Exhibit 2.3
STOCK EXCHANGE AND PURCHASE AGREEMENT
This Stock Exchange and Purchase Agreement (the "Agreement") is dated as of
this 16th day of August, 1999, by and between HPF Holdings, Inc., a Delaware
corporation, with a principal place of business located at 0000 Xxxxxxxx Xxxx,
Xx. Xxxxxxx, XX 00000 ("HPF"), Xxxxx Xxxxxxx, an individual, residing at 0000
Xxxxx Xxxxx, Xxxxxxx, XX 00000 ("Xxxxxxx"); ANSAMA Corp., a Nevada corporation,
with a principal place of business located at 000 Xxxxx 00, Xxxxxxx 000, Xxxxxx,
XX 00000 (the "Company"); Nutri/System Direct, L.L.C. management (comprised of
Xxx Xxxxxxx, Xxxxxxxx Xxxxxx, and Xxxxxxx Xxxxxx and hereinafter collectively
referred to as "Management"); and Xxxx Xxxxx, an individual residing at 0000
Xxxxxx Xxxx, Xxxxxxxxx, XX 00000 ("Xxxxx").
WHEREAS, the Company is interested in acquiring all outstanding ownership
interests of the direct marketing company, Nutri/System Direct, L.L.C.
("NSDirect"); and
WHEREAS, the Interest Holders of NSDirect are willing to sell and/or
exchange all of their ownership interests in NSDirect for cash and/or shares of
the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
SALE AND EXCHANGE
1.1 On the Closing Date (as hereinafter defined) HPF shall assign, transfer
and convey to Company its ownership interest of NSDirect representing eighty-one
and one half percent (81.5%) of all outstanding ownership interests in NSDirect.
In exchange for its interest in NSDirect, HPF shall receive a payment of Four
Hundred Thousand Dollars ($400,000.00). The Company shall make payment to HPF at
Closing by wire transfer to HPF's bank account in the amount of Four Hundred
Thousand Dollars ($400,000.00).
1.2 On the Closing Date (as hereinafter defined) HPF shall assign, transfer
and convey to Company the remainder of its ownership interest in NSDirect
representing seven and one half percent (7.5%) of all outstanding ownership
interests in NSDirect. In exchange for its ownership interest in NSDirect, HPF
shall receive 8,200,000 shares of the Company's common stock, representing 40.9%
of all outstanding shares of the Company on a fully diluted basis as of the
Closing Date.
1.3 On the Closing Date, Xxxxxxx shall assign, transfer and convey to
Company his ownership interest in NSDirect representing seven and one half
percent (7.5%) of all outstanding ownership interests in NSDirect. In exchange
for its ownership interest of NSDirect, Xxxxxxx shall receive 8,200,000 shares
of the Company's common stock, representing 40.9% of all outstanding shares of
the Company on a fully diluted basis as of the Closing Date.
1.4 On the Closing Date, Management shall assign, transfer and convey to
Company their ownership interests in NSDirect representing three percent (3%) of
all outstanding ownership interests in NSDirect. In exchange for its ownership
interest in NSDirect, Management shall receive 600,000 shares of the Company's
common stock, representing 2.99% of all outstanding shares of the Company on a
fully diluted basis as of the Closing Date.
1.5 On the Closing Date, Xxxxx shall assign, transfer and convey to Company
his ownership interest in NSDirect representing one half of one percent (2.5%)
of all outstanding ownership interests in NSDirect. In exchange for his
ownership interest in NSDirect, Xxxxx shall receive 500,000 shares of the
Company's common stock, representing 2.5% of all outstanding shares of the
Company on a fully diluted basis as of the Closing Date.
1.6 As a result of the transactions contemplated herein, the existing
shareholders of record of the Company who hold shares at the date and time of
the Closing of this transaction (the "Existing Shareholders") shall retain
2,039,337 shares of the Company's common stock, representing 10.2% of all
outstanding shares of the Company on a fully diluted basis as of the Closing
Date.
1.7 500,000 shares of the Company's common stock will be set aside as
option shares for new and existing employees, representing 2.5% of all
outstanding shares of the Company on a fully diluted basis as of the Closing
Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. Company hereby
represents and warrants to HPF, Xxxxxxx and Management (the "NSDirect Interest
Holders") and Xxxxx as follows:
(a) Incorporation. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. The Company
has all requisite corporate power and authority to execute and deliver this
Agreement and to carry out the transactions contemplated hereby.
(b) Capitalization. The authorized capital stock of the Company
consists of 55,000,000 shares of common stock, $.01 par value per share, of
which 2,039,337 shares are issued and outstanding to Existing Shareholders. All
of the Company's issued and outstanding shares of capital stock have been duly
authorized and validly issued, are fully paid and non-assessable and are owned
by Existing Shareholders. Accurate and complete copies of the Company's charter
and bylaws are attached hereto. As of the Closing, the Company shall not have
outstanding any stock or securities convertible or exchangeable for any shares
of its capital stock containing any profit participation features, nor shall it
have outstanding any rights or options to subscribe for or to purchase its
capital stock or any stock or securities convertible into or exchangeable for
its capital stock or any stock appreciation rights or phantom stock plans. As of
the Closing, the Company shall not be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock or any warrants, options or other rights to acquire its
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capital stock, except pursuant to the Certificate of Incorporation. All
outstanding securities of the Company were issued in compliance with state and
federal securities laws.
(c) Execution, Delivery, Binding Effect. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Board of Directors of the Company. The Board of
Directors of the Company is not required to submit this Agreement for approval
by its stockholders and the stockholders are not required to approve this
Agreement. This Agreement is a valid and binding obligation of the Company
enforceable against it in accordance with its terms, except as may be limited by
applicable bankruptcy and similar laws and general principals of equity.
(d) Transfer Free and Clear. The shares of the Company are being
transferred to the parties hereto free and clear of all liens, pledges, security
interests, restrictions, claims, charges and other encumbrances, and at the time
of issuance, will be duly authorized, validly issued, fully paid and
non-assessable.
(e) Reports with the Securities and Exchange Commission. The Company is
a non-reporting Company. The Company last filed a Form 10Q with the Securities
and Exchange Commission for the quarter ending September 30, 1992. Subsequent to
this date, the Company filed Form 15 with the Securities and Exchange Commission
and became a non-reporting Company. The Company's Form 15 filing is attached
hereto as Exhibit "A".
(f) Conduct of Business; Liabilities. The Company does not currently
conduct any business, has no material debts, obligations or liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise, whether or not known
to the Company and whether due or to become due) and has not entered into any
contracts or agreements. Prior to Closing, the Company has not violated and will
not violate any laws or governmental rules or regulations.
(g) Financial Statements. Attached hereto as Exhibit "B" are the
following financial statements:
(i) the audited balance sheets of the Company as of December 31,
1998 and December 31, 1997, and the related statements of income and cash flows
(or the equivalent) for the respective twelve-month periods then ended; and
(ii) the unaudited balance sheet of the Company as of June 30,
1999, and the related statements of income and cash flows (or the equivalent)
for the six month period then ended.
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) is accurate and complete in all material respects, is
consistent with the books and records of the Company (which, in turn, are
accurate and complete in all material respects) and has been prepared in
accordance with generally accepted accounting principals, consistently applied,
subject in the case of the unaudited financial statements to the lack
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of footnote disclosure and changes resulting from normal year-end adjustments
(none of which would, alone or in the aggregate, be materially adverse to the
financial condition, operating results, assets, operations, or business
prospects of the Company taken as a whole). All of the books, records and
accounts of the Company are in all material respects accurate and complete and
have been prepared in accordance with good business practice and all laws,
regulations and rules applicable to the Company and accurately present and
reflect in all material respects all of the transactions described therein.
2.2 Representations and Warranties of and the NSDirect Interest Holders.
Except as otherwise provided, each NSDirect Interest Holder, singularly and not
on behalf of any other NSDirect Interest Holder, hereby represents and warrants
to the Company as follows:
(a) Interest Ownership. The NSDirect Interest Holder is the beneficial
and record owner of its ownership interest of NSDirect and there are no
outstanding agreements or rights to subscribe for or purchase its ownership
interest. Additionally Xxxxxxx and Management, but not HPF represent and warrant
that there are no outstanding agreements or rights to subscribe for or purchase
any additional ownership interests in NSDirect.
(b) Enforceability. This Agreement is a valid and binding obligation of
the NSDirect Interest Holder in accordance with its terms, except as may be
limited by applicable bankruptcy and similar laws and general principals of
equity.
(c) NSDirect Ownership Interests. The NSDirect ownership interests are,
and at the time of Closing will be, free and clear of all liens, pledges,
security interests, restrictions, claims, charges and other encumbrances.
(d) The NSDirect ownership interests are being purchased in an "as is"
condition. THE NSDIRECT INTEREST HOLDERS MAKE NO REPRESENTATION OR WARRANTY OF
ANY KIND WITH RESPECT TO THE OWNERSHIP INTERESTS OR IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY OTHER THAN THOSE SET FORTH IN THIS SECTION 2.2
AND OTHER DOCUMENTS DELIVERED OR TO BE DELIVERED HEREWITH.
(e) Organization. NSDirect is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware. NSDirect has all requisite limited liability company power and
authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby.
(f) Financial Statements. Attached hereto as Exhibit "C" are the
following financial statements:
(i) the unaudited balance sheets of NSDirect as of December 31,
1998 and December 31, 1997, and the related statements of income and cash flows
(or the equivalent) for the respective twelve-month periods then ended; and
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(ii) the unaudited balance sheet of NSDirect as of June 30, 1999,
and the related statements of income and cash flows (or the equivalent) for the
six-month period then ended.
With respect to the attached financial statements Xxxxxxx and Management, but
not HPF or NSDirect, represent and warrant that each of the foregoing financial
statements (including in all cases the notes thereto, if any) is accurate and
complete in all material respects, is consistent with the books and records of
NSDirect (which, in turn, are accurate and complete in all material respects)
and has been prepared in accordance with generally accepted accounting
principals, consistently applied, subject in the case of the unaudited financial
statements to the lack of footnote disclosure and changes resulting from normal
year-end adjustments (none of which would, alone or in the aggregate, be
materially adverse to the financial condition, operating results, assets,
operations, or business prospects of NSDirect taken as a whole). All of the
books, records and accounts of NSDirect are in all material respects accurate
and complete and have been prepared in accordance with good business practice
and all laws, regulations and rules applicable to NSDirect and accurately
present and reflect in all material respects all of the transactions described
therein.
(g) Execution, Delivery, Binding Effect. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by NSDirect. No consents are required for the execution of
this Agreement and it does not violate or conflict with any applicable statute,
regulation, order or judgment applicable to NSDirect and does not constitute a
default under, and does not conflict with, the provisions of any operating
agreement or other agreement or any judgment to which NSDirect is a party or by
which it may be bound or affected including but not limited to any obligation of
NSDirect to its creditors.
ARTICLE III
CLOSING; OTHER MATTERS
3.1 Closing. The Closing shall take place on or before _____________, 1999,
(the "Closing Date") and shall take place at such place and time as the parties
may agree. At the Closing of the transactions contemplated herein, the NSDirect
Interest Holders shall deliver to the Company documents representing all of
their ownership interests in NSDirect, duly endorsed for transfer. Concurrently
therewith the Company shall deliver to the NSDirect Interest Holders and Xxxxx
certificates of the Company's stock in the amounts set forth above for each
NSDirect Interest Holder and Xxxxx, properly registered and issued in the
respective names of the NSDirect Interest Holders and Xxxxx.
3.2 Additional Investment. It is anticipated that on or about the Closing
Date the Company will raise an additional five million dollars ($5,000,000.00)
at not less than one dollar ($1.00) per share in a private placement of equity
based on this Agreement and related agreements. The Company will issue an
additional five million (5,000,000) shares of common stock as part of this
contemplated transaction. The parties hereto acknowledge that the Company will
be making this additional offering and agree to cooperate with the Company in
the furtherance of this offering. The parties hereto
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further acknowledge that their percentage of ownership in the Company will be
diluted, as set forth in Exhibit "D" attached hereto, by the proposed offering.
3.3 Conditions to Obligations of the Company. The obligations of the
Company under this Agreement are additionally subject to the satisfaction of or
written waiver by the Company of each of the following conditions on or before
the Closing Date, any of which may be waived by the Company in writing and each
of which shall be considered properly performed if no notice to the contrary has
been provided to the NSDirect Interest Holders and Xxxxx in writing by the close
of any contingency time set forth in this section:
(a) the Company shall have received funding from the Company's
investors in an amount sufficient to complete this transaction. If the Company
has not received a firm commitment from its investors at least ten (10) days
prior to the scheduled Closing Date, then the Company must give written notice
to the NSDirect Interest Holders and Xxxxx whether the Company elects to cancel
this Agreement or proceed to Closing without the financing. However, if no
written notice is received then this Agreement is terminated and none of the
parties hereto has any continuing obligation to any other party hereto;
(b) there shall have been no material change in the Business of
NSDirect between the date hereof and the Closing Date;
(c) prior to the Closing of this transaction, Nutri/System L.P. shall
have executed and delivered an Asset Purchase Agreement to Company, a copy of
which is attached hereto as Exhibit "E" (the "Asset Purchase Agreement"), and
there shall be no remaining conditions to Company's obligation to Close under
the Asset Purchase Agreement;
(d) prior to the Closing Date, the Company shall be entitled, through
its employees and representatives, to satisfactorily complete such
investigations of the property and such examination of the books, records and
financial condition of NSDirect as the Company may reasonably request. In order
that the Company may have the full opportunity to do so, NSDirect and the
NSDirect Interest Holders shall furnish the Company and its representatives
during such period with all such information concerning the affairs of NSDirect
as the Company or such representatives may reasonably request and cause
NSDirect's officers, employees, consultants, agents, accountants and attorneys
to cooperate fully with the Company or such representatives in connection with
such review and examination and to make full disclosure of all information and
documents requested by the Company and/or such representatives. Any such
investigations and examinations shall be conducted at reasonable times and under
reasonable circumstances.
(e) All covenants, agreements and conditions contained in this
Agreement to be performed or complied with by NSDirect and NSDirect Interest
Holders at or prior to the Closing shall have been performed or complied with in
all material respects.
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3.4 Conditions to Obligations of NSDirect Interest Holders and Xxxxx. The
obligations of the NSDirect Interest Holders and Xxxxx under this Agreement are
additionally subject to the satisfaction of each of the following conditions on
or before the Closing Date, unless waived by each NSDirect Interest Holder and
Xxxxx in writing:
(a) The representations and warranties made by the Company in Section
2.1 shall be true and correct when made, and shall be true and correct as of
Closing as if made at Closing;
(b) All covenants, agreements and conditions contained in this
Agreement to be performed or complied with by the Company at or prior to the
Closing shall have been performed or complied with in all material respects; and
(c) At or prior to Closing, the Company shall have entered into the
Asset Purchase Agreement and that concurrently with the Closing hereunder, the
Company and Nutri/System L.P. shall have closed pursuant to the terms of the
Asset Purchase Agreement.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnification by the Company. The Company will indemnify the NSDirect
Interest Holders and Xxxxx for any loss, liability, claims, damages and
expenses, including reasonable attorneys fees, suffered by the NSDirect Interest
Holders and/or Xxxxx, or any of them, as a result of any breach by the Company
of its representations and warranties or covenants hereunder.
4.2 Indemnification by NSDirect Interest Holders and Xxxxx. Each NSDirect
Interest Holder and Xxxxx, singularly, and not on behalf of any other NSDirect
Interest Holder or Xxxxx, as the case may be, will indemnify the Company for any
loss, liability, claims, damages and expenses, including reasonable attorneys
fees, suffered by the Company, as a result of any breach by the NSDirect
Interest Holders and/or Xxxxx of its representations and warranties or covenants
hereunder.
4.3 Indemnification Procedures. Any party claiming indemnification
hereunder shall give written notice thereof to the party or parties against whom
indemnification is sought. If the claim involves a third party claim, notice
shall be given timely in order to allow the indemnifying party the opportunity
to participate in the defense of the claim, to the extent the party wishes;
provided, however, that no failure of an indemnified party to give notice timely
shall relieve the indemnifying party of any obligation hereunder except to the
extent, if any, that the failure materially prejudices the ability of the
indemnifying party to defend the third-party claim.
ARTICLE V
MISCELLANEOUS MATTERS
5.1 Notices. All notices, requests, demands, payments and other
communications under this Agreement shall be in writing and shall be duly given
if delivered personally to the person to whom it is authorized to be given, or
it is sent by mail, telegraph, overnight
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courier service, or transmission by telecopy or similar service at the person's
address set forth below, or at such other address as the person may from time to
time specify by written notice pursuant to this section 5.1. Any notice shall be
deemed to be given as of the date so delivered, if delivered personally, or upon
confirmation of the telecopy, or as of the date the same was deposited in the
United States Mail, or delivered to an overnight courier service, in each case
with all applicable charges prepaid, addressed as set forth below:
If to Company: Xxxxx Schniedmill
000 Xxxxx 00
Xxxxxxx 000
Xxxxxx, XX 00000
If to HPF: 0000 Xxxxxxxx Xxxx
Xx. Xxxxxxx, XX 00000
Att'n: Xxxxxxx Xxxxxxx
If to Xxxxxxx: 0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000
If to Xxxxx: 0000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
If to Xxxxxxx: 00 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
If to Simone: 0000 Xxxxx Xxxx
Xxxxxxxxxx Xxxxxx, XX 00000
If to Gallen: 00 Xxxxxxxx Xxxxxx
Xxxxx, XX 00000
5.2 Binding Agreement. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, their successors, assigns, heirs and
personal representatives.
5.3 Entire Agreement. This Agreement and the agreements contemplated herein
constitute the entire agreement between the parties with respect to the subject
matter hereof; there are no other terms other than those contained herein and
therein and this Agreement may not be modified or amended except in a writing
signed by the parties hereto.
5.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to principles of conflicts of law thereof.
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5.5 Counterparts. This Agreement may be executed in counterparts and by
each party hereto on separate counterparts, each of which shall be deemed an
original, but which together shall constitute one and the same agreement.
5.6 Termination or Abandonment.
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement may be terminated and abandoned at any time prior to the Closing Date:
(a) by the mutual written consent of the parties hereto;
(b) by Company or the NSDirect Interest Holders holding a majority of
the NSDirect interests if any court of competent jurisdiction or governmental
body, authority or agency having jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and nonappealable;
(c) by Company if one or more of the conditions to the obligations of
Company as set forth in Section 3.3 hereof has not been fulfilled by the Closing
Date;
(d) by the NSDirect Interest Holders holding a majority of the NSDirect
interests if one or more of the conditions to the obligations of the NSDirect
Interest Holders as set forth in Section 3.4 hereof has not been fulfilled by
the Closing Date; or
(e) by NSDirect Interest Holders holding a majority of the NSDirect
interests if Closing hereunder has not taken place within 45 calendar days after
the date of execution hereof.
Neither Buyer nor Seller shall be liable to the other for any termination of
this Agreement pursuant to this Section 5.6.
5.7 Each party shall be entitled to rely on the representations and
warranties of the other set forth herein and on any Exhibit or other document
delivered pursuant to this Agreement to the extent the party does not have or
receive actual notice that the representation or warranty is untrue or has been
breached by the party making the representation or warranty. The
representations, warranties, covenants and obligations of the parties made
herein shall survive the Closing.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
HPF HOLDINGS, INC. ANSAMA CORP.
BY: /s/ Xxxxxxx X. Xxxxxxx BY: /s/ Xxxxx Schniedmill
------------------------- ---------------------------
Assistant Secretary President and CEO
/s/ Xxxxx Xxxxxxx /s/ Xxxx Xxxxx
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XXXXX XXXXXXX XXXX XXXXX
/s/ Xxx Xxxxxxx /s/ Xxxxxxxx Xxxxxx
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XXX XXXXXXX XXXXXXXX XXXXXX
/s/ Xxxxxxx Xxxxxx
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XXXXXXX XXXXXX
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