UNITED STATES
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): APRIL 30, 2004
COMMISSION FILE NO.: 000-50014
WINFIELD FINANCIAL GROUP, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0478644
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(STATE OR OTHER JURISDICTION OF INCORPORATION (IRS EMPLOYER IDENTIFICATION NO.)
1126 WEST FOOTHILL BLVD, SUITE 105, UPLAND, CA 91786
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(909) 608-2035
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(ISSUER TELEPHONE NUMBER)
2770 S. MARYLAND PARKWAY, SUITE 402
LAS VEGAS, NEVADA 89109
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(FORMER NAME AND ADDRESS)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
As a result of the Acquisition as discussed below under "Item 2.
Acquisition or Disposition of Assets," control of the Registrant shifted to
Chandana Basu who owns 25,150,000 shares (or approximately 80.0%) of the
Registrant's common stock.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 23, 2004, the Registrant acquired 100% of the issued and
outstanding shares of Healthcare Business Services Groups, Inc., a Delaware
corporation ("Healthcare"). As part of the same transaction on May 7, 2004, the
Registrant acquired 100% of the issued and outstanding shares of AutoMed
Software Corp., a Nevada corporation ("AutoMed"), and 100% of the membership
interests of Silver Shadow Properties, LLC, a Nevada single member limited
liability company ("Silver Shadow"). The transactions are collectively referred
to herein as the "Acquisition." As a result of the Acquisition, the Registrant
acquired 100% of two corporations and one limited liability company and has
changed its business focus. The term "Company" shall include a reference to
Winfield Financial Group, Inc. (the "Registrant"), Healthcare, AutoMed and
Silver Shadow unless otherwise stated. Healthcare, AutoMed and Silver Shadow are
sometimes collectively referred to herein as "HBSGI."
The Registrant acquired Healthcare, AutoMed, and Silver Shadow from
Chandana Basu, the sole owner, in exchange for 25,150,000 newly issued treasury
shares of the Registrant's common stock. Immediately after these transactions,
there were 31,414,650 shares of the Registrant's common stock outstanding. As a
result, control of the Registrant shifted to Ms. Basu who owns approximately
80.0% of the Registrant's common stock.
In connection with the Acquisition, Linda Burley resigned as a Director and
officer of the Company. Robert Burley is making preparations to resign as a
Director and officer effective May 17, 2004. As part of the Acquisition, HBSGI
was allowed to designate two (2) people to be appointed to the Registrant's
board of directors. As of the date of this report, HBSGI has elected Bharati
Shah, MD as a Director.
The Registrant is a holding company for HBSGI. The business operations
discussed herein are conducted by HBSGI. The Registrant, through HBSGI, is
engaged in the business of providing medical billing services to health care
providers in the United States.
DESCRIPTION OF THE BUSINESS
Winfield Financial Group, Inc. was incorporated in the State of Nevada on
May 2, 2000. The Company acquired 100% of the equity interest of Healthcare
Business Services Groups, Inc. on April 23, 2004. As part of the same
transaction, the Company acquired 100% of the equity interest of AutoMed
Software Corp. and Silver Shadow Properties, LLC on May 7, 2004. Prior to the
Acquisition, the Registrant was a business broker, primarily representing
sellers and offering its clients' businesses for sale. As a result of the
Acquisition, the Company changed its business focus.
The Company is a medical billing service provider that for over nine years
has assisted various health care providers to successfully enhance their billing
function. The company has a diversified market base with operations in
Providence, Rhode Island; Stockton, California; Laredo, Texas; and Upland,
California. The Company has developed a proprietary software system. The Company
expects that after this software is launched, revenues will grow substantially
over the next three to five years extending its billing model into the
technology era. In addition, the company made an investment in real estate which
the Company had rezoned for its first surgical center.
The Company considers itself one of the fastest growing full service
medical billing agencies in the United States. The Company has successfully
distinguished itself as a customized billing agency. The Company assigns a
Biller to each client's account. The Biller studies and specializes in their
client's specific cases. The Company collects a premium for the Biller's
expertise.
DESCRIPTION OF THE PRINCIPAL PRODUCTS AND SERVICES
The Company is a medical reimbursement consulting firm dedicated to helping
medical practices become more efficient and save money by allowing them to
out-source their insurance processing and medical billing to an expert
reimbursement service. The Company currently provides medical billing services
("Medical Billing") to various health care providers within the United States.
The Company is in the process of entering into two new lines of business: the
research, development and marketing of its proprietary medical billing software
("AutoMed") and the development and management of surgery centers ("Surgery
Centers").
The Company's traditional core competency is Medical Billing. The Company
conducts the Medical Billing line of business through its Delaware subsidiary,
Healthcare Business Services Groups, Inc. The company has a successful track
record of assisting various health care providers to successfully enhance their
billing function. The Company continues to increase relationships with
physicians and medical specialty practices around the country. The Company
believes that this stable base of operations, with its historical track record
of revenues and earnings, lays the groundwork for the Company to enter a higher
margin automated segment of the business with AutoMed as well as fund the
development of a more stable asset-backed segment with the Surgery Centers line
of business. The Company conducts the Surgery Centers line of business through
Silver Shadow Properties, LLC.
To complement Medical Billing, and to provide a distinct, higher margin
product offering, the Company developed AutoMed, a proprietary software that
streamlines and automates electronic billing services. The Company conducts the
AutoMed Software line of business through its Nevada subsidiary, AutoMed
Software Corp. AutoMed is a newly developed and successfully tested
technological medical billing software that is ready for implementation. The
Company believes that AutoMed is the first in its class and the only full
service product on the market. The Company believes that automated medical
billing and medical billing software are markets that are ripe for substantial
growth in terms of revenues and net profits. After AutoMed is launched, the
Company anticipates that this line of business will grow substantially over the
next three to five years extending Medical Billing, which has proven successful
to the Company, into the area of technology and automation.
The Company has broadened its product and service offerings to include the
Surgery Centers line of business which is intended to diversify the Company's
business operations. The Company intends to be a value-added developer and
manager of high-quality surgery centers in each geographic market where it
currently offers Medical Billing. The Company is in the process of renovating a
building and add another building for its first surgery center, as discussed
below under the heading "Description of Property."
The Company owns 100% of Silver Shadow Properties, LLC which was organized
to develop, own and manage the surgery centers. Silver Shadow owns real estate
in Upland, California and is currently renovating an existing building and in
the process of constructing a new building for its surgery center. The Company
believes that it has a positive reputation in the medical industry, particularly
in the geographic markets where it provides Medical Billing. As such, the
Company believes that it will be able to partner with physicians and hospitals
to be a low cost provider of surgical services in each community where it will
develop, own and manage surgery centers. The Company believes that, as an
asset-backed investment, Surgery Centers will provide a stable revenue stream
that the Company expects will enhance with each new surgery center that the
Company opens.
The Company believes that the combination of Medical Billing, AutoMed and
Surgery Centers offers an adequate diversity of revenue streams to enhance the
Company's earning potential.
COMPETITIVE BUSINESS CONDITIONS
Medical Billing
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According to the New England Journal of Medicine, the U.S. Healthcare
System wastes up to 24 to 30 cents of every dollar on administrative and billing
costs that translate into $6 billion annually. Due to today's extremely
competitive healthcare industry, many healthcare providers are outsourcing their
billing. Medical billing services exist to help healthcare providers better
manage their medical practices. These services relieve medical professionals of
tedious detail work, but rarely do they offer a means to substantially maximize
the practice's bottom line.
Medical billing companies generally gather patient information and billing
details from a physician or clinic and submit these details to insurance
carriers for payment. A billing company may also submit statements to patients
for payments of their portion. Currently hundreds of thousands potential medical
billing clients exist. The Company distinguishes itself from thousands of other
billing agencies in the industry as a customized billing agency and a
one-stop-shopping service for all medical practice administrative functions. The
Company considers its medical billing service as the key to its clients' getting
paid efficiently and quickly by private and government administered insurance
companies.
The Company provides a completely customized medical billing service that
can be fine tuned to any medical practice or specialty. The Company provides a
wide range of billing services including:
- Delinquent account management
- Surgery center setup and management
- Assessment of practice cash flow
- Practice management
- HMO, PPO and capitation contract management
- Business Auditing
The medical billing business is labor intensive, however, the Company
estimates that its clients collect 50% more revenue than they otherwise would
collect without the Company's services. Due to this benefit to its clients,
Healthcare has experienced continued growth since its inception in 1994. The
Company offers clients not only more office staff capacity for more crucial
tasks, but also a maximized return from insurance carriers.
Cost savings and decreases in payment time have made electronic submission
of medical bills much more appealing to clients. Potential users of electronic
bill submission include family practice, internal medicine, surgeons,
psychologists, chiropractors, physical therapists, podiatrists, specialists,
ambulance services, medical laboratories, ambulatory surgery centers and
hospitals. In order to service this growing demand, the Company has developed
and successfully tested AutoMed.
AutoMed (TM)
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The AutoMed(TM) software is a means to provide automated billing software
that is customized for medical practices and hospitals, particularly in the area
of insurance claims processing via electronic submission. AutoMed(TM) is
designed to help medical practices become more efficient and save money by
allowing them to cost effectively manage their insurance processing and medical
billing for reimbursement. AutoMed(TM) gives a private practice, hospital, or
surgical center the capability to submit electronic billing of their medical
insurance claims. This is a badly needed service for most medical practices
which has become more critical since the Federal Government implemented a
mandate for electronic submission of Medicare claims.
The Company has initially focused AutoMed(TM) on claims filing. AutoMed(TM)
has been piloted in the Company's Medical Billing line of business since July
2003. During 2004, the Company plans to use AutoMed(TM) as a means of providing
one-stop shopping for medical office management.
The AutoMed(TM) software is expected to be priced at $50,000 per initial
installation for a single user and one computer. The Company separately prices
additional providers and computers. The Company expects that when implemented,
it will also generate support fees for AutoMed(TM). The Company believes that
AutoMed(TM) is the only automated medical billing software available in the
United States that is versatile enough to automate all specialties of medical
practices. AutoMed(TM) automatically generates practice management reports,
material management reports, practice analysis and financial reports to provide
the healthcare provider with control over the medical practice. Reports can be
accessed over the Internet from any where at any time. AutoMed(TM) also follows
up on unpaid claims by sending follow up letters to the insurance companies and
sends messages to the operator to take action if payments are not received
within 45 days. AutoMed(TM) automatically performs remittance processing for
money received from Medicare. AutoMed(TM) automatically sends patients
statements, bills secondary insurance claims and generates collection letters.
The Company estimates that by using AutoMed(TM), a medical practice will
save 50% to 75% of its billing and collection cost. By implementing AutoMed, a
medical practice may save as much as $50,000 over a -year period. These
employees could be reallocated to collections, a potentially new revenue stream.
According to National statistics, only about 25% of insurance claims,
initially submitted on paper are ever paid by insurance carriers. With
electronic submission, the Company can increase the percentage of claims paid to
approximately 70% when accepted electronic. Additional statistics indicate that
it currently costs a medical practice between $10.00 and $15.00 per claim to
process insurance for their patients. The Company can reduce these costs by 35%
or more with their current service package. The Company expects that with the
implementation of AutoMed, it can reduce these costs by up to 75%.
Turnaround time for paper insurance claims generally ranges anywhere
between 45 to 90 days or more that create a low turnover of accounts receivables
within the healthcare industry. The Company estimates that by submitting claims
electronically, the Company can increase the turnover of accounts receivable to
15 to 28 days which will improve its clients' cash flow.
Industry statistics also show a 45% to 55% suspension/rejection rate for
paper insurance claims which, in turn, creates a costly, labor intensive
collection process. The Company estimates that this percentage can be reduced to
less than 50% by editing claims prior to their electronic transmission to
insurance carriers. Claims that are submitted electronically have an approximate
95% accuracy rate.
AutoMed's unique position in the market will be to offer a full-service
medical billing and reimbursement software package that is the single-source
resource for a medical practice's entire claims continuum. The policy behind
AutoMed(TM) is to customize the software packages based on the medical
specialization and the needs of each office or hospital. Our goal with AutoMed
is to provide "one-stop shopping" for medical practices when it comes to their
administrative functions. The Company believes that its one-stop model is a new
paradigm that provides greater operational efficiency by minimizing vendor
relationships and the need for patch-work interfaces between them. The Company
provides the following services as part of one-stop shopping:
- Automatic patient record setup using electronic registration forms
completed by the patient or front office;
- Automatic electronic and manual medical claims filing using electronic
(rather than paper) superbill forms completed and submitted by the medical
service provider;
- Automatic patient statement (initial and monthly statements);
- Automatic Medicare remittance processing;
- Auto-tracking drugs, materials, and supply management;
- Automatic follow up collection notices generated after 45 days of
nonpayment; and
- Automatic practice management reports generated for printing on a local
printer and uploaded to the Internet for office access.
The Company is currently developing automated medical transcription
services and electronic records such as notes and op-reports which are to be
included in AutoMed.
A client can use AutoMed to immediately input claims. AutoMed incorporates
the unique processing requirements for all designated insurance carriers and
edits the submitted data accordingly before transmitting the information to the
appropriate insurance carrier for reimbursement which facilitates accuracy and
rapid payment in most cases. Upon receiving the electronically submitted
insurance claim, the insurance carriers process the claim and send the payment
directly to the client. AutoMed not only provides electronic transmission to
insurance carriers and computerized data verification, but it also eliminates
most of the human element. AutoMed simplifies and accelerates the claims filing
process.
The Company believes that AutoMed is poised to drastically change the
medical billing process. AutoMed will eliminate the need for employees to
perform coding and billing. With AutoMed, clients can directly submit an
electronic claim after examining the patient which bypasses the bottlenecks
caused by coding and billing. The system prints a copy of the bill and
simultaneously submits the form to Medicare or the appropriate insurance
company.
AutoMed(TM) is a full-featured practice management software that performs
other administrative functions needed by hospitals or medical practices. For
example, in the event there is a delay in claims processing, AutoMed(TM) will
automatically generate the appropriate follow-up correspondence at 45, 60, and
90-day intervals. AutoMed will also bill patients for co-payments and other
charges not covered by their insurance company. AutoMed can track secondary and
supplementary insurance so that payments and balances are accurately applied.
AutoMed utilizes state-of-the-art, open-item accounting, where most other
systems use balance-forward systems. AutoMed can track outstanding receivables
with insurance aging reports in several different sequences for ease of use.
AutoMed can do a complete practice analysis to show where money is coming from
which will increase office efficiency. For each procedure, AutoMed calculates
and prints the charges and percentage of total charges they represent for
immediate reference. AutoMed can generate Transactional Journals and Detail
Ledgers to provide an accurate overall picture of the client's medical practice.
With managed care sweeping the country, it is imperative for medical
practices to evaluate the benefits they receive from affiliation with different
organizations. The Company's managed care contract service tracks payments and
analyzes the information to produce customized reports showing profitability, or
lack of profitability, with each managed care facility. These reports are
critical when decisions need to be made on renewing and negotiating contracts.
The Company believes that AutoMed(TM) will provide outstanding accuracy,
quality, and service to facilitate such negotiations. The company's dedication
to service is demonstrated by providing the physician one-stop shopping for all
his or her billing and claims needs.
Surgery Centers
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Silver Shadow acquired real estate in Upland, California and is currently
renovating an existing building and in the process of constructing a new
building for its surgery center, discussed in more detail below under the
heading "Description of Property." Surgical centers can offer the same services
as an out patient hospital, but at decreased costs and higher convenience. The
centers can specialize in a certain field such as pain management, eye
gastro-intestinal and some orthopedic procedures or provide a wide range of
other minor surgical services. Surgery centers are able to provide the excellent
healthcare of hospitals at a competitive cost with more convenient locations.
The surgical center industry in the United States includes about 1,500
companies that operate 3,500 freestanding outpatient surgical centers, with
combined annual revenue close to 6 billion dollars. The industry is highly
fragmented. Twenty of the largest companies have approximately 40% market share.
Surgery centers are geographically centered in areas of growing populations
which makes them more assessable than hospitals. Most centers have from 2 to 6
operating rooms. Cataract removal, artificial lens insertion and pain management
account for 75% of all procedures performed at surgical centers. Most of the
surgical centers are Medicare-certified.
DEPENDENCE ON ONE OR A FEW CUSTOMERS
The Company has approximately 48 to 50 customers throughout the United
States. Its largest customer is Dr. Narinder Grewal, an anesthesiologist and
pain management specialist. The fees charged to Dr. Grewal constitute over 40%
of the Company's revenues. Dr. Grewal is currently a Director of Healthcare. Dr.
Grewal will also become a Director of the Registrant effective may 17, 2004. The
Company's relationship with Dr. Grewal is discussed in more detail below under
the heading "Related party Transactions."
PATENTS, TRADEMARKS & LICENSES
The Company owns the trademark, Automed. The Company has developed and
successfully tested proprietary medical billing software, however, the Company
has not initiated steps to obtain a patent or copyright for the software.
NEED FOR GOVERNMENTAL APPROVAL AND THE EFFECTS OF REGULATIONS
The Company offers medical business services which are subject to HIPPA
compliance and HCFA billing guidelines. As a result, Medical Billing and AutoMed
require minimal government regulation and are subject to minimal government
approval. The Company is, however, subject to various federal laws regarding the
construction and development of Surgery Centers as well as state and local
zoning laws and potentially state and local laws governing the need for such
facilities.
RESEARCH & DEVELOPMENT OVER THE PAST TWO YEARS
The Company has spent approximately 10% of its time during the last two
years on research and development. The Company has generated a predominate
portion of its business through word of mouth.
EMPLOYEES
The Company has a total of 28 employees, 26 of which are hired on a
full-time basis. The Company intends to hire 20 employees during the next twelve
months allocated as follows: 10 to Medical Billing, 5 to AutoMed and 5 to
Surgery Centers.
DESCRIPTION OF PROPERTY
The Company currently leases office space in Upland, California; Laredo,
Texas; and Providence, Rhode Island. The Upland lease ends May 2005, at which
time the Company plans to relocate to approximately 7,250 square feet of office
space in the surgery center that is currently being renovated, as discussed
below. The office space in Laredo, Texas is leased on a month-to-month basis.
The term of the lease for office space in Providence, Rhode Island is 3 years
and ends in June 2004. The Company pays $3,338 per month for 3,800 square feet
of office space in Upland, California, $600 per month for 100 square feet of
office space in Laredo, Texas, and $651 per month for 100 square feet of office
space in Providence, Rhode, Island.
Silver Shadow owns a fee interest in real estate in Upland, California in
the County of San Bernardino. Silver Shadow is currently renovating an existing
building on the property and in the process of constructing a new building for
its first surgery center. The Company believes that the property is suitable for
its intended use. In the opinion of the Company's management, said property is
adequately covered by insurance.
LEGAL PROCEEDINGS
On September 20, 1999, Mohammad Tariq, MD was granted a default judgment in
the District Court of Collin County, Texas, 380th Judicial District in the
amount of $280,835.10, plus prejudgment and post-judgment interest against
Healthcare Business Services Group, Inc. As of the filing of this report on Form
8-K, Healthcare has not paid any money with respect to such default judgment.
The default judgment relates to a contract for billing services between
Healthcare and Dr. Tariq entered into in 1996. After termination of the
contract, Dr. Tariq requested an accounting of the amounts collected from his
patients by Healthcare in connection with the billing services. In July 1999,
Healthcare sent an accounting to Dr. Tariq in the amount of $275,355 collected,
$42,512 charged by Healthcare as its fee and $222,298 was paid to Dr. Tariq. On
September 22, 1999, Healthcare received notice of the default judgment. Although
Healthcare has not taken legal steps to defend itself against the default
judgment, Healthcare claims to have not received proper notice from Dr. Tariq of
a civil action. To the best of Healthcare management's knowledge, Dr. Tariq has
not sought to enforce the judgment.
RISK FACTORS
NEED FOR ADDITIONAL FINANCING. In addition to its continued medical billing
operation, the Company has planned to begin marketing AutoMed, to open its first
surgery center and to purchase a second parcel of land for its second surgery
center in 2004. The Company can satisfy the cash requirements for these plans
for the next six months. The Company needs to raise additional capital financing
of four to five million dollars to implement its business plan. The Company does
not have any commitments or identified sources of additional capital from third
parties or from its officers, directors or majority shareholders. There is no
assurance that additional financing will be available on favorable terms, if at
all.
RELIANCE ON KEY MANAGEMENT. The success of the Company depends upon the
personal efforts and abilities of Chandana Basu, Payel Madero, Margeret Foley,
Gina Ruiz, Valerie Salazar, and Sherryl Montgomery. The Company faces
competition in retaining such personnel and in attracting new personnel should
any of the foregoing chose to leave the Company. The loss of any of these
employees could have a material adverse effect on the Company's business and
operations.
BECAUSE MS. CHANDANA BASU OWNS 80.0% OF OUR OUTSTANDING COMMON STOCK, SHE WILL
EXERCISE CONTROL OVER CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO OTHER
MINORITY SHAREHOLDERS. Chandana Basu, a Director of the Company and the
Company's Chief Executive Officer, owns approximately 80.0% of the issued and
outstanding shares of our common stock. Accordingly, she will exercise control
in determining the outcome of all corporate transactions or other matters,
including mergers, consolidations and the sale of all or substantially all of
our assets, and also the power to prevent or cause a change in control. The
interests of Ms. Basu may differ from the interests of the other stockholders
and thus result in corporate decisions that are disadvantageous to other
shareholders.
IF THERE'S A MARKET FOR OUR COMMON STOCK, OUR STOCK PRICE MAY BE VOLATILE.
If there's a market for our common stock, we anticipate that such market would
be subject to wide fluctuations in response to several factors, including, but
not limited to:
(1) actual or anticipated variations in our results of operations;
(2) our ability or inability to generate new revenues;
(3) conditions and trends in the natural gas industry.
Further, because our common stock is traded on the NASD over the counter
bulletin board, our stock price may be impacted by factors that are unrelated or
disproportionate to our operating performance. These market fluctuations, as
well as general economic, political and market conditions, such as recessions,
interest rates or international currency fluctuations may adversely affect the
market price of our common stock.
ITEM 5. OTHER EVENTS
In connection with the acquisition of HBSGI, Robert Burley will resign as
a Director and as President, Chief Executive Officer and Treasurer of the
Registrant effective May 17, 2004. Linda Burley resigned as a Director and as
Secretary. Bharati Shah, MD was appointed as a Director. Christopher Madero
was appointed as Secretary. After Mr. Burley resigns on May 17, 2004, Chandana
Basu will be appointed as a Director and as the Registrant's Chief Executive
Officer and Treasurer effective May 17, 2004. Dr. Thomas Guthrie will be
appointed as President. As a result of the change in focus of the Registrant's
business, the Registrant will change its name to Healthcare Business Services
Groups, Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
SEPARATE COMPANY FINANCIAL STATEMENTS FOR HEALTHCARE BUSINESS SERVICES
GROUPS, INC., AUTOMED SOFTWARE CORP. AND SILVER SHADOW PROPERTIES, LLC
(c) Financial Statements of Business Acquired To Be Provided
(d) Pro Forma Financial Information To Be provided
(e) Exhibits:
2.1 Common Stock Purchase Agreement
2.2 Addendum to Common Stock Purchase Agreement
Signatures
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Winfield Financial Group, Inc.
May 17, 2004
/s/ Robert Burley
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Robert Burley
Chief Executive Officer
Exhibit 2.1
COMMON STOCK PURCHASE AGREEMENT
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This Common Stock Purchase Agreement (the "Agreement") is made and entered into
as of the 23rd day of April, 2004, between Winfield Financial Group, Inc., a
Nevada corporation ("Buyer" or "Winfield") and Health Care Business Services
Groups, Inc., a Delaware corporation, AutoMed Software Corporation a Nevada
Corporation and Silver Shadow Properties, LLC, a Nevada Limited Liability
Company ("Seller" or "HBSGI, et all").
RECITALS
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The Buyer desires to acquire all issued and outstanding shares of common stock
of Seller, and the Seller wishes to have all issued and outstanding shares of
common stock of Seller acquired by the Buyer, on the terms and conditions set
forth in this Agreement by way of an exchange of shares (the "Exchange").
The board of directors of the Buyer and the Seller have determined that it is in
the best interest of the parties for the Buyer to acquire all issued and
outstanding shares of common stock of the Seller pursuant to an exchangeable
share transaction.
The Company, Health Care Business Services Groups and it's Shareholders desire
to set forth the terms of the Exchange Offer, which is intended to constitute a
tax-free reorganization pursuant to the provisions of the Internal Revenue Code
of 1986.
NOW, THEREFORE, in consideration of the terms, conditions, agreements and
covenants contained herein (the receipt and sufficiency of which are
acknowledged by each party), and in reliance upon the representations and
warranties contained in this Agreement, the parties hereto agree as follows:
I. RECITALS; TRUE AND CORRECT
The above stated recitals are true and correct and are incorporated into this
Agreement.
II. PURCHASE AND SALE
2.1 Purchase and Sale. Subject to all the terms and conditions of this
Agreement, at the Closing, the Seller agrees to receive from the Buyer, and
Buyer agree to issue to the shareholders of the Seller (a "Shareholder") Shares
of Common Stock of the Buyer ("Buyer Shares") (the "Share Consideration")
according to Schedule A attached in exchange for the transfer of all the issued
and outstanding shares of the Common Stock of the Seller ("Seller's Shares") to
the Buyer. The Seller Shareholders shall surrender the certificates evidencing
100% of the shares of The Seller stock, duly endorsed with Medallion Guaranteed
stock powers so as to make the Seller the sole owner thereof ;
a) The Buyer will issue and deliver 25,150,000 newly issued treasury
shares of the Seller's Common Stock in the name of Shareholders or
its assigns in accordance with this Agreement;
b) At Closing, Two (2) existing Director's of the Buyer shall resign and
contemporaneously therewith HBSGI shall designate Two (2) person's to
be appointed to the Board of Directors to fill the vacancy created by
such resignation. Upon the appointment of HBSGI's Designate, the Buyer
will have four (4) Directors;
c) The Closing shall be consummated by the execution and acknowledgment
by the Buyer and HBSGI of Articles of Share Exchange in accordance
with applicable Nevada law. The Articles of Share Exchange executed
and acknowledged shall be delivered for filing to the Secretary of
State of the State of Nevada as promptly as possible after the
consummation of the Closing. The Articles of Share Exchange shall
specify the effective date and time of the Share Exchange;
d) HBSGI, et all will transfer all issued shares to Winfield Financial
Group in connection with this agreement between WFLD and HBSGI; and
2.2 Closing. The parties shall hold the Closing on April 26 ("Closing
Date"), at 9:00 P.M., local time, at the offices of the Advisor, or at such
other time and place as the parties may agree upon.
2.3 Name Change. Immediately following the Closing, Winfield may change its
name to Health Care Business Services Groups, Inc. (the "Name Change").
Shareholder consent will be required under a Schedule 14C filed with the SEC and
relevant provisions of Nevada law. The Schedule 14C shall be filed with the SEC
as required.
2.4 Restriction on issuance of shares under S-8 Registration Statement.
Subsequent to the Closing Date of the definitive Agreement and for a period of
12 months thereafter, Winfield shall not undertake and HBSGI shall not cause
Winfield to undertake registration of more than 10% of the issued and
outstanding shares of common stock on the Closing Date on Form S-8. Winfield
will sign an on-going Reporting Consulting Agreement, consisting of 500,000
shares to PCMS d/b/a Stephen Brock for on-going compliance with SEC and NASD
requirements for a period of 12 months post Closing Date. This shall be binding
upon Winfield post closing.
2.5 Transferred Assets. All Assets of Winfield Financial Group set forth on
Schedule C will be transferred to Robert Burley or assignee, former officer,
director and principal shareholder of Winfield after the close of the
transaction and no Schedule 14C filing with respect to same has been made with
the SEC. Further, no 14F filing was made in connection with the related change
of control.
2.6 Plan of Action. Plan of action regarding roles and responsibilities,
including payment of costs and expenses, after execution of this Agreement is
set forth on Schedule 2.9.
2.7 Pre-Closing Actions. The parties acknowledge that this Agreement is
being executed prior to the negotiation and discussion of all matters relating
to such exchangeable share transaction and prior to the negotiation and
discussion of the schedules to this Agreement and documents to be delivered
thereto. As well, all of the representations and warranties may not be complete
or true as of the date of signing of the Agreement. The parties agree to work
together in good faith in finalizing the documentation and resolving such issues
prior to Closing, which may involve an amendment to this Agreement to reflect
such issues. All schedules and material documentation must be presented to the
other party for review as soon as possible following execution of this
Agreement.
III. CONDUCT OF BUSINESS PENDING CLOSING
Seller and Buyer covenant that between the date hereof and the date of the
Closing:
3.1 Access to Seller. Seller shall (a) give to Buyer and to Buyer's
counsel, accountants and other representatives reasonable access, during normal
business hours, throughout the period prior to the Closing Date (as defined in
Section 6.1), to all of the books, contracts, commitments and other records of
Seller and shall furnish Buyer during such period with all information
concerning Seller that Buyer may reasonably request; and (b) afford to Buyer and
to Buyer's representatives, agents, employees and independent contractors
reasonable access, during normal business hours, to the properties of Seller, in
order to conduct inspections at Buyer's expense to determine that Seller is
operating in compliance with all applicable federal, state, local and foreign
statutes, rules and regulations, and all material building, fire and zoning laws
or regulations and that the assets of Seller are substantially in the condition
and of the capacities represented and warranted in this Agreement; provided,
however, that in every instance described in (a) and (b), Buyer shall make
arrangements with Seller reasonably in advance and shall use its best efforts to
avoid interruption and to minimize interference with the normal business and
operations of Seller. Any such investigation or inspection by Buyer shall not be
deemed a waiver of, or otherwise limit, the representations, warranties or
covenants of Seller contained herein.
3.2 Conduct of Business. During the period from the date hereof to the
Closing Date, Seller shall and shall use reasonable efforts, to the extent such
efforts are within Seller's control, to cause its business to be operated in the
usual and ordinary course of business and in material compliance with the terms
of this Agreement.
3.3 Exclusivity to Buyer. Until either the exchange agreement is
terminated or the exchange closed, Seller agrees not to solicit any other
inquiries, proposals or offers to purchase or otherwise acquire, in an exchange
transaction or another type of transaction, the business of Seller or the shares
of capital stock of Seller. Any person inquiring as to the availability of the
business or shares of capital stock of Seller or making an offer therefore shall
be told that Seller is bound by the provisions of this Agreement. Seller as well
as its officers, directors, representatives or agents further agree to advise
Buyer promptly of any such inquiry or offer.
3.4 Access to Buyer. Buyer shall (a) give to Seller and to Seller's
counsel, accountants and other representatives reasonable access, during normal
business hours, throughout the period prior to the Closing Date, to all of the
books, contracts, commitments and other records of Buyer and shall furnish
Seller during such period with all information concerning Buyer that Seller may
reasonably request; and (b) afford to Seller and to Seller's representatives,
agents, employees and independent contractors reasonable access, during normal
business hours, to the properties of Buyer in order to conduct inspections at
Seller's expense to determine that Buyer is operating in compliance with all
applicable federal, state, local and foreign statutes, rules and regulations,
and all material building, fire and zoning laws or regulations and that the
assets of Buyer are substantially in the condition and of the capacities
represented and warranted in this Agreement; provided, however, that in every
instance described in (a) and (b), Seller shall make arrangements with Buyer
reasonably in advance and shall use its best efforts to avoid interruption and
to minimize interference with the normal business and operations of Buyer. Any
such investigation or inspection by Seller shall not be deemed a waiver of, or
otherwise limit, the representations, warranties or covenants of Buyer contained
herein.
3.5 Conduct of Business. During the period from the date hereof to the
Closing Date, the business of Buyer shall be operated by Buyer in the usual and
ordinary course of such business and in material compliance with the terms of
this Agreement.
3.6 Exclusivity to Buyer. Until either this Agreement is terminated or the
exchange closed, Buyer agrees not to solicit any other inquiries, proposals or
offers to enter into exchange or business combination negotiations with other
parties. Any person inquiring as to the availability of the Buyer for such
purposes or the making an offer therefore shall be told that Buyer is bound by
the provisions of this Agreement. Buyer as well as its officers, directors,
representatives or agents further agree to advise Seller promptly of any such
inquiry or offer.
3.7 Approval. As promptly as reasonably practicable following the date of
this Agreement, Seller shall take all action reasonably necessary in accordance
with the laws of the state of California and its Articles of Incorporation and
Bylaws to secure the required approval and adoption of this Agreement.
3.8 Mutual Cooperation. The initial press release relating to this
Agreement shall be a joint press release. Thereafter, each of the Seller and
the Buyer agree to provide 24 hour pre-notification to the other party of any
news releases or regulatory filings which the party proposes to issue or file
and shall agree to consider any reasonable recommendation or suggestion of the
other party with respect thereto. Buyer shall be permitted to make
announcements of Seller's newsworthy activities provided the consent of the
Seller is obtained in writing, which consent shall not be reasonably withheld.
Each party shall also provide the other party with notice a reasonable time in
advance of, and shall permit a representative of the other party to review or
participate in, any communications, meetings, or correspondence relating to
investor relations matters, including matters relating to public offering
activities which are expected to take place following Closing.
IV. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows, with the knowledge and
understanding that Buyer is relying materially upon such representations and
warranties:
4.1 Organization and Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of state of California.
Seller has all requisite corporate power to carry on its business as it is now
being conducted and is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where such qualification is
necessary under applicable law, except where the failure to qualify
(individually or in the aggregate) does not have any material adverse effect on
the assets, business or financial condition of Seller, and all states in which
Seller is qualified to do business as of the date hereof, are listed in the
information in Schedule 4.1. The copies of the Articles of Incorporation and
Bylaws of Seller, as amended to date, delivered to Buyer, are true and complete
copies of these documents as now in effect. Except as otherwise set forth in the
information Schedule 4.1, Seller does not own any interest in any other
corporation, business trust or similar entity. The minute book of Seller
contains accurate records of all meetings of its respective Board of Directors
and shareholders since its incorporation.
4.2 Capitalization. The authorized capital stock of Seller is 50,000,000 (
Fifty-Million) common shares of which 6,264,650 are issued and outstanding. All
of such shares of capital stock are duly authorized, validly issued and
outstanding, fully paid and nonassessable, and were not issued in violation of
the preemptive rights of any person. There are no subscriptions, options,
warrants, rights or calls or other commitments or agreements to which Seller is
a party or by which it is bound, calling for any issuance, transfer, sale or
other disposition of any class of securities of Seller, except as set forth in
Schedule 4.2. There are no outstanding securities convertible or exchangeable,
actually or contingently, into shares of common stock or any other securities of
Seller. Seller has no subsidiaries except as set forth in Schedule 4.2.
4.3 Authority. This Agreement constitutes, and all other agreements
contemplated hereby will constitute, when executed and delivered by Seller in
accordance therewith (and assuming due execution and delivery by the other
parties hereto), the valid and binding obligation of Seller, enforceable in
accordance with their respective terms, subject to general principles of equity
and bankruptcy or other laws relating to or affecting the rights of creditors
generally.
4.4 Properties. Except as set forth on the information in Schedule 4.4
concerning Seller, Seller has good title to all of the Assets which it purports
to own as reflected on the balance sheet included in the Financial Statements
(as hereinafter defined), Deeds, AutoMed Software Corporation Pending Trademark
Application or thereafter acquired. Seller has a valid leasehold interest in all
material property of which it is the lessee and each such lease is valid,
binding and enforceable against Seller, as the case may be, and, to the
knowledge of Seller, the other parties thereto in accordance with its terms.
Neither Seller nor the other parties thereto are in material default in the
performance of any material provisions thereunder. Neither the whole nor any
material portion of the Assets of Seller is subject to any governmental decree
or order to be sold or is being condemned, expropriated or otherwise taken by
any public authority with or without payment of compensation therefore, nor, to
the knowledge of Seller, any such condemnation, expropriation or taking been
proposed. None of the assets of Seller is subject to any restriction which would
prevent continuation of the use currently made thereof or materially adversely
affect the value thereof.
4.5 Contracts Listed; No Default. All contracts, agreements, licenses,
leases, easements, permits, rights of way, commitments, and understandings,
written or oral, connected with or relating in any respect to present or
proposed future operations of Seller (except employment or other agreements
terminable at will and other agreements which, in the aggregate, are not
material to the business, properties or prospects of Seller and except
governmental licenses, permits, authorizations, approvals and other matters
referred to in Section 4.17) are listed and described in the information in
Schedule 4.5 concerning Seller. Seller is the holder of, or party to, all of the
Seller Contracts. To the knowledge of Seller, the Seller Contracts are valid,
binding and enforceable by the signatory thereto against the other parties
thereto in accordance with their terms. Neither Seller nor any signatory thereto
is in default or breach of any material provision of the Seller Contracts.
Seller's operation of its business has been, is, and will, between the date
hereof and the Closing Date, continue to be, consistent with the material terms
and conditions of the Seller Contracts.
4.6 Litigation. Except as disclosed in the information in Schedule 4.6
concerning Seller, there is no claim, action, proceeding or investigation
pending or, to the knowledge of Seller, threatened against or affecting Seller
before or by any court, arbitrator or governmental agency or authority which, in
the reasonable judgment of Seller, could have any materially adverse effect on
Seller. There are no decrees, injunctions or orders of any court, governmental
department, agency or arbitration outstanding against Seller.
4.7 Taxes. For purposes of this Agreement, (A) "Tax" (and, with
correlative meaning, "Taxes") shall mean any federal, state, local or foreign
income, alternative or add-on minimum, business, employment, franchise,
occupancy, payroll, property, sales, transfer, use, value added, withholding or
other tax, levy, impost, fee, imposition, assessment or similar charge, together
with any related addition to tax, interest, penalty or fine thereon; and (B)
"Returns" shall mean all returns (including, without limitation, information
returns and other material information), reports and forms relating to Taxes or
to any benefit plans as due and required.
Seller has duly filed all Returns required by any law or regulation to be filed
by it, except for extensions duly obtained. All such Returns were, when filed,
and to the knowledge of Seller are, accurate and complete in all material
respects and were prepared in conformity with applicable laws and regulations in
all material respects. Seller has paid or will pay in full or has adequately
reserved against all Taxes otherwise assessed against it through the Closing
Date, and the assessment of any material amount of additional Taxes in excess of
those paid and reported is not reasonably expected.
Seller is not a party to any pending action or proceeding by any governmental
authority for the assessment of any Tax, and no claim for assessment or
collection of any Tax has been asserted against Seller that has not been paid.
There are no Tax liens upon the assets (other than the lien of property taxes
not yet due and payable) of Seller. There is no valid basis, to the knowledge of
Seller, except as set forth in Schedule 4.7, for any assessment, deficiency,
notice, 30-day letter or similar intention to assess any Tax to be issued to
Seller by any governmental authority.
4.8 Compliance with Laws and Regulations. To its knowledge, Seller is in
compliance, in all material respects, with all laws, rules, regulations, orders
and requirements (federal, state and local) applicable to it in all
jurisdictions where the business of Seller is currently conducted or to which
Seller is currently subject which has a material impact on Seller, including,
without limitation, all applicable civil rights and equal opportunity employment
laws and regulations, and all state and federal antitrust and fair trade
practice laws and the Federal Occupational Health and Safety Act laws, rules and
regulations. Seller knows of no assertion by any party that Seller is in
violation of any such laws, rules, regulations, orders, restrictions or
requirements with respect to its current operations, and no notice in that
regard has been received by Seller. To the knowledge of Seller, there is not
presently pending any proceeding, hearing or investigation with respect to the
adoption of amendments or modifications to existing laws, rules, regulations,
orders, restrictions or requirements which, if adopted, would materially
adversely affect the current operations of Seller.
4.9 Compliance with Laws. (a) To its knowledge, the business, operations,
property and assets of Seller (and, to the knowledge of Seller, the business of
any sub-tenant or licensee which is occupying or has occupied any space on any
premises of Seller and the activities of which could result in any material
adverse liability to Seller) (i) conform with and are in compliance in all
material respects with all, and are not in material violation of any applicable
federal, state and local laws, rules and regulations, including, but not limited
to, the Comprehensive Environmental Response Compensation and Liability Act of
1980, as amended (including the 1986 Amendments thereto and the Superfund
Amendments and Reauthorization Act) ("CERCLA"), and the Resource Conservation
and Recovery Act ("RCRA"), as well as any other laws, rules or regulations
relating to tax, product liability, controlled substances, product registration,
environmental protection, hazardous or toxic waste, employment, or occupational
safety matters in the US; and (ii) have been conducted and operated in a manner
such that, to Seller's knowledge, Seller has foreseeable potential liabilities
for environmental clean-up under CERCLA, RCRA or under any other law, rule,
regulation or common or civil law doctrine or similar laws, rules and
regulations.
(b) To its knowledge, no predecessor-in-title to any real property now or
previously owned or operated by Seller, nor any predecessor operator thereof
conducted its business or operated such property in violation of CERCLA and RCRA
or any other applicable federal, state and local laws, rules and regulations
relating to environmental protection or hazardous or toxic waste matters.
(c) Except as disclosed in the information in Schedule 4.9 concerning
Seller, no suit, action, claim, proceeding, nor investigation, review or inquiry
by any court or federal, state, county, municipal or local governmental
department, commission, board, bureau, agency or instrumentality, including,
without limitation, any state or local health department (all of the foregoing
collectively referred to as "Governmental Entity") concerning any such possible
violations by Seller is pending or, to the knowledge of Seller, threatened,
including, but not limited to, matters relating to diagnostic tests and products
and product liability, environmental protection, hazardous or toxic waste,
controlled substances, employment, occupational safety or tax matters. Seller
does not know of any reasonable basis or ground for any such suit, claim,
investigation, inquiry or proceeding. For purposes of this Section 4.9, the term
"inquiry" includes, without limitation, all pending regulatory issues (whether
before federal, state, local or inter-governmental regulatory authorities)
concerning any regulated product, including, without limitation, any diagnostic
drugs and products.
4.10 Information. Seller has furnished and will continue to furnish Buyer
all information and
(a) The books and records of The Seller are in all material respects
complete and correct and have been maintained in accordance with good business
and accounting practices.
(b) The Seller has no material liabilities, direct or indirect, matured or
unmatured, contingent or otherwise in excess of Twenty-Five Thousand Dollars
($25,000) except as to a disputed Liability of $290,000 and a Note for $250,000.
4.11 Condition of Assets. The equipment, fixtures and other personal
property of Seller, taken as a whole, is in good operating condition and repair
(ordinary wear and tear excepted) for the conduct of the business of Seller as
is contemplated to be conducted.
4.12 No Breaches. To its knowledge, the making and performance of this
Agreement and the other agreements contemplated hereby by Seller will not (i)
conflict with or violate the Articles of Incorporation or the Bylaws of Seller;
(ii) violate any material laws, ordinances, rules or regulations, or any order,
writ, injunction or decree to which Seller is a party or by which Seller or any
of its respective assets, businesses, or operations may be bound or affected; or
(iii) result in any breach or termination of, or constitute a default under, or
constitute an event which, with notice or lapse of time, or both, would become a
default under, or result in the creation of any encumbrance upon any asset of
Seller under, or create any rights of termination, cancellation or acceleration
in any person under, any Seller Contract.
4.13 Employees. None of the employees of Seller is represented by any
labor union or collective bargaining unit and, to the knowledge of Seller, no
discussions are taking place with respect to such representation.
4.14 Financial Statements. Seller has furnished or will prior to SEC
filing deadlines furnish Buyer Sellers' financial statements (the "Financial
Statements") for the year end from December 31, 2002, year end December 31, 2003
and the quarter ended March 31, 2004. The Financial Statements, when submitted
to Buyer for inclusion in the SEC filings, will have been prepared in accordance
with Regulation S-X of the SEC and, in particular, Rules 1-02 and 3-05
promulgated thereunder. The Financial Statements present fairly, in all
respects, the consolidated financial position and results of operations of
Seller as of the dates and periods indicated, prepared in accordance with
generally accepted accounting principles consistent with ("GAAP"). Without
limiting the generality of the foregoing, (i) there is no basis for any
assertion against Seller as of the date of the Financial Statements of any debt,
liability or obligation of any nature not fully reflected or reserved against in
the Financial Statements; and (ii) there are no assets of Seller as of the date
of the Financial Statements, the value of which is overstated in the Financial
Statements. Except as disclosed in the Financial Statements, Seller has no known
contingent liabilities (including liabilities for Taxes), forward or long-term
commitments or unrealized or anticipated losses from unfavorable commitments
other than in the ordinary course of business. Seller is not a party to any
contract or agreement for the forward purchase or sale of any foreign currency
that is material to Seller taken as a whole.
4.15 Absence of Certain Changes or Events. Since the date of the last
financial statement furnished to Buyer, there has not been:
(a) Any material adverse change in the financial condition, properties,
assets, liabilities or business of Seller;
(b) Any material damage, destruction or loss of any material properties of
Seller, whether or not covered by insurance;
(c) Any material change in the manner in which the business of Seller has
been conducted;
(d) Any material change in the treatment and protection of trade secrets or
other confidential information of Seller;
(e) Any material change in the business or contractual relationship of
Seller with any customer or supplier which might reasonably be expected to
materially and adversely affect the business or prospects of Seller;
(f) Any agreement by Seller, whether written or oral, to do any of the
foregoing; and
(g) Any occurrence not included in paragraphs (a) through (f) of this
Section 4.16 which has resulted, or which Seller has reason to believe, in its
reasonable judgment, might be expected to result, in a material adverse change
in the business or prospects of Seller.
4.16 Governmental Licenses, Permits, Etc. To its knowledge, Seller has all
governmental licenses, permits, authorizations and approvals necessary for the
conduct of its business as currently conducted ("Licenses and Permits"). The
information in Schedule 4.16 concerning Seller includes a list of all Licenses
and Permits. All Licenses and Permits are in full force and effect, and no
proceedings for the suspension or cancellation of any thereof is pending or
threatened.
4.17 Employee Agreements. (a) For purposes of this Agreement, the
following definitions apply:
(1) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations promulgated thereunder or similar laws, rules and
regulations.
(2) "Multi-employer Plan" means a plan, as defined in ERISA Section 3(37)
or similar laws, rules and regulations, to which Seller contributes or is
required to contribute.
(3) "Employee Plan" means any pension, retirement, profit sharing, deferred
compensation, vacation, bonus, incentive, medical, vision, dental, disability,
life insurance or any other employee benefit plan as defined in Section 3(3) of
ERISA other than a Multi-employer Plan or similar laws, rules and regulations to
which Seller contributes, sponsors, maintains or otherwise is bound to with
regard to any benefits on behalf of the employees of Seller.
(4) "Employee Pension Plan" means any Employee Plan for the provision of
retirement income to employees or which results in the deferral of income by
employees extending to the termination of covered employment or beyond as
defined in Section 3(2) of ERISA or similar laws, rules and regulations.
(5) "Employee Welfare Plan" means any Employee Plan other than an Employee
Pension Plan.
(6) "Compensation Arrangement" means any plan or compensation arrangement
other than an Employee Plan, whether written or unwritten, which provides to
employees of Seller, former employees, officers, directors or shareholders of
Seller any compensation or other benefits, whether deferred or not, in excess of
base salary or wages, including, but not limited to, any bonus or incentive
plan, stock rights plan, deferred compensation arrangement, life insurance,
stock purchase plan, severance pay plan and any other employee fringe benefit
plan.
(b) The information in Schedule 4.17 concerning Seller lists, all (1)
employment agreements and collective bargaining agreements to which Seller is a
party; (2) compensation arrangements of Seller with any officer, director or
employee; (3) Employee Welfare Plans; (4) Employee Pension Plans; and (5)
consulting agreements under which Seller has or may have any monetary
obligations to employees or consultants of Seller or their beneficiaries or
legal representatives or under which any such persons may have any rights.
Seller has previously made available to Buyer true and complete copies of all of
the foregoing employment contracts, collective bargaining agreements, Employee
Plans and Compensation Arrangements, including descriptions of any unwritten
contracts, agreements, Compensation Arrangements or Employee Plans, as amended
to date. In addition, with respect to any Employee Plan which continues after
the Closing Date, Seller has previously delivered or made available to Buyer (1)
any related trust agreements, master trust agreements, annuity contracts or
insurance contracts; (2) certified copies of all Board of Directors' resolutions
adopting such plans and trust documents and amendments thereto; (3) current
investment management agreements; (4) custodial agreements; (5) fiduciary
liability insurance policies; (6) indemnification agreements; (7) the most
recent determination letter (and underlying application thereof and
correspondence and supplemental material related thereto) issued by the Internal
Revenue Service with respect to the qualification of each Employee Plan under
the provisions of Section 401(a) of the Code; (8) copies of all "advisory
opinion letters," "private letter rulings," "no action letters," and any similar
correspondence (and the underlying applications therefore and correspondence and
supplemental material related thereto) that was issued by any governmental or
quasigovernmental agency with respect to the last plan year; (9) Annual Reports
(Form 5500 Series) and Schedules A and B thereto for the last plan year; (10)
all actuarial reports prepared for the last plan year; (11) all certified
Financial Statements for the last plan year; and (12) all current Summary Plan
Descriptions, Summaries of Material Modifications and Summary Annual Reports.
All documents delivered by Seller to Buyer as photocopies faithfully reproduce
the originals thereof, such originals are authentic and were, to the extent
execution was required, duly executed.
(c) Except as otherwise disclosed in the information in Schedule 4.17
concerning Seller:
(1) It is not a party to and has, in effect or to become effective
after the date of this Agreement, any bonus, cash or deferred compensation,
severance, medical, health or hospitalization, pension, profit sharing or
thrift, retirement, stock option, employee stock ownership, life or group
insurance, death benefit, welfare, incentive, vacation, sick leave, cafeteria,
so-called "golden parachute" payment, disability or trust agreement or
arrangement.
4.18 Brokers. Seller has not made any agreement or taken any action with
any person or taken any action which would cause any person to be entitled to
any agent's, broker's or finder's fee or commission in connection with the
transactions contemplated by this Agreement.
4.19 Business Locations. Seller does not own or lease any real or personal
property in any location except as set forth on the information in the Schedule
4.19 or otherwise noted on the financial statements of the company to be
rendered in the audit concerning Seller. Seller does not have a place of
business (including, without limitation, Seller's executive offices or place
where Seller's books and records are kept) except as otherwise set forth on the
information in Schedule 4.19 concerning Seller.
4.20 Intellectual Property. The information in Schedule 4.20 or
alternatively in the audited financial statements concerning Seller lists all of
the Intellectual Property (as hereinafter defined) used by Seller which
constitutes a material patent, trade name, trademark, service mark or
application for any of the foregoing. "Intellectual Property" means all of
Seller's right, title and interest in and to all patents, trade names, assumed
names, trademarks, service marks, and proprietary names, copyrights (including
any registration and pending applications for any such registration for any of
them), together with all the goodwill relating thereto and all other
intellectual property of Seller. Other than as disclosed in the information in
Schedule 4.20 concerning Seller, Seller does not have any licenses granted by or
to it or other agreements to which it is a party, relating in whole or in part
to any Intellectual Property, whether owned by Seller or otherwise. All of the
patents, trademark registrations and copyrights listed in the information in
Schedule 4.20 concerning Seller that are owned by Seller are valid and in full
force and effect. To the knowledge of Seller, it is not infringing upon, or
otherwise violating, the rights of any third party with respect to any
Intellectual Property. No proceedings have been instituted against or claims
received by Seller, nor to its knowledge are any proceedings threatened alleging
any such violation, nor does Seller know of any valid basis for any such
proceeding or claim. To the knowledge of Seller, there is no infringement or
other adverse claims against any of the Intellectual Property owned or used by
Seller. To the knowledge of Seller, its use of software does not violate or
otherwise infringe the rights of any third party.
4.21 Warranties. The information in Schedule 4.21 concerning Seller sets
forth a true and complete list of the forms of all express warranties and
guaranties made by Seller to third parties with respect to any services rendered
by Seller.
4.22 Suppliers. Except as set forth in the information in Schedule 4.22
concerning Seller, Seller knows and has no reason to believe that, either as a
result of the transactions contemplated hereby or for any other reason
(exclusive of expiration of a contract upon the passage of time), any present
material supplier of Seller will not continue to conduct business with Seller
after the Closing Date in substantially the same manner as it has conducted
business prior thereto.
4.23 Accounts Receivable. The accounts receivable reflected on the balance
sheets included in the Financial Statements, or thereafter acquired by Seller,
consists, in the aggregate in all material respects, of items which are
collectible in the ordinary and usual course of business.
4.24 Governmental Approvals. To its knowledge, other than as set forth
herein, no authorization, license, permit, franchise, approval, order or consent
of, and no registration, declaration or filing by Seller with, any governmental
authority, federal, state or local, is required in connection with Seller's
execution, delivery and performance of this Agreement.
4.25 No Omissions or Untrue Statements. None of the information relating
to Seller supplied or to be supplied in writing by it specifically for inclusion
in SEC filings, at the respective times that the filings are made contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
4.26 Information concerning Seller Complete. Seller shall promptly provide
to Buyer notice concerning any of the information concerning Seller furnished
hereunder if events occur prior to the Closing Date that would have been
required to be disclosed had they existed at the time of executing this
Agreement. The information provided to Buyer concerning Seller, as supplemented
prior to the Closing Date, will contain a true, correct and complete list and
description of all items required to be set forth therein. The information
provided to Buyer concerning Seller, as supplemented prior to the Closing Date,
is expressly incorporated herein by reference. Notwithstanding the foregoing,
any such supplement to the information in furnished by Seller following the date
hereof shall not in any way affect Buyer's right not to consummate the
transactions contemplated hereby as set forth herein.
4.27 Acquisition of the Shares by the Seller Shareholders. The Seller
Shareholders are acquiring the Shares for their own account without the
participation of any other person and with the intent of holding the Shares for
investment and without the intent of participating, directly or indirectly, in a
distribution of the Shares, or any portion thereof, and not with a view to, or
for resale in connection with, any distribution of the Shares, or any portion
thereof. The Seller Shareholders have read, understand and consulted with their
legal counsel regarding the limitations and requirements of Section 5 of the
1933 Act. The Seller Shareholders will offer, sell, pledge, convey or otherwise
transfer the Shares, or any portion thereof, only if: (i) pursuant to an
effective registration statement under the 1933 Act and any and all applicable
state securities or Blue Sky laws or in a transaction which is otherwise in
compliance with the 1933 Act and such laws; or (ii) pursuant to a valid
exemption from registration.
4.28 Accredited Investor Status. Each The Seller Shareholder is an
accredited investor as that term is defined in Rule 501 of Regulation D
promulgated under the 1933 Act.
4.29 Accuracy of Representations and Performance of Covenants. The
representations and warranties made by The Seller in this Agreement were true
when made and shall be true at the Closing Date with the same force and effect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement). The Seller shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by The Seller prior to or at the
Closing. The Company shall be furnished with a certificate, signed by a duly
authorized executive officer of The Seller and dated the Closing Date, to the
foregoing effect.
V. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows, with the knowledge and
understanding that Seller is relying materially on such representations and
warranties:
5.1 Organization and Standing of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada, and has the corporate power to carry on its business as now conducted
and to own its assets and it not required to qualify to transact business as a
foreign corporation in any state or other jurisdiction. The copies of the
Articles of Incorporation and Bylaws of Buyer, delivered to Seller, are true and
complete copies of those documents as now in effect. Buyer does not own any
capital stock in any other corporation, business trust or similar entity, and is
not engaged in a partnership, joint venture or similar arrangement with any
person or entity. The minute books of Buyer contain accurate records of all
meetings of its incorporator, shareholders and Board of Directors since its date
of incorporation.
5.2 Buyer's Authority. Buyer's Board of Directors has approved and adopted
this Agreement and the Exchange.
5.3 Due Execution. This Agreement constitutes, and all other agreements
contemplated hereby will constitute, when executed and delivered by Buyer in
accordance herewith (and assuming due execution and delivery by the other
parties hereto), the valid and binding obligations of Buyer, enforceable in
accordance with their respective terms, subject to general principles of equity
and bankruptcy or other laws relating to or affecting the rights of creditors
generally.
5.4 No Breaches. To its knowledge, the making and performance of this
Agreement (including, without limitation, the issuance of the Buyer Shares and
Exchangeable Shares) by Buyer will not (i) conflict with the Articles of
Incorporation or the Bylaws of Buyer or Sub; (ii) violate any order, writ,
injunction, or decree applicable to Buyer of Sub; or (iii) result in any breach
or termination of, or constitute a default under, or constitute an event which,
with notice or lapse of time, or both, would become a default under, or result
in the creation of any encumbrance upon any asset of Buyer under, or create any
rights of termination, cancellation or acceleration in any person under, any
agreement, arrangement or commitment, or violate any provisions of any laws,
ordinances, rules or regulations or any order, writ, injunction or decree to
which Buyer or Sub is a party or by which Buyer or Sub or any of its assets may
be bound.
5.5 Capitalization. The authorized capital stock of Buyer is as set forth
in Schedule A and at the Closing Date shall be adjusted as set forth in Schedule
A. Except for the foregoing and for the shares to be issued under the terms of
this Agreement or otherwise referred to in this Agreement, there are no
agreements, commitments, obligations, options, warrants or similar rights, oral
or written, known to Buyer or its affiliates under which additional shares of
Buyer are required to be issued after the Closing. All of the outstanding Buyer
Common Stock is duly authorized, validly issued, fully paid and nonassessable,
and was not issued in violation of the preemptive rights of any person. The
Share Consideration to be issued upon effectiveness of the Exchange, when issued
in accordance with the terms of this Agreement shall be duly authorized, validly
issued, fully paid and non-assessable.
5.6 Business. Buyer, since its formation, has engaged in no business other
than as set forth in Buyer's SEC filings.
5.7 Governmental Approval; Consents. To its knowledge, except for the
reports filed by Buyer, as a reporting company, under the Exchange Act, the
filing of Buyer's SEC filings under the Securities Act, no authorization,
license, permit, franchise, approval, order or consent of, and no registration,
declaration or filing by Buyer with, any governmental authority, federal, state
or local, is required in connection with Buyer's execution, delivery and
performance of this Agreement. No consents of any other parties are required to
be received by or on the part of Buyer to enable Buyer to enter into and carry
out this Agreement.
5.8 Financial Statements. To its knowledge, the financial statements of
Buyer as set forth in Buyer's SEC filings (the "Buyer Financial Statements")
present fairly, in all material respects, the financial position of Buyer as of
the respective dates and the results of its operations for the periods covered
in accordance with GAAP applicable to the United States. Without limiting the
generality of the foregoing, (i) except as set forth in Schedule 5.13 and as
follows, there is no basis for any assertion against Buyer as of the date of
said balance sheets of any material debt, liability or obligation of any nature
not fully reflected or reserved against in such balance sheets or in the notes
thereto; and (ii) there are no assets of Buyer, the value of which (in the
reasonable judgment of Buyer) is materially overstated in said balance sheets.
Except as disclosed therein, Buyer has no known material contingent liabilities
(including liabilities for taxes), unusual forward or long-term commitments or
unrealized or anticipated losses from unfavorable commitments. Buyer is not a
party to any contract or agreement for the forward purchase or sale of any
foreign currency.
5.9 Adverse Developments. Except as expressly provided or set forth in, or
required by, this Agreement, or as set forth in the Buyer Financial Statements,
since the last date of its financial information in Buyer's SEC filings, there
have been no materially adverse changes in the assets, liabilities, properties,
operations or financial condition of Buyer, and no event has occurred other than
in the ordinary and usual course of business or as set forth in Buyer's SEC
filings or in the Buyer Financial Statements which could be reasonably expected
to have a materially adverse effect upon Buyer, and Buyer does not know of any
development or threatened development of a nature that will, or which could be
reasonably expected to, have a materially adverse effect upon Buyer's operations
or future prospects. The parties recognize that Buyer is essentially dormant,
conducts no operations and has no significant assets.
5.10 Contracts Listed. All material contracts, agreements, licenses,
leases, easements, permits, rights of way, commitments, and understandings,
written or oral, connected with or relating in any respect to the present
operations of Buyer are, with the exception of this Agreement, described in
Buyer's SEC filings.
5.11; No Default. All of the contracts, agreements, leases, commitments
and understandings, written or oral, and any other contract, agreement, lease,
commitment or understanding, written or oral, binding upon Buyer referred to in
section 5.10 above, are listed in Buyer's SEC filings. To the knowledge of
Buyer, the Buyer Contracts are valid, binding and enforceable by Buyer against
the other parties thereto in accordance with their terms. Neither Buyer nor, to
the knowledge of Buyer, any of the other parties thereto is in default or breach
of any material provision of the Buyer Contracts. Buyer has furnished Seller
with a true and complete copy of each Buyer Contract, as amended.
5.12 Taxes. Buyer has duly filed all Returns required by any law or
regulation to be filed by it except for extensions duly obtained. All such
Returns were, when filed, and to the best of Buyer's knowledge are, accurate and
complete in all material respects and were prepared in conformity with
applicable laws and regulations. Buyer has paid or will pay in full or has
adequately reserved against all Taxes otherwise assessed against it through the
Closing Date, and the assessment of any material amount of additional Taxes in
excess of those paid and reported is not reasonably expected.
Buyer is not a party to any pending action or proceeding by any
governmental authority for the assessment of any Tax, and no claim for
assessment or collection of any Tax has been asserted against Buyer that has not
been paid. There are no Tax liens upon the assets of Buyer (other than the lien
of personal property taxes not yet due and payable). There is no valid basis, to
the best of Buyer's knowledge, except as set forth in the Buyer Disclosure
Schedule, for any assessment, deficiency, notice, 30-day letter or similar
intention to assess any Tax to be issued to Buyer by any governmental authority.
5.13 Litigation. Except as disclosed in this Agreement, Buyer's SEC
filings or Schedule 5.13, there is no claim, action, proceeding or investigation
pending or, to Buyer's knowledge, threatened against or affecting Buyer before
or by any court, arbitrator or governmental agency or authority which, in the
reasonable judgment of Buyer, could have a materially adverse effect on Buyer.
There are no decrees, injunctions or orders of any court, governmental
department, agency or arbitration outstanding against Buyer.
5.14 Compliance with Laws and Regulations. To its knowledge, Buyer is in
compliance, in all material respects, with all laws, rules, regulations, orders
and requirements (federal, state and local) applicable to it in all
jurisdictions in which the business of Buyer is currently conducted or to which
Buyer is currently subject, which may have a material impact on Buyer,
including, without limitation, all applicable civil rights and equal opportunity
employment laws and regulations, all state and federal antitrust and fair trade
practice laws and the Federal Occupational Health and Safety Act. Buyer does not
know of any assertion by any party that Buyer is in violation of any such laws,
rules, regulations, orders, restrictions or requirements with respect to its
current operations, and no notice in that regard has been received by Buyer. To
Buyer's knowledge, there is not presently pending any proceeding, hearing or
investigation with respect to the adoption of amendments or modifications of
existing laws, rules, regulations, orders, restrictions or requirements which,
if adopted, would materially adversely affect the current operations of Buyer.
5.15 Compliance with Laws. (a) To its knowledge, the business operations,
property and assets of Buyer (and to the knowledge of Buyer, the business of any
sub-tenant or license which is occupying or has occupied any space on any
premises of Buyer and the activities of which could result in any material
adverse liability to Buyer) (i) conform with and are in compliance in all
material respects with all, and are not in material violation of any applicable
federal, state and local laws, rules and regulations, including, but not limited
to, CERCLA and RCRA, as well as any other laws, rules or regulations relating to
tax, product liability, controlled substances, product registration,
environmental protection, hazardous or toxic waste, employment, or occupational
safety matters; and (ii) have been conducted and operated in a manner such that,
to Buyer's knowledge, Buyer has no foreseeable potential liabilities for
environmental clean-up under CERCLA, RCRA or under any law, rule, regulation or
common or civil law doctrine.
(b) To its knowledge, no predecessor-in-title to any real property now or
previously owned or operated by Buyer, nor any predecessor operator thereof
conducted its business or operated such property in violation of CERCLA and RCRA
or any other applicable, federal, state and local laws, rules and regulations
relating to environmental protection or hazardous or toxic waste matters.
(c) Except as disclosed Buyer's SEC filings, no suit, action, claim,
proceeding nor investigation review or inquiry by any Government Entity (as
defined in Section 4.9) concerning any such possible violations by Buyer is
pending or, to Buyer's knowledge, threatened, including, but not limited to,
matters relating to diagnostic tests and products and product liability,
environmental protection, hazardous or toxic waste, controlled substances,
employment, occupational safety or tax matters. Buyer does not know of any
reasonable basis or ground for any such suit, claim, investigation, inquiry or
proceeding.
5.16 Governmental Licenses, Permits, Etc. To its knowledge, Buyer has all
governmental licenses, permits, authorizations and approvals necessary for the
conduct of its business as currently conducted. All such licenses, permits,
authorizations and approvals are in full force and effect, and no proceedings
for the suspension or cancellation of any thereof is pending or threatened.
5.17 Brokers. Buyer has not made any agreement or taken any action with
any person or taken any action which would cause any person to be entitled to
any agent's, broker's or finder's fee or commission in connection with the
transactions contemplated by this Agreement.
5.18 Employee Plans. Except as listed in Buyer's SEC filings, Buyer has no
employees, consultants or agents, and Buyer has no Employee Plans or
Compensation Arrangements.
5.19 SEC Filings. The Buyer has filed all forms, reports and documents that
are required to be filed by the Buyer with the SEC since September 26, 2002,
except as otherwise disclosed herein. All such required forms, reports and
documents (including such forms, reports and documents that the Buyer may file
subsequent to the date hereof) are referred to herein as the "SEC Reports." As
of their respective dates, to the Buyer's knowledge the SEC Reports (i) complied
as to form in all material respects with the requirements of the Securities Act
or the Securities Exchange Act of 1934, as applicable, and the rules and
regulations of the SEC thereunder applicable to such SEC Reports, and (ii) did
not at the time they were filed (or if amended or superseded by a filing, then
on the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except to the extent corrected by a
subsequently filed the SEC Report that was filed before the date of this
Agreement.
5.20 Liabilities. The Company acknowledges that it will have no liabilities
outstanding on the Closing Date.
5.21 Quotation on the OTC Bulletin Board. The Company's Common Stock is
quoted on the OTC Bulletin Board under the symbol "WFLD.OB" and the Company will
retain such quotation on the OTC Bulletin Board until the Closing of the
transactions contemplated herein.
5.22 Approval of the Exchange by the Company's Shareholders. The
transactions contemplated by this Agreement do not require the approval of the
Company's shareholders and the Company is not required to file a Schedule 14A or
14C with the Securities and Exchange Commission as a result of the transactions
contemplated herein.
5.23 Approval of the Exchange Offer and related transactions by the
Company's Shareholders is not required by Nevada law or the Company's Articles
of Incorporation or Bylaws or any amendments thereto.
5.24 Accuracy of Representations and Performance of Covenants. The
representations and warranties made by The Buyer in this Agreement were true
when made and shall be true at the Closing Date with the same force and effect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement). The Buyer shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by The Buyer prior to or at the
Closing. The Company shall be furnished with a certificate, signed by a duly
authorized executive officer of The Buyer and dated the Closing Date, to the
foregoing effect.
VI. STOCKHOLDER APPROVAL; CLOSING DELIVERIES
6.1 Approval of the Exchange by the Buyer's Shareholders. The transactions
contemplated by this Agreement do not require the approval of the Buyer's
shareholders and the Buyer is not required to file a Schedule 14A or 14C with
the Securities and Exchange Commission as a result of the transactions
contemplated herein.
6.2 Closing Deliveries of Seller. At the Closing, Seller shall deliver, or
cause to be delivered, to Buyer:
(a) A certificate dated as of the Closing Date, to the effect that the
representations and warranties of Seller contained in this Agreement (and the
Schedules to be provided for Closing) are true and correct in all material
respects at and as of the Closing Date and that Seller has complied with or
performed in all material respects all terms, covenants and conditions to be
complied with or performed by Seller on or prior to the Closing Date;
(b) A certificate, dated as of the Closing Date, certifying as to the
Articles of Incorporation and Bylaws of Seller, the incumbency and signatures of
the officers of each of Seller and copies of the directors' and shareholders'
resolutions of Seller approving and authorizing the execution and delivery of
this Agreement, and the consummation of the transactions contemplated hereby;
(c) Stock certificates representing all of Seller's Shares, duly endorsed
for transfer to the Buyer or as the Buyer may otherwise direct.
(d) Such other documents, at the Closing or subsequently, as may be
reasonably requested by Buyer as necessary for the implementation and
consummation of this Agreement and the transactions contemplated hereby.
6.3 Closing Deliveries of Buyer. At the Closing, Buyer shall deliver to
Seller:
(a) A certificate of Buyer, dated as of the Closing Date, to the effect
that the representations and warranties of Buyer contained in this Agreement
(and the Schedules to be provided for Closing) are true and correct in all
material respects and that Buyer has complied with or performed in all material
respects all terms, covenants and conditions to be complied with or performed by
Buyer on or prior to the Closing Date;
(b) A certificate, dated as of the Closing Date, executed by the Secretary
of Buyer, certifying the Articles of Incorporation, Bylaws, incumbency and
signatures of officers of Buyer and copies of Buyer's directors' and
shareholders' resolutions approving and authorizing the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby;
(c) Books and records of Buyer;
(e) Documentation satisfactory to Seller evidencing the fact that the
signatories on all relevant bank accounts of Buyer have been changed to
signatories designated by Seller.
(f) A corporate resolution that will irrevocably instruct Pacific Stock
Transfer about the exchange ratio representing the Buyer Shares issued as
partial consideration hereunder and instructions to issue share certificates to
the Shareholders in the appropriate amounts, including evidence of any share
conditions attributable to the Buyer Shares. No Buyer Shares shall be issued
until the Buyer shall have received a certificate for required number of
Seller's Shares.
(g) Share certificates in the appropriate amount of Buyers Shares issued to
the Shareholders. No Buyers Shares shall be issued until the Buyer shall have
received a certificate for required number of Seller's Shares.
(h) Such other documents, at the Closing or subsequently, as may be
reasonably requested by Seller as necessary for the implementation and
consummation of this Agreement and the transactions contemplated hereby.
VII. CONDITIONS TO OBLIGATIONS OF SELLER
The obligation of Seller to consummate the Closing is subject to the
following conditions, any of which may be waived by Seller in its sole
discretion:
7.1 Compliance by Buyer. Buyer shall have performed and complied in all
material respects with all agreements and conditions required by this Agreement
to be performed or complied with by Buyer prior to or on the Closing Date.
7.2 Accuracy of Buyer's Representations. Buyer's representations and
warranties contained in this Agreement (including all Schedules) or any
schedule, certificate or other instrument delivered pursuant to the provisions
hereof or in connection with the transactions contemplated hereby shall be true
and correct in all material respects at and as of the Closing Date (except for
such changes permitted by this Agreement) and shall be deemed to be made again
as of the Closing Date.
7.3 Documents. All documents and instruments delivered by Buyer to Seller
at the Closing shall be in form and substance reasonably satisfactory to Seller
and its counsel.
7.4 Litigation. No litigation seeking to enjoin the transactions
contemplated by this Agreement or to obtain damages on account hereof shall be
pending or, to Seller's knowledge, be threatened.
VIII. CONDITIONS TO BUYER'S OBLIGATIONS
Buyer's obligation to consummate the closing is subject to the following
conditions, any of which may be waived by Buyer in its sole discretion:
8.1 Compliance by Seller. Seller shall have performed and complied in all
material respects with all agreements and conditions required by this Agreement
to be performed or complied with prior to or on the Closing Date.
8.2 Accuracy of Seller's Representations. Seller's representations and
warranties contained in this Agreement (including the Schedules hereto) or any
schedule, certificate or other instrument delivered pursuant to the provisions
hereof or in connection with the transactions contemplated hereby shall be true
and correct in all material respects at and as of the Closing Date (except for
such changes permitted by this Agreement) and shall be deemed to be made again
as of the Closing Date.
8.3 Material Adverse Change. No material adverse change shall have
occurred subsequent to the last date of the financial statements of Seller
furnished Buyer under this Agreement in the financial position, results of
operations, assets, liabilities or prospects of Seller taken as a whole, nor
shall any event or circumstance have occurred which would result in a material
adverse change in the business, assets or condition, financial or otherwise, of
Seller taken as a whole, within reasonable discretion of Buyer.
8.4 Litigation. No litigation seeking to enjoin the transactions
contemplated by this Agreement or to obtain damages on account hereof shall be
pending or, to Seller's knowledge, be threatened.
IX. INDEMNIFICATION
9.1 By Seller. Subject to Section 9.4, Seller shall indemnify, defend and
hold Buyer, its directors, officers, shareholders, attorneys, agents and
affiliates, harmless from and against any and all losses, costs, liabilities,
damages, and expenses (including legal and other expenses incident thereto) of
every kind, nature and description, including any undisclosed liabilities
(collectively, "Losses") that result from or arise out of (i) the breach of any
representation or warranty of Seller set forth in this Agreement or in any
certificate delivered to Buyer pursuant hereto; or (ii) the breach of any of the
covenants of Seller contained in or arising out of this Agreement or the
transactions contemplated hereby.
9.2 By Buyer. Subject to Section 9.4, Buyer and the Buyer pre-exchange
board of directors as of the date of signing of this agreement shall indemnify,
defend, and hold Seller its directors, officers, shareholders, attorneys, agents
and affiliates harmless from and against any and all Losses that arise out of
(i) the breach of any representation or warranty of Buyer set forth in this
Agreement or in any certificate delivered to Seller pursuant hereto; (ii) the
breach of any of the covenants of Buyer contained in or arising out of this
Agreement or the transactions contemplated hereby, (iii) any liabilities of
Buyer not disclosed herein or in its SEC filings which arise from any facts or
circumstances prior to the date of the closing of the exchange and which
occurred through no fault of Seller or its Affiliates; or (iv) any liabilities
of the Buyer resulting from the litigation matters disclosed in Schedule 5.13.
9.3 Claims Procedure. Should any claim covered by Sections 9.1 or 9.2 be
asserted against a party entitled to indemnification under this Article (the
"Indemnitee"), the Indemnitee shall promptly notify the party obligated to make
indemnification (the "Indemnitor"); provided, however, that any delay or failure
in notifying the Indemnitor shall not affect the Indemnitor's liability under
this Article if such delay or failure was not prejudicial to the Indemnitor. The
Indemnitor upon receipt of such notice shall assume the defense thereof with
counsel reasonably satisfactory to the Indemnitee and the Indemnitee shall
extend reasonable cooperation to the Indemnitor in connection with such defense.
No settlement of any such claim shall be made without the consent of the
Indemnitor and Indemnitee, such consent not to be unreasonably withheld or
delayed, nor shall any such settlement be made by the Indemnitor which does not
provide for the absolute, complete and unconditional release of the Indemnitee
from such claim. In the event that the Indemnitor shall fail, within a
reasonable time, to defend a claim, the Indemnitee shall have the right to
assume the defense thereof without prejudice to its rights to indemnification
hereunder.
9.4 Limitations on Liability. Neither Seller nor Buyer shall be liable
hereunder as a result of any misrepresentation or breach of such party's
representations, warranties or covenants contained in this Agreement unless and
until the Losses incurred by each, as the case may be, as a result of such
misrepresentations or breaches under this Agreement shall exceed, in the
aggregate, US$20,000 (in which case the party liable therefore shall be liable
for the entire amount of such claims, including the first US$20,000), except
that Seller shall have the additional right to offset against the Notes any
amounts it pays or is subject to a valid, binding, enforceable obligation to pay
as a result of Buyer or its pre-exchange board member as set forth above failure
to furnish the indemnification required under this Article IX.
X. TERMINATION
10.1 Termination Prior to Closing. (a) If the Closing has not occurred by
30 days after the execution of this Agreement or such other date as mutually
agreed upon by the parties (the "Termination Date"), any of the parties hereto
may terminate this Agreement at any time thereafter by giving written notice of
termination to the other parties; provided, however, that no party may terminate
this Agreement if such party has willfully or materially breached any of the
terms and conditions hereof. Prior to the Termination Date, Seller may
terminate this Agreement but shall receive NO REFUND OF ANY CONSIDERATION PAID
PRIOR TO SAID DATE. If the parties agree to extend the Termination Date, ALL
payments previously made shall be NON-REFUNDABLE EVEN IF THE TRANSACTION DOES
NOT ULTIMATELY CLOSE THEREAFTER.
(b) Prior to the Termination Date either party to this Agreement may
terminate this Agreement following the insolvency or bankruptcy of the other, or
if any one or more of the conditions to Closing set forth in Article VI, Article
VII or Article VIII shall become incapable of fulfillment and shall not have
been waived by the party for whose benefit the condition was established, then
either party may terminate this Agreement.
10.2 Consequences of Termination. Upon termination of this Agreement
pursuant to this Article X or any other express right of termination provided
elsewhere in this Agreement, the parties shall be relieved of any further
obligation to the other. No termination of this Agreement, however, whether
pursuant to this Article X hereof or under any other express right of
termination provided elsewhere in this Agreement, shall operate to release any
party from any liability to any other party incurred before the date of such
termination or from any liability resulting from any willful misrepresentation
made in connection with this Agreement or willful breach hereof.
XI. ADDITIONAL COVENANTS
11.1 Mutual Cooperation. The parties hereto will cooperate with each
other, and will use all reasonable efforts to cause the fulfillment of the
conditions to the parties' obligations hereunder and to obtain as promptly as
possible all consents, authorizations, orders or approvals from each and every
third party, whether private or governmental, required in connection with the
transactions contemplated by this Agreement.
11.2 Changes in Representations and Warranties of Seller. Between the date
of this Agreement and the Closing Date, Seller shall not, directly or
indirectly, enter into any transaction, take any action, or by inaction permit
an event to occur, which would result in any of the representations and
warranties of Seller herein contained not being true and correct at and as of
(a) the time immediately following the occurrence of such transaction or event
or (b) the Closing Date. Seller shall promptly give written notice to Buyer upon
becoming aware of (i) any fact which, if known on the date hereof, would have
been required to be set forth or disclosed pursuant to this Agreement and (ii)
any impending or threatened breach in any material respect of any of the
representations and warranties of Seller contained in this Agreement and with
respect to the latter shall use all reasonable efforts to remedy same.
11.3 Changes in Representations and Warranties of Buyer. Between the date
of this Agreement and the Closing Date, Buyer shall not, directly or indirectly,
enter into any transaction, take any action, or by inaction permit an event to
occur, which would result in any of the representations and warranties of Buyer
herein contained not being true and correct at and as of (a) the time
immediately following the occurrence of such transaction or event or (b) the
Closing Date. Buyer shall promptly give written notice to Seller upon becoming
aware of (i) any fact which, if known on the date hereof, would have been
required to be set forth or disclosed pursuant to this Agreement and (ii) any
impending or threatened breach in any material respect of any of the
representations and warranties of Buyer contained in this Agreement and with
respect to the latter shall use all reasonable efforts to remedy same.
11.4 Blue Sky Manual Exemption. The Company shall file with Standard &
Poors or Moody's within one hundred fifty (150) days from the date of Closing.
11.5 Limitation of Subsequent Corporate Actions. It is expressly understood
and agreed that the Company, the shareholders of The Seller, and their
affiliates will take all steps necessary to ensure that:
(1) The Company will not enact a reverse split of its Common Stock for a
period of eighteen (18) months after execution of this Agreement;
(2) that the assets of The Seller, if any, shall remain in the Company as
part of its business operations for no less than twelve 12 months;
(3) that no more then 2.5 million shares of the Company's common stock
shall be registered pursuant to an S-8 registration statement during each twelve
(12) months following the date of execution of this Agreement;
(4) The Seller shall not issue any securities of more than Five Million
(5,000,000) shares of common stock for a period of twelve (12) months following
this Agreement.
Notwithstanding items (1), and (3) the Company may waive such conditions stated
above with a written waiver. Other than (1), (2), (3), and (4) of this Section,
there are no restrictions upon the Company to inhibit, prevent, limit or
restrict the Company from issuing additional securities of any class, preference
or type after the date of the Closing.
XII. MISCELLANEOUS
12.1 Expenses. Buyer will pay for its counsel and accountants and all their
costs. Seller will pay for its accountants and attorneys and all their costs.
12.2 Survival of Representations, Warranties and Covenants. All statements
contained in this Agreement or in any certificate delivered by or on behalf of
Seller or Buyer pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed representations, warranties and covenants by
Seller or Buyer, as the case may be, hereunder. All representations, warranties
and covenants made by Seller and by Buyer in this Agreement, or pursuant hereto,
shall survive through the Closing Date.
12.3 Nondisclosure. Buyer will not at any time after the date of this
Agreement, without Seller' consent, divulge, furnish to or make accessible to
anyone (other than to its representatives as part of its due diligence or
corporate investigation) any knowledge or information with respect to
confidential or secret processes, inventions, discoveries, improvements,
formulae, plans, material, devices or ideas or know-how, whether patentable or
not, with respect to any confidential or secret aspects (including, without
limitation, customers or suppliers) ("Confidential Information") of Seller.
Seller will not at any time after the date of this Agreement, without
Buyer's consent (except as may be required by law), use, divulge, furnish to or
make accessible to anyone any Confidential Information (other than to its
representatives as part of its due diligence or corporate investigation) with
respect to Buyer. The undertakings set forth in the preceding two paragraphs of
this Section 12.3 shall lapse if the Closing takes place as to Buyer and Seller,
but shall not lapse as to the officers and directors of Buyer, individually.
Any information, which (i) at or prior to the time of disclosure by either
of Seller or Buyer was generally available to the public through no breach of
this covenant, (ii) was available to the public on a non-confidential basis
prior to its disclosure by either of Seller or Buyer or (iii) was made available
to the public from a third party, provided that such third party did not obtain
or disseminate such information in breach of any legal obligation to Seller or
Buyer, shall not be deemed Confidential Information for purposes hereof, and the
undertakings in this covenant with respect to Confidential Information shall not
apply thereto.
12.4 Succession and Assignments; Third Party Beneficiaries. This Agreement
may not be assigned (either voluntarily or involuntarily) by any party hereto
without the express written consent of the other party. Any attempted assignment
in violation of this Section shall be void and ineffective for all purposes. In
the event of an assignment permitted by this Section, this Agreement shall be
binding upon the heirs, successors and assigns of the parties hereto. Except as
expressly set forth in this Section, there shall be no third party beneficiaries
of this Agreement.
12.5 Notices. All notices, requests, demands or other communications with
respect to this Agreement shall be in writing and shall be (i) sent by facsimile
transmission, (ii) sent by the federal postal service, registered or certified
mail, return receipt requested, or (iii) personally delivered by a nationally
recognized express overnight courier service, charges prepaid, to the addresses
specified in writing by each party.
Any such notice shall, when sent in accordance with the preceding sentence,
be deemed to have been given and received on the earliest of (i) the day
delivered to such address or sent by facsimile transmission, (ii) the fifth
(5th) business day following the date deposited with the United States Postal
Service, or (iii) twenty-four (24) hours after shipment by such courier service.
12.6 Construction. This Agreement shall be construed and enforced in
accordance with the internal laws of Nevada without giving effect to the
principles of conflicts of law thereof.
12.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same Agreement.
12.8 No Implied Waiver; Remedies. No failure or delay on the part of the
parties hereto to exercise any right, power or privilege hereunder or under any
instrument executed pursuant hereto shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. All rights, powers and privileges granted herein shall be in addition
to other rights and remedies to which the parties may be entitled at law or in
equity.
12.9 Entire Agreement. This Agreement, including the Exhibits and
Schedules attached hereto, sets forth the entire understandings of the parties
with respect to the subject matter hereof, and it incorporates and merges any
and all previous communications, understandings, oral or written, as to the
subject matter hereof, and cannot be amended or changed except in writing,
signed by the parties.
12.10 Headings. The headings of the Sections of this Agreement, where
employed, are for the convenience of reference only and do not form a part
hereof and in no way modify, interpret or construe the meanings of the parties.
12.11 Severability. To the extent that any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
12.12 Public Disclosure. From and after the date hereof through the
Closing Date, Buyer shall not issue a press release or any other public
announcement with respect to the transactions contemplated hereby without the
prior consent of Seller, which consent shall not be unreasonably withheld or
delayed. It is understood by Seller that Buyer is required under the Exchange
Act to make prompt disclosure of any material transaction.
12.13 No Bankruptcy and No Criminal Convictions. None of the Parties to
the Agreement, nor their officers, directors or affiliates, promoters,
beneficial shareholders or control persons, nor any predecessor thereof have
been subject to the following:
(a) Any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer within the past five (5)
years;
(b) Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(c) Being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; and
(d) Being found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission (the "SEC") or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended,
THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, HAVE HAD THE
OPPORTUNITY TO CONSULT WITH INDEPENDENT COUNSEL OF THEIR OWN CHOICE, AND
UNDERSTAND EACH OF THE PROVISIONS OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
WINFIELD FINANCIAL GROUP, INC.
By:
/s/ Robert Burley
----------------------
Name: Robert Burley
Title: President
HEALTH CARE BUSINESS SERVICES GROUPS, INC.
By:
/s/ Chandana Basu
----------------------
Name: Chandana Basu
Title: Chief Executive Officer
Exhibit 2.2
ADDENDUM TO COMMON STOCK PURCHASE AGREEMENT
-------------------------------------------
This Addendum to Common Stock Purchase Agreement (the "Addendum") is made and
entered into as of the 7th day of May, 2004, between Winfield Financial Group,
Inc., a Nevada corporation ("Buyer" or "Winfield") and Health Care Business
Services Groups, Inc., a Delaware corporation, AutoMed Software Corp., a Nevada
Corporation and Silver Shadow Properties, LLC, a Nevada Limited Liability
Company (collectively referred to as "Seller" or "HBSGI, et all" unless
otherwise noted).
RECITALS
--------
The Buyer and Health Care Business Services Groups, Inc. entered into a Common
Stock Purchase Agreement on April 23, 2004 (the "Agreement") under which Buyer
acquired 100% of the ownership interests of Health Care Business Services
Groups, Inc., a Delaware corporation, and it was intended that Buyer also
acquire 100% of the ownership interests of AutoMed Software Corp., a Nevada
Corporation and Silver Shadow Properties, LLC pursuant to the Agreement.
Unless otherwise specifically stated below, the terms of the Agreement apply as
set forth therein. The Buyer and Seller desire to more specifically state their
intentions and the terms regarding the exchange of shares and the Seller's
audited financial statements, and to properly reflect the authorized
capitalization of the Seller. AutoMed Software Corp. and Silver Shadow
Properties, LLC desire to provide their signatures for purposes of the Agreement
and this Addendum.
NOW, THEREFORE, in consideration of the terms, conditions, agreements and
covenants contained herein and in the Agreement (the receipt and sufficiency of
which are acknowledged by each party), and in reliance upon the representations
and warranties contained in the Agreement, the parties hereto agree as follows:
Section 1. The term "Seller's Shares" as defined in "Section 2.1 Purchase
and Sale" of the Agreement is more specifically stated to mean all the issued
and outstanding shares of the Common Stock of Health Care Business Services
Group, Inc. and AutoMed Software Corp. and all of the membership interests of
Silver Shadow Properties, LLC.
Section 2. The Buyer shall issue 25,150,000 newly issued treasury shares to
the Shareholder (as defined in the Agreement) in exchange for the transfer of
Seller's Shares to the Buyer. As Shareholder is a single individual and the only
shareholder of Health Care Business Services Groups, Inc. and AutoMed Software
Corp. and the only member of Silver Shadow Properties, LLC, Shareholder will
receive an aggregate of 25,150,000 newly issued treasury shares of Buyer. The
Shareholder shall surrender the certificates evidencing 100% of the issued and
outstanding shares of Health Care Business Services Group, Inc., 100% of the
issued and outstanding shares of AutoMed Software Corp. and 100% of the
membership interests of Silver Shadow Properties, LLC, duly endorsed with
Medallion Guaranteed stock powers so as to make the Buyer the sole owner
thereof.
Section 3. The authorized capitalization of the Seller as provided for in
"Section 4.2 Capitalization" of the Agreement is corrected as follows: The
authorized capital stock of Health Care Business Services Groups, Inc. is 1,500
( Fifteen Hundred) common shares, without par value, of which 1,000 shares are
issued and outstanding to a single shareholder. The authorized capital stock of
AutoMed Software Corp. is 75,000,000 (Seventy-Five Million) common shares, $.001
par value per share, of which 25,000 shares are issued and outstanding to a
single shareholder. Silver Shadow Properties, LLC is a single member limited
liability company as One Hundred Percent (100%) of its membership interests are
issued to a single person.
Section 4. To more specifically provide for the nature and scope of the
audit provided for in "section 4.14 Financial Statements" of the Agreement,
Buyer and Seller hereby agree that Health Care Business Services Groups, Inc.,
AutoMed Software Corp. and Silver Shadow Properties, LLC will each complete and
audit of their respective business operations within 75 days of April 23, 2004.
Section 5. Buyer and Seller hereby agree that this Addendum shall be a part
of the Agreement and governed by the terms thereof except that, to the extent
that the intentions of Buyer and Seller under this Addendum and the terms of
this Addendum are different from the intentions of Buyer and Seller under the
Agreement and the terms of the Agreement, the intentions of Buyer and Seller
under this Addendum shall control.
Section 6. For purposes of this Addendum, a faxed signature shall
constitute an original signature.
"BUYER"
WINFIELD FINANCIAL GROUP, INC.
By: /s/ Robert Burley
Name: Robert Burley
Title: President
""SELLER"
HEALTH CARE BUSINESS SERVICES GROUPS, INC.
By: /s/ Chandana Basu
Name: Chandana Basu
Title: Chief Executive Officer
AUTOMED SOFTWARE CORP.
By: /s/ Chandana Basu
Printed Name: Chandana Basu
Title: Chief Executive Officer
SILVER SHADOW PROPERTIES LLC
By: /s/ Chandana Basu
Printed Name: Chandana Basu
Title: Manager
"SHAREHOLDER"
/s/ Chandana Basu
------------------
Chandana Basu
1,000 shares of Healthcare Business Services Groups, Inc.
s/ Chandana Basu
-----------------
Chandana Basu
25,000 shares of AutoMed Software Corp.
s/ Chandana Basu
-----------------
Chandana Basu
100% of the membership interests of Silver Shadow Properties, LLC