EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") made and
entered into as of December 9, 1997, is by and among Interactive Medical
Technologies, Ltd., a Delaware corporation (hereinafter referred to as the
"Company"), Kaire International, Inc., a Delaware corporation (hereinafter
referred to as "Kaire"), each of the holders of shares of Common Stock of Kaire
(hereinafter collectively referred to as the "Kaire Stockholders") listed on
Schedule A attached hereto and each of the executive officers and/or directors
of Kaire listed on Schedule B attached hereto (hereinafter individually referred
to as a "Kaire Affiliate" and collectively referred to as the "Kaire
Affiliates").
RECITALS
WHEREAS, the Kaire Stockholders collectively own a number of shares of
common stock of Kaire (the "Kaire Shares") which constitutes not less than 80%
of the issued and outstanding common stock of Kaire as of the date of this
Agreement;
WHEREAS, the Kaire Affiliates are executive officers and/or directors of
Kaire;
WHEREAS, each of the Kaire Stockholders listed on Schedule B attached
hereto (individually a "Major Stockholder" and collectively, the "Major
Stockholders") is a corporation, limited liability company, partnership, trust
or other entity which is owned or controlled, directly or indirectly, by the
Kaire Affiliate whose name appears opposite such Major Stockholder, or in which
such Kaire Affiliate holds, directly or indirectly, a material interest or with
respect to which such Kaire Affiliate serves as an officer, director, partner,
manager or trustee (or in a similar capacity);
WHEREAS, Kaire may, if and to the extent permitted hereunder, issue
additional shares of its Common Stock after the date hereof to persons or
entities who agree to become parties to this Agreement by executing an
appropriate amendment hereto pursuant to which they shall be listed as a Kaire
Stockholder on Schedule A attached hereto or an amendment thereto and shall have
all of the rights and obligations of a Kaire Stockholder under this Agreement;
and
WHEREAS, the Company desires to acquire all of the Kaire Shares and the
Kaire Stockholders desire to exchange all of the Kaire Shares for shares of
common stock of the Company in a transaction intended to qualify under Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in reliance upon the representations and warranties
hereinafter set forth, the parties agree as follows:
1. EXCHANGE OF THE SHARES AND CONSIDERATION
1.1 Shares Being Exchanged. Subject to the terms and conditions of
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this Agreement, at the closing provided for in Section 2 hereof (the "Closing"),
each of the Kaire Stockholders shall sell, assign, transfer and deliver to the
Company all of the Kaire Shares which each of them respectively own.
1.2 Consideration. Subject to the terms and conditions of this
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Agreement and in consideration of the sale, assignment, transfer and delivery of
the Kaire Shares to the Company, at the Closing, the Company shall issue and
deliver to the Kaire Stockholders a number of shares of the Company's common
stock (hereinafter referred to as the "Company Shares") equal to the sum of (a)
forty seven percent (47%) of the Company's "Total Shares" (as defined below)
less (b) the number of shares determined in accordance with Section 8.13 below.
"Total Shares" shall mean the sum of (i) the total number of shares of the
Company's common stock outstanding immediately prior to the Closing, except for
shares that have been issued prior to the Closing or that are issuable upon
exercise or conversion of options, warrants or convertible securities that have
been issued prior to the Closing to investors who invest or commit to invest up
to $3,000,000 in the Company pursuant to Section 8.11 below, (ii) the Company
Shares, and (iii) any shares of the Company's common stock issuable upon
exercise or conversion of any options, warrants, rights or convertible
securities outstanding immediately prior to the Closing, except for shares
issuable upon exercise or conversion of any options, warrants, rights or
convertible securities which are exercisable or convertible at a price in excess
of $.10 per share, shares issuable pursuant to Section 8.19 below or shares
which the Company has agreed or committed to issue after the Closing to
investors who invest or commit to invest up to $3,000,000 in the Company
pursuant to Section 8.11 below; provided that, for purposes of calculating Total
Shares, if any of such options, warrants or convertible securities by their
terms provide that the exercise or conversion price thereof and the number of
shares to be issued upon exercise or conversion thereof is to be determined as
of a certain date by reference to the market price of the Company's common stock
as of such date or some other date, the number of shares issuable upon exercise
or conversion thereof shall be deemed to be such number of shares as would have
been issued had the full exercise or conversion occurred on the date immediately
preceding the Closing Date. Each Kaire Stockholder shall receive a pro rata
portion of the Company Shares based on the number of Kaire Shares held by each
Kaire Stockholder on the date of the Closing.
2. THE CLOSING
2.1 Time and Place. The closing of the transactions contemplated by
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this Agreement shall be held on December 12, 1997, or on such other date as the
parties may agree upon in writing. The date on which the Closing is to be held
is referred to herein as the "Closing Date". The Closing shall be held at the
offices of Day Xxxxxxxx & XxXxxx, 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxx,
Xxxxxxxxxx 00000 at 10:00 a.m. on the Closing Date, or at such other time and
place as the parties may agree upon in writing.
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2.2 Deliveries by the Kaire Stockholders. At the Closing, each Kaire
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Stockholder shall deliver to the Company the following: (a) stock certificates
representing the number of Kaire Shares set forth opposite the name of such
Kaire Stockholder on Schedule A hereto, duly endorsed or accompanied by stock
powers duly executed in blank and otherwise in form acceptable for transfer on
the books of Kaire, (b) an investment letter in the form attached hereto as
Exhibit 3.3 executed by such Kaire Stockholder, and (c) a release in the form
attached hereto as Exhibit 3.4 (the "Release") executed by such Kaire
Stockholder.
2.3 Deliveries by Kaire. At the Closing, in addition to the
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documents referred to in Section 9.2 hereof, Kaire shall deliver to the Company
the following: (a) certified resolutions of the Kaire Board of Directors
authorizing the execution and delivery of this Agreement and the performance by
Kaire of its obligations hereunder, and (b) a certificate of good standing of
Kaire from the Secretary of State of Delaware dated as of the most recent
practicable date.
2.4 Deliveries by the Kaire Affiliates. At the Closing, the Kaire
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Affiliates shall deliver to the Company (a) a certificate or certificates signed
by the Kaire Affiliates that the representations and warranties of the Kaire
Affiliates were true and correct as of the date of this Agreement and are true
and correct as of the Closing Date as if made on the Closing Date, and (b) a
release in the form attached hereto as Exhibit 2.4 (the "Kaire Affiliate
Release") executed by each of the Kaire Affiliates.
2.5 Deliveries by the Company. At the Closing, in addition to the
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documents referred to in Section 9.3 hereof, the Company shall deliver to the
Kaire Stockholders the following: (i) a stock certificate issued in the name of
each Kaire Stockholder representing the number of Company Shares each such Kaire
Stockholder is entitled to receive; (ii) certified resolutions of the Company's
Board of Directors authorizing the execution and delivery of this Agreement and
the performance by the Company of its obligations hereunder; and (iii) a
certificate of good standing of the Company from the Secretary of State of
Delaware dated as of the most recent practicable date.
3. INDIVIDUAL REPRESENTATIONS AND WARRANTIES BY THE KAIRE STOCKHOLDERS
Each of the Kaire Stockholders, severally but not jointly, represents
and warrants to the Company as follows:
3.1 Title. Such Kaire Stockholder owns the number of Kaire Shares
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set forth opposite such Kaire Stockholder's name on Schedule A hereto, or any
amendment to Exhibit A hereto approved by the Company, and shall transfer to the
Company at the Closing good and valid title to said number of Kaire Shares, free
and clear of all liens, claims, options, charges, and encumbrances of every
kind, character or description.
3.2 Valid and Binding Agreement. Such Kaire Stockholder has full
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power and authority to execute and deliver this Agreement and consummate the
transactions contemplated
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hereby, and this Agreement is binding on him and enforceable in accordance with
its terms. The execution and delivery of this Agreement and consummation of the
transactions contemplated hereby do not violate or conflict with or constitute a
default under any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which he is a party or by which he or his property is
bound, or to his knowledge any existing applicable law, rule, regulation,
judgment, order or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over him or any of his property.
Such Kaire Stockholder is not and will not be required to give any notice to or
obtain any consent from any person in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
3.3 Investment Representations. Such Kaire Stockholder intends to
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acquire the Company Shares for investment and not with a view to the public
distribution or resale thereof, and such Kaire Stockholder shall confirm such
intention to the Company by delivering to the Company at the Closing an
investment letter in the form attached as Exhibit 3.3 hereto executed by such
Kaire Stockholder. Such Kaire Stockholder agrees that the Company may endorse
on any stock certificate for the Company Shares to be delivered pursuant to this
Agreement an appropriate legend referring to the provisions of the investment
letter attached as Exhibit 3.3 hereto, and that the Company may instruct its
transfer agent not to transfer any Company Shares unless advised by the Company
that such provisions have been complied with.
3.4 Release. Such Kaire Stockholder has full power and authority to
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execute and deliver a release in the form attached hereto as Exhibit 3.4 (the
"Release"), and upon execution and delivery thereof, the Release will be binding
on him and enforceable in accordance with its terms.
4. REPRESENTATIONS AND WARRANTIES OF KAIRE AND THE KAIRE AFFILIATES
Subject to and except as disclosed by Kaire in the Kaire Disclosure
Schedule attached hereto, Kaire and each of the Kaire Affiliates, jointly and
severally, represent and warrant to the Company as follows:
4.1 Authority. Kaire has all requisite corporate power and authority
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to enter into this Agreement and to consummate the transactions contemplated
herein. The execution and delivery of this Agreement and the consummation of
the transactions contemplated herein have been duly authorized and approved by
all necessary corporate action on the part of Kaire. This Agreement has been
duly executed and delivered by Kaire and constitutes the valid and binding
obligation of Kaire, enforceable in accordance with its terms.
4.2 Organization.
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(a) Kaire is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Kaire has the
corporate power and authority to
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carry on its business as presently conducted and to own or lease its properties
and assets, possesses all licenses, franchises, rights and privileges material
to the conduct of its business, and is qualified to conduct business as a
foreign corporation and is in good standing under the laws of all jurisdictions
where the failure to be so qualified would have a material adverse effect on its
financial position, results of operation or business.
(b) The copies of the Articles of Incorporation and all
amendments thereto of Kaire, as certified by the Secretary of State of Delaware,
and the Bylaws and all amendments thereto, as certified by the Secretary of
Kaire, which have heretofore been delivered to the Company, are complete and
correct copies of the Articles of Incorporation and Bylaws of Kaire as amended
and in effect on the date hereof. All minutes of meetings and actions in writing
without a meeting of the Board of Directors and stockholders of Kaire are
contained in the minute book of Kaire heretofore delivered to the Company for
examination, and no minutes or actions in writing without a meeting have been
included in such minute book since such delivery to the Company that have not
also been delivered to the Company.
4.3 Capitalization.
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(a) The authorized capital stock of Kaire consists of
25,000,000 shares of common stock, $.01 par value, of which 4,418,351 shares are
issued and outstanding and 5,000,000 shares of preferred stock, $.01 par value,
none of which are issued and outstanding. All of the issued and outstanding
shares of common stock of Kaire were issued in compliance with applicable state
and federal securities laws, are duly authorized, validly issued, fully paid and
nonassessable, and are not subject to preemptive rights created by statute,
Kaire's Articles of Incorporation or Bylaws or any agreement to which Kaire is a
party or by which it is bound.
(b) There are no options, warrants, calls, rights, commitments
or agreements of any character to which Kaire is a party or by which it is bound
obligating Kaire to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of Kaire or obligating Kaire to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement.
4.4 Equity Investments. Kaire does not own any equity interest,
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directly or indirectly, in any corporation, partnership or other form of
business entity, except for the corporations listed on the Kaire Disclosure
Schedule (individually, a "Kaire Subsidiary" and collectively, the "Kaire
Subsidiaries"). Each Kaire Subsidiary is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, with
full corporate power and authority to conduct its business as it is now being
conducted and to own or lease its properties and assets, possesses all licenses,
franchises, rights and privileges material to the conduct of its businesses, and
is qualified to conduct business as a foreign corporation and is in good
standing under the laws of all jurisdictions where the failure to be so
qualified would have a material adverse affect on its financial position,
results of operation or business. All of the issued and outstanding shares of
capital stock of each Kaire Subsidiary are duly authorized, validly issued,
fully paid and
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nonassessable, and, except as disclosed in the Kaire Disclosure Schedule, are
owned by Kaire free and clear of all liens, claims, options, charges, and
encumbrances of every kind, character or description.
4.5 Financial Statements. Kaire has delivered to the Company copies
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of its audited balance sheets for the fiscal years ended December 31, 1995 and
1996 and the related statements of operations, stockholders' equity and cash
flows for the periods then ended together with appropriate notes to such
financial statements and the report thereon of BDO Xxxxxxx, LLP, certified
public accountants, and copies of its unaudited balance sheet as of September
30, 1997 and the related statement of operations, stockholders' equity and cash
flows for the nine month period then ended (the "Kaire Financial Statements"),
copies of which are attached hereto as Exhibit 4.5. The Kaire Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved, and
present fairly the financial condition and the results of its operations,
changes in stockholders' equity and cash flow of Kaire as of the dates and for
the periods indicated thereon, subject in the case of the unaudited portion of
the Kaire Financial Statements to normal year-end audit adjustments, which will
not, individually or in the aggregate, be material, and the absence of certain
footnote disclosures.
4.6 Absence of Undisclosed Liabilities. At the date of the most
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recent balance sheet of Kaire included in the Kaire Financial Statements and as
of the Closing Date, Kaire had and will have no liability or obligation of any
nature, whether accrued, absolute, contingent, or otherwise, and whether due, or
to become due, other than liabilities or obligations individually or in the
aggregate less than $5,000, that is not reflected or reserved against in the
most recent balance sheet of Kaire or the accompanying notes thereto included in
the Kaire Financial Statements, except for those that may have been incurred
after the date of such balance sheet and those that are not required by
generally accepted accounting principles to be included in such balance sheet or
the accompanying notes thereto. All liabilities and obligations incurred after
the date of such balance sheet were incurred in the ordinary course of business
and are usual and normal in amount both individually and in the aggregate.
4.7 Business Changes. Since the date of the most recent balance
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sheet of Kaire included in the Kaire Financial Statements, Kaire and each Kaire
Subsidiary has conducted its business only in the ordinary and usual course and,
without limiting the generality of the foregoing:
(a) There have been no changes in the condition (financial or
otherwise), business, net worth, assets, prospects, properties, employees,
operations, obligations or liabilities of Kaire or any Kaire Subsidiary which,
in the aggregate, have had or may be reasonably expected to have a materially
adverse effect on the condition, business, net worth, assets, prospects,
properties or operations of Kaire and the Kaire Subsidiaries taken as a whole.
(b) Neither Kaire nor any Kaire Subsidiary has issued, or
authorized for issuance, or entered into any commitment to issue, any equity
security, bond, note or other security of Kaire or any Kaire Subsidiary.
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(c) Neither Kaire nor any Kaire Subsidiary has incurred
additional debt for borrowed money, nor incurred any obligation or liability
except in the ordinary and usual course of business.
(d) Neither Kaire nor any Kaire Subsidiary has declared or made
any dividend, payment or other distribution on or with respect to any share of
capital stock of Kaire or any Kaire Subsidiary.
(e) Neither Kaire nor any Kaire Subsidiary has purchased,
redeemed or otherwise acquired or committed itself to acquire, directly or
indirectly, any share or shares of capital stock of Kaire or any Kaire
Subsidiary.
(f) Neither Kaire nor any Kaire Subsidiary has mortgaged,
pledged, or otherwise, voluntarily or involuntarily, encumbered any of its
assets or properties, except for liens for current taxes which are not yet
delinquent and purchase-money liens arising out of the purchase or sale of
products made in the ordinary and usual course of business.
(g) Neither Kaire nor any Kaire Subsidiary has disposed of, or
agreed to dispose of, by sale, lease, license or otherwise, any asset or
property, tangible or intangible, except in the ordinary and usual course of
business.
(h) Neither Kaire nor any Kaire Subsidiary has purchased or
agreed to purchase or otherwise acquire any securities of any corporation,
partnership, joint venture, firm or other entity.
(i) Neither Kaire nor any Kaire Subsidiary has made any
expenditure or commitment for the purchase, acquisition, construction or
improvement of a capital asset, except in the ordinary and usual course of
business.
(j) Neither Kaire nor any Kaire Subsidiary has entered into any
transaction or contract, or made any commitment to do the same, except in the
ordinary and usual course of business.
(k) Neither Kaire nor any Kaire Subsidiary has effected or
committed itself to effect any amendment or modification to its Articles of
Incorporation or Bylaws.
4.8 Properties. The most recent Kaire balance sheet included in the
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Kaire Financial Statements reflects all of the real and personal property used
by Kaire in its business or otherwise held by Kaire except for (i) property
acquired or disposed of in the ordinary and usual course of the business of
Kaire since the date of the most recent Kaire balance sheet included in the
Kaire Financial Statements, and (ii) property not required under generally
accepted accounting principles to be reflected thereon. Kaire has good and
marketable title to all assets and properties listed on the most recent Kaire
balance sheet included in the Kaire Financial Statements and
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thereafter acquired, free and clear of any imperfections of title, lien, claim,
encumbrance, restriction, charge or equity of any nature whatsoever, except for
the lien of current taxes not yet delinquent. All of the fixed assets and
properties listed on the most recent Kaire balance sheet included in the Kaire
Financial Statements or thereafter acquired are in satisfactory condition and
repair for the requirements of the business as presently conducted by Kaire.
4.9 Taxes. Within the times and in the manner prescribed by law,
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Kaire has filed all federal, state, and local tax returns and reports required
by law and has paid in full all taxes, assessments, known penalties and interest
(all such items are collectively referred to as "Taxes"), due to, or claimed to
be due by, any governmental authority. The most recent balance sheet of Kaire
included in the Kaire Financial Statements fully accrues all current and
deferred Taxes. Kaire is not a party to any pending action or proceeding, nor,
to the actual knowledge of Kaire or any of the Kaire Affiliates, is any such
action or proceeding threatened by any governmental authority for the assessment
or collection of Taxes. There are no liens for Taxes except for liens for
property taxes not yet delinquent.
4.10 Litigation. There is no claim, action, suit or proceeding, at
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law or in equity, pending against Kaire or any Kaire Subsidiary, or involving
any of their respective assets or properties, before any court, agency,
authority, arbitration panel or other tribunal (other than those, if any, with
respect to which service of process or similar notice has not been made on Kaire
or any Kaire Subsidiary), and, to the knowledge of Kaire or the Kaire
Affiliates, none have been threatened. Neither Kaire nor any Kaire Subsidiary is
subject to any order, writ, injunction or decree of any court, agency,
authority, arbitration panel or other tribunal, nor is it in default with
respect to any notice, order, writ, injunction or decree.
4.11 Compliance with Law. All licenses, permits, clearances,
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consents, certificates and other evidences of authority of Kaire and each Kaire
Subsidiary which are material to the conduct of Kaire's and each Kaire
Subsidiary's business ("Permits") are in full force and effect and neither Kaire
nor any Kaire Subsidiary is in violation of any Permit in any material respect.
Except for possible exceptions, the curing or non-curing of which would not have
a material adverse effect on the condition (financial or otherwise), business,
net worth, assets, prospects, properties or operations of Kaire, to Kaire's
knowledge, the business of Kaire and each Kaire Subsidiary has been conducted in
accordance with all applicable laws, regulations, orders and other requirements
of governmental authorities, including, without limiting the generality of the
foregoing, employment practices and procedures, the health and safety of
employees, export controls, direct selling activities, product formulation,
labeling, packaging and importation, product claims and advertising, fair trade
and distributor practices, and the use, storage, treatment, disposal, transport,
generation, release and exposure of others to Hazardous Materials. Neither
Kaire nor any Kaire Affiliate has any knowledge of the presence of Hazardous
Materials in, under or about the soil and/or groundwater of any properties at
any time owned, leased or occupied by Kaire or any Kaire Subsidiary. "Hazardous
Materials" shall mean any substance regulated or prohibited by any law or
designated by any governmental agency to be toxic, radioactive or otherwise a
danger to health or the environment. Neither Kaire nor any Kaire Subsidiary has
received any notice of any investigation, claim or proceeding against Kaire or
any Kaire Subsidiary relating to Hazardous Materials and Kaire is not
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aware of any fact or circumstance which could involve Kaire or any Kaire
Subsidiary in any environmental litigation, proceeding, investigation or claim
or impose any environmental liability upon Kaire or any Kaire Subsidiary.
4.12 Contracts and Undertakings. The Kaire Disclosure Schedule
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contains a complete list of all contracts, instruments, leases, licenses,
agreements, commitments and other undertakings to which Kaire and each Kaire
Subsidiary is a party or by which it or its properties or assets are bound,
copies of which have been furnished or made available to Company. Neither Kaire
nor any Kaire Subsidiary is in default, or alleged to be in default, under any
of the contracts, instruments, leases, licenses, agreements, commitments or
undertakings listed on the Kaire Disclosure Schedule and, to the knowledge of
Kaire or the Kaire Affiliates, no other party to any of said contracts,
instruments, leases, licenses, agreements, commitments or undertakings is in
default thereunder nor, to the knowledge of Kaire or the Kaire Affiliates, does
there exist any condition or event which, after notice or lapse of time or both,
would constitute a default by any party to any of said contracts, instruments,
leases, licenses, agreements, commitments or undertakings.
4.13 Real Property. The Kaire Disclosure Schedule contains a full and
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complete list of all real property leased by Kaire and each Kaire Subsidiary.
All such real property leased by Kaire and each Kaire Subsidiary is held under
valid, subsisting and enforceable leases. To the actual knowledge of Kaire or
the Kaire Affiliates, neither real property leased by Kaire nor the operations
of Kaire or any Kaire Subsidiary thereon, violate any applicable building code,
zoning requirement or classification, or pollution control ordinance or statute
relating to the property or to such operations, and such non-violation is not
dependent, in any instance, on so-called nonconforming use exemptions.
4.14 Proprietary Rights.
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(a) The Kaire Disclosure Schedule contains a complete list of
all patents and applications for patents, trademarks, trade names, service
marks, and copyrights, and applications therefor, owned or used by Kaire or any
Kaire Subsidiary or in which it has any rights or licenses. The Kaire Disclosure
Schedule contains a complete and accurate description of all agreements of Kaire
and each Kaire Subsidiary with each officer, employee or consultant of Kaire and
each Kaire Subsidiary providing Kaire or any Kaire Subsidiary with title and
ownership to patents, patent applications, trade secrets and inventions
developed or used by Kaire or any Kaire Subsidiary in its business. All of such
agreements so described are valid, enforceable and legally binding.
(b) Kaire owns or possesses licenses or other rights to use all
patents, patent applications, trademarks, trademark applications, trade secrets,
service marks, trade names, copyrights, inventions, drawings, designs, customer
lists, proprietary know-how or information, or other rights with respect thereto
(collectively referred to as "Proprietary Rights"), used in the business of
Kaire and each Kaire Subsidiary, and the same are sufficient to conduct the
business of Kaire and each Kaire Subsidiary as it has been and is now being
conducted.
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(c) To the actual knowledge of Kaire or the Kaire Affiliates,
the operations of Kaire and each Kaire Subsidiary do not conflict with or
infringe, and no one has asserted to Kaire or any Kaire Subsidiary that such
operations conflict with or infringe, any Proprietary Rights, owned, possessed
or used by any third party. There are no claims, disputes, actions, proceedings,
suits or appeals pending against Kaire or any Kaire Subsidiary with respect to
any Proprietary Rights (other than those, if any, with respect to which service
of process or similar notice may not yet have been made on Kaire or any Kaire
Subsidiary), and, to the actual knowledge of Kaire or the Kaire Affiliates, none
has been threatened against Kaire or any Kaire Subsidiary. To the actual
knowledge of Kaire or the Kaire Affiliates, there are no facts or alleged facts
which would reasonably serve as a basis for any claim that Kaire or any Kaire
Subsidiary does not have the right to use, free of any rights or claims of
others, all Proprietary Rights in the development, manufacture, use, sale or
other disposition of any or all products or services presently being used,
furnished or sold in the conduct of the business of Kaire or any Kaire
Subsidiary as it has been and is now being conducted.
(d) To the actual knowledge of Kaire or the Kaire Affiliates,
no employee of Kaire is in violation of any term of any employment contract,
proprietary information and inventions agreement, non-competition agreement, or
any other contract or agreement relating to the relationship of any such
employee with Kaire or any previous employer.
4.15 Insurance. The Kaire Disclosure Schedule contains a complete
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list of all policies of insurance to which Kaire and each Kaire Subsidiary is a
party or is a beneficiary or named insured. Kaire and each Kaire Subsidiary has
in full force and effect, with all premiums due thereon paid, the policies of
insurance set forth therein. All the insurable properties of Kaire and each
Kaire Subsidiary are insured in amounts and coverages and against risks and
losses which are adequate and usually insured against by persons holding or
operating similar properties in similar businesses.
4.16 No Conflict. The execution and delivery of this Agreement and
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the consummation of the transactions contemplated hereby do not and will not
conflict with, or result in a breach of any term or provision of, or constitute
a default under or result in a violation of (i) the Articles of Incorporation or
Bylaws of Kaire, (ii) any agreement, contract, lease, license or instrument to
which Kaire or any Kaire Subsidiary is a party or by which Kaire or any Kaire
Subsidiary or any of their respective properties or assets are bound, (iii) any
judgment, decree, order, or writ by which Kaire is bound or to which it or any
of its properties or assets are subject or (iv) any of the terms or requirements
of, or give any governmental body the right to revoke, withdraw, suspend,
cancel, terminate or modify any governmental authorization that is held by Kaire
or any Kaire Subsidiary or that otherwise relates to the business of, or any of
the assets owned or used by, Kaire or any Kaire Subsidiary.
4.17 Consent. No consent, approval, order or authorization of, or
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registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality is required by or
with respect to Kaire or any Kaire Subsidiary in
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connection with the execution and delivery of this Agreement or the consummation
by Kaire of the transactions contemplated herein. No consent, waiver or approval
of third parties material to the business or operations of Kaire or any Kaire
Subsidiary is required to be obtained by Kaire in connection with the execution
and delivery of this Agreement and the performance of Kaire's obligations
hereunder.
4.18 Brokers or Finders. Neither Kaire nor any of the Kaire
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Affiliates has dealt with any broker or finder in connection with the
transactions contemplated by this Agreement. Neither Kaire nor any Kaire
Subsidiary has incurred, and shall not incur, directly or indirectly, any
liability for any brokerage or finders' fees or agents commissions or any
similar charges in connection with this Agreement or any transaction
contemplated herein.
4.19 Related Parties. To the actual knowledge of Kaire or the Kaire
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Affiliates, no officer or director of Kaire or any Kaire Subsidiary, or any
affiliate of any such person, has, either directly or indirectly, (i) an
interest in any corporation, partnership, firm or other person or entity which
furnishes or sells services or products which are similar to those furnished or
sold by Kaire or any Kaire Subsidiary, or (ii) a beneficial interest in any
contract, lease, license or agreement to which Kaire or any Kaire Subsidiary is
a party or by which Kaire or any Kaire Subsidiary may be bound.
4.20 Underlying Documents. Copies of any underlying documents listed
--------------------
or described as having been disclosed to the Company pursuant to this Agreement,
if requested by the Company, have been furnished to the Company. All such
documents furnished to the Company are true and correct copies, and there are no
amendments or modifications thereto that have not been disclosed to the Company.
4.21 Full Disclosure. Any information furnished to the Company by or
---------------
on behalf of Kaire in writing pursuant to this Agreement and any information
contained in the Kaire Disclosure Schedule, at any time prior to the Closing
Date, does not and will nor contain any untrue statement of a material fact and
does not and will not omit to state any material fact necessary to make any
statement, in light of the circumstances under which such statement is made, not
misleading.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to and except as disclosed by the Company in the Company
Disclosure Schedule attached hereto, the Company represents and warrants to
Kaire and the Kaire Stockholders as follows:
5.1 Authority. The Company has all requisite corporate power and
---------
authority to enter into this Agreement and, subject to satisfaction of the
conditions set forth herein, to consummate the transactions contemplated herein.
The execution and delivery of this Agreement, the consummation of the
transactions contemplated herein, and the issuance of the Company Shares in
accordance with the terms hereof, have been duly authorized by all necessary
action on the part
11
of the Company. This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company.
12
5.2 Organization.
------------
(a) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to carry on its business as
presently conducted, and is qualified to do business in all jurisdictions where
the failure to be so qualified would have a material adverse effect on its
business or financial condition.
(b) The copies of the Articles of Incorporation and all
amendments thereto of the Company, as certified by the Secretary of State of
Delaware, and the Bylaws of the Company and all amendments thereto, as certified
by the Secretary of the Company, which have heretofore been delivered to Kaire
and made available to the Kaire Stockholders for examination, are complete and
correct copies of the Articles of Incorporation and Bylaws of the Company as
amended and in effect on the date hereof. All minutes of meetings and actions in
writing without a meeting of the Board of Directors and stockholders of the
Company are contained in the minute book of the Company heretofore delivered to
Kaire and made available to the Kaire Stockholders for examination, and no
minutes or actions in writing without a meeting have been included in such
minute book since such delivery to Kaire that have not also been delivered to
Kaire.
5.3 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of
400,000,000 shares of Common Stock, $.001 par value, of which 93,997,418 shares
were issued and outstanding on the date hereof. All of the issued and
outstanding shares of Common Stock of the Company were issued in compliance with
applicable state and federal securities laws, are duly authorized, validly
issued, fully paid and non-assessable, and are not subject to preemptive rights
created by statute, the Company's Articles of Incorporation or Bylaws or any
agreement to which the Company is a party or is bound.
(b) Except as contemplated, permitted or required by this
Agreement or described in the Company Disclosure Schedule, there are no options,
warrants, calls, rights, commitments or agreements of any character to which the
Company is a party or by which it is bound obligating the Company to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock of the Company or obligating the Company to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement.
5.4 Equity Investments. Company does not own any equity interest in
------------------
any corporation, partnership, or other form of business entity, except for the
corporations listed on the Company Disclosure Schedule.
5.5 Financial Statements. Company has delivered to Kaire and made
--------------------
available to the Kaire Stockholders for examination copies of its audited
balance sheets for the years ended
13
December 31, 1995 and 1996 and the related statements of operations,
stockholders' equity and cash flows for the periods then ended together with
appropriate notes to such financial statements, and copies of its unaudited
balance sheet as of September 30, 1997 and the related statement of operations,
stockholders' equity and cash flows for the nine month period then ended (the
"Company Financial Statements"), a copy of which is attached hereto as Exhibit
5.5. The Company Financial Statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis during
the periods involved, and present fairly the financial condition of the Company
and the results of operations as of the dates and for the periods indicated
therein, subject in the case of the unaudited portion of the Company Financial
Statements to normal year-end audit adjustments, which will not be material, and
the absence of certain footnote disclosures.
5.6 Absence of Undisclosed Liabilities. At the date of the most
----------------------------------
recent balance sheet of the Company included in the Company Financial
Statements, the Company had no liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to become due,
that is not reflected or reserved against in the most recent balance sheet of
the Company included in the Company Financial Statements, except for those that
are not required by generally accepted accounting principles to be included in
such balance sheet or the accompanying notes thereto.
5.7 Business Changes. Since the date of the most recent balance
----------------
sheet of the Company included in the Company Financial Statements and prior to
the date of this Agreement, except as disclosed in the Company Disclosure
Schedule, the Company has conducted its business only in the ordinary and usual
course.
5.8 Properties. The most recent Company balance sheet included in
----------
the Company Financial Statements reflects all of the real and personal property
used by the Company in its business or otherwise held by the Company except for
(i) property acquired or disposed of in the ordinary and usual course of the
business of the Company since the date of the most recent Company balance sheet
included in the Company Financial Statements, and (ii) property not required
under generally accepted accounting principles to be reflected thereon. The
Company has good and marketable title to all assets and properties listed on the
most recent Company balance sheet included in the Company Financial Statements
and thereafter acquired.
5.9 Taxes. Within the times and in the manner prescribed by law, the
-----
Company has filed all federal, state, and local tax returns required by law and
has paid all taxes, assessments, known penalties and interest (all such items
are collectively referred to as "Taxes") due to, or claimed to be due by, any
governmental authority. The most recent balance sheet of the Company included
in the Company Financial Statements fully accrues all current and deferred
Taxes. The Company is not a party to any pending action or proceeding, nor, to
the actual knowledge of the Company, is any such action or proceeding threatened
by any governmental authority for the assessment or collection of Taxes. There
are no liens for Taxes except for liens for property taxes not yet delinquent.
14
5.10 Litigation. There is no claim, action, suit or proceeding, at
----------
law or in equity, pending against the Company or involving any of its assets or
properties, before any court, agency, authority, arbitration panel or other
tribunal (other than those, if any, with respect to which service of process or
similar notice has not been made on the Company), and, to the actual knowledge
of the Company, none have been threatened. The Company is not subject to any
order, writ, injunction or decree of any court, agency, authority, arbitration
panel or other tribunal, nor is it in default with respect to any notice, order,
writ, injunction or decree.
5.11 Compliance with Law. All licenses, permits, clearances,
-------------------
consents, certificates and other evidences of authority of the Company which are
material to the conduct of its business ("Permits") are in full force and effect
and the Company is not in violation of any Permit in any material respect.
Except for (a) possible exceptions, the curing or non-curing of which would not
have a material adverse effect on the condition (financial or otherwise),
business, net worth, assets, prospects, properties or operations of the Company,
and (b) the violation of provisions of the Federal Trade Commission Act
described in the Complaint (Docket No. C-3751) against the Company by the
Federal Trade Commission ("FTC"), a copy of which, together with the FTC order
issued in connection therewith, has been delivered to Kaire and made available
to the Kaire Stockholders, to the Company's knowledge, the business of the
Company has been conducted in accordance with all applicable laws, regulations,
orders and other requirements of governmental authorities, including, without
limiting the generality of the foregoing, employment practices and procedures,
the health and safety of employees, export controls, direct selling activities,
product formulation, labeling, packaging and importation, product claims and
advertising, fair trade and distributor practices and the use, storage,
treatment, disposal, transport, generation, release and exposure of others to
Hazardous Materials. The Company has no knowledge of the presence of Hazardous
Materials in, under or about the soil and/or groundwater of any properties at
any time owned, leased or occupied by the Company. "Hazardous Materials" shall
mean any substance regulated or prohibited by any law or designated by any
governmental agency to be toxic, radioactive or otherwise a danger to health or
the environment. The Company has not received any notice of any investigation,
claim or proceeding against the Company relating to Hazardous Materials and the
Company is not aware of any fact or circumstance which could involve the Company
or its Subsidiary in any environmental litigation, proceeding, investigation or
claim or impose any environmental liability upon the Company.
5.12 Contracts and Undertakings. The Company Disclosure Schedule
--------------------------
contains a complete list of all contracts, instruments, leases, licenses,
agreements, commitments and other undertakings to which the Company is a party
or by which it or its properties or assets are bound, copies of which have been
furnished or made available to Kaire. The Company is not in default, or alleged
to be in default, under any of the contracts, instruments, leases, licenses,
agreements, commitments or undertakings listed on the Company Disclosure
Schedule and, to the knowledge of the Company, there does not exist any
condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any of said contracts, instruments, leases,
licenses, agreements, commitments or undertakings.
15
5.13 Real Property. The Company Disclosure Schedule contains a full
-------------
and complete list of all real property leased by the Company. All such real
property leased by the Company is held under valid, subsisting and enforceable
leases. To the actual knowledge of the Company, neither real property leased by
the Company nor the operations of the Company thereon, violate any applicable
building code, zoning requirement or classification, or pollution control
ordinance or statute relating to the property or to such operations, and such
non-violation is not dependent, in any instance, on so-called nonconforming use
exemptions.
5.14 Proprietary Rights.
------------------
(a) The Company Disclosure Schedule contains a complete list of
all patents and applications for patents, trademarks, trade names, service
marks, and copyrights, and applications therefor, owned or used by the Company
or in which it has any rights or licenses. The Company Disclosure Schedule
contains a complete and accurate description of all agreements of the Company
with each officer, employee or consultant of the Company providing the Company
with title and ownership to patents, patent applications, trade secrets and
inventions developed or used by the Company in its business. All of such
agreements so described are valid, enforceable and legally binding.
(b) The Company owns or possesses licenses or other rights to
use all patents, patent applications, trademarks, trademark applications, trade
secrets, service marks, trade names, copyrights, inventions, drawings, designs,
customer lists, proprietary know-how or information, or other rights with
respect thereto (collectively referred to as "Proprietary Rights"), used in the
business of the Company, and the same are sufficient to conduct the business of
the Company as it has been and is now being conducted.
(c) To the actual knowledge of the Company, the operations of
the Company do not conflict with or infringe, and no one has asserted to the
Company that such operations conflict with or infringe, any Proprietary Rights,
owned, possessed or used by any third party. There are no claims with or
disputes, actions, proceedings, suits or appeals pending against the Company
with respect to any Proprietary Rights (other than those, if any, with respect
to which service of process or similar notice may not yet have been made on the
Company), and, to the actual knowledge of the Company, none has been threatened
against the Company. To the actual knowledge of the Company, there are no facts
or alleged facts which would reasonably serve as a basis for any claim that the
Company does not have the right to use, free of any rights or claims of others,
all Proprietary Rights in the development, manufacture, use, sale or other
disposition of any or all products or services presently being used, furnished
or sold in the conduct of the business of the Company as it has been and is now
being conducted.
5.15 Insurance. The Company Disclosure Schedule contains a complete
---------
list of all policies of insurance to which the Company is a party or is a
beneficiary or name insured. The Company has in full force and effect, with all
premiums due thereon paid, the policies of insurance set forth therein. All the
insurable properties of the Company are insured in amounts and coverages
16
and against risks and losses which are adequate and usually insured against by
persons holding or operating similar properties in similar businesses.
5.16 No Conflict. The execution and delivery of this Agreement and
-----------
the consummation of the transactions contemplated hereby do not and will not
conflict with, or result in a breach of any term or provision of, or constitute
a default under or result in a violation of, the Articles of Incorporation or
Bylaws of the Company, any agreement, contract, lease, license, or instrument to
which the Company is a party or by which it or any of its assets are bound, or
any judgment, decree, order or writ by which the Company is bound or to which it
or any of its assets are subject.
5.17 Consent. No consent, approval, order or authorization of, or
-------
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality is required by or
with respect to the Company in connection with the execution and delivery of
this Agreement or the consummation by the Company of the transactions
contemplated herein, except for (a) such filings as may be required under
applicable state securities law and (b) such other consents, approvals, orders,
authorizations, registrations, declarations and filings which if not obtained or
made would not have a material adverse effect on the Company. No consent,
waiver or approval of third parties material to the business or operations of
the Company is required to be obtained by the Company in connection with the
execution and delivery of this Agreement and the performance of the Company's
obligations hereunder.
5.18 Brokers or Finders. The Company has not dealt with any broker or
------------------
finder in connection with the transactions contemplated by this Agreement except
as disclosed in the Company Disclosure Schedule. The Company has not incurred,
and shall not incur, directly or indirectly, any liability for any brokerage or
finders' fees or agents commissions or any similar charges in connection with
this Agreement or any transaction contemplated herein except as disclosed in the
Company Disclosure Schedule.
5.19 Compliance with Securities Laws. The Company has delivered to
-------------------------------
Kaire and made available to the Kaire Stockholders for examination true and
complete copies, including exhibits and, as applicable, amendments thereto, of
the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1996 and all Quarterly Reports on Form 10-QSB and Current Reports on Form 8-
K filed since December 31, 1996. All reports required to be filed by the
Company with the Securities and Exchange Commission (collectively, the
"Reports") have been properly filed and comply in all material respects with the
requirements of the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder with respect to such Reports.
5.20 Underlying Documents. Copies of any underlying documents listed
--------------------
or described as having been disclosed to Kaire or the Kaire Stockholders
pursuant to this Agreement, if requested by Kaire, have been furnished to Kaire
and made available to the Kaire Stockholders. All such documents furnished to
Kaire and made available to the Kaire Stockholders are true and
17
correct copies, and there are no amendments or modifications thereto that have
not been disclosed to Kaire or the Kaire Stockholders.
5.21 Full Disclosure. Any information furnished by or on behalf of
---------------
the Company in writing pursuant to this Agreement and any information contained
in the Company's Disclosure Schedule, at any time prior to the Closing Date,
does not and will not contain any untrue statement of a material fact and does
not and will not omit to state any material fact necessary to make any
statement, in light of the circumstances under which such statement is made, not
misleading.
60 COVENANT'S RELATING TO CONDUCT OF BUSINESS OF KAIRE
During the period from the date of this Agreement and continuing until
the Closing Date, Kaire and the Majority Stockholders agree (except as expressly
contemplated by this Agreement or to the extent that the Company shall otherwise
consent in writing) that:
6.1 Ordinary Course. Kaire and each Kaire Subsidiary shall carry on
---------------
its business in the usual and ordinary course, including the payment of all
state and federal taxes, in substantially the same manner as heretofore
conducted and, to the extent consistent with such business, use all reasonable
efforts consistent with past practice and policies to preserve intact its
present business organization, keep available the services of its present
officers and key employees and preserve its relationship with sales associates,
customers, providers and others having business dealings with it to the end that
its goodwill and ongoing business shall be unimpaired at the Closing Date.
6.2 Dividends; Purchase of Stock. Kaire shall not and shall not
----------------------------
propose to (i) declare or pay any dividends on or make other distributions in
respect of any of its capital stock, or (ii) repurchase or otherwise acquire any
shares of its capital stock or rights to acquire any shares of its capital
stock.
6.3 Issuance of Securities. Kaire shall not issue or sell or
----------------------
authorize or propose the issuance or sale of, or purchase or propose the
purchase of, any shares of its capital stock of any class or securities
convertible into, or rights, warrants or options to acquire, any such shares or
other convertible securities, except that Kaire may issue and sell shares of its
common stock in connection with (i) the exercise of any option or warrant
outstanding on the date of the Agreement and described on the Kaire Disclosure
Schedule, (ii) the conversion of any convertible security outstanding on the
date of this Agreement and described on the Kaire Disclosure Schedule or (iii)
the cancellation of any debt outstanding on the date of this Agreement and
described on the Kaire Disclosure Schedule, provided that in each such case, the
person to whom any such shares are issued agrees to become a party to this
Agreement by executing an appropriate amendment hereto.
6.4 Governing Documents. Kaire shall not amend its Articles of
-------------------
Incorporation or Bylaws.
6.5 No Acquisitions. Kaire shall not acquire or agree to acquire by
---------------
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner,
18
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to Kaire except in
the usual and ordinary course of business consistent with prior practice.
6.6 No Dispositions. Kaire shall not sell, assign, transfer, pledge,
---------------
encumber or otherwise dispose of, by sale, lease, license or otherwise, any of
its assets, tangible or intangible, which are material, individually or in the
aggregate, to Kaire except in the usual and ordinary course of business
consistent with prior practice.
6.7 No Debt. Kaire shall not incur any amount of long or short-term
-------
debt for money borrowed, guarantee or agree to guarantee the obligations of
others, indemnify or agree to indemnify others or incur any other liabilities
other than those incurred in the usual and ordinary course of business
consistent with past practices.
6.8 Maintain Insurance. Kaire shall keep in full force and effect
------------------
insurance covering Kaire, its assets and business comparable in amount and scope
of coverage to that now maintained.
6.9 No Liens. Kaire shall not mortgage, pledge or otherwise encumber
--------
any of its assets or properties, except for liens for current taxes which are
not yet delinquent and purchase money liens arising out of the purchase or sale
of products made on the ordinary and usual course of business.
6.10 No Capital Expenditures. Kaire shall not make any expenditure or
-----------------------
commitment for the purchase, acquisition, construction or improvement of a
capital asset, except in the ordinary and usual course of business.
6.11 Transaction or Contract. Kaire shall not enter into, or agree or
-----------------------
otherwise commit to enter into, any transaction or contract except in the
ordinary and usual course of business.
6.12 Notice. Kaire shall promptly notify the Company of any default,
------
the threat or commencement of any litigation, or any development that occurs
before the Closing that could in any way materially affect Kaire, its assets or
business.
70 COVENANTS RELATING TO CONDUCT OF BUSINESS OF THE
COMPANY PENDING CLOSING
During the period from the date of this Agreement and continuing until
the Closing Date, the Company agrees (except as expressly contemplated, required
or permitted by this Agreement or to the extent that Kaire and the Kaire
Stockholders shall otherwise consent in writing) that:
19
7.1 Ordinary Course. The Company shall carry on its business in the
---------------
usual and ordinary course in substantially the same manner as heretofore
conducted.
20
8.1 ADDITIONAL AGREEMENTS
8.1 Access to Information.
---------------------
(a) Kaire shall afford to the Company and shall cause its
independent accountants to afford to the Company, and its accountants, counsel
and other representatives, reasonable access during normal business hours during
the period prior to the Closing Date to all of Kaire's properties, books,
contracts, commitments and records and to the audit work papers and other
records of Kaire's independent accountants. During such period, Kaire shall use
reasonable efforts to furnish promptly to the Company all information concerning
the business, properties and personnel of Kaire as the Company may reasonably
request, provided that Kaire shall not be required to disclose any information
which it is legally required to keep confidential. The Company will not use such
information for purposes other than this Agreement and will otherwise hold such
information in confidence (and the Company will cause its consultants and
advisors also to hold such information in confidence) until such time as such
information otherwise becomes publicly available, and in the event of
termination of this Agreement for any reason the Company shall promptly return,
or cause to be returned, to the disclosing party all documents obtained from
Kaire, and any copies made of such documents, extracts and copies thereof.
(b) The Company shall afford to Kaire and shall cause its
independent accountants to afford to Kaire, and its accountants, counsel and
other representatives, reasonable access during normal business hours during the
period prior to the Closing Date to all of the Company's properties, books,
contracts, commitments and records and to the audit work papers and other
records of the Company's independent accountants. During such period, the
Company shall use reasonable efforts to furnish promptly to Kaire such
information concerning the Company as Kaire may reasonably request, provided
that the Company shall not be required to disclose any information which it is
legally required to keep confidential. Kaire will not use such information for
purposes other than this Agreement and will otherwise hold such information in
confidence (and Kaire will cause Kaire's consultants and advisors also to hold
such information in confidence) until such time as such information otherwise
becomes publicly available, and in the event of termination of this Agreement
for any reason Kaire shall promptly return, or cause to be returned, to the
disclosing party all documents obtained from the Company, and any copies made of
such documents, extracts and copies thereof.
8.2 Legal Conditions to the Transactions Contemplated by This
---------------------------------------------------------
Agreement. Each party will take all reasonable actions necessary to comply
---------
promptly with all legal requirements which may be imposed on such party with
respect to the transactions contemplated by this Agreement and will promptly
cooperate with and furnish information to the other party in connection with any
such requirements imposed upon such other party in connection with the
transactions contemplated by this Agreement. Each party will take all
reasonable actions to obtain (and to cooperate with the other party in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any governmental authority, or other third party, required to be obtained or
made by
21
such party (or by the other party) in connection with the transactions
contemplated by this Agreement.
8.3 Blue Sky Laws. The Company shall take such steps as may be
-------------
necessary to comply with the securities and Blue Sky laws of all jurisdictions
which are applicable in connection with the issuance of the Company Shares to
the Kaire Stockholders pursuant to this Agreement. Kaire shall use its best
efforts to assist the Company as may be necessary to comply with such laws.
8.4 Communications. Between the date hereof and the Closing Date,
--------------
neither Kaire nor the Company will, without the prior written approval of the
other party, furnish any communication to its shareholders or to the public
generally if the subject matter thereof relates to the other party or to the
transactions contemplated by this Agreement, except as may be necessary, in the
opinion of their respective counsel, to comply with the requirements of any law,
governmental order or regulation.
8.5 Update to Kaire Disclosures. Without limiting the Company's
---------------------------
right to rely on the representations and warranties as of the date of this
Agreement, Kaire and the Majority Stockholders shall provide the Company with
updates to the disclosures provided or made available to the Company as to
material facts which arise between the date of this Agreement and the Closing
Date and which, if they had occurred and been known prior to the date of this
Agreement, would have been required to have been disclosed in order to make the
representations and warranties contained in Article 4 true and correct as of the
date of this Agreement.
8.6 Update to Company Disclosures. Without limiting the right of
-----------------------------
Kaire and the Kaire Stockholders to rely on the representations and warranties
as of the date of this Agreement, the Company shall provide Kaire and the Kaire
Stockholders with updates to the disclosure provided or made available to Kaire
and the Kaire Stockholders as to material facts which arise between the date of
this Agreement and the Closing Date and which, if they had occurred and been
known prior to the date of this Agreement, would have been disclosed in order to
make the representations and warranties contained in Article 5 true and correct
as of the date of this Agreement.
8.7 Good Faith. Each party shall act in good faith in an attempt to
----------
cause all the conditions precedent to its obligations under this Agreement to be
satisfied. Each party will act in good faith and take all reasonable action
within its capability necessary to render accurate as of the Closing Date its
representations and warranties contained in this Agreement.
8.8 Securities Law Matters. The Company Shares issued to the Kaire
----------------------
Stockholders shall be issued without registration under the Securities Act of
1933, as amended, (the "Act"), in reliance upon certain exemptions from the
registration requirements of the Act, including Regulation D adopted thereunder.
Accordingly, the Company Shares may not be resold by the holders thereof without
registration under the Act unless a further exemption from the registration
requirements of the Act is available for such resale. All certificates
representing the Company Shares shall bear the following legend or a legend of
similar import:
22
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
CERTAIN STATE SECURITIES LAWS. NO SALE OR TRANSFER OF THESE SHARES
MAY BE MADE IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR (2) AN OPINION OF COUNSEL THAT REGISTRATION UNDER THE
ACT OR UNDER APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED SALE OR TRANSFER."
8.9 Loan to Kaire Prior to Closing. Prior to the Closing, the
------------------------------
Company agrees to loan Kaire the sum of Seven Hundred Thousand Dollars
($700,000) (the "Loan"). The Loan shall be made in accordance with the terms of
the loan and security agreement dated October 27, 1997 between the Company and
Kaire (the "Loan Agreement"). The Loan shall be evidenced by Kaire's secured
promissory note, in the form of the promissory note attached to the Loan
Agreement (the "Note"). The Note shall be secured by all of Kaire's assets in
accordance with the terms of the security agreement attached to the Loan
Agreement (the "Security Agreement"). Payment of the Note shall also be secured
by a pledge of stock by the holders of at least 40% of Kaire's voting stock
pursuant to a stock pledge agreement (the "Stock Pledge Agreement") and a
subordination of indebtedness by each pledgor of any indebtedness owed by Kaire
to each pledgor. Kaire acknowledges receipt of $700,000 of loan proceeds as of
the date of this Agreement.
8.10 Increase in Authorized Capital Stock. Prior to the Closing Date,
------------------------------------
the Company shall amend its Articles of Incorporation to increase the authorized
number of shares of Common Stock to Four Hundred million (400,000,000).
8.11 Additional Capital. (a) The Company agrees to use commercially
------------------
reasonable efforts to (i) raise additional capital in the gross minimum amount
of One Million Dollars ($1,000,000) prior to the Closing Date from the offer and
sale of the Company's convertible promissory notes (the "Convertible Notes") or
other form of investment, (ii) obtain a written commitment from one or more
investors to invest an additional $500,000 of capital in the Company on or
before December 25, 1997, by the purchase of the Company's Convertible Notes or
other form of investment, (iii) obtain a written commitment from one or more
investors to invest an additional $500,000 of capital in the Company on or
before January 15, 1998 by the purchase of the Company's Convertible Notes or
other form of investment, and (iv) obtain a written commitment from one or more
investors to invest an additional $1,000,000 of capital in the Company on or
before February 15, 1998 by the purchase of the Company's Convertible Notes or
other form of investment The terms and conditions of the Convertible Notes or
other form of investment shall be determined by agreement of the holders thereof
and the Company. The first $700,000 of the proceeds received by the Company
from the sale of the Convertible Notes or other form of investment shall be
loaned to Kaire in accordance with Section 8.9 above. The shares of Common
Stock issuable by the Company upon conversion of the Convertible Notes or
pursuant to an other form of investment are sometimes
23
hereinafter collectively referred to as the "Additional Shares". The Company
shall be entitled to grant registration rights to the holders of the Additional
Shares, pursuant to and in accordance with the terms of a registration rights
agreement in form and substance satisfactory to the Company and the holders of
the Convertible Notes or other form of investment with respect to such
Additional Shares.
8.12 Use of Additional Capital. The first $700,000 of additional
-------------------------
capital received by the Company shall be loaned to Kaire pursuant to Section 8.9
above. On or after the Closing Date, the balance of the additional capital
received by the Company in accordance with Section 8.11 above shall be allocated
to and utilized by Kaire in such amounts, for such purposes and at such times as
the Executive Committee of Kaire's Board of Directors appointed pursuant to
Section 8.16 below shall, in its discretion, determine. All of the additional
capital received by the Company pursuant to Section 8.11 above after the Closing
and allocated to Kaire pursuant to this Section 8.12 shall be provided to Kaire
as equity capital and not as a loan.
8.13 Cancellation or Restructure of Affiliate Debt. As of the date of
---------------------------------------------
this Agreement, the unpaid balance of all loans to Kaire from certain of its
officers, directors and shareholders (individually an "Affiliate" and
collectively, the "Affiliates") is $502,860 (individually, an "Affiliate Loan"
and collectively, the "Affiliate Loans"). Kaire agrees to use its best efforts
to obtain the written agreement of each Affiliate to cancel the entire amount of
his Affiliate Loan in exchange for shares of common stock of Kaire at or prior
to the Closing. The Affiliates shall not have the right to cancel any part of
their Affiliate Loans in exchange for shares of common stock of Kaire or the
Company after the Closing. If any Affiliate does not agree to cancel all of his
Affiliate Loan at or prior to the Closing, (i) the total number of Company
Shares which the Kaire Stockholders shall be entitled to receive at the Closing
shall be reduced by a number of shares determined by dividing the unconverted
portion of all Affiliate Loans (the "Unconverted Affiliate Debt") by the market
price of a share of the Company's common stock on the date immediately preceding
the Closing Date, and (ii) such Affiliate shall enter into a written agreement
with Kaire on or prior to the Closing which provides, on terms and conditions
satisfactory to the Company, that Kaire shall not be obligated to make any
payment on the Unconverted Affiliated Debt until after the end of the first
calendar quarter following the Closing Date in which Kaire has achieved positive
net cash flow (the "Initial Payment Quarter"), and that within thirty (30) days
after the end of the Initial Payment Quarter and each succeeding calendar
quarter in which Kaire has achieved positive net cash flow, Kaire shall only be
obligated to make a payment to such Affiliates, on a prorata basis, on such
Unconverted Affiliate Debt in an aggregate amount equal to 50% of the positive
net cash flow for each such calendar quarter.
8.14 Cancellation or Restructure of Certain Nonaffiliated Debt. As of
---------------------------------------------------------
the date of this Agreement, Kaire is indebted to Xxxxx Xxxxx ("Xxxxx") in the
principal amount of $350,000 (the "Xxxxx Debt") and to the holders of Kaire's
10% promissory notes (the "Bridge Loan Note Holders") in the aggregate principal
amount of $1,725,000 (the "Bridge Loan Debt"). Kaire agrees to use its best
efforts to obtain the written agreement of Xxxxx and the Bridge Loan Note
Holders to cancel the entire amount of the Xxxxx Debt and the Bridge Loan Debt,
respectively, in exchange
24
for common stock of Kaire at or prior to the Closing. If Xxxxx and/or the Bridge
Loan Note Holders do not agree to cancel all of their Xxxxx Debt and Bridge Loan
Debt, respectively, Kaire shall use its best efforts to (a) enter into a written
agreement with Xxxxx at or prior to the Closing which provides, on terms and
conditions satisfactory to the Company, that any default by Kaire with respect
to payment of the Xxxxx Debt prior to the Closing shall be waived and that Kaire
shall have a reasonable period of time after the Closing to repay the Xxxxx
Debt, and (b) enter into a written agreement with the Bridge Loan Note Holders
at or prior to the Closing which provides, on terms and conditions satisfactory
to the Company, that any default by Kaire under its agreement with the Bridge
Loan Note Holders prior to the Closing, including without limitation, any
default occurring by reason of this Agreement or the consummation of any of the
transactions contemplated hereby, shall be waived.
8.15 Election of Additional Kaire Directors. At or prior to the
--------------------------------------
Closing, (a) Kaire shall amend its Bylaws or take such other action as may be
necessary to provide that the authorized number of directors on Kaire's Board of
Directors shall be seven (7), and (b) at the Closing, Kaire shall elect two (2)
persons designated by the Company to serve on Kaire's Board of Directors.
8.16 Appointment of Kaire Executive Committee. At the Closing,
----------------------------------------
Kaire's Board of Directors shall adopt and approve resolutions, in form and
substance satisfactory to the Company, which shall provide (a) for the
appointment of an Executive Committee of the Board of Directors of Kaire
consisting of five (5) members, three (3) of which shall be directors designated
by Kaire and two (2) of which shall be the two (2) new members of Kaire's Board
of Directors designated by the Company, (b) that the Kaire Executive Committee
shall be authorized and empowered, to the same extent as Kaire's Board of
Directors, to take action on (i) raising additional capital (ii) obtaining debt
financing, (iii) issuing any equity or debt securities or (iv) anything
materially affecting the operation of Kaire's business, and (c) that all action
taken by Kaire's Executive Committee must be approved by at least four (4) of
its five (5) members.
8.17 Election of Additional Company Directors. At or prior to the
----------------------------------------
Closing, (a) the Company shall amend its Bylaws, or take such other action as
may be necessary to provide that the authorized number of directors on the
Company's Board of Directors shall be five (5), and, (b) at the Closing, the
Company shall elect two (2) persons designated by Kaire to serve on the
Company's Board of Directors.
8.18 Appointment of Company Executive Committee. At the Closing, the
------------------------------------------
Company's Board of Directors shall adopt and approve resolutions, in form and
substance satisfactory to Kaire, which shall provide (a) for the appointment of
an Executive Committee of the Board of Directors of the Company consisting of
five (5) members, three (3) of which shall be directors designated by the
Company and two (2) of which shall be the two (2) new members of the Company's
Board of Directors designated by Kaire, (b) that the Company's Executive
Committee shall be authorized and empowered, to the same extent as the Company's
Board of Directors, to take action on (i) raising additional capital (ii)
obtaining debt financing, (iii) issuing any equity or debt securities or (iv)
anything materially affecting the operation of the business of the Company and
its
25
Subsidiary, and (c) that all actions taken by the Company Executive Committee
must be approved by at least four (4) of its five (5) members.
26
8.19 Consulting Fees.
---------------
8.19.1 The Company shall issue and deliver to Day Xxxxxxxx & XxXxxx
("DCM") shares of the Company's Common Stock in the amounts and at the times set
forth below:
(a) At or within 30 days after the Closing, the Company shall
issue and deliver to DCM a number of shares of the Company's common stock equal
to four percent (4%) of the Company's Total Adjusted Shares. "Total Adjusted
Shares" shall mean the sum of (i) the total number of shares of the Company's
common stock outstanding immediately prior to the Closing, including any shares
issued pursuant to Section 8.11 above, (ii) the Company Shares, (iii) the shares
issuable under this Section 8.19(a), and (iv) any shares of the Company's common
stock issuable upon exercise or conversion of any options, warrants, rights or
convertible securities outstanding immediately prior to the Closing, including
any shares issuable upon exercise or conversion of any options, warrants or
convertible securities issued pursuant to Section 8.11 above; provided that, for
purposes of calculating Total Adjusted Shares, if any of such options, warrants,
rights or convertible securities by their terms provide that the exercise or
conversion price thereof and the number of shares to be issued upon exercise or
conversion thereof is to be determined as of a certain date by reference to the
market price of the Company's common stock as of such date or some other date,
the number of shares issuable upon exercise or conversion thereof shall be
deemed to be such number of shares as would have been issued had the full
exercise or conversion occurred on the date immediately preceding the Closing
Date.
(b) After the Closing, the Company shall issue to DCM a number
of shares of the Company's common stock equal to four percent (4%) of (i) the
number of shares of the Company's common stock issued after the Closing pursuant
to Section 8.11 above (other than pursuant to (ii) below), and (ii) the number
of shares issuable upon exercise or conversion of warrants, options or
convertible securities issued after the Closing pursuant to Section 8.11 above;
provided that, for purposes of calculating the number of shares to be issued to
DCM under this Section 8.19(b), if any options, warrants or convertible
securities issued after the Closing pursuant to Section 8.11 above by their
terms provide that the exercise or conversion price thereof and the number of
shares to be issued upon exercise or conversion thereof is to be determined as
of a certain date by reference to the market price of the Company's common stock
as of such date or some other date, the number of shares issuable upon exercise
or conversion thereof shall be deemed to be such number of shares as would have
been issued had the full exercise or conversion occurred as of the date of
issuance of such options, warrants, rights or convertible securities.
(d) All of the shares of the Company's common stock which the
Company is obligated to issue to DCM pursuant to this Section 8.19 shall be
registered on a Form S-8 duly filed and accepted by the Securities and Exchange
Commission.
27
8.19.2 The Company shall issue to EMCO/Hanover Group, Inc. or Xxxxx
Xxxxxx the number of shares of the Company's common stock that the Company has
agreed to issue pursuant to that certain Consulting Agreement dated June 1,
1997.
8.20 Assistance in Restructuring Kaire Debt. The Company shall use
--------------------------------------
its best efforts to assist Kaire in negotiating with Kaire's creditors to reduce
and/or restructure the amount and/or terms of payment of Kaire's accounts
payable, debts and other liabilities.
8.21 Letter of Intent with May Xxxxx Group, Inc. The Company
------------------------------------------
acknowledges that Kaire and May, Xxxxx Group, Inc. have signed a letter of
intent dated February 4, 1997, a copy of which has been furnished to the
Company, regarding a proposed public offering of securities of Kaire, and that
after the Closing Date Kaire may elect to proceed with such proposed public
offering on the terms and conditions set forth in such letter of intent.
9. CONDITIONS PRECEDENT
9.1 Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction on or prior to the Closing Date
of the following conditions unless waived by such party:
(a) Government Approvals. All authorizations, consents, orders
--------------------
or approvals of, or declarations or filings with, or expiration of waiting
periods imposed by, any governmental authority necessary for the consummation of
the transactions contemplated by this Agreement shall have been filed, occurred
or been obtained.
(b) Third-Party Approvals. Any and all consents or approvals
---------------------
required from third parties relating to contracts, licenses, leases and other
instruments, material to the respective businesses of the Company and Kaire,
shall have been obtained.
(c) Legal Action. No temporary restraining order, preliminary
------------
injunction or permanent injunction or other order preventing the consummation of
the transactions contemplated by this Agreement shall have been issued by any
federal or state court and remain in effect, and no litigation seeking the
issuance of such an order or injunction, shall be pending which, in the good
faith judgment of the Company's Board of Directors, has a reasonable probability
of resulting in such order, injunction or damages. In the event any such order
or injunction shall have been issued, each party agrees to use its reasonable
efforts to have any such injunction lifted.
(d) Additional Capital. At or prior to the Closing, the
------------------
Company shall have (a) received and made available to Kaire capital in the
amount of $1,000,000 (including the $700,000 loaned to Kaire in accordance with
Section 8.9 above) from the sale of the Company's Convertible Notes or other
form of investment, (b) received a written commitment to provide, on or before
December 25, 1997, additional capital to the Company in the amount of $500,000
by the purchase of the Company's Convertible Notes or other form of investment,
(c) received a written commitment to provide, on or before January 15, 1998,
additional capital to the Company in the
28
amount of $500,000 by the purchase of the Company's Convertible Notes or other
form of investment, and (d) received a written commitment to provide, on or
before February 15, 1998, additional capital to the Company in the amount of
$1,000,000 by the purchase of the Company's Convertible Notes or other form of
investment.
(e) Amendment to Company's Certificate of Incorporation. The
---------------------------------------------------
Company shall have filed, at or prior to the Closing, with the office of the
Secretary of State of Delaware a Certificate of Amendment to the Company's
Certificate of Incorporation which increases the number of authorized shares of
the Company's Common Stock to 400,000,000.
9.2 Conditions to Obligations of the Company. The obligations of
----------------------------------------
the Company to consummate the transactions contemplated by this Agreement are
subject to the satisfaction on or prior to the Closing Date of the following
conditions, unless waived by the Company:
(a) Representations and Warranties of Kaire Stockholders. The
----------------------------------------------------
representations and warranties of the Kaire Stockholders set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as if made at and as of the Closing Date, except as otherwise
contemplated by this Agreement.
(b) Representations and Warranties of Kaire. The
---------------------------------------
representations and warranties of Kaire set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as if made at and as of the Closing Date, except as otherwise contemplated by
this Agreement, and the Company shall have received a certificate to such effect
signed by the chief executive officer and chief financial officer of Kaire.
(c) Representations and Warranties of Kaire Affiliates. The
--------------------------------------------------
representations and warranties of the Kaire Affiliates set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as if made at and as of the Closing Date, and the Company
shall have received a certificate or certificates to such effect signed by the
Kaire Affiliates.
(d) Performance of Obligations of Kaire. Kaire shall have
-----------------------------------
performed in all material respects all obligations required to be performed by
it under this Agreement prior to the Closing Date, and the Company shall have
received a certificate to such effect signed by the chief executive officer and
chief financial officer of Kaire.
(e) Opinion of Kaire's Counsel. The Company shall have
--------------------------
received an opinion dated the Closing Date of counsel to Kaire, substantially in
the form set forth in Exhibit 9.2(e) attached hereto, with such qualifications
thereto as are customary and reasonable.
(f) Additional Capital. At or prior to the Closing, the
------------------
Company shall have (a) received and made available to Kaire capital in the
amount of $1,000,000 (including the $700,000 loaned to Kaire in accordance with
Section 8.9 above) from the sale of the Company's Convertible Notes or other
form of investment, (b) received a written commitment to provide, on
29
or before December 25, 1997, additional capital to the Company in the amount of
$500,000 by the purchase of the Company's Convertible Notes or other form of
investment, (c) received a written commitment to provide, on or before January
15, 1998, additional capital to the Company in the amount of $500,000 by the
purchase of the Company's Convertible Notes or other form of investment, and
(iv) received a written commitment to provide, on or before February 15, 1998,
additional capital to the Company in the amount of $1,000,000 by the purchase of
the Company's Convertible Notes or other form of investment.
(g) Election of Directors. Kaire shall have elected the
---------------------
following persons nominated by the management of the Company to serve on the
Board of Directors of Kaire effective as of the Closing Date:
Xxxxx Xxxxxxxx
Xxxxx Benz
(h) Additional Closing Documents. The Company shall have
----------------------------
received the following documents and instruments:
(1) A duly executed copy of each agreement between Kaire
and the Affiliates with respect to (a) the cancellation of the Affiliate Loans
and (b) the payment by Kaire of any Unconverted Affiliate Debt, pursuant to and
in accordance with the provisions of Section 8.13 above.
(2) A duly executed copy of an agreement between Kaire
and Xxxxx dated on or prior to the Closing Date, pursuant to and in accordance
with the provisions of Section 8.14 above.
(3) A duly executed copy of an agreement between Kaire
and the Bridge Loan Note Holders dated on or prior to the Closing Date, pursuant
to and in accordance with the provisions of Section 8.14 above.
(4) A duly executed certificate of the Secretary of Kaire
certifying that (a) the persons named in Section 9.2(g) above have been duly
elected to serve on the Kaire Board of Directors effective as of the Closing
Date, and (b) the Board of Directors has duly adopted resolutions appointing the
Kaire Executive Committee, pursuant to and in accordance with the provisions of
Section 8.16 above, and that the resolutions set forth in the certificate are
identical to those duly adopted by the Board of Directors of Kaire.
(5) A duly executed Release from each of the Kaire
Stockholders releasing Kaire, the Kaire Subsidiaries and the Company from all
claims, debts, obligations and liabilities except for those described on Exhibit
9.2(h)(5) attached hereto.
30
(6) A duly executed Release from each of Kaire Affiliates
releasing Kaire, the Kaire Subsidiaries and the Company from all claims, debts,
obligations and liabilities except for those described on Exhibit 9.2(h)(6)
attached hereto.
(7) Such other documents and instruments as are required
to be delivered pursuant to the provisions of this Agreement or otherwise
reasonably requested by the Company.
9.3 Conditions to Obligations of Kaire. The obligations of Kaire
----------------------------------
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction on or prior to the Closing Date of the following conditions unless
waived by Kaire:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as if made at and
as of the Closing Date, except as otherwise contemplated by this Agreement, and
Kaire shall have received a certificate to such effect signed by the chief
executive officer and chief financial officer of the Company.
(b) Performance of Obligations of the Company. The Company
-----------------------------------------
shall have performed in all material respects all obligations required to be
performed by it under this Agreement prior to the Closing Date, and Kaire shall
have received a certificate to such effect signed by the chief executive officer
and chief financial officer of the Company.
(c) Opinion of the Company's Counsel. The Company shall have
--------------------------------
received an opinion dated the Closing Date of counsel to the Company,
substantially in the form set forth in Exhibit 9.3(c) attached hereto, with such
qualifications thereto as are customary and reasonable.
(d) Additional Capital. At or prior to the Closing, the
------------------
Company shall have (a) received and made available to Kaire, at or prior to the
Closing, capital in the amount of $1,000,000 (including the $700,000 loaned to
Kaire in accordance with Section 8.9 above) from the sale of the Company's
Convertible Notes or other form of investment, (b) received a written commitment
to provide, on or before December 25, 1997, additional capital to the Company in
the amount of $500,000 by the purchase of the Company's Convertible Notes or
other form of investment, (c) received a written commitment to provide, on or
before January 15, 1998, additional capital to the Company in the amount of
$500,000 by the purchase of the Company's Convertible Notes or other form of
investment, and (d) received a written commitment to provide, on or before
February 15, 1998, additional capital to the Company in the amount of $1,000,000
by the purchase of the Company's Convertible Notes or other form of investment.
(e) Election of Directors and Officers. The Board of Directors
----------------------------------
of the Company shall have elected the following persons nominated by the
management of Kaire to serve on the Board of Directors of the Company effective
as of the Closing Date:
00
Xxxxxx Xxxxxxxx
Xxxxx X. Xxxxxx
(f) Additional Closing Documents. Kaire and the Kaire
----------------------------
Stockholders shall have received the following documents and instruments:
(1) A duly executed certificate of the secretary of the
Company certifying that (a) the persons named in Section 9.3(e) above have been
duly elected to serve on the Company's Board of Directors effective as of the
Closing Date and (b) the Board of Directors has duly adopted resolutions
appointing the Company's Executive Committee pursuant to and in accordance with
the provisions of Section 8.18 above and that the resolutions set forth in the
certificate are identical to those duly adopted by the Company's Board of
Directors;
(2) Such other documents and instruments as are required
to be delivered pursuant to the provisions of this Agreement or otherwise
reasonably requested by Kaire.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY
10.1 Survival of Representations and Warranties. The respective
------------------------------------------
representations and warranties of the parties other than Kaire contained herein
shall survive the Closing, but shall expire on the second anniversary date
following the date of Closing, unless a specific claim in writing with respect
to these matters shall have been made, or any action at law or in equity shall
have been commenced or filed before such anniversary date. The representations
and warranties of Kaire contained herein shall terminate on the date of Closing.
The limitation period for the survival of the representations and warranties of
the parties contained herein shall not apply to any fraudulent breach,
representation or warranty or to any breach or inaccuracy in any representation
or warranty known to such party on or before the date of Closing. The right to
indemnification, payment of damages or other remedy based on such
representations and warranties will not be affected by any investigation
conducted with respect to, or any knowledge acquired at any time, whether before
or after the execution and delivery of this Agreement or the Closing Date, with
respect to the accuracy or inaccuracy of any such representation or warranty.
10.2 Indemnification.
---------------
(a) The Kaire Affiliates and the Major Shareholders, jointly
and severally, agree to indemnify and hold the Company and its officers,
directors, stockholders, agents, affiliates and attorneys (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons the amount
of, any loss, liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense and reasonable
attorneys' fees, or diminution of value, whether or not involving a third party
claim (collectively "Damages"), arising, directly or indirectly, from or in
connection with: (1) any breach or violation of this Agreement by Kaire or the
Kaire Affiliates; or (2) any breach of any of the representations, warranties or
covenants
32
made in this Agreement by Kaire or the Kaire Affiliates; or (3) any inaccuracy
or misrepresentation in the Kaire Disclosure Schedule or in any certificate,
document or instrument delivered in accordance with the terms of this Agreement
by Kaire or the Kaire Affiliates.
(b) The Company agrees to indemnify and hold harmless the
Kaire Stockholders from and against all damages, claims, losses, liabilities and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) resulting from or arising out of (1) any breach or violation of this
Agreement by the Company; or (2) any breach of any of the representations,
warranties or covenants made in this Agreement by the Company; or (3) any
inaccuracy or misrepresentation in the Company Disclosure Schedule or in any
certificate, document or instrument delivered in accordance with the terms of
this Agreement by the Company.
(c) The obligations to indemnify and hold harmless pursuant to
this Section 10.2 shall survive the Closing for a period of two (2) years after
the date of Closing.
11. OBLIGATIONS OF THE COMPANY AND THE KAIRE STOCKHOLDERS AFTER THE
CLOSING
11.1 After the Closing the Company agrees that:
(a) The Company shall file a Form 8-K which contains the
audited financial statements of Kaire and proforma financial information
required by Form 8-K with the Securities and Exchange Commission within 75 days
after the Closing Date.
(b) For a period of one (1) year after the Closing Date, the
Company agrees that in any election of a director or directors of Kaire, the
Company shall vote or cause to be voted all of the Kaire Shares beneficially
owned by the Company in such a manner that immediately after such election,
Kaire's Board of Directors shall include five (5) representatives nominated by
the management of Kaire and two (2) representatives nominated by the management
of the Company.
(c) If, on or before each date set forth below, the Company
has not provided Kaire with the amount of additional capital set forth opposite
each such date, then the Company shall assign and transfer to the Kaire
Stockholders, on a prorata basis, within thirty (30) days after each such date
on which the Company failed to provide Kaire with the amount of additional
capital required to be provided by such date, a number of the Kaire Shares
received by the Company at the Closing equal to 3.3% of the total number of
shares of common stock of Kaire outstanding on the Closing Date.
December 25, 1997 $ 500,000
January 15, 1998 $ 500,000
February 15, 1998 $1,000,000
33
(d) If, on or before the later of (i) February 15, 1998 or
(ii) the date on which Kaire receives the signed report of BDO Xxxxxxx, LLP on
the Company's consolidated financial statements for fiscal year ended December
31, 1997, the total amount of additional capital provided by the Company to
Kaire prior to and after the Closing is less than $3,000,000, the Company shall
assign and transfer to the Kaire Stockholders, on a pro rata basis, a number of
Kaire Shares received by the Company at the Closing determined by (i)
subtracting the total amount of additional capital provided by the Company to
Kaire prior to and after the Closing from $3,000,000, dividing the result
obtained in (i) above by $3,000,000 and (iii) multiplying the fraction obtained
in (ii) above times the number of Kaire Shares received by the Company at the
Closing. By way of example, if the Company provided $1,000,000 of additional
capital to Kaire prior to the Closing and $1,000,000 of additional capital after
the Closing, and if the Company received 3,000,000 Kaire Shares at the Closing,
the Company would be obligated to assign and transfer 1,000,000 of the Kaire
Shares to the Kaire Stockholders determined as follows:
(i) $ 3,000,000
$(2,000,000)
------------
$1,000,000
(ii) $1,000,000 = 1/3
----------
$3,000,000
(iii) 1/3 x 3,000,000 shares = 1,000,000 shares
11.2 After the Closing, the Kaire Stockholders agree that:
(a) For a period of one (1) year after the Closing Date, the
Kaire Stockholders agree that in any election of a director or directors of the
Company, the Kaire Stockholders shall vote or cause to be voted all of the
Company Shares beneficially owned by them in such a manner that immediately
after such election, the Company's Board of Directors shall include three (3)
representatives nominated by the management of the Company and two (2)
representatives nominated by the management of Kaire.
12. PAYMENT OF EXPENSES
The Company and Kaire shall each pay their own fees and expenses
incurred incident to the preparation and carrying out of the transactions herein
contemplated (including legal and accounting fees).
13. TERMINATION
13.1 This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual written consent of the Company, Kaire and the
Kaire Stockholders;
34
(b) by the Company if there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement by
Kaire or the Kaire Stockholders;
(c) by Kaire and the Kaire Stockholders if there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement by the Company;
(d) by the Company if any condition to the Company's obligation
to consummate the transactions contemplated by this Agreement has not been
satisfied or waived by the Company;
(e) by Kaire and the Kaire Stockholders if any condition to the
obligations of Kaire and the Kaire Stockholders to consummate the transactions
contemplated by this Agreement has not been satisfied or waived by Kaire and the
Kaire Stockholders.
13.2 Effect of Termination. Termination of this Agreement in
---------------------
accordance with Section 13.1 may be effected by written notice from either the
Company or Kaire and the Kaire Stockholders, as appropriate, specifying the
reasons for termination and shall not subject the terminating party to any
liability for any valid termination.
14. MISCELLANEOUS
14.1 Tax Treatment. The transaction contemplated herein is intended
-------------
to qualify as a so-called "tax-free" reorganization under the provisions of
Section 368 of the Internal Revenue Code. Kaire, the Kaire Stockholders and the
Company acknowledge, however, that they each have been represented by their own
tax advisors in connection with this transaction; that no party hereto has made
any representation or warranty to the other with respect to the treatment of
such transaction or the effect thereof under applicable tax laws, regulations,
or interpretations; and that no attorney's opinion or private revenue ruling has
been obtained with respect to the effects thereof under the Internal Revenue
Code of 1986, as amended.
14.2 Further Assurances. From time to time, at the other party's
------------------
request and without further consideration, each of the parties will execute and
deliver to the others such documents and take such action as the other party may
reasonably request in order to consummate more effectively the transactions
contemplated hereby.
14.3 Payment of Fees and Expenses. If any legal action or any
----------------------------
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and
35
other costs incurred in that action or proceeding, in addition to any other
relief to which it or they may be entitled.
14.4 Parties in Interest. Except as otherwise expressly provided
-------------------
herein, all the terms and provisions of this Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the respective heirs,
beneficiaries, personal and legal representatives, successors and assigns of the
parties hereto.
14.5 Entire Agreement; Amendments. This Agreement, including the
----------------------------
Schedules, Exhibits and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter. This Agreement may be amended only by a written instrument duly
executed by the parties or their respective successors or assigns.
14.6 Headings, Etc.. The section and paragraph headings contained in
--------------
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
14.7 Pronouns. All pronouns and any variations thereof shall be
--------
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
14.8 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
14.9 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware.
14.10 Notices. Any and all notices, demands or other communications
-------
required or desired to be given hereunder by any party shall be in writing and
shall be validly given or made to another party if given by personal delivery,
telex, facsimile, telegram or if deposited in the United States mail, certified
or registered, postage prepaid, return receipt requested. If such notice,
demand or other communication is given by personal delivery, telex, facsimile or
telegram, service shall be conclusively deemed made at the time of receipt. If
such notice, demand or other communication is given by mail, such notice shall
be conclusively deemed given forty-eight (48) hours after the deposit thereof in
the United States mail addressed to the party to whom such notice, demand or
other communication is to be given as hereinafter set forth:
If to Kaire: 000 Xxxxxxx Xxxxxx
00
Xxxxxxxx, Xxxxxxxx 00000
If to the Kaire Stockholders
or the Kaire Affiliates: At the addresses set forth below their
names on the signature page of this
Agreement or on Exhibit A or Exhibit B
hereto
If to Company: 0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
14.11 Delivery by Facsimile Transmission. Delivery of an executed
----------------------------------
counterpart of this Agreement or any exhibit attached hereto by telefacsimile
transmission shall be equally as effective as delivery of an executed hard copy
of the same. Any party delivering an executed counterpart of this Agreement or
any exhibit attached hereto by telefacsimile transmission shall also deliver an
executed hard copy of the same, but the failure by such party to deliver an
executed hard copy shall not affect the validity, enforceability and binding
effect of this Agreement or such exhibit.
15. APPOINTMENT OF AGENT
The Kaire Stockholders hereby irrevocably constitute and appoint
Xxxxxx Xxxxxxxx as their true and lawful attorney (the "Agent") with full right
and power in their names and stead to take any and all action by and on behalf
of them necessary or desirable to consummate the transactions contemplated by
this Agreement, including without limitation, the right and power to receive
certificates representing the Company Shares on behalf of each of the Kaire
Stockholders, to deliver to the Company the certificates representing the Kaire
Shares, to waive performance of any of the obligations of the Company or waive
compliance by the Company with any of its covenants hereunder, to deliver the
investment letters and Releases of the Kaire Stockholders referred to in Section
2.2 hereof, and to amend or terminate this Agreement as herein provided. Any
such action taken by the Agent on behalf of a Kaire Stockholder shall be binding
upon such Kaire Stockholder. The Company shall not have any responsibility to
the Kaire Stockholders or any of them for the distribution by the Agent of the
certificates representing the Company Shares to be delivered to the Kaire
Stockholders, nor shall the Company be liable in any manner whatsoever to the
Kaire Stockholders or any of them by or on account of any act or omission of the
Agent.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto as of the date first above written.
INTERACTIVE MEDICAL TECHNOLOGIES,
LTD.,
a Delaware corporation
37
By:
-------------------------------------
Its:
------------------------------
KAIRE INTERNATIONAL, INC.,
a Delaware corporation
By:
-------------------------------------
Its:
------------------------------
[Signatures of Kaire Stockholders continued on next page]
38
KAIRE STOCKHOLDERS
SIGNATURE PAGE
Xxxxx Investment Group
----------------------------------
By:
Title:
Aerostar Fiduciary Fund
----------------------------------
By:
Title:
CCB Investments, L.L.C.
----------------------------------
By:
Title:
Rain Bird Enterprises, L.L.C.
----------------------------------
By:
Title:
----------------------------------
Xxxx X. Xxxxx Xx.
DRP Corporation
----------------------------------
By:
Title:
39
Xxxxxxxxx, LTD.
----------------------------------
By:
Title:
L.N.W. International, L.P.
----------------------------------
By:
Title:
----------------------------------
Xxxxx X. Xxxxxxx
Zero Investments, L.L.C.
----------------------------------
By:
Title:
The Bismarck Investment Group
----------------------------------
By:
Title:
----------------------------------
X.X. Xxxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxxx
40
Exclusive Marketing Trust
----------------------------------
By:
Title:
Mystic Enterprises, Inc.
----------------------------------
By:
Title:
----------------------------------
Xxxxxx X. Xxxxx
Gusrae, Xxxxxx & Bruno
----------------------------------
By:
Title:
41
KAIRE STOCKHOLDERS
SIGNATURE PAGE
(CONTINUED)
------------
Xxxxxx Xxxxxxxx, by signing his name hereto, does sign this Agreement and
Plan of Reorganization among Interactive Medical Technologies Ltd., Kaire
International, Inc., and the stockholders of Kaire International, Inc. on behalf
of each of the indicated persons on November __, 1997, pursuant to a power of
attorney duly executed by such person.
------------------------------ November __, 1997
Xxxxxx Xxxxxxxx
42
Schedule A
KAIRE STOCKHOLDERS
Name of Kaire Stockholder No. of Shares
------------------------- -------------
Tenant Investment Group 767,200
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
00-0000000
Aerostar Fiduciary Fund 627,200
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
CCB Investments, L.L.C. 308,823
000 Xxxxxx Xxxxxx
XX Xxx 000
Xx Xxxxx, XX 00000
Rain Bird Enterprises, L.L.C. 308,823
000 Xxxxxx Xxxxxx
XX Xxx 000
Xx Xxxxx, XX 00000
Xxxx X. Xxxxx Xx. 84,000
X.X. Xxx 00
Xxxxxxxxxx, XX 00000
DRP Corporation 70,000
000 X. Xxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxxxxx, LTD. 98,000
00 Xxxxxxxx Xxxxxx
Douglas, Isle of Xxxx, British Isles
441624 620 631
L.N.W. International, L.P. 98,000
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Schedule A
Xxxxx X. Xxxxxxx 210,000
XX Xxx 00
Xxxx, XX 00000
Zero Investments, L.L.C. 308,823
000 Xxxxxx Xxxxxx
XX Xxx 000
Xx. Xxxxx, XX 00000
The Bismarck Investment Group 70,000
0000 X. Xxxxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxx, XX 00000
X.X. Xxxxxxxxx 294,000
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxxx 61,600
00000 00xx Xxx
Xxxxxxx Xxxxxxxx, Xxxxxx
Xxxxx X. Xxxxxxxx 14,000
0000 Xxxxxxxxxxxx Xxxx
Xxxxxxxx, Xx 00000
Mystic Enterprises, Inc. 177,882
XX Xxx 0000
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxx 50,000
0000 00xx Xxx.
Xxxxxxxx, Xx 00000
Gusrae, Xxxxxx & Xxxxx 25,000
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
2
Schedule B
KAIRE AFFILIATES
Xxxxxx Xxxxxxxx
X.X. Xxxxxxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
MAJOR STOCKHOLDERS
Name of Kaire Affiliate
Who owns or control
Name of Major Stockholder the Major Stockholder
------------------------- ---------------------
Aerostar Fiduciary Fund Xxxxxx Xxxxxxxx
Grand Investment Group X. X. Xxxxxxxxx
CCB Investments, L.L.C. Xxxxx X. Xxxxxx
Zero Investments, L.L.C. Xxxx Xxxxxxxx
Rain Bird Enterprises, L.L.C. Xxxx Xxxxxxxx
