AGREEMENT AND PLAN OF MERGER

Execution Copy

 

Exhibit 2.1

 

AGREEMENT AND PLAN OF MERGER

 

by and among

 

BRIGHT NOW! DENTAL, INC.

 

DRAWBRIDGE ACQUISITIONS, INC.

 

and

 

CASTLE DENTAL CENTERS, INC.

 

APRIL 25, 2004

TABLE OF CONTENTS

 

 

ii

 

iii

 

EXHIBITS

 

 

iv

SCHEDULES

 

 

v

Index of Defined Terms

 

 

vi

 

vii

 

 

viii

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of April 25, 2004, by and among Bright Now! Dental, Inc., a Delaware corporation (“ Parent ”), Drawbridge Acquisitions, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“ Merger Sub ”), and Castle Dental Centers, Inc., a Delaware corporation (the “ Company ”).

 

W I T N E S S E T H:

 

WHEREAS, the respective boards of directors of Parent, Merger Sub and the Company have deemed it advisable and in the best interests of their respective corporations and stockholders that the Company and Parent engage in a business combination;

 

WHEREAS, in furtherance thereof, the boards of directors of each of Parent, Merger Sub and the Company have approved this Agreement and the merger of Merger Sub with and into the Company (the “ Merger ”) so that the Company continues as the surviving corporation in the Merger (sometimes referred to in such capacity as the “ Surviving Corporation ”), upon the terms and subject to the conditions set forth in this Agreement and in accordance with the provisions of the Delaware General Corporation Law (the “ DGCL ”);

 

WHEREAS, the board of directors of the Company (the “ Board of Directors ”) has determined to recommend to its stockholders the adoption of this Agreement and the approval of the transactions contemplated hereby, including, without limitation, the Merger;

 

WHEREAS, immediately after the execution and delivery of this Agreement and as a condition to Parent’s and Merger Sub’s willingness to enter into this Agreement, Sentinel Capital Partners II, L.P. (the “ Majority Stockholder ”), the holder of shares of Company Preferred Stock (as defined in Section 3.3) which represent a majority of the votes, when voting together with the holders of the common stock, par value $0.001 per share, of the Company (the “ Company Common Stock ”) and all other series and classes of capital stock of the Company entitled to be cast on the adoption of this Agreement and the approval of the transactions contemplated hereby by the stockholders of the Company, will deliver its written consent in the form attached hereto as Exhibit A (the “ Majority Stockholder Written Consent ”), pursuant to which the Majority Stockholder will adopt this Agreement and approve the transactions contemplated hereby;

 

WHEREAS, concurrently with the execution and delivery of this Agreement and as a condition to Parent’s and Merger Sub’s willingness to enter into this Agreement, the Majority Stockholder and Parent have entered into a letter agreement (the “ Letter Agreement ”), pursuant to which the Majority Stockholder has agreed, on the terms and subject to the conditions therein, to make certain payments to Parent in the event of certain events of termination of this Agreement; and

 

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and the other transactions contemplated hereby.

 

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NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

THE MERGER

 

Section 1.1 The Merger . Upon the terms of and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time (as defined in Section 1.3), Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the Surviving Corporation in the Merger and shall succeed to and assume all the property, rights, privileges, powers and franchises of Merger Sub in accordance with the DGCL.

 

Section 1.2 Closing . The closing of the Merger (the “ Closing ”) shall take place at 10:00 a.m. (local time) on a date to be specified by the parties hereto, which shall be as soon as practicable, but in no event later than the second (2 ^nd ) Business Day (as defined in Section 8.5), after satisfaction or waiver of all of the conditions set forth in Article VI (other than delivery of items to be delivered at the Closing and other than those conditions that by their nature are to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the delivery of such items and the satisfaction or waiver of such conditions at the Closing), at the offices of Latham & Watkins LLP, 505 Montgomery Street, Suite 1900, San Francisco, California 94111, unless another time, date or place is agreed to in writing by the parties hereto. The date on which the Closing occurs is referred to herein as the “ Closing Date ”.

 

Section 1.3 Effective Time . Upon the terms of and subject to the conditions of this Agreement, at the Closing, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger executed in accordance with the relevant provisions of the DGCL (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware (the “ Secretary of State ”) and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State, or at such subsequent date or time as Parent, Merger Sub and the Company shall agree and specify in the Certificate of Merger. The date and time at which the Merger shall become effective is referred to herein as the “ Effective Time ”. At the Effective Time, the Merger shall have the effects set forth in this Agreement and in Section 259 of the DGCL.

 

Section 1.4 Surviving Corporation Organizational Documents . At the Effective Time, the certificate of incorporation of the Company shall be amended in its entirety to read as set forth in Exhibit B , and such amended certificate of incorporation shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the DGCL and as provided in such certificate of incorporation. At the Effective Time, the bylaws of the Company shall be amended and restated in their entirety to read as set forth in Exhibit C , and such amended and restated bylaws shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with the DGCL and as provided in such bylaws.

 

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Section 1.5 Directors and Officers of the Surviving Corporation . The directors of Merger Sub and the officers of the Company immediately prior to the Effective Time shall, from and after the Effective Time, be the directors and officers, respectively, of the Surviving Corporation until their successors shall have been duly elected or appointed or qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws.

 

Section 1.6 Transaction Expenses . At the Effective Time, subject to the satisfaction or waiver of each of the conditions specified in Article VI, Parent shall pay or cause the Company to pay the fees and expenses described on Schedule 1.6 (“ Transaction Expenses ”) accrued as of the Closing and not paid by the Company as of the Closing; provided , however , that Parent shall not be required to pay as of the Closing, and the Company may not pay and may not incur (unless subject to the termination of this Agreement) prior to the Closing, Transaction Expenses payable to Sentinel Capital Partners, L.L.C. (which for such purposes shall include payments to Kirkland & Ellis LLP on its behalf), Sheffield Merchant Banking Group or Burnham Securities Inc. in excess of the maximum amounts set forth in the letters provided to the Company by each such Person as of the date hereof providing for a maximum amount of such Transaction Expenses to be paid by the Company to such Person in connection with the Merger (the “ Maximum Expense Letters ”), it being acknowledged and agreed that neither the Maximum Expense Letters nor this Agreement shall restrict the Company from paying to Sentinel Capital Partners, L.L.C. its periodic management fee payable under the Sentinel Management Agreement, dated as of May 15, 2003 (the “ Sentinel Management Agreement ”), by and between the Company and Sentinel Capital Partners, L.L.C., or reimbursing Sentinel for any of its ordinary course expenses (other than expenses or fees of legal counsel) for which it is entitled to reimbursement pursuant to the Sentinel Management Agreement.

 

ARTICLE II

 

CONVERSION OF SECURITIES

 

Section 2.1 Conversion of Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the holders of any shares of the Company’s capital stock or the holders of Merger Sub’s capital stock or any other Person (as defined in Section 8.5), except as expressly provided herein:

 

(a) Merger Sub Common Stock . Each issued and outstanding share of common stock of Merger Sub shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.00001 per share, of the Surviving Corporation and one validly issued, fully paid and nonassessable share of preferred stock, par value $0.0000l per share, of the Surviving Corporation.

 

(b) Cancellation of Treasury Stock and Parent-Owned Stock . All shares of Company Common Stock and Company Preferred Stock that are owned by the Company as treasury stock, all shares of Company Common Stock and Company Preferred Stock owned by the Wholly Owned Subsidiaries (as defined in Section 8.5) and any shares of Company Common Stock and Company Preferred Stock owned by Parent, Merger Sub or any other wholly owned

 

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subsidiary of Parent shall be canceled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor.

 

(c) Conversion of Shares of Company Common Stock . Each issued and outstanding share of Company Common Stock, other than shares to be canceled in accordance with Section 2.1(b) and any Appraisal Shares (as defined in Section 2.4), shall be converted into the right to receive $0.1572 in cash, without interest (the “ Common Stock Merger Consideration ”), payable to the holder thereof upon surrender of the certificate formerly representing such share of Company Common Stock in the manner provided in Section 2.3. All such shares of Company Common Stock, when so converted, shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate representing any such shares shall cease to have any rights with respect thereto, except the right to receive the Common Stock Merger Consideration therefor upon the surrender of such certificate in accordance with Section 2.3.

 

(d) Conversion of Shares of Company Preferred Stock . Each issued and outstanding share of Company Preferred Stock, other than shares to be canceled in accordance with Section 2.1(b) and any Appraisal Shares, shall be converted into the right to receive an amount in cash, without interest, equal to the product of (x) the number of shares of Company Common Stock into which such share of Company Preferred Stock is convertible as of the Effective Time multiplied by (y) the Common Stock Merger Consideration (such product, the “ Preferred Stock Merger Consideration ”), payable to the holder thereof upon surrender of the certificate formerly representing such share of Company Preferred Stock in the manner provided in Section 2.3. All such shares of Company Preferred Stock, when so converted, shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate representing any such shares shall cease to have any rights with respect thereto, except the right to receive the Preferred Stock Merger Consideration therefor upon the surrender of such certificate in accordance with Section 2.3.

 

(e) Conversion of Company Warrants . Each issued and outstanding Company Warrant (as defined in Section 3.3) shall be converted, in accordance with its terms, into the right to receive, upon exercise thereof and payment of the exercise price thereunder, (i) with respect to Company Warrants exercisable for shares of Company Preferred Stock, an amount in cash, without interest, equal to the product of (x) the number of shares of Company Preferred Stock into which such Company Warrant is exercisable as of the Effective Time multiplied by (y) the Preferred Stock Merger Consideration or (ii) with respect to Company Warrants exercisable for shares of Company Common Stock, an amount in cash, without interest, equal to the product of (x) the number of shares of Company Common Stock into which such Company Warrant is exercisable as of the Effective Time multiplied by (y) the Common Stock Merger Consideration (such product, as applicable, the “ Warrant Merger Consideration ”; the Common Stock Merger Consideration, the Preferred Stock Merger Consideration, the Warrant Merger Consideration and the Option Merger Consideration (as defined in Section 2.2) are referred to collectively as the “ Merger Consideration ” to mean the consideration payable to a holder of a share of the Company Common Stock, a share of the Company Preferred Stock, a Company Warrant or an Option (as defined in Section 2.2), as applicable), payable to the holder thereof upon exercise of the Company Warrant from and after the consummation of the Merger. Except as set forth in the immediately preceding sentence, each Company Warrant shall continue

 

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to have, and be subject to, the same terms and conditions as set forth in any agreements therefor immediately prior to the Effective Time.

 

Section 2.2 Options . At the Effective Time, by virtue of the Merger and without any action on the part of the holders of any option to purchase shares of Company Common Stock, whether vested or not vested (each, an “ Option ” and collectively, the “ Options ”; Options granted under the Company’s Omnibus Stock and Incentive Plan (as such plan may be amended, supplemented or modified, the “ 1996 Plan ”) are referred to herein as the “ 1996 Options ” and Options granted under the Company’s 2002 Stock Option Plan (as such plan may be amended, supplemented or modified, the “ 2002 Plan ”) are referred to herein as “ 2002 Options ”), or any other Person, except as expressly provided herein:

 

(a) each Option outstanding immediately prior to the Effective Time with an exercise price per share equal to or greater than the Common Stock Merger Consideration shall be canceled and the holder thereof shall have no right to receive any consideration therefor; and

 

(b) each Option outstanding immediately prior to the Effective Time with an exercise price per share less than the Common Stock Merger Consideration shall be canceled in exchange for the right to receive a payment in cash, without interest, equal to the product (such product, the “ Option Merger Consideration ”) of (i) the excess of (x) the Common Stock Merger Consideration over (y) the exercise price per share under such Option multiplied by (ii) the number of shares of Company Common Stock into which such Option is exercisable, which cash payment shall be reduced by any applicable withholding taxes. As soon as reasonably practicable following the Effective Time, but in no event more than ten (10) Business Days thereafter, the Surviving Corporation shall mail to each holder of an Option the applicable Option Merger Consideration.

 

Section 2.3 Exchange of Certificates .

 

(a) Paying Agent . Prior to the Effective Time, Parent shall designate a bank or trust company reasonably acceptable to the Company (the “ Paying Agent ”) to make the payments of the funds to which holders of shares of Company Common Stock or shares of Company Preferred Stock shall be entitled pursuant to Section 2.1(c) or Section 2.1(d), respectively, and Parent shall enter into an agreement with the Paying Agent to provide for the foregoing on terms reasonably acceptable to the Company. At the Effective Time, Parent shall deposit with the Paying Agent all such funds in trust for the benefit of holders of shares of Company Common Stock and shares of Company Preferred Stock for timely payment hereunder in accordance with Section 2.1 and this Section 2.3 (such deposited funds, the “ Exchange Fund ”).

 

(b) Exchange Procedures . As promptly as practicable after the Effective Time but in no event more than five (5) Business Days thereafter, Parent shall cause the Paying Agent to mail to each holder of record of a certificate or certificates, which immediately prior to the Effective Time represented outstanding shares of Company Common Stock or Company Preferred Stock as of the Effective Time (the “ Certificates ”) whose shares were converted pursuant to Section 2.1(c) or 2.1(d) into the right to receive the Common Stock Merger

 

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Consideration or the Preferred Stock Merger Consideration, as applicable, (i) a letter of transmittal and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment of the Common Stock Merger Consideration or the Preferred Stock Merger Consideration, as applicable. Upon surrender of a Certificate for cancellation to the Paying Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, the holder of such Certificate shall be entitled to receive as promptly as practicable in exchange therefor, subject to subsection (f) below, the Common Stock Merger Consideration multiplied by the number of shares of Company Common Stock or the Preferred Stock Merger Consideration multiplied by the number of shares of Company Preferred Stock formerly represented by such Certificate, and in each case the Certificate so surrendered shall forthwith be canceled. Until surrendered as contemplated by this Section 2.3, each Certificate shall be deemed for all purposes at any time after the Effective Time to represent only the right to receive upon such surrender the applicable Merger Consideration in cash as contemplated by Section 2.1 and this Section 2.3. No interest will be paid or accrue in any respect on any cash payable upon surrender of any certificate.

 

(c) Transfers of Ownership . If payment of the applicable Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the Person requesting such payment shall have paid any transfer and other taxes required by reason of the payment of the applicable Merger Consideration to a Person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable.

 

(d) Transfer Books; No Further Ownership Rights in Shares . At the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of shares of Company Common Stock or Company Preferred Stock on the records of the Company. From and after the Effective Time, the holders of Certificates evidencing ownership of shares of Company Common Stock or Company Preferred Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares, except as otherwise provided for herein or by applicable law. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged for the applicable Merger Consideration in the proper amount of cash as provided in this Article II.

 

(e) Return of Funds; No Liability . At any time following the six (6) month anniversary of the Effective Time, Parent or the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) remaining in the Exchange Fund which has not been disbursed to holders of Certificates as of such time, and thereafter, such holders shall be entitled to look only to Parent or the Surviving Corporation (subject to abandoned property, escheat or other similar laws) as general creditors thereof with respect to the payment of any applicable Merger Consideration that may be payable upon surrender of any Certificates such stockholder holds, as determined pursuant to this Agreement, without any interest thereon; provided that such holders shall have no greater rights against Parent than may be accorded to general creditors of Parent under applicable laws. Any portion of the Exchange Fund remaining unclaimed as of a date which is immediately prior to

 

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such time as such amounts would otherwise escheat to or become property of any governmental entity shall, to the extent permitted by applicable law, become the property of Parent free and clear of any claims or interest of any Person previously entitled thereto. Notwithstanding the foregoing, none of Parent, the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Certificate for any applicable Merger Consideration properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

 

(f) Withholding Taxes . Parent, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable to a holder of shares of Company Common Stock or shares of Company Preferred Stock pursuant to the Merger such amounts as Parent, the Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “ Code ”), or any provision of state, local or foreign Tax law. To the extent amounts are so withheld by Parent, the Surviving Corporation or the Paying Agent, the withheld amounts shall be (i) timely paid to the appropriate Governmental Entity (as defined in Section 3.5) to whom such taxes are owed and (ii) treated for all purposes of this Agreement as having been paid to the holder of the shares in respect of which the deduction and withholding was made.

 

(g) Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond in such reasonable amount as Parent may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent shall deliver in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration with respect thereto.

 

(h) Investment of Exchange Fund . The Exchange Fund shall be invested by the Paying Agent as directed by Parent; provided , however , that the terms and conditions of the investment shall be such as to permit the Paying Agent to make prompt payment of the Merger Consideration as necessary. Any net profit resulting from, or interest or income produced by, such investments will be payable to Parent, and Parent shall promptly, upon notice by the Paying Agent, deposit with the Paying Agent the amount of any net loss resulting from or produced by such investments.

 

Section 2.4 Appraisal Shares . Notwithstanding any provision of this Agreement to the contrary, shares of Company Common Stock and Company Preferred Stock which are issued and outstanding immediately prior to the Effective Time and which are held by holders of such shares of Company Common Stock or Company Preferred Stock who have properly exercised appraisal rights with respect thereto (the “ Appraisal Shares ”) in accordance with Section 262 of the DGCL shall not be exchangeable for the right to receive the applicable Merger Consideration, and holders of such Appraisal Shares shall be entitled to receive payment of the appraised value of such Appraisal Shares in accordance with the provisions of Section 262 of the DGCL unless and until such holders fail to perfect, waive or effectively withdraw or otherwise lose their rights to appraisal and payment under the DGCL. If, after the Effective Time, any such holder fails to perfect or effectively withdraws or loses such right, such Appraisal Shares shall thereupon be deemed to have been converted as of the Effective Time into, and to have become exchangeable for, solely the right to receive the applicable Merger Consideration otherwise

 

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payable pursuant to Sections 2.1(c) and 2.1(d), without any interest thereon. Notwithstanding anything to the contrary contained in this Section 2.4, if this Agreement is terminated prior to the Effective Time, then the right of any stockholder to be paid the appraised value of such stockholder’s Appraisal Shares pursuant to Section 262 of the DGCL shall cease. The Company shall give Parent (i) prompt notice of any demands received by the Company for appraisal of Appraisal Shares, withdrawals of such demands and any other instruments served pursuant to the DGCL which are received by the Company and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands for appraisal under the DGCL. The Company shall not, except with the prior written consent of Parent, (i) make any payment with respect to any demands for appraisal, (ii) offer to settle or settle any such demands for appraisal, (iii) waive any failure to timely deliver a written demand for appraisal in accordance with the DGCL, or (iv) agree to do any of the foregoing.

 

Section 2.5 Adjustment to Merger Consideration . In the event of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification or other like change with respect to the Company having a record date on or after the date hereof and prior to the Effective Time, appropriate and proportionate adjustments shall be made to the amount of the Merger Consideration, and all references to the Merger Consideration, the Common Stock Merger Consideration, the Preferred Stock Merger Consideration, the Warrant Merger Consideration or the Option Merger Consideration in this Agreement shall be deemed to be to the Merger Consideration as so adjusted.

 

Section 2.6 Additional Agreements . If at any time after the Effective Time the Surviving Corporation shall determine or be advised that any agreements, documents, deeds, bills of sale, assignments or assurances or any other acts or things are necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation, its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of either of the constituent corporations in the Merger, or (b) otherwise to carry out the purposes of this Agreement, the Surviving Corporation and its proper officers and directors or their designees are hereby authorized to execute and deliver, in the name and on behalf of either of the constituent corporations in the Merger, all such deeds, bills of sale, assignments and assurances and do, in the name and on behalf of such constituent corporations, all such other acts and things necessary, desirable or proper, consistent with the terms of this Agreement, to vest, perfect or confirm its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of such constituent corporations and otherwise to carry out the purposes of this Agreement, in each case at the sole expense of the Company or Parent.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to Parent and Merger Sub as follows:

 

Section 3.1 Organization and Qualification; Subsidiaries .

 

(a) Each of the Company and the Subsidiaries (as defined in Section 8.5) is duly organized, validly existing and in good standing under the laws of its incorporation or

 

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organization, as applicable. Each of the Company and the Subsidiaries has the requisite power and authority necessary to own, lease and operate its properties and to carry on its businesses as presently conducted.

 

(b) Each of the Company and the Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it, or the nature of the business conducted by it, makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not have a Company Material Adverse Effect (as defined in Section 8.5).

 

(c) Except as set forth on Schedule 3.1(c), the Company does not directly or indirectly own any Equity Interest (as defined in Section 8.5) in, any corporation, partnership, limited liability company, joint venture or other business association or entity. Schedule 3.1(c) sets forth the name, owner, jurisdiction of organization and percentages of outstanding Equity Interests owned, directly or indirectly, by the Company, with respect to each corporation, partnership, limited liability company, joint venture or other business association or entity of which the Company owns directly or indirectly, any Equity Interest.

 

Section 3.2 Authority . The Company has all necessary power and authority to enter into, deliver and perform its obligations pursuant to this Agreement and, upon delivery of the Majority Stockholder Written Consent, to consummate the transactions contemplated hereby, including the Merger. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceeding on the part of the Company is necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against it in accordance with its terms, except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable equitable principles (whether considered in a proceeding at law or in equity). The Board of Directors has (a) adopted a resolution approving this Agreement and the transactions contemplated hereby and declaring its and their advisability and (b) determined that this Agreement and the transactions contemplated hereby are in the best interests of the Company’s stockholders. With the receipt of the Majority Stockholder Written Consent, no vote of the holders of any class or series of the capital stock of the Company is necessary to approve this Agreement or to consummate the transactions contemplated hereby. The Board of Directors has taken all action necessary, if any, such that the restrictions on business combinations contained in Section 203 of the DGCL do not apply to the Merger and the other transactions contemplated hereby.

 

Section 3.3 Capitalization of the Company . As of the date hereof, except as set forth in Schedule 3.3, the authorized capital stock of the Company consists of 18,000,000 shares of Company Common Stock, of which 8,265,323 shares are issued and outstanding, 1,000,000 shares of Class B Nonvoting Common Stock, par value $0.001 per share, of the Company, of which no shares are issued and outstanding, and 1,000,000 shares of preferred stock, par value $0.001 per share, of the Company, which consists of 214,000 shares of Series A-1 Convertible Preferred Stock, par value $0.001 per share, of the Company (the “ Series A-1 Preferred Stock ”),

 

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of which 195,838 shares are issued and outstanding which are convertible into 35,776,356 shares of Company Common Stock in the aggregate, 62,000 shares of Series A-2 Convertible Preferred Stock, par value $0.001 per share, of the Company (the “ Series A-2 Preferred Stock ”), of which no shares are issued and outstanding, and 80,000 shares of Series B Convertible Preferred Stock, par value $0.001 per share, of the Company (the “ Series B Preferred Stock ” and together with the Series A-1 Preferred Stock and the Series A-2 Preferred Stock, the “ Preferred Stock ”), of which 79,190 shares are issued and outstanding which are convertible into 165,022,853 shares of Company Common Stock in the aggregate. As of the date hereof, (A) no shares of Company Common Stock were held in the treasury of the Company or by the Subsidiaries, (B) 7,701,827 shares of Company Common Stock were issuable (and such number was reserved for issuance) upon exercise of Options outstanding as of such date, and (C) 10,984 shares of Series A-2 Preferred Stock, which are convertible into 2,006,595 shares of Company Common Stock in the aggregate, were issuable (and such number was reserved for issuance) upon exercise of warrants (the “ Company Warrants ”) outstanding as of such date. No other shares of the Company’s capital stock, or securities convertible into or exchangeable for such capital stock or other Equity Interests, are outstanding. All of the issued and outstanding shares of capital stock of the Company have been duly authorized and are validly issued, fully paid, and non-assessable. Except for the Options and Company Warrants and arrangements and agreements described on Schedule 3.3(a) or as modified as contemplated by Schedule 5.13, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Company or any Subsidiary to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Company or any Subsidiary. Except as modified as contemplated by Schedule 5.13, Schedule 3.3(a) sets forth a true and complete list of the prices at which outstanding Options and Company Warrants may be exercised, the number of Options and Company Warrants outstanding at each such price and the number of vested and unvested Options and Company Warrants for each holder thereof. All shares of Series A-2 Preferred Stock subject to issuance pursuant to the Company Warrants, upon issuance prior to the Effective Time on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. Except as set forth in the Stockholders Agreement, dated as of May 15, 2003 (the “ Stockholders Agreement ”), by and among the Company, the Majority Stockholder and certain other stockholders of the Company, or on Schedule 3.3(b), there are no outstanding contractual obligations of the Company or any Subsidiary (A) restricting the transfer of, (B) affecting the voting rights of, (C) requiring the repurchase, redemption or disposition of, or containing any right of first refusal with respect to, (D) requiring the registration for sale of, or (E) granting any preemptive or antidilutive right with respect to, any shares of capital stock of, or other Equity Interests in, the Company or any Subsidiary. Each outstanding share of capital stock of each Subsidiary is duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights and is owned, beneficially and of record, by the Company or another Subsidiary free and clear of all Liens (as defined in Section 8.5) (other than those restrictions under applicable securities laws), agreements, limitations on the Company’s or such Subsidiary’s voting rights, charges and other encumbrances of any nature whatsoever (other than under applicable securities laws). There are no outstanding contractual obligations of the Company or any Subsidiary to provide funds to, or make any investment (in the form of a loan, capital

 

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contribution or otherwise) in, any Subsidiary or any other Person, other than guarantees by any of the Company or any of its wholly owned Subsidiaries of any indebtedness or other obligations of any of the Company or any of its wholly owned Subsidiaries.

 

Section 3.4 Financial Statements; December Credit Balance . The audited financial statements set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 (the “ Financial Statements ”): (a) have been prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods covered thereby, except as may be indicated in the notes thereto, and (b) fairly present in all material respects, the consolidated financial condition, results of operations and cash flows of the Company as of the dates thereof and its consolidated results of operations for the periods then ended. The information as of December 31, 2003 set forth in note 4 to the Financial Statements as to the amounts due to patients was true and correct in all material respects as of such date.

 

Section 3.5 Noncontravention . Except as set forth on Schedule 3.5, neither the execution and the delivery of this Agreement nor the consummation of the transactions contemplated hereby, including the consummation of the Merger, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any court, tribunal arbitrator or mediator or any administrative, governmental or regulatory body, agency or authority (each, a “ Governmental Entity ”) to which any of the Company or any of the Subsidiaries is subject or any provision of the certificate of incorporation or bylaws of any of the Company or any of the Subsidiaries or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under or payment pursuant to any agreement, contract, lease, license, instrument, or other arrangement to which any of the Company or any of the Subsidiaries is a party or by which any of them is bound or to which any of their respective assets is subject (or result in the imposition of any Lien upon any of their respective assets). Except as set forth on Schedule 3.5, neither the Company nor any of the Subsidiaries is required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Entity or any other party in order for the parties hereto to consummate the transactions contemplated by this Agreement.

 

Section 3.6 Filings with SEC .

 

(a) Since January 1, 2001, the Company has made all filings with the U.S. Securities and Exchange Commission (the “ SEC ”) that it has been required to make under the Securities Act of 1933, as amended (the “ Securities Act ”) and the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) (such reports collectively, the “ Public Reports ”). Each of the Public Reports as of its date has complied with the Securities Act or the Exchange Act, as applicable, in all material respects. None of the Public Reports, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, except to the extent that a Public Report listed on Schedule 3.6(a) was corrected by a Public Report subsequently filed with the SEC and identified as the correcting Public Report on Schedule 3.6(a).

 

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(b) Each required form, report and document containing financial statements that the Company has filed with or submitted to the SEC since July 31, 2002 was accompanied by the certifications required to be filed or submitted by the Company’s chief executive officer and chief financial officer pursuant to the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated under such act or the Exchange Act (collectively, the “ Sarbanes-Oxley Act ”), and no such certificate has been modified or withdrawn. A copy of each such certificate has been provided to Parent. Neither the Company nor any of its officers has received notice from any Governmental Entity questioning or challenging the accuracy, completeness, content, form or manner of filing or submission of such certifications.

 

Section 3.7 Material Contracts . Except as set forth on Schedule 3.7, as of the date hereof, neither the Company nor any of the Subsidiaries (nor, solely with respect to clauses (ii), (iii), (iv), (v) or (viii) below, a Company P.C.) is a party to or bound by any:

 

(i) written contract or agreement for the employment of any officer, individual employee or other person on a full-time, part-time, consulting or other basis;

 

(ii) agreement, indenture or guarantee relating to indebtedness for borrowed money except for indebtedness for borrowed money for an amount individually less than $25,000 and not greater than $100,000 in the aggregate;

 

(iii) lease or agreement under which the Company or any Subsidiary is lessee of or holds or operates any personal property owned by any other party, except for any lease or agreement under which the aggregate annual rental payments do not exceed $25,000;

 

(iv) lease or agreement under which the Company or any Subsidiary is lessor of or permits any third party to hold or operate any property, real or personal, owned or controlled by the Company;

 

(v) contract or other agreement, the benefits of which will be increased, or the vesting of the benefits to any party of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, including the Merger, or the value of any of the benefits to any party of which will be calculated on the basis of any of the transactions contemplated by this Agreement, including the Merger;

 

(vi) agreement which is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated under the Exchange Act);

 

(vii) contract or other agreement involving aggregate expenditures or imposing any liability or obligation of the Company or any Subsidiary which involves annual expenditures in excess of $250,000 and is not cancelable without penalty within ninety (90) days;

 

(viii) contract or other agreement which contains any non-compete or exclusivity provision with respect to any line of business or geographic area with respect to the Company, any Subsidiary, or any Company P.C.;

 

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(ix) material contract or other material arrangement with any Governmental Entity, insurance company, third party fiscal intermediary or carrier administering any Medicaid state program, Medicare program, any clinic or other in-patient health care facility, dental health or health maintenance organization, preferred provider organization, dental insurance company, managed dental care plan or other dental benefits provider, self-insured employer or other third-party payor; or

 

(x) material contract or other material agreement providing for the payment for dental services provided to patients of any Company P.C. on credit or any other material financing arrangement with the patients of any Company P.C.

 

The agreements which are or are required to be set forth on Schedule 3.7 are referred to as the “ Material Contracts .” Except as set forth on Schedule 3.7, each Material Contract is valid and binding on the Company, the applicable Subsidiary or the applicable Company P.C. party thereto, as the case may be, and is in full force and effect, and the Company, the applicable Subsidiary or the applicable Company P.C. party thereto, as the case may be, has performed all material obligations required to be performed by it under each Material Contract. Except as set forth on Schedule 3.7, the Company does not have Knowledge of, nor has the Company or any Subsidiary party to any Material Contract received notice of, any violation or default under (or any condition which with the passage of time or the giving of notice would cause such a violation of or default under) any such Material Contract or any other contract to which it is a party or by which it or any of its properties or assets is bound. Except as set forth on Schedule 3.7, to the knowledge of the senior officers of the Company P.C. party to any Material Contract, such Company P.C. has not received notice of, any violation or default under (or any condition which with the passage of time or the giving of notice would cause such a violation of or default under) such Material Contract.

 

Section 3.8 Absence of Changes . Except for the transactions provided for in this Agreement or as set forth on Schedule 3.8, since December 31, 2003, the Company and the Subsidiaries have conducted their respective businesses, in all material respects, in the Ordinary Course of Business and, since such date, there has not been (A) any Company Material Adverse Effect or an event or development that is reasonably likely, individually or in the aggregate, to have a Company Material Adverse Effect, or (B) any action taken by the Company or any Subsidiary that, if taken during the period from the date of this Agreement through the Effective Time, would constitute a breach of any of the provisions of Section 5.1.

 

Section 3.9 Litigation . Except for litigation brought by stockholders of the Company arising out of or relating to the transactions contemplated hereby (none of which has been instituted or is pending as of the date hereof) or as set forth on Schedule 3.9, there is no suit, litigation, arbitration, claim, action, proceeding or investigation pending or, to the Company’s Knowledge, threatened against the Company, any Subsidiary, any Company P.C. or any of their respective properties, assets or business before any Governmental Entity, or for which the Company, any Subsidiary or any Company P.C. is obligated to indemnify a third party, which could result in a liability individually in excess of $100,000 or in excess of $500,000 with respect to all suits, litigations, arbitrations, claims, actions, proceedings or investigations not listed on Schedule 3.9. Except as disclosed on Schedule 3.9, neither the Company, any Subsidiary nor any Company P.C. is subject to any outstanding order, writ, injunction or decree.

 

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Section 3.10 Compliance with Applicable Law .

 

(a) Each of the Company, the Subsidiaries and the Company P.C.s holds all material permits, licenses, consents, authorizations, certificates, variances, exemptions, orders and approvals of and from all, and has made all material declarations and filings with, Governmental Entities necessary for the lawful conduct of their respective businesses, as presently conducted, and to own, lease, license and use their respective properties and assets (the “ Company Permits ”), and all the Company Permits are valid, and in full force and effect. The Company, each Subsidiary and each Company P.C. is in material compliance with the terms of all Company Permits. The activities and businesses of the Company, each Subsidiary and each Company P.C. are being conducted in compliance with all laws, rules, orders, judgments, decrees, ordinances and regulations (including all applicable dental practice, Occupational Safety & Health Administration, consumer credit and environmental laws and regulations) of the United States, all states, counties and localities, and all Governmental Entities, the failure to comply with which would, individually or in the aggregate, have a Company Material Adverse Effect. No Company Permit is subject to termination or suspension as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby.

 

(b) None of the Company or any Subsidiary is required to make any 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, except where the failure to make such filings or to be licensed or authorized would not, individually or in the aggregate, have a Company Material Adverse Effect. Except as set forth on Schedule 3.10(b), neither the Company nor any Subsidiary has received any notification from any Governmental Entity to the effect that any material permit from such Governmental Entity must be obtained by it in order to conduct its business, which permit has not been duly obtained.

 

Section 3.11 Employee Plans .

 

(a) Schedule 3.11(a) sets forth a true and complete list of each “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), and any other material plan, policy, program, practice, agreement, understanding or arrangement providing pension or welfare-type benefits to any current or former director, officer or employee (or to any dependent or beneficiary thereof) of the Company or, solely with respect to any employee benefit plan subject to Title IV of ERISA, any ERISA Affiliate (as defined below), that are now maintained, sponsored or contributed to by the Company or, solely with respect to an employee benefit plan subject to Title IV of ERISA, any ERISA Affiliate (each a “ Company Benefit Plan ”). For purposes of this Section 3.11, “ ERISA Affiliate ” shall mean any entity (whether or not incorporated) other than the Company that, together with the Company, is considered under common control and treated as one employer under Section 414(b), (c), (m) or (o) of the Code. With respect to each Company Benefit Plan, the Company has made available to Parent true, correct and complete copies of, as applicable, (A) current plan documents, trust agreements, insurance contracts or other funding vehicles and all material amendments thereto, (B) current summary plan descriptions, including any current summary of material modifications, (C) the most recent annual report (Form 5500 series) filed with the Internal Revenue Service (“ IRS ”), (D) the most recent actuarial report or other financial

 

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statement relating to such Company Benefit Plan, (E) the most recent determination or opinion letter issued by the IRS, and, (F) all filings made within the past six (6) years with any Governmental Entity under the Voluntary Compliance Resolution or Closing Agreement Program or the Department of Labor Delinquent Filer Program.

 

(b) Each Company Benefit Plan has been administered in all material respects in accordance with its terms and all applicable laws, including ERISA and the Code, and contributions required to be made under the terms of any of the Company Benefit Plans have been timely made or, if not yet due, have been properly reflected on the most recent consolidated balance sheet filed or incorporated by reference in the Public Reports prior to the date of this Agreement to the extent required by GAAP. With respect to Company Benefit Plans, no event has occurred and, to the Company’s Knowledge (as defined in Section 8.5), there exists no condition or set of circumstances in connection with which the Company is reasonably likely to be subject to any material liability (other than for routine benefit liabilities) under the terms of, or with respect to, such Company Benefit Plans.

 

(c) Except as disclosed on Schedule 3.11(c), each Company Benefit Plan that is intended to qualify under Section 401(a) of the Code has either received a favorable determination or opinion letter from the IRS as to its qualified status or the remedial amendment period for such Company Benefit Plan has not yet expired, and, to the Company’s Knowledge, no fact or event has occurred that could reasonably be expected to adversely affect the qualified status of any such Company Benefit Plan.

 

(d) Except as set forth on Schedule 3.11(d), (i) no amount that could be received (whether in cash or property or the vesting of property) as a result of the consummation of the transactions contemplated by this Agreement by any employee, officer or director of the Company or any Subsidiary who is a “disqualified individual” (as such term is defined in proposed Treasury Regulation Section 1.280G-1) under any Company Benefit Plan could be characterized by the IRS as an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code), and (ii) no Company Benefit Plan or other agreement provides for a tax gross-up to be paid by the Company to any disqualified individual for any excise taxes imposed by reason of Section 4999 of the Code.

 

Section 3.12 Environmental, Health and Safety Matters . Except as set forth on Schedule 3.12:

 

(a) Each of the Company and each Subsidiary and Company P.C. is (A) in compliance with all federal, state, local and foreign statutes, regulations, and ordinances concerning pollution or protection of the environment, including, without limitation, all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, as such requirements are enacted and in effect on or prior to the Closing Date (“ Environmental, Health and Safety Requirements ”), including, without limitation, obtaining all permits and licenses required thereunder, (B) holds or has applied for all permits, approvals, identification numbers, licenses and other authorizations required under any applicable Environmental Law (any of the foregoing, an “ Environmental Permit ”) necessary to conduct their current operations, and (C) is in compliance with their

 

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respective Environmental Permits, in each of the foregoing cases except for any such noncompliance or failure to hold or apply which would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

(b) Neither the Company nor any Subsidiary nor any Company P.C. has received any written notice, report or other information regarding any actual or alleged material violation of Environmental, Health and Safety Requirements, or any material liabilities or potential material liabilities, including any material investigatory, remedial or corrective obligations, relating to the Company or any Subsidiary or any Company P.C. and arising under Environmental, Health and Safety Requirements.

 

(c) None of the Company or any Subsidiary or any Company P.C. (A) has entered into or agreed to any consent decree or order or is subject to any judgment, decree or judicial order relating to compliance with Environmental, Health and Safety Requirements, Environmental Permits or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Materials (as defined below) and no investigation, litigation or other proceeding is pending or, to the Company’s Knowledge, threatened in writing with respect thereto, (B) is an indemnitor in connection with any claim pending or, to the Company’s Knowledge, threatened or asserted in writing by any third-party indemnitee for any liability under any Environmental Law or relating to any Hazardous Materials, or (C) has entered into any agreement with any Person pursuant to which it has assumed responsibility for, either directly or indirectly, or otherwise agreed to contribute to the investigation, assessment or remediation of conditions resulting from a release of Hazardous Materials into the indoor or outdoor environment related to the handling of Hazardous Materials. For purposes of this Agreement, “ Hazardous Materials ” means (A) any petroleum, petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials or polychlorinated biphenyls or (B) any chemical, material or other substance defined or regulated as toxic or hazardous or as a pollutant or contaminant or waste under any applicable Environmental, Health and Safety Requirements.

 

(d) None of the real property owned or leased by the Company or any Subsidiary or Company P.C. is listed or, to the Company’s Knowledge, proposed for listing on the “National Priorities List” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended as of the date hereof, or any similar state or foreign list of sites requiring investigation or cleanup.

 

Section 3.13 Intellectual Property . Solely for purposes of this Section 3.13, the “ Company ” shall mean the Company, each Subsidiary and each Company P.C.

 

(a) Generally . Schedule 3.13(a) sets forth a complete and accurate list of all United States and foreign: (i) trademarks and service marks (whether registered or unregistered), trade names, designs and general intangibles of like nature, together with all goodwill related to the foregoing (collectively, “ Trademarks ”); (ii) patents and patent applications, including any continuations, continuations-in-part, divisionals, reissues, renewals and applications for any of the foregoing (collectively, “ Patents ”); (iii) copyrights and mask works, including any registrations and applications therefore and whether registered or unregistered (collectively, “ Copyrights ”); and (iv) domain names, including top-level Internet

 

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domain names and all lower-level Internet domain names for which such top-level domains are a root or parent, whether in the form of an address for use in electronic mail transfer, a Universal Resource Locator, a File Transfer Protocol location, or other form suitable for specifying the location of an electronic data file over a distributed computer network (collectively, “ Domain Names ”), in each case owned by or licensed to the Company, in whole or in part, including jointly with others (such schedule specifying if such Intellectual Property (as defined in Section 8.5) is owned jointly).

 

(b) Trademarks . The Company is the owner of all right, title and interest in and to, or has the right to use, all of the Trademarks, in each case free and clear of any and all Liens other than Permitted Liens (as defined in Section 8.5), and the Company has not received any written notice or claim or, to the Company’s Knowledge, any oral notice or claim, challenging the Company’s complete and exclusive ownership of the Trademarks or suggesting that any other person has any claim of ownership with respect thereto.

 

(c) Patents . The Company owns no Patents.

 

(d) Copyrights . The Company is the owner of all right, title and interest in and to, or has the right to use, each of the Copyrights used by the Company (the “ Company Owned Copyrights ”), free and clear of any and all Liens other than Permitted Liens, and the Company has not received any notice or claim (whether written or oral) challenging the Company’s ownership of the Company Owned Copyrights or suggesting that any other Person has any claim of legal or beneficial ownership with respect thereto.

 

(e) Trade Secrets . The Company has taken all reasonable steps in accordance with normal industry practice to protect its rights in confidential information and proprietary information that: (1) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy (collectively, “ Trade Secrets ”). Except under written non-disclosure or confidentiality agreements, there has been no disclosure by the Company of its material confidential information or Trade Secrets.

 

(f) License Agreements . Schedule 3.13(f) sets forth a complete and accurate list of all license agreements granting to the Company any right to use or practice any rights under any Intellectual Property (other than “off-the-shelf” shrink wrap software commercially available for a license fee of no more than $10,000 (“ Shrinkwrap Licenses ”), but including all such agreements that are otherwise material to the Company) (collectively, the “ Company Inbound License Agreements ”), indicating for each the title and the parties thereto. There is no outstanding or, to the Company’s Knowledge, threatened dispute with respect to any Company Inbound License Agreement. Correct and complete executed copies of all Company Inbound License Agreements have been made available to Parent.

 

(g) Domain Names . The Company is the sole owner of, or has the right to use, the Domain Names, and all such Domain Names are currently registered with an ICANN accredited registrar. Except as set forth on Schedule 3.13(g), the Company is the owner or authorized licensee of all user content displayed on the Internet site associated with each of the

 

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Domain Names (collectively, the “ Content ”), and no consent from any third party is required in connection with the sale or transfer of the ownership of the Domain Names and the continued use of the Content by the Surviving Corporation.

 

(h) Ownership; Sufficiency of Intellectual Property Assets . Except as set forth on Schedule 3.13(h), the Company owns or possesses adequate licenses or other rights to use all of its Intellectual Property, free and clear of all Liens other than Permitted Liens. The Intellectual Property identified on Schedule 3.13(a), together with Trade Secrets, Company Owned Copyrights and the Company’s unregistered Copyrights and the Company’s rights granted to them under the Company Inbound License Agreements and any Shrinkwrap Licenses, constitute all the material Intellectual Property rights and Company Inbound License Agreements used in the operation of the Company’s businesses as currently conducted. Except as described on Schedule 3.13(a), all such Intellectual Property rights and Company Inbound License Agreements shall be available for use after the Closing in substantially the same manner as prior to the Closing without any requirement that Parent pay additional fees or the requirement of Parent to obtain the consent of any third party.

 

(i) Assignment; Change of Control . The execution, delivery and performance by the Company of this Agreement and each of the other documents contemplated hereby to which it is a party, and the consummation of the transactions contemplated hereby, including the Merger, will not result in the loss or impairment of, or give rise to any right of any third party to terminate, any of the Company’s rights to own any of its Intellectual Property or rights under any Company Inbound License Agreement, nor require the consent of any third party in respect of any such Intellectual Property, except as described in Schedule 3.13(i).

 

Section 3.14 Labor Matters .

 

(a) Each of the Company and each Subsidiary and Company P.C. is in compliance with all applicable laws, rules, orders, judgments, decrees, ordinances or regulations (including all applicable dental practice respecting labor, employment,