AGREEMENT AND PLAN OF MERGER, dated as of June 16, 1997 (the "Agreement"), among
Consumer Health Network, Inc. a New Jersey corporation ("CHN" or the "Seller"),
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 this Agreement and the applicable laws of the State
of New Jersey;
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
MERGER OF SELLER WITH AND INTO NEWCO
1.01 Merger and Surviving Corporation.
(a) Pursuant to the applicable laws of the State of New Jersey, on
the Effective Date (as hereinafter defined) Seller shall merge with and into
Newco, and Newco shall be the surviving corporation after the Merger (the
"Surviving Corporation") and shall continue to exist under the provisions of the
Business Corporation Act of New Jersey ("BCA"). The name of the Surviving
Corporation shall be Consumer Health Network, Inc. The separate existence of
Seller shall cease upon the Effective Date (as defined below).
(b) The Certificate of Incorporation of Newco, shall (as amended to
change the name of Newco to Consumer Health Network, Inc.), from and after the
Effective Date, be
the Certificate of Incorporation of the Surviving Corporation, until amended in
accordance with the BCA.
(c) The By-Laws of Newco shall, from and after the Effective Date,
be the By-Laws of the Surviving Corporation, until altered or amended in
accordance with the BCA or as provided herein.
1.02 Effectiveness of the Merger. In the event that all of the conditions
precedent to the obligations of each of the parties hereto as hereinafter set
forth shall either have been satisfied or waived, a Certificate of Merger under
the applicable provisions of the BCA substantially in the form annexed hereto as
Exhibit B, (the "Merger Certificate"), shall be delivered for filing as soon as
practicable following the Closing Date (as defined below) to the Secretary of
State of New Jersey and shall become effective upon the acceptance of the filing
of such Merger Certificate by said Secretary State, which date shall be the
"Effective Date" for purposes of this Agreement and which date shall be as soon
as practicable after the Closing.
1.03 Conversion of Seller Stock and Newco Stock. The manner and basis
of converting the shares of capital stock of Seller and Newco shall be as
follows:
(a) Each of the 100 common shares, par value $.01 per share, of
Newco (the "Newco Stock"), issued and outstanding at the Effective Date and all
rights with respect thereto shall, by reason of and simultaneous with the Merger
and without any action on the part of the holder thereof, be unaltered, and
shall continue to be the sole issued and outstanding shares of Newco's capital
stock immediately following the Effective Date.
(b) (i) All of the common shares, no par value, of Seller (the
"Seller Common Stock") issued and outstanding at the Effective Date and all
rights with respect thereto shall, by reason of and simultaneous with the Merger
and without any action on the
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part of the holders thereof be canceled and converted into a right to receive in
the aggregate the Consideration (as defined below).
(ii) Immediately following the Effective Date each of the
shareholders of the Seller set forth on Exhibit A hereto (collectively, the
"Shareholders") shall be entitled, upon the surrender to Newco of such
certificates of Seller Common Stock as shall represent all of his shares of such
stock, properly endorsed, to receive the percentage of the Consideration as is
set forth next to such Shareholder's name under the column headed Applicable
Percentage on Exhibit A (the "Applicable Percentage").
(iii) All rights with respect to shares of Seller Common Stock
shall cease and terminate at the Effective Date, notwithstanding that any
certificates evidencing said shares of Seller's Common Stock shall not have been
surrendered to Newco, and the holders of said shares shall have no interest in
or claims against the Surviving Corporation arising out of the ownership of such
shares of Common Stock, except for the right to receive the Consideration for
such Common Stock in accordance with the terms hereof.
(c) Immediately following the Effective Date, any and all options or
other rights to acquire any shares of the capital stock or other equity security
of Seller shall be canceled and shall thereafter be void and of no further force
and effect.
1.04 Directors and Officers of the Surviving Corporation. The Board of
Directors of the Surviving Corporation shall consist of Xxxxxx Xxxxxxxxxx, Xxxxx
Xxxxxxxx, Xxxxxx Xxxxxxxx and one person designated by Seller (the "Seller
Director") and reasonably acceptable to Complete, all as set forth on Schedule
1.04 hereto, which Directors shall hold office from and after the Effective
Date, in accordance with the By-Laws of the Surviving Corporation until the next
annual meeting of stockholders and until their respective successors
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shall have been duly elected and qualified. Notwithstanding the foregoing,
during the Adjustment Period (defined below) the Seller Director shall not be
removed or replaced, except by a majority in interest of the Shareholders. The
officers of the Surviving Corporation shall be those persons set forth on
Schedule 1.04 hereto; provided, however, that the listing of such persons on
said Schedule 1.04 shall not be deemed to constitute an employment agreement
with the Surviving Corporation or any other entity or any assurance as to future
employment. Such persons shall continue to hold their respective offices until
such time as their successors shall have been duly appointed and qualified.
1.05 Tax Treatment The parties acknowledge that the merger will be treated
as a sale of assets from CHN to Newco for federal, state and local income tax
purposes and CHN, Shareholders, Newco and Complete each hereby agree to report
the transaction as a sale of assets from CHN to Newco for federal, state and
local income tax purposes. The obligation to pay sales and similar transfer
taxes which may be payable with respect to the consummation of the transactions
contemplated by this Agreement shall be borne by Newco.
ARTICLE II
CONSIDERATION; CLOSING
2.01 Consideration. The "Consideration" to be received by the Shareholders
of Seller in the Merger shall consist of the "First Consideration" as determined
in accordance with Section 2.04 hereof and the "Additional Consideration" as
determined in accordance with Section 2.05 hereof.
2.02 Payment of Consideration. The manner and time of payment of the First
Consideration shall be as provided in Section 2.04 hereof and the manner and
time of payment of the Additional Consideration shall be as provided in Section
2.05 hereof.
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2.03 Definitions. As used in this Article II and elsewhere in this
Agreement, the following terms shall have the following respective meanings:
(a) "Adjustment Period" shall mean the period beginning on July 1,
1997 and ending on June 30, 1998
(b) "Closing Price of Complete Common Stock" for any given trading
day shall mean the closing price per share of the common stock, par value $.001
of Complete ("Complete Common Stock") as quoted in the Wall Street Journal
American Stock Exchange Composite Transactions Table for such day or if shares
of Complete Common Stock are not listed on the American Stock Exchange on such
day the closing price per share of Complete Common Stock in the then primary
market for shares of Complete Common Stock on such day.
(c) "Company Business" shall mean the business of Seller as
conducted either directly or indirectly through Newco or any successor company
to Newco during the Adjustment Period.
(d) "Company Earnings" shall mean the net income, computed on an
accrual basis, of the Company Business for the relevant period determined in
accordance with generally accepted accounting principles, consistently applied,
after depreciation and amortization of intangibles, but excluding amortization
of goodwill created in this transaction or depreciation of any increase in asset
basis as a result of this transaction and prior to any accrual for, or payment
of, any federal, state or local taxes measured by such net income, all as
determined by the independent public accountants who examine and report on the
consolidated financial statements of Complete and its subsidiaries.
Notwithstanding that the same may not be in accordance with generally accepted
accounting principles, the following
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principles shall apply to the determination of Company Earnings: (i) Company
Earnings shall not include any gains or losses on the sale or other disposition
of any fixed assets; (ii) Company Earnings shall not include any general
corporate overhead of Complete or management fees to Complete; and (iii) charges
for services provided to or on behalf of the Company Business by or on behalf of
Complete or any affiliate of Complete (such as fees for audit and legal service
or for insurance) shall be chargeable to Company Earnings but shall not be
greater than the charges which the Company Business would reasonably have had to
pay for such services if they were rendered by an unaffiliated third party. In
determining Company Earnings for the Adjustment Period there shall not be
deducted from income any additional expenses incurred which are not consistent
with those incurred by the Seller in the operation of the Company Business prior
to the Closing. For purposes of determining Company Earnings for the Adjustment
Period, it shall be assumed that the Company Business has been operated only in
the usual, regular and ordinary manner and consistent with past practices and no
expenses or other items which constitute a material departure from past business
practices such as, by way of example, and not by way of limitation, marketing or
other material expenses incurred to change or expand the lines of business or
expand the areas or states in which the Company Business operates, shall be
deducted from income.
2.04 First Consideration. The First Consideration shall be $8,000,000,
payable in cash, and $4,000,000 payable in shares of Complete Common Stock,
valued as set forth below, both payable on the Effective Date by Complete to the
Shareholders against the delivery to Newco of all of the outstanding shares of
Seller Common Stock; provided however that the cash portion of the First
Consideration shall be reduced by the amount, if any, by which stockholders
equity, before giving effect to the Merger is less than $3.4 million at
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closing. The amount of such reduction shall be initially determined based upon a
preliminary balance sheet as of the Closing to be delivered by Seller to
Complete at the Closing and adjusted by additional payment by Complete or refund
by the Shareholders, as the case may be, based upon a final closing balance
sheet of Seller at such date to be prepared as soon as practicable after
Closing.
2.05 Additional Consideration. The Shareholders shall be entitled to
receive, and Complete shall pay to the Shareholders, as "Additional
Consideration" the following:
(a) Within thirty (30) days after the determination of Company Earnings
for Adjustment Period, the Shareholders shall be paid Additional Consideration,
if any, in an amount equal to five (5) times the Company Earnings in excess of
$2,600,000, but in no event more than an aggregate of $1,000,000. The
determination of Company Earnings shall be made within ninety (90) days of the
end of the Adjustment Period. The Shareholders or their designated accountant
shall be provided with any and all documents reasonably requested and/or shall
have the right to review the documents and materials used in connection with the
determination of Company Earnings after the determination by the Company of such
earnings.
(b) The Additional Consideration shall be payable either in cash, or at
the election of Complete, in shares of Complete Common Stock, valued as set
forth below.
2.06 Determination of Consideration.
(a) For purposes of determining the First Consideration, the value of
Complete Common Stock shall be the average Closing Price of Complete Common
Stock for the first ten (10) of the twenty 20 trading days preceding the
Closing. For purposes of determining the Additional Consideration, the value of
Complete Common Stock shall be the average Closing
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Price of Complete Common Stock for the first ten (10) of the twenty (20) trading
days preceding the end of the Adjustment Period.
(b) Each Shareholder shall be entitled to that portion of the First
Consideration and Additional Consideration as shall be equal to such
Consideration multiplied by such Shareholder's Applicable Percentage.
(c) If the Shareholders object to either (i) a reduction in the First
Consideration pursuant to Section 2.04 hereof or (ii) the amount of Additional
Consideration payable to them pursuant to Section 2.05 hereof, they shall have a
right to request an audit of the financial statements upon which such amounts
are based. Any such audit shall be jointly performed by Purchaser's regularly
employed independent public accountant and an independent public accountant
designated by the Shareholders; provided, however, that in the event that such
accounting firms cannot agree as to amounts, then such firms shall agree upon a
third firm with no prior relationship to either of the parties hereto or to
either of such accounting firms and the decision of such third firm shall
prevail. Complete and the Shareholders shall each bear the cost of its
accountant and such parties shall share the cost of the third accountant.
2.07 Closing Date. The closing of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Morse, Zelnick, Rose &
Lander, LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 2:00 P.M. on the day
following the date on which all of the conditions set forth in Articles VIII and
IX hereof have been satisfied or waived, or at such other place, date or time as
shall be mutually agreed on by the Seller and Complete (such time and such date
or such other agreed upon time and date is called the "Closing Date"). The
parties agree that if the Closing shall not have occurred on or before June 16,
1997, either
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CHN or Complete may terminate this Agreement by written notice to each of the
parties hereto.
ARTICLE III
[intentionally omitted]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller hereby represents and warrants to and agrees with Newco and
Complete as follows:
4.01 Organization and Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey, with full power and authority to conduct its business as now
conducted and to own or lease and operate the assets and properties now owned or
leased and operated by it. The Seller is duly qualified to do business and,
except as forth on Schedule 4.01, is in good standing in each jurisdiction in
which the nature of its business or the character of its properties requires
such qualification except where the failure to be so qualified would not have a
material adverse effect on the business of the Seller taken as a whole (a
"Material Adverse Effect"). The jurisdictions in which Seller is so qualified
are set forth on Schedule 4.01.
4.02 Capitalization of Seller. The total authorized capital stock of
Seller consists of 1,000,000 shares of common stock, no par value, of which
1,564 shares are issued and outstanding. All of such issued and outstanding
shares have been duly authorized and validly issued, are fully paid and
non-assessable and were issued in compliance with all appropriate federal and
state securities laws.
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4.03 Subsidiaries of Seller. The Seller has no subsidiaries nor owns
any equity interest in any corporation, partnership or other entity.
4.04 Options, Etc. Except as set forth on Schedule 4.04, the Seller has
outstanding (a) no option, warrant or other right to purchase, acquire or
convert into any shares of its capital stock or other equity securities, or (b)
no other agreement or right (preemptive, contractual or otherwise) to issue or
sell any such shares of its capital stock or other equity securities.
4.05 No Restrictions on Securities. Except as set forth on Schedule 4.05,
and except as may be contemplated hereby, the Seller is not a party to any
agreement (a) creating rights in any person with respect to shares of its
capital stock or (b) relating to the voting of shares of its capital stock on
any matter.
4.06 Authority and Compliance. The Seller has full corporate power and
authority and has obtained all necessary authorizations and approvals by its
Board of Directors to execute and deliver this Agreement and to consummate the
transactions contemplated hereby subject to approval by the Shareholders. Seller
will seek the unanimous written consent of its Shareholders within two (2) days
of the execution hereof and will advise Complete if such consent has not been
obtained within five (5) days of such execution. Subject to receipt of
Shareholder approval, this Agreement has been duly and validly executed and
delivered on behalf of the Seller and constitutes a valid obligation of the
Seller, enforceable against the Seller in accordance with its terms, except to
the extent that such enforceability may be limited by applicable insolvency,
bankruptcy, reorganization or similar laws affecting the enforcement of
creditors' rights generally and by general equity principles. Except for the
Certificate of Merger and as otherwise contemplated hereby and as set forth on
Schedule 4.06 no consent,
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authorization or approval of, exemption by, or filing with, any domestic
governmental or administrative authority, or any court, is required to be
obtained or made by the Seller in connection with the execution, delivery and
performance of this Agreement by the Seller or the consummation of the
transactions contemplated hereby by the Seller, except for any which if not
obtained would not have a Material Adverse Effect.
4.07 Certificate of Incorporation; By-Laws. The Seller has previously
furnished to Newco and Complete true, complete and correct copies of (a) the
Certificate of Incorporation, as amended to date, of the Seller and (b) the
By-Laws, as currently in effect, of the Seller.
4.08 No Conflict. Except as set forth on Schedule 4.08, the performance of
this Agreement by the Seller and the consummation of the transactions
contemplated hereby by the Seller will not result in a breach or violation of
any of the terms or provisions of, or constitute a default under, (i) any
contract or other agreement or instrument to which Seller is a party or by which
Seller or any of its properties or assets is bound, or (ii) the articles of
incorporation or by-laws of the Seller, or (iii) any law, order, rule,
regulation, writ, injunction or decree applicable to the Seller and which, if
breached or violated would have a Material Adverse Effect..
4.09 Compliance with Law. Except as set forth on Schedule 4.09, the
Seller, and its use and occupancy of its assets and properties wherever located,
are both in substantial compliance with all, and not in material violation of
any, regulation of the Health Care Finance Administration ("HCFA"), except for
violations caused by unknowing reliance on misinformation provided by medical
practice clients, or of any other applicable law, statute or ordinance, or any
order, rule or regulation of any governmental agency or body to which the
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Seller or its business, operations, assets or properties is subject, involving,
specifically any Government Regulation with respect to the licensure or
operation of a preferred provider network in New Jersey, New York or
Connecticut, and which would not have a Material Adverse Effect nor has the
Seller received any claim or notice that it is in violation of any of the
foregoing or failed to obtain or to substantially adhere to the requirements of
any material government license, permit or authorization necessary to the
ownership, possession, use or occupancy of its assets and properties or to the
conduct of its business which would have a Material Adverse Effect. All
governmental permits, licenses and authorizations utilized by Seller in the
ownership or possession of the assets and properties of the Seller or to the
operation of the business of the Seller is set forth in Schedule 4.09.
4.10 Financial Statements.
(a) Schedule 4.10(a) contains copies of the audited financial
statements of the Seller for each of the three years ended December 31, 1994,
December 31, 1995, and December 31, 1996 (the "Financial Statements"). The
Financial Statements are true and correct, have been prepared in accordance with
Generally Accepted Accounting Principles ("GAAP") and present fairly, in all
material respects, the financial position of the Seller as of such dates, and
the results of its operations and cash flows for each of the years then ended.
(b) Schedule 4.10(b) contains copies of the unaudited financial
statements of the Seller for the 4 months ended April 30, 1997 (the "Interim
Statements"). The Interim Statements are true and correct have been prepared
substantially in accordance with GAAP and consistent with all interim statements
for the current year and the prior year's audited statements (reflecting all
adjustments thereto consistent with adjustments required or permitted in audited
financial statements prepared strictly in accordance with GAAP) except that such
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statements contain no financial statement notes. The Interim Statements present
fairly, in all material respects, the financial position of the Seller as of
April 30, 1997 and the results of its operations and cash flows for the 4 month
period then ended.
(c) Except as set forth on Schedule 4.10(c), as at the date of the
Interim Statements, except (i) as reflected in the Interim Statements; (ii) as
not required to be reflected in the Interim Statements substantially in
accordance with GAAP and consistent with all interim statements for the current
year and the prior year's audited statements (reflecting all adjustments thereto
consistent with adjustments required or permitted in audited financial
statements prepared strictly in accordance with GAAP) except that such
statements contain no financial statement notes, or (iii) as provided in the
Schedules referred to in this Agreement or not required to be disclosed therein
by reason of term or amount or other qualifications, the Seller at such date did
not have any liabilities or obligations of any kind or nature whatsoever,
whether known, unknown, absolute, accrued, contingent or other.
4.11 Books and Records. The books of account and other financial records
of the Seller are complete and correct in all material respects and are
maintained in accordance with good business practices, and accurately reflect
the basis for the preparation of the Financial Statements and the Interim
Statements.
4.12 Real Property. The Seller does not own any real property.
4.13 Assets and Properties. Except as set forth on Schedule 4.13, the
Seller has good and marketable title to all of its personal property reflected
in the Interim Statements or acquired by it subsequent thereto (except for such
property sold or otherwise disposed of in the ordinary course of business since
such date), free and clear of all liens, pledges, mortgages, security interests,
conditional sales contracts, leases, subleases, licenses and other
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encumbrances of any kind or nature whatsoever except liens reflected on the
Financial Statements or the Interim Statements, liens for taxes not yet due and
payable and liens which do not, individually or in the aggregate, materially
impair the value or use of such property or the ability of the Seller to conduct
its business as now conducted.
4.14 Condition of Assets and Properties. All tangible assets and
properties owned or used by the Seller in its business are in good operating
condition and repair (normal wear and tear excepted) and are usable in the
ordinary course of the business of the Seller as previously conducted and all
computer hardware has been serviced and maintained by qualified vendors.
4.15 Receivables. All accounts receivable reflected on the Financial
Statements, and all accounts receivable acquired or created by the Seller
subsequent to the date thereof to and including the Closing Date (the "New
Receivables") arose and/or will arise from bona fide transactions in the
ordinary course of business. All accounts receivable reflected on the Financial
Statements and all New Receivables as shall exist on the Closing Date, in excess
of a reserve of $130,000 with respect to accounts receivable shown on the
Financial Statements and a reserve equal to 8% of the aggregate amount of New
Receivables (the "Net Receivables") will be collected in full within 18 months
following the Closing Date for workers' compensation and automobile no-fault
receivables and nine months following the Closing Date for all other
receivables. If less than the Net Receivables are collected, within such time
periods, then the underage shall be charged to the Escrow Fund to be established
by the Shareholders (the "Escrow Fund"). If the underage, or any portion
thereof, is recovered by Complete from the Escrow Fund and additional
receivables are then collected, Complete shall pay to the Shareholders an amount
equal to such additional collection, but no more than the
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recovery from the Escrow Fund. If more than the Net Receivables are collected
within such time periods then the excess collections shall be paid to the
Shareholders. Any amounts to be paid by Complete hereunder shall be paid within
19 months after the Closing.
4.16 Absence of Certain Events. Except as set forth on Schedule 4.16, or
as otherwise contemplated by this Agreement, since December 31, 1996, the Seller
has not:
(a) amended its Certificate of Incorporation or By-Laws:
(b) changed its authorized capital stock or issued or sold, or
purchased, redeemed or otherwise acquired, or issued any rights to subscribe
for, or warrants to purchase, or entered into any agreement, commitment or
obligation (including, without limitation, any convertible securities) to issue,
sell, purchase, redeem or otherwise acquire, any shares of its capital stock, or
made any declaration or any payment or distribution of any dividend or any other
distribution with respect to its capital stock;
(c) incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice, or discharged or
satisfied any lien or encumbrance, or paid any liabilities, other than in the
ordinary course of business consistent with past practice;
(d) sold, assigned or transferred any of its assets or properties
except in the ordinary course of business consistent with past practice;
(e) created, incurred, assumed or guaranteed any indebtedness for
money borrowed (other than in the ordinary course of business consistent with
past practice), or mortgaged, pledged or subjected to any lien, pledge,
mortgage, security interest, conditional sales contract or other encumbrance any
of its assets or properties;
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(f) made any amendment or termination of any material contract,
commitment or agreement to which it is a party or by which it is bound, or
canceled, modified or waived any material debts or claims held by it, in each
case other than in the ordinary course of business consistent with past
practice, or waived any rights of material value, whether or not in the ordinary
course of business;
(g) other than in the ordinary course of business consistent with
past practice, or as required by law or any Contract (as hereafter defined) or
Employee Plan (as hereafter defined) increased the salaries or other
compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its shareholders, directors,
officers or employees, or made any increase in, or any additions to, other
benefits to which any of its shareholders, directors, officers or employees may
be entitled;
(h) made any capital expenditure or capital addition or betterment
(including any capitalized lease transaction) except such which were made in the
ordinary course of business consistent with past practice and which do not
exceed $25,000 in amount in the aggregate;
(i) changed any of the accounting principles followed by it or the
methods of applying such principles; or
(j) entered into any material transaction or operated other than in
the ordinary course of business consistent with past practice.
4.17 Taxes and Tax Returns. Seller is a Sub Chapter S Corporation and pays
no federal income taxes. The amounts established as liabilities or reserves for
taxes on the Financial Statements and the Interim Statements are sufficient for
the payment of all state and
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local taxes and all employment and payroll-related taxes, including any
penalties or interest thereon, whether or not based upon or measured by income
of the Seller accrued for or applicable to all periods ended on or prior to the
date of the Interim Statements. The Seller has (i) duly made all deposits
required by law to be made with respect to employees' withholding taxes; (ii)
duly filed (subject to any extensions of time to file any tax returns which the
Seller has duly availed itself of) with all appropriate governmental agencies
and bodies, whether federal, state or local, all income, sales, license,
franchise, excise, gross receipts, employment and payroll-related and real and
personal property tax returns and all other tax returns which were required to
be filed, all of which properly reflect the taxes owed by them for the periods
covered thereby, and they have paid, or established adequate liabilities or
reserves for the payment of, all taxes shown to be due on such returns; and
(iii) not received any notice of assessment or deficiency or proposed assessment
by the Internal Revenue Service or any other taxing authority in connection with
such tax returns which has not been satisfied in full and there is no pending
tax examination of or tax claim asserted against the Seller. None of the federal
income tax returns of the Seller has ever been audited by the Internal Revenue
Service. No agreement for the extension of time or waiver of the statute of
limitations for the assessment of any tax deficiency or adjustment for any year
is in effect as against the Sellers. True, correct and complete copies of all
federal, state and local income and/or franchise tax returns filed by the Seller
since January 1, 1995 have previously been made available to Complete and Newco.
4.18 Patents, Trademarks, Copyrights, Etc. Schedule 4.18 contains a
complete and correct list of all patents, patent rights, patent applications,
material licenses, trademarks, trademark applications, trade names, copyrights,
material computer software and similar rights
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(collectively "Rights") currently owned or used by the Seller in the conduct of
the business of the Seller, indicating, where applicable, the registered and
beneficial owner and the expiration date thereof. Except as indicated on
Schedule 4.18, the Seller owns or validly licenses all Rights and other
proprietary information utilized in the conduct of its business as currently
being conducted and the Seller's Rights and the conduct of the business of the
Seller as currently conducted does not conflict with valid Rights of others in
any way.
4.19 Legal Proceedings, Etc. Except as set forth on Schedule 4.19 hereto,
there are no claims, actions, suits, proceedings, arbitrations or
investigations, either administrative or judicial, pending or to the best of
Seller's knowledge, threatened by, or against the Seller, or affecting its
business or any of its assets or properties, whether or not covered by
insurance, or specifically relating to the transactions contemplated by this
Agreement, at law or in equity or otherwise, before or by any court or
governmental agency or body, domestic or foreign, or before an arbitrator of any
kind nor are there any facts which are likely give rise to any claim, action,
suit, proceeding, arbitration or investigation affecting the Seller, its
business or any of its assets or properties.
4.20 Customers; Suppliers; Adverse Conditions. Except as set forth on
Schedule 4.20, there has not, since January 1, 1996, been any termination,
cancellation, modification or expiration of, nor to the best of Seller's
knowledge any threatened termination, cancellation, modification, a notice of
non-renewal of any contract relating to the business relationship of the Seller
with (a) any of the ten (10) largest customers of the Seller, (b) any of the
major suppliers of the Seller, (c) more than 10% of the hospitals whose services
are offered by Seller in each of New York, New Jersey or Connecticut and (d)
more than 10% of the medical practitioners whose services are offered in each of
New Jersey, New York or Connecticut.
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Also set forth on Schedule 4.20 are the ten largest customers of the Seller for
the year ended December 31, 1996, indicating the name of each such customer and
the volume of such business during 1995 and 1996.
4.21 Insurance. Schedule 4.21 contains a list all policies or binders of
fire, liability, errors and omissions, vehicular, title and other insurance held
by or on behalf of the Seller. The policies and binders included in Schedule
4.21 are in full force and effect, are valid, binding and enforceable in
accordance with their terms. There is no default by the Seller with respect to
any material provision contained in any such policy or binder nor has there been
any failure to give any notice or present any claim under any such policy or
binder in due and timely fashion. No notice of cancellation or nonrenewal of any
such policy or binder has been received or to the best knowledge of Seller,
threatened..
4.22 Schedules of Assets; Properties; Customers; Suppliers. Set forth on
Schedule 4.22 are complete and accurate lists of the following:
(a) All machinery, vehicles, equipment and software owned by the
Seller and material to the Seller's business;
(b) All machinery, vehicles, equipment and software under lease or
license to the Seller and material to the Seller's business, together with the
identity of the lessor or the annual rental or fees and unexpired lease term for
any such leased property;
(c) All real property and interests in real property (including the
location thereof and the description of any structures located thereon) under
lease to the Seller, together with the annual rental and unexpired lease term
and identity of the lessor;
19
(d) All entities or persons to whom the Seller has paid aggregate
fees to, and/or made aggregate purchases of goods or services from, in excess of
$50,000 during the year ended December 31, 1996;
(e) All affiliated or related party entities or persons to whom
Seller has paid fees (other than employee compensation), purchased goods or
services or leased real estate or equipment during the year ended December 31,
1996; and
(f) All potential material contracts or agreements in active process
of negotiation which are not otherwise described on any other Schedule hereto.
4.23 Contracts and Commitments.
(a) Except as listed and described on Schedule 4.23, or any other
Schedule annexed hereto, the Seller is not a party to any:
(i) Contract (as defined below) with any present or former
shareholder, director, officer, employee or consultant (including, without
limitation, any employment agreement);
(ii) Contract for the future purchase of, or payment for,
supplies, products, insurance or financial instruments involving annual payment
in excess of $50,000 or for the performance of services by a third party
involving annual payment in excess of $25,000;
(iii) Contract to sell or supply products or to perform
services involving receipt by the Seller of consideration in excess of $125,000
annually;
(iv) lease under which the Seller is the lessor or lessee
relating to either real or personal property and involving annual payments by or
to the Seller in excess of $10,000;
20
(v) Contract or Contracts for the borrowing of money or a line
of credit, or for a guarantee, pledge or undertaking of the indebtedness of any
other person;
(vi) factoring agreement or agreement for the assignment of
receivables;
(vii) Contract with respect to any Rights;
(viii) Contract for any capital expenditure involving future
payments, which, together with future payments under all other existing
Contracts for all capital projects are in excess of $50,000;
(ix) Contract limiting or restraining in any respect the
Seller from engaging or competing in any lines of business or with any
person;
(x) Contract requiring the Seller to loan money to any person
in the future; or
(xi) other Contract involving more than (a) five percent (5%)
of the Seller's revenues for 1996 or (b) expenses in excess of $125,000 per item
or in the aggregate. As used in the Agreement, the term "Contract" includes any
mortgage, indenture, agreement, license, contract, commitment or lease.
(b) Except as may be otherwise set forth on Schedule 4.23, with
respect to each of the Contracts listed on any Schedule to this Agreement, (i)
such Contract is valid and enforceable against the Seller in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable insolvency, bankruptcy, reorganization or similar laws affecting the
enforcement of creditors' rights generally and by general equity principles,
(ii) the Seller is in compliance with the provisions thereof in all material
respects, (iii) no other party is in default in the performance, observance or
fulfillment of any material obligations,
21
covenant or condition contained therein and (iv) no event has occurred which
with or without the giving of notice or lapse of time, or both, would constitute
a default thereunder by the Seller. Except as set forth on Schedule 4.23, the
transactions as contemplated by this Agreement, will not (i) result in the
automatic termination of any Contract listed on any Schedule to this Agreement;
or (ii) result in the automatic acceleration or amendment of any of the terms of
any such Contract; or (iii) give rise to a right in any party to unilaterally
amend the terms of, or terminate, any such Contract.
4.24 Officers and Directors, Employees, Powers of Attorney and
Certain Authorized Persons. Set forth on Schedule 4.24 are complete and accurate
lists of the following:
(a) the names of all current directors and the names and offices of
all current officers of the Seller;
(b) the names, current annual compensation and current address of
the principal place of employment, of all present directors, officers and
employees of the Seller whose compensation is in excess of $50,000 per annum,
together with a statement of the full amount of any remuneration paid to each
such person during the year ended December 31, 1996;
(c) the names of all persons holding powers of attorney from the
Seller and a summary statement of the terms thereof;
(d) the names of all persons authorized to borrow money or incur or
guarantee indebtedness on behalf of the Seller;
(e) all safes, vaults and safe deposit boxes maintained by or on
behalf of the Seller and the names of all persons authorized to have access
thereto; and
22
(f) all bank accounts of the Seller and the names of all persons who
are authorized signatories with respect to such accounts.
4.25 Preferred Provider Network. Seller operates a preferred provider
network (a "PPN") in the states of New Jersey, New York and Connecticut.
Schedule 4.25 sets forth the number of hospitals and medical practices
comprising such PPN in each of New Jersey, New York and Connecticut during 1996
and at April 30, 1997. Schedule 4.25 also includes the forms of agreement
generally used by the Seller with medical practices and a sub-schedule of the
material economic terms of its agreements with hospitals comprising its network
in New Jersey, New York and Connecticut.
4.26 Interests in Property or Activities of the Sellers. Except as set
forth on Schedule 4.26, no Shareholder has any (direct or indirect) interest (a)
in any property, real or personal, tangible or intangible, used in the business
of the Seller or (b) in any Person which conducts business with the Seller.
4.27 Employee Benefit Plans. (a) Set forth on Schedule 4.27 is a summary
of each bonus, incentive, deferred compensation, profit sharing, pension,
retirement, disability, hospitalization, life insurance, health benefit, medical
reimbursement, vacation, sick pay, severance pay or other plan, program,
arrangement or agreement (whether written or oral) maintained by the Seller or
any other person relating to Seller's business and providing benefits to any of
the employees of the Seller ("Employee Plans").
(b) Set forth on Schedule 4.27 is the total amount of cumulative
fringe benefits to which employees of the Seller have accrued entitlement as of
April 30, 1996. All amounts required by the provisions of any Employee Plan and
applicable law to be contributed to any Employee Plan, have been or will be
contributed to such Employee Plan through the
23
Closing Date, no contribution being disproportionately large compared to any
prior contribution.
(c) None of the Employee Plans is a "multiemployer plan" as defined
in Section 3(37) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and the Sellers have never at any time contributed to a
"multiemployer plan." All Employee Plans are in compliance in all material
respects with the requirements prescribed by any and all applicable statutes,
orders or governmental rules or regulations currently in effect with respect
thereto, and the Seller has performed all material obligations required to be
performed by it under, and are not in default under or in violation of, any of
the Employee Plans. Each Employee Plan intended to be qualified under Section
401(a) of the Internal Revenue Code (the "Code") has heretofore been determined
by the Internal Revenue Service (the "IRS") to so qualify, and each trust
created thereunder has heretofore been determined by the IRS to be exempt from
tax under the provisions of Section 501(a) of the Code. As of the date hereof,
the Seller has not incurred any "withdrawal liability" within the meaning of
Section 4201 of ERISA with respect to any Employee Plan. There are no actions,
suits or claims pending, or threatened, or anticipated (other than routine
claims for benefits) against any Employee Plan or against the assets of any
Employee Plan. None of the transactions contemplated herein will (either alone
or upon the occurrence of any additional or subsequent events) constitute an
event under any Employee Plan or individual agreement that will or may result in
any payment (whether of severance pay or otherwise), acceleration, vesting, or
increase in benefits with respect to any employee, former employee or director
of the Seller. None of the Employee Plans nor any of the trusts relating thereto
has incurred any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA. No
24
person has engaged in any transaction involving any Employee Plan which is a
"prohibited transaction" under Section 406 of ERISA or Section 4975 of the Code.
(d) The Seller has provided Complete with true and correct copies of
all Employee Plans, any related trusts and the most recent IRS determination
letters with respect to each Employee Plan intended to qualify under Section
401(a) of the Code. The Seller has provided Complete with true and correct
copies of all actuarial reports, and all filings with the IRS, the Department of
Labor and the Pension Benefit Guaranty Corporation prepared during the past two
(2) years with respect to all of the Employee Plans.
(e) None of the Employee Plans provides post-retirement medical or
life insurance coverage with respect to the current or former employees of the
Seller, other than those contemplated under paragraph (f) below.
(f) The Seller fully complied with the continuation coverage
requirements set forth under Part 6 of Title 1 of ERISA so that no tax under
Section 4980B of the Code would result.
4.28 Finder. There is no firm, corporation, agency or other person that is
entitled to a finder's fee or any type of brokerage commission in relation to or
in connection with the transactions contemplated by this Agreement as a result
of any agreement or understanding with any of the Shareholders, the Seller or
any of its directors, officers, employees or shareholders, except as set forth
on Schedule 4.27. All such fees and commissions shall be accrued on Seller's
Interim Financial Statements
4.29 Full Disclosure. The Seller with respect to any representation or
warranty made individually by it whether in this Agreement or in any document to
be delivered by the Seller pursuant hereto, further represent and warrant that
such representation and warranties
25
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.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NEWCO AND COMPLETE
Newco and Complete hereby, jointly and severally, represent and warrant to
the Seller and the Shareholders as follows:
5.01 Organization and Good Standing.
(a) Newco is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey, with full corporate
power and authority to conduct its business as now conducted and to own or lease
and operate the assets and properties now owned or leased and operated by it.
The total authorized capital stock of Newco consists of 100 shares of Common
Stock par value $.001 per share. The outstanding shares of capital stock of
Newco consist of 100 shares of common stock, par value $.001, all of the which
are owned by Complete. All of such issued and outstanding shares have been duly
authorized and validly issued, are fully paid and non-assessable and were issued
in compliance with all federal and state securities laws.
(b) Complete is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York, with full corporate
power and authority to conduct its business as now conducted and to own or lease
and operate the assets and properties now owned or leased and operated by it.
5.02 Authority and Compliance. Each of Newco and Complete has full
corporate power and authority to execute and deliver this Agreement. The
consummation and
26
performance by Newco and Complete of the transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate and
other proceedings. This Agreement has been duly and validly executed and
delivered on behalf of each of Newco and Complete and constitutes a valid
obligation of each of Newco and Complete, enforceable in accordance with its
terms. Except for the Certificate of Merger and for filings and/or approvals
under applicable securities laws, no consent, authorization or approval of,
exemption by, or filing with, any domestic governmental or administrative
authority, or any court, is required to be obtained or made by Newco or Complete
in connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby.
5.03 No Conflict. The performance of this Agreement and the consummation
of the transactions herein contemplated will not result in a breach or violation
of any of the terms or provisions of, or constitute a default under, (i) any
contract or other agreement or instrument to which Newco or Complete is a party
or by which Newco or Complete or any of their properties or assets is bound, or
(ii) the articles of incorporation or by-laws of Newco or Complete or (iii) any
law, order, rule, regulation, writ, injunction or decree applicable to Newco or
Complete.
5.04 Complete Documents. Complete has delivered to the Shareholders true,
correct and complete copies of the Commission Reports (as defined in the
agreement of even date herewith among the parties hereto and the shareholders of
the Seller). The Commission Reports, at the respective date of their filing with
the Commission, did not contain any untrue statement of a material fact and did
not fail to state any material fact necessary in order to
27
make any statement made therein, in the light of the circumstances under which
they were made, not misleading.
5.05 Absence of Certain Events. Except as may be disclosed in the
Commission Reports, since December 31, 1996 there has not been any change in the
financial condition or in the nature of the business or operations of Complete,
which has had or which might have a materially adverse effect on its business,
operations, assets, properties or prospects.
5.06 Complete Stock. All of the shares of Complete Common Stock to be
issued to the Shareholders as contemplated by this Agreement will, upon
delivery, be duly authorized and validly issued, fully paid and non-assessable
and assuming the accuracy of the Shareholders' investment representation, issued
in compliance with all federal and state securities laws and free and clear of
all liens, charges, restrictions, mortgages, security interests or claims of any
kind.
5.07 Full Disclosure. No representation or warranty made by Complete or
Newco in this Agreement or in any document to be delivered by Complete or Newco
pursuant hereto contains, or will contain, any untrue statement of a material
fact or fails, or will fail, to state any material fact necessary to make any
statement herein or therein not materially misleading.
5.08 Business, Liabilities, etc. Newco has conducted no business, has
incurred no liabilities or become subject to any liens or encumbrances and has
no assets other than the cash received in payment of the par value of its
outstanding shares.
5.09 Securities Filings. Complete is registered under the Securities
Exchange Act of 1934 (the 'Exchange Act") and is required to file reports
thereunder. As of the date hereof Complete is current in its filings and will
remain current for at least two (2) years after the Closing. The reports filed
under the Exchange Act do not contain any untrue statement of a
28
material fact nor do they fail to state any material fact necessary to make any
statement therein not materially misleading.
ARTICLE VI
COVENANTS OF THE SELLER
The Seller covenants and agrees with Newco and Complete as follows:
6.01 Conduct of Business Until Closing Date. Except as contemplated by
this Agreement, from and after the date hereof until the Closing Date, the
Seller will:
(a) operate its business only in the usual, regular and ordinary
manner and, to the extent consistent with such operation, to (i) preserve the
present business organization intact, (ii) use its best efforts to keep
available the services of their present officers and significant employees
unless the Seller determined it to be in the best interests of the Seller to
terminate their relationship with such persons and (iii) use their best efforts
to preserve the present business relationships with customers, suppliers, and
others having business dealings with the Seller;
(b) use its best efforts to maintain all properties necessary for
the conduct of their business in substantially the same condition as they now
are (reasonable wear and tear excepted) and maintain in full force and effect
insurance with responsible companies comparable in amount, scope and coverage to
that in effect on the date of this Agreement;
(c) maintain its books, records and accounts in the usual, regular
and ordinary manner on a basis consistent with prior periods;
(d) duly comply with all laws known to be applicable to them and
material to the conduct of its business;
29
(e) perform all of its material obligations without default unless
being contested in good faith;
(f) neither (i) amend or change the Articles of Incorporation or the
By-Laws of the Seller; (ii) merge with or into, consolidate or otherwise combine
with, or acquire all or substantially all of the stock or assets of, any other
entity; (iii) sell, lease or otherwise transfer any significant part of its
assets other than in the ordinary course of business consistent with past
practice, nor (iv) change the character of its business;
(g) neither (i) increase the number of shares of capital stock or
other equity securities of the Seller issued and outstanding nor (ii) grant any
option, warrant, or other right to purchase or to convert any obligation into
shares of capital stock of the Seller;
(h) neither (i) declare, pay or make any dividend or other
distribution or payment in respect of the outstanding shares of capital stock of
the Seller other than a dividend to be declared which will not reduce
Shareholders' Equity at the Closing to less than an amount reasonably acceptable
to Complete nor (ii) purchase, redeem or otherwise acquire for consideration any
shares of capital stock of the Seller;
(i) neither (i) encumber, mortgage, or subject to lien any of their
properties or assets other than in the ordinary course of business; (ii) convey,
transfer or acquire any material asset or property other than in the ordinary
course of business; nor (iii) enter into any contract or undertaking relating
to, or pay or promise to pay, any bonus, profit-sharing, or special compensation
to any employee or director or make any increase in the compensation payable or
to become payable to any employee or director other than in the ordinary course
of business, or pursuant to a Contract or Employee Plan;
30
(j) neither (i) incur any debt nor (ii) modify, change or terminate
any of the Contracts disclosed on any Schedule to this Agreement, other than in
the ordinary course of business and except to provide compensation to a Board
Member in connection with this transaction which compensation shall be accrued
on the Interim Financial Statements;
(k) neither (i) change the banking arrangements described in
Schedule 4.24 other than in the ordinary course nor (ii) grant any power of
attorney; and
(l) not enter into any employment agreement not terminable by the
Seller on thirty (30) days notice or less without cost or liability.
6.02 Access. The Seller shall, upon prior notice, afford to Complete and
its representatives free and full access during regular business hours to all of
the books, records, contracts, documents, key personnel and properties of the
Seller. The Seller will use its best efforts to cause the key employees,
accountants, attorneys and other representatives of the Seller to cooperate
fully with Complete and to make full disclosure to Complete of all material
facts affecting the business properties and financial condition of the Seller,
as Complete shall reasonably request.
ARTICLE VII
[intentionally omitted]
ARTICLE VIIA
COVENANTS OF NEWCO AND COMPLETE
Complete and Newco hereby jointly and severally covenant and agree that
until June 30, 1998 (i) Complete shall operate the Seller's Business as a
separate and distinct profit center and shall maintain separate books of account
and other financial records for the Seller's Business, and (ii) that the
Seller's Business shall be operated on a day-to-day basis in
31
substantially the same manner in which it has been operated prior to the date
hereof, and (iii) that it shall provide D&O insurance to the Seller Director on
similar terms as the Directors appointed by Complete.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
NEWCO AND COMPLETE
The obligations of Newco and Complete pursuant to this Agreement are
subject to the satisfaction at the Closing of each of the following conditions;
provided, however, that Newco and Complete may, in their sole discretion, waive
any of such conditions and proceed with the transactions contemplated hereby.
8.01 Accuracy of Representations and Warranties. The representations and
warranties of the Seller and the Shareholders contained in this Agreement or any
other document delivered to Newco or Complete at the Closing in connection with
this Agreement or in any other agreement by the Shareholders dated even date
herewith shall be true and correct in all material respects on and as of the
Closing Date, as if made on and as of the Closing Date.
8.02 Performance of Agreements. The Seller and the Shareholders shall have
performed and complied with all covenants, obligations and agreements to be
performed or complied with by any of them on or before the Closing Date pursuant
to this Agreement.
8.03 Litigation, etc.
(a) No claim, action, suit, proceeding, arbitration, or hearing or
notice of hearing shall be pending (and no action or investigation by any
governmental authority shall be
32
threatened) which seeks to enjoin or prevent the consummation of the
transactions contemplated by this Agreement.
(b) No law, regulation or decree shall have been adopted or
promulgated after the date hereof, the enforcement of which would have a
Material Adverse Effect; and no law, regulation or decree shall have been
adopted or promulgated after the date hereof, the enforcement of which would
materially adversely affect Newco and Complete's ability to consummate the
transactions contemplated by this Agreement.
8.04 Approvals; Consents. All material approvals, consents, waivers,
filings, (other than the Certificate of Merger) registrations, permits,
authorizations or other actions required in connection with the Merger or which
may be required on account of the change in ownership of the Seller shall have
been obtained or made, including approvals from landlords with respect to all
material premises occupied by Seller, approvals with respect to the change in
ownership from all lessors of material equipment utilized by Seller in the
conduct of the Seller's Business and approval with respect to the continued
operation by Newco of a PPN in each of New Jersey, New York and Connecticut.
8.05 Opinion of Counsel. Newco and Complete shall have received from
Xxxxxxxxxx, Sandler, Kohl, Xxxxxx & Xxxxxx, counsel to the Seller, an opinion
addressed to Newco and Complete, dated the Closing Date in the form annexed
hereto as Schedule 8.05
8.06 Good Standing Certificates. Complete shall have received certificates
of the Secretary of State of New Jersey, New York and Connecticut, each dated
within thirty (30) days before the Closing Date, certifying, respectively, that
the Seller is validly existing and in good standing under the laws of the state
of New Jersey and is in good standing in New York and Connecticut.
33
8.07 Actions, Proceedings, etc. All actions, proceedings, instruments and
documents from Seller and Shareholders required to carry out the transactions
contemplated by this Agreement and all other related legal matters shall be
reasonably satisfactory to Complete and its counsel; and Complete shall have
been furnished by the Sellers and Shareholders with such other instruments and
documents as it shall have reasonably requested.
8.08 Casualty; Condemnation. Subsequent to the date hereof and prior to
the Closing Date, no material portion of the physical operating assets of Seller
shall have been destroyed or damaged (whether or not such entity is insured
against such loss) and no material portion of such physical operating assets
shall have been taken by condemnation or eminent domain or made the subject of
any condemnation or eminent domain proceeding, nor shall any such proceeding be
threatened.
8.09 Financial Statements; Consents.
(a) Prior to the Closing Date, Complete shall have receive a report
from Xxxxxx Xxxxxxxx & Co. that the Financial Statements are in form
satisfactory to meet the rules, regulations and requirements of the Securities
and Exchange Commission with respect to financial statements required to be
included in any registration statement to be filed under the Securities Act of
1933, as amended (the "Securities Act"), and/or any report to be filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and that the
audit procedures undertaken by X.X. Xxxx, LLP ( the "Seller Accountants") in
connection with the preparation of their report on the Financial Statements
shall be reasonably satisfactory to Xxxxxx Xxxxxxxx LLP. Complete shall direct
Xxxxxx Xxxxxxxx & Co. to act expeditiously in the matter in order to consummate
the transactions contemplated hereby within the time set forth in Section 2.06,
above.
34
(b) Prior to the Closing Date, the Seller Accountants shall have delivered
to Complete and Newco a letter (i) indicating that they understand that the
Audited Financial Statements may be included in a registration statement filed
by Complete under the Securities Act and (ii) agreeing with Complete that
subject to their prompt performance of any required procedures and subject to
payment by Complete of their reasonable fees in connection with their performing
such required procedures, they will promptly execute such consents as may be
required in connection with the inclusion of the Audited Financial Statements in
any registration statement to be filed under the Securities Act or report under
the Exchange Act.
8.10 Employment Agreements. Newco shall have entered into employment
agreements, or reached satisfactory understandings with respect to continued
employment, with each of the key officers or employees of Seller identified on
Schedule 8.10.
8.11 Preferred Provider Network Information. Seller shall have delivered
to Newco and Complete a copy of the provider directory for the PPN and
schedules, reasonably satisfactory to them, providing the following information:
(a) the medical practice specialty of each medical practitioner currently
in Seller's PPN;
(b) whether or not any practitioner in the PPN has had his professional
license suspended or revoked since the most recent edition of the provider
directory;
(c) all disciplinary proceedings or action now pending against
practitioners in the PPN or the results of any such proceedings determined
within the past year.
The information specified above can be based upon written information provided
to Seller from the practitioner. Seller shall have no liability for such
information, except where it knows that such information is untrue or
inaccurate, provided that Seller transfers to Newco
35
any transferable rights or claims it has against the medical practice provider
for misinformation or non-disclosure.
8.12 Other Agreements. The Shareholders shall have executed an
indemnification agreement dated even date herewith.
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE SELLER AND THE SHAREHOLDERS
The obligations of the Seller and the Shareholders under this Agreement
are subject to the satisfaction at the Closing of each of the following
conditions; provided, however, that the Seller and the Shareholders may, in
their sole discretion, waive any of such conditions and proceed with the
transactions contemplated hereby.
9.01 Accuracy of Representations and Warranties. The representations and
warranties of Newco and Complete contained in this Agreement, the Other
Agreement or any other document delivered by Newco or Complete to the Sellers or
the Shareholders at the Closing or in any other agreement dated the date hereof
in connection with this Agreement shall be true and correct in all material
respects on and as of the Closing Date, as if made on and as of the Closing
Date.
9.02 Performance of Agreements. Newco and Complete shall have performed
and complied with all covenants, obligations and agreements to be performed or
complied with by any of them on or before the Closing Date pursuant to this
Agreement.
9.03 Litigation, etc. No claim, action, suit, proceeding, arbitration or
hearing or notice of hearing shall be pending (and no action or-investigation by
any governmental
36
authority shall be threatened) which seeks to enjoin or prevent the consummation
of the transactions contemplated by this Agreement.
9.04 Opinion of Counsel to Complete. The Seller shall have received from
Morse, Zelnick, Rose & Lander, LLP, counsel to Newco and Complete, a favorable
opinion addressed to the Seller, dated the Closing Date in the form annexed
hereto as Schedule 9.05.
9.05 Actions, Procedures, etc. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated by this Agreement
and all other related legal matters shall be reasonably satisfactory to the
Seller and its counsel; and the Seller shall have been furnished with such other
instruments and documents as it shall have reasonably requested.
9.06 Material Adverse Change. There shall not have been, and on the
Closing Date there shall not be in existence, any event, condition or state of
facts which could reasonably be expected to result in any material adverse
change in the condition (financial or otherwise) of the assets, results of
operation, business or prospects of Newco or Complete.
ARTICLE X
[intentionally omitted]
ARTICLE XI
[intentionally omitted]
ARTICLE XII
GENERAL PROVISIONS
12.01 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
37
this Agreement until the expiration of the applicable statute of limitations. 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.
12.02 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated including all accounting,
auditing and legal fees hereby shall be paid by the party incurring such
expense.
12.03 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.
38
with a copy to: Xxxxxxxxxx, Sandler, Kohl,
Xxxxxx & Xxxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx XxxXxx, II, Esq.
Fax: (000) 000-0000
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.
12.04 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.
12.05 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 between the parties with respect
to the transactions contemplated herein and supersede all previous written or
oral negotiations, commitments and understandings except for an agreement among
the parties hereto and the Shareholders.
12.06 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
39
bound thereby. A waiver of any of the terms or conditions of this 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.
12.07 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.
12.08 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.
12.09 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.
12.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
12.11 Connecticut Qualification. Seller agrees that it shall pay or
establish a reserve for the payment of any unpaid taxes or penalties or filing
fees necessary to bring Seller into good standing in Connecticut.
[balance of this page intentionally left blank]
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12.11 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
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