letter dated January 3, 2005, was dismissed as the independent registered public accounting firm for National Business Holdings, Inc. (the "Company"). Scharfman had been the independent registered public accounting firm for and audited the financial statements of the Company as of May 31, 2004 for the seventeen months in the period ended May 31, 2004.
(ii) The reports of Scharfman on the financial statements of the Company for the period of May 31, 2004 for the seventeen months in the period ended May 31, 2004 contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
(iii) The decision to change accountants was approved unanimously by the Board of Directors.
(iv) In connection with the audit for the period of May 31, 2004 for the seventeen months in the period ended May 31, 2004 and in connection with Scharfman's review of the subsequent interim periods preceding dismissal on January 3, 2005, there have been no disagreements between the Company and Scharfman on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Scharfman, would have caused Scharfman to make reference thereto in their report on the Company's financial statements for these fiscal years. During the two most recent fiscal years and prior to the date hereof, the Company had no reportable events (as defined in Item 304(a)(1) of Regulation S-B).
(b) De Meo Young McGrath ("DYM"), by letter dated January 3, 2004, was engaged as the independent registered public accounting firm for the Company.
(i) The Company has not consulted with DYM regarding the application of accounting principles to any contemplated or completed transactions nor the type of audit opinion that might be rendered on the Company's financial statements, and neither written nor oral advice was provided that would be an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issues.
Section 5 - Corporate Governance and Management
Item 5.01 Change in Control of Registrant.
With the issuance of 17,500,000 shares of Common Stock to holders of capital stock of Union Dental and DDS upon the Company's Acquisition, the former holders of capital stock of Union Dental and DDS became the holders of 63.6% of the capital stock of the Company. The change of control of the Company was effected solely by the issuance of newly issued shares of the Company to the former shareholders of Union Dental and DDS upon the Acquisition without any other consideration.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
(a) Effective on December 27, 2004 and upon the Acquisition, the then officers and directors of the Company resigned and were replaced by persons who have been officers and directors of Union Dental. See 5.02(c) of this report on Form 8-K.
(b) See 5.02(c) of this report on Form 8-K.
(c) The following persons became the executive officers and directors of the Company on December 27, 2004. Prior to the Acquisition, such persons had no relationship with the Company.
Name Age Position ------------------- ----- ----------------------------------------------------- Dr. George D. Green 46 President, Chief Executive Officer and Chairman of the Board of Directors |
Dr. George D. Green 46, is Chairman of the Board of Directors, President and Chief Executive Officer of Union Dental Corp. He graduated from the University of Miami in 1983. He attended Georgetown University School of Dentistry where he graduated in 1985 with his Doctor of Dental Surgery (DDS) degree. Dr. Green started his general dentistry practice in Florida in 1986 and currently maintains that office. He has been President of the Coral Springs Business Club from 1993-96 and President of the Coral Springs/Parkland Rotary Club from 1996-97. He is the Founder of Union Dental Corp., and has held the management positions of the Company since inception. Dr. Green has been a Dental Network participant since 1992 in General Dentistry, Endodontics and Periodontics. In August 2000, he purchased 50% ownership of DDS and on December 31, 2003, he purchased the remaining 50% of DDS.
Executive Compensation Union Dental's Officers
The officers of Union Dental became the officers of the Company after the closing of the Acquisition. The following table sets forth the compensation earned during the years ended December 31, 2002 and 2003 by Union Dental's officers. On December 28, 2004, Dr. George D. Green became the President and Chief Executive Officer of the Company:
Long Term Compensation Annual Compensation Awards --------------------------------------------------------------------------- Securities Underlying Name And Principal Position Salary($) Bonus($) Options --------------------------------------------------------------------------- Dr. George D. Green, President, Chief Executive 2003 $ 505,587(1) $ 0 0 Officer, and Director 2002 $ 542,572(2) 0 0 Dr. Melvyn Greenstein 2003 $ 270,259(3) 0 0 Former Director (a) 2002 $ 263,647(4) 0 0 ----------------- |
(a) On January 5, 2004, Dr. Melvyn Greenstein resigned from DDS as a director, president and registered agent. He was succeeded as president and registered agent by Dr. George D. Green.
(1) In 2003 Dr. George Green received from DDS $235,464.00 and $270,123.00 from George D. Green, DDS, PA.
(2) In 2002 Dr. George Green received from DDS $243,647.00 and $298,925.00 from George D. Green, DDS, PA.
(3) In 2003 Dr. Melvyn Greenstein received from DDS $38,321.00 and his
management company (Gopher International) received $231,938.00 from DDS.
(4) In 2002 Dr. Melvyn Greenstein received from DDS $15,647.00 and his
management company (Gopher International) received $248,000.00 from DDS.
Related Party Transactions
Union Dental entered into an employment agreement with Dr. George D. Green on December 22, 2004, pursuant to which Dr. Green is employed as the President, Chief Executive Officer and Chairman of the Board of Directors of Union Dental and became the Chief Executive Officer, President and Chairman of the Board of the Company upon the closing of the Acquisition. The current term of the agreement expires December 31, 2009 but will be automatically renewed for one-year periods until either party gives the other party written notice of its intent not to renew at least 30 days prior to the end of the term. Dr Green is under contract to receive an annual base salary of $250,000. Dr. Green is entitled to participate in the Company's bonus program which will be dependent upon the achievement of certain milestones. Additionally, Union Dental granted Dr. Green 750,000 options to purchase shares of common stock of Union Dental. Upon the closing of the Acquisition, such options became options to purchase shares of Common Stock of the Company.
Union Dental entered into an employment agreement with Dr. Leonard I. Weinstein on October 26, 2004, pursuant to which Dr. Weinstein is employed as a Director of Union Dental. In addition, upon the completion of Union Dental of funding of $3,000,000, Dr. Weinstein would become the Chief Operating Officer. The current term of the agreement expires on the second anniversary from the date of funding but may be renewed for one-year periods by Union Dental unless either party gives the other party written notice of its intent not to renew at least 90 days prior to the end of the term. Upon becoming the Chief Operating Officer, Dr Weinstein shall receive an annual base salary of $60,000 and shall receive $500 per meeting as a director. Union Dental granted Dr. Weinstein 156,250 options to purchase shares at a 10% discount from the first quote after the Acquisition. One third of these options vest immediately with the remaining options dependent upon the achievement of certain milestones. Additionally, Union Dental entered into a Shareholder's Agreement and Management Contract with Tropical Medical Services, a company in which Dr. Weinstein is President whereby upon the Company receiving debt or equity financing of $3,000,000 from an introduction by Tropical Medical or dp Martin & Associates, Inc., Tropical Medical shall receive 960,000 shares of the Issuer. Upon the closing of the Acquisition, such options became options to purchase shares of Common Stock of the Company.
Union Dental entered into an employment agreement with Robert Gene Smith on February 15, 2004, pursuant to which Mr. Smith became a member of the Board of Directors of Union Dental. The current term of the agreement expires February 15, 2006 and thereafter shall be voted on by Union Dental's shareholders at the annual meeting and renewed for two-year periods unless either party gives the other party written notice of its intent not to renew at least 90 days prior to the end of the term. Mr. Smith has been receiving an annual stipend of $24,000. Additionally, Union Dental granted Mr. Smith 250,000 options to purchase shares of common stock of Union Dental at $0.50 per share and an additional 247,500 options dependent upon the achievement of certain milestones. Upon the closing of the Acquisition, such options became options to purchase shares of Common Stock of the Company.
Item 5.05 Amendment to the Registrant's Code of Ethics or Waiver of a Provision of the Code of Ethics.
Effective on December 28, 2004, the Company adopted a Code of Ethics (filed hereto as Exhibit 14.1). Prior thereto, the Company had no formal, written code of ethics.
Section 8 - Other Events
Item 8.01 Other Events.
Certificate of Incorporation and By-laws.
As soon as practicable following the Acquisition, the articles of incorporation of the Company will be amended and restated to: (i) change the name of the Company to Union Dental Holdings, Inc. As soon as practicable following the Acquisition, the bylaws of the Company will be amended and restated in their entirety.
Section 9 - Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Direct Dental Services, Inc. and George D. Green, D.D.S., P.A., Inc. Financial Statements for the years ended December 31, 2003 and December 31, 2002 with independent auditors report (including Balance Sheets, Statement of Operations, Statements of Shareholders' Equity, Statement of Cash Flows, and Notes to Consolidated Financial Statements) starting on page F-1.
INDEX TO DIRECT DENTAL SERVICES, INC. FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm..................F-1 Consolidated Balance Sheet...............................................F-2 Consolidated Income Statement............................................F-3 Consolidated Statement of Changes in Shareholder's Equity................F-4 Consolidated Statement of Cash Flows.....................................F-5 Notes to Consolidated Financial Statement...............................F-6 |
INDEX TO GEORGE D. GREEN, DDS, P.A., INC. FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm..................F-9 Consolidated Balance Sheet..............................................F-10 Consolidated Income Statement...........................................F-11 Consolidated Statement of Changes in Shareholder's Equity...............F-12 Consolidated Statement of Cash Flows....................................F-13 Notes to Consolidated Financial Statement..............................F-14 |
DE MEO, YOUNG, MCGRATH
A PROFESSIONAL SERVICES COMPANY
SUITE 517 SUITE 411 2400 EAST COMMERCIAL BOULEVARD 2424 NORTH FEDERAL HIGHWAY FORT LAUDERDALE, FLORIDA 33308 BOCA RATON, FLORIDA 33431 (954) 351-9800 (561) 447-9800 FAX (954) 938-8683 FAX (561) 391-8856 www.dymco.net www.dymco.net ANTHONY DE MEO, CPA*, ABV, PFS MICHAEL I. BLOOM, CPA ROBERT E. MCGRATH, CPA LAWRENCE E. DEBRUNNER, CPA DAVID I. STOCKWELL, CPA BARRY E. WAITE, CPA ------------------ ROBERTA N. YOUNG, CPA *regulated by the State of Florida |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Direct Dental Services, Inc.
We have audited the accompanying balances of Direct Dental Services, Inc. (a Florida corporation) as of December 31, 2003 and 2002, and the related statements of income, changes in shareholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit of these statements in accordance with the standards of the Public Company Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Direct Dental Services, Inc. as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
De Meo, Young, McGrath
/s/De Meo, Young, McGrath Fort Lauderdale, Florida November 29, 2004 |
DYM
MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS: MANAGEMENT CONSULTING SERVICES DIVISION; SEC PRACTICE SECTION; PRIVATE COMPANIES PRACTICE SECTION; TAX DIVISION OF FLORIDA; INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS; INSTITUTE OF BUSINESS APPRAISERS
DIRECT DENTAL SERVICES, INC. BALANCE SHEETS DECEMBER 31, 2003 AND 2002 2003 2002 ---------------- ------------------ ASSETS Current Assets: Cash $ 6,656 $ - Accounts Receivable 24,500 42,876 Due from officer 232,467 240,036 ---------------- ------------------ Total Current Assets 273,623 282,912 ---------------- ------------------ Property and Equipment: Furniture and Equipment 21,606 21,606 Accumulated Depreciation (21,606) (21,606) ---------------- ------------------ Total Property and Equipment - - ---------------- ------------------ Total Assets $ 273,623 $ 282,912 ---------------- ------------------ LIABILITIES AND SHAREHOLDER'S EQUITY Current Liabilities: Accounts Payable and Accrued Expenses $ 8,460 $ 1,419 Unearned Membership Fees 264,663 280,993 ---------------- ------------------ Total Current Liabilities 273,123 282,412 ---------------- ------------------ Total Liabilities 273,123 282,412 ---------------- ------------------ Shareholders' Equity: Common Stock, par value $1.00, 7,500 shares authorized, 500 shares issued and outstanding 500 500 Retained Earnings - - ---------------- ------------------ Total Shareholders' Equity 500 500 ---------------- ------------------ Total Liabilities and Shareholders' Equity $ 273,623 $ 282,912 ================ ================== |
See the accompanying accountant's report and related notes to financial statements.
DIRECT DENTAL SERVICES, INC. INCOME STATEMENT DECEMBER 31, 2003 AND 2002 2003 2002 ---------------- ------------------ Income Fees $ 645,994 $ 576,324 ---------------- ------------------ Operating Expenses Advertising and Promotions - 1,100 General and administrative 58,877 53,797 Postage 21,608 31,874 Printing Brochures 32,534 21,209 Rent 42,800 40,038 ---------------- ------------------ Total Operating Expenses 155,819 148,018 ---------------- ------------------ Operating Income 490,175 428,306 ---------------- ------------------ Other Income Interest Income 930 1,632 ---------------- ------------------ Net Income $ 491,105 $ 429,938 ================ ================== |
See the accompanying accountant's report and related notes to financial statements.
DIRECT DENTAL SERVICES, INC. STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY DECEMBER 31, 2003 AND 2002 TOTAL COMMON RETAINED SHAREHOLDER'S STOCK EARNINGS EQUITY ----------- --------------- ----------------- December 31, 2001 $ 500 $ (160,311) $ (159,811) Net Income - 429,938 429,938 Distributions - (269,627) (269,627) ----------- --------------- ----------------- December 31, 2002 $ 500 $ - $ 500 Net Income - 491,105 491,105 Distributions - (491,105) (491,105) ----------- --------------- ----------------- December 31, 2003 $ 500 $ - $ 500 =========== =============== ================= |
See the accompanying accountant's report and related notes to financial statements.
DIRECT DENTAL SERVICES, INC. STATEMENT OF CASH FLOWS DECEMBER 31, 2003 AND 2002 2003 2002 ----------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 491,105 $ 429,938 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation - - (Increase) Decrease in: Accounts Receivable 18,376 (6,877) Shareholders' loans (4,431) (247,588) Increase (Decrease) in: Accounts Payable 8,460 - Deferred Revenue (16,330) 87,080 Net Cash Provided by Operating Activities 497,180 262,553 ----------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES Loans From Shareholders 12,000 - Net Cash Provided by Investing Activities 12,000 - ----------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES Distributions (491,105) (269,627) Net Cash Used in Financing Activities (491,105) (269,627) ----------------- ---------------- NET INCREASE(DECREASE) IN CASH 18,075 (7,074) CASH AT BEGINNING OF YEAR (1,419) 5,655 ----------------- ---------------- CASH AT END OF YEAR $ 16,656 $ (1,419) ================= ================ SUPPLEMENTAL DISCLOSURE Interest paid $ - $ - ================= ================ |
See the accompanying accountant's report and related notes to financial statements.
DIRECT DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Direct Dental Services, Inc (the Company) was formed under the laws of the State of Florida in January 1988 and maintains a network of dentists who perform dental services for union members in seventeen states. The Company has contracts with dentists in Alabama, Arizona, California, Florida, Georgia, Hawaii, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Nevada, North Carolina, Oklahoma, South Carolina, Tennessee and Texas.
Property and Equipment
Property and equipment are stated at cost. There is no depreciation provision for 2003 or 2002 as assets were fully depreciated at December 31, 2001. The assets were depreciated using the straight line method over their useful lives. Assets are capitalized if they have a cost of $250 or greater and a useful life greater than one year.
Revenue Recognition
The Company prepares their financial statements on the accrual basis of accounting. Under this basis, revenues are recognized when earned and expenses are recognized when incurred.
Allowance for Doubtful Accounts
The Company has no provision for doubtful accounts since accounts receivables consist primarily of amounts recorded as unearned memberships. If a participating dentist does not timely remit the amount due, the Company voids their contract with the resulting write-off against unearned memberships.
Statement of Cash Flows
The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents for purposes of the Statement of Cash Flows.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
DIRECT DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
NOTE 2 - ACCOUNTS RECEIVABLE
Accounts receivable result from contracts signed by dentists who join the network and pay the contract fee in installments.
Accounts receivable consist of the following:
2003 2002 ------------- ------------ Due from individual dentists $ 24,500 $ 42,876 ============= ============ |
NOTE 3 - CONCENTRATIONS OF CREDIT RISK
All income is derived from dentist membership fees. However, the concentration of credit risk associated with that is limited due to the large number of dentists in the network and their dispersion throughout the many geographic areas of the Company's network.
Concentration of credit risk associated with respect to accounts receivable are limited due to the Company's large number of dentists and the fact that no single dentist accounts for more than 2 percent of the company's fees.
NOTE 4 - PROPERTY AND EQUIPMENT
At December 31, 2003 and 2002, property and equipment consisted of the following:
2003 2002 -------------- ------------- Furniture and equipment $ 21,606 $ 21,606 Less: accumulated depreciation (21,606) (21,606) $ - $ - ============== ============= |
DIRECT DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
NOTE 5 -UNEARNED MEMBERSHIP FEES
Dentists enroll and renew their contracts with the Company every year or year and a half at various times. Most of the dentist membership fees are paid at the signing of the contracts. The revenue is recognized over the life of the contracts.
Unearned membership fees at December 31, 2003 and 2002 is as follows:
2003 2002 ------------- ------------ Unearned Membership fees $ 264,663 $ 280,993 ============= ============ |
NOTE 6 -RELATED PARTY TRANSACTIONS
The Company reimburses the shareholders for certain expenses which they incur personally on behalf of the Company. These expenses are primarily for office overhead and insurance. The amounts reimbursed to the shareholders by the Company were $57,835 and $63,682 for 2003 and 2002, respectively.
NOTE 7 -SHAREHOLDERS' LOANS
The shareholders' are obligated on loans made to them by the Company. The loans have no stated interest rate or repayment terms. The loans are expected to be repaid within the next year and therefore, are classified as current assets. The amounts owed by the shareholders' to the Company are $232,467 and $240,036 for 2003 and 2002, respectively.
NOTE 8 -SUBSEQUENT EVENTS
Subsequent to December 31, 2003, the Company entered into a reorganzition agreement with National Business Holdings, Inc., a Florida corporation. The agreement is expected to be finalized by December 31, 2004.
The lease for the office space has expired and a new lease has yet to be signed.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of George D. Green, D.D.S., P.A., Inc.
We have audited the accompanying balances of George D. Green, D.D.S., P.A., Inc. (a Florida corporation) as of December 31, 2003 and 2002, and the related statements of income, changes in shareholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of George D. Green, D.D.S., P.A., Inc. as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
De Meo, Young, McGrath
/s/ De Meo, Young, McGrath Fort Lauderdale, Florida November 29, 2004 |
GEORGE D. GREEN, DDS, P.A. BALANCE SHEET DECEMBER 31, 2003 AND 2002 2003 2002 ---------------- ---------------- ASSETS Current Assets: Cash $ - $ 6,624 Accounts receivable 248,273 281,274 Inventory, supplies 24,055 28,213 Prepaid expenses 13,809 634 Due from Officer 48,187 48,187 ---------------- ---------------- Total Current Assets 334,324 364,932 ---------------- ---------------- Property and Equipment: Net of accumulated depreciation of $156,768 and $149,238 for 2003 and 2002 respectively 46,753 50,546 ---------------- ---------------- Total Assets $ 381,077 $ 415,478 ================ ================ LIABILITIES AND SHAREHOLDER'S EQUITY Current Liabilities: Accounts payable and accrued expenses $ 23,542 $ 30,390 Notes payable - current portion 40,434 21,704 Customer deposits 26,613 30,577 ---------------- ---------------- Total Current Liabilities 90,589 82,671 ---------------- ---------------- Long Term Liabilities: Notes payable - long-term portion 53,938 94,372 ---------------- ---------------- Total Liabilities 144,527 177,043 ---------------- ---------------- Shareholder's Equity: Common Stock, $1.00 par value, 1,000 shares authorized, 500 shares issued and outstanding 500 500 Retained earnings 236,050 237,935 ---------------- ---------------- Total Shareholder's Equity 236,550 238,435 ---------------- ---------------- Total Liabilities & Shareholder's Equity $ 381,077 $ 415,478 ================ ================ |
See the accompanying accountant's report and related notes to financial statements.
GEORGE D. GREEN, DDS, P.A. INCOME STATEMENT DECEMBER 31, 2003 AND 2002 2003 2002 ---------------- ---------------- Income: Fees $ 1,355,414 $ 1,348,882 Rental income 15,000 - ---------------- ----------------- Total Income 1,370,414 1,348,882 ---------------- ----------------- Expenses: Advertising and promotion 2,972 1,078 General and administrative costs 501,438 479,464 Depreciation 7,530 7,876 Wages and payroll tax expenses 587,411 513,272 ---------------- ----------------- Total Operating Expense 1,099,351 1,001,690 ---------------- ----------------- Net Income $ 271,063 $ 347,192 ================ ================= |
See the accompanying accountant's report and related notes to financial statements.
GEORGE D. GREEN, DDS, P.A. STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY DECEMBER 31, 2003 AND 2002 TOTAL COMMON RETAINED SHAREHOLDER'S STOCK EARNINGS EQUITY ----------- --------------- ----------------- December 31, 2001 $ 500 $ 288,669 $ 289,169 Net Income - 347,192 347,192 Distributions - (397,926) (397,926) ----------- --------------- ----------------- December 31, 2002 $ 500 $ 237,935 $ 238,435 ----------- --------------- ----------------- Net income - 271,063 271,063 Distributions - (272,948) (272,948) ----------- --------------- ----------------- December 31, 2003 $ 500 $ 236,050 $ 236,550 =========== =============== ================= |
See the accompanying accountant's report and related notes to financial statements.
GEORGE D. GREEN, DDS, P.A. STATEMENT OF CASH FLOWS DECEMBER 31, 2003 AND 2002 2003 2002 ----------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 271,063 $ 347,192 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 7,530 7,876 (Increase) Decrease in: Accounts Receivable 33,001 (52,643) Inventory, supplies 4,158 1,814 Prepaid Expenses (13,175) 3,290 Increase (Decrease) in: Accounts Payable and accrued expenses (977) 8,146 Customer Deposits (3,964) 16,177 Net Cash Provided by Operating Activities 297,636 331,852 ----------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment: (3,738) (44,468) Net Cash Provided (Used) by Investing Activities (3,738) (44,468) ----------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES Repayments on Borrowings (28,201) (36,671) Repayment of Loan to Shareholder - 145,000 Distributions (272,948) (397,926) Net Cash Used by Financing Activities (301,149) (289,597) ----------------- ---------------- NET DECREASE IN CASH (7,251) (2,213) CASH AT BEGINNING OF YEAR 6,624 8,837 ----------------- ---------------- CASH AT END OF YEAR $ (627) $ 6,624 ================= ================ SUPPLEMENTAL DISCLOSURE Interest Paid $ 45,057 $ 55,282 ================= ================ |
See the accompanying accountant's report and related notes to financial statements.
GEORGE D. GREEN, DDS, P.A.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
George D. Green, DDS, P.A. (the Company), was formed under the laws of the State of Florida in August 1990 and performs general dentistry in South Florida.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Property and Equipment
Property and equipment are stated at cost. Depreciation is being provided for by the use of the straight line method over the estimated useful lives of the assets. Assets are capitalized if they have a cost of $250 or greater and a useful life greater than one year.
Revenue Recognition
The Company prepares their financial statements on the accrual basis of accounting. Under this basis, revenues are recognized when earned and expenses are recognized when incurred.
The Company recognizes revenue in the period in which services are performed. Net operating revenues consist primarily of net patient services that are recorded based on established billing rates less estimated discounts for contractual allowances. No provision for doubtful accounts has been established because the Company primarily bills insurance companies under contractual agreements and is reimbursed under established criteria for the services performed.
Inventory, Supplies
The Company carries its inventory of dental supplies at the lower of cost or market, using the specific unit cost method.
GEORGE D GREEN, DDS, P.A.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
NOTE 2 - ACCOUNTS RECEIVABLE
Accounts receivable result primarily from the performance of dental services to patients and the billing to various insurance companies for reimbursement.
Accounts receivable consist of the following:
2003 2002 ------------- ------------- Due from individual patients $ 248,273 $ 281,274 ============= ============= |
NOTE 3 - PROPERTY AND EQUIPMENT
At December 31, 2003 and 2002, property and equipment consisted of the following:
2003 2002 -------------- ------------ Dental & office equipment $ 118,288 $ 118,288 Furniture and fixtures 59,141 55,404 Leasehold Improvements 26,092 26,092 -------------- ------------ 203,521 199,784 Less: accumulated depreciation 156,768 149,238 -------------- ------------- $ 46,753 $ 50,546 ============== ============ |
Depreciation expense was $7,530 and $7,876 for the years ending December 31, 2003 and 2002 respectively.
NOTE 4 - INVENTORY, SUPPLIES
Inventory consists of dental supplies valued at the lower of cost or market. At December 31, 2003 and 2002, inventory was valued at the following amounts:
2003 2002 ------------ ----------- Dental Supplies $ 24,055 $ 28,213 ============ =========== |
GEORGE D GREEN, DDS, P.A.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
NOTE 5 - LONG-TERM DEBT
At December 31, 2003 and 2002, long-term debt consisted of the following:
2003 2002 --------- --------- Lease payable, equipment, collateralized by the equipment. Monthly payments in the amount of $2,546 including interest. Final payment of $2,546 is due August 2005. $ 45,335 $ 49,883 Lease payable, equipment, collateralized by the equipment. Monthly payments in the amount of $3,386 including interest. Final payment of $3,386 is due August 2005. 49,037 66,193 --------- --------- 94,372 116,076 Less current maturities (40,434) (21,704) --------- --------- Total long-term debt $ 53,938 $ 94,372 ========= ========= |
The aggregate principal maturities on long-term debt and the other borrowings as of December 31, 2003 are as follows:
Year Ended December 31, Amount ------------- --------- 2004 $ 40,434 2005 $ 53,938 -------- $ 94,372 ======== |
NOTE 6 - COMMITMENTS
The Company leases its office facility under a 5 year lease that expires in May 2007. The terms of the lease provide for monthly payments of approximately $2,300.
The following is a schedule of the future minimum lease payments required under long-term operating leases that have initial or remaining noncancelable lease terms in excess of one year at December 31, 2003:
GEORGE D GREEN, DDS, P.A.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
NOTE 6 - COMMITMENTS (CONTINUED)
Year Ended December 31, ------------- 2004 27,600 2005 27,600 2006 27,600 2007 11,500 -------- $ 94,300 |
Lease expense was approximately $48,100 for the year ended December 31, 2003
NOTE 7 - SUBSEQUENT EVENTS
Subsequent to December 31, 2003, the Company entered into negotiations to sell all of its assets to Union Dental Corp., a Florida corporation. The agreement calls for Union Dental Corp to acquire all the assets of the Company in exchange for a ten year installment note in the amount of approximately $1,000,000. The agreement is expected to be finalized by December 31, 2004.
In addition, subsequent to December 31, 2003, Union Dental Corp. entered into a reorganzition agreement with National Business Holdings, Inc., a Florida corporation. The agreement is expected to be finalized by December 31, 2004.
(b) ProForma Financial Information
Unaudited Pro Forma Condensed Financial Statements of Union Dental and DDS (including Balance Sheet, Statement of Operations and Notes to Financial Statements) as of and for the quarter ended September 30, 2004.
INDEX TO PROFORMA FINANCIAL STATEMENTS
Proforma Consolidated Balance Sheet.........................................F-19 Proforma Consolidated Statements of Operations..............................F-20 Notes to Proforma Consolidated Financial Statement.........................F-21 |
National Business Holdings, Inc. Proforma Consolidated Balance Sheet (Unaudited) September 30, 2004 National Direct George D. Business Dental Green, Holdings, Services DDS, PA Proforma Inc. Inc. (UDC) Adjustments Proforma ------------- ------------ ------------- ------------ ---------------- ASSETS CURRENT ASSETS Cash $ 2,000 $ 5,610 $ 0 $ 7,610 Accounts receivable 0 71,791 234,514 306,305 Due from/to affiliate 0 150,749 (150,749) 0 Due from officer 0 293,345 48,187 341,532 Prepaid expenses and other current assets 0 0 29,347 29,347 ------------- ------------ ------------- ---------------- Total current assets 2,000 521,495 161,299 684,794 ------------- ------------ ------------- ---------------- PROPERTY, PLANT AND EQUIPMENT (Net of accumulated depreciation) 0 8,324 43,625 51,949 ------------- ------------ ------------- ---------------- Total property, plant and equipment 0 8,324 43,625 51,949 ------------- ------------ ------------- ---------------- OTHER ASSETS Investment in subsidiaries 0 0 0 a) (1,645,550) d) 1,645,550 0 Other assets 0 11,013 0 11,013 Goodwill 7,750 0 0 7,750 ------------- ------------ ------------- ---------------- Total other assets 7,750 11,013 0 18,763 ------------- ------------ ------------- ---------------- Total Assets $ 9,750 $ 540,832 $ 204,924 $ 755,506 ============= ============ ============= ================ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 0 $ 11,799 $ 44,204 $ 56,003 Unearned Membership fees/customer deposits 0 293,533 26,339 319,872 Short-term note/s payable 18,124 235,000 53,818 306,942 ------------- ------------ ------------- ---------------- Total current liabilities 18,124 540,332 124,361 682,817 ------------- ------------ ------------- ---------------- LONG-TERM DEBT Long-term debt 0 0 0 0 ------------- ------------ ------------- ---------------- Total long-term debt 0 0 0 0 ------------- ------------ ------------- ---------------- Total Liabilities 18,124 540,332 124,361 682,817 ------------- ------------ ------------- ---------------- STOCKHOLDERS' EQUITY Preferred stock, $.0001 par value; 25,000,000 shares authorized; 0 shares issued and outstanding 0 n/a n/a a) 1 Common stock, $.0001; $1.00 and $1.00 par value; 300,000,000, 7,500 and 1,000 shares authorized; 32,284,831; 500 and 500 shares issued and outstanding 3,228 500 500 a) 1,250 b) 500 c) (2,228) d) (1,000) 2,750 Additional paid-in capital 1,631,949 0 0 a) (1,644,300) c) 2,228 (10,123) Accumulated deficit (1,643,551) 0 80,063 d) 1,643,551 80,063 ------------- ------------ ------------- ---------------- Total stockholders' equity (8,374) 500 80,563 72,691 ------------- ------------ ------------- ---------------- Total Liabilities and Stockholders' Equity $ 9,750 $ 540,832 $ 204,924 $ 755,508 ============= ============ ============= ================ |
The accompanying notes are an integral part of the proforma financial statements
National Business Holdings, Inc. Proforma Consolidated Statements of Operations (Unaudited) Nine Months Ended September 30, 2004 National Direct George D. Business Dental Green, Holdings, Services DDS, PA Proforma Inc. Inc. (UDC) Adjustments Proforma --------------- --------------- ------------- ---------------- ---------------- REVENUES Sales $ 0 $ 469,273 $ 1,020,391 $ 1,489,664 --------------- --------------- ------------- ---------------- Total revenues 0 469,273 1,020,391 1,489,664 OPERATING EXPENSES General and administrative 18,800 255,221 944,160 1,218,181 Depreciation 0 1,415 5,992 7,407 --------------- --------------- ------------- ---------------- 0 Total operating expenses 18,800 256,636 950,152 1,225,588 --------------- --------------- ------------- ---------------- Operating income (loss) (18,800) 212,637 70,239 264,076 --------------- --------------- ------------- ---------------- OTHER INCOME (EXPENSE) Interest income 0 13 0 13 Interest expense (312) 0 0 (312) --------------- --------------- ------------- ---------------- Total other income (expense) (312) 13 0 (299) --------------- --------------- ------------- ---------------- Net income (loss) $ (19,112)$ 212,650 $ 70,239 $ 263,777 =============== =============== ============= ================ |
The accompanying notes are an integral part of the proforma financial statements
National Business Holdings, Inc. Notes to Proforma Consolidated Financial Statements
(Unaudited)
(1) Proforma Changes On December 28, 2004, the Company entered into a Share Exchange Agreement with Direct Dental Services, Inc., (DDS), a Florida corporation and Union Dental Corp., (successor to George D. Green, DDS, PA), (UDC), also a Florida corporation . The business combination is a reverse merger, accounted for as a recapitalization of DDS and UDC. The Proforma statement of operations includes the six months ended November 30, 2004 for the Company and the nine months ended September 30, 2004 for DDS and UDC. The Company issued 17,500,000 shares of common stock and 1,000,000 shares of preferred stock of the Company to complete this acquisition.
(2) Proforma Adjustments
a) 1,000,000 shares of preferred stock and 12,500,000 shares of common stock of the Company in exchange for 500 shares of common stock of Direct Dental Services, Inc.
b) 5,000,000 shares of common stock of the Company in exchange for 500 shares of common stock of Union Dental Corp. (as successor to George D. Green, DDS, PA)
c) 22,284,831 shares of common stock of the Company returned to the Company and cancelled.
Consolidation:
d) Eliminate investment in subsidiary, the Company's retained deficit and
common stock of subsidiary.
INDEX TO PROFORMA FINANCIAL STATEMENTS
Proforma Consolidated Statements of Operations..............................F-23
Notes to Proforma Consolidated Financial Statement.........................F-24
National Business Holdings, Inc. Proforma Consolidated Statements of Operations (Unaudited) Year Ended December 31, 2003 National Direct George D. Business Dental Green, Holdings, Services DDS, PA Proforma Inc. Inc. (UDC) Adjustments Proforma --------------- --------------- ------------- ---------------- ---------------- REVENUES Sales $ 0 $ 645,994 $ 1,370,414 $ 2,016,408 --------------- --------------- ------------- ---------------- Total revenues 0 645,994 1,370,414 2,016,408 OPERATING EXPENSES General and administrative 23,000 155,819 1,091,821 1,270,640 Depreciation 0 0 7,530 7,530 --------------- --------------- ------------- ---------------- 0 Total operating expenses 23,000 155,819 1,099,351 1,278,170 --------------- --------------- ------------- ---------------- Operating income (loss) (23,000) 490,175 271,063 738,238 --------------- --------------- ------------- ---------------- OTHER INCOME (EXPENSE) Interest income 0 930 0 930 Interest expense (520) 0 0 (520) --------------- --------------- ------------- ---------------- Total other income (expense) (520) 930 0 410 --------------- --------------- ------------- ---------------- Net income (loss) $ (23,520)$ 491,105 $ 271,063 $ 738,648 = ======= =============== =============== ============= ================ |
The accompanying notes are an integral part of the proforma financial statements
National Business Holdings, Inc. Notes to Proforma Consolidated Financial Statements
(Unaudited)
(1) Proforma Changes On December 28, 2004, the Company entered into a Share Exchange Agreement with Direct Dental Services, Inc., (DDS), a Florida corporation and Union Dental Corp., (successor to George D. Green, DDS, PA), (UDC), also a Florida corporation . The business combination is a reverse merger, accounted for as a recapitalization of DDS and UDC. The Proforma statement of operations includes the year ended May 31, 2004 for the Company and the year ended December 31, 2003 for DDS and UDC. The Company issued 17,500,000 shares of common stock and 1,000,000 shares of preferred stock of the Company to complete this acquisition.
(c) Exhibits.
2.3 * Reorganization Agreement, dated December 28, 2004, by and among the Company, Union Dental, DDS and the shareholders of Union Dental and DDS. 2.4 * Asset Purchase Agreement dated October 15, 2004 by and among Union Dental and George D. Green, DDS, P.A. 3(i).3 * Articles of Incorporation of Union Dental Corp.(to be provided under seperate cover.) 3(i).4 * Articles of Incorporation of Direct Dental Services, Inc. (to be provided under seperate cover.) 3(ii).2 * Bylaws of Union Dental Corp. (to be provided under seperate cover.) 3(ii).3 * Bylaws of Direct Dental Services, Inc.(to be provided under seperate cover.) 4.1 * Form of Option issued to Union Dental optionholders. 10.1 Business Associate Agreement dated October 15, 2004 by and among Union Dental and George D. Green, DDS, P.A. (to be provided under seperate cover.) 10.2 Management Services Agreement dated October 15, 2004 by and among Union Dental and George D. Green, DDS, P.A. (to be provided under seperate cover.) 10.3 * Employment Agreement dated March 20, 2004 by and among Union Dental and Dr. George D. Green. 10.4 * Employment Agreement dated October 26, 2004 by and among Union Dental and Dr. Leonard I. Weinstein. 10.5 * Shareholder's Agreement and Management Contract by and among Union Dental and Tropical Medical Services. 10.6 * Employment Agreement dated February 15, 2004 by and among Union Dental and Robert Gene Smith. 10.7 * 2004 Stock Option Plan for Union Dental. 14.1 * Code of Ethics. 16.1 * Letter from Lawrence Scharfman to the Securities and Exchange Commission dated January 3, 2005. 17.1 * Letter of Resignation of Dr. Melvyn Greenstein. 17.2 * Letter of Resignation of Roger E. Pawson -------------------------------- |
* Filed herewith
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.
NATIONAL BUSINESS HOLDINGS, Inc.
January 3, 2004 By: /s/ Dr. George D. Green ------------------------------------------ Name: George D. Green Title: President and Chief Executive Officer |
EXHIBIT 2.3
Reorganization Agreement
This Reorganization Agreement (the "Agreement") is made and entered into by and among National Business Holdings, Inc., a publicly held Florida corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended ("Issuer" and the "Exchange Act," respectively); Union Dental Corp., a Florida corporation ("Union Dental"); Direct Dental Services, Inc., a Florida corporation ("DDS") and the individuals listed in Exhibit A annexed hereto and made a part hereof as Exhibit 0.1 ("Stockholders"); Issuer, Union Dental, DDS and the Stockholders being sometimes hereinafter collectively referred to as the "Parties" or generically as a "Party").
Preamble:
WHEREAS, the respective boards of directors of Issuer, DDS and Union Dental believe it is in the best interests of each corporation and their respective stockholders that Union Dental and DDS become a wholly owned subsidiary of Issuer and, in furtherance thereof, have approved the Reorganization; and
WHEREAS, the Issuer currently has 32,284,831 shares of common stock issued and outstanding and zero shares of preferred stock issued and outstanding.
WHEREAS, pursuant to the terms of the Reorganization, as hereinafter set forth, among other things, all of the outstanding and reserved securities of DDS (the "DDS's Securities") will be exchanged for 12,500,0000 shares of Issuer's common stock, $0.001 par value ("Issuer's common stock") and 1,000,000 shares of Issuer's preferred stock, $0.0001 par value with each share of preferred stock provides voting rights equal to 15 shares of Issuer's common stock (Issuer's preferred stock), representing approximately 46% and 100% of the issued and outstanding Issuer common stock and Issuer preferred stock at the time of Closing; and
WHEREAS, pursuant to the terms of the Reorganization, as hereinafter set forth, among other things, all of the outstanding and reserved securities of Union Dental (the "Union Dental's Securities") will be exchanged for 5,000,000 shares of Issuer's common stock, $0.001 par value ("Issuer's common stock") and zero shares of Issuer's preferred stock, no par value, representing approximately 18% of the issued and outstanding Issuer common stock on the Closing Date; and
WHEREAS, on or about December 20, 2004, Union Dental acquired substantially all of the assets (except the Patient List) of George D. Green D.D.S., P.A. (hereinafter referred to as "PA") pursuant to an Asset Purchase Agreement; and
WHEREAS, the Parties have mutually agreed to make certain representations and warranties and other agreements in connection with the Reorganization and their subsequent operating and business relationships; and
WHEREAS, the Parties intend, by executing this Agreement, to adopt a plan of reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code"):
NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein, and for other good and valuable consideration the sufficiency of which is acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
Article I Plan of Reorganization
1.1 Definitions
The following terms, whether or not initially capitalized, will have the meanings set forth below:
Accredited Investor: A person or entity that meets the asset or income requirements for treatment as an accredited investor specified in Rule 501 of Commission Regulation D promulgated under the Securities Act
Affiliate: An entity or person that controls, is controlled by or is under common control with another person.
Issuer Financial Statements: Financial statements, including all related schedules and the notes thereto, of Issuer included in the report on Commission Form 10-KSB for the period ended May 31, 2003, as amended; the reports on Commission Form 10-QSB filed subsequent to May 31, 2003 and any financial statements included in current reports on Commission Form 8-K filed since the dates of the Subsequent Quarterly Reports; all such financial statements being hereinafter collectively and generically referred to as the "Issuer Financial Statements,"
Issuer Schedules: The schedules referenced by the Section designations of this Agreement as to which they apply, annexed at the direction of Issuer to this Agreement and constituting a material component of this Agreement.
Capital Stock: The generic term used for equity securities, whether common, preferred or otherwise.
Closing: The event at which the exchange of all of the Union Dental and DDS securities will be exchanged for approximately 64% of the outstanding shares of Issuer's common stock.
Closing Date: The date on which the Closing takes place.
Commission: The United States Securities and Exchange Commission.
Code: The Internal Revenue Code of 1986, as amended.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Act Reports: All reports filed by Issuer with the Commission pursuant to the Exchange Act, including all exhibits filed therewith.
Exchange Agent: The person or entity responsible following the Closing, for issuing and delivering the shares of Issuer's common stock and preferred stock to the Union Dental and DDS Stockholders.
GAAP: Generally accepted accounting principles, consistently applied.
IRS: The United States Internal Revenue Service.
Knowledge: When used to qualify a representation or warranty, the word "knowledge" or any derivations or variations thereof, whether in the form of a word or phrase, will mean knowledge after reasonable inquiry by a senior executive officer of the legal entity on whose behalf the assertion is made and will include information that such legal entity should have had in the exercise of reasonable diligence.
Target's Financial Statements: DDS and PA's financial statements (balance sheets, income statements and related schedules and footnotes) as of and for the fiscal years ending December 31, 2002 and 2003 (audited), any calendar quarter ended between December 31, 2003 and the Closing Date and Union Dental's financial statements (unaudited),, all prepared in conformity with GAAP and applicable Commission auditing rules and regulations.
Target Schedules: The schedules referenced by the Section designations of this Agreement as to which they apply, annexed at the direction of Union Dental and DDS to this Agreement and constituting a material component of this Agreement.
Material: When used to qualify a representation or warranty, the word "material" or any derivations or variations thereof, whether in the form of a word or phrase, will mean a variance that could have negatively affected a decision by a reasonably prudent person to engage in the transactions contemplated by this Agreement, and will be measured both on the occasion in which such term is referenced as well as on an aggregate basis with other similar matters.
NASD: The National Association of Securities Dealers, Inc., a Delaware corporation and self regulatory organization registered with the Commission.
OTC Bulletin Board: The over the counter electronic securities market operated by the NASD.
Securities Act: The Securities Act of 1933, as amended.
Substantial Compliance: Compliance which the Party for whose benefit or at whose request an act is performed, or for whose benefit or at whose request an act is refrained from could under the circumstances be reasonably expected to accept as full compliance.
Tax: For the purposes of this Agreement, a "Tax" or, collectively, "Taxes," means any and all federal, state, local and foreign taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts and any obligations under any agreements or arrangements with any other person with respect to such amounts.
Additional defined terms are specified in certain sections and subsections below and are characterized by the use of initial letter capitalization.
1.2 Reorganization
(A) The Reorganization.
(1) At the Closing on this Agreement all of the Union Dental's Stockholders will exchange all of their Union Dental securities, being an aggregate of 500 shares of common stock, $0.001 par value, for 5,000,000 shares of Issuer common stock, $0.001 par value, which represents approximately 18% of the outstanding shares of Issuer's common stock.
(2) At the Closing of this Agreement, all of the issued and outstanding options to purchase 3,452,250 Union Dental common stock (the "Union Dental Options") shall be exchanged for an aggregate of 3,452,250 options to purchase Issuer common stock (the "Issuer Options") upon the same terms and conditions;
(3) The shares of Issuer's common stock and preferred stock will be issued by the Exchange Agent following the Closing and will be transferred to the Stockholders in proportion to their holdings of Union Dental common stock at the time of Closing.
(4) At the Closing on this Agreement all of the DDS's Stockholders will exchange all of their DDS securities, being an aggregate of 500 shares of common stock, $0.001 par value, for 12,500,000 shares of Issuer common stock, $0.001 par value, which represents approximately 46% of the outstanding shares of Issuer's common stock and 1,000,000 shares of the Issuer preferred stock, no par value, which represents 100% of the outstanding shares of Issuer's preferred stock, as called for by this Agreement.
(5) The shares of Issuer's common stock and preferred stock will be issued by the Exchange Agent following the Closing and will be transferred to the Stockholders in proportion to their holdings of DDS common stock at the time of Closing.
(B) As promptly as practicable after the satisfaction or waiver of the conditions set forth in Article VI, the Parties will cause the Reorganization to be consummated by effecting the exchange all of Union Dental's and DDS's common stock for the shares of Issuer's common stock and preferred stock, as described above.
(C) The Closing Date and time of the Reorganization will be the date and time on which the Closing of this Reorganization Agreement is consummated, which shall, in any event, take place on or before December 31, 2004, unless the Parties agree in writing to further extend the Closing Date.
(1) At the Closing the Parties will exchange all closing documentation, certificates, resolutions, exhibits, schedules and opinions called for by this Agreement, and
(2) All of Union Dental and DDS's outstanding securities will be exchanged with Issuer for approximately 64% of Issuer's common stock and 100% of Issuer's preferred stock, as specified above; provided that delivery of the certificates for the shares of Issuer's common stock and preferred stock will be made directly to Stockholders by Issuer's stock transfer agent as soon as practicable after the Closing.
1.3 Effect of the Reorganization.
At the Closing, the effect of the Reorganization will be that Union Dental and DDS will each become a wholly owned subsidiary of Issuer and that the Stockholders immediately prior to the Closing will become stockholders of Issuer at the Closing, with no further rights, title or interest in Union Dental or DDS, other than indirectly as stockholders of Issuer.
1.4 Fractional Shares.
No fraction of a share of Issuer's common stock will be issued, but in lieu thereof each holder of shares of Union Dental or DDS's common stock who will otherwise be entitled to a fraction of a share of Issuer's common stock (after aggregating all fractional shares of Issuer's common stock to be received by such holder) will be entitled to receive from Issuer a whole share of Issuer's common stock. 1.5 Exchange of Certificates.
(A) Exchange Agent. Unless modified by Issuer prior to the Closing Date, Issuer's current transfer agent, will serve as the Exchange Agent.
(B) Issuer to Provide Common Stock. Issuer will promptly make available to the Exchange Agent for exchange in accordance with this Article I the shares of Issuer's common stock and preferred stock in exchange for all of the outstanding shares of Union Dental and DDS's common stock.
(C) Exchange Procedures. All certificates for shares of Union Dental and DDS's outstanding common stock will be tendered to Issuer at the Closing, with medallion signature guarantees or otherwise in proper form for immediate transfer to the order of Issuer, whereupon Issuer will issue instructions to the Exchange Agent to issue shares of Issuer's common stock, in the quantities and names set forth in Schedule 1.5(C).
(D) Transfers of Ownership. If any certificate for shares of Issuer's common stock and preferred stock is to be issued in a name other than that in which the certificate surrendered in exchange therefor is registered, it will be a condition of the issuance thereof that the certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and that the person requesting such exchange will have paid to Issuer or any agent designated by it any transfer or other Taxes required by reason of the issuance of a certificate for shares of Issuer's common stock and preferred stock in any name other than that of the registered holder of the certificate surrendered, or established to the satisfaction of Issuer, or any agent designated by it, that such Tax has been paid or is not payable.
(E) No Liability. Notwithstanding anything to the contrary in this Section 17, neither the Exchange Agent, Issuer, Union Dental, DDS or any other person will be liable to a holder of shares of Issuer's common stock or Union Dental or DDS's Capital Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.
1.6 No Further Ownership Rights in Union Dental or DDS's Securities.
(A) All shares of Issuer's common stock and preferred stock issued upon the surrender for exchange of shares of Union Dental and DDS's Capital Stock in accordance with the terms hereof will be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Union Dental and DDS's Capital Stock, and there will be no further registration of transfers on the records of Union Dental or DDS, of shares of Union Dental or DDS's Capital Stock which were outstanding immediately prior to the Closing.
(B) If, after the Closing, Certificates are presented to Union Dental or DDS, for any reason, they will be canceled and exchanged as provided in this Article I.
1.7 Lost, Stolen or Destroyed Certificates.
In the event any certificates evidencing shares of Union Dental or DDS's Capital Stock will have been lost, stolen or destroyed, Union Dental or DDS's transfer agent or share registrar will, prior to the Closing, have issued in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of that fact by the holder thereof, such shares of its stock; provided, however, that Issuer may, in its discretion and as a condition precedent to the issuance of the shares of Issuer's common stock and preferred stock to be exchanged therefor, require the owner of such lost, stolen or destroyed certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Issuer or the Exchange Agent with respect to the certificates alleged to have been lost, stolen or destroyed.
1.8 Tax Consequences and Accounting Treatment.
It is intended by the Parties that the Reorganization will constitute a reorganization within the meaning of Section 368(a)(1)(B) of the Code, and the Parties agree that if modification of the non-material terms of this Agreement to attain such qualification is necessary, they will negotiate in good faith to make such required modification.
1.9 Taking of Necessary Action: Further Action.
If, at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement including the vesting in Issuer of full right, title and possession to all of Union Dental and DDS's Capital Stock or compliance with the requirements of Code Section 368(a)(1)(B), the officers and directors of Issuer, Union Dental and DDS are fully authorized and empowered in the name of their respective corporations or otherwise to take, and will take, all lawful and necessary action.
Article II Representations and Warranties of Union Dental and DDS
Union Dental, DDS and the Stockholders hereby represent and warrant to Issuer, as a material inducement to its entry into this Agreement, subject only to the exceptions specifically disclosed in Schedule 2, as follows:
2.1 Organization of Union Dental and DDS.
(A) Union Dental and DDS are each a corporation duly organized, validly existing and in good standing under the laws of the State of Florida.
(B) Union Dental and DDS each have the corporate power to own its property and to carry on its business as now being conducted and as proposed to be conducted by Union Dental and DDS.
(C) Union Dental and DDS are each duly qualified to do business and in good standing as a foreign corporation in each jurisdiction in which the failure to be so qualified would have a material adverse effect on the business, assets (including intangible assets), financial condition, or results of operations of Union Dental and DDS.
(D) Union Dental and DDS each has delivered a true and correct copy of its articles of incorporation and bylaws (or similar governing instruments), each as amended to date, to counsel for Issuer.
2.2 Union Dental and DDS's Capital Structure.
(A) The authorized Capital Stock of Union Dental consists of 10,000,000 shares of common stock, $0.001 par value, and zero shares of preferred stock;
(B) The authorized Capital Stock of DDS consists of 7,500 shares of common stock, $1.00 par value, and zero shares of preferred stock;
(C) There are 500 shares of Union Dental common stock and zero shares of Union Dental preferred stock issued and outstanding, held by the persons, and in the amounts, set forth on Schedule 1.5(C).
(D) There are 500 shares of DDS common stock and zero shares of DDS preferred stock issued and outstanding, held by the persons, and in the amounts, set forth on Schedule 1.5(C).
(E) All outstanding shares of Union Dental and DDS common or preferred stock are duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights created by statute, the articles of incorporation or bylaws of Union Dental, DDS or any agreement to which Union Dental or DDS are a party or is bound.
(F) Except as set forth on Schedule 2.2(F), Union Dental and DDS each has no other outstanding securities or securities reserved for issuance for any purpose, there being no other obligations directly or indirectly obligating Union Dental or DDS to issue any of its securities to any person for any purpose; and there are no other options, warrants, calls, rights, commitments or agreements of any character to which Union Dental or DDS is a party or by which it is bound obligating Union Dental or DDS to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the Union Dental or DDS Capital Stock or obligating Union Dental or DDS to grant, extend or enter into any such option, warrant, call, right, commitment or agreement.
2.3 Subsidiaries.
Union Dental and DDS do not have any subsidiaries, and does not otherwise own any shares of stock or any interest in, or control, directly or indirectly, any other corporation, partnership, association, joint venture or business entity.
2.4 Authority.
(A) Union Dental and DDS each has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.
(B) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Union Dental and DDS.
(C) This Agreement has been duly executed and delivered by Union Dental and DDS and, subject to the proper authorization of this Agreement by Issuer's board of directors and its due execution and delivery by Issuer to Union Dental and DDS, constitutes the valid and binding obligation of Union Dental and DDS.
(D) The execution and delivery of this Agreement by Union Dental and DDS does not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a material benefit under (i) any provision of the articles of incorporation or bylaws of Union Dental or DDS or (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Union Dental or DDS or its properties or assets.
(E) No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality ("Governmental Entity"), is required by or with respect to Union Dental or DDS in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state and federal securities laws (e.g., notification on Form D) and the laws of any foreign country.
2.5 DDS and PA Financial Statements.
(A) Schedule 2.5(A) includes Union Dental's DDS and PA's Financial Statements.
(B) Union Dental, DDS and PA's Financial Statements are complete and correct in all material respects and have been prepared in accordance GAAP throughout the periods indicated.
(C) Union Dental, DDS and PA's Financial Statements present fairly the financial condition and operating results of DDS and PA as of the dates and during the periods indicated therein, subject to normal year-end audit adjustments, which will not be material in the aggregate.
(D) Union Dental, DDS and PA's financial statements comply with the requirements for material acquisitions under Commission Regulation S-B and in a manner permitting Issuer to comply with its obligation under the Securities Act and the Exchange Act in conjunction therewith
2.6 No Undisclosed Liabilities.
Union Dental or DDS each separately represent and warrant that it does not have any material liabilities or obligations, either accrued or contingent (whether or not required to be reflected in financial statements in accordance with generally accepted accounting principles), and whether due or to become due, which individually or in the aggregate (i) have not been reflected in the DDS or PA Balance Sheet (including the notes thereto) or (ii) have not been specifically described in this Agreement or in the Union Dental or DDS Schedules.
2.7 Title of Properties, Absence of Liens and Encumbrances & Condition of Equipment.
(A) Schedule 2.7(A) sets forth a true and complete list of all real property owned and leased by Union Dental and DDS and the aggregate annual mortgage, rental or other fee payable therefor or under any such lease.
(B) All deeds, titles, leases and mortgages are in good standing, valid and effective in accordance with their respective terms, and there is not with respect to Union Dental or DDS under any of such deeds, titles, leases or mortgages, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default and with respect to which Union Dental or DDS has not taken adequate steps to prevent such default from occurring), except where the lack of such good standing, validity and effectiveness or the existence of such default or event of default would not have a material adverse effect on Union Dental or DDS.
(C) Union Dental and DDS each holds good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used in its business, free and clear of any liens, charges, pledges, security interests or other encumbrances, except as reflected in Union Dental and DDS's Financial Statements and except for such imperfections of title and encumbrances, if any, which are not substantial in character, amount or extent, and which do not materially detract from the value, or interfere with the present use, of the property subject thereto or affected thereby
(D) The equipment owned or leased by Union Dental and DDS are listed in Schedule 2.7(D) (the "Equipment"), except individual pieces of equipment owned by Union Dental or DDS with an individual value of less than $500. The Equipment is, taken as a whole, in good operating condition and regularly and properly maintained, reasonable wear and tear excepted.
2.8 Litigation.
Schedule 2.8 annexed hereto accurately lists all suits, actions and legal, administrative, arbitration or other proceedings and governmental investigations and all other claims, pending or, to Union Dental and DDS's Knowledge, threatened or which Union Dental and DDS each expects will ultimately be threatened or commenced. None of any such suits, actions, proceedings, investigations or claims seeks to prevent the consummation of the Reorganization.
2.9 Minute Books.
The minute books of Union Dental and DDS made available to counsel for Issuer each contain a complete and accurate summary of all meetings of directors and stockholders since the time of incorporation of Union Dental and DDS, and reflect all transactions referred to in such minutes accurately in all material respects.
2.10 Brokers' and Finders' Fees.
Union Dental and DDS each has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.
2.11 Regulation SB Disclosure Document
The information supplied by Union Dental and DDS responding to each Item in Commission Regulation S-B (other than Items 201, 501, 502, 506, 512 and, to the extent of audit requirements, Item 310) annexed hereto as Exhibit 2.11 (the "Regulation S-B Disclosure Documents"), part of which must be included in a current report on Commission Form 8-K to be filed by Issuer within four (4) days after the Closing Date, as well as in all other reports which Issuer files thereafter pursuant to the Exchange Act, will not contain any statement which, at such time and in light of the circumstances under which it is made, is false or misleading with respect to any Material fact, or will omit to state any Material fact necessary in order to make the statements made therein not false or misleading or omit to state any Material fact necessary to correct any statement which has become false or misleading.
2.12 Disclosure to Union Dental and DDS's Stockholders
Each of Union Dental and DDS's Stockholders hereby represents and warrants that he, she or it:
(A) Has had access through the Commission's Internet web site at www.sec.gov, in the EDGAR Archives sub-cite, to all of Issuer's reports filed with the Commission during the past two fiscal years, has reviewed all such reports and has, either directly or through a representative, been granted access to all of Issuer's officers and directors, and to all officers and directors of Issuer's operating subsidiaries, for purposes of providing all disclosure required under applicable federal and state securities laws in conjunction with the exchange contemplated by this Agreement;
(B) Has been advised that:
(1) The securities to be issued to them by Issuer in exchange for their
shares of Union Dental and DDS's common stock have not been registered
under the Securities Act, the Exchange Act or any comparable state
securities laws, but rather are being issued in reliance on the
exemption from registration under the Securities Act provided by
Section 4(2) thereof;
(2) All certificates for their shares of Issuer's common stock and preferred stock will bear legends restricting any transactions therein, directly or indirectly, unless the Issuer's shares are first registered under applicable federal and state securities laws or the proposed transaction is exempt from such registration requirements, and such facts are demonstrated to the satisfaction of Issuer and its legal counsel, based on such third party legal opinions, affidavits and transfer agency procedures as Issuer will reasonably require;
(3) Issuer's transfer agent has been instructed to decline transfers of certificates for their shares of Issuer's common stock, unless the foregoing requirements have been met and have been confirmed as having been met by a duly authorized officer of Issuer.
(C) Has independently determined through his, her or its own legal counsel, that all requirements of their states of domicile for the issuance of the shares of Issuer's common stock and preferred stock called for by this Agreement have been met, or will have been met, prior to Closing, by such legal counsel acting on behalf of the Parties to this Agreement.
2.13 Representations Complete.
None of the representations or warranties made by Union Dental, DDS or their stockholders, nor any statement made in any Schedule, Exhibit or certificate furnished by Union Dental or DDS pursuant to this Agreement, when read in its entirety, contains or will contain any untrue statement of a Material fact at the time the Closing takes place, or omits or will omit to state any Material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading.
Article III Representations and Warranties of Issuer
Issuer represents and warrants to Union Dental and DDS as a Material inducement to its entry into this Agreement, subject to the exceptions specifically disclosed in the Issuer Schedules or in Issuer's Exchange Act Reports, as follows:
3.1 Organization, Standing and Power.
(A) Issuer is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida.
(B) Issuer has the corporate power to own its properties and to carry on its business as now being conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the failure to be so qualified would have a Material adverse effect on Issuer taken as a whole.
(C) A true and correct copy of its articles of incorporation and bylaws, as amended to date, are available at the Commission's web site in the EDGAR archives, filed as exhibits to the report on Form 10-KSB for the year ended May 31, 2003, and any future modifications thereof will be filed with the Commission and will also be available at such site.
3.2 Capital Structure.
(A) The authorized stock of Issuer consists of 300,000,000 shares of common stock, par value $0.0001 per share, and 25,000,000 shares of Preferred Stock, $0.0001 par value per share, the attributes of which are to be determined on a case by case basis by Issuer's board of directors.
(B) Issuer will have 32,284,831 shares of common stock issued and outstanding as of Closing. There are no shares of preferred stock issued and outstanding as of Closing. Immediately following the Closing there will be 27,500,000 shares of common stock issued and outstanding. Existing shareholders of Issuer, by agreement, will surrender a sufficient number of issued and outstanding shares to treasury if necessary to reach this result.
(C) There are no other options, warrants, calls, rights, commitments, retirement plans or deferred compensation plans of any nature or agreements of any character to which Issuer is a party or by which it is bound obligating Issuer to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the Capital Stock of Issuer or obligating Issuer to grant, extend or enter into any such option, warrant, call, right, commitment or agreement.
(D) All of Issuer's shares of common and preferred stock have been duly authorized, and all of its issued and outstanding shares of Issuer common stock have been validly issued, are fully paid and non-assessable and are free of any liens or encumbrances other than any liens or encumbrances created by or imposed upon the holders thereof.
(E) Subject to the Union Dental, DDS and the Stockholders' compliance with their obligations under this Agreement, the shares of Issuer's common stock and preferred stock to be issued pursuant to the Reorganization will be duly authorized, validly issued, fully paid, and non-assessable.
3.3 Authority.
(A) Issuer has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.
(B) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Issuer
(C) This Agreement has been duly executed and delivered by Issuer and, subject to having also been approved by Union Dental and DDS's board of directors and properly executed and delivered by Union Dental and DDS, constitutes a valid and binding obligation of Issuer.
(D) The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under:
(1) Any provision of the articles of incorporation or bylaws of Issuer; or
(2) Any mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Issuer or its properties or assets, other than any such conflicts, violations, defaults, terminations, cancellations or accelerations which individually or in the aggregate would not have a material adverse effect on the ability of Issuer to consummate the transactions contemplated hereby.
(E) No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity, is required by or with respect to Issuer in connection with the execution and delivery of this Agreement by Issuer or the consummation by Issuer of the transactions contemplated hereby, except for:
(1) Such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state and federal securities laws (e.g, a Form D Notification Statement) and the laws of any foreign country; and
(2) Such other consents, authorizations, filings, approvals and registrations which if not obtained or made would not have a Material adverse effect on the ability of Issuer to consummate the transactions contemplated hereby.
3.4 Exchange Act Reports; Issuer Financial Statements.
(A) All materials required to be filed by Issuer with the Commission pursuant to Sections 13 or 15(d) of the Exchange Act have been filed and are available on the Commission's Internet web site at www.sec.gov in its EDGAR Archives sub-site.
(B) To the best of Issuer's Knowledge, the Exchange Act Reports comply in all Material respects with the requirements of the Exchange Act and do not contain any untrue statement of a Material fact or omit to state a Material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent corrected by a subsequently filed document with the Commission or by information provided by Issuer to Union Dental.
(C) The Issuer Financial Statements comply as to form in all Material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, have been prepared in accordance with GAAP and fairly present the consolidated financial position of Issuer at the date thereof and of its operations and cash flows for the period then ended, subject to normal year end audit adjustments.
(D) There has been no change in Issuer's accounting policies or estimates except as described in the notes to Issuer's Financial Statements. Since the date of the financial statements, there has not been any change in the financial condition or operations of Issuer, except changes in the ordinary course of business, which changes have not in the aggregate been materially adverse.
(E) Issuer has no material obligations, other than those set forth in Issuer's Financial Statements.
(F) The information provided by Issuer in the Current Report on Form 8-K pertaining to this Reorganization (excluding information provided by or on behalf of Union Dental or DDS, as to which Issuer makes no representation) will not contain any statement which, at such time and in light of the circumstances under which it will be made, is false or misleading with respect to any Material fact, or will omit to state any Material fact necessary in order to make the statements therein not false or misleading.
(G) If at any time prior to the Closing Date any event relating to Issuer or any of its affiliates, officers or directors should be discovered by Issuer which should be set forth in a current report on Form 8-K, Issuer will promptly inform Union Dental and DDS.
3.5 Brokers' and Finders' Fees.
Except as disclosed in the Exchange Act Reports, Issuer has not incurred, and will not incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement, the Reorganization or any transaction contemplated hereby.
3.6 Ownership of Union Dental and DDS's Capital Stock.
As of the date of execution of this Agreement, Issuer does not own any shares of Union Dental or DDS's Capital Stock.
3.7 Litigation.
There are no suits, actions or legal, administrative, arbitration or other proceedings or governmental investigations against Issuer pending or, to Issuer's Knowledge, threatened, which (i) if determined adversely to Issuer, could be expected to result in a Material adverse effect on the financial condition or results of operations of Issuer, or (ii) seek to prevent the consummation of the Reorganization, except as may be disclosed in the Exchange Act Reports.
3.8 Limited Activities.
(A) Issuer has no material day-to-day operations or assets other than acquisition-related activities and compliance with applicable laws, including federal securities and internal revenue laws.
(B) Issuer currently has no operating subsidiaries.
3.9 No Undisclosed Liabilities.
Issuer does not have any Material liabilities or obligations, either accrued or contingent (whether or not required to be reflected in financial statements in accordance with GAAP), and whether due or to become due, which individually or in the aggregate, (i) have not been reflected in the Issuer Financial Statements (including the notes thereto) or (ii) have not been specifically described in this Agreement or in the Exchange Act Reports.
3.10 No Changes.
Since the date of its latest Exchange Act Report there has not been, occurred or arisen any:
(A) Destruction, damage to, or loss of any assets (including without limitation intangible assets) of Issuer or its subsidiaries (whether or not covered by insurance), either individually or in the aggregate, exceeding $500.
(B) Labor trouble or claim of wrongful discharge, sexual harassment or other unlawful labor practice or action;
(C) Change in accounting methods or practices (including any change in depreciation or amortization policies or rates, any change in policies in making or reversing accruals, or any change in capitalization of software development costs) by Issuer or its subsidiaries;
(D) Declaration, setting aside, or payment of a dividend or other distribution in respect to the shares of Issuer, or any direct or indirect redemption, purchase or other acquisition by Issuer of any of its shares;
(E) Other event or condition of any character that has or would, in Issuer's reasonable judgment, be expected to have a Material adverse effect on Issuer;
(F) Negotiation or agreement by Issuer to do any of the things described in the preceding clauses (A) through (E) other than negotiations regarding the transactions contemplated by this Agreement.
3.11 Tax and Other Returns and Reports.
(A) Tax Returns and Audits.
(1) Issuer has accurately prepared and filed all required federal, state, local and foreign returns, estimates, information statements and reports ("Returns") relating to any and all Taxes relating or attributable to Issuer or its operations and such Returns are true and correct in all Material respects and have been completed in accordance with applicable law in all material respects.
(2) Issuer has timely paid all Taxes required to be paid with respect to such Returns and have withheld with respect to its employees all federal and state income taxes, FICA, FUTA and other Taxes they are required to withhold.
(3) The accruals for Taxes on the books and records of Issuer are sufficient to discharge the Taxes for all periods (or the portion of any period) ending on or prior to the Closing Date.
(4) Issuer has not been delinquent in the payment of any Tax nor is there any Tax deficiency outstanding, proposed or assessed against Issuer, nor has Issuer executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.
(5) No audit or other examination of any Return of Issuer is presently in progress. Issuer does not have any liabilities for unpaid federal, state, local and foreign Taxes, whether asserted or unasserted, known or unknown, contingent or otherwise and Issuer has no Knowledge of any basis for the assertion of any such liability attributable to Issuer or its assets or operations.
(6) Issuer is not a party to or bound by any tax indemnity, tax sharing or tax allocation agreement.
(7) Issuer has provided, or made available to Union Dental, DDS or their legal counsel copies of all federal, provincial and state income and all sales and use Tax Returns of Issuer for all periods since 2000.
(8) There are (and as of immediately following the Closing Date there will be) no liens on the assets of Issuer relating to or attributable to Taxes.
(9) Issuer has no Knowledge of any basis for the assertion of any Tax claim which, if adversely determined, would result in liens on the assets of Issuer.
(10) There is no contract, agreement, plan or arrangement, including but not limited to the provisions of this Agreement, covering any employee or former employee of Issuer that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 162 or 404 of the Code.
(B) No Penalty.
Issuer is not subject to any penalty by reason of a violation of any order, rule or regulation of, or a default with respect to any return, report or declaration required to be filed with, any Governmental Entity to which it is subject, which violations or defaults, individually or in the aggregate, would have a material adverse effect on Issuer.
3.12 Environmental and OSHA.
(A) Hazardous Material.
(1) As of the Closing Date, no Material amount of any substance that is regulated by any Governmental Entity or that has been designated by any Governmental Entity to be radioactive, toxic, hazardous or otherwise a danger to health or the environment, including, without limitation, PCBs, asbestos, urea-formaldehyde and all substances listed pursuant to CERCLA or RCRA, and the regulations and publications promulgated pursuant to said laws (a "Hazardous Material"), is present, as a result of the actions of Issuer in violation of any law in effect on or before the Closing Date, in, on or under any property, including the land and the improvements, ground water and surface water thereof, that Issuer owns, operates, occupies or leases.
(2) In any event, Issuer does not know of the presence of any Hazardous Material in, on or under any of their property.
(B) Hazardous Materials Activities.
At no time prior to the Closing Date has Issuer transported, stored, used, manufactured, released or exposed its employees or others to Hazardous Materials in violation of any law in effect on or before the Closing Date, nor has Issuer disposed of, transferred, sold, or manufactured any product containing a Hazardous Material (collectively "Hazardous Materials Activities") in violation of CERCLA, RCRA, TSCA or any other applicable state or federal acts (including the rules and regulations thereunder) as in effect on or before the Closing Date.
(C) Permits.
Issuer currently holds no environmental approvals, permits, licenses, clearances and consents and none are necessary for the conduct of Issuer's Hazardous Material Activities and other businesses of Issuer as such activities and businesses are currently being conducted.
3.13 No Reverse Merger.
Issuer's existing or successor board of directors shall not recommend or pass a corporate resolution that it reverse split its common stock for a period of twelve (12) months from the Effective Date except if the reverse split is necessary for Issuer to become qualified and accepted for listing on the NASDAQ Small Cap Exchange, the American Stock Exchange or any other major exchange.
3.14 Representations Complete.
None of the representations or warranties made by Issuer, nor any statement made in any Schedule, Exhibit or certificate furnished by Issuer pursuant to this Agreement, when read in its entirety, contains or will contain any untrue statement of a Material fact at the Closing Date, or omits or will omit to state any Material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading.
Article IV Conduct Prior to the Closing
4.1 Conduct of Business of Union Dental and DDS
During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing, as the case may be, Union Dental and DDS agree (except to the extent that Issuer will otherwise consent in writing), that they will promptly notify Issuer of any event or occurrence or emergency which is not in the ordinary course of business and which is Material and adverse to the business of Union Dental or DDS.
4.2 Conduct of Business of Issuer.
During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing, as the case may be, Issuer agrees (except to the extent that Union Dental and DDS will otherwise consent in writing), that Issuer will promptly notify Union Dental and DDS of any event or occurrence or emergency which is not in the ordinary course of business and which is Material and adverse to the business of Issuer.
Article V Additional Agreements
5.1 Report on Form 8-K.
(A) Within four (4) days following the Closing Date, Issuer, with the assistance and cooperation of Union Dental's current officers, auditors, employees and legal counsel, will prepare and file with the Commission a current report on Commission Form 8-K (the "8-K Report") disclosing the Reorganization and containing information concerning Union Dental required by Commission Regulation S-B.
(B) The Parties will use their best efforts to secure the Commission's acceptance of Union Dental and DDS's audited financial statements, as complying with the requirements of Regulation S-B, and Union Dental and DDS will make any modifications to its financial statements suggested by the Commission; and, if required, will use best efforts to secure from the Commission required extensions of time in which to provide materials complying with Commission Regulation S-B, if necessary.
5.2 Consent of Union Dental's Stockholders.
Because each Union Dental and DDS Stockholder has independently made the decision to exchange all of his, her or its Union Dental and DDS Securities for shares of Issuer's common stock, no formal stockholder action by Union Dental or DDS will be required in conjunction with authorization of this Agreement or the Closing; however, each Union Dental and DDS Stockholder must have become a party to this Agreement.
5.3 Access to Information.
(A) Union Dental and DDS will afford Issuer and its accountants, counsel and other representatives, reasonable access during normal business hours during the period prior to the Closing to all of its properties, books, contracts, commitments and records; and other information concerning the business, properties and personnel of Union Dental and DDS as Issuer may reasonably request.
(1) Union Dental and DDS agree to provide to Issuer and its accountants, counsel and other representatives copies of internal financial statements promptly upon request.
(B) Issuer will afford Union Dental, DDS and their accountants, counsel and other representatives, reasonable access during normal business hours during the period prior to the Closing to all of its properties, books, contracts, commitments and records; and other information concerning the business, properties and personnel of Issuer as Union Dental and DDS may reasonably request.
(1) Issuer agrees to provide to Union Dental, DDS and their accountants, counsel and other representatives copies of internal financial statements promptly upon request.
(C) No information or Knowledge obtained in any investigation pursuant to this
Section 5.3 will affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the
Parties to consummate the Reorganization.
5.4 Confidentiality.
(A) From the date hereof to and including the Closing Date, the Parties will maintain, and cause their directors, employees, agents and advisors to maintain, in confidence and not disclose or use for any purpose, except the evaluation of the transactions contemplated hereby and the accuracy of the respective representations and warranties of the Parties contained herein, information concerning the other Parties and obtained directly or indirectly from such Parties, or their directors, employees, agents or advisors, or as was in the possession of such Party prior to obtaining such information from such other Party as to which the fact of prior possession such possessing Party will have the burden of proof and such information as is or becomes:
(1) Available to the non-disclosing Party from third parties not subject to an undertaking of confidentiality or secrecy;
(2) Generally available to the public other than as a result of a breach by the non-disclosing party hereunder; or
(3) Required to be disclosed under applicable law.
(B) In the event that the transactions contemplated hereby will not be consummated, all such information which will be in writing will be returned to the Party furnishing the same, including to the extent reasonably practicable, copies or reproductions thereof which may have been prepared.
5.5 Expenses.
Whether or not the Reorganization is consummated, all expenses incurred in connection with the Reorganization and this Agreement will be the sole obligation of the Party incurring such expenses.
5.6 Public Disclosure.
Unless otherwise required by law, prior to the Closing Date no disclosure (whether or not in response to an inquiry) of the subject matter of this Agreement will be made by any Party unless approved by all Parties prior to release, provided that such approval will not be unnecessarily withheld, subject, in the case of Issuer, to Issuer's obligation to comply with applicable securities laws.
5.7 Consents.
The Parties will promptly apply for or otherwise seek, and use their best efforts to obtain, all consents and approvals required to be obtained by them for the consummation of the Reorganization; all of such consents and approvals being set forth in Schedule 5.7.
5.8 Legal Requirements.
The Parties will take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on them with respect to the consummation of the transactions contemplated by this Agreement and will promptly cooperate with and furnish information to any Party in connection with any such requirements imposed upon such other Party in connection with the consummation of the transactions contemplated by this Agreement and will take all reasonable actions necessary to obtain (and will cooperate with the other Parties in obtaining) any consent, approval, order or authorization of, or any registration, declaration or filing with, any Governmental Entity or other person, required to be obtained or made in connection with the taking of any action contemplated by this Agreement.
5.9 Best Efforts: Additional Documents and Further Assurances.
(A) Each of the Parties to this Agreement will use its best efforts to effectuate the transactions contemplated hereby and to fulfill and cause to be fulfilled the conditions to the Reorganization and the condition subsequent under this Agreement.
(B) Each Party, at the request of another Party, will execute and deliver such other instruments and do and perform such other acts and things as may be reasonably necessary or desirable for effecting completely the consummation of this Agreement and the transactions contemplated hereby.
5.10 Board of Directors.
Immediately following Closing, Dr. George D. Green will be elected to Issuer's board of directors and thereafter, Issuer will call its annual meeting of stockholders, nominating as director candidates such persons as the Stockholders shall deem appropriate.
Article VI Conditions to the Reorganization
6.1 Conditions to Obligations of Each Party to Effect the Reorganization.
The respective obligations of each party to this Agreement to effect the Reorganization will be subject to the satisfaction at or prior to the Closing Date of the following conditions:
(A) No Injunctions or Restraints: Illegality.
No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Reorganization will be in effect, nor will any proceeding brought by an administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, seeking any of the foregoing be pending; nor will there be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Reorganization, which makes the consummation of the Reorganization illegal.
6.2 Additional Conditions to Obligations of Union Dental and DDS.
The obligations of Union Dental and DDS to consummate and effect this Agreement and the transactions contemplated hereby will be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, exclusively by Union Dental and DDS:
(A) Representations, Warranties and Covenants.
The representations and warranties of Issuer in this Agreement will be true and correct in all material respects on and as of the Closing Date as though such representations and warranties were made on and as of such time and Issuer will have performed and complied in all Material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Closing Date.
(B) Certificate of Issuer.
Union Dental and DDS will have been provided with a certificate executed on behalf of Issuer by its President and its Chief Financial Officer, Treasurer or officer exercising such functions to the effect that, as of the Closing Date:
(1) All representations and warranties made by Issuer under this Agreement are true and complete in all material respects; and
(2) All covenants, obligations and conditions of this Agreement to be performed by Issuer on or before such date have been so performed in all Material respects.
(C) Satisfactory Form of Legal Matters.
The form, scope and substance of all legal and accounting matters contemplated hereby and all documents and other papers delivered hereunder prior to and on the Closing Date will be reasonably acceptable to counsel to Union Dental and DDS.
(D) Legal Opinion.
Union Dental and DDS will have received a legal opinion from legal counsel to Issuer, substantially in the form of Exhibit 6.2(D) hereto.
(E) No Material Adverse Changes.
There will not have occurred any event, fact or condition that has had or reasonably would be expected to have a Material adverse effect on Issuer.
(F) Tax Opinion.
(1) Union Dental will have received a written opinion from its tax advisors to the effect that the Reorganization will constitute a reorganization within the meaning of Section 368(a)(1)(B) of the Code. In rendering such opinion such tax advisor may rely on (and to the extent reasonably required, the Parties will make) reasonable representations related thereto.
6.3 Additional Conditions to the Obligations of Issuer.
The obligations of Issuer to consummate and effect this Agreement and the transactions contemplated hereby will be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, exclusively by Issuer:
(A) Representations, Warranties and Covenants.
The representations and warranties of Union Dental and DDS in this Agreement will be true and correct in all Material respects on and as of the Closing Date as though such representations and warranties were made on and as of such time and Union Dental and DDS will have performed and complied in all Material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Closing Date.
(B) Certificate of Union Dental and DDS.
Issuer will have been provided with a certificate executed on behalf of Union Dental and DDS respectively by its President and Chief Financial Officer to the effect that, as of the Closing Date, all:
(1) Representations and warranties made by Union Dental and DDS respectively under this Agreement are true and complete in all Material respects; and
(2) Covenants, obligations and conditions of this Agreement to be performed by Union Dental and DDS respectively on or before such date have been so performed in all Material respects.
(C) Third Party Consents.
Any and all consents, waivers and approvals required from third parties relating to the contracts and agreements of Union Dental and DDS so that the Reorganization and other transactions contemplated hereby do not adversely affect the rights of, and benefits to, Union Dental and DDS thereunder will have been obtained.
(D) Satisfactory Form of Legal and Accounting Matters.
The form, scope and substance of all legal and accounting matters contemplated hereby and all documents and other papers delivered hereunder prior to and on the Closing Date will be reasonably acceptable to Issuer's counsel (provided that the condition subsequent concerning the compliance of information provided by Union Dental with the requirements of Commission Regulation S-B, on a timely basis, will survive the Closing).
(E) Legal Opinion.
Issuer will have received a legal opinion from legal counsel to Union Dental and DDS, in substantially the form of Exhibit 6.3(E) hereto.
(F) No Material Adverse Changes.
There will not have occurred any event, fact or condition that has had or reasonably would be expected to have a Material adverse effect on Union Dental or DDS.
(G) Non-accredited Investors.
There will be no stockholders of Union Dental or DDS who are not Accredited Investors.
6.4 Documents to be Delivered at Closing.
(A) By the Issuer
(1) Board of Directors Minutes authorizing the issuance of a certificate or certificates for 15,000,000 Shares, registered in the names of the Stockholders based upon their holdings in Union Dental and DDS as agreed to on Exhibit A.
(2) The resignation of all officers of Issuer.
(3) A Board of Directors resolution appointing such person as Stockholder's designate as a director(s) of Issuer.
(4) The resignation of all the directors of Issuer, except that of Stockholder's designee, dated subsequent to the resolution described in 6.4(A)(3), above.
(5) Audited financial statements of the Issuer filed with the SEC, which shall include a current balance sheet and statements of operations, stockholders equity and cash flows for the twelve month period then ended.
(6) All of the business and corporate records of Issuer, including but not limited to correspondence files, bank statements, checkbooks, savings account books, minutes of shareholder and directors meetings, financial statements, shareholder listings, stock transfer records, agreements and contracts.
(7) Such other minutes of Issuer's shareholders or directors as may reasonably be required by Stockholders.
(B) By Union Dental, DDS and the Stockholders
(1) Delivery to the Issuer, or to its Transfer Agent, the certificates representing 100% of the issued and outstanding stock of Union Dental and DDS.
(2) Consents signed by all the Stockholders of Union Dental and DDS consenting to the terms of this Agreement.
(3) Audited financial statements in form and substance, and prepared in accordance with, rules and regulations of the Commission and meeting the filing requirements for a transaction of this type.
Article VII Survival of Condition Subsequent, Representations and Warranties & Covenants
7.1 Survival of Condition Subsequent, Representations and Warranties & Covenant.
All conditions subsequent to the Reorganization and covenants to be performed after the Closing, and all representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement will survive the Closing and continue until the date the audit of Issuer's financial statements for the year ending May 31, 2004 has been completed and Issuer has received a signed opinion from its independent auditors certifying such financial statements (the "2004 Audit Date").
Article VIII Termination, Amendment and Waiver
8.1 Termination.
This Agreement may be terminated and the Reorganization abandoned at any time prior to the Closing Date, as follows:
(A) By mutual consent of the Parties.
(B) By Issuer if it is not in Material breach of its obligations under this Agreement and there has been a Material breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of Union Dental or DDS and such breach has not been cured within 15 days after notice to Union Dental or DDS.
(C) By Union Dental or DDS if it is not in Material breach of its respective obligations under this Agreement and there has been a Material breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of Issuer and such breach has not been cured within 15 days after notice to Issuer;
(D) By any Party if:
(1) The Reorganization has not occurred by December 31, 2004;
(2) There is a order of a federal or state court in effect preventing consummation of the Reorganization; or
(3) There will be any action taken, or any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the Reorganization by any Governmental Entity which would make consummation of the Reorganization illegal.
(E) Where action is taken to terminate this Agreement pursuant to this Section 8.1, it will be sufficient for such action to be authorized by the board of directors (as applicable) of the Party taking such action.
8.2 Effect of Termination.
In the event of termination of this Agreement as provided in Section 8.1,
this Agreement will immediately become null and void and there will be no
liability or obligation on the part of any Party or their respective officers,
directors or stockholders, except if such termination results from the breach by
a Party of any of its representations, warranties, covenants or agreements set
forth in this Agreement (it being understood that termination of this Agreement
because of failure of Union Dental or DDS to satisfy the condition set forth in
Section 6.3(A) as a result of the occurrence of a Post-Execution Event will not
be deemed to be a termination resulting from such a breach of representation or
warranty.)
8.3 Amendment.
(A) This Agreement may be amended by the Parties at any time before or after approval of matters presented in connection with the Closing by the stockholders of those Parties required by applicable law to so approve but, after any such stockholder approval, no amendment will be made which by law requires the further approval of stockholders of a party without obtaining such further approval.
(B) This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Parties.
8.4 Extension & Waiver.
(A) At any time prior to the Closing any Party may, to the extent legally allowed:
(1) Extend the time for the performance of any of the obligations or other acts of the other Parties;
(2) Waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto; or
(3) Waive compliance with any of the agreements or conditions for the benefit of such Party contained herein.
(B) Any agreement on the part of a Party to any such extension or waiver will be valid only if set forth in an instrument in writing signed on behalf of such Party.
Article IX General Provisions
9.1 Interpretation.
(A) When a reference is made in this Agreement to Schedules or Exhibits, such reference will be to a Schedule or Exhibit to this Agreement unless otherwise indicated.
(B) The words "include," "includes" and "including" when used herein will be deemed in each case to be followed by the words "without limitation."
(C) The headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.
(D) The captions in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provisions hereof.
(E) All pronouns and any variations thereof will be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Party or Parties, or their personal representatives, successors and assigns may require.
(F) The Parties agree that they have been represented by counsel during the negotiation and execution of this Agreement (or waive its right to such representation) and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.
9.2 Notice.
(A) All notices, demands or other communications given hereunder will be in writing and will be deemed to have been duly given on the third business day after mailing by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
(1) To Issuer:
National Business Holdings, Inc. 4878 Ronson Ct., San Diego, CA 92111 Attention: Roger E. Pawson, CEO Telephone (858) 243-2615, Fax (858) 243-2615.
(2) To Union Dental:
Union Dental Corp.
1700 University Drive Suite 200, Coral Springs, FL 33071
Attention: Dr. George D. Green, President
Telephone (954) 575-2252; Fax (954) 344-8479;
e-mail docgreen@uniondental.com;
with a copy to
Kenneth S. Pollock, Esquire Newman, Pollock & Klein, LLP 2424 N. Federal Highway, Suite 411, Boca Raton, FL 33431 Telephone (561) 393-6168; Fax (561) 391-8856; e-mail kpollock@nkp-law.com.
(3) To DDS:
Direct Dental Services, Inc. 1700 University Drive, Suite 200, Coral Springs, FL 33071 Attention: Dr. George D. Green, President Telephone (954) 575-2252; Fax (954) 344-8479; e-mail docgreen@uniondental.com.
with a copy to
Kenneth S. Pollock, Esquire Newman, Pollock & Klein, LLP 2424 N. Federal Highway, Suite 411, Boca Raton, FL 33431 Telephone (561) 393-6168; Fax (561) 391-8856; e-mail kpollock@nkp-law.com.
or to the Stockholders at their respective addresses set forth herein or such other address or to such other person as any Party will designate to the other for such purpose in the manner hereinafter set forth.
(B) At the request of any Party, notice will also be provided by overnight delivery, facsimile transmission or e-mail, provided that a transmission receipt is retained.
9.3 Merger of All Prior Agreements Herein.
(A) This instrument, together with the instruments referred to herein, contains all of the understandings and agreements of the Parties with respect to the subject matter discussed herein.
(B) All prior agreements whether written or oral are merged herein and will be of no force or effect.
9.4 Survival.
The several representations, warranties and covenants of the Parties contained herein will survive the execution hereof and the Closing and will be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party.
9.5 Severability.
If any provision or any portion of any provision of this Agreement, other than one of the conditions precedent or subsequent, or the application of such provision or any portion thereof to any person or circumstance will be held invalid or unenforceable, the remaining portions of such provision and the remaining provisions of this Agreement or the application of such provision or portion of such provision as is held invalid or unenforceable to persons or circumstances other than those to which it is held invalid or unenforceable, will not be affected thereby.
9.6 Governing Law.
This Agreement will be construed in accordance with the substantive and procedural laws of the State of Florida (other than those regulating Taxation and choice of law). 9.7 Indemnification.
(A) Each Party hereby irrevocably agrees to indemnify and hold the other Parties harmless from any and all liabilities and damages (including legal
or other expenses incidental thereto), contingent, current, or inchoate to which they or any one of them may become subject as a direct, indirect or incidental consequence of any action by the indemnifying Party or as a consequence of the failure of the indemnifying Party to act, whether pursuant to requirements of this Agreement or otherwise.
(B) In the event it becomes necessary to enforce this indemnity through an attorney, with or without litigation, the successful Party will be entitled to recover from the indemnifying Party, all costs incurred including reasonable attorneys' fees throughout any negotiations, trials or appeals, whether or not any suit is instituted.
9.8 Dispute Resolution.
(A) In any action between the Parties to enforce any of the terms of this Agreement or any other matter arising from this Agreement any proceedings pertaining directly or indirectly to the rights or obligations of the Parties hereunder will, to the extent legally permitted, be held in Broward County, Florida, and the prevailing Party will be entitled to recover its costs and expenses, including reasonable attorneys' fees up to and including all negotiations, alternative dispute resolution proceedings, trials and appeals, whether or not any formal proceedings are initiated.
(B) In the event of any dispute arising under this Agreement, or the negotiation thereof or inducements to enter into the Agreement, the dispute will, at the request of any Party, be exclusively resolved through the following procedures:
(1) First, the issue will be submitted to mediation before a mediation service in Broward County, Florida to be selected by lot from four alternatives to be provided, two by Issuer and two by Union Dental. The mediation efforts will be concluded within ten business days after their initiation unless the Parties unanimously agree to an extended mediation period;
(2) In the event that mediation does not lead to a resolution of the dispute then at the request of any Party, the Parties will submit the dispute to binding arbitration before an arbitration service located in Broward County, Florida to be selected by lot, from four alternatives to be provided, two by Issuer and two by Union Dental.
(3) Expenses of mediation will be borne equally by the Parties, if successful. Expenses, including reasonable attorneys' fees, of mediation, if unsuccessful, and of arbitration, will be borne by the Party or Parties against whom the arbitration decision is rendered. If the terms of the arbitral award do not establish a prevailing Party, then the expenses of unsuccessful mediation and arbitration will be borne equally by the Parties involved.
9.9 Benefit of Agreement.
The terms and provisions of this Agreement will be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representatives, estate, heirs and legatees but are not intended to confer upon any other person any rights or remedies hereunder.
9.10 Further Assurances.
The Parties agree to do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, stock certificates and other documents, as may, from time to time, be required herein to effect the intent and purpose of this Agreement.
9.11 Counterparts.
(A) This Agreement may be executed in any number of counterparts.
(B) All executed counterparts will constitute one Agreement notwithstanding that all signatories are not signatories to the original or the same counterpart.
(C) Execution by exchange of facsimile transmission will be deemed legally sufficient to bind the signatory; however, the Parties will, for aesthetic purposes, prepare a fully executed original version of this Agreement which will be the document filed with the Commission.
9.12 Time of Essence.
Time is of the essence of this Agreement and of each and every provision hereof.
In Witness Whereof, Issuer, Union Dental, DDS and the Stockholders have caused this Agreement to be executed by themselves or their duly authorized respective officers, all as of the last date set forth below:
National Business Holdings, Inc.
(a Florida corporation)
By: /s/ Roger E. Pawson ------------------------ Roger E. Pawson, President Dated: December 28, 2004 |
State of }
County of ___________ } ss.:
On this 28th day of December, 2004, before me, a notary public in and for the county and state aforesaid, personally appeared ___________________, to me known, and known to me to be the President of National Business Holdings, Inc., the above-described corporation, and to me known to be the person who executed the foregoing instrument, and acknowledged the execution thereof to be his free act and deed, and the free act and deed of National Business Holdings, Inc., for the uses and purposes therein mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of ______________, ____.
Union Dental Corporation
(a Florida corporation)
By: /s/Dr. George D. Green --------------------------------- Dr. George D. Green, President Dated: December 28, 2004 |
State of Florida }
County of Broward } ss.:
On this 28th day of December, 2004, before me, a notary public in and for the county and state aforesaid, personally appeared Dr. George D. Green, to me known, and known to me to be the President of Union Dental Corp., the above-described corporation, and to me known to be the person who executed the foregoing instrument, and acknowledged the execution thereof to be his free act and deed, and the free act and deed of Union Dental Corp., for the uses and purposes therein mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of _______________, ____
Direct Dental Services, Inc.
(a Florida corporation)
By: /s/Dr. George D. Green --------------------------------- Dr. George D. Green, President Dated: December 28, 2004 |
State of Florida }
County of Broward } ss.:
On this 28th day of December, 2004, before me, a notary public in and for the county and state aforesaid, personally appeared Dr. George D. Green, to me known, and known to me to be the President of Direct Dental Services, Inc. , the above-described corporation, and to me known to be the person who executed the foregoing instrument, and acknowledged the execution thereof to be his free act and deed, and the free act and deed of Direct Dental Services, Inc., for the uses and purposes therein mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of _______________, ____
Stockholders
/s/ Dr. George D. Green --------------------------------- Dr. George D. Green, owner of 1,000 shares of common stock of Union Dental Corp. And 7,500 shares of common stock of DDS. Dated: December 27, 2004 |
State of Florida }
County of Broward } ss.:
On this 27th day of December, 2004, before me, a notary public in and for the county and state aforesaid, personally appeared Dr. George D. Green, to me known, and known to me to be a stockholder of Union Dental Corp. and Direct Dental Services, Inc., the above-described corporations, and to me known to be the person who executed the foregoing instrument, and acknowledged the execution thereof to be his free act and deed, for the uses and purposes therein mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of _______________, ____.
{seal}
EXHIBIT 2.4
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET AND SALE AGREEMENT (the "Agreement") is made and entered this 15th day of October, 2004, by and between UNION DENTAL CORP., a Florida Corporation (hereinafter referred to as the "Purchaser"), and GEORGE D. GREEN, D.D.S., P.A., a Florida professional corporation (hereinafter referred to as the "Seller" and collectively referred to as the "Sellers"). Seller and Purchaser are sometimes herein referred to collectively as the "Parties" and singularly as the "Party".
RECITALS:
WHEREAS, Seller operates a dental practice (the "Practice") and a dental network marketing company (the "Marketing Company") located at 200 N. University Drive, Suite 200 and 304 respectively, Coral Springs, Florida 33071 (sometimes hereinafter referred to as the "premises"); and
WHEREAS, Seller desire to sell, and Purchaser wishes to purchase, certain of the assets of Seller used in the operation of the Practice and Marketing Company at the Premises, including cash and funds held in bank accounts as of the date of the closing, upon the terms and conditions and for the price hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants, representations and warranties contained in this Agreement, and for the good an valuable consideration paid by the parties hereto to the other, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants, representations and warranties contained in this Agreement, and for other good and valuable consideration paid by the Parties hereto to the other, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
1. Recitations. The aforesaid recitations are true and correct and are incorporated by reference herein.
2. Sale of Assets. Subject to the terms and conditions contained herein, on the Closing Date (as hereinafter defined), Seller agrees to sell, convey, transfer and deliver to the Purchaser, and the Purchaser agrees to purchase from the Seller, only the assets set for on Exhibit "A" attached hereto and made a part hereof (collectively hereinafter referred to as the "Assets"), free and clear of all liens, claims, pledges and encumbrances of any kind, character and description
3, No Assumption of Liabilities. The Assets shall be conveyed by Seller to Purchaser, with general warranties of title, free and clear of any and all liens, security agreements, claims and encumbrances, except as otherwise provided herein the debts listed on Exhibit B" (collectively hereinafter referred to as the "Debts"), and Purchaser shall not be deemed to have assumed or to have taken any other assets of Seller to be liable and responsible for satisfying and discharging and liabilities and obligations of Seller, whether known or unknown, mature or contingent other than provided for in Exhibit B.
4. Purchase Price and Payment. The aggregate purchase price (Purchase Price") payable by Purchaser for the Assets shall be One Million Dollars ($ 1,000,000.00) Dollars, shall be payable by delivery of Purchaser's Promissory Note (the "Note") in the amount of the Purchase Price with interest thereon of five percent (5%) per annum, and which note shalkl contain, among other matters, that principal and interest be payable in 10 (10) equal yearly installments.
5. Date and Place of Closing.The closing ("Closing") shall be effective on the date of the execution of this Agreement (the "Closing Date") and shall take place at the office of Purchaser's attorney, located at 7805 S.W. 8th Court, Plantation, Florida 33324, or at such other place as may be mutually agreed by the arties. The Closing shall take place simultaneously with the execution of this Agreement.
6. Documents for Closing. Sellers will execute such deeds, bills of sale, endorsements, assignments, and other good and sufficient instruments of conveyance and transfer in the form satisfactory to Purchaser's attorney, and containing full warranties of title, which instruments shall be effective to vest title in Purchaser, good, absolute and marketable title in the Assets being transferred herein free and clear of all liens, charges, and encumbrances, and restrictions whatsoever, except as list in Exhibit "B" of this Agreement.
7. Warranties and Representations. Sellers represent and warrant to Purchaser, which representations and warranties will be correct and complete as of the Closing Date, as follows:
(a) Organization, Power and Standing. Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has all requisite power and authority to own the Assets and to conduct its Practice as now being conducted.
(b) Authorization of Transaction; Binding Effect. Seller has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of, and performance of its obligations under, this Agreement by Seller has been duly authorized by all requisite action on the part of Seller. This Agreement constitutes a valid and binding obligation of Seller enforceable against it in accordance with its terms.
(c) Approvals. No consent, approval, order or authorization of, or registration, declaration or filing with, any person, governmental authority or governmental accrediting body having jurisdiction is required in connection with the execution and delivery of this agreement by Seller or the consummation by Seller of the transactions contemplated hereby.
(d) Litigation. There are no claims, actions, suits or proceedings (arbitration or otherwise) pending, or, to the best of Seller's knowledge, threatened against Seller with respect to Seller's Practice or the Assets at law or in equity in any court or before or by any governmental authority. Seller is not in default in respect of any judgment, order, writ, injunction or decree of any court or other governmental authority with respect to the Assets or the Practice of Seller or the transactions contemplated by this Agreement.
(e) Title to Asset. At time of Closing, Seller is the owner of and has good and marketable title to the Assets as above described, free and clear of all liens and encumbrances, except as hereinafter set forth, at time of Closing, and is with full authority to sell the Assets as set forth in Paragraph 1 above.
(f) Taxes. There are no Federal, State or local or other taxes owed which could constitute or give rise to any lien upon the Assets being transferred in connection with this transaction, impose any liability upon Purchaser or the Assets being transferred, or prevent the closing of this transaction, nor will there be at Closing.
(g) Contracts. Seller has entered into no contracts to sell, encumber or mortgage the Assets or any portion thereof, except as otherwise described in this Agreement.
(h) Condition of Assets. The Assets purchased under this Agreement shall be in good working condition as of the time of the Closing. In the event that any of the aforesaid items shall be found to be in need of repair, Seller shall, prior to the closing at Seller's expense, repair the property to working condition. At Purchaser's option, Purchaser may accept a credit from Seller for the cost of said repairs, which credit shall be applied against the cash portion of the Purchase Price required at the Closing,
(i) Full Disclosure. No representation or warranty by Seller in this Agreement, whether in this Section 8 or otherwise, nor any statement, schedule or certification furnished, or to be furnished, to Purchaser pursuant hereto or in connection with the transactions contemplated hereby, contains, or will contain, any untrue statement of a material fact, or omits, or will omit, to state a material fact necessary to make the statements contained therein not misleading.
8. Warranties and Representations of Purchaser. Purchaser represents and warrants to Seller, which representations and warranties will be correct and complete as of the Closing Date, as follows:
(a) Organization, Power and Standing. Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation.
(b) Authorization of Transaction: Binding Effect. Purchaser has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of, and performance of its obligations under, this Agreement by Purchaser has been duly authorized by all requisite action on the part of Purchaser. This Agreement constitutes a valid and binding obligation of Purchaser enforceable against it in accordance with its terms.
(c) Approval. No consent, approval, order or authorization of, or registration, declaration or filing with, any person, governmental authority or governmental accrediting body having jurisdiction is required in connection with the execution and delivery of this Agreement by Purchaser or the consummation by Purchaser of the transactions contemplated hereby.
(d) Litigation. There are no claims, actions, suits or proceedings (arbitration or otherwise) pending, or, to the best of Purchaser's knowledge, threatened against Purchaser with respect ~o Purchaser's business at law or in equity in any court or before or by any governmental authority. Purchaser is not in default in respect of any judgment, order, writ, injunction or decree of any court or other governmental authority with respect to the business of Purchaser or the transactions contemplated by this Agreement.
9. Seller's Indemnification.
(a) Seller shall defend, indemnify, save and keep Purchaser, its officers, directors, managers members, assigns, its lenders and their respective officers and directors and successors and assigns, forever harmless against and from assigns, forever harmless against and from all liabilities, demands, claims, actions or causes of action, assessments, losses, fines, penalties, costs, damages and expenses, including reasonable attorneys' and expert witness fees (collectively, "Indemnifiable Matters") sustained or incurred By Purchaser, its lenders and their respective successors or assigns, as a result of or arising out of or by virtue of:
(i) The failure of Seller to comply with, or the breach by Seller of any representation, warranty or covenant of, this Agreement to be performed by Seller (including, without limitation, this Section); or
(ii) Any third party claim or action arising prior to the date of Closing relating to the Assets; or
(iii) Any liability arising from filing information with the Internal Revenue Service, or Florida Department of Revenue; or
(iv) Any and all tax liabilities of Seller with regard to the Assets being sold hereunder, including but not limited to, personal property, sales and use taxes, and any transferee liabilities imposed by any Federal, State or local taxing authorities; or
(v) Together with any incidental expenses incurred by Purchaser in defending all actions, suits, proceedings, demands, assessments, judgment, costs and expenses incidental to any of the foregoing.
(b) Purchaser's Indemnification. Purchaser agrees to indemnify, defend and hold harmless Seller from and against all Indemnifiable Matters reasonably and proximately incurred by Seller as a result of (i) any breach of any representation or warranty made by Purchaser in this Agreement or any certificate delivered pursuant to this Agreement to Seller, or (ii) any breach of or failure to perform any covenant or agreement of Purchaser as required by this Agreement, or (iii) any third party claim or action arising after the date of Closing relating to the Assets.
(c) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified Party") with respect to any matter (a "Third Party Claim") which may give rise to a claim for indemnification against any other Party (the "Indemnifying Party") under this Section 1O, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided. however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is materially prejudiced in defending any such claim.
(ii) Any Indemnifying Party will have the right to assume the defense of the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party, so long as (A) the Indemnifying Party notifies the Indemnified Party in writing within thirty (30) days after the Indemnified Party has given notice of the Third Party Claim, that the Indemnifying Party elects to assume such defense, and (B) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief; provided, however, that the Indemnifying Party must conduct the ""'defense of the Third Party Claim actively and diligently thereafter in order to preserve its rights in this regard, and provided, further that the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim.
(iii) So long as the Indemnifying Party elected to assume and is conducting the defense of the Third Party Claim in accordance with (ii) above, (A) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably), and (8) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably).
(iv) In the event none of the Indemnifying Parties assumes and conducts the Thirty Party Claim in accordance with (ii) above (A) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith), (8) the Indemnifying Party will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorneys' fees and expenses), and (C) the Indemnifying Party will remain responsible for any damages or losses the Indemnified Party may suffer resulting from arising out of, or otherwise relating to the Third Party Claim to the fullest extent provided in this Section 10.
10. Miscellaneous.
(a) Notices. All notices, requests, demands, claims and other communications hereunder shall be in writing, and shall be deemed duly given if (and then two (2) business days after) sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:
If to Sellers: GEORGE D. GREEN, D.D.S., P .A. 1700 University Drive, Suite 200 Coral Springs, Florida 33071 If to Purchaser: UNION DENTAL CORP. 1700 University Drive Suite 304 Coral Springs, Florida 33071 |
Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (Including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but the same shall not be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.
(b) Consent to Jurisdiction and Service of Process. Any claim arising out of or relating to this Agreement shall be instituted in any Federal or State court in the county of Broward and State of Florida, and each Party agrees not to assert, by way of motion, as a defense or otherwise in any such claim, that it is not subject personally to the jurisdiction of such court, that the claim is brought in an inconvenient forum, that the venue of the claim is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court. Each Party further irrevocably submits to the jurisdiction of such courts in any such claim. Any and all service of process and any other notice in any such claim shall be effective against any Party if given personally or by
registered or certified mail, return receipt requested, or by any other means of mail that requires a signed receipt, postage prepaid, mailed to such Party as herein provided. Nothing herein contained shall be deemed to affect the right of any Party to serve process in any manner permitted by law or to commence legal proceedings or otherwise against any other Party in any other jurisdiction.
(c) Successors and Assigns. This Agreement and the various rights and obligations arising hereunder shall inure to the benefit of and be binding upon Seller, its respective successors and permitted assigns, and Purchaser and its successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be transferred or assigned (by operation of law or otherwise) by any of the Parties without the prior written consent of the other Party except that Seller or Purchaser shall have the right to assign its rights hereunder to an affiliate of Seller. Any transfer or assignment of any of the rights, interests or obligations hereunder in violation of the terms hereof shall be void and of no force or effect.
(d) Expenses. Each Party shall be responsible for and shall pay its own expenses incidental to the execution and delivery of, and the performance of its obligations under, this Agreement, including the consummation of the transactions contemplated hereby, regardless of whether the acquisition is consummated or this Agreement is terminated.
(e) Entire Agreement: Governing Law: Amendments: etc. This Agreement (i) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and understandings, both written and oral, among the Parties with regard to the subject matter hereof, (ii) except as specifically provided for herein is not intended to confer upon any person not a party any rights or remedies hereunder or with respect to the subject matter hereof, (iii) shall be governed by, and construed and enforced in accordance with, the internal substantive laws (but not the law governing choice of law) of the State of Florida, (iv) may be executed in two or more counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute a single agreement, (v) may be amended only by a document ., signed by all of the Parties hereto and (vi) may be waived with respect to any provision only by a document signed by the Party entitled to the benefit of such provision.
(f) Headings. The article, section and subsection headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement (or any provision thereof).
(g) Delays or Omissions; Waiver. No delay or omission to exercise any rights, power or remedy accruing to any Party hereto, upon any breach or default of any other Party under this Agreement, shall impair any such right, power or remedy of such Party nor shall it be construed to be a waiver of, or estoppel with respect to, any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Party hereto of any breach or default under this Agreement, or any waiver on the part of any Party of any provisions, obligations, covenants, agreements or conditions of this Agreement must be made in writing and shall be effective only to the extent otherwise afforded to any Party, shall be cumulative and not alternative. Whenever this Agreement requires or permits consent by or on behalf of any Party hereto, such consent shall be given in writing.
(h) Severability. Unless otherwise provided herein, if any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
(i) Attorneys' Fees. If any Party to this Agreement seeks to enforce the terms and provisions of this Agreement, then the prevailing Party in such action shall be entitled to recover from the losing party all costs in connection with such action, including, without limitation, reasonable attorneys' fees, expenses and costs incurred at the administrative, trial, bankruptcy and all appellate levels.
(j) No Construction Against Draftsmen. The Parties hereto acknowledge that this is a negotiated Agreement, and that in no event shall the terms hereof be construed against either Party on the basis that such Party, or its counsel, drafted this Agreement.
(k) No Reliance. No third party is entitled to rely on any of the representations, warranties and agreements of the Parties hereto contained in this Agreement; and the Parties assume no liability to any third party because of any reliance on the representations, warranties and agreements of the Parties hereto contained in this Agreement.
(l) Further Instruments and Actions. Each Party hereto shall deliver ;an~ further instruments and take any further action that may be reasonably requested by the other in order to carry out the provisions and purposes of this Agreement.
(m) Survival Clause. All agreements, representations, warranties or covenants contained in the Agreement shall survive the Closing of this transaction.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and dated as of the date and year first above written.
Sellers:
GEORGE D. GREEN, D.D.S., P.A.
a Florida professional corporation
BY: /s/ Dr. George D. Green ----------------------------- Its: President |
Purchaser:
UNION DENTAL CORP.
By: /s/ Dr. George D. Green ------------------------------ Its: President |
Exhibit "A"
All Assets associated with Sellers business with the exception of the Patient List of the Dental Practice which shall remain the property of Dr. George D. Green.
The Purchase Price has been determined to be One Million Two Hundred Eighty Five Thousand Six Hundred Twenty Three Dollars and no cents ($1,285,623.00) less the shareholder loan owed by Dr. George D. Green in the amount of $285,623.00.
Promissory Installment Note
RECITATIONS:
Date: October 15, 2004 Borrower: Union Dental Corp. Borrower's Address: 1700 University Drive Coral Springs, FL 33071 Payee: Dr. George D. Green Place for Payment: Union Dental Corp. 1700 University Dr., Suite 304 Coral Springs, FL 33071 Principal Amount: $1,000,000.00 Term: Ten (10) years Yearly Payments: $100,000.00 plus accrued interest at the rate of five (5) percent per annum. |
INTEREST RATE: Annual interest rate shall be five percent (5%) per annum. Any unpaid accrued balance in default of payment shall be at the maximum rate allowed under the laws of the State of Florida. PAYMENT TERMS: This Note is due and payable as follows, to-wit: Ten (10) equal yearly payments of $100,000.00 principal plus interest. The first such payment due and payable on the 27th day of October, 2005, and a like installment shall be due and payable on the same day of each succeeding month thereafter until the total principal of One Million Dollars $ 1,000,000.00 principal is paid in full. If each payment is not paid on time, the remaining balance will be subject to the maximum amount of interest permitted by the Laws of the State of Florida.
BORROWER'S PRE-PAYMENT RIGHT. Borrower reserves the right to prepay this Note in whole or in part, prior to maturity, without penalty. PLACE FOR PAYMENT. Borrower promises to pay to the order of Payee at the place for payment and according to the terms for payment the principal amount plus interest at the rates stated above. All unpaid amounts shall be due by the final scheduled payment date.
DEFAULT AND ACCELERATION CLAUSE. If Borrower defaults in the payment of this Note or in the performance of any obligation, and the default continues after Payee gives Borrower notice of the default and the time within which it must be cured, as may be required by law or written agreement, then Payee may declare the unpaid principal balance and earned interest on this Note immediately due. Borrower and each surety, endorser, and guarantor waive all demands for payment, presentation for payment, notices of intentions to accelerate maturity, notices of acceleration of maturity, protests, and notices of protest, to the extent permitted by law.
INTEREST ON PAST DUE INSTALLMENTS AND CHARGES. All past due installments of principal and/or interest and/or all other past-due incurred charges shall bear interest after maturity at the maximum amount of interest permitted by the Laws of the State of Florida until paid. Failure by Borrower to remit any payment by the 15th day following the date that such payment is due entitles the Payee hereof to declare the entire principal and accrued interest immediately due and
payable. Payee's forbearance in enforcing a right or remedy as set forth herein shall not be deemed a waiver of said right or remedy for a subsequent cause, breach or default of the Borrower's obligations herein.
INTEREST. Interest on this debt evidenced by this Note shall not exceed the maximum amount of non-usurious interest that may be contracted for, taken, reserved, charged, or received under law; any interest in excess of the maximum shall be credited on the principal of the debt or, if that has been paid, refunded. On any acceleration or required or permitted prepayment, any such excess shall be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the debt or, if the principal of the debt has been paid, refunded. This provision overrides other provisions in this instrument (and any other instruments) concerning this debt.
FORM OF PAYMENT. Any check, draft, Money Order, or other instrument given in payment of all or any portion hereof may be accepted by the holder and handled in collection in the customary manner, but the same shall not constitute payment hereunder or diminish any rights of the holder hereof except to the extent that actual cash proceeds of such instruments are unconditionally received by the payee and applied to this indebtedness in the manner elsewhere herein provided.
ATTORNEY'S FEES. If this Note is given to an attorney for collection or enforcement, or if suit is brought for collection or enforcement, or if it is collected or enforced through probate, bankruptcy, or other judicial proceeding, then Borrower shall pay Payee all costs of collection and enforcement, including reasonable attorney's fees and court costs in addition to other amounts due.
SEVERABILITY. If any provision of this Note or the application thereof shall, for any reason and to any extent, be invalid or unenforceable, neither the remainder of this Note nor the application of the provision to other persons, entities or circumstances shall be affected thereby, but instead shall be enforced to the maximum extent permitted by law.
BINDING EFFECT. The covenants, obligations and conditions herein contained shall be binding on and inure to the benefit of the heirs, legal representatives, and assigns of the parties hereto.
DESCRIPTIVE HEADINGS. The descriptive headings used herein are for convenience of reference only and they are not intended to have any effect whatsoever in determining the rights or obligations under this Note.
CONSTRUCTION. The pronouns used herein shall include, where appropriate, either gender or both, singular and plural.
GOVERNING LAW. This Note shall be governed, construed and interpreted by, through and under the Laws of the State of Florida. Borrower is responsible for all obligations represented by this Note.
EXECUTED this 15th Day of October, 2004.
Union Dental Corp.
By: /s/ Dr. George D. Green ------------------------------- Its: President |
EXHITBIT 4.1
OPTION AGREEMENT
This Option Agreement ("Agreement") made and entered into on this ____ day of _____, 200_, by and between UNION DENTAL CORP., a Florida corporation with its principal place of business located at 1700 University Drive, Suite 200, Coral Springs, FL 33071 (hereinafter the "Grantor"), its successors and/or assigns, and ________________ _________________________________________________ (hereinafter the "Grantee").
WHEREAS, Grantee and Grantor have entered into an Employment Agreement (the "Agreement") and pursuant to the terms of said Agreement, Grantor has agreed to issue to Grantee an option to purchase shares of Grantor's Common Stock, provided that certain conditions enumerated in the Agreement have been adhered to; and
WHEREAS, all of the conditions included in the Agreement relating to the issuance of this Option by Grantor have been met.
NOW THEREFORE, the parties hereby agree as follows:
1. Issuance of Option to Purchase Common Stock. In exchange for good and valuable consideration, more specifically stated in the Agreement, the receipt and sufficiency of which is hereby acknowledged, Grantor herewith grants and gives to Grantee the absolute and irrevocable right, privilege and option for the period commencing on __________ and continuing thereafter for a period of five (5) years from the commencement date referenced herein (the "Option Period"), to purchase ___________ Common Shares, par value $.0001 per share, of Grantor (the "Option Stock"), or in the event any merger, consolidation or other combination effectuated between the Grantor and any other entity, to purchase such Common Shares from Grantor's successor thereto.
2. Reservation of Common Shares. Grantor agrees to reserve from its authorized but unissued Common Stock sufficient shares to allow Grantee to exercise the Option granted herein and Grantor will hold the same in reserve until the end of the Option Period so that Grantee may have the opportunity to take advantage of such Option and exercise the same. Grantor further represents and warrants to Grantee that is has a sufficient number of authorized but unissued Common Shares to effectuate this proposed transaction.
3. Exercise Price. The Grantor hereby grants to Grantee the right to purchase such Common Stock at a purchase price of Fifty Cents ($.50) per share Grantee shall not be obligated to exercise its Option on all of the Option Stock at any one time, but may elect to exercise its rights hereunder in as many separate allocations as it may so desire during the Option Period.
4. Consideration. All payments tendered by Grantee to Grantor for the Option Stock shall be for cash consideration only.
5. Method of Exercise of Option. At lease five (5) days prior to the date upon which all or any portion of the option granted herein is to be exercised, Grantee shall deliver to the Grantor written notice of its election to exercise the option, which notice shall specify the date and time for the issuance of the shares underlying the option granted herein, as well as the number of shares in respect of which the option is to be exercised. The date specified shall be a business day and time specified shall be during the regular business hours of the Company.
6. Payment and Delivery of Shares. The Grantee shall, at the date and time specified in the applicable notice described in Paragraph 5 hereinabove, deliver a bank cashier's check or other form of certified funds acceptable to Grantor in United States currency, payable to Grantor herein in the amount of the option price for the shares in respect of which the option is being exercised. Such delivery shall be made to the Grantor at its principal place of business and such check or checks shall be drawn to the order of the Grantor. Contemporaneously with such payments, the Grantor shall deliver to the Grantee duly endorsed and in proper form, certificates representing the common shares of Grantor in respect of which the option is being exercised.
7. Adjustments. The number of common shares subject to the option granted herein shall be proportionately adjusted for any change in the stock structure of the Grantor because of stock splits whether forward or reverse.
8. Investment Intent. All Option Stock acquired by exercise of the option granted by this Agreement shall be subject to the restrictions all included within Rule 144 promulgated under the Securities Act of 1933, as amended, unless otherwise stated in Grantee's Employment Agreement. All share certificates representing shares acquired by the exercise of the option provided herein shall have endorsed thereon the following legend, unless otherwise stated in Grantee's Employment Agreement:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND ARE `RESTRICTED SECURITIES' AS THAT TERM IS DEFINED IN THE ACT. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY."
9. Representations of Grantee. Upon exercise of the option granted herein, Grantee hereby acknowledges that it will be required to represent to Grantor that:
a. The Option Shares are being purchased by Grantee for investment only,
for its own account, and not with a view to the offer or sale in
connection therewith, or the distribution thereof, and that the
Grantee is not participating, directly or indirectly, in an
underwriting or any such undertaking.
b. Grantee will not take, or cause to be taken, any action that would
cause it to be deemed an underwriter of the Option Shares, as defined
in Section 2(11) of the Securities Act of 1933, as amended (the
"Act").
c. Grantee has been afforded an opportunity to examine such documents and
obtain such information concerning the Company as it may have
requested and has had the opportunity to request such other
information (and all information so requested has been provided) for
the purpose of verifying the information furnished to it and for the
purpose of answering any question it may have had concerning the
business affairs of the Company.
d. It understands that the issuance of the Option Shares is made pursuant
to exemptions from registration provided by Section 4(2) of the Act
and/or Regulation D, promulgated thereunder.
10. Benefit. This Option Agreement and the covenants and conditions herein contained shall inure to the benefit of and be binding upon the parties hereto and their successors and assigns. Immediately upon the exercise of the option herewith granted, all rights, privileges and benefits pertaining to all of such shares shall pass to and be the unencumbered property of the Grantee.
11. Applicable Law. It is the intention of the parties that the laws of the State of Florida govern the determination of the validity of this Agreement, the construction of its terms and interpretation of the rights and duties of the parties.
12. Notices. Any notices or other communications required or permitted hereby shall be sufficiently given if sent by registered or certified mail, postage prepaid, return receipt requested, addressed to the applicable party as stated hereinabove or to such other addresses as either party shall designate to the other by notice, in writing.
IN WITNESS WHEREOF, the parties have signed this Option Agreement on this ____ day of _____, 200_.
GRANTOR: UNION DENTAL CORP.
By:/s/ George D. Green ----------------------------------- George D. Green, President & C.E.O. |
GRANTEE: (NAME)
By:___________________________________
EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") entered into this 20th day of March, 2004 by and between Union Dental Corp, (the "Company") a Florida corporation whose principal place of business is 1700 University Drive, Suite 200, Coral Springs, Florida 33071, and Dr. George D. Green , whose address is located at 8307 NW 51st Manor, Coral Springs, Florida 33067 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company has offered the Executive the position as Chairman of the Board, President and Chief Executive Officer of the Company and the Executive possesses knowledge and experience which are valuable to the company; and
WHEREAS, the principal business of the Company is a dental practice referred to as George D. Green D.D.S., P.A. (hereinafter referred to as "Green") and a second business, Direct Dental Services, Inc. ("DDS") which encompasses the sales and marketing of an exclusive Dental Network for the Communications Workers of America union ("CWA") and the International Brotherhood of Electrical Workers union ("IBEW") in eighteen (18) states with the intent of expanding the concept throughout the United States and into other unions, such as General Electric and the United Auto Workers.
NOW, THEREFORE, for and in consideration of the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereto agree as follows:
1. Employment. The Company hereby offers to employ Executive, and Executive accepts such employment, upon the terms and conditions hereinafter set forth.
2. Employment Term. The "Initial Term" means the basic term of this Agreement, which begins on the date hereof (the "Effective Date") and ends on the seventh anniversary of this Agreement. Thereafter, Executive's employment hereunder shall be automatically renewed for successive periods of one (1) year (each a "Renewal Term"), unless either party hereto shall give written notice to the other that Executive's employment hereunder shall not be renewed or continued, as the case may be, not less than ninety (90) days prior to the end of the then current term of employment. The Initial Term and any Renewal Term may be terminated pursuant to Section 7 hereof.
3. Office: Duties of Executive. During the term of the Executive's employment, the Executive shall serve as Executive Officer and, in so doing, shall perform normal duties and responsibilities associated with such position, including, without limitation, working with the Board of Directors to develop the Company's growth plan and strategic alternatives, developing financing sources, evaluating the Company's capital structure and recommending any appropriate changes, serving as liaison with and otherwise managing the Company and its relationship with members of the Dental Network, and carrying out such other or different duties as may be assigned him by the Company's Board of Directors. During the term of this Agreement, Executive shall devote so much of his business time and attention to the business and affairs of the Company as he, in his sole discretion, deems appropriate, subject to the general direction, approval and control of the Board of Directors.
4. Compensation. Except as otherwise provided in this Agreement, the Company shall compensate Executive in the manner set forth in this Section 4 payable in accordance with the normal payroll practices of the Company for the duration of the term of this Agreement ("Employment Term").
4.1 Base Salary. For each year during the Employment Term (or, if this Agreement shall be earlier terminated in accordance the terms of Section 7 hereof, ending on the date of termination of this Agreement), the Company will pay to Executive and aggregate annual salary equal to the base salary listed on Exhibit A attached hereto and made a part hereof. The base salary will be paid in accordance with the normal payroll procedures of the Company unless otherwise stated in Exhibit A.
4.2 Incentive Bonuses. With the approval of the Board of Directors, the Company may pay additional increases in the base compensation and may pay incentive bonuses to Executive.
4.2(a) At the signing of this Agreement, the Executive shall receive 750,000 options (this number being based upon a formula of 3% of the issued and outstanding shares of stock in the Company currently estimated to be 25,000,000 shares) with an exercise price of $ _________ (at market bid price as determined by the first quote of the shares as obtained from the National Quotation Bureau "NQB") exercisable within five (5) years of the date first mentioned in this Agreement. Fifty (50) percent of these shares shall be "vested" immediately and the balance of the options shall be deemed "vested" at the end of the two year term as a Member of the Board of Directors. The term "vested" shall mean the shares of stock underlying the options agreement shall be registered by the Company at the first available opportunity.
4.3 Vacation. Executive shall be entitled to a total of four (4) weeks of paid vacation per calendar year.
4.4 Other Benefits. Executive shall receive other employment benefits which are similar to compensation packages comparable to executives of other companies in similar industries.
4.4(a) Executive shall receive a fully covered health insurance policy, including, but not limited to, the coverage of prescription drugs and medications.
4.4(b) Executive shall receive a life insurance policy fully paid for by the Company, in the amount of $1.0 million, and, the beneficiary to be named by the Executive.
4.4(c) The Company shall maintain a key man life insurance policy on the Executive, in an amount to be determined by the Board of Directors, fully paid for by the Company, and, inure to the benefit of the Company.
4.4(d) Executive shall receive disability insurance comparable to other executives of similar companies or be compensated to the equivalent of a disability insurance policy that would be in effect in case of such extremes where the Executive is not able to perform his duties.
4.4(e) Executive shall receive a car allowance not to exceed $2,000 per month, which car or cars may be used for either business or personal.
4.4(f) Executive shall be entitled to participate in the Company's
401(k) Retirement Plan.
4.4(g) Executive shall receive days off on regular holidays that are available to similarly situated employees of the Company and that are at least equivalent to such benefits currently being received by Executive.
5. Business-Related Expenses. Upon presentation, in accordance with Company policies, of itemized accounts of his expenditures related to his performance as an Executive, the Company promptly shall reimburse Executive for all reasonable and necessary travel expenses and other expenses incurred by Executive on behalf of the Company in the performance of his duties under this Agreement.
5.1 Executive, when traveling by air, shall travel in Business Class.
5.2 Executive shall be allowed to stay at hotels that are four (4) stars, but, may choose hotels of greater or lesser status, at his discretion.
5.3 Executive shall be allowed to rent a luxury car of his choosing to fit the needs of the travel plans associated with his duties as an Executive while on business trips.
5.4 Executive shall be allowed to dine at exclusive restaurants, as the need arises, at his discretion, in order to properly entertain business associates.
5.5 For accounting purposes, and, to eliminate part of the procedure of expense account reports, Executive shall be issued a Company credit card to be used for business related expenses, where the billing will be charged directly to the Company.
6. Covenants.
6.1 Proprietary Information. In performance of services under this Agreement, Executive may have access to:
6.1(a) information which derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and is the subject of efforts that are reasonable under the circumstance to maintain its secrecy (hereinafter "Trade Secrets" or "Trade Secret"); and
6.1(b) information which does not rise to the level of Trade Secret but is valuable to the Company and provided in confidence to Executive (hereinafter "Confidential Information"). Executive acknowledges and agrees with respect to Trade Secrets and Confidential Information provided to or obtained by Executive (hereinafter collectively the "Proprietary Information"):
6.1(b) (i) the Proprietary Information is and shall remain the exclusive property of the Company; and
6.1(b) (ii) to use the Proprietary Information exclusively for the purpose of fulfilling the obligations of this Agreement; and
6.1(b) (iii) to return the Proprietary Information, and any copies thereof, in his possession or under his control, to the Company upon request of the Company, or expiration or termination of this Agreement for any reason; and
6.1(b) (iv) to hold the Proprietary Information in confidence and not copy, publish or disclose to others or allow any other party to copy, publish or disclose to others in any form, any Proprietary Information without the prior written approval of an authorized representative of the Board of Directors.
The obligations and restrictions set forth in this Section 6.1 shall survive the expiration or termination of this Agreement, for any reason, and shall remain in full force and effect as follows:
6.1(b) (x) as to Trade Secrets, indefinitely, and
6.1(b) (y) as to Confidential Information, for a period of two (2) years after the expiration or termination of this Agreement for any reason.
The confidentiality, property, and proprietary rights protections available in this Agreement are in addition to, and not exclusive of, any and all other corporate rights, including those provided under copyright, corporate officer or director fiduciary duties, and trade secret and confidential information laws. The obligations set forth in this Section 6.1 shall not apply or shall terminate with respect to any particular portion of the
Proprietary Information which (i) was in Executive's possession, free of any obligation of confidence, prior to his receipt from the Company, (ii) Executive establishes the Proprietary Information is already in the public domain at the time the Company communicates it to the Executive, or become available to the public through no breach of this Agreement by Executive, or (iii) Executive establishes that the Proprietary Information was received by Executive independently and in good faith from a third party lawfully in possession thereof and has no obligation to keep such information confidential.
6.2 Ownership of Property. Executive agrees and acknowledges that all works of authorship and inventions, including but not limited to products, goods, know-how, Trade Secrets and Confidential Information, and any revisions thereof, in any form and in whatever stage of creation or development, arising out of or resulting from, or in connection with, the services provided by Executive to the Company under this Agreement (collectively the "Property") are works made for hire and shall be the sole and exclusive property of the Company. Executive agrees to execute such documents as the Company may reasonably request for the purpose of effectuating the rights of the Company herein.
6.3 Warranty and Absence of Conflict. Executive warrants to the Company that Executive is not under any other contract or agreement that precludes Executive from remaining as an employee of the Company or performing services as provided in this Agreement.
6.4 Non-Solicitation. Executive covenants and agrees that during his employment with the Company, and for a period of one (1) year following the date that his employment is terminated for any reason whatsoever, he will not on behalf of any person, firm, corporation or entity solicit or accept business from customers of the Company, including actively-sought prospective customers, with whom he had material contact during the course of his employment with the Company during the two (2) year period prior to Executive's termination of employment for the purpose of providing or selling products or services that are competitive with those provided by Company in connection with the Business.
6.5 Non Competition. Executive covenants and agrees that during his employment with the Company and for a period of one (1) year following the date that his employment is terminated for any reason whatsoever, he will not, within the Business Area (defined below), directly or indirectly, on his own behalf or in the service or on behalf of others, engage in any business which is the same or essentially the same as the business of the Company (the "Business"), as a manager, supervisor, administrator, owner, salesman, or in another capacity which involves duties, and responsibilities similar in any way to those undertaken for the Company herein.
6.6 Certain Definitions and Exclusions.
6.6(a) "Business Area" means the geographic areas located within the eighteen (18) state dental networks under contract, operated and maintained by the Company.
6.6(b) The Company and Executive specifically acknowledge that Executive shall not be prohibited from entering into any transaction pursuant to which Executive (a) obtains voting or management control of an institution which either engages in the business of discount dental services or funds or invests in companies or businesses engaged in the business of discount dental services or funds or invests in companies or businesses engaged in the business of discount dental services or (b) invests in or obtains voting or management control of any entity which discounts dental services as an ancillary activity to such entity's normal business activities as long as these business activities are not engaged in marketing or selling of dental services or creating dental networks for unions.
6.7 Non-Interference. Executive covenants and agrees that during his employment with the Company and for a period of two (2) years following the date that his employment agreement is terminated for any reason whatsoever, he will not, directly or indirectly, on his own behalf or in the service or on behalf of others, call upon, solicit, recruit, or hire away or assist others in calling upon, soliciting, recruiting or hiring away, any person who is or was, during the two (2) year period prior to Executive's termination of employment, an employee of the Company or of any Member of the Company in any attempt to have such person work in any other firm, association, corporation or entity engaged in a business substantially similar to the Business.
6.8 Injunctive Relief. Executive acknowledges and agrees that the remedy at law for any such breach of this Section 6 will be inadequate and that in the event of such breach the Company will suffer irreparable damage; accordingly, the Company shall be entitled to temporary and permanent injunctive relief in the event of breach without the necessity of proving monetary damages.
6.9 Indemnification Defense. Executive shall indemnify the Company from and against any and all actions, suits, proceedings, liabilities, damages, losses, costs and expenses (including attorneys' and experts' fees) arising out of or in connection with any breach or threatened breach by the Executive of any one or more provisions of this Agreement. The existence of any claim, demand, action or cause of action of the Executive against the Company shall not constitute a defense to the enforcement by the Company of any of the covenants or agreements herein.
7. Termination.
7.1 General. This Agreement may be terminated prior to the expiration of the Initial Term or any Renewal Term by any of the following events:
7.1(a) mutual written agreement expressed in a single document signed by both the Company and Executive;
7.1(b) voluntary written resignation by Executive other than for Good Reason;
7.1(c) death of Executive;
7.1(d) disability of Executive;
7.1(e) termination by the Company for any reason other than Cause (as defined below); or
7.1(f) termination by the Company for one of the following reasons
("Cause"): (i) an act by Executive of fraud or misappropriation; (ii)
Executive's willful breach of any agreement or covenant of this Agreement;
(iii) criminal conduct of Executive which results in a felony conviction of
Executive with respect to which all opportunities for appeal have been
expired; or (iv) Executive's recurring gross negligence or continuing
willful failure of Executive to perform his duties under this Agreement if
such failure is not cured within ten (10) days after notice from the
Company thereof.
7.2 Compensation Through Date of Termination. Upon termination for any of the foregoing reasons, Executive shall continue to render his services and shall be paid his regular compensation and benefits up to the date of termination. Severance payment hereunder is in addition to the regular compensation and benefits which Executive shall receive up to the date of termination.
7.3 Severance and Liquidated Damages. If this Agreement is terminated by the Company pursuant to Section 7.1(e), the Company shall pay to the Executive a severance and liquidated damages payment equal to Executive's then base salary under Section 4.1 through the end of the Initial Term or the Renewal Term then in effect, as the case may be, pursuant to the normal payroll practices of the Company. Otherwise, the Company shall have no obligation to pay Executive any form of severance or other payment upon termination or expiration of this Agreement by the Company or the Executive. Expiration of the Initial Term of this Agreement shall not be deemed a termination pursuant to Section 7.1(e). Executive agrees that such payment shall not constitute liquidated damages for any alleged or actual breach by the Company under this Agreement or the Company's Operating Agreement and agrees that, upon receipt of such severance liquidated damages payment, he shall release the Company and all other persons from any and all claims arising out of alleged or actual breaches of this Agreement or the Operating Agreement.
7.4 Confidentiality of Cause Notice. Executive agrees that in the event he receives written notice of termination with cause, Executive shall treat the contents of said notice as privileged and Executive shall have no action against the
Company or any of its officers, agents, or employees due to the contents of said notice unless the contents are intentionally false and malicious.
8. Miscellaneous.
8.1 Severability. In the event that any provision or portion thereof of this Agreement is declared invalid, void or unenforceable by a court of competent jurisdiction, the remaining provisions or portions thereof shall nevertheless continue in full force and effect without being impaired or invalidated in any way or to any extent.
8.2 Waiver of Breach. Failure or delay of either party to insist upon compliance with any provision hereof shall not operate as, and is not to be construed as, a waiver or amendment of such provision. Any express waiver of any provision of this Agreement shall not operate and is not to be construed as a waiver of any subsequent breach, whether occurring under similar or dissimilar circumstances.
8.3 Notice. All notices and other communications required or permitted to be given by this Agreement shall be in writing and shall be given and shall be deemed received if and when either hand delivered and a signed receipt is given therefore or mailed by registered or certified United States mail, postage-prepaid, and if to the Company, to:
Union Dental Corp.
1700 University Drive
Suite 200
Coral Springs, FL 33071
Or, if to Executive, to:
Dr. George D. Green
c/o Robert A. White, Esq.
1401 University Drive
Suite 600
Coral Springs, FL 33071
Or at such other address as either party hereto shall notify the other of in writing.
8.4 Entire Agreement. This Agreement supersedes any and all prior agreements between the parties hereto, and constitutes the entire agreement and understanding by and between Executive and the Company with respect to the Employment of Executive and no representations, promises, agreements or understandings, written or oral relating to the employment of Executive by the Company not contained or referenced herein shall be of any force or effect.
8.5 Amendment. This Agreement may be amended at any time by mutual consent of the parties hereto, with any such amendment to be invalid unless in writing and signed by the Company and Executive.
8.6 Benefit. This Agreement, together with any amendments hereto, shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs and personal representatives, except that the rights and benefits of either of the parties under this Agreement may not be assigned without the prior written consent of the other party.
8.7 Withholding. Any payments provided for herein shall be reduced by any amounts required to be withheld by the Company from time to time under applicable federal, state or local income or employment tax laws or similar statutes or other provisions of law then in effect.
8.8 Arbitration. In the event of any dispute between the parties, such dispute shall be resolved by arbitration in accordance with the rules of the American Arbitration Association, with costs and reasonable attorney fees to be assessed against the non-prevailing party.
8.9 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but both of which together shall constitute one and the same Agreement.
8.10 Governing Law. This Agreement is being made in the State of Florida and shall be construed and enforced in accordance with the laws of that state.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above... EXECUTIVE UNION DENTAL CORP. /s/ Dr. George D. Green /s/ Dr. George D. Green ------------------------ ------------------------- Dr. George D. Green Dr. George D. Green, President |
EXHIBIT A
Base Salary First Year: $225,000 Base Salary Second Year: $125,000 Base Salary Third Year: $185,500 Base Salary Fourth Year: $196,630 Base Salary Fifth Year: $208,427 Base Salary Sixth Year: $220,932 Base Salary Seventh Year: $234,187 |
Bonus: In addition to the options listed in Section four (4) of this Agreement, the Executive shall be granted the following Incentive Bonuses under the following terms and conditions:
1. If the Company should increase gross revenues to $3.0 million in any calendar year, then the Executive shall receive 332,500 options (this number is currently being based upon a formula of .0133% of the issued and outstanding shares of stock, totaling 25,000,000 shares in the Company) with an exercise price of $ _________ (at market bid price as determined by the quote of the shares at the close of business the day the options were issued by the National Quotation Bureau "NQB") and exercisable within five (5) years from the date such options are issued. All of these shares shall be "vested" immediately. The term "vested" shall mean the shares of stock underlying the options agreement shall be registered by the Company at the first available opportunity.
2. If the Company should increase gross revenues to $4.0 million in any calendar year, then the Executive shall receive 332,500 options (this number is currently being based upon a formula of .0133% of the issued and outstanding shares of stock, totaling 25,000,000 shares in the Company) with an exercise price of $ _________ (at market bid price as determined by the quote of the shares at the close of business the day the options were issued by the National Quotation Bureau "NQB") and exercisable within five (5) years from the date such options are issued. All of these shares shall be "vested" immediately. The term "vested" shall mean the shares of stock underlying the options agreement shall be registered by the Company at the first available opportunity.
3. If the Company should increase gross revenues to $5.0 million in any calendar year, then the Executive shall receive 332,500 options (this number is currently being based upon a formula of .0133% of the issued and outstanding shares of stock, totaling 25,000,000 shares in the Company) with an exercise price of $ _________ (at market bid price as determined by the quote of the shares at the close of business the day the options were issued by the Quotation Bureau "NQB") and exercisable within five (5) years from the date such options are issued. All of these shares shall be "vested" immediately. The term "vested" shall mean the shares of stock underlying the options agreement shall be registered by the Company at the first available opportunity.
EXHIBIT 10.4
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") entered into this 26th day of October, 2004, Supercedes the Executive Employment Agreement entered into on the 20th day of March, 2004 by and between Union Dental Corp. (the "Company") a Florida corporation whose principal place of business is 1700 University Drive, Suite 200, Coral Springs, Florida 33071, and Dr. Leonard I. Weinstein, whose address is located at 1880 So. Ocean Drive, Suite 307-W, Hallandale, FL 33009 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company has offered the Executive the position as Member of the Board of Directors and Chief Operating Officer ("C.O.O." of which the salary for that position to commence upon the completion of $3.0 million in equity funding) of the Company and the Executive possesses knowledge and experience which are valuable to the company; and
WHEREAS, the principal business of the Company is a dental practice referred to as George D. Green D.D.S., P.A. (hereinafter referred to as "Green") and a second business, Direct Dental Services, Inc. ("DDS") which encompasses the sales and marketing of an exclusive Dental Network for the Communications Workers of America union ("CWA") and the International Brotherhood of Electrical Workers union ("IBEW") in eighteen (18) states with the intent of expanding the concept throughout the United States and into other unions, such as General Electric and the United Auto Workers.
NOW, THEREFORE, for and in consideration of the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereto agree as follows:
1. Employment. The Company hereby offers to employ Executive, and Executive accepts such employment, upon the terms and conditions hereinafter set forth.
2. Employment Term. The "Initial Term" means the basic term of this Agreement, which commences for the position of Member of the Board of Directors upon the signing of this Agreement, and, for the position as C.O.O. to commence upon the date of the completion of a funding of US$ 3.0 million (gross proceeds) in the form of equity participation by investors, or convertible debt (which will become the "Effective Date" for the C.O.O. position) and ends on the second anniversary from that date of this Agreement. Thereafter, Executive's employment hereunder shall be renewed for successive periods of one (1) year (each a "Renewal Term"), by the sole authority of the Company President, unless either party hereto shall give written notice to the other that Executive's employment hereunder shall not be renewed or continued, as the case may be, not less than ninety (90) days prior to the end of the then current term of employment. The Initial Term and any Renewal Term may be terminated pursuant to Section 7 hereof.
3. Office: Duties of Executive. During the term of the Executive's employment, the Executive shall serve as a member of the Board of Directors and, additionally, upon the completion of $3.0 million in equity funding in the position of Chief Operating Officer and, in so doing, shall perform normal duties and responsibilities associated with such position, including, without limitation, working for the President, Chief Executive Officer and the Board of Directors to develop the Company's growth plan and strategic alternatives, developing financing sources, evaluating the Company's capital structure and recommending any appropriate changes, serving as liaison with and otherwise managing the Company and its relationship with members of the Dental Network, and carrying out such other or different duties as may be assigned him by the Company's President, Chief Executive Officer or the Board of Directors. During the term of this Agreement, Executive shall devote so much of his business time and attention to the business and affairs of the Company as he, in his sole discretion, deems appropriate, subject to the general direction, approval and control of the Board of Directors.
4. Compensation. Except as otherwise provided in this Agreement, the Company shall compensate Executive in the manner set forth in this Section 4 payable in accordance with the normal payroll practices of the Company for the duration of the term of this Agreement ("Employment Term").
4.1 Base Salary. For each year during the Employment Term for the position as a Member of the Board of Directors (or, if this Agreement shall be earlier terminated in accordance the terms of Section 7 hereof, ending on the date of termination of this Agreement) the Executive will be compensated as outlined in Exhibit A attached hereto and made a part hereof. After the completion of equity funding of US$ 3.0 million, the Company will pay to Executive for his position as C.O.O. an aggregate annual salary equal to the base salary listed on Exhibit A attached hereto and made a part hereof. The base salary will be paid in accordance with the normal payroll procedures of the Company
4.2 Incentive Bonuses. With the approval of the Board of Directors, the Company may pay additional increases in the base compensation and may pay incentive bonuses to Executive.
4.2(a) At the signing of this Agreement, Executive, for his position as a Member of the Board of Directors, for a term of two years, and for bonuses tied to the performance of the Company, shall receive 156,250 options (this number being based upon a formula of .625% of the issued and outstanding shares of stock in the Company currently estimated to be 25,000,000 shares) with an exercise price of $ _________ (a 10% discount from the first quote of the shares as obtained from the National Quotation Bureau "NQB") exercisable within five (5) years of the date first mentioned in this Agreement. Executive will be responsible for any tax liability to the Internal Revenue Service or Florida Tax Authority which may be incurred by using a price that is a discount from the Fair Market Value or bid price of the shares of stock as quoted on a stock exchange. One Third (33.33%) of these shares shall be "vested" immediately and the second 1/3 (33.33%) shall be vested when the Company meets $3.0 million in revenues, and the balance of 1/3 (33.34%) of the options shall be deemed "vested" when the Company meets $4.0 million in revenues. The term "vested" shall mean the shares of stock underlying the options agreement shall be registered by the Company at the first available opportunity.
4.3 Vacation. Executive shall be entitled to a total of two (2) weeks of paid vacation per calendar year.
4.4 Other Benefits. Executive shall receive other employment benefits which are similar to compensation packages comparable to executives of other companies in similar industries. Benefits for Executive will commence upon the completion of an equity funding of the Company in the amount of US$ 3.0 million in gross proceeds and are listed as follows:
4.4(a) Executive shall receive days off on regular holidays that are available to similarly situated employees of the Company and that are at least equivalent to such benefits currently being received by Executive.
5. Business-Related Expenses.Upon presentation, in accordance with Company policies, of itemized accounts of his expenditures related to his performance as a member of the Board of Directors, or, in a capacity as C.O.O., the Company promptly shall reimburse Executive for all reasonable and necessary travel expenses and other expenses incurred by Executive on behalf of the Company in the performance of his duties under this Agreement.
5.1 Executive, when traveling by air, shall travel in Coach Class.
5.2 Executive shall be allowed to stay at hotels rated three (3) stars.
5.3 Executive shall be allowed to rent a mid size car of his choosing to fit the needs of the travel plans associated with his duties as an Executive while on business trips.
5.4 Executive shall be allowed to dine at restaurants, as the need arises, at his discretion, in order to properly entertain business associates.
6. Covenants.
6.1 Proprietary Information. In performance of services under this Agreement, Executive may have access to:
6.1(a) information which derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and is the subject of efforts that are reasonable under the circumstance to maintain its secrecy (hereinafter "Trade Secrets" or "Trade Secret"); and
6.1(b) information which does not rise to the level of Trade Secret but is valuable to the Company and provided in confidence to Executive (hereinafter "Confidential Information"). Executive acknowledges and agrees with respect to Trade Secrets and Confidential Information provided to or obtained by Executive (hereinafter collectively the "Proprietary Information"):
6.1(b) (i) the Proprietary Information is and shall remain the exclusive property of the Company; and
6.1(b) (ii) to use the Proprietary Information exclusively for the purpose of fulfilling the obligations of this Agreement; and
6.1(b) (iii) to return the Proprietary Information, and any copies thereof, in his possession or under his control, to the Company upon request of the Company, or expiration or termination of this Agreement for any reason; and
6.1(b) (iv) to hold the Proprietary Information in confidence and not copy, publish or disclose to others or allow any other party to copy, publish or disclose to others in any form, any Proprietary Information without the prior written approval of an authorized representative of the Board of Directors.
The obligations and restrictions set forth in this Section 6.1 shall survive the expiration or termination of this Agreement, for any reason, and shall remain in full force and effect as follows:
6.1(b) (v) as to Trade Secrets, indefinitely, and
6.1(b) (vi) as to Confidential Information, for a period of two (2) years after the expiration or termination of this Agreement for any reason.
The confidentiality, property, and proprietary rights protections available in this Agreement are in addition to, and not exclusive of, any and all other corporate rights, including those provided under copyright, corporate officer or director fiduciary duties, and trade secret and confidential information laws. The obligations set forth in this Section 6.1 shall not apply or shall terminate with respect to any particular portion of the Proprietary Information which (i) was in Executive's possession, free of any obligation of confidence, prior to his receipt from the Company, (ii) Executive establishes the Proprietary Information is already in the public domain at the time the Company communicates it to the Executive, or become available to the public through no breach of this Agreement by Executive, or (iii) Executive establishes that the Proprietary Information was received by Executive independently and in good faith from a third party lawfully in possession thereof and has no obligation to keep such information confidential.
6.2 Ownership of Property. Executive agrees and acknowledges that all works of authorship and inventions, including but not limited to products, goods, know-how, Trade Secrets and Confidential Information, and any revisions thereof, in any form and in whatever stage of creation or development, arising out of or resulting from, or in connection with, the services provided by Executive to the Company under this Agreement (collectively the "Property") are works made for hire and shall be the sole and exclusive property of the Company. Executive agrees to execute such documents as the Company may reasonably request for the purpose of effectuating the rights of the Company herein.
6.3 Warranty and Absence of Conflict. Executive warrants to the Company that Executive is not under any other contract or agreement that precludes Executive from remaining as an employee of the Company or performing services as provided in this Agreement.
6.4 Non-Solicitation.Executive covenants and agrees that during his employment with the Company, and for a period of one (1) year following the date that his employment is terminated for any reason whatsoever, he will not on behalf of any person, firm, corporation or entity solicit or accept business from customers of the Company, including actively-sought prospective customers, with whom he had material contact during the course of his employment with the Company during the two (2) year period prior to Executive's termination of employment for the purpose of providing or selling products or services that are competitive with those provided by Company in connection with the Business.
6.5 Non Competition. Executive covenants and agrees that during his employment with the Company and for a period of one (1) year following the date that his employment is terminated for any reason whatsoever, he will not, within the Business Area (defined below), directly or indirectly, on his own behalf or in the service or on behalf of others, engage in any business which is the same or essentially the same as the business of the Company (the "Business"), as a manager, supervisor, administrator, owner, salesman, or in another capacity which involves duties, and responsibilities similar in any way to those undertaken for the Company herein.
6.6 Certain Definitions and Exclusions.
6.6(a) "Business Area" means the geographic areas located within the eighteen (18) state dental networks under contract, operated and maintained by the Company.
6.6(b) The Company and Executive specifically acknowledge that Executive shall not be prohibited from entering into any transaction pursuant to which Executive (a) obtains voting or management control of an institution which either engages in the business of discount dental services or funds or invests in companies or businesses engaged in the business of discount dental services or funds or invests in companies or businesses engaged in the business of discount dental services or (b) invests in or obtains voting or management control of any entity which discounts dental services as an ancillary activity to such entity's normal business activities as long as these business activities are not engaged in marketing or selling of dental services or creating dental networks for unions.
6.7 Non-Interference.Executive covenants and agrees that during his employment with the Company and for a period of two (2) years following the date that his employment agreement is terminated for any reason whatsoever, he will not, directly or indirectly, on his own behalf or in the service or on behalf of others, call upon, solicit, recruit, or hire away or assist others in calling upon, soliciting, recruiting or hiring away, any person who is or was, during the two (2) year period prior to Executive's termination of employment, an employee of the Company or of any Member of the Company in any attempt to have such person work in any other firm, association, corporation or entity engaged in a business substantially similar to the Business.
6.8 Injunctive Relief. Executive acknowledges and agrees that the remedy at law for any such breach of this Section 6 will be inadequate and that in the event of such breach the Company will suffer irreparable damage; accordingly, the Company shall be entitled to temporary and permanent injunctive relief in the event of breach without the necessity of proving monetary damages.
6.9 Indemnification Defense. Executive shall indemnify the Company from and against any and all actions, suits, proceedings, liabilities, damages, losses, costs and expenses (including attorneys' and experts' fees) arising out of or in connection with any breach or threatened breach by the Executive of any one or more provisions of this Agreement. The existence of any claim, demand, action or cause of action of the Executive against the Company shall not constitute a defense to the enforcement by the Company of any of the covenants or agreements herein.
7. Termination.
7.1 General. This Agreement may be terminated prior to the expiration of the Initial Term or any Renewal Term by any of the following events:
7.1(a) mutual written agreement expressed in a single document signed by both the Company and Executive;
7.1(b) voluntary written resignation by Executive other than for Good Reason;
7.1(c) death of Executive;
7.1(d) disability of Executive;
7.1(e) termination by the Company for any reason other than Cause (as defined below); or
7.1(f) termination by the Company for one of the following reasons ("Cause"): (i) an act by Executive of fraud or misappropriation; (ii) Executive's willful breach of any agreement or covenant of this Agreement; (iii) criminal conduct of Executive which results in a felony conviction of Executive with respect to which all opportunities for appeal have been expired; or (iv) Executive's recurring gross negligence or continuing willful failure of Executive to perform his duties under this Agreement if such failure is not cured within ten (10) days after notice from the Company thereof.
7.2 Compensation Through Date of Termination. Upon termination for any of the foregoing reasons, Executive shall continue to render his services and shall be paid his regular compensation and benefits up to the date of termination. Severance payment hereunder is in addition to the regular compensation and benefits which Executive shall receive up to the date of termination.
7.3 Severance and Liquidated Damages. If this Agreement is terminated by the Company pursuant to Section 7.1(e), the Company shall pay to the Executive a severance and liquidated damages payment equal to Executive's then base salary under Section 4.1 through the end of the Initial Term or the Renewal Term then in effect, as the case may be, pursuant to the normal payroll practices of the Company. Otherwise, the Company shall have no obligation to pay Executive any form of severance or other payment upon termination or expiration of this Agreement by the Company or the Executive. Expiration of the Initial Term of this Agreement shall not be deemed a termination pursuant to Section 7.1(e). Executive agrees that such payment shall not constitute liquidated damages for any alleged or actual breach by the Company under this Agreement or the Company's Operating Agreement and agrees that, upon receipt of such severance liquidated damages payment, he shall release the Company and all other persons from any and all claims arising out of alleged or actual breaches of this Agreement or the Operating Agreement.
7.4 Confidentiality of Cause Notice. Executive agrees that in the event he receives written notice of termination with cause, Executive shall treat the contents of said notice as privileged and Executive shall have no action against the Company or any of its officers, agents, or employees due to the contents of said notice unless the contents are intentionally false and malicious.
8. Miscellaneous.
8.1 Severability. In the event that any provision or portion thereof of this Agreement is declared invalid, void or unenforceable by a court of competent jurisdiction, the remaining provisions or portions thereof shall nevertheless continue in full force and effect without being impaired or invalidated in any way or to any extent.
8.2 Waiver of Breach.Failure or delay of either party to insist upon compliance with any provision hereof shall not operate as, and is not to be construed as, a waiver or amendment of such provision. Any express waiver of any provision of this Agreement shall not operate and is not to be construed as a waiver of any subsequent breach, whether occurring under similar or dissimilar circumstances.
8.3 Notice. All notices and other communications required or permitted to be given by this Agreement shall be in writing and shall be given and shall be deemed received if and when either hand delivered and a signed receipt is given therefore or mailed by registered or certified United States mail, postage-prepaid, and if to the Company, to:
Union Dental Corp.
1700 University Drive
Suite 200
Coral Springs, FL 33071
Or, if to Executive, to:
Dr. Leonard I. Weinstein
1880 So. Ocean Drive
Suite 307-W
Hallandale, FL 33009
Or at such other address as either party hereto shall notify the other of in writing.
8.4 Entire Agreement.This Agreement supersedes any and all prior agreements between the parties hereto, and constitutes the entire agreement and understanding by and between Executive and the Company with respect to the Employment of Executive and no representations, promises, agreements or understandings, written or oral relating to the employment of Executive by the Company not contained or referenced herein shall be of any force or effect.
8.5 Amendment. This Agreement may be amended at any time by mutual consent of the parties hereto, with any such amendment to be invalid unless in writing and signed by the Company and Executive.
8.6 Benefit.This Agreement, together with any amendments hereto, shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs and personal representatives, except that the rights and benefits of either of the parties under this Agreement may not be assigned without the prior written consent of the other party.
8.7 Withholding. Any payments provided for herein shall be reduced by any amounts required to be withheld by the Company from time to time under applicable federal, state or local income or employment tax laws or similar statutes or other provisions of law then in effect.
8.8 Arbitration. In the event of any dispute between the parties, such dispute shall be resolved by arbitration in accordance with the rules of the American Arbitration Association, with costs and reasonable attorney fees to be assessed against the non-prevailing party.
8.9 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but both of which together shall constitute one and the same Agreement.
8.10 Governing Law. This Agreement is being made in the State of Florida and shall be construed and enforced in accordance with the laws of that state.
8.11 Disclaimer. In the event the Company completes a merger with another company by other means than from introductions by Tropical Medical Services or dp Martin & Associates; receives debt or equity financing in the amount of $3.0 million by other means than from introductions by Tropical Medical Services or dp Martin & Associates, then this Agreement and all of its Exhibits shall become null and void.
IN WITNESS WHEREOF, the parties have placed their seal, executed and delivered this Agreement as of the date first written above.
MEMBER UNION DENTAL CORP. /s/ Dr. Leonard I. Weinstein /s/ Dr. George D. Green ---------------------------- ------------------------------ Dr. Leonard I. Weinstein Dr. George D. Green, President |
EXHIBIT A
The remuneration for participation in meetings as a Member of the Board of Directors shall commence immediately upon the signing of the Agreement and the Base Salary outlined in Exhibit A of this Agreement will commence upon the Company completing an equity funding of US$ 3.0 million, which may be done separately, in whole or in part in different and/or separate offerings.
Remuneration as a member of the Board of Directors: $500.00 per meeting
Base Salary for the position as Chief Operating Officer and after $3.0 million in equity funding: $60,000.00
EXHIBIT 10.5
October 26, 2004
SHAREHOLDER'S AGREEMENT AND MANAGEMENT CONTRACT
WHEREAS, this Shareholder's Agreement and Management Contract shall supercede the Shareholder's Agreement and Management Contract dated March 18, 2004.
WHEREAS, Union Dental Corp., is a "C" Corporation chartered and incorporated in the state of Florida providing dental services on a local and national basis to union members under contract with union corporations;
WHEREAS, Tropical Medical Services is a healthcare management company providing financial introductory services, management structure, organizational development, business marketing and other related services;
WHEREAS, Tropical Medical Services has introduced Union Dental Corp. to several companies wishing to finance their company;
WHEREAS, all parties have agreed to work together in the provision of dental services to union members throughout the United States;
WHEREAS, all parties have agreed to enter into, with one another, as explained below:
NOW THEREFORE, in consideration of the above, the following terms and conditions between Union Dental Corp., and Tropical Medical Services are in force only with reference to any transaction that may occur as a direct result of a merger proposal brought to Union Dental Corp., by introductions through Tropical Medical Services. As is precluded by the following terms and conditions:
1. Tropical Medical Services shall receive 3.84% or 960,000 shares of the issued and outstanding stock of the newly merged public company and Union Dental Corp. Should it be necessary that the number of issued and outstanding shares be diluted then Tropical Medical Services shall be diluted equally, proportionate to the dilution of all other shareholders.
2. The shares shall be registered in the name of Tropical Medical Services, subject to the restriction under the Securities and Exchange Commission Rule 144 as promulgated under the Securities Act of 1933 (as Amended).
3. As further service, Dr. Leonard I. Weinstein will immediately receive an Employment Agreement from Union Dental Corp. with a salary of $60,000 per year to serve as the Chief Operating Officer. This salary will commence once the second round of funding has been achieved in the aggregate amount of $3.0 million.
4. Dr. Leonard I. Weinstein will also serve on the Board of Directors of Union Dental Corp., as well as a voting member of the Audit Committee. The fee for attendance at each Board of Director's meeting shall be $500.
5. In additional, Tropical Medical Services and/or Leonard Weinstein shall receive 156,250 shares of the Company in the form of stock options. 1/3 of those options shall vest immediately upon the signing of the Agreement; 1/3 of the options shall vest once the Company hits $3.0 million in gross revenues and 1/3 of the options shall vest when the Company hits $4.0 million in gross revenues. These options are for Board of Director's services, ESOP and discretionary bonus.
6. The price of the options shall be established at the price of the first trading date times 90%. This shall be known as the exercise price for all options issued. Since these options are being issued under "Fair Market Value" any tax liability incurred by the recipient from the options received shall be at the sole expense of the recipient.
7. These options shall be under a formal option agreement approved by the Board of Directors and filed with the SEC.
8. Dr. Weinstein's employment agreement shall be for a period of two (2) years.
9. The stock certificates shall include the state of incorporation, the name of the shareholder, the number and type of hares, the date of issuance, the share certificate number, and the signatures of the authorized officers. There shall be no legend on the shares other that Securities and Exchange Commission Rule 144 as promulgated under the Securities Act of 1933 (as Amended).
10. Are terms and conditions of this Agreement are effective immediately.
11. Disclaimer. In the event the Company completes a merger with another company by other means than from introductions by Tropical Medical Services or dp Martin & Associates; receives debt or equity financing in the amount of $3.0 million by other means than from introductions by Tropical Medical Services or dp Martin & Associates, then this Agreement and all of its Exhibits shall become null and void.
ENTIRE AGREEMENT
This Agreement sets forth the entire understanding of the parties and it may not be changed except by written document signed by all of the parties hereto.
GOVERNANCE
This Agreement shall be governed by the laws of the state of Florida as within the jurisdiction of Broward County. In the event of a legal dispute, the prevailing party shall be reimbursed its reasonable legal fees and costs by the other party.
BINDING EFFECT
All parties acknowledge that they are authorized to execute the terms of this Agreement which shall be binding upon and inure to the benefit of, and shall be enforceable by, the parties and their respective successors, heirs, beneficiaries and personal representatives.
ASSIGNMANET
The rights and benefits of this Agreement shall not be transferable by any party without the written consent of the other.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals on the dates set forth herein below.
TROPICAL MEDICAL SERVICES
By: /s/ Leonard I. Weinstein ----------------------------------------------- Leonard I. Weinstein, President |
UNION DENTAL CORP.
By: /s/ Dr. George D. Green ------------------------------------------------ Dr. George D. Green, President & C.E.O. |
EXHIBIT 10.7
UNION DENTAL CORP
2004 STOCK OPTION PLAN
Approved by Board of Directors and Majority Stockholders on October 15, 2004
Union Dental Corp.
2004 Stock Option Plan
1. Section Purpose; Definitions.
1.1 Purpose. The purpose of the Union Dental Corp 2004 Stock Option Plan is to enable the Company to offer to its employees, officers, directors and consultants whose past, present and/or potential contributions to the Company and its Subsidiaries have been, are or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company. The various types of long-term incentive awards that may be provided under the Plan will enable the Company to respond to changes in compensation practices, tax laws, accounting regulations and the size and diversity of its businesses.
1.2 Definitions. For purposes of the Plan, the following terms shall be defined as set forth below:
(a) "Agreement" means the agreement between the Company and the Holder setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to time.
(d) "Committee" means the Stock Option Committee of the Board or any other committee of the Board that the Board may designate to administer the Plan or any portion thereof. If no Committee is so designated, then all references in this Plan to "Committee" shall mean the Board.
(e) "Common Stock" means the Common Stock of the Company, $.001 par value per share.
(f) "Company" means Union Dental Corp., a corporation organized under the laws of the State of Florida.
(g) "Deferred Stock" means Common Stock to be received, under an award made pursuant to Section 8, below, at the end of a specified deferral period.
(h) "Disability" means physical or mental impairment as determined under procedures established by the Committee for purposes of the Plan.
(i) "Effective Date" means the date set forth in Section 12.1, below.
(j) "Fair Market Value", unless otherwise required by any applicable provision of the Code or any regulations issued thereunder, means, as of any given date:
(i) if the Common Stock is listed on a national securities exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the last sale price of the Common Stock in the principal trading market for the Common Stock on such date, as reported by the exchange or Nasdaq, as the case may be;
(ii) if the Common Stock is not listed on a national securities exchange or
quoted on the Nasdaq National Market or Nasdaq SmallCap Market, but is traded in
the over-the-counter market, the closing bid price for the Common Stock on such
date, as reported by the OTC Bulletin Board or the National Quotation Bureau,
Incorporated or similar publisher of such quotations; and
(iii) if the fair market value of the Common Stock cannot be determined
pursuant to clause (i) or (ii) above, such price as the Committee shall
determine, in good faith.
(k) "Holder" means a person who has received an award under the Plan.
(l) "Incentive Stock Option" means any Stock Option intended to be and designated as an "incentive stock option" within the meaning of Section 422 of the Code.
(m) "Nonqualified Stock Option" means any Stock Option that is not an Incentive Stock Option.
(n) "Normal Retirement" means retirement from active employment with the Company or any Subsidiary on or after age 65.
(o) "Other Stock-Based Award" means an award under Section 9, below, that is valued in whole or in part by reference to, or is otherwise based upon, Common Stock.
(p) "Parent" means any present or future "parent corporation" of the Company, as such term is defined in Section 424(e) of the Code.
(q) "Plan" means the Union Dental Corp. 2004 Stock Option Plan, as hereinafter amended from time to time.
(r) "Repurchase Value" shall mean the Fair Market Value in the event the award to be repurchased under Section 10.2 is comprised of shares of Common Stock and the difference between Fair Market Value and the Exercise Price (if lower thanFair Market Value) in the event the award is a Stock Option or Stock Appreciation Right; in each case, multiplied by the number of shares subject to the award.
(s) "Restricted Stock" means Common Stock, received under an award made pursuant to Section 7, below, that is subject to restrictions under said Section 7.
(t) "SAR Value" means the excess of the Fair Market Value (on the exercise date) over the exercise price that the participant would have otherwise had to pay to exercise the related Stock Option, multiplied by the number of shares for which the Stock Appreciation Right is exercised.
(u) "Stock Appreciation Right" means the right to receive from the Company, on surrender of all or part of the related Stock Option, without a cash payment to the Company, a number of shares of Common Stock equal to the SAR Value divided by the Fair Market Value (on the exercise date).
(v) "Stock Option" or "Option" means any option to purchase shares of Common Stock which is granted pursuant to the Plan.
(w)"Stock Reload Option" means any option granted under Section 5.3 of the Plan.
(x) "Subsidiary" means any present or future "subsidiary corporation" of the Company, as such term is defined in Section 424(f) of the Code.
2. Section Administration.
2.1 Committee Membership. The Plan shall be administered by the Board or a Committee. Committee members shall serve for such term as the Board may in each case determine, and shall be subject to removal at any time by the Board. The Committee members, to the extent possible and deemed to be appropriate by the Board, shall be "non-employee directors" as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and "outside directors" within the meaning of Section 162(m) of the Code.
2.2 Powers of Committee. The Committee shall have full authority to award, pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Deferred Stock, (v) Stock Reload Options and/or (vi) Other Stock-Based Awards. For purposes of illustration and not of limitation, the Committee shall have the authority (subject to the express provisions of this Plan):
(a) to select the officers, employees, directors and consultants of the Company or any Subsidiary to whom Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Reload Stock Options and/or Other Stock-Based Awards may from time to time be awarded hereunder.
(b) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder (including, but not limited to, number of shares, share exercise price or types of consideration paid upon exercise of such options, such as other securities of the Company or other property, any restrictions or limitations, and any vesting, exchange, surrender, cancellation, acceleration, termination, exercise or forfeiture provisions, as the Committee shall determine);
(c) to determine any specified performance goals or such other factors or criteria which need to be attained for the vesting of an award granted hereunder; (d) to determine the terms and conditions under which awards granted hereunder are to operate on a tandem basis and/or in conjunction with or apart from other equity awarded under this Plan and cash awards made by the Company or any Subsidiary outside of this Plan;
(e) to permit a Holder to elect to defer a payment under the Plan under such rules and procedures as the Committee may establish, including the crediting of interest on deferred amounts denominated in cash and of dividend equivalents on deferred amounts denominated in Common Stock;
(f) to determine the extent and circumstances under which Common Stock and other amounts payable with respect to an award hereunder shall be deferred that may be either automatic or at the election of the Holder; and
(g) to substitute (i) new Stock Options for previously granted Stock Options, which previously granted Stock Options have higher option exercise prices and/or contain other less favorable terms, and (ii) new awards of any other type for previously granted awards of the same type, which previously granted awards are upon less favorable terms.
2.3 Interpretation of Plan.
(a) Committee Authority. Subject to Section 11, below, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall, from time to time, deem advisable,
to interpret the terms and provisions of the Plan and any award issued under the
Plan (and to determine the form and substance of all Agreements relating
thereto), and to otherwise supervise the administration of the Plan. Subject to
Section 11, below, all decisions made by the Committee pursuant to the
provisions of the Plan shall be made in the Committee's sole discretion and
shall be final and binding upon all persons, including the Company, its
Subsidiaries and Holders.
(b) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to Incentive Stock
Options (including but limited to Stock Reload Options or Stock Appreciation
rights granted in conjunction with an Incentive Stock Option) or any Agreement
providing for Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify the Plan under Section 422 of the Code, or, without the consent
of the Holder(s) affected, to disqualify any Incentive Stock Option under such
Section 422.
3. Section Stock Subject to Plan.
3.1 Number of Shares. The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be 5,000,000 shares. Shares of
Common Stock under the Plan may consist, in whole or in part, of authorized and
unissued shares or treasury shares. If any shares of Common Stock that have been
granted pursuant to a Stock Option cease to be subject to a Stock Option, or if
any shares of Common Stock that are subject to any Stock Appreciation Right,
Restricted Stock, Deferred Stock award, Reload Stock Option or Other Stock-Based
Award granted hereunder are forfeited or any such award otherwise terminates
without a payment being made to the Holder in the form of Common Stock, such
shares shall again be available for distribution in connection with future
grants and awards under the Plan. If a Holder pays the exercise price of a Stock
Option by surrendering any previously owned shares and/or arranges to have the
appropriate number of shares otherwise issuable upon exercise withheld to cover
the withholding tax liability associated with the Stock Option exercise, then
the number of shares available under the Plan shall be increased by the lesser
of (i) the number of such surrendered shares and shares used to pay taxes; and
(ii) the number of shares purchased under such Stock Option.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any merger, reorganization, consolidation, dividend (other than a cash dividend) payable on shares of Common Stock, stock split, reverse stock split, combination or exchange of shares, or other extraordinary or unusual event occurring after the grant of an award which results in a change in the shares of Common Stock of the Company as a whole, the Committee shall determine, in its sole discretion, whether such change equitably requires an adjustment in the terms of any award or the aggregate number of shares reserved for issuance under the Plan. Any such adjustments will be made by the Committee, whose determination will be final, binding and conclusive.
4. Section Eligibility.
Awards may be made or granted to employees, officers, directors and consultants who are deemed to have rendered or to be able to render significant services to the Company or its Subsidiaries and who are deemed to have contributed or to have the potential to contribute to the success of the Company. No Incentive Stock Option shall be granted to any person who is not an employee of the Company or a Subsidiary at the time of grant.
5. Section Stock Options.
5.1 Grant and Exercise. Stock Options granted under the Plan may be of two types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any Stock Option granted under the Plan shall contain such terms, not inconsistent with this Plan, or with respect to Incentive Stock Options, not inconsistent with the Plan and the Code, as the Committee may from time to time approve. The Committee shall have the authority to grant Incentive Stock Options or Non-Qualified Stock Options, or both types of Stock Options which may be granted alone or in addition to other awards granted under the Plan. To the extent that any Stock Option intended to qualify as an Incentive Stock Option does not so qualify, it shall constitute a separate Nonqualified Stock Option.
5.2 Terms and Conditions. Stock Options granted under the Plan shall be subject to the following terms and conditions:
(a) Option Term. The term of each Stock Option shall be fixed by the Committee; provided, however, that an Incentive Stock Option may be granted only within the ten-year period commencing from the Effective Date and may only be exercised within ten years of the date of grant (or five years in the case of an Incentive Stock Option granted to an optionee who, at the time of grant, owns Common Stock possessing more than 10% of the total combined voting power of all classes of stock of the Company ("10% Stockholder").
(b) Exercise Price. The exercise price per share of Common Stock purchasable under a Stock Option shall be determined by the Committee at the time of grant and may be less than 100% of the Fair Market Value on the day of grant; provided, however, that the exercise price of an Incentive Stock Option granted to a 10% Stockholder shall not be less than 110% of the Fair Market Value on the date of grant.
(c) Exercisability. Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee and as set forth in Section 10, below. If the Committee provides, in its discretion, that any Stock Option is exercisable only in installments, i.e., that it vests over time, the Committee may waive such installment exercise provisions at any time at or after the time of grant in whole or in part, based upon such factors as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment, exercise and waiting period provisions are applicable in a particular case, Stock Options may be exercised in whole or in part at any time during the term of the Option, by giving written notice of exercise to the Company specifying the number of shares of Common Stock to be purchased. Such notice shall be accompanied by payment in full of the purchase price, which shall be in cash or, if provided in the Agreement, either in shares of Common Stock (including Restricted Stock and other contingent awards under this Plan) or partly in cash and partly in such Common Stock, or such other means which the Committee determines are consistent with the Plan's purpose and applicable law. Cash payments shall be made by wire
transfer, certified or bank check or personal check, in each case payable to the order of the Company; provided, however, that the Company shall not be required to deliver certificates for shares of Common Stock with respect to which an Option is exercised until the Company has confirmed the receipt of good and available funds in payment of the purchase price thereof. Payments in the form of Common Stock shall be valued at the Fair Market Value on the date prior to the date of exercise. Such payments shall be made by delivery of stock certificates in negotiable form that are effective to transfer good and valid title thereto to the Company, free of any liens or encumbrances. Subject to the terms of the Agreement, the Committee may, in its sole discretion, at the request of the Holder, deliver upon the exercise of a Nonqualified Stock Option a combination of shares of Deferred Stock and Common Stock; provided that, notwithstanding the provisions of Section 8 of the Plan, such Deferred Stock shall be fully vested and not subject to forfeiture. A Holder shall have none of the rights of a Stockholder with respect to the shares subject to the Option until such shares shall be transferred to the Holder upon the exercise of the Option.
(e) Transferability. Except as may be set forth in the Agreement, no Stock Option shall be transferable by the Holder other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the Holder's lifetime, only by the Holder (or, to the extent of legal incapacity or incompetency, the Holder's guardian or legal representative).
(f) Termination by Reason of Death. If a Holder's employment by the Company or a Subsidiary terminates by reason of death, any Stock Option held by such Holder, unless otherwise determined by the Committee at the time of grant and set forth in the Agreement, shall thereupon automatically terminate, except that the portion of such Stock Option that has vested on the date of death may thereafter be exercised by the legal representative of the estate or by the legatee of the Holder under the will of the Holder, for a period of one year (or such other greater or lesser period as the Committee may specify at grant) from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. If a Holder's employment by the Company or any Subsidiary terminates by reason of Disability, any Stock Option held by such Holder, unless otherwise determined by the Committee at the time of grant and set forth in the Agreement, shall thereupon automatically terminate, except that the portion of such Stock Option that has vested on the date of termination may thereafter be exercised by the Holder for a period of one year (or such other greater or lesser period as the Committee may specify at the time of grant) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is the shorter.
(h) Other Termination. Subject to the provisions of Section 13.3, below, and unless otherwise determined by the Committee at the time of grant and set forth in the Agreement, if a Holder is an employee of the Company or a Subsidiary at the time of grant and if such Holder's employment by the Company or any Subsidiary terminates for any reason other than death or Disability, the Stock Option shall thereupon automatically terminate, except that if the Holder's employment is terminated by the Company or a Subsidiary without cause or due to Normal Retirement, then the portion of such Stock Option that has vested on the date of termination of employment may be exercised for the lesser of three months after termination of employment or the balance of such Stock Option's term.
(i) Additional Incentive Stock Option Limitation. In the case of an Incentive Stock Option, the aggregate Fair Market Value (on the date of grant of the Option) with respect to which Incentive Stock Options become exercisable for the first time by a Holder during any calendar year (under all such plans of the Company and its Parent and Subsidiary) shall not exceed $100,000.
(j) Buyout and Settlement Provisions. The Committee may at any time, in its sole discretion, offer to repurchase a Stock Option previously granted, based upon such terms and conditions as the Committee shall establish and communicate to the Holder at the time that such offer is made.
5.3 Stock Reload Option. If a Holder tenders shares of Common Stock to pay the exercise price of a Stock Option ("Underlying Option"), and/or arranges to have a portion of the shares otherwise issuable upon exercise withheld to pay the applicable withholding taxes, the Holder may receive, at the discretion of the Committee, a new Stock Reload Option to purchase that number of shares of Common Stock equal to the number of shares tendered to pay the exercise price and the withholding taxes ( but only if such shares were held by the Holder for at least six months). Stock Reload Options may be any type of option permitted under the Code and will be granted subject to such terms, conditions, restrictions and limitations as may be determined by the Committee, from time to time. Such Stock Reload Option shall have an exercise price equal to the Fair Market Value as of the date of exercise of the Underlying Option. Unless the Committee determines otherwise, a Stock Reload Option may be exercised commencing one year after it is granted and shall expire on the date of expiration of the Underlying Option to which the Reload Option is related.
6. Section Stock Appreciation Rights.
6.1 Grant and Exercise. The Committee may grant Stock Appreciation Rights to participants who have been, or are being granted, Stock Options under the Plan as a means of allowing such participants to exercise their Stock Options without the need to pay the exercise price in cash. In the case of a Nonqualified Stock Option, a Stock Appreciation Right may be granted either at or after the time of the grant of such Nonqualified Stock Option. In the case of an Incentive Stock Option, a Stock Appreciation Right may be granted only at the time of the grant of such Incentive Stock Option.
6.2 Terms and Conditions. Stock Appreciation Rights shall be subject to the following terms and conditions:
(a) Exercisability. Stock Appreciation Rights shall be exercisable as shall be determined by the Committee and set forth in the Agreement, subject to the limitations, if any, imposed by the Code, with respect to related Incentive Stock Options.
(b) Termination. A Stock Appreciation Right shall terminate and shall no longer be exercisable upon the termination or exercise of the related Stock Option.
(c) Method of Exercise. Stock Appreciation Rights shall be exercisable upon such terms and conditions as shall be determined by the Committee and set forth in the Agreement and by surrendering the applicable portion of the related Stock Option. Upon such exercise and surrender, the Holder shall be entitled to receive a number of shares of Common Stock equal to the SAR Value divided by the Fair Market Value on the date the Stock Appreciation Right is exercised.
(d) Shares Affected Upon Plan. The granting of a Stock Appreciation Right shall not affect the number of shares of Common Stock available under for awards under the Plan. The number of shares available for awards under the Plan will, however, be reduced by the number of shares of Common Stock acquirable upon exercise of the Stock Option to which such Stock Appreciation Right relates.
7. Section Restricted Stock.
7.1 Grant. Shares of Restricted Stock may be awarded either alone or in addition to other awards granted under the Plan. The Committee shall determine the eligible persons to whom, and the time or times at which, grants of Restricted Stock will be awarded, the number of shares to be awarded, the price (if any) to be paid by the Holder, the time or times within which such awards may be subject to forfeiture ("Restriction Period"), the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the awards.
7.2 Terms and Conditions. Each Restricted Stock award shall be subject to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be represented by a stock certificate or certificates registered in the name of the Holder to whom such Restricted Stock shall have been awarded. During the Restriction Period, certificates representing the Restricted Stock and any securities constituting Retained Distributions (as defined below) shall bear a legend to the effect that ownership of the Restricted Stock (and such Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions provided in the Plan and the Agreement. Such certificates shall be deposited by the Holder with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Stock and any securities constituting Retained Distributions that shall be forfeited or that shall not become vested in accordance with the Plan and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes. The Holder will have the right to vote such Restricted Stock, to receive and retain all regular cash dividends and other cash equivalent distributions as the Board may in its sole discretion designate, pay or distribute on such Restricted Stock and to exercise all other rights, powers and privileges of a holder of Common Stock with respect to such Restricted Stock, with the exceptions that (i) the Holder will not be entitled to delivery of the stock certificate or certificates representing such Restricted Stock until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled; (ii) the Company will retain custody of the stock certificate or certificates representing the Restricted Stock during the Restriction Period; (iii) other than regular cash dividends and other cash equivalent distributions as the Board may in its sole discretion designate, pay or distribute, the Company will retain custody of all distributions ("Retained Distributions") made or declared with respect to the Restricted Stock (and such Retained Distributions will be subject to the same restrictions, terms and conditions as are applicable to the Restricted Stock) until such time, if ever, as the Restricted Stock with respect to which such Retained Distributions shall have been made, paid or declared shall have become vested and with respect to which the Restriction Period shall have expired; (iv) a breach of any of the restrictions, terms or conditions contained in this Plan or the Agreement or otherwise established by the Committee with respect to any Restricted Stock or Retained Distributions will cause a forfeiture of such Restricted Stock and any Retained Distributions with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the Restriction Period with respect to each award of Restricted Stock and the satisfaction of any other applicable restrictions, terms and conditions (i) all or part of such Restricted Stock shall become vested in accordance with the terms of the Agreement, subject to Section 10, below, and (ii) any Retained Distributions with respect to such Restricted Stock shall become vested to the extent that the Restricted Stock related thereto shall have become vested, subject to Section 10, below. Any such Restricted Stock and Retained Distributions that do not vest shall be forfeited to the Company and the Holder shall not thereafter have any rights with respect to such Restricted Stock and Retained Distributions that shall have been so forfeited.
8. Section Deferred Stock.
8.1 Grant. Shares of Deferred Stock may be awarded either alone or in addition to other awards granted under the Plan. The Committee shall determine the eligible persons to whom and the time or times at which grants of Deferred Stock will be awarded, the number of shares of Deferred Stock to be awarded to any person, the duration of the period ("Deferral Period") during which, and the conditions under which, receipt of the shares will be deferred, and all the other terms and conditions of the awards.
8.2 Terms and Conditions. Each Deferred Stock award shall be subject to the following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period (or the Additional Deferral Period referred to in Section 8.2 (d) below, where applicable), share certificates shall be issued and delivered to the Holder, or his legal representative, representing the number equal to the shares covered by the Deferred Stock award.
(b) Rights of Holder. A person entitled to receive Deferred Stock shall not have any rights of a Stockholder by virtue of such award until the expiration of the applicable Deferral Period and the issuance and delivery of the certificates representing such Common Stock. The shares of Common Stock issuable upon expiration of the Deferral Period shall not be deemed outstanding by the Company until the expiration of such Deferral Period and the issuance and delivery of such Common Stock to the Holder.
(c) Vesting; Forfeiture. Upon the expiration of the Deferral Period with respect to each award of Deferred Stock and the satisfaction of any other applicable restrictions, terms and conditions all or part of such Deferred Stock shall become vested in accordance with the terms of the Agreement, subject to Section 10, below. Any such Deferred Stock that does not vest shall be forfeited to the Company and the Holder shall not thereafter have any rights with respect to such Deferred Stock.
(d) Additional Deferral Period. A Holder may request to, and the Committee may at any time, defer the receipt of an award (or an installment of an award) for an additional specified period or until a specified event ("Additional DeferralPeriod"). Subject to any exceptions adopted by the Committee, such request must generally be made at least one year prior to expiration of the Deferral Period for such Deferred Stock award (or such installment).
9. Section Other Stock-Based Awards.
Other Stock-Based Awards may be awarded, subject to limitations under applicable law, that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, purchase rights, shares of Common Stock awarded which are not subject to any restrictions or conditions, convertible or exchangeable debentures, or other rights convertible into shares of Common Stock and awards valued by reference to the value of securities of or the performance of specified Subsidiaries. Other Stock-Based Awards may be awarded either alone or in addition to or in tandem with any other awards under this Plan or any other plan of the Company. Each other Stock-Based Award shall be subject to such terms and conditions as may be determined by the Committee.
10. Section Accelerated Vesting and Exercisability.
10.1 Non-Approved Transactions. If any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act of 1934, as amended ("Exchange Act")), is or becomes the "beneficial owner" (as referred in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Company's then outstanding securities in one or more transactions, and the Board does not authorize or otherwise approve such acquisition, then the vesting periods of any and all Stock Options and other awards granted and outstanding under the Plan shall be accelerated and all such Stock Options and awards will immediately and entirely vest, and the respective holders thereof will have the immediate right to purchase and/or receive any and all Common Stock subject to such Stock Options and awards on the terms set forth in this Plan and the respective agreements respecting such Stock Options and awards.
10.2 Approved Transactions. The Committee may, in the event of an acquisition of substantially all of the Company's assets or at least 50% of the combined voting power of the Company's then outstanding securities in one or more transactions (including by way of merger or reorganization) which has been approved by the Company's Board of Directors, (i) accelerate the vesting of any and all Stock Options and other awards granted and outstanding under the Plan, and (ii) require a Holder of any award granted under this Plan to relinquish such award to the Company upon the tender by the Company to Holder of cash in an amount equal to the Repurchase Value of such award.
11. Section Amendment and Termination.
The Board may at any time, and from time to time, amend alter, suspend or discontinue any of the provisions of the Plan, but no amendment, alteration, suspension or discontinuance shall be made that would impair the rights of a Holder under any Agreement theretofore entered into hereunder, without the Holder's consent.
12. Section Term of Plan.
12.1 Effective Date. The Plan shall be effective as of April, 2004, subject to the approval of the Plan by the Company's stockholders within one year after the Effective Date. Any awards granted under the Plan prior to such approval shall be effective when made (unless otherwise specified by the Committee at the time of grant), but shall be conditioned upon, and subject to, such approval of the Plan by the Company's stockholders and no awards shall vest or otherwise become free of restrictions prior to such approval.
12.2 Termination Date. Unless terminated by the Board, this Plan shall continue to remain effective until such time as no further awards may be granted and all awards granted under the Plan are no longer outstanding. Notwithstanding the foregoing, grants of Incentive Stock Options may be made only during the ten-year period following the Effective Date.
13. Section General Provisions.
13.1 Written Agreements. Each award granted under the Plan shall be confirmed by, and shall be subject to the terms, of the Agreement executed by the Company and the Holder. The Committee may terminate any award made under the Plan if the Agreement relating thereto is not executed and returned to the Company within 10 days after the Agreement has been delivered to the Holder for his or her execution.
13.2 Unfunded Status of Plan. The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Holder by the Company, nothing contained herein shall give any such Holder any rights that are greater than those of a general creditor of the Company.
13.3 Employees.
(a) Engaging in Competition With the Company; Disclosure of Confidential Information. If a Holder's employment with the Company or a Subsidiary is terminated for any reason whatsoever, and within three months after the date thereof such Holder either (i) accepts employment with any competitor of, or otherwise engages in competition with, the Company or (ii) discloses to anyone outside the Company or uses any confidential information or material of the Company in violation of the Company's policies or any agreement between the Holder and the Company, the Committee, in its sole discretion, may require such Holder to return to the Company the economic value of any award that was realized or obtained by such Holder at any time during the period beginning on that date that is six months prior to the date such Holder's employment with the Company is terminated.
(b) Termination for Cause. The Committee may, if a Holder's employment with the Company or a Subsidiary is terminated for cause, annul any award granted under this Plan to such employee and, in such event, the Committee, in its sole discretion, may require such Holder to return to the Company the economic value of any award that was realized or obtained by such Holder at any time during the period beginning on that date that is six months prior to the date such Holder's employment with the Company is terminated.
(c) No Right of Employment. Nothing contained in the Plan or in any award hereunder shall be deemed to confer upon any Holder who is an employee of the Company or any Subsidiary any right to continued employment with the Company or any Subsidiary, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any Holder who is an employee at any time.
13.4 Investment Representations; Company Policy. The Committee may require each person acquiring shares of Common Stock pursuant to a Stock Option or other award under the Plan to represent to and agree with the Company in writing that the Holder is acquiring the shares for investment without a view to distribution thereof. Each person acquiring shares of Common Stock pursuant to a Stock Option or other award under the Plan shall be required to abide by all policies of the Company in effect at the time of such acquisition and thereafter with respect to the ownership and trading of the Company's securities.
13.5 Additional Incentive Arrangements. Nothing contained in the Plan shall prevent the Board from adopting such other or additional incentive arrangements as it may deem desirable, including, but not limited to, the granting of Stock Options and the awarding of Common Stock and cash otherwise than under the Plan; and such arrangements may be either generally applicable or applicable only in specific cases.
13.6 Withholding Taxes. Not later than the date as of which an amount must first be included in the gross income of the Holder for Federal income tax purposes with respect to any option or other award under the Plan, the Holder shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any Federal, state and local taxes of any kind required by law to be withheld or paid with respect to such amount. If permitted by the Committee, tax withholding or payment obligations may be settled with Common Stock, including Common Stock that is part of the award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditioned upon such payment or arrangements and the Company or the Holder's employer (if not the Company) shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Holder from the Company or any Subsidiary.
13.7 Governing Law. The Plan and all awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Florida. All matters relating to or involving corporate law shall be governed by the laws of the State of Florida.
13.8 Other Benefit Plans. Any award granted under the Plan shall not be deemed compensation for purposes of computing benefits under any retirement plan of the Company or any Subsidiary and shall not ffect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation (unless required by specific reference in any such other plan to awards under this Plan).
13.9 Non-Transferability. Except as otherwise expressly provided in the Plan or the Agreement, no right or benefit under the Plan may be alienated, sold, assigned, hypothecated, pledged, exchanged, transferred, encumbranced or charged, and any attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void.
13.10 Applicable Laws. The obligations of the Company with respect to all Stock Options and awards under the Plan shall be subject to (i) all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including, without limitation, the Securities Act of 1933, as amended, and (ii) the rules and regulations of any securities exchange on which the Common Stock may be listed.
13.11 Conflicts. If any of the terms or provisions of the Plan or an Agreement conflict with the requirements of Section 422 of the Code, then such terms or provisions shall be deemed inoperative to the extent they so conflict with such requirements. Additionally, if this Plan or any Agreement does not contain any provision required to be included herein under Section 422 of the Code, such provision shall be deemed to be incorporated herein and therein with the same force and effect as if such provision had been set out at length herein and therein. If any of the terms or provisions of any Agreement conflict with any terms or provisions of the Plan, then such terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of the Plan. Additionally, if any Agreement does not contain any provision required to be included therein under the Plan, such provision shall be deemed to be incorporated therein with the same force and effect as if such provision had been set out at length therein.
13.12 Non-Registered Stock. The shares of Common Stock to be distributed under this Plan have not been, as of the Effective Date, registered under the Securities Act of 1933, as amended, or any applicable state or foreign securities laws and the Company has no obligation to any Holder to register the Common Stock or to assist the Holder in obtaining an exemption from the various registration requirements, or to list the Common Stock on a national securities exchange or any other trading or quotation system, including the Nasdaq National Market and Nasdaq SmallCap Market.
Plan Amendments
Initials Date Approved of Attorney Date Approved by Stockholders Sections Effecting Description of |
EXHIBIT 14.1
CODE OF BUSINESS CONDUCT AND ETHICS
FOR
UNION DENTAL HOLDINGS, INC.
INTRODUCTION
UNION DENTAL HOLDINGS, INC. (the "Company") is committed to the highest standards of legal and ethical conduct. This Code of Business Conduct and Ethics (the "Code") sets forth the Company's policies with respect to the way we conduct ourselves individually and operate our business. The provisions of this Code are designed to deter wrongdoing and to promote honest and ethical conduct among our employees, officers and directors.
In the course of performing our various roles in the Company, each of us will encounter ethical questions in different forms and under a variety of circumstances. Moments of ethical uncertainty may arise in our dealings with fellow employees of the Company, with customers, or with other parties such as government entities or members of our community. In achieving the high ground of ethical behavior, compliance with governmental laws is not enough. Our employees should never be content with simply obeying the letter of the law, but must also strive to comport themselves in an honest and ethical manner. This Code provides clear rules to assist our employees, directors and officers in taking the proper actions when faced with an ethical dilemma.
The reputation of the Company is our greatest asset and its value relies on the character of its employees. In order to protect this asset, the Company will not tolerate unethical behavior by employees, officers or directors. Those who violate the standards in this Code will be subject to disciplinary action. If you are concerned about taking an action that may violate the Code or are aware of a violation by another employee, an officer or a director, follow the guidelines set forth in Sections 10 and 11 of this Code.
This Code applies equally to all employees, officers and directors of the Company. All references to employees contained in this Code should be understood as referring to officers and directors as well.
1. COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Company policy requires that the Company, as well as all employees, officers and directors of the Company, comply fully with both the spirit and the letter of all laws, rules and regulations. Whenever an applicable law, rule or regulation is unclear or seems to conflict with either another law or any provision of this Code, all employees, officers and directors are urged to seek clarification from their supervisor, the appropriate compliance official or the Chief Executive Officer. See Section 11 for contact information. Beyond mere compliance with the law, we should always conduct our business with the highest standards of honesty and integrity - wherever we operate.
2. CONFLICTS OF INTEREST
Every employee has a primary business responsibility to the Company and must avoid conflicts of interest. A conflict of interest arises when an employee takes actions or enters into relationships that oppose the interests of the Company, harm the Company's reputation or interfere with the employee's performance or independent judgment when carrying out any actions on behalf of the Company. The Company strictly prohibits its employees from taking any action or entering into any relationship, personal or professional, that creates, or even appears to create, a conflict of interest.
A conflict situation can arise when a director, officer or employee takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interests may also arise when a director, officer or employee, or a member of his or her family, receives an improper personal benefit as a result of his or her position with the Company. It may be a conflict of interest for a director, officer or employee to work simultaneously for a competitor, customer or supplier. The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on our behalf. Employees must be sensitive to potential conflicts of interest that may arise and use their best efforts to avoid the conflict.
In particular, except as provided below, no director, officer or employee shall:
A. be a consultant to, or a director, officer or employee of, or otherwise operate an outside business that:
o markets products or services in competition with our current or potential products and services;
o supplies products or services to the Company; or
o purchases products or services from the Company;
B. accept any personal loan or guarantee of obligations from the Company, except to the extent such arrangements have been approved by the Chief Executive Officer and are legally permissible; or
C. conduct business on behalf of the Company with immediate family members, which include your spouse, children, parents, siblings and persons sharing your same home whether or not legal relatives.
Directors, officers and employees must notify the Chief Executive Officer of the existence of any actual or potential conflict of interest. With respect to officers or directors, the Board may make a determination that a particular transaction or relationship will not result in a conflict of interest covered by this policy. With respect to all other employees or agents, the Chief Executive Officer, acting alone, or the Board may make such a determination. Any waivers of this policy as to an officer or director may only be approved by the Board of Directors.
Any employee, officer or director who is aware of a transaction or relationship that could reasonably be expected to give rise to a conflict of interest in violation of this section must inform the appropriate personnel in accordance with the procedures set forth in Section 12 of this Code. If an employee has any questions regarding the Company's policy on conflicts of interest or needs assistance in avoiding a potential conflict of interest, he or she is urged to seek the advice of a supervisor or the Chief Executive Officer.
3. CORPORATE OPPORTUNITIES
Employees, officers and directors are prohibited from taking for themselves personally opportunities that are discovered through the use of Company property, Company information or their position in the Company. Furthermore, employees may not use Company property, information or influence or their position in the Company for improper personal gain. Finally, employees have a duty to advance the Company's legitimate interests when the opportunity to do so arises. Consequently, employees are not permitted to compete with the Company.
4. CONFIDENTIALITY
Employees must maintain the confidentiality of confidential information entrusted to them by the Company or its customers or suppliers, except when disclosure is authorized by the Company or required by applicable laws or regulations. Confidential information includes proprietary information of the Company, as well as all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. This confidentiality requirement is in additional to any other obligations imposed by the Company to keep information confidential.
5. INSIDER TRADING
Employees, officers and directors will frequently become aware of confidential non-public information concerning the Company and the parties with which the Company does business. The Company prohibits employees from using such confidential information for personal financial gain, such as for purposes of stock trading, or for any other purpose other than the conduct of our business. Employees must maintain the confidentiality of such information and may not make disclosures to third parties, including members of the employee's family. All non-public information about the Company should be treated as confidential information. To use non-public information for personal financial benefit or to "tip" others who may make stock trades on the basis of this information is not only unethical but also illegal. This policy also applies to trading in the securities of any other company, including our customers or suppliers, if employees have material, non-public information about that company which the employee obtained in the course of their employment by the Company. In addition to possible legal sanctions, any employee, officer or director found to be in violation of this insider trading policy will face decisive disciplinary action. Employees are encouraged to contact the Company's Chief Executive Officer with any questions concerning this policy.
6. PROTECTION AND PROPER USE OF COMPANY ASSETS
All Company assets should be used for legitimate business purposes and all employees, officers and directors must make all reasonable efforts to protect the Company's assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Company's profitability and must therefore be avoided. The suspected occurrence of fraud or theft should be immediately reported to the appropriate person in accordance with the procedures set forth in Section 11 of this Code.
An employee's obligation to protect the Company's assets extends to the Company's proprietary information. Proprietary information includes intellectual property such as patents, trademarks, copyrights and trade secrets. An employee who uses or distributes such proprietary information without the Company's authorization will be subject to disciplinary measures as well as potential legal sanctions.
7. FAIR DEALING
Although the success of our Company depends on our ability to outperform our competitors, the Company is committed to achieving success by fair and ethical means. We seek to maintain a reputation for fair dealing among our competitors and the public alike. In light of this aim, the Company prohibits employees from engaging in any unethical or illegal business practices. An
exhaustive list of unethical practices cannot be provided. Instead, the Company relies on the judgment of each individual employee to avoid such practices. Furthermore, each employee should endeavor to deal fairly with the Company's customers, suppliers, competitors and employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair business practice.
8. DISCLOSURES
It is Company policy to make full, fair, accurate, timely and understandable disclosure in compliance with all applicable laws, rules and regulations in all reports and documents that the Company files with, or submits to, the Securities and Exchange Commission and in all other public communications made by the Company. Employees shall endeavor in good faith to assist the Company in such efforts.
9. WAIVERS
The Company expects all employees, officers and directors to comply with the provisions of this Code. Any waiver of this Code for executive officers, directors or employees may be made only by the Board of Directors or a Board committee and will be promptly disclosed to the public as required by law and stock exchange regulations.
10. COMPLIANCE GUIDELINES AND RESOURCES
In some situations, our employees may not be certain how to proceed in compliance with this Code. This uncertainty may concern the ethical nature of the employee's own acts or the employee's duty to report the unethical acts of another. When faced with this uncertainty, the employee should carefully analyze the situation and make use of Company resources when determining the proper course of action. The Company also encourages employees to talk to their supervisors, or other personnel identified below, when in doubt about the best course of action.
1. GATHER ALL THE FACTS. Do not take any action that may violate the Code until you have gathered all the facts that are required to make a well-informed decision and, if necessary, you have consulted with your supervisor, or the Chief Executive Officer.
2. IS THE ACTION ILLEGAL OR CONTRARY TO POLICY? If the action is illegal or contrary to the provision of this Code, you should not carry out the act. If you believe that the Code has been violated by an employee, an officer or a director, you must promptly report the violation in accordance with the procedures set forth in Section 12.
3. DISCUSS THE PROBLEM WITH YOUR SUPERVISOR. It is your supervisor's duty to assist employees in complying with this Code. Feel free to discuss a situation that raises ethical issues with your supervisor if you have any questions. You will suffer no retaliation for seeking such guidance.
4. ADDITIONAL RESOURCES. The Chief Executive Officer is available to speak with you about problematic situations if you do not feel comfortable approaching your direct supervisor. If you prefer, you may request assistance in writing by sending a request to the Chief Executive Officer.
11. REPORTING PROCEDURES
All employees have a duty to report any violations of this Code, as well as violations of any laws, rules, or regulations. The Company does not permit retaliation of any kind against employees for good faith reports of ethical violations.
If you believe that the Code has been violated by an employee you must promptly report the violation to your direct supervisor or the Chief Executive Officer. If a report is made to a supervisor, the supervisor must in turn report the violation to the Chief Executive Officer. All violations by an officer or director of the Company must be reported directly to the entire Board of Directors.
CONTACT INFORMATION
Reports may be made in person, by telephone or in writing by sending a description of the violation and the names of the parties involved to the appropriate personnel mentioned in the preceding paragraph. The contact information is as follows:
Dr. George D. Green Chief Executive Officer 1700 University Drive, Suite 200 Coral Springs, FL 33071 (954) 575-2252
12. DISCIPLINARY ACTION
Employees, officers and directors of the Company will be held accountable for adherence to this Code. The penalty for a particular violation of this Code will be decided on a case-by-case basis and will depend on the nature and severity of the violation as well as the employee's history of non-compliance and cooperation in the disciplinary process. Significant penalties will be imposed for violations resulting from intentional or reckless behavior. Penalties may also be imposed when an employee fails to report a violation due to the employee's indifference, deliberate ignorance or reckless conduct. All violations of this Code will be treated seriously and will result in the prompt imposition of penalties which may include (1) an oral or written warning, (2) a reprimand, (3) suspension, (4) termination and/or (5) restitution.
All employees of the Company may be asked from to time to reaffirm their understanding of and willingness to comply with this Code by signing an appropriate certificate (see Appendix A).
13. NO RIGHTS CREATED
This Code is a statement of certain fundamental principles, policies and procedures that govern the Company's officers, directors and employees in the conduct of the Company's business. It is not intended to and does not create any rights in any employee, supplier, competitor, shareholder or any other person or entity.
APPENDIX A
EMPLOYEE STATEMENT
I acknowledge having received a copy of the Company's Code of Business Conduct and Ethics. I have read it completely and I understand that the Code applies to me. I understand the Code does not constitute an employment contract and I agree to comply fully with each of the provisions of the Code, including such changes to the Code as the Company may announce from time to time. I have reviewed with my department head or my supervisor any matters concerning ownership or other activities which are required to be disclosed to the Company by the Code.
Employee Name _________________________________________________
Employee Signature ____________________________________________
Date __________________________________________________________
Exhibit 16.1
EXHIBIT 16.1
January 3, 2005
Office of the Chief Accountants
SECPS Letter File
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: National Business Holdings, Inc. File Reference No 000-32563
We were previously the principal accountants for National Business Holdings, Inc. and under the date of July 17, 2004, we reported on the consolidated financial statements of National Business Holdings, Inc. and Subsidiaries as of May 31, 2004 and December 31, 2003, and the related statements of operations, stockholders' equity (deficit) and cash flows for the seventeen months in the period ended May 31, 2004. On January 3, 2005, we were dismissed as principal accountant. We have read National Business Holdings, Inc.'s statements included in Item 4.01 (a)(i), (ii), and (iv) of the Form 8-K dated January 3, 2005 of National Business Holdings, Inc. to be filed with the Securities and Exchange Commission and we agree with such statements.
Very truly yours,
Lawrence Scharfman
/s/ Lawrence Scharfman, CPA For the Firm |
EXHIBIT 17.1
R E S I G N A T I O N
I, Melvyn Greenstein, hereby resign, effective January 5, 2003, as an officer, director and registered agent of Direct Dental Services, Inc.
Dated January 5, 2003
/s/ Melvyn Greenstein ------------------------- Melvyn Greenstein |
EXHIBIT 17.2
Roger E. Pawson
December 26, 2004
National Business Holdings, Inc.
4878 Ronson Ct.
San Diego, CA 92111
Re: Resignation
To Whom It May Concern:
Please be advised that effective today, December 28, 2004, I hereby resign as President, Chief Executive Officer and a member of the Board of Directors of National Business Holdings, Inc., a corporation organized and existing under the laws of the State of Florida and that I no longer hold any officer or director positions National Business Holdings, Inc.
Very truly yours,
/s/ Roger E. Pawson ----------------------------- Roger E. Pawson, CEO and Director |