Exhibit 2.1
Form 8-K
5 Starliving Online, Onc.
File No. 000-26875
AGREEMENT AND PLAN OF EXCHANGE
Between
5 STARLIVING ONLINE, INC.
VIRAL GENETICS, INC.
and
THE STOCKHOLDERS OF VIRAL GENETICS, INC.
Dated September 6, 2001
Index
1. Definitions 1
2. Basic Transaction 4
3. Representations and Warranties of Viral 4
4. Representations and Warranties of 5Star 16
5. Pre-Closing Covenants 18
6. Conditions to Obligation to Close 19
7. Termination 21
8. Miscellaneous 21
Exhibit A Adherence Agreement
Exhibit B Viral Historical Financial Statements
Disclosure Schedule-Exceptions to Representations and Warranties
ii
AGREEMENT AND PLAN OF EXCHANGE
THIS AGREEMENT AND PLAN OF EXCHANGE is made and entered into
as of this 6th day of September 2001, by and between 5 STARLIVING
ONLINE, INC., a Delaware corporation, Viral GENETICS, INC., a
California corporation, and the STOCKHOLDERS of Viral Genetics,
Inc., identified on individual Adherence Agreements in the form
of Exhibit A.
Premises
This Agreement provides for the acquisition by 5Star of all
of the issued and outstanding shares of Viral solely in exchange
for voting shares of 5Star on the terms and conditions
hereinafter provided, all for the purpose of effecting a so-
called "tax-free" reorganization pursuant to section 368(a)(1)(B)
of the Internal Revenue Code of 1986.
Agreement
NOW, THEREFORE, on the stated premises and for and in
consideration of the mutual covenants and agreements hereinafter
set forth and the mutual benefits to the Parties to be derived
here from, it is hereby agreed as follows:
1. Definitions.
"5Star" means 5 Starliving Online, Inc., a Delaware
corporation and Party to this Agreement.
"Accredited Investor" has the meaning set forth in
Regulation D promulgated under the Securities Act.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction that forms or could form the basis for any specified
consequence.
"Closing" has the meaning set forth in 2(b) below.
"Closing Date" has the meaning set forth in 2(b) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Disclosure Schedule" has the meaning set forth in 3 below.
"Environmental, Health, and Safety Requirements" shall mean
all federal, state, local and foreign statutes, regulations,
ordinances and other provisions having the force or effect of
law, all judicial and administrative orders and determinations,
all contractual obligations and all common
1
law concerning public
health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all
those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls,
noise or radiation, each as amended and as now or hereafter in
effect.
"Exchanged 5Star Stock" means the 29,750,580 or 78.73% of
the common shares of 5Star, par value $0.001, to be issued to the
Viral Stockholders pursuant to this Agreement.
"Financial Statement" has the meaning set forth in 3(g)
below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Intellectual Property" means all of the following in any
jurisdiction throughout the world: (a) all inventions (whether
patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, slogans, trade names,
corporate names, Internet domain names and rights in telephone
numbers, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works,
all copyrights, and all applications, registrations, and renewals
in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all
trade secrets and confidential business information (including
ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all computer
software (including source code, executable code, data, databases
and related documentation), (g) all advertising and promotional
materials, (h) all other proprietary rights, and (i) all copies
and tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable
investigation.
"Lease Consents" has the meaning set forth in 6(a) below.
"Leased Real Property" means all leasehold or subleasehold
estates and other rights to use or occupy any land, buildings,
structures, improvements, fixtures or other interest in real
property held by Viral.
"Leases" means all leases, subleases, licenses, concessions
and other agreements (written or oral), including all amendments,
extensions, renewals, guaranties and other agreements with
respect thereto, pursuant to which Viral holds any Leased Real
Property, including the right to all
2
security deposits and other
amounts and instruments deposited by or on behalf of Viral there
under.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for
Taxes.
"Material Leased Real Property" has the meaning set forth in
6(a) below.
"Most Recent Balance Sheet" means the balance sheet
contained within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth
in 3(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in
3(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in
3(g) below.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"Party" means any one of 5Star, Viral or the Viral
Stockholders.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for Taxes
not yet due and payable, (c) purchase money liens and liens
securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the
common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental
(including taxes under Code 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether
disputed or not.
3
"Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
"Viral" means Viral Genetics, Inc., a California corporation
and a Party to this Agreement.
"Viral Stock" means 75,000,000 common shares of Viral, no
par value, which are all of the issued and outstanding shares of
the capital stock of Viral.
"Viral Stockholder(s)" means one or more of the stockholders
of Viral identified on individual Adherence Agreements in the
form of Exhibit A, each of which is a Party to this Agreement.
2. Basic Transaction.
(a) Pursuant to this Agreement, all Viral Stock shall be
conveyed, transferred, and assigned to 5Star in exchange for the
Exchanged 5Star Stock. At the Closing, the Viral Stockholders
shall deliver to 5Star stock certificates representing all issued
and outstanding shares of Viral Stock, each certificate duly
endorsed for transfer with signature guarantees, and receive in
exchange there for one or more certificates representing in the
aggregate that number of shares of Exchanged 5Star Stock set
forth opposite the name of each Stockholder on the Adherence
Agreement signed and delivered by each Stockholder. The shares
of Exchanged 5Star Stock issued pursuant to this 2(a) shall be,
when issued, legally issued, fully paid, and non-assessable. It
is the intent of the Parties that the exchange be effected as a
so-called "tax-free" reorganization pursuant to section
368(a)(1)(B) of the Internal Revenue Code of 1986, and the
Parties covenant and agree to reflect the exchange as such on all
financial statements, Tax Returns, filings, and other documents
identifying or referring to the exchange contemplated by this
Agreement.
(b) The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the offices of Lehman Walstrand & Associates, LLC, in Salt
Lake City, Utah commencing at 9:00 a.m. local time on the second
business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the
Closing itself) or such other date as the Parties may mutually
determine (the "Closing Date").
(c) Deliveries at the Closing. At the Closing, (i) Viral
and the Viral Stockholders will deliver to 5Star the various
certificates, instruments, and documents referred to in 6(a)
below; and (ii) 5Star will deliver to Viral and the Viral
Stockholders the various certificates, instruments, and documents
referred to in 6(b) below.
3. Representations and Warranties of Viral and the Viral
Stockholders. Viral and the principal and controlling Viral
Stockholder, Xxxx Xxxxxxxxx, each represents and warrants to
5Star that the statements contained in this 3 are correct and
complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as
4
though the Closing Date were substituted for the date of this
Agreement throughout this 3), except as set forth in the
disclosure schedule accompanying this Agreement and initialed by
the Viral and 5Star (the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this 3.
(a) Organization of Viral. Viral is a corporation duly
organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation.
(b) Authorization of Transaction. Viral has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. Without limiting the generality of the foregoing, the
board of directors of Viral has duly authorized the execution,
delivery, and performance of this Agreement by Viral. This
Agreement constitutes the valid and legally binding obligation of
Viral, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Viral is
subject or any provision of the charter or bylaws of Viral or
(ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Viral is a party or by which it is
bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets).
Viral does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. Viral has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for
which 5Star could become liable or obligated.
(e) Title to Assets. Viral has good and marketable title
to, or a valid leasehold interest in, the properties and assets
used by it, located on its premises, or shown on the Most Recent
Balance Sheet or acquired after the date thereof, free and clear
of all Security Interests, except for properties and assets
disposed of in the Ordinary Course of Business since the date of
the Most Recent Balance Sheet.
(f) Subsidiaries. Viral has no Subsidiaries.
(g) Financial Statements. Attached hereto as Exhibit B are
the following financial statements (collectively the "Financial
Statements"): (i) audited balance sheet as of December 31, 2000,
and audited statements of income, changes in stockholders'
equity, and cash flow for the fiscal years ended December 31,
2000 and 1999 (the "Most Recent Fiscal Year End") for Viral; and
(ii) unaudited balance sheet as of May 31, 2001, and statements
of income, changes in stockholders' equity, and cash flow (the
"Most Recent Financial Statements") as of and for the
5
five months
ended May 31, 2001, (the "Most Recent Fiscal Month End") for
Viral. The Financial Statements (including the notes thereto)
have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present
fairly the financial condition of Viral as of such dates and the
results of operations of Viral for such periods, are correct and
complete, and are consistent with the books and records of Viral
(which books and records are correct and complete); provided,
however, that the Most Recent Financial Statements are subject to
normal year-end adjustments (which will not be material
individually or in the aggregate).
(h) Events Subsequent to Most Recent Fiscal Year End.
Since the Most Recent Fiscal Year End, there has not been any
material adverse change in the business, financial condition,
operations, results of operations, or future prospects of any of
Viral. Without limiting the generality of the foregoing, since
that date:
(i) Viral has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other
than for a fair consideration in the Ordinary Course of
Business;
(ii) Viral has not entered into any agreement,
contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either
involving more than $20,000 or outside the Ordinary Course
of Business;
(iii) no party (including Viral) has accelerated,
terminated, modified, or cancelled any agreement, contract,
lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $20,000
to which Viral is a party or by which it is bound;
(iv) Viral has not imposed any Security Interest upon
any of its assets, tangible or intangible;
(v) Viral has not made any capital expenditure (or
series of related capital expenditures) either involving
more than $20,000 or outside the Ordinary Course of
Business;
(vi) Viral has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of,
any other Person (or series of related capital investments,
loans, and acquisitions) either involving more than $20,000
or outside the Ordinary Course of Business;
(vii) Viral has not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed money or capitalized lease
obligation either involving more than $200,000 singly or
$200,000 in the aggregate;
(viii) Viral has not delayed or postponed the
payment of accounts payable and other Liabilities outside
the Ordinary Course of Business;
6
(ix) Viral has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and
claims) either involving more than $20,000 or outside the
Ordinary Course of Business;
(x) Viral has not granted any license or sublicense of
any rights under or with respect to any Intellectual
Property;
(xi) there has been no change made or authorized in the
charter or bylaws of Viral;
(xii) Viral has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any
options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of
its capital stock;
(xiii) Viral has not declared, set aside, or paid
any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
(xiv) Viral has not experienced any damage,
destruction, or loss (whether or not covered by insurance)
to its property;
(xv) Viral has not made any loan to, or entered into
any other transaction with, any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xvi) Viral has not entered into any employment
contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or
agreement;
(xvii) Viral has not granted any increase in the
base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xviii) Viral has not adopted, amended, modified, or
terminated any bonus, profit sharing, incentive, severance,
or other plan, contract, or commitment for the benefit of
any of its directors, officers, and employees;
(xix) Viral has not made any other change in
employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xx) Viral has not made or pledged to make any
charitable or other capital contribution outside the
Ordinary Course of Business;
(xxi) there has not been any other material
occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business
involving Viral; and
(xxii) Viral has not committed to any of the
foregoing.
7
(i) Undisclosed Liabilities. Viral does not have any
Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to
any Liability), except for (i) Liabilities set forth on the face
of the Most Recent Balance Sheet (rather than in any notes
thereto) and (ii) Liabilities which have arisen after the Most
Recent Fiscal Month End in the Ordinary Course of Business (none
of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
(j) Legal Compliance. Each of Viral and its Affiliates has
complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges there under) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them
alleging any failure so to comply.
(k) Tax Matters.
(i) Viral has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and
complete in all respects. All Taxes owed by Viral (whether
or not shown on any Tax Return) have been paid. Viral is
not currently is the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where Viral does not
file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Security Interests on any
of the assets of Viral that arose in connection with any
failure (or alleged failure) to pay any Tax.
(ii) Viral has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(iii) No Viral Stockholder or director or officer
(or employee responsible for Tax matters) of Viral expects
any authority to assess any additional Taxes for any period
for which Tax Returns have been filed. There is no dispute
or claim concerning any Tax Liability of Viral either (A)
claimed or raised by any authority in writing or (B) as to
which any of the Viral Stockholders and the directors and
officers (and employees responsible for Tax matters) of
Viral has Knowledge based upon personal contact with any
agent of such authority. 3(k) of the Disclosure Schedule
lists all federal, state, local, and foreign income Tax
Returns filed with respect to Viral for taxable periods
ended on or after December 31, 1998, indicates those Tax
Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. Viral has
delivered to 5Star correct and complete copies of all
federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by
Viral since January 1, 1998.
(iv) Viral has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
8
(v) The unpaid Taxes of Viral (A) did not, as of the
Most Recent Fiscal Month End, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and
Tax income) set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) and (B) do not
exceed that reserve as adjusted for the passage of time
through the Closing Date in accordance with the past custom
and practice of Viral in filing its Tax Returns.
(l) Real Property.
(i) 3(l)(ii) of the Disclosure Schedule sets forth
the address of each parcel of Leased Real Property, and a
true and complete list of all Leases for each such Leased
Real Property (including the date and name of the parties to
such Lease document). Viral has delivered to 5Star a true
and complete copy of each such Lease document, and in the
case of any oral Lease, a written summary of the material
terms of such Lease. Except as set forth in 3(l)(ii) of
the Disclosure Schedule, with respect to each of the Leases:
(A) such Lease is legal, valid, binding,
enforceable and in full force and effect;
(B) the transaction contemplated by this
Agreement does not require the consent of any other
party to such Lease will not result in a breach of or
default under such Lease, and will not otherwise cause
such Lease to cease to be legal, valid, binding,
enforceable and in full force and effect on identical
terms following the Closing;
(C) Viral's possession and quiet enjoyment of the
Leased Real Property under such Lease has not been
disturbed and there are no disputes with respect to
such Lease;
(D) Viral is not in breach or default under such
Lease, and no event has occurred or circumstance exists
which, with the delivery of notice, the passage of time
or both, would constitute such a breach or default, or
permit the termination, modification or acceleration of
rent under such Lease;
(E) no security deposit or portion thereof
deposited with respect to such Lease has been applied
in respect of a breach or default under such Lease
which has not been redeposited in full;
(F) Viral does not owe, or will owe in the
future, any brokerage commissions or finder's fees with
respect to such Lease;
(G) the other party to such Lease is not an
affiliate of, and otherwise does not have any economic
interest in, Viral;
(H) Viral has not subleased, licensed or
otherwise granted any Person the right to use or occupy
such Leased Real Property or any portion thereof;
9
(I) Viral has not collaterally assigned or
granted any other security interest in such Lease or
any interest therein; and
(J) there are no liens or encumbrances on the
estate or interest created by such Lease.
(ii) The Leased Real Property identified in 3(l)(ii)
comprises all of the real property used in Viral's business;
and Viral is not a party to any agreement or option to
purchase any real property or interest therein.
(m) Intellectual Property.
(i) Viral owns or possesses or has the right to use
pursuant to a valid and enforceable, written license,
sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the business of
Viral as presently conducted and as presently proposed to be
conducted. Each item of Intellectual Property owned or used
by Viral immediately prior to the Closing hereunder will be
owned or available for use by Viral on identical terms and
conditions immediately subsequent to the Closing hereunder.
Viral has taken all necessary action to maintain and protect
each item of Intellectual Property that it owns or uses.
(ii) Viral has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and none of
Viral Stockholders and the directors and officers (and
employees with responsibility for Intellectual Property
matters) of Viral has ever received any charge, complaint,
claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any
claim that Viral must license or refrain from using any
Intellectual Property rights of any third party). To the
Knowledge of any of the Viral Stockholders and the directors
and officers (and employees with responsibility for
Intellectual Property matters) of Viral, no third party has
interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property
rights of Viral.
(iii) 3(m)(iii) of the Disclosure Schedule
identifies each patent or registration which has been issued
to Viral with respect to any of its Intellectual Property,
identifies each pending patent application or application
for registration which Viral has made with respect to any of
its Intellectual Property, and identifies each license,
sublicense, agreement, or other permission which Viral has
granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). Viral
has delivered to 5Star correct and complete copies of all
such patents, registrations, applications, licenses,
sublicenses, agreements, and permissions (as amended to
date). 3(m)(iii) of the Disclosure Schedule also
identifies each unregistered trademark, service xxxx, trade
name, corporate name or Internet domain name, computer
software item (other than commercially available off-the-
shelf software purchased or licensed for less than a total
cost of $1,000 in the aggregate) and each material
unregistered copyright used by Viral in
10
connection with its
business. With respect to each item of Intellectual
Property required to be identified in 3(m)(iii) of the
Disclosure Schedule:
(A) Viral owns and possesses all right, title,
and interest in and to the item, free and clear of any
Security Interest, license, or other restriction or
limitation regarding use or disclosure;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is
pending or, to the Knowledge of any of Viral
Stockholders and the directors and officers (and
employees with responsibility for Intellectual Property
matters) of Viral, is threatened which challenges the
legality, validity, enforceability, use, or ownership
of the item, and there are no grounds for the same;
(D) Viral has never agreed to indemnify any
Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the
item; and
(E) no loss or expiration of the item is
threatened, pending, or reasonably foreseeable, except
for patents expiring at the end of their statutory
terms (and not as a result of any act or omission by
the Viral Stockholders or Viral, including without
limitation, a failure by the Viral Stockholders or
Viral to pay any required maintenance fees).
(iv) 3(m)(iv) of the Disclosure Schedule identifies
each item of Intellectual Property that any third party owns
and that Viral uses pursuant to license, sublicense,
agreement, or permission. Viral has delivered to 5Star
correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to
date). With respect to each item of Intellectual Property
required to be identified in 3(m)(iv) of the Disclosure
Schedule;
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical
terms following the consummation of the transactions
contemplated hereby;
(C) no party to the license, sublicense,
agreement, or permission is in breach or default, and
no event has occurred which with notice or lapse of
time would constitute a breach or default or permit
termination, modification, or acceleration there under;
11
(D) no party to the license, sublicense,
agreement, or permission has repudiated any provision
thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections
(A) through (D) above are true and correct with respect
to the underlying license;
(F) the underlying item of Intellectual Property
is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is
pending or, to the Knowledge of any of the Viral
Stockholders and the directors and officers (and
employees with responsibility for Intellectual Property
matters) of Viral, is threatened which challenges the
legality, validity, or enforceability of the underlying
item of Intellectual Property, and there are no grounds
for the same; and
(H) Viral has not granted any sublicense or
similar right with respect to the license, sublicense,
agreement, or permission.
(v) To the Knowledge of any of the Viral Stockholders
and the directors and officers (and employees with
responsibility for Intellectual Property matters) of Viral:
(A) Viral has not in the past nor will interfere with,
infringe upon, misappropriate, or otherwise come into
conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of its
business as presently conducted and as presently proposed to
be conducted; (B) there are no facts that indicate a
likelihood of any of the foregoing; and (C) no notices
regarding any of the foregoing (including, without
limitation, any demands or offers to license any
Intellectual Property from any third party) have been
received.
(vi) None of Viral and the directors and officers (and
employees with responsibility for Intellectual Property
matters) of Viral has any Knowledge of any new products,
inventions, procedures, or methods of manufacturing or
processing that any competitors or other third parties have
developed which reasonably could be expected to supersede or
make obsolete any product or process of Viral or to limit
the business of Viral as presently conducted or as presently
proposed to be conducted.
(vii) Viral has taken all necessary and desirable
action to maintain and protect all of the Intellectual
Property of Viral and will continue to maintain and protect
all of the Intellectual Property of Viral so as not to
adversely affect the validity or enforceability thereof. To
the Knowledge of Viral, the owners of any of the
Intellectual Property licensed to Viral have taken all
necessary and desirable action to maintain and protect the
Intellectual Property covered by such license.
(viii) Viral has complied in all material respects
with and are presently in compliance in all material
respects with all foreign, federal, state, local,
governmental
12
(including, but not limited to, the Federal
Trade Commission and State Attorneys General),
administrative or regulatory laws, regulations, guidelines
and rules applicable to any Intellectual Property and Viral
shall take all steps necessary to ensure such compliance
until Closing.
(n) Tangible Assets. Viral owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the
conduct of its business as presently conducted and as presently
proposed to be conducted. Each such tangible asset is free from
defects (patent and latent), has been maintained in accordance
with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear), and is suitable for the
purposes for which it presently is used and presently is proposed
to be used.
(p) Contracts. 3(o) of the Disclosure Schedule lists the
following contracts and other agreements to which Viral is a
party:
(i) any agreement (or group of related agreements) for
the lease of personal property to or from any Person
providing for lease payments in excess of $20,000 per annum;
(ii) any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for the
furnishing or receipt of services, the performance of which
will extend over a period of more than one year, result in a
material loss to Viral, or involve consideration in excess
of $20,000;
(iii) any agreement concerning a partnership or
joint venture;
(iv) any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized
lease obligation, in excess of $20,000 or under which it has
imposed a Security Interest on any of its assets, tangible
or intangible;
(v) any agreement concerning confidentiality or non-
competition;
(vi) any agreement involving any of the Viral
Stockholders and their Affiliates (other than Viral);
(vii) any profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation,
severance, or other plan or arrangement for the benefit of
its current or former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual
on a full-time, part-time, consulting, or other basis
providing annual compensation in excess of $20,000 or
providing severance benefits;
13
(x) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xi) any agreement under which the consequences of a
default or termination could have a material adverse effect
on the business, financial condition, operations, results of
operations, or future prospects of Viral; or
(xii) any other agreement (or group of related
agreements) the performance of which involves consideration
in excess of $20,000.
Viral has delivered to 5Star a correct and complete copy of each
written agreement listed in 3(o) of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms
and conditions of each oral agreement referred to in 3(o) of the
Disclosure Schedule. With respect to each such agreement: (A)
the agreement is legal, valid, binding, enforceable, and in full
force and effect; (B) the agreement will continue to be legal,
valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby; (C) no party is in breach or default, and no
event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) no
party has repudiated any provision of the agreement.
(p) Notes and Accounts Receivable. All notes and accounts
receivable of Viral are reflected properly on their books and
records, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and will be collected
in accordance with their terms at their recorded amounts, subject
only to the reserve for bad debts set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of Viral.
(q) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of Viral.
(r) Insurance. 3(r) of the Disclosure Schedule sets forth
the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and
workers' compensation coverage and bond and surety arrangements)
to which Viral has been a party, a named insured, or otherwise
the beneficiary of coverage at any time within the past three
years:
(i) the name, address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
14
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis)
and amount (including a description of how deductibles and
ceilings are calculated and operate) of coverage; and
(v) a description of any retroactive premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is
legal, valid, binding, enforceable, and in full force and effect;
(B) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby; (C) neither Viral nor any other party to the policy is in
breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination, modification, or
acceleration, under the policy; and (D) no party to the policy
has repudiated any provision thereof. Viral has been covered
during the past three years by insurance in scope and amount
customary and reasonable for the businesses in which it has
engaged during the aforementioned period. 3(r) of the
Disclosure Schedule describes any self-insurance arrangements
affecting Viral.
(s) Litigation. 3(s) of the Disclosure Schedule sets
forth each instance in which Viral (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) is a party or, to the Knowledge of any of the
Viral Stockholders and the directors and officers (and employees
with responsibility for litigation matters) of Viral, is
threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-
judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator. None of the
actions, suits, proceedings, hearings, and investigations set
forth in 3(s) of the Disclosure Schedule could result in any
material adverse change in the business, financial condition,
operations, results of operations, or future prospects of Viral.
None of the Viral Stockholders and the directors and officers
(and employees with responsibility for litigation matters) of
Viral has any reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or
threatened against Viral.
(t) Employees. To the Knowledge of any of the Viral
Stockholders and the directors and officers (and employees with
responsibility for employment matters) of Viral, no executive,
key employee, or group of employees has any plans to terminate
employment with Viral. Viral is not a party to or bound by any
collective bargaining agreement, nor has any of them experienced
any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. Viral has not committed
any unfair labor practice. None of the Viral Stockholders and
the directors and officers (and employees with responsibility for
employment matters) of Viral has any Knowledge of any
organizational effort presently being made or threatened by or on
behalf of any labor union with respect to employees of Viral.
(u) Guaranties. Viral is not a guarantor or otherwise is
liable for any Liability or obligation (including indebtedness)
of any other Person.
15
(v) Environmental, Health, and Safety Matters. Viral and
its Affiliates have complied and are in compliance with all
Environmental, Health, and Safety Requirements.
(w) Certain Business Relationships With Viral. None of the
Viral Stockholders and their Affiliates have been involved in any
business arrangement or relationship with Viral within the past
12 months, and none of the Viral Stockholders and their
Affiliates own any asset, tangible or intangible, which is used
in the business of Viral.
(x) Disclosure. The representations and warranties
contained in this 3 do not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements and information contained in this 3
not misleading.
4. Representations and Warranties of 5Star. 5Star represents
and warrants to Viral (and to the Viral Stockholders for purposes
of the Agreement with the Viral Stockholders) that the statements
contained in this 4 are correct and complete as of the date of
this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this 4),
except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this 4.
(a) Organization of 5Star. 5Star is a corporation duly
organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation.
(b) Authorization of Transaction. 5Star has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally
binding obligation of 5Star, enforceable in accordance with its
terms and conditions.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which 5Star is
subject or any provision of its charter or bylaws or (ii)
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or
other arrangement to which 5Star is a party or by which it is
bound or to which any of its assets is subject. 5Star does not
need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. 5Star has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for
which Viral could become liable or obligated.
(e) SEC Reports. 4(e) of the Disclosure Schedule contains
5Star's Annual Report on Form 10-KSB for the year ended May 31,
2001, as filed with the Securities and Exchange
16
Commission. Such
report is complete and accurate in all material respects, and
does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements and information contained in such report not
misleading.
(f) Subsidiaries. 5Star has no Subsidiaries.
(g) Undisclosed Liabilities. 5Star has no Liabilities (and
there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand against it giving rise to any Liability), except for (i)
Liabilities set forth on the face of the balance sheet (rather
than in any notes thereto) contained in 5Star's Annual report on
Form 10-KSB for the year ended May 31, 2001 (the "Most Recent
Annual Report") and (ii) Liabilities which have arisen after the
Most Recent Annual Report in the Ordinary Course of Business
(none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
(h) Legal Compliance. 5Star and each of its predecessors
and Affiliates has complied with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges there under) of federal, state,
local, and foreign governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply.
(i) Litigation. 5Star is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is
a party or, to the Knowledge of any of the directors and officers
of 5Star, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator.
(j) Tax Matters.
(i) 5Star has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and
complete in all respects. All Taxes owed by 5Star (whether
or not shown on any Tax Return) have been paid. 5Star is
not currently the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where 5Star does not
file Tax Returns that it is or may be subject to taxation by
that jurisdiction.
(ii) No director or officer of 5Star expects any
authority to assess any additional Taxes for any period for
which Tax Returns have been filed. There is no dispute or
claim concerning any Tax Liability of 5Star either (A)
claimed or raised by any authority in writing or (B) as to
which any of the directors and officers of 5Star has
Knowledge based upon personal contact with any agent of such
authority. 4(j) of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed
with respect to 5Star for taxable periods ended on or after
December 31, 1998, indicates those Tax Returns that have
been audited, and indicates those Tax Returns that currently
are the subject of audit. 5Star has delivered to Viral
correct and complete copies of all
17
federal income Tax
Returns, examination reports, and statements of deficiencies
assessed against or agreed to by 5Star since January 1,
1998.
(k) Certain Business Relationships With 5Star. None of the
Affiliates of 5Star have been involved in any business
arrangement or relationship with 5Star within the past 12 months.
(l) Condition at Closing. As of the Closing 5Star shall
have no outstanding options or rights to acquire additional
shares of 5Star common stock.
(m) Disclosure. The representations and warranties
contained in this 4 do not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements and information contained in this 4
not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with
respect to the period between the execution of this Agreement and
the Closing.
(a) General. Each of the Parties will use its best efforts
to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth
in 6 below).
(b) Notices and Consents. Viral will give any notices to
third parties, and Viral will use its best efforts to obtain any
third party consents, that 5Star may request in connection with
the matters referred to in 3(c) above. Each of the Parties will
give any notices to, make any filings with, and use its best
efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the
matters referred to in 3(c) and 4(c) above.
(c) Operation of Business. Viral will not engage in any
practice, take any action, or enter into any transaction outside
the Ordinary Course of Business. Without limiting the generality
of the foregoing, Viral will not (i) declare, set aside, or pay
any dividend or make any distribution with respect to its capital
stock or redeem, purchase, or otherwise acquire any of its
capital stock, (ii) pay any amount to any third party with
respect to any Liability or obligation (including any costs and
expenses Viral has incurred or may incur in connection with this
Agreement and the transactions contemplated hereby) other than in
the Ordinary Course of Business, or (iii) otherwise engage in any
practice, take any action, or enter into any transaction of the
sort described in 3(h) above.
(d) Preservation of Business. Viral will keep its business
and properties substantially intact, including its present
operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and
employees.
(e) Full Access. Viral will permit representatives of
5Star to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations
of Viral, to all premises, properties, personnel, books, records
(including Tax records), contracts, and documents of or
pertaining to Viral.
18
(f) Notice of Developments. Each Party will give prompt
written notice to the other Party of any material adverse
development causing a breach of any of its own representations
and warranties in 3 and 4 above. No disclosure by any Party
pursuant to this 5(f), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) Exclusivity. Viral will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person
relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets, of Viral
(including any acquisition structured as a merger, consolidation,
or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the
foregoing. Viral will notify 5Star immediately if any Person
makes any proposal, offer, inquiry, or contact with respect to
any of the foregoing.
(h) Leases. Viral shall not amend, modify, extend, renew
or terminate any Lease, nor shall Viral enter into any new lease,
sublease, license or other agreement for the use or occupancy of
any real property, without the prior written consent of 5Star.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of 5Star. The obligation of
5Star to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in 3
above and the Adherence Agreements signed by the Viral
Stockholders shall be true and correct in all material
respects at and as of the Closing Date;
(ii) Viral shall have performed and complied with all
of its covenants hereunder in all material respects through
the Closing;
(iii) Viral shall have procured all of the third
party consents specified in 5(b) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any
of the transactions contemplated by this Agreement to be
rescinded following consummation, or (C) affect adversely
the right of Viral to own its assets and to operate its
business (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(v) Viral shall have delivered to 5Star a certificate
to the effect that each of the conditions specified above in
6(a)(i)-(iv) is satisfied in all respects;
19
(vi) 5Star shall have received the duly endorsed
certificates representing the Viral Stock contemplated by
2(a); and
(vii) all actions to be taken by Viral and the
Viral Stockholders in connection with consummation of the
transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be
satisfactory in form and substance to 5Star.
5Star may waive any condition specified in this 6(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Viral and the Viral
Stockholders. The obligation of Viral and the Viral Stockholders
to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in 4
above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) 5Star shall have performed and complied with all
of its covenants hereunder in all material respects through
the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any
of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in
effect);
(iv) 5Star shall have delivered to Viral a certificate
to the effect that each of the conditions specified above in
6(b)(i)-(iii) is satisfied in all respects;
(v) The Viral Stockholders shall have received the
Exchanged 5Star Stock contemplated by 2(a);
(vi) The board of directors shall have appointed to the
board of directors of 5Star one director designated by Viral
effective as of the Closing, and each of the officers of
5Star shall have resigned in favor of the appointment of new
officers designated by Viral effective as of the Closing;
and
(vii) all actions to be taken by 5Star in
connection with consummation of the transactions
contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in
form and substance to Viral.
20
Viral may waive any condition specified in this 6(b) if it
executes a writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. Certain of the Parties may
terminate this Agreement as provided below:
(i) 5Star and Viral may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) 5Star may terminate this Agreement by giving
written notice to Viral on or before the 30th day following
the date of this Agreement if 5Star is not reasonably
satisfied with the results of its continuing business,
legal, and accounting due diligence regarding Viral;
(iii) 5Star may terminate this Agreement by giving
written notice to Viral at any time prior to the Closing (A)
in the event any of Viral or the Viral Stockholders has
breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, 5Star
has notified Viral of the breach, and the breach has
continued without cure for a period of 30 days after the
notice of breach or (B) if the Closing shall not have
occurred on or before September 30, 2001, by reason of the
failure of any condition precedent under 6(a) hereof
(unless the failure results primarily from 5Star itself
breaching any representation, warranty, or covenant
contained in this Agreement); and
(iv) Viral may terminate this Agreement by giving
written notice to 5Star at any time prior to the Closing (A)
in the event 5Star has breached any material representation,
warranty, or covenant contained in this Agreement in any
material respect, Viral has notified 5Star of the breach,
and the breach has continued without cure for a period of 30
days after the notice of breach or (B) if the Closing shall
not have occurred on or before September 30, 2001, by reason
of the failure of any condition precedent under 6(b) hereof
(unless the failure results primarily from Viral itself
breaching any representation, warranty, or covenant
contained in this Agreement).
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to 7(a) above, all rights and obligations of
the Parties hereunder shall terminate without any Liability of
any Party to any other Party (except for any Liability of any
Party then in breach).
8. Miscellaneous.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this
Agreement shall survive the Closing hereunder for a term of two
years.
21
(b) Press Releases and Public Announcements. No Party
shall issue any press release or make any public announcement
relating to the subject matter of this Agreement prior to the
Closing without the prior written approval of the other Party;
provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making
the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement
between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written
or oral, to the extent they relate in any way to the subject
matter hereof.
(e) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of
the other Party.
(f) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
(g) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set
forth below:
If to Viral and the Viral Stockholders: Xx. Xxxx Xxxxxxxxx
Viral Genetics, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, XX 00000
If to 5Star: Mr. Xxxx Xxxxxxx
5 Starliving Online, Inc.
0000 00xx Xxxxxx Xxxx
Xxxxxxx, XX 00000
22
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address
set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the
intended recipient. Any Party may change the address to which
notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the state of
California without giving effect to any choice or conflict of law
provision or rule (whether of the state of California or any
other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the state of California.
(j) Amendments and Waivers. No amendment of any provision
of this Agreement shall be valid unless the same shall be in
writing and signed by 5Star and Viral. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend
to any prior or subsequent default, misrepresentation, or breach
of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of 5Star, the Viral Stockholders, and
Viral will bear his or its own costs and expenses (including
legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated there under,
unless the context requires otherwise. The word "including"
shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the
mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a
representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other
item itself). The Parties intend that each representation,
warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant
relating to the same subject matter (regardless of
23
the relative
levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of
the first representation, warranty, or covenant.
(n) Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges
and agrees that the other Party would be damaged irreparably in
the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the Parties agrees that the
other Party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions
hereof in any action instituted in any court of the United States
or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
(p) Post-Closing Conditions. 5Star covenants and agrees
that it will obtain through the sale of its debt or equity
securities additional financing for the operations of Viral that
will not be dilutive of the equity interest of the Viral
Stockholders, unless otherwise mutually agreed to by the Parties,
as follows: (i) US$1,000,000 within 15 business days following
the Closing Date; (ii) an additional US$500,000 within 60 days
following the Closing Date; (i) an additional US$1,500,000 within
90 days following the Closing Date; and, (iv) an additional
US$7,000,000 on or before March 31, 2002, unless otherwise
mutually agreed to by the Parties.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
5 STARLIVING ONLINE, INC.
By: /s/ Xxxx Xxxxxxx, President
VIRAL GENETICS, INC.
By: /s/ Xxxx Xxxxxxxxx, President
/s/ Xxxx Xxxxxxxxx, Individually As the
Principal Viral Stockholder
24
Exhibit A to
Agreement and Plan of Exchange
ADHERENCE AGREEMENT
The undersigned, the record and beneficial owner of the
number of common shares of Viral Genetics, Inc. ("Viral") set
forth below, hereby agrees to be bound by the Agreement and Plan
of Exchange by and among 5 Starliving Online, Inc. ("5Star"),
Viral, and the Stockholders of Viral dated as of September 6,
2001 (the "Agreement") as though the undersigned were an original
signatory to the Agreement; provided, that the undersigned does
not join in any of the representations or warranties made by
Viral in 3 of the Agreement. All capitalized terms used herein
shall have the same meaning ascribed to such terms in the
Agreement.
The undersigned hereby represents, warrants, and agrees as
follows:
(a) The execution and delivery of the Agreement does
not, and the consummation of the transactions contemplated
by the Agreement in accordance with the terms hereof will
not: result in the breach of, constitute a default under,
result in the acceleration of, create in any Person the
right to accelerate, terminate, modify, cancel, or require
any notice under, any material agreement, contract, lease,
license, instrument, or other arrangement to which the
undersigned is a party or by which the undersigned is bound;
or, violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which the undersigned is subject.
(b) The undersigned has full power and authority, and
has taken all action required by law and otherwise to
execute and deliver the Agreement and to perform its
obligations there under. The Agreement represents the valid
and binding obligation of the undersigned enforceable in
accordance with its terms, except as limited by bankruptcy
and insolvency laws and by other laws affecting the rights
of creditors generally.
(c) No authorization, approval, consent, or order of,
or registration, declaration, or filing with, any court or
other governmental body is required in connection with the
execution and delivery by the undersigned of the Agreement
and the consummation by the undersigned of the transactions
contemplated thereby.
(d) The undersigned is the legal and beneficial owner
of the Viral Stock set forth below, free and clear of
Security Interests, and the undersigned has full right,
power, and authority to transfer, assign, convey, and
deliver the Viral Stock; and delivery of such stock at the
Closing will convey to 5Star good and marketable title to
the Viral Stock free and clear of any Security Interests.
(e) The undersigned (i) understands that the Exchanged
5Star Stock has not been, and will not be, registered under
the Securities Act, or under any state securities laws, and
are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public
offering, (ii) is acquiring the Exchanged 5Star Stock solely
for its own account for investment purposes, and not with a
view to the
25
distribution thereof, (iii) is a sophisticated
investor with knowledge and experience in business and
financial matters, (iv) has received certain information
concerning 5Star and has had the opportunity to obtain
additional information as desired in order to evaluate the
merits and the risks inherent in holding the Exchanged 5Star
Stock, and (v) is able to bear the economic risk and lack of
liquidity inherent in holding the Exchanged 5Star Stock.
____________________________________
Type or Print Name of Owner(s)
___________________________________
Signature
____________________________________
Signature of Joint Owner, If Any
____________________________________
No. of Shares of Viral Stock
____________________________________
No. of Shares of Exchanged 5Star Stock
26
