AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
LIFE USA, INC.,
NEURO NUTRITION, INC.,
and
THE SHAREHOLDERS OF NEURO NUTRITION, INC .
August __, 2005
TABLE OF CONTENTS
ARTICLE I Definitions...................... .............................1
ARTICLE II Transactions; Terms of Transaction; Manner of Converting Share...5
2.1 Transaction.................................................5
2.2 Time and Place of Closing...................................5
2.3 Effective Time..............................................5
2.4 Charter.....................................................5
2.5 Bylaws......................................................5
2.6 Directors and Officers......................................5
2.7 Conversion of Shares........................................5
2.8 Exchange of Shares..........................................6
2.9 Rights of Former Neuro Stockholders.........................6
2.10 Legending of Shares.........................................7
2.11 Fractional Shares...........................................7
2.12 Lost, Stolen or Destroyed Certificates......................7
ARTICLE III Representations and Warranties of LUSA, PURCHASER and THE LUSA
........................7
3.1 Organization; Standing and Power............................7
3.2 Authorization; Enforceability...............................8
3.3 No Violation or Conflict....................................8
3.4 Consents of Governmental Authorities and Others.............8
3.5 Conduct of Business.........................................9
3.6 Litigation..................................................9
3.7 Brokers.....................................................9
3.8 Compliance.................................................10
3.9 Charter, Bylaws and Corporate Records......................10
3.10 Subsidiaries and Investments...............................10
3.11 Capitalization.............................................10
3.12 Rights, Warrants, Options..................................11
3.13 Commission Filings and Financial Statements................11
3.14 Absence of Undisclosed Liabilities.........................11
3.15 Real Property..............................................11
3.16 List of Accounts and Proxies...............................12
3.17 Personnel..................................................12
3.18 Employment Agreements and Employee Benefit Plans...........12
3.19 Tax Matters................................................13
3.20 Material Agreements........................................13
3.21 Guaranties.................................................14
3.22 Environmental Matters......................................14
3.23 Absence of Certain Business Practices......................14
3.24 Disclosure.................................................15
ARTICLE IV Representations and Warranties of Neuro................15
4.1 Organization...............................................15
4.2 Authorization; Enforceability..............................15
4.3 No Violation or Conflict...................................16
4.4 Consents of Governmental Authorities and Others............16
4.5 Brokers....................................................16
4.6 Charter, Bylaws and Corporate Records......................16
4.7 Subsidiaries and Investments...............................16
4.8 Capitalization.............................................16
4.9 Rights, Warrants, Options..................................17
ARTICLE V Additional Agreements..................................17
5.1 Survival of the Representations and Warranties.............17
5.2 Investigation..............................................17
5.3 Indemnification............................................17
5.4 Indemnity Procedure........................................18
5.5 General Release............................................19
ARTICLE VI Closing; Deliveries; Conditions Precedent..............19
6.1 Closing; Effective Date....................................19
6.2 Deliveries.................................................20
6.3 Conditions Precedent to the Obligations of Neuro...........21
6.4 Conditions Precedent to the Obligations of LUSA............23
6.5 Best Efforts...............................................23
6.6 Termination................................................23
ARTICLE VII Covenants..............................................24
7.1 General Confidentiality....................................24
7.2 Continuing Obligations.....................................25
7.3 Satisfaction of Certain Outstanding Payables...............25
7.4 Tax Matters................................................25
ARTICLE VIII Miscellaneous..........................................25
8.1 Notices....................................................25
8.2 Entire Agreement; Incorporation............................26
8.3 Binding Effect.............................................27
8.4 Assignment.................................................27
8.5 Waiver and Amendment.......................................27
8.6 No Third Party Beneficiary.................................27
8.7 Severability...............................................27
8.8 Expenses...................................................27
8.9 Headings...................................................28
8.10 Other Remedies; Injunctive Relief..........................28
8.11 Counterparts...............................................28
8.12 Remedies Exclusive.........................................28
8.13 Jurisdiction and Venue.....................................28
8.14 Participation of Parties...................................28
8.15 Further Assurances.........................................29
8.16 Publicity..................................................29
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
August __, 2005, by and among Neuro Nutrition, Inc., a Colorado Corporation
("Neuro"); and LIFE USA, INC., a Colorado Corporation ("LUSA"); (as defined in
Article I) and the Neuro shareholders ("Shareholders").
W I T N E S S E T H:
Preamble
The respective Boards of Directors of Neuro Nutrition, and LUSA are of
the opinion that the transactions described herein are in the best interests of
the parties to this Agreement and their respective stockholders. This Agreement
provides for the acquisition of Neuro by LUSA as a wholly owned subsidiary. At
the effective time of the transaction, the outstanding shares of the capital
stock of Neuro shall be exchanged for shares of the common stock of LUSA. As a
result, the stockholders of Neuro shall become stockholders of LUSA and Neuro
shall continue to conduct its business and operations as a wholly owned
subsidiary of LUSA. The transactions described in this Agreement are subject to
the satisfaction of certain other conditions described in this Agreement. It is
the intention of the parties to this Agreement that the transaction for federal
income tax purposes shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Code.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE I
Definitions
In addition to terms defined elsewhere in this Agreement, the following
terms when used in this Agreement shall have the meanings indicated below:
"Affiliate" shall mean with respect to a specified Person, any other
Person which, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes, with respect to a
Person (a) any other Person which beneficially owns or holds ten percent (10%)
or more of any class of voting securities or other securities convertible into
voting securities of such Person or beneficially owns or holds ten percent (10%)
or more of any other equity interests in such Person, (b) any other Person with
respect to which such Person beneficially owns or holds ten percent (10%) or
more of any class of voting securities or other securities convertible into
voting securities of such Person, or owns or holds ten percent (10%) or more of
the equity interests of the other Person, and (c) any director or senior officer
of such Person. For purposes of this definition, the term "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agreement" shall mean this Agreement and Plan of Reorganization
together with all exhibits and schedules referred to herein, which exhibits and
schedules are incorporated herein and made a part hereof.
"Certificates" shall have the meaning set forth in Section 2.8.
"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall mean the date that the Closing takes place.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and
Exchange Commission.
"Consideration Shares" shall have the meaning set forth in Section
2.7(c).
"Effective Time" shall have the meaning set forth in Section 2.3.
"Employee Benefit Plans" shall have the meaning set forth in Section
3.18.
"Environmental Laws" shall have the meaning set forth in Section 3.22.
"ERISA" shall have the meaning set forth in Section 3.18.
"Exchange Ratio" shall have the meaning set forth in Section 2.7(c).
"Financial Statements of LUSA" shall mean (i) the audited balance sheet
and the audited statements of income, cash flow and retained earnings of LUSA
for the twelve (12) month period ended December 31, 2004, and (ii) the unaudited
balance sheet and the unaudited statements of income, cash flow and retained
earnings of LUSA for the fiscal year ended July 31, 2004, including in each such
case any related notes, each prepared according to GAAP consistently applied
with prior periods, except as set forth on Schedule 3.13.
"GAAP" shall have the meaning set forth in Section 3.13.
"Guaranty" shall mean, as to any Person, all liabilities or obligations
of such Person, with respect to any indebtedness or other obligations of any
other Person, which have been guaranteed, directly or indirectly, in any manner
by such Person, through an agreement, contingent or otherwise, to purchase such
indebtedness or obligation, or to purchase or sell property or services,
primarily for the purpose of enabling the debtor to make payment of such
indebtedness or obligation or to guarantee the payment to the owner of such
indebtedness or obligation against loss, or to supply funds to or in any manner
invest in the debtor.
"Indemnified Party" shall have the meaning set forth in Section 5.4.
"Indemnifying Party" shall have the meaning set forth in Section 5.4.
"Intellectual Property" shall mean the rights to any patent, trademark,
copyright, service xxxx, invention, software, software code, trade secret,
technology, product, composition, formula, method or process.
"Investments" shall mean, with respect to any Person, all advances,
loans or extensions of credit to any other Person (except for extensions of
credit to customers in the ordinary course of business), all purchases or
commitments to purchase any stock, bonds, notes, debentures or other securities
of any other Person, and any other investment in any other Person, including
partnerships or joint ventures (whether by capital contribution or otherwise) or
other similar arrangement (whether written or oral) with any Person, including,
but not limited to, arrangements in which (i) the first Person shares profits
and losses of the other Person, (ii) any such other Person has the right to
obligate or bind the first Person to any third party, or (iii) the first Person
may be wholly or partially liable for the debts or obligations of such
partnership, joint venture or other entity.
"Knowledge" shall mean, in the case of any Person who is an individual,
knowledge that a reasonable individual under similar circumstances would have
after such investigation and inquiry as such reasonable individual would under
such similar circumstances make, and in the case of a Person other than an
individual, the knowledge that a senior officer or director of such Person, or
any other Person having responsibility for the particular subject matter at
issue of such Person, would have after such investigation and inquiry as such
senior officer, director or responsible Person would under such similar
circumstances make.
"Law" and "Laws" shall have the meaning set forth in Section 3.19.
"Liabilities" shall have the meaning set forth in Section 3.14.
"Litigation" shall have the meaning set forth in Section 3.6.
"Material Adverse Effect" shall mean any event or condition of any
character which has had or could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), results of operations,
assets, liabilities, properties, business or prospects of LUSA or Neuro, as
applicable.
"Material LUSA Agreements" shall have the meaning set forth in Section
3.20.
"Transaction" shall have the meaning set forth in Section 2.1.
"Transaction Consideration" shall have the meaning set forth in Section
2.7(c).
"Outstanding LUSA Common Stock" shall have the meaning set forth in
Section 3.11.
"Periodic Reports" shall have the meaning set forth in Section 3.13.
"Person" shall mean any natural person, corporation, unincorporated
organization, partnership, association, limited liability company, joint stock
company, joint venture, trust or government, or any agency or political
subdivision of any government or any other entity.
Shareholder or "Newuro Shareholders" shall mean Shareholders of Neuro
Nutrition, Inc., a Colorado corporation
"Neuro" shall mean Neuro Nutrition, Inc., a Colorado Corporation.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" of any Person shall mean any Person, whether or not
capitalized, in which such Person owns, directly or indirectly, an equity
interest of more than fifty percent (50%), or which may effectively be
controlled, directly or indirectly, by such Person.
"Parent Corporation" shall mean Neuro as the surviving corporation
resulting from the Transaction with Purchaser
"Tax" and "Taxes" shall have the meaning set forth in Section 3.19.
"Tax Returns" shall have the meaning set forth in Section 3.19.
"LUSA" shall mean Life USA, Inc., a Colorado corporation.
----
"LUSA Common Stock" shall mean the shares of common stock, no par value
per share, of LUSA, as further described in Section 3.11.
"LUSA Leased Property" shall have the meaning set forth in Section
3.15.
"Transaction" shall have the meaning set forth in Section 2.1.
The words "hereof", "herein" and "hereunder" and the words of similar
import shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The terms defined in the singular shall have a
comparable meaning when used in the plural and vice versa.
ARTICLE II
Transactions; Terms of Transaction; Manner of Exchanging Shares
2.1 Transaction. Subject to the terms and conditions of this Agreement, at
the Effective Time, 100% of outstanding stock of Neuro shall be acquired by LUSA
in accordance with the provisions of the Laws of the State of Colorado. As a
result of the Transaction, Neuro shall become a wholly owned Subsidiary of LUSA
and shall continue to be governed by the laws of the State of Colorado. The
Transaction shall be consummated pursuant to the terms of this Agreement, which
has been approved and adopted by the respective Boards of Directors of Neuro,
and LUSA, and by the joinder hereof by Shareholders of Neuro Nutrition, Inc..
2.2 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at 10:00 A.M. on the date
that the Effective Time occurs or at such other time as the parties, acting
through their authorized officers, may mutually agree. The Closing shall be held
at the offices of Xxxxxxx X. Xxxxxxx, 0000 Xxxxxxx Xxxx, Xxxxxx, XX 00000, or at
such other location as may be mutually agreed upon by the parties.
2.3 Effective Time. The transactions contemplated by this Agreement shall
become effective on the date and at the time this document has been executed by
all parties.(the "Effective Time").
2.4 Charter. The Certificate of Incorporation of Neuro in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Parent corporation until duly amended or repealed.
2.5 Bylaws. The Bylaws of Neuro in effect immediately prior to the
Effective Time shall be the Bylaws of the Parent Corporation until duly amended
or repealed.
2.6 Directors and Officers. The directors of Neuro in office immediately
prior to the Effective Time, together with such two additional Persons as Neuro
may desire to appoint, shall serve as the directors of the Parent Corporation
from and after the Effective Time in accordance with the Bylaws of LUSA. The
officers of Neuro in office immediately prior to the Effective Time, together
with such additional Persons as may thereafter be elected, shall be appointed by
the Board to serve as the officers of LUSA from and after the Effective Time in
accordance with the Bylaws of the LUSA.
2.7 Exchange of Shares. Subject to the provisions of this Article II, at
the Effective Time, by virtue of this Agreement and without any further action
on the part of LUSA, Neuro or the stockholders of any of the foregoing, the
shares of LUSA shall be exchanged as follows:
Each share of Neuro Shareholders Common Stock issued and outstanding
immediately prior to the Effective Time shall be exchanged into one share of
Common Stock of the Parent Corporation, LUSA, the Consideration Shares shall,
upon issuance and delivery to the stockholders of Neuro in accordance with the
terms hereof, be fully paid, validly issued and non-assessable, but shall not be
registered securities under the Securities Act of 1933, as amended, (the
"Securities Act") pursuant to a valid exemption thereunder.
2.8 Exchange of Shares. At the Closing, the Neuro Shareholders shall
surrender each certificate or certificates which represented shares of Neuro's
Common Stock immediately prior to the Effective Time (the "Certificates") and
shall promptly upon surrender thereof receive in exchange therefore the number
of whole Consideration Shares issuable in respect of all shares of Neuro's
Common Stock held by such Neuro Shareholder (rounded to the nearest share). LUSA
shall not be obligated to deliver the consideration to which a Neuro Shareholder
is entitled as a result of the Transaction until such Person surrenders its
Certificate or Certificates for exchange as provided in this Section 2.8. Any
other provision of this Agreement notwithstanding, LUSA shall not be liable to a
holder of Neuro's Common Stock for any amounts paid or property delivered in
good faith to a public official pursuant to any applicable abandoned property,
escheat or similar law.
2.9 Rights of Former Neuro Shareholders. At the Effective Time, the
stock transfer books of Neuro shall be closed as to holders of Neuro Common
Stock immediately prior to the Effective Time and no transfer of Neuro Common
Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 2.8, each
Certificate theretofore representing shares of Neuro Common Stock shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Section 2.7 in exchange therefore. Whenever a
dividend or other distribution is declared by LUSA on the LUSA Common Stock, the
record date for which is at or after the Effective Time, the declaration shall
include dividends or other distributions on all shares of LUSA Common Stock
issuable pursuant to this Agreement, but no dividend or other distribution
payable to the holders of record of LUSA Common Stock as of any time subsequent
to the Effective Time shall be delivered to the holder of any Certificate until
such holder surrenders such Certificate for exchange as provided in Section 2.8.
However, upon surrender of such Certificate, both the LUSA Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered dividends payable in respect thereof
(without interest) shall be delivered and paid with respect to each share
represented by such Certificate.
2.10 Legending of Securities. Each certificate for LUSA Common Stock to
be issued to the Neuro Shareholders as part of the Transaction Consideration
shall bear substantially the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, OR ANY STATE SECURITIES LAWS. THESE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED. OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR LAWS, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT, IN THE CIRCUMSTANCES,
REQUIRED UNDER SAID ACT".
2.11 Fractional Shares. Notwithstanding any other provision of this
Agreement, if the Sellers would otherwise have been entitled to receive a
fraction of a share of LUSA Common Stock (after taking into account all
certificates delivered by the Neuro stockholders), the number of shares issuable
to the Neuro stockholder shall be rounded up to the next whole number.
2.12 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by such Neuro stockholder (setting forth the number of
shares of Neuro Common Stock represented by such lost, stolen or destroyed
Certificates), LUSA shall issue such Neuro Shareholder the Consideration Shares
to which such Neuro Shareholder is entitled.
ARTICLE III
Representations and Warranties of LUSA
In order to induce Neuro and Stockholders to enter into this Agreement
and to consummate the transactions contemplated hereby, LUSA makes the
representations and warranties set forth below to Neuro and Stockholders.
3.1 Organization; Standing and Power. LUSA is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado. LUSA has all requisite
right, power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. LUSA has all corporate right,
power and authority to own or lease and operate their properties, and to conduct
their business as presently conducted. LUSA is duly qualified to transact
business as a foreign corporation in all jurisdictions where the ownership or
leasing of their properties or the conduct of its business requires such
qualification.
3.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement by LUSA, and all other agreements to be executed,
delivered and performed by LUSA pursuant to this Agreement (collectively, the
"Purchaser Documents") and the consummation by LUSA of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate or individual action on the part of LUSA as applicable. This Agreement
have been duly executed and delivered by LUSA, and constitute the legal, valid
and binding obligation of LUSA, enforceable in accordance with their respective
terms, except to the extent that their enforcement is limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.
3.3 No Violation or Conflict. The execution, delivery and performance
of this Agreement by LUSA, Shareholders and Neuro and the consummation by LUSA,
Shareholders and Neuro of the transactions contemplated hereby and thereby: (a)
do not violate or conflict with any provision of law or regulation (whether
federal, state or local), or any writ, order or decree of any court or
governmental or regulatory authority, or any provision of LUSA Articles or
Certificate of Incorporation or Bylaws; and (b) do not and will not, with or
without the passage of time or the giving of notice, result in the breach of, or
constitute a default (or an event that with notice or lapse of time or both
would become a default), cause the acceleration of performance, give to others
any right of termination, amendment, acceleration or cancellation of or require
any consent under, or result in the creation of any lien, charge or encumbrance
upon any property or assets of LUSA pursuant to any instrument or agreement to
which LUSA is a party or by which LUSA or their respective properties may be
bound or affected, other than instruments or agreements as to which consent
shall have been obtained at or prior to the Closing, each of which instruments
or agreements is listed in Schedule 3.3 hereto.
3.4 Consents of Governmental Authorities and Others. No consent,
approval, order or authorization of, or registration, declaration, qualification
or filing with any federal, state or local governmental or regulatory authority,
or any other Person, is required to be made by LUSA in connection with the
execution, delivery or performance of this Agreement by LUSA, or the
consummation by LUSA of the transactions contemplated hereby.
3.5 Conduct of Business. Except as disclosed on Schedule 3.5 hereto,
since December 31, 2004, LUSA has conducted its businesses in the ordinary and
usual course consistent with past practices and there has not occurred any
adverse change in the condition (financial or otherwise), results of operations,
properties, assets, liabilities, business or prospects of LUSA, and no such
change is threatened. Without limiting the generality of the foregoing, except
as disclosed on Schedule 3.6, since December 31, 2004, LUSA has not: (a) amended
its Articles of Incorporation or Bylaws except as to a reverse split of one for
50 and authorization of a name change ; (b) issued, sold or authorized for
issuance or sale, shares of any class of its securities (including, but not
limited to, by way of stock split or dividend) or any subscriptions, options,
warrants, rights or convertible securities or entered into any agreements or
commitments of any character obligating it to issue or sell any such securities;
(c) redeemed, purchased or otherwise acquired, directly or indirectly, any
shares of its capital stock or any option, warrant or other right to purchase or
acquire any such capital stock; (d) suffered any damage, destruction or loss,
whether or not covered by insurance, which has had or could reasonably be
expected to have a Material Adverse Effect on any of its properties, assets,
business or prospects; (e) granted or made any mortgage or pledge or subjected
itself or any of its properties or assets to any lien, charge or encumbrance of
any kind; (f) made or committed to make any capital expenditures in excess of
$10,000; (g) become subject to any Guaranty; (h) granted any increase in the
compensation payable or to become payable to directors, officers or employees
(including, without limitation, any such increase pursuant to any severance
package, bonus, pension, profit-sharing or other plan or commitment); (i)
entered into any agreement which would be a Material Agreement, or amended or
terminated any existing Material Agreement; (j) been named as a party in any
Litigation, or become the focus of any investigation by any government or
regulatory agency or authority; (k) declared or paid any dividend or other
distribution with respect to its capital stock; or (l) experienced any other
event or condition of any character which has had or to LUSA's Knowledge, could
reasonably be expected to have a Material Adverse Effect on LUSA.
3.6 Litigation. There are no actions, suits, investigations, claims or
proceedings ("Litigation") pending or, to the Knowledge of LUSA, threatened
before any court or by or before any governmental or regulatory authority or
arbitrator, (a) affecting LUSA (as plaintiff or defendant) or (b) against LUSA
relating to LUSA's Common Stock or the transactions contemplated by this
Agreement and there exist no facts or circumstances to the Knowledge of LUSA
creating any reasonable basis for the institution of any Litigation against
LUSA.
3.7 Brokers. Neither of LUSA, nor Neuro has employed any broker or
finder, and none of them has incurred or will incur, directly or indirectly, any
broker's, finder's, investment banking or similar fees, commissions or expenses
in connection with the transactions contemplated by this Agreement.
3.8 Compliance. LUSA is in compliance with all federal, state, local
and foreign laws, ordinances, regulations, judgments, rulings, orders and other
requirements applicable to LUSA and its respective assets and properties,
including, without limitation, those relating to the registration and sale of
the LUSA Common Stock. LUSA is not subject to any judicial, governmental or
administrative inquiry, investigation, order, judgment or decree.
3.9 Charter, Bylaws and Corporate Records. A true, correct and complete
copy of (a) the Articles of Incorporation of LUSA as amended and in effect on
the date hereof, (b) the Bylaws of LUSA, as amended and in effect on the date
hereof, and (c) the minute books of LUSA (containing all corporate proceedings
from the date of incorporation) have been furnished to Neuro. Such minute books
contain accurate records of all meetings and other corporate actions of the
board of directors, committees of the board of directors, incorporators and
shareholders of LUSA from the date of its incorporation to the date hereof which
were memorialized in writing. No actions have been taken since the date of LUSA
incorporation that are not memorialized in writing.
3.10 Subsidiaries and. LUSA has no Subsidiaries.
3.11 Capitalization. The authorized capital stock of LUSA consists of
50,000,000 shares of common stock, of which 786,265 shares are issued and
outstanding (the "Outstanding LUSA Common Stock"). All shares of Outstanding
LUSA Common Stock have been duly authorized, are validly issued and outstanding,
and are fully paid and non-assessable. No securities issued by LUSA from the
date of its incorporation to the date hereof were issued in violation of any
statutory, contractual or common law preemptive rights. There are no dividends
which have accrued or been declared but are unpaid on the capital stock of LUSA.
All taxes required to be paid in connection with the issuance and any transfers
of LUSA's capital stock have been paid. All permits or authorizations required
to be obtained from or registrations required to be effected with any Person in
connection with any and all issuances of securities of LUSA from the date of
LUSA's incorporation to the date hereof have been obtained or effected and all
securities of LUSA have been issued and are held in accordance with the
provisions of all applicable securities or other laws. The Outstanding LUSA
Common Stock constitutes one hundred percent (100%) of the issued and
outstanding capital stock of LUSA. The Consideration Shares shall, upon issuance
and delivery to the Neuro stockholders in accordance with the terms hereof, be
fully paid, validly issued and non-assessable, but shall not be registered
securities under the Securities Act of 1933. There are no registration rights
outstanding which relate to the Outstanding LUSA Common Stock and, to the
Knowledge of LUSA, there are no voting trusts, proxies or other agreements or
understandings with respect to any equity security of any class of LUSA.
3.12 Rights, Warrants, Options. There are no outstanding (a) securities
or instruments convertible into or exercisable for any of the capital stock or
other equity interests of LUSA; (b) options, warrants, subscriptions, puts,
calls, or other rights to acquire capital stock or other equity interests of
LUSA; or (c) commitments, agreements or understandings of any kind, including
employee benefit arrangements, relating to the issuance or repurchase by LUSA of
any capital stock or other equity interests of LUSA, or any instruments
convertible or exercisable for any such securities or any options, warrants or
rights to acquire such securities.
3.13 Commission Filings and Financial Statements. All of the Periodic
Reports of LUSA required to satisfy the information requirements of Section 13
of the Exchange Act have been filed with the Commission, have been true,
accurate and complete in all material respects and have been filed in compliance
with the requirements of the Exchange Act. The Financial Statements of LUSA: (a)
have been prepared in accordance with the books of account and records of LUSA;
(b) fairly present, and are true, correct and complete statements in all
material respects of LUSA's financial condition and the results of its
operations at the dates and for the periods specified in those statements; and
(c) have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") consistently applied with prior periods.
3.14 Absence of Undisclosed Liabilities. Other than as disclosed by the
Periodic Reports, the Financial Statements of LUSA or as disclosed on Schedule
3.14, LUSA do not have any direct or indirect indebtedness, liability, claim,
loss, damage, deficiency, obligation or responsibility, known or unknown, fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise, including, without
limitation, liabilities on account of taxes, other governmental charges or
Litigation, whether or not of a kind required by GAAP to be set forth on a
financial statement ("Liabilities"). Except as listed on Schedule 3.14, LUSA and
Purchaser do not have any Liabilities other than Liabilities fully and
adequately reflected in the Periodic Reports or the Financial Statements of
LUSA. LUSA has no Knowledge of any circumstances, conditions, events or
arrangements which may hereafter give rise to any Liabilities of LUSA, except as
set forth on Schedule 3.14.
3.15 Real Property and Mineral Leases. LUSA do not own any fee simple
interest in real property. Nor has it any mineral leases.
3.16 List of Accounts and Proxies. Set forth on Schedule 3.16 is: (a)
the name and address of each bank or other institution in which LUSA maintains
an account (cash, securities or other) or safe deposit box; (b) the name and
phone number of LUSA's contact person at such bank or institution; (c) the
account number of the relevant account and a description of the type of account;
(d) the name of each person authorized by LUSA to effect transactions therewith
or to have access to any safe deposit box or vault; and (e) all proxies, powers
of attorney or other like instruments to act on behalf of LUSA in matters
concerning its business or affairs.
3.17 Personnel. Schedule 3.17 contains the names and annual salary
rates and other compensation of all officers, directors, consultants and
employees of LUSA (including compensation paid or payable by LUSA under any
employee benefit or option plans). There are no employee policies, employee
manuals or other written statements of rules or policies as to working
conditions, vacation and sick leave.
3.18 Employment Agreements and Employee Benefit Plans. LUSA has not had
any and does not have any defined contribution plan and it is not (and was
never) part of a controlled group contributing to any defined contribution plan
and is not and was never a party to any collective bargaining agreement or other
employment contracts. LUSA has not, nor does it now contribute to any pension,
profit-sharing, option, other incentive plan, or any other type of Employee
Benefit Plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), or any health, dental, vision, long
term disability, short term disability, life insurance or other welfare benefits
plan, or have any obligation to or customary arrangement with employees for
bonuses, incentive compensation, vacations, severance pay, insurance, or other
benefits, and it is not now (and was never) a part of a controlled group with
regard to any of the foregoing. Schedule 3.17 also contains a true and correct
statement of the names, relationship with LUSA, present rates of compensation
(whether in the form of salary, bonuses, commissions, or other supplemental
compensation now or hereafter payable), and aggregate compensation for the
fiscal year ended December 31, 2004 of each director, officer, consultant or
employee of LUSA. Except as set forth on Schedule 3.17, since December 31, 2004,
LUSA has not changed the rate of compensation of any of its directors, officers,
consultants or employees, and LUSA will not be required to make any severance
payments to any of its directors, officers, consultants or employees as a result
of the Transaction.
There are no complaints, charges, claims, allegations,
grievances, or litigations pending or threatened which reflect or pertain to:
(i) any federal, state or local labor, employment, anti-discrimination, workers
compensation, disability or unemployment law, regulation or ordinance; (ii) any
claim for wrongful discharge, harassment, discrimination, breach of employment
contract or employment-related tort; or (iii) any employment agreement,
restrictive covenant, non-competition agreement or employee confidentiality
agreement, which, in any such case, if adversely determined, could reasonably be
expected to have a Material Adverse Effect on LUSA.
3.19 Taxes.
(a) LUSA has properly prepared and timely filed all Tax Returns (as
defined below) relating to any and all Taxes (as defined below) concerning or
attributable to it or its operations for any period ending on or before the
Closing Date and such Tax Returns are true, correct and complete in all material
respects and have been completed in accordance with applicable Laws (as defined
below).
(b) All Taxes (whether or not shown on any Tax Return) payable by LUSA
have been fully and timely paid. The cash reserves or accruals for Taxes
provided in the books and records of LUSA with respect to any period for which
Tax Returns have not yet been filed or for which Taxes are not yet due and owing
have been established in accordance with GAAP and are, or prior to the Closing
Date, will be, sufficient for all unpaid Taxes of LUSA through and including the
Closing Date (including, without limitation, with respect to any Taxes resulting
from the transactions contemplated by this Agreement).
(c) Neither LUSA nor any Person on behalf of or with respect to LUSA
has executed or filed any agreements or waivers extending any statute of
limitations on or extending the period for the assessment or collection of any
Tax. No power of attorney on behalf of LUSA with respect to any Tax matter is
currently in force.
(d) LUSA is not a party to any Tax-sharing agreement or similar
arrangement with any other party (whether or not written), and LUSA has not
assumed any Tax obligations of, or with respect to any transaction relating to,
any other Person or agreed to indemnify any other Person with respect to any
Tax.
(e) No Tax Return concerning or relating to LUSA or its operations has
ever been audited by a government or taxing authority, nor is any such audit in
process or pending, and LUSA has not been notified of any request for such an
audit or other examination. No claim has been made by a taxing authority in a
jurisdiction where Tax Returns concerning or relating to LUSA or its operations
have not been filed that it is or may be subject to taxation by that
jurisdiction.
(f) LUSA has never been included in any consolidated, combined, or
unitary Tax Return.
(g) LUSA has complied in all material respects with all applicable Laws
relating to the payment and withholding of Taxes and has duly and timely
withheld from employee salaries, wages and other compensation and has paid over
to the appropriate taxing authorities all amounts required to be so withheld and
paid over for all periods under all applicable laws.
(h) Neither LUSA nor any other Person on behalf of and with respect to
LUSA has (i) agreed to or is required to make any adjustments pursuant to
Section 481(a) of the Internal Revenue Code of 1986 ("Code") or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by LUSA, and LUSA has no Knowledge that the Internal Revenue
Service ("IRS") has proposed any such adjustment or change in accounting method,
or has any application pending with any taxing authority requesting permission
for any changes in accounting methods that relate to the business or operations
of LUSA, (ii) executed or entered into a closing agreement pursuant to Section
7121 of the Code or any predecessor provision thereof or any similar provision
of state, local or foreign law with respect to LUSA or (iii) requested any
extension of time within which to file any Tax Return concerning or relating to
LUSA or its operations, which Tax Return has since not been filed.
(i) No property owned by LUSA is (i) property required to be treated as
being owned by another Person pursuant to the provisions of Section 168(f)(8) of
the Internal Revenue Code of 1954, as amended and in effect immediately prior to
the enactment of the Tax Reform Act of 1986, (ii) constitutes "tax-exempt use
property" within the meaning of Section 168(h)(1) of the Code or (iii) is
"tax-exempt bond financed property" within the meaning of Section 168(g) of the
Code.
(j) LUSA is not subject to any private letter ruling of the IRS or
comparable rulings of other taxing authorities.
(k) LUSA does not own any interest in any entity that is treated as a
partnership for U.S. federal income Tax purposes or would be treated as a
pass-through or disregarded entity for any Tax purpose.
(l) LUSA has not constituted either a "distributing corporation" or a
"controlled corporation" within the meaning of Section 355(a)(1)(A) of the Code
in a distribution qualifying for tax-free treatment under Section 355 of the
Code (i) in the two years prior to the date of this Agreement or (ii) in a
distribution that could otherwise constitute part of a "plan" or "series of
transactions" (within the meaning of Section 355(e) of the Code) in conjunction
with this Agreement.
(m) LUSA has no elections in effect for U.S. federal income Tax purposes
under Sections 108, 168, 441, 472, 1017, 1033 or 4977 of the Code.
The term "Law" or "Laws" as used in this Agreement shall mean
any federal, state, local or foreign statue, law, ordinance, regulation, rule,
code, order or other requirement or rule of law.
The term "Tax" or "Taxes" as used in this Agreement shall mean
(i) all income, excise, gross receipts, ad valorem, sales, use, employment,
franchise, profits, gains, property, transfer, payroll, withholding, severance,
occupation, social security, unemployment compensation, alternative minimum,
value added, intangibles or other taxes, fees, stamp taxes, duties, charges,
levies or assessments of any kind whatsoever (whether payable directly or by
withholding), together with any interest and any penalties, fines, additions to
tax or additional amounts imposed by any Governmental Authority with respect
thereto, (ii) any liability for the payment of any amounts of the type described
in (i) as a result of being a member of a consolidated, combined, unitary or
aggregate group for any Taxable period, and (3) any liability for the payment of
any amounts of the type described in (i) or (ii) as a result of being a
transferee or successor to any person or as a result of any express or implied
obligation to indemnify any other Person.
The term "Tax Returns" as used in this Agreement shall mean returns,
declarations, reports, claims for refund, information returns or other documents
(including any related or supporting schedules, statements or information) filed
or required to be filed in connection with the determination, assessment or
collection of any Taxes of any party or the administration of any laws,
regulations or administrative requirements relating to any Taxes.
3.20 Material Agreements. Schedule 3.20 sets forth a brief description
of all material written and oral contracts or agreements relating to LUSA
(except with respect to the LUSA Leases, which are set forth on Schedule 3.16,
which is hereby incorporated by reference into Schedule 3.21 and made a part
thereof), including without limitation any: (i) contract resulting in a
commitment or potential commitment for expenditure or other obligation or
potential obligation, or which provides for the receipt or potential receipt,
involving in excess of Ten Thousand Dollars ($10,000.00) in any instance, or
series of related contracts that in the aggregate give rise to rights or
obligations exceeding such amount; (ii) indenture, mortgage, promissory note,
loan agreement, guarantee or other agreement or commitment for the borrowing or
lending of money or encumbrance of assets involving more than Ten Thousand
Dollars ($10,000.00) in each instance; (iii) agreement which restricts LUSA from
engaging in any line of business or from competing with any other Person; or
(iv) any other contract, agreement, instrument, arrangement or commitment that
is material to the condition (financial or otherwise), results of operation,
assets, properties, liabilities, business or prospects of LUSA (collectively,
and together with the LUSA Leases, employment agreements, Employee Benefit Plans
and all other agreements required to be disclosed on any Schedule to this
Agreement, the "Material LUSA Agreements"). LUSA has previously furnished to
Neuro true, complete and correct copies of all written agreements, as amended,
required to be listed on Schedule 3.20.
Except as set forth on Schedule 3.20, none of the Material
LUSA Agreements was entered into outside the ordinary course of business of LUSA
, or contains any provisions that will impair or adversely affect the operations
of LUSA . The Material LUSA Agreements are each in full force and effect and are
the valid and legally binding obligations of LUSA and, to the Knowledge of LUSA,
the other parties thereto. LUSA has not received notice of default by LUSA under
any of the Material LUSA Agreements. LUSA has not received notice of any pending
or threatened Litigation relating to any of the Material LUSA Agreements.
3.21 Guaranties. Except as set forth on Schedule 3.21, LUSA is not a party
to any Guaranty, and no Person is a party to any Guaranty for the benefit of
LUSA .
3.22 Environmental Matters. Property used by LUSA presently or in the
past has been used to manufacture, treat, store, or dispose of any hazardous
substance and such property is free of all such substances such that the
condition of the property is in compliance with applicable Environmental Laws
(as defined below). As for it has become aware, LUSA is in compliance with all
laws, regulations and other federal, state or local governmental requirements,
and all applicable judgments, orders, writs, notices, decrees, permits,
licenses, approvals, consents or injunctions relating to the generation,
management, handling, transportation, treatment, disposal, storage, delivery,
discharge, release or emission of any waste, pollutant or toxic or hazardous
substance (including, without limitation, asbestos, radioactive material and
pesticides) (the "Environmental Laws") applicable to LUSA or its business as a
result of any hazardous substance utilized by LUSA in its business or otherwise
placed at any of the facilities owned, leased or operated by LUSA, or in which
LUSA has a contractual interest. Neither LUSA (or its directors or officers),
has received any complaint, notice, order, or citation of any actual, threatened
or alleged noncompliance by LUSA with any Environmental Laws, and there is no
Litigation pending or, to LUSA, threatened against any of LUSA, or any director
or officer of LUSA, with respect to any violation or alleged violation of the
Environmental Laws, and to LUSA, there is no reasonable basis for the
institution of any such Litigation.
3.23 Absence of Certain Business Practices. None of the LUSA Employees,
nor LUSA, nor any Affiliates thereof nor, to the Knowledge of each, any other
Person acting on behalf of LUSA has with respect to the business or activities
of LUSA: (a) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits, regardless
of their nature or type, from any customer, supplier, trading company, shipping
company, governmental employee or other Person with whom LUSA has done business
directly or indirectly; or (b) directly or indirectly, given or agreed to give
any gift or similar benefit to any customer, supplier, trading company, shipping
company, governmental employee or other Person who is or may be in a position to
help or hinder the business of LUSA (or assist LUSA in connection with any
actual or proposed transaction) which (i) may subject LUSA to any material
damage or any penalty in any Litigation, (ii) if not given in the past, may have
had a Material Adverse Effect on the assets, business or operations of LUSA as
reflected in the Periodic Reports or Financial Statements of LUSA or (iii) if
not continued in the future, may materially adversely affect the assets,
business or operations of LUSA or subject LUSA to suit or penalty in any private
or governmental litigation or proceeding.
3.24 Disclosure. No representation or warranty of LUSA contained in
this Agreement, and no statement, report, or certificate furnished by or on
behalf of LUSA, Purchaser to Neuro or its agents pursuant hereto or in
connection with the transactions contemplated hereby, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading or omits
or will omit to state a material fact necessary in order to provide Neuro with
full and proper information as to the business, financial condition, assets,
liabilities, results of operation or prospects of LUSA and the value of their
properties or the ownership of LUSA .
ARTICLE IV
Representations and Warranties of Neuro
In order to induce LUSA to enter into this Agreement and to consummate
the transactions contemplated hereby, Neuro makes the representations and
warranties set forth below to LUSA.
4.1 Organization. Neuro is a Corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado. Neuro is
duly qualified to transact business as a foreign corporation in all
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to so qualify
would not have a Material Adverse Effect on Neuro. Neuro has the requisite power
and authority to (a) own or lease and operate its properties and (b) conduct its
business as presently conducted.
4.2 Authorization; Enforceability. Neuro has the capacity to execute,
deliver and perform this Agreement. This Agreement and all other documents
executed and delivered by Neuro pursuant to this Agreement have been duly
executed and delivered and constitute the legal, valid and binding obligations
of Neuro, assuming the due authorization, execution and delivery of this
Agreement by LUSA, enforceable in accordance with their respective terms, except
to the extent that their enforcement is limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights generally and by general principals of equity.
4.3 No Violation or Conflict. The execution, delivery and performance
of this Agreement and the other documents contemplated hereby by Neuro, and the
consummation by Neuro of the transactions contemplated hereby: (a) do not
violate or conflict with any provision of law or regulation (whether federal,
state or local), or any writ, order or decree of any court or governmental or
regulatory authority, or any provision of Neuro's Certificate of Incorporation
or Bylaws; and (b) except as set forth on Schedule 4.3 hereto, do not, with or
without the passage of time or the giving of notice, result in the breach of, or
constitute a default, cause the acceleration of performance or require any
consent under, or result in the creation of any lien, charge or encumbrance upon
any property or assets of Neuro pursuant to any instrument or agreement to which
Neuro is a party or by which Neuro or its properties may be bound or affected,
other than instruments or agreements as to which consent shall have been
obtained at or prior to the Closing, each of which instruments or agreements is
listed in Schedule 4.3 hereto.
4.4 Consents of Governmental Authorities and Others. No consent,
approval or authorization of, or registration, qualification or filing with any
federal, state or local governmental or regulatory authority, or any other
Person, is required to be made by Neuro in connection with the execution,
delivery or performance of this Agreement by Neuro or the consummation by them
of the transactions contemplated hereby, excluding the execution, delivery and
performance of this Agreement by the Sellers.
4.5 Brokers. Neuro has not employed any broker or finder, and has not
incurred and will not incur any broker's, finder's, investment banking or
similar fees, commissions or expenses in connection with the transactions
contemplated by this Agreement.
4.6 Charter Records. A true, correct and complete copy of the Certificate
of Organization of Neuro, as amended and in effect on the date hereof,
Incorporation and Bylaws have been furnished.
4.7 Subsidiaries and Investments. Except as described on Schedule 4.7,
Neuro has no Subsidiaries or Investments.
4.8 Capitalization. The authorized capital stock of Neuro consists of
50,000,000 shares of common stock, (the "Neuro Common Stock"). Neuro will have
issued and outstanding 9,000,000 shares of Neuro Common Stock (the "Outstanding
Neuro Common Stock"). The Outstanding Neuro Common Stock shall then constitute
one hundred percent (100%) of the issued and outstanding capital stock of Neuro.
The Outstanding Neuro Common Stock is owned by its stockholders will be in the
amounts set forth on Schedule A. All of the Outstanding Neuro Common Stock will
have been duly authorized, is validly issued and outstanding, and is fully paid
and non-assessable. No securities issued by Neuro from the date of its
incorporation to the date hereof were issued in violation of any statutory or
common law preemptive rights. All taxes required to be paid in connection with
the issuance and any transfers of Neuro's capital stock have been paid. All
permits or authorizations required to be obtained from or registrations required
to be effected with any Person in connection with any and all issuances of
securities of Neuro from the date of its incorporation to the date hereof have
been obtained or effected and all securities of Neuro have been issued and are
held in accordance with the provisions of all applicable securities or other
laws.
4.9 Rights, Warrants, Options. There are no outstanding (a) securities
or instruments convertible into or exercisable for any of the capital stock or
other equity interests of Neuro; (b) options, warrants, subscriptions or other
rights to acquire capital stock or other equity interests of Neuro; or (c)
Commitments, agreements or understandings of any kind, including employee
benefit arrangements, relating to the issuance or repurchase by Neuro of any
capital stock or other equity interests of Neuro, or any instruments convertible
or exercisable for any such securities or any options, warrants or rights to
acquire such securities.
ARTICLE V
Additional Agreements
5.1 Survival of the Representations and Warranties. The representations
and warranties contained in Sections 3.1, 3.2, 3.12, 3.13 and 3.14 and the
covenants in Section 7.1 and 7.3 shall survive the Closing and remain in effect
indefinitely. The representations and warranties contained in Section 3.23
(relating to environmental matters) shall survive the Closing until the
expiration of two (2) years from the Closing Date. The representations and
warranties contained in Section 3.20 (relating to taxes) shall survive the
Closing until the later of the expiration of twenty four months from the Closing
Date or the expiration of the last day of the statute of limitations applicable
to any action against LUSA based upon the non-payment of taxes, or other
violation of the Code, which occurred prior to the Closing Date. Except as set
forth above, the representations and warranties and covenants of LUSA contained
in this Agreement shall survive the Closing until the expiration of twenty-four
months from the Closing Date. No claim for indemnity with respect to breaches of
representations and warranties may be brought by any party hereto, other than a
claim for fraud or intentional misrepresentation, after expiration of the
applicable survival period therefore as set forth in this Section 5.1
5.2 Investigation. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. All statements contained herein or in any
schedule, certificate, exhibit, list or other document required to be delivered
pursuant hereto, shall be deemed to be representations and warranties for
purposes of this Agreement; provided, that any knowledge or materiality
qualifications contained herein shall be applicable to such other documents.
5.3 Indemnity Procedure. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party".
(a) An Indemnified Party under this Agreement shall, with respect to claims
asserted against such party by any third party, give written notice to the
Indemnifying Party of any liability which might give rise to a claim for
indemnity under this Agreement within sixty (60) business days of the receipt of
any written claim from any such third party, but not later than twenty (20) days
prior to the date any answer or responsive pleading is due, and with respect to
other matters for which the Indemnified Party may seek indemnification, give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim for indemnity; provided, however, that any failure to give
such notice will not waive any rights of the Indemnified Party except to the
extent the rights of the Indemnifying Party are materially prejudiced.
(b) The Indemnifying Party shall have the right, at its election, to take over
the defense or settlement of such claim by giving written notice to the
Indemnified Party at least fifteen (15) days prior to the time when an answer or
other responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, it may conduct the defense of such claim
through counsel of its choosing (subject to the Indemnified Party's approval of
such counsel, which approval shall not be unreasonably withheld), shall be
solely responsible for the expenses of such defense and shall be bound by the
results of its defense or settlement of the claim. The Indemnifying Party shall
not settle any such claim without prior notice to and consultation with the
Indemnified Party, and no such settlement involving any equitable relief or
which might have an adverse effect on the Indemnified Party may be agreed to
without the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld). So long as the Indemnifying Party is diligently
contesting any such claim in good faith, the Indemnified Party may pay or settle
such claim only at its own expense and the Indemnifying Party will not be
responsible for the fees of separate legal counsel to the Indemnified Party,
unless the named parties to any proceeding include both parties and
representation of both parties by the same counsel would be inappropriate. If
the Indemnifying Party does not make such election, or having made such election
does not, in the reasonable opinion of the Indemnified Party proceed diligently
to defend such claim, then the Indemnified Party may (after written notice to
the Indemnifying Party), at the expense of the Indemnifying Party, elect to take
over the defense of and proceed to handle such claim in its discretion and the
Indemnifying Party shall be bound by any defense or settlement that the
Indemnified Party may make in good faith with respect to such claim. In
connection therewith, the Indemnifying Party will fully cooperate with the
Indemnified Party should the Indemnified Party elect to take over the defense of
any such claim.
(c) The parties agree to cooperate in defending such third party claims and the
Indemnified Party shall provide such cooperation and such access to its books,
records and properties as the Indemnifying Party shall reasonably request with
respect to any matter for which indemnification is sought hereunder; and the
parties hereto agree to cooperate with each other in order to ensure the proper
and adequate defense thereof.
With regard to claims of third parties for which indemnification is
payable hereunder, such indemnification shall be paid by the Indemnifying Party
upon the earlier to occur of: (i) the entry of a judgment against the
Indemnified Party and the expiration of any applicable appeal period, or if
earlier, five (5) days prior to the date that the judgment creditor has the
right to execute the judgment; (ii) the entry of an unappealable judgment or
final appellate decision against the Indemnified Party; or (iii) a settlement of
the claim. Notwithstanding the foregoing, provided that there is no dispute as
to the applicability of indemnification, the reasonable expenses of counsel to
the Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party if such expenses are a liability of the Indemnifying Party. With regard to
other claims for which indemnification is payable hereunder, such
indemnification shall be paid promptly by the Indemnifying Party upon demand by
the Indemnified Party.
ARTICLE VI
Closing; Deliveries; Conditions Precedent
6.1 Closing; Effective Date. All proceedings taken and all documents
executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
6.2 Deliveries
(a) At Closing, LUSA shall deliver the following documents to Neuro:
(1) the certificates representing the Consideration
Shares;
(2) the written resignation of all LUSA officers from all
of their positions as LUSA or officers, all to be
effective upon Closing;
(3) the minute books of LUSA, including its corporate
seals, unissued stock certificates, stock registers,
Articles of Incorporation, Bylaws and corporate
minutes approving the terms and conditions of this
Agreement and the other documents contemplated hereby
and the transactions contemplated hereby and thereby;
(4) certificates issued by the Secretary of State of
Colorado, as of a recent date, as to the good
standing of LUSA in its jurisdiction of incorporation
and certifying its Articles of Incorporation;
(5) certificates issued by the Secretary of State of
Colorado, as of a recent date, as to the good
standing of Purchaser in its jurisdiction of
incorporation and certifying its Certificate of
Incorporation;
(6) a certificate, dated the Closing Date, of an officer
of LUSA setting forth that authorizing resolutions
were adopted by LUSA and Purchaser's Boards of
Directors, approving the terms and conditions of this
Agreement and the other documents contemplated hereby
and the transactions contemplated hereby and thereby;
(7) the consents of any third party including, but not
limited to, parties to any of the Material Agreements
whose consent is required under the terms of any such
Material Agreement or otherwise;
(8) the certificates referred to in Section 6.3(d);
(9) the favorable opinion of Xxxxxxx Xxxxxxx, Esq.,
counsel to LUSA, dated the Closing Date, addressed to
Neuro, in the form of Exhibit C hereto; and
(10) such other documents and instruments as Neuro may
reasonably request.
(11) appointment by Board Minutes, of two new directors.
(b) At Closing, Neuro or its shareholders shall
deliver the following documents to LUSA:
(1) the Certificates of Neuro Common Stock to be
delivered to LUSA;
(2) a certificate of the Secretary of State of the State
of Colorado, as of a recent date, as to the good
standing of Neuro and certifying its Certificate of
Incorporation;
(3) a certificate, dated the Closing Date, of an officer
of Neuro setting forth that authorizing resolutions
were adopted by Neuro's Board of Directors, approving
the terms and conditions of this Agreement and the
other documents contemplated hereby and the
transactions contemplated hereby and thereby;
(4) the certificates referred to in Section 6.4(d); and
(5) such other documents and instruments as LUSA may
reasonably request.
6.3 Conditions Precedent to the Obligations of Neuro. Each and every
obligation of Neuro to consummate the transactions described in this Agreement
and any and all liability of Neuro to LUSA shall be subject to the fulfillment
on or before the Closing Date of the following conditions precedent:
(a) Representations and Warranties True. Each of the
representations and warranties of LUSA, contained herein or in any certificate
or other document delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as of the Closing Date with the same force and effect as though made on
and as of such date.
(b) Performance. LUSA shall have performed and complied in all
material respects with all of the agreements, covenants and obligations required
under this Agreement to be performed or complied with by them on or prior to the
Closing Date.
(c) No Material Adverse Change. Except as expressly permitted or
contemplated by this Agreement, no event or condition shall have occurred which
has adversely affected or may adversely affect in any respect the condition
(financial or otherwise) of LUSA .
(d) LUSA's Certificate. LUSA shall have delivered to Neuro a
certificate dated the Closing Date, certifying that the conditions specified in
Section 6.3(a), (b) and (c) above have been fulfilled and as to such other
matters as Neuro may reasonably request.
(e) No Litigation. No litigation, arbitration or other legal or
administrative proceeding shall have been commenced or be pending by or before
any court, arbitration panel or governmental authority or official, and no
statute, rule or regulation of any foreign or domestic, national or local
government or agency thereof shall have been enacted after the date of this
Agreement, and no judicial or administrative decision shall have been rendered
which enjoins or prohibits, or seeks to enjoin or prohibit, the consummation of
all or any of the transactions contemplated by this Agreement.
(f) Appointment. Messrs. and ____________ shall have been appointed
to the Board of Directors of LUSA effective at the Closing, and ____________
shall have been appointed subject to the 10 day Notice requirement of Section
14f of the Exchange Act. Xxxxx Xxxxxxx shall resign as President effective
immediately and as director effective 10 days after Notice under 14f as above.
Xxxxxx Xxxxxxx shall resign as Secretary effective immediately and Director
effective 10 days after Notice under 14f as above.
(g) Consents. LUSA shall have obtained all authorizations,
consents, waivers and approvals as may be required to consummate the
transactions contemplated by this Agreement including, but not limited to, those
with respect to any Material LUSA Agreement.
(h) No LUSA Options or Warrants Outstanding. On the Closing Date
there shall be no options, warrants or other securities convertible into or
exercisable for LUSA Common Stock outstanding.
(i) Opinion of Counsel. LUSA shall have obtained an opinion letter
from counsel to LUSA addressed to Neuro in form and substance reasonably
acceptable to Neuro, and such opinion shall not have been withdrawn.
6.4 Conditions Precedent to the Obligations of LUSA. Each and every
obligation of LUSA to consummate the transactions described in this Agreement
and any and all liability of LUSA to Neuro shall be subject to the fulfillment
on or before the Closing Date of the following conditions precedent:
(a) Representations and Warranties True. Each of the
representations and warranties of Neuro contained herein or in any certificate
or other document delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as of the Closing Date with the same force and effect as though made on
and as of such date.
(b) Performance. Neuro shall have performed and complied in all
material respects with all of the agreements, covenants and obligations required
under this Agreement to be performed or complied with by it on or prior to the
Closing Date.
(c) Neuro's Certificate. Neuro shall have delivered to LUSA, a
certificate addressed to LUSA, dated the Closing Date, certifying that the
conditions specified in Sections 6.4(a), and (b) above have been fulfilled.
(d) No Litigation. No litigation, arbitration or other legal or
administrative proceeding shall have been commenced or be pending by or before
any court, arbitration panel or governmental authority or official, and no
statute, rule or regulation of any foreign or domestic, national or local
government or agency thereof shall have been enacted after the date of this
Agreement, and no judicial or administrative decision shall have been rendered
which enjoins or prohibits, or seeks to enjoin or prohibit, the consummation of
all or any of the transactions contemplated by this Agreement.
(e) Consents. Neuro shall have obtained all authorizations,
consents, waivers and approvals as may be required to consummate the
transactions contemplated by this Agreement, including but not limited to, those
with respect to any Material Agreement of Neuro.
6.5 Best Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties shall use their respective best efforts in good
faith to take or cause to be taken as promptly as practicable all reasonable
actions that are within its power to cause to be fulfilled those of the
conditions precedent to its obligations or the obligations of the other parties
to consummate the transactions contemplated by this Agreement that are dependent
upon its actions, including obtaining all necessary consents, authorizations,
orders, approvals and waivers.
6.6 Termination. This Agreement and the transactions contemplated
hereby may be terminated (i) at any time by the mutual consent of the parties
hereto; (ii) by Neuro, or by LUSA, if the Closing has not occurred on or prior
to August 20, 2005 (such date of termination being referred to herein as the
"Termination Date"), provided the failure of the Closing to occur by such date
is not the result of the failure of the party seeking to terminate this
Agreement to perform or fulfill any of its obligations hereunder; (iii) by Neuro
at any time at or prior to Closing in its sole discretion if (1) any of the
representations or warranties of LUSA in this Agreement are not in all material
respects true, accurate and complete or if LUSA, breach in any material respect
any covenant contained in this Agreement, provided that such misrepresentation
or breach is not cured within ten (10) business days after notice thereof, but
in any event prior to the Termination Date or (2) any of the conditions
precedent to Neuro's obligations to conduct the Closing have not been satisfied
by the date required thereof; (iv) by LUSA at any time at or prior to Closing in
its sole discretion if (1) any of the representations or warranties of Neuro in
this Agreement are not in all material respects true, accurate and complete or
if Neuro breaches in any material respect any covenant contained in this
Agreement, provided that such misrepresentation or breach is not cured within
ten (10) business days after notice thereof, but in any event prior to the
Termination Date or (2) any of the conditions precedent to Neuro's
obligations to conduct the Closing have not been satisfied by the date required
thereof. If this Agreement is terminated pursuant to this Section 6.6, written
notice thereof shall promptly be given by the party electing such termination to
the other party and, subject to the expiration of the cure periods provided in
clauses (iii) and (iv) above, if any, this Agreement shall terminate without
further actions by the parties and no party shall have any further obligations
under this Agreement. Notwithstanding the preceding sentence, the respective
obligations of the parties under Sections 7.1 shall survive the termination of
this Agreement. Notwithstanding anything to the contrary contained herein, if
the termination of this Agreement is a result of the willful misrepresentation,
willful inaccuracy or omission in a representation, willful breach of warranty,
fraud or any willful failure to perform or comply with any covenant or agreement
contained herein, the aggrieved party shall be entitled to recover from the
non-performing party all out-of-pocket expenses which such aggrieved party has
incurred and the termination of this Agreement shall not be deemed or construed
as limiting or denying any other legal or equitable right or remedy of such
party.
ARTICLE VII
Covenants
7.1 General Confidentiality. LUSA acknowledges that the Intellectual
Property and all other confidential or proprietary information with respect to
the business and operations of Neuro are valuable, special and unique assets of
Neuro. LUSA shall not, at any time either before or after the Closing Date,
disclose, directly or indirectly, to any Person, or use or purport to authorize
any Person to use any confidential or proprietary information with respect to
Neuro, whether or not for LUSA's own benefit, without the prior written consent
of Neuro or unless required by law, including without limitation, (i) any of
Neuro's trade secrets, designs, formulae, drawings, Intellectual Property,
diagrams, techniques, research and development, specifications, data, know-how,
formats, marketing plans, business plans, budgets, strategies, forecasts or
client data; (ii) information relating to the products developed by Neuro, (iii)
the names of Neuro's customers and contacts, (iv) Neuro's marketing strategies,
(v) the names of Neuro's vendors and suppliers, (vi) the cost of materials and
labor, and the prices obtained for products or services sold (including the
methods used in price determination, manufacturing and sales costs), (vii) the
lists or other written records used in Neuro's business, including compensation
paid to employees and consultants and other terms of employment, production
operation techniques or any other confidential information of, about or
pertaining to the business of Neuro, and, (viii) all tangible material that
embodies any such confidential and proprietary information as well as all
records, files, memoranda, reports, price lists, drawings, plans, sketches and
other written and graphic records, documents, equipment, and the like, relating
to the business of Neuro, and (ix) any other confidential information or trade
secrets relating to the business or affairs of Neuro which LUSA may acquire or
develop in connection with or as a result of their performance of the terms and
conditions of this Agreement, excepting only such information as is already
known to the public or which may become known to the public without any fault of
LUSA, or in violation of any confidentiality restrictions; provided, however,
that the restrictions of this Section 7.1 shall not be applicable to LUSA in
connection with such Parties' enforcement of its rights under this Agreement.
LUSA acknowledges that Neuro would not enter into this Agreement without the
assurance that all such confidential and proprietary information will be used
for the exclusive benefit of Neuro.
7.2 Continuing Obligations. The restrictions set forth in Section 7.1
are considered by the parties to be reasonable for the purposes of protecting
the value of the business and goodwill of Neuro. LUSA's acknowledge that Neuro
would be irreparably harmed and that monetary damages would not provide an
adequate remedy to Neuro in the event the covenants contained in Section 7.1
were not complied with in accordance with their terms. Accordingly, LUSA agrees
that any breach or threatened breach by any of them of any provision of Section
7.1 shall entitle Neuro to injunctive and other equitable relief to secure the
enforcement of these provisions, in addition to any other remedies (including
damages) which may be available to Neuro. It is the desire and intent of the
parties that the provisions of Section 7.1 be enforced to the fullest extent
permissible under the laws and public policies of each jurisdiction in which
enforcement is sought. If any provision of Section 7.1 are adjudicated to be
invalid or unenforceable, the invalid or unenforceable provisions shall be
deemed amended (with respect only to the jurisdiction in which such adjudication
is made) in such manner as to render them enforceable and to effectuate as
nearly as possible the original intentions and agreement of the parties. In
addition, if any party brings an action to enforce Section 7.1 hereof or to
obtain damages for a breach thereof, the prevailing party in such action shall
be entitled to recover from the non-prevailing party all reasonable attorney's
fees and expenses incurred by the prevailing party in such action.
7.3 Satisfaction of Certain Expenses of the Transaction. Upon the
closing, Neuro provide funds to and pay expenses of the Transaction in an
aggregate amount of $_______ including costs, with such payments being made in
cash to the entities or persons and in the amounts identified on Schedule B
hereto.
7.4 Tax Treatment. Neither LUSA nor Neuro will knowingly take any
action, written or otherwise, which would result in the transactions
contemplated by this Agreement not being accounted for as a tax-free exchange
pursuant to Section 368(a)(1)(B) of the Code.
ARTICLE VIII
Miscellaneous
8.1 Notices. Any notice, demand, claim or other communication under
this Agreement shall be in writing and delivered personally or sent by certified
mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid
overnight courier to the parties at the addresses as follows (or at such other
addresses as shall be specified by the parties by like notice):
If to XXXX XXXX, Inc.
With a copy to: Xxxxxxx Xxxxxxx, Esq.
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Phone: (000) 000-0000
If to Neuro:
With a copy to:
and
Such notice shall be deemed delivered upon receipt against
acknowledgment thereof if delivered personally, on the third business day
following mailing if sent by certified mail, upon transmission against
confirmation if sent by facsimile and on the next business day if sent by
overnight courier.
8.2 Entire Agreement; Incorporation. This Agreement and the documents
and instruments and other agreements among the parties hereto as contemplated by
or referred to herein contain every obligation and understanding between the
parties relating to the subject matter hereof and merges all prior discussions,
negotiations, agreements and understandings, both written and oral, if any,
between them, and none of the parties shall be bound by any conditions,
definitions, understandings, warranties or representations other than as
expressly provided or referred to herein. All schedules, exhibits and other
documents and agreements executed and delivered pursuant hereto are incorporated
herein as if set forth in their entirety herein.
8.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs, personal
representatives, legal representatives, and permitted assigns.
8.4 Assignment. This Agreement may not be assigned by any party without
the written prior consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
8.5 Waiver and Amendment. Any representation, warranty, covenant, term
or condition of this Agreement which may legally be waived, may be waived, or
the time of performance thereof extended, at any time by the party hereto
entitled to the benefit thereof, and any term, condition or covenant hereof
(including, without limitation, the period during which any condition is to be
satisfied or any obligation performed) may be amended by the parties thereto at
any time. Any such waiver, extension or amendment shall be evidenced by an
instrument in writing executed on behalf of the party against whom such waiver,
extension or amendment is sought to be charged. No waiver by any party hereto,
whether express or implied, of its rights under any provision of this Agreement
shall constitute a waiver of such party's rights under such provisions at any
other time or a waiver of such party's rights under any other provision of this
Agreement. No failure by any party thereof to take any action against any breach
of this Agreement or default by another party shall constitute a waiver of the
former party's right to enforce any provision of this Agreement or to take
action against such breach or default or any subsequent breach or default by
such other party.
8.6 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement, except as otherwise
provided herein.
8.7 Severability. In the event that any one or more of the provisions
contained in this Agreement, or the application thereof, shall be declared
invalid, void or unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall remain in full force and effect and the
application of such provision to other Persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto. The
parties further agree to replace such invalid, void or unenforceable provision
with a valid and enforceable provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid, void or
unenforceable provision.
8.8 Expenses. Except as otherwise provided herein, each party agrees to
pay, without right of reimbursement from the other party, the costs incurred by
it incident to the performance of its obligations under this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, costs incident to the preparation of this Agreement, and the fees
and disbursements of counsel, accountants and consultants employed by such party
in connection herewith.
8.9 Headings. The table of contents and the section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of any provisions of this Agreement.
8.10 Other Remedies; Injunctive Relief. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity. In any action at law or suit in equity to enforce this Agreement or the
rights of the parties hereunder, the prevailing party in any such action or suit
shall be entitled to receive a reasonable sum for its attorneys' fees and all
other reasonable costs and expenses incurred in such action or suit.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be deemed valid and binding.
8.12 Remedies Exclusive. Except in the case of fraud or equitable
remedies expressly provided for herein, the parties acknowledge and agree that
the indemnification provisions set forth in Article V of this Agreement
constitute the parties' sole and exclusive remedy with respect to any and all
claims relating to the transactions contemplated by this Agreement.
Governing Law. This Agreement has been entered into and shall be construed and
enforced in accordance with the laws of the State of Colorado, without reference
to the choice of law principles thereof.
8.13 Jurisdiction and Venue. This Agreement shall be subject to the
exclusive jurisdiction of the courts of Jefferson County Colorado. The parties
to this Agreement agree that any breach of any term or condition of this
Agreement shall be deemed to be a breach occurring in the State of Colorado by
virtue of a failure to perform an act required to be performed in the State of
Colorado and irrevocably and expressly agree to submit to the jurisdiction of
the courts of the State of Colorado for the purpose of resolving any disputes
among the parties relating to this Agreement or the transactions contemplated
hereby. The parties irrevocably waive, to the fullest extent permitted by law,
any objection which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement, or any
judgment entered by any court in respect hereof brought in Colorado County,
Colorado, and further irrevocably waive any claim that any suit, action or
proceeding brought in Colorado County, Colorado has been brought in an
inconvenient forum.
8.14 Participation of Parties. The parties hereby agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding,
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.15 Further Assurances. The parties hereto shall deliver any and all
other instruments or documents reasonably required to be delivered pursuant to,
or necessary or proper in order to give effect to, all of the terms and
provisions of this Agreement including, without limitation, all necessary stock
powers and such other instruments of transfer as may be necessary or desirable
to transfer ownership of the Neuro Stock.
8.16 Publicity. No public announcement or other publicity concerning
this Agreement or the transactions contemplated hereby shall be made without the
prior written consent of both Neuro and LUSA as to form, content, timing and
manner of distribution. Nothing contained herein shall prevent any party from
making any filing required by federal or state securities laws or stock exchange
rules.
[Signature Page to Follow]
IN WITNESS WHEREOF, the parties hereto have each executed and
delivered this Agreement as of the day and year first above written.
LIFE USA, INC.
By:______________________________________
Name:
Title:
NEURO NUTRITION, INC.
By:______________________________________
Name:
Title:
SHAREHOLDERS OF NEURO NUTRITION, INC.
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