Exhibit 10.2
AMENDMENT NO. 1 TO SHARE EXCHANGE AGREEMENT
Amendment No.1, dated as of March 14, 2001 (this "Amendment") to the
Share Exchange Agreement, dated as of February 15, 2001 (the "Agreement"), by
and among HealthStar Corp., a Delaware corporation ("HealthStar"), and
Xxxxxxxxxxx.xxx, Inc., a Delaware corporation ("Salesmation"), M2(M-squared)
Limited, Inc., a Maryland corporation ("M2"), and each of Xxxxxxx X. Pellet, the
President and Chief Executive Officer of M2, Mercedes M. Pellet, the Chief
Operating Officer of M2, and Xxxxx-Xxxx Pellet, Senior Vice President of M2
(collectively, the "Key Individuals" and individually, a "Key Individual"). Each
of HealthStar, Salesmation, M2 and each of the Key Individuals is deemed a
"party" to this Agreement and hereinafter may collectively be referred to as the
"parties."
RECITALS
WHEREAS, the Agreement provides for HealthStar to issue four million
(4,000,000) shares of common stock of HealthStar, par value $.00l per share (the
"HealthStar Acquisition Shares") to Salesmation in exchange for all of the Sixty
Six Thousand Two Hundred (66,200) issued and outstanding shares of capital
stock, par value $1.00 per share, of M2 (the "M2 Shares"), upon the terms and
subject to the conditions set forth in the Agreement;
WHEREAS, the parties wish to make certain amendments to the Agreement
as specifically provided herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements as set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
1. INCORPORATION. The recitals set forth above are incorporated herein as though
more fully set forth. And, unless otherwise provided, all defined terms shall
have the meaning ascribed in the Agreement.
2. SECTION 1.2. Section 1.2 of the Agreement shall be amended to read in its
entirety as follows:
"SECTION 1.2 EXCHANGE OF CERTIFICATES; ESCROW DEPOSIT
(a) ISSUANCE AND EXCHANGE OF HEALTHSTAR ACQUISITION SHARES. On the
Closing Date (as hereinafter defined) and subject to the terms and conditions
set forth in the Agreement, in consideration of the sale, assignment, transfer
and delivery of the M2 Shares, HealthStar shall issue and deliver to Salesmation
the HealthStar Acquisition Shares represented by: (i) a certificate evidencing
2,500,000 HealthStar Shares (the "Salesmation Certificate"); and (ii) a
certificate evidencing 1,500,000 HealthStar Shares (the "Escrow Shares
Certificate"). In order that the Transaction qualifies as a reorganization under
Section 368(a)(1)(B) of the Code, the consideration paid by HealthStar shall
consist solely of the HealthStar Acquisition Shares (which are voting common
stock) and no other consideration shall be paid by HealthStar.
(b) ESCROW AGREEMENT AND ESCROW DEPOSIT. On the Closing Date,
HealthStar shall deposit with an escrow agent, mutually agreed to by the parties
(the "Escrow Agent"), the Escrow Shares Certificate registered in the name of
Salesmation. Such Escrow Shares Certificate shall be held in accordance with the
provisions of the escrow agreement to be dated as of the Closing Date between
HealthStar, Salesmation and the Escrow Agent (the "Escrow Agreement")."
3. SECTION 1.3(b). Section 1.3(b) of the Agreement shall be amended to read in
its entirety as follows:
"(b) CLOSING DELIVERIES BY HEALTHSTAR. At the Closing, HealthStar shall
deliver to: (i) Salesmation, the Salesmation Certificate, (ii) the Escrow Agent,
the Escrow Shares Certificate and (iii) all other previously undelivered
documents required to be delivered by HealthStar to Salesmation, M2 and the Key
Individuals at or prior to the Closing Date in connection with the Transaction
contemplated hereby including those documents required to be delivered by
Article VIII hereof."
4. SECTION 1.3(c). Section 1.3(c) of the Agreement shall be amended to read in
its entirety as follows:
"(c) DIRECTORS OF HEALTHSTAR ON AND AFTER THE CLOSING DATE. Xxxxxx X.
Xxxxx, who shall remain Chairman of HealthStar's board of directors, Xx. Xxxxxxx
X. Xxxx, Xxxxx X. Xxxxx and Xxxxxx Xxxxxxxx, Xx., currently serving as directors
of HealthStar immediately prior to the Closing Date, shall continue to serve on
HealthStar's board of directors. In addition, HealthStar's board of directors
shall be expanded to include Xxxxxxx X. Pellet and Xxxxx-Xxxx Pellet. Each
director shall hold office, subject to the applicable provisions of HealthStar's
certificate of incorporation and bylaws, until the next annual stockholder's
meeting of HealthStar and until their respective successors shall be duly
elected or appointed and qualified."
5. ARTICLE I. Article I of the Agreement shall be amended to add Sections 1.4,
1.5 and 1.6 as follows:
"SECTION 1.4 ACHIEVEMENT OF FINANCIAL TARGETS; RELEASE OF ESCROW.
(a) As soon as practicable following September 30, 2001, M2 shall
prepare in accordance with GAAP financial statements (the "Mid-Year Statement")
which shall fairly present the financial condition and results of operations of
M2 for the period commencing on April 1, 2001 and ending on September 30, 2001.
(b) M2 MID-YEAR FINANCIAL TARGETS. If the Mid-Year Statement, as
approved by HealthStar, evidences Sales (as calculated in accordance with GAAP)
and EBITDA in the amount equal to or greater than both $2,000,000 and $88,000,
respectively (the "Mid-Year Targets"), then HealthStar shall immediately cause
the Escrow Agent to deliver to Salesmation the Escrow Shares Certificate with an
instruction to the Transfer Agent that upon the request of the holder it may
remove that portion of the legend as it relates to the forfeiture. If, however,
M2 fails to meet the Mid-Year Targets then Salesmation shall not be entitled to
receive the Escrow Shares Certificate
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which shall continue to be held by the Escrow Agent until the delivery of the
First Anniversary Statement, as defined below.
SECTION 1.5 TWELVE-MONTH FINANCIAL TARGETS; RELEASE OF ESCROW.
(a) As soon as practicable following March 31, 2002 (the "First
Anniversary"), M2 shall prepare in accordance with GAAP financial statements
(the "First Anniversary Statement") which shall fairly present the financial
condition and results of operations of M2 for the period commencing on April
1, 2001 and ending on the First Anniversary and shall deliver a copy thereof
to HealthStar.
(b) M2 FIRST ANNIVERSARY FINANCIAL TARGETS. If the First Anniversary
Statement, as approved by HealthStar, evidences Sales and EBITDA in an amount
equal to or greater than both $4,500,000 and $277,000, respectively (the "First
Anniversary Targets") then HealthStar shall immediately cause the Escrow Agent
to deliver to Salesmation the Escrow Shares Certificate with an instruction to
the Transfer Agent that upon the request of the holder that it may remove that
portion of the legend as it relates to forfeiture.
SECTION 1.6 FAILURE TO MEET FINANCIAL TARGETS. If M2 fails to meet both
the Mid-Year Financial Targets and the First Anniversary Financial Targets, then
Salesmation shall not be entitled to receive that portion the HealthStar
Acquisition Shares evidenced by the Escrow Shares Certificate. And thereafter,
the Escrow Agent shall immediately cause such disposition of the Escrow Shares
Certificate to HealthStar for its cancellation without any further act or
writing being required."
6. SECTION 2.27(f). Section 2.27(f) of the Agreement shall be amended to read in
its entirety as follows:
(i) The Salesmation Certificate shall include the legend set forth below:
"THIS CERTIFICATE AND THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE
DIRECTLY OR INDIRECTLY SOLD OR OFFERED FOR SALE OR OTHERWISE
HYPOTHECATED OR DISTRIBUTED OR PLEDGED OR OTHERWISE DISPOSED
OF EXCEPT (A)(i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAWS OR (ii) PURSUANT TO A VALID
EXEMPTION FROM SUCH REGISTRATION UNDER THE SECURITIES ACT AND
UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND (B) UPON
RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL FOR THE
HOLDER, WHICH OPINION SHALL BE SATISFACTORY IN FORM AND
SUBSTANCE TO THE COMPANY THAT SUCH SALE IS IN
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COMPLIANCE WITH THE SECURITIES ACT AND, SUCH STATE LAWS.
THESE SECURITIES ARE ALSO SUBJECT TO A LOCK-UP FOR ONE YEAR
FROM THE DATE HEREOF AS WELL AS AN ASSIGNMENT OF VOTING
RIGHTS, AS SET FORTH IN A SHARE EXCHANGE AGREEMENT DATED
FEBRUARY 15, 2001, AS AMENDED, A COPY OF WHICH IS AVAILABLE
FROM THE ISSUER UPON REQUEST.
(ii) The Escrow Shares Certificate shall include the legend
set forth below:
"THIS CERTIFICATE AND THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE
DIRECTLY OR INDIRECTLY SOLD OR OFFERED FOR SALE OR OTHERWISE
HYPOTHECATED OR DISTRIBUTED OR PLEDGED OR OTHERWISE DISPOSED
OF EXCEPT (A)(i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAWS OR (ii) PURSUANT TO A VALID
EXEMPTION FROM SUCH REGISTRATION UNDER THE SECURITIES ACT AND
UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND (B) UPON
RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL FOR THE
HOLDER, WHICH OPINION SHALL BE SATISFACTORY IN FORM AND
SUBSTANCE TO THE COMPANY THAT SUCH SALE IS IN COMPLIANCE WITH
THE SECURITIES ACT AND SUCH STATE LAWS."
THESE SECURITIES ARE ALSO SUBJECT TO LOCK-UP FOR ONE YEAR FROM
THE DATE HEREOF, AND AN ASSIGNMENT OF VOTING RIGHTS, ALL AS
SET FORTH IN A SHARE EXCHANGE AGREEMENT DATED FEBRUARY 15,
2001, AS AMENDED, A COPY OF WHICH IS AVAILABLE FROM THE ISSUER
UPON REQUEST.
ADDITIONALLY, THESE SECURITIES ARE SUBJECT TO THE POSSIBILITY
OF FORFEITURE AS SET FORTH IN A SHARE EXCHANGE AGREEMENT DATED
FEBRUARY 15, 2001, AS AMENDED, A COPY OF WHICH IS AVAILABLE
FROM ISSUER UPON REQUEST.
(iii) Any legend imposed or required by HealthStar's
certificate of incorporation or bylaws or applicable
state securities laws.
(iv) Salesmation understands, acknowledges and agrees that
HealthStar will make, or cause to be made, a notation in
its stock registry with respect to the restrictions on
the offer and sale of the Salesmation Certificate, the
Escrow Shares Certificate and any and all HealthStar
Acquisition Shares underlying
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such certificates received, held and owned by
Salesmation pursuant to the terms of this Agreement.
Salesmation acknowledges and agrees that HealthStar may
deliver stop transfer instructions to its transfer agent
and impose stop transfer restrictions on the Salesmation
Certificate, the Escrow Shares Certificate or on any
HealthStar Acquisition Shares received, held and owned
by Salesmation pursuant to the terms of this Agreement.
7. SECTION 2.27(h) AND (i). Section 2.27 of the Agreement shall be amended and
Subsections 2.27(h) and 2.27(i) added as follows:
"(h) LOCK-UP. Salesmation hereby agrees that for a period of one (1)
year after the Closing Date (the "Lock-up"), it will not directly or indirectly:
(i) offer, sell, transfer, pledge, hypothecate, contract to
sell, sell any option or contract for the sale or purchase of,
or
(ii) lend, enter into any swap or other arrangement that
transfers to another any of the economic consequences of
ownership of, or otherwise dispose of,
the HealthStar Acquisition Shares. Salesmation acknowledges and agrees that
HealthStar may deliver stop transfer instructions to its transfer agent and
impose stop transfer restrictions on the Salesmation Certificate, the Escrow
Shares Certificate or on any HealthStar Acquisition Shares received, held and
owned by Salesmation pursuant to the terms of this Agreement. The Lock-up
provisions of this Section 2.27(h) shall terminate and be of no further force or
effect upon the expiration of the Lock-up period or otherwise pursuant to the
terms of this Agreement.
(i) VOTING. Salesmation acknowledges and agrees that the board of
directors of HealthStar shall be vested with all of the rights to vote, either
in person or by proxy, the HealthStar Acquisitions Shares to the maximum extent
permitted by law, at every meeting of the stockholders of HealthStar called, and
at every adjournment thereof, and on every action or approval by written consent
of the stockholders of HealthStar and for any and all purposes. Concurrently
with the execution of this Amendment, Salesmation agrees to deliver to the board
of directors of HealthStar an irrevocable proxy with respect to the Salesmation
Certificate and the Escrow Share Certificate, to the extent permitted by law.
The voting provisions of this Section 2.27(i) shall be in effect so long as
Salesmation holds the HealthStar Acquisition Shares. The restrictions of this
Section 2.27(i) shall terminate upon a proper transfer by Salesmation of the
HealthStar Acquisition Shares, in whole or in part. And, any such transferee
shall be entitled to the issuance of a new certificate for such shares free of
such legended restriction."
8. ARTICLE VIII. (a) Section 8.2(e) of the Agreement shall be deleted in its
entirety and the following sentence is hereby added.
"(e) On or simultaneous with closing, M2 shall have paid all
federal, Maryland and any other state withholding taxes (including interest
penalties with respect thereto) for all quarters ending on or before the Closing
Date, except for those amounts provided for under Schedule 2.14."
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(b) Section 8.2(g) of the Agreement shall be deleted in its entirety
and the following sentence is hereby added.
"(g) There shall be no outstanding loans or bank loans to or
on behalf of M2, except for the obligation owing to Potomac Valley Bank in the
amount as set forth in Schedule 2.7."
(c) Section 8.2(l) of the Agreement shall be amended to read in its
entirety as follows:
"(l) M2 shall have net working capital as of February 28, 2001
of Closing of $35,000. For purposes of this Section 8.2(l), net working capital
(excluding (i) those amounts scheduled in Schedule 2.14 and (ii) all outstanding
amounts owing to Potomac Valley Bank as set forth in Schedule 2.7) shall be
defined as current assets minus current liabilities."
9. ENTIRE AGREEMENT Except as expressly amended or modified by the terms of this
Amendment, the Agreement shall remain unmodified and in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, or have caused this Amendment to be duly executed with legal and
binding effect by their respective authorized officers, in their individual
capacity, as of the date first written above.
HEALTHSTAR CORP.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: President
XXXXXXXXXXX.XXX, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
M2 LIMITED, INC.,
a Maryland corporation
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: President
Xxxxxxxxxxx.xxx, Inc.
Sole Shareholder of M2 Limited, Inc.
KEY INDIVIDUALS OF M2 LIMITED, INC.
By: /s/ Xxxxxxx X. Pellet
----------------------------------------------
Name: Xxxxxxx X. Pellet
Title: President and Chief Executive Officer
of M2 Limited, Inc.
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By: /s/ Mercedes M. Pellet
----------------------------------------------
Name: Mercedes M. Pellet
Title: Chief Financial Officer of
M2 Limtied, Inc.
By: /s/ Xxxxx-Xxxx Pellet
----------------------------------------------
Name: Xxxxx-Xxxx Pellet
Title: Senior Vice President of M2 Limited,
Inc.
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