SECOND AMENDMENT TO MERGER AGREEMENT
THIS SECOND AMENDMENT TO MERGER AGREEMENT ("Second Amendment") dated
February 22, 1998, by and among METROPOLITAN HEALTH NETWORKS, INC., a Florida
corporation ("Parent"), METCARE VI, INC., a Florida corporation and a
wholly-owned subsidiary of Parent ("Parent Sub"), and TRIDENT MEDICAL CONCEPTS,
INC., a Delaware corporation ("Trident").
RECITALS
WHEREAS, the parties have entered into a Merger Agreement dated as of
November 30, 1997 (the "Merger Agreement") and a First Amendment to Merger
Agreement dated as of January 13, 1998 ("First Amendment" and collectively with
the Merger Agreement the "Agreements");
WHEREAS, as of the date hereof Trident has not obtained the consent of
Xxxxxxxxx LLC., Trident's Lender (the "Lender's Consent") to consummate the
transaction contemplated by the Agreements;
WHEREAS, the parties have determined that it is in the best interest of
the parties and their shareholders to close the Merger as of the date hereof;
WHEREAS, the parties have agreed that in the event that Trident has not
obtained Lender's Consent or otherwise replaced Lender on or before May 1, 1998
or as otherwise provided for herein ("Ending Date") then and in that event the
Merger will be unwound as provided for herein; and
WHEREAS, to protect the interest of the parties during the period from
the date hereof ("Closing Date") through the Ending Date (the "Transitional
Period") neither Parent, Parent Sub or Trident shall take any action that would
materially adversely effect the business or assets of Parent, Parent Sub or
Trident without the consent of Parent, Parent Sub and Trident.
NOW, THEREFORE, in consideration of the agreements contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
conclusively acknowledged, the parties intending to be legally bound, agree as
follows:
1. The provisions of this Second Amendment shall govern and control
over any conflicting or inconsistent provisions in the Merger Agreement or First
Amendment, but except as modified hereby, all provisions of the Merger Agreement
and First Amendment remain unmodified and in full force and effect and are
hereby reaffirmed by each of the parties hereto. Unless otherwise defined
herein, all capitalized terms shall have the meanings as provided therefor in
the Merger Agreement.
2. Section 1.6 of the Merger Agreement is amended as follows:
SECTION 1.6 Closing Date, Time and Place. The closing and consummation
of the Merger will take place on February 22, 1998 ("Closing Date") at the
offices of Atlas, Xxxxxxxx, Trop & Borkson, P.A., 000 Xxxx Xxx Xxxx Xxxxxxxxx,
Xxxxx 0000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000, or at another time or place mutually
agreed upon by the parties hereto.
3. A new section, Section 6.7, shall be added to the Merger Agreement
and read as follows:
SECTION 6.7 Covenants as to Transitional Period
(a) Affirmative Covenants. Prior to the Ending Date, unless
otherwise specifically provided in the Agreement or consented to in writing by
Parent or Trident, Parent and Trident shall: (i) operate its business and
conducts its affairs only in the usual and ordinary course consistent with past
practices, and in such manner as shall be consistent with all representations
and warranties of Trident so that the same remain true and accurate as of the
Ending Date; (ii) preserve substantially intact its business organization,
maintain its rights and franchises, use its reasonable efforts to retain the
services of its officers and key employees and maintain its relationships with
its customers and suppliers.
(b) Negative Covenants of Trident. Except as specifically
provided in this Agreement or otherwise consented to in writing by Parent (which
consent shall not be unreasonably withheld) from the Closing Date of this
Agreement until the Ending Date. Trident/Parent Sub shall not do any of the
following:
(1) (i) increase the compensation payable or to become
payable to any director of officer; (ii) grant any severance or termination pay
to, or enter into any employment or severance agreement with, any director,
officer or employee; or (iii) establish, adopt, enter into, or amend, any
Benefit Plan except as may be required by applicable Law except in any case for
customary bonus or increases in the ordinary course of business or as required
by contract;
(2) declare, set aside or pay any dividend on, or make
any other distribution in respect of, outstanding shares of capital stock;
(3) (i) redeem, purchase or otherwise acquire any
shares of its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any options, warrants or
conversion or other rights to acquire any shares of its capital stock or any
such securities or obligations; (ii) effect any reorganization or
recapitalization; or (iii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities.
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(4) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
assets of, or in any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets of any other person;
(5) sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its material assets, except for
dispositions of assets in the ordinary course of business and consistent with
past practice;
(6) initiate, solicit, encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any competing transaction, or enter into discussions or
negotiate with any person or entity in furtherance of such inquires or otherwise
with respect to a competing transaction, or agree to or endorse any competing
transaction, or authorize or permit any of the officers, directors or employees
of Trident/Parent Sub or any investment banker, financial advisor, attorney,
accountant or other representative retained by Trident/Parent Sub to take any
such action; notwithstanding the foregoing, Trident/Parent Sub and its directors
may, to the extent required by their fiduciary duties under applicable law,
participate in discussions or negotiations with, furnish information to and
afford access to properties, books and records of Trident/Parent Sub and its
subsidiaries to, any person in connection with a competing transaction by such
person.
(7) propose or adopt any amendments to its Articles of
Incorporation or By-Laws;
(8) incur any obligation for borrowed money or purchase
money indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business consistent with
past practice, except for issuance of Trident Sub promissory note or preferred
stock convertible into shares and warrants in approximate amount of $1,000,000
of Metropolitan or Trident after the Ending Date, as the case may be;
(9) (i) change any of its methods of accounting in
effect at the Closing Date, (ii) make or rescind any express or deemed election
relating to taxes, or (iii) change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year ended May 31,
1997, except, in the case of clause (i) or (ii) as may be required by Law or
generally accepted accounting principles;
(10) agree in writing or otherwise to do any of the
foregoing.
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(c) Negative Covenants of Parent. Except as specifically
provided in this Agreement or otherwise consent to in writing by Trident/Parent
Sub (which consent shall not be unreasonably withheld) from the Closing Date
until the Ending Date, excluding those items previously reported, disclosed,
recorded in the books of the corporation, or as noted in any filing with the
SEC, NASDAQ or NASD, Parent shall not do any of the following:
(1) (i) increase the compensation payable or to become
payable to any director of officer; (ii) grant any severance or termination pay
to, or enter into any employment or severance agreement with, any director,
officer or employee; or (iii) establish, adopt, enter into, or amend, any
Benefit Plan except as may be required by applicable Law except in any case for
customary bonus or increases in the ordinary course of business or as required
by contract;
(2) declare, set aside or pay any dividend on, or make
any other distribution in respect of, outstanding shares of capital stock;
(3) (i) redeem, purchase or otherwise acquire any
shares of its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any options, warrants or
conversion or other rights to acquire any shares of its capital stock or any
such securities or obligations; (ii) effect any reorganization or
recapitalization; or (iii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities.^
(4) sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its material assets, except for
dispositions of assets in the ordinary course of business and consistent with
past practice;
(5) initiate, solicit, encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any competing transaction, or enter into discussions or
negotiate with any person or entity in furtherance of such inquires or otherwise
with respect to a competing transaction, or agree to or endorse any competing
transaction, or authorize or permit any of the officers, directors or employees
of Parent or any investment banker, financial advisor, attorney, accountant or
other representative retained by Parent to take any such action; notwithstanding
the foregoing, Trident/Parent Sub and its directors may, to the extent required
by their fiduciary duties under applicable law, participate in discussions or
negotiations with, furnish information to and afford access to properties, books
and records of Trident/Parent Sub and its subsidiaries to, any person in
connection with a competing transaction by such person.
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(6) propose or adopt any amendments to its Articles of
Incorporation or By-Laws;
(7) incur any obligation for borrowed money or purchase
money indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business consistent with
past practice and except in connection with obtaining up to an aggregate of
$3,000,000 obtained in connection with the issuance of preferred shares of
Parent;
(8) (i) change any of its methods of accounting in
effect at the Closing Date, (ii) make or rescind any express or deemed election
relating to taxes, or (iii) change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year ended May 31,
1997, except, in the case of clause (i) or (ii) as may be required by Law or
generally accepted accounting principles;
(9) agree in writing or otherwise to do any of the
foregoing.
4. Article II, Section 2.1(a)(1), Section 2.4 and Section 2.5 is
amended to provide for an exchange rate of 1.15.
5. A new section, Article 11, Additional Matters, shall be added to the
Merger Agreement and read as follows:
ARTICLE 11
ADDITIONAL MATTERS
Section 11.1 Waiver. The parties have expressly agreed that the
following Closing conditions set forth in Article 7 shall be waived:
Section 7.1(e) Pooling Letters
Section 7.1(f) Financial Statements, except as provided in
Section 11.2 hereof
Section 11.2 Rights to Unwind.
(a) Parent shall have the absolute right to cause the
Merger to be unwound as provided for in Section 11.3 herein solely upon the
occurrence of any of the following events:
(i) failure by Parent to receive the audited Financial
Statements described in Section 7.1(f) by March 3, 1998 in substantially the
same form as previously delivered in "draft" to Parent and included herewith; or
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(ii) failure to obtain Lender's Consent to the Merger
Agreement, as amended, or to replace Lender by May 1, 1998;or
(iii) the receipt by Trident of a notice of Event of
Default as described in the Financing Agreement dated as of December 5, 1997.
(b) To exercise the rights under this Article 11, notice shall
be given as provided in Section 9.2 of the Merger Agreement.
Section 11.3 Unwind. In the event that the Merger Agreement should be
unwound for any of the events set forth in Section 11.2, the parties shall take
such action, the results of which shall be to place Parent, Parent Sub, Trident
and the Trident Shareholders in the same or similar financial condition as they
would have been if the transactions contemplated under the Merger Agreement had
not been consummated. Each of the parties shall use their best efforts to take
such actions in order to effectuate, carry out and comply with all the terms and
provisions of this Section.
Section 11.4 Exhibits and Schedules
Parties agree that all exhibits and schedules shall be
prepared and exchanged on or before March 3, 1998 and all parties acknowledge
that they are aware of:
(i) Form 10-Q of Parent and current financial status of
Trident;
(ii) as to Parent matters relating to Kunan, Milian, Ward
and NASD; and
(iii) as to Trident, matters relating to telephone claim
and MDIA.
Section 11.5 Appointment to Board of Directors
Providing Merger Agreement is not unwound, after Ending Date,
Xxxxxxx Xxxxxxxxxx shall become a member of Parent Board of Directors.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment to the Merger Agreement this 22nd day of February, 1998.
PARENT:
METROPOLITAN HEALTH NETWORKS, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and CEO
PARENT SUB: TRIDENT:
METCARE VI, INC. TRIDENT MEDICAL CONCEPTS, INC.
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------- -------------------------------
Name: Xxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxxx
Title: President and CEO Title: President and CEO
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