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