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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 14, 1997
Champion Financial Corporation
(Exact name of registrant as specified in its charter)
UTAH 0-19499 88-0169547
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
9495 East San Salvador Drive, Scottsdale, Arizona 85258
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 614-4270
19 Hillsyde Court, Cockeysville, Maryland 21030
(Former name or former address, if changed since last report.)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On January 14, 1997, the Registrant completed its previously
announced acquisition of National Health Benefits & Casualty Corporation
("NHBC"). That transaction, which had been delayed from a previously announced
closing date of December 31, 1996, resulted in the acquisition of 100% of the
capital stock of NHBC which, through its subsidiaries, operates a national
managed health care organization and provides related services and products
designed to reduce the cost of medical care. NHBC markets these services and
products to insurance companies, self-insured businesses which maintain employee
medical plans, and third parties who administer employee medical plans for such
employees.
Upon the closing of the acquisition, Mr. Paul F. Caliendo and Mr.
Stephen J. Carder became the President and Chief Executive Officer and Executive
Vice President and Chief Financial Officer of the Registrant, respectively.
Messrs. Caliendo and Carder were previously the sole shareholders of NHBC and
served as Officers of NHBC. Following the merger, the Registrant's principal
executive offices were relocated to NHBC's principal offices in Scottsdale,
Arizona.
The NHBC merger resulted in a change of control of the Registrant
with Messrs. Caliendo and Carder now each holding 1.1 million shares of the
outstanding and issued Common Stock of the Registrant, representing in the
aggregate 42.5% of its voting power. In addition, Messrs. Caliendo and Carder
were granted an irrevocable proxy to vote an additional 1.5 million shares of
the Registrant's Common Stock beneficially owned by Risk Resolution Group, a
Maryland Partnership, giving them aggregate voting control of 71.52% of the
Registrant's 5,273,000 shares of outstanding Common Stock. The consideration
paid for the 2.2 million shares acquired by Messrs. Caliendo and Carder
consisted of the exchange of their 1 million shares of NHBC common stock. No
outside bank financing or other funds were utilized in connection with the
transaction. There were no pre-existing relationships between NHBC, or Messrs.
Carder and Caliendo and the Registrant or any of its affiliates.
The NHBC acquisition constitutes the acquisition of a significant
business and the audited financial statements of NHBC will be filed in
compliance with Regulation S-X.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
See Item 1.
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ITEM 5. OTHER EVENTS.
Pursuant to an Agreement and Plan of Acquisition entered into as
of December 30, 1996, the Registrant acquired all of the outstanding and issued
Common Stock of Three Rivers Provider Network, a Nevada corporation ("TRPN").
The acquisition was made through the exchange of 100,000 of the Registrant's
Common Stock in return for 100% of the outstanding and issued Common Stock of
TRPN. TRPN provides managed health care network designed to reduce the cost of
medical care. The acquisition of TRPN did not constitute the acquisition of a
significant business or subsidiary.
EXHIBITS
EXHIBIT NO.
2.1 Agreement and Plan of Reorganization dated as of December 31, 1996
regarding National Health Benefits & Casualty Corp.
2.2 Agreement and Plan of Acquisition dated as of December 30, 1996,
regarding Three Rivers Provider Network, Inc.
99 Irrevocable Proxy of Risk Resolution Group Executed on January 8,
1997, and Effective Upon Closing of Agreement and Plan of Merger.
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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.
CHAMPION FINANCIAL CORPORATION
Date January 28, 1997 By /s/ Paul F. Caliendo
-- ---------------------------------------
Paul F. Caliendo
Its President and Chief Executive Officer
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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization is made as of the
16th day of December, 1996, among Champion Financial Corporation, a
Utah Corporation having its principal place of business at 19 Hillsyde
Court, Cockeysville, Maryland 21030 ("CFC"), Paul F. Caliendo, an
individual residing at 8075 E. Dale Lane, Scottsdale, AZ 85262
("Caliendo") and Stephen J. Carder, an individual residing at 8417 E.
Whispering Wind Drive, Scottsdale, AZ 85255 ("Carder"). Caliendo and
Carder are referred to collectively in this Agreement as the "NHBC
Shareholders."
RECITALS
The NHBC Shareholders own all the issued and outstanding shares of
capital stock of National Health Benefits & Casualty Corporation, a Nevada
corporation ("NHBC"). NHBC is the successor, through merger, of National Health
Benefits Corporation and National Property Casualty Corporation, both Arizona
corporations. References in this Agreement to NHBC, in so far as such references
refer to the period prior to such merger shall be deemed to refer to NHBC and
such predecessor corporations. CFC desires to acquire from the NHBC
Shareholders, and the NHBC Shareholders desire to transfer to CFC, solely in
exchange for voting common stock of CFC, 1,000,000 shares, constituting 100% of
the outstanding capital stock, of NHBC pursuant to a plan for a tax-free
reorganization within the meaning of Section 368 (a)(1) of the Internal Revenue
Code of 1986, as amended.
AGREEMENT
The parties therefore agree as follows:
1. TERMS OF EXCHANGE.
(a) On the Closing Date (as hereinafter defined), and upon the terms
and subject to the conditions set forth in this Agreement, each of the NHBC
Shareholders will transfer, assign and deliver to CFC 500,000 shares of the
Common Stock, par value $.001 per share, of NHBC (the "NHBC Shares"),
constituting together 100% of the outstanding capital stock of NHBC, free and
clear of all liens, claims, pledges and encumbrances of any kind whatsoever.
Certificates evidencing such shares will be delivered to CFC on the Closing
Date, duly endorsed, or with appropriate stock powers attached, for transfer to
CFC with all necessary transfer tax stamps, if any, affixed or provided for.
(b) In full consideration and exchange for the NHBC Stock, CFC shall
issue and deliver to each of the NHBC Shareholders on the Closing Date 1,100,000
fully paid and non-assessable shares of the voting Common Stock, par value $.001
per share, of CFC. The shares of CFC to be issued and delivered to the NHBC
Shareholders herein shall constitute the sole and exclusive consideration to be
delivered to Caliendo and Carder in exchange for the NHBC Shares. The 1,000,000
shares of NHBC stock to be transferred to CFC, and the 2,200,000 shares of CFC
stock to be issued to the NHBC Shareholders (the "CFC Shares") shall be subject
to appropriate adjustment for any exchange, stock split, stock dividend or other
reclassification or
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changes or consolidation or reorganization of NHBC or CFC between the date
hereof and the Closing.
2. DEFINITIONS. As used in this Agreement, the following terms shall have the
meanings set forth below.
(a) "BUSINESS" shall mean the business previously carried on by
National Health Benefits Corporation and National Property Casualty Corporation
of operating a national preferred provider organization and providing related
services and products designed to reduce the costs of medical care, all as more
fully described in a certain Supplement to Confidential Private Placement
Memorandum of CFC dated November 22, 1996 (the "Supplement").
(b) "CUSTOMER LISTS" shall mean all names, addresses and other
pertinent information in the possession of NHBC relating in any way to customers
for products included in the Business, including prospective purchasers who have
contacted or been contacted by either of such corporations but from whom orders
have not been received.
(c) "EQUIPMENT" shall mean all of NHBC's furniture, machinery, tools
and equipment used in the Business.
3. REPRESENTATIONS AND WARRANTIES OF THE NHBC SHAREHOLDERS. Each of the NHBC
Shareholders, jointly and severally, represents and warrants to CFC that the
statements contained in this Section 3 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section ) except as such statements may be
affected by the transactions specifically described in this Agreement.
(a) ORGANIZATION; QUALIFICATION. NHBC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Nevada.. NHBC presently has no subsidiaries. NHBC has the corporate power and
authority to own, lease and operate the properties used by it in the Business
and to carry on the Business as now being conducted by it and as proposed to be
conducted by NHBC following the completion of the transactions contemplated
hereby, and is duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction where qualification as a foreign corporation is
required by reason of its conduct of the Business. The NHBC Shareholders have
previously delivered to CFC complete and correct copies of the certificates of
incorporation and by-laws of NHBC as presently in effect. A sets forth the names
and positions of all directors and officers of NHBC.
(b) CAPITALIZATION AND TITLE TO STOCK. The authorized capital stock of
NHBC consists of 20,000,000 shares of Common Stock, par value $.001 per share,
of which 1,000,000 shares are issued and outstanding, and no shares are reserved
for issuance.
(i) The NHBC Shares have been validly authorized and issued,
are fully paid and non-assessable and are owned by the NHBC Shareholders
beneficially and of record, free and clear of any lien, security interest,
pledge, charge, claim, option, equity, right, restriction on transfer or
encumbrance of any nature whatsoever.
(ii) There is no option, warrant, call, subscription or other
right, commitment or understanding that directly or indirectly calls for the
issuance of any shares of capital stock of NHBC. Except as set forth in Exhibit
B, neither of such corporations has any equity interest in any
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corporation, partnership, joint venture or other entity nor is either of them
subject to any obligation to make any equity investment in or other capital
contribution to any corporation, partnership, joint venture or other entity.
(c) FINANCIAL STATEMENTS. NHBC has had no operations prior to the date
of the merger referred to in the Recitals. The NHBC Shareholders have heretofore
furnished CFC with copies of the unaudited balance sheets of National Health
Benefits Corporation and National Property Casualty Corporation as of December
31, 1995, and related statements of income for the period then ended, together
with unaudited balance sheet as of September 30, 1996, and related statements of
income for the period then ended. Such financial statements have been prepared
in accordance with generally accepted accounting principles consistently applied
and present fairly such corporations' respective financial positions and results
of operations as of, and for the periods, indicated therein.
(d) ABSENCE OF CERTAIN CHANGES. Since the date of the most recent
balance sheet referred to in the preceding paragraph, there has not been:
(i) any sale, lease, abandonment or other disposition of any
assets relating to the Business other than in the ordinary course of business;
(ii) any damage, loss (whether or not covered by insurance)
affecting such assets;
(iii) any change in the compensation of any employee except
for normal year end raises in the ordinary course of the applicable
corporation`s business, or any hiring of any employee;
(iv) any material adverse change in the condition (financial
or other) of the Business; or
(v) any other material transaction by NHBC not in the ordinary
course of its business.
(e) BROKERS. All negotiations by the NHBC Shareholders relative to this
Agreement and the transactions contemplated hereby have been carried on by the
parties and their counsel without the intervention of any other person in such
manner as to give rise to any valid claim against CFC for a brokerage
commission, finder's fee or other payment.
(f) ACCOUNTS. All accounts receivable reflected in the financial
statements referred to in paragraph 3c or thereafter acquired after the date
thereof and prior to the Closing, have been and will be acquired only in the
ordinary and regular course of business and will be fully collectible in full at
the book value thereof (net of usual reserves for doubtful accounts consistent
with prior experience) without set-off or counterclaim.
(g) CUSTOMER LISTS. NHBC is the sole owner of the Customer Lists free
and clear of any claim thereto by any third party and of all mortgages, liens,
charges or encumbrances whatsoever.
(h) OWNERSHIP OF EQUIPMENT. Except as set forth in Exhibit C the
Equipment is owned by NHBC free and clear of all mortgages, liens, charges or
encumbrances whatsoever.
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(i) CONDITION OF EQUIPMENT. The Equipment is in good operating
condition and capable of performing the tasks required of it in the Business.
(j) LITIGATION. There are no actions, suits, arbitrations or other
proceedings or investigations pending or threatened against or affecting NHBC
which would, if determined adversely to it, adversely affect its Business, or
create any mortgage, lien, charge or encumbrance on any of its assets. NHBC is
not subject to any order, writ, injunction or decree of any court or any
federal, State, municipal or other governmental department, commission, board,
bureau, agency or instrumentality applicable to the Business or such assets.
(K) REAL PROPERTY.
(i) Exhibit D lists and describes briefly all real property
leased or subleased to NHBC. The NHBC Shareholders have delivered to CFC correct
and complete copies of the leases and subleases listed in Exhibit D. With
respect to each lease and sublease listed in Exhibit D:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby;
(C) no party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would constitute
a breach or default or permit termination, modification, or acceleration
thereunder;
(D) no party to the lease or sublease has repudiated any
provision thereof;
(E) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(F) with respect to each sublease, the representations and
warranties set forth in subsections A through E above are true and correct with
respect to the underlying lease;
(G) NHBC has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or subleasehold;
(H) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations;
(I) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of such
facilities; and
(J) the owner of the facility leased or subleased has good and
marketable title to the parcel of real property, free and clear of any security
interest, easement, covenant, or other restriction, except for installments of
special easements not yet delinquent and
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recorded easements, covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of title, of the property
subject thereto.
(l) EMPLOYEE CONTRACTS. NHBC is not a party to any collective
bargaining or other contract with any of its employees. The NHBC Shareholders
are not aware of any existing or threatened strike, labor action or demand for
recognition against either of such corporations by any labor organization or of
any pending or threatened claim under any equal employment opportunity or
occupational safety and health law.
(m) EMPLOYEE BENEFIT PLANS. Except as set forth in E, NHBC, has no
pension, bonus, profit-sharing, incentive compensation, severance or other
plans, programs, agreements or arrangements covering employees or former
employees (the "Plans"), including but not limited to "employee benefit plans"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). True and complete copies of the following
items relating to each Plan, where applicable, have heretofore been delivered to
CFC: (i) the plan and trust documents, including all amendments thereto; (ii)
the most recent actuarial reports and annual reports; (iii) the most recent
determination letter issued by the Internal Revenue Service (the "IRS") and (iv)
the most recent summary plan description, summary of material modifications and
all material employee communications relating to such plan.
(i) All of the Plans are in substantial compliance with all
applicable laws, including without limitation the Internal Revenue code of 1986,
as amended (the "Code") and ERISA. None of the Plans is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA. Each Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and the NHBC Shareholders are not aware of
any circumstances likely to result in revocation of any such favorable
determination letter. There is no pending, anticipated or threatened litigation
relating to the Plans. None of the NHBC Shareholders, NHBC and any of their
officers, directors or controlling shareholders is aware of any transaction with
respect to any Plan which could subject any person associated with the Plan to
(A) a tax or penalty imposed by either Section 4975 or 4976 of the Code or
Section 502 of ERISA or (B) liability under Section 409 of ERISA.
(ii) During the six years preceding the Closing, (a) no
liability under Subtitle C or D or Title IV of ERISA has been incurred and not
satisfied, and no condition exists which presents a material risk that liability
would be incurred thereunder, in each case with respect to any ongoing, frozen
or terminated plan currently or formerly maintained or contributed to by NHBC or
any entity or person which together with it would be now or at the applicable
time considered a "single employer" within the meaning of Section 4001(a) of
ERISA (an "ERISA Affiliate"), and (b) check no withdrawal liability has been
incurred and not satisfied under Subtitle E of Title IV of ERISA (regardless of
whether based on contributions of an ERISA Affiliate or that corporation) which
could result in liability to that corporation. No Notice of Reportable Event
(within the meaning of Section 4043 of ERISA) for which the reporting
requirement has not been waived has been required to be filed for any Plan or
any "employee benefit plan" (within the meaning of Section 3(3) of ERISA) of an
ERISA Affiliate ("Affiliate Plan") within the most recent 12-month period.
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(iii) All contributions required to be made on or prior to
the Closing Date under the terms of any Plan or required by applicable law have
been or will be timely made. No Plan or Affiliate Plan has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code and NHBC and any ERISA Affiliate has no outstanding funding waiver.
(iv) Under each Plan which is a "single employer plan,"
(within the meaning of Section 4001(a)(15) of ERISA, as of the last day of the
most recent Plan year, the Accumulated Benefit Obligation (within the meaning of
Statement of Financial Accounting Standards No. 87 ("SFAS No. 87") (as
determined on the basis of the actuarial assumptions contained in the Plan's
most recent actuarial valuation) did not exceed the then current value of the
assets of such Plan, and there has been no material change in the financial
condition of such Plan since the last day of the most recent Plan year.
(v) Except as set forth in the Plans, no written or oral
representations have been made to any employee promising or guaranteeing any
employer payment or funding for the continuation of any medical, dental, life or
disability coverage for any period of time beyond the end of the current plan
year, except to the extent of coverage required under Section 4980B of the Code.
(vi) NHBC has no plan or commitment to create any additional
plan, agreement or arrangement or modify or change any existing Plan.
(n) TAXES. Except as set forth in F as of the closing date, NHBC will
not be liable for any taxes or assessments attributable to the operation of the
Business (including without limitation of the foregoing, income taxes, excise,
unemployment, social security, occupation, franchise, real or personal property,
sales or use taxes, import duties or charges or any penalties or interest with
respect thereof), except for taxes for the current fiscal year from operations
prior to closing, and for taxes payable as a result of the closing. All taxes
which have become due and payable have been paid, and all returns and reports
required to be filed in connection therewith have been filed with the
appropriate taxing authorities. All taxes and other assessments and levies which
such corporation is required by law to withhold or to collect have been duly
withheld and collected and have been paid over to the proper governmental
authorities or are not yet payable and are held by the applicable corporation
for such payment.
(o) COMPLIANCE WITH LAW. Except as set forth in G, NHBC's conduct of
the Business has fully complied with all laws, ordinances, rulings and
regulations of all constituted governmental authorities having jurisdiction with
respect to the conduct of such Business, and no violations have been noted in,
or issued by, any governmental authority in consequence of the conduct of such
Business.
(p) PURCHASE ORDERS AND CONTRACTS. Neither of the NHBC Shareholders is
aware of any facts which would indicate that any of the purchase orders and
contracts of NHBC will result in a loss upon completion.
(q) CERTAIN BUSINESS RELATIONSHIPS. Except as set forth in H, none of
NHBC, or any of its affiliates or family members of such affiliates has been
involved in any business arrangement or relationship with NHBC within the last
24 months, and none of such persons or entities owns any asset, tangible or
intangible, which is used in the Business.
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(r) DISQUALIFICATION PROVISIONS. None of the NHBC Shareholders and any
officer or director of NHBC is subject to any of the disqualification provisions
of Regulation A of the Securities and Exchange Commission under the Securities
Act of 1933 or any similar state "blue sky" law of any state.
(s) UNREGISTERED STATUS OF CFC SHARES. Each of the NHBC Shareholders is
aware that the CFC Shares have not been registered under the Securities Act of
1933, that such Shares may not be sold or otherwise transferred in the absence
of such registration or an exemption therefrom, and that the certificates
evidencing the CFC Shares will bear the legends set forth below and any others
as may be required by law:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
HOLDERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
(t) DISCLOSURE. No representation or warranty by the NHBC Shareholders
in this Agreement or any statement furnished or to be furnished by the NHBC
Shareholders pursuant hereto, or in conjunction with the transactions
contemplated hereby, contains or will contain any untrue or misleading statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements so made or furnished not misleading.
4. REPRESENTATIONS AND WARRANTIES OF CFC. CFC represents and warrants to the
NHBC Shareholders that the statements contained in this Section 4 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section ) except as
such statements may be affected by the transactions specifically described in
the Confidential Private Placement Memorandum dated September 3, 1996, as
supplemented.
(a) ORGANIZATION; QUALIFICATION. CFC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Utah. It has no subsidiaries. CFC has the corporate power and authority to
own, lease and operate the properties used in its business and to carry on its
business as now being conducted, and is duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction where qualification
as a foreign corporation is required by reason of its conduct of such business.
CFC has previously delivered to the NHBC Shareholders complete and correct
copies of the certificate of incorporation and by-laws of CFC as presently in
effect. I sets forth the names and positions of all directors and officers of
CFC.
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(b) CAPITALIZATION. The authorized capital stock of CFC consist of
100,000,000 shares of Common Stock, par value $.001 per share, of which
3,348,302 shares are issued and outstanding, and no shares are reserved for
issuance. There is no option, warrant, call, subscription or other right,
commitment or understanding that directly or indirectly calls for the issuance
of any shares of capital stock of CFC. Except as set forth in J, CFC has no
equity interest in any corporation, partnership, joint venture or other entity
nor is CFC subject to any obligation to make any equity investment in or other
capital contribution to any corporation, partnership, joint venture or other
entity.
(c) DUE AUTHORIZATION. All necessary corporate proceedings have been
had to authorize the execution and delivery by CFC of this Agreement and the
consummation by CFC of the transactions contemplated hereby.
(d) POWER TO SELL. CFC has full corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby.
(e) FINANCIAL STATEMENTS. CFC has heretofore furnished the NHBC
Shareholders with copies of its audited balance sheet as of March 31, 1996, and
related statement of income for the period then ended, in each case accompanied
by a report thereon by Dohan & Co., together with an unaudited balance sheet as
of September 30, 1996, and related statement of income for the period then
ended. Such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied and present fairly CFC's
financial position and results of operations as of, and for the periods,
indicated therein.
(f) ABSENCE OF CERTAIN CHANGES. Since the date of the most recent
balance sheet referred to in the preceding paragraph, there has not been:
(i) any sale, lease, abandonment or other disposition by CFC
of any assets other than in the ordinary course of business;
(ii) any damage, loss (whether or not covered by insurance)
affecting such assets; or
(iii) any material adverse change in the condition (financial
or other) of CFC's business
(g) LITIGATION. There are no actions, suits, arbitrations or other
proceedings or investigations pending or threatened against or affecting CFC
which would, if determined adversely to CFC, materially and adversely affect the
Business or the NHBC Shareholders' title to the CFC Shares, or create any
material mortgage, lien, charge or encumbrance thereon or on any asset of CFC.
CFC is not subject to any order, writ, injunction or decree of any court or any
federal, State, municipal or other governmental department, commission, board,
bureau, agency or instrumentality applicable to the CFC Shares or such assets.
(h) BROKERS. All negotiations by CFC relative to this Agreement and
the transactions contemplated hereby have been carried on by the parties and
their counsel without the intervention of any other person in such manner as to
give rise to any valid claim against the NHBC Shareholders for a brokerage
commission, finder's fee or other payment.
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(i) ERISA. CFC has no pension, bonus, profit-sharing or retirement
plans for officers or employees, and is not required to contribute to any
multi-employer pension plan.
(j) CERTAIN BUSINESS RELATIONSHIPS. Except as described in the
Confidential Private Placement Memorandum dated September 3, 1996, as
supplemented, no officer or director of CFC or any of his affiliates or family
members has been involved in any business arrangement or relationship with CFC
within the last 24 months, and none of such persons or entities owns any asset,
tangible or intangible, which is used in CFC's business.
(k) DISCLOSURE. No representation or warranty by CFC in this Agreement
or any statement furnished or to be furnished by CFC pursuant hereto, or in
conjunction with the transactions contemplated hereby, contains or will contain
any untrue or misleading statement of a material fact or omits or will omit to
state a material fact necessary to make the statements so made or furnished not
misleading.
5. COVENANTS OF THE NHBC SHAREHOLDERS. The NHBC Shareholders covenant as
follows.
(a) CERTAIN ACTIONS PRIOR TO CLOSING. From and after the date of this
Agreement and until the Closing, the NHBC Shareholders
shall
(i) provide CFC access to the Customer Lists and other
marketing information pertinent to the providing of services or sale of products
in the Business;
(ii) use its best efforts to maintain its existing
relationships with customers, suppliers and others and refrain from taking any
action which might reasonably be expected to result in injury to the business
reputation or good will relating to the sale of such services or products.
(b) ACCESS TO RECORDS. During the period from the date of this
Agreement through the Closing, the NHBC Shareholders shall make available to CFC
and its representatives, for inspection, the books of account (including
accountants' work papers) and other business records of NHBC relating to the
Business and shall cooperate with CFC in making such investigations of the
Business as CFC may reasonably deem appropriate, including without limitation
making the employees of such corporations available to answer CFC's reasonable
inquiries relating to the operations of the Business.
(c) NON-COMPETITION. For a period of three (3) years from and after
the date of this Agreement and within the United States, neither the NHBC
Shareholders nor any director, officer or other person, firm, organization,
company or corporation directly or indirectly controlling or controlled by the
NHBC Shareholders will own, manage, operate, join, control or participate in the
ownership, management or control of any business enterprise which is engaged in
the Business.
(d) INDEMNIFICATION. The NHBC Shareholders shall indemnify and hold
harmless CFC against and in respect of:
(i) any damage or deficiency resulting from misrepresentation,
breach of warranty or nonfulfillment of any agreement on the part of the NHBC
Shareholders under this Agreement or from any misrepresentation of fact or
misleading statement of fact in any instrument furnished or to be furnished to
CFC under this Agreement; and
9
<PAGE> 10
(ii) all actions, suits, proceedings, assessments, judgments,
costs and expenses (including attorney's fees) reasonably incurred incident to
any of the foregoing;
provided that CFC shall as soon as practicable after receipt of notice of any
claim relating to the foregoing clauses i or ii have notified the NHBC
Shareholders thereof in writing and tendered to them the defense thereof.
6. COVENANTS OF CFC. CFC covenants as follows.
(a) COMPLETE OFFERING. CFC shall make all reasonable efforts to
complete the private offering referred to in Section 7a as promptly as is
reasonably practicable.
(b) ACCESS TO RECORDS. During the period from the date of this
Agreement through the Closing, CFC shall make available to the NHBC Shareholders
and its representatives, for inspection, CFC's books of account (including
accountants' work papers) and other business records relating to its business
and shall cooperate with the NHBC Shareholders in making such investigations of
such business as the NHBC Shareholders may reasonably deem appropriate,
including without limitation making CFC's employees available to answer the NHBC
Shareholders' reasonable inquiries relating to the operations of its business.
(c) INDEMNIFICATION. CFC shall indemnify and hold harmless the NHBC
Shareholders against and in respect of:
(i) any damage or deficiency resulting from misrepresentation,
breach of warranty or nonfulfillment of any agreement on the part of CFC under
this Agreement or from any misrepresentation of fact or misleading statement of
fact in any instrument furnished or to be furnished to the NHBC Shareholders
under this Agreement; and
(ii) all actions, suits, proceedings, assessments, judgments,
costs and expenses (including attorney's fees) reasonably incurred incident to
any of the foregoing;
provided that the NHBC Shareholders shall as soon as practicable after receipt
of notice of any claim relating to the foregoing clauses i or ii have notified
CFC thereof in writing and tendered to it the defense thereof.
7. CONDITIONS PRECEDENT TO CFC'S OBLIGATIONS. The obligations of CFC hereunder
shall be subject to the satisfaction, on or before the date of Closing, of the
following conditions precedent or concurrent.
(a) COMPLETION OF PRIVATE OFFERING. CFC shall have completed and closed
its contemplated private offering of $2,800,000 of common stock as described in
its Confidential Private Offering Memorandum dated September 3, 1996 and shall
have received from such offering net proceeds of not less than $625,000.
(b) TRUTH OF REPRESENTATIONS. Each of the representations and
warranties of the NHBC Shareholders contained in this Agreement shall be true
and correct at and as of the time of Closing date as if made as of such time.
(c) DELIVERY OF DOCUMENTS. All documents required to be delivered by
the NHBC Shareholders at or prior to the Closing shall have been delivered.
10
<PAGE> 11
(d) OPINION OF COUNSEL. CFC shall have received an opinion dated the
date of Closing of. Gordon & Silver, LTD, counsel for the NHBC Shareholders to
the effect that:
(i) NHBC is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Nevada, and has the
corporate power and authority to own, lease and operate the properties used in
the Business and to carry on the Business as now being conducted and as proposed
to be conducted following the completion of the transactions contemplated
hereby, and is duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction where qualification as a foreign corporation is
required by reason of its conduct of the Business..
(ii) The authorized capital stock of NHBC consists of
20,000,000 shares of Common Stock, par value $.001 per share, of which 1,000,000
shares are issued and outstanding, and no shares are reserved for issuance.
(iii) The NHBC Shares have been validly authorized and
issued, are fully paid and non-assessable and to the best of such counsel's
knowledge after due inquiry are owned by the NHBC Shareholders beneficially and
of record, free and clear of any lien, security interest, pledge, charge, claim,
option, equity, right, restriction on transfer or encumbrance of any nature
whatsoever.
(iv) The execution and delivery by the NHBC Shareholders of
this Agreement and the consummation of the transactions contemplated hereby,
will not violate, be in conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under, any of the terms or
provisions of any agreement or instrument known to such counsel and to which
NHBC or either of the NHBC Shareholders is a party or by which any of their
property may be bound or affected.
(v) This Agreement is a valid and binding obligation of the
NHBC Shareholders, enforceable in accordance with its terms, subject to
bankruptcy, insolvency and similar laws affecting the rights of creditors
generally, and to principles of equity which may limit the availability of
specific performance in certain circumstances.
8. CONDITIONS PRECEDENT TO THE NHBC SHAREHOLDERS' OBLIGATIONS. The obligations
of the NHBC Shareholders hereunder shall be subject to the satisfaction, on or
before the date of Closing, of the following conditions precedent or concurrent.
(a) COMPLETION OF PRIVATE OFFERING. CFC shall have completed and closed
its contemplated private offering of common stock as described in its
Confidential Private Offering Memorandum dated September 3, 1996 and shall have
received from such offering net proceeds of not less than $625,000.
(b) TRUTH OF REPRESENTATIONS. Each of the representations and
warranties of CFC contained in this Agreement shall be true and correct at and
as of the time of Closing date as if made as of such time.
(c) DELIVERY OF DOCUMENTS. All documents required to be delivered by
CFC at or prior to the Closing shall have been delivered.
11
<PAGE> 12
(d) ENLARGEMENT OF CFC BOARD. CFC shall have taken all required
corporate action to increase the number of directors comprising the entire board
of CFC to 7.
(e) OPINION OF COUNSEL. The NHBC Shareholders shall have received an
opinion dated the date of Closing of Robert J. Poulson, Jr., Esq., counsel for
CFC to the effect that:
(i) CFC is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Utah. CFC has the corporate
power and authority to own, lease and operate the properties used in its
business and to carry on its business as now being conducted, and is duly
qualified to do business and in good standing as a foreign corporation in each
jurisdiction where qualification as a foreign corporation is required by reason
of its conduct of such business.
(ii) The authorized capital stock of CFC consist of
100,000,000 shares of Common Stock, par value $.001 per share, of which
5,548,302 shares are issued and outstanding.
(iii) The CFC Shares have been validly authorized and issued,
are fully paid and non-assessable.
(iv) All necessary corporate proceedings have been had to
authorize the execution and delivery by CFC of this Agreement and the
consummation by CFC of the transactions contemplated hereby.
(v) CFC has full corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated hereby.
(vi) The execution and delivery by CFC of this Agreement and
the consummation of the transactions contemplated hereby, do not violate any
provisions of the certificate of incorporation or bylaws of CFC and will not
violate, be in conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, any of the terms or provisions
of any agreement or instrument known to such counsel and to which CFC is a party
or by which CFC or any of its property may be bound or affected.
(vii) This Agreement is a valid and binding obligation of CFC,
enforceable in accordance with its terms, subject to bankruptcy, insolvency and
similar laws affecting the rights of creditors generally, and to principles of
equity which may limit the availability of specific performance in certain
circumstances.
9. THE CLOSING. The Closing hereunder shall take place at ______ A.M. Eastern
Standard time on December 31, 1996, at the offices of Robert J. Poulson, Jr., 67
Wall Street, New York, NY 10005, or at such other time or place as the parties
may mutually agree. At the Closing:
(a) DOCUMENTS TO BE DELIVERED BY THE NHBC SHAREHOLDERS. The NHBC
Shareholders will deliver to CFC:
(i) certificates evidencing the NHBC Shares, duly endorsed or
accompanied by stock powers duly executed in blank; and
(ii) the opinion referred to in Section 7d.
12
<PAGE> 13
(b) DOCUMENTS TO BE DELIVERED BY CFC. CFC will deliver to the NHBC
Shareholders:
(i) certificates evidencing the CFC Shares; and
(ii) the opinion referred to in Section 8e.
(c) EMPLOYMENT AGREEMENT. The parties will execute and deliver an
Employment Agreement in the form of Exhibit L.
(d) ELECTION OF CFC AND NHBC DIRECTORS AND OFFICERS. The Board of
Directors of CFC shall appoint the NHBC Shareholders as directors of CFC to fill
the two recently created vacancies, and shall elect Caliendo and Carder as
President and Chief Financial Officer, respectively, of CFC. The Board shall
elect Caliendo as its Executive Chairman, replacing the present Executive
Chairman.
10. POST-CLOSING TRANSACTIONS.
(a) FURTHER INSTRUMENTS. After the Closing, on the reasonable request
of either party, the others shall do, execute, acknowledge and deliver all such
further acts, assurances, deeds, assignments, transfers, conveyances, powers of
attorney and other instruments and documents as may be required to carry out the
transactions contemplated by this Agreement.
(b) WORKING CAPITAL. Immediately following the Closing, CFC shall
contribute an aggregate of $625,000 to NHBC for use as working capital.
11. MISCELLANEOUS.
(a) CONFIDENTIALITY. Each of the parties shall, and shall cause its
directors, employees, shareholders, affiliates, agents and representatives to
keep confidential as proprietary and privileged information the terms and
conditions contained herein, the negotiations of the parties respecting the
consummation of the transactions contemplated hereby, and any other item which
may be expressly identified or noticed as confidential to be non-disclosing
party (collectively "confidential information"). Notwithstanding the foregoing,
each of the parties shall have the right to disclose any confidential
information to such of its officers, directors, employees, shareholders, agents
and representatives as they need to know such confidential information in order
to proceed with the transactions contemplated hereby. CFC may make a general
public announcement about the subject matter of this Agreement at such time as
CFC may deem appropriate. Any such announcement shall be subject to approval as
to its contents by the NHBC Shareholders.
(b) ENTIRE AGREEMENT; MODIFICATION. This Agreement, and the documents
delivered pursuant hereto, record the entire agreement among the parties hereto
and all the representations and warranties made by any party with respect to the
subject matter hereof. This Agreement may be amended only by a written
instrument executed on behalf of each of the parties, or by a duly authorized
officer as appropriate.
(c) GOVERNING LAW. All questions relating to the validity,
interpretation and performance of this Agreement shall be determined in
accordance with the laws of the State of New York, without reference to
principles of conflict of laws.
13
<PAGE> 14
(d) NOTICES. All communications under this Agreement shall be in
writing and shall be deemed to have been duly given on the date of service if
served personally on the party to whom notice is to be given, or on the third
day after mailing, if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, return receipt requested, postage
prepaid and properly addressed as follows:
To CFC:
Champion Financial Corporation
19 Hillsyde Court
Cockeysville, MD 21030
With copies (which shall not constitute
notice) to:
Robert J. Poulson, Jr., Esq.
67 Wall Street
New York, NY 10005
To the NHBC Shareholders:
Paul F. Caliendo
8075 E. Dale Lane
Scottsdale, AZ 85262
Stephen J. Carder
8417 E. Whispering
Wind Drive
Scottsdale, AZ 85255
With copies (which shall not constitute
notice) to:
______________
______________
______________
Attention:___________
(e) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(f) HEADINGS. The Section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provisions thereof.
(g) SURVIVAL OF REPRESENTATIONS. The representations and warranties
contained in this Agreement shall survive the closing.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
this Agreement to be executed by their officers thereunto duly authorized as of
the day and year first above written.
/s/ Paul F. Caliendo
------------------------
Paul F. Caliendo
/s/ Stephen J. Carder
------------------------
Stephen J. Carder
Champion Financial Corporation
By: /s/ Marcy M. Engelbrecht
------------------------
15
<PAGE> 16
EXHIBITS
Exhibit A Officers and Directors of NHBC
Exhibit B Subsidiaries, etc. of NHBC
Exhibit C Equipment Encumbrances
Exhibit D Real Property
Exhibit E Employee Benefit Plans
Exhibit F Taxes
Exhibit G Legal Compliance
Exhibit H Certain Transactions
Exhibit I Directors and Officers of CFC
Exhibit J Subsidiaries, etc. of CFC
Exhibit K CFC Employee Benefit Plans
Exhibit L Form of Employment Agreement
16
<PAGE> 17
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT A
Officers and Directors of
National Health Benefits & Casualty Corp
Paul F. Caliendo President/CEO
8075 E. Dale Lane Director
Scottsdale, AZ 85262
Stephen J. Carder Executive Vice President
8417 E. Whispering Wind Drive Director
Scottsdale, AZ 85255
Mitchell A. Rosenberg Vice President
8810 N. 83rd St.
Scottsdale, AZ 85258
<PAGE> 18
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT B
Subsidiaries, etc. of
National Health Benefits & Casualty Corp
None
<PAGE> 19
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT C
Equipment Encumbrances
All of the equipment is subject to a blanket security interest in
favor of NHBC's principal lending bank.
<PAGE> 20
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT D
Real Property
Lease is attached
<PAGE> 21
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT E
Employee Benefit Plans
None
<PAGE> 22
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT F
Taxes
None
<PAGE> 23
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT G
Legal Compliance
None
<PAGE> 24
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT H
Certain Transactions
<PAGE> 25
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT I
Directors and Officers of CFC
<PAGE> 26
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT J
Subsidiaries, etc. of CFC
MPLC, Inc. is a wholly owned subsidiary of CFC. MPLC has entered into
an agreement to purchase 40% of the outstanding capital stock of Hayes,
Incorporated.
<PAGE> 27
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT K
CFC Employee Benefit Plans
<PAGE> 28
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT L
Form of Employment Agreement
NONE
<PAGE> 1
EXHIBIT 2.2
AGREEMENT AND PLAN OF ACQUISITION
This Agreement and Plan of Acquisition is made as of the 30th
day of December, 1996, among Champion Financial Corporation, a Utah
Corporation having its principal place of business at 19 Hillsyde
Court, Cockeysville, Maryland 21030 ("CFC"), Mark D. Dyer, an
individual residing at 1607 W. Thunderhill Drive, Phoenix, Arizona
85045 ("Dyer") and Darren Sivertsen an individual residing at 9328
Angelfish Drive, Las Vegas, Nevada 89117 ("Sivertsen"). Dyer and
Sivertsen are referred to collectively in this Agreement as the "TRPN
Shareholders."
The TRPN Shareholders own all the issued and outstanding shares of
capital stock of Three Rivers Provider Network, a Nevada corporation ("TRPN").
CFC desires to acquire from the TRPN Shareholders, and the TRPN Shareholders
desire to transfer to CFC, solely in exchange for voting common stock of CFC,
1000 shares, constituting 100% of the outstanding capital stock of TRPN pursuant
to a plan for a tax-free reorganization within the meaning of Section 368 (a)(1)
of the Internal Revenue Code of 1986, as amended.
AGREEMENT
The parties therefore agree as follows:
1. TERMS OF EXCHANGE
(a) On the Closing Date (as hereinafter defined), and upon the terms
and subject to the conditions set forth in this Agreement, the TRPN Shareholders
Mark D. Dyer will transfer, assign and deliver to CFC 650 shares of the Common
Stock, and Darren Sivertsen will transfer, assign and deliver to CFC 350 shares
of the Common Stock, par value $.001 per share, of TRPN (the "TRPN Shares"),
constituting together 100% of the outstanding capital stock of TRPN, free and
clear of all liens, claims, pledges and encumbrances of any kind whatsoever.
Certificates evidencing such shares will be delivered to CFC on the Closing
Date, duly endorsed, or with appropriate stock powers attached, for transfer to
CFC with all necessary transfer tax stamps, if any, affixed or provided for.
(b) In full consideration and exchange for the TRPN Stock, CFC shall
issue and deliver to the TRPN Shareholders on the Closing Date 65,000 shares to
Dyer and 35,000 shares to Sivertsen fully paid and non-assessable shares of the
voting Common Stock par value $.001 per share, of CFC. The shares of CFC to be
issued and delivered to the TRPN Shareholders herein shall constitute the sole
and exclusive consideration to be delivered to Dyer and Sivertsen in exchange
for the TRPN Shares. The 1,000 shares of TRPN stock to be transferred to CFC,
and the 100,000 shares of CFC stock to be issued to the TRPN Shareholders (the
"CFC Shares") shall be subject to appropriate adjustment for any exchange, stock
split, stock dividend or other reclassification or changes or
<PAGE> 2
consolidation or reorganization of TRPN or CFC between the date hereof and the
Closing and all adjustment will be equal to the amounts stated within this
agreement.
2. DEFINITIONS. As used in this Agreement, the following terms shall have the
meanings set forth below.
(a) "BUSINESS" shall mean the business previously carried on by Three
Rivers Provider Network of operating a national preferred provider organization
and providing related services and products designed to reduce the costs of
medical care.
(b) "CUSTOMER LISTS" shall mean all names, addresses and other
pertinent information in the possession of TRPN relating in any way to customers
for products included in the Business, including prospective purchasers who have
contacted or been contacted by either of such corporations but from whom orders
have not been received.
(c) "EQUIPMENT" shall mean all of TRPN furniture, machinery, tools and
equipment used in the Business.
3. REPRESENTATION AND WARRANTIES OF THE TRPN SHAREHOLDERS. Each of the TRPN
Shareholders, jointly and severally, represents and warrants to CFC that the
statements contained in this Section 3 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section) except as such statements may be
affected by the transactions specifically described in this Agreement.
(a) ORGANIZATION; QUALIFICATION. TRPN is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Nevada. TRPN presently has no subsidiaries. TRPN has the corporate power and
authority to own, lease and operate the properties used by it in the Business
and to carry on the Business as now being conducted. The TRPN Shareholders have
previously delivered to CFC complete and correct copies of the certificates of
incorporation and by-laws TRPN as presently in effect. A sets forth the names
and positions of all directors and officers of TRPN.
(b) CAPITALIZATION AND TITLE TO STOCK. The authorized capital stock of
TRPN consists of 2,500 shares of Common Stock, par value $.001 per share, of
which 1,000 shares are issued and outstanding, and no shares are reserved for
issuance.
(i) The TRPN Shares have been validly authorized and issued, are
fully paid and non-assessable and are owned by the TRPN
Shareholders beneficially and of record, free and clear of any
lien, security interest, pledge, charge,
-2-
<PAGE> 3
claim, option, equity, right, restriction on transfer or
encumbrance of any nature whatsoever.
(ii) There is no option, warrant, call, subscription or other
right, commitment or understanding that directly or indirectly
calls for the issuance of any shares of capital stock of TRPN.
Except as set forth in Exhibit B, neither of such corporations has
any equity interest in any corporation, partnership, joint venture
or other entity nor is either of them subject to any obligation to
make any equity investment in or other capital contribution to any
corporation, partnership, joint venture or other entity.
(c) FINANCIAL STATEMENTS. TRPN has had limited operations prior to
this date and the TRPN Shareholders have heretofore furnished CFC with copies of
the unaudited statements for the period ending December 31, 1996.
(d) ABSENCE OF CERTAIN CHANGES. Since the date of the most recent
balance sheet referred to in the preceding paragraph, there has not been:
(i) any sale, lease, abandonment or other disposition of any assets
relating to the Business other than in the ordinary course of
business;
(ii) any damage, loss (whether or not covered by insurance)
affecting such assets:
(iii) any change in the compensation of any employee except for
normal year end raises in the ordinary course of the applicable
corporation's business, or any hiring of any employee;
(iv) any material adverse change in the condition (financial or
other) of the Business; or
(v) any other material transaction by TRPN not in the ordinary
course of its business.
(e) BROKERS. All negotiations by the TRPN Shareholders relative to
this Agreement and the transactions contemplated hereby have been carried on by
the parties and their counsel without the intervention of any other person in
such manner as to give rise to any valid claim against CFC for a brokerage
commission, finder's fee or other payment.
(f) ACCOUNTS. All accounts receivable reflected in the financial
statements referred to in paragraph 3c or thereafter acquired after the date
thereof and prior to the Closing, have been and will be acquired only in the
ordinary and regular course of business and will be fully collectible in full at
the book value thereof (net of usual reserves for doubtful accounts consistent
with prior experience) without set-off or counterclaim.
-3-
<PAGE> 4
(g) CUSTOMER LISTS. TRPN is the sole owner of the Customer Lists
free and clear of any claim thereto by any third party and of all mortgages,
liens, charges or encumbrances whatsoever.
(h) OWNERSHIP OF EQUIPMENT. Except as set forth in Exhibit C the
Equipment is owned by TRPN free and clear of all mortgages, liens, charges or
encumbrances whatsoever.
(i) CONDITION OF EQUIPMENT. The Equipment is in good operating
condition and capable of performing the tasks required of it in the Business.
(j) LITIGATION. There are no actions, suits, arbitrations or other
proceedings or investigations pending or threatened against or affecting TRPN
which would, if determined adversely to it, adversely affect its Business, or
create any mortgage, lien, charge or encumbrance on any of its assets. To TRPN's
best knowledge they are not subject to any order, writ, injunction or decree of
any court or any federal, State, municipal or other governmental department,
commission, board, bureau, agency or instrumentality applicable to the Business
or such assets.
(k) REAL PROPERTY
(i) Exhibit D
(l) EMPLOYEE CONTRACTS. TRPN is not a party to any collective
bargaining or other contract with any of its employees.
(m) TAXES. Except as set forth in F as of the closing date, TRPN
will not be liable for any taxes or assessments attributable to the operation of
the Business (including without limitation of the foregoing, income taxes,
excise, unemployment, social security, occupation, franchise, real or personal
property, sales or use taxes, import duties or charges or any penalties or
interest with respect thereof), except for taxes for the current fiscal year
from operations prior to closing, and for taxes payable as a result of the
closing. All taxes which have become due and payable have been paid, and all
returns and reports required to be filed in connection therewith have been filed
with the appropriate taxing authorities. All taxes and other assessments and
levies which such corporation is required by law to withhold or to collect have
been duly withheld and collected and have been paid over to the proper
governmental authorities or are not yet payable and are held by the applicable
corporation for such payment.
(n) COMPLIANCE WITH LAW. To TRPN's best knowledge the Business has
fully complied with all laws, ordinances, ruling and regulations of all
constituted governmental authorities having jurisdiction with respect to the
conduct of such Business, and no violations have been noted in, or issued by,
any governmental authority in consequence of the conduct of such Business.
-4-
<PAGE> 5
(o) PURCHASE ORDERS AND CONTRACTS. Neither of the TRPN Shareholders
is aware of any facts which would indicate that any of the purchase orders and
contracts of TRPN will result in a loss upon completion.
(p) DISQUALIFICATION PROVISIONS. None of the TRPN Shareholders and
any officer or director of TRPN to their best knowledge is subject to any of the
disqualification provisions of Regulation A of the Securities and Exchange
Commission under the Securities Act of 1933 or any similar state "blue sky" law
of any state.
(q) UNREGISTERED STATUS OF CFC SHARES. Each of the TRPN
Shareholders is aware that the CFC Shares have not been registered under the
Securities Act of 1933, that such Shares may not be sold or otherwise
transferred in the absence of such registration or an exemption therefrom, and
that the certificates evidencing the CFC Shares will bear the legends set forth
below and any others as may be required by law:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OR CERTAIN
STATES. THESE SECURITIES MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. HOLDERS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER
OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
It is further understood CFC gives piggyback rights to the shares
issued in the terms of this agreement to the shareholders of TRPN,
and as is clarified in the private placement supplement, all shares
will be registered within 180 days. Mark D. Dyer and Darren
Sivertsen, TRPN shareholders agree they will not liquidate more
than 3,200 shares and 1,800 shares respectfully or 5,000 shares
collectively during a 30 day period.
(r) DISCLOSURE. No representation or warranty by the TRPN
Shareholders in this Agreement or any statement furnished or to be furnished by
the TRPN Shareholders pursuant hereto, or in conjunction with the transactions
contemplated hereby, contains or will contain any untrue or misleading statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements so made or furnished not misleading.
(s) ADDITIONAL WARRANTIES OF TRPN.
(i) TRPN is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Nevada, and
has the corporate power and authority to own, lease and operate
the properties used in the
-5-
<PAGE> 6
Business and to carry on the Business as now being conducted
and as proposed to be conducted following the completion of the
transactions contemplated hereby, and is duly qualified to do
business and in good standing as a foreign corporation in each
jurisdiction where qualification as a foreign corporation is
required by reason of its conduct of the Business.
(ii) The authorized capital stock of TRPN consists of 2,500
shares of Common Stock, par value $.001 per share, of which
1,000 shares are issued and outstanding, and no shares are
reserved for issuance.
(iii) The TRPN Shares have been validly authorized and issued,
are fully paid and non-assessable and to the best of such
counsel's knowledge after due inquiry are owned by the TRPN
Shareholders beneficially and of record, free and clear of any
lien, security interest, pledge, charge, claim, option, equity,
right, restriction on transfer or encumbrance of any nature
whatsoever.
(iv) The execution and delivery by the TRPN Shareholders of
this Agreement and the consummation of the transactions
contemplated hereby, will not violate, be in conflict with,
result in a breach of, or constitute (with due notice or lapse
of time or both) a default under, any of the terms or
provisions of any agreement or instrument known to such counsel
and to which TRPN or either of the TRPN Shareholders is a party
or by which any of their property may be bound or affected.
(v) This Agreement is a valid and binding obligation of the
TRPN Shareholders, enforceable in accordance with its terms,
subject to bankruptcy, insolvency and similar laws affecting
the rights of creditors generally, and to principles of equity
which may limit the availability of specific performance in
certain circumstances.
4. REPRESENTATIONS AND WARRANTIES OF CFC. CFC represents and warrants to the
TRPN Shareholders that the statements contained in this Section 4 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section).
(a) ORGANIZATION; QUALIFICATION. CFC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Utah. It has no subsidiaries. CFC has the corporate power and authority to
own, lease and operate the properties used in its business and to carry on its
business as now being conducted, and is duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction where qualification
as a foreign corporation is required by reason of its conduct of such business.
CFC has previously delivered to the TRPN Shareholders complete and correct
copies of the certificate of incorporation and by-laws of CFC as
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<PAGE> 7
presently in effect. I sets forth the names and positions of all directors and
officers of CFC.
(b) CAPITALIZATION. The authorized capital stock of CFC consists of
100,000 shares of Common Stock, par value $.001 per share, of which 5,684,302
shares are issued and outstanding, and no shares are reserved for issuance.
There is no option, warrant, call, subscription or other right, commitment or
understanding that directly or indirectly calls for the issuance of any shares
of capital stock of CFC. Except as set forth in Exhibit J, CFC has no equity
interest in any corporation, partnership, joint venture or other entity nor is
CFC subject to any obligation to make any equity investment in or other capital
contribution to any corporation, partnership, joint venture or other entity.
(c) DUE AUTHORIZATION. All necessary corporate proceedings have
been had to authorize the execution and delivery by CFC of this Agreement and
the consummation by CFC of the transactions contemplated hereby.
(d) POWER TO SELL. CFC has full corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated hereby.
(e) FINANCIAL STATEMENTS. CFC has heretofore furnished the TRPN
Shareholders with copies of its audited balance sheet as of March 31, 1996, and
related statement of income for the period then ended, in each case accompanied
by a report thereon by Dohan & Co., together with an unaudited balance sheet as
of September 30, 1996, and related statement of income for the period then
ended. Such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied and present fairly CFC's
financial position and results of operations as of, and for the periods,
indicated therein.
(f) ABSENCE OF CERTAIN CHANGES. Since the date of the most recent
balance sheet referred to in the preceding paragraph, there has not been:
(i) any sale, lease, abandonment or other disposition by CFC of
any assets other than in the ordinary course of business;
(ii) any damage, loss (whether or not covered by insurance)
affecting such assets; or
(iii) any material adverse change in the condition (financial
or other) of CFC's business
(g) LITIGATION. There are no actions, suits, arbitrations or other
proceedings or investigations pending or threatened against or affecting CFC
which would, if determined adversely to CFC, materially and adversely affect the
Business or the TRPN Shareholders' title to the CFC Shares, or create any
material mortgage, lien, charge or encumbrance thereon or on any asset of CFC.
CFC is not subject to any order, writ, injunction or decree of any court or any
federal, State, municipal or other governmental
-7-
<PAGE> 8
department, commission, board, bureau, agency or instrumentality applicable to
the CFC Shares or such assets.
(h) BROKERS. All negotiations by CFC relative to this Agreement and
the transactions contemplated hereby have been carried on by the parties and
their counsel without the intervention of any other person in such manner as to
give rise to any valid claim against the TRPN Shareholders for a brokerage
commission, finder's fee or other payment.
(i) ERISA. CFC has no pension, bonus, profit-sharing or retirement
plans for officers or employees, and is not required to contribute to any
multi-employer pension plan.
(j) DISCLOSURE. No representation or warranty by CFC in this
Agreement or any statement furnished or to be furnished by CFC pursuant hereto,
or in conjunction with the transactions contemplated hereby, contains or will
contain any untrue or misleading statement of a material fact or omits or will
omit to state a material fact necessary to make the statements so made or
furnished not misleading.
(k) CFC represents the company has timely filed all required SEC
documentation in order to comply with all issues regarding good standing status
with all state and federal requirements surrounding securities issued and
outstanding of CFC.
5. COVENANTS OF THE TRPN SHAREHOLDERS. The TRPN Shareholders covenant as
follows.
(a) CERTAIN ACTIONS PRIOR TO CLOSING. From and after the date of
this Agreement and until the Closing, the TRPN Shareholders shall
(i) provide CFC access to the Customer Lists and other marketing
information pertinent to the providing of services or sale of
products in the Business;
(ii) use its best efforts to maintain its existing relationships
with customers, suppliers and others and refrain from taking any
action which might reasonably be expected to result in injury to
the business reputation or good will relating to the sale of such
services or products.
(b) ACCESS TO RECORDS. During the period from the date of this
Agreement through the Closing, the TRPN Shareholders shall make available to CFC
and its representatives, for inspection, the books of account (including
accountants' work papers) and other business records of TRPN relating to the
Business and shall cooperate with CFC in making such investigations of the
Business as CFC may reasonably deem appropriate, including without limitation
making the employees of such corporations available to answer CFC's reasonable
inquiries relating to the operations of the Business.
-8-
<PAGE> 9
(c) NON-COMPETITION. For a period of three (3) years from and after
the date of this Agreement and within the United States, neither the TRPN
Shareholders nor any director, officer or other person, firm, organization,
company or corporation directly or indirectly controlling or controlled by the
TRPN Shareholders will own, manage, operate, join, control or participate in the
ownership, management or control of any business enterprise which is engaged in
the Business other than Information Management Solutions (i/mx) and its
affiliates and subsidiaries and Health Management Solutions (h/mx), its
affiliates and subsidiary, Sierra Health Services and its affiliates.
(d) INDEMNIFICATION. The TRPN Shareholders shall indemnify and hold
harmless CFC against and in respect of:
(i) any damage or deficiency resulting from misrepresentation,
breach of warranty or nonfulfillment of any agreement on the
part of the TRPN Shareholders under this Agreement or from any
misrepresentation of fact or misleading statement of fact in
any instrument furnished or to be furnished to CFC under this
Agreement; and
(ii) all actions, suits, proceedings, assessments, judgments,
costs and expenses (including attorney's fees) reasonably
incurred incident to any of the foregoing;
provided that CFC shall as soon as practicable after receipt of
notice of any claim relating to the foregoing clauses in (i) or
(ii) have notified the TRPN Shareholders thereof in writing and
tendered to them the defense thereof.
6. COVENANTS OF CFC. CFC covenants as follows.
(a) COMPLETE OFFERING. CFC shall make all reasonable efforts to
complete the private offering referred to in Section 7a as promptly as is
reasonably practicable.
(b) ACCESS TO RECORDS. During the period from the date of this
Agreement through the Closing, CFC shall make available to the TRPN Shareholders
and its representatives, for inspection, CFC's books of account (including
accountants' work papers) and other business records relating to its business
and shall cooperate with the TRPN Shareholders in making such investigations of
such business as the TRPN Shareholders may reasonably deem appropriate,
including without limitation making CFC's employees available to answer the TRPN
Shareholders' reasonable inquiries relating to the operations of its business.
(c) INDEMNIFICATION. CFC shall indemnify and hold harmless the TRPN
Shareholders against and in respect of:
(i) any damage or deficiency resulting from misrepresentation,
breach of warranty or nonfulfillment of any agreement on the
part of CFC under this
-9-
<PAGE> 10
Agreement or from any misrepresentation of fact or misleading
statement of fact in any instrument furnished or to be
furnished to the TRPN Shareholders under this Agreement; and
(ii) all actions, suits, proceedings, assessments, judgments,
costs and expenses (including attorney's fees) reasonably
incurred incident to any of the foregoing;
provided that the TRPN Shareholders shall as soon as
practicable after receipt of notice of any claim relating to
the foregoing clauses in (i) or (ii) have notified CFC thereof
in writing and tendered to it the defense thereof.
7. CONDITIONS PRECEDENT TO CFC'S OBLIGATIONS. The obligations of CFC hereunder
shall be subject to the satisfaction, on or before the date of Closing, of the
following conditions precedent or concurrent.
(a) TRUTH OF REPRESENTATIONS. Each of the representations and
warranties of the TRPN Shareholders contained in this Agreement shall be true
and correct at and as of the time of Closing date as if made as of such time.
(b) DELIVERY OF DOCUMENTS. All documents required to be delivered
by the TRPN Shareholders at or prior to the Closing shall have been delivered.
8. CONDITIONS PRECEDENT TO THE TRPN SHAREHOLDERS' OBLIGATIONS. The obligations
of the TRPN Shareholders hereunder shall be subject to the satisfaction, on or
before the date of Closing, of the following conditions precedent or concurrent.
(a) TRUTH OF REPRESENTATIONS. Each of the representations and
warranties of CFC contained in this Agreement shall be true and correct at and
as of the time of Closing date as if made as of such time.
(b) DELIVERY OF DOCUMENTS. All documents required to be delivered
by CFC at or prior to the Closing shall have been delivered.
(c) OPINION OF COUNSEL. The TRPN Shareholders shall have received
an opinion dated the date of Closing of Robert J. Poulson, Jr., Esq., counsel
for CFC to the effect that:
(i) CFC is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Utah. CFC
has the corporate power and authority to own, lease and operate
the properties used in its business and to carry on its
business as now being conducted, and is duly qualified to do
business and in good standing as a foreign corporation in each
jurisdiction where qualification as a foreign corporation is
required by reason of its conduct of such business.
-10-
<PAGE> 11
(ii) The authorized capital stock of CFC consists of
100,000,000 shares of Common Stock, par value $.001 per share,
of which 5,684,302 Shares are issued and outstanding, and no
shares are reserved for issuance.
(iii) The CFC Shares have been validly authorized and issued,
are fully paid and non-assessable.
(iv) All necessary corporate proceedings have been had to
authorize the execution and delivery by CFC of this Agreement
and the consummation by CFC of the transactions contemplated
hereby.
(v) CFC has full corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated
hereby.
(vi) The execution and delivery by CFC of this Agreement and
the consummation of the transactions contemplated hereby, do
not violate any provisions of the certificate of incorporation
or bylaws of CFC and will not violate, be in conflict with,
result in a breach of, or constitute (with due notice or laps
of time or both) a default under, any of the terms or
provisions of any agreement or instrument known to such counsel
and to which CFC is a party or by which CFC or any of its
property may be bound or affected.
(vii) This Agreement is a valid and binding obligation of CFC,
enforceable in accordance with its terms, subject to
bankruptcy, insolvency and similar laws affecting the rights of
creditors generally, and to principles of equity which may
limit the availability of specific performance in certain
circumstances.
9. THE CLOSING. The Closing hereunder shall take place at ________a.m. Mountain
Standard Time on January 9, 1997, at the offices of NHBC, 9495 East San Salvador
Drive, Scottsdale, AZ 85258, or at such other time or place as the parties may
mutually agree. At the Closing:
(a) DOCUMENTS TO BE DELIVERED BY THE TRPN SHAREHOLDERS. The TRPN
Shareholders will deliver to CFC:
(i) certificates evidencing the TRPN Shares, duly endorsed or
accompanied by stock powers duly executed in blank; and
(b) DOCUMENTS TO BE DELIVERED BY CFC. CFC will deliver to the TRPN
Shareholders:
(i) certificates evidencing the CFC Shares; and
(ii) the opinion referred to in Section 8e.
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<PAGE> 12
(c) COMPENSATION. The parties will execute and deliver a
Compensation Agreement in the form of L.
(d) The TRPN shareholder loans will be repaid respectively within
seven (7) working days from the date of closing.
10. POST-CLOSING TRANSACTIONS.
(a) FURTHER INSTRUMENTS. After the Closing, on the reasonable
request of either party, the others shall do, execute, acknowledge and deliver
all such further acts, assurances, deeds, assignments, transfers, conveyances,
powers of attorney and other instruments and documents as may be required to
carry out the transactions contemplated by this Agreement.
11. MISCELLANEOUS.
(a) CONFIDENTIALITY. Each of the parties shall, and shall cause its
directors, employees, shareholders, affiliates, agents and representatives to
keep confidential as proprietary and privileged information the terms and
conditions contained herein, the negotiations of the parties respecting the
consummation of the transactions contemplated hereby, and any other item which
may be expressly identified or noticed as confidential to be non-disclosing
party (collectively "confidential information"). Notwithstanding the foregoing,
each of the parties shall have the right to disclose any confidential
information to such of its officers, directors, employees, shareholders, agents
and representatives as they need to know such confidential information in order
to proceed with the transactions contemplated hereby. CFC may make a general
public announcement about the subject matter of this Agreement at such time as
CFC may deem appropriate. Any such announcement shall be subject to approval as
to its contents by the TRPN Shareholders.
(b) ENTIRE AGREEMENT; MODIFICATION. This Agreement and the
documents delivered pursuant hereto, record the entire agreement among the
parties hereto and all the representations and warranties made by any party with
respect to the subject matter hereof. This Agreement may be amended only by a
written instrument executed on behalf of each of the parties, or by a duly
authorized officer as appropriate.
(c) GOVERNING LAW. All questions relating to the validity,
interpretation and performance of this Agreement shall be determined in
accordance with the laws of the State of Arizona, without reference to
principles of conflict of laws.
(d) NOTICES. All communications under this Agreement shall be in
writing and shall be deemed to have been duly given on the date of service if
served personally on the party to whom notice is to be given, or on the third
day after mailing, if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, return receipt requested, postage
prepaid and properly addressed as follows:
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<PAGE> 13
To CFC:
Champion Financial
19 Hillsyde Court
Cockeysville, MD 21030
With copies (which shall not constitute notice) to:
Robert J. Poulson, Jr., Esq.
67 Wall Street
New York, NY 10005
To the TRPN Shareholders:
Mr. Mark D. Dyer
Chief Executive Officer
1607 W. Thunderhill Drive
Phoenix, AZ 85045
Mr. Darren Sivertsen
Chief Financial Officer
Three Rivers Network, Inc.
5015 W. Sahara Ave.
Suite 125-102
Las Vegas, NV 89102
With copies (which shall not constitute notice) to:
--------------------------------------
--------------------------------------
--------------------------------------
Attention:____________________________
(e) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(f) HEADINGS. The Section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provisions thereof.
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<PAGE> 14
(g) SURVIVAL OF REPRESENTATIONS. The representations and warranties
contained in this Agreement shall survive the closing.
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
this Agreement to be executed by their officers thereunto duly authorized as of
the day and year first above written.
/s/ Mark D. Dyer
-------------------------------------
Mark D. Dyer
-------------------------------------
Darren Sivertsen
-------------------------------------
Champion Financial Corporation
By: /s/ Zirk Engelbrecht
----------------------------------
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<PAGE> 15
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT A
Officers and Directors of TRPN
Mark D. Dyer
1607 W. Thunderhill Drive
Phoenix, AZ 85045
Darren S. Sivertsen
9328 Angelfish Drive
Las Vegas, NV 89117
<PAGE> 16
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT B
Subsidiaries, etc. of TRPN
NONE
<PAGE> 17
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT C
Equipment Encumbrances
NONE
<PAGE> 18
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT D
Real Property
NONE
<PAGE> 19
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT E
Employee Benefit Plan
NONE
<PAGE> 20
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT F
Taxes
NONE
<PAGE> 21
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT G
Legal Compliance
NONE
<PAGE> 22
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT H
Certain Transactions
NONE
<PAGE> 23
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT I
Directors and Officers of CFC
<PAGE> 24
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT J
Subsidiaries, etc. of CFC
<PAGE> 25
NATIONAL HEALTH BENEFITS & CASUALTY CORP.
EXHIBIT K
Form of Employment Agreement
<PAGE> 1
Exhibit 99
IRREVOCABLE PROXY
Risk Resolution Group, a Maryland partnership ("RRG"), a shareholder of
Champion Financial Corporation, a Utah corporation (the "Corporation") hereby
irrevocably appoints Messrs. Paul F. Caliendo and Stephen J. Carder, RRG's proxy
agents (the "Proxy Agents"), with full power of substitution, and to vote an
aggregate of 1.5 million shares (the "Shares") of the Corporation owned by RRG
with respect to all matters, subject to the exceptions in the following
sentence, submitted to the shareholders at all meetings of the shareholders, or
any adjournments thereof, and in all consents to any actions taken without a
meeting. Notwithstanding the foregoing, this irrevocable proxy shall not be
granted to the Proxy Agents with respect to any transactions between either
Proxy Agent and the Corporation in which either Proxy Agent, any member of
either Proxy Agent's immediate families, or entity controlled by or under common
control with either Proxy Agent, any such family member or any such other
entity. This appointment with respect to any portion of the Shares shall
continue from this date until the date on which RRG no longer owns such portion
of the Shares. Subject to the exceptions set forth herein, the Proxy Agents
shall have all of the power that RRG would possess with respect to voting the
Shares and granting RRG's consent. RRG hereby ratifies and confirms all acts
that the Proxy Agents shall do or cause to be done by virtue of and within the
limitations set forth in this proxy.
RRG hereby revokes all proxies previously given with respect to the
Shares.
RRG hereby waives its right to cancel this Irrevocable Proxy at any
time during the time period described herein. RRG hereby acknowledges that this
Irrevocable Proxy is coupled with an interest described as follows: an absolute
ownership interest in the Corporation.
IN WITNESS WHEREOF, RRG has executed this proxy on this 8th day of
January, 1997.
Risk Resolution Group
By: /s/ Zirk Engelbrecht
------------------------
