ASSET CONTRIBUTION AGREEMENT
BY AND AMONG
PENTEGRA DENTAL GROUP, INC.,
PENTEGRA, LTD.,
NAPILI, INTERNATIONAL
and
XXXX X. XXXX, D.D.S.
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 CONTRIBUTORS AND
SHAREHOLDER.
2.1 CORPORATE EXISTENCE; GOOD STANDING. . . . . . . . . . . 2
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. . . . . . . . . . 3
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS . . . 3
2.4 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 DISTRIBUTIONS AND REPURCHASES . . . . . . . . . . . . . 3
2.6 CORPORATE RECORDS . . . . . . . . . . . . . . . . . . . 3
2.7 CONTRIBUTORS' FINANCIAL INFORMATION . . . . . . . . . . 3
2.8 LEASES. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 CONDITION OF ASSETS . . . . . . . . . . . . . . . . . . 4
2.10 TITLE TO AND ENCUMBRANCES ON PROPERTY . . . . . . . . . 4
2.11 INVENTORIES . . . . . . . . . . . . . . . . . . . . . . 4
2.12 INTELLECTUAL PROPERTY RIGHTS; NAMES . . . . . . . . . . 4
2.13 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. 4
2.14 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . 4
2.15 CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 SUBSEQUENT EVENTS . . . . . . . . . . . . . . . . . . . 5
2.17 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.18 COMMISSIONS AND FEES. . . . . . . . . . . . . . . . . . 7
2.19 LIABILITIES; DEBT . . . . . . . . . . . . . . . . . . . 7
2.20 INSURANCE POLICIES. . . . . . . . . . . . . . . . . . . 7
2.21 EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . 7
2.22 ADVERSE AGREEMENTS. . . . . . . . . . . . . . . . . . . 8
2.23 COMPLIANCE WITH LAWS IN GENERAL . . . . . . . . . . . . 8
2.24 [intentionally deleted] . . . . . . . . . . . . . . . . 8
2.25 NO UNTRUE REPRESENTATIONS . . . . . . . . . . . . . . . 8
2.26 BANKING RELATIONS . . . . . . . . . . . . . . . . . . . 8
2.27 [INTENTIONALLY DELETED] . . . . . . . . . . . . . . . . 8
2.28 [INTENTIONALLY DELETED] . . . . . . . . . . . . . . . . 8
Section 3. REPRESENTATIONS AND WARRANTIES OF PENTEGRA
3.1 CORPORATE EXISTENCE: GOOD STANDING. . . . . . . . . . . 8
3.2 POWER AND AUTHORITY; CONSENTS . . . . . . . . . . . . . 8
3.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS . . . 9
3.4 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . 9
3.5 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 COMMISSIONS AND FEES. . . . . . . . . . . . . . . . . . 9
3.7 CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . 9
3.8 NO UNTRUE REPRESENTATIONS . . . . . . . . . . . . . . . 9
Section 4. COVENANTS OF CONTRIBUTORS AND SHAREHOLDER.
4.1 CONSUMMATION OF AGREEMENT; EXHIBITS . . . . . . . . . . 9
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4.2 BUSINESS OPERATIONS; CHANGE OF NAME . . . . . . . . . . 10
4.3 ACCESS AND NOTICE . . . . . . . . . . . . . . . . . . . 10
4.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS . . 10
4.5 ACQUISITION PROPOSALS . . . . . . . . . . . . . . . . . 10
4.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. . . . . . . . . . 10
4.7 EMPLOYEE MATTERS. . . . . . . . . . . . . . . . . . . . 10
4.8 DISTRIBUTIONS AND REPURCHASES . . . . . . . . . . . . . 11
4.9 REQUIREMENTS TO EFFECT ACQUISITION. . . . . . . . . . . 11
4.10 ACCOUNTING AND TAX MATTERS. . . . . . . . . . . . . . . 11
4.11 WAIVER OF BULK TRANSFER COMPLIANCE. . . . . . . . . . . 11
4.12 [INTENTIONALLY DELETED] . . . . . . . . . . . . . . . . 11
4.13 HIRING OF EMPLOYEES . . . . . . . . . . . . . . . . . . 11
Section 5. COVENANTS OF PENTEGRA
5.1 CONSUMMATION OF AGREEMENT; EXHIBITS . . . . . . . . . . 11
5.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS . . 11
Section 6. COVENANTS OF PENTEGRA AND CONTRIBUTORS AND SHAREHOLDER
6.1 FILINGS; OTHER ACTIONS. . . . . . . . . . . . . . . . . 11
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 CONSENTS AND APPROVALS. . . . . . . . . . . . . . . . . 12
7.8 CLOSING DELIVERIES. . . . . . . . . . . . . . . . . . . 12
7.9 DEBT AND RECEIVABLES. . . . . . . . . . . . . . . . . . 12
7.10 NO CHANGE IN WORKING CAPITAL. . . . . . . . . . . . . . 13
Section 8. CONTRIBUTORS'S AND SHAREHOLDER' 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 . . . . . . . . . . . . . . . . . . 13
Section 9. CLOSING DELIVERIES
9.1 DELIVERIES OF CONTRIBUTORS AND SHAREHOLDER. . . . . . . 13
9.2 DELIVERIES OF PENTEGRA. . . . . . . . . . . . . . . . . 14
Section 10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
10.1 NATURE AND SURVIVAL . . . . . . . . . . . . . . . . . . 15
10.2 INDEMNIFICATION BY PENTEGRA . . . . . . . . . . . . . . 15
10.3 INDEMNIFICATION BY CONTRIBUTORS AND SHAREHOLDER . . . . 16
10.4 INDEMNIFICATION PROCEDURE . . . . . . . . . . . . . . . 17
10.5 RIGHT OF SETOFF . . . . . . . . . . . . . . . . . . . . 17
Section 11. TERMINATION
Section 12. TRANSFER REPRESENTATIONS
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12.1 TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . 18
12.2 INVESTMENTS; COMPLIANCE WITH LAW. . . . . . . . . . . . 18
12.3 ECONOMIC RISK; SOPHISTICATION . . . . . . . . . . . . . 18
Section 13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Section 14. NONCOMPETITION
14.1 PROHIBITED ACTIVITIES . . . . . . . . . . . . . . . . . 19
14.2 REASONABLE RESTRAINT. . . . . . . . . . . . . . . . . . 19
14.3 SEVERABILITY; REFORMATION . . . . . . . . . . . . . . . 19
14.4 TERM. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 15. MISCELLANEOUS
15.1 TAX COVENANT. . . . . . . . . . . . . . . . . . . . . . 20
15.2 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 20
15.3 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . 20
15.4 EACH PARTY TO BEAR COSTS. . . . . . . . . . . . . . . . 20
15.5 PUBLIC DISCLOSURES. . . . . . . . . . . . . . . . . . . 20
15.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 21
15.7 CAPTIONS. . . . . . . . . . . . . . . . . . . . . . . . 21
15.8 INTEGRATION OF EXHIBITS . . . . . . . . . . . . . . . . 21
15.9 ENTIRE AGREEMENT/AMENDMENT. . . . . . . . . . . . . . . 21
15.10 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . 21
15.11 BINDING EFFECT/ASSIGNMENT . . . . . . . . . . . . . . . 21
15.12 COSTS OF ENFORCEMENT. . . . . . . . . . . . . . . . . . 21
15.13 PRORATIONS. . . . . . . . . . . . . . . . . . . . . . . 21
15.14 AMENDMENTS; WAIVERS . . . . . . . . . . . . . . . . . . 22
15.15 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . 22
15.16 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . 23
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ASSET CONTRIBUTION AGREEMENT
This ASSET CONTRIBUTION AGREEMENT (this "Agreement"), made and executed as
of August 20, 1997, is by and among PENTEGRA DENTAL GROUP, INC., a Delaware
corporation ("Pentegra"), PENTEGRA, LTD., an Arizona corporation and NAPILI,
INTERNATIONAL, an Arizona corporation (collectively, "Contributors"), and the
shareholders of Contributors set forth on the signature page hereof (referred to
herein as "Shareholder" or "Shareholder").
WITNESSETH:
WHEREAS, Contributors conduct a consulting and training business
("Business") and Pentegra is engaged in the business of managing certain
non-dentistry aspects of dental practices;
WHEREAS, Contributors desire to contribute to Pentegra, and Pentegra
desires to receive from Contributors, certain assets of Contributors;
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 Contributors, 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, Contributors shall convey, transfer,
deliver and assign to Pentegra or any affiliate of Pentegra designated by
Pentegra all of Contributors' 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.
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1.3 EXCLUDED ASSETS. There shall be excluded from the Assets to be
transferred and contributed hereunder, and Contributors shall retain all of
their right, title and interest in and to, the assets not specifically
transferred hereunder, including without limitation, the assets described on
EXHIBIT 1.2 (the "Excluded Assets").
1.4 PURCHASE PRICE; ASSUMPTION OF LIABILITIES. As consideration for the
Assets and the representations, warranties and agreements of Contributors
contained herein, Pentegra shall, on the Closing Date:
(a) Cause to be transferred to Contributors 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 Contributors 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 Contributors, including, but not limited to, liabilities arising
under any Contributor 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 Shareholder or Contributors, 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 Contributors reflected on the books of
Contributors at or prior to the Closing Date; (v) any liability based upon or
arising out of any tortious or wrongful actions of Contributors, any employee or
independent contractor of Contributors or Shareholder, (vi) any liability for
the payment of any taxes of Contributors or Shareholder, 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 Contributors or Shareholder.
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,
Contributors and Shareholder 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 CONTRIBUTORS AND SHAREHOLDER.
Contributors and Shareholder, jointly and severally, hereby represent and
warrant to Pentegra as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. Contributors are each a
corporation duly organized, validly existing and in good standing under the laws
of the State of Arizona. Contributors have all necessary corporate powers to
own all of its assets and to carry on its business as such business is now being
conducted. Contributors do not own stock in or control, directly or indirectly,
any other corporation, association or business organization, nor are
Contributors a party to any joint venture or partnership. The Shareholder is
the sole shareholder of each Contributor and own all outstanding shares of
capital stock free of all security interests, claims, encumbrances and liens.
Each share of each Contributor's common stock has been legally and validly
issued and fully paid and nonassessable. No shares of capital stock of either
Contributor are owned by either Contributor in treasury. There are no
outstanding (a) bonds, debentures, notes or other obligations the holders of
which have the right to vote with the stockholders of Contributors on any
matter, (b) securities of Contributors convertible into equity interests in
Contributors, or (c) commitments, options, rights or warrants to issue any such
equity interests in Contributors, to issue securities of Contributors
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convertible into such equity interests, or to redeem any securities of
Contributors. No shares of capital stock of Contributors have been issued or
disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of Contributors' stockholders. Contributors are not
required to qualify to do business as a foreign corporation in any other state
or jurisdiction by reason of its business, properties or activities in or
relating to such other state or jurisdiction. Contributors do 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 FOR TRANSACTIONS. Contributors have the corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by them pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all action required
by law, their Articles or Certificate of Incorporation, their Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Shareholder has the legal capacity to
enter into and perform this Agreement and the other agreements to be executed
and delivered in connection herewith. Contributors have obtained the approval
of their stockholders necessary to the consummation of the transactions
contemplated herein. 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 Contributors and Shareholder, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of Contributors and Shareholder, enforceable against Contributors
and Shareholder 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,
violate any provision of the Articles or Certificate of Incorporation or Bylaws
of Contributors 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 Contributors or Shareholder is a
party or by which Contributors or Shareholder is bound, or violate any material
restrictions of any kind to which Contributors is subject, or result in any lien
or encumbrance on any of Contributors' assets or the Assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All building or
other permits, certificates of occupancy, concessions, grants, franchises,
licenses, certificates of need and other governmental authorizations and
approvals required for the conduct of the Business or the use of the Assets, or
waivers thereof, have been duly obtained and are in full force and effect and
are described on EXHIBIT 2.3. There are no proceedings pending or, to the
knowledge of Contributors and Shareholder, 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 Contributors or Shareholder.
2.5 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or dividend
of any kind has been declared or paid by Contributors on any of their capital
stock since the Balance Sheet Date. No repurchase of any of Contributors'
capital stock has been approved, effected or is pending, or is contemplated by
Contributors.
2.6 CORPORATE RECORDS. True and correct copies of the Articles or
Certificate of Incorporation, Bylaws and minutes of Contributors and all
amendments thereto have been delivered to Pentegra. The minute books of
Contributors contain accurate minutes of all meetings of and consents to actions
taken without meetings of the Board of Directors and stockholders of
Contributors since their formation. The books of account of Contributors have
been kept accurately in the ordinary course of business and the revenues,
expenses, assets and liabilities of Contributors have been properly recorded in
such books.
2.7 CONTRIBUTORS' FINANCIAL INFORMATION. Contributors have 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
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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 Contributors as of the dates and for the
periods indicated and reflect all fixed and contingent liabilities of
Contributors.
2.8 LEASES. EXHIBIT 2.8 attached hereto sets forth a list of all leases
pursuant to which Contributors or Shareholder 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 Contributors, as lessor or lessee, or any condition or
event of which Shareholder or Contributors has knowledge which with notice or
lapse of time, or both, would constitute a default, in respect of which
Contributors or Shareholder have 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 Contributors and Shareholder have no
knowledge of any latent defects therein.
2.10 TITLE TO AND ENCUMBRANCES ON PROPERTY. Contributors have 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. Contributors 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 Contributors, 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, Contributors have 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 Contributors,
including the names of any entities from whom Contributors previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on EXHIBIT 2.12, Contributors are not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar items
and no such licenses are necessary for the conduct of the Business or the use of
the Assets. No claim is pending or has been made to the effect that the Assets
or the present or past operations of Contributors 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. Contributors have 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 name of each director and officer of Contributors and the
offices held by each, (b) the most recent payroll report of Contributors,
showing all current employees of Contributors and their current levels of
compensation, (c) promised increases in compensation of employees of
Contributors that have not yet been effected, (d) oral or written employment
agreements, consulting agreements or independent contractor agreements (and all
amendments thereto) to which Contributors is a party, copies of which have been
delivered to Pentegra, and (e) all employee manuals, materials, policies,
procedures and work-related rules, copies of which have been delivered to
Pentegra. Contributors are in compliance with all applicable laws, rules,
regulations and ordinances respecting employment and employment practices.
Contributors have not engaged in any unfair labor practice. There are no unfair
labor practices charges or complaints pending or threatened against
Contributors, and Contributors has never been a party to any agreement with any
union, labor organization or collective bargaining unit.
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2.14 LEGAL PROCEEDINGS. Neither Shareholder, Contributors nor the Business
nor any of the Assets is subject to any pending, nor does Contributors or
Shareholder have knowledge of any threatened, litigation, governmental
investigation, condemnation or other proceeding against or relating to or
affecting Contributors, Shareholder, the Business, the Assets or the
transactions contemplated by this Agreement, and, to the knowledge of
Contributors and Shareholder, no basis for any such action exists, nor is there
any legal impediment of which Contributors or Shareholder 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. Contributors have delivered to Pentegra true copies of all
written, and disclosed to Pentegra all oral, outstanding contracts, obligations
and commitments of Contributors ("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 Contributors or Shareholder, or any condition or event of
which Contributors or Shareholder has knowledge which with notice or lapse of
time, or both, would constitute a default. Contributors and Shareholder have
no knowledge of any default by any other party to such Contracts. Contributors
and Shareholder have 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, Contributors are not a party to any material
written or oral agreement contract, lease or arrangement, including without
limitation, any:
(a) Contract related to the Assets other than this Agreement;
(b) Employment, consulting or compensation agreement or arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether as lessor
or lessee;
(e) Deed, xxxx of sale or other document evidencing an interest in or
agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or equipment (i)
which is in excess of the requirements of the Business now booked or for normal
operating inventories, or (ii) which is not terminable upon notice of thirty
(30) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Business of a particular product or
service;
(h) Loan agreement or other contract for money borrowed or lent or to
be borrowed or lent to another;
(i) Contracts containing non-competition covenants;
(j) Financial or similar contracts or agreements with patients of the
Contributors or Shareholder, 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
Contributors on more than 30 days after the date hereof.
5
2.16 SUBSEQUENT EVENTS. Other than as set forth on EXHIBIT 2.16,
Contributors have 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) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any person or
entity other than in the ordinary course of business;
(e) 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;
(f) 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 Contributors since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the Assets, tangible or intangible;
(h) 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;
(i) 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;
(j) Authorized or incurred any capital expenditures in excess of
Five Thousand and No/100 Dollars ($5,000.00);
(k) 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;
(l) Redeemed, purchased, sold or issued any stock, bonds or other
securities;
(m) 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;
(n) Declared or paid a distribution, payment or dividend of any
kind on the capital stock of Contributors;
(o) Repurchased, approved any repurchase or agreed to repurchase
any of Contributors's capital stock; or
(p) Suffered any material adverse change in the Business or to the
Assets.
6
2.17 TAXES. (a) Contributors have 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. Contributors has not received any notice that any
tax deficiency or delinquency has been or may be asserted against
Contributors. There are no audits relating to taxes of Contributors pending
or in process or, to the knowledge of Contributors, threatened. Contributors
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
Contributors. Contributors have withheld and paid all taxes required by law
to have been withheld and paid by it. Neither Contributors nor any
predecessor of Contributors 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. Contributors have delivered to
Pentegra correct and complete copies of Contributors'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 Contributors during the three calendar year period preceding the date
of this Agreement. Contributors have 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) Contributors do 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.
Contributors and Shareholder have no knowledge, after due inquiry, of any
such intent, plan, arrangement or agreement by Shareholder. Nothing
contained herein shall prohibit Contributors 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, Contributors or Contributors's Shareholder resulting from any
action taken by Contributors or Shareholder 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, Contributors 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. Contributors and Shareholder do not know, or have
reasonable grounds to know, of any basis for the assertion against
Contributors or Shareholder 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 Contributors
(including without limitation, indebtedness for borrowed money, guaranties
and capital lease obligations) is described on EXHIBIT 2.19 attached hereto.
2.20 INSURANCE POLICIES. Contributors carry 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. Neither
Shareholder nor Contributors have not received notice or other communication
from the issuer of any such insurance policy cancelling or amending such
policy or threatening to do so. Contributors have no outstanding settlements
or premiums owed against any insurance policy.
2.21 EMPLOYEE BENEFIT PLANS. Except as set forth on EXHIBIT 2.21
attached hereto, Contributors neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program,
agreement, policy, commitment, contract or arrangement (whether or not set
forth in a written document); (b) any pension, profit-sharing, retirement or
other plan, program or arrangement; or (c) any other employee benefit plan,
fund or program, including, but not limited to, those described in SECTION
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). All such plans listed on EXHIBIT 2.20 (individually "Contributors
Plan," and collectively "Contributors Plans") have been operated and
7
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 Contributors has resulted in a "prohibited
transaction" (as defined in ERISA) with respect to the Contributors Plans.
No "reportable event" (as defined in ERISA) has occurred with respect to any
of the Contributors Plans. Contributors have 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 Contributors 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. Contributors are 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 Contributors, the Business or the Assets.
2.23 COMPLIANCE WITH LAWS IN GENERAL. Contributors and Shareholder 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 Contributors of any Federal, state or local law or regulation.
Contributors and Shareholder have 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
Contributors.
2.24 [INTENTIONALLY DELETED]
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
Contributors or Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
Contributors or Shareholder and furnished or to be furnished to Pentegra
pursuant hereto, or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements or facts
contained therein not misleading.
2.26 BANKING RELATIONS. Set forth in EXHIBIT 2.26 is a complete and
accurate list of all arrangements that Contributors have 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 [INTENTIONALLY DELETED]
2.28 [INTENTIONALLY DELETED]
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PENTEGRA.
Pentegra hereby represents and warrants to Contributors and Shareholder
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,
8
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 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 Contributors or
Shareholder 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.
9
SECTION 4. COVENANTS OF CONTRIBUTORS AND SHAREHOLDER.
Contributors and Shareholder, jointly and severally, agree that between
the date hereof and the Closing Date:
4.1 CONSUMMATION OF AGREEMENT; EXHIBITS. Contributors and Shareholder
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
Contributors and Shareholder agree to complete the Exhibits hereto to be
provided by them in form and substance satisfactory to Pentegra.
4.2 BUSINESS OPERATIONS; CHANGE OF NAME. Contributors and Shareholder
shall operate the Business and use the Assets in the ordinary course.
Contributors and Shareholder 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. Contributors and Shareholder 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.
Contributors and Shareholder shall use their best efforts to preserve intact
the relationships with payors, customers, suppliers, patients and others
having significant business relations with Contributors. Contributors and
Shareholder shall collect its receivables and pay its trade payables in the
ordinary course of business. Contributors and Shareholder shall not
introduce any new method of management, operations or accounting. Each
Contributors shall change its name to a name approved by Pentegra in its
reasonable discretion.
4.3 ACCESS AND NOTICE. Contributors and Shareholder shall permit
Pentegra and its authorized representatives access to, and make available for
inspection, all of the assets and business of Contributors, 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
Contributors, the Business or the Assets as Pentegra or its representatives
may request. Contributors and Shareholder shall promptly notify Pentegra in
writing of (a) any notice or communication relating to a default or event
that, with notice or lapse of time or both, could become a default, under any
contract, commitment or obligation to which Contributors is a party or
relating to the Business or the Assets, and (b) any adverse change in
Contributors's or the Business' financial condition or the Assets.
4.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. Contributors
and Shareholder shall use their 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.
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, Contributors and Shareholder shall not, and shall
use its best efforts to cause Contributors'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 Shareholder,
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 Contributors 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
Contributors and Shareholder will immediately cease any such activities,
discussions or negotiations heretofore conducted with respect to any of the
foregoing. Contributors and Shareholder shall immediately notify Pentegra if
any such inquiries or proposals are received.
4.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. Contributors 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 Contributors or any entity might have any liability
whatsoever arising from any insurance, pension plan, employment tax or
similar liability of Contributors to any employee or other person or entity
(including, without limitation, any Contributors Plan and any liability under
employment contracts with Contributors) allocable to services performed prior
to the Closing Date. Contributors and Shareholder acknowledge that the
purpose and intent of this covenant is to assure that Pentegra shall have no
unfunded liability whatsoever at any time after the Closing Date with respect
to any of Contributors's employees or similar persons or entities, including,
without limitation, any Contributors Plan for the period prior to the Closing
Date.
10
4.7 EMPLOYEE MATTERS. Contributors shall not, without the prior
written approval of Pentegra, except as required by law, increase the cash
compensation of Shareholder (other than in the ordinary course of business)
or other employee or an independent contractor of Contributors, 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
Contributors, its business, assets or prospects.
4.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by Contributors, nor will any
repurchase of any of Contributors's capital stock be approved or effected.
4.9 REQUIREMENTS TO EFFECT ACQUISITION. Contributors and Shareholder
shall use their 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. Contributors and Shareholder will not
change in any material respect the tax or financial accounting methods or
practices followed by Contributors (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. Contributors and Shareholder will duly,
accurately and timely (without regard to any extensions of time) file all
returns, information statements and other documents relating to taxes of
Contributors 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, Shareholder and
Contributors hereby waive any compliance with the applicable state Bulk
Transfers Act, if any. Contributors and Shareholder covenant and agree that
all of the creditors with respect to the Business and the Assets will be paid
in full by Contributors 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, Contributors and Shareholder shall
furnish Pentegra with proof of payment of all creditors with respect to the
Business and the Assets. Notwithstanding the foregoing, Contributors and
Shareholder 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 Contributors and Shareholder agree to
indemnify and bond Pentegra for such amounts as is satisfactory to Pentegra.
4.12 [INTENTIONALLY DELETED]
4.13 HIRING OF EMPLOYEES. Contributors and Shareholder shall cooperate
with all requests made by Pentegra for the purpose of allowing Pentegra to
hire those non-dental employees of Contributors designated by Pentegra, such
employment to be effective as of the Closing Date. Notwithstanding the
above, Contributors and Shareholder shall remain liable under any
Contributors 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 Contributors's employees incurred by
Contributors prior to the Closing Date.
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.
11
SECTION 6. COVENANTS OF PENTEGRA AND CONTRIBUTORS AND SHAREHOLDER.
Pentegra, Shareholder and Contributors agree as follows:
6.1 FILINGS; OTHER ACTIONS. Pentegra, Contributors and Shareholder 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 Contributors and Shareholder shall furnish all information
concerning Contributors and Shareholder as may be reasonable requested in
connection with any such action.
Contributors and Shareholder represent and warrant 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. Contributors and
Shareholder 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.
Contributors and Shareholder shall furnish Pentegra will all information
concerning themselves, their subsidiaries, if any, directors, officers and
stockholders and such other matters as may be reasonable requested by Pentegra
in connection with the preparation of the Registration Statement and each
amendment or supplement thereto, or any other statement, filing, notice or
application made by or on behalf of each such party or any of its subsidiaries
to any governmental entity in connection with the transactions contemplated by
the Other Agreements or this Agreement.
SECTION 7. PENTEGRA CONDITIONS PRECEDENT.
The obligations of Pentegra hereunder are subject to the fulfillment at or
prior to the Closing of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Contributors and Shareholder 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. Contributors and Shareholder shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by Contributors and Shareholder
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 Contributors 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 Contributors, 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.
12
7.7 CONSENTS AND APPROVALS. Contributors and Shareholder shall have
obtained all necessary government and other third-party approvals and consents.
7.8 CLOSING DELIVERIES. Pentegra shall have received all documents, duly
executed in form satisfactory to Pentegra and its counsel, referred to in
SECTION 9.1.
7.9 DEBT AND RECEIVABLES. There shall be no indebtedness, receivables or
payables between Contributors and its Shareholder or affiliates and Contributors
shall not have any liabilities, including indebtedness, guaranties and capital
leases, that are not set forth on EXHIBIT 2.19.
7.10 NO CHANGE IN WORKING CAPITAL. There shall have been no material
change in the working capital of Contributors since the Balance Sheet Date.
SECTION 8. CONTRIBUTORS'S AND SHAREHOLDER' CONDITIONS PRECEDENT.
The obligations of Contributors and Shareholder 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. Contributors shall have received all documents,
duly executed in form satisfactory to Contributors 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 CONTRIBUTORS AND SHAREHOLDER. Within five business days
after requested by Pentegra, Contributors and Shareholder 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) a copy of the resolutions of the Board of Directors of
Contributors 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;
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(b) a xxxx of sale conveying the Assets to Pentegra;
(c) an assignment of each contract, agreement and lease being
assigned to and assumed by Pentegra;
(d) certificates of the Shareholder and a duly authorized officer of
Contributors dated as of the Closing Date, (i) as to the truth and correctness
of the representations and warranties of Contributors and Shareholder contained
herein; (ii) as to the performance of and compliance by Contributors and
Shareholder with all covenants contained herein; and (iii) certifying that all
conditions precedent of Contributors and Shareholder to the Closing have been
satisfied;
(e) a certificate of the Secretary of Contributors certifying as to
the incumbency of the directors and officers of Contributors and as to the
signatures of such directors and officers who have executed documents delivered
at the Closing on behalf of Contributors;
(f) a certificate, dated within 30 days of the Closing Date, of the
Secretary of the State of incorporation of Contributors and any state of
required foreign qualification of Contributors establishing that Contributors is
in existence and is in good standing to transact business in its state of
incorporation;
(g) an opinion of counsel to Contributors and Shareholder 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
Contributors, the enforceability of this Agreement and the other agreements and
documents to be executed in connection herewith, and other matters reasonably
requested by Pentegra;
(h) non-foreign affidavits executed by Contributors;
(i) all authorizations, consents, approvals, permits and licenses
referred to in SECTIONS 2.3 and 2.4;
(j) evidence of the change of name of Contributors pursuant to
SECTION 4.2;
(k) an executed Registration Rights Agreement between Pentegra and
Contributors, in substantially the form attached hereto as EXHIBIT 9.1(l) (the
"Registration Rights Agreement"); and
(l) 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 Contributors and Shareholder, the following, all of which shall be in
a form satisfactory to counsel to Contributors and Shareholder 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 assumption of each contract, agreement and lease being
assigned to and assumed by Pentegra;
(c) 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;
(d) 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
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compliance by Pentegra with all covenants contained herein; and (iii) certifying
that all conditions precedent of Pentegra to the Closing have been satisfied;
(e) 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;
(f) 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 Contributors;
(g) 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 Contributors;
(h) the executed Registration Rights Agreement; and
(i) such other instruments and documents as reasonably requested by
Contributors 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 Contributors and
Shareholder, jointly and severally, 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 CONTRIBUTORS AND THEIR SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE
FOREGOING, INCLUDING CONTRIBUTORS AND SHAREHOLDERS, 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
15
(C) ANY LIABILITY UNDER THE SECURITIES ACT, THE EXCHANGE ACT OR ANY OTHER
FEDERAL OR STATE "BLUE SKY" OR SECURITIES LAWS OR REGULATION, AT COMMON LAW OR
OTHERWISE, ARISING OUT OF OR BASED UPON ANY UNTRUE STATEMENT OR ALLEGED UNTRUE
STATEMENT OF A MATERIAL FACT RELATING TO PENTEGRA CONTAINED IN ANY PRELIMINARY
PROSPECTUS, THE REGISTRATION STATEMENT OR ANY PROSPECTUS FORMING A PART THEREOF,
OR ANY AMENDMENT THEREOF OR SUPPLEMENT THERETO, ARISING OUT OF OR BASED UPON ANY
OMISSION OR ALLEGED OMISSION TO STATE THEREIN A MATERIAL FACT RELATING TO
PENTEGRA REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS
THEREIN NOT MISLEADING.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES, INDEMNITOR
SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY ARE
INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON
AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT
THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT
ENTITLED TO INDEMNIFICATION HEREUNDER.
10.3 INDEMNIFICATION BY CONTRIBUTORS AND SHAREHOLDER. CONTRIBUTORS AND
SHAREHOLDER (FOR PURPOSES OF THIS SECTION 10.3 AND, TO THE EXTENT APPLICABLE,
SECTION 10.4, "INDEMNITOR"), JOINTLY AND SEVERALLY, SHALL INDEMNIFY AND HOLD
PENTEGRA AND ITS AFFILIATES, OFFICERS, DIRECTORS, SHAREHOLDER, 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, AND
(B) PRIOR TO AND AFTER THE CLOSING DATE, THE INDEMNITOR'S MANAGEMENT AND
CONDUCT OF THE BUSINESS;
(C) ANY ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS
AND INDEPENDENT CONTRACTORS IN OR ABOUT CONTRIBUTORS'S BUSINESS WHETHER ON OR
AFTER THE CLOSING DATE,
(D) ANY VIOLATION BY CONTRIBUTORS OR ITS SHAREHOLDER OR THEIR 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 CONTRIBUTORS OR SHAREHOLDER RELATING TO
CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR, WHETHER ON OR AFTER THE CLOSING DATE,
(E) TAXES OF CONTRIBUTORS OR SHAREHOLDER OR ANY OTHER PERSON OR ENTITY
RELATED TO OR AFFILIATED WITH THE CONTRIBUTORS OR SHAREHOLDER ARISING FROM OR AS
A RESULT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
(F) ANY LIABILITY OF CONTRIBUTORS OR THE SHAREHOLDER 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,
16
(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 CONTRIBUTORS OR ITS SHAREHOLDER AND
PROVIDED TO PENTEGRA OR ITS COUNSEL BY THE CONTRIBUTORS OR ITS SHAREHOLDER
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 CONTRIBUTORS OR ITS
SHAREHOLDER REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS
THEREIN NOT MISLEADING.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES, INDEMNITOR
SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY ARE
INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON
AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT
THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT
ENTITLED TO INDEMNIFICATION HEREUNDER.
10.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after Indemnified
Person receives written notice of the commencement of any action or other
proceeding in respect of which indemnification or reimbursement may be sought
hereunder, or within such lesser time as may be provided by law for the defense
of such action or proceeding, such Indemnified Person shall notify Indemnitor
thereof. If any such action or other proceeding shall be brought against any
Indemnified Person, Indemnitor shall, upon written notice given within a
reasonable time following receipt by Indemnitor of such notice from Indemnified
Person, be entitled to assume the defense of such action or proceeding with
counsel chosen by Indemnitor and reasonably satisfactory to Indemnified Person;
provided, however, that any Indemnified Person may at its own expense retain
separate counsel to participate in such defense. Notwithstanding the foregoing,
Indemnified Person shall have the right to employ separate counsel at
Indemnitor's expense and to control its own defense of such action or proceeding
if, in the reasonable opinion of counsel to such Indemnified Person, (a) there
are or may be legal defenses available to such Indemnified Person or to other
Indemnified Persons that are different from or additional to those available to
Indemnitor and which could not be adequately advanced by counsel chosen by
Indemnitor, or (b) a conflict or potential conflict exists between Indemnitor
and such Indemnified Person that would make such separate representation
advisable; provided, however, that in no event shall Indemnitor be required to
pay fees and expenses hereunder for more than one firm of attorneys of
Indemnified Person in any jurisdiction in any one action or proceeding or group
of related actions or proceedings. Indemnitor shall not, without the prior
written consent of any Indemnified Person, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action or
proceeding to which such Indemnified Person is a party unless such settlement,
compromise or consent includes an unconditional release of such Indemnified
Person from all liability arising or potentially arising from or by reason of
such claim, action or proceeding.
10.5 RIGHT OF SETOFF. In the event of any breach of warranty,
representation, covenant or agreement by Contributors or Shareholder 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;
17
(b) at any time by Pentegra if any representation or warranty of
Contributors or Shareholder contained in this Agreement or in any certificate or
other document executed and delivered by Contributors or Shareholder pursuant to
this Agreement is or becomes untrue or breached in any material respect or if
Contributors or Shareholder 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 Contributors or Shareholder 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, Shareholder or Contributors if the transaction
contemplated hereby shall not have been consummated by December 31, 1997; or
(e) by Pentegra at any time prior to the Closing Date if Pentegra
determines in its sole discretion as the result of its legal, financial and
operational due diligence with respect to Contributors, 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,
Contributors 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 Contributors 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. Contributors and Shareholder
acknowledge that the shares of Pentegra Common Stock to be delivered to
Contributors 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
Contributors 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. Contributors 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.
18
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
Contributors resides.
12.3 ECONOMIC RISK; SOPHISTICATION. Contributors and Shareholder are 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 have 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 their own interests in
connection with the acquisition of the Pentegra Common Stock. Contributors,
Shareholder and their 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. Contributors,
Shareholder and their representatives have asked any and all questions in the
nature described in the preceding sentence and all questions have been answered
to their satisfaction. Contributors and Shareholder are "accredited investors"
as defined in Regulation D of the Securities Act of 1933, as amended.
SECTION 13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Contributors and
Shareholder recognize and acknowledge that they had in the past, currently have,
and in the future may possibly have, access to certain confidential information
of Pentegra that is valuable, special and unique assets of Pentegra's
businesses. Contributors and Shareholder agree 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 Contributors
or Shareholder, (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), Contributors and Shareholder
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) Contributors and Shareholder reasonably believe that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) Contributors and Shareholder are 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 Contributors or Shareholder of the provisions of this SECTION 13,
Pentegra shall be entitled to an injunction restraining Contributors and
Shareholder 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. NONCOMPETITION.
14.1 PROHIBITED ACTIVITIES. In order to protect Pentegra and each of its
affiliates against the unauthorized use or disclosure of any of their
confidential information presently known or hereinafter acquired by the
Shareholder and the Contributors and other good and valuable consideration,
Shareholder and the Contributors hereby agree that, subject to adjustment
pursuant to SECTION 14.4, for a period of five (5) years following the Closing
Date, each Contributor and Shareholder and his or her respective affiliates
shall not knowingly, directly or indirectly, for herself or himself or on or
behalf of any other corporation, person, firm, partnership, association or any
other entity (whether as an individual, agent, employee, offer director or in
any other capacity) act as an officer, director, employee, consultant,
shareholder, lender, guarantor or agent of, or otherwise assist any entity which
is engaged in any business of the same nature as, or in direct competition with,
the dental practice management business, consulting business or training
business or any other business in which Pentegra or its affiliates are now
engaged or other business in which such entities become engaged. The
Contributors and Shareholders agree that, in the event of a breach by them of
the foregoing covenant, the covenant may be enforced by Pentegra by a suit for
damages, by injunction or by restraining order.
14.2 REASONABLE RESTRAINT. It is agreed by the parties that the foregoing
covenants in this SECTION 14 impose a reasonable restraint on the Contributors
and Shareholder in light of the activities and business of PRG on the date of
the execution of this Agreement and the future plans of Pentegra.
19
14.3 SEVERABILITY; REFORMATION. The covenants in this SECTION 14 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
14.4 TERM. It is specifically agreed that the period of five (5) years
stated above, shall be computed by excluding from such computation any time
during which any Contributor or Shareholder is in violation of any provision of
this SECTION 14. The covenants contained in this SECTION 14 shall have no
effect if the transactions contemplated by this Agreement are not consummated
for any reason but otherwise shall not be affected by any breach of any other
provision hereof by any party hereto.
SECTION 15. MISCELLANEOUS.
15.1 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 Shareholder, Contributors and Pentegra shall be filed in a manner
consistent with such intention and Contributors 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.
15.2 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 Contributors or Shareholder:
To address set forth on EXHIBIT 15.2
with a copy to:
Person and address set forth on EXHIBIT 15.2
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
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15.3 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.
15.4 EACH PARTY TO BEAR COSTS. Subject to SECTION 15.12, 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 Contributors or Shareholder 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.
15.5 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 Contributors.
15.6 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF INCORPORATION OF
Contributors AND APPLIED WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS
PRINCIPLES.
15.7 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.
15.8 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.
15.9 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.
15.10 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
15.11 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 Contributors, be relieved from its obligations to
Contributors under this Agreement.
15.12 COSTS OF ENFORCEMENT. In the event that Pentegra, on the one
hand, or Contributors, 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
21
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.
15.13 PRORATIONS. Contributors 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 Contributors 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 Contributors or may demand from Contributors, and
Contributors agrees to pay, the amount necessary to correct the estimate and
proration made at Closing.
15.14 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.
15.15 ARBITRATION. Other than pursuant to SECTION 14 hereunder, upon
the request of either Pentegra or the Contributors or Shareholder
(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
22
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.
15.16 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, LTD.
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Xxxxx X. Xxxx, President
NAPILI INTERNTIONAL, INC.
By: /s/ Xxxxxx X. Xxxx
----------------------------------------
Xxxxxx X. Xxxx, President
PENTEGRA DENTAL GROUP, INC.
By: /s/ Xxx Xxxxxx
----------------------------------------
Its: Senior V.P.
---------------------------------------
/s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
MOR LIMITED PARTNERSHIP
By: /s/ Xxxx X. Xxxx, D.D.S.
----------------------------------------
Xxxx X. Xxxx, D.D.S.
By: /s/ Xxxxxx X. Xxxx
----------------------------------------
Xxxxxx X. Xxxx
XXXX TRUST
By: /s/ Xxxx X. Xxxx
----------------------------------------
Xxxx X. Xxxx, Trustee
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Xxxxx X. Xxxx, Trustee
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Xxxxx X. Xxxx, Trustee
By: /s/ Xxxx Xxxx Xxxxxx
----------------------------------------
Xxxx Xxxx Xxxxxx, Trustee
24
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
2.3 Permits and Licenses
2.4 Consents
2.8 Leases
2.10 Encumbrances
2.12 Patents and Trademarks; Names
2.13 Directors and Officers; 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
9.1(l) Form of Registration Rights Agreement
15.2 Addresses for Notice
25
ANNEX I
ACQUISITION CONSIDERATION
The aggregate consideration to be received by the Contributors pursuant
to the Agreement (the "Acquisition Consideration") is the following:
Cash in the amount of $200,000.00.
26
