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AGREEMENT AND PLAN OF REORGANIZATION
dated as of
March 19, 1997
among
NATURAL HEALTH TRENDS CORP.,
GHA HOLDINGS, INC.
and
GLOBAL HEALTH ALTERNATIVES, INC.
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TABLE OF CONTENTS*
Page
ARTICLE I
THE MAIN TRANSACTION
SECTION 1.01. Sale and Purchase of Assets.......................................................... 1
SECTION 1.02. Assumption of Liabilities............................................................ 2
SECTION 1.03. Non-Assigned Company Contracts....................................................... 2
SECTION 1.04. Consideration (a) Firm Shares........................................................ 2
(b) First Contingent Shares................................................................... 2
(c) Second Contingent Shares.................................................................. 3
(d) ..................................................................................... 3
(e) ........................................................................................6
SECTION 1.05. Tax Values........................................................................... 6
SECTION 1.06. "Main Transaction" and "Transactions" Defined........................................ 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01. Organization and Existence .......................................................... 7
SECTION 2.02. Consents, Authorizations and Conflicts .............................................. 8
SECTION 2.03. Company Financial Statements......................................................... 8
SECTION 2.04. Title to Subsidiary Shares .......................................................... 9
SECTION 2.05. Company Properties; Liens............................................................ 9
SECTION 2.06. Company Insurance.................................................................... 9
SECTION 2.07. Company Litigation and Compliance.................................................... 9
SECTION 2.08. Company Contracts................................................................... 10
SECTION 2.09. Company Taxes....................................................................... 11
SECTION 2.10. Company Employee Plans.............................................................. 11
SECTION 2.11. Company Environmental Compliance.................................................... 12
SECTION 2.12. Finder's Fees....................................................................... 13
SECTION 2.13. Absence of Certain Changes.......................................................... 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE NHTC PARTIES
SECTION 3.01. Organization and Existence.......................................................... 14
SECTION 3.02. Consents, Authorizations and Conflicts.............................................. 15
SECTION 3.03. NHTC Financial Statements........................................................... 16
SECTION 3.04. NHTC Capitalization................................................................. 16
SECTION 3.05. NHTC Properties; Liens.............................................................. 17
SECTION 3.06. NHTC Insurance...................................................................... 17
SECTION 3.07. NHTC Litigation and Compliance...................................................... 17
SECTION 3.08. NHTC Contracts...................................................................... 18
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* The Table of Contents and cover page are not a part of this Agreement.
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Page
SECTION 3.09. NHTC Taxes.......................................................................... 18
SECTION 3.10. NHTC Employee Plans................................................................. 19
SECTION 3.11. NHTC Environmental Compliance....................................................... 19
SECTION 3.12. SEC Filings......................................................................... 20
SECTION 3.13. Finder's Fees....................................................................... 20
SECTION 3.14. Absence of Certain Changes.......................................................... 20
SECTION 3.15. Nature of Transaction............................................................... 22
ARTICLE IV
OTHER REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Acquisition for Investment.......................................................... 22
SECTION 4.02. No Other Representations and Warranties............................................. 23
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
SECTION 5.01. Access to Records and Properties.................................................... 23
SECTION 5.02. Operation of the Company and NHTC Parties........................................... 24
SECTION 5.03. Consents and Notices................................................................ 25
SECTION 5.04. Best Efforts to Satisfy Conditions.................................................. 25
SECTION 5.05. Bridge Loan......................................................................... 25
ARTICLE VI
CONDITIONS TO THE MAIN TRANSACTION
SECTION 6.01. Conditions to Obligations of NHTC Parties........................................... 26
(a) Representations and Warranties; Performance of Obligations............................... 26
(b) Charter, By-laws, etc.................................................................... 26
(c) Consents and Notices..................................................................... 27
(d) Legal Restraints........................................................................ 27
(e) No Company Material Adverse Change....................................................... 27
(f) Instruments of Transfer.................................................................. 27
(g) Receipt.................................................................................. 27
(h) Opinions of Counsel...................................................................... 27
(i) Name Change.............................................................................. 27
(j) Voting Trust............................................................................. 28
(k) Heller Options........................................................................... 28
(l) Financing................................................................................ 28
(m) Indemnifying Company Stockholders......................................................... 28
(n) Other Matters............................................................................. 28
SECTION 6.02. Conditions to Obligations of the Company............................................ 28
(a) Representations and Warranties; Performance of Obligations............................... 28
(b) Charter, By-laws, etc.................................................................... 29
(c) Consents and Notices..................................................................... 29
(d) Legal Restraints......................................................................... 29
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Page
(e) No NHTC Material Adverse Change.......................................................... 29
(f) Instruments of Assumption................................................................ 30
(g) Firm Shares Certificates................................................................. 30
(h) Opinions of Counsel...................................................................... 30
(i) Registration Rights Agreement............................................................ 30
(j) Corporate Governance..................................................................... 30
(k) Employment Agreement...................................................................... 30
(l) Management Compensation................................................................... 31
(m) Fruitseng Contingent Shares.............................................................. 31
(n) Voting Trust............................................................................. 31
(o) Financing................................................................................ 31
(p) MikeCo Acquisition....................................................................... 31
(q) Reservation of Shares................................................................... 31
(r) Other Matters............................................................................ 31
ARTICLE VII
CLOSING DATE AND TERMINATION
SECTION 7.01. Closing Date........................................................................ 32
SECTION 7.02. Termination of Agreement............................................................ 32
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. By the Company...................................................................... 32
SECTION 8.02. By the NHTC Parties................................................................. 34
SECTION 8.03. "Losses" Defined.................................................................... 35
SECTION 8.04. Notice of Claims.................................................................... 35
SECTION 8.05. Survival of Provisions.............................................................. 35
SECTION 8.06. Exclusive Remedy.................................................................... 36
SECTION 8.07. Other Recoveries.................................................................... 36
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Board and Executive Committee Representation........................................ 36
SECTION 9.02. Fruitseng Contingent Shares......................................................... 37
SECTION 9.03. Public Announcements................................................................ 37
SECTION 9.04. Further Actions..................................................................... 37
SECTION 9.05. Expenses............................................................................ 38
SECTION 9.06. Entire Agreement.................................................................... 38
SECTION 9.07. Descriptive Headings; References.................................................... 38
SECTION 9.08. Notices............................................................................. 38
SECTION 9.09. Governing Law and Forum............................................................. 39
SECTION 9.10. Assignment.......................................................................... 40
SECTION 9.11. Remedies............................................................................ 40
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SECTION 9.12. Waivers and Amendments.............................................................. 41
SECTION 9.13. Third Party Rights.................................................................. 41
SECTION 9.14. Illegalities........................................................................ 41
SECTION 9.15. Bulk Sales.......................................................................... 41
SECTION 9.16. Gender and Plural Terms............................................................. 41
SECTION 9.17. Counterparts........................................................................ 41
SIGNATURES.................................................................................................. 42
EXHIBITS
EXHIBIT A Form of Bill of Sale and Assumption
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, dated as of March 19, 1997
(this "Agreement"), is by and among NATURAL HEALTH TRENDS CORP., a Florida
corporation ("NHTC"), and GHA HOLDINGS, INC., a Delaware corporation
("Holdings") and wholly-owned subsidiary of NHTC, on the one hand, and GLOBAL
HEALTH ALTERNATIVES, INC., a Delaware corporation (the "Company"), on the other
hand, and evidences that, for and in consideration of the mutual covenants set
forth herein, and intending to effect a tax-free reorganization under Section
368(a)(1)(C) of the Internal Code of 1986, as amended (the "Code"), the parties
hereto hereby agree as follows:
ARTICLE I
MAIN TRANSACTION
SECTION 1.01. Sale and Purchase of Assets. (a) On the Closing Date (as
defined in Section 7.01), the Company shall execute and deliver to Holdings a
Bill of Sale and Assumption substantially in the form of Exhibit A attached
hereto and made part hereof (with such changes thereto as may be agreed upon by
the Company and NHTC on or prior to the Closing Date, the "Bill of Sale") and
thereby (among other things) sell, transfer, grant, convey, assign and set over
to Holdings, and its successors and assigns forever, and Holdings shall execute
and deliver to the Company the Bill of Sale and thereby (among other things)
purchase and receive from the Company, free and clear of any and all liens,
security interests, mortgages, pledges, covenants, easements, encumbrances,
defects in title, agreements and claims and rights of third parties ("Liens")
(other than Permitted Liens (as hereinafter defined)), all of the rights, title
and interest of the Company in, to and under the businesses, franchises, rights,
claims, privileges, properties and assets owned, used or held for use by the
Company, of every nature and description, tangible and intangible, wherever
located and whether or not carried on the books or records of the Company, all
as the same shall exist on the date hereof, but subject to such additions and
dispositions as shall have occurred in the ordinary course of business after the
date hereof or shall otherwise occur with the written consent of Holdings (the
foregoing rights, title and interest being hereinafter sometimes collectively
referred to as the "Subject Assets"). The Subject Assets are more particularly
described in Section 1 of the Bill of Sale.
(b) For purposes of this Agreement, the term "Permitted Liens"
means: (i) Liens for taxes not yet due and payable; (ii) Liens imposed by Laws
(as defined in Section 2.07), such as banker's, warehousemen's, mechanic's and
materialmen's liens, and other similar statutory or common law liens arising in
the ordinary course of business; (iii) Liens arising out of pledges, bonds or
deposits under worker's compensation laws, unemployment insurance, old age
pension or other social security or retirement benefits or similar legislation
and deposits securing obligations for self-insurance arrangements in connection
with any of the foregoing; (iv) easements, rights of way, building restrictions,
minor defects or irregularities in title and such other encumbrances or charges
against property (real, personal or mixed) as are of a nature that do not in a
materially adverse way affect the marketability of the same or interfere with
the use thereof in the ordinary course of business as presently conducted; (v)
Liens arising under Company Contracts (as defined in Section 2.08); (vi) Liens
securing indebtedness (x) disclosed or reflected in the Company Financial
Statements (as defined in Section 2.03), (y) owed to NHTC or any subsidiary
thereof, (z) or otherwise Previously Disclosed (as
defined in Article II); and (vii) Liens that will be released and discharged in
full on or prior to the Closing Date.
SECTION 1.02. Assumption of Liabilities. On the Closing Date Holdings
shall execute and deliver to the Company the Bill of Sale and thereby (among
other things) assume and agree to pay, satisfy and discharge in accordance with
their respective terms (subject to any defenses or claimed offsets asserted in
good faith against the obligee to whom such liabilities are owed) the "Assumed
Liabilities" (as defined in Section 2 of the Bill of Sale); provided, however,
that the "Assumed Liabilities" do not include, Holdings is not assuming, and the
Company is retaining responsibility for and shall remain liable to discharge,
pay and perform, the "Retained Liabilities" (as defined in Section 2 of the Bill
of Sale).
SECTION 1.03. Non-Assigned Company Contracts. (a) From and after the
Closing (as defined in Section 7.01), the Company shall: (i) hold in trust for
the benefit of Holdings all Non-Assigned Company Contracts (as hereinafter
defined), (ii) remit (promptly upon receipt thereof) to Holdings all amounts
paid to the Company thereunder in respect of the performance thereof by the
Company or Holdings thereunder, (iii) cooperate with Holdings in any reasonable
arrangement designed to provide for Holdings the benefits thereunder, and (iv)
insofar as permissible, assign to Holdings, at Holdings's written request from
time to time, any or all of such Non-Assigned Company Contracts. Holdings agrees
to perform, in the name and on behalf of the Company, all Non- Assigned Company
Contracts as to which the foregoing provisions have been complied with.
(b) For purposes of this Agreement, the term "Non-Assigned Company
Contracts" means those Company Contracts as to which (x) the consent of a party
thereto (other than the Company) is required for an assignment thereof, and such
consents are not obtained on or before the Closing Date.
SECTION 1.04. Consideration. (a) Firm Shares. In consideration of
the Company's sale of the Subject Assets to Holdings as aforesaid (in addition
to Holdings's assumption of the Assumed Liabilities), on the Closing Date NHTC
shall issue and deliver to the trustee(s) under the voting trust to be
established under the Voting Trust Agreement (as defined in Section 6.01(j))
(such voting trust, the "Voting Trust"; and such trustee(s), in its (their)
capacity as such, the "Voting Trustee"), for the benefit of the Company and its
respective successors and assigns, and the Voting Trustee shall receive from
GHA, free and clear of any and all Liens, pre-emptive and similar rights,
5,800,000 shares (the "Firm Shares") of NHTC's Common Stock, par value $.001 per
share ("NHTC Common Stock").
(b) First Contingent Shares. In further consideration of the
Company's sale of the Subject Assets as aforesaid (in addition to Holdings's
assumption of the Assumed Liabilities), if Acquired Pre-Tax Earnings during the
First Contingent Shares Measure Period (as such terms are defined in Section
1.04(d) below) shall equal or exceed $1,200,000 promptly after the sixtieth
(60th) day after the end of the First Contingent Shares Measure Period, NHTC
shall issue and deliver to the Voting Trustee, for the benefit of the Company
and its respective successors and assigns, free and clear of all Liens,
pre-emptive and similar rights, 800,000 shares of NHTC Common Stock.
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(c) Second Contingent Shares. In further consideration of the
Company's sale of the Subject Assets as aforesaid (in addition to Holdings's
assumption of the Assumed Liabilities), promptly after the sixtieth (60th) day
after the end of the Second Contingent Shares Measure Period, NHTC shall issue
and deliver to the Company (or its respective successors and assigns), free and
clear of all Liens, pre-emptive and similar rights, a number of shares of NHTC
Common Stock having a Fair Market Value (as of such 60th day) equal to
the lesser of:
o (8 x Acquired Pre-Tax Earnings) minus FSFMV minus FCSFMV minus
Acquisition Costs, and
o $45,000,000
with the terms used in the above formula and provisions having the meanings set
forth in Section 1.04(d) below; provided, however, that: (i) no fractional
shares of NHTC Common Stock shall be issued under the foregoing; and (ii) all
fractional shares of NHTC Common Stock that the Company (or any successor or
assign thereof) would otherwise be entitled to receive in accordance with the
foregoing shall be aggregated, and if a fractional share of NHTC Common Stock
results from such aggregation the Company (or such successor or assign) shall be
entitled to receive, in lieu thereof, an additional whole share of NHTC Common
Stock.
(d) For purposes of this Agreement, the term:
"Acquired Pre-Tax Earnings" means the Pre-Tax Earnings of the
Existing Businesses and any New Business in Holdings during the First Contingent
Shares Measure Period (for purposes of Section 1.04(b)) or Second Contingent
Shares Measure Period (for purposes of Section 1.04(c)).
"Acquisition" means any transaction, or any series of related
transactions, by which Holdings or any of its consolidated subsidiaries: (1)
acquires (x) all or a substantial part of the assets (other than through a
purchase of inventory in the ordinary course of business), (y) one or more
manufacturing lines or (z) a going business or division, of any other person or
entity, whether through purchase of assets, merger or otherwise, or (2) directly
or indirectly acquires (in one transaction or as the most recent transaction in
a series of transactions) control of at least 50% (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or at least 50% (by percentage or voting power)
ownership interest in any partnership, joint venture or limited liability
company (other than corporate partnerships or joint ventures covered by the
preceding clause).
"Acquisition Costs" means the consideration paid at any time
on or after the Closing Date and prior to the end of the Second Contingent
Shares Measure Period for any Acquisition of an Existing Business or New
Business, including (net of any tax benefits) commissions, finders fees,
investment banking, legal and accounting fees and disbursements paid in
connection therewith and such other transaction costs as shall be
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agreed upon by the NHTC and the Company (or its successor or assign for such
purpose). For this purpose, any such consideration consisting of: (1) NHTC
Common Stock shall be valued at the Fair Market Value thereof as of the date of
issuance; (2) any promissory notes issued by, or indebtedness assumed by, NHTC
or any subsidiary thereof (including Holdings) shall be valued at the face
amount of such promissory notes or indebtedness (as the case may be); and (3)
any Other Consideration shall be valued at the Fair Market Value thereof. The
parties hereto hereby acknowledge and agree that the "Acquisition Costs" of: (A)
the Ellon Acquisition shall be limited to any "Contingent Consideration" paid in
accordance with (and as defined in) Section 1.04(b) of the Ellon Acquisition
Agreement; (B) the Fruitseng Acquisition shall be limited to any "Contingent
Shares" issued in accordance with (and as defined in) Section 1.04(b) of the
Fruitseng Acquisition Agreement (as such provision may be modified or amended
from time to time, including as contemplated by Section 6.02(l)); (C) any MikeCo
Acquisition shall be limited to any shares of NHTC Common Stock issued as the
"Consideration" under (and as defined in) the MikeCo Option Agreement (if any);
and (D) each of the Ellon Acquisition, Fruitseng Acquisition and Troy
Acquisition shall additionally include legal and accounting fees and
disbursements and such other transactional costs attributable to such
Acquisition (as opposed to services or other valuable assets or other rights) as
shall be agreed upon by the NHTC and the Company (or its successor or assign for
such purpose), in the case of each of the foregoing clauses (A), (B), (C) and
(D), at any time on or after the Closing Date and prior to the end of the Second
Contingent Shares Measure Period.
"Business" means the assets, manufacturing lines, going
business or division, corporation, partnership, joint venture or limited
liability company the acquisition of which constitutes an "Acquisition"
hereunder.
"Contingent Shares" means the shares of NHTC Common Stock
issued or issuable under Section 1.04(b).
"Ellon Acquisition" means the Acquisition described in clause
(1) of the definition of "Existing Business" in this Section 1.04(c), which was
effected pursuant to the Ellon Acquisition Agreement.
"Ellon Acquisition Agreement" means that certain Assets
Purchase Agreement, dated as of October 15, 1996, by and among the Company,
Ellon, Inc., Ellon USA, Inc. and Ralph Kaslof and Leslie J. Kaslof, as the same
may be supplemented, modified, amended and/or restated from time to time..
"Existing Business" means: (1) Ellon, Inc. ("New Ellon"), a
Delaware corporation and wholly-owned subsidiary of the Company, which (in
October 1996) completed an Acquisition of substantially all of the assets of
Ellon USA, Inc. ("Old Ellon"); (2) Maine Naturals, Inc. (formerly named
Fruitseng, Inc.), a Delaware corporation, which (in October 1996) completed an
Acquisition of substantially all of the assets of Downeast Cranberry Company,
Inc.; (3) Global Health Alternatives (UK) Ltd., an England and Wales corporation
and wholly-owned subsidiary of the Company, and the other entities and
operations of the Company through which the Company's rights and obligations
under the General Agreement of Cooperation between the Company and MEBO Holding
Corp. are held and/or performed; (4) the entities and/or operations of the
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Company throughwhich the Company's rights and obligations under the Agreement of
Development with Kang Ban Technical Trading Company (affiliated with the Beijing
University of Traditional Chinese Medicine) are held and/or performed; (5) the
entities and/or operations of the Company through which the Company's rights and
obligations are held and/or performed under the Option Agreement, dated 5
December 1996, as amended, from the Company to MikeCo, Inc. and Troy
Laboratories, Inc., and executed by the Principals (as defined therein), and the
secured loans made or to be made thereunder; and (6) any other entities and/or
operations of the Company that are included in the Subject Assets.
"Fair Market Value" means: (1) when used with reference to
NHTC Common Stock, as of any particular date, the average of the mean of the
final bid and final ask prices of the NHTC Common Stock for each trading day
during the 30-day period immediately preceding such date, provided that: (i) if
at the time of determination NHTC Common Stock shall be traded on a national
securities exchange or quoted in an automated quotation system for which closing
sale price information is published, then such average shall be of the closing
sale prices of the NHTC Common Stock on each such trading day; and (ii) if on
any such trading day there shall not have been reported final bid and ask prices
(or, if applicable, a closing sale price) then such prices (or, if applicable,
such price) shall be the final bid and ask prices (or, if applicable, the
closing sale price) reported for the next preceding trading day for which such
prices (or, if applicable, such price) shall have been reported; and (2) when
used with reference to any Other Consideration, the fair market value thereof as
determined in good faith by the Board of Directors of NHTC.
"FCSFMV" means the Fair Market Value, as of the sixtieth
(60th) day after the First Contingent Shares Measure Period, of the NHTC Common
Stock issued or issuable as the First Contingent Shares; provided that if no
First Contingent Shares are issued then such "FCSFMV" means zero ($0).
"Firm Shares" means the shares of NHTC Common Stock issued or
issuable under Section 1.04(a).
"First Contingent Shares" means the shares of NHTC Common
Stock issued or issuable under Section 1.04(b).
"First Contingent Shares Measure Period" means the
twelve-month period ending June 30, 1998.
"Fruitseng Acquisition" means the Acquisition described in
clause (2) of the definition of "Existing Business" in this Section 1.04(c).
"Fruitseng Acquisition Agreement" means that certain Assets
Purchase Agreement, dated as of October 15, 1996, by and among the Company,
Fruitseng Inc. (now, Maine Naturals, Inc.), Downeast Cranberry Company, Inc. and
Robert E. Cleaves, IV, Stephen W. Batzell, Thomas P. Pinansky, John M. Eldredge
and Robert C. Bruce, as the same may be supplemented, modified, amended and/or
restated from time to time.
"FSFMV" means the Fair Market Value, as of the Closing Date,
of the NHTC Common Stock issued or issuable as the Firm Shares.
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"GAAP" means United States generally accepted accounting
principles.
"MikeCo Acquisition" means any "Acquisition Transaction"
effected pursuant to (and as defined in) the MikeCo Option Agreement.
"MikeCo Option Agreement" means the Option Agreement referred
to in clause (5) of the definition of "Existing Company Business" in this
Section 1.02(b), as the same may be supplemented, modified, amended and/or
restated from time to time.
"New Business" means any Business that: (i) is not an Existing
Business, and (ii) is not, on or prior to the date of acquisition thereof by
Holdings or any other subsidiary of NHTC, designated by the Company (or any
successor or assign thereof) as an "Excluded New Business" for purposes of this
Agreement.
"Other Consideration" means, when used with reference to the
Acquisition Costs of any Existing Business or New Business, any consideration
paid for the purchase or other acquisition thereof excluding: (i) NHTC Common
Stock and (ii) any promissory notes issued by, or indebtedness assumed by, NHTC
or any subsidiary thereof (including Holdings).
"Pre-Tax Earnings" means, with respect to any entity for any
period, the income (or loss) from operations before income taxes (if any) of
such entity for such period plus any non-cash charges (such as, without
limitation, depreciation and amortization) plus any extraordinary or
non-recurring expenses incurred during such period related to the disposition of
any Business or the revaluation of intangibles.
"Second Contingent Shares" means the shares of NHTC Common
Stock issued or issuable under Section 1.04(c).
"Second Contingent Shares Measure Period" means the
twelve-month period ending June 30, 2000.
(e) No First Contingent Shares shall be issued if the formula
provided under Section 1.04(b) above yields a zero or negative value, and no
Second Contingent Shares shall be issued if the formula provided under Section
1.04(c) above yields a zero or negative value; and in either such event NHTC
shall have no claim or cause of action against the Company, its successors or
assigns or any other person or entity (without prejudice, however, to the rights
of NHTC under Article VIII).
SECTION 1.05. Tax Values. The respective fair market values of the
discrete items (or categories of items) of Subject Assets as of the Closing
Date, the respective values (for tax purposes) of the discrete items (or
categories of items) of Assumed Liabilities as of the Closing Date, and the
allocation of the respective values of the Firm Shares and Assumed Liabilities
among the Subject Assets, shall be determined as soon as practicable after the
Closing Date (but in no event later than 60 days thereafter) through such
methodologies (including mutual agreement) as the parties hereto shall agree.
The parties hereto shall prepare their respective federal, state, local and
foreign income tax returns employing such valuations and shall not take a
position in any tax proceeding or tax audit, or otherwise, inconsistent with
such valuations; provided, however, that nothing
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contained in this Section 1.05 shall require any party to contest beyond (or
otherwise than by) the exhaustion of administrative remedies before any taxing
authority or agency, and no party shall be required to litigate before any
court, including, without limitation, United States Tax Court, any proposed
deficiency or adjustment by any taxing authority or agency which challenges any
such valuation. Each party hereto shall give each other party hereto (i) prompt
notice of the commencement of any tax audit or the assertion of any proposed
deficiency or adjustment by any taxing authority or agency which challenges any
such valuation and (ii) the opportunity to participate in any tax audit or tax
proceeding which challenges any such valuation.
SECTION 1.06. "Main Transaction" and "Transactions" Defined. The
transactions provided for above in this Article I are hereinafter sometimes
referred to as the "Main Transaction"; and the Main Transaction and other
transactions contemplated by this Agreement are hereinafter sometimes referred
to as the "Transactions".
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to NHTC and Holdings
(collectively, the "NHTC Parties"; and each individually, an "NHTC Party") that,
except as previously disclosed in writing to one or more of the NHTC Parties (in
this Article II (and Section 6.01(a)), "Previously Disclosed"):
SECTION 2.01. Organization and Existence. (a) The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Each Subsidiary (as defined below) of the
Company, all of which are included in the Subject Assets and the identities of
which have been Previously Disclosed, is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its Subsidiaries has the full corporate
power and authority to own and lease their respective properties and assets and
to carry on their respective businesses as and where such properties and assets
are now owned, leased and/or operated and such businesses are now conducted. The
Company has heretofore made available to the NHTC Parties true, correct and
complete copies of the respective certificates or articles of incorporation and
by-laws (or equivalent governing instruments), each as amended to the date
hereof, of the Company and each of its Subsidiaries. Each of the Company and
each of its Subsidiaries is duly licensed or qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
character of the properties and assets now owned and/or operated by it or the
nature of the business now conducted by it requires it to be so licensed or
qualified and in which failure to be so licensed or qualified could reasonably
be expected to have a material adverse effect on the condition (financial or
otherwise), business, properties, assets, liabilities, capitalization, financial
position, operations, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, or on the ability of the Company to perform its
respective obligations under this Agreement and/or to consummate the
Transactions (a "Company Material Adverse Effect").
(b) The Company has made available to the NHTC Parties the original
or true copies of the minute books and stock transfer records of the Company and
its
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Subsidiaries. Such stock transfer records are current and accurate in all
material respects.
(c) For the purposes of this Agreement, the term "Subsidiary"
means, of any person or entity, any other entity of which the securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors (or other persons performing similar functions) are
directly or indirectly owned by such first person or entity. The Company does
not own, directly or indirectly, any equity or proprietary interests or
securities of any entity or enterprise organized under the laws of the United
States, any state thereof, the District of Columbia or any other domestic or
foreign jurisdiction, other than the Subsidiaries thereof Previously Disclosed.
SECTION 2.02. Consents, Authorizations and Conflicts. (a) Neither the
execution and delivery by the Company of this Agreement, the Bill of Sale, the
Voting Trust Agreement, the Registration Rights Agreement (as defined in Section
6.02(i) hereof) or any of the other agreements, instruments, certificates or
other documents executed and delivered (or to be executed and delivered) by the
Company in connection with this Agreement and/or the Transactions (collectively,
the "Company Documents"), nor the consummation of the Transactions, nor the
performance by the Company of any of its other obligations hereunder or
thereunder, require or will require any governmental authority or private party
consent, waiver, approval, authorization or exemption (collectively, "Consents")
or the giving of any notice ("Notice") applicable to the Company (as opposed to
NHTC and Holdings) except for such Consents and Notices: (i) that have been duly
obtained (in the case of Consents) or given (in the case of Notices) and are
unconditional and in full force and effect, or (ii) of which the failure to
obtain (in the case of Consents) or give (in the case of Notices) could not
reasonably be expected to have a Company Material Adverse Effect.
(b) This Agreement and each other Company Document has been (or
prior to the Closing will be) duly authorized, executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, reorganization,
insolvency, fraudulent conveyance or similar laws of general application
relating to or affecting the enforcement of creditors' rights. The execution and
delivery by the Company of the Company Party Documents, the performance by the
Company of its respective obligations thereunder, and the consummation of the
Transaction, do not and will not contravene, conflict or be inconsistent with,
result in a breach of, constitute a violation of or default under, or require or
result in any right of acceleration or to create or impose any Lien under: (i)
the Company's certificate of incorporation or by-laws, or (ii) except where such
contravention, conflict, inconsistency, breach, violation, default, right or
imposition could not reasonably be expected to have a Company Material Adverse
Effect, and assuming satisfaction of the matters referred to in Section 2.02(a):
(x) any Laws applicable or relating to the Company or any of the businesses or
assets of the Company or any Subsidiary thereof, or (y) any Company Permit (as
defined in Section 2.07) or Company Contract.
SECTION 2.03. Company Financial Statements. (a) The books of account
and other financial and accounting records of the Company and its Subsidiaries
are, and during the respective periods covered by the Company Financial
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Statements (as hereinafter defined) were, correct and complete in all material
respects, fairly and accurately reflect or reflected their respective income,
expenses, assets and liabilities, including the nature thereof and the
transactions giving rise thereto, and provide or provided a fair and accurate
basis for the preparation of the Company Financial Statements. On or before
April 10, 1997, the Company will deliver to the NHTC Parties the following
unaudited financial statements of the Company (the "Company Financial
Statements"): Consolidated Balance Sheet as of December 31, 1997 and
Consolidated Statements of Income and Consolidated Statement of Cash Flows for
the periods then ended. The Company Financial Statements will be prepared in
conformity with GAAP, consistently applied, and will be correct and complete in
all material respects, and fairly present the consolidated financial position of
the Company as of the respective dates thereof and the consolidated results of
its operations and cash flows for the periods covered thereby.
(b) As of the date of this Agreement, neither the Company nor its
Subsidiaries has any indebtedness, liabilities or obligations (absolute,
contingent or otherwise) other than those: (i) that will be set forth or
reserved against in the most recent of the Company Financial Statements, (ii)
incurred since the Company Base Date in the ordinary course of its business or
otherwise consistent with recent past practice that are, individually and in the
aggregate, of an immaterial nature and amount, (iii) arising under $645,000
aggregate principal amount of 12 1/2% Promissory Notes of the Company ("Bridge
Notes") and warrants to purchase Common Stock of the Company ("Company
Warrants") issued after the Company Base Date, (iv) arising under Laws, Company
Permits and/or Company Contracts, and (v) which could not reasonably be expected
to have a Company Material Adverse Effect.
SECTION 2.04. Title to Subsidiary Shares. The Company or one or more of
its Subsidiaries is the record and beneficial owner of all of the outstanding
capital stock of each Subsidiary of the Company, free and clear of all Liens
(other than Permitted Liens).
SECTION 2.05. Company Properties; Liens. The Company has good and
marketable title to the Subject Assets, free and clear of all Liens (other than
Permitted Liens). Each Subsidiary of the Company has good and marketable title
to its interests in its properties and assets (real, personal or mixed, tangible
or intangible), free and clear of all Liens (other Permitted Liens).
SECTION 2.06. Company Insurance. The Company has heretofore delivered
to the NHTC Parties a true, correct and complete list of all insurance policies
and fidelity bonds covering the assets, business, equipment, properties,
operations, employees, officers and directors of the Company and its
Subsidiaries. There are no material claims pending under any such policies or
material disputes with underwriters, and all premiums due and payable have been
paid. There are no pending or threatened terminations with respect to any such
policies, and the Company and its Subsidiaries are in compliance in all material
respects with all conditions contained therein. All such policies are in full
force and effect.
SECTION 2.07. Company Litigation and Compliance. (a) Except as
Previously Disclosed or (in the case of the following clauses (iii) and (v)
only) where such events or circumstances could not reasonably be expected to
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have a Company Material Adverse Effect: (i) there are no governmental authority
or private party actions, suits, claims, proceedings or investigations pending
or threatened against the Company, any Subsidiary thereof or any Company
Securityholder: (x) relating to either the Company, any Subsidiary thereof or
any properties or assets now or previously owned, leased or operated by the
Company or any Subsidiary thereof, (y) which questions or challenges the
validity of this Agreement or any other Company Party Document or any action
taken or to be taken by the Company or any Company Securityholder pursuant
thereto, or (z) which questions or challenges the Company's or any of its
Subsidiary's right, title or interest in or to any of its properties or assets;
(ii) neither the Company nor any Subsidiary thereof is the subject of any
judgment, order or decree of any governmental authority, court or arbitrator;
(iii) the Company and each of its Subsidiaries is in compliance with all
federal, state, local and foreign laws, statutes, ordinances, codes, judgments,
orders, decrees, directives, rules and regulations of any governmental
authority, court or arbitrator ("Laws") applicable or relating to its business,
properties or assets; (iv) neither the Company nor any of its Subsidiaries has
engaged in any unfair trade practice, committed any commercial or other fraud,
paid or provided any kickbacks, bribes or other gratuitous goods or services in
order to solicit, secure or maintain any business or commercial relationship, or
committed any act or omission actionable under the federal Racketeer Influenced
and Corrupt Organizations Act, as amended ("RICO"), or any similar state Laws,
or under the federal Foreign Corrupt Practices Act (assuming for this purpose
that the Company has securities registered under Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) or any similar state
Laws, nor has any Company Securityholder or any other person or entity engaged
in or committed any such acts or omissions or made any such payments in order to
benefit, directly or indirectly, the Company, any Subsidiary or the prospects
thereof; and (v) the Company and each Subsidiary thereof has obtained all
governmental licenses, permits, rights, privileges, registrations, exemptions,
required reports, franchises, authorizations and other consents which are
required under any applicable Laws ("Permits") to own and/or operate the
respective businesses, properties, assets and operations of the Company and its
Subsidiaries ("Company Permits"). All Company Permits are valid and in full
force and effect, and there exists no default or violation by the Company under
any Company Permit which could reasonably be expected to have a Company Material
Adverse Effect. No event, act or omission has occurred which has resulted, or
(with or without notice, the passage of time or both) could reasonably be
expected to result, in the revocation or non-renewal of any Company Permit the
revocation or non-renewal of which could reasonably be expected to have a
Company Material Adverse Effect.
SECTION 2.08. Company Contracts. (a) In this Agreement, the term: (i)
"Contract" means any contract, agreement, instrument, undertaking, bid,
commitment or arrangement, written or oral, of any kind or description
whatsoever (including without limitation all leases (of real or personal
property), licenses, indentures, credit agreements, debt instruments,
guarantees, mortgages, security agreements, joint venture agreements, company or
business acquisition or disposition agreements, concession agreements,
management agreements, consulting agreements, employment agreements, powers of
attorney, agency agreements, equipment purchase orders, customer purchase
orders, supply orders, indemnity agreements, and agreements or covenants not to
compete); and (ii) the term "Company Contract" means any Contract to which the
Company or any of its Subsidiaries is a party or by which any of their
properties or assets are subject or bound.
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(b) The Company has Previously Disclosed all Company Contracts
(other than routine purchase or supply orders, those for routine services
provided to the Company or a Subsidiary thereof, and those terminable at will or
upon 60 days' or less notice without the payment of any penalty, bonus,
severance payment or additional compensation) existing on the date hereof, and
provided to the NHTC Parties true, complete and correct copies of all such
Company Contracts requested to be reviewed thereby. Except where such event or
circumstance could not reasonably be expected to have a Company Material Adverse
Effect: (i) all Company Contracts are in full force and effect in accordance
with the written terms thereof, and there are no outstanding defaults by the
Company, any Subsidiary thereof or any other party under any Company Contract,
(ii) no event, act or omission has occurred which has resulted, or (with or
without notice, the passage of time or both) could reasonably be expected to
result, in a default under any Company Contract, and (iii) no other party to any
Company Contract has asserted the right, and no such party has any right, to
renegotiate or modify the terms or conditions of any Company Contract.
SECTION 2.09. Company Taxes. (a) The Company and each Subsidiary
thereof have filed all Tax returns required to be filed by them, which returns
are complete and correct in all material respects, and neither the Company nor
any Subsidiary is in default in the payment of any Taxes which were payable
pursuant to said return, except where the failure to so file or such default
could not reasonably be expected to have a Company Material Adverse Effect.
Neither the Company nor any Subsidiary thereof has, since their respective
inceptions, been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code. As of December 31, 1996, the Company
and each of its Subsidiaries has paid or accrued on its books and records all
liability for Taxes with respect to all periods or portions thereof ending on or
before such date. For the period January 1, 1997 through the Closing Date,
neither the Company nor any Subsidiary thereof has incurred any liability for
Taxes other than Taxes arising in the ordinary course of business with respect
to such period. Neither the Company nor any Subsidiary thereof: (i) is under
audit, examination or review by any taxing authority nor has any such audit,
examination or review been threatened; (ii) has received notice of any proposed
or actual assessment or deficiency with respect to Taxes; (iii) has extended the
statute of limitation with respect to the assessment or collection of any Taxes.
(b) For purposes of this Agreement, the terms "Tax" or "Taxes" mean
all taxes, charges, levies or other like assessments, including without
limitation all net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, capital, payroll, employment, excise, stamp,
property or other taxes, together with any interest and any penalties, additions
to tax or additional amounts imposed by any federal, state, local or foreign
governmental authority.
SECTION 2.10. Company Employee Plans. (a) Except as Previously
Disclosed, there is no, and has not been for the five-year period preceding the
Closing Date any, "employee benefit plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) which (x)
is or was subject to any provision of ERISA, and (y) is or was maintained,
administered or contributed to by the Company or any ERISA Affiliate (as defined
below) thereof that covers any employee or former employee of the Company or any
ERISA Affiliate thereof or under which the Company or any such ERISA Affiliate
has any material liability, which has not, as of the date hereof,
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been disclosed in writing to NHTC and a copy thereof delivered to the NHTC
Parties. Such plans are hereinafter referred to collectively as the "Company
Employee Plans"; and for purposes of this Agreement, "ERISA Affiliate" means, of
any person or entity, any other person or entity which is a member of a
controlled group of corporations with such person (within the meaning of Section
414(b), 414(c) or 414(m) of the Code).
(b) Except as Previously Disclosed, there are no material
liabilities relating to any Company Employee Plan. Prior to the date hereof
there has been no amendment to, written interpretation or announcement (whether
or not written) by the Company or any of its ERISA Affiliates relating to, or
change in employee participation or coverage under, any Company Employee Plan
which would increase the expense of maintaining such Company Employee Plan above
the level of the expense incurred in respect thereof for the fiscal quarter
ended on December 31, 1996. Each Company Employee Plan is and has been since
inception in compliance in all material respects with the applicable provisions
of ERISA and the applicable provisions of the Code. All contributions required
to be made to each Company Employee Plan have been timely made. Each Company
Employee Plan intended to be qualified under Section 401 of the Code (if any) is
so qualified and has received a favorable determination letter from the U.S.
Internal Revenue Service ("IRS"). No Company Employee Plan is or was a "defined
benefit plan", as defined in Section 3(35) of ERISA, or a "multiemployer plan",
as defined in Section 3(37)(A) of ERISA. There are no pending or threatened
investigations, audits, examinations or inquiries by any governmental authority
involving any Company Employee Plan, no threatened or pending claims (except for
claims for benefits payable in the ordinary course), suits or proceedings
against any Company Employee Plan or asserting any rights or claims to benefits
under any Company Employee Plan which could give rise to any liability, nor are
there any facts which could give rise to any liability in the event of any such
investigation, audit, examination, inquiry, claim, suit or proceeding.
SECTION 2.11. Company Environmental Compliance. (a) Except where such
events or circumstances could not reasonably be expected to have a Company
Material Adverse Effect: (i) the respective properties and operations of the
Company and its Subsidiaries are in compliance with all applicable Laws and
Permits regulating, relating to or imposing liability or standards of conduct
relating to environmental matters or the protection of human health or the
environment ("Environmental Laws"); (ii) neither the Company nor any Subsidiary
thereof has received any citation, summons, order, complaint, penalty,
investigation or review, or request for information or other action, by any
governmental authority or private party with respect to any: (x) alleged
violation by the Company or any Subsidiary thereof of any Environmental Laws,
(y) alleged failure by the Company or any Subsidiary thereof to have any Permit
under any Environmental Laws, or (z) use, possession, generation, treatment,
storage, recycling, transportation or disposal (collectively "Management") or
"release" (as defined in the Comprehensive Environmental Response, Compensation
and Liability of Act of 1980, as amended ("CERCLA")) of any Hazardous Material
(as hereinafter defined) by or on behalf of the Company or any Subsidiary
thereof; and (iii) no Hazardous Material Managed by or on behalf of the Company
or any Subsidiary thereof has been "released" on any property of the Company or
any Subsidiary thereof, or has come to be located at any site (including any
property of the Company or any Subsidiary thereof) which is listed or proposed
for listing on the National Priority List under CERCLA, the federal
Comprehensive Environmental Response, Compensation and Liability Information
System
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("CERCLIS") or on any similar state list, or which is the subject of federal,
state or local enforcement actions or other investigations which may lead to
claims for investigation, clean-up costs, remedial work, damages to natural
resources or for personal injury claims, including, but not limited to, claims
under CERCLA.
(b) For purposes of this Agreement, the term "Hazardous Material"
means and includes any hazardous or toxic or polluting substance or waste,
including petroleum products and radioactive materials.
SECTION 2.12. Finder's Fees. Except as Previously Disclosed, there is
no investment banker, broker, finder or other intermediary which has been
retained by, or is authorized to act on behalf of, the Company, any Subsidiary
of the Company or any principal stockholder of the Company who may be entitled
to any fee or commission from either of the NHTC Parties or any of their
respective affiliates upon consummation of, or otherwise in connection with, the
Transaction.
SECTION 2.13. Absence of Certain Changes. Since the Company Base Date,
except as Previously Disclosed or as consented to by either of the NHTC Parties:
(A) the Company and its Subsidiaries have conducted their respective businesses
only in the ordinary course and/or otherwise consistent with recent past
practice; (B) there has been no material adverse change in the condition
(financial or otherwise), business, properties, assets, liabilities,
capitalization, financial position, operations, results of operations or
prospects of the Company and its Subsidiaries, taken as a whole, or on the
ability of the Company to perform its respective obligations under this
Agreement and to consummate the Transactions; and (C) without intending to limit
the generality of the foregoing, neither the Company nor any Subsidiary thereof
has:
(i) amended its certificate or articles of incorporation or
by-laws;
(ii) made or agreed to make any increase in the compensation
payable to any officer, director, employee, consultant, agent or
representative, or paid or agreed to pay any bonus or extraordinary
compensation to any such person;
(iii) entered into or completed any transaction or Company
Contract, or amended or terminated any transaction or Company Contract,
except: (1) Bridge Notes and Company Warrants, substantially similar to
those in existence at the date hereof, issued to new investors in the
Company, and (2) transactions and agreements entered into in the
ordinary course of business and/or otherwise consistent with recent
past practice;
(iv) cancelled or waived any claim or right of substantial
value;
(v) increased (or experienced any adverse change in any
assumption underlying any method of calculating) bad debts,
contingencies or other reserves from that reflected in the Company
Financial Statements;
(vi) sold, assigned, transferred, licensed or otherwise
disposed of, encumbered, permitted to lapse, or suffered any Lien
(other than Permitted
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Liens) on or with respect to, any of its properties or assets, except
in the ordinary course of business or otherwise pursuant to Company
Contracts Previously Disclosed;
(vii) issued or sold any debt securities (other than Bridge
Notes, substantially similar to those in existence at the date hereof),
or granted any rights calling for the issuance or sale of any debt
securities (including without limitation options, warrants, convertible
or exchangeable securities or similar rights) (other than Company
Warrants Notes, substantially similar to those in existence at the date
hereof);
(viii) created or otherwise become liable with respect to any
indebtedness for borrowed money (except Bridge Notes) or the purchase
of property, plant or equipment;
(ix)guaranteed, indemnified or otherwise became liable for the
obligations or liabilities of another person or entity; or
(x) agreed or committed, whether or not in writing, to do any
of the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE NHTC PARTIES
Each of NHTC and Holdings hereby represents and warrants to the Company
that, except as previously disclosed in the SEC Filings (as defined in Section
3.12) or otherwise in writing to the Company (in this Article III (and Section
6.02(a)), "Previously Disclosed"):
SECTION 3.01. Organization and Existence. (a) NHTC is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Florida. Holdings is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Each other
Subsidiary of NHTC, the identities of which has been Previously Disclosed, is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Each of NHTC and its Subsidiaries has
the full corporate power and authority to own and lease their respective
properties and assets and to carry on their respective businesses as and where
such properties and assets are now owned and/or operated and such businesses are
now conducted. NHTC has heretofore made available to the Company true, correct
and complete copies of the respective certificates or articles of incorporation
and by-laws (or equivalent governing instruments), each as amended to the date
hereof, of NHTC, Holdings and each other Subsidiary of NHTC. Each of NHTC and
each of its Subsidiaries is duly licensed or qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
character of the properties and assets now owned and/or operated by it or the
nature of the business now conducted by it requires it to be so licensed or
qualified and in which failure to be so licensed or qualified could reasonably
be expected to have a material adverse effect on the condition (financial or
otherwise), business, properties, assets, liabilities, capitalization, financial
position, operations, results of operations or prospects of NHTC and its
Subsidiaries, taken as a
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whole, or on the ability of NHTC or Holdings to perform their respective
obligations under this Agreement and/or to consummate the Transactions (an "NHTC
Material Adverse Effect").
(b) NHTC does not own, directly or indirectly, any equity or
proprietary interests or securities of any entity or enterprise organized under
the laws of the United States, any state thereof, the District of Columbia or
any other domestic or foreign jurisdiction, other than Subsidiaries thereof
Previously Disclosed.
(c) Holdings is a special purpose corporation formed solely for the
purpose of engaging in the Transactions. Holdings has virtually no assets or
liabilities, and since the date of its incorporation Holdings has not engaged in
any business or other activities except in connection with the Transactions.
SECTION 3.02. Consents, Authorizations and Conflicts. (a) Neither the
execution and delivery by the Voting Trustee of the Voting Trust Agreement nor
the execution and delivery by the NHTC Parties of this Agreement, the Bill of
Sale (in the case of Holdings), the Registration Rights Agreement (in the case
of NHTC) or any of the other agreements, instruments, certificates or other
documents executed and delivered (or to be executed and delivered) by either
NHTC Party in connection with this Agreement and/or the Transactions
(collectively (including the Voting Trust Agreement), the "NHTC Party
Documents"), nor the consummation of the Transaction, nor the performance by
either NHTC Party or the Voting Trustee of their other respective obligations
thereunder, require any Consent or any Notice applicable to either NHTC Party or
the Voting Trustee (as opposed to any Company Party) (including without
limitation such Consents and Notices as may be necessary or appropriate in order
to preserve for (x) the educational/vocational operations and facilities of NHTC
and its Subsidiaries (the "NHTC Educational Facilities") their accredited
status, and (y) students of the NHTC Educational Facilities, as such, access to
the financial aid programs to which they currently have access, at substantially
current levels) except for such Consents and Notices: (i) that have been duly
obtained (in the case of Consents) or given (in the case of Notices) and are
unconditional and in full force and effect, or (ii) of which the failure to
obtain (in the case of Consents) or give (in the case of Notices) could not
reasonably be expected to have an NHTC Material Adverse Effect.
(b) This Agreement and each other NHTC Party Document has been (or
prior to the Closing will be) duly authorized, executed and delivered by the
NHTC Party(ies) party thereto and constitute the legal, valid and binding
obligations of the NHTC Party(ies) party thereto enforceable against such NHTC
Party(ies) in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, reorganization, insolvency,
fraudulent conveyance or similar laws of general application relating to or
affecting the enforcement of creditors' rights. The execution and delivery by
the NHTC Parties and the Voting Trustee of the NHTC Party Documents to which
they are respectively a party, the performance by the NHTC Parties and the
Voting Trustee of their respective obligations thereunder, and the consummation
of the Transaction, do not will not contravene, conflict or be inconsistent
with, result in a breach of, constitute a violation of or default under, or
require or result in any right of acceleration or to create or impose any Lien
under: (i) either NHTC Party's certificate or articles of incorporation or
by-laws, or (ii) except where such contravention, conflict, inconsistency,
breach,
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violation, default, right or imposition could not reasonably be expected to have
an NHTC Material Adverse Effect, and assuming satisfaction of the matters
referred to in Section 3.02(a): (x) any Laws applicable or relating to either
NHTC Party or the Voting Trustee or any of the businesses or assets of NHTC or
any Subsidiary thereof, or (y) any NHTC Permit (as defined in Section 3.07) or
NHTC Contract (as defined in Section 3.08).
SECTION 3.03. NHTC Financial Statements. (a) The books of account and
other financial and accounting records of NHTC and its Subsidiaries are, and
during the respective periods covered by the NHTC Financial Statements (as
hereinafter defined) were, correct and complete in all material respects, fairly
and accurately reflect or reflected their respective income, expenses, assets
and liabilities, including the nature thereof and the transactions giving rise
thereto, and provide or provided a fair and accurate basis for the preparation
of the NHTC Financial Statements. Such books of account and records have been
maintained in accordance with the Exchange Act and all applicable rules and
regulations of: (i) the U.S. Securities and Exchange Commission ("SEC"), (ii)
the U.S. Department of Education ("USDOE"), (iii) the Florida Department of
Education and its State Board of Independent Postsecondary, Vocational,
Technical, Trade and Business Schools (the "Florida State Board"), and (iv) all
applicable accreditation bodies who have presently accredited any of the NHTC
Educational Facilities. Prior to the date hereof NHTC has delivered to the
Company the audited and unaudited financial statements of NHTC appearing in the
SEC Filings (the "NHTC Financial Statements"). The NHTC Financial Statements
include the consolidated balance sheet of NHTC as of September 30, 1996 (the
"NHTC Base Date"). The NHTC Financial Statements have been prepared in
conformity with GAAP, consistently applied, are correct and complete in all
material respects, and fairly present the consolidated financial position of
NHTC as of the respective dates thereof and the consolidated results of its
operations and cash flows for the periods covered thereby.
(b) As of the date of this Agreement, neither NHTC nor its
Subsidiaries has any indebtedness, liabilities or obligations (absolute,
contingent or otherwise) other than those: (i) set forth or reserved against in
the most recent of the NHTC Financial Statements, (ii) incurred since the NHTC
Base Date in the ordinary course of its business or otherwise consistent with
recent past practice that are, individually and in the aggregate, of an
immaterial nature and amount, (iii) arising under Laws, NHTC Permits and/or NHTC
Contracts, and (iv) which could not reasonably be expected to have an NHTC
Material Adverse Effect.
SECTION 3.04. NHTC Capitalization. (a) The authorized capital stock of
NHTC consists of: (i) 40,000,000 shares of NHTC Common Stock, of which (A)
11,900,471 shares are issued and outstanding, (B) 648,666 shares are reserved
for issuance under outstanding options granted under the NHTC Plan prior to the
date hereof, (C) ________________ shares are reserved for issuance under Class A
Warrants and Class B Warrants (collectively, "NHTC Warrants") issued prior to
the date hereof, and (D) 5,800,000 are reserved for issuance as the Firm Shares;
and (ii) 1,500,000 shares of undesignated Preferred Stock, par value $.001 per
share, none of which are issued or outstanding. All of the shares described in
the foregoing clause (i)(A) have been, and all of the Firm Shares, Contingent
Shares and shares of NHTC Common Stock to be issued in lieu of the shares of
Company Common Stock issuable pursuant to Section 1.04(b) of the Fruitseng
Acquisition Agreement (as such provision shall be modified and
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amended as contemplated under Section 9.02 hereof) will (upon the issuance and
delivery of certificates therefor) be, duly authorized, validly issued, fully
paid and nonassessable, and no personal liability attaches to, or will attach
to, the ownership thereof. Except as Previously Disclosed or hereinabove
described, there are no issued, outstanding or existing: (1) preemptive or
similar rights with respect to the issuance or sale of any capital stock of
NHTC; (2) securities convertible into or exchangeable for any shares of capital
stock of NHTC or any Subsidiary thereof; (3) options, warrants or other rights
to purchase or subscribe for any shares of capital stock of NHTC or for
securities convertible into or exchangeable for any shares of capital stock of
the NHTC or any Subsidiary thereof; or (4) agreements or commitments of any kind
or description relating to the issuance or purchase of any shares of capital
stock of NHTC or any Subsidiary thereof, any such convertible or exchangeable
securities or any such options, warrants or other rights.
(b) NHTC or one or more of its Subsidiaries is the record and
beneficial owner of all of the outstanding capital stock of each Subsidiary of
NHTC, free and clear of all Liens (other than Permitted Liens). Holdings is a
direct, wholly-owned subsidiary of NHTC.
SECTION 3.05. NHTC Properties; Liens. Each of NHTC and each of its
Subsidiaries has good and marketable title to its interests in its properties
and assets (real, personal or mixed, tangible or intangible), free and clear of
all Liens (other than Permitted Liens).
SECTION 3.06. NHTC Insurance. NHTC has heretofore delivered to the
Company a true, correct and complete list of all insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of NHTC and its Subsidiaries. There are no
material claims pending under any such policies or material disputes with
underwriters, and all premiums due and payable have been paid. There are no
pending or threatened terminations with respect to any such policies, and NHTC
and its Subsidiaries are in compliance in all material respects with all
conditions contained therein. All such policies are in full force and effect.
SECTION 3.07. NHTC Litigation and Compliance. (a) Except as Previously
Disclosed or (in the case of the following clauses (iii) and (v) only) where
such events or circumstances could not reasonably be expected to have an NHTC
Material Adverse Effect: (i) there are no governmental authority or private
party actions, suits, claims, proceedings or investigations pending or
threatened against NHTC, Holdings, any other Subsidiary of NHTC or any principal
stockholder thereof: (x) relating to either NHTC, Holdings, any other Subsidiary
of NHTC or any properties or assets now or previously owned, leased or operated
by NHTC, Holdings or any other Subsidiary of NHTC, (y) which questions or
challenges the validity of this Agreement or any other NHTC Party Document or
any action taken or to be taken by NHTC or Holdings pursuant thereto, or (z)
which questions or challenges NHTC's or any of its Subsidiary's right, title or
interest in or to any of its properties or assets; (ii) neither NHTC, Holdings
nor any other Subsidiary of NHTC is the subject of any judgment, order or decree
of any governmental authority, court or arbitrator; (iii) NHTC and each of its
Subsidiaries is in compliance with all Laws applicable or relating to its
business, properties or assets; (iv) neither NHTC nor any of its Subsidiaries
has engaged in any unfair trade practice, committed any
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commercial or other fraud, paid or provided any kickbacks, bribes or other
gratuitous goods or services in order to solicit, secure or maintain any
business or commercial relationship, or committed any act or omission actionable
under RICO or any similar state Laws, or under the federal Foreign Corrupt
Practices Act or any similar state Laws, nor has any principal stockholder or
any other person or entity engaged in or committed any such acts or omissions or
made any such payments in order to benefit, directly or indirectly, NHTC, any
Subsidiary or the prospects thereof; and (v) NHTC and each Subsidiary thereof
has obtained all Permits to own and/or operate the respective businesses,
properties, assets and operations of the Company and its Subsidiaries (including
without limitation such Permits as may be necessary or appropriate in order
afford to students of the NHTC Educational Facilities, as such, access to the
financial aid programs described in the SEC Filings, at substantially current
levels) ("NHTC Permits"). All NHTC Permits are valid and in full force and
effect, and there exists no default or violation by the Company under any
Company Permit which could reasonably be expected to have an NHTC Material
Adverse Effect. No event, act or omission has occurred which has resulted, or
(with or without notice, the passage of time or both) could reasonably be
expected to result, in the revocation or non-renewal of any NHTC Permit the
revocation or non-renewal of which could reasonably be expected to have an NHTC
Material Adverse Effect.
SECTION 3.08. NHTC Contracts. (a) In this Agreement, the term "NHTC
Contract" means any Contract to which NHTC, Holdings or any other Subsidiary of
NHTC is a party or by which any of their properties or assets are subject or
bound.
(b) NHTC has Previously Disclosed all NHTC Contracts (other than
routine purchase or supply orders, those for routine services provided to the
Company or a Subsidiary thereof, and those terminable at will or upon 60 days'
or less notice without the payment of any penalty, bonus, severance payment or
additional compensation) existing on the date hereof, and provided to the
Company true, complete and correct copies of all such NHTC Contracts requested
to be reviewed thereby. Except where such event or circumstance could not
reasonably be expected to have an NHTC Material Adverse Effect: (i) all NHTC
Contracts are in full force and effect in accordance with the written terms
thereof, and there are no outstanding defaults by NHTC, any Subsidiary thereof
or any other party under any NHTC Contract, (ii) no event, act or omission has
occurred which has resulted, or (with or without notice, the passage of time or
both) could reasonably be expected to result, in a default under any NHTC
Contract, and (iii) no other party to any NHTC Contract has asserted the right,
and no such party has any right, to renegotiate or modify the terms or
conditions of any NHTC Contract.
SECTION 3.09. NHTC Taxes. NHTC and each Subsidiary thereof have filed
all Tax returns required to be filed by them, which returns are complete and
correct in all material respects, and neither NHTC nor any Subsidiary is in
default in the payment of any Taxes which were payable pursuant to said returns,
except where the failure to so file or such default could not reasonably be
expected to have an NHTC Material Adverse Effect. Neither NHTC nor any
Subsidiary thereof has, for the five-year period preceding the Closing Date,
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code. As of December 31, 1996, the Company and each of
its Subsidiaries has paid or accrued on its books and records all liability for
Taxes with respect to all periods or portions thereof ending on or before such
date. For the period
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January 1, 1997 through the Closing Date, neither the Company nor any Subsidiary
thereof has incurred any liability for Taxes other than Taxes arising in the
ordinary course of business with respect to such period. Neither the Company nor
any Subsidiary thereof: (i) is under audit, examination or review by any taxing
authority nor has any such audit, examination or review been threatened; (ii)
has received notice of any proposed or actual assessment or deficiency with
respect to Taxes; (iii) has extended the statute of limitation with respect to
the assessment or collection of any Taxes.
SECTION 3.10. NHTC Employee Plans. (a) Except as Previously Disclosed,
there is no, and has not been for the five-year period preceding the Closing
Date any, "employee benefit plan" (as defined in Section 3(3) of ERISA) which
(x) is or was subject to any provision of ERISA, and (y) is or was maintained,
administered or contributed to by NHTC or any ERISA Affiliate thereof that
covers any employee or former employee of NHTC or any ERISA Affiliate thereof or
under which NHTC or any such ERISA Affiliate has any material liability, which
has not, as of the date hereof, been disclosed in writing to the Company and a
copy thereof delivered to the Company. Such plans are hereinafter referred to
collectively as the "NHTC Employee Plans".
(b) Except as Previously Disclosed, there are no material
liabilities relating to any NHTC Employee Plan. Prior to the date hereof there
has been no amendment to, written interpretation or announcement (whether or not
written) by NHTC or any of its ERISA Affiliates relating to, or change in
employee participation or coverage under, any NHTC Employee Plan which would
increase the expense of maintaining such NHTC Employee Plan above the level of
the expense incurred in respect thereof for the fiscal quarter and fiscal year
ended on December 31, 1996. Each NHTC Employee Plan is and has been since
inception in compliance in all material respects with the applicable provisions
of ERISA and the applicable provisions of the Code. All contributions required
to be made to each NHTC Employee Plan have been timely made. Each NHTC Employee
Plan intended to be qualified under Section 401 of the Code (if any) is so
qualified and has received a favorable determination letter from the IRS. No
NHTC Employee Plan is or was a "defined benefit plan", as defined in Section
3(35) of ERISA, or a "multiemployer plan", as defined in Section 3(37)(A) of
ERISA. There are no pending or threatened investigations, audits, examinations
or inquiries by any governmental authority involving any NHTC Employee Plan, no
threatened or pending claims (except for claims for benefits payable in the
ordinary course), suits or proceedings against any NHTC Employee Plan or
asserting any rights or claims to benefits under any NHTC Employee Plan which
could reasonably be expected to give rise to any liability, nor are there any
facts which could give rise to any liability in the event of any such
investigation, audit, examination, inquiry, claim, suit or proceeding.
SECTION 3.11. NHTC Environmental Compliance. Except where such events
or circumstances could not reasonably be expected to have an NHTC Material
Adverse Effect: (i) the respective properties and operations of NHTC and its
Subsidiaries are in compliance with all applicable Environmental Laws; (ii)
neither NHTC nor any Subsidiary thereof has received any citation, summons,
order, complaint, penalty, investigation or review, or request for information
or other action, by any governmental authority or private party with respect to
any: (x) alleged violation by NHTC or any Subsidiary thereof of any
Environmental Laws, (y) alleged failure by NHTC or any Subsidiary thereof to
have any Permit under any Environmental Laws, or (z) Management or "release" (as
defined in
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CERCLA) of any Hazardous Material by or on behalf of NHTC or any Subsidiary
thereof; and (iii) no Hazardous Material Managed by or on behalf of NHTC or any
Subsidiary thereof has been released on any property of NHTC or any Subsidiary
thereof, or has come to be located at any site (including any property of NHTC
or any Subsidiary thereof) which is listed or proposed for listing on the
National Priority List under CERCLA, CERCLIS or on any similar state list, or
which is the subject of federal, state or local enforcement actions or other
investigations which may lead to claims for investigation, clean-up costs,
remedial work, damages to natural resources or for personal injury claims,
including, but not limited to, claims under CERCLA.
SECTION 3.12. SEC Filings. NHTC has previously delivered to the Company
true, correct and complete copies of the following documents filed with the SEC
(collectively, the "SEC Filings"): (i) NHTC's annual reports on Form 10-K for
its fiscal years ended December 31, 1995 and December 31, 1996, (ii) NHTC's
quarterly reports on Form 10-Q for its fiscal quarters ended March 31, 1996,
June 30, 1996 and September 30, 1996, (iii) NHTC's proxy or information
statements relating to meetings of, or actions taken without a meeting by the
stockholders of NHTC held since January 1, 1993, and (iv) all of its other
reports, registration statements (including under the Securities Act of 1933, as
amended (the "Securities Act")) and other filings (including amendments) filed
by NHTC with the SEC since January 1, 1996. Each SEC Filing filed under the
Exchange Act contains the disclosures required to be made therein under the
Exchange Act and, as of the date thereof, did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. Each SEC Filing filed under the Securities Act
contains the disclosures required to be made therein under the Securities Act
and, as of the date thereof, did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
SECTION 3.13. Finder's Fees. Except as Previously Disclosed, there is
no investment banker, broker, finder or other intermediary which has been
retained by, or is authorized to act on behalf of, NHTC, Holdings, any other
Subsidiary of NHTC or principal stockholder of NHTC who may be entitled to any
fee or commission from any of the Company Parties or any of their respective
affiliates upon consummation of, or otherwise in connection with, the
Transaction.
SECTION 3.14. Absence of Certain Changes. Since the NHTC Base Date,
except as Previously Disclosed or as consented to by the Company: (A) NHTC and
its Subsidiaries have conducted their respective businesses only in the ordinary
course and/or otherwise consistent with recent past practice; (B) there has been
no material adverse change in the condition (financial or otherwise), business,
properties, assets, liabilities, capitalization, financial position, operations,
results of operations or prospects of NHTC and its Subsidiaries, taken as a
whole, or on the ability of the NHTC Parties to perform their respective
obligations under this Agreement and to consummate the Transaction; and (C)
without intending to limit the generality of the foregoing, neither NHTC,
Holdings Company nor any other Subsidiary of NHTC has:
(i) amended its certificate or articles of incorporation or
by-laws;
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(ii) made or agreed to make any increase in the compensation
payable to any officer, director, employee, consultant, agent or
representative, or paid or agreed to pay any bonus or extraordinary
compensation to any such person;
(iii) entered into or completed any transaction or Company
Contract, or amended or terminated any transaction or Company Contract,
except: (1) the offer and issuance of shares of NHTC Common Stock in an
offering exempt from the registration requirements of the Securities
Act under Regulation S (the "Reg. S Offering"), and (2) transactions
and agreements entered into in the ordinary course of business and/or
are consistent with recent past practice;
(iv) cancelled or waived any claim or right of substantial
value;
(v) increased (or experienced any adverse change in any
assumption underlying any method of calculating) bad debts,
contingencies or other reserves from that reflected in the NHTC
Financial Statements;
(vi) sold, assigned, transferred, licensed or otherwise
disposed of, encumbered, permitted to lapse, or suffered any Lien
(other than Permitted Liens) on or with respect to, any of its
properties or assets, except in the ordinary course of business or
otherwise pursuant to NHTC Contracts Previously Disclosed;
(vii) declared, paid or set aside for payment any dividend or
other distribution (whether in cash, securities or other property) in
respect of any of its capital stock;
(viii) issued or sold any shares of its capital stock (other
than NHTC Common Stock pursuant to the Reg. S Offering) or debt
securities, or granted any rights calling for the issuance or sale of
any of the foregoing (including without limitation options, warrants,
convertible or exchangeable securities or similar rights);
(ix) purchased, redeemed or otherwise acquired (whether or
not for value) any shares of its capital stock;
(x) created or otherwise became liable with respect to any
indebtedness for borrowed money or the purchase of property, plant or
equipment;
(xi) guaranteed, indemnified or otherwise become liable for
the obligations or liabilities of another person or entity; or
(xii) agreed or committed, whether or not in writing, to do
any of the foregoing.
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SECTION 3.15. Nature of Transaction. NHTC acknowledges that the Main
Transaction is a purchase of a business in its entirety as a going concern to be
directed and operated by NHTC, and not an investment in, or a purchase and sale
of, securities under the Securities Act, Exchange Act or the securities or Blue
Sky laws of any state ("Blue Sky Laws"). NHTC is acquiring its 100% ownership
interest in the Subsidiaries of the Company for its own account for strategic
business purposes and with no present intention of offering, selling or
distributing of all or any part of such interest.
ARTICLE IV
OTHER REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Acquisition for Investment. (a) The Company hereby
acknowledges its understanding that the Firm Shares and any Contingent Shares to
be acquired by it (or by the Voting Trustee for its benefit) under Article I
(collectively, the "Main Transaction Shares") are not registered under the
Securities Act, or registered or qualified under any Blue Sky Laws, on the
grounds that the offering, sale, issuance and delivery thereof are exempt from
the registration and/or qualification requirements thereof, and that NHTC's
reliance on such exemption is predicated in part on the following
representation, warranties, covenants, agreements and acknowledgments of the
Company. The Company hereby represents and warrants to and covenants and agrees
with NHTC that the Company: (1) has been furnished with all information which
the Company deems necessary to evaluate the merits and risks of the acquisition
of the Main Transaction Shares; (2) has had the opportunity to ask questions and
receive answers concerning the information received about the Main Transaction
Shares and NHTC; (3) has been given the opportunity to obtain any additional
information the Company deems necessary to verify the accuracy of any
information obtained concerning the Main Transaction Shares and NHTC; (4) by
reason of its business and financial experience, and the business and financial
experience of those persons, if any, retained by the Company to advise it with
respect to such the Company's investment in the Main Transaction Shares, the
Company, together with such advisors (if any), has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of an investment in the Main
Transaction Shares; (5) is acquiring the Main Transaction Shares for the
Company's own account for investment purposes and with no present intention of
offering, selling or distributing of all or any part of the Main Transaction
Shares (or any interest therein), except as set forth in Section 4.01(b) below;
(6) received the offer to invest in the Main Transaction Shares on a personal
contact basis and not by means of any general solicitation or general
advertising; (7) understands that: (i) the Main Transaction Shares have not been
registered or qualified under the Securities Act or any Blue Sky Laws and cannot
be resold unless the Main Transaction Shares are subsequently so registered and
qualified or an exemption from such registration and qualification is available,
and (ii) neither NHTC nor any other person is obligated to effect such
registration or qualification (except to the extent provided in the Registration
Rights Agreement); (8) will not offer, sell, transfer, distribute or otherwise
dispose of the Main Transaction Shares except in compliance with the Securities
Act and all applicable Blue Sky Laws; (9) has adequate means of providing for
the Company's current needs and foreseeable contingencies and has no need for
its investment in the Main Transaction Shares to be liquid; (10) is able to bear
the economic risk of the investment in the Main Transaction Shares indefinitely;
(11) is currently able to afford the complete loss of such investment; and (12)
consents to the placing of a legend
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on the certificate(s) representing the Main Transaction Shares stating that such
securities have not been registered under the Securities Act and setting forth
the restrictions on transfer contemplated hereby and to the placing of a stop
transfer order on the books of NHTC (and any transfer agent thereof) against the
Main Transaction Shares until the same may be legally resold or distributed.
(b) NHTC hereby: (1) acknowledges its understanding that it is the
present intention of the Company to distribute, assign and/or otherwise transfer
to its stockholders, on a pro rata basis and as part of a complete liquidation
of the Company: (i) the Company's beneficial interest under the Voting Trust to
the Firm Shares, (ii) the Company's rights under this Agreement to receive the
First Contingent Shares (and all rights and claims associated therewith), and
the Company's beneficial interest under the Voting Trust to the First Contingent
Shares (if any), (iii) the Company's rights under this Agreement to receive the
Second Contingent Shares (and all rights and claims associated therewith); and
(iv) the Company's rights under the Registration Rights Agreement (such rights
under this Agreement and the Registration Rights Agreements, the "Associated
Rights"); (2) consents and agrees to such distribution, assignment and/or other
transfer being effected; and (3) to the extent that such Main Transaction Shares
and Associated Rights (or beneficial interests therein) are distributed,
assigned and/or otherwise transferred to such stockholders (and subsequently
assigned and/or otherwise transferred to their respective successors and
assigns), to recognize for all purposes such stockholders (and such respective
successors and assigns) (collectively, "Main Transaction Share Holders") as the
successors and assigns to the Company with respect to the Main Transaction
Shares and Associated Rights (or beneficial interests therein, as appropriate)
(subject to the terms and conditions of this Agreement and the Registration
Rights Agreement); provided, however, that prior to or simultaneously with any
such distribution, assignment and/or other transfer of any Main Transaction
Shares and/or Associated Rights the Company or transferring/assigning Main
Transaction Share Holders shall obtain, for the benefit of NHTC (among others),
representations, warranties, covenants, agreements and acknowledgments from its
transferee substantially similar to (or, at the transferor's option, more
favorable to NHTC than) those of the Company set forth above in Section 4.01(a).
SECTION 4.02. No Other Representations and Warranties. Each party
hereto acknowledges and agrees that no other party hereto has made to any other
party hereto (or to any other person or entity) any representation or warranty
with respect to this Agreement and/or the Transactions other than those
expressly set forth in Article II, III or IV hereof or in any other Company
Document or NHTC Party Document (as the case may be).
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
SECTION 5.01. Access to Records and Properties. (a) The Company shall
give the NHTC Parties and their counsel, accountants and lenders and the
respective officers, directors, employees, agents and representatives thereof,
such access (during normal business hours) to, and opportunity to examine, the
books, records, files, documents, properties and assets of the Company and its
Subsidiaries, and cause the officers, directors, employees, consultants, agents,
representatives, counsel and accountants of
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the Company and its Subsidiaries to furnish such financial and operating data
and other information with respect to the Company and its Subsidiaries, in each
case, as NHTC shall from time to time reasonably request. The NHTC Parties shall
give the Company and the Company's counsel, accountants and lenders, and the
respective officers, directors, employees, consultants, agents and
representatives thereof, such access (during normal business hours) to, and
opportunity to examine, the books, records, files, documents, properties and
assets of, NHTC and its Subsidiaries, and cause the officers, directors,
employees, agents, representatives, counsel and accountants of NHTC and its
Subsidiaries to furnish such financial and operating data and other information
with respect to the NHTC and its Subsidiaries, in each case, as the Company
shall from time to time reasonably request. Any investigation pursuant to this
Section 5.01 shall be conducted in such manner as not to interfere unreasonably
with the ordinary course of the business, operations or other activities of the
parties hereto or with the confidentiality respecting the transactions
contemplated by this Agreement.
(b) In the event the Closing shall not occur: (i) the Company and
its counsel, accountants and lenders, and the respective officers, directors,
employees, agents and representatives thereof, shall return all documents and
materials that are non-public, confidential and/or proprietary to NHTC which
have been furnished in connection herewith; and (ii) the NHTC Parties and their
counsel, accountants and lenders, and the respective officers, directors,
employees, agents and representatives thereof, shall return all documents and
materials that are non-public, confidential and/or proprietary to the Company
which have been furnished in connection herewith. However, nothing contained in
this Section 5.01 shall prohibit the Company, either NHTC Party or any such
other person or entity from (subject to the penultimate sentence of Section 5.03
and to Section 9.03) supplying or filing such documents, materials or other
information with such federal, state, local or foreign government, agency or
authority which any party hereto deems necessary or appropriate in connection
with the matters contemplated by Section 5.03.
SECTION 5.02. Operation of the Company and NHTC Parties. From the date
hereof to the Closing Date, or except to the extent that either NHTC Party shall
otherwise consent in writing, the Company shall operate its and its
Subsidiaries' businesses as presently operated and only in such a manner as
would be the ordinary course of business and/or consistent with recent past
practice. Without limiting the generality of the foregoing, the Company and each
NHTC Party shall (and shall cause each of its Subsidiaries to): (i) not be in
default or violation under any Laws applicable to its business, operations,
property or assets; (ii) (in the case of the NHTC Parties and their Subsidiaries
only) not merge or consolidate with any other entity, acquire any other business
or entity, or agree to do any of the foregoing; (iii) maintain its properties
and assets in good operating condition, order and repair (ordinary wear and tear
excepted), and notify the other such parties of any significant loss of, damage
to or destruction of any such properties or assets; (iv) use its reasonable best
efforts to preserve its present employees, reputation and business relationships
with persons and entities having business dealings with it; (v) use its
reasonable best efforts to preserve its present rights, privileges and
franchises; and (vi) refrain from taking any action, or fail to act in such a
way, that would render any of its representations and warranties contained in
Article II (including without limitation Section 2.13) (in the case of the
Company) or Article III (including without limitation Section 3.14) (in the case
of the NHTC Parties) inaccurate at
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and as of the Closing Date, and shall promptly advise the other such parties of
any such event or circumstance and of any other breach of any representation,
warranty, covenant, condition or obligation of such party hereunder.
SECTION 5.03. Consents and Notices. Promptly after the date hereof, the
Company and the NHTC Parties hereto shall use their respective reasonable best
efforts to obtain all Consents and give all Notices which may be necessary or
appropriate in order to consummate the Main Transaction and the other
transactions contemplated hereby (including without limitation such Consents and
Notices as may be necessary or appropriate to obtain from the USDOE or Florida
State Board), and to continue in effect, and to assure that the Company, NHTC
and their respective Subsidiaries shall to be entitled to have and enjoy, all of
the benefits of the Company Contracts, Company Permits and Subject Assets and
the NHTC Contracts and NHTC Permits after the Effective Time (including
preserving for (x) the NHTC Educational Facilities their accredited status, and
(y) students of the NHTC Educational Facilities, as such, access to the
financial aid programs to which they currently have access, at substantially
current levels). The parties hereto shall not (x) submit or file any documents,
materials or information to or with, or take any other action before or at the
request of, any governmental authority in respect of any Laws, NHTC Permit or
Company Permit, or (y) take any other action with respect to, or which may
affect NHTC's, the Company's or any of their respective Subsidiaries' rights
under, any NHTC Contract or Company Contract or NHTC Permit or Company Permit
without (in each case) first consulting with (in the case of the Company or
Company Securityholders) counsel to NHTC or (in the case of the NHTC Parties)
counsel to the Company. The parties hereto shall otherwise cooperate with each
other in discharging their respective obligations under this Section 5.03, and
shall promptly advise counsel to the other parties hereto of any difficulties
encountered in obtaining any such Consents or giving any such Notices.
SECTION 5.04. Best Efforts to Satisfy Conditions. Each of the Company
and each NHTC Party shall use its reasonable best efforts to cause the
conditions to the Closing set forth in Article VI hereof to be satisfied, to the
extent that the satisfaction of such conditions is in the control of such party,
as soon as practicable after the date hereof; provided, however, the foregoing
shall not constitute a limitation upon the covenants and obligations of any
party otherwise expressly set forth in this Agreement.
SECTION 5.05. Bridge Loan. It is the intention of the parties hereto
that, as soon as practicable after the date hereof, NHTC shall make an secured,
"bridge" loan to the Company (convertible into common equity of the Company)
(the "Company Bridge Loan") of not less than $500,000 nor more than $1,500,000
(the "Bridge Range"), on terms: (i) reasonably satisfactory to the Company, and
(ii) the same as, with respect to terms of payment and interest rate, and
otherwise generally comparable to (to the extent practicable), a "bridge" loan
to NHTC (convertible into common equity of NHTC) (the "NHTC Bridge Loan") to be
obtained from a source or sources previously disclosed by NHTC to the Company.
Accordingly, from and after the date hereof: (A) NHTC shall use its reasonable
best efforts in order to obtain the NHTC Bridge Loan, in such an amount within
the Bridge Range as shall be not less than the amount requested by the Company
for the Company Bridge Loan, and (B) the Company and NHTC shall negotiate
diligently and in good faith in order to agree upon mutually satisfactory terms
of the Company Bridge Loan (subject to the clause (ii) of the foregoing
sentence). Provided that
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Company and NHTC shall have so agreed upon such mutually satisfactory terms, and
that (having used its reasonable best efforts as aforesaid) NHTC shall have
obtained the NHTC Bridge Loan, on the date that (or the first business day after
the date that) the NHTC Bridge Loan shall have been made, NHTC shall make the
Company Bridge Loan, in such an amount within the Bridge Range as shall be not
less than the amount requested by the Company for the Company Bridge Loan.
ARTICLE VI
CONDITIONS TO THE MAIN TRANSACTION
SECTION 6.01. Conditions to Obligations of NHTC Parties. The obligation
of the NHTC Parties to consummate the Main Transaction and other Transactions is
subject to the satisfaction of the following conditions, each of which may be
waived by either NHTC Party.
(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of the Company set forth in Article II shall be
true and correct on the Closing Date as if made on as of the Closing Date. The
Company shall have performed the agreements and obligations required to be
performed by it under this Agreement prior to the Closing Date. The Company
shall have executed and delivered to the NHTC Parties a certificate or
certificates certifying to their compliance with the foregoing, in form and
substance reasonably satisfactory to the NHTC Parties. Notwithstanding the first
sentence of this Section 6.01(a): (1) from time to time on or prior to the
Closing, the Company shall be permitted to deliver to the NHTC Parties written
information which changes, modifies or supplements the representations and
warranties set forth in Section 2.01 (or Previously Disclosed) because of the
occurrence or non-occurrence of any event, or any circumstance arising, after
the date of this Agreement; (2) upon such delivery such information shall be
deemed to have been "Previously Disclosed" for purposes of Section 2.01 (and,
accordingly, the representations and warranties therein shall deemed to be
amended by such information), and (3) if such event(s) or circumstance(s)
result(s) in the aggregate in a Company Material Adverse Effect, then the
condition stated in the first sentence of this Section 6.01(a) shall be deemed
not to have been satisfied. If, notwithstanding (x) any failure of such
condition as provided in the foregoing clause "(3)", or (y) any
misrepresentation on the part of the Company as to which the NHTC Parties have
received written notice from or on behalf of the Company prior to the Closing,
the NHTC Parties proceed with the Closing, then such failure of condition and/or
such misrepresentation (as the case may be) shall be deemed for all purposes to
be waived.
(b) Charter, By-laws, etc. The Company shall have delivered to the
NHTC Parties a certificate signed by two or of more its officers certifying to:
(i) a true, correct and complete copy of the Company's certificate of
incorporation, (ii) a true, correct and complete copy of the Company's by-laws,
(iii) a true, correct and complete copy of all Company Board of Directors and
stockholder resolutions adopted in connection with this Agreement and/or the
Transactions, and (iv) the identity and signature of its officer or officers who
shall have executed this Agreement or any other Company Document on or before
the Closing Date.
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(c) Consents and Notices. All Consents and Notices which may be
necessary or appropriate in order for any NHTC Party to consummate the Main
Transaction or any of the other Transactions (including without limitation such
Consents and Notices as may be necessary or appropriate to obtain from the USDOE
or Florida State Board) and to continue in effect, and to assure that the
Company, NHTC and their respective Subsidiaries shall to be entitled to have and
enjoy, all of the benefits of the Company Contracts, Company Permits and Subject
Assets and the NHTC Contracts and NHTC Permits after the Effective Time
(including preserving for (x) the NHTC Educational Facilities their accredited
status, and (y) students of the NHTC Educational Facilities, as such, access to
the financial aid programs to which they currently have access, at substantially
current levels), shall have been duly obtained (in the case of Consents) or
given (in the case of Notices) and shall be unconditional and in full force and
effect.
(d) Legal Restraints. There shall not have been proposed or enacted
any Laws, or any change in any existing Laws, which prohibits or delays, or
threatens to prohibit or delay, the consummation of the Main Transaction or any
of the other Transactions or which could reasonably be expected to have a
Company Material Adverse Effect. No action, suit, claim or proceeding shall have
been commenced or threatened by any governmental authority or private party (i)
seeking to restrain, enjoin or hinder, or to seek damages from either NHTC Party
or any Subsidiary thereof on account, of the consummation of the Main
Transaction or any of the other Transactions, or (ii) which could reasonably be
expected to have a Company Material Adverse Effect.
(e) No Company Material Adverse Change. There shall have been no
material adverse change in the condition (financial or otherwise), business,
properties, assets, liabilities, capitalization, financial position, operations,
results of operations or prospects of the Company and its Subsidiaries, taken as
a whole, since the Company Base Date.
(f) Instruments of Transfer. The Company shall have executed and
delivered to Holdings the Bill of Sale and such other instruments of transfer as
Holdings shall reasonably request in order to further evidence and/or effect, of
record or otherwise, the sale and transfer of the Subject Assets (including,
without limitation, assignable Company Contracts).
(g) Receipt. The Voting Trustee shall have executed and delivered
to the NHTC Parties a written instrument, in form and substance reasonably
satisfactory to the NHTC Parties, acknowledging the Voting Trustee's receipt of
the certificate(s) representing the Firm Shares.
(h) Opinions of Counsel. The NHTC Parties shall have received an
opinion letter of Dechert Price & Rhoads, New York, New York, special counsel to
the Company, dated the Closing Date and in form and substance reasonably
satisfactory to counsel to the NHTC Parties. The NHTC Parties shall have
received an opinion letter of special counsel to the NHTC Parties with respect
to USDOE and Florida State Board matters, dated the Closing Date and in form and
substance reasonably satisfactory to counsel to the NHTC Parties.
(i) Name Change. The Company shall have changed its corporate
name to a name that does not include either of the terms "Global" or "Health".
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(j) Voting Trust. Neal R. Heller and Sir Brian Wolfson shall have
executed and delivered (and thereby, among other things, shall have agreed to
become the voting trustee(s) under) a voting trust agreement, covering the Firm
Shares, any First Contingent Shares and not less than the lesser of (x)
5,800,000 and (y) the number of shares of NHTC Common Stock on the Closing Date
owned by any one or more of Neal R. Heller, Elizabeth S. Heller and/or one or
more affiliates thereof (collectively, "Heller Persons"), in form and substance
reasonably satisfactory to Neal R. Heller, NHTC and the Company (the "Voting
Trust Agreement"). The Voting Trustee shall have issued to each Heller Person
who shall have contributed NHTC Common Stock to the Voting Trust as contemplated
by Section 6.02(n) hereof a certificate or certificates evidencing its
beneficial interest in such shares of NHTC Common Stock.
(k) Heller Options. The Board of Directors of the Company (or an
appropriate committee thereof) shall have granted or issued to Neal R. Heller
and/or Elizabeth S. Heller options to purchase 800,000 shares NHTC Common Stock
(in the aggregate), in form and substance reasonably satisfactory to the
Company.
(l) Financing. NHTC shall have consummated a private placement
equity financing reasonably satisfactory to it providing gross proceeds (after
the consummation of the Main Transaction) of not less than $8,000,000.
(m) Indemnifying Company Stockholders. (i) The Indemnifying Company
Stockholders (as defined in Section 8.01(c)) shall have executed and delivered
to the NHTC Parties one or more instruments by which they shall (i) agree to be
bound by the provisions of Article VIII hereof applicable to them, (ii) in
connection therewith, agree to be bound by Section 9.09 hereof, and (iii) agree
that their liability under such Article VIII shall be joint and several.
(n) Other Matters. The Company shall have furnished or caused to be
furnished to the NHTC Parties, in form and substance reasonably satisfactory to
the NHTC Parties or their counsel, such certificates and other evidences as the
NHTC Parties may reasonably request as to the satisfaction of the conditions
contained in this Section 6.01.
SECTION 6.02. Conditions to Obligations of the Company. The obligation
of the Company to consummate the Main Transaction and other Transactions is
subject to the satisfaction of the following conditions, each of which may be
waived by the Company.
(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of the NHTC Parties set forth in Article III
shall be true and correct on the Closing Date as if made on as of the Closing
Date. The NHTC Parties shall have performed the agreements and obligations
required to be respectively performed by them under this Agreement prior to the
Closing Date. The NHTC Parties shall have executed and delivered to the Company
a certificate or certificates certifying to their compliance with the foregoing,
in form and substance reasonably satisfactory to the Company. Notwithstanding
the first sentence of this Section 6.02(a): (1) from time to time on or prior to
the Closing, the NHTC Parties shall be permitted to deliver to the Company
written information which changes, modifies or supplements the representations
and warranties set forth in Section 3.01 (or Previously Disclosed) because of
the
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occurrence or non-occurrence of any event, or any circumstance arising, after
the Agreement Date; (2) upon such delivery such information shall be deemed to
have been "Previously Disclosed" for purposes of Section 3.01 (and, accordingly,
the representations and warranties therein shall deemed to be amended by such
information), and (3) if such event(s) or circumstance(s) result(s) in the
aggregate in an NHTC Material Adverse Effect, then the condition stated in the
first sentence of this Section 6.02(a) shall be deemed not to have been
satisfied. If, notwithstanding (x) any failure of such condition as provided in
the foregoing clause "(3)", or (y) any misrepresentation on the part of the NHTC
Parties as to which the Company has received written notice from or on behalf of
the NHTC Parties prior to the Closing, the Company proceeds with the Closing,
then such failure of condition and/or such misrepresentation (as the case may
be) shall be deemed for all purposes to be waived.
(b) Charter, By-laws, etc. Each NHTC Party shall have delivered to
the Company a certificate signed by two or more its officers certifying to: (i)
a true, correct and complete copy of such NHTC Party's certificate or articles
of incorporation, (ii) a true, correct and complete copy of such NHTC Party's
by-laws, (iii) a true, correct and complete copy of all such NHTC Party's Board
of Directors and stockholder resolutions adopted in connection with this
Agreement and/or the Transactions, and (iv) the identity and signature of its
officer or officers who shall have executed this Agreement or any other NHTC
Party Document on or before the Closing Date.
(c) Consents and Notices. All Consents and Notices which may be
necessary or appropriate in order for the Company to consummate the Main
Transaction or any of the other Transactions (including without limitation such
Consents and Notices as may be necessary or appropriate to obtain from the USDOE
or Florida State Board) and to continue in effect, and to assure that the
Company, NHTC and their respective Subsidiaries shall to be entitled to have and
enjoy, all of the benefits of the Company Contracts, Company Permits and Subject
Assets and the NHTC Contracts and NHTC Permits after the Effective Time
(including preserving for (x) the NHTC Educational Facilities their accredited
status, and (y) students of the NHTC Educational Facilities, as such, access to
the financial aid programs to which they currently have access, at substantially
current levels), shall have been duly obtained (in the case of Consents) or
given (in the case of Notices) and shall be unconditional and in full force and
effect.
(d) Legal Restraints. There shall not have been proposed or enacted
any Laws, or any change in any existing Laws, which prohibits or delays, or
threatens to prohibit or delay, the consummation of the Main Transaction or any
of the other transactions contemplated by this Agreement or which could
reasonably be expected to have an NHTC Material Adverse Effect. No action, suit,
claim or proceeding shall have been commenced or threatened by any governmental
authority or private party (i) seeking to restrain, enjoin or hinder, or to seek
damages from the Company or any Subsidiary thereof on account of the
consummation of the Main Transaction or any of the other Transactions, or (ii)
which could reasonably be expected to have an NHTC Material Adverse Effect.
(e) No NHTC Material Adverse Change. There shall have been no
material adverse change in the condition (financial or otherwise), business,
properties, assets, liabilities, capitalization, financial position, operations,
results of operations or prospects
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of NHTC and its Subsidiaries, taken as a whole, since the NHTC Base Date. NHTC
Common Stock shall continue to be quoted in the NASDAQ Small Cap market; and
there shall not have been proposed or enacted any Laws, or any change in any
existing Laws, and no action, suit, claim or proceeding shall have been
commenced or threatened by any governmental authority, the National Association
of Securities Dealers, Inc. or any private party seeking that would result in
the discontinuance of such listing.
(f) Instruments of Assumption. Holdings shall have executed and
delivered to the Company the Bill of Sale and such other instruments of
assumption as the Company shall reasonably request in order to further evidence
and/or effect, of record or otherwise, the assumption by Holdings of the Assumed
Liabilities.
(g) Firm Shares Certificates. NHTC shall have issued to the
Voting Trustee a certificate or certificates representing the shares of NHTC
Common Stock comprising the Firm Shares.
(h) Opinions of Counsel. The Company shall have received an opinion
letter of Lane & Mittendorf LLP, New York, New York, special counsel to the NHTC
Parties, dated the Closing Date and in form and substance reasonably
satisfactory to counsel to the Company. The Company shall have received an
opinion letter of special counsel to the NHTC Parties with respect to USDOE and
Florida State Board matters, dated the Closing Date and in form and substance
reasonably satisfactory to counsel to the Company.
(i) Registration Rights Agreement. NHTC shall have executed and
delivered to the Company a Registration Rights Agreement in form and substance
reasonably satisfactory to the Company (the "Registration Rights Agreement").
(j) Corporate Governance. The Board of Directors of NHTC shall have
been increased to by two (2), and Leo L. Azure, Jr. and Sir Brian Wolfson shall
have been appointed members of such Board to fill the vacancies created by such
increase; and Sir Brian Wolfson shall have been named Chairman of the Board of
Directors of NHTC by its Board of Directors. The Board of Directors of NHTC
shall have established an Executive Committee comprising the following four of
its directors: Neal R. Heller, Martin C. Licht, Leo L. Azure, Jr. and Sir Brian
Wolfson; such Executive Committee shall have been delegated the authority to act
in the place and stead of the Board of Directors of NHTC to the fullest extent
permitted under Florida corporate law; and Sir Brian Wolfson shall have been
named Chairman of such Committee. The Board of Directors of Holdings shall have
been fixed at such number as shall have been agreed upon on or before the
Closing Date by the Company and NHTC; and Sir Brian Wolfson shall have been
elected a member thereof and the Chairman of such Board; and Sir Brian Wolfson
shall have been named; and the remaining directorships of Holdings shall have
been filled with such persons as Sir Brian Wolfson and NHTC shall have agreed on
or before the Closing Date.
(k) Employment Agreement. NHTC shall have executed and delivered
to Sir Brian Wolfson an Employment Agreement in form and substance reasonably
satisfactory to the Company (the "Employment Agreement").
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(l) Management Compensation. NHTC shall have offered in writing to
the management personnel of the Company selected by it such committed
compensation packages (having salary, benefits, bonus, stock ownership/option
and other components) as shall be reasonably satisfactory to the Company. All
holders of compensatory options to purchase Company Common Stock shall have
agreed in writing to the termination thereof and the release of all obligations
of the Company thereunder, effective as of the Closing.
(m) Fruitseng Contingent Shares. Each of the persons and or
entities who shall, as of the Closing Date, be entitled to receive any portion
of the up to 369,350 shares of Common Stock of the Company issuable under
Section 1.04(b) of the Fruitseng Acquisition Agreement shall have agreed to
accept, in lieu of any shares of Common Stock of the Company, a number of shares
of NHTC Common Stock per each such share of Common Stock of the Company in the
same proportion that (i) the number of Firm Shares bears to (ii) the number of
shares of Common Stock of the Company, and shares issuable under Company
Warrants outstanding, on the Closing Date (which proportion shall not be greater
than 1.62:1).
(n) Voting Trust. The Voting Trustee shall have issued to the
Company a certificate or certificates evidencing its beneficial interests in the
shares of NHTC Common Stock comprising the Firm Shares. One or more Heller
Persons shall have transferred, assigned and delivered to the Voting Trustee (in
the aggregate) a number of shares of NHTC Common Stock equal to the lesser of
(x) 5,800,000 and (y) the number of shares of NHTC Common Stock on the Closing
Date owned by any one or more of the Heller Persons.
(o) Financing. NHTC shall have consummated a private placement
equity financing reasonably satisfactory to the Company providing gross proceeds
(after the consummation of the Main Transaction) of not less than $8,000,000.
(p) MikeCo Acquisition. The Company shall have consummated the
MikeCo Acquisition.
(q) Reservation of Shares. NHTC shall have reserved for issuance as
the Contingent Shares and for issuance in lieu of the shares of Company Common
Stock issuable pursuant to Section 1.04(b) of the Fruitseng Acquisition
Agreement (as such provision shall be modified and amended as contemplated under
Section 9.02) such number of shares of NHTC Common Stock as the Company and NHTC
shall mutually agree.
(r) Other Matters. The NHTC Parties shall have furnished or caused
to be furnished to the Company, in form and substance reasonably satisfactory to
the Company or its counsel, such certificates and other evidences as the Company
may reasonably request as to the satisfaction of the conditions contained in
this Section 6.02.
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ARTICLE VII
CLOSING DATE AND TERMINATION
SECTION 7.01. Closing Date. The closing of the Main Transaction (the
"Closing") shall take place at the offices of Dechert Price & Rhoads, 30
Rockefeller Plaza, New York, New York 10112, or at such other place as the
Company and NHTC shall mutually agree, at 10:00 A.M., local time, on such date
mutually agreed upon by the Company and NHTC that is within five business days
after the first date upon which all Consents and Notices which at the time
remain conditions to the obligations of the parties to effect the Main
Transaction and other Transactions shall have been obtained or given (as the
case may be, the "Closing Date").
SECTION 7.02. Termination of Agreement. (a) This Agreement may be
terminated by either the Company or NHTC, upon notice to the other such parties
hereto, if the Closing shall not have occurred on or before June 30, 1997 (the
"Deadline Date"); provided, however, that: (i) NHTC shall not be permitted to
terminate this Agreement under this Section 7.02 if the Closing shall not have
occurred by the Deadline Date by reason of any breach by either NHTC Party of
Section 5.04; and (ii) the Company shall not be permitted to terminate this
Agreement under this Section 7.02 if the Closing shall not have occurred by the
Deadline Date by reason of any breach by the Company of Section 5.04.
(b) Termination of this Agreement under this Section 7.02 shall
automatically and irrevocably terminate all liabilities and obligations of the
terminating party (and, in the event that the terminating party is NHTC,
Holdings) arising under this Agreement; all rights of the terminating party (and
such other party) arising under this Agreement, and all liabilities and
obligations of the other party or parties hereto, shall survive any such
termination.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. By the Company. (a) Subject to the limitations set forth
below in this Section 8.01, from and after the Closing Date, the Company (or the
persons identified in Section 8.01(b)(iv), to the extent set forth therein)
shall indemnify the NHTC Parties and their respective directors, officers,
employees and agents (collectively, the "NHTC Indemnified Persons"), against,
and hold the NHTC Indemnified Persons harmless from, any and all Losses (as
defined in Section 8.03) directly or indirectly incurred, suffered, sustained or
required to be paid by, or sought to be imposed upon, any of the NHTC
Indemnified Persons resulting from, relating to arising out of:
(i) any breach of any of the representations or warranties of
the Company set forth in Section 2.01 hereof or in any other Company
Document,
(ii) any breach of any covenant or agreement made by the
Company under this Agreement or any other Company Document, or
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(iii) any Retained Liabilities, excluding, however, up to
approximately $60,000 of Taxes of Old Ellon that the relevant taxing
authorities may attempt to recover from New Ellon (it being agreed that
the event of any such payment by New Ellon, NHTC or any other
Subsidiary of NHTC after the Closing Date, such payment shall be
included as "Acquisition Costs" under Section 1.04).
(b) The right to indemnification under this Section 8.01 is subject
to the following limitations:
(i) The indemnification rights under this Section 8.01 shall
expire at the respective times set forth in Section 8.05, and the
Company (and its successors and assigns) shall not have any liability
under this Section 8.01 or otherwise in connection with the
Transactions unless an NHTC Indemnified Person gives written notice to
the Company (or its successors and assigns) asserting a claim for
Losses, including reasonably detailed specific facts and circumstances
pertaining thereto, before the expiration of the periods of time that
the underlying representations, warranties, covenants and agreements
survive under Section 8.05 hereof.
(ii) Indemnification for claims under this Section 8.01 shall be
payable hereunder only if and to the extent that the aggregate amount
of all Losses of the NHTC Indemnified Persons to which this Section
8.01 hereof applies shall exceed $25,000, and shall not be payable in
any event with respect to the first $25,000 of such Losses.
(iii) The liability for all claims under this Section 8.01 of
the Company (or any successor or assign thereof) shall in no event
exceed the lesser of (as the case may be, the "Indemnity Cap"): (A)
$3,000,000 and (B) one-half of the Fair Market Value (as defined in
Section 1.04(d)), as of the date of determination, of (x) the Main
Transaction Shares then held by (or held in the Voting Trust for the
benefit of) the Indemnifying Company Stockholders, and (y) the realized
cash proceeds (in the form of, for example, dividends or sale proceeds)
or readily marketable assets (in the form of, for example, freely
tradeable securities) (such cash or readily marketable assets,
"Qualified Proceeds") in respect of the Main Transaction Shares
previously held by (or held in the Voting Trust for the benefit of) the
Indemnifying Company Stockholders.
(iv) The NHTC Indemnified Persons shall have recourse
hereunder only against the Main Transaction Shares issued hereunder and
held by (or held in the Voting Trust for the benefit of) the
Indemnifying Company Stockholders and any Qualified Proceeds thereof;
provided, however, that in no event shall the Main Transaction Shares
and Qualified Proceeds of any one Indemnifying Company Stockholder (and
members of its immediate family, successors and assigns, treated for
this purpose as one Indemnifying Company Stockholder) forfeited,
surrendered or applied in respect of any Losses under this Section 8.01
exceed the product of (A) the Company Indemnity Cap, and (B) the
percentage obtained by dividing (x)
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the percentage ownership in the Company of such Indemnifying Company
Stockholder as of the Closing Date by (y) the percentage ownership in
the Company of all Indemnifying Company Stockholders as of the Closing
Date.
(c) For purposes of this Agreement, the term "Indemnifying Company
Stockholders" means: Azure Limited Partnership I; Capital Development S.A.;
Joseph Grace; John M. Eldredge; Robert C. Bruce; and members of their respective
immediate families, and their respective successors and assigns.
SECTION 8.02. By the NHTC Parties. (a) Subject to the limitations set
forth below in this Section 8.02, from and after the Closing Date, the NHTC
Parties, jointly and severally, shall indemnify the Company (or its successors
and assigns) and their respective directors, officers, employees and agents
(collectively, the "Company Indemnified Persons"), against, and hold the Company
Indemnified Persons harmless from, any and all Losses directly or indirectly
incurred, suffered, sustained or required to be paid by, or sought to be imposed
upon, any of the Company Indemnified Persons resulting from, relating to arising
out of:
(i) any breach of any of the representations or warranties of
the NHTC Parties set forth in Section 2.02 hereof or in any other NHTC
Document,
(ii) any breach of any covenant or agreement made by the
Company under this Agreement or any other Company Document, or
(iii) any Assumed Liabilities.
(b) The right to indemnification under this Section 8.02 is subject
to the following limitations:
(i) The indemnification rights under this Section 8.02 shall
expire at the respective times set forth in Section 8.05, and neither
NHTC Party shall have any liability under this Section 8.02 or
otherwise in connection with the Transactions unless a Company
Indemnified Person gives written notice to the NHTC Parties asserting a
claim for Losses, including reasonably detailed specific facts and
circumstances pertaining thereto, before the expiration of the periods
of time that the underlying representations, warranties, covenants and
agreements survive under Section 8.05 hereof.
(ii) Indemnification for claims under this Section 8.02 shall be
payable hereunder only if and to the extent that the aggregate amount
of all Losses of the Seller's Indemnified Persons to which this Section
6.02 hereof applies shall exceed $25,000, and shall not be payable in
any event with respect to the first $25,000 of such Losses; provided,
however, that the foregoing limitations shall not apply with respect to
claims under clause (3) of Section 8.02(a).
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(iii) The NHTC Parties's liability for all claims under this
Section 8.02 shall in no event exceed the Indemnity Cap; provided,
however, that the foregoing limitations shall not apply with respect to
claims under clause (3) of Section 8.02(a).
SECTION 8.03. "Losses" Defined. In this Agreement, the term "Losses"
means and includes all losses, claims, liabilities, damages (including, without
limitation, punitive, consequential and special damages awarded to any
third-party claimant), judgments, liabilities, payments, obligations, costs and
expenses (including, without limitation, any costs of investigation, remediation
or cleanup, and any reasonable legal fees and costs and expenses incurred after
the Closing Date in defense of or in connection with any alleged or asserted
liability, payment or obligation as to which indemnification may apply
hereunder), regardless of whether or not any liability, payment, obligation or
judgment is ultimately imposed against the NHTC Indemnified Persons or Company
Indemnified Persons and whether or not the NHTC Indemnified Persons or Company
Indemnified Persons are made or become parties to an action, suit or proceeding
in respect thereof, voluntarily or involuntarily.
SECTION 8.04. Notice of Claims. With respect to any matter as to which
any person or entity (the "Indemnified Person") is entitled to indemnification
from any other person or entity (the "Indemnifying Person") under this Article
VIII, the Indemnified Person shall have the right, but not the obligation, to
contest, defend or litigate, and to retain counsel of its choice in connection
with, any claim, action, suit or proceeding by any third party alleged or
asserted against the Indemnified Person in respect of, resulting from, relating
to or arising out of such matter, and the costs and expenses thereof shall be
subject to the indemnification obligations of the Indemnifying Person hereunder;
provided, however, that if the Indemnifying Person acknowledges in writing its
obligation to indemnify the Indemnified Person in respect of such matter to the
fullest extent provided by this Article VIII, the Indemnifying Person shall be
entitled, at its option, to assume and control the defense of such claim,
action, suit or proceeding at its expense through counsel of its choice if it
gives prompt notice of its intention to do so to the Indemnified Person. Neither
an Indemnified Person nor an Indemnifying Person shall be entitled to settle or
compromise any such claim, action, suit or proceeding without the prior written
consent of the other party hereto (and for purposes of this provision the "other
party hereto" shall be: (A) NHTC, for any Indemnified Person or Indemnifying
Person who is an NHTC Indemnified Person, and (B) the Company, for any
Indemnified Person or Indemnifying Person who is a Company Indemnified Person),
which consent shall not be unreasonably withheld.
SECTION 8.05. Survival of Provisions. (a) All representations and
warranties contained herein or made pursuant to this Agreement shall survive the
Closing for a period of one year after the Closing Date except that
(1) the representations and warranties contained in or made
pursuant to Section 2.05 shall survive the Closing without limitation,
and
(2) the representations and warranties contained in or made
pursuant to Sections 2.07, 2.10 and 2.11 shall survive the Closing for
so
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long as any claim may be made in respect of the matters described
therein under any applicable statute of limitations.
(b) All covenants and agreements of the parties contained in or
made pursuant to this Agreement and required to be performed prior to the
Closing Date shall survive the Closing for a period of one year. All other
covenants and agreements contained in or made pursuant to this Agreement
(including Section 8.01 and 8.02) shall survive the Closing for so long as any
claim may be made in respect of such matters under any applicable statute of
limitations.
SECTION 8.06. Exclusive Remedy. Each party hereto agrees that the sole
liability of any other party hereto for any claim with respect to the
transactions contemplated under this Agreement shall be limited to
indemnification under this Article VIII; provided, however, that the foregoing
shall not be deemed to prohibit or restrict the availability of any equitable
remedies (including specific performance) in the event of any breach (or
threatened breach) circumstances described in Section 8.11 (or in any provision
of any other Company Document or NHTC Document which specifically contemplates
the availability, or permits the exercise, of equitable remedies (including
specific performance)).
SECTION 8.07. Other Recoveries. (a) Notwithstanding anything to the
contrary set forth in this Article VIII, the obligations of Indemnifying Persons
under Section 8.01 and 8.02 in respect of any particular Losses shall be reduced
by the amount of any Other Recoveries (as hereinafter defined) actually received
(before or after indemnification hereunder) by or on behalf of the Indemnified
Persons in reduction of such Losses. Any Indemnified Person who shall have
received any indemnification payment hereunder (including in the form of Main
Transaction Shares and Qualified Proceeds thereof) for any particular Losses
shall, upon receipt of any Other Recoveries in reduction of such Losses, pay to
the appropriate Indemnifying Person an amount equal to the lesser of (x) such
Other Recoveries actually received, and (y) the amount of such indemnification
payment (and/or the Fair Market Value of any such non-cash indemnification
payment). The Company and NHTC Parties hereby agree to use their reasonable best
efforts to (and shall cooperate with each other in order to) enforce their
respective rights to any Other Recoveries, both prior to and after making any
claim for indemnification hereunder.
(b) For purposes of this Agreement, the term "Other Recoveries"
shall mean the proceeds or other amounts realized or that may be realized under
any insurance policy or other indemnity or hold harmless agreement (including,
without limitation, those indemnity and hold harmless agreements established
under the Ellon Acquisition Agreement, Fruitseng Acquisition Agreement and the
acquisition agreement entered into (or to be entered into) in order to effect
the MikeCo Acquisition).
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Board and Executive Committee Representation. (a) For so
long as the Company and/or any Main Transaction Share Holders shall collectively
beneficially own (including through the Voting Trust, in whole or in part) not
less than ten percent (10%) of the outstanding shares of NHTC Common Stock, NHTC
shall use its reasonable
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best efforts to: (i) cause two individuals designated by the Company (or its
successor or assign designated for the purpose) and reasonably acceptable to
NHTC to be nominated for election to the Board of Directors of NHTC at each
annual meeting of its stockholders and each special meeting (and written consent
in lieu of a meeting) at (or in) which directors are to be elected following the
Closing Date, (ii) cause the Board of Directors or management of NHTC to
recommend in any proxy statement for such meeting to the stockholders of NHTC
that they vote for the election of such nominees, and (iii) cause the management
proxies who may vote at any such meeting to vote any shares for which a proxy
card is received with no indication as to the election of such nominees to vote
for their election; provided, however, that from and after such time (if any)
that Company and/or any Main Transaction Share Holders shall collectively
beneficially own (including through the Voting Trust, in whole or in part) less
than ten percent (10%), but not less than five percent (5%), of the outstanding
shares of NHTC Common Stock, NHTC shall be required to fulfill its obligations
under the foregoing provisions of this Section 9.01(a) only with respect to one
individual designated by the Company (or its successor or assign designated for
the purpose) and reasonably acceptable to NHTC.
(b) For so long as NHTC shall have any obligations under the
foregoing Section 9.01(a), NHTC shall use its reasonable best efforts to cause
the Board of Directors of NHTC to: (i) maintain an Executive Committee thereof,
comprising not more than four members of such Board and having the authority to
act in the place and stead of the Board of Directors of NHTC to the fullest
extent permitted under Florida corporate law, and (ii) designate or appoint the
director(s) designated and elected in accordance with the foregoing Section
9.01(a) as members of such Executive Committee.
SECTION 9.02. Fruitseng Contingent Shares. NHTC hereby agrees (in the
event that the Closing occurs) that, in connection with the Company's
obligations under Section 1.04(b) of the Fruitseng Acquisition Agreement,
subject to the satisfaction of the condition set forth in Section 6.02(m), it
shall, in lieu of the up to 369,350 shares of Common Stock of the Company
issuable under Section 1.04(b) of the Fruitseng Acquisition Agreement (if any
shares become issuable thereunder), issue shares of NHTC Common in the
proportion contemplated by Section 6.02(m).
SECTION 9.03. Public Announcements. No party hereto shall make any
announcement to the public, the Company's or NHTC's respective "trades" or to
the respective employees, customers or suppliers of such parties, or to any
federal, state, local or foreign government, agency or authority, with respect
to this Agreement and/or the Transactions (an "Announcement") to which the other
such party hereto shall reasonably object; however, NHTC will be required under
the Exchange Act to report this Agreement and the Transactions, and such
reporting (to the extent required under the Exchange Agreement) shall be
permitted in all events. Each party shall afford the other parties hereto the
opportunity to review and comment upon each Announcement proposed to be made by
it prior to the release thereof.
SECTION 9.04. Further Actions. From time to time after the Effective
Time, the parties hereto shall execute and deliver (or cause to be executed and
delivered) such other and further agreements, instruments, certificates or other
documents and shall take (or cause to be taken) such other and further actions,
as any other party hereto may
-37-
reasonably request in order to further effect and/or evidence the Transactions
or to otherwise consummate and give effect to the covenants and agreements set
forth herein.
SECTION 9.05. Expenses. Each party hereto shall bear its own legal
fees, accountants' fees, brokers, finder's and investment banking fees and other
costs and expenses with respect to the negotiation, execution and the delivery
of this Agreement and the consummation of the Transaction.
SECTION 9.06. Entire Agreement. This Agreement, which includes the
Exhibits hereto, and the other NHTC Party Documents and Company Documents,
contain the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof, and supersede all prior agreements,
arrangements and understandings with respect thereto (including without
limitation that certain letter agreement (captioned "Letter of Intent/Heads of
Agreement"), dated 15 November 1996, from the Company addressed to NHTC).
SECTION 9.07. Descriptive Headings; References. The descriptive
headings of this Agreement and other NHTC Party Documents and Company Documents
are for convenience of reference only and shall not control or affect the
meaning or construction of any provision hereof or thereof. Article, Section and
Exhibit references in this Agreement are to the referenced Articles and Sections
of, and Exhibits to, this Agreement, unless the context otherwise requires.
SECTION 9.08. Notices. Any notice or other communication which is
required or permitted hereunder or under any other NHTC Party Document or
Company Document shall be in writing and shall be deemed to have been delivered
and received (x) on the day of (or, if not a business day, the first business
day after) its having been personally delivered or telecopied to the following
address or telecopy number, (y) on the first business day after its having been
sent by overnight delivery service to the following address, or (z) if sent by
regular, registered or certified mail, when actually received at the following
address:
If to the Company:
-38-
[c/o] Global Health Alternatives, Inc.
44 Welbeck Street
London W1M 7HF England
Attention: Sir Brian Wolfson
Telecopier No. 011-44-171-486-6217
Telephone No. 011-44-171-486-6216
and
[c/o] Global Health Alternatives, Inc.
193 Middle Street, Suite 201
Portland, Maine 04101
Attention: Robert C. Bruce
Telecopier No. (207) 772-8493
Telephone No. (207) 772-7234
with a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Attention: Claude A. Baum, Esq.
Telecopier No. (212) 698-3599
Telephone No. (212) 698-3500
If to either NHTC Party:
[c/o] Natural Health Trends Corp.
2001 West Sample Road
Pompano Beach, Florida 33064
Attention: Neal R. Heller, Esq.
Telecopier No. (954) 969-9747
Telephone No. (954) 969-9771
with a copy to:
Lane & Mittendorf LLP
320 Park Avenue
New York, New York 10022
Attention: Martin C. Licht, Esq.
Telecopier No. (212) 508-3230
Telephone No. (212) 508-3200
Any party may by notice change the address or telecopier number to which notices
or other communications to it are to be delivered, telecopied or sent.
SECTION 9.09. Governing Law and Forum. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York (other
than the choice of law principles thereof). Any claim, action, suit or other
proceeding initiated by any party hereto against any other party hereto under or
in connection with this Agreement or any other NHTC Party Document or Company
Document and/or the Transactions shall exclusively be asserted, brought,
prosecuted and maintained in any federal or state court located in the Borough
of Manhattan, State of New York, as the party bringing such action, suit or
proceeding shall elect, having jurisdiction over the subject matter thereof, and
each party hereto hereby irrevocably: (i) submits to the
-39-
jurisdiction of such courts, (ii) waives any and all rights to object to the
laying of venue in any such court, (iii) waives any and all rights to claim that
any such court may be an inconvenient forum, and (iv) agrees that service of
process on it in any such action, suit or proceeding may be effected by the
means by which notices may be given to it under this Agreement.
SECTION 9.10. Assignment. This Agreement, and the respective rights and
obligations of the parties hereunder, may not be assigned or delegated otherwise
than by operation of law by either NHTC Party or (after the Closing) the Company
without the prior written consent of (if prior to the Closing) the Company or
(if after the Closing) the holders of a majority of the then-outstanding Main
Transaction Shares, and any purported assignment or delegation by any party
hereto in violation of the foregoing shall be void ab initio; provided, however,
that (i): any or all rights of any party to receive the performance of the
obligations of the other parties hereunder (but not any obligations of any party
hereunder) and rights to assert claims against the other parties in respect of
breaches of representations, warranties or covenants may be assigned to any
entity extending credit to such party or any of its affiliates, but any assignee
of such rights shall take such rights subject to any defenses, counterclaims and
rights of set-off to which the non-assigning parties might be entitled under
this Agreement; and (ii) this Agreement and the rights of the Company under this
Agreement may be assigned as contemplated under Section 4.01(b) hereof. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.
SECTION 9.11. Remedies. (a) The parties hereto acknowledge that the
remedy at law for any breach of their respective obligations to effect the Main
Transaction is and will be insufficient and inadequate and that the parties
hereto shall be entitled to equitable relief, in addition to remedies at law.
Each party hereto hereby waives the defense that there is an adequate remedy at
law in the event of any action to enforce the provisions of this Agreement to
effect the Main Transaction. The Company acknowledges that the Subject Assets
are unique and cannot be obtained on the open market; and the NHTC Parties
acknowledge that the Main Transaction Shares and other benefits to be provided
to the Company hereunder are unique and cannot be obtained on the open market.
Without limiting any remedies that any party hereto may otherwise have hereunder
or under applicable law in the event that any other party hereto refuses to
perform its obligations under this Agreement to consummate the Main Transaction,
such parties shall have, in addition to any other remedy at law or in equity,
the right to specific performance.
(b) The parties hereto acknowledge that any violation or threatened
violation of Section 5.01(b) will cause irreparable harm and that the remedy at
law for any such violation or threatened violation will be inadequate. Each
party hereto therefor agrees that the other parties hereto shall be entitled to
temporary and permanent injunctive relief for any such violation or threatened
violation without the necessity of proving (i) that the other parties will be
irreparably injured thereby, (ii) that the remedy at law for such violation or
threatened violation is inadequate or (iii) actual damages.
(c) No party hereto shall have any liability to any other party
hereto for any punitive, consequential, incidental or special damages by virtue
of any breach of any representation, warranty, covenant or agreement in or
pursuant to this Agreement or any
-40-
other NHTC Party Document or Company Document or any other agreement,
instrument, certificate or other document executed and delivered pursuant hereto
or in connection herewith or the Transactions.
SECTION 9.12. Waivers and Amendments. Any waiver of any term or
condition of this Agreement, and any amendment or supplementation of this
Agreement, shall be effective only if in a writing executed by (or on behalf of)
each of the parties hereto; provided, however, that any waiver, amendment or
supplementation after the Closing shall, as a condition to the effectiveness
thereof, be consented to by the holders of a majority of the then-outstanding
Main Transaction Shares. A waiver of any breach or failure to enforce any of the
terms or conditions of this Agreement shall not in any way affect, limit or
waive a party's rights hereunder at any time to enforce strict compliance
thereafter with every term or condition of this Agreement. No failure or delay
by any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.
SECTION 9.13. Third Party Rights. Notwithstanding any other provision
of this Agreement, and except as permitted pursuant to Sections 4.01(b) and 9.10
hereof or other expressly set forth herein or therein, this Agreement and the
other NHTC Party Documents and Company Documents shall not create benefits on
behalf of any employee, consultant, agent or representative of any person or
entity not party hereto (including without limitation any counsel, accountant,
broker, finder or investment banker, notwithstanding the provisions of Section
9.05), and this Agreement and the other NHTC Party Documents and Company
Documents shall be effective only as between the parties hereto, their
successors and permitted assigns.
SECTION 9.14. Illegalities. In the event that any provision contained
in this Agreement shall be determined to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect, and the remaining provisions of this
Agreement, shall not, at the election of the party for whose benefit the
provision exists, be in any way impaired.
SECTION 9.15. Bulk Sales. The NHTC Parties hereby waive compliance with
all applicable bulk sales laws (if any) in connection with the Main Transaction
and other Transactions.
SECTION 9.16. Gender and Plural Terms. Words of gender or neuter may be
read as masculine, feminine or neuter, as required by the context. Singular and
plural forms of defined and other terms herein may be read as singular or
plural, as required or permitted by the context.
SECTION 9.17. Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
-41-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective authorized officers as of the
day and year first above written.
NHTC: The Company:
NATURAL HEALTH TRENDS CORP. GLOBAL HEALTH ALTERNATIVES, INC.
By:/s/ Neal R. Heller By:/s/ Sir Brian Wolfson
Title: CEO, President Title: Chairman
Holdings:
GHA HOLDINGS, INC.
By:/s/ Neal R. Heller
Title: President
-42-
EXHIBIT A
(to Agreement)
FORM OF BILL OF SALE AND ASSUMPTION
THIS BILL OF SALE AND ASSUMPTION, dated [CLOSING DATE] (this "Bill of
Sale"), is by and between Global Health Alternatives, Inc., a Delaware York
corporation ("Transferor"), and GHA Holdings, Inc., a Delaware corporation
("Transferee").
BACKGROUND
Transferor and Transferee are party to that certain Agreement and Plan
of Reorganization, dated as of March 19, 1997 (the "Agreement"), by and among
Natural Health Trends Corp., a Florida corporation, Transferee, and Transferor,
pursuant to which (among other things) Transferor has agreed to sell to
Transferee the Subject Assets and Transferee has agreed to assume the Assumed
Liabilities, as defined in and more particularly described hereinbelow.
The purpose of this Bill of Sale is to evidence and effect such sale
and assumption and to provide for certain related matters. All capitalized terms
used and not defined herein shall have the respective meanings ascribed to such
terms in the Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Transferor and Transferee:
1. Subject Assets. Transferor does hereby sell, transfer, grant,
convey, assign and set over to Transferee, and its successors and assigns
forever, and Transferee does hereby purchase and receive from Transferor, free
and clear of any and all liens, security interests, mortgages, pledges,
covenants, easements, encumbrances, defects in title, agreements and claims and
rights of third parties, all of Transferor's right, title and interest in, to
and under the businesses, franchises, rights, claims, privileges, properties and
assets owned, used or held for use by Transferor, of every nature and
description, tangible and intangible, wherever located and whether or not
carried on the books or records of Transferor (the "Subject Assets"), including,
without limitation, all the right, title and interest of Transferor in, to and
under the following:
(A) All fixed and tangible personal property used or held for use
by or for Transferor, including (but not limited to) all physical
assets and equipment, leasehold improvements, machinery, vehicles,
furniture, fixtures, office materials and supplies and spare parts,
together with all replacements thereof, additions and alterations
thereto, and substitutions therefor;
(B) All cash on hand, cash equivalents, and bank, brokerage and
other deposit accounts, including (but not limited to) the cash
equivalents and deposit accounts listed or described in Part A. of
Attachment 1 attached hereto;
(C) All trade and other accounts and notes receivable;
-Page 1 of ___ Pages-
EXHIBIT A
(to Agreement)
(D) All inventory, materials and supplies, including, without
limitation, all raw materials, work-in-progress and finished goods;
(E) All prepaid expenses, advances and deposits;
(F) All registered and unregistered patents, patent applications,
trade names, service marks, trademarks, trademark applications, trade
dress rights, copyrights, copyright applications, inventions, trade
secrets, computer software, logos, slogans, proprietary processes and
formulae and all other proprietary technical and other information,
know-how and intellectual property rights, whether patentable or
unpatentable, owned, licensed or used by Transferor, and all goodwill
of Transferor and the associated with any of the foregoing
(collectively, "Intellectual Property Rights"), including (but not
limited to) those Intellectual Property Rights listed or described in
Part A. of Attachment 1 attached hereto;
(G) All records and files of Transferor, including (but not limited
to) property records, production records, research and development
records, engineering records, financial records, purchasing and sales
records, personnel records, plant records, mailing lists, customer and
vendor lists and records, and computer programs, computer records,
computer files and related software and manuals;
(H) All stationery, purchase orders, forms, labels, shipping
material, catalogs, brochures, art work, photographs and advertising
and promotional copy, materials and literature;
(I) All transferable Federal, state, local and foreign governmental
licenses, permits, authorizations and approvals required for the
operation of Transferor, including (but not limited to) those listed or
described in Part A. of Attachment 1 attached hereto;
(J) the outstanding capital stock of all Subsidiaries of
Transferor, a list or description of which is included in Part A. of
Attachment 1 attached hereto and made part hereof; and
(K) All rights against third parties relating to the Subject Assets
or the Assumed Liabilities (as hereinafter defined).
2. Assumed Liabilities. Transferor does hereby transfer, assign and
delegate to Transferee, and Transferee does hereby assume and agree to pay,
perform, satisfy and discharge in accordance with their respective terms
(subject to any defenses or claimed offsets asserted in good faith against the
obligee to whom such liabilities are owed) all the indebtedness, liabilities and
obligations of Transferee (including those under
-Page 2 of ___ Pages-
EXHIBIT A
(to Agreement)
Assigned/Assumed Contracts, as hereinafter defined) (the "Assumed Liabilities");
provided, however, that, notwithstanding anything to the contrary set forth
herein, Transferee is not assuming and shall not assume (and the definition of
"Assumed Liabilities" excludes), and Transferor shall retain responsibility for
and be liable to discharge, pay and perform, the indebtedness, liabilities and
obligations of Transferor (the "Retained Liabilities"):
(A) for Taxes (relating to all periods, before or after the date
hereof);
(B) in respect of any action, suit, claim, proceeding,
investigation or similar matter (including with respect to product
liability and other third-party liability claims)) to the extent that
the same may result from, relate to or arise out of occurrences on or
before the Closing Date;
(C) owed to or held by either any stockholder or warrant holder of
the Company (in their capacities as such); and
(D) for any fees, costs and expenses in connection with the
negotiation, execution and/or consummation of the transactions
contemplated by the Agreement.
3. Assigned/Assumed Contracts. Transferor does hereby sell transfer,
grant, convey, assign, delegate and set over to Transferee, and its successors
and assigns forever, and Transferee does hereby receive, assume and agree to
pay, perform, satisfy and discharge in accordance with their respective terms,
all of the rights, title, interest and obligations of Transferor in, to and
under the Company Contracts listed on Attachment 2 attached hereto and made part
hereof (the "Assigned/Assumed Contracts").
4. The Agreement. Nothing contained in this Bill of Sale shall be
deemed to enlarge, diminish or otherwise affect any of the rights, obligations,
covenants, agreements, representations or warranties of the Transferor,
Transferee or any other party contained in the Agreement, it being expressly
agreed that the same shall survive the execution and delivery hereof to the
extent provided in the Agreement. In addition, to the extent anything contained
herein shall conflict with the Agreement, the Agreement shall govern and
control.
5. Limitation on Liabilities. Except as expressly set forth herein with
respect to the Assumed Liabilities, Transferee is not taking the Subject Assets
or the Assigned/Assumed Contracts subject to, and Transferee is not assuming,
any debts, liabilities, duties or obligations of Transferor, and any such
assumption, to the maximum extent permitted by law, is hereby expressly
disclaimed and negated.
6. Power of Attorney. Transferor does hereby appoint Transferee, and
its successors and assigns forever, as the true and lawful attorney-in-fact of
Transferor, with full power of substitution and at the expense of the
Transferee, to institute and prosecute all proceedings which Transferee may deem
proper in order to collect, assert or enforce any claim, right, title or
interest in, to or under any of the Subject Assets and Assigned/Assumed
-Page 3 of ___ Pages-
EXHIBIT A
(to Agreement)
Contracts, to defend or compromise any or all actions, suits or proceedings in
respect of any of the Subject Assets and Assigned/Assumed Contracts, and to do
all such other acts and things in relation to the Subject Assets and
Assigned/Assumed Contracts as Transferee shall deem advisable.
7. Further Assurances. Transferor will, at any time and from time to
time after the date hereof, on the request Transferee, do, execute, acknowledge
and deliver, or cause to be done, executed, acknowledged or delivered, all such
further acts, deeds, assignments, transfers, conveyances, powers of attorney or
assurances as may be reasonably required for the better transferring, assigning,
conveying, granting, assuring and confirming to Transferee, or for the aiding
and assisting in the collection of or reducing to possession by Transferee, of
any of the Subject Assets or Assigned/Assumed Contracts, or to vest in
Transferee all of Transferor's right, title and interest in and to the Subject
Assets and the Assigned/Assumed Contracts, or to otherwise enable Transferee to
realize upon or otherwise enjoy the Subject Assets and Assigned/Assumed
Contracts.
8. Successors and Assigns. This Bill of Sale shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
9. Governing Law; Jurisdiction and Venue. This Bill of Sale shall be
construed and enforced in accordance with the laws of the State of New York
(without regard to the conflict-of-law laws and principles thereof). Any claim,
action, suit or other proceeding initiated by any of either party hereto against
the other under or in connection with this Bill of Sale may be asserted,
brought, prosecuted and maintained in any federal or state court in the City and
State of New York, as the party bringing such action, suit or proceeding shall
elect, having jurisdiction over the subject matter thereof, and Transferor and
Transferee hereby irrevocably (a) submit to the jurisdiction of such courts, (b)
waive any and all rights to object to the laying of venue in any such court, (c)
waive any and all rights to claim that any such court may be an inconvenient
forum, and (d) agree that service of process on them in any such action, suit or
proceeding may be effected by the means by which notices may be given to it
under the Asset Agreement.
-Page 4 of ___ Pages-
EXHIBIT A
(to Agreement)
10. Counterparts. This Bill of Sale may be executed in any number of
counterparts, each of which shall be deemed to be an original document but all
of which together shall constitute a single document.
IN WITNESS WHEREOF, the undersigned have executed this Bill of Sale on
the date first above written.
Transferor: Transferee:
GLOBAL HEALTH ALTERNATIVES GHA HOLDINGS, INC.
INC.
By: By:
------------------- --------------------
Name: Name:
Title: Title:
EXHIBIT A
(to Agreement)
Attachment 1
(to Bill of Sale)
Listed Subject Assets
This Attachment 1 is intended to list only certain of the Subject Assets, and is
not intended to be (nor shall it be construed as) and exhaustive list of any of
the Purchased Assets or any category or type thereof.
Cash Equivalents and Deposit Accounts
[To be added by Closing]
Intellectual Property Rights
[To be added by Closing]
Subsidiaries
1. Ellon, Inc., a Delaware corporation
2. Maine Naturals, Inc., a Delaware corporation
3. Global Health Alternatives (UK) Ltd., an England and Wales corporation
4. [To be added by Closing: Name of company formed to effect the Troy
Acquisition]
EXHIBIT A
(to Agreement)
Attachment 2
(to Bill of Sale)
Assigned/Assumed Contracts
[To be added by Closing]