EXHIBIT 10.1
AGREEMENT AND PLAN OF EXCHANGE
Between
ZURICH AMERICAN FINANCIAL GROUP, S.A.
and
THE STOCKHOLDERS OF
COMPOUND HEALTH CARE, INC.
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
ARTICLE II. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF
COMPOUNDHEALTH
2.01 Organization
2.02 Non-contravention
2.03 Authorization of Transaction
2.04 Subsidiaries
2.05 Capitalization
2.06 Absence of Certain Changes or Events
2.07 Title and Related Matters
2.08 Tax Matters
2.9 Litigation and Proceedings
2.10 Contracts
2.11 Material Contract Defaults
2.12 Governmental Authorizations
2.13 Compliance With Laws and Regulations
2.14 Insurance
2.15 Transactions With Affiliates
2.16 Labor Relations
2.17 Foreign Business Practices
2.18 Information
2.19 COMPOUNDHEALTH Schedules
ARTICLE III. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF ZRAF
3.01 Organization
3.02 Non-contravention
3.03 Authorization of Transaction
3.04 Subsidiaries
3.05 Capitalization
3.06 Absence of Certain Changes or Events
3.07 Title and Related Matters
3.08 Tax Matters
3.09 Litigation and Proceedings
3.10 Contracts
3.11 Material Contract Defaults
3.12 Governmental Authorizations
3.13 Compliance With Laws and Regulations
3.14 Insurance
3.15 Labor Relations
3.16 Foreign Business practices
3.17 Information
3.18 ZRAF Schedules
ARTICLE IV. PLAN OF EXCHANGE
4.01 Exchange of ZRAF Stock and COMPOUNDHEALTH Stock
ARTICLE V. SPECIAL COVENANTS
5.01 Access to Properties and Records
5.02 Actions Prior to Closing
5.03 Special Covenants and Representations Regarding the Exchanged
ZRAF Stock
5.04 Indemnification
5.05 Third Party Indemnity
5.06 Third Person Consents and Certificates
5.08 Termination
5.09 Officer and Director Resignations
ARTICLE VI. CLOSING
6.01 Closing
6.02 Closing Events
ARTICLE VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF ZRAF
7.01 Accuracy of Representations
7.02 Litigation Certificates
7.03 No Material Adverse Change
7.04 Good Standing
7.05 Consents Agreements
7.06 Other Items
ARTICLE VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPOUNDHEALTH AND THE
STOCKHOLDERS
8.01 Accuracy of Representations
8.02 Litigation Certificate
8.03 No Material Adverse Change
8.04 Good Standing
8.05 Consents/Agreements
8.06 Other Items
ARTICLE IX. MISCELLANEOUS
9.01 Brokers
9.02 Governing Law
9.03 Notices
9.04 Attorneys' Fees
9.05 Third Party Beneficiaries
9.06 Entire Agreement
9.07 Counterparts
9.08 Amendment or Waiver
9.09 Post Closing Filings
EXHIBITS
Schedule A Obligations and Liabilities of COMPOUNDHEALTH
Schedule B Obligations and Liabilities of ZRAF
Schedule C Adherence Agreement
AGREEMENT AND PLAN OF EXCHANGE
THIS AGREEMENT AND PLAN OF EXCHANGE is made and entered into as of this
29 day of September, 2004, by and between ZURICH AMERICAN FINANCIAL GROUP,
S.A. (hereinafter, "ZURICH"), a Nevada corporation, COMPOUND HEALTHCARE, INC.
(hereinafter "COMPOUNDHEALTH", a California corporation, and the STOCKHOLDERS
of Compound Health Care, Inc., identified on individual Adherence Agreements
in the form of Exhibit A.
Premises
This Agreement provides for the acquisition by ZRAF of all of the issued
and outstanding shares and warrants of COMPOUNDHEALTH solely in exchange for
the shares of ZRAF on the terms and conditions hereinafter provided, all for
the purpose of effecting a so-called "tax free" reorganization pursuant to
section 368(a)(1)(B) of the Internal Revenue Code of 1986.
Agreement
NOW, THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the Parties to be derived herefrom, it is hereby agreed as
follows:
ARTICLE I
DEFINITIONS
Adverse Consequences means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
Affiliate has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
Agreement means this Agreement and Plan of Exchange dated September 22, 2004.
Closing means the acts by the Parties of issuing, executing, and/or
delivering the ZRAF Stock, COMPOUNDHEALTH Stock, ZRAF, certificates of
officers, schedules, and other instruments provided for in Articles VI, VII,
and VIII of this Agreement.
Common stock means the duly authorized common stock, par value $0.001, of
ZRAF.
Compoundhealth is Compound Healthcare, Inc., a California corporation and a
Party to this Agreement.
Compoundhealth Schedules means the schedules of COMPOUNDHEALTH identified in
Section 2.20 of this Agreement.
Compoundhealth Stock means 1,000 common shares of COMPOUNDHEALTH, which are
all of the issued and outstanding shares of the capital stock of
COMPOUNDHEALTH.
Exchanged ZRAF Stock means the Common Stock of ZRAF to be issued to the
Stockholders pursuant to this Agreement.
GAAP means the United States generally accepted accounting principles as in
effect from time to time.
Knowledge means actual knowledge after reasonable investigation.
Material means, when used as an adjective in conjunction with an event,
condition, circumstance, effect, or other item, that there is a substantial
likelihood that a reasonable person would attach importance to the event,
condition, circumstance, effect, or item in evaluating the party to which it
relates and the transactions herein contemplated.
Nevada Corporation Law means the corporation law of the state of Nevada set
forth in Chapter 78 of the Nevada Revised Statutes, as amended.
Ordinary Course of Business means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).
Person means an individual, a partnership, a corporation, an association, a
joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or
political subdivision thereof).
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended.
Security Interest means any mortgage, pledge, lien, encumbrance, charge, or
other security interest, other than: (a) mechanic's, materialmen's, and
similar liens; (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings; (c)
purchase money liens and liens securing rental payments under capital lease
arrangements; and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
Stockholder(s) is one or more of the stockholders of COMPOUNDHEALTH who are
parties to this Agreement and identified either on the signature pages of
this Agreement or on individual Adherence Agreements in the form of Exhibit A
(who are the holders of all the COMPOUNDHEALTH Stock).
Subsidiary means any corporation with respect to which a specified Person (or
a Subsidiary thereof) owns a majority of the common stock or has the power to
vote or direct the voting of sufficient securities to elect a majority of the
directors.
Tax means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
Tax Return means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ZRAF is Zurich American. Financial Group, S.A, a Nevada corporation and a
Party to this Agreement.
ZRAF Schedules means the schedules of ZRAF identified in Section 3.19 of this
Agreement
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF COMPOUNDHEALTH
As an inducement to, and to obtain the reliance of, ZRAF, COMPOUNDHEALTH
represents and warrants as follows:
Section 2.01 Organization. COMPOUNDHEALTH is a corporation duly
organized, validly existing, and in good standing under the laws of the state
of California. COMPOUNDHEALTH has the corporate power and is duly authorized,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now
being conducted, including qualification to do business as a foreign
corporation in the states or provinces in which the character and location of
the assets owned by it or the nature of the business transacted by it
requires qualification, except in such jurisdictions, if any, where the
failure to be so qualified would not, either individually or in the
aggregate, have a material adverse effect on the business, properties, or
assets of COMPOUNDHEALTH. Included in the COMPOUNDHEALTH Schedules (as
hereinafter defined) arc complete and correct copies of the articles of
incorporation, as amended, and bylaws of COMPOUNDHEALTH as in effect on the
date hereof.
Section 2.02 Non-contravention. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not: violate any
provision of the articles of incorporation, charter, or bylaws of
COMPOUNDHEALTH; result in the breach of, constitute a default under, result
in the acceleration of, create in any Person the right to accelerate,
terminate, modify, cancel, or require any notice under, any material
agreement, contract, lease, license, instrument, or other arrangement to
which COMPOUNDHEALTH is a party or by which it is bound or to which any of
its assets is subject; or, violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
COMPOUNDHEALTH is subject.
Section 2.03 Authorization of Transaction. COMPOUNDHEALTH has full power
and authority, and has taken all action required by law; its articles of
incorporation and bylaws, and otherwise to execute and deliver this Agreement
and to perform, its obligations hereunder. Without limiting the generality of
the foregoing, the board of directors of COMPOUNDHEALTH has duly authorized
the execution, delivery, and performance of this Agreement by COMPOUNDHEALTH.
This Agreement represents the valid and binding obligation of COMPOUNDHEALTH
enforceable in accordance with its terms, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors
generally.
Section 2.04 Subsidiaries. COMPOUNDHEALTH has no Subsidiaries, and owns
no shares of the capital stock or equity interest of any other corporation or
business entity.
Section 2.05 Capitalization. The authorized capitalization of
COMPOUNDHEALTH consists of 10,000 shares of common stock without nominal or
par value, of which 1,000 shares are currently issued and outstanding. All
issued and outstanding shares are validly issued, fully paid, and non
assessable and not issued in violation of the pre-emptive or other rights of
any Person. Except as otherwise disclosed herein and in the COMPOUNDHEALTH
Schedules, there are no existing options, warrants, calls, or commitments of
any character relating to the authorized and unissued COMPOUNDHEALTH common
shares, except options, warrants, calls, or commitments, if any, to which
COMPOUNDHEALTH is not a party and by which it is not bound. Except as
disclosed herein and in the COMPOUNDHEALTH Schedules, there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to COMPOUNDHEALTH.
Section 2.06 Absence of Certain Changes or Events. Except as described
herein or in the COMPOUNDHEALTH Schedules, since September 1, 2004, the date
of the most recent balance sheet of COMPOUNDHEALTH:
(a) There has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of COMPOUNDHEALTH; or (ii) any
damage, destruction, or loss to COMPOUNDHEALTH (whether or not covered by
insurance) materially and adversely affecting its business, operations,
properties, assets, or financial condition.
(b) COMPOUNDHEALTH has not (i) amended its articles of incorporation,
charter, or bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind whatsoever to
stockholders, or purchased or redeemed, or agreed to purchase or redeem, any
of its capital stock; (iii) waived any rights of value which in the aggregate
are extraordinary or material considering its business; (iv) made any
material change in its method of management, operation, or accounting; (v)
entered into any other material transaction; (vi) made any accrual or
arrangement for payment of bonuses or special compensation of any kind or any
severance or termination pay to any Xxxxxx; or (vii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension, retirement,
or other employee benefit plan, payment, or arrangement made to, for, or with
its officers, directors, Affiliates, or employees, except in the Ordinary
Course of Business.
(c) COMPOUNDHEALTH has not (i) granted or agreed to grant any options,
warrants, or other rights for its stocks, bonds, or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed to
borrow any funds or incurred, or become subject to, any material obligation
or liability (absolute or contingent),; (iii) paid any obligation or
liability (absolute or contingent) other than current liabilities reflected
in or shown on Schedule "A", including, the costs incurred in connection with
the transactions contemplated by this Agreement; (iv) sold or transferred, or
agreed to sell or transfer, any of its assets, properties, or rights (except
assets, properties, or rights not used or useful in its business which, in
the aggregate, have a value of less than $1,000), or canceled, or agreed to
cancel, any debts or claims in excess of reserves reflected on the schedule
of accounts receivable included in the COMPOUNDHEALTH Schedules and additions
thereto (except debts or claims which, in the aggregate, are of a value of
less than $1,000); or (v) made or permitted any amendment or termination of
any contract, agreement, or license to which it is a party if such amendment
or termination is material, considering its business.
(d) To the Knowledge of COMPOUNDHEALTH, it has not become subject to any
law or regulation which materially and adversely effects, or in the future
may adversely effect its business as conducted on the date hereof.
Section 2.07 Title and Related Matters. COMPOUNDHEALTH has good and
marketable title to all of its properties, interests in properties, and
assets, real and personal, which are reflected in Schedule "A", free and
clear of all Security Interests, except as disclosed in the COMPOUNDHEALTH
Schedules. Except as set forth in the COMPOUNDHEALTH Schedules,
COMPOUNDHEALTH owns free and clear of any Security Interests any and all
trademarks, service marks, tradenames, copyrights, procedures, techniques,
marketing plans, business plans, methods of management, intellectual
property, and other information utilized in connection with its business.
Except as set forth in the COMPOUNDHEALTH Schedules, no Person has any right
to, and COMPOUNDHEALTH has not received any notice of, infringement of, or
conflict with, asserted rights of others with respect to any marketing
rights, trade secrets, know-how, proprietary techniques, trademarks, service
marks, tradenames, copyrights, or intellectual property, which, if the
subject of an. unfavorable decision, ruling, or finding, would have a
materially adverse effect on the business, operations, financial condition,
income, or business of COMPOUNDHEALTH and its Subsidiaries, or any material
portion of its properties, assets, or rights.
Section 2.08 Tax Matters.
(a) To the Knowledge of COMPOUNDHEALTH, COMPOUNDHEALTH has filed, or
will have filed prior to the Closing, all Tax Returns that it was required to
rile as of the date of Closing, except where extensions were obtained. All
such Tax Returns were correct and complete in all material respects. All
Taxes owed by COMPOUNDHEALTH (as shown on any Tax Return) have been paid,
except where extensions were obtained. COMPOUNDHEALTH is not currently the
beneficiary of any extension of time within which to file any Tax Return,
except as disclosed in the COMPOUNDHEALTH Schedules. No claim has ever been
made by an authority in a jurisdiction where COMPOUNDHEALTH does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There
are no Security Interests on any of the assets of COMPOUNDHEALTH that arose
in connection with any failure (or alleged failure) to pay any Tax.
(b) COMPOUNDHEALTH has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other Person.
(c) Except as disclosed in the COMPOUNDHEALTH Schedules, no Stockholder,
director, or officer (or employee responsible for Tax matters) reasonably
expects any authority to assess against COMPOUNDHEALTH any additional Taxes
for any period for which Tax Returns have been filed. Except as disclosed in
the COMPOUNDHEALTH Schedules, there is no dispute or claim concerning any Tax
liability of COMPOUNDHEALTH either (i) claimed or raised by an authority in
writing or, (ii) as to which any of the Stockholders, directors, and officers
(and employees responsible for Tax matters) has knowledge based upon personal
contact with any agent of such authority. The COMPOUNDHEALTH Schedules
include a list of all Tax Returns filed with respect to COMPOUNDHEALTH for
all taxable periods ending on or after January 1 2004, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit.
(d) COMPOUNDHEALTH has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency.
Section 2.9 Litigation and Proceedings. Except as set forth in the
COMPOUNDHEALTH Schedules, there are no actions, suits, proceedings, or
investigations pending or, to the Knowledge of COMPOUNDHEALTH, threatened by
or against it or affecting its properties, at law or in equity, before any
court or other governmental agency or instrumentality, domestic or foreign,
or before any arbitrator of any kind. To the Knowledge of COMPOUNDHEALTH,
there is no material default on its part with respect to any judgment, order,
writ, injunction, decree, award, or ruling of any court, arbitrator, or
governmental agency or instrumentality.
Section 2.10 Contracts.
(a) Except as included or described herein or in the COMPOUNDHEALTH
Schedules, there are no contracts, agreements, franchises, license
agreements, or other commitments to which COMPOUNDHEALTH is a party or by
which its properties ate bound.
(b) All contracts, agreements, franchises, license agreements, and other
commitments to which COMPOUNDHEALTH is a party or by which its properties are
bound and which are material to its operations arc valid and enforceable by
it in all respects, except as limited by bankruptcy and insolvency laws and
by other laws affecting the rights of creditors generally.
(c) Except as included or described In the COMPOUNDHEALTH Schedules,
COMPOUNDHEALTH is not a party to any oral or written: (i) contract for the
employment of any officer or employee which is not terminable on, 30 days or
less notice; (ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan, agreement, or arrangement;
(iii) agreement, contract, or indenture relating to the borrowing of money;
(iv) guaranty of any obligation, other than one on which it is a primary
obligor, for the borrowing of money or otherwise, excluding endorsements made
for collection and other guaranties of obligations which, in the aggregate,
do not exceed $1,000; (v) consulting or other similar contracts with an
unexpired term of more than one year or providing for payments in excess of
$1,000 in. the aggregate; (vi) collective bargaining agreement; (vii)
agreement with army present or former officer or director, or (viii)
contract, agreement, or other commitment involving payments by it of more
than $10,000 in the aggregate.
Section 2.11 Material Contract Defaults. Except as disclosed in the
COMPOUNDHEALTH Schedules, COMPOUNDHEALTH is not in default in any respect
under the terms of any outstanding contract, agreement, lease, or other
commitment which is material to its business, operations, properties, assets,
or business condition, and there is no event of default or other event which,
with notice or lapse of time or both, would constitute a default in any
material respect under any such. contract, agreement, tease, or other
commitment in respect of which it has not taken adequate steps to prevent
such a default from occurring.
Section 2.12 Governmental Authorizations. Except as set forth. in the
COMPOUNDHEALTH Schedules, COMPOUNDHEALTH has all licenses, franchises,
permits, and other governmental authorizations that are legally required to
enable it to conduct its business in all material respects as conducted on
the date hereof. Except for compliance with the Securities Act contemplated
by Section 5.03 of this Agreement, no material authorization, approval,
consent, or order of, or registration, declaration, or filing with, any court
or other governmental body is required in connection with the execution and
delivery by COMPOUNDHEALTH of this Agreement and the consummation by
COMPOUNDHEALTH of the transactions contemplated hereby.
Section 2.13 Compliance With Laws and Regulations. COMPOUNDHEALTH has
complied with all applicable statutes and regulations of any country, state,
provincial, municipal, or local governmental entity or agency thereof, except
to the extent that noncompliance would not materially and adversely affect
the business, operations, properties, assets, or business condition of
COMPOUNDHEALTH, and except to the extent non-compliance would not result in
any material liability. COMPOUNDHEALTH will deliver at closing, a legal
opinion as to the issuance of its shares and the corporate status of
COMPOUNDHEALTH.
Section 2.14 Insurance. All the insurable properties of COMPOUNDHEALTH
are insured in accordance with industry standards against all risks
customarily insured against by persons operating similar properties in
localities where such properties are located and under valid and enforceable
policies by insurers of recognized responsibility.
Section 2.15 Transactions With Affiliates. Set forth in the
COMPOUNDHEALTH Schedules is a description of every material contract,
agreement, or arrangement between COMPOUNDHEALTH and any Affiliate during the
period beginning January 1, 2003, and ending on the date of Closing.
Section 2.16 Labor Relations. COMPOUNDHEALTH has not had a work stoppage
resulting from labor problems. No union or other collective bargaining
organization is organizing or attempting to organize any employee of CH.
Section 2.17 Foreign Business Practices. To the Knowledge of
COMPOUNDHEALTH, no officer, director, employee, Affiliate, or Stockholder of
COMPOUNDHEALTH has made any offer, payment, promise to pay, or authorization
of the payment of any money, or offer, gift, promise to give, or
authorization of the giving of anything of value for the purpose of assisting
COMPOUNDHEALTH in obtaining or retaining business for or with, or directing
business to, any Person, to;
(a) Any foreign official for purposes of, (i) influencing any act or
decision of such foreign official in his official capacity, (ii) inducing
such foreign official to do or omit to do any act in violation of the lawful
duty of such official, or (iii) inducing such foreign official to use his
influence with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality;
(b) Any foreign political party or official thereof or any candidate for
foreign political office for purposes of, (i) influencing any act or decision
of such party, official, or candidate in its or his official capacity, (ii)
inducing such party, official or candidate to do or omit to do an act in
violation of the lawful duty of such party, official, or candidate, or (iii)
inducing such party, official, or candidate to use its or his influence with
a foreign government or instrumentality thereof to affect or influence any
act or decision of such government or instrumentality; or
(c) To any Person, while knowing that all or a portion of such money or
thing of value will be offered, given, or promised, directly or indirectly,
to any foreign official, to any foreign political party or official thereof,
or to any candidate for foreign political office, for purposes of, (i)
influencing any act or decision of such foreign official, political party
official, or candidate in his or its official capacity, (ii) inducing such.
foreign official, political party, party official, or candidate to do or omit
to do any act in violation of the lawful duty of such foreign official,
political party, party official, or candidate, or (iii) inducing such foreign
official, political party, party official, or candidate to use or its
influence with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality.
Section 2.18 Information. The information concerning COMPOUNDHEALTH set
forth in this Agreement and in the COMPOUNDHEALTH Schedules is complete and
accurate in all material respects and does not contain any untrue statement
of a material fact or omit to state a material fact required to make the
statements made, in light of the circumstances under which they arc made, not
misleading.
Section 2.19 COMPOUNDHEALTH Schedules. No later than two business days
prior to Closing, COMPOUNDHEALTH will deliver to ZRAF the following documents
and information, which are collectively referred to as the "COMPOUNDHEALTH
Schedules." Thereafter, COMPOUNDHEALTH shall provide to ZRAF all materials
and information requested, including any information requested to verify any
information furnished:
(a) complete and correct copies of the articles of incorporation, as
amended, and bylaws of COMPOUNDHEALTH in effect as of the date of Closing;
(d) a description of all real property owned and/or leased by
COMPOUNDHEALTH, together with a description of every Security Interest in
respect thereof;
(e) copies of all material agreements, arrangements, contracts, or other
instruments to which COMPOUNDHEALTH is a party or by which it or its
properties are bound required to be provided by Section 2.11 hereof, together
with a description of all oral. contracts, leases, agreements, and other
instruments to which 'COMPOUNDHEALTH is a party or by which it or its
properties are bound;
(f) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to which
COMPOUNDHEALTH carries on or proposes to carry on its business (except those
which, in the aggregate, are immaterial to the present or proposed business
of COMPOUNDHEALTH);
(g) a description of any material change in the business, operations,
property, inventory, assets, or condition of COMPOUNDHEALTH since January 1,
2003 required to be provided pursuant to Section 2.07 hereof;
(h) a description of transactions with Affiliates required to be
described by Section 2.16; and
(i) a schedule setting forth any other information, together with any
copies of documents, required to be disclosed in the COMPOUNDHEALTH Schedules
by Sections 2.01 through 2.19.
With respect to any separate items that are part of the COMPOUNDHEALTH
Schedules delivered before or after the date of this Agreement to ZRAF or its
representatives by COMPOUNDHEALTH or its representatives, COMPOUNDHEALTH may
provide to ZRAF as the full or partial schedule required by this Section
2.20, a list specifying the items so delivered. COMPOUNDHEALTH shall 'cause
the COMPOUNDHEALTH Schedules and the instruments and data to be delivered to
ZRAF hereunder to be updated after the date of delivery up to and including
the date of Closing.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF ZRAF
As an inducement to, and to obtain the reliance of, COMPOUNDHEALTH and
the Stockholders, ZRAF represents and warrants as follows,
Section 3.01 Organization. ZRAF is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Nevada. ZRAF
has the corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on
its business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification, except in such
jurisdictions, if any, where the failure to be so qualified would not, either
individually or in the aggregate, have a material adverse effect on the
business, properties, or assets of ZRAF. Included in the ZRAF Schedules (as
hereinafter defined) are complete and correct copies of the articles of
incorporation, as amended, and bylaws of ZRAF as in effect on the date
hereof.
Section 3.02 Non-contravention. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not: violate any
provision of the articles of incorporation, charter, or bylaws of ZRAF;
result in the breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate, terminate,
modify, cancel, or require any notice under, any material agreement,
contract, lease, license, instrument, or other arrangement to which ZRAF is a
party or by which it is bound or to which any of its assets is subject; or,
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which ZRAF is subject.
Section 3.03 Authorization of Transaction. ZRAF has hill power and
authority, and has taken all action required by law, its articles of
incorporation and bylaws, and otherwise to execute and deliver this Agreement
and to perform its obligations hereunder. Without limiting the generality of
the foregoing, the board of directors of ZRAF has duly authorized the
execution, delivery, and performance of this Agreement by ZRAF. This
Agreement represents the valid and binding obligation of ZRAF enforceable in
accordance with its terms, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors generally.
Section 3.04 Subsidiaries. ZRAF has no Subsidiaries, and owns no shares
of the capital stock or equity interest of any other corporation or business
entity.
Section 3.05 Capitalization. The authorized capitalization of ZRAF is
50,000,000 shares of Common Stock, (to be increased to 100,000,000 shares of
common stock by ZRAF promptly following the execution of this Agreement) of
which 22,085,000 shares are currently issued and outstanding. All issued and
outstanding shares are legally issued, fully paid, and non-assessable and not
issued in violation of the pre-emptive or other rights of any Person. Except
as otherwise disclosed herein and in the ZRAF Schedules there are no existing
options, warrants, calls, or commitments of any character relating to the
authorized and unissued ZRAF Common Stock, except options, warrants, calls,
or commitments, if any, to which ZRAF is not a party and by which it is not
bound. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to ZRAF.
Section 3.06 Absence of Certain Changes or Events. Except as described
herein or in the ZRAF Schedules, since the date of the 09/2412004, ZRAF
balance sheet:
(a) There has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of ZRAF; or (ii) any damage,
destruction, or lots to ZRAF (whether or not covered by insurance) materially
amid adversely affecting its business, operations, properties, assets, or
financial condition;
(b) ZRAF has not (i) amended its articles of incorporation, charter, or
bylaws; (ii) waived airy rights of value which in the aggregate are
extraordinary or material considering its business; or, (iii) entered into
any other material transaction;
(c) ZRAF has not (i) granted or agreed to grant any options, warrants,
or other rights for its stocks, bonds, or other corporate securities calling
for the issuance thereof; (ii) borrowed or agreed to borrow any funds or
incurred, or become subject to, any obligation or liability (absolute or
contingent),; or (iii) made or permitted any amendment or termination of any
contract, agreement, or license to which it is a party if such amendment or
termination is material, considering its business.
(d) To the Knowledge of ZRAF, it has not become subject to any law or
regulation which materially and adversely affects, or in the future may
adversely affect its business as conducted on the date hereof.
Section 3.07 Title and Related Matters. ZRAF has good and marketable
title to all of its properties, inventory, interests in properties, and
assets, real and personal, which are reflected in the Schedule "B" or
acquired after that date (except properties, interests in properties, and
assets sold or otherwise disposed of since such date in the Ordinary Course
of Business), free and clear of all Security interests, except as disclosed
in the ZRAF Schedules. Except as set forth in the ZRAF Schedules, ZRAF owns
free and clear of any Security Interests any and all trademarks, service
marks, tradenames, copyrights, procedures, techniques, marketing plans,
business plans, methods of management, intellectual property, and other
information utilized in connection with its business. Except as set forth in.
the ZRAF Schedules, no Person has any right to, and ZRAF has not received any
notice of infringement of, or conflict with, asserted rights of others with
respect to any marketing rights, trade secrets, know-how, proprietary
techniques, trademarks, service marks, tradenames, copyrights, or
intellectual property, which, if the subject of an unfavorable decision,
ruling, or finding, would have a materially adverse affect on the business,
operations, financial condition, income, or business of ZRAF, or any material
portion of its properties, assets, or rights.
Section 3.08 Tax Matters.
(a) ZRAF has never filed, any Tax Returns. ZRAF is a developing company
with no operating business. All Taxes owed by ZRAF (as shown on any Tax
Return) have been paid. ZRAF currently is not the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where ZRAF does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of ZRAF that arose in connection with
any failure (or alleged failure) to pay any Tax.
(b) ZRAF has withhold and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other Person.
(c) No ZRAF director or officer (or employee responsible for Tax
matters) reasonably expects any authority to assess against ZRAF additional
Taxes for any period for which Tax Returns have been. filed, except as
disclosed in the ZRAF Schedules. There is no dispute or claim concerning any
Tax liability of ZRAF either (i) claimed or raised by an authority in writing
or, (ii) as to which any of the ZRAF directors and officers (and employees
responsible for Tax matters) has knowledge based upon personal contact with
any agent of such authority, except as disclosed in the ZRAF Schedules. The
ZRAF Schedules include a list of all federal, state, local, and foreign
income Tax Returns filed with respect to any of ZRAF and its Subsidiaries for
taxable periods commencing on or after August 12, 1999, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. ZRAF has made available to COMPOUNDHEALTH
and the Stockholders correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed against
or agreed to by ZRAF since September, 1, 2002.
(d) ZRAF has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency.
Section 3.9 Litigation and Proceedings. There are no actions, suits,
proceedings, or investigations pending or, to the Knowledge of ZRAF,
threatened by or against it or affecting its properties, at law or in equity,
before any court or other governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind. ZRAF has no Knowledge of any
material default on its part with respect to any judgment, order, writ,
injunction, decree, award, or ruling of any court, arbitrator, or
governmental agency or instrumentality.
Section 3.10 Contracts. All contracts, agreements, franchises, license
agreements, and other commitments to which ZRAF is a party or by which its
properties are bound and which are material to its operations are valid and
enforceable by it in all respects, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors
generally.
Section 3.11 Material Contract Defaults. Except as disclosed in the ZRAF
Schedules, ZRAF is not in default in any respect under the terms of any
outstanding contract, agreement, lease, or other commitment which is material
to its business, operations, properties, assets, or business condition, and
there is no event of default or other event which, with notice or lapse of
time or both, would constitute a default in any respect under any such
contract, agreement, lease, or other commitment in. respect of which. it has
not taken adequate steps to prevent such a default from occurring.
Section 3.12 Governmental Authorizations. Except as set forth in the
ZRAF Schedules, ZRAF has all licenses, franchises, permits, and other
governmental authorizations that are legally required to enable it to conduct
its business in all material respects as conducted on the date hereof. Except
for compliance with the Securities Act as contemplated by Section 5.03 of
this Agreement, no material authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other governmental
body is required in connection with the execution and delivery by ZRAF of
this Agreement and the consummation by ZRAF of the transactions contemplated
hereby. ZRAF warrants and represents that it has fulfilled all requirements
for listing on the Pink Sheets market and that it has a valid stock symbol
"ZRAF" obtained in compliance with NASD procedures.
Section 3.13 Compliance With Laws and Regulations. ZRAF has complied
with all applicable statutes and regulations of any country, state,
provincial, municipal, or local governmental entity or agency thereof, except
to the extent that noncompliance would not materially and adversely affect
the business, operations, properties, assets, or business condition of ZRAF,
and except to the extent noncompliance would not result in any material
liability. ZRAF's stock is traded on the Pink Sheets market under the symbol
"ZRAF" and to the knowledge of ZRAF is not nor has ever hear subject to any
stop order or suspension of trading. ZRAF will deliver at closing a legal
opinion in form and substance satisfactory to COMPOUNDHEALTH regarding the
corporate and SEC status of ZRAF.
Section 3.14 Insurance. All the insurable properties of ZRAF are insured
in accordance with industry standards against all risks customarily insured
against by persons operating similar properties in localities where such
properties are located and under valid and enforceable policies by insurers
of recognized responsibility.
Section 3.15 Labor Relations. ZRAF has not had a work stoppage resulting
from labor problems. No union or other collective bargaining organization is
organizing or attempting to organize any employee of ZRAF.
Section 3.16 Foreign Business Practices. To the Knowledge of ZRAF, no
officer, director, employee, Affiliate, or stockholder of ZRAF has made any
offer, payment, promise to pay, or authorization of the payment of any money,
or offer, gift, promise to give, or authorization of the giving of anything
of value for the purpose of assisting ZRAF in obtaining or retaining business
for or with, or directing business to, any Person, to:
(a) Any foreign official for purposes of, (i) influencing any act or
decision of such foreign official in his official capacity, (ii) inducing
such foreign. official to do or omit to do any act in violation of the lawful
duty of such official, or (iii) inducing such foreign official to use his
influence with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality;
(b) Any foreign political party or official thereof or any candidate for
foreign political office for purposes of, (i) influencing any act or decision
of such party, official, or candidate in its or his official capacity, (ii)
inducing such party, official or candidate to do or omit to do an act in
violation of the lawful duty of such party, official, or candidate, or (iii)
inducing such party, official,
Section 4.01 Exchange of ZRAF Stock and COMPOUNDHEALTH Stock Pursuant to
this Agreement, all COMPOUNDHEALTH Stock shall be conveyed, transferred, and
assigned to ZRAF in exchange for Fifty-Four Million Four Hundred Fifteen
Thousand newly issued (54,415,000) shares of Exchanged ZRAF Stock issued to
the shareholders of COMPOUNDHEALTH in proportion to their respective
shareholdings, at the Closing. At the Closing, the Stockholders shall deliver
to ZRAF stock certificates representing all issued and outstanding shares of
COMPOUNDHEALTH Stock, each certificate duly endorsed for transfer with
signature guarantees, and receive in exchange therefor one or more
certificates representing in the aggregate that number of shares of Exchanged
ZRAF Stack set forth opposite the name of each Stockholder on the Adherence
Agreement signed and delivered by each Stockholder. The Sixteen Million
(16,000,000) outstanding shares of ZRAF Stock shall be cancelled and the
cancelled certificates delivered. to COMPOUNDHEALTH at the Closing. The
shares of Exchanged ZRAF Stock issued pursuant to this Section 4.01 shall be,
when issued, legally issued, fully paid, and non-assessable, and ZRAF shall
provide the legal opinion of its legal counsel to such effect. It is the
intent of the Parties that the exchange be effected as a so-called "tax-free"
reorganization pursuant to section 368(a)(1)(B) of the Internal Revenue Code
of 1986, and the Parties covenant and agree to reflect the exchange as such
on all financial statements, Tax Returns, filings, and other documents
identifying or referring to the exchange contemplated by this Agreement. Upon
consummation of this Agreement, the Shareholders of COMPOUNDHEALTH will hold
in the aggregate at least 90% of the outstanding stock of ZRAF.
ARTICLE V
SPECIAL COVENANTS
Section 5.01 Access to Properties and Records. ZRAF and COMPOUNDHEALTH
will each afford to the officers and authorized representatives of the other,
and to the Stockholders, full access to its properties, books, and records in
order that each may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the other, and
each will furnish the other with such additional financial and operating data
and other information as to its business and properties as the other shall
from time to time reasonably request.
Section 5.02 Actions Prior to Closing.
(a) From and after the date of this Agreement, COMPOUNDHEALTH will: (i)
carry on its business in substantially the same manner as it has heretofore;
(ii) maintain and keep its properties in states of good repair and condition
as at present, except for depreciation due to ordinary wear and tear and
damage due to casualty; (iii) maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligation under material
contracts, leases, and instruments relating to or affecting its assets,
properties, and business; (v) use its best efforts to maintain and preserve
its business organization intact, to retain its key employees, and to
maintain its relationship with its material suppliers and customers; and (vi)
fully comply with and perform in all material respects all obligations and
duties imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement until the date of Closing
Date, COMPOUNDHEALTH will not: (%) make any change in its articles of
incorporation or bylaws; (ii) take any action described in Section 2.07 (all.
except as permitted therein or as disclosed in the COMPOUNDHEALTH Schedules);
or (iii) enter into or amend any contract, agreement, or other instrument of
any of the types described in the COMPOUNDHEALTH Schedules, except that
COMPOUNDHEALTH may enter into or amend any contract, agreement, or other
instrument in the Ordinary Course of Business.
Section 5.03 Special Covenants and Representations Regarding the
Exchanged ZRAF Stock. The consummation of this Agreement and the transactions
herein contemplated, including the issuance of the Exchanged ZRAF Stock to
the Stockholders as contemplated hereby, constitutes the offer and xxxx of
securities under the Securities Act and applicable state securities statutes.
Such transactions shall be consummated in reliance on exemptions from the
registration and prospectus delivery requirements of such statutes, which
depend, inter altar, upon the circumstances under which the Stockholders
acquire such securities. ZRAF covenants and agrees that it will take all
action required for it to rely on exemptions from the registration and
qualification requirements of the Securities Act and applicable state
statutes for the issuance and delivery to the Stockholders of the Exchanged
ZRAF Stock as provided in this Agreement. By acceptance of the Exchanged ZRAF
Stock, each Stockholder agrees that all offers and sales of the Exchanged
ZRAF Stock prior to the expiration, of a period commencing on the date of
Closing and ending one-year thereafter shall only be made in compliance with
the safe harbor contained in Regulation S, pursuant to the registration
provisions under the Securities Act, or pursuant to an exemption from
registration, and all offers and sales after the expiration of the one-year
period shall be made only pursuant to such registration or to such exemption
from registration. The Stockholders acknowledge that the securities are
"restricted securities" within the meaning of Rule 144 under the Securities
Act. ZRAF is bound to refuse to effect any transfer of the Exchanged
COMPOUNDHEALTH Stock not made in compliance with the safe harbor contained in
Regulation S, pursuant to the registration provisions under the Securities
Act, or pursuant to an exemption from registration.
Section 5.04 Indemnification.
(a) All of the representations and warranties of the Parties contained
in this Agreement shall survive the Closing hereunder and continue in full
force and effect for a period of one year thereafter. ZRAF agrees to
indemnity COMPOUNDHEALTH for any and all activities of ZRAF prior to and up
to the Closing. In the event any Party breaches (or in the event any third
Person alleges facts that, if true, would mean any Party has breached) any of
its representations and warranties contained herein, provided a written claim
for indemnification. against the breaching Party is made within any
applicable survival period specified in this paragraph (a) of Section 5.04,
then the breaching Party (the "Indemnifying Party") agrees to indemnify the
other Parties (the "Indemnified Parties") from and against the entirety of
any Adverse Consequences the Indemnified Parties may suffer through and after
the date of the claim for indemnification (including any Adverse Consequences
the Indemnified Parties may suffer after the end of any applicable survival
period) resulting Prone, arising out of, relating to, in the nature of, or
caused by the breach (or the alleged breach); provided, however, that no
Indemnifying Party shall have any obligation to indemnify any Indemnified
Party from and against any Adverse Consequences resulting from, arising out
of, relating to, in the nature of, or caused by the breach (or alleged
breach) of any representation, warranty, or covenant of the Indemnifying
Party until the Indemnified Parties have suffered Adverse Consequences by
reason of all such breaches (or alleged breaches) in excess of a $5,000
aggregate threshold, at which point the Indemnifying Party will be obligated
to indemnify the Indemnified Parties from and against all such Adverse
Consequences relating back to the first dollar; and provided further, that
the maximum obligation to indemnify all Indemnified Parties from and against
Adverse Consequences resulting from, arising out of, relating to, in die
nature of, or caused by the breach (or alleged breach) of any representation,
warranty, or covenant of the Indemnifying Party shall not exceed $200,000 in
the aggregate.
(b) If any third Person shall notify any Indemnified Party with respect
to any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against any Indemnifying Party under this Section 5.04, then
the Indemnified Party shall promptly notify each Indemnifying Party thereof
in writing, provided, however, that no delay on the part of the Indemnified
Party in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the extent)
the Indemnifying Party thereby is prejudiced. Any Indemnifying Party will
have the right to defend the Indemnified Party against the Third Party Claim
with counsel of it choice reasonably satisfactory to the Indemnified Party so
long as (i) the Indemnifying Party notifies the Indemnified Party in writing
within 1 S days after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party will indemnify the Indemnified Party
from and against the entirety of any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the Third Party Claim, (ii) the Indemnifying Party provides
the Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to defend
against the Third Party Claim and fulfill its indemnification obligations
hereunder, (iii) the Third Party Claim involves only money damages and does
not seek an injunction or other equitable relief, (iv) settlement of, or an
adverse judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice materially adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently. So long as the Indemnifying
Party is conducting the defense of the Third Party Claim in accordance with
this paragraph, the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party
Claim, the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnified Party (not to be
withheld unreasonably). In the event any of the conditions in clauses (i)
through (v) of this paragraph is or becomes unsatisfied, the Indemnified
Party may defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in connection
therewith), the Indemnifying Party will reimburse the Indemnified Party
promptly and periodically for the costs of defending against the Third Party
Claim (including reasonable attorneys' fees and expenses), and the
Indemnifying Party Will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim to the fullest extent
provided in this Section 5.04.
Section 5.05 Third Party Indemnity. The current president of ZRAF at
this date, in consideration for COMPOUNDHEALTH's execution of this Agreement,
has concurrently executed a Third Party Indemnity Agreement in the Form
attached hereto as Exhibit E, wherein he has agreed after the Closing to
indemnify and hold ZRAF harmless from any and all liability, including costs
of suit and attorneys' fees, resulting from any claims which might be brought
against ZRAF in the future as a result of the original issuance of securities
by ZRAF.
Section 5.06 Third Person Consents and Certificates. The Parties agree
to cooperate with each other in order to obtain any required third Person
consents to this Agreement and the transactions herein contemplated.
Section 5.08 Termination. This Agreement may be terminated by the board
of directors of any Party at any time prior to the Closing if
(a) There shall be any actual or threatened action or proceeding before
any court or any governmental body which shall seek: to restrain, prohibit,
or invalidate the transactions contemplated by this Agreement and which, in
the judgment of such board of directors, made in good faith and based on the
advice of its legal counsel, makes it inadvisable to proceed with the
transactions contemplated by this Agreement;
(b) Any of the transactions contemplated hereby are disapproved by any
regulatory authority whose approval is required to consummate such
transactions or in the judgment of such board of directors, made in good
faith and based on the advice of counsel, there is substantial likelihood
that any such approval will not be obtained or will be obtained only on a
condition or conditions which would be unduly burdensome, making it
inadvisable to proceed with the transactions contemplated hereby;
(e) The Parties shall fail to obtain the consents or waivers required of
any third Person to consummate the transactions contemplated by this
Agreement; or
(f) Any Party shall fail to comply in any material respect with any of
its covenants or agreements contained in this Agreement or if any of the
representations or warranties of any Party contained herein shall be
inaccurate in any material respect.
(e) There has been a stop order or suspension of trading in ZRAF's
stock.
In the event of termination pursuant to this Section 5.07, no obligation,
right, or liability shall arise hereunder, and each Party shall bear all of
the expenses incurred by it in connection with the negotiation, drafting, and
execution of this Agreement and the transactions herein contemplated.
Section 5.09 Officer and Director Resignations. At Closing, the officers
of ZRAF shall resign and the directors of ZRAF shall and thereof immediately
resign appoint replacements to fill the vacancies on the Board of Directors
of ZRAF after the Closing, said replacements to be such persons as
COMPOUNDHEALTH shall in writing designate to ZRAF. The ZRAF designated
directors shall not be subject to any "Bad Boy" provisions as defined in
Section 3(a)(39) of the Securities Exchange Act of 1934.
ARTICLE VI
CLOSING
Section 6.01 Closing. The Closing of the transactions contemplated by
this Agreement shall occur on or before September 30, 2004; provided, that
the exchange contemplated by this Agreement is effective as of September 29,
2004.
Section 6.02 Clueing Events. At the Closing, each of the respective
Parties hereto shall execute, acknowledge, and deliver (or shall cause to be
executed, acknowledged, and delivered) any and all certificates, financial
statements, schedules, agreements, resolutions, rulings, or other instruments
required by this Agreement to be so delivered at or prior to the Closing,
together with such other items as may be reasonably requested by the Parties
hereto and their respective legal counsel in order to effectuate or evidence
the transactions contemplated hereby.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF ZRAF
The obligations of ZRAF under this Agreement are subject to the
satisfaction, at or before the Closing, of the following conditions:
Section 7.01 Accuracy of Representations. The representations and
warranties made by COMPOUNDHEALTH and the Stockholders in this Agreement were
true when made and shall be true as of the date of Closing with the same
force and effect as if such representations and warranties were made at and
as of the date of Closing (except for changes therein permitted by this
Agreement), and COMPOUNDHEALTH and the Stockholders shall have performed or
complied with all covenants and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing. ZRAF shall be
furnished with certificates signed by a duly authorized officer of
COMPOUNDHEALTH dated the date of Closing to the foregoing effect.
Section 7.02 Litigation Certificates. ZRAF shall have been furnished
with certificates dated the date of Closing and signed by a duly authorized
officer of COMPOUNDHEALTH to the effect that no litigation, proceeding,
investigation, or inquiry is pending which might result in an action to
enjoin or prevent the consummation of the transactions contemplated by this
Agreement.
Section 7.03 No Material Adverse Change. .Prior to the Closing, there
shall not have occurred any material adverse change iii the financial
condition, business, or operations of COMPOUNDHEALTH.
Section 7.04 Good Standing. ZRAF shall have received a certificate of
good standing from the California Secretary of State as of a date within ten
days prior to the Closing certifying that COMPOUNDHEALTH is in good standing
as a corporation in such state.
Section 7.05 Consents/Agreements. The Parties shall have obtained any
third Person consents pursuant to Section 5.05.
Section 7.06 Other Items. ZRAF shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as ZRAF may reasonably request.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPOUNDHEALTH AND THE STOCKHOLDERS
The obligations of COMPOUNDHEALTH and the Stockholders under this
Agreement are subject to the satisfaction, at or before the Closing, of the
following conditions:
Section 8.01 Accuracy of Representations. The representations and
warranties made by ZRAF in this Agreement were true when made and shall be
true as of the date of Closing with the same force and effect as if such
representations and warranties were made at and as of the date of Closing
(except for changes therein permitted by this Agreement), and ZRAF shall have
performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
COMPOUNDHEALTH and the Stockholders shall be furnished with a certificate,
signed by a duly authorized officer of ZRAF and dated the date of Closing, to
the foregoing effect.
Section 8.02 Litigation Certificate. COMPOUNDHEALTH and the Stockholders
shall have been furnished with a certificate dated the date of Closing and
signed by a duly authorized officer of ZRAF to the effect that no litigation,
proceeding, investigation, or inquiry is pending which might result in an
action to enjoin or prevent the consummation of the transactions contemplated
by this Agreement.
Section 8.03 No Material Adverse Change. Prior to the Closing, there
shall not have occurred any material adverse change in the financial
condition, business, or operations of ZRAF.
Section 8.04 Good Standing. COMPOUNDHEALTH and the Stockholders shall
have received a certificate of good standing from the Secretary of state of
the state of Nevada dated as of a date within ten days prior to the Closing
certifying that ZRAF is in good standing as a corporation in such state.
Section 8.05 Consents/Agreements. The Parties shall have obtained any
third Person consents pursuant to Section 5.05, which will include the
resignation of the officers and directors of ZRAF in favor of the appointment
of the designees of COMPOUNDHEALTH by all required action of the board of
directors of ZRAF.
Section 8.06 Other Items. COMPOUNDHEALTH and the Stockholders shall have
received such further documents, certificates, or instruments relating to the
transactions contemplated hereby as they may reasonably request.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Brokers. The Parties agree that there were no finders or
brokers involved in. bringing the Parties together or who were instrumental
in the negotiation, execution, or consummation of this Agreement. The Parties
each agree to indemnify the other against any claim by any Person for any
commission, brokerage, or finders' fee arising from the transactions
contemplated hereby based on any alleged agreement or understanding between
the indemnifying Party and such Person, whether express or implied from the
actions of the indemnifying Party.
Section 9.02 Governing Law. This Agreement shall be governed by,
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to matters of state law, with the laws of
California.
Section 9.03 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it
or sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to ZRAF, to: Zurich American Financial Group, Inc.
Attn: President Xxxx Xxxxxx
00000 Xxxx Xxxx Xxx Xxxxx 000
Xxxxxxxx, XX 00000
With copies to:
if to COMPOUNDHEALTH or
the Stockholders, to: Compound Healthcare, Inc.
Attn: Xxxxxx X. Xxxxxx
000 X. Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
xxxxxxx@xxxxxxxxxxxxx.xxx
With copies to: Law Offices of
Xxxxx X. Xxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxx, Xxxxxxxxxx 00000
xxxxxx@xxxxxxxxx.xxx
or such other addresses as shall be furnished in writing by any Party in the
manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered, mailed, or
telegraphed
Section 9.04 Attorneys' Fees. In the event that any Party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching Party or Parties shall reimburse
the non-breaching Party or Parties for all costs, including attorneys' fees,
incurred in connection therewith and in enforcing or collecting any judgment
rendered therein.
Section 9.05 Third Party Beneficiaries. This Agreement is solely between
the Parties hereto, and except as specifically provided herein, and in the
Exhibits hereto, no director, officer, stockholder, employee, agent,
independent contractor, or any other Person shall be deemed to be a third
party beneficiary of this Agreement.
Section 9.06 Entire Agreement. This Agreement, including the exhibits
and schedules hereto, represents the entire agreement between the Parties
relating to the subject matter hereof,. This Agreement fully and completely
expresses the agreement of the Parties. There are no other courses of
dealing, understandings, agreements, representations, or warranties, written
or oral, except as set forth herein.
Section 9.07 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
taken together shall be but a single instrument.
Section 9.08 Amendment or Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and
no waiver by any Party of the performance of any obligation by the other
Parties shall be construed as a waiver of the same or any other default then,
theretofore, or thereafter occurring or existing. At any time prior to the
Closing, this Agreement may be amended by a. writing signed by all Parties
hereto with respect to any of the terms contained herein, and any teem or
condition of this
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, or
caused this Agreement to be executed by their officers hereunto duly
authorized, as of the date first above-written
ZURICH AMERICAN FINANCIAL GROUP, INC.
By /s/ Xxxx Xxxxxx
Xxxx Xxxxxx, President
COMPOUND HEALTHCARE, INC.
By ______________________________________
Xxxxxx X. Xxxxxx, President
SCHEDULE "A"
SCHEDULE "B"
SCHEDULE "C"
Agreement and Plan of Exchange
ADHERENCE AGREEMENT
The undersigned, the record and beneficial owner of the number of common
shares of Compound Healthcare, Inc. ("COMPOUNDHEALTH") set forth below,
hereby agrees to be bound by the Agreement and Plan of Exchange by and among
Zurich American Financial Group, Inc. ("ZRAF"), COMPOUNDHEALTH, and the
Stockholders of COMPOUNDHEALTH dated as of September 29, 2004 (the
"Agreement") as though the undersigned wore an original signatory to the
Agreement. All capitalized terms used herein shall have the same meaning
ascribed to such terms in the Agreement.
The undersigned hereby represents, warrants, and agrees as follows:
(a) The execution and delivery of the Agreement does not, and the
consummation of the transactions contemplated by the Agreement in accordance
with the terms hereof will not: result in the breach of, constitute a default
under, result in the acceleration of, create in any Person the right to
accelerate, terminate, modify, cancel, or require any notice under, any
material agreement, contract, lease, license, instrument, or other
arrangement to which the undersigned is a party or by which the undersigned
is bound; or, violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which the undersigned is
subject.
(b) The undersigned has full power and authority, and has taken all
action required by law and otherwise to execute and deliver the Agreement and
to perform its obligations thereunder. The Agreement represents the valid and
binding obligation of the undersigned enforceable in accordance with its
terms, except as limited by bankruptcy and insolvency laws and by other laws
affecting the rights of creditors generally.
(c) Except for compliance with the Securities Act contemplated by
Section 5.03 of the Agreement, no authorization, approval, consent, or order
of, or registration, declaration, or filing with, any court or other
governmental body is required in connection with the execution and delivery
by the undersigned of the Agreement and the consummation by the undersigned
of the transactions contemplated thereby.
(d) The undersigned is the legal and beneficial owner of the
COMPOUNDHEALTH Stock set forth below, free and clear of any claims, charges,
equities, liens, security interests, and encumbrances whatsoever, and the
undersigned has full right, power, and authority to transfer, assign, convey,
and deliver the COMPOUNDHEALTH ; and delivery of such stock at the Closing
will convey to ZRAF good and marketable title to the COMPOUNDHEALTH Stock
free and clear of any claims, charges, equities, liens, security interests,
and encumbrances whatsoever.
(e) The undersigned is acquiring the Exchanged ZRAF Stock and Exchanged
ZRAF Warrants for its own account and not on behalf of any other person, and
the undersigned is the sole beneficial owner of the securities, and has not
pre-arranged any sale with any other purchasers.
(f) The undersigned acknowledges that the Exchanged ZRAF Stock has not
been registered under the Securities Act and agrees that all offers and sale
of the Exchanged ZRAF Stock shall only be made, pursuant to the registration
provisions under the Securities Act, or pursuant to an exemption from
registration, and all offers and sales after the expiration of the one-year
period shall be made only pursuant to such registration or to such exemption
from registration. The undersigned acknowledges that the Exchanged ZRAF Stock
and Exchanged ZRAF Warrants are "restricted securities" within the meaning of
Rule 144 under the Securities Act.
(g) The undersigned understands that in the view of the Securities and
Exchange Commission ("SEC") the statutory basis for the exemption claimed for
this transaction would not be present if the offering of securities, although
in technical compliance with the exemption, is part of a plan or scheme to
evade the registration provisions of the Securities Act. The undersigned is
acquiring the Exchanged ZRAF Stock for investment purposes and has no present
intention to sell the securities either now or after any fixed period of
time. The undersigned will not engage in any hedging transactions with
respect to the Exchanged ZRAF Stock and Exchanged ZRAF Warrants except in
compliance with the Securities Act.
(j) The Subscriber is an "accredited investor" as defined by Regulation
D as set forth below:
According to Rule 501(a) of Regulation D, "accredited. investor" means
any person who comes within any of the following categories, or who the
Issuer reasonable believes comes within any of the following categories, at
the time of the sale of the Shares to that person:
(i) Any bank as defined in section 3(a)(2) of the Act, or any savings
and loan association or other institution as defined in section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; any broker or
dealer registered pursuant to section 15 of the Securities Exchange Act of
1934; an insurance company as defined in section 2(13) of the Act; an
investment company registered under the Investment Company Act of 1940 or a
business development company as defined in section 2(a)(48) of that Act; a
Small business Investment Company licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment
Act of 1958; any plan established and maintained by a State, its political
subdivisions, or any agency or instrumentality of a State or its political
subdivisions, for the benefit of its employees, if such plan has total assets
in excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in section 3(21) of such Act, which
is either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has total
assets in excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
(ii) Any private business development company as defused in section
202(a)(22) of the Investment Advisers Act of 1940;
(iii) Any organization described in section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
(iv) Any director, executive officer, or general partner of the issuer
of the securities being offered or sold, or any director, executive officer,
or general partner of that issuer;
(v) Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
(vi) Any natural person who had individual income in excess of $200,000
in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
(vii) Any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities offered, whose purchase
is directed by a sophisticated person as described in section
30.506(b)(2)(ii); and
(viii) Any entity in which all of the equity owners are accredited
investors.
(k) To the Knowledge of the undersigned, the information concerning the
undersigned and COMPOUNDHEALTH set forth in the Agreement under Article 11
and this Adherence Agreement is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit
to state a material fact required to make the statements made, in light of
the circumstances under which they are made, not misleading
Xxxxxx. X. Xxxxxx
Print Name
000 X. Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx
Dated : September 29, 2004
Number of shares owned of COMPOUNDHEALTH Stock: 1000 (100% of the outstanding
shares)
Exhibit D to
Agreement and Plan of Exchange
[To be inserted]
Escrow Agreement
Exhibit E to
Agreement and Plan of Exchange
[To be inserted]
Third Party Indemnity Agreement
