STOCK PURCHASE AGREEMENT
BY AND AMONG
DENTAL SOURCE OF MISSOURI AND KANSAS, INC.,
A MISSOURI CORPORATION,
SAFEGUARD HEALTH PLANS, INC.
A MISSOURI CORPORATION
AND
SAFEGUARD HEALTH ENTERPRISES, INC.
A DELAWARE CORPORATION,
THE SOLE SHAREHOLDER OF
SAFEGUARD HEALTH PLANS, INC.,
A MISSOURI CORPORATION
CLOSING DATE:
OCTOBER 1, 2001
EFFECTIVE DATE:
NOVEMBER 1, 2001
TABLE OF CONTENTS
1. Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase of Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Tender of Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Assumption of Certain Liabilities. . . . . . . . . . . . . . . . . . . . . . 4
2.4 Liabilities Not Assumed. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Closing; Effective Date; Further Assurances. . . . . . . . . . . . . . . . . . . . . . 6
3.1 Documents and Other Items to be Delivered by Shareholder and/or Company
at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Documents and Other Items to be Delivered by Purchaser at Closing. . . . . . 7
3.3 Documents and Other Items to be Delivered by Purchaser at the Effective
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Best Efforts to Deliver Stock and Company's Assets . . . . . . . . . . . . . 7
3.5 Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. Access and Information Prior to Effective Date . . . . . . . . . . . . . . . . . . . . 7
5. Representations and Warranties by Company and Shareholder. . . . . . . . . . . . . . . 8
5.1 Status of Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.5 Accounts Receivable; Prepaid Expenses and Deposits . . . . . . . . . . . . . 11
5.6 Real Property and Leaseholds; Equipment and Personal Property; Equipment and
Personal Property Leases; Liens. . . . . . . . . . . . . . . . . . . . . . . 11
5.7 Contracts; Other Agreements; Consents; Defaults. . . . . . . . . . . . . . . 12
5.8 ERISA and Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.9 No Illegal Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.10 Patents, Trademarks/Service Marks, Trade Names; Software Licenses. . . . . . 14
5.11 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.13 Operations in Conformity With Law. . . . . . . . . . . . . . . . . . . . . . 15
5.14 Violation of Other Instruments . . . . . . . . . . . . . . . . . . . . . . . 15
5.15 Governmental and Other Approvals and Filings . . . . . . . . . . . . . . . . 15
5.16 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.17 Inventories and Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.18 Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.19 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.20 Certain Transactions; Transactions with Affiliates . . . . . . . . . . . . . 17
5.21 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.22 Adequacy of Representations and Warranties . . . . . . . . . . . . . . . . . 18
5.23 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.24 Broker's or Finder's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.25 Ownership of Stock; Authorization. . . . . . . . . . . . . . . . . . . . . . 18
5.26 Agreements, Judgments and Decrees Affecting Shareholder. . . . . . . . . . . 19
5.27 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.28 Provider Agreements and Dental Policies. . . . . . . . . . . . . . . . . . . 19
5.29 Agents of Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.30 Computer Software, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.31 Commissions; Policies; Marketing Rights. . . . . . . . . . . . . . . . . . . 20
5.32 Complaint Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6. Representations and Warranties by Purchaser. . . . . . . . . . . . . . . . . . . . . . 20
6.1 Status of Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Authority for Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Brokers, Finders, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Statements True and Correct. . . . . . . . . . . . . . . . . . . . . . . . . 21
7. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8. Additional Agreements of the Parties.. . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1 Conduct of Business Prior to Effective Date. . . . . . . . . . . . . . . . . 21
8.2 Company Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.3 Acquisition Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.4 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.5 Required Regulatory Consents . . . . . . . . . . . . . . . . . . . . . . . . 23
8.6 Shareholder Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.7 Breach of Representation and Warranties. . . . . . . . . . . . . . . . . . . 23
8.8 No Transfers of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.9 Administrative Services Agreement. . . . . . . . . . . . . . . . . . . . . . 24
9. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 24
10. Indemnities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.1 Indemnities of Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.2 Indemnities of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.3 Certification of Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.4 Brokers, Finders, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.5 Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.6 Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11. Confidentiality; Non-Competition; Remedies.. . . . . . . . . . . . . . . . . . . . . . 27
11.1 Shareholder Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 27
11.2 Non-Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.4 Survival of Protective Covenants . . . . . . . . . . . . . . . . . . . . . . 28
11.5 Extension of Restricted Time Period. . . . . . . . . . . . . . . . . . . . . 29
11.6 Revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12. Conditions Precedent to Purchaser's Obligations. . . . . . . . . . . . . . . . . . . . 29
12.1 Representations and Warranties; Certificate. . . . . . . . . . . . . . . . . 29
12.2 Performance of Agreements; Certificate . . . . . . . . . . . . . . . . . . . 29
12.3 Absence of Errors and Omissions. . . . . . . . . . . . . . . . . . . . . . . 29
12.4 Certificates; Resolutions; Opinion . . . . . . . . . . . . . . . . . . . . . 30
12.5 No Actions; Proceedings or Injunctions . . . . . . . . . . . . . . . . . . . 30
12.6 Consents and Approvals of Partnership and Third Parties. . . . . . . . . . . 30
12.7 Approval of Proceedings; Documentation . . . . . . . . . . . . . . . . . . . 30
12.8 Absence of Material Adverse Changes. . . . . . . . . . . . . . . . . . . . . 30
12.9 Transaction Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.10 Absence of Natural Disasters . . . . . . . . . . . . . . . . . . . . . . . . 30
12.11 Release of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.12 Company Related-Party Transactions . . . . . . . . . . . . . . . . . . . . . 31
12.13 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.14 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.15 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.16 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.17 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.18 Administrative Services Agreement. . . . . . . . . . . . . . . . . . . . . . 31
13. Conditions Precedent to the Obligations of Company and Shareholder . . . . . . . . . . 31
13.1 Representations and Warranties; Certificate. . . . . . . . . . . . . . . . . 31
13.2 Performance of Agreements; Certificate . . . . . . . . . . . . . . . . . . . 32
13.3 Approval of Proceedings; Documentation . . . . . . . . . . . . . . . . . . . 32
13.4 No Actions, Proceedings or Injunctions . . . . . . . . . . . . . . . . . . . 32
13.5 Transaction Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.6 Absence of Errors and Omissions. . . . . . . . . . . . . . . . . . . . . . . 32
13.7 Consents and Approvals of Third Parties. . . . . . . . . . . . . . . . . . . 32
13.8 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.1 Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
14.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
16. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
17. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
18. Exhibits, Schedules, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
19. Successors and Assigns; Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . 34
20. Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
21. Knowledge and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
22. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
23. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
24. Severability; Modifications for Prospective Legal Events . . . . . . . . . . . . . . . 35
25. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
26. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
27. Effect of Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
28. Construction of Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 36
29. Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SCHEDULES
---------
2.3(a) Accounts Payable and Accrued Expenses to be Assumed
2.3(b) Other Executory Obligations to be Assumed
2.5 Excluded Assets
5.2 Subsidiaries
5.3 Company Financial Statements
5.4 Material Adverse Changes
5.5 Accounts and Notes Receivable; Prepaid Expenses and Deposits
5.6 Equipment and Personal Property; Equipment and Personal Property
Leases; Real Properties and Leaseholds; Liens
5.7 Contracts; Other Agreements; Consents; Defaults
5.8 ERISA and Employee Matters
5.10 Patents; Trademarks/Service Marks; Tradenames; Software Licenses; Etc.
5.12 Litigation
5.13 Violations of Law
5.14 Violations of Other Instruments
5.15 Permits and Approvals
5.16 Tax Matters
5.18 Guarantors
5.19 Employees and Compensation
5.20 Certain Transactions; Transactions with Affiliates
5.21 Environmental Matters
5.23 Books and Records
5.24 Broker's or Finder's Fees
5.27 Bank Accounts
5.28 Provider Agreements and Dental Policies
5.29 Agents of Company
5.30 Computer Systems
5.32 Complaint Procedures
EXHIBITS
--------
A Form of Stock Power and Assignment
B Form of Effective Date Certificate
C Form of Opinion of Company's and Shareholder's Counsel
Stock Purchase Agreement
This Stock Purchase Agreement (the "Purchase Agreement"), is dated effective as
of the date set forth below, by and among Dental Source of Missouri and Kansas,
Inc., a Missouri corporation ("Purchaser"), SafeGuard Health Plans, Inc., a
Missouri corporation ("Company") and SafeGuard Health Enterprises, Inc., a
Delaware corporation, ("Shareholder"), being the sole shareholder of the
Company.
R E C I T A L S:
A. Company is a prepaid dental plan corporation duly licensed and
operating in the state of Missouri.
B. Shareholder owns all the outstanding shares of Stock (as defined
below) of Company.
C. Shareholder desires to sell and Purchaser desires to purchase, the
Stock pursuant to this Purchase Agreement (the "Transaction").
D. It is the intention of the parties hereto that, upon consummation of
the transactions contemplated herein, Purchaser shall own all the outstanding
shares of stock of Company.
Now Therefore, in consideration of the mutual covenants and representations and
warranties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Defined Terms.
--------------
"Administrative Services Agreement" shall have that meaning ascribed to it
in Section 8.9 of this Purchase Agreement.
------------
"Affiliate" means (i) any corporation or organization of which such Person
is an officer, director or partner or is directly or indirectly the beneficial
owner of at least ten percent (10%) of the outstanding shares of any class of
equity securities or financial interest therein; (ii) any trust or other estate
in which such Person has a beneficial interest or as to which such Person serves
as trustee or in any similar fiduciary capacity; (iii) the mother father,
brother, sister, child or spouse of such Person, or of such Person's spouse; or
(iv) any Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, or is acting as
agent on behalf or, or as an officer or director of, such Person. As used in
this definition of affiliate, the term "control" (including the terms
"controlling", "controlled by" or "under common control with") means the
possession, direct or indirect, of the power to direct, cause the direction of
or influence the management and policies of a Person, whether through the
ownership of voting securities, by contract, through the holding of a position
as a director or officer of such Person, or otherwise.
"Base Balance Sheet" shall have that meaning ascribed to it in Section 5.3
-----------
of this Purchase Agreement.
"Cash Consideration" shall have that meaning ascribed to it in Section
-------
2.2(a) of this Purchase Agreement.
------
"Closing" shall have that meaning ascribed to it in Section 3 of this
---------
Purchase Agreement.
"Closing Date" shall have that meaning ascribed to it in Section 3 of this
---------
Purchase Agreement.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commonly Controlled Entity" shall have that meaning ascribed to it in
Section 5.8 of this Purchase Agreement.
------------
"Common Stock" means the Company's Common Stock, $.001 par value per share.
"Company Financial Statements" shall have that meaning ascribed to it in
Section 5.3 of this Purchase Agreement.
------------
"Determining Party" shall have that meaning ascribed to it in Section 10.3
------------
of this Purchase Agreement.
"Effective Date" shall have that meaning ascribed to it in Section 3 of
---------
this Purchase Agreement.
"Environmental Laws" shall have that meaning ascribed to it in Section 5.21
------------
of this Purchase Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" shall have that meaning ascribed to it in Section 2.5 of
-----------
this Purchase Agreement.
"GAAP" shall have that meaning ascribed to it in Section 22 of this
----------
Purchase Agreement.
"Geographic Area" shall have that meaning ascribed to it in Section 11.2 of
------------
this Purchase Agreement.
"Hazardous Materials" shall have that meaning ascribed to it in Section
-------
5.21 of this Purchase Agreement.
----
"Indemnifying Party" shall have that meaning ascribed to it in Section 10.3
------------
of this Purchase Agreement.
"Leases" shall have that meaning ascribed to it in Section 5.6 of this
-----------
Purchase Agreement.
"Legal Requirement" shall mean any federal, state, local or foreign law,
statute, standard, ordinance, code, order, rule, regulation, resolution,
promulgation, or any order, judgment or decree of any court, arbitrator,
tribunal or governmental authority, or any license, franchise, permit or similar
right granted under any of the foregoing, or any similar provision having the
force and effect of law. Legal Requirement shall include any law, statute or
regulation applicable to health maintenance organizations and/or prepaid dental
provider organizations.
"Liens" shall have that meaning ascribed to it in Section 5.6 of this
-----------
Purchase Agreement.
"Losses" shall have that meaning ascribed to it in Section 10.1 of this
------------
Purchase Agreement.
"Material Adverse Effect" shall have that meaning ascribed to it in Section
-------
5.3 of this Purchase Agreement.
---
"Note" shall have that meaning ascribed to it in Section 2.2(b) of this
--------------
Purchase Agreement.
"Permitted Encumbrances" shall have that meaning ascribed to it in Section
-------
5.6 of this Purchase Agreement.
---
"Person" shall include an individual, corporation, limited liability
company, partnership, limited partnership, joint venture, joint stock company,
firm, company, syndicate, trust, estate, association, governmental authority,
business organization or any other incorporated or unincorporated entity.
"Purchase Price" shall have that meaning ascribed to it in Section 2.2 of
-----------
this Purchase Agreement.
"Recent Financials" shall have that meaning ascribed to it in Section
-------
5.3(b) of this Purchase Agreement.
------
"Recipient Party" shall have that meaning ascribed to it in Section 10.5 of
------------
this Purchase Agreement.
"Related Party Transaction" shall have that meaning ascribed to it in
Section 12.12 of this Purchase Agreement.
--------------
"Restricted Time Period" shall have that meaning ascribed to it in Section
-------
11.2 of this Purchase Agreement.
----
"Securities Act" means the Securities Act of 1933, as amended.
"Stock" means collectively, the Company's Common Stock.
"Third Party Claims" shall have that meaning ascribed to it in Section 10.5
------------
of this Purchase Agreement.
"Transaction" shall have that meaning ascribed to it in Recital D of this
---------
Purchase Agreement.
"Transaction Documents" means, individually and collectively, this Purchase
Agreement and all of the documentation required to be delivered in connection
with this Purchase Agreement and/or contemplated by or related to this
Transaction.
2. Purchase of Stock.
-------------------
2.1 Tender of Stock. Subject to the terms and conditions of this
-----------------
Purchase Agreement and in reliance upon the representations, warranties and
covenants herein set forth, Purchaser hereby agrees to purchase from
Shareholder, and Shareholder hereby agrees to sell and deliver to Purchaser at
the Effective Date, all of the issued and outstanding Stock, free and clear of
any and all liens, claims, options, charges, pledges, security interests, voting
agreements or trusts, encumbrances, rights or restrictions of any nature.
Subject to the terms and conditions herein stated, the certificates representing
all of the Stock (or affidavits of Lost Securities) shall be tendered (at the
Effective Date) by Shareholder, to Purchaser, duly endorsed or accompanied by
stock power(s) (in the form attached hereto as Exhibit B duly executed in blank,
---------
by Shareholder with all necessary transfer tax and other revenue stamps, if any,
acquired at Shareholder's expense, affixed and canceled. Shareholder agrees to
cure any deficiencies with respect to the endorsement of the certificate(s)
representing the Stock owned by Shareholder or with respect to the stock power
accompanying any such certificate(s).
2.2 Purchase Price. The aggregate purchase price to be paid by
---------------
Purchaser to the Shareholders for the Stock (the "Purchase Price") shall be the
amount determined pursuant to the following formula: the aggregate total of
cash, cash equivalents and marketable securities of the Company less all accrued
----
or unaccrued liabilities of the Company as of the Effective Date as determined
pursuant to GAAP. The Purchase Price shall be paid by cashier's check or wire
transfer in immediately available funds to an account designated by Shareholder
in writing; provided, however, that such sums may be reduced to give effect to,
by way of example and not limitation, the payment of certain liabilities of
Company (not assumed by Purchaser) to be paid, as the parties may agree.
2.3 Assumption of Certain Liabilities. Notwithstanding the fact that
-----------------------------------
this Purchase Agreement involves the purchase of Stock, the parties hereby
acknowledge that the transactions contemplated by this Purchase Agreement do not
include the assumption of liabilities of Company by Purchaser (except to the
extent explicitly assumed by Purchaser pursuant to this Section 2.3). On the
-----------
terms and subject to the conditions set forth herein, and subject to Section
-------
2.3, from and after the Effective Date, Purchaser shall assume and satisfy or
---
perform when due only the following obligations and liabilities of Company which
occur in the ordinary course of business:
(a) The trade accounts payable, accrued expenses (excluding
accrued sick leave and ad valorem taxes), all un-filed claims of the dental
policies in force as of the Effective Date and any other liability associated
with such issued dental policies of Company described in Schedule 2.3(a)
---------------
attached to this Purchase Agreement.
2.4 Liabilities Not Assumed. Notwithstanding anything in this Purchase
-----------------------
Agreement to the contrary and notwithstanding the fact that this Purchase
Agreement involves the purchase of Stock, the parties hereby acknowledge that
Purchaser will not assume or perform any of liabilities or obligations not
specifically set forth on Schedule 2.3(a) or (b), including, but not limited to:
----------------------
(a) Any liability or obligation of Company and Shareholder for
federal, state, local or foreign taxes whether or not incurred prior to the
Effective Date;
(b) Any liability or obligation of Company and Shareholder for, or
in respect of, any loan, account payable or indebtedness to, or for the benefit
of, any Person controlling, controlled by or under common control with Company
and Shareholder;
(c) Any liability or obligation of Company and Shareholder arising
as a result of any legal or equitable action or judicial or administrative
proceeding initiated at any time in respect of anything done, suffered to be
done or omitted to be done on or prior to the Effective Date by Company and
Shareholder or any of their respective Affiliates, employees or agents;
(d) Any liability or obligation of Company and Shareholder
incurred in connection with the making or performance of this Purchase
Agreement;
(e) Any liability or obligation of Company and Shareholder for
taxes (including, but not limited to, noncompetition payments) based on or
measured by any income or gain realized upon the transfer of the Stock of the
Company hereunder;
(f) Any liability or obligation of Company and Shareholder arising
out of any "employee benefit plan," as such term is defined by ERISA,
established or maintained by Company or to which Company contributes or any
liability with respect to any pension or benefit plan of Company or the
termination of any such plan;
(g) Any liability or obligation of Company and Shareholder for
making payments of any kind (including as a result of this sale of Stock or as a
result of the termination of employment by Company of employees or other labor
claims) to employees of Company, including, but not limited to, any liabilities
or obligations of Company arising under or with respect to COBRA;
(h) Any liability or obligation of Company and Shareholder with
respect to any claims or actions arising under or relating to any Environmental
Laws, or related common law theories, including third party claims and any
liability or obligation for any penalties, fines, expenses, costs, losses,
claims or damages arising out of or resulting from any generation, storage,
treatment, handling, disposal or release of Hazardous Materials, in each case
arising out of or resulting from or relating to any acts, omissions, occurrences
or other events occurring on or prior to the Effective Date;
(i) Any liabilities or obligations of Company and Shareholder to
the extent that their existence or materiality constitutes or results in a
breach of a representation, warranty or covenant made by Company or Shareholder
to Purchaser under, or in connection with, this Purchase Agreement;
(j) Any liabilities or obligations of Company and Shareholder
under any leases, contracts, agreements, insurance policies, purchase orders and
commitments not listed on Schedules 2.3(a) and 2.3(b);
------------------------------
(k) Any liability for personal injury or property damage which
relates to the Company and relates to the period prior to the Effective Date or
any liability for personal injury or property damage which relates to any of
Company's other businesses, if any;
(l) Any liability under products liability, strict liability or
implied warranty claims relating to services rendered or products sold by
Company arising out of resulting from or relating to events occurring on or
prior to the Effective Date;
(m) Any liability under any theory for services rendered by
Company, its employees or its independent contractors (including, but not
limited to, taxes, penalties and interest) prior to the Effective Date;
(n) Any liability related to any automobiles;
(o) Any liability related to any real property (other than leasehold
interests) owned by Company and/or Shareholder;
(p) Any liability not specifically and expressly assumed pursuant
to Section 2.3 of this Purchase Agreement.
------------
2.5 Excluded Assets. Notwithstanding the fact that this Purchase
----------------
Agreement involves the purchase of Stock, the parties hereby acknowledge that
Company shall not sell, convey, assign, transfer or deliver to Purchaser, and
Purchaser shall not acquire (or make any payments or otherwise discharge any
liability or obligation of Company with respect to) those assets of Company
which are specifically described on Schedule 2.5 to this Purchase Agreement (the
------------
"Excluded Assets"). The Excluded Assets shall be conveyed to Shareholder by the
Company prior to or at the Effective Date.
3. Closing; Effective Date; Further Assurances. The Transaction Documents
---------------------------------------------
shall be executed at a closing ("Closing") to be held at such location, time or
date as is mutually agreed upon by the parties. The date on which the Closing
occurs shall be referred to as the "Closing Date." Subject to the fulfillment
of the conditions precedent specified in Sections 12 and 13, the Transaction
------------------
shall be effective at 12:00 a.m. on the 1st day of November, 2001 (the
"Effective Date").
3.1 Documents and Other Items to be Delivered by Shareholder and/or
-------------------------------------------------------------------
Company at Closing. At the Closing, in contemplation of the Effective Date,
--------------------
pursuant to this Purchase Agreement, Shareholder and/or Company, as applicable,
shall deliver, or cause to be delivered, to Purchaser the following:
(a) Such bills of sale, endorsements and assignments as are
necessary to vest in Purchaser good and valid title to all of the outstanding
Stock and Company's assets;
(b) The legal opinion required to be delivered pursuant to Section
-------
12.4(a);
-------
(c) Executed Transaction Documents (including Schedules); and
(d) Any other documentation required to be delivered under this
Purchase Agreement or otherwise reasonably requested to be delivered by
Purchaser that is necessary or appropriate to consummate the Transaction.
3.2 Documents and Other Items to be Delivered by Purchaser at Closing.
-------------------------------------------------------------------
At the Closing, in contemplation of the Effective Date, pursuant to this
Purchase Agreement, Purchaser shall deliver to Company or Shareholder, as the
case may be, the following:
(a) Executed Transaction Documents (including Schedules); and
(b) Any other documentation required to be delivered under this
Purchase Agreement or otherwise reasonably requested to be delivered by Company
or Shareholder that is necessary or appropriate to consummate the Transaction.
3.3 Documents and Other Items to be Delivered by Purchaser at the
-------------------------------------------------------------------
Effective Date. At the Effective Date and pursuant to this Purchase Agreement,
----------------
Purchaser shall deliver the Purchase Price to Shareholder.
3.4 Best Efforts to Deliver Stock and Company's Assets. Simultaneously
--------------------------------------------------
with such delivery, Company and Shareholder jointly and severally agree to use
their best efforts, and to take all action as may be reasonably necessary to,
put Purchaser in possession and operating control of all of the outstanding
Stock and Company's assets, respectively, free and clear of all liens or other
restrictions or encumbrances, including the obtaining of such oral or written
consents of third parties as may be reasonably necessary to effect the
foregoing.
3.5 Further Actions. At any time and from time to time after the
----------------
Closing and/or the Effective Date, at the request of Purchaser and without
further consideration, Company and Shareholder will execute and deliver such
other instruments of sale, transfer, conveyance, assignment and confirmation and
take such action as Purchaser may reasonably determine is necessary to transfer,
convey and assign to Purchaser, and to confirm Purchaser's title to, or interest
in, all of the outstanding Stock and Company's assets, respectively, to put
Purchaser in actual possession and operating control thereof and to assist
Purchaser in exercising all rights with respect thereto to which each is
entitled pursuant to the Transaction Documents, including, but not limited to,
any accounts receivable of the Company collected by Shareholder after the
Effective Date.
4. Access and Information Prior to Effective Date. From and after the
----------------------------------------------------
Closing Date and prior to the Effective Date, Company and Shareholder shall (i)
provide to Purchaser and its counsel, accountants and other representatives
reasonable access to all properties, books, contracts and records belonging to
Company and Shareholder, relating to the Company, the Stock and Company's assets
and liabilities; (ii) furnish to Purchaser all financial and operating
information and documentation relating to the Company as Purchaser may
reasonably request; and (iii) make available, upon the reasonable prior request
of Purchaser, the shareholders and employees of Company to confer with Purchaser
with respect to the business of Company. Purchaser shall exercise its rights
under this Section 4 in such a manner so as not to interfere unreasonably with
---------
the conduct of the Company and Shareholder of any other business. If the
transactions contemplated by this Purchase Agreement are not consummated,
Purchaser covenants and agrees to hold and shall cause its representatives to
hold for a period of two (2) years after the date of termination of this
Purchase Agreement all such information in strict confidence. Additionally,
Purchaser shall return and shall cause its representatives to return to Company
and Shareholder all such information.
5. Representations and Warranties by Company and Shareholder. Company and
-----------------------------------------------------------
Shareholder jointly and severally represent and warrant to Purchaser, as
follows:
5.1 Status of Company. Company is a corporation duly organized and
-------------------
validly existing under the laws of the State of Missouri and has all necessary
power and authority to carry on the business as now conducted and to own or
lease and operate its properties and assets. The authorized capital stock of
Company consists of 100,000 shares of Common Stock, $1.00 par value per share.
As of the Effective Date, there are 100,000 shares of Common Stock issued and
outstanding. All such outstanding shares have been duly authorized and validly
issued and are fully paid and non-assessable. There are no outstanding options,
warrants, rights, calls, commitments, conversion rights, rights of exchange,
plans or other agreements of any character providing for the purchase, issuance
or sale of any shares of the capital stock of Company, other than as
contemplated by this Purchase Agreement. Company has the power and authority to
enter into the Transaction Documents and to carry out Company's obligations
thereunder. The execution and delivery of the Transaction Documents to which
Company is a party and the consummation of the Transaction have been duly and
validly authorized by Company, and no other proceedings on the part of Company
are necessary to authorize the Transaction or the Transaction Documents. This
Purchase Agreement has been duly and validly executed and delivered by each of
Company and Shareholder, and constitutes the valid and binding agreement of each
of Company and Shareholder enforceable against each of them, in accordance with
its terms. Each Transaction Document to be executed and delivered at the
Closing and/or the Effective Date by Company or Shareholder will upon such
execution and delivery constitute the valid and binding agreement of Company and
Shareholder enforceable against each of them, in accordance with its terms.
5.2 Subsidiaries. Except as specified in Schedule 5.2 hereto, Company
------------ ------------
does not own directly or indirectly any shares of capital stock or other equity
interest in any corporation, partnership, association or other entity or
business enterprise. Company has no commitment to contribute to the capital of,
make loans to, or share the losses of, any enterprise.
5.3 Financial Information. Attached hereto as Schedule 5.3 are copies
---------------------- ------------
of the following financial statements (the financial statements described in
Sections 5.3(a), 5.3(b) and 5.3(c) being herein referred to as the "Company
--------------------------------------
Financial Statements"):
(a) Audited financial statements of Company for the last three (3)
years ended December 31, compiled by Company's independent public accountants,
and consisting of balance sheets, a statement of assets and liabilities arising
from cash transactions of Company and related statements of income,
shareholders' equity and cash flows for the years (including revenues collected
and expenses disbursed and shareholder's equity for such periods) then ended;
and
(b) Unaudited financial statements of Company for the interim
period beginning January 1, 2001, and ending with the Closing Date, certified by
Company's President and consisting of a balance sheet and the related statement
of income, shareholder's equity and cash flows and shareholder's equity for the
period then ended (the "Recent Financials").
(c) All statutory statements filed with the Missouri Department of
Insurance (including, but not limited to, certificate of authority renewals and
annual reports) for the last three (3) years ending December 31.
The Company Financial Statements referred to in Sections 5.3(a) and (b)
-----------------------
above have been prepared in accordance with GAAP, and such statements present
fairly the financial condition of Company, as of the respective dates thereof,
and the results of its operations and cash flows for the indicated periods.
Company has no material liabilities or other obligations of any kind or
nature, whether due or to become due, and whether accrued or contingent, that
are not reflected as a part of the Company Financial Statements included in
Schedule 5.3 hereto or in other Schedules or Exhibits to this Purchase
-------------
Agreement, other than liabilities incurred in the ordinary course of business,
since the date of the latest unaudited balance sheet included in the Company
Financial Statements referred to in Section 5.3(a) (the "Base Balance Sheet"),
--------------
which are permitted to be incurred by Company under Section 8.1 hereof
------------
(assuming, for purposes of this Section, that the provisions of Section 8.1 are
-----------
applied to the period beginning as of the date of the and ending with the
Effective Date). As used in this Purchase Agreement, any reference to any
event, condition, change, effect or development being a "Material Adverse
Effect" or having a "Material Adverse Effect" on or with respect to an entity
means that the occurrence or existence of any such event, condition, change,
effect or development has or is reasonably likely to have a materially adverse
effect on the condition (financial or otherwise), properties, assets,
liabilities (including contingent liabilities), business, results of operations
or prospects of such entity.
5.4 Absence of Certain Changes. Except as set forth in Schedule 5.4
----------------------------- ------------
hereto, since the date of the Base Balance Sheet, the Company has not:
(a) Undergone any change in the condition (financial or
otherwise), assets, liabilities, indebtedness, liens, operations,
capitalization, business or business prospects of Company, other than changes in
the ordinary course of business, none of which has had a Material Adverse Effect
on Company;
(b) Suffered any damage, destruction or loss (whether or not
covered by insurance) which has had, or could be expected to have, a Material
Adverse Effect on Company;
(c) Acquired or disposed of any assets or properties in any
transaction with any shareholder, director, officer, or salaried employee of
Company, or any of their relatives by blood or marriage, or, except in the
ordinary course of business, acquired, disposed of or leased any material assets
or properties in any transaction with any other Person;
(d) Entered into any transaction with any Person, other than in
the ordinary course of business;
(e) Granted to any shareholder, salaried employee or any class of
other employees any increase in compensation in any form (including any increase
in value of any benefits) in excess of the amount thereof in effect as of the
date of the Base Balance Sheet, or any severance or termination pay, or entered
into any employment agreement with any such shareholder or salaried or other
employee, except in the ordinary course of business in accordance with existing
personnel policies;
(f) Adopted, or amended in any material respect, any bonus,
profit-sharing, compensation, stock option, pension, retirement, deferred
compensation or other plan, agreement, trust fund or arrangement for the benefit
of any employees (whether or not legally binding);
(g) Suffered any strike or other labor trouble that has had a
Material Adverse Effect on its relations with its employees or been the subject
of any effort to reorganize its workforce, or any part thereof, into a
bargaining unit;
(h) Incurred any liability or obligation (whether absolute,
accrued, contingent or otherwise) other than in the ordinary course of business
or incurred any attorneys' fees, accounting fees, appraisal fees and consulting
fees (except in connection with the negotiation of the Transaction Documents and
the transactions contemplated thereby) or pledged or subjected any of its assets
to any lien, charge, security interest or any other encumbrance or restriction
(including liens arising by operation of law);
(i) Amended, changed or terminated, or suffered any amendment,
change or termination of, any material contract to which Company or Shareholder
is a party or by which their property is bound;
(j) Canceled or compromised any material debt or claim or waived
or released any material right or instituted, settled or agreed to settle any
litigation, action, proceeding or arbitration; or
(k) Permitted or made any dividend, distribution or other payment
to any Shareholder other than in the ordinary course of business.
There is no event or condition (other than activities of competitors in the
ordinary course of their business or the adoption, proposal or promulgation by
any governmental authority of any laws, rules or regulations applicable to the
health care industry generally) the existence or occurrence of which could have
a Material Adverse Effect on Company or Purchaser or the use of the Company's
assets as they were used prior to the Effective Date or are to be operated or
used by Purchaser subsequent to the Effective Date.
5.5 Accounts Receivable; Prepaid Expenses and Deposits. Schedule 5.5
---------------------------------------------------- ------------
hereto contains a correct and complete list of all accounts receivable and notes
receivable or other rights to receive payment owing to Company (and/or
Shareholder) including, but not limited to, all cash and/or other proceeds
arising from the collection of such receivables by Company from and after the
Effective Date. Such Accounts Receivable are evidenced by valid and enforceable
written invoices, contracts or other agreements. The form of all invoices,
contracts or other agreements executed or delivered in connection with the sale
and delivery of merchandise and/or services by Company are in compliance with
all applicable Legal Requirements, and Company has obtained all required
consents from appropriate governmental authorities before using such contracts
or agreements. All amounts paid or collected under such contracts or
agreements, which are required by applicable Legal Requirements, to be deposited
in trust or deposit accounts have been so deposited on a timely basis in
accordance with such Legal Requirements. All such trust and deposit accounts
have been established, funded and maintained in accordance with all applicable
Legal Requirements. Company's Accounts Receivable are fully collectible without
resort to legal proceedings or collection agencies, and are not subject to any
refunds or other adjustments, or any defenses, rights of setoff, assignments,
encumbrances, or conditions enforceable by third parties, except to the extent
they are reflected in Company's reserve for bad debts computed in accordance
with GAAP. Also set forth on Schedule 5.5 is a complete list of all of
-------------
Company's prepaid expenses, prepaid insurance, deposits and similar items.
5.6 Real Property and Leaseholds; Equipment and Personal Property;
-------------------------------------------------------------------
Equipment and Personal Property Leases; Liens. Schedule 5.6 contains a complete
--------------------------------------------- ------------
and correct list of all real properties and interests therein owned or leased by
Company, including, but not limited to all land (if any), structures,
improvements, parking facilities, leaseholds, rights to occupancy under any
leasehold interests, leasehold improvements and fixtures owned or leased by
Company. Schedule 5.6 also contains a complete and correct list of all tangible
------------
personal property owned or leased by Company, including, but not limited to, (i)
all of the machinery, equipment, vehicles, furniture (including office
furniture), furnishings, computer hardware and other computer equipment, tools,
instruments and other tangible personal property of Company; and (ii) all leases
of supplies, machinery, equipment, vehicles, furniture, furnishings, computer
hardware and other computer equipment, tools, instruments and other tangible
personal property of Company. Company has good and marketable title to all of
the real and all of the tangible and intangible personal properties owned by
Company (including Company's accounts receivable, inventories, contract rights
and other general intangibles), and valid leasehold interests in all real and
tangible personal property leased by Company, in each case free and clear of all
mortgages, liens, charges, encumbrances, easements, security interests or title
imperfections (collectively, "Liens") except (i) Liens for current taxes not due
and payable; (ii) Liens existing on December 31, 1998, securing indebtedness
reflected on Company's Recent Financials, which Liens are listed on Schedule
--------
5.6, and (iii) easements, rights of way and similar encumbrances on the real
---
estate leased by Company which do not, individually or in the aggregate,
materially and adversely affect the use and occupancy of the premises subject to
said leases (collectively, "Permitted Encumbrances"). Except as set forth on
Schedule 5.6, no other Liens exist.
-------------
Company has delivered to Purchaser prior to the Closing complete and
correct copies of all documents of title with respect to such real property
owned by it and of all title insurance policies with respect to the same, and of
all such leases of real property and personal property. Except as set forth on
Schedule 5.7, no consent or other agreement of any other Person is required for
-------------
the transfer and assignment to Purchaser of the Stock to be transferred
hereunder.
Company enjoys peaceful and undisturbed possession under all leases under
which it operates, which leases shall be conveyed to Purchaser (collectively,
the "Leases"). All such Leases are valid and subsisting with no default
existing thereunder on the part of any party thereto.
All buildings and improvements, and all machinery, instruments and
equipment contained therein and all operations conducted therein and all other
real property owned or leased by Company in connection with the operation of
Company and which are to be conveyed or leased to or otherwise used by Purchaser
comply in all material respects with all applicable building and zoning and
other laws, ordinances, regulations and permits in effect at the date hereof,
and the continuation of any such operation as currently conducted will not
result in the enforcement or the threat of enforcement of any such building and
zoning and other laws, ordinances, regulations and permits as in effect on the
date of this Purchase Agreement.
Except as set forth on Schedule 5.6 to this Purchase Agreement, all
-------------
structures and other improvements located on such real properties and all such
tangible personal property reasonably necessary to the conduct of the business
of Company as currently conducted are in good operating condition in all
material respects for property of its type and age, subject to ordinary wear and
tear.
The Company's assets constitute all of the assets (other than the Excluded
Assets) used by Company in the conduct of its business on the date hereof, and
such assets comprise all assets required for the continued conduct of the
business by Purchaser as now being conducted.
5.7 Contracts; Other Agreements; Consents; Defaults. Schedule 5.7
--------------------------------------------------- -------------
contains a complete and correct list as of the date hereof of all contracts,
agreements and commitments of Company of the following types (which are not
otherwise set forth on Schedule 5.29 to this Purchase Agreement), written or
-------------
oral, to which Company is a party or by which Company or any of its property is
bound as of the date hereof: (i) notes, loans, credit agreements and
instruments relating to the borrowing of money by or an extension of credit to
Company; (ii) sales agency, representative or broker agreements; (iii)
agreements, orders or commitments for the purchase by Company of supplies or
finished products exceeding $1,000.00 or that are not required to be performed
by the vendor in thirty (30) days; (iv) agreements or commitments for capital
expenditures in excess of $1,000.00 for any single project; (v) leases, joint
venture agreements, management agreements, stock purchase agreements,
acquisition agreements, pledge agreements, notes, severance agreements and all
other agreements or obligations material to Company; (vi) all other material
agreements, contracts and commitments of Company, excluding employment
agreements, which will be terminated at or prior to Closing; and (vii) all
purchase orders.
Except as set forth on Schedule 5.7 attached to this Purchase Agreement, no
------------
consent or other agreement of any other Person is required for the transfer and
assignment to Purchaser of the Stock to be transferred hereunder, including, but
not limited to, the Leases, and the contracts, agreements and commitments of
Company set forth on Schedule 5.7, or, if required, all such consents and
-------------
agreements have been, or prior to the Effective Date will be duly obtained by
Company and copies of such consents and agreements shall be supplied to
Purchaser on or before the Effective Date.
Company has delivered or made available to Purchaser complete and correct
copies of all written contracts, agreements and commitments listed on Schedule
--------
5.7, together with all amendments thereto, and accurate descriptions of all oral
---
agreements listed in Schedule 5.7. Such contracts, agreements and commitments
------------
are in full force and effect and constitute the legal, valid and binding
obligations of the parties thereto; enforceable in accordance with their
respective terms. Except as disclosed in Schedule 5.7, all parties to such
------------
agreements, contracts and commitments have in all material respects performed
all obligations required to be performed by them to date and are not in default.
In the judgment of Company, no agreement, contract or commitment to which
Company is a party or by which any of its property is bound has a Material
Adverse Effect on Company. Company has no outstanding powers of attorney,
except routine powers of attorney relating to representation before governmental
agencies.
5.8 ERISA and Employee Matters. Except as described on Schedule 5.8
----------------------------- ------------
attached to this Purchase Agreement, Company maintains no pension, retirement,
deferred compensation, bonus, stock purchase, stock option, profit sharing,
insurance or other employee benefit or welfare plan, agreement, arrangement or
informal understanding for the benefit of employees or partners, whether or not
legally binding. Except as set forth on Schedule 5.8, neither Company nor any
------------
other entity, whether or not incorporated, which is deemed to be under common
control (as defined in Section 414 of the Code or 4001(b) of ERISA), with
Company ("Commonly Controlled Entity") maintains or contributes to any employee
pension benefit plan (as defined in Section 3(2) of ERISA) that is a defined
contribution plan described in Section 3(34) of ERISA or Section 414(i) of the
Code, or that is a defined benefit plan described in Section 3(35) of ERISA or
Section 414(j) of the Code, and, with respect to which, there exists any
liability of Company for (i) any premium payments due under Section 4007 of
ERISA; or (ii) any unpaid minimum funding contributions described in Section 412
of the Code or Section 302 of ERISA. Neither Company nor any Commonly
Controlled Entity sponsors or sponsored, or maintains or maintained, any defined
benefit plan (described in the immediately preceding sentence) that has been, or
will be, terminated in a manner that would result in any liability of Company to
the Pension Benefit Guaranty Corporation or that would result in the imposition
of a lien on any assets of Company pursuant to Section 4068 of ERISA. At no
time during the five (5) consecutive year period immediately preceding the first
day of the year in which the Effective Date occurs has Company or any Commonly
Controlled Entity participated in or contributed to any multi-employer plan
defined in Section 4001(a)(3) of ERISA, or Section 414(f) of the Code, nor
during such period has Company or any Commonly Controlled Entity had an
obligation to participate in or contribute to any such multi-employer plan.
Except as set forth on Schedule 5.8, (a) Company is not obligated under any
------------
agreement or other arrangement pursuant to which compensation or benefits will
become payable as a result of the consummation of the transactions contemplated
in this Purchase Agreement; (b) neither Company nor any of its employees or
agents has, with respect to any employee benefit plan (as defined in Section
3(3) of ERISA) that is or has been established by or contributed to, or with
respect to which costs or liabilities are accrued by, Company, engaged in any
conduct that would result in any material taxes or penalties on prohibited
transactions under Section 4975 of the Code or under Section 502(i) or 502(l) of
ERISA or in breach of fiduciary duty liability under Section 409 of ERISA; (c)
no actions, investigations, suits or claims with respect to the fiduciaries,
administrators or assets of any such employee benefit plan (other than routine
claims for benefits) are pending or, to the best of Company's and Shareholder's
knowledge, threatened; (d) none of the Company's welfare benefit plans (as
defined in Section 3(1) of ERISA) provides for or promises retiree medical,
disability or life insurance benefits to any current or former employee of
Company, other than "continuation coverage" required under the Consolidated
Omnibus Budget Reconciliation Act of 1985; and (e) all plans, policies, programs
or arrangements of Company or any Commonly Controlled Entity which are subject
to Section 4980B of the Code have been and are in compliance with the
requirements of Section 4980B of the Code and Part 6 of Title I of ERISA.
5.9 No Illegal Payments. Company has, with respect to its business, at
-------------------
no time made any illegal payments for political contributions or made or
received any bribes, illegal kickback payments or other illegal payments.
5.10 Patents, Trademarks/Service Marks, Trade Names; Software Licenses.
------------------------------------------------------------------
Set forth on Schedule 5.10 is a complete list of all patents, patent
--------------
applications, trade secrets and processes and proprietary properties, trade
names, trademarks, service marks, customer and supplier lists, software programs
and know-how licenses, service marks and trademark and service xxxx applications
and other intangible property and rights of Company. Company owns or possesses
adequate rights to use, all patents, trade names, trademarks, service marks,
copyrights, inventions, processes, designs, formulas, trade secrets, know-how
and proprietary interests and rights reasonably necessary for the conduct of its
business, with no known conflict with or infringement of the asserted rights of
others. The right to the exclusive use of the name "SafeGuard" and "SafeGuard
Health Plans" is not transferred as a result of this Purchase Agreement and
Shareholder hereby retains the exclusive right in perpetuity to use the name of
"SafeGuard" and "SafeGuard Health Plans" and all derivations thereof.
Shareholder and SafeGuard covenant that they have not granted, and will not
grant, to any other person, firm or corporation the right to use, and that
Shareholder will not grant the use of such names as part of the corporate or
firm name of any other firm, entity, corporation or business. If Purchaser has
not merged Company into Purchaser, Purchaser shall, within sixty (60) days of
the Closing, change the name of Company to a name that does not interfere with
Seller's exclusive use of such name or derivations thereof.
5.11 Intentionally Omitted
----------------------
5.12 Litigation. Except as described in Schedule 5.12 attached to this
---------- -------------
Purchase Agreement, there are no judicial or administrative actions, suits,
proceedings or investigations pending or, to the best of Company's and
Shareholder's knowledge, threatened, (i) the occurrence or existence of which
could result in a Material Adverse Effect on Company or the Company's assets;
(ii) the occurrence or existence of which could materially interfere with any
part of the operations of Company or the Company's assets; or (iii) that
question the validity of any Transaction Document or of any action taken or to
be taken pursuant to or in connection with the provisions of any Transaction
Document, nor do any of Company or Shareholder know of any basis for any such
action, suit, proceeding or investigation. Company is subject to no labor
dispute or, to the best of Company's and Shareholder's knowledge, organization
attempt. There are no citations, fines or penalties heretofore assessed against
Company or Shareholder under any federal, state or local law relating to air or
water pollution, solid, liquid or hazardous waste disposal or other
environmental protection matters, or relating to occupational health or safety,
that remain unpaid, and no such citations, fines or penalties have been assessed
or threatened within the three (3) years preceding the date hereof, or are now
being threatened, nor are there any administrative actions, suits, proceedings
or investigations with respect to such matters pending or threatened (other than
with respect to rule making and other proceedings of general application), nor
any basis therefor. Neither Company nor any Shareholder is subject to any
ruling, order, decree, judgment or writ entered by any court, agency or other
authority, nor has in the past been subject to any of the same.
5.13 Operations in Conformity With Law. Except as set forth in
-------------------------------------
Schedule 5.13, the operations of Company, as conducted now or at any time during
--------------
the past three (3) years, were not and are not in violation of, nor is Company
in default under, any Legal Requirement or Insurance Law, whether heretofore or
now in effect or, to the knowledge of Company and Shareholder, currently
proposed to be in effect, where any such violation or default could have a
Material Adverse Effect on Company. Neither Company nor any Shareholder is
aware of any basis on which the operations of Company, when conducted as
currently proposed to be conducted after the Effective Date, would be held so to
violate or to give rise to any such default.
5.14 Violation of Other Instruments. Except as set forth in Schedule
-------------------------------- --------
5.14 attached to this Purchase Agreement, the execution and delivery of this
----
Purchase Agreement and other Transaction Documents and the consummation and
performance of the transactions contemplated hereby and thereby will not
conflict with or result in any violations of or defaults under any provisions of
Company's articles of incorporation or by-laws or, in any material respect,
conflict with or result in any violation of or default with respect to any
mortgage, indenture, lease, agreement, understanding or other instrument,
permit, concession, grant, franchise, license, judgment, statute, law,
ordinance, rule, regulation, order (naming Company and/or Shareholder
specifically) or decree (naming Company and/or Shareholder specifically),
applicable to Company or Shareholder. Such execution, delivery, performance and
consummation will not accelerate the maturity of or otherwise modify the terms
of any indebtedness of Company, or accelerate the time for performance of any
material obligation of Company under any contract or instrument, or result in
the creation of any lien, charge, encumbrance or security interest upon any of
the property or assets of Company (including the Company's assets), or give rise
to any right of termination of any agreement.
5.15 Governmental and Other Approvals and Filings. Schedule 5.15
------------------------------------------------- --------------
attached to this Purchase Agreement, hereto sets forth a list of (and copies of)
all franchises, licenses and permits issued by governmental authorities, which
will be required to continue the business after the Effective Date. Company
possesses such franchises, licenses, permits and other authority as are
necessary for the conduct of its business (as currently conducted and proposed
to be conducted) and is not in default nor, to the best of the Company's and
Shareholder's knowledge, subject to any inquiry in any material respect under
any of such franchises, licenses, permits or other authority, except for such
failures to possess, such defaults, and such inquiries the existence or
occurrence of which could not, individually or in the aggregate, have a Material
Adverse Effect on Company or its business. Except as set forth in Schedule
--------
5.15, neither the execution and delivery of this Purchase Agreement, nor the
----
consummation of the transactions contemplated hereby, will alter or impair any
of such rights. A true, correct and complete list of all such governmental
licenses, permits, franchises and other authorizations is set forth on Schedule
--------
5.15, and a true, correct and complete copy of each such license, permit,
----
franchise and authorization shall be delivered by Company to Purchaser on or
prior to the Effective Date. Company, in its conduct of the business, has
during the past five (5) years timely filed all reports, statements, documents,
registrations, filings or submissions required to be filed by it with any
federal, state, county, local or other governmental department, commission,
board, bureau, agency or other. In addition, Company shall timely file all
reports, statements, documents, registrations, filings or submissions required
to be filed by it with any federal, state, county, local or other governmental
department, commission, board, bureau, agency or other instrumentality, which
are required to be filed prior to the Effective Date. All such filings made
were in compliance with all applicable Legal Requirements.
5.16 Tax Matters. Company has duly and timely filed all tax returns
------------
that are required to have been filed by it, including, but not limited to: all
federal, state, county, foreign, excise, franchise, property, severance payroll,
income, capital stock, premium, and sales and use. All such returns are true,
correct and complete in all material respects as filed, were prepared in good
faith and in accordance with all applicable tax rules and regulations and, to
the extent Company is subject to taxation, Company has paid or made adequate
provision for the payment of all taxes that are shown thereon to have become due
pursuant thereto, and has paid or made adequate provision for the payment of all
other taxes, assessments and other governmental charges imposed by law upon it
or any of its properties, assets, income, receipts, payrolls, transactions,
capital, net worth or franchises which have become due, and no taxes due as of
the date hereof have not been paid. Except as set forth on Schedule 5.16, the
-------------
federal and state income tax returns of Company have not been audited by any
governmental authority, and Company has received no notice of deficiency or
assessment of additional taxes. Except as set forth on Schedule 5.16, Company
-------------
is a party to no action or proceeding by any governmental authority for
assessment or collection of taxes with respect to the Company's assets or its
business. Except as set forth on Schedule 5.16, Company has granted no waiver
-------------
of any statute of limitation with respect to, or any extension of a period for
the assessment of, any federal, state, local or foreign tax. Except as set
forth on Schedule 5.16, no deficiency assessment or proposed adjustment of
--------------
Company's federal, state, local or foreign taxes is pending and, except for
taxes incurred by Company in the ordinary course of business allocable to the
period from January 1, 2001, to the Closing Date and/or the Effective Date,
Company and Shareholder have no knowledge of any proposed liability for any tax
to be imposed upon its properties, assets or business for which there is not an
adequate reserve reflected in Company's Recent Financials. Company has
heretofore furnished Purchaser with true and correct copies of Company's federal
and state income tax returns for the years 1997 through 2000.
5.17 Inventories and Supplies. All supplies and inventories of Company
------------------------
reflected on the Company's Financial Statements consist of items, in the case of
inventory, of a quality, quantity and condition suitable for sale at prevailing
market prices (without discounts other than those customary in the business in
which Company is engaged), or, in the case of supplies, usable in the normal
course of Company's business; and the values at which such inventories and
supplies are reflected on the Company's Recent Financials, at no more than the
lower of cost or market.
5.18 Guarantors. Except as set forth on Schedule 5.18 attached to this
---------- -------------
Purchase Agreement, there are no guarantors of any liability or obligation of
Company, and Company has not entered into any guaranty of any liability or
obligation of any other party.
5.19 Compensation. Company has delivered to Purchaser a true and
------------
complete list (a copy of which is attached as Schedule 5.19 of this Purchase
-------------
Agreement) of all of its employees engaged in connection with Company as of the
Effective Date, which list states the rate of compensation (including all
employee benefits), accrued vacation and sick leave, the positions held by the
persons listed and the duration of their employment or engagement by Company.
Also set forth on Schedule 5.19 is a list of all employment agreements and
--------------
independent contractor agreements to which Company is party.
5.20 Certain Transactions; Transactions with Affiliates. Except as set
--------------------------------------------------
forth in Schedule 5.20 attached to this Purchase Agreement, none of Shareholder,
-------------
shareholders or salaried employees of Company, or any relative by blood or
marriage, Affiliate or associate of any of the foregoing, is currently a party
to any transaction with Company (other than for services as employees),
including, without limitation, any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from, any
such Person, or any corporation, partnership, trust or other entity in which any
such Person has a substantial interest or is an officer, director, trustee, or
partner, or any officer, director or employee of such an entity.
5.21 Environmental Matters. Except to the extent described in
----------------------
reasonable detail on Schedule 5.21 attached to this Purchase Agreement, Company
-------------
is not in violation of any existing federal, state or local law, statute or
regulation, or any existing decree, order, arbitration award, or any license or
permit issued by any federal, state or local governmental authority relating to
pollution or protection of the environment (the "Environmental Laws"),
including, without limitation, Environmental Laws relating to (i) treatment,
storage, disposal, generation and transportation of pollutants or contaminants,
toxic or hazardous substances, or solid or hazardous waste regulated under
Environmental Laws ("Hazardous Materials"); (ii) air, water and noise pollution;
(iii) ground water contamination; (iv) the release or threatened release into
the environment of Hazardous Materials; (v) the protection of wildlife, marine
sanctuaries and wetlands; (vi) the protection of natural resources; (vii)
storage tanks, vessels and related equipment; (viii) abandoned or discarded
barrels, containers and other closed receptacles; (ix) health and safety of
employees and other persons; and (x) otherwise relating to the manufacture,
processing, use, distribution, treatment, storage, disposal, transportation or
handling of Hazardous Materials. There are no written notices or written
complaints which Company has received in the last two (2) years of any violation
of the Environmental Laws. To the best of Company's and Shareholder's
knowledge, Company has obtained and continues to possess all permits, licenses,
approvals or other authorizations under the Environmental Laws which are
material to the operation of the Company and any other business as now conducted
by Company and has filed such timely and complete renewal applications as may be
required prior to the Effective Date. Company has complied with all material
reporting and recordkeeping requirements applicable to Company and any other
business as now conducted under the Environmental Laws. Except as disclosed on
Schedule 5.21 attached to this Purchase Agreement, neither Company nor any
--------------
Shareholder has in any manner constituting a violation of any applicable laws
(i) generated, released, stored, used, discharged or disposed of any Hazardous
Materials at, on, under, in or about, or in any other manner affecting, the
properties of Company; or (ii) transported or caused to be transported any
Hazardous Materials to or from such properties. Except to the extent described
in reasonable detail on Schedule 5.21 attached hereto, there have been no
--------------
events, conditions, circumstances, activities, practices, incidents, actions or
plans (i) which may prevent continued compliance by Company with the
Environmental Laws or which may give rise to any criminal or civil liability on
the part of Company or Purchaser under the Environmental Laws; and (ii) which
could have a Material Adverse Effect on Company or the Company's assets.
5.22 Adequacy of Representations and Warranties. None of the
----------------------------------------------
warranties and representations made by Company and Shareholder herein or in the
Exhibits, Schedules or other documents related thereto, nor the Company
Financial Statements nor any certificate or memorandum furnished or to be
furnished by Company or on behalf of Company, contains or will contain any
untrue statement of fact or omits or will omit to state a fact necessary in
order to make the statements contained herein or therein not misleading, and all
representations and warranties of Company and Shareholder herein contained shall
be true on and as of the Closing Date and the Effective Date with substantially
the same effect as if made on and as of such date.
5.23 Books and Records. The corporate records of Company contain
-------------------
accurate records of all required meetings of, and corporate actions or written
consents by, Shareholder and the Board of Directors of Company. The originals
of all corporate records will be delivered to Purchaser at the Closing. The
material books and records of Company including, but not limited to, all
accounting records, files, invoices, customer lists and supply lists have been
provided to Purchaser, and a complete and accurate list of same is set forth on
Schedule 5.23 attached hereto. Except as set forth in Schedule 5.23 attached
-------------- -------------
hereto, Company does not have any material records, systems, controls, data or
information recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not, including all means of access
thereto and therefrom) which are not under the exclusive ownership of, and
accessible by, Company.
5.24 Broker's or Finder's Fees. Except as set forth on Schedule 5.24,
-------------------------- -------------
all negotiations relating to this Purchase Agreement and the transactions
contemplated hereby have been carried on without intervention of any Person
acting on behalf of Shareholder or Company and no Person is, or will be,
entitled to any commission or broker's or finder's fees from Company or
Shareholder. The parties agree that all fees due to the broker as outlined in
Schedule 5.24 shall be paid by Purchaser at the Closing.
--------------
5.25 Ownership of Stock; Authorization. Shareholder individually is
------------------------------------
the lawful owner of 100,000 shares of Stock, free and clear of all liens,
encumbrances, restrictions and claims of every kind. Such number constitutes
all shares of Company so owned beneficially or of record by Shareholder.
Shareholder possesses full authority and legal right to sell, transfer and
assign to Purchaser the entire legal and beneficial ownership of the Stock, free
and clear of all encumbrances. Shareholder acquired the Stock in a transaction
that fully complied with the provisions of all applicable securities laws.
There are no claims pending or, to Company's or Shareholder's knowledge,
threatened against Company or Shareholder that concern or affect title to any of
the Stock, or that seek to compel the issuance of Stock or other securities of
Company. Shareholder (i) hereby consents to the transactions contemplated by
this Purchase Agreement; (ii) has full legal right, power and authority to enter
into this Purchase Agreement and to sell the shares of Stock so owned by
Shareholder pursuant to this Purchase Agreement. The delivery to Purchaser of
the Stock owned by Shareholder pursuant to the provisions of this Purchase
Agreement will transfer to Purchaser valid title thereto, free and clear of all
liens, encumbrances, restrictions and claims of every kind. This Purchase
Agreement constitutes a legal, valid and binding obligation of Shareholder,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally, and by legal and equitable
limitations on the availability of specific remedies.
5.26 Agreements, Judgments and Decrees Affecting Shareholder.
------------------------------------------------------------
Shareholder represents and warrants that Shareholder is not subject to any
agreement, judgment or decree adversely affecting Shareholder's right to act as
an owner, officer, director or employee of Company.
5.27 Bank Accounts. Set forth on Schedule 5.27 attached hereto, is an
-------------- -------------
accurate and complete list showing the name and address of each bank in which
Company has an account or safe deposit box, the number of any such account or
any such box and the names of all persons authorized to draw thereon or to have
access thereto.
5.28 Provider Agreements and Dental Policies. Attached hereto as
-------------------------------------------
Schedule 5.28 is a list (together with a copy of each "form") of (i) all
--------------
contracts, contract certificates and contract amendments issued to any enrollee
or group enrollee of the Company; and (ii) all contracts made or to be made
between any provider of dental health care services and the Company. All such
contracts issued, assumed, or entered into by Company and now in force are, to
the extent required under applicable Legal Requirements, on forms approved by
the insurance regulatory authority of the state or jurisdiction where such
policies or contracts were issued or have been filed with, and not objected to,
by such authority within the period provided for objection. All providers have
been properly credentialed in accordance with all Legal Requirements.
5.29 Agents of Company. Set forth on Schedule 5.29 attached hereto, is
----------------- -------------
an accurate and complete list showing the name and address of each agent that
solicits contracts on behalf of the Company. All such agents are registered
with the insurance regulatory authority of the state or jurisdiction where such
agent solicits contracts.
5.30 Computer Software, Etc. Except as set forth on Schedule 5.30 to
------------------------ -------------
this Purchase Agreement, Seller has the right to use, free and clear of any
royalty or other payment obligations, claims of infringement or other liens, all
computer software, programs and similar systems owned by or licensed to Seller
or used in the conduct of the business of the Facilities, including, without
limitation, those intellectual properties and such computer software, programs
and similar systems disclosed on Schedule 5.30 to this Purchase Agreement; and
-------------
Seller is not in conflict with or in violation or infringement of, nor has
Seller received any notice of any conflict with or violation or infringement of
or any claims of conflict with any asserted rights of any other Person with
respect to any intellectual property or any computer software, programs or
similar systems, including without limitation any of such items disclosed on
Schedule 5.30 to this Purchase Agreement, and to the knowledge of Seller, no
--------------
other Person is in conflict with or in violation or infringement of any such
items of intellectual property or computer software, programs or similar
systems. Except as set forth on Schedule 5.30 to this Purchase Agreement,
--------------
Purchaser will, subsequent to the Closing, without further action or the payment
of additional fees, royalties or other compensation to any Person, be entitled
to unrestricted use of all computer software programs and similar systems
currently used in the business, including, without limitation, those set forth
on Schedule 5.30 to this Purchase Agreement.
--------------
Seller represents and warrants that Seller's computer systems including,
but not limited to, all hardware, software, firmware, third party software and
goods with computer chips (the "Computer Systems") are Year 2000 Compliant
through the year 2030. This representation and warrant shall survive any
warranty expiration period or termination of this Purchase Agreement. Year 2000
Compliant means the Computer Systems will: (i) function without interruption or
human intervention with four digit year processing on all Date Data, including
errors or interruptions from functions which may involve Date Data from more
than one century or leap years, regardless of the date of processing or date of
Date Data; (ii) provide results from any operation accurately reflecting any
Date Data used in the operation performed, with output in any form, except
graphics, having four digit years; (iii) accept two digit year Date Data in a
manner that resolves any ambiguities as to century in a defined manner and will
interpret dates from a prior century; and (iv) provide data interchange in the
ISO 8601:1988 standard of CCYYMMDD. For purposes of this Section 5.30, "Date
------------
Data" shall mean any data, input, calculation, output or stored data, which
includes an indication of date.
5.31 Commissions; Policies; Marketing Rights. Shareholder further
------------------------------------------
represents and warrants that Company is the owner, free and clear of any liens
or security interests, of all of the prepaid dental insurance policies,
marketing rights and commissions due and payable under such policies. At the
Effective Date, there shall be no commissions due or payable by Company to
Shareholder or any other employee, agent or third party.
5.32 Complaint Procedures. Attached hereto as Schedule 5.32 is (i) a
--------------------- -------------
copy of Company's procedures for review and mediation of complaints of enrollees
concerning the quality of care rendered by a participating dentist; or (ii) the
written document submitted to the insurance regulatory authority of the state or
jurisdiction where such policies or contracts were issued to enrollees agreeing
to utilize the services of a peer review committee of a state, district or local
dental society.
6. Representations and Warranties by Purchaser. Purchaser represents and
----------------------------------------------
warrants as follows:
6.1 Status of Purchaser. Purchaser is a limited partnership duly
---------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to carry on its business as
now conducted.
6.2 Authority for Purchase Agreement. Purchaser has all necessary
-----------------------------------
corporate power and authority to execute and deliver this Purchase Agreement and
the other Transaction Documents to which it is a party and to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Purchase Agreement and the other Transaction Documents to which it is a party
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by the Board of Directors of Purchaser, and no other
corporate action (including, but not limited to, shareholder approval) is
legally required to be taken or obtained by Purchaser to duly authorize the
execution, delivery and performance of this Purchase Agreement and the other
Transaction Documents to which it is a party and the transactions contemplated
hereby and thereby. Each of this Purchase Agreement and the other Transaction
Documents to which it is a party constitutes the valid and legally binding
obligation of Purchaser and is enforceable against Purchaser in accordance with
its terms except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditor's rights generally or the availability of
equitable remedies. The execution and delivery of this Purchase Agreement and
the other Transaction Documents to which it is party and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
any violation of or default under any provision of the Certificate of
Incorporation or Bylaws of Purchaser or in any violation of or default with
respect to any mortgage, indenture, lease, agreement or other instrument,
permit, concession, grant, franchise, license, judgment, order, decree, and to
the knowledge of Purchaser any statute, law, ordinance, rule or regulation
applicable to Purchaser or Company or Shareholder. Such execution, delivery and
consummation will not accelerate the maturity of or otherwise modify the terms
of any indebtedness of Purchaser or result in the creation of any lien, charge,
encumbrance or security interest upon any of the property or assets of
Purchaser.
6.3 Brokers, Finders, Etc. Except as set forth in Schedule 5.24, all
----------------------- -----------
negotiations relating to this Purchase Agreement and the transactions
contemplated hereby have been carried on without the intervention of any Person
acting on behalf of Purchaser in such manner as to give rise to any valid claim
against Purchaser, Company or Shareholder for any brokerage or finder's
commission, fee or similar compensation. The parties agree that all fees due to
the broker as outlined in Schedule 5.24 shall be paid by Purchaser at the
--------------
Closing.
6.4 Statements True and Correct. All representations and warranties of
---------------------------
Purchaser herein contained shall be true on and as of the Closing Date and the
Effective Date with substantially the same effect as if made on and as of such
date.
7. Expenses. Each of the parties hereto shall assume and bear all expenses,
--------
costs and fees incurred or assumed by such party in the preparation and
execution of the Transaction Documents, the consummation of the Closing and/or
through the Effective Date hereunder and compliance with the terms and
provisions hereof, whether or not the transactions herein provided shall be
consummated.
8. Additional Agreements of the Parties.
----------------------------------------
8.1 Conduct of Business Prior to Effective Date. During the period
-----------------------------------------------
from and after the Closing Date and until the Effective Date:
(a) Company and Shareholder will carry on Company's business in
substantially the same manner as heretofore carried on and will not make any
purchase or sale, incur any indebtedness or liens, or introduce any method of
management or operation in respect to such business or otherwise engage in any
transaction except in the ordinary course of business and in the manner not
inconsistent with prior practice (including, but not limited to, the accelerated
collection of accounts receivable, the delay in the payment of accounts payable
and/or the incurrence of any indebtedness) and the terms of this Purchase
Agreement other than with the prior written consent of Purchaser;
(b) Neither Company nor Shareholder will permit any change to be
made in the Articles of Incorporation or Bylaws of Company other than with the
prior written consent of Purchaser;
(c) Neither Company nor Shareholder will acquire or dispose of any
capital asset having an initial cost or current value in excess of $1,000.00
other than with the prior written consent of Purchaser;
(d) Neither Company nor Shareholder will increase the compensation
payable or to become payable to any of its shareholders, directors, employees or
agents other than with the prior written consent of Purchaser;
(e) Neither Company nor Shareholder will set aside, permit or make
any dividend or distribution or other payment of any kind to any Shareholder of
the Company (other than compensation in the ordinary course of business
consistent with past practices); or
(f) Neither Company nor Shareholder will take, or permit or suffer
to be taken, any action, which is represented and warranted in Section 5.4 not
-----------
to have occurred since the date of the Base Balance Sheet, other than with the
prior written consent of Purchaser.
8.2 Company Tax Returns. Shareholder shall be responsible for, and
---------------------
shall timely complete, as applicable, all "stub period" tax returns/reports for
Company, including, but not limited to, fourth quarter 940, annual 941,
imputation of income to Shareholder for forgiveness of debt and include on W-2s,
completion and issuance of W-2s, completion and issuance of W-3s, completion and
issuance of 1099s, completion and filing of all state and federal income tax
reports and all tax filings relative to payroll accounts for employees and for
independent contractors and termination of all third party payroll contracts, if
any (including preparation of all tax filings relative to such services).
8.3 Acquisition Proposals. Shareholder shall not, and shall not permit
---------------------
Company to directly or indirectly (i) solicit, initiate, encourage or otherwise
cooperate in any way with any inquiries or Acquisition Proposals from any Person
or (ii) participate in any discussions or negotiations regarding, furnish to any
Person other than Purchaser or its representatives any information with respect
to, or otherwise assist, facilitate, encourage or otherwise cooperate in any way
with any Acquisition Proposal by any other Person. "Acquisition Proposal" means
any proposal for a merger, consolidation or other business combination involving
Company or for the acquisition or purchase of any equity interest in, or a
material portion of the assets of Company. Shareholder shall promptly
communicate to Purchaser the terms of any such written acquisition proposal that
they may receive or any written inquiries made to any of them or Company or any
of its directors, officers, representatives or agents.
8.4 Public Announcements. Except as mutually agreed, prior to the
---------------------
Effective Date, neither Purchaser, Shareholder, nor any of their respective
Affiliates or agents shall issue any press release or public announcement
regarding the execution of this Purchase Agreement or the transactions
contemplated hereby.
8.5 Required Regulatory Consents. The parties shall take all necessary
----------------------------
steps and use their best efforts to obtain as promptly as possible, the approval
of any regulatory agency having or asserting jurisdiction to approve the
Transaction as may be necessary. Receipt of the regulatory approvals shall be a
condition precedent to the Effective Date, and neither party shall be required
to close in the absence of such approvals. The required approvals shall be in
writing and shall be in the form and content acceptable to Purchaser, and shall
contain or impose any restrictions or conditions not provided for herein.
8.6 Shareholder Release. Subject to the effectiveness of the
--------------------
Transaction, Shareholder for himself and his heirs, successors, and assigns,
hereby releases, relinquishes, and forever discharges in full the Company,
Purchaser and the Company's and Purchaser's, legal representatives,
subsidiaries, successors, assigns, officers, directors, affiliates, agents, and
employees (the "Released Parties") from any and all claims, demands,
liabilities, obligations, actions, and causes of action of every kind
whatsoever, known or unknown, that Shareholder has or may have, or that
subsequently accrue in Shareholder's favor, against the Released Parties, which
is based upon or relates to any transaction effected or event occurring or
agreement, commitment, arrangement or state of facts existing on or prior to the
Effective Date, or that is attributable to any period ending on or prior to the
Effective Date, or to any action taken or omitted to be taken during any such
period (except as expressly provided in this Purchase Agreement). Shareholder
acknowledges that the Company, by accepting this release, does not admit to any
fault, liability, or damage, all of which are expressly denied by the Company.
8.7 Breach of Representation and Warranties. Promptly upon either
-------------------------------------------
Shareholder or Company becoming aware of any breach of any of the
representations and warranties of Company or Shareholder contained in this
Purchase Agreement and made as of the date hereof, or any event which would
cause Company or Shareholder to be unable to deliver the certificates
contemplated by Section 12.1 of this Purchase Agreement, Company and Shareholder
------------
shall give detailed written notice thereof to Purchaser and shall use their best
efforts to prevent or promptly remedy the same.
8.8 No Transfers of Shares. Unless and until this Purchase Agreement
------------------------
shall have been terminated in accordance with its terms for any reason,
Shareholder shall not directly or indirectly exchange, deliver, assign, pledge,
encumber or otherwise transfer or dispose of any shares of capital stock of
Company owned beneficially or of record by Shareholder, nor shall Shareholder
directly or indirectly grant any right of any kind to acquire, dispose of, vote
or otherwise control in any manner any such shares of capital stock of the
Company; provided that a transfer to the executor or administrator of
Shareholder upon the death of such Shareholder shall not be deemed prohibited by
this Section 8.11 as long as such executor or administrator on behalf of the
-------------
estate of Shareholder shall be bound by all of the provisions of this Purchase
Agreement to the same extent as Shareholder.
8.9 Administrative Services Agreement. Shareholder and Purchaser shall
---------------------------------
enter into an Administrative Services Agreement, whereby Purchaser shall provide
benefits to those members of Shareholder who reside in Missouri and Kansas based
upon Shareholder's contracts that arise outside the States of Missouri and
Kansas (the "Administrative Services Agreement").
9. Survival of Representations and Warranties. All representations and
----------------------------------------------
warranties of Company and Shareholder and Purchaser contained herein (including
all Schedules and Exhibits hereto) or in any document, statement, certificate or
other instrument referred to herein or delivered at the Effective Date in
connection with the transactions contemplated hereby shall survive any
investigation made by or on behalf of any of the above parties and shall survive
the execution and delivery of this Purchase Agreement, the Closing and the
Effective Date and the sale of Stock contemplated hereby and shall remain in
full force and effect for a period of three (3) years after the Effective Date;
provided, however, that the representations and warranties of Company and
Shareholder set forth in Section 5.1 shall survive indefinitely and the
------------
representations and warranties contained in Sections 5.16 and 5.23 shall survive
----------------------
until the expiration of any and all applicable statutes of limitation periods.
10. Indemnities.
-----------
10.1 Indemnities of Shareholder. For the benefit of Purchaser in
----------------------------
connection with any claim or right arising from any covenant, warranty or
representation made by Company or Shareholder in this Purchase Agreement, in any
Transaction Document or in any Exhibit, Schedule, statement, list, certificate
or other document delivered to Purchaser in connection with the Closing and/or
the Effective Date, Shareholder hereby agrees to indemnify and hold harmless
Purchaser and Company after the Effective Date and each of their respective
partners, directors, officers and Affiliates ("Purchaser Indemnified Parties")
against and in respect of the following (hereinafter called a "Loss" or
"Losses") in accordance with the terms and conditions of this Section 10.
----------
(a) Any and all liabilities or obligations of, or claims against,
Purchaser Indemnified Parties of any nature, whether accrued, absolute,
contingent or otherwise arising out of or relating to (i) any contract, lease,
agreement, purchase order, insurance policy or commitment of the Company
existing on the Effective Date that is not listed or described pursuant to
Section 2.3; or (ii) the operation of Company's business prior to the Effective
-------
Date;
(b) Any damage or deficiency that results from (i) the inaccuracy
of any representation or warranty made by Company or Shareholder herein or in
any Transaction Document (including all Schedules and Exhibits hereto or
thereto); (ii) any breach, non-fulfillment or non-compliance of any covenant,
agreement or obligation to be performed or observed by Company or Shareholder
under this Purchase Agreement; or (iii) any misrepresentation in or omission
from any list, document, statement, certificate or other instrument furnished or
to be furnished by Company or Shareholder in connection with the Closing and/or
the Effective Date to Purchaser under this Purchase Agreement, in each case
whether or not such inaccuracy, breach, non-fulfillment, misrepresentation or
omission should have been known by Purchaser on the Closing and/or the Effective
Date, it being the agreed intention of the parties that Shareholder shall be
completely responsible for, and Purchaser shall be conclusively deemed to have
relied upon, such representations, warranties, agreements and instruments;
(c) Any and all claims, losses, expenses, damages, costs,
obligations and liabilities resulting from or arising out of any and all
liabilities and obligations of or claims against Company and Shareholder not
expressly assumed by Purchaser pursuant to the terms of this Purchase Agreement,
including, but not limited to, any matter set forth in Section 2.3;
------------
(d) Without limiting the generality of Section 10.1(c) above, any
---------------
and all claims, obligations, damages, losses, liabilities, costs and expenses
(i) arising under any Environmental Laws or related common law theories
including third-party claims; or (ii) arising out of or relating to claims by
third parties (including, but not limited to, any governmental authority or
agency) based upon the generation, storage, treatment, disposal or release of
Hazardous Materials, in each case arising on or prior to the Effective Date,
including, but not limited to, the claims described in Schedule 5.12 hereto, in
-------------
each case except to the extent attributable to or based on acts or omissions of
Purchaser;
(e) Any and all claims, losses, expenses, damages, reasonable
costs, obligations, and liabilities (i) resulting from Company's or
Shareholder's failure to obtain any consents required to be obtained to convey
the Stock, including, but not limited to, the lease(s) for Company's premises,
as required by Section 12.6; or (ii) arising out of or resulting from Company's
------------
or Shareholder's failure to satisfy on or before the Effective Date any of the
conditions set forth in Section 12 of this Purchase Agreement; and/or
-----------
(f) Any and all claims, actions, suits, proceedings, demands,
assessments, judgments, costs, liabilities, obligations, losses, damages and
expenses, including, without limitation, attorneys' fees, incident to any of the
foregoing.
10.2 Indemnities of Purchaser. For the benefit of Shareholder in
--------------------------
connection with any claim or right arising from any covenant, warranty or
representation made by Purchaser in this Purchase Agreement, in any Transaction
Document or in any Exhibit, Schedule, statement, list, certificate or other
document delivered to Shareholder in connection with the Closing and/or the
Effective Date, after the Effective Date Purchaser hereby agrees to indemnify
and hold harmless Shareholder against and in respect of the following
(hereinafter called a "Loss" or "Losses") in accordance with the terms and
conditions of this Section 10.2:
-------------
(a) Any damage or deficiency that results from (i) the inaccuracy
of any representation or warranty made by Purchaser herein or in any Transaction
Document (including all Schedules and Exhibits hereto or thereto); (ii) any
material breach, non-fulfillment or non-compliance of any covenant, agreement or
obligation to be performed or observed by Purchaser under this Purchase
Agreement; or (iii) any misrepresentation in or omission from any list,
document, statement, certificate or other instrument furnished or to be
furnished by Purchaser in connection with the Closing and/or the Effective Date
to Company or Shareholder under this Purchase Agreement, in each case whether or
not such inaccuracy, breach, non-fulfillment, misrepresentation or omission
should have been known by Company or Shareholder on the Closing and/or the
Effective Date, it being the agreed intention of the parties that Purchaser
shall be completely responsible for, and Company and Shareholder shall be
conclusively deemed to have relied upon, such representations, warranties,
agreements and instruments;
(b) Any and all claims, losses, expenses, damages, reasonable
costs, obligations and liabilities resulting from or arising out of Purchaser's
failure to satisfy on or before the Effective Date any of the conditions set
forth in Section 13 of this Purchase Agreement; and or
-----------
(c) Any and all claims, actions, suits, proceedings, demands,
assessments, judgments, reasonable costs, liabilities, obligations, losses,
damages and expenses, including, without limitation, reasonable attorneys' fees,
incident to any of the foregoing.
10.3 Certification of Losses. If a party (the "Determining Party") is
------------------------
of the opinion that any Loss has occurred or will or may occur, the Determining
Party shall so notify the other party (the "Indemnifying Party"), and each such
notice shall specify the circumstances of such asserted Loss. Notwithstanding
the provisions of Section 10 providing for the survival of certain of the
-----------
Indemnifying Party's representations and warranties for a certain period after
the Effective Date, the indemnification obligations of the Indemnifying Party
hereunder shall survive until the later to occur of (i) the expiration of any
and all applicable statutes of limitation periods; or (ii) the applicable
situation has been resolved (without liability on the part of the Determining
Party) with respect to any actual or threatened Loss as to which the Determining
Party has notified the Indemnifying Party in accordance with the provisions of
this Section 10.3.
-------------
10.4 Brokers, Finders, Etc. Except as set forth in Section 5.24 and
----------------------- ------------
Section 6.3, each of Purchaser, Company and Shareholder agree to indemnify and
----------
hold harmless the other parties from and against any liability, fees or expenses
incurred by the indemnified parties in connection with any brokerage or
investment banking fees of the indemnifying party.
10.5 Third Party Claims. In the event any claim is made, suit is
--------------------
brought or tax audit or other proceeding instituted against a party (the
"Recipient Party") which involves or appears reasonably likely to involve a Loss
(a "Third Party Claim"), the Recipient Party will, promptly after receipt of
notice of any such claim, suit or proceedings for which indemnification may be
sought, notify the Indemnifying Party of the commencement thereof. The failure
to so notify the Indemnifying Party of the commencement of any such claim, suit
or proceeding will relieve the Indemnifying Party from liability under this
Section 10, unless and to the extent that such failure materially adversely
-----------
affects the ability of the Indemnifying Party to defend its/their interests in
such claim, action or proceedings.
The Indemnifying Party will have the right (at such party's expense) to
defend the Recipient Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Recipient Party so long as (i) the
Indemnifying Party notifies the Recipient Party in writing within thirty (30)
days after the Recipient Party has given notice of the Third Party Claim that
the Indemnifying Party will, to the fullest extent provided in this Section 10,
----------
indemnify and hold harmless the Recipient Party from and against any Loss which
the Recipient Party may suffer resulting from, arising out of, relating to, in
the nature of, or caused by, the Third Party Claim; (ii) the Indemnifying Party
provides the Recipient Party with evidence reasonably acceptable to the
Recipient Party that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification obligations
hereunder; (iii) the Third Party Claim does not seek an injunction or other
equitable relief that could have a Material Adverse Effect on the Recipient
Party; (iv) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith and reasonable opinion of the Recipient
Party, likely to establish a precedential custom or practice adverse to the
continuing business interests of the Recipient Party; and (v) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently.
So long as the Indemnifying Party is conducting the defense of the Third
Party Claim in accordance with this Section 10, (i) the Recipient Party may
----------
retain separate co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim; (ii) the Recipient Party will not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed; and (iii) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Recipient Party, which consent shall not be unreasonably withheld
or delayed.
In the event any of the above conditions is or becomes unsatisfied,
however, (i) the Recipient Party may defend against, and consent to the entry of
any judgment or enter into any settlement with respect to, the Third Party Claim
in any manner it may deem appropriate (provided that the Recipient Party shall
not, except at their own respective cost, make any settlement with respect to
any such Third Party Claim without the prior consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed); and (ii) the
Indemnifying Party will remain responsible for any Loss that the Recipient Party
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent provided in this Section
-------
10. It is understood and agreed that in situations where failure of the
--
Recipient Party to settle a Third Party Claim expeditiously could have a
Material Adverse Effect on the Recipient Party, failure of the Indemnifying
Party to act upon the Recipient Party's request for consent to such settlement
within ten (10) business days of receipt by the Indemnifying Party of notice
thereof from the Recipient Party shall be deemed to constitute consent by the
Indemnifying Party of such settlement for purposes of this Section 10.
-----------
10.6 Limitations. Except for claims by Purchaser against Company (i)
-----------
for any and all taxes payable by Company (which Company fails to pay); (ii)
regarding compliance with applicable bulk sales laws; and (iii) regarding real
property leases, as a condition precedent to the right of Purchaser to be
indemnified hereunder, such right shall not accrue, and neither the Purchaser
shall be entitled to assert any claim for indemnification pursuant to the terms
hereof unless and until the aggregate amount of all Losses shall exceed
$5,000.00 (the "Threshold Amount"). If the Threshold Amount is reached, however,
a claim for indemnification for the full amount may be asserted, and any
subsequent claim for indemnification may be asserted at any time without regard
to the Threshold Amount.
11. Confidentiality; Non-Competition; Remedies.
--------------------------------------------
11.1 Shareholder Confidentiality. Shareholder shall, and shall use
----------------------------
their reasonable efforts to cause Shareholder's employees, agents and
representatives to, for a period of three (3) years after the Effective Date,
hold in confidence all financial information concerning Company and the
Company's assets. Notwithstanding the preceding sentence, Shareholder may
disclose such information when required by law or governmental order or
regulation, or when required by a subpoena or other process (provided Purchaser
shall be provided advance notice of such disclosure in order to seek an
appropriate protective order). This Section 11 shall cease to apply to
-----------
information that comes into the public domain through no fault of Company or
Shareholder.
11.2 Non-Competition. Shareholder agrees that Shareholder will not,
---------------
for a period of three (3) years after the Effective Date (the "Restricted Time
Period"), directly or indirectly, whether as owner, shareholder, partner,
investor, consultant, agent, employee, independent contractor, independent
practitioner, co-venturer or otherwise, run, manage, operate, control, consult
for or be employed by, provide services to, with or without compensation, or
invest in (other than passive investments of less than one percent (1.00%) of
the outstanding shares of a publicly traded company) any business or venture in
competition with Purchaser, Company and/or their respective Affiliates in the
Geographic Area. For purposes of this Purchase Agreement, the "Geographic Area"
shall mean the State of Missouri. Shareholder further agrees that during the
Restricted Time Period, Shareholder will not, and will not assist anyone else
to, (i) directly or indirectly, hire or employ in any capacity or solicit
employment of, offer employment to, entice away or in any other manner seek to
persuade any employee of Purchaser, Company or any of their respective
Affiliates to discontinue employment; (ii) solicit or encourage any customers,
clients or vendors of Company and/or Purchaser or any of their respective
Affiliates to terminate or diminish their relationship with Purchaser, Company
or any of their respective Affiliates; or (iii) seek to persuade any client,
customer or any prospective customer of Purchaser, Company or any of their
respective Affiliates to conduct with anyone else any business or activity that
such client, customer or prospective customer conducts or could conduct with
Purchaser, Company or any of their respective Affiliates. The parties agree
that the restraints set forth above in this Section 11.2 are reasonable in
------------
respect to subject matter, length of time and geographic area.
11.3 Remedies. Shareholder agrees that the restrictions on its
--------
respective activities contained in this Section 11 are fully reasonable and
----------
necessary to protect the goodwill, confidential information and relationships,
economic advantage and other legitimate interests of Purchaser. Shareholder
further acknowledges that, should there be a breach of any of the covenants
contained in this Section 11, Purchaser would be harmed and the damage to
-----------
Purchaser would be irreparable. Accordingly, Shareholder acknowledges and
agrees that, as Purchaser's legal remedies may be inadequate in the event of a
breach of the covenants of Shareholder in this Section 11, in addition to
----------
damages and other remedies available to Purchaser, such covenants may be
enforced by injunction or other equitable remedies.
11.4 Survival of Protective Covenants. Each covenant herein, on the
-----------------------------------
part of Shareholder, shall be construed as an agreement independent of any other
provision of this Purchase Agreement, unless otherwise indicated herein, and
shall survive the termination of this Purchase Agreement, and the existence of
any claim or cause of action of Shareholder against Purchaser, Company or any of
their respective Affiliates, whether predicated on this Purchaser Agreement or
otherwise, shall not constitute a defense to the enforcement by the Purchaser of
such covenant. Company and/or Shareholder waive any requirement that
Shareholder could assert for the securing or posting of any bond in connection
with the obtaining of the injunctive or other equitable relief.
11.5 Extension of Restricted Time Period. If Company and Shareholder
-------------------------------------
violate the protective covenants hereunder and Purchaser brings legal action for
injunctive or other relief hereunder, Purchaser shall not, as a result of the
time involved in obtaining the relief, be deprived of the benefit of the full
Restricted Time Period of the protective covenants contained in this Section 11.
----------
Accordingly, such Restricted Time Period for the purposes of this Section 11
----------
shall be deemed to have a duration of the Restricted Time Period stated in this
Section 11, computed from the date relief is granted, but reduced by the time
-----------
between the period when the restriction began to run and the date of the first
violation of the covenant by Company and/or Shareholder.
11.6 Revision. If any of the restrictions under this Section 11 are
-------- ----------
adjudicated, by a court of competent jurisdiction, to be excessively broad, said
restrictions determined excessively broad shall be reduced to a restriction that
is the maximum extent permitted by such court, and the restrictions shall be
enforced to such reduction. Any provision of this Purchase Agreement not so
reduced, shall remain in full force and effect.
12. Conditions Precedent to Purchaser's Obligations. The obligations of
---------------------------------------------------
Purchaser to consummate the transactions contemplated under this Purchase
Agreement shall be subject to the fulfillment of each of the following
conditions to the satisfaction of Purchaser prior to or at the Effective Date or
such other date specified in any of the following conditions, any of which may
be waived, in whole or in part, by Purchaser:
12.1 Representations and Warranties; Certificate. The representations
--------------------------------------------
and warranties of Company and Shareholder contained in this Purchase Agreement
or in any certificate, Schedule, Exhibit or other document delivered pursuant to
the provisions of this Purchase Agreement, or in connection with this Purchase
Agreement, shall be true and correct in all respects as of the Effective Date
and shall be deemed to be made again at and as of the Effective Date and shall
be true and correct in all respects at and as of such time, except as a result
of changes or events expressly permitted or contemplated in this Purchase
Agreement. Purchaser shall have received an "Effective Date Certificate" from
Company and Shareholder confirming the truth and correctness of the
representations and warranties of Company and Shareholder in this Purchase
Agreement dated as of the Effective Date.
12.2 Performance of Agreements; Certificate. Company and Shareholder
----------------------------------------
shall have performed and complied in all material respects with all agreements
and conditions required by this Purchase Agreement to be performed or complied
with prior to or on the Effective Date, and, in the event that the Closing Date
is not the same date as the Effective Date, Company and Shareholder shall
deliver to Purchaser an "Effective Date Certificate" dated as of the Effective
Date (substantially in the form attached hereto as Exhibit C), certifying in
---------
such detail as Purchaser may reasonably request to the fulfillment of the
foregoing.
12.3 Absence of Errors and Omissions. Purchaser shall not have
-----------------------------------
discovered any material error, misstatement or omission in the Company Financial
Statements or in any of the representations or warranties, or any material
failure to perform or satisfy any covenants or conditions required by this
Purchase Agreement to be performed or satisfied by Company and Shareholder on or
prior to the Effective Date.
12.4 Certificates; Resolutions; Opinion. Company and Shareholder shall
----------------------------------
have delivered to Purchaser:
(a) An opinion of counsel for Company and Shareholder, dated as of
the Effective Date, substantially in the form attached hereto as Exhibit D; and
---------
(b) Certified copies of the Articles and Bylaws of Company;
(c) Certified copy of the Company's Certificate of Authority.
12.5 No Actions; Proceedings or Injunctions. No legal or regulatory
-----------------------------------------
action or proceeding shall be pending or threatened by any Persons to enjoin,
restrict or prohibit the transactions contemplated herein. No preliminary or
permanent injunction or other order by any federal, national, provincial or
state court which prevents the consummation of the transactions shall have been
issued and remain in effect.
12.6 Consents and Approvals of Partnership and Third Parties. The
------------------------------------------------------------
consummation of the transactions contemplated by this Purchase Agreement shall
not be prohibited by any Legal Requirement. All consents, authorizations and
approvals that are necessary or appropriate for the parties to consummate the
Transaction, including, without limitation, consents of any and all landlords to
the assignment of leases and any and all consents required under any
nondisturbance and recognition agreements, shall have been duly obtained (or
will be obtained as soon as practicable after the Effective Date with the
permission of Purchaser).
12.7 Approval of Proceedings; Documentation. All instruments and legal
--------------------------------------
and corporate proceedings in connection with the transactions contemplated by
this Purchase Agreement, and the form and substance of all instruments,
opinions, certificates and other documents hereunder, shall be reasonably
satisfactory in form and substance to Purchaser and Purchaser's counsel.
12.8 Absence of Material Adverse Changes. There shall have been no
---------------------------------------
change in the condition (financial or otherwise), business, assets, operations
or prospects of Company from the date hereof which could have a Material Adverse
Effect on Company.
12.9 Transaction Documents. Company and Shareholder shall have
----------------------
executed and delivered all Transaction Documents to which they are a party.
12.10 Absence of Natural Disasters. Neither the Company or the
-------------------------------
Company's assets shall have been materially adversely affected in any way as a
result of fire, explosion, disaster, accident, labor dispute, any action by the
United States of America or any other government or governmental authority,
domestic or foreign, flood, riot, act of war, civil disturbance or act of God
(collectively, a "Natural Disaster"). Nor shall the Company or the Company's
assets be seriously threatened to be materially adversely affected in any way as
a result of a previously occurred Natural Disaster.
12.11 Release of Liens. Except for the Permitted Encumbrances, all
------------------
liens currently encumbering the Stock or the Company's assets shall be duly
released by the secured parties and other lien holders, and UCC-3 release or
such other termination statements and other lien discharging documents shall
have been properly recorded.
12.12 Company Related-Party Transactions. Purchaser shall have
------------------------------------
determined in Purchaser's sole reasonable discretion, that all transactions
between Company and any of its officers, directors, shareholders, partners or
other Affiliates ("Related Party Transactions") are fair and commercially
reasonable and, to the extent Purchaser has determined that any Related Party
Transactions are not fair or commercially reasonable, such transactions shall
have been recast or amended so as to be fair and commercially reasonable in a
manner satisfactory to Purchaser.
12.13 Schedules and Exhibits. Purchaser, Company and Shareholder are
------------------------
able to prepare and agree to the Schedules and Exhibits to be attached to the
Purchase Agreement prior to the Effective Date.
12.14 Employee Benefits. Company shall have confirmed with all
------------------
administrators (and have provided evidence of same to Purchaser's satisfaction)
of Company's Employee Benefit Plans (with regard to those Employee Benefit Plans
which Purchaser is expressly assuming pursuant to the terms of this Agreement)
that Purchaser may make any and all premium payments (or otherwise) necessary to
continue such Employee Benefit Plans until such time as Company's employees can
be converted to Purchaser's available benefit plans;
12.15 Benefit Plans. Company and/or Shareholder shall cause all of
--------------
Company's employee benefit plans to be terminated and/or frozen at, or prior to,
the Effective Date. Company and/or Shareholder shall take all action necessary
to transfer "sponsorship" of any Company employee benefit plan to Purchaser
and/or its Affiliates. Company and/or Shareholder shall cause all governmental
filings to be timely and properly filed as respects any employee benefit plan
terminated and/or frozen.
12.16 Resignations. All directors and officers of Company shall have
------------
tendered their written resignations to be effective upon the Effective Date.
12.17 Financing. Purchaser shall have secured financing on terms and
---------
conditions satisfactory to Purchaser for the acquisition of the Stock.
12.18 Administrative Services Agreement. Purchaser and Shareholder
-----------------------------------
shall have executed the Administrative Services Agreement.
13. Conditions Precedent to the Obligations of Company and Shareholder. The
------------------------------------------------------------------
obligation of Company and Shareholder to consummate the transactions
contemplated under this Purchase Agreement shall be subject to the fulfillment
of each of the following conditions prior to or at the Effective Date or such
earlier date specified in any of the following conditions, any one or more of
which may be waived, in whole or in part, by Company and Shareholder:
13.1 Representations and Warranties; Certificate. The representations
--------------------------------------------
and warranties of Purchaser contained in this Purchase Agreement or in any
certificate, Schedule, Exhibit or other document delivered pursuant to the
provisions of this Purchase Agreement, or in connection with this Purchase
Agreement, shall be true and correct in all respects as of the date when made
and shall be deemed to be made again at and as of the Effective Date and shall
be true and correct in all respects at and as of such time, except as a result
of changes or events expressly permitted or contemplated in this Purchase
Agreement. Company shall have received a certificate from a duly authorized
senior officer of Purchaser confirming the truth and correctness of the
representations and warranties of Purchaser in this Purchase Agreement dated as
of the Effective Date.
13.2 Performance of Agreements; Certificate. Purchaser shall have
-----------------------------------------
performed and complied in all material respects with all agreements and
conditions required by this Purchase Agreement to be performed or complied with
by Purchaser prior to or on the Effective Date, and Purchaser shall deliver to
Company and Shareholder a certificate dated as of the Effective Date, certifying
in such detail as Company and Shareholder may reasonably request to the
fulfillment of the foregoing.
13.3 Approval of Proceedings; Documentation. All instruments and legal
--------------------------------------
and corporate and other proceedings of Purchaser in connection with the
transactions contemplated by this Purchase Agreement and the form and substance
of all instruments, opinions, certificates and other documents hereunder shall
be reasonably satisfactory in form and substance to Company and Shareholder and
Shareholder's counsel.
13.4 No Actions, Proceedings or Injunctions. No legal or regulatory
-----------------------------------------
action or proceeding shall be pending or threatened by any Persons to enjoin,
restrict or prohibit the transactions contemplated herein. No preliminary or
permanent injunction or other order by any federal, national, provincial or
state court which prevents the consummation of the transactions contemplated by
this Purchase Agreement shall have been issued and remain in effect.
13.5 Transaction Documents. Purchaser shall have executed and
----------------------
delivered all Transaction Documents to which it is a party.
13.6 Absence of Errors and Omissions. Company and Shareholder shall
----------------------------------
not have discovered any material error, misstatement or omission in any of the
representations or warranties, or any material failure to perform or satisfy any
covenants or conditions required by this Purchase Agreement to be performed or
satisfied by Purchaser on or prior to the Effective Date.
13.7 Consents and Approvals of Third Parties. The consummation of the
----------------------------------------
transactions contemplated by this Purchase Agreement shall not be prohibited by
any Legal Requirement. All consents, authorizations and approvals that are
necessary or appropriate for the parties to consummate the Transaction shall
have been duly obtained.
13.8 Schedules and Exhibits. Purchaser and Company and Shareholder are
----------------------
able to prepare and agree to the Schedules and Exhibits to be attached to the
Purchase Agreement prior to at the Effective Date.
14. Termination.
-----------
14.1 Right to Terminate. This Purchase Agreement may only be
--------------------
terminated prior to the Effective Date under the following conditions:
(a) By the mutual written consent of Purchaser and Shareholder; or
(b) By either Purchaser, Company and/or Shareholder upon prior
written notice to the other party;
(i) If any court or governmental or regulatory agency,
authority or body shall have enacted, promulgated or issued any statute, rule,
regulation, ruling, writ or injunction, or taken any other action, restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby and all
appeals and means of appeal therefrom have been exhausted;
(ii) By Purchaser, upon prior written notice to Company and
Shareholder, if any of the conditions specified in Section 12 have not been met
----------
or waived prior to the Effective Date (or any extension thereof); or
(iii) By Company, upon prior written notice to Purchaser, if
any of the conditions specified in Section 13 shall not have been met or waived
----------
prior to the Effective Date (or any extension thereof).
14.2 Effect of Termination. In the event of termination of this
-----------------------
Purchase Agreement pursuant to this Section 14, this Purchase Agreement shall
----------
forthwith become null and void and there shall be no liability on the part of
any of the parties hereto or their respective officers or directors with respect
to this Purchase Agreement, except for Section 7 and the last sentence of
----------
Section 4 which shall remain in full force and effect after any such termination
---------
of this Purchase Agreement, and except that nothing herein shall relieve any
party from liability for a breach of this Purchase Agreement prior to the
termination thereof.
15. Entire Agreement. This Purchase Agreement (together with the Schedules
-----------------
and Exhibits hereto) and the Transaction Documents (including any "side letter
agreements" executed by the parties) constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all prior
and contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth herein or in such other
agreements.
16. Amendment. This Purchase Agreement may be amended by the parties hereto
---------
at any time, but only by an instrument in writing duly executed and delivered on
behalf of each of the parties hereto.
17. Headings. Section headings are not to be considered part of this
--------
Purchase Agreement and are included solely for convenience and are not intended
to be full accurate descriptions of the contents thereof. References to
Sections are to portions of this Purchase Agreement unless the context requires
otherwise.
18. Exhibits, Schedules, Etc. Exhibits, Schedules and other documents
--------------------------
referred to in this Purchase Agreement are an integral part of this Purchase
Agreement. To the extent a Schedule requires an item and/or matter to be listed
or described on such Schedule, any and all applicable documents or other
explanatory materials shall be attached to the applicable Schedule in the order
therein referenced.
19. Successors and Assigns; Third Party Beneficiaries. All of the terms and
-------------------------------------------------
provisions of this Purchase Agreement shall be binding upon, and shall inure to,
the benefit of the parties hereto and their respective permitted transferees,
successors and assigns. This Purchase Agreement is not intended to confer any
rights or benefits on any Persons other than the parties hereto, it being agreed
that all third party beneficiary rights are hereby expressly denied.
20. Notices, Etc. Any notice or other communication under this Purchase
-------------
Agreement shall be in writing and shall be delivered in person or sent by
pre-paid certified or registered mail, receipted overnight messenger service,
receipted hand delivery or facsimile (with electronic confirmation), as follows:
(a) If to Company and/or to Shareholder, addressed as applicable to:
SafeGuard Health Enterprises, Inc.
00 Xxxxxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Senior Vice President and
General Counsel
Facsimile: 949.425.4586
(b) If to Purchaser, addressed to:
Dental Economics, L.L.C., General Partner
00000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx, President and CEO
Facsimile: 713.493.6599
with a copy to:
Gardere Xxxxx Xxxxxx LLP
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxxx XX
Facsimile: 214.999.3528
21. Knowledge and Gender. A representation or statement made herein to the
---------------------
knowledge of Company or Shareholder also includes the knowledge or belief of
Company's directors and officers, and the independent accountants and attorneys
of Company and Shareholder regardless of whether the knowledge of such Person
was obtained outside of the course and scope of his employment by, or duties to
Company or Shareholder, and regardless of whether any such Person's interests
are adverse to Company. Whenever the context requires, the gender of all words
used herein shall include the masculine, feminine and neuter.
22. Accounting Terms. All accounting terms not otherwise defined herein
-----------------
have the meanings assigned to them, determined in accordance with generally
acceptable accounting principles, consistently applied throughout the periods
indicated ("GAAP").
23. Governing Law. This Purchase Agreement, and the rights, remedies,
--------------
obligations, and duties of the parties under this Purchase Agreement, shall be
governed by, construed in accordance with and enforced under the laws of the
State of Texas, without giving effect to the principles of conflict of laws of
such state. If any action is brought to enforce or interpret this Agreement,
venue for such action shall be proper in Xxxxxx County, Texas. The parties
irrevocably (i) submit to the exclusive jurisdiction of the state courts of the
State of Texas over any action or proceeding arising out of a breach of this
Agreement, (ii) agree that all claims in respect of such action or proceeding
may be heard and determined in such courts, (iii) waive, to the fullest extent
they may effectively do so, the defense of an inconvenient or inappropriate
forum to the maintenance of such action or proceeding, and (iv) waive any
defense based on lack of personal jurisdiction of any such purpose.
24. Severability; Modifications for Prospective Legal Events. The
-------------------------------------------------------------
provisions of this Purchase Agreement are severable, and in the event that any
one or more provisions are deemed illegal or unenforceable, the remaining
provisions shall remain in full force and effect. In the event any state or
federal laws or regulations, now existing or enacted or promulgated after the
date hereof, are interpreted by judicial decision, a regulatory agency or legal
counsel in such a manner as to indicate that this Purchase Agreement or any
provision hereof may be in violation of such laws or regulations, the parties
hereto shall amend this Purchase Agreement as necessary to preserve the
underlying economic and financial arrangements between the parties hereto and
without substantial economic detriment to either party. Neither party shall
claim or assert illegality as a defense to the enforcement of this Purchase
Agreement or any provision hereof; instead, any such purported illegality shall
be resolved pursuant to the terms of this Section.
25. Counterparts. This Purchase Agreement may be executed simultaneously in
------------
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
26. Assignment. This Purchase Agreement may not be assigned by any of the
----------
parties hereto without the prior written consent of the others; provided,
however, that Purchaser may assign Purchaser's rights and obligations under this
Purchase Agreement to any subsidiary of Purchaser or any Person that controls,
is controlled by or is in common control with Purchaser or to any Person that
merges with or into Purchaser or that acquires all or substantially all of the
assets of Purchaser.
27. Effect of Review. Any review or investigation performed by, or on
------------------
behalf of, a party of the first part shall not affect the representations and
warranties and indemnification obligations of the party of the second part under
this Purchases Agreement, regardless of the knowledge and information received
(or which should have been received) by a party of the first part as a result of
such review or investigation.
28. Construction of Purchase Agreement. The parties and their counsel have
-----------------------------------
participated fully in the preparation, review and revision of this Purchase
Agreement. Any rule of construction to the effect that ambiguities are to be
resolved against the drafting party shall not apply to the interpretation of
this Purchase Agreement.
29. Arbitration. The parties hereto shall submit to binding arbitration by
-----------
a board of three (3) arbitrators any disputed question or controversy arising
under this Purchase Agreement or arising out of, or relating to, the transaction
contemplated by the Purchase Agreement. Any party may initiate the arbitration,
by notice in writing to the other party, setting forth the nature of the
dispute, the amount involved, if any, and the remedy sought. Any party desiring
to initiate arbitration shall serve a written notice of intention to arbitrate
to the other party and to the American Arbitration Association office closest to
Company within one hundred eighty (180) days after a dispute has arisen. The
board of three (3) arbitrators shall be appointed promptly upon written
application of the initiating party, and shall be selected in accordance with
the Commercial Arbitration Rules of the American Arbitration Association. All
of the arbitrators shall be members of the American Arbitration Association.
Depositions may be taken and other discovery obtained in any arbitration under
this Purchase Agreement. The board of arbitrators appointed hereunder shall
conduct the arbitration pursuant to the Commercial Arbitration Rules of the
American Arbitration Association then in effect, except as such rules may be
modified for the purpose of the arbitration proceeding by action of a majority
vote of the arbitrators or by mutual written agreement of the parties to this
Purchase Agreement. The award of the arbitrators, or a majority of them, shall
be final and binding upon the parties hereto and judgment thereon may be entered
in any court having jurisdiction. All statutes of limitations, which would
otherwise be applicable, shall apply to any arbitration proceeding hereunder.
The provisions of this section shall survive any termination, amendment or
expiration of this Purchase Agreement unless all the parties hereto otherwise
expressly agree in writing. The arbitrators, or a majority of them, shall award
reasonable attorneys' fees and costs to the prevailing party pursuant to the
terms of this Purchase Agreement. Except as set forth above concerning awards
to the prevailing party, each party shall bear its own expenses in connection
with preparation for the presentation of its case at the arbitration proceedings
and the fees and expenses of the arbitrators and all other expenses of the
arbitration (except those referred to in the preceding sentence) shall be borne
equally by the parties to such arbitration. The arbitration shall take place in
the city of the party not initiating the arbitration.
(Signatures begin on next page)
IN WITNESS WHEREOF, the parties have caused this Purchase Agreement to be
duly executed as of the 1st day of October, 2001, effective as of the Effective
Date.
Purchaser:
---------
Dental Economics, L.P., a Delaware limited partnership
By: Dental Economics, L.L.C., a Delaware limited
liability company, its general partner
By: /s/ Xxxxx X. Xxxxxx
----------------------
Xxxxx X. Xxxxxx, President and Chief
Executive Officer
Company:
-------
SafeGuard Health Plans, Inc., a Missouri corporation
By: /s/ Xxxx X. Xxxxx
---------------------------
Xxxx X. Xxxxx, Vice President and Chief
Development Officer
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx, Senior Vice President
and Secretary
Shareholder:
-----------
SafeGuard Health Enterprises, Inc., a Delaware
corporation
By: /s/ Xxxx X. Xxxxx
---------------------------
Xxxx X. Xxxxx, Vice President and
Chief Development Officer
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx, Senior Vice President
and Secretary
Schedule 2.2(a)
----------------
Accounts Payable and Accrued Expenses to be Assumed
Summary of Financial Data
List of Accrued Commissions
List of Groups with Brokers Attached
Approximate Value $16,000
Summary of Deferred Revenue
Schedule 2.3(b)
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Other Executory Obligations to be Assumed
(NONE)
Schedule 2.5
------------
Excluded Assets
Lease for Office Space located at 000 Xxxx Xxxx Xxxxx, XX. Xxxxx, XX 00000
Schedule 5.2
------------
Subsidiaries
(NONE)
Schedule 5.3
------------
Company Financial Statements
Financial Statements audited by Deloitte and Touche LLP for calendar years 1998,
1999, and 2000
Statutory Financial Statements filed with the Missouri Department of Insurance
for calendar years 1998, 1999, and 2000
Seller's internal generated financial statements for the period from January 1,
2001 to October 31, 2001
Documentation evidencing the Company's Certificate of Authority issued to it by
the Missouri Department of Insurance for calendar years 1998, 1999 and 2000
Schedule 5.4
------------
Material Adverse Changes
(NONE)
Schedule 5.5
------------
Accounts and Notes Receivable; Prepaid Expenses and Deposits
Central Bank for Statutory Deposits in the approximate amount of $150,000
Interest receivable on Statutory Deposits mentioned above
Accounts receivable to be listed by group and amount of account receivable for
each group
Schedule 5.6
------------
Equipment and Personal Property; Equipment and Personal Property Leases;
Real Properties and Leaseholds; Liens
(NONE)
Schedule 5.7
------------
Contracts; Other Agreements; Consents; Defaults
(NONE)
Schedule 5.8
------------
ERISA and Employee Matters
(NONE)
Schedule 5.10
-------------
Patents; Trademarks/Service Marks; Tradenames;
Software Licenses; Etc.
(NONE)
Schedule 5.12
-------------
Litigation
(NONE)
Schedule 5.13
-------------
Violations of Law
(NONE)
Schedule 5.14
-------------
Violations of Other Instruments
(NONE)
Schedule 5.15
-------------
Permits and Approvals
Certificate of Authority regarding Company issued by the Missouri Department of
Insurance for calendar years 1998, 1999 and 2000
Schedule 5.16
-------------
Tax Matters
Missouri pages out of the consolidated Federal income tax return filled by
Seller for calendar years 1998, 1999 and 2000
Missouri Franchise and other state tax returns filed for the calendar years
1998, 1999 and 2000
Schedule 5.18
-------------
Guarantors
(NONE)
Schedule 5.19
-------------
Employees and Compensation
Employment letter agreement between the Company and Xxxxx X. Xxxxxxxxx dated as
of January 3, 2001, a copy of which is attached hereto, to be terminated prior
to closing with Seller to be responsible for any payments required thereupon
Schedule 5.20
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Certain Transactions; Transactions with Affiliates
Tax Sharing Agreement between the Company and Seller to be terminated prior to
the Effective Date
Management Services Agreement between Company and Seller to terminated prior to
the Effective Date
Schedule 5.21
-------------
Environmental Matters
(NONE)
Schedule 5.23
-------------
Books and Records
Original Minute Book of Company
Triennial Examinations conducted by the Missouri Department of Insurance and any
responses by the Company thereto
All material regulatory filing made by the Company
All material correspondence between the Missouri Department of Insurance and the
Company
Schedule 5.24
-------------
Broker's or Finder's Fees
Purchaser has reached an agreement with Xx Xxxxx of Xx Xxxxx and Associates to
pay a brokers' fee for which Purchaser is responsible
Schedule 5.27
-------------
Bank Accounts
Central Bank-Statutory Bank Account in the approximate amount of $150,000
Dreyfess Money Market account which shall be liquidated and closed by Seller
prior to the Effective Date
Schedule 5.28
-------------
Provider Agreements and Dental Policies
List of all dental providers with standard form provider agreements
List of all dental providers with non-standard provider agreement and copies of
all such agreements
List of all current dental polices which includes a listing of all Group
Contracts and a listing of all individual contract forms and the names of each
individual subscribers covered under such individual polices
Schedule 5.29
-------------
Agents of Company
List of all brokers for the Company by name and address
Schedule 5.30
-------------
Computer Systems
(NONE)
Schedule 5.32
-------------
Complaint Procedures
Copy of the Company's current grievance policy in effect
