ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as of the
Execution Date set forth on the signature page hereof ("Execution Date"), by and
between TOTAL DENTAL ADMINISTRATORS HEALTH PLAN, INC., an Arizona corporation
("TDAHP" or "Buyer") and SAFEGUARD HEALTH PLANS, INC., an Arizona corporation
("SafeGuard" or "Seller"), with reference to the following facts:
A. SafeGuard is the owner of certain assets identified as all of SafeGuard's
group contracts, individual member contracts, provider contracts, agent/broker
contracts, and all other contracts related to SafeGuard's prepaid dental plan
business located in Arizona, excluding SafeGuard's name and subsidiary
corporation domiciled and licensed in Arizona (the "Purchased Assets").
B. Buyer is an Arizona corporation licensed as a Prepaid Dental Plan
Organization in the state of Arizona.
C. Seller and Buyer entered into a letter of agreement dated November 20,
2000 (the "Letter of Intent"), pursuant to which Seller has agreed to sell to
Buyer, and Buyer agreed to purchase from Seller, the Purchased Assets, upon
terms and conditions set forth in the Letter of Intent, subject to (i) Buyer's
satisfactory completion of its legal, financial and operating due diligence
review regarding the Purchased Assets ("Buyer's Due Diligence Review") and (ii)
the parties' completion of definitive documents that shall set forth all of the
terms and conditions of the transactions contemplated by the Letter of Intent
(collectively, the "Transaction") consistent with the terms of the Letter of
Intent.
IN CONSIDERATION of the recitals, covenants, conditions and promises herein
contained, and for other valuable consideration, the receipt and sufficiency of
which the parties hereby acknowledge, Buyer and Seller hereby agree as follows:
1. Purchase and Sale.
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1.1 Purchased Assets. Seller shall sell to Buyer, and Buyer shall
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purchase from Seller, the Purchased Assets described on Exhibit A, attached
hereto and incorporated herein by this reference as if set forth in full, (the
"Purchased Assets"), in exchange for the Purchase Price and other consideration
described herein below.
1.2 No Liens and Encumbrances. Seller shall convey the Purchased
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Assets to Buyer free and clear of all liens, pledges, security interests, rights
of first refusal, options, restrictions, encumbrances, liabilities and defects
in title, including, without limitation, any deeds of trust, mortgages,
indentures, financing statements or similar security interests that secure debts
of the Seller.
2. Consideration.
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2.1 Purchase Price. The total purchase price for the Purchased Assets
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("Purchase Price") shall be one thousand dollars ($1,000) payable in cash at
closing.
2.2 No Assumption of Liability by Buyer. Seller and Buyer acknowledge
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and agree that Buyer shall not hereunder or otherwise assume any of liabilities
or obligations of Seller, or of any other party, arising with respect to the
Purchased Assets, whether known or unknown, disclosed or undisclosed, including
without limitation those relating to: (i) any taxes that may be assessed or due
for any period prior to the Effective Time; (ii) any claim or lien of any
governmental agency for or arising out of events occurring during any period
prior to the Effective Time; (iii) any claims or liabilities whatsoever
incurred, existing or arising out of events, or out of errors or omissions of
Seller or its predecessors in interest to the Purchased Assets, or their
respective officers, directors, employees, contractors or agents, occurring
prior to the Effective Time; (v) any liability for borrowed money or other
indebtedness incurred prior to the Effective Time.
2.3 No Retention of Liability by Seller. Seller and Buyer acknowledge
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and agree that Seller shall not hereunder or otherwise assume any of liabilities
or obligations of Buyer, or of any other party, arising with respect to the
Purchased Assets, whether known or unknown, disclosed or undisclosed, including
without limitation those relating to: (i) any taxes that may be assessed or due
for any period after the Effective Time; (ii) any claim or lien of any
governmental agency for or arising out of events occurring after the Effective
Time; (iii) any claims or liabilities whatsoever incurred, existing or arising
out of events, or out of errors or omissions of Buyer or its predecessors in
interest to the Purchased Assets, or their respective officers, directors,
employees, contractors or agents, occurring after the Effective Time; or (v) any
liability for borrowed money or other indebtedness incurred after the Effective
Time.
3. Closing.
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3.1 Closing Time. The consummation of the Transaction ("Closing")
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shall occur as of the Effective Time on not less than forty eight (48) hours
notice and at such location and on such time and place as shall be fixed by the
mutual written consent of the parties hereto ("Closing Time"). Notwithstanding
the foregoing, in the event that the conditions precedent set forth in Section
11 (Conditions Precedent) of this Agreement have not been satisfied or waived
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prior to the Closing Time, either party hereto shall have the right at its
option to extend the Closing Time for an additional period of time necessary to
satisfy such conditions, such additional period not to extend beyond an
additional thirty (30) days. Notwithstanding anything to the contrary contained
herein, the closing of the Transaction shall occur not later than one hundred
twenty (120) days after the execution of this agreement.
3.2 Effective Time. All transactions consummated pursuant to this
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Agreement shall be deemed to have been consummated at 12:00 a.m. on the date of
the Closing Time (the "Effective Time").
3.3 Post-Closing Cooperation. Following the Closing, Seller shall
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execute and deliver such documents, and provide such other assurances and
cooperation, as Buyer shall reasonably request to provide to Buyer the ownership
and benefit of the Purchased Assets and to arrange for an effective transition
in the ownership of the Purchased Assets to Buyer.
4. Representations, Warranties and Agreements of Seller. Seller makes the
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following representations, warranties and agreements for the purpose of inducing
Buyer to enter into this Agreement and consummate the sale and purchase of the
Assets. The term "Material" as used in this Section 4 (Representations,
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Warranties and Agreements of Seller) means (a) with respect to any contractual
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obligation, any such obligation of SafeGuard that involves the payment or
receipt of Ten Thousand Dollars ($10,000) or more in any one (1) year, (b) with
respect to the breach or violation of any contractual obligation by Seller, any
such breach or violation having potential consequences that could materially and
adversely affect Seller's business, operations, assets or financial condition,
Seller's ability to perform its obligations under this Agreement or Buyer's
purchase of the Purchased Assets or the ownership or use thereof by Buyer, or
(c) with respect to any legal obligation, any such obligation of Seller the
violation of, or noncompliance with, by Seller could result in the imposition of
fines, penalties, sanctions or other consequences involving more than $10,000
within any one (1) year, depriving Seller or any successor of the rights to own
the Purchased Assets, or limiting the right of Seller or a successor to be
compensated for services rendered or goods sold, or materially and adversely
affecting the SafeGuard's business, operations, assets or financial condition,
Seller's ability to perform its obligations under this Agreement or Buyer's
purchase of the Purchased Assets or the ownership or use thereof by Buyer. The
term "Knowledge" or "Seller's Knowledge" as used in this Section 4
(Representations, Warranties and Agreements of Seller) means the actual
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collective and individual knowledge of each of the Seller's respective President
and Chief Executive Officer and Senior Vice President and General Counsel, after
due inquiry.
4.1 Organization and Standing. SafeGuard is an Arizona corporation,
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which is duly formed and in good standing under and by virtue of the laws of the
State of Arizona. Seller possesses all requisite power to enter into this
Agreement and consummate the Transaction.
4.2 Authority; Binding Effect. The execution and delivery of this
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Agreement, and each of the documents to be executed by or on behalf of Seller
pursuant to this Agreement, and the consummation of the Transaction, have been
duly authorized. Seller has the full power and authority to enter into and
perform this Agreement and to carry out all of the terms and provisions hereof.
This Agreement is a valid and binding obligation of Seller, enforceable against
each and all of them in accordance with its terms, except insofar as enforcement
thereof may be limited by bankruptcy, insolvency or similar laws and all general
equitable principles, including the availability of any specific equitable
remedy.
4.3 No Violation or Bar. There is no Material contract or agreement or
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any restriction to which SafeGuard is a party or respecting the Purchased Assets
otherwise that would prevent or restrict the power or authority of SafeGuard to
enter into this Agreement and to consummate the Transaction. Neither the
execution and delivery of this Agreement nor the consummation of the Transaction
will (i) violate, or be in conflict with, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of or accelerate the performance required, or cause
the acceleration of the maturity of any Material debt or obligation pursuant to,
or result in the creation or imposition of any Material security interest, lien
or other encumbrance upon any of the Purchased Assets under any agreement or
commitment to which SafeGuard is a party or to which the Purchased Assets are
subject, or cause SafeGuard to become insolvent or otherwise unable to pay its
obligations as they become due, or (ii) violate any Material order of any
governmental or regulatory authority, any judgment, decree, order or award of
any court, arbitrator, administrative agency or governmental authority or any
Material license, consent, permit, order, approval or any other authorization of
any governmental or regulatory authority, or any Material statute, law,
ordinance, rule or regulation.
4.4 Completeness of Purchased Assets. The Purchased Assets shall
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comprise all of the group contracts, individual member contracts, provider
contracts, agent/broker contracts, and all other contracts related to
SafeGuard's prepaid dental plan in Arizona as set forth in Exhibit A.
4.5 Title. Seller has at the Effective Time sole and exclusive, and
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good and marketable, title to all the Purchased Assets, free and clear of all
liens, mortgages, deeds of trust, encumbrances, leases, security interests (UCC
or otherwise), actions, claims, charges, conditions or restrictions of any
nature whatsoever, including without limitation chattel mortgages, conditional
sale contracts, collateral security arrangements, leases and other title or
interest retention arrangements.
4.6 Consents. Seller shall use all commercially reasonable efforts to
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obtain all consents, releases and permissions of every kind or nature, whether
from public authorities, or otherwise, which may be required with respect to the
performance by Seller of its obligations hereunder.
4.7 Required Governmental Consents. No consent, approval or
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authorization of, or filing or registration with any governmental authority,
whether federal, state or local, is required to be obtained or made by any of
the Seller in order for the Seller lawfully to consummate the Transaction,
except any approval that may be required by the Arizona Department of Insurance.
The parties agree that this Agreement may be terminated by either party upon
thirty (30) advance written notice in the event the Arizona Department of
Insurance does not approve the transaction contemplated by this Agreement.
4.8 Litigation and Related Proceedings. SafeGuard has not been served
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with or received notice of any summons, complaint or notice to arbitrate and
there is no suit, litigation, claim, equitable, legal, administrative
arbitration or other proceeding pending or threatened to which either SafeGuard
is a party that affects the Purchased Assets.
4.9 Orders, Decrees, Rulings and Contracts. SafeGuard is not a party
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to any order, decree or ruling of any court or administrative agency, federal,
state or local, nor has SafeGuard had any contacts or knowledge of any contacts,
formal or informal, with such agency relating to the Purchased Assets that could
Materially and adversely affect the Purchased Assets, or the ability of Seller
to perform its obligations hereunder.
4.10 Negative Covenants. During the period from the date of the Letter
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of Agreement to the Closing Time, SafeGuard shall not, without Buyer's written
consent:
(1) Create, participate in or agree to the creation of any liens,
encumbrances or hypothecations of any of the Purchased Assets, except any liens
for current taxes and liens created in the ordinary and usual course of its
business as heretofore conducted.
(2) Enter into any agreement to do any of the acts previously
described in Section 4.10 (Negative Covenants).
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4.11 Truth of Representations and Warranties. No representation or
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warranty of Seller contained in this Agreement, or any document or certificate
furnished or to be furnished by Seller hereunder, will contain any untrue
statement of any Material fact known to Seller or fail to state any Material
fact known to Seller that the omission of which would cause any representation
or warranty made by Seller hereunder to be false or misleading.
4.12 Survival of Representations, Warranties and Agreements. The
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warranties, representations and agreements by Seller set forth in this Section 4
(Representations, Warranties and Agreements of Seller) shall be true on and as
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of the Closing Time as though such representations, warranties and agreements
were made on and as of such time and shall survive (i) any investigation or
review by Buyer of the Purchased Assets and (ii) for a period of one (1) year
following the Closing Time.
5. Representations, Warranties and Agreements of Buyer. Buyer makes the
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following representations, warranties and agreements for the purpose of inducing
Seller to enter into this Agreement and consummate the Transaction. The term
"Material" as used in this Section 5 (Representations, Warranties and Agreements
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of Buyer) means (a) with respect to any contractual obligation, any such
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obligation of Buyer that involves the payment or receipt of Ten Thousand Dollars
($10,000) or more in any one (1) year, (b) with respect to the breach or
violation of any contractual obligation by Buyer, any such breach or violation
having potential consequences that could materially adversely affect Buyer's
business, operations, assets or financial condition, Buyer's ability to perform
its obligations under this Agreement or Buyer's purchase of the Purchased Assets
or the ownership or use thereof by Buyer, or (c) with respect to any legal
obligation, any such obligation of Buyer, the violation of, or noncompliance
with, by Buyer could result in the imposition of fines, penalties, sanctions or
other consequences involving more than Ten Thousand Dollars ($10,000), depriving
Buyer or any successor to Buyer of the rights to conduct the business of Buyer
as conducted on the Closing Date, or limiting the right of Buyer or a successor
to Buyer to be compensated for services rendered or goods sold, or materially
adversely affecting Buyer's business, operations, assets or financial condition,
Buyer's ability to perform its obligations under this Agreement or Buyer's
purchase of the Purchased Assets or the ownership or use thereof by Buyer. The
term "Knowledge" or "Buyer's Knowledge" as used in this Section 5
(Representations, Warranties and Agreements of Buyer) means the actual
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collective and individual knowledge of the chief executive officer and chief
financial officer of Buyer, after due inquiry.
5.1 Organization and Standing. Buyer is a corporation, duly organized,
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existing and in good standing under and by virtue of the laws of the State of
Arizona. Buyer possesses all requisite power to enter into this Agreement and
consummate the Transaction.
5.2 Authority; Binding Effect. The execution and delivery of this
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Agreement, and each of the documents to be executed by or on behalf of Buyer
pursuant to this Agreement, and the consummation of the Transaction have been
duly authorized by the Board of Directors of Buyer. Buyer has full power and
authority to enter into and perform this Agreement and to carry out all of the
terms and provisions hereof. This Agreement is a valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except insofar
as enforcement thereof may be limited by bankruptcy, insolvency or similar laws
and all general equitable principles, including the availability of any specific
equitable remedy.
5.3 No Violation or Bar. Buyer is not a party to any Material contract
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or agreement or subject to any restrictions respecting the Assets, or otherwise,
which would prevent or restrict the power or authority of Buyer to enter into
this Agreement and to consummate the Transaction, except such contracts or
agreements for which consent to the Transaction will be obtained prior to the
Closing Time. Neither the execution and delivery of this Agreement nor the
consummation of the Transaction will violate any provisions of the Articles of
Incorporation and Bylaws of Buyer or, (i) violate, or be in conflict with, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of or accelerate
the performance required, or cause the acceleration of the maturity of any
Material debt or obligation pursuant to, or result in the creation or imposition
of any security interest, lien or other encumbrance upon any of Buyer's real or
personal property under any agreement or commitment to which Buyer is a party or
to which Buyer is bound, or to which said real or personal property are subject,
or (ii) violate any order of any governmental or regulatory authority, any
judgment, decree, order or award of any court, arbitrator, administrative agency
or governmental authority or, to the best knowledge of Buyer, any Material
license, consent, permit, order, approval or any other authorization of any
governmental or regulatory authority, or any Material statute, law, ordinance,
rule or regulation.
5.4 Consents. Buyer shall use all commercially reasonable efforts to
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obtain all consents, releases and permissions of every kind or nature, whether
from public authorities, or otherwise, which may be required with respect to the
performance by Buyer of its obligations hereunder and shall cooperate with
Seller in securing any regulatory consents that may be required.
5.5 Orders, Decrees, Rulings and Contracts. Buyer is not a party to
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any order, decree or ruling of any court or administrative agency, federal,
state or local, nor has Buyer any contracts, formal or informal, with such
agency that could materially and adversely affect the ability of Buyer to
perform its obligations hereunder.
5.6 Material Adverse Change. During the period from the Execution Date
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to the Closing Time, Buyer shall promptly notify Seller in writing of any event
of which Buyer obtains Knowledge which has had or might reasonably be expected
to cause any representation or warranty to be untrue, inaccurate or misleading
in any Material respect.
5.7 Truth of Representations and Warranties. No representation or
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warranty of Buyer contained in this Agreement, or any statement, document or
certificate furnished or to be furnished by Buyer in connection with the
transactions contemplated hereby, will contain any untrue statement of any
Material fact known to Buyer or fail to state any Material fact that would cause
any representation, warranty or statement to be false or misleading.
5.8 Survival of Representations, Warranties and Agreements. The
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warranties, representations and agreements of Buyer set forth in this Section 5
(Representations, Warranties and Agreements of Buyer) shall be true on and as of
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the Closing Time as though such representations, warranties and agreements were
made on and as of such time and shall survive (i) any investigation or review by
Seller of Buyer's organization and operation and (ii) for a period of one (1)
year following the Closing Time.
6. Prorations and Other Payments.
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6.1 Contract Payments; Fees. All prepaid expenses included within the
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Assets, all license fees and other payments and deposits shall be prorated by
the parties as of the Effective Time. Buyer shall pay only the pro-rata share
of such prepaid expenses, contracts, liabilities and obligations accruing or
arising with respect to the period after the Effective Time. Buyer shall at the
Closing pay the pro-rata amounts therefore described on Exhibit 6.1 attached
hereto, as may be applicable ("Prorations").
6.2 Sales and Use Taxes. Buyer shall pay any and all sales and use
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taxes arising as a result of the Transaction. Notwithstanding the foregoing,
Buyer shall have the right to assert the right and claim that the Transaction is
not subject to any sales or use tax and Seller shall cooperate fully with Buyer
with respect to such rights and claims.
6.3 Closing Costs. Except as otherwise specifically set forth herein
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or agreed by the parties in writing, each party shall bear its own legal,
accounting and consulting expenses incurred in connection with the transactions
contemplated by this Agreement, except that Seller will assist Buyer in the
preparation and filing of any application or request for approval that may be
required by the Arizona Department of Insurance.
7. Closing Tax Returns, Notices and Reports.
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7.1 Returns, Notices and Reports. Buyer and Seller shall promptly file
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or arrange for the filing of any and all closing returns, notices and reports of
every kind and nature required by federal, state, county and municipal
governments or any subdivision thereof, in respect to the Purchased Assets, and
pay or arrange for payment of all sums payable in connection therewith and shall
cooperate fully with the other parties in the preparation of all such returns,
notices and reports and shall provide, or cause to be provided at the requesting
party's sole cost and expense, to the other party, any records and other
information requested by such party in connection therewith.
7.2 Tax Reporting. Buyer and Seller shall report the Transaction for
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federal and state income tax purposes and to file all other reports required by
appropriate governmental agencies and authorities. Seller shall cooperate fully
with Buyer after the Closing in connection with any tax investigation, audit or
other proceeding relating to events occurring prior to the Effective Time. The
parties hereto acknowledge and agree that said Purchase Price represents the
fair market value of the Purchased Assets and is based in part upon Buyer's Due
Diligence Review.
8. Indemnity by Seller.
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8.1 Indemnity. Seller agrees to protect, indemnify, defend and hold
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Buyer, its officers, directors, legal representatives, successors and assigns
(each an "Indemnified Party"), and each of them, free and harmless from and
against any and all debts, liabilities, obligations, losses, damages, costs or
expenses (including, but not limited to attorneys' fees), and settlements in
respect thereof, liens or encumbrances (individually a "Loss" and, collectively
"Losses") accruing or based upon or arising out of (i) any breach or violation
of any representation or warranty by Seller, or (ii) the breach by Seller of
any other term or provision of this Agreement, or (iii) any and all liabilities
and obligations of Seller whatsoever, or Third Party Claims; provided, however,
that Seller's aggregate obligation to indemnify Buyer hereunder shall not exceed
twenty thousand dollars ($20,000.00), not including Buyer's attorneys' fees.
8.2 Third Party Claims
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(1) Any person wishing to claim indemnification under this Section
8 (Indemnity by Seller), upon learning of any claim, action, suit, proceeding or
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investigation as to which it wishes to be indemnified, shall notify Seller;
provided however that no failure to so notify Seller will relieve Seller, or any
guarantor of the obligations of any Seller, to indemnify such person or of any
other obligation imposed by this Section 8 (Indemnity by Seller) unless such
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failure materially prejudices the indemnifying party's ability to defend the
claim. Any claim for indemnification pursuant to this Section 8 (Indemnity by
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Seller) shall be made within ninety (90) days following the expiration of the
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period described in Section 4.12 (Survival of Representations, Warranties and
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Agreements).
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(2) If the facts giving rise to any indemnification provided for
in this Section 8 (Indemnity by Seller) involve any actual or threatened claim
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or demand by any person other than an Indemnified Party, or any of its
successors or assigns (collectively, a "third party"), against an Indemnified
Party or any possible claim by an Indemnified Party against any third party
(collectively, a "third party claim"), Seller shall have the right to assume the
defense or prosecution of such claim or litigation resulting therefrom,
exercisable by notice to the Indemnified Party given within ten (10) days after
notice of the Indemnified Party's claim for indemnification pursuant to this
Section 8 (Indemnity by Seller). Any such defense or prosecution of a third
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party claim by Seller pursuant to this Paragraph 8.2(2) shall be through legal
counsel chosen by Seller, acting together, subject to the approval of such legal
counsel by the Indemnified Party(ies), which approval shall not unreasonably be
withheld, and the terms of Paragraphs 8.2(3) and 8.2(4) below
(3) If the defense or prosecution of a third party claim is
assumed by Seller pursuant to this Section 8.2 (Third Party Claims), the
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Indemnified Party shall be entitled, at its own expense, to participate in such
defense or prosecution through legal counsel chosen by the Indemnified Party.
If Seller assumes the defense or prosecution of such claim or litigation, Seller
shall take all steps necessary in the defense, prosecution or settlement of such
claim or litigation and shall hold the Indemnified Party harmless from and
against all Losses caused by or arising out of any settlement thereof approved
by Seller or any judgment in connection therewith (other than the Indemnified
Party's expenses of participation in such defense, prosecution or settlement).
Seller may not, in the defense or prosecution of any suit, claim, action or
proceeding the defense of which Seller has assumed, except with the written
consent of the Indemnified Party (which shall not be unreasonably withheld),
consent to the entry of any judgment or enter into any settlement (i) that does
not include as an unconditional term thereof the giving to the Indemnified Party
by the third party of a full and final release from all liability in respect of
such suit, claim, action or proceeding or (ii) that shall limit, restrict, make
of have a material adverse effect upon or otherwise affect the right of the
Buyer to carry on or conduct its businesses (then or in the future), or requires
any payment to be made by the Indemnified Party, or limits, restricts, has a
material adverse effect upon or otherwise adversely affects the manner in which
Buyer carries on or conducts its businesses then or in the future.
(4) If Seller does not assume the defense or prosecution of such
claim or litigation pursuant to this Section 8.2 (Third Party Claims), the
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Indemnified Party may defend or prosecute such claim or litigation in such
manner as it may deem appropriate (in which case legal expenses of the
Indemnified Party shall be at the expense of Seller, and shall be considered to
be part of the Losses incurred pursuant to this Section 8 (Indemnity by Seller))
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after giving written notice thereof (and reasonably opportunity to respond) to
Seller, on such terms as the Indemnified Party may deem appropriate. Seller
shall promptly reimburse the Indemnified Party for the Losses arising out of any
judgment rendered against the Indemnified Party or settlement entered into by
the Indemnified Party.
(5) If an Indemnified Party assumes the defense of a third party
claim or demand pursuant to this Section 8.2 (Third Party Claims), the
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Indemnified Party shall employ legal counsel and defend, prosecute and/or settle
such claims or demands at Seller's expense. Seller shall promptly reimburse the
Indemnified Party for the Losses arising out of any judgment rendered against
the Indemnified Party or settlement entered into by the Indemnified Party. Any
expenses for which the Indemnified Party is entitled to reimbursement hereunder
shall be paid as incurred.
9. Indemnity By Buyer.
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9.1 Indemnity. Buyer agrees to protect, indemnify, defend and hold
Seller, its officers, directors, legal representatives, successors and assigns,
and each of them, free and harmless from and against any and all debts,
liabilities, obligations, losses, damages, costs or expenses (including, but not
limited to attorneys' fees), and settlements in respect thereof, liens or
encumbrances accruing or based upon or arising out of (i) any breach or
violation by Buyer of any representation or warranty set forth in Section 5
(Representations, Warranties and Agreements of Buyer) hereof, or (ii) the breach
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by Buyer of any other term or provision of this Agreement, or (iii) any facts or
events occurring after the Effective Time and connected with the Purchased
Assets or Buyer's operation of its business utilizing the Purchased Assets
within the state of Arizona; provided, however, that Buyer's aggregate
obligation to indemnify Seller hereunder shall not exceed twenty thousand
dollars ($20,000.00), not including Buyer's attorneys' fees.
9.2 Third Party Claims.
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(1) Any person wishing to claim indemnification under this Section
9 (Indemnity by Buyer), upon learning of any claim, action, suit, proceeding or
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investigation as to which it wishes to be indemnified, shall notify Buyer;
provided however that no failure to so notify Buyer will relieve Buyer, or any
guarantor of the obligations of Buyer, to indemnify such person or of any other
obligation imposed by this Section 9 (Indemnity by Buyer) unless such failure
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material prejudices the indemnifying party's ability to defend the claim. Any
claim for indemnification pursuant to this Section 9 (Indemnity by Buyer) shall
------------------
be made within ninety (90) days following the expiration of the period described
in Section 5.8 (Survival of Representations, Warranties and Agreements).
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(2) If the facts giving rise to any indemnification provided for
in this Section 9 (Indemnity by Buyer) involve any actual or threatened claim or
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demand by any person other than an Indemnified Party, or any of its successors
or assigns (collectively, a "third party"), against an Indemnified Party or any
possible claim by an Indemnified Party against any third party (collectively, a
"third party claim"), Buyer shall have the right to assume the defense or
prosecution of such claim or litigation arising therefrom, exercisable by notice
to the Indemnified Party given within ten (10) days after notice of the
Indemnified Party's claim for indemnification pursuant to this Section 9
(Indemnity by Buyer). Any such defense or prosecution of a third party claim by
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Buyer pursuant to this Paragraph 9.2(2) shall be through legal counsel chosen by
Buyer, subject to the approval of such legal counsel by the Indemnified
Party(ies), which approval shall not unreasonably be withheld, and the terms of
Paragraphs 9.2(3) and 9.2(4) below.
(3) If the defense or prosecution of a third party claim is
assumed by Buyer pursuant to this Section 9.2 (Third Party Claims), the
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Indemnified Party shall be entitled, at its own expense, to participate in such
defense or prosecution through legal counsel chosen by the Indemnified Party.
If Buyer assumes the defense or prosecution of such claim or litigation, it
shall take all steps necessary in the defense, prosecution or settlement of such
claim or litigation and shall hold the Indemnified Party harmless from and
against all Losses caused by or arising out of any settlement thereof approved
by Buyer or any judgment in connection therewith (other than the Indemnified
Party's expenses of participation in such defense, prosecution or settlement).
Buyer may not, in the defense or prosecution of any suit, claim, action or
proceeding, the defense of which Buyer has assumed, except with the written
consent of the Indemnified Party (which shall not be unreasonably withheld),
consent to the entry of any judgment or enter into any settlement (i) that does
not include as an unconditional term thereof the giving to the Indemnified Party
by the third party of a full and final release from all liability in respect of
such suit, claim, action or proceeding or (ii) requires any payment to be made
by the Indemnified Party.
(4) If Buyer does not assume the defense or prosecution of such
claim or litigation pursuant to this Section 9.2 (Third Party Claims), the
------------------
Indemnified Party may defend or prosecute such claim or litigation in such
manner as it may deem appropriate (in which case legal expenses of the
Indemnified Party shall be at the expense of Buyer, and shall be considered to
be part of the Losses incurred pursuant to this Section 9 (Indemnity by Buyer))
------------------
after giving written notice thereof (and reasonably opportunity to respond) to
Buyer, on such terms as the Indemnified Party may deem appropriate. Buyer shall
promptly reimburse the Indemnified Party for the Losses arising out of any
judgment rendered against the Indemnified Party or settlement entered into by
the Indemnified Party. Any expenses for which an Indemnified Party is entitled
to reimbursement hereunder shall be paid as incurred.
(5) If an Indemnified Party assumes the defense of a third party
claim or demand pursuant to this Section 9.2 (Third Party Claims), the
--------------------
Indemnified Party shall employ counsel and defend, prosecute and/or settle such
claims or demands at Buyer's expense. Buyer shall promptly reimburse the
Indemnified Party for the Losses arising out of any judgment rendered against
the Indemnified Party or settlement entered into by the Indemnified Party. Any
expenses for which the Indemnified Party is entitled to reimbursement hereunder
shall be paid as incurred.
10. Documents Delivered at Closing. The parties hereto shall execute and
---------------------------------
deliver all documents, papers and instruments necessary or convenient to carry
out the terms of this Agreement. Without limiting the generality of the
foregoing and subject to the conditions set forth in this Agreement, the
following documents are to be delivered by the indicated party on or before the
Closing Time:
(1) All evidence and documents as the attorneys for Buyer may
reasonably require as to Seller's compliance with its agreements hereunder and
the fulfillment of the conditions to Buyer's obligation to consummate the
transaction contemplated hereby.
(2) All evidence and documents as the attorneys for Seller may
reasonably require as to Buyer's compliance with its agreements hereunder and
the fulfillment of the conditions to Seller's obligations to consummate the
transaction contemplated hereby.
(3) A certificate by the Seller, executed by its duly authorized
officer, confirming the truthfulness in all material respects of the
representations, warranties and covenants made herein as of the Closing Time.
(4) A certificate by Buyer, executed by any of its authorized
officers, confirming the truthfulness in all material respects of the
representations, warranties and covenants made herein as of the Closing Time.
(5) Buyer's payment of the Purchase Price to Seller in accordance
with Section 2.1 (Purchase Price).
---------------
11. Conditions Precedent. The obligations of the parties to consummate the
---------------------
Transaction are conditioned and contingent upon each of the following conditions
described in this Section 11 (Conditions Precedent).
---------------------
11.1 Conditions for the Benefit of Buyer and Seller.
-----------------------------------------------------
(1) Seller shall have received all third party consents required
to transfer and assign the Purchased Assets to Buyer, including but not limited
to the approval of the Transaction by the Arizona Department of Insurance as may
be required.
(2) No law or court order shall have been enacted, promulgated or
enforced by any governmental agency, nor shall any legal or regulatory action
have been instituted and remain pending and threatened that prohibits or
restricts the consummation of the Transaction.
(3) Buyer and Seller shall have agreed in writing to the form and
content of any and all Exhibits described herein that are not attached hereto
upon the execution of this Agreement by both of the parties.
11.2 Conditions for the Benefit of Buyer.
----------------------------------------
(1) Buyer shall have entered into such written agreements it
determines in its sole discretion to be appropriate, providing on terms and
conditions acceptable to Buyer in its sole discretion (including without
limitation conditions subject to Buyer's approval of matters disclosed in due
diligence) for Buyer's acquisition of the Purchased Assets.
(2) Seller's performance of and compliance with all covenants,
agreements, conditions, terms and provisions required by this Agreement to be
performed or complied with by Seller on or prior to the Closing Time.
(3) The accuracy and completeness of all representations and
warranties made by Seller pursuant to Section 4 (Representations, Warranties and
-------------------------------
Agreements of Seller).
----------------------
(4) Seller shall have delivered to Buyer a certificate certifying
that, between the period commencing as of the date of execution of this
Agreement and the Closing Time, to their respective knowledge (as defined in
Section 4 (Representations, Warranties and Agreements of Seller), the Company
-----------------------------------------------------
shall have; (a) operated only in the ordinary course of business consistent with
past custom and practice; (b) not sold, paid, contributed, distributed or
otherwise transferred any of the assets of the Company to any person for any
reason other than in the ordinary course of business; (c) paid all employees and
accounts payable, and collected all accounts receivable, in the ordinary course
of business consistent with past custom and practice; and (d) not declared,
paid, made or otherwise effectuated any dividends, distributions, redemptions,
equity repurchases or other transactions involving Sellers capital stock.
11.3 Conditions for the Benefit of Seller.
-----------------------------------------
(1) Buyer's performance and compliance with all covenants,
agreements, conditions, terms and provisions required by this Agreement to be
performed or complied with by Buyer prior to the Closing.
(2) The accuracy and completeness of all representations and
warranties made by Buyer pursuant to Section 5 (Representations, Warranties and
-------------------------------
Agreement of Buyer) hereof.
--------------------
11.4 Waiver of Conditions. The conditions set forth in Section 11.2
----------------------
(Conditions for the Benefit of Buyer) may be waived only by Buyer and only in
---------------- ---------------------
writing. The conditions set forth in Section 11.3 (Conditions for the Benefit
--------------------------
of Seller) may be waived only by Seller and only in writing. The conditions set
---------
forth in Section 11.1 (Conditions for the Benefit of Seller and Buyer) may
------------------------------------------------
waived only in a writing signed by both Seller and Buyer.
11.5 Satisfaction of Conditions. The parties hereto agree to use all
----------------------------
reasonable effort and due diligence to timely satisfy all of the foregoing
conditions and contingencies. In the event that at the Closing Time, as extended
pursuant to Section 3.1 (Closing Time) hereof, the conditions set forth in
-------------
Section 11.2 (Conditions for the Benefit ofBuyer) have not been satisfied or
-------------------------------
waived by Buyer, this Agreement may thereupon be terminated by Buyer, at its
option, and upon such termination, Seller shall be liable to Buyer for all
damages incurred or sustained by Buyer; provided, however, if any such condition
fails because of the refusal of a third party to provide a consent, Seller shall
not be liable in damages to Buyer if Seller used commercially reasonable efforts
to obtain such consent. In the event that at the Closing Time, as extended
pursuant to Section 3.1 (Closing Time), the conditions set forth in Section 11.3
------------
(Conditions for the Benefit of Seller) have not been satisfied or waived by
--------------- ------------------------
Seller, this Agreement may thereupon be terminated by Seller, acting together,
-------
at their option, and upon such termination, Buyer shall be liable to Seller for
all damages incurred or sustained by Seller; provided, however, if any such
condition fails because of the refusal of a third party to provide a consent,
Buyer shall not be liable in damages to Seller if Buyer used commercially
reasonable efforts to obtain such consent. If on the Closing Time, as extended
pursuant to Section 3.1 (Closing Time) hereof, the conditions set forth in
-------------
Section 11.1 (Conditions for the Benefit of Buyer and Seller) have not been
-------------------------------------------------
satisfied or waived in accordance with the foregoing, either Buyer or Seller,
acting together, may terminate this Agreement effective immediately and each
party shall thereupon be fully and forever discharged and released from all
obligation and liability hereunder.
12. Confidential Information. Except insofar as data and information may be
------------------------
required by law or regulation to be disclosed or is available to the public,
Buyer and Seller each shall at all times to hold in strict confidence all data
and information obtained in connection with the Transaction and this Agreement
which relates to the business of the other party. If the Transaction is not
consummated, each party shall return to the other party all data and information
received from such other party and any copies, summaries or analyses drawn from
such data and information received from such other party. The parties also
agree to issue no press releases concerning the Transaction or this Agreement
without the express written consent of the other party.
13. Brokerage Fee. Buyer and each of the Seller represents, warrants and
--------------
agrees that all negotiations relative to this Agreement have been carried on by
its representative directly with the other party without the intervention of any
person; that no broker brought about or participated in the transaction on its
behalf; each party shall and hereby does agree to indemnify and hold the other
party free and harmless from any and all claims, suits and actions for brokerage
or other commissions and from and against all expenses of any character,
including reasonable attorneys' fees, incurred by the other party by reason of
any claims by any person or broker claiming to have been engaged by, or on
behalf of, the Indemnifying Party, or with whom the Indemnifying Party is
claimed to have made an agreement for compensation.
14. Notices. All notices required to be given hereunder shall be given in
-------
writing and shall be deemed delivered if dispatched by certified or registered
mail, return receipt requested, postage prepaid, or by an express delivery
service customarily used for business correspondence and providing substantially
similar written proof of delivery and receipt, charges prepaid, addressed to the
parties as set forth below their respective names:
Buyer: Seller:
Total Dental Administrators Health Plan, Inc. SafeGuard Health Plans, Inc.
0000 Xxxx Xxxxxxxx, Xxxxx 000 00 Xxxxxxxxxx
Xxxxxxx, XX 00000 Xxxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxxx, President Attention: Xxxxxx X. Xxxxxxxx, Senior
and Chief Executive Officer Vice President and General Counsel
Fax: (000) 000-0000 Fax: (000) 000-0000
A notice shall be deemed given on the date it is deposited in the mail or
submitted to the express delivery service in accordance with the foregoing. Any
party may change the address at which to send notices by notifying the other
party of such change of address in writing in accordance with the foregoing.
15. Dispute Resolution. All controversies, claims and disputes arising
-------------------
under this Agreement or the construction, interpretation, breach, termination,
enforceability or validity thereof, shall be resolved by submission to binding
arbitration.
15.1 Notice. The party desiring to initiate arbitration can do so by
------
sending written notice of an intention to arbitrate by registered or certified
mail to the other parties and to American Arbitration Association ("AAA"). The
notice must contain a description of the dispute, the amount of money involved,
and the remedies sought.
15.2 Arbitrator. The parties shall attempt to agree on a retired judge
----------
from the AAA panel to act as the arbitrator hereunder. If the parties are
unable to agree, AAA shall provide a list of three available judges to each
party and each party may strike one. If the parties strike the same individual,
then AAA shall be entitled to select the final arbitrator. If they strike
different individuals, the remaining judge shall serve as the arbitrator. The
parties agree the arbitration must be initiated within one (1) year after the
claimed breach occurred and that the failure to initiate arbitration within the
one (1) year period constitutes an absolute bar to the institution of any
arbitration or any judicial proceeding on any dispute set forth in the notice of
intent to arbitrate. It is agreed that by all parties that any legal
proceedings under this Agreement shall remain sealed and not open to the public.
15.3 Costs. Each party to the arbitration must pay its own witness
-----
fees. Each party must pay its pro-rata share of the arbitrator's fees. The
arbitrator must award to the prevailing party attorneys' fees and costs actually
and reasonably incurred.
15.4 Fees. If any party to this Agreement shall bring any arbitration
----
or any other action, suit, counterclaim or appeal for any relief against any
other party, declaratory or otherwise, to enforce the terms hereof or to declare
rights hereunder (collectively, an "Action"), the prevailing party shall be
entitled to recover as part of any such Action its reasonable attorneys' fees
and costs, including any fees and costs incurred in bringing and prosecuting
such Action and/or enforcing any order, judgment, ruling or award granted as
part of such Action. "Prevailing party" within the meaning of this section
includes, without limitation, a party who agrees to dismiss an Action upon the
other party's payment of all or a portion of the sums allegedly due or
performance of the covenants allegedly breached, or who obtains substantially
the relief sought.
16. General Provisions.
-------------------
16.1 Assignment Permitted. Buyer may assign any or all of its rights,
---------------------
and/or delegate any or all of its responsibilities, arising under this Agreement
to a corporate entity controlling, controlled by or under common control with
Buyer.
16.2 Governing Law. This Agreement and all rights, duties and
--------------
obligations hereunder shall be construed and interpreted in accordance with the
laws of the State of Arizona. The venue for any judicial proceeding brought by
either party with regard to any provision of or obligation arising under this
Agreement shall be in Orange County, California.
16.3 Entire Agreement. This Agreement supersedes all prior oral and
-----------------
written understandings and agreements between the parties hereto relating to the
subject of this Agreement. This document, together with its Exhibits attached
hereto and incorporated herein in their entirety by this reference, and all
other documents specifically referenced herein, constitutes the entire agreement
between the parties regarding the services to be provided by the parties hereto.
No representations, promises, conditions or warranties with reference to the
execution of this document, including, but not limited to pro forma and other
financial information, have been made or entered into between the parties hereto
other than those expressly provided herein.
16.4 Waiver of Provisions. Any waiver of any term and condition hereof
--------------------
must be in writing and signed by the parties hereto. A waiver of any of the
terms and conditions hereof shall not be construed as a waiver of any other
terms and conditions hereof.
16.5 Severability. Nothing contained in this Agreement shall be
------------
construed so as to require the commission of an act contrary to law and whenever
there is any conflict between any provision hereof and any present statute, law,
ordinance or regulation contrary to which the parties have no legal right to
contract, the latter shall prevail, but in such event, the provisions hereof
affected shall be curtailed and limited only to the extent necessary to bring it
within the requirements of the law and to carry out the purposes hereof.
16.6 Force Majeure. Neither party shall be liable nor deemed to be in
--------------
default for any delay or failure in performance under the Agreement or other
interruption of service or employment deemed resulting, directly or indirectly,
from acts of God, civil or military authority, acts of public enemy, war,
accidents, fires, explosions, earthquakes, floods, failure of transportation,
machinery or supplies, vandalism, strikes or other work interruptions beyond the
reasonable control of either party. However, both parties shall make good faith
efforts to perform under this Agreement in the event of any such circumstances.
16.7 Attorneys' Fees. Except as otherwise provided herein, each party
----------------
shall be and remain responsible for its own attorneys' fees incurred in
connection with the negotiation, performance, interpretation and enforcement of
this Agreement.
16.8 Licenses, Permits and Certificates. Seller shall obtain and
-------------------------------------
maintain in effect, during the term hereof, all licenses, permits and
certificates required by law that are applicable to its performance pursuant to
this Agreement.
16.9 Time of the Essence. Time is of the essence in each and all of
----------------------
the agreements, covenants and conditions hereof.
16.10 Headings. Any headings of or captions to the articles, sections,
--------
subsections, paragraphs or subparagraphs hereof are solely for the convenience
of the parties, are not a part hereof, and shall not be used for the
interpretation or determination of validity hereof or any provision hereof.
16.11 Gender and Number. Whenever the context hereof requires, the
-------------------
gender of all words shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and plural.
16.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such executed counterpart shall be deemed to be an
original instrument, but all such executed counterparts shall be deemed to be
one and the same instrument.
17. Non-Competition Agreement. SafeGuard shall not engage in the business
--------------------------
of operating a prepaid dental plan organization in the state of Arizona from the
date of Closing through a period of three (3) years after the date of Closing.
IN WITNESS WHEREOF, the parties have executed this Agreement the date set forth
below.
"Buyer" "Seller"
TOTAL DENTAL ADMINISTRATORS HEALTH PLAN, INC., SAFEGUARD HEALTH PLANS, INC.,
An Arizona Corporation an Arizona corporation
By: /s/ Xxxxxx Xxxxxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------- --------------------------------------------
Name: XXXXXX XXXXXXXXXXX Name: XXXXX X. XXXXXXX
Title: President and Chief Executive Officer Title: President and Chief Executive Officer
Dated: February 21, 2001 By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------------- --------------------------------------------
Name: XXXXXX X. XXXXXXXX
Title: Senior Vice President and Secretary
Dated: February 26, 2001
--------------------------------------------
EXHIBIT A
LIST OF PURCHASED ASSETS
1. Any and all contractual rights between SafeGuard Health Plans, Inc. and the
attached list of dentists (both specialists and general dentists), and
2. Any and all contractual rights between SafeGuard Health Plans, Inc. and the
attached list of members.
EXHIBIT 6.1
PRORATIONS
(HERE WILL BE STATED ANY PRORATIONS THAT ARE REQUIRED TO BE PAID BY BUYER TO
SELLER, DEPENDING ON THE DATE OF CLOSING.)
