AGREEMENT AND PLAN OF REORGANIZATION
Agreement and Plan of Reorganization ("Agreement") between Alliance Health
Enterprises, Inc., a Nevada corporation ("AHE"), and the persons executing this
Agreement as "Shareholders" (the "Shareholders"), being the owners of record of
all of the issued and outstanding shares of American Buyer's Club International,
Inc., a Delaware corporation (the "Company").
WHEREAS, AHE wishes to acquire and the Shareholders wish to transfer all of
the issued and outstanding stock of the Company in exchange for 732,000 shares
of common stock of AHE in a transaction intended to qualify as a reorganization
within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1954,
as amended.
WHEREAS, the effective date of the transaction contemplated herein shall be
January 1, 1997. NOW, THEREFORE, AHE and the Shareholders adopt this Plan of
Reorganization and agree as follows:
SECTION 1. EXCHANGE OF STOCK
1.01 Number of Shares. The Shareholders agree to transfer to AHE at the
Closing the number of shares of common stock of the Company ("Company Shares"),
shown opposite their names below in exchange for an aggregate of 732,000 shares
(the "AHE Shares") of common stock of AHE, $.001 par value per share. The AHE
Shares will be issued to the Shareholders at the Closing at the rate of 732 AHE
Shares for each Company Share in the numbers shown opposite their names as set
forth below.
1.02 Delivery of Certificates by Shareholders. The transfer of the Company
Shares by the Shareholders shall be effected by the delivery to AHE at the
Closing of certificates representing the Company Shares endorsed in blank or
accompanied by stock powers executed in blank, with all signatures guaranteed by
a national bank or broker-dealer.
1.03 Further Assistance. At the Closing and from time to time thereafter,
the Shareholders shall execute such additional instruments and take such other
action as AHE may request in order to more effectively sell, transfer and assign
the transferred Company Shares to AHE and to confirm AHE's title thereto.
1.04 Changes in AHE's Capitalization. If between the date of this Agreement
and the Closing, the outstanding shares of AHE common stock are, without the
receipt of new consideration by AHE, increased, decreased, changed into or
exchanged for a different number or kind of shares or securities of AHE through
reorganization, reclassification, stock dividend, stock split, reverse stock
split or similar change in AHE's capitalization, AHE will issue and deliver to
the Shareholders in addition to or in lieu of the AHE Shares specified in
Section 1.01, voting stock of AHE in equitably adjusted amounts. In the event of
any change in AHE's capitalization, all references to AHE Shares herein shall
refer to the number of AHE Shares as thus adjusted.
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SECTION 2. CLOSING
2.01 The closing contemplated by Section 1.01 (the "Closing") shall be held
at the offices of Xxxxx X. Xxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, on April 1, 1997 or as soon as practical thereafter
unless another place or time is agreed upon in writing by the parties.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders hereby warrant, represent and agree as follows:
3.01 Corporate Status. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
licensed or qualified as a foreign corporation in all jurisdictions in which the
nature of its business or the character or ownership of its properties makes
such licensing or qualification necessary.
3.02 Capitalization. The authorized capital stock of the Company consists
of 1,000 shares of common stock, of which 1,000 shares are issued and
outstanding. All such shares are fully paid and non-assessable.
3.03 Financial Statements. The financial statements of the Company
furnished to AHE, consisting of an unaudited balance sheet as of March 31, 1997
and a related statement of income for the period then ended (the "Financial
Statements") will be delivered at the Closing, will be correct and fairly
present the financial condition of the Company as of the dates and for the
periods involved.
3.04 Undisclosed Liabilities. The Company has no liabilities of any nature
except to the extent reflected or reserved against in the Financial Statements,
whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, and the Company's
accounts receivable are collectible in accordance with the terms of such
accounts, except to the extent of the reserve therefor in the Financial
Statements.
3.05 Interim Changes. Between March 31, 1997 and the date of this
Agreement, there have not been, (1) any changes in the Company's financial
condition, assets, liabilities, or business which, in the aggregate, have been
materially adverse; (2) any damage, destruction or loss of or to the Company's
property, whether or not covered by insurance; (3) any declaration or payment of
any dividends or other distribution in respect of the Company's capital stock,
or any direct or indirect redemption, purchase or other acquisition or any such
stock; or (4) any increase paid or agreed to in the compensation, retirement
benefits or other commitments to employees.
3.06 Title to Property. The Company has good and marketable title to all
properties and assets, real and personal, reflected in the Financial Statements,
except as since sold or otherwise disposed of in the ordinary course of
business, and the Company's properties and assets are subject to no mortgage,
pledge, lien or encumbrance, except for liens shown therein, with respect to
which no default exists.
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3.07 Litigation. There is no litigation or proceeding pending, or to
Shareholders' knowledge threatened, against or relating to the Company, its
properties or business.
3.08 Access to Records, etc. From the date of this Agreement to the
Closing, the Shareholders will cause the Company (1) to give to AHE and its
representatives full access during normal business hours to all of its offices,
books, records, contracts, and other corporate documents and properties so that
AHE may inspect and audit them; and (2) to furnish such information concerning
the Company's properties and affairs as AHE may reasonably request.
3.09 Confidentiality Until the Closing (and permanently if there is no
Closing), the Shareholders and their representatives will keep confidential any
information which they obtain from AHE concerning its properties, assets and
business. If the transactions contemplated by this Agreement are not consummated
by April 15, 1997 the Shareholders will return to AHE all written matter with
respect to AHE obtained by them in connection with the negotiation or
consummation of this Agreement.
3.10 Title to Shares. The Shareholders are, in the aggregate, the owners,
free and clear of any liens, claims and encumbrances, of all Company Shares.
3.11 Investment Intent. The Shareholders are acquiring the AHE Shares for
their own respective accounts, for investment purposes, and not for or with a
view to resale or distribution. The AHE shares shall bear a legend to the effect
that they represent restricted securities which may not be sold, transferred or
hypothecated in the absence of a registration statement under the Securities Act
of 1933, as amended, or an opinion of counsel that registration is not required.
3.12 Employment Agreements. At the Closing each of the Shareholders shall
execute an employment agreement with the Company in the form attached hereto as
Exhibit 3.12.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF AHE
AHE represents and warrants to, and covenants with the Shareholders as
follows:
4.01 Corporate Status. AHE is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and is
licensed or qualified as a foreign corporation in all jurisdictions in which the
nature of its business or the character or ownership of its properties makes
such licensing or qualification necessary.
4.02 Capitalization. The authorized capital stock of AHE consists of
10,000,000 shares of common stock, having a par value of $.001 per share, of
which 1,707,462 shares are issued and outstanding, fully paid and
non-assessable.
4.03 Undisclosed Liabilities. AHE has no undisclosed liabilities of any
nature.
4.04 Title to Property. AHE has good and marketable title to all properties
and assets, real and personal, and AHE's properties and assets are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown therein, with
respect to which no default exists.
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4.05 Litigation. There is no litigation or proceeding pending, or to AHE's
knowledge threatened, against or relating to AHE, its properties or business.
4.06 Confidentiality. Until the Closing (and permanently if there is no
Closing), the Company and its representatives will keep confidential any
information which it obtained from the Company concerning its properties, assets
and business. If the transactions contemplated by this Agreement are not
consummated by April 30, 1997 AHE will return to the Company all written matter
with respect to the Company obtained by it in connection with the negotiation or
consummation of this Agreement.
4.07 Investment Intent. AHE is acquiring the Company Shares to be
transferred to it under this Agreement for investment and not with a view to the
sale or distribution thereof, and AHE has no commitment or present intention to
liquidate the Company or to sell or otherwise dispose of the Company Shares.
4.08 Corporate Authority. AHE has full corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder and will
deliver to the Shareholders at the Closing a certified copy of resolutions of
its Board of Directors authorizing execution of this Agreement by its officers
and performance thereunder.
4.09 Due Authorization. Execution of this Agreement and performance by AHE
hereunder has been or prior to the Closing will be duly authorized by all
requisite corporate and shareholder action on the part of AHE, and this
Agreement constitutes a valid and binding obligation of AHE and performance
hereunder will not violate any provision of AHE's Articles of Incorporation,
Bylaws, mortgages, agreements with third parties or other commitments.
SECTION 5. CONDUCT OF COMPANY PENDING THE CLOSING
The Shareholders agree that from the date of this Agreement until the
Closing the Company will conduct itself in the following manner:
5.01 Certificate of Incorporation and Bylaws. The Company will not change
its Certificate of Incorporation or Bylaws.
5.02 Capitalization, etc. The Company will not make any change in its
authorized, issued or outstanding capital stock; grant any stock option or right
to purchase shares of its capital stock; issue any security convertible into
shares of its capital stock; purchase, redeem, retire, or otherwise acquire any
shares of its capital stock; or agree to do any of the foregoing; or declare,
set aside or pay any dividend or other distribution in respect of its capital
stock.
5.03 Business in Ordinary Course. The Company will conduct its business in
the ordinary course and will (1) use its best efforts to preserve its business
organization intact, to keep available to AHE the services of its present
officers and employees and to preserve the goodwill of suppliers, customers and
others having business relations with it; (2) maintain its properties in
customary repair, working order and condition, reasonable wear and tear and
damage by casualty excepted; (3) keep in force at no less than their present
limit all policies of insurance; (4) make no material change in the customary
terms and conditions on which it extends credit to customers; and (5) enter into
no sale, lease, contract, commitment or other transaction; provided, however,
that nothing in this Section 5.03 shall prohibit compliance by the Company with,
or the Company's borrowings or repayment funds pursuant to, and agreements or
other commitments disclosed by the Company to AHE.
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5.04 Banking Arrangements; Powers of Attorney. The Company will not make
any change in its banking and safe deposit arrangements and will not grant any
powers of attorney.
5.05 Accounting Practices. Except as required by generally accepted
accounting principles, the Company will not make any changes in its accounting
methods or practices.
5.06 Merger, etc. The Company will not merge or consolidate with any other
corporation; sell or lease all or substantially all of its assets and business;
acquire all or substantially all of the stock of the business or assets or any
other person, corporation or business organization; or agree to do any of the
foregoing.
SECTION 6. COVENANTS AFTER THE CLOSING
6.01 After Closing. From and after the Closing, all parties hereto agree to
issue certificates representing the AHE Shares to the Shareholders of the
Company pursuant to Paragraph 1.01 hereof.
SECTION 7. CONDITIONS PRECEDENT - AHE
All obligations of AHE under this Agreement are subject, at AHE's option,
to the fulfillment, before or at the Closing, of each of the following
conditions:
7.01 Representations and Warranties True at Closing. The Shareholders'
representations and warranties contained in this Agreement shall be true and
correct as of the date hereof and as of the Closing in all material respects.
7.02 Due Performance. The Shareholders shall have performed and complied
with all the terms and conditions required by this Agreement to be performed or
complied with by them before the Closing.
7.03 Books and Records. The Shareholders have caused the Company to make
available to AHE all books and records of the Company, including minute books
and stock transfer records.
7.04 Acceptance by the Shareholders. The terms of this Agreement shall have
been accepted by all of the Shareholders of the Company as evidenced by their
signatures on the signature page of this Agreement.
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SECTION 8. CONDITIONS PRECEDENT - THE SHAREHOLDERS
All obligations of the Shareholders under this Agreement are subject, at
their option, to the fulfillment, before or at the Closing, of each of the
following conditions:
8.01 Representations and Warranties True at Closing. AHE's representations
and warranties contained in this Agreement shall be true and correct as of the
date hereof at and as of the Closing in all material respects.
8.02 Due Performance. AHE shall have performed and complied with all of the
terms and conditions required by this Agreement to be performed or complied with
by it before the Closing.
8.03 Revocation of Prior Authorizations. The Shareholders shall have
delivered to AHE certified copies of resolutions of the Company's Board of
Directors revoking as of the Closing all prior authorizations, powers of
attorney, designations and appointments relating to the signing of checks,
borrowing of funds, access to corporate safe deposit boxes and other similar
matters, to the extent requested by AHE.
8.04 Resignations. There shall have been delivered to AHE the signed
resignations of such directors of the Company as AHE shall request, dated as of
the Closing.
SECTION 9. INDEMNIFICATION
9.01 Indemnification of AHE. The Shareholders severally (and not jointly)
agree to indemnify AHE against any loss, damage or expense (including reasonable
attorneys' fees) suffered by AHE from (1) any breach by the Shareholders of this
Agreement; or (2) any inaccuracy in or breach of any of the representations,
warranties or covenants by the Shareholders herein; provided, however that (a)
AHE shall be entitled to assert rights of indemnification hereunder only if and
to the extent that it suffers losses, damages and expenses (including reasonable
attorneys' fees) exceeding $50,000 in the aggregate; and (b) AHE shall give
notice of any claims hereunder within the twenty-four (24) month period
beginning on the date of the Closing. No loss, damage or expense shall be deemed
to have been sustained by AHE to the extent of insurance proceeds paid to, or
tax benefits realizable by, AHE or the Company as a result of the event giving
rise to such light indemnification.
9.02 Indemnification of Shareholders. AHE agrees to indemnify the
Shareholders against any loss, damage or expense (including reasonable
attorneys' fees) suffered by any of the Shareholders from (1) any breach by AHE
of this Agreement; or (2) any inaccuracy in or breach of any of AHE's
representations, warranties or covenants herein.
9.03 Defense of Claims. Upon obtaining knowledge thereof, the indemnified
party shall promptly notify the indemnifying party of any claim which has given
or could give rise to a right of indemnification under this Agreement. If the
right of indemnification relates to a claim asserted by a third party against
the indemnified party, the indemnifying party shall have the right to employ
counsel acceptable to the indemnified party to cooperate in the defense of any
such claim. So long as the indemnifying party is defending any such claim in
good faith, the indemnified party will not settle such claim. If the
indemnifying party does not elect to defend any such claim, the indemnified
party shall have no obligation to do so.
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SECTION 10. TERMINATION
10.01 Termination. This Agreement may be terminated (1) by mutual consent
in writing; (2) by either the Shareholders or AHE if there has been a material
misrepresentation or material breach of any warranty or covenant by the other
party; or (3) by either the Shareholders of AHE if the Closing shall not have
taken place, unless adjourned to a later date by mutual consent in writing by
April 30, 1997.
SECTION 11. GENERAL PROVISIONS
11.01 Further Assurances. At any time, and from time to time, after the
Effective Date, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry out
the intent and purposes of this Agreement.
11.02 Waiver. Any failure on the part of either party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
11.03 Brokers. Each party represents to the other party that no broker or
finder has acted for it in connection with this Agreement, and agrees to
indemnify and hold harmless the other party against any fee, loss or expense
arising out of claims by brokers or finders employed or alleged to have been
employed by it.
11.04 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class registered or certified mail, return receipt requested, as
follows:
To: Alliance Health Enterprises, Inc.
c/o Xxxxx X. Xxxxx
0000 Xxxxxxx Xxxx Xxxx, #0000
Xxx Xxxxxxx, XX 00000
(000) 000-0000
To: Xxxxxxx Xxxxxx, Esq.
c/x Xxxxxx & Masia
Freehold Executive Center
0000 Xxxxx 0 Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
11.05 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
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11.06 Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.07 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada.
11.08 Assignment. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided,
however, that any assignment by either party of its rights under this Agreement
without the written consent of the other party shall be void.
11.09 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be considered as original signatures.
Executed as of this 17th day of April, 1997.
ALLIANCE HEALTH ENTERPRISES, INC.
By:____________________________
SHAREHOLDERS OF AMERICAN BUYER'S CLUB INTERNATIONAL, INC.
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Xxxxxx Xxxx Xxxxx Xxxxxx
Shares of Company: 500 Shares of Company: 500
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Shares of AHE: 366,000 Shares of AHE: 366,000
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