STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made this _____ day
of July, 1997 (the "Closing Date") between Metropolitan Health Networks, Inc.
(the "Seller"), whose mailing address is 0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000,
Xxxx Xxxxx, Xxxxxxx 00000-0000 and Xxxx Xxx Xxxxx (the "Purchaser"), whose
mailing address is 0000 Xxxxxxx Xxxx, Xxxxxxxxxx, XX 00000.
W I T N E S S E T H :
WHEREAS, the Purchaser desires to purchase an aggregate of Five
Thousand (5,000) shares of the Series A 10% Convertible Preferred Stock, par
value of $.001 per share, of the Company (the "Shares") from the Company on the
terms and conditions set forth in this Agreement; and the Company desires to
sell the Shares to the Purchaser on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the Company and the Purchaser hereby agree as
follows:
1. Incorporation by reference. The above recitals are herein
incorporated by reference.
2. Purchase and Sale. The Purchaser shall purchase from the Company,
and the Company shall sell to the Purchaser, the Shares on the terms and
conditions of this Agreement. The Shares shall have the rights, preferences and
limitations as set forth in the Articles of Amendment designating the Series A
Preferred Stock, a copy of which is attached hereto as Exhibit A.
3. Consideration/Purchase Price. In consideration of the purchase of
the Shares by the Purchaser, the Purchaser shall pay to the Company a purchase
price (the "Purchase Price"), in the amount of $500,000, in cash, or by
cashier's or certified check payable to the order of the Company or by other
mutual acceptable manner, payable in full on the Closing Date, as defined
herein.
4. Obligations of Seller.
(a) At the Closing, as defined herein, the Company shall
deliver to the Purchaser 5,000 Shares in the name of the Purchaser.
(b) A receipt for the payment delivered to the Company by the
Purchaser pursuant to Section 3 of this Agreement.
5. Obligations of the Purchaser. At the Closing, the Purchaser shall
deliver to the Company the Purchase Price pursuant to the terms of Section 3 of
this Agreement.
6. Closing and Condition to Closing.
6.1 Closing. The Closing of the transactions contemplated
by this
Agreement (the "Closing") shall take place on or before ____________, 1997
("Closing Date") at the offices of counsel for the Company or at such other
place mutually agreed upon between Purchaser and the Company, to be effective as
of the Closing Date.
6.2 Condition to Closing. The Closing shall be subject to
satisfaction of the condition that (i) the representations and warranties of (a)
the Company contained in Section 7 hereof; (b) the Purchaser contained in
Section 8 hereof, are true and correct and shall be true and correct as of the
Closing Date; the Company shall have delivered to the Purchaser the items
required by Section 4 hereof; (c) the Purchaser shall have delivered to the
Company the items required by Section 5 hereof; and (d) the Purchaser and the
Company shall have performed and complied with all agreements and conditions
required by this Agreement to be performed and complied with by such party prior
to or as of the Closing Date.
7. Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants to, and covenants with,
the Company as follows:
(a) The Purchaser has received and reviewed the Company's
Registration Statement on Form SB-2 File No. 333-5884-A, including all
exhibits thereto, and the Form 10-QSB for the quarter ended March 31,
1997 (collectively the "Disclosure Documents");
(b) The Purchaser has had a reasonable opportunity to ask
questions of and receive answers from the Company concerning the
Company and the Shares, and all such questions, if any, have been
answered to the full satisfaction of the Purchaser;
(c) The Purchaser has such knowledge and expertise in
financial and business matters that the Purchaser is capable of
evaluating the merits and risks involved in an investment in the
Company;
(d) Except as set forth herein and in the Disclosure
Documents, no representations or warranties have been made to the
Purchaser by or on behalf of the Company or any agent, employee or
affiliate of the Company and in entering into this transaction the
Purchaser is not relying upon any information, other than that
contained in the Disclosure Documents and the results of independent
investigation by the Purchaser;
(e) The Purchaser understands that (A) the Shares have not
been regis-tered under the Act or the securities laws of any state,
based upon an exemption from such registration requirements for
non-public offerings pursuant to an exemption under the Act; (B) the
Shares are and will be "restricted securities", as said term is defined
in Rule 144 of the Rules and Regulations promulgated under the Act; (C)
the Shares may not be sold or otherwise transferred unless they have
been first registered under the Act and all
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applicable state securities laws, or unless exemptions from such
registration provisions are available with respect to said resale or
transfer; (D) other than as set forth in the Disclosure Documents and
this Agreement, the Company is under no obligation to register the
Shares under the Act or any state securities laws, or to take any
action to make any exemption from any such registration provisions
available; (E) the certificates for the Shares will bear a legend to
the effect that the transfer of the securities represented thereby is
subject to the provisions hereof; and (F) stop transfer instructions
will be placed with the transfer agent for the Shares;
(f) The Purchaser is acquiring the Shares solely for the
account of the Purchaser, for investment purposes only, and not with a
view towards the resale or distribution thereof;
(g) The Purchaser will not sell or otherwise transfer any of
the Shares, or any interest therein, unless and until (i) said Shares
shall have first been registered under the Act and all applicable state
securities laws; or (ii) the Purchaser shall have first delivered to
the Company a written opinion of counsel (which counsel and opinion (in
form and substance) shall be reasonably satisfactory to the Company),
to the effect that the proposed sale or transfer is exempt from the
registration provisions of the Act and all applicable state securities
laws;
(h) The Purchaser is a corporation duly organized under the
laws of the State of ___________; has full power and authority to
execute and deliver this Agreement and to perform the obligations of
the Purchaser hereunder; and this Agreement is a legally binding
obligation of the Purchaser in accordance with its terms;
(i) The Purchaser is an "accredited investor," as such term is
defined in Regulation D of the Rules and Regulations promulgated under
the Act and the Purchaser understands that the Company has determined
that the exemption from the registration provisions of the Securities
Act of 1933, as amended (the "Act"), which is based upon non-public
offerings are applicable to the offer and sale of the Shares, based, in
part, upon the representations, warranties and agreements made by the
Purchaser herein and in the this Agreement.
8. Representations and Warranties of the Company.
The Company hereby represents and warrants to, and covenants with the
Purchaser, as follows:
(a) The Company is a corporation duly organized under the laws
of Florida; has full power and authority to execute and deliver this
Agreement and perform its obligations hereunder, and this Agreement is
a legally binding obligation of the Company in accordance with its
terms.
(b) The Shares, and the underlying shares of Common Stock,
when issued and paid for in accordance with the terms of this Agreement
will be validly issued and fully paid and non-assessable; the holders
thereof will not be subject to any personal liability as such holders;
all corporate action required to be taken for the authorization,
issuance sale of the Shares, and underlying shares of Common Stock, has
been duly and validly taken.
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(c) The execution and delivery of the Agreement does not (i)
conflict with or will conflict with, result in a material breach of, or
constitute a default under (x) the articles or bylaws of the Company;
(y) any material contract, indenture mortgage, deed of trust or other
material agreement or instrument to which the Company is a party or by
which any of the properties or assets of the Company may be bound.
(d) The Company has filed with the Securities and Exchange
Commission ("SEC") Disclosure Documents which reports do not contain
any material misstatements of facts or omit to state any material
facts. Since the date of filing of the last such report there has been
no material adverse change in the business or financial condition of
the Company. Except as disclosed in the Disclosure Documents, there are
no pending or threatened litigations or other proceedings which could
have a material adverse effect on the business or financial condition
of the Company.
9. Registration.
(a) In the event that the Company proposes, at any time prior
to two years after the issuance of the Series A Preferred Stock, to
file a registration statement on a general form of registration under
the Act (other than a form X- 0, X-0 or other inappropriate form)
relating to securities issued or to be issued by it, then it shall give
written notice of such proposal to the record owner(s) of the Series A
Preferred Stock and any shares of Common Stock issued upon the exercise
thereof. If, within 15 days after the giving of such notice, the record
owners of any of the Series A Preferred Stock or shares of Common Stock
issued or issuable upon their exercise shall request in writing that
all of the shares of Common Stock issued or issuable upon exercise of
the Series A Preferred Stock be included in such proposed registration,
the Company shall, at its own expense (except as set forth below), also
register such securities as shall have been so requested in writing;
provided, however, that
(i) the Company shall not be required to include any
of such securities if, by reason of such inclusion, the
Company shall be required to prepare and file a registration
statement on a form promulgated by the Securities and Exchange
Commission different from that which the Company otherwise
would use;
(ii) such owners shall cooperate with the Company in
the preparation of such registration statement to the extent
required to furnish information concerning such owners
therein; and
(iii) if any underwriter or managing agent is
purchasing or arranging for the sale of the securities then
being offered by the Company under such registration
statement, then such owners (A) shall agree to have the
securities being so registered sold to or by such underwriter
or managing agent on terms substantially equivalent to the
terms upon which the Company is selling the securities so
registered, or (B) shall delay the sale of such securities for
the 90 day period commencing with the effective date of the
registration statement;
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further, if the number of shares as to which such owner, and
all other owners of securities of the Company holding
registration rights, has requested registration is in the
aggregate sufficient that such underwriter reasonably believes
in good faith that the inclusion of such securities in the
registration statement may jeopardize the success of the
offering, then such underwriter may require that each such
owner of securities reduce the number of shares of Common
Stock to be registered, with such reduction to be in
proportion to the number of shares as to which each respective
owner has requested registration which may be the entire
number of securities thereof.
(b) In the event that the record owners of a "Sufficient
Number," as defined below, of the Series A Preferred Stock should give
written notice to the Company of their intention to exercise the rights
set forth in this Section 9(b), then the Company shall file a
registration statement in accordance with this Section 9(b). Such
notice(s) by the record owners must, to be effective, (i) be received
by the Company within a 30-day period of each other, and (ii) be given
with respect to securities (the Common Stock issued upon exercise
thereof) that the record owner is not otherwise entitled to sell
publicly in the United States without registration. A record owner may
give such notice repeatedly, but notice by a record owner shall be
ineffective if given with respect to securities which may then be sold
pursuant to a registration statement already filed, and the Company
shall be obliged no more than once to file a registration statement in
accordance with this Section 9(b). The rights provided record owners by
this Section 9(b) are in addition to those provided by Section 9(a).
For the purposes hereof, a Sufficient Number of the Series A Preferred
Stock means in excess of 51% of the Common Stock issued or issuable,
upon exercises of the Series A Preferred Stock issued pursuant to this
agreement, with all outstanding Series A Preferred Stock issued
pursuant to this agreement deemed exercised. Unless the record owner's
notice specifically states otherwise, it shall be deemed to be a notice
with respect to the Common Stock issuable upon exercise thereof. After
receipt of such notice from a Sufficient Number, if received at any
time (i) after the expiration of 365 days from the date hereof and
prior to two years after the issuance of the Series A Preferred Stock,
or (ii) if the Company has a annual run rate of revenue less than
$30,000,00 as of the date hereof, after the expiration of seven (7)
months from the date hereof and prior to two years after the issuance
of the Series A Preferred Stock, the Company shall then, at its own
expense (except as set forth below), register such securities as were
the subject of the notice by record owners of a Sufficient Number;
provided, however, that
(i) such owners shall cooperate with the Company in
the preparation of such registration statement to the extent
required to furnish information concerning such owners
therein; and
(ii) if any underwriter or managing agent is
purchasing or arranging for the sale of the securities then
being offered by the Company under another registration
statement previously filed or filed
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within 30 days after the notice by the record owners of a
Sufficient Number, then such owners (A) shall agree to have
the securities being otherwise registered sold to or by such
underwriter or managing agent on terms substantially
equivalent to the terms upon which the Company is selling the
securities otherwise registered, or (B) shall delay the sale
of such securities for the 90 day period commencing with the
effective date of the other registration statement.
(c) In connection with the filing of a registration statement
pursuant to Section 9(a) or 9(b), the Company shall:
(i) notify such owners as to the filing thereof and
of all amendments thereto filed prior to the effective date of
said registration statement;
(ii) notify such owners, promptly after it shall have
received notice thereof, of the time when the registration
statement becomes effective or any supplement to any
prospectus forming a part of the registration statement has
been filed;
(iii) prepare and file without expense to such owners
any necessary amendment or supplement to such registration
statement or prospectus as may be necessary to comply with
Section 10(a)(3) of the Act or advisable in connection with
the proposed distribution of the securities by such owners;
(iv) take all reasonable steps to qualify the shares
of Common Stock being so registered for sale under the
securities or blue sky laws in such states, but only in such
states, as the Company would qualify the sales of its
securities absent any registration of the shares of Common
Stock issued or issuable hereunder, in the case of a
registration pursuant to Section 9(a); or in such states as
the record owners may reasonably request, in the case of a
registration pursuant to Section 9(b);
(v) notify such registered owners of any stop order
suspending the effectiveness of the registration statement and
use its reasonable best efforts to remove such stop order; and
(vi) undertake to keep said registration statement
and prospectus effective until the earlier of (A) one year
from the effective date thereof (provided, that if the Holders
are required to delay the sale of the securities pursuant to
Section 9(a)(iii)(B) or 9(b)(ii)(B) hereof, then such period
shall be extended by the amount of such delay), or (B) the
date the Series A Preferred Stock or shares of Common Stock
are sold or become available for public sale without
restriction under the Act; provided, however, that such
undertaking shall apply only to the extent that the Company is
permitted to register such securities for continuous sale
under Rule 415 of the General Rules promulgated under the
Securities Act of 1933, under any successor provision, or
under authoritative interpretations of applicable law.
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(d) The record owners of the shares of Common Stock being
registered under this Section 9 agree to pay all of the underwriting
discounts and commissions, registration fees and their own counsel fees
with respect to the securities owned by them and being registered. The
Company agrees that the costs and expenses which it is obligated to pay
in connection with a registration statement to be filed pursuant to
Section 9(a) or 9(b) hereof include, but are not limited to, the fees
and expenses of counsel for the Company, the fees and expenses of its
accountants and all other costs and expenses incident to the
preparation, printing and filing under the Act of any such registration
statement, each prospectus and all amendments and supplements thereto,
the costs incurred in connection with the qualification of such
securities for sale in a reasonable number of states, including fees
and disbursements of counsel for the Company, and the costs of
supplying a reasonable number of copies of the registration statement,
each preliminary prospectus, final prospectus and any supplements or
amendments thereto to such registered owners.
10. In connection with the obligation of the Company to register shares
of Common Stock pursuant to the provisions of Section 9 hereof, the Company and
each Holder agree as follows:
(a) The Company hereby agrees to indemnify and hold harmless
each Holder and each person who controls each Holder within the meaning
of Section 15 of the Act or Section 20 of the Securities Exchange Act
of 1934 (the "Exchange Act") from and against any and all losses,
claims, damages, liabilities or actions to which each Holder or they or
any of them may become subject under the Act, the Exchange Act or
otherwise and to reimburse the persons indemnified above for any legal
or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them in connection with any
litigation or proceeding or threatened litigation or proceeding,
whether or not resulting in any liabilities, but only insofar as such
losses, claims, damages, liabilities or actions arise out of, or are
based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the registration statement with respect to
the shares of the Common Stock (or incorporated therein by reference)
or any amendment or supplement thereto (such registration statement,
together with any such amendments or supplements, is referred to herein
as the "Registration Statement"), or the omission or alleged omission
to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or (ii)
the employment of the Company of any device, scheme or artifice to
defraud, or the engaging by the Company in any act, practice or course
of business which operates or would operate as a fraud or deceit, or
any conspiracy with respect thereto, in which the Company shall
participate, in connection with the sale pursuant to the Registration
Statement of any of the securities registered thereby; provided,
however, that the indemnity agreement contained in this paragraph (a)
shall not extend to any indemnified person in respect of any such
losses, claims, damages, liabilities or actions arising out of, or
based upon, any such untrue statement or alleged untrue statement or
any such omission or alleged omission, if such statement or omission
was made in reliance upon information furnished in writing to the
Company by such person
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specifically for use in connection with the preparation of the
Registration Statement. The Company agrees to pay any legal and other
expenses for which it is liable under this paragraph (a) from time to
time (but not more frequently than monthly) within 30 days after its
receipt of a xxxx therefor.
(b) Each Holder agrees to indemnify and hold harmless the
Company, its directors, its officers who shall have signed the
registration statement, each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the
Company to each Holder but in each case to the extent, and only to the
extent, that any statement in or omission from or alleged omission from
the registration statement, any preliminary prospectus, the prospectus
or any amendment or supplement thereto was made in reliance upon
information furnished in writing to the Company by such Holder
specifically for use in connection with the preparation of the
registration statement, any preliminary prospectus or the prospectus or
any such amendment or supplement thereto. Each Holder agrees to pay any
legal and other expenses for which it is liable under this paragraph
(b) from time to time (but not more frequently than monthly) within 30
days after its receipt of a xxxx therefor.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing paragraphs (a) or (b) (an
"Indemnified Party") in respect of which indemnity may be sought
against a person granting indemnification (an "Indemnifying Party")
pursuant to such subsections, such Indemnified Party shall promptly
notify such Indemnifying Party in writing of the commencement thereof;
but the omission so to notify the Indemnifying Party of any such action
shall not release the Indemnifying Party from any liability it may have
to such Indemnified Party otherwise than on account of the indemnity
agreement contained in paragraphs (a) or (b). In case any such action
is brought against an Indemnified Party and it notifies an Indemnifying
Party of the commencement thereof, the Indemnifying Party against which
a claim is to be made will be entitled to participate therein, and, to
the extent that it may wish, to assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Party, provided,
however, that if the defendants in any such action include both the
Indemnified Party and the Indemnifying Party and the Indemnified Party
shall have reasonably concluded based upon advice of counsel that there
may be legal defenses available to it and/or other Indemnified Parties
which conflict with those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to
assume such legal defenses and otherwise to participate in the defense
of such action on behalf of such Indemnified Party or Parties. Upon
receipt of notice from the Indemnifying Party to such Indemnified Party
of its election so to assume the defense of such action and approval by
the Indemnified Party of counsel, the Indemnifying Party will not be
liable to such Indemnified Party under this agreement for any legal or
other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof unless (i) the Indemnified Party
shall have employed such counsel in connection with the assumption of
legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate
counsel), (ii) the Indemnifying Party shall not have employed counsel
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reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party within a reasonable time after notice of commencement
of the action or (iii) the Indemnifying Party has authorized the
employment of such counsel for the Indemnified Party at the expense of
the Indemnifying Party. An Indemnifying Party shall not be liable for
any settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in
paragraph (a) is unavailable to a Holder in accordance with its terms.
The Company and each Holder shall contribute to the aggregate losses,
claims, damages and liabilities of the nature contemplated by said
indemnity agreement incurred by each Holder based on the relative fault
of the Company on the one hand, and each Holder on the other hand, in
connection with the statements or omissions which resulted in such
losses, claims, damages and liabilities. The relative fault shall be
determined by reference to, among other things, whether in the case of
an untrue statement or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact, such
statement or omission relates to information supplied by the Company or
such Holder and the party's relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement
or omission. The amount paid or payable by the Indemnified Party as a
result of the losses, claims, damages, or liabilities referred to above
in this paragraph shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending against or appearing as a third party
witness in any such action or claim. Notwithstanding the provisions of
this paragraph, if a Holder is found to be guilty or fraudulent
misrepresentation within the meaning of Section 11(f) of the Act, it
shall not be entitled to contribution from the Company unless the
Company is also found to be guilty of such fraudulent
misrepresentation.
11. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
physically delivered; delivered by overnight delivery, confirmed telecopy,
telegram or courier; or three days after having been deposited in the United
States Mail, as certified mail with return receipt requested and with postage
prepaid, addressed to the recipient at the address listed at the top of the
first page of this Agreement. Any of the foregoing addresses may be changed by
giving notice of such change in the foregoing manner, except that notices for
changes of address will be effective only upon receipt.
12. Miscellaneous.
(a) Assignment. This Agreement and the rights granted
hereunder may not be assigned in whole or in part by any of the parties
without the prior written consent of the other parties.
(b) Further Assurances. All parties hereto shall execute and
deliver such other instruments and do such other acts as may be
necessary to carry out the intent and purposes of this Agreement.
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(c) Gender. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or
neuter forms and the singular form of nouns and pronouns shall include
the plural and vice versa.
(d) Captions. The captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit,
extend or prescribe the scope of this Agreement or the intent of any of
the provisions hereof.
(e) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter
hereof. It supersedes all prior negotiations, letters and
understandings relating to the subject matter hereof.
(f) Amendment. This Agreement may not be amended, supplemented
or modified in whole or in part except by an instrument in writing
signed by the party or parties against whom enforcement of any such
amendment, supplement or modification is sought.
(g) Choice of Law. This Agreement will be interpreted,
construed and enforced in accordance with the laws of the State of
Florida.
(h) Effect of Waiver. The failure of any party at any time or
times to require performance of any provision of this Agreement will in
no manner affect the right to enforce the same. The waiver by any party
of any breach of any provision of this Agreement will not be construed
to be a waiver by any such party of any succeeding breach of that
provision or a waiver by such party of any breach of any other
provision.
(i) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality
or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
(j) Enforcement. Should it become necessary for any party to
institute legal action to enforce the terms and conditions of this
Agreement, the successful party will be awarded reasonable attorneys'
fees at all trial and appellate levels, expenses and costs. Venue for
any such action, in addition to any other venue permitted by statute,
will be Broward County, Florida.
(k) Binding Nature. This Agreement will be binding upon and
will inure to the benefit of any successor or successors of the parties
to this Agreement.
(l) Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of
which together will constitute one and the same instrument.
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(m) Construction. This Agreement shall be construed within the
fair meaning of each of its terms and not against the party drafting
the document.
The parties, as evidenced by their signatures below, acknowledge that
this Agreement has been presented to their attorneys and that their attorneys
have had the opportunity to review and explain to them the terms and provisions
of the Agreement, and that they fully understand those terms and provisions.
IN WITNESS WHEREOF, the parties have respectively caused this Agreement
to be executed on the date first above written.
Seller:
The Company
Metropolitan Health Networks, Inc., a Florida
corporation
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxx, President
Purchaser:
/s/ Xxxx Xxx Xxxxx
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Xxxx Xxx Xxxxx
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