Exhibit 10.1
EXCLUSIVE REFERRAL AGREEMENT
THIS EXCLUSIVE REFERRAL AGREEMENT (this "Agreement") is made effective
December 5, 2006, by and between DENTAL PATIENT CARE AMERICA, INC., a Utah
corporation ("DPCA"); DENTAL COOPERATIVE, INC., a Utah corporation ("COOP");
DENTAL PRACTICE TRANSITION, INC., a Utah corporation ("DPT"), and STILLWATER
NATIONAL BANK AND TRUST COMPANY (the "Bank").
WITNESSETH:
WHEREAS, DPCA, through its subsidiaries, is in the business of
providing services to dentists and the dental industry;
WHEREAS, DPCA is developing a new line of business to be operated
through COOP, DPT or another subsidiary of DPCA that involves (a) the funding of
the acquisition and operation of dental practices of retiring dentists or
dentists that are relocating and (b) facilitating loans to the DPCA's affiliate
dental practices;
WHEREAS, DPCA, COOP, and DPT require funding necessary to enable DPCA
to acquire the business and operations of dental practices from time to time;
WHEREAS, DPCA, COOP, and DPT desire to offer the Bank the first right
to provide loans to Subscribers (as defined below) and to provide funding to
DPCA for the purpose of, among other things, enabling DPCA to acquire the
business and operations of dental practices from time to time;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
DPCA, COOP, DPT, and the Bank mutually covenant and agree as follows.
1. Definitions.
1.1. Affiliate. The term "Affiliate" means any person or entity
directly or indirectly controlling or controlled by or under
common control with another person or entity; provided that,
for purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under
common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through
the ownership of voting securities or by contract or
otherwise.
1.2. COOP. The term "COOP" means Dental Cooperative, Inc., a Utah
corporation.
1.3. DPCA. The term "DPCA" means Dental Patient Care America, Inc.,
a Utah corporation, and its successors.
1.4. DPCA Group. The term "DPCA Group" means, individually and
collectively, DPCA, COOP, DPT, all existing and future
Subsidiaries of DPCA, and all existing and future Affiliates
of any of the foregoing.
1.5. Purchase Agreement. The term "Purchase Agreement" means each
Affiliate Member Practice Purchase Agreement, between one or
more members of the DPCA Group and a Subscriber, together with
all substantially similar agreements and all amendments,
modifications and replacements thereof, and any other
agreement or arrangement, whether written or oral, by which a
member of the DPCA Group provides services, agrees to purchase
the Subscriber's dental practice, or refers, endorses, or
otherwise promotes a lender's services to or for the benefit
of a Subscriber.
1.6. Referral Period. The period beginning on the date of this
Agreement and ending on the fifth anniversary of this
Agreement.
1.7. Subscriber. The term "Subscriber" means each dental practice
or dental practitioner to whom a member of the DPCA Group
provides services, including without limitation, each dental
practice that is a party to a Purchase Agreement.
1.8. Subscriber Loans. The term "Subscriber Loans" means each loan
to a Subscriber pursuant to a Purchase Agreement.
1.9. Subsidiary and Subsidiaries. The term "Subsidiary" or
"Subsidiaries" means each present or future partnership,
limited partnership, limited liability company, corporation or
other entity of which DPCA owns, directly or indirectly, more
than 50% of the voting interests or voting stock.
1.10. Third Party Financing. The term "Third Party Financing" means
any loan, financing, or other extension of credit to any
member of the DPCA Group by a bank, savings and loan, or other
financial institution or any other third party, except (a)
credit card financing arrangements, purchase money equipment
financings, and other ordinary course of business financings
in the aggregate principal amount not to exceed $100,000, and
(b) loans and equity or debt financings by Heartland Dental
Care, Inc.
2. Exclusive Referral.
2.1. Subscriber Loans. Each member of the DPCA Group grants to the
Bank the exclusive right of first refusal during the Referral
Period to act as the lender for each Subscriber Loan. The
Bank's right of first refusal will be exercised in accordance
with the provisions of paragraph 3 of this Agreement. During
the Referral Period, each member of the DPCA Group will
exclusively recommend, refer, endorse and otherwise promote
the Bank as the lender for all Subscriber Loans under each
Purchase Agreement, except as expressly provided in paragraph
3.4 of this Agreement.
2.2. Failure to Refer. If the DPCA Group fails to comply with its
obligations under paragraph 2.1 of this Agreement with respect
to a particular Subscriber, and the Subscriber enters into a
Subscriber Loan with a lender other than the Bank, then the
DPCA Group, jointly and severally, will pay the Damages
Payment (as defined below) to the Bank on or before the
earlier of (a) 10 days following such failure or (b) receipt
by DPCA of written demand by the Bank.
2.3. Damages Payment. The Damages Payment is the amount equal to
the greater of (a) the product of the maximum principal amount
of the applicable Subscriber Loan, times 2% or (b) $10,000.
The DPCA Group and the Bank agree that if the DPCA Group fails
to comply with its obligations under paragraph 2.1 of this
Agreement, and the Subscriber enters into a Subscriber Loan
with a lender other than the Bank, the Damages Payment will
constitute liquidated damages for the Bank's loss of the
opportunity to undertake the Subscriber Loan, to recover loan
origination expenses, and to realize profits over the balance
of the Subscriber Loan, the actual amount of which loss would
be impracticable or extremely difficult to calculate, and will
not be construed as a penalty.
2.4. Audit Rights. Each member of the DPCA Group irrevocably
authorizes the Bank to inspect personally, or through the
Bank's designated agents or representatives, the books of
account and all other records of the DPCA Group for the
purpose of determining the DPCA Group's compliance with
paragraphs 2.1 and 2.2 of this Agreement. DPCA will, and will
cause each member of the DPCA Group to, maintain at its
principal executive office a permanent, accurate set of books
and records of all Subscribers, Subscriber Loans, Purchase
Agreements, and such other records as reasonably necessary to
enable the Bank to conduct an effective audit. The Bank's
right to audit pursuant to this paragraph 2.4 may be exercised
during regular business hours at such time and from time to
time as determined in the Bank's sole discretion upon at least
24 hours notice to DPCA. As long as the DPCA Group is not in
breach of any of the terms of this Agreement, the Bank may not
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conduct more than two audits each calendar year. Each audit
will be conducted at the Bank's expense, provided that DPCA
will pay the Bank's expenses for each audit that discloses the
breach by a member of the DPCA Group of its obligations under
paragraphs 2.1 and 2.2 of this Agreement.
3. Referral Procedure. In connection with the negotiation and performance
of each Purchase Agreement and at each other time a Subscriber requests
or otherwise indicates an interest in or desire for a Subscriber Loan,
the DPCA Group or applicable member of the DPCA Group and the Bank will
take the following actions.
3.1. Notice to Bank. The DPCA Group will promptly deliver to the
Bank written notice stating the name of the Subscriber and the
proposed loan amount.
3.2. Due Diligence Delivery. The DPCA Group will collect the Due
Diligence Materials (as defined below) from the Subscriber and
other parties and deliver the Due Diligence Materials to the
representative of the Bank designated in writing to DPCA. The
"Due Diligence Materials" means the financial statements and
other information of the Subscriber and, if applicable, the
equity owners of the Subscriber, that is listed in Schedule
"1" to this Agreement, as such Schedule may be amended by the
Bank from time to time. The Due Diligence Materials will not
be deemed to have been delivered to the Bank until all items
comprising the Due Diligence Materials (other than items the
receipt of which is waived in writing by the Bank) have been
received by the Bank. In order to facilitate administrative
efficiencies, the DPCA Group will submit the Due Diligence
Materials only at such times as the aggregate principal amount
of all proposed Subscriber Loans for which such Due Diligence
Materials were collected equal at least $2,500,000.
3.3. General Lending Standards. Subject to the Due Diligence
Materials being satisfactory to the Bank, in the Bank's sole
discretion, and such internal approvals as may be required by
the Bank, the Bank agrees to undertake each Subscriber Loan on
the terms and conditions set forth in Schedule "2" to this
Agreement, as such Schedule may be amended by the Bank from
time to time, with the consent of DPCA.
3.4. Acceptance Period. For 30 days after the receipt of the Due
Diligence Materials (the "Acceptance Period"), the Bank will
have the preemptive right to undertake the Subscriber Loan.
The Bank's acceptance or refusal to undertake the Subscriber
Loan will be made by written notice to the Subscriber, with a
copy to DPCA. If the Bank delivers a notice of refusal or
fails to provide notice of acceptance within the Acceptance
Period, then the DPCA Group may refer the Subscriber to a
lender other than the Bank for purposes of facilitating the
Subscriber Loan that was the subject of the Due Diligence
Materials. Each subsequent Subscriber Loan for the particular
Subscriber will be subject to the Bank's right of first
refusal and the procedures set forth in paragraphs 2 and 3 of
this Agreement, respectively.
3.5. Bank's Discretion. Notwithstanding any provision of this
Agreement, the Bank is not obligated to commit to provide a
Subscriber Loan or to provide any financial or other services
to any Subscriber. The DPCA Group acknowledges and agrees that
the decision whether to undertake a Subscriber Loan or to
otherwise loan funds, extend credit, or make any financial
accommodation to or for the benefit of any Subscriber is in
the sole discretion of the Bank.
4. First Refusal. Each member of the DPCA Group grants to the Bank the
exclusive right of first refusal during the Referral Period to act as
the lender for each member of the DPCA Group with respect to any Third
Party Financing. In connection with each proposed Third Party
Financing, the DPCA Group or applicable member of the DPCA Group and
the Bank will take the following actions.
4.1. Notice to Bank. The DPCA Group will promptly deliver to the
Bank written notice describing the desired Third Party
Financing, the proposed use of funds, and all other material
information necessary fully apprise the Bank of the need,
purpose, and anticipated source of repayment of the Third
Party Financing.
4.2. DPCA Information. The DPCA Group will provide such due
diligence information and materials as requested by the Bank
in connection with its consideration whether to undertake the
Third Party Financing (the "DPCA Information"). The DPCA
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Information will not be deemed to have been delivered to the
Bank until all items comprising the DPCA Information have been
received by the Bank.
4.3. Commitment Period. For 30 days after the receipt of the DPCA
Information (the "Commitment Period"), the Bank will have the
preemptive right to undertake the Third Party Financing on
such terms and conditions as determined by the Bank in the
Bank's sole discretion. The Bank's acceptance or refusal to
undertake the Third Party Financing will be made by written
notice to DPCA. If (a) the Bank delivers a notice of refusal
or fails to provide notice of acceptance within the Commitment
Period, or (b) DPCA declines to accept the terms and
conditions of the Third Party Financing offered by the Bank,
then the DPCA Group may offer the opportunity to provide the
Third Party Financing to a lender other than the Bank.
Notwithstanding the foregoing sentence, if the Bank offers to
provide the Third Party Financing, but DPCA declines to accept
the terms and conditions of such offer, then DPCA may not
undertake the Third Party Financing with a lender other than
the Bank on terms substantially similar to those offered by
the Bank for a period of six months following the date DPCA
declines the Bank's offer to provide that particular Third
Party Financing. Each subsequent Third Party Financing will be
subject to the Bank's right of first refusal and the
procedures set forth in this paragraph 4 of this Agreement.
4.4. Bank's Discretion. Notwithstanding any provision of this
Agreement, the Bank is not obligated to commit to provide any
Third Party Financing or to provide any financial or other
services to DPCA or any member of the DPCA Group. The DPCA
Group acknowledges and agrees that the decision whether to
undertake any Third Party Financing or to otherwise loan
funds, extend credit, or make any financial accommodation to
or for the benefit of DPCA or any member of the DPCA Group is
in the sole discretion of the Bank.
5. Miscellaneous Provisions.
5.1. Time. Time is the essence of each provision of this Agreement.
5.2. No Assignment. This Agreement is not assignable without the
prior written consent of the other party. Any attempt to
assign any of the rights, duties, or obligations of this
Agreement without such consent is void.
5.3. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal, or unenforceable, the
validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.
5.4. No Waiver. Neither party shall, by mere lapse of time, without
giving notice or taking other action hereunder, be deemed to
have waived any breach by the other party of any of the
provisions of this Agreement. Further, the waiver by either
party of a particular breach of this Agreement by the other
shall not be construed as nor constitute a continuing waiver
of such breach or of breaches of the same or other provisions
of this Agreement.
1.1 Notices. Any notice, demand or communication required or
permitted to be given by any provision of the Loan Documents
will be in writing and will be deemed to have been given when
delivered personally or by telefacsimile, receipt confirmed,
to the party designated to receive such notice or on the date
following the day sent by overnight courier or on the third
(3rd) business day after the same is sent by certified mail,
postage and charges prepaid, directed to the following
addresses or to such other or additional addresses as any
party might designate by written notice to the other party:
DPCA, COOP,
DPT and the
DPCA Group: 2150 South 0000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: President
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The Bank: Stillwater National Bank and Trust Company
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxx, President - Healthcare Lending
5.5. Construction. Nothing in the Loan Documents is intended to
constitute the Bank as a joint venturer with DPCA or any
member of the DPCA Group or to create a partnership. Except
for the terms defined in paragraph 1 of this Agreement, the
descriptive headings contained in this Agreement are for
convenience in reference and are not intended to be used in
the construction of the content of this Agreement.
5.6. Force Majeure. Neither party shall be in default if its
failure to perform any obligation hereunder is caused solely
by supervening conditions beyond that party's reasonable
control; provided, however, that in order to avail itself of
the excuse from performance under this Section, the party
seeking such excuse shall demonstrate diligence in attempting
to remedy any such supervening conditions.
5.7. Binding Effect. This Agreement will be binding on DPCA, COOP,
DPT, each member of the DPCA Group, and their respective
successors and permitted assigns and will inure to the benefit
of the Bank and the Bank's successors and assigns.
5.8. Entire Agreement. The parties hereto acknowledge that this
Agreement are the complete and exclusive statement of
agreement and supersedes all prior understandings and other
communications between the parties relating hereto. This
Agreement may be amended only by a subsequent writing that
specifically refers to this Agreement and that is signed by
both parties.
5.9. Governing Law. This Agreement is to be construed according to
the internal laws of the State of Oklahoma. All actions with
respect to this Agreement may be instituted in the courts of
the State of Oklahoma sitting in Oklahoma County, Oklahoma or
the United States District Court sitting in Oklahoma County,
Oklahoma, as the Bank might elect from time to time, and by
the execution and delivery of this Agreement, DPCA, COOP, and
DPT irrevocably and unconditionally submit to the jurisdiction
(both subject matter and personal) of each such court and
irrevocably and unconditionally waive: (a) any objection DPCA,
COOP, and DPT might now or hereafter have to the venue in any
such court; and (b) any claim that any action or proceeding
brought in any such court has been brought in an inconvenient
forum.
5.10. Fees and Expenses. As a material condition to the obligations
of the Bank under this Agreement, DPCA, COOP and DPT, jointly
and severally, agree to pay within 30 days from the date of
this Agreement all out of pocket fees and expenses, including
attorney fees and expenses, incurred by the Bank in connection
with the negotiation, preparation and completion of this
Agreement and the form of draft loan documents to be provided
to prospective Subscribers
5.11. Counterparts. This Agreement may be executed in counterparts
and, when so executed, each counterpart shall be deemed to be
an original, and said counterparts together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized representatives as set forth below.
DENTAL PATIENT CARE AMERICA, INC., a Utah
corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx, President
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DENTAL COOPERATIVE, INC., a Utah corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx, President
DENTAL PRACTICE TRANSITION, INC., a Utah corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx, President
STILLWATER NATIONAL BANK AND TRUST COMPANY
By: /s/ Xxx Xxxxx
----------------------------------------
Xxx Xxxxx, President - Healthcare Lending
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