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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
dated as of
July 23, 1997
by and among
NATURAL HEALTH TRENDS CORP.,
GLOBAL HEALTH ALTERNATIVES, INC.
and
THE STOCKHOLDERS OF GLOBAL HEALTH ALTERNATIVES, INC.
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Table of Contents*
Page
Article I
The Main Transaction
Section 1.01. Main Transaction......................................... 1
Section 1.02. Consideration............................................ 1
(a) Firm Shares.......................................... 1
(b) First Contingent Shares.............................. 2
(c) Second Contingent Shares............................. 2
Section 1.03. Main Transaction and Transactions Defined................ 7
Section 1.04. Execution of Agreement................................... 7
Section 1.05. Power of Attorney........................................ 8
Article II
Representations and Warranties of the Company
Section 2.01. Organization and Existence .............................. 8
Section 2.02. Consents, Authorizations and Conflicts .................. 9
Section 2.03. Company Financial Statements............................. 9
Section 2.04. Capitalization and Title to Shares ....................... 10
Section 2.05. Company Properties; Liens................................. 11
Section 2.06. Company Insurance......................................... 11
Section 2.07. Company Litigation and Compliance......................... 11
Section 2.08. Company Contracts......................................... 12
Section 2.09. Company Taxes............................................. 13
Section 2.10. Company Employee Plans.................................... 13
Section 2.11. Company Environmental Compliance.......................... 14
Section 2.12. Finder's Fees............................................. 15
Section 2.13. Absence of Certain Changes................................ 15
Article III
Representations and Warranties of NHTC
Section 3.01. Organization and Existence................................ 16
Section 3.02. Consents, Authorizations and Conflicts.................... 16
Section 3.03. NHTC Financial Statements................................. 17
Section 3.04. NHTC Capitalization....................................... 18
Section 3.05. NHTC Properties; Liens.................................... 18
Section 3.06. NHTC Insurance............................................ 19
Section 3.07. NHTC Litigation and Compliance............................ 19
Section 3.08. NHTC Contracts............................................ 19
Section 3.09. NHTC Taxes................................................ 20
Section 3.10. NHTC Employee Plans....................................... 20
Section 3.11. NHTC Environmental Compliance............................. 21
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* The Table of Contents and cover page are not a part of this Agreement.
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Page
Section 3.12. SEC Filings............................................... 21
Section 3.13. Finder's Fees............................................. 22
Section 3.14. Absence of Certain Changes ............................... 22
Article IV
Other Representations and Warranties
Section 4.01. Nature of Transaction..................................... 23
Section 4.02. Acquisition for Investment................................ 24
Section 4.03. Tax Treatment of Transactions............................. 25
Section 4.04. No Other Representations and Warranties................... 26
Section 4.05. Release................................................... 26
Article V
Conduct and Transactions Prior to Closing
Section 5.01. Access to Records and Properties.......................... 26
Section 5.02. Operation of the Company and NHTC......................... 27
Section 5.03. Consents and Notices...................................... 27
Section 5.04. Best Efforts to Satisfy Conditions........................ 28
Section 5.05. Bridge Loans.............................................. 28
Article VI
Conditions to the Main Transaction
Section 6.01. Conditions to Obligations of NHTC......................... 28
(a) Representations and Warranties;
Performance of Obligations........................ 28
(b) Charter, By-laws, etc................................ 29
(c) Consents and Notices................................. 29
(d) Legal Restraints..................................... 29
(e) No Company Material Adverse Change................... 29
(f) Company Shares Certificates......................... 29
(g) Receipt.............................................. 30
(h) Opinions of Counsel.................................. 30
(i) IRS Forms W-8 and W-9............................... 30
(j) Management Options.................................. 30
(k) ▇▇▇▇▇▇ Options....................................... 30
(l) Other Matters....................................... 30
Section 6.02. Conditions to Obligations of the Company Stockholders..... 30
(a) Representations and Warranties;
Performance of Obligations........................ 30
(b) Charter, By-laws, etc................................ 31
(c) Consents and Notices................................. 31
(d) Legal Restraints..................................... 31
(e) No NHTC Material Adverse Change...................... 31
(f) Receipt............................................. 32
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(g) Firm Shares Certificates............................. 32
(h) Opinions of Counsel.................................. 32
(i) Registration Rights Agreement....................... 32
(j) Corporate Governance................................ 32
(k) Management Compensation.............................. 32
(l) Reservation of Shares............................... 32
(m) Other Matters......................................... 33
Article VII
Closing Procedure and Date; Termination
Section 7.01. Closing Procedure; Closing Date........................... 33
Section 7.02. Termination of Agreement.................................. 33
Article VIII
Indemnification
Section 8.01. By the Company Stockholders............................... 34
Section 8.02. By NHTC................................................... 36
Section 8.03. "Losses" Defined.......................................... 37
Section 8.04. Notice of Claims.......................................... 38
Section 8.05. Survival of Provisions.................................... 38
Section 8.06. Exclusive Remedy.......................................... 38
Section 8.07. Other Recoveries.......................................... 39
Article IX
Miscellaneous
Section 9.01. Board and Executive Committee Representation.............. 39
Section 9.02. Termination and Modification of Agreements................ 40
Section 9.03. Public Announcements...................................... 40
Section 9.04. Further Actions........................................... 40
Section 9.05. Expenses.................................................. 41
Section 9.06. Entire Agreement.......................................... 41
Section 9.07. Descriptive Headings; References.......................... 41
Section 9.08. Notices................................................... 41
Section 9.09. Governing Law and Forum................................... 42
Section 9.10. Assignment................................................ 43
Section 9.11. Remedies.................................................. 43
Section 9.12. Waivers and Amendments.................................... 44
Section 9.13. Third Party Rights........................................ 44
Section 9.14. Illegalities.............................................. 44
Section 9.15. Gender and Plural Terms................................... 44
Section 9.16. Effectiveness; Termination of Original Agreement.......... 44
Section 9.17. Counterparts.............................................. 44
Signatures................................................................
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
This Amended and Restated Agreement and Plan of Reorganization, dated as
of July 23, 1997 (this "Agreement"), is by and among: (1) Natural Health Trends
Corp., a Florida corporation ("NHTC"), on the one hand, and (2) Global Health
Alternatives, Inc., a Delaware corporation (the "Company"), and (3) the
stockholders of the Company who execute this Agreement (the "Company
Stockholders"), on the other hand. The names and addresses of the Company
Stockholders appear on Exhibit A attached hereto and made part hereof. The
shares of the Company owned by the Company Stockholders (the "Company Shares")
will constitute all of the outstanding 4,829,768 shares of Common Stock, par
value $.0001 per share, of the Company (the "Company Common Stock") if all
stockholders of the Company execute this Agreement.
Background
Under that certain Agreement and Plan of Reorganization, dated as of
March 19, 1997 (the "Original Agreement"), by and among NHTC, GHA Holdings,
Inc., a Delaware corporation ("Holdings") and wholly owned subsidiary of NHTC,
and the Company, the parties thereto agreed to effect a tax-free reorganization
under Section 368(a)(1)(C) of the Code. The parties to the Original Agreement
now wish to effect a tax-free reorganization under Section 368(a)(1)(B) of the
Code and, consequently, to amend and restate (and thereby supersede) the
Original Agreement. In connection with such amendment and restatement (and
supersession), among other things: (i) Holdings is being deleted as a party to
the Transactions (as defined in the Original Agreement and this Agreement), and
(ii) the Company Stockholders are being added as parties to this Agreement.
NOW, THEREFORE, this Agreement evidences that, for and in consideration
of the mutual covenants set forth herein, and intending to: (A) amend and
restate (and thereby supersede in its entirety) the Original Agreement as of the
date hereof (the "Restatement Date"), so that from and after the Restatement
Date the Original Agreement shall no longer be of any force or effect, and (B)
effect a tax-free reorganization under Section 368(a)(1)(B) of the Code, the
parties hereto hereby agree as follows:
Article I
Main Transaction
Section 1.01. Main Transaction. On the Closing Date or on the date(s) of
any subsequent Additional Closing(s) (as defined in Section 7.01), each Company
Stockholder shall transfer, assign, grant, convey and set over to NHTC, and its
successors and assigns forever, and NHTC shall accept and receive from each
Company Stockholder, free and clear of any and all liens, security interests,
mortgages, pledges, covenants, easements, encumbrances, defects in title,
agreements and claims and rights of third parties ("Liens") all of such Company
Stockholder's right, title and interest in, to and under the number of Company
Shares set forth opposite such Company Stockholder's name on the appropriate
"Agreement Signature Page" hereto.
Section 1.02. Consideration. (a) Firm Shares. In consideration of the
Company Stockholders' transfer of the Company Shares to NHTC, on the Closing
Date NHTC shall issue and deliver to each Company Stockholder, and each Company
Stockholder shall accept and receive from NHTC, free and clear of any and all
Liens, pre-emptive and similar rights, a number of shares of NHTC Common Stock,
par value $.001 per share
("NHTC Common Stock"), equal to such Company Stockholder's Percentage (as
defined in Section 1.02(d) below) of 5,800,000; provided, however, that: (i) no
fractional shares of NHTC Common Stock shall be issued pursuant to the
foregoing; and (ii) all fractional shares of NHTC Common Stock that a Company
Stockholder would otherwise be entitled to receive pursuant to the foregoing
shall be aggregated, and if a fractional share of NHTC Common Stock results from
such aggregation such fraction shall be rounded (up or down) to the nearest
whole share. The number of Firm Shares so issuable to each Company Stockholder
in accordance with the foregoing is set forth opposite such Company
Stockholder's name on the appropriate "Agreement Signature Page" hereto.
(b) First Contingent Shares. In further consideration of the Company
Stockholders' transfer of the Company Shares to NHTC as aforesaid, if Acquired
Pre-Tax Earnings during the First Contingent Shares Measure Period (as such
terms are defined in Section 1.02(d) below) shall equal or exceed $1,200,000,
then promptly after the sixtieth (60th) day after the end of the First
Contingent Shares Measure Period, NHTC shall issue and deliver to each Company
Stockholder, and each Company Stockholder shall accept and receive from NHTC,
free and clear of all Liens, pre-emptive and similar rights, a number of shares
of NHTC Common Stock equal to such Company Stockholder's Percentage of 800,000;
provided, however, that: (i) no fractional shares of NHTC Common Stock shall be
issued pursuant to the foregoing; and (ii) all fractional shares of NHTC Common
Stock that a Company Stockholder would otherwise be entitled to receive pursuant
to the foregoing shall be aggregated, and if a fractional share of NHTC Common
Stock results from such aggregation such fraction shall be rounded (up or down)
to the nearest whole share.
(c) Second Contingent Shares. In further consideration of the Company
Stockholders' transfer of the Company Shares to NHTC as aforesaid, promptly
after the sixtieth (60th) day after the end of the Second Contingent Shares
Measure Period, NHTC shall issue and deliver to each Company Stockholder, and
each Company Stockholder shall accept and receive from NHTC, free and clear of
all Liens, pre-emptive and similar rights, a number of shares of NHTC Common
Stock equal to such Company Stockholder's Percentage of a number of shares of
NHTC Common Stock having a Fair Market Value (as of such 60th day) equal to
the lesser of:
o (8 x Acquired Pre-Tax Earnings) minus FSFMV minus FCSFMV minus
Acquisition Costs minus $27,350, and
o $45,000,000
with the terms used in the above formula and provisions having the meanings set
forth in Section 1.02(d) below; provided, however, that: (i) no fractional
shares of NHTC Common Stock shall be issued pursuant to the foregoing; and (ii)
all fractional shares of NHTC Common Stock that a Company Stockholder would
otherwise be entitled to receive pursuant to the foregoing shall be aggregated,
and if a fractional share of NHTC Common Stock results from such aggregation
such fraction shall be rounded (up or down) to the nearest whole share.
(d) For purposes of this Agreement, the term:
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"Acquired Pre-Tax Earnings" means the Pre-Tax Earnings of the
Existing Businesses and any New Business in the Company (or any successor or
assign thereof) during the First Contingent Shares Measure Period (for purposes
of Section 1.02(b)) or Second Contingent Shares Measure Period (for purposes of
Section 1.02(c)).
"Acquisition" means any transaction, or any series of related
transactions, by which the Company (or any successor or assign thereof) or any
of its consolidated subsidiaries: (1) acquires (x) all or a substantial part of
the assets (other than through a purchase of inventory in the ordinary course of
business), (y) one or more manufacturing lines or (z) a going business or
division, of any other person or entity, whether through purchase of assets,
merger or otherwise, or (2) directly or indirectly acquires (in one transaction
or as the most recent transaction in a series of transactions) control of at
least 50% (in number of votes) of the securities of a corporation which have
ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or at least
50% (by percentage or voting power) ownership interest in any partnership, joint
venture or limited liability company (other than corporate partnerships or joint
ventures covered by the preceding clause).
"Acquisition Costs" means the consideration paid at any time on
or after the Closing Date and prior to the end of the Second Contingent Shares
Measure Period for any Acquisition of an Existing Business or New Business,
including (net of any tax benefits) commissions, finders fees, investment
banking, legal and accounting fees and disbursements paid in connection
therewith and such other transaction costs as shall be agreed upon by the NHTC
and one or more of the Attorneys (as defined in Section 1.05). For this purpose,
any such consideration consisting of: (1) NHTC Common Stock shall be valued at
the Fair Market Value thereof as of the date of issuance; (2) any promissory
notes issued by, or indebtedness assumed by, NHTC or any subsidiary thereof
(including the Company) shall be valued at the face amount of such promissory
notes or indebtedness (as the case may be); and (3) any Other Consideration
shall be valued at the Fair Market Value thereof. The parties hereto hereby
acknowledge and agree that the "Acquisition Costs" of: (A) the Ellon Acquisition
shall be limited to any "Contingent Consideration" paid in accordance with (and
as defined in) Section 1.04(b) of the Ellon Acquisition Agreement; (B) the
Fruitseng Acquisition shall be limited to any "Contingent Shares" issued in
accordance with (and as defined in) Section 1.04(b) of the Fruitseng Acquisition
Agreement (as such provision is being modified and amended under Section 9.02(a)
hereof); (C) the MikeCo Acquisition shall be zero ($0); (D) each of the Ellon
Acquisition, Fruitseng Acquisition and MikeCo Acquisition shall additionally
include legal and accounting fees and disbursements and such other transactional
costs attributable to such Acquisition (as opposed to services or other valuable
assets or other rights) as shall be agreed upon by the NHTC and one or more of
the Attorneys, in the case of each of the foregoing clauses (A), (B), (C) and
(D), at any time on or after the Closing Date and prior to the end of the Second
Contingent Shares Measure Period. The parties hereto hereby additionally
acknowledge and agree that "Acquisition Costs" shall include the following
Losses (as defined in Section 8.03), but only to the extent that such Losses
shall not have been taken into account in the calculation of "Acquired Pre-Tax
Earnings" during Second Contingent Shares Measure Period and only to the extent
that such Losses shall not have been reimbursed pursuant to Section 8.01: all
such Losses directly or indirectly incurred, suffered, sustained or required to
be paid by NHTC, the Company or any of their respective Subsidiaries at any time
on or after the Closing Date and prior to the end of the Second Contingent
Shares Measure Period resulting from, relating to
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or arising out of any: (i) Taxes (as defined in Section 2.09(b) hereof) of the
Company relating to any periods prior to the Closing Date; (ii) any action,
suit, claim, proceeding, investigation or similar matter (including with respect
to product liability and other third-party liability claims) of any Existing
Business or New Business, to the extent that the same may result from, relate to
or arise out of acts or occurrences on or before the Closing Date; (iii) any
liability or obligation owed to any Company Stockholder or other securityholder
of the Company (as such), to the extent that the same may result from, relate to
or arise out of acts or occurrences of or on behalf of the Company on or before
the Closing Date (and not in connection with any of the Transactions); and (iv)
any fees, costs and expenses in connection with the negotiation, execution
and/or consummation of the Transactions (the Losses described in the foregoing
clauses (i) through (iv) being hereinafter collectively referred to as the
"Unexpected Acquisition Costs").
"Business" means the assets, manufacturing lines, going business
or division, corporation, partnership, joint venture or limited liability
company the acquisition of which constitutes an "Acquisition" hereunder.
"Contingent Shares" means the First Contingent Shares and Second
Contingent Shares, collectively.
"Ellon Acquisition" means the Acquisition described in clause (1)
of the definition of "Existing Business" in this Section 1.02(d), which was
effected pursuant to the Ellon Acquisition Agreement.
"Ellon Acquisition Agreement" means that certain Assets Purchase
Agreement, dated as of October 15, 1996, by and among the Company, Ellon, Inc.,
Ellon USA, Inc. and ▇▇▇▇▇ Kaslof and ▇▇▇▇▇▇ ▇. Kaslof, as the same may be
supplemented, modified, amended and/or restated from time to time.
"Existing Business" means: (1) Ellon, Inc. ("New Ellon"), a
Delaware corporation and wholly-owned subsidiary of the Company, which (in
October 1996) completed an Acquisition of substantially all of the assets of
Ellon USA, Inc. ("Old Ellon"), and the operations thereof, or such other
entities and operations of the Company through which its homeopathic and/or
flower remedy product business(es) are held and/or performed; (2) Maine
Naturals, Inc. (formerly named Fruitseng, Inc.), a Delaware corporation, which
(in October 1996) completed an Acquisition of substantially all of the assets of
Downeast Cranberry Company, Inc., and the operations thereof, or such other
entities and operations of the Company through which its beverage business(es)
are held and/or performed; (3) Global Health Alternatives (UK) Ltd., an England
and Wales corporation and wholly-owned subsidiary of the Company, and the
operations thereof, (4) the other entities and operations of the Company through
which the Company's rights and obligations under the General Agreement of
Cooperation between the Company and MEBO Holding Corp. are held and/or
performed; (5) the entities and/or operations of the Company through which the
Company's rights and obligations under the Agreement of Development with Kang
Ban Technical Trading Company (affiliated with the Beijing University of
Traditional Chinese Medicine) are held and/or performed; (6) MikeCo, Inc., a New
York corporation and wholly-owned subsidiary of the Company, the outstanding
capital stock of which (in May 1997) was acquired by the Company, and the
operations thereof, or such other entities and operations of the Company through
which its "NR- 1222" business(es) are held and/or performed; (7) GHA Natural
Products, Inc., a
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Delaware corporation and wholly-owned subsidiary of the Company formed by the
Company in May 1997, and the operations thereof; (8) Natural Health
Laboratories, Inc., a Delaware corporation and wholly-owned subsidiary of the
Company formed by the Company in May 1997, and the operations thereof; and (9)
any other entities and/or operations that are part of the properties or assets
of the Company or any Subsidiary (as defined in Section 2.01(c) hereof) of the
Company on the Closing Date.
"Fair Market Value" means: (1) when used with reference to NHTC
Common Stock, as of any particular date, the average of the mean of the final
bid and final ask prices of the NHTC Common Stock for each trading day during
the 30-day period immediately preceding such date, provided that: (i) if at the
time of determination NHTC Common Stock shall be traded on a national securities
exchange or quoted in an automated quotation system for which closing sale price
information is published, then such average shall be of the closing sale prices
of the NHTC Common Stock on each such trading day; and (ii) if on any such
trading day there shall not have been reported final bid and ask prices (or, if
applicable, a closing sale price) then such prices (or, if applicable, such
price) shall be the final bid and ask prices (or, if applicable, the closing
sale price) reported for the next preceding trading day for which such prices
(or, if applicable, such price) shall have been reported; and (2) when used with
reference to any Other Consideration, the fair market value thereof as
determined in good faith by the Board of Directors of NHTC.
"FCSFMV" means the Fair Market Value, as of the sixtieth (60th)
day after the First Contingent Shares Measure Period, of the NHTC Common Stock
issued or issuable as the First Contingent Shares; provided that if no First
Contingent Shares are issued then such "FCSFMV" means zero ($0).
"Firm Shares" means the shares of NHTC Common Stock issued or
issuable under Section 1.02(a).
"First Contingent Shares" means the shares of NHTC Common Stock
issued or issuable under Section 1.02(b).
"First Contingent Shares Measure Period" means the twelve-month
period ending June 30, 1998.
"Fruitseng Acquisition" means the Acquisition described in clause
(2) of the definition of "Existing Business" in this Section 1.02(d), which was
effected pursuant to the Fruitseng Acquisition Agreement.
"Fruitseng Acquisition Agreement" means that certain Assets
Purchase Agreement, dated as of October 15, 1996, by and among the Company,
Fruitseng Inc. (now, Maine Naturals, Inc.), Downeast Cranberry Company, Inc. and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as the same may be supplemented, modified, amended and/or
restated from time to time.
"FSFMV" means the Fair Market Value, as of the Closing Date, of
the NHTC Common Stock issued or issuable as the Firm Shares.
"GAAP" means United States generally accepted accounting
principles.
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"MikeCo Acquisition" means the Acquisition described in clause
(6) of the definition of "Existing Business" in this Section 1.02(d), which was
effected pursuant to the MikeCo Acquisition Agreements.
"MikeCo Acquisition Agreements" means that certain: (i) Agreement
and Plan of Reorganization dated as May 23, 1997, by and among the Company,
MikeCo, Inc. and H. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as the same may be supplemented, modified, amended
and/or restated from time to time, and (ii) Assignment of Patents dated May 23,
1997 made by ▇▇▇▇ Laboratories, Inc. in favor of MikeCo, Inc.
"New Business" means any Business that: (i) is not an Existing
Business, and (ii) is not, on or prior to the date of acquisition thereof by the
Company or any other subsidiary of NHTC, designated by one or more of the
Attorneys as an "Excluded New Business" for purposes of this Agreement.
"NHTC Shares" means the Firm Shares and any Contingent Shares
that may be issued or issuable under this Article I.
"Other Consideration" means, when used with reference to the
Acquisition Costs of any Existing Business or New Business, any consideration
paid for the purchase or other acquisition thereof excluding: (i) NHTC Common
Stock and (ii) any promissory notes issued by, or indebtedness assumed by, NHTC
or any subsidiary thereof (including the Company or ).
"Percentage" means, with respect to any Company Stockholder, the
percentage obtained by dividing: (i) the number of Company Shares held by such
Company Stockholder (as indicated opposite such Company Stockholder's name on
the appropriate "Agreement Signature Page" hereto), by (ii) the total number of
Company Shares outstanding on the Closing Date; provided, however, that in the
event that a Company Stockholder establishes to the reasonable satisfaction of
NHTC that such Company Stockholder has acquired or transferred its rights to any
of the Firm Shares and/or Contingent Shares from or to any other Company
Stockholder, then, with respect to the rights to any of such Firm Shares and/or
Contingent Shares (as the case may be), such Company Stockholders' Percentages
shall be appropriately adjusted.
"Pre-Tax Earnings" means, with respect to any entity for any
period, the income (or loss) from operations before income taxes (if any) of
such entity for such period plus any non-cash charges (such as, without
limitation, depreciation and amortization) plus any extraordinary or
non-recurring expenses incurred during such period related to the disposition of
any Business or the revaluation of intangibles.
"Second Contingent Shares" means the shares of NHTC Common Stock
issued or issuable under Section 1.02(c).
"Second Contingent Shares Measure Period" means the twelve-month
period ending June 30, 2000.
(e) No First Contingent Shares shall be issued if the formula
provided under Section 1.02(b) above yields a zero or negative value, and no
Second Contingent Shares
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shall be issued if the formula provided under Section 1.02(c) above yields a
zero or negative value; and in either such event NHTC shall have no claim or
cause of action against the Company, its successors or assigns or any other
person or entity (without prejudice, however, to the rights of NHTC under
Article VIII).
Section 1.03. "Main Transaction" and "Transactions" Defined. The
transactions provided for above in this Article I are hereinafter sometimes
referred to as the "Main Transaction"; the Main Transaction and other
transactions contemplated by this Agreement are hereinafter sometimes referred
to as the "Transactions".
Section 1.04. Execution of Agreement. (a) Each Company Stockholder is
executing and delivering this Agreement, for the limited purpose of: (i)
consenting to the above provisions of Article I of this Agreement and agreeing
to be bound thereby, (ii) making the representations, warranties, covenants and
agreements set forth in Sections 4.02 and 4.05 with respect to such Company
Stockholder (and no other Company Stockholder), (iii) confirming to the Company
and Indemnifying Company Stockholders (as defined in Section 8.01(d)) the truth
and accuracy of the representations and warranties made by the Company herein,
and of the other statements made herein, with respect to such Company
Stockholder (and no other Company Stockholder), and (iv) making and giving all
covenants, agreements, confirmations and ratifications set forth in this
Agreement that are expressly being made or given (as the case may be) by the
Company Stockholders (in their capacity as such).
(b) Each party hereto hereby acknowledges and agrees that,
notwithstanding anything to the contrary set forth in this Agreement (but except
as otherwise expressly provided in Article VIII hereof), no Company Stockholder
or Attorney shall have any liability under this Agreement or otherwise in
respect of the Transactions other than for a breach of: (i) representations and
warranties of such Company Stockholder or Attorney (and no other Company
Stockholder or other person or entity) made herein, (ii) the representations and
warranties of the Company made herein with respect to such Company Stockholder
or Attorney (and no other Company Stockholder or other person or entity), (iii)
the covenants and agreements of such Company Stockholder or Attorney (and no
other Company Stockholder or other person or entity) made herein, and (iv) the
covenants and agreements of the Company made herein with respect to such Company
Stockholder or Attorney (and no other Company Stockholder or other person or
entity). From and after the Closing Date, the liability of the parties hereto
for breaches of this Agreement shall be subject to limitations of Article VIII
hereof.
Section 1.05. Power of Attorney. (a) Each Company Stockholder has
executed and delivered an Irrevocable Power of Attorney in respect of this
Agreement and the Transactions (each a "Power of Attorney") appointing ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ attorneys-in-fact of such Company
Stockholder (such individuals so appointed (and any other person substituted or
appointed by any of them in accordance with the Power of Attorney) in such
capacity, individually an "Attorney" and collectively the "Attorneys").
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Article II
Representations and Warranties of the Company
The Company hereby represents and warrants to NHTC that, except as
previously disclosed in writing to NHTC (in this Article II (and Section
6.01(a)), "Previously Disclosed"):
Section 2.01. Organization and Existence. (a) The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Each Subsidiary of the Company, the identities of
which have been Previously Disclosed, is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its Subsidiaries has the full corporate
power and authority to own and lease their respective properties and assets and
to carry on their respective businesses as and where such properties and assets
are now owned, leased and/or operated and such businesses are now conducted. The
Company has heretofore made available to NHTC true, correct and complete copies
of the respective certificates or articles of incorporation and by-laws (or
equivalent governing instruments), each as amended to the date hereof, of the
Company and each of its Subsidiaries. Each of the Company and each of its
Subsidiaries is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the character
of the properties and assets now owned and/or operated by it or the nature of
the business now conducted by it requires it to be so licensed or qualified and
in which failure to be so licensed or qualified could reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
business, properties, assets, liabilities, capitalization, financial position,
operations, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, or on the ability of the Company or any Company
Stockholder to perform their respective obligations under this Agreement and/or
to consummate the Transactions (a "Company Material Adverse Effect").
(b) Each Company Stockholder that is a corporation, partnership or
other non- natural person (each, a "Corporate Company Stockholder") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
(c) The Company has made available to NHTC the original or true
copies of the minute books and stock transfer records of the Company and its
Subsidiaries. Such stock transfer records are current and accurate in all
material respects.
(d) For the purposes of this Agreement, the term "Subsidiary" means,
of any person or entity, any other entity of which the securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors (or other persons performing similar functions) are directly
or indirectly owned by such first person or entity. The Company does not own,
directly or indirectly, any equity or proprietary interests or securities of any
entity or enterprise organized under the laws of the United States, any state
thereof, the District of Columbia or any other domestic or foreign jurisdiction,
other than the Subsidiaries thereof Previously Disclosed.
Section 2.02. Consents, Authorizations and Conflicts. (a) Neither the
execution and delivery by the Company or any Company Stockholder (collectively,
the "Company Parties"; and each individually, a "Company Party") of this
Agreement, the Power of
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Attorney, Registration Rights Agreement or any of the other agreements,
instruments, certificates or other documents executed and delivered (or to be
executed and delivered) by any Company Party in connection with this Agreement
and/or any of the Transactions (collectively, the "Company Party Documents"),
nor the consummation of the Transactions, nor the performance by the Company of
any of its other obligations hereunder or thereunder, require or will require
any governmental authority or private party consent, waiver, approval,
authorization or exemption (collectively, "Consents") or the giving of any
notice ("Notice") applicable to the Company (as opposed to NHTC) except for such
Consents and Notices: (i) that have been duly obtained (in the case of Consents)
or given (in the case of Notices) and are unconditional and in full force and
effect, or (ii) of which the failure to obtain (in the case of Consents) or give
(in the case of Notices) could not reasonably be expected to have a Company
Material Adverse Effect.
(b) This Agreement and each other Company Party Document has been (or
prior to the Closing will be) duly authorized (in the case of the Company and
the Corporate Company Stockholders), executed and delivered by each Company
Party party thereto and constitute the legal, valid and binding obligations of
such Company Party enforceable against such Company Party in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, fraudulent conveyance or similar laws of
general application relating to or affecting the enforcement of creditors'
rights. The execution and delivery by the Company Parties of the Company Party
Documents to which they are respectively a party, the performance by the Company
Parties of their respective obligations thereunder, and the consummation of the
Transactions, do not and will not contravene, conflict or be inconsistent with,
result in a breach of, constitute a violation of or default under, or require or
result in any right of acceleration or to create or impose any Lien under: (i)
the Company's or any Corporate Company Stockholder's certificate of
incorporation or by-laws (or equivalent governing instruments), or (ii) except
where such contravention, conflict, inconsistency, breach, violation, default,
right or imposition could not reasonably be expected to have a Company Material
Adverse Effect, and assuming satisfaction of the matters referred to in Section
2.02(a): (x) any Laws applicable or relating to any Company Party or any of the
businesses or assets of the Company or any Subsidiary thereof, or (y) any
Company Permit (as defined in Section 2.07) or Company Contract.
Section 2.03. Company Financial Statements. (a) The books of account and
other financial and accounting records of the Company and its Subsidiaries are,
and during the respective periods covered by the Company Financial Statements
(as hereinafter defined) were, correct and complete in all material respects,
fairly and accurately reflect or reflected their respective income, expenses,
assets and liabilities, including the nature thereof and the transactions giving
rise thereto, and provide or provided a fair and accurate basis for the
preparation of the Company Financial Statements. The Company has heretofore
delivered to NHTC the following unaudited financial statements of the Company
(the "Company Financial Statements"): Consolidated Balance Sheet as of December
31, 1996 (the "Company Base Date") and Consolidated Statements of Income and
Consolidated Statement of Cash Flows for the periods then ended. The Company
Financial Statements have been prepared in conformity with GAAP (except for the
absence of notes), consistently applied, and are correct and complete in all
material respects, and fairly present the consolidated financial position of the
Company
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as of the respective dates thereof and the consolidated results of its
operations and cash flows for the periods covered thereby.
(b) As of the Restatement Date, neither the Company nor its
Subsidiaries has any indebtedness, liabilities or obligations (absolute,
contingent or otherwise) other than those: (i) that have been set forth or
reserved against in the Company Financial Statements, (ii) incurred since the
Company Base Date in the ordinary course of its business or otherwise consistent
with recent past practice that are, individually and in the aggregate, of an
immaterial nature and amount, (iii) arising under $685,000 aggregate principal
amount of 12 1/2% Promissory Notes of the Company ("Bridge Notes") and warrants
to purchase Common Stock of the Company ("Company Warrants") issued after the
Company Base Date, (iv) arising under borrowings made from NHTC, (v) arising in
connection with the MikeCo Acquisition, the terms of which (and agreements with
respect to which) have been Previously Disclosed, (vi) arising under Laws,
Company Permits and/or Company Contracts, and (vii) which could not reasonably
be expected to have a Company Material Adverse Effect.
Section 2.04. Capitalization and Title to Shares. (a) The authorized
capital stock of the Company consists of: (1) 10,000,000 shares of Company
Common Stock, of which (i) 4,829,768 (the "Company Shares") are issued and
outstanding, (ii) up to 300,000 shares have been (or at the date hereof may be)
reserved for issuance (formally or informally) pursuant to options formally (or
informally) granted to management personnel of the Company or subsidiaries
thereof ("Management Options"); and (2) 10,000,000 shares of undesignated
Preferred Stock, par value $.0001 per share, none of which are issued or
outstanding. All Company Shares are duly authorized, validly issued, fully paid
and nonassessable shares of capital stock of the Company, with no personal
liability attaching to the ownership thereof. Except as disclosed hereinabove or
otherwise Previously Disclosed, there are no issued, outstanding or existing:
(1) securities convertible into or exchangeable for any shares of capital stock
of the Company; (2) options, warrants or other rights to purchase or subscribe
for any shares of capital stock of the Company or for securities convertible
into or exchangeable for any shares of capital stock of the Company; or (3)
agreements or commitments of any kind or description relating to the issuance or
purchase of any shares of capital stock of the Company, any such convertible or
exchangeable securities or any such options, warrants or other rights.
(b) The Company or one or more of its Subsidiaries is the record and
beneficial owner of all of the outstanding capital stock of each Subsidiary of
the Company, free and clear of all Liens (other than Permitted Liens).
(c) Each Company Stockholder has good and marketable title to the
number of Company Shares indicated opposite such Company Stockholder's name on
the appropriate "Agreement Signature Page" hereto, free and clear of all Liens.
(d) For purposes of this Agreement, the term "Permitted Liens" means:
(i) Liens for taxes not yet due and payable; (ii) Liens imposed by Laws (as
defined in Section 2.07), such as banker's, warehousemen's, mechanic's and
materialmen's liens, and other similar statutory or common law liens arising in
the ordinary course of business; (iii) Liens arising out of pledges, bonds or
deposits under worker's compensation laws, unemployment insurance, old age
pension or other social security or retirement benefits
-10-
or similar legislation and deposits securing obligations for self-insurance
arrangements in connection with any of the foregoing; (iv) easements, rights of
way, building restrictions, minor defects or irregularities in title and such
other encumbrances or charges against property (real, personal or mixed) as are
of a nature that do not in a materially adverse way affect the marketability of
the same or interfere with the use thereof in the ordinary course of business as
presently conducted; (v) Liens arising under Company Contracts (as defined in
Section 2.08); (vi) Liens securing indebtedness (x) disclosed or reflected in
the Company Financial Statements, (y) owed to NHTC or any subsidiary thereof,
(z) or otherwise Previously Disclosed; and (vii) Liens that will be released and
discharged in full on or prior to the Closing Date.
Section 2.05. Company Properties; Liens. The Company has good and
marketable title to its interests in its properties and assets, free and clear
of all Liens (other than Permitted Liens). Each Subsidiary of the Company has
good and marketable title to its interests in its properties and assets (real,
personal or mixed, tangible or intangible), free and clear of all Liens (other
Permitted Liens).
Section 2.06. Company Insurance. The Company has heretofore delivered to
NHTC a true, correct and complete list of all insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company and its Subsidiaries. There are
no material claims pending under any such policies or material disputes with
underwriters, and all premiums due and payable have been paid. There are no
pending or threatened terminations with respect to any such policies, and the
Company and its Subsidiaries are in compliance in all material respects with all
conditions contained therein. All such policies are in full force and effect.
Section 2.07. Company Litigation and Compliance. (a) Except as
Previously Disclosed or (in the case of the following clauses (iii) and (v)
only) where such events or circumstances could not reasonably be expected to
have a Company Material Adverse Effect: (i) there are no governmental authority
or private party actions, suits, claims, proceedings or investigations pending
or threatened against the Company, any Subsidiary thereof or any Company
Stockholder: (x) relating to either the Company, any Subsidiary thereof or any
properties or assets now or previously owned, leased or operated by the Company
or any Subsidiary thereof, (y) which questions or challenges the validity of
this Agreement or any other Company Party Document or any action taken or to be
taken by the Company or any Company Stockholder pursuant thereto, or (z) which
questions or challenges the Company's or any of its Subsidiary's right, title or
interest in or to any of its properties or assets; (ii) neither the Company nor
any Subsidiary thereof is the subject of any judgment, order or decree of any
governmental authority, court or arbitrator; (iii) the Company and each of its
Subsidiaries is in compliance with all federal, state, local and foreign laws,
statutes, ordinances, codes, judgments, orders, decrees, directives, rules and
regulations of any governmental authority, court or arbitrator ("Laws")
applicable or relating to its business, properties or assets; (iv) neither the
Company nor any of its Subsidiaries has engaged in any unfair trade practice,
committed any commercial or other fraud, paid or provided any kickbacks, bribes
or other gratuitous goods or services in order to solicit, secure or maintain
any business or commercial relationship, or committed any act or omission
actionable under the federal Racketeer Influenced and Corrupt Organizations Act,
as amended ("RICO"), or any similar state Laws, or under the federal Foreign
Corrupt Practices Act (assuming
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for this purpose that the Company has securities registered under Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) or any
similar state Laws, nor has any Company Stockholder or any other person or
entity engaged in or committed any such acts or omissions or made any such
payments in order to benefit, directly or indirectly, the Company, any
Subsidiary or the prospects thereof; and (v) the Company and each Subsidiary
thereof has obtained all governmental licenses, permits, rights, privileges,
registrations, exemptions, required reports, franchises, authorizations and
other consents which are required under any applicable Laws ("Permits") to own
and/or operate the respective businesses, properties, assets and operations of
the Company and its Subsidiaries ("Company Permits"). All Company Permits are
valid and in full force and effect, and there exists no default or violation by
the Company under any Company Permit which could reasonably be expected to have
a Company Material Adverse Effect. No event, act or omission has occurred which
has resulted, or (with or without notice, the passage of time or both) could
reasonably be expected to result, in the revocation or non-renewal of any
Company Permit the revocation or non-renewal of which could reasonably be
expected to have a Company Material Adverse Effect.
Section 2.08. Company Contracts. (a) In this Agreement, the term: (i)
"Contract" means any contract, agreement, instrument, undertaking, bid,
commitment or arrangement, written or oral, of any kind or description
whatsoever (including without limitation all leases (of real or personal
property), licenses, indentures, credit agreements, debt instruments,
guarantees, mortgages, security agreements, joint venture agreements, company or
business acquisition or disposition agreements, concession agreements,
management agreements, consulting agreements, employment agreements, powers of
attorney, agency agreements, equipment purchase orders, customer purchase
orders, supply orders, indemnity agreements, and agreements or covenants not to
compete); and (ii) the term "Company Contract" means any Contract to which the
Company or any of its Subsidiaries is a party or by which any of their
properties or assets are subject or bound.
(b) The Company has Previously Disclosed all Company Contracts (other
than routine purchase or supply orders, those for routine services provided to
the Company or a Subsidiary thereof, and those terminable at will or upon 60
days' or less notice without the payment of any penalty, bonus, severance
payment or additional compensation) existing on the date hereof, and provided to
NHTC true, complete and correct copies of all such Company Contracts requested
to be reviewed thereby. Except where such event or circumstance could not
reasonably be expected to have a Company Material Adverse Effect: (i) all
Company Contracts are in full force and effect in accordance with the written
terms thereof, and there are no outstanding defaults by the Company, any
Subsidiary thereof or any other party under any Company Contract, (ii) no event,
act or omission has occurred which has resulted, or (with or without notice, the
passage of time or both) could reasonably be expected to result, in a default
under any Company Contract, and (iii) no other party to any Company Contract has
asserted the right, and no such party has any right, to renegotiate or modify
the terms or conditions of any Company Contract.
Section 2.09. Company Taxes. (a) The Company and each Subsidiary thereof
have filed all Tax returns required to be filed by them, which returns are
complete and correct in all material respects, and neither the Company nor any
Subsidiary is in default in the payment of any Taxes which were payable pursuant
to said return, except where
-12-
the failure to so file or such default could not reasonably be expected to have
a Company Material Adverse Effect. Neither the Company nor any Subsidiary
thereof has, since their respective inceptions, been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code. As of December 31, 1996, the Company and each of its Subsidiaries has paid
or accrued on its books and records all liability for Taxes with respect to all
periods or portions thereof ending on or before such date. For the period
January 1, 1997 through the Closing Date, neither the Company nor any Subsidiary
thereof has incurred any liability for Taxes other than Taxes arising in the
ordinary course of business with respect to such period. Neither the Company nor
any Subsidiary thereof: (i) is under audit, examination or review by any taxing
authority nor has any such audit, examination or review been threatened; (ii)
has received notice of any proposed or actual assessment or deficiency with
respect to Taxes; (iii) has extended the statute of limitation with respect to
the assessment or collection of any Taxes.
(b) For purposes of this Agreement, the terms "Tax" or "Taxes" mean
all taxes, charges, levies or other like assessments, including without
limitation all net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, capital, payroll, employment, excise, stamp,
property or other taxes, together with any interest and any penalties, additions
to tax or additional amounts imposed by any federal, state, local or foreign
governmental authority.
Section 2.10. Company Employee Plans. (a) Except as Previously
Disclosed, there is no, and has not been for the five-year period preceding the
Closing Date any, "employee benefit plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) which (x)
is or was subject to any provision of ERISA, and (y) is or was maintained,
administered or contributed to by the Company or any ERISA Affiliate (as defined
below) thereof that covers any employee or former employee of the Company or any
ERISA Affiliate thereof or under which the Company or any such ERISA Affiliate
has any material liability, which has not, as of the date hereof, been
Previously Disclosed and a copy thereof delivered to NHTC. Such plans are
hereinafter referred to collectively as the "Company Employee Plans"; and for
purposes of this Agreement, "ERISA Affiliate" means, of any person or entity,
any other person or entity which is a member of a controlled group of
corporations with such person (within the meaning of Section 414(b), 414(c) or
414(m) of the Code).
(b) Except as Previously Disclosed, there are no material liabilities
relating to any Company Employee Plan. Prior to the date hereof there has been
no amendment to, written interpretation or announcement (whether or not written)
by the Company or any of its ERISA Affiliates relating to, or change in employee
participation or coverage under, any Company Employee Plan which would increase
the expense of maintaining such Company Employee Plan above the level of the
expense incurred in respect thereof for the fiscal quarter ended on December 31,
1996. Each Company Employee Plan is and has been since inception in compliance
in all material respects with the applicable provisions of ERISA and the
applicable provisions of the Code. All contributions required to be made to each
Company Employee Plan have been timely made. Each Company Employee Plan intended
to be qualified under Section 401 of the Code (if any) is so qualified and has
received a favorable determination letter from the U.S. Internal Revenue Service
("IRS"). No Company Employee Plan is or was a "defined benefit plan", as defined
in Section 3(35) of ERISA, or a "multiemployer plan", as defined in Section
3(37)(A) of ERISA. There are no pending or threatened investigations, audits,
examina-
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tions or inquiries by any governmental authority involving any Company Employee
Plan, no threatened or pending claims (except for claims for benefits payable in
the ordinary course), suits or proceedings against any Company Employee Plan or
asserting any rights or claims to benefits under any Company Employee Plan which
could give rise to any liability, nor are there any facts which could give rise
to any liability in the event of any such investigation, audit, examination,
inquiry, claim, suit or proceeding.
Section 2.11. Company Environmental Compliance. (a) Except where such
events or circumstances could not reasonably be expected to have a Company
Material Adverse Effect: (i) the respective properties and operations of the
Company and its Subsidiaries are in compliance with all applicable Laws and
Permits regulating, relating to or imposing liability or standards of conduct
relating to environmental matters or the protection of human health or the
environment ("Environmental Laws"); (ii) neither the Company nor any Subsidiary
thereof has received any citation, summons, order, complaint, penalty,
investigation or review, or request for information or other action, by any
governmental authority or private party with respect to any: (x) alleged
violation by the Company or any Subsidiary thereof of any Environmental Laws,
(y) alleged failure by the Company or any Subsidiary thereof to have any Permit
under any Environmental Laws, or (z) use, possession, generation, treatment,
storage, recycling, transportation or disposal (collectively "Management") or
"release" (as defined in the Comprehensive Environmental Response, Compensation
and Liability of Act of 1980, as amended ("CERCLA")) of any Hazardous Material
(as hereinafter defined) by or on behalf of the Company or any Subsidiary
thereof; and (iii) no Hazardous Material Managed by or on behalf of the Company
or any Subsidiary thereof has been "released" on any property of the Company or
any Subsidiary thereof, or has come to be located at any site (including any
property of the Company or any Subsidiary thereof) which is listed or proposed
for listing on the National Priority List under CERCLA, the federal
Comprehensive Environmental Response, Compensation and Liability Information
System ("CERCLIS") or on any similar state list, or which is the subject of
federal, state or local enforcement actions or other investigations which may
lead to claims for investigation, clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not limited to,
claims under CERCLA.
(b) For purposes of this Agreement, the term "Hazardous Material"
means and includes any hazardous or toxic or polluting substance or waste,
including petroleum products and radioactive materials.
Section 2.12. Finder's Fees. Except as Previously Disclosed, there is no
investment banker, broker, finder or other intermediary which has been retained
by, or is authorized to act on behalf of, the Company, any Subsidiary of the
Company or any Company Stockholder who may be entitled to any fee or commission
from NHTC or any of its affiliates upon consummation of, or otherwise in
connection with, the Transactions.
Section 2.13. Absence of Certain Changes. Since the Company Base Date,
except as Previously Disclosed or as consented to in writing by NHTC: (A) the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary course and/or otherwise consistent with recent past practice; (B)
there has been no material adverse change in the condition (financial or
otherwise), business, properties, assets, liabilities, capitalization, financial
position, operations, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, or on the ability of the
-14-
Company or any Company Stockholder to perform their respective obligations under
this Agreement and to consummate the Transactions; and (C) without intending to
limit the generality of the foregoing, neither the Company nor any Subsidiary
thereof has:
(i) amended its certificate or articles of incorporation or
by-laws;
(ii) made or agreed to make any increase in the compensation
payable to any officer, director, employee, consultant, agent or
representative, or paid or agreed to pay any bonus or extraordinary
compensation to any such person;
(iii) entered into or completed any transaction or Company
Contract, or amended or terminated any transaction or Company Contract,
except: (1) Bridge Notes and Company Warrants, substantially similar to
those in existence at the date hereof, issued to new investors in the
Company, and (2) transactions and agreements entered into in the
ordinary course of business and/or otherwise consistent with recent past
practice;
(iv) cancelled or waived any claim or right of substantial value;
(v) increased (or experienced any adverse change in any
assumption underlying any method of calculating) bad debts,
contingencies or other reserves from that reflected in the Company
Financial Statements;
(vi) sold, assigned, transferred, licensed or otherwise disposed
of, encumbered, permitted to lapse, or suffered any Lien (other than
Permitted Liens) on or with respect to, any of its properties or assets,
except in the ordinary course of business or otherwise pursuant to
Company Contracts Previously Disclosed;
(vii) issued or sold any debt securities (other than Bridge
Notes, substantially similar to those in existence at the date hereof),
or granted any rights calling for the issuance or sale of any debt
securities (including without limitation options, warrants, convertible
or exchangeable securities or similar rights) (other than Bridge
Warrants and Bridge Notes, substantially similar to those in existence
at the date hereof);
(viii) created or otherwise become liable with respect to any
indebtedness for borrowed money (except Bridge Notes and for money
borrowed from NHTC) or the purchase of property, plant or equipment;
(ix) guaranteed, indemnified or otherwise became liable for the
obligations or liabilities of another person or entity (other than a
Subsidiary); or
(x) agreed or committed, whether or not in writing, to do any of
the foregoing.
Article III
Representations and Warranties of ▇▇▇▇
-▇▇-
▇▇▇▇ hereby represents and warrants to the Company and the Company
Stockholders that, except as previously disclosed in the SEC Filings (as defined
in Section 3.12) or otherwise in writing to the Company (in this Article III
(and Section 6.02(a)), "Previously Disclosed"):
Section 3.01. Organization and Existence. (a) NHTC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida. Each Subsidiary of NHTC, the identities of which has been Previously
Disclosed, is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of NHTC and
its Subsidiaries has the full corporate power and authority to own and lease
their respective properties and assets and to carry on their respective
businesses as and where such properties and assets are now owned and/or operated
and such businesses are now conducted. NHTC has heretofore made available to the
Company true, correct and complete copies of the respective certificates or
articles of incorporation and by-laws (or equivalent governing instruments),
each as amended to the date hereof, of NHTC. Each of NHTC and each of its
Subsidiaries is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the character
of the properties and assets now owned and/or operated by it or the nature of
the business now conducted by it requires it to be so licensed or qualified and
in which failure to be so licensed or qualified could reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
business, properties, assets, liabilities, capitalization, financial position,
operations, results of operations or prospects of NHTC and its Subsidiaries,
taken as a whole, or on the ability of NHTC to perform its obligations under
this Agreement and/or to consummate the Transactions (an "NHTC Material Adverse
Effect").
(b) NHTC does not own, directly or indirectly, any equity or
proprietary interests or securities of any entity or enterprise organized under
the laws of the United States, any state thereof, the District of Columbia or
any other domestic or foreign jurisdiction, other than Subsidiaries thereof
Previously Disclosed.
Section 3.02. Consents, Authorizations and Conflicts. (a) Neither the
execution and delivery by NHTC, the Registration Rights Agreement or any of the
other agreements, instruments, certificates or other documents executed and
delivered (or to be executed and delivered) by NHTC in connection with this
Agreement and/or any of the Transactions (collectively, the "NHTC Documents"),
nor the consummation of the Transactions, nor the performance by NHTC of its
other obligations thereunder, require any Consent or any Notice applicable to
NHTC (as opposed to any Company Party) (including without limitation such
Consents and Notices as may be necessary or appropriate in order to preserve for
(x) the educational/vocational operations and facilities of NHTC and its
Subsidiaries (the "NHTC Educational Facilities") their accredited status, and
(y) students of the NHTC Educational Facilities, as such, access to the
financial aid programs to which they currently have access, at substantially
current levels) except for such Consents and Notices: (i) that have been duly
obtained (in the case of Consents) or given (in the case of Notices) and are
unconditional and in full force and effect, or (ii) of which the failure to
obtain (in the case of Consents) or give (in the case of Notices) could not
reasonably be expected to have an NHTC Material Adverse Effect.
(b) This Agreement and each other NHTC Document has been (or prior to
the Closing will be) duly authorized, executed and delivered by NHTC and
constitute the
-16-
legal, valid and binding obligations of NHTC enforceable against NHTC in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, reorganization, insolvency, fraudulent conveyance or
similar laws of general application relating to or affecting the enforcement of
creditors' rights. The execution and delivery by NHTC of the NHTC Documents, the
performance by NHTC of its respective obligations thereunder, and the
consummation of the Transactions, do not and will not contravene, conflict or be
inconsistent with, result in a breach of, constitute a violation of or default
under, or require or result in any right of acceleration or to create or impose
any Lien under: (i) NHTC's certificate or articles of incorporation or by-laws,
or (ii) except where such contravention, conflict, inconsistency, breach,
violation, default, right or imposition could not reasonably be expected to have
an NHTC Material Adverse Effect, and assuming satisfaction of the matters
referred to in Section 3.02(a): (x) any Laws applicable or relating to NHTC or
any of the businesses or assets of NHTC or any Subsidiary thereof, or (y) any
NHTC Permit (as defined in Section 3.07) or NHTC Contract (as defined in Section
3.08).
Section 3.03. NHTC Financial Statements. (a) The books of account and
other financial and accounting records of NHTC and its Subsidiaries are, and
during the respective periods covered by the NHTC Financial Statements (as
hereinafter defined) were, correct and complete in all material respects, fairly
and accurately reflect or reflected their respective income, expenses, assets
and liabilities, including the nature thereof and the transactions giving rise
thereto, and provide or provided a fair and accurate basis for the preparation
of the NHTC Financial Statements. Such books of account and records have been
maintained in accordance with the Exchange Act and all applicable rules and
regulations of: (i) the U.S. Securities and Exchange Commission ("SEC"), (ii)
the U.S. Department of Education ("USDOE"), (iii) the Florida Department of
Education and its State Board of Independent Postsecondary, Vocational,
Technical, Trade and Business Schools (the "Florida State Board"), and (iv) all
applicable accreditation bodies who have presently accredited any of the NHTC
Educational Facilities. Prior to the date hereof NHTC has delivered to the
Company the audited and unaudited financial statements of NHTC appearing in the
SEC Filings (the "NHTC Financial Statements"). The NHTC Financial Statements
include the consolidated balance sheet of NHTC as of September 30, 1996 (the
"NHTC Base Date"). The NHTC Financial Statements have been prepared in
conformity with GAAP, consistently applied, are correct and complete in all
material respects, and fairly present the consolidated financial position of
NHTC as of the respective dates thereof and the consolidated results of its
operations and cash flows for the periods covered thereby.
(b) As of the Restatement Date, neither NHTC nor its Subsidiaries has
any indebtedness, liabilities or obligations (absolute, contingent or otherwise)
other than those: (i) set forth or reserved against in the most recent of the
NHTC Financial Statements, (ii) incurred since the NHTC Base Date in the
ordinary course of its business or otherwise consistent with recent past
practice that are, individually and in the aggregate, of an immaterial nature
and amount, (iii) arising under Laws, NHTC Permits and/or NHTC Contracts, and
(iv) which could not reasonably be expected to have an NHTC Material Adverse
Effect.
Section 3.04. NHTC Capitalization. (a) The authorized capital stock of
NHTC consists of: (i) 40,000,000 shares of NHTC Common Stock, of which (A)
12,811,261 shares are issued and outstanding, (B) 666,666 shares are reserved
for issuance under
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outstanding options granted under the NHTC Plan prior to the date hereof, (C) an
aggregate of 5,723,344 shares are reserved for issuance under Class A Warrants
and Class B Warrants (collectively, "NHTC Warrants") issued prior to the date
hereof, and (D) 5,800,000 are reserved for issuance as the Firm Shares; and (ii)
2,200 shares of Series A Preferred Stock, par value $.001 per share, and
1,497,800 shares of undesignated Preferred Stock, par value $.001 per share,
none of which are issued or outstanding. All of the shares described in the
foregoing clause (i)(A) have been, and all of the Firm Shares, Contingent Shares
and shares of NHTC Common Stock to be issued in lieu of the shares of Company
Common Stock issuable pursuant to Section 1.04(b) of the Fruitseng Acquisition
Agreement (as such provision has been modified and amended under Section 9.02(a)
hereof) will (upon the issuance and delivery of certificates therefor) be, duly
authorized, validly issued, fully paid and nonassessable, and no personal
liability attaches to, or will attach to, the ownership thereof. Except as
Previously Disclosed or hereinabove described, there are no issued, outstanding
or existing: (1) preemptive or similar rights with respect to the issuance or
sale of any capital stock of NHTC; (2) securities convertible into or
exchangeable for any shares of capital stock of NHTC or any Subsidiary thereof;
(3) options, warrants or other rights to purchase or subscribe for any shares of
capital stock of NHTC or for securities convertible into or exchangeable for any
shares of capital stock of the NHTC or any Subsidiary thereof; or (4) agreements
or commitments of any kind or description relating to the issuance or purchase
of any shares of capital stock of NHTC or any Subsidiary thereof, any such
convertible or exchangeable securities or any such options, warrants or other
rights.
(b) NHTC or one or more of its Subsidiaries is the record and
beneficial owner of all of the outstanding capital stock of each Subsidiary of
NHTC, free and clear of all Liens (other than Permitted Liens).
Section 3.05. NHTC Properties; Liens. Each of NHTC and each of its
Subsidiaries has good and marketable title to its interests in its properties
and assets (real, personal or mixed, tangible or intangible), free and clear of
all Liens (other than Permitted Liens).
Section 3.06. NHTC Insurance. NHTC has heretofore delivered to the
Company a true, correct and complete list of all insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of NHTC and its Subsidiaries. There are no
material claims pending under any such policies or material disputes with
underwriters, and all premiums due and payable have been paid. There are no
pending or threatened terminations with respect to any such policies, and NHTC
and its Subsidiaries are in compliance in all material respects with all
conditions contained therein. All such policies are in full force and effect.
Section 3.07. NHTC Litigation and Compliance. (a) Except as Previously
Disclosed or (in the case of the following clauses (iii) and (v) only) where
such events or circumstances could not reasonably be expected to have an NHTC
Material Adverse Effect: (i) there are no governmental authority or private
party actions, suits, claims, proceedings or investigations pending or
threatened against NHTC, any Subsidiary of NHTC or any principal stockholder
thereof: (x) relating to either NHTC, any Subsidiary of NHTC or any properties
or assets now or previously owned, leased or operated by NHTC or any Subsidiary
of NHTC, (y) which questions or challenges the validity of this Agreement or any
other NHTC Document or any action taken or to be taken by ▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ (▇) which questions or challenges NHTC's or any of its
Subsidiary's right, title or interest in or to any of its properties or assets;
(ii) neither NHTC nor any Subsidiary of NHTC is the subject of any judgment,
order or decree of any governmental authority, court or arbitrator; (iii) NHTC
and each of its Subsidiaries is in compliance with all Laws applicable or
relating to its business, properties or assets; (iv) neither NHTC nor any of its
Subsidiaries has engaged in any unfair trade practice, committed any commercial
or other fraud, paid or provided any kickbacks, bribes or other gratuitous goods
or services in order to solicit, secure or maintain any business or commercial
relationship, or committed any act or omission actionable under RICO or any
similar state Laws, or under the federal Foreign Corrupt Practices Act or any
similar state Laws, nor has any principal stockholder or any other person or
entity engaged in or committed any such acts or omissions or made any such
payments in order to benefit, directly or indirectly, NHTC, any Subsidiary or
the prospects thereof; and (v) NHTC and each Subsidiary thereof has obtained all
Permits to own and/or operate the respective businesses, properties, assets and
operations of NHTC and its Subsidiaries (including without limitation such
Permits as may be necessary or appropriate in order afford to students of the
NHTC Educational Facilities, as such, access to the financial aid programs
described in the SEC Filings, at substantially current levels) ("NHTC Permits").
All NHTC Permits are valid and in full force and effect, and there exists no
default or violation by the NHTC under any NHTC Permit which could reasonably be
expected to have an NHTC Material Adverse Effect. No event, act or omission has
occurred which has resulted, or (with or without notice, the passage of time or
both) could reasonably be expected to result, in the revocation or non-renewal
of any NHTC Permit the revocation or non-renewal of which could reasonably be
expected to have an NHTC Material Adverse Effect.
Section 3.08. NHTC Contracts. (a) In this Agreement, the term "NHTC
Contract" means any Contract to which NHTC or any Subsidiary of NHTC is a party
or by which any of their properties or assets are subject or bound.
(b) NHTC has Previously Disclosed all NHTC Contracts (other than
routine purchase or supply orders, those for routine services provided to NHTC
or a Subsidiary thereof, and those terminable at will or upon 60 days' or less
notice without the payment of any penalty, bonus, severance payment or
additional compensation) existing on the date hereof, and provided to the
Company true, complete and correct copies of all such NHTC Contracts requested
to be reviewed thereby. Except where such event or circumstance could not
reasonably be expected to have an NHTC Material Adverse Effect: (i) all NHTC
Contracts are in full force and effect in accordance with the written terms
thereof, and there are no outstanding defaults by NHTC, any Subsidiary thereof
or any other party under any NHTC Contract, (ii) no event, act or omission has
occurred which has resulted, or (with or without notice, the passage of time or
both) could reasonably be expected to result, in a default under any NHTC
Contract, and (iii) no other party to any NHTC Contract has asserted the right,
and no such party has any right, to renegotiate or modify the terms or
conditions of any NHTC Contract.
Section 3.09. NHTC Taxes. NHTC and each Subsidiary thereof have filed
all Tax returns required to be filed by them, which returns are complete and
correct in all material respects, and neither NHTC nor any Subsidiary is in
default in the payment of any Taxes which were payable pursuant to said returns,
except where the failure to so file or such default could not reasonably be
expected to have an NHTC Material Adverse Effect. Neither NHTC nor any
Subsidiary thereof has, for the five-year period preceding the
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Closing Date, been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code. As of December 31, 1996, the Company
and each of its Subsidiaries has paid or accrued on its books and records all
liability for Taxes with respect to all periods or portions thereof ending on or
before such date. For the period January 1, 1997 through the Closing Date,
neither NHTC nor any Subsidiary thereof has incurred any liability for Taxes
other than Taxes arising in the ordinary course of business with respect to such
period. Neither NHTC Company nor any Subsidiary thereof: (i) is under audit,
examination or review by any taxing authority nor has any such audit,
examination or review been threatened; (ii) has received notice of any proposed
or actual assessment or deficiency with respect to Taxes; (iii) has extended the
statute of limitation with respect to the assessment or collection of any Taxes.
Section 3.10. NHTC Employee Plans. (a) Except as Previously Disclosed,
there is no, and has not been for the five-year period preceding the Closing
Date any, "employee benefit plan" (as defined in Section 3(3) of ERISA) which
(x) is or was subject to any provision of ERISA, and (y) is or was maintained,
administered or contributed to by NHTC or any ERISA Affiliate thereof that
covers any employee or former employee of NHTC or any ERISA Affiliate thereof or
under which NHTC or any such ERISA Affiliate has any material liability, which
has not, as of the date hereof, been Previously Disclosed and a copy thereof
delivered to the Company. Such plans are hereinafter referred to collectively as
the "NHTC Employee Plans".
(b) Except as Previously Disclosed, there are no material liabilities
relating to any NHTC Employee Plan. Prior to the date hereof there has been no
amendment to, written interpretation or announcement (whether or not written) by
NHTC or any of its ERISA Affiliates relating to, or change in employee
participation or coverage under, any NHTC Employee Plan which would increase the
expense of maintaining such NHTC Employee Plan above the level of the expense
incurred in respect thereof for the fiscal quarter and fiscal year ended on
December 31, 1996. Each NHTC Employee Plan is and has been since inception in
compliance in all material respects with the applicable provisions of ERISA and
the applicable provisions of the Code. All contributions required to be made to
each NHTC Employee Plan have been timely made. Each NHTC Employee Plan intended
to be qualified under Section 401 of the Code (if any) is so qualified and has
received a favorable determination letter from the IRS. No NHTC Employee Plan is
or was a "defined benefit plan", as defined in Section 3(35) of ERISA, or a
"multiemployer plan", as defined in Section 3(37)(A) of ERISA. There are no
pending or threatened investigations, audits, examinations or inquiries by any
governmental authority involving any NHTC Employee Plan, no threatened or
pending claims (except for claims for benefits payable in the ordinary course),
suits or proceedings against any NHTC Employee Plan or asserting any rights or
claims to benefits under any NHTC Employee Plan which could reasonably be
expected to give rise to any liability, nor are there any facts which could give
rise to any liability in the event of any such investigation, audit,
examination, inquiry, claim, suit or proceeding.
Section 3.11. NHTC Environmental Compliance. Except where such events or
circumstances could not reasonably be expected to have an NHTC Material Adverse
Effect: (i) the respective properties and operations of NHTC and its
Subsidiaries are in compliance with all applicable Environmental Laws; (ii)
neither NHTC nor any Subsidiary thereof has received any citation, summons,
order, complaint, penalty, investigation or review, or request for information
or other action, by any governmental authority or private
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party with respect to any: (x) alleged violation by NHTC or any Subsidiary
thereof of any Environmental Laws, (y) alleged failure by NHTC or any Subsidiary
thereof to have any Permit under any Environmental Laws, or (z) Management or
"release" (as defined in CERCLA) of any Hazardous Material by or on behalf of
NHTC or any Subsidiary thereof; and (iii) no Hazardous Material Managed by or on
behalf of NHTC or any Subsidiary thereof has been released on any property of
NHTC or any Subsidiary thereof, or has come to be located at any site (including
any property of NHTC or any Subsidiary thereof) which is listed or proposed for
listing on the National Priority List under CERCLA, CERCLIS or on any similar
state list, or which is the subject of federal, state or local enforcement
actions or other investigations which may lead to claims for investigation,
clean-up costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under CERCLA.
Section 3.12. SEC Filings. NHTC has previously delivered to the Company
true, correct and complete copies of the following documents filed with the SEC
(collectively, the "SEC Filings"): (i) NHTC's annual reports on Form 10-K for
its fiscal years ended December 31, 1995 and December 31, 1996, (ii) NHTC's
quarterly reports on Form 10-Q for its fiscal quarter ended March 31, 1996, June
30, 1996, September 30, 1996, and ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) NHTC's proxy or
information statements relating to meetings of, or actions taken without a
meeting by the stockholders of NHTC held since January 1, 1996, (iv) NHTC's
registration statement on Form S-3 dated June 11, 1997, and (v) all of its other
reports, registration statements (including under the Securities Act of 1933, as
amended (the "Securities Act")) and other filings (including amendments) filed
by NHTC with the SEC since January 1, 1996. Each SEC Filing filed under the
Exchange Act contains the disclosures required to be made therein under the
Exchange Act and, as of the date thereof, did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. Each SEC Filing filed under the Securities Act
contains the disclosures required to be made therein under the Securities Act
and, as of the date thereof, did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
Section 3.13. Finder's Fees. Except as Previously Disclosed, there is no
investment banker, broker, finder or other intermediary which has been retained
by, or is authorized to act on behalf of, NHTC, any Subsidiary of NHTC or
principal stockholder of NHTC who may be entitled to any fee or commission from
any of the Company Parties or any of their respective affiliates upon
consummation of, or otherwise in connection with, the Transactions.
Section 3.14. Absence of Certain Changes. Since the NHTC Base Date,
except as Previously Disclosed or as consented to by the Company: (A) NHTC and
its Subsidiaries have conducted their respective businesses only in the ordinary
course and/or otherwise consistent with recent past practice; (B) there has been
no material adverse change in the condition (financial or otherwise), business,
properties, assets, liabilities, capitalization, financial position, operations,
results of operations or prospects of NHTC and its Subsidiaries, taken as a
whole, or on the ability of NHTC to perform their respective obligations under
this Agreement and to consummate the Transactions; and (C) without intending to
limit the generality of the foregoing, neither NHTC, nor any Subsidiary of NHTC
has:
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(i) amended its certificate or articles of incorporation or
by-laws;
(ii) made or agreed to make any increase in the compensation
payable to any officer, director, employee, consultant, agent or
representative, or paid or agreed to pay any bonus or extraordinary
compensation to any such person;
(iii) entered into or completed any transaction or NHTC Contract,
or amended or terminated any transaction or NHTC Contract, except: (1)
the offer and issuance of shares of NHTC Common Stock in an offering
exempt from the registration requirements of the Securities Act under
Regulation S (the "Reg. S Offering"), and (2) transactions and
agreements entered into in the ordinary course of business and/or are
consistent with recent past practice;
(iv) cancelled or waived any claim or right of substantial value;
(v) increased (or experienced any adverse change in any
assumption underlying any method of calculating) bad debts,
contingencies or other reserves from that reflected in the NHTC
Financial Statements;
(vi) sold, assigned, transferred, licensed or otherwise disposed
of, encumbered, permitted to lapse, or suffered any Lien (other than
Permitted Liens) on or with respect to, any of its properties or assets,
except in the ordinary course of business or otherwise pursuant to NHTC
Contracts Previously Disclosed;
(vii) declared, paid or set aside for payment any dividend or
other distribution (whether in cash, securities or other property) in
respect of any of its capital stock;
(viii) issued or sold any shares of its capital stock (other than
NHTC Common Stock pursuant to the Reg. S Offering) or debt securities,
or granted any rights calling for the issuance or sale of any of the
foregoing (including without limitation options, warrants, convertible
or exchangeable securities or similar rights);
(ix) purchased, redeemed or otherwise acquired (whether or not
for value) any shares of its capital stock;
(x) created or otherwise became liable with respect to any
indebtedness for borrowed money or the purchase of property, plant or
equipment;
(xi) guaranteed, indemnified or otherwise become liable for the
obligations or liabilities of another person or entity; or
(xii) agreed or committed, whether or not in writing, to do any
of the foregoing.
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Article IV
Other Representations and Warranties
Section 4.01. Nature of Transaction. NHTC acknowledges that the Main
Transaction is an acquisition of a business in its entirety as a going concern
to be directed and operated by NHTC, and not an investment in, or a purchase and
sale of, securities under the Securities Act, Exchange Act or the securities or
Blue Sky laws of any state ("Blue Sky Laws"). Nevertheless (and without
intending to create any implication that the Main Transaction is an investment
in, or a purchase and sale of, securities under the Securities Act, Exchange Act
or any Blue Sky Laws), NHTC hereby acknowledges its understanding that the
Company Shares are not registered under the Securities Act, or registered or
qualified under any Blue Sky Laws, on the grounds that the offering, sale,
issuance and delivery thereof are exempt from the registration and/or
qualification requirements thereof, and that the Company Stockholder's reliance
on such exemption is predicated in part on the following representations,
warranties, covenants, agreements and acknowledgments of NHTC. NHTC hereby
represents and warrants to and covenants and agrees with the Company
Stockholders that NHTC: (1) has been furnished with all information which NHTC
deems necessary to evaluate the merits and risks of the acquisition of the
Company Shares; (2) has had the opportunity to ask questions and receive answers
concerning the information received about the Company Shares and Company; (3)
has been given the opportunity to obtain any additional information NHTC deems
necessary to verify the accuracy of any information obtained concerning the
Company Shares and Company; (4) (i) meets the requirements of at least one of
the suitability standards for an "accredited investor" (as that term is defined
in Rule 501 of Regulation D under the Securities Act), and (ii) by reason of its
business and financial experience, and the business and financial experience of
those persons, if any, retained by NHTC to advise it with respect to its
investment in the Company, NHTC, together with such advisors (if any), has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of an investment in the Company
Shares; (5) is acquiring the Company Shares for NHTC's own account for strategic
business purposes and with no present intention of offering, selling or
distributing of all or any part of the Company Transaction Shares (or any
interest therein); (6) received the offer to invest in the Company Shares on a
personal contact basis and not by means of any general solicitation or general
advertising; (7) understands that: (i) the Company Shares have not been
registered or qualified under the Securities Act or any Blue Sky Laws and cannot
be resold unless the Company Shares are subsequently so registered and qualified
or an exemption from such registration and qualification is available, and (ii)
neither the Company, any Company Stockholder nor any other person is obligated
to effect such registration or qualification; (8) will not offer, sell,
transfer, distribute or otherwise dispose of the Company Shares except in
compliance with the Securities Act and all applicable Blue Sky Laws; (9) has
adequate means of providing for NHTC's current needs and foreseeable
contingencies and has no need for its investment in the Company Shares to be
liquid; (10) is able to bear the economic risk of the investment in the Company
Shares indefinitely; and (11) is currently able to afford the complete loss of
such investment.
Section 4.02. Acquisition for Investment. Each Company Stockholder
hereby acknowledges its understanding that the NHTC Shares to be acquired by it
in the Main Transaction ("its NHTC Shares") are not registered under the
Securities Act, or registered or qualified under any Blue Sky Laws, on the
grounds that the offering, sale, issuance
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and delivery thereof are exempt from the registration and/or qualification
requirements thereof, and that NHTC's reliance on such exemption is predicated
in part on the following representations, warranties, covenants, agreements and
acknowledgments of such Company Stockholder. Each Company Stockholder hereby
represents and warrants to and covenants and agrees with NHTC that such Company
Stockholder: (1) has been furnished with all information which such Company
Stockholder deems necessary to evaluate the merits and risks of the acquisition
of its NHTC Shares; (2) has had the opportunity to ask questions and receive
answers concerning the information received about its NHTC Shares and NHTC; (3)
has been given the opportunity to obtain any additional information such Company
Stockholder deems necessary to verify the accuracy of any information obtained
concerning its NHTC Shares and NHTC; (4) (i) meets the requirements of at least
one of the suitability standards for an "accredited investor" (as that term is
defined in Rule 501 of Regulation D under the Securities Act), (ii) is not a
"U.S. person" (as that term is defined in Regulation S under the Securities Act)
and the offer of its NHTC Shares was not made to such Company Stockholder in the
United States and at the time the buy order for its NHTC Shares originated such
Company Stockholder was outside the United States, and/or (iii) by reason of
such Company Stockholder's business and financial experience, and the business
and financial experience of those persons, if any, retained by such Company
Stockholder to advise such Company Stockholder with respect to such Company
Stockholder's investment in its NHTC Shares, such Company Stockholder, together
with such advisors (if any), has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and risks of an investment in its NHTC Shares; (5) is acquiring its NHTC Shares
for such Company Stockholder's own account for investment purposes and with no
present intention of offering, selling or distributing of all or any part of its
NHTC Shares (or any interest therein); (6) received the offer to invest in its
NHTC Shares on a personal contact basis and not by means of any general
solicitation or general advertising; (7) understands that: (i) its NHTC Shares
have not been registered or qualified under the Securities Act or any Blue Sky
Laws and cannot be resold unless its NHTC Shares are subsequently so registered
and qualified or an exemption from such registration and qualification is
available, and (ii) neither NHTC nor any other person is obligated to effect
such registration or qualification (except to the extent provided in the
Registration Rights Agreement); (8) will not offer, sell, transfer, distribute
or otherwise dispose of its NHTC Shares except in compliance with the Securities
Act and all applicable Blue Sky Laws; (9) has adequate means of providing for
such Company Stockholder's current needs and foreseeable contingencies and has
no need for such Company Stockholder's investment in its NHTC Shares to be
liquid; (10) is able to bear the economic risk of the investment in its NHTC
Shares indefinitely; (11) is currently able to afford the complete loss of such
investment; (12) consents to the placing of a legend on the certificate(s)
representing its NHTC Shares stating that such securities have not been
registered under the Securities Act and setting forth the restrictions on
transfer contemplated hereby and to the placing of a stop transfer order on the
books of NHTC (and any transfer agent thereof) against its NHTC Shares until the
same may be legally resold or distributed; and (13) is acquiring its NHTC Shares
in a transaction intended to qualify as a reorganization under the provisions of
Section 368(a)(1)(B) of the Code and that as of the Closing such Company
Stockholder has no plan or intention to sell, exchange or otherwise dispose of
its NHTC Shares received in such reorganization.
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Section 4.03. Tax Treatment of Transactions. (a) NHTC and the Company
intend that the Main Transaction and the other Transactions (the
"Reorganization") will qualify as a reorganization under the provisions of
Section 368(a)(1)(B) of the Code). As of the Closing, NHTC: (i) has no plan or
intention to liquidate the Company, to merge the Company with or into another
corporation, to sell or otherwise dispose of the stock of the Company or to
cause the Company to sell or otherwise dispose of any of its assets except in
the ordinary course of its trade or business; (ii) has no plan or intention to
cause the Company to issue additional shares of its stock that would result in
NHTC losing control of the Company within the meaning of Section 368(c) of the
Code, (iii) has no plan or intention to discontinue the historic business of the
Company and (iv) has no plan or intention to reacquire any of its stock issued
in the Reorganization.
(b) Following the Closing, NHTC shall take no action, and shall not
permit the Company to take any action, which would cause the Reorganization to
fail to qualify as a reorganization under the provisions of Section 368(a)(1)(B)
of the Code.
(c) Following the Closing, if NHTC has acquired at least 90% but less
than 100% of the Company Common Stock, it will take, and/or cause the Company to
take such actions as the Attorneys reasonably request in order for either NHTC,
the Company or an Affiliate of either to acquire the Company Shares not owned by
NHTC in a manner that will preserve the Reorganization as a reorganization
qualified under the provisions of Section 368 (a)(1)(B) of the Code; provided,
however that NHTC shall not be obligated to:
(i) pay any consideration greater than or different from the number of
Firm Shares or Contingent Shares which NHTC would have paid, or
(ii) to incur or assume any liabilities or obligations greater than or
different from those which NHTC would have incurred or assumed,
in relation to the Company Shares in question had they been acquired pursuant to
this Agreement.
Section 4.04. No Other Representations and Warranties. Each party hereto
acknowledges and agrees that no other party hereto has made to any other party
hereto (or to any other person or entity) any representation or warranty with
respect to this Agreement and/or any of the Transactions other than those
expressly set forth in Article II, III or IV hereof or in any other Company
Party Document or NHTC Document (as the case may be).
Section 4.05. Release. Each Company Stockholder hereby irrevocably
releases and forever discharges NHTC, its directors, officers, employees and
agents from any Losses, as defined in Section 8.03, whether or not previously
incurred or hereafter arising out of or in any way related to, directly or
indirectly, the sale of the Company's securities to such Company Stockholder.
Article V
Conduct and Transactions Prior to Closing
Section 5.01. Access to Records and Properties. (a) The Company shall
give NHTC and its counsel, accountants and lenders and the respective officers,
directors,
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employees, agents and representatives thereof, such access (during normal
business hours) to, and opportunity to examine, the books, records, files,
documents, properties and assets of the Company and its Subsidiaries, and cause
the officers, directors, employees, consultants, agents, representatives,
counsel and accountants of the Company and its Subsidiaries to furnish such
financial and operating data and other information with respect to the Company
and its Subsidiaries, in each case, as NHTC shall from time to time reasonably
request. NHTC shall give the Company and the Company's counsel, accountants and
lenders, and the respective officers, directors, employees, consultants, agents
and representatives thereof, such access (during normal business hours) to, and
opportunity to examine, the books, records, files, documents, properties and
assets of, NHTC and its Subsidiaries, and cause the officers, directors,
employees, agents, representatives, counsel and accountants of NHTC and its
Subsidiaries to furnish such financial and operating data and other information
with respect to the NHTC and its Subsidiaries, in each case, as the Company
shall from time to time reasonably request. Any investigation pursuant to this
Section 5.01 shall be conducted in such manner as not to interfere unreasonably
with the ordinary course of the business, operations or other activities of the
parties hereto or with the confidentiality respecting the transactions
contemplated by this Agreement.
(b) In the event the Closing shall not occur: (i) the Company and its
counsel, accountants and lenders, and the respective officers, directors,
employees, agents and representatives thereof, shall return all documents and
materials that are non-public, confidential and/or proprietary to NHTC which
have been furnished in connection herewith; and (ii) NHTC and its counsel,
accountants and lenders, and the respective officers, directors, employees,
agents and representatives thereof, shall return all documents and materials
that are non-public, confidential and/or proprietary to the Company which have
been furnished in connection herewith. However, nothing contained in this
Section 5.01 shall prohibit the Company, NHTC or any such other person or entity
from (subject to the penultimate sentence of Section 5.03 and to Section 9.03)
supplying or filing such documents, materials or other information with such
federal, state, local or foreign government, agency or authority which any party
hereto deems necessary or appropriate in connection with the matters
contemplated by Section 5.03.
Section 5.02. Operation of the Company and NHTC. From the date hereof to
the Closing Date, or except to the extent that NHTC shall otherwise consent in
writing, the Company shall operate its and its Subsidiaries' businesses as
presently operated and only in such a manner as would be the ordinary course of
business and/or consistent with recent past practice. Without limiting the
generality of the foregoing, the Company and NHTC shall (and shall cause each of
its Subsidiaries to): (i) not be in default or violation under any Laws
applicable to its business, operations, property or assets; (ii) (in the case of
NHTC and its Subsidiaries only) not merge or consolidate with any other entity,
acquire any other business or entity, or agree to do any of the foregoing; (iii)
maintain its properties and assets in good operating condition, order and repair
(ordinary wear and tear excepted), and notify the other such parties (or, in the
case of the Company Stockholders, one or more of the Attorneys) of any
significant loss of, damage to or destruction of any such properties or assets;
(iv) use its reasonable best efforts to preserve its present employees,
reputation and business relationships with persons and entities having business
dealings with it; (v) use its reasonable best efforts to preserve its present
rights, privileges and franchises; and (vi) refrain from taking any action, or
fail to act in such a way, that would render any of its representations and
warranties
-26-
contained in Article II (including without limitation Section 2.13) (in the case
of the Company) or Article III (including without limitation Section 3.14) (in
the case of NHTC) inaccurate at and as of the Closing Date, and shall promptly
advise the other such parties of any such event or circumstance and of any other
breach of any representation, warranty, covenant, condition or obligation of
such party hereunder.
Section 5.03. Consents and Notices. Promptly after the date hereof, the
Company and NHTC hereto shall use their respective reasonable best efforts to
obtain all Consents and give all Notices which may be necessary or appropriate
in order to consummate the Main Transaction and the other Transactions
(including without limitation such Consents and Notices as may be necessary or
appropriate to obtain from the USDOE or Florida State Board), and to continue in
effect, and to assure that the Company, NHTC and their respective Subsidiaries
shall to be entitled to have and enjoy, all of the benefits of the Company
Contracts, Company Permits and the properties and assets of the Company and the
NHTC Contracts and NHTC Permits after the Closing Date (including preserving for
(x) the NHTC Educational Facilities their accredited status, and (y) students of
the NHTC Educational Facilities, as such, access to the financial aid programs
to which they currently have access, at substantially current levels). The
parties hereto shall not (x) submit or file any documents, materials or
information to or with, or take any other action before or at the request of,
any governmental authority in respect of any Laws, NHTC Permit or Company
Permit, or (y) take any other action with respect to, or which may affect
NHTC's, the Company's or any of their respective Subsidiaries' rights under, any
NHTC Contract or Company Contract or NHTC Permit or Company Permit without (in
each case) first consulting with (in the case of the Company or any Company
Stockholder) counsel to NHTC or (in the case of NHTC) counsel to the Company.
The parties hereto shall otherwise cooperate with each other in discharging
their respective obligations under this Section 5.03, and shall promptly advise
counsel to the other parties hereto of any difficulties encountered in obtaining
any such Consents or giving any such Notices.
Section 5.04. Best Efforts to Satisfy Conditions. Each of the Company
and NHTC shall use its reasonable best efforts to cause the conditions to the
Closing set forth in Article VI hereof to be satisfied, to the extent that the
satisfaction of such conditions is in the control of such party, as soon as
practicable after the date hereof; provided, however, the foregoing shall not
constitute a limitation upon the covenants and obligations of any party
otherwise expressly set forth in this Agreement.
Section 5.05. Bridge Loans. Each of the Company and NHTC hereby
acknowledges and agrees that, inasmuch as NHTC has made one or more "Company
Bridge Loans" (as defined in the Original Agreement) to the Company on terms
satisfactory to both the Company and NHTC, such parties have discharged their
respective obligations under Section 5.05 of the Original Agreement.
Article VI
Conditions to the Main Transaction
Section 6.01. Conditions to Obligations of NHTC. The obligation of NHTC
to consummate the Main Transaction and other Transactions is subject to the
satisfaction of the following conditions, each of which may be waived by NHTC.
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(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of the Company set forth in Article II shall be
true and correct on the Closing Date as if made on and as of the Closing Date.
The Company Parties shall have performed the agreements and obligations required
to be respectively performed by them under this Agreement prior to the Closing
Date. The Company and the Company Stockholders (or one or more Attorneys on the
behalf of the Company Stockholders) shall have executed and delivered to NHTC a
certificate or certificates certifying to their compliance with the foregoing,
in form and substance reasonably satisfactory to NHTC. Notwithstanding the first
sentence of this Section 6.01(a): (1) from time to time on or prior to the
Closing, the Company shall be permitted to deliver to NHTC written information
which changes, modifies or supplements the representations and warranties set
forth in Section 2.01 (or Previously Disclosed) because of the occurrence or
non-occurrence of any event, or any circumstance arising, after the date of this
Agreement; (2) upon such delivery such information shall be deemed to have been
"Previously Disclosed" for purposes of Section 2.01 (and, accordingly, the
representations and warranties therein shall be deemed to be amended by such
information), and (3) if such event(s) or circumstance(s) result(s) in the
aggregate in a Company Material Adverse Effect, then the condition stated in the
first sentence of this Section 6.01(a) shall be deemed not to have been
satisfied. If, notwithstanding (x) any failure of such condition as provided in
the foregoing clause "(3)", or (y) any misrepresentation on the part of the
Company as to which NHTC have received written notice from or on behalf of the
Company prior to the Closing, NHTC proceeds with the Closing, then such failure
of condition and/or such misrepresentation (as the case may be) shall be deemed
for all purposes to be waived.
(b) Charter, By-laws, etc. The Company shall have delivered to NHTC a
certificate signed by two or of more its officers certifying to: (i) a true,
correct and complete copy of the Company's certificate of incorporation, (ii) a
true, correct and complete copy of the Company's by-laws, (iii) a true, correct
and complete copy of all Company Board of Directors and stockholder resolutions
adopted in connection with this Agreement and/or the Transactions, and (iv) the
identity and signature of its officer or officers who shall have executed this
Agreement or any other Company Party Document on or before the Closing Date.
(c) Consents and Notices. All Consents and Notices which may be
necessary or appropriate in order for NHTC to consummate the Main Transaction or
any of the other Transactions (including without limitation such Consents and
Notices as may be necessary or appropriate to obtain from the USDOE or Florida
State Board) and to continue in effect, and to assure that the Company, NHTC and
their respective Subsidiaries shall to be entitled to have and enjoy, all of the
benefits of the Company Contracts, Company Permits and the properties and assets
of the Company and the NHTC Contracts and NHTC Permits after the Closing Date
(including preserving for (x) the NHTC Educational Facilities their accredited
status, and (y) students of the NHTC Educational Facilities, as such, access to
the financial aid programs to which they currently have access, at substantially
current levels), shall have been duly obtained (in the case of Consents) or
given (in the case of Notices) and shall be unconditional and in full force and
effect.
(d) Legal Restraints. There shall not have been proposed or
enacted any Laws, or any change in any existing Laws, which prohibits or delays,
or threatens to prohibit or
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delay, the consummation of the Main Transaction or any of the other Transactions
or which could reasonably be expected to have a Company Material Adverse Effect.
No action, suit, claim or proceeding shall have been commenced or threatened by
any governmental authority or private party (i) seeking to restrain, enjoin or
hinder, or to seek damages from NHTC or any Subsidiary thereof on account, of
the consummation of the Main Transaction or any of the other Transactions, or
(ii) which could reasonably be expected to have a Company Material Adverse
Effect.
(e) No Company Material Adverse Change. There shall have been no
material adverse change in the condition (financial or otherwise), business,
properties, assets, liabilities, capitalization, financial position, operations,
results of operations or prospects of the Company and its Subsidiaries, taken as
a whole, since the Company Base Date.
(f) Company Shares Certificates. Each Company Stockholder shall have
delivered to NHTC the certificate or certificates representing such Company
Stockholder's Company Shares, endorsed by such Company Stockholder in blank or
accompanied by a stock power executed by such Company Stockholder in blank.
(g) Receipt. The Company Stockholders (or one or more Attorneys on
the behalf of the Company Stockholders) shall have executed and delivered to
NHTC a written instrument, in form and substance reasonably satisfactory to
NHTC, acknowledging receipt of the certificates representing the Firm Shares.
(h) Opinions of Counsel. NHTC shall have received an opinion letter
of Dechert Price & ▇▇▇▇▇▇, New York, New York, special counsel to the Company,
dated the Closing Date and in form and substance reasonably satisfactory to
counsel to NHTC.
(i) IRS Forms W-8 and W-9. Each Company Stockholder shall have
completed, executed and delivered to NHTC an IRS Form W-8 (or substitute
therefor) or IRS Form W-9 (or substitute therefor), as appropriate.
(j) Management Options. Each holder of Management Options shall
have agreed to the cancellation and termination thereof, effective as of the
Closing, by an agreement or instrument reasonably satisfactory to NHTC.
(k) ▇▇▇▇▇▇ Options. The Board of Directors of the NHTC (or an
appropriate committee thereof) shall have granted or issued to ▇▇▇▇ ▇. ▇▇▇▇▇▇
and/or ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ options to purchase 800,000 shares NHTC Common Stock
(in the aggregate), in form and substance reasonably satisfactory to the
Company.
(l) Other Matters. The Company and Company Stockholders (or one or
more Attorneys on the behalf of the Company Stockholders) shall have furnished
or caused to be furnished to NHTC, in form and substance reasonably satisfactory
to NHTC or their counsel, such certificates and other evidences as NHTC may
reasonably request as to the satisfaction of the conditions contained in this
Section 6.01.
Section 6.02. Conditions to Obligations of the Company Stockholders. The
obligation of the Company Stockholders to consummate the Main Transaction and
other Transactions is subject to the satisfaction of the following conditions,
each of which may be waived by the Company or any Attorney.
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(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of NHTC set forth in Article III shall be true
and correct on the Closing Date as if made on as and of the Closing Date. NHTC
shall have performed the agreements and obligations required to be respectively
performed by them under this Agreement prior to the Closing Date. NHTC shall
have executed and delivered to the Company and Company Stockholders (or one or
more Attorneys on the behalf of the Company Stockholders) a certificate or
certificates certifying to its compliance with the foregoing, in form and
substance reasonably satisfactory to the Company. Notwithstanding the first
sentence of this Section 6.02(a): (1) from time to time on or prior to the
Closing, NHTC shall be permitted to deliver to the Company and Company
Stockholders (or one or more Attorneys on the behalf of the Company
Stockholders) written information which changes, modifies or supplements the
representations and warranties set forth in Section 3.01 (or Previously
Disclosed) because of the occurrence or non-occurrence of any event, or any
circumstance arising, after the Agreement Date; (2) upon such delivery such
information shall be deemed to have been "Previously Disclosed" for purposes of
Section 3.01 (and, accordingly, the representations and warranties therein shall
be deemed to be amended by such information), and (3) if such event(s) or
circumstance(s) result(s) in the aggregate in an NHTC Material Adverse Effect,
then the condition stated in the first sentence of this Section 6.02(a) shall be
deemed not to have been satisfied. If, notwithstanding (x) any failure of such
condition as provided in the foregoing clause "(3)", or (y) any
misrepresentation on the part of NHTC as to which the Company and Company
Stockholders (or one or more Attorneys on the behalf of the Company
Stockholders) has received written notice from or on behalf of NHTC prior to the
Closing, the Company and Company Stockholders (or one or more Attorneys on the
behalf of the Company Stockholders) proceeds with the Closing, then such failure
of condition and/or such misrepresentation (as the case may be) shall be deemed
for all purposes to be waived.
(b) Charter, By-laws, etc. NHTC shall have delivered to the Company
and Company Stockholders (or one or more Attorneys on the behalf of the Company
Stockholders) a certificate signed by two or more its officers certifying to:
(i) a true, correct and complete copy of NHTC's certificate or articles of
incorporation, (ii) a true, correct and complete copy of NHTC's by-laws, (iii) a
true, correct and complete copy of all NHTC Board of Directors resolutions
adopted in connection with this Agreement and/or the Transactions, and (iv) the
identity and signature of its officer or officers who shall have executed this
Agreement or any other NHTC Document on or before the Closing Date.
(c) Consents and Notices. All Consents and Notices which may be
necessary or appropriate in order for the Company Stockholders to consummate the
Main Transaction or any of the other Transactions (including without limitation
such Consents and Notices as may be necessary or appropriate to obtain from the
USDOE or Florida State Board) and to continue in effect, and to assure that the
Company, NHTC and their respective Subsidiaries shall to be entitled to have and
enjoy, all of the benefits of the Company Contracts, Company Permits and the
properties and assets of the Company and the NHTC Contracts and NHTC Permits
after the Closing Date (including preserving for (x) the NHTC Educational
Facilities their accredited status, and (y) students of the NHTC Educational
Facilities, as such, access to the financial aid programs to which they
currently have access, at substantially current levels), shall have been duly
obtained (in
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the case of Consents) or given (in the case of Notices) and shall be
unconditional and in full force and effect.
(d) Legal Restraints. There shall not have been proposed or enacted
any Laws, or any change in any existing Laws, which prohibits or delays, or
threatens to prohibit or delay, the consummation of the Main Transaction or any
of the other Transactions or which could reasonably be expected to have an NHTC
Material Adverse Effect. No action, suit, claim or proceeding shall have been
commenced or threatened by any governmental authority or private party (i)
seeking to restrain, enjoin or hinder, or to seek damages from any Company
Stockholder, the Company or any Subsidiary thereof on account of the
consummation of the Main Transaction or any of the other Transactions, or (ii)
which could reasonably be expected to have an NHTC Material Adverse Effect.
(e) No NHTC Material Adverse Change. There shall have been no
material adverse change in the condition (financial or otherwise), business,
properties, assets, liabilities, capitalization, financial position, operations,
results of operations or prospects of NHTC and its Subsidiaries, taken as a
whole, since the NHTC Base Date. NHTC Common Stock shall continue to be quoted
in the NASDAQ Small Cap market; and there shall not have been proposed or
enacted any Laws, or any change in any existing Laws, and no action, suit, claim
or proceeding shall have been commenced or threatened by any governmental
authority, the National Association of Securities Dealers, Inc. or any private
party seeking that would result in the discontinuance of such listing.
(f) Receipt. NHTC shall have executed and delivered to the Company
Stockholders (or one or more Attorneys on the behalf of the Company
Stockholders) a written instrument, in form and substance reasonably
satisfactory to the Attorneys, acknowledging receipt of the certificates
representing all of the Company Shares.
(g) Firm Shares Certificates. NHTC shall have issued to each Company
Stockholder, and delivered to one or more Attorneys on the behalf of each
Company Stockholders, a certificate representing the number of Firm Shares
issuable to such Company Stockholder under Section 1.04(a) hereof.
(h) Opinions of Counsel. The Company shall have received an opinion
letter of Lane & ▇▇▇▇▇▇▇▇▇▇ LLP, New York, New York, special counsel to NHTC,
dated the Closing Date and in form and substance reasonably satisfactory to
counsel to the Company.
(i) Registration Rights Agreement. NHTC shall have executed and
delivered to the Company a Registration Rights Agreement in form and substance
reasonably satisfactory to the Attorneys (the "Registration Rights Agreement").
(j) Corporate Governance. The Board of Directors of NHTC shall have
taken the following actions, effective immediately after the annual meeting of
the shareholders of NHTC scheduled to take place on August 4, 1997: (i) the
Board of Directors of NHTC shall have been increased by two (2), and ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ and another person designated by at least two of the Attorneys (the
"Other Director") shall have been appointed members of such Board to fill the
vacancies created by such increase; (ii) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have been named
Chairman of the Board of Directors of NHTC by its Board of Directors; (iii) the
Board of Directors of NHTC shall have established an
-31-
Executive Committee comprised of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ and such Executive Committee shall have been delegated the
authority to act in the place and stead of the Board of Directors of NHTC to the
fullest extent permitted under Florida corporate law; and (iv) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
shall have been named Chairman of such Committee. The Board of Directors of the
Company shall have been fixed at one, and ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have been
elected (or shall remain) the sole member thereof.
(k) Management Compensation. NHTC shall have offered in writing to
the management personnel of the Company selected by it such committed
compensation packages (having salary, benefits, bonus, stock ownership/option
and other components) as shall be reasonably satisfactory to the Company.
(l) Reservation of Shares. NHTC shall have reserved for issuance as
the Contingent Shares and for issuance in lieu of the shares of Company Common
Stock issuable pursuant to Section 1.04(b) of the Fruitseng Acquisition
Agreement (as such provision is being modified and amended as under Section
9.02(a) hereof) such number of shares of NHTC Common Stock as the Company and
NHTC shall mutually agree.
(m) Other Matters. NHTC shall have furnished or caused to be
furnished to the Company and/or Attorneys on behalf of the Company Stockholders,
in form and substance reasonably satisfactory to the Company or its counsel,
such certificates and other evidences as the Company may reasonably request as
to the satisfaction of the conditions contained in this Section 6.02.
Article VII
Closing Procedure and Date; Termination
Section 7.01. Closing Procedure; Closing Date. (a) The Main Transaction
may be completed at one or more closings and the initial such closing shall be
referred to herein as the "Closing" (unless the context otherwise requires) and
the term "Closing Date" (defined below) refers to the date of the initial
Closing. Subject to Section 7.01(b) below the initial Closing shall take place
when the Attorneys are able to, and do, deliver to NHTC in accordance with this
Agreement at least 4,346,792 shares of the Company Common Stock (which
constitutes more than 90% of the Company Common Stock). If less than all Company
Shares are delivered at the initial Closing then one or more additional Closings
(each an "Additional Closing") shall be scheduled upon three business days
notice from the Attorneys to NHTC, provided that there can be no Closing after
the Initial Deadline Date or Additional Closing after the Final Deadline Date
(defined below). At any Additional Closing the Conditions to the Main
Transaction set forth in Article VI hereof which were satisfied or waived at the
Initial closing shall be deemed to still be so satisfied or waived, except for
those relating to the delivery of the Company Shares and Firm Shares which are
the subject of such Additional Closing and the related receipts.
(b) The Closing of the Main Transaction shall take place at the
offices of Lane & ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ or at such
other place as the Company and NHTC shall mutually agree, at 10:00 A.M., local
time, on such date mutually agreed upon by the Company and NHTC that is within
five business days after the first date upon which all Consents and Notices
which at the time remain conditions to the obligations of the parties to effect
the Main Transaction and other Transactions shall have been obtained or given
(as the case may be, the "Closing Date").
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Section 7.02. Termination of Agreement. (a) This Agreement may be
terminated by either the Company or NHTC, upon notice to the other such parties
hereto, if the initial Closing shall not have occurred on or before August 4,
1997 (the "Initial Deadline Date") or if there shall have been a Closing, as to
only those Company Shares not delivered by September 5, 1997 (the "Final
Deadline Date"); provided, however, that: (i) NHTC shall not be permitted to
terminate this Agreement under this Section 7.02 if the Closing shall not have
occurred by the Initial Deadline Date or if any Additional Closing shall not
have occurred by the Final Deadline Date to the extent applicable, as the case
may be, by reason of any breach by NHTC of Section 5.04; and (ii) the Company
shall not be permitted to terminate this Agreement under this Section 7.02 if
the Closing shall not have occurred by the Initial Deadline Date or Final
Deadline Date, as the case may be, by reason of any breach by the Company of
Section 5.04.
(b) To the extent of the rights, liabilities and obligations
pertaining to Company Shares or Firm Shares not theretofore delivered at a
Closing or Additional Closing, termination of this Agreement under this Section
7.02 shall automatically and irrevocably terminate all liabilities and
obligations of the terminating party (and, in the event that the terminating
party is the Company, the Company Stockholders) arising under this Agreement;
all rights of the terminating party (and such other party) arising under this
Agreement, and all liabilities and obligations of the other party or parties
hereto, shall survive any such termination.
Article VIII
Indemnification
Section 8.01. By the Company Stockholders. (a) Subject to the
limitations set forth below in this Section 8.01, from and after the Closing
Date, the Indemnifying Company Stockholders, jointly and severally, shall
indemnify NHTC and its directors, officers, employees and agents (collectively,
the "NHTC Indemnified Persons"), against, and hold the NHTC Indemnified Persons
harmless from, any and all Losses directly or indirectly incurred, suffered,
sustained or required to be paid by, or sought to be imposed upon, any of the
NHTC Indemnified Persons resulting from, relating to or arising out of:
(i) any breach of any of the representations or warranties of the
Company set forth in Section 2.01 hereof or in any other Company Party
Document,
(ii) any breach of any covenant or agreement made by the Company
under this Agreement or any other Company Party Document,
(iii) the sale of the Company's securities to the Company
Stockholders, including but not limited to any such Losses related to
any action, suit or proceeding brought by one or more Company
Stockholders notwithstanding Section 4.05 hereof.
(iv) any Unexpected Acquisition Costs to the extent (and only to
the extent) that the same shall exceed (determined as of the end of the
Second Contingent Shares Measure Period): (i) 8 x Acquired Pre-Tax
Earnings minus (ii) FSFMV minus (iii) FCSFMV minus (iv) other
Acquisition Costs minus $27,350 (as such terms are defined in Section
1.02(d) hereof).
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(b) Subject to the limitations set forth below in this Section 8.01,
from and after the Closing Date, each Company Stockholder shall: (i) indemnify
the NHTC Indemnified Persons and Indemnifying Company Stockholders, against, and
hold the NHTC Indemnified Persons and Indemnifying Company Stockholders harmless
from, any and all Losses directly or indirectly incurred, suffered, sustained or
required to be paid by, or sought to be imposed upon, any of the NHTC
Indemnified Persons or Indemnifying Company Stockholders resulting from,
relating to or arising out of such Company Stockholder (but no other Company
Stockholder) not having good and marketable title to the number of Company
Shares indicated opposite such Company Stockholder's name on the appropriate
"Agreement Signature Page" hereto, free and clear of all Liens, prior to the
Closing; and (ii), indemnify and hold harmless the NHTC Indemnified Persons
against and from any and all Losses directly or indirectly incurred, suffered,
sustained or required to be paid by, or sought to be imposed upon, any of the
NHTC Indemnified Persons resulting from, relating to or arising out of such
Company Stockholder bringing, joining or maintaining any action, suit or
proceeding directly or indirectly relating to the sale of the Company's
securities against the NHTC Indemnifed Persons notwithstanding such Company
Stockholder's release pursuant to Section 4.05 hereof.
(c) The right to indemnification under this Section 8.01 is subject
to the following limitations:
(i) The indemnification rights under this Section 8.01 shall
expire at the respective times set forth in Section 8.05, and the
Indemnifying Company Stockholders and other Company Stockholder shall
not have any liability under this Section 8.01 or otherwise in
connection with the Transactions unless an NHTC Indemnified Person gives
written notice to one or more of the Attorneys asserting a claim for
Losses, including reasonably detailed specific facts and circumstances
pertaining thereto, before the expiration of the periods of time that
the underlying representations, warranties, covenants and agreements
survive under Section 8.05 hereof.
(ii) Indemnification for Losses under Section 8.01 shall be payable
hereunder only if and to the extent that the aggregate amount of all
Losses of the NHTC Indemnified Persons to which this Section 8.01 hereof
applies shall exceed $25,000 (the "Indemnity Floor"), and shall not be
payable in any event with respect to the Indemnity Floor;
notwithstanding the foregoing, the Indemnity Floor shall not apply to
any Losses resulting from, relating to or arising out of an event
described in Section 8.01(a)(iii).
(iii) The liability for Losses under Section 8.01(a) of the
Indemnifying Company Stockholders shall in no event exceed the lesser of
(as the case may be, the "Indemnity Cap"): (A) $3,000,000 and (B)
one-half of the Fair Market Value (as defined in Section 1.02(d)), as of
the date of determination, of (x) the NHTC Shares then held by the
Indemnifying Company Stockholders, and (y) the realized cash proceeds
(in the form of, for example, dividends or sale proceeds) or readily
marketable assets (in the form of, for example, freely tradeable
securities) (such cash or readily marketable assets, "Qualified
Proceeds") in respect of the NHTC Shares
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previously held by the Indemnifying Company Stockholders;
notwithstanding the foregoing, the Indemnity Cap shall not apply to any
Losses resulting from, relating to or arising out of an event described
in Section 8.01(a)(iii).
(iv) The liability for Losses under Section 8.01(b)(i) of each
Company Stockholder shall in no event exceed Fair Market Value, as of
the date of determination, of (x) the NHTC Shares then held by such
Company Stockholder, and (y) the Qualified Proceeds in respect of the
NHTC Shares previously held by such Company Stockholders. The liability
for Losses under Section 8.01(b)(ii) of a Company Stockholder shall in
no event exceed the lesser of (A) the product of $0.5625 which amount is
the closing market price per share of NHTC Common Stock on the day prior
to the Closing Date, times the number of NHTC Shares acquired on the
Closing Date by such Company Stockholder, and (B) such Company
Stockholder's pro rata portion of such Losses as determined by the ratio
of such Company Stockholder's NHTC Shares to all of the NHTC Shares
acquired on the Closing Date by all Company Stockholders party to the
action, suit or proceeding giving rise to such Losses.
(v) The NHTC Indemnified Persons shall have recourse hereunder
only against the NHTC Shares issued hereunder and held by the
Indemnifying Company Stockholders (in the case of Losses under clauses
(i), (ii) and (iv) of Section 8.01(a)) and the relevant Company
Stockholder (in the case of Losses under Section 8.01(b)(i)) and any
Qualified Proceeds thereof; provided that in no event arising under such
clauses of such Sections, shall the NHTC Shares and Qualified Proceeds
of any one Indemnifying Company Stockholder (and members of its
immediate family, successors and assigns, treated for this purpose as
one Indemnifying Company Stockholder) forfeited, surrendered or applied
in respect of any such Losses exceed the product of (A) the Indemnity
Cap, and (B) the percentage obtained by dividing (x) such Indemnifying
Company Stockholder's Percentage (as defined in Section 1.02(d)) as of
the Closing Date by (y) the Percentage of all Indemnifying Company
Stockholders as of the Closing Date ("Pro Rata Indemnity Percentage").
With respect to Losses arising under Section 8.01(a)(iii), the liability
of any one Indemnifying Company Stockholder (as defined in the previous
sentence) shall in no event exceed the lesser of (A) the product of
$0.5625, which amount is the closing market price per share of NHTC
Common Stock on the day prior to the Closing Date times the number of
NHTC Shares acquired on the Closing Date by such Indemnifying Company
Stockholder, and (B) such Indemnifying Company Stockholder's Pro Rata
Indemnity Percentage of such Losses (the "Securities Claim Liability
Amount").
(vi) Notwithstanding anything to the contrary set forth in this
Agreement, the liability of any one Indemnifying Company Stockholder
shall not in the aggregate exceed the greater of either such
Indemnifying Company Stockholder's Pro Rata Indemnity Percentage of the
Indemnity
Cap or the Securities Claim Liability Amount.
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(d) For purposes of this Agreement, the term "Indemnifying Company
Stockholders" means the following Company Stockholders: the Azure Limited
Partnership I; Capital Development S.A.; ▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇
▇. ▇▇▇▇▇; and their respective successors and assigns.
Section 8.02. By NHTC. (a) Subject to the limitations set forth below in
this Section 8.02, from and after the Closing Date, NHTC shall indemnify the
Company Stockholders, and their respective directors, officers, employees and
agents (collectively, the "Company Indemnified Persons"), against, and hold the
Company Indemnified Persons harmless from, any and all Losses directly or
indirectly incurred, suffered, sustained or required to be paid by, or sought to
be imposed upon, any of the Company Indemnified Persons resulting from, relating
to arising out of:
(i) any breach of any of the representations or warranties of
NHTC set forth in Section 2.02 hereof or in any other NHTC Document,
(ii) any breach of any covenant or agreement made by the Company
under this Agreement or any other Company Party Document, or
(iii) any indebtedness, liability or obligation of the Company or
any Subsidiary thereof not constituting an Unexpected Acquisition Cost.
(b) The right to indemnification under this Section 8.02 is subject
to the following limitations:
(i) The indemnification rights under this Section 8.02 shall
expire at the respective times set forth in Section 8.05, and NHTC shall
not have any liability under this Section 8.02 or otherwise in
connection with the Transactions unless a Company Indemnified Person
gives written notice to NHTC asserting a claim for Losses, including
reasonably detailed specific facts and circumstances pertaining thereto,
before the expiration of the periods of time that the underlying
representations, warranties, covenants and agreements survive under
Section 8.05 hereof.
(ii) Indemnification for Losses under this Section 8.02 shall be
payable hereunder only if and to the extent that the aggregate amount of
all Losses of the Company's Indemnified Persons to which this Section
8.02 hereof applies shall exceed $25,000, and shall not be payable in
any event with respect to the first $25,000 of such Losses; provided,
however, that the foregoing limitations shall not apply with respect to
claims under clause (iii) of Section 8.02(a).
(iii) NHTC's liability for Losses under Section 8.02(a) shall in
no event exceed the Indemnity Cap; provided, however, that the foregoing
limitations shall not apply with respect to claims under clause (iii) of
Section 8.02(a).
Section 8.03. "Losses" Defined. In this Agreement, the term "Losses"
means and includes all losses, claims, liabilities, damages (including, without
limitation, punitive, consequential and special damages awarded to any
third-party claimant), judgments,
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liabilities, payments, obligations, costs and expenses (including, without
limitation, any costs of investigation, remediation or cleanup, and any
reasonable legal fees and costs and expenses incurred after the Closing Date in
defense of or in connection with any alleged or asserted liability, payment or
obligation as to which indemnification may apply hereunder), regardless of
whether or not any liability, payment, obligation or judgment is ultimately
imposed against the NHTC Indemnified Persons or Company Indemnified Persons and
whether or not the NHTC Indemnified Persons or Company Indemnified Persons are
made or become parties to an action, suit or proceeding in respect thereof,
voluntarily or involuntarily.
Section 8.04. Notice of Claims. With respect to any matter as to which
any person or entity (the "Indemnified Person") is entitled to indemnification
from any other person or entity (the "Indemnifying Person") under this Article
VIII, the Indemnified Person shall have the right, but not the obligation, to
contest, defend or litigate, and to retain counsel of its choice in connection
with, any claim, action, suit or proceeding by any third party alleged or
asserted against the Indemnified Person in respect of, resulting from, relating
to or arising out of such matter, and the costs and expenses thereof shall be
subject to the indemnification obligations of the Indemnifying Person hereunder;
provided, however, that if the Indemnifying Person acknowledges in writing its
obligation to indemnify the Indemnified Person in respect of such matter to the
fullest extent provided by this Article VIII, the Indemnifying Person shall be
entitled, at its option, to assume and control the defense of such claim,
action, suit or proceeding at its expense through counsel of its choice if it
gives prompt notice of its intention to do so to the Indemnified Person. Neither
an Indemnified Person nor an Indemnifying Person shall be entitled to settle or
compromise any such claim, action, suit or proceeding without the prior written
consent of the other party hereto (and for purposes of this provision the "other
party hereto" shall be: (A) NHTC, for any Indemnified Person or Indemnifying
Person who is an NHTC Indemnified Person, and (B) one or more of the Attorneys,
for any Indemnified Person or Indemnifying Person who is a Company Indemnified
Person), which consent shall not be unreasonably withheld.
Section 8.05. Survival of Provisions. (a) All representations and
warranties contained herein or made pursuant to this Agreement shall survive the
Closing for a period of one year after the Closing Date except that
(1) the representations and warranties contained in or made
pursuant to Section 2.04 shall survive the Closing without limitation,
and
(2) the representations and warranties contained in or made
pursuant to Sections 2.07, 2.10 and 2.11 shall survive the Closing for
so long as any claim may be made in respect of the matters described
therein under any applicable statute of limitations.
(b) All covenants and agreements of the parties contained in or made
pursuant to this Agreement and required to be performed prior to the Closing
Date shall survive the Closing for a period of one year. All other covenants and
agreements contained in or made pursuant to this Agreement (including Sections
4.05, 8.01 and 8.02) shall survive the Closing for so long as any claim may be
made in respect of such matters under any applicable statute of limitations.
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Section 8.06. Exclusive Remedy. Each party hereto agrees that the sole
liability of any other party hereto for any claim with respect to the
transactions contemplated under this Agreement shall be limited to
indemnification under this Article VIII; provided, however, that the foregoing
shall not be deemed to prohibit or restrict the availability of any equitable
remedies (including specific performance) in the event of any breach (or
threatened breach) in the circumstances described in Section 9.11 (or in any
provision of any other Company Party Document or NHTC Document which
specifically contemplates the availability, or permits the exercise, of
equitable remedies (including specific performance)).
Section 8.07. Other Recoveries. (a) Notwithstanding anything to the
contrary set forth in this Article VIII, the obligations of Indemnifying Persons
under Section 8.01 and 8.02 in respect of any particular Losses shall be reduced
by the amount of any Other Recoveries (as hereinafter defined) actually received
(before or after indemnification hereunder) by or on behalf of the Indemnified
Persons in reduction of such Losses. Any Indemnified Person who shall have
received any indemnification payment hereunder (including in the form of NHTC
Shares and Qualified Proceeds thereof) for any particular Losses shall, upon
receipt of any Other Recoveries in reduction of such Losses, pay to the
appropriate Indemnifying Person an amount equal to the lesser of (x) such Other
Recoveries actually received, and (y) the amount of such indemnification payment
(and/or the Fair Market Value of any such non-cash indemnification payment). The
Company Stockholders and NHTC hereby agree to use their reasonable best efforts
to (and shall cooperate with each other in order to) enforce their respective
rights to any Other Recoveries, both prior to and after making any claim for
indemnification hereunder.
(b) For purposes of this Agreement, the term "Other Recoveries" shall
mean the proceeds or other amounts realized or that may be realized under any
insurance policy or other indemnity or hold harmless agreement (including,
without limitation, those indemnity and hold harmless agreements established
under the Ellon Acquisition Agreement, Fruitseng Acquisition Agreement and the
MikeCo Acquisition Agreements).
Article IX
Miscellaneous
Section 9.01. Board and Executive Committee Representation. (a) For so
long as the Company Stockholders shall collectively beneficially own not less
than ten percent (10%) of the outstanding shares of NHTC Common Stock, NHTC
shall use its reasonable best efforts to: (i) cause two individuals designated
by one or more of the Attorneys and reasonably acceptable to NHTC to be
nominated for election to the Board of Directors of NHTC at each annual meeting
of its stockholders and each special meeting (and written consent in lieu of a
meeting) at (or in) which directors are to be elected following the Closing
Date, (ii) cause the Board of Directors or management of NHTC to recommend in
any proxy statement for such meeting to the stockholders of NHTC that they vote
for the election of such nominees, and (iii) cause the management proxies who
may vote at any such meeting to vote any shares for which a proxy card is
received with no indication as to the election of such nominees to vote for
their election; provided, however, that from and after such time (if any) that
the Company Stockholders shall collectively beneficially own less than ten
percent (10%), but not less than five percent (5%), of the outstanding shares of
NHTC Common Stock, NHTC shall be required to fulfill its obligations under the
foregoing provisions of this Section 9.01(a) only with respect to
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one individual designated by one or more of the Attorneys and reasonably
acceptable to NHTC.
(b) For so long as NHTC shall have any obligations under the
foregoing Section 9.01(a), NHTC shall use its reasonable best efforts to cause
the Board of Directors of NHTC to: (i) maintain an Executive Committee thereof,
comprising not more than three members of such Board and having the authority to
act in the place and stead of the Board of Directors of NHTC to the fullest
extent permitted under Florida corporate law, and (ii) designate or appoint one
of the director(s) designated and elected in accordance with the foregoing
Section 9.01(a) as a member of such Executive Committee.
Section 9.02. Termination and Modification of Agreements. (a) Each
Company Stockholder that is a Former Fruitseng Holder (as defined in Section
9.02(b)), being presently entitled to receive a portion of the up to 369,350
shares of Company Common Stock issuable under Section 1.04(b) of the Fruitseng
Acquisition Agreement, effective automatically at and upon the Closing, hereby
agrees that such Former Fruitseng Holder shall accept, in lieu of such Former
Fruitseng Holder's portion of such shares of Company Common Stock, a number of
shares of NHTC Common Stock per each such share of Common Stock of the Company
in the same proportion that (i) the number of Firm Shares bears to (ii) the
number of outstanding Company Shares (which proportion is approximately 1.2:1).
The foregoing provisions of this Section 9.02(b) shall be deemed to constitute
amendments to Section 1.04(b), and (to the extent necessary to implement such
amendment) the other relevant terms, of the Fruitseng Acquisition Agreement.
NHTC hereby agrees that, in connection with and in satisfaction of the Company's
obligations under Section 1.04(b) (as modified and amended pursuant to the
foregoing provisions of this Section 9.02(a)), it shall issue such shares of
NHTC Common Stock to such Company Stockholders (or their respective successors
and assigns).
(b) The Company and each Company Stockholder who is a party to any of
the following agreements hereby agrees that, effective automatically at and upon
the Closing, such agreements shall be terminated and no longer be of any force
or effect, and no party thereto shall thereafter have any rights, obligations or
liability thereunder: (1) Stockholder's Agreement, dated as of June 30, 1996, by
and between the Company and ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Weeks; (2) Stockholders
Agreement, dated as of October 15, 1996, by and among the Company, ▇▇▇▇▇ Kaslof,
▇▇▇▇▇▇ ▇. Kaslof, International Marketing Group Ltd. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and
(3) Stockholders Agreement, dated as of October 15, 1996, by and among the
Company, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇. Page,
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (the foregoing
individuals, the "Former Fruitseng Holders").
Section 9.03. Public Announcements. No party hereto shall make any
announcement to the public, the Company's or NHTC's respective "trades" or to
the respective employees, customers or suppliers of such parties, or to any
federal, state, local or foreign government, agency or authority, with respect
to this Agreement and/or the Transactions (an "Announcement") to which NHTC, the
Company or any Attorney shall reasonably object; however, NHTC will be required
under the Exchange Act to report this Agreement and the Transactions, and such
reporting (to the extent required under the Exchange Agreement) shall be
permitted in all events. Each party shall afford
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NHTC, the Company and one or more Attorneys, the opportunity to review and
comment upon each Announcement proposed to be made by it prior to the release
thereof.
Section 9.04. Further Actions. From time to time after the Closing Date,
the parties hereto shall execute and deliver (or cause to be executed and
delivered) such other and further agreements, instruments, certificates or other
documents and shall take (or cause to be taken) such other and further actions,
as any other party hereto may reasonably request in order to further effect
and/or evidence the Transactions or to otherwise consummate and give effect to
the covenants and agreements set forth herein.
Section 9.05. Expenses. Each party hereto shall bear its own legal fees,
accountants' fees, brokers, finder's and investment banking fees and other costs
and expenses with respect to the negotiation, execution and the delivery of this
Agreement and the consummation of the Transactions.
Section 9.06. Entire Agreement. This Agreement, which includes the
Exhibit hereto, and the other NHTC Documents and Company Party Documents,
contain the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof, and supersede all prior agreements,
arrangements and understandings with respect thereto (including without
limitation that certain letter agreement (captioned "Letter of Intent/Heads of
Agreement"), dated 15 November 1996, as amended, from the Company addressed to
NHTC).
Section 9.07. Descriptive Headings; References. The descriptive headings
of this Agreement and other NHTC Documents and Company Party Documents are for
convenience of reference only and shall not control or affect the meaning or
construction of any provision hereof or thereof. Article, Section and Exhibit
references in this Agreement are to the referenced Articles and Sections of, and
Exhibits to, this Agreement, unless the context otherwise requires.
Section 9.08. Notices. Any notice or other communication which is
required or permitted hereunder or under any other NHTC Document or Company
Party Document shall be in writing and shall be deemed to have been delivered
and received (x) on the day of (or, if not a business day, the first business
day after) its having been personally delivered or telecopied to the following
address or telecopy number, (y) on the first business day after its having been
sent by overnight delivery service to the following address, or (z) if sent by
regular, registered or certified mail, when actually received at the following
address:
If to any Company Stockholder, to the address for such Company
Stockholder set forth on Exhibit A hereto, with copies to the Attorneys and the
counsel set forth in the paragraph next following and (if before the Closing)
the Company, at the addresses as set forth in the paragraph next following;
If to any Attorney or (before the Closing) the Company:
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[c/o] Global Health Alternatives, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No. 011-44-171-486-6217
Telephone No. ▇▇▇-▇▇-▇▇▇-▇▇▇-▇▇▇▇
and
[c/o] Global Health Alternatives, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Dechert Price & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
If to NHTC or (after the Closing) the Company:
[c/o] Natural Health Trends Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Lane & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Any party may by notice change the address or telecopier number to which notices
or other communications to it are to be delivered, telecopied or sent.
Section 9.09. Governing Law and Forum. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York (other
than the choice of law principles thereof). Any claim, action, suit or other
proceeding initiated by any party hereto against any other party hereto under or
in connection with this Agreement or any other NHTC Document or Company Party
Document and/or the Transactions shall exclusively be asserted, brought,
prosecuted and maintained in any federal or state court located in the Borough
of Manhattan, State of New York, as the party bringing such action, suit or
proceeding shall elect, having jurisdiction over the subject matter thereof, and
each party hereto hereby irrevocably: (i) submits to the jurisdiction of such
courts, (ii) waives any and all rights to object to the laying of venue
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in any such court, (iii) waives any and all rights to claim that any such court
may be an inconvenient forum, and (iv) agrees that service of process on it in
any such action, suit or proceeding may be effected by the means by which
notices may be given to it under this Agreement.
Section 9.10. Assignment. This Agreement, and the respective rights and
obligations of the parties hereunder, may not be assigned or delegated otherwise
than by operation of law by (x) NHTC or (after the Closing) the Company without
the prior written consent of (if prior to the Closing) the Company or (if after
the Closing) one or more of the Attorneys, or (y) any Company Stockholder
without the prior written consent of NHTC, and any purported assignment or
delegation by any party hereto in violation of the foregoing shall be void ab
initio; provided, however, that any or all rights of any party to receive the
performance of the obligations of the other parties hereunder (but not any
obligations of any party hereunder) and rights to assert claims against the
other parties in respect of breaches of representations, warranties or covenants
may be assigned to (i) any entity extending credit to such party or any of its
affiliates or (ii) in the case of the Company Stockholders, any other person or
entity (provided that notice of such assignment shall have previously been
provided to NHTC), but any assignee of such rights shall take such rights
subject to any defenses, counterclaims and rights of set-off to which the
non-assigning parties might be entitled under this Agreement. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
Section 9.11. Remedies. (a) The parties hereto acknowledge that the
remedy at law for any breach of their respective obligations to effect the Main
Transaction is and will be insufficient and inadequate and that the parties
hereto shall be entitled to equitable relief, in addition to remedies at law.
Each party hereto hereby waives the defense that there is an adequate remedy at
law in the event of any action to enforce the provisions of this Agreement to
effect the Main Transaction. The Company Stockholders acknowledge that the
Company Shares are unique and cannot be obtained on the open market; and NHTC
acknowledges that the NHTC Shares and other benefits to be provided to the
Company Stockholders hereunder are unique and cannot be obtained on the open
market. Without limiting any remedies that any party hereto may otherwise have
hereunder or under applicable law in the event that any other party hereto
refuses to perform its obligations under this Agreement to consummate the Main
Transaction, such parties shall have, in addition to any other remedy at law or
in equity, the right to specific performance.
(b) The parties hereto acknowledge that any violation or threatened
violation of Section 5.01(b) will cause irreparable harm and that the remedy at
law for any such violation or threatened violation will be inadequate. Each
party hereto therefor agrees that the other parties hereto shall be entitled to
temporary and permanent injunctive relief for any such violation or threatened
violation without the necessity of proving (i) that the other parties will be
irreparably injured thereby, (ii) that the remedy at law for such violation or
threatened violation is inadequate or (iii) actual damages.
(c) No party hereto shall have any liability to any other party
hereto for any punitive, consequential, incidental or special damages by virtue
of any breach of any representation, warranty, covenant or agreement in or
pursuant to this Agreement or any other NHTC Document or Company Party Document
or any other agreement, instrument,
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certificate or other document executed and delivered pursuant hereto or in
connection herewith or the Transactions.
Section 9.12. Waivers and Amendments. Any waiver of any term or
condition of this Agreement, and any amendment or supplementation of this
Agreement, shall be effective only if in a writing executed by (or on behalf of)
NHTC, the Company and the Company Stockholders (or one or more Attorneys on the
behalf of the Company Stockholders). A waiver of any breach or failure to
enforce any of the terms or conditions of this Agreement shall not in any way
affect, limit or waive a party's rights hereunder at any time to enforce strict
compliance thereafter with every term or condition of this Agreement. No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
Section 9.13. Third Party Rights. Notwithstanding any other provision of
this Agreement, and except as permitted pursuant to Section 9.10 hereof or other
expressly set forth herein or therein, this Agreement and the other NHTC
Documents and Company Party Documents shall not create benefits on behalf of any
employee, consultant, agent or representative of any person or entity not party
hereto (including without limitation any counsel, accountant, broker, finder or
investment banker, notwithstanding the provisions of Section 9.05), and this
Agreement and the other NHTC Documents and Company Party Documents shall be
effective only as between the parties hereto, their successors and permitted
assigns.
Section 9.14. Illegalities. In the event that any provision contained in
this Agreement shall be determined to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect, and the remaining provisions of this
Agreement, shall not, at the election of the party for whose benefit the
provision exists, be in any way impaired.
Section 9.15. Gender and Plural Terms. Words of gender or neuter may be
read as masculine, feminine or neuter, as required by the context. Singular and
plural forms of defined and other terms herein may be read as singular or
plural, as required or permitted by the context.
Section 9.16. Effectiveness; Termination of Original Agreement. This
Agreement shall become effective only upon its being executed and delivered by
the Company, NHTC and Company Stockholders owning at least 4,346,791 Company
Shares. Effective automatically at such time, the Original Agreement is hereby
terminated by mutual consent.
Section 9.17. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
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In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective authorized officers as of the
day and year first above written.
NHTC: The Company:
Natural Health Trends Corp. Global Health Alternatives, Inc.
By: By:
-------------------------- -------------------------------
Title: President & Chief Title: Chairman of the Board &
Executive Officer President
Company Stockholders
Name and Signature Number of Number of
Company NHTC Firm Shares
Shares Held to be Received
Azure Limited Partnership I 1,384,617 1,662,767
By:
General Partner
By:
General Partner
By:
General Partner
Capital Development S.A. 683,366 820,645
By:
Title:
Cosmo Finance & Investments 5,395 6,485
Services S.A.
By:
Title:
Agreement Signature Page
Company Stockholders
Name and Signature Number of Number of
Company NHTC Firm Shares
Shares Held to be Received
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 50,000 60,044
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ 35,000 42,031
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ 135,965 163,278
▇▇▇▇▇▇ ▇. ▇▇▇▇ 89,562 107,554
Golden Union International S.A. 102,151 122,672
By:
Title:
N.K. Verwaltungs Inc. 114,386 137,364
By:
Title:
▇. ▇▇▇▇ & Co. A/S 35,965 43,190
By:
Title:
Agreement Signature Page
Company Stockholders
Name and Signature Number of Number of
Company NHTC Firm Shares
Shares Held to be Received
Promenade Investments Limited 35,965 43,190
By:
Title:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust 17,983 21,595
(U/A/D 7/20/79)
By:
Title:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 3,597 4,319
Didgemere Consultants Limited 17,983 21,595
By:
Title:
Z & M Capital Corporation 17,983 21,595
By:
Title:
▇▇▇▇▇ Kaslof 33,000 39,629
Agreement Signature Page
Company Stockholders
Name and Signature Number of Number of
Company NHTC Firm Shares
Shares Held to be Received
▇▇▇▇▇▇ ▇. Kaslof 93,000 111,682
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 7,000 8,406
International Marketing Group Ltd. 7,000 8,406
By:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇ 241,692 290,244
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 94,623 113,631
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 128,001 153,715
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 67,633 81,219
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 7,193 8,638
Agreement Signature Page
Company Stockholders
Name and Signature Number of Number of
Company NHTC Firm Shares
Shares Held to be Received
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 64,246 77,152
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 8,092 9,717
▇▇▇▇▇▇▇▇ ▇▇▇▇ 4,046 4,859
▇▇▇▇▇▇ ▇. Page 4,046 4,859
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (JT TEN with below)
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (JT TEN with above) 4,046 4,859
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 3,238 3,888
Westminster Associates 17,983 21,595
By:
Title:
Agreement Signature Page
Company Stockholders
Name and Signature Number of Number of
Company NHTC Firm Shares
Shares Held to be Received
Sir ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 21,580 25,915
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇ 5,000 6,004
▇▇. ▇▇▇▇▇▇▇▇ S. Weeks 30,000 36,026
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 10,000 12,009
Complimentary Medical Associates, Inc. 10,000 12,009
By:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 382,225 459,009
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 382,225 459,009
▇▇▇ ▇▇▇▇▇ 382,225 459,009
▇▇▇▇▇ ▇▇▇▇▇ 5,395 6,479
H. ▇▇▇▇▇▇ ▇▇▇▇ 40,662 48,830
▇▇▇▇ ▇▇▇▇▇▇ 24,398 29,299
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 16,265 19,532
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 3,597 4,319
▇▇▇▇▇ ▇.▇. ▇▇▇ 1,439 1,728
Totals: 4,829,768 5,800,000
Exhibit A
(to Agreement)
Company Stockholders: Addresses for Notices
[to come]
