AGREEMENT AND PLAN OF MERGER
Exhibit
10.1
AGREEMENT
AND PLAN OF MERGER
This
Agreement and Plan of Merger, dated as of this 9th
day of
April, 2008 (the “Agreement”),
by
and among Nutra Pharma Corp., a California corporation (“Nutra
Pharma”),
NP
Acquisition Corporation, a Nevada corporation wholly owned by Nutra Pharma
(“Acquisition”),
Receptopharm, Inc., a Nevada corporation (“Receptopharm”)
and
the stockholders of Receptopharm listed on the signature pages hereto
(collectively, the “Executing
Stockholders,”
and
together with Nutra Pharma and Receptopharm shall be referred to collectively
as, the “Parties”).
Terms
used herein and not otherwise defined shall have the meaning set forth in
Article
IX
hereof.
WITNESSETH:
WHEREAS,
Nutra
Pharma is the beneficial owner of 4,444,444 shares of the common stock, par
value $.001 per share, of Receptopharm (the
“Receptopharm
Common Stock”),
which
shares represent thirty-eight percent (38%) of the aggregate outstanding shares
of Receptopharm Common Stock; and
WHEREAS, Nutra
Pharma desires to acquire the remaining sixty-two percent (62%) of the
outstanding shares of Receptopharm Common Stock on the terms and subject to
the
conditions set forth herein; and
WHEREAS,
the
Parties desire that Acquisition be merged with and into Receptopharm in
accordance with Nevada law (the “Merger”);
and
WHEREAS,
the
Board of Directors of Receptopharm has (i) determined that the Merger, this
Agreement and the other transactions contemplated herein are fair to and in
the
best interests of Receptopharm and its stockholders and have declared that
the
Merger is advisable; and (ii) approved the Merger and this Agreement and (iii)
recommended that its stockholders adopt and approve the Merger and this
Agreement; and
WHEREAS, the
respective Boards of Directors of Nutra Pharma and Acquisition and the sole
shareholder of Acquisition have each (i) adopted this Agreement and (ii)
approved the Merger and the transactions contemplated by this Agreement;
and
WHEREAS, the
terms
and conditions of the Merger, the manner of converting the capital stock of
Receptopharm and such other terms and conditions as may be required or permitted
to be stated in this Agreement are set forth below;
NOW,
THEREFORE,
in
consideration of the foregoing and the mutual covenants and agreements herein
contained and intending to be legally bound hereby, Nutra Pharma, Acquisition,
Receptopharm and the Executing Stockholders hereby agree as
follows:
ARTICLE
I.
THE
MERGER
1.1 The
Merger. Subject to the terms and conditions contained herein, at
the
Effective Time, Acquisition shall be merged with and into Receptopharm in
accordance with the requirements of Nevada law.
Thereupon, the corporate existence of Receptopharm, with all of its rights,
privileges, immunities, powers and purposes, shall continue unaffected and
unimpaired by the Merger, and Receptopharm, as the corporation surviving the
Merger, shall be fully vested therewith, the separate existence of Acquisition
shall cease upon the Merger becoming effective as herein provided and thereupon
Acquisition and Receptopharm shall be a single corporation (sometimes referred
to herein as the “Surviving Corporation”).
1.2 Filing.
As soon
as practicable following fulfillment of the conditions specified in Article
V
hereof, and provided that this Agreement has not been terminated and abandoned
pursuant to Article VIII hereof, Acquisition and Receptopharm will cause (a)
executed Articles of Merger (the “Articles
of Merger”)
in the
form required by Section 92A.200 and 92A.207 of the Nevada Revised Statutes
(“NRS”) to be filed with the Secretary of State of the State of Nevada in
accordance with the provisions of the NRS.
1.3 Effective
Time of the Merger. The
Merger shall be effective at the date and time that the Articles of Merger
is
filed with the Secretary of State of the State of Nevada, which date and time
are sometimes referred to herein as the “Effective Time”.
1.4 Effect
of the Merger. The Merger shall have the effects set forth in Section
92A.250 of the NRS.
1.5 Articles
of Incorporation and Bylaws. At
the
Effective Time, the Articles of Incorporation of Receptopharm as in effect
immediately prior to the Merger shall be the Articles of Incorporation of the
Surviving Corporation, which may be amended from time to time after the
Effective Time as provided by law. At the Effective Time, the bylaws of
Receptopharm as in effect immediately prior to the Merger shall be the bylaws
of
the Surviving Corporation, which may be amended from time to time after the
Effective Time as provided by law.
1.6 Directors
and Officers.
(a) From
and
after the Effective Time, the members of the Board of Directors of Receptopharm
immediately prior to the Effective Time shall become the members of the Board
of
Directors of the Surviving Corporation.
(b) From
and
after the Effective Time, the officers of Receptopharm immediately prior to
the
Effective Time shall become the officers of the Surviving Corporation, in the
same capacities they respectively held in Receptopharm.
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1.7 Conversion.
At the
Effective Time, all of the issued and outstanding shares of capital stock of
Acquisition and Receptopharm shall, by virtue of the Merger and without any
action on the part of the respective holders thereof, be converted as
follows:
(a) Each
share of common stock, par value $.001per share, of Acquisition shall be
converted into one share of Receptopharm Common Stock;
(b) Each
share of Receptopharm Common Stock (other than shares of Receptopharm Common
Stock owned by Nutra Pharma or any subsidiary of Nutra Pharma) shall
be
converted into four (4) shares of common stock, par value $.0001 per share
(the
“Nutra
Pharma Common Stock”),
of
Nutra Pharma (collectively, the “Merger
Consideration”);
provided that in no event shall the number of shares of Nutra Pharma Common
Stock issued in connection with the transactions contemplated by this Agreement
exceed thirty million (30,000,0000) shares.
1.8 Effect
of
Conversion of Shares. After the Effective Time, and until surrendered, each
outstanding certificate which, prior to the Effective Time represented shares
of
Receptopharm Common Stock (each, a “Receptopharm Certificate”), shall be
deemed for all purposes to represent only the right to receive four (4) shares
of Nutra Pharma Common Stock multiplied by the number of shares of Receptopharm
formerly represented by such Receptopharm Certificate.
1.9 Stock
Option and Other Plans. Prior
to
the Effective Time, Receptopharm shall terminate any
stock
option plan
and any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of Receptopharm (collectively,
the “Stock Plans”). As
of the
date hereof, there are no options currently exercisable to acquire shares of
Receptopharm Common Stock.
1.10 Procedures
for Exchange. Nutra Pharma shall take all steps reasonably necessary on and
as of the Effective Time to deliver to an exchange agent mutually agreed upon
by
Nutra Pharma and Receptopharm (the “Exchange Agent”), for the benefit of
the holders of Receptopharm Certificates, for exchange in accordance with
Section 1.7, the number of shares of Nutra Pharma Common Stock in accordance
with this Agreement.
1.11 Dissenting
Shares.
(a) Upon
filing a notice of election to demand payment for shares of Receptopharm Common
Stock pursuant to Section 92A.420 of the NRS, and complying with the other
requirements thereof and of Sections 92A.300-500 of the NRS, a Dissenting
Stockholder shall thereafter be entitled only to payment as provided in Sections
92A.460 through 92A.500 of the NRS and shall not be entitled to vote or to
exercise any other rights of a stockholder of Receptopharm. If the Dissenting
Stockholder fails to properly exercise and perfect its dissenters’ rights as set
forth in NRS Sections 92A.340-500 inclusive, in a timely manner, then, such
Dissenting Stockholder’s Dissenting Shares shall cease to be Dissenting Shares
and shall be converted into and only represent the right to receive the Merger
Consideration payable in respect of such shares.
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(b) In
accordance with Nevada law, concurrently with notice of the Receptopharm
stockholders’ meeting being held to consider and vote upon the Merger,
Receptopharm has or will notify each Receptopharm stockholder who is eligible
to
exercise dissenters’ rights under Section 92A.380 of the NRS that dissenters’
rights are or may be available for any or all of such stockholder’s shares of
Receptopharm Common Stock. Such notice has or shall include a copy of NRS
Sections 92A.300-92A.500. Any such stockholder entitled to dissenter’s rights
must deliver to Receptopharm before the stockholder vote is taken, written
notice of its intent to demand payment for its shares of Receptopharm Common
Stock if the Merger is effectuated and must not vote in favor of the Merger
(any
such stockholder who properly provides such notice and complies with Section
92A.420 of the NRS, a “Dissenting
Stockholder”).
1.12 Closing
Deliveries
(a) At
the
Closing, Receptopharm and the Executing Stockholders shall deliver or cause
to
be delivered to Nutra Pharma:
(i) a
certificate of the President of Receptopharm certifying as to the matters set
forth in this Section 5.2(a);
(ii) a
certificate of the President of Receptopharm certifying as to the matters set
forth in Section 5.2(b); and
(iii) Receptopharm
Certificates representing shares of Receptopharm Common Stock beneficially
owned
by the Executing Stockholders, with stock powers attached thereto.
(b) At
the
Closing, Nutra Pharma and Acquisition shall deliver or cause to be delivered
to
Receptopharm:
(i) a
certificate of the Chief Executive Officer or Chief Financial Officer of Nutra
Pharma certifying as to the matters set forth in this Section 5.3(a);
(ii) a
certificate of the Chief Executive Officer or Chief Financial Officer of Nutra
Pharma certifying as to the matters set forth in this Section 5.3(b);
and
(iii) the
shares of Nutra Pharma Common Stock issuable pursuant to Section 1.7(b)
hereof.
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AND
THE EXECUTING STOCKHOLDERS
Receptopharm
and the Executing Stockholders represent and warrant to Nutra Pharma and
Acquisition as of the date of this Agreement and as of the Effective
Time:
2.1 Organization,
Good Standing and Corporate Power.
Receptopharm is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and has the requisite corporate
or other power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Receptopharm is duly qualified
or
licensed and in good standing to do business in each jurisdiction in which
the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect
on
Receptopharm.
2.2 Capitalization.
The authorized, issued and outstanding Receptopharm Common Stock and securities
that are convertible into, or exchangeable for, shares of Receptopharm Common
Stock without giving effect to any of the transactions contemplated hereby
are
held beneficially and of record by the Persons set forth in Schedule 2.2
hereto. Receptopharm has no contracts containing any profit participation
features, stock appreciation rights or phantom stock options that allow any
Person to participate in the equity of Receptopharm except as set forth on
Schedule 2.2 hereto. All of the outstanding shares of Receptopharm Common
Stock are validly issued, fully paid and non-assessable. Receptopharm is not
subject to any obligation or contract (contingent or otherwise) to repurchase
or
otherwise acquire or retire any shares of its capital stock. There
are
no shares of capital stock of Receptopharm held in the treasury of Receptopharm
and no shares of capital stock of Receptopharm are currently reserved for
issuance for any purpose or upon the occurrence of any event or condition.
There
are no outstanding Options.
2.3 Authority
Relative to This Agreement.
(a) Receptopharm
has full corporate power and authority to enter into this Agreement and the
agreements contemplated hereby to which Receptopharm is a party and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and all other agreements and the
transactions contemplated hereby have been duly authorized by the Board of
Directors and stockholders of Receptopharm and no other corporate proceedings
on
its/their part are necessary to authorize this Agreement and the agreements
contemplated hereby and the transactions contemplated hereby and thereby. Upon
the execution and delivery of this Agreement by Receptopharm, this Agreement
will constitute a legal, valid and binding obligation of Receptopharm
enforceable against it in accordance with its terms.
(b) Each
Executing Stockholder has full power and authority to enter into this Agreement
and the agreements contemplated hereby and to deliver its respective shares
of
Receptopharm Common Stock to Nutra Pharma as provided for herein, free and
clear
of all Liens except for Permitted Liens. Upon the execution and delivery by
the
Executing Stockholders of this Agreement, this Agreement will constitute a
legal, valid and binding obligation of the Executing Stockholders enforceable
against them in accordance with its terms.
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(c) Except
as
set forth on Schedule
2.3(c),
the
execution, delivery and performance of this Agreement by Receptopharm and the
Executing Stockholders of this Agreement, and all other agreements contemplated
hereby, and the fulfillment of and compliance with the respective terms hereof
and thereof by Receptopharm and the Executing Stockholders, do not and will
not
(i) conflict with or violate Receptopharm’s Articles of Incorporation,
as amended, or Receptopharm’s Bylaws; (ii) conflict with or violate any Law
applicable to the Executing Stockholders or Receptopharm or by which any
property or assets of Receptopharm are bound except such Laws the failure of
which to comply with would not have or cause a Material Adverse Effect on
Receptopharm; or (iii) result in any breach of or constitute a material default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration
or
cancellation of any Material Contract; or (iv) result in the creation of a
Lien
on any property or assets of Receptopharm except such that would not result
in a
Material Adverse Effect on Receptopharm.
2.5 Taxes.
Receptopharm has filed its tax returns required to be filed for the five (5)
fiscal years ended December 31, 2006 and has paid all taxes due, if any, for
all
such periods. All such returns and reports are accurate and correct in all
material respects. Receptopharm has no liabilities with respect to the payment
of any federal, state, county, local, or other taxes (including any
deficiencies, interest, or penalties) accrued for or applicable to the period
ended on the Effective Time and all such dates and years and periods prior
thereto and for which Receptopharm may at said date have been liable in its
own
right or as transferee of the assets of, or as successor to, any other
corporation or entity, except for taxes accrued but not yet due and payable,
and
to the knowledge of Receptopharm, no deficiency assessment or proposed
adjustment of any such tax return is pending, proposed or contemplated. To
the
knowledge of Receptopharm, none of such income tax returns has been examined
or
is currently being examined by the Internal Revenue Service and no deficiency
assessment or proposed adjustment of any such return is pending. There are
no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any tax return of Receptopharm.
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(a) Receptopharm
owns no real property. Set forth on Schedule
2.6(a),
hereto
is a list of all real property leased by Receptopharm.
(b) Receptopharm
is the owner of and has good and marketable title to all material tangible
personal property and assets currently in use by Receptopharm, or in which
it
has an interest, free and clear of all Liens except for Permitted Liens. Except
as set forth on Schedule
2.6(b),
all
such material tangible personal property and assets are in good operating
condition and repair subject only to ordinary wear and tear.
2.7 Undisclosed
Liabilities.
Except
for those liabilities that are (i) clearly reflected or reserved against on
the
Receptopharm Balance Sheet (or in the notes thereto), (ii) incurred by
Receptopharm since the Financial Statement Date in the ordinary course of
business, (iii) set forth on Schedule 2.7 hereto or (iv) not required to
be reflected or reserved against on Receptopharm Balance Sheet consistent with
Receptopharm’s past practices, Receptopharm does not have any material
outstanding liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due), except for those
that
could not reasonably be expected to have, individually or in the aggregate,
a
Material
Adverse Effect on Receptopharm.
2.8 Litigation
and Proceedings. Except as set forth on Schedule 2.8, there are no
material actions, suits, claims, or administrative or other proceedings pending,
asserted or to the knowledge of Receptopharm, threatened, by or against
Receptopharm or adversely affecting Receptopharm or its properties, at law
or in
equity, before any Authority which could reasonably be expected to have a
Material Adverse Effect on Receptopharm. To the knowledge of Receptopharm,
Receptopharm is not in default of any judgment, order, writ, injunction, decree,
award, rule, or regulation of any Authority.
(a) Receptopharm
has the right to use, sell or license all Receptopharm Intellectual Property
identified on Schedule
2.10
hereto,
free and clear of all Liens except Permitted Liens, and except for liens of
licensors of Receptopharm Intellectual Property. To the knowledge of
Receptopharm, all registrations of Receptopharm Intellectual Property are valid
and enforceable and have been duly recorded and maintained.
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(b) To
the
knowledge of Receptopharm, the conduct of Receptopharm’s business and the use of
Receptopharm Intellectual Property does not materially infringe or violate
any
intellectual property rights of any Person or give rise to any obligations
to
any Person as a result of co-authorship, and Receptopharm has not received
any
written notice of any claims or threats that Receptopharm’s use of any of
Receptopharm Intellectual Property materially infringes or violates or is
otherwise in conflict with any intellectual property rights of any third party
or that any of Receptopharm Intellectual Property is invalid or
unenforceable.
2.11 Broker’s
or Finder’s Fee. No Person will be entitled to a broker’s, finder’s,
financial advisors or similar fees from Receptopharm in connection with this
Agreement or any of the transactions contemplated
hereby based upon arrangements made by or on behalf of Receptopharm or the
Executing Stockholders.
2.12 Exclusivity.
Except for this Agreement, Receptopharm is not subject to any binding agreement,
letter of intent or other binding or non-binding understanding with respect
to
the sale or license of its assets or securities or any other transaction that
could conflict with the matters contemplated by this Agreement.
2.13 Prior
Loans to Receptopharm/Paid in Capital Upon Closing. Receptopharm hereby
acknowledges that from March 26, 2006 to February 29, 2008, Nutra Pharma made
various loans to Receptopharm in the aggregate principal amount of $1,225,000.
ARTICLE
III.
REPRESENTATION
AND WARRANTIES OF NUTRA PHARMA AND ACQUISITION
Nutra
Pharma and Acquisition represent and warrant to Receptopharm and the Executing
Stockholders as of the date of this Agreement and as of the Effective
Time:
3.1 Organization,
Good Standing and Corporate Power.
(a) Nutra
Pharma is a corporation duly organized, validly existing and in good standing
under the laws of the State of California and has the requisite corporate or
other power and authority to own, lease and operate its properties and to carry
on its business as now being conducted. Nutra Pharma is duly qualified or
licensed and in good standing to do business in each jurisdiction in which
the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except where the failure to be so
qualified could not reasonably be expected to individually or in the aggregate
have a Material Adverse Effect on Nutra Pharma.
(b) Acquisition
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Nevada and has the requisite corporate or other power
and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Acquisition is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified could
not
reasonably be expected to individually or in the aggregate have a Material
Adverse Effect on Acquisition.
8
3.2 Capitalization.
(a) The
authorized capital stock of Nutra Pharma consists of two billion (2,000,000,000)
shares of common stock of which 161,295,682 are issued and outstanding. The
authorized capital stock of Acquisition consists of 25,000,000 shares of common
stock, par value $.001 per share (the “Acquisition
Common Stock”),
of
which [11,944,444] shares of Acquisition Common Stock are issued and outstanding
and all of which are owned by Nutra Pharma. Except as set forth on Schedule
3.2,
there
are no outstanding Options relating to the Nutra Pharma Common Stock or other
equity interests of Nutra Pharma pursuant to which Nutra Pharma is or may become
obligated to issue shares of its securities or other equity interests or any
securities convertible into, exchangeable for or evidencing the right to
subscribe for, any shares of the securities or other equity or other interest
of
Nutra Pharma.
(b) Nutra
Pharma has reserved for issuance a sufficient number of authorized and unissued
shares of Nutra Pharma Common Stock to consummate the transactions contemplated
by this Agreement. Upon the issuance of the shares of Nutra Pharma Common Stock
upon the Effective Time of the Merger, such shares of Nutra Pharma Common Stock
will be duly authorized, validly issued, fully paid and non-assessable and
not
subject to preemptive rights created by statute or by Nutra Pharma’s Articles of
Incorporation or Bylaws.
3.3 Authority
Relative to this Agreement; Issuance of Shares.
(a) Each
of
Nutra Pharma and Acquisition has all necessary corporate power and authority
to
execute and deliver this Agreement and the agreements contemplated hereby to
which Nutra Pharma is a party and do not require any further corporate
authorization or consent of Nutra Pharma or Acquisition. The execution, delivery
and performance of this Agreement by Nutra Pharma and the consummation by Nutra
Pharma of the Merger and the other transactions contemplated by this Agreement
have been duly and validly authorized by all necessary corporate action of
Nutra
Pharma and Acquisition, including any action by its board of directors or
stockholders and do not require any further corporate authorization or consent
of Nutra Pharma or Acquisition and no other corporate proceedings on the part
of
Nutra Pharma are necessary to authorize this Agreement or the agreements
contemplated hereby to which Nutra Pharma is a party or to consummate the Merger
and the other transactions contemplated by this Agreement. This Agreement has
been duly and validly executed and delivered by Nutra Pharma and, assuming
the
due authorization, execution and delivery by Receptopharm and the Executing
Stockholders, constitutes a legal, valid and binding obligation of Nutra Pharma
enforceable against Nutra Pharma in accordance with its terms, except that:
(i)
such enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer, or other laws, now or hereafter in effect,
relating to or limiting creditors’ rights generally; and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may
be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefore may be brought.
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(b) The
execution, delivery and performance of this Agreement by Nutra Pharma and the
consummation by Nutra Pharma of the Merger and the other transactions
contemplated by this Agreement do not require the approval of any exchange
upon
which where the Nutra Pharma Common Stock is quoted or of any other Authority.
The execution, delivery and performance of this Agreement by Nutra Pharma and
the consummation by Nutra Pharma of the Merger and the other transactions
contemplated by this Agreement do not require the approval of the holders of
the
Nutra Pharma Common Stock.
3.4 Absence
of Undisclosed Liabilities. Except as set forth in Nutra Pharma’s balance
sheet for the year ended December 31, 2006 (the “Nutra Pharma Balance
Sheet”), or set forth on Schedule 3.4, there is no liability
(including unasserted claims, whether known or unknown), whether absolute,
contingent, accrued or otherwise, which is not shown or which is in excess
of
amounts shown or reserved for on the Nutra Pharma Balance Sheet, which is not
shown or which is in excess of amounts shown or reserved for in the Nutra Pharma
Balance Sheet, other than immaterial liabilities incurred after the date of
Nutra Pharma’s Balance Sheet in the ordinary course of business consistent with
past practices, and to Nutra Pharma’s knowledge, there is no reasonable basis
for assertion against Nutra Pharma of any such liability, commitment or
obligation.
3.5 No
Conflict; Required Filings and Consents.
(a) The
execution, delivery and performance of this Agreement and the other agreements
contemplated hereby and the fulfillment of and compliance with the respective
terms hereof and thereof by Nutra Pharma and Acquisition, do not and will not
(i) conflict with or violate the respective Articles of Incorporation or Bylaws
of Nutra Pharma or Acquisition, as the case may be; (ii) conflict with or
violate any Law applicable to Nutra Pharma or any of its subsidiaries or by
which any property or assets of Nutra Pharma or Acquisition is bound or
affected; or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien on any property or assets of Nutra
Pharma or Acquisition with respect to clause (ii) and (iii) for any such
conflicts, violations, breaches, defaults or other occurrences that have not
had, and could not reasonably be expected to have individually or in the
aggregate, a Material Adverse Effect on Nutra Pharma or
Acquisition.
(b)
The
execution, delivery, and performance of this Agreement by Nutra Pharma and
Acquisition will not require any consent, approval, authorization or permit
of,
or filing with or notification to, any Authority except as set forth on
Schedule
3.5(b).
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3.6 SEC
Filings; Financial Statements.
(a) Nutra
Pharma has filed all statements, forms, reports, schedules and documents
required to be filed by it with the SEC (collectively, including all exhibits
thereto and any registration statement filed since such date, the “Nutra
Pharma SEC Reports”).
As of
the respective dates on which they were filed, (i) Nutra Pharma SEC Reports
complied in all material respects with the requirements of the Securities Act
of
1933, as amended, or the Securities Exchange Act of 1934, as the case may be,
and (ii) none of Nutra Pharma SEC Reports contained, nor will any forms,
reports, schedules or documents filed after the date of this Agreement 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 light of the circumstances under which they
were
made, not misleading. No subsidiary of Nutra Pharma is required to file any
form, report, schedule or other document with the SEC.
(b) Each
of
the consolidated financial statements (including, in each case, any notes
thereto) contained in Nutra Pharma SEC Reports and in any statement, form,
report, schedule or document filed after the date of this Agreement was, or
will, as the case may be, (i) comply as to form in all material respects with
the published rules and regulations of the SEC; (ii) were prepared in accordance
with GAAP throughout the periods indicated (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q
under the Exchange Act) and (iii) present or will present fairly the
consolidated financial position, results of operations and cash flows of Nutra
Pharma and the consolidated Nutra Pharma Subsidiaries as at the respective
dates
thereof and for the respective periods indicated therein, except as otherwise
noted therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which were not material in amount).
3.7 Absence
of Litigation.
Except as specifically disclosed in the Nutra Pharma SEC Reports filed prior
to
the date of this Agreement, there is no action, suit, claim or administrative
or
other proceeding pending or, to the knowledge of Nutra Pharma, threatened
against Nutra Pharma or any of its subsidiaries or any property or asset of
Nutra Pharma or Acquisition or any subsidiary of Nutra Pharma, before any
Authority that could affects Nutra Pharma’s ability to consummate the
transactions contemplated by this Agreement.
3.8 Broker’s
or Finder’s Fee. No agent, broker, financial adviser, person or firm is, or
shall be, entitled to any fee, commission or broker’s or finder’s fees in
connection with this Agreement or any of the transactions contemplated hereby
for which Receptopharm or the Executing Stockholders could be
liable.
3.9 Absence
of Changes. Since December 31, 2006, Nutra Pharma has not:
(a) conducted
its business other than in the ordinary course of business consistent with
past
practice;
(b) made
material changes in its accounting principles or practices;
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(c) declared
or paid any dividends on or made any other distributions (whether in cash,
stock
or property) in respect of any of its capital stock, or split, combined or
reclassified any of the Nutra Pharma Common Stock or issued or authorized the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of Nutra Pharma Common Stock;
(d) other
than upon the exercise of securities that are exercisable or exchangeable for
or
convertible into shares of Nutra Pharma Common Stock, issued, delivered or
sold
or authorized or proposed the issuance, delivery or sale of, any shares of
Nutra
Pharma Common Stock of any class or securities convertible into, or Options
to
acquire or entered into other agreements, or commitment of any character
obligating it to issue any shares or other convertible securities;
(e) caused,
permitted or proposed any amendments to its Articles of Incorporation or
bylaws;
(f) created,
incurred, assumed or guaranteed any indebtedness for borrowed money or entered
into as lessee, any capitalized lease obligations (as defined by GAAP) other
than in the ordinary course of business consistent with past
practices;
(g) taken
any
other action which could reasonably be expected to cause any of the conditions
to Closing not to be satisfied; or
(h) agreed
to
do any of the foregoing.
ARTICLE
IV.
(a) From
and
after the date hereof and prior to the Effective Time and except as may be
agreed in writing by Nutra Pharma, or as may be expressly permitted pursuant
to
this Agreement, Receptopharm and the Executing Stockholders agree that
Receptopharm:
(i) shall
conduct its business in the ordinary course;
(ii) shall
use
commercially reasonable efforts to (A) preserve intact its business organization
and goodwill and (B) keep available the services of its current officers and
other key employees and preserve its relationships with those Persons having
business dealings with Receptopharm;
(iii) shall
promptly notify Nutra Pharma of any change in its condition (financial or
otherwise) or the breach of any representation or warranty contained
herein;
12
(iv) shall
maintain its insurance coverage in such amounts and against such risks and
losses as are customary for Receptopharm;
(v) shall
not
authorize, declare or pay any dividends on or make any distribution with respect
to any shares of its capital stock;
(vi) shall
not
split, combine or reclassify any of its capital stock or other equity interests
or issue or authorize or issue any other equity interests in respect of, in
lieu
of or in substitution for, shares of its capital stock or other equity interests
other than the issuance of capital stock pursuant to options, warrants and
convertible Receptopharm Securities outstanding as of the date of this
Agreement;
(vii) shall
not
(A) increase the rate of compensation of any employee, except for increases
or
bonuses occurring in the ordinary course of business, (B) enter into or amend
any employment, severance or similar agreements or arrangements with any of
its
present or former directors
or officers, or (C) enter into, adopt or amend any other Receptopharm Employee
Benefit Plan;
(viii) shall
not
terminate any executive officer without cause if the termination would entitle
such executive officer to receive enhanced separation payments upon consummation
of the Merger;
(ix) shall
not
authorize or announce an intention to authorize or propose, or enter into an
agreement with respect to, any merger, consolidation or business combination
(other than the Merger) and shall not purchase a substantial portion of the
assets or equity or other securities of any business;
(x) shall
not
adopt any amendment to its Articles of Incorporation or Bylaws;
(xi) shall
not
incur or assume or any indebtedness or any other liabilities other than those
liabilities incurred in the ordinary course of business;
(xii) shall
not
(A) make any loans, advances or capital contributions to, or investments in,
any
other Person, or (B) pay, discharge or satisfy any claims, liabilities or
obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than
indebtedness, issuances of debt securities, guaranties, loans, advances, capital
contributions, investments, payments, discharges or satisfactions incurred
or
committed to in the ordinary course of business;
(xiii) shall
not
sell, lease, license, mortgage or otherwise encumber or subject to any Lien
or
otherwise dispose of any of its properties or assets (including
securitizations), other than in the ordinary course of business;
13
(xiv) shall
not
enter into any agreement or arrangement that limits or otherwise restricts
Receptopharm or that would, be reasonably likely to limit or restrict
Receptopharm from engaging or competing in any line of business in any
geographic area;
(xv) shall
not
settle or compromise any material claim, action or proceeding (including any
material claim, action or proceeding relating to Taxes) involving money damages,
except in the ordinary course of business;
(xvii) except
as
required by an Authority, shall not change its methods of accounting (including
making any material write-off or reduction in the carrying value of any assets),
other than as agreed by Receptopharm’s independent auditors;
(xviii) shall
not
take any action that is reasonably likely to delay or materially or adversely
affect the ability of any of the Parties hereto to obtain any consent,
authorization, order or approval of any governmental commission, board or other
regulatory body or the expiration of any applicable waiting period required
to
consummate the transactions contemplated by this Agreement; and
(xix) shall
not
agree, in writing or otherwise, to take any of the foregoing actions or take
any
action which would result in any of the conditions to the Merger set forth
in
Article V not being satisfied.
(b) From
and
after the date hereof and prior to the Effective Time and except as may be
expressly permitted pursuant to this Agreement, or as set forth in Schedule
4.1(b),
Nutra
Pharma:
(i) shall
promptly deliver to Receptopharm true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement;
(ii) shall
not
split, combine or reclassify any of its capital stock;
(iii) shall
not
authorize, propose or announce an intention to authorize or propose, or enter
into an agreement with respect to, any merger, consolidation or
business combination;
14
(iv) shall
not
issue or authorize the issuance of, or agree to issue or sell any shares of
its
capital stock of any class, or any other equity interests (in each case, whether
through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) which would result in a change
of the voting control of Nutra Pharma; and
(v) shall
not
take any action that is reasonably likely to delay the ability of any of the
Parties hereto to obtain any consent, authorization, order or approval of any
governmental commission, board or other regulatory body or the expiration of
any
applicable waiting period required to consummate the transactions contemplated
by this Agreement.
4.2 Consents.
Subject to the terms and conditions of this Agreement, the Parties shall use
their commercially reasonable efforts to make, or cause to be made, all filings
and use commercially reasonable efforts to obtain, or cause to be obtained,
all
assignments, Permits, authorizations, consents and approvals of Authorities
and
other third parties necessary, proper or advisable to consummate the
transactions contemplated by this Agreement. The Parties shall use their
commercially reasonable efforts to furnish, or cause to be furnished, to one
another such information and assistance as such other party may reasonably
request in connection with the foregoing and shall provide one another with
copies of all filings and or documents made by Receptopharm with any
governmental authority or other third party or any other information supplied
by
such Party to a Authority or other third party in connection with the
transactions contemplated by this Agreement.
4.3 Public
Announcements. No press release or other public announcement shall be
released by any Party without prior written mutual agreement.
4.4 Board
of Directors. Nutra Pharma shall appoint Xxxx X. Xxxx and Xxxxxx X. Xxxxx to
Nutra Pharma’s Board of Directors. Nutra Pharma shall take all actions necessary
and appropriate so that from and after the Effective Time such representation
comprises no less than forty percent (40%) of the membership of Nutra Pharma’s
Board of Directors. Nutra Pharma shall file all required forms with the SEC
pertaining to such appointments.
4.5 Tax-Free
Reorganization Treatment.
To the
extent consistent with the other terms and conditions of this Agreement, the
Executing Stockholders, Nutra Pharma, Acquisition and Receptopharm shall use
all
commercially reasonable efforts to cause the transactions contemplated by this
Agreement to be treated as a “reorganization” within the meaning of Section
368(a)(1)(B) of the Code to the maximum extent permissible and shall not
knowingly take or fail to take any action which action or failure to act would
jeopardize the qualification of the Merger as a “reorganization” within the
meaning of Section 368 of the Code.
15
4.6 Exclusivity.
From
and after the date hereof until the Effective Time or other termination hereof,
neither the Executing Stockholders nor Receptopharm shall, directly or
indirectly, (i) encourage, solicit, initiate, engage or participate in
discussions or negotiations with any person or entity (other than Nutra Pharma)
concerning any merger, consolidation, sale of material assets, or other business
combination involving Receptopharm or any division of Receptopharm, or to sell
the Receptopharm Common Stock, or (ii) provide any non-public information
concerning prospective acquirer (other than Nutra Pharma).
4.7 Stand-Alone
Subsidiary. From and after the Effective Time, Nutra Pharma and Receptopharm
acknowledge and agree that Receptopharm shall be a stand-alone subsidiary of
Nutra Pharma and shall remain a stand-alone subsidiary of Nutra Pharma for
a
period of not less than two (2) years from the Effective Time.
4.8 Security
Act Provisions.
(a) Each
Executing Stockholder acknowledges that the shares of Nutra Pharma Common Stock
to be received in connection with the consummation of the Merger are being
acquired for its own account and not with the present view of disposing of
such
shares except (i) pursuant to an effective registration statement under the
Securities Act of 1933 or
(ii)
in any other transaction which, in the opinion of counsel, acceptable to Nutra
Pharma, is exempt from registration under the Securities Act or the rules and
regulations of the SEC thereunder.
In
order
to effectuate the covenants of this subsection 4.8(a), an appropriate
restrictive legend in the form set forth on Schedule
4.8(a)
will be
placed on the certificate representing the Nutra Pharma Securities at the time
of distribution of such shares by Nutra Pharma pursuant to this Agreement,
and
stop transfer instructions shall be placed with the transfer agent for the
Nutra
Pharma Securities.
(b) Each
Executing Stockholder is aware that the shares of Nutra Pharma Common Stock
to
be received have not been registered pursuant to the Securities Act and,
therefore, the shares may not be re-offered or re-sold except through a valid
registration statement or pursuant to a valid exemption from the registration
requirements of the Securities Act.
ARTICLE
V.
CONDITIONS
OF CLOSING
5.1 Mutual
Conditions Precedent. The respective obligations of the Parties to
consummate the Merger shall be subject to the fulfillment at or prior to the
Effective Time, of the following conditions (any of which may be waived, to
the
extent permitted by Law, in writing, in whole or in part, by the party to which
such condition is owed):
(a) All
consents, approvals, orders or authorizations of, or registrations, declarations
or filings with, any Authority required by or with respect to Receptopharm,
Nutra Pharma, Acquisition or any Executing Stockholder in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby shall have been obtained or made.
16
(b) This
Agreement, and the transactions contemplated by this Agreement shall, if
necessary, have received the requisite approval and authorization of the
shareholders of Nutra Pharma in accordance with applicable requirements of
Law
and the Articles of Incorporation and Bylaws of Nutra Pharma.
(c) No
requirement of Law shall have been enacted or promulgated which prohibits the
consummation of the transactions contemplated by this Agreement; and there
shall
be no order or injunction of a court of competent jurisdiction in effect
precluding consummation of the transactions contemplated by this
Agreement.
(d) No
action, suit or proceeding shall be pending before any Authority wherein an
unfavorable judgment, order, decree, stipulation or injunction would prevent
consummation of any of the transactions contemplated by this Agreement or cause
any of the transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect.
(e) There
shall not have occurred and be continuing a declaration of banking moratorium
by
federal or New York authorities or any suspension of payments in respect of
banks in the United States that regularly participate in the market in loans
to
large corporations, in each case which would prevent the acceptance for payment
or the payment for Nutra Pharma Common Stock accepted for payment
hereunder.
5.2 Conditions
to the Obligations of Nutra Pharma
and
Acquisition. The obligations of Nutra Pharma and Acquisition to consummate
the Merger are subject to the satisfaction or waiver in writing by Nutra Pharma
of the following additional conditions:
(a) Each
of
the representations and warranties of Receptopharm and the Executing
Stockholders contained in this Agreement shall be true and correct as of the
Effective Time, as though made at and as of the Effective Time, except to the
extent those representations and warranties address matters only as of a
particular date, and except to the extent that the failure of the
representations and warranties to be so true and correct could not reasonably
be
expected, individually or in the aggregate, to have a Material Adverse Effect
upon Receptopharm.
(b) Receptopharm
shall have performed or complied in all respects with all agreements and
covenants required by this Agreement to be performed or complied with by it
on
or prior to the Closing.
(c) No
action, suit or proceeding shall be pending before any Authority wherein an
unfavorable judgment, order, decree, stipulation or injunction would prevent
consummation of any of the transactions contemplated by this Agreement or cause
any of the transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect.
17
5.3 Conditions
to the Obligations of Receptopharm.
The obligations of Receptopharm and the Executing Stockholders to consummate
the
Merger are subject to the satisfaction or waiver in writing by Receptopharm
of
the following additional conditions:
(a) Each
of
the representations and warranties of Nutra Pharma and Acquisition contained
in
this Agreement shall be true and correct as of the Effective Time, as though
made at and as of the Effective Time, except to the extent those representations
and warranties address matters only as of a particular date, and except
to the
extent that the failure
of the representations and warranties to be so true and correct could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on Nutra Pharma.
(b) Nutra
Pharma and Acquisition shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be performed
or
complied with by it on or prior to the Closing.
(c) No
action, suit or proceeding shall be pending before any Authority wherein an
unfavorable judgment, order, decree, stipulation or injunction would prevent
consummation of any of the transactions contemplated by this Agreement or cause
any of the transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect.
(d) Nutra
Pharma shall have delivered the shares of Nutra Pharma Common Stock issuable
pursuant to Section 1.7(b) hereof.
(e) Receptopharm
shall have received from Nutra Pharma such other documents as Receptopharm
may
reasonably request.
18
ARTICLE
VI.
REGISTRATION
RIGHTS
6.1 Right
to Include Registrable Securities. If at any time Nutra Pharma proposes to
register any shares of Nutra Pharma Common Stock under the Securities Act (other
than any registration by and for the account of Nutra Pharma of securities
issued pursuant to any employee benefit or similar plan, including employee
stock and stock option plans, or any dividend reinvestment plan), either in
connection with a primary offering for cash for the account of Nutra Pharma
or a
secondary offering or a combination thereof, Nutra Pharma will, each time it
intends to effect such a registration, give written notice to all Holders of
Registrable Securities at least fifteen (15) business days prior to the
anticipated filing date of a Registration Statement with the SEC pertaining
thereto, informing such Holders of its intent to file such Registration
Statement and of the Holders’ rights to request the registration of the
Registrable Securities held by the Holders under this Section 6.1 (the
“Notice”); provided, that if in the reasonable opinion of Nutra Pharma
such fifteen (15) business day period would materially interfere with the
ability of Nutra Pharma to effect a registration and issue and sell securities
pursuant to such registration, such period may be reduced to a period of not
less than ten (10) business days as reasonably determined by Nutra Pharma.
Upon
the written request of any Holder made within seven (7) business days after
any
such Notice is given (which request shall specify the Registrable Securities
intended to be disposed of by such Holder and, unless the applicable
registration is intended to effect a primary offering of shares of Nutra Pharma
Common Stock for cash for the account of Nutra Pharma, the intended method
of
distribution thereof), Nutra Pharma will use its commercially reasonable efforts
to effect the registration under the Securities Act of all Registrable
Securities which Nutra Pharma has been so requested to register by such Holders
to the extent required to permit the disposition (in accordance with the
intended methods of distribution thereof) of the Registrable Securities so
requested to be registered, including, if necessary, by filing with the SEC
a
post-effective amendment or a supplement to the Registration Statement or the
related prospectus or any document incorporated therein by reference or by
filing any other required document or otherwise supplementing or amending the
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by Nutra Pharma for such Registration
Statement by the Securities Act, any state securities or blue sky laws, or
any
rules and regulations thereunder; provided, however, that if, at any time after
giving written notice of its intention to register any securities and prior
to
the effective date of the Registration Statement filed in connection with such
registration, Nutra Pharma shall determine for any reason not to register or
to
delay registration of such securities, Nutra Pharma may, at its election, give
written notice of such determination to each Holder of Registrable Securities
and, thereupon, (A) in the case of a determination not to register, Nutra Pharma
shall be relieved of its obligation (other than with respect to any future
and
additional registrations as set forth in and pursuant to this Section 6.1
hereof) to register any Registrable Securities in connection with and only
with
respect to such terminated registration (but not from its obligation to pay
the
Registration Expenses incurred in connection therewith) and (B) in the case
of a
determination to delay such registration, Nutra Pharma shall be permitted to
delay registration of any Registrable Securities requested to be included in
such Registration Statement for the same period as the delay in registering
such
other securities.
6.2 Expenses.
Nutra Pharma agrees to pay all Registration Expenses in connection with each
registration effected in accordance with this Article VI.
19
ARTICLE
VII.
INDEMNIFICATION
7.1 Indemnification
by Receptopharm. Subject to Section 7.4(a) hereof, the Executing
Stockholders, severally (based on their pro rata ownership of the shares of
Nutra Pharma Common Stock issued in connection with the Merger) and not jointly,
agree to indemnify and hold Nutra Pharma harmless from and against any and
all
losses, costs and expenses (hereinafter, a “Loss” and collectively,
“Losses”) suffered by Nutra Pharma resulting from, arising out of,
or
incurred with respect to any liability incurred by Nutra Pharma as a result
of
the breach of the representation or warranty contained in Section 2.12
(Exclusivity) of this Agreement or the breach of the covenant contained in
Section 4.6 of this Agreement.
7.2 Indemnification
by Nutra Pharma. Subject to Section 7.4(b) hereof, Nutra Pharma agrees to
indemnify Receptopharm and the Executing Stockholders and hold each of them
harmless from and against any and all Losses, arising out of or resulting from
the breach of (i) the representations and warranties contained in Sections
3.1
(Organization, Good Standing and Corporate Power), 3.2 (Capitalization), 3.3(a)
and 3.3(b) (Authority Relative to this Agreement; Issuance of Shares), 3.4
(Absence of Undisclosed Liabilities), 3.5 (No Conflict; Required Filings and
Consents), 3.8 (Broker’s or Finder’s Fee) of this Agreement; and (ii) any
covenant made by Nutra Pharma or Acquisition contained in this
Agreement.
20
7.4 Limitations
on Indemnification.
(a) Notwithstanding
anything to the contrary contained in this Agreement, after the Effective Time,
the aggregate maximum amount of indemnifiable Losses which may be recovered
from
the Executing Stockholders by Nutra Pharma pursuant to Section 7.1 hereof shall
not exceed $30,000 in the aggregate; provided
that to
the extent the Executing Stockholders shall be liable to Nutra Pharma pursuant
to Section 7.1 for any Losses, such indemnification claim may be satisfied
by
the Executing Stockholders, in their sole discretion, by delivery of a number
of
shares of Nutra Pharma Common Stock having a fair market value (as determined
below in this Section 7.4) equal to the amount of such Losses but in no event
to
exceed $30,000. For purposes of this Section 7.4(a), the shares of Nutra Pharma
Common Stock used by the Executing Stockholders to satisfy any indemnification
claim shall have a fair market value equal to the greater of (a) closing price
of Nutra Pharma Common Stock on the Effective Time (as reported on the OTCBB
or
other electronic quotation system on which the Nutra Pharma Common Stock is
then
quoted) and (b) the closing price of the Nutra Pharma Common Stock on the
business day immediately preceding the day on which such shares are delivered
to
Nutra Pharma (as reported on the OTCBB or other electronic quotation system
on
which the Nutra Pharma Common Stock is then quoted) to satisfy any such
indemnification claim.
(b) Notwithstanding
anything to the contrary contained in this Agreement, after the Effective Time,
the aggregate maximum amount of indemnifiable Losses that may be recovered
by
the Receptopharm stockholders from Nutra Pharma pursuant to Section 7.2 hereof
shall not exceed $30,000 in the aggregate.
7.5 Notice
of Claim.
(a) Any
Party
seeking indemnification hereunder (the “Indemnified
Party”)
shall
promptly after obtaining knowledge, give to the party obligated to provide
indemnification (the “Indemnitor”)
a
notice describing any claim, liability or obligation for which the Indemnitor
may be required under this Agreement to indemnify such Indemnified Party. If
such indemnity obligation arises from the claim of a third party, the Indemnitor
shall have the right to defend the Indemnified Party against the third party
claim with counsel of its choice so long as the Indemnitor gives written notice
to the Indemnified Party within fifteen days after the Indemnified Party has
given notice of the third party claim that the Indemnitor will defend such
claim. The Indemnified Party and the Indemnitor shall cooperate in the defense
of any third party claims. In the event that the Indemnitor assumes or
participates in the defense of such third party claim as provided herein, the
Indemnified Party shall make available to the Indemnitor all relevant records
and take such other action and sign such documents as are reasonably necessary
to defend such third party claim in a timely manner. If the Indemnified Party
shall be required by judgment or a settlement agreement to pay any amount in
respect of any obligation or liability against which the Indemnitor has agreed
to indemnify the Indemnified Party under this Agreement, the Indemnitor shall
promptly reimburse the Indemnified party in an amount equal to the amount of
such payment plus all documented expenses incurred by such Indemnified Party
in
connection with such obligation or liability subject to this Article VII. No
Indemnitor, in the defense of any such claim, shall, except with the written
consent of the Indemnified Party, consent to entry of any judgment or enter
into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim. In the event that the Indemnitor does
not
accept the defense of any matter for which it is entitled to assume as provided
above, the Indemnified Party shall have the full right to defend such
claim.
21
(b) Prior
to
paying or settling any claim against which an Indemnitor is, or may be,
obligated under this Agreement to indemnify an Indemnified Party, the
Indemnified Party must first supply the Indemnitor with a copy of a final court
judgment or decree holding the Indemnified Party liable on such claim or failing
such judgment or decree, must first receive the written approval of the terms
and conditions of such settlement from the Indemnitor, which shall not be
unreasonably withheld.
ARTICLE
VIII.
8.1 Extension;
Waiver.
(a) At
any
time prior to the Effective Time, the Parties, by action taken by or on behalf
of the respective Boards of Directors of Receptopharm and Nutra Pharma, may
(i)
upon
the mutual consent of the Parties, extend the time for the performance of any
of
the obligations or other acts of the other Parties; (ii) waive any inaccuracies
in the representations and warranties contained herein by any other applicable
Party or in any document, certificate or writing delivered pursuant hereto
by
any other applicable Party; or (iii) waive compliance by the other Party with
any of the agreements or conditions contained herein. Notwithstanding the
foregoing, no failure or delay by Receptopharm or Nutra Pharma in exercising
any
right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any other
right hereunder. Any agreement on the part of any Party to any such extension
or
waiver shall be valid only if set forth in an instrument in writing signed
on
behalf of such Party.
(b) Except
as
provided in this Agreement, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any Party,
shall be deemed to constitute a waiver by the Party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement. The waiver by any Party hereto of a breach of
any
provision hereunder shall not operate or be construed as a waiver of any prior
or subsequent breach of the same or any other provision hereunder.
8.2 Expenses.
Whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid
by
the Party incurring such expenses.
8.3 Amendments.
This Agreement may not be amended except by an instrument in writing signed
on
behalf of each of the Parties hereto.
8.4 Entire
Agreement. This Agreement (including the exhibits, schedules and instruments
referred to herein) constitutes the entire agreement among the Parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings
among the Parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any Party hereto unless made
in writing and signed by all Parties hereto.
22
8.5 No
Strict Construction. Notwithstanding the fact that this Agreement has been
drafted or prepared by one of the Parties, each of the Parties confirms that
both it and its counsel have reviewed, negotiated and adopted this Agreement
as
the joint agreement and understanding of the Parties, and the language used
in
this Agreement shall be deemed to be the language chosen by the Parties to
express their mutual intent, and no rule of strict construction shall be applied
against any Party. Accordingly, any rule of Law or any legal decision that
would
require interpretation of any claimed ambiguity in this Agreement against the
Party that drafted it has no application and is expressly waived by each
Party.
8.6 Headings.
Headings of the articles and sections of this Agreement and table of contents
are for the convenience of the Parties only and shall be given no substantive
or
interpretative effect whatsoever.
8.7 Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida without regard to its rules of conflict of
laws.
8.9 Notices.
Except as otherwise provided herein, any notice required to be given hereunder
shall be sufficient if in writing and sent by facsimile transmission (which
is
confirmed) or by courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid),
addressed as follows:
(a) If
to
Receptopharm:
0000
XX
00xx
Xxxxxx
Xxxxxxxxxx,
Xxxxxxx 00000
Attention:
Xxxxxx Xxxxx
23
with
a copy to (which shall not constitute notice to Receptopharm):
Xxxxxxx
Xxxxxx Xxxxxx Xxxxxxxx
Xxxxxxxx
& Xxxxxxxxx, P.A.
Museum
Tower
000
Xxxx
Xxxxxxx Xxxxxx
Xxxxx
0000
Xxxxx,
Xxxxxxx 00000
Attention:
Xxxxxxx Xxxxxxxx, Esq.
(b) If
to the
Executing Stockholders, to the names and addresses listed on the signature
pages
hereto.
(c) If
to
Nutra Pharma:
000
Xxxx
xx Xxxxxxxx Xxxxxxxxx
Xxxxx
000
Xxxx
Xxxxx, Xxxxxxx 00000
Attention:
Xxx Xxxxxxx, Chief Executive Officer
with
a copy to (which shall not constitute notice to Nutra Pharma):
Xxxxxxxxx
X. Xxxxxx, Esquire
Xxxxxxxx
& Xxxxxx, P.A.
000
Xxxxx
Xxxx Xxxxx, Xxxxx 000
Xxxx
Xxxxx, Xxxxxxx 00000
8.10 Enforcement
of Agreement.
(a) The
Parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement were not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to prevent breaches
of
this Agreement and to enforce specifically the terms and provisions hereof,
this
being in addition to any other remedy to which they are entitled at law or
in
equity.
(b) Each
of
the Parties hereto: (i) consents to submit itself to the personal jurisdiction
of any Florida state court or any federal court located in the State of Florida
in the event any dispute arises out of this Agreement or any of the transactions
contemplated herein; (ii) agrees that it will not attempt to deny or defeat
such
personal jurisdiction by motion or other request for leave from any such court;
(iii) agrees that it will not bring any action relating to this Agreement or
any
of the transactions contemplated herein in any court other than any Florida
state court or any federal court sitting in the State of Florida; and (iv)
waives any right to trial by jury with respect to
any
action related to or arising out of this Agreement or any of the transactions
contemplated herein.
24
8.11 Severability.
Any term or provision of this Agreement which is invalid or unenforceable in
any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable,
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
8.12 Waiver
of Jury Trial.
EACH OF
THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS
IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY SCHEDULE
OR
EXHIBIT HERETO, OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS
(WHETHER VERBAL OR WRITTEN) RELATING TO THE FOREGOING. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.
8.13 Counterparts.
This Agreement may be executed and delivered (including by facsimile or e-mail
transmission) in one or more counterparts, and by the different Parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which when taken together shall constitute
one and the same Agreement.
ARTICLE
IX.
DEFINITIONS;
INTERPRETATION
9.1 Interpretation.
In this Agreement:
(a) Unless
the context otherwise requires, words describing the singular number shall
include the plural and vice versa, words denoting any gender shall include
all
genders, and words denoting natural persons shall include corporations and
partnerships and vice versa.
(b) Whenever
the words “include,” includes” or “including” are used in this Agreement they
shall be deemed to be followed by the words “without limitation.”
(c) The
phrase “to the Knowledge of Receptopharm” shall mean the actual knowledge of
Xxxx
X.
Xxxx, Xxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxxxx after reasonable investigation
of
the parties responsible for such matters.
(d) The
phrase “to the Knowledge of Nutra Pharma” shall mean the actual knowledge of Xxx
Xxxxxxx after reasonable investigation of the parties responsible for such
matters.
25
9.2 Definitions
“Acquisition”
has
the
meaning set forth in the preamble of this Agreement.
“Agreement”
has
the
meaning set forth in the preamble of this Agreement.
“Articles
of Merger”
has
the
meaning set forth in Section 1.2 of this Agreement.
“Authority”
means
any governmental, regulatory or administrative body, agency, commission, board,
arbitrator or authority, any court or judicial authority, any public, private
or
industry regulatory authority, whether international, national, federal, state
or local.
“Closing”
means
the consummation of the transactions contemplated by this
Agreement.
“Dissenting
Shares”
means
the shares of Receptopharm Common Stock owned of record or beneficially by
Dissenting Stockholders.
“Dissenting
Stockholder”
has
the
meaning set forth in Section 1.11(b) of this Agreement.
“Effective
Time”
has
the
meaning set forth in Section 1.3 of this Agreement.
“Exchange
Agent”
has
the
meaning set forth in Section 1.10 of this Agreement.
“Executing
Stockholders”
has
the
meaning set forth in the preamble of this Agreement.
“Holder”
or
“Holders”
means
the stockholders of Receptopharm that receive Registrable Securities pursuant
to
this Agreement.
“Indemnified
Party”
has
the
meaning set forth in Section 7.5(a) of this Agreement.
“Indemnitor”
has
the
meaning set forth in Section 7.5(a) of this Agreement.
“Law”
means
any rule, law, code, statute, regulation, ordinance, requirement, announcement,
policy, guideline, rule of common law or other binding action of or by an
Authority and any judicial interpretation thereof.
“Liens”
means
any lien, encumbrance, charge or assessment of any kind or nature.
26
“Loss”
or
“Losses”
has
the
meaning set forth in Section 7.1 of this Agreement.
“Material
Adverse Effect”
means
(a) with
respect to Receptopharm, any circumstances, state of facts or matters which
might reasonably be expected to (i) have a material adverse effect in respect
of
the business, operations, properties, assets, condition (financial or otherwise)
or results of Receptopharm or (ii) materially impair the ability of Receptopharm
to consummate the transactions contemplated by this Agreement; provided
that a
Material Adverse Effect with respect to Receptopharm shall not include any
effect that is attributable to (x) general business, economic or financial
conditions or changes affecting the industry generally in which Receptopharm
operates in each case, so long as Receptopharm is not disproportionately
impacted thereby relative to other companies in the same industry, (y) the
announcement or pendency of the transactions contemplated hereby or any change
or effect arising out of actions contemplated or required by this Agreement
or
any actions or omissions of Receptopharm and/or the Executing Stockholders
taken
with the prior written consent of Nutra Pharma or (z) force majeure events,
disruptions of supplies or acts of terrorism, warm, acts of God, national or
international political or social conditions, including the engagement by the
United States in hostilities, whether or not pursuant to the declaration of
a
national emergency or war in each case, so long as Receptopharm is not
disproportionately impacted thereby; and
(b) with
respect to Nutra Pharma, any circumstances, state of facts or matters which
might reasonably be expected to (i) have a material adverse effect in respect
of
the business, operations, properties, assets, condition (financial or otherwise)
or results of Nutra Pharma or (ii) materially impair the ability of Nutra Pharma
to consummate the transactions contemplated by this Agreement; provided
that a
Material Adverse Effect with respect to Nutra Pharma shall not include any
effect that is attributable to (x) general business, economic or financial
conditions or changes affecting the industry generally in which Nutra Pharma
operates in each case, so long as Nutra Pharma is not disproportionately
impacted thereby relative to other companies in the same industry, (y) the
announcement or pendency of the transactions contemplated hereby or (z) force
majeure events, disruptions of supplies or acts of terrorism, warm, acts of
God,
national or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to
the
declaration of a national emergency or war in each case, so long as Nutra Pharma
is not disproportionately impacted thereby.
“Merger”
has
the
meaning set forth in Section 1.1 of this Agreement.
“Nutra
Pharma”
has
the
meaning set forth in the preamble of this Agreement.
27
“Nutra
Pharma Ancillary Agreement”
means
all agreements, instruments and documents being or to be executed and delivered
by Nutra Pharma or Acquisition under this Agreement or in connection
herewith.
“Nutra
Pharma Balance Sheet”
has
the
meaning set forth in Section 3.4 of this Agreement.
“Nutra
Pharma Common Stock”
has
the
meaning set forth in Section 1.7(b) of this Agreement.
“Nutra
Pharma SEC Reports”
has
the
meaning set forth in Section 3.6(a) of this Agreement.
“Options”
means
any options, warrants, rights, subscriptions, claims, agreements or obligations,
by which Receptopharm is bound to issue any additional shares of its capital
stock or an interest in its equity or rights pursuant to which any Person has
a
right to purchase shares of Receptopharm’s capital stock or an interest in its
equity.
“Parties”
has
the
meaning set forth in the preamble of this Agreement.
“Permits”
means
all permits, licenses, registrations, certificates, franchises, qualifications
or approvals required by any Authority or other Person.
“Permitted
Liens”
means
(a) statutory Liens not yet delinquent and immaterial in amount; (b) such
imperfections or irregularities of title or Liens as do not materially detract
from or interfere with the present use of the properties or assets subject
thereto or affected thereby, otherwise impair present business operations at
such properties, or do not detract from the value of such properties and assets;
(c) Liens reflected in the Financial Statements or the notes thereto; (d) the
rights of customers of Receptopharm with respect to inventory or work in
progress under purchase orders or contracts entered into by Receptopharm in
the
ordinary course of business; (e) mechanics’, carriers’, workers’, repairmen’s,
warehousemen’s, or other similar Liens arising in the ordinary course of
business in respect of obligations not overdue and immaterial in amount or
which
are being contested in good faith and covered by a bond in an amount at least
equal to the amount of the Lien; and (f) deposits or pledges to secure workmen’s
compensation, unemployment insurance, old age benefits or other social security
obligations in connection with, or to secure the performance of, bids, tenders,
trade contracts not for the payment of money or leases, or to secure statutory
obligations or surety or appeal bonds or other pledges or deposits for purposes
of like nature in the ordinary course of business and immaterial in
amount.
“Person”
means
any corporation, partnership, joint venture, limited liability company,
organization, entity, Authority or natural person.
28
“Prospectus”
means
the prospectus included in a Registration Statement, including any preliminary
Prospectus, and any such Prospectus as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities and by all other amendments and supplements to such
Prospectus, including post-effective amendments, and in each case all material
incorporated by reference therein.
“Receptopharm”
has
the
meaning set forth in the preamble of this Agreement.
“Receptopharm
Balance Sheet”
has
the
meaning set forth in Section 2.4 of this Agreement.
“Receptopharm
Certificate”
has
the
meaning set forth in Section 1.8 of this Agreement.
“Receptopharm
Common Stock”
has
the
meaning set forth in the recitals of this Agreement.
“Receptopharm
Intellectual Property”
means
all of the following which are necessary to conduct the business of Receptopharm
as presently conducted or as currently proposed to be conducted: (i) trademarks,
trade dress, service marks, copyrights, logos, trade names, corporate names
and
all registrations and applications to register the same; (ii)
patents and pending patent applications; (iii) all material computer software
programs, databases and compilations; (iv) all technology, know-how and trade
secrets; and (v) all material licenses and agreements to which Receptopharm
is a
party which relate to any of the foregoing.
“Registrable
Securities”
means
the shares of Nutra Pharma Common Stock issued to the stockholders of
Receptopharm pursuant to this Agreement or with respect to such Nutra Pharma
Common Stock (w) upon any conversion or exchange thereof, (x) by way of stock
dividend or stock split, (y) in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or (z)
otherwise, in all cases subject to Article VI of this Agreement. As to any
particular Registrable Securities, once issued such securities shall cease
to be
Registrable Securities when (A) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act
and
such securities shall have been disposed of in accordance with such Registration
Statement, (B) such securities shall have been sold in reliance upon Rule 144,
(C) such securities shall have been otherwise transferred, new certificates
for
such securities not bearing a legend restricting further transfer shall have
been delivered by the Company and subsequent disposition of such securities
shall not require registration or qualification of such securities under the
Securities Act or any similar state law then in force, or (D) such securities
shall have ceased to be outstanding.
29
“Registration
Expenses”
means
all expenses incident to Nutra Pharma’s performance of or compliance with this
Agreement, including, without limitation, (i) all registration, listing,
qualification and filing fees (including NASD filing fees), (ii) fees and
disbursements of counsel for the Company, (iii) accounting fees, (iv) blue
sky
fees and expenses (including counsel fees in connection with the preparation
of
a blue sky memorandum and legal investment survey and NASD filings), and (v)
all
printing, distributing, mailing and delivery expenses for any Registration
Statement, any Prospectus, transmittal letters, securities certificates and
other documents relating to the performance of and compliance with Article
VI of
this Agreement.
“Registration
Statement”
means
any registration statement of Nutra Pharma, including a Shelf Registration
Statement, which covers the sale of any Registrable Securities by Holders,
and
all amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
“SEC”
means
the Securities and Exchange Commission.
“Stock
Plans”
has
the
meaning set forth in Section 1.9 of this Agreement.
[Signature
Page Follows]
30
IN
WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto
have executed this Agreement on the date first set forth above.
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/s/ Xxx
X. Xxxxxxx
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Xxx
X. Xxxxxxx, President
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NP
ACQUISITION CORPORATION
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/s/ Xxx
X. Xxxxxxx
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Xxx
X. Xxxxxxx, President
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RECEPTOPHARM,
INC.
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/s/ Xxxxxx
X.Xxxxx
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Xxxxxx
X. Xxxxx, President
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EXECUTING
STOCKHOLDERS:
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/s/ Xxxx
X. Xxxx
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Xxxx
X. Xxxx, Ph.D
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Address:
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/s/ Xxxxxx
X. Xxxxx
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Xxxxxx
X. Xxxxx
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Address:
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/s/ Xxxxxxxx
X. Xxxxxxx
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Xxxxxxxx
X. Xxxxxxx, Ph. D
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Address:
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/s/ Xxxx
Xxxxx Xxxxxxx
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Xxxx
Xxxxx Xxxxxxx
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Address:
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32
