AGREEMENT, dated as of June 16, 1997 (the "Agreement"), among Consumer Health
Network, Inc. a New Jersey corporation ("CHN" or the "Seller"), the shareholders
of the Seller set forth on Exhibit A hereto (individually a "Shareholder" and
collectively the "Shareholders"), CHN Acquisition Corp., a New Jersey
corporation ("Newco") and Complete Management, Inc., a New York corporation
("Complete").
WITNESSETH:
WHEREAS, the respective Boards of Directors of each of Newco, Complete and
Seller deem it desirable and in the best interests of their respective
corporations and shareholders that Seller merge with and into Newco (the
"Merger") in accordance with the Agreement and Plan of Merger of even date
herewith (the "Merger Agreement") and the applicable laws of the State of New
Jersey;
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder, for himself only, and not jointly, hereby represents and
warrants to and agrees with Newco and Complete, as follows:
1.01 Ownership. As of the date hereof, such Shareholder owns beneficially
and of record the number of shares of Seller Common Stock set forth opposite his
name on Exhibit A.
1.02 No Liens. Except as set forth on Schedule 1.02, and except for the
obligation of the Shareholder to deliver shares under the Merger Agreement, the
shares of Seller Common Stock owned by such Shareholder are free and clear of
all liens, charges, encumbrances and restrictions of any kind and nature
whatsoever and none of such shares is subject to any agreement whatsoever with
respect to the voting, sale or pledge thereof or any like matter, nor has any
proxy been granted to any corporation, company, partnership, joint venture,
other entity or natural person (a "Person") with respect to any such shares of
Seller Common Stock.
1.03 Authorization of Agreement. This Agreement has been duly and validly
executed and delivered by or on behalf of such Shareholder and constitutes a
valid obligation of such Shareholder, enforceable in accordance with its terms
against such Shareholder, except to the extent that such enforceability may be
limited by applicable insolvency, bankruptcy, reorganization or similar laws
affecting the
1.04 Complete Documents. Complete has distributed to such Shareholder, and
such Shareholder represents and warrants to Complete that such Shareholder has
had an opportunity to review, prior to his execution and delivery of this
Agreement, Complete's Form 10-K for the year ended December 31, 1996 and
Complete's Form 10-Q for the quarter ended March 31, 1997 and the Final
Prospectus dated December 5, 1996, each as filed by Complete with the Securities
and Exchange Commission together with any amendments thereto (the "Commission
Reports").
1.05 Investment Intent. All shares of Complete Common Stock to be acquired
by each Shareholder pursuant to this Agreement are being acquired for such
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Shareholder's own account, solely for the purpose of investment and not with a
view to, or for sale in connection with, any distribution thereof other than in
compliance with federal and state securities laws. Such Shareholder acknowledges
that all such shares of Complete Common Stock have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state or other
jurisdiction, and that all such shares of Complete Common Stock bear a legend in
substantially the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, (THE "SECURITIES ACT") AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS A REGISTRATION STATEMENT WITH
RESPECT TO THESE SHARES HAS BECOME EFFECTIVE
UNDER THE SECURITIES ACT, OR THE CORPORATION HAS
BEEN FURNISHED WITH AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED."
1.06 Full Disclosure. Each Shareholder with respect to any representation
or warranty made individually by such Shareholder, whether in this Agreement or
in any document to be delivered by such Shareholder pursuant hereto, further
represents and warrants that such representations and warranties do not contain
or will not contain any untrue statement of a material fact or fail or will fail
to state any material fact necessary to make any statement herein or therein not
materially misleading.
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ARTICLE II
COVENANTS OF THE SHAREHOLDERS
2.01 Covenant Not to Compete. For the period beginning on the Closing Date
and ending on the fifth anniversary thereof (the "Non-Compete Period"), each of
the Shareholders except Xxxxx X. Xxxxx hereby covenants and agrees that without
Complete's prior written consent, such except Xxxxx X. Xxxxx Shareholder will
not anywhere in the States of New York, New Jersey or Connecticut (i) compete,
directly or indirectly, with Complete or any of its affiliates in the business
or activities in which the Seller is now engaged (the "Seller's Business"); (ii)
directly or indirectly, on such Shareholder's own behalf or on behalf of or as
an employee or agent of any other person or entity, contact or approach any
person or business, wherever located, for the purpose of competing with Complete
in the Seller's Business, in the States of New York, New Jersey or Connecticut;
(iii) participate as a director, officer, consultant, or partner of, or have any
other direct or indirect financial interest in, any enterprise which engages in
the Seller's Business in the States of New York, New Jersey or Connecticut;
provided, however, that each Shareholder may own up to two (2%) percent of the
capital stock of any corporation (other than Complete as to which this proviso
shall not apply) required to file reports pursuant to the Securities Exchange
Act of 1934 that is in competition with the Seller; or (iv) participate as an
employee, agent, representative or consultant in, or render any services to, any
enterprise in which he has responsibilities for activities which compete,
directly or indirectly, with the Seller's Business in the States of New York,
New Jersey or Connecticut, except for Xxxxxx X.
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Xxxxxxxxx who may continue to operate CPR Medical Marketing and Communications
Inc., and Xxxxxxx X. Xxxxxxx who may continue to operate Xxxxxxx, Xxxx &
Company, P.C., each as he currently does, without any restriction whatsoever.
2.02 Confidential Information. During the Non-Competition Period and at
any time thereafter, such Shareholder (other than Xxxxx X. Xxxxx) shall keep
secret and retain in strictest confidence, and shall not use for the benefit of
himself or others, all confidential matters relating to the Seller's Business,
including, without limitation, customer lists, operational methods and other
business affairs relating to the Seller's Business known by such Shareholder
and, except as otherwise required by law, shall not disclose such information to
anyone, except with Complete's express prior written consent.
2.03 Non-Solicitation. Each Shareholder except Xxxxx X. Xxxxx shall not at
any time during the Non-Compete Period (i), directly or indirectly, hire,
solicit or encourage to leave the employment of Complete or any of its
affiliates, any employee of Complete or any of its affiliates who work in or
perform services for the Seller's Business, including any person who has left
the employment of Complete or any of its affiliates during the six months
preceding the end of the Non-Compete Period, or (ii) solicit business from or
services to any entity that was a customer of Newco during the Non Compete
Period.
2.04 Acknowledgment; Severability. Each of the Shareholders except Xxxxx
X. Xxxxx acknowledges that the restrictions contained in Sections 2.01, 2.02 and
2.03 are reasonable and necessary to protect the business and interests of
Complete
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and that any violation of these restrictions will cause substantial and
irreparable injury to Complete. Therefore, each Shareholder agrees that Complete
is entitled, in addition to any other remedies, to preliminary and permanent
injunctive relief to secure specific performance, and to prevent a breach or
contemplated breach, of Sections 2.01, 2.02 and/or 2.03 The restrictions set
forth herein shall be construed as independent covenants, and the existence of
any claim or cause of action against Complete, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Complete of the restrictions contained in Sections 2.01, 2.02 and 2.03. In the
event that the provisions of Sections 2.01, 2.02 and/or 2.03 should ever be
deemed to exceed the time or geographic limitations or any other limitations
permitted under applicable laws, then such provisions shall be deemed reformed
to the maximum extent permitted by applicable laws. The parties acknowledge that
the provisions of this Article II shall not apply to Xxxxx X. Xxxxx.
ARTICLE III
INDEMNIFICATION
3.01 Indemnification by the Shareholders. The Shareholders hereby jointly
and severally covenant and agree with Newco and Complete that, to the extent of
the Escrow Fund described in Section 3.04 hereof they shall reimburse and
indemnify Newco and Complete and their respective successors and assigns
(individually an "Indemnified Party") and hold them harmless from, against and
in respect of any and all costs, losses, claims, liabilities, fines, penalties,
damages and expenses (including interest which may be imposed in connection
therewith and court costs and reasonable
6
fees and disbursements of counsel) incurred by any of them due to, arising out
of, or in connection with, a breach of any of the representations, warranties,
covenants or agreements made by Seller in the Merger Agreement (a "Claim"),
provided that they have been given notice of the subject matter of the
indemnification providing reasonable details as to all claims on or before 18
months after the Closing . In no event shall the Shareholders have any personal
liability for the indemnification obligations set forth in this Section 3.01,
the liability therefor being limited to the Escrow Fund described in Section
3.04.
3.02 Indemnification by Complete. Complete hereby covenants and agrees
with the Shareholders that it shall reimburse and indemnify the Shareholders and
their respective successors and assigns (also individually an "Indemnified
Party") and hold them harmless from, against and in respect of any and all
costs, losses, claims, liabilities, fines, penalties, damages and expenses
(including interest which may be imposed in connection therewith and court costs
and reasonable fees and disbursements of counsel) incurred by any of them due
to, arising out of, or in connection with, a breach of any of the
representations, warranties, covenants or agreements made by Complete or Newco
in this Agreement or the operation by Complete of the Seller's Business after
the Closing (also a "Claim").
3.03 Right to Defend, etc.
(a) If the facts giving rise to any such indemnification shall
involve any actual Claim or demand by any third party against an Indemnified
Party, the indemnifying party shall be entitled to notice of and entitled to
defend or prosecute
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such Claim at its expense and through counsel of its own choosing if it advises
in writing of its intention to do so to the Indemnified Party within thirty (30)
days after notice of such Claim has been given to the indemnifying party
(without prejudice to the right of any Indemnified Party to participate at its
expense through counsel of its own choosing). Such Indemnified Party shall
cooperate in the defense and/or settlement of such Claim, but shall be entitled
to be reimbursed, as provided herein, for all costs and expenses incurred by it
in connection therewith. No settlement of any Claim may be made without the
consent of the indemnifying party, which consent may not be unreasonably
withheld; provided, however, that if such indemnifying party has been offered
the opportunity to defend such Claim and has elected not to do so then
settlement may be made without the consent of the indemnifying party.
(b) Notwithstanding Section 3.03(a) hereof, if, in the reasonable
opinion of Complete, any Claim involves an issue or matter which could have a
materially adverse effect on the business, operations, assets or prospects of
Complete or Newco, then, and in such event, Complete shall have the right to
control the defense or settlement of any such Claim. If Complete should so elect
to exercise such right, the indemnifying party shall have the right to
participate in, but not control, the defense or settlement of such Claim. No
settlement of any such Claim may be made without the consent of the indemnifying
party, which consent may not be unreasonably withheld.
3.04 Escrow Fund.
(a) Immediately after receipt by the Shareholders of Complete Common
Shares as part of the First Consideration, they shall deliver to Morse, Zelnick,
Rose &
8
Lander LLP, in escrow, such number of shares as have a value of not less
than One Million Dollars ($1,000,000), when valued at the price used in
determining the issuance thereof. Such shares, together with the Additional
Consideration, if any, shall constitute a fund out of which any obligation of
the Shareholders under this Article III shall be paid and satisfied (such fund
being herein called the "Escrow Fund"). Until any securities deposited in the
Escrow Fund are withdrawn by Complete pursuant hereto, each Shareholder shall
each retain the right to exercise voting powers relating to his proportionate
share of such securities and to substitute property of equal value therefor.
Each Shareholder shall be entitled to such Shareholder's proportionate share of
any dividends or other income in respect to any securities or cash held in
escrow as in this Section provided, and Complete promptly after the receipt by
it of any such dividends or income, shall pay the same, proportionally, to the
Shareholders. The Escrow Fund shall be held by Complete until the expiration of
18 months from the Closing and at the end of such period the Escrow Fund, less
any reduction thereof pursuant hereto and less amounts reasonably necessary to
satisfy claims asserted hereunder but not determined prior to such date, shall
be returned to the Shareholders in proportion to their contribution, and at the
end of the Indemnity Period the balance of the Escrow Fund, if any, less
reductions shall be returned to the Shareholders.
(b) At the time of any payment by Complete to any third person because of
a breach of any warranty or representation by the Shareholders, or at the time
the amount of any liability on the part of the Shareholders under this Section
is determined (which in the case of payments to third parties shall be the dates
of such payments), the
9
amount of such payment or liability shall be deducted and withdrawn by Complete
from Escrow Fund. Shares used for such purpose, shall be valued at the Closing
Price of Complete Common Stock on the trading day immediately preceding the date
on which such liability is finally determined.
ARTICLE IV
REGISTRATION RIGHTS
4.01 In the event that, during the period between the first and second
anniversary of the Closing, the Company is not current in its filings as
required by the Securities and Exchange Act of 1934, as amended, then the
Shareholders shall be entitled to the rights described in a Registration Rights
Agreement of even date herewith between Complete and the Shareholders.
ARTICLE V
GENERAL PROVISIONS
5.01 Survival of Representations, Warranties, Covenants, and Agreements.
The representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution of this Agreement and the closing of the
transactions contemplated by this Agreement for a period of 18 months following
the Closing. If any claim for indemnity has been timely made but has not been
resolved by the parties prior to the expiration of the applicable time period of
survival them, and in such event, such claim shall survive until finally
resolved.
5.02 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection with
this
10
Agreement and the transactions contemplated including all accounting,
auditing and legal fees hereby shall be paid by the party incurring such
expense.
5.03 Notices. All notices, requests, demands and other communications
which are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given when (a) delivered in person
or by facsimile and dispatch by first class mail,(b) the day following dispatch
by an overnight courier service (such as Federal, Express or UPS, etc.) or (c)
three (3) days after dispatch by certified or registered first class mail,
postage prepaid, return receipt requested, to the party to whom the same is so
given or made:
If to Newco or
Complete addressed to: Complete Management, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxxx, Chief Executive
Officer
Fax: (000) 000-0000
with a copy to: Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
If to a Shareholder addressed to: the address or facsimile
number set forth below such
Shareholder's name on Exhibit A
with a copy to: Xxxxxxxxxx, Sandler, Kohl, Xxxxxx &
Xxxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx XxxXxx, II, Esq.
Fax: (000) 000-0000
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If to CHN addressed to: Consumer Health Network, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxxx, XX 00000
Attn: Xxxx X. X'Xxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxxxxxx, Sandler, Kohl, Xxxxxx &
Xxxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx XxxXxx, II, Esq.
Fax: (000) 000-0000
or such other address as any of the parties shall hereafter notify the other
parties in writing.
5.04 Assignability and Amendments. This Agreement and the rights and
obligations created hereunder shall not be assignable by any of the parties.
This Agreement cannot be altered or otherwise amended except pursuant to an
instrument in writing signed by each of the parties.
5.05 Entire Agreement. This Agreement and the Exhibits and Schedules which
are a part hereof and the other writings and agreements specifically identified
herein contain the entire agreement among the parties with respect to the
transactions contemplated herein and supersede all previous written or oral
negotiations, commitments and understandings except for an Agreement and Plan of
Merger among the Seller, Newco and Complete.
5.06 Waivers, Remedies. Any condition to the performance of any party
hereto which legally may be waived on or prior to the Closing Date may be waived
by the party entitled to the benefit thereof. Any waiver must be in writing and
signed by the party to be bound thereby. A waiver of any of the terms or
conditions of this
12
Agreement shall not in any way affect, limit or waive a party's rights under any
other term or condition of this Agreement. All remedies under this Agreement
shall be cumulative and not alternative.
5.07 Counterparts and Headings. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. All headings (including,
without limitation, Article headings and Section titles) are inserted for
convenience of reference only and shall not affect its meaning or
interpretation.
5.08 Severability. If and to the extent that any court of competent
jurisdiction holds any provision (or any part thereof) of this Agreement to be
invalid or unenforceable, such holding shall in no way affect the validity of
the remainder of this Agreement.
5.09 No Third-Party Beneficiaries. Nothing contained in this Agreement
shall be deemed to confer rights on any Person or to indicate that this
Agreement has been entered into for the benefit of any Person, other than the
parties hereto.
5.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
[balance of this page intentionally left blank]
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5.11 Binding Effects. This Agreement shall be binding upon and incur to
the benefit of the parties hereto, their successors, legal representatives and
assigns.
COMPLETE MANAGEMENT, INC.
by: /s/ Xxxxxx Xxxxxxx
----------------------------------------
Xxxxxx Xxxxxxx, Executive Vice President
CHN ACQUISITION CORP.
by: /s/ Xxxxxx Xxxxxxx
----------------------------------------
Xxxxxx Xxxxxxx, Executive Vice President
CONSUMER HEALTH NETWORK, INC.
by: /s/ Xxxx X.X'Xxxxxx
----------------------------------------
Xxxx X. X'Xxxxxx, Chairman
[signatures of shareholders appear on following page]
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SHAREHOLDERS
/s/ Xxxx X. X'Xxxxxx
---------------------------------------
Xxxx X. X'Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxx
---------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxxx, by Xxxxxxx Xxxxxx,
attorney-in-fact
/s/ Xxxxxxx X. Xxxxx
---------------------------------------
Xxxxxxx X. Xxxxx
/s/ J. Xxxxxx Xxxxxx
---------------------------------------
J. Xxxxxx Xxxxxx
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. XxXxxxxxx
---------------------------------------
Xxxxx X. XxXxxxxxx
ESTATE OF XXXXXXX X. XXXXXXXXX
by: /s/ Xxxxx X. XxXxxxxxx
---------------------------------------
Xxxxx X. XxXxxxxxx, Co-Executrix
ESTATE OF XXXXXXX X. XXXXXXXXX
by: /s/ Xxxxx X. XxXxxxxx
---------------------------------------
Xxxxx X. XxXxxxxxx, Co-Executrix
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