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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 18, 1998
MONARCH DENTAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 0-22835 51-0363560
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(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
4201 Spring Valley Road, Suite 320, Dallas, Texas 75244
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (972) 702-7446
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets.
On September 18, 1998, Monarch Dental Corporation (the "Company")
acquired certain dental assets of Talbert Medical Management Corporation
("Talbert") which operated dental offices in Utah, Arizona and California.
Simultaneous with the closing of this transaction, the Company completed the
sale of the California dental offices to Community Dental Services, Inc. After
the divestiture of the California dental offices, the Talbert acquisition
encompassed 10 dental offices with 32 dentists. The acquisition was structured
as a merger between a subsidiary of the Company and Talbert. The Company
intends to continue to operate Talbert as a dental practice.
In the acquisition, the Company paid approximately $7.2 million in
cash. The Company utilized its credit facility with a bank syndicate to fund
the purchase. Additional consideration of up to $400,000 determined by an
agreed upon formula will be paid to Talbert within sixty days following the
consummation of the sale of the California dental offices. The purchase price
was determined by negotiations between the parties.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
2.1 Asset Purchase Agreement, dated as of September 1, 1998, by
and among Monarch Dental Associates (Utah), Inc., Robert
Anderson, D.D.S., Inc., James Brodahl, D.D.S., Inc., Larry
Kaban, D.D.S., Inc., John Whitley, D.D.S., Inc., Talbert
Dental Group, P.C., Talbert Dental Group, Inc. and Talbert
Medical Management Corporation (excluding schedules, which
the Registrant agrees to furnish supplementally to the
Commission upon request)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Monarch Dental Corporation
(Registrant)
Date: October 2, 1998 By: /s/ Steven G. Peterson
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Name: Steven G. Peterson
Title: Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Index Description
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2.1 Asset Purchase Agreement, dated as of September 1,
1998, by and among Monarch Dental Associates (Utah),
Inc., Robert Anderson, D.D.S., Inc., James Brodahl,
D.D.S., Inc., Larry Kaban, D.D.S., Inc., John
Whitley, D.D.S., Inc., Talbert Dental Group, P.C.,
Talbert Dental Group, Inc. and Talbert Medical
Management Corporation (excluding schedules, which
the Registrant agrees to furnish supplementally to
the Commission upon request)
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), is entered into as of
the 1st day of September, 1998, by and among Monarch Dental Associates (Utah),
Inc., a Utah corporation ("Purchaser"), Robert Anderson, D.D.S, Inc., a
California professional corporation ("Anderson P.C."), James Brodahl, D.D.S.,
Inc., a California professional corporation ("Brodahl P.C."), Larry Kaban,
D.D.S, Inc., a California professional corporation ("Kaban P.C."), John
Whitley, D.D.S, Inc., a California professional corporation ("Whitley P.C."),
Talbert Dental Group, P.C., an Arizona professional corporation ("Talbert
Arizona P.C."), Talbert Dental Group, Inc., a Utah professional corporation
("Talbert Utah P.C."), and Talbert Medical Management Corporation, a Delaware
corporation ("Talbert Management") (Anderson P.C., Brodahl P.C., Kaban P.C.,
Whitley P.C., Talbert Arizona P.C., Talbert Utah P.C. and Talbert Management
are collectively referred to herein as the "Seller"). MedPartners, Inc., a
Delaware corporation ("MedPartners") is made a party to this Agreement for the
purposes stated specifically herein.
R e c i t a l s
Seller is the owner of all the assets comprising, and presently
conducts, the business known as the Talbert Dental Group (the "Seller's Dental
Business"). The Seller's Dental Business is conducted at the locations
identified on Exhibit A attached hereto.
Seller desires to sell to Purchaser, and Purchaser desires to buy from
Seller, substantially all of the assets of Seller, consisting of all of the
assets used in the Seller's Dental Business and to assume certain specified
liabilities and obligations of Seller, for the consideration and on the terms
and conditions 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. PURCHASE OF ASSETS AND ASSUMPTION OF CERTAIN LIABILITIES.
1.1 Purchase of Assets.
(1) Included Assets. Subject to the terms and conditions
hereof and in reliance upon the representations, warranties, covenants and
agreements contained herein, at the Closing (as defined in Article 2 below),
Seller does hereby sell, transfer, convey and deliver to Purchaser, and
Purchaser does hereby purchase and accept from Seller, all of the assets
described herein:
(1) all of Seller's tangible personal property, furniture,
fixtures, equipment, machines, inventories, raw materials, tools
and supplies used in the Seller's Dental Business, as described
on Section 1.1(a)(i) of the Disclosure Schedule attached to this
Agreement;
(2) all of Seller's supplier and vendor lists, copies of
which are attached to this Agreement as Section 1.1(a)(ii) of
the Disclosure Schedule, and all records, including all records,
documents, written information, computer tapes, programs and
files concerning past, present and future dealings and
arrangements with suppliers and vendors relating to the Seller's
Dental Business;
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(3) all of Seller's computer hardware, cabling and
peripherals, tools and supplies relating to the Seller's Dental
Business to the extent of Seller's interest therein, except for
the network communication equipment listed on Section
1.1(a)(iii) of the Disclosure Schedule;
(4) all of Seller's rights to use all of the trademarks,
service marks, trade names, copyrights, patents and patent
applications and interests thereunder, inventions, processes and
know-how, restrictive covenants, licenses and all other
intangible rights relating to the Seller's Dental Business;
(5) copies of all books, records and other data relating to
the assets, business, ownership, employees and operations of the
Seller's Dental Business, including, but not limited to,
correspondence, employment records, tax and accounting records,
property records, mailing lists, regulatory files (including
master files), provided that Seller shall retain originals of
the tax and accounting records of such business as heretofore
conducted and Seller shall provide true and accurate copies of
the same to Purchaser at the Closing;
(6) all rights of Seller under the contracts, agreements
and powers of attorney relating to the Seller's Dental Business
including without limitation those referred to in this Section
1.1(a) and those referred to in Section 4.13 and the Disclosure
Schedules thereto, except as set forth in Section 1.1(a)(vi) of
the Disclosure Schedule;
(7) all of Seller's title and interest in and to any and
all of the databases used in the Seller's Dental Business and
all software, source code, documentation, manual and computer
processes (collectively, the "Software"), whether owned or
licensed, including without limitation, all proprietary software
used in the Seller's Dental Business to the extent that software
licenses are transferable and source code accessible; provided,
however, that to the extent that the necessary licenses cannot
be assigned by Seller to Purchaser and Purchaser continues to
use such software, Purchaser shall make such Software licensing
arrangements as may be necessary to continue to use any Software
on personal computers acquired by Purchaser pursuant to this
Agreement;
(8) all of Seller's right, title and interest in and to
accounts receivable and payments for services rendered prior to
the Closing relating to the Seller's Dental Business
(collectively, the "Accounts Receivable"), Section 1.1(a)(viii)
of the Disclosure Schedule hereto setting forth the aggregate
amount thereof with aging data, and including any and all trade
installment notes;
(9) all of Seller's right, title and interest in and to the
real property leases listed in Section 1.1(a)(ix) of the
Disclosure Schedule attached hereto relating to the Seller's
Dental Business together with Seller's right, title and interest
in all leasehold improvements;
(10) all of Seller's right, title and interest in and to
the leased personal property relating to the Seller's Dental
Business as described in Section 1.1(a)(x) of the Disclosure
Schedule (including, without limitation, all of Seller's right,
title and interest under capital leases), and including all
options to purchase leased personal property relating to the
Seller's Dental Business, as set forth in Section 1.1(a)(x) of
the Disclosure Schedule;
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(11) all of Seller's right, title and interest in and to
the non-professional goodwill and going concern value related to
the Seller's Dental Business including, but not limited to, the
exclusive right to use the name "Talbert Dental Group" and all
associated logos as all or part of a trade or corporate name or
otherwise (for a maximum period of twelve (12) months following
the Effective Date), telephone numbers and any other intangible
assets;
(12) all prepaid expenses, advances and deposits of Seller
relating to the Seller's Dental Business; and
(13) Intentionally Omitted;
(14) all of Seller's other assets and property rights of
every kind and nature, tangible or intangible, owned or leased,
relating to the Seller's Dental Business, other than any such
assets disposed of in the ordinary course of the Seller's Dental
Business and in a manner consistent with the terms of this
Agreement and also not including the Excluded Assets (as defined
below).
The assets, property and business to be acquired by Purchaser under
this Agreement, subject to Section 1.1(b), are hereinafter referred to
collectively as the "Acquired Assets."
(2) Excluded Assets. Notwithstanding anything herein to the
contrary, there shall be excluded from such purchase and sale and from the
definition of "Acquired Assets" the following property:
(1) Seller's minute books, charter documents, corporate
stock record books, original tax and accounting records, and
such other records as have to do exclusively with Seller's
organization or capitalization (collectively, the "Corporate
Records");
(2) cash and cash equivalents of Seller;
(3) those personally owned, non-operating assets of Seller
listed on Section 1.1(b) of the Disclosure Schedule;
(4) any rights of Seller under this Agreement or any other
agreement between Purchaser and Seller entered into on or after
the date hereof;
(5) any rights of Seller under any third-party payor
contracts accruing prior to the Effective Date (e.g.,
adjustments, reconciliations, etc.);
(6) securities of Seller;
(7) any refund claims with taxing authorities; and
(8) the patient records, permits, employment agreements and
provider agreements (including capitation agreements) of Seller
assigned to Modern Dental Professionals - Arizona, P.C., an
Arizona professional corporation and Modern Dental Professionals
- Utah, P.C., a Utah professional corporation, as the case may
be, pursuant to those certain Assignment Agreements of even
date.
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The assets, property and business of Seller described above which are
excluded from the Acquired Assets are hereinafter sometimes referred to as the
"Excluded Assets."
1.2 Assumption of Liabilities. Upon the sale and purchase of the
Acquired Assets, Purchaser shall assume and agree to pay or discharge when due
in accordance with their respective terms all obligations (a) under all leases
of real property set forth on Section 4.5(b)(i) of the Disclosure Schedule, (b)
under all contracts set forth in Section 4.12(a) of the Disclosure Schedule,
(c) under the capital and operating equipment leases set forth in Section
4.12(a)(xii) of the Disclosure Schedule, and (d) relating to Seller's Dental
Business that are incurred by Purchaser and that arise on and after the
Effective Date, excluding any liability for breach or non-performance by Seller
of any of the foregoing described in clauses (a), (b) or (c) existing on or
prior to the Effective Date. The liabilities to be assumed by Purchaser under
this Agreement are hereinafter sometimes referred to as the "Liabilities."
Except as specifically provided in the first sentence of this Section 1.2,
Purchaser shall not assume or be bound by any obligations or liabilities of
Seller or its affiliates or predecessors, of any kind or nature, known,
unknown, accrued, absolute, contingent or otherwise, whatsoever.
The liabilities which are not assumed by Purchaser under this
Agreement are hereinafter sometimes referred to as the "Excluded Liabilities."
The assumption of the Liabilities by Purchaser hereunder shall not enlarge any
rights of third parties and nothing herein shall prevent Purchaser from
contesting in good faith with any third party any of such Liabilities.
1.3 Certain Expenses.
(1) Accrued Vacation; Personal Time Off. Seller shall compensate
the current employees of Seller for all accrued vacation time, personal time
off and maternity leave (if applicable), and also for any bonuses due to such
employees through the date of Closing.
(2) Ad Valorem Taxes. Ad valorem (property) taxes for the year
in which the Closing occurs shall be prorated between Seller and Purchaser. All
taxes due and payable through the date of Closing shall be borne and paid
solely by Seller.
(3) Sales and Use Tax; Transfer Tax. Purchaser shall pay, in
connection with the acquisition of the Acquired Assets, all applicable sales
tax, use tax and/or similar transfer tax; provided, however, that Seller shall
reasonably cooperate with Purchaser so that Purchaser may obtain the benefit of
any applicable "occasional sale/casual sale" or similar exemptions.
1.4 WARN Act. To the extent the WARN Act (as defined herein) is
applicable to the transaction contemplated herein, Purchaser agrees: (i) the
sale of Seller's Dental Business constitutes the sale of one or more businesses
within the meaning of the Worker Adjustment Retraining and Notification Act and
the rules and regulations promulgated thereunder (the "WARN Act"), and for
purposes of the WARN Act, any person who is an employee of Seller's Dental
Business (other than Part-Time Employees as defined under the WARN Act) as of
the Closing Date (which shall constitute the effective date of the sale within
the meaning of the WARN Act) shall be considered an employee of Purchaser for
purposes of the WARN Act immediately upon the Closing; and (ii) with respect to
such "deemed" employees, Purchaser will be responsible for all applicable
notices and liabilities under the WARN Act resulting from the termination of
any such employees on or after the Closing.
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ARTICLE 2. CLOSING.
Subject to the terms hereof, the purchase of the Acquired Assets and
the assumption of the Liabilities shall be consummated at a closing (the
"Closing"), to take place on September 1, 1998, at 10:00 a.m., at the offices
of Haynes and Boone, L.L.P. at 901 Main Street, Suite 3100, Dallas, Texas
75202, but such Closing shall be effective as if, for economic purposes, the
Closing occurred as of September 1, 1998 at 12:01 a.m. ("Effective Date")
(i.e., the income from the Seller's Dental Business will be deemed to accrue
for the benefit of the Purchaser and the expenses from the Seller's Dental
Business will be deemed to accrue as an obligation to the Purchaser from and
after the Effective Date).
ARTICLE 3. CLOSING EXCHANGE.
3.1 Purchase Price for Acquired Assets. The Purchase Price to be paid
by Purchaser to Seller for the purchase of the Acquired Assets and the
assumption of the Liabilities at the Closing shall be $7,199,000.00. The
Purchase Price shall be allocated between and among Anderson P.C., Brodahl
P.C., Kaban P.C., Whitley P.C., Talbert Arizona P.C., Talbert Utah P.C. and
Talbert Management in the percentages that are set forth on Exhibit B. The
Purchase Price shall be paid in immediately available funds by wire transfer
pursuant to the wire transfer instructions provided to Purchaser by Seller and
attached hereto as Exhibit C.
SELLER EXPRESSLY ACKNOWLEDGES AND AGREES THAT THE PURCHASE PRICE SHALL
BE WIRE TRANSFERRED BY PURCHASER TO THE ACCOUNT OF MEDPARTNERS, INC. AS SET
FORTH ON EXHIBIT C FOR FURTHER FORWARDING TO THE SELLER IN ACCORDANCE WITH
EXHIBIT B.
Following the Closing, if Purchaser sells all or substantially all of
the assets of the California offices of the Seller's Dental Business (the
"California Assets"), then Purchaser shall pay to Seller, as additional
Purchase Price, an amount equal to $400,000.00 minus thirty-three percent (33%)
of all employee severance amounts paid by Purchaser and all of Purchaser's
operating losses (specifically excluding depreciation, amortization, interest,
income taxes and corporate overhead allocations, all as determined under
generally accepted accounting principles) incurred on and after the Effective
Date and through the date of the sale of the California Assets by Purchaser and
its affiliates in operating the California Assets. Such additional Purchase
Price, if any, shall be paid by Purchaser to Seller within sixty (60) days
following the consummation of the sale of the California Assets.
3.2 Certain Closing Deliveries.
(1) Consideration Price. At the Closing, Purchaser shall deliver
the consideration specified in Section 3.1 hereof to Seller.
(2) Transfer of Acquired Assets. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser good and sufficient instruments
of transfer transferring to Purchaser good and valid title to all the Acquired
Assets, free and clear of all liens, restrictions, encumbrances and other
claims (except for the Liabilities) (collectively the "Liens").
(3) Delivery of Records and Contracts. At the Closing, Seller
shall deliver or cause to be delivered to Purchaser all the leases, contracts,
commitments, agreements and rights constituting Acquired Assets, with such
assignments thereof and consents to assignments as are necessary to assure
Purchaser of the full benefit of the same, subject to Section 3.5 with respect
to agreements not freely assignable at the date hereof. Seller shall also
deliver to Purchaser at the Closing all business records, tax returns, books
and other data relating to the Seller's Dental Business (or true and complete
copies in the case of tax and accounting
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records), except the Corporate Records and other Excluded Assets, and Seller
shall take all requisite steps to put Purchaser in actual possession and
operating control of the Acquired Assets as of the Closing. After the Closing,
Purchaser shall afford to Seller and its accountants and attorneys, for the
purpose of preparing such tax returns of Seller as may be required after the
Closing, reasonable access to the books and records of Seller delivered to
Purchaser under this Agreement and shall permit Seller at Seller's expense, to
make extracts and copies therefrom, provided that all such information shall be
held in confidence except as Purchaser deems necessary to prepare or complete
tax returns or to respond to inquiries from taxing authorities or pursuant to
court order.
(4) Other Deliveries. Purchaser and Seller shall also deliver at
the Closing such other documents and instruments as are customary for
transactions of the type contemplated hereby and as shall be reasonably
requested in advance of the Closing by any of them.
3.3 Further Assurances. Seller from time to time after the Closing at
the request of Purchaser and without further consideration shall execute and
deliver such further instruments of transfer and assignment and take such other
action as Purchaser may reasonably require to more effectively transfer and
assign to, and vest in, Purchaser the Acquired Assets and to otherwise effect
the transactions contemplated by this Agreement. Seller shall cooperate with
Purchaser to assist Purchaser in obtaining Seller's rating and benefits under
the workman's compensation laws and unemployment compensation laws of
applicable jurisdictions, to the extent permitted by such laws. Nothing herein
shall be deemed a waiver by Purchaser of its right to receive at the Closing an
effective assignment of each of the leases, contracts, commitments or rights of
Seller as otherwise set forth in this Agreement.
3.4 Allocation of Purchase Price. Purchaser and Seller shall agree
upon the allocation of the consideration paid by Purchaser to Seller (including
the assumption of the Liabilities) among the Acquired Assets and shall set
forth the allocation of such consideration and the tax basis of the Acquired
Assets for federal income tax purposes in writing (which is attached hereto as
Exhibit B). Such allocation will be made in accordance with the applicable
rules under Section 1060 of the Internal Revenue Code of 1986, as amended, and
when completed shall be binding upon Purchaser and Seller for federal income
tax purposes. Purchaser and Seller also each agree to file appropriate
documents with the IRS under Treasury Regulation Section 1.1060-1T(h)(2)
reflecting the foregoing.
3.5 Procedures for Assets not Transferable. If any of the contracts
or agreements or any other property or rights included in the Acquired Assets
are not assignable or transferable either by virtue of the provisions thereof
or under applicable law without the consent of some party or parties and any
such consent cannot be obtained prior to the Closing, Seller shall use its best
efforts to obtain any such consent as soon as possible after the Closing or
otherwise obtain for Purchaser the practical benefit of such property or rights
and Purchaser shall use all commercially reasonable efforts to assist in that
endeavor.
3.6 Non-Competition Agreement. As a material inducement to and a
condition precedent of Purchaser's acquisition of the Acquired Assets and
assumption of the Liabilities, MedPartners and Seller are each executing and
delivering at the Closing a Non-Competition Agreement (the "Non-Competition
Agreement").
3.7 Collateral Agreements. In connection and simultaneously with the
Closing, Purchaser, Seller, MedPartners, and, as the case may be, Modern Dental
Professionals - Arizona, P.C. and Modern Dental Professionals - Utah, P.C. will
enter into the following agreements, among others, with terms and conditions as
are set forth in such agreements: (i) Loaned Employee Agreement, (ii)
Assignment Agreements (regarding patient records, provider agreements,
employment agreements and permits),
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(iii)Non-Competition Agreements, (iv) Office Lease Agreements, and (v) Bill of
Sale. (All of the agreements described in this Section 3.7 are referred to
collectively as the "Collateral Agreements.")
3.8 Professional Liability Insurance. Seller shall deliver to
Purchaser at the Closing evidence satisfactory to Purchaser that Seller has
currently in full force and effect "claims made" extended professional
liability insurance coverage as required by Section 5.12 of this Agreement.
3.9 Loaned Employees Agreement. Purchaser and Talbert Management
shall contemporaneously herewith enter into a Loaned Employees Agreement
providing for Talbert Management to continue to provide certain payroll,
benefits and similar services to Seller's former employees that are hired by
Purchaser at the sole cost and expense of Purchaser. Such agreement shall (i)
terminate on December 31, 1998, and (ii) require payment of remuneration by
Purchaser to Talbert Management as provided therein.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER.
4.1 Making of Representations and Warranties. As a material
inducement to Purchaser to enter into this Agreement and to consummate the
transactions contemplated hereby, Anderson P.C., Brodahl P.C., Kaban P.C.,
Whitley P.C., Talbert Arizona P.C., Talbert Utah P.C. and Talbert Management
each, severally, hereby make to Purchaser the representations and warranties
contained in this Article 4.
For the purposes of this Agreement, references to "knowledge" or "best
knowledge" of Seller or "known" by Seller or words of similar import, shall be
deemed to include such knowledge as any executive officer and/or manager of
Anderson P.C., Brodahl P.C., Kaban P.C., Whitley P.C., Talbert Arizona P.C.,
Talbert Utah P.C. and Talbert Management listed in Section 4.1 of the
Disclosure Schedule 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 Purchaser on the date hereof. For the purposes of this Article 4,
Seller is deemed to have knowledge of each of the documents entered into in
connection with the transactions contemplated hereby.
4.2 Organization and Qualification; Capital Stock. Talbert Management
is a corporation duly organized, validly existing and in good standing under
the laws of the state of Delaware 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 such Seller as amended to date and certified by the
Secretary of State of each relevant jurisdiction, and of the by-laws of such
Seller, as amended to date, certified by its Secretary, and heretofore
delivered to Purchaser, have been duly adopted and are current, complete and
correct, no amendments thereto are pending, and such Seller is not in violation
thereof. Such Seller is duly qualified to do business as a corporation in the
state of Delaware and in such other jurisdictions as are set forth on Section
4.2 of the Disclosure Schedule. Such Seller 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 a material
adverse effect on the business or operations of such Seller. All of the issued
and outstanding capital stock of such Seller is owned beneficially and of
record as set forth in Section 4.2 of the Disclosure Schedule. The total
authorized capital stock of such Seller is set forth on Section 4.2 of the
Disclosure Schedule.
Anderson P.C., Brodahl P.C., Kaban P.C., Whitley P.C., Talbert Arizona
P.C., and Talbert Utah P.C. each is a professional corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation with full corporate power and authority to own or lease its
properties and to
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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 each such Seller as
amended to date and certified by the Secretary of State of each relevant
jurisdiction, and of the by-laws of each such Seller, as amended to date,
certified by its Secretary, and heretofore delivered to Purchaser, have been
duly adopted and are current, complete and correct, no amendments thereto are
pending, and each such Seller is not in violation thereof. Each such Seller is
duly qualified to do business as a corporation in the state of its
incorporation and in such other jurisdictions as are set forth on Section 4.2
of the Disclosure Schedule. Each such Seller 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 a material
adverse effect on the business or operations of each such Seller. All of the
issued and outstanding capital stock of each such Seller is owned beneficially
and of record as set forth in Section 4.2 of the Disclosure Schedule. The total
authorized capital stock of each such Seller is set forth on Section 4.2 of the
Disclosure Schedule.
4.3 Subsidiaries. Seller has no subsidiaries (as defined in Section
9.12 hereof) that are engaged in a dental practice management or other
dental-related business, owns no securities issued by any other business
organization or governmental authority that is engaged in a dental practice
management or other dental-related business, and has no direct or indirect
interest in or control over any corporation, professional corporation,
partnership, joint venture or entity of any kind except as listed in Section
4.3 of the Disclosure Schedule.
4.4 Authority; Noncontravention. Seller has full corporate power and
authority or capacity, as applicable, (i) to enter into (a) this Agreement and
(b) each agreement, document and instrument to be executed and delivered by it
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 of this
Agreement, the Collateral Agreements and each such other agreement, document
and instrument have been duly authorized by all necessary action of Seller
including any required action of the shareholder of Seller, and no other action
on the part of Seller or the shareholder of Seller is required in connection
therewith. This Agreement, the Collateral Agreements and each such agreement,
document and instrument executed and delivered by Seller pursuant to or in
connection with this Agreement constitute valid and binding obligations of
Seller enforceable in accordance with their 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 it is a party:
(1) do not and will not violate any provision of the charter,
by-laws or equivalent constituent documents of Seller;
(2) 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
require Seller, except as set forth in Section 4.4 of the Disclosure Schedule,
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
(3) 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
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agreement or any other agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award, whether written or oral, to which Seller is a party or by
which the property of Seller is bound or affected, or (e) result in the
creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the Acquired Assets, except to the extent
that any of the foregoing would not have an adverse effect on the business,
operations, results of operations, assets, condition (financial or other) or
prospects of Seller.
4.5 Status of Property.
(1) Real Property. The Acquired Assets do not include any owned
real estate.
(2) Leased Real Property. All of the real property leased in
connection with the Seller's Dental Business is identified in Section 4.5(b)(i)
of the Disclosure Schedule (collectively referred to herein as the "Leased Real
Property"). Further:
(1) 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 Purchaser are complete,
accurate, true and correct copies of each of the Leases,
including any amendments to such leases. With respect to each of
the Leases:
(1) 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;
(2) to Seller's knowledge, all obligations of the
landlord or lessor under the Leases which have accrued have
been performed, 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 a material adverse effect on
the business, operations, results of operations, assets,
condition (financial or other) or prospects of the Seller's
Dental Business;
(3) all obligations of the tenant or lessee under the
Leases which have accrued have been performed, and Seller is
not in default under or in arrears in the payment of any sum
or in the performance of any material 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 Seller; and
(4) Seller has 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 its
assignees, except as set forth in Section 4.5(b)(i)(D) of
the Disclosure Schedule.
(2) Title and Description. Seller holds a good, clear,
marketable (if applicable), 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, free and clear of all
other prior or subordinate interests, including, without
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limitation, mortgages, deeds of trust, ground leases, leases,
subleases, security interests or similar encumbrances, liens,
assessments, tenancies, licenses, claims, rights of first
refusal, options, covenants, conditions, restrictions, rights of
way, easements, judgments or other encumbrances or matters
affecting title, and free of encroachments onto or off of the
Leased Real Property.
(3) Compliance with Law; Government Approvals. Seller has
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 knowledge,
improvements located on or constituting a part of the Leased
Real Property and the construction, installation, use and
operation thereof (including, without limitation, the
construction, installation, use and operation of any signs
located thereon) were completed and installed and are now 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. To Seller's knowledge, 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 Seller's Dental Business. To
Seller's knowledge, the Leased Real Property has at least the
minimum access required by applicable subdivision or similar
law.
(4) Real Property Taxes. Seller has not received notice of
any pending or threatened reassessment of all or any portion of
any of the Leased Real Property, and to Seller's knowledge, the
consummation of the transactions contemplated by this Agreement
or referred to herein will not result in any such reassessment.
(3) Personal Property. Except as specifically disclosed in
Section 4.5(c) of the Disclosure Schedule, Seller represents and warrants that
Seller owns and has good, valid and (if applicable) marketable title to all of
the personal property used in connection with the conduct of the Seller's
Dental Business, and none of such personal property or assets is subject to any
mortgage, pledge, lien, conditional sale agreement, restriction on transfer,
stockholder or similar agreement, security title, encumbrance or other charge
except as specifically disclosed in said schedule. All of the tangible personal
property of Seller is sold on an "AS IS, WHERE IS" basis, "WITH ALL FAULTS,"
and Seller makes no representation or warranty as to its condition, including,
without limitation, any warranty as to merchantability or fitness for a
particular purpose.
(4) Transfer of Title. At the Closing, Purchaser will receive
good, valid and (if applicable) marketable title to the Acquired Assets, free
and clear of all liens, encumbrances, charges, restrictions on transfer,
stockholder or similar agreements, equities and other claims of every kind
except for the Liabilities.
4.6 Financial Statements; Undisclosed Liabilities.
(1) 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:
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(1) Statements of income (or loss) for Seller for the
fiscal years ended December 31, 1997 (herein the "Statement of
Income"), and December 31, 1996; and
(2) A statement of income (or loss) for Seller for the
fiscal quarter ended June 30, 1998.
Said financial statements have been prepared by Seller from its books and
records, and present fairly in all material respects the results of the
operations of Seller's Dental Business for the periods covered thereby and
include the financial impact of all operating and capital leases used in
Seller's Dental Business.
(2) As of the date hereof, there are no liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise,
asserted or unasserted, known or unknown, relating to the Seller's Dental
Business, except liabilities specifically disclosed in Section 4.6(b) of the
Disclosure Schedule furnished to Purchaser hereunder on the date hereof and
attached hereto.
4.7 Taxes.
(1) Seller has 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 and property 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
(collectively, "Taxes") shown to be due on all tax returns required to be filed
through the date hereof, whether disputed or not.
(2) Seller has 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.
(3) Neither the Internal Revenue Service nor any other
governmental authority is now asserting (in a suit, action, proceeding,
investigation, claim or otherwise) or threatening to assert against Seller any
deficiency or claim for additional Taxes. No claim has ever been made by an
authority in a jurisdiction where Seller does not file reports and returns that
Seller is or may be subject to taxation by that jurisdiction. There are no
security interests or liens on any of the assets of Seller that arose in
connection with any failure (or alleged failure) to pay any Tax. Seller has not
entered into a closing agreement pursuant to Section 7121 of the Internal
Revenue Code of 1986, as amended, or any predecessor statutes (the "Code").
(4) Except as set forth in Section 4.7(d) of the Disclosure
Schedule, there has not been during the past five years any audit of any tax
return filed by Seller, no audit of any tax return of Seller is in progress,
and Seller has not been notified by any tax authority that any such audit is
contemplated or pending. Except as set forth in Section 4.7(d) of the
Disclosure Schedule, no extension of time with respect to any date on which a
tax return was or is to be filed by Seller is in force, and no waiver or
agreement by any of Seller is in force for the extension of time for the
assessment or collection of any Taxes.
(5) Seller does not own or has never owned a direct or indirect
interest in any trust, partnership, corporation or other entity except as set
forth in Section 4.7(e) of the Disclosure Schedule, and no assets of Seller
include an interest in any such entity.
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<PAGE> 12
(6) Seller has correctly treated as employees those workers who
should be classified as employees for purposes of federal, state, local and
foreign employment, social security, withholding, unemployment and all other
payroll-related taxes ("Employment Taxes"). With respect to workers treated as
non-employees, the classification of such workers as non-employees for purposes
of Employment Taxes is correct and no amount of Employment Taxes or other
additions to tax, interest, fines or penalties are or may be owed by Seller
with respect to such non-employee workers.
(7) 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 Seller's Dental Business (subject to contractual allowances
and allowance for doubtful accounts consistent with the past practices of the
Seller's Dental Business) as described in Section 4.8 of the Disclosure Schedule
are reflected properly in Seller's books and records and are valid and
enforceable claims, and, to Seller's knowledge, are not subject to set off or
counterclaim. Section 4.8 of the Disclosure Schedule contains a complete and
accurate summary of the amount of accounts receivable. As of the Closing,
Seller's aggregate outstanding accounts receivable have been calculated by
Seller in the ordinary course of the Seller's Dental Business and consistent
with the past practices of the Seller's Dental Business. To Seller's knowledge,
Seller does not have any material accounts receivable or loans receivable from
any person, firm or corporation which is affiliated with Seller or from any
stockholder, director, officer or employee of Seller or any affiliate thereof.
4.9 Absence of Certain Changes. Except as disclosed in Section 4.9 of
the Disclosure Schedule, since December 31, 1997, there has not been:
(1) Any adverse change in the properties, assets, liabilities,
business, operations, condition (financial or other), personnel, or prospects
of the Seller's Dental Business, 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;
(2) Any contingent liability relating to the Seller's Dental
Business 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 Seller's Dental Business;
(3) Any mortgage, encumbrance or lien placed on any of the
properties of the Seller's Dental Business which remains in effect on the date
hereof except for the Liabilities;
(4) Any material obligations or liability of any nature, whether
accrued, absolute, contingent or otherwise, known to be incurred by the
Seller's Dental Business other than obligations and liabilities incurred in the
ordinary course of business and otherwise consistent with the terms of this
Agreement;
(5) 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 Seller's Dental Business other than in the ordinary
course of business;
(6) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting any of the properties, assets or
business of the Seller's Dental Business;
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<PAGE> 13
(7) Any labor trouble or claim of unfair labor practices
involving the Seller's Dental Business;
(8) Any change in the compensation (in the form of salaries,
wages, incentive arrangements or otherwise) or benefits payable by Seller or
the Seller's Dental Business 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 entity; or any entering into any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any such person or entity, excepting in
the ordinary course of business and consistent with past practice, and
excepting for that certain Separation Agreement with Robert Anderson, D.D.S.
(the "Anderson Agreement");
(9) Any material change, or the obtaining of information
concerning a prospective change, with respect to any officers, management
employees or dentists (including professional corporations) of Seller or
involved in the Seller's Dental Business, any grant of any severance or
termination pay to any officer, employee, agent, independent contractor,
dentist or dental professional corporation of Seller or involved in the
Seller's Dental Business or any increase in benefits payable under any existing
severance or termination pay policies or employment agreement or relationship;
(10) Any payment or discharge of a material lien or liability
relating to the Seller's Dental Business that is not in the ordinary course of
business;
(11) Any payment made or obligation or liability incurred by
Seller to, or any other transaction by Seller with, any of its respective
officers, directors, partners, stockholders, employees or independent
contractors (including dentists and dental professional corporations), or any
loans or advances made by Seller to any of its respective officers, directors,
partners, stockholders, employees or independent contractors (including
dentists and dental professional corporations), except normal compensation and
expense allowances consistent with past practice;
(12) Any change in accounting methods or practices, credit
practices, collection policies or payment policies used by Seller including,
without limitation, any change in the discharge or recording of accounts
payable relative to past practices;
(13) Any material cancellation or loss of any material right or
asset, or waiver of any right, of Seller;
(14) Any material change in Seller's relationships with
suppliers, distributors, licensees, licensors, customers or others with whom
Seller or the Seller's Dental Business has business relationships which would
have a material adverse effect on Seller or the Seller's Dental Business, and
Seller has no knowledge of any fact or contemplated event which may cause any
such adverse change;
(15) Any alteration or change in the methods of operation
employed by Seller or the Seller's Dental Business other than in the ordinary
course of business;
(16) Any other material transaction relating to Seller or the
Seller's Dental Business other than transactions in the ordinary course of
business and consistent with past practices;
(17) Any amendment or termination of any material contract with
respect to the Seller's Dental Business to which Seller is a party;
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(18) Any changes in the amount or scope of coverage of insurance
now carried by Seller; or
(19) Any agreement or understanding, whether in writing or
otherwise, by Seller or any other person that would result in any of the
transactions or events or require Seller to take any of the actions specified
in paragraphs (a) through (r) above.
4.10 Ordinary Course. Since December 31, 1997, Seller has conducted
the Seller's Dental Business only in the ordinary course and in a manner
consistent with prior practices.
4.11 Intellectual Property.
(1) Seller has exclusive ownership of trade secrets (including,
without limitation, customer lists, production processes and inventions), and
other proprietary rights, and a license to use all computer software
(collectively, "Intellectual Property"), used in the Seller's Dental Business
as presently conducted. Seller'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 or with respect to Intellectual Property which is not freely
assignable at the date hereof. No proceedings have been instituted, or are
pending or to Seller's knowledge threatened, which challenge the rights of
Seller in respect of any Intellectual Property, and to the best knowledge of
Seller, no other person has or alleges any rights in or to the Intellectual
Property.
(2) All trademarks, service marks, trademark and service mark
applications and registrations and registered copyrights related to the conduct
of the Seller's Dental Business as presently conducted or contemplated to be
conducted, are listed in Section 4.11(b) of the Disclosure Schedule.
(3) All licenses or other agreements under which Seller or the
Seller's Dental Business is granted rights in Intellectual Property are listed
in Section 4.11(c) of the Disclosure Schedule. All said licenses or other
agreements are in full force and effect, there is no default by Seller, or any
other party thereto, and as provided in Section 4.11(a) above, all rights
thereunder are freely assignable.
(4) To Seller's knowledge, the conduct of the Seller's Dental
Business has not and does not infringe any Intellectual Property of any other
person. No proceeding charging Seller or the Seller's Dental Business with
infringement of any adversely held Intellectual Property has been filed or is
threatened to be filed. To Seller's knowledge, 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 Seller or
the Seller's Dental Business. To Seller's knowledge, the conduct of the
Seller's Dental 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. To Seller's
knowledge, neither Seller nor any of Seller's employees has any agreements or
arrangements with any persons other than Seller 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.
(5) As of the Closing, Seller will possess the valid right to
use the name "Talbert Dental Group," all similar names and derivations thereof,
and all related trademarks, trade names and service marks used in its business.
Seller's use of such names does not infringe upon the rights of any other
person or persons.
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4.12 Contracts
(1) Except for contracts, commitments, plans, agreements and
licenses described in Section 4.12(a) of the Disclosure Schedule (true and
complete copies of which have been delivered to Purchaser), Seller, with
respect to Seller's Dental Business, is not a party to or subject to:
(1) 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;
(2) any employment contract, or any contract for services
which requires the payment of more than $100,000 annually or
which is not terminable within 60 days without liability for any
penalty or severance payment;
(3) 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 $10,000 each,
such orders not exceeding $100,000 in the aggregate;
(4) any other contracts or agreements creating an
obligation or receivable of $50,000 or more with respect to any
such contract;
(5) any contract or agreement providing for the purchase
of all or substantially all of its requirements of a particular
product from a supplier;
(6) any contract or agreement which by its terms does not
terminate or is not terminable without penalty within one year
after the date hereof;
(7) any contract or agreement for the sale or lease of its
products not made in the ordinary course of business;
(8) any contract with any sales agent or distributor;
(9) any contract containing covenants limiting Seller's
freedom to compete in any line of business or with any person or
entity;
(10) 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;
(11) any license agreement (as licensor or licensee) for a
total consideration exceeding $50,000 for any one such license;
(12) any agreement involving a lease or license of real
property or personal property including any operating,
capitalized or financing lease;
(13) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment for the
borrowing of money and any related security agreement;
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(14) any contract or agreement with any officer, employee,
director, or stockholder or with any persons or organizations
controlled by or affiliated with any of them (other than the
Anderson Agreement);
(15) 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 maintenance organization, preferred
provider organization, self-insured employer or other
third-party payor of any kind or nature; or
(16) any power of attorney.
(2) All contracts, agreements, leases and instruments to which
Seller is a party and as are set forth in Section 4.12(a) of the Disclosure
Schedule are valid and are in full force and effect, and constitute legal,
valid and binding obligations of Seller and to Seller's knowledge the other
parties thereto, enforceable in accordance with their 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 Seller nor, to Seller's knowledge, any other party to any
contract, agreement, lease or instrument to which Seller is a party or any
judgment, decree or order applicable to either Seller or the Seller's Dental
Business is in material 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 Seller or, to Seller's
knowledge, on the part of any other party thereto in any such case that could
have an adverse effect on the business or operations of the Seller's Dental
Business. Seller is not subject to or bound by any agreement, judgment, decree
or order which adversely affects the business or operations of the Seller's
Dental Business.
(3) Except as disclosed in Section 4.12(c) of the Disclosure
Schedule, 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"), in
connection with the Seller's Dental Business or pursuant to which Seller
receives revenues or compensation regarding the provision of dental services to
patients in connection with such business.
4.13 Litigation. Section 4.13 of the Disclosure Schedule sets forth a
detailed listing of all currently pending litigation and governmental or
administrative proceedings or investigations to which Seller is a party. Except
for matters described in Section 4.13 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, to Seller's knowledge,
threatened against Seller or the Seller's Dental Business which may have an
adverse effect on the business or operations of the Seller's Dental Business 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 4.13 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. Neither Seller nor the
Seller's Dental Business is presently subject to any injunction, judgment, order
or other decree of any court.
Since January 1, 1994, Seller has not 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.
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Without limitation of the foregoing, except as set forth in Section
4.13 of the Disclosure Schedule, to Seller's knowledge, there are no pending or
threatened malpractice claims, Arizona, Utah or California Regulatory Boards
investigations, suits, notices of intent to institute arbitrations or
proceedings, either administrative or judicial, involving Seller or the Seller's
Dental Business including, without limitation, any of the Health Care Providers.
4.14 Permits; Compliance with Laws; Licensing and Credentialing;
Health Care Providers.
(1) General Compliance. Except as set forth in Section 4.14(a)
of the Disclosure Schedule, Seller and the Seller's Dental Business have all
franchises, authorizations, approvals, orders, consents, licenses,
certificates, permits, registrations, qualifications or other rights and
privileges (collectively "Permits") necessary to permit the ownership of
respective properties involved therein and the conduct of such business as the
same is presently conducted. A listing of such Permits is set forth in Section
4.14(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 or operations of the Seller's
Dental Business. To Seller's knowledge, with respect to Permits that are
otherwise transferable, no such 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.
To the knowledge of Seller, Seller and the Seller's Dental
Business are now and have heretofore been in compliance with all applicable
statutes, ordinances, orders, rules and regulations (including, without
limitation, 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 Seller's Dental
Business, except for any such non-compliance or violation that, individually or
in the aggregate, would not have an adverse effect on the business or
operations of the Seller's Dental Business.
(2) Licensing and Credential Information. Each Health Care
Provider is duly licensed under the laws of the State of Arizona, Utah or
California, as applicable, and, to Seller's knowledge, each Health Care
Provider has complied in all respects with all laws, rules and regulations
relating to the rendering of services including without limitation OSHA. Except
as set forth in Section 4.14(b) of the Disclosure Schedule, no Health Care
Provider since January 1, 1993: (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) to Seller's knowledge 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) to Seller's knowledge has had a final
judgment or settlement entered against him or her in connection with a
malpractice or similar action.
The names of the Health Care Providers who provide services in
connection with the Seller's Dental Business are set forth in Section 4.14(b)
of the Disclosure Schedule. To the best of Seller'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 Seller. Except as set forth in
Section 4.14(b) of the Disclosure Schedule, to the best of Seller's knowledge,
none of the employed and engaged Health Care Providers uses 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 Seller.
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(3) Medicare/Medicaid. The Seller's Dental Business does not
involve and has never involved patients with dental benefits covered by or
arrangements with Medicare or Medicaid.
(4) Other. Neither Seller nor the Seller's Dental Business is
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 Seller and
the Seller's Dental Business 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 Seller 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 conducts its business.
4.15 Insurance. The physical properties and assets comprising the
Acquired Assets are insured to the extent disclosed in Section 4.15 of the
Disclosure Schedule, and all insurance policies, binders and arrangements
relating to the Seller's Dental Business 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 Seller is in compliance in all
respects with the terms thereof. Except as disclosed in Section 4.15 of the
Disclosure Schedule, (i) 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 an adverse effect on the Seller's
Dental Business and (ii) 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. Seller, other than Talbert Management,
presently has, and has had since the date Talbert Management became a subsidiary
of MedPartners, a "claims-made" professional liability insurance policy.
4.16 Finder's Fees. Seller 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 or the
transactions referred to herein.
4.17 Transactions with Interested Persons. Except as set forth in
Section 4.17 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
Seller, including, without limitation, any contract, agreement or other
arrangement (excluding employment-type arrangements) providing for the sale of
goods to or from such person, loan to or from or rental of real or personal
property to or from, and to the best knowledge of Seller, 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 Seller's Dental Business, or any organization
which has a contract or arrangement with the Seller's Dental Business, provided
that no representation shall be deemed made with respect to the provision of
dental services by any former employee or independent contractor. 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, and, following the Closing, Purchaser shall not have any obligation of
any kind or description to any such affiliate unless such obligation is a
Liability as described in Section 1.2 above.
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4.18 Employee Benefit Programs.
Section 4.18 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 Seller under which Seller has any
present or future obligations or liability (the "Benefit Plans"). Seller 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.
Further: (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 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 Buyer; (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 his dependents). Other
than claims for benefits submitted by participants or beneficiaries or appeals
from denial thereof, there is no litigation, legal action, suit, investigation,
claim, counterclaim or proceeding pending or, to the best knowledge of Seller,
threatened against any Benefit Plan.
4.19 Environmental Matters. To Seller's knowledge, (i) Seller has no
liability under, and has never violated in any material respect, any
Environmental Law (as defined below); (ii) Seller and each property owned,
operated, leased, or used in connection with the Seller's Dental Business, and
any facilities and operations thereon are presently in compliance in all
material respects with all applicable Environmental Laws; (iii) Seller has never
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 Section 4.19, "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, whether
existing as of the date hereof, or subsequently enacted.
4.20 List of Certain Employees and Suppliers. Section 4.20 of the
Disclosure Schedule lists all managers, employees, consultants and independent
contractors (including dentists and related professional corporations) of the
Seller's Dental Business who, individually, have received for the fiscal year
ended December 31, 1997, or are scheduled to receive for the fiscal year ended
December 31, 1998, 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 4.20 of the Disclosure Schedule also lists all
suppliers to whom the Seller's Dental Business made payments aggregating
$100,000 or more during the fiscal year ended December 31, 1997, showing, with
respect to each such supplier, the name, address and dollar volume involved. To
the knowledge of Seller, no supplier has any plan or intention to terminate or
reduce its business with the Seller's Dental Business or to materially and
adversely modify its relationship therewith.
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4.21 Employees; Labor Matters. The Seller's Dental Business (i)
employs approximately 174 full-time non-dentist employees (54 in California)
and 27 part-time non-dentist employees, (ii) employs approximately 52 (20 in
California) dentists (all dentists are employed pursuant to a written agreement
between Seller and the dentist) and (iii) generally enjoys a good
employer-employee relationship. Seller 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. 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 except under the Anderson
Agreement and as set forth on Section 4.21 of the Disclosure Schedule.
Except as set forth in Section 4.21 of the Disclosure Schedule,
neither Seller nor the Seller's Dental Business has any policy, practice, plan
or program of paying severance pay or any form of severance compensation in
connection with the termination of employment or services. Seller 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. Except as set forth in Section 4.21 of the
Disclosure Schedule, 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, nor are there, and within the last three years there
have not been, any strikes, slowdowns, stoppages of work, or any other concerted
interference with normal operations existing, pending or threatened against or
involving the Seller's Dental Business. No question concerning representation
exists respecting the employees of Seller. To the best knowledge of Seller,
there are no grievances, complaints or charges that have been filed under any
dispute resolution procedure (including, but not limited to, any proceedings
under any dispute resolution procedure under any collective bargaining
agreement) that might have an adverse effect on Seller or the Seller's Dental
Business. No arbitration or similar proceeding is pending and no claim therefor
has been asserted. No collective bargaining agreement is in effect or is
currently being or is about to be negotiated by Seller. Seller 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.
Except as set forth in Section 4.21 of the Disclosure Schedule,
there are no changes pending or, of which Seller has knowledge, threatened with
respect to (including, without limitation, resignation of) the senior
management, key supervisory personnel or dentists of the Seller's Dental
Business, nor has Seller received any notice or information concerning any
prospective change with respect to such senior management or key supervisory
personnel.
4.22 Material Relationships and Government Contracts.
(1) Except as set forth in Section 4.22(a) of the Disclosure
Schedule, to the best knowledge of Seller, the relationships of the Seller's
Dental Business with its customers, Health Care Providers and the parties to
the contracts referred to in Section 4.12(a)(xv) are good commercial working
relationships. To the best knowledge of Seller, no Health Care Provider or
dental health maintenance organization ("DHMO") with which the Seller's Dental
Business 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. Except as set forth in Section 4.22(a) of the Disclosure Schedule, no
DHMO relationship or material contract or other material business relationship
of the Seller's Dental Business has been terminated in the past year.
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<PAGE> 21
(2) Seller has no contracts or subcontracts with any government
(including any municipal government) or governmental agency or activity, and
Seller is eligible to submit bids to any DHMO.
4.23 Disclosure. The representations, warranties and statements
contained in this Agreement and in the certificates, exhibits and schedules
delivered by Seller pursuant to this Agreement, together with all materials
provided by Seller or their agents with respect to the Seller's Dental Business,
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. To Seller's knowledge,
there are no facts known to Seller which presently or may in the future have a
material adverse effect on the business or operations of the Seller's Dental
Business which has not been specifically disclosed herein or in a Schedule
furnished herewith.
4.24 Seller Records. The record books of Seller accurately record
all action taken by its respective stockholders, board of directors, equity
owners, governing bodies and committees. The copies of the records of Seller
provided to Purchaser for review, are true and complete copies of the originals
of such documents.
4.25 List of Directors and Officers. Section 4.25 of the Disclosure
Schedule contains a true and complete list of all current directors and officers
of Seller.
4.26 Transfer of Equity Interests. No holder of stock or other
equity interest of Seller has at any time transferred any of such instruments to
any employee or professional independent contractor of Seller, which transfer
constituted or could be viewed as compensation for services rendered to Seller
by said employee or professional independent contractor.
4.27 Entire Business Assets. Seller hereby represents and warrants
that the Acquired Assets comprise all of the assets, including all personal
property, used in the conduct of the Seller's Dental Business as heretofore
conducted by Seller except as contemplated by Sections 1.1(b) and 3.6 and
comprise all of the assets necessary for Purchaser to operate such business
following the date hereof.
ARTICLE 5. COVENANTS OF SELLER.
5.1 Making of Covenants and Agreements. Seller hereby makes the
covenants and agreements as set forth in this Article 5 for the period from and
after the Closing.
5.2 Cooperation. Seller shall cooperate with all reasonable requests
of 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 promptly following the Closing,
and in no event later than September 30, 1998, any and all consents,
authorizations and approvals not obtained prior to the Closing, 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 limitation, any consents, authorizations or approvals
required or necessary under, among other things, capital leases and operating
leases in connection with the acquisition of the Acquired Assets. With respect
to the leases described in the previous sentence, Seller further covenants and
states that, to its knowledge, such leases are in full force and effect and no
defaults exist with respect to such leases. Seller shall defend and hold
Purchaser harmless from
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all costs, losses, damages, liabilities and expenses incurred by it as a result
of Seller's failure to obtain any consents described in this Section 5.3.
5.4 Notice of Default. Promptly upon the occurrence of, or promptly
upon Seller's becoming aware of the impending or threatened occurrence of, any
event which would cause or constitute a breach or default, or would have caused
or constituted a breach or default had such event occurred or been known to
Seller prior to the date hereof, 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, Seller shall give detailed
written notice thereof to Purchaser, and Seller shall use its best efforts to
prevent or promptly remedy the same.
5.5 No Successor Liability. At all times from and after the Closing,
Seller and all of its agents, representatives and employees shall (a) not in
any way represent that Purchaser is the successor partnership of Seller and (b)
take all actions necessary to affirm to inquiring third parties that Purchaser
is an independent entity not associated in any way with Seller.
5.6 Payment of Obligations. Seller covenants and agrees that Seller
shall pay, or cause to pay, all of the Excluded Liabilities in the ordinary
course of business as such liabilities become due and specifically including
all obligations and expenses relating to the Seller's Dental Business through
August 31, 1998, which obligations and expenses shall include, but are not
limited to, all salaries, commissions, bonuses and similar payments to
employees and/or others, lease payments, utilities, insurance and taxes. If
Purchaser receives any invoice(s) for expenses of the Seller's Dental Business
that includes both pre- and post-August 31, 1998 expenses, Purchaser shall
submit to Seller a copy of such invoice(s), together with a statement prorating
such expenses. Within thirty (30) days of receipt of the copy of the invoice
and statement, Seller shall pay to Purchaser the amount of the expenses
prorated through August 31, 1998, as set forth on such statement. If Seller
receives any invoice(s) for expenses of the Seller's Dental Business that
includes both pre- and post-August 31, 1998 expenses, Seller shall submit such
invoice to Purchaser. Purchaser shall then submit to Seller a statement
prorating such expenses, together with a copy of the invoice. Within thirty
(30) days of receipt of such statement, Seller shall pay to Purchaser the
amount of the expenses prorated through August 31, 1998, as set forth on such
statement.
5.7 Collection of Receivables. Subsequent to the Closing, Purchaser
and its assignees shall have the right and authority to collect all receivables
and other items transferred and assigned by Seller hereunder and to endorse
with the name of Seller or any of its affiliates any checks received on account
of such receivables or other items, and Seller agrees that it will promptly
transfer or deliver to Purchaser and its assignees from time to time, any cash
or other property that it may receive on or after September 1, 1998 (and, in
any event, no later than sixty (60) days after its receipt of such item(s)),
with respect to any claims, contracts, licenses, leases, commitments, sales
orders, purchase orders, receivables of any character or any other items
included in the assets transferred to Purchaser pursuant to this Agreement;
provided, however, that with respect to the bank accounts assigned by Seller to
Purchaser in connection with this transaction, Purchaser shall promptly deliver
to Seller any deposits credited into such bank accounts effective on September
1, 1998, for August 31, 1998 receipts (and, in any event, no later than sixty
(60) days after its receipt of such deposit).
5.8 Availability of Records. After the Closing, Purchaser and Seller,
as the case may be, shall make available to the other party ("Requesting
Party"), as reasonably requested by the Requesting Party in connection with the
Requesting Party's business purposes or by any taxing authority, and at the
Requesting Party's expense, any and all information, records or documents
relating to the Seller's Dental Business conducted prior to the Closing and
related personnel retained by Seller, in respect of periods prior to Closing,
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<PAGE> 23
and shall also make available to the Requesting Party, as reasonably requested
by the Requesting Party, personnel responsible for preparing or maintaining
information, records and documents, both in connection with tax matters as well
as litigation. Purchaser and Seller shall preserve all such information,
records and documents until the later of seven (7) years after the Closing or
the expiration of all statutes of limitations or extensions thereof. Prior to
destroying any records related to the Seller's Dental Business conducted prior
to the Closing, Purchaser and/or Seller, as the case may be, shall notify the
other party of its intent to destroy such records and will permit the other
party to retain any such records if it desires to do so. Purchaser and Seller
agree to hold all information relating to the Seller's Dental Business
conducted prior to Closing in strict confidence from and after the Closing
unless disclosure is required by law, court order or other governmental
authority; provided that Purchaser and/or Seller, as the case may be, shall
give the other party prompt notice of such requirement to disclose such that
the other party has the opportunity to contest such disclosure, and Purchaser
and Seller agree to cooperate with and assist the other party in contesting
such disclosure.
5.9 Use of Name. On or promptly following the date of the Closing,
Seller shall file any documents required to withdraw its use of the name
"Talbert Dental Group" or any variant thereof or related acronym and thereafter
Seller shall refrain from any use of such trade names or any associated logos.
5.10 Payment of Certain Liabilities. Seller covenants and agrees to
promptly reimburse Purchaser for any payments Purchaser may be required to make
for any liabilities not specifically assumed by Purchaser under this Agreement.
5.11 Certificate of No Tax Due. Within thirty (30) days following the
Closing date, Seller shall obtain from the Comptroller or Treasurer of
California, Arizona, Utah and Delaware and deliver to Purchaser a "Certificate
of No Tax Due" issued by such Comptrollers and/or Treasurers stating that
Seller has no outstanding state tax liabilities or obligations as of the
Closing date.
5.12 Professional Liability Insurance. Notwithstanding anything to the
contrary in this Agreement, for a period of seven (7) full years from the date
hereof, Seller shall either (i) continue its present claims-made professional
liability insurance policy in full force and effect, or (ii) acquire extended
professional liability insurance coverage (e.g., "tail coverage") with an
insurance company reasonably acceptable to Purchaser and with limits of no less
than $1,000,000, to cover professional liability claims that may be made
against Seller, the Seller's Dental Business, Seller's employees, and/or
independent contractors or professional corporations that provide professional
services to, for or on behalf of Seller or the Seller's Dental Business, for
acts or omissions committed or omitted by Seller or such employees, independent
contractors or professional corporations prior to and including the date of
Closing ("Seller Professional Liability Claims"). Such extended professional
liability insurance coverage shall name as additional insureds Purchaser,
Monarch, the parent corporation of Purchaser, Modern Dental Professionals -
Arizona, P.C. and Modern Dental Professionals - Utah, P.C.
Such extended professional liability insurance coverage, if required
as set forth above, shall require that Purchaser receive thirty (30) days prior
written notice of (i) cancellation or termination of such insurance coverage
for any reason or (ii) any change in coverage limits.
5.13 Transfer of Telephone Numbers. Seller covenants and agrees that
Seller will execute any authorization form, letter or document required by the
telephone company or companies with whom Seller has a telephone number(s),
telephone listing(s) and telephone yellow page advertisements relating to the
Seller's Dental Business, in order to transfer to Purchaser ownership and
control of Seller's telephone
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<PAGE> 24
number(s), telephone listings and telephone yellow page advertisements relating
to the Seller's Dental Business.
5.14 Cooperative Marketing Efforts. MedPartners will make commercially
reasonable efforts to cooperate with Purchaser in marketing Purchaser's dental
services to patients of clinics at which Talbert dental offices are located
which are affiliated with MedPartners, but only to the extent permitted, in
MedPartners' legal counsel's opinion, by applicable law and regulation.
5.15 Closure of California Operations. If Purchaser chooses to close
the California operations of Seller, Seller shall cooperate reasonably with
Purchaser in connection with Purchaser's closing of all of the California
offices of Seller but only to the extent such offices are closed within six (6)
months from the date hereof. MedPartners will further cooperate reasonably in
facilitating discussion between Purchaser and PacifiCare, the California dental
board and other third party payors that Purchaser believes are necessary to
ensure that its Arizona and Utah operations are not adversely effected.
5.16 Sale of California Assets. It is acknowledged by the parties
hereto that following the Closing, Purchaser intends to either sell the
California Assets or close the California operations. If Purchaser sells the
California Assets, then the parties agree that, in connection with the sale of
the California Assets only, the buyer of such assets is expressly made a third
party beneficiary of this Agreement for all purposes including, but not limited
to, its right to indemnification under Article 8, and Purchaser is expressly
permitted to assign any and all of its rights under this Agreement to the buyer
as such rights relate to the California Assets. Seller further shall execute
with Purchaser and the buyer such documents or other instruments as buyer may
reasonably require to cause the buyer to be a third party beneficiary and
assignee of Purchaser's rights hereunder in respect to the California Assets
and to otherwise effect the transactions contemplated by this paragraph.
ARTICLE 6. COVENANTS OF PURCHASER.
6.1 Making of Covenants and Agreements. Purchaser hereby makes the
covenants and agreements set forth in this Article 6.
6.2 Cooperation. Purchaser shall cooperate with all reasonable
requests of Seller and its representatives and agents to more effectively
consummate the transactions contemplated hereby or the transactions referred to
herein.
6.3 Consents. Purchaser shall assist Seller 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 No Known Omissions. To Purchaser's knowledge, there are no known
omissions to Seller's disclosures set forth on the Disclosure Schedule.
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 regardless of any investigation and shall not merge in the
performance of any obligation by either party hereto, subject to the provisions
of Section 5.12 and Article 8 hereof.
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ARTICLE 8. INDEMNIFICATION.
8.1 Indemnification by Seller. Seller and its successors and assigns
(collectively, for purposes of this Article 8, the "Companies"), agrees to
defend, indemnify and hold Purchaser, all subsidiaries, affiliates, and
permitted successors and assignees pursuant to Section 5.16 of Purchaser
(including without limitation stockholders of any of the foregoing (other than
the Companies) and persons serving as officers, directors, partners, employees
or agents of Purchaser, or such subsidiaries, affiliates, or permitted
successors and assignees pursuant to Section 5.16 thereof (in each case, other
than the Companies)) (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 ("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 Purchaser
Indemnified Party (a "Loss" or "Losses"), based upon, arising out of, by reason
of or otherwise in respect of or in connection with:
(1) 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 as part of or pursuant to this
Agreement, or any claim, action or proceeding asserted, instituted or arising
out of any matter or thing covered by such representations or warranties
(collectively, "Warranty Claims");
(2) 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;
(3) any liability of Seller for Taxes (but specifically
excluding tax, if any, due by Purchaser pursuant to Section 1.3 hereof) arising
from an event or transaction prior to the Closing or as a result of the
Closing; or
(4) any claim arising out of or relating to Seller's ownership,
control or management of Seller's assets prior to the Closing, whether any such
claims are asserted prior to or after the Closing other than claims relating to
the Liabilities.
The rights of Purchaser Indemnified Parties to recover indemnification
in respect of any occurrence referred to in either of clauses (b), (c) or (d)
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 Limitations on Indemnification by Seller.
(1) The right of Purchaser Indemnified Parties to
indemnification under Section 8.1 shall be subject to the following provisions:
(1) Indemnification with respect to Warranty Claims shall
expire eighteen (18) months after the Closing; provided,
however, that the limitation of this clause (i) shall not apply
to Warranty Claims involving fraud, intentional
misrepresentation, title to the Acquired Assets or Taxes, for
which the period for making such claims shall expire on the date
which is six (6) months after the termination of the applicable
statute of limitations relating thereto. If prior to the
relevant date of expiration, a specific set of facts shall have
become known which may constitute or give rise to any Warranty
Claim as to which indemnity may be payable and a Purchaser
Indemnified Party shall have given notice of such facts to
Seller, then the right to indemnification with respect thereto
shall remain in
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effect without regard to when such matter shall have been
finally determined and disposed of, according to the date on
which notice of the applicable claim is given.
(2) No indemnification shall be payable with respect to
Warranty Claims (but expressly excluding any such claims
involving fraud, intentional misrepresentation, title to the
Acquired Assets or Taxes) to Purchaser Indemnified Parties
unless the total of all Warranty Claims shall exceed forty
thousand dollars ($40,000.00) in the aggregate, whereupon any
amount in excess of such amount shall be recoverable in
accordance with the terms hereof.
(3) Seller shall not be obligated to indemnify Purchaser
Indemnified Parties for Warranty Claims (but expressly excluding
any such claims involving fraud, intentional misrepresentation,
title to the Acquired Assets or Taxes) after the cumulative
amount of all amounts paid by Seller to Purchaser Indemnified
Parties with respect thereto exceeds two million dollars
($2,000,000.00).
(4) The limitations herein with respect to certain Warranty
Claims shall not limit the rights of any Purchaser Indemnified
Party with respect to any other claims arising under provisions
of Section 8.1.
(2) In the event any claim for Indemnification hereunder arises
under more than one provision of Section 8.1, and as such may be subject to
limitations pursuant to this Section 8.2 if deemed to arise under a particular
provision but not if deemed to arise under a different provision (e.g., a
matter constituting both a breach of a representation and a breach of a
covenant), then the claim shall be deemed to arise under the provision to which
no restrictions or the least restrictive provisions apply.
(3) Indemnification pursuant to Section 8.1 is the exclusive
remedy of Purchaser Indemnified Parties against Seller for matters arising out
of the representations and warranties of Seller set forth in this Agreement and
the Disclosure Schedule hereto and certificates delivered in connection
herewith after the Closing.
(4) The amount of any Losses suffered, sustained or incurred by
Purchaser Indemnified Parties or required to be paid by Seller shall be reduced
by the amount of any insurance proceeds and other amounts paid to such
Purchaser Indemnified Parties by any Person not a party to this Agreement.
8.3 Indemnification by Purchaser. Purchaser agrees to defend,
indemnify and hold Seller (individually a "Seller Indemnified Party" and
collectively the "Seller Indemnified Parties") harmless from and against any
and all Claims, whether or not arising out of third-party claims, and including
all amounts paid in respect of Losses (as defined in Section 8.1 hereof) 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 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
covered by such representations or warranties (collectively "Seller Warranty
Claims"); (b) any breach of any covenant or agreement made by Purchaser in this
Agreement, or in any schedule, exhibit or certificate, delivered by Purchaser
as part of or pursuant to this Agreement; or (c) any claim based on a Liability
or a guaranty of a Liability (such claims under clauses (a), (b) and (c) being
hereinafter collectively referred to as "Seller Indemnifiable Claims"). The
rights of Seller Indemnified Parties to recover indemnification in respect of
any occurrence referred to in clause (b) of this Section 8.3.
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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 8.3.
8.4 Limitations on Indemnification by Purchaser.
(1) The right of Seller Indemnified Parties to indemnification
under Section 8.3 shall be subject to the following provisions:
(1) Indemnification with respect to Seller Warranty
Claims shall expire eighteen (18) months after the Closing;
provided, however, that the limitation of this clause (i)
shall not apply to Seller Warranty Claims involving fraud
or intentional misrepresentation, for which the period for
making such claims shall expire on the date which is six
(6) months after the termination of the applicable statute
of limitations relating thereto. If prior to the relevant
date of expiration a specific state of facts shall have
become known which may constitute or give rise to any
Seller Warranty Claim as to which indemnity may be payable
and a Seller Indemnified Party shall have given notice of
such facts to Purchaser, then the right to indemnification
with respect thereto shall remain in effect without regard
to when such matter shall have been finally determined and
disposed of, according to the date on which notice of the
applicable claim is given.
(2) No indemnification shall be payable with respect
to Seller Warranty Claims (but expressly excluding any such
claims involving fraud or intentional misrepresentation) to
Seller Indemnified Parties unless the total of all Seller
Warranty Claims shall exceed forty thousand dollars
($40,000.00) in the aggregate, whereupon any amount in
excess of such amount shall be recoverable in accordance
with the terms hereof.
(3) Purchaser shall not be obligated to indemnify
Seller Indemnified Parties for Seller Warranty Claims (but
expressly excluding any such claims involving fraud or
intentional misrepresentation) after the cumulative amount
of all amounts paid by Purchaser to Seller Indemnified
Parties with respect thereto exceeds two million dollars
($2,000,000.00).
(4) The limitations herein with respect to certain
Seller Warranty Claims shall not limit the rights of any
Seller Indemnified Party with respect to any other claims
arising under clause (b) of Section 8.4.
(2) In the event any claim for Indemnification hereunder
arises under more than one provision of Section 8.3, and as such may be subject
to limitations pursuant to this Section 8.4 if deemed to arise under a
particular provision but not if deemed to arise under a different provision
(e.g., a matter constituting both a breach of a representation and a breach of
a covenant), then the claim shall be deemed to arise under the provision to
which no restrictions or the least restrictive provisions apply.
(3) Indemnification pursuant to Section 8.3 is the sole and
exclusive remedy of Seller Indemnified Parties against Purchaser for matters
arising out of the representations and warranties of Purchaser set forth in
this Agreement and the Disclosure Schedule hereto and certificates delivered in
connection herewith after the Closing.
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<PAGE> 28
(4) The amount of any Losses suffered, sustained or
incurred by Seller Indemnified Parties or required to be paid by Purchaser
shall be reduced by the amount of any insurance proceeds and other amounts paid
to such Seller Indemnified Parties by any Person not a party to this Agreement.
8.5 Notice: Defense of Claims.
(1) 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.
(2) In the case of any third-party claim, if, within twenty
(20) days after receiving the notice described in the preceding paragraph, 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 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.
(3) 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.
(4) 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
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<PAGE> 29
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.
8.6 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 Certain Fees and Expenses. Except as provided herein, each party
to this Agreement will pay its fees and expenses in connection with this
Agreement and the transactions contemplated hereby and thereby. In the event a
party to this Agreement seeks to enforce any of its rights hereunder in a court
of competent jurisdiction, and if such action results in a judgment for either
party (a dismissal with prejudice by the party commencing such action shall be
deemed to be a judgment in favor of the other party for purposes of this
section), the prevailing party shall be entitled to recover from the other
party, in addition to the relief awarded to the prevailing party in or by
judgment, all court costs, reasonable investigation expenses, and reasonable
attorneys' fees, including appellate proceedings and proceedings in bankruptcy,
incurred by the prevailing party in such action.
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, 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 PURCHASER: Monarch Dental Associates (Utah), Inc.
c/o Monarch Dental Corporation
4201 Spring Valley, Suite 320
Dallas, Texas 75244
Attn: President
With a copy to: Haynes and Boone, L.L.P.
901 Main Street, Suite 3100
Dallas, Texas 75202
Attn: Kenneth K. Bezozo
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<PAGE> 30
TO SELLER: Talbert Medical Management Corporation
c/o Mac Crawford, Chairman and CEO
3000 Galleria Tower, Suite 1000
Birmingham, Alabama 35244
With a copy to: MedPartners
Legal Services
5000 Airport Plaza Drive
Long Beach, California 90815
Attn: Don Garner
Any notice given hereunder may be given on behalf of any party by its counsel
or other authorized representatives.
9.4 Entire Agreement. This Agreement, including the Disclosure
Schedules 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 May 13, 1998, and any and all confidentiality or similar
agreements.
9.5 Assignability; Binding Effect. This Agreement and any rights
hereunder shall be assignable by Purchaser to one or more corporations or
partnerships controlling, controlled by or under common control with Purchaser,
directly or indirectly, provided Purchaser shall remain liable for its
obligations hereunder in connection with any such assignment, or to any
successor or acquiror of Purchaser or its affiliates provided such entity
assumes or agrees to be bound by Purchaser's obligations hereunder, or to any
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), upon written notice to Seller. This
Agreement may not be assigned by Seller without the prior written consent of
Purchaser. This Agreement shall be binding upon and enforceable by, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns.
9.6 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.
9.7 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. Any counterpart of this Agreement may be
executed via facsimile transmission.
9.8 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.
9.9 Consent to Jurisdiction Certain Remedies. Solely for the purpose
of allowing a party to enforce its indemnification and other rights hereunder,
each of the parties hereby consents to personal
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<PAGE> 31
jurisdiction, service of process and venue in the federal or state courts of
Texas or in the court in which any claim for which indemnification may be
sought hereunder is brought against an indemnified party. 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 the remedy of specific
performance, and each of the parties hereto expressly waives the defense that a
remedy in damages will be adequate.
9.10 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.
9.11 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.
9.12 Certain Definitions. For purposes of this Agreement, the term:
(1) "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 an
entity, any officer, director, stockholder, partner or investor in such entity
or of or in any affiliate of such entity; and (iii) with respect to a person or
entity, any person or entity which directly or indirectly controls, is
controlled by, or is under common control with such person or entity.
(2) "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;
(3) "person" means an individual, corporation, partnership,
association, trust or any unincorporated organization; and
(4) "subsidiary" of a person means any corporation more than 50
percent of whose outstanding voting securities, or any partnership, joint
venture or other entity more than 50 percent of whose total equity interest, is
directly or indirectly owned by such person.
9.13 Public Announcements. All notices to third parties and all other
publicity concerning the transactions shall be jointly planned, coordinated and
reasonably approved by Purchaser and Talbert Management. The parties expressly
agree that neither party shall disclose any material financial terms of this
transaction as set forth in Section 3.1 without the prior written consent of
the other party.
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.
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<PAGE> 32
For the purposes of this Agreement, references to "knowledge" or "best
knowledge" of Purchaser or "known" by Purchaser or words of similar import,
shall be deemed to include such knowledge as Purchaser or any executive officer
of Monarch (i.e., Warren F. Melamed, Gary W. Cage and Steven G. Peterson)
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 Utah 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 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
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; and
(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.
10.4 Litigation. There is no litigation pending or, to the best
knowledge of Purchaser, threatened against Purchaser which would 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.
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<PAGE> 33
10.6 Warranties and Representations Concerning Seller's Business.
Purchaser acknowledges that no warranties or representations concerning the
Seller's Dental Business or Seller 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. To Purchaser's knowledge, no statement contained
in any certificate, schedule, financial statement, exhibit or other instrument
furnished by Purchaser pursuant to this Agreement or in any exhibit hereto
contains any material untrue statement of fact or omits to state a fact
necessary in order to make the statements contained herein not materially
misleading in light of the circumstances under which they were made.
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<PAGE> 34
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:
MONARCH DENTAL ASSOCIATES (UTAH), INC.,
a Utah corporation
By: /s/ GARY W. CAGE
------------------------------------
Name: Gary W. Cage
-------------------------------
Title: Vice President
------------------------------
MEDPARTNERS:
MEDPARTNERS, INC.,
a Delaware corporation
By: /s/ JAMES H. DICKERSON, JR.
------------------------------------
Name: James H. Dickerson, Jr.
-------------------------------
Title: Chief Financial Officer
------------------------------
SELLER:
ROBERT ANDERSON, D.D.S, INC., a California
professional corporation
By: /s/ ROBERT ANDERSON, D.D.S.
------------------------------------
Name: Robert Anderson, D.D.S.
-------------------------------
Title: President/Treasurer
------------------------------
JAMES BRODAHL, D.D.S., INC., a California
professional corporation
By: /s/ ROBERT ANDERSON, D.D.S.
------------------------------------
Name: Robert Anderson, D.D.S.
-------------------------------
Title: Vice President/Treasurer
------------------------------
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<PAGE> 35
LARRY KABAN, D.D.S., INC., a California professional
corporation
By: /s/ ROBERT ANDERSON, D.D.S.
------------------------------------
Name: Robert Anderson, D.D.S.
-------------------------------
Title: Vice President/Treasurer
------------------------------
JOHN WHITLEY, D.D.S., INC., a California
professional corporation
By: /s/ ROBERT ANDERSON, D.D.S.
------------------------------------
Name: Robert Anderson, D.D.S.
-------------------------------
Title: Vice President/Treasurer
------------------------------
TALBERT DENTAL GROUP, P.C., an Arizona
professional corporation
By: /s/ GREGORY E. BROWER, D.D.S.
------------------------------------
Name: Gregory E. Brower, D.D.S.
-------------------------------
Title: President
------------------------------
TALBERT DENTAL GROUP, INC., a Utah professional
corporation
By: /s/ KEVIN S. CAHOON, D.D.S.
------------------------------------
Name: Kevin S. Cahoon, D.D.S.
-------------------------------
Title: President
------------------------------
TALBERT MEDICAL MANAGEMENT CORPORATION,
a Delaware corporation
By: /s/ JAMES H. DICKERSON, JR.
------------------------------------
Name: James H. Dickerson, Jr.
-------------------------------
Title: Vice President/Treasurer
------------------------------
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<PAGE> 36
EXHIBIT A
LOCATIONS OF SELLER'S DENTAL BUSINESS
ARIZONA
1. 10222 West Coggins Drive, Sun City, Arizona
2. 275 West Continental, Green Valley, Arizona
3. 2423 West Dunlap Avenue, Phoenix, Arizona
4. 1950 S. Country Club Drive, Mesa Arizona
CALIFORNIA
1. 23340 Moulton Parkway, Laguna Hills, California
2. 818 West Alondra Blvd., Compton, California
3. 1112 North Magnolia Avenue, Anaheim, California
4. 2925-2933 North Palo Verde Avenue, Long Beach, California
5. 9940 Talbert Avenue, Fountain Valley, California
6. 500 Alamitos Avenue, Long Beach, California
UTAH
1. 7495 South State Street, Midvale, Utah
2. 1890 South 1350 West, Ogden, Utah
3. 145 West 1300 South, Orem, Utah
4. 1525 West 2100 South, Salt Lake City, Utah
5. 3730 West 4700 South, West Valley City, Utah
6. 2132 North 1700 West, Layton, Utah
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<PAGE> 37
EXHIBIT B
ALLOCATION OF PURCHASE PRICE BETWEEN ENTITIES
To be agreed upon by parties post-closing.
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