* * * * STOCK EXCHANGE AGREEMENT by and between National Health & Safety Corp. and Alternative Delivery Solutions, Inc. And Clark R. Doyal James D. Schell Greg Danna Jim and Vickie Foster, JTWROS George Pjura ADS Equity Partners, LP Charles M. Preston...
* * * * *
STOCK EXCHANGE AGREEMENT
by and between
National Health & Safety Corp.
and
Alternative Delivery Solutions, Inc.
And
Xxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxx
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxxxxx Xxxxx
ADS Equity Partners, LP
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxx
DoorDrop, XX
Xxxxxx Capital, LLC
(“ADS Shareholders”)
* * * * *
September ____, 2002
This Stock Exchange Agreement, dated as of September ____, 2002 (this "Agreement"), is made and entered into by and between
National Health & Safety Corp., a Utah corporation, having its principal office at 0000 Xxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000 (“NHLT” or the "Company"), Alternative Delivery Solutions, Inc., a Texas corporation, having its principal
offices at 00000 Xxx Xxxxx; Xxxxx 000, Xxx Xxxxxxx, Xxxxx ("ADS"), Xxxxx X. Xxxxx, Xxxxx X. Xxxxxx, Xxxx Xxxxx, Xxx and Xxxxxx
Xxxxxx, JTWROS, Xxxxxx Xxxxx, ADS Equity Partners, LP, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxx, Xxxxxx Capital, LLC and DoorDrop,
LP (known collectively as “ADS Shareholders”).
RECITALS:
A. The Company desires to purchase and each and all of the ADS Shareholders desire to
sell all of the issued and outstanding shares of common stock of ADS, and rights to receive ADS stock, in a stock for stock
exchange that would qualify as a tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue Code (the
“IRC”), on the terms and conditions set forth in this Agreement. This Agreement is not intended to
constitute a share exchange pursuant to Article 5.02 of the Texas Business Corporation Act.
B. The
respective Boards of Directors of the Company and ADS have adopted resolutions approving and adopting the proposed plan of exchange
(the "Exchange") upon the terms and conditions hereinafter set forth in this Agreement.
C. The ADS
Shareholders listed on Schedule 1 hereto hold ____________________ (____,000) shares of ADS's Common Stock and Austin Capital, LLC
holds _____________ warrants entitling it to purchase ______________ shares of ADS Common Stock (the "ADS Shares"). The
attached Schedule 1 sets forth the holdings of each ADS Shareholder opposite their respective names on said Schedule 1, which
shares represent all of the issued and outstanding shares of common stock of ADS, taking into account all dilution.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE 1
THE EXCHANGE
1.1 The Exchange. Upon the terms and subject to the conditions hereof, at the
Closing (as hereinafter defined) the ADS Shareholders will sell, convey, assign, transfer and deliver to the Company stock
certificate(s), properly endorsed, representing the ADS Shares, and the Company will issue to the ADS Shareholders, in
exchange for the ADS Shares, stock certificates representing an aggregate of Seventy Five Percent (75%) of its common stock on a
fully diluted and fully converted basis, as of the Closing Date after the issuance of the shares issued pursuant to this Agreement
(the "Company Shares") The number of Company Shares to be exchanged and the exchange rate per share of ADS common stock will
be determined by multiplying the total number of shares of Common Stock of the Company outstanding immediately prior to Closing
(fully diluted and based on the Closing Certificate provided by the Company and its officers) by three (3).
1.2 Closing.
The closing of the Exchange (the "Closing") shall take place the sooner of December 31, 2002, or as soon as the conditions set
forth in Article 6 have been satisfied or waived. Such date is herein referred to as the "Closing Date." Subject to the
provisions of Article 6, the failure to consummate the Exchange on the date and time determined pursuant to this Section
1.2 will not result in the termination of this Agreement and will not relieve any party of any obligation
hereunder.
1.3 Termination
Date. Pursuant to Article 7.2, this Agreement shall terminate on January 1, 2003 (the “Termination Date”) and
the parties will have no further obligations to the other to effectuate a Closing, unless Company and ADS consent and agree to
extend the Termination Date for a period not to exceed ninety (90) days. In order to extend the Termination Date, Company and
ADS must obtain the written consent of three of the following, which are collectively referenced herein as the
“Investors”:
|
|
(a) |
|
DoorDrop, LP |
|
|
|
000 Xxxxxx Xx., Xxxxx 000 |
|
|
|
|
Xxxxxx XX, 00000 |
|
|
|
|
||
|
|
|
Xxxxx Xxxx Holdings, Inc., its general partner |
|
|
|
|
Xxxxx Xxxx, President |
|
|
|
|
||
|
|
(b) |
|
ADS Equity Partners, LP |
|
|
|
0000 Xxx Xxxx Xxxx; Xxxxx 000 |
|
|
|
|
||
|
|
|
General Partner(s) |
|
|
|
|
First Advisors, Inc., Xxxx Xxxxx, President |
|
|
|
|
Austin Capital, LLC, Xxxxx Xxxxxx, Manager |
|
|
|
|
||
|
|
(c) |
|
Xxxxxxx X. Xxxxxxx |
|
|
|
000 Xxxxxxxx |
|
|
|
|
Xxxxxx, Xxxxx 00000 |
|
|
|
|
||
|
|
(d) |
|
Xxxxx X. Xxxx |
|
|
|
Care Of Xxxxxxx X. Xxxxxxx |
|
|
|
|
600 Congress |
|
|
|
|
Xxxxxx, Xxxxx 00000 |
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF ADS AND THE ADS SHAREHOLDERS
A. ADS hereby represents and warrants to the
Company as follows:
2.1 Organization.
ADS has been duly incorporated, is validly existing as a corporation and is in good standing under the laws of its state of
incorporation, and has the requisite corporate power and specific board and shareholder authority to carry on its business as now
conducted.
2.2 Capitalization.
The authorized capital stock of ADS consists of 500,000 shares of common stock, no par value, of which ________________ shares are
issued and outstanding, and no shares of preferred stock. All of the issued and outstanding shares of common stock are duly
authorized, validly issued, fully paid, non-assessable and free of preemptive rights. Save and except the Austin Capital
Warrant(s) (as hereinafter defined in Section 5.7) issued pursuant to ADS’s engagement agreement with Austin Capital, LLC
(the “Austin Capital Agreement”), there are no outstanding or authorized options, rights, warrants, calls, convertible
securities, rights to subscribe, conversion rights or other agreements or commitments to which ADS is a party or which are binding
upon ADS providing for the issuance or transfer by ADS of additional shares of its capital stock and ADS has not reserved any
shares of its capital stock for issuance, nor are there any outstanding stock option rights, phantom equity or similar rights,
contracts, arrangements or commitments. There are no voting trusts or any other agreements or understandings with respect to the
voting of ADS's capital stock, other than as specifically set forth herein. There are no dividends declared and unpaid on any
of the ADS Shares.
2.3 Certain Corporate
Matters. ADS is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in
which the ownership of its properties, the employment of its personnel or the conduct of its business requires it to be so
qualified, except where such failure would not have a material adverse effect on ADS’s financial condition, results of
operations or business. ADS has full corporate power and authority and all authorizations, licenses and permits necessary to carry
on the business in which it is engaged and to own and use the properties owned and used by it, and the conduct of such business by
ADS is not in contravention of any covenant, agreement, or other obligation of ADS or the ADS Shareholders.
2.4 Authority Relative to this
Agreement. ADS has the requisite corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance of this Agreement by ADS and the consummation by ADS of the
transactions contemplated hereby have been duly authorized by the Board of Directors of ADS and, except for approval by the ADS
Shareholders, no other actions on the part of ADS are necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by ADS and constitutes a valid and binding agreement of
ADS, enforceable against ADS in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity.
2.5 Consents and
Approvals; No Violations. No filing with, and no permit, authorization, consent or approval of, any third party, public
body or authority is necessary for the consummation by ADS of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by ADS nor the consummation by ADS of the transactions contemplated hereby, nor compliance
by ADS with any of the provisions hereof, will (a) conflict with or result in any breach of any provisions of the Certificate of
Incorporation or Bylaws of ADS, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract, agreement or other instrument or obligation to which ADS is a
party or by which it or its properties or assets may be bound or (c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to ADS, or any of its properties or assets, except in the case of clauses (b) and (c) for violations,
breaches or defaults which are not in the aggregate material to ADS taken as a whole.
2.6 Disclosure. The
representations and warranties and statements of fact made by ADS in this Agreement are, as applicable, accurate, correct and
complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make
the statements and information contained herein not false or misleading.
B. The ADS Shareholders, individually and severally with respect to the ADS Shares
held by such ADS Shareholder, but not jointly, each respectively represent and warrant as follows:
2.7 Ownership by ADS
Shareholders. Such ADS Shareholder is the owner of record of the number of fully paid and non-assessable shares of common
stock of ADS set forth opposite his/her name on the attached Schedule 1 and is transferring those shares to the Company free and
clear of any liens or encumbrances. No person other than the ADS Shareholder owns any right, title or interest in the ADS
Shares being transferred to the Company. Such ADS Shareholder has no basis to claim any share amount other than what is
listed, whether it be by reason of employment, contract, options, warrants, share issuance, verbal agreement, or other contract or
arrangement.
2.8
Authorization. Such ADS Shareholder has full power and authority to enter into this Agreement, and this Agreement
constitutes a valid and legally binding obligation of such ADS Shareholder, enforceable against the ADS Shareholder in accordance
with its terms.
2.9 Investment
Intent. Such ADS Shareholder represents that the shares of common stock being acquired under this Agreement are being acquired
for investment purposes only, and not with a view to reselling the shares or dividing participation in those shares with others,
except as permitted by law. Such ADS Shareholder represents that he/she/it has no present intent to resell or otherwise
dispose of all or any part of these shares. Such ADS Shareholder acknowledges that the shares being received in the Exchange
have not been registered under the Securities Act of 1933 (the “Act”). The Company may require, as a condition of
the subsequent sale or transfer of the Company Shares, an opinion of counsel that the sale or transfer would be pursuant to an
effective registration statement under the Act or pursuant to an exemption from such registration requirements. Such ADS
Shareholder acknowledges that the Company Shares to be received in the Exchange shall be stamped with a legend in substantially the
following form:
“The shares represented by this Certificate have not been registered under the Securities Act of 1933 (the
“Act”) and are “restricted securities” as that term is defined in Rule 144 under the Act. These
shares may not be offered for sale, sold, or otherwise transferred except pursuant to the effective registration statement under
the Act, the availability of which is to be established to the satisfaction of the Company.”
2.10 Disclosure of
Information. Each ADS Shareholder represents that he, she or it (i) has carefully reviewed the representations concerning
the Company contained in this Agreement and other information provided to the ADS Shareholder on behalf of the Company and (ii) had
adequate opportunity to ask questions and receive answers from the company regarding the terms and conditions of the Exchange and
the assets, prospects and financial condition of the Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to ADS as follows:
3.1 Organization.
The Company is a corporation duly organized, validly existing and in good standing under the laws of Utah, and has the requisite
corporate power to carry on its business as now conducted.
3.2 Capitalization.
The Company’s capitalization was, on June 30, 2002, as set forth in its Form 10-QSB for the quarter ended June 30,
2002. All issued and outstanding shares of the Company Common Stock are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. When issued, the Company Shares will be duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. Additionally, the Company has reserved and anticipates issuing options to
purchase up to 25,000,000 shares of Company Common Stock as compensation for services. Further, the Company expects that
certain debt obligations owed by the Company to insiders and employees, among others, will be converted into up to 71,000,000
shares of Company Common Stock; however, the exact amount of Company Common Stock issued in conversion of this debt is unknown at
this time, and will only be known when the Company’s Board of Directors determines and approves a conversion price.
Except as set forth above and/or in the Company’s Form 10-QSB dated June 30, 2002, with the SEC, there are no outstanding or
authorized options, rights, warrants, calls, convertible securities, rights to subscribe, conversion rights or other agreements or
commitments to which the Company is a party or which are binding upon the Company providing for the issuance by the Company or
transfer by the Company of additional shares of the Company's capital stock and the Company has not reserved any shares of its
capital stock for issuance, nor are there any outstanding stock option rights, phantom equity or similar rights, contracts,
arrangements or commitments. There are no voting trusts or any other agreements or understandings with respect to the voting of the
Company's capital stock. At or prior to the Closing, Company shall verify, certify, represent and warrant to the ADS
Shareholders and ADS the fully-diluted, as converted capitalization as of the Closing Date, and further determine the issued and
outstanding shares of the Company, on a fully diluted and converted basis, for the purpose of calculating the Company Shares
pursuant to Section 1.1.
3.3 Certain Corporate
Matters. The Company is duly licensed or qualified to do business and is in good standing as a foreign corporation in
every jurisdiction in which the character of the Company's properties or nature of the Company's business requires it to be so
licensed or qualified other than such jurisdictions in which the failure to be so licensed or qualified does not, or insofar as can
reasonably be foreseen, in the future will not, have a material adverse effect on its financial condition, results of operations or
business. The Company has full corporate power and authority and all authorizations, licenses and permits necessary to carry on the
business in which it is engaged or in which it proposes presently to engage and to own and use the properties owned and used by
it. The Company has delivered to ADS, or ADS otherwise has had access to, true, accurate and complete copies of its
Certificate of Incorporation and Bylaws, which reflect all restatements of and amendments made thereto at any time prior to the
date of this Agreement. The records of meetings of the stockholders and Board of Directors of the Company are complete and correct
in all material respects. The stock records of the Company and the stockholder lists of the Company as maintained by its transfer
agent are, to the best of Company belief, complete and correct in all material respects and accurately reflect the record ownership
and the beneficial ownership of all the outstanding shares of Company’s capital stock and any other outstanding securities
issued by the Company. The Company is not in default under or in violation of any provision of its Certificate of
Incorporation or Bylaws in any material respect. The Company is not in any material default or in violation of any
restriction, lien, encumbrance, indenture, contract, lease, sublease, loan agreement, note or other obligation or liability by
which it is bound or to which any of its assets is subject.
3.4 Authority Relative to this
Agreement. The Company has the requisite corporate power and authority to enter into this Agreement and carry out its
obligations hereunder. The execution, delivery and performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of Directors of the Company and no other actions on the
part of the Company are necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity.
3.5 Consents and Approvals; No
Violations. No filing with, and no permit, authorization, consent or approval of, any third party, public body or
authority is necessary for the consummation by the Company of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by the Company nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the provisions hereof, will (a) conflict with or result in any breach of any
provisions of the charter or Bylaws of Company, (b) result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation to which the Company is a party or by which it or any of its properties or assets may be bound or (c) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company, or any of its properties or assets, except in the
case of clauses (b) and (c) for violations, breaches or defaults which are not in the aggregate material to the Company taken as a
whole.
3.6 Reports Filed
Pursuant to Section 12 of The Securities Exchange Act of 1934. All reports filed by or on behalf of the Company pursuant
to Section 12 and/or Section 13 of The Securities Exchange Act of 1934 are true and correct.
3.7 Disclosure.
The representations and warranties and statements of fact made by the Company in this Agreement are, as applicable, accurate,
correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements and information contained herein not false or misleading. There is no material, non-public
information regarding the Company that has not been disclosed to ADS.
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1
Conduct of Business by ADS Pending the Closing. ADS covenants and agrees that prior to
the Closing Date:
(a) ADS shall conduct its business and operations only in the usual and ordinary course
of business;
(b) Except as contemplated by this Agreement and the Austin Capital Agreement, ADS shall
not directly or indirectly do any of the following: (i) sell, pledge, dispose of or encumber any of its assets; (ii) amend or
propose to amend its Certificate of Incorporation or Bylaws; (iii) split, combine or reclassify any outstanding shares of its
capital stock, or declare, set aside or pay any dividend or other distribution payable in cash, stock, property or otherwise with
respect to shares of its capital stock; (iv) redeem, purchase or acquire or offer to acquire any shares of its capital stock or
other securities; (v) create any subsidiaries; (vi) enter into or modify any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
(c) Except as contemplated by this Agreement and the Austin Capital Agreement, ADS shall
not (i) issue, sell, pledge or dispose of, or agree to issue, sell, pledge or dispose of, any additional shares of, or any options,
warrants, conversion privileges or rights of any kind to acquire any shares of, its capital stock; (ii) acquire (by merger,
consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division
or the material assets thereof; (iii) incur any indebtedness for borrowed money, issue any debt securities or guarantee any
indebtedness to others; or (iv) enter into or modify any contract, agreement, commitment or arrangement with respect to any of the
foregoing;
(d) ADS shall notify the Company promptly of any material adverse event or circumstance
affecting ADS (including the filing of any material litigation against ADS or the existence of any dispute with any person or
entity which involves a reasonable likelihood of such litigation being commenced); and
(e) ADS shall comply in all material respects with all legal requirements and contractual
obligations applicable to its operations and business and pay all applicable taxes.
4.2 Other Actions By
ADS. Unless approved in writing by the Company, ADS shall not take any action or permit any action to occur that might
reasonably be expected to result in any of the representations and warranties of ADS contained in this Agreement becoming untrue
after the date hereof or any of the conditions to the Closing set forth in Article 6 of this Agreement not being
satisfied.
4.3 Conduct of Business by the
Company Pending the Closing. The Company covenants and agrees that prior to the Closing Date:
(a) the Company shall conduct its business and operations only in the usual and ordinary
course of business;
(b) Except as contemplated by this Agreement, and as necessary to effect the proposals
contained in the Company Proxy Statement to be filed (the “Company Proxy Statement”), the Company shall not
directly or indirectly do any of the following: (i) sell, pledge, dispose of or encumber any of its assets; (ii) amend or propose
to amend its Certificate of Incorporation or Bylaws; (iii) split, combine or reclassify any outstanding shares of its capital
stock, or declare, set aside or pay any dividend or other distribution payable in cash, stock, property or otherwise with respect
to shares of its capital stock; (iv) redeem, purchase or acquire or offer to acquire any shares of its capital stock or other
securities; (v) create any subsidiaries; (vi) enter into or modify any contract, agreement, commitment or arrangement with respect
to any of the foregoing;
(c) Except as contemplated by this Agreement, and those items contained in the Company
Proxy Statement to be filed, the Company shall not (i) issue, sell, pledge or dispose of, or agree to issue, sell, pledge or
dispose of, any additional shares of, or any options, warrants, conversion privileges or rights of any kind to acquire any shares
of, its capital stock; (ii) acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation,
partnership or other business organization or division or the material assets thereof; (iii) incur any indebtedness for borrowed
money, issue any debt securities or guarantee any indebtedness to others; or (iv) enter into or modify any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(d) the Company shall notify ADS promptly of any material adverse event or circumstance
affecting ADS (including the filing of any material litigation against the Company or the existence of any dispute with any person
or entity which involves a reasonable likelihood of such litigation being commenced);
(e) the Company shall comply in all material respects with all legal requirements and
contractual obligations applicable to its operations and business and pay all applicable taxes; and
(f) the Company’s proxy statement or statements to be filed and
shareholders’ meeting or meetings to be held prior to the Closing Date will be limited to consideration of and voting upon
the following matters: (i) amending the Company’s Articles of Incorporation to effect a reverse stock split and change
the number of authorized shares of capital stock, (ii) amending the Company’s Articles of Incorporation to change the
Company’s name, (iii) election of directors, (iv) adoption of the Company’s 2002 Stock Option Plan, and (v) appointment
of the Company’s accountants.
4.4 Other Actions.
Unless approved in writing by ADS, the Company shall not take any action or permit any action to occur that might reasonably be
expected to result in any of the representations and warranties of the Company contained in this Agreement becoming untrue after
the date hereof or any of the conditions to the Closing set forth in Article 6 of this Agreement not being satisfied.
Notwithstanding the provisions in this Article 4, the Company intends to undertake the corporate actions at or before
Closing which are contemplated by Article 5 of this Agreement.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1
Access and Information. Except for information relating to any claims any party may have
against the other, ADS and the Company shall each afford to the other and to the other's financial advisors, legal counsel,
accountants, consultants and other representatives necessary access throughout the period prior to the Closing to all of its books,
records, properties and personnel and, during such period in order to allow each party to complete its due diligence review, each
shall furnish promptly to the other all information as such other party may reasonably request.
5.2 Certain
Information. The Company, ADS and each of their respective representatives, shall cooperate to prepare and assemble certain
information regarding the Exchange, the Company and ADS, necessary for the stockholders of ADS to make an informed investment
decision regarding the Exchange. ADS shall deliver all of the due diligence materials requested by the Company and/or Austin
Capital, and have executed those documents deemed necessary by Company and/or Austin Capital to satisfy their respective concerns
that ADS has provided all information material to a thorough understanding of the corporate and business affairs of ADS.
5.3 Proposed Board of
Directors of the Company. At the Closing, all necessary actions would be taken to establish and/or maintain a five member
board of directors for the Company. The following will occur:
(a) On or before October 1, 2002, the Company will nominate for election two persons
designated by ADS to the Board of Directors of the Company, such nominees to be included in the Proxy Statement to be filed on
behalf of the Company.
(b) At Closing, provided all conditions precedent to Closing have occurred or have been
waived, the three directors of the Company who were not designated by ADS will resign from the Board of Directors of the Company
and as officers of the Company, and will further resign in any and all capacities as officers or directors of any Affiliate of the
Company, thereby creating 3 vacancies on the five member Board of Directors of the Company.
(c) At that time, the Company Board will be comprised of two directors (as nominated by
ADS and elected by the shareholders of the Company by proxy), and pursuant to the Bylaws of the Company, the Board of Directors
shall convene a Special Meeting of the Board to appoint directors to fill the vacancies created by the resignations of the former
Company directors.
(d) In the event Closing does not occur, the nominees of ADS, if elected by the
shareholders of the Company, agree to resign from the Board of Directors of Company immediately upon request of the Chairman of the
Board of the Company.
5.4 Liquidation of
MedSmart and HealthVIP. Prior to the Closing, the Company shall use its best efforts to liquidate or dispose of the
operations of MedSmart and Health VIP. The parties do not contemplate that either ADS or the ADS Shareholders, upon Closing,
will receive any interest in MedSmart or HealthVIP as a result of the liquidation or disposition of those operations and
entities.
5.6 Indemnity.
Each of the parties hereto (each an “Indemnifying Party”) respectively agree to indemnify, defend and hold the other
party hereto and its officers, directors, agents, attorneys, and Affiliates (collectively, “Indemnified Parties”)
harmless of and from any and all losses, claims, obligations, demands, assessments, penalties, fines, forfeitures, liabilities,
costs, damages and reasonable attorneys’ fees and expenses assert against or incurred by reason of or relating in any manner
to:
(a) Any breach of an Indemnifying Party’s representations, warranties, covenants or
agreements, and
(b) Any and all actions, causes of action, suits, claims, investigations, demands,
audits, judgments, arbitration awards or other proceedings incident to any of the matters made the subject of Subsection (a) of
this Paragraph 5.6.
5.7 Austin Capital
Warrant. Pursuant to an engagement agreement by and between ADS and Austin Capital, LLC (“Austin Capital”),
ADS agreed to issue Austin Capital a stock purchase warrant in connection with certain consulting services provided by Austin
Capital, as more fully set forth in the referenced engagement agreement (the “Austin Capital Warrant”). In the
event of the Closing, or the consolidation of ADS with another entity in which the shareholders of ADS receive cash or securities
of another issuer, or any combination thereof, in exchange for their shares of ADS common stock, or the sale of all or
substantially all of the assets of ADS, ADS and the Company agree the Austin Capital Warrant shall be assumed by or an equivalent
warrant, option or right substituted and issued by the Company at Closing, having the same terms and conditions as the Austin
Capital Warrant, as adjusted for price and shares purchasable thereunder as a result of the Exchange.
5.8 Demand
Registration.
(a) As used in this Section, the following terms shall have the following respective
meanings:
"Commission" means the Securities and Exchange Commission or any other federal agency at the time administering the
Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal rule or statute and the rules
and regulations of the Commission thereunder, all as the same shall be in effect at the time.
"Initiating Holders" means any of DoorDrop, LP, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxx, and ADS Equity Partners, LP.
"Registrable Securities" means (1) Company Shares issued pursuant to this Agreement and (2) any common stock of the Company
issued or issuable in respect of the Company Shares upon any stock split, stock dividend, recapitalization or similar event;
provided, however, that securities shall only be treated as Registrable Securities if and so long as they have not been sold to or
through a broker or dealer or underwriter in a public distribution or a public securities transaction. Notwithstanding the
foregoing, Registrable Securities shall not include any securities sold in a transaction in which the transferor's rights to
registration are not assigned in accordance with the terms herein.
The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company in complying with subsections (b) and (c) hereof,
including without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the
Company). Registration Expenses shall also include the fees and disbursements for one special counsel to the selling stockholders
for each registration pursuant to subsections (b) and (c) hereof.
"Rule 144" and "Rule 145" shall mean Rules 144 and 145, respectively, promulgated under the Securities Act, or any
similar federal rules thereunder, all as the same shall be in effect at the time.
"Securities Act" shall mean the federal Securities Act of 1933, as amended, or any similar federal rule or statute and the
rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling commissions applicable to the securities registered by
the ADS Shareholders.
(b) Requested Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect any registration with respect to the resale by the ADS Shareholders of
their shares of Registrable Securities, the Company will:
(1) promptly give written notice of the proposed registration to all other ADS
Shareholders; and
(2) as soon as practicable, effect such registration (including, without limitation,
appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution by the ADS Shareholders of all or such portion of such Registrable Securities as are specified
in such request, together with all or such portion of the Registrable Securities of any ADS Shareholder or ADS Shareholders joining
in such request by delivering a written notice to such effect to the Company within twenty days after the date of such written
notice from the Company.
(3) Notwithstanding the foregoing, the Company shall not be obligated to take any action
to effect or complete any such registration pursuant to this Subsection (b):
(i) Unless the requested registration would have an aggregate offering price to the
public of all Registrable Securities sought to be registered by all ADS Shareholders exceeding $250,000;
(ii) Following the filing of, and for 180 days immediately following the effective date
of, any registration statement pertaining to equity securities of the Company (other than a registration of securities in a Rule
145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith
commercially reasonable efforts to cause such registration statement to become effective;
(iii) If the Initiating Holders are able to request a registration on Form S‑3 pursuant
to subsection (c) hereof; or
(iv) If the Company shall furnish to the Initiating Holders a certificate signed by the
President of the Company (i) giving notice of its bona fide intention to effect the filing of a registration statement with the
Commission, or (ii) stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the
Company or its stockholders for a registration statement to be filed in the near future. In such case, the Company's obligation to
register, qualify or comply under this subsection (b) may be deferred one or more times for a period not to exceed 90 days in the
aggregate.
(v) More than two years after the date of this Agreement.
Subject to the foregoing clauses i through vii, the Company
shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Initiating Holders.
(c) Registration on Form S-3.
(1) In case the Company shall receive from Initiating Holders a written request that the
Company file a registration statement on Form S-3 (or any successor form to Form S-3) for a public offering of Registrable
Securities the aggregate price to the public of which would exceed $250,000, and the Company is a registrant entitled to use Form
S-3 to register the Registrable Securities for such an offering, the Company shall use best efforts to cause such Registrable
Securities to be registered for the offering on such form and to cause such Registrable Securities to be qualified in such
jurisdictions as such ADS Shareholder or ADS Shareholders may reasonably request; provided, however, that the Company shall not be
required to effect more than one registration pursuant to this Section in any six month period. If such offering is to be an
underwritten offering, the underwriters shall be selected for such underwriting by a majority in interest of the Initiating
Holders, but subject to the Company's reasonable approval. The Company shall inform the other ADS Shareholders of the proposed
registration and offer them the opportunity to participate.
(2) Notwithstanding
the foregoing, the Company shall not be obligated to take any action pursuant to this Section 0:
(vi.) Following the filing of, and for 180 days immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction
or with respect to an employee benefit plan), provided that the Company is actively employing in good faith commercially reasonable
efforts to cause such registration statement to become effective;
(vii.) Within six months after the Company has effected such a registration pursuant to subsection 0, and
such registration has been declared or ordered effective; or
(viii) If the Company shall furnish to the Initiating Holders a certificate signed by the President
of the Company (A) giving notice of its bona fide intention to effect the filing of a registration statement with the Commission,
or (B) stating that, in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company or its
stockholders for a registration statement to be filed in the near future, then the Company's obligation to use its commercially
reasonable efforts to file a registration statement may be deferred one or more times for a period not to exceed 90 days in the
aggregate.
(ix.) More than two years after the date of this Agreement.
(d) Expenses of Registration. All expenses other than underwriting discounts
and commissions incurred in connection with registrations, filings or qualifications pursuant to Section 5.8, including
(without limitation) all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements
of counsel for the Company and the reasonable fees and disbursements, which shall not exceed $25,000, of one counsel for the
selling Initiating Holders (selected by the selling Initiating Holders) shall be borne by the Company.
(e) Limit on Number of Registrations. The Company shall not be obligated to
file more than two registration statements pursuant to this Section.
(f) Registration Procedures. In the case of each registration effected
by the Company pursuant to this Agreement, the Company will keep each ADS Shareholder advised in writing as to the initiation of
such registration and as to the completion thereof. The Company will:
(1) Prepare and file with the Commission a registration statement and such amendments and
supplements as may be necessary and cause such registration statement to become and remain effective until (i) in the case of
registrations pursuant to subsection (b) -- the earlier of (A) 120 days following the date the registration statement is declared
effective, or (B) the distribution described in the registration statement has been completed or, (ii) in the case of a
registration pursuant to Section 0, until the distribution described in the registration statement is effected; and
(2) Furnish to the ADS Shareholders participating in such registration and to the
underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such ADS Shareholders and underwriters may reasonably request in order to
facilitate the public offering of such securities.
(3) Notwithstanding the foregoing, the Company shall notify each ADS Shareholder whose
securities are included in a registration of the happening of any event which makes any statement made in the registration
statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any
material respect or which requires the making of any changes in the registration statement or prospectus so that, in the case of
the registration statement, it will not contain an untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not
contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading. In such event, the Company may suspend use of the
prospectus on written notice to each participating ADS Shareholder, in which case each participating ADS Shareholder shall not
dispose of Registrable Securities covered by the registration statement or prospectus until copies of a supplemented or amended
prospectus are distributed to the participating ADS Shareholders or until the participating ADS Shareholders are advised in writing
by the Company that the use of the applicable prospectus may be resumed (the period of such suspension shall be a "Blackout
Period"). The Company shall ensure that the use of the prospectus may be resumed as soon as practicable. The Company shall, upon
the occurrence of any event contemplated by this paragraph, prepare a supplement or post‑effective amendment to the
registration statement or a supplement to the related prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder,
such prospectus will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading. In the event that the Company
declares one or more Blackout Periods, the 120‑day period set forth in subsection (f)(1) shall be extended by the number of
days that constitute any such Blackout Periods. The Company shall give each ADS Shareholder due diligence access, furnish
reasonably requested comfort letters and opinions and cooperate as reasonably requested to facilitate the distribution.
(g) Indemnification.
(1) The Company will indemnify each ADS Shareholder, each of its officers and directors
and partners, and each person controlling such ADS Shareholder within the meaning of Section 15 of the Securities Act, with respect
to which registration has been effected pursuant to this Agreement, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such
registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or any
violation by the Company of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under
such laws applicable to the Company in connection with any such registration, and the Company will reimburse each such ADS
Shareholder, each of its officers and directors, and each person controlling such ADS Shareholder, for any legal and any other
expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement
or omission, made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such ADS
Shareholder for use therein.
(2) Each ADS Shareholder will, if Registrable Securities held by such ADS Shareholder are
included in the securities as to which such registration is being effected, indemnify the Company, each of its officers and
directors, each person who controls the Company within the meaning of Section 15 of the Securities Act, each other holder of the
Company's securities covered by such registration statement, and each such holder's, officers and directors and each person
controlling such holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not
misleading, of any violation by the ADS Shareholder of the Securities Act, the Exchange Act, state securities laws or any rule or
regulation promulgated under such laws applicable to the ADS Shareholder, and will reimburse the Company, such other holders, such
officers, directors, or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in
connection with investigating or defending any such claim, loss, damage, liability or action, but in the case of the Company or the
other holders or their officers, directors, or control persons, only to the extent that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with information furnished to the Company in writing by such ADS Shareholder for use
therein. Notwithstanding the foregoing, the liability of each ADS Shareholder under this subsection (g)(2) shall be limited
to an amount equal to the net proceeds from the offering received by such ADS Shareholder. A ADS Shareholder will not be required
to enter into any agreement or undertaking in connection with any registration under this Section providing for any indemnification
or contribution on the part of such ADS Shareholder greater than the ADS Shareholder's obligations under this subsection
(g)(2).
(3) Each party entitled to indemnification under this subsection (g) (the "Indemnified
Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”)
promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (which
approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense,
and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying
Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as
to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably
withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or
litigation.
(4) If the indemnity and reimbursement obligation provided in any paragraph of this
subsection (g) is unavailable or insufficient to hold harmless an Indemnified Party in respect of any losses, damages and
liabilities (or actions in respect thereof) referred to therein, then the Indemnifying Party shall contribute to the amount paid or
payable by the Indemnified Party as a result of such losses, damages and liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and the Indemnified Party on
the other hand in connection with statements or omissions which resulted in such losses, damages and liabilities as well as any
other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission of or alleged omission to state a material fact relates
to information supplied by the Indemnifying Party or the Indemnified Party and the parties relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would
not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable considerations referred to in the first sentence of this
paragraph. The amount paid by an Indemnified Party as a result of the losses, damages, and liabilities referred to in the
first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any losses, damages or liabilities which is the subject of this
paragraph.
(5) Notwithstanding the foregoing, to the extent that the provisions on indemnification
and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
(h) Information by ADS Shareholder. The ADS Shareholder or ADS Shareholders
of Registrable Securities included in any registration shall furnish to the Company such information regarding such ADS Shareholder
or ADS Shareholders, the Registrable Securities held by them and the distribution proposed by such ADS Shareholder or ADS
Shareholders as the Company may reasonably request in writing and as shall be required in connection with any registration referred
to in this Agreement.
5.9 Filing of SB-2
Registration Statement. Upon the successful completion of the Closing, and the timely provision of the audited financial
statements of ADS, the Company covenants and agrees that it will use its best efforts to, within thirty (30) days of the filing
with the SEC of ADS audited financial statements, file and seek effective registration of the certain designated securities of the
Company, as determined by the Company and including without limitation, the Company Shares and the shares underlying the Austin
Capital Warrant.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Third Party Beneficiaries of Three Conditions of Closing the Exchange.
(a) In consideration of Investors providing equity financing at or about the time of
execution of this Agreement, the Company and ADS acknowledge that the Investors are third party beneficiaries of the transaction
represented by this Agreement, only and without exception to the limited extent of the fulfillment of the following three
conditions:
(1) At or prior to the Closing, ADS will have received, before calculation of any fees or
expenses, a total of Five Hundred Thousand and No/100 Dollars ($500,000.00) in equity capital, from whatever sources, on the same
per share purchase price and the same or substantially similar terms as received by the Investors.
(2) Pursuant to Paragraph 1.3, the Closing must take place on or before January 1,
2003.
(3) The Company shall have paid and/or converted all current and long term liabilities
listed on the balance sheet dated June 30, 2002 and shall not have incurred additional liabilities other than in the ordinary
course of business in association with the actions contemplated in this Agreement.
(b) At least five (5) days prior to the Closing, Company and ADS will provide Investors a
certificate, signed by both parties, representing that the foregoing condition set forth in Paragraph 6.1(a) has been
satisfied.
(c) Further, Company and ADS acknowledge and agree that the Closing will not take place
unless and until the foregoing conditions set forth in Paragraph 6.1 has been satisfied, or the Company and ADS have received
written statements waiving the satisfaction of any condition that was not satisfied by the date of the Closing, such statement
requiring the affirmative consent of three of the Investors.
(d) In the event of a failure to satisfy the conditions set forth in 6.1(b) and 6.1(c)
above, and in the event any three Investors shall waive satisfaction of any or all of said conditions, such waiver and consent to
proceed with Closing shall serve as consent for all Investors.
(e) Notwithstanding anything in this Agreement to the contrary, the Investors,
individually or collectively, are not, and shall not be deemed to be Third Party Beneficiaries to any provision of this Agreement
other than as set forth in Paragraph 6.1(b) and 6.1(c), nor shall they be Third Party Beneficiaries, individually or collectively,
to the Agreement as a whole. Accordingly, provided the conditions to closing in Paragraph 6.1 are met, and verified in
writing to the Investors pursuant to Paragraph 6.1(b), the Investors, individually and collectively, agree not to assert any claims
as Third Party Beneficiaries or otherwise, which would seek to enjoin, delay or prohibit the Closing.
6.2 Conditions to
Obligations of Each Party to Effect the Closing. The respective obligations of each party hereto to effect the Closing
shall be subject to the fulfillment on or prior to the Closing Date of the following conditions. None of the conditions are
waivable without written consent of Company and ADS:
(a) The Exchange and the other proposals contained in ADS shareholder consents shall have
been approved by the ADS Shareholders in accordance with applicable law; and
(b) No order shall have been entered and remained in effect in any action or proceeding
before any foreign, federal or state court or governmental agency or other foreign, federal or state regulatory or administrative
agency or commission that would prevent or make illegal the consummation of the transactions contemplated hereby.
(c) All current long term debt on the Company’s balance sheet will have been paid
or otherwise converted to into equity of the Company.
6.3 Additional Conditions
to ADS's Obligations. The obligations of ADS to effect the Closing are subject to the satisfaction of the following
additional conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article 3 of this Agreement
will be true and correct in all material respects as of the date hereof and at and as of the Closing Date as though then
made;
(b) The Company shall have performed, in all material respects, each obligation and
agreement and complied with each covenant to be performed and complied with by them under Articles 4 and 5 of this Agreement
prior to the Closing Date;
(c) At the Closing, the Company shall have delivered or caused to be delivered to ADS the
following:
(1) resolutions duly adopted by the Board of Directors of the Company that have
authorized and approved the Exchange and the execution, delivery and performance of this Agreement; and
(2) release and termination agreements providing for the termination of certain
consulting agreements and release of claims against Company from the following parties:
(A) First Advisors, Inc.
(B) Stack/Xxxxxx, LLP
(C) Southwest Strategic Partners, LLC
(D) The Franklin Group, Inc.
(3) Proposed Form 8-K addressing the Exchange.
(4) Engagement Agreement with SEC qualified auditor.
(5) A certificate representing that since the date of the execution of this Agreement,
there has not been any material adverse change in the Company’s business, and, to the knowledge of the Company, no event has
occurred or circumstance exists that reasonably would be expected to result in such a material adverse change; and (b) since the
date of the execution of this Agreement, and except to the extent contemplated by this Agreement, the Company has conducted the
Company’s business in the ordinary course of business. The certificate will contain a representation regarding the
number of shares of stock of the Company then outstanding (fully diluted) as required by Section 1.1 of this Agreement.
(d) At the Closing, the Company shall have delivered or caused to be delivered to the ADS
Shareholders properly issued, fully paid and non assessable shares of the Company pursuant to Section 1.1.
6.4 Additional Conditions
to the Obligations of the Company. The respective obligations of the Company to effect the Closing are subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article 2 of this Agreement
will be true and correct in all material respects as of the date hereof and at and as of the Closing Date as though then
made;
(b) ADS shall have performed, in all material respects, each obligation and agreement and
complied with each covenant required to be performed and complied with by it under Article 5 of this Agreement prior to the
Closing Date;
(c) No action or proceeding before any court or governmental body will be pending or
threatened wherein a judgment, decree or order would prevent any of the transactions contemplated hereby or cause such transactions
to be declared unlawful or rescinded; and
(d) On the Closing Date, ADS shall have delivered to the Company the following:
(1) a certificate executed on behalf of ADS stating that the conditions set forth in
Sections 6.4(a) through (c) of this Agreement have been satisfied;
(2) resolutions duly adopted by the Board of Directors of ADS authorizing and
approving the Exchange and the execution, delivery and performance of this Agreement;
(3) certificates representing all of the outstanding the ADS Shares to be tendered
pursuant to this Agreement, properly endorsed for transfer;
(4) Executed employment agreements for Dub Xxxxx and Xxx Xxxxxx in the form
attached;
(5) such other documents as the Company may reasonably request in connection with the
transactions contemplated hereby; and
(6) a certificate representing that since the date of the execution of this Agreement,
there has not been any material adverse change in ADS business, and, to the knowledge of ADS, no event has occurred or circumstance
exists that reasonably would be expected to result in such a material adverse change; and (b) since the date of the execution of
this Agreement, and except to the extent contemplated by this Agreement, ADS has conducted its business in the ordinary course of
business.
ARTICLE 7
TERMINATION
7.1
Termination by Mutual Consent. This Agreement may be terminated at any time prior to
the Closing by the mutual written consent of the parties hereto.
7.2 Termination
Date. This Agreement shall terminate on January 1, 2003 (the “Termination Date”) and the parties will have no
further obligations to the other to effectuate a Closing, unless Company and ADS consent and agree to extend the Termination Date
for a period not to exceed ninety (90) days, and obtain written consent from a majority of Investors as provided for in Article
1.3.
7.2 Termination by Any
Party. This Agreement may be terminated by any party hereto if a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or administrative agency or commission shall have issued an
order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action shall have become final and non‑appealable;
provided, however, that the party seeking to terminate this Agreement pursuant to this clause shall have used all reasonable
efforts to remove such injunction, order or decree.
7.3 Material
Breach. This Agreement may be terminated by any party if a material breach of this Agreement has been committed and such
breach has not been waived or cured by the alleged breaching party within 30 days of receipt of written notice from a
non‑breaching party detailing such breach.
7.4 Effect of
Termination. In the event of termination of this Agreement pursuant to this Article 7, the obligations of the
parties hereto to consummate the Exchange shall terminate. Each party's right of termination under this Article 7 is in
addition to any other rights it may have under this Agreement or otherwise, and the exercise of such right of termination will not
be an election of remedies.
ARTICLE 8
GENERAL PROVISIONS
8.1
Notices. All notices and other communications hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally, sent by overnight courier or mailed by registered or certified mail
(postage prepaid and return receipt requested) to the party to whom the same is so delivered, sent or mailed.
8.2 Interpretation.
The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to sections and articles of this Agreement unless
otherwise stated.
8.3 Severability. If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated and the parties shall negotiate in good faith to modify this
Agreement to preserve each party's anticipated benefits under this Agreement.
8.4 Miscellaneous.
This Agreement (together with all other documents and instruments referred to herein): (a) constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter
hereof; (b) except as expressly set forth herein, is not intended to confer upon any other person any rights or remedies hereunder
and (c) shall not be assigned by operation of law or otherwise, except as may be mutually agreed upon by the parties hereto.
8.5 Governing Law.
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas.
8.6 Counterparts.
This Agreement may be executed in multiple counterparts, which together shall constitute a single agreement.
8.7 Amendment.
This Agreement may be amended, modified or supplemented only by an instrument in writing executed by all parties hereto.
8.8 Parties In Interest:
No Third Party Beneficiaries. Except as provided in Article 6, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal representatives, successors and assigns of the parties
hereto. This Agreement shall not be deemed to confer upon any person not a party hereto any rights or remedies hereunder unless
expressly provided for herein, and then only to the extent so provided.
8.9 Waiver. No
waiver by any party of any default or breach by another party of any representation, warranty, covenant or condition contained in
this Agreement shall be deemed to be a waiver of any subsequent default or breach by such party of the same or any other
representation, warranty, covenant or condition. No act, delay, omission or course of dealing on the part of any party in
exercising any right, power or remedy under this Agreement or at law or in equity shall operate as a waiver thereof or otherwise
prejudice any of such party's rights, powers and remedies. All remedies, whether at law or in equity, shall be cumulative and the
election of any one or more shall not constitute a waiver of the right to pursue other available remedies.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
|
|
NATIONAL HEALTH & SAFETY CORP. |
|
|
|
|
|
|
|
|
|
|
By: |
|
Xxxx X. Xxxxx |
|
Name: |
|
Xxxx X. Xxxxx |
|
Title: |
|
Chairman, Chief Executive Officer and President |
|
|
ALTERNATIVE DELIVERY SOLUTIONS, INC. |
|
|
|
|
|
|
|
|
|
|
By: |
|
Xxxxx X. “Dub” Xxxxx |
|
Name: |
|
Xxxxx X. “Dub” Xxxxx |
|
Title: |
|
Chief Executive Officer |
Shareholders of Alternative Delivery Solutions, Inc.:
Xxxxx X. “Dub”
Xxxxx
Xxxxx R. “Dub” Xxxxx
Xxxxx X.
Xxxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxx
Xxxx Xxxxx
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxxxxx Xxxxx
Xxxxxx Xxxxx
|
|
ADS EQUITY PARTNERS, LP |
|
|
|
|
|
|
|
|
|
|
|
Xxxx Xxxxx, President |
|
|
By: |
|
First Advisors, Inc. |
|
|
Xxxx Xxxxx, President |
Xxxxxxx X.
Xxxxxxx
Xxxxxxx X. Xxxxxxx
|
|
DoorDrop, LP |
|
|
|
|
|
|
|
|
|
|
By: |
|
Xxxxx Xxxx, President |
|
|
Xxxxx Xxxx Holdings, Inc. |
|
|
|
Xxxxx Xxxx, President |
Xxxxx X.
Xxxx
Xxxxx X. Xxxx
|
|
|
Austin Capital, LLC |
|
|
|
|
|
|
|
|
|
By: |
|
Xxxxx Xxxxxx, Manager |
|
|
|
Xxxxx Xxxxxx, Manager |
SCHEDULE 1
Alternative Delivery Systems, Inc.
Shareholders and Warrant Holders
|
|
Names of Shareholders |
|
Number of Shares |
|
|
|
|
|||
|
1. |
|
Xxxxx X. “Dub” Xxxxx |
|
66,000 |
|
|
|
|||
|
2. |
|
Xxxxx X. Xxxxxx |
|
22,000 |
|
|
|
|||
|
3. |
|
Xxxx Xxxxx |
|
1,000 |
|
|
0000 Xxxxxxxxx Xxxx |
|
||
|
|
Xxx Xxxxxxx, Xxxxx 00000 |
|
||
|
|
|
|||
|
4. |
|
Xxx and Xxxxxx Xxxxxx, JTWROS |
|
1,000 |
|
|
00000 Xxxxxxxx Xxxx |
|
||
|
|
Xxx Xxxxxxx, Xxxxx 00000 |
|
||
|
|
|
|||
|
5. |
|
Xxxxxx Xxxxx |
|
10,000 |
|
|
0000 Xxxxxxxxxxx |
|
||
|
|
Xxxx Xxxxxxxxx, Xxxxxxxx 00000 |
|
||
|
|
|
|||
|
6. |
|
ADS Equity Partners, LP |
|
_____ |
|
|
0000 Xxx Xxxx Xxxx; Xxxxx 000 |
|
|
|
|
|
Xxxxxx, Xxxxx 00000 |
|
|
|
|
|
Attention Xxxx Xxxxx |
|
|
|
|
|
|
|
||
|
7. |
|
Xxxxxxx X. Xxxxxxx |
|
1,786 |
|
|
000 Xxxxxxxx |
|
||
|
|
Xxxxxx, Xxxxx 00000 |
|
||
|
|
|
|||
|
8. |
|
DoorDrop, LP |
|
10,714 |
|
|
000 Xxxxxx Xx., Xxxxx 000 |
|
||
|
|
Xxxxxx XX, 00000 |
|
||
|
|
Attention: Xxxxx Xxxx Holdings, Inc. |
|
||
|
|
|
|||
|
9. |
|
Xxxxx X. Xxxx |
|
8,929 |
|
|
Care of Xxxxxxx Xxxxxxx |
|
||
|
|
000 Xxxxxxxx |
|
||
|
|
Xxxxxx, Xxxxx 00000 |
|
||
|
|
|
|||
|
|
|
|||
|
|
Names of Warrant Holders: |
|
Number of Warrants |
|
|
|
|
|
||
|
1. |
|
Austin Capital, LLC |
|
_____ |
|
|
0000 Xxx Xxxx Xxxx; Xxxxx 000 |
|
||
|
|
Xxxxxx, Xxxxx 00000 |
|
||
|
|
Attention: Xxxxx Xxxxxx |
|
* * * * *
AMENDMENT NO. 1 TO
STOCK EXCHANGE AGREEMENT
by and between
National Health & Safety Corp.
and
Alternative Delivery Solutions, Inc.
And
Xxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxx
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxxxxx Xxxxx
ADS Equity Partners, LP
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxx
DoorDrop, XX
Xxxxxx Capital, LLC
("ADS Shareholders")
* * * * *
September ____, 2002
AMENDMENT NO. 1 TO
STOCK EXCHANGE AGREEMENT
This Amendment No. 1
(this "Amendment") is made as of October ____, 2002 with reference to that certain Stock Exchange Agreement dated as of September
____, 2002 (the "Agreement"), by and among National Health & Safety Corp., a Utah corporation, having its principal office at
0000 Xxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 ("NHLT" or the "Company"), Alternative Delivery Solutions, Inc., a Texas
corporation, having its principal offices at 00000 Xxx Xxxxx; Xxxxx 000, Xxx Xxxxxxx, Xxxxx ("ADS"), Xxxxx X. Xxxxx, Xxxxx X.
Xxxxxx, Xxxx Xxxxx, Xxx and Xxxxxx Xxxxxx, JTWROS, Xxxxxx Xxxxx, ADS Equity Partners, LP, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxx, Xxxxxx
Capital, LLC and DoorDrop, LP (known collectively as "ADS Shareholders"). Unless otherwise indicated herein, capitalized
terms used in this Amendment without definition shall have the respective meanings specified in the Agreement.
RECITAL:
WHEREAS the Company and the ADS Shareholders desire to amend the
Agreement as provided below.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE 1
AMENDMENTS TO THE AGREEMENT
1.1 Amendment to Article 5, Section 5.3 "Proposed Board of Directors of the
Company." Section 5.3 of Article 5 of the Agreement is hereby amended to read in its entirety as follows:
5.3 Proposed Board of
Directors of the Company. At or prior to the Closing, all necessary actions would be taken to establish and/or maintain a
five member board of directors for the Company following Closing. The following will occur:
(a). The Company will nominate Xxxxx X. "Dub" Xxxxx, Xxxxx X. (Xxx) Xxxxxx, and Xxxxx Xxxxxx
for election to the Board of Directors of the Company, such nominees to be included in the Proxy Statement to be filed on behalf of
the Company.
(b). Two of the current directors of the Company, Xxxx X. Xxxxx and Xxxxx Xxx, XX, have
been nominated for reelection to the Board in the Proxy Statement to be filed on behalf of the Company. Three of the current
directors of the Company will not stand for reelection.
(c). As part of the Agreement, upon Closing, Xxxxx Xxx, XX will submit his resignation as
director, to permit the remaining directors to select his replacement pursuant to the Company's bylaws. The newly elected
board of directors shall fill the vacancy created by Xx. Xxx'x resignation.
(d). Upon Closing, Xxxx X. Xxxxx and Xxxxx Xxx, XX will each resign their respective positions
as officers of the Company.
(e). In the event Closing does not occur, Xxxxx X Xxxxx, Xxxxx X. Xxxxxx and Xxxxx Xxxxxx, if
elected as directors by the Company's shareholders, each agree to resign from the Board of Directors immediately upon request of
the Chairman of the Board of the Company.
ARTICLE 2
EFFECTS OF THIS AMENDMENT
2.1
Reference to the Agreement. As of and after the date hereof, each reference in the
Agreement to "this Agreement", "hereunder", 'hereof", "herein", "hereby" or words of like import referring to the Agreement shall
mean and be a reference to the Agreement as amended by this Amendment.
2.2 No Other
Effect. Except as specifically amended by this Amendment, each term, provision and condition of the Agreement survives,
remains and shall continue in full force and effect. Nothing in this Amendment shall be deemed to (a) constitute a waiver of
compliance by any party to the Agreement with respect to any term, provision or condition of the Agreement, or (b) prejudice any
right or remedy that any party to the Agreement may now have or may have in the future under or in connection with the
Agreement.
2.3 Governing Law.
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas.
2.4 Counterparts.
This Agreement may be executed in multiple counterparts, by manual or facsimile signature, which together shall constitute a single
agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first written above.
|
|
NATIONAL HEALTH & SAFETY CORP. |
|
|
|
|
|
|
|
|
|
|
By: |
|
Xxxx X. Xxxxx |
|
Name: |
|
Xxxx X. Xxxxx |
|
Title: |
|
Chairman, Chief Executive Officer and President |
|
|
ALTERNATIVE DELIVERY SOLUTIONS, INC. |
|
|
|
|
|
|
|
|
|
|
By: |
|
Xxxxx X. “Dub” Xxxxx |
|
Name: |
|
Xxxxx X. “Dub” Xxxxx |
|
Title: |
|
Chief Executive Officer |
Shareholders of Alternative Delivery Solutions, Inc.:
Xxxxx X. “Dub”
Xxxxx
Xxxxx R. “Dub” Xxxxx
Xxxxx X.
Xxxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxx
Xxxx Xxxxx
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxxxxx Xxxxx
Xxxxxx Xxxxx
|
|
ADS EQUITY PARTNERS, LP |
|
|
|
|
|
|
|
|
|
|
|
Xxxx Xxxxx, President |
|
|
By: |
|
First Advisors, Inc. |
|
|
Xxxx Xxxxx, President |
Xxxxxxx X.
Xxxxxxx
Xxxxxxx X. Xxxxxxx
|
|
DoorDrop, LP |
|
|
|
|
|
|
|
|
|
|
By: |
|
Xxxxx Xxxx, President |
|
|
Xxxxx Xxxx Holdings, Inc. |
|
|
|
Xxxxx Xxxx, President |
Xxxxx X.
Xxxx
Xxxxx X. Xxxx
|
|
|
Austin Capital, LLC |
|
|
|
|
|
|
|
|
|
By: |
|
Xxxxx Xxxxxx, Manager |
|
|
|
Xxxxx Xxxxxx, Manager |
