Exhibit 8.1
PURCHASE AGREEMENT AND PLAN OF REORGANIZATION
This Agreement, dated February 1, 1998, by and between UltraDerma,
Ltd., a New York corporation ("Seller") and Kid Rom, Inc., a Delaware
corporation ("Buyer")
W I T N E S S E T H:
Whereas Seller is engaged in development and distribution of cosmetic
and skincare products, including Theracel Advanced Pro-Cellular Formula ("APF"),
Advanced Pro-Cellular Moisturizer and Advanced Pro-Cellular Nite Serum and is
developing other products for the hands, scalp and hair for marketing under the
Theracel trademark; and
Whereas Buyer is the sole owner of [Xxxx/Xxxxx Enterprises, Inc.], a
Delaware corporation, ("Newco"); and
Whereas Buyer desires that Newco acquire all of Seller's assets,
business, and goodwill in exchange solely for _______________ shares of common
stock of Buyer valued at $_____ per share, plus $_______________ (20% of the
total purchase price) and for the assumption by the Newco of all of Seller's
liabilities and obligations; and
Whereas Seller desires that all of its properties be so exchanged,
whereupon Seller will dissolve and completely liquidate and distribute to its
sole shareholder all of its right, title, and interest in and to the shares of
Buyer's stock to be received by Seller, in exchange for surrender by such
shareholders for cancellation of all of Seller's outstanding common stock;
Now, therefore, in consideration of the premises and the respective
agreements hereinafter set forth, the parties agree as follows:
1. ISSUANCE OF STOCK OF NEWCO, CHANGE OF NAME AND TRANSFER OF ASSETS.
(a) Issuance of common stock of Newco; change of name. Buyer undertakes
to cause Newco to issue ___________ shares of common stock to Buyer for
cash to be held by Buyer. Buyer further undertakes to change the name
of Newco to "UltraDerma Ltd." and to qualify Newco to do business in
the States of ______________________. Seller will give such consent to
the use of the Newco's name as Buyer may request.
(b) Transfer of assets to Newco. Subject to the terms and conditions of
this Agreement, Seller will convey and transfer to Newco at the closing
hereunder all of Seller's then existing assets and business as a going
concern including, without limitation, its goodwill and its right to
the use of its name; and Seller shall at the time of the closing
deliver such assets and business at the then location thereof to Newco.
The assets so to be conveyed, transferred, and delivered shall include
those owned by Seller on the close of business January 31, 1998
(including, without limitation, those reflected in Seller's December
31, 1997 balance sheet referred to in Section [4(c)(1)] below), with
only such changes therein as shall have occurred in the ordinary course
of business between December 31, 1997, and the closing, or otherwise as
may be consented to or approved by Buyer in writing.
(c) Consideration for transfer to Newco. Buyer agrees that at the
closing, subject to the terms and conditions of this Agreement, and in
full consideration for the aforementioned conveyance, transfer, and
delivery to Newco:
(1) Buyer will deliver to Seller, a certificate or
certificates for _________ shares of Buyer's presently
authorized common stock, par value $.01 per share, fully paid
and nonassessable, registered as provided below in this
Section 1(c);
(2) Newco will issue and deliver to Buyer certificates for a
number of shares of Newco's common stock, fully paid and
nonassessable, equal to ______ shares less the number of
shares, if any, theretofore issued by Newco to Buyer pursuant
to Section 1(a);
(3) Newco will deliver to Seller an undertaking whereby Newco
assumes and agrees to pay, perform, and discharge all debts,
obligations, contracts, and liabilities of Seller of any kind,
character, or description (whether or not reflected or
reserved against in Seller's balance sheets, books of account,
and records), except expenses incurred by Seller in connection
with the performance of this Agreement, including the
liquidation and dissolution of Seller as contemplated herein.
Seller hereby irrevocably directs that the foregoing _______
shares of common stock of Buyer to be delivered to Seller shall be
registered in the name of Xxxxx X. Xxxx, whom Seller represents to be
its sole shareholder.
(d) Instruments of conveyance and transfer to Newco. At the
closing, Seller will deliver to Newco (1) such deeds, endorsements,
assignments, and other good and sufficient instruments of conveyance
and transfer, in form satisfactory to Buyer's counsel, Messrs. Xxxxx &
Schloss LLP, as shall be effective to vest in Newco good and marketable
title to the assets and business to be conveyed, transferred, and
delivered hereunder, and (2) all of Seller's contracts and commitments,
books (except corporate minute and stock books), records, and other
data relating to its assets, business, and operations; and,
simultaneously with such delivery, Seller will take all such steps as
may be required to put Newco in actual possession and operating control
of such assets and business.
(e) Further assurances to Newco. From time to time, at Newco's request
and without further consideration, Seller will execute and deliver such other
instruments of conveyance and transfer and take such other action as Newco
reasonably may require more effectively to convey, transfer to, and vest in
Newco, and to put Newco in possession of, any property to be conveyed,
transferred, and delivered hereunder, and, in the case of contracts and rights,
if any, which cannot be transferred effectively without the consent of third
parties which is unobtainable, Seller will use its best efforts to assure to
Newco the benefits thereof.
2. APPROVAL BY SELLER'S SOLE SHAREHOLDER; LIQUIDATION AND DISSOLUTION.
Seller will deliver to Buyer a duly executed Secretary's Certificate certifying
resolutions passed by the written consent of Seller's sole shareholder,
approving the transfer contemplated herein to Newco, and the change of name and
liquidation and dissolution of Seller as herein provided. Promptly at or after
the closing, Seller will take such action as may be required to change its name
to one which does not include the word "UltraDerma" and/or to dissolve and
terminate its corporate existence and to liquidate completely and to distribute
directly to its sole shareholder all its right, title, and interest in and to
the shares of Buyer's stock received by Seller under this agreement in exchange
for the surrender by such sole shareholder of Seller's common stock for
cancellation.
3. REPRESENTATIONS AND WARRANTIES BY SELLER. Seller hereby represents
and warrants as follows:
(a) Organization, capitalization, etc. Seller is a corporation
duly organized, validly existing, and in good standing under the laws
of the State of New York, has corporate power to carry on its business
as it is
now being conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the character of the
properties owned by it or the nature of the business transacted by it
makes such qualification necessary. Seller's authorized capital stock
consists of _______ shares of common capital stock, par value ___ each,
of which _______ shares are, on the date hereof (and will be at the
time of the closing), validly issued and outstanding, fully paid, and
nonassessable. There are no existing options, calls, or commitments of
any character relating to Seller's authorized or issued stock. The
copies of Seller's Certificate of Incorporation, as amended (certified
by the Secretary of State of New York), and of Seller's Bylaws
(certified by Seller's Secretary) which have been delivered to Buyer
are complete and correct as at the date of this Agreement.
(b) Authority relative to this Agreement. The execution,
delivery, and performance of this Agreement by Seller, including,
without limitation, the conveyances, transfers, and deliveries
contemplated hereby, have been duly and effectively authorized and
consented to by Seller's Board of Directors, subject to approval by
Seller's sole shareholder as required by law.
(c) Financial statements. Seller has delivered to Buyer copies
of all financial statements requested by Buyer, all of which are true
and complete and have been prepared in accordance with generally
accepted accounting principles consistently followed.
(d) Absence of undisclosed liabilities. Except as and to the
extent reflected or reserved against in Seller's balance sheet as
provided to Buyer, Seller, as of the date thereof, had no liabilities
or obligations (whether accrued, absolute, contingent, or otherwise) of
a nature customarily reflected in a corporate balance sheet prepared in
accordance with generally accepted accounting principles including,
without limitation, any tax liabilities due or to become due. The
existence (unknown to Seller) of any such liabilities or obligations
shall, for the purposes of Section [2] hereof, be deemed beyond the
control of Seller.
(e) Absence of certain changes or events. Since December 31,
1997, there has not been:
(1) any change in Seller's financial condition,
assets, liabilities, or business, other than changes in the
ordinary course of business and changes of which Buyer has
been advised in writing, none of which has been materially
adverse;
(2) any declaration, setting aside, or payment of any
dividend or other distribution in respect of Seller's capital
stock;
(3) any material increase in the compensation payable
or to become payable by Seller to any officers, employees, or
agents whose compensation for services rendered to Seller is
currently at an annual rate of more than $10,000;
(4) any significant labor trouble, or without
limitation any other event or condition of any character which
has materially and adversely affected Seller's business; or
(5) any contracts entered into for salaries of
persons who are officers or currently earning at an annual
rate of more than $10,000 a year (other than contracts
terminable at will).
(g) Accounts receivable. The accounts receivable of Seller
shown on its December 31, 1997, balance sheet, or thereafter acquired
prior to the date of this Agreement, have been collected or are
collectible in amounts not less than 90% of the book amounts thereof.
(h) Inventories. The inventories of Seller shown on its
December 31, 1997 balance sheet, or thereafter acquired by it prior to
the date of this Agreement, consist of items of a quality and quantity
usable or salable in the normal course of the business of Seller, and
the values at which such inventories are carried reflect the normal
inventory valuation policy of Seller.
(i) Title to properties. Seller has good and marketable title
to all its properties and assets, real and personal, free and clear of
all liens and encumbrances, except such imperfections of title and
encumbrances, if any, as are not substantial in character, amount, or
extent, and do not materially detract from the value, or interfere with
the present use, of the properties subject thereto or affected thereby,
or otherwise materially impair business operations. Seller has received
no notice of violation of any applicable law, order, regula tions, or
requirement relating to its operations or its owned or leased
properties and, so far as known to Seller, there is no such violation.
(j) Lists of properties, contracts, and personnel data. Seller
has delivered (or will deliver prior to the closing) to Buyer accurate
lists and summary descriptions, certified correct by authorized
officers of Seller, of the following:
(1) all real property owned or leased of record or
beneficially by Seller and a brief description of all
buildings and structures located thereon, and all leases to
which Seller is a party;
(2) all patents, patent applications, trademarks,
trademark registrations and applications therefor, trade
names, copyrights, copyright registrations and applications
therefor, patent licenses, and all patent licenses granted by
Seller to others and in force as of December 31, 1997;
(3) all presently existing contracts and commitments
of Seller involving payment by Seller of more than $10,000 or
contracts or commitments of any nature which are reasonably
material to the business of the Seller;
(4) the names and current annual salary rates of all
Seller's present directors and of all its officers and
employees whose current annual salary rate is $20,000 or more,
together with a summary of the bonuses, percentage
compensation, and other like benefits, if any, paid or payable
to such persons for the calendar year 1997;
(5) all employment contracts (other than contracts
terminable at will).
(k) Litigation. Except for suits, if any, of a character
incident to the normal conduct of Seller's business and involving not
more than $50,000 in the aggregate, there is no litigation, proceeding,
or governmental investigation pending or, so far as known to Seller,
threatened against or relating to Seller, or its properties or
business, or the transactions contemplated by this Agreement, nor is
there any basis known to Seller for any such action.
5. REPRESENTATIONS AND WARRANTIES BY BUYER.
(a) Buyer hereby represents and warrants: (i) that it is a corporation
duly organized, existing and in good standing under the laws of the
State of Delaware; (ii) that its authorized preferred stock consists of
_________ preferred shares and its authorized common stock consists of
__________ common shares; (iii) that the execution of this agreement by
Buyer has been duly and effectively authorized by all requisite
corporate action; (iv) that the shares of Buyer's common stock to be
delivered to Seller, pursuant to this agreement, will, when so
delivered, be validly issued and outstanding, fully paid and
nonassessable; (v) that there has been no material change in the
condition, financial or otherwise, of Buyer, as shown on its December
31, 1997 balance sheet heretofore submitted to Seller, except changes
either in the regular course of business or changes not materially
adverse; and (vi) that Newco will not on or prior to the closing have
contracted any liabilities except those incident to its organization
and qualification and the acquisition re ferred to in paragraphs (b)
and (c) of Section 1.
(b) Buyer further represents that Newco is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Delaware, has corporate power to carry on the business of
Seller as it is being conducted, and will be duly qualified to do
business in and be in good standing in the States of ________________
____________. The execution of documents, delivery, and performance by
Newco, contemplated by this agreement, shall have been duly authorized
and approved by all requisite action of Newco's Board of Directors, and
all such documents shall have been executed and delivered by Newco and
shall constitute the valid and binding obligation of Newco in
accordance with their terms; and all other action and proceedings
required by law or contemplated by this Agreement to be taken by Newco,
at or prior to the closing, in connection with this agreement and the
transactions provided for herein have been duly and validly taken.
(Buyer undertakes to take all appropriate action available to it to
meet the conditions of this paragraph (j) and its failure to do so
shall be deemed a cause within its control within the meaning of
Section 2.)
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. All obligations of
Seller under this agreement are subject to the fulfillment, prior to or at the
closing, of each of the following conditions unless waived by Seller in writing:
(a) Seller shall not have discovered any material adverse
error, misstatement, or omission in the representations and warranties
made by Buyer in Section 5 above.
(b) Buyer's representations and warranties contained in
Section 5 shall be deemed to have been made again at and as of the time
of the closing and shall then be true in all material respects.
(c) The transfer of all of the property and assets of Seller
to Newco and the liquidation and dis solution of Seller, in accordance
with the provisions of this Agreement, shall have been authorized and
approved by the sole shareholder of Seller.
7. BULK SALES LAW. Buyer hereby waives compliance by Seller with the
bulk transfer provisions of the Uniform Commercial Code of any applicable
jurisdiction in connection with the transfer to Newco and will procure a like
waiver by Newco on the transfer to Newco.
8. TERMINATION OF REPRESENTATIONS AND WARRANTIES. Seller and Buyer
agree that their respective representations and warranties contained in Sections
4 and 5 above and those provided for in Sections 8(b) and 9(b) above shall
expire with, and be terminated and extinguished by, the closing under this
agreement on the closing date, and that, the closing having been consummated,
neither Seller nor Buyer shall be under any liability whatsoever with respect to
any such representation or warranty.
IN WITNESS WHEREOF the undersigned parties have duly executed this
agreement as of the date first above written.
KID ROM, INC.
Attest: By:
--------------------------
Xxxxxx X. Xxxxx
President
-------------------------
Secretary
ULTRADERMA, LTD.
Attest: By:
--------------------------
Xxxxx X. Xxxx
President
-------------------------
Secretary
