EXHIBIT 2.4
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Annex 1
APPLE ORTHODONTIX, INC.
UNIFORM PROVISIONS
FOR THE
ACQUISITION
OF
FOUNDING COMPANIES
WORDS AND TERMS USED IN THESE UNIFORM PROVISIONS WHICH ARE DEFINED IN THE
CONTRIBUTION AGREEMENT AMONG APPLE ORTHODONTIX, INC. AND THE OWNER NAMED XXXXXXX
(CALLED THEREIN AND HEREIN "THIS AGREEMENT"), TO WHICH THESE UNIFORM PROVISIONS
ARE ATTACHED AS ANNEX 1 ARE USED HEREIN AS DEFINED THEREIN.
TABLE OF CONTENTS
ARTICLE I ADDITIONAL DEFINITIONS....................................... 1
Section 1.02 Additional Defined Terms................................ 1
Section 1.03 Other Definitional Provisions........................... 11
Section 1.04 Captions................................................ 12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE OWNER.................. 12
Section 3.02 [Intentionally Left Blank].............................. 12
Section 3.03 [Intentionally Left Blank]. ............................ 12
Section 3.04 No Conflicts or Litigation.............................. 12
Section 3.05 No Brokers.............................................. 12
Section 3.06 [Intentionally Left Blank]. ............................ 12
Section 3.07 Control of Related Businesses........................... 13
ARTICLE IV ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE OWNER....... 13
Section 4.02 Locations............................................... 13
Section 4.03 Power; Enforceability; Absence of Conflicts;
Required Consents....................................... 13
Section 4.04 [Intentionally Left Blank].............................. 14
Section 4.05 No Defaults............................................. 14
Section 4.06 [Intentionally Left Blank].............................. 14
Section 4.07 [Intentionally Left Blank].............................. 14
Section 4.08 [Intentionally Left Blank].............................. 14
Section 4.09 [Intentionally Left Blank].............................. 14
Section 4.10 Predecessor Status; Etc................................. 14
Section 4.11 Related Party Agreements................................ 14
Section 4.12 Litigation.............................................. 15
Section 4.13 Financial Statements; Disclosure........................ 15
Section 4.14 Compliance With Laws.................................... 15
Section 4.15 Certain Environmental Matters........................... 16
Section 4.16 Liabilities and Obligations............................. 16
Section 4.17 Receivables............................................. 17
Section 4.18 Owned and Leased Real Properties........................ 17
Section 4.19 Owned and Leased Property, Plant and Equipment.......... 18
Section 4.20 Proprietary Rights...................................... 18
Section 4.21 Title to Other Properties............................... 18
Section 4.22 Commitments............................................. 18
Section 4.23 Capital Expenditures.................................... 20
Section 4.24 Inventories............................................. 20
Section 4.25 Insurance............................................... 20
Section 4.26 Employee Matters........................................ 21
Section 4.27 Compliance with XXXXX, Etc.............................. 23
Section 4.28 Taxes................................................... 25
Section 4.29 Government Contracts.................................... 26
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Section 4.30 Absence of Changes...................................... 26
Section 4.31 Bank Relations; Powers of Attorney...................... 28
Section 4.32 Relations With Governments, Etc......................... 28
Section 4.33 Preemptive and Other Rights; Waiver..................... 28
Section 4.34 Organization and Good Standing; Qualification........... 28
Section 4.35 Corporate Records. .................................... 28
Section 4.36 Authorization and Validity. ........................... 29
Section 4.37 No Violation. ......................................... 29
Section 4.38 No Business, Agreements, Assets or Liabilities. ....... 29
Section 4.39 Compliance with Laws. ................................. 29
Section 4.40 Reliance on Representatives. .......................... 29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF APPLE...................... 30
Section 5.02 Organization; Power..................................... 30
Section 5.03 Authorization; Enforceability; Absence of
Conflicts; Required Consents............................ 30
Section 5.04 Charter Documents....................................... 31
Section 5.05 Capital Stock of Apple.................................. 31
Section 5.06 Subsidiaries............................................ 31
Section 5.07 Liabilities............................................. 31
Section 5.08 Compliance With Laws; No Litigation..................... 31
Section 5.09 No Brokers.............................................. 32
Section 5.10 Private Placement Memorandum............................ 32
ARTICLE VI COVENANTS EXTENDING TO THE IPO CLOSING DATE.................. 32
Section 6.02 Access and Cooperation; Due Diligence................... 32
Section 6.03 Conduct of Business Pending Closing..................... 33
Section 6.04 Prohibited Activities................................... 33
Section 6.05 No Shop................................................. 35
Section 6.06 Formation of Orthodontic Entity......................... 35
Section 6.07 Notification of Certain Matters......................... 35
Section 6.08 Supplemental Information................................ 36
Section 6.09 Cooperation in Connection With the IPO.................. 36
Section 6.10 Additional Financial Statements and Other Information... 37
Section 6.11 Termination or Transfer of Plans........................ 37
Section 6.12 Disposition of Unwanted Assets.......................... 37
Section 6.13 HSR Act Matters......................................... 37
ARTICLE VII THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION....... 38
Section 7.02 Conditions to the Obligations of Each Party............. 38
Section 7.03 Conditions to the Obligations of the Owner.............. 40
Section 7.04 Conditions to the Obligations of Apple.................. 40
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ARTICLE VIII COVENANTS FOLLOWING THE IPO CLOSING DATE..................... 42
Section 8.02 Disclosure.............................................. 42
Section 8.03 Preparation and Filing of Tax Returns................... 42
Section 8.04 Directors............................................... 42
Section 8.05 [Intentionally Left Blank].............................. 42
Section 8.06 Access.................................................. 42
Section 8.07 Licenses and Permits.................................... 42
Section 8.08 Orthodontist Employment Agreement....................... 43
ARTICLE IX INDEMNIFICATION.............................................. 43
Section 9.02 Survival of Representations and Warranties.............. 43
Section 9.03 Indemnification of Apple Indemnified Parties............ 43
Section 9.04 Indemnification of Owner Indemnified Parties............ 44
Section 9.05 Conditions of Indemnification........................... 44
Section 9.06 Remedies Not Exclusive.................................. 46
Section 9.07 Limitations on Indemnification.......................... 46
ARTICLE XI GENERAL PROVISIONS........................................... 47
Section 11.15 Treatment of Confidential Information.................. 47
Section 11.16 Bulk Sales............................................. 48
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THE UNIFORM PROVISIONS
ARTICLE I
ADDITIONAL DEFINITIONS
Section 1.02 ADDITIONAL DEFINED TERMS. These provisions constitute the
Uniform Provisions of the Contribution Agreement by and between Apple and the
Owner and, although in a separate document, are part of and are to be included
in the Contribution Agreement. As used in this Agreement, the following terms
have the meanings assigned to them below:
"Acquisition Proposal" has the meaning specified in Section 6.05.
"Affiliate" means, as to any specified Person, any other Person that,
directly or indirectly through one or more intermediaries or otherwise,
controls, is controlled by or is under common control with the specified Person.
As used in this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person (whether through ownership of Capital Stock of that Person,
by contract or otherwise).
"Apple Common Stock" means the common stock, par value $.01 per share,
of Apple.
"Apple Indemnified Party" means Apple and its Affiliates and each of
their respective officers, directors, employees, agents, financial advisors and
counsel; provided, however, that no Person who indemnifies Apple Indemnified
Parties in this Agreement in his capacity as an Owner will be an Apple
Indemnified Party for purposes of this Agreement, notwithstanding that the
Person is an Apple Indemnified Party for purposes of one or more of the Other
Agreements.
"Apple Indemnified Loss" has the meaning specified in Section 9.03.
"Capital Lease" means a lease of (or other agreement conveying the right
to use) real or personal property that is required to be classified and
accounted for as a capital lease under GAAP as in effect on the date of this
Agreement.
"Capital Stock" means, with respect to: (a) any corporation, any share,
or any depositary receipt or other certificate representing any share, of an
equity ownership interest in that corporation; and (b) any other Entity, any
share, membership or other percentage interest, unit of participation or other
equivalent (however designated) of an equity interest in that Entity.
"Cash Compensation" means, as applied to any employee, nonemployee
director or officer of, or any natural person who performs consulting or other
independent contractor services for, the Business, the wages, salaries, bonuses
(discretionary and formula), fees and other cash compensation paid or payable by
the Owner to that employee or other natural person.
"CERCLA" means the Comprehensive Environmental Response, Conservation,
and Liability Act of 1980.
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"Charter Documents" means, with respect to any Entity at any time, in
each case as amended, modified and supplemented at that time, (a) the articles
or certificate of formation, incorporation, organization or association (or the
equivalent organizational documents) of that Entity, (b) the bylaws, limited
liability company agreement or regulations or partnership agreement (or the
equivalent governing documents) of that Entity and (c) each document setting
forth the designation, amount and relative rights, limitations and preferences
of any class or series of that Entity's Capital Stock or of any rights in
respect of that Entity's Capital Stock.
"Claim Notice" has the meaning specified in Section 9.05.
"Closing" has the meaning specified in Section 7.01.
"COBRA" means the Comprehensive Omnibus Budget Reconciliation Act of
1984.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means, with respect to any Person, all trade
secrets and other confidential, nonpublic and/or proprietary information of that
Person, including information derived from reports, investigations, research,
work in progress, codes, marketing and sales programs, capital expenditure
projects, cost summaries, pricing formulae, contract analyses, financial
information, projections, confidential filings with any Governmental Authority
and all other confidential, nonpublic concepts, methods of doing business,
ideas, materials or information prepared or performed for, by or on behalf of
that Person.
"Current Balance Sheet" has the meaning specified in Section 1.01.
"Current Balance Sheet Date" has the meaning specified in Section 1.01.
"Current Date" means any day during the 20-day period ending on the date
of the Closing.
"Damage" to any specified Person means any cost, damage (including any
consequential, exemplary, punitive or treble damage) or expense (including
reasonable fees and actual disbursements by attorneys, consultants, experts or
other Representatives and Litigation costs) to, any fine of or penalty on or any
liability (including loss of earnings or profits) of any other nature of that
Person.
"Damage Claim" means, as asserted (a) against any specified Person, any
claim, demand or Litigation made or pending against that Person for Damages to
any other Person, or (b) by the specified Person, any claim or demand of the
specified Person against any other Person for Damages to the specified Person.
"Derivative Securities" of a specified Entity means any Capital Stock or
debt security or other Indebtedness of the specified Entity or any other Person
which is convertible into or exchangeable for, or any option, warrant or other
right to acquire, (a) any unissued Capital
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Stock of the specified Entity or (b) any Capital Stock of the specified Entity
which has been issued and is being held by the Entity directly or indirectly as
treasury Capital Stock.
"DGCL" means the General Corporation Law of the State of Delaware.
"Election Period" has the meaning specified in Section 9.05.
"Employee Policies and Procedures" means at any time all employee
manuals and all material policies, procedures and work-related rules that apply
at that time to any employee, nonemployee director or officer of, or any other
natural person performing consulting or other independent contractor services
for, the Business.
"Employment Agreement" means at any time any (a) agreement relating to
the Business to which the Owner is a party which then relates to the direct or
indirect employment or engagement, or arises from the past employment or
engagement, of any natural person by the Owner, whether as an employee, a
nonemployee officer or director, a consultant or other independent contractor, a
sales representative or a distributor of any kind, including any employee
leasing or service agreement and any noncompetition agreement, and (b) agreement
between the Owner and any Person which arises from the sale of a business by
that Person to the Owner and limits that Person's competition with the Owner.
"Entity" means any sole proprietorship, corporation, professional
association or corporation, partnership of any kind having a separate legal
status, limited liability company, business trust, unincorporated organization
or association, mutual company, joint stock company or joint venture.
"Environmental Laws" means any and all Governmental Requirements
relating to the environment or worker health or safety, including ambient air,
surface water, land surface or subsurface strata, or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including Solid Wastes,
Hazardous Wastes or Hazardous Substances) or noxious noise or odor into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, recycling, removal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes (including petroleum, petroleum distillates, asbestos or
asbestos-containing material, polychlorinated biphenyls, chlorofluorocarbons
(including chlorofluorocarbon-12) or hydrochlorofluorocarbons).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to any specified Person at any
time, any other Person, including an Affiliate of the specified Person, that is,
or at any time within six years of that time was, a member of any ERISA Group of
which the specified Person is or was a member at the same time.
"ERISA Affiliate Pension Plan" has the meaning specified in Section
4.26.
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"ERISA Employee Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA and includes any ERISA Pension Benefit Plan.
"ERISA Group" means any "group of organizations" within the meaning of
Section 414(b), (c), (m) or (o) of the Code or any "controlled group" as defined
in Section 4001(a)(14) of ERISA.
"ERISA Pension Benefit Plan" means any "employee pension benefit plan,"
as defined in Section 3(2) of ERISA, including any plan that is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code (excluding any Multiemployer Plan).
"Exchange Act" means the Securities Exchange Act of 1934.
"Final Prospectus" means the prospectus included in the Registration
Statement at the time it becomes effective, except that if the prospectus first
furnished to the Underwriter after the Registration Statement becomes effective
for use in connection with the IPO differs from the prospectus included in the
Registration Statement at the time it becomes effective (whether or not that
prospectus so furnished is required to be filed with the SEC pursuant to
Securities Act Rule 424(b)), the prospectus so furnished is the "Final
Prospectus."
"Financial Statements" means the Initial Financial Statements and the
other financial statements relating to the Business, if any, delivered to Apple
pursuant to Section 6.10 prior to the IPO Closing Date.
"GAAP" means generally accepted accounting principles and practices in
the United States as in effect from time to time which (i) have been concurred
in by Xxxxxx Xxxxxxxx LLP and (ii) have been or are applied on a basis
consistent (except for changes concurred in by Xxxxxx Xxxxxxxx LLP) with the
most recent audited Financial Statements delivered to Apple prior to the IPO
Closing Date.
"Governmental Approval" means at any time any authorization, consent,
approval, permit, franchise, certificate, license, implementing order or
exemption of, or registration or filing with, any Governmental Authority,
including any certification or licensing of a natural person to engage in a
profession or trade or a specific regulated activity, at that time.
"Governmental Authority" means (a) any national, state, county,
municipal or other government, domestic or foreign, or any agency, board,
bureau, commission, court, department or other instrumentality of any such
government, or (b) any Person having the authority under any applicable
Governmental Requirement to assess and collect Taxes for its own account.
"Governmental Requirement" means at any time (a) any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction, writ, edict,
award, authorization or other requirement of any Governmental Authority in
effect at that time or (b) any obligation included in any certificate,
certification, franchise, permit or license issued by any Governmental
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Authority or resulting from binding arbitration, including any requirement under
common law, at that time.
"Guaranty" means, for any specified Person, without duplication, any
liability, contingent or otherwise, of that Person guaranteeing or otherwise
becoming liable for any obligation of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, and including any liability of
the specified Person, direct or indirect, (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) that obligation or to purchase (or
to advance or supply funds for the purchase of) any security for the payment of
that obligation, (b) to purchase property, securities or services for the
purpose of assuring the owner of that obligation of its payment or (c) to
maintain working capital, equity capital or other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to pay
that obligation; provided, that the term "Guaranty" does not include
endorsements for collection or deposit in the ordinary course of the endorser's
business.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"Immediate Family Member" of the Owner means at any time: any child or
grandchild (by blood or legal adoption) or spouse of the Owner at that time, or
any child of that spouse.
"Indebtedness" of any Person means, without duplication, (a) any
liability of that Person (i) for borrowed money or arising out of any extension
of credit to or for the account of that Person (including reimbursement or
payment obligations with respect to surety bonds, letters of credit, banker's
acceptances and similar instruments), for the deferred purchase price of
property or services or arising under conditional sale or other title retention
agreements, other than trade payables arising in the ordinary course of
business, (ii) evidenced by notes, bonds, debentures or similar instruments,
(iii) in respect of Capital Leases or (iv) in respect of Interest Rate
Protection Agreements, (b) any liability secured by any Lien upon any property
or assets of that Person (or upon any revenues, income or profits of that Person
therefrom), whether or not that Person has assumed that liability or otherwise
become liable for the payment thereof or (c) any liability of others of the type
described in the preceding clause (a) or (b) in respect of which that Person has
incurred, assumed or acquired a liability by means of a Guaranty.
"Indemnified Party" has the meaning specified in Section 9.05.
"Indemnifying Party" has the meaning specified in Section 9.05.
"Indemnity Notice" has the meaning specified in Section 9.05.
"Information" means written information, including (a) data,
certificates, reports and statements (excluding Financial Statements) and (b)
summaries of unwritten agreements, arrangements, contracts, plans, policies,
programs or practices or of unwritten amendments or modifications of,
supplements to or waivers under any of the foregoing documents.
"IPO" means the first time after January 31, 1997 a registration
statement filed under the Securities Act and respecting a primary offering by
Apple of shares of Apple Common Stock
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(other than a registration statement respecting shares being offered pursuant to
an Owner ERISA Benefit Plan or any Other Compensation Plan) is declared
effective under the Securities Act and the shares registered by that
registration statement are issued and sold by Apple (otherwise than pursuant to
the exercise by the Underwriter of any over-allotment option).
"IPO Closing Date" means the date on which Apple first receives payment
for the shares of Apple Common Stock it sells to the Underwriter in the IPO.
"IPO Price" means the price per share of Apple Common Stock which is set
forth as the "price to public" on the cover page of the Final Prospectus.
"IPO Pricing Date" means the date, if any, on which Apple and the
Underwriter agree in the Underwriting Agreement to the price per share of Apple
Common Stock at which the Underwriter, subject to the terms and conditions of
the Underwriting Agreement, will purchase newly issued shares of Apple Common
Stock from Apple on the IPO Closing Date.
"IRS" means the Internal Revenue Service.
"Lien" means, with respect to any property or asset of any Person (or
any revenues, income or profits of that Person therefrom) (in each case whether
the same is consensual or nonconsensual or arises by contract, operation of law,
legal process or otherwise), (a) any mortgage, lien, security interest, pledge,
attachment, levy or other charge or encumbrance of any kind thereupon or in
respect thereof or (b) any other arrangement under which the same is
transferred, sequestered or otherwise identified with the intention of
subjecting the same to, or making the same available for, the payment or
performance of any liability in priority to the payment of the ordinary,
unsecured creditors of that Person, including any "adverse claim" (as defined in
Section 8-302(b) of each applicable Uniform Commercial Code) in the case of any
Capital Stock. For purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any asset that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to that asset.
"Litigation" means any action, case, proceeding, claim, grievance, suit
or investigation or other proceeding conducted by or pending before any
Governmental Authority or any arbitration proceeding.
"Material" means, as applied to any Entity, material to the business,
operations, property or assets, liabilities, financial condition or results of
operations of that Entity and its Subsidiaries considered as a whole.
"Material Adverse Effect" means, with respect to the consequences of any
fact or circumstance (including the occurrence or non-occurrence of any event)
to the Business considered as a whole (or after the IPO Closing Date, Apple)
that such fact or circumstance has caused, is causing or will cause, directly,
indirectly or consequentially, singly or in the aggregate with other facts and
circumstances, any Damages in excess of the Threshold Amount.
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"Material Agreement" of an Entity means any contract or agreement (a) to
which that Entity or any of its Subsidiaries is a party, or by which that Entity
or any of its Subsidiaries is bound or to which any property or assets of that
Entity or any of its Subsidiaries is subject and (b) which is Material to that
Entity.
"Minimum Cash Amount" has the meaning specified in Section 7.02.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, Section 414(f) of the Code or Section 3(37) of ERISA.
"Organization State" means, as applied to (a) any corporation, its state
or other jurisdiction of incorporation, (b) any limited liability company or
limited partnership, the state or other jurisdiction under whose laws it is
organized and existing in that legal form, and (c) any other Entity, the state
or other jurisdiction whose laws govern that Entity's internal affairs.
"Orthodontics" means providing services related to the movement and
rearrangement of teeth.
"Other Agreements" has the meaning specified in the Preliminary
Statement in this Agreement.
"Other Compensation Plan" means any compensation arrangement, plan,
policy, practice or program relating to the Business established, maintained or
sponsored by the Owner, or to which the Owner contributes, on behalf of any of
his employees or other natural persons performing consulting or other
independent contractor services for the Owner, (a) including all such
arrangements, plans, policies, practices or programs providing for severance
pay, deferred compensation, incentive, bonus or performance awards or the actual
or phantom ownership of any Capital Stock or Derivative Securities of the Owner,
but (b) excluding all Owner ERISA Pension Plans and Employment Agreements.
"Other Financing Sources" has the meaning specified in Section 7.02.
"Other Transaction Documents" means the Other Agreements and the other
written agreements, documents, instruments and certificates at any time executed
pursuant to or in connection with the Other Agreements (other than the
Transaction Documents and the Underwriting Agreement), all as amended, modified
or supplemented from time to time.
"Owner" means any Person who owns any ownership interest in the
Business.
"Owner Commitment" has the meaning specified in Section 4.22.
"Owner ERISA Benefit Plan" has the meaning specified in Section 4.26.
"Owner ERISA Pension Plan" has the meaning specified in Section 4.26.
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"Owner Indemnified Loss" has the meaning specified in Section 9.04.
"Owner Indemnified Party" means the Owner and each of his employees,
agents and counsel.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Investments" means at the time of purchase or other
acquisition by the Owner (a) obligations issued or guaranteed by the United
States of America with a remaining maturity not exceeding one year, (b)
commercial paper with maturities of not more than 270 days and a published
rating of not less than A-1 by S&P or P-1 by Moody's and (c) certificates of
deposit and bankers' acceptances having maturities of not more than one year of
any commercial bank or trust company if (A) that bank or trust company has a
combined capital and surplus of at least $500,000,000 and (B) its unsecured
long-term debt obligations, or those of a holding company of which it is a
subsidiary, are rated not less than A- by S&P or A3 by Moody's.
"Permitted Liens" means, as applied to the property or assets of any
Person (or any revenues, income or profits of that Person therefrom): (a) Liens
for Taxes if the same are not at the time due and delinquent; (b) Liens incurred
in the ordinary course of that Person's business in connection with worker
compensation, unemployment insurance and other social security legislation
(other than pursuant to ERISA or Section 412(n) of the Code); (c) easements,
rights-of-way, reservations, restrictions and other similar encumbrances
incurred in the ordinary course of that Person's business or existing on
property and not materially interfering with the ordinary conduct of that
Person's business or the use of that property; (d) defects or irregularities in
that Person's title to its real properties which do not materially (i) diminish
the value of the surface estate or (ii) interfere with the ordinary conduct of
that Person's business or the use of any of such properties; (e) any interest or
title of a lessor of assets being leased by any Person pursuant to any Capital
Lease disclosed in Section 4.19 of the Disclosure Statement or any lease that,
pursuant to GAAP, would be accounted for as an operating lease; and (f) Liens
securing purchase money Indebtedness disclosed in Section 4.16 of the Disclosure
Statement so long as such Liens do not attach to any property or assets other
than the properties or assets purchased with the proceeds of such Indebtedness.
"Person" means any natural person, Entity, estate, trust, union or
employee organization or Governmental Authority or, for the purpose of the
definition of "ERISA Affiliate," any trade or business.
"Plan" has the meaning specified in Section 4.27.
"Private Placement Memorandum" means the Apple Private Placement
Memorandum dated as of January 28, 1997 relating to the offer of Apple Common
Stock in connection with the Acquisition.
"Professional Codes" means any and all Governmental Requirements
relating to the licensing or other regulation of the business of providing
orthodontic care to patients.
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"Prohibited Transaction" means any transaction that is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA.
"Property, Plant and Equipment" means at any time any property that then
would be included and classified as property, plant and equipment on a
consolidated balance sheet prepared in accordance with GAAP of the Owner
relating to the Business.
"Proprietary Rights" means (a) patents, applications for patents and
patent rights, (b) in each case, whether registered, unregistered or under
pending registration, trademark rights, trade names, trade name rights,
corporate names, business names, trade styles or dress, service marks and logos
and other trade designations and copyrights and (c), in the case of the Owner,
all agreements relating to the technology, know-how or processes used in the
Business.
"Qualified Plans" has the meaning specified in Section 4.27.
"RCRA" means the Resource Conservation and Recovery Act of 1976.
"Registration Rights Agreement" means the registration rights agreement
to be executed and delivered at the Closing by Apple and the Owner, electing to
be parties thereto in the form of Exhibit 7.03(b)(iv), with the blanks
appropriately filled.
"Registration Statement" means the registration statement, including (a)
each preliminary prospectus included therein prior to the date on which that
registration statement is declared effective under the Securities Act (including
any prospectus filed with the SEC pursuant to Securities Act Rule 424(b)), (b)
the Final Prospectus and (c) any amendments thereof and all supplements and
exhibits thereto, filed by Apple with the SEC to register shares of Apple Common
Stock under the Securities Act for public offering and sale in the IPO.
"Related Party Agreement" means any contract or other agreement, written
or oral, (a) to which the Owner is a party or is bound or by which any property
of the Owner relating to the Business is bound or may be subject and (b) (i) to
which the Owner or any of the Owner's Related Persons or Affiliates also is a
party, (ii) of which the Owner or the Owner's Related Persons or Affiliates is a
beneficiary or (iii) as to which any transaction contemplated thereby properly
would be characterized (without regard to the amount involved) as a related
party transaction for purposes of applying the disclosure requirements of GAAP
or the SEC applicable to the Registration Statement.
"Related Person" of the Owner means: (i) any Immediate Family Member of
the Owner, (ii) any Estate of the Owner or any Immediate Family Member of the
Owner, (iii) the trustee of any inter vivos or testamentary trust of which all
the beneficiaries are Related Persons of the Owner and (iv) any Entity the
entire equity interest in which is owned by any one or more of the Owner and
Related Persons of the Owner. As used in this definition, "Estate" means, as to
any natural person who has died or been adjudicated mentally incompetent by a
court of competent jurisdiction, (i) that person's estate or (ii) the
administrator, conservator, executor, guardian or representative of that estate.
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"Reportable Event" means, with respect to any Owner ERISA Pension Plan,
(a) the occurrence of any of the events set forth in Section 4043(b) or (c)
(other than a Reportable Event as to which the provision of 30 days' notice to
the PBGC is waived under applicable regulations), 4062(e) or 4063(a) of ERISA
with respect to that plan, (b) any event requiring the Owner or any ERISA
Affiliate to provide security to that plan under Section 401(a)(29) of the Code
or (c) any failure to make a payment required by Section 412(m) of the Code with
respect to that plan.
"Representatives" means, with respect to any Person, the directors,
officers, employees, Affiliates, accountants (including independent certified
public accountants), advisors, attorneys, consultants or other agents of that
Person, or any other representatives of that Person or of any of those
directors, officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents.
"Restricted Payment" means, with respect to any Entity at any time, any
of the following effected by that Entity: (a) any declaration or payment of any
dividend or other distribution, direct or indirect, on account of any Capital
Stock of that Entity or any Affiliate of that Entity or (b) any direct or
indirect redemption, retirement, purchase or other acquisition for value of, or
any direct or indirect purchase, payment or sinking fund or similar deposit for
the redemption, retirement, purchase or other acquisition for value of, or to
obtain the surrender of, any then outstanding Capital Stock of that Entity or
any Affiliate of that Entity or any then outstanding warrants, options or other
rights to acquire or subscribe for or purchase unissued or treasury Capital
Stock of that Entity or any Affiliate of that Entity.
"Returns" means the returns, reports or statements (including any
information returns) any Governmental Requirement requires to be filed for
purposes of any Tax.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Security Agreement" has the meaning set forth in the Service Agreement.
"Solid Wastes, Hazardous Wastes or Hazardous Substances" have the
meanings ascribed to those terms in CERCLA, RCRA or any other Environmental Law
applicable to the business or operations of the Owner which imparts a broader
meaning to any of those terms than does CERCLA or RCRA.
"S&P" means Standard and Poor's Rating Group.
"Subsidiary" of any specified Person at any time, means any entity a
majority of the Capital Stock of which is at that time owned or controlled,
directly or indirectly, by the specified Person.
"Supplemental Information" has the meaning specified in Section 6.08.
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"Tax" or "Taxes" means all net or gross income, gross receipts, net
proceeds, sales, use, ad valorem, value added, franchise, bank shares,
withholding, payroll, employment, excise, property, deed, stamp, alternative or
add-on minimum, environmental or other taxes, assessments, duties, fees, levies
or other governmental charges or assessments of any nature whatever imposed by
any Governmental Requirement, whether disputed or not, together with any
interest, penalties, additions to tax or additional amounts with respect
thereto.
"Taxing Authority" means any Governmental Authority having or purporting
to exercise jurisdiction with respect to any Tax.
"Termination Event" means, with respect to any Owner ERISA Pension Plan,
(a) any Reportable Event with respect to that plan which is likely to result in
the termination of that plan, (b) the termination of, or the filing of a notice
of intent to terminate, that plan or the treatment of any amendment to that plan
as a termination under Section 4041(c) of ERISA or (c) the institution of
proceedings to terminate, or the appointment of a trustee to administer, that
plan under Section 4042 of ERISA.
"Third Party Claim" has the meaning specified in Section 9.05.
"Transaction Document" means this Agreement, the Registration Rights
Agreement, the Service Agreement, the Security Agreement and the other written
agreements, documents, instruments and certificates executed pursuant to or in
connection with this Agreement (other than the Other Transaction Documents and
the Underwriting Agreement), including those specified in Article VII to be
delivered at or before the Closing, all as amended, modified or supplemented
from time to time.
"Underwriter" means collectively (a) the investment banking firms that
prospectively may enter into the Underwriting Agreement and (b) from and after
the IPO Pricing Date, the investment banking firms parties to the Underwriting
Agreement.
"Underwriting Agreement" has the meaning specified in Section 7.02.
"Welfare Plan" means an "employee welfare benefit plan" as defined in
Section 3(1) of ERISA.
Section 1.03 OTHER DEFINITIONAL PROVISIONS. (a) Except as otherwise
specified herein, all references herein to any Governmental Requirement defined
or referred to herein, including the Code, CERCLA, ERISA, the Exchange Act, RCRA
and the Securities Act, shall be deemed references to that Governmental
Requirement or any successor Governmental Requirement, as the same may have been
amended or supplemented from time to time, and any rules or regulations
promulgated thereunder.
(b) When used in this Agreement, the words "herein," "hereof" and
"hereunder" and words of similar import shall refer to this Agreement as a whole
and not to any provision of this Agreement, and the words "Article," "Section,"
"Addendum," "Annex" and "Exhibit" refer to
11
Articles and Sections of, and Xxxxxxx, Annexes and Exhibits to, this Agreement
unless otherwise specified.
(c) Whenever the context so requires, the singular number includes the
plural and vice versa, and a reference to one gender includes the other gender
and the neuter.
(d) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any description
preceding such word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
Section 1.04 CAPTIONS. Captions to Articles, Sections and subsections
of, and Addenda, Annexes and Exhibits to, this Agreement or any other
Transaction Document are included for convenience of reference only, and such
captions shall not constitute a part of this Agreement or any other Transaction
Document for any other purpose or in any way affect the meaning or construction
of any provision of this Agreement or any other Transaction Document.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
Section 3.02 [INTENTIONALLY LEFT BLANK].
Section 3.03 [INTENTIONALLY LEFT BLANK].
Section 3.04 NO CONFLICTS OR LITIGATION. The execution, delivery and
performance in accordance with their respective terms by the Owner of this
Agreement and the other Transaction Documents to which the Owner is a party do
not and will not (a) violate or conflict with any Governmental Requirement or
(b) breach or constitute a default under any agreement or instrument to which
the Owner is a party or by which the Owner is bound. No Litigation is pending
or, to the knowledge of the Owner, threatened to which the Owner is or may
become a party which (a) questions or involves the validity or enforceability of
any of the Owner's obligations under any Transaction Document or (b) seeks (or
reasonably may be expected to seek) (i) to prevent or delay the consummation by
the Owner of the transactions contemplated by this Agreement to be consummated
by the Owner or (ii) damages in connection with any consummation by the Owner of
the transactions contemplated by this Agreement.
Section 3.05 NO BROKERS. Except as disclosed in the Private Placement
Memorandum or in Section 11.03 of the Disclosure Statement, the Owner has not,
directly or indirectly, in connection with this Agreement or the transactions
contemplated hereby (a) employed any broker, finder or agent (other than a
Purchaser Representative) or (b) agreed to pay or incurred any obligation to pay
any broker's or finder's fee, any sales commission or any similar form of
compensation.
Section 3.06 [INTENTIONALLY LEFT BLANK].
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Section 3.07 CONTROL OF RELATED BUSINESSES. Except as accurately set
forth in Schedule 3.07 of the Disclosure Statement, the Owner is not, alone or
with one or more other Persons, the controlling Affiliate of any Entity,
business or trade (other than the Business) that (a) is engaged in any line of
business which is the same as or similar to the Business or (b) is, or has
within the three-year period ending on the date of this Agreement, engaged in
any transaction with the Business, except for transactions in the ordinary
course of business of the Business.
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF
THE OWNER
Section 4.02 LOCATIONS. Section 4.02 of the Disclosure Statement
accurately lists all the jurisdictions in which the Owner carries on the
Business as now conducted, and the Owner does not own, lease or operate
properties or carry on the Business in any jurisdiction not listed in that
Section which is Material to the Business.
Section 4.03 POWER; ENFORCEABILITY; ABSENCE OF CONFLICTS; REQUIRED
CONSENTS. (a) The Owner has the full power, legal capacity and authority to
execute and deliver this Agreement and each other Transaction Document to which
the Owner is a party and to perform the Owner's obligations in this Agreement
and in all other Transaction Documents to which the Owner is a party.
(b) This Agreement has been, and each of the other Transaction Documents
to which the Owner is a party, when executed and delivered to Apple will have
been, duly executed and delivered by the Owner and is, or when so executed and
delivered will be, the legal, valid and binding obligation of the Owner,
enforceable against the Owner in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law).
(c) Except as set forth in Section 4.03 of the Disclosure Statement, the
execution, delivery and performance in accordance with their respective terms by
the Owner of the Transaction Documents to which he is a party have not and will
not (i) violate, breach or constitute a default under any Material Agreement of
the Owner, (ii) result in the acceleration or mandatory prepayment of any
Indebtedness, or any Guaranty not constituting Indebtedness, of the Owner or
afford any holder of any of that Indebtedness, or any beneficiary of any of
those Guaranties, the right to require the Owner to redeem, purchase or
otherwise acquire, reacquire or repay any of that Indebtedness, or to perform
any of those Guaranties, (iii) cause or result in the imposition of, or afford
any Person the right to obtain, any Lien upon any property or assets of the
Owner (or upon revenues, income or profits of the Owner therefrom) or (iv)
result in the revocation, cancellation, suspension or material modification, in
any single case or in the aggregate, of any Governmental Approval possessed by
the Owner at the date hereof and
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necessary for the ownership or lease or the operation of his properties or the
carrying on of his business as now conducted, including any necessary
Governmental Approval under each applicable Environmental Law and Professional
Code.
(d) Except (i) for filings of the Registration Statement under the
Securities Act and the SEC order declaring the Registration Statement effective
under the Securities Act and (ii) as may be required by the HSR Act or the
applicable state securities or blue sky laws, no Governmental Approvals are
required to be obtained, and no reports or notices to or filings with any
Governmental Authority are required to be made, by the Owner for the execution,
delivery or performance by the Owner of the Transaction Documents to which he is
a party, the enforcement against the Owner of his obligations thereunder or the
effectuation of the Acquisition and the other transactions contemplated thereby.
Section 4.04 [INTENTIONALLY LEFT BLANK].
Section 4.05 NO DEFAULTS. No condition or state of facts exists, or,
with the giving of notice or the lapse of time or both, would exist, which (a)
entitles any holder of any outstanding Indebtedness, or any Guaranty not
constituting Indebtedness, of the Owner, or a representative of that holder, to
accelerate the maturity, or require a mandatory prepayment, of that Indebtedness
or Guaranty, or affords that holder or its representative, or any beneficiary of
that Guaranty, the right to require the Owner to redeem, purchase or otherwise
acquire, reacquire or repay any of that Indebtedness, or to perform that
Guaranty in whole or in part, (b) entitles any Person to obtain any Lien (other
than a Permitted Lien) upon any properties or assets of the Owner relating to
the Business (or upon revenues, income or profits of any of the Owner therefrom)
or (c) constitutes a violation or breach of, or a default under, any Material
Agreement of the Owner by the Owner.
Section 4.06 [INTENTIONALLY LEFT BLANK].
Section 4.07 [INTENTIONALLY LEFT BLANK].
Section 4.08 [INTENTIONALLY LEFT BLANK].
Section 4.09 [INTENTIONALLY LEFT BLANK].
Section 4.10 PREDECESSOR STATUS; ETC. Section 4.10 of the Disclosure
Statement accurately lists all the legal and assumed names of all predecessor
companies for the past five years of the Business, including the names of any
Entities from which the Business previously acquired material assets. Except as
accurately disclosed in Section 4.10 of the Disclosure Statement, the Business
has not been a Subsidiary or division of another corporation or a part of an
acquisition that later was rescinded.
Section 4.11 RELATED PARTY AGREEMENTS. Except as set forth in Section
4.11 of the Disclosure Statement, each Related Party Agreement in effect on the
date hereof will have been terminated as of the IPO Closing Date.
14
Section 4.12 LITIGATION. Except as accurately disclosed in Section 4.12
of the Disclosure Statement, no Litigation is pending or, to the knowledge of
the Owner, threatened to which the Owner is or may become a party.
Section 4.13 FINANCIAL STATEMENTS; DISCLOSURE. (a) FINANCIAL STATEMENTS.
(i) The Financial Statements (including in each case the related schedules and
notes) delivered to Apple present fairly, in all material respects, the
consolidated financial position of the Business at the respective dates of the
balance sheets included therein and the consolidated results of its operations
and its consolidated cash flows and owners' equity for the respective periods
set forth therein and have been prepared in accordance with GAAP. As of the date
of any balance sheet included in those Financial Statements, the Business then
did not have any outstanding Indebtedness to any Person or any liabilities of
any kind (including contingent obligations, tax assessments or unusual forward
or long-term commitments), or any unrealized or anticipated loss, which in the
aggregate then were Material to the Business and required to be reflected in
those Financial Statements or in the notes related thereto in accordance with
GAAP which were not so reflected.
(ii) Since the Current Balance Sheet Date, no change has occurred in the
business, operations, properties or assets, liabilities, condition (financial or
other) or results of operations of the Business that could reasonably be
expected, either alone or together with all other such changes, to have a
Material Adverse Effect on the Business.
(iii) All financial budgets and projections that have been or are
hereafter from time to time prepared by the Owner or any of his Representatives
and made available prior to the IPO Closing Date to Apple pursuant to or in
connection with this Agreement, any other Transaction Document or the
transactions contemplated hereby or thereby have been and will be prepared and
furnished to Apple in good faith and were and will be based on facts and
assumptions that are believed by the Owner to be reasonable in light of the then
current and foreseeable business conditions of the Business and represented and
will represent the Owner's good faith estimate of the consolidated projected
financial performance of the Business based on the information available to the
Owner at the time so furnished.
Section 4.14 COMPLIANCE WITH LAWS. (a) Except as accurately disclosed in
Section 4.14 of the Disclosure Statement: (i) the Owner possesses, if required
by the applicable Governmental Requirement, Governmental Approvals required for
the conduct of the Business; and (ii) the Owner is, and to the knowledge of the
Owner his employees are, in compliance in all material respects with the terms
and conditions of all Governmental Approvals necessary for the ownership or
lease and the operation of the properties relating to the Business (including
all the facilities and sites he owns or holds under any lease relating to the
Business) and the carrying on of the Business as now conducted. The Owner has
provided Apple with an accurate, complete written list of all the Governmental
Approvals so possessed. To the knowledge of the Owner, all the Governmental
Approvals so listed are valid, and, except as accurately disclosed in Section
4.14 of the Disclosure Statement, the Owner has not received, nor to the
knowledge of the Owner has any employee of the Owner received, any notice from
any Governmental Authority of its intention to cancel, terminate or not renew
any of those Governmental Approvals.
15
(b) Except as accurately disclosed in Section 4.14 of the Disclosure
Statement, the Owner: (i) to the knowledge of the Owner, has been and continues
to be in compliance with all Governmental Requirements applicable to him or any
of his presently or previously owned or operated properties (including all the
facilities and sites now or previously owned or held by him under any lease),
businesses or operations, including all applicable Governmental Requirements
under ERISA, Environmental Laws and Professional Codes; and (ii)(A) the Owner
has not received, nor to the knowledge of the Owner, the Owner has any employee
of the Owner received, any notice from any Governmental Authority which asserts,
or raises the possibility of assertion of, any noncompliance with any of those
Governmental Requirements and, to the knowledge of the Owners (B) no condition
or state of facts exists which would provide a valid basis for any such
assertion.
Section 4.15 CERTAIN ENVIRONMENTAL MATTERS. Except as accurately
disclosed in Section 4.15 of the Disclosure Statement: (a) to the knowledge of
the Owner, the Owner has complied, and remains in compliance, to the knowledge
of the Owner, with the provisions of all Environmental Laws applicable to the
Owner or any of his presently owned or operated facilities, sites or other
properties, businesses and operations and which relate to the reporting by the
Owner of all sites presently owned or operated by any of them where Solid
Wastes, Hazardous Wastes or Hazardous Substances have been treated, stored,
disposed of or otherwise handled; (b) no release (as defined in those
Environmental Laws) at, from, in or on any site owned or operated by the Owner
has occurred which, if all relevant facts were known to the relevant
Governmental Authorities, reasonably could be expected to require remediation to
avoid deed record notices, restrictions, liabilities or other consequences that
would not be applicable if that release had not occurred; (c) the Owner has not
(nor has any agent or contractor of the Owner) transported or arranged for the
transportation of any Solid Wastes, Hazardous Wastes or Hazardous Substances to,
or disposed or arranged for the disposition of any Solid Wastes, Hazardous
Wastes or Hazardous Substances at, any off-site location that could lead to any
claim against the Owner or Apple, as a potentially responsible party or
otherwise, for any clean-up costs, remedial work, damage to natural resources,
personal injury or property damage, including any claim under CERCLA; and (d) no
storage tanks exist on or under any of the properties owned or operated by the
Owner from which any Solid Wastes, Hazardous Wastes or Hazardous Substances have
been released into the surrounding environment. The Owner has provided Apple
with copies (or if not available, accurate written summaries) of all
environmental investigations, studies, audits, reviews and other analyses
conducted by or on behalf, or which otherwise are in the possession, of the
Owner respecting any facility, site or other property presently owned or
operated by the Owner.
Section 4.16 LIABILITIES AND OBLIGATIONS. Section 4.16 of the Disclosure
Statement accurately lists all present liabilities, of every kind, character and
description and whether accrued, absolute, fixed, contingent or otherwise, of
the Owner relating to the Business which (a) (i) exceed or reasonably could be
expected to exceed $1,000 and (ii) (A) had been incurred prior to the Current
Balance Sheet Date, but are not reflected on the Current Balance Sheet, or (B)
were incurred after the Current Balance Sheet otherwise than in the ordinary
course of business, and consistent with the past practice, of that Entity. That
Section also accurately lists and describes, for the Owner relating to the
Business: (a) each of his outstanding secured and unsecured Guaranties not
constituting his Indebtedness and, for each of those Guaranties,
16
whether any Related Person or Affiliate of the Owner is a Person whose
obligation is covered by that Guaranty, and (b) for each of the items listed
under clause (a) of this sentence, (i) if that item is secured by any property
or asset of the Owner, the nature of that security, and (ii) if that item is
covered in whole or in part by a Guaranty of any Related Person or Affiliate of
the Owner, the name of the guarantor.
Section 4.17 RECEIVABLES. Except as accurately set forth in Section 4.17
of the Disclosure Statement; all the accounts and notes or other advances
receivable of the Owner reflected on the Current Balance Sheet were collected,
or are, in the good faith belief of the Owner, collectible, in the respective
amounts so reflected, net of the reserves, if any, reflected in the Current
Balance Sheet.
Section 4.18 OWNED AND LEASED REAL PROPERTIES. (a) Section 4.18 of the
Disclosure Statement accurately lists and correctly describes in all material
respects: (i) all real properties owned by the Owner relating to the Business
and, for each of those properties, the address thereof, the type and square
footage of each structure located thereon and the use thereof in the Business;
(ii) all real properties relating to the Business of which the Owner is the
lessee and, for each of those properties, the address thereof, the type and
square footage of each structure located thereon the Owner is leasing and the
expiration date of his lease and the use thereof in the Business; and (iii) in
the case of each real property listed as being owned, whether it was previously
owned, and in the case of each real property listed as being leased, whether it
is presently owned, by any of the Owner's Related Persons or Affiliates.
(b) The Owner has provided Apple with true, complete and correct copies
of all title reports and insurance policies owned or in the possession of the
Owner and relating to any of the real properties listed as being owned in
Section 4.18 of the Disclosure Statement. Except as accurately set forth in that
Section or those reports and policies, and except for Permitted Liens, the Owner
owns in fee, and has good, valid and marketable title to, free and clear of all
Liens, each property listed in that Section as being owned.
(c) The Owner has provided Apple with true, correct and complete copies
of all leases under which the Owner is leasing each of the properties listed in
Section 4.18 of the Disclosure Statement as being leased and, except as
accurately set forth in Section 4.18 of the Disclosure Statement, (i) each of
those leases is, to the knowledge of the Owner, valid and binding on the lessor
party thereto, and (ii) the lessee party thereto has not sublet any of the
leased space to any Person other than the Owner.
(d) The fixed assets of the Owner relating to the Business are affixed
only to one or more of the real properties listed in Section 4.18 of the
Disclosure Statement and, except as accurately set forth in that Section, are
well-maintained and adequate for the purposes for which they presently are being
used or held for use, ordinary wear and tear excepted.
(e) The Owner has accurately disclosed in Section 4.18 of the Disclosure
Statement in all material respects all plans or projects relating to the
Business involving the opening of new operations, the expansion of any existing
operations or the acquisition of any real property or existing business, with
respect to which the Owner has made any expenditure in the two-year
17
period prior to the date of the Agreement in excess of $1,000, or which if
pursued by the Owner would require additional capital expenditures in excess of
$1,000.
Section 4.19 OWNED AND LEASED PROPERTY, PLANT AND EQUIPMENT. (a) The
Owner has provided Apple with a list accurate and complete in all material
respects of the Property, Plant and Equipment owned and leased by the Owner,
which list states, in the case of each of those properties listed as being
owned, whether it was previously owned, and in the case of each of those
properties listed as being leased, whether it is presently owned, by any of the
Owner's Related Persons or Affiliates.
(b) Except as accurately set forth in Section 4.19 of the Disclosure
Statement and except for Permitted Liens, the Owner has good, valid and
marketable title to, free and clear of all Liens, the Acquired Assets.
(c) The Owner has provided Apple with true, correct and complete copies
of all leases under which the Owner is leasing each of the properties listed in
Section 4.21 of the Disclosure Statement as being leased and all leases referred
to in Section 4.19 and, except as accurately set forth in Section 4.19 of the
Disclosure Statement, (i) each of those leases is, to the knowledge of the
Owner, valid and binding on the lessor party thereto, and (ii) the lessee party
thereto has not sublet any of the leased property to any Person other than the
Owner.
(d) Except as accurately set forth in Section 4.19 of the Disclosure
Statement, all the Property, Plant and Equipment listed therein are in good
working order and condition, ordinary wear and tear excepted, and adequate for
the purposes for which they presently are being used or held for use.
Section 4.20 PROPRIETARY RIGHTS. Except as accurately set forth in
Section 4.20 of the Disclosure Statement, the Owner owns or has the legal right
to use all Proprietary Rights that are necessary to the conduct of the Business
as now conducted, in each case free of any claims or infringements known to the
Owner. Section 4.20 of the Disclosure Statement accurately (a) lists these
Proprietary Rights and (b) indicates those owned by the Owner and, for those not
listed as so owned, the agreement or other arrangement pursuant to which they
are possessed. Except as accurately set forth in that Section, (a) no consent of
any Person will be required for the use of any of these Proprietary Rights by
Apple or any Subsidiary of Apple following the IPO Closing Date and (b) no
governmental registration of any of these Proprietary Rights has lapsed or
expired or been canceled, abandoned, opposed or the subject of any reexamination
request.
Section 4.21 TITLE TO OTHER PROPERTIES. In each case, free and clear of
all Liens except for Permitted Liens and as accurately set forth in Section 4.21
of the Disclosure Statement, the Owner has good and valid title to, or holds
under a lease valid and binding on the lessor party thereto, all the Owner's
tangible personal properties and assets (other than Property, Plant and
Equipment) that individually is or in the aggregate are Material to the
Business.
Section 4.22 COMMITMENTS. (a) Except as accurately set forth in Section
4.22(a) of the Disclosure Statement, the Owner has provided Apple with a
complete, accurate list of each of
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the following (each an "Owner Commitment") to which the Owner is a party
relating to the Business or by which any of its properties is bound and which
presently remains executory in whole or in any part:
(i) each partnership, joint venture or cost-sharing agreement;
(ii) each guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(iii) each instrument, agreement or other obligation evidencing or
relating to Indebtedness of the Owner or to money lent or to be
lent to another Person;
(iv) each contract to purchase or sell real property;
(v) each agreement with dealers or sales or commission agents,
public relations or advertising agencies, accountants or
attorneys (other than in connection with this Agreement and the
transactions contemplated hereby) involving total payments
within any 12-month period in excess of $5,000 and which is not
terminable without penalty and on no more than 30 days' prior
notice;
(vi) each Related Party Agreement involving total payments within any
12-month period in excess of $1,000 and which is not terminable
without penalty on no more than 30 days' prior notice;
(vii) each agreement for the acquisition or provision of services,
supplies, equipment, inventory, fixtures or other property
involving more than $1,000 in the aggregate;
(viii) each contract containing any noncompetition agreement, covenant
or undertaking;
(ix) each agreement providing for the purchase from a supplier of all
or substantially all the requirements of the Owner of a
particular product or service; or
(x) each other agreement or commitment not made in the ordinary
course of business or that is Material to the Business.
True, correct and complete copies of all written Owner Commitments, and
true, correct and complete written descriptions of all oral Owner Commitments,
have heretofore been delivered or made available to Apple. Except as accurately
set forth in Section 4.22(a) of the
19
Disclosure Statement: (i) there are no existing or asserted defaults, events of
default or events, occurrences, acts or omissions that, with the giving of
notice or lapse of time or both, would constitute defaults or events of default
under any Owner Commitment Material to the Business by the Owner or, to the
knowledge of the Owner, any other party thereto; and (ii) no penalties have been
incurred, nor are amendments pending, with respect to the Owner Commitments
Material to the Business. The Owner Commitments are in full force and effect and
are valid and enforceable obligations of the Owner and, to the knowledge of the
Owner, the other parties thereto in accordance with their respective terms, and
no defenses, off-sets or counterclaims have been asserted or, to the knowledge
of the Owner, may be made by any party thereto (other than by the Business), nor
has the Owner waived any rights thereunder, except as accurately described in
Section 4.22(a) of the Disclosure Statement.
(b) Except as accurately disclosed in Section 4.22(b) of the Disclosure
Statement or contemplated hereby or by any other Transaction Document to which
the Owner is a party: (i) the Owner has not received notice of any plan or
intention of any other party to any Owner Commitment to exercise any right to
cancel or terminate any Owner Commitment, and the Owner knows of no condition or
state of facts which would justify the exercise of such a right; and (ii) the
Owner does not currently contemplate, and has no reason to believe any other
Person currently contemplates, any amendment or change to any Owner Commitment.
Section 4.23 CAPITAL EXPENDITURES. Section 4.23 of the Disclosure
Statement accurately sets forth the total amount of capital expenditures
currently budgeted to be incurred by the Owner relating to the Business during
the balance of the Business' current fiscal year. Except as accurately set forth
in that Section, to the knowledge of the Owner, no condition or state of facts
exists which will cause the total capital expenditures of the Owner which will
be required to replace worn-out Property, Plant and Equipment in any of the
Business' five fiscal years following that current fiscal year to exceed by a
material amount the amount budgeted for capital expenditures of that type by the
Owner for that current fiscal year in order to maintain the types and levels of
patients and services the Owner presently provides.
Section 4.24 INVENTORIES. Except as accurately set forth in Section 4.24
of the Disclosure Statement: (a) all inventories, net of reserves determined in
accordance with GAAP, of the Business which are classified as such on the
Current Balance Sheet are, to the knowledge of the Owner, merchantable and
salable or usable in the ordinary course of business of the Owner; (b) the
inventories reflected in the Financial Statements, as at the Current Balance
Sheet Date, (i) were reasonable in relation to the then existing circumstances
of the Business and classified as current assets in accordance with GAAP, (ii)
were consistent with its past practices and (iii) fairly reflected the average
inventory levels maintained during the 12-month periods ended on that date; and
(c) the Owner does not depend on any single vendor for its inventories the loss
of which could have a Material Adverse Effect on the Business and the Owner has
not sustained a difficulty Material to the Business in obtaining its
inventories.
Section 4.25 INSURANCE. Except as accurately set forth in Section 4.25
of the Disclosure Statement: (a) the Owner has provided Apple with: (i) a list
accurate as of the Current Balance Sheet Date of all insurance policies then
carried by the Owner relating to the Business; (ii) an accurate list of all
insurance loss runs and worker's compensation claims
20
received for the most recently ended three policy years; and (iii) true,
complete and correct copies of all insurance policies carried by the Owner
relating to the Business which are in effect, all of which (A) have been issued
by insurers of recognized responsibility and (B) currently are, and will remain
without interruption through the IPO Closing Date, in full force and effect; (b)
no insurance carried by the Owner relating to the Business has been canceled by
the insurer during the past five years, and the Owner has never been denied
coverage; and (c) the Owner has not received any notice or other communication
from any issuer of any such insurance policy of any material increase in any
deductibles, retained amounts or the premiums payable thereunder, and, to the
knowledge of the Owner, no such increase in deductibles, retainages or premiums
is threatened.
Section 4.26 EMPLOYEE MATTERS. (a) CASH COMPENSATION. The Owner has
provided Apple with an accurate, complete written list of the names, titles and
rates of annual Cash Compensation, at the Current Balance Sheet Date and at the
date hereof (and the portions thereof attributable to salary or the equivalent,
fixed bonuses, discretionary bonuses and other Cash Compensation, respectively)
of all employees and key consultants and independent contractors of the Owner
relating to the Business.
(b) Employment Agreement. Section 4.26(b) of the Disclosure Statement
accurately lists all Employment Agreements remaining executory in whole or in
part on the date hereof, and the Owner has provided Apple with true, complete
and correct copies of all those Employment Agreements. The Owner is not a party
to any oral Employment Agreement.
(c) OTHER COMPENSATION PLANS. Section 4.26(c) of the Disclosure
Statement accurately lists all Other Compensation Plans either remaining
executory at the date hereof or to become effective after the date hereof. The
Owner has provided Apple with a true, correct and complete copy of each of those
Other Compensation Plans that is in writing and an accurate description of each
of those Other Compensation Plans that is not written. Except as accurately set
forth in Section 4.26(c) of the Disclosure Statement, each of the Other
Compensation Plans, including each that is a Welfare Plan, may be unilaterally
amended or terminated by the Owner without liability to any of them, except as
to benefits accrued thereunder prior to that amendment or termination.
(d) ERISA BENEFIT PLANS. Section 4.26(d) of the Disclosure Statement
accurately (i) lists each ERISA Pension Benefit Plan (A)(1) the funding
requirements of which (under Section 301 of ERISA or Section 412 of the Code)
are, or at any time during the six-year period ending on the date hereof were,
in whole or in part, the responsibility of the Owner or (2) respecting which the
Owner is, or at any time during that period was, a "contributing sponsor" or an
"employer" as defined in Sections 4001(a)(13) and 3(5), respectively, of ERISA
(each plan described in this clause (A) being an "Owner ERISA Pension Plan"),
(B) each other ERISA Pension Benefit Plan respecting which an ERISA Affiliate
is, or at any time during that period was, such a "contributing sponsor" or
"employer" (each plan described in this clause (B) being an "ERISA Affiliate
Pension Plan") and (C) each other ERISA Employee Benefit Plan that is being, or
at any time during that period was, sponsored, maintained or contributed to by
the Owner (each plan described in this clause (C) and each Owner ERISA Pension
Plan being an "Owner ERISA Benefit Plan"), (ii) states the termination date of
each Owner ERISA Benefit
21
Plan and ERISA Affiliate Pension Plan that has been terminated and (iii)
identifies for each ERISA Affiliate Pension Plan the relevant ERISA Affiliates.
The Owner has provided Apple with (i) true, complete and correct copies of (A)
each Owner ERISA Benefit Plan and ERISA Affiliate Pension Plan, (B) each trust
agreement related thereto and (C) all amendments to those plans and trust
agreements. Except as accurately set forth in Section 4.26(d) of the Disclosure
Statement, (i) the Owner is not, nor at any time during the six-year period
ended on the date hereof was, a member of any ERISA Group and (ii) no Person is
an ERISA Affiliate of the Owner.
(e) EMPLOYEE POLICIES AND PROCEDURES. Section 4.26(e) of the Disclosure
Statement accurately lists all Employee Policies and Procedures. The Owner has
provided Apple with a copy of all written Employee Policies and Procedures and a
written description of all material unwritten Employee Policies and Procedures.
(f) UNWRITTEN AMENDMENTS. Except as accurately described in Section
4.26(f) of the Disclosure Statement, no material unwritten amendments have been
made, whether by oral communication, pattern of conduct or otherwise, with
respect to any of the Employment Agreements, Other Compensation Plans or
Employee Policies and Procedures.
(g) LABOR COMPLIANCE. To the knowledge of the Owner, the Owner has been
and is in compliance with all applicable Governmental Requirements respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and the Owner is not liable for any arrears of wages or
penalties for failure to comply with any of the foregoing. The Owner has not
engaged in any unfair labor practice or discriminated on the basis of race,
color, religion, sex, national origin, age, disability or handicap in his
employment conditions or practices. Except as accurately set forth in Section
4.26(g) of the Disclosure Statement, there are no (i) unfair labor practice
charges or complaints or racial, color, religious, sex, national origin, age,
disability or handicap discrimination charges or complaints pending or, to the
knowledge of the Owner, threatened against the Owner before any Governmental
Authority (nor, to the knowledge of the Owner, does any valid basis therefor
exist) or (ii) existing or, to the knowledge of the Owner, threatened labor
strikes, disputes, grievances, controversies or other labor troubles affecting
the Owner (nor, to the knowledge of the Owner, does any valid basis therefor
exist).
(h) UNIONS. Neither the Owner nor any ERISA Affiliate has ever been a
party to any agreement with any union, labor organization or collective
bargaining unit. No employees of the Owner are represented by any union, labor
organization or collective bargaining unit. Except as accurately set forth in
Section 4.26(h) of the Disclosure Statement, to the knowledge of the Owner, none
of the employees of the Owner have threatened to organize or join a union, labor
organization or collective bargaining unit.
(i) NO ALIENS. All employees of the Owner are citizens of, or are
authorized in accordance with federal immigration laws to be employed in, the
United States.
(j) CHANGE OF CONTROL BENEFITS. Except as accurately set forth in
Section 4.26(j) of the Disclosure Statement, the Owner is not a party to any
agreement, nor has
22
he established any policy, practice or program, requiring the Owner to make a
payment or provide any other form of compensation or benefit or vesting rights
to any person performing services for the Owner which would not be payable or
provided in the absence of this Agreement or the consummation of the
transactions contemplated by this Agreement, including any parachute payment
under Section 280G of the Code.
(k) RETIREES. The Owner does not have any obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any of his
employees who may retire or any of his former employees who have retired except
as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Code and the applicable parallel provisions of ERISA.
Section 4.27 COMPLIANCE WITH ERISA, ETC. (a) COMPLIANCE. Each of the
Owner ERISA Benefit Plans and Other Compensation Plans (each, a "Plan") (i) is
in substantial compliance with all applicable provisions of ERISA, as well as
with all other applicable Governmental Requirements, and (ii) has been
administered, operated and managed in accordance with its governing documents.
(b) QUALIFICATION. All Plans that are intended to qualify under Section
401(a) of the Code (the "Qualified Plans") are so qualified and have been
determined by the IRS to be so qualified (or application for determination
letters have been timely submitted to the IRS). The Owner has provided Apple
with true, complete and correct copies of the current plan determination
letters, most recent actuarial valuation reports, if any, most recent Form 5500,
or, as applicable, Form 5500-C/R, filed with respect to each such Qualified Plan
and most recent trustee or custodian report. To the extent that any Qualified
Plans have not been amended to comply with applicable Governmental Requirements,
the remedial amendment period permitting retroactive amendment of these
Qualified Plans has not expired and will not expire within 120 days after the
IPO Closing Date. All reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including annual reports, summary annual reports, actuarial reports, PBGC-1
Forms, audits or Returns) have been timely filed or distributed.
(c) NO PROHIBITED TRANSACTIONS, ETC. Neither the Owner nor any Plan has
engaged in any Prohibited Transaction. No Plan has incurred an accumulated
funding deficiency, as defined in Section 412(a) of the Code and Section 302(a)
of ERISA, and no circumstances exist pursuant to which the Owner could have any
direct or indirect liability whatsoever (including being subject to any
statutory Lien to secure payment of any such liability), to the PBGC under Title
IV of ERISA or to the IRS for any excise tax or penalty with respect to any Plan
now or hereafter maintained or contributed to by the Owner or any of his ERISA
Affiliates. Further:
(i) there have been no terminations, partial terminations or
discontinuances of contributions to any Qualified Plan without a
determination by the IRS that such action does not adversely
affect the tax-qualified status of that plan;
23
(ii) no Termination Event has occurred;
(iii) no Reportable Event has occurred with respect to any Plan which
was not properly reported;
(iv) the valuation of assets of any Qualified Plan, as of the IPO
Closing Date, shall equal or exceed the actuarial present value
of all "benefit liabilities" (within the meaning of Section
40001(a)(16) of ERISA) under that plan in accordance with the
assumptions contained in the Regulations of the PBGC governing
the funding of terminated defined benefit plans;
(v) with respect to Plans qualifying as "group health plans" under
Section 4980B of the Code or Section 607(l) or 609 of ERISA and
related regulations (relating to the benefit continuation rights
imposed by COBRA or qualified medical child support orders), the
Owner has complied (and at the IPO Closing Date will have
complied) in all material respects with all reporting,
disclosure, notice, election and other benefit continuation and
coverage requirements imposed thereunder as and when applicable
to those plans, and the Owner has not incurred (and will not
incur) any direct or indirect liability and is not (and will not
be) subject to any loss, assessment, excise tax penalty, or
other sanction, arising on account of or in respect of any
direct or indirect failure by the Owner, at any time prior to
the IPO Closing Date, to comply with any such federal or state
benefit continuation or coverage requirement, which is capable
of being assessed or asserted before or after the IPO Closing
Date directly or indirectly against the Owner, or Apple with
respect to any of those group health plans;
(vi) the Financial Statements as of the Current Balance Sheet Date
reflect the approximate total unfunded (or uninsured) pension,
medical and other benefit liability for all Plans determined in
accordance with accounting principles and actuarial assumptions
consistently applied in the on-going administration of the
Plans; and
(vii) the Owner has not incurred liability under Section 4062 of
ERISA.
(d) MULTIEMPLOYER PLANS. Except as set forth in Section 4.27(d) of the
Disclosure Statement, neither the Owner nor any ERISA Affiliate of the Owner,
is, or at any time during the six-year period ended on the date hereof was,
obligated to contribute to a
24
Multiemployer Plan. Neither the Owner nor any ERISA Affiliate of the Owner, has
made a complete or partial withdrawal from a Multiemployer Plan so as to incur
withdrawal liability as defined in Section 4201 of ERISA.
(e) CLAIMS AND LITIGATION. Except as accurately set forth in Section
4.27(e) of the Disclosure Statement, no Litigation or claims (other than routine
claims for benefits) are pending or, to the knowledge of the Owner, threatened
against, or with respect to, any of the Plans or with respect to any fiduciary,
administrator or sponsor thereof (in their capacities as such), or any
party-in-interest thereof.
(f) EXCISE TAXES, DAMAGES AND PENALTIES. No act, omission or transaction
has occurred which would result in the imposition on the Owner of (i) breach of
fiduciary duty liability damages under Section 409 of ERISA, (ii) a civil
penalty assessed pursuant to subsection (c), (i) or (l) of Section 502 of ERISA
or (iii) any excise tax under applicable provisions of the Code with respect to
any Plan.
(g) VEBA WELFARE TRUST. Any trust funding a Plan, which is intended to
be exempt from federal income taxation pursuant to Section 501(c)(9) of the
Code, satisfies the requirements of that section and has received a favorable
exemption letter from the IRS regarding that exempt status and has not, since
receipt of the most recent favorable exemption letter, been amended or operated
in a way that would adversely affect that exempt status. The value of assets of
each trust described in the Section 4.27(g) equals or exceeds the value of
benefit liabilities of such trust (or related Plan) determined in accordance
with actuarial assumptions consistently applied in the on-going administration
of such trust (or related Plan).
Section 4.28 TAXES. (a) Each of the following representations and
warranties in this Section 4.28 is qualified to the extent set forth in Section
4.28 of the Disclosure Statement.
(b) All Returns required to be filed with respect to any Tax for which
the Owner is liable have been duly and timely (taking into account applicable
extensions) filed with the appropriate Taxing Authority, all such Returns were
correct and complete in all material respects, all Taxes that have become due
from the Owner have been paid, each Tax payable by the Owner by assessment has
been timely paid in the amount assessed and adequate reserves have been
established on the books of the Owner for all Taxes for which the Owner is
liable, but the payment of which is not yet due. The Owner is not, and never has
been, liable for any Tax payable by reason of the income or property of a Person
other than the Owner (or the Owner's spouse). The Owner has timely filed true,
correct and complete declarations of estimated Tax in each jurisdiction in which
any such declaration is required to be filed by him. No Liens for Taxes exist
upon the assets of the Owner except Liens for Taxes which are not yet due. The
Owner is not, and never has been, subject to Tax in any jurisdiction outside of
the United States. No Litigation with respect to any Tax for which the Owner is
asserted to be liable is pending or, to the knowledge of the Owner, threatened
and no basis which the Owner believes to be valid exists on which any claim for
any such Tax can be asserted against the Owner. There are no requests for
rulings or determinations in respect of any Taxes pending between the Owner and
any Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for which the Owner is or may be liable has been
granted
25
to any Taxing Authority. The Owner is not and has not been a party to any tax
allocation or sharing agreement. All amounts required to be withheld by the
Owner and paid to governmental agencies for income, social security,
unemployment insurance, sales, excise, use and other Taxes have been collected
or withheld and paid to the proper Taxing Authority. The Owner has made all
deposits required by law to be made with respect to employees' withholding and
other employment taxes.
(c) The Owner is not a "foreign person," as that term is referred to in
Section 1445(f)(3) of the Code.
(d) The Owner has not filed a consent pursuant to Section 341(f) of the
Code or any comparable provision of any other Tax statute nor has agreed to have
Section 341(f)(2) of the Code or any comparable provision of any other Tax
statute apply to any disposition of an asset. The Owner has not made, is not
obligated to make and is not a party to any agreement that could require him to
make any payment that is not or would not be deductible under Section 280G of
the Code. The Owner is not subject to any provision of applicable law which
eliminates or reduces the allowance for depreciation or amortization in respect
of that asset below the allowance generally available to an asset of its type.
No accounting method changes of the Owner exist or are proposed or threatened
which could give rise to an adjustment under Section 481 of the Code.
Section 4.29 GOVERNMENT CONTRACTS. Except as accurately set forth in
Section 4.29 of the Disclosure Statement, the Owner is not a party to any
governmental contract subject to price redetermination or renegotiation.
Section 4.30 ABSENCE OF CHANGES. Since the Current Balance Sheet Date,
except as accurately set forth in Section 4.30 of the Disclosure Statement, none
of the following has occurred with respect to the Owner or the Business:
(a) any circumstance, condition, event or state of facts (either singly
or in the aggregate), other than conditions generally affecting the business of
providing orthodontic care to patients, which has caused, is causing or will
cause a Material Adverse Effect on the Business;
(b) [Intentionally Left Blank];
(c) any Restricted Payment;
(d) any increase in, or any commitment or promise to increase, the rates
of Cash Compensation as of the date hereof, or the amounts or other benefits
paid or payable under any Owner ERISA Pension Plan or Other Compensation Plan,
except for ordinary and customary bonuses and salary increases for employees
(other than the Owner's or his Immediate Family Members) at the times and in the
amounts consistent with his past practice;
26
(e) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, that will have a Material Adverse
Effect on Apple following the IPO Closing Date;
(f) any distribution, sale or transfer of, or any Owner Commitment to
distribute, sell or transfer, any of its assets or properties of any kind which
singly is or in the aggregate are Material to the Business, other than
distributions, sales or transfers in the ordinary course of its business and
consistent with its past practices to Persons other than the Owner and his
Immediate Family Members and Affiliates;
(g) any cancellation, or agreement to cancel, any Indebtedness,
obligation or other liability owing to it, including any Indebtedness,
obligation or other liability of the Owner or any Related Person or Affiliate
thereof, provided that the Owner may negotiate and adjust bills in the course of
good faith disputes with customers in a manner consistent with past practice, if
all those adjustments are included in the Supplemental Information provided
Apple pursuant to Section 6.08;
(h) any plan, agreement or arrangement granting any preferential rights
to purchase or acquire any interest in any of the assets, property or rights
relating to the Business or requiring consent of any Person to the transfer and
assignment of any such assets, property or rights;
(i) any purchase or acquisition of, or agreement, plan or arrangement to
purchase or acquire, any property, rights or assets relating to the Business
outside of the ordinary course of business consistent with past practices;
(j) any waiver of any of rights or claims that singly is or in the
aggregate are Material to the Business;
(k) any transaction by the Owner relating to the Business outside the
ordinary course of business or not consistent with past practices;
(l) any incurrence by the Business of any Indebtedness or any Guaranty
not constituting Indebtedness, or any Owner Commitment to incur any Indebtedness
or any such Guaranty;
(m) any investment in the Capital Stock, Derivative Securities or
Indebtedness of any Person other than a Permitted Investment;
(n) except in accordance with the Business' capital expenditure budget
for the Business' current fiscal year, any capital expenditure or series of
related capital expenditures by the Owner relating to the Business in excess of
$5,000, or commitments by the Owner to make capital expenditures relating to the
Business totaling in excess of $5,000; or
(o) any cancellation or termination of a Material Agreement of the Owner
relating to the Business.
27
Section 4.31 BANK RELATIONS; POWERS OF ATTORNEY. The Owner has provided
Apple with an accurate, complete written statement setting forth the following
information to the extent it relates to the Business:
(a) the name of each financial institution in which the Owner has
borrowing or investment arrangements, deposit or checking accounts or safe
deposit boxes;
(b) the types of those arrangements and accounts, including, as
applicable, names in which accounts or boxes are held, the account or box
numbers and the name of each Person authorized to draw thereon or have access
thereto; and
(c) the name of each Person holding a general or special power of
attorney from the Owner and a description of the terms of each such power.
Section 4.32 RELATIONS WITH GOVERNMENTS, ETC. The Owner has not made,
offered or agreed to offer anything of value to any governmental official,
political party or candidate for government office which would cause the Owner
to be in violation of the Foreign Corrupt Practices Act of 1977 or any
Governmental Requirement to a similar effect.
Section 4.33 PREEMPTIVE AND OTHER RIGHTS; WAIVER. Except for the right
of the Owner to receive shares of Apple Common Stock as a result of the
Acquisition or to acquire Apple Common Stock pursuant to any written option
granted by Apple to the Owner, the Owner either (a) does not own or otherwise
have any statutory or contractual preemptive or other right of any kind
(including any right of first offer or refusal) to acquire any shares of Apple
Common Stock or (b) hereby irrevocably waives each right of that type the Owner
does own or otherwise has.
Section 4.34 ORGANIZATION AND GOOD STANDING; QUALIFICATION. The
Orthodontic Entity is, or will be no later than the IPO Pricing Date, a
professional corporation or association duly organized, validly existing and in
good standing under the laws of its Organization State, with all requisite
corporate power and authority to carry on the business in which it intends to
engage, to own the properties it intends to own, and to execute and deliver the
Service Agreement, the Security Agreement, the Owner Employment Agreement and
consummate the transactions and perform the services contemplated thereby. The
Orthodontic Entity is, or will be no later than the IPO Pricing Date, duly
qualified and licensed to do business and is in good standing in all
jurisdictions where the nature of its intended business makes such qualification
necessary, which jurisdictions are listed in Section 4.34 of the Disclosure
Statement.
Section 4.35 CORPORATE RECORDS. The copies of the Charter Documents, and
all amendments thereto, of the Orthodontic Entity that have been, or will have
been by the IPO Pricing Date, delivered or made available to Apple are true,
correct and complete copies thereof, as in effect on the IPO Pricing Date. The
minute books of the Orthodontic Entity, copies of which have been, or will have
been by the IPO Pricing Date, delivered or made available to Apple, contain
accurate minutes of all meetings of, and accurate consents to all actions taken
without meetings by, the Board of Directors (and any committees thereof) and the
stockholders of the Orthodontic Entity since its formation.
28
Section 4.36 AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by the Orthodontic Entity of the Service Agreement, the Security
Agreement, the Owner Employment Agreement and the other agreements contemplated
thereby, and the consummation of the transactions and provisions of services
contemplated thereby, have been, or will have been by the IPO Pricing Date, duly
authorized by the Orthodontic Entity. The Service Agreement, the Security
Agreement, the Owner Employment Agreement and each other agreement contemplated
thereby will be as of the IPO Pricing Date duly executed and delivered by the
Orthodontic Entity and will constitute legal, valid and binding obligations of
the Orthodontic Entity enforceable against the Orthodontic Entity 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.
Section 4.37 NO VIOLATION. Neither the execution, delivery or
performance of the Service Agreement, the Security Agreement, the Owner
Employment Agreement or the other agreements contemplated thereby nor the
consummation of the transactions or provision of services contemplated thereby
will (a) conflict with, or result in a violation or breach of the terms,
conditions or provisions of, or constitute a default under, the Charter
Documents of the Orthodontic Entity, or (b) to the actual knowledge of the
Owner, violate or conflict with any Governmental Requirement.
Section 4.38 NO BUSINESS, AGREEMENTS, ASSETS OR LIABILITIES. The
Orthodontic Entity has not commenced business since its incorporation. Other
than its Charter Documents, and as of the IPO Pricing Date, the Service
Agreement, the Security Agreement, the Owner Employment Agreement and the other
contracts and agreements assigned to the Orthodontic Entity by the Owner
pursuant to Section 6.12, the Orthodontic Entity is not a party to or subject to
any agreement, indenture or other instrument. The Orthodontic Entity does not
own any assets (tangible or intangible) other than the consideration received
upon the issuance of shares of its capital stock and the assets transferred
pursuant to Section 6.12, and the Orthodontic Entity does not have any
liabilities, accrued, contingent or otherwise (known or unknown and asserted or
unasserted).
Section 4.39 COMPLIANCE WITH LAWS. The Orthodontic Entity has complied
with all applicable laws, regulations and licensing requirements and has filed
with the proper authorities all necessary statements and reports, except where
failure to so comply or file would not, individually or in the aggregate, have a
material adverse effect on the business, operations or financial condition of
the Orthodontic Entity.
Section 4.40 RELIANCE ON REPRESENTATIVES. The Owner is solely relying on
his own Representatives (including his own legal counsel and accountant) as to
legal, tax and related matters concerning the transaction contemplated by this
Agreement and is in no way relying on Apple or Apple's Representatives
(including Apple's legal counsel and account) as to such legal, tax and related
matters. Further, the Owner acknowledges that neither Apple nor Apple's
Representatives have made any representations regarding the tax treatment of the
transactions contemplated by this Agreement.
29
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF APPLE
Section 5.02 ORGANIZATION; POWER. Apple is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and Apple has all requisite corporate power and authority under the laws of its
Organization State and its Charter Documents to own or lease and to operate its
properties presently and following the IPO Closing Date and to carry on its
business as now conducted and as proposed to be conducted following the IPO
Closing Date. Apple has not engaged in any operations since its organization
other than in connection with their formation and capitalization and the
transactions contemplated by this Agreement and the Other Agreements.
Section 5.03 AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS;
REQUIRED CONSENTS. (a) The execution, delivery and performance by Apple of this
Agreement and each other Transaction Document to which it is a party, and the
effectuation of the Acquisition and the other transactions contemplated hereby
and thereby, are within its corporate power under its Charter Documents and the
applicable Governmental Requirements of its Organization State and have been
duly authorized by all proceedings, including actions permitted to be taken in
lieu of proceedings, required under its Charter Documents and the applicable
Governmental Requirements of its Organization State.
(b) This Agreement has been, and each of the other Transaction Documents
to which Apple is a party, when executed and delivered to the other parties
thereto, will have been, duly executed and delivered by it and is, or when so
executed and delivered will be, its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law).
(c) The execution, delivery and performance in accordance with their
respective terms by Apple of the Transaction Documents to which it is a party
have not and will not (i) violate, breach or constitute a default under (A) the
Charter Documents of Apple, (B) any Governmental Requirement applicable to Apple
or (C) any Material Agreement of Apple, (ii) result in the acceleration or
mandatory prepayment of any Indebtedness, or any Guaranty not constituting
Indebtedness, of Apple or afford any holder of any of that Indebtedness, or any
beneficiary of any of those Guaranties, the right to require Apple to redeem,
purchase or otherwise acquire, reacquire or repay any of that Indebtedness, or
to perform any of those Guaranties, (iii) cause or result in the imposition of,
or afford any Person the right to obtain, any Lien upon any property or assets
of Apple (or upon any revenues, income or profits of Apple therefrom) or (iv)
result in the revocation, cancellation, suspension or material modification, in
any single case or in the aggregate, of any Governmental Approval possessed by
Apple at the date hereof and necessary for the ownership or lease and the
operation of its properties or the carrying on of its business as now conducted,
including any necessary Governmental Approval under each applicable
Environmental Law and Professional Code.
30
(d) Except for (i) filings of the Registration Statement under the
Securities Act and the SEC order declaring the Registration Statement effective
under the Securities Act and (ii) as may be required by the HSR Act or the
applicable state securities or blue sky laws, no Governmental Approvals are
required to be obtained, and no reports or notices to or filings with any
Governmental Authority are required to be made, by Apple for the execution,
delivery or performance by Apple of the Transaction Documents to which it is a
party, the enforcement against Apple of its obligations thereunder or the
effectuation of the Acquisition and the other transactions contemplated thereby.
Section 5.04 CHARTER DOCUMENTS. Apple has delivered to the Owner true,
complete and correct copies of the Charter Documents of Apple. No breach or
violation of any Charter Document of either Apple has occurred and is
continuing.
Section 5.05 CAPITAL STOCK OF APPLE. (a) Immediately prior to the IPO
Closing Date, (i) the authorized Capital Stock of Apple will be comprised of (A)
50,000,000 shares of Apple Common Stock and (B) 10,000,00 shares of preferred
stock, $.01 par value per share, (ii) before giving effect to the Acquisition
and the merger or other acquisition transactions contemplated by the Other
Agreements, (A) the number of shares of Apple Common Stock then issued and
outstanding will be as set forth in the Registration Statement when it becomes
effective under the Securities Act, (B) no shares of the Apple preferred stock
then will be issued or outstanding and (C) Apple will have reserved for issuance
pursuant to Other Compensation Plans or the exercise of Derivative Securities
the number of shares of Apple Common Stock set forth in the Registration
Statement when it becomes effective under the Securities Act.
(b) All shares of Apple Common Stock outstanding immediately prior to
the IPO Closing Date, and all shares of Apple Common Stock to be issued pursuant
to Section 2.04, when issued, (i) will have been duly authorized and validly
issued in accordance with the DGCL and their issuer's Charter Documents and (ii)
will be fully paid and nonassessable. None of the shares of Apple Common Stock
to be issued pursuant to Section 2.04 will, when issued, have been issued in
breach or violation of (i) any applicable statutory or contractual preemptive
rights, or any other rights of any kind (including any rights of first offer or
refusal), of any Person or (ii) the terms of any of its Derivative Securities
then outstanding.
Section 5.06 SUBSIDIARIES. Immediately prior to the IPO Closing Date,
(a) Apple will have no Subsidiaries and (b) Apple will not own, of record or
beneficially, directly or indirectly through any Person or otherwise (except
pursuant hereto or to the Other Agreements), any Capital Stock or Derivative
Securities of any Entity.
Section 5.07 LIABILITIES. Except as disclosed in the Private Placement
Memorandum, Apple has no material liabilities of any kind other than those
incurred in connection with this Agreement and the Other Agreements and the
transactions contemplated hereby and thereby, including the IPO.
Section 5.08 COMPLIANCE WITH LAWS; NO LITIGATION. Apple is in compliance
with all Governmental Requirements applicable to it, and no Litigation is
pending or, to the knowledge of Apple, threatened to which Apple is or may
become a party which (a) questions or involves
31
the validity or enforceability of any obligation of Apple under any Transaction
Document, (b) seeks (or reasonably may be expected to seek) (i) to prevent or
delay consummation by Apple of the transactions contemplated by this Agreement
to be consummated by Apple, or (ii) damages from Apple in connection with any
such consummation.
Section 5.09 NO BROKERS. Except as disclosed in the Private Placement
Memorandum, Apple has not, directly or indirectly, in connection with this
Agreement or the transactions contemplated hereby (a) employed any broker,
finder or agent or (b) agreed to pay or incurred any obligation to pay any
broker's or finder's fee, any sales commission or any similar form of
compensation.
Section 5.10 PRIVATE PLACEMENT MEMORANDUM. At the date hereof, the
Private Placement Memorandum (other than the historical financial statements,
including the notes thereto, of the Founding Companies (other than the Business)
and the historical information contained therein respecting the Business and the
Owner, to which this Section 5.10 does not apply) does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not materially misleading in the light
of the circumstances under which those statements are made.
ARTICLE VI
COVENANTS EXTENDING TO THE IPO CLOSING DATE
Section 6.02 ACCESS AND COOPERATION; DUE DILIGENCE. (a) From the date
hereof and until the IPO Closing Date, the Owner will (i) afford to the
Representatives of Apple reasonable access to all the key employees, sites,
properties, books and records of the Business, (ii) provide Apple with such
additional financial and operating data and other information relating to the
business and properties of the Business as Apple or any Other Founding Company
may from time to time reasonably request and (iii) cooperate with Apple and each
Other Founding Company and their respective Representatives in the preparation
of any documents or other material which may be required in connection with any
Transaction Documents or any Other Transaction Documents. The Owner will treat
all Confidential Information obtained by him in connection with the negotiation
and performance of this Agreement or the due diligence investigations conducted
with respect to Apple as confidential in accordance with the provisions of
Section 11.01.
(b) The Owner will use his best efforts to secure, as soon as
practicable after the date hereof, all approvals or consents of third Persons as
may be necessary to consummate the transactions contemplated hereby.
(c) From the date hereof and until the IPO Closing Date, Apple will (i)
afford to the Representatives of Owner access to all sites, properties, books
and records of Apple, (ii) provide the Owner with such additional financial and
operating data and other information relating to the business and properties of
Apple as the Owner may from time to time reasonably request and (iii) cooperate
with the Owner and his Representatives in the preparation of any
32
documents or other material which may be required in connection with any
Transaction Documents.
(d) If this Agreement is terminated pursuant to Section 12.1, Apple
promptly will return all written Confidential Information of the Owner it then
possesses to the Owner.
Section 6.03 CONDUCT OF BUSINESS PENDING CLOSING. From the date hereof
and until the IPO Closing Date, the Owner will except as and only to the extent
set forth in Section 6.03 of the Disclosure Statement:
(a) carry on his businesses in substantially the same manner as he has
heretofore and not introduce any material new method of management, operation or
accounting;
(b) maintain his properties and facilities relating to the Business,
including those held under leases, in as good working order and condition as at
present, ordinary wear and tear excepted;
(c) perform all his obligations under agreements relating to or
affecting his assets, properties and other rights relating to the Business;
(d) keep in full force and effect without interruption all his present
insurance policies or other comparable insurance coverage relating to the
Business;
(e) use reasonable commercial efforts to (i) maintain and preserve his
business organization intact, (ii) retain his present employees and (iii)
maintain his relationships with suppliers, customers, patients and others having
business relations with him;
(f) comply with all applicable Governmental Requirements; and
(g) except as required or expressly permitted by this Agreement,
maintain the instruments and agreements governing his outstanding Indebtedness
and leases relating to the Business on their present terms and not enter into
new or amended Indebtedness or lease instruments or agreements relating to the
Business involving amounts over $1,000 in any case or $5,000 in the aggregate,
without the prior written consent of Apple (which consent will not be
unreasonably withheld).
Section 6.04 PROHIBITED ACTIVITIES. From the date hereof and until the
IPO Closing Date, without the prior written consent of Apple or unless as
required or expressly permitted by this Agreement, the Owner will not:
(a) [Intentionally Left Blank];
(b) [Intentionally Left Blank];
(c) make any Restricted Payment (other than as provided in Section 6.04
of the Disclosure Statement);
33
(d) make any investments relating to the Business (other than Permitted
Investments) in the Capital Stock, Derivative Securities or Indebtedness of any
Person;
(e) enter into any contract or commitment or incur or agree to incur any
liability or make any capital expenditures in a single transaction or a series
of related transactions relating to the Business involving an aggregate amount
of more than $1,000 otherwise than in the ordinary course of his business and
consistent with his past practice;
(f) increase or commit or promise to increase the Cash Compensation
payable or to become payable to any employee or agent, consultant or independent
contractor of the Owner or make any discretionary bonus or management fee
payment to any such Person, except bonuses or salary increases to employees
(other than the Owner or the Owner's Immediate Family Members) at the times and
in the amounts consistent with his past practice;
(g) create, assume or permit to be created or imposed any Liens (other
than Permitted Liens) upon any of his assets or properties relating to the
Business, whether now owned or hereafter acquired, except for purchase money
Liens incurred in connection with the acquisition of equipment with an aggregate
cost not in excess of $1,000 and necessary or desirable for the conduct of the
Business;
(h) (i) adopt, establish, amend or terminate any ERISA Employee Benefit
Plan, or any Other Compensation Plan or Employee Policies and Procedures or (ii)
take any discretionary action, or omit to take any contractually required
action, if that action or omission could either (A) deplete the assets of any
ERISA Employee Benefit Plan or any Other Compensation Plan or (B) increase the
liabilities or obligations under any such plan;
(i) sell, assign, lease or otherwise transfer or dispose of any of his
owned or leased property or equipment relating to the Business otherwise than in
the ordinary course of his business and consistent with his past practice;
(j) negotiate for the acquisition of any business or the start-up of any
new business;
(k) merge, consolidate or effect a share exchange with, or agree to
merge, consolidate or effect a share exchange with any other Entity;
(l) waive any of his material rights or claims relating to the Business,
provided that he may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice, but such
adjustments will not be deemed to be included in Section 4.17 of the Disclosure
Statement unless specifically listed in the Supplemental Information;
(m) commit a material breach of or amend or terminate any Material
Agreement of the Owner or any of his Governmental Approvals; or
34
(n) enter into any other transaction relating to the Business (i)
outside the ordinary course of his business and consistent with his past
practice or (ii) prohibited hereby.
Section 6.05 NO SHOP. (a) The Owner agrees that, from the date hereof
and until the first to occur of the IPO Closing Date or the termination of this
Agreement in accordance with Article XII, the Owner shall not, and the Owner
will direct and use his best efforts to cause each of his respective
Representatives not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer with
respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, the Business (any such proposal or offer being an
"Acquisition Proposal") or engage in any activities, discussions or negotiations
concerning, or provide any Confidential Information respecting, the Business,
any Other Founding Company or Apple to, or have any discussions with, any Person
relating to an Acquisition Proposal or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal. The Owner will: (i)
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and each will take the steps necessary to inform the
Persons referred to in the first sentence of this Section 6.05(a) of the
obligations undertaken in this Section 6.05(a); and (ii) notify Apple
immediately if any such inquiries or proposals are received by, any such
information is requested from or any such discussions or negotiations are sought
to be initiated or continued with the Owner.
(b) [Intentionally Left Blank].
Section 6.06 FORMATION OF ORTHODONTIC ENTITY. The Owner shall duly form
and organize and incorporate the Orthodontic Entity in its Organization State,
and the Articles of Association and Bylaws of the Orthodontic Entity shall be in
form and substance reasonably satisfactory to Apple. The Owner shall not permit
the Orthodontic Entity to commence business until the IPO Pricing Date.
Section 6.07 NOTIFICATION OF CERTAIN MATTERS. The Owner shall give
prompt notice to Apple of (a) the existence or occurrence of each condition or
state of facts which will or reasonably could be expected to cause any
representation or warranty of the Owner contained herein to be untrue or
incorrect in any material respect at or prior to the Closing or on the IPO
Closing Date and (b) any material failure of the Owner to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by the
Owner hereunder, provided that no such notice shall be required until Apple
shall give notice to the Owner of the date scheduled for the Closing with
respect to the occurrence in the ordinary course of business and consistent with
past practice of the Owner of any condition or state of facts which would cause
any Sections of the Disclosure Statement to be incorrect. Apple shall give
prompt notice to the Owner of (a) the existence or occurrence of each condition
or state of facts which will or reasonably could be expected to cause any
representation or warranty of Apple contained herein to be untrue or inaccurate
at or prior to the Closing or on the IPO Closing Date and (b) any material
failure of Apple to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder. The delivery of any notice
pursuant to this Section 6.07 shall not be deemed to (a) modify the
representations or warranties herein of the party
35
delivering that notice, or any other party, which modification may be made only
pursuant to Section 6.08, (b) modify the conditions set forth in Article VII or
(c) limit or otherwise affect the remedies available hereunder to the party
receiving that notice.
Section 6.08 SUPPLEMENTAL INFORMATION. The Owner agrees that, with
respect to the representations and warranties of the Owner contained in this
Agreement, the Owner will have the continuing obligation (except to the extent
otherwise provided in Section 6.07) until the Closing to provide Apple promptly
with such additional supplemental Information (collectively, the "Supplemental
Information"), in the form of (a) amendments to then existing Sections of the
Disclosure Statement or (b) additional Sections of the Disclosure Statement, as
would be necessary, in the light of the circumstances, conditions, events and
states of facts then known to the Owner, to make each of those representations
and warranties true and correct as of the Closing and on the IPO Closing Date.
For purposes only of determining whether the conditions to the obligations of
Apple which are specified in Sections 7.04(a)(ii)(A) and 7.04(b)(ii) have been
satisfied, and not for any purpose under Article IX, the Disclosure Statement as
of the Closing and on the IPO Closing Date shall be deemed to be the Disclosure
Statement as of the date hereof as amended or supplemented by the Supplemental
Information provided to Apple prior to the Closing pursuant to this Section
6.08; provided, however, that if the Supplemental Information so provided
discloses the existence of circumstances, conditions, events or states of facts
which, in any combination thereof, (a) have had a Material Adverse Effect on the
Owner which was not reflected in the determination of the Transaction Value or,
in the sole judgment of Apple (which shall be conclusive for purposes of this
Section 6.08 and Article XII, but not for any purpose of Article IX), (b) are
having or will have a Material Adverse Effect on the Owner, as the case may be,
Apple will be entitled either (i) to terminate this Agreement pursuant to
Section 12.01(d) or (ii) to treat as Apple Indemnified Losses for all purposes
of Article IX (which treatment will not prejudice the right of the Owner under
Article IX to contest Damage Claims made by Apple in respect of those Apple
Indemnified Losses) all Damages to the Owner which are attributable to the
circumstances, conditions, events and states of facts first disclosed herein
after the date hereof in the Supplemental Information. Apple will provide the
Owner with copies of the Registration Statement, including all pre-effective
amendments thereto, promptly after the filing thereof with the SEC under the
Securities Act.
Section 6.09 COOPERATION IN CONNECTION WITH THE IPO. The Owner will (a)
provide Apple and the Underwriter with all the Information concerning the Owner
which is reasonably requested by Apple and the Underwriter from time to time in
connection with effecting the IPO and (b) cooperate with Apple and the
Underwriter and their respective Representatives in the preparation and
amendment of the Registration Statement (including the Financial Statements) and
in responding to the comments of the SEC staff, if any, with respect thereto.
The Owner agrees promptly to (a) advise Apple if, at any time during the period
in which a prospectus relating to the IPO is required to be delivered under the
Securities Act, any information contained in the then current Registration
Statement prospectus concerning the Owner becomes incorrect or incomplete in any
material respect and (b) provide Apple with the information needed to correct or
complete that information.
36
Section 6.10 ADDITIONAL FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Owner will furnish to Apple:
(a) as soon as available and in any event within 30 days after the end
of each of the Business' fiscal quarters which ends prior to the IPO Pricing
Date, an unaudited consolidated balance sheet of the Business as of the end of
that fiscal quarter and the related consolidated statements of income or
operations, cash flows and stockholders' or other owners' equity for that fiscal
quarter and for the period of the Business' fiscal year ended with that quarter,
in each case (i) setting forth in comparative form the figures for the
corresponding portion of the Business' previous fiscal year and (ii) prepared in
accordance with GAAP applied on basis consistent (A) throughout the periods
indicated (excepting footnotes) and (B) with the basis on which the Initial
Financial Statements including the Current Balance Sheet were prepared;
(b) if requested by Apple in connection with any amendment of the
Registration Statement and promptly following any such request, such summary
consolidated operating or other financial information of the Business as of the
end of either the first or second fiscal month in any of the Business' fiscal
quarters as Apple may request; and
(c) to the extent not provided at the time of execution and delivery of
this Agreement, on or prior to March 1, 1997 the information concerning the
Owner and the Business contemplated by the Agreement to be set forth in the
Disclosure Statement.
Section 6.11 TERMINATION OR TRANSFER OF PLANS. If requested by Apple,
the Owner will if permitted by all applicable Governmental Requirements to do
so, terminate each Plan identified in Section 4.26(c) or (d) of the Disclosure
Statement as a "Plan To Be Terminated" (or in the case of Owner ERISA Benefit
Plans, or Owner ERISA Pension Plans, remove such Plans from the Business and
transfer sponsorship of such Plans to the Orthodontic Entity) prior to the IPO
Closing Date.
Section 6.12 DISPOSITION OF UNWANTED ASSETS. At or prior to the Closing,
the Owner will make all arrangements and take all such actions as are necessary
and satisfactory to Apple to convey to the Orthodontic Entity, prior to the IPO
Closing Date, each asset of the Owner relating to the Business that by law
cannot be acquired by Apple because it relates to the practice of dentistry,
which assets are listed in Section 2.1 of the Disclosure Statement.
Section 6.13 HSR ACT MATTERS. If Apple shall determine that filings
pursuant to and under the HSR Act are necessary or appropriate in connection
with the effectuation of the Acquisition or the consummation of the acquisitions
contemplated by the Other Agreements, and advises the Owner in writing of that
determination, the Owner promptly will compile and file under the HSR Act such
information respecting him and the Business as the HSR Act requires of an Entity
to be acquired, and the expiration or termination of the applicable waiting
period and any extension thereof under the HSR Act shall be deemed a condition
precedent set forth in Section 7.02(b).
37
ARTICLE VII
THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 7.02 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. (a) The
obligation of each party hereto to take the actions contemplated to be taken by
that party at the Closing is subject to the satisfaction of each of the
following conditions on or before the date of the Closing:
(i) NO LITIGATION. Except as set forth in Section 7.02 of the
Disclosure Statement, no Litigation shall be pending on the date
of the Closing to restrain, prohibit or otherwise interfere
with, or to obtain material damages or other relief from Apple
in connection with, the consummation of the Acquisition or the
IPO;
(ii) GOVERNMENTAL APPROVALS. All Governmental Approvals required to
be obtained by any of the Owner and Apple in connection with the
consummation of the Acquisition and the IPO shall have been
obtained; and
(iii) THE REGISTRATION STATEMENT. (A) The Registration Statement, as
amended to cover the offering, issuance and sale by Apple of
such number of shares of Apple Common Stock at the IPO Price
(which need not be set forth in the Registration Statement when
it becomes effective under the Securities Act) as shall yield
aggregate cash proceeds to Apple from that sale (net of the
Underwriter's discount or commissions) in at least the amount
(the "Minimum Cash Amount") that is sufficient, when added to
the funds, if any, available from other sources (if any, and as
set forth in the Registration Statement when it becomes
effective under the Securities Act) (the "Other Financing
Sources") to enable Apple to pay or otherwise deliver on the IPO
Closing Date (1) the total cash portion of the Acquisition
Consideration then to be delivered pursuant to Section 2.04, (2)
the total cash portion of the consideration then to be delivered
pursuant to the Other Agreements as a result of the consummation
of the Acquisition or other acquisition transactions
contemplated thereby and (3) the total amount of Indebtedness of
the Founding Companies and Apple which the Registration
Statement discloses at the time it becomes effective under the
Securities Act will be repaid on the IPO Closing Date with
proceeds received by Apple from the IPO and the Other Financing
Sources, shall have been declared effective under the Securities
Act by the SEC; (B)
38
no stop order suspending the effectiveness of the Registration
Statement shall have been issued by the SEC, and the SEC shall
not have initiated or threatened to initiate Litigation for that
purpose; and (C) the Underwriter shall have agreed in writing
(the "Underwriting Agreement," which term includes the related
pricing agreement, if any) to purchase from Apple on a firm
commitment basis for resale to the public initially at the IPO
Price, subject to the conditions set forth in the Underwriting
Agreement, such number of shares of Apple Common Stock covered
by the Registration Statement as, when multiplied by the price
per share of Apple Common Stock to be paid by the Underwriter to
Apple pursuant to the Underwriting Agreement, shall equal at
least the Minimum Cash Amount.
(b) The obligation of each party hereto with respect to the actions to
be taken on the IPO Closing Date is subject to the satisfaction on that date of
each of the following conditions:
(i) NO LITIGATION. Except as set forth in Section 7.02 of the
Disclosure Statement, no Litigation shall be pending on the IPO
Closing Date to restrain, prohibit or otherwise interfere with,
or to obtain material damages or other relief from Apple in
connection with, the consummation of the Acquisition or the IPO;
(ii) GOVERNMENTAL APPROVALS. All Governmental Approvals required to
be obtained by the Owner and Apple in connection with the
consummation of the Acquisition and the IPO shall have been
obtained;
(iii) RECEIPT OF CERTAIN CERTIFICATES. The Owner or his Representative
shall receive the certificates that such party is entitled to
receive on the IPO Closing Date; and
(iv) CLOSING OF THE IPO. Apple shall have issued and sold shares of
Apple Common Stock to the Underwriter in accordance with the
Underwriting Agreement for initial resale at the IPO Price and
received payment therefor in an amount at least equal to the
amount by which (A) the Minimum Cash Amount exceeds (B) the
aggregate amount of funds actually received on the IPO Closing
Date, if any, from any one or more of the Other Financing
Sources.
39
Section 7.03 CONDITIONS TO THE OBLIGATIONS OF THE OWNER. The obligations
of the Owner with respect to actions to be taken by him at or before the Closing
and the actions to be taken on the IPO Closing Date are subject to the
satisfaction, or the written waiver by the Owner pursuant to Section 11.05 on or
before the date of the Closing of, in addition to the conditions specified in
Section 7.02(a) or 7.02(b), as applicable, (i) all the conditions set forth in
Section 7.01(b), if any, and (ii) all the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. All the representations and
warranties of Apple in Article V shall be true and correct as of the Closing as
though made at that time;
(b) DELIVERY OF DOCUMENTS. Apple shall have delivered to the Owner:
(i) an Apple officer's certificate respecting the representations
and warranties of Apple in Article V and compliance with the
covenants of Apple in Article VI and in the form thereof
attached as an exhibit to the Closing Memorandum;
(ii) opinions dated the IPO Closing Date and addressed to the Owner
from Counsel for Apple substantially in the forms thereof
attached as exhibits to the Closing Memorandum;
(iii) a certificate of the secretary or any assistant secretary of
Apple in the form thereof attached as an exhibit to the Closing
Memorandum and respecting, and to which is attached, (A) the
Charter Documents of Apple (certified by the Secretary of State
of the State of Delaware in the case of the certificates of
incorporation included therein); (B) the resolutions of the
board of directors of Apple respecting the Transaction Documents
and the transactions contemplated thereby; (C) a certificate
respecting the incumbency and true signatures of the Apple
officers who execute the Transaction Documents on behalf of
Apple; (D) a specimen certificate evidencing shares of Apple
Common Stock; (E) the prospectus included in the Registration
Statement when it became effective; and (F) a facsimile copy of
the Underwriting Agreement as executed and delivered by Apple
and the Underwriter;
(iv) the Registration Rights Agreement duly executed and delivered by
Apple; and
(v) a certificate, dated as of a Current Date, duly issued by the
Secretary of State of the State of Delaware, showing Apple to be
in good standing and authorized to do business in that State.
Section 7.04 CONDITIONS TO THE OBLIGATIONS OF APPLE. (a) The obligations
of Apple with respect to actions to be taken by them at or before the Closing
are subject to the satisfaction
40
on or before the date of the Closing of, in addition to the conditions specified
in Section 7.02 (a), (i) all the conditions set forth in Section 7.01(c), if
any, and (ii) all the following conditions:
(A) REPRESENTATIONS AND WARRANTIES. All the representations and
warranties of the Owner in Articles III and IV shall be true and correct as of
the Closing as though made at that time;
(B) DELIVERY OF DOCUMENTS. The Owner shall have delivered to Apple:
(1) a certificate signed by the Owner respecting the representations
and warranties of the Owner and in Articles III and IV and
compliance with the covenants of the Owner in Article VI and in
the form thereof attached as an exhibit to the Closing
Memorandum;
(2) opinions dated the IPO Closing Date and addressed to Apple and
Counsel for Apple from Counsel for the Owner, if any,
substantially in the form thereof attached as exhibits to the
Closing Memorandum;
(3) [Intentionally Left Blank];
(4) [Intentionally Left Blank];
(5) from the Owner, an executed certificate to the effect that no
withholding is required under Section 1445 of the Code, in the
form of Exhibit 7.04(a)(ii)(B)(5), with the blanks appropriately
filled;
(6) [Intentionally Left Blank]; and
(7) from the Owner, a bill of sale and deeds, assignments and any
other necessary instruments, satisfactory in form and content
and approved prior to the Closing by Apple, conveying, free and
clear of any Liens, all the Acquired Assets to Apple.
(C) DUE DILIGENCE. Apple's due diligence investigation of the Owner and
the Business shall have been completed to the satisfaction of Apple in its sole
discretion.
(b) The obligations of Apple with respect to the actions to be taken on
the IPO Closing Date are subject to the satisfaction on that date of (i) all the
conditions set forth in Section 7.01(d), if any, and (ii) the condition that all
the representations and warranties of the Owner in Articles III and IV shall be
true and correct as of the IPO Closing Date as though made on that date.
41
ARTICLE VIII
COVENANTS FOLLOWING THE IPO CLOSING DATE
Section 8.02 DISCLOSURE. If, subsequent to the IPO Pricing Date and
prior to the 25th day after the date of the Final Prospectus, the Owner becomes
aware of any fact or circumstance which would change (or, if after the IPO
Closing Date, would have changed) a representation or warranty of the Owner in
this Agreement or would affect any document delivered pursuant hereto in any
material respect, the Owner will promptly give notice of that fact or
circumstance to Apple.
Section 8.03 PREPARATION AND FILING OF TAX RETURNS. Each party hereto
will, and will cause its Affiliates to, provide to each of the other parties
hereto such cooperation and information as any of them reasonably may request in
filing any Return, amended Return or claim for refund, determining a liability
for Taxes or a right to refund of Taxes or in conducting any audit or other
proceeding in respect of Taxes. This cooperation and information shall include
providing copies of all relevant portions of the relevant Returns, together with
such accompanying schedules and work papers, documents relating to rulings or
other determinations by Taxing Authorities and records concerning the ownership
and Tax bases of property as are relevant which a party possesses. Each party
will make its employees, if any, reasonably available on a mutually convenient
basis at its cost to provide an explanation of any documents or information so
provided. Subject to the preceding sentence, each party required by law to file
Returns shall bear all costs attributable to the preparation and filing of those
Returns; provided that if Apple is required to file a Return covering a period
described in Code Section 1362(e)(1)(A) (an S short year), such costs shall be
reimbursed by the Owners.
Section 8.04 DIRECTORS. Apple will use its best efforts to cause each of
the persons, if any, who are named in the Final Prospectus as persons who will
become members of the board of directors of Apple following the IPO Closing Date
to be appointed to that board when that prospectus so provides.
Section 8.05 [INTENTIONALLY LEFT BLANK].
Section 8.06 ACCESS. The Owner shall, at reasonable times during normal
business hours and on reasonable notice, permit apple and its authorized
representatives reasonable access to, and make available for inspection, all of
the assets and records of the Orthodontic Entity, and permit Apple and its
authorized representatives to inspect and, at Apple's sole cost and expense,
make copies of all documents, records (other than patient medical records) and
information with respect to the affairs of the Orthodontic Entity as Apple and
its representatives may request.
Section 8.07 LICENSES AND PERMITS. The Owner shall use his best efforts
to obtain all licenses, permits, approvals or other authorizations required
under any law, statute, rule, regulation or ordinance, or otherwise necessary or
desirable to provide the services of the Orthodontic Entity, the stockholders of
the Orthodontic Entity and the Orthodontic Entity Professional Employees (as
defined in the Service Agreement), the Orthodontic Entity
42
Professional Employment Agreements (as defined in the Service Agreement), and to
conduct the intended business of the Orthodontic Entity.
Section 8.08 ORTHODONTIST EMPLOYMENT AGREEMENT. The Owners shall use his
best efforts to cause, at or immediately prior to Closing, each orthodontist (i)
to terminate his or her employment agreement, if any, with the Business by
mutual consent without any liability therefor on the part of the Owner and (ii)
to enter into an Orthodontic Entity Professional Employment Agreement with the
Orthodontic Entity.
ARTICLE IX
INDEMNIFICATION
Section 9.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All the
provisions of this Agreement will survive the Closing and the IPO Closing Date
indefinitely notwithstanding any investigation at any time made by or on behalf
of any party hereto or the provision of any Supplemental Information pursuant to
Section 6.08, provided that the representations and warranties set forth in
Articles IV, V and VI and in any certificate delivered in connection herewith
with respect to any of those representations and warranties will terminate and
expire on December 31, 1999, except as follows: (a) the representations and
warranties of the Owner which relate expressly or by necessary implication to
Taxes, ERISA or other employment or labor matters or the Governmental
Requirements referred to in clause (iii) of Section 9.03(a) will survive until
ninety (90) days after the expiration of the applicable statutes of limitations
(including all periods of extension and tolling); and (b) the representations
and warranties of the Owner which relate expressly or by necessary implication
to the environment or Environmental Laws will survive for a period of three
years from the IPO Closing Date. After a representation and warranty has
terminated and expired, no indemnification will or may be sought pursuant to
this Article IX on the basis of that representation and warranty by any Person
who would have been entitled pursuant to this Article IX to indemnification on
the basis of that representation and warranty prior to its termination and
expiration, provided that, in the case of each representation and warranty that
will terminate and expire as provided in this Section 9.02, no claim presented
in writing for indemnification pursuant to this Article IX on the basis of that
representation and warranty prior to its termination and expiration will be
affected in any way by that termination and expiration.
Section 9.03 INDEMNIFICATION OF APPLE INDEMNIFIED PARTIES. (a) Subject
to the applicable provisions of Sections 9.02 and 9.07, the Owner covenants and
agrees that he will indemnify each Apple Indemnified Party against, and hold
each Apple Indemnified Party harmless from and in respect of, all Damage Claims
that arise from, are based on or relate or otherwise are attributable to (i) any
breach of the representations and warranties of the Owner set forth herein or in
certificates delivered in connection herewith, (ii) any nonfulfillment of any
covenant or agreement on the part of the Owner under this Agreement, (iii) all
Taxes of the Owner that arise or result from the consummation of the
transactions contemplated by this Agreement or any agreement ancillary hereto
(including, without limitation, sales, use and other transfer Taxes and income
Taxes), (iv) any liability under the Securities Act, the Exchange Act
43
or other applicable Governmental Requirement which arises out of or is based on
(A) any untrue statement or alleged untrue statement of a material fact relating
to the Owner or the Business which is (1) provided to Apple or its counsel by
the Owner and (2) contained in the Private Placement Memorandum, any preliminary
prospectus relating to the IPO, the Registration Statement or any prospectus
forming a part thereof, or any amendment thereof or supplement thereto, or (B)
any omission or alleged omission to state therein a material fact relating to
the Owner or the Business, required to be stated therein or necessary to make
the statements therein not misleading, and not provided to Apple or its counsel
by the Owner, (v) the litigation described in Section 4.12 of the Disclosure
Statement, or (vi) any debts, liabilities or obligations of the Owner, direct or
indirect, fixed, contingent or otherwise, that are not expressly assumed by
Apple in this Agreement (each such Damage Claim being an "Apple Indemnified
Loss"); provided, however, that the Owner shall not be obligated to indemnify
any Apple Indemnified Party against any Apple Indemnified Loss to the extent
that such untrue statement (or alleged untrue statement) was made in, or such
omission (or alleged omission) occurred in, any preliminary prospectus and the
Owner timely provided, in writing, corrected or the necessary additional
information to Apple and its counsel for inclusion in the Final Prospectus.
(b) [Intentionally Left Blank].
Section 9.04 INDEMNIFICATION OF OWNER INDEMNIFIED PARTIES. Apple
covenants and agrees that it will indemnify each Owner Indemnified Party
against, and hold each Owner Indemnified Party harmless from and in respect of,
all Damage Claims (that arise from, are based on or relate or otherwise are
attributable to (i) any breach by Apple of their representations and warranties
set forth herein or in their certificates delivered to the Owner in connection
herewith, (ii) any nonfulfillment of any covenant or agreement on the part of
Apple under this Agreement, or (iii) any liability under the Securities Act, the
Exchange Act or other applicable Governmental Requirement which arises out of or
is based on (A) any untrue statement or alleged untrue statement of a material
fact relating to Apple or any of the Other Founding Companies contained in the
Private Placement Memorandum, any preliminary prospectus relating to the IPO,
the Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or (B) any omission or alleged omission
to state therein a material fact relating to Apple, or any of the Other Founding
Companies, or any of them, required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made (each such Damage Claim being an "Owner Indemnified Loss").
Section 9.05 CONDITIONS OF INDEMNIFICATION. (a) All claims for
indemnification under this Agreement shall be asserted and resolved as follows
in this Section 9.05.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-party claim or
claims asserted against the Indemnified Party ("Third Party Claim") that could
give rise to a right of indemnification under this Agreement and (ii) transmit
to the Indemnifying Party a written notice ("Claim Notice") describing in
reasonable detail the nature of the Third Party Claim, a copy of all papers
served with respect to that claim (if any), an estimate of the amount of damages
attributable to the Third Party Claim
44
to the extent feasible (which estimate shall not be conclusive of the final
amount of such claim) and the basis for the Indemnified Party's request for
indemnification under this Agreement. Except as set forth in Section 9.02, the
failure to promptly deliver a Claim Notice shall not relieve the Indemnifying
Party of its obligations to the Indemnified Party with respect to the related
Third Party Claim except to the extent that the resulting delay is materially
prejudicial to the defense of that claim. Within 15 days after receipt of any
Claim Notice (the "Election Period"), the Indemnifying Party shall notify the
Indemnified Party (i) whether the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Article IX with respect to that
Third Party Claim and (ii) if the Indemnifying Party does not dispute its
potential liability to the Indemnified Party with respect to that Third Party
Claim, whether the Indemnifying Party desires, at the sole cost and expense of
the Indemnifying Party, to defend the Indemnified Party against that Third Party
Claim.
(c) If the Indemnifying Party does not dispute its potential liability
to the Indemnified Party and notifies the Indemnified Party within the Election
Period that the Indemnifying Party elects to assume the defense of the Third
Party Claim, then the Indemnifying Party shall have the right to defend, at its
sole cost and expense, that Third Party Claim by all appropriate proceedings,
which proceedings shall be prosecuted diligently by the Indemnifying Party to a
final conclusion or settled at the discretion of the Indemnifying Party in
accordance with this Section 9.05(c) and the Indemnified Party will furnish the
Indemnifying Party with all information in its possession with respect to that
Third Party Claim and otherwise cooperate with the Indemnifying Party in the
defense of that Third Party Claim; provided, however, that the Indemnifying
Party shall not enter into any settlement with respect to any Third Party Claim
that purports to limit the activities of, or otherwise restrict in any way, any
Indemnified Party or any Affiliate of any Indemnified Party without the prior
consent of that Indemnified Party (which consent may be withheld in the sole
discretion of that Indemnified Party). The Indemnified Party is hereby
authorized, at the sole cost and expense of the Indemnifying Party, to file,
during the Election Period, any motion, answer or other pleadings that the
Indemnified Party shall deem necessary or appropriate to protect its interests
or those of the Indemnifying Party. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 9.05(c) and will bear its own
costs and expenses with respect to that participation; provided, however, that
if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party, and, on its written
notification of that employment, the Indemnifying Party shall not have the right
to assume or continue the defense of such action on behalf of the Indemnified
Party.
(d) If the Indemnifying Party (i) within the Election Period (A)
disputes its potential liability to the Indemnified Party under this Article IX,
(B) elects not to defend the Indemnified Party pursuant to Section 9.05(c) or
(C) fails to notify the Indemnified Party that the Indemnifying Party elects to
defend the Indemnified Party pursuant to Section 9.05(c) or (ii) elects to
defend the Indemnified Party pursuant to Section 9.05(c) but fails diligently
and promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the
45
right to defend, at the sole cost and expense of the Indemnifying Party (if the
Indemnified Party is entitled to indemnification hereunder), the Third Party
Claim by all appropriate proceedings, which proceedings shall be promptly and
vigorously prosecuted by the Indemnified Party to a final conclusion or settled.
The Indemnified Party shall have full control of such defense and proceedings.
Notwithstanding the foregoing, if the Indemnifying Party has delivered a written
notice to the Indemnified Party to the effect that the Indemnifying Party
disputes its potential liability to the Indemnified Party under this Article IX
and if such dispute is resolved in favor of the Indemnifying Party, the
Indemnifying Party shall not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this Section 9.05 or of the Indemnifying
Party's participation therein at the Indemnified Party's request, and the
Indemnified Party shall reimburse the Indemnifying Party in full for all
reasonable costs and expenses of such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 9.05(d), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation.
(e) In the event any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of Damages attributable to that claim to the extent
feasible (which estimate shall not be conclusive of the final amount of such
claim) and the basis of the Indemnified Party's request for indemnification
under this Agreement. If the Indemnifying Party does not notify the Indemnified
Party within 15 days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Party hereunder. If the Indemnifying Party has timely disputed such claim, as
provided above, such dispute shall be resolved by proceedings in an appropriate
court of competent jurisdiction if the parties do not reach a settlement of such
dispute within 30 days after notice of a dispute is given.
(f) Payments of all amounts owing by an Indemnifying Party pursuant to
this Article IX relating to a Third Party Claim shall be made within 30 days
after the latest of (i) the settlement of that Third Party Claim, (ii) the
expiration of the period for appeal of a final adjudication of that Third Party
Claim or (iii) the expiration of the period for appeal of a final adjudication
of the Indemnifying Party's liability to the Indemnified Party under this
Agreement. Payments of all amounts owing by an Indemnifying Party pursuant to
Section 9.05(e) shall be made within 30 days after the later of (i) the
expiration of the 30-day Indemnity Notice period or (ii) the expiration of the
period for appeal of a final adjudication of the Indemnifying Party's liability
to the Indemnified Party under this Agreement.
Section 9.06 REMEDIES NOT EXCLUSIVE. The remedies provided in this
Agreement shall not be exclusive of any other rights or remedies available to
one party against the other, either at law or in equity.
Section 9.07 LIMITATIONS ON INDEMNIFICATION. (a) Notwithstanding the
provisions of Section 9.03(a), the Owner shall not be required to indemnify or
hold harmless any of the Apple Indemnified Parties on account of any Apple
Indemnified Loss under Section 9.03(a) unless the
46
liability of the Owner in respect of that Apple Indemnified Loss, when
aggregated with the liability of the Owner in respect of all Apple Indemnified
Losses under Section 9.03(a), exceeds, and only to the extent the aggregate
amount of all those Apple Indemnified Losses does exceed, the Threshold Amount.
In no event shall the aggregate liability of the Owner under this Agreement,
including Section 9.03(a), exceed the Transaction Value. For purposes of
determining the amount of Apple Indemnified Losses, no effect will be given to
any resulting Tax benefit to any Apple Indemnified Party.
(b) Notwithstanding the provisions of Section 9.04, Apple shall not be
required to indemnify or hold harmless any of the Owner Indemnified Parties on
account of any Owner Indemnified Loss unless the liability of Apple in respect
of that Owner Indemnified Loss, when aggregated with the liability of Apple in
respect of all Owner Indemnified Losses, exceeds, and only to the extent the
aggregate amount of all those Owner Indemnified Losses does exceed, the
Threshold Amount. In no event shall Apple be liable under this Agreement,
including Section 9.04, for any amount in excess of the Transaction Value. For
purposes of determining the amount of Owner Indemnified Losses, no effect will
be given to any resulting Tax benefit to any Owner Indemnified Party.
ARTICLE XI
GENERAL PROVISIONS
Section 11.15 TREATMENT OF CONFIDENTIAL INFORMATION. (a) The Owner
acknowledges that it has or may have had in the past, currently has and in the
future may have access to Confidential Information of the Other Founding
Companies and their Subsidiaries and Apple and its Subsidiaries. The Owner
agrees that it will keep confidential all such Confidential Information
furnished to it and, except with the specific prior written consent of Apple
will not disclose such Confidential Information to any Person except (a)
Representatives of Apple, (b) its own Representatives, provided that these
Representatives (other than counsel) agree to the confidentiality provisions of
this Section 11.15; and provided, further, that Confidential Information shall
not include (i) such information which becomes known to the public generally
through no fault of the Owner, (ii) information required to be disclosed 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), Owner shall,
if possible, give prior written notice thereof to Apple and provide Apple with
the opportunity to contest such disclosure, or (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party. In the event of a breach or
threatened breach by the Owner of the provisions of this Section 11.15 with
respect to any Confidential Information, Apple shall be entitled to an
injunction restraining the Owner from disclosing, in whole or in part, that
Confidential Information. Nothing herein shall be construed as prohibiting Apple
from pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
(b) Because of the difficulty of measuring economic losses as a result
of the breach of the foregoing covenants in Section 11.15(a), and because of the
immediate and irreparable
47
damage that would be caused to Apple for which it would have no other adequate
remedy, the Owner agrees that Apple may enforce the provisions of Section
11.01(a) by injunctions and restraining orders against each of them who breaches
any of those provisions.
(c) The obligations of Apple set forth in Section 6.02(d) are
incorporated in this Section 11.01 by this reference.
(d) The obligations of the parties under this Section 11.15 shall
survive the termination of this Agreement.
Section 11.16 BULK SALES. Without implication that such laws apply to
the transaction contemplated hereby, the Owner and Apple shall not comply with
the provisions of the Uniform Commercial Code and other applicable laws of any
states relating to bulk sales or transfers.
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