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Prior Option
Excerpt from
CONTRACT BLUEPRINT: GUIDE to a DENTAL TRANSITION and LEGAL AGREEMENT -
Revised October 2006
Note: This is an example only. Its accuracy and acceptability are not
guaranteed.
The objective of this provision--as with the above junior obligation--is
to also obligate the junior to purchase senior’s share of the practice,
but in this case, where the junior wanted to leave rather than the senior.
This way, if the senior were anticipating retirement, the junior would in
either case be obligated to purchase the practice at the senior’s option.
Otherwise, without this provision, a junior could perhaps terminate and
perhaps also sell his or her portion of the practice at any time.
As with the voluntary portion of the above junior obligation, this too
would normally apply only following a buy-in and if so, should be defined
accordingly. Also however, as with the above obligation, it would be
advantageous for the senior to try to extend this to include the option of
selling before a buy-in as well.
Specifically, the provision would state that the senior party would have
the prior option of selling the practice to the junior party and that the
junior would then have the obligation to make that purchase if the junior
otherwise intended to:
(1) exercise and move under the above payment for patient records
provision. The option under that provision would then become null and
void.
(2) sell his or her stock.
(3) terminate the agreement.
The purchase price, as with the above provisions, would probably be as
described in the below sell-out purchase price, but could also be
negotiable or left silent.
The method of notification under this option should be stated. It should
require the junior to give such notification of intent and the senior
would then be required to give written notice (perhaps within ten days of
the junior’s notice of intent) to the junior of this prior option.
The provision would probably only apply if there were no more than two
stockholders at that time.
There should probably be penalties of some kind to a junior for failure to
fulfill this obligation.
Copyright 2006 by Norman C. Culver, all rights reserved.
For more information, call 1.877.428.5837.
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"With the information from Norm Culver's seminar—and the "blueprint"—I
proceeded with a transition that allowed me to cut work from 4 to 2.5 days
a week and with no reduction in income. My associate bought half my
practice and just returned from a 5 month sailing sabbatical in the
Bahamas. Now I'll work 1.5 days a week and probably sell the other half of
the practice in 3 more years. I'm 50 and have a full agenda for the second
half of my life."
— Stephen D. Michel, DMD (Mt. Pleasant, SC)
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