ASSET CONTRIBUTION AGREEMENT
BY AND AMONG
PENTEGRA DENTAL GROUP, INC.,
AND
XXXXXX XXXXXX, D.D.S.
TABLE OF CONTENTS
PAGE
Section 1. TERMS OF THE CONTRIBUTION
1.2 CONTRIBUTION OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 EXCLUDED ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 PURCHASE PRICE; ASSUMPTION OF LIABILITIES. . . . . . . . . . . . . . . 2
1.5 SUBSEQUENT ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. REPRESENTATIONS AND WARRANTIES OF DENTIST.
2.1 EXISTENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 POWER AND AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. . . . . . . . . . . 3
2.4 CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 [INTENTIONALLY DELETED]. . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 [INTENTIONALLY DELETED]. . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 DENTIST'S FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . 3
2.8 LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 CONDITION OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 TITLE TO AND ENCUMBRANCES ON PROPERTY. . . . . . . . . . . . . . . . . 3
2.11 INVENTORIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.12 INTELLECTUAL PROPERTY RIGHTS; NAMES. . . . . . . . . . . . . . . . . . 3
2.13 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES . . . . . . . . 4
2.14 LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.15 CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.16 SUBSEQUENT EVENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.18 COMMISSIONS AND FEES . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.19 LIABILITIES; DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.20 INSURANCE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.21 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . 6
2.22 ADVERSE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.23 COMPLIANCE WITH LAWS IN GENERAL. . . . . . . . . . . . . . . . . . . . 7
2.24 THIRD PARTY PAYORS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.25 NO UNTRUE REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . 7
2.26 BANKING RELATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.27 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS . . . . . . . . 8
2.28 PAYORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. REPRESENTATIONS AND WARRANTIES OF PENTEGRA
3.1 CORPORATE EXISTENCE: GOOD STANDING . . . . . . . . . . . . . . . . . . 8
3.2 POWER AND AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 COMMISSIONS AND FEES . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 NO UNTRUE REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. COVENANTS OF DENTIST.
4.1 CONSUMMATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 9
4.2 BUSINESS OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 ACCESS AND NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. . . . . . . . . . 9
4.5 ACQUISITION PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . 9
4.7 EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8 [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . . . . . . . . . . . 10
4.9 REQUIREMENTS TO EFFECT ACQUISITION . . . . . . . . . . . . . . . . . . 10
4.10 ACCOUNTING AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . 10
4.11 WAIVER OF BULK TRANSFER COMPLIANCE . . . . . . . . . . . . . . . . . . 10
4.12 LEASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.13 HIRING OF EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.14 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . 10
4.15 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.16 FORMATION OF THE PRACTICE. . . . . . . . . . . . . . . . . . . . . . . 10
4.17 CORPORATE RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.18 POWER AND AUTHORITY FOR TRANSACTIONS . . . . . . . . . . . . . . . . . 11
4.19 NO BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.20 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5. COVENANTS OF PENTEGRA
5.1 CONSUMMATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 11
5.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. . . . . . . . . . 11
Section 6. COVENANTS OF PENTEGRA AND DENTIST
6.1 FILINGS; OTHER ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7. PENTEGRA CONDITIONS PRECEDENT
7.1 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 12
7.2 COVENANTS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . 12
7.3 PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.4 NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . . . . 12
7.5 DUE DILIGENCE REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.6 APPROVAL BY THE BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . 12
7.7 SERVICE AGREEMENT; GUARANTY AGREEMENT. . . . . . . . . . . . . . . . . 13
7.8 EMPLOYMENT ARRANGEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 13
7.9 CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . 13
7.10 CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.11 DEBT AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.12 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.13 NO CHANGE IN WORKING CAPITAL . . . . . . . . . . . . . . . . . . . . . 13
7.14 SECURITIES APPROVAL. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8. DENTIST'S CONDITIONS PRECEDENT
8.1 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 13
8.2 COVENANTS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . 13
8.3 PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.4 CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.5 SECURITIES APPROVAL. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 9. CLOSING DELIVERIES
9.1 DELIVERIES OF DENTIST. . . . . . . . . . . . . . . . . . . . . . . . . 14
9.2 DELIVERIES OF PENTEGRA . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
10.1 NATURE AND SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.2 INDEMNIFICATION BY PENTEGRA. . . . . . . . . . . . . . . . . . . . . . 16
10.3 INDEMNIFICATION BY DENTIST . . . . . . . . . . . . . . . . . . . . . . 16
10.4 INDEMNIFICATION PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . 17
10.5 RIGHT OF SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 11. TERMINATION
Section 12. TRANSFER REPRESENTATIONS
12.1 TRANSFER RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 18
12.2 INVESTMENTS; COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . 19
12.3 ECONOMIC RISK; SOPHISTICATION. . . . . . . . . . . . . . . . . . . . . 19
Section 13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Section 14. MISCELLANEOUS
14.1 TAX COVENANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.2 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.3 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.4 EACH PARTY TO BEAR COSTS . . . . . . . . . . . . . . . . . . . . . . . 20
14.5 PUBLIC DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.6 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.7 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.8 INTEGRATION OF EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . 21
14.9 ENTIRE AGREEMENT/AMENDMENT . . . . . . . . . . . . . . . . . . . . . . 21
14.10 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.11 BINDING EFFECT/ASSIGNMENT . . . . . . . . . . . . . . . . . . . . 21
14.12 NO RULE OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . 21
14.13 COSTS OF ENFORCEMENT. . . . . . . . . . . . . . . . . . . . . . . 21
14.14 PRORATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.15 AMENDMENTS; WAIVERS . . . . . . . . . . . . . . . . . . . . . . . 21
14.16 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.17 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ASSET CONTRIBUTION AGREEMENT
This ASSET CONTRIBUTION AGREEMENT (this "Agreement"), made and executed as
of August 20, 1997, is by and among PENTEGRA DENTAL GROUP, INC., a Delaware
corporation ("Pentegra") and Xxxxxx Xxxxxx, D.D.S. ("Dentist").
WITNESSETH:
WHEREAS, Dentist operates a dental practice ("Business") and Pentegra is
engaged in the business of managing certain non-dentistry aspects of dental
practices;
WHEREAS, Dentist desires to contribute to Pentegra, and Pentegra desires
to receive from Dentist, certain assets of Dentist;
WHEREAS, Pentegra or its affiliated designee has entered into or intends to
enter into Agreements and Plans of Reorganization, Asset Contribution Agreements
and other acquisition agreements (collectively, the "Other Agreements") with
such persons or entities or the stockholders of such entities listed on EXHIBIT
A (together with Dentist, the "Target Companies");
WHEREAS, it is intended for Federal income tax purposes that the transfers
contemplated by this Agreement, the Other Agreements and Pentegra's initial
public offering ("Initial Public Offering") of shares of its common stock, par
value $.01 per share ("Pentegra Common Stock") shall qualify as an exchange
within the meaning of Section 351 of the Internal Revenue Code of 1986, as
amended ("IRC" or "Code");
WHEREAS, the consummation of the transfers to Pentegra pursuant to this
Agreement is intended to occur in connection with, and is conditioned upon, the
simultaneous consummation of the transfers contemplated by the Other Agreements
and the Initial Public Offering.
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. TERMS OF THE CONTRIBUTION.
1.1 THE CLOSING. The closing of the transactions contemplated hereby
shall take place at 10:00 am local time, at the offices of Xxxxxxx & Xxxxxx,
L.L.P., on the day on which the Initial Public Offering of Pentegra Common Stock
is consummated. The date on which the Closing occurs is hereinafter referred to
as the "Closing Date".
1.2 CONTRIBUTION OF ASSETS. Subject to and upon the terms and conditions
contained herein, on the Closing Date, Dentist shall convey, transfer, deliver
and assign to Pentegra or any affiliate of Pentegra designated by Pentegra all
of Dentist's right, title and interest in and to those certain assets described
on EXHIBIT 1.1 attached hereto (individually, "Asset", and collectively
"Assets"), free and clear of all obligations, security interests, claims, liens
and encumbrances, except as specifically assumed, or taken subject to, by
Pentegra pursuant to SECTION 1.3(b) hereof.
1.3 EXCLUDED ASSETS. There shall be excluded from the Assets to be
transferred and
contributed hereunder, and Dentist shall retain all of its right, title and
interest in and to, the assets not specifically transferred hereunder,
including without limitation, the assets described on EXHIBIT 1.2 (the
"Excluded Assets").
1.4 PURCHASE PRICE; ASSUMPTION OF LIABILITIES. As consideration for the
Assets and the representations, warranties and agreements of Dentist contained
herein, Pentegra shall, on the Closing Date:
(a) Cause to be transferred to Dentist the consideration specified in
ANNEX I attached hereto (the "Acquisition Consideration"); and.
(b) Except as otherwise provided herein, assume and perform or
discharge on or after the Closing Date, the contracts, leases, obligations,
commitments, liabilities and indebtedness of Dentist listed on EXHIBIT 1.3(b)
attached hereto to the extent that such obligations, commitments, liabilities
and indebtedness are current and not otherwise in default. (the "Assumed
Liabilities"). Notwithstanding any contrary provision contained herein,
Pentegra shall not be deemed to have assumed, nor shall Pentegra assume: (i)
any liability, commitment or obligation or trade payable or indebtedness not
specifically disclosed on EXHIBIT 1.3(b), (ii) any liability set forth on
EXHIBIT 1.3(b) which may be incurred by reason of any breach of or default
under such contracts, leases, commitments or obligations which occurred on or
before the Closing Date; (iii) any liability for any employee benefits
payable to employees of Dentist, including, but not limited to, liabilities
arising under any Dentist Plan (as defined in SECTION 2.21 hereof); (iv) any
liability based upon or arising out of a violation of any antitrust or
similar restraint-of-trade laws by Dentist, including, without limiting the
generality of the foregoing, any such antitrust liability which may arise in
connection with agreements, contracts, commitments or orders for the sale of
goods or provision of services by Dentist reflected on the books of Dentist
at or prior to the Closing Date; (v) any liability based upon or arising out
of any tortious or wrongful actions of Dentist, any licensed professional
employee or independent contractor of Dentist, (vi) any liability for the
payment of any taxes of Dentist, including without limitation, sales, use and
other transfer taxes and income taxes arising from or by reason of the
transactions contemplated by this Agreement; (vii) any indebtedness secured
by deeds of trust or mortgages on real property; nor (viii) any liability
incurred or to be incurred pursuant to any malpractice or other suits or
actions pending against Dentist.
1.5 SUBSEQUENT ACTIONS. If, at any time after the Closing Date, Pentegra
shall consider or be advised that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in Pentegra its right, title or
interest in, to or under any of the Assets or otherwise to carry out this
Agreement, in return for the consideration set forth in this Agreement, the
Dentist shall execute and deliver all such deeds, bills of sale, assignments and
assurances and take and do all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title and interest
in, to and under the Assets in Pentegra or otherwise to carry out this
Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF DENTIST.
Dentist hereby represents and warrants to Pentegra as follows:
2.1 EXISTENCE. Dentist is a sole proprietorship under the laws of the
State of Texas. Dentist does not have any assets, employees or offices in any
state other than the state set forth in the first sentence of this SECTION 2.1.
2.2 POWER AND AUTHORITY. Dentist has the legal capacity to enter into and
perform this
Agreement and the other agreements to be executed and delivered in
connection herewith. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by Dentist and constitute or will constitute
the legal, valid and binding obligations of Dentist in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies. The execution and delivery of this Agreement, and the
agreements executed and delivered pursuant to this Agreement or to be executed
and delivered on the Closing Date, do not, and, subject to the receipt of
consents described on EXHIBIT 2.4, the consummation of the actions contemplated
hereby will not, result in the acceleration of, any obligation under any
mortgage, lien, lease, agreement, rent, instrument, order, arbitration award,
judgment or decree to which Dentist is a party or by which Dentist is bound, or
violate any material restrictions of any kind to which Dentist is subject, or
result in any lien or encumbrance on any of Dentist's assets or the Assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All building or
other permits, certificates of occupancy, concessions, grants, franchises,
licenses, certificates of need and other governmental authorizations and
approvals required for the conduct of the Business or the use of the Assets, or
waivers thereof, have been duly obtained and are in full force and effect and
are described on EXHIBIT 2.3. There are no proceedings pending or, to the
knowledge of Dentist, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any such licenses or
permits.
2.4 CONSENTS. Except as set forth on EXHIBIT 2.4, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of Dentist.
2.5 [INTENTIONALLY DELETED].
2.6 [INTENTIONALLY DELETED].
2.7 DENTIST'S FINANCIAL INFORMATION. Dentist has heretofore furnished
Pentegra with copies of its unaudited balance sheet and related unaudited
statements of income, retained earnings and cash flows for its prior two full
fiscal years, as well as copies of its unaudited balance sheet as of December
31, 1996 and June 30, 1997 (collectively, the "Balance Sheet" and the latest
date thereof shall be referred to as the "Balance Sheet Date") and any related
unaudited statements of income, retained earnings, schedule of accounts
receivable, accounts payable and accrued liabilities, and cash flows for the
twelve months then ended (collectively, with the related notes thereto, the
"Financial Statements"). The Financial Statements fairly present the financial
condition and results of operations of Dentist as of the dates and for the
periods indicated and reflect all fixed and contingent liabilities of Dentist.
2.8 LEASES. EXHIBIT 2.8 attached hereto sets forth a list of all leases
pursuant to which Dentist leases, as lessor or lessee, real or personal property
used in operating the Business, related to the Assets or otherwise. All such
leases listed on EXHIBIT 2.8 are valid and enforceable in accordance with their
respective terms, and there is not under any such lease any existing default by
Dentist, as lessor or lessee, or any condition or event of which Dentist has
knowledge which with notice or lapse of time, or both, would constitute a
default, in respect of which Dentist has not taken adequate steps to cure such
default or to prevent a default from occurring.
2.9 CONDITION OF ASSETS. All of the Assets are in good condition and
repair subject to normal wear and tear and conform with all applicable
ordinances, regulations and other laws, and Dentist has no knowledge of any
latent defects therein.
2.10 TITLE TO AND ENCUMBRANCES ON PROPERTY. Dentist has good, valid and
marketable title to all of the Assets, free and clear of any liens, claims,
charges, exceptions or encumbrances, except for those, if any, which are set
forth in EXHIBIT 2.10 attached hereto. Dentist shall cause all encumbrances set
forth on EXHIBIT 2.10 (other than those encumbrances indicated on EXHIBIT
1.3(b)) to be released or terminated prior to the Closing Date and evidence of
such releases of liens and claims shall be provided to Pentegra on the Closing
Date and the Assets shall not be used to satisfy such liens, claims or
encumbrances.
2.11 INVENTORIES. All of the Assets constituting inventory are owned or
used by Dentist, are in good, current, standard and merchantable condition and
are not obsolete or defective.
2.12 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on EXHIBIT
2.12, Dentist has no right, title or interest in or to patents, patent rights,
corporate names, assumed names, manufacturing processes, trade names,
trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items. Set forth in EXHIBIT
2.12 is a listing of all names of all predecessor companies of Dentist,
including the names of any entities from whom Dentist previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on EXHIBIT 2.12, Dentist is not a licensee in respect of any patents,
trademarks, service marks, trade names, copyrights or applications therefor, or
manufacturing processes, formulas or trade secrets or similar items and no such
licenses are necessary for the conduct of the Business or the use of the Assets.
No claim is pending or has been made to the effect that the Assets or the
present or past operations of Dentist in connection with the Assets or Business
infringe upon or conflict with the asserted rights of others to any patents,
patent rights, manufacturing processes, trade names, trademarks, service marks,
inventions, licenses, specialized treatment protocols, copyrights, formulas,
know-how and trade secrets. Dentist has the sole and exclusive right to use all
Assets constituting proprietary rights without infringing or violating the
rights of any third parties and no consents of any third parties are required
for the use thereof by Pentegra.
2.13 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set forth on
EXHIBIT 2.13 attached hereto is a true and complete list, as of the date of this
Agreement of: (a) the most recent payroll report of Dentist, showing all current
employees of Dentist and their current levels of compensation, (b) promised
increases in compensation of employees of Dentist that have not yet been
effected, (c) oral or written employment agreements, consulting agreements or
independent contractor agreements (and all amendments thereto) to which Dentist
is a party, copies of which have been delivered to Pentegra, and (d) all
employee manuals, materials, policies, procedures and work-related rules, copies
of which have been delivered to Pentegra. Dentist is in compliance with all
applicable laws, rules, regulations and ordinances respecting employment and
employment practices. Dentist has not engaged in any unfair labor practice.
There are no unfair labor practices charges or complaints pending or threatened
against Dentist, and Dentist has never been a party to any agreement with any
union, labor organization or collective bargaining unit.
2.14 LEGAL PROCEEDINGS. Neither Dentist nor the Business nor any of the
Assets is subject to any pending, nor does Dentist have knowledge of any
threatened, litigation, governmental investigation, condemnation or other
proceeding against or relating to or affecting Dentist, the Business, the Assets
or the transactions contemplated by this Agreement, and, to the knowledge of
Dentist, no basis for any such action exists, nor is there any legal impediment
of which Dentist has knowledge to the continued operation of its business or the
use of the Assets in the ordinary course, subject to consents set forth on
EXHIBIT 2.4.
2.15 CONTRACTS. Dentist has delivered to Pentegra true copies of all
written, and disclosed to Pentegra all oral, outstanding contracts,
obligations and commitments of Dentist ("Contracts"), entered into in
connection with and related to the Assets or the Business, all of which are
listed or incorporated by reference on EXHIBIT 2.8 (in the case of leases),
EXHIBIT 2.13 (in the case of employment agreements) and EXHIBIT 2.15 (in the
case of Contracts other than leases) attached hereto. Except as otherwise
indicated on
such Exhibits, all of such Contracts are valid, binding and enforceable in
accordance with their terms and are in full force and effect, and no
defenses, offsets or counterclaims have been asserted or may be made by any
party thereto. Except as indicated on such Exhibits, there is not under any
such Contract any existing default by Dentist, or any condition or event of
which Dentist has knowledge which with notice or lapse of time, or both,
would constitute a default. Dentist has no knowledge of any default by any
other party to such Contracts. Dentist has not received notice of the
intention of any party to any Contract to cancel or terminate any Contract
and have no reason to believe that any amendment or change to any Contract is
contemplated by any party thereto. Other than those contracts, obligations
and commitments listed on EXHIBIT 2.8, EXHIBIT 2.13 and EXHIBIT 2.15, Dentist
is not a party to any material written or oral agreement contract, lease or
arrangement, including without limitation, any:
(a) Contract related to the Assets other than this Agreement;
(b) Employment, consulting or compensation agreement or arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether as lessor
or lessee;
(e) Deed, xxxx of sale or other document evidencing an interest in or
agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or equipment (i)
which is in excess of the requirements of the Business now booked or for normal
operating inventories, or (ii) which is not terminable upon notice of thirty
(30) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Business of a particular product or
service;
(h) Loan agreement or other contract for money borrowed or lent or to
be borrowed or lent to another;
(i) Contracts containing non-competition covenants;
(j) Financial or similar contracts or agreements with patients of the
Dentist, oral or written, that provide for prepayments or deferred installment
payments; or
(k) Other contracts or agreements that involve either an unperformed
commitment in excess of $1,000 or that terminate or can only be terminated by
Dentist on more than 30 days after the date hereof.
2.16 SUBSEQUENT EVENTS. Other than as set forth on EXHIBIT 2.16, Dentist
has not, since the Balance Sheet Date:
(a) Incurred any material obligation or liability (absolute, accrued,
contingent or otherwise) or entered into any contract, lease, license or
commitment, except in connection with the performance of this Agreement;
(b) Discharged or satisfied any material lien or encumbrance, or paid
or satisfied any material obligation or liability (absolute, accrued, contingent
or otherwise) other than (i) liabilities shown or reflected on the Balance
Sheet, (ii) liabilities incurred since the Balance Sheet Date in the ordinary
course of business;
(c) Made any payments to or loaned any money to any person or entity
other than in the ordinary course of business;
(d) Lost or terminated any employee, patient, customer or supplier
that has or may have, individually or in the aggregate, a material adverse
effect on the Business;
(e) Increased or established any reserve for taxes or any other
liability on its books or otherwise provided therefor, except as may have been
required due to income or operations of Dentist since the Balance Sheet Date;
(f) Mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the Assets, tangible or intangible;
(g) Sold or contracted to sell or transferred or contracted to
transfer any of the Assets or any other assets used in the conduct of the
Business, canceled any debts or claims or waived any rights, except in the
ordinary course of business;
(h) Except in the ordinary course or business consistent with past
practices, granted any increase in the rates of pay of employees, consultants or
agents, or by means of any bonus or pension plan, contract or other commitment,
increased the compensation of any officer, employee, consultant or agent;
(i) Authorized or incurred any capital expenditures in excess of Five
Thousand and No/100 Dollars ($5,000.00);
(j) Except for this Agreement and any other agreement executed and
delivered pursuant to this Agreement, entered into any material transaction
other than in the ordinary course of business or permitted hereunder;
(k) Experienced damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting any of its properties, assets
or business or the Business or the Assets, or experienced any other material
adverse change in its financial condition, assets, prospects, liabilities or
business; or
(l) Suffered any material adverse change in the Business or to the
Assets.
2.17 TAXES. (a) Dentist has filed all tax returns (including tax reports
and other statements) required to have been filed by it, and has paid all taxes
(including any interest, penalty or additions thereto) required to have been
paid by it. All such tax returns are complete and accurate in all respects and
properly reflect the relevant taxes for the periods covered thereby. Dentist
has not received any notice that any tax deficiency or delinquency has been or
may be asserted against Dentist. There are no audits relating to taxes of
Dentist pending or in process or, to the knowledge of Dentist, threatened.
Dentist is not currently the beneficiary of any waiver of any statute of
limitations in respect of taxes nor of any extension of time within which to
file any tax return or to pay any tax assessment or deficiency. There are no
liens or encumbrances relating to taxes on or threatened against any of the
assets of Dentist. Dentist has withheld and paid all taxes required by law to
have been withheld and paid by it. Neither Dentist nor any predecessor of
Dentist is or has been a party to any tax allocation or sharing agreement or a
member of an affiliated group of corporations filing a consolidated Federal
income tax return. Dentist has delivered to Pentegra correct and complete
copies of Dentist's three most recently filed annual state, local and Federal
income tax returns, together with all examination reports and statements of
deficiencies assessed against or agreed to by Dentist during the three calendar
year period preceding the date of this Agreement. Dentist has neither made any
payments, is obligated to make any payments, or is a party to any agreement that
under any circumstance could obligate it to make any payments that will not be
deductible under Code section 280G.
(b) Dentist does not intend to dispose of any of the shares of Pentegra
Common Stock to be received hereunder and is not a party to any plan,
arrangement or agreement for the disposition of such shares. Nothing contained
herein shall prohibit Dentist from selling such shares of Pentegra Common Stock
after the designated holding period and in accordance with SECTION 12.1 hereof.
2.18 COMMISSIONS AND FEES. There are no claims for brokerage commissions
or finder's or similar fees in connection with the transactions contemplated by
this Agreement which may be now or hereafter asserted against Pentegra, Dentist
resulting from any action taken by Dentist or their respective agents or
employees, or any of them.
2.19 LIABILITIES; DEBT. Except to the extent reflected or reserved against
on the Balance Sheet, Dentist did not have, as of the Balance Sheet Date, and
has not incurred since that date and will not have incurred as of the Closing
Date, any liabilities or obligations of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, other than those
incurred in the ordinary course of business or as set forth on EXHIBIT 2.16.
Dentist does not know, or have reasonable grounds to know, of any basis for the
assertion against Dentist as of the Balance Sheet Date, of any claim or
liability of any nature in any amount not fully reflected or reserved against on
the Balance Sheet, or of any claim or liability of any nature arising since that
date other than those incurred in the ordinary course of business or
contemplated by this Agreement. All indebtedness of Dentist (including without
limitation, indebtedness for borrowed money, guaranties and capital lease
obligations) is described on EXHIBIT 2.19 attached hereto.
2.20 INSURANCE POLICIES. Dentist and each licensed professional of Dentist
carries property, liability, malpractice, workers' compensation and such other
types of insurance as is customary in the industry. Valid and enforceable
policies in such amounts are outstanding and duly in force and will remain duly
in force through the Closing Date. All such policies are described in EXHIBIT
2.20 attached hereto and true and correct copies have been delivered to
Pentegra. Dentist has not received notice or other communication from the
issuer of any such insurance policy cancelling or amending such policy or
threatening to do so. Neither Dentist nor any licensed professional employee of
Dentist has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.21 EMPLOYEE BENEFIT PLANS. Except as set forth on EXHIBIT 2.21 attached
hereto, Dentist has neither established, nor maintains, nor is obligated to make
contributions to or under or otherwise participate in, (a) any bonus or other
type of compensation or employment plan, program, agreement, policy, commitment,
contract or arrangement (whether or not set forth in a written document); (b)
any pension, profit-sharing, retirement or other plan, program or arrangement;
or (c) any other employee benefit plan, fund or program, including, but not
limited to, those described in SECTION 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). All such plans listed on EXHIBIT
2.20 (individually "Dentist Plan," and collectively "Dentist Plans") have been
operated and administered in all material respects in accordance with all
applicable laws, rules and regulations, including without limitation, ERISA, the
Internal Revenue Code of 1986, as amended, Title VII of the Civil Rights Act of
1964, as amended, the Equal Pay Act of 1967, as amended, the Age Discrimination
in Employment Act of 1967, as amended, and the related rules and regulations
adopted by those Federal agencies responsible for the administration of such
laws. No act or failure to act by Dentist has resulted in a "prohibited
transaction" (as defined in ERISA) with respect to the Dentist Plans. No
"reportable event" (as defined in ERISA) has occurred with respect to any of the
Dentist Plans. Dentist has not previously made, is not currently making, and is
not obligated in any way to make, any contributions to any multiemployer plan
within the meaning of the Multi-Employer Pension Plan Amendments Act of 1980.
With respect to each Dentist Plan, either (i) the value of plan assets
(including commitments under insurance contracts) is at
least equal to the value of plan liabilities or (ii) the value of plan
liabilities in excess of plan assets is disclosed on the Balance Sheet, all
as of the Closing Date.
2.22 ADVERSE AGREEMENTS. Dentist is not, and will not be as of the Closing
Date, a party to any agreement or instrument or subject to any charter or other
corporate restriction or any judgment, order, writ, injunction, decree, rule or
regulation that materially and adversely affects the condition (financial or
otherwise), operations, assets, liabilities, business or prospects of Dentist,
the Business or the Assets.
2.23 COMPLIANCE WITH LAWS IN GENERAL. Dentist and Dentist's licensed
professional employees, and the conduct of the Business and use of the Assets,
have complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by Dentist or any licensed professional employee of Dentist
of any Federal, state or local law or regulation. Dentist has not received any
notice of a violation of any Federal, state and local laws, regulations and
ordinances relating to the operations of the Business and Assets and no notice
of any pending inspection or violation of any such law, regulation or ordinance
has been received by Dentist.
2.24 THIRD PARTY PAYORS. Dentist and each licensed professional
employee or independent contractor of Dentist has timely filed all claims or
other reports required to be filed with respect to the purchase of services
by third-party payors, and all such claims or reports are complete and
accurate, and has no liability to any payor with respect thereto. There are
no pending appeals, overpayment determinations, adjustments, challenges,
audit, litigation or notices of intent to open Medicare or Medicaid claim
determinations or other reports required to be filed by Dentist and each
licensed professional employee of Dentist. Neither Dentist nor any licensed
professional employee of Dentist has been convicted of, or pled guilty or
nolo contendere to, patient abuse or negligence, or any other Medicare or
Medicaid program related offense and none has committed any offense which may
serve as the basis for suspension or exclusion from the Medicare and Medicaid
programs or any other third party payor program. With respect to payors,
Dentist and Dentist's licensed professional employees has not (a) knowingly
and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights
to any benefit or payment; (c) failed to disclose knowledge of the occurrence
of any event affecting the initial or continued right to any benefit or
payment on its own behalf or on behalf of another, with the intent to
fraudulently secure such benefit or payment; and (d) violated any applicable
state anti-remuneration or self-referral statutes, rules or regulations.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by Dentist
in this Agreement, and no Exhibit or certificate issued or executed by, or
information furnished by Dentist or to be furnished by Dentist to Pentegra
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 or facts
contained therein not misleading.
2.26 BANKING RELATIONS. Set forth in EXHIBIT 2.26 is a complete and
accurate list of all arrangements that Dentist has with any bank or other
financial institution, indicating with respect to each relationship the type of
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereof.
2.27 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. No officer or
employee or family member of Dentist, or their respective spouses, children or
affiliates, owns directly or indirectly, on an individual or joint basis, any
interest in, has a compensation or other financial arrangement with, or
serves as an officer or director of, any customer or supplier or competitor
of Dentist or any organization that has a material contract or arrangement
with Dentist.
2.28 PAYORS. EXHIBIT 2.28 sets forth a true, complete and correct list of
the names and addresses of each payor of Dentist's services which accounted for
more than 10% of revenues of Dentist in the preceding fiscal year. Dentist has
good relations with all such payors and other material payors of Dentist and
none of such payors has notified Dentist that it intends to discontinue its
relationship with Dentist or to deny any claims submitted to such payor for
payment.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PENTEGRA.
Pentegra hereby represents and warrants to Dentist as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. Pentegra is a corporation duly
organized and existing and in good standing under the laws of the State of
Delaware.
3.2 POWER AND AUTHORITY; CONSENTS. Pentegra has corporate power to
execute, deliver and perform this Agreement and all agreements and other
documents executed and delivered by it pursuant to this Agreement or to be
executed and delivered on the Closing Date, and has taken all actions required
by law, its Certificate of Incorporation, its Bylaws or otherwise, to authorize
the execution, delivery and performance of this Agreement and such related
documents. This Agreement and all agreements and documents executed and
delivered in connection herewith have been, or will be as of the Closing Date,
duly executed and delivered by Pentegra and constitute or will constitute the
legal, valid and binding obligations of Pentegra, enforceable against Pentegra
in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies. The execution and delivery
of this Agreement, and the agreements executed and delivered pursuant to this
Agreement or to be executed and delivered on the Closing Date, do not, and, the
consummation of the actions contemplated hereby will not, violate any provision
of the Certificate of Incorporation or Bylaws of Pentegra or any provisions of,
or result in the acceleration of, any obligation under any mortgage, lien,
lease, agreement, rent, instrument, order, arbitration award, judgment or decree
to which Pentegra is a party or by which Pentegra is bound, or violate any
material restrictions of any kind to which Pentegra is subject, or result in any
lien or encumbrance on any of Pentegra's assets. Other than as have been
obtained or as would not have a material adverse effect, there are no consents
of any person or entity required for the transaction contemplated hereby on
behalf of Pentegra.
3.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All building or
other permits, certificates of occupancy, concessions, grants, franchises,
licenses, certificates of need and other governmental authorizations and
approvals required for the conduct of the business of Pentegra or waivers
thereof, have been duly obtained and are in full force and effect, except as
would not have a material adverse effect upon Pentegra. Other than as would not
have a material adverse effect, there are no proceedings pending or, to the
knowledge of Pentegra, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any such licenses or
permits.
3.4 LEGAL PROCEEDINGS. Other than as would not have a material adverse
effect, neither Pentegra nor its business or assets is subject to any pending,
nor does Pentegra have knowledge of any threatened, litigation, governmental
investigation, condemnation or other proceeding against or relating to or
affecting Pentegra, its business, assets or the transactions contemplated by
this Agreement, and, to the knowledge of Pentegra, no basis for any such action
exists, nor is there any legal impediment of which Pentegra has knowledge to the
continued operation of its business or the use of its Assets in the ordinary
course.
3.5 TAXES. Pentegra has filed all tax returns (including tax reports and
other statements) required to have been filed by it, and has paid all taxes
(including any interest, penalty or additions thereto) required to have been
paid by it, other than as would not have a material adverse effect. Pentegra
has not received any notice that any tax deficiency or delinquency has been or
may be asserted against Pentegra. There are no audits relating to taxes of
Pentegra pending or in process or, to the knowledge of Pentegra, threatened.
Pentegra is not currently the beneficiary of any waiver of any statute of
limitations in respect of taxes nor of any extension of time within which to
file any tax return or to pay any tax assessment or deficiency.
3.6 COMMISSIONS AND FEES. Pentegra has not incurred any obligation for
any finder's, broker's or similar fees in connection with the transactions
contemplated hereby.
3.7 CAPITAL STOCK. The issuance and delivery by Pentegra of shares of
Pentegra Common Stock in connection with the acquisition contemplated hereby
will be as of the Closing Date duly and validly authorized by all necessary
corporate action on the part of Pentegra. The Pentegra Common Stock to be
issued in connection with the acquisition contemplated hereby, when issued in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable.
3.8 NO UNTRUE REPRESENTATIONS. No representation or warranty by Pentegra
in this Agreement, and no Exhibit or certificate issued by officers or directors
of Pentegra and furnished or to be furnished to Dentist 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 or facts contained therein not
misleading.
SECTION 4. COVENANTS OF DENTIST.
Dentist agrees that between the date hereof and the Closing Date:
4.1 CONSUMMATION OF AGREEMENT; EXHIBITS. Dentist shall use his best
efforts to cause the consummation of the transactions contemplated hereby in
accordance with their terms and conditions. Dentist agrees to complete the
Exhibits hereto to be provided by him in form and substance satisfactory to
Pentegra.
4.2 BUSINESS OPERATIONS. Dentist shall operate the Business and use the
Assets in the ordinary course. Dentist shall not enter into any lease,
contract, indebtedness, commitment, purchase or sale or acquire or dispose of
any capital asset relating to the Business or the Assets except in the ordinary
course of business. Dentist shall use their best efforts to preserve the
Business and Assets intact and shall not take any action that would have an
adverse effect on the Business or Assets. Dentist shall use their best efforts
to preserve intact the relationships with payors, customers, suppliers, patients
and others having significant business relations with Dentist. Dentist shall
collect its receivables and pay its trade payables in the ordinary course of
business. Dentist shall not introduce any new method of management, operations
or accounting.
4.3 ACCESS AND NOTICE. Dentist shall permit Pentegra and its authorized
representatives access to, and make available for inspection, all of the assets
and business of Dentist, the Business and the Assets, including employees,
customers and suppliers and permit Pentegra and its authorized representatives
to inspect and make copies of all documents, records and information with
respect to the business or assets of Dentist, the Business or the Assets as
Pentegra or its representatives may request. Dentist shall promptly
notify Pentegra in writing of (a) any notice or communication relating to a
default or event that, with notice or lapse of time or both, could become a
default, under any contract, commitment or obligation to which Dentist is a
party or relating to the Business or the Assets, and (b) any adverse change
in Dentist's or the Business' financial condition or the Assets.
4.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. Dentist shall
use his best efforts to secure all necessary approvals and consents of third
parties to the consummation of the transactions contemplated hereby, including
consents described on EXHIBIT 2.4. Dentist shall use his best efforts to obtain
all licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to provide the services of the Practice
contemplated by the Service Agreement and to conduct the intended business of
the Practice and operate the Business and use the Assets.
4.5 ACQUISITION PROPOSALS. From the execution of this Agreement until the
earlier of Closing or the termination of this Agreement in accordance with the
provisions hereof, Dentist shall not, and shall use its best efforts to cause
Dentist's employees, agents and representatives not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or implementation
of any proposal or offer, including without limitation, any proposal or offer to
the Dentist, with respect to a merger, acquisition, consolidation or similar
transaction involving, or the purchase of all or any significant portion of the
assets or any equity securities of Dentist or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to such proposal or offer, and Dentist
will immediately cease any such activities, discussions or negotiations
heretofore conducted with respect to any of the foregoing. Dentist shall
immediately notify Pentegra if any such inquiries or proposals are received.
4.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. Dentist hereby covenants and
agrees that it will take whatever steps are necessary to pay or fund completely
for any accrued benefits, where applicable, or vested accrued benefits for which
Dentist or any entity might have any liability whatsoever arising from any
insurance, pension plan, employment tax or similar liability of Dentist to any
employee or other person or entity (including, without limitation, any Dentist
Plan and any liability under employment contracts with Dentist) allocable to
services performed prior to the Closing Date. Dentist acknowledges that the
purpose and intent of this covenant is to assure that Pentegra shall have no
liability whatsoever at any time after the Closing Date with respect to any of
Dentist's employees or similar persons or entities, including, without
limitation, any Dentist Plan for the period prior to the Closing Date.
4.7 EMPLOYEE MATTERS. Dentist shall not, without the prior written
approval of Pentegra, except as required by law, increase the cash compensation
of the Dentist (other than in the ordinary course of business) or other employee
or an independent contractor of Dentist, adopt, amend or terminate any
compensation plan, employment agreement, independent contractor agreement,
employee policies and procedures or employee benefit plan, take any action that
could deplete the assets of any employee benefit, or fail to pay any premium or
contribution due or file any report with respect to any employee benefit plan,
or take any other actions with respect to its employees or employee matters
which might have an adverse effect upon Dentist, its business, assets or
prospects.
4.8 [INTENTIONALLY OMITTED].
4.9 REQUIREMENTS TO EFFECT ACQUISITION. Dentist shall use his best
efforts to take, or cause to be taken, all actions necessary to effect the
acquisition contemplated hereby under applicable law.
4.10 ACCOUNTING AND TAX MATTERS. Dentist will not change in any material
respect the tax or financial accounting methods or practices followed by Dentist
(including any material change in any assumption underlying, or any method of
calculating, any bad debt, contingency or other reserve), except
as may be required by law or generally accepted accounting principles.
Dentist will duly, accurately and timely (without regard to any extensions of
time) file all returns, information statements and other documents relating
to taxes of Dentist required to be filed by it, and pay all taxes required to
be paid by it, on or before the Closing Date.
4.11 WAIVER OF BULK TRANSFER COMPLIANCE. Pentegra and Dentist hereby waive
any compliance with the applicable state Bulk Transfers Act, if any. Dentist
covenants and agrees that all of the creditors with respect to the Business and
the Assets will be paid in full by Dentist prior to the Closing Date, except to
extent that any liability to such creditors is assumed by Pentegra pursuant to
this Agreement. If required by Pentegra, Dentist shall furnish Pentegra with
proof of payment of all creditors with respect to the Business and the Assets.
Notwithstanding the foregoing, Dentist may dispute the validity or amount of any
such creditor's claim without being deemed to be in violation of this SECTION
4.11, provided that such dispute is in good faith and does not unreasonably
delay the resolution of the claim and provided, further that Dentist agrees to
indemnify and bond Pentegra for such amounts as is satisfactory to Pentegra.
4.12 LEASE. If Dentist leases any of its premises from the Dentist or
other affiliate of Dentist, Pentegra shall have entered into a building lease
(the "Building Lease") with the owner of such premises on terms and conditions
satisfactory to Pentegra, the terms and conditions of which shall include,
without limitation, (i) a five year initial term plus three five-year renewal
options, (ii) a lease rate equal to the fair market value lease rate, as agreed
to by Pentegra, and (iii) such other provisions to be acceptable to Pentegra.
4.13 HIRING OF EMPLOYEES. Dentist shall cooperate with all requests made
by Pentegra for the purpose of allowing Pentegra to hire those non-dental
employees of Dentist designated by Pentegra, such employment to be effective as
of the Closing Date. Notwithstanding the above, Dentist shall remain liable
under any Dentist Plans for any claims incurred by any employees or their
spouses or dependents, and for all compensation, bonuses, benefits and other
such items and other liabilities related to Dentist's employees incurred by
Dentist prior to the Closing Date.
4.14 EMPLOYEE BENEFIT PLANS. Dentist agrees and acknowledges that all
employees of Dentist hired by Pentegra pursuant to SECTION 4.13 above, shall be
treated as "leased employees" (as defined in Code Section 414(n)) of Dentist and
shall be treated as Clinic employees for purposes of eligibility and
participation in Dentist Plans.
4.15 INSURANCE. Dentist shall cause Pentegra and its affiliates to be
named as an additional insured on its liability insurance programs, effective as
of the Closing Date.
4.16 FORMATION OF THE PRACTICE. Dentist shall have formed a limited
liability company, partnership or other legal entity (the "Practice") approved
by Pentegra for the purpose of practicing dentistry and entering into the
Service Agreement. The Practice shall be duly organized, in existing and in
good standing under the laws of the State in which the Dentist and the Practice
are to practice dentistry. The Practice shall have all necessary power to own
all of its assets and to carry on its business as such business is now being
conducted. The Dentist shall be the sole member/shareholder/partner of the
Practice and own all such interests free of all security interests, claims,
encumbrances and liens. Each interest in the Practice shall be legally and
validly issued and fully paid and nonassessable. There shall be no outstanding
(a) bonds, debentures, notes or other obligations the holders of which have the
right to vote with the members/partners/shareholders of the Practice on any
matter, (b) securities of the Practice convertible into equity interests in the
Practice, or (c) commitments, options, rights or warrants to issue any such
equity interests in the Practice, to issue securities of the Practice
convertible into such equity interests, or to redeem any securities of the
Practice. No interests of the Practice shall have been issued or disposed of in
violation of
the preemptive rights, rights of first refusal or similar rights of any of
the Practice's members/partners/shareholders. The Practice shall quality to
do business as a foreign entity in any other state or jurisdiction by reason
of its business, properties or activities in or relating to such other state
or jurisdiction.
4.17 CORPORATE RECORDS. True and correct copies of the Articles of
Organization/Partnership Agreement\Articles of Incorporation, Bylaws/Regulations
and minutes of the Practice and all amendments thereto of the Practice shall
have been delivered to Pentegra and shall be in form and substance satisfactory
to Pentegra. The minute books of the Practice shall contain all accurate
minutes of the meetings of and consents to actions taken without meetings of the
members\managers/partners/board of directors of the Practice since its
formation. The books of account of the Practice shall have been kept accurately
in the ordinary course of business and the revenues, expenses, assets and
liabilities of the Practice shall have been properly recorded in such books.
4.18 POWER AND AUTHORITY FOR TRANSACTIONS. The Practice shall have the
power to execute, deliver and perform its obligations under all agreements
and other documents to be executed and delivered by it pursuant to this
Agreement, including without limitation, the Service Agreement and each
Employment Agreement or to be executed and delivered on the Closing Date, and
has taken all action required by law, its Organization/Partnership
Agreement/Articles of Incorporation, its Bylaws/Regulations or otherwise, to
authorize the execution, delivery and performance of such documents. The
Service Agreement, the Employment Agreement and the other agreements
contemplated hereby shall have been duly executed and delivered by the
Practice and constitute or will constitute the legal, valid and binding
obligations of the Practice enforceable against the Practice in accordance
with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally
or the availability of equitable remedies. The execution and delivery of the
Service Agreement, the Employment Agreements and the other agreements
contemplated hereby will not violate any provision of the organizational
documents of the Practice or any provisions of, or result in the acceleration
of, any obligation under any mortgage, lien, lease, agreement, rent,
instrument, order, arbitration award, judgment or decree to which the
Practice is a party or by which the Practice is bound, or violate any
material restrictions of any kind to which the Practice is subject, or result
in any lien or encumbrance on any of the Practice's assets.
4.19 NO BUSINESS. Other than its Articles of Organization/Partnership
Agreement/Articles of Incorporation, Bylaws/Regulations and as of the Closing
Date, the Service Agreement and the Employment Agreements, the Practice shall
not be a party to or subject to any agreement, indenture or other instrument.
4.20 COMPLIANCE WITH LAWS. The Practice shall have complied with all
applicable laws, regulations and licensing requirements and has filed with
the proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF PENTEGRA.
Pentegra agrees that between the date hereof and the Closing:
5.1 CONSUMMATION OF AGREEMENT; EXHIBITS. Pentegra shall use its best
efforts to cause the consummation of the transactions contemplated hereby in
accordance with their terms and provisions. Pentegra agrees to complete the
Exhibits hereto to be provided by it.
5.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. Pentegra shall
use its best efforts to secure all necessary approvals and consents of third
parties to the consummation of the transactions contemplated hereby.
SECTION 6. COVENANTS OF PENTEGRA AND DENTIST.
Pentegra and Dentist agree as follows:
6.1 FILINGS; OTHER ACTIONS. Pentegra and Dentist shall cooperate to
promptly prepare and file with the Securities Exchange Commission ("SEC")
the Registration Statement on Form S-1 (or other appropriate Form) to be
filed by Pentegra in connection with its Initial Public Offering (including
the prospectus constituting a part thereof, the "Registration Statement").
Pentegra shall obtain all necessary state securities laws or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement and the Dentist shall furnish all information concerning
Dentist as may be reasonable requested in connection with any such action.
Dentist represents and warrants that none of the information or documents
supplied or to be supplied by it specifically for inclusion in the
Registration Statement, by exhibit or otherwise, will, at the time the
Registration Statement and each amendment or supplement thereto, if any,
becomes effective under the Securities Act of 1933, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Dentist shall
be entitled to review the Registration Statement and each amendment thereto,
if any, prior to the time each becomes effective under the Securities Act of
1933.
Dentist shall furnish Pentegra will all information concerning itself and
such other matters as may be reasonable requested by Pentegra in connection
with the preparation of the Registration Statement and each amendment or
supplement thereto, or any other statement, filing, notice or application
made by or on behalf of each such party or any of its subsidiaries to any
governmental entity in connection with the transactions contemplated by the
Other Agreements or this Agreement.
SECTION 7. PENTEGRA CONDITIONS PRECEDENT.
The obligations of Pentegra hereunder are subject to the fulfillment at
or prior to the Closing of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Dentist contained herein shall have been true and correct in all respects
when initially made and shall be true and correct in all respects as of the
Closing Date.
7.2 COVENANTS AND CONDITIONS. Dentist shall have performed and complied
with all covenants and conditions required by this Agreement to be performed
and complied with by Dentist prior to the Closing Date.
7.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
7.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of Dentist shall have occurred since the Balance Sheet Date.
7.5 DUE DILIGENCE REVIEW. By the Closing Date, Pentegra shall have
completed a due diligence review of the business, operations and financial
statements of Dentist, the Business and the Assets, the results of which
shall be satisfactory to Pentegra in its sole discretion.
7.6 APPROVAL BY THE BOARD OF DIRECTORS. This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of Pentegra or a committee thereof.
7.7 SERVICE AGREEMENT; GUARANTY AGREEMENT. The Practice and Pentegra
shall have executed and delivered a Service Agreement (the "Service
Agreement"), in substantially the form attached hereto as EXHIBIT 7.7,
pursuant to which Pentegra will provide management services to the Practice.
Dentist shall have executed and delivered a Guaranty Agreement in
substantially the form attached as EXHIBIT 4.10 of the Service Agreement
pursuant to which Dentist shall, among other things, guaranty the obligations
of the Practice under the Service Agreement.
7.8 EMPLOYMENT ARRANGEMENTS. Dentist shall have terminated his or her
employment agreement and executed an employment agreement ("Employment
Agreement") with the Practice in form and substance attached hereto as
EXHIBIT 7.8 and otherwise satisfactory to Dentist and Pentegra.
7.9 CONSENTS AND APPROVALS. Dentist shall have obtained all necessary
government and other third-party approvals and consents.
7.10 CLOSING DELIVERIES. Pentegra shall have received all documents,
duly executed in form satisfactory to Pentegra and its counsel, referred to
in SECTION 9.1.
7.11 DEBT AND RECEIVABLES. There shall be no indebtedness, receivables
or payables between Dentist and its affiliates and Dentist shall not have any
liabilities, including indebtedness, guaranties and capital leases, that are
not set forth on EXHIBIT 2.19.
7.12 INSURANCE. Dentist shall have named Pentegra as an additional
insured on its liability insurance program in accordance with SECTION 4.15.
7.13 NO CHANGE IN WORKING CAPITAL. There shall have been no material
change in the working capital of Dentist since the Balance Sheet Date.
7.14 SECURITIES APPROVAL. The Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC. At or prior to the date that the Registration Statement is declared
effective by the SEC, Pentegra shall have received all state securities and
"Blue Sky" permits necessary to consummate the transactions contemplated
hereby. The Pentegra Common Stock shall have been approved for listing on
Nasdaq or other exchange selected by Pentegra, subject only to official
notification of issuance.
SECTION 8. DENTIST'S CONDITIONS PRECEDENT.
The obligations of Dentist hereunder are subject to fulfillment at or
prior to the Closing of each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Pentegra contained herein shall have been true and correct in all respects
when initially made and shall be true and correct in all respects as of the
Closing Date.
8.2 COVENANTS AND CONDITIONS. Pentegra shall have performed and
complied with all covenants and conditions required by this Agreement to be
performed and complied with by Pentegra prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 CLOSING DELIVERIES. Dentist shall have received all documents, duly
executed in form satisfactory to Dentist and its counsel, referred to in
SECTION 9.2.
8.5 SECURITIES APPROVAL. The Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC. At or prior to the date that the Registration Statement is declared
effective by the SEC, Pentegra shall have received all state securities and
"Blue Sky" permits necessary to consummate the transactions contemplated
hereby. The Pentegra Common Stock shall have been approved for listing on
Nasdaq or other exchange selected by Pentegra, subject only to official
notification of issuance.
SECTION 9. CLOSING DELIVERIES.
9.1 DELIVERIES OF DENTIST. Within five business days after requested by
Pentegra, Dentist shall deliver to Pentegra the following, all of which shall
be in a form satisfactory to counsel to Pentegra and shall be held by Xxxxxxx
& Xxxxxx, L.L.P. (counsel for Pentegra) in escrow pending Closing, pursuant
to an escrow agreement or letter agreement in form and substance mutually
acceptable to the parties hereto:
(a) an executed original Service Agreement and executed originals
of all documents required by that agreement, including but not limited to the
Guaranty Agreement and security agreement referred to therein;
(b) executed Employment Agreements;
(c) a xxxx of sale conveying the Assets to Pentegra;
(d) an assignment of each contract, agreement and lease being
assigned to and assumed by Pentegra;
(e) certificates of Dentist dated as of the Closing Date, (i) as to
the truth and correctness of the representations and warranties of Dentist
contained herein; (ii) as to the performance of and compliance by Dentist
with all covenants contained herein; and (iii) certifying that all conditions
precedent of Dentist to the Closing have been satisfied;
(f) an opinion of counsel to Dentist opining as to the execution
and delivery of this Agreement and the other documents and agreements to be
executed pursuant hereto, the good standing and authority of Dentist, the
enforceability of this Agreement and the other agreements and documents to be
executed in connection herewith, and other matters reasonably requested by
Pentegra;
(g) non-foreign affidavits executed by Dentist;
(h) all authorizations, consents, approvals, permits and licenses
referred to in SECTIONS 2.3 and 2.4;
(i) an executed Registration Rights Agreement between Pentegra and
Dentist, in substantially the form attached hereto as EXHIBIT 9.1(l) (the
"Registration Rights Agreement"); and
(j) such other instruments and documents as reasonably requested by
Pentegra to carry out and effect the purpose and intent of this Agreement.
9.2 DELIVERIES OF PENTEGRA. On or before the Closing Date, Pentegra
shall deliver to Dentist the following, all of which shall be in a form
satisfactory to counsel to Dentist and shall be held by Xxxxxxx & Xxxxxx,
L.L.P. (counsel for Pentegra) in escrow pending Closing, pursuant to an
escrow agreement or letter agreement in form and substance mutually
acceptable to the parties hereto:
(a) the Acquisition Consideration;
(b) an executed Service Agreement;
(c) an assumption of each contract, agreement and lease being
assigned to and assumed by Pentegra;
(d) a copy of the resolutions of the Board of Directors of Pentegra
(or a committee thereof) authorizing the execution, delivery and performance
of this Agreement and all related documents and agreements each certified by
the Secretary as being true and correct copies of the original thereof;
(e) certificates of the President of Pentegra, dated as of the
Closing Date, (i) as to the truth and correctness of the representations and
warranties of Pentegra contained herein; (ii) as to the performance of and
compliance by Pentegra with all covenants contained herein; and (iii)
certifying that all conditions precedent of Pentegra to the Closing have been
satisfied;
(f) a certificate of the Secretary of Pentegra certifying as to the
incumbency of the directors and officers of Pentegra and as to the signatures
of such directors and officers who have executed documents delivered at the
Closing on behalf of Pentegra;
(g) certificates, dated within 30 days of the Closing Date, of the
Secretary of the State of Delaware establishing that Pentegra is in existence
and are in good standing to transact business in the State of Delaware and
the State of incorporation of Dentist;
(h) an opinion of counsel to Pentegra opining as to the execution
and delivery of this Agreement and the other documents and agreements to be
executed pursuant hereto, the good standing and authority of Pentegra, the
enforceability of this Agreement and the other agreements and documents to be
executed in connection herewith, and other matters reasonably requested by
Dentist;
(i) the executed Registration Rights Agreement; and
(j) such other instruments and documents as reasonably requested by
Dentist to carry out and effect the purpose and intent of this Agreement.
SECTION 10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
10.1 NATURE AND SURVIVAL. All statements contained in this Agreement or
in any Exhibit attached hereto, any agreement executed pursuant hereto, and
any certificate executed and delivered by any party pursuant to the terms of
this Agreement, shall constitute representations and warranties of Dentist or
of Pentegra, as the case may be. All such representations and warranties,
and all representations and warranties expressly labeled as such in this
Agreement shall survive the date of this Agreement and the Closing Date for a
period of five (5) years following the Closing Date, except that (i) the
representations and warranties with respect to environmental and medical
waste laws and health care laws and matters shall survive for a period of
fifteen (15) years and tax representations shall survive until one year after
the expiration of the applicable statute of limitations. Each party
covenants with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which
such survival period shall terminate. No party shall be entitled to claim
indemnity from any other party pursuant to SECTION 10.2 or 10.3 hereof,
unless such party has timely given the notice required in SECTION 10.2, 10.3
or 10.4 hereof, as the case may be. Each party hereby releases, acquits and
discharges the other party from any and all claims and demands, actions and
causes of action, damages, costs, expenses and rights of setoff with respect
to which the notices required by SECTION 10.2, 10.3 or 10.4, as applicable,
are not timely provided.
10.2 INDEMNIFICATION BY PENTEGRA. PENTEGRA (FOR PURPOSES OF THIS SECTION
10.2 AND, TO THE EXTENT APPLICABLE, SECTION 10.4, "INDEMNITOR"), SHALL
INDEMNIFY AND HOLD DENTIST AND ITS AGENTS AND EMPLOYEES (EACH OF THE
FOREGOING, INCLUDING DENTIST FOR PURPOSES OF THIS SECTION 10.2 AND, TO THE
EXTENT APPLICABLE, SECTION 10.4, AN "INDEMNIFIED PERSON"), HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ARISING FROM OR BY REASON OF OR
RESULTING FROM:
(A) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY, AGREEMENT
OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS HERETO) AND
EACH DOCUMENT, CERTIFICATE OR OTHER INSTRUMENT FURNISHED OR TO BE FURNISHED
BY INDEMNITOR HEREUNDER, AND
(B) AFTER THE CLOSING DATE, INDEMNITOR'S OWNERSHIP OF THE ASSETS, AND
(C) ANY LIABILITY UNDER THE SECURITIES ACT, THE EXCHANGE ACT OR ANY
OTHER FEDERAL OR STATE "BLUE SKY" OR SECURITIES LAWS OR REGULATION, AT COMMON
LAW OR OTHERWISE, ARISING OUT OF OR BASED UPON ANY UNTRUE STATEMENT OR
ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT RELATING TO PENTEGRA CONTAINED IN
ANY PRELIMINARY PROSPECTUS, THE REGISTRATION STATEMENT OR ANY PROSPECTUS
FORMING A PART THEREOF, OR ANY AMENDMENT THEREOF OR SUPPLEMENT THERETO,
ARISING OUT OF OR BASED UPON ANY OMISSION OR ALLEGED OMISSION TO STATE
THEREIN A MATERIAL FACT RELATING TO PENTEGRA REQUIRED TO BE STATED THEREIN OR
NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON
IS NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
10.3 INDEMNIFICATION BY DENTIST. DENTIST (FOR PURPOSES OF THIS SECTION
10.3
AND, TO THE EXTENT APPLICABLE, SECTION 10.4, "INDEMNITOR"), SHALL INDEMNIFY
AND HOLD PENTEGRA AND ITS AFFILIATES, OFFICERS, DIRECTORS, SHAREHOLDERS,
AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PENTEGRA, FOR PURPOSES
OF THIS SECTION 10.3 AND, TO THE EXTENT APPLICABLE, SECTION 10.4, AN
"INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES,
LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND EXPENSES
(INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF COUNSEL
THROUGH APPEAL) ARISING FROM OR BY REASON OF OR RESULTING FROM OR WITH
RESPECT TO:
(A) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY, AGREEMENT
OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS HERETO) AND
EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE FURNISHED
BY INDEMNITOR HEREUNDER,
(B) PRIOR TO AND AFTER THE CLOSING DATE, THE INDEMNITOR'S MANAGEMENT AND
CONDUCT OF THE BUSINESS AND OWNERSHIP OR OPERATION OF THE ASSETS, AND
(C) ANY ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS
AND INDEPENDENT CONTRACTORS IN OR ABOUT DENTIST'S BUSINESS WHETHER ON OR
AFTER THE CLOSING DATE,
(D) ANY VIOLATION BY DENTIST OR ITS CONSULTANTS, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR FEDERAL LAWS GOVERNING
HEALTHCARE FRAUD AND ABUSE, OR ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF
OR RESULTING FROM ACTIONS OF THE DENTIST RELATING TO CLAIMS SUBMITTED TO ANY
THIRD PARTY PAYOR, WHETHER ON OR AFTER THE CLOSING DATE,
(E) TAXES OF DENTIST OR ANY OTHER PERSON OR ENTITY RELATED TO OR
AFFILIATED WITH DENTIST ARISING FROM OR AS A RESULT OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT,
(F) ANY LIABILITY OF DENTIST FOR COSTS AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES) INCURRED IN CONNECTION WITH THE NEGOTIATION,
PREPARATION OF CLOSING OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH,
(G) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN LIABILITIES,
(H) ANY LIABILITIES THAT ARE NOT SET FORTH ON EXHIBIT 1.3(b), OR
(I) ANY LIABILITY UNDER THE SECURITIES ACT, THE EXCHANGE ACT OR ANY
OTHER FEDERAL OR STATE "BLUE SKY" OR SECURITIES LAWS OR REGULATION, AT COMMON
LAW OR OTHERWISE, ARISING OUT OF OR BASED UPON ANY UNTRUE STATEMENT OR
ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT RELATING TO DENTIST AND PROVIDED
TO PENTEGRA OR ITS COUNSEL BY THE DENTIST SPECIFICALLY FOR INCLUSION IN ANY
PRELIMINARY PROSPECTUS, THE REGISTRATION STATEMENT OR ANY PROSPECTUS FORMING
A PART THEREOF, OR ANY AMENDMENT THEREOF OR SUPPLEMENT THERETO, ARISING OUT
OF OR BASED UPON ANY OMISSION OR ALLEGED OMISSION TO STATE
THEREIN A MATERIAL FACT RELATING TO DENTIST REQUIRED TO BE STATED THEREIN OR
NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON
IS NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
10.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after Indemnified
Person receives written notice of the commencement of any action or other
proceeding in respect of which indemnification or reimbursement may be sought
hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own
defense of such action or proceeding if, in the reasonable opinion of counsel
to such Indemnified Person, (a) there are or may be legal defenses available
to such Indemnified Person or to other Indemnified Persons that are different
from or additional to those available to Indemnitor and which could not be
adequately advanced by counsel chosen by Indemnitor, or (b) a conflict or
potential conflict exists between Indemnitor and such Indemnified Person that
would make such separate representation advisable; provided, however, that in
no event shall Indemnitor be required to pay fees and expenses hereunder for
more than one firm of attorneys of Indemnified Person in any jurisdiction in
any one action or proceeding or group of related actions or proceedings.
Indemnitor shall not, without the prior written consent of any Indemnified
Person, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding to which such Indemnified
Person is a party unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Person from all liability arising
or potentially arising from or by reason of such claim, action or proceeding.
10.5 RIGHT OF SETOFF. In the event of any breach of warranty,
representation, covenant or agreement by Dentist giving rise to
indemnification under SECTION 10.3 or SECTION 10.4 hereof, Pentegra shall be
entitled to offset the amount of damages incurred by it as a result of such
breach of warranty, representation, covenant or agreement against any amounts
payable by Pentegra, including the amounts payable under the Service
Agreement.
SECTION 11. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by Pentegra if any representation or warranty of Dentist
contained in this Agreement or in any certificate or other document executed
and delivered by Dentist pursuant to this Agreement is or becomes untrue or
breached in any material respect or if Dentist fails to comply in any
material respect with any covenant or agreement contained herein, and any
such misrepresentation, noncompliance or breach is not cured, waived or
eliminated within twenty (20) days after receipt of written notice thereof;
(c) at any time by Dentist if any representation or warranty of Pentegra
contained in this Agreement or
in any certificate or other document executed and delivered by Pentegra
pursuant to this Agreement is or becomes untrue or breached in any material
respect or if Pentegra fails to comply in any material respect with any
covenant or agreement contained herein and such misrepresentation,
noncompliance or breach is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(d) by Pentegra or Dentist if the transaction contemplated hereby shall
not have been consummated by December 31, 1997; or
(e) by Pentegra at any time prior to the Closing Date if Pentegra
determines in its sole discretion as the result of its legal, financial and
operational due diligence with respect to Dentist, that such termination is
desirable and in the best interests of Pentegra.
SECTION 12. TRANSFER REPRESENTATIONS.
12.1 TRANSFER RESTRICTIONS. For a period of one year from the Closing
Date, Dentist shall not voluntarily (a) sell, assign, exchange, transfer,
encumber, pledge, distribute, appoint or otherwise dispose of (i) any shares
of Pentegra Common Stock received by such party hereunder, (ii) any interest
(including without limitation, an option to buy or sell) in any shares of
Pentegra Common Stock, in whole or in part, and no such attempted transfer
shall be treated as effective for any purpose or (b) engage in any
transaction, whether or not with respect to any shares of Pentegra Common
Stock or any interest therein, the intent or effect of which is to reduce the
risk of owning shares of Pentegra Common Stock. The certificates evidencing
the Pentegra Common Stock delivered to Dentist pursuant to the terms hereof
will bear a legend substantially in the form set forth below and containing
such other information as Pentegra may deem necessary or appropriate:
The shares represented by this certificate may not be voluntarily sold,
assigned, exchanged, transferred, encumbered, pledged, distributed,
appointed or otherwise disposed of, and the issuer shall not be required to
give effect to any attempted voluntary sale, assignment, exchange,
transfer, encumbrance, pledge, distribution, appointment or other
disposition prior to _________ [date that is one year from the Closing
Date]. Upon the written request of the holder of this certificate, the
issuer agrees to remove this restrictive legend (and any stop order placed
with the transfer agent) after the date specified above.
12.2 INVESTMENTS; COMPLIANCE WITH LAW. Dentist acknowledges that the
shares of Pentegra Common Stock to be delivered to Dentist pursuant to this
Agreement have not been and will not be registered under the Securities Act
of 1933 and may not be resold without compliance with the Securities Act of
1933. The Pentegra Common Stock to be acquired by Dentist pursuant to this
Agreement is being acquired solely for its own account, for investment
purposes only and with no present intention of distributing, selling or
otherwise disposing of it in connection with a distribution. Dentist
covenants, warrants and represents that none of the shares of Pentegra Common
Stock issued to it will be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except after full compliance with all of
the applicable provisions of the Securities Act, as amended, and the rules
and regulations of the Securities Exchange Commission and applicable state
securities laws and regulations. All certificates evidencing shares of
Pentegra Common Stock shall bear the following legend in addition to the
legend referenced in SECTION 12.1.
The shares represented hereby have not been registered under the Securities
Act of 1933 (the "Act") and may only be sold or otherwise transferred if
the holder hereof complies with the Act and applicable securities laws.
In addition, certificates evidencing shares of Pentegra Common Stock
shall bear any legend required by the securities or blue sky laws of any
state where Dentist resides.
12.3 ECONOMIC RISK; SOPHISTICATION. Dentist is able to bear the economic
risk of an investment in Pentegra Common Stock acquired pursuant to this
Agreement and can afford to sustain a total loss of such investment and has
such knowledge and experience in financial and business matters that they are
capable of evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect its own interests in connection with
the acquisition of the Pentegra Common Stock. Dentist and its
representatives have had an adequate opportunity to ask questions and receive
answers from the officers of Pentegra concerning any and all matters relating
to the background and experience of the officers and directors of Pentegra,
the plans for the operations of the business of Pentegra, and any plans for
additional acquisitions and the like. Dentist and its representatives have
asked any and all questions in the nature described in the preceding sentence
and all questions have been answered to their satisfaction. Dentist is an
"accredited investors" as defined in Regulation D of the Securities Act of
1933, as amended.
SECTION 13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Dentist recognizes
and acknowledges that it had in the past, currently have, and in the future
may possibly have, access to certain confidential information of Pentegra
that is valuable, special and unique assets of Pentegra's businesses.
Dentist agrees that it will not disclose such confidential information to any
person, firm, corporation, association or other entity for any purpose or
reason whatsoever, unless (i) such information becomes available to or known
by the public generally through no fault of Dentist, (ii) disclosure is
required by law or the order of any governmental authority under color of
law, provided, that prior to disclosing any information pursuant to this
clause (ii), Dentist shall, if possible, give prior written notice thereof to
the other parties hereto, and provide such other parties hereto with the
opportunity to contest such disclosure, (iii) Dentist reasonably believes
that such disclosure is required in connection with the defense of a lawsuit
against the disclosing party, or (iv) Dentist is the sole and exclusive owner
of such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by
Dentist of the provisions of this SECTION 13, Pentegra shall be entitled to
an injunction restraining Dentist from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
Pentegra from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages. The obligations of the
parties under this SECTION 13 shall survive the termination of this Agreement.
SECTION 14. MISCELLANEOUS.
14.1 TAX COVENANT. The parties intend that the transactions contemplated
by this Agreement, together with the transactions contemplated by the Other
Agreement and the Initial Public Offering, will qualify as an exchange
meeting the requirements of Section 351 of the Code. The tax returns (and
schedules thereto) of Dentist and Pentegra shall be filed in a manner
consistent with such intention and Dentist and Pentegra shall each provide
the other with such tax information, reports, returns or schedules as may be
reasonably required to assist the other in so reporting the transactions
contemplated hereby.
14.2 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand
delivery, or by facsimile AND overnight courier, to the parties hereto at the
following addresses, or at such other address as either party may advise the
other in writing from time to time:
If to Pentegra:
Pentegra Dental Group, Inc.
0000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: President
Facsimile: (000) 000-0000
with a copy of each notice directed to Pentegra to:
Xxxxx X. Xxxx, III, Esquire
Xxxxxxx & Xxxxxx, L.L.P.
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to Dentist:
To address set forth on EXHIBIT 14.2
with a copy to:
Person and address set forth on EXHIBIT 14.2
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
14.3 FURTHER ASSURANCES. Each party hereby agrees to perform any further
acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement.
14.4 EACH PARTY TO BEAR COSTS. Subject to SECTION 14.12, each of the
parties to this Agreement shall pay all of the costs and expenses incurred by
such party in connection with the transactions contemplated by this
Agreement, whether or not such transactions are consummated. Without
limiting the generality of the foregoing and whether or not such liabilities
may be deemed to have been incurred in the ordinary course of business,
Pentegra shall not be liable to or required to pay, either directly or
indirectly, any fees and expenses of legal counsel, accountants, auditors or
other persons or entities retained by Dentist for services rendered in
connection with negotiating and closing the transactions contemplated by this
Agreement or the documents to be executed in connection herewith, whether or
not such costs or expenses are incurred before or after the Closing Date.
14.5 PUBLIC DISCLOSURES. Each party shall keep this Agreement and its
terms confidential, and shall make no press release or public disclosure,
either written or oral, regarding the transactions contemplated by this
Agreement without the prior written consent of the other party, provided that
the foregoing shall not prohibit any disclosure (a) by press release, filing
or otherwise that Pentegra has determined in good faith judgment to be
required by Federal securities laws or the rules of the National Association
of Securities Dealers, (b) to attorneys, accountants, investment bankers or
other agents of the parties assisting the parties in connection with the
transactions contemplated by this Agreement, and (c) by Pentegra in
connection with the conduct of its Initial Public Offering and conducting an
examination of the operations and assets of Dentist.
14.6 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF INCORPORATION OF
Dentist AND APPLIED WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
14.7 CAPTIONS. The captions or headings in this Agreement are made for
convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
14.8 INTEGRATION OF EXHIBITS. All Exhibits attached to this Agreement
are integral parts of this Agreement as if fully set forth herein, and all
statements appearing therein shall be deemed disclosed for all purposes and
not only in connection with the specific representation in which they are
explicitly referenced.
14.9 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE
PARTIES, WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
HEREBY.
14.10 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts shall together constitute and be one and the
same instrument
14.11 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding on,
and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that Pentegra may assign its rights and delegate its
obligations hereunder to any entity that is an affiliate of Pentegra. For
purposes of this Agreement an "affiliate" of Pentegra shall include any
entity that, through one or more intermediaries is, controlled, controlled by
or under common control with, Pentegra. Upon any such assignment prior to
the Closing, all references herein to Pentegra (including those to Pentegra
Common Stock) shall be deemed to include references to the assignee and the
assignee's common stock. Notwithstanding any such assignment, Pentegra shall
not, absent a written release from Dentist, be relieved from its obligations
to Dentist under this Agreement.
14.12 COSTS OF ENFORCEMENT. In the event that Pentegra, on the one
hand, or Dentist, on the other hand, file suit in any court against any other
party to enforce the terms of this Agreement against the other party or to
obtain performance by it hereunder, the prevailing party will be entitled to
recover all reasonable costs, including reasonable attorneys' fees, from the
other party as part of any judgment in such suit. The term "prevailing party"
shall mean the party in whose favor final judgment after appeal (if any) is
rendered with respect to the claims asserted in the Complaint. "Reasonable
attorneys' fees" are those reasonable attorneys' fees actually incurred in
obtaining a judgment in favor of the prevailing party.
14.13 PRORATIONS. Dentist agrees to reimburse Pentegra at Closing a
pro rata portion of all taxes levied upon the Assets for the calendar year in
which the Closing occurs. Such taxes shall be estimated, apportioned and
pro-rated among Dentist and Pentegra as of the Closing Date, and the prorated
amount due Pentegra shall be credited to the cash portion of the Purchase
Consideration. Upon payment by Pentegra of such taxes actually assessed and
paid on the Assets, Pentegra shall calculate the apportionment of such taxes
and shall pay Dentist or may demand from Dentist, and Dentist agrees to pay,
the amount necessary to correct the estimate and proration made at Closing.
14.14 AMENDMENTS; WAIVERS. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions
hereof must be in writing, and signed by the parties hereto. The waiver of
any of the terms and conditions of this Agreement shall not be construed as a
waiver of any other terms and conditions hereof.
14.15 ARBITRATION. Upon the request of either Pentegra or the
Dentist (hereinafter referred to as a "Party"), whether made before or after
the institution of any legal proceeding, any dispute among the parties hereto
in any way arising out of, related to, or in connection with this Agreement
(hereinafter a "Dispute"), shall be resolved by binding arbitration in
accordance with the terms of this Section (hereinafter the "Arbitration
Program").
All Disputes between the Parties shall be resolved by binding arbitration
administered by the American Arbitration Association (the "AAA") in
accordance with the terms of this Arbitration Program, the Commercial
Arbitration Rules of the AAA. In the event of any inconsistency between this
Arbitration Program and those rules or statutes, then the terms of this
Arbitration Program shall control.
The parties hereto agree to adhere to all warranties and covenants (as
described herein) until such time as the arbitration process has been
completed and the arbitrators have determined each party's post-arbitration
obligations and responsibilities as it relates to such warranties and
covenants. No provision of, nor the exercise of any rights under, this
Arbitration Program shall limit the right of any Party at any time to seek or
use ancillary or preliminary judicial or non-judicial self help remedies for
the purposes of obtaining, perfecting, preserving, or foreclosing upon any
personal property in which there has been granted a security interest or lien
by a Party in the Documents. In Disputes involving indebtedness or other
monetary obligations, each Party agrees that the other Party may proceed
against all liable persons, jointly and severally against one or more of
them, without impairing rights against other liable persons. Nor shall a
Party be required to join the principal obligor or any other liable persons
(e.g., sureties or guarantors) in any proceeding against a particular person.
A Party may release or settle with one or more liable persons as the Party
deems fit without releasing or impairing rights to proceed against any
persons not so released. All statutes of limitation that would otherwise be
applicable shall apply to any arbitration proceeding.
The party seeking arbitration shall notify the other Party, in writing,
of that Party's desire to arbitrate a dispute; and each Party shall, within
twenty (20) days from the date such notification is received, select an
arbitrator, and those two arbitrators shall select a third arbitrator within
ten (10) days thereafter. The issues or claims in dispute shall be committed
to writing, separately stated and numbered, and each party's proposed answers
or contentions shall be signed below the questions. Failure by a party to
select an arbitrator within the prescribed time period shall serve as that
Party's acquiescence and acceptance of the other party's selection of
arbitrator. The arbitrators shall resolve all Disputes in accordance with the
applicable substantive law. Any Dispute shall be decided by a majority vote
of three arbitrators, unless the claim or amount in controversy does not
exceed $100,000.00, in which case a single arbitrator (who shall have
authority to render a maximum award of $100,000.00, including all damages of
any kind, costs and fees) may decide the Dispute. The arbitrators may grant
any remedy or relief that the arbitrators deem just and equitable and within
the scope of this Arbitration Program. The arbitrators may also grant such
ancillary relief as is necessary to make effective the award. In all
arbitration proceedings the arbitrators shall make specific and written
findings of fact and conclusions of law. In all arbitration proceedings in
which the amount in controversy exceeds $100,000.00, in the aggregate, the
Parties shall have in addition to the statutory right to seek vacation or
modification of any award pursuant to applicable law, the right to seek
vacation or modification of any award that is based in whole, or in part, on
an incorrect or erroneous ruling of law by appeal to an appropriate court
having jurisdiction; provided, however, that any such application for
vacation or modification of an award based on an incorrect ruling of law must
be filed in a court having jurisdiction over the Dispute within 15 days from
the date the award in rendered. The arbitrators' findings of fact shall be
binding on all Parties and shall not be subject to further review except as
otherwise allowed by applicable law.
To the maximum extent practicable, an arbitration proceeding hereunder
shall be concluded within 180 days of the filing of the Dispute with AAA.
Arbitration proceedings hereunder shall be conducted where agreed to in
writing by the Parties or, in the absence of such agreement in Phoenix,
Arizona or the headquarters of Pentegra if other than Phoenix, Arizona. The
provisions of this Arbitration Program shall survive any termination,
amendment, or expiration of the Documents, unless the Parties otherwise
expressly agree in writing making specific reference to this Arbitration
Program. To the extent permitted by applicable law, the arbitrator shall
have the power to award
recovery of all costs and fees (including attorney's fees, administrative
fees, and arbitrators' fees) to the prevailing Party. This Arbitration
Program may be amended, changed, or modified only by a writing which
specifically refers to this Arbitration Program and which is signed by all
the Parties. If any term, covenant, condition or provision of the
Arbitration Program is found to be unlawful or invalid or unenforceable, such
illegality or invalidity or unenforceable shall not affect the legality,
validity or enforceability of the remaining parts of this Arbitration
Program, and all such remaining parts hereof shall be valid and enforceable
and have full force and effect as if the illegal, invalid or unenforceable
part had not been included. Each Party agrees to keep all Disputes and
arbitration proceedings strictly confidential, except for disclosures of
information required in the ordinary course of business of the Parties or by
applicable law or regulation.
14.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu
of such provision, there shall be added automatically as part of this
Agreement, a provision as similar in its terms to such provision as may be
possible and be legal, valid and enforceable.
[End of Page]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PENTEGRA DENTAL GROUP, INC.
By: /s/ Xxxxx X. Xxxx, Xx.
------------------------------------
Its: Senior Vice President
------------------------------------
/s/ Xxxxxx Xxxxxx, D.D.S.
-------------------------------------------
Xxxxxx Xxxxxx, D.D.S.
INDEX TO EXHIBITS
Exhibit Description
------- -----------
Annex I Acquisition Consideration
A Target Companies
1.1 Assets
1.2(b) Excluded Assets
1.3(b) Assumed Liabilities
2.1 [intentionally omitted]
2.3 Permits and Licenses
2.4 Consents
2.8 Leases
2.10 Real and Personal Property; Encumbrances
2.12 Patents and Trademarks; Names
2.13 Payroll Information; Employment Agreements
2.15 Contracts (other than Leases and Employment Agreements)
2.16 Subsequent Events
2.19 Debt
2.20 Insurance Policies
2.21 Employee Benefit Plans
2.26 Banking Relations
2.28 Payors
7.7 Form of Service Agreement
7.8 Form of Employment Agreement
9.1(l) Form of Registration Rights Agreement
14.2 Addresses for Notice
