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EXHIBIT 2.6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is entered into
on the 19th day of June, 1997, by and among Monarch Dental Corporation, a
Delaware corporation ("Monarch"), Dental Centers of Indiana (Monarch), Inc., an
Indiana corporation and a wholly-owned subsidiary of Monarch (the "Purchaser"),
or its assigns, Dental Centers of Indiana, Inc., an Indiana corporation
("Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇ ("▇▇▇▇▇"), all individuals residing in Indiana and
collectively referred to as the "Seller" or "Sellers."
R e c i t a l s
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ each own 33 1/3% of the outstanding common
stock, no par value, of the Company (formerly known as ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇, D.D.S., Inc.).
Purchaser desires to acquire all of the issued and outstanding shares
of capital stock of the Company (the "Stock") by means of a Merger (defined
below) of the Company with and into Purchaser whereby Purchaser is the
surviving corporation in the Merger, for the consideration and on the terms set
forth in this Agreement.
NOW, THEREFORE, for and in consideration of the above premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby expressly acknowledged, the parties hereto do hereby agree as follows:
ARTICLE 1. THE MERGER; TERMS OF THE MERGER.
1.1 The Merger.
1.1.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Indiana
Business Corporation Law (the "IBCL"), at the Effective Time (defined below),
the Company shall be merged with and into Purchaser (the "Merger"), in
accordance with the terms set forth in this Agreement. From and after the
Effective Time, the separate corporate existence of the Company shall cease,
and Purchaser shall continue as the surviving corporation in the Merger and
shall continue to be governed by the laws of the State of Indiana. The Merger
shall be consummated by filing a Certificate of Merger with the Secretary of
State of the State of Indiana, together with all other documents, notices and
filings required by the IBCL.
1.1.2 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in Section 23-1-40-6 of the IBCL. If
at any time the Purchaser shall consider or be advised that any further
assignments, assurances in law, or other acts or instruments are necessary or
desirable to vest, perfect, or confirm to the Purchaser the title to any
property or rights of the Company and the Purchaser (collectively, the
"Constituent Corporations"), the Constituent Corporations and their proper
officers and directors shall and will do all such acts and things as may be
necessary or proper to vest, effect, or confirm title to such property or
rights of the Purchaser and otherwise to carry out the purposes of this
Agreement.
1.1.3 Certificate of Incorporation; Bylaws; Directors and
Officers. The Certificate of Incorporation and Bylaws of Purchaser, in each
case as in effect at the Effective Time, shall be the Certificate of
Incorporation and Bylaws of the Purchaser after the Merger. At the Effective
Time, the
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directors and officers of the Purchaser after the Merger shall be comprised of
the directors and officers of Purchaser, to hold office until their respective
successors are duly elected or appointed and qualified.
1.1.4 Tax Consequences. It is intended that the Merger
shall constitute a reorganization described in Section 368(a)(2)(D) of the
Internal Revenue Code of 1986, as amended (the "Code") and that this Agreement
shall constitute a "plan of reorganization" for the purposes of Section 368 of
the Code. It shall not be a condition to the consummation of the Merger that
any party hereto shall have received a ruling of the Internal Revenue Service
as to the federal income tax consequences of the Merger.
1.1.5 Ownership of Certain Assets. As a result of the
Merger, the Purchaser will acquire all of Company's right, title and interest
in (i) the following partnerships: Drs. ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Associates and
DCI-▇▇▇ (the "Partnerships"), and (ii) Indiana Dental Provider Alliance
("Alliance"); provided, however, that Sellers shall receive twenty percent
(20%) of the revenue received by the Company from Alliance, less any expenses
incurred by the Company with respect to Alliance (the "Alliance Expenses"), for
a period of five (5) years following the Closing; and further provided that if
the revenue received by the Company from Alliance less Alliance Expenses shall
equal or exceed $2,000,000 during the fifth year following the Closing, then,
in addition to the Sellers receiving twenty percent (20%) of the revenue
received by the Company from Alliance less Alliance Expenses, the Sellers shall
also receive an additional amount equal to twenty-five percent (25%) of the
revenue received by the Company from Alliance less Alliance Expenses.
1.2 Terms of the Merger.
1.2.1 Merger Consideration.
(a) At the Effective Time, by virtue of the
Merger and without any action by the Seller, all Stock issued
and outstanding immediately prior to the Effective Time shall
be canceled and retired and converted into and become rights
to receive the Merger Consideration (defined below) in the
manner described in subsection 1.2.1(c) below.
(b) The aggregate consideration provided for in
this subsection (b) (the "Merger Consideration") shall be
payable by delivery of:
(i) $1,838,500 in cash, less the amount
of Seller's expenses paid by
Purchaser under Section 9.1(a),
without any interest thereon (the
"Cash Merger Consideration"), which
shall be payable by wire transfer
(pursuant to the wire transfer
instructions set forth on Exhibit A)
or other immediately available
funds; and
(ii) the number of shares of common
stock, par value $.01 per share, of
Monarch (the "Monarch Common Stock")
determined by dividing $1,800,000 by
the per share price set forth in the
"Price to Public" column on the
front cover page of the final
prospectus filed with the Securities
and Exchange Commission in
connection with its initial public
offering of Monarch Common Stock
(the "IPO Price"), rounded to the
nearest whole share of Monarch
Common Stock (the "Stock Merger
Consideration").
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(c) The Merger Consideration shall be allocated
among the Sellers equally. At the Effective Time, all of the
issued and outstanding Stock held by each Seller shall be
converted without any action on the part of the holder thereof
into and be exchangeable for:
(i) 33 1/3% of the aggregate amount of
the Cash Merger Consideration; and
(ii) 33 1/3% of the aggregate number of
shares of Monarch Common Stock
comprising the Stock Merger
Consideration.
(d) At the Closing, the Cash Merger Consideration
and the Stock Merger Consideration shall be distributed
pursuant to subsection 1.2.1 and Section 1.2.2 hereof.
(e) At the Closing, and in accordance with the
terms of this Agreement, Monarch agrees to deliver a
sufficient number of shares of Monarch Common Stock necessary
to satisfy its obligations set forth in this Section 1.2.1.
1.2.2 Exchange Procedure for the Sellers. At the Closing,
each Seller shall surrender each certificate or certificates evidencing the
Stock to the Purchaser, duly endorsed and executed as the Purchaser may
require, to the Purchaser for cancellation, at which time the Cash Merger
Consideration and the Stock Merger Consideration applicable to such Stock shall
be delivered to such Seller. At the Effective Time, each Seller shall cease to
have any rights with respect to the Stock, and their sole right shall be to
receive their respective portions of the Merger Consideration set forth above.
All rights to receive the Cash Merger Consideration or the Stock Merger
Consideration (or cash in lieu of fractional shares of Monarch Common Stock),
shall be deemed, when paid or issued hereunder, to have been paid or issued, as
the case may be, in full satisfaction of all rights pertaining to the Stock.
Notwithstanding any other provision of this Agreement, no certificates or scrip
representing fractional shares of Monarch Common Stock shall be issued upon the
surrender for exchange of certificates which prior to the Effective Time shall
have represented any of the Stock. In lieu of any fractional shares, there
shall be paid to each Seller who would be entitled to receive a fractional
share of Monarch Common Stock an amount of cash (without interest) determined
by multiplying such fraction by the IPO Price.
1.2.3 Purchaser Capital Stock; Company Treasury Stock.
Each share of common stock of Purchaser issued and outstanding immediately
prior to the Merger shall continue to be issued and outstanding and evidence
ownership of the same number of shares of common stock of the Purchaser after
the Merger, and the Merger shall effect no change in any of such shares, and no
shares of Purchaser common stock shall be converted in the Merger. Any shares
of the Stock held in the treasury of the Company immediately prior to the
Effective Time shall be canceled as of the Effective Time, without payment of
any consideration therefor.
ARTICLE 2. CLOSING.
Subject to the terms hereof, the Merger shall be consummated at a
closing (the "Closing"), to take place on the first business day of the month
immediately following the month that Monarch's initial public offering is
commenced, at the offices of ▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P. at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other time or place as the parties may agree upon.
If all of the conditions of the Merger set forth in Articles 11 and 12 shall
have been fulfilled or waived in accordance herewith and this Agreement shall
not have been terminated in accordance with Article 13 hereof, the parties
hereto shall
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cause a Certificate of Merger, together with all other documents and
instruments required by law, together with all required fees, to be properly
executed, filed or paid, as applicable, in accordance with the IBCL on the date
of Closing. The Merger shall be effective as of the time of filing of the
Certificate of Merger (the "Effective Time").
ARTICLE 3. MERGER CONSIDERATION; COLLATERAL AGREEMENTS.
The consideration to be paid by Purchaser to Seller at the Closing in
connection with the Merger (the "Closing Purchase Price") shall be paid
pursuant to and as set forth in Sections 1.2, 3.1 and 3.2.
3.1 Deferred Payments. On or before March 31, 1998, Purchaser
shall pay to Seller an amount equal to five (5) times the amount that
Purchaser's EBITDA (defined below) for the 1997 calendar year exceeds $712,000
(which shall be allocated equally among the Sellers). Such amount, if any,
shall be paid one-half in cash and one-half in Monarch Common Stock unless
Seller requests in writing a different allocation of cash and Monarch Common
Stock on or before March 15, 1998. For this purpose, the fair market value of
the Monarch Common Stock shall be deemed to be the average closing price of
Monarch's Common Stock for the ten (10) trading days beginning March 16, 1998
and continuing through and including March 27, 1998, on the primary national
securities exchange or system where the Monarch Common Stock is then traded.
For purposes of this Agreement, EBITDA shall mean the earnings of the
business operations conducted by the Company as it existed before the Closing
(specifically excluding the Beechgrove and West 10th offices) (the "Acquired
Business") before interest, taxes, depreciation and amortization, determined
using generally accepted accounting principles, consistently applied, and
specifically including (i) deductions for direct expenses reasonably incurred
by Purchaser and its affiliates for or on behalf of the Acquired Business; (ii)
the monthly costs of operating Purchaser's information systems; and (iii)
$26,000 of expenses excluded in the recast income statement of the Company as
of December 31, 1996, dated March 21, 1997 and shall specifically exclude
$67,000 of revenue included in the recast income statement of the Company as of
December 31, 1996, dated March 21, 1997; and specifically excluding (iv) any
deduction for the allocation of Purchaser's or its affiliates' overhead or
other expenses relating to the operation of Monarch's headquarters; (v) the
capital costs of upgrading the Acquired Business' information systems; (vi) any
capitalized expenditures; (vii) any expenses incurred by the Company in
connection with the transactions contemplated by this Agreement in an amount
not exceeding $10,000; and (viii) all net revenues received by the Company from
or with respect to Alliance. In addition, for purposes of this Agreement,
EBITDA of the Acquired Business shall not be reduced as a result of Purchaser's
change of accounting methods (i.e., from cash to accrual); provided, however,
that for this purpose, all of the Purchaser's accounts payable shall be deemed
to have been paid twenty (20) days following their receipt by Purchaser.
Finally, for purposes of calculating EBITDA for the 1997 calendar year, no more
than a proportional amount (subject to an allowed variance of ten percent
(10%)) of the 1997 EBITDA may accrue before the date of Closing. If more than
a proportional amount subject to the above-described variance) accrues before
the date of Closing, then any amount in excess of such proportional amount
shall specifically be excluded from the calculation of 1997 EBITDA. The
Purchaser shall prepare, with the assistance and cooperation of Seller, a
financial statement stating the Company's EBITDA for the period ended June 30,
1997. The principles used in such financial statement to establish the
Company's EBITDA through June 30, 1997, shall be used on a consistent basis to
establish EBITDA for purposes of this Agreement. In the event that a dispute
arises regarding any calculation of EBITDA under this Agreement, such dispute
shall be settled by an audit partner at ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Company,
Indianapolis, Indiana.
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3.2 Stock Options. Seller believes that the Acquired Business is
capable of producing higher revenues and greater profitability than has been
achieved by the Company prior to the Closing Date. Therefore, in further
consideration of the Stock sold by Seller to Purchaser pursuant to this
Agreement and, without regard to the continuing employment status of ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ and ▇▇▇▇▇ by Purchaser or its affiliates, Seller shall be entitled to
receive from Monarch options to purchase shares of Monarch's Common Stock as
described herein (which shall be allocated equally among the Sellers).
Subject to the provisions of this Section 3.2, Seller shall be
entitled to receive from Monarch options to purchase up to an aggregate of
40,000 shares of Monarch Common Stock (based on the total shares of Monarch
Common Stock outstanding as of April 28, 1997) as set forth in the matrix
attached as Exhibit B. Such options will be granted ratably following the end
of each of the first five (5) calendar years following the date of Closing,
commencing with the period January 1, 1998 through December 31, 1998 (each such
period being referred to as an "Earnout Period") subject to the achievement of
the performance goals based on annual revenue and EBITDA over each of such five
(5) calendar years as set forth in the matrix attached as Exhibit B.
For this purpose, revenues mean, for the applicable Earnout Period,
the gross revenues of the Acquired Business which shall be determined in
accordance with generally accepted accounting principles, consistently applied,
excluding capital or extraordinary gains or losses and any gain or loss from
sales of investments, receivables, goodwill or agreements not to compete.
Options granted hereunder, if any, shall be granted pursuant to
Monarch's 1996 Equity Acquisition Option Plan (the "Plan"), and shall be
subject to all limitations of such Plan, including the aggregate number of
options which may be granted thereunder. Any options granted pursuant to this
Section 3.2 shall be at an exercise price equal to the IPO Price of Monarch
Common Stock. Options granted pursuant to this Section 3.2 shall be fully
vested on the date of grant and shall expire ten (10) years from the date of
grant.
Monarch shall grant the options to Seller for the applicable Earnout
Period pursuant to this Section 3.2 on or before the one hundred twentieth
(120th) day following the end of each of the applicable Earnout Periods.
Options not earned by Seller during each applicable Earnout Period(s) shall not
be available for grant to Seller in a subsequent Earnout Period. The items in
the attached matrix (Exhibit B) shall be determined from Purchaser's financial
records for the applicable Earnout Period and set forth in a statement (the
"Statement"), represented by Purchaser that such Statement was prepared in
accordance with this Agreement and generally accepted accounting principles. A
copy of such Statement shall be delivered to Seller not later than forty-five
(45) days after the end of each Earnout Period. Such Statements may be
reviewed for accuracy by the accountants employed by Seller. If within thirty
(30) days after delivery of the Statement to Seller, ▇▇▇▇▇ (or any other
representative designated by Seller in writing to Purchaser), on behalf of
Seller, has not given written notice to Monarch disputing such Statement and
stating the basis of such dispute, Monarch shall thereafter have no further
liability to grant options to Seller with respect to that Earnout Period except
as set forth in such Statement. If Monarch receives notice disputing the
Statement within such thirty (30) day period, Seller's accountants and
Purchaser's auditors shall use their best efforts to settle the dispute within
ninety (90) days after the giving of such dispute notice. If Purchaser's
auditors and the accountants representing Seller are unable to resolve the
dispute within the ninety (90)-day period, the dispute shall be submitted to an
independent firm of certified public accountants of recognized national
standing, reasonably satisfactory to Monarch and Seller, whose decision on such
dispute shall be binding on all parties.
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3.3 Collateral Agreements. In connection and simultaneously with
the Closing, Seller, Purchaser, the Company and/or other appropriate persons
will enter into the following agreements, among others, with terms and
conditions as are set forth in such agreements: (i) Employment Agreements in
the form attached hereto as Exhibit C; (ii) Non-Competition Agreements in the
form attached hereto as Exhibit D; (iii) Management Services Agreement in the
form attached hereto as Exhibit E; (iv) Succession Agreement in the form
attached hereto as Exhibit F; (v) Working Group Director Service Agreement in
the form attached hereto as Exhibit G; (vi) General Releases in the form
attached hereto as Exhibit H; and (vii) real property leases substantially in
the form attached hereto as Exhibit I (collectively, the "Collateral
Agreements"). Subject to the terms and conditions of this Agreement, as a
material inducement to and a condition precedent of Purchaser's acquisition of
the Stock, Seller shall execute and deliver at the Closing the Non- Competition
Agreements.
3.4 Further Assurances. Sellers, from time to time, both before
and after the Closing, at the request of the Purchaser and without further
consideration, shall execute and deliver to Purchaser such further documents
necessary to memorialize the transactions contemplated hereby and take such
other actions as the Purchaser may reasonably require as are contemplated
herein.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER AND COMPANY.
4.1 Making of Representations and Warranties. As a material
inducement to the Purchaser to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller and Company, jointly and severally,
hereby make to the Purchaser the representations and warranties contained in
this Article 4.
For the purposes of this Agreement, references to "knowledge" of
Seller or "known" by Seller or words of similar import, shall be deemed to
include such knowledge as Seller or executive officers of the Company actually
has or reasonably ought to have in the ordinary course of performing their
duties. For purposes of this Agreement, references to the "Disclosure
Schedule" shall mean the Disclosure Schedule delivered by Seller to the
Purchaser on the date hereof. For the purposes of this Article 4, (i) Seller
is deemed to have knowledge of each of the documents entered into in connection
with the transactions contemplated hereby, and (ii) Seller's and Company's
representations and warranties with respect to the Company shall be deemed to
include the Partnerships.
4.2 Organization and Qualification; Capital Stock. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the state of Indiana with full corporate power and authority to own or
lease its properties and to conduct its business in the manner and in the
places (including qualifications to do business) where such properties are
owned or leased or such business is currently conducted. The copies of the
charter documents of the Company as amended to date and certified by the
Secretary of State of each relevant jurisdiction, and of the by-laws of the
Company, as amended to date, certified by its Secretary, and heretofore
delivered to the Purchaser, have been duly adopted and are current, complete
and correct, no amendments thereto are pending, and the Company is not in
violation thereof.
The Company is duly qualified to do business as a corporation only in
the state of Indiana and is not required to be licensed or qualified to conduct
its business or own its properties in any other jurisdiction in which the
failure to be so qualified would have an adverse effect on the business,
operations, results of operations, assets, condition (financial or other) or
prospects of the Company. All of the issued and outstanding capital stock or
other equity interests of the Company are duly and validly authorized and
issued, fully paid and non-assessable and are owned beneficially and of record
as set forth in Section 4.2
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of the Disclosure Schedule, free and clear of all liens, mortgages, pledges,
encumbrances, security interests, charges, restrictions on transfer,
stockholder or similar agreements, conditional sales agreements, equities and
other claims of any kind (collectively, "Liens"), and there are no outstanding
options, warrants, rights, commitments, pre-emptive rights or agreements of any
kind for the issuance or sale of, or outstanding securities convertible into,
any additional shares of capital stock of any class or other equity interests
of the Company. The total authorized capital stock of the Company is set forth
on Section 4.2 of the Disclosure Schedule.
All of the Stock is duly and validly authorized, is validly issued,
fully paid and nonassessable and is held equally by each Seller free and clear
of Liens. To Seller's and Company's knowledge, the Company has materially
complied with all applicable statutes, laws, regulations, orders or rules of
any federal or state governmental agency or body or of any other type of
regulatory body in connection with the issuance of the Stock.
4.3 Subsidiaries. Except as provided in Section 4.3 of the
Disclosure Schedule, the Company has no subsidiaries (as defined in Section
9.10 hereof), nor owns any securities issued by any other business organization
or governmental authority, nor has any direct or indirect interest in or
control over any corporation, partnership, joint venture or entity of any kind.
4.4 Authority; Noncontravention. Seller and Company each has full
and unrestricted individual and/or corporate capacity, as the case may be, (i)
to enter into (a) this Agreement and (b) each agreement, document and
instrument to be executed and delivered by them pursuant to or contemplated by
this Agreement, including, but not limited to, the Collateral Agreements, and
(ii) to carry out the transactions contemplated hereby and thereby. The
execution, delivery and performance by Seller and Company of this Agreement,
the Collateral Agreements and each such other agreement, document and
instrument have been duly authorized by all necessary action of the Company and
each Seller (including, without limitation, approval of the Merger as a
shareholder of the Company), and no other action on the part of Seller or the
Company is required in connection therewith. This Agreement, the Collateral
Agreements and each such agreement, document and instrument executed and
delivered by Seller and Company pursuant to or in connection with this
Agreement constitute valid and binding obligations of Seller and Company
enforceable in accordance with its respective terms, subject to bankruptcy,
reorganization, insolvency and other similar laws affecting the enforcement of
creditors' rights in general and to general principles of equity (regardless of
whether considered in a proceeding in equity or an action at law).
The execution, delivery and performance by Seller of this Agreement,
the Collateral Agreements and each such agreement, document and instrument
pursuant to or in connection with this Agreement to which they are a party:
(i) do not and will not violate any provision of
the charter, by-laws or equivalent constituent documents of the
Company;
(ii) do not and will not violate in any material
respect any laws of the United States or any state or other
jurisdiction applicable to Seller or the Company or require Seller or
the Company to obtain any approval, consent or waiver of, or make any
filing with, any person or entity (governmental or otherwise) that has
not been obtained or made; and
(iii) do not and will not (a) result in a breach
of, (b) constitute a default under, (c) accelerate any obligation
under, (d) give rise to a right of termination of any indenture,
loan or credit agreement or any other agreement, contract, instrument,
mortgage, lien, lease, permit,
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authorization, order, writ, judgment, injunction, decree,
determination or arbitration award, whether written or oral, to which
Seller or the Company is a party or by which the property of Seller or
the Company is bound or affected, or (e) result in the creation or
imposition of any Liens on any of the Stock, except to the extent that
any of the foregoing would not have a material adverse effect on the
business, operations, results of operations, assets, condition
(financial or other) or prospects of Seller or the Company.
4.5 Status of Property.
(a) Real Property. The Company owns no real estate.
(b) Leased Real Property. All of the real property
leased in connection with the Company's business is identified in Section
4.5(b)(i) of the Disclosure Schedule (collectively referred to herein as the
"Leased Real Property"). Section 4.5(b)(ii) of the Disclosure Schedule sets
forth any other real estate previously owned, leased or otherwise operated by
the Company or Seller in connection with the Company at any time during the
immediately preceding five years and the time periods of any such ownership,
lease or operation, except for any offices in personal residences of employees
of the Company. Further:
(i) Leases. All of the leases of any of the
Leased Real Property (collectively, the "Leases") are listed in
Section 4.5(b)(i) of the Disclosure Schedule. The copies of the
Leases heretofore delivered or furnished to the Purchaser are
complete, accurate, true and correct copies of each of the Leases,
including any amendments to such Leases, except as set forth in
Section 4.5(b)(i) of the Disclosure Schedule. With respect to each of
the Leases, except as set forth in Section 4.5(b)(i) of the Disclosure
Schedule:
(A) each of the Leases is in full force and
effect on the terms set forth therein and has not been
modified, amended, or altered, in writing or otherwise;
(B) all obligations of the landlord or lessor
under the Leases which have accrued have been performed, and
to Seller's and Company's knowledge, no landlord or lessor is
in default under or in arrears in the payment of any sum or in
the performance of any obligation required of it under any
Lease, and no circumstance presently exists which, with notice
or the passage of time, or both, would give rise to a default
by the landlord or lessor under any Lease, except for any
default which would not have an adverse effect on the
business, operations, results of operations, assets, condition
(financial or other) or prospects of the Company's business;
(C) all obligations of the tenant or lessee under
the Leases which have accrued have been performed in all
material respects, and neither Seller nor the Company is in
default under or in arrears in the payment of any sum or in
the performance of any material obligation required of them or
it under any Lease, and no circumstance presently exists
which, with notice or the passage of time, or both, would give
rise to a default by Seller or the Company; and
(D) Seller and the Company have obtained the
consent of each landlord or lessor under any Lease whose
consent is required in connection with the transactions
contemplated by this Agreement and each other transaction
referred to herein or the collateral assignment of any Lease
by Seller or the Company or their or its assignees.
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(ii) Title and Description. The Company holds a
good, clear, valid and enforceable leasehold interest in the Leased
Real Property leased by it pursuant to the Leases, subject only to the
right of reversion of the landlords or lessors under such Leases, in
all cases, such leasehold interests being free and clear of all other
prior or subordinate interests, including, without limitation,
mortgages, deeds of trust, subleases, security interests or similar
encumbrances, liens, assessments, tenancies, licenses, claims, rights
of first refusal, options, covenants, conditions, restrictions,
judgments or other encumbrances or matters affecting title to such
leasehold interests.
(iii) Compliance with Law; Government Approvals.
To Seller's and Company's knowledge, except as set forth in Section
4.5(b)(iii) of the Disclosure Schedule, Seller and the Company have
not received notice from any municipal, state, federal or other
governmental authority of any violation of any zoning, building, fire,
water, use, health, or other law, ordinance, code, regulation,
license, permit or authorization issued in respect of any of the
Leased Real Property. To Seller's and Company's knowledge,
improvements located on or constituting a part of the Leased Real
Property and the use and operation thereof (including, without
limitation, the use and operation of any signs located thereon) are in
compliance with all applicable municipal, state, federal or other
governmental laws, ordinances, codes, regulations, licenses, permits
and authorizations, including, without limitation, applicable zoning,
building, fire, water, use or health laws, ordinances, codes,
regulations, licenses, permits and authorizations, and there are
presently in effect all certificates of occupancy, licenses, permits
and authorizations required by law, ordinance, code or regulation or
by any governmental or private authority having jurisdiction over any
of the Leased Real Property or any portion thereof, or the occupancy
thereof or any present use thereof (collectively, "Governmental
Approvals"), which are necessary or otherwise material to the conduct
of the Company's business. The Leased Real Property has at least the
minimum access required by applicable subdivision or similar law.
(c) Personal Property. Except as specifically
disclosed in Section 4.5(c) of the Disclosure Schedule or in the Base Balance
Sheet (as defined in Section 4.6(a)(ii)), the Company owns and has good, valid
and (if applicable) marketable title to all of the personal property used in
connection with the conduct of the Company's business, and none of such
personal property or assets is subject to any Lien, except as specifically
disclosed in said Schedule or in the Base Balance Sheet. The Base Balance
Sheet reflects all personal property used in connection with the conduct of the
Company's business, subject to dispositions and additions in the ordinary
course of business and consistent with this Agreement. Except as otherwise
specified in Section 4.5(c) of the Disclosure Schedule, all of the tangible
personal property of the Company is in generally good operating condition and
repair, normal wear and tear excepted, has been well maintained, and conforms
in all material respects with all applicable ordinances, regulations and other
laws.
4.6 Financial Statements; Undisclosed Liabilities.
(a) Seller has previously delivered to Purchaser the
following financial statements, copies of which are attached hereto as Section
4.6(a) of the Disclosure Schedule:
(i) Unaudited balance sheets for the Company as
of December 31, 1996 (herein the "Base Balance Sheet"), and December
31, 1995 and unaudited statements of income, retained earnings and
cash flows for the years then ended prepared in accordance with the
cash method of accounting; and
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(ii) An unaudited balance sheet for the Company as
of April 30, 1997 (herein the "Interim Base Balance Sheet"), and an
unaudited statement of income and retained earnings for the four month
period then ended prepared in accordance with the cash method of
accounting.
Said financial statements have been prepared by the Company from its books and
records, and present fairly in all material respects the financial condition of
the Company at the dates of said statements and the results of their operations
for the periods covered thereby in accordance with the cash method of
accounting.
(b) As of the date of the Base Balance Sheet, there were
no liabilities or obligations of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, known or unknown, relating to
the Company, except liabilities (i) stated or adequately reserved against on
the Base Balance Sheet or the notes thereto, (ii) specifically disclosed in
Section 4.6(b) of the Disclosure Schedule furnished to Purchaser hereunder on
the date hereof and attached hereto, or (iii) incurred in the ordinary course
of business consistent with the terms of this Agreement subsequent to the date
of the Base Balance Sheet.
(c) There are no liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, asserted or
unasserted, known or unknown, relating to the Company, except liabilities (i)
stated or adequately reserved against on the Base Balance Sheet or the notes
thereto, (ii) specifically disclosed in Section 4.6(c) of the Disclosure
Schedule, or (iii) incurred in the ordinary course of business consistent with
the terms of this Agreement subsequent to the date of the Base Balance Sheet.
(d) As of the date of the Interim Base Balance Sheet,
there were no liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown,
relating to the Company, except liabilities (i) stated or adequately reserved
against on the Interim Base Balance Sheet or the notes thereto, (ii)
specifically disclosed in Section 4.6(d) of the Disclosure Schedule furnished
to Purchaser hereunder on the date hereof and attached hereto, or (iii)
incurred in the ordinary course of business consistent with the terms of this
Agreement subsequent to the date of the Interim Base Balance Sheet.
(e) There are no liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, asserted or
unasserted, known or unknown, relating to the Company, except liabilities (i)
stated or adequately reserved against on the Interim Base Balance Sheet or the
notes thereto, (ii) specifically disclosed in Section 4.6(e) of the Disclosure
Schedule, or (iii) incurred in the ordinary course of business consistent with
the terms of this Agreement subsequent to the date of the Interim Base Balance
Sheet.
4.7 Taxes.
(a) Except as disclosed in Section 4.7(a) of the
Disclosure Schedule, the Company and its predecessors have paid or caused to be
paid all federal, state, local, foreign, and other taxes, including, without
limitation, income taxes, estimated taxes, alternative minimum taxes, excise
taxes, sales taxes, use taxes, value-added taxes, gross receipts taxes,
franchise taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, stamp taxes, transfer taxes, windfall profit taxes,
environmental taxes, property taxes and business and license fees and taxes,
whether or not measured in whole or in part by net income and all deficiencies,
and other additions to tax, interest, fines, charges and penalties owed by it
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(collectively, "Taxes") shown to be due on all tax returns required to be filed
through the date hereof, whether disputed or not.
(b) The Company and its predecessors have in accordance
with applicable law timely filed all federal, state, local and foreign tax
returns, information returns and reports required to be filed through the date
hereof, and all such returns and reports are true, correct and complete.
Complete and correct copies of all federal, state, local and foreign income tax
returns filed with respect to the Company and its predecessors for taxable
periods ended on or after December 31, 1992, have been previously provided to
Purchaser, together with any Internal Revenue Service or other governmental
examination reports and statements of deficiencies assessed or agreed to with
respect to said returns.
(c) Neither the Internal Revenue Service nor any other
governmental authority is now asserting (in a suit, action, proceeding,
investigation, claim or otherwise) or, to Seller's or Company's knowledge,
threatening to assert against the Company or its predecessors any deficiency or
claim for additional Taxes. No claim has ever been made by an authority in a
jurisdiction where the Company and its predecessors do not file reports and
returns that the Company or its predecessors are or may be subject to taxation
by that jurisdiction. There are no security interests or liens on any of the
assets of the Company that arose in connection with any failure (or alleged
failure) to pay any Tax. Neither the Company nor its predecessors have entered
into a closing agreement pursuant to Section 7121 of the Internal Revenue Code
of 1986, as amended, or any predecessor statutes (the "Code").
(d) There has not been during the past five years any
audit of any tax return filed by the Company or its predecessors, no audit of
any tax return of the Company or its predecessors in progress, and neither the
Company nor its predecessors have been notified by any tax authority that any
such audit is contemplated or pending. No extension of time with respect to
any date on which a tax return was or is to be filed by the Company or its
predecessors is in force, and no waiver or agreement by any of the Company or
its predecessors is in force for the extension of time for the assessment or
collection of any Taxes.
(e) The Company and its predecessors have never been (and
have never had any liability for unpaid Taxes because they once were) a member
of an "affiliated group" (as defined in Section 1504(a) of the Code). Neither
the Company nor its predecessors have ever filed, or have ever been required to
file, a consolidated, combined or unitary tax return with any other entity.
Neither the Company nor its predecessors are parties to any tax sharing or
similar agreement.
(f) Neither the Company nor its predecessors is a
"foreign person" within the meaning of Section 1445 of the Code and Treasury
Regulations Section 1.1445-2.
(g) Neither the Company nor its predecessors has made any
payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Section 280G of the Code.
(h) The Company and its predecessors have treated all of
their workers as employees for purposes of federal, state, local and foreign
employment, social security, withholding, unemployment and all other payroll
related taxes.
(i) The Base Balance Sheet reflects and includes adequate
charges, accruals, reserves and provisions for the payment in full of all Taxes
relating to the Company for any and all periods (i)
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12
ending on or before the date the Interim Base Balance Sheet and (ii) ending
subsequent to the date of the Interim Base Balance Sheet and through and
including the Closing Date.
(j) The Company is an "S corporation" within the meaning
of Section 1361(a)(1) of the Code.
(k) Except as is set forth on Section 4.7(k) of the
Disclosure Schedule, neither the Company nor its predecessors own or have ever
owned a direct or indirect interest in any trust, partnership, corporation or
other entity, and no assets of the Company include an interest in any such
entity.
(l) For purposes of this Agreement, all references to
sections of the Code shall include any predecessor provisions to such sections
and any similar provisions of federal, state, local or foreign law.
4.8 Collectibility of Accounts Receivable. All of the accounts
receivable of the Company's business (subject to contractual allowances
consistent with the past practices of the Company's business) as described in
Section 4.8 of the Disclosure Schedule are reflected properly in the Company's
books and records and are valid and enforceable claims, are current (consistent
with aging practice of the Company) and, to Seller's and Company's knowledge,
are collectible (subject to reasonable allowance for doubtful accounts as
reflected on the balance sheets of the Company) and are not subject to set off
or counterclaim (and not covered by insurance), provided that the foregoing
representation is not a guarantee of collectibility. A complete and accurate
summary of the amount of accounts receivable has previously been provided to
Company. The Company has no accounts receivable or loans receivable from any
person, firm or corporation which is affiliated with Seller or the Company or
from any stockholder, director, officer or employee of Seller or the Company or
any affiliate thereof.
4.9 Absence of Certain Changes. Except as disclosed in Section
4.9 of the Disclosure Schedule, since the date of the Base Balance Sheet,
there has not been:
(a) Any adverse change in the properties, assets,
liabilities, business, operations, condition (financial or other), personnel or
prospects of the Company, which change by itself or in conjunction with all
other such changes, whether or not arising in the ordinary course of business,
has been material;
(b) Any contingent liability relating to the Company as
guarantor or otherwise with respect to the obligations of others or any
cancellation of any material debt or claim owing to, or waiver of any material
right of, the Company's business;
(c) Any Lien placed on any of the properties of the
Company which remains in effect on the date hereof;
(d) Any material obligations or liability of any nature,
whether accrued, absolute, contingent or otherwise, asserted or unasserted,
known or unknown, incurred by the Company other than obligations and
liabilities incurred in the ordinary course of business and otherwise
consistent with the terms of this Agreement;
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13
(e) Any purchase, sale or other disposition, or any
agreement or other arrangements for the purchase, sale or other disposition, of
any of the properties or assets of the Company other than in the ordinary
course of business;
(f) Any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting any of the properties,
assets or business of the Company;
(g) Any declaration, set aside or payment of any dividend
by the Company or the making of any other distribution in respect of the
capital stock or other equity interest of the Company or any direct or indirect
redemption, purchase or other acquisition by the Company of its own capital
stock or other equity interest;
(h) Any change in the compensation (in the form of
salaries, wages, incentive arrangements or otherwise) or benefits payable by
the Company to any officers, employees, agents, independent contractors,
dentists or dental professional corporations other than normal merit increases
in accordance with its usual practices, or any bonus payment or arrangement
made to or with any such person or Company; or any entering into any
employment, deferred compensation or other similar agreement (or any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement)) with any such person or entity;
(i) Any material change, or the obtaining of written
information concerning a prospective change, with respect to any officers,
management employees or dentists (including professional corporations) of the
Company, any grant of any severance or termination pay to any officer,
employee, agent, independent contractor, dentist or dental professional
corporation of the Company or any increase in benefits payable under any
existing severance or termination pay policies or employment agreement or
relationship;
(j) Any payment or discharge of a material Lien or
liability relating to the Company which was not shown on the Base Balance Sheet
or incurred in the ordinary course of business thereafter;
(k) Any change in accounting methods or practices, credit
practices, collection policies or payment policies used by the Company
including, without limitation, any change in the discharge or recording of
accounts payable relative to past practices;
(l) Any material cancellation or loss of any material
right or asset, or waiver of any right, of the Company;
(m) Any other material transaction relating to the
Company other than transactions in the ordinary course of business and
consistent with past practices; or
(n) Any agreement or understanding, whether in writing or
otherwise, by the Company or any other person that would result in any of the
transactions or events or require the Company to take any of the actions
specified in paragraphs (a) through (m) above.
4.10 Ordinary Course. Since the date of the Base Balance Sheet,
the Company has conducted its business only in the ordinary course and in a
manner consistent with prior practices.
4.11 Banking Relations. All of the accounts with any banking
institution relating to the Company are accurately and in all material respects
described in Section 4.11 of the Disclosure Schedule,
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14
indicating with respect to each of such accounts the name of the institution,
the account number(s), the type of arrangement maintained (such as checking
account, borrowing, etc.) and the person or persons authorized in respect
thereof.
4.12 Intellectual Property.
(a) The Company has exclusive ownership of, or exclusive
license to use, all computer software, patent, copyright, trade secret
(including, without limitation, customer lists, production processes and
inventions), trademark, service ▇▇▇▇ and other proprietary rights
(collectively, "Intellectual Property"), used in the Company's business as
presently conducted. The Company's rights in all of such Intellectual Property
are freely transferable. No representation or warranty is made as to licensed
software which is generally commercially available and used in the ordinary
course of business with respect to Intellectual Property which is not freely
assignable at the date hereof. No proceedings have been instituted, or are
pending or threatened, which challenge the rights of the Company in respect of
any Intellectual Property, and to the knowledge of Seller, no other person has
or alleges any rights in or to the Intellectual Property.
(b) All patents, patent applications, trademarks, service
marks, trademark and service ▇▇▇▇ applications and registrations and registered
copyrights related to the conduct of the Company's business as presently
conducted or contemplated to be conducted, are listed in Section 4.12(b) of the
Disclosure Schedule.
(c) All licenses or other agreements under which the
Company is granted rights in Intellectual Property are listed in Section
4.12(c) of the Disclosure Schedule. All said licenses or other agreements are
in full force and effect, there is no default by the Company, or any other
party thereto, and, except as set forth in Section 4.12(c) of the Disclosure
Schedule and as provided in Section 4.12(a) above, all rights thereunder are
freely assignable.
(d) To Seller's and Company's knowledge, the conduct of
the Company's business has not and does not infringe any Intellectual Property
of any other person. No proceeding charging the Company with infringement of
any adversely held Intellectual Property has been filed or, to the knowledge of
Seller or Company, is threatened to be filed. There exists no unexpired patent
or patent application which includes claims that would be infringed by or
otherwise adversely affect the services, activities or business of the Company.
The conduct of the Company's business does not involve the unauthorized use of
any confidential information or trade secrets of any person including, without
limitation, any former employer of any past or present employee. Neither the
Company, nor to Seller's or Company's knowledge, any of its employees, has any
agreements or arrangements with any persons other than the Company related to
confidential information or trade secrets of such persons or restricting any
such employee's engagement in business activities of any nature, other than
those relating to patient confidentiality as required by law.
(e) As of the Closing, the Company will possess the valid
right to use the name "Dental Centers of Indiana" and all similar names and
derivations thereof and all related trademarks and trade names used in its
business. To Seller's and Company's knowledge, the Company's use of such names
does not infringe upon the rights of any other person.
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4.13 Contracts.
(a) Except for contracts, commitments, plans, agreements
and licenses described in Section 4.13(a) of the Disclosure Schedule (true and
complete copies of which have been delivered to the Purchaser), the Company is
not a party to or subject to:
(i) any plan or contract providing for bonuses,
pensions, options, stock purchases, deferred compensation, retirement
payments, profit sharing, collective bargaining or the like, or any
contract or agreement with any labor union;
(ii) any employment contract, or any contract for
services which requires the payment of more than $100,000 annually or
which is not terminable within 30 days without liability for any
penalty or severance payment;
(iii) any contract or agreement for the purchase of
any commodity, material, equipment or service except purchase orders
in the ordinary course of business for less than $5,000 each, provided
that such orders do not exceed $50,000 in the aggregate;
(iv) any other contracts or agreements creating an
obligation or receivable of $50,000 or more with respect to any such
contract;
(v) any contract or agreement which by its terms
does not terminate or is not terminable without penalty within one
year after the date hereof;
(vi) any contract or agreement for the sale or
lease of its products not made in the ordinary course of business;
(vii) any contract containing covenants limiting
its freedom to compete in any line of business or with any person or
entity;
(viii) any contract or agreement for the purchase of
any fixed asset for a price in excess of $50,000, whether or not such
purchase is in the ordinary course of business;
(ix) any license agreement (as licensor or
licensee) for a total consideration exceeding $50,000 for any one such
license;
(x) any agreement involving a lease or license of
real property or any "capitalized" or "financing" lease;
(xi) any indenture, mortgage, promissory note,
loan agreement, guaranty or other agreement or commitment for the
borrowing of money and any related security agreement;
(xii) any contract or agreement with any Company
officer, employee, director, or stockholder or with any persons or
organizations controlled by or affiliated with any of them;
(xiii) any contract or agreement with any
governmental authority, insurance company, third- party fiscal
intermediary or carrier administering any Medicaid program of any
state, the Medicare program, any clinic or other in-patient health
care facility, dental or health
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16
maintenance organization, preferred provider organization,
self-insured employer or other third-party payor of any kind or
nature;
(xiv) any power of attorney; or
(xv) any judgment, decree or order affecting the
Company.
(b) All contracts, agreements, leases and instruments to
which the Company is a party and as are set forth in Section 4.13(a) of the
Disclosure Schedule are valid and are in full force and effect, and constitute
legal, valid and binding obligations of the Company and the other parties
thereto, enforceable in accordance with its respective terms, subject to
bankruptcy, reorganization, insolvency and other similar laws affecting the
enforcement of creditors' rights in general and to general principles of equity
(regardless of whether considered in a proceeding in equity or an action at
law). Neither the Company nor, to the knowledge of Seller or Company, any
other party to any contract, agreement, lease or instrument to which the
Company is a party or any judgment, decree or order applicable to the Company
is in default in complying with any provisions thereof, and no condition, event
or facts exist which, with notice, lapse of time or both, would constitute a
default thereof on the part of the Company or on the part of any other party
thereto in any such case that could have a material adverse effect on the
business, operations, results of operations, assets, condition (financial or
other) or prospects of the Company. The Company is not subject to or bound by
any agreement, judgment, decree or order which materially adversely affects the
business, operations, results of operations, assets, condition (financial or
other) or prospects of its business.
(c) There are no contracts, agreements, arrangements or
understandings (each, an "HCP Agreement") with any dentist, dental assistant,
nurse, technician, or other health care provider (each a "Health Care
Provider"), pursuant to which any Seller receives revenues or compensation
regarding the provision of dental services to patients in connection with such
business.
4.14 Litigation. Section 4.14 of the Disclosure Schedule sets
forth a detailed listing of all currently pending litigation and governmental
or administrative proceedings or investigations to which Seller or the Company
is a party. Except for matters described in Section 4.14 of the Disclosure
Schedule, there are no claims, actions, suits or proceedings and there is no
litigation or governmental or administrative proceeding or investigation
pending or threatened against the Company which may have a material adverse
effect on the business, operations, results of operations, assets, condition
(financial or other) or prospects of the Company or which could prevent or
hinder the consummation of the transactions contemplated by this Agreement or
any other transaction contemplated by or referred to herein. With respect to
each matter set forth therein, Section 4.14 of the Disclosure Schedule sets
forth a description of the forums for the matter, the parties thereto and the
type and amount of relief sought. The Company is not presently subject to any
injunction, order or other decree of any court.
Without limitation of the foregoing, except as set forth in Section
4.14 of the Disclosure Schedule, there are no pending or threatened malpractice
claims, Indiana Regulatory Board investigations, suits, notices of intent to
institute arbitrations or proceedings, either administrative or judicial,
involving the Company including, without limitation, any of the Health Care
Providers.
4.15 Permits; Compliance with Laws; Licensing and Credentialing;
Health Care Providers.
(a) General Compliance. Except as set forth in Section
4.15(a) of the Disclosure Schedule, the Company has all franchises,
authorizations, approvals, orders, consents, licenses,
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17
certificates, permits, registrations, qualifications or other rights and
privileges (collectively "Permits") necessary to permit the ownership of its
properties and the conduct of such business as the same is presently conducted.
To Seller's and Company's knowledge, a listing of such Permits is set forth in
Section 4.15(a) of the Disclosure Schedule, and all such Permits are valid and
in full force and effect except to the extent the absence of any such Permit
would not have a material adverse effect on the business, operations, results
of operations, assets, condition (financial or other) or prospects of the
Company's business. No Permit is subject to termination as a result of the
performance of the Agreement or consummation of the transactions contemplated
hereby or referred to herein.
The Company is now and has heretofore been in full compliance
with all applicable statutes, ordinances, orders, rules and regulations
promulgated by any federal, state, municipal or other governmental authority
involving the corporate practice of dentistry. In addition, the Company is now
and has heretofore been in compliance with all other applicable statutes,
ordinances, orders, rules and regulations (including, without limitation,
material compliance with OSHA and regulations thereunder and all applicable
environmental laws and regulations) promulgated by any federal, state,
municipal or other governmental authority which apply to the conduct of the
Company's business, except for any such non-compliance or violation that,
individually or in the aggregate, would not have a material adverse effect on
the business, operations, results of operations, assets, condition (financial
or other) or prospects of the Company. Since January 1, 1993, neither Seller
nor the Company has ever entered into or been subject to any judgment, consent
decree, compliance order or administrative order with respect to any insurance,
consumer protection, environmental or health and safety law, or received any
request for information, notice, demand letter, administrative inquiry or
formal or informal complaint or claim with respect to any environmental or
health and safety matter or the enforcement of any such law.
(b) Licensing and Credential Information. Each Health
Care Provider is duly licensed under the laws of the State of Indiana (except
for license revocation or suspension proceedings currently in process of which
Seller and Company have no knowledge), and each Health Care Provider has
complied in all material respects with all laws, rules and regulations relating
to the rendering of services including without limitation OSHA. Except as set
forth in Section 4.15(b) of the Disclosure Schedule, no Health Care Provider
since January 1, 1992: (i) has had his or her professional license, Drug
Enforcement Agency number, Medicare or Medicaid provider status, or staff
privileges at any hospital or dental facility suspended, relinquished,
terminated or revoked, (ii) has been reprimanded, sanctioned or disciplined by
any licensing board or any federal, state or local society, agency, regulatory
body, governmental authority, hospital, third-party payor or specialty board;
or (iii) has had a final judgment or settlement entered against him or her in
connection with a malpractice or similar action. The names and dental license
numbers of the Health Care Providers who provide services in connection with
the Company's business are set forth in Section 4.15(b) of the Disclosure
Schedule.
To the best of Seller's and Company's knowledge, all of the
employed and engaged Health Care Providers are in good physical and mental
health and do not suffer from any illnesses or disabilities which could prevent
any of them from fulfilling their responsibilities under the respective
contracts, agreements or understandings with Company. To the best of Seller's
and Company's knowledge, none of the employed and engaged Health Care Providers
uses (without a physician's approval) or abuses any controlled substances at
any time or is under the influence of alcohol or is affected by the use of
alcohol during the time period required to perform his or her duties and
obligations under any contracts, agreements or understandings with Company.
(c) Medicare/Medicaid. INTENTIONALLY OMITTED.
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(d) Other. The Company is not required to make filings
under any insurance holding company or similar state statute, or to be licensed
or authorized as an insurance holding company in any jurisdiction in order to
conduct its business as presently conducted. The dental plan services and
related products offered and provided by the Company have been and are offered
and provided in compliance with the requirements of all relevant laws and
regulations, in each case, with such exceptions, individually or in the
aggregate, as would not have an adverse effect on the business, operations,
assets, condition (financial or other) or prospects of such business and the
Company has not received any notification from any governmental regulatory
authority to the effect that any Permit from such regulatory authority is
needed to be obtained by it in order to conduct its business.
To the knowledge of Seller and Company, there exists no legislation,
rule or regulation which shall either (i) have been proposed and be in Seller's
reasonable judgment reasonably likely to be adopted in Indiana in the
foreseeable future, or (ii) have been adopted in Indiana in either case that,
individually or in the aggregate, has a material adverse effect or could
reasonably be anticipated to have a material adverse effect on the business,
operations, results of operations, assets, (financial or otherwise) or
prospects of the Company.
4.16 Insurance. The physical properties and assets of the Company
are insured to the extent disclosed in Section 4.16 of the Disclosure Schedule,
and all insurance policies, binders and arrangements relating to the Company
are disclosed in said Schedule. Said insurance policies and arrangements are
in full force and effect, all premiums with respect thereto are currently paid,
and the Company is in compliance in all material respects with the terms
thereof. To Seller's and Company's knowledge, said insurance is adequate and
customary for the Company's business and is sufficient for compliance with all
requirements of law and all agreements and leases to which the Company's
business is subject. There is no default with respect to any such policy or
binder, nor has there been any failure to give any notice or present any claim
under any such policy or binder in a timely fashion or in the manner or detail
required by the policy or binder, except for any of the foregoing that would
not, individually or in the aggregate, have a material adverse effect on the
Company and all said insurance policies will be in full force and effect after
giving effect to the transactions contemplated by this Agreement and the
transactions referred to herein.
4.17 Finder's Fees. Except as set forth in Section 4.17 of the
Disclosure Schedule, neither Seller nor the Company has incurred or become
liable for any broker's commission, or finder's fee or investment banker's fee
relating to or in connection with the transactions contemplated by this
Agreement or the transactions referred to herein.
4.18 Transactions with Interested Persons. Except as set forth in
Section 4.18 of the Disclosure Schedule, no present or former supervisory
employee, officer, director, stockholder or independent contractor (including
any dentist or professional corporation) and no affiliate (as defined in
Section 9.12(a)) of any such person, is currently a party to any transaction
with the Company, including, without limitation, any contract, agreement or
other arrangement providing for the employment of, loan to or from, furnishing
of services by or to, rental of real or personal property to or from, or
otherwise requiring payments to any such person, and to the knowledge of Seller
and Company no such person owns directly or indirectly on an individual or
joint basis any material interest in, or serves as an officer or director or in
another similar capacity of, any competitor or supplier of the Company, or any
organization which has a contract or arrangement with the Company. There are
no obligations or commitments to, and no income reflected in the financial
statements referred to in Section 4.6 has been derived from, any affiliate of
Seller or the Company, and, following the Closing, the Company shall not have
any obligation or commitment of any kind or description to any such affiliate.
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4.19 Employee Benefit Programs and ERISA. Section 4.19 of the
Disclosure Schedule sets forth all employee benefit plans as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained by the Company under which the Company has any present or
future obligations or liability (the "Benefit Plans"). The Company does not
sponsor nor participate in any "defined benefit plan" as defined in section
3(35) of ERISA or any "multiemployer plan" as defined in Section 3(37) of ERISA
or any "multiemployer plan" as defined in Section 3(37) of ERISA.
To Seller's and Company's knowledge: (i) each Benefit Plan which is an
"employee pension benefit plan" as defined in Section 3(2) of ERISA has
received a favorable determination letter from the Internal Revenue Service;
(ii) all of the Benefit Plans have been maintained and administered, in all
material respects, in accordance with their terms and the applicable provisions
of ERISA and the Internal Revenue Code of 1986 (the "Code"); (iii) no facts
exist which would adversely affect the qualified status of any of the Benefit
Plans; (iv) no prohibited transaction under ERISA has occurred under any of the
Benefit Plans for which there exists neither a statutory nor a regulatory
exception and which would result in any material liability to the Purchaser;
(v) all contributions required under the Benefit Plans have been made, and all
contributions made to or accrued with respect to all Benefit Plans are
deductible under Section 404 or 162 of the Code; (vi) no facts exist which
could result in a material increase in premium costs of the Benefit Plans for
which benefits are insured or a material increase in benefit costs of Benefit
Plans which provide self-insured benefits; and (vii) no Benefit Plan provides
(or has any obligation or commitment to provide) health, medical, disability,
life or other similar benefits with respect to any current or former employees
(or any beneficiary thereof) of Seller beyond their retirement or other
termination of service (other than coverage mandated by Title I, Subtitle B,
Part 6 of ERISA, which coverage is fully paid by the former employee or their
dependents). Other than claims for benefits submitted by participants or
beneficiaries or appeals from denial thereof, to the knowledge of Seller and
Company, there is no litigation, legal action, suit, investigation, claim,
counterclaim or proceeding pending or threatened against any Benefit Plan.
4.20 Environmental Matters. To Seller's and Company's knowledge,
(i) neither Seller nor the Company has any liability under, nor has either ever
violated in any material respect, any Environmental Law (as defined below);
(ii) Seller and the Company and each property owned, operated, leased, or used
in connection with the Company's business, and any facilities and operations
thereon are presently in compliance in all material respects with all
applicable Environmental Laws; (iii) neither Seller nor the Company has ever
entered into or been subject to any judgment, consent decree, compliance order,
or administrative order with respect to any environmental or health and safety
matter or received any request for information, notice, demand letter,
administrative inquiry, or formal or informal complaint or claim with respect
to any environmental or health and safety matter or the enforcement of any
Environmental Law; and (iv) none of the items enumerated in clause (iii) of
this paragraph will be forthcoming. For purposes of this Agreement, (i)
"Environmental Law" shall mean any environmental or health-and-safety-related
law, regulation, rule, ordinance, or by-law at the federal, state, or local
level; and (ii) "the Company's business" shall include the Company and any
predecessor to the Company.
4.21 List of Certain Employees and Suppliers. Section 4.21 of the
Disclosure Schedule lists all managers, employees, consultants and independent
contractors (including dentists and related professional corporations) of the
Company who, individually, have received for the fiscal year ended December 31,
1996, or are scheduled to receive for the fiscal year ended December 31, 1997,
compensation or payments in excess of $100,000. In each case, such Schedule
includes the current job title and aggregate annual compensation of each such
individual. Section 4.21 of the Disclosure Schedule also lists all suppliers
to whom the Company made payments aggregating $50,000 or more during the fiscal
year ended December 31, 1995, showing, with respect to each such supplier, the
name, address and dollar volume involved. To
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the knowledge of Seller and Company, no supplier has any plan or intention to
terminate or reduce its business with the Company or to materially and
adversely modify its relationship therewith.
4.22 Employees; Labor Matters. The Company's business (i) employs
approximately 28 full-time non-dentist employees and 15 part-time non-dentist
employees, (ii) employs approximately 10 dentists (including both full-time and
part-time) (all dentists are employed pursuant to a written agreement between
the Company and the dentist) and (iii) generally enjoys a good
employer-employee relationship. The Company is not delinquent in payments to
any of its employees or dentists for any wages, salaries, commissions, bonuses
or other direct compensation for any services performed for it to the date
hereof or amounts required to be reimbursed to such employees. Except as
provided in Section 4.22 of the Disclosure Schedule, upon termination of the
employment of any of said employees or dentists, no severance or other payments
(including without limitation payments required by the Workers' Adjustment,
Retraining, and Notification Act) will become due.
The Company has no policy, practice, plan or program of paying
severance pay or any form of severance compensation in connection with the
termination of employment or services. The Company is in compliance in all
material respects with all applicable laws and regulations respecting labor,
employment, fair employment practices, terms and conditions of employment, and
wages and hours. There are no, and within the last three years there have not
been, any written or otherwise alleged charges of employment discrimination or
unfair labor practices. The Company is, and at all times since November 6,
1986 has been, in compliance in all material respects with the requirements of
the Immigration Reform Control Act of 1986.
4.23 Material Relationships and Government Contracts.
(a) To the knowledge of Seller and Company, the
relationships of the Company with its customers, Health Care Providers and the
parties to the contracts referred to in Section 4.13(a)(xv) are good patient
and/or commercial working relationships. To the knowledge of Seller and
Company, no Health Care Provider or dental health maintenance organization
("DHMO") with which the Company does business has any plan or intention to
terminate, to cancel or otherwise materially and adversely modify its
relationship with such business or to decrease materially or limit its purchase
of the services of such business. No DHMO relationship or material contract or
other material business relationship of the Company has been terminated since
January 1, 1995.
(b) The Company has no contracts or subcontracts with any
government (including any municipal government) or governmental agency or
activity, and the Company is eligible to submit bids to any DHMO.
4.24 Disclosure. The representations, warranties and statements
contained in this Agreement and in the certificates, exhibits and schedules
delivered by Seller and the Company pursuant to this Agreement, together with
all materials provided by Seller and the Company or its agents with respect to
the Company, do not contain any untrue statement of a material fact and, when
taken together, do not omit to state a material fact required to be stated
therein or necessary in order to make such representations, warranties or
statements not misleading in light of the circumstances under which they were
made. There are no facts known to Seller or Company which presently or may in
the future have a material adverse effect on the business, operations, results
of operations, assets, condition (financial or other) or prospects of the
Company which have not been specifically disclosed herein or in a Schedule
furnished herewith.
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4.25 Corporate Records. The corporate files and records maintained
by the Company accurately record in all material respects all corporate action
taken by its board of directors, governing bodies and committees. The copies
of the corporate records of the Company provided to the Purchaser for review,
are true and complete copies of the originals of such documents.
4.26 List of Directors and Officers. Section 4.26 of the
Disclosure Schedule contains a true and complete list of all current directors
and officers of the Company.
4.27 Additional Financial Representations.
(a) [INTENTIONALLY OMITTED]
(b) Company Accounts Receivable. As of the Closing, the
Company's aggregate accounts receivable shall be at least equal to ninety-five
percent (95%) the average of the Company's accounts receivable as of the last
day of February 1997, March 1997 and April 1997, all of which have been
calculated by Seller in accordance with the cash method of accounting.
(c) Company Accounts Payable. As of the Closing, the
Company aggregate accounts payable (in accordance with the cash method of
accounting) shall be zero.
(d) No Other Indebtedness. As of the Closing, the
aggregate outstanding indebtedness (i.e., indebtedness which is not an account
payable as described in Section 4.27(c)), together with the amount of
indebtedness the payment of which has been guaranteed by Company, is zero.
(e) Net Asset Value of Company. As of the date of
Closing, the net asset value of the Company will be at least $500,000.00. For
purposes of this provision, Purchaser's change of accounting methods (from cash
to accrual) shall not adversely effect the calculation of the Company's net
asset value as of the Closing.
4.28 Investment Representations. Seller, in connection with their
acquisition of the Monarch Common Stock, represents that each of them is an
"accredited investor" as such term is defined in Rule 501 under the Securities
Act of 1933, as amended (the "Securities Act"). Seller represents to the
Purchaser that they are acquiring the Monarch Common Stock for their own
account, for investment only and not with a view to, or any present intention
of, effecting a distribution of such securities or any part thereof except
pursuant to a registration or an available exemption under applicable law.
Seller acknowledges that the Monarch Common Stock has not been registered under
the Securities Act or the securities laws of any state or other jurisdiction
and cannot be disposed of unless it is subsequently registered under the
Securities Act and any applicable state laws or exemption from such
registration is available. Seller represents that each of them has such
knowledge and experience in financial and business matters, that they are
capable of evaluating the merits and risks of the investment contemplated by
this Agreement and the transactions contemplated hereby and the transactions
referred to herein and making an informed investment decision with respect
thereto.
Seller acknowledges and agrees that the following legend shall be
typed on each certificate evidencing shares of the Monarch Common Stock issued
hereunder:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES OR BLUE
SKY LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR
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22
OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES AND (3) IN ACCORDANCE WITH APPLICABLE STATE SECURITIES AND BLUE
SKY LAWS.
ARTICLE 5. COVENANTS OF SELLER.
5.1 Making of Covenants and Agreements. Seller hereby makes the
covenants and agreements set forth in this Article 5.
5.2 Cooperation. Seller shall cooperate with all reasonable
requests of the Purchaser and any of its representatives and agents to more
effectively consummate the transactions contemplated hereby and the
transactions referred to herein.
5.3 Consents. Seller shall obtain any and all consents,
authorizations and approvals, in a form reasonably acceptable to Purchaser,
required or necessary in connection with the consummation of the transactions
contemplated hereby or referred to herein, including, without limitations, any
consents, authorizations or approvals required or necessary under, among other
things, real property leases, capital leases and operating leases, in
connection with the transfer of the Stock. With respect to the leases
described in the previous sentence, Seller covenants and states that such
leases are in full force and effect and no defaults exist with respect to such
leases.
5.4 Notice of Default. Promptly upon the occurrence of, or
promptly upon Seller becoming aware of the impending or threatened occurrence
of, any event or condition which would cause or constitute a breach or default
of any of the representations, warranties or covenants of Seller contained in
or referred to in this Agreement or in any Schedule or Exhibit referred to in
this Agreement had such representation, warranty or covenant been made as of
the time of discovery of such event or condition, or would have caused or
constituted a breach or default of any of such representations, warranties or
covenants of Seller had such event occurred or been known to Seller prior to
the date hereof, Seller shall give detailed written notice thereof to the
Purchaser, and Seller shall use their best efforts to prevent or promptly
remedy the same. Should any fact or condition require any change in the
Disclosure Schedule, Seller will promptly deliver to Purchaser a supplement to
the Disclosure Schedule specifying such change.
5.5 Operation of the Business of the Company. Between the date of
this Agreement and the date of Closing, Seller will, and will cause the Company
to:
(a) conduct the business of the Company only in the
ordinary course of business consistent with past practices;
(b) use their best efforts to preserve intact the current
business organization of the Company, keep available the services of the
current officers, employees, and agents of the Company, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with the Company;
(c) make available promptly to Purchaser, its
accountants, attorneys and financial advisors such information regarding the
Company's business, as well as selected employees and dentists of the Company,
as reasonably may be necessary for Purchaser to conduct and complete timely its
due diligence investigation of the Company;
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(d) confer with Purchaser concerning operational matters
of a material nature; and
(e) otherwise report periodically to Purchaser concerning
the status of the business, operations, and finances of the Company.
5.6 Negative Covenants. Except as otherwise expressly permitted
by this Agreement, between the date of this Agreement and the date of Closing,
Seller will not, and will cause the Company not to, without the prior consent
of Purchaser, take any affirmative action, or fail to take any reasonable
action within their control, as a result of which any of the changes or events
listed in Section 4.9 is likely to occur. Each Seller agrees not to transfer
the Stock or any interest in the Stock to any person or entity (or enter into
any agreement or understanding to do so) without the prior consent of
Purchaser.
5.7 Payment of Indebtedness by Related Persons. Seller will cause
all indebtedness owed to the Company by Seller or any affiliate of Seller to be
paid in full prior to Closing.
5.8 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Article 13, Seller will not, and will cause the Company
and each of their representatives and affiliates not to, directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non- public information to, or consider the merits
of any unsolicited inquiries or proposals from, any person or entity (other
than Purchaser) relating to any transaction involving the sale of the business
or assets (other than in the ordinary course of business consistent with past
practices) of the Company, or any of the capital stock of the Company, or any
merger, consolidation, business combination, or similar transaction involving
the Company.
5.9 Best Efforts. Between the date of this Agreement and the date
of Closing, Seller will use its best efforts to cause the conditions in
Articles 11 and 12 to be satisfied.
5.10 Agreement to Vote in Favor of Merger. Seller shall take all
actions necessary to vote as a holder of the Stock to approve the Merger and
shall sign all documents as may be reasonably requested by Purchaser to
evidence such approval of the Merger.
ARTICLE 6. COVENANTS OF THE PURCHASER.
6.1 Making of Covenants and Agreements. The Purchaser hereby
makes the covenants and agreements set forth in this Article 6.
6.2 Cooperation. The Purchaser shall cooperate with all
reasonable requests of Seller and their representatives and agents to more
effectively consummate the transactions contemplated hereby or the transactions
referred to herein.
6.3 Consents. Purchaser shall assist Seller and the Company in
obtaining any and all consents, authorizations and approvals necessary in
connection with the consummation of the transactions contemplated hereby or
referred to herein.
6.4 Removal of Seller as a Guarantor. Following the Closing, the
Purchaser and its affiliates shall use their best reasonable efforts, with the
strong cooperation of Seller, to cause each lessor of property to the Company
to remove Seller as a guarantor and release them from any liability to each
such lessor; provided, however, that Seller shall not be removed as a guarantor
if such removal will prevent the
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Seller from obtaining any consent, authorization or approval required or
necessary in connection with the transfer of the Stock.
6.5 Notice of Default. Promptly upon the occurrence of, or
promptly upon Purchaser becoming aware of the impending or threatened
occurrence of, any event or condition which would cause or constitute a breach
or default of any of the representations, warranties or covenants of Purchaser
contained in or referred to in this Agreement or in any Schedule or Exhibit
referred to in this Agreement had such representation, warranty or covenant
been made as of the time of discovery of such event or condition, or would have
caused or constituted a breach or default of any of such representations,
warranties or covenants of Purchaser had such event occurred or been known to
Purchaser prior to the date hereof, Purchaser shall give detailed written
notice thereof to the Seller, and Purchaser shall use its best efforts to
prevent or promptly remedy the same. Should any fact or condition require any
change in the Disclosure Schedule, Purchaser will promptly deliver to Seller a
supplement to the Disclosure Schedule specifying such change.
6.6 Best Efforts. Between the date of this Agreement and the date
of Closing, Purchaser will use its best efforts to cause the conditions in
Articles 11 and 12 to be satisfied; provided, however, that Monarch shall have
no obligation to consummate its initial public offering of Monarch Common
Stock, and Monarch and Purchaser shall not, under any circumstances, be liable
to any Seller for any failure to consummate such initial public offering.
6.7 Delivery of Quarterly Earnings Release. Monarch shall deliver
to Seller on a quarterly basis through the end of 1998 its quarterly earnings
release.
ARTICLE 7. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ARRANGEMENTS, COVENANTS
AND OBLIGATIONS.
All representations, warranties, agreements, covenants and obligations
herein or in any Schedule, exhibit or certificate delivered by any party to the
other party incident to the transactions contemplated hereby are material,
shall be deemed to have been relied upon by the other party and shall survive
the Closing and the Merger regardless of any investigation and shall not merge
in the performance of any obligation by either party hereto, subject to the
provisions of Article 8 hereof.
ARTICLE 8. INDEMNIFICATION.
8.1 Indemnification by Seller. Seller, on behalf of themselves
and their successors, executors, administrators, estates, heirs and assigns
(collectively, for purposes of this Article 8, "Sellers"), agrees to defend,
indemnify and hold Purchaser, all subsidiaries and affiliates of any of the
foregoing (including without limitation stockholders of any of the foregoing
(other than themselves) and persons serving as officers, directors, partners,
employees or agents of Purchaser, or such subsidiaries or affiliates thereof
(in each case, other than themselves)) (individually a "Purchaser Indemnified
Party" and collectively the "Purchaser Indemnified Parties"), harmless from and
against any and all damages, liabilities, losses, taxes, fines, penalties,
costs, and expenses (including, without limitation, reasonable fees of counsel)
of any kind or nature whatsoever (whether or not arising out of third-party
claims and including all amounts paid in investigation, defense or settlement
of the foregoing) which may be sustained or suffered by any such Purchaser
Indemnified Party, based upon, arising out of, by reason of or otherwise in
respect of or in connection with: (a) any inaccuracy in or breach of any
representation or warranty made by Seller in this Agreement, or in any
Schedule, Exhibit or certificate delivered by or on behalf of Seller or the
Company as part of or pursuant to this Agreement, or any claim, action or
proceeding asserted, instituted or arising
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25
out of any matter or thing covered by such representations or warranties; or
(b) any breach of any covenant or agreement made by or on behalf of Seller in
this Agreement, or in any Schedule, Exhibit or certificate delivered by or on
behalf of Seller as part of or pursuant to this Agreement. The rights of
Purchaser Indemnified Parties to recover indemnification in respect of any
occurrence referred to in clause (b) of this Section 8.1 shall not be limited
by the fact that such occurrence may not constitute an inaccuracy in or breach
of any representation or warranty referred to in clause (a) of this Section
8.1.
8.2 Indemnification by Purchaser. Purchaser, on behalf of itself
and its successors and assigns (collectively, for purposes of this Article 8,
"Purchasers"), agrees to defend, indemnify and hold Seller, and their
successors, executors, administrative, estates, heirs and assigns
(individually, a "Seller Indemnified Party" and collectively, the "Seller
Indemnified Parties"), harmless from and against any and all damages,
liabilities, losses, taxes, fines, penalties, costs and expenses (including,
without limitation, reasonable fees of counsel) of any kind or nature
whatsoever ("Claims") (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing) which may be sustained or suffered by any such Seller Indemnified
Party, based upon, arising out of, by reason of or otherwise in respect of or
in connection with: (a) any inaccuracy in or breach of any representation or
warranty made by Purchaser in this Agreement, or in any Schedule, Exhibit or
certificate delivered by or on behalf of Purchaser as part of or pursuant to
this Agreement, or any claim, action or proceeding asserted, instituted or
arising out of any matter or thing recovered by such representations or
warranties; or (b) any breach of any covenant or agreement made by or on behalf
of Purchaser in this Agreement, or in any Schedule, Exhibit or certificate
delivered by or on behalf of Purchaser as part of or pursuant to this
Agreement. The rights of Seller Indemnified Parties to recover indemnification
in respect of any occurrence referred to in clause (b) of this Section 8.2
shall not be limited by the fact that such occurrence may not constitute an
inaccuracy in or breach of any representation or warranty referred to in clause
(a) of this Section 8.2.
8.3 Notice; Defense of Claims.
(a) Promptly after receipt by an indemnified party of
notice of any third-party or other claim, liability or expense to which the
indemnification obligations hereunder would apply, including in connection with
any governmental, employer or malpractice related proceeding, the indemnified
party shall give notice thereof in writing to the indemnifying party or
parties, but the omission to so notify the indemnifying party or parties
promptly will not relieve the indemnifying party or parties from any liability
except to the extent that the indemnifying party or parties shall have been
materially prejudiced as a result of the failure or delay in giving such
notice. Such notice shall state the information then available regarding the
amount and nature of such claim, liability or expense and shall specify the
provision or provisions of this Agreement under which the liability or
obligation is asserted.
(b) In the case of any third-party claim, if, within
twenty (20) days after receiving the notice described in the preceding
sentence, the indemnifying party or parties (i) give written notice to the
indemnified party or parties stating that they intend to defend in good faith
against such claim, liability or expense at their own cost and expense and (ii)
provide assurance and security reasonably acceptable to such indemnified party
or parties that such indemnification will be paid fully and promptly if
required and such indemnified party or parties will not incur cost or expense
during the proceeding, then counsel for the defense shall be selected by the
indemnifying party or parties (subject to the consent of such indemnified party
or parties, which consent shall not be unreasonably withheld) and such
indemnified party or parties shall not be required to make any payment with
respect to such claim, liability or expense as long as the indemnifying party
or parties are conducting a good faith and diligent defense at their own
expense; provided, however, that the assumption of defense of any such matters
by the indemnifying party or parties
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26
shall relate solely to the claim, liability or expense that is subject or
potentially subject to indemnification. If the indemnifying party or parties
assume such defense in accordance with the preceding sentence, they shall have
the right, with the consent of such indemnified party or parties, which consent
shall not be unreasonably withheld, to settle all indemnifiable matters related
to claims by third parties which are susceptible to being settled provided the
indemnifying party's or parties' obligation to indemnify such indemnified party
or parties therefor will be fully satisfied and the settlement includes a
complete release of such indemnified party or parties.
(c) The indemnifying party or parties shall keep such
indemnified party or parties apprised of the status of the claim, liability or
expense and any resulting suit, proceeding or enforcement action, shall furnish
such indemnified party or parties with all documents and information that such
indemnified party or parties shall reasonably request and shall consult with
such indemnified party or parties prior to acting on major matters, including
settlement discussions.
(d) Notwithstanding anything herein stated, such
indemnified party or parties shall at all times have the right fully to
participate in such defense at its own expense directly or through counsel;
provided, however, if the named parties to the action or proceeding include
both the indemnifying party or parties and the indemnified party or parties and
representation of both parties by the same counsel would be inappropriate under
applicable standards of professional conduct, the expense of separate counsel
for such indemnified party or parties shall be paid by the indemnifying party
or parties. If no such notice of intent to dispute and defend is given by the
indemnifying party or parties, or if such diligent good faith defense is not
being or ceases to be conducted, such indemnified party or parties shall, at
the expense of the indemnifying party or parties, undertake the defense of
(with counsel selected by such indemnified party or parties), and shall have
the right to compromise or settle such claim, liability or expense. If such
claim, liability or expense is one that by its nature cannot be defended solely
by the indemnifying party or parties, then such indemnified party or parties
shall make available all information and assistance that the indemnifying party
or parties may reasonably request and shall cooperate with the indemnifying
party or parties in such defense.
8.4 Right of Set-off. Upon notice to Seller specifying in
reasonable detail the basis for such set-off, the Purchaser Indemnified Parties
may set off any amounts to which it may be entitled under Section 8.1 against
amounts otherwise payable under the deferred payments provided for in Section
3.1. The exercise of such right of set-off by Purchaser in good faith, whether
or not ultimately determined to be justified, will not constitute a default of
Purchaser under Section 3.1. Neither the exercise of nor the failure to
exercise such right of set-off will constitute an election of remedies or limit
Purchaser in any manner in the enforcement of any other remedies that may be
available to it.
8.5 Satisfaction of Indemnification Obligations. Any indemnity
payable pursuant to this Article 8 shall be paid within the later of (a) ten
(10) days after the indemnified party's request therefor or (b) ten (10) days
prior to the date on which the Loss upon which the indemnity is based is
required to be satisfied by the indemnified party.
ARTICLE 9. MISCELLANEOUS.
9.1 Fees, Expenses and Certain Taxes.
(a) Purchaser will assume and pay Seller's fees and
expenses in connection with this Agreement and the transactions contemplated
hereby and thereby up to an amount not in excess of
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27
$250,000.00. The Purchaser also will pay its fees and expenses in connection
with this Agreement and the transactions contemplated hereby and thereby.
(b) Subject to Section 9.1(a) above, Seller will pay all
costs (i) incurred, whether at or subsequent to the Closing, in connection with
the transfer of the Stock to the Purchaser as contemplated by this Agreement,
including without limitation, all transfer taxes and charges applicable to such
transfer, and (ii) of obtaining all necessary permits, waivers, registrations
or consents with respect to any assets, rights or contracts of the Purchaser in
connection with or as a result of transactions contemplated by this Agreement
and the transactions referred to herein.
(c) Purchaser will pay all costs incurred, whether at or
subsequent to the Closing, in connection with the transfer of the Monarch
Common Stock to the Seller as contemplated by this Agreement, including without
limitation, all transfer taxes and charges applicable to such transfer.
9.2 Governing Law. This Agreement shall be construed under and
governed by the internal laws of the State of Texas without regard to its
conflict of laws provisions.
9.3 Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon confirmation of
receipt, or if sent by registered or certified mail, upon the sooner of the
expiration of three days after deposit in United States post office facilities
properly addressed with postage prepaid or acknowledgment of receipt. All
notices and payments to a party will be sent to the addresses set forth below
or to such other address or person as such party may designate by notice to
each other party hereunder:
TO THE PURCHASER: Dental Centers of Indiana (Monarch), Inc.
c/o Monarch Dental Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Monarch Dental Corporation ▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
TO THE SELLER: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
126 South Mulberry ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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28
Any notice given hereunder may be given on behalf of any party by their or its
counsel or other authorized representatives.
9.4 Entire Agreement. This Agreement, including the Disclosure
Schedule referred to herein and the other writings specifically identified
herein or contemplated hereby or delivered in connection with the transactions
contemplated hereby, is complete, reflects the entire agreement of the parties
with respect to its subject matter, and supersedes all previous written or oral
negotiations, commitments and writings, including, without limitation, the term
sheet dated April 28, 1997.
9.5 Severability. In the event any section or part of this
Agreement or any of the attached exhibits or parts thereof should be adjudged
invalid, such adjudication shall in no manner affect the other sections or
exhibits, which shall remain in full force and effect as if the section or
exhibit so declared or adjudged invalid were not originally a part hereof.
9.6 Assignability; Binding Effect. This Agreement and any rights
hereunder shall be assignable by the Purchaser, upon written notice to Seller,
(i) to one or more corporations or partnerships controlling, controlled by or
under common control with the Purchaser, directly or indirectly, provided the
Purchaser shall remain liable for its obligations hereunder in connection with
any such assignment, (ii) with Seller's approval, to any successor or acquiror
of the Purchaser or its affiliates provided such entity assumes or agrees to be
bound by the Purchaser's obligations hereunder, or (iii) with Seller's
approval, to the entity providing financing in connection with the transactions
contemplated hereby or to any successor or assign or such an entity (including
without limitation any such successor or assign in connection with any
refinancing, renewal or extension of such refinancing). This Agreement may not
be assigned by Seller without the prior written consent of the Purchaser. This
Agreement shall be binding upon and enforceable by, and shall inure to the
benefit of, the parties hereto and their respective successors, heirs and
permitted assigns (including without limitation the estate and heirs of Seller
in the event of their death).
9.7 Waiver of Breach or Violation Not Deemed Continuing. The
waiver by either party of a breach or violation of any provision of this
Agreement shall not operate as, or be construed to be, a waiver of any
subsequent breach or violation of any provision thereof. No breach or
violation of any provision hereof may be waived except by an agreement in
writing signed by the waiving party.
9.8 Captions and Gender. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun
in reference to a party hereto shall be deemed to include the feminine or
neuter pronoun, as the context may require.
9.9 Execution in Counterparts. For the convenience of the parties
and to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
9.10 Amendments. This Agreement may not be amended or modified,
nor may compliance with any condition or covenant set forth herein be waived,
except by a writing duly and validly executed by each of the parties hereto or
in the case of a waiver, the party or parties waiving compliance.
9.11 Certain Remedies. If any party should default in the
performance of its obligations hereunder, the other party or parties, as
applicable, shall, in addition to any other of its rights and remedies
hereunder or otherwise, be entitled to seek the remedy of specific performance,
and each of the parties hereto expressly waives the defense that a remedy in
damages will be adequate.
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29
9.12 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a person shall mean (i) with respect
to a person, any member of such person's family (including any child,
step-child, parent, step-parent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law); (ii) with
respect to the Company, any officer, director, stockholder, partner or investor
in such Company or of or in any affiliate of such Company; and (iii) with
respect to a person or Company, any person or Company which directly or
indirectly controls, is controlled by, or is under common control with such
person or Company.
(b) "breach," when used in connection with the breach of
a representation, warranty, covenant, obligation, payment or other provision of
this Agreement or any instrument delivered pursuant to this Agreement, will be
deemed to have occurred if there is or has been (i) any inaccuracy in or breach
of, or any failure to perform or comply with, such representation, warranty,
covenant, obligation, or other provision, or (ii) any claim (by any person) or
other occurrence or circumstance that is or was inconsistent with such
representation, warranty, covenant, obligation, or other provision, and the
term "breach" means any such inaccuracy, breach, failure, claim, occurrence, or
circumstance; provided, however, that the determination of whether a breach has
occurred shall be subject to materiality provisions, if any, included in
particular representations, warranties, covenants, obligations and other
provisions of this Agreement.
(c) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(d) "person" means an individual, corporation,
partnership, limited liability association, trust or any unincorporated
organization; and
(e) "subsidiary" of a person means any corporation more
than 50 percent of whose outstanding voting securities, or any partnership,
joint venture or other Company more than 50 percent of whose total equity
interest, is directly or indirectly owned by such person.
9.13 Public Announcements. Any public announcement or similar
publicity with respect to this Agreement or the transactions contemplated by
this Agreement will be issued, if at all, at such time and in such manner as
Purchaser determines. Unless consented to by Purchaser in advance or required
by applicable law, rule, regulation, ruling or order, prior to the Closing,
Seller shall, and shall cause the Company to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any person.
Seller and Purchaser will consult with each other concerning the means by which
the Company's employees, customers, and suppliers and others having dealings
with the Company will be informed of the transactions contemplated by this
Agreement, and Purchaser will have the right to be present for any such
communication.
9.14 Confidentiality. Between the date of this Agreement and the
date of Closing, Purchaser and Seller will maintain in confidence, and will
cause the directors, officers, employees, agents, and advisors of Purchaser,
Seller and the Company to maintain in confidence any written, oral, or other
information obtained in confidence from another party or the Company in
connection with this Agreement or the transactions contemplated by this
Agreement, unless (a) such information is already known to such party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the transactions
contemplated
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30
by this Agreement, or (c) the furnishing or use of such information is required
by legal proceedings. Notwithstanding anything in this Agreement to the
contrary, Monarch is expressly permitted to disclose fully this transaction,
and append a copy of this Agreement and the Disclosure Schedules, including,
but not limited to the Company's financial statements, the Collateral
Agreements and related documents, in any filings with the Securities and
Exchange Commission.
If the transactions contemplated by this Agreement are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request. Whether or not the
Closing takes place, Seller waives, and will upon Purchaser's request, cause
the Company to waive, any cause of action, right, or claim arising out of the
access of Purchaser or its representatives to any trade secrets or other
confidential information of the Company except for the intentional competitive
misuse by Purchaser of such trade secrets or confidential information.
9.15 Litigation. In the event of any litigation between the
parties hereto to enforce any provision or right hereunder, the unsuccessful
party to such litigation covenants and agrees to pay to the successful party
herein all costs and expenses reasonably including, but not limited to,
reasonable attorney's fees incurred therein by such successful party, which
costs, expenses and attorney's fees shall be included in and as a part of any
judgment rendered in such litigation.
9.16 Damage for Sellers' Breach or Default. In the event that the
transactions contemplated by this Agreement are not consummated in accordance
with the terms hereof due to Sellers' breach of or default under this
Agreement, Sellers shall pay to Purchaser immediately upon its demand an amount
equal to two hundred fifty thousand dollars ($250,000.00) which is a fair and
reasonable estimate of Purchaser's expenses and losses if Sellers breach or
default under this Agreement.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
10.1 Making of Representations and Warranties. As a material
inducement to Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser hereby makes the representations
and warranties to Seller contained in this Article 10.
For the purposes of this Agreement, references to "knowledge" of
Purchaser or "known" by Purchaser or words of similar import, shall be deemed
to include such knowledge as Purchaser or the following executive officer of
Monarch (i.e., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇) actually
has or reasonably ought to have in the ordinary course of performing their
duties. For the purposes of this Article 10, Purchaser is deemed to have
knowledge of each of the documents entered into in connection with the
transactions contemplated hereby.
10.2 Organization of Purchaser. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Indiana with
full corporate power and authority to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is currently conducted by it.
10.3 Authority of Purchaser. Purchaser has full corporate power
and authority (i) to enter into (a) this Agreement and (b) each agreement,
document and instrument to be executed and delivered by Purchaser pursuant to
or contemplated by this Agreement, including, but not limited to, the
Collateral Agreements, and (ii) to carry out the transactions contemplated
hereby and thereby. The execution, delivery and performance by Purchaser of
this Agreement and the Collateral Agreements have been duly authorized by all
necessary action of Purchaser, and no other action on the part of Purchaser is
required
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31
in connection therewith. This Agreement, the Collateral Agreements and each
such agreement, document and instrument executed and delivered by Purchaser
pursuant to this Agreement constitute valid and binding obligations of
Purchaser enforceable in accordance with their respective terms, except as may
be limited by bankruptcy, reorganization, fraudulent conveyance, insolvency or
similar laws of general application relating to or affecting the rights of
creditors, and subject to general principles of equity.
The execution, delivery and performance by Purchaser of this
Agreement, the Collateral Agreements and each such agreement, document and
instrument pursuant to or in connection with this Agreement to which it is a
party:
(i) do not and will not violate any provision of the
charter, by-laws or equivalent constituent documents
of Purchaser;
(ii) do not and will not violate in any material respect
any laws of the United States or any state or any
other jurisdiction applicable to Purchaser or require
Purchaser to obtain any approval, consent or waiver
of, or make any filing with, any person or entity
(governmental or otherwise) which has not been
obtained or made;
(iii) do not and will not (a) result in a breach of, (b)
constitute a default under, (c) accelerate any
obligation under or (d) give rise to a right of
termination of any indenture, loan or credit
agreement, or other agreement, contract, instrument,
mortgage, lien, lease, permit, authorization, order,
writ, judgment, injunction, decree, determination or
arbitration award, whether written or oral, to which
Purchaser is a party or by which the property of
Purchaser is bound or affected; and
(iv) do not and will not result in the creation or
imposition of any Lien on any of the Monarch Common
Stock.
10.4 Litigation. There is no litigation pending or, to the
knowledge of Purchaser, threatened against Purchaser which would have a
material adverse effect on the business, operations, results of operations,
assets, condition (financial or other) or prospects of Purchaser or which could
prevent or hinder the consummation of the transactions contemplated by this
Agreement.
10.5 Finder's Fees. Purchaser has not incurred or become liable
for any broker's commission or finder's fee or investment banker's fee relating
to or in connection with the transactions contemplated by this Agreement.
10.6 Warranties and Representations Concerning the Company's
Business. Purchaser acknowledges that no warranties or representations
concerning the Company's business have been made by Seller or its agents, or
from any other party in this transaction, and that no understanding has been
had or agreement has been made between the parties, except as set forth in this
Agreement.
10.7 Disclosure. The representations, warranties and statements
contained in this Agreement and in the certificates, exhibits and schedules
delivered by Purchaser pursuant to this Agreement, together with all materials
provided Purchaser or its agents, do not contain any untrue statement of a
material fact and, when taken together, do not omit to state a material fact
required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made.
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32
10.8 Common Stock. Upon consummation of the transactions
contemplated hereby, the shares of Monarch Common Stock issued to Seller
pursuant to Section 1.2.1 and 3.1 (if any) shall be duly authorized, validly
issued, fully paid, non-assessable, and free and clear of all Liens. All
shares of Monarch Common Stock, if any, issued pursuant to any stock options
granted under Section 3.2 shall be, when issued, duly authorized, validly
issued, fully paid and non- assessable. In reliance upon Seller's
representations and warranties in Section 4.28, the issuance of all shares of
Monarch Common Stock to Seller by Purchaser complies with applicable federal
and state securities laws.
10.9 Financial Statements; Undisclosed Liabilities. Purchaser has
previously delivered to Seller the audited balance sheet for Monarch as of
December 31, 1996 and an audited statement of income, retained earnings and
cash flows for the year then ended including full generally accepted accounting
principles disclosures, a copy of which is attached hereto as Section 10.9 of
Purchaser's Disclosure Schedule. Said financial statement has been prepared by
Monarch from its books and records, and presents fairly in all respects the
consolidated financial condition of Monarch at the dates of said statement and
the consolidated results of operations for the period covered thereby in
accordance with generally accepted accounting principles in the United States.
10.10 Payment of Obligations. Subsequent to the Closing, Purchaser
shall pay, or cause to pay, all of the Company's liabilities in the ordinary
course of business as such liabilities become due except as may be contested in
good faith.
10.11 Ordinary Course. Since the date of the Monarch's audited
balance sheet, Monarch has conducted its business only in the ordinary course
and in a manner consistent with prior practices.
ARTICLE 11. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE.
Purchaser's obligation to acquire the Stock and to take the other
actions required to be taken by Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Purchaser, in whole or in part):
11.1 Accuracy of Representations. All of Seller's representations
and warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all respects as of the date of this Agreement, and must be accurate
in all material respects as of the date of Closing as if made on the date of
Closing, without giving effect to any supplement to the Disclosure Schedule.
11.2 Seller's Performance.
(a) All of the covenants and obligations that Seller is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all respects.
(b) Seller must have delivered each of the Collateral
Agreements and other documents required to be delivered by Seller pursuant to
the provisions of this Agreement.
11.3 Consent of NationsBank. The consent of NationsBank of Texas,
N.A. to the consummation of the transactions contemplated by this Agreement
must have been executed and obtained and must be in full force and effect.
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33
11.4 Additional Documents. Each of the following documents must
have been executed and delivered to Purchaser:
(a) a certificate executed by each Seller representing
and warranting to Purchaser that each of Seller's representations and
warranties in this Agreement was accurate in all respects as of the date of
this Agreement and is accurate in all material respects as of the date of
Closing as if made on the date of Closing (giving full effect to any
supplements to the Disclosure Schedule that were delivered by Seller to
Purchaser prior to the date of Closing in accordance with Section 5.4);
(b) a Certificate of Merger; and
(c) such other documents as Purchaser may reasonably
request for the purpose of (i) evidencing the accuracy of any of Seller's
representations and warranties, (ii) evidencing the performance by Seller of,
or the compliance by Seller with, any covenant or obligation required to be
performed or complied with by Seller, (iii) evidencing the satisfaction of any
condition referred to in this Article 11, or (iv) otherwise facilitating the
consummation or performance of any of the transactions contemplated by this
Agreement, including, without limitation, resignations of the directors and
officers of the Company requested by Purchaser.
11.5 No Proceedings. Since the date of this Agreement, there must
not have been commenced against Purchaser, or against any person or entity
affiliated with Purchaser, any proceeding (a) involving any material challenge
to, or seeking substantial damages or other substantial relief in connection
with, any of the transactions contemplated by this Agreement, or (b) that has
the effect of making illegal any of the transactions contemplated by this
Agreement.
11.6 No Claim Regarding Stock Ownership or Merger Proceeds. There
must not have been made or threatened by any person any claim asserting that
such person (a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, the Stock or any stock of, or any
other voting, equity, or ownership interest in, the Company, or (b) is entitled
to all or any portion of the Closing Purchase Price.
11.7 No Prohibition. Neither the consummation nor the performance
of any of the transactions contemplated by this Agreement will, directly or
indirectly (with or without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause Purchaser or any
person affiliated with Purchaser to suffer any material adverse consequence
under, any applicable law, rule, regulation, ruling or order.
11.8 Consent of Indiana Securities Board. The consent of the
Indiana Securities Board to the sale of the Monarch Common Stock by Purchaser
to Seller shall have been obtained if required by applicable law or regulation.
11.9 Monarch Initial Public Offering. Monarch shall have
consummated the initial public offering of Monarch Common Stock on or before
October 31, 1997.
ARTICLE 12. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
Seller's obligation to sell the Stock and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Seller, in whole or in part):
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34
12.1 Accuracy of Representations. All of Purchaser's
representations and warranties in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), must
have been accurate in all respects as of the date of this Agreement and must be
accurate in all material respects as of the date of Closing as if made on the
date of Closing.
12.2 Purchaser's Performance.
(a) All of the covenants and obligations that Purchaser
is required to perform or to comply with pursuant to this Agreement at or prior
to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all respects.
(b) Purchaser must have delivered each of the Collateral
Agreements and other documents required to be delivered by Purchaser and must
have made the payments required to be made by Purchaser pursuant to the
provisions of this Agreement.
12.3 Additional Documents. Each of the following documents must
have been executed and delivered to Seller:
(a) A certificate executed by Purchaser representing and
warranting to Seller that each of Purchaser's representations and warranties in
this Agreement was accurate in all respects as of the date of this Agreement
and is accurate in all material respects as of the date of Closing as if made
on the date of Closing;
(b) a Certificate of Merger; and
(c) Such documents as Seller may reasonably request for
the purpose of (i) evidencing the accuracy of any representation or warranty of
Purchaser, (ii) evidencing the performance by Purchaser of, or the compliance
by Purchaser with, any covenant or obligation required to be performed or
complied with by Purchaser, (iii) evidencing the satisfaction of any condition
referred to in this Article 12, or (iv) otherwise facilitating the consummation
of any of the transactions contemplated by this Agreement.
12.4 No Proceedings. Since the date of this Agreement, there must
not have been commenced against Seller, or against any person or entity
affiliated with Seller, any proceeding (a) involving any material challenge to,
or seeking substantial damages or other substantial relief in connection with,
any of the transactions contemplated by this Agreement, or (b) that has the
effect of making illegal any of the transactions contemplated by this
Agreement.
12.5 No Prohibition. Neither the consummation nor the performance
of any of the transactions contemplated by this Agreement will, directly or
indirectly (with or without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause Seller or any
person affiliated with Seller to suffer any material adverse consequence under,
any applicable law, rule, regulation, ruling or order.
12.6 Monarch Initial Public Offering. Monarch shall have
consummated its initial public offering of Monarch Common Stock on or before
October 31, 1997.
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35
ARTICLE 13. TERMINATION
13.1 Termination Events. This Agreement may, by notice given prior
to or at the Closing, be terminated:
(a) by either Purchaser or Seller if a material breach of
any provision of this Agreement has been committed by the other party and such
breach has not been waived;
(b) (i) by Purchaser if any of the conditions in Article
11 has not been satisfied as of the date of Closing or if satisfaction of such
a condition is or becomes impossible (other than through the failure of
Purchaser to comply with its obligations under this Agreement) and Purchaser
has not waived such condition on or before the date of Closing; or (ii) by
Seller, if any of the conditions in Article 12 has not been satisfied of the
date of Closing or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Seller to comply with their obligations
under this Agreement) and Seller has not waived such condition on or before the
date of Closing;
(c) by mutual consent of Purchaser and Seller; or
(d) by either Purchaser or Seller if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before November 15, 1997, or such later date as the parties may agree upon.
13.2 Effect of Termination. Each party's right of termination
under Section 13.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
13.1, all further obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 9.1, 9.13 and 9.14 will
survive; provided, however, that if this Agreement is terminated by a party
because of the breach of the Agreement by the other party or because one or
more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
* * * * *
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______ _______ _______
36
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the date set forth above by their
duly authorized representatives.
PURCHASER:
DENTAL CENTERS OF INDIANA (MONARCH), INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, Vice President
MONARCH:
MONARCH DENTAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S., President
COMPANY:
DENTAL CENTERS OF INDIANA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, D.D.S., President
SELLER:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, D.D.S.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
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