1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 16, 2001
BY AND AMONG
ORTHODONTIC CENTERS OF AMERICA, INC.,
OCA ACQUISITION CORPORATION
AND
ORTHALLIANCE, INC.
2
TABLE OF CONTENTS
Page
ARTICLE I. DEFINED TERMS AND INTERPRETATION............................................................1
1.1. Defined Terms...................................................................................1
1.2. Interpretation..................................................................................1
ARTICLE II. THE MERGER..................................................................................2
2.1. The Merger......................................................................................2
2.2. Effective Time..................................................................................2
2.3. Effects of the Merger...........................................................................3
2.4. Conversion of OrthAlliance Common Stock; Exchange Ratio.........................................3
2.5. Anti-Dilution Adjustments.......................................................................6
2.6. No Fractional Shares............................................................................7
2.7. Cancellation of Treasury Stock..................................................................7
2.8. Dissenting Shares...............................................................................7
2.9. Stock Options...................................................................................7
2.10. Effect on OCA Common Stock......................................................................8
2.11. Conversion of Merger Sub Shares.................................................................8
2.12. Certificate of Incorporation of the Surviving Corporation.......................................8
2.13. Bylaws of the Surviving Corporation.............................................................8
2.14. Directors and Officers of the Surviving Corporation.............................................8
2.15. Tax Consequences; Accounting Treatment..........................................................8
2.16. Closing.........................................................................................9
ARTICLE III. EXCHANGE OF SHARES..........................................................................9
3.1. Deposit of Exchange Fund with Transfer Agent....................................................9
3.2. Exchange of Shares..............................................................................9
3.3. No Dividends Paid To Holders of Unsurrendered Certificates..................................... 9
3.4. Issuance of Certificate in Name Differing From Surrendered Certificate.........................10
3.5. Closing of Stock Transfer Books................................................................10
3.6. Termination of Exchange Fund...................................................................10
3.7. Lost, Stolen or Destroyed Certificates.........................................................11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ORTHALLIANCE............................................11
4.1. Corporate Organization.........................................................................11
4.2. Authorization; Binding Agreement...............................................................11
4.3. Consents and Approvals.........................................................................12
4.4. No Conflicts...................................................................................12
4.5. Capitalization.................................................................................13
4.6. SEC Reports and Financial Statements...........................................................14
4.7. Subsidiaries...................................................................................15
4.8. Absence of Undisclosed Liabilities.............................................................15
4.9. Investigations; Litigation.....................................................................15
3
4.10. Compliance with Law............................................................................16
4.11. Governmental Licenses..........................................................................16
4.12. Absence of Certain Changes or Events...........................................................17
4.13. Title to Assets................................................................................18
4.14. Assets.........................................................................................18
4.15. Intellectual Property Rights...................................................................18
4.16. Contracts......................................................................................19
4.17. Leases.........................................................................................20
4.18. Affiliated Practices...........................................................................20
4.19. Tax Matters....................................................................................22
4.20. Employee Benefit Matters.......................................................................24
4.21. Environmental Matters..........................................................................26
4.22. Labor Controversies............................................................................27
4.23. Insurance......................................................................................27
4.24. Billing Practices; Fraud and Abuse.............................................................27
4.25. Required Stockholder Vote......................................................................28
4.26. Takeover Laws..................................................................................28
4.27. Reorganization.................................................................................28
4.28. Brokers and Finders............................................................................28
4.29. Opinion of Financial Advisor...................................................................28
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF OCA.....................................................28
5.1. Corporate Organization.........................................................................28
5.2. Authorization; Binding Agreement...............................................................29
5.3. Consents and Approvals.........................................................................29
5.4. No Conflicts...................................................................................30
5.5. Capitalization.................................................................................30
5.6. SEC Reports and Financial Statements...........................................................31
5.7. Subsidiaries...................................................................................31
5.8. Absence of Undisclosed Liabilities.............................................................32
5.9. Litigation; Decrees............................................................................32
5.10. Compliance with Law............................................................................32
5.11. Absence of Certain Changes or Events...........................................................32
5.12. Reorganization.................................................................................33
5.13. Brokers and Finders............................................................................33
5.14. Opinion of Financial Advisor...................................................................33
5.15 Trading on NYSE................................................................................33
ARTICLE VI. CERTAIN COVENANTS AND AGREEMENTS...........................................................33
6.1. Conduct of OrthAlliance's Business Pending the Merger..........................................33
6.2. Conduct of OCA's Business Pending the Merger...................................................36
6.3. Access to Information..........................................................................37
6.4. No Solicitation................................................................................37
6.5. Registration Statement and Proxy Statement.....................................................39
6.6. Stockholder Meeting............................................................................39
6.7. Affiliates.....................................................................................39
ii
4
6.8. NYSE Listing...................................................................................40
6.9. Indemnification of OrthAlliance Directors and Officers.........................................40
6.10. Public Statements..............................................................................41
6.11 Expenses and Fees..............................................................................41
6.12. Notification...................................................................................41
6.13. Additional Agreements..........................................................................41
6.14. Reasonable Best Efforts, Cooperation...........................................................41
6.15. OrthAlliance Credit Agreement..................................................................42
6.16. OCA Board of Directors.........................................................................43
ARTICLE VII. CONDITIONS TO CLOSING......................................................................43
7.1. Conditions to Each Party's Obligation To Effect the Merger.....................................43
7.2. Conditions to Obligations of OCA...............................................................43
7.3. Conditions to Obligations of OrthAlliance......................................................45
ARTICLE VIII. AMENDMENT; TERMINATION.....................................................................45
8.1. Amendment......................................................................................45
8.2. Termination....................................................................................45
8.3. Effect of Termination..........................................................................47
8.4. Break-Up Fee and Expense Reimbursement to OCA..................................................47
8.5. Break-Up Fee to OrthAlliance and OCA's Non-Solicitation of OrthAlliance Affiliated
Professionals..................................................................................47
8.6. Waiver.........................................................................................48
ARTICLE IX. GENERAL....................................................................................48
9.1. Non-Survival of Representations and Warranties.................................................48
9.2. Notices........................................................................................48
9.3. Entire Agreement...............................................................................49
9.4. Governing Law..................................................................................49
9.5. Counterparts; Effectiveness....................................................................50
9.6. Assignment; Successors and Assigns; Parties In Interest........................................50
9.7. Severability...................................................................................50
9.8. Enforcement of Agreement.......................................................................50
9.9. Remedies Cumulative............................................................................50
ARTICLE X. DEFINITIONS................................................................................50
iii
5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of May 16,
2001, is by and among ORTHODONTIC CENTERS OF AMERICA, INC., a Delaware
corporation ("OCA"), OCA ACQUISITION CORPORATION, a Delaware corporation ("OCA
Merger Sub"), and ORTHALLIANCE, INC., a Delaware corporation ("OrthAlliance").
RECITALS:
WHEREAS, OCA Merger Sub is a wholly-owned subsidiary of OCA;
WHEREAS, the respective boards of directors of OCA, OCA Merger Sub and
OrthAlliance have determined that it is in the best interests of their
respective companies and stockholders to consummate the business combination
transactions provided for herein, in which OCA Merger Sub will merge with and
into OrthAlliance (the "Merger") and OrthAlliance shall thereby become a
wholly-owned subsidiary of OCA, subject to the terms and conditions set forth
herein;
WHEREAS, OCA, as the sole stockholder of OCA Merger Sub, has approved
this Agreement and the Merger with respect to OCA Merger Sub;
WHEREAS, the parties intend that the Merger be treated as a
reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder
(the "Code"); and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
AGREEMENT:
ARTICLE I. DEFINED TERMS AND INTERPRETATION
1.1. Defined Terms. Certain terms used in this Agreement have the meanings
ascribed thereto in Article X hereof. Accounting terms used in this Agreement
which are not otherwise defined herein shall have the meaning assigned such
terms under GAAP.
1.2. Interpretation.
(a) When used in this Agreement, the word "including" and words of
similar import shall mean "including, without limitation," and any list of items
that may follow such word shall
6
not be deemed to represent a complete list of, or be limited to, the contents of
the referent of the subject.
(b) Unless the context otherwise requires, when used in this Agreement,
the singular shall include the plural, the plural shall include the singular,
and all nouns, pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine or neuter, as the identity of the Person or Persons may
require.
(c) The headings contained in this Agreement are for reference purposes
only and do not affect in any way the meaning or interpretation of this
Agreement.
(d) In this Agreement, unless a contrary intention appears, (i) the
words "herein", "hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular Article, Section or other
subdivision, and (ii) references to any Article or Section are to an article or
a section of this Agreement, as applicable, and references to any schedule or
exhibit are to a schedule or exhibit to this Agreement, as applicable.
(e) The parties hereto have each negotiated the terms hereof, reviewed
this Agreement carefully, and discussed it with their respective legal counsel.
It is the intent of the parties that each word, phrase and sentence and other
part hereof shall be given its plain meaning. No provision of this Agreement
shall be interpreted or construed against any party hereto solely because such
party or its legal representative drafted such provision.
(f) References to any document (including this Agreement) are
references to that document as amended, consolidated, supplemented, novated or
replaced by the parties from time to time. References to any party to this
Agreement shall include references to its respective successors and permitted
assigns. References to law are references to that law as amended, consolidated,
supplemented or replaced from time to time, and shall include references to any
constitutional provision, treaty, decree, convention, statute, act, regulation,
rule, ordinance, subordinate legislation, rule of common law and of equity and
judgment and shall include the requirements of any applicable stock exchange.
References to a judgment shall include references to any order, injunction,
decree, determination or award of any court or tribunal.
(g) All references to "$" or "dollars" shall be to United States
dollars and all references to "days" shall be to calendar days unless otherwise
specified.
ARTICLE II. THE MERGER
2.1. The Merger. Subject to the terms and conditions of this Agreement, in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), at the Effective Time, OCA Merger Sub shall merge with and into
OrthAlliance. OrthAlliance shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") in the Merger, and shall continue
its corporate existence under the laws of the State of Delaware. The name of the
Surviving Corporation shall be "OrthAlliance, Inc." Upon consummation of the
Merger, the separate corporate existence of OCA Merger Sub shall terminate.
2.2. Effective Time. The Merger shall become effective (the "Effective Time")
upon filing of a certificate of merger (the "Certificate of Merger") with
respect to the Merger with the Secretary of State of the State of Delaware (the
"Delaware Secretary") in accordance with the DGCL, or at
2
7
such later time as mutually agreed among the parties hereto and set forth in the
Certificate of Merger. The parties hereto shall cause the Certificate of Merger
to be filed with the Delaware Secretary in accordance with the DGCL
simultaneously with or as soon as practicable after the Closing.
2.3. Effects of the Merger. At and after the Effective Time, the Merger shall
have the effects set forth in Section 259 of the DGCL.
2.4. Conversion of OrthAlliance Common Stock; Exchange Ratio.
(a) At the Effective Time, each share of Class A common stock, par
value $.001 per share, of OrthAlliance (the "OrthAlliance Class A Common
Stock"), and each share of Class B common stock, par value $.001 per share, of
OrthAlliance (the "OrthAlliance Class B Common Stock," and, together with the
OrthAlliance Class A Common Stock, the "OrthAlliance Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than OrthAlliance
Dissenting Shares and other than shares of OrthAlliance Common Stock held
directly or indirectly by OCA or OrthAlliance or any of their respective
Subsidiaries), shall, by virtue of this Agreement and without any action on the
part of the holder thereof, be converted into and exchangeable for an amount of
shares of the common stock, par value $.01 per share, of OCA ("OCA Common
Stock") equal to the Applicable Exchange Ratio, subject to Section 2.6.
(b) For purposes of this Agreement:
(i) "Applicable Exchange Ratio" shall mean:
(A) 0.09214, if, as of the Effective Time, less than
the 31% to 40% Level of OrthAlliance Affiliated Practice
Owners and OrthAlliance Affiliated PCs, shall each have duly
executed and delivered to OrthAlliance (with a complete and
accurate copy provided to OCA) an (1) Amendment to
OrthAlliance Affiliated Professional Employment Agreement,
with respect to their applicable OrthAlliance Affiliated
Professional Employment Agreement, and (2) Amendment to
OrthAlliance Service and Consulting Agreement, with respect to
their applicable OrthAlliance Service and Consulting
Agreement;
(B) 0.10135, if, as of the Effective Time, at least
the 31% to 40% Level of OrthAlliance Affiliated Practice
Owners and OrthAlliance Affiliated PCs, but less than the 41%
to 50% Level of OrthAlliance Affiliated Practice Owners and
OrthAlliance Affiliated PCs, shall each have duly executed and
delivered to OrthAlliance (with a complete and accurate copy
provided to OCA) an (1) Amendment to OrthAlliance Affiliated
Professional Employment Agreement, with respect to their
applicable OrthAlliance Affiliated Professional Employment
Agreement, and (2) Amendment to OrthAlliance Service and
Consulting Agreement, with respect to their applicable
OrthAlliance Service and Consulting Agreement;
(C) 0.11056, if, as of the Effective Time, at least
the 41% to 50% Level of OrthAlliance Affiliated Practice
Owners and OrthAlliance Affiliated PCs, but less than the 51%
to 60% Level of OrthAlliance Affiliated Professionals and
OrthAlliance Affiliated PCs, shall each have duly executed and
delivered to
3
8
OrthAlliance (with a complete and accurate copy provided to
OCA) an (1) Amendment to OrthAlliance Affiliated Professional
Employment Agreement, with respect to their applicable
OrthAlliance Affiliated Professional Employment Agreement, and
(2) Amendment to OrthAlliance Service and Consulting
Agreement, with respect to their applicable OrthAlliance
Service and Consulting Agreement;
(D) 0.12899, if, as of the Effective Time, at least
the 51% to 60% Level of OrthAlliance Affiliated Practice
Owners and OrthAlliance Affiliated PCs, but less than the 61%
and Greater Level of OrthAlliance Affiliated Practice Owners
and OrthAlliance Affiliated PCs, shall each have duly executed
and delivered to OrthAlliance (with a complete and accurate
copy provided to OCA) an (A) Amendment to OrthAlliance
Affiliated Professional Employment Agreement, with respect to
their applicable OrthAlliance Affiliated Professional
Employment Agreement, and (B) Amendment to OrthAlliance
Service and Consulting Agreement, with respect to their
applicable OrthAlliance Service and Consulting Agreement; and
(E) 0.16585, if, as of the Effective Time, the 61% or
Greater Level of OrthAlliance Affiliated Practice Owners and
OrthAlliance Affiliated PCs shall each have duly executed and
delivered to OrthAlliance (with a complete and accurate copy
provided to OCA) an (A) Amendment to OrthAlliance Affiliated
Professional Employment Agreement, with respect to their
applicable OrthAlliance Affiliated Professional Employment
Agreement, and (B) Amendment to OrthAlliance Service and
Consulting Agreement, with respect to their applicable
OrthAlliance Service and Consulting Agreement.
(ii) "31% to 40% Level of OrthAlliance Affiliated Practice
Owners and OrthAlliance Affiliated PCs" shall mean (A) 57 to 75 of the
OrthAlliance Affiliated Practice Owners (but not including any Practice
Improvement Performance Guarantee Professionals), and (B) such number
of OrthAlliance Affiliated Practice Owners (but not including any
Practice Improvement Performance Guarantee Professionals) with respect
to which is attributable 31.00% to 40.99% (rounded to the nearest
one-hundredth of a percent) of the OrthAlliance Annual Service Fees,
and (C) each of the OrthAlliance Affiliated PCs employing such
OrthAlliance Affiliated Practice Owners referenced in clauses (A) and
(B).
(iii) "41% to 50% Level of OrthAlliance Affiliated Practice
Owners and OrthAlliance Affiliated PCs" shall mean (A) 76 to 93 of the
OrthAlliance Affiliated Practice Owners (but not including any Practice
Improvement Performance Guarantee Professionals), and (B) such number
of OrthAlliance Affiliated Practice Owners (but not including any
Practice Improvement Performance Guarantee Professionals) with respect
to which is attributable 41.00% to 50.99% (rounded to the nearest
one-hundredth of a percent) of the OrthAlliance Annual Service Fees,
and (C) each of the OrthAlliance Affiliated PCs employing such
OrthAlliance Affiliated Practice Owners referenced in clauses (A) and
(B).
4
9
(iv) "51% to 60% Level of OrthAlliance Affiliated Practice
Owners and OrthAlliance Affiliated PCs" shall mean (A) 94 to 112 of the
OrthAlliance Affiliated Practice Owners (but not including any Practice
Improvement Performance Guarantee Professionals), and (B) such number
of OrthAlliance Affiliated Practice Owners (but not including any
Practice Improvement Performance Guarantee Professionals) with respect
to which is attributable 51.00% to 60.99% (rounded to the nearest
one-hundredth of a percent) of the OrthAlliance Annual Service Fees,
and (C) each of the OrthAlliance Affiliated PCs employing such
OrthAlliance Affiliated Practice Owners referenced in clauses (A) and
(B).
(v) "61% and Greater Level of OrthAlliance Affiliated Practice
Owners and OrthAlliance Affiliated PCs" shall mean (A) 113 or more of
the OrthAlliance Affiliated Practice Owners (but not including any
Practice Improvement Performance Guarantee Professionals), and (B) such
number of OrthAlliance Affiliated Practice Owners (but not including
any Practice Improvement Performance Guarantee Professionals) with
respect to which is attributable 61.00% or more (rounded to the nearest
one-hundredth of a percent) of the OrthAlliance Annual Service Fees,
and (C) each of the OrthAlliance Affiliated PCs employing such
OrthAlliance Affiliated Practice Owners referenced in clauses (A) and
(B).
(vi) "OrthAlliance Affiliated Practice Owners" shall mean
OrthAlliance Affiliated Professionals who own, beneficially and of
record, shares of capital stock of, or partnership, membership or other
equity interests in, an OrthAlliance Affiliated PC as of the date
hereof and the Effective Time.
(vii) "OrthAlliance Annual Service Fees" shall mean the amount
of service, consulting and management service fees paid to OrthAlliance
during the 12 month period from and including April 1, 2000 through and
including March 31, 2001 under the OrthAlliance Service and Consulting
Agreements (excluding any OrthAlliance Service and Consulting Agreement
that is subject to a Practice Improvement Performance Guarantee
Agreement and excluding the Pashley Agreement, and including the
adjustments with respect to the ▇▇▇▇▇▇▇ Agreement and the Tringis
Agreement, and annualized amounts with respect to certain OrthAlliance
Service and Consulting Agreements originated since April 1, 2000, as
provided in Schedule 4.18(h) of the OrthAlliance Disclosure Schedule),
but excluding all amounts paid, earned or accrued with respect to
reimbursement of center expenses, operating and non-operating expenses
incurred in the operation of the OrthAlliance Affiliated Practices or
other expenses.
(viii) "Amendment to OrthAlliance Affiliated Professional
Employment Agreement" shall mean a written amendment to an OrthAlliance
Affiliated Practice Owner's respective OrthAlliance Affiliated
Professional Employment Agreement, in form and substance satisfactory
to OCA and its counsel, which amendment shall be in full force and
effect upon and following the Effective Time, include OrthAlliance as a
third party beneficiary and provide for an agreement by such
OrthAlliance Affiliated Practice Owner and the applicable OrthAlliance
Affiliated PC to continue the employment of such OrthAlliance
Affiliated Practice Owner by such OrthAlliance
5
10
Affiliated PC as an orthodontist or pedodontist, as applicable, for a
period of at least three years following the Closing Date.
(ix) "Amendment to OrthAlliance Service and Consulting
Agreement" shall mean a written amendment to the respective
OrthAlliance Service and Consulting Agreement relating to the
OrthAlliance Affiliated Practice of an OrthAlliance Affiliated Practice
Owner and the applicable OrthAlliance Affiliated PC employing such
OrthAlliance Affiliated Practice Owner, in form and substance
satisfactory to OCA and its counsel, which amendments shall be in full
force and effect upon and following the Effective Time, and provide for
(A) an agreement by such OrthAlliance Affiliated Practice Owner and
OrthAlliance Affiliated PC to continue the employment of such
OrthAlliance Affiliated Practice Owner by such OrthAlliance Affiliated
PC as an orthodontist or pedodontist, as applicable, for a period of at
least three years following the Closing Date, (B) an agreement by such
OrthAlliance Affiliated Practice Owner to guarantee, during the term of
his or her employment by such OrthAlliance Affiliated PC, the payment
of service, consulting and other fees and amounts, reimbursement of
center expenses and other performance by such OrthAlliance Affiliated
PC under such OrthAlliance Service and Consulting Agreement, and (C) an
agreement by such OrthAlliance Affiliated Practice Owner and
OrthAlliance Affiliated PC to utilize only OCA's and its Subsidiaries'
proprietary computer software and operating systems in connection with
patient accounting and scheduling, payroll, supplies ordering and other
business functions of such OrthAlliance Affiliated Practice, and to
maintain the current status of such OrthAlliance Affiliated Practice's
advertising or non-advertising, as the case may be, to the general
public, unless otherwise mutually agreed in writing between OCA or its
Subsidiary and such OrthAlliance Affiliated PC.
(c) At the Effective Time, each certificate (each, a "Certificate")
previously representing any such shares of OrthAlliance Common Stock shall
thereafter only represent the right to receive the number of whole shares of OCA
Common Stock, and the cash in lieu of fractional shares, into which the shares
of OrthAlliance Common Stock represented by such Certificate have been converted
pursuant to this Article II. Certificates previously representing shares of
OrthAlliance Common Stock shall be exchanged for certificates representing whole
shares of OCA Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Certificates in accordance
with Section 3.2 hereof, without any interest thereon.
2.5. Anti-Dilution Adjustments. If, between the date of this Agreement and the
Effective Time, the shares of OCA Common Stock shall be changed into a different
number or class of shares by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or a stock dividend
thereon shall be declared with a record date within said period (any such event,
an "Anti-Dilution Event"), the Applicable Exchange Ratio shall be appropriately
and proportionately adjusted to reflect such Anti-Dilution Event, and all
references to the Applicable Exchange Ratio shall thereupon and thereafter be to
the Applicable Exchange Ratio as so adjusted. There shall be no adjustment in
the Exchange Ratio in the event of any change in the price of OCA Common Stock,
OrthAlliance Class A Common Stock or OrthAlliance Class B Common Stock or any
other matter, other than for Anti-Dilution Events. All shares of OCA Common
Stock that are issuable in the Merger shall be deemed for all purposes to have
been issued by OCA at the Effective Time.
6
11
2.6. No Fractional Shares. Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of OCA Common
Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to OCA Common Stock shall be payable on or
with respect to any fractional share, and such fractional share interests shall
not entitle the owner thereof to vote or to any other rights of a stockholder of
OCA. In lieu of the issuance of any such fractional share, OCA shall pay to each
holder who otherwise would be entitled to receive a fractional share of OCA
Common Stock pursuant to the Merger an amount in cash equal to the product of
(x) the Closing Price (as defined below), times (y) the fraction of a share of
OCA Common Stock which such holder would otherwise be entitled to receive
pursuant to Article II hereof. The "Closing Price" means the average of the last
reported sale prices of OCA Common Stock, as reported by the New York Stock
Exchange ("NYSE") Composite Transactions Reporting System (as reported in The
Wall Street Journal or, if not reported therein, in another authoritative source
mutually agreeable to the parties), for the three NYSE trading days immediately
preceding the Closing Date.
2.7. Cancellation of Treasury Stock. At the Effective Time, all shares of
OrthAlliance Common Stock that are owned directly or indirectly by OCA or
OrthAlliance or any of their respective Subsidiaries, shall be canceled and
shall cease to exist and no stock of OCA or other consideration shall be
delivered in exchange therefor.
2.8. Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of OrthAlliance Class B Common Stock which are outstanding
immediately prior to the Effective Time and with respect to which appraisal
rights shall have been properly demanded in accordance with Section 262 of the
DGCL ("OrthAlliance Dissenting Shares") shall not be converted into the right to
receive, or be exchangeable for, OCA Common Stock or cash in lieu of fractional
shares but, instead, the holders thereof shall be entitled to payment of the
appraised value of such OrthAlliance Dissenting Shares in accordance with the
provisions of Section 262 of the DGCL; provided, however, that (i) if any holder
of OrthAlliance Dissenting Shares shall subsequently deliver a written
withdrawal of his demand for appraisal of such shares, or (ii) if any holder
fails to establish his entitlement to appraisal rights as provided in Section
262 of the DGCL, such holder or holders (as the case may be) shall forfeit the
right to appraisal of such shares of OrthAlliance Common Stock and each of such
shares shall thereupon be deemed to have been converted into the right to
receive, and to have become exchangeable for, as of the Effective Time, OCA
Common Stock and/or cash in lieu of fractional shares, without any interest
thereon, as provided in this Article II. OrthAlliance shall give OCA prompt
notice of any demands for appraisal received by OrthAlliance, withdrawals of
such demands and any other instruments served pursuant to the DGCL and received
by OrthAlliance, and the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. OrthAlliance shall not,
except with the prior written consent of OCA, make any payment with respect to
any demands for appraisal or offer to settle or settle any such demands.
2.9. Stock Options. At the Effective Time, each unexpired option or warrant
granted by OrthAlliance to purchase shares of OrthAlliance Common Stock (each a
"OrthAlliance Option") which is outstanding and unexercised immediately prior to
the Effective Time shall cease to represent a right to acquire shares of
OrthAlliance Common Stock and shall automatically and without any action on the
part of the holder thereof be assumed by OCA and converted into an option or
warrant, as applicable, to purchase a number of shares of OCA Common Stock at an
exercise price determined as follows:
7
12
(a) The number of shares of OCA Common Stock to be subject to such
option or warrant as so converted shall be equal to the product of the number of
shares of OrthAlliance Common Stock theretofore subject to the option or warrant
times the Applicable Exchange Ratio, provided that any fractional shares of OCA
Common Stock resulting from such multiplication shall be rounded down to the
nearest whole share; and
(b) The exercise price per share of OCA Common Stock under such option
or warrant as so converted shall be equal to the exercise price per share of
OrthAlliance Common Stock theretofore under the option or warrant divided by the
Applicable Exchange Ratio, provided that such exercise price shall be rounded up
to the nearest cent.
At the Effective Time, the other terms of each such OrthAlliance Option shall
continue to apply in accordance with the terms thereof, the applicable stock
option plan and applicable law, except that references to OrthAlliance and its
Subsidiaries shall mean OCA and its Subsidiaries.
2.10. Effect on OCA Common Stock. Except for any shares of OCA Common Stock
owned by OrthAlliance or any of its Subsidiaries, which shall be converted into
treasury stock, the shares of OCA Common Stock issued and outstanding
immediately prior to the Effective Time shall be unaffected by the Merger and
such shares shall remain issued and outstanding.
2.11. Conversion of Merger Sub Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of OCA as the sole stockholder of OCA
Merger Sub, each issued and outstanding share of common stock, par value $.01
per share, of OCA Merger Sub ("OCA Merger Sub Common Stock") will convert into
one share of common stock, par value $.01 per share, of the Surviving
Corporation.
2.12. Certificate of Incorporation of the Surviving Corporation. At the
Effective Time, the certificate of incorporation of OCA Merger Sub, as in effect
at the Effective Time, shall be the certificate of incorporation of the
Surviving Corporation.
2.13. Bylaws of the Surviving Corporation. At the Effective Time, the bylaws of
OCA Merger Sub, as in effect immediately prior to the Effective Time, shall be
the bylaws of the Surviving Corporation until thereafter amended in accordance
with applicable law and the certificate of incorporation of the Surviving
Corporation.
2.14. Directors and Officers of the Surviving Corporation. At the Effective
Time, the directors of OCA Merger Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each to hold office in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified. At the Effective Time, the officers of the Surviving Corporation
shall be the individuals designated therefor by the board of directors of the
Surviving Corporation in accordance with the bylaws of the Surviving
Corporation. At or prior to the Closing, OrthAlliance shall deliver to OCA
written resignations of each of the directors of OrthAlliance, in form and
substance satisfactory to OCA, with such resignations to be effective as of the
Effective Time.
2.15. Tax Consequences; Accounting Treatment. It is intended that the Merger
shall (i) constitute a reorganization within the meaning of Section 368 of the
Code and that this
8
13
Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code, and (ii) be accounted for as a purchase under GAAP.
2.16. Closing. The closing of the transactions contemplated herein (the
"Closing") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, A
Professional Limited Liability Company, Nashville, Tennessee at 10:00 a.m.
Nashville time on a date designated by OCA within five Business Days following
the satisfaction, or waiver by the applicable party, of all of the conditions
set forth in Sections 7.1, 7.2 and 7.3 hereof, or at such other location, and on
such other date and/or time, as the parties hereto may mutually agree (the
"Closing Date"). At the Closing, subject to the satisfaction of the terms and
conditions set forth herein, each of OrthAlliance, OCA and OCA Merger Sub will
execute and deliver the instruments, certificates and other documents to be
executed and delivered hereunder or as may be reasonably requested by any party
to consummate the transactions contemplated hereby, all in form and substance
reasonably satisfactory to the parties hereto and their respective counsel.
ARTICLE III. EXCHANGE OF SHARES
3.1. Deposit of Exchange Fund with Transfer Agent. Promptly following the
Effective Time, OCA shall deposit, or shall cause to be deposited, with
EquiServe or such other bank or trust company (the "Exchange Agent") selected by
OCA and reasonably satisfactory to OrthAlliance, in trust for the benefit of the
holders of Certificates, for exchange in accordance with this Article III,
certificates representing the shares of OCA Common Stock and the cash in lieu of
fractional shares (such cash and certificates for shares of OCA Common Stock,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") to be issued or paid pursuant to
Article II in exchange for outstanding shares of OrthAlliance Common Stock.
3.2. Exchange of Shares. Promptly after the Effective Time, OCA shall cause the
Exchange Agent to mail to each holder of record of a Certificate or Certificates
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon actual
delivery of the Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing the shares of OCA Common Stock and the cash in lieu of fractional
shares into which the shares of OrthAlliance Common Stock represented by such
Certificate or Certificates shall have been converted pursuant to this
Agreement. Upon surrender of a Certificate for exchange and cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor and
the Exchange Agent shall promptly mail to such holder following such surrender
(i) a certificate representing that number of whole shares of OCA Common Stock
to which such holder of OrthAlliance Common Stock shall have become entitled
pursuant to Article II and (ii) a check representing the amount of cash in lieu
of fractional shares, if any, which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of Article II,
and the Certificate so surrendered shall forthwith be cancelled. No interest
will be paid or accrued on the cash in lieu of fractional shares and unpaid
dividends and distributions, if any, payable to holders of Certificates.
3.3. No Dividends Paid To Holders of Unsurrendered Certificates. No dividends or
other distributions declared after the Effective Time with respect to OCA Common
Stock and payable
9
14
to the holders of record thereof shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate in accordance with this Article III. After the surrender of a
Certificate in accordance with this Article III, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
OCA Common Stock represented by such Certificate.
3.4. Issuance of Certificate in Name Differing From Surrendered Certificate. If
any certificate representing shares of OCA Common Stock is to be issued in a
name other than that in which the Certificate surrendered in exchange therefor
is registered, it shall be a condition of the issuance thereof that the
Certificate so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form for transfer,
and that the person requesting such exchange shall pay to the Exchange Agent in
advance any transfer or other taxes required by reason of the issuance of a
certificate representing shares of OCA Common Stock in any name other than that
of the registered holder of the Certificate surrendered, or required for any
other reason, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
3.5. Closing of Stock Transfer Books. Upon and after the Effective Time, there
shall be no transfers on the stock transfer books of OrthAlliance of the shares
of OrthAlliance Common Stock which were issued and outstanding immediately prior
to the Effective Time. If, after the Effective Time, Certificates representing
such shares are presented for transfer to the Exchange Agent, they shall be
canceled and exchanged for certificates representing shares of OCA Common Stock
as provided in this Article III.
3.6. Termination of Exchange Fund. Promptly following the first anniversary of
the Effective Time, the Exchange Agent will deliver to OCA all cash,
certificates (including any representing shares of OCA Common Stock) and other
documents in its possession relating to the transactions this Agreement
describes, and the Exchange Agent's duties will terminate. Any portion of the
Exchange Fund that remains unclaimed by the stockholders of OrthAlliance for 12
months after the Effective Time shall be paid to OCA. Any stockholders of
OrthAlliance who have not theretofore complied with this Article III shall
thereafter look only to OCA for payment of their shares of OCA Common Stock,
cash in lieu of fractional shares and unpaid dividends and distributions on OCA
Common Stock deliverable in respect of each share of OrthAlliance Common Stock
such stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of OCA,
OrthAlliance, the Exchange Agent or any other person shall be liable to any
former holder of shares of OrthAlliance Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws (collectively, "Escheat Law"). If any Certificate is not
surrendered prior to the end of the applicable period after the Effective Time
under any applicable Escheat Law (or immediately prior to such earlier date on
which any shares of OCA Common Stock, any cash in lieu of fractional shares of
OCA Common Stock or any dividends or distributions with respect to such
Certificates would otherwise escheat to or become the property of any
Governmental Authority) and such shares, cash and dividends or distributions
with respect to such Certificates will, to the extent permitted by applicable
law, become the property of OCA, free and clear of all claims or interest of any
person previously entitled thereto.
10
15
3.7. Lost, Stolen or Destroyed Certificates. In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by OCA or the Exchange Agent, the posting by such person of a
bond in such amount as OCA or the Exchange Agent may direct as indemnity against
any claim that may be made against OCA or the Exchange Agent with respect to
such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of OCA Common Stock and cash in lieu
of fractional shares deliverable in respect thereof pursuant to this Agreement.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ORTHALLIANCE
OrthAlliance hereby represents and warrants to OCA and OCA Merger Sub
that, except as set forth in the disclosure schedule dated as of the date hereof
and signed by an authorized officer of OrthAlliance, with each such exception
included therein specifically identifying the relevant Section hereto to which
it specifically relates (the "OrthAlliance Disclosure Schedule"):
4.1. Corporate Organization. OrthAlliance is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has the corporate power and authority to own, lease and operate its assets
and properties and to carry on its business as it is currently being conducted.
OrthAlliance is duly qualified and in good standing to transact business as a
foreign corporation in each jurisdiction in which the ownership or use of its
assets and properties and the conduct of its business requires such
qualification, except such jurisdictions, individually or in the aggregate, in
which the failure to be so qualified does not have, and would not be reasonably
expected to have, an OrthAlliance Material Adverse Effect. True, accurate and
complete copies of OrthAlliance's certificate of incorporation, bylaws or other
governing documents, and all amendments thereto, in each case as in effect on
the date hereof, have heretofore been delivered or made available to OCA.
4.2. Authorization; Binding Agreement. OrthAlliance has the corporate power and
authority to enter into this Agreement and the other documents and instruments
to be executed and delivered by OrthAlliance pursuant hereto (collectively, the
"OrthAlliance Documents"), and, subject to receipt of approval of this Agreement
by the stockholders of OrthAlliance, to consummate the Merger and the other
transactions contemplated hereby. The execution and delivery of this Agreement
and the OrthAlliance Documents, and the consummation of the transactions
contemplated hereby, have been duly authorized and approved by the Board of
Directors of OrthAlliance at a meeting duly called and held and at which a
quorum was present and acting throughout, by the requisite affirmative vote of
the directors of OrthAlliance, and the Board of Directors of OrthAlliance has
determined that the Merger is in the best interests of OrthAlliance and its
stockholders, approved this Agreement and the Merger, recommended to the
stockholders of OrthAlliance that they approve and adopt this Agreement and
directed that this Agreement and the transactions contemplated hereby be
submitted to the stockholders of OrthAlliance for approval by such stockholders
at a duly called meeting of such stockholders. No other corporate proceedings on
the part of OrthAlliance are necessary to authorize the execution and delivery
of this Agreement or, except for the adoption of this Agreement by the requisite
vote of OrthAlliance's stockholders in accordance with the DGCL and the
certificate of incorporation and bylaws of OrthAlliance, the consummation by
OrthAlliance of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by OrthAlliance, and, assuming due
execution and delivery by OCA and OCA Merger Sub, this
11
16
Agreement constitutes the valid and binding agreement and obligation of
OrthAlliance, enforceable against OrthAlliance in accordance with its terms
(except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws now or
hereafter in effect affecting creditors' rights generally and general equitable
principles, regardless of whether enforceability is considered in a proceeding
in law or in equity).
4.3. Consents and Approvals. Except for (a) the filing with, and declaration of
effectiveness by, the United States Securities and Exchange Commission ("SEC")
of a registration statement on Form S-4 (such registration statement and any
post-effective amendment thereto relating to this transaction, or any other
registration statement on Form S-4 used in connection with the Merger, the
"Registration Statement") in which will be included as a prospectus a definitive
proxy statement relating to the meeting of stockholders (the "OrthAlliance
Stockholders' Meeting") of OrthAlliance to be held in connection with this
Agreement and the transactions contemplated herein (the "Proxy Statement"), (b)
the approval of this Agreement by the requisite vote of the stockholders of
OrthAlliance, (c) the filing of the Certificate of Merger with the Delaware
Secretary, (d) the filing by OCA and OrthAlliance of a pre-merger notification
with the Federal Trade Commission ("FTC") and the Antitrust Division of the
United States Department of Justice ("Antitrust Division") under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the expiration or termination of any waiting period thereunder, (e)
any filings required under state securities or "Blue Sky" laws, (f) any filings
and consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
necessitated by the transactions contemplated in this Agreement, (g) requisite
consent to consummation of the Merger by the lenders under the OrthAlliance
Credit Agreement, and (h) such other authorizations, consents, approvals or
filings, the failure of which to obtain or make, individually or in the
aggregate, does not have, and would not reasonably be expected to have, an
OrthAlliance Material Adverse Effect or materially impair or delay the
consummation by OrthAlliance of the transactions contemplated hereby, no
authorization, consents or approvals of or filings or registrations with any
federal, state, local or foreign government, court, administrative, regulatory
or other governmental agency or commission or other governmental authority or
instrumentality (each a "Governmental Authority") or with any third party are
necessary in connection with (i) the execution and delivery by OrthAlliance of
this Agreement and the OrthAlliance Documents and (ii) the consummation by
OrthAlliance of the Merger.
4.4. No Conflicts. Neither the execution or delivery by OrthAlliance of this
Agreement and the other OrthAlliance Documents, nor the consummation by
OrthAlliance of the transactions contemplated hereby or thereby, nor the
compliance by OrthAlliance with the provisions hereof, will: (a) violate or
conflict with or result in any breach of any provision of the certificate of
incorporation, bylaws or other governing documents of OrthAlliance or its
Subsidiaries; (b) violate or conflict with any order, injunction, decree, law,
statute, rule, ordinance or regulation applicable to OrthAlliance or its
Subsidiaries or by which any of their respective properties or assets may be
bound; (c) result in a violation or breach of, constitute a default or give rise
to any right of termination, cancellation or acceleration under, any loan or
credit agreement, note, mortgage, bond, indenture, lease, benefit plan or other
agreement, obligation or instrument applicable to OrthAlliance or any Subsidiary
thereof, or result in the creation of an Encumbrance upon any property or asset
of OrthAlliance or its Subsidiaries or by which any such properties or assets
may be bound, or trigger any right of first refusal or other purchase right
applicable to OrthAlliance or any Subsidiary thereof; or (d) result in the loss
of any license, franchise or
12
17
permit applicable to OrthAlliance or any Subsidiary thereof; except in each
case, where such violation, conflict, breach, default, loss or other event,
individually or in the aggregate, does not have, and would not reasonably be
expected to have, an OrthAlliance Material Adverse Effect.
4.5. Capitalization.
(a) The authorized capital stock of OrthAlliance consists of 70,000,000
shares of OrthAlliance Class A Common Stock, 250,000 shares of OrthAlliance
Class B Common Stock and 20,000,000 shares of preferred stock, par value $.001
per share ("OrthAlliance Preferred Stock"). As of the date hereof, (i)
12,076,601 shares of OrthAlliance Class A Common Stock are issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and free of preemptive rights, (ii) 172,526 shares of OrthAlliance Class B
Common Stock are issued and outstanding, all of which were validly issued and
are fully paid, nonassessable and free of preemptive rights, (iii) no shares of
OrthAlliance Preferred Stock are issued and outstanding, and (iv) 1,198,126
shares of OrthAlliance Class A Common Stock, no shares of OrthAlliance Class B
Common Stock and no shares of OrthAlliance Preferred Stock are held in the
treasury of OrthAlliance or any of its Subsidiaries.
(b) There are no shares of OrthAlliance Common Stock reserved for
issuance pursuant to the exercise of outstanding options and warrants other than
(i) 2,000,000 shares of OrthAlliance Class A Common Stock reserved for issuance
pursuant to OrthAlliance's Amended and Restated 1997 Employee Stock Option Plan
(the "OrthAlliance 1997 Employee Plan"), (ii) 500,000 shares of OrthAlliance
Class A Common Stock reserved for issuance pursuant to OrthAlliance's 1997
Director Stock Option Plan (the "OrthAlliance 1997 Director Plan"), (iii)
300,000 shares of OrthAlliance Class A Common Stock reserved for issuance
pursuant to OrthAlliance's 1997 Orthodontist Stock Option Plan (the
"OrthAlliance 1997 Orthodontist Plan"), (iv) 280,000 shares of OrthAlliance
Class A Common Stock reserved for issuance pursuant to OrthAlliance's 1999
Orthodontist Stock Option Plan (the "OrthAlliance 1999 Orthodontist Plan"), (v)
500,000 shares of OrthAlliance Class A Common Stock reserved for issuance
pursuant to OrthAlliance's 2000 Employee Stock Option Plan (the "OrthAlliance
2000 Employee Plan", and collectively with the OrthAlliance 1997 Employee Plan,
the OrthAlliance 1997 Director Plan, the OrthAlliance 1997 Orthodontist Plan and
the OrthAlliance 1999 Orthodontist Plan, the "OrthAlliance Option Plans"), (vi)
593,622 shares of OrthAlliance Class A Common Stock reserved for issuance
pursuant to the exercise of certain warrants to purchase shares of OrthAlliance
Class A Common Stock (the "OrthAlliance Warrants"), and (vii) 1,922,526 shares
of OrthAlliance Class A Common Stock reserved for issuance upon conversion of
outstanding shares of OrthAlliance Class B Common Stock.
(c) Except for (i) options outstanding to purchase a total of (A)
1,150,859 shares of OrthAlliance Class A Common Stock under the OrthAlliance
1997 Employee Plan, (B) 295,000 shares of OrthAlliance Class A Common Stock
under the OrthAlliance 1997 Director Plan, (C) 184,169 shares of OrthAlliance
Class A Common Stock under the OrthAlliance 1997 Orthodontist Plan, (D) 274,394
shares of OrthAlliance Class A Common Stock under the OrthAlliance 1999
Orthodontist Plan, and (E) 140,000 shares of OrthAlliance Class A Common Stock
under the OrthAlliance 2000 Employee Plan, (ii) warrants outstanding to purchase
a total of 543,622 shares of OrthAlliance Class A Common Stock (the
"OrthAlliance Warrants"), and (iii) 172,526 shares of OrthAlliance Class B
Common Stock issued and outstanding as of the date hereof, OrthAlliance does not
have and is not bound by any outstanding subscriptions, options, warrants,
convertible securities, conversion rights, preemptive or other rights, calls,
13
18
commitments or agreements of any character calling for the purchase or issuance
of any shares of OrthAlliance Common Stock or OrthAlliance Preferred Stock or
any other equity security or capital stock of OrthAlliance or any securities
representing the right to purchase or otherwise receive any shares of
OrthAlliance Common Stock or any other equity security or capital stock of
OrthAlliance. OrthAlliance has no outstanding stock appreciation rights, phantom
stock rights or similar rights. OrthAlliance has no outstanding obligations,
contingent or otherwise, to reacquire any shares of OrthAlliance Common Stock.
Set forth in Section 4.5 of the OrthAlliance Disclosure Schedule is a complete
and correct list, for each of the OrthAlliance Plan Options and the OrthAlliance
Warrants, of the names of the optionees or holders thereof, the date of grant or
issuance, the OrthAlliance Option Plan to which any such OrthAlliance Plan
Option relates, the number of shares of OrthAlliance Common Stock subject to
each such OrthAlliance Plan Option and OrthAlliance Warrant, the expiration date
of each such OrthAlliance Plan Option and OrthAlliance Warrant, and the price at
which each such OrthAlliance Plan Option and OrthAlliance Warrant may be
exercised.
(d) The holders of bonds, debentures, notes or other indebtedness of
OrthAlliance do not have the right, as such, to vote on this Agreement and the
transactions contemplated herein or other matters with respect to which
stockholders of OrthAlliance may vote. There are no voting trusts, proxies or
other agreements or understandings (collectively, "Voting Arrangements") to
which OrthAlliance or any of its Subsidiaries, directors or executive officers
is a party or is bound with respect to the voting of any shares of capital stock
of OrthAlliance.
4.6. SEC Reports and Financial Statements.
(a) OrthAlliance has timely filed with the SEC all reports, schedules,
forms, registration statements, proxy statements, information statements and
other documents (including all exhibits, post-effective amendments and
supplements) required to be filed by OrthAlliance with the SEC since January 1,
1998 (collectively, the "OrthAlliance SEC Reports"), all of which OrthAlliance
SEC Reports, as amended if applicable, complied when filed in all material
respects with all applicable requirements of the appropriate act and the rules
and regulations thereunder. OrthAlliance has previously delivered or made
available to OCA copies (including all exhibits, post-effective amendments and
supplements) of the OrthAlliance SEC Reports. None of OrthAlliance's
Subsidiaries is or has been required to file any reports, schedules, forms,
registration statements, proxy statements, information statements or other
documents with the SEC. As of their respective dates, the OrthAlliance SEC
Reports did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The audited consolidated financial statements and unaudited interim
consolidated financial statements of OrthAlliance included in the OrthAlliance
SEC Reports (collectively, the "OrthAlliance Financial Statements") were
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as may be indicated therein or in the notes thereto) and fairly
present in all material respects the consolidated financial position of
OrthAlliance and its Subsidiaries as of the dates thereof and the results of
their operations and their cash flows for the periods then ended, subject, in
the case of the unaudited interim financial statements, to normal year-end and
audit adjustments and any other adjustments described therein.
14
19
4.7. Subsidiaries.
(a) Set forth in Section 4.7 of the OrthAlliance Disclosure Schedule is
the name and state of incorporation of each of OrthAlliance's Subsidiaries and,
except as so disclosed, OrthAlliance does not control, directly or indirectly,
and does not have any direct or indirect equity participation in any other
Person. Each Subsidiary of OrthAlliance is duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each
Subsidiary of OrthAlliance is qualified to do business and is in good standing
in each jurisdiction in which the properties it owns, leases or operates or the
nature of the business it conducts makes such qualification necessary, except
where the failure to be so qualified and in good standing, when taken together
with all such other failures with respect to all of OrthAlliance's Subsidiaries,
does not have, and would not reasonably be expected to have, an OrthAlliance
Material Adverse Effect. True, accurate and complete copies of the respective
certificates or articles of incorporation, bylaws or other governing documents,
and all amendments thereto, in each case as in effect on the date hereof, of
OrthAlliance's Subsidiaries have heretofore been delivered or made available to
OCA.
(b) OrthAlliance owns, directly or indirectly, all of the issued and
outstanding shares of the capital stock and equity securities of each of its
Subsidiaries, free and clear of all liens, charges, encumbrances and security
interests whatsoever, and all of such shares are duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. OrthAlliance's
Subsidiaries are not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of any of
OrthAlliance's Subsidiaries or any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
any of OrthAlliance's Subsidiaries. There are no outstanding subscriptions,
options, warrants, calls, commitments, agreements or Voting Arrangements of any
character by which OrthAlliance or any of its Subsidiaries will be bound calling
for the voting, purchase or issuance of any shares of the capital stock or
equity securities of any of OrthAlliance's Subsidiaries.
4.8. Absence of Undisclosed Liabilities. None of OrthAlliance or its
Subsidiaries has incurred any liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature, except (a) liabilities,
obligations or contingencies that are accrued or reserved against in the
OrthAlliance 2000 Financial Statements or reflected in the notes thereto, or
were incurred in the ordinary course of business and consistent with past
practices, (b) liabilities, obligations or contingencies that, individually or
in the aggregate, do not have, and would not reasonably be expected to have, an
OrthAlliance Material Adverse Effect, and (c) liabilities and obligations that
are of a nature not required to be reflected in the OrthAlliance 2000 Financial
Statements, and that were incurred in the ordinary course of business consistent
with past practice.
4.9. Investigations; Litigation.
(a) There is no investigation or review being undertaken or that is
pending by any Governmental Authority with respect to OrthAlliance or any of its
Subsidiaries that, individually or in the aggregate, has, or would reasonably be
expected to have, an OrthAlliance Material Adverse Effect, nor has any
Governmental Authority notified OrthAlliance or any of its Subsidiaries of an
intention to conduct any such investigation or review.
15
20
(b) There are no claims, suits, actions, arbitration actions or other
proceedings pending or, to the knowledge of OrthAlliance, threatened against,
relating to or affecting any of OrthAlliance or its Subsidiaries, or their
respective directors and officers, in their capacities as such, or their
respective assets, businesses or properties, which seeks to restrain or enjoin
the consummation of the transactions contemplated herein or which have, or would
reasonably be expected to have, either alone or in the aggregate with all such
claims, actions or other proceedings, an OrthAlliance Material Adverse Effect.
There are no decrees, injunctions, writs or orders of any court or governmental
department or agency applicable to any of OrthAlliance or its Subsidiaries, or
their assets or businesses, or which prohibits or restricts the consummation of
the transactions contemplated herein or which have, or would reasonably be
expected to have, an OrthAlliance Material Adverse Effect. To the knowledge of
OrthAlliance, there are no professional malpractice claims, suit or actions, nor
any disciplinary or similar proceedings before or by any applicable dental board
or similar Governmental Authority, pending or threatened against any of the
OrthAlliance Affiliated Professionals.
4.10. Compliance with Law. OrthAlliance and each of its Subsidiaries is in
compliance with all applicable statutes, regulations, judgments, injunctions,
decrees, orders, ordinances and other laws (collectively, "Laws") of the United
States of America and any applicable foreign jurisdictions, all state and local
governments and other Governmental Authorities, and agencies and courts of any
of the foregoing, to which any of OrthAlliance or its Subsidiaries is subject,
and none of OrthAlliance or its Subsidiaries has received any notice to the
effect that, or otherwise been advised that, any of OrthAlliance or its
Subsidiaries has violated or is not in compliance with any of such Laws, and, to
the knowledge of OrthAlliance, there are no investigations with respect thereto;
except in each case with respect to non-compliance or violations that,
individually or in the aggregate, do not have, and would not reasonably be
expected to have, an OrthAlliance Material Adverse Effect.
4.11. Governmental Licenses.
(a) Section 4.11 of the OrthAlliance Disclosure Schedule contains a
complete and accurate list of each license, permit and other governmental
authorization ("Governmental Licenses") that is held by OrthAlliance or any of
its Subsidiaries or that is required in connection with the business of
OrthAlliance and its Subsidiaries. Each such Governmental License is valid and
in full force and effect and OrthAlliance and its Subsidiaries are and have been
in compliance in all material respects with all of the terms and requirements
thereof. OrthAlliance and its Subsidiaries have all Governmental Licenses
necessary to conduct their businesses as currently conducted, except for
permits, the absence of which, in the aggregate, do not have, and would not
reasonably be expected to have, an OrthAlliance Material Adverse Effect.
(b) No event has occurred or circumstance exists that may (with or
without notice or lapse of time) (i) constitute or result directly or indirectly
in a violation of or a failure to comply with any term or requirement of any
Governmental License, or (ii) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation or termination of, or any modification to,
any Governmental License except as does not have and would not reasonable be
expected to have an OrthAlliance Material Adverse Effect.
16
21
(c) Neither OrthAlliance nor any of its Subsidiaries has received any
notice or other communication from any Governmental Authority or any other
person regarding (i) any actual, alleged, possible or potential violation of or
failure to comply with any term or requirement of any Governmental License or
any failure to obtain any required Governmental License, or (ii) any actual,
proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of or modification to any Governmental License.
(d) All applications required to have been filed for the renewal of the
Governmental Licenses have been duly filed on a timely basis with the
appropriate Governmental Authorities, and all other filings required to have
been made with respect to such Governmental Licenses have been duly made on a
timely basis with the appropriate Governmental Authorities except as does not
and would not reasonably be expected to have an OrthAlliance Material Adverse
Effect.
4.12. Absence of Certain Changes or Events. Except as set forth in Section 4.12
of the OrthAlliance Disclosure Schedule, since December 31, 2000, none of
OrthAlliance or its Subsidiaries has: (a) operated other than in the ordinary
course of business consistent with past practice; (b) incurred, experienced or
suffered any OrthAlliance Material Adverse Effect; (c) acquired or agreed to
acquire any material assets, or entered into any OrthAlliance Service and
Consulting Agreements or acquisition agreements (or similar agreements) with any
orthodontists, dentists or professional entities, either directly or indirectly,
by purchase, merger, stock purchase or otherwise, except in the ordinary course
of business, consistent with past practice; (d) transferred, leased, licensed,
sold, mortgaged, pledged, disposed of or encumbered any assets, other than in
the ordinary course of business and consistent with past practice; (e) except in
the ordinary course of business, consistent with past practice, adopted any new,
or amended or otherwise increased, or accelerated the payment or vesting of the
amounts payable or to become payable under any existing, bonus, incentive
compensation, deferred compensation, severance, profit sharing, stock option,
stock purchase, insurance, pension, retirement or other employee benefit plan
agreement or arrangement, entered into any employment, consulting, change in
control, severance or similar agreement with or, except in accordance with the
existing written agreements, granted any severance, change in control or
termination pay to any officer, director, key employee, consultant, agent or
group of employees, or increased the compensation or benefits of any officer,
director, key employee, consultant, agent or group of employees; (f) modified,
amended, canceled or terminated, or suffered or received notice of the
termination or cancellation of, any OrthAlliance Service and Consulting
Agreement, leases, contracts or receivables, or waived, released or assigned any
material rights or claims with respect thereto, except in the ordinary course of
business and consistent with past practice; (g) incurred or modified any
material indebtedness or other liability, except in the ordinary course of
business, consistent with past practice; (h) assumed, guaranteed, endorsed or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for material obligations of any other person, except in the ordinary
course of business and consistent with past practice; (i) made any material
loans, advances or capital contributions to, or investments in, any other person
(other than to its wholly-owned Subsidiaries or in the ordinary course of
business consistent with past practice); (j) instituted, settled or agreed to
settle, any material litigation, action or proceeding before any court,
arbitrator or governmental body; (k) made any tax election or settled or
compromised any tax liability, or made any change in any method of accounting
for taxes or accounting policy with respect to taxes; (l) changed any of the
accounting methods or policies used by it; (m) paid, discharged or satisfied any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
17
22
discharge or satisfaction of any such claims, liabilities or obligations, in the
ordinary course of business and consistent with past practice, or claims,
liabilities or obligations reflected or reserved against in, or contemplated by,
the OrthAlliance 2000 Financial Statements; (n) entered into any material
transaction, contract, agreement or commitment, other than this Agreement or in
the ordinary course of business and consistent with past practice; or (o)
agreed, whether in writing or otherwise, to take any action described in this
Section 4.12.
4.13. Title to Assets. OrthAlliance and its Subsidiaries have good and
marketable title to all of their respective assets, free and clear of all
Encumbrances, and no financing statement covering all or any portion of
OrthAlliance's and its Subsidiaries' assets and naming OrthAlliance or a
Subsidiary thereof as debtor has been filed in any public office, and neither
OrthAlliance nor any Subsidiary thereof has signed any financing statement or
security agreement as debtor or borrower which financing statement or security
agreement covers all or any portion of the assets of OrthAlliance or its
Subsidiaries.
4.14. Assets. OrthAlliance's and its Subsidiaries' material equipment,
furniture, computers and other tangible personal property are in good operating
condition and repair (ordinary wear and tear excepted), free of any material
defects and suitable in all material respects for the operations of
OrthAlliance's and its Subsidiaries' business, as currently conducted, are not
in need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. OrthAlliance's and its
Subsidiaries' inventories of material dental and orthodontic, janitorial and
office supplies and consumables are of a good and merchantable quality usable or
saleable in the ordinary course of business consistent with past practice, is in
a quantity reasonable for the operations of OrthAlliance's and its Subsidiaries'
business, as currently conducted, in the ordinary course of business in
accordance with past practice, and is valued at reasonable amounts not subject
to any material write-down. Set forth in Section 4.14 of the OrthAlliance
Disclosure Schedule is a complete and accurate description of the accounts
receivable, notes receivable, evidences of indebtedness and other rights to
receive payment for service fees, consulting fees, center expense reimbursement,
advances, loans and other amounts payable to OrthAlliance and its Subsidiaries
by OrthAlliance Affiliated PCs and OrthAlliance Affiliated Professionals
("Receivables") as of March 31, 2001. Such Receivables are valid and enforceable
claims and obligations, have arisen only from bona fide transactions in the
ordinary course of business and are collectible in the aggregate amount thereof,
less any applicable reserves recorded on OrthAlliance balance sheet as of March
31, 2001, a copy of which has heretofore been provided to OrthAlliance, which
reserves are adequate and calculated consistent with past practice. Except as
set forth in Section 4.14 of the OrthAlliance Disclosure Schedule, to the
knowledge of OrthAlliance, there are no asserted contests, refusals to pay or
rights of set-off with respect to any of such Receivables.
4.15. Intellectual Property Rights. OrthAlliance and its Subsidiaries have all
right, title and interest in, or a valid and binding license to use, all
intellectual property individually or in the aggregate material to the conduct
of the businesses of OrthAlliance and its Subsidiaries as currently conducted
and taken as a whole. Neither OrthAlliance nor any Subsidiary thereof is in
default (or with the giving of notice or lapse of time, or both, would be in
default) under any license to use such intellectual property. To the knowledge
of OrthAlliance, such intellectual property is not being infringed by any third
party and neither OrthAlliance nor any Subsidiary thereof is infringing any
intellectual property of any third party, except for such defaults and
18
23
infringements that, individually or in the aggregate, do not have and would not
be reasonably expected to have an OrthAlliance Material Adverse Effect.
4.16. Contracts.
(a) Set forth in Section 4.16(a) of the OrthAlliance Disclosure
Schedule is a list, including parties and dates, of each of the OrthAlliance
Service and Consulting Agreements. OrthAlliance has heretofore delivered to OCA
or its counsel true, correct and complete copies of all of the OrthAlliance
Service and Consulting Agreements, and all amendments, supplements and other
documents related thereto. Each of the OrthAlliance Service and Consulting
Agreements is a valid and binding obligation of the parties thereto, are
unmodified, are in full force and effect, and are enforceable against each of
the parties thereto in accordance with their respective terms (except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws now or hereafter in effect
affecting creditors' rights generally and general equitable principles,
regardless of whether enforceability is considered in a proceeding in law or in
equity). To the knowledge of OrthAlliance, except as disclosed in Section
4.16(a) of the OrthAlliance Disclosure Schedule, no event has occurred which,
after notice or the passage of time or both, would constitute a material default
or breach by any party to any of the OrthAlliance Service and Consulting
Agreements, (ii) no party to any of the OrthAlliance Service and Consulting
Agreements has or, to the knowledge of OrthAlliance, intends, to terminate or
adversely modify its agreement(s) or obligations with respect thereto, or cease
performing thereunder, and (iii) there are no outstanding material disputes
under any of the OrthAlliance Service and Consulting Agreements, and there is no
pending or, to the knowledge of OrthAlliance, threatened, litigation or other
legal proceeding with respect to any of the OrthAlliance Service and Consulting
Agreements. The OrthAlliance Service and Consulting Agreements constitute all of
the contracts, agreements and understandings applicable to the provision of
administrative, management or business services to the OrthAlliance Affiliated
PCs.
(b) Set forth in Section 4.16(b) of the OrthAlliance Disclosure
Schedule is a list, including parties and dates, of any contract or agreement
(whether written or oral), other than the OrthAlliance Service and Consulting
Agreements, to which OrthAlliance or any of its Subsidiaries is a party to or
bound by any contract or agreement (whether written or oral) (i) with respect to
the employment of any employees, officers, directors or consultants, (ii) which,
upon the consummation of the transactions contemplated by this Agreement, will
(either alone or upon the occurrence of any additional acts or events) result in
any payment or benefits (whether of severance pay or otherwise) becoming due, or
the acceleration or vesting of any rights to any payment or benefits, from OCA,
OrthAlliance, the Surviving Corporation or any of their respective Subsidiaries
to any employee, officer, director or consultant thereof, (iii) which is a
material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC)
to be performed after the date of this Agreement ("OrthAlliance Material
Contracts"), (iv) which is not terminable on 90 days or less notice involving
the payment of more than $100,000 per annum, or (v) which materially restricts
the conduct of any line of business by OrthAlliance or any of its Subsidiaries.
Each contract, arrangement, commitment or understanding of the type described in
this Section 4.16(b) is referred to herein as a "OrthAlliance Contract."
OrthAlliance has heretofore provided to OCA or its counsel true, correct and
complete copies of each OrthAlliance Contract. Each OrthAlliance Material
Contract is valid and binding and in full force and effect with respect to the
obligations of OrthAlliance or its Subsidiaries and, to the knowledge of
OrthAlliance, is valid and binding, enforceable and in full force and effect
with
19
24
respect to the obligations of the counterparties thereto (except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws now or hereafter in effect
affecting creditors' rights generally and general equitable principles,
regardless of whether enforceability is considered in a proceeding in law or in
equity), and OrthAlliance and each of its Subsidiaries has performed in all
material respects all obligations required to be performed by it to date under
each such OrthAlliance Material Contract, and no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of OrthAlliance or any of its Subsidiaries under
any OrthAlliance Material Contract, or to the knowledge of OrthAlliance, any
other party thereto.
4.17. Leases. OrthAlliance has heretofore delivered to OCA true, correct and
complete copies of each of the lease agreements, and all amendments, supplements
and other documents related thereto, under which OrthAlliance or its
Subsidiaries lease real or personal property that is material to the operations
of OrthAlliance's and its Subsidiaries' business as currently conducted
(collectively, the "Leases"). Each Lease is legal, valid, binding, enforceable
and in full force and effect and will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws now or hereafter in effect
affecting creditors' rights generally and general equitable principles,
regardless of whether enforceability is considered in a proceeding in law or in
equity). Neither OrthAlliance nor any of its Subsidiaries is in breach or
default under any Lease and no event has occurred which, with notice or lapse of
time, would constitute a breach or default of such Lease by OrthAlliance or any
of its Subsidiaries or permit termination, modification or acceleration thereof
by the respective lessor, and no party to any such Lease has repudiated any
provision thereof. There are no disputes, oral agreements or forbearance
programs in effect as to any Lease. All facilities leased under the Leases are
supplied with utilities and other services necessary for the operation of said
facilities.
4.18. Affiliated Practices.
(a) Section 4.18(a) of the OrthAlliance Disclosure Schedule contains
complete and accurate lists separately identifying each of (i) the OrthAlliance
Affiliated PCs, (ii) the OrthAlliance Affiliated Practice Owners, (iii) the
OrthAlliance Affiliated Orthodontists, and (iv) the OrthAlliance Affiliated
Pedodontists, indicating the practice location(s) for each such OrthAlliance
Affiliated PC, OrthAlliance Affiliated Practice Owner, OrthAlliance Affiliated
Orthodontist and OrthAlliance Affiliated Pedodontist.
(b) To the knowledge of OrthAlliance, each OrthAlliance Affiliated
Orthodontist engages in orthodontic practice only for an OrthAlliance Affiliated
Practice, has graduated from an accredited school of dentistry and orthodontic
residency program, is fully accredited as, and has all necessary Governmental
Licenses to practice as an orthodontist in each applicable state, and carries
all professional malpractice insurance required under his or her respective
OrthAlliance Affiliated Professional Employment Agreement and applicable
OrthAlliance Service and Consulting Agreement.
20
25
(c) To the knowledge of OrthAlliance, each OrthAlliance Affiliated
Pedodontist engages in a pedodontic practice only for an OrthAlliance Affiliated
Practice, has graduated from an accredited school of dentistry and pedodontic
residency program, is fully accredited as, and has all necessary Governmental
Licenses to practice as a pedodontist in each applicable state, and carries all
professional malpractice insurance required under his or her respective
OrthAlliance Affiliated Professional Employment Agreement and applicable
OrthAlliance Service and Consulting Agreement.
(d) To the knowledge of OrthAlliance, each OrthAlliance Affiliated
Professional is able to fulfill his or her employment commitment to his or her
applicable OrthAlliance Affiliated PC.
(e) To the knowledge of OrthAlliance: (i) each Governmental License
required to be maintained by an OrthAlliance Affiliated PC or OrthAlliance
Affiliated Professional is valid and in full force and effect and each
OrthAlliance Affiliated PC or OrthAlliance Affiliated Professional is in
compliance in all material respects with all of the terms and requirements
thereof, (ii) no event has occurred or circumstance exists that may (with or
without notice or lapse of time) constitute or result directly or indirectly in
a violation of or a failure to comply with any term or requirement of any
Governmental License maintained by any OrthAlliance Affiliated PC or
OrthAlliance Affiliated Professional, or result directly or indirectly in the
revocation, withdrawal, suspension, cancellation or termination of, or any
modification to, any Governmental License maintained by any OrthAlliance
Affiliated PC or OrthAlliance Affiliated Professional, except as does not have,
and would not reasonably be expected to have, an OrthAlliance Material Adverse
Effect, (iii) no OrthAlliance Affiliated PC or OrthAlliance Affiliated
Professional has received any notice or other communication from any
Governmental Authority or any other person regarding any actual, alleged,
possible or potential violation of or failure to comply with any term or
requirement of any Governmental License maintained by any OrthAlliance
Affiliated PC or OrthAlliance Affiliated Professional or any failure to obtain
any required Governmental License, or any actual, proposed, possible or
potential revocation, withdrawal, suspension, cancellation, termination of or
modification to any Governmental License maintained by any OrthAlliance
Affiliated PC or OrthAlliance Affiliated Professional; (iv) all applications
required to have been filed by each OrthAlliance Affiliated PC and OrthAlliance
Affiliated Professional for the renewal of the Governmental Licenses have been
duly filed on a timely basis with the appropriate Governmental Authorities, and
all other filings required to have been made by each OrthAlliance Affiliated PC
and OrthAlliance Affiliated Professionals with respect to such Governmental
Licenses have been duly made on a timely basis with the appropriate Governmental
Authorities, except as do not have, and would not reasonably be expected to
have, an OrthAlliance Material Adverse Effect.
(f) Section 4.18(f) of the OrthAlliance Disclosure Schedule identifies
each "Market Profitability Index" or other similar provision applicable to any
OrthAlliance Affiliated PC or OrthAlliance Affiliated Professional, identifying
the relevant OrthAlliance Affiliated PC or OrthAlliance Affiliated Professional.
OrthAlliance has never been required to pay any amounts under any Market
Profitability Index provision, has never been requested to pay any amount under
any such provision and has never formulated any requirements for payments under
any such provision.
21
26
(g) Section 4.18(g) of the OrthAlliance Disclosure Schedule identifies
each Practice Improvement Performance Guarantee or other similar provision
applicable to any OrthAlliance Affiliated PC or OrthAlliance Affiliated
Professional, identifying the relevant OrthAlliance Affiliated PC or
OrthAlliance Affiliated Professional. Other than as set forth in Section 4.18(g)
of the OrthAlliance Disclosure Schedule, OrthAlliance and its Subsidiaries have
never been required to reduce or defer any payments due to it under an
OrthAlliance Service and Consulting Agreement pursuant to a Practice Improvement
Performance Guarantee.
(h) Section 4.18(h) of the OrthAlliance Disclosure Schedule sets forth
a complete and accurate schedule of the amount of OrthAlliance Annual Service
Fees attributable to each OrthAlliance Affiliated Practice Owner.
4.19. Tax Matters.
(a) All Tax Returns for all periods ending on or before the Closing
Date that are or were required to be filed by or with respect to OrthAlliance
and any of its Subsidiaries, either separately or as a member of an affiliated
group of corporations, have been filed on a timely basis and in accordance with
applicable laws, regulations and administrative requirements. All such Tax
Returns that have been filed on or before the Closing Date were, when filed, and
continue to be, true, correct and complete in all material respects.
(b) OrthAlliance has provided or made available to OCA all reports of
and communications for all open years from IRS agents and the corresponding
agents of other state, local and foreign Governmental Authorities who have
examined the respective books and records applicable to OrthAlliance and any of
its Subsidiaries. Section 4.19(b) of the OrthAlliance Disclosure Schedule
describes all adjustments in respect of OrthAlliance and any of its Subsidiaries
to Tax Returns filed by, or on behalf of, OrthAlliance, its Subsidiaries or any
affiliated group of corporations of which OrthAlliance or a Subsidiary thereof
is or was a member, for all open taxable years, that have been proposed by any
representative of any governmental agency, and Section 4.19(b) of the
OrthAlliance Disclosure Schedule describes the resulting Taxes, if any, proposed
to be assessed. All deficiencies proposed (plus interest, penalties and
additions to tax that were or are proposed to be assessed thereon, if any) as a
result of such examinations have been paid, reserved against or settled or, as
described in Section 4.19(b) of the OrthAlliance Disclosure Schedule, are being
contested in good faith by appropriate proceedings. Neither OrthAlliance nor any
of its Subsidiaries has given or been requested to give waivers or extensions
(or is or would be subject to a waiver or extension given by any other entity)
of any statute of limitations relating to the payment of Taxes for which
OrthAlliance or any of its Subsidiaries may be liable.
(c) OrthAlliance and its Subsidiaries have paid, or made provision for
the payment of, all Taxes, including personal property taxes, that have or may
become due for all periods ending on or before the Closing Date, including,
without limitation, all Taxes reflected on the Tax Returns referred to in this
Section 4.19, or in any assessment, proposed assessment or notice, received by
OrthAlliance or any Subsidiary of OrthAlliance, except such Taxes, if any, as
are set forth in Section 4.19(c) of the OrthAlliance Disclosure Schedule that
are being contested in good faith and as to which adequate reserves (determined
in accordance with GAAP consistently applied) have been provided. The charges,
accruals and reserves with respect to Taxes reflected in the OrthAlliance 2000
Financial Statements were determined in accordance with GAAP consistently
applied. In all material respects, all Taxes that OrthAlliance and its
Subsidiaries are
22
27
or were required by law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the appropriate
Governmental Authority. There are no liens with respect to Taxes upon any of the
properties or assets, real or personal, tangible or intangible, of OrthAlliance
or any of its Subsidiaries (except for Taxes not yet due).
(d) There are no closing agreements, requests for rulings or requests
for technical advice, in respect of any Taxes, pending between OrthAlliance or
any of its Subsidiaries and any Governmental Authority.
(e) No consent to the application of Section 341(f)(2) of the Code has
ever been filed with respect to any property or assets held or acquired or to be
acquired by OrthAlliance or any of its Subsidiaries.
(f) There is no existing tax allocation or sharing agreement that may
or will require that any payment be made by or to OrthAlliance or any of its
Subsidiaries on or after the Closing Date.
(g) No property or asset owned by OrthAlliance or any of its
Subsidiaries is property that OCA is or will be required to treat as being owned
by another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately before the
enactment of the Tax Reform Act of 1986, or is "tax-exempt use property" within
the meaning of Section 168(h)(1) of the Code.
(h) Neither OrthAlliance nor any of its Subsidiaries has agreed to, or
is required to make, any adjustment pursuant to Section 481(a) of the Code, nor
has the IRS proposed any such adjustment or change in accounting method with
respect to OrthAlliance or any of its Subsidiaries. OrthAlliance and its
Subsidiaries do not have any application pending with any Governmental Authority
requesting permission for any change in accounting method.
(i) Except as disclosed in Section 4.19(i) of the OrthAlliance
Disclosure Schedule, there is no contract, agreement, plan or arrangement
covering any person that, individually or collectively, as a consequence of this
transaction could give rise to the payment of any amount that would not be
deductible by OCA, the Surviving Corporation, or OrthAlliance or any of its
Subsidiaries by reason of Section 280G of the Code.
(j) Neither OrthAlliance nor any of its Subsidiaries owns an interest
in any (i) domestic international sales corporation, (ii) foreign sales
corporation, (iii) controlled foreign corporation, or (iv) passive foreign
investment company.
(k) Neither OrthAlliance nor any of its Subsidiaries is a party to any
deferred intercompany transaction that will be restored (pursuant to the
Treasury Regulations under Section 1502 of the Code) and will result in income
or loss to OrthAlliance or any of its Subsidiaries due to this Agreement and the
transactions contemplated hereby.
(l) Neither OrthAlliance nor any of its Subsidiaries is, nor has ever
been, a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
23
28
(m) None of the assets of OrthAlliance or any of its Subsidiaries
directly or indirectly secure any debt the interest on which is tax-exempt under
Section 103(a) of the Code.
4.20. Employee Benefit Matters.
(a) Set forth in Section 4.20 of the OrthAlliance Disclosure Schedule
is a complete and accurate list of each employee benefit plan including, but not
limited to, pension, profit sharing, 401(k), severance, welfare, disability and
deferred compensation, and all other material employee benefit plans,
agreements, programs, policies or arrangements including, but not limited to,
stock purchase, stock option, employment, change-in-control, fringe benefit,
bonus and incentive, whether or not subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), whether formal or informal, oral or
written, legally binding or not, under which any employee, former employee,
director, consultant or independent contractor of OrthAlliance or any Subsidiary
thereof has any present or future right to benefits or under which OrthAlliance
or any Subsidiary thereof has any present or future liability. All such plans,
agreements, programs, policies and arrangements shall be collectively referred
to as the "OrthAlliance Benefit Plans" but shall be separately identified in
such Section 4.20 of the OrthAlliance Disclosure Schedule.
(b) With respect to each OrthAlliance Benefit Plan, OrthAlliance has
delivered or made available to OCA (i) current, accurate and complete copies of
each such OrthAlliance Benefit Plan, including all trust agreements, each
summary plan description or other description, insurance or annuity contracts,
agreements, participant records and any other material documents or instruments
relating thereto; (ii) copies of each Form 5500 Annual Report and accompanying
schedules, each actuarial report (to the extent applicable) and; (iii) with
respect to each such OrthAlliance Benefit Plan which is an employee pension
benefit plan (as such term is defined in section 3(2) of ERISA), intended to
qualify under section 401(a) of the Code, copies of the most recent IRS
determination letter (including copies of any outstanding request for
determination letters).
(c) Each OrthAlliance Benefit Plan has been established and
administered in accordance with its terms, and each such OrthAlliance Benefit
Plan and OrthAlliance and its Subsidiaries are in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal and
state applicable laws, rules and regulations with respect thereto.
(d) Each OrthAlliance Benefit Plan that is an "employee pension benefit
plan" (within the meaning of section 3(2) of ERISA) is qualified under section
401(a) of the Code and its related trust is exempt from federal income tax under
section 501(a) of the Code. No event has occurred or circumstance exists that
will or could give rise to disqualification or loss of tax-exempt status of any
such OrthAlliance Benefit Plan or trust.
(e) No event has occurred and no condition exists that likely could
subject OrthAlliance or any Subsidiary thereof to any tax, fine, lien, penalty
or other liability imposed by ERISA (including any breach of fiduciary
responsibility by any director, officer or employee), the Code or other
applicable laws, rules and regulations.
(f) Neither OrthAlliance nor any Subsidiary thereof sponsors or
maintains, or has ever sponsored or maintained, or has any actual or contingent
liability under or relating to, any plan that is or was a defined benefit plan,
as defined in section 3(35) of ERISA, or that is a
24
29
Multiemployer Plan within the meaning of section 4001(a)(3) of ERISA, or that is
otherwise subject to title IV of ERISA.
(g) No OrthAlliance Benefit Plan is a "multiple employer welfare
arrangement" within the meaning of section 3(40) of ERISA, except for
OrthAlliance Benefit Plans that are fully insured and with respect to which each
Form M-1 has been timely filed.
(h) All material reports, returns, notices and similar documents
pertaining to each OrthAlliance Benefit Plan that are required to be filed with
any Governmental Authority or distributed to any OrthAlliance Benefit Plan
participant have been duly and timely filed or distributed.
(i) For each OrthAlliance Benefit Plan with respect to which a Form
5500 has been filed, no material change has occurred with respect to the matters
covered by the most recent Form 5500 since the date thereof.
(j) No "prohibited transaction" (as such term is defined in section 406
of ERISA and section 4975 of the Code) or "accumulated funding deficiency" (as
such term is defined in section 302 of ERISA and section 412 of the Code
(whether or not waived)) has occurred with respect to any OrthAlliance Benefit
Plan.
(k) No OrthAlliance Benefit Plan or any related trust or fiduciary
thereof is the direct or indirect subject of a material audit, investigation or
examination by any Governmental Authority or quasi-governmental authority.
(l) The execution of this Agreement and the performance of the
transactions contemplated hereby will not constitute an event under any
OrthAlliance Benefit Plan that may reasonably be expected to result in any
payment (whether of severance pay or otherwise), acceleration, vesting or
increase in benefits with respect to any employee, former employee or director
of OrthAlliance or any Subsidiary thereof.
(m) All contributions and payments made or accrued with respect to all
OrthAlliance Benefit Plans and other benefit obligations are deductible under
section 162 of the Code or section 404 of the Code. No amount or any asset of
any OrthAlliance Benefit Plan is subject to tax as unrelated business taxable
income.
(n) To the knowledge of OrthAlliance, no event has occurred or
circumstance exists that could result in a material increase in premium costs of
OrthAlliance Benefit Plans and other benefit obligations that are insured or a
material increase in benefit costs of such plans and obligations that are
self-insured.
(o) Except to the extent required under section 601 et seq. of ERISA
and section 4980B of the Code, OrthAlliance and its Subsidiaries do not provide
health or welfare benefits for any retired or former employee and is not
obligated to provide health or welfare benefits to any active employee following
such employee's retirement or other termination of service.
(p) OrthAlliance and its Subsidiaries have the right to modify and
terminate each OrthAlliance Benefit Plan with respect to both retired and active
employees.
25
30
(q) OrthAlliance and its Subsidiaries have complied in all material
respects with the provisions of section 601 et seq. of ERISA and section 4980B
of the Code.
(r) With respect to any OrthAlliance Benefit Plan, (i) no actions,
suits or claims (other than claims for benefits made in the ordinary course of
the OrthAlliance Benefit Plan's operation) are pending or, to the knowledge of
OrthAlliance, threatened; and (ii) no facts or circumstances exist that
reasonably could give rise to any such actions, suits or claims.
(s) Full payment has been made of all amounts which are due to any of
the OrthAlliance Benefit Plans. Furthermore, OrthAlliance and its Subsidiaries
have made adequate provision for reserves to meet contributions that have not
been made because they are not yet due under the terms of each of the
OrthAlliance Benefit Plans.
(t) All OrthAlliance Affiliated Professionals have, at all times during
their relationship with OrthAlliance and its Subsidiaries, been properly
classified as independent contractors and not employees of OrthAlliance or its
Subsidiaries for purposes of all applicable law, including, without limitation,
for federal, state and local employment tax purposes.
4.21. Environmental Matters.
(a) OrthAlliance and each of its Subsidiaries are in compliance with
all applicable international, federal, state, local and foreign laws and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) (collectively, "Environmental Laws"),
which compliance includes, but is not limited to, the possession by OrthAlliance
and its Subsidiaries of all permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof, except for noncompliance which, individually or in the
aggregate, does not have, and would not reasonably be expected to have, an
OrthAlliance Material Adverse Effect.
(b) Neither OrthAlliance nor any of its Subsidiaries have received
written notice of, or is the subject of, any actions, causes of action, claims,
investigations, demands or notices by any person asserting an obligation to
conduct investigations or cleanup activities under Environmental Law or alleging
liability under or noncompliance with any Environmental Law (collectively,
"Environmental Claims") that, individually or in the aggregate, has, or would
reasonably be expected to have, an OrthAlliance Material Adverse Effect.
(c) There are no past or present events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with or
prevent continued compliance, or which may give rise to any common law or
statutory liability or otherwise form the basis of any claim, action, suit,
proceeding, hearing or investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, release or threatened release into the
environment, or any pollutant, contaminant, or hazardous or toxic material or
waste (including biohazardous and medical waste) with respect to or affecting
OrthAlliance or any of its Subsidiaries except for such events, conditions,
circumstances, activities, practices, incidents, actions or plans as, singly or
in the aggregate, do not have, and would not reasonably be expected to have, an
OrthAlliance Material Adverse Effect.
26
31
4.22. Labor Controversies. There are no controversies pending or, to the
knowledge of OrthAlliance, threatened between any of OrthAlliance or its
Subsidiaries and any representatives of any of their employees and, to the
knowledge of OrthAlliance, there are no organizational efforts being made
involving any unorganized employees of any of OrthAlliance or its Subsidiaries,
except for such controversies and organizational efforts, as, singly or in the
aggregate, do not have, and would not reasonably be expected to have, an
OrthAlliance Material Adverse Effect.
4.23. Insurance. OrthAlliance and its Subsidiaries maintain insurance coverage
reasonably adequate for their assets and the operation of their businesses. None
of OrthAlliance or its Subsidiaries is in material default with respect to any
policies or binders of indemnity, liability, directors' and officers,' worker's
compensation, health and other forms of insurance policies or binders in force
as of the date hereof and insuring against risks of any of OrthAlliance and its
Subsidiaries. No notice of cancellation or non-renewal with respect to, or
disallowance of any claim under, any such policy has been received by
OrthAlliance or any of its Subsidiaries. Each of OrthAlliance and its
Subsidiaries is named as an additional insured party on the professional
liability insurance policies of their respective OrthAlliance Affiliated
Professionals and/or OrthAlliance Affiliated PCs.
4.24. Billing Practices; Fraud and Abuse. All billing practices by OrthAlliance
and its Subsidiaries to all third party payors, including without limitation, to
the extent applicable, the TRICARE (formerly CHAMPUS) program, the federal
Medicare program, state Medicaid programs, all other state and federal benefit
programs, and all private insurance programs, have been true, fair and correct
and in compliance with all applicable Laws and the policies of all such third
party payors, and neither OrthAlliance nor any of its Subsidiaries has billed
for or received any payment or reimbursement in excess of amounts allowed by
applicable Law; except, in each case, as, singly or in the aggregate, does not
have, and would not reasonably be expected to have, an OrthAlliance Material
Adverse Effect. None of OrthAlliance and its Subsidiaries, and their respective
officers, directors, employees and affiliates and persons and entities providing
professional services for OrthAlliance or any of its Subsidiaries has engaged in
any activities which are prohibited under 42 U.S.C. Sections 1320a-7b and
1395nn, the regulations in 42 CFR Sections 1001 et seq., or any related state or
local statutes or regulations, or which are prohibited by rules of professional
conduct, including knowingly and willfully (i) making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment, (ii) making or causing to be made any false statement or
representation of a material fact for use in determining rights to any benefit
or payment, (iii) soliciting or receiving any remuneration, directly or
indirectly, in cash or kind, in return for (A) referring an individual to a
person for the furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in part under any federal or state
health care program or (B) purchasing, leasing, or ordering or arranging for or
recommending purchasing, leasing or ordering any good, facility, service, or
item for which payment may be made in whole or in part under any federal or
state health care program or (iv) offering or paying any remuneration, directly
or indirectly, in cash or kind, to any person to induce such person (A) to refer
an individual to a person for the furnishing or arranging for the furnishing of
any item or service for which payment may be made in whole or in part under any
federal or state health care program or (B) to purchase, lease, order, or
arrange for or recommend purchasing, leasing, or ordering any good, facility,
service, or item for which payment may be
27
32
made in whole or in part under any federal or state health care program; except,
in each case, as, singly or in the aggregate, does not have, and would not
reasonably be expected to have, an OrthAlliance Material Adverse Effect.
4.25. Required Stockholder Vote. The affirmative vote at the OrthAlliance
Stockholders' Meeting of a majority of the outstanding shares of OrthAlliance
Common Stock, voting as a single class, is the only vote of the holders of any
shares of capital stock of OrthAlliance necessary under OrthAlliance's
certificate of incorporation, bylaws and other governing documents, applicable
law and the listing standards and other rules and requirements of any stock
exchange or market on which capital stock of OrthAlliance is listed or quoted,
to approve and adopt this Agreement and the transactions contemplated hereby.
4.26. Takeover Laws. The Board of Directors of OrthAlliance has taken all
necessary and appropriate action so that Section 203 of the DGCL will be
inapplicable to this Agreement and the transactions contemplated hereby.
OrthAlliance, its Subsidiaries and this Agreement and the transactions
contemplated hereby, are not subject to or are exempt from, the requirements of
any "moratorium", "control share", "fair price" or other state anti-takeover
laws and regulations (collectively, "Takeover Laws").
4.27. Reorganization. OrthAlliance has no reason to believe that the Merger will
fail to qualify as a reorganization under Section 368(a) of the Code.
4.28. Brokers and Finders. OrthAlliance and its Subsidiaries have not entered
into any contract, arrangement or understanding with any Person or firm (other
than with U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., as reflected in an engagement letter
between such firm and OrthAlliance, a true, complete and correct copy of which
has heretofore been provided to OCA) which may result in the obligation of
OrthAlliance or any of its Subsidiaries to pay any finder's fees, brokerage
fees, agent commissions or similar fees, commissions or payments in connection
with the transactions contemplated hereby, and there is no claim for payment of
any such fees, commissions or payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
4.29. Opinion of Financial Advisor. OrthAlliance has received the opinion of its
financial advisor, U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., to the effect that the
Applicable Exchange Ratio is fair from a financial point of view to the holders
of OrthAlliance Common Stock.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF OCA
OCA hereby represents and warrants to OrthAlliance that, except as set
forth in the disclosure schedule dated as of the date hereof and signed by an
authorized officer of OCA, with each such exception included therein
specifically identifying the relevant Section hereto to which it specifically
relates (the "OCA Disclosure Schedule"):
5.1. Corporate Organization.
(a) OCA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the corporate power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is currently being conducted.
28
33
OCA is duly qualified and in good standing to transact business as a foreign
corporation in each jurisdiction in which the ownership or use of its assets and
properties and the conduct of its business requires such qualification, except
such jurisdictions, individually or in the aggregate, in which the failure to be
so qualified does not have, and would not be reasonably expected to have, an OCA
Material Adverse Effect. True, accurate and complete copies of OCA's certificate
of incorporation, bylaws or other governing documents, and all amendments
thereto, in each case as in effect on the date hereof, have heretofore been
delivered or made available to OrthAlliance.
(b) OCA Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has the
corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is currently being conducted. OCA
Merger Sub was formed solely for the purpose of engaging in the transactions
contemplated in this Agreement and has not engaged in any activities other than
in connection with those transactions. OCA Merger Sub has not incurred any
material obligations or liabilities or entered into any material agreements or
arrangements with any Person except for this Agreement and as contemplated
hereby. True, accurate and complete copies of OCA Merger Sub's certificate of
incorporation, bylaws or other governing documents, and all amendments thereto,
in each case as in effect on the date hereof, have heretofore been delivered or
made available to OrthAlliance.
5.2. Authorization; Binding Agreement. Each of OCA and OCA Merger Sub has the
corporate power and authority to enter into this Agreement and the other
documents and instruments to be executed and delivered by OCA and OCA Merger Sub
pursuant hereto (collectively, the "OCA Documents"), and to consummate the
Merger and the other transactions contemplated hereby. The execution and
delivery of this Agreement and the OCA Documents, and the consummation of the
transactions contemplated hereby, have been duly authorized and approved by the
Board of Directors of OCA at a meeting duly called and held and at which a
quorum was present and acting throughout, by the requisite affirmative vote of
the directors of OCA, and the Board of Directors of OCA has determined that the
Merger is in the best interests of OCA and its stockholders and approved this
Agreement and the Merger. The execution and delivery of this Agreement and the
OCA Documents, and the consummation of the transactions contemplated hereby,
have been duly authorized and approved by the Board of Directors of OCA Merger
Sub, and by OCA as the sole stockholder of OCA Merger Sub, and the Board of
Directors of OCA Merger Sub has determined that the Merger is in the best
interests of OCA Merger Sub and its stockholders and approved this Agreement and
the Merger. No other corporate proceedings on the part of OCA or OCA Merger Sub
are necessary to authorize the execution and delivery of this Agreement or the
consummation by OCA and OCA Merger Sub of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by OCA and OCA
Merger Sub, and, assuming due execution and delivery by OrthAlliance, this
Agreement constitutes the valid and binding agreement and obligation of OCA and
OCA Merger Sub, enforceable against OCA and OCA Merger Sub in accordance with
its terms (except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
now or hereafter in effect affecting creditors' rights generally and general
equitable principles, regardless of whether enforceability is considered in a
proceeding in law or in equity).
5.3. Consents and Approvals. Except for (a) the filing with, and declaration of
effectiveness by, the SEC of the Registration Statement in which will be
included as a prospectus the Proxy
29
34
Statement, (b) the filing of the Certificate of Merger with the Delaware
Secretary, (c) the filing by OCA and OrthAlliance of a pre-merger notification
with the FTC and the Antitrust Division under the HSR Act, and the expiration or
termination of any waiting period thereunder, (d) approval for listing of OCA
Common Stock to be issued in the Merger on the NYSE, (e) any filings required
under state securities or "Blue Sky" laws, (f) any filings and consents as may
be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval necessitated by
the transactions contemplated in this Agreement, (g) requisite consent to
consummation of the Merger by the lenders under the OCA Credit Agreement, and
(h) such other authorizations, consents, approvals or filings, the failure of
which to obtain or make, individually or in the aggregate, does not have, and
would not reasonably be expected to have, an OCA Material Adverse Effect or
materially impair or delay the consummation by OCA or OCA Merger Sub of the
transactions contemplated hereby, no consents or approvals of or filings or
registrations with any Governmental Authority or with any third party are
necessary in connection with (i) the execution and delivery by OCA and OCA
Merger Sub of this Agreement and the OCA Documents and (ii) the consummation by
OCA and OCA Merger Sub of the Merger. Neither OCA nor OCA Merger Sub were,
immediately prior to their execution of this Agreement, an "interested
shareholder" of OrthAlliance within the meaning of Section 203 of the DGCL.
5.4. No Conflicts. Neither the execution or delivery by OCA and OCA Merger Sub
of this Agreement and the other OCA Documents, nor the consummation by OCA and
OCA Merger Sub of the transactions contemplated hereby or thereby, nor the
compliance by OCA with the provisions hereof, will: (a) violate or conflict with
or result in any breach of any provision of the certificate of incorporation,
bylaws or other governing documents of OCA, OCA Merger Sub or their
Subsidiaries; (b) violate or conflict with any order, injunction, decree, law,
statute, rule, ordinance or regulation applicable to OCA, OCA Merger Sub or
their Subsidiaries or by which any of their respective properties or assets may
be bound; (c) result in a violation or breach of, constitute a default or give
rise to any right of termination, cancellation or acceleration under, any loan
or credit agreement, note, mortgage, bond, indenture, lease, benefit plan or
other agreement, obligation or instrument applicable to OCA, OCA Merger Sub or
their Subsidiaries, or result in the creation of an Encumbrance upon any
property or asset of OCA, OCA Merger Sub or their Subsidiaries or by which any
such properties or assets may be bound, or trigger any right of first refusal or
other purchase right applicable to OCA, OCA Merger Sub or any Subsidiary
thereof; or (d) result in the loss of any license, franchise or permit
applicable to OCA, OCA Merger Sub or any Subsidiary thereof; except in each
case, where such violation, conflict, breach, default, loss or other event,
individually or in the aggregate, does not have, and would not reasonably be
expected to have, an OCA Material Adverse Effect.
5.5. Capitalization.
(a) The authorized capital stock of OCA consists of 100,000,000 shares
of OCA Common Stock, and 10,000,000 shares of preferred stock, par value $.01
per share ("OCA Preferred Stock"). As of the date hereof, (i) 49,158,539 shares
of OCA Common Stock were issued and outstanding, all of which were validly
issued and are fully paid, nonassessable and free of preemptive rights, (ii) no
shares of OCA Preferred Stock were issued and outstanding, and (iii) no shares
of OCA Common Stock and no shares of OCA Preferred Stock were held in the
treasury of OCA or any of its Subsidiaries.
30
35
(b) Except for options, commitments and agreements under OCA's stock
option and stock purchase programs to purchase a total of 4,256,502 shares of
OCA Common Stock, OCA does not have and is not bound by any outstanding
subscriptions, options, warrants, convertible securities, conversion rights,
preemptive or other rights, calls, commitments or agreements of any character
calling for the purchase or issuance of any shares of OCA Common Stock or OCA
Preferred Stock or any other equity security or capital stock of OCA or any
securities representing the right to purchase or otherwise receive any shares of
OCA Common Stock or any other equity security or capital stock of OCA.
(c) The shares of OCA Common Stock to be issued pursuant to the Merger
will be duly authorized and validly issued, and, at the Effective Time, will be
fully paid, nonassessable and free of preemptive rights.
(d) The authorized capital stock of OCA Merger Sub consists of 1,000
shares of OCA Merger Sub Common Stock. OCA owns beneficially and of record all
the issued and outstanding shares of OCA Merger Sub Common Stock.
5.6. SEC Reports and Financial Statements.
(a) OCA has timely filed with the SEC all reports, schedules, forms,
registration statements, proxy statements, information statements and other
documents (including all exhibits, post-effective amendments and supplements)
required to be filed by OCA with the SEC since January 1, 1998 (collectively,
the "OCA SEC Reports"), all of which OCA SEC Reports, as amended if applicable,
complied when filed in all material respects with all applicable requirements of
the appropriate act and the rules and regulations thereunder. OCA has previously
delivered or made available to OrthAlliance copies (including all exhibits,
post-effective amendments and supplements) of the OCA SEC Reports. None of OCA's
Subsidiaries is or has been required to file any reports, schedules, forms,
registration statements, proxy statements, information statements or other
documents with the SEC. As of their respective dates, the OCA SEC Reports did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(b) Except as disclosed in the OCA SEC Reports, the audited
consolidated financial statements and unaudited interim consolidated financial
statements of OCA included in the OCA SEC Reports (collectively, the "OCA
Financial Statements") were prepared in accordance with GAAP consistently
applied throughout the periods involved (except as may be indicated therein or
in the notes thereto) and fairly present in all material respects the
consolidated financial position of OCA and its Subsidiaries as of the dates
thereof and the results of their operations and their cash flows for the periods
then ended, subject, in the case of the unaudited interim financial statements,
to normal year-end and audit adjustments and any other adjustments described
therein.
5.7. Subsidiaries. Except as disclosed in the OCA SEC Reports, OCA does not have
any Subsidiaries that are required to be disclosed in such OCA SEC Reports. Each
Subsidiary of OCA is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has the requisite power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted in all material respects. Each
Subsidiary of OCA is qualified to do business and is in good standing in each
jurisdiction in
31
36
which the properties it owns, leases or operates or the nature of the business
it conducts makes such qualification necessary, except where the failure to be
so qualified and in good standing, when taken together with all such other
failures with respect to all of OCA's Subsidiaries, does not have, and would not
reasonably be expected to have, an OCA Material Adverse Effect.
5.8. Absence of Undisclosed Liabilities. None of OCA or its Subsidiaries has
incurred any liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature, except (a) liabilities, obligations or
contingencies that are accrued or reserved against in the OCA 2000 Financial
Statements or reflected in the notes thereto, or were incurred in the ordinary
course of business and consistent with past practices, (b) liabilities,
obligations or contingencies that, individually or in the aggregate, do not
have, and would not reasonably be expected to have, an OCA Material Adverse
Effect, and (c) liabilities and obligations that are of a nature not required to
be reflected in the OCA 2000 Financial Statements, and that were incurred in the
ordinary course of business, consistent with past practice.
5.9. Litigation; Decrees. Except as disclosed in the OCA SEC Reports, there are
no claims, suits, actions, arbitration actions, government investigations or
inquiries or other proceedings pending or, to the knowledge of OCA, threatened
against, relating to or affecting any of OCA or its Subsidiaries, or their
assets or businesses, which seeks to restrain or enjoin the consummation of the
transactions contemplated herein or which have, or would reasonably be expected
to have, either alone or in the aggregate with all such claims, actions or other
proceedings, an OCA Material Adverse Effect. Except as disclosed in the OCA SEC
Reports, there are no decrees, injunctions, writs or orders of any court or
governmental department or agency applicable to any of OCA or its Subsidiaries,
or their assets or businesses, or which prohibits or restricts the consummation
of the transactions contemplated herein or which have, or would reasonably be
expected to have, an OCA Material Adverse Effect.
5.10. Compliance with Law. OCA and each of its Subsidiaries is in compliance
with all applicable Laws of the United States of America and any applicable
foreign jurisdictions, all state and local governments and other Governmental
Authorities, and agencies and courts of any of the foregoing, to which any of
OCA or its Subsidiaries is subject, and none of OCA or its Subsidiaries has
received any notice to the effect that, or otherwise been advised that, any of
OCA or its Subsidiaries has violated or is not in compliance with any of such
Laws, and, to the knowledge of OCA, there are no investigations with respect
thereto; except in each case with respect to non-compliance or violations that,
individually or in the aggregate, do not have, and would not reasonably be
expected to have, an OCA Material Adverse Effect. OCA and its Subsidiaries have
all permits necessary to conduct their businesses as currently conducted, except
for permits, the absence of which, in the aggregate, do not have, and would not
reasonably be expected to have, an OCA Material Adverse Effect, and none of OCA
and its Subsidiaries is in violation of the terms of any such permit, except for
delays in filing reports or violations that do not have, and would not
reasonably be expected to have, an OCA Material Adverse Effect.
5.11. Absence of Certain Changes or Events. Except as disclosed in the OCA SEC
Reports, since December 31, 2000, none of OrthAlliance or its Subsidiaries has
operated other than in the ordinary course of business consistent with past
practice, or incurred, experienced or suffered any OCA Material Adverse Effect.
32
37
5.12. Reorganization. OCA has no reason to believe that the Merger will fail to
qualify as a reorganization under Section 368(a) of the Code.
5.13. Brokers and Finders. OCA and its Subsidiaries have not entered into any
contract, arrangement or understanding with any Person or firm (other than Banc
of America Securities LLC) which may result in the obligation of OrthAlliance or
any of its subsidiaries to pay any finder's fees, brokerage fees, agent
commissions or similar fees, commissions or payments in connection with the
transactions contemplated hereby, and there is no claim for payment of any such
fees, commissions or payments in connection with the negotiations leading to
this Agreement or the consummation of the transactions contemplated hereby.
5.14. Opinion of Financial Advisor. The financial advisor of OCA, Banc of
America Securities LLC, has rendered an opinion to the Board of Directors of OCA
to the effect that the Applicable Exchange Ratio is fair from a financial point
of view to OCA.
5.15 Trading on NYSE. Shares of OCA Common Stock are listed for trading on the
NYSE, and trading in OCA Common Stock on the NYSE is not suspended.
ARTICLE VI. CERTAIN COVENANTS AND AGREEMENTS
6.1. Conduct of OrthAlliance's Business Pending the Merger. During the period
from the date of this Agreement and continuing until the Effective Time, except
as expressly contemplated or permitted by this Agreement or with the prior
express written consent of OCA, OrthAlliance and each of its Subsidiaries shall
maintain its existence and carry on its respective businesses in the ordinary
course consistent with past practice. Without limiting the generality of the
foregoing, and except as set forth in Section 6.1 of the OrthAlliance Disclosure
Schedule or as otherwise contemplated by this Agreement or as expressly
consented to in writing in advance by OCA, OrthAlliance shall, and shall cause
each of its Subsidiaries to:
(a) not declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock during any period, other
than dividends or distributions by a Subsidiary of OrthAlliance to OrthAlliance
or another Subsidiary of OrthAlliance;
(b) not (i) repurchase, redeem or otherwise acquire any shares of the
capital stock of OrthAlliance or any Subsidiary of OrthAlliance, or any
securities convertible into or exercisable for any shares of the capital stock
of OrthAlliance or any Subsidiary of OrthAlliance, (ii) split, combine or
reclassify any shares of its capital stock, or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, or (iii) issue, deliver or sell, or authorize
or propose the issuance, delivery or sale of, any shares of its capital stock or
any securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing, except, in the case of clauses (ii) and (iii), for the
issuance of OrthAlliance Class A Common Stock upon the exercise, conversion or
fulfillment of the Warrants, OrthAlliance Class B Common Stock or options issued
or existing pursuant to the OrthAlliance Option Plans all to the extent
outstanding and in existence on the date of this Agreement and in accordance
with their current terms;
33
38
(c) not amend its certificate of incorporation, articles of
incorporation, bylaws or other similar governing documents;
(d) not make any capital expenditures other than those which are made
in the ordinary course of business consistent with past practice or are
necessary to maintain existing assets in good repair;
(e) not enter into any new line of business;
(f) not acquire or agree to acquire, by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or Person or division
thereof, nor otherwise acquire any assets other than expenditures for current
assets in the ordinary course of business consistent with past practice and
expenditures for fixed or capital assets in the ordinary course of business
consistent with past practice;
(g) not change its methods of accounting, except as required by changes
in GAAP or regulatory accounting principles as concurred to by OrthAlliance's
independent auditors;
(h) except as required by applicable law, or to the extent required
under any OrthAlliance Benefit Plan to which OrthAlliance or a Subsidiary
thereof is a party prior to the date hereof, or as required to maintain
qualification pursuant to the Code, not adopt, amend, terminate or accelerate
the payment, right to payment or vesting of any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or arrangement
for any employee, director, officer or retiree (including, without limitation,
any OrthAlliance Benefit Plan);
(i) not enter into, amend or terminate any employment, severance,
consulting, change in control or similar agreement, arrangement or contract
between OrthAlliance or any Subsidiary of OrthAlliance and one or more of its
current or former directors, officers or employees, nor, except for normal
increases in the ordinary course of business consistent with past practice or
except as required by applicable law, increase in any manner the compensation or
fringe benefits of any director, officer, consultant or employee or pay any
benefit not required by any OrthAlliance Benefit Plan or agreement as in effect
as of the date hereof, nor grant, modify or award any stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares; provided, however, that OrthAlliance may employ a chief
executive officer who is reasonably satisfactory to OCA, pursuant to
compensation, benefits, severance and other terms of employment that are
commercially reasonable and otherwise comparable to that of a chief executive
officer of a comparable company, including with respect to severance, change in
control, "golden parachute" or other payments triggered by or resulting from
this Agreement, the transactions contemplated hereby or the consummation
thereof, and approved in advance in writing by OCA;
(j) not take or permit to be taken any action which would disqualify
the Merger as a reorganization under Section 368(a) of the Code;
(k) other than activities in the ordinary course of business consistent
with past practice, not sell, lease,
34
39
encumber, assign or otherwise dispose of, nor agree to sell, lease, encumber,
assign or otherwise dispose of, any of its material assets, properties or other
rights or agreements;
(l) not incur any indebtedness for borrowed money, other than in the
ordinary course of business consistent with past practice, and in any event, in
an aggregate amount of not greater than $100,000 (except that OrthAlliance and
its Subsidiaries may, after using their respective reasonable best efforts to
fund the following payments through OrthAlliance's and its Subsidiaries
available cash flow, incur additional indebtedness of up to $5,000,000 with
respect to the payment of professional fees, interest and taxes due and payable
in the ordinary course of business, consistent with past practice, and, with the
prior written consent of OCA, which shall not be unreasonably held, the
acquisition of capital stock or assets of, or entering into a West Service and
Consulting Agreement with, orthodontists, pedodontists or their professional
entities, capital expenditures and the opening of additional or satellite
offices or practice locations), nor assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any other Person,
other than in the ordinary course of business consistent with past practice;
(m) not agree to the settlement of any material claim or litigation,
other than claims and litigation that are disclosed in OrthAlliance's Annual
Report on Form 10-K for the year ended December 31, 2000, as filed with the SEC,
or in the OrthAlliance Disclosure Schedule;
(n) not enter into any agreement, understanding or commitment that
restrains, limits or impedes, in any material respects, OrthAlliance's or its
Subsidiaries' ability to compete with or conduct any business or line of
business, including geographic limitations;
(o) not plan, announce, implement or effect any reduction in force,
lay-off, early retirement program, severance program or other program or effort
concerning the termination of employment of employees of OrthAlliance or its
Subsidiaries, other than routine employee terminations in the ordinary course of
business;
(p) not make, change or revoke any material Tax election or make any
material agreement or settlement regarding Taxes with any taxing authority;
(q) not enter into, create, renew, amend, cancel or terminate or give
notice of a proposed renewal, amendment, cancellation or termination of, any
material contract, agreement or lease to which OrthAlliance or any of its
Subsidiaries is a party or by which OrthAlliance or any of its Subsidiaries or
their respective properties is bound, including any Service or Consulting
Agreement, nor waive, release or assign any material rights or claims, except in
the ordinary course of business and consistent with past practice or as
contemplated by this Agreement;
(r) not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the OrthAlliance 2000 Financial Statements or incurred in the
ordinary course of business consistent with past practice;
35
40
(s) not violate or fail to perform in any material respect any material
obligation or duty imposed upon it by applicable Law;
(t) not authorize, recommend, propose or announce an intention to do
any of the foregoing, nor enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
(u) use commercially reasonable efforts to maintain with financially
responsible insurance companies insurance on its tangible assets and its
businesses in such amounts and against such risks and losses as are commercially
reasonable and consistent with past practice;
(v) use its reasonable best efforts to collect outstanding Receivables,
shall not generate, create or allow any Receivables other than in the ordinary
course of business consistent with past practice and, in any event, shall not
generate, create or allow any Receivables in an aggregate amount that exceeds
the amount set forth in Section 4.14 of the OrthAlliance Disclosure Schedule;
and
(w) use all reasonable efforts to keep available the services of its
current officers and employees and preserve its relationships with
orthodontists, pedodontists, dentists, professional entities, customers,
suppliers, licensors, lessors, third party payors and others having business
dealings with it to the end that its goodwill and ongoing business shall be
unimpaired at the Effective Time.
6.2. Conduct of OCA's Business Pending the Merger. During the period from the
date of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement or with the prior express
written consent of OrthAlliance, OCA shall maintain its existence and carry on
its business in the ordinary course consistent with past practice. Without
limiting the generality of the foregoing, and except as set forth in Section 6.2
of the OCA Disclosure Schedule or as otherwise contemplated by this Agreement or
as expressly consented to in writing in advance by OrthAlliance, OCA shall, and
shall cause each of its Subsidiaries to:
(a) not declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock during any period, other
than dividends or distributions by a Subsidiary of OCA to OCA or another
Subsidiary of OCA;
(b) not split, combine or reclassify any shares of its capital stock,
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock;
(c) not amend its certificate of incorporation;
(d) not take or permit to be taken any action which would disqualify
the Merger as a reorganization under Section 368 of the Code; and
(e) not authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
36
41
6.3. Access to Information.
(a) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, each of OCA and OrthAlliance shall, and shall cause
each of its respective Subsidiaries to, afford to the officers, employees,
accountants, attorneys, financial advisors and other representatives (each, a
"Representative") of the other party, access during normal business hours during
the period prior to the Effective Time to all its properties, books, contracts,
commitments, records, officers, employees, accountants, counsel and other
representatives and, during such period, it shall, and shall cause its
Subsidiaries to, make available to the other party all information concerning
its business, properties and personnel as the other party may reasonably request
in connection herewith.
(b) All information furnished pursuant to Section 6.3(a) shall be
subject to, and the parties shall hold all such information in confidence in
accordance with, the provisions of the confidentiality agreement, dated as of
January 3, 2001 (the "Confidentiality Agreement"), between OCA and OrthAlliance.
(c) Notwithstanding anything in the Confidentiality Agreement or any
other agreement to the contrary, no provision of the Confidentiality Agreement
or investigation by either of the parties or their respective Representatives
shall affect the representations, warranties, covenants or agreements of the
other set forth herein and the parties shall remain responsible to the extent
provided herein.
6.4. No Solicitation
(a) OrthAlliance agrees that it and its Subsidiaries, officers,
directors, employees, representatives, consultants, investment bankers,
attorneys, accountants and agents shall not, directly or indirectly, (i)
encourage, solicit, initiate, facilitate, entertain or accept any Acquisition
Proposal, (ii) enter into any agreement with respect to any Acquisition Proposal
or enter into any arrangement, understanding or agreement requiring it to
abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement, (iii) propose or make any Acquisition Proposal
to any Person other than OCA and OCA Merger Sub, (iv) participate in any way in
discussions or negotiations with, or furnish or disclose any information to, any
Person (other than OCA and OCA Merger Sub) in connection with or with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal, or (v) authorize or permit its Subsidiaries, officers,
directors, employees, representatives, consultants, investment bankers,
attorneys, accountants and agents to do any of the foregoing; provided, however,
that OrthAlliance, in response to an unsolicited, bona fide, written Acquisition
Proposal, may, after giving notice to OCA and without limiting OrthAlliance's
obligations under Section 8.4, take one or more of the following actions if the
Board of Directors of OrthAlliance determines in good faith that the failure to
take such action or actions would violate the fiduciary obligations of such
Board of Directors under applicable law: (1) participate or engage in such
discussions or negotiations with the Person making such Acquisition Proposal
regarding such unsolicited, bona fide, written Acquisition Proposal, (2) provide
or cause to be provided information to the Person making such Acquisition
Proposal (pursuant to a confidentiality agreement with terms not more favorable
to such third party than the terms of the Confidentiality Agreement between
OrthAlliance and OCA), and (3) authorize and permit its officers, directors,
employees, representatives, investment bankers, attorneys, accountants,
financial advisors and agents to take
37
42
such actions. OrthAlliance and its Subsidiaries, officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
agents shall immediately cease any discussions, activities or negotiations with
Persons other than OCA and OCA Merger Sub that may be ongoing or previously or
currently conducted with respect to any Acquisition Proposal.
(b) In addition, the Board of Directors of OrthAlliance, and each
committee thereof, shall not (A) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to OCA or OCA Merger Sub, the approval and
recommendation of this Agreement or the Merger, or (B) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal other than the Merger;
provided, however, the Board of Directors of OrthAlliance may, if the Board of
Directors of OrthAlliance determines in good faith that the failure to do so
would violate the fiduciary obligations of such Board of Directors under
applicable law, after giving notice to OCA and without limiting OrthAlliance's
obligations under Section 8.4, (i) recommend a Superior Proposal and in
connection therewith withdraw or modify its approval or recommendation of this
Agreement and the Merger, and (ii) terminate this Agreement solely in order to
concurrently enter into a merger agreement, acquisition agreement, option
agreement or letter of intent with respect to such Superior Proposal, but only
after the fifth business day following OCA's receipt of written notice from
OrthAlliance advising OCA that the Board of Directors of OrthAlliance is
prepared to accept such Superior Proposal and describing the terms and
conditions of such Superior Proposal and the Person making such Superior
Proposal.
(c) Within 24 hours of receipt thereof, OrthAlliance shall promptly
notify OCA of any request for information or of any Acquisition Proposal, or any
inquiry, proposal, discussions or negotiations with respect to any Acquisition
Proposal, and OrthAlliance shall promptly provide OCA with the terms and
conditions of such request, Acquisition Proposal, inquiry, proposal, discussion
or negotiation, copies of any written materials received by OrthAlliance in
connection with any of the foregoing and the identity of the Person making any
such Acquisition Proposal or such request, inquiry or proposal or with whom any
discussions or negotiations are taking place. OrthAlliance shall keep OCA fully
informed of the status and details (including amendments or proposed amendments)
of any such request or Acquisition Proposal and keep OCA fully informed as to
the details of any information requested of or provided by OrthAlliance and as
to the details of all discussions or negotiations with respect to any such
request, takeover proposal or inquiry. OrthAlliance shall promptly provide to
OCA any non-public information concerning OrthAlliance provided to any other
Person in connection with any Acquisition Proposal which was not previously
provided to OCA.
(d) Nothing contained in this Section 6.4 shall prohibit OrthAlliance
from taking or disclosing to its stockholders a position contemplated by Rule
14d-9(f) or Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to OrthAlliance's stockholders if the Board of Directors of
OrthAlliance determines in good faith that the failure to do so would violate
the fiduciary obligations of such Board of Directors under applicable law;
provided, however, that, except as otherwise permitted in Section 6.4(b),
neither OrthAlliance nor its Board of Directors nor any committee thereof shall
withdraw or modify, or propose to withdraw or modify, its position with respect
to this Agreement or the Merger or approve or recommend, or propose to approve
or recommend, an Acquisition Proposal.
(e) For purposes of this Agreement:
38
43
(i) "Acquisition Proposal" shall mean any tender or exchange
offer, proposal for a merger, consolidation or other business
combination involving OrthAlliance or any Subsidiary of OrthAlliance or
any proposal, inquiry or offer to acquire in any manner, in a single
transaction or a series of related transactions, all or 15% or greater
equity interest in, or all or a substantial portion of the assets of,
OrthAlliance or any Subsidiary of OrthAlliance, other than the
transactions contemplated or permitted by this Agreement; and
(ii) "Superior Proposal" shall mean a bona fide, written
Acquisition Proposal to acquire all or substantially all of the capital
stock or assets of OrthAlliance made by a Person which is not an
Affiliate of OrthAlliance or its Subsidiaries, and with respect to
which the Board of Directors of OrthAlliance determines in good faith
that such Acquisition Proposal would be more favorable to OrthAlliance
and its stockholders than the transactions contemplated hereby, that
financing for such transaction, to the extent required, is fully
committed or is reasonably capable of being obtained by such Person and
that such transaction is reasonably capable of being consummated
without undue delay.
6.5. Registration Statement and Proxy Statement. As soon as practicable
following the date hereof, OCA and OrthAlliance shall jointly prepare, and OCA
shall file with the SEC, the Registration Statement in which the Proxy Statement
will be included as a prospectus. Each of OCA and OrthAlliance shall use its
reasonable best efforts to have the Registration Statement declared effective by
the SEC under the Securities Act as promptly as practicable after such filing,
to thereafter cause the Proxy Statement to be mailed to OrthAlliance's
stockholders as promptly as practicable, and to keep the Registration Statement
effective as long as is reasonably necessary to consummate the Merger. OCA shall
also use its reasonable best efforts (other than qualifying to do business in
any jurisdiction in which it is not currently qualified) to obtain all necessary
state securities law or "Blue Sky" permits and approvals required to carry out
the transactions contemplated by this Agreement. The parties will, promptly upon
receipt of written comments from the SEC with respect to the Registration
Statement, the Proxy Statement and the documents incorporated by reference
therein, provide copies thereof to the other party, consult with each other and
prepare written responses to such comments. The parties will promptly furnish to
the other all information concerning such party and other matters relevant to
such party, its stockholders and the transactions contemplated herein, and take
such other actions, as the other party or parties hereto may reasonably request
in connection with the preparation and filing of the Registration Statement and
the Proxy Statement. Each of OCA and OrthAlliance agrees that none of the
information such party provides for inclusion or incorporation by reference in
the Registration Statement or the Proxy Statement will (i) in the case of the
Registration Statement, at the time it becomes effective and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or (ii) in the case of the Proxy Statement,
at the time of the mailing of the Proxy Statement and at the time of the
OrthAlliance Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Registration Statement will
comply as to form in all material respects with the provisions of the Securities
Act, and the Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act.
39
44
6.6. Stockholders Meeting. OrthAlliance shall take all steps in accordance with
applicable law necessary to duly call, give notice of, convene and hold the
OrthAlliance Stockholders' Meeting to be held as soon as is reasonably
practicable after the date on which the Registration Statement becomes effective
for the purpose of voting upon the approval and adoption of this Agreement.
Subject to Section 6.4(b), OrthAlliance will, through its Board of Directors,
recommend to its stockholders approval and adoption of this Agreement and the
Merger and other transactions contemplated hereby.
6.7. Affiliates. Within 30 days following the date hereof, OrthAlliance shall
deliver to OCA a list of names and addresses of each director, executive officer
and other Person who, in OrthAlliance's reasonable judgment, is an "affiliate"
of OrthAlliance within the meaning of Rule 145 under the Securities Act, and
OrthAlliance shall use its reasonable best efforts to cause each such person to
execute and deliver to OCA, as soon as practicable after the date of this
Agreement and prior to the Effective Time, a written affiliate letter agreement,
in the form and substance of Exhibit A hereto.
6.8. NYSE Listing. OCA shall make all filings required of it to cause the shares
of OCA Common Stock to be issued in the Merger to be approved for listing on the
NYSE, subject to official notice of issuance, as of the Effective Time.
6.9. Indemnification of OrthAlliance Directors and Officers.
(a) OCA agrees that all rights to indemnification and exculpation from
liabilities for acts or omissions (including advancement of expenses, if so
provided) occurring prior to the Effective Time now existing in favor of the
current or former directors or officers of OrthAlliance and its Subsidiaries
(collectively, the "Indemnified Parties") as provided by OrthAlliance or its
Subsidiaries in their respective certificates or articles of incorporation and
bylaws shall survive the Merger and shall continue in full force and effect in
accordance with their terms for a period of six years from and after the
Effective Time and the obligations of OrthAlliance and its Subsidiaries in
connection therewith shall be assumed by OCA.
(b) OCA shall cause each person serving as a director or officer of
OrthAlliance immediately prior to the Effective Time to be covered for a period
of six years from the Effective Time by the directors' and officers' liability
insurance policy maintained by OrthAlliance (provided that OCA may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy) with respect to
acts or omissions occurring prior to the Effective Time which were committed by
such officers and directors in their capacity as such; provided, however, that
in no event shall OCA be required to expend on an annual basis more than 200% of
the current amount expended by OrthAlliance (the "Insurance Amount") to maintain
or procure insurance coverage, and further provided that if OCA is unable to
maintain or obtain the insurance called for by this Section 6.9, OCA shall use
all reasonable efforts to obtain as much comparable insurance as is available
for the Insurance Amount.
(c) In the event OCA or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, to the extent necessary,
proper provision
40
45
shall be made so that the successors and assigns of OCA assume the obligations
set forth in this section.
(d) The provisions of this Section 6.9 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
6.10. Public Statements. OCA and OrthAlliance will consult with each other and
will mutually agree on any press releases or public announcements pertaining to
this Agreement or the transactions contemplated hereby and will not issue any
such press releases or make any such public announcements prior to such
consultation and agreement, except as may be required by applicable securities
or other Laws or by obligations pursuant to any applicable listing agreement or
standard with or of the NYSE or the Nasdaq Stock Market, as applicable, in which
case the party proposing to issue such press release or make such public
announcement will use its commercially reasonable best efforts to consult in
good faith with the other party before issuing any such press releases or making
any such public announcements.
6.11. Expenses and Fees. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including legal, accounting
and financial advisory fees and expenses, will be paid by the party incurring
such costs and expenses, except that expenses and fees incurred in connection
with the printing and filing of the Registration Statement and the Proxy
Statement and with filings under the HSR Act (other than legal, accounting,
investment banking and financial advisory fees and expenses, which shall be paid
by the party incurring such fees and expenses) will be shared equally by OCA and
OrthAlliance. The foregoing shall not affect the legal right, if any, that any
party hereto may have to recover expenses from any other party that breaches its
obligations hereunder.
6.12. Notification. Each of OrthAlliance and OCA agree to (a) give prompt notice
to the other party, and to use their respective reasonable best efforts to
prevent or promptly remedy, (i) upon such party obtaining knowledge thereof, the
occurrence or failure to occur, or the impending or threatened occurrence or
failure to occur, of any event whose occurrence or failure to occur would be
likely to cause any of its representations or warranties in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Effective Time, and (ii) any material failure on its part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder and (b) give prompt notice to the other party of any fact which, if
known by it on the date hereof, would have been required to be set forth or
disclosed by it pursuant to this Agreement.
6.13. Additional Agreements. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such necessary action
as may be reasonably requested by OCA.
6.14. Reasonable Best Efforts, Cooperation.
(a) Subject to the terms and conditions of this Agreement, each of OCA
and OrthAlliance agrees to use its respective reasonable best efforts in good
faith to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or
41
46
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
(b) Without limitation of the foregoing, each party hereto undertakes
and agrees to:
(i) File as soon as practicable after the date hereof a
Notification and Report Form and related material under the HSR Act
with the FTC and the Antitrust Division. Each party hereto shall use
their reasonable best efforts to obtain an early termination of the
applicable waiting period, shall make any further filings or
information submissions pursuant thereto that may be necessary, proper
or advisable, and shall (A) use its commercially reasonable efforts to
comply as expeditiously as possible with all lawful requests of the FTC
or the Antitrust Division for additional information and documents and
(B) not extend any waiting period under the HSR Act or enter into any
agreement with the FTC or the Antitrust Division not to consummate the
transactions contemplated by this Agreement, except with the prior
written consent of the other parties hereto;
(ii) Take all action necessary to ensure that no Takeover Law
or similar statute or regulation is or becomes applicable to the
Merger, this Agreement or any of the other transactions contemplated
hereby and if any Takeover Law or similar statute or regulation becomes
applicable to the Merger, this Agreement or any of the other
transactions contemplated hereby, take all action necessary to ensure
that the Merger and the other transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated by
this Agreement and otherwise to minimize the effect of such statute or
regulation on the Merger and the other transactions contemplated by
this Agreement;
(iii) Use its reasonable best efforts to cause the Merger to
qualify as a reorganization under the provisions of Section 368(a) of
the Code and to forebear from taking any action that would cause the
Merger not to qualify as a reorganization under the provisions of
Section 368(a) of the Code;
(iv) Promptly following the execution and delivery of this
Agreement, prepare and use reasonable efforts to obtain Amendments to
OrthAlliance Affiliated Professional Employment Agreements and
Amendments to OrthAlliance Service and Consulting Agreements from the
OrthAlliance Affiliated Professionals and OrthAlliance Affiliated PCs,
and cooperate with each other in connection therewith; and
(v) Cooperate with each other in obtaining opinions of OCA's
Counsel and OrthAlliance's Counsel, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Code, and, in connection therewith, deliver to such counsel customary
representation letters in form and substance reasonably satisfactory to
such counsel.
6.15. OrthAlliance Credit Agreement. At the Effective Time, OCA, on behalf of
OrthAlliance, shall repay in full all borrowings, accrued interest and other
amounts then owing under the OrthAlliance Credit Agreement, and agree to the
termination of the commitments of the lenders under the OrthAlliance Credit
Agreement, unless such lenders otherwise agree in writing and, at
42
47
or before the Effective Time, provide the requisite consent under the
OrthAlliance Credit Agreement to consummation by OrthAlliance of the
transactions contemplated hereby.
6.16. OCA Board of Directors. Promptly upon the Effective Time, OCA's Board of
Directors shall increase the size of OCA's Board of Directors to create a
vacancy on such Board, and one individual who is serving as a director of
OrthAlliance as of the date hereof and the Closing Date, and who is selected by
the mutual agreement of the respective Boards of Directors of OCA and
OrthAlliance prior to the Effective Time, shall be appointed to fill such
vacancy as a director of OCA, to hold office in accordance with the certificate
of incorporation and bylaws of OCA.
ARTICLE VII. CONDITIONS TO CLOSING
7.1. Conditions to Each Party's Obligation To Effect the Merger. The respective
obligation of each of the parties hereto to effect the Merger shall be subject
to the satisfaction, or the waiver by such party, at or prior to the Effective
Time, of the following conditions:
(a) Stockholder Approval. This Agreement shall have been duly approved
and adopted by the requisite vote of the stockholders of OrthAlliance under
applicable law.
(b) Listing of Shares. The shares of OCA Common Stock which shall be
issued to the stockholders of OrthAlliance upon consummation of the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
(c) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(d) HSR Approval. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
(e) Approvals. All consents, approvals, orders or authorizations of or
registrations, declarations or filings with any Governmental Authority, which
the failure to obtain, make or occur has or would reasonably be expected to have
the effect of making the Merger or any of the transactions contemplated hereby
illegal or to have an OrthAlliance Material Adverse Effect or an OCA Material
Adverse Effect, as the case may be, shall have been obtained, shall have been
made or shall have occurred, and shall be in full force and effect.
(f) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Authority
which prohibits, restricts or makes illegal consummation of the Merger.
7.2. Conditions to Obligations of OCA. The obligation of OCA to effect the
Merger is also subject to the satisfaction, or waiver by OCA, at or prior to the
Effective Time, of the following conditions:
43
48
(a) Representations and Warranties of OrthAlliance. Each of the
representations and warranties of OrthAlliance contained in this Agreement (i)
that are qualified by materiality, including the terms "material," "in any
material respects," "in all material respects" and "OrthAlliance Material
Adverse Effect" or words of similar effect, shall be true and correct in all
respects when made and as of the Closing, with the same effect as though such
representations and warranties had been made on and as of the Closing, and (ii)
that are not so qualified by materiality, shall be true and correct in all
material respects when made and as of the Closing, with the same effect as
though such representations and warranties had been made on and as of the
Closing. OCA shall have received a certificate signed on behalf of OrthAlliance
by the Chief Executive Officer and the Chief Financial Officer of OrthAlliance
to the foregoing effect.
(b) Performance of Obligations of OrthAlliance. OrthAlliance shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and OCA shall have
received a certificate signed on behalf of OrthAlliance by the Chief Executive
Officer and the Chief Financial Officer of OrthAlliance to such effect.
(c) Federal Tax Opinion. OCA shall have received an opinion from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, PLLC, counsel to OCA ("OCA's Counsel"), dated the
Effective Time, in form and substance reasonably satisfactory to OCA,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code and that OCA and
OrthAlliance will each be a party to that reorganization. In rendering such
opinion, OCA's Counsel may require and rely upon representations and covenants,
including those contained in certificates of officers of OCA, OrthAlliance and
others, reasonably satisfactory in form and substance to such counsel.
(d) No Material Adverse Change. Since the date of this Agreement, there
shall not have occurred any OrthAlliance Material Adverse Effect. OCA shall have
received a certificate signed on behalf of OrthAlliance by the Chief Executive
Officer and the Chief Financial Officer of OrthAlliance to that effect.
(e) Amendments. Each of at least the 30% Level of OrthAlliance
Affiliated Practice Owners and OrthAlliance Affiliated PCs shall have duly
executed and delivered to OrthAlliance (with a complete and accurate copy
provided to OCA) an (i) Amendment to OrthAlliance Affiliated Professional
Employment Agreement, with respect to their applicable OrthAlliance Affiliated
Professional Employment Agreement, and (ii) Amendment to OrthAlliance Service
and Consulting Agreement, with respect to their applicable OrthAlliance Service
and Consulting Agreement.
For purposes of this Agreement, "30% Level of OrthAlliance Affiliated
Practice Owners and OrthAlliance Affiliated PCs" shall mean (A) 56 of the
OrthAlliance Affiliated Practice Owners (but not including any Practice
Improvement Performance Guarantee Professionals), and (B) such number of
OrthAlliance Affiliated Practice Owners (but not including any Practice
Improvement Performance Guarantee Professionals) with respect to which is
attributable 30.00% to 30.99% (rounded to the nearest one-hundredth of a
percent) of the OrthAlliance Annual Service Fees, and (C) each of the
OrthAlliance Affiliated PCs employing such OrthAlliance Affiliated Practice
Owners referenced in clauses (A) and (B).
44
49
7.3. Conditions to Obligations of OrthAlliance. The obligation of OrthAlliance
to effect the Merger is also subject to the satisfaction, or waiver by
OrthAlliance, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of OCA contained in this Agreement (i) that are qualified by
materiality, including the terms "material," "in any material respects," "in all
material respects" and "OCA Material Adverse Effect" or words of similar effect,
shall be true and correct in all respects when made and as of the Closing, with
the same effect as though such representations and warranties had been made on
and as of the Closing, and (ii) that are not so qualified by materiality, shall
be true and correct in all material respects when made and as of the Closing,
with the same effect as though such representations and warranties had been made
on and as of the Closing. OrthAlliance shall have received a certificate signed
on behalf of OCA by the Chief Executive Officer and the Chief Financial Officer
of OCA to the foregoing effect.
(b) Performance of Obligations of OCA. OCA shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and OrthAlliance shall have received
a certificate signed on behalf of OCA by the Chief Executive Officer and the
Chief Financial Officer of OCA to such effect.
(c) Federal Tax Opinion. OrthAlliance shall have received an opinion
from ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP ("OrthAlliance's Counsel"), or other counsel
reasonably satisfactory to OrthAlliance, in form and substance reasonably
satisfactory to OrthAlliance, dated the Effective Time, substantially to the
effect that, on the basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing at the
Effective Time, the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code and that OCA and OrthAlliance will each be
a party to that reorganization. In rendering such opinion, OrthAlliance's
Counsel may require and rely upon representations and covenants, including those
contained in certificates of officers of OCA, OrthAlliance and others,
reasonably satisfactory in form and substance to such counsel. OCA and
OrthAlliance will cooperate with each other and OrthAlliance's Counsel in
executing and delivering to OrthAlliance's Counsel customary representations
letters in connection with such opinion.
(d) No Material Adverse Change. Since the date of this Agreement, there
shall not have occurred any OCA Material Adverse Effect. OrthAlliance shall have
received a certificate signed on behalf of OCA by the Chief Executive Officer
and the Chief Financial Officer of OCA to that effect.
ARTICLE VIII. AMENDMENT; TERMINATION.
8.1. Amendment. This Agreement may be amended only by a written instrument
signed on behalf of each of OrthAlliance, OCA and OCA Merger Sub at any time
prior to the Effective Time and before or after approval hereof by the
stockholders of OrthAlliance.
8.2. Termination. This Agreement may be terminated as follows:
(a) By mutual written agreement of OrthAlliance and OCA prior to the
Effective Time;
45
50
(b) by either OCA or OrthAlliance, upon written notice (signed on
behalf of such party by its duly authorized officer) thereof to the other party:
(i) if the Merger shall not have been consummated by November
30, 2001; provided, however, that the right to terminate this Agreement
pursuant to this Section 8.2(b)(i) shall not be available to any party
whose actions or failure to perform any of its obligations under this
Agreement results in the failure of the Merger to be consummated by
such time; or
(ii) if approval by the stockholders of OrthAlliance required
for the consummation of the Merger shall not have been obtained by
reason of the failure to obtain the required vote at a duly held
meeting of such stockholders or at any adjournment or postponement
thereof; provided, however, that that the right to terminate this
Agreement pursuant to this Section 8.2(b)(ii) shall not be available to
OrthAlliance if it is in material breach of its obligations under
Section 6.6;
(c) By OCA, upon written notice (signed on behalf of OCA by its duly
authorized officer) thereof to OrthAlliance, in the event that OrthAlliance
shall have breached, or failed to perform, in any material respects (without
giving effect to any qualification contained therein as to materiality,
including the terms "material," "in any material respects," "in all material
respects" and "OrthAlliance Material Adverse Effect"), any of OrthAlliance's
representations, warranties, covenants or other agreements set forth in this
Agreement, and such breach or failure to perform is either incapable, by its
nature, of being cured or is not cured within 30 calendar days following the
giving of written notice thereof to OrthAlliance;
(d) By OrthAlliance, upon written notice (signed on behalf of
OrthAlliance by its duly authorized officer) thereof to OCA, in the event that
OCA shall have breached, or failed to perform, in any material respects (without
giving effect to any qualification contained therein as to materiality,
including the terms "material," "in any material respects," "in all material
respects" and "OCA Material Adverse Effect"), any of OCA's representations,
warranties, covenants or other agreements set forth in this Agreement, and such
breach or failure to perform is either incapable, by its nature, of being cured
or is not cured within 30 calendar days following the giving of written notice
thereof to OCA;
(e) By OCA, upon written notice (signed on behalf of OCA by its duly
authorized officer) thereof to OrthAlliance, if OrthAlliance's Board of
Directors shall (i) have failed to recommend in the Proxy Statement that
OrthAlliance's stockholders approve and adopt this Agreement, or (ii) withdraw,
modify in a manner adverse to OCA, or discloses its intention to so withdraw or
modify, its approval or recommendation of this Agreement and the transactions
contemplated in this Agreement, or (iii) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal;
(f) By OCA, upon written notice (signed on behalf of OCA by its duly
authorized officer) thereof to OrthAlliance, if OrthAlliance's Board of
Directors exercises the rights provided in clause (i) or clause (ii) of the
proviso set forth in Section 6.4(b), or if OrthAlliance accepts another
Acquisition Proposal, or enters into an agreement or letter of intent with
respect to another Acquisition Proposal;
46
51
(g) By OrthAlliance, upon written notice (signed on behalf of
OrthAlliance by its duly authorized officer) thereof to OCA, if OrthAlliance's
Board of Directors exercises the right provided in clause (ii) of the proviso
set forth in Section 6.4(b);
(h) By OCA, upon written notice (signed on behalf of OCA by its duly
authorized officer) thereof to OrthAlliance, if any of the conditions set forth
in Sections 7.1 and 7.2 shall have become incapable of fulfillment or cure
(unless due to the action or inaction of OCA) and shall not have been waived by
OCA; and
(i) By OrthAlliance, upon written notice (signed on behalf of
OrthAlliance by its duly authorized officer) thereof to OCA, if any of the
conditions set forth in Sections 7.1 and 7.3 shall have become incapable of
fulfillment or cure (unless due to the action or inaction of OrthAlliance) and
shall not have been waived by OrthAlliance.
8.3. Effect of Termination. This Agreement will thereafter become void and have
no further force and effect and all further obligations of OrthAlliance, OCA and
OCA Merger Sub to each other under this Agreement will terminate without further
obligation or liability on the part of OrthAlliance, OCA or OCA Merger Sub to
the other, except for Sections 6.3(b) and 6.12, this Section 8.3, Sections 8.4
and 8.5 and Article IX, which shall survive termination; provided, however, that
such termination shall not prejudice any rights and remedies of a party hereto
against another party hereto with respect to breach of such other party's
representations, warranties, covenants, agreements and obligations under this
Agreement or otherwise.
8.4. Break-Up Fee and Expense Reimbursement to OCA. In the event that this
Agreement is terminated (a) pursuant to Sections 8.2(e), 8.2(f) or 8.2(g), or
(b) pursuant to Section 8.2(b) and (i) at any time after the date of this
Agreement and before such termination, an Acquisition Proposal shall have been
publicly announced or otherwise communicated to the stockholders of OrthAlliance
and shall not have been publicly withdrawn or rescinded, and (ii) OrthAlliance
or its Subsidiary enters into a definitive merger, acquisition, purchase, option
or other agreement with respect to an Acquisition Proposal within the 12 months
immediately following such termination, then, with respect to (a), on the
Business Day immediately following the date of such termination, and, with
respect to (b), on the Business Day immediately following the date that
OrthAlliance or its Subsidiary enters into such definitive merger, acquisition,
purchase, option or other agreement with respect to an Acquisition Proposal,
OrthAlliance shall: (A) reimburse OCA in immediately available funds for all of
OCA's reasonable out-of-pocket costs and expenses (including, without
limitation, filing fees and legal, accounting and financial advisory fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated herein, including due diligence, negotiation, preparation,
execution and delivery of this Agreement, the Registration Statement and all
other documents or actions contemplated hereby or related to this Agreement, the
transactions contemplated hereby and any related financing, in an aggregate
amount not to exceed $500,000, and (B) in addition, pay to OCA $4,000,000 in
cash by wire transfer of immediately available funds to an account designated by
OCA.
8.5. Break-Up Fee to OrthAlliance and OCA's Non-Solicitation of OrthAlliance
Affiliated Professionals. In the event that this Agreement is terminated by OCA
solely as a result of the condition set forth in Section 7.2(e) failing to be
satisfied at or before the Effective Time, then:
47
52
(a) On the Business Day immediately following the date of such
termination, OCA shall remit to OrthAlliance $1,000,000 in cash by wire transfer
of immediately available funds to an account designated by OrthAlliance, and
(b) For a period of two years following the date of such termination,
OCA shall not (directly or through its Subsidiaries, directors, officers and
Representatives), and OCA shall cause its Subsidiaries, directors and officers
not to, solicit or induce any individual or professional entity that is an
OrthAlliance Affiliated Practice Owner or OrthAlliance Affiliated PC as of the
date hereof to terminate his, her or its applicable OrthAlliance Service or
Consulting Agreement or OrthAlliance Affiliated Professional Employment
Agreement (provided, however, that the parties acknowledge that OCA and its
Subsidiaries do not control the orthodontists, professional entities and other
dental professionals for whose practices OCA and its Subsidiaries provide
business and consulting services, and, accordingly, such restriction shall not
apply to the employment or independent contracting of any such OrthAlliance
Affiliated Practice Owner by a professional entity or individual, other than any
such OrthAlliance Affiliated Practice Owner or OrthAlliance Affiliated PC, that
is a party to a business services agreement, management services agreement,
consulting agreement or other agreement comparable to the OrthAlliance Service
and Consulting Agreements with OCA or a Subsidiary thereof, if OCA and its
Subsidiaries did not solicit or induce such employment or independent
contracting of such OrthAlliance Affiliated Practice Owner).
8.6. Waiver. At any time prior to the Effective Time, the parties hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant thereto and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver will
be valid if set forth in an instrument in writing signed on behalf of that
party. The failure of a party to assert any of its rights hereunder or otherwise
shall not constitute a waiver of such right or rights.
ARTICLE IX. GENERAL.
9.1. Non-Survival of Representations and Warranties. None of the representations
and warranties contained in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive beyond the Effective Time.
9.2. Notices. All notices, claims, demands and other communications hereunder
shall be in writing and shall be deemed given upon (i) confirmation of receipt
of a facsimile transmission, (ii) confirmed delivery by a standard overnight
carrier or when delivered by hand, or (iii) the expiration of three Business
Days after the day when mailed by registered or certified mail (postage prepaid,
return receipt requested), in each case addressed to the respective parties at
the following addresses (or such other address for a party as shall be specified
by like notice):
(a) If to OCA or OCA Merger
Sub, to: Orthodontic Centers of America, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇.
48
53
with a copy (which
shall not constitute
notice) to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, PLLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) If to OrthAlliance, to: OrthAlliance, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy (which
shall not constitute
notice) to: ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
And
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
9.3. Entire Agreement. This Agreement (including the schedules and exhibits
thereto, and the other documents and instruments referred to herein, including
the Confidentiality Agreement) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, among the
parties or any of them, with respect to the subject matter hereof, including any
transaction between or among the parties hereto. No representation, promise,
inducement or statement of intention has been made by OrthAlliance, OCA or OCA
Merger Sub that is not embodied in this Agreement or the other agreements
referred to herein and entered into in connection herewith, the schedules or
exhibits hereto, or the written statements, certificates or other documents
delivered pursuant hereto.
9.4. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the
principles of conflict of laws thereof or of any other jurisdiction. If legal
action is commenced to enforce this Agreement, the prevailing party in such
action shall be entitled to recover its costs and reasonable attorneys' fees in
addition to any other relief granted.
49
54
9.5. Counterparts; Effectiveness. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement. This Agreement shall become
effective when each party hereto shall have received counterparts thereof signed
by all the other parties hereto.
9.6. Assignment; Successors and Assigns; Parties In Interest. No party hereto
shall assign this Agreement, or its right or duties hereunder, by operation of
law or otherwise, without first obtaining the written consent of the other
parties hereto, except that OCA Merger Sub may assign this Agreement and its
rights and obligations hereunder to another wholly-owned Subsidiary of OCA.
Subject to the foregoing provisions, all of the rights, benefits, duties,
liabilities and obligations of the parties hereto shall inure to the benefit of
and be binding upon the parties and their respective successors and assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
other person any rights or remedies hereunder.
9.7. Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
9.8. Enforcement of Agreement. The parties hereto agree that irreparable damage
would occur in the event that the provisions contained in this Agreement were
not performed in accordance with its specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions thereof in any court of the United States or any state
having jurisdiction, without having to post bond therefor or prove actual
damages, this being in addition to any other remedy to which they are entitled
at law or in equity.
9.9. Remedies Cumulative. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise or beginning of the exercise of
any thereof by any party shall not preclude the simultaneous or later exercise
of any other such right, power or remedy by such party.
ARTICLE X. DEFINITIONS.
As used herein, the following terms shall have the following meanings
ascribed thereto (with terms defined in the plural having comparable meaning
when used in the singular, and likewise with respect to terms defined in the
singular):
"Acquisition Proposal" shall have the meaning set forth in Section 6.4.
"Affiliate" means, with respect to any Person, any other Person which, directly
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, such Person.
"Agreement" means this Agreement and Plan of Merger.
50
55
"Amendment to OrthAlliance Affiliated Professional Employment Agreement" shall
have the meaning set forth in Section 2.4.
"Amendment to OrthAlliance Service and Consulting Agreement" shall have the
meaning set forth in Section 2.4.
"Anti-Dilution Event" shall have the meaning set forth in Section 2.5.
"Antitrust Division" shall have the meaning set forth in Section 4.3.
"Applicable Exchange Ratio" shall have the meaning set forth in Section 2.4.
"Balance Sheet" shall have the meaning set forth in Section 4.12.
"Business Day" means a day of the year on which banks are not authorized to be
closed in the City of New Orleans, Louisiana.
"Certificate" shall have the meaning set forth in Section 2.4.
"Certificate of Merger" shall have the meaning set forth in Section 2.2.
"Closing" shall have the meaning set forth in Section 2.16.
"Closing Date" shall have the meaning set forth in Section 2.16.
"Closing Price" shall have the meaning set forth in Section 2.6.
"Code" shall have the meaning set forth in the third recital to this Agreement.
"Confidentiality Agreement" shall have the meaning set forth in Section 6.3.
"control" of a Person means the possession, directly or indirectly, of the power
to direct or cause the direction of the management policies of a person, whether
through the ownership of voting securities, by contract, as trustee or executor
or otherwise.
"Delaware Secretary" shall have the meaning set forth in Section 2.2.
"DGCL" shall have the meaning set forth in Section 2.1.
"Effective Time" shall have the meaning set forth in Section 2.2.
"Encumbrances" shall mean any liens, claims, charges, encumbrances, mortgages,
pledges, security interests and other interests.
"Environmental Claims" shall have the meaning set forth in Section 4.21.
"Environmental Laws" shall have the meaning set forth in Section 4.21.
"ERISA" has the meaning set forth in Section 4.20.
"Escheat Law" shall have the meaning set forth in Section 3.6.
51
56
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" shall have the meaning set forth in Section 3.1.
"Exchange Fund" shall have the meaning set forth in Section 3.1.
"FTC" shall have the meaning set forth in Section 4.3.
"GAAP" means generally accepted accounting principles in effect in the United
States consistently applied.
"Governmental Authority" shall have the meaning set forth in Section 4.3.
"Governmental Licenses" shall have the meaning set forth in Section 4.11.
"HSR Act" shall have the meaning set forth in Section 4.3.
"Indemnified Parties" shall have the meaning set forth in Section 6.9.
"Insurance Amount" shall have the meaning set forth in Section 6.9.
"IRS" means the United States Internal Revenue Service.
"knowledge" means, with respect to an individual, such individual is actually
aware of the particular fact, matter, circumstance or other item, or a prudent
individual could be expected to discover or otherwise become aware of such fact,
matter, circumstance or other item in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter; and, with respect to any other Person (other than an individual), any
individual who is serving as a director, officer, partner, executor or trustee
of such Person (or in any similar capacity) has knowledge of such fact, matter,
circumstance or other item.
"Laws" shall have the meaning set forth in Section 4.10.
"Leases" shall have the meaning set forth in Section 4.17.
"Merger" shall have the meaning set forth in the second recital to this
Agreement.
"NYSE" shall have the meaning set forth in Section 2.6.
"ordinary course of business" means, with respect to any particular Person: (a)
an action is consistent with the past practices of such Person and is taken in
the ordinary course of the normal day-to-day operations of such Person; (b) such
action is not required to be authorized by the board of directors of such Person
(or by any Person or group of Persons exercising similar authority) and is not
required to be specifically authorized by the parent company (if any) of such
Person; and (c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"OCA" shall have the meaning set forth in the preamble to this Agreement.
52
57
"OCA Common Stock" shall have the meaning set forth in Section 2.4.
"OCA Credit Agreement" shall mean that certain Credit Agreement, dated as of
October 8, 1998, among OCA, First Union National Bank, as agent for the lenders,
Bank of America FSB, as documentation agent, Citibank, N.A., as syndication
agent, and certain lenders named therein.
"OCA Disclosure Schedule" shall have the meaning set forth in preamble of
Article V.
"OCA Documents" shall have the meaning set forth in Section 5.2.
"OCA Financial Statements" shall have the meaning set forth in Section 5.6.
"OCA Material Adverse Effect" means any event, change, occurrence, effect, fact
or circumstance having, or would reasonably be expected to have, individually or
in the aggregate with other events, changes, occurrences, effects, facts or
circumstances, a material adverse effect on (i) the ability of OCA to perform
its obligations under this Agreement or to consummate the transactions
contemplated hereby, or (ii) the business, properties, assets, liabilities,
prospects, results of operations or condition (financial or otherwise) of OCA
and its Subsidiaries (taken as a whole), other than events, changes,
occurrences, effects, facts or circumstances affecting the orthodontic practice
management industry in general, and not specifically relating to OCA or its
Subsidiaries, and other than events, changes, occurrences, effects, facts or
circumstances resulting from this Agreement, the transactions contemplated
hereby or the announcement thereof; provided, however, that any increase or
decrease in the trading price of OCA Common Stock shall not be considered an OCA
Material Adverse Effect nor create any presumption that an OCA Material Adverse
Effect has occurred or will occur.
"OCA Merger Sub" shall have the meaning set forth in the preamble to this
Agreement.
"OCA Merger Sub Common Stock" shall have the meaning set forth in Section 2.11.
"OCA Preferred Stock" shall have the meaning set forth in Section 5.5.
"OCA SEC Reports" shall have the meaning set forth in Section 5.6.
"OCA's Counsel" shall have the meaning set forth in Section 6.3.
"OCA 2000 Financial Statements" means OCA's audited consolidated financial
statements for the year ended, and as of, December 31, 2000, included in OCA's
Annual Report on Form 10-K for the year ended December 31, 2000, as amended, as
filed with the SEC.
"OrthAlliance" shall have the meaning set forth in the preamble to this
Agreement.
"OrthAlliance Affiliated Orthodontists" means orthodontists who are parties to
OrthAlliance Service and Consulting Agreements or otherwise provide, as
employees and/or equity owners of OrthAlliance Affiliated PCs, orthodontic
services through orthodontic practices managed by OrthAlliance or its
Subsidiaries or with respect to which OrthAlliance or its Subsidiaries provide
consulting services pursuant to the OrthAlliance Service and Consulting
Agreements.
"OrthAlliance Affiliated Pediatric Dentists" means pedodontists who are parties
to OrthAlliance Service and Consulting Agreements or otherwise provide, as
employees and/or equity owners of
53
58
OrthAlliance Affiliated PCs, pedodontic services through pedodontic practices
managed by OrthAlliance or its Subsidiaries or with respect to which
OrthAlliance or its Subsidiaries provide consulting services pursuant to the
OrthAlliance Service and Consulting Agreements.
"OrthAlliance Affiliated Professional Employment Agreement" shall mean an
employment agreement pursuant to which an OrthAlliance Affiliated PC employs an
OrthAlliance Affiliated Professional to provide orthodontic or pedodontic
services, as applicable, for the OrthAlliance Affiliated Practice to which the
relevant OrthAlliance Service and Consulting Agreement pertains.
"OrthAlliance Affiliated PC" shall mean a professional corporation or other
professional entity which is a party to an OrthAlliance Service and Consulting
Agreement.
"OrthAlliance Affiliated Practice" shall mean an orthodontic or pedodontic
practice that is owned by an OrthAlliance Affiliated PC or OrthAlliance
Affiliated Professional or otherwise the subject of an OrthAlliance Service and
Consulting Agreement.
"OrthAlliance Affiliated Practice Owner" shall have the meaning set forth in
Section 2.4.
"OrthAlliance Affiliated Professionals" means OrthAlliance Affiliated
Orthodontists and OrthAlliance Affiliated Pediatric Dentists.
"OrthAlliance Annual Service Fees" shall have the meaning set forth in Section
2.4.
"OrthAlliance Benefit Plans" shall have the meaning set forth in Section 4.20.
"OrthAlliance Class A Common Stock" shall have the meaning set forth in Section
2.4.
"OrthAlliance Class B Common Stock" shall have the meaning set forth in Section
2.4.
"OrthAlliance Common Stock" shall have the meaning set forth in Section 2.4.
"OrthAlliance Contracts" shall have the meaning set forth in Section 4.14.
"OrthAlliance's Counsel" shall have the meaning set forth in Section 7.3.
"OrthAlliance Credit Agreement" shall mean that certain Credit Agreement, dated
as of March 26, 1999, among OrthAlliance, First Union National Bank, as agent
for the lenders, and certain lenders named therein.
"OrthAlliance Disclosure Schedule" shall have the meaning set forth in preamble
of Article IV.
"OrthAlliance Dissenting Shares" shall have the meaning set forth in Section
2.8.
"OrthAlliance Documents" shall have the meaning set forth in Section 4.2.
"OrthAlliance Financial Statements" shall have the meaning set forth in Section
4.6.
"OrthAlliance Material Adverse Effect" means any event, change, occurrence,
effect, fact or circumstance having, or would reasonably be expected to have,
individually or in the aggregate
54
59
with other events, changes, occurrences, effects, facts or circumstances, a
material adverse effect on (i) the ability of OrthAlliance to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby, or (ii) the business, properties, assets, liabilities, prospects,
results of operations or condition (financial or otherwise) of OrthAlliance and
its Subsidiaries (taken as a whole), other than events, changes, occurrences,
effects, facts or circumstances affecting the orthodontic practice management
industry in general, and not specifically relating to OrthAlliance or its
Subsidiaries, and other than events, changes, occurrences, effects, facts or
circumstances resulting from this Agreement, the transactions contemplated
hereby or the announcement thereof; provided, however, that any increase or
decrease in the trading price of OrthAlliance Common Stock shall that any
increase or decrease in the trading price of OrthAlliance Common Stock shall not
be considered an OrthAlliance Material Adverse Effect nor create any presumption
that an OrthAlliance Material Adverse Effect has occurred or will occur.
"OrthAlliance Material Contracts" shall have the meaning set forth in Section
4.16.
"OrthAlliance Option Plans" shall have the meaning set forth in Section 4.5.
"OrthAlliance Options" shall have the meaning set forth in Section 2.9.
"OrthAlliance Plan Options" shall have the meaning set forth in Section 4.5.
"OrthAlliance Preferred Stock" shall have the meaning set forth in Section 4.5.
"OrthAlliance Service and Consulting Agreements" shall mean service agreements,
consulting agreements, management service agreements and similar agreements
pursuant to which OrthAlliance or its Subsidiaries manage or provide consulting
services for the orthodontic and pediatric dental practices of the OrthAlliance
Affiliated PCs and OrthAlliance Affiliated Professionals.
"OrthAlliance SEC Reports" shall have the meaning set forth in Section 4.6.
"OrthAlliance Stockholders' Meeting" shall have the meaning set forth in Section
4.3.
"OrthAlliance Warrants" shall have the meaning set forth in Section 4.5.
"OrthAlliance 1997 Employee Plan" shall have the meaning set forth in Section
4.5.
"OrthAlliance 1997 Director Plan" shall have the meaning set forth in Section
4.5.
"OrthAlliance 1997 Orthodontist Plan" shall have the meaning set forth in
Section 4.5.
"OrthAlliance 1999 Orthodontist Plan" shall have the meaning set forth in
Section 4.5.
"OrthAlliance 2000 Employee Plan" shall have the meaning set forth in Section
4.5.
"OrthAlliance 2000 Financial Statements" means OrthAlliance's audited
consolidated financial statements for the year ended, and as of, December 31,
2000, included in OrthAlliance's Annual Report on Form 10-K for the year ended
December 31, 2000 as filed with the SEC.
55
60
"Pashley Agreement" shall mean the Management Service Agreement, dated July 1,
1998, between Pashley Dental Corporation and New Image Orthodontic Group, Inc.
"Person(s)" means any individual, corporation, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental or regulatory body or other entity.
"Practice Improvement Performance Guarantee Agreement" shall mean any practice
improvement performance guarantee agreement or comparable agreement between an
OrthAlliance Affiliated Professional or OrthAlliance Affiliated PC and
OrthAlliance or a Subsidiary thereof, pursuant to which service or consulting
fees payable under an OrthAlliance Service or Consulting Agreement may be abated
based upon profitability of the applicable OrthAlliance Affiliated Practice and
the value of consideration paid to such OrthAlliance Affiliated Professional
and/or OrthAlliance Affiliated PC upon OrthAlliance's or its Subsidiary's
acquisition of stock or assets from, or entering into an OrthAlliance Service
and Consulting Agreement with, such Person.
"Practice Improvement Performance Guarantee Professionals" shall mean any
OrthAlliance Affiliated Professional who is a party, or employed by an
OrthAlliance Affiliated PC that is a party, to a Practice Improvement
Performance Guarantee Agreement with OrthAlliance or a Subsidiary thereof.
"Proxy Statement" shall have the meaning set forth in Section 4.3.
"Receivables" shall have the meaning set forth in Section 4.14.
"Registration Statement" shall have the meaning set forth in Section 4.3.
"Representative" shall have the meaning set forth in Section 6.3.
"SEC" shall have the meaning set forth in Section 4.3.
"Securities Act" means the Securities Act of 1933.
"Subsidiary" of any Person means any other Person of which such Person (either
alone or through or together with any other Subsidiary): (i) owns, directly or
indirectly, more than 50% of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such other Person, (ii) is a general partner, trustee
or other entity performing similar functions or (iii) has control.
"Superior Proposal" shall have the meaning set forth in Section 6.4.
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
"Takeover Laws" shall have the meaning set forth in Section 4.26.
"Taxes" means all taxes, assessments, charges, duties, fees, levies or other
governmental charges including, without limitation, all Federal, state, local,
foreign and other income, franchise, profits, capital gains, capital stock,
transfer, sales, use, occupation, property, excise, severance, windfall profits,
stamp, license, payroll, withholding and other taxes, assessments, charges,
56
61
duties, fees, levies or other governmental charges of any kind whatsoever
(whether payable directly or by withholding and whether or not requiring the
filing of a Return), all estimated taxes, deficiency assessments, additions to
tax, penalties and interest and shall include any liability for such amounts as
a result either of being a member of a combined, consolidated, unitary or
affiliated group or of a contractual obligation to indemnify any person or other
entity.
"Tax Returns" means any return, report, rendition or other document or
information required to be supplied to a taxing authority in connection with the
Taxes.
"Tringis Agreement" shall mean the Management Service Agreement, dated August 1,
1999, between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.M.D., M.S., P.A. and New Image Orthodontic
Group, Inc.
"Voting Arrangements" shall have the meaning set forth in Section 4.5.
"▇▇▇▇▇▇▇ Agreement" shall mean the Consulting and Business Services Agreement,
dated January 5, 2001, between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S., M.S.D., P.C. and
OrthAlliance.
"30% Level of OrthAlliance Affiliated Practice Owners and OrthAlliance
Affiliated PCs" shall have the meaning set forth in Section 7.2(e).
"31% to 40% Level of OrthAlliance Affiliated Practice Owners and OrthAlliance
Affiliated PCs" shall have the meaning set forth in Section 2.4.
"41% to 50% Level of OrthAlliance Affiliated Practice Owners and OrthAlliance
Affiliated PCs" shall have the meaning set forth in Section 2.4.
"51% to 60% Level of OrthAlliance Affiliated Practice Owners and OrthAlliance
Affiliated PCs" shall have the meaning set forth in Section 2.4.
"61% and Greater Level of OrthAlliance Affiliated Practice Owners and
OrthAlliance Affiliated PCs" shall have the meaning set forth in Section 2.4.
[SIGNATURE PAGE IS THE NEXT PAGE]
57
62
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
ORTHODONTIC CENTERS OF AMERICA, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
OCA ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President
ORTHALLIANCE, INC.
By: /s/ W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
President, Chief Executive Officer and
Chairman of the Board
58