EXHIBIT 10
PURCHASE AGREEMENT
FOR COMMON STOCK
PURCHASE AGREEMENT (the "AGREEMENT") dated as of August 6, 2002 among
GOHEALTH.MD, INC., a Nevada corporation ("COMPANY"), and UNITED HEALTH
PARTNERS, LLC (the "INVESTOR").
WHEREAS, the Company desires to sell to the Investor, and the Investor
desires to purchase, approximately 16,000,000 shares of the Company's Common
Stock, $.01 par value (the "COMMON STOCK"), constituting no less than Fifty
One percent (51%) of the Company's outstanding Common Stock, as adjusted for
all outstanding options, warrants or other rights to purchase Common Stock;
and
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. PURCHASE AND SALE OF STOCK.
1.1. SALE AND ISSUANCE OF PURCHASED SHARES. The Company shall sell and
issue to the Investor and the Investor shall purchase from the Company for an
aggregate purchase price of $500,000, an amount of Common Stock equal to (upon
issuance at Closing) no less than Fifty One percent (51%) of the Company's
outstanding Common Stock, as adjusted for all outstanding options, warrants or
other rights to purchase Common Stock, which amounts to a total of
approximately 16,000,000 shares of Common Stock (the "PURCHASED SHARES"). The
number of Purchased Shares to be purchased by the Investor from the Company is
set forth opposite the name of such Investor on the signature page hereof,
subject to acceptance, in whole or in part, by the Company.
1.2. CLOSING. The purchase and sale of the Purchased Shares hereunder
shall take place at a closing (the "CLOSING ") on or before September 30,
2002, but no earlier than approval by Securities and Exchange Commission
("SEC") and fulfillment of relevant SEC and state laws and regulations
concerning the Company's Information Statement and its mailing to shareholders
concerning the within transaction. At the Closing:
(a) the Investor purchasing Purchased Shares at such Closing
shall deliver to the Company or its agent, by wire transfer, cashier's checks
or certified checks from a bank acceptable to the Company, or such other
method of payment as the Company shall approve, an amount equal to the
purchase price of the portion of the Purchased Shares, as set forth opposite
its name on the signature pages hereof;
(b) the Company shall issue and deliver to each Investor
purchasing Purchased Shares at such Closing a certificate or certificates for
its portion of the Purchased Shares to be
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issued by the Company and purchased by such Investor, as set forth opposite
such Investor's name on the signature pages hereof;
(c) the Investor shall have the right to appoint three (3) persons
to the Company Board of Directors;
(d) the Company shall cause one (1) of the three (3) current
members of the Company Board of Directors to resign at Closing;
and the Investor shall cause the terms of two (2) remaining
current members of the Company Board of Directors to be extended
for a period of twenty four (24) months beyond the Closing.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor, to the best of Company's knowledge,
as follows:
2.1. CORPORATE ORGANIZATION; AUTHORITY; DUE AUTHORIZATION.
(a) The Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority to own or lease its
properties as and in the places where such business is now conducted and to
carry on its business as now conducted and (iii) is duly qualified and in good
standing as a foreign corporation authorized to do business in every
jurisdiction where the failure to so qualify, individually or in the
aggregate, would have a material adverse effect on the operations, prospects,
assets, liabilities, financial condition or business of the Company (a
"COMPANY MATERIAL ADVERSE EFFECT").
(b) The Company (i) has the requisite corporate power and
authority to execute, deliver and perform this Agreement and the other
agreements contemplated hereby to which it is a party and to incur the
obligations herein and therein and (ii) has been authorized by all necessary
corporate action to execute, deliver and perform this Agreement and the other
agreements contemplated hereby to which it is a party and to consummate the
transactions contemplated hereby and thereby (the "CONTEMPLATED
TRANSACTIONS"). This Agreement and each of the other agreements contemplated
hereby to which the Company is a party is a valid and binding obligation of
the Company enforceable in accordance with its terms.
2.2. CAPITALIZATION. Immediately prior to the Closing, the authorized
capital of the Company is as set forth on Schedule 2.2. All outstanding
shares were issued in compliance with all applicable Federal and state
securities laws. Except as contemplated by this Agreement or as set forth in
the Schedules attached hereto, there are (i) no outstanding subscriptions,
warrants, options, conversion privileges or other rights or agreements to
purchase or otherwise acquire or issue any shares of capital stock of the
Company (or shares reserved for such purpose), (ii) no preemptive rights or
rights of first refusal with respect to the issuance of additional shares of
capital stock of the Company, including the Purchased Shares, and (iii) no
commitments or understandings (oral or written) of the Company to issue any
shares, warrants, options or other rights. To the best of the Company's
knowledge, except as set forth in Schedule 2.2, none of the
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shares of Common Stock are subject to any share Investor' agreement, voting
trust agreement or similar arrangement or understanding. Except as set forth
in the Company Disclosure Letter, the Company has no outstanding bonds,
debentures, notes or other obligations the Investor of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stock Investor of the Company on any matter.
2.3. VALIDITY OF PURCHASED SHARES. The issuance of the Purchased
Shares has been duly authorized, and when issued, sold and delivered in
accordance with the terms and for the consideration expressed herein, the
Purchased Shares shall be validly issued, fully paid and non-assessable.
2.4. N/A
PRIVATE OFFERING. - Neither the Company nor anyone acting on its behalf
has within the last 12 months issued, sold or offered any security of
the Company to any person or organization under circumstances that would
cause the issuance and sale of the Purchased Shares, as contemplated by
this Agreement, to be subject to the registration requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT"). The Company
agrees that neither the Company nor anyone acting on its behalf will
offer the Purchased Shares or any part thereof or any similar securities
for issuance or sale to, or solicit any offer to acquire any of the same
from, anyone so as to make the issuance and sale of the Purchased Shares
subject to the registration requirements of Section 5 of the Securities
Act. Except for the piggyback registration rights granted to the
following: Xxxxxx Xxxxxx 900,000 shares and Xxxxx Xxxxxxxx 800,000
shares.
2.6. BROKERS AND FINDERS. The Company has not retained any investment
banker, broker or finder in connection with the Contemplated Transactions.
2.7. SUBSIDIARIES.
(a) Except as set forth in Schedule 2.7, the Company has no Subsidiaries
and does not otherwise directly or indirectly control any other business
entity. As used in this Agreement, "SUBSIDIARY" means any corporation or
other organization, whether incorporated or unincorporated, of which the
Company directly or indirectly owns or controls at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, or any
organization of which the Company is a general partner or any limited
liability company of which the Company is a manager.
(b) Each Subsidiary of the Company (each, a "COMPANY SUBSIDIARY" and
collectively, "COMPANY SUBSIDIARIES") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its properties and
to carry on its business as it is now being conducted, and is duly qualified
to do business and is in good standing in each jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so
qualified or to be in good standing would
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not, individually or in the aggregate, have a Company Material Adverse Effect.
The copies of the Certificate of Incorporation and Bylaws of the Company and
the Company Subsidiaries previously made available to the Purchaser are true
and correct.
(c) The Company owns directly or indirectly all of the outstanding
shares of capital stock (or other ownership interests having by their terms
ordinary voting power to elect a majority of directors or others performing
similar functions with respect to such Company Subsidiary) of each of the
Company Subsidiaries. Each of the outstanding shares of capital stock of each
of the Company Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by the Company. Except as
set forth in Schedule 2.7, each of the outstanding shares of capital stock of
each Company Subsidiary is owned, directly or indirectly, by the Company free
and clear of all liens, pledges, security interests, claims or other
encumbrances other than liens imposed by local law which are not material.
There are no irrevocable proxies, voting agreements or similar obligations
with respect to such capital stock of the Company Subsidiaries, and no equity
securities or other interests of any of the Company Subsidiaries are or may
become required to be issued or purchased by reason of any options, warrants,
rights to subscribe to, puts, calls, reservation of shares or commitments of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of any capital stock of any Company Subsidiary,
and there are no contracts, commitments, understandings or arrangements by
which any Company Subsidiary is bound to issue additional shares of its
capital stock, or options, warrants or rights to purchase or acquire any
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. Schedule 2.7 sets forth the following
information for each Company Subsidiary, if applicable: (i) its name and
jurisdiction of incorporation or organization; (ii) its authorized capital
stock or share capital; (iii) the number of issued and outstanding shares of
capital tock or share capital, and (iv) the percentage of such shares owned by
the Company.
2.8. OTHER INTEREST. Except for interests in the Company Subsidiaries,
neither the Company nor any Company Subsidiary owns directly or indirectly any
interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity.
2.9. USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Purchased Shares for working capital.
2.10. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company do
not, and the consummation by the Company of the transactions contemplated
hereby will not, (i) conflict with or violate the Certificate of Incorporation
or By-Laws or equivalent organizational documents of (x) the Company or (y)
any Company Subsidiary, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Company or any Company
Subsidiary or by which any property or asset of the Company or any Company
Subsidiary is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, result in the loss of a material benefit under,
or give to others any right of purchase or sale, or any right of termination,
amendment, acceleration, increased payments or cancellation of, or result in
the creation of a lien
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or other encumbrance on any property or asset of the Company or any Company
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Company Subsidiary is a party or by which the
Company or any Company Subsidiary or any property or asset of the Company or
any Company Subsidiary is bound or affected, except, in the case of clauses
(i)(y), (ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences which would not prevent or delay consummation of any of
the Contemplated Transactions in any material respect, or otherwise prevent
the Company from performing its obligations under this Agreement in any
material respect, and would not, individually or in the aggregate, have a
Company Material Adverse Effect. The execution and delivery of this Agreement
by the Company do not, and the consummation by the Company of the Contemplated
Transactions will not, result in any material breach of or constitute a
material default (or an event which with notice or lapse of time or both would
become a material default) under, result in the loss of a material benefit
under, or give to others any right of purchase or sale, or any right of
termination amendment, acceleration, increased payments or cancellation of, or
result in the creation of a lien or other encumbrance on any property or
asset of the Company or any Company Subsidiary pursuant to, any Company
Material Contract (as hereafter defined).
(b) The execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement and the consummation by the
Company of the transactions contemplated hereby will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign (each a
"GOVERNMENTAL ENTITY") except for applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") or any state
securities or "blue sky" laws ("BLUE SKY LAWS").
2.11. COMPLIANCE. Neither the Company nor any Company Subsidiary is in
conflict with, or in default or violation of (i) any law, rule, regulation,
order, judgment or decree applicable to the Company or any Company Subsidiary
("LEGAL REQUIREMENT") or by which any property or asset of the Company or any
Company Subsidiary is bound or affected, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Company Subsidiary is a
party or by which the Company or any Company Subsidiary or any property or
asset of the Company or any Company Subsidiary is bound or affected, in each
case except for any such conflicts, defaults or violations that would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Neither the Company nor any Company Subsidiary has received any notice or
other communication from any Governmental Body regarding any actual or
possible violation of, or failure to comply with, any Legal Requirement. The
Company and the Company Subsidiaries have obtained all licenses, permits, and
other authorizations and have taken all actions required by applicable law or
governmental regulations in connection with their business as now conducted,
where the failure to obtain any such item or to take any such action would
have, individually or in the aggregate, a Company Material Adverse Effect.
None of the Company, any Company Subsidiary or, to the knowledge of Company,
any director, officer, agent, employee or other person acting on behalf of any
of the foregoing has used any corporate funds for unlawful contributions,
payments, gifts or entertainment or for the payment of other unlawful expenses
relating to political activity, or made any direct or indirect unlawful
payments to
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governmental or regulatory officials or others. For purposes of this Agreement
"GOVERNMENTAL BODY" shall mean any: (a) nation, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government; or (c)
governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or entity and any court or other tribunal).
2.12. SEC DOCUMENTS.
(a) Except as set forth in Schedule 2.12, the Company has filed all
forms, reports and documents required to be filed by it with the Securities
and Exchange Commission (the "SEC") since its formation (the "COMPANY
REPORTS"). As of their respective dates and to the best of management's
knowledge, the Company Reports filed prior to the date hereof (i) complied as
to form in all material respects with the applicable requirements of the
Securities Act, the Exchange Act, and the rules and regulations thereunder and
(ii) did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. The representation in clause (ii) of the preceding
sentence shall not apply to any misstatement or omission in any Company Report
filed prior to the date of this Agreement which was superseded by a subsequent
Company Report filed prior to the date of this Agreement. The Company has
provided to the Investor a draft of the financial statements to be filed in
its Form 10-QSB for its quarter ended June 30, 2002 which will be filed with
the SEC on or before August 15, 2002 and which is not expected to be
materially different from that provided to the Investor (except to the extent
amended to reflect the transactions contemplated hereby) (the "6-30-02
10-QSB"). When filed with the SEC, the 6-30-02 10-QSB (i) will comply as to
form in all material respects with the applicable requirements of the
Securities Act, the Exchange Act, and the rules and regulations thereunder and
(ii) will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. No Company Subsidiary is required to file any
report, form or other document with the SEC. Except as set forth in Schedule
2.12 neither the Company nor any Company Subsidiary is a party or is subject
to any note, bond, mortgage, indenture, contract, lease, license, agreement,
understanding, instrument, bid or proposal that is required to be described in
or filed as an exhibit to any Company Report that is not described in or filed
as an exhibit to such Company Report as required by the Securities Act or the
Exchange Act, as the case may be. No event has occurred prior to the date
hereof as a consequence of which the Company would be required to file a
Current Report on Form 8-K pursuant to the requirements of the Exchange Act as
to which such a report has not been timely filed with the SEC. Any reports,
statements and registration statements and amendments thereto (including,
without limitation, Annual Reports on Form 10-KSB, Quarterly Reports on Form
10-QSB and Current Reports on Form 8-K, as amended) filed by the Company with
the SEC after the date hereof shall be provided to the Purchaser no later than
the date of such filing.
(b) Each of the consolidated balance sheets of Company included in or
incorporated by reference into the Company Reports (including the related
notes and schedules) fairly presents the consolidated financial position of
the Company and the Company Subsidiaries
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as of its date, and each of the consolidated statements of income, retained
earnings and cash flows of Company included in or incorporated by reference
into the Company Reports (including any related notes and schedules) fairly
presents the results of operations, retained earnings or cash flows, as the
case may be, of the Company and the Company Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments which would not be material in amount or effect),
in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein. Neither the Company nor any of the Company Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or
reserved against in, a balance sheet of the Company or in the notes thereto,
prepared in accordance with generally accepted accounting principles
consistently applied, except for (i) liabilities or obligations that were so
reserved on, or reflected in (including the notes to), the consolidated
balance sheet of the Company as of June 30, 2002; (ii) liabilities or
obligations arising in the ordinary course of business since June 30, 2002 and
(iii) liabilities or obligations which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
2.13. LITIGATION. Except as set forth the Company Reports or in
Schedule 2.13 there are no claims, actions, suits, investigations, inquiries
or proceedings pending against the Company or the Company Subsidiaries or, to
the knowledge of the Company, threatened against the Company or the Company
Subsidiaries, or any officer, director, employee or agent thereof in his or
her capacity as such, at law or in equity, or before or by any court,
tribunal, arbitrator, mediator or any federal or state commission, board,
bureau, agency or instrumentality, that, individually or in the aggregate, are
reasonably likely to have a Company Material Adverse Effect.
2.14. ABSENCE OF CERTAIN CHANGES. Except as specifically contemplated
by this Agreement or set forth in Schedule 2.14, since August __, 2002, there
has not been (i) any event, occurrence, fact, condition, change, development
or effect ("EVENT") that would reasonably be expected to have a Company
Material Adverse Effect; (ii) any declaration, payment or setting aside for
payment of any dividend (except to Company or a Company Subsidiary wholly
owned by Company) or other distribution or any redemption, purchase or other
acquisition of any shares of capital stock or securities of Company or any
Company Subsidiary; (iii) any return of any capital or other distribution of
assets to stock Investor of Company or any Company Subsidiary (except to
Company or a Company Subsidiary wholly owned by Company); (iv) any
acquisition (by merger, consolidation, acquisition of stock or assets or
otherwise) of any person or business; (v) any other action or agreement or
undertaking by Company or any Company Subsidiary that, if taken or done on or
after the date hereof would reasonably be expected to have a Company Material
Adverse Effect; or (vi) any material change in its accounting principles,
practices or methods. Without limiting foregoing, since December 31, 2001,
there has been no Company Material Adverse Effect affecting the Company's
financial condition as of August __, 2002 or results of operation through that
date which would not be reflected in its unaudited financial statements to be
prepared for and through June 30, 2002.
2.15. TAXES.
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(a) Except as set forth in Schedule 2.15, each of the Company and the
Company Subsidiaries has filed all material tax returns and reports required
to be filed by it, or requests for extensions to file such returns or reports
have been timely filed and granted and have not expired, and all tax returns
and reports are complete and accurate in all respects, except to the extent
that such failures to file, have extensions granted that remain in effect or
be complete and accurate in all respects, as applicable, individually or in
the aggregate, would not have a Company Material Adverse Effect. The Company
and each of the Company Subsidiaries has paid (or the Company has paid on its
behalf) all taxes shown as due on such tax returns and reports. The most
recent financial statements contained in the Company Reports reflect an
adequate reserve for all taxes payable by the Company and the Company
Subsidiaries for all taxable periods and portions thereof accrued through the
date of such financial statements, and no deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any Company Subsidiary
that are not adequately reserved for, except for inadequately reserved taxes
and inadequately reserved deficiencies that would not, individually or in the
aggregate, have a Company Material Adverse Effect. No requests for waivers of
the time to assess any taxes against the Company or any Company Subsidiary
have been granted or are pending, except for requests with respect to such
taxes that have been adequately reserved for in the most recent financial
statements contained in the Company Reports, or, to the extent not adequately
reserved, the assessment of which would not, individually or in the aggregate,
have a Company Material Adverse Effect.
(b) As used in this Section 2.15, "taxes" shall include all Federal,
state, local and foreign income, franchise, property, sales, use, excise and
other taxes, including obligations for withholding taxes from payments due or
made to any other person and any interest, penalties or additions to tax.
2.16. EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 2.16 and except
as would not, individually or in the aggregate, have a Company Material
Adverse Effect, (i) all employee benefit plans or programs maintained for the
benefit of the current or former employees or directors of the Company or any
Company Subsidiary that are sponsored, maintained or contributed to by the
Company or any Company Subsidiary, or with respect to which the Company or any
Company Subsidiary has any liability, including without limitation any such
plan that is an "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), are in compliance
with all applicable requirements of law, including ERISA and the Code, and
(ii) neither the Company nor any Company Subsidiary has any liabilities or
obligations with respect to any such employee benefit plans or programs,
whether accrued, contingent or otherwise, nor to the knowledge of the Company
are any such liabilities or obligations expected to be incurred. The
execution of, and performance of the transactions contemplated in, this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any benefit plan, policy,
arrangement or agreement or any trust or loan that will or may result in any
payment (whether of severance pay, bonus, golden parachute or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee. The
only severance agreements or severance policies applicable to the Company or
the Company Subsidiaries are the agreements and policies specifically referred
to in Schedule 2.16.
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2.17. LABOR MATTERS. Neither the Company nor any of the Company
Subsidiaries has any material obligations, contingent or otherwise, under any
employment, severance or consulting agreement, any collective bargaining
agreement or any other contract with a labor union or other labor or employee
group. To the knowledge of Company, as of the date of this Agreement, there
are no negotiations, demands or proposals which are presently pending or
overtly threatened by or on behalf of any labor union with respect to the
unionizing of employees of Company or any Company Subsidiary. There is no
labor strike, labor dispute, work slowdown, stoppage or lockout actually
pending, or to the knowledge of the Company, threatened against or affecting
the Company or any Company Subsidiary, except as would not, individually or in
the aggregate, have a Company Material Adverse Effect. There is no unfair
labor practice or labor arbitration proceeding pending or, to the knowledge of
the Company, threatened against the Company or its Subsidiaries relating to
their business, except for any such proceeding which would not have a Company
Material Adverse Effect.
2.18. CONTRACTS. Except as set forth in the Company Reports or the
Schedule 2.18, neither the Company nor any Company Subsidiary is a party or is
subject to, and their property and assets are not bound or affected by, any of
the following (each, a "COMPANY MATERIAL CONTRACT"):
(a) any agreement or understanding with an affiliate of the Company or
of a Company Subsidiary;
(b) any contract relating to the acquisition, transfer, use,
development, sharing or license of any technology or any Proprietary Asset (as
hereafter defined);
(c) any single note, bond, mortgage, indenture, contract, lease,
license, agreement, understanding, instrument, bid or proposal pursuant to
which the financial obligation of the Company or a Company Subsidiary
thereunder or applicable to the assets or properties of the Company or a
Company Subsidiary subject thereto could exceed $10,000 after the Closing;
(d) any single contract, bid or offer to which the Company or a Company
Subsidiary is a party or by which the Company or a Company Subsidiary is bound
to provide services to third parties which provides for recurring monthly
revenues to the Company or a Company Subsidiary in excess of $10,000;
(e) any contract creating or involving any agency relationship,
distribution arrangement or franchise relationship;
(f) any contract which includes any exclusivity restrictions applicable
to the Company or a Company Subsidiary or imposes any restriction on the
Company's right or ability (A) to compete with any person, (B) to acquire any
product or other asset or any services from any other person, to sell any
product or other asset to or perform any services for any other person or to
transact business or deal in any other manner with any other person, or (C)
develop or distribute any technology;
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(g) any contract relating to the acquisition, issuance or transfer of
any securities, except as contemplated hereunder;
(h) any contract involving or incorporating any guaranty, any pledge,
any performance or completion bond, any indemnity or any surety arrangement;
(i) any contract creating or relating to any partnership or joint
venture or any sharing of revenues, profits, losses, costs or liabilities;
(j) any contract constituting or relating to a Government Contract (as
hereafter defined) or Government Bid (as hereafter defined);
(k) any contract that was entered into outside the ordinary course of
business or was inconsistent with the Company's or a Company Subsidiary's past
practices;
(l) any other Company Contract that has a term of more than 120 days
and that may not be terminated by the Company (without penalty) within 120
days after the delivery of a termination notice by the Company; or
(m) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation that is material
to the ownership or operation of any of the Company or a Company Subsidiary.
The Company has made available to the Investor true and accurate copies of the
Company Material Contracts. Except as set forth in Schedule 2.18 all such
Company Material Contracts are or will be valid and binding and are or will be
in full force and effect and enforceable in accordance with their respective
terms. Except as set forth in Schedule 2.18, no consent of any person is
needed in order that each such Company Material Contract shall continue in
full force and effect in accordance with its terms without penalty,
acceleration or rights of early termination by reason of the consummation of
the transactions contemplated by this Agreement, except for consents the
absence of which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect. Neither the Company nor
any Company Subsidiary is in violation or breach of or default under any such
Company Material Contract, nor to the Company's knowledge is any other party
to any such Company Material Contract in violation or breach of or default
under any such Company Material Contract, in each case where such violation or
breach would give rise to a right of termination or modification. For
purposes of this Agreement "GOVERNMENT BID" shall mean any quotation, bid or
proposal submitted to any Governmental Body or any proposed prime contractor
or higher-tier subcontractor of any Governmental Body. For purposes of this
Agreement "GOVERNMENT CONTRACT" shall mean any prime contract, subcontract,
letter contract, purchase order or delivery order executed or submitted to or
on behalf of any Governmental Body or any prime contractor or higher-tier
subcontractor, or under which any Governmental Body or any such prime
contractor or subcontractor otherwise has or may acquire any right or
interest.
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2.19. ENVIRONMENTAL MATTERS. As of the date of this Agreement, (i) the
Company and the Company Subsidiaries are in compliance with all applicable
Environmental Laws (as hereinafter defined), (ii) there is no civil, criminal
or administrative judgment, action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or, to
the knowledge of the Company, threatened against the Company, a Company
Subsidiary or any of their respective properties pursuant to Environmental
Laws, and (iii) there are no past or present Events which, reasonably may be
expected to prevent compliance with, or which have given rise to or will give
rise to liability on the part of the Company or a Company Subsidiary under,
Environmental Laws, except, in each case, for any deviations from the
foregoing which, individually or in the aggregate, do not and would not
reasonably be expected to have a Company Material Adverse Effect. The Company
has provided or made available to the Investor prior to the date of this
Agreement true, accurate and complete copies of all environmental reports in
the possession of the Company or a Company Subsidiary relating to any of their
respective past or present properties. As used herein, the term
"ENVIRONMENTAL LAWS" shall mean laws relating to pollution, waste control, the
generation, presence or disposal of asbestos, hazardous or toxic wastes or
substances, the protection of the environment, environmental activity or
public health and safety.
2.20. PROPRIETARY ASSETS.
(a) For purposes of this Agreement "PROPRIETARY ASSETS" shall
mean any: (i) patent, patent application, trademark (whether registered or
unregistered), trademark application, trade name, fictitious business name,
service xxxx (whether registered or unregistered), service xxxx application,
copyright (whether registered or unregistered), copyright application,
maskwork, maskwork application, trade secret, know-how, customer list,
franchise, system, computer software, computer program, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset; or (ii) right
to use or exploit any of the foregoing.
(b) Schedule 2.20 sets forth, with respect to each Proprietary
Asset of the Company or a Company Subsidiary registered with any Governmental
Body or for which an application has been filed with any Governmental Body,
(i) a brief description of such Proprietary Asset and (ii) the names of the
jurisdictions covered by the applicable registration or application. Schedule
2.20 identifies and provides a brief description of all other Proprietary
Assets owned by the Company or a Company Subsidiary, and identifies and
provides a brief description of each Proprietary Asset licensed to the Company
or a Company Subsidiary by any person (except for any Proprietary Asset that
is licensed to the Company or a Subsidiary under any third party software
license generally available to the public at a cost of less than $10,000), and
identifies the license agreement under which such Proprietary Asset is being
licensed to the Company or a Company Subsidiary. Except as set forth in
Schedule 2.20, the Company or a Company Subsidiary: has good, valid and
marketable title to all of the Proprietary Assets identified in Schedule 2.20,
free and clear, of all liens and other encumbrances; has a valid right to use
all Proprietary Assets identified in Schedule 2.20; and is not obligated to
make any payment to any person for the use of any Proprietary Asset. Except
as set forth in Schedule 2.20, neither the Company nor any Company Subsidiary
has developed jointly with any other person any Proprietary Asset with respect
to which such other person has any rights.
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(c) The Company and the Company Subsidiaries have taken all
measures and precautions necessary to protect and maintain the confidentiality
and secrecy of all Proprietary Assets of the Company and the Company
Subsidiaries (except Proprietary Assets whose value would be unimpaired by
public disclosure) and otherwise to maintain and protect the value of all
Proprietary Assets of the Company and the Company Subsidiaries. The Company
and the Company Subsidiaries have not disclosed or delivered to any person, or
permitted the disclosure or delivery to any person of, (i) the source code, or
any portion or aspect of the source code, of any Proprietary Asset, or (ii)
the object code, or any portion or aspect of the object code, of any
Proprietary Asset of the Company or a Company Subsidiary.
(d) To the best of the knowledge of the Company, none of the
Proprietary Assets of the Company or a Company Subsidiary infringes or
conflicts with any Proprietary Asset owned or used by any other Person. The
Company and the Company Subsidiaries are not infringing, misappropriating or
making any unlawful use of, and the Company and the Company Subsidiaries have
not at any time infringed, misappropriated or made any unlawful use of, or
received any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement, misappropriation or
unlawful use of, any Proprietary Asset owned or used by any other Person. To
the best of the knowledge of the Company, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other person infringes or conflicts with, any Proprietary Asset
of the Company or a Company Subsidiary.
(e) There has not been any claim by any customer or other person
alleging that any Proprietary Asset of the Company or a Company Subsidiary
(including each version thereof that has ever been licensed or otherwise made
available by the Company or a Company Subsidiary to any person) does not
conform in all material respects with any specification, documentation,
performance standard, representation or statement made or provided by or on
behalf of the Company or a Company Subsidiary, and, to the best of the
knowledge of the Company, there is no basis for any such claim.
(f) The Proprietary Assets of the Company and the Company
Subsidiaries constitute all the Proprietary Assets necessary to enable the
Company and the Company Subsidiaries to conduct their businesses in the manner
in which such businesses have been and are being conducted. The Company and
the Company Subsidiaries have not licensed any of their Proprietary Assets to
any person on an exclusive, semi-exclusive or royalty-free basis. The Company
and the Company Subsidiaries have not entered into any covenant not to compete
or contract limiting their ability to exploit fully any of their Proprietary
Assets or to transact business in any market or geographical area or with any
person.
2.21. NO ADVERSE ACTIONS. There is no existing, pending or, to the
knowledge of the Company, threatened termination, cancellation, limitation,
modification or change in the business relationship of Company or any of the
Company Subsidiaries, with any supplier, customer or other person except such
as would not reasonably be expected, individually or in the aggregate, to have
a Company Material Adverse Effect.
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2.22. INSURANCE. The Company currently maintains no insurance policies
of whatsoever kind.
2.23. DISCLOSURE. No representation or warranty of the Company herein
and no information contained or referenced in the Company Reports or the
Schedules attached hereto contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. Each Investor
represents and warrants to the Company as follows:
3.1. AUTHORIZATION. When executed and delivered by such Investor, this
Agreement will constitute the valid and binding obligation of such Investor.
3.2. BROKERS AND FINDERS. Such Investor has not retained any investment
banker, broker or finder in connection with the Contemplated Transactions.
4. SECURITIES LAWS.
4.1. SECURITIES LAWS REPRESENTATIONS AND COVENANTS OF INVESTOR.
(a) This Agreement is made with the Investor in reliance upon such
Investor's representation to the Company, which by such Investor's execution
of this Agreement such Investor hereby confirms, that the Purchased Shares to
be received by such Investor will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof such that such Investor would
constitute an "underwriter" under the Securities Act, and that such Investor
has no present intention of selling, granting any participation in or
otherwise distributing the Purchased Shares. By executing this Agreement,
each Investor further represents that such Investor does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person with
respect to, any of the Purchased Shares.
(b) The Investor understands and acknowledges that the offering of
the Purchased Shares pursuant to this Agreement will not be registered under
the Securities Act or qualified under any Blue Sky Laws on the grounds that
the offering and sale of the Purchased Shares are exempt from registration
and qualification, respectively, under the Securities Act and the Blue Sky
Laws, and that the Company's reliance upon such exemption is predicated upon
such Investor's representations set forth in this Agreement.
(c) Each Investor covenants that, unless the Purchased Shares, or
any other shares of capital stock of the Company received in respect of the
foregoing have been registered with the SEC, such Investor will not dispose of
such securities unless and until such Investor shall have notified the Company
of the proposed disposition and shall have furnished the Company with an
opinion of counsel reasonably satisfactory in form and substance to the
Company to the effect that (x) such disposition will not require registration
under the Securities Act and (y)
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appropriate action necessary for compliance with the Securities Act and any
applicable state, local or foreign law has been taken; PROVIDED, HOWEVER, that
an Investor may dispose of such securities without providing the opinion
referred to above if the Company has been provided with adequate assurance
that such disposition is made in compliance with Rule 144 under the Securities
Act (or any similar or analogous rule) and any applicable state, local or
foreign law.
(d) In connection with the investment representations made herein,
the Investor represents that (i) such Investor is able to fend for itself in
the Contemplated Transactions; (ii) such Investor has such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of such Investor's prospective investment in the
Purchased Shares; (iii) such Investor has the ability to bear the economic
risks of such Investor's prospective investment and can afford the complete
loss of such investment; (iv) such Investor has been furnished with and has
had access to such information as is in the Schedules attached hereto together
with the opportunity to obtain such additional information as it requested to
verify the accuracy of the information supplied; and (v) such Investor has had
access to officers of the Company and an opportunity to ask questions of and
receive answers from such officers and has had all questions that have been
asked by such Investor satisfactorily answered by the Company.
(e) The Investor further represents by execution of this Agreement
that such Investor qualifies as an "accredited investor" as such term is
defined under Rule 501 promulgated under the Securities Act. Any Investor
that is a corporation, a partnership, a trust or other business entity further
represents by execution of this Agreement that it has not been organized for
the purpose of purchasing the Purchased Shares.
(f) By acceptance hereof, each Investor agrees that the Purchased
Shares and any shares of capital stock of the Company received in respect of
the foregoing held by it may not be sold by such Investor without registration
under the Securities Act or an exemption therefrom, and therefore such
Investor may be required to hold such securities for an indeterminate period.
(g) So long as the Company is in compliance in all material
respects with its obligations to the Investor pursuant to this Agreement, the
Investor agrees that it and its affiliates shall not hold a short position or
engage in short sales or other hedging transactions relating to the Common
Stock of the Company.
4.2. LEGENDS. All certificates for the Purchased Shares, and each
certificate representing any shares of capital stock of the Company received
in respect of the foregoing, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon or otherwise and each
certificate for any such securities issued to subsequent transferees of any
such certificate (unless otherwise permitted herein) shall bear substantially
the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT."
14
In addition, such certificates shall bear any legend that, in the opinion of
the Company's counsel, is required pursuant to any state, local or foreign law
governing the Purchased Shares.
5. ADDITIONAL COVENANTS OF THE COMPANY.
5.1. REPORTS, INFORMATION, SHARES.
(a) The Company shall cooperate with the Investor in supplying
such information as may be reasonably requested by such Investor to complete
and file any information reporting forms presently or hereafter required by
the SEC as a condition to the availability of an exemption, presently existing
or hereafter adopted, from the Securities Act for the sale of any of the
Purchased Shares and shares of capital stock of the Company received in
respect of the foregoing.
(b) The Company shall deliver to Investor, contemporaneously with
delivery to other investors of Common Stock, a copy of each report of the
Company delivered to any other investor of Common Stock.
5.2. EXPENSES; INDEMNIFICATION.
(a) The Company agrees to save the Investor harmless against
liability for the payment of any stamp or similar taxes (including interest
and penalties, if any) that may be determined to be payable in respect of the
execution and delivery of this Agreement, the issue and sale of any Purchased
Shares, the expense of preparing and issuing the Purchased Shares, the cost of
delivering the Purchased Shares purchased by the Investor to such Investor's
home office, and the costs and expenses incurred in the preparation of all
certificates and letters on behalf of the Company and of the Company's
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with. The Investor shall be
responsible for its out-of-pocket expenses arising in connection with the
Contemplated Transactions, including, without limitation, fees and
disbursements of counsel to the Investor and due diligence expenses of the
Investor. In addition, the company will hold current directors harmless
against any liabilities, acts/omissions to the extent allowed by law.
(b) The Company hereby agrees and acknowledges that the Investor
has been induced to enter into this Agreement and to purchase the Purchased
Shares hereunder, in part, based upon the representations, warranties and
covenants of the Company contained herein. The Company hereby agrees to pay,
indemnify and hold harmless the Investor and any director, officer or employee
of any Investor against all claims, losses and damages resulting from any and
all legal or administrative proceedings, including without limitation,
reasonable attorneys' fees and expenses incurred in connection therewith
(collectively, "LOSS"), resulting from a breach by the Company of any
representation or warranty of the Company contained herein or the failure of
the Company to perform any covenant made herein.
15
(c) As soon as reasonably practicable after receipt by an
Investor of notice of any Loss in respect of which the Company may be liable
under this Section 5.2, the Investor shall give notice thereof to the Company.
Each Investor may, at its option, claim indemnity under this Section 5.2 as
soon as a claim has been threatened by a third party, regardless of whether an
actual Loss has been suffered, so long as counsel for such Investor shall in
good faith determine that such claim is not frivolous and that such Investor
may be liable or otherwise incur a Loss as a result thereof and shall give
notice of such determination to the Company. Each Investor shall permit the
Company, at the Company's option and expense, to assume the defense of any
such claim by counsel mutually and reasonably satisfactory to the Company and
the Investor who are subject to such claim, and to settle or otherwise dispose
of the same; PROVIDED, HOWEVER, that each Investor may at all times
participate in such defense at such Investor's expense; and PROVIDED, FURTHER,
that the Company shall not, in defense of any such claim, except with the
prior written consent of each Investor subject to such claim, (i) consent to
the entry of any judgment that does not include as an unconditional term
thereof the giving by the claimant or plaintiff in question to each Investor
and its subsidiaries of a release of all liabilities in respect of such
claims, or (ii) consent to any settlement of such claim. If the Company does
not promptly assume the defense of such claim irrespective of whether such
inability is due to the inability of the afore-described Investor and the
Company to mutually agree as to the choice of counsel, or if any such counsel
is unable to represent an investor due to a conflict or potential conflict of
interest, then an Investor may assume such defense and be entitled to
indemnification and prompt reimbursement from the Company for its costs and
expenses incurred in connection therewith, including without limitation,
reasonable attorneys' fees and expenses. Such fees and expenses shall be
reimbursed to the Investor as soon as practicable after submission of invoices
to the Company.
5.3 DILUTION AND ANTI-DILUTION. If, and as often as, there is any
change in the Common Stock or the Common Stock by way of a stock split, stock
dividend, combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Common Stock or
the Common Stock as so changed.
5.4 INCREASE OF AUTHORIZED SHARES; FUTURE BOARD ACTION ON REVERSE SPLIT
OR CONVERTIBLE SECURITIES.
(a)The Company agrees that its Articles of Incorporation shall be
amended prior to or at Closing to increase the number of authorized common
shares to 35,000,000.
(b) The Company agrees that its Bylaws or Articles of Incorporation,
whichever is necessary, shall be amended prior to or at Closing such that: Any
action of the Board of Directors to create a new convertible security,
increase the number of authorized common shares above the new authorized limit
of 35,000,000 shares, or effect a reverse split-up of the outstanding common
shares shall require an unanimous vote of the Board of Directors.
6. MISCELLANEOUS.
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6.1. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement
constitutes the entire contract between the parties relative to the subject
matter hereof and no party shall be liable or bound to the other in any manner
by any warranties, representations or covenants except as specifically set
forth herein. Any previous agreement among the parties with respect to the
sale of the Purchased Shares is superseded by this Agreement. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective executors, administrators, heirs, successors and assigns of the
parties. Except as expressly provided herein, nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
6.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding
any right of the Investor fully to investigate the affairs of the Company and
notwithstanding any knowledge of facts determined or determinable by any
Investor pursuant to such right of investigation or right of investigation,
each Investor has the right to rely fully upon the representations,
warranties, covenants and agreements of the Company contained in this
Agreement or in any documents delivered pursuant to this Agreement. All such
representations and warranties of the Company shall survive the execution and
delivery of this Agreement and the Closing hereunder and shall continue in
full force and effect until the lapse of any applicable statute of limitations
(taking into account any waiver or tolling thereof) with respect to claims
which may arise thereunder or relate thereto shall have run and the provisions
of this Section 6.2 shall constitute a waiver by the Company of any such
applicable statute of limitations.
6.3. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of New Jersey without
regard to principles of conflicts of law. Each party hereby irrevocably
consents and submits to the jurisdiction of any New Jersey State or United
States Federal Court sitting in the State of New Jersey, over any action or
proceeding arising out of or relating to this Agreement and irrevocably
consents to the service of any and all process in any such action or
proceeding by registered mail addressed to such party at its address specified
in Section 8(b). Each party further waives any objection to venue in New
Jersey and any objection to an action or proceeding in such state and county
on the basis of forum non conveniens. Each party also waives any right to
trial by jury.
6.4. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.5. HEADINGS. The headings of the sections of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
6.6. NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery
and if a fax number has been provided, upon delivery (with answerback
confirmed), addressed to a party at its address and the fax number, if any,
shown below or at such other address and fax number as such party may
designate by three days advance notice to the other party.
17
Any notice to the Investor shall be sent to:
Fax Number:
Attention:
with a copy to:
Xxxx X. Xxxx, Esq.
Law Offices of Xxxx X. Xxxx
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax Number: 000-000-0000
Attention: Xxxx X. Xxxx, Esq.
Any notice to the Company shall be sent to:
Fax Number:
Attention: Xxxxxxx Xxxxx, President
with a copy to:
Fax Number:
Attention:
6.7. RIGHTS OF TRANSFEREES. Any and all rights and obligations of
Investor herein incident to the ownership of Purchased Shares shall pass
successively to all subsequent transferees of such Purchased Shares until
extinguished pursuant to the terms hereof.
6.8. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or any other provision of this Agreement.
6.9. TERMINATION.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) By the written agreement of Investor and Company;
or
18
(ii) By Investor by written notice to the Company if (i) the
representations and warranties of Company shall not have
been true and correct in all material respects .
(b) In the event of the termination of this Agreement pursuant to
this Section 6.9, this Agreement shall become void, without any
liability to any party in respect hereof or of the transactions
contemplated hereby on the part of any party hereto, or any of its
directors, officers, employees, agents, consultants,
representatives, advisers, stockholders or affiliates, except for
any liability resulting from such party's breach of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
GOHEALTH.MD, INC
/s/ Xxxxxxx Xxxxx
By: _____________________________
Its: Chief Executive Officer
UNITED HEALTH PARTNERS, LLC
/s/ Xxxxxxx Xxxxxxx
By: _____________________________
Its: Managing Member
Amount of Purchased Shares: ______________
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SCHEDULES
2.2. CAPITALIZATION
Authorized Common: 25,000,000; Authorized Preferred:__________, none
outstanding.
At 7/31/02:
Free trading 4,644,282
Restricted 9,935,321
Total 14,579,603 common shares outstanding
Options out 566,500
Total 15,145,103 ( 51%= 15,296,554)
Options Revenue if exercised ----$763,250.00
Options breakdown
Expire Amount Price
12/31/02 164,500 $1.00
9/30/03 102,000 $2.50
3/10/05 100,000 $1.50
6/30/06 25,000 $ .75
7/31/09 100,000 $1.00
2.7. SUBSIDIARIES
2.13. LITIGATION
2.14. ABSENCE OF CERTAIN CHANGES
2.15. TAXES
2.16. EMPLOYEE BENEFIT PLANS
2.18. CONTRACTS
2.20. PROPRIETARY ASSETS
20
