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EXHIBIT 10.1
AGREEMENT
AND
PLAN OF DISTRIBUTION
BETWEEN
GHS, INC.
AND
U.S. NEUROSURGICAL, INC.
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AGREEMENT AND PLAN OF DISTRIBUTION
THIS AGREEMENT AND PLAN OF DISTRIBUTION ("Agreement") is made as of May
27, 1999 by and between GHS, INC., a Delaware corporation (the "Company"), and
U.S. NeuroSurgical, Inc., a Delaware corporation and a wholly-owned subsidiary
of the Company ("USN").
RECITALS
(i) The Company, via its wholly owned subsidiary, USN, provides
management and financing services to the health care industry;
(ii) The Company has determined that it is in its own and its
shareholders' long-term best interests that the Company be restructured
into two publicly held companies:
(1) the Company, which will, following the Effective Date
(as defined below), provide internet related services; and
(2) USN, which will continue to own and operate
stereotactic radiosurgery centers, utilizing the Gamma Knife
technology, including the two Gamma Knife centers it currently
owns and operates (the "Gamma Knife Business");
(iii) To accomplish the restructuring, the Company desires to
distribute (the "Distribution") to each shareholder of the Company one
share of the common stock, $.01 par value, of USN (the "USN Common
Stock") for each one share of the Common Stock, $.01 par value, of the
Company (the "Company Common Stock") owned by such shareholder.
(iv) The Company and USN desire to provide in this Agreement for
the Distribution of USN Common Stock.
(v) The Company and USN also desire to allow for certain other
transactions, and to make provision for certain on-going relationships
between them concerning delivery of services, indemnification and other
matters.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. THE PLAN OF DISTRIBUTION.
1.1 Transactions Prior to Distribution.
1.1.1 Assets and Liabilities of USN; Other Transactions. On or prior to
date hereof, the Company has transferred to USN all assets and liabilities of
the Company related to the Gamma Knife Business and transferred certain other
assets and liabilities of the Company to USN pursuant to the Assignment and
Assumption Agreement, dated as of May 27, 1999, between USN and the Company (the
"Assignment and Assumption Agreement").
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1.1.2 The Information Statement. The Company will prepare for
distribution to its shareholders, in accordance with the Securities Act of 1933,
as amended (the "1933 Act"), the Securities Exchange Act of 1934, as amended
(the "1934 Act") and the rules and regulations thereunder, a registration or
information statement, as the case may be, required to be delivered thereunder
(the "Statement"), identifying and describing the Distribution and the reasons
therefor. The Statement will be sent to all Company shareholders on the date
established by the Company's Board of Directors (the "Company Board"), pursuant
to Section 1.1.3 (the "Record Date"), and will provide that the Distribution
will be effective as of a certain date (the "Effective Date").
1.1.3 Record Date. The Company Board, or, if so directed by resolution of
the Company Board, a Committee appointed for such purposes (the "Committee")
shall set the Record Date on which a record of the Company shareholders shall be
taken so as to determine which shareholders shall be provided the Statement and
receive the Distribution.
1.1.4 Stock Split. The Board of Directors of USN (the "USN Board") shall
take all actions necessary to cause a stock split, in the form of a stock
dividend, the effect of which will be that as of the Record Date the number of
shares of USN Common Stock held by the Company will equal exactly the number of
shares of Company Common Stock held by all shareholders of the Company.
1.1.5 Effective Date. The Company Board shall establish the Effective
Date upon which the Distribution shall take place and the spin off shall be
effective, provided that such date shall be identified in the Information
Statement and shall be no fewer than 20 days following the Record Date. In the
event for any reason that the Company Board determines to postpone the spin off,
the Effective Date shall be the date rescheduled by the Company Board to be the
date upon which the Distribution shall take place.
1.2 The Distribution.
1.2.1 Distribution of USN Common Stock. The Company shall as soon as
practical after the Effective Date distribute to the Company shareholders who
held Company Common Stock on the Record Date certificates representing the
shares of USN Common Stock held by the Company in accordance with Section 1.1.4
above on the basis of one share of USN Common Stock for each one share of the
Company Common Stock held by such shareholder.
1.2.2 Conditions. The consummation of this Agreement is subject to the
following conditions:
(a) The Company and USN shall have obtained all orders, rulings,
consents or approvals, governmental or otherwise, necessary to permit
them to perform this Agreement in accordance with its terms.
(b) On the Effective Date, each party shall furnish to the other
all such documents and certificates, including assignments and
conveyances, as shall, in the opinion of counsel, be required to
consummate this Agreement.
(c) The USN Common Stock shall have been registered under the 1934
Act.
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1.3 Termination and Amendment. Notwithstanding the approval of this Agreement
by the Company Board and the USN Board, at any time prior to the Effective
Date, this Agreement may be terminated, or the Effective Date may be delayed,
by the Company Board acting in its sole discretion, and the terms hereof may be
amended by the mutual consent of the Company Board and the USN Board.
2. PROVISION OF SERVICES AND SPECIFICATION OF ON-GOING RELATIONSHIPS.
2.1 Services. The following terms hereof shall apply with respect to the
services to be provided between and among the parties (collectively,
"Services").
2.1.1 General Assistance. From and after the Effective Date for a period
of two (2) years, the Company and USN shall generally make their respective
employees available to each other as necessary to support the respective
activities of each party in areas including, without limitation, (a) advice and
services relating to legal matters, (b) accounting, (c) taxation and financial
services, and (d) human resources.
2.1.2 Exceptions to Requirement to Provide Services. Neither the Company
nor USN shall be obliged to provide Services to the other if:
2.1.2.1 doing so would unreasonably interfere with the performance
by any employee of services for his employer or otherwise cause
unreasonable burden on the party otherwise obliged to provide Services;
2.1.2.2 it is not in a position to provide such Services by reason
of an absence of past participation, involvement or familiarity with such
matters or the absence of personnel competent to perform such services;
or
2.1.2.3 the performance of such Service presents an unavoidable
conflict of interest between the Company and USN.
2.1.3 Payment for Services. Each party shall be entitled to receive
payment from the other party for the reasonable costs and expenses of providing
such services.
2.2 Access to Information and Witnesses.
Subsequent to the Distribution, each of the Company and USN may have in
its possession or under its control (or the control of persons or firms which
have rendered services to or otherwise done business with it) books, records,
contracts, instruments, data and other information (collectively, "Information")
which may prove necessary to the other in connection with the other's business.
Accordingly, at all times subsequent to the Record Date, (i) the Company agrees
to provide to USN, and USN agrees to provide to the Company, upon the other's
request, at all reasonable times, full and complete access to (including access
to persons or firms possessing Information), and duplication rights with respect
to, any and all such Information as the other may reasonably request and require
in the conduct of its business; and (ii) the Company agrees to use its best
efforts to make available to USN, and USN agrees to use its best efforts to make
available to the Company, upon the other's request, their respective officers,
directors, employees and agents as witnesses to the extent
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that such persons may reasonably be required in connection with any legal,
administrative or other proceedings in which USN or the Company, as the case may
be, may from time to time be involved. "Information" shall include without
limitation information sought for audit, accounting, regulatory filing, claims,
litigation and tax purposes as well as for purposes of fulfilling disclosure and
reporting obligations under federal and state securities laws. The party
providing Information or making witnesses available shall be entitled to receive
from the other party, upon the presentation of invoices therefor, payment as
calculated in Section 2.1.3 above. This provision is intended for the
convenience of the parties in administrative matters, and all information that
is by its nature privileged or confidential will be subject to release only in
the event a confidentiality agreement reasonably acceptable to the releasing
party is executed at the time of the release.
2.3 Mail and Other Items.
Subsequent to the Distribution, each of the Company and USN may receive
mail, deliveries, faxes, email, packages and other communications properly
belonging to the other. Accordingly, at all times subsequent to the Record Date,
each of the Company and USN authorizes the other to receive and open mail,
deliveries, faxes, email, packages and other communications received by it and
not unambiguously intended for the other party or any of the other party's
officers and/or directors specifically in their capacities as such, and to
retain the same to the extent that they relate to the business of the receiving
party. To the extent that they do not relate to the business of the receiving
party and do relate to the business of the other party, or to the extent that
they relate to both businesses, the receiving party shall promptly contact the
other party for delivery instructions and such mail, telegrams, packages or
other communications (or, in case the same relate to both businesses, copies
thereof) shall promptly be forwarded to the other party in accordance with its
delivery instructions. The provisions of this Section 2.3 are not intended to
and shall not be deemed to constitute an authorization by either the Company or
USN to permit the other to accept service of process on its behalf and neither
party is nor shall be deemed to be the agent of the other for service of process
purposes.
2.4 Indemnification.
2.4.1 USN shall be liable for all liabilities and obligations retained or
assumed by USN pursuant to the Assignment and Assumption Agreement
(collectively, the "USN Liabilities"); provided that liabilities and obligations
in respect of taxes shall be governed by the terms of the Tax Matters Agreement
(as defined in Section 3.1). The Company shall be liable for all liabilities and
obligations retained or assumed by the Company pursuant to the Assignment and
Assumption Agreement (collectively, the "Company Liabilities"); provided that
liabilities and obligations in respect of taxes shall be governed by the terms
of the Tax Matters Agreement. USN shall each be responsible for all
"Distribution Liabilities" (defined as expenses, costs, or liabilities directly
related to the Distribution) which are incurred or accrued prior to or following
the Effective Date; provided that liabilities and obligations in respect of
taxes shall be governed by the Tax Matters Agreement.
2.4.2 USN agrees to indemnify, defend and hold harmless the Company and
its officers, directors, employees, agents and affiliates from and against any
and all losses, liabilities, claims, damages, costs and expenses (including
without limitation reasonable attorneys' fees) arising out of or related in any
manner to the USN Liabilities.
2.4.3 The Company agrees to indemnify, defend and hold harmless USN and
its officers, directors, employees, agents and affiliates from and against any
and all losses, liabilities, claims,
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damages, costs and expenses (including without limitation reasonable attorneys'
fees) arising out of or related in any manner to the Company Liabilities.
2.4.4 If any action is brought or any claim is made against a party or
controlling person with respect to which indemnity may be sought (the
"Indemnified Party"), the Indemnified Party shall, with reasonable promptness
after the receipt of information indicating that an action has been or is likely
to be instituted or a claim has been or is likely to be made, notify the party
from whom indemnification is to be sought (the "Indemnifying Party") in writing
of such action or claim and the Indemnifying Party shall have the obligation to
assume the defense of such action or claim, including the employment of counsel
reasonably satisfactory to the Indemnified Party; provided, however, that the
Indemnifying Party shall not-be entitled to settle such action or claim on
behalf of the Indemnified Party without the prior written consent of the
Indemnified Party, (which consent shall not unreasonably be withheld, if, but
only if, such settlement would not, in addition to the payment of money, impose
an unreasonable and material burden on the Indemnified Party, such as a consent
judgment or injunction). Such Indemnified Party shall have the right to employ
its own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless the employment of such
counsel shall have been authorized in writing by the Indemnifying Party in
connection with the defense of such action or claim or the Indemnifying Party
shall not have employed counsel to take charge of the defense of such action or
claim or such Indemnified Party shall have reasonably concluded that there may
be defenses available to it which are different from or in addition to those
available to the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to direct any different or additional defense of such action
or claim on behalf of the Indemnified Party), in any of which events such fees
and expenses shall be borne by the Indemnifying Party. Except as expressly
provided above, the Indemnifying Party shall not be liable to any Indemnified
Party for legal or other expenses incurred by such Indemnified Party in
investigating, preparing or defending against such action or claim subsequent to
such time as the Indemnifying Party assumes the defense of such action or claim.
Anything in this Section 2.4 to the contrary notwithstanding, no Indemnifying
Party shall be liable for any settlement of any such claim or action effected
without its written consent. In the event that any actions or claims could
result in both parties being liable to the other under these indemnification
provisions, the parties shall endeavor, acting reasonably and in good faith, to
agree upon a manner of conducting the defense and/or settlement of such action
or claim with a view to minimizing the legal expenses and associated costs that
might otherwise be incurred by the parties under the provisions of this Section
2.4.4.
2.4.5 For purposes of this Section 2.4, losses, liabilities, claims,
damages, costs and expenses of past, present or future officers, directors,
employees, agents or subsidiaries of the Company or USN shall be deemed to have
been suffered by the Company or USN, as the case may be.
2.4.6 The indemnification provided for in this Section 2.4 shall be
subject to the following provisions:
2.4.6.1 Any amounts payable from the Company to USN and from USN
to the Company shall first be offset against each other with any net
balance then payable upon demand;
2.4.6.2 The indemnification provisions hereof shall survive the
Effective Date and any investigation made at any time by either of the
parties. In addition, actual prior
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knowledge by the Indemnified Party with respect to any matter as to which
indemnification may be sought shall not constitute a defense to the
Indemnifying Party or otherwise affect the Indemnified Party's rights to
indemnification pursuant to the provisions hereof; and
2.4.6.3 Subject to the provisions of Section 2.4.6.1 and 2.4.6.2
above, the indemnification provisions of this Section 2.4 are made for
the sole benefit of the Company and USN and shall not, except to the
extent expressly stated otherwise herein, inure to the benefit of any
third party.
2.5 Pending Litigation and Significant Obligations.
2.5.1 With respect to all pending litigation and proceedings (the
"Proceedings") relating to the Gamma Knife Business to which the Company has
heretofore been a party and the liability for which will be assumed by USN
pursuant to this Agreement and the Assignment and Assumption Agreement, USN
shall assume and have the sole and exclusive right to direct the defense,
prosecution and/or settlement of the claims involved, including the employment
of counsel (which counsel may be the counsel heretofore used by the Company for
such purpose), and USN shall pay all expenses related thereto. To the extent
that any such expenses are paid by the Company, USN shall promptly reimburse the
Company therefor.
2.5.2 With respect to all significant outstanding contracts, licenses,
guarantees and other obligations relating to the Gamma Knife Business to which
the Company has heretofore been a party and the liability for which will be
assumed by USN pursuant to this Agreement, the parties will endeavor, to the
extent not already provided for, to have USN substituted in the place of and for
the Company (and to have the Company removed) as a party as promptly as is
reasonably practicable.
3. SPECIFIC AGREEMENTS BETWEEN THE PARTIES.
3.1 Tax Matters Agreement. Exhibit 3.1, the Tax Matters Agreement, dated May
27, 1999 (the "Tax Matters Agreement") contains terms that establish the parties
respective rights and obligations concerning tax aspects of the Distribution.
4. MISCELLANEOUS PROVISIONS OF GENERAL APPLICABILITY.
4.1 Entire Agreement.
All prior or contemporaneous oral agreements, contracts, promises,
representations and statements, if any, among the parties hereto, or their
representatives, are merged into this Agreement and this Agreement, together
with the Assignment and Assumption Agreement and the Tax Matters Agreement,
shall constitute the entire agreement and understanding among them with respect
to the subject matter hereof. No modification or waiver of the terms hereof
shall be valid unless in writing signed by the party to be charged and only to
the extent therein set forth.
4.2 Benefit of Agreement.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors; provided, however, that this
Agreement is not assignable, in whole or in part,
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directly or indirectly, by either party hereto without the written consent of
the other which consent shall not be unreasonably withheld.
4.3 Further Documents; Compliance; Governmental Approvals.
Both the Company and USN shall make, execute, acknowledge and deliver
such other instruments and documents, and take all such other actions, as may be
reasonably required in order to effectuate the purposes of this Agreement and to
consummate the transactions contemplated hereby. Both the Company and USN shall,
in connection with entering into this Agreement, performing its obligations
hereunder and taking any and all actions relating hereto, (i) comply with all
applicable laws, regulations, orders and decrees, (ii) obtain all required
consents and approvals and make all required filings with any governmental
agency, other regulatory or administrative agency, commission or similar
authority, and (iii) promptly provide the other with all such information as the
other may reasonably request in order to be able to comply with the provisions
of this section.
4.4 Notices.
All communications hereunder shall be in writing and shall be either
personally delivered or sent by first class mail, national courier services or
facsimile.
4.5 Attorneys' Fees.
In the event that any party maintains or defends any cause of action
against another party to this Agreement, the prevailing party shall be entitled
to recover all reasonable attorneys' fees and costs of litigation and
arbitration.
4.6 Governing Law.
The provisions of this Agreement shall be governed by and construed in
accordance with the laws of the state of New York.
4.7 Headings.
The captions appearing in this Agreement are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
and intent of this Agreement or any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year set forth below.
GHS, INC.
By: /s/ Xxxx Xxxx
-------------------------------------
Name: Xxxx Xxxx
Title: President
U.S. NEUROSURGICAL, INC.
By: /s/ Xxxx Xxxx
-------------------------------------
Name: Xxxx Xxxx
Title: President
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