INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (the "Agreement") is made and
entered into as of the 22nd day of December, 1997 by and among
IATROS HEALTH NETWORK, INC., a Delaware corporation ("IHNI") and
NEWCARE HEALTH CORPORATION, a Nevada corporation ("NewCare").
W I T N E S S E T H:
WHEREAS, IHNI desires to sell to NewCare, and NewCare
desires to purchase from IHNI, 4,000,000 newly issued shares (the
"Shares") of the common stock, par value $.0001 per share, of
IHNI (the "Common Stock") for an aggregate purchase price of
$1,000,000 (the "Purchase Price") pursuant to the terms and
conditions set forth herein;
WHEREAS, IHNI has, by resolution of the Board of Directors
of IHNI (the "IHNI Board"), increased the number of directors
serving on the IHNI Board to seven members;
WHEREAS, IHNI desires to grant NewCare the right to appoint
the Chairman of the Board of the IHNI Board (the "Chairman") and
one additional director to serve on the IHNI Board at the
discretion of NewCare (the "Additional Director" and, together
with the Chairman, the "NewCare Directors") who will begin
serving on the IHNI Board immediately upon the execution and
delivery hereof; and
WHEREAS, the parties hereto wish to set forth their
agreement with respect to the purchase and sale of the Shares by
NewCare and the appointment of the NewCare Directors;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt of which is
acknowledged by the undersigned, the undersigned hereby agree as
follows:
Section 1. Agreement of Purchase and Sale.
Simultaneously with the execution hereof, NewCare shall purchase
from IHNI and IHNI shall sell to NewCare the Shares for the
Purchase Price, and IHNI will make delivery of the Shares to
NewCare by delivering to NewCare share certificate(s)
representing the Shares in the amount contemplated hereby. The
Purchase Price shall be paid by NewCare in accordance with the
following:
Forgiveness of Indebtedness. Two Hundred Eleven
Thousand Dollars ($211,000) shall be paid
contemporaneously with the execution and delivery
hereof by cancelling the indebtedness of IHNI in favor
of NewCare represented by that certain Promissory Note
dated as of December 12, 1997; and
Payment of Balance. Seven Hundred Eighty-Nine
Thousand Dollars ($789,000) shall be paid in equal
installments of One Hundred Ninety-Seven Thousand Two
Hundred Fifty Dollars ($197,250) on each of January 15,
1998, February 15, 1998, March 15, 1998 and April 15,
1998, unless the parties hereto mutually agree in
writing to a different method and timing of payment
hereunder.
Section 2. Corporate Governance.
Appointment of NewCare Directors. Immediately upon
the execution and delivery hereof, IHNI shall take
whatever action is necessary (including any necessary
amendments of the Bylaws of IHNI) to implement the
provisions of this Section 2 and to cause the full IHNI
Board, at and immediately after the date hereof, to
include the NewCare Directors, each of whom shall be
chosen by NewCare, at its sole discretion. If any
person chosen by NewCare to serve on the IHNI Board as
a NewCare Director is unable or unwilling to serve, or
if a NewCare Director resigns or is removed from the
IHNI Board, such person shall be replaced by an
individual or individuals designated by NewCare, in its
sole discretion.
Equitable Considerations. IHNI acknowledges that
irreparable loss and injury would result to NewCare
upon the breach of any of the covenants contained in
this Section 2 and that damages arising out of such
breach would be difficult to ascertain. IHNI hereby
agrees that, in addition to all other remedies provided
at law or in equity, NewCare may petition and obtain
from a court of law or equity, without the necessity of
proving actual damages and without posting bond or
other security, both temporary and permanent injunctive
relief and all other equitable remedies available to
NewCare to prevent a breach by IHNI of any covenant
contained in this Section 2.
Section 3. Representations and Warranties of IHNI. As a
material inducement to enter into this Agreement, IHNI represents
and warrants to NewCare as follows, and acknowledges and confirms
that NewCare is relying upon such representations and warranties
in connection with the execution, delivery and performance
hereof, notwithstanding any investigation made by NewCare or on
its behalf.
3.1 Due Organization. IHNI is a corporation duly
organized, existing and in good standing under the laws
of the State of Delaware with corporate power and
authority to conduct its business as currently
conducted and to own and use its assets as currently
owned and used.
3.2 Capital Stock. IHNI's authorized shares consist of
25,000,000 shares of the Common Stock, of which
16,330,449 shares were outstanding as of December 15,
1997, and 5,000,000 shares of preferred stock, $.0001
par value per share, of which 533,333 shares of Series
A Preferred Stock and 100,000 shares of Series B
Preferred Stock were outstanding as of December 15,
1997.
3.3 No Derivatives. Except as set forth in Exhibit"A"
attached hereto and incorporated herein by this
reference, there are no options, subscriptions,
warrants, calls, rights or commitments obligating IHNI
to issue equity securities or acquire its equity
securities.
3.4 Shares Duly Authorized, Validly Issued, Etc. The
Shares have been duly authorized, are validly issued
and have not been issued in violation of any statutory
preemptive rights of shareholders and are fully paid
and non-assessable shares of the Common Stock, and no
personal liability attaches or will attach to NewCare
by reason of its ownership thereof in accordance with
Section 152 of the Delaware General Corporation Law.
3.5 No Encumbrances. IHNI has all right, title and
interest in and to the Shares, free and clear of all
liens, claims and encumbrances.
3.6 Due Authorization. This Agreement has been duly
authorized by all necessary corporate action on the
part of IHNI and constitutes a valid and binding
obligation of IHNI, enforceable against IHNI in
accordance with its terms.
3.7 No Violation. The execution, delivery and
performance of this Agreement by IHNI does not (with or
without the giving of notice, the passage of time or
both) result in any violation of the Certificate of
Incorporation and Bylaws of IHNI or conflict with or
constitute a breach of any contract, agreement or
obligation of IHNI.
Section 4. Representations and Warranties of NewCare.
As a material inducement to enter into this Agreement, NewCare
represents and warrants to IHNI as follows, and acknowledges and
confirms that IHNI is relying upon such representations and
warranties in connection with the execution, delivery and
performance hereof, notwithstanding any investigation made by
IHNI or on its behalf:
4.1 Due Organization. NewCare is a corporation duly
organized, existing and in good standing under the laws
of the State of Nevada with corporate power and
authority to conduct its business as currently
conducted and to own and use its assets as currently
owned and used;
4.2 Due Authorization. This Agreement has been duly
authorized by all necessary corporate action on the
part of NewCare and constitutes a valid and binding
obligation of NewCare, enforceable against NewCare in
accordance with its terms; and
4.3 No Violation. The execution, delivery and
performance of this Agreement by NewCare does not (with
or without the giving of notice, the passage of time or
both) result in any violation of the Articles of
Incorporation and Bylaws of NewCare or conflict with or
constitute a breach of any contract, agreement or
obligation of NewCare.
Section 5. Registration Rights.
5.1 Shelf Registration. (a) Upon written request by
NewCare in accordance with the terms of Subsection 9.4
hereof within one (1) year following the date hereof,
IHNI shall file with the Securities and Exchange
Commission (the "Commission") a shelf registration
statement on an appropriate form under Rule 415 under
the Securities Act of 1933, as amended (the "Securities
Act"), or any similar rule that may be adopted by the
Commission (a "Shelf Registration Statement"), relating
to the resale of the Shares by NewCare from time to
time in accordance with the methods of distribution set
forth in such Shelf Registration Statement and shall
use its best efforts to cause such Shelf Registration
Statement to be declared effective under the Securities
Act as soon as practicable thereafter.
(b) IHNI shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order
to permit the prospectus forming a part thereof to be
usable by NewCare until the earliest to occur of the
following: (A) the two year anniversary of the date
hereof; (B) the earliest time at which all the Shares
have been sold pursuant to the Shelf Registration
Statement; and (C) the earliest time at which, in the
written opinion of independent counsel to IHNI, all
outstanding Shares held by persons that are not
affiliates of IHNI may be resold without registration
under the Securities Act pursuant to Rule 144(k) under
the Securities Act or any successor provision thereto
(in any such case, such period being called the
"Effectiveness Period"). IHNI shall be deemed not to
have used its best efforts to keep the Shelf
Registration Statement effective during the requisite
period if IHNI voluntarily takes any action that would
result in NewCare not being able to offer and sell the
Shares during the Effectiveness period, unless such
action is required by applicable law.
5.2 Registration Procedures. In connection with
any Shelf Registration Statement, the following
provisions shall apply:
(a) IHNI shall take such action as may be necessary so
that (i) any Shelf Registration Statement and any
amendment thereto and any prospectus forming part
thereof and any amendment or supplement thereto (and
each report or other document incorporated therein by
reference in each case) complies in all material
respects with the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
and the respective rules and regulations thereunder,
(ii) any Shelf Registration Statement and any amendment
thereto does not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not misleading
and (iii) any prospectus forming part of any Shelf
Registration Statement, and any amendment or supplement
to such prospectus, does not include an untrue
statement of a material fact or omit to state a
material fact necessary in order to make the
statements, in the light of the circumstances under
which they were made, not misleading.
(b) IHNI shall advise NewCare:
(i) when a Shelf Registration Statement and any
amendment thereto has been filed with the
Commission and when the Shelf Registration
Statement or any post-effective amendment thereto
has become effective;
(ii) upon the issuance by the Commission of any
stop order suspending effectiveness of the Shelf
Registration Statement or the initiation of any
proceedings for that purpose;
(iii) upon the receipt by IHNI of any notification
with respect to the suspension of the
qualification of the securities included therein
for sale in any jurisdiction or the initiation of
any proceeding for such purpose; and
(iv) upon the happening of any event that requires
the making of any changes in the Shelf
Registration Statement or the prospectus so that,
as of such date, the Shelf Registration Statement
and the prospectus do not contain an untrue
statement of a material fact and do not omit to
state a material fact required to be stated
therein or necessary to make the statements
therein (in the case of the prospectus, in light
of the circumstances under which they were made)
not misleading (which advice shall be accompanied
by an instruction to suspend the use of the
prospectus until the requisite changes have been
made).
(c) IHNI shall, during the Effectiveness Period,
deliver to NewCare with respect to a Shelf Registration
Statement, without charge, as many copies of the
prospectus (including each preliminary prospectus)
included in such Shelf Registration Statement and any
amendment or supplement thereto as NewCare may
reasonably request; and IHNI consents to the use of the
prospectus or any amendment or supplement thereto by
NewCare in connection with the offering and sale of the
IHNI Shares covered by the prospectus or any amendment
or supplement thereto during the Effectiveness Period.
(d) Prior to any offering of the Shares pursuant to
any Shelf Registration Statement, IHNI shall register
or qualify or cooperate with NewCare and its counsel in
connection with the registration or qualification of
the Shares for offer and sale under the securities or
blue sky laws of such jurisdictions as NewCare
reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the
offer and sale in such jurisdictions of the Shares
covered by such Shelf Registration Statement.
(e) Upon the occurrence of any event contemplated by
Subsection 4.2(b)(iv) above, IHNI shall promptly
prepare a post-effective amendment to any Shelf
Registration Statement or an amendment or supplement to
the related prospectus or file any other required
document so that, as thereafter delivered to purchasers
of the Shares included therein, the prospectus will not
include an untrue statement of a material fact or omit
to state any material fact necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading. If IHNI
notifies NewCare of the occurrence of any event
contemplated by Section 4.2(b)(iv) above, NewCare shall
suspend the use of the prospectus until the requisite
changes to the prospectus have been made.
(f) IHNI may require NewCare with respect to the Shelf
Registration Statement to furnish to IHNI such
information regarding NewCare and the distribution of
the Shares as may be required by applicable law or
regulation for inclusion in such Shelf Registration
Statement.
(g) IHNI will use its best efforts to cause the Shares
to be listed with the Nasdaq Small Cap Market or other
stock exchange or trading system on which the Common
Stock primarily trades on or prior to the effective
date of any Shelf Registration Statement hereunder."
Section 6. Parties' Knowledge and Sophistication.
NewCare hereby represents the following:
6.1 Sophistication. NewCare has sufficient knowledge
and experience in financial and business matters to be
able to evaluate the risks and merits of the investment
represented by the purchase of the Shares hereunder.
6.2 Economic Risks. NewCare is able to bear the
economic risks of its investment in the Shares,
including the risk of losing all of such investment.
6.3 No Need for Liquidity. NewCare has no need for
liquidity with respect to its investment in the Shares.
6.4 Independent Investigation. NewCare understands that
no prospectus, offering circular or other offering
statement containing information with respect to IHNI
and the Shares or with respect to IHNI's business is
being issued by IHNI herewith, and NewCare has made its
own inquiry and analysis with respect to IHNI and the
Shares, IHNI's business and other material factors
affecting the investment in the Shares. NewCare
acknowledges that it has either been supplied with or
has had access to information to which a reasonable
investor would attach significance in making investment
decisions, and has had the opportunity to ask questions
and receive answers from IHNI management and from other
knowledgeable individuals concerning IHNI, its business
and the Shares so that, as a reasonable investor,
NewCare has been able to make an informed decision to
purchase the Shares. In determining to proceed with
this transaction, NewCare has relied solely on the
results of its own independent investigation with
respect to the Shares.
Section 7. Manner of Sale. The Shares were not offered
to NewCare by means of publicly disseminated advertisements or
sales literature, or as a part of a general solicitation, nor is
NewCare aware of any offers made to other persons by such means.
NewCare understands that the Shares are not being registered
under the Securities Act or under the securities or Blue Sky laws
and regulations of any state in reliance upon exemptions from
registration. NewCare further understands that the Shares cannot
be sold, transferred or otherwise disposed of unless subsequently
registered under the Securities Act and applicable state
securities or Blue Sky laws or pursuant to an exemption from such
registration which is available at the time of desired sale, and
will bear a legend to that effect.
Section 8. Investment Intent. NewCare is purchasing the
Shares for its own account and for investment purposes and not
with a view to resale or other distribution thereof inconsistent
with or in violation of the federal securities laws or the
securities or Blue Sky laws of any state.
Section 9. Indemnification.
9.1 Indemnities. Subject to the limitations hereinafter
set forth, from and after the date hereof, IHNI and
NewCare (hereinafter referred to respectively as the
"Indemnifying Party") shall indemnify and save the
other party hereto, as the case may be (hereinafter
referred to respectively as the "Indemnified Party"),
and each of such Indemnified Party's employees,
shareholders, subsidiaries, affiliates, officers,
directors, successors and assigns, as the case may be,
harmless from, against, for and in respect of any and
all claims, injuries, damages and liabilities,
including, without limitation, reasonable attorneys'
fees and costs (collectively, "Damages") suffered,
sustained, incurred or required to be paid by any
Indemnified Party by reason of (a) the failure of
performance or breach by the Indemnifying Party of any
of the terms and conditions set forth in this
Agreement, (b) the untruth, inaccuracy or breach of any
representation, warranty, agreement or covenant of the
Indemnifying Party contained in or made pursuant to
this Agreement, and (c) any untrue statement or alleged
untrue statement of a material fact contained in any
Shelf Registration Statement or prospectus contained
therein or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, in light of the circumstances
under which they were made.
9.2 Rules Regarding Indemnification.
The obligations and liabilities of the Indemnifying
Party hereunder with respect to Damages resulting from
the assertion of liability by the Indemnified Party
shall be subject to the following terms and conditions:
(a) The Indemnified Party shall give prompt written
notice to the Indemnifying Party of any claim that
might give rise to a claim by the indemnified party
against the Indemnifying Party based on the indemnity
agreement contained in Subsection 8.1 hereof, stating
the nature and basis of said claims and the amounts
thereof, to the extent known; and
(b) if any claim, action, suit or proceeding is
brought against the Indemnified Party with respect to
which the Indemnifying Party may have liability under
the indemnity agreement contained in Subsection 8.1
hereof, the claim, action, suit or proceeding shall,
upon the written acknowledgment by the Indemnifying
Party that it is obligated to indemnify under
Subsection 8.1 hereof, be defended (including all
proceedings on appeal or for review that counsel for
the Indemnified Party shall deem appropriate) by the
Indemnifying Party. The Indemnified Party shall have
the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at
the Indemnified Party's own expense unless (i) the
employment of such counsel and the payment of such fees
and expenses both shall have been specifically
authorized by the Indemnifying Party in connection with
the defense of such claim, action, suit or proceeding,
or (ii) such Indemnified Party shall have reasonably
concluded and specifically notified the Indemnifying
Party that there may be specific defenses available to
it that are different from or additional to those
available to the Indemnifying Party or that such claim,
action, suit or proceeding involves or could have an
effect upon matters beyond the scope of the indemnity
agreement contained in Subsection 8.1 hereof, in which
event the Indemnifying Party, to the extent made
necessary by such defenses, shall not have the right to
direct the defense of such claim, action, suit or
proceeding on behalf of the Indemnified Party. In such
case only that portion of such fees and expenses
reasonably related to matters covered by the indemnity
agreement contained in Subsection 8.1 hereof shall be
borne by the Indemnifying Party. The Indemnified Party
shall be kept fully informed of such claim, action,
suit or proceeding at all stages thereof whether or not
it is so represented. The Indemnifying Party shall
make available to the Indemnified Party and its
attorneys and accountants all books and records of the
Indemnifying Party relating to such claims, proceedings
or litigation, and the parties hereto agree to render
to each other such assistance as they may reasonably
require of each other in order to ensure the proper and
adequate defense of any such claim, action, suit or
proceeding.
(c) The Indemnified Party shall not make any
settlement of any claims without the written consent of
the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
(d) Except as herein expressly provided, the remedies
provided in this Section 8 shall be cumulative and
shall not preclude the assertion by any party of any
other rights or the seeking of any other rights or
remedies against any other party hereto.
Section 10. Miscellaneous.
10.1 Governing Law. This Agreement shall be governed
by, construed and enforced in accordance with the laws
of the State of Georgia, without regard to its
principles of conflicts-of-laws.
10.2 Entire Agreement. This Agreement contains the
entire understanding of the parties with respect to the
transactions contemplated hereby and supersede all
prior agreements and understandings between the parties
with respect to such matters.
10.3 Section Headings. The section and subsection
headings contained in this Agreement are for reference
purposes only and will not affect in any way the
meaning or interpretation of this Agreement.
10.4 Notices. All notices and other communications
under this Agreement shall be in writing and may be
given by any of the following methods: (i) personal
delivery; (ii) facsimile transmission; (iii) registered
or certified mail, postage prepaid, return receipt
requested; or (iv) overnight delivery service requiring
acknowledgment of receipt. Any such notice or
communication shall be sent to the appropriate party at
its address or facsimile number given below (or at such
other address or facsimile number for such party as
shall be specified by notice given hereunder):
If to IHNI:
Iatros Health Network, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile:404/262-7627
Attention: General Counsel
with a copy to:
Xxxxxxxxxx & Xxxxxxxx
2500 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
If to NewCare:
NewCare Health Corporation
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxx & Hardin LLP
2700 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxx, Esq.
10.5 Amendments. This Agreement may not be changed
orally or modified, amended or supplemented without an
express written agreement executed by each of the
parties hereto.
10.6 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be
considered one and the same agreement, and shall become
effective when one or more counterparts have been
signed by each of the parties and delivered to the
other parties.
[Signatures Next Page]
IN WITNESS WHEREOF, IHNI and NewCare have each executed and
delivered this Agreement by its duly authorized officer as of the
day and year first above written.
IATROS HEALTH NETWORK, INC.
By:________________________
Its:_______________________
NEWCARE HEALTH CORPORATION
By:________________________
Its:_______________________
