Exhibit
2.1
AGREEMENT
AND PLAN OF REORGANIZATION
AMONG
CROFF
ENTERPRISES, INC.,
AMHN
ACQUISITION CORP.,
AMERICA’S
MINORITY HEALTH NETWORK, INC.
AND
THE
MAJOR SHAREHOLDERS
Listed
on Schedule A Hereto
AGREEMENT
AND PLAN OF REORGANIZATION
This
Agreement and Plan of Reorganization (hereinafter the “
Agreement
”)
is entered into effective as of this 6th day of July 2009, by and among Croff
Enterprises, Inc., a Utah corporation (hereinafter “
Parent
”);
AMHN Acquisition Corp., a newly formed Delaware corporation and wholly owned
subsidiary of Parent (hereinafter “
Merger
Sub
”); the Major Shareholders listed on
Schedule A
hereto
(hereinafter the “
Major
Shareholders
”); and America’s Minority Health Network, Inc. a Delaware
corporation (hereinafter the “
Company
”
or “AMHN”) and the
Major
Shareholders
.
RECITALS
WHEREAS
, Parent desires to
acquire the Company as a wholly-owned subsidiary and to issue shares of Parent
Common Stock (as defined below) to the stockholders of the Company upon the
terms and conditions set forth herein. Merger Sub is a wholly-owned subsidiary
corporation of Parent that shall be merged into the
Company
;
whereupon the Company shall be the surviving corporation of said merger and
shall become a wholly-owned subsidiary of Parent (Merger Sub and the Company are
sometimes collectively hereinafter referred to as the “
Constituent
Corporations
”).
WHEREAS
, the boards of
directors of each of Parent, Merger Sub and the Company deem it advisable and in
the best interests of such corporations and their respective stockholders that
Merger Sub merge with and into the Company pursuant to this Agreement and the
Delaware Certificate of Merger (in the form attached hereto as Exhibit A) and
pursuant to applicable provisions of law (such transaction hereafter referred to
as the “
Merger
”).
WHEREAS
, Merger Sub has an
authorized capitalization consisting of 1,000 shares of common stock, par value
$0.001 per share, of which 1,000 shares shall be issued and outstanding and
owned by Parent as of the closing of the Merger.
WHEREAS
, Parent has an
authorized capitalization consisting of 50,000,000 shares of common stock, par
value $0.10 per share (“
Parent Common
Stock
”), of which, 1,017,573 shares of Parent Common Stock shall be, as
of the Effective Date ( as defined below), issued and outstanding (post forward
split, 3,052,719) and, except as may be set forth within the Disclosure Schedule
of Parent no shares of Parent Common Stock are reserved for issuance
pursuant to options, warrants or other securities that are convertible into or
exchangeable for Parent Common Stock, in each case as of the Effective
Date.
WHEREAS
, the Company has an
authorized capitalization consisting of 1,000 shares of common stock, par value
$0.001 per share (“
AMHN Common
Stock
”), of which 1,000 shares are issued and outstanding as of the
Effective Date.
NOW THEREFORE
, for the mutual
consideration set out herein, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties agree as
follows:
AGREEMENT
1.
Plan of
Reorganization
. The parties to this Agreement do hereby agree
that Merger Sub shall be merged with and into the Company upon the terms and
conditions set forth herein and in accordance with the provisions of the
Delaware General Corporation Law. It is the intention of the parties hereto that
this transaction qualify as a tax-free reorganization under Section 368(a)(2)(E)
of the Internal Revenue Code of 1986, as amended, and related sections
thereunder.
2.
Terms of
Merger
. In accordance with the provisions of this Agreement
and the requirements of applicable law, Merger Sub shall be merged with and into
the Company as of the Effective Date (the terms “
Closing
”
and “
Effective
Date
” are defined in Section 6 hereof). The Company shall
be the surviving corporation (hereinafter the “
Surviving
Corporation
”) and the separate existence of Merger Sub shall cease when
the Merger shall become effective. Consummation of the Merger shall
be upon the following terms and subject to the conditions set forth
herein:
(a)
Corporate
Existence
.
(i) Commencing
with the Effective Date, the Surviving Corporation shall continue its corporate
existence as a Delaware corporation and (i) it shall thereupon and thereafter
possess all rights, privileges, powers, franchises and property (real, personal
and mixed) of each of the Constituent Corporations; (ii) all debts due to
either of the Constituent Corporations, on whatever account, all causes in
action and all other things belonging to either of the Constituent Corporations
shall be taken and deemed to be transferred to and shall be vested in the
Surviving Corporation by virtue of the Merger without further act or deed; and
(iii) all rights of creditors and all liens, if any, upon any property of any of
the Constituent Corporations shall be preserved unimpaired, limited in lien to
the property affected by such liens immediately prior to the Effective Date, and
all debts, liabilities and duties of the Constituent Corporations shall
thenceforth attach to the Surviving Corporation.
(ii) At
the Effective Date, (i) the Certificate of Incorporation of the Company shall be
the Certificate of Incorporation of the Surviving Corporation, and the By-laws
of the Company, as existing immediately prior to the Effective Date, shall be
and remain the By-laws of the Surviving Corporation; (ii) the members of the
Board of Directors of the Company holding office immediately prior to the
Effective Date shall be appointed the members of the Board of Directors of the
Surviving Corporation (if on or after the Effective Date a vacancy exists on the
Board of Directors of the Surviving Corporation, such vacancy may thereafter be
filled in a manner provided by applicable law and the By-laws of the Surviving
Corporation); and (iii) until the Board of Directors of the Surviving
Corporation shall otherwise determine, all persons who hold offices
of the Company at the Effective Date shall be elected to hold the
same offices of the Surviving Corporation.
(b)
Conversion
of Securities
. As of the Effective Date and without any action
on the part of Parent, Merger Sub, the Company or the holders of any of the
securities of any of these corporations, each of the following shall
occur:
(i) After
giving effect to a three for one forward split of Parent’s currently issued and
outstanding common stock (the “Share Split”), each share of AMHN Common Stock
issued and outstanding immediately prior to the Effective Date shall be
converted into 13,693.689 shares of Parent Common Stock (the “
Conversion
Ratio
”), an aggregate of 13,693.689 shares. All such shares of AMHN
Common Stock shall no longer be outstanding and shall automatically be canceled
and shall cease to exist, and upon the execution and delivery of a assignment of
rights, acknowledged by a licensed notary public, to receive certificates of
AMHN in accordance with the provisions of Section 4 hereof, certificates
evidencing such number of shares of Parent Common Stock, respectively, into
which such shares of AMHN Common Stock were converted. The holders of rights to
receive shares of AMHN Common Stock outstanding immediately prior to the
Effective Date shall receive their respective shares of Parent Common
Stock. All shares issued to the holders of the capital stock of the
Company will be subject to certain restrictions on any sale, assignment,
transfer, encumbrance or other manner of disposition as more fully set forth
below;
(ii) Any
shares of capital stock of AMHN held in the treasury of the Company
immediately prior to the Effective Date shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto;
(iii) Each
share of capital stock of Merger Sub issued and outstanding immediately prior to
the Effective Date shall remain in existence as one share of common stock of the
Surviving Corporation, which shall be owned by Parent;
(c)
Other
Matters
.
(i) At
the Closing, the existing directors of Parent shall nominate and appoint to the
Board of Directors of Parent: Sky Kelley, Kimberly Sarubbi and Robin Tjon, or
such other persons designated by AMHN, and all of the persons serving as
directors and officers of Parent immediately prior to the Closing shall
thereafter resign from all of their positions with Parent, all subject to
compliance with Rule 14f-1 promulgated under the Securities Exchange Act of
1934, as amended (the “
Exchange
Act
”).
3.
Delivery
of Shares
. Promptly after the Effective Date, Parent shall mail to each
record holder of AMHN Common Stock at the address set forth on books of Parent,
(i) a notice of the effectiveness of the Merger and (ii) certificates
representing the shares of Parent Common Stock into which such holder’s shares
of AMHN capital stock were converted pursuant to the Merger (the “
New
Certificates
”), that such holder is entitled to receive.
4.
Representations
of AMHN and Each of its Major Shareholders
. AMHN
and each
of its Major Shareholders
hereby represent and warrant as follows, which
warranties and representations shall also be true as of the
Closing:
(a) As
of the Effective Date, one thousand (1,000) shares of AMHN Common Stock are
issued and outstanding and there are no shares of Preferred Stock
authorized. The foregoing shares represent all of the shares of the
Company’s capital stock that will be issued and outstanding as of the
Closing.
(b) The
issued and outstanding shares of AMHN Common Stock constitute duly authorized,
validly issued shares of capital stock of the Company. All issued and
outstanding shares of AMHN Common Stock are fully paid and
nonassessable.
(c) The
AMHN audited financial statements as of May 31, 2009, which have been made
available to Parent (hereinafter referred to as the “
AMHN Financial
Statements
”), fairly present the financial condition of the Company as of
the date thereof and the results of its operations for the period
covered. Other than as set forth in any schedule or Exhibit attached
hereto, and except as may otherwise be set forth or referenced herein, there are
no material liabilities or obligations, either fixed or contingent, not
disclosed or referenced in the Company Financial Statements or in any exhibit
thereto or notes thereto other than contracts or obligations occurring in the
ordinary course of business since April 1, 2009; and no such contracts or
obligations occurring in the ordinary course of business constitute liens or
other liabilities which materially alter the financial condition of AMHN as
reflected in the Company Financial Statements. AMHN has or will have at the
Closing, good title to all assets shown on the
AMHN
Financial Statements subject only to dispositions and other transactions in the
ordinary course of business, the disclosures set forth therein and liens and
encumbrances of record. The AMHN Financial Statements have been prepared in
accordance with generally accepted accounting principles (except as may be
indicated therein or in the notes thereto and except for the absence of
footnotes).
(d) Except
as set forth in Schedule 4(d), since April 1, 2009 there have not been any
material adverse changes in the financial position of AMHN except
changes arising in the ordinary course of business, which changes will not
materially and adversely affect the financial position
of AMHN.
(e)
AMHN is not a party to any material pending litigation or, to the knowledge
(herein, “
Knowledge
”),
of its executive officers, and each of its Major Shareholders, any governmental
investigation or proceeding, not reflected in the AMHN Financial Statements,
and, to its and their Knowledge, no material litigation, claims, assessments or
any governmental proceedings are threatened against the Company.
(f)
AMHN is in good standing in the State of Delaware, and is in good standing and
duly qualified to do business in California and each other state where AMHN is
required to be so qualified except where the failure to so qualify would have no
material negative impact on AMHN.
(g) AMHN
has, or by the Closing will have, filed all material tax, governmental and/or
related forms and reports (or extensions thereof) due or required to be filed in
the ordinary course of business and has (or will have) paid or made adequate
provisions for all taxes or assessments which have become due as of the Closing,
except where the failure to do so would not have a material adverse effect on
AMHN.
(h) AMHN
has not materially breached any material agreement to which it is a party. AMHN
has made available to Parent copies of or access to all material contracts,
commitments and/or agreements to which the Company is a party, including all
contracts covering relationships or dealings with related parties or
affiliates.
(i) AMHN
has no subsidiary corporations.
(j) AMHN
has made its corporate financial records, minute books, and other corporate
documents and records available for review to present management of Parent prior
to the Closing, during reasonable business hours and on reasonable
notice.
(k) AMHN
has the corporate power to enter into this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been or will prior to
the Closing be duly authorized by the Board of Directors of AMHN and by the
stockholders of AMHN. The execution of this Agreement does not materially
violate or breach any material agreement or contract to which AMHN is
a party, and AMHN, to the extent required, has (or will have by
Closing) obtained all necessary approvals or consents required by any agreement
to which AMHN is a party. The execution and performance of this
Agreement will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of AMHN.
(l) Information
regarding AMHN which has been delivered by AMHN to Parent for use in connection
with the Merger, is true and accurate in all material respects.
5.
Representations
of Parent, Merger Sub
. Parent and Merger Sub hereby jointly
and severally represent and warrant subject to the Disclosure Schedules of
Parent as follows, each of which representations and warranties shall also be
true as of the Closing:
(a) As
of the Closing, the shares of Parent Common Stock to be issued and delivered to
AMHN Stockholders hereunder and in connection herewith will, when so issued and
delivered, constitute duly authorized, validly and legally issued, fully-paid,
nonassessable shares of Parent capital stock, will not be issued in violation of
any preemptive or similar rights and will be issued free and clear of all liens
and encumbrances. As of the Closing, the shares of Parent Common Stock to be
reserved for issuance to the holders of options and warrants to purchase AMHN
Common Stock, when so issued and delivered in accordance with such options or
warrants, will constitute duly authorized, validly and legally issued,
fully-paid, nonassessable shares of Parent capital stock, will not be issued in
violation of any preemptive or similar rights and will be issued free and clear
of all liens and encumbrances.
(b) Parent
and Merger Sub each has the corporate power to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby (i) have been duly
authorized by the respective Boards of Directors of Parent and Merger Sub and by
Parent as the sole stockholder of Merger Sub and (ii) do not need to be approved
or authorized by the stockholders of Parent. This Agreement has been duly
executed and delivered by each of Parent and Merger Sub and constitutes a legal,
valid and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms except as enforcement may be
limited by applicable bankruptcy, insolvency or other laws affecting creditor’s
rights generally or by legal principles of general applicability governing the
availability of equitable remedies. The execution and performance of this
Agreement will not constitute a material breach of any agreement, indenture,
mortgage, license or other instrument or document to which Parent, Merger Sub is
a party or to which it is otherwise subject and will not violate any judgment,
decree, order, writ, law, rule, statute, or regulation applicable to Parent,
Merger Sub, or their respective properties. The execution and performance of
this Agreement will not violate or conflict with any provision of the respective
Articles of Incorporation or Certificate of Incorporation or by-laws of either
Parent or Merger Sub.
(c) Parent
has delivered to AMHN a true and complete copy of its audited financial
statements for the fiscal years ended December 31, 2008 and 2007 and the
unaudited financial statements for the three months ended March 31, 2009 (the
“
Parent
Financial Statements
”). The Parent Financial Statements are complete,
accurate and fairly present the financial condition of Parent as of the dates
thereof and the results of its operations for the periods then ended. Except as
may be set forth in the Disclosure Schedules of Parent, there are no material
liabilities or obligations either fixed or contingent not reflected therein. The
Parent Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present the financial
position of Parent as of the dates thereof and the results of its operations and
changes in financial position for the periods then ended. Merger Sub has no
financial statements because it was recently formed solely for the purpose of
effectuating the Merger and it has been, is and will remain inactive except for
purposes of the Merger, and it has no assets, liabilities, contracts or
obligations of any kind other than as incurred in the ordinary course of
business in connection with its incorporation in Delaware. Parent has no
subsidiaries (other than Merger Sub) or affiliates and does not have any direct
or indirect equity participation or similar interest in any corporation,
partnership, limited liability company, joint venture, trust or other business.
Merger Sub has no subsidiaries or affiliates (other than Parent) and does not
have any direct or indirect equity participation or similar interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business.
(d) Since
March 31, 2009, there have not been any material adverse changes in the
financial condition of Parent. At the Closing, neither Parent nor Merger Sub
shall have any material assets other than those reflected in the Parent
Financial Statements. At Closing, Parent shall have entered into agreements
effective as of the Effective Time to convert all liabilities of Parent into
shares of Parent Common Stock such that at the Effective Time Parent shall not
have any liabilities other than those set forth in the Parent Financial
Statements. Merger Sub currently has no, and at Closing shall not
have any, liabilities of any kind.
(e) Neither
Parent nor Merger Sub is a party to, or the subject of, any pending litigation,
claims, or governmental investigation or proceeding not reflected in the Parent
Financial Statements, and to the Knowledge of the Parent Chief Executive
Officer, Parent and Merger Sub, there are no lawsuits, claims, assessments,
investigations, or similar matters, threatened or contemplated against or
affecting Merger Sub, Parent, or the management or properties of Parent or
Merger Sub.
(f) Parent
and Merger Sub are each duly organized, validly existing and in good standing
under the laws of the jurisdiction of their incorporation; each has the
corporate power to own, lease and operate its property and to carry on its
business as now being conducted and is duly qualified to do business and in good
standing to do business in any jurisdiction where so required except where the
failure to so qualify would have no material negative impact. Neither
corporation is required to be qualified to do business in any state other than
the State of Delaware as to Merger Sub and Utah as to Parent.
(g) Parent
and Merger Sub have each filed all federal, state, county and local income,
excise, property and other tax, governmental and/or other returns, forms,
filings, or reports, which are due or required to be filed by it prior to the
date hereof or have obtained valid extensions therefor and have paid or made
adequate provision in the Parent Financial Statements for the payment of all
taxes, fees, or assessments which have or may become due pursuant to such
returns, filings or reports or pursuant to any assessments
received. Neither Parent nor Merger Sub is delinquent or obligated
for any tax, penalty, interest, delinquency or charge and there are no tax liens
or encumbrances applicable to either corporation.
(h) At
the Effective Date (without giving effect to the issuance of Parent Common Stock
pursuant to the Merger), Parent’s authorized capital stock will consist of
50,000,000 shares of Parent Common Stock, of which 1,117,719 shares of Parent
Common Stock will be issued and outstanding after giving effect to the Share
Split and the Share Cancellation. Merger Sub’s capitalization consists solely of
1,000 authorized shares of common stock, par value $0.001 per share, of which
1,000 shares are outstanding, all of which are owned by Parent, free and clear
of all liens, claims and encumbrances. All outstanding shares of capital stock
of Parent and Merger Sub are, and shall be at Closing, validly issued, fully
paid and nonassessable. Except as may be set forth in the Disclosure Schedule of
Parent, there are no existing options, convertible or exchangeable securities,
calls, claims, warrants, preemptive rights, registration rights or commitments
of any character relating to the issued or unissued capital stock or other
securities of either Parent or Merger Sub. There are no voting trusts, proxies
or other agreements, commitments or understandings of any character to which
Parent or Merger Sub is a party or by which Parent or Merger Sub is bound with
respect to the voting of any capital stock of Parent or Merger Sub. There are no
outstanding stock appreciation, phantom stock or similar rights with respect to
any capital stock of Parent or Merger Sub. There are no outstanding obligations
to repurchase, redeem or otherwise acquire any shares of capital stock of Parent
or Merger Sub.
(i) Parent
and Merger Sub have (and at the Closing they will have) disclosed in writing to
the Company all events, conditions and facts materially affecting the business,
financial conditions (including any liabilities, contingent or otherwise) or
results of operations of either Parent or Merger Sub.
(j) The
financial records, minute books, and other documents and records of Parent and
Merger Sub have been made available to the Company prior to the
Closing.
(k) Neither
Parent nor Merger Sub has breached, nor is there any pending, or to the
Knowledge of the Parent Chief Executive Officer, any existing or threatened
claim that Parent or Merger Sub has breached, any of the terms or conditions of
any agreements, contracts, commitments or other documents to which it is a party
or by which it is, or its properties are bound. The execution and performance of
this Agreement will not violate any provisions of applicable law or any
agreement to which Parent or Merger Sub is subject. Each of Parent and Merger
Sub hereby represent and warrant that it is not a party to any material contract
or commitment, and that it has disclosed to the Company in writing all previous
or existing relationships or dealings with related or controlling parties or
affiliates of Parent, Merger Sub or any Chief Executive Officer. Each of Parent
and Merger Sub hereby represents and warrants that there are no currently
existing agreements with any affiliates, related or controlling persons or
entities of Parent, Merger Sub or the Parent Chief Executive
Officer.
(l) Parent
has to its Knowledge complied with all material provisions relating to the
issuance of securities, and for the registration thereof, under the Securities
Act of 1933, as amended (the “
Securities
Act
”), other applicable securities laws, and all applicable blue sky laws
in connection with any and all of its stock issuances. There are no outstanding,
pending or threatened stop orders or other actions or investigations relating
thereto involving federal and state securities laws. All issued and outstanding
shares of Parent’s capital stock were to the Knowledge of Parent offered and
sold in compliance with federal and state securities laws and were not offered,
sold or issued in violation of any preemptive right, right of first refusal or
right of first offer and are not subject to any right of
rescission.
(m) All
information regarding Parent which has been provided to the Company by Parent or
set forth in any document or other communication, disseminated to any former,
existing or potential shareholders of Parent or to the public or filed with the
Financial Industry Regulatory Authority (“
FINRA
”) or
the Securities and Exchange Commission (“
SEC
”) or
any state securities regulators or authorities is to the Knowledge of Parent
true, complete, accurate in all material respects, not misleading, and was and
is in full compliance with all securities laws and regulations.
(n) Parent
is and has been in compliance with, and Parent has conducted any business
previously owned or operated by it in compliance with, all applicable laws,
orders, rules and regulations of all governmental bodies and agencies, including
applicable securities laws and regulations and environmental laws and
regulations, except where such noncompliance has and will have, in the
aggregate, no material adverse effect. Parent has not received notice of any
noncompliance with the foregoing, nor does it or Parent Chief Executive Officer
have Knowledge of any claims or threatened claims in connection therewith.
Parent to its Knowledge has never conducted any operations or engaged in any
business transactions whatsoever other than as set forth in the reports Parent
has previously filed with the SEC.
(o) Without
limiting the foregoing, (i) Parent and any other person or entity for whose
conduct Parent is legally held responsible are and have been in material
compliance with all applicable federal, state, regional, and local laws,
statutes, ordinances, judgments, rulings and regulations relating to any matters
of pollution, protection of the environment, health or safety, or environmental
regulation or control, and (ii) neither Parent nor any other person for whose
conduct Parent is legally held responsible has manufactured, generated, treated,
stored, handled, processed, released, transported or disposed of any hazardous
substance on, under, from or at any of Parent’s properties or in connection with
Parent’s operations since the period that current management and directors of
Parent have commenced their tenure.
(p) Parent
to its Knowledge has timely filed all required documents, reports and schedules
with the SEC, FINRA and any applicable state or regional securities regulators
or authorities (collectively, the “
Parent SEC
Documents
”) except where the failure to so timely file is not or has not
been material to the operations of parent taken as a whole. As of
their respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act, the Exchange Act, FINRA
rules and regulations and state and regional securities laws
and regulations, as the case may be, and, at the respective times
they were filed, none of the Parent SEC Documents 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 (including, in each case, any notes thereto) of Parent included in
the Parent SEC Documents complied as to form and substance in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto, were prepared in accordance with generally
accepted accounting principles (except as may be indicated therein or in the
notes thereto) applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly presented in all
material respects the financial position of Parent as of the respective dates
thereof and the results of its operations and its cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments and to any other adjustments described therein).
(q) Except
as and to the extent specifically disclosed in this Agreement and as may be
specifically disclosed or reserved against as to amount in the latest balance
sheet contained in the Parent Financial Statements, there is no basis for any
assertion against Parent of any material liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise and whether due or to
become due, known or unknown, including, without limitation, any liability for
taxes (including e-commerce sales or other taxes), interest, penalties and other
charges payable with respect thereto. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
result in any payment (whether severance pay, unemployment compensation or
otherwise) becoming due from Parent to any person or entity, including without
limitation any employee, director, officer or affiliate or former employee,
director, officer or affiliate of Parent, (b) increase any benefits otherwise
payable to any person or entity, including without limitation any employee,
director, officer or affiliate or former employee, director, officer or
affiliate of Parent, or (c) result in the acceleration of the time of payment or
vesting of any such benefits.
(r) No
aspect of Parent’s past or present business, operations or assets is of such a
character as would restrict or otherwise hinder or impair Parent from carrying
on the business of Parent as it is presently being conducted by
Parent.
(s) Parent
has no material contracts, commitments, arrangements, or understandings relating
to its business, operations, financial condition, prospects or otherwise. For
purposes of this Section 5, “material” means payment or performance of a
contract, commitment, arrangement or understanding which is expected to involve
payments in excess of $10,000.
(t) Other
than this Agreement and the transactions contemplated hereby, there are no
outstanding contracts, commitments or bids, or services, development, sales or
other proposals of either Parent or Merger Sub.
(u) There
are no outstanding lease commitments that cannot be terminated without penalty
upon 30-days notice, or any purchase commitments, in each case of either Parent
or Merger Sub.
(v) No
representation or warranty by Parent or Merger Sub contained in this Agreement
and no statement contained in any certificate, schedule or other communication
furnished pursuant to or in connection with the provisions hereof contains or
shall contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading.
There is no current or prior event or condition of any kind or character
pertaining to Parent that may reasonably be expected to have a material adverse
effect on Parent or its subsidiaries. Except as specifically indicated elsewhere
in this Agreement, all documents delivered by Parent in connection herewith have
been and will be complete originals, or exact copies thereof.
(w) Assuming
all corporate consents and approvals have been obtained and assuming the
appropriate filings and mailings are made by Parent under the Securities Act,
the Exchange Act, with the FINRA, and with the Secretary of State of Delaware,
the execution and delivery by Parent of this Agreement and the closing documents
and the consummation by Parent of the transactions contemplated hereby do not
and will not (i) require the consent, approval or action of, or any filing or
notice to, any corporation, firm, person or other entity or any public,
governmental or judicial authority (except for such consents, approvals,
actions, filing or notices the failure of which to make or obtain will not in
the aggregate have a material adverse effect); or (ii) violate any order, writ,
injunction, decree, judgment, ruling, law, rule or regulation of any federal,
state, county, municipal, or foreign court or governmental authority applicable
to Parent, or its business or assets. Parent is not subject to, or a party to,
any mortgage, lien, lease, agreement, contract, instrument, order, judgment or
decree or any other material restriction of any kind or character which would
prevent, hinder, restrict or impair the continued operation of the business of
Parent (or to the Knowledge of Parent, the continued operation of the business
of AMHN) after the Closing.
(x) Gregory
R. Woodhill, Michael Chester and David S. Hamilton are the sole directors and
Mr. Woodhill is the sole executive officer of each of Parent and Merger Sub.
Except for Mr. Woodhill, Parent currently has no employees, consultants or
independent contractors other than its attorneys and accountants, and there are
no labor disputes, grievances or requests for arbitration. Parent has no
pension, retirement, savings, profit sharing, stock-based, incentive
compensation or other similar employee benefit plan.
(y) Except
as filed as exhibits to the Parent SEC Documents, Parent has no “material
contracts” (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to which
it is a party. Parent is not a party to or bound by any contract which would
prohibit or materially delay the consummation of the transactions contemplated
by this Agreement. All of the Parent’s “material contracts” are in good
standing, valid and effective in accordance with their respective terms, and
neither Parent nor any other party to a “material contract” of Parent has
violated any provision of, or committed or failed to perform any act which, with
or without notice, lapse of time or both, would constitute a default under the
provisions of, any such “material contract.”
(z) Except
as set forth in (i) the Parent SEC Documents, there are no liabilities
(including, but not limited to, tax liabilities) or claims against Parent
(whether such liabilities or claims are contingent or absolute, direct or
indirect, and matured or unmatured), and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a liability or claim.
(aa) Parent
is not in compliance with the requirements of the Sarbanes-Oxley Act of 2002
applicable to it as of the date of this Agreement. Parent maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Parent has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for Parent and designed such
disclosures controls and procedures so that material information relating to
Parent is made known to the certifying officers by others within Parent,
particularly during the period in which Parent’s Form 10-K or 10-Q, as the case
may be, is being prepared. Parent’s certifying officers have
evaluated the effectiveness of Parent’s controls and procedures as of the date
of its most recently filed periodic report (such date, the “
Evaluation
Date
”). Since the Evaluation Date, there have been no significant changes
in Parent’s internal control over financial reporting (as such term is defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) or in other factors that could
significantly affect Parent’s internal control over financial reporting.
Parent’s auditors, at all relevant times, have been duly registered in good
standing with the Public Accounting Oversight Board.
(bb) There
are no legal, administrative, arbitral or other proceedings, claims, suits,
actions or governmental investigations of any nature pending, or to Parent’s
knowledge threatened, directly or indirectly involving Parent or its officers,
directors or affiliates, including, but not limited to any stockholder claims or
derivative actions, or challenging the validity or propriety of the transactions
contemplated by this Agreement. Parent is not subject to any order, judgment,
injunction, rule or decree of any Governmental Authority or
arbitrator.
(cc) Parent
has all Permits required to own, lease and operate its properties and to carry
on its business as currently conducted. Parent: (i) is not in default under or
in violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by Parent under), nor
has Parent received notice of a claim that it is in default under or that it is
in violation of, any indenture, mortgage, deed of trust or other agreement,
instrument or contract to which Parent is a party or by which it or any of its
assets or properties are bound (whether or not such default or violation has
been waived), (ii) is not in violation of any order of any court, arbitrator or
governmental body, (iii) is not and has not been in violation of any law, order,
rule, regulation, writ, injunction, judgment or decree of any Governmental
Authority having jurisdiction over Parent or any of its business or properties,
including federal and state securities laws and regulations and (iv) is not in
violation of any of its Permits.
(dd) No
sale of Parent’s securities or Parent’s use of the proceeds from such sale has
violated the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto. Without limiting the foregoing, Parent (i) is not a
person whose property or interests in property are blocked pursuant to Section 1
of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) and (ii) does not engage in any dealings or
transactions, or be otherwise associated, with any such person. Parent is in
compliance with the USA Patriot Act of 2001.
(ee) There
are no disagreements of any kind presently existing, or reasonably anticipated
by Parent to arise, between the accountants and lawyers formerly or presently
employed by Parent and Parent is current with respect to any fees owed to its
accountants and lawyers.
(ff) Parent
has complied with all applicable environmental laws. There is no pending or
threatened civil or criminal litigation, written notice of violation, formal
administrative proceeding or investigation, inquiry or information request by
any Governmental Authority or other entity relating to any environmental law
involving Parent
(gg) The
Parent Common Stock has been approved for listing on the Over-The-Counter
Bulletin Board (the “
OTCBB
”)
and Parent has and continues to satisfy all of the requirements of the OTCBB for
such listing and for the trading of Parent Common Stock thereunder.
(hh) Parent
confirms that neither it nor any other Person acting on its behalf has provided
AMHN or its agents or counsel with any information that constitutes or might
constitute material, nonpublic information concerning Parent. Parent understands
and confirms that AMHN will rely on the foregoing representations in effecting
transactions in securities of Parent. All disclosure provided to AMHN regarding
Parent, its business and the transactions contemplated hereby furnished by or on
behalf of Parent with respect to the representations and warranties made herein
are true and correct with respect to such representations and warranties and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein not
misleading. Parent acknowledges and agrees that AMHN has not made, nor is AMHN
making, any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth herein.
6.
Closing
. The
transactions contemplated by this Agreement shall be consummated (the “
Closing
”)
at the offices of AMHN, 345 Maple Drive, Suite 208, Beverly Hills, California
90210 (or remotely via the exchange of documents and signatures) as promptly as
practicable, but in no event more than five (5) business days, following the
satisfaction or waiver of all conditions to Closing set forth in Sections 8, 9
and 10. The “
Effective
Date
” of the Merger shall be that date and time specified in the
Certificate of Merger as the date on which the Merger shall become
effective.
7.
Actions
Prior to Closing
.
(a) Prior
to the Closing, AMHN on the one hand, and Parent and Merger Sub on the other
hand, shall be entitled to make such investigations of the assets, properties,
business and operations of the other party, and to examine the books, records,
tax returns, financial statements and other materials of the other party as such
investigating party deems necessary in connection with this Agreement and the
transactions contemplated hereby. Any such investigation and examination shall
be conducted at reasonable times and under reasonable circumstances, and the
parties hereto shall cooperate fully therein. Until the Closing, and if the
Closing shall not occur, thereafter, each party shall keep confidential and
shall not use in any manner inconsistent with the transactions contemplated by
this Agreement, and shall not disclose, nor use for their own benefit, any
information or documents obtained from the other party concerning the assets,
properties, business and operations of such party, unless such information (i)
is readily ascertainable from public or published information, (ii)
is received from a third party not under any obligation to keep such information
confidential, or (iii) is required to be disclosed by any law or order (in which
case the disclosing party shall promptly provide notice thereof to the other
party in order to enable the other party to seek a protective order or to
otherwise prevent such disclosure). If this transaction is not consummated for
any reason, each party shall return to the other all such confidential
information, including notes and compilations thereof, promptly after the date
of such termination. The representations and warranties contained in this
Agreement shall not be affected or deemed waived by reason of the fact that
either party hereto discovered or should have discovered any representation or
warranty is or might be inaccurate in any respect.
(b) Prior
to the Closing, AMHN, Parent, Merger Sub, and their respective officers,
directors, agents agree not to issue any statement or communications to the
public or the press regarding the transactions contemplated by this Agreement
without the prior written consent of the other parties. In the event that Parent
is required under federal securities law to either (i) file any document with
the SEC that discloses this Agreement or the transactions contemplated hereby,
or (ii) to make a public announcement regarding this Agreement or the
transactions contemplated hereby, Parent shall provide AMHN with a copy of the
proposed disclosure no less than 48 hours before such disclosure is made and,
unless otherwise advised by counsel, shall endeavor to incorporate into such
disclosure the substance of any reasonable comments or changes that AMHN may
request.
(c) Prior
to the Closing, except as contemplated by this Agreement, there shall be no
stock dividend, stock split (other than the Share Split), recapitalization, or
exchange of shares with respect to or rights, options or warrants issued in
respect of Parent Common Stock after the date hereof and there shall be no
dividends or other distributions paid on Parent Common Stock after the date
hereof, in each case through and including the Closing. Parent and Merger Sub
shall conduct no business, prior to the Closing, other than in the ordinary
course of business or as may be necessary in order to consummate the
transactions contemplated hereby. Prior to the Closing, Parent and Merger Sub
shall not take any action or enter into any agreement to issue or sell any
shares of capital stock of Parent or Merger Sub or any securities convertible
into or exchangeable for any shares of capital stock of Parent or Merger Sub or
to repurchase, redeem or otherwise acquire any of the issued and outstanding
capital stock of Parent or Merger Sub without the prior written consent of
AMHN.
(d) Prior
to the Closing, Parent and Merger Sub shall conduct their business only in the
usual and ordinary course and the character of such business shall not be
changed nor shall any different business be undertaken. Prior to the Closing,
except as contemplated hereby, Parent and Merger Sub shall not incur any
liabilities or obligations without the prior written consent of the
Company.
(e) Prior
to the Closing, Parent will timely file all required Parent SEC Documents and
comply in all material respects with the requirements of the Securities Act, the
Exchange Act, FINRA rules and regulations and state and regional securities laws
and regulations.
(f) Prior
to the Closing, Parent shall take such actions as shall be necessary to cancel
any liabilities of Parent so that Parent shall have no liabilities at the
Effective Time other than those contemplated in the Parent Financial
Statements.
(g) Prior
to the Closing, Parent shall have effected the Share Split.
(h) Prior
to the Closing, Parent shall have accepted for cancellation 1,935,000 shares
held of record by a principal shareholder (the “Share Cancellation”) and,
immediately after giving effect to the Closing, shall issue that shareholder
(the “Canceling Shareholder”) 403,802 shares of common stock (the “New Post
Merger Shares”) having the piggy-back registration rights that are set forth in
the Form of Registration Rights Agreement attached hereto as Exhibit
C.
8.
Conditions
Precedent to the Obligations of AMHN
. All obligations of AMHN
under this Agreement are subject to the fulfillment, prior to or as of the
Closing, of each of the following conditions:
(a) The
representations and warranties by or on behalf of Parent, Merger Sub and each
Officer contained in this Agreement or in any certificate or document delivered
pursuant to the provisions hereof or in connection herewith shall be true and
correct in all material respects at and as of the Closing as though such
representations and warranties were made at and as of such time.
(b) Parent
and Merger Sub shall have performed and complied with all covenants, agreements,
and conditions set forth or otherwise contemplated in, and shall have executed
and delivered all documents required by, this Agreement to be performed or
complied with or executed and delivered by them prior to or at the
Closing.
(c) The
directors of Parent and the directors and sole stockholder of Merger Sub shall
have approved in accordance with applicable state corporation law the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein.
(d) On
or before the Closing Date, Parent and Merger Sub shall have delivered to the
Company certified copies of resolutions of the stockholders and the directors of
Merger Sub and Parent approving and authorizing the execution, delivery and
performance of this Agreement and authorizing all of the necessary and proper
action to enable Parent and Merger Sub to comply with the terms of this
Agreement, including the appointment of the Company’s nominees to the Board of
Directors of Parent and all matters outlined or contemplated
herein.
(e) The
Merger shall be permitted by applicable state law and otherwise and Parent shall
have sufficient shares of its capital stock authorized to complete the Merger
and the transactions contemplated hereby.
(f) At
Closing, all of the directors and officers of Parent shall have resigned in
writing from their positions as directors and officers of Parent effective upon
the election and appointment of AMHN nominees, and the directors of Parent shall
take such action as may be necessary or desirable regarding such election and
appointment of the Company nominees.
(g) At
the Closing, all instruments and documents delivered by Parent or Merger Sub,
including to the Company Stockholders pursuant to the provisions hereof shall be
reasonably satisfactory to legal counsel for AMHN.
(h) The
shares of Parent capital stock to be issued to AMHN Stockholders at Closing will
be validly issued, nonassessable and fully paid under Utah corporation
law.
(i)
AMHN shall have received all necessary and required approvals and consents from
required parties and from its stockholders.
(j) AMHN
shall have completed a due diligence review of Parent to AMHN’s reasonable
satisfaction.
(k) All
outstanding rights to acquire the capital stock of the Parent shall have been
exercised in full, and there shall be no outstanding rights to acquire any
shares of the capital stock of the Parent, including, without limitation,
through payment of the exercise price, conversion of any convertible securities
or repayment of indebtedness.
(l) At
the Closing, Parent and Merger Sub shall have delivered to AMHN an
opinion of Parent’s legal counsel dated as of the Closing to the effect
that:
(i) Each
of Parent and Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation;
(ii) This
Agreement has been duly authorized, executed and delivered by Parent and Merger
Sub and is a valid and binding obligation of Parent and Merger Sub enforceable
in accordance with its terms;
(iii) Parent
and Merger Sub each through its Board of Directors and stockholders have taken
all corporate action necessary for performance under this
Agreement;
(iv) The
documents executed by Parent and Merger Sub and delivered to AMHN hereunder are
valid and binding in accordance with their terms and vest in AMHN Stockholders
all right, title and interest in and to the shares of Parent’s capital stock to
be issued pursuant to Section 2 hereof, and the shares of Parent capital stock
when issued will be duly and validly issued, fully paid and nonassessable;
and
(v) Parent
and Merger Sub each has the corporate power to execute, deliver and perform
under this Agreement.
(m) Compliance
with applicable securities laws in connection with the proposed issuance of
Parent Common Stock in the Merger, including compliance activities related to a
Form 8-K filing in conjunction with the Merger.
(n) Receipt
of all necessary governmental and third party consents.
(o) Prior
to the Closing, Parent shall have effected the Share Split.
(p) Prior
to the Closing, Parent shall have effected the Share Cancellation, and,
immediately after giving effect to the Closing, shall issue to the Canceling
Shareholder the New Post Merger Shares having the piggy-back registration rights
that are set forth in the Form of Registration Rights Agreement attached hereto
as Exhibit C.
9.
Conditions
Precedent to the Obligations of Parent and Merger Sub
. All obligations of
Parent and Merger Sub under this Agreement are subject to the fulfillment, prior
to or at the Closing, of each of the following conditions:
(a) The
representations and warranties by AMHN contained in this Agreement or in any
certificate or document delivered pursuant to the provisions hereof shall be
true and correct in all material respects at and as of the Closing as though
such representations and warranties were made at and as of such
times.
(b) AMHN
shall have performed and complied with, in all material respects, all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing;
(c) The
directors and the shareholders of AMHN shall have approved in accordance with
applicable state corporation law the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein.
(d) AMHN
shall deliver an opinion of its legal counsel to the effect that:
(i)
AMHN is a corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation;
(ii) This
Agreement has been duly authorized, executed and delivered by AMHN and the Major
Shareholders and is a valid and binding obligation of AMHN and the Major
Shareholders enforceable in accordance with its terms;
(iii) The
Board of Directors and stockholders of AMHN have taken all corporate action
necessary for performance under this Agreement; and
(iv)
AMHN has the corporate power to execute, deliver and perform under this
Agreement.
(v) All
of the shares of AMHN capital stock that are currently issued and outstanding
are validly issued, fully paid and nonassessable.
(e) AMHN
shall have delivered verified assurances in form and substance acceptable to
Parent and Merger Sub that at Closing AMHN has at least seventy-five (75) office
locations with confirmation of commitments of carriage for AMHN
content..
(f) AMHN
shall have received assurances from the Major Shareholders, in form reasonably
satisfactory to Parent, of up to $500,000 funding to be made available to
AMHN if and as needed to assure not less than six (6) months of the
Company’s operations.
(g) Prior
to the Closing, Parent shall have effected the Share Cancellation, and,
immediately after giving effect to the Closing, shall issue to the Canceling
Shareholder the New Post Merger Shares having the piggy-back registration rights
that are set forth in the Form of Registration Rights Agreement attached hereto
as Exhibit C.
10.
Survival
and Indemnification
. All representations, warranties, covenants and
agreements contained in this Agreement, or in any schedule, certificate,
document or statement delivered pursuant hereto, shall survive (and not be
affected in any respect by) the Closing, any investigation conducted by any
party hereto and any information which any party may receive. Notwithstanding
the foregoing, the representations and warranties contained in or made pursuant
to this Agreement shall terminate on, and no claim or action with respect
thereto may be brought after, the first anniversary of the Effective Date. The
representations and warranties which terminate on the first anniversary of the
Effective Date, and the liability of any party with respect thereto pursuant to
this Section 10, shall not terminate with respect to any claim, whether or
not fixed as to liability or liquidated as to amount, with respect to which the
appropriate party has been given written notice setting forth the facts upon
which the claim for indemnification is based prior to the first anniversary of
the Effective Date, as the case may be. Notwithstanding the
foregoing, claims as to fraud and intentional misrepresentations shall survive
until the expiration of the applicable statue of limitations.
(a) The
parties shall indemnify each other as set forth below:
(b) Subject
to the provisions of this Section 10, each of the Chief Executive Officer,
Parent and Merger Sub (individually and collectively, the “
Parent
Group
”) shall jointly and severally indemnify and hold
harmless AMHN and AMHN’s past, present and future
officers, directors, stockholders, employees, attorneys, and agents (and after
the Closing, the Chief Executive Officer shall also indemnify Parent)
(collectively, “
AMHN Indemnified
Parties
”) from and against any Losses (as defined below) including,
without limitation, any reasonable legal expenses to the extent arising from,
relating to or otherwise in respect of (i) any inaccuracy or breach of any
representation or warranty of the Parent Group contained in Sections 5 or 13 of
this Agreement (as of the date hereof, or as of the Closing) or of any
representation, warranty or statement made in any schedule, certificate,
document or instrument delivered by the Parent Group or any officer or any of
them at or in connection with the Closing, in each case without giving effect to
any materiality qualification (including qualifications indicating accuracy in
all material respects), or (ii) the breach by the Parent Group, of or failure by
the Parent Group to perform any of its covenants or agreements contained in this
Agreement; provided, however, that (A) no member of the Parent Group shall be
responsible for any Losses with respect to the matters referred to in clauses
(i) or (ii) of this Section 10(a), until the cumulative aggregate amount of all
such Losses exceeds $10,000, in which event the Parent Group shall then be
liable for all such cumulative aggregate Losses, including the first $10,000.
Each member of the Parent Group specifically acknowledges and agrees that any
member of AMHN Indemnified Party may proceed against any member of
the Parent Group under this Section 10 without contemporaneously, or at any
time, proceeding against any other member of the Parent Group. As used herein,
“
Losses
”
shall mean any and all demands, claims, complaints, actions or causes of action,
suits, proceedings, investigations, arbitrations, assessments, losses, damages,
payments, liabilities or obligations (including those arising out of any action,
such as any settlement or compromise thereof or judgment or award therein) and
any fees, costs and expenses related thereto, and the term “
legal
expenses
” shall mean the fees, costs and expenses of any kind incurred by
any party indemnified herein and its counsel in investigating, preparing for,
defending against or providing evidence, producing documents or taking other
action with respect to any threatened or asserted claim.
(c) Subject
to the provisions of this Section 10, AMHN and the Major Shareholders
jointly and severally shall indemnify and hold harmless each member of the
Parent Group (collectively, the “
Parent Group
Indemnified Parties
”) from and against any Losses (including, without
limitation, any reasonable legal expenses) to the extent arising from, relating
to or otherwise in respect of (i) the inaccuracy or breach of any representation
or warranty of AMHN contained in Sections 4 or 13 of this
Agreement (as of the date hereof, or as of the Closing) or of any
representation, warranty or statement made in any schedule, certificate document
or instrument delivered by the Company or an officer of AMHN at or in connection
with the Closing, in each case without giving effect to any materiality
qualification (including qualifications indicating accuracy in all material
respects), or (ii) the breach by AMHN of or failure by AMHN to
perform any of its covenants or agreements contained in this Agreement;
provided, however, that AMHN shall not be responsible for any Losses with
respect to the matters until the cumulative aggregate amount of such Losses
exceeds $10,000, in which event AMHN shall then be liable for all such
cumulative aggregate Losses, including the first $10,000.
(d) (i) If
the claim involves a third party claim (a “
Third Party
Claim
”), then the Indemnifying Party shall have the right, at its sole
cost, expense and ultimate liability regardless of the outcome, and through
counsel of its choice (which counsel shall be reasonably satisfactory to the
Indemnified Party), to litigate, defend, settle or otherwise attempt to resolve
such Third Party Claim; provided, however, that if in the Indemnified Party’s
reasonable judgment a conflict of interest may exist between the Indemnified
Party and the Indemnifying Party with respect to such Third Party Claim, then
the Indemnified Party shall be entitled to select counsel of its own choosing,
reasonably satisfactory to the Indemnifying Party, in which event the
Indemnifying Party shall be obligated to pay the fees and expenses of such
counsel.
(ii) Notwithstanding
the preceding paragraph, if in the Indemnified Party’s reasonable judgment no
such conflict exists, the Indemnified Party may, but will not be obligated to,
participate at its own expense in a defense of such Third Party Claim by counsel
of its own choosing, but the Indemnifying Party shall be entitled to control the
defense unless (A) in the case where only money damages are sought, the
Indemnified Party has relieved the Indemnifying Party from liability with
respect to the particular matter or (B) in the case where equitable relief is
sought, the Indemnified Party elects to participate in and jointly control the
defense thereof.
(iii) Whenever
the Indemnifying Party controls the defense of a Third Party Claim, the
Indemnifying Party may only settle or compromise the matter subject to
indemnification without the consent of the Indemnified Party if such settlement
includes a complete release of all Indemnified Parties as to the matters in
dispute and relates solely to money damages. The Indemnified Party will not
unreasonably withhold consent to any settlement or compromise that requires its
consent.
(iv) In
the event the Indemnifying Party fails to timely defend, contest, or otherwise
protect the Indemnified Party against any such claim or suit, the Indemnified
Party may, but will not be obligated to, defend, contest, or otherwise protect
against the same, and make any compromise or settlement thereof, and in such
event, or in the case where the Indemnified Party jointly controls such claim or
suit, the Indemnified Party shall be entitled to recover its costs thereof from
the Indemnifying Party, including attorneys’ fees, disbursements and all amounts
paid as a result of such claim or suit or the compromise or settlement
thereof.
(v) The
Indemnified Party shall cooperate and provide such assistance as the
Indemnifying Party may reasonably request in connection with the defense of the
matter subject to indemnification and in connection with recovering from any
third parties amounts that the Indemnifying Party may pay or be required to pay
by way of indemnification hereunder.
(e) The
amount of Losses for which indemnification is provided hereunder shall be
computed without regard to any insurance recovery related to such
losses.
11.
Nature of
Representations
. All of the parties hereto are executing and
carrying out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement and the other documents delivered at the Closing and not upon any
representation warranty, agreement, promise or information, written or oral,
made by the other party or any other person other than as specifically set forth
herein.
12.
Documents
at Closing
. At the Closing, the following documents shall be
delivered:
(a)
AMHN will deliver, or will cause to be delivered, to Parent the
following:
(i)
a certificate executed by the President of AMHN to the
effect that all representations and warranties made by AMHN under this Agreement
are true and correct as of the Closing, the same as though originally given to
Parent or Merger Sub on said date;
(ii)
a certificate from the State of Delaware dated within five business
days of the Closing to the effect that AMHN is in good standing under the laws
of Delaware;
(iii) such
other instruments, documents and certificates, if any, as are required to be
delivered pursuant to the provisions of this Agreement;
(iv) executed
copy of the Certificate of Merger for filing in Delaware;
(v)
certified copies of resolutions adopted by the stockholders and
directors of AMHN authorizing the Merger;
(vi) all
other items, the delivery of which is a condition precedent to the obligations
of Parent and Merger Sub, as set forth herein; and
(vii) the
legal opinion required by Section 9(d) hereof.
(b) Parent
and Merger Sub will deliver or cause to be delivered to AMHN:
(i)
stock certificates representing those securities of Parent to
be issued as a part of the Merger as described in Section 2 hereof;
(ii)
a certificate of the President of Parent and Merger Sub,
respectively, to the effect that all representations and warranties of Parent
and Merger Sub made under this Agreement are true and correct as of the Closing,
the same as though originally given to the Company on said date;
(iii) certified
copies of resolutions adopted by the stockholders and the Board of Directors of
Merger Sub and the Board of Directors of Parent authorizing the Merger and all
related matters;
(iv) certificates
from the jurisdiction of incorporation of Parent and Merger Sub dated within
five business days of the Closing Date that each of said corporations is in good
standing under the laws of said state;
(v)
executed copy of the Certificate of Merger for filing in
Delaware;
(vi) opinion
of Parent’s counsel as described in Section 8(l) above;
(vii) such
other instruments and documents as are required to be delivered pursuant to the
provisions of this Agreement;
(viii) written
resignation of all of the officers and directors of Parent and Merger Sub and
the written appointment of AMHN’s nominees as directors and officers of Parent;
and
(ix) all
other items, the delivery of which is a condition precedent to the obligations
of AMHN, as set forth in Section 9 hereof.
13.
Finder’s
Fees
. Parent and Merger Sub, jointly and severally, represent
and warrant to AMHN, and AMHN and each of the Major Shareholders, jointly and
severally, represents and warrants to each of the Parent and Merger Sub, that
none of them, or any party acting on their behalf, has incurred any liabilities,
either express or implied, to any “broker” or “finder” or similar person in
connection with this Agreement or any of the transactions contemplated
hereby.
14.
Post-Closing
Covenants
.
(a)
Financial
Statements
. After the Closing, Parent shall timely file a
current report on Form 8-K to report the Merger. In addition, for a period of 12
months following the Closing, Parent shall use its commercially reasonable
efforts to timely file all reports and other documents required to be filed by
Parent under the Securities Exchange Act of 1934.
(b)
Standard
and Poor’s
. If required, Parent shall use its commercially
reasonable efforts to apply for listing with Standard and Poor’s Information
Service and Blue Sky filings.
(c)
Confidentiality
. Each
Chief Executive Officer hereby agrees that, after the Closing, he or she shall
not publicly disclose any confidential information of either Parent, Merger Sub
or AMHN, and that he or she shall not make any public statement or announcement
regarding the Merger or the business, financial condition, prospects or
operations of Parent or AMHN, without the prior written consent
of AMHN (or, after the Effective Date, Parent).
15.
Miscellaneous
.
(a)
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.
(b)
Waiver
. Any
failure on the part of any party hereto to comply with any of its obligations,
agreements or conditions hereunder may be waived in writing by the party (in its
sole discretion) to whom such compliance is owed.
(c)
Termination
. This
Agreement and all obligations hereunder (other than those under Section 15(l))
may be terminated (i) after September 30, 2009 at the discretion of either party
if the Closing has not occurred by August 31, 2009 (unless the
Closing date is extended with the consent of both AMHN and Parent)
for any reason other than the default hereunder by the terminating party, (ii)
at any time by the non-breaching party if any of the representations and
warranties or other agreements made herein by the other party have been
materially breached, or (iii) by mutual written consent of Parent
and AMHN.
(d)
Amendment
. This
Agreement may be amended only in writing as agreed to by all parties
hereto.
(e)
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 to the last known address
of the noticed party.
(f)
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.
(g)
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.
(h)
Binding
Effect
. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
(i)
Entire
Agreement
. This Agreement and the attached Exhibits, including
the Certificate of Merger, which is attached hereto as
Exhibit A
, is
the entire agreement of the parties covering everything agreed upon or
understood in the transaction. There are no oral promises, conditions,
representations, understandings, interpretations or terms of any kind as
conditions or inducements to the execution hereof.
(j)
Time
. Time
is of the essence.
(k)
Severability
. If
any part of this Agreement is deemed to be unenforceable, the balance of the
Agreement shall remain in full force and effect.
(l)
Responsibility
and Costs
. Whether the Merger is consummated or not, all fees,
expenses and out-of-pocket costs, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred by the
parties hereto shall be borne solely and entirely by the party that has incurred
such costs and expenses, unless the failure to consummate the Merger constitutes
a breach of the terms hereof, in which event the breaching party shall be
responsible for all costs of all parties hereto. The indemnification provisions
of Section 10 shall not apply in the event of the termination of this Agreement
prior to the Closing as a result of a breach hereof by either
party.
(m)
Inapplicability
of Indemnification Provisions
. The provisions contained in
Parent’s Articles of Incorporation and/or By-laws for indemnifying officers and
directors of that AMHN shall not apply to the representations and warranties
made herein by each Chief Executive Officer or the officers of
Parent.
(n)
Applicable
Law
. This Agreement shall be construed and governed by the
internal laws of the State of Delaware.
(o)
Jurisdiction
and Venue
. Each party hereto irrevocably consents to the
jurisdiction and venue of the state or federal courts located in Los Angeles
County, State of California, in connection with any action, suit, proceeding or
claim to enforce the provisions of this Agreement, to recover damages for breach
of or default under this Agreement, or otherwise arising under or by reason of
this Agreement.
[Signature
Pages Follow]
IN WITNESS WHEREOF
, the
parties have executed this Agreement the day and year first above
written.
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CROFF
ENTERPRISES, INC.
By:
/s/
Gregory R. Woodhill
Name:
Gregory R. Woodhill
Title:
Chief Executive Officer
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AMHN
ACQUISITION CORP.
By:
/s/
Gregory R. Woodhill
Name:
Gregory R. Woodhill
Title:
Chief Executive Officer
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AMERICA’S
MINORITY HEALTH NETWORK, INC.
By:
/s/
Robin Tjon
Name: Robin
Tjon
Title: Vice
President, Secretary, and Sole Director
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MAJOR
SHAREHOLDERS:
SADDLE
RANCH PRODUCTIONS, INC. NETWORK, INC.
By:
/s/
Kimberly Sarubbi
Name: Kimberly
Sarubbi
Title: President
SEATAC
DIGITAL RESOURCES, INC. NETWORK, INC.
By:
/s/
Robin Tjon
Name: Robin
Tjon
Title: President
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