EXHIBIT 99.1
ACQUISITION AGREEMENT
AND
PLAN OF MERGER
This Acquisition Agreement and Plan of Merger (the "Agreement")
is made and entered into as of June ____, 2003, by and among
MARKETSHARE RECOVERY, INC., a New York Corporation ("MKSR"), the
shareholders of MKSR whose signatures are set forth at the end of this
Agreement (the "MKSR Shareholders"), and HEALTH & LEISURE, INC., a
publicly held and traded Delaware corporation, which trades on the
NASD OTCBB under the stock ticker symbol HLLS ("HLLS" or the
"Company"), VENTURE SUM, INC., a Delaware corporation and the wholly-
owned subsidiary of HLLS ("Mergerco"), and Xxxxxx X. Xxxxxxx, a
shareholder of HLLS ("Xx. Xxxxxxx").
RECITALS
WHEREAS, HLLS a public company whose stated purpose is to seek
a business to merge with or acquire an operating business has
identified and desires to acquire 100% of the total outstanding
capital stock of Marketshare Recovery, Inc. in contemplation of
combining the entities and;
WHEREAS, Marketshare Recovery, Inc. and its shareholders agree
to enter into a business combination transaction which shall result in
the combination of the two entities with the former shareholders of
Marketshare controlling a majority of the combined entity.
WHEREAS, the parties desire to effect the combination through
a merger of Mergerco into MKSR (the "Merger"), which is intended to
be a statutory merger under Section 907 of the New York Business
Corporation Act (the "New York Act") and Section 252 of the Delaware
General Corporation Law (the "Delaware Act"); and
WHEREAS, the Merger is intended to qualify as a tax-free
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
THEREFORE, in consideration of the terms and conditions
set forth herein, the parties hereto intending to be legally bound
hereby, agree as follows:
1. THE ACQUISITION
1.1 Acquisition and Merger Subject to the Terms and Conditions
of this Agreement. At the time of Closing to be held as provided
in Section 2, the parties shall effectuate the Merger of Mergerco
into MKSR. At the time that the Merger becomes effective under
both the Delaware Act and the New York Act (the "Effective Time"),
Mergerco shall be merged with and into MKSR in accordance with the
applicable provisions of the Delaware Act and the New York Act, the
separate existence of Mergerco shall thereupon cease, and MKSR, as the
surviving corporation in the Merger, shall continue its corporate
existence in accordance with the New York Act. At the Closing, (i)
the 100 issued and outstanding shares of MKSR common stock, par
value $.0001 per share (the "MKSR Common Stock"), constituting all of
the issued and outstanding shares of MKSR Common Stock, shall be
extinguished, (ii) each share of stock of Mergerco issued and
outstanding shall be extinguished and in substitution for the full
number of shares of Mergerco held by it, HLLS shall receive 100
shares of MKSR authorized but unissued Common Stock (iii) HLLS
shall issue to the MKSR shareholders the greater of 10,197,668
validly issued, fully paid, and non-assessable, under Delaware law,
shares of common stock of HLLS or that number of shares that shall
result in ownership of fifty-one percent (51%) of the outstanding
shares of common stock of HLLS, and (iv) HLLS shall issue 3,425,000
shares of its voting convertible noncumulative preferred stock, par
value $.01 per share ("HLLS Preferred Stock") to the holders of MKSR
Common Stock at the exchange rate of 101,976.68 shares of HLLS Common
Stock and 34,250 shares of HLLS Preferred Stock for each share of
MKSR Common Stock. The 3,425,000 shares of Preferred Stock shall be
convertible into 34,250,000 shares of HLLS Common Stock. 2,670,000
of the HLLS shares of Common Stock to be issued to the MKSR
Shareholders shall be from the HLLS' authorized but unissued shares,
and 7,527,668 of the HLLS shares of Common Stock shall be
contributed to HLLS by Xx. Xxxxxxx and then reissued by HLLS in the
Merger. Following the issuance, HLLS will have the following shares
outstanding:
Preferred Stock
MKSR shareholders 3,425,000
Common Stock
MKSR shareholders 10,197,668
Xxxxxxx 1,872,332
Other shareholders 3,756,840
Public 4,168,587
Total Common Outstanding 19,995,427
At the Effective Time, and as a result of the Merger, the
conversion of the shares of MKSR Common Stock into the HLLS Common
Stock and the HLLS Preferred Stock as set forth in this Section 1.1,
shall occur automatically and without further act of either HLLS or
MKSR and, until appropriate transfers can be requested following the
Effective Time, the holders of record of each MKSR share so extinguished
and converted shall be deemed to be recorded on the books of HLLS as the
holder of the number of shares of HLLS Common Stock and HLLS Preferred
Stock which he is entitled to receive under this Agreement. Each person
who, as a result of the Merger, holds one or more certificates which
theretofore represented one or more shares of MKSR that have been
extinguished and converted as a result of the Merger shall surrender
each such certificate held by him/her to HLLS and, within a reasonable
time after such surrender, HLLS shall deliver to such person in exchange
therefor one or more certificates evidencing the HLLS Preferred Stock
that such person is entitled to receive as a result of the Merger. A
form of the certificate of designation setting forth the terms of the
HLLS Preferred Stock is attached hereto as Exhibit A.
1.2 Sale of H&L Concepts, Inc. At the Closing, HLLS and Marketshare
shall contribute the sum of $125,000 to H&L concepts, Inc. through the
issuance of a secured promissory note to pay the principal amount of
$125,000 together with interest (the "Promissory Note") to H&L Concepts,
Inc., in accordance with the terms of said note, (a copy of which is
attached hereto as Exhibit B). After execution of the Promissory Note,
Xx. Xxxxxxx shall purchase all of the outstanding shares of stock of
H&L concepts, Inc. for nominal consideration. The parties acknowledge
that most of the trade payables and other consolidated liabilities of
HLLS are actually liabilities of H&L Concepts, Inc., the subsidiary to
HLLS, and by selling the stock of H&L Concepts, Inc. to Xx. Xxxxxxx it
has the effect of removing most of the trade payables and liabilities
form the HLLS balance sheet and fixing the post closing liabilities of
HLLS to that set forth in the promissory note. At the Closing HLLS
shall execute and deliver to Xx. Xxxxxxx one or more stock certificates
representing all of the outstanding shares of stock of H&L Concepts,
Inc.
1.3 Payment of Professional Fees. At the signing of this document,
MKSR shall make payments as follows, to-wit: four thousand two hundred
and fifty, ($4,250 USD) to the preparing Accountant, one thousand nine
hundred and fifty, ($1,950 USD) to the auditor who issues his independent
auditors report and consent and five thousand, ($5,000 USD) to the
attorney, for professional fees associated with said filing and shall
reimburse shareholders one thousand four hundred and fifty dollars,
($1,450 USD) for retainer paid to auditor. Additionally, at the
time of signing of this document, MKSR shall make a payment to H&L
Concpets, Inc. in the amount of $2,800 to cover additional anticipated
expenses.
1.4 Pre-Closing SEC Filings. Within five days after the date of
execution of this Agreement HLLS shall file a Form 8-K with the SEC
disclosing this Agreement and the contemplated transactions. No later
than 10 days prior to the Closing, HLLS shall file with the SEC a
Schedule 14f-1 disclosing the contemplated change in the directors of
HLLS at the Closing. MKSR agrees to prepare the initial draft of the
Schedule 14f-1 and shall provide all information about the MKSR
designees for directors therein. Additionally, MKSR agrees to
pay all costs and expenses associated with preparing and completing
such filings with the SEC.
1.5 Rule 144 Sales Permitted. After this transaction has been
announced and the Form 8-K contemplated by Section 1.4 has been filed
with the SEC, Xx. Xxxxxxx shall be permitted to sell shares of HLLS
under Rule 144, within the volume limitations of Rule 144. Such sales
may occur either before or after the Closing.
2. THE CLOSING.
2.1 Place and Time. "Closing" is defined as the date after both
Parties sign the Merger Agreement and the exchange of share
certificates is completed as the Parties agree. Closing shall take
place at Marketshare Recovery's office at 000 Xxxxxxxxxxx Xx., Xxxxx
000, Xxxxxxxx, XX 00000 no later than the close of business (eastern
time) on or before June 12, 2003 or at such other place, date and
time as the parties may agree in writing.
2.2 Deliveries by HLLS. At the Closing, HLLS shall deliver the
following to the MKSR:
a. Certificates representing HLLS Shares, duly endorsed for
transfer to MKSR shareholders and accompanied by appropriate stock
powers, or Certificates representing the HLLS Shares reissued in
the name of MKSR.
b. The documents contemplated by Section 3.
c. All other documents, instruments and writings required by
this Agreement to be delivered by HLLS at the Closing and any other
documents or records relating to HLLS' business reasonably requested
by MKSR in connection with this Agreement.
2.3 Deliveries by MKSR. At the Closing, MKSR shall deliver the
following to HLLS:
a. The executed promissory note and Certificates representing
100% of the total outstanding MKSR Shares, duly endorsed for
transfer to HLLS and accompanied by appropriate stock powers, or
Certificates representing MKSR Shares to be issued in the name of
HLLS.
b. The documents contemplated by Section 4.
c. All other documents, instruments, writings, and payments
required by this Agreement to be delivered by MKSR at the Closing.
3. CONDITIONS TO MKSR'S OBLIGATIONS.
The obligations of MKSR to effect the Closing shall be
subject to the satisfaction at or prior to the Closing of the
following conditions, any one or more of which may be waived by
MKSR:
3.1 No Injunction. There shall not be in effect any injunction,
order or decree of a court of competent jurisdiction that prevents
the consummation of the transactions contemplated by this Agreement,
that prohibits MKSR's acquisition of the HLLS Shares or the
acquisition by HLLS of the shares of MKSR or that will require any
divestiture as a result of MKSR's acquisition of the HLLS Shares or
the HLLS acquisition of the MKSR Shares or that will require all or
any part of the business of HLLS to be held separate and no
litigation or proceedings seeking the issuance of such an
injunction, order or decree or seeking to impose substantial
penalties on HLLS or MKSR if this Agreement is consummated shall
be pending.
3.2 Representations, Warranties and Agreements. (a) The
representations and warranties of HLLS set forth in this Agreement
shall be true and complete in all material respects as of the
Closing Date as though made at such time, and (b) HLLS shall have
performed and complied in all material respects with the agreements
contained in this Agreement required to be performed and complied
with by it at or prior to the Closing.
3.3 Regulatory Approvals. All licenses, authorizations,
consents, orders and regulatory approvals of Governmental Bodies
necessary for the consummation of the Merger and MKSR's
acquisition of the HLLS Shares and HLLS' acquisition of the MKSR
shares shall have been obtained and shall be in full force and
effect.
3.4 Resignations of Director. Effective on the Closing Date,
all of the officers and directors shall have resigned as an
officer, director and employee of HLLS. MKSR understands that
such resignations may require a filing in accordance with Rule
14f-1 of the Exchange Act.
3.5 Delivery of Closing Document. All documents to be
delivered by HLLS at the Closing pursuant to this Agreement shall
have been delivered.
4. CONDITIONS TO HLLS'S OBLIGATIONS.
The obligations of HLLS to effect the Closing shall be
subject to the satisfaction at or prior to the Closing of the
following conditions, any one or more of which may be waived by
HLLS:
4.1 No Injunction. There shall not be in effect any
injunction, order or decree of a court of competent jurisdiction
that prevents the consummation of the transactions contemplated
by this Agreement, that prohibits MKSR's acquisition of the HLLS
Shares or HLLS' acquisition of the MKSR Shares or that will
require any divestiture as a result of MKSR's acquisition of
the HLLS Shares or HLLS' acquisition of the MKSR Shares or
that will require all or any part of the business of HLLS to be
held separate and no litigation or proceedings seeking the
issuance of such an injunction, order or decree or seeking
to impose substantial penalties on HLLS or MKSR if this
Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The
representations and warranties of MKSR set forth in this
Agreement shall be true and complete in all material respects
as of the Closing Date as though made at such time, and (b)
MKSR shall have performed and complied in all material
respects with the agreements contained in this Agreement
required to be performed and complied with by it at or prior
to the Closing.
4.3 Regulatory Approvals. All licenses, authorizations,
consents, orders and regulatory approvals of Governmental
Bodies necessary for the consummation of the Merger and
MKSR's acquisition of the HLLS Shares and HLLS' acquisition
of the MKSR Shares shall have been obtained and shall be in
full force and effect.
5. REPRESENTATIONS AND WARRANTIES OF HLLS.
HLLS hereby represents and warrants to MKSR that:
5.1 Authorization. HLLS is a corporation duly organized,
validly existing and in good standing under the laws of the
state of Delaware. This Agreement constitutes a valid and binding
obligation of HLLS, enforceable against it in accordance with
its terms.
5.2 Reporting Company. HLLS is a reporting company pursuant
to Section 12 (g) of the Securities Exchange Act of 1934 and has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the past 12 months
and has been subject to such filing requirements for the past 90
days. HLLS is listed and traded on the OTCBB under the stock
ticker symbol HLLS, and HLLS has complied in all material
respects with all relevant rules and regulations and is current
in all material respects with the NASD and the OTCBB listing
service, to the best of its knowledge and belief.
5.3 Capitalization. The authorized capital stock of HLLS
consists of 20,000,000 authorized shares of common stock, par
value $0.01, and 10,000,000 preferred shares, par value $0.01,
of which 19,995,427 common shares and 3,425,000 preferred
shares will be issued and outstanding at Closing. As of the
Closing Date there will not be outstanding any warrants,
options or other agreements on the part of HLLS obligating
HLLS to issue any additional shares of common or preferred
stock or any of its securities of any kind, except as set
forth in this Agreement.
5.4 Ownership of HLLS Shares. The delivery of certificates
to MKSR provided in Section 2.2 will result in MKSR's immediate
acquisition of record and beneficial ownership of the HLLS
Shares, free and clear of all Encumbrances subject to applicable
State and Federal securities laws.
5.5 Consents and Approvals of Governmental Authorities.
Except with respect to applicable State and Federal securities
laws, to the best of HLLS' knowledge and belief no consent,
approval or authorization of, or declaration, filing or
registration with, any Governmental Body is required to be made
or obtained by HLLS or any of its Subsidiaries in connection
with the execution, delivery and performance of this Agreement
by HLLS or the consummation of the transactions contemplated
by this Agreement.
5.6 Financial Statements. HLLS has delivered to MKSR the
balance sheet of HLLS as of December 31, 2002, and statements
of income and changes in cash flow for the periods then ended,
together with the report thereon of HLLS' independent
accountant (the " HLLS Statements"). To the best of HLLS'
knowledge and belief the HLLS Statements fairly present the
financial condition, results of operation and the cash flows
of HLLS in accordance with generally accepted accounting
principles.
5.7 Litigation. To the best of HLLS' knowledge and belief,
there is no action, suit, inquiry, proceeding or investigation
by or before any court or Governmental Body pending or
threatened in writing against or involving HLLS which is
likely to have a material adverse effect on the business or
financial condition of HLLS. To the best of HLLS' knowledge
and belief, HLLS is not subject to any judgment, order or
decree that is likely to have a material adverse effect on
the business or financial condition of HLLS.
5.8 Absence of Certain Changes. To the best of HLLS'
knowledge and belief, since the date of the HLLS Statements,
HLLS has not:
a. suffered the damage or destruction of any of its
properties or assets (whether or not covered by insurance)
which is materially adverse to the business or financial
condition of HLLS or made any disposition of any of its
material properties or assets other than in the ordinary
course of business;
b. made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments;
c. organized any new Subsidiary or acquired any Equity
Securities of any Person or any equity or ownership interest
in any business;
d. borrowed any funds or incurred, or assumed or become
subject to, whether directly or by way of guarantee or
otherwise, any obligation or liability with respect to any
such indebtedness for borrowed money;
e. paid, discharged or satisfied any material claim,
liability or obligation (absolute, accrued, contingent or
otherwise),other than in the ordinary course of business;
f. prepaid any material obligation having a maturity
of more than 90 days from the date such obligation was
issued or incurred;
g. canceled any material debts or waived any material
claims or rights, except in the ordinary course of business,
with exception of the undertakings herein;
h. disposed of or permitted to lapse any rights to
the use of any material patent or registered trademark or
copyright or other intellectual property owned or used by
it;
i. granted any general increase in the compensation
of officers or employees (including any such increase
pursuant to any employee benefit plan);
j. purchased or entered into any contract or commitment
to purchase any material quantity of raw materials or
supplies, or sold or entered into any contract or commitment
to sell any material quantity of property or assets, except
(i) normal contracts or commitments for the purchase of, and
normal purchases of, raw materials or supplies, made in the
ordinary course of business, (ii) normal contracts or
commitments for the sale of, and normal sales of, inventory
in the ordinary course of business, and (iii) other
contracts, commitments, purchases or sales in the ordinary
course of business;
k. written off or been required to write off any notes
or accounts receivable in an aggregate amount in excess of
$2,000, with exception to the undertakings herein;
l. written down or been required to write down any
inventory in an aggregate amount in excess of $2,000;
m. entered into any collective bargaining or union
contract or agreement; or
n. other than in the ordinary course of business,
incurred any liability required by generally accepted
accounting principles to be reflected on a balance sheet and
material to the business or financial condition of HLLS.
5.9 No Material Adverse Change. To the best of HLLS'
knowledge and belief, since the date of the HLLS Statements, there
has not been any material adverse change in the business or
financial condition of HLLS.
5.10 Brokers or Finders. HLLS has not employed any broker or
finder or incurred any liability for any brokerage or finder's
fees or commissions or similar payments in connection with the
transactions contemplated by this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF MKSR.
MKSR represents and warrants to HLLS that:
6.1 Authorization. MKSR is a corporation duly organized,
validly existing and in good standing under the laws of the state
of New York.
6.2 Binding Effect. This Agreement constitutes a valid and
binding obligation of MKSR, enforceable against MKSR in accordance
with its terms.
6.3 Capitalization. The authorized capital stock of MKSR
consists of 100 authorized shares of common stock, par value
$.0001, of which 100 common shares and no preferred shares will
be issued and outstanding at Closing. As of the Closing Date
there will not be outstanding any warrants, options or other
agreements on the part of MKRS obligating MKRS to issue any additional
shares of common or preferred stock or any of its securities of any kind.
6.4 Ownership of MKRS Shares. The delivery of certificates to
HLLS provided in Section 2.2 will result in HLLS' immediate acquisition
of record and beneficial ownership of 100% of the outstanding MKSR
Shares, free and clear of all Encumbrances subject to applicable State
and Federal securities laws.
6.5 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration
with, any Governmental Body is required to be made or obtained by MKSR
in connection with the execution, delivery and performance of this
Agreement by MKSR or the consummation of the transactions contemplated
hereby.
6.6 Other Consents. No consent of any Person is required to be
obtained by MKSR to the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated by
this Agreement.
6.7 Manner of Acquisition. At no time was MKSR presented with or
solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation
or advertising.
6.8 Financial Statements. MKSR has delivered to HLLS the balance
sheets of MKSR as of December 31, 2002 and 2001 and statements of
income and cash flows for the periods then ended, together with the
audit report thereon of MKSR's independent accountant (the "MKSR
Statements"). To the best of MKSR's knowledge and belief the MKSR
Statements fairly present the results of operations, financial position
and cash flows of MKSR for the periods presented in the MKSR Statements
in accordance with generally accepted accounting principles,
consistently applied. Such MKSR Statements meet the requirements for
financial statements to be filed with the Securities and Exchange
Commission or will meet such requirements within 60 days after the
Closing.
6.9 Litigation. To the best of MKSR's knowledge and belief, there
is no action, suit, inquiry, proceeding or investigation by or before
any court or Governmental Body pending or threatened in writing
against or involving MKSR which is likely to have a material adverse
effect on the business or financial condition of MKSR. To the best
of MKSR's knowledge and belief, MKSR is not subject to any judgment,
order or decree that is likely to have a material adverse effect on
the business or financial condition of MKSR.
6.10 Absence of Certain Changes. To the best of MKSR's knowledge
and belief, since the date of the MKSR Statements, MKSR has not:
a. made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments;
b. organized any new Subsidiary or acquired any Equity Securities
of any Person or any equity or ownership interest in any business;
c. borrowed any funds or incurred, or assumed or become subject
to, whether directly or by way of guarantee or otherwise, any
obligation or liability with respect to any such indebtedness for
borrowed money;
d. prepaid any material obligation having a maturity of more than
90 days from the date such obligation was issued or incurred;
e. granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any employee
benefit plan);
f. entered into any collective bargaining or union contract or
agreement; or
g. other than in the ordinary course of business, incurred any
liability required by generally accepted accounting principles to
be reflected on a balance sheet and material to the business or
financial condition of MKSR.
6.11 No Material Adverse Change. To the best of MKSR's knowledge
and belief, since the date of the MKSR Statements, there has not
been any material adverse change in the business or financial
condition of MKSR.
6.12 Directors, Officers and Principal Shareholders. During
the past five years, none of the officers, directors or principal
shareholders of MKSR :
a. Has had a petition under the Federal bankruptcy
laws or any state insolvency law been filed by or against, or
has had a receiver, fiscal agent or similar officer been appointed
by a court for the business or property of (i) such officer,
director or shareholder personally, (ii) any partnership in which
such officer, director or shareholder was a general partner at the
time of, or within two years prior to the filing of the petition
or appointment, or (iii) any corporation or business association
in which such officer, director or shareholder was an executive
officer at the time of, or within two years prior to, the filing
of the petition or appointment.
b. Has been (i) named as a subject of a criminal
proceeding now pending or (ii) convicted in a criminal proceeding
(other than for traffic violations and other minor offenses).
c. Has been the subject of any order, judgment, or
decree of any court of competent jurisdiction, not subsequently
reversed, suspended, or vacated, permanently or temporarily
enjoining such officer, director or shareholder from, or
otherwise limiting, the following activities:
(i) Acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool
operator, floor broker, leverage transaction merchant, any other
person regulated by the Commodity Futures Trading Commission,
or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities,
or as an affiliated person, director or employee of any
investment company, bank, savings and loan association, or
insurance company, or engaging in or continuing any conduct or
practice in connection with such activity;
(ii) Engaging in any type of business practice;
(iii) Engaging in any activity in connection
with the purchase or sale of any security or commodity or in
connection with any violation of Federal or state securities laws
or Federal commodities laws;
d. Has been the subject of any order, judgment, or
decree, not subsequently reversed, suspended or vacated, of any
Federal or state authority barring, suspending, or otherwise limiting
for more than 60 days, the right of such officer, director or
shareholder to engage in any activity described in subparagraph
(c)(i), above, or to be associated with persons engaged in any such
activity;
e. Has been found by a court in a civil action or by
the Securities and Exchange Commission or any state securities
authority to have violated any Federal or state securities law, the
judgment or finding of which has not been subsequently vacated,
reversed, or suspended;
f. Has been found by a court of competent jurisdiction
in a civil action or by the Commodity Futures Trading Commission to
have violated any Federal commodities law, and the judgment in such
civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or vacated.
6.13 Brokers or Finders. MKSR has not employed any broker or
finder or incurred any liability for any brokerage or finder's fees
or commissions or similar payments in connection with the merger of
HLLS and MKSR.
7. REPRESENTATIONS AND WARRANTIES OF MKSR SHAREHOLDERS.
Each of the MKSR Shareholders individually represents
and warrants to HLLS with respect to himself as follows:
7.1 Ownership and Power to Sell. Set forth on the attached
Schedule 7.1 is a true and correct list of the shareholders of
MKSR and the number of the MKSR Shares owned by each. The Shares
are fully paid and nonassessable. Each MKSR Shareholder
represents and warrants with respect to the MKSR Shares owned by
him that: (a) he has good and marketable title to the MKSR Shares
set forth on Schedule 7.1 as being owned by him, free and clear
of any claims, liens, restrictions on transfer or encumbrances
with respect thereto; and (b) he has the full power, right and
authority to transfer, convey to HLLS at the Closing the Shares
to be transferred by such MKSR Shareholder hereunder.
7.2 Authorization. This Agreement has been duly authorized,
executed and delivered by such MKSR Shareholder and no further
proceedings (corporate, partnership or otherwise) on the part of
such MKSR Shareholder are or will be necessary to authorize this
Agreement and the transactions contemplated hereby. This
Agreement is the legal, valid and binding obligation of such
MKSR Shareholder, enforceable in accordance with its terms.
Neither the execution, delivery and performance of this Agreement
by such MKSR Shareholder, nor the consummation of the transactions
contemplated hereby, will violate, conflict with, or result in
a breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute
a default) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination
or acceleration under, or the creation of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of such MKSR Shareholder, or MKSR or its Subsidiaries
(as defined below) (a) under any of the terms, conditions or
provisions of (i) the articles of incorporation or code of
regulations, MKSR or of such MKSR Shareholder, or (ii) except
where such event would not have a material adverse effect on
the financial condition or business of MKSR and its Subsidiaries
taken as a whole, any material note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or
obligation to which such MKSR Shareholder, MKSR or any of its
Subsidiaries, is a party or by which such MKSR Shareholder, MKSR
or its Subsidiaries, may be bound, or to which such MKSR
Shareholder, MKSR or its Subsidiaries, or the properties or
assets of MKSR or its Subsidiaries, may be subject or (b)
except where such event would not have a material adverse
effect on the financial condition or business of MKSR and its
Subsidiaries taken as a whole, of any judgment, ruling, order,
writ, injunction, decree, statute, rule or regulation applicable
to MKSR or its Subsidiaries, or to the properties or assets of the
Company or its Subsidiaries.
No material notice to, filing with, authorization of, exemption by,
or consent or approval of, any regulatory authority is necessary
for the consummation by such MKSR Shareholder of the transactions
contemplated by this Agreement.
7.3 Litigation. As of the date of this Agreement, there is no
action, suit or proceeding pending against, or to the knowledge of
such MKSR Shareholder threatened against or affecting, such MKSR
Shareholder or any affiliate of such MKSR Shareholder or any of
their respective properties before any court or arbitrator or any
governmental body, agency or official which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay
any of the transactions contemplated hereby.
7.4 Purchase for Investment. MKSR shareholders are acquiring
HLLS Shares solely for its own account for the purpose of
investment and not with a view to, or for sale in connection
with, any distribution of any portion thereof in violation of
any applicable securities law. The MKSR shareholders understand
that the issuance to them of the HLLS Shares in the Merger will
not be registered under the Securities Act of 1933, as amended,
or state securities laws, and that they may not resell them without
such registrations unless an exemption from registration is
available. The MKSR shareholders agree that a legend respecting
these restrictions will be placed on their stock certificates and
stop transfer instructions may be given to the HLLS transfer agent.
7.5 Directors, Officers and Principal Shareholders. The
representations and warranties set forth in Section 6.12 are true
and correct with respect to the MKSR shareholders.
8. POST CLOSING COVENANTS
8.1 Capital Structure. As soon as practicable following the
Closing, HLLS (which shall then be controlled by the MKSR
Shareholders) shall prepare and file with the SEC preliminary proxy
materials, or an information statement, for a stockholders' meeting
or consent procedure in order to consider and approve a 10 for 1
reverse split of the HLLS Common Stock, to authorize up to
50,000,000 shares of HLLS Common Stock and to change the name of
HLLS to Market Share, Inc. Upon SEC clearance, HLLS shall proceed
to conduct a stockholders' meeting or consent procedure, as the
case may be, in order to effect such proposals. Any other or
different capital changes shall not be effected without the prior
approval of those shareholders of HLLS who owned at least a majority
of the outstanding HLLS Common Stock prior to the Closing.
Marketshare shall pay all professional and filing fees associated
with those changes. Following the reverse stock split, the
capitalization of HLLS shall be approximately as follows:
before reverse after 1:10 reverse
Preferred stock
Marketshare holders 3,425,000 3,425.000
Common Stock
Marketshare holders 10,197,668 1,019,767
Xx. Xxxxxxx 1,872,332 187,233
Others 3,756,840 375,684
Public 4,168,587 416,859
19,995,427 1,999,543
8.2.1 Issuance of Stock/ Conversion. HLLS is a guarantor on
debt owed to Xx. Xxxxxxx. Following the reverse stock split and
the authorization of additional shares of common stock, $12,700 of
such debt shall be converted into 1,270,000 shares of common stock.
Xx. Xxxxxxx shall be required to cancel all other indebtedness owed
by HLLS to him and to cancel any guarantees of debt by HLLS.
Following the reverse stock split, the shares of Preferred stock
shall be automatically converted into 34,250,000 shares of common
stock. The conversion of the shares of Preferred Stock and the
issuance of the stock to Xx. Xxxxxxx upon conversion of the debt
shall occur simultaneously. After the issuances of shares provided
for in this Section and the conversion of the Preferred Stock of
HLLS into Common Stock of HLLS, the Capitalization of the Company
shall be approximately as follows:
Common Shares percent
Former Marketshare holders 35,269,767 94.0
Xx. Xxxxxxx 1,457,233 3.88
Others 375,684 1.00
Public 416,859 1.1
Total 36,669,543 100.00
8.3 Dilution. Unless otherwise agreed by Xx. Xxxxxxx, for a
period of 12 months after Closing or as otherwise agreed between
the Parties, there shall be no further reverse of the stock and
Xx. Xxxxxxx'x share position shall not be diluted beyond his
(percentage) position at Closing after shares have been issued
to Marketshare shareholders including up to 2 million shares
which may be sold for the purpose of raising money.
8.4 Officers' and Directors' Indemnification.
(a) HLLS, and MKSR shall, and from and after the
Closing, indemnify, defend and hold harmless the present and
former directors, officers, employees and agents of HLLS and its
subsidiaries (each, an "Indemnified party") against all losses,
claims, damages, costs, expenses (including reasonable attorneys'
fees and expenses), liabilities, judgments or amounts that are paid
in settlement with the approval of HLLS, as the case may be (the
"Indemnifying party") of, or in connection with, any threatened or
actual claim, action, suit, proceeding or investigation based in
whole or in part on, or arising in whole or in part out of, or
pertaining to, the fact that such person is or was a director or
officer of HLLS or any of its subsidiaries, whether pertaining to
any matter existing at or prior to the Closing and whether asserted
or claimed prior to, at the time of, or after, the Closing
("Indemnified Liabilities"), including all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of,
or pertaining to, this Agreement or the transactions contemplated
hereby, in each case to the fullest extent a corporation is
permitted under the laws of Delaware as the same exists or may
hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits broader rights than such
law permitted prior to such amendment, and only to the extent
such amendment is not retroactively applicable) to indemnify its
own directors or officers, as the case may be. Without limiting
the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified
party (whether arising before or after the Closing), (i) the
Indemnified party may retain counsel satisfactory to it and HLLS,
and HLLS and MKSR shall pay all fees and expenses of such counsel
for the Indemnified party promptly as statements therefor are
received and otherwise advanced to such Indemnified party upon
request for reimbursement of documented expenses incurred, in
either case to the fullest extent and in the manner permitted by
the corporation law of Delaware; and (ii) the HLLS or MKSR will
use all reasonable efforts to assist in the vigorous defense of
any such matter, provided that neither HLLS nor MKSR shall be
liable for any settlement effected without its prior written
consent. Any Indemnified party wishing to claim indemnification
under this Section upon learning of any such claim, action, suit,
proceeding or investigation, shall notify HLLS or MKSR (but the
failure so to notify shall not relieve such Indemnifying party
from any liability which it may have under this Section except
to the extent such failure materially prejudices such Indemnifying
party), and shall to the extent required by the laws of the state
of Delaware deliver to HLLS or MKSR any undertaking contemplated
by Delaware law. HLLS and MKSR agree that all rights to
indemnification, including provisions relating to advances or
expenses incurred in defense of any action or suit, existing in
favor of the Indemnified parties with respect to matters occurring
through the Closing, shall survive the Closing and shall continue
in full force and effect for a period of not less than six years
from the Closing; provided, however, that all rights to
indemnification in respect of any Indemnified Liabilities asserted
or made within such period shall continue until the disposition of
such Indemnified Liabilities. This Section is intended for the
irrevocable benefit of, and to grant third party rights to, the
Indemnified parties and shall be binding on all successors and
assigns of HLLS, and MKSR. Each of the Indemnified parties shall
be entitled to enforce the covenants contained in this Section.
9. FILINGS WITH GOVERNMENTAL AUTHORITIES.
Regulatory Matters. MKSR and HLLS shall (a) file with
applicable regulatory authorities any applications and related
documents required to be filed by them in order to consummate the
contemplated transaction and (b) cooperate with each other as
they may reasonably request in connection with the foregoing.
10. DEFINITIONS.
As used in this Agreement, the following terms have the
meanings specified or referred to in this Section 10.
10.1 "Business Day" - Any day that is not a Saturday or
Sunday or a day on which banks located in the City of New York
are authorized or required to be closed.
10.2 "Code" - The Internal Revenue Code of 1986, as amended.
10.3 "Encumbrances" - Any security interest, mortgage, lien,
charge, adverse claim or restriction of any kind, including, but
not limited to, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership,
other than a restriction on transfer arising under Federal or state
securities laws.
10.4 "Equity Securities" - See Rule 3a-11-1 under the Securities
Exchange Act of 1934.
10.5 "ERISA" - The Employee Retirement Income Security Act of
1974, as amended.
10.6 "Governmental Body" - Any domestic or foreign national,
state or municipal or other local government or multi-national body
(including, but not limited to, the European Economic Community),
any subdivision, agency, commission or authority thereof.
10.7 "Knowledge" - Actual knowledge, after reasonable
investigation.
10.8 "Person" - Any individual, corporation, partnership, joint
venture, trust, association, unincorporated organization, other
entity, or Governmental Body.
10.9 "Subsidiary" - With respect to any Person, any corporation
of which securities having the power to elect a majority of that
corporation's Board of Directors (other than securities having that
power only upon the happening of a contingency that has not
occurred) are held by such Person or one or more of its Subsidiaries.
11. NOTICES.
All notices, consents, assignments and other communications
under this Agreement shall be in writing and shall be deemed to have
been duly given when (a) delivered by hand, (b) sent by telex or
facsimile (with receipt confirmed), provided that a copy is mailed
by registered mail, return receipt requested, or (c) received by the
delivery service (receipt requested), in each case to the
appropriate addresses, telex numbers and facsimile numbers
set forth below (or to such other addresses, telex numbers and
facsimile numbers as a party may designate as to itself by notice
to the other parties).
(a) If to MKSR or the MKSR Shareholders:
Marketshare Recovery, Inc,
000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile (000)000-0000
Attn: Xxx Xxxxxx
(b) If to HLLS or Xx. Xxxxxxx:
Health & Leisure, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Facsimile (000) 000 0000
Attn: President
12. MISCELLANEOUS.
12.1 Expenses. Each party shall bear its own expenses incident
to the preparation, negotiation, execution and delivery of this
Agreement and the performance of its obligations hereunder except
that MKSR agrees to pay all HLLS professional and filing fees
associated with preparing for and executing the terms of this
agreement.
12.2 Captions. The captions in this Agreement are for convenience
of reference only and shall not be given any effect in the
interpretation of this agreement.
12.3 No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement. Any waiver must be in writing.
12.4 Exclusive Agreement; Amendment. This Agreement supersedes all
prior agreements among the parties with respect to its subject matter
with respect thereto and cannot be changed or terminated orally.
12.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all
of which together shall constitute the same instrument.
12.6 Governing Law, Venue. This Agreement and (unless otherwise
provided) all amendments hereof and waivers and consents hereunder
shall be governed by the internal law of the State of Ohio, without
regard to the conflicts of law principles thereof. Jurisdiction
and venue for any cause of action brought to enforce any part of
this Agreement shall be in Franklin County, Ohio.
12.7 Binding Effect. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective
successors and assigns, provided that neither party may
assign its rights hereunder without the consent of the other.
12.8 Facsimile Execution. This Agreement may be executed in
counterparts by original or telefax signatures, and all
counterparts of this Agreement which are executed by telefax
signature shall be valid and binding as original signatures or
all purposes (evidently or otherwise).
SIGNATURES
IN WITNESS WHEREOF, the corporate parties hereto have caused
this Agreement to be executed by their respective officers,
hereunto duly authorized, and entered into as of the date first
above written.
"MKSR"
MARKETSHARE RECOVERY, INC
A New York Corporation
______________________________
By: Xxx Xxxxxx, President
"HLLS"
HEALTH & LEISURE, INC. VENTURE SUM, INC.
A Delaware Corporation A Delaware Corporation
By:______________________________ By:_______________________________
Xxxxxx X. Xxxxxxx, President Xxxxxx X. Xxxxxxx, President
Xxxxxx X. Xxxxxxx, Individually
MARKETSHARE SHAREHOLDERS:
Xxx Xxxxxx, Individually Xxxxxxx Xxxxxxx, Individually
