EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement made and entered into this 29th day of December, 1997,
by and between DENTAL CARE ALLIANCE, INC., a Delaware corporation (Dental);
DENTAL CARE ALLIANCE OF FLORIDA, INC., a Florida corporation (Subsidiary);
MARKETPLACE DENTAL, INC., a Florida corporation (Marketplace) and the
Shareholders of Marketplace identified on the signature page to this Agreement
(Shareholders).
W I T N E S S E T H:
WHEREAS, the Shareholders own all of the issued and outstanding stock
of Marketplace; and
WHEREAS, the parties have agreed that Shareholders will transfer all of
the outstanding stock of Marketplace for a consideration consisting of stock of
Dental and cash; and
WHEREAS, the parties intend that this Agreement be approved and adopted
by all relevant parties as a plan of reorganization within the provisions of
Section 368(a)(1)(A) and (D) of the Internal Revenue Code of 1986;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree as follows:
1. THE MERGER.
1.1. On the date of closing. upon the terms and subject to the
conditions set forth herein and in accordance with the corporate laws of the
states of incorporation of
Subsidiary and Marketplace, marketplace shall. be merged with and into
Subsidiary; the separate existence of Marketplace shall cease; and Subsidiary
shall continue an the surviving Corporation.
1.2. On the date of closing, Subsidiary shall continue its
corporate existence under the laws of the state of its incorporation and shall
succeed to all rights, immunities, franchises and powers, and be subject to all
duties, liabilities, debts and obligations, of Marketplace in accordance with
the provisions of the applicable corporate laws.
2. THE SURVIVING CORPORATION.
2.1. The Certificate of Incorporation of Subsidiary as in
effect immediately prior to the date of closing shall be the certificate of the
surviving corporation until amended in accordance with applicable law and such
certificate of incorporation, provided, however, that such certificate may be
amended by the Certificate of Merger to change Subsidiary's name to Marketplace.
2.2. The by-laws of Subsidiary as in affect immediately prior
to the date of closing shall be the by-laws of the surviving corporation until
thereafter amended in accordance with applicable law, the Certificate of
Incorporation of such surviving corporation, and such by-laws.
2.3. The director of Subsidiary immediately prior to the date
of closing shall be the initial Board of Directors of the surviving corporation,
each of such persons to serve until his or her successor, if there is to be one,
is duly elected and qualified.
2.4. The officers of subsidiary immediately prior to the date
of closing shall be the initial officers of the surviving corporation, each of
such officers to serve until his or her successor, it there is to be one, is
duly qualified.
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3. MERGER CONSIDERATION: CONVERSIONS.
3.1. On the date of closing, by virtue of the merger, and
without any action on the part of the Shareholders, all of the Marketplace
shares issued and outstanding immediately prior to the effective time shall be
cancelled, retired and converted into and become the right to receive the merger
consideration described in this Article 3.
3.2. (a) The merger considerations shall consist of
(i) eighty thousand (80,000) shares of common
stock of Dental;
(ii) an amount in cash equal to the excess of (y)
the aggregate of the amount of $500,000, the amount of any cash, security,
demand, savings or other deposits in any bank, savings and loan or other
financial institution, the face amount of any negotiable or non-negotiable
instruments owned by Marketplace; and the unamortized amount of any prepaid
expenses of Marketplace over (z) the amount of the liabilities of Marketplace to
First United Bank (SBA) and amounts classified as owed to related parties on
Marketplace's financial statements; as of the close of its business on November
30, 1997 (effective time); and
(iii) that number of shares of Dental's common
stock (but not in excess of 79,999 shares), having a value, determined by
reference to the average mean between the opening bid and ask quote for such
shares over the three trading days immediately preceding the determination date,
equal to the excess, if any, of the EBITDA, of Subsidiary's business as herein
defined for the twelve month period following the effective time over the EBITDA
of the business of Marketplace for the twelve month period ending at the
effective time, multiplied by two. A shareholder's right to receive additional
.shares shall not be assignable except by operation of law and shall not be
evidenced by any negotiable instrument.
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EBITDA is an amount equal to the earnings of the business during each measuring
period determined under Generally Accepted Accounting Principles consistently
applied increased by the aggregate of the amounts included as interest expenses;
taxes measured by income; depreciation; and amortization and the determination
date shall be the last day of the twelve month period following the effective
time. For purposes of this provision, the business shall include the business of
managing dental practices acquired as a result of the merger and managing any
other dental practices acquired and conducted by shareholders, or any one of
them, or an entity owned by such persons.
3.3. The merger consideration shall be allocated among the
shareholders of Marketplace proportionately according to the number of shares
owned by each. If the allocation results in fractional shares, no fractional
shares shall be issued, but such shareholder shall be paid an amount in cash
equal to such fractional part of a share multiplied by the stock value utilized
in determining the number of shares to be issued on the effective date of the
merger,
3.4. The procedure for closing is as follows:
(a) The consummation of the transactions contemplated in
this Agreement shall take place at such time and in such manner as the parties
shall agree on the later of (i) December 31, 1997; or (ii) the last day of the
month during which all of the conditions precedent to the consummation of this
merger have been satisfied (date of closing) but on the basis of effective time
computations.
(b) On the date of closing, Dental and Subsidiary shall
file the documents required by the corporate laws to effect the merger and such
documents shall become effective on the date of closing.
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(c) On the date of closing, Shareholders will deliver
the certificates representing all of the issued and outstanding shares of
Marketplace, duly endorsed; and Dental shall deliver to such Shareholders the
certificates representing the shares of stock to which they are entitled under
the provisions of Section 3.1(a)(i) hereof and the amount of $100,000 in cash by
wire transfer to the trust account of shareholders' attorneys; provided,
however, that actual delivery of the certificates representing the shares of
Dental to be delivered to the shareholders at closing can be delayed for up to
ten business (10) days if the parties execute a memorandum agreement at closing
reflecting the number or shares to be issued to each Shareholder by Dental and
its obligation to issue the certificates representing such shares as of the
closing date and deliver such certificates within the allowable ten (10) day
period.
3.5. The following shall be done after closing:
(a) Within sixty (60) days after closing, subsidiary
shall deliver financial statements to Shareholders, including a balance sheet of
Marketplace at the effective time; and its EBITDA for the twelve month period
ending at the effective time. Such financial statements shall be prepared in
accordance with Generally Accepted Accounting Principles, consistently applied.
Shareholders shall have thirty (30) days within which to object to such
statements, or approve them. If any objections are raised, such shall be
resolved by agreement of the parties, or if none by a decision made within
thirty (30) days after the conclusion of the objection period by a majority of
three certified public accountants, one of which shall be appointed by
Shareholders, one by Subsidiary; and a third by the two so appointed. The final
decision reached by such majority shall be binding on all parties and shall not
be subject to judicial review in the absence of fraud.
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(b) Within thirty (30) days after finalizing the
effective time financials, Dental shall pay to shareholders, or Shareholders
shall pay to Dental, as the case may be, an amount equal to the difference
between the cash required to be paid to such Shareholders under the provisions
of Section 3.2(a)(ii) and the amount of cash paid at closing. The amount owed by
or to Dental shall be paid directly to or by the Shareholders in proportion to
their interest in the consideration received.
(c) On or before the last day of the fourteenth month
after the effective time, Subsidiary shall deliver to Shareholders, a
determination date financial statement reflecting the income and EBITDA of the
business during the twelve month period immediately following the effective
time. The procedures utilized in resolving any differences that were, or would
have been applicable in resolving any differences as to the information included
in the effective time financial statements submitted to the stockholders shall
be utilized in resolving any differences as to the correctness of the
determination date financials. Within fifteen days after finalizing the
determination date financial statements, Dental shall issue to Shareholders, the
certificates representing the additional shares of Dental to which they are
entitled under the provisions of Section 3.2(iii).
4. ADDITIONAL AGREEMENTS.
4.1. Each party to this Agreement shall pay its own expenses
incident to the authorization, preparation, execution and performance of this
Agreement and the transactions contemplated hereby. Each party's expenses shall
include those attributable to the accountant selected by such party to resolve
differences under section 3.5(c) hereof and one-half of the expenses
attributable to the third accountant selected under the provisions of such
section.
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4.2. Each party shall indemnify the other and hold such other
party harmless from and against all claims or demands for commissions or other
compensation by any broker, finder, or similar agent claiming to have been
employed by or on behalf of any party to this Agreement.
4.3. Shareholders hereby agree that they will not, for a
period of five (5) years from the closing of this transaction engage directly or
indirectly in a dental management company in the geographical location of
Broward, Palm Beach, Xxxxxx or St. Lucie Counties, State of Florida shareholders
further agree that during the said five (5) year period in the geographical
location described above, they will not directly or indirectly be connected with
any person, corporation, or business entity operating a dental management
company. Shareholders will have no financial interest in any business entity
operating a dental management company in the geographical location described
above during the five (5) year restrictive period.
Shareholders acknowledge that the restraints set forth in the above
paragraph are reasonable and necessary for the protection of legitimate business
Interests of Dental or Subsidiary and that this covenant on the part of the
Shareholders shall be construed as an agreement. The existence of any claim or
cause of action of the Shareholders shall not be construed as a defense to the
enforcement by Dental or Subsidiary of this covenant. It is agreed by Dental or
Subsidiary and Shareholders that if any portion of this restrictive covenant is
held unreasonable, arbitrary or against public policy, these covenants shall be
considered to be diminishable both as to time and geographical area, and each
month for the specific period shall be deemed a separate period of time and each
square mile shall be deemed a separate geographical area and shall remain
effective so long as the same is not otherwise unreasonable, arbitrary or
against public policy.
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Shareholders and Dental hereby agree that in the event any court
determines any specific time period or any specific geographical area to be
unreasonable, arbitrary or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary and not
against public policy may be enforced against the Shareholders. The Shareholders
further understand that this covenant may be enforced by the entering of a
temporary or permanent injunction. It is understood that in determining the
enforceability of the restrictive covenant, the court shall not consider any
individual economic or other hardships that might be caused to the person or
entity against whom the enforcement is sought.
It is understood that a court of competent jurisdiction shall construe
this restrictive covenant in favor of providing reasonable protection to all
legitimate business interests to Dental or Subsidiary. It is understood that the
court shall not employ any rule of contract construction that requires the court
to construe a restrictive covenant narrowly, against the restraint, or against
the drafter of the contract. It is understood that no court may refuse to
enforce this restrictive covenant on the grounds that the contract violates
public policy unless such public policy is articulated specifically by the court
and the court finds that the specific public policy requirements substantially
outweigh the need to protect the legitimate business interests or interests
established by Dental or Subsidiary.
The violation of this restrictive covenant creates a presumption of
irreparable injury to Dental and Subsidiary on seeking its enforcement. Dental
and Subsidiary will post a proper bond as set by the court if an injunction is
entered. In the event it becomes necessary for Dental and Subsidiary to retain
the services of an attorney to enforce this restrictive covenant, it is agreed
that the prevailing party shall be entitled to reasonable attorney's fees and
costs in any legal proceeding, both at the trial or appellate level.
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Shareholders agree the restriction contained herein is freely
assignable by Dental and Subsidiary, in their sole discretion, and any assignee,
successor or third-party beneficiary to this Agreement may enforce the same.
The laws of the State of Florida shall control the interpretation of
this restrictive covenant and in particular Florida Statute 542.335.
Shareholders specifically agree that the Fifteenth Judicial Circuit in and for
Palm Beach County, Florida, has jurisdiction over the enforcement of this
restrictive covenant, and that the Fifteenth Judicial Circuit in and for Palm
Beach County, Florida, will be the appropriate venue for any action brought
pursuant to this restrictive covenant.
In the event Dental and Subsidiary or their successors in interest
shall make application to a court of competent jurisdiction for injunctive
relief, then, in that event, the five (5) year period of time specified above
shall be tolled for a period of time from the effective date of any lawsuit
commenced by Dental and Subsidiary for enforcement hereof until final judgment
is entered, if such final judgment is adverse to Shareholders.
The covenants of the Shareholders hereunder shall become void and of no
force and effect if Dental and/or Subsidiary ceases to be engaged in the active
conduct of the dental management business in the area to which the covenant
would otherwise relate.
4.4. Shareholders acknowledge that none of the shares of
Dental stock to be received by then hereunder will have been registered under
the Securities Act of 1933, as amended, or the Securities Laws of any state, and
that they have no registration rights and are subject to the remaining
underwriting lockup period of one hundred and eighty days (180) from November 4,
1997. The Shareholders acknowledge and agree that there shall be placed on all
certificates representing the shares of Dental stock issued to then pursuant to
this Agreement, an appropriate restrictive legend providing an follows:
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"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAW. THESE SECURITIES MAY NOT BE OFFERED, SOLD, OR OTHERWISE
TRANSFERRED IN ANY MANNER ABSENT EITHER REGISTRATION UNDER THE ACT AND
UNDER APPLICABLE STATE SECURITIES LAW, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT REGISTRATION UNDER THOSE LAWS IS NOT
REQUIRED,"
5. REPRESENTATION, WARRANTIES AND COVENANTS OF SHAREHOLDERS AND
MARKETPLACE.
5.1. (a) Marketplace is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. It has the
corporate power and authority to own and lease all of its properties and assets
and to carry on its business that is now being conducted and is duly licensed at
qualified to do such business.
(b) The authorized capital stock of Marketplace consists
of 10,000,000 shares of common stock. As of the date of the execution of this
agreement, there are 5,000,000 shares of its common stock issued and
outstanding. All issued and outstanding shares of Marketplace have been duly
authorized and validly issued, are fully paid, and non-assessable. Marketplace
is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the transfer, purchase or
issuance of any shares of its capital stock or any securities representing the
right to purchase or otherwise receive any shares of its common stock or any
securities convertible into or representing the right to purchase or subscribe
for any such shares, and there are no agreements or understandings with respect
to the voting of any such shares other than proxies in favor of persons who are
parties to this Agreement as Shareholders.
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(c) Subject to the approval of this Agreement and the
transactions contemplated hereby by the Stockholders of Marketplace, Marketplace
has full corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of Marketplace in accordance with its certificate of
incorporation and applicable laws and regulations. This Agreement has been duly
and validly executed and delivered by Marketplace and constitutes valid and
binding obligations enforceable against it in accordance with its terms.
(d) All of the issued and outstanding shares of the
company are owned of record and beneficially by the Shareholders who are parties
to this Agreement. Each Shareholder agrees to vote all shares such Shareholder
is entitled to vote by ownership, proxy, or otherwise, in favor of approving the
consummation of the transaction contemplated by this Agreement.
5.2. Marketplace warrants and represents that:
(a) It is the owner of and has good and marketable title
to all of the assets, and the assets are free and clear of all debts, liens and
encumbrances, except those obligations listed in the closing date financial
statement.
(b) The execution and performance by Marketplace of this
Agreement complies with all relevant federal, state and local laws.
(c) It is not engaged in or threatened with, and none of
the assets or business operation being transferred hereunder is the subject of,
any pending or threatened legal
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action, suit or other proceeding before any court, any federal, state or local
governmental agency or before any other forum.
(d) No breach of contract, tort or other claim, whether
arising from it's business operations or otherwise, has been asserted by an
employee, creditor, patient, supplier, claimant or other person against it, nor
has there been any occurrence which could give rise to such a claim.
(e) There are no persons or entities with whom it has
done business that have a right of set off, chargeback, return or credit that
will have a material effect upon the financial position of it in the conduct of
its trade or business.
(f) No present or former employee of it has a claim or
basis for a claim against it under any employment agreement. contract or
otherwise.
(g) It is in compliance with federal, state and local
laws, ordinances and regulations regarding employment practices, terms and
conditions of employment and wages and hours and is not engaged in any unfair
labor practice.
(h) It will not change the compensation of any employees
or pay or commit to pay any bonus, profit share or other extraordinary payment
or other arrangement.
(i) There are no outstanding contracts, oral or written
relating to the business or assets to which it is a party.
(j) All existing local, state or federal operating and
occupational licenses necessary to operate the business are in good standing and
it knows of no actions, claims or violations which are pending which would
result in any limitations on or suspension or termination of such licenses.
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(k) The financial statements previously disclosed to
Dental and/or its accountants, attorneys or other agents, and the effective time
financial statements, are complete, accurate and thoroughly present the
financial position of Marketplace for the periods to which they relate, and
there has been no material adverse change in the condition, financial or
otherwise, of Marketplace since the effective time, other than changes occurring
in the ordinary course of business as conducted by it and/or those required
under the terms of this Agreement.
(l) All equipment being transferred hereunder is in good
working order. An amount equal to the costs of ordinary and necessary repairs
required within thirty (30) days after the closing date shall constitute a
liability of Marketplace at the effective time.
(m) With respect to the operation of the business from
the date of this Agreement until the date of closing, Marketplace:
(1) will not dispose of any of the assets or permit
any of the assets to be removed or transferred from their present location
except (a) sales or usage of said assets in the ordinary course of it's
business, or (b) for repair or replacement. Any replacement of an asset to be
sold, transferred or conveyed hereunder shall be of equal quantity and quality.
(2) will carry on the business in a good and diligent
manner, will maintain all of the assets in the good condition that they were in
on the date of this Agreement, ordinary wear and tear excepted, will pay and
discharge all of its debts and obligations as they occur, and will preserve the
goodwill of those having a business relationship with it.
(3) will not enter into, assume or create any pledge,
security interest or any title retention agreement, lien, encumbrance, charge,
claim or lease of any kind upon or involving any of the assets.
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(4) will keep full and accurate records of all
transactions entered into and conducted by the business.
(n) has filed all necessary federal, state and local
income, sales, use, capital stock, withholding, unemployment, tangible and
intangible property and franchise tax returns, and all other necessary reports
and returns for all other taxes due to the federal, state and local governments,
and it has paid all taxes shown on any such returns. There are no unpaid
assessments or proposed assessments of such taxes pending against it. It has no
knowledge of any tax deficiency or the existence of any basis upon which any tax
deficiency might be asserted against it. It's books and records contain adequate
reserves for any and all tax liabilities for periods prior to the date of the
closing of this transaction.
(o) is in compliance in all material respects with
all requirements of the Occupational Safety and Health Act pertaining to the
facilities and operations used in its business.
(p) is in compliance in all material respects, with
all applicable federal, state and local environmental laws.
(q) has the right to occupy all premises used in the
conduct of its trade or business.
(r) The assets are adequately insured under such
policies to the extent usually insured by persons engaged in a dental management
business against loss or damage of any kind, customarily insured on such
business.
(s) No representation or warranty by it in this
Agreement, nor any statement or certificate furnished or to be furnished by it
pursuant hereto, or in connection with
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the transaction as contemplated hereby, contains or will contain an untrue
statement of any material fact necessary to make the statement contained therein
not misleading.
(t) Its only business since its incorporation has
been that of a dental management company and it has never operated a dental
practice.
(u) The balance sheet attached as Schedule 5.2(u)
reflects the financial condition of Marketplace as of the effective time. At
closing, it will have no liabilities that are not disclosed on such balance
sheet other than those incurred in the ordinary course of its business which
shall include capitalized leases with respect to equipment used in that
business, It is recognized that this is a warranty that the items classified as
"Contracts Payable" and "Medicare Liability Payable" on statements that may have
been prepared to reflect its financial condition are not valid or enforceable
claims against Market place,
(v) it has no deferred compensation plan, whether or
not qualified, for the benefit of its employees.
5.3. Each Shareholder is receiving shares of Dental for
investment for the Shareholder's own account, not on behalf of others and not
with a view to sell or otherwise distribute such shares other than pursuant to
an effective registration statement or valid exemption from registration under
the Securities Act. The financial condition of each Shareholder is currently
adequate to bear the economic risk of an investment in Dental. Each Shareholder
has sufficient knowledge and experience in investment and business matters to
understand the economic risk of such an investment and the risk involved in a
commercial enterprise such as Dental. Each Shareholder has received and
carefully read the prospectus relating to the initial public offering of Dental
shares and has had an opportunity to ask questions and receive answers from
officers of Dental, concerning Dental and the Dental stock and to
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obtain any additional information which each Shareholder reasonably requested
and is material to an investment decision.
5.4. No representation or warranty of any Shareholder
contained in this Agreement, the other agreements, the Disclosure Memorandum, or
any instrument, certificate, agreement or other writing delivered by or on
behalf of any Shareholder or Marketplace pursuant to this Agreement or any other
agreement or in connection with the transactions contemplated herein or therein
contains any untrue or incomplete statement of a material fact or omits (or will
omit) to state a material fact necessary to make the statements contained herein
and therein not misleading. To Marketplace's and the Shareholders' knowledge,
there is no fact which adversely affects, or in the future may adversely affect,
the business, assets, properties, liabilities, affairs, results of operations,
condition (financial or otherwise), cash flows or prospects of Marketplace which
has not been or is not disclosed in this Agreement, the Disclosure Memorandum or
in the other instruments, certificates, agreements or writings furnished to
Dental by or on behalf of the Shareholders pursuant to this Agreement or other
agreements or in connection with the transactions contemplated herein.
6. CONTINGENCIES TO DENTAL'S OBLIGATION TO CLOSE.
6.1. Dental's obligation to conclude and consummate the
transaction provided for in this Agreement is conditioned upon the fulfillment
of each of the following:
(a) Marketplace's assets shall not have been materially
and/or adversely affected prior to closing by anything whatsoever including, but
not limited to fire, explosion, disaster, accident or any other Act of God or
other event or an unusual nature, or any change in law or regulation (federal,
state or local) affecting the right of Dental to operate the business, or a
requisition or taking of any federal, state or local government.
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(b) Marketplace shall have operated its business
diligently and in good faith, consistent with past management practices, kept
available the services of its present officers and employees and preserved its
present relationships with persons having business dealings with it.
(c) Subsidiary shall have entered into an Administrative
services agreement in the form included in Schedule 6.1(c) with Wellington
Group, P.A. and Xxxxx Xxxxx and shall have received confirmation from such
contracting parties that such agreement will survive the merger and supercede
and replace all existing management and other agreements, whether oral or in
writing, between such contracting parties and Marketplace.
(d) Subsidiary shall have entered into a consulting
agreement with Xxxxx Xxxxx, in the form included in Schedule 6.1(d) and received
written confirmation from Xxxxx Xxxxx that the terms of such agreement will
survive the merger.
(e) Dental's completion of its business, financial and
legal due diligence review of Marketplace with Dental having determined, in its
mole discretion, that the results thereof are satisfactory.
(f) Dental shall not have discovered any material error
or misstatement in the representations and warranties made by Marketplace and/or
Shareholders and the representations and warranties made by Marketplace herein
shall be substantially correct on and as of the closing date with the same force
and effect (except as said representations and warranties may be affected by the
transactions contemplated under this agreement and changes occurring in the
ordinary course of business by Marketplace) as though such representations and
warranties were made on and as of the closing and all the terms and conditions
of this agreement
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to be completed with and performed by Marketplace and/or Shareholders on or
before the closing shall have been substantially complied with and performed.
Dental may waive any contingency to its obligation to
close and consummate the transactions described in this Agreement by written
notice of waiver delivered to Marketplace not loss than three days prior to
closing.
7. REPRESENTATIONS AND WARRANTIES OF DENTAL AND SUBSIDIARY. As an
inducement to Marketplace and the Shareholders to enter into and perform this
Agreement, Dental and Subsidiary hereby represent and warrant as follows:
7.1. Dental is a corporation duly organized and validly
existing under the laws of the State of Delaware. Subsidiary is a corporation
duly organized and validly existing under the laws of some state of the United
States that will permit the consummation of the transactions contemplated by
this Agreement.
7.2. Dental has full corporate power and authority to execute,
deliver and perform this Agreement and the other agreements to which it is a
party, and will have full power and authority to cause Subsidiary to execute,
deliver and perform this Agreement and any other agreements to which it is a
party. The Agreement has been duly and validly executed and delivered and
constitutes the valid and legally binding obligations of Dental and will
constitute the valid and legally binding obligations of Subsidiary, enforceable
in accordance with their respective terms.
7.3. The shares of Dental stock to be issued to the
shareholders pursuant to this Agreement, including contingent shares that may be
required under section 3.2(a)(3) will be duly authorized and reserved for
issuance at or before the closing and at or before the determination
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date with respect to the contingent shares, and upon issuance to the
Shareholders will be fully paid and non-assessable.
7.4. (a) Prior to the closing, Dental will be in control of
Subsidiary. Following the closing, Subsidiary will not issue additional shares
of its capital stock that will result in Dental losing such control. For
purposes of this paragraph 7.4, "control" shall have the meaning provided by
S368(c) of the Code.
(b) Dental has no plan or intention to reacquire any of
its stock issued to stockholders in connection with the merger contemplated by
this Agreement.
(c) Dental has no plan or intention to liquidate
Subsidiary, to merge Subsidiary with and into another corporation, to sell or
otherwise dispose of the stock of Subsidiary, or to cause Subsidiary to sell or
otherwise dispose of any of the assets of Marketplace, except for dispositions
made in the ordinary course of business or transfers described in Section
368(a)(2)(C) of the Code.
(d) Following the closing, Subsidiary will continue the
historic business or Marketplace or use a significant portion of Marketplace's
business assets in a business.
(e) Neither Dental or any affiliate of Dental other than
Subsidiary, will engage in the dental management business in the area protected
by the covenant described in Section 14.3.
(f) Subsidiary may engage in the business of managing
additional dental practices in the area protected by the covenant, if, and only
if, it first gives to Xxxxx X. Quick, or an entity designated by him in which he
has a controlling interest (Purchaser) a right of first refusal to purchase each
practice it intends to manage upon such terms and for such
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consideration as Subsidiary, in its discretion, shall determine and Subsidiary
agrees to manage each such practice under terms substantially similar to those
included in the Administrative Services Agreement executed between Subsidiary
and Wellington Group, P.A., except that the management fee otherwise payable by
reference to such Agreement shall be reduced by the amounts required to be paid
to purchase each such practice together with interest on such amounts and/or on
indebtedness incurred to pay such amounts (purchase costs). If this right of
first refusal in exercised, Subsidiary agrees to advance to Purchaser as a loan
from time to time all purchase cost amounts required to be paid in excess of
credits actually allowed against management fees that would otherwise then be
due, which advances will be added to and become a part of the purchase costs.
The principal and interest constituting the purchase costs shall be payable over
such reasonable period as Subsidiary shall determine; provided, however, that
the amount due at any time may not exceed the amount allowable as a reduction in
the management fee due at the same time.
Nothing herein shall be construed as prohibiting
Subsidiary from agreeing to manage dental practices in the area subject to the
covenant, it being understood and agreed that the only restriction is the
requirement that Xxxxx X. Quick, or his designee, be given the right to purchase
such practice on the terms and conditions herein set out.
7.5. Prior to or immediately after closing, Dental will
provide sufficient cash to Subsidiary, as a loan or capital contribution, to
enable it to satisfy and cause Subsidiary to satisfy by payment, all liabilities
of Subsidiary assumed by it in the merger which were allowed in determining the
amount of cash payable to Shareholders under the terms of Section 3.1(a)(ii) of
this Agreement.
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7.6. Dental and Subsidiary will utilize their best effort to
have Shareholders, or any of them, released as guarantors of any obligation
incurred by Marketplace that are not required to be satisfied under the terms of
this Agreement including specifically, but without limitation, any capital lease
obligations.
8. CONDUCT OF BUSINESS OF MARKETPLACE PENDING CLOSING. The business of
Marketplace shall be conducted only in the ordinary and usual course and
consistent with prior practices without limiting the generality of the
foregoing:
(a) Marketplace shall not enter into any material
contracts, agreements or other arrangements in connection with the business or
affecting the assets of Marketplace, other than those entered into in the
ordinary course of the business of Marketplace at prices and on terms consistent
with the prior operating practices of Marketplace; provided, however, that
Marketplace will purchase from Wellington Group, P.A. the dental and office
equipment; furniture and fixtures; and leasehold improvements utilized in the
present conduct of its business and assume its rights and obligations as a
tenant under the lease with respect to the premises presently occupied by it for
a consideration in an amount equal to the fair market value of such assets, as
determined by an appraisal, which amount shall be payable after closing and
classified as a related party obligation in existence at the effective time both
for purposes of determining the cash payment to shareholders under the terms of
section 3.1(a)(ii) hereof and the liabilities that must be satisfied by
Subsidiary promptly after the effective data of the merger;
(b) all efforts to collect notes and accounts
receivable shall be undertaken in the ordinary course in accordance with past
practices, and no rebates, discounts or concessions shall be granted after the
date of this Agreement other than in the ordinary course in accordance with past
practices;
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(c) Marketplace shall maintain, preserve and protect
all of its assets and properties in good condition, except for ordinary wear and
tear;
(d) the books, records and accounts of Marketplace
shall be maintained in the ordinary course of business on a basis consistent
with prior practices and in accordance with the basis used to prepare the
financial statements;
(e) each Shareholder shall use his best efforts, and
shall Cause Marketplace to use its best efforts, to preserve its' business, to
preserve the good will of its suppliers, customers and others having business
relations with Marketplace which relate to its business, and to assist
Subsidiary in retaining the services of key employees and agents of Marketplace,
to the extent desired by Subsidiary.
(f) Marketplace shall not declare or pay any dividend
or make any distribution in respect of its capital stock whether now or
hereafter outstanding or purchase, redeem or otherwise acquire or retire for
value any shares of its capital stock; and
(g) each Shareholder and Marketplace shall not take,
or agree to take, any action which would make any representation or warranty by
him or Marketplace contained herein, untrue, incorrect or misleading in any
material respect as of the date when made or at any time through the closing.
9. INDEMNITIES.
9.1. (a) In accordance with and subject to the provisions of
this article 8,1(a), the Shareholders will indemnify and hold harmless
Subsidiary, Dental, their affiliates and the officers, directors, agents and
employees of such entities (collectively, the "Indemnitees"), from and against
and in respect of any and all loss, damage, diminution in value, liability, coot
and expense, including reasonable attorneys' fees and amounts paid in settlement
(collectively,
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the "Indemnified Losses"), suffered or incurred by any one or more of the
Indemnitees by reason of, or arising out of
(i) any misrepresentation or breach of representation
or warranty contained in this Agreement, the other agreements, instrument,
agreement or other writing delivered by or on behalf of any shareholder or
Marketplace pursuant to this Agreement or in connection with the transactions
contemplated herein, or the breach of any covenant or agreement of any
Shareholder of Marketplace contained in this Agreement, any other agreement, or
any certificate, instrument, agreement or other writing delivered to Subsidiary
or Dental by or on behalf of any Shareholder or Marketplace pursuant to this
Agreement or in connection with the transactions contemplated herein;
(ii) any and all liability for federal or state taxes
payable by Marketplace after the closing resulting from the failure of the
merger to qualify as a tax-free reorganization within the meaning of Section
368(a) of the Code including, but not limited to a failure by reason of the sale
of stock by Shareholders or former Shareholders of Marketplace unless such
failure is the result of any misrepresentation or breach of this Agreement by
Dental or Subsidiary;
(iii) any and all actions, orders, assessments, fees
and expenses incident to any of the foregoing or incurred in investigating or
attempting to avoid the some or to oppose the imposition thereof, or in
enforcing this indemnification; and
(iv) any and all liabilities existing at the
effective time that are not included in the financial statement as of that date.
(b) The Shareholders shall reimburse Indemnitees on demand for
any indemnified losses suffered by the Indemnitees, based on the judgment of any
court of competent
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jurisdiction or pursuant to a bona fide compromise or settlement of claims,
demands, or actions in respect of any indemnified losses. The Shareholders shall
have the opportunity to defend at their expense any claim, action or demand for
which the Indemnitees claim indemnity against the Shareholders; provided that
(i) the defense is conducted by reputable counsel approved by the Indemnitees,
which approval shall not be unreasonably withheld or delayed; (ii) the defense
is expressly assumed in writing within ten (10) days after written notice of the
claim, action or demand is given to the Shareholders; and (iii) counsel for the
Indemnitees may participate at all times and in all proceedings (formal and
informal) relating to the defense, compromise and settlement of the claim,
action or demand at the expense of the Indemnitees.
9.2. No claim shall be brought by any Indemnitee under this
article 8 for any breach of any representation or warranty, and none of them
shall be entitled to receive any payment with respect thereto, unless and until
the aggregate amount of such claim(s) equals or exceeds $5,000. Anything to the
contrary notwithstanding, (i) each shareholder will be liable to the Indemnitees
for the percentage of such indemnified losses set forth opposite his or her name
on the signature page below; and (ii ii) no Shareholder shall be liable to the
Indemnitees for indemnified losses In excess or such Shareholder's percentage of
the aggregate Value, as of the date of delivery of the merger consideration,
except for taxes and amounts attributable to willful misrepresentations or
fraud.
9.3. Subsidiary shall not have any liability to any
Shareholder as a result of any misrepresentation or breach of misrepresentation
or warranty by Marketplace or Shareholders contained in this Agreement, any
other agreement, or any certificate, instrument, agreement or other writing
delivered by or on behalf of any Shareholder of Marketplace pursuant to this
Agreement, any other agreement, or in connection with the transactions
contemplated herein, or
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the breach of any covenant or agreement of any Shareholder or Marketplace
contained in this Agreement, any other agreement, any certificate, instrument,
agreement or other writing by or on behalf of any Shareholder or Marketplace
pursuant to the provisions of this Agreement or in connection with the
transactions contemplated herein, and no Shareholder shall have any right of
indemnification or contribution against Subsidiary on account of any event or
condition occurring or existing prior to or on the date hereof.
9.4. The representations and warranties of each Shareholder
and Marketplace contained in this Agreement, any other agreement, any
certificate, instrument, agreement or other writing delivered by or on behalf of
any Shareholder of Marketplace pursuant to this Agreement or in connection with
the transactions contemplated herein shall survive the closing.
10. NOTICES.
10.1. All notices under this Agreement shall be in writing and
shall be given to Dental, Marketplace and Subsidiary at the applicable addresses
shown on schedule 9.1.
11. GOVERNING LAW.
11.1. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida and each party agrees that the
venue of any action arising from or attributable to this Agreement shall
exclusively rest in a court having proper jurisdiction in Palm Beach County,
Florida, or in the appropriate Federal court which has removal jurisdiction from
such court.
12. TAX OPINION.
12.1. Marketplace shall have delivered to Dental and
Subsidiary an opinion of Marketplace's counsel, in such form as Dental shall
reasonably approve, to the effect that the
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merger and the transactions contemplated hereby will be treated for federal
income tax purposes as a tax-free reorganization within the meaning of Section
368(a) of the Code.
13. MISCELLANEOUS.
13.1. All warranties and representations contained herein
shall survive the closing of this transaction.
13.2. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall constitute one and the same agreement.
13.3. This Agreement contains the entire agreement between the
parties regarding the subject matter hereof and any transactions contemplated
hereby. The parties hereto may by mutual agreement in writing (a) extend the
time for the performance of any of the obligations of the parties hereto, (b)
waive any inaccuracies in the warranties and representations contained in this
Agreement, and (c) waive compliance with any of the covenants contained herein
and so waive performance of any of the obligations of the parties hereto.
13.4. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns. Whenever required by the context, the
singular number shall include the plural, the plural the singular, and the use
of any gender shall include any other gender as appropriate in the context.
13.5. This Agreement, or any portion hereof shall not be
assignable by Marketplace or Dental without the prior written consent of the
other party hereto which consent shall not be unreasonably withheld.
13.6. If a dispute arises between the parties relative to the
terms of this Agreement or any closing document, the prevailing party shall be
entitled to recover reasonable attorney fees and costs.
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MARKETPLACE DENTAL, INC., a Florida
corporation
By:/s/ XXXXX XXXXX
----------------------------------------------
DENTAL CARE ALLIANCE, INC., a Delaware
corporation
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------------
DENTAL CARE ALLIANCE OF FLORIDA, INC., a Florida
corporation
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------------
/s/ XXXXX X. QUICK
-------------------------------------------------
XXXXX X. QUICK
/s/ XXXXXXX XXXXXXXX-XXXXX
-------------------------------------------------
XXXXXXX XXXXXXXX-XXXXX
/s/ XXXXX X. XXXXXXXXX
-------------------------------------------------
XXXXX X. XXXXXXXXX
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