Agreement and Plan of Acquisition and Merger
Between the Parties
MT Ultimate Healthcare Corp.
and
Abundant Nursing, Inc.
and
▇▇▇▇ ▇. ▇▇▇▇▇
- - - - - - - - - - Confidential and Proprietary - - - - - - - - -
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions 4
2. The Acquisition and Merger 6
2.1 The Acquisition/Merger 6
2.2 Effective Time 6
2.3 Effects of the Acquisition/Merger 6
2.4 Certificate of Incorporation 7
2.5 By-Laws 7
2.6 Officers and Directors of Corporation 7
2.7 Conversion/Cancellation of Securities 7
2.8 Consideration 8
2.9 No Further Liability 9
2.10 Withholding Rights 9
3. Representations and Warranties of the Company 10
3.1 Organization and Good Standing 10
3.2 Authority; No Conflict 10
3.3 Capitalization 11
3.4 Financial Statements 11
3.5 No Undisclosed Liabilities 12
3.6 Taxes 12
3.7 Accounts Receivable/Payable 13
3.8 No Material Adverse Change 14
3.9 Books and Records 14
3.10 Encumbrances 14
3.11 Condition of Assets 14
3.12 Employee Benefits 15
3.13 Compliance with Laws 15
3.14 Legal Proceedings 15
3.15 Absence of Certain Changes and Events 16
3.16 Contracts 16
3.17 Insurance 17
3.18 Environmental Matters 17
3.19 Employees 17
3.20 Labor Relations 17
3.21 Intellectual Property 18
3.22 Absence of Certain Payments 18
3.23 Relationships with Related Persons 18
3.24 Brokers or Finders 19
3.25 Conduct of Business/Use of Name 19
3.26 Restrictions on Business Activities 19
3.27 Outstanding Indebtedness 19
3.28 Clients and Contractors 20
3.29 Fairness Opinion 20
3.30 Voting Requirements 20
3.31 Disclosure 20
4. Representations and Warranties of Parent 21
4.1 Organization and Good Standing 21
4.2 Authority 21
4.3 Legal Proceedings 21
5. Covenants of the Company 22
5.1 Normal Course 22
5.2 Conduct of Business 22
5.3 Certain Filings 22
5.4 Consents and Approvals 23
5.5 Best Efforts 23
5.6 Intercompany Payments 23
5.7 Notification of Certain Matters 23
6. Conditions to Obligations of the Company 24
6.1 Representations and Warranties 24
6.2 Performance of Covenants 24
6.3 Update Certificate 24
6.4 No Proceeding 24
7. General Provisions 25
7.1 Expenses 25
7.2 Public Announcements 25
7.3 Notices 25
7.4 Jurisdiction 26
7.5 Further Assurances 26
7.6 Waiver 26
7.7 Entire Agreement and Modifications 26
7.8 Termination 27
7.9 Assignments, Successors 27
7.10 Severability 28
7.11 Governing Law 28
7.12 Counterparts 28
1. DEFINITIONS
-- -----------
For the purposes of this Agreement, the following terms have the meanings
specified or referred to as follows:
- Accounts Receivable - as defined in Section 3.7.
- Acquisition Offer - the transaction contemplated and addressed herein.
- Affiliate - any person directly or indirectly controlling, controlled
by or under common control with such other person as a principal of
the Company.
- Agreement - this Agreement and Plan of Merger by and among the Parent
and the Company.
- Business Day - any day other than Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or
obligated by law to be closed.
- Certificate of Merger - as defined in Section 2.2.
- Closing Date - the date and time as of which the closing of the
transaction actually takes place as defined in Section 2.1.
- Code - the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
- Company - Abundant Nursing, Inc., as defined in the first paragraph of
this Agreement.
- Effective Time - as defined in Section 2.2.
- Employee Benefit Plan - the Company's Employee Benefits Plan.
- Encumbrance - any charge, claim, property interest, condition,
equitable interest, lien, option, pledge, security interest, right of
first refusal, receipt of income, or exercise of any other attribute
of ownership.
- Environmental Matters - operations by the Company that all
Environmental Laws applicable to the Company are in full compliance.
- Exchange Act - the Securities Exchange Act of 1934, as amended, and
any successor law.
- Financial Statements - as defined in Section 3.4.
- GAAP - Generally Accepted Accounting Principles as accepted in the
United Stated and applied on a consistent basis by the Company.
4
- Governmental Authority - any court, tribunal, authority, agency,
bureau, department, official, or other instrumentality of the United
States.
- Government Order - any order, ordinance, injunction, judgment, decree,
or writ issued by any Government Authority.
- Intellectual Property - as defined in Section 3.21.
- IRS - the United States Internal Revenue Service or any successor
agency and, to the relevant extent, the United States Department of
the Treasury.
- Merger - as defined in Section 2.1.
- Occupational Safety and Health Law - any legal or governmental
requirement or obligation relating to safe and healthful working
conditions and to the reduction of occupational safety and health
hazards, or any such program thereof.
- Organizational Documents - Company documents including but not limited
to: articles or certificate of incorporation, bylaws, code(s) of
regulation, operating agreement, agreement of limited liability,
partnership agreements, charter, code of conduct, or any amendment to
any such document.
- Parent - MT Ultimate Healthcare Corp., as defined in Section 2.1.
- Seller - the present sole holder of Company stock and interests.
- Trade Secrets - as defined in Section 3.21.
5
2. THE ACQUISITION AND MERGER
-- --------------------------
2.1 The Acquisition and Merger
--- --------------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the Laws of the State of New York,
the stock of Abundant Nursing, Inc. of Mount Joy, Pennsylvania (the
Company) shall be acquired from Seller on the Closing Date (the
"effective time" of the acquisition). The Company shall be merged with
and into the acquiring firm, MT Ultimate Healthcare Corp., (MT
Ultimate) of Brooklyn, New York (the Parent) after the date that MT
Ultimate has fully paid to Seller all amounts due under this
Agreement, the Promissory Note in Section 2.8 and all agreements
contemplated by this Agreement. Until full payment to Seller of all
amounts due under this Agreement, the Promissory Note in Section 2.8
and all agreements contemplated by this Agreement (the "Final Payment
Date"), MT Ultimate shall: (1) keep the Company as a separate
Pennsylvania corporation, including without limitation, no merger or
consolidation of the Company with MT Ultimate, (2) shall maintain the
separate assets, employees and operations of the Company as the exist
on the Closing Date, (3) shall not issue, sell or transfer any Company
stock, and (4) shall not permit or allow any liens on the assets of
the Company.
(b) Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Section 7.8
and the conditions set forth, the consummation of the acquisition and
merger, the closing, will take place as promptly as practicable
following written agreement to the terms and conditions of this Plan
(generally assumed to be within approximately five(5) business days
thereafter) at Kegel ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and at a time agreed to in writing by the parties
hereto.
6
2.2 Effective Time
--- --------------
The acquisition will take effect at such time as the consummation stated
above occurs or at a subsequent time as the Company and the Parent shall agree.
At the closing, all shares held in the Company shall be transferred to MT
Ultimate. The merger shall occur after the Final Payment Date.
2.3 Effects of the Acquisition
--- --------------------------
At and after the effective time of the acquisition of the Company stock,
the Parent shall have, without limiting factors, all rights, privileges,
powers, and every other interest of the Company as the sole owner of the Company
with the sole exceptions being: that Seller shall have claim to all accounts
receivable as due at the effective time, cash held by the Company on the
effective time, as well as all accounts payable as of the effective time. These
shall be itemized for the Parent and approved by the Parent prior to the
effective time. Specific measures and steps for acquiring/transferring said
assets and the corresponding satisfaction of all payables shall be presented by
the seller to the Parent prior to closing, and the Parent must agree to the
steps in writing and shall monitor the accomplishment of said approved steps.
Seller shall provide MT Ultimate with a list of such accounts receivable and MT
Ultimate agrees that for one hundred twenty (120) days after closing, MT
Ultimate shall use its best efforts to collect Seller's accounts receivable. MT
Ultimate agrees that on Monday of each week (on Tuesday if Monday is a holiday
in a particular week), MT Ultimate shall remit to Seller all of Seller's
accounts receivable collected for the prior week. After such 120-day period, MT
Ultimate shall have no further obligation to make any reasonable efforts to
collect Seller's accounts receivable. To the extent MT Ultimate does receive
payments towards Seller's accounts receivable after the expiration of the
120-day period, MT Ultimate shall, on a monthly basis on or before the 10th day
of each month, remit to Seller all payments received towards Seller's accounts
receivable during the prior month which have not previously been paid to the
Seller. When MT Ultimate receives payment from a customer who has multiple
accounts receivable, some of which may be included in Seller's accounts
receivable and some of which may be accounts receivable of MT Ultimate, MT
Ultimate shall apply such amounts received to the oldest accounts receivable,
except where an older account receivable is subject to a dispute with a customer
or the customer specifically identifies a payment as payment for a particular
account receivable other than the oldest account receivable for such customer.
7
2.4 Certificate of Incorporation
--- ----------------------------
The original certificate of incorporation of the Company shall be presented
to the Parent at the effective time and shall be in effect until thereafter
changed or amended as provided therein or by applicable law.
2.5 By-Laws
--- -------
The by-laws of the Company, as in effect immediately prior to the effective
time, shall be the by-laws in effect until thereafter changed or amended as
provided therein or by applicable law.
2.6 Officers and Directors of Corporation
--- -------------------------------------
The officers and directors of MT Ultimate shall become the officers and
directors of the Company at the effective time. All current officers and
directors of the Company will effect their resignation or removal, or otherwise
ceasing to be an officer of the Company at the effective time.
2.7 [Intentionally Omitted]
--- -----------------------
2.8 Consideration
--- -------------
As consideration for the acquisition of the Company and in accordance to
the terms and conditions presented herein, the Parent shall pay the Seller and
the Seller hereby agrees to accept the following schedule:
8
- $150,000 shall be paid by the Parent directly to the Seller at
closing, as defined in Section 2.1, in immediately available funds.
- $295,000, as adjusted below, shall be financed by the seller at an
interest rate of seven (7) percent for five (5) years. The note shall
be prepared by the Seller and shall be amortized monthly, with
principal and interest payments of $5,841.35, as adjusted below. The
Parent agrees to provide security for the note in the form of a first
priority stock pledge of all Company stock to Seller and a first
priority lien on the assets of the Company for the benefit of Seller.
In the first six months of 2004, the Company prepaid some of its
insurance premiums for coverage for all of 2004. Therefore, at
Closing, the principal of the Note shall be increased by a pro-rated
amount of the insurance premium prepayment calculated by as follows:
the insurance premium payments through the closing multiplied by the
-------------- fraction with a numerator of the number of days
remaining in 2004 and denominator of 365. The monthly payment shall be
correspondingly adjusted.
- The Parent shall, in return, receive all shares of the Company's stock
issued pursuant to applicable laws.
- At closing, the Company shall have no known liabilities and the seller
will retain accounts receivable and cash at the time of closing, in
accordance with the provisions of Section 2.3.
2.9 No Further Liability
--- --------------------
None of the Parent and the Company or any agent shall be liable to any
person in respect of any cash delivered to a public official pursuant to any
applicable abandoned property, escheat, or similar law.
9
2.10 Withholding Rights
---- ------------------
Subject to applicable law, the Parent shall be entitled to deduct and
withhold any applicable taxes or related fees not accepted or anticipated by the
seller as outlined in Section 2.3. Seller shall have the right to contest or
dispute, in good faith, any such tax or fee, and if Seller does so, Parent shall
not deduct or withhold such fee until the contest or dispute is resolved.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
-- ---------------------------------------------
The Company hereby represents and warrants to Parent as follows:
10
3.1 Organization and Good Standing
--- ------------------------------
(a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Pennsylvania. The Company has full
corporate power and authority to own its property and to carry on its
business as is now being conducted. Furthermore, the Company warrants that
it is duly qualified to transact business and is in good standing in each
jurisdiction wherein the nature of the business is done or the property
owned, leased, or operated.
(b) True, correct and complete copies of the certificate of incorporation and
by-laws of the Company and all amendments thereto have been delivered to
the Parent. Also, that the corporate minutes and corporate records of the
Company will be fully available to the Parent prior to the closing and that
they will be true, complete, and correct in all material respects.
(c) The Company sets forth that it has no subsidiaries and that any such
entities shall be fully disclosed to the Parent prior to the closing.
3.2 Authority; No Conflict
--- -----------------------
(a) The Company attests that it has the right, power, authority, and capacity
to execute and deliver the Agreement and to consummate the acquisition and
merger and to perform its obligations under this Agreement.
(b) That the Board of Directors of the Company has unanimously given its
approval to the execution and delivery of this Agreement.
(c) That this Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid, and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(d) That neither execution, delivery, or performance of this Agreement, nor the
consummation of it by the Company will: directly or indirectly contravene,
conflict, or result in a violation or breach of any provision or resolution
or authorization of the Company; result in a violation or breach of or
constitute a default or give rise to a termination, cancellation, or create
an entitlement to any party; or result in the imposition or creation of any
encumbrance upon or with respect to any of the properties or assets owned
or used by the Company.
11
3.3 Capitalization
--- --------------
The authorized equity securities of the Company consists solely of the
shares of stock tendered to the Parent as of the effective date of the
transaction. The Company agrees that there are no voting trusts or contracts
relating to issuance, sale, or transfer of any equity securities and that there
are no outstanding options, warrants, or other securities exercisable.
Additionally, the Company attests that neither the Company nor any affiliates
owns or has any contract to acquire any equities/securities, either directly or
indirectly, from any person or business.
3.4 Financial Statements
--- --------------------
(a) Under this Agreement, Financial Statements shall mean the compiled
consolidated balance sheets of the Company as of December 31, 2003 and
December 31, 2002, and compiled consolidated statements of income and
expense for the same periods, as well as unaudited consolidated balance
sheet and income statements for the period January 1, 2004 through July 31,
2004. Current income and balance sheet statements shall be provided through
the closing date or current date at the request of the Parent.
(b) Additionally, the Company has delivered to the Parent true and correct
copies of all such statements and interim statements.
(c) That the Financial Statements have been prepared from the books and records
of the Company and fully reflect all liabilities and contingent liabilities
of the Company, along with accurate assets, notably accounts receivable by
the Company, provided that they do not reflect employee vacation accruals,
tax accruals and bonus accruals.
12
3.5 No Undisclosed Liabilities
--- --------------------------
The Company attests that it has no material liabilities or obligations of
any nature (whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against the financial
statements and interim financial statements, current liabilities incurred in the
ordinary course of business since the date of the aforementioned financial
statements, employee vacation accruals, tax accruals and bonus accruals.
3.6 Taxes
--- -----
The Company has properly and timely filed all federal, state, and local tax
returns and has paid all taxes, assessments, and penalties due and payable.
Furthermore, all tax returns were complete and correct in all respects as filed
and no claims have been assessed with respect to such returns. There are no
present, pending, or threatened audit, investigations, assessments, or disputes
as to any taxes of any nature payable by the Company or any of its affiliates,
nor any tax liens whether existing or inchoate on any of the assets of the
Company, except for current year taxes not presently due and payable.
Additionally, no IRS or foreign, state, county, or local tax audit is currently
in progress. There are no outstanding requests for any extensions of time within
which to pay tax and the Company is not liable for taxes of any person nor is
currently under any obligation to indemnify any person with respect to taxes or
is a party to any tax sharing agreement or any other agreement providing for
payments by the Company with respect to taxes. For the purposes herein, the term
"tax" shall mean any United States federal, national, state, provincial, local,
or other jurisdictional income, gross receipt, property, sales, use, license,
excise, franchise, employment, payroll, estimated, alternative or add-on
minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or like assessment or charge imposed by any governmental
authority, together with interest or penalty imposed thereon.
3.7 Accounts Receivable/Payable
--- ---------------------------
The Company warrants that:
(a) All accounts receivable and accounts payable to the Company shall be
retained by the seller and current shareholder of the Company as part of
this transaction. The accounts receivable and accounts payable shall be
documented clearly by the Company and agreed to by the parties at closing.
Any existing receivable(s) from Seller shall be forgiven by the Company at
no cost to Seller prior to closing or documented at closing and all related
tax consequences of such transaction shall be borne by the individual
Seller.
13
(b) All accounts receivable of the Company reflected on any and all financial
statements represent valid obligations arising from sales actually made or
services actually performed in the ordinary course of business. No accounts
receivable include pre-payments or advances of any kind by the client and
all said receivables are current and collectable at the full recorded
amount thereof without resort to litigation. Any adjustments decreasing
receivables will be the sole responsibility of the seller and no actions
against any receivable agent can be taken without the written consent of
the Parent.
(c) All accounts payable of the Company reflected on any and all financial
statements arose in the ordinary course of business. All material payables
are reflected on financial statements and in books and records of the
Company in a manner consistent with past practice, except employee vacation
accruals, tax accruals and bonus accruals. There have been no adverse
changes since the date of the last full financial statement period in he
amount or delinquency of the accounts payable of the Company which would
have a material adverse effect.
3.8 No Material Adverse Change
--- --------------------------
Except for potentially less business from Maple Farm Nursing Home and
impacts from MT Ultimate's premature disclosure of the transactions contemplated
by this Agreement, since the date of the financial statements, there has not
been any material adverse change in the business, operations, properties,
prospects, staff, liabilities, results of operations, assets, or other condition
(financial or otherwise) of the Company. Furthermore, except for potentially
less business from Maple Farm Nursing Home, and impacts from MT Ultimate's
premature disclosure of the transactions contemplated by this Agreement, no
event has occurred or circumstance exists that may result in a material adverse
effect.
14
3.9 Books and Records
--- -----------------
The complete books and records of the Company which have been provided to
the Parent are true, correct, and complete. Furthermore, the minute books of the
Company contain true, correct, and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Board of Directors, and all
committees of the Board of Directors. At closing, all of those books and records
will be in possession of the Company and for transfer to the Parent.
3.10 Encumbrances
---- ------------
The Company has provided a complete and accurate list of all real property
leaseholds or other interests therein held by the Company, and that the Company
neither holds nor owns any real property. The same is true for all licensed
vehicles.
3.11 Condition of Assets
---- -------------------
To the Company's actual knowledge, considering their age and ordinary wear
and tear excluded, all facilities, vehicles, furniture, fixtures, equipment, and
other property owned, held by, or used by the Company are structurally sound,
are in good operating condition and repair, and are full available and adequate
for the uses to which they are being put and that none are in need of
maintenance, or repairs. To the Company's actual knowledge, considering their
age and ordinary wear and tear excluded, the buildings, vehicles, furniture,
fixtures, equipment, and other assets and property of the Company are sufficient
for the continued conduct of their respective business functions at closing.
15
3.12 Employee Benefits
---- ------------------
Except for a 401k Plan and health insurance, neither the Company nor any
ERISA Affiliate maintains any employee benefits plans. Such an employee benefit
plan means (other than worker's compensation required by any state or
subdivision thereof) such plan as defined in Section 3(3) of ERISA.
Additionally, at closing the Parent shall have no liability or obligation for
any benefits due staff of the Company, whether actual or contingent, including
all incentives, bonuses, or stock options or similar commitments.
3.13 Compliance with Laws
---- ----------------------
(a) To the Company's actual knowledge, the Company is in full compliance with
all federal, state, and local laws, authorizations, licenses, and permits
of all Governmental Authority and all government orders affecting the
business, operations, properties, or assets of the Company.
(b) Except for a Department of Labor Wage and Hour Audit in 2002, the Company
has never been charged with violating any federal, state, or local law nor,
to the Company's actual knowledge, is such an investigation or threat of
charge underway.
(c) To the Company's actual knowledge, no license or permit is required by the
Company to operate its business.
3.14 Legal Proceedings
---- ------------------
There is no pending or , to the Company's actual knowledge, threat of
claim, action, investigation, arbitration, litigation, suit, or other proceeding
that has commenced by or against the Company that may have an effect on the
business or any assets or efforts of the Company. Also, that challenges or any
responses to such actions have been provided to the Parent. Also, to the
Company's actual knowledge, there have been no such proceedings threatened, and
no event has occurred or circumstances exist that may give rise to or serve as
the basis for the commencement of any such proceeding.
16
3.15 Absence of Certain Changes and Events
---- ------------------------------------------
Except as provided below, since the date of the latest financial statements
provided to the Parent, the Company has conducted its business only in the
ordinary course of business consistent with past practice and there has been no
increases in bonuses or salaries or other compensation since the submission of
said statements. Except as provided below, there has been no material change
in claims or rights. Except as provided below, there has been no:
(a) except for Maple Farm Nursing Home, entry into or termination of or notice
of termination of any contract or transaction of the Company;
(b) amendment or other modification relating to the salaries, fees, or
organizational positions of any member of the Company;
(c) except for Maple Farm Nursing Home, loss of services of any key employees
or consultants, or any loss of a material client;
(d) loan or advance to any person inconsistent with the normal course of past
business practice;
(e) agreement or commitment, whether oral or written by the Company to do any
of the foregoing.
Notwithstanding the forgoing, the Company has transferred all cash and
accounts receivable to Seller and has forgiven, for no consideration, the
loan owed by Seller to the Company.
3.16 Contracts
---- ---------
The Company has no joint ventures or related contracts or commitments with
related parties. Also, that each contract of the Company is in good standing
with no defaults. There are no related third-party contracts or obligations.
17
3.17 Insurance
---- ---------
The Company has in effect such required insurance policies necessary for
the proper conduct of the business and that their terms and expiration dates
have been provided or will be provided prior to closing. To the Company's
actual knowledge, there are no grounds for cancellation or avoidance of such
policies or any known increases in premiums thereof. To the Company's actual
knowledge, such policies insure the Company in amounts and against losses and
risks customary and sufficient for the business.
3.18 Environmental Matters
---- ----------------------
The Company has at all times operated the business in material compliance
with all Environmental Laws and all permits, licenses, and required
registrations are in full effect. There are no environmental claims against the
Company and that there are no claims pending or known liabilities retained or
assumed.
3.19 Employees
---- ---------
An accurate list of all employees will be provided at closing. The listing
shall contain: name, job, client supported, position, compensation, and any
accruals made. No director or employee is a party to or bound by any agreement
or obligation.
3.20 Labor Relations
---- ----------------
To the Company's actual knowledge, the Company has satisfactory relations
with its employees. Furthermore, to the Company's actual knowledge, the Company
is in full compliance with all material respects with all applicable laws
relating to employment and employment practices, terms, conditions, and such
measures relating to the employees and the Company industry. There are no
claims or petitions pending before the National Labor Relations Board or any
state or local agency and to the Company's actual knowledge, none is currently
threatened.
18
3.21 [Intentionally Omitted]
---- ------------------------
3.22 Absence of Certain Payments
---- ------------------------------
Neither the Company nor any director, officer, employee, or agent of the
Company has directly or indirectly made any contribution, given a bribe,
payoff, influence payment, or other related payment to any person, regardless of
form, to pay for or obtain special treatment to secure business or retain
contracts.
3.23 Relationships with Related Persons
---- -------------------------------------
No person, other than the seller and sole stockholder, has any interest in
any property or asset of the Company used in or pertaining to the business. No
other person has an equity interest in the Company or any other financial or
profit interest in the enterprise.
3.24 Brokers or Finders
---- --------------------
Neither the Company or any respective director, officer, or agent on their
behalf has incurred any obligation or liability, contingent or otherwise or
brokerage or finder's fees except for the fee payable to Strategic Endeavors,
LLC.
19
3.25 Conduct of Business/Use of Name
---- -----------------------------------
The business has been carried on by the Company and, to the Company's
actual knowledge, the Company has the right to use the name Abundant Nursing,
Inc.
3.26 Restrictions on Business Activities
---- --------------------------------------
There is no contract or governmental order binding upon the Company to have
the effect of prohibiting or materially impairing any business practice of the
Company. This includes acquiring property or providing any service by the
Company as currently conducted or proposed to be conducted.
3.27 Outstanding Indebtedness
---- -------------------------
Pursuant to the consideration offered for this proposed transaction, the
seller personally assumes all outstanding indebtedness of the Company effective
at closing. Financial statements listing such indebtedness shall be provided to
the Parent at closing. There shall be no encumbrances or financial obligations
due by the Company and Parent at closing.
3.28 Clients and Contractors
---- -------------------------
Prior to closing, the Company will provide a complete list of all clients,
including contact names and addresses. Additionally, all subcontractor
agreements shall be provided. To the actual knowledge and expectation of the
Company and except for Maple Farm Nursing Home, there are no facts or
circumstances, including the consummation of transactions contemplated as a
result of this Agreement, that are likely to result in the loss of any material
client of the Company or in a material change in the relationship of the Company
with such a client.
20
3.29 Fairness Opinion
---- -----------------
The Company's Board of Directors believes and agrees to the value and
consideration given for this Agreement and believe that the acquisition and
merger is fair to the Company and its stockholders.
3.30 Voting Requirements
---- --------------------
The affirmative vote or consent of the outstanding shares of the Company's
common stock is necessary to adopt this Agreement and approve the transaction
contemplated.
3.31 Disclosure
---- ----------
No representation or warranty by the Company in the Agreement, nor in any
statement, certificate, schedule, or exhibit delivered or to be delivered to the
Parent contains or will contain any untrue statement of material fact or omit to
state a material fact necessary to make the statements and understandings herein
true under which they were made and not misleading.
4. REPRESENTATIONS AND WARRANTIES OF PARENT
-- --------------------------------------------
4.1 Organization and Good Standing
--- ---------------------------------
Parent is a public corporation duly organized, validly existing, and in
good standing under the laws of the States of New York and Nevada. The Parent
has the full power and corporate authority to conduct its business as it is now
being conducted and to own or use the property and assets that it owns or uses
in its business.
21
4.2 Authority
--- ---------
The Parent has the right, power, authority, and capacity to execute and
deliver this agreement, to consummate the acquisition and merger, and to perform
the respective obligations under this Agreement.
4.3 Legal Proceedings
--- ------------------
There is no proceeding pending against the Parent that challenges, or that
may have the effect of preventing, delaying, making illegal, or otherwise
interfering with the transaction contemplated hereby.
4.4 Material Adverse Effects.
--- ---------------------------
Since the date of the last reported financial statements, there has not
been any material adverse change in the business, operations, properties,
prospects, staff, liabilities, results of operations, assets, or other condition
(financial or otherwise) of MT Ultimate. Furthermore, no event has occurred or
circumstance exists that may result in a material adverse effect.
4.5 Undisclosed Liabilities.
--- ------------------------
MT Ultimate attests that it has no material liabilities or obligations of
any nature (whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against the last reported
financial statements and interim financial statements and current liabilities
incurred in the ordinary course of business since the date of the aforementioned
financial statements.
4.6 Organization and Good Standing
--- ------------------------------
Mt Ultimate is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York. MT Ultimate has full corporate
power and authority to own its property and to carry on its business as is now
being conducted. Furthermore, MT Ultimate warrants that it is duly qualified to
transact business and is in good standing in each jurisdiction wherein the
nature of the business is done or the property owned, leased, or operated.
22
4.7 Authority; No Conflict
--- -----------------------
(a) MT Ultimate attests that it has the right, power, authority, and capacity
to execute and deliver the Agreement and to consummate the acquisition and
merger and to perform its obligations under this Agreement.
(b) That the Board of Directors of MT Ultimate has unanimously given its
approval to the execution and delivery of this Agreement.
(c) That this Agreement has been duly executed and delivered by MT Ultimate and
constitutes the legal, valid, and binding obligation of the Company,
enforceable against MT Ultimate in accordance with its terms.
(d) That neither execution, delivery, or performance of this Agreement, nor the
consummation of it by MT Ultimate will: directly or indirectly contravene,
conflict, or result in a violation or breach of any provision or resolution
or authorization of MT Ultimate; result in a violation or breach of or
constitute a default or give rise to a termination, cancellation, or create
an entitlement to any party; or result in the imposition or creation of any
encumbrance upon or with respect to any of the properties or assets owned
or used by MT Ultimate.
23
5. COVENANTS OF THE COMPANY
-- ---------------------------
5.1 Normal Course
--- --------------
From the date hereof until the closing, the Company will: maintain its
corporate existence in good standing, maintain the general image and character
of the business with clients and in the community, preserve its business
relationships, maintain adequate books and records, permit Parent and its
representatives full access to management, its books, and records, and in all
respects conduct its business in the usual and ordinary manner consistent with
past practices, except the Company may transfer cash and accounts receivable to
Seller and forgive, for no consideration, the loan owed by Seller to the
Company.
5.2 Conduct of Business
--- ---------------------
The Company shall conduct its business in its usual course and shall not:
amend or otherwise modify its organizational documents, issue or sell any
options or securities, pledge or grant any secured interest in the Company,
increase salaries or bonuses, incur and indebtedness outside the normal course
of business, terminate or modify any contract or agreement, make a loan or
advance to any person other than routine advances for travel and the like, make
any capital expenditures, change its method of accounting, institute or settle
any litigation, or enter into any commitment for any of the foregoing, except
the Company may transfer cash and accounts receivable to Seller and forgive, for
no consideration, the loan owed by Seller to the Company..
5.3 Certain Filings
--- ----------------
The Company agrees, at no cost or expense to it, to cooperate with the
Parent with respect to all filings with regulatory authorities that are required
to be made by the Company.
24
5.4 Consents and Approvals
--- ------------------------
The Company and MT Ultimate shall use their best efforts to obtain as
promptly as possible any consents, authorizations, approvals, or waivers
required in connection with this Agreement.
5.5 Best Efforts
--- -------------
The Company and MT Ultimate shall use their best efforts to satisfy the
conditions set forth herein that are within their respective duty and control.
5.6 Intercompany Payments
--- ----------------------
All intercompany loans, payments, or other amounts due shall be the
responsibility of the seller and paid in full at closing.
5.7 Notification of Certain Matters
--- ----------------------------------
From the date of execution of this Agreement and until closing, the Company
and Mt Ultimate shall immediately notify each other of:
(a) the occurrence of any fact or event of which it has knowledge which would
likely cause any representation or warranty of it contained herein to be
untrue or inaccurate, or would the cause the Agreement or a condition of
the Agreement not to be completed or satisfied in any material respect,
(b) any failure of it to comply with or satisfy any part of this Agreement or
any representation herein.
25
5.8 S Corporation Issues.
--- ----------------------
Seller, the Company and MT Ultimate acknowledge that upon the transfer of
the Company shares by Seller to MT Ultimate, the S Corporation election of the
Company will automatically terminate because MT Ultimate is an ineligible
shareholder for the valid continuation of S Corporation status. Seller, the
Company and MT Ultimate also acknowledge that because more than fifty percent
(50%) of the stock of the Company will change ownership in the current tax year,
under Code Section 1362(e)(6)(D), normal tax accounting methods, and not a pro
rata allocation, will apply to the short S tax year and the short C tax year
resulting from the termination of the S Corporation elections. Upon execution
of this Agreement and continuing after the transfer, Seller, the Company and MT
Ultimate agree, without further consideration, to execute and deliver promptly
to the requesting party such further assignment, endorsement, and other
documents and instruments, and to take all such further actions as Seller, the
Company or MT Ultimate may from time to time reasonably request with respect to
the preparation and submittal of tax returns, tax notices and other documents,
including, without limitation, the execution and delivery of a consent to
termination date of the S Corporation election of the Company. MT Ultimate
shall prepare, at its cost and expense, the short-S and short-C tax returns in
consultation with Seller and her advisors.
6. CONDITIONS TO OBLIGATIONS OF THE COMPANY. As a condition precedent to
-- -------------------------------------------
the MT Ultimate's obligations to close on the transactions contemplated by this
Agreement, the following shall occur at Closing:
6.1 Representations and Warranties
--- --------------------------------
The representations and warranties of the Company contained herein or any
certificate delivered pursuant hereto which are not qualified as to materiality
shall be complete and correct as to the date made and deemed repeated at and as
of the closing and shall then be complete and correct in all respects.
26
6.2 Performance of Covenants
--- --------------------------
The Company shall have performed and complied in all material respects with
each covenant, agreement, and condition required by this Agreement to be
performed or complied with prior to the closing date.
6.3 Update Certificate
--- -------------------
The Company shall provide favorable certificates, dated the closing date,
signed by an officer of the Company as to the matters set forth in Sections 6.1
and 6.2.
6.4 No Proceeding
--- --------------
No order of any Governmental Authority shall be in effect that restrains or
prohibits the acquisition and merger, and no written advice shall have been
received by counsel from any Governmental Authority. Furthermore, no proceeding
is in process or known by the Company that will invalidate or restrain the
transaction.
7. CONDITIONS TO OBLIGATIONS OF THE COMPANY. As a condition precedent to
-- -------------------------------------------
the Company's and Seller's obligations to close on the transactions contemplated
by this Agreement, the following shall occur at Closing:
7.1 Representations and Warranties
--- --------------------------------
The representations and warranties of MT Ultimate contained herein or any
certificate delivered pursuant hereto which are not qualified as to materiality
shall be complete and correct as to the date made and deemed repeated at and as
of the closing and shall then be complete and correct in all respects.
27
7.2 Performance of Covenants
--- --------------------------
MT Ultimate shall have performed and complied in all material respects with
each covenant, agreement, and condition required by this Agreement to be
performed or complied with prior to the closing date.
7.3 Update Certificate
--- -------------------
MT Ultimate shall provide favorable certificates, dated the closing date,
signed by an officer of the Company as to the matters set forth in Sections 7.1
and 7.2.
7.4 No Proceeding
--- --------------
No order of any Governmental Authority shall be in effect that restrains or
prohibits the acquisition and merger, and no written advice shall have been
received by counsel from any Governmental Authority. Furthermore, no proceeding
is in process or known by MT Ultimate that will invalidate or restrain the
transaction.
7.5 Deliveries.
--- -----------
MT Ultimate shall deliver the payment required by Section 2.8, the Note, in
the form attached hereto as Exhibit A, the Stock Pledge Agreement, in the form
---------
attached hereto as Exhibit B, the stock of the Company endorsed in blank for
----------
purposes of the Stock Pledge Agreement, the Security Agreement, in the form
attached hereto as Exhibit C, and the financing statements for purposes of the
---------
Security Agreement.
8. GENERAL PROVISIONS
-- -------------------
8.1 Expenses
--- --------
Each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement,
including all fees and expenses of agents, representatives, counsel,
accountants, et al.
28
8.2 Public Announcements
--- ---------------------
Any public announcement or similar publicity with respect to this
Agreement, the closing, or the transaction contemplated herein shall be prepared
and issued by the Parent in such a manner that Parent and Seller agree and shall
be made in accordance and full compliance with SEC Regulation FD. No
announcement or similar publicity shall occur before the Closing Date, unless
both parties have consented in writing. The Seller and the Parent will in good
faith consult with each other concerning the means by which the Company's
employees, clients, suppliers, and others having dealings with the Company will
be informed of this Agreement, the closing, and the transaction contemplated
herein, provided that Seller may immediately inform her management employees of
the transactions contemplated by this Agreement.
8.3 Notices
--- -------
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
delivered by hand (with confirmation of receipt), sent by fax (with written
confirmation of receipt), by registered mail with return receipt, or sent by a
nationally recognized overnight delivery service. In such cases, the Parent
information is as follows:
Mt Ultimate Healthcare Corp.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President and Chief Executive
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
29
For Seller:
▇▇▇▇ ▇. ▇▇▇▇▇
c/o D. ▇▇▇▇ ▇▇▇▇▇, ▇▇., Esq.
Kegel ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
8.4 Further Assurances
--- -------------------
The parties agree to furnish upon request to each other such further
information to execute and deliver other such documents and to accomplish such
other reasonable requests for the purpose of carrying out the intent of this
Agreement or the documents referred to herein.
8.5 Waiver
--- ------
Neither the failure nor any delay by any party in exercising any right,
power, or privilege under this Agreement or the documents referred to herein
will operate as a waiver of such right, power, or privilege.
8.6 Entire Agreement and Modifications
--- -------------------------------------
This Agreement supersedes all prior agreements between the parties with
respect to the subject matter and the Company. This is the entire Agreement
between the parties. This Agreement may not be amended, nor may any provision
hereof or default hereunder be waived, except by a written agreement executed by
the party to be charged with the amendment or waiver.
30
8.7 Termination
--- -----------
This Agreement may be terminated:
(a) at any time prior to the effective time by mutual consent of the Parent and
the Company
(b) by the Parent or the Company prior to the effective time due to a material
breach of any representation or warranty, or the nonfulfillment in a
material respect and failure to cure such nonfulfillment within five (5)
business days, or breach of any covenant or item contained herein on the
part of the party or parties seeking termination.
(c) by either Parent or Company if a Governmental Authority shall have issued a
nonappealable final order, decree, or ruling having the effect of
permanently restraining, enjoining, or otherwise prohibiting the
acquisition and merger.(c)
8.8 Assignments, Successors
--- ------------------------
No party may assign any of its rights under this Agreement without the prior
written consent of the other party. This Agreement will apply to, be binding in
all respects, and inure to the benefit of the successors and permitted assigns
of the parties.
8.9 Severability
--- ------------
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part will remain in full force and effect to the extent
not held invalid or unenforceable.
8.10 Governing Law
---- --------------
This Agreement will be governed by the laws of the State of New York
without regard to principles of conflict of laws and provisions relating to the
acquisition and merger.
31
8.11 Counterparts
---- ------------
This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original
copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of this 28th day of September 2004.
----------------------------
SELLER ABUNDANT NURSING, INC.
------ ------------------------
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------- -------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇, President
MT ULTIMATE HEALTHCARE CORP.
-------------------------------
By: /s/ MacDonald Tudeme
----------------------------
Name
Title: Chief Executive Officer
--------------------------
32