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EXHIBIT 10.33
THIS AGREEMENT OF PURCHASE AND SALE OF STOCK (this "Agreement"), dated
September ___, 1997, by and among UNITED AMERICAN HEALTHCARE CORPORATION, a
Michigan corporation (the "Seller"), CORPORATE HEALTHCARE FINANCING, INC., a
Michigan corporation (the "Company") and CHF ACQUISITION, INC., a Delaware
corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is the owner of all the issued and outstanding capital
stock of the Company; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, all of the issued and outstanding shares of capital stock
of the Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and in order to set forth the terms and conditions
of the purchase and sale of stock and the manner of carrying the same into
effect, the parties hereto hereby agree as follows:
1. Purchase and Sale of Stock. Subject to and upon the terms and
conditions set forth in this Agreement, at the Closing (as hereinafter defined),
Seller will sell, transfer, convey, assign and deliver to Purchaser (or a
designated affiliate of Purchaser as contemplated by Section 2(b) hereof), and
Purchaser will purchase all of the issued and outstanding shares of capital
stock (the "Stock") of the Company.
2. (a) Purchase Price. In consideration of the sale, transfer,
conveyance, assignment and delivery of the Stock by Seller to Purchaser, and in
reliance upon the representations and warranties made herein by Seller,
Purchaser agrees, in full payment therefor, to deliver to Seller at the Closing
(as herein defined) the sum of Thirty Million Dollars ($30,000,000.00) by wire
transfer or certified or cashier's check (the "Purchase Price").
(b) Acquisition by Affiliates. Notwithstanding anything to the
contrary in this Agreement, Purchaser may cause the Stock to be acquired by one
(1) or more affiliates of Purchaser; provided, however, that Purchaser shall
remain liable for all obligations of Purchaser hereunder. The term "affiliates"
as used in this Section 2(b) shall have the same meaning as set forth under the
definition of "affiliates" in Rule 405 of the Securities Act.
(c) Tax Election. Seller and Buyer hereby agree to make an
election under Section 338(h)(10) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Regulations promulgated thereunder (the "Tax
Election"), with respect to the Stock to be purchased and sold hereunder. In
connection therewith, within thirty (30) days after Closing,
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Seller and Purchaser shall file with the Internal Revenue Service (the "IRS")
and the appropriate state taxing authorities Form 8023-A and any other documents
necessary to make the Tax Election. At least fifteen (15) days prior to
Closing, the Company shall arrange for an appraisal of its tangible and
intangible assets (other than cash and cash equivalents). The parties shall
thereafter allocate (the "Allocation") the Purchase Price in accordance with
Section 338 of the Code and the Regulations promulgated hereunder for purposes
of completing Form 8023. Any dispute regarding the Allocation shall be resolved
by the joint decision of the Baltimore and Detroit offices of Xxxxx Xxxxxxxx,
LLP. The Seller and Purchaser each agree to give notice to the other and to
diligently defend the Allocation on a consistent basis in the event that any
income tax returns of the Seller or Purchaser (including the individual
shareholders of the Purchaser, if Purchaser is an S corporation) is examined by
the IRS or any other taxing authority and the Allocation, or any tax reporting
positions taken with respect thereto, is the subject, in whole or part of each
examination. The parties acknowledge that the effect of the Tax Election will be
to treat the transaction contemplated hereby as an asset sale for state and
federal income tax purposes, but for all other purposes the transaction shall be
treated as a stock purchase. In the event either Seller or Purchaser fails to
make any necessary filing or takes any other action that would cause the
Election to be ineffective, then the party failing to do so shall indemnify the
other party from any additional costs or taxes or loss of deductions, including
interest and penalties, as a result of such failure. Purchaser shall further
indemnify Seller from such additional costs or taxes if the IRS independently
disqualifies the election as a result of any action or inaction by Purchaser.
3. (a) Closing. The closing of the transactions contemplated under
this Agreement (the "Closing") shall take place at the offices of Xxxxxx,
Heyman, Greenberg, Xxxxxxxx & Belgrad, P.A., 10th Floor-Sun Life Building, 00
Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 as soon as practicable, but in
any event no later than the earlier of (i) January 12, 1998 (the "Outside Date")
or (ii) one hundred twenty (120) days after the contingencies described in
Section 15(c)(iv) are satisfied or waived, or at such other time and place as
the parties may agree. Purchaser shall give Seller five (5) days advance
written notice of the date and time of Closing. The day on which the Closing
actually takes place is herein sometimes referred to as the "Closing Date."
(b) Further Action.
(i) Seller, Purchaser and the Company each agree to use all
reasonable good faith efforts to take all actions and to do all things
necessary, proper or advisable to consummate the transactions contemplated
hereby by the Closing Date.
(ii) Seller and the Company, as promptly as practicable,
will use all reasonable efforts to obtain, or cause to be obtained, all consents
of any governmental authority and of any third party (collectively, the
"Consents") necessary to be obtained in order to consummate the sale and
transfer of the Stock pursuant to this Agreement and the consummation of the
other transactions contemplated hereby.
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(iii) Seller and the Company will coordinate and cooperate
with Purchaser in exchanging such information and supplying such assistance as
may be reasonably required by Purchaser in connection with this Agreement and
the consummation of the other transactions contemplated hereby.
(iv) At all times prior to the Closing, Seller and the
Company, on the one hand, and Purchaser, on the other hand, shall promptly
notify the other in writing upon becoming aware of any fact, condition, event or
occurrence that will or may result in the failure to satisfy any of the
conditions precedent to the transactions contemplated by this Agreement as set
forth in Section 15 hereof.
4. Seller's Obligations at Closing; Further Assurances.
(a) At the Closing, Seller agrees to deliver, or cause to be
delivered, to Purchaser (and, as applicable, execute):
(i) stock certificates representing the Stock, duly endorsed
in blank, with signatures guaranteed by a commercial bank satisfactory to
Purchaser, and with all necessary stock transfer stamps, if any, attached;
(ii) resignations of such of the directors and officers of
the Company and Statutory Benefits Management Corporation, a Michigan
corporation ("SBMC"), and United American Network Services, Inc., a Michigan
corporation (collectively the "Subsidiaries") thereof as shall have been
requested by Purchaser which requests shall be at least three (3) days prior to
Closing, effective immediately, which resignations shall include a statement
that the Company is not indebted or obligated to the resigning party in any way
whatsoever, or at the option of Seller and the Company, the Company may remove
such officers who fail to submit their resignation upon request;
(iii) certificates as to the good standing of the Company
and the Subsidiaries, and its payment of franchise taxes and filing of required
reports, from the appropriate officials of the jurisdictions in which the
Company and the Subsidiaries are incorporated or qualified and authorized to do
business as a foreign corporation all dated within thirty (30) days of the
Closing;
(iv) the opinion of Seller's counsel, Xxxxxxx & Xxxxx, P.C.,
in form attached hereto as Exhibit 4(a)(iv).
(vi) a certified copy of resolutions adopted by the
Seller's and the Company's Board of Directors authorizing the execution,
delivery and performance of this Agreement;
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(vii) a copy of the Company's Articles of Incorporation, as
amended, certified by the Office of the Secretary of State of the State of
Michigan, and a true and correct copy of the By-Laws of the Company as certified
by the secretary of the Company;
(viii) a copy of the certificate of incorporation, as
amended, of the Subsidiaries certified by the office of the Secretary of State
of its incorporation (or other applicable governing body), and a true and
correct copy of the By-Laws of each such Subsidiary as certified by the
secretary of each such Subsidiary;
(ix) an Assignment and Assumption Agreement (the "Lease
Assignment") in a form specified by the Landlord for the assignment by Seller to
the Purchaser of the Lease between Baltimore Center Associates Limited
Partnership and the Seller, as amended to the date hereof (the "Lease"), which
Assignment and Assumption Agreement shall be duly executed by Seller;
(x) a release, duly executed by Seller, in form attached
hereto as Exhibit 4(a)(x) pursuant to which Seller shall release the Company
from any and all obligations, except obligations pursuant to a Tax Service
Agreement dated or intended to be dated of even date herewith;
(xi) the certificate required pursuant to Section 15(b)(iv)
hereof;
(xii) all Consents;
(xiii) all other documents and instruments required to be
delivered to Purchaser by Seller and the Company pursuant to this Agreement.
(b) At any time and from time to time after the Closing, at
Purchaser's request and expense, without further consideration, Seller shall
execute and deliver such other additional instruments of sale, transfer,
conveyance, assignment and confirmation and take such other action as Purchaser
may reasonably deem necessary or desirable (i) in order to transfer, convey and
assign to Purchaser, and confirm Purchaser's title to, the Stock and (ii) to put
Purchaser in actual possession and operating control of all of the business,
properties, assets and goodwill of the Company thereof. In addition thereto,
Seller shall take such action and execute such documents or instruments as may
be reasonably requested by Purchaser, and as may be reasonably necessary, in
connection with any governmental or regulatory matters or filings required to be
made by Purchaser in connection with the transactions contemplated hereby.
(c) Notwithstanding anything to the contrary in this Agreement,
this Agreement shall not constitute an agreement to assign or transfer any
instrument, contract, lease, permit or other agreement or arrangement or any
claim, right or benefit arising thereunder or resulting therefrom if an
assignment or transfer or an attempt to make such an assignment or transfer
without the consent of a third party would constitute a breach or violation
thereof or affect adversely the rights of Purchaser or the Company thereunder;
any transfer or assignment to
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Purchaser by Seller of any interest under any such instrument, contract, lease,
permit or other agreement or arrangement that requires the consent or approval
of a third party shall be made subject to such consent or approval being
obtained. In the event any such consent or approval is not obtained on or prior
to the Closing Date, Seller shall continue to use reasonable efforts to obtain
such approval or consent after the Closing Date until such time as such consent
or approval has been obtained.
5. Purchaser's Obligations at Closing.
(a) At the Closing, Purchaser agrees to deliver, or cause to be
delivered, as the case may be, to Seller (and, as applicable, execute):
(i) the Purchase Price as provided in Section 2 hereof;
(ii) a certified copy of resolutions adopted by the Board of
Directors of Purchaser authorizing the execution, delivery and performance of
this Agreement;
(iii) a copy of Purchaser's certificate of incorporation, as
amended, certified by the Office of the Secretary of State of Delaware, and a
true and correct copy of the by-laws of Purchaser as certified by the secretary
of Purchaser;
(iv) an opinion of Purchaser's counsel, Xxxxxx, Heyman,
Greenberg, Xxxxxxxx & Belgrad, P.A., in form attached hereto as Exhibit
5(a)(iv);
(v) a waiver duly executed by Xxxxxxx Xxxxx of any right
that he may have to receive a ten percent (10%) ownership interest in SBMC;
(vi) all other documents and instruments required to be
delivered to Seller pursuant to the provision of this Agreement.
(b) At any time and from time to time after the Closing, at
Seller's request and expense, without further consideration, Purchaser shall
execute and deliver such other additional instruments as Sellers may reasonably
deem necessary to evidence Purchaser's obligations under this Agreement, and
Purchaser agrees to take such actions as may be reasonably necessary to carry
out the purposes and intentions of this Agreement.
6. Representations and Warranties of Seller. Seller represents and
warrants to Purchaser as follows. Whereever herein a representation is made "to
the knowledge of Seller," the knowledge of Seller only shall be deemed to
include the knowledge of Xxxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxxxxxx Xxxxxxxxx,
Xxxx Xxxxxxx and Xxxxx XxXxxx and any attorneys, accountants or financial
institutions with whom the foregoing individuals may have consulted regarding
the Company, and shall be deemed to specifically exclude the knowledge of Xxxxxx
Xxx, Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxxxx Xxxxx and Xxxxxxx X. Xxxxxxx,
and any
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attorneys or accountants with whom the foregoing individuals may have consulted
regarding the Company
(a) Organization, Standing and Qualification. The Company and
each of the Subsidiaries, as the case may be, (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan or the laws of the state or country of its incorporation, as the case
may be; (ii) has all requisite corporate power and authority and is entitled to
carry on its business as now being conducted and to own, lease or operate its
properties in the places where such business is now conducted and such
properties are now owned, leased or operated; and (iii) is duly qualified,
licensed and in good standing as a foreign corporation authorized to do business
in the states listed on Schedule 6(a) annexed hereto, which are the only states
where the failure to be so qualified would have a material adverse effect on the
condition, financial or otherwise, of the Company. The Company has delivered to
Purchaser true and complete copies of (i) the certificate of incorporation of
the Company and all amendments thereto, certified as true and correct by the
Office of the Secretary of State of the State of Michigan, (ii) the certificate
of incorporation of each of the Subsidiaries and all amendments thereto,
certified as true and correct by the Secretary of State of the state of its
incorporation (or other applicable governing body), (iii) the by-laws of the
Company as presently in effect, certified as true and correct by the Company's
secretary and (iv) the by-laws of each subsidiary of the Company as presently in
effect, certified as true and correct by such subsidiary's secretary. For
purposes of Sections 6 through 18 hereof, the term "Company" shall be deemed to
include the Company and each of the Subsidiaries unless the context requires
otherwise.
(b) Subsidiaries. Except the Subsidiaries, (i) the Company has
no subsidiaries; (ii) the Company owns all of the outstanding capital stock of
all of the Subsidiaries; (iii)the Company has no interest, directly or
indirectly, and has no commitment to purchase any interest, directly or
indirectly, in any other corporation or in any partnership, joint venture or
other business enterprise or entity; and (iv) there are no securities of any
subsidiary of the Company directly or indirectly convertible, exercisable or
exchangeable for any of the capital stock of any subsidiary of the Company,
including, but not limited to, any options, warrants, rights, agreements,
understandings or commitments, vested or unvested, of any nature whatsoever
relating to the capital stock of any subsidiary of the Company.
(c) Transactions with Certain Persons. The Company has not
directly or indirectly, purchased, leased from others or otherwise acquired any
property or obtained any services from, or sold, leased to others or otherwise
disposed of any property or furnished any services to, or otherwise dealt with
(except with respect to remuneration for services rendered as a director,
officer or employee of the Company), in the ordinary course of business or
otherwise (i) the Seller, or (ii)any person who is an employee, director or
officer of the Seller, other than Xxxxx X. Xxxxxxxx (the "Seller Related
Parties"). Except as set forth on Schedule 6(c) annexed hereto, the Company
does not owe any amount to, or have any contract with or commitment to the
Seller or the Seller Related Parties. Except as set forth on Schedule 6(c)
annexed hereto, no part of the property or assets of Seller are used by the
Company. Except as set forth on Schedule 6(c) annexed hereto, no
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part of the property or assets of the Company are used by Seller for its benefit
or any purpose not related to the business of the Company.
(d) Execution, Delivery and Performance of Agreement; Authority.
Except as set forth on Schedule 6(d) annexed hereto, neither the execution,
delivery nor performance of this Agreement and all other agreements to which
Seller is a party required to be delivered by Seller pursuant to Section 4(a)
hereof (which documents are hereinafter sometimes collectively referred to as
"Seller's Related Agreements") (i) will, with or without the giving of notice or
the passage of time, or both, conflict with, result in a default, right to
accelerate or loss of rights under, or result in the creation of any lien,
charge or encumbrance pursuant to any provision of the Seller's or the Company's
certificate of incorporation or by-laws or any franchise, mortgage, deed of
trust, lease, license, agreement, applicable law, rule or regulation or any
order, judgment or decree to which Seller or the Company, as the case may be, is
a party or by which any of them may be bound or materially or adversely affected
or (ii) require any consent, authorization, approval or any other action by, or
any notice to, or filing or registration with, any Governmental Authority or
other third party, in any case, which, if not obtained, would have a material
adverse effect upon the Company. Except as set forth on Schedule 6(d) annexed
hereto, no other party, including, without limitation, any present or former
partner, shareholder in common with, or employee of the Company or Seller have,
may or will have any right to any of Seller's interest in the Company or the
proceeds of the sale of the Stock. Except as set forth on Schedule 6(d) annexed
hereto, no Consent is required to be obtained or made by Seller or the Company
in connection with the execution and delivery of this Agreement or the Seller's
Related Agreements and to consummate the transactions contemplated hereby.
Seller and the Company each have the full power and authority to enter into this
Agreement and, as applicable, Seller's Related Agreements and to carry out the
transactions contemplated hereby, as applicable, all proceedings required to be
taken by them to authorize and approve the execution, delivery and performance
of this Agreement and Seller's Related Agreements have been properly taken, and
this Agreement and Seller's Related Agreements constitute valid and binding
obligations of Seller and the Company, enforceable in accordance with their
terms, except that such enforcement may be subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium and similar law
affecting creditors' rights generally. The execution, delivery and performance
of this Agreement and Seller's Related Agreements have been duly authorized, to
the extent required by Applicable Law and by all requisite corporate and
shareholder action of Seller, if necessary.
(e) Capitalization. The authorized capital of the Company
consists of Sixty Thousand (60,000) shares, no par value per share, of which One
Thousand (1,000) shares are issued and outstanding on the date hereof. All of
the shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable. All of the presently authorized,
issued and outstanding shares of capital stock of the Company are owned by
Seller. Except as otherwise disclosed on Schedule 6(e) annexed hereto, there
are no outstanding subscriptions, rights, options, warrants, calls, contracts,
demands, commitments, convertible
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securities or other agreements or arrangements of any character or nature
whatsoever under which the Company or Seller are or may become obligated to
issue, assign or transfer any shares of the capital stock of the Company.
(f) Ownership of the Company's Capital Stock. Seller is the
lawful record and beneficial owner of all of the Company's capital stock free
and clear of any liens, claims, encumbrances or restrictions of any kind.
Neither the Company nor the Seller nor any of their respective Affiliates is a
party to or otherwise subject to any agreement, understanding or arrangement
regarding the transfer, sale, disposition, purchase, acquisition or voting of
the Stock. Upon the delivery thereof to Purchaser at Closing, together with
executed stock transfer forms in respect thereof, Purchaser will acquire good,
marketable and valid title to the Stock free and clear of any liens, claims,
encumbrances or restrictions of any kind.
(g) Financial Statements. Seller has delivered to Purchaser
copies (initialed by the Company's secretary and identified with a reference to
this Section 6(g)) of the following financial statements (hereinafter,
collectively, the "Financial Statements"), copies of which are annexed hereto as
Schedule 6(g), all of which are true, accurate and correct, and have been
prepared in good faith from the books and records of the Company in conformity
with generally accepted accounting principles ("GAAP"), in each case
consistently applied and fairly present the financial position and results of
operations of the Company at such dates and for the periods then ended:
(i) Consolidated Balance Sheets, and related statements of
income, shareholders' equity and cash flows (including the notes thereto) of the
Company audited by Xxxxx Xxxxxxxx LLP as at June 30, 1996, June 30, 1995 and
June 30, 1994 and for the periods then ended; and
(ii) Unaudited Consolidated Balance Sheets and related
statements of income, shareholders' equity and cash flows (including the notes
thereto, if any) of the Company prepared by the Company as of March 31, 1997 and
for the nine (9) month period then ended. (The Balance Sheet and related income
statement for the period ended March 31, 1997 is hereinafter referred to as the
"Balance Sheet" or the "March 31 Balance Sheet" and the date March 31, 1997 is
hereinafter referred to as the "Balance Sheet Date").
(h) Absence of Undisclosed Liabilities. As of the Balance Sheet
Date, except as (i) reflected in the Balance Sheet or (ii) disclosed in the
notes thereto or (iii) set forth on Schedule 6(h) annexed hereto or (iv)
disclosed elsewhere in this Agreement or in the Schedules annexed hereto, or (v)
incurred in the ordinary course of business of the Company by the Company, to
the knowledge of the Seller, the Company had no debts, liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature
whatsoever.
(i) Taxes. (i) Except as set forth on Schedule 6(i) annexed
hereto, all Taxes imposed by the United States or by any foreign country or by
any state, municipality,
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subdivision or instrumentality of the United States or of any foreign country,
or by any other taxing authority, which are due or payable by the Company or the
Subsidiaries, and all interest and penalties thereon, whether disputed or not,
have been paid in full; and all tax returns required to be filed in connection
therewith have been accurately prepared and duly and timely filed prior to the
expiration of any available extension periods. Except as set forth on Schedule
6(i) annexed hereto, the Company is not currently delinquent in the payment of
any foreign or domestic tax, assessment or governmental charge or deposit and
has no tax deficiency or claim outstanding, or, to its knowledge, proposed or
assessed against it, and there is no basis for any such deficiency or claim.
Except as set forth on Schedule 6(i) annexed hereto, there is not now in force
any extension of time with respect to the date on which any tax return was or is
due to be filed by or with respect to the Company. As used in this Agreement,
"Taxes" shall include, without limitation, all federal, state, provincial,
local, foreign or other income, alternative minimum, accumulated earnings,
add-on, personal holding company, franchise, capital stock, net worth, capital,
profits, gross receipt, value added, sales, use, goods and services,
transaction, excise customs duties, transfer, conveyance, mortgage,
registration, stamp, documentary, recording, premium, charges, fees, severance,
environmental (including, taxes under Section 59A of the Code, real property,
gains tax, personal property, ad valorem, intangibles, rent, occupancy, license,
estimated or other similar tax, duty or other governmental charge or assessment
or deficiency thereof, including all interest and penalties thereon and
additional thereto whether disputed or not).
(ii) Except for the Tax Service Agreement described in
Section 4(a)(x) hereof, there are no tax sharing agreements or arrangements or
tax indemnity agreements between the Company and any other person.
(iii) The Company has no liability for the Taxes of any
person (A) under Section 1.1502-6 of the Treasury Regulations promulgated under
the Code (or any similar provision of state, local or foreign law),(B) as a
transferee or successor, C) by contract or (D) otherwise.
(j) Absence of Changes or Events. Except as set forth on Schedule
6(j) annexed hereto, since the Balance Sheet Date, to the knowledge of Seller,
the Company has conducted its business only in the ordinary course and has not:
(i) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations in the ordinary course of business
and consistent with its prior practice, none of which liabilities, in any case
or in the aggregate, materially and adversely affects the business, properties,
assets, liabilities or condition, financial or otherwise, of the Company;
(ii) discharged or satisfied any lien, charge or encumbrance
other than those then required to be discharged or satisfied, or paid any
obligation or liability, absolute, accrued, contingent or otherwise, whether due
or to become due, other than current
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liabilities shown on the Balance Sheet and current liabilities incurred since
the Balance Sheet Date in the ordinary course of business and consistent with
its prior practice;
(iii) declared or made any payment of dividends or other
distribution to its shareholders or upon or in respect, of any shares of its
capital stock, or purchased, retired or redeemed, or obligated itself to
purchase, retire or redeem, any of its shares of capital stock or other
securities;
(iv) mortgaged, pledged or subjected to lien, charge,
security interest or any other encumbrance or restriction any of its property,
business or assets, tangible or intangible;
(v) sold, transferred, leased to others or otherwise
disposed of any of its assets except in the ordinary course of business, or
cancelled or compromised any debt or claim, or waived or released any right of
substantial value;
(vi) issued or sold any shares of its capital stock or other
securities, or issued, granted or sold any options, rights or warrants with,
respect thereto, or acquired any capital stock or other securities of any
corporation or any interest in any business enterprise, or otherwise made any
loan or advance to or investment in any person, firm or corporation;
(vii) entered into any agreement or made any commitment,
whether written or oral, to take any of the types of action described in
subparagraphs (i) through (vi) above.
(k) Litigation. Except as set forth on Schedule 6(k) annexed
hereto, to the knowledge of Seller, there are no claims, charges, legal actions,
suits, arbitrations or other legal or administrative proceedings (or
governmental investigations) nor any order, decree or judgment in progress,
pending or in effect, or, to the knowledge of Seller, threatened against or
relating to the Company, its officers or directors (including, without
limitation, Seller), its properties, assets or business, and except as set forth
on such schedule, Seller does not know of any basis for the same.
(l) Title to Properties. To the knowledge of Seller, the Company
has good, marketable and insurable title to all of the properties and assets it
owns and uses in its business or purports to own, including, without limitation,
those reflected in its books and records and in the Balance Sheet. Except as set
forth on Schedule 6(l) annexed hereto, to the knowledge of Seller, none of such
properties and assets are subject to any loan agreement, conditional sale or
title retention agreement, equipment obligation, lease purchase agreement,
mortgage, indenture, pledge, security agreement, guaranty, lien, charge,
security interest, encumbrance, restriction, lease, license, easement, liability
or adverse claim of any nature whatsoever (excluding trade and account
payables), direct or indirect, whether accrued, absolute,
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contingent or otherwise (collectively, "Encumbrances").
(m) No Guaranties. To the knowledge of Seller, the Company has
not guaranteed the obligations or liabilities of any other person, firm or
corporation, including, but not limited to, the Seller or any of its other
subsidiaries.
(n) Absence of Certain Business Practices. Except as set forth
on Schedule 6(n) annexed hereto, to the knowledge of Seller neither the Seller
nor the Seller Related Parties, nor any other person acting on its behalf, has,
directly or indirectly, given or agreed to give any gift or similar benefit, of
a material nature to any customer, supplier, governmental employee or other
person who is or may be in a position to help or hinder the business of the
Company (or assist the Company in connection with any actual or proposed
transaction) which (i) might subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (ii) if not given in
the past, might have had an adverse effect on the assets, business or operations
of the Company or (iii) if not continued in the future, might adversely affect
the assets, business, operations or prospects or which might subject the Company
to suit or penalty in any private or governmental litigation or proceeding.
(o) Lease. The Lease is legal, valid, binding, enforceable, and
in full force and effect, except as may be limited by bankruptcy, insolvency,
reorganization and similar Applicable Laws affecting creditors generally and by
the availability of equitable remedies. To the knowledge of Seller, neither the
Seller nor the landlord under the Lease is (or upon the consummation of the
transactions contemplated hereby, will be) in default, violation or breach in
any respect under the Lease, and no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both, would constitute a
default, violation or breach in any respect under any Lease. The Lease has not
been pledged, mortgaged, assigned, modified or amended by the Seller. The
Seller has good and valid title to the leasehold estate under the Lease free and
clear of all liens.
(p) Employee Benefit Plans. The only employee benefit plans
sponsored by Seller in which the employees of the Company participate are the
United American Healthcare Corporation Employee's Retirement Plan and the United
American Healthcare Corporation Stock Purchase Plan (the "Benefit Plans"). True
and correct copies of all plan documents with respect to the Benefit Plans are
attached hereto and made a part hereof as Schedule 6(p) (the "Benefit Plan
Documents"). All requirements of the Benefit Plan Documents and applicable law,
including without limitation, the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA"), have been fulfilled in all material respects
by Seller with regard to the Benefit Plans and the administration thereof and
shall continue to be fulfilled through the Closing. With respect to the Benefit
Plans, Seller has not received notice from any present or former employee of the
Company making a claim as a result of a violation by Seller or the Company of
the Benefit Plan Document or ERISA, and Seller does not know of any facts which
would form the basis of such a claim. With respect to the Stock Purchase Plan,
Seller shall refund any contributions
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made by the Company's employees for the period commencing July 1, 1997 as soon
as administratively possible after Closing in accordance with the terms of
Employee Stock Purchase Plan, but not later than ninety (90) days after
Closing.
(q) Disclosure. No representation or warranty by the Seller
contained in this Agreement or in any other document furnished or to be
furnished by the Company or Seller in connection herewith or pursuant hereto
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact required to make the statements herein or
therein contained not misleading or necessary in order to provide a prospective
purchaser of the Stock with adequate information as to the Company and its
condition (financial or otherwise), properties, assets, liabilities, business
and prospects and Seller has disclosed to Purchaser in writing all material
adverse facts known to them related to the financial condition, assets,
liabilities and business of the Company.
7. Representations and Warranties by Purchaser. Purchaser represents and
warrants to Seller as follows:
(a) Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to enter into this Agreement and all
other agreements to which Purchaser is a party required to be delivered by
Purchaser pursuant to Section 5(a) hereof (which documents are hereinafter
sometimes collectively referred to as "Purchaser's Related Agreements") and to
carry out the transactions contemplated by this Agreement. Purchaser has
delivered to Seller copies of Purchaser's certificate of incorporation, and all
amendments thereto, and the by-laws of Purchaser as presently in effect, each
certified as true and correct by Purchaser's secretary.
(b) Execution, Delivery and Performance of Agreement. Neither
the execution, delivery nor performance of this Agreement and Purchaser's
Related Agreements by Purchaser will, with or without the giving of notice or
the passage of time, or both, conflict with, result in a default, right to
accelerate or loss of rights under, or result in the creation of any lien,
charge or encumbrance pursuant to any provision of Purchaser's certificate of
incorporation or by-laws or any franchise, mortgage, deed of trust, lease,
license, agreement, understanding, law, ordinance, rule or regulation or any
order, judgment or decree to which Purchaser is a party or by which it may be
bound or affected. Purchaser has the full power and authority to enter into
this Agreement and to carry out the transactions contemplated hereby, all
proceedings required to be taken by Purchaser to authorize the execution,
delivery and performance of this Agreement and Purchaser's Related Agreements
have been properly taken, and this Agreement and Purchaser's Related Agreements
constitute the valid and binding obligations of Purchaser, enforceable in
accordance with their respective terms, except that such enforcement may be
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium and similar law affecting creditors' rights generally.
(c) Litigation. There is no claim, legal action, suit,
arbitration,
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governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment in progress, pending or in effect or, to Purchaser's
knowledge, threatened against or relating to Purchaser in connection with or
relating to the transactions contemplated by this Agreement and the Purchaser's
Related Agreements and Purchaser does not know or have any reason to be aware
of any basis for the same.
8. Non-Competition.
(a) Non Competition. Seller agrees that it will not solicit any
present, or former customers of the Company in connection with the performance
of any work related directly to the Company's business, or become involved in,
represent in anyway, be connected with or perform any work related to the
business of the Company, in the geographic area designated by a one hundred mile
radius from each of the offices of the Company listed on Schedule 8(a) attached
hereto, for the period from the date of this Agreement until three (3) years
after the Closing Date. Seller agrees that its promise herein made so to
refrain from soliciting customers and from engaging in the business of the
Company means that it will not, directly or indirectly, either on its own
account or as a partner, agent or consultant of or for any person, firm,
association or corporation, or stockholder of any corporation, solicit customers
or engage in the business of the Company, as stated herein. For purposes of
this Agreement, the business of the Company shall be defined as the provision of
services related to self funded health insurance programs (excluding Third Party
Administrative related activities), worker's compensation risk management and
third party liability management.
(b) Records of the Company. The Seller, during the course of its
ownership of the Stock may have worked on and been consulted with respect to
matters for clients of the Company. All such matters are highly confidential.
The Seller acknowledges and agrees that the Seller has not and shall acquire no
rights to any of this information. All records, notes, memoranda, files,
financial statements, client and client lists, brochures, documents and all
other similar material relating to the Company or the business of the Company or
those of its clients (hereinafter referred to as the "Records") which have or
shall come into the possession of the Seller, shall remain and be deemed to be
the property of the Company. The Seller shall return any originals and all
copies of the Records determined to be in its possession and as specifically
requested by Purchaser in writing, delivered to the Company at or after Closing.
(c) Non-Disclosure. Except with the prior written consent of the
Company, which consent is within the sole discretion of the Company, the Seller
agrees that it will not directly or indirectly, disclose or reveal (except as
Seller is required to disclose by court order, summons, subpoena or similar
process of law or to Seller's attorney in connection with the foregoing) to or
use for the benefit of Seller or others, the confidential information of the
Company or its clients including, but not limited to proprietary information,
secrets, the lists of the Company's clients, the lists of employees of the
Company, any secret or confidential information or data regarding the business
of the Company, any secret or confidential information or data concerning the
clients or prospective clients of the Company. Such business
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methods and secrets shall include but are not limited to programs, data systems,
processes, computer programs, computer systems, equipment and configurations,
financial information, pricing policies, names of employees, names of clients,
any information contained on any Records and all other business knowledge and
techniques of the Company.
(d) Remedies. Seller acknowledges that a violation of any of the
agreements or covenants contained in this paragraph 8 by it could cause
irreparable injury to the Purchaser and the Company and there may be no adequate
remedy at law for such violation. In the event of a breach or a threatened
breach by Seller, its officers, directors or employees of the provisions of this
paragraph 8, the Company and/or the Purchaser shall have the right, in addition
to any other remedies available to it at law or in equity, to enjoin the
violating party or any of its representatives, agents, or employees, in a court
of equity from violating any of the provisions hereof.
The parties acknowledge that the restrictions contained herein
are reasonable, but agree that if any court of competent jurisdiction shall hold
such restrictions unreasonable as to time, geographic area, activities, or
otherwise, such restrictions shall be deemed to be reduced to the extent
necessary in the opinion of the court to make them reasonable.
This subsection shall not be construed to limit in any manner
whatsoever any other rights and remedies an aggrieved party may have by virtue
of any breach of this Agreement.
The covenants of the Seller set forth herein are a part of the
essence of this Agreement; they shall be construed as independent of any other
provisions in this Agreement; and the existence of any claim or cause of action
of Seller against the Purchaser, whether predicated on this Agreement or not,
shall not constitute a defense to the enforcement of these covenants.
9. Tax Information; Tax Returns; Disputes; Tax Indemnity.
(a) After the Closing Date, (i) Purchaser shall provide such
assistance as may reasonably be requested by Seller in connection with the
preparation of any tax return, the conduct of any audit or the defense of any
litigation or other proceeding with respect to any Tax liability of the Company
for any period prior to or including the Closing Date, including the period from
July 1, 1997 through the date of Closing, and (ii) Purchaser shall retain, or
shall cause to be retained, for the appropriate period any records or
information that may be relevant to any such return or audit. The assistance
provided for in this Section shall include providing such information as might
reasonably be expected to be of use in connection with any audit or the defense
of any litigation. Any information provided shall be held in confidence by the
recipient thereof and shall not be disclosed by the recipient in any manner
whatsoever and shall not be used by the recipient other than in connection with
such return, audit or litigation without the
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written consent of the supplier of the information, except as required by law.
The term "audit" as used in this Section 9 shall include any inquiry,
examination or other conduct of any taxing authority or any judicial or
administrative proceedings.
(b) The Seller shall prepare and timely file (or cause to be
prepared and timely filed) for all taxable periods ending on or before the
Closing Date, including the period from July 1, 1997 through the Closing Date
all tax returns required to be filed after the Closing Date with respect to
which the Company or the assets of the Company are liable or otherwise in any
way subject; and Seller shall be responsible for and shall pay all Taxes
attributable to such period.
(c) Seller will pay all sales, transfer and documentary taxes, if
any, payable in connection with the sale of Stock to Purchaser hereunder.
Seller shall prepare and file and the Purchaser shall cooperate in the filing of
all returns relating to any tax described in this Section 9(c), if any.
(d) Seller shall be entitled to any refunds or credits of Taxes,
or interest and penalties received by the Company attributable to Taxable
Periods (or portions thereof) ending on or prior to the Closing Date.
10. Indemnification.
(a) Seller hereby indemnifies and agrees to defend and hold
Purchaser harmless from, against and in respect of (and shall, subject to the
other provisions of this Agreement, on demand reimburse Purchaser for):
(i) any and all loss, liability or damage suffered or
incurred by the Company or Purchaser by reason of any untrue representation,
breach of warranty or nonfulfillment of any covenant by Seller or, prior to the
Closing Date, by the Company contained herein or in any certificate, document or
instrument delivered by Seller or the Company to Purchaser hereunder, provided
that, Seller shall not be liable for any loss, liability, or damage suffered by
the Company or Purchaser as a result of any untrue representation or warranty
with respect to the Company, which, when made, was known by the Purchaser,
Xxxxxx Xxx, Xxxxx Xxxxxxxx, Xxxxxxx Xxxxx and/or Xxxxxxx Xxxxxxx, to be
inaccurate or untrue;
(ii) any violation of Seller's obligations under Sections 8
or 9 hereof;
(iii) any and all loss, liability or damage suffered or
incurred by Purchaser by reason of or in connection with any claim for finder's
fee or brokerage or other commission arising by reason of any services alleged
to have been rendered to or at the instance of Seller with respect to this
Agreement or any of the transactions contemplated hereby; and
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(iv) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to (i) through (iii)
above or incurred in investigating or attempting to avoid the same or to oppose
the imposition thereof, or in enforcing this indemnity.
(b) In the event that the Closing occurs, Seller shall not be
entitled to contribution or any other payments from the Company for any amounts
that Seller is obligated to pay pursuant to this Section 10.
(c) Purchaser shall indemnify, defend and hold Seller harmless
from, against and in respect of (and shall, subject to the other provisions of
this Agreement, on demand reimburse it for):
(i) any and all loss, liability or damage suffered or
incurred by Seller by reason of or resulting from any untrue representation,
breach of warranty or non-fulfillment of any covenant or agreement by Purchaser
contained herein or in any certificate, document or instrument delivered to
Seller hereunder.
(ii) any and all liabilities or obligations of Seller
assumed by Purchaser hereunder, including, but not limited to, obligations under
the Lease;
(iii) any and all actual loss, liability or damage suffered
or incurred by Seller by reason of or in connection with any claim for finder's
fee or brokerage or other commission arising by reason of any services alleged
to have been rendered to or at the instance of Purchaser with respect to this
Agreement or any of the transactions contemplated hereby; and
(iv) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to (i) through (iii)
above or incurred in investigating or attempting to avoid the same or to oppose
the imposition thereof, or in enforcing this indemnity; and
(d) Seller, on the one hand, and Purchaser, on the other hand,
shall not be required to indemnify the other under this Section 10 hereof unless
the aggregate amounts for which indemnity would otherwise be due thereunder
exceeds One Hundred Thousand Dollars ($100,000.00) (the "Indemnification
Basket"), in which case Seller, on the one hand, or Purchaser, on the other
hand, shall, as the case may be, be responsible for all such indemnifiable
amounts in excess of the Indemnification Basket due pursuant to this Section 10.
Notwithstanding the foregoing to the contrary, the Indemnification Basket shall
not apply to a breach of a representation, warranty or covenant contained in (i)
Section 6(i) (Taxes) hereof; (ii) Section 9 (Tax Matters) and (iii) Section 8
(Non-Competition) and, in such event, Seller's obligation thereunder shall
indemnify Purchaser therefor from the first dollar.
(e) Any indemnifiable liability or reimbursement under this
Section 10
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shall be limited to the amount of damages (of any nature) subject to
indemnification sustained by a party hereto, net of any applicable insurance
payments actually received, other reimbursement or tax benefit actually realized
by such party.
(f) If a claim by a third party is made against a party hereto
(an "Indemnified Party"), and if an Indemnified Party intends to seek indemnity
with respect thereto under this Section 10, the Indemnified Party shall promptly
notify the party required to indemnify the Indemnified Party pursuant to this
Section 10 (an "Indemnifying Party") of such claim (the "Indemnity Notice");
provided, however, that failure by an Indemnified Party to notify an
Indemnifying Party of such claim shall not effect the Indemnified Party's right
to seek indemnification so long as the Indemnifying Party is not materially
prejudiced by such failure to have been notified of such claim. The
Indemnifying Party shall have ten (10) days after receipt of the Indemnity
Notice to undertake, conduct and control, through counsel of its own choosing
and at its expense, but reasonably acceptable to the Indemnified Party, the
settlement or defense thereof, and the Indemnified Party shall cooperate with it
in connection therewith including execution of all lawful, true and correct
powers of attorney as reasonably required by the Indemnifying Party; provided,
however, that with respect to settlements entered into by the Indemnifying
Party, the Indemnifying Party shall obtain the release of the claiming party in
favor of the Indemnified Party. If the Indemnifying Party undertakes, conducts
and controls the settlement or defense of such claim, the Indemnifying Party
shall permit the Indemnified Party to participate in such settlement or defense
through counsel chosen by the Indemnified Party, providing that the fees and
expenses of such counsel shall be borne by the Indemnified Party. With respect
to indemnification provided for hereunder, the Indemnified Party shall not pay
or settle any such claim so long as the Indemnifying Party is reasonably
contesting any such claim in good faith. Notwithstanding the immediately
preceding sentence, the Indemnified Party shall have the right to pay or settle
any such claims, provided that in such event it shall waive any right to
indemnity therefor by the Indemnifying Party.
(g) Subject to the limitations set forth in Sections 10(d)-(f),
if the Indemnifying Party does not notify the Indemnified Party within fifteen
(15) days after the receipt of the Indemnified Party's notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
Indemnified Party shall have the right to contest, settle or compromise the
claim in the exercise of its good faith reasonable judgment at the expense of
the Indemnifying Party subject to the other terms and provisions of this Section
10.
11. Nature and Survival of Representations and Warranties; Rules
Regarding Indemnification and Other Actions.
(a) All statements, representations, warranties and indemnities
made by each of the parties to this Agreement (and in any schedule or exhibit
annexed hereto) are and shall be true and correct as of the date hereof and as
of the Closing Date, and each of them shall survive the Closing as provided in
section 11(b) hereof and shall be subject to Section 10 hereof.
(b) No claim shall be made or enforced against an Indemnifying
Party,
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whether pursuant to Section 10 hereof or by an action at law or any other action
including, but not limited to, a claim of a breach of a representation and
warranty (collectively, "Other Action") unless and to the extent that the
Indemnity Notice or notice of an Other Action shall have been given by the party
seeking indemnification or instituting an Other Action to the Indemnifying Party
not later than eighteen (18) months after the Closing Date or, (i) with respect
to any claim arising under any Benefit Plans, the date upon which the applicable
statute of limitations has expired, or, (ii) in the case of Taxes, the date upon
which the applicable period of limitation on assessment or refund of any
relevant tax has expired; provided that claims asserted pursuant to an Indemnity
Notice prior to the expiration of the applicable survival period shall survive
until such claim shall be resolved and payment in respect thereof, if any is
owing, shall be made.
12. Conduct of Business Prior to Closing.
(a) Prior to the Closing, the Company shall conduct its business
and affairs only in the ordinary course and consistent with its prior practice
and shall maintain, keep and preserve its business and properties in good
condition and repair and maintain insurance thereon in accordance with present
practices, and Seller and the Company will use their best efforts to preserve
the business of the Company, to keep available to Purchaser the services of the
Company's present officers and employees, to preserve for the benefit of
Purchaser the goodwill of the Company's suppliers and customers and others
having business relations with it, including, without limitation, the following:
(i) Liabilities. Consistent with past practice, the Company
shall pay or discharge its current liabilities when the same become due and
payable, except for such liabilities as may be subject to a good faith dispute
or counterclaim.
(ii) Litigation. Seller shall promptly notify Purchaser of
any lawsuits, claims, proceedings or investigations which after the date hereof
are commenced or, to the knowledge of Seller, threatened against the Company or
against any shareholder, officer, employee, consultant or agent with respect to
the Company or the transactions contemplated by this Agreement.
(iii) Compliance with Laws. Seller and the Company will
take such action as may be necessary to materially comply with all laws,
statutes, rules and regulations applicable to it as they relate to the conduct
of the Company's business.
(iv) Continued Effectiveness of Representations and
Warranties. Seller shall use its best efforts in its capacity as the sole
shareholder and the employer of a majority of the Board of Directors of the
Company to conduct the business of the Company in such a manner so that the
representations and warranties contained in Section 6 hereof shall continue to
be true and correct on and as of the Closing Date as if made on and as of the
Closing Date. Seller and the Company shall promptly give to Purchaser notice of
any event, condition or circumstance occurring from the date hereof through the
Closing Date which would constitute a
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violation or breach of their representations, warranties, covenants or
agreements contained in this Agreement.
(b) Without limiting the generality of Section 12(a) hereof,
prior to the Closing, Seller or the Company will not without Purchaser's prior
written approval:
(i) change the Company's certificate of incorporation or
by-laws or merge or consolidate or obligate the Company to do so with or into
any other entity;
(ii) enter into any contract, agreement, commitment or other
understanding or arrangement which is not in the ordinary course of the business
of the Company; or
(iii) perform, take any action or incur or permit to exist
any of the acts, transactions, events or occurrences of the type described in
Section 6(j) hereof which would have been inconsistent with the representations
and warranties set forth therein had the same occurred after the Balance Sheet
Date and prior to the date hereof, or which would not be in the ordinary course
of the business of the Company.
(c) Seller shall give Purchaser prompt written notice of any
change in any of the information contained in the representations and warranties
made in Section 6 hereof or the Schedules referred to therein which occurs prior
to the Closing.
13. Access to Information and Documents. So long as this Agreement is
in effect, Seller and the Company will give Purchaser and Purchaser's attorneys,
accountants, consultants, employees, agents and other representatives full and
immediate access to the Company's personnel and all properties, documents,
contracts, information, books, work papers and records of the Company, including
the electronic media format of such items, and will furnish Purchaser with
copies of such documents (certified by the Company's officers if so requested)
and with such information with respect to all properties, assets, books,
contracts, commitments, reports and records as Purchaser may from time to time
request, including, without limitation, such books, records, documents and any
other information relating to any predecessor to the Company's business, and
Purchaser will not improperly disclose the same. Any furnishing of such
information to Purchaser or any investigation by Purchaser shall not affect
Purchaser's right to rely on any representations and warranties made in this
Agreement. Seller shall reasonably cooperate with Purchaser to permit Purchaser
to start maintaining the Company's financial books and records on Purchaser's
computer system and software as of the Closing Date, including providing the
information in such electronic format as is required by the Purchaser. Seller
shall permit Purchaser to use Seller's "Platinum" accounting software for 30
days after Closing, for a fee payable by Purchaser to Seller at Closing in the
amount of Five Thousand Dollars ($5,000.00).
14. Exclusive Dealing. In consideration of the substantial expenses
which Purchaser will incur in connection with the consummation of the
transaction contemplated
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hereby, until the earlier to occur of (i) the date this Agreement is terminated
under Section 16 hereof, or (ii) the Outside Date (as herein defined), Seller
shall not, and shall cause the Company not to, directly or indirectly, through
any representative or otherwise, solicit or entertain offers from, negotiate
with, or in any manner encourage, discuss, accept or consider any proposal of
any other person relating to the acquisition of the Stock, the Company's assets
or business, in whole or in part, whether through a purchase, merger,
consolidation or other business combination, except for any proposed transaction
under active consideration as of July 25, 1997 with respect to all of the
Seller's business. During the period described above, Seller shall promptly
inform Purchaser of any inquiries or proposals received with respect to the
foregoing.
15. Conditions Precedent.
(a) Conditions to Obligations of Each Party. The obligations of
the parties to consummate the transactions contemplated hereby shall be subject
to the fulfillment (or waiver by Purchaser and Seller) on or prior to the
Closing Date of the condition that: the transactions contemplated hereby shall
not have been restrained, enjoined or otherwise prohibited by any applicable
law, including any order, injunction, decree or judgment of any court or other
governmental authority; no court or other governmental authority shall have
determined any applicable law to make illegal the consummation of the
transactions contemplated by the Agreement or the transactions contemplated
hereby; and no proceeding with respect to the application of any such applicable
law to such effect shall be pending.
(b) Conditions to Obligations of the Purchaser. All obligations
of the Purchaser hereunder are subject, at the option of Purchaser, to the
fulfillment of each of the following conditions at or prior to the Closing or
such earlier date as set forth herein, and Seller and the Company shall exert
their test efforts to cause such conditions to be fulfilled:
(i) Unless otherwise provided herein, all representations
and warranties of Seller and the Company contained herein or in any document
delivered pursuant hereto shall be true and correct in all material respects
when made and, unless otherwise provided herein, shall be deemed to have been
made again at and as of the date of the Closing, and shall then be true and
correct in all material respects.
(ii) All covenants, agreements of this Agreement to be
performed before the Closing shall have been performed in all material respects.
(iii) Since the date of this Agreement, there shall not
have occurred any material adverse change in the condition (financial or
otherwise), business, properties, assets or prospects of the Company.
(iv) There shall be delivered to Purchaser a certificate
executed by the Seller, dated the date of the Closing, certifying the conditions
set forth in paragraphs (i), (ii) and (iii) of this Section 15(b) have been
fulfilled.
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(v) All documents required to be delivered to Purchaser
pursuant to Section 4 of this Agreement or otherwise in connection with this
Agreement at or prior to the Closing shall have been so delivered.
(vi) On or before ninety (90) days after the satisfaction of
Seller's condition set forth in Section 15(c)(iv), Purchaser shall have obtained
equity or debt financing of the Purchase Price and Purchaser's working capital
requirements, in such amounts and upon such terms and conditions, as are
satisfactory to the Purchase in its sole discretion.
(vii) Purchaser shall have received all Consents.
(c) Conditions to Obligations of Seller. All obligations of
Seller at the Closing are subject, at the option of Seller, to the fulfillment
of each of the following conditions at or prior to the Closing or such earlier
date as set forth herein, and Purchaser shall exert its best efforts to cause
each such condition to be so fulfilled:
(i) All representations and warranties of Purchaser
contained herein or in any document delivered pursuant hereto shall be true and
correct in all material respects when made and shall be deemed to have been made
again at and as of the date of the Closing, and shall then be true and correct
in all material respects.
(ii) All obligations required by the terms of this Agreement
to be performed by Purchaser at or before the Closing shall have been duly and
properly performed in all material respects.
(iii) There shall be delivered to the Seller a certificate
executed by the President and Secretary of Purchaser, dated the date of the
Closing, certifying the conditions set forth in paragraphs (i) and(ii)of this
Section 15(c) have been fulfilled.
(iv) On or before September 12, 1997, Seller shall have
obtained approval of its Board of Directors, an affirmative fairness opinion
from Xxxxx & Co., Detroit, Michigan and any lender approval specifically
required under any loan documents to which Seller is a party.
(v) Purchaser shall have delivered to the Seller, a release
from Xxxxx X. Xxxxxxxx ("Xxxxxxxx") and Xxxxx X. Xxxxxxxx of any obligation of
Seller pursuant to their respective Employment Agreements with the Company dated
May 7, 1993, provided that it shall be a condition of the release by Xxxxxxxx
that Seller agree to (i) nominate and recommend to Seller's shareholders the
election of Xxxxxxxx for one (1) additional term of three (3) years as a member
of the Seller's Board of Directors (the "Board") prior to the expiration of his
current term, and (ii) use Seller's best efforts to cause its shareholders to
elect Xxxxxxxx as a member of the Board to the additional term described above.
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(vi) All documents required to be delivered to the Seller
pursuant to Section 5 of this Agreement or otherwise in connection with this
Agreement at or prior to the Closing shall have been so delivered.
16. (a) Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(i) by the written agreement of Purchaser and the Seller;
(ii) by either the Seller or Purchaser by written notice to
the other party if the transactions contemplated hereby shall not have been
consummated pursuant hereto by 5:00 p.m. E.T. on January 6, 1998 (the "Outside
Date"), unless such date shall be extended by the mutual written consent of the
Seller and Purchaser.
(iii) by the Purchaser by written notice to the Seller if
(A) the representations and warranties of the Seller shall not have been true
and correct in all respects as of the date when made, (B) Seller defaults under
any of the terms and conditions contained in this Agreement and such default is
not cured within ten (10) days after written notice from Purchaser, or (C) if
any of the conditions precedent set forth in Section 15(b) shall not have been,
or if it becomes apparent that any of such conditions will not be fulfilled by
the Outside Date, provided that with respect to the condition set forth in
Section 15(b)(vi), Purchaser must give the notice of termination on or before
the date fixed for satisfaction of the condition precedent in Section 15(b)(vi),
and if no notice is given, the condition shall be deemed waived.
(iv) by the Seller by written notice to Purchaser if (A) the
representations and warranties of Purchaser shall not have been true and correct
in all respects as of the date when made, (B) Purchaser defaults under any of
the terms and conditions contained in this Agreement and such default is not
cured within ten (10) days after written notice from Seller, or (C) if any of
the conditions precedent set forth in Section 15(c) shall not have been, or if
it becomes apparent that any of such conditions will not be fulfilled by the
Outside Date, provided that with respect to the condition set forth in Section
15(c)(iv), Seller must give the notice of termination on or before the date
fixed for satisfaction of the condition precedent in Section 15(c)(iv), and if
no notice is given, the condition shall be deemed waived.
(b) Effect of Termination. In the event of the termination of
this Agreement pursuant to the provisions of Section 16(a) hereof, this
Agreement shall become null and void and have no further force and effect,
without any liability in respect hereof or of the transactions contemplated
hereby on the part of any party hereto, or any of the directors, officers,
employees, agents, consultants, representatives, advisers, stockholders or
Affiliates of any party hereto, except for any liability resulting from such
party's breach of this Agreement.
(c) Breach. In the event of a breach by a party of the terms and
conditions of this Agreement, which breach is not cured within any applicable
grace or notice
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periods herein contained, the non-breaching party(ies) shall have the right to
exercise any right or remedy permitted under this Agreement or allowed by law or
equity, including the right to recover any and all damages incurred as a result
of the breach, which damages shall be paid within ten (10) days of demand
therefore by the non-breaching party. Additionally, Purchaser shall have the
right to xxx for specific performance in the event of a breach by Seller. In
the event that either party brings an action to enforce the terms and conditions
of this Agreement, the prevailing party in such action shall be entitled to
recover its reasonable attorney's fees and costs in connection therewith.
(d) Break-up Fee. If, as a result of a breach by the Seller, the
Closing does not occur by the Outside Date, and within twelve (12) months after
the Outside Date, either Seller or the Company closes a transaction relating to
the acquisition of any of the Stock or a material portion of the Company's
assets or business (other than in a transaction involving a business combination
of the Seller, including a merger or sale of all or substantially all of the
assets or stock of Seller), in whole or in part, whether through a purchase,
merger, consolidation or other business combination of the Company
(collectively, a "Subsequent Sale"), then, immediately upon such closing, and in
addition to all other remedies herein contained, Seller shall pay (or cause the
Company to pay) to Purchaser the sum of One Million Dollars ($1,000,000) (the
"Break-up Fee"). Notwithstanding the foregoing, such Break-up Fee shall be
payable by Purchaser to Seller in the event that the Closing does not occur as
specified above due to any breach by Purchaser. Additionally, in the event of
termination by Seller under Section 16(a)(iv)(C) as a result of failing to
obtain an affirmative fairness opinion, the Break-up Fee shall be due from
Seller to Purchaser in the event of a Subsequent Sale within the twelve (12)
month period described above at a price equal to or less than Thirty Three
Million Dollars ($33,000,000), provided that at such time, the Company does not
have substantially less book value or annual income than as of the date hereof
or events beyond the control of Seller dictate the sale of the Company at an
amount equal to or less than $33,000,000 (i.e. a material adverse change in the
Seller's financial condition). If Purchaser is not entitled to the Break-up Fee
pursuant to the foregoing sentence, then for a period of one (1) year after the
Outside Date, in the event that Seller or Company receive an offer from an
outside offeror to acquire any or all of the Stock or all or any material part
of the assets of the Company, Seller shall give Purchaser written notice
thereof, and Purchaser shall have a right of first refusal for the purchase upon
the same terms contained in the outside offer, which right of first refusal
shall be exercised by written notice from Purchaser to Seller within thirty (30)
days of the date of Seller's original notice. If Purchaser exercises the
foregoing right of first refusal, then Seller or the Company (as the case may
be) shall be obligated to sell to Purchaser the Stock or assets covered by the
outside offer in accordance with the terms of the outside offer. In the event
that Purchaser does not exercise the right of first refusal, then Seller or the
Company (as the case may be) shall have the right for a period of four months to
sell to the outside offeror the Stock or assets covered by the outside offer in
accordance with the terms of the outside offer, without having to give Purchaser
additional notice.
17. Notices. Any and all notices, demands or requests required or
permitted
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to be given under this Agreement shall be given in writing and sent,
by registered or certified U.S. mail, return receipt requested, by hand, or by
overnight courier, addressed to the parties hereto at their addresses set
forth above or such other addresses as they may from time-to-time designate by
written notice, given in accordance with the terms of this Section, together
with copies thereof as follows:
In the case of Seller: United American Healthcare Corporation
Xxxxxx X. Xxxxx, M.D.
Chairman and Chief Executive Officer
0000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
With a copy to: Xxxx Xxxxx, Esq.
Xxxxxxx & Xxxxx, P.C.
00000 X. Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
If to the Company: CHF ACQUISITION, INC.
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
With a copy to: Xxxxx Xxxxxxxx, Esquire
Xxxxxx, Heyman, Greenberg, Xxxxxxxx
& Belgrad, P.A.
10th Floor, Sun Life Building
00 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
(In addition, without constituting notice hereunder, the parties shall use
reasonable efforts to send by facsimile to counsel for the party to whom notice
is to be sent copies of all notices sent by such party). Notice given as
provided in this Section shall be deemed effective: (i) on the date hand
delivered, (ii) on the first business day following the sending thereof by
overnight courier, and (iii) on the third calendar day (or, if it is not a
business day, then the next succeeding business day thereafter) after the
depositing thereof into the exclusive custody of the U.S. Postal Service.
18. Miscellaneous.
(a) This Agreement, including, without limitation, the schedules
and other documents referred to herein, together with that certain letter of
intent dated July 25, 1997 between the Seller and Purchaser hereto, constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersedes any and all prior agreements, arrangements or
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understandings with respect hereto, and may not be modified or amended except by
a written agreement signed by all of the parties hereto.
(b) No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
(c) This Agreement shall be binding upon and inure to the benefit
of each party hereto, its successors and assigns.
(d) The section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections.
(e) Each party hereto shall cooperate, shall take such further
action and shall execute and deliver such further documents as may be reasonably
requested by any other party in order to carry out the provisions and purposes
of this Agreement.
(f) Except as otherwise provided herein or in agreements
delivered in connection with this Agreement, all legal, accounting and other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party or parties incurring
the same.
(g) This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which taken together shall
constitute one and the same instrument.
(h) This Agreement and all amendments hereto shall be governed
by, construed and enforced in accordance with the internal laws of the State of
Maryland without reference to principles of conflict of laws.
(i) If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision, only to the extent it is invalid or unenforceable, and shall not in
any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.
(j) All schedules and exhibits attached hereto shall be
incorporated by reference herein as if set forth herein in full.
(k) Except as and to the extent required by law, without the
prior written consent of the other party, neither Seller, the Company nor the
Purchaser shall, and each shall direct its representatives not to, directly or
indirectly, make any public comment, statement or communications with respect
to, or otherwise disclose or permit the disclosure of the existence
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of discussions regarding the Agreement, the transaction contemplated hereby or
any of the terms, conditions or other aspects of the Agreement. If any such
disclosure is required by law, in the opinion of counsel for the Purchaser
and/or Seller, as the case may be, each party shall consult with the other
regarding the form and content of the disclosure, and neither party shall make
any disclosure without prior written notice to the other party. Purchaser
hereby acknowledges that Seller is a publicly-traded corporation listed on the
NYSE, and is thereby subject to extensive disclosure requirements regarding its
business. Notwithstanding the foregoing, each party may disclose the existence
of this transaction to its attorneys, accountants, investment advisors, lenders
and similar parties reasonably required to assist that party in completing this
transaction, provided any party to whom disclosed must agree to the provisions
of this Section 18(k).
(1) Except as and to the extent required by law, without the
prior written consent of the other party, neither Seller, the Company nor the
Purchaser shall, and each shall direct its representatives not to, directly or
indirectly, make any public comment, statement or communications with respect
to, or otherwise disclose or permit the disclosure of the existence of
discussions regarding the Agreement, the transaction contemplated hereby or any
of the terms, conditions or other aspects of the Agreement. If any such
disclosure is required by law, in the opinion of counsel for the Purchaser
and/or Seller, as the case may be, each party shall consult with the other
regarding the form and content of the disclosure, and neither party shall make
any disclosure without prior written notice to the other party. Purchaser
hereby acknowledges that Seller is a publicly-traded corporation listed on the
NYSE, and is thereby subject to extensive disclosure requirements regarding its
business. Notwithstanding the foregoing, each party may disclose the existence
of this transaction to its attorneys, accountants, investment advisors, lenders
and similar parties reasonably required to assist that party in completing this
transaction, provided any party to whom disclosed must agree to the provisions
of this Section 18(k). The Seller, on the one hand, and Purchaser, on the other
hand, represent and warrant to the other that there is no obligation to pay any
commission, finder's fee, broker's fee or similar charge in connection with the
transactions provided for in this Agreement, resulting from any agreements or
other action of such representing party.
(m) This Agreement is not intended to, and shall not confer any
rights upon, any parties other than the express parties hereto.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed as of the day and year first
above written.
WITNESS: UNITED AMERICAN HEALTHCARE
CORPORATION
/s/ Xxxxx XxXxxx By: /s/ Xx. Xxxxxx Xxxxx, Chairman and CEO (SEAL)
------------------ ---------------------------------------
Seller
CORPORATE HEALTHCARE FINANCING, INC.
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxxx, President (SEAL)
------------------ ---------------------------------
Company
CHF ACQUISITION, INC.
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxx X. Xxx, Executive Vice President (SEAL)
------------------ -------------------------------------------
Purchaser
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