AGREEMENT AND PLAN OF MERGER
among
ACCUHEALTH, INC.
ACH ACQUIRING CORP.
PROHEALTHCARE, INC.
PROHEALTHCARE INFUSION SERVICES, INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Dated as of March 14, 1997
AGREEMENT AND PLAN OF MERGER
This agreement and plan of merger dated as of March 14, 1997 is among
Accuhealth, Inc., a New York corporation ("Parent"), ACH Acquiring Corp., a New
Jersey corporation and wholly-owned subsidiary of Parent ("Sub"), ProHealthCare,
Inc., a Delaware corporation ("ProHealthCare"), ProHealthCare Infusion Services,
Inc., a New Jersey corporation and a wholly-owned subsidiary of ProHealthCare
(the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ (collectively, the
"Stockholders").
Parent, Sub, ProHealthCare, the Company and the Stockholders desire that
Parent acquire the Company pursuant to the merger of Sub with and into the
Company in accordance with the terms of this agreement and the New Jersey
Business Corporation Act (the "NJBCA").
The parties agree as follows:
1. The Merger; The Surviving Corporation
1.1 The Merger. At the Effective Time (as defined in section 1.3), Sub
shall be merged with and into the Company (the "Merger") pursuant to the NJBCA,
and the separate existence of Sub shall cease. The Company shall be the
surviving corporation (the "Surviving Corporation") and shall continue to be
governed by the NJBCA.
1.2 Closing. The closing of the transactions contemplated by this agreement
(the "Closing") shall take place at the offices of Proskauer ▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇ LLP, at 10:00 a.m., local time, two business days after the
conditions specified in section 10 have been satisfied or on such other date and
at such other time and place as Parent and the Company shall agree (the "Closing
Date").
1.3 Effective Time of the Merger. As soon as practicable after the Closing,
a properly executed certificate of merger providing for the Merger shall be
filed with the Secretary of State of the State of New Jersey. The Merger shall
become effective at the time of filing of the certificate of merger or at such
later time specified in the certificate of merger (the "Effective Time").
1.4 Certificate of Incorporation and By-Laws. The articles of incorporation
and by-laws of Sub in effect at the Effective Time shall be the certificate of
incorporation and by-laws of the Surviving Corporation until amended, except
that the name of the Surviving Corporation shall be "ProHealthCare Infusion
Services, Inc."
2. Conversion of Shares; Options
2.1 Treatment of Shares of the Company. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) All the shares of capital stock, no par value per share, of the
Company ("Company Common Stock") issued and outstanding immediately prior
to the Effective Time (other than shares to be cancelled in accordance with
section 2.1(b)) shall automatically be cancelled and shall be converted
into the right to receive an aggregate of 300,000 shares of the common
stock, par value $.01 per share, of Parent ("Parent Common Stock"), which
shall be delivered to ProHealthCare within one business day after the
surrender of the certificate or certificates formerly representing such
share of Company Common Stock in accordance with section 2.2.
(b) Any shares of Company Common Stock that are held by the Company as
treasury shares shall be cancelled and retired and cease to exist, and no
securities of Parent or other consideration shall be delivered in exchange
therefor.
(c) Each share of common stock, par value $.01 per share, of Sub ("Sub
Common Stock") issued and outstanding immediately prior to the Effective
Time shall be converted into and become one fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving
Corporation.
2.2 Exchange of Company Stock.
(a) Promptly after the Effective Time, ProHealthCare shall present to
Parent for cancellation a certificate or certificates, which immediately prior
to the Effective Time represented all the issued and outstanding shares of
Company Common Stock, free and clear of all Liens (as defined in section 5.2),
and Parent shall thereupon deliver to ProHealthCare in exchange therefor a
certificate or certificates representing 300,000 shares of Parent Common Stock.
(b) If Final Incremental Gross Profit (as defined in section 2.4) exceeds
$1.2 million, then, promptly after the determination of Final Incremental Gross
Profit, Parent shall deliver to ProHealthCare a number of shares equal to the
product of (i) the amount, if any, by which (x) the quotient of $1.2 million
divided by the average of the per share closing price for Parent Common Stock on
the NASDAQ or the average of the last per share bid prices on the
over-the-counter Bulletin Board (as reported by the Nasdaq Stock Market, Inc.),
as the case may be, for the 30 trading days immediately preceding the first
anniversary of the Closing (the "Average Price") exceeds (y) the number of
shares of Parent Common stock delivered to ProHealthCare pursuant to section
2.2(a) multiplied by (ii) a fraction, the numerator of which is the number of
shares of Parent Common Stock delivered to ProHealthCare pursuant to section
2.2(a) that are held, on the first anniversary of the Closing, by ProHealthCare
or by any person
who is a stockholder of ProHealthCare on the date of this agreement, and the
denominator of which is the number of shares of Parent Common Stock delivered to
ProHealthCare pursuant to section 2.2(a); provided that the aggregate number of
shares delivered to ProHealthCare pursuant to sections 2.2(a) and 2.2(b) shall
not exceed 500,000. Notwithstanding the preceding sentence, Parent shall not
deliver any share to ProHealthCare pursuant to this section 2.2(b) if (a) the
average of the per share closing price for Parent Common Stock on the NASDAQ or
the average of the last per share bid prices on the over-the-counter Bulletin
Board (as reported by the Nasdaq Stock Market, Inc.), as the case may be, for
any ten consecutive trading days prior to the first anniversary of the Closing
is greater than or equal to $4.00 or (b) the Parent Common Stock is converted,
by merger or any similar corporate event, into publicly-traded securities of
which, on the date of conversion, the per share closing price is greater than or
equal to $4.00. Parent's obligation under this section 2.2(b) shall be expressly
assumed by any successor of Parent. If Parent shall pay a dividend in Parent
Common Stock, subdivide the outstanding Parent Stock, combine the outstanding
Parent Stock into a smaller number of shares or issue by any similar capital
event other securities of the Company, the kind and number of shares deliverable
pursuant to this section 2.2(b) and the $4.00 target price shall be adjusted
appropriately. Notwithstanding anything in this section 2.2(b) to the contrary,
no shares shall be delivered pursuant to this section 2.2(b) if any shares are
delivered pursuant to section 2.2(c).
(c) If, prior to the determination of Final Incremental Gross Profit,
Parent consummates a merger or similar transaction (a "Parent Merger") as a
result of which, on June 30, 1998, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is no longer employed by
Parent or any successor of Parent in a senior management position, then, on
September 30, 1998, Parent shall deliver to ProHealthCare a number of shares
equal to the product of (i) the amount, if any, by which (x) the quotient of
$1.0 million divided by the Average Price exceeds (y) 300,000 multiplied by (ii)
a fraction, the numerator of which is the number of shares of Parent Common
Stock delivered to ProHealthCare pursuant to section 2.2(a) that are held, on
the first anniversary of the Closing, by ProHealthCare or by any person who is a
stockholder of ProHealthCare on the date of this agreement, and the denominator
of which is 300,000; provided that the aggregate number of shares of Parent
Common Stock delivered to ProHealthCare pursuant to sections 2.2(a) and 2.2(c)
shall not exceed 500,000. Notwithstanding the preceding sentence, Parent shall
not deliver any share to ProHealthCare pursuant to this section 2.2(c) if (a)
the average of the per share closing price for Parent Common Stock on the NASDAQ
or a national securities exchange or the average of the last per share bid
prices on the over-the-counter Bulletin Board (as reported by the Nasdaq Stock
Market, Inc.), as the case may be, for any ten consecutive trading days prior to
the first anniversary of the Closing is greater than or equal to $4.00 or (b)
the Parent Common Stock was converted, by the Parent Merger, into
publicly-traded securities of which, on the date of conversion, the per share
closing price is greater than or equal to $4.00. Parent's obligation under this
section 2.2(c) shall be expressly assumed by any successor of Parent. If Parent
shall pay a dividend in Parent Common Stock, subdivide the outstanding Parent
Stock, combine the outstanding Parent Stock into a smaller number of shares or
issue by any similar capital event other securities of the Company, the kind and
number of shares deliverable pursuant to this section 2.2(c), and the $4.00
target price, shall be adjusted appropriately. The number and kind
of shares deliverable pursuant to this section 2.2(c) and the $4.00 target price
shall be deemed to refer to the appropriate number and kind, and price of, any
security into which the outstanding Parent Common Stock may be converted as a
result of the Parent Merger.
2.3 No Fractional Securities. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of certificates of Company Common Stock or pursuant to section 2.2(b),
section 2.2(c) or section 4.2, and such fractional interests shall not entitle
the owner thereof to vote or to any rights of a security holder. In lieu of any
such fractional securities ProHealthCare would otherwise have been entitled to
receive pursuant to sections 2.2(b), 2.2(c) or 4.2, ProHealthCare will be
entitled to receive, and Parent will timely make, a cash payment (without
interest) determined by multiplying (i) the fractional interest to which
ProHealthCare would otherwise be entitled and (ii) in the case of any fractional
security ProHealthCare would otherwise have been entitled to receive pursuant to
section 2.2(b) or section 2.2(c), the Average Price or, in the case of any
fractional security ProHealthCare would otherwise have been entitled to receive
pursuant to section 4.2, $4.00.
2.4 Determination of Final Incremental Gross Profit.
(a) Parent Calculation of Incremental Gross Profit.
(i) Within 50 days after the end of each of Parent's fiscal quarters
up to and including March 31, 1998, Parent shall deliver to ProHealthCare
and each Stockholder a statement of Parent's calculation of Incremental
Gross Profit for that quarter.
(ii) Within 90 days after the end of Parent's fiscal quarter ending
June 30, 1998, Parent shall deliver to ProHealthCare a statement (the
"Parent's IGP Statement") in reasonable detail of the Parent's calculation
of Incremental Gross Profit for any four consecutive fiscal quarters of
Parent ending on or prior to June 30, 1998.
(b) For purposes of this agreement, "Incremental Gross Profit" means the
Net Sales of the Surviving Corporation and of Parent minus all costs of
medicines and supplies sold, field nursing, freight and other direct, out of
pocket expenses, which are attributable to goods or services marketed under the
"Accuhealth" or "ProHealthCare" name to customers referred by the referral
sources identified on Schedule 2.4 hereto. ProHealthCare and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
represent and warrant to Parent that, except as set forth on Schedule 2.4, each
customer and referral source identified on Schedule 2.4 has purchased goods or
services from, or referred customers to, ProHealthCare or the Company on one or
more occasions during the 12-month period commencing March 11, 1996 and ending
March 14, 1997. For purposes of this agreement, "Net Sales" shall mean sales
collected and sales that Parent expects to be collected.
(c) ProHealthCare's Verification of Incremental Gross Profit. After the
delivery to ProHealthCare of the Parent's IGP Statement, ProHealthCare and its
representatives shall have access at reasonable times and on reasonable notice,
at ProHealthCare's
sole expense, to the books and records of the Surviving Corporation for the
purpose of verifying the accuracy of the Incremental Gross Profit calculation
set forth in the Parent's IGP Statement. If ProHealthCare disagrees with the
calculation of Incremental Gross Profit set forth in the Parent's IGP Statement,
ProHealthCare shall deliver to Parent, prior to the end of the 90th day
following the delivery of the Parent's Statement, a statement (the "Seller's IGP
Statement") that sets forth in reasonable detail an explanation of such
disagreement and a proposed alternative determination of Incremental Gross
Profit. If ProHealthCare does not deliver to Parent a Seller's IGP Statement
within such 90-day period, the Incremental Gross Profit set forth in the
Parent's IGP Statement shall be deemed final, binding and conclusive upon each
party hereto.
(d) Dispute Resolution.
(i) If ProHealthCare shall timely deliver a Seller's IGP Statement,
then Parent and ProHealthCare will attempt in good faith to resolve all
differences with regard to their respective determinations of Incremental
Gross Profit during the next 30 days or such longer period as Parent and
ProHealthCare may agree in writing. If Parent and ProHealthCare are unable
to resolve such differences and agree as to Incremental Gross Profit prior
to the expiration of such 30-day period (or longer period if so agreed)
Incremental Gross Profit shall be determined pursuant to section
2.4(d)(ii).
(ii) Promptly following the 30-day period referred to in section
2.4(d)(i), Parent and ProHealthCare shall jointly select a firm of
independent public accountants of national or regional prominence to
resolve any dispute concerning the calculation of Incremental Gross Profit
that is not resolved by Parent and ProHealthCare. If Parent and
ProHealthCare fail to select such firm within 30 days after the 30-day
period referred to in section 2.4(d)(i), such firm shall be ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ & Company or, if ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company is or has been engaged
for any purpose by any party to this agreement, any "big six" accounting
firm selected by the President of the Association of the Bar of the City of
New York (as long as it is not a firm that any party to this agreement has
engaged for any purpose within the preceding five years). Such firm
selected pursuant to this section 2.4(d)(ii) is hereinafter referred to as
the "IGP Accountants". The IGP Accountants shall be instructed to deliver
to Parent and ProHealthCare a written report (the "Accountants' IGP
Report") setting forth the IGP Accountants' calculation of Incremental
Gross Profit, no later than 60 days following their selection. The
determination of Incremental Gross Profit set forth in the Accountants' IGP
Report shall be deemed final, binding and conclusive upon each party
hereto. The fees and expenses of the IGP Accountants shall be paid by
ProHealthCare, except that if the IGP Accountant's calculation of
Incremental Gross Profit is at least $50,000 greater than Parent's
calculation of Incremental Gross Profit, the fees and expenses of the
Accountants shall be paid by Parent.
(e) Final Incremental Gross Profit. Incremental Gross Profit as mutually
agreed to by Parent and ProHealthCare pursuant to section 2.4(d)(i), or as
deemed final, binding and conclusive pursuant to section 2.4(c) or 2.4(d)(ii),
shall be deemed the "Final Incremental Gross Profit".
3. Determination of Final Net Liquid Assets; Adjustment to Merger
Consideration
3.1 Parent Calculation of Net Liquid Assets. Within 90 days after the end
of Parent's fiscal quarter ending December 31, 1997, Parent shall deliver to
ProHealthCare a statement (the "Parent's Statement") in reasonable detail of the
Parent's calculation of Net Liquid Assets as of December 31, 1997.
(a) For purposes of this agreement, "Net Liquid Assets" means the
difference between (i) the sum of $__________, which represents the value of the
Company's inventory as of the Closing Date that was purchased from Parent, plus
all payments received after the Closing Date in respect of accounts receivable
of the Company, including those accounts receivable assigned by ProHealthCare to
the Company pursuant to Section 10.2(m), that were outstanding on the Closing
Date ("Accounts Receivable"), minus (ii) the sum of all payments made by the
Company, the Surviving Corporation, Parent or any affiliate of any of them after
the Closing Date in respect of liabilities of the Company and ProHealthCare that
existed as of the Closing Date, including payments pursuant to section 9.5 of
this agreement, and the value of all unpaid liabilities (as determined in
accordance with generally accepted accounting principles ("GAAP")) of the
Company and ProHealthCare that existed as of the Closing Date, plus all
financing charges and similar fees incurred, after the Closing Date, by Parent
or the Surviving Corporation in connection with the discharge of liabilities of
the Company or ProHealthCare that existed as of the Closing Date less any
liabilities that were reduced, written off, waived, assumed by ProHealthCare
pursuant to an assignment and assumption agreement in the form of Exhibit ▇- ▇
to this agreement or that otherwise will not be payable by the Surviving
Corporation. It is understood that to the extent that Parent or Sub incurs debt
to satisfy accounts payable of the Company, interest, financing and other actual
costs related to such debt will reduce Net Liquid Assets, and, as Accounts
Receivable of the Company are collected, collected amounts shall be deemed to
reduce the principal of such borrowed funds for purposes of calculating ongoing
costs.
(b) Within 45 days after the end of each calendar month up to and including
November 30, 1997, Parent shall deliver to ProHealthCare and each Stockholder a
statement (a "Monthly Statement") of Parent's calculation of Net Liquid Assets
as of the end of that month. In addition, each Monthly Statement shall set forth
any amount withdrawn from the Stratogen Account (as denied in section 9.5)
during the month to which the Monthly Statement relates and the use of such
amount.
3.2 ProHealthCare's Verification of Net Liquid Assets. After the delivery
to ProHealthCare of each Monthly Statement and after delivery to ProHealthCare
of the Parent's Statement, ProHealthCare and its representatives shall have
access at reasonable times and on reasonable notice, at ProHealthCare's sole
expense, to the books and records of the Surviving Corporation for the purpose
of verifying the accuracy of the Net Liquid Assets calculation set forth in the
Monthly Statement or in the Parent's Statement.
3.3 Dispute Resolution.
(a) If ProHealthCare disagrees with the calculation of Net Liquid Assets
set forth in the Parent's Statement, ProHealthCare shall deliver to Parent,
prior to the end of the 90th day following the delivery of the Parent's
Statement, a statement approved by ProHealthCare's board of directors (the
"Seller's Statement") that sets forth in reasonable detail an explanation of
such disagreement and a proposed alternative determination of Net Liquid Assets.
If ProHealthCare does not deliver to Parent a Seller's Statement within such
90-day period, Net Liquid Assets set forth in the Parent's Statement shall be
deemed final, binding and conclusive upon each party hereto.
(b) If ProHealthCare shall timely deliver a Seller's Statement, then Parent
and ProHealthCare will attempt in good faith to resolve all differences with
regard to their respective determinations of Net Liquid Assets during the next
30 days or such longer period as Parent and ProHealthCare may agree in writing.
If Parent and ProHealthCare are unable to resolve such differences and agree as
to Net Liquid Assets prior to the expiration of such 30-day period (or longer
period if so agreed) Net Liquid Assets shall be determined pursuant to section
3.3(c).
(c) Promptly following the 30-day period referred to in section 3.3(b),
Parent and ProHealthCare shall jointly select a firm of independent public
accountants of national or regional prominence to resolve any dispute concerning
the calculation of Net Liquid Assets that is not resolved by Parent and
ProHealthCare. If Parent and ProHealthCare fail to select such firm within 30
days after the 30-day period referred to in section 3.3(b), such firm shall be
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company or, if ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company is or has been
engaged for any purpose by any party to this agreement, any "big six" accounting
firm selected by the President of the Association of the Bar of the City of New
York (as long as it is not a firm that any party to this agreement has engaged
for any purpose within the preceding five years). Such firm selected pursuant to
this section 3.3(c) is hereinafter referred to as the "Accountants". The
Accountants shall be instructed to deliver to Parent and ProHealthCare a written
report (the "Accountants' Report") setting forth the Accountants' calculation of
Net Liquid Assets no later than 60 days following their selection. The
determination of Net Liquid Assets set forth in the Accountants' Report shall be
deemed final, binding and conclusive upon each party hereto. The fees and
expenses of the Accountants shall be paid by ProHealthCare, except that if the
Accountant's calculation of Net Liquid Assets is at least $50,000 greater than
Parent's calculation of Net Liquid Assets, the fees and expenses of the
Accountants shall be paid by Parent.
3.4 Final Net Liquid Assets.
(a) Net Liquid Assets as mutually agreed to by Parent and ProHealthCare
pursuant to section 3.3(b), or as deemed final, binding and conclusive pursuant
to such section or section 3.3(a) or 3.3(c), shall be deemed the "Final Net
Liquid Assets".
(b) If Final Net Liquid Assets is a positive number, within 30 days after
the determination of Final Net Liquid Assets pursuant to section 3.4(a), Parent
shall deliver to ProHealthCare an amount in cash equal to Final Net Liquid
Assets.
(c) If Final Net Liquid Assets is a negative number, immediately after the
determination of Final Net Liquid Assets pursuant to Section 3.4(a), (i) there
shall be deemed repurchased and cancelled a number of shares of Parent Common
Stock issued pursuant to section 2 equal to the quotient of Final Net Liquid
Assets divided by the greater of the Liquid Assets Average Price (as defined
below) or $2.00 or (ii) ProHealthCare shall, at its option, promptly deliver to
Parent an amount in cash equal to the product of Final Net Liquid Assets
multiplied by negative one. Notwithstanding anything in the preceding sentence
to the contrary, the number of shares cancelled and deemed repurchased pursuant
to this section 3.4(c) shall not exceed 150,000.
(d) For purposes of this agreement, the "Liquid Assets Average Price" means
average of the per share closing price for Parent Common Stock on the NASDAQ or
the average of the last per share bid prices on the over-the-counter Bulletin
Board (as reported by the Nasdaq Stock Market, Inc.), as the case may be, for
the 30 trading days immediately preceding the date on which Final Net Liquid
Assets is determined pursuant to section 3.4(a).
3.5 Treatment of Intercompany Advances. For purposes of determining Net
Liquid Assets and Final Net Liquid Assets pursuant to this section 3, advances
from ProHealthCare or any of its affiliates to the Company and advances from the
Company to ProHealthCare (collectively, "Intercompany Advances") shall not be
given effect.
4. Tangible Property; Adjustment to Merger Consideration.
4.1 Calculation of Tangible Property. For purposes of this agreement,
"Tangible Property" means the book value of all inventory, furniture and
fixtures, vehicles, computers, equipment and leasehold improvements, net of
allowances for depreciation and amortization (as determined in accordance with
GAAP), of the Company as of March 14, 1997 minus $___________, which represents
medications and other inventory of the Company as of the Closing Date that was
purchased from Parent, as set forth on Schedule 4.1.
4.2 Adjustment to Merger Consideration. Within one business day after the
Closing, Parent shall deliver to ProHealthCare a number of whole shares of
Parent Common Stock equal to the quotient of the Tangible Property divided by
$5.00.
5. Representations and Warranties of ProHealthCare
ProHealthCare and the Stockholders jointly and severally represent and
warrant to Parent and Sub as follows:
5.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation
and has the corporate power to carry on its business as it is now being
conducted or presently proposed to be conducted. The Company is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified will not have a Company Material Adverse Effect.
For purposes of this agreement, "Company Material Adverse Effect" means a
material adverse effect, individually or in the aggregate, on the financial
condition, results of operations, business, assets or prospects of the Company
or the ability of the Company to consummate the Merger and the other
transactions contemplated by this agreement.
5.2 Capitalization.
(a) The authorized capital stock of the Company consists of 50 shares of
Company Common Stock, of which 50 shares of Company Common Stock are issued and
outstanding. ProHealthCare is, and immediately prior to the Closing will be, the
record and beneficial owner of all the issued and outstanding shares of Company
Common Stock, free and clear of liens, pledges, security interests, claims,
charges or other encumbrances of any kind whatsoever ("Liens").
(b) There is not outstanding any security, right, subscription, warrant,
call, option or other agreement or arrangement of any kind (collectively,
"Rights") entitling any person to acquire any shares of the capital stock or any
other security of the Company, and there is no outstanding security of any kind
convertible into or exchangeable for the capital stock of the Company. There is
no voting agreement, voting trust, proxy or other agreement, instrument or
understanding with respect to the voting of the capital stock of the Company or
any agreement with respect to the transferability, purchase or redemption of the
capital stock of the Company.
5.3 Subsidiaries. The Company does not own any interest in any other
business or entity.
5.4 Authority. ProHealthCare, the Company and each Stockholder has the full
legal corporate power or capacity, as the case may be, to execute and deliver
each Document (as defined below) to which he, she or it is a party. The
execution, delivery and performance of each Document executed or to be executed
by ProHealthCare or the Company have been duly
authorized by its respective board of directors and stockholder(s), and no other
corporate proceedings on the part of ProHealthCare or the Company are necessary
to authorize this agreement or any other Documents or for ProHealthCare and the
Company to consummate the transactions contemplated hereby or thereby. The
Documents are, or when executed and delivered will be, valid and binding
obligations of ProHealthCare, the Company and each Stockholder, enforceable
against ProHealthCare, the Company and each Stockholder in accordance with their
terms, except as may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights in general and subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
For purposes of this agreement, "Documents" means this agreement, the
Employment Agreement (as defined in section 10.2(d)), the Non-Competition
Agreement (as defined in section 10.2(e)), the Registration Rights Agreement (as
defined in section 10.3(c)), the Tax Provisions Agreement (as defined in section
10.2(h)) and each other document or agreement executed and delivered by
ProHealthCare, the Company and/or any Stockholder pursuant to this agreement.
5.5 Consents and Approvals; No Violations. Except as set forth on Schedule
5.5, the execution, delivery and performance of this agreement will not: (i)
conflict with or result in any breach of any provisions of the certificate of
incorporation, by laws or other organizational documents of ProHealthCare or the
Company, (ii) require a filing with, or a permit, authorization, consent or
approval of, any federal, state, local or foreign court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or administrative agency or commission (a "Governmental Entity"),
except the filing of a certificate of merger, (iii) conflict with, or result in
the breach, termination or acceleration of, or constitute a default under, or
result in the creation of a Lien on any property or asset of ProHealthCare or
the Company pursuant to any written lease, agreement, commitment or other
instrument (each, a "Contract") to which ProHealthCare, the Company or any
Stockholder is a party or by which any of them or any of their properties or
assets are bound or (iv) violate any law, order, writ, injunction, decree,
statute, rule or regulation of any Governmental Entity applicable to
ProHealthCare, the Company or any Stockholder or any of their respective
properties or assets.
5.6 Financial Statements. The combined balance sheet of ProHealthCare and
the Company as of March 31, 1996, the statements of operations, changes in
stockholders' equity and cash flows of ProHealthCare and the Company for the
year ended March 31, 1996, and the balance sheet of the Company (the "Interim
Balance Sheet") as of February 19, 1997 and the statement of operations of the
Company (together with the Interim Balance Sheet, the "Interim Financial
Statements") for the period from April 1, 1997 through February 19, 1997
(collectively, the "Financial Statements") are attached to this agreement as
Schedule 5.6A. Except as described on Schedule 5.6B, the Financial Statements
are true and correct in all material respects and fairly present in all material
respects the financial position and the results of operations of ProHealthCare
and the Company or the Company, as the case may be, as of the dates and for the
periods indicated, except for, with respect to ProHealthCare, any matter that
does not affect the
Company or represent the financial position or results of operation of the
Company. The Interim Financial Statements do not reflect any Intercompany
Advances or tax adjustments. Since March 31, 1996, there has been no change in
any of the significant accounting (including tax accounting) policies, practices
or procedures of the Company. The Interim Financial Statements reflect the
financial position and the results of operations of the Company's business and
do not reflect the separate operations of ProHealthCare.
5.7 Absence of Undisclosed Liabilities. Except to the extent reflected or
reserved for in the Financial Statements, the Company does not have any
liability or obligation of any kind, whether accrued, absolute, contingent or
otherwise, other than (a) as set forth on Schedule 5.7, (b) liabilities and
obligations under agreements and other commitments entered into in the ordinary
course of business and in amounts substantially consistent with past practices
and (c) other liabilities that are not, individually or in the aggregate,
material in amount, and none of ProHealthCare, the Company and the Stockholders
knows of any basis for the assertion against the Company of any such liability
that is not fully disclosed or reserved for in the Financial Statements. The
Company does not have any indebtedness to any Stockholder or any affiliate of
any Stockholder. All liabilities of the Company assigned to ProHealthCare as of
the Closing are set forth on Schedule 3.1.
5.8 Absence of Certain Changes or Events. Except as set forth on Schedule
5.8, since December 31, 1996,
(a) the Company has conducted its business and operations in the
ordinary course of business and consistent with past practice, and there
has not been any material change in the Company's outstanding liabilities
or the level of compensation (including Company Plans (as defined in
section 5.18)) paid to its employees;
(b) the Company has not taken any actions that, if it had been in
effect, would have violated or been inconsistent with the provisions of
section 7.1; and
(c) there has not been any fact, event, circumstance or change
affecting or relating to the Company, which, to the best knowledge of
ProHealthCare, the Company and the Stockholders has had, or is reasonably
likely to have, a material adverse effect on the Company.
5.9 Material Contracts. Schedule 5.9 lists each Contract to which the
Company is a party or is bound or which is applicable to the Company's
businesses that is material in nature or amount or that was entered into other
than in the ordinary course of business and consistent with past practice (a
"Material Contract"), including, without limitation, the following:
(a) each Contract for the purchase of products or services that
involves or will involve an expenditure or series of related expenditures
of more than $5,000;
(b) each real or personal property lease that involves annual payments
or receipts of more than $5,000;
(c) each note or other Contract relating to any indebtedness or any
guaranty of indebtedness;
(d) each employment or consulting agreement that provides for
compensation in excess of $2,500 per year and each Contract that provides
for severance or similar benefits;
(e) each Contract between the Company, on the one hand, and any of its
affiliates, associates or stockholders, on the other hand;
(f) each Contract to which the Company is a party containing any
provisions relating to a change in its control;
(g) each Contract under which the Company is restricted from engaging
in any business or competing with any other person;
(h) any Contract for the sale, lease, license, rental or disclosure of
any lists or records, including customer lists, relating to the business of
the Company; and
(i) any other Contract (written or oral) that requires payment by or
to the Company of more than $10,000 or cannot be terminated by the Company
on less than 30 days notice without liability.
True and complete copies of all the Material Contracts have been delivered to
Parent.
5.10 No Default. Except as set forth on Schedule 5.10, each Material
Contract is in full force and effect in accordance with its terms, and, to the
best knowledge of the Company and each Stockholder, no party is in default (and
no event has occurred, which, with notice or the lapse of time or both, would
constitute a default) of any term, condition or provision of any Material
Contract, except for any default that would not have a Company Material Adverse
Effect.
5.11 Compliance with Law. The Company is not in violation (and no event has
occurred, which, with notice or the lapse of time or both, would constitute a
violation) of any order, writ, injunction, decree, statute, rule or regulation
of any Governmental Entity applicable to the Company.
5.12 Health Care Matters.
(a) Schedule 5.12(a) lists the required cost reports and other submissions
and filings (other than claims for payments), with respect to Medicaid and
Medicare or other third party payments to the Company and indicates each cost
report or other submission or filing that has been audited by the government or
other third party payor (and all disallowances and retroactive rate adjustments
thereon settled, paid or otherwise recouped). All the cost reports and other
submissions and filings were complete and accurate in all material respects, and
were prepared in accordance with the requirements of the Medicaid program, the
Medicare program or the other third party payors, as applicable.
(b) No third-party payor (including, without limitation, Medicare or
Medicaid) has asserted any liability against the Company in respect of any
period through the date of this agreement, which has not been settled or paid.
To the best knowledge of ProHealthCare, the Company and each Stockholder, there
is no pending audit or any pending or threatened audit assessment or retroactive
rate adjustment against the Company and no basis therefor, and, if any such
audit assessment or retroactive rate adjustment is so asserted, it will be
promptly paid or otherwise satisfied by the Company and will have no material
effect upon any of their rates, operations or financial performance.
(c) Schedule 5.12(c) lists all agreements, arrangements and other
relationships of the Company, which are in effect or were in effect at any prior
time, with individuals and entities who refer or have referred to or otherwise
generate or have generated business for the Company (including without
limitation, sales representatives and referring health care providers).
(d) None of ProHealthCare, the Company or the Stockholders has actual
knowledge that any referring physician, chiropractor, podiatrist, dentist, nurse
or other licensed health professional has, or has ever had, an ownership
interest in or otherwise has or had a financial relationship with the Company.
5.13 Litigation, etc. Except as set forth on Schedule 5.13, there is no
suit, action, proceeding, investigation or review pending or, to the best
knowledge of ProHealthCare, the Company and each Stockholder, threatened against
or affecting the Company or any suit, action or proceeding brought by or on
behalf of the Company, and, to the best knowledge of ProHealthCare, the Company
and each Stockholder, there is no basis for any such suit, action, proceeding,
investigation or review. There is no judgment, decree, injunction, ruling or
order of any Governmental Entity outstanding against the Company.
5.14 Permits. The Company holds, or, on the Closing Date, will hold, all
permits, licenses, exemptions, orders and approvals of all Governmental Entities
necessary for the conduct of its businesses (collectively, "Permits"). The
Company is in compliance with the terms of all Permits, and (i) no fact exists
or event has occurred, and no action or proceeding is pending
or, to ProHealthCare's, the Company's and the Stockholders' best knowledge,
threatened, that is reasonably likely to result in a revocation, nonrenewal,
termination, suspension or other material impairment of any material Permit.
5.15 Taxes. Except as set forth on Schedule 5.15, ProHealthCare and the
Company have (a) filed with the appropriate federal, state and local taxing
authorities all tax returns required to be filed by or with respect the
Company's business or operations, and those tax returns are correct and complete
in all material respects, and (b) paid in full or made adequate provision for
the payment of all taxes shown to be due on those tax returns. Neither
ProHealthCare nor the Company has received any notice of deficiency or
assessment from any federal, state or local taxing authority with respect to
liabilities for taxes that have not been fully paid or finally settled.
5.16 Title to Properties; Encumbrances. The Company has good and marketable
title to, or valid leasehold interests or licenses in, all its properties and
assets of whatever kind (real or personal, tangible or intangible), including,
without limitation, all the Company's properties and assets reflected in the
Financial Statements (except for properties and assets disposed of in the
ordinary course of business and consistent with past practices since March 31,
1996). None of such properties or assets are subject to any Liens (whether
absolute, accrued, contingent or otherwise), except for liens for current taxes
and assessments not yet due and payable. Such properties and assets include all
the properties and assets necessary to operate the Company's business as
presently operated. Except as set forth on Schedule 5.16A, none of the
properties or assets, including, without limitation, contract rights, used by
the Company in the conduct of its businesses as presently conducted is owned or
leased by ProHealthCare. Schedule 5.16B contains a complete list of all real
property (including buildings and structures) and all equipment, computers,
furniture, leasehold improvements, vehicles and other personal property owned,
leased or used by the Company.
5.17 Proprietary Rights. Schedule 5.17 lists all patents and patent
applications, trademarks, trade names, registered copyrights, service marks, and
applications therefor owned, used or held for use in connection with the
businesses of the Company (collectively, "Proprietary Rights"), specifying as to
each, as applicable: (i) the owner of the Proprietary Right and (ii) all
licenses, sublicenses and other agreements, including any amendments or addenda
thereto, to which ProHealthCare, the Company or any Stockholder is a party and
pursuant to which any person is authorized to use the Proprietary Right. The
Company has no notice of any claim that the Proprietary Rights infringe any
other party's rights and, to ProHealthCare's, the Company's and the
Stockholders' best knowledge, the Company has used the Proprietary Rights
without infringing any other party's rights without infringement by others. None
of ProHealthCare, the Company and the Stockholders is aware of any assertion or
any reasonable basis for asserting that any Proprietary Right is invalid or
unenforceable.
5.18 Employee Benefit Plans; ERISA; Labor Matters.
(a) Schedule 5.18 sets forth a true and complete list of all Company Plans.
For purposes of this agreement, "Company Plan" shall mean any employee benefit
plan, arrangement or agreement that is maintained, or was maintained or
contributed to by the Company or by any Company ERISA Affiliate (as defined
below) on behalf of employees or former employees or with respect to which the
Company has or could incur liability. The Company has not taken any action to
modify, amend or alter any material benefit arrangement.
For purposes of this agreement, Company ERISA Affiliate means any trade or
business, whether or not incorporated which together with the Company would be
deemed a "single employer" within the meaning of Section 414(b), (c), (m) or (o)
of the Code or Section 4001 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
(b) Each Company Plan is and has been operated and administered in all
material respects in accordance with the terms of the Company Plan and in
accordance with the requirements prescribed by all applicable statutes, orders
and governmental rules and regulations, including in compliance with ERISA and
the Code. Each Company Plan intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified.
(c) Neither the Company nor any Company ERISA Affiliate nor any
predecessors of the Company or any Company ERISA Affiliate maintains, has ever
maintained, contributes to or has ever contributed to a plan which is subject to
Section 412 of the Code or Title IV of ERISA. No Company Plan is a multiemployer
plan (within the meaning of Sections 3(37) or 4001(a)(3) of ERISA or Section
414(f) of the Code) ("Multiemployer Plan") and no Company Plan is a multiple
employer plan as defined in Section 413 of the Code ("Multiple Employer Plan").
All contributions have been made for all employees and former employees of the
Company under or with respect to each Company Plan with respect to all periods
through the Effective Time except as fully accrued and reflected in the
Financial Statements. Neither the Company nor any Company ERISA Affiliate is or
was obligated to contribute to any Multiemployer Plan or Multiple Employer Plan.
To the best knowledge of ProHealthCare, the Company and the Stockholders, there
are no material pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the Company Plans or any
trusts related thereto.
(d) The Company is not a party to, or bound by, any collective bargaining
agreement, contract or other understanding with a labor union or labor
organization and, to the knowledge of ProHealthCare and the Company, there is no
activity involving any employees of the Company seeking to certify a collective
bargaining unit or engaging in any other organizational activity.
5.19 Environmental Laws and Regulations.
(a) The Company is and has been in compliance with, and none of
ProHealthCare, the Company and the Stockholders is aware of any outstanding
allegations by any person or entity that the Company is not or has not been in
compliance with, all federal, state and local laws, rules, regulations, common
law, ordinances, administrative orders or other binding legal requirements
relating to employee health and safety, air, water or noise pollution or
otherwise relating to public health and safety or environmental protection
(including the protection of endangered species), or the use, generation,
manufacture, accumulation, storage, discharge, release, disposal or
transportation of hazardous materials ("Environmental Laws"). The Company
currently hold all permits, licenses, registrations and other governmental
authorizations (including exemptions, waivers, and the like) and financial
assurance required under Environmental Laws for the Company to operate its
businesses.
(b) Without conducting any investigation, to the knowledge of
ProHealthCare, the Company and the Stockholders, there is no friable
asbestos-containing material in or on any real property currently owned, leased
or operated by the Company, and there are and have been no underground storage
tanks (whether or not required to be registered under any applicable law),
dumps, landfills, lagoons, surface impoundments, injection ▇▇▇▇▇ or other land
disposal units in or on any property currently owned, leased or operated by the
Company.
(c) Neither ProHealthCare nor the Company has received (i) any written
communication from any person stating or alleging that either of them may be a
potentially responsible party under any Environmental Law (including, without
limitation, the Federal Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended) with respect to any actual or alleged
environmental contamination or (ii) any request for information under any
Environmental Law from any Governmental Entity with respect to any actual or
alleged material environmental contamination; and (iii) none of ProHealthCare,
the Company or any Governmental Entity is conducting or has conducted (or, to
the knowledge of ProHealthCare and the Company, is threatening to conduct) any
environmental remediation or investigation which could result in a material
liability of the Company under any Environmental Law.
5.20 Brokers. No broker, finder or financial advisor is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this agreement based upon arrangements made by
or on behalf of ProHealthCare or the Company.
6. Representations and Warranties of Parent. Parent represents and warrants to
the Company as follows:
6.1 Organization. Parent is a corporation duly organized, validly existing
and in good standing under the laws of the state of New York and has the
corporate power to carry on its business as it is now being conducted or
presently proposed to be conducted. Parent is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities make such qualification necessary, except where the failure to be so
qualified will not have a Parent Material Adverse Effect. For purposes of this
agreement, "Parent Material Adverse Effect" means a material adverse effect,
individually or in the aggregate, on the financial condition, results of
operations, business, assets or prospects of Parent and its subsidiaries taken
as a whole or the ability of Parent to consummate the Merger and the other
transactions contemplated by this agreement. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. Sub has not engaged in any business (other than in connection with
this agreement and the transactions contemplated hereby) since the date of its
incorporation.
6.2 Capitalization.
(a) The authorized capital stock of Parent consists of 15,000,000 shares of
Parent Common Stock, of which 1,375,085 are issued and outstanding and 308,004
are treasury shares, and 5,000,000 shares of preferred stock, of which 1,350,000
shares of 6% cumulative convertible preferred stock of Parent are issued and
outstanding. Options and warrants to acquire an aggregate of 862,500 shares of
Parent Common Stock (collectively, the "Parent Stock Options") are outstanding.
All the outstanding shares of capital stock of Parent are, and the shares of
Parent Common Stock issuable in exchange for shares of Company Common Stock at
the Effective Time in accordance with this agreement will be, when so issued,
duly authorized, validly issued, fully paid and nonassessable.
(b) The authorized capital stock of Sub consists of 1,000 shares of Sub
Common Stock, of which 100 shares are issued and outstanding. All the
outstanding shares of Sub Common Stock are owned by Parent and are validly
issued, fully paid and nonassessable.
6.3 Authority. Each of Parent and Sub has the full legal corporate power to
execute and deliver each Document to which it is a party. The execution,
delivery and performance of each Document executed or to be executed by Parent
or Sub have been duly authorized by its respective boards of directors, and no
other corporate proceedings on the part of Parent or Sub are necessary to
authorize this agreement or any other Document or for Parent and Sub to
consummate the transactions contemplated hereby or thereby. The Documents to
which Parent or Sub are a party are, or when executed and delivered will be,
valid and binding obligations of Parent or Sub, enforceable against Parent or
Sub in accordance with their terms, except as may be limited by bankruptcy,
insolvency or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
6.4 Consents and Approvals; No Violations. The execution, delivery and
performance of this agreement by Parent and Sub will not: (i) conflict with or
result in any breach of any provisions of the certificate of incorporation or
by-laws of Parent or of Sub, (ii) require a filing with, or a permit,
authorization, consent or approval of, any Governmental Entity, except in
connection with or in order to comply with the applicable provisions of the
Securities Exchange Act of 1934 (the "Exchange Act") and the filing of a
certificate of merger, (iii) except as set forth on Schedule 6.4, conflict with,
or result in the breach, termination or acceleration of, or constitute a default
under, or result in the creation of a Lien on any property or asset of Parent or
any of its subsidiaries pursuant to any term, condition or provision of any
material Contract to which Parent or Sub is a party or by which either of them
or any of their properties or assets are bound or (iv) violate any law, order,
writ, injunction, decree, statute, rule or regulation of any Governmental Entity
applicable to Parent, Sub or any of their properties or assets.
6.5 Reports and Financial Statements. Since March 31, 1995, Parent has
filed all reports required to be filed with the Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933 (the "Securities Act")
(collectively, the "SEC Reports"). The SEC Reports, as of their respective
dates, complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and none of such SEC
Reports contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Parent included in the SEC Reports have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods indicated (except as otherwise noted
therein or, in the case of unaudited statements, as permitted by applicable law)
and fairly present (subject, in the case of unaudited statements, to normal,
recurring year-end adjustments and any other adjustments described therein) in
all material respects the consolidated financial position of Parent and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of operations and cash flows of Parent and its consolidated subsidiaries for the
periods then ended. Since the date of Parent's last report on Form 10-Q, there
has not been any fact, event, circumstance or change affecting or relating to
the Company or any of its subsidiaries which has had or is reasonably likely to
have a Parent Material Adverse Effect.
6.6 Brokers. No broker, finder or financial advisor is entitled to any
brokerage finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this agreement based upon arrangements made by
or on behalf of Parent or Sub.
6.7 Dispositions. Parent has no present intention to dispose of a
substantial amount of the stock or assets of the Company.
7. Covenants of ProHealthCare, the Company and the Stockholders
7.1 Conduct of Business. Prior to the Effective Time, except as Parent
shall otherwise agree in writing or as otherwise expressly contemplated by this
agreement, the Company shall conduct, and ProHealthCare shall cause the Company
to conduct, its business only in the ordinary and usual course consistent with
past practice, and the Company shall use its reasonable efforts to preserve
intact the present business organization, keep available the services of its
present officers and key employees, and preserve the goodwill of those having
business relationships with it. Without limiting the generality of the foregoing
and except as contemplated by this agreement, prior to the Effective Time,
unless Parent shall otherwise agree in writing:
(a) the Company shall not (i) amend its charter, by-laws or other
organizational documents, (ii) split, combine or reclassify any shares of
its outstanding capital stock, (iii) declare, set aside or pay any dividend
or other distribution payable in cash, stock or property, or (iv) directly
or indirectly redeem or otherwise acquire any shares of its capital stock;
(b) the Company shall not (i) authorize for issuance, issue or sell or
agree to issue or sell any shares of, or Rights to acquire any securities
or convertible into any shares of, its capital stock; (ii) merge or
consolidate with another entity; (iii) acquire or purchase an equity
interest in or a substantial portion of the assets of another corporation,
partnership or other business organization or otherwise acquire any assets
outside the ordinary and usual course of business and consistent with past
practice; (iv) enter into any material contract, commitment or transaction
outside the ordinary and usual course of business consistent with past
practice; (v) sell, lease, license, waive, release, transfer, encumber or
otherwise dispose of any of its assets outside the ordinary and usual
course of business and consistent with past practice; (vi) incur, assume or
prepay any material indebtedness or any other material liabilities other
than in the ordinary course of business and consistent with past practice;
(vii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person; (viii) make any loans, advances or capital contributions to,
or investments in, any other person, other than extensions of credit to
customers in the ordinary course of business consistent with past practice;
(ix) authorize or make capital expenditures other than in the ordinary
course of business consistent with past practice; (x) change any accounting
principle or practice used by it, except as required by generally accepted
accounting principles; (xi) permit any insurance policy naming the Company
as a beneficiary or a loss payee to be cancelled or terminated other than
in the ordinary course of business; or (xii) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing;
and
(c) the Company shall not (i) adopt, enter into, terminate or amend
(except as may be required by applicable law) any Company Plan or other
arrangement for the current or future benefit or welfare of any director,
officer or current or former employee, (ii) increase in any manner the
compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee of the Company (except for normal increases in salaried
compensation in the ordinary course of business consistent with past
practice), or (iii) take any action to fund or in any
other way secure, or to accelerate or otherwise remove restrictions with
respect to, the payment of compensation or benefits under any employee
plan, agreement, contract, arrangement or other Company Plan.
7.2 No Solicitation. Prior to the Effective Time, ProHealthCare agrees that
neither it, any of its subsidiaries or any of their affiliates, nor any of the
respective directors, officers, employees, agents or representatives of the
foregoing will, directly or indirectly, solicit, initiate, facilitate or
knowingly encourage (including by way of furnishing or disclosing non-public
information) any inquiries or the making of any proposal with respect to any
merger, consolidation or other business combination involving ProHealthCare, the
Company or any other subsidiary of ProHealthCare or the acquisition of any
securities of, or of all or any significant assets of, ProHealthCare, the
Company or any other subsidiary of ProHealthCare, taken as a whole, (an
"Acquisition Transaction") or enter into or continue any discussions or
negotiations with any person (other than Parent and its representatives) with
respect to any Acquisition Transaction or enter into any agreement, arrangement
or understanding with respect to any such Acquisition Transaction or which would
require it to abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by this agreement. ProHealthCare and the Company agree
that as of the date of this agreement, they, and their affiliates, and the
respective directors, officers, employees, agents and representatives of the
foregoing, shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any person (other than Parent and
its representatives) conducted heretofore with respect to any Acquisition
Transaction. ProHealthCare and the Company agree to immediately advise Parent in
writing of any inquiries or proposals received by, any information requested
from, or any negotiations or discussions sought to be initiated or continued
with, any of ProHealthCare, its subsidiaries or affiliates, or any of the
respective directors, officers, employees, agents or representatives of the
foregoing, in each case from a person (other than Parent and its
representatives) with respect to an Acquisition Transaction, and the terms
thereof, including the identity of such third party, and to update on an ongoing
basis or upon Parent's request, the status thereof.
7.3 Access and Information.
(a) ProHealthCare and the Company shall (and shall cause its respective
officers, directors, employees, auditors and agents to) afford to the Parent and
to the Parent's officers, employees, financial advisors, legal counsel,
accountants, consultants and other representatives reasonable access during
normal business hours throughout the period prior to the Effective Time to all
books and records (other than privileged documents) relating to the Company,
properties and plants used in connection with the Company's business and
personnel who are familiar with the Company's business.
(b) Unless otherwise required by law, Parent agrees that (i) prior to the
Effective Time, it (and its representatives) shall hold in confidence all
non-public information acquired by it pursuant to this section 7.3 and (ii) it
(and its representatives) shall hold in confidence all non-public information
acquired by it pursuant to this section 7.3 that relates solely
to ProHealthCare, including without limitation information relating to the sale
of ProHealthCare of Miami Beach, Inc. d/b/a Stratogen Health of Miami Beach
("Stratogen").
8. Covenant of Parent.
Subject to section 9.7 of this agreement, Parent shall use all reasonable
efforts to collect in a timely fashion all accounts receivable of the Company
outstanding as of the Closing Date, and Parent shall not compromise, reduce or
release any such accounts receivable without the consent of ProHealthCare, which
consent shall not be unreasonably withheld. Subject to section 10.2(j), Parent
shall not (in a manner that deviates from the Company's past practices) delay
payment of any material account payable of the Company outstanding as of the
Closing Date.
9. Additional Agreements.
9.1 Reasonable Best Efforts. Subject to the terms and conditions of this
agreement, each party agrees to use all reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this agreement, including, without
limitation, the obtaining of all necessary waivers, consents and approvals and
the effecting of all necessary registrations and filings.
9.2 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
9.3 Public Announcements. None of Parent, ProHealthCare or the Company
shall issue any press release or otherwise make any public statement with
respect to this agreement or the transactions contemplated hereby without the
prior consent of the others, which consent shall not be unreasonably withheld or
delayed; provided, however, that such disclosure can be made without obtaining
such prior consent if (a) the disclosure is required by law and (b) the party
making such disclosure has first used all reasonable efforts to consult with the
other party about the form and substance of such disclosure.
9.4 Supplemental Disclosure. ProHealthCare shall give prompt notice to
Parent, and Parent shall give prompt notice to ProHealthCare, of (a) the
existence, nonexistence, occurrence, or non-occurrence, of any fact,
circumstance or event the existence, nonexistence, occurrence, or non-occurrence
of which would be likely to cause (i) any representation or warranty by any
party contained in this agreement to be untrue or inaccurate or (ii) any
covenant, condition or agreement contained in this agreement not to be complied
with or satisfied and (b) any failure of ProHealthCare, the Company or Parent,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this section 9.4 shall not have any
effect for the purpose of determining the satisfaction of the conditions set
forth in section 10 of this agreement or otherwise limit or affect the remedies
available hereunder to any party.
9.5 Deposits of Certain Payments. After the Closing, ProHealthCare shall
deposit in a separate account established by the Surviving Corporation (the
"Stratogen Account"), as and when received by ProHealthCare, the first $90,000
of the payments made by the purchaser of Stratogen after the Closing Date;
provided that ProHealthCare shall not be required to deposit, during any one
month, an amount in excess of the product of the number of months elapsed since
the Closing Date multiplied by $15,000. The amounts on hand in such account (i)
may be used by the Surviving Corporation to discharge the obligations assumed by
ProHealthCare pursuant to section 10.2(j) of this agreement, (ii) after March
31, 1997, may be used by the Surviving Corporation, at any time that Net Liquid
Assets during a month (without giving effect to prior months) is a negative
number, to discharge liabilities of the Company that were outstanding as of the
Closing Date, and, (iii) to the extent not used pursuant to the preceding
clauses (i) and (ii), shall be paid to ProHealthCare within five days after the
first anniversary of the Closing Date or, if earlier, the date on which
ProHealthCare certifies to Parent that the aggregate liabilities (as determine
in accordance with GAAP) of ProHealthCare do not exceed $25,000. Upon request by
ProHealthCare, Parent may, in its sole and absolute discretion, from time to
time, permit ProHealthCare to withdraw from the Stratogen Account amounts
required by ProHealthCare to satisfy obligations of ProHealthCare; provided that
ProHealthCare shall agree to refund to the Stratogen Account, within 30 days
from the date of withdrawal, any amount withdrawn from the Stratogen Account by
ProHealthCare pursuant to this sentence (it being understood that ProHealthCare
shall not be required to so refund the Stratogen Account after all amounts in
the Stratogen Account have been paid to ProHealthCare pursuant to the
immediately preceding sentence).
9.6 Leased Property. After the Closing and during the term of the lease
dated June 26, 1995 between ProHealthCare and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Lessor"),
ProHealthCare shall permit Parent and the Surviving Corporation full and
exclusive use of the property subject to that lease (the "Premises") for a
period concurrent with the term of such lease; provided that the Surviving
Corporation shall, during the term of such lease, (a) pay to Lessor, on behalf
of ProHealthCare, (i) when rent is due to Lessor, an amount equal to such rent
due under such lease and (ii) any other amounts due under such lease that arise
out of the Surviving Corporation's use of the Premises after the Closing and (b)
satisfy any other obligation under such lease that arises out of the Surviving
Corporation's use of the Premises after the Closing. The Surviving Corporation
shall promptly negotiate in good faith with Lessor for an agreement with Lessor
to lease the Premises. If, prior to June 30, 1997, the Surviving Corporation has
not entered into an agreement to lease the Premises, the Surviving Corporation
shall assume all ProHealthCare's rights and obligations under ProHealthCare's
lease of the Premises; provided that any lease assumed by the Surviving
Corporation pursuant to this sentence shall contain terms no less favorable to
the lessee than the terms of the lease dated June 26, 1995, and provided further
that Parent shall not assume any obligation to pay any amounts due under such
lease arising out of the Company's use of the Premises prior to the Closing
Date. ProHealthCare shall be entitled to maintain on the Premises,
at no cost and for a period of one year or, if shorter, for as long as Parent is
using the Premises, an office for administrative purposes; provided that such
office shall be for the exclusive use of the president of ProHealthCare (it
being understood that Parent may exclude from such office any other person), and
provided further that ProHealthCare's right to maintain such office may be
terminated by Parent upon not less than 60 days' notice. Parent may, in its sole
and absolute discretion, grant access to such office to other officers and
directors of ProHealthCare and their respective agents, advisors and
representatives, for the sole purpose of examining the books and records of
ProHealthCare.
9.7 Accounts Receivable. If Parent determines, in its sole discretion, that
any Accounts Receivable are uncollectable, Parent shall, or shall cause the
Surviving Corporation to, assign to ProHealthCare, those Accounts Receivable.
Parent shall, or shall cause the Surviving Corporation to, assign to
ProHealthCare all Accounts Receivable that are uncollected as of December 31,
1997. For purposes of calculation of Net Liquid Assets and Final Net Liquid
Assets, no value shall be given to any Accounts Receivable assigned to
ProHealthCare pursuant to this section 9.7.
10. Conditions to Consummation of the Merger
10.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions,
unless waived in writing by each party:
(a) No Governmental Action. No Governmental Entity (including a
federal or state court) of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which materially
restricts, prevents or prohibits consummation of the Merger or any
transaction contemplated by this agreement; provided, however, that the
parties shall use all reasonable efforts to cause any such decree,
judgment, injunction or other order to be vacated or lifted.
(b) Board Approval. The Board of Directors of Parent shall have
approved this Agreement and the transactions contemplated hereunder,
including, without limitation, the Merger, and that approval shall not have
been withdrawn.
10.2 Conditions to Obligations of Parent and Sub to Effect the Merger. The
obligations of Parent and Sub to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by Parent:
(a) Representations and Warranties. The representations and warranties
of ProHealthCare, the Company and Stockholders set forth in this agreement
shall be true and correct in all material respects, as of the date of this
agreement, and, except to the extent such representations and warranties
speak as of an earlier date, as of the Effective Time as though
made at and as of the Effective Time, and Parent shall have received a
certificate signed on behalf of ProHealthCare by the chief executive
officer or the chief financial officer of ProHealthCare to such effect.
(b) Performance of Obligations of the Company. ProHealthCare, the
Company and each Stockholder shall have performed in all material respects
all obligations required to be performed by it under this agreement at or
prior to the Effective Time.
(c) Consent. All notices to, and consents, approvals and waivers set
forth on Schedule 5.5, Schedule 5.10 and Schedule 6.4, including, without
limitation, the consents required pursuant to section 10.2(j), shall have
been obtained, in each case without any condition or qualification adverse
to Parent or Sub.
(d) Employment Agreement. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have entered into an
employment agreement with the Company (the "Employment Agreement") in
substantially the form attached to this agreement as Exhibit A; provided
that the Employment Agreement shall not contain terms substantially more
favorable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ than the terms set forth in Exhibit A and that
the definition and calculation of Incremental Gross Profit shall be the
same in the Employment Agreement as in this agreement.
(e) Non-Competition Agreement. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have entered into
a non-competition agreement with Parent and the Company in substantially
the form attached to this agreement as Exhibit B (the "Non-Competition
Agreement").
(f) Releases. Each Stockholder shall have executed and delivered to
the Company a general release in the form annexed hereto as Exhibit C-1,
and ▇▇▇▇▇ ▇▇▇▇▇ and ProHealthCare Registered Nursing PC shall have executed
and delivered a release in form and substance reasonably satisfactory to
Parent.
(g) Permits. ProHealthCare shall have caused to have been transferred
or issued to the Company all Permits that are transferrable or issuable to
the Company and which were not theretofore originally issued in the name of
the Company.
(h) Tax Provisions Agreement. ProHealthCare shall have entered into a
tax provisions agreement with Parent and the Company substantially in the
form attached to this agreement as Exhibit D (the "Tax Provisions
Agreement").
(i) Escrow Agreement. ProHealthCare shall have entered into the escrow
agreement referred to in section 12.3 of this agreement.
(j) Assumption of Certain Liabilities. ProHealthCare shall have
assumed, pursuant to an assignment and assumption agreement in
substantially the form of Exhibit E-2 to this agreement, those liabilities
of the Company indicated on Schedule 3.1.
(k) Opinion of Counsel. Parent shall have received an opinion dated
the Closing Date of Crummy, Del Deo, Dolan, Griffinger & ▇▇▇▇▇▇▇▇▇ in
substantially the form attached to this agreement as Exhibit F.
(l) Certifications. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have delivered to the Parent
a certificate to the effect that he has not:
(1) filed or had filed against him a petition under the Federal
bankruptcy laws or any state insolvency law;
(2) had a receiver, fiscal agent or similar officer appointed by
a court for his business or property or any partnership in which he
was a general partner at, or any time after, January 1, 1994 or any
corporation or business association of which he was an executive
officer at, or any time after, January 1, 1994;
(3) been convicted in a criminal proceeding or named subject of a
pending criminal proceeding;
(4) been the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting the following activities:
(i) acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator, floor
broker, leverage transaction merchant, any other person regulated
by the Commodities Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank,
savings and loan association or insurance company, or engaging in
or continuing any conduct or practice in connection with such
activity,
(ii) engaging in any type of business or practice or
(iii) engaging in any activity in connection with the
purchase or sale of any security or in connection with any
violation of Federal or state securities laws;
(5) been the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any Federal or state
authority barring, suspending or otherwise limiting for more than 60
days the right of such person to engage in any activity described in
paragraph (d) above, or to be associated with persons engaged in any
such activity;
(6) been found by a court of competent jurisdiction in a civil
action or by the Securities Exchange Commission to have violated any
Federal or state securities law, and the judgment in such civil action
or finding by the Securities Exchange Commission has not been
subsequently reversed, suspended or vacated;
(7) been found by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have violated
any Federal commodities law, and the judgment in such civil action or
finding by the Commodity Futures Trading Commission has not been
subsequently reversed, suspended or vacated;
(8) failed to file any federal or state tax returns required to
be filed by him, filed any tax return that is incomplete or incorrect
in any material respect, failed to pay in full or make adequate
provision for the payment in full of all taxes shown to be due on his
tax returns, or received any notice of deficiency or assessment from
any federal or state taxing authority with respect to liabilities for
taxes that have not been fully paid or finally settled; or
(9) except as set forth in Schedule 5.13, performed services for
ProHealthCare or the Company in violation of any contract or other
obligation by which he is or was bound, including, but not limited to,
any non-competition agreement.
(m) Assignment of Assets. ProHealthCare shall have assigned to the
Company, pursuant to an assignment agreement in form and substance
reasonably satisfactory to Parent, all the inventory, trade accounts
receivable (other than trade accounts receivable that arose from the
business of Stratogen prior to the date of this agreement) and fixed assets
and equipment of ProHealthCare reflected on the Interim Balance Sheet.
10.3 Conditions to Obligation of ProHealthCare and the Company to Effect
the Merger. The obligation of ProHealthCare, the Company and the Stockholders to
effect the Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following additional conditions, unless waived in writing
by ProHealthCare:
(a) Representations and Warranties. The representations and warranties
of Parent set forth in this agreement shall be true and correct in all
material respects as of the date of this agreement, and, except to the
extent such representations and warranties speak as of an earlier date, as
of the Effective Time as though made on and as of the Effective Time, and
ProHealthCare shall have received a certificate signed on behalf of Parent
by the chief executive officer or the chief financial officer of Parent to
such effect.
(b) Performance of Obligations of Parent and Sub. Each of Parent and
Sub shall have performed in all material respects all obligations required
to be performed by it under this agreement at or prior to the Effective
Time.
(c) Registration Rights Agreement. Parent shall have entered into a
registration rights agreement with ProHealthCare in the form attached to
this agreement as Exhibit G (the "Registration Rights Agreement").
(d) Opinion of Counsel. The Company and Stockholders shall have
received the opinion of Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP dated the
Closing Date in substantially the form attached to this agreement as
Exhibit H.
11. Termination
11.1 Termination. This agreement may be terminated at any time prior to the
Effective Time:
(a) by mutual consent of Parent and ProHealthCare;
(b) by either Parent or ProHealthCare, if the Merger shall not have
been consummated before April 1, 1997 (unless, in the case of any
termination pursuant to this section 11.1(b), the failure to so consummate
the Merger by such date shall have been caused by the action or failure to
act of the party (or its subsidiaries) seeking to terminate this agreement,
which action or failure to act constitutes a breach of this agreement);
(c) by Parent, if (i) there has been any material breach of warranty
or material misrepresentation by ProHealthCare, the Company or any
Stockholder set forth in this agreement or (ii) there has been a breach in
any material respect of any of the covenants or agreements set forth in
this agreement on the part of ProHealthCare, the Company or any
Stockholder, in either case, which breach is not curable or, if curable, is
not cured within 30 days after written notice of such breach is given by
Parent to ProHealthCare; or
(d) by ProHealthCare, if (i) there has been a material breach of
warranty or material misrepresentation by Parent set forth in this
agreement or (ii) there has been a breach in any material respect of any of
the covenants or agreements set forth in this agreement on the part of
Parent, in either case, which breach is not curable or, if curable, is not
cured within 30 days after written notice of such breach is given by
ProHealthCare to Parent.
11.2 Effect of Termination. In the event of termination of this agreement
pursuant to this section 11, the Merger shall be deemed abandoned and this
agreement shall forthwith become void, without liability on the part of any
party hereto, except as provided in sections 7.3(b), 9.2 and (to the extent
applicable to the foregoing sections) 13 and except that nothing in this section
11.2 shall relieve any party from liability for any breach of this agreement.
12. Indemnification
12.1 Survival. All representations and warranties contained in sections 5
and 6 of this agreement shall survive the Closing, subject to section 12.3
hereof, notwithstanding any examination or investigation made by or for any
party. Each party hereto shall be deemed to have waived its right to
indemnification hereunder with respect to Losses (as defined in section 12.2)
other than Losses involving a third party, which arise out of or in connection
with any misrepresentation, breach of warranty or breach or nonfulfillment of
any covenant or agreement known to such party on the Closing Date.
12.2 Indemnification by the Stockholders. ProHealthCare and the
Stockholders shall jointly and severally indemnify, defend and hold harmless
Parent, Sub and the Surviving Corporation and their respective affiliates,
directors, officers, employees, agents and representatives and all of their
successors and assigns (collectively, "Parent Claimants"), promptly upon demand
at any time and from time to time, against any and all claims, actions,
liabilities, losses, costs, damages or expenses whatsoever (including without
limitation reasonable attorneys' fees and disbursements) (collectively,
"Losses") whether involving a third party or between the parties to this
agreement that any Parent Claimant may suffer, sustain or become subject to
arising out of or in connection with (a) any misrepresentation or breach of any
warranty of any Stockholder, ProHealthCare or the Company contained in this
agreement) or; (b) any breach or nonfulfillment of any covenant or agreement of
any Stockholder, ProHealthCare or the Company contained in this agreement.
Notwithstanding anything in this section 12 to the contrary, but subject to
section 2.4 of the Tax Provisions Agreement, the Sellers' and the Buyer's
indemnification obligations with respect to Income Taxes (as defined in the Tax
Provisions Agreement) shall be exclusively governed by the Tax Provisions
Agreement.
12.3 Limitation on Indemnification. Subject to section 3.4(c), but
notwithstanding anything else to the contrary contained in this agreement (a) no
party hereto shall be obligated to indemnify any party pursuant to this section
12 with respect to any claim for indemnification asserted after the first
anniversary of the Closing Date unless such claim is based upon a breach of the
representations and warranties contained in sections 5.1, 5.2, 5.4, 5.5., 5.11,
5.15, 6.1, 6.2, 6.3 or 6.4 hereof, and (b) the sole remedy of any Parent
Claimant pursuant to this section 12 with respect to ProHealthCare or any
Stockholder shall be to obtain from the Indemnity Escrow, as hereinafter
defined, shares of Parent Common Stock, as hereinafter provided. At the Closing,
the Stockholders shall deposit into escrow with counsel for ProHealthCare (the
"Indemnity Escrow Agent"), and subject to the terms and conditions of an escrow
agreement to be entered into by ProHealthCare, Parent and the Indemnity Escrow
Agent in form and substance satisfactory to such parties, 225,000 shares of
Parent Common Stock (the "Indemnity Escrow Shares"). The Indemnity Escrow Shares
shall be available to satisfy the indemnification claims of Parent Claimants
pursuant to this section 12 and for such purpose shall be valued as of the date
such shares are released to Parent at a price per share equal to the average
closing price for Parent Common Stock on NASDAQ or the average of the last per
share bid prices for Parent Common Stock on the over-the-counter Bulletin Board
(as reported by the
Nasdaq Stock Market, Inc.), as the case may be, in each case for the 30 trading
days preceding such release. Unless a claim or claims by Parent Claimants are
then pending, in amounts in excess of the then value of 112,500 shares of Parent
Common Stock, 112,500 shares of Parent Common Stock shall be released six months
after the Closing and, unless any claim or claims by Parent Claimants are then
pending, the balance shall be released on the later of the first anniversary of
the Closing Date and such date on which the aggregate liabilities (as determined
in accordance with GAAP) of ProHealthCare do not exceed $25,000.
12.4 Indemnification by Parent. Parent shall indemnify, defend and hold
harmless ProHealthCare, the Stockholders, and their respective affiliates and
directors, officers, employees, agents and representatives (collectively, the
"Company Claimants"), promptly upon demand at any time and from time to time
against any and all Losses asserted against, imposed upon or incurred by any
Company Claimant resulting from or arising out of (a) any misrepresentation or
breach of any warranty of Parent or Sub contained in this agreement, or (b) any
breach or nonfulfillment of any covenant or agreement of Parent or Sub contained
in this agreement.
12.5 Indemnification Procedures.
(a) An indemnified party shall promptly give written notice to the
indemnifying party after the indemnified party has knowledge that any legal
proceeding has been instituted or any claim has been asserted in respect of
which indemnification may be sought under the provisions of section 12. If the
indemnifying party, within 10 days after the indemnified party has given such
notice (or within such shorter period of time as an answer or other responsive
motion may be required), shall have acknowledged in writing his or its
obligation to indemnify and shall have furnished to the indemnified party a
bond, letter of credit, escrow or similar arrangement in an amount equal to the
total amount demanded in such claim or proceeding, then the indemnifying party
shall have the right to control the defense of such claim or proceeding, and the
indemnified party shall not settle or compromise such claim or proceeding
without the written consent of the indemnifying party, which consent shall not
unreasonably be withheld or delayed. The indemnified party may in any event
participate in any such defense with his or its own counsel and at his or its
own expense.
(b) The indemnified party shall be kept fully informed by the indemnifying
party of such action, suit or proceeding at all stages thereof, whether or not
the indemnified party is represented by counsel. The indemnifying party shall,
at its expense, make available to the indemnified party and its representatives
all books and records of the indemnifying party relating to such proceedings or
litigation, and the parties hereto agree to render to each other such assistance
as they may reasonably require of each other in order to ensure the proper and
adequate defense of any such action, suit or proceeding. The indemnifying party
shall make no settlement of any claims which the indemnifying party has
undertaken to defend, without the indemnified party's consent, unless the
indemnifying party fully indemnifies the indemnified party for all losses, there
is no finding or admission of violation of law by, or effect on any other claims
that may be made against, the indemnified party and the relief granted in
connection therewith requires no action on the part of and has no effect on the
indemnified party.
13. Miscellaneous
13.1 Amendment and Modification. Prior to the Effective Time, this
agreement may be amended or modified only by written agreement of Parent, Sub,
ProHealthCare, the Company and the Stockholders.
13.2 Waiver. Prior to the Effective Time, Parent and Sub, on the one hand,
and ProHealthCare, the Company and the Stockholders, on the other hand, may
waive compliance by the other with any provision of this agreement. No waiver of
any provision shall be construed as a waiver of any other breach of that
provision or of any other provision of this agreement. Any waiver must be in
writing.
13.3 Notices. Any notice or other communication under this agreement shall
be in writing and shall be considered given upon receipt, if personally
delivered or telecopied, or one day after delivery to a courier for next-day
delivery, to the parties at the addresses set forth below (or at such other
address as a party may specify by notice to the others).
If to Parent or Sub, to it at:
Accuhealth, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
if to ProHealthCare, the Company or any Stockholder, to it, him or her at:
ProHealthCare, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and
Crummy, Del Deo, Dolan, Griffinger & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
13.4 Headings. The section headings of this agreement are for reference
purposes only and shall not affect the construction or interpretation of this
agreement.
13.5 Entire Agreement; Assignment. This agreement (including the schedules
and exhibits) contains a complete statement of the understanding of the parties
with respect to its subject matter and supersedes and cancels any prior
communications, understandings and agreements among them relating to that
subject matter. This agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns;
provided that neither this agreement nor any right or obligation under this
agreement may be assigned or transferred, except that (a) Parent or Sub may
assign its rights and obligations hereunder to a direct or indirect subsidiary
of Parent, but no such assignment shall relieve Parent or Sub, as the case may
be, of its obligations hereunder, and (b) ProHealthCare may assign its rights
and obligations under sections 8.6 and 8.9 to its stockholders. If Parent shall
issue by merger or any similar corporate event other securities of Parent or of
any successor of Parent, each reference in this agreement to Parent Common Stock
shall be deemed to be a reference to such kind and number of shares into which
Parent Common Stock shall have been converted.
13.6 Governing Law. This agreement shall be governed by and construed in
accordance with the law of the state of New York excluding choice-of-law
principles.
13.7 Severability. The parties agree that any provision of this agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
13.8 Counterparts. This agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
The parties have executed this agreement as of the date set forth above.
ACCUHEALTH, INC.
By:__________________________________
Name:
Title:
ACH ACQUIRING CORP.
By:__________________________________
Name:
Title:
PROHEALTHCARE, INC.
By:__________________________________
Name:
Title:
PROHEALTHCARE INFUSION SERVICES, INC.
By:__________________________________
Name:
Title:
STOCKHOLDERS:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
TABLE OF CONTENTS
1. The Merger; The Surviving Corporation........................................................................1
1.1 The Merger..........................................................................................1
1.2 Closing.............................................................................................1
1.3 Effective Time of the Merger........................................................................1
1.4 Certificate of Incorporation and By-Laws............................................................1
2. Conversion of Shares; Options................................................................................2
2.1 Treatment of Shares of the Company..................................................................2
2.2 Exchange of Company Stock...........................................................................2
2.3 No Fractional Securities............................................................................4
2.4 Determination of Final Incremental Gross Profit.....................................................4
3. Determination of Final Net Liquid Assets; Adjustment to Merger Consideration.................................6
3.1 Parent Calculation of Net Liquid Assets.............................................................6
3.2 ProHealthCare's Verification of Net Liquid Assets...................................................6
3.3 Dispute Resolution..................................................................................7
3.4 Final Net Liquid Assets.............................................................................8
3.5 Treatment of Intercompany Advances..................................................................8
4. Tangible Property; Adjustment to Merger Consideration........................................................8
4.1 Calculation of Tangible Property....................................................................8
4.2 Adjustment to Merger Consideration..................................................................9
5. Representations and Warranties of ProHealthCare..............................................................9
5.1 Organization........................................................................................9
5.2 Capitalization......................................................................................9
5.3 Subsidiaries........................................................................................9
5.4 Authority..........................................................................................10
5.5 Consents and Approvals; No Violations..............................................................10
5.6 Financial Statements...............................................................................10
5.7 Absence of Undisclosed Liabilities.................................................................11
5.8 Absence of Certain Changes or Events...............................................................11
5.9 Material Contracts.................................................................................11
5.10 No Default.........................................................................................12
5.11 Compliance with Law................................................................................12
5.12 Health Care Matters................................................................................13
5.13 Litigation, etc....................................................................................13
5.14 Permits. .........................................................................................14
5.15 Taxes..............................................................................................14
5.16 Title to Properties; Encumbrances..................................................................14
5.17 Proprietary Rights.................................................................................14
5.18 Employee Benefit Plans; ERISA; Labor Matters.......................................................15
5.19 Environmental Laws and Regulations.................................................................16
5.20 Brokers............................................................................................16
6. Representations and Warranties of Parent....................................................................17
6.1 Organization.......................................................................................17
6.2 Capitalization.....................................................................................17
6.3 Authority..........................................................................................17
6.4 Consents and Approvals; No Violations..............................................................18
6.5 Reports and Financial Statements...................................................................18
6.6 Brokers............................................................................................18
6.7 Dispositions.......................................................................................18
7. Covenants of ProHealthCare, the Company and the Stockholders................................................19
7.1 Conduct of Business................................................................................19
7.2 No Solicitation....................................................................................20
7.3 Access and Information.............................................................................20
8. Covenant of Parent..........................................................................................21
9. Additional Agreements.......................................................................................21
9.1 Reasonable Best Efforts............................................................................21
9.2 Expenses...........................................................................................21
9.3 Public Announcements...............................................................................21
9.4 Supplemental Disclosure............................................................................21
9.5 Deposits of Certain Payments.......................................................................22
9.6 Leased Property....................................................................................22
9.7 Accounts Receivable................................................................................23
10. Conditions to Consummation of the Merger....................................................................23
10.1 Conditions to Each Party's Obligation to Effect the Merger.........................................23
10.2 Conditions to Obligations of Parent and Sub to Effect the Merger. .................................23
10.3 Conditions to Obligation of ProHealthCare and the Company to Effect the Merger. ...................26
11. Termination.................................................................................................27
11.1 Termination........................................................................................27
11.2 Effect of Termination..............................................................................27
12. Indemnification.............................................................................................28
12.1 Survival...........................................................................................28
12.2 Indemnification by the Stockholders................................................................28
12.3 Limitation on Indemnification......................................................................28
12.4 Indemnification by Parent..........................................................................29
12.5 Indemnification Procedures.........................................................................29
13. Miscellaneous...............................................................................................30
13.1 Amendment and Modification.........................................................................30
13.2 Waiver.............................................................................................30
13.3 Notices............................................................................................30
13.4 Headings...........................................................................................31
13.5 Entire Agreement; Assignment.......................................................................31
13.6 Governing Law......................................................................................32
13.7 Severability.......................................................................................32
13.8 Counterparts.......................................................................................32
SCHEDULES
Schedule 2.4 -- Referral Sources
Schedule 3.1 -- Pre-Closing Liabilities
Schedule 3.5 -- Certain Intercompany Advances
Schedule 4.1 -- Tangible Property
Schedule 5.5 -- Consents
Schedule 5.6A -- Financial Statements
Schedule 5.6B -- Financial Statements - Exceptions
Schedule 5.7 -- Liabilities
Schedule 5.8 -- Certain Changes and Events
Schedule 5.9 -- Material Contracts
Schedule 5.10 -- Defaults
Schedule 5.12(a) -- Health Care Cost Reports, Submissions and Filings
Schedule 5.12(c) -- Agreements with Referral Sources, Etc.
Schedule 5.13 -- Litigation, Etc.
Schedule 5.15 -- Taxes
Schedule 5.16A -- Title to Properties
Schedule 5.16B -- Certain Property
Schedule 5.17 -- Proprietary Rights
Schedule 5.18 -- Employee Benefit Plans
Schedule 5.20 -- Brokers
Schedule 6.4 -- Consents
EXHIBITS
Exhibit A -- Employment Agreement
Exhibit B -- Non-Competition Agreement
Exhibit C-1 -- Form of Release
Exhibit D -- Tax Provisions Agreement
Exhibit E-1 -- Form of Assignment and Assumption Agreement
Exhibit E-2 -- Form of Assignment and Assumption Agreement
Exhibit F -- Opinion of ProHealthCare's Counsel
Exhibit G -- Registration Rights Agreement
Exhibit H -- Opinion of Parent's Counsel