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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization is made as of the
16th day of December, 1996, among Champion Financial Corporation, a
Utah Corporation having its principal place of business at 00 Xxxxxxxx
Xxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000 ("CFC"), Xxxx X. Xxxxxxxx, an
individual residing at 0000 X. Xxxx Xxxx, Xxxxxxxxxx, XX 00000
("Xxxxxxxx") and Xxxxxxx X. Xxxxxx, an individual residing at 0000 X.
Xxxxxxxxxx Xxxx Xxxxx, Xxxxxxxxxx, XX 00000 ("Xxxxxx"). Xxxxxxxx and
Xxxxxx are referred to collectively in this Agreement as the "NHBC
Shareholders."
RECITALS
The NHBC Shareholders own all the issued and outstanding shares of
capital stock of National Health Benefits & Casualty Corporation, a Nevada
corporation ("NHBC"). NHBC is the successor, through merger, of National Health
Benefits Corporation and National Property Casualty Corporation, both Arizona
corporations. References in this Agreement to NHBC, in so far as such references
refer to the period prior to such merger shall be deemed to refer to NHBC and
such predecessor corporations. CFC desires to acquire from the NHBC
Shareholders, and the NHBC Shareholders desire to transfer to CFC, solely in
exchange for voting common stock of CFC, 1,000,000 shares, constituting 100% of
the outstanding capital stock, of NHBC pursuant to a plan for a tax-free
reorganization within the meaning of Section 368 (a)(1) of the Internal Revenue
Code of 1986, as amended.
AGREEMENT
The parties therefore agree as follows:
1. TERMS OF EXCHANGE.
(a) On the Closing Date (as hereinafter defined), and upon the terms
and subject to the conditions set forth in this Agreement, each of the NHBC
Shareholders will transfer, assign and deliver to CFC 500,000 shares of the
Common Stock, par value $.001 per share, of NHBC (the "NHBC Shares"),
constituting together 100% of the outstanding capital stock of NHBC, free and
clear of all liens, claims, pledges and encumbrances of any kind whatsoever.
Certificates evidencing such shares will be delivered to CFC on the Closing
Date, duly endorsed, or with appropriate stock powers attached, for transfer to
CFC with all necessary transfer tax stamps, if any, affixed or provided for.
(b) In full consideration and exchange for the NHBC Stock, CFC shall
issue and deliver to each of the NHBC Shareholders on the Closing Date 1,100,000
fully paid and non-assessable shares of the voting Common Stock, par value $.001
per share, of CFC. The shares of CFC to be issued and delivered to the NHBC
Shareholders herein shall constitute the sole and exclusive consideration to be
delivered to Xxxxxxxx and Xxxxxx in exchange for the NHBC Shares. The 1,000,000
shares of NHBC stock to be transferred to CFC, and the 2,200,000 shares of CFC
stock to be issued to the NHBC Shareholders (the "CFC Shares") shall be subject
to appropriate adjustment for any exchange, stock split, stock dividend or other
reclassification or
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changes or consolidation or reorganization of NHBC or CFC between the date
hereof and the Closing.
2. DEFINITIONS. As used in this Agreement, the following terms shall have the
meanings set forth below.
(a) "BUSINESS" shall mean the business previously carried on by
National Health Benefits Corporation and National Property Casualty Corporation
of operating a national preferred provider organization and providing related
services and products designed to reduce the costs of medical care, all as more
fully described in a certain Supplement to Confidential Private Placement
Memorandum of CFC dated November 22, 1996 (the "Supplement").
(b) "CUSTOMER LISTS" shall mean all names, addresses and other
pertinent information in the possession of NHBC relating in any way to customers
for products included in the Business, including prospective purchasers who have
contacted or been contacted by either of such corporations but from whom orders
have not been received.
(c) "EQUIPMENT" shall mean all of NHBC's furniture, machinery, tools
and equipment used in the Business.
3. REPRESENTATIONS AND WARRANTIES OF THE NHBC SHAREHOLDERS. Each of the NHBC
Shareholders, jointly and severally, represents and warrants to CFC that the
statements contained in this Section 3 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section ) except as such statements may be
affected by the transactions specifically described in this Agreement.
(a) ORGANIZATION; QUALIFICATION. NHBC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Nevada.. NHBC presently has no subsidiaries. NHBC has the corporate power and
authority to own, lease and operate the properties used by it in the Business
and to carry on the Business as now being conducted by it and as proposed to be
conducted by NHBC following the completion of the transactions contemplated
hereby, and is duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction where qualification as a foreign corporation is
required by reason of its conduct of the Business. The NHBC Shareholders have
previously delivered to CFC complete and correct copies of the certificates of
incorporation and by-laws of NHBC as presently in effect. A sets forth the names
and positions of all directors and officers of NHBC.
(b) CAPITALIZATION AND TITLE TO STOCK. The authorized capital stock of
NHBC consists of 20,000,000 shares of Common Stock, par value $.001 per share,
of which 1,000,000 shares are issued and outstanding, and no shares are reserved
for issuance.
(i) The NHBC Shares have been validly authorized and issued,
are fully paid and non-assessable and are owned by the NHBC Shareholders
beneficially and of record, free and clear of any lien, security interest,
pledge, charge, claim, option, equity, right, restriction on transfer or
encumbrance of any nature whatsoever.
(ii) There is no option, warrant, call, subscription or other
right, commitment or understanding that directly or indirectly calls for the
issuance of any shares of capital stock of NHBC. Except as set forth in Exhibit
B, neither of such corporations has any equity interest in any
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corporation, partnership, joint venture or other entity nor is either of them
subject to any obligation to make any equity investment in or other capital
contribution to any corporation, partnership, joint venture or other entity.
(c) FINANCIAL STATEMENTS. NHBC has had no operations prior to the date
of the merger referred to in the Recitals. The NHBC Shareholders have heretofore
furnished CFC with copies of the unaudited balance sheets of National Health
Benefits Corporation and National Property Casualty Corporation as of December
31, 1995, and related statements of income for the period then ended, together
with unaudited balance sheet as of September 30, 1996, and related statements of
income for the period then ended. Such financial statements have been prepared
in accordance with generally accepted accounting principles consistently applied
and present fairly such corporations' respective financial positions and results
of operations as of, and for the periods, indicated therein.
(d) ABSENCE OF CERTAIN CHANGES. Since the date of the most recent
balance sheet referred to in the preceding paragraph, there has not been:
(i) any sale, lease, abandonment or other disposition of any
assets relating to the Business other than in the ordinary course of business;
(ii) any damage, loss (whether or not covered by insurance)
affecting such assets;
(iii) any change in the compensation of any employee except
for normal year end raises in the ordinary course of the applicable
corporation`s business, or any hiring of any employee;
(iv) any material adverse change in the condition (financial
or other) of the Business; or
(v) any other material transaction by NHBC not in the ordinary
course of its business.
(e) BROKERS. All negotiations by the NHBC Shareholders relative to this
Agreement and the transactions contemplated hereby have been carried on by the
parties and their counsel without the intervention of any other person in such
manner as to give rise to any valid claim against CFC for a brokerage
commission, finder's fee or other payment.
(f) ACCOUNTS. All accounts receivable reflected in the financial
statements referred to in paragraph 3c or thereafter acquired after the date
thereof and prior to the Closing, have been and will be acquired only in the
ordinary and regular course of business and will be fully collectible in full at
the book value thereof (net of usual reserves for doubtful accounts consistent
with prior experience) without set-off or counterclaim.
(g) CUSTOMER LISTS. NHBC is the sole owner of the Customer Lists free
and clear of any claim thereto by any third party and of all mortgages, liens,
charges or encumbrances whatsoever.
(h) OWNERSHIP OF EQUIPMENT. Except as set forth in Exhibit C the
Equipment is owned by NHBC free and clear of all mortgages, liens, charges or
encumbrances whatsoever.
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(i) CONDITION OF EQUIPMENT. The Equipment is in good operating
condition and capable of performing the tasks required of it in the Business.
(j) LITIGATION. There are no actions, suits, arbitrations or other
proceedings or investigations pending or threatened against or affecting NHBC
which would, if determined adversely to it, adversely affect its Business, or
create any mortgage, lien, charge or encumbrance on any of its assets. NHBC is
not subject to any order, writ, injunction or decree of any court or any
federal, State, municipal or other governmental department, commission, board,
bureau, agency or instrumentality applicable to the Business or such assets.
(K) REAL PROPERTY.
(i) Exhibit D lists and describes briefly all real property
leased or subleased to NHBC. The NHBC Shareholders have delivered to CFC correct
and complete copies of the leases and subleases listed in Exhibit D. With
respect to each lease and sublease listed in Exhibit D:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby;
(C) no party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would constitute
a breach or default or permit termination, modification, or acceleration
thereunder;
(D) no party to the lease or sublease has repudiated any
provision thereof;
(E) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(F) with respect to each sublease, the representations and
warranties set forth in subsections A through E above are true and correct with
respect to the underlying lease;
(G) NHBC has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or subleasehold;
(H) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations;
(I) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of such
facilities; and
(J) the owner of the facility leased or subleased has good and
marketable title to the parcel of real property, free and clear of any security
interest, easement, covenant, or other restriction, except for installments of
special easements not yet delinquent and
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recorded easements, covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of title, of the property
subject thereto.
(l) EMPLOYEE CONTRACTS. NHBC is not a party to any collective
bargaining or other contract with any of its employees. The NHBC Shareholders
are not aware of any existing or threatened strike, labor action or demand for
recognition against either of such corporations by any labor organization or of
any pending or threatened claim under any equal employment opportunity or
occupational safety and health law.
(m) EMPLOYEE BENEFIT PLANS. Except as set forth in E, NHBC, has no
pension, bonus, profit-sharing, incentive compensation, severance or other
plans, programs, agreements or arrangements covering employees or former
employees (the "Plans"), including but not limited to "employee benefit plans"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). True and complete copies of the following
items relating to each Plan, where applicable, have heretofore been delivered to
CFC: (i) the plan and trust documents, including all amendments thereto; (ii)
the most recent actuarial reports and annual reports; (iii) the most recent
determination letter issued by the Internal Revenue Service (the "IRS") and (iv)
the most recent summary plan description, summary of material modifications and
all material employee communications relating to such plan.
(i) All of the Plans are in substantial compliance with all
applicable laws, including without limitation the Internal Revenue code of 1986,
as amended (the "Code") and ERISA. None of the Plans is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA. Each Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and the NHBC Shareholders are not aware of
any circumstances likely to result in revocation of any such favorable
determination letter. There is no pending, anticipated or threatened litigation
relating to the Plans. None of the NHBC Shareholders, NHBC and any of their
officers, directors or controlling shareholders is aware of any transaction with
respect to any Plan which could subject any person associated with the Plan to
(A) a tax or penalty imposed by either Section 4975 or 4976 of the Code or
Section 502 of ERISA or (B) liability under Section 409 of ERISA.
(ii) During the six years preceding the Closing, (a) no
liability under Subtitle C or D or Title IV of ERISA has been incurred and not
satisfied, and no condition exists which presents a material risk that liability
would be incurred thereunder, in each case with respect to any ongoing, frozen
or terminated plan currently or formerly maintained or contributed to by NHBC or
any entity or person which together with it would be now or at the applicable
time considered a "single employer" within the meaning of Section 4001(a) of
ERISA (an "ERISA Affiliate"), and (b) check no withdrawal liability has been
incurred and not satisfied under Subtitle E of Title IV of ERISA (regardless of
whether based on contributions of an ERISA Affiliate or that corporation) which
could result in liability to that corporation. No Notice of Reportable Event
(within the meaning of Section 4043 of ERISA) for which the reporting
requirement has not been waived has been required to be filed for any Plan or
any "employee benefit plan" (within the meaning of Section 3(3) of ERISA) of an
ERISA Affiliate ("Affiliate Plan") within the most recent 12-month period.
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(iii) All contributions required to be made on or prior to
the Closing Date under the terms of any Plan or required by applicable law have
been or will be timely made. No Plan or Affiliate Plan has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code and NHBC and any ERISA Affiliate has no outstanding funding waiver.
(iv) Under each Plan which is a "single employer plan,"
(within the meaning of Section 4001(a)(15) of ERISA, as of the last day of the
most recent Plan year, the Accumulated Benefit Obligation (within the meaning of
Statement of Financial Accounting Standards No. 87 ("SFAS No. 87") (as
determined on the basis of the actuarial assumptions contained in the Plan's
most recent actuarial valuation) did not exceed the then current value of the
assets of such Plan, and there has been no material change in the financial
condition of such Plan since the last day of the most recent Plan year.
(v) Except as set forth in the Plans, no written or oral
representations have been made to any employee promising or guaranteeing any
employer payment or funding for the continuation of any medical, dental, life or
disability coverage for any period of time beyond the end of the current plan
year, except to the extent of coverage required under Section 4980B of the Code.
(vi) NHBC has no plan or commitment to create any additional
plan, agreement or arrangement or modify or change any existing Plan.
(n) TAXES. Except as set forth in F as of the closing date, NHBC will
not be liable for any taxes or assessments attributable to the operation of the
Business (including without limitation of the foregoing, income taxes, excise,
unemployment, social security, occupation, franchise, real or personal property,
sales or use taxes, import duties or charges or any penalties or interest with
respect thereof), except for taxes for the current fiscal year from operations
prior to closing, and for taxes payable as a result of the closing. All taxes
which have become due and payable have been paid, and all returns and reports
required to be filed in connection therewith have been filed with the
appropriate taxing authorities. All taxes and other assessments and levies which
such corporation is required by law to withhold or to collect have been duly
withheld and collected and have been paid over to the proper governmental
authorities or are not yet payable and are held by the applicable corporation
for such payment.
(o) COMPLIANCE WITH LAW. Except as set forth in G, NHBC's conduct of
the Business has fully complied with all laws, ordinances, rulings and
regulations of all constituted governmental authorities having jurisdiction with
respect to the conduct of such Business, and no violations have been noted in,
or issued by, any governmental authority in consequence of the conduct of such
Business.
(p) PURCHASE ORDERS AND CONTRACTS. Neither of the NHBC Shareholders is
aware of any facts which would indicate that any of the purchase orders and
contracts of NHBC will result in a loss upon completion.
(q) CERTAIN BUSINESS RELATIONSHIPS. Except as set forth in H, none of
NHBC, or any of its affiliates or family members of such affiliates has been
involved in any business arrangement or relationship with NHBC within the last
24 months, and none of such persons or entities owns any asset, tangible or
intangible, which is used in the Business.
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(r) DISQUALIFICATION PROVISIONS. None of the NHBC Shareholders and any
officer or director of NHBC is subject to any of the disqualification provisions
of Regulation A of the Securities and Exchange Commission under the Securities
Act of 1933 or any similar state "blue sky" law of any state.
(s) UNREGISTERED STATUS OF CFC SHARES. Each of the NHBC Shareholders is
aware that the CFC Shares have not been registered under the Securities Act of
1933, that such Shares may not be sold or otherwise transferred in the absence
of such registration or an exemption therefrom, and that the certificates
evidencing the CFC Shares will bear the legends set forth below and any others
as may be required by law:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
HOLDERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
(t) DISCLOSURE. No representation or warranty by the NHBC Shareholders
in this Agreement or any statement furnished or to be furnished by the NHBC
Shareholders pursuant hereto, or in conjunction with the transactions
contemplated hereby, contains or will contain any untrue or misleading statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements so made or furnished not misleading.
4. REPRESENTATIONS AND WARRANTIES OF CFC. CFC represents and warrants to the
NHBC Shareholders that the statements contained in this Section 4 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section ) except as
such statements may be affected by the transactions specifically described in
the Confidential Private Placement Memorandum dated September 3, 1996, as
supplemented.
(a) ORGANIZATION; QUALIFICATION. CFC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Utah. It has no subsidiaries. CFC has the corporate power and authority to
own, lease and operate the properties used in its business and to carry on its
business as now being conducted, and is duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction where qualification
as a foreign corporation is required by reason of its conduct of such business.
CFC has previously delivered to the NHBC Shareholders complete and correct
copies of the certificate of incorporation and by-laws of CFC as presently in
effect. I sets forth the names and positions of all directors and officers of
CFC.
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(b) CAPITALIZATION. The authorized capital stock of CFC consist of
100,000,000 shares of Common Stock, par value $.001 per share, of which
3,348,302 shares are issued and outstanding, and no shares are reserved for
issuance. There is no option, warrant, call, subscription or other right,
commitment or understanding that directly or indirectly calls for the issuance
of any shares of capital stock of CFC. Except as set forth in J, CFC has no
equity interest in any corporation, partnership, joint venture or other entity
nor is CFC subject to any obligation to make any equity investment in or other
capital contribution to any corporation, partnership, joint venture or other
entity.
(c) DUE AUTHORIZATION. All necessary corporate proceedings have been
had to authorize the execution and delivery by CFC of this Agreement and the
consummation by CFC of the transactions contemplated hereby.
(d) POWER TO SELL. CFC has full corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby.
(e) FINANCIAL STATEMENTS. CFC has heretofore furnished the NHBC
Shareholders with copies of its audited balance sheet as of March 31, 1996, and
related statement of income for the period then ended, in each case accompanied
by a report thereon by Dohan & Co., together with an unaudited balance sheet as
of September 30, 1996, and related statement of income for the period then
ended. Such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied and present fairly CFC's
financial position and results of operations as of, and for the periods,
indicated therein.
(f) ABSENCE OF CERTAIN CHANGES. Since the date of the most recent
balance sheet referred to in the preceding paragraph, there has not been:
(i) any sale, lease, abandonment or other disposition by CFC
of any assets other than in the ordinary course of business;
(ii) any damage, loss (whether or not covered by insurance)
affecting such assets; or
(iii) any material adverse change in the condition (financial
or other) of CFC's business
(g) LITIGATION. There are no actions, suits, arbitrations or other
proceedings or investigations pending or threatened against or affecting CFC
which would, if determined adversely to CFC, materially and adversely affect the
Business or the NHBC Shareholders' title to the CFC Shares, or create any
material mortgage, lien, charge or encumbrance thereon or on any asset of CFC.
CFC is not subject to any order, writ, injunction or decree of any court or any
federal, State, municipal or other governmental department, commission, board,
bureau, agency or instrumentality applicable to the CFC Shares or such assets.
(h) BROKERS. All negotiations by CFC relative to this Agreement and
the transactions contemplated hereby have been carried on by the parties and
their counsel without the intervention of any other person in such manner as to
give rise to any valid claim against the NHBC Shareholders for a brokerage
commission, finder's fee or other payment.
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(i) ERISA. CFC has no pension, bonus, profit-sharing or retirement
plans for officers or employees, and is not required to contribute to any
multi-employer pension plan.
(j) CERTAIN BUSINESS RELATIONSHIPS. Except as described in the
Confidential Private Placement Memorandum dated September 3, 1996, as
supplemented, no officer or director of CFC or any of his affiliates or family
members has been involved in any business arrangement or relationship with CFC
within the last 24 months, and none of such persons or entities owns any asset,
tangible or intangible, which is used in CFC's business.
(k) DISCLOSURE. No representation or warranty by CFC in this Agreement
or any statement furnished or to be furnished by CFC pursuant hereto, or in
conjunction with the transactions contemplated hereby, contains or will contain
any untrue or misleading statement of a material fact or omits or will omit to
state a material fact necessary to make the statements so made or furnished not
misleading.
5. COVENANTS OF THE NHBC SHAREHOLDERS. The NHBC Shareholders covenant as
follows.
(a) CERTAIN ACTIONS PRIOR TO CLOSING. From and after the date of this
Agreement and until the Closing, the NHBC Shareholders
shall
(i) provide CFC access to the Customer Lists and other
marketing information pertinent to the providing of services or sale of products
in the Business;
(ii) use its best efforts to maintain its existing
relationships with customers, suppliers and others and refrain from taking any
action which might reasonably be expected to result in injury to the business
reputation or good will relating to the sale of such services or products.
(b) ACCESS TO RECORDS. During the period from the date of this
Agreement through the Closing, the NHBC Shareholders shall make available to CFC
and its representatives, for inspection, the books of account (including
accountants' work papers) and other business records of NHBC relating to the
Business and shall cooperate with CFC in making such investigations of the
Business as CFC may reasonably deem appropriate, including without limitation
making the employees of such corporations available to answer CFC's reasonable
inquiries relating to the operations of the Business.
(c) NON-COMPETITION. For a period of three (3) years from and after
the date of this Agreement and within the United States, neither the NHBC
Shareholders nor any director, officer or other person, firm, organization,
company or corporation directly or indirectly controlling or controlled by the
NHBC Shareholders will own, manage, operate, join, control or participate in the
ownership, management or control of any business enterprise which is engaged in
the Business.
(d) INDEMNIFICATION. The NHBC Shareholders shall indemnify and hold
harmless CFC against and in respect of:
(i) any damage or deficiency resulting from misrepresentation,
breach of warranty or nonfulfillment of any agreement on the part of the NHBC
Shareholders under this Agreement or from any misrepresentation of fact or
misleading statement of fact in any instrument furnished or to be furnished to
CFC under this Agreement; and
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(ii) all actions, suits, proceedings, assessments, judgments,
costs and expenses (including attorney's fees) reasonably incurred incident to
any of the foregoing;
provided that CFC shall as soon as practicable after receipt of notice of any
claim relating to the foregoing clauses i or ii have notified the NHBC
Shareholders thereof in writing and tendered to them the defense thereof.
6. COVENANTS OF CFC. CFC covenants as follows.
(a) COMPLETE OFFERING. CFC shall make all reasonable efforts to
complete the private offering referred to in Section 7a as promptly as is
reasonably practicable.
(b) ACCESS TO RECORDS. During the period from the date of this
Agreement through the Closing, CFC shall make available to the NHBC Shareholders
and its representatives, for inspection, CFC's books of account (including
accountants' work papers) and other business records relating to its business
and shall cooperate with the NHBC Shareholders in making such investigations of
such business as the NHBC Shareholders may reasonably deem appropriate,
including without limitation making CFC's employees available to answer the NHBC
Shareholders' reasonable inquiries relating to the operations of its business.
(c) INDEMNIFICATION. CFC shall indemnify and hold harmless the NHBC
Shareholders against and in respect of:
(i) any damage or deficiency resulting from misrepresentation,
breach of warranty or nonfulfillment of any agreement on the part of CFC under
this Agreement or from any misrepresentation of fact or misleading statement of
fact in any instrument furnished or to be furnished to the NHBC Shareholders
under this Agreement; and
(ii) all actions, suits, proceedings, assessments, judgments,
costs and expenses (including attorney's fees) reasonably incurred incident to
any of the foregoing;
provided that the NHBC Shareholders shall as soon as practicable after receipt
of notice of any claim relating to the foregoing clauses i or ii have notified
CFC thereof in writing and tendered to it the defense thereof.
7. CONDITIONS PRECEDENT TO CFC'S OBLIGATIONS. The obligations of CFC hereunder
shall be subject to the satisfaction, on or before the date of Closing, of the
following conditions precedent or concurrent.
(a) COMPLETION OF PRIVATE OFFERING. CFC shall have completed and closed
its contemplated private offering of $2,800,000 of common stock as described in
its Confidential Private Offering Memorandum dated September 3, 1996 and shall
have received from such offering net proceeds of not less than $625,000.
(b) TRUTH OF REPRESENTATIONS. Each of the representations and
warranties of the NHBC Shareholders contained in this Agreement shall be true
and correct at and as of the time of Closing date as if made as of such time.
(c) DELIVERY OF DOCUMENTS. All documents required to be delivered by
the NHBC Shareholders at or prior to the Closing shall have been delivered.
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(d) OPINION OF COUNSEL. CFC shall have received an opinion dated the
date of Closing of. Xxxxxx & Silver, LTD, counsel for the NHBC Shareholders to
the effect that:
(i) NHBC is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Nevada, and has the
corporate power and authority to own, lease and operate the properties used in
the Business and to carry on the Business as now being conducted and as proposed
to be conducted following the completion of the transactions contemplated
hereby, and is duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction where qualification as a foreign corporation is
required by reason of its conduct of the Business..
(ii) The authorized capital stock of NHBC consists of
20,000,000 shares of Common Stock, par value $.001 per share, of which 1,000,000
shares are issued and outstanding, and no shares are reserved for issuance.
(iii) The NHBC Shares have been validly authorized and
issued, are fully paid and non-assessable and to the best of such counsel's
knowledge after due inquiry are owned by the NHBC Shareholders beneficially and
of record, free and clear of any lien, security interest, pledge, charge, claim,
option, equity, right, restriction on transfer or encumbrance of any nature
whatsoever.
(iv) The execution and delivery by the NHBC Shareholders of
this Agreement and the consummation of the transactions contemplated hereby,
will not violate, be in conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under, any of the terms or
provisions of any agreement or instrument known to such counsel and to which
NHBC or either of the NHBC Shareholders is a party or by which any of their
property may be bound or affected.
(v) This Agreement is a valid and binding obligation of the
NHBC Shareholders, enforceable in accordance with its terms, subject to
bankruptcy, insolvency and similar laws affecting the rights of creditors
generally, and to principles of equity which may limit the availability of
specific performance in certain circumstances.
8. CONDITIONS PRECEDENT TO THE NHBC SHAREHOLDERS' OBLIGATIONS. The obligations
of the NHBC Shareholders hereunder shall be subject to the satisfaction, on or
before the date of Closing, of the following conditions precedent or concurrent.
(a) COMPLETION OF PRIVATE OFFERING. CFC shall have completed and closed
its contemplated private offering of common stock as described in its
Confidential Private Offering Memorandum dated September 3, 1996 and shall have
received from such offering net proceeds of not less than $625,000.
(b) TRUTH OF REPRESENTATIONS. Each of the representations and
warranties of CFC contained in this Agreement shall be true and correct at and
as of the time of Closing date as if made as of such time.
(c) DELIVERY OF DOCUMENTS. All documents required to be delivered by
CFC at or prior to the Closing shall have been delivered.
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(d) ENLARGEMENT OF CFC BOARD. CFC shall have taken all required
corporate action to increase the number of directors comprising the entire board
of CFC to 7.
(e) OPINION OF COUNSEL. The NHBC Shareholders shall have received an
opinion dated the date of Closing of Xxxxxx X. Xxxxxxx, Xx., Esq., counsel for
CFC to the effect that:
(i) CFC is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Utah. CFC has the corporate
power and authority to own, lease and operate the properties used in its
business and to carry on its business as now being conducted, and is duly
qualified to do business and in good standing as a foreign corporation in each
jurisdiction where qualification as a foreign corporation is required by reason
of its conduct of such business.
(ii) The authorized capital stock of CFC consist of
100,000,000 shares of Common Stock, par value $.001 per share, of which
5,548,302 shares are issued and outstanding.
(iii) The CFC Shares have been validly authorized and issued,
are fully paid and non-assessable.
(iv) All necessary corporate proceedings have been had to
authorize the execution and delivery by CFC of this Agreement and the
consummation by CFC of the transactions contemplated hereby.
(v) CFC has full corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated hereby.
(vi) The execution and delivery by CFC of this Agreement and
the consummation of the transactions contemplated hereby, do not violate any
provisions of the certificate of incorporation or bylaws of CFC and will not
violate, be in conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, any of the terms or provisions
of any agreement or instrument known to such counsel and to which CFC is a party
or by which CFC or any of its property may be bound or affected.
(vii) This Agreement is a valid and binding obligation of CFC,
enforceable in accordance with its terms, subject to bankruptcy, insolvency and
similar laws affecting the rights of creditors generally, and to principles of
equity which may limit the availability of specific performance in certain
circumstances.
9. THE CLOSING. The Closing hereunder shall take place at ______ A.M. Eastern
Standard time on December 31, 1996, at the offices of Xxxxxx X. Xxxxxxx, Xx., 00
Xxxx Xxxxxx, Xxx Xxxx, XX 00000, or at such other time or place as the parties
may mutually agree. At the Closing:
(a) DOCUMENTS TO BE DELIVERED BY THE NHBC SHAREHOLDERS. The NHBC
Shareholders will deliver to CFC:
(i) certificates evidencing the NHBC Shares, duly endorsed or
accompanied by stock powers duly executed in blank; and
(ii) the opinion referred to in Section 7d.
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(b) DOCUMENTS TO BE DELIVERED BY CFC. CFC will deliver to the NHBC
Shareholders:
(i) certificates evidencing the CFC Shares; and
(ii) the opinion referred to in Section 8e.
(c) EMPLOYMENT AGREEMENT. The parties will execute and deliver an
Employment Agreement in the form of Exhibit L.
(d) ELECTION OF CFC AND NHBC DIRECTORS AND OFFICERS. The Board of
Directors of CFC shall appoint the NHBC Shareholders as directors of CFC to fill
the two recently created vacancies, and shall elect Xxxxxxxx and Xxxxxx as
President and Chief Financial Officer, respectively, of CFC. The Board shall
elect Xxxxxxxx as its Executive Chairman, replacing the present Executive
Chairman.
10. POST-CLOSING TRANSACTIONS.
(a) FURTHER INSTRUMENTS. After the Closing, on the reasonable request
of either party, the others shall do, execute, acknowledge and deliver all such
further acts, assurances, deeds, assignments, transfers, conveyances, powers of
attorney and other instruments and documents as may be required to carry out the
transactions contemplated by this Agreement.
(b) WORKING CAPITAL. Immediately following the Closing, CFC shall
contribute an aggregate of $625,000 to NHBC for use as working capital.
11. MISCELLANEOUS.
(a) CONFIDENTIALITY. Each of the parties shall, and shall cause its
directors, employees, shareholders, affiliates, agents and representatives to
keep confidential as proprietary and privileged information the terms and
conditions contained herein, the negotiations of the parties respecting the
consummation of the transactions contemplated hereby, and any other item which
may be expressly identified or noticed as confidential to be non-disclosing
party (collectively "confidential information"). Notwithstanding the foregoing,
each of the parties shall have the right to disclose any confidential
information to such of its officers, directors, employees, shareholders, agents
and representatives as they need to know such confidential information in order
to proceed with the transactions contemplated hereby. CFC may make a general
public announcement about the subject matter of this Agreement at such time as
CFC may deem appropriate. Any such announcement shall be subject to approval as
to its contents by the NHBC Shareholders.
(b) ENTIRE AGREEMENT; MODIFICATION. This Agreement, and the documents
delivered pursuant hereto, record the entire agreement among the parties hereto
and all the representations and warranties made by any party with respect to the
subject matter hereof. This Agreement may be amended only by a written
instrument executed on behalf of each of the parties, or by a duly authorized
officer as appropriate.
(c) GOVERNING LAW. All questions relating to the validity,
interpretation and performance of this Agreement shall be determined in
accordance with the laws of the State of New York, without reference to
principles of conflict of laws.
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(d) NOTICES. All communications under this Agreement shall be in
writing and shall be deemed to have been duly given on the date of service if
served personally on the party to whom notice is to be given, or on the third
day after mailing, if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, return receipt requested, postage
prepaid and properly addressed as follows:
To CFC:
Champion Financial Corporation
00 Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
With copies (which shall not constitute
notice) to:
Xxxxxx X. Xxxxxxx, Xx., Esq.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
To the NHBC Shareholders:
Xxxx X. Xxxxxxxx
0000 X. Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx
0000 X. Xxxxxxxxxx
Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
With copies (which shall not constitute
notice) to:
______________
______________
______________
Attention:___________
(e) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(f) HEADINGS. The Section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provisions thereof.
(g) SURVIVAL OF REPRESENTATIONS. The representations and warranties
contained in this Agreement shall survive the closing.
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused
this Agreement to be executed by their officers thereunto duly authorized as of
the day and year first above written.
/s/ Xxxx X. Xxxxxxxx
------------------------
Xxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxx
------------------------
Xxxxxxx X. Xxxxxx
Champion Financial Corporation
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------
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EXHIBITS
Exhibit A Officers and Directors of NHBC
Exhibit B Subsidiaries, etc. of NHBC
Exhibit C Equipment Encumbrances
Exhibit D Real Property
Exhibit E Employee Benefit Plans
Exhibit F Taxes
Exhibit G Legal Compliance
Exhibit H Certain Transactions
Exhibit I Directors and Officers of CFC
Exhibit J Subsidiaries, etc. of CFC
Exhibit K CFC Employee Benefit Plans
Exhibit L Form of Employment Agreement
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NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT A
Officers and Directors of
National Health Benefits & Casualty Corp
Xxxx X. Xxxxxxxx President/CEO
0000 X. Xxxx Xxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx Executive Vice President
0000 X. Xxxxxxxxxx Xxxx Xxxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxxxx X. Xxxxxxxxx Vice President
0000 X. 00xx Xx.
Xxxxxxxxxx, XX 00000
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NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT B
Subsidiaries, etc. of
National Health Benefits & Casualty Corp
None
19
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT C
Equipment Encumbrances
All of the equipment is subject to a blanket security interest in
favor of NHBC's principal lending bank.
20
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT D
Real Property
Lease is attached
21
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT E
Employee Benefit Plans
None
22
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT F
Taxes
None
23
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT G
Legal Compliance
None
24
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT H
Certain Transactions
25
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT I
Directors and Officers of CFC
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NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT J
Subsidiaries, etc. of CFC
MPLC, Inc. is a wholly owned subsidiary of CFC. MPLC has entered into
an agreement to purchase 40% of the outstanding capital stock of Xxxxx,
Incorporated.
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NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT K
CFC Employee Benefit Plans
28
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT L
Form of Employment Agreement
NONE
