SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 24, 1998
ACADIA NATIONAL HEALTH SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
COLORADO
(State or Other Jurisdiction of Incorporation)
0-28976 010509781
(Commission File Number) (I.R.S. Employer Identification Number)
95 Park Street, Lewiston, Maine 04240
(Address of Principal Executive Offices) (Zip Code)
(207) 777-3423
(800) 274-9185
(Registrant's Telephone Number, Including Area Code)
<PAGE>
INFORMATION INCLUDED IN THIS REPORT
ITEM 1 CHANGES IN CONTROL OF REGISTRANT
Not Applicable
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
(a) On September 8, 1998, the Registrant entered into a Contract for Sale of
Assets agreement with Northeast Medical Business Group, Inc., a New Hampshire
corporation (hereinafter referred to as "Northeast" or "Company") and Frank
and Martha DeJohn, sole shareholders of the Company, to acquire selected
assets and a limited list of liabilities of the Company. The Registrant
acquired all accounts receivables, furniture & equipment, computer hardware
and operating systems as well as all software licenses along with various
inventories an prepaid assets. In consideration, the Registrant paid a
combination of $300,000 in cash and selected bank, lease and trade debt
assumption, along with one hundred thousand (100,000) shares of the
Registrant's common stock valued at $1.12 per share. A portion of the cash
used in the acquisition was supplied by a five (5) year term loan for $200,000
at variable market rates obtained from Northeast Bank FSB, Auburn, Maine 04211
(no relationship with acquisition).
(b) All assets acquired were owned by or under lease to Northeast Medical
Business Group, Inc., and will continue to be used in the operations of
medical billing, accounts receivable management and medical practice
management.
ITEMS 3 THROUGH 4, 6 AND THROUGH 9 NOT APPLICABLE.
ITEM 5. OTHER EVENTS.
(i) Reference is made to the press release issued to the public by the
Registrant on September 9, 1998, the text of which is attached hereto as
Exhibit 99.1, for a description of the events reported pursuant to this
Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
---------------------
As of the date of the filing of this Current Report
on Form 8-K, the Registrant's Independent Auditor, Berry,
Dunn, McNeil & Parker, is completing its fiscal year end
audit (September 30, 1998) of the Registrant's financial
statements on a consolidated basis that will provide for
the financial statements required by this Item 7(a).
In accordance with Item 7(a)(4) of Form 8-K, such financial
statements will be filed within the Registrant's Form
10KSB for FY 98, no later than December 31, 1998.
(b) Pro Forma Financial Information.
--------------------------------
The folowing represents the pro forma financial statement
required by this Item 7(b).
<TABLE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
PROFORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
(Unaudited)
<CAPTION>
ACADIA NORTHEAST
NATIONAL MEDICAL PROFORMA ADJUSTED
HEALTH BUSINESS ADJUSTMENTS BALANCE
SYSTEMS, INC. GROUP, INC.
(NOTE B) SEPT. 30, 1998
<S> <C> <C> <C> <C>
CURRENT ASSETS:
CASH-OPERATING $ 2,332 $ 1,915 $ (1,915) A $ 2,332
ACCOUNTS RECEIVABLE 855,657 288,312 (150,482) B 993,487
NOTES AND INTEREST RECEIVABLE 36,430 36,430
OTHER CURRENT ASSETS 56,667 56,667
TOTAL CURRENT ASSETS 951,086 290,227 (152,397) 1,088,916
PROPERTY & EQUIPMENT, NET 214,921 57,393 97,607 B 369,921
DUES FROM OFFICERS 192,404 (192,404) A
INTANGIBLE ASSETS, NET 34,253 920 66,868 B 102,041
OTHER ASSETS 52,400 7,968 232 B 60,600
$ 301,574 258,685 (27,697) 532,562
TOTAL ASSETS $ 1,252,660 548,912 (180,094) 1,621,478
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 72,631 33,939 (99,012) B,C 7,558
NOTES PAYABLE, CURRENT PORTION 300,378 (242,778) A 57,600
LINE OF CREDIT 542,737 - 542,737
ACCRUED EXPENSE 56,279 21,008 32,450 E 109,737
TOTAL CURRENT LIAB. 671,647 355,325 (309,340) 717,632
LONG TERM LIABILITIES:
LONG TERM DEBT $ 126,849 56,980 6,880 B 190,709
OTHER NON-CUR. LIAB. 66,789 - 80,443 B 147,232
TOTAL LIABILITIES $ 865,285 412,305 (222,017) 1,055,573
STOCKHOLDERS' EQUITY:
COMMON STOCK 276,640 1,000 111,000 B 388,640
TREASURY STOCK (1,272) (1,272)
PAID IN CAPITAL 43,961 - - 43,961
RETAINED EARNINGS 68,046 135,607 (69,077) 134,576
TOTAL EQUITY $ 387,375 136,607 41,923 565,905
TOTAL LIABILITIES &
EQUITY $ 1,252,660 548,912 (180,094) 1,621,478
</TABLE>
See Accompanying Notes to
Financial Statements
<TABLE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
STATEMENT OF INCOME
FOR THE TWELVE MONTHS
ENDED SEPTEMBER 30, 1998
<CAPTION>
ACADIA NORTHEAST
NATIONAL MEDICAL PROFORMA ADJUSTED
HEALTH BUSINESS ADJUSTMENTS BALANCE
SYSTEMS, INC. GROUP, INC. SEPT. 30, 1998
1998 1998
<S> <C> <C> <C> <C>
REVENUES: $ 1,112,692 $ 519,126 1,631,818
DIRECT COSTS $ 388,273 224,250 612,523
GROSS PROFIT $ 724,419 $ 294,876 1,019,295
SELLING, GENERAL AND ADMIN EXP $ 610,317 148,479 758,796
DEPRECIATION AND AMORTIZATION EXP $ 43,720 - 47,417 D 91,137
INCOME BEFORE INCOME TAXES $ 70,382 146,397 (47,417) 169,362
PROVISION FOR INCOME TAXES $ 17,070 - 32,450 E 49,520
NET INCOME $ 53,312 146,397 (14,967) 119,842
NET INCOME (LOSS) PER SHARE 0.031654
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING F 3,837,987
</TABLE>
See Accompanying Notes to
Financial Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
The accompanying unaudited pro forma condensed combined balance sheet as of
September 30, 1998 and unaudited pro forma condensed combined statements of
income for the year ended September 30, 1998 are presented to reflect the
acquisition of assets and business operations of Northeast Medical Business
Group, Inc. for a purchase price of $25,000 in cash and 100,000 shares of the
Company's common stock valued at $1.12 per share. The acquisitions were
effected pursuant to the terms of the Contract for Sale of Assets dated
September 8, 1998. The acquisitions were accounted for under the purchase
method of accounting. The accompanying unaudited pro forma condensed combined
financial statements reflects the effects of a preliminary allocation of the
purchase price.
Notes to Unaudited Pro forma Condensed Combined Financial Information
A. Adjustments to remove those certain assets and liabilities of Northeast
Medical Business Group that were not included in the acquisition under the
Contract for Sale of Assets dated September 8, 1998 (see Note B.)
B. To record the acquisition of Northeast Medical Billing, Acadia National
Health Systems acquired certain assets for total consideration of $137,000
and assumed certain liabilities not to exceed $275,000. Cash consideration
amounted to $25,000 with stock consideration of an additional $112,000. Net
assets acquired and liabilities assumed were as follows:
Accounts Receivable: $ 137,830
Equipment Deposits 8,200
Fixed assets and software 155,000
Liabilities assumed (248,765)
Fair Market Value of Net Assets Acquired 52,565
Goodwill of $84,735 has been recognized which represents the excess of the
purchase price of $137,000 over the fair market value of the net assets
acquired of $52,265.
Pro forma Condensed Combined Income Statement Adjustments
C. Northeast Medical Billing income for the year ended September 30, 1998 has
been combined with Acadia National Health Systems, Inc.
D. Amortization of goodwill over 5 year life. Fixed assets and software are
depreciated over lives ranging from 5 to 10 years.
E. Provisions for income taxes at an estimated income tax rate of 28%.
F. Weighted average shares increased by 100, 000 shares as if these shares were
issued on October 1, 1997 and were outstanding for the entire year.
(c) Exhibits
--------
See Index to Exhibits
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Mark T. Thatcher
DATE: November 23, 1998 By: /s/ Mark T. Thatcher
Name: Mark T. Thatcher
Title: Filing Agent
<PAGE>
INDEX TO EXHIBITS
Exhibit Description:
2.1--Contract for Sale of Assets of Northeast Medical Business Group to
Acadia National Health Systems, Inc., dated September 8, 1998;
2.2--Non-Competition, Confidentiality and Non-Solicitation Agreement
between Frank and Martha DeJohn and Acadia National Health Systems, Inc.,
dated September 8, 1998;
5.1--Opinion on Legality of Securities Being Issued to Frank and Martha
DeJohn;
10.1--Board of Directors' Resolution Authorizing Increase of Outstanding
Shares in connection with the issuance of 100,000 shares of common
stock of Acadia National Health Systems, Inc., to Frank and Martha
DeJohn, in joint tenancy w/ right of survivorship;
10.2--Opinion of Counsel with respect to issuance of 100,000 shares of
common stock of Acadia National Health Systems, Inc. to Frank and
Martha DeJohn;
20.1--Board of Director's Resolutions authorizing a term loan in connection
with purchase of selected assets of Northeast Medical Business Group,
Inc. by Acadia National Health Systems, Inc;
20.2--Opinion of Borrower's Counsel;
99.1--Text of press release dated September 9, 1998.
CONTRACT FOR SALE OF ASSETS
THIS AGREEMENT dated as of August 31, 1998, or any time thereafter as mutually
agreed upon by all parties (the "Closing Date") between ACADIA NATIONAL HEALTH
SYSTEMS, INC., a Colorado corporation ("Buyer"), and NORTHEAST MEDICAL
BUSINESS GROUP, INC., a New Hampshire corporation ("Seller").
1. Sale of business assets.
(a) Sale. On the terms and subject to the conditions herein set forth,
Seller shall convey, transfer, assign, and deliver to Buyer, on a going
concern basis, and Buyer shall acquire and accept as provided below, the
following of Seller's assets, properties, business, patents, trademarks, and
goodwill:
(i)current trade receivables as of The Closing Date;
(ii)unbooked receivables as of The Closing Date;
(iii)software licenses as set forth and fully described in Exhibit A
attached hereto;
(iv)furniture and fixtures as set forth and fully described in
Exhibit B attached hereto;
(v)goodwill; and
(vi)all existing service agreements between Seller and its clients.
wherever located, except as provided in paragraph 2, including, without
limitation, all property, tangible or intangible, real, personal, or mixed,
accounts receivable, bank accounts, cash and securities, claims and rights
under contracts (excluding any judgment, award or settlement resulting from
the claim by Seller against Physician Health Care Alliance and CHC
Physicians,) and all books and records relating to such assets and properties
being conveyed, transferred, and assigned hereunder, all as they exist at the
time of closing referred to in paragraph 7.
(b) Disposition of liabilities. Subject to the conditions set forth in
paragraph 1(c) below, from and after the Closing Date, Buyer shall assume,
pay, perform, and discharge $275,000 of debts, obligations, contracts, and
liabilities of Seller, prioritized as follows:
(i)remaining bank debt (estimated to be $94,000);
(ii)equipment leases; and
(iii)remaining debt assumption in current trade payables, to be
identified by Seller and set forth and fully described in Exhibit C attached
hereto,
all as they exist at the Closing Date.
(c) Exceptions. The following are excluded from the assumption of
liabilities provided for in the preceding paragraph:
(1) Income tax. Any liability for the payment of accrued and unpaid
federal and state income taxes of Seller for periods after December 31,
1990;
(2) Leases. Any liability or obligation arising out of or relating
to the Seller's leases covering the properties referred to in paragraph 3(d)
hereof prior to the Closing Date;
(3) Physician Health Care Alliance and CHC Physicians Counterclaim.
Any liability arising out of the counter-claim dated April 30, 1998, between
Physician Health Care Alliance and CHC Physicians, Respondents, and Seller
referred to in paragraph 3(l), including the litigation referred to therein,
to the extent that any such liability relates to the period before The Closing
Date, subject, however, to the provisions of the last paragraph of paragraph
17(g);
(4) Remaining Trade Payables. Any remaining trade payables not
covered by the $275,000 debt assumption "ceiling" as described in paragraph
1(b);
(5) Undisclosed liabilities. Buyer is not acquiring, directly or
indirectly, any liability which is not fully disclosed to it. For purposes of
this agreement, the liabilities disclosed to Buyer shall be those which are
reflected in or reserved against Seller's balance sheets, books of accounts,
and records, as well as contingent liabilities and pending claims as more
fully set forth on Exhibit D attached hereto and incorporated herein by
reference.
(6) Assurance. Seller warrants and represents that Buyer will not at
any time suffer any liability in respect of the foregoing liabilities not
assumed by Buyer.
(d) Conveyances. The conveyance, transfer, assignment, and delivery of
the assets and properties shall be effected by deeds, bills of sale,
endorsements, assignments, drafts, checks, and other instruments of transfer
and conveyance in appropriate form.
(e) Additional documents. Seller shall, at any one or more times after
the Closing Date, upon Buyer's request, do, execute, acknowledge, and deliver
all further acts, deeds, assignments, transfers, conveyances, powers of
attorney, and assurances that are required for the assigning, transferring,
granting, conveying, assuring, and confirming to Buyer, or to its successors
and assigns, or for aiding and assisting in collecting and reducing to
possession, any of or all the assets and properties to be conveyed, to Buyer,
and any of or all the obligations of Seller to be assigned to, and assumed,
paid, performed, and discharged by, Buyer.
2. Composition of purchase price.
On the terms and subject to the conditions herein set forth, Buyer shall issue
and deliver to Seller on the Closing Date:
(a) Common Stock. 100,000 Common Shares, without par value ("Common
Shares"), of Buyer at a price of $1.12 per share, i.e., on a share-for-share
basis, subject to adjustment as provided therein, and containing the other
terms and provisions set forth in Exhibit E attached, registered in the name
of Seller or its nominee; and
(b) Cash. Buyer will issue and deliver to Seller a check in the amount of
$25,000 on the Closing Date, payable to Seller or its nominee.
(c) Excluded property. The following assets and properties shall be
retained by Seller and not be conveyed, transferred, assigned, or delivered
to Buyer:
(1) Securities. The securities (other than shares of affiliates),
including any of Buyer's Common Shares, owned by Seller on the Closing Date;
(2) Income tax. Any liability for the payment of accrued and unpaid
federal and state income taxes of Seller for periods after December 31,
1990;
(3) Tax loss carrybacks. All tax loss carrybacks arising out of
events occurring after December 31, 1992, and any benefits accruing to Seller
therefrom;
(4) Remaining Trade Payables. Any differential balance remaining on
the actual "pay-out" by Buyer to Seller on trade payables as compared to the
$275,000 debt assumption "ceiling" described in paragraph 1(b);
(5) Stock. Corporate shares of Seller held in its treasury;
(6) Cash. Any cash on hand prior to the Closing Date.
(d) Subleases. Provided Buyer is unable to secure an assignment of the
leases referred to in paragraphs 3(f) and (o), Seller covenants and agrees
that it will sublease to Buyer the properties referred to in paragraphs 3(f)
and (o) for the duration of Seller's lease commencing the day after the
Closing Date, and that for a period of 90 days before such period terminates
Buyer may extend the term of such sublease for the balance of the periods of
the leases held by Seller on such properties. The rental under such sublease
for the initial and renewal terms shall be the same as Seller's rentals under
the leases held by it on such properties. Buyer shall furnish an estoppel
certificate from each lessor under such leases, whereby the lessors will
verify that each of the leases is not in default and is in full force and
effect as of the date of closing. Such estoppel certificate shall be in the
form of Exhibit F, and also contain a provision whereby the lessor consents
to the sublease.
(e) Buyer's account. From and after the Closing Date, all operations
relating to Seller's assets, properties, business, patents, trademarks, and
goodwill to be conveyed to Buyer shall be for the account, and accrue to the
benefit, of Buyer, subject to the provisions of paragraph 21.
3. Representations and warranties of seller.
Seller hereby represents and warrants to Buyer as follows:
(a) Duly organized. Seller is a corporation duly organized and existing
in good standing under the laws of New Hampshire, and is entitled to own or
lease its properties and to carry on its business as and in the places where
such properties are now owned, leased, or operated and such business is now
conducted.
(b) Compiled financial statements. Exhibit G consists of (1) statements
of Seller's financial position as of April 30, 1998, and (2) the related
statements of consolidated earnings and consolidated earned surplus for the
four month period ended April 30, 1998, compiled by Robert M. Mucha, CPA, PC,
certified public accountants. All such statements fairly present Seller's
financial position as of the dates indicated and the results of its operations
for the periods indicated in such statements of earnings and earned surplus,
subject to the matters referred to in the certificate of Robert M. Mucha, CPA,
PC included in Exhibit G and to the matters referred to in subparagraph (j)
below and, in the case of such unaudited statement, to audit and usual
year-end adjustments. All such statements have been prepared in conformity
with generally accepted accounting principles consistently applied.
(c) Liabilities. At the Closing Date, the Seller did not have any
absolute or contingent liabilities which are not shown or provided for on the
unaudited statement of Seller's financial position as of April 30, 1998
(Exhibit G), other than the litigation and other matters referred to in
subparagraph (h) below and Exhibit G.
(d) Leases. Exhibit H is a list and brief description of all material
leases and agreements under which Seller and its subsidiaries lease, hold, and
operate real property or significant items of personal property. All such
leases and agreements are assignable except as stated therein, and no material
adverse claim against, or defect in, the interest purportedly leased or given
under or by any such instrument exists. Seller and its subsidiaries are not in
default with respect to any instrument on such list. Seller and its
subsidiaries own outright and have good and marketable title to all the assets
and properties reflected in the unaudited statement of consolidated financial
position of Seller as of April 30, 1998, (Exhibit G), or thereafter acquired,
except those assets and properties sold or otherwise disposed of in the
ordinary course of business after such date, and such properties and assets
are not subject to any mortgages, liens, charges, or encumbrances of any
nature whatsoever or adverse claims with respect thereto, except as set forth
in such list.
(e) Intangible property. Exhibit I is a list of all significant United
States patents, patent applications, and trademarks owned by or registered in
the name of Seller and its subsidiaries or in which Seller or any of its
subsidiaries has any rights, and in each case a brief description of the
nature of such rights. Neither Seller nor any of its subsidiaries is a
licensor in respect of any United States patents, trademarks, trade names, and
applications therefor, except as stated in such list.
(f) Insurance. Exhibit J contains a brief description of all material
policies of fire, liability, and other forms of insurance held by Seller.
(g) Contracts. Seller is not a party to any oral or written: (1) contract
for the employment of any officer or individual employee, the term of which
extends beyond the Closing Date; (2) distributor, sales agency, or advertising
contract which is not terminable on 30 days' or less notice without penalty;
(3) pension, profit-sharing, retirement, or stock purchase plan in effect with
respect to its employees or others; (4) agreement with an institutional
lender; or (5) material contract not made in the ordinary course of business,
except in each case as set forth in Exhibit K.
(h) Litigation. There are no actions, suits, proceedings, or
investigations pending or to the knowledge of the Seller threatened against or
affecting the Seller, in law or in equity, which involve the likelihood of any
judgment or liability not fully covered by insurance in excess of $1,000,000
in the aggregate, or which may result in any material adverse change in the
business, operations, properties, or assets or in the condition, financial or
otherwise, of the Seller, except as follows: The Seller is the Petitioner in
an action entitled Northeast Medical Billing, Petitioner, and Physician Health
Care Alliance and CHC Physicians, Respondents;
Physician Health Care Alliance and CHC Physicians, Respondents, instituted on
April 30, 1998, and now pending before the American Arbitration Association,
a counterclaim in which claimant seeks to recover the sum of $1,000,000
million from Seller under the agreement dated September 5, 1996, between
Physician Health Care Alliance and CHC Physicians and Seller, and in which the
Seller had previously asserted a claim against Physician Health Care Alliance
and CHC Physicians for $300,000.
(i) Accounts receivable. The notes and accounts receivable and the other
receivables of Seller to be assigned to Buyer under this agreement will be
collectible at their book amounts. Said notes and accounts receivable
represent bona fide indebtedness arising out of the ordinary course of
business. They do not represent obligations of Seller's shareholders or
directors or any of Seller's subsidiaries. Seller shall furnish Buyer with a
list of accounts and notes receivable.
(j) Material transactions. Since April 30, 1998, Seller has not entered
into any material transaction other than in the ordinary course of business.
(k) Material changes. Since April 30, 1998, there has not been any
material change in the financial or other condition, of Seller as shown in the
unaudited statement of financial position of Seller as of April 30, 1998
(Exhibit G), other than changes occurring in the ordinary course of business.
(l) Good condition. Upon delivery of possession to Buyer, Seller's
furniture, fixtures, equipment and machinery will be in reasonably good repair
and working order, capable of producing sound and merchantable service. This
warranty, however, shall not be deemed to apply to the condition of any
furniture, fixtures, machinery or equipment not in use in the ordinary course
of business on the Closing Date.
(m) Investment purpose. Seller is acquiring for investment, and not with
a view to the sale or distribution thereof, the Common Shares to be delivered
hereunder to Seller, and any Options to Purchase Common Shares issuable upon
their conversion. Seller shall not sell or otherwise dispose of any note
acquired hereunder unless a registration statement under the Securities Act
of 1933, as amended, is in effect with respect thereto and Seller has duly
complied with the Securities Act and all applicable regulations thereunder, or
Seller has received an opinion from Purchaser's counsel that the contemplated
sale or other disposition of such notes will not require registration under
the Securities Act.
(n) Values. The unaudited statement of Seller's financial position as of
the Closing Date to be delivered to Buyer as provided in paragraph 8, as
compiled by Robert M. Mucha, CPA, PC, will be true and correct. The items
which will be included in such unaudited statement under the captions
"Accounts Receivable" and "Furniture and Fixtures" are the same items included
on the unaudited statement as of April 30, 1998. These items will have
current value or will be items which are properly deferrable to future
operations in accordance with generally accepted accounting practice. The
certificate of Robert M. Mucha, CPA, PC with respect to such compiled
statement shall be with qualification.
(o) Authorization. Seller's Board of Directors has approved this
agreement and the transactions contemplated herein and has authorized the
execution and delivery of this agreement by Seller. The conveyance,
assignment, transfer, and delivery of the assets, properties, business,
patents, trademarks, and goodwill of Seller have been consented to in writing
by the holders of record of all the Common Shares, without par value, of
Seller, which are the Seller's only classes of shares entitled to vote
thereon.
4. Representations and warranties of buyer.
Buyer represents and warrants to Seller as follows:
(a) Duly organized. Buyer is a corporation duly organized and existing in
good standing under the laws of Colorado, and is entitled to own or lease its
properties and to carry on its business as and in the places where such
properties are now owned, leased, or operated and such business is now
conducted.
(b) Stock. The aggregate number of Buyer's shares consists of 40,000,000
million Common Shares, par value $0 per share, of which 3,733,987 shares
(including 48,000 shares held in the treasury) are issued and outstanding.
There are not outstanding any options, rights, or warrants entitling the
holder thereof to purchase shares of Buyer or any securities which are
convertible into or exchangeable for such shares.
(c) Financial statements. Buyer has furnished Seller with copies of the
following financial statements: Buyer's Annual Report for the year ended
September 27, 1997, containing, among other things, statements of its
financial condition as of September 27, 1997 and June 26, 1996, and the
related statements of earnings and earnings retained for use in business for
the two years ended September 27, 1997, certified by Berry, Dunn, McNeil &
Parker, certified public accountants. Annexed hereto as Exhibit L is an
unaudited statement of Buyer's financial condition as of June 30, 1998, and a
related unaudited statement of earnings and earnings retained for use in
Buyer's business for the nine months then ended. All such statements present
fairly Buyer's financial position as of the dates indicated and the results of
Buyer's operations for the periods indicated in such statements of earnings
and earnings retained for use in the business, subject in the case of such
unaudited statements to audit and usual year-end adjustments. All such
statements have been prepared in conformity with generally accepted
accounting principles.
(d) Liabilities. At June 30, 1998, neither Buyer nor any of its
subsidiaries had any absolute or contingent liabilities which are not shown or
provided for on the unaudited statement of Buyer's financial position as of
June 30, 1998, (Exhibit L).
(e) Contracts. Buyer is not a party to any written or oral: (1) contract
for the employment of any officer or individual employee, the term of which
extends beyond December 31, 2002; (2) distributor or sales agency or
advertising contract which is not terminable on 30 days' or less notice
without penalty; (3) contract with a labor union; (4) contract continuing over
a period of more than one year for the future purchase of materials, supplies,
or equipment under which Buyer has a commitment in excess of $100,000; (5)
contract continuing over a period of more than one year from its date for
services or for the future sale or purchase of products or raw materials; (6)
pension, profit-sharing, retirement, or stock purchase plan in effect with
respect to its employees or others; (7) agreement with an institutional
lender; or (8) material contract not made in the ordinary course of business,
except in each case as set forth in information which Buyer has furnished to
Seller.
(f) Litigation. No actions, suits, proceedings, or investigations, in law
or equity, are pending, or to Buyer's knowledge are threatened against or
affecting, Buyer or its subsidiaries, which involve the likelihood of any
judgment or liability not fully covered by insurance exceeding a total of
$300,000, or which may result in any material adverse change in the business,
operations, properties, assets, or financial or other condition of Buyer and
its subsidiaries.
(g) Taxes. The amounts set up as provisions for taxes on the unaudited
statement of Buyer's financial position as of June 30, 1998 (Exhibit L), are
sufficient for the payment of all accrued and unpaid federal, state, county,
and local taxes of Buyer and its subsidiaries, whether or not disputed, for
the nine months ended on such date and for all fiscal years prior thereto.
Federal income tax returns of Buyer have been examined by the Internal Revenue
Service for all past fiscal years through the fiscal year ended September 27,
1997.
(h) Material transactions. Since June 30, 1998, Buyer has not entered
into any material transaction other than in the ordinary course of business.
(i) Material changes. There has been no material change in the financial
or other condition, of Buyer as shown or reflected on the unaudited statement
of Buyer's financial condition as of June 30, 1998, (Exhibit L), other than
changes occurring in the ordinary course of business.
(j) Securities. The Common Shares deliverable to Seller, when issued and
delivered as provided herein, will be Buyer's validly issued and outstanding
shares, fully paid and nonassessable by Buyer. The Common Shares issuable upon
exercise of options will be duly authorized and reserved and, when issued upon
such conversions, will be Buyer's validly issued and outstanding Common
Shares, fully paid and nonassessable by Buyer.
(k) Authorization. Buyer's Board of Directors has approved this agreement
and authorized its reporting to the Buyer's shareholders as provided below.
5. Access to records.
(a) Available material. Before the Closing Date, the parties' officers
and accredited representatives shall each have full access to the plants,
properties, books, accounts, and records of every kind, including, without
limitation, the other's monthly balance sheets and income and operating
statements, and each will furnish the other with all additional financial and
operating data and other information as to its business and properties that is
from time to time reasonably requested. Each party shall authorize and direct
its respective independent auditors to make available to the other party any
information, including access to work papers, requested by such party. Each
party may also have representatives present at the taking of inventories by
the other.
(b) Confidentiality. Buyer and Seller mutually acknowledge that, pursuant
to their respective rights to inspect the other's plants, properties, books,
accounts and records, as above provided, they may become privy to the other's
confidential information, and that communication of such confidential
information to third parties (whether such communication is authorized by
Buyer or Seller respectively or otherwise) could damage the other's business
after the transaction is completed. Buyer and Seller therefore mutually agree
to take reasonable steps to insure that such information about the other,
obtained by Buyer or Seller respectively, or any of their respective
employees, officers, agents, attorneys, or other accredited representatives,
shall remain confidential and not be disclosed or revealed to outside
sources.
"Confidential information" includes information not ordinarily known by
noncompany personnel, including customer lists, supplier lists, trade secrets,
channels of distribution, pricing policy and records, inventory records, and
all other information normally understood to be confidential or otherwise
designated as such by Seller or Buyer respectively.
6. Interim unaudited statements.
Buyer's agreement. Buyer shall deliver to Seller promptly after
preparation, the unaudited statement of Buyer's financial position as of June
30, 1998, (Exhibit L).
7. Closing date.
(a) The closing under this agreement shall take place at 11 a.m., Eastern
Daylight Time, on August 31, 1998, or any time thereafter as mutually agreed
upon by all parties, at the offices of Acadia National Health Systems, Inc.,
Lewiston, Maine.
(b) Conditions precedent. Closing shall occur if: (1) the unaudited
statement of Seller's financial position referred to in paragraph 6, is
delivered to Buyer; (2) the conditions set forth in paragraph 13 are met; (3)
the conditions set forth in paragraph 12 are met, except to the extent Buyer
waives any or all of them; and (4) the conditions set forth in paragraph 11
are met, except to the extent Seller waives any or all of them.
(c) Total Assets, Total Liabilities and Net Income. For the purpose of
determining whether Buyer has met the condition set forth in paragraph 12(a),
concerning its "Total Assets", Total Liabilities", and "Net Income", the test
provided for therein may be satisfied on the basis of the unaudited statement
of Buyer's financial position (the statement) as of June 30, 1998.
(d) Alternate closing date. If the closing does not take place on August
31, 1998, it shall take place on any later date, but not later than September
26, 1998, that either party designates in writing to the other, if the
conditions set forth in the first sentence of this paragraph are fulfilled or
waived by such other date.
8. Post-closing adjustments.
Delivery. Seller shall deliver to the Buyer the compiled statement of
financial position and related statements of earnings and earned surplus,
together with a certificate of Robert M. Mucha, CPA, PC, which Seller is
entitled to receive under paragraph 3.
9. Approval of buyer's directors.
Buyer shall call a meeting of its directors, between August 1, 1998,
and August 15, 1998, inclusive, for the purpose of:
(a) Sale. Approving this agreement and its execution, delivery, and
performance by Buyer; and
(b) New stock. Authorizing a corporate resolution and authorization in
order to authorize the issuance by Buyer of 100,000 Common Shares.
10. Conduct of business pending closing.
Between the date hereof and the Closing Date, Seller, subject to the
provisions of paragraph 3, will not, without the Buyer's written consent:
(a) declare or pay any dividend or make any distribution on any class of
its shares or purchase, redeem, or otherwise acquire or retire for value any
of its shares; or
(b) enter into any transaction not in the ordinary course of business.
Between the date hereof and the next annual meeting of the Buyer's
shareholders held after the Closing Date at which directors are elected,
Buyer shall not, without the Seller's written consent:
(i) issue any shares of any class or any options, rights, or
warrants entitling the holder thereof to purchase shares of any class or any
securities which are convertible into or exchangeable for shares of any class,
including in each case shares held in the treasury (except for the issuance of
restricted stock options as provided in paragraph 4(b)), and shall not declare
or pay any dividend or make any distribution on its Common Shares or to the
holders of its Common Shares or purchase, redeem, or otherwise acquire or
retire for value any of its Common Shares; or
(ii) enter into any transaction not in the ordinary course of
business.
11. Conditions to buyer's obligations.
Buyer's obligations hereunder are, at its election, subject to the
conditions that, at or before the Closing Date:
(a) Financial statements. Except as the same may be affected by the
outcome of the litigation and claims referred to in paragraph 3(l), as of the
Closing Date the amount shown opposite the captions "Current Trade
Receivables", "Unbooked Receivables"and "Furniture and Fixtures" on the
unaudited statement of Seller's financial position as of April 30, 1998,
referred to in paragraph 8, shall be at least 95 percent of the amount shown
opposite each respective caption as of April 30, 1998.
(b) Representations and warranties; limitation. Buyer has not discovered
any material error, misstatement, or omission in the representations and
warranties made by Seller in paragraph 3, and all the terms, covenants, and
conditions of this agreement to be complied with and performed by Seller on or
before the Closing Date are complied with and performed. An error,
misstatement, or omission in such representations and warranties shall be
deemed to be material, within the meaning of this paragraph, only if (1) the
aggregate effect of all such errors, misstatements, and omissions upon
Seller's financial position as of the Closing Date, results in a
nonfulfillment of the conditions set forth in (a) of this paragraph, or (2)
the nature of such error, misstatement, or omission is such that Seller's
liability in respect thereof cannot be satisfied through the adjustments
provided for in paragraph 19, and such error, misstatement, or omission is
material in relation to the Seller's assets, properties, and business,
considered as a whole, to be conveyed, transferred, and assigned to Buyer.
12. Conditions to seller's obligations.
Seller's obligations hereunder are, at its option, subject to the
conditions that, at or before the Closing Date:
(a) Total Assets, Total Liabilities and Net Income. As of the Closing
Date, the amount shown opposite the captions "Total Assets", "Total
Liabilities", and "Net Income"on the unaudited statement of Buyer's financial
position as of June 30, 1998, referred to in paragraph 7, shall be at least 95
percent of the amount shown opposite such caption on the unaudited statement
of Buyer's financial position as of June 30, 1998 (Exhibit L).
(b) Representations and warranties. Seller shall not discover any
material error, misstatement, or omission in the representations and
warranties made by Buyer in paragraph 4, and all the terms, covenants, and
conditions of this agreement to be complied with and performed by Buyer on or
before the Closing Date shall be complied with and performed.
(c) Casualty. Buyer's business and properties shall not be adversely
affected in any material way as a result of any fire, accident, or other
casualty, or act of God or the public enemy.
(d) No changes; limitation. The representations and warranties made by
Buyer in paragraph 4 shall be correct as of the Closing Date, with the same
force and effect as though they had been made as of the Closing Date, except
to the extent that such representations and warranties are incorrect as of the
Closing Date because of events or changes occurring or arising after the date
hereof in the ordinary course of Buyer's business or as otherwise provided in
or permitted by this agreement; and Buyer has delivered to Seller a
certificate dated the Closing Date, signed by the Buyer's Chief Executive
Officer to such effect.
13. Restrictive covenant.
(a) Noncompetition. Seller shall not, for a period of five (5) years from
the Closing Date, engage, either directly or indirectly, in the business of
providing or selling medical billing/physician practice management services
within five hundred (500) miles of any headquarters, regional office,
domiciled subsidiary or domiciled affiliation of Buyer, and it shall obtain
from Frank J. DeJohn and Martha T. DeJohn, principal shareholders of Seller,
individually, and deliver to Buyer on the Closing Date, a commitment to the
same effect with respect to their personal activities, except on behalf of
Buyer, for a period of five (5) years from the Closing Date.
(b) Other activities. It is expressly understood that Frank J. DeJohn and
Martha T. DeJohn may, without limitation, own shares in publicly held
corporations in the medical billing/physician practice management business, if
any such share ownership does not amount to control of any such corporation.
Notwithstanding any of the terms and conditions of this paragraph, or this
Agreement as read in its entirety, the Stockholder will not be prevented from
serving as an officer, director, control person or beneficial owner of
Northeast Medical Business Group, Inc., nor will the Stockholder be precluded
from owning up to one hundred percent (100%) of the preferred and/or common
equity of said entity.
(c) Enforceability. The parties believe that the restrictive covenants
contained in this paragraph are reasonable. However, if any court of competent
jurisdiction subsequently holds this restriction to be unenforceable or
unreasonable, whether as to scope, territory, or period of time specified
herein, such scope, territory, or period of time shall be deemed to be that
declared or determined as reasonable by the court.
(d) Injunctive relief. Seller and its principal shareholder recognize
that Buyer will suffer irreparable damage if the terms of this restrictive
covenant are violated, and that it will be difficult, if not impossible, to
compute Buyer's actual damages resulting from such unauthorized competition.
The parties, therefore, agree that any party may apply to a court of competent
jurisdiction to enjoin any threatened or actual breach of the covenants
contained herein.
(e) Ability to earn livelihood. The covenant from Frank J. DeJohn and
Martha T. DeJohn shall contain a provision whereby they acknowledge that they
have sufficient experience and ability to permit them to obtain employment in
areas which are not in violation of the restrictive covenants contained
herein, and that enforcement of such covenants will not prevent them from
earning a livelihood. The restrictive covenant granted by Frank J. DeJohn and
Martha T. DeJohn shall be effective during the term of their employment with
Buyer and for a period of five years thereafter, notwithstanding any contrary
provision herein.
14. Utilization of name.
Buyer shall, after the Closing Date, take any action that is necessary
(including an amendment to its Certificate of Incorporation and the submission
thereof to the first meeting of shareholders to be held after the Closing
Date) to utilize the name "Northeast Medical Billing"
15. Employment of seller's personnel.
(a) Employees. Seller will use its best efforts to persuade its employees
on the Closing Date to make themselves available for employment by Buyer, and
Buyer will endeavor to employ such employees on terms and conditions
comparable to those upon which they were employed by Seller before the
Closing Date.
(b) Principal. Buyer affirms that it intends to employ Frank J. DeJohn
and Martha T. DeJohn in a principal executive capacity from and after the
Closing Date, and Seller hereby affirms that it is its understanding that
Frank J. DeJohn and Martha T. DeJohn intend to enter into the Buyer's
employment in such a capacity from and after the Closing Date.
(c) Right to terminate. If Frank J. DeJohn should die before the Closing
Date, Seller may terminate this agreement by giving Buyer written notice,
within three days thereafter, of Seller's exercise of such termination rights.
If Seller does not exercise its option to terminate, Buyer may terminate the
agreement by giving written notice to Seller within three business days after
Seller's three-day period expires.
16. Registration of securities.
(a) If at any time while Seller holds any of Buyer's Common Shares,
Buyer takes action to register any of its securities under the Securities Act
of 1933, as amended, or any similar federal statute, Buyer shall give Seller
prompt written notice of its intended action on each such occasion. If
registration of any such securities held by Seller is then possible under
applicable laws, regulations, and practices of the Securities and Exchange
Commission or other appropriate governmental agency, and Seller within 15 days
after receipt of any such notice requests Buyer to do so, Buyer shall, at its
expense, take action to register the securities at the same time, and use its
best efforts to the end that such registration shall become effective and that
no stop order with respect to the registration is issued. In addition, if at
any time during a period of five years after the Closing Date Seller continues
to hold any of such securities, and if so requested by Seller, Buyer shall
take action at Buyer's expense to register such securities under the
Securities Act of 1933, as amended, or any other appropriate federal statute,
and use its best efforts to the end that such registration shall become
effective and that no stop order with respect to the registration is issued.
In this regard, however, Seller may not make more than three such requests in
such five-year period.
(b) Seller's cooperation. Seller will furnish Buyer correct and complete
information, including financial statements, data, and other documents Buyer
shall reasonably request for inclusion in proxy statements, periodic reports,
and registration statements which Buyer is required to file with the
Securities and Exchange Commission, appropriate state authorities, and the
National Association of Securities Dealers as a result of, or pertaining to,
any transaction contemplated by this agreement, with respect to which the
foregoing is required. Buyer covenants that any such materials, concerning
Buyer, to be filed by it with or submitted by it to the above governmental and
regulatory authorities shall be submitted to and approved by Seller's counsel
before any filing or submission.
17. Survival of representations and warranties.
Seller's representations and warranties made in this agreement shall
survive for a period of 24 months after the Closing Date, except for the
representation and warranty contained in subparagraph 1(c)(5), relating to
Seller's liabilities not assumed by Buyer, which shall continue to survive
until the liabilities therein referred to are satisfied. If Seller is notified
of a misrepresentation or breach of warranty within 24 months (except that any
notice with respect to the representation and warranty contained in
subparagraph 1(c)(5) may be received in more than 24 months) and the
misrepresentation or breach of warranty is thereafter established, it is
understood and agreed that Seller shall be liable to Buyer as follows:
(a) Undisclosed liabilities. If the misrepresentation or breach of
warranty is the result of an undisclosed liability, Seller may, either (1)
assume the payment of such liability, or (2) reimburse Buyer in an amount (A)
equal to the cost to Buyer of satisfying any such liability after giving
effect to the amount thereof which will be deductible by Buyer for federal
income tax purposes at the then applicable tax rate, and (B) equal to 100
percent of any other such liability.
(b) Other matters. If the misrepresentation or breach of warranty is the
result of a matter other than an undisclosed liability, Seller shall put Buyer
in the position that it would have been in had such representation or warranty
been true and correct.
(c) Assumption of liabilities. If Seller elects to assume any liability
under subparagraph (a) above, it may deliver to Buyer on any date Seller
designates a sufficient principal amount, in order to enable Seller to
satisfy such liability.
(d) Accounts receivable. If any note, account receivable, or other
receivable covered by the representation and warranty contained in paragraph
3(i) is not collectible at the book amount, as provided in paragraph 3(i),
less normal discounts and allowances, Buyer shall reassign such receivable to
Seller equal to the receivable's unpaid balance, For purposes of this
paragraph, an account or note shall be deemed uncollectible as to that portion
which remains unpaid for a period of 120 days after it is due.
(e) Exclusive remedy. The remedies provided for herein for any
misrepresentation or breach of warranty by Seller shall be Buyer's sole and
exclusive remedies and any person claiming under, by, or through Buyer.
(f) Buyer's and Seller's representations and warranties. Buyer's and
Seller's representations and warranties made in this agreement shall not
survive the Closing Date, and Buyer and Seller shall not have any subsequent
liability with regard thereto.
(g) Physician Health Care Alliance and CHC Physicians litigation. If
Seller suffers any liability as a result of the litigation referred to in
paragraph 3(l) or of any subsequent litigation or claim based upon the
counterclaim referred to therein with Physician Health Care Alliance and CHC
Physicians, or the settlement thereof, relating to any period prior to the day
following the Closing Date, Buyer shall not reimburse the Seller for any
resulting loss. It is expressly understood that any liability as a result of
any litigation or claims relating to any period after the Closing Date shall
be Seller's sole responsibility.
18. Consent of third party.
(a) Assignments. To the extent that the assignment of any contract,
license, lease, commitment, sales order, or purchase order to be assigned to
Buyer requires the consent of the other party, this agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof. Seller will diligently pursue and use its best
efforts to obtain the consent of the other parties to all such contracts,
licenses, leases, commitments, sales orders, or purchase orders of Seller to
the assignment thereof to Buyer. If such consent is not obtained, Seller will
cooperate with Buyer in any reasonable arrangement designed to provide for
Buyer the benefits under any such contracts, licenses, leases, commitments,
service orders, including enforcement, at the cost and for the benefit of
Buyer, of all Seller's rights against the other party thereto arising out of
a breach or cancellation by such other party or otherwise.
(b) Accounts receivable. Buyer may collect for its account all
receivables and other items that are transferred to it, and may endorse
Seller's name on all checks received on account of such items. Seller shall
deliver to Buyer all cash or other property Seller receives for such items.
19. Fees and expenses.
(a) Each party shall pay their own fees and expenses incurred in
preparing this agreement, carrying it into effect, and consummating the
transactions contemplated hereby. However, if such transactions are not
consummated because Buyer's directors have failed to take the action required
under paragraph 9(a), Buyer shall reimburse Seller for its fees and expenses,
including, without limitation, Seller's reasonable attorneys' and
accountants' fees, in an amount not exceeding $5,000.
(b) Non-liability. Except as provided above, neither party shall have any
obligation to the other if the transactions contemplated under this agreement
are not consummated for any reason other than the party's willful failure or
refusal to comply with its obligations hereunder. In that event, the
defaulting party shall remain liable for all damages caused by its willful
failure or refusal.
20. Waiver of compliance with bulk sale requirements.
Buyer waives Seller's compliance provisions with the provisions of the
bulk sales law as enacted in any applicable jurisdiction. Seller, however,
shall indemnify and hold Buyer harmless from all liabilities and obligations
of Seller which are not assumed by Buyer under this agreement, and from any
and all liabilities resulting from noncompliance with the bulk sales law,
including, but not limited to, all costs and expenses incurred in connection
with the defense or settlement of any such liability or obligation.
21. Assignment of agreement.
(a) This agreement shall not be assignable by either party except with
the other's written consent.
(b) Third parties. Nothing in this agreement, expressed or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
agreement.
22. Brokerage.
Each party represents and warrants that there are no claims for brokerage
commissions or finders' fees in connection with the transactions contemplated
by this agreement, insofar as such claims are alleged to be based on
arrangements or agreements made by it or on its behalf, and each of the
parties agrees to indemnify the other against and hold it harmless from all
liabilities arising from any such claim (including, without limitation, cost
of counsel fees in connection therewith).
23. Notices.
All notices and other communications ("Notices") to be given hereunder by
either party to the other shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid, if to Buyer, addressed to
Buyer, attention of the CEO, 95 Park Street, Second Floor, Lewiston, Maine
04240, and if to Seller, addressed to Seller, attention of the President, 17
Wilder Street, Keene, New Hampshire 03431. Copies of all such Notices shall be
sent to the attorneys for the respective parties. The address for delivery of
Notices may be changed by any party upon furnishing to the other the new
address for Notices in accordance with the provisions of this paragraph.
24. Entire agreement.
This instrument contains the entire agreement between the parties with
respect to the transactions contemplated herein. All exhibits referred to in
this agreement and attached hereto are hereby incorporated herein by
reference. Each party has caused to be included herein all representations and
warranties that it considers material for the purposes of the transactions
contemplated hereby, based upon investigations which each of them has made of
the other's business and affairs. The representations and warranties contained
herein constitute all the representations and warranties upon which the
parties have relied. Nothing contained in this agreement, nor any of the
exhibits referred to herein or any other instrument or document heretofore or
hereafter furnished by either party to the other in relation to this
transaction, contains or will contain any untrue statement of any material
fact or omits or will omit to state any material fact required to be stated in
order to make such statement, document, or other instrument not misleading.
25. Execution.
This agreement is being executed on behalf of Buyer on the date first
above written and delivered to Seller for signature. This agreement shall be
executed on behalf of the Seller on or before the Closing Date, if on or
before such date the representations contained in paragraph 3(o) are true and
correct. The presentation of this agreement to Buyer for signature does not
constitute an implied representation by Seller that any of its officers or
stockholders is obligated to take any action to approve this agreement or to
cause it to be executed on behalf of Seller. Buyer shall not take any action
to rescind or revoke this agreement before January 1, 1999.
26. Governing law.
This agreement shall be governed by and construed in accordance with the
laws of the State of Maine.
27. Severability of provisions.
The invalidity or unenforceability of any term, phrase, clause,
paragraph, restriction, covenant, agreement or other provision hereof shall in
no way affect the validity or enforcement of any other provision, or any part
thereof.
28. Headings.
The captions and titles in this agreement are for convenience and
reference only, and shall not be used to define, limit, or otherwise construe
its terms and provisions.
29. Counterparts.
This agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument.
30. Actions necessary to complete transaction.
Each party hereby agrees to execute and deliver all such other documents
or instruments and to take any action that is reasonably required to
effectuate the transactions contemplated by this agreement.
31. Non-waiver.
No delay or failure by either party to exercise any right hereunder, and
no partial or single exercise of any such right, shall constitute a waiver of
that or any other right, or release the other party from any claims arising
out of or connected with this agreement, unless otherwise expressly provided
herein.
32. Binding effect.
This agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
33. Time of essence.
Time is of the essence of this agreement.
IN WITNESS WHEREOF the parties have caused this agreement to be duly executed
and their corporate seals to be affixed.
(Seal) ACADIA NATIONAL HEALTH SYSTEMS, INC.
Attest:
/s/ Jacquelyn J. Magno /s/ Paul W. Chute
JACQUELYN J. MAGNO, PAUL W. CHUTE,
Secretary CEO
(Seal) NORTHEAST MEDICAL BUSINESS GROUP,
INC
Attest:
/s/ Martha T. DeJohn /s/ Frank J. DeJohn
MARTHA T. DEJOHN, FRANK J. DEJOHN,
Secretary President
NON-COMPETITION, CONFIDENTIALITY AND NON-SOLICITATION AGREEMENT
This Agreement is entered into as of August 31, 1998 between Acadia
National Health Systems, Inc., a State of Colorado corporation (the
"Company"), located in the City of Lewiston, State of Maine, and Frank J. and
Martha T. DeJohn, individuals employed at Northeast Medical Business Group,
Inc. at 17 Wilder Street, City of Keene, State of New Hampshire (hereinafter
collectively referred to as the "Stockholder").
A. The Stockholder is a shareholder of Northeast Medical Business Group,
Inc. (the "Seller").
B. The Seller and the Company have entered into the business/asset
purchase agreement dated August 31, 1998 (the "Purchase Agreement"), pursuant
to which Seller is on this date selling and transferring to the Company the
assets of its business, which is engaged in the medical billing/physician
practice management services industry (the "Business").
C. It is a condition to the obligation of the Company to consummate the
transactions contemplated by the Purchase Agreement that the Stockholder
execute this Agreement.
D. The Stockholder will derive substantial economic benefit from the sale
of the Business to the Company pursuant to the Purchase Agreement.
E. The Stockholder acknowledges that the Company is acquiring the
Business because of synergies with the Company's existing business and the
opportunities to expand the Business, and that the Company would not effect
the closing of the transactions contemplated by the Purchase Agreement unless
the Stockholder agrees to the terms of this Agreement and executes and
delivers this Agreement to the Company at such closing.
NOW, THEREFORE, in consideration of the promises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Definitions.
The following terms, as used in this agreement, shall have the following
meanings:
1.1 "Confidential Information" means any information which is proprietary
or unique to the Business, including but not limited to trade secret
information, matters of a technical nature such as processes, devices,
techniques, data and formulas, research subjects and results, marketing
methods, plans and strategies, operations, products, revenues, expenses,
profits, sales, key personnel, customers, suppliers, pricing policies, any
information concerning the marketing and other business affairs and methods
of the Business which is not readily available to the public.
1.2 "Restricted Business" means any business activity relating to the
medical billing/physician practice management services industry within five
hundred (500) miles of any headquarters, regional office, domiciled
subsidiary or domiciled affiliate of Acadia.
1.3 "Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
2. Confidential Information.
The Stockholder acknowledges that in connection with the Stockholder's
ownership and/or employment in the Business, the Stockholder has obtained
Confidential Information, and the Stockholder agrees that the Stockholder will
not disclose to any Person or entity any Confidential Information, except with
the Company's express prior written consent. The confidentiality obligations
imposed by this paragraph 2 shall cease to apply to any item of Confidential
Information after the earliest of the date on which the Stockholder provides
the Company with written evidence clearly establishing that such item of
Confidential Information: (i) was publicly available prior to the
Stockholder's receipt of such item of Confidential Information from the
Company, or (ii) has become generally known to the public in the United
States through no fault of the Stockholder.
3. Noncompetition, Nonsolicitation and Nondisparagement.
The Stockholder acknowledges and agrees with the Company that during the
course of the Stockholder's ownership and/or employment with the Business, the
Stockholder has had the opportunity to develop relationships with existing
employees, customers and other business associates of the Business, which
relationships constitute goodwill of the Business being acquired by the
Company, and the Stockholder acknowledges and agrees that the Company would be
irreparably damaged if the Stockholder were to take actions that would damage
or misappropriate such goodwill. The Stockholder accordingly covenants and
agrees as follows:
3.1 The Stockholder acknowledges that the Business is currently conducted
throughout the World and that the Company has plans to expand the Business to
take advantage of synergies between the Business and the Company's medical
billing/physician practice management services business and of other
opportunities to expand the Business. Accordingly, in consideration of the
Company closing the transactions contemplated by the Purchase Agreement, from
the date hereof until the fifth anniversary of the date hereof (the
"Restricted Period"), the Stockholder shall not, directly or indirectly, enter
into, engage in, assist, give or lend funds to or otherwise finance, be
employed by or consult with, have an ownership or equity interest in, or have
a financial or other interest in, any business which engages in any aspect of
the Restricted Business, whether for or by himself or as an independent
contractor, agent, stockholder, partner or joint venturer for any other
Person, provided that the aggregate ownership by the Stockholder of no more
than two percent of the outstanding equity securities of any Person, which
securities are traded on a national or foreign securities exchange, quoted on
the Nasdaq Stock Market or other automated quotation system shall not be
deemed to be giving or lending funds to, otherwise financing or having a
financial interest in a competitor. In the event that any Person in which the
Stockholder has any financial or other interest directly or indirectly enters
into the Restricted Business during the Restricted Period, the Stockholder
shall divest all of his interest (other than any amount permitted under this
paragraph) in such Person within 30 days after such Person enters into any
aspect of the Restricted Business. Notwithstanding any of the terms and
conditions of this paragraph, or this Agreement as read in its entirety, the
Stockholder will not be prevented from serving as an officer, director,
control person or beneficial owner of Northeast Medical Business Group, Inc.,
nor will the Stockholder be precluded from owning up to one hundred percent
(100%) of the preferred and/or common equity of said entity.
3.2 The Stockholder covenants and agrees that, during the Restricted
Period, the Stockholder will not, directly or indirectly, either for himself
or for any other Person (i) solicit any employee of the Company to terminate
his or her employment with the Company or employ any such individual during
his or her employment with the Company and for a period of six months after
such individual terminates employment with the Company, (ii) solicit any
supplier to the Company to purchase or distribute information, products or
services of or on behalf of the Stockholder or such other Person that are
competitive with the information, products or services provided by the
Company, or (iii) take any action, including without limitation the making of
disparaging statements concerning the Company or its officers, directors or
employees, that is reasonably likely to cause injury to the relationships
between the Company or any of its employees and any lessor, lessee, vendor,
supplier, customer, distributor, employee, consultant or other business
associate of the Company, as such relationship relates to the Company's
conduct of the Restricted Business.
3.3 The Stockholder understands that the foregoing restrictions may limit
the Stockholder's ability to earn a livelihood in a business similar to the
Restricted Business, but the Stockholder nevertheless believes that the
Stockholder has received and will receive sufficient consideration and other
benefits as a result of the closing of the transactions contemplated by the
Purchase Agreement to clearly justify such restrictions which, in any event
(given the Stockholder's education, skills and ability), the Stockholder does
not believe would prevent him from otherwise earning a living.
4. Remedies.
In the event of the violation or threatened violation by the Stockholder
of any of the covenants contained in this Agreement, in addition to any other
remedy available in law or in equity, the Company shall have (i) the right and
remedy of specific enforcement, including injunctive relief, it being
acknowledge and agreed that any such violation or threatened violation will
cause irreparable injury to the Company and that monetary damages will not
provide an adequate remedy, and (ii) the right to any and all damages
available as a matter of law, and costs and expenses incurred by the Company
in pursuing its rights under this Agreement, including reasonable attorneys'
fees and other litigation expenses.
5. Severability.
Should any covenant, term or condition contained in this Agreement become
or be declared invalid or unenforceable by a court of competent jurisdiction,
the parties agree that the court shall be requested to judicially modify such
unenforceable provision consistent with the intent of this Agreement so that
it shall be enforceable to the fullest extent possible.
6. Applicable Law; Jurisdiction.
This Agreement shall be construed, interpreted and enforced according to
the statutes, rules of law and court decisions of the State of Maine without
regard to conflict of law provisions. The Stockholder hereby submits to the
jurisdiction of, and waives any venue objections against, the State of Maine
and the federal courts of the United States located in such state in respect
of all actions arising out of or in connection with the interpretation or
enforcement of this Agreement, and the Stockholder consents to the personal
jurisdiction of such courts for such purposes.
7. Amendments; Waivers.
This Agreement may be amended, modified, superseded or canceled, and the
terms or covenants waived, only by a written instrument executed by both of
the parties hereto or, in the case of a waiver, by the Company. The failure to
require performance of any provision hereof shall in no manner affect the
right at a later time to enforce the same. No waiver of any term, whether by
conduct or otherwise, shall be deemed to be a further or continuing waiver of
any such breach, or a waiver of the breach of any other term contained in
this Agreement.
8. Notices.
All notices under this Agreement shall be in writing and shall be deemed
effective when delivered in person (in the Company's case, to its Chief
Executive Officer) or 48 hours after deposit thereof in the U.S. mails,
postage prepaid, addressed, in the case of the Stockholder, to the
Stockholder's address set forth at the end of this Agreement, and, in the case
of the Company, to the corporate headquarters, attention of the Chief
Executive Officer, or to such other address as the party to be notified may
specify by written notice to the other party.
9. Construction.
Paragraph headings are for convenience only and shall not be considered
a part of the terms and provisions of the Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
as of the day and year first above written.
ACADIA NATIONAL HEALTH SYSTEMS, INC.
/s/ Paul W. Chute
PAUL W. CHUTE, President
THE STOCKHOLDERS
/s/ Frank DeJohn
FRANK DEJOHN
/s/ Martha T. DeJohn
MARTHA T. DEJOHN
September 22, 1998
CONFIDENTIAL
Office of Small Business Policy
Division of Corporation Finance
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Acadia National Health Systems, Inc. -
Opinion re Legality of Securities to be Issued
Ladies and Gentlemen:
I have acted as special counsel for Acadia National Health Systems, Inc.,
a Colorado corporation (the "Company"), in connection with the execution,
delivery and performance of a Contract for Sale of Assets executed between the
Company and Northeast Medical Business Group (hereinafter collectively
referred to as "Northeast" or "Shareholders"), whose corporate address is 17
Wilder Street, Keene, New Hampshire.
In connection with this matter, I have examined the originals or copies
certified or otherwise identified to my satisfaction of the following:
(a) Articles of Incorporation of the Company, as amended to date;
(b) By-laws of the Company, as amended to date;
(c) Certificates from the Secretary of State of the State of Colorado,
dated as of a recent date, stating that Acadia is duly incorporated and in
good standing in the State of Colorado;
(d) Certificates from the Secretary of State of the State of Maine, dated
as of a recent date, stating that the Company has duly qualified to do
business and is in good standing in Maine and has filed all required reports
and paid all taxes due;
Page 2
S.E.C.
September 22, 1998
- -------------------
(e) Certificates from the Secretary of State of the State of Colorado
dated as of a recent date for the Company listing all charter documents on
file, attaching a copy of each charter document so listed, and certifying as
to the true nature of each such copy;
(f) Certificate of the Company, dated the date hereof, described in the
Contract for Sale of Assets between Northeast and the Company;
(g) Certificate of the Secretary of the Company, dated the date hereof,
relating to various matters of fact;
(h) Resolutions of the Board of Directors of the Company adopted on
September 9, 1998, authorizing the issuance of one hundred thousand (100,000)
of Company Shares, the execution and delivery of the Contract for Sale of
Assets between Northeast and the Company, the filing of said documents, and
establishing the market value per share for the Shares that will be issued;
(i) Executed copy of the Contract for Sale of Assets;
(j) Registrar and Transfer Agent's Certificate, dated the date hereof, of
American Securities Transfer, as registrar and transfer agent, with respect to
the issuance, countersigning, and registration of the Shares and as to the
total number of outstanding shares; and
In addition to the foregoing, I have also relied as to matters of fact upon
the representations made by the Company in compliance with due diligence
requirements submitted by my office and related certificates and upon
representations made by the Shareholders. Based upon and in reliance upon the
foregoing, and after examination of such corporate and other records,
certificates and other documents and such matters of law as I have deemed
applicable or relevant to this opinion, it is my opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to own its properties
and conduct its business; the Company is duly qualified as a foreign
corporation and in good standing in Maine and in each other jurisdiction in
which the ownership or leasing of property requires such qualification (except
for those jurisdictions in which the only material consequence of a failure to
be so qualified, other than potential penalties not individually or in the
aggregate material to the Company and its Subsidiaries
Page 3
S.E.C.
September 22, 1998
- ---------------------
taken as a whole, is that actions may not be brought in the courts of such
jurisdictions by the Company until its failure to so qualify, if required,
has been cured);
2. The authorized capital stock of the Company consists of 40,000,000
shares of Common Stock, no par value, of which there are outstanding 3,737,987
shares. Proper corporate proceedings have been taken validly to authorize
such authorized capital stock; all the outstanding shares of such capital
stock (including the Shares) have been duly and validly issued and are fully
paid and nonassessable; the shareholders of the Company have no preemptive
rights with respect to the Common Stock of the Company;
3. A Registration Statement on Form 10SB (the "Registration Statement"),
filed on behalf of the Company, became effective under the Securities Exchange
Act of 1934 (the "Exchange Act") and, to the best of my knowledge, no stop
order suspending the effectiveness of the Registration Statement or suspending
or preventing trading on the Over-the-Counter ("OTC") Bulletin Board is in
effect and no proceedings for that purpose have been instituted or are
pending or contemplated by the N.A.S.D.;
4. The Registration Statement (except as to the financial statements
contained therein, as to which I express no opinion) comply as to form in all
material respects with the requirements of the Act and with the rules and
regulations of the Securities and Exchange Commission thereunder;
5. On the basis of information developed and made available to me, the
accuracy or completeness of which has not been independently verified by me, I
have no reason to believe that the Contract for Sale of Assets or the
Registration Statement (except as to the financial statements contained
therein, as to which I express no opinion) contains any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
6. The information required to be set forth in the Contract for Sale of
Assets is, to the best of my knowledge, accurately and adequately set forth
therein in all material respects or no response is required with respect to
such items, and, to the best of my knowledge, the description of the Company's
stock option plans and agreements and the options granted and which may be
granted thereunder set forth in the Registration Statement accurately and
fairly represents the information required to be shown with respect to said
plans, agreements, and options by the Exchange Act and the rules and
regulations of the Securities and Exchange Commission thereunder;
Page 4
S.E.C.
September 22, 1998
_____________________
7. The terms and provisions of the capital stock of Acadia conform to
the description thereof contained in the Registration Statement, and the
statements in the Summary in the first paragraph under the caption
"Description of Common Stock" have been reviewed by me and insofar as such
statements constitute a summary of the law or documents referred to therein,
are correct in all material respects, and the forms of certificates
evidencing the Common Stock comply with the Colorado law;
8. The descriptions in the Registration Statement and Summary of
material contracts and other material documents are fair and accurate in all
material respects; and I do not know of any franchises, contracts, leases,
licenses, documents, statutes or legal proceedings, pending or threatened,
which in my opinion is of a character required to be described in the
Registration Statement or Summary or to be filed as exhibits to the
Registration Statement, which are not described and filed as required;
9. The Contract for Sale of Assets has been duly authorized, executed,
and delivered by the Company and constitutes the valid and legally binding
obligation of the Company except as the indemnity provisions thereof may be
limited by the principles of public policy;
10. The issuance of one hundred thousand (100,000) Shares of the Company
as contemplated by the Contract for Sale of Assets will not conflict with, or
result in a breach of, any material agreement or instrument known to me which
the Company is a party or by which it is bound, or any applicable law or
regulation, or, so far as is known by us, any order, writ, injunction or
decree applicable to the Company of any jurisdiction, court or governmental
instrumentality, or the Restated Articles of Incorporation or By-laws of the
Company.
11. To the best of my knowledge and belief after due inquiry, there are
no holders of Common Stock or other securities of the Company having
registration rights with respect to such securities on account of the filing
of the Registration Statement who have not effectively waived such rights; and
12. No consent, approval, authorization, or order of any court or
governmental agency or body is required for the consummation by the Company of
the transactions on its part contemplated by the Contract for Sale of Assets,
except such as have been obtained under the Exchange Act and such as may be
required under state or other securities or blue sky laws in connection with
the distribution of the Shares to the Shareholders.
Page 5
S.E.C.
September 22, 1998
_____________________
In addition, I have participated in conferences with representatives of
Northeast and the Company and accountants for the Company at which the
contents of the Contract for Sale of Assets and Registration Statement were
discussed. Although I have not verified the accuracy or completeness of the
statements contained in the Registration Statement or the Summary (other than
the caption "Description of Common Stock"), I advise you that on the basis of
foregoing, I have no reason to believe that either the Contract for Sale of
Assets or the Registration Statement, as of the effective date, contained any
untrue statements of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading (except in each such case for the financial statements or other
financial data contained in the Registration Statement or Summary as to which
I am not called upon to and do not express any opinion).
This letter is furnished to you as for filing purposes on behalf of the
Company, and is solely for the benefit of the United States Securities and
Exchange Commission.
Respectfully,
/s/ Mark T. Thatcher
Mark T. Thatcher, Esq.
Atty Reg. No. 25-275 CO
Atty Reg. No. 453658 DC
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Board of Directors' Resolution Authorizing
Increase in Outstanding Common Stock
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned, being all of the Directors of ACADIA NATIONAL HEALTH SYSTEMS,
INC. (hereinafter referred to as "ACADIA" or the "Company") do hereby waive
any and all notice that may be required to be given with respect to a meeting
of the Directors of the Corporation and do hereby unanimously take, ratify,
confirm and approve the following action, as of September 8, 1998, and do
hereby certify that the following resolution is a true and correct copy of a
resolution duly adopted pursuant to a Meeting of the Board of Directors of
the Company held on September 9, 1998.
RESOLVED that one hundred thousand (100,000) restricted shares of the Company's
Common Stock be issued to FRANK AND MARTHA DEJOHN, in joint tenancy with a
right of survivorship, whose collective address is 17 Wilder Street, Keene,
New Hampshire, 03431 in connection with the Contract for Sale of Assets
executed between the Company and Northeast Medical Business Group, Inc. on
September 8, 1998; and that the increase in the outstanding shares of the
Company's Common Stock by one hundred thousand (100,000) shares is hereby
approved.
The certificate shall bear the following legend:
The shares represented by this Certificate have not been registered under the
Securities Act of 1933 (the "Act") and are "restricted securities" as that
term is defined in Rule 144 under the act. The shares may not be offered for
sale, sold or otherwise transferred except pursuant to an effective
registration statement under the Act, the availability of which is to be
established to the satisfaction of the Company.
FURTHER RESOLVED, that the officers of the Company be authorized to take any
and all actions that may be necessary to carry out the foregoing resolutions.
WITNESS my hand and seal of the Company on this 23rd day of September 1998.
SIGNATURE NAME TITLE
- --------- ---- -----
______________________ Paul W. Chute Chairman,
/s/ Paul W. Chute 95 Park Street CEO
Lewiston, ME 04240
______________________ Jacquelyn J. Magno Vice President,
/s/ Jacquelyn J. Magno 95 Park Street Secretary
Lewiston, ME 04240
______________________ John Crispin, MD Member
/s/ John Crispin, MD C/O ANHS, Inc.
95 Park Street
Lewiston, ME 04240
______________________ Mark T. Thatcher, Esq. Member
/s/ Mark T. Thatcher 360 Thames Street
Newport, RI 02840
September 22, 1998
FEDERAL EXPRESS
CONFIDENTIAL
American Securities Transfer, Inc.
As Representative of Acadia National Health Systems, Inc.
938 Quail Street, Suite 101
Lakewood, CO 80215-5513
Re: Acadia National Health Systems, Inc. ("Acadia") -
Restricted Issuance of 100,000 common shares of
Acadia National Health Systems, Inc. to Frank and
Martha DeJohn, in joint tenancy with a right of survivorship
Ladies and Gentlemen:
This office represents Acadia National Health Systems, Inc. ("Acadia").
I am in receipt of various communications from Acadia National Health Systems,
Inc. relating to the proposed issuance of 100,000 shares of Acadia common
stock pursuant to Section 4(2) of the Securities Act of 1933.
Based on representations contained in these documents, copies of which
are attached hereto, it is my opinion that you may issue the 100,000 shares of
common stock from the treasury of Acadia in reliance upon the exemption from
registration provided for in Section 4(1).
All shares, when issued, should bear a restricted legend in standard form
and should not be further transferred without the prior written consent of
the Company.
In rendering the above opinion, I have excluded from consideration state
securities or blue sky laws, except as specifically noted. My opinion is
limited to the federal laws of the United States, the laws of the State of
Colorado and the General Corporation Law of the State of Colorado as
prescribed by the Colorado Business Corporation Act, and I can assume no
responsibility with respect to the applicability or effect of the laws of any
other jurisdiction. I disclaim any obligation to notify you or any other
person or entity if any change in fact and/or law should change my opinion
with respect to any matter on which I am expressing an opinion herein.
Page 2
American Securities Transfer, Inc.
September 22, 1998
_________________________________
The foregoing opinion is furnished by me as counsel for the Company and
is solely for your benefit and may not be relied upon by any other person
unless my prior written consent is obtained.
Respectfully,
/s/ Mark T. Thatcher
Mark T. Thatcher, Esq.
Atty. Reg. No. 25-275
MTT/jet
cc: Paul W. Chute, CEO
Frank DeJohn
Martha DeJohn
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Board of Directors' Resolution Authorizing
Borrowing from a Bank
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned, being all of the Directors of ACADIA NATIONAL HEALTH SYSTEMS,
INC. (hereinafter referred to as "ACADIA" or the "Corporation") do hereby
waive any and all notice that may be required to be given with respect to a
meeting of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following action, as of September 8, 1998:
WHEREAS, this Corporation is in need of funds for its corporate purposes
and the officers of this Corporation have arranged for financial
accommodations from NORTHEAST BANK FSB (hereinafter referred to as the
"Bank"), whose address is 232 Center Street, Auburn, ME 04210, upon terms
and conditions satisfactory to such officers and to this Board.
RESOLVED: That this Corporation borrow from the Bank funds up to but not
exceeding the principal amount of Two Hundred Thousand Dollars ($200,000)
(hereinafter referred to as the "Loan"), and that the Chief Executive Officer
or Treasurer of the Corporation be and such officers are hereby authorized and
empowered in the name of and on behalf of the Corporation (a) to execute,
acknowledge and deliver to the Bank the promissory note or notes or other
instruments of this Corporation evidencing any such Loan or any extensions or
renewals thereof, maturing upon such date, bearing interest at such rate, in
such form, and containing such terms and conditions as may be agreed upon by
the Bank and said officers, the execution, acknowledgment and delivery of any
such promissory note or other instruments by such corporate officers to be
conclusive evidence of such agreement.
RESOLVED: That said officers be and they are hereby authorized and
empowered in the name of and on behalf of this Corporation to execute,
acknowledge and deliver to the Bank a Loan Agreement, a Security Agreement and
a Collateral Assignment of Company Assets in connection with such Loan
containing such terms, conditions, covenants and agreements of this
Corporation as may be agreed upon by the Bank and said officers, the
execution, acknowledgment and delivery of any such security agreement by such
corporate officers to be conclusive evidence of such agreement.
RESOLVED: That for action of the Bank in reliance thereon, the
Secretary of this Corporation be and is hereby authorized and empowered to
certify to the Bank a copy of these resolutions and that the Bank may consider
such officers to continue in office and these resolutions to remain in full
force and effect until written notice to the contrary shall be received by an
officer of the Bank.
RESOLVED: That the Chief Executive Officer of the Corporation be and is
hereby authorized and directed in the name of the Corporation and upon its
behalf to accept the Loan Documents and to execute, acknowledge, and deliver
the acceptance by the Corporation of such Loan Documents.
RESOLVED, that all other actions taken by the officers of the Corporation
since the date of the last Annual Minutes of the Board of Directors are
hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above proceedings as of the date first above mentioned.
/s/ Paul W. Chute
_______________________________
PAUL W. CHUTE,
Chairman
/s/ Jacquelyn J. Magno
_______________________________
JACQUELYN J. MAGNO,
Secretary
DATED: September 8, 1998
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Board of Directors' Resolution Authorizing
Banking Transactions
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned, being all of the Directors of ACADIA NATIONAL HEALTH SYSTEMS,
INC. (hereinafter referred to as "ACADIA" or the "Corporation") do hereby
waive any and all notice that may be required to be given with respect to a
meeting of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following action, as of September 8, 1998:
WHEREAS, this Corporation may be in need of consummating transactions
with a financial institution for its corporate purposes and the officers of
this Corporation have arranged for financial accommodations from NORTHEAST
BANK FSB (hereinafter referred to as the "Bank"), whose address is 232 enter
Street, Auburn, ME 04210, upon terms and conditions satisfactory to such
officers and to this Board.
RESOLVED: That this Corporation may transact business (the "transaction")
with this Bank with respect to all necessary corporate matters, and that the
President and Secretary or Vice President and Secretary of the Corporation be
and such officers are hereby authorized and empowered in the name of and on
behalf of the Corporation to execute, seal, acknowledge and deliver to the
Bank any instruments, documents, agreements or certifications of this
Corporation which may at any time or from time to time be required by the Bank
in connection with such transaction, the execution, sealing, acknowledgment
and delivery of any such other instruments, documents, agreements or
certifications by such corporate officers to be conclusive evidence of such
requirement, and to receive or endorse on behalf of and in the name of this
Corporation any checks, drafts or credits representing such transaction.
RESOLVED: That said officers be and they are hereby authorized and
empowered at any time and from time to time in the name of and on behalf of
this Corporation to mortgage, pledge, assign, hypothecate or grant a security
interest in any or all of the assets or properties of this Corporation, now
owned or hereafter acquired, to secure any such transaction, loan or any
extension and renewal thereof and in connection therewith said officers be and
are hereby authorized and empowered at any time and from time to time in the
name of and on behalf of this Corporation to execute, acknowledge, seal and
deliver to the Bank any instrument and agreement including, without limitation,
mortgages, deeds of trust, pledges, assignments and security agreements,
containing such terms, conditions, covenants and agreements of this
Corporation as may be agreed upon by the Bank and said officers, the
execution, sealing, acknowledgment and delivery of any such mortgages, deeds
of trust, pledges, assignments and security agreements by such corporate
officers to be conclusive evidence of such agreement.
RESOLVED: That for action of the Bank in reliance thereon, the
Secretary of this Corporation be and is hereby authorized and empowered to
certify to the Bank a copy of these resolutions and that the Bank may consider
such officers to continue in office and these resolutions to remain in full
force and effect until written notice to the contrary shall be received by an
officer of the Bank.
RESOLVED: That the Chief Executive Officer and Secretary, or Vice
President and Secretary, of the Corporation be and are hereby authorized and
directed in the name of the Corporation and upon its behalf to execute Bank
documents and to execute, acknowledge, and deliver the acceptance by the
Corporation of such Bank documents.
RESOLVED, that all other actions taken by the officers of the Corporation
since the date of the last Annual Minutes of the Board of Directors are
hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above proceedings as of the date first above mentioned.
/s/ Paul W. Chute
_______________________________
PAUL W. CHUTE,
Chairman
/s/ Jacquelyn J. Magno
_______________________________
JACQUELYN J. MAGNO,
Secretary
DATED: September 8, 1998
September 8, 1998
VIA HAND DELIVERY
VIA FACSIMILE TRANSMISSION
Sterling G. Williams, Senior V.P.
Northeast Bank
232 Center Street
Auburn, ME 04210
Re: Opinion of Borrower's Counsel -
Letter re Term Loans, Section Legal Opinions
$200,000 Term Loan
Dear Mr. Williams:
Pursuant to the terms and conditions provided in your letter dated August
24, 1998, and in addition to all other requirements more fully described in
the loan documents between Northeast Bank (hereinafter referred to as
"Lender"), whose address is 232 Center Street, Auburn, Maine 04210, and Acadia
National Health Systems, Inc. (hereinafter referred to as "Borrower" or
"Acadia"), I hereby inform you as follows:
1. Acadia is a fully reporting, public corporation as defined by Section
12(g) of the Securities Exchange Act of 1934, duly organized and validly
existing and in good standing under the laws of the State of Colorado.
2. Acadia has all requisite corporate power to execute, acknowledge and
deliver the Loan Documents and to perform its obligations therein.
Page 2
Mr. Sterling G. Williams
September 8, 1998
- --------------------------
3. Acadia has duly and validly authorized the execution, delivery, and
performance of the Loan Documents and consummation of the transactions
contemplated thereby.
4. The Loan Documents have been duly executed, acknowledged, and delivered
by Acadia and are the legal, valid and binding obligations of Acadia, each
enforceable against Acadia in accordance with its terms except as such
enforceability may be limited by general principles of equity, bankruptcy,
insolvency, moratorium and similar laws relating to creditors' rights
generally.
5. Acadia has taken all corporate action required in order to authorize
the execution of the Loan Documents.
6. The current officers and directors of Acadia, as set forth this 8th
day of September, are as follows:
Paul W. Chute,
CEO and Chairman of the Board
Jacquelyn J. Magno,
Vice President, Secretary and Director
John Crispin, M.D.,
Member
Mark T. Thatcher, Esq.,
Member
7. The authorized capital stock of Acadia consists of 50,000,000 shares of
Common Stock, no par value, of which 3,737,987 shares are issued, and all of
such issued shares have been duly and validly authorized and issued and are
fully paid and non-assessable.
Page 3
Mr. Sterling G. Williams
September 8, 1998
- -------------------------
8. As of the date prescribed and set forth herein (September 8, 1998), no
one (1) shareholder of Acadia owns twenty percent (20%) or more of the issued
and outstanding stock.
9. To the best of my knowledge there are no litigation proceedings, or
governmental investigations or labor disputes pending or threatened against
or relating to Acadia, its assets, its properties or businesses.
10. As to such other matters incident to the issues contemplated in
connection with the pledging of assets by Acadia as collateral for the loans
(described more fully in the Loan Documents,) I will provide to the Lender
whatever further documents and information the Lender may reasonably request.
Sincerely,
/s/ Mark T. Thatcher
Mark T. Thatcher
Atty. Reg No.025275 CO
453658 DC
MTT/jet
cc: Paul W. Chute
Jacquelyn J. Magno
H. Kelly Matzen, Esq.
CERTIFICATE
CORPORATE RESOLUTION OF
THE BOARD OF DIRECTORS
OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Pursuant to the provisions of the Colorado Business Corporation Act, as
amended, the following individuals represent the entire incumbent Board of
Directors of Acadia National Health Systems, Inc., a Colorado corporation, on
September 8, 1998, and have been elected as officers of the corporation to
serve in the capacities set forth opposite their respective names until their
successors shall have been duly elected and qualified:
NAME TITLE
Paul W. Chute Chairman,
95 Park Street CEO
Lewiston, ME 04240
Jacquelyn J. Magno Vice President,
95 Park Street Secretary
Lewiston, ME 04240
John Crispin, MD Member
C/O ANHS, Inc.
95 Park Street
Lewiston, ME 04240
Mark T. Thatcher, Esq. Member
360 Thames Street
Newport, RI 02840
RESOLVED, that a corporate seal bearing the words, "Acadia National
Health Systems, Inc." and identified by the impression thereof in the margin
of this page, be and hereby is affixed by the corporation.
DATED: September 8, 1998.
/s/ Paul W.
Chute
PAUL W. CHUTE,
Chairman and CEO
/s/ Jacquelyn J. Magno
JACQUELYN J. MAGNO,
Vice President and
Secretary of the Board
ACADIA NATIONAL HEALTH SYSTEMS, INC.
ACQUIRES NORTHEAST MEDICAL BUSINESS GROUP, INC.
Lewiston, Maine - September 8, l998 - Acadia National Health Systems, Inc.
(OTCBB:ACAD) announced the acquisition of Northeast Medical Business Group,
Inc., a medical billing and management services corporation located in
Keene, New Hampshire.
Paul W. Chute, Chairman and Chief Executive Officer of Acadia, is
exceptionally pleased with this acquisition and the resulting business
relationship. "Frank and Martha DeJohn, long-time owners, operators and
principle developers of Northeast, bring to Acadia a wealth of knowledge
about the complex medical services industry and a real personal dedication
to their clients. I am excited about Frank and Martha's long term
commitment to stay with Acadia and work towards our common goal of
providing an exceptional group of medical service products throughout the
Northeast."
Acadia National Health Systems, Inc. specializes in medical billing for
health care providers throughout Maine and New Hampshire. Northeast
Medical Business Group compliments this with clients in New Hampshire,
Vermont and Massachusetts. Both companies concentrate in providing
accounts receivable management, medical billing and practice management
consulting services in radiology, anesthesiology, surgery, emergency
services, family practice, internal medicine and behavioral health
medicine. Additional practice experience in urology, pulmonology,
pathology and rural health centers support Acadia's position of being a
full service medical services organization.
"Acadia's goal is to become a dominant medical services organization (MS0)
throughout New England and the Northeast", said Mr. Chute and he further
commented, "We continue to develop business relationships with
well-established companies dedicated to offering quality, competitive
services and strive to continue a local presence and personal relationship
with each medical provider we service."
CONTACT:
Acadia National Health Systems, Inc.
Paul W. Chute, Chief Executive Officer
207 777-3423
207 784-7743 (fax)
email: [email protected]
