EXCHANGE AGREEMENT
Between
HEALTHRENU MEDICAL, INC.
and
HEALTHRENU, INC.
Dated September 23, 2003
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement") is
entered into as of this 23rd day of September, 2003, by and between HEALTHRENU
MEDICAL, INC., a Nevada corporation (hereinafter referred to as the "Company"),
HEALTHRENU, INC., a Delaware corporation (hereinafter referred to as
"Healthrenu"), and the persons executing this Agreement listed on the signature
page hereto (referred to collectively as "Healthrenu Shareholders") who own one
hundred percent (100%) of the outstanding shares of Healthrenu, upon the
following premises:
Premises
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WHEREAS, the Healthrenu Shareholders own one hundred percent (100%) of the
issued and outstanding shares of the capital stock of Healthrenu;
WHEREAS, the Company is a publicly held corporation whose common stock is
quoted on the OTC Bulletin Board under the symbol "HRUM";
WHEREAS, Healthrenu is a privately held corporation organized under the
laws of the State of Delaware;
WHEREAS, the Company desires to acquire 100% of the issued and outstanding
shares of Common Stock of Healthrenu in exchange for unissued shares of its
Common Stock (the "Common Stock") (the "Exchange Offer"), so that Healthrenu
will become a wholly owned subsidiary of the Company;
WHEREAS, Healthrenu Shareholders desire to exchange all of their shares of
capital stock of Healthrenu solely in exchange for the shares of authorized but
unissued Common Stock, $.001 par value, of the Company; and
WHEREAS, the Company, Healthrenu and the Healthrenu Shareholders desire to
set forth the terms of the Exchange Offer, which is intended to constitute a
tax-free reorganization pursuant to the provisions of the Internal Revenue Code
of 1986.
Agreement
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NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF HEALTHRENU
AND THE HEALTHRENU SHAREHOLDERS
As an inducement to and to obtain the reliance of the Company, except as
set forth on the Healthrenu Schedules (as hereinafter defined), Healthrenu and
the Healthrenu Shareholders represent and warrant as follows:
Section 1.01 Organization. Healthrenu is a corporation duly organized,
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validly existing, and in good standing under the laws of the State of Delaware
and has the corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states or countries
in which the character and location of the assets owned by it or the nature of
the business transacted by it requires qualification, except where failure to be
so qualified would not have a material adverse effect on its business. Included
in the Healthrenu Schedules are complete and correct copies of the Articles of
Incorporation and Bylaws of Healthrenu as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of Healthrenu's
Articles of Incorporation or Bylaws. Healthrenu has taken all actions required
by law, its Articles of Incorporation, or otherwise to authorize the execution
and delivery of this Agreement. Healthrenu has full power, authority, and legal
right and has taken all action required by law, its Articles of Incorporation,
and otherwise to consummate the transactions herein contemplated.
Section 1.02 Capitalization. The authorized capitalization of
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Healthrenu consists of 45,000,000 shares of common stock of which 15,323,199
shares are common stock with par value of $.001 per share, and 5,000,000 shares
are preferred stock with par value of $.001 per share. There are currently
15,323,199 shares of common stock issued and outstanding. All issued and
outstanding shares are legally issued, fully paid, and non-assessable and not
issued in violation of the preemptive or other rights of any person.
Section 1.03 Subsidiaries and Predecessor Corporations. Healthrenu
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does not have any predecessor corporation(s) or subsidiary(ies), and does not
own, beneficially or of record, any shares of any other corporation.
Section 1.04 Other Information.
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(a) Healthrenu has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties), except for taxes accrued but not yet due and payable.
(b) Healthrenu has filed all state, federal or local income and/or
franchise tax returns required to be filed by it from inception to the date
hereof. Each of such income tax returns reflects the taxes due for the period
covered thereby, except for amounts which, in the aggregate, are immaterial.
(c) The books and records of Healthrenu are in all material respects
complete and correct and have been maintained in accordance with good business
and accounting practices.
(d) Healthrenu has no material liabilities, direct or indirect, matured
or unmatured, contingent or otherwise in excess of Twenty-Five Thousand Dollars
($25,000).
Section 1.05 Information. The information concerning Healthrenu set
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forth in this Agreement and in the Healthrenu Schedules is complete and accurate
in all material respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading. In
addition, Healthrenu has fully disclosed in writing to the Company (through this
Agreement or the Healthrenu Schedules) all information relating to matters
involving Healthrenu or its assets or its present or past operations or
activities which (i) indicated or may indicate, in the aggregate, the existence
of a greater than Twenty-Five Thousand Dollars ($25,000) liability or diminution
in value, (ii) have led or may lead to a competitive disadvantage on the part of
Healthrenu, or (iii) either alone or in aggregation with other information
covered by this Section, otherwise have led or may lead to a material adverse
effect on the transactions contemplated herein or on Healthrenu, its assets, or
its operations or activities as presently conducted or as contemplated to be
conducted after the Closing Date, including, but not limited to, information
relating to governmental, employee, environmental, litigation and securities
matters and transactions with affiliates.
Section 1.06 Options or Warrants. There are no existing options,
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warrants, calls, or commitments of Healthrenu of any character relating to the
authorized and unissued Healthrenu common stock, except options, warrants, calls
or commitments, if any, to which Healthrenu is not a party and by which it is
not bound.
Section 1.07 Absence of Certain Changes or Events. Except as set forth
------------------------------------
in this Agreement or the Healthrenu Schedules, since June 30, 2003:
(a) there has not been (i) any material adverse change in the proposed
business, operations, properties, assets, or condition of Healthrenu or (ii) any
damage, destruction, or loss to Healthrenu (whether or not covered by insurance)
materially and adversely affecting the business or financial condition of
Healthrenu;
(b) Healthrenu has not (i) amended its Articles of Incorporation or
Bylaws; (ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to stockholders
or purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock; (iii) waived any rights of value which in the aggregate are outside of
the ordinary course of business or material considering the business of
Healthrenu; (iv) made any material change in its method of management, operation
or accounting; (v) entered into any other material transaction other than sales
in the ordinary course of its business; (vi) made any accrual or arrangement for
payment of bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii) increased
the rate of compensation payable or to become payable by it to any of its
officers or directors or any of its salaried employees whose monthly
compensation exceeds Ten Thousand Dollars ($10,000); or (viii) made any increase
in any profit sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement made to,
for, or with its officers, directors, or employees;
(c) Healthrenu has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) in excess of $25,000 except as disclosed herein and except
liabilities incurred in the ordinary course of business; (ii) paid or agreed to
pay any material obligations or liability (absolute or contingent) other than
current liabilities, and current liabilities incurred in the ordinary course of
business and professional and other fees and expenses in connection with the
preparation of this Agreement and the consummation of the transactions
contemplated hereby; (iii) sold or transferred, or agreed to sell or transfer,
any of its assets, properties, or rights (except assets, properties, or rights
not used or useful in its business which, in the aggregate have a value of less
than Twenty-Five Thousand Dollars [$25,000]), or canceled, or agreed to cancel,
any debts or claims (except debts or claims which in the aggregate are of a
value of less than Twenty-Five Thousand Dollars [$25,000]); or (iv) made or
permitted any amendment or termination of any contract, agreement, or license to
which it is a party if such amendment or termination is material, considering
the business of Healthrenu; and
(d) To the best knowledge of Healthrenu, Healthrenu has not become
subject to any law or regulation which materially and adversely affects, or in
the future may adversely affect, the business, operations, properties, assets,
or condition of Healthrenu.
Section 1.08 Title and Related Matters. No third party has any right
--------------------------
to, and Healthrenu has not received any notice of infringement of or conflict
with asserted rights of others with respect to, any product, technology, data,
trade secrets, know-how, proprietary techniques, trademarks, service marks,
trade names, or copyrights which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a materially
adverse effect on the proposed business, operations, financial condition,
income, or business prospects of Healthrenu or any material portion of its
properties, assets, or rights.
Section 1.09 Litigation and Proceedings. There are no actions, suits,
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or proceedings pending or, to the knowledge of Healthrenu after reasonable
investigation, threatened by or against Healthrenu or affecting Healthrenu or
its properties, at law or in equity, before any court or other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind. Healthrenu does not have any knowledge of any material default on its
part with respect to any judgment, order, injunction, decree, award, rule, or
regulation of any court, arbitrator, or governmental agency or instrumentality
or of any circumstances which, after reasonable investigation, would result in
the discovery of such a default.
Section 1.10 Contracts.
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(a) There are no material contracts, agreements, franchises, license
agreements, debt instruments or other commitments to which Healthrenu is a party
or by which it or any of its assets, products, technology, or properties are
bound other than those incurred in the ordinary course of business (as used in
this Agreement, a "material" contract, agreement, franchise, license agreement,
debt instrument or commitment is one which (i) will remain in effect for more
than six (6) months after the date of this Agreement and (ii) involves aggregate
obligations of at least Twenty-Five Thousand Dollars ($25,000);
(b) All contracts, agreements, franchises, license agreements, debt
instruments and other commitments, if any, to which Healthrenu is a party and
which are material to the operations of Healthrenu taken as a whole are valid
and enforceable by Healthrenu in all respects, except as limited by bankruptcy
and insolvency laws and by other laws affecting the rights of creditors
generally;
(c) Healthrenu is not a party to or bound by, and the properties of
Healthrenu are not subject to, any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment, order,
writ, injunction, decree, or award which materially and adversely affects, the
business operations, properties, assets, or condition of Healthrenu; and
(d) Except as included or described in the Healthrenu Schedules,
Healthrenu is not a party to any oral or written (i) contract for the employment
of any officer or employee which is not terminable on thirty (30) days, or less
notice; (ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan; (iii) agreement, contract, or
indenture relating to the borrowing of money; (iv) guaranty of any obligation,
other than one on which Healthrenu is a primary obligor, for the borrowing of
money or otherwise, excluding endorsements made for collection and other
guaranties of obligations which, in the aggregate do not exceed more than one
(1) year or provide for payments in excess of Twenty-Five Thousand Dollars
($25,000) in the aggregate; (v) collective bargaining agreement; or (vi)
agreement with any present or former officer or director of Healthrenu.
Section 1.11 Material Contract Defaults. Healthrenu is not in default
--------------------------
in any material respect under the terms of any outstanding material contract,
agreement, lease, or other commitment which is material to the business,
operations, properties, assets or condition of Healthrenu and there is no event
of default in any material respect under any such contract, agreement, lease, or
other commitment in respect of which Healthrenu has not taken adequate steps to
prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
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Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
an event of default under, or terminate, accelerate or modify the terms of any
material indenture, mortgage, deed of trust, or other material contract,
agreement, or instrument to which Healthrenu is a party or to which any of its
properties or operations are subject.
Section 1.13 Governmental Authorizations. Except as set forth in the
----------------------------
Healthrenu Schedules, Healthrenu has all licenses, franchises, permits, and
other governmental authorizations that are legally required to enable it to
conduct its business in all material respects as conducted on the date hereof.
Except for compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by Healthrenu of this
Agreement and the consummation by Healthrenu of the transactions contemplated
hereby.
Section 1.14 Compliance With Laws and Regulations. Except as set forth
------------------------------------
in the Healthrenu Schedules, to the best of its knowledge Healthrenu has
complied with all applicable statutes and regulations of any federal, state, or
other governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets, or condition of Healthrenu or except to the
extent that noncompliance would not result in the occurrence of any material
liability for Healthrenu.
Section 1.15 Approval of Agreement. The Board of Directors of
-----------------------
Healthrenu has authorized the execution and delivery of this Agreement by
Healthrenu and has approved this Agreement and the transactions contemplated
hereby, and will recommend to the Healthrenu Shareholders that the Exchange
Offer be accepted by them.
Section 1.16 Material Transactions or Affiliations. Set forth in the
--------------------------------------
Healthrenu Schedules is a description, if applicable, of every contract,
agreement, or arrangement between Healthrenu or any predecessor and any person
who was at the time of such contract, agreement, or arrangement an officer,
director, or person owning of record, or known by Healthrenu to own
beneficially, five percent (5%) or more of the issued and outstanding common
stock of Healthrenu and which is to be performed in whole or in part after the
date hereof or which was entered into not more than three (3) years prior to the
date hereof. Except as disclosed in the Healthrenu Schedules or otherwise
disclosed herein, no officer, director, or five percent (5%) shareholder of
Healthrenu has, or has had since inception of Healthrenu, any known interest,
direct or indirect, in any transaction with Healthrenu which was material to the
business of Healthrenu. There are no commitments by Healthrenu, whether written
or oral, to lend any funds, or to borrow any money from, or enter into any other
transaction with, any such affiliated person.
Section 1.17 Healthrenu Schedules. Healthrenu will deliver to the
---------------------
Company the following schedules, if such schedules are applicable to the
business of Healthrenu, which are collectively referred to as the " Healthrenu
Schedules" and which consist of separate schedules dated as of the date of
execution of this Agreement, all certified by the chief executive officer of
Healthrenu as complete, true, and correct as of the date of this Agreement in
all material respects:
(a) a schedule containing complete and correct copies of the Articles
of Incorporation in effect as of the date of this Agreement;
(b) a schedule containing complete and correct copies of the Bylaws of
Healthrenu in effect as of the date of this Agreement;
(c) a schedule containing any Corporate Resolutions of the Shareholders of
Healthrenu;
(d) a schedule containing Minutes of meetings of the Board of Directors of
Healthrenu;
(e) a schedule containing a list indicating the name and address of each
shareholder of Healthrenu together with the number of shares owned by him, her
or it; and
(f) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed by Healthrenu.
Healthrenu shall cause the Healthrenu Schedules and the instruments and
data delivered to the Company hereunder to be promptly updated after the date
hereof up to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by Healthrenu. Healthrenu
shall have until October 6, 2003 to provide such schedules. If Healthrenu
cannot or fails to do so, or if the Company acting reasonably finds any such
schedules or updates provided after the date hereof to be unacceptable according
to the criteria set forth herein, the Company may terminate this Agreement by
giving written notice to Healthrenu within five (5) days after the schedules or
updates were due to be produced or were provided. For purposes of the
foregoing, the Company may consider a disclosure in the Healthrenu Schedules to
be "unacceptable" only if that item would have a material adverse impact on the
financial condition of Healthrenu, taken as a whole.
Section 1.18 Valid Obligation. This Agreement and all agreements and
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other documents executed by Healthrenu in connection herewith constitute the
valid and binding obligation of Healthrenu, enforceable in accordance with its
or their terms, except as may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought. The Exchange of the Healthrenu shares by the Healthrenu
Shareholders is not contingent upon any other agreement, conditions or
understandings.
Section 1.19 Acquisition of the Shares by the Healthrenu Shareholders.
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The Healthrenu Shareholders are acquiring the Shares for their own account
without the participation of any other person and with the intent of holding the
Shares for investment and without the intent of participating, directly or
indirectly, in a distribution of the Shares, or any portion thereof, and not
with a view to, or for resale in connection with, any distribution of the
Shares, or any portion thereof. The Healthrenu Shareholders have read,
understand and consulted with their legal counsel regarding the limitations and
requirements of Section 5 of the 1933 Act. The Healthrenu Shareholders will
offer, sell, pledge, convey or otherwise transfer the Shares, or any portion
thereof, only if: (i) pursuant to an effective registration statement under the
1933 Act and any and all applicable state securities or Blue Sky laws or in a
transaction which is otherwise in compliance with the 1933 Act and such laws; or
(ii) pursuant to a valid exemption from registration.
Section 1.20 Exemption from Registration. Each Healthrenu Shareholder
----------------------------
is being offered securities under this Agreement pursuant to an exemption from
registration as set forth in Rule 506 of Regulation D promulgated under the 1933
Act which provides that there are no more than 35 non-accredited investors.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY
As an inducement to, and to obtain the reliance of Healthrenu and the
Healthrenu Shareholders, except as set forth in the Company Schedules (as
hereinafter defined), the Company represents and warrants as follows:
Section 2.01 Organization. The Company is a corporation duly
------------
organized, validly existing, and in good standing under the laws of the State of
Nevada and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and assets, to carry
on its business in all material respects as it is now being conducted, and
except where failure to be so qualified would not have a material adverse effect
on its business, there is no jurisdiction in which it is not qualified in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification. Included in the Company
Schedules are complete and correct copies of the Articles of Incorporation and
Bylaws of the Company as in effect on the date hereof. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of the Company's Articles of
Incorporation or Bylaws. The Company has taken all action required by law, its
Articles of Incorporation, its Bylaws, or otherwise to authorize the execution
and delivery of this Agreement, and the Company has full power, authority, and
legal right and has taken all action required by law, its Articles of
Incorporation, Bylaws, or otherwise to consummate the transactions herein
contemplated.
Section 2.02 Capitalization. The Company is authorized to issue
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50,000,000 shares of Common Stock, par value $.001 per share, of which 58,700
shares of Company Common Stock will be issued and outstanding at the Closing
prior to the issuance of the shares to the Healthrenu Shareholders as set forth
in Section 3.01(ii). The Company is also authorized to issue 5,500,000 shares
of preferred stock constituting of 3,500,000 shares of "Series A" convertible
preferred stock, par value $1.00 per share, of which no shares will be issued
and outstanding at the Closing prior to the issuance of the shares to the
Healthrenu Shareholders as set forth in Section 3.01(ii), 1,500,000 shares of
"Series 2000A" convertible preferred stock, par value $.001, of which 1,498,395
shares will be issued and outstanding at such Closing, and 500,000 shares of
"Series 2003A" preferred stock with super voting powers, of which 500,000 shares
are currently issued and outstanding. However, at Closing, the owner of all of
the shares of Series 2003A preferred stock shall return the same to the Company
for cancellation pursuant to Section 3.02(e). All issued and outstanding shares
are legally issued, fully paid, and non-assessable and not issued in violation
of the preemptive or other rights of any person.
Section 2.03 Subsidiaries and Predecessor Corporations. The Company does
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not have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation.
Section 2.04 Financial Statements.
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(a) Included in the Company Schedules are (i) the audited balance
sheets of the Company and the related statements of operations and cash flows as
of and for the twelve (12) months ended September 30, 2002 and (ii) the
unaudited balance sheets of the Company and the related statements of operations
and cash flows for the nine (9) months ended June 30, 2003.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved. The Company balance sheets present fairly as of their
respective dates the financial condition of the Company. As of the date of such
balance sheets, except as and to the extent reflected or reserved against
therein, the Company had no liabilities or obligations (absolute or contingent)
which should be reflected in the balance sheets or the notes thereto prepared in
accordance with generally accepted accounting principles, and all assets
reflected therein are properly reported and present fairly the value of the
assets of the Company, in accordance with generally accepted accounting
principles. The statements of operations, stockholders' equity and cash flows
reflect fairly the information required to be set forth therein by generally
accepted accounting principles.
(c) The Company has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties), except for taxes accrued but not yet due and payable.
(d) The books and records, financial and otherwise, of the Company are
in all material aspects complete and correct and have been maintained in
accordance with good business and accounting practices.
(e) All of the Company's assets are reflected on its financial
statements, and, except as set forth in the Company Schedules or the financial
statements of the Company or the notes thereto, the Company has no material
liabilities, direct or indirect, matured or unmatured, contingent or otherwise.
Section 2.05 Information. The information concerning the Company set
-----------
forth in this Agreement and the Company Schedules is complete and accurate in
all material respects and does not contain any untrue statements of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading. In
addition, the Company has fully disclosed in writing to Healthrenu (through this
Agreement or the Company Schedules) all information relating to matters
involving the Company or its assets or its present or past operations or
activities which (i) indicated or may indicate, in the aggregate, the existence
of a greater than One Thousand Dollars ($1,000) liability or diminution in
value, (ii) have led or may lead to a competitive disadvantage on the part of
the Company or (iii) either alone or in aggregation with other information
covered by this Section, otherwise have led or may lead to a material adverse
effect on the transactions contemplated herein or on the Company, its assets, or
its operations or activities as presently conducted or as contemplated to be
conducted after the Closing Date, including, but not limited to, information
relating to governmental, employee, environmental, litigation and securities
matters and transactions with affiliates.
Section 2.06 Options or Warrants. Except as included or described in
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Schedule 2.06, there are no existing options, warrants, calls, or commitments of
any character relating to the authorized and unissued stock of the Company.
Section 2.07 Absence of Certain Changes or Events. Except as disclosed
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in Schedule 2.07, or permitted in writing by Healthrenu, since the date of the
most recent Company balance sheet:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets or condition of the Company or (ii) any damage,
destruction or loss to the Company (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties, assets
or condition of the Company;
(b) The Company has not and will not (i) amend its Articles of
Incorporation or Bylaws except to complete the performance of the Company as set
forth herein; (ii) declare or make, or agree to declare or make any payment of
dividends or distributions of any assets of any kind whatsoever to stockholders
or purchase or redeem, or agree to purchase or redeem, any of its capital stock;
(iii) waive any rights of value which in the aggregate are outside of the
ordinary course of business or material considering the business of the Company;
(iv) make any material change in its method of management, operation, or
accounting; (v) enter into any transaction or agreement other than in the
ordinary course of business; (vi) make any accrual or arrangement for or payment
of bonuses or special compensation of any kind or any severance or termination
pay to any present or former officer or employee; (vii) increase the rate of
compensation payable or to become payable by it to any of its officers or
directors or any of its salaried employees whose monthly compensation exceed One
Thousand Dollars ($1,000); or (viii) make any increase in any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement, made to, for or with its officers,
directors, or employees;
(c) The Company has not (i) granted or agreed to grant any options or
warrants; (ii) borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) paid or agreed to
pay any material obligations or liabilities (absolute or contingent) other than
current liabilities reflected in or shown on the most recent Company balance
sheet and current liabilities incurred since that date in the ordinary course of
business and professional and other fees and expenses in connection with the
preparation of this Agreement and the consummation of the transaction
contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer,
any of its assets, properties, or rights (except assets, properties, or rights
not used or useful in its business which, in the aggregate have a value of less
than One Thousand Dollars [$1,000]), or canceled, or agreed to cancel, any debts
or claims (except debts or claims which in the aggregate are of a value less
than One Thousand Dollars [$1,000]); and (v) made or permitted any amendment or
termination of any contract, agreement, or license to which it is a party if
such amendment or termination is material, considering the business of the
Company; and
(d) The Company has not become subject to any law or regulation which
materially and adversely affects, or in the future, may adversely affect, the
business, operations, properties, assets or condition of the Company.
Section 2.08 Title and Related Matters. The Company has good and
----------------------------
marketable title to all of its properties, inventory, interest in properties,
and assets, real and personal, which are reflected in the most recent Company
balance sheet or acquired after that date (except properties, inventory,
interest in properties, and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens, pledges,
charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as described in the
Company Schedules. Except as set forth in the Company Schedules, the Company
owns, free and clear of any liens, claims, encumbrances, royalty interests, or
other restrictions or limitations of any nature whatsoever, any and all products
it is currently manufacturing, including the underlying technology and data, and
all procedures, techniques, marketing plans, business plans, methods of
management, or other information utilized in connection with the Company's
business. Except as set forth in the Company Schedules, no third party has any
right to, and the Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how, proprietary techniques, trademarks, service
marks, trade names, or copyrights which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
materially adverse effect on the business, operations, financial condition,
income, or business prospects of the Company or any material portion of its
properties, assets, or rights.
Section 2.09 Litigation and Proceedings. There are no actions, suits,
--------------------------
proceedings or investigations pending or, to the knowledge of the Company after
reasonable investigation, threatened by or against the Company or affecting the
Company or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. The Company has no knowledge of any default on its part
with respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator, or governmental agency or instrumentality,
or any circumstance which after reasonable investigation would result in the
discovery of such default.
Section 2.10 Contracts.
---------
(a) Except as disclosed in the Company Schedules, the Company is not a
party to, and its assets, products, technology and properties are not bound by,
any material contract, franchise, license agreement, agreement, debt instrument
or other commitments whether such agreement is in writing or oral.
(b) All contracts, agreements, franchises, license agreements, debt
instruments, and other commitments to which the Company is a party or by which
its properties are bound and which are material to the operations of the Company
taken as a whole are valid and enforceable by the Company in all respects,
except as limited by bankruptcy and insolvency laws and by other laws affecting
the rights of creditors generally;
(c) The Company is not a party to or bound by, and the properties of
the Company are not subject to any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment, order,
writ, injunction, decree, or award which materially and adversely affects, the
business operations, properties, assets, or condition of the Company; and
(d) Except as included or described in the Company Schedules or
reflected in the most recent Company balance sheet, the Company is not a party
to any oral or written (i) contract for the employment of any officer or
employee which is not terminable on thirty (30) days, or less notice; (ii)
profit sharing, bonus, deferred compensation, stock option, severance pay,
pension benefit or retirement plan, (iii) agreement, contract, or indenture
relating to the borrowing of money, (iv) guaranty of any obligation, other than
one on which the Company is a primary obligor, for the borrowing of money or
otherwise, excluding endorsements made for collection and other guaranties of
obligations which, in the aggregate do not exceed more than one year or provide
for payments in excess of Twenty-Five Thousand Dollars ($25,000) in the
aggregate; (v) collective bargaining agreement; or (vi) agreement with any
present or former officer or director of the Company.
Section 2.11 Material Contract Defaults. The Company is not in default
--------------------------
in any respect under the terms of any outstanding contract, agreement, lease, or
other commitment which is material to the business, operations, properties,
assets or condition of the Company and there is no event of default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which the Company has not taken adequate steps to prevent such a
default from occurring.
Section 2.12 No Conflict With Other Instruments. The execution of this
----------------------------------
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
a default under, or terminate, accelerate or modify the terms of, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which the
Company is a party or to which any of its assets or operations are subject.
Section 2.13 Governmental Authorizations. The Company has all
----------------------------
licenses, franchises, permits, and other governmental authorizations, that are
legally required to enable it to conduct its business operations in all material
respects as conducted on the date hereof. Except for compliance with federal
and state securities or corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. To the best of its
------------------------------------
knowledge, the Company has complied with all applicable statutes and regulations
of any federal, state, or other applicable governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
the Company or except to the extent that noncompliance would not result in the
occurrence of any material liability. This compliance includes, but is not
limited to, the filing of all reports, filings and schedules to date with
federal and state securities authorities.
Section 2.15 Approval of Agreement. The Board of Directors of the
-----------------------
Company has authorized the execution and delivery of this Agreement by the
Company and has approved this Agreement and the transactions contemplated
hereby.
Section 2.16 Material Transactions or Affiliations. Except as
----------------------------------------
disclosed herein and in the Company Schedules, there exists no contract,
agreement or arrangement between the Company and any predecessor and any person
who was at the time of such contract, agreement or arrangement an officer,
director, or person owning of record or known by the Company to own
beneficially, five percent (5%) or more of the issued and outstanding Common
Stock of the Company and which is to be performed in whole or in part after the
date hereof or was entered into not more than three years prior to the date
hereof. Neither any officer, director, nor five percent (5%) shareholder of the
Company has, or has had since inception of the Company, any known interest,
direct or indirect, in any such transaction with the Company which was material
to the business of the Company. The Company has no commitment, whether written
or oral, to lend any funds to, borrow any money from, or enter into any other
transaction with, any such affiliated person.
Section 2.17 The Company Schedules. Within ten (10) days prior to
-----------------------
Closing, the Company will deliver to Healthrenu the following schedules, which
are collectively referred to as the "Company Schedules" and which consist of
separate schedules, which are dated the date of this Agreement, all certified by
the chief executive officer of the Company to be complete, true, and accurate in
all material respects as of the date of this Agreement:
(a) a schedule containing complete and accurate copies of the Articles
of Incorporation and Bylaws of the Company as in effect as of the date of this
Agreement;
(b) a schedule containing the financial statements of the Company
identified herein;
(c) a certified list from the Company's Transfer Agent setting forth
the name and address of each shareholder of the Company together with the number
of shares owned by him, her or it;
(d) a schedule containing a description of all real property owned by
the Company, together with a description of every mortgage, deed of trust,
pledge, lien, agreement, encumbrance, claim, or equity interest of any nature
whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to which the
Company carries on or proposes to carry on its business (except those which, in
the aggregate, are immaterial to the present or proposed business of the
Company);
(f) a schedule listing the accounts receivable and notes and other
obligations receivable of the Company as of August 31, 2003, or thereafter other
than in the ordinary course of business of the Company, indicating the debtor
and amount, and classifying the accounts to show in reasonable detail the length
of time, if any, overdue, and stating the nature and amount of any refunds, set
offs, reimbursements, discounts, or other adjustments which are in the aggregate
material and due to or claimed by such debtor;
(g) a schedule listing the accounts payable and notes and other
obligations payable of the Company as of August 31, 2003, or that arose
thereafter other than in the ordinary course of the business of the Company,
indicating the creditor and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the nature
and amount of any refunds, set offs, reimbursements, discounts, or other
adjustments, which in the aggregate are material and due to or claimed by the
Company respecting such obligations;
(h) a schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or condition of
the Company since June 30, 2003; and
(i) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the Company Schedules
by Sections 2.01 through 2.18.
The Company shall cause the Company Schedules and the instruments and data
delivered to Healthrenu hereunder to be promptly updated after the date hereof
up to and including the Closing Date.
If the Company cannot or fails to provide the schedules required by this
Section, or if Healthrenu or the Healthrenu Shareholders find any such schedules
or updates provided after the date hereof to be unacceptable, Healthrenu or the
Healthrenu Shareholders may terminate this Agreement by giving written notice to
the Company within five (5) days after the schedules or updates were due to be
produced or were provided. For purposes of the foregoing, the Healthrenu may
consider a disclosure in the Company Schedules to be "unacceptable" only if that
item would have a material adverse impact on the financial condition of the
Company, taken as a whole.
Section 2.18 Valid Obligation. This Agreement and all agreements and
-----------------
other documents executed by the Company in connection herewith constitute the
valid and binding obligation of the Company, enforceable in accordance with its
or their terms, except as may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
Section 2.19 Liabilities. The Company acknowledges that it will
-----------
have no liabilities outstanding on the Closing Date (as defined in Section
3.02).
Section 2.20 Reporting Requirements of the Company. The Company is
----------------------------------------
subject to the reporting and filing requirements of the Securities Exchange Act
of 1934 ("the Exchange Act') including (1) the periodic reporting requirements
and (2) the Proxy Rules set forth thereunder. The Company and its officers,
directors, and beneficial owners are subject to the provisions of the Exchange
Act Section 16 relating to short-swing profit recapture, reports of beneficial
ownership and short sale prohibitions and the Company and its officers,
directors, and beneficial owners have timely complied in all respects with the
filing requirements of the Exchange Act.
Section 2.21 Quotation on the OTC Bulletin Board. The Company's Common
-----------------------------------
Stock is quoted on the OTC Bulletin Board under the symbol "HRUM" and the
Company will retain such quotation on the OTC Bulletin Board until the Closing
of the transactions contemplated herein.
Section 2.22 Approval of the Exchange by the Company's Board of
---------------------------------------------------------
Directors. The Directors of the Company shall have approved the Exchange Offer
and the related transactions described herein.
Section 2.23 Approval of the Exchange by the Company's Shareholders.
--------------------------------------------------------
Approval of the Exchange Offer and related transactions by the Company's
Shareholders is not required by Nevada law or the Company's Articles of
Incorporation or Bylaws or any amendments thereto.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 The Exchange. (i) On the terms and subject to the
-------------
conditions set forth in this Agreement, on the Closing Date (as defined in
Section 3.02), each Healthrenu Shareholder who shall elect to accept the
Exchange Offer described herein shall assign, transfer and deliver, free and
clear of all liens, pledges, encumbrances, charges, restrictions or known claims
of any kind, nature, or description, the number of shares of common stock of
Healthrenu set forth herein, in the aggregate constituting 100% of the issued
and outstanding shares of common stock of Healthrenu. After the acquisition of
100% of the outstanding shares of Healthrenu, Healthrenu shall become a wholly
owned subsidiary of the Company.
Section 3.01(ii) The Company will have approximately 58,700 shares of
Common Stock issued and outstanding at Closing. The Healthrenu Shareholders
will receive one (1) share of the Company's Common Stock for every one (1) share
of Healthrenu common stock held or an aggregate amount of Fifteen Million Three
Hundred Twenty-Three Thousand One Hundred Ninety-Nine (15,323,199) shares of the
Company's Common Stock.
Section 3.02 Closing. The closing ("Closing") of the transaction
-------
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date") but not later than September 30, 2003
subject to the right of the Company or Healthrenu to extend such Closing Date by
up to an additional ten (10) days. Such Closing shall take place at a mutually
agreeable time and place. At Closing, or immediately thereafter, the following
will occur:
(a) The Healthrenu Shareholders shall surrender the certificates
evidencing 100% of the shares of Healthrenu stock, duly endorsed with Medallion
Guaranteed stock powers so as to make the Company the sole owner thereof;
(b) The Company will issue and deliver 15,323,199 newly issued
treasury shares of the Company's Common Stock in the name of Shareholders in
accordance with this Agreement;
(c) At Closing, Xxxx X. Xxxxxxx shall resign from his position as
director and officer of the Company and contemporaneously therewith he together
with Xxxxx Xxxxxxx shall appoint directors and officers of the Company as
directed by Healthrenu;
(d) The Closing shall be consummated by the execution and acknowledgment
by the Company and Healthrenu of Articles of Share Exchange in accordance with
applicable Nevada law. The Articles of Share Exchange executed and acknowledged
shall be delivered for filing to the Secretary of State of the State of Nevada
as promptly as possible after the consummation of the Closing. The Articles of
Share Exchange shall specify the effective date and time of the Share Exchange;
(e) Xxxxx Xxxxxxx shall return for cancellation 500,000 shares of
Series 2003A preferred stock of the Company;
(f) At Closing, all outstanding notes and accrued wages and interest
of the Company of approximately $379,902 as shown on Exhibit 3.02f will be
canceled in exchange for the issuance of 379,902 shares of post reverse
restricted common stock of the Company, and issued on the basis of one (1)
common share for every one ($1.00) dollar of principal and interest due and
owing as of the date of Closing. All shares issued in connection with the
conversion of outstanding indebtedness listed on Exhibit A shall be designated
with "piggy-back" registration rights requiring the Company to include the
registration of those shares issuable upon conversion as set forth on Exhibit
3.02f on a Form SB-2 registration statement or such other form of registration
statement that may be available to it pursuant to the Securities Act covering
the offer and sale of the Common Stock granted herein (the "Registerable
Securities"). Within one year from the date above, the Company shall use all
reasonable commercial efforts to have said registration statement declared
effective at the earliest practicable date, and shall keep said registration
statement effective for a period of not less than five (5) years from the date
above. The Company agrees to furnish to the shareholders such number of copies
of a prospectus, including a preliminary prospectus in conformity with the
requirements of the Securities Act and such other documents as they may
reasonably request in order to facilitate the conversion and disposition of the
Registerable Securities owned by the shareholders. The Company shall use all
reasonable efforts to register and/or qualify the securities covered by such
registration statement under such other securities or Blue Sky laws in such
jurisdictions as shall be reasonably requested by the shareholders of the
Registerable Securities provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions. All registration expenses incurred in connection with the
demand registration shall be borne by the Company, excepting expenses of the
shareholders with respect to the sale of the securities such as brokerage
commissions, transfer agent fees, and other expenses.; and
(g) At the Closing, the Company, Healthrenu and each of the Healthrenu
Shareholders shall execute, acknowledge, and deliver (or shall ensure to be
executed, acknowledged, and delivered) any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby. Among other things, the Company
shall provide an opinion of counsel acceptable to Healthrenu as to such matters
as Healthrenu may reasonably request, which shall include, but not be limited
to, a statement, to the effect that to such counsel's best knowledge, after
reasonable investigation, from inception until the Closing Date, the Company has
complied with all applicable statutes and regulations of any federal, state, or
other applicable governmental entity or agency thereof, except to the extent
that noncompliance would not materially and adversely affect the business,
operations, properties, assets or condition of the Company or except to the
extent that noncompliance would not result in the occurrence of any material
liability (such compliance including, but not being limited to, the filing of
all reports to date with federal and state securities authorities).
Section 3.03 Name. The Company has changed its name to HealthRenu
-----
Medical, Inc. prior to the Closing.
Section 3.04 Tradability of Shares. The shares of the Common Stock of
----------------------
the Company to be issued to the Healthrenu Shareholders have not been registered
under the 1933 Act, nor registered under any state securities law, and are
"restricted securities" as that term is defined in Rule 144 under the 0000 Xxx.
The securities may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the 1933 Act, or pursuant
to an exemption from registration under the 1933 Act. The shares to be issued to
the Healthrenu Shareholders will bear the following restrictive legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED WITHOUT EITHER: i)
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS, OR ii) SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF ARE
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS."
Section 3.05 Anti-Dilution. The number of shares of the Company's
-------------
Common Stock issuable upon the Exchange Offer shall be appropriately adjusted to
take into account any other stock split, stock dividend, reverse stock split,
recapitalization, or similar change in the Company's Common Stock which may
occur (i) between the date of the execution of this Agreement and the Closing
Date.
Section 3.06 Termination.
-----------
(a) This Agreement may be terminated by the Board of Directors of
either the Company or Healthrenu or by the Healthrenu Shareholders at any time
prior to the Closing Date if:
(i) there shall be any actual or threatened action or proceeding
before any court or any governmental body which shall seek to restrain,
prohibit, or invalidate the transactions contemplated by this Agreement and
which, in the judgment of such Board of Directors, made in good faith and
based upon the advice of its legal counsel, makes it inadvisable to proceed
with the Exchange;
(ii) any of the transactions contemplated hereby are disapproved by
any regulatory authority whose approval is required to consummate such
transactions (which does not include the Securities and Exchange
Commission) or in the judgment of such board of directors, made in good
faith and based on the advice of counsel, there is substantial likelihood
that any such approval will not be obtained or will be obtained only on a
condition or conditions which would be unduly burdensome, making it
inadvisable to proceed with the Exchange; or
(iii) if less than eighty percent (80%) of the Healthrenu Shareholders
agree to the Exchange Offer.
In the event of termination pursuant to this paragraph, no obligation, right or
liability shall arise hereunder, and each party shall bear all of the expenses
incurred by it in connection with the negotiation, drafting, and execution of
this Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated by the Board of Directors of the
Company at any time prior to the Closing Date if:
(i) the Board of Directors of the Company determines in good faith
that one or more of the Company's conditions to Closing has not occurred,
through no fault of the Company.
(ii) The Company takes the termination action specified in Section
1.17 as a result of Healthrenu Schedules or updates thereto which the
Company finds unacceptable; or
(iii) Healthrenu shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement or if any of the
representations or warranties of Healthrenu contained herein shall be
inaccurate in any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph, this Agreement shall
be of no further force or effect, and no obligation, right or liability shall
arise hereunder, except that Healthrenu shall bear the costs in connection with
the negotiation, preparation, and execution of this Agreement and qualifying the
offer and sale of securities to be issued in the Exchange under the registration
requirements, or exemption from the registration requirements, of state and
federal securities laws.
(c) This Agreement may be terminated by the Board of Directors of
Healthrenu or by the Healthrenu Shareholders at any time prior to the Closing
Date if:
(i) there shall have been any change after the date of the latest
balance sheet of the Company in the assets, properties, business or
financial condition of the Company which could have a material adverse
effect on the financial statements of the Company listed in Section 2.04(a)
and 2.04(b) taken as a whole, except any changes disclosed in the Company
Schedules;
(ii) the Board of Directors of Healthrenu determines in good faith
that one or more of Healthrenu's conditions to Closing has not occurred,
through no fault of Healthrenu;
(iii) Healthrenu takes the termination action specified in Section
2.17 as a result of the Company Schedules or updates thereto which
Healthrenu finds unacceptable;
(iv) on or before September 30, 2003, if Healthrenu notifies the
Company that Healthrenu's investigation pursuant to Section 4.01 below has
uncovered information which it finds unacceptable by the same criteria set
forth herein; or
(v) The Company shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement or if any of the
representations or warranties of the Company contained herein shall be
inaccurate in any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph, this Agreement shall
be of no further force or effect, and no obligation, right or liability shall
arise hereunder.
No revenue ruling or opinion of counsel will be sought as to the tax-free
nature of the subject Exchange and such tax treatment is not a condition to
Closing herein.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Access to Properties and Records. The Company and Healthrenu
---------------------------------
will each afford to the officers and authorized representatives of the other
full access to the properties, books and records of the Company or Healthrenu,
respectively, in order that each may have a full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of the other,
and each will furnish the other with such additional financial and operating
data and other information as to the business and properties of the Company or
Healthrenu, respectively, as the other shall from time to time reasonably
request. Any such investigation and examination shall be conducted at
reasonable times and under reasonable circumstances, and each party hereto shall
cooperate fully therein. No investigation by a party hereto shall, however,
diminish or waive in any way any of the representations, warranties, covenants
or agreements of the other party under this Agreement. In order that each party
may investigate as it may wish the business affairs of the other, each party
shall furnish the other during such period with all such information and copies
of such documents concerning the affairs of it as the other party may reasonably
request, and cause its officer, employees, consultants, agents, accountants, and
attorneys to cooperate fully in connection with such review and examination, and
to make full disclosure to the other parties all material facts affecting its
financial condition, business operations, and the conduct of operations.
Without limiting the foregoing, as soon as practicable after the end of each
fiscal quarter (and in any event through the last fiscal quarter prior to the
Closing Date), the Company shall provide Healthrenu with quarterly internally
prepared and unaudited financial statements for all periods up to the date of
Closing.
Section 4.02 Delivery of Books and Records. At the Closing, Healthrenu
-----------------------------
shall deliver to the Company copies of the corporate minute books, books of
account, contracts, records, and all other books or documents of Healthrenu now
in the possession of Healthrenu or its representatives.
Section 4.03 Third Party Consents and Certificates. The Company and
---------------------------------------
Healthrenu agree to cooperate with each other in order to obtain any required
third party consents to this Agreement and the transactions herein contemplated.
Section 4.04 Consent of Healthrenu Shareholders. Healthrenu shall use
----------------------------------
its best efforts to obtain the consent of all Healthrenu Shareholders to
participate in the Exchange.
Section 4.05 Exclusive Dealing Rights. Until 5:00 P.M. Eastern
--------------------------
Daylight Time on October 5, 2003.
(a) In recognition of the substantial time and effort which the Company
has spent and will continue to spend in investigating Healthrenu and its
business and in addressing the matters related to the transactions contemplated
herein, each of which may preempt or delay other management activities, neither
Healthrenu, nor any of its officers, employees, representatives or agents will
directly or indirectly solicit or initiate any discussions or negotiations with,
or, except where required by fiduciary obligations under applicable law as
advised by counsel, participate in any negotiations with or provide any
information to or otherwise cooperate in any other way with, or facilitate or
encourage any effort or attempt by, any corporation, partnership, person or
other entity or group (other than the Company and its directors, officers,
employees, representatives and agents) concerning any merger, sale of
substantial assets, sale of shares of capital stock, (including without
limitation, any public or private offering of the common stock of Healthrenu) or
similar transactions involving Healthrenu (all such transactions being referred
to as " Healthrenu Acquisition Transactions"). If Healthrenu receives any
proposal with respect to a Healthrenu Acquisition Transaction, it will
immediately communicate to the Company the fact that it has received such
proposal and the principal terms thereof.
(b) In recognition of the substantial time and effort which Healthrenu
has spent and will continue to spend in investigating the Company and its
business and in addressing the matters related to the transactions contemplated
herein, each of which may preempt or delay other management activities, neither
the Company, nor any of its officers, employees, representatives, shareholders
or agents will directly or indirectly solicit or initiate any discussions or
negotiations with, or, except where required by fiduciary obligations under
applicable law as advised by counsel, participate in any negotiations with or
provide any information to or otherwise cooperate in any other way with, or
facilitate or encourage any effort or attempt by, any corporation, partnership,
person or other entity or group (other than Healthrenu and its directors,
officers, employees, representatives and agents) concerning any merger, sale of
substantial assets, sale of shares of capital stock, (including without
limitation, any public or private offering of the Common Stock of the Company or
similar transactions involving the Company (all such transactions being referred
to as "Company Acquisition Transactions"). If the Company receives any proposal
with respect to a Company Acquisition Transaction, it will immediately
communicate to Healthrenu the fact that it has received such proposal and the
principal terms thereof.
Section 4.06 Actions Prior to Closing.
---------------------------
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the Company Schedules or Healthrenu Schedules or as
permitted or contemplated by this Agreement, the Company (subject to paragraph
(b) below) and Healthrenu respectively, will each:
(i) carry on its business in substantially the same manner as it has
heretofore;
(ii) maintain and keep its properties in states of good repair and
condition as at present, except for depreciation due to ordinary wear and
tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in amount
and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations under
material contracts, leases, and instruments relating to or affecting its
assets, properties, and business;
(v) use its best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to maintain its
relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws and all
rules, regulations, and orders imposed by federal or state governmental
authorities.
(b) From and after the date of this Agreement until the Closing Date,
neither the Company nor Healthrenu will:
(i) make any changes in their Articles of Incorporation or Bylaws,
except as otherwise provided in this Agreement;
(ii) take any action described in Section 1.07 in the case of
Healthrenu, or in Section 2.07, in the case of the Company (all except as
permitted therein or as disclosed in the applicable party's schedules);
(iii) enter into or amend any contract, agreement, or other instrument
of any of the types described in such party's schedules, except that a
party may enter into or amend any contract, agreement, or other instrument
in the ordinary course of business involving the sale of goods or services;
or
(iv) sell any assets or discontinue any operations, sell any shares of
capital stock (other than the sale of securities underlying existing
warrants or options of the Company) or conduct any similar transactions
other than in the ordinary course of business.
Section 4.07 Indemnification.
---------------
(a) The Company hereby agrees to indemnify Healthrenu and each of the
officers, agents, and directors of Healthrenu and each of the Healthrenu
Shareholders as of the date of execution of this Agreement against any loss,
liability, claim, damage, or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever), to
which it or they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made by the Company under this Agreement and
any and all past due legal expenses and audit fees of the Company whether or not
such expenses and fees are listed on the Company's balance sheet. The
indemnification provided for in this paragraph shall survive the Closing and
consummation of the transactions contemplated hereby and termination of this
Agreement.
Section 4.08 Limitation of Subsequent Corporate Actions. It is
----------------------------------------------
expressly understood and agreed that the Company, the shareholders of
Healthrenu, and their affiliates will take all steps necessary to ensure that:
(a) The Company will not enact a reverse split of its Common Stock for
a period of twelve (12) months after the Reverse Stock Split provided for in
this Agreement and Closing; and
(b) The assets of Healthrenu, if any, shall remain in the Company as
part of its business operations;
Notwithstanding items (1) and (2), the Company may waive such conditions
stated above with a written waiver. Other than (1) and (2) of this Section,
there are no restrictions upon the Company to inhibit, prevent, limit or
restrict the Company from issuing additional securities of any class, preference
or type after the date of the Closing.
Section 4.09 Indemnification of Subsequent Corporate Actions.
---------------------------------------------------
(a) No officer, director, controlling shareholder, agent or
representative of the Company, or any other person currently affiliated with the
Company, has offered or agreed to assist in the promotion, market making,
development, enhancement, or support of the Company's business, capital raising,
or securities market.
(b) Healthrenu hereby represents and warrants that it will indemnify
and hold harmless any officer, director, controlling shareholder, agent or
representative of the Company, or any other person affiliated with the Company,
from any decisions, activities, or conduct of the Company contemporaneous with,
or subsequent to this Agreement.
Section 4.10 Audited Financial Statements. The Company shall file
------------------------------
audited financial statements of Healthrenu as required by the Securities and
Exchange Commission within seventy-five (75) days from the date of Closing.
Section 4.11 Blue Sky Manual Exemption. The Company shall file with
----------------------------
Standard & Poors or Xxxxx'x within one hundred twenty (120) days from the date
of Closing.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations and Performance of Covenants.
--------------------------------------------------------
The representations and warranties made by Healthrenu in this Agreement were
true when made and shall be true at the Closing Date with the same force and
effect as if such representations and warranties were made at and as of the
Closing Date (except for changes therein permitted by this Agreement).
Healthrenu shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by Healthrenu prior
to or at the Closing. The Company shall be furnished with a certificate, signed
by a duly authorized executive officer of Healthrenu and dated the Closing Date,
to the foregoing effect.
Section 5.02 Officer's Certificate. The Company shall have been
----------------------
furnished with a certificate dated the Closing Date and signed by a duly
authorized officer of Healthrenu to the effect that no litigation, proceeding,
investigation, or inquiry is pending, or to the best knowledge of Healthrenu
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement, or, to the
extent not disclosed in the Healthrenu Schedules, by or against Healthrenu,
which might result in any material adverse change in any of the assets,
properties, business, or operations of Healthrenu.
Section 5.03 No Material Adverse Change. Prior to the Closing Date,
----------------------------
there shall not have occurred any material change in the financial condition,
business, or operations of Healthrenu nor shall any event have occurred which,
with the lapse of time or the giving of notice, is determined to be unacceptable
using the criteria set forth in Section 1.17.
Section 5.04 Approval by Healthrenu Shareholders. The Exchange shall
---------------------- ------------
have been approved, and shares delivered in accordance with Section 3.01, by the
holders of not less than one hundred percent (100%) of the outstanding common
stock of Healthrenu.
Section 5.05 No Governmental Prohibition. No order, statute, rule,
-----------------------------
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 5.06 Consents. All consents, approvals, waivers or amendments
--------
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of the Company and Healthrenu after the Closing Date on the basis as
presently operated shall have been obtained.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF HEALTHRENU
AND THE HEALTHRENU SHAREHOLDERS
The obligations of Healthrenu and the Healthrenu Shareholders under this
Agreement are subject to the satisfaction, at or before the Closing Date, of the
following conditions:
Section 6.01 Accuracy of Representations and Performance of Covenants.
--------------------------------------------------------
The representations and warranties made by the Company in this Agreement were
true when made and shall be true as of the Closing Date (except for changes
therein permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date.
Additionally, the Company shall have performed and complied with all covenants
and conditions required by this Agreement to be performed or complied with by
the Company and shall have satisfied all conditions set forth herein prior to or
at the Closing. Healthrenu shall have been furnished with certificates, signed
by duly authorized executive officers of the Company and dated the Closing Date,
to the foregoing effect.
Section 6.02 Officer's Certificate. Healthrenu shall have been
----------------------
furnished with certificates dated the Closing Date and signed by the duly
authorized executive officer of the Company, to the effect that no litigation,
proceeding, investigation or inquiry is pending, or to the best knowledge of the
Company threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the Company Schedules, by or against the Company, which
might result in any material adverse change in any of the assets, properties or
operations of the Company.
Section 6.03 No Material Adverse Change. Prior to the Closing Date,
----------------------------
there shall not have occurred any change in the financial condition, business or
operations of the Company nor shall any event have occurred which, with the
lapse of time or the giving of notice, is determined to be unacceptable using
the criteria set forth in Section 2.17.
Section 6.04 No Governmental Prohibition. No order, statute, rule,
-----------------------------
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 6.05 Consents. All consents, approvals, waivers or amendments
--------
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of the Company and Healthrenu after the Closing Date on the basis as
presently operated shall have been obtained.
Section 6.06 Other Items. Healthrenu shall have received further
------------
opinions, documents, certificates, or instruments relating to the transactions
contemplated hereby as Healthrenu may reasonably request.
Section 6.07 The Reverse Stock Split. The Company has undergone an
------------------------
850:1 reverse stock split.
Section 6.08 Cancellation of Series 2003A Preferred Stock.
-------------------------------------------------
Contemporaneously with Closing, Xxxxx Xxxxxxx shall return for cancellation
500,000 shares of Series 2003A preferred stock of the Company as provided for in
Sections 2.02 and 3.02(e), which shares constitute one hundred percent (100%) of
such series of preferred stock.
Section 6.09 Conversion of Outstanding Related-Party Debt Into Equity.
--------------------------------------------------------
Contemporaneously with Closing, outstanding notes and accrued wages shall be
converted into 379,902 shares of Common Stock of the Company as provided for in
Section 3.02(f) .
ARTICLE VII
MISCELLANEOUS
Section 7.01 No Bankruptcy and No Criminal Convictions. None of the
-------------------------------------------
Parties to the Agreement, nor their officers, directors or affiliates,
promoters, beneficial shareholders or control persons, nor any predecessor
thereof have been subject to the following:
(a) Any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer within the past
five (5) years;
(b) Any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(c) Being subject to any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities; and
(d) Being found by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission (the "SEC") or the Commodity
Futures Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended, or vacated.
Section 7.02 Brokers. No broker's or finder's fee will be paid in
-------
connection with the transaction contemplated by this Agreement other than fees
payable to persons registered as broker-dealers pursuant to Section 15 of the
Securities Exchange Act of 1934. The Company and Healthrenu agree that, except
as set forth herein and on Schedule 7.02 attached hereto, there were no brokers
or finders involved in bringing the parties together or who were instrumental in
the negotiation, execution or consummation of this Agreement. The Company and
Healthrenu each agree to indemnify the other against any claim by any third
person other than those described above for any commission, brokerage, or
finder's fee arising from the transactions contemplated hereby based on any
alleged agreement or understanding between the indemnifying party and such third
person, whether express or implied from the actions of the indemnifying party.
Section 7.03 Governing Law and Arbitration. This Agreement shall be
-------------------------------
governed by, enforced, and construed under and in accordance with the laws of
the United States of America and, with respect to the matters of state law, with
the laws of the State of Nevada without giving effect to principles of conflicts
of law thereunder. All controversies, disputes or claims arising out of or
relating to this Agreement shall be resolved by binding arbitration. The
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. All arbitrators shall possess
such experience in, and knowledge of, the subject area of the controversy or
claim so as to qualify as an "expert" with respect to such subject matter. The
governing law for the purposes of any arbitration arising hereunder shall be in
Nevada. The prevailing party shall be entitled to receive its reasonable
attorney's fees and all costs relating to the arbitration. Any award rendered
by arbitration shall be final and binding on the parties, and judgment thereon
may be entered in any court of competent jurisdiction.
Section 7.04 Notices. Any notice or other communications required or
-------
permitted hereunder shall be in writing and shall be sufficiently given if
personally delivered to it or sent by telecopy, overnight courier or registered
mail or certified mail, postage prepaid, addressed as follows:
If to the Company, to: HEALTHRENU MEDICAL, INC.
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
If to HEALTHRENU, to: HEALTHRENU, INC.
000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxx, 00000
With copies to: Xxxxx X. Xxxx, Attorney at Law
0000 Xxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section 7.05 Attorney's Fees. In the event that either party
----------------
institutes any action or suit to enforce this Agreement or to secure relief from
any default hereunder or breach hereof, the prevailing party shall be reimbursed
by the losing party for all costs, including reasonable attorney's fees,
incurred in connection therewith and in enforcing or collecting any judgment
rendered therein.
Section 7.06 Confidentiality. Each party hereto agrees with the other
---------------
that, unless and until the transactions contemplated by this Agreement have been
consummated, it and its representatives will hold in strict confidence all data
and information obtained with respect to another party or any subsidiary thereof
from any representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except (i) to the extent
such data or information is published, is a matter of public knowledge, or is
required by law to be published; or (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement. In the event of the termination of this
Agreement, each party shall return to the other party all documents and other
materials obtained by it or on its behalf and shall destroy all copies, digests,
work papers, abstracts or other materials relating thereto, and each party will
continue to comply with the confidentiality provisions set forth herein.
Section 7.07 Public Announcements and Filings. Unless required by
-----------------------------------
applicable law or regulatory authority, none of the parties will issue any
report, statement or press release to the general public, to the trade, to the
general trade or trade press, or to any third party (other than its advisors and
representatives in connection with the transactions contemplated hereby) or file
any document, relating to this Agreement and the transactions contemplated
hereby, except as may be mutually agreed by the parties. Copies of any such
filings, public announcements or disclosures, including any announcements or
disclosures mandated by law or regulatory authorities, shall be delivered to
each party at least one (1) business day prior to the release thereof.
Section 7.08 Schedules; Knowledge. Each party is presumed to have full
--------------------
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 7.09 Third Party Beneficiaries. This contract is strictly
---------------------------
between the Company and Healthrenu and the Healthrenu Shareholders, and, except
as specifically provided, no director, officer, stockholder (other than the
Healthrenu Shareholders), employee, agent, independent contractor or any other
person or entity shall be deemed to be a third party beneficiary of this
Agreement.
Section 7.10 Expenses. The Company and Healthrenu each hereto agree to
---------
pay its own costs and expenses incurred in negotiating this Agreement including
legal, accounting and professional fees, incurred in connection with the
Exchange or any of the other transactions contemplated hereby, and those costs
and expenses incurred in consummating the transactions described herein.
Section 7.11 Entire Agreement. This Agreement represents the entire
-----------------
agreement between the parties relating to the subject matter thereof and
supersedes all prior agreements, understandings and negotiations, written or
oral, with respect to such subject matter.
Section 7.12 Survival; Termination. The representations, warranties,
----------------------
and covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of two (2)
years.
Section 7.13 Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.14 Amendment or Waiver. Every right and remedy provided
---------------------
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may by amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
Section 7.15 Best Efforts. Subject to the terms and conditions herein
------------
provided, each party shall use its best efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under this
Agreement so that the transactions contemplated hereby shall be consummated as
soon as practicable. Each party also agrees that it shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective this Agreement and the transactions contemplated
herein.
Section 7.16 Faxed Copies. For purposes of this Agreement, a
-------------
faxed signature will constitute an original signature.
Section 7.17 Severability. The invalidity or unenforceability of
------------
any term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective officers, hereunto duly authorized, as of the
date first-above written.
HEALTHRENU MEDICAL, INC.
BY: /s/ Xxxxx Xxxxxxx
--------------
Xxxxx Xxxxxxx, Chief Executive Officer
HEALTHRENU, INC.
BY: /s/ Xxxxxxx Good
-------------
Xxxxxxx Good, Chief Executive Officer
HEALTHRENU SHAREHOLDERS:
/s/ Xxxxxxx Good
------------
By: Xxxxxxx Good, individually
Number of Shares: 5,500,000
/s/ Xxxxxx Good
---------------
By: Xxxxxx Good, individually
-----------
Number of Shares: 795,000
/s/ The Agricultural Research Group
-----------------------------------
By: Xxx Xxx
-------
Its: Vice President
--------------
Number of Shares: 740,000
/s/ Xxxx Xxxxx
--------------
By: Xxxx Xxxxx, individually
----------
Number of Shares: 650,000
/s/ X. Xxxx Consulting Corp.
-- --------------------------
By: Xxxx Xxxxx,
----------
Its: President
---------
Number of Shares: 750,000
/s/ Xxxx Investments, Ltd.
--------------------------
By: Xxxx XxXxxxx,
------------
Its: General Manager
---------------
Number of Shares: 500,000
/s/ Xxxxxx X. Xxxxxxxxx, Xx.
----------------------------
By: Xxxxxx X. Xxxxxxxxx, Xx., individually
------------------------
Number of Shares: 935,000
/s/ Xxxxx X. Xxxxxxxxx
----------------------
By: Xxxxx X. Xxxxxxxxx, individually
-----------------
Number of Shares: 762,500
/s/ Xxxxxx Xxxxxxxxx III
------------------------
By: Xxxxxx Xxxxxxxxx III, individually
-------------------
Number of Shares: 762,500
/s/ Xx. Xxxxxx
--------------
By: Xx. Xxxxxx, individually
----------
Number of Shares: 450,000
/s/ Xxxxxx Good
_______________
By: Xxxxxx Good, trustee
Number of Shares: 1,080,000
