KARA INTERNATIONAL, INC.
00 Xxxx 000 Xxxxx
Xxxxx, Xxxx 00000
Telephone: (000) 000-0000
Xxxxx 0, 0000
Xxxxxxx IHI Stockholders and
Certain IHI Option Holders who
are Accredited Investors
Re: Agreement and Plan of Reorganization (the Plan )
between Kara International, Inc., a Nevada corporation
( Kara ) and International Heritage, Inc., a North
Carolina corporation ( IHI ), with a proposal to
exchange unregistered and restricted shares of
common stock (the Kara Shares ) and options to
acquire shares of common stock of Kara (the Kara
Options ) with certain accredited investors who own
shares of common stock and certain options to acquire
shares of common stock of IHI (the IHI Shares and
the IHI Options )
Dear IHI Stockholder or IHI Option Holder:
You are receiving this communication because you have received
from IHI a Proxy Statement outlining a Plan pursuant to which a proposal to
exchange Kara Shares for certain IHI Shares and like Kara Options for certain
outstanding IHI Options, in accordance with the terms and conditions of the
Plan, and because you have completed a Confidential Accredited Investor
Questionnaire provided to you and have indicated therein that you are an
accredited investor, as outlined in Exhibit A attached hereto. Three Kara
Shares will be exchanged for each one IHI Share and one Kara Option will be
exchanged for each one IHI Option.
The determination of being an accredited investor as outlined in
Exhibit A is based solely on income or assets, and your satisfaction of one of
these categories may not mean that you have the education, business acumen,
experience or other knowledge through which you can adequately evaluate the
risks and merits of the Plan and the exchange contemplated thereby. In such
event, you are urged to seek independent advice from persons who have no
interest in the Plan prior to considering whether to become a party to the
Plan. Further, if you are not an accredited investor, you should read no
further and these materials should be promptly returned to the address above.
Enclosed herewith please find two packages, which include the
following, to-wit:
First Package:
1. Copy of this letter dated March 6, 1998, with an accredited
investor Exhibit A attached to it.
2. The Plan with a Counterpart Signature Page and the following
exhibits:
Exhibit A - IHI Stockholders
Exhibit A-1- IHI Option Holders
Exhibit B - Kara Financial Statements
Exhibit C - Exceptions
Exhibit D - IHI Financial Statements
Exhibit E - Exceptions
Exhibit F - Investment Letter
Exhibit G - Kara Compliance Certificate
Exhibit H - IHI Compliance Certificate
Second Package:
Counterpart Signature Page
Investment Letter
The first package is for your records, and includes a copy of each
of the documents outlined under the caption Second Package.
You should now carefully review the Proxy Statement of IHI and
specifically, the caption Agreement and Plan of Reorganization commencing on
page 6 and ending on page 10 therein, and the related Risk Factors regarding
Kara and IHI commencing on page 10 and ending on page 16 therein. You should
also review the 1997 10-KSB Annual Report of Kara for the fiscal year ended
December 31, 1997, which is attached to the Proxy Statement of IHI as Exhibit
A.
If after reviewing all of these documents you believe you would
like to participate in the exchange of IHI Shares or IHI Options for Kara
Shares and like Kara Options, you should also consider the following.
Kara is a corporate shell, and at the completion of the Plan
will result in an immediate and substantial dilution in your percentage of
ownership in IHI amounting to 16.7% assuming 100% of IHI is acquired in this
exchange; this is based upon computations to the effect that there are
currently 7,540,756 shares of IHI outstanding which, if 100% of the IHI shares
were acquired, would result in there being 22,622,268 Kara Shares being issued
in the exchange, and there are currently 4,559,761 Kara Shares outstanding.
Therefore, the Kara stockholders would retain an ownership of 16.7%, even
though Kara has no assets or liabilities and a book value of $-0-.
Further, based on the unaudited balance sheet and income statement
of IHI contained within the Plan, IHI has a book value of ($12,233,369). This
amount would not change, on a consolidated basis, on completion of the Plan,
assuming 100% of the IHI Shares are acquired, but there would be an additional
4,559,761 Kara Shares outstanding. By dividing the total outstanding shares
into this amount, the book value per share would be decreased by ($0.45),
which would result in a cash dilution of ($1.17)(taking into account the three
for one exchange).
You should also consider that the Kara Shares are unregistered
and restricted shares and that you will commence a new holding period once
the Plan is completed with respect to the Kara Shares; accordingly, you may
not be able to sell these shares in the public market or avail yourself of the
provisions of Rule 144 of the Securities and Exchange Commission for at least
one year from the completion of the exchange.
The holding period with respect to the shares underlying the
options exchanged does not commence until the exercise of the options.
Concerning the IHI Options currently outstanding, where the IHI
shares are being exchanged on the basis of three Kara Shares for each of the
IHI Shares, the IHI Options are being exchanged on a one for one basis, and
there is no reduction in the exercise price. Agreeing to the exchange of
options may waive or compromise certain anti-dilution provisions which may be
present in the agreement covering the IHI Options.
You should also understand that this Plan will not be completed
unless persons owning at least 80% of the IHI Shares agree to the exchange.
If you desire further information regarding Kara, you should
contact its sole director and executive officer, who is also its President,
Xxxxx X. Xxxxxxx, Xx., at the above address and telephone number; or Kara's
counsel, Xxxxxxx X. Xxxxxxxxxx, Esq., or Xxxxxxxxx, Xxxxx & Xxxxx, its
certified public accountants. Kara s quarterly reports for the last year can
be reviewed on the Internet at xxx.xxx.xxx in the XXXXX archives.
Instructions if you intend to participate:
If, after reviewing all of the foregoing, and taking into
consideration all of the risk factors and having the opportunity to ask
questions and receive answers to any such questions you may have of any
director, executive officer, legal counsel or accountant for Kara, and for
that fact, of IHI, you should execute the Counterpart Signature Page and fill
in your name and address; execute the Investment Letter; and sign your IHI
stock certificate and return these materials to Xxxxxxxx Xxxxx Xxxxxxx, Esq.,
at IHI, 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, as
soon as possible.
In the event that persons owning at least 80% of the IHI shares do
not adopt, ratify and approve the Plan within thirty days, your stock
certificate will be returned to you. Otherwise, a stock certificate
representing the Kara Shares you are to receive in the exchange shall be
delivered to you promptly; this stock certificate shall bear a restrictive
legend as outlined in the Investment Letter.
Thank you.
Very truly yours,
Xxxxx X. Xxxxxxx, Xx.
Enclosures
EXHIBIT "A"
"Accredited investor" shall mean any person who comes within any
of the following categories, or whom the Company reasonably believes comes
within any of the following categories, at the time of the sale of the Shares
to that person:
(1) Any bank as defined in Section 3(a)(2) of the Act, or any
savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Act, whether acting in its
individual or fiduciary capacity; any broker or dealer
registered pursuant to Section 15 of the Securities Exchange
Act of 1934; any insurance company as defined in Section
2(13) of the Act; any investment company registered under
the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; Small
Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958; any plan established
and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan
has total assets in excess of $5,000,000; employee benefit
plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by
a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association,
insurance company or registered investment adviser, or if
the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited
investors;
(2) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring securities offered, with total assets
in excess of $5,000,000;
(4) Any director, executive officer or general partner of the
issuer of the securities being offered or sold, or any
director, executive officer or general partner of a general
partner of that issuer;
(5) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his or her
purchase exceeds $1,000,000;
(6) Any natural person who had individual income in excess of
$200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in
each of those years and has a reasonable expectation of
reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated
person as described in Section 230.506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are accredited
investors.
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT (the "Agreement") is made this 6th day of
March, 1998, between Kara International, Inc., a Nevada corporation
("Kara"); International Heritage, Incorporated, a North Carolina corporation
("IHI"); and certain persons listed in Exhibits A and A-1 hereof who are
respectively the owners of record of certain shares of the outstanding common
stock and certain option holders who own rights to acquire common stock of IHI
and who execute and deliver a copy of this Agreement (respectively, the IHI
Stockholders and the IHI Option Holders ).
WITNESSETH:
WHEREAS, Kara wishes to acquire all of the outstanding common
stock of IHI in exchange for common stock of Kara in a transaction qualifying
as a tax-free exchange pursuant to Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended; and
WHEREAS, Kara also desires to exchange like options to acquire
shares of its common stock for the outstanding IHI options to acquire shares
of common stock of IHI, all as outlined in Exhibit A-1 hereof;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
Section 1
Exchange of Stock and Options
1.1 Number of Shares. The IHI Stockholders agree to transfer to
Kara at the closing (the "Closing") 100% of the outstanding securities of IHI,
which are listed in Exhibit A hereof attached hereto and incorporated herein
by reference (the "IHI Shares" or IHI Share ), in exchange for the $0.001 par
value "unregistered" and "restricted" common voting stock of Kara set forth
opposite the respective names of each such IHI Stockholder, amounting to three
(3) shares of Kara for each outstanding IHI Share.
1.2 Delivery of Certificates by IHI Stockholders. The transfer
of the IHI Shares by the IHI Stockholders shall be effected by the delivery to
Kara at the Closing of a stock certificate or certificates representing the
transferred shares duly endorsed in blank or accompanied by stock powers
executed in blank, with all signatures witnessed or guaranteed to the
satisfaction of Kara and with all necessary transfer taxes and other revenue
stamps affixed and acquired at the IHI Stockholders expense.
1.3 Further Assurances. At the Closing and from time to time
thereafter, the IHI Stockholders shall execute such additional instruments and
take such other action as Xxxx xxx request in order to exchange and transfer
clear title and ownership in the IHI Shares to Kara.
1.4 Resignation of Present Sole Director and Executive Officer
Kara and Designation of New Directors and Executive Officers of Kara. On
Closing, the present sole director and executive officer of Kara shall resign
and designate the directors and executive officers nominated by IHI to serve
in his place and stead, until the next respective annual meetings of the
stockholders and Board of Directors of Kara, and until their respective
successors shall be elected and qualified or until their respective prior
resignations or terminations.
1.6 Assets and Liabilities of Kara at Closing. Kara shall have
no material assets and no liabilities at Closing, and all costs incurred by
Kara incident to the Agreement shall have been paid or satisfied.
1.7 Exchange of Like Options. Kara agrees to exchange like
options of Kara for certain outstanding options of IHI to acquire IHI Shares
(collectively, the IHI Options ), on the basis of one option to acquire one
share of Kara for each outstanding option to acquire one share of IHI, only to
the extent outlined in Exhibit A-1 hereof; and agrees to issue shares of its
unregistered and restricted common stock in lieu of IHI Shares in
accordance with Exhibit A-1, on exercise.
1.8 Closing. The Agreement may close on the execution and
delivery of Counterpart Signature Pages by persons who own not less than 80%
of the outstanding IHI Shares; and Kara will use its best efforts to acquire
in exchange for unregistered and restricted shares of its common stock or
like options the remaining outstanding IHI Shares and IHI Options, to the
extent that such securities can be acquired pursuant to available exemptions
from the registration requirements of applicable securities laws, rules and
regulations, or, in the sole discretion of Kara, by registration pursuant to
applicable securities laws, rules and regulations, on similar terms and
conditions, for a period of two years from the Closing; and Kara shall reserve
a sufficient number of shares of its unregistered and restricted common
stock to cover the exchange of the remaining IHI Shares and those shares
underlying outstanding IHI Options which are not exchanged hereunder.
1.9 Name Change and Increase of Authorized Shares of Kara.
On Closing, the name of Kara shall be changed to International Heritage,
Incorporated or such other name as the respective Boards of Directors of Kara
and IHI shall determine; the authorized shares of Kara shall be increased from
50,000,000 shares to 100,000,000 shares, retaining the par value at $0.001;
and Xxxxx X. Xxxxxxx, Xx., who is the sole director and executive officer of
Kara, who owns approximately 88% of the outstanding voting securities of Kara,
shall have adopted and ratified all required or necessary resolutions under
the Nevada Revised Statutes to effect such changes.
Section 2
Closing
The Closing contemplated by Section 1.1 shall be held at the
offices of Xxxxxxx X. Xxxxxxxxxx, Esq., Suite 205 Hermes Building, 000 Xxxx
000 Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, unless another place or time is agreed
upon in writing by the parties. The Closing may be accomplished by wire,
express mail or other courier service, conference telephone communications or
as otherwise agreed by the respective parties or their duly authorized
representatives.
Section 3
Representations and Warranties of Kara
Kara represents and warrants to, and covenants with, the IHI
Stockholders, the IHI Option Holders and IHI as follows:
3.1 Corporate Status. Kara is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada
and is licensed or qualified as a foreign corporation in all states in which
the nature of its business or the character or ownership of its properties
makes such licensing or qualification necessary (Nevada only). Kara is a
publicly held company, having previously and lawfully offered and sold a
portion of its securities in accordance with applicable federal and state
securities laws, rules and regulations. Kara files reports with the
Securities and Exchange Commission pursuant to Section 15(d) of the Securities
Exchange Act of 1934, as amended (the 1934 Act ), and all reports required to
have been filed by it during the past 12 months have been filed and are true
and correct in every material respect. The common stock of Kara is quoted in
the OTC Bulletin Board of the National Association of Securities Dealers, Inc.
(the NASD ) under the symbol KARA, though there is currently no
established trading market in these securities.
3.2 Capitalization. The authorized capital stock of Kara
consists of 50,000,000 shares of one mill ($0.001) par value common voting
stock, of which 4,559,761 shares are issued and outstanding, all fully paid
and non-assessable. There are no outstanding options, warrants or calls
pursuant to which any person has the right to purchase any authorized and
unissued capital stock of Kara. All outstanding common stock of Kara has been
lawfully issued in accordance with applicable federal and state securities
laws, rules and regulations.
3.3 Financial Statements. The financial statements of Kara
furnished to the IHI Stockholders, the IHI Option Holders and IHI, consisting
of audited financial statements for the fiscal years ended December 31, 1997
and 1996, attached hereto as Exhibit B, are correct and fairly present the
financial condition of Kara at such dates and for the periods involved; such
statements were prepared in accordance with generally accepted accounting
principles consistently applied, and no material change has occurred in the
matters disclosed therein, except as indicated in Exhibit C, which is attached
hereto and incorporated herein by reference. Such financial statements do not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
3.4 Undisclosed Liabilities. Kara has no liabilities of any
nature except to the extent reflected or reserved against in its balance
sheets, whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, except as set
forth in Exhibit C.
3.5 Interim Changes. Since the date of its balance sheets,
except as set forth in Exhibit C, there have been no (1) changes in financial
condition, assets, liabilities or business of Kara which, in the aggregate,
have been materially adverse; (2) damages, destruction or losses of or to
property of Kara, payments of any dividend or other distribution in respect of
any class of stock of Kara, or any direct or indirect redemption, purchase or
other acquisition of any class of any such stock; or (3) increases paid or
agreed to in the compensation, retirement benefits or other commitments to
employees.
3.6 Title to Property. Kara has good and marketable title to
all properties and assets, real and personal, reflected in its balance sheets,
and the properties and assets of Kara are subject to no mortgage, pledge, lien
or encumbrance, except for liens shown therein or in Exhibit C, with respect
to which no default exists.
3.7 Litigation. There is no litigation or proceeding pending,
or to the knowledge of Kara, threatened, against or relating to Kara, its
properties or business, except as set forth in Exhibit C. Further, no
officer, director or person who may be deemed to be an affiliate of Kara is
party to any material legal proceeding which could have an adverse effect on
Kara (financial or otherwise), and none is party to any action or proceeding
wherein any has an interest adverse to Kara.
3.8 Books and Records. From the date of this Agreement to the
Closing, Kara will (1) give to the IHI Stockholders, the IHI Option Holders
and IHI or their respective representatives full access during normal business
hours to all of its offices, books, records, contracts and other corporate
documents and properties so that the IHI Stockholders, the IHI Option Holders
and IHI or their respective representatives may inspect and audit them; and
(2) furnish such information concerning the properties and affairs of Kara as
the IHI Stockholders, the IHI Option Holders and IHI or their respective
representatives may reasonably request.
3.9 Tax Returns. Kara has filed all federal and state income or
franchise tax returns required to be filed or has received currently effective
extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter if there
is no Closing), Kara and its representatives will keep confidential any
information which they obtain from the IHI Stockholders, the IHI Option
Holders or from IHI concerning the properties, assets and business of IHI. If
the transactions contemplated by this Agreement are not consummated by March
15, 1998, Kara will return to IHI all written matter with respect to IHI
obtained by Kara in connection with the negotiation or consummation of this
Agreement.
3.11 Investment Intent. Kara is acquiring the IHI Shares to be
transferred to it under this Agreement for investment and not with a view to
the sale or distribution thereof, and Kara has no commitment or present
intention to liquidate IHI or to sell or otherwise dispose of the IHI Shares.
3.12 Corporate Authority. Kara has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder and will deliver to the IHI Stockholders, the IHI Option Holders and
IHI or their respective representatives at the Closing a certified copy of
resolutions of its Board of Directors authorizing execution of this Agreement
by its officers and performance thereunder, and the sole director adopting and
delivering such resolutions is the duly elected and incumbent director of
Kara.
3.13 Due Authorization. Execution of this Agreement and
performance by Kara hereunder have been duly authorized by all requisite
corporate action on the part of Kara, and this Agreement constitutes a valid
and binding obligation of Kara and performance hereunder will not violate any
provision of the Articles of Incorporation, Bylaws, agreements, mortgages or
other commitments of Kara.
3.14 Environmental Matters. Kara has no knowledge of any
assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of Kara. In addition,
to the best knowledge of Kara, there are no substances or conditions which may
support a claim or cause of action against Kara or any of its current or
former officers, directors, agents or employees, whether by a governmental
agency or body, private party or individual, under any Hazardous Materials
Regulations. Hazardous Materials means any oil or petrochemical products,
PCB s, asbestos, urea formaldehyde, flammable explosives, radioactive
materials, solid or hazardous wastes, chemicals, toxic substances or related
materials, including, without limitation, any substances defined as or
included in the definition of hazardous substances, hazardous wastes,
hazardous materials, or toxic substances under any applicable federal or
state laws or regulations. Hazardous Materials Regulations means any
regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
3.15 Access to Information Regarding IHI. Kara acknowledges that
it has been delivered copies of what has been represented to be documentation
containing all material information respecting IHI and its present and
contemplated business operations, potential acquisitions, management and other
factors; that it has had a reasonable opportunity to review such documentation
and discuss it, to the extent desired, with its legal counsel, directors and
executive officers; that it has had, to the extent desired, the opportunity to
ask questions of and receive responses from the directors and executive
officers of IHI, and with the legal and accounting firms of IHI, with respect
to such documentation; and that to the extent requested, all questions raised
have been answered to its complete satisfaction.
Section 4
Representations, Warranties and Covenants of IHI
the IHI Stockholders and the IHI Option Holders
IHI, the IHI Stockholders and the IHI Option Holders represent
and warrant to, and covenant with, Kara as follows (the representations and
warranties contained in Sections 4.2 through 4.10, and Sections 4.13 through
4.16 apply only to IHI Stockholders or IHI Option Holders who are directors,
executive officers or 10% stockholders of IHI):
4.1 IHI Shares and IHI Options. The IHI Stockholders and the
IHI Option Holders are the record and beneficial owners of all of the IHI
Shares and the IHI Options listed in Exhibits A and A-1, free and clear of
adverse claims of third parties; and Exhibits A and A-1 correctly set forth
the names, addresses and the number of IHI Shares and IHI Options
respectively owned by the IHI Stockholders and the IHI Option Holders.
4.2 Corporate Status. IHI is a corporation duly organized,
validly existing and in good standing under the laws of the State of North
Carolina and is licensed or qualified as a foreign corporation in all states
in which the nature of its business or the character or ownership of its
properties makes such licensing or qualification necessary.
4.3 Capitalization. The authorized capital stock of IHI
consists of 25,000,000 shares of common voting stock, one mill ($0.001) par
value, of which 7,540,756 shares are issued and outstanding, all fully paid
and non-assessable. Except as set forth in Exhibits A and A-1, there are no
outstanding options, warrants or calls pursuant to which any person has the
right to purchase any authorized and unissued capital stock of IHI. Except as
disclosed to Kara in writing, all outstanding common stock of IHI has been
lawfully issued in accordance with applicable federal and state securities
laws, rules and regulations.
4.4 Financial Statements. The financial statements of IHI
furnished to the Kara, consisting of the unaudited December 31, 1997
Consolidated Balance Sheet and Income Statement, and Consolidated Financial
Statements and Supplemental Information for the Year Ended December 31, 1996,
and the Period Ended December 31, 1995, attached hereto as Exhibit D, are
correct and fairly present the financial condition of IHI as of that date and
for the periods involved, and such statements were prepared in accordance with
generally accepted accounting principles consistently applied. These
financial statements do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
4.5 Undisclosed Liabilities. IHI has no material liabilities of
any nature except to the extent reflected or reserved against in the balance
sheets, whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, except as set
forth in Exhibit E attached hereto and incorporated herein by reference.
4.6 Interim Changes. Since the date of these balance sheets,
except as set forth in Exhibit E, there have been no (1) changes in the
financial condition, assets, liabilities or business of IHI, which in the
aggregate, have been materially adverse; (2) damages, destruction or loss of
or to the property of IHI, payment of any dividend or other distribution in
respect of the capital stock of IHI, or any direct or indirect redemption,
purchase or other acquisition of any such stock; or (3) increases paid or
agreed to in the compensation, retirement benefits or other commitments to
their employees.
4.7 Title to Property. IHI has good and marketable title to all
properties and assets, real and personal, proprietary or otherwise, reflected
in these balance sheets, and the properties and assets of IHI are subject to
no mortgage, pledge, lien or encumbrance, except as reflected in the balance
sheet or in Exhibit E, with respect to which no default exists.
4.8 Litigation. There is no litigation or proceeding pending,
or to the knowledge of IHI, threatened, against or relating to IHI or its
properties or business, except as set forth in Exhibit E. Further, no
officer, director or person who may be deemed to be an affiliate of IHI is
party to any material legal proceeding which could have an adverse effect on
IHI (financial or otherwise), and none is party to any action or proceeding
wherein any has an interest adverse to IHI.
4.9 Books and Records. From the date of this Agreement to the
Closing, the IHI Stockholders and the IHI Option Holders will cause IHI to (1)
give to Kara and its representatives full access during normal business hours
to all of its offices, books, records, contracts and other corporate documents
and properties so that Xxxx xxx inspect and audit them; and (2) furnish such
information concerning the properties and affairs of IHI as Xxxx xxx
reasonably request.
4.10 Tax Returns. IHI has filed all federal and state income or
franchise tax returns required to be filed or has received currently effective
extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously if
there is no Closing), IHI, the IHI Stockholders, the IHI Option Holders and
their representatives will keep confidential any information which they obtain
from Kara concerning its properties, assets and business. If the transactions
contemplated by this Agreement are not consummated by Xxxxx 00, 0000, XXX, the
IHI Stockholders and the IHI Option Holders will return to Kara all written
matter with respect to Kara obtained by them in connection with the
negotiation or consummation of this Agreement.
4.12 Investment Intent. The IHI Stockholders and the IHI Option
Holders are acquiring the shares or options to be exchanged and delivered to
them under this Agreement for investment and not with a view to the sale or
distribution thereof, and the IHI Stockholders and the IHI Option Holders have
no commitment or present intention to sell or otherwise dispose of the Kara
shares or options to be received in exchange for the IHI Shares or the IHI
Options hereunder. The IHI Stockholders and the IHI Option Holders shall
execute and deliver to Kara on the Closing an Investment Letter attached
hereto as Exhibit F and incorporated herein by reference, acknowledging the
receipt of a copy of the Agreement, the "unregistered" and "restricted" nature
of the shares or options of Kara being received under the Agreement in
exchange for the IHI Shares or IHI Options, and receipt of certain material
information regarding Kara, including, but not limited to copies of the
reports of Kara which have been filed with the Securities and Exchange
Commission under Section 15(d) of the 1934 Act during the past 12 months.
4.13 Corporate Authority. IHI has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder and will deliver to Kara or its representative at the Closing a
certified copy of resolutions of its Board of Directors authorizing execution
of this Agreement by its officers and performance thereunder.
4.14 Due Authorization. Execution of this Agreement and
performance by IHI hereunder have been duly authorized by all requisite
corporate action on the part of IHI, and this Agreement constitutes a valid
and binding obligation of IHI and performance hereunder will not violate any
provision of the Articles of Incorporation, Bylaws, agreements, mortgages or
other commitments of IHI. IHI shall provide Kara with copies of duly signed
and authorized consents of all persons or entities whose consent is required
to complete the transactions contemplated hereby.
4.15 Environmental Matters. IHI, the IHI Stockholders and the
IHI Option Holders have no knowledge of any assertion by any governmental
agency or other regulatory authority of any environmental lien, action or
proceeding, or of any cause for any such lien, action or proceeding related to
the business operations of IHI or its predecessors. In addition, to the best
knowledge of IHI, there are no substances or conditions which may support a
claim or cause of action against IHI or any of its current or former officers,
directors, agents, employees or predecessors, whether by a governmental agency
or body, private party or individual, under any Hazardous Materials
Regulations. Hazardous Materials means any oil or petrochemical products,
PCB s, asbestos, urea formaldehyde, flammable explosives, radioactive
materials, solid or hazardous wastes, chemicals, toxic substances or related
materials, including, without limitation, any substances defined as or
included in the definition of hazardous substances, hazardous wastes,
hazardous materials, or toxic substances under any applicable federal or
state laws or regulations. Hazardous Materials Regulations means any
regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
4.16 Access to Information Regarding Kara. IHI, the IHI
Stockholders and the IHI Option Holders acknowledge that they have been
delivered copies of what has been represented to be documentation containing
all material information respecting Kara and its present and contemplated
business operations, potential acquisitions, management and other factors;
that they have had a reasonable opportunity to review such documentation and
discuss it, to the extent desired, with their legal counsel, directors and
executive officers; that they have had, to the extent desired, the opportunity
to ask questions of and receive responses from the directors and executive
officers of Kara, and with the legal and accounting firms of Kara, with
respect to such documentation; and that to the extent requested, all questions
raised have been answered to their complete satisfaction.
Section 5
Conditions Precedent to Obligations of IHI,
the IHI Stockholders
and the IHI Option Holders
All obligations of IHI, the IHI Stockholders and the IHI Option
Holders under this Agreement are subject, at their option, to the fulfillment,
before or at the Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
representations and warranties of Kara contained in this Agreement shall be
deemed to have been made again at and as of the Closing and shall then be true
in all material respects and shall survive the Closing.
5.2 Due Performance. Kara shall have performed and complied
with all of the terms and conditions required by this Agreement to be
performed or complied with by it before the Closing.
5.3 Officers' Certificate. IHI, the IHI Stockholders and the
IHI Option Holders shall have been furnished with a certificate signed by the
President of Kara, attached hereto as Exhibit G and incorporated herein by
reference, dated as of the Closing, certifying (1) that all representations
and warranties of Kara contained herein are true and correct; and (2) that
since the date of the financial statements (Exhibit B hereto), there has been
no material adverse change in the financial condition, business or properties
of Kara, taken as a whole.
5.4 Opinion of Counsel of Kara. IHI, the IHI Stockholders and
the IHI Option Holders shall have received an opinion of counsel for Kara,
dated as of the Closing, to the effect that (1) the representations of
Sections 3.1, 3.2 and 3.12 are correct; (2) except as specified in the
opinion, counsel knows of no inaccuracy in the representations in 3.5, 3.6 or
3.7; (3) the shares of Kara to be issued to the IHI Stockholders under this
Agreement will, when so issued, be validly issued, fully paid and non-
assessable; and (4) the options of Kara to be exchanged with the IHI Option
Holders shall deemed to be validly issued.
5.5 Assets and Liabilities of Kara. Kara shall have no material
assets and no liabilities at Closing, and all costs, expenses and fees
incident to the Agreement shall have been paid.
5.6 Resignation of Sole Director and Executive Officer and
Designation of New Directors and Executive Officers. The present sole
director and executive officer of Kara shall resign, and shall have designated
nominees of IHI as directors and executive officers of Kara to serve in his
place and stead, until the next respective annual meetings of the stockholders
and Board of Directors of Kara, and until their respective successors shall be
elected and qualified or until their respective prior resignations or
terminations.
5.7 Name Change of Kara. On Closing, the name of Kara shall
be
changed to International Heritage, Incorporated or such other name as the
respective Boards of Directors of Kara and IHI shall determine, and Xxxxx X.
Xxxxxxx, Xx., who is the sole director and executive officer of Kara, who owns
approximately 88% of the outstanding voting securities of Kara, shall have
adopted and ratified all required or necessary resolutions under the Nevada
Revised Statutes to effect such name change.
Section 6
Conditions Precedent to Obligations of Kara
All obligations of Kara under this Agreement are subject, at its
option, to the fulfillment, before or at the Closing, of each of the following
conditions:
6.1 Representations and Warranties True at Closing. The
representations and warranties of IHI, the IHI Stockholders and the IHI Option
Holders contained in this Agreement shall be deemed to have been made again at
and as of the Closing and shall then be true in all material respects and
shall survive the Closing.
6.2 Due Performance. IHI, the IHI Stockholders and the IHI
Option Holders shall have performed and complied with all of the terms and
conditions required by this Agreement to be performed or complied with by them
before the Closing.
6.3 Officers' Certificate. Kara shall have been furnished with
a certificate signed by the President of IHI, attached hereto as Exhibit H
and incorporated herein by reference, dated as of the Closing, certifying (1)
that all representations and warranties of IHI, the IHI Stockholders and the
IHI Option Holders contained herein are true and correct; and (2) that since
the date of the financial statements (Exhibit D), there has been no material
adverse change in the financial condition, business or properties of IHI,
taken as a whole.
6.4 Opinion of Counsel of IHI. Kara shall have received an
opinion of counsel for IHI, dated as of the Closing, to the effect that (1)
the representations of Sections 4.2, 4.3 and 4.13 are correct; (2) except as
specified in the opinion, counsel knows of no inaccuracy in the
representations in 4.6, 4.7 or 4.8; (3) the IHI Shares to be delivered to Kara
under this Agreement will, when so delivered, have been validly issued, fully
paid and non-assessable; and the IHI Options are validly issued.
6.5 Books and Records. The IHI Stockholders, the IHI Option
Holders or the Board of Directors of IHI shall have caused IHI to make
available all books and records of IHI, including minute books and stock
transfer records; provided, however, only to the extent requested in writing
by Kara at Closing.
6.6 Acceptance by IHI Stockholders. The terms of this Agreement
shall have been accepted by the IHI Stockholders who own not less than 80% of
the IHI Shares by their execution and delivery of a copy of the Agreement and
related instruments.
Section 7
Termination
Prior to Closing, this Agreement may be terminated (1) by mutual
consent in writing; (2) by either the sole director of Kara or IHI, the IHI
Stockholders and the IHI Option Holders if there has been a material
misrepresentation or material breach of any warranty or covenant by the other
party; or (3) by either the sole director of Kara or IHI, the IHI Stockholders
and the IHI Option Holders if the Closing shall not have taken place, unless
adjourned to a later date by mutual consent in writing, by the date fixed in
Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to time,
after the Closing, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm
or perfect title to any property transferred hereunder or otherwise to carry
out the intent and purposes of this Agreement.
8.2 Waiver. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
8.3 Brokers. Each party represents to the other parties
hereunder that no broker or finder has acted for it in connection with this
Agreement, and agrees to indemnify and hold harmless the other parties against
any fee, loss or expense arising out of claims by brokers or finders employed
or alleged to have been employed by he/she/it.
8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first-class registered or certified mail, return
receipt requested, as follows:
If to Kara: 00 Xxxx 000 Xxxxx
Xxxxx, Xxxx 00000
With a copy to: Xxxxxxx X. Xxxxxxxxxx, Esq.
455 East 000 Xxxxx, #000
Xxxx Xxxx Xxxx, Xxxx 00000
If to IHI: 0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxxx Xxxxx Xxxxxxx, Esq.
Vice President, Legal Affairs
If to the IHI Stockholders
or IHI Option Holders: To the addresses listed in Exhibits
A and A-1
8.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
8.6 Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
8.7 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Nevada,
except to the extent pre-empted by federal law, in which event (and to that
extent only), federal law shall govern.
8.8 Assignment. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their successors and assigns;
provided however, that any assignment by any party of its rights under this
Agreement without the prior written consent of the other parties shall be
void.
8.9 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization effective the day and year first above written.
KARA INTERNATIONAL, INC.
Date: 3/5/98 By/s/ Xxxxx X. Xxxxxxx, Xx.
Xxxxx X. Xxxxxxx, Xx., President
INTERNATIONAL HERITAGE, INC.
Date: 3/6/98 By/s/Xxxxxxx X. Xxx Xxxxx
Xxxxxxx X. Xxx Xxxxx, President
COUNTERPART SIGNATURE PAGE
AGREEMENT AND PLAN OF REORGANIZATION
This Counterpart Signature Page for that certain Agreement and Plan of
Reorganization (the "Agreement") dated as of the 23rd day of February, 1998,
among Kara International, Inc., a Nevada corporation ("Kara"); International
Heritage, Inc., a North Carolina corporation ("IHI"); and the persons listed
in Exhibits A and A-1 hereof who are respectively the owners of record of all
of the outstanding common stock and certain option holders who own rights to
acquire common stock of IHI who are signatories thereto is executed by the
undersigned, an IHI Stockholder or IHI Option Holder, as of the date first
written above. The undersigned, through execution and delivery of this
Counterpart Signature page, intends to be legally bound by the terms of the
Agreement.
NAME DATE
/s/ Acme Holdings 2/28/98
/s/ Xxxxx X. Xxxxxxx 2/26/98
/s/ Xxxxxxxx Xxx Xxxxx 3/5/98
/s/ Advance Equities 3/2/98
/s/ Xxxxx Xxxxxx Xxxxxxxxx 3/2/98
/s/ Xxxxxxx Xxxxxxxx 3/5/98
/s/ Xxxx Xxxxxxxx 3/3/98
/s/ Xxxxxx X. Xxxx 3/2/98
/s/ Xxxxxx Xxxxx Xxxxxxxx 3/2/98
/s/ Xxxxxxx X. Xxxxxxxxx &
Xxxxxxx X. Xxxxxxxxx (JTROS) 2/26/98
/s/ Xxxxxx Xxx Xxxx 3/3/98
/s/ Xxxx X. and Xxxxxxx X. Xxxxxx (JTRS) 2/27/98
/s/ Xxxxxxx Xxxxxxx Xxxxxxxx 2/25/98
/s/ Faiger X. Xxxxxxxxx 3/4/98
/s/ Xxxxx X. Xxxxxxxxxxx/Xxxx X.
Xxxxxxxxxxx (JTRS) 2/26/98
/s/ Xxx Xxxxxxxxx 2/25/98
/s/ Xxxx Xxxxxxx 2/25/98
/s/ Xxxxxxx X. Xxxxxx III 2/25/98
/s/ Xxxxx X. Xxxxxxxx 3/5/98
/s/ Xxxxxx X. & Xxxxx X. Xxxxxxxx 3/5/98
/s/ Xxxxxxx X. Xxxxxxxx 3/5/98
/s/ Xxxxx Xxxxxx/Xxxxxxxx Xxxxxx 3/2/98
/s/ Xxxxxxx X. Xxxxxx 3/6/98
/s/ Xxxxx Xxxxx Xxxxxxx 2/25/98
/s/ Xxxxx X. & Xxxxxxx X. Xxxxxxx (JTRS) 2/25/98
/s/ Xxxxxxx X. Xxxxx 3/4/98
/s/ Xxxxxx & Xxx Xxxxx (JTRS) 2/27/98
/s/ Xxxx X. Xxxxxxx 3/2/98
/s/ Xxxxxxxx Xxxx Xxxxxxx 3/4/98
/s/ Xxxxxxxx Xxxxxx Xxxxxxxx 3/3/98
/s/ Xxxxxxx X. Xxxxxxxx 2/25/98
/s/ Xxxxxx Xxxxxxxx Xxxxxxxx 3/3/98
/s/ Enrico Xxxxxx Xxxxxxxx and
Xxxxx X. Xxxxxxxx (JTRS) 2/25/98
/s/ Xxxxx Xxxxxxx Xxxxxxx 3/3/98
/s/ Xxxxxxx X. Xxxxxxx, Xx. 3/3/98
/s/ Xxxxxxxx X. Xxxxxxx 3/3/98
/s/ Xxxx Xxxxx Xxxxxxx 2/28/98
/s/ Xxxx Xxxxx Xxxxxxx/Xxxxxxxx X.
Xxxxxxxxx (JTRS) 2/28/98
/s/ Capital Financial Dynamics Group 3/5/98
/s/ Xxxx X. Xxxxxxx 2/25/98
/s/ Xxxxxx X. & Xxxxxx X. Xxxxxxx 3/4/98
/s/ H. Xxxxxxx Xxxxxx 2/27/98
/s/ Xxxxxx X. Xxxxxxxx 3/3/98
/s/ Xxxx Xxxxxxx 3/3/98
/s/ Xxxxx Xxxxxxx 3/3/98
/s/ Xxxxxx X. & Xxxxxxx X. Xxxxx (JTWRS) 3/2/98
/s/ Xxxxxx X. Xxxxxx & Xxxxx Xxxx (JTRS) 3/1/98
/s/ Xxxxxx X. Xxxxxx 3/3/98
/s/ Xxx Xxxx Xxxxxx 2/25/98
/s/ Xxxxxx X. & Xxxxxxxxx X. Xxxxxx (JTRS) 3/4/98
/s/ Xxxxxxx Xxxx Xxxxxx 3/2/98
/s/ Xxxxxxx Xxxxx Xxxxxx 3/2/98
/s/ Dujay Living Trust 1994 (Xxxxxxxx
Xxx Xxxxx, Trustee) 2/27/98
/s/ Xxxxxxx Xxxxx Xxxxx 2/27/98
/s/ Xxxxxx X. Xxxxxxxxx 3/3/98
/s/ Xxxxxxx X. Xxxxxxxxx, Xx. 2/26/98
/s/ Xxxx Xxxxxx Xxxxxxx 3/3/98
/s/ Xxxxxxx X. & Xxxxx X. Xxxxxxx (JTRS) 3/3/98
/s/ Xxxxx X. Xxxxx 3/2/98
/s/ Xxxxxxx Xxxxxx Xxxxx 2/27/98
/s/ XxXxx Xxxxx 3/3/98
/s/ Xxxxx Xxxxxxx, MD 2/25/98
/s/ McCleldon Van Evans/Xxxxxx Xxx
Xxxxx (JTRS) 2/25/98
/s/ Etablissement Pour Le Placment Prive 3/2/98
/s/ Xxxxx X. Xxxxxxx 2/25/98
/s/ Xxxx Xxxxxxx Xxxxx 3/2/98
/s/ Xxxxx X. & Xxxx X. Xxxxx (JTRS) 3/2/98
/s/ Xxxxx X. Xxxxxxx 3/5/98
/s/ Xxxxx Xxxx Xxxx 2/27/98
/s/ Xxxxxxx X. Xxxxxxxx 2/25/98
/s/ Xxxx X. Xxxxxxxx 2/25/98
/s/ Xxxxx Xxxxxxxx, Xx. 2/25/98
/s/ Gold Raven, Inc. 2/27/98
/s/ Xxxxxx Xxxxx/Xxxxxxxxx Xxxxx (JTRS) 2/27/98
/s/ Xxxxxx X. Xxxxxxx/Xxxxxxxx X. Xxxxxxx
(JTRS) 2/26/98
/s/ Xxxxx Xxxxxxxx 2/28/98
/s/ Xxxxx X. Xxxx 3/3/98
/s/ Xxxxx X. Xxxxxx 2/26/98
/s/ Xxxxx Xxxxxxx 3/5/98
/s/ Reine R. and Xxxxx Xxxxxxxxxx (JTRS) 3/3/98
/s/ Xxxxx X. Xxxxxx 2/26/98
/s/ Xxxxxxx X. Xxxxx 3/3/98
/s/ Xxxxxx Xxxxxxxx Xxxxxx 2/25/98
/s/ Xxxx Xxxxx 3/2/98
/s/ Xxxx X. Xxxxxx & Xxxxxxxx X. Xxxxxx
(JTRS) 2/25/98
/s/ Xxxxxxx Xxxxxx Xxxxxxx & Xxxxx
Xxxxx Xxxxxxx, JTRS 2/27/98
/s/ Xxxxxxx X. Xxxxxxx 2/26/98
/s/ Imperial Management Fund 3/3/98
/s/ Infinity Marketing 2/26/98
/s/ Xxx Xxxxxx 2/25/98
/s/ Xxxxxxx Xxxxx Xxxxxx 3/3/98
/s/ Jade Resources Institute 2/25/98
/s/ Xxxxx X. Xxxxx 3/4/98
/s/ Xxxxx X. Xxxxx 2/25/98
/s/ Xxxxx X. Xxxxx 3/4/98
/s/ Xxxxx X. Xxxxxxx 3/6/98
/s/ Xxxxxx X. Xxxxxxx, Xx. 3/6/98
/s/ Xxxxxxxxx Xxxxxxx Kennel 2/25/98
/s/ Xxxx Xxxxxxxxx Kennel 2/25/98
/s/ Xxxx Xxxxxxxxx 2/25/98
/s/ Xxxxxx X. & Xxxxxx X. Xxxxxxx (JTRS) 3/5/98
/s/ Xxxxxx Xxxxxxxx 3/3/98
/s/ Xxxxx Xxxxx 3/3/98
/s/ Xxxxxxx XxXxxxx 2/28/98
/s/ Xxxxxxx Xxxxxxxx 3/3/98
/s/ Leisure Time Rentals & Mgmt, Inc. 3/3/98
/s/ Xxxxxxxx Xxxxxxx Leone 2/25/98
/s/ Xxxxxxxx X. Xxxxx 3/2/98
/s/ Xxxxxx Xxxxx 2/27/98
/s/ Xxxx Xxxxxxxx 2/26/98
/s/ Xxxxxx Xxxxx Xxxxxx 3/5/98
/s/ Xxxxxx Xxxxxx 3/5/98
/s/ The Xxxxx X. Xxxxxx Irrevocable Trust 2/26/98
/s/ Xxxxx XxXxxx 3/3/98
/s/ Xxxxx X. Xxxxxx XxXxxxxx 2/26/98
/s/ Braxton F. Mettitt 3/5/98
/s/ Xxxxxx X. Xxxx 3/3/98
/s/ Xxxxxxx X. Xxxx & Xxxxxxxx X. Ming (JTRS)3/3/98
/s/ Xxxxxxx X. Xxxxxxxx 2/25/98
/s/ Xxxxxxx X. & Xxxxxx X. Xxxxx (JTRS) 2/26/98
/s/ Xx. Xxxxxxx X. Xxxxx III 3/5/98
/s/ Ray & Xxxxxx Xxxxxxxx (JTRS) 2/25/98
/s/ Xxxxxxx Xxxxxx Xxxxxxx 2/27/98
/s/ Xxxxx X. Xxxxxxxx 2/27/98
/s/ Xxxxxx Xxxxxx Queen 3/2/98
/s/ Xxxxxx X. & Xxxxx X. Xxxxx (JTRS) 2/25/98
/s/ Xxxxxx X. Xxxxxxxxxx 3/1/98
/s/ Xxxxx Xxxxxxxx 3/5/98
/s/ Xxxxx X. Xxxxxx 2/26/98
/s/ Xxxxxxxx Xxxxxxx 3/2/98
/s/ Xxxxxxx X. Xxxxxx 2/26/98
/s/ Xxxxxx Xxxxxx Xxxx 3/2/98
/s/ Dr. T. Xxxxxx Xxxxxx &/or
Xxxx X. Xxxxxx (JTRS) 3/2/98
/s/ Xxxxxxx X. Xxxxxxx 2/25/98
/s/ SPS Investments 3/4/98
/s/ Xxxxx X. Xxxxxxx 2/26/98
/s/ Xxxxxx Xxxxxx Saxon 3/3/98
/s/ Xxxxxx X. Xxxxxx, Xx. 2/26/98
/s/ Xxxxxx X. Xxxxxx 2/26/98
/s/ Xxxxxxxx X. Xxxxxxx 3/2/98
/s/ Xxxxxxx Xxxx Xxxxxxxxxxx 2/25/98
/s/ Xxxxxxxxx Xxxxxx 3/2/98
/s/ Xxxxxxx & Associates Profit Sharing Trust
00-0000000 2/27/98
/s/ Xxxxx Xxxxxx Xxxxxxxx-Xxxxxx Xxxx
Xxxxxxxx (JTRS) 2/28/98
/s/ (Xxxxxx X. Xxxxxxx) Xxxxxx Xxxxxxx) 3/2/98
/s/ Xxxxxx Xxxxxxxx/Xxxx Xxxxxxxx, JWROS 2/26/98
/s/ Xxxx and Xxxxxx Xxxxxxxx, JWROS 2/25/98
/s/ Xxxx X. Xxxxx & Associates 3/4/98
/s/ Xxxxxx Xxxxx 3/2/98
/s/ Xxxxxxx Xxxxxx Xxxxx 2/26/98
/s/ Xxx X. Xxxxx 3/2/98
/s/ Xxx X. Xxxxx 2/25/98
/s/ Xxxxx X./Xxxxxxx X. Xxxxxx 2/25/98
/s/ Xxxxxx X. & Xxxxxxx X. Xxxxx (JTRS) 2/26/98
/s/ Xxxxx Xxxx X. Xxxxxx 3/3/98
/s/ Xxxxx X. Xxxxxx 2/26/98
/s/ Xxxxx X. Xxxxxxx 2/25/98
/s/ Xxxxx Xxxx Xxxxxxx 3/2/98
/s/ To the Top We Go, Inc. Xxxx Xxxxxxxx 2/25/98
/s/ Xxxxx X. Xxxxxx 2/25/98
/s/ Xxxxxxx X. Xxx Xxxxx 3/2/98
/s/ Xxxxxx X. & Xxxxxx X. Xxxxxxx (JTRS) 2/25/98
/s/ Xxxxx X. & Xxxxx X. Xxxxx (JTRS) 2/25/98
/s/ Xxxxxx Xxxxxxx Xxxx 3/4/98
/s/ Xxxxx & Xxxxx Xxxxxxxx 3/1/98
/s/ Xxxx X. Xxxxxxxxx 3/4/98
/s/ Xxxxxxx X. Xxxxx, Xx./Xxxxxxxx X. Xxxxx 3/3/98
/s/ Xxxxxxx X. Xxxxxxxxx & Xxxxx
X. Xxxxxxxxx (JTRS) 2/25/98
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE
This Counterpart Signature Page for that certain Agreement and Plan of
Reorganization (the "Agreement") dated as of the 23rd day of February, 1998,
among Kara International, Inc., a Nevada corporation ("Kara"); International
Heritage, Inc., a North Carolina corporation ("IHI"); and the persons listed
in Exhibits A and A-1 hereof who are respectively the owners of record of all
of the outstanding common stock and certain option holders who own rights to
acquire common stock of IHI who are signatories thereto is executed by the
undersigned, an IHI Stockholder or IHI Option Holder, as of the date first
written above. The undersigned, through execution and delivery of this
Counterpart Signature page, intends to be legally bound by the terms of the
Agreement.
OPTIONEES DATE
/s/ Xxxxxxx X. Xxxxxxxx 2/25/98
/s/ Xxxx Xxxxxxxx 2/25/98
/s/ Imperial Management Fund 3/3/98
/s/ Mayflower Venture Capital Fund, LLC 3/5/98
/s/ Xxxx Xxxxxx 3/4/98
/s/ Xxxxxx X. Xxxxxx 3/2/98
/s/ Xxxxxxx Xxxxxxx Xxx Xxxxx 3/5/98
/s/ Xxxxxxx Xxxxx Xxx Xxxxx 3/2/98
/s/ Xxx Xxx Xxxxx 3/3/98
/s/ Xxxx Xxx Xxxxx 3/6/98
EXHIBIT A
The attached list outlines the persons or entities who own common
shares of IHI. Each person or entity who is an accredited investor and who
executes and delivers a copy of the Plan will receive three shares of Kara for
each one share that they own of IHI.
International Heritage, Inc Shareholders 2/23/98
SHAREHOLDER NAME ADDRESS TOTAL SHARES
Xxxxxxx Xxxxx P. 0000 Xx. Xxxxxx Xx. 7,500
Xxxxxxx Xxxxxx, XX 00000
Acme Holdings P. O. box 12595 379,375
(Xxxxx Xxxxx) Xxxxxxxxxx, XX 00000
00-0000000
Advance Equities P. O. Box 1418 206,400
Xxxxx Xxxxxx Xxxxxxxxx, XX 00000
###-##-####
Alexander Xxxxx Xxxxxx P. O. Xxx 00 000
Xxxxx, XX 00000
Xxxxx Xxxxxxxx Xxx 0000 Xxx Xxxxxxxx Xxxxx 0,000
Xxxxxxxx, XX 00000
Xxxxxx Xxxxxx Xxxx 0000 XX 000xx Xxxxx X000 7,500
Xxxxxxx, XX 00000
Xxxxxxxx Xxxxxxx 0000 Xxxxxx Xxxx Xxxx 000
Xxxxx Xxxxx Xxxx, XX 00000
Associated International Marketing, Inc. 45,000
Xxxxxxxx, Xxxxxx X. & Xxxxxxx III
0000 XX 00xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Xxxxxxxx Xxxx 0000-X Xxxxx Xxxxx 000
Xxxxxxx, XX 00000
Xxxx Xxxxxx Xxx 000 Xxxxxx Xxxx 1,500
###-##-#### Xxxxxxxxx, XX 00000
Xxxx Xxxxxx B. 0000 Xxx Xxxx Xxx 10-P 45,000
###-##-#### Xxxxxxxxxx, XX 00000
Xxxxxxxx Xxxxx 000 Xx. Xx. 000 0,000
Xxxxxxxxx, XX 00000
Xxxxxxxxx Xxxxxxx D & Xxxxxxx M 45,000
###-##-#### ###-##-#### 000 Xxxxxxxxxx
Xxxxxx, Xx 00000
Xxxxxx Xxxx Xxx & Xxxxxxx 0000 X. Xxxxxx Xxxxxxx 0,000
Xxxxx Xxxxxxx, XX 00000
Xxxxxxxx Xxxxxxx A 0000 Xxxxxxxxx Ct 46,875
###-##-#### Xxxxxxx, XX 00000
Xxxxxxxxxxx Xxxxx P & Nina L, JWROS 000 Xxxxxxxxx Xxxxx 46,125
###-##-#### ###-##-#### Xxxxxxx, XX 00000
Xxxxxxxxx Faiger M X.X. Xxx 0000 22,500
Xxxxxxxxxx, XX 00000
Xxxxxxxxx Xxx Xxxx X.X. Xxx 00000 375
###-##-#### Xxxxxxxxx, XX 00000
0000 X Xxxxxxx Xx
Xxx Xxxxxx, XX 00000
Xxxxxxx Xxxx 0000 Xxxxxx Xxxxxx 4,500
###-##-#### New Xxxxxx, XX 00000
Xxxxxx Xxxxxx Xxxxxx III 0000 Xxxxxx Xx. Xxx 00 000
###-##-#### Xxx Xxxxxx, XX 00000
Xxxxxxxx Xxxxx S 0000 Xxxxxxxx Xxx Xx 45,000
###-##-#### Xxxxxxxxx, XX 00000
Xxxxxxxx Xxxxxx E & Xxxxx C 0000 Xxxxxxx Xxxxx 45,000
000-00-000 ###-##-#### Xxxxxxxx, XX 00000
Xxxxxxxx Xxxxxxx E 000 Xxxxx Xxxxxx Xxxxx 45,000
Xxxxxxx, XX 00000
Xxxxxx Xxxxx & Xxxxxxxx 0000 Xxxxxxx Xx 4,500
###-##-#### ###-##-#### Xx Xxxxxx, XX 00000
Xxxxxx Xxxxxxx Xxxxx 0 Xxx 0000 3,750
Xxxxxxx, XX 00000
Xxxxxxx Xxxxx Xxxxx 0000 Xxxxxx Xxxxx 1,500
###-##-#### Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxx W & Xxxxxxx E 0000 Xxxxxx Xxxxx 45,000
###-##-#### ###-##-#### Xxxxxxxxxx XX 00000
Xxxxx Xxxxxxx H X.X. Xxx 00000 000
Xxxxxxxxxxxx, XX 00000
Xxxxxxxxx Xxxxxxx A 000 Xxxxxxxxxxxx Xx XX #0 00,000
Xxxxxxxxxxxx, Xxxxxxx,
Xxxxxx LOP 1BO
Xxxxx Xxxxxx & Xxx 000 Xxxxxx Xxxx 12,500
Xxxxxxxxx, XX 00000
Xxxxxxx Xxxx 000 Xxxx Xxxxxx 22,500
###-##-#### Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxxx 000 Xxxx Xxxxxx 00,000
Xxxxxxxxxx, XX 00000
Xxxxxxxx Xxxxxxxx Xxxxx 0000 X. 0xx Xxxxxx 1,500
###-##-#### Xxxxxxxxx, XX 00000
Xxxxxxxx Xxxxxxx Aine 0000 0xx Xxxxxx X. 000
Xxxxxxxxx, XX 2220
Xxxxxxxx Xxxxxx Xxxxxxxx 0000 0xx Xxxxxx X 000
Xxxxxxxxx, XX 00000
Xxxxxxxx Xxxxxx Xxxxxx 0000 Xxxx Xxxxx 7,500
###-##-#### Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxx Xxxxxxx 000 Xxxxxx Xxxx #000 3,750
Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxxx A 000 X Xxxxxxx Xx 750
###-##-#### Xxxxxxx, XX 00000
Canning, Jr Xxxxxxx Xxxxxxx 1570 Fallowfield Ct 28,500
###-##-#### Xxxxxxx, XX 00000
Xxxxxxx Xxxx Xxxxx 000 Xxxxxx Xxxx #000 45,000
Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxx Xxxxx & Goldammer307 Xxxxxx Pkwy #714 3,750
Xxxxxxxx R Xxxxxxxxxx, XX 00000
Capital Dynamics Financial Group 000 Xxxxxxx Xxxx Xx 419,250
Xxxxxxx IDerrick L Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxx J 000 Xxxxxxxxx Xxxxx 000
Xxx Xxxxxx, XX 00000
Xxxxxxx Xxxxxx W & Xxxxxx 0000 Xxxx Xxxxxx Xx 101,250
###-##-#### Xxxxxxxxxx, XX 00000
Central Welding & Industriai Supply 0000 Xxxxxxx Xxx 1,875
(Xxxxx X. Xxxx, Xx.) Xxxxxxx, XX 00000
00-0000000
Xxxxxx X. Xxxxxxx 000 X. Xxxxx Xx 000
###-##-#### Xxxxx, XX 00000
Xxxxxxxx Xxxxxx L c/o International Heritage
of Can 45,000
###-##-#### 0000 Xxxxxxx Xxxxx
Xxxxx #00
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxxx Xxxx 0000 Xxxxxx Xxxxx Xxxxx 000,000
Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxx 128OO Laurens Ridge # 1213 45,000
Xxxxxxxxx, XX 00000-0000
Xxxxxxxx Xxxxx 0000 Xxxxx Xxx 0,000
###-##-#### Xxxxxxxxxx, XX 00000
Xxxxx Xxxxxxx C 0000 Xxxxx Xxxxxx Xx 9,375
###-##-#### Xxxx Xxxxx, XX 00000
Cromer Jr Xxxxxx S & Xxxxx J 000 Xxxxx Xxx Xxxxxx 1,500
###-##-#### ###-##-#### Xxxxxxxx, XX 00000
Xxxxxx Xxxxxx E X.X. Xxx 000 3,750
###-##-#### Xx Xxxxxxxx, XX 00000
Disrnan Xxx Xxxx X.X. Xxx 00000 90,000
464484899 Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxxx 8 Xxxxxxxxx 0000 XX 00xx Xxxxxxx 3,750
Xxxxxxxxxxx, XX 00000
Dujay Living Trust of 1994 000 Xxxxxx Xxxx 3,750
(Xxxxxxxx Xxx Xxxxx, Trustee) Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxxx Clay 000 Xxxxxxx Xxxxxx S. E. 1,500
###-##-#### Xxxxxxx, XX 00000-0000
Xxxxxx Xxxxxxx Xxxxx 0000 Xxxxxxxxx Xxxxx 000
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxx & Xxxxx 0000 Xxxxxxx Xxxxx 1,500
###-##-#### ###-##-#### Xxxxxxxxxx, XX 00000
Xxxxx Xxxxxxx Xxxxx X.X. Xxx 0000 2,250
###-##-#### Murrells Xxxxx, XX 00000
Xxxxxxxxx Xxxxxx B 0000 Xxxx Xxxxxxx Xxxxxx 262,500
Xxxxxx, XX 00000
Xxxxxxxxx Jr Xxxxxxx Xxxxxxxx 0000 Xxxxxxxx Xx 7,500
###-##-#### Xxxxxxxxx, XX 00000
Elliot Xxxx Xxxxxx 0000 Xxx 000 Xxxxxx S. 28,125
###-##-#### Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxx X & Xxxxx X X.X. Xxx 0000 102,375
###-##-#### ###-##-#### Xxxxxxxxx, XX 00000
Xxxxx Xxxxx L 0000 Xxxx'x Xxxx Xx 000,000
Xxxx, XX 00000
Xxxxx Xxxxxxx Xxxxxx 000 Xxxxxxxxx Xx 000
###-##-#### Xxxxx, XX 00000
Irod XxXxxx 000 Xxxxx Xxxxx Xx 000
###-##-#### Xxxxxxxx, XX 00000
English M.D. Xxxxx 000 Xxxxxx Xxx 00,000
Xxxxxx, XX 00000
Etablissement Pour le Placement Prive 000 Xxxxx Xxxxxx 50,000
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
Xxxxx McCleldon & Xxxxxx 2923 Chaville 2,250
Xxxxxxx, XX 00000
Xxxxxxx Xxxxx R 000 Xxx Xxxxxxx Xx 3,750
###-##-#### Xxxxxxx, XX 00000
Fears Xxxx Xxxxxxx 000 Xxxxxx Xxxx Xx 5,250
###-##-#### Xxx Xxxxxx, XX 00000
Xxxxx Xxxxx R & Xxxx J 000 Xxxxxx Xxxx Xx 0,000
Xxx Xxxxxx, XX 00000
Xxxxxxx Xxxxx US 15 North 3,750
Xxxxxxxxx, XX 00000
Xxxxxx Jr Xxxxxxx X & Xxxxxx X X.X. Xxx 000 18,750
###-##-#### ###-##-#### Xxxxxxxxxx, XX 00000
Xxxx Xxxxx Xxxx 000 Xxxxxx Xxxxx 37,500
###-##-#### Xxxxxxx, XX 00000
Xxx Xxxxx 00 Xxx Xxxxx 000
Xxxxxxxx, XX 00000
Xxxxxxxx Xxxxxxx C 0000 X. Xxxxx Xxxxx Xx. 3,375
###-##-#### New Xxxxxx, XX 00000
Xxxxxxxx Xxxx J 0000 X. Xxxxx Xxxxx Xx. 3,375
###-##-#### New Xxxxxx, XX 00000
Geoffroy, Jr Xxxxx 0000 X. Xxxxx Xxxxx Xx. 4,500
###-##-#### New Xxxxxx, XX 00000
Xxxxx Xxxx H 0000 Xxxx Xx #00 30C 750
###-##-#### Xxxxxxxx, XX 00000
Gold Raven, Inc 0000-X Xxxxxxxxxx Xxxx Xxxxx00,000
(XXXxxxx, Xx.) Xxxxxxxxx, XX 00000
Xxxx Xxxxxxxx A 0000 X Xxxxxxxxx Xxx #000 000
Xxx Xxxxxxx, XX 00000
Xxxxx Xxxxxx & Xxxxxxxxx P.O. Box 543 7,500
Murrells Xxxxx, XX 00000
Xxxxxxx Xxxx 0000 X. Xxxxxxxxx Xx
###-##-#### Xx Xxxxxxxx, XX 00000
sold 3,750 to Xxxxxx X Xxxxxx
Xxxxxxx Xxxxxx & Xxxxxxxx 3609 Satellite Court 93,750
Xxxxxxx, XX 00000
Xxxxxxxx Xxxxx 0000 Xxxx Xxxx Xxxxx 000
Xxxxxxxxxx, XX 00000
Xxxx Xxxxx S X.X. Xxx 00000 3,750
###-##-#### Xxxxxxxx, XX 00000
Xxxxxxx Xxxxxx A. 0000 Xxxxxxx Xxxxx 0,000
Xxxxxxx, XX 00000
Xxxxxx Xxxxx M 00 Xxxxxxxxx Xxxxxxxxx 3,000
Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxx A 000 Xxxxxxxxxx Xx 1,875
Xxxxxxx, XX 00000
Hemelright Reine R & Xxxxx 0000 Xxxxxxx Xxxxx 1,500
###-##-#### ###-##-#### Xxxxxx Xxxx, XX 00000
Xxxxxx Xxxxx 00000 Xxxxxxxxxxx Xx 0,000
Xxx Xxxxxx, XX 00000
Xxxxx Xxxxxxx R 0000 Xxxxxxxxx Xxxxx 0,000
Xxxxxxxxx, XX 00000
Xxxx Xxxxx A & Xxxxx J 0000 Xxxxxx Xx 4,500
###-##-#### ###-##-#### Xxxxx Xxxxxxx, XX 00000
Xxxxx Xxxxxxx L 000 Xxxxxxxxx Xxxxx 93,750
Xxxx, XX 00000
Xxxxxx Xxxxxx Xxxxxxxx 0000 Xxxxxxxx Xxxxx 0,000
###-##-#### Xxxxxxxx, XX 00000
Xxxxx Xxxx 000 Xxxxx Xxxx Xx 45,000
###-##-#### Xxxxxxxxxx, XX 00000
Xxxxxx Xxxx F & Xxxxxxxx H 000 Xxxxxxx Xx 22,500
###-##-#### ###-##-#### Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxx Xxxxxx 000 Xxxxxx Xxxx 1,875
###-##-#### Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxx A 10805 Canaan Valiey Ct 140,625
###-##-#### Xxxx Xxxxx, XX 00000
Imperial Management Fund 000 Xxxx Xxxxx Xx, Xxx 000 686,250
Xxxxx X Xxxxx 00-0000000 Xxxxxxxxxx, XX 00000
(formerly Omega Leasing)
Infinity Marketing 000 Xxxxxx Xx 3,000
Xxxx Xxxxxxx L Xxxxxxx, XX 00000
###-##-####
Xxxxxx Xxx X.X. Xxx 000 0,000
Xxxxx, XX 00000
Xxxxxx Xxxxxxx Xxxxx 000 Xxxxx Xxxxx 7,500
###-##-#### Xxxxx Xxxxx, XX 00000
Jade Resource Xxxxxxxxx 000 Xxxxxx Ct 37,500
Xxxxxxxx Xxxxxx Xxxxxx, XX 00000
###-##-####
Xxxxx Xxxxx B 2 Wild Xxxxxxxxx Ct 37,500
###-##-#### Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxxx Xxxx 0000 Xxxxxxxx Xxxxx 0,000
Xxxxxxxxxx, XX 00000
Xxxxx Xxxxx W 0000 Xxxxxx Xxxxx 3,750
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxx FBO: Xxx Xxxxx Xxxxxxxx 000 Xxxxxxxx Xxxx 750
Tax ID 43-034 Cust. No.000-00002-0-8 Xxxxxxxx Xxxxxxx, XX 00000
Cusip No. 459641-10-6
Xxxxx Xxxxx & Xxxxxxxxx 000 Xxxxx Xx 2,250
###-##-#### ###-##-#### Xxxxxxxxxx, XX 00000
Xxxxx Xxxxx Xxxx 000 Xxxx Xx
*sold 000 xx X. Xxxxxxxx Xxxx Xxxx, XX 00000
Xxxxx Xxxxx 0000 Xxxxxxxx Xxxxx 00
###-##-#### Xxxxxxx, XX 00000
Xxxxxxx Xxxxx W 0000 XXX Xxxxx 000
Xxxxxx, XX 00000
Xxxxxxx Sr Xxxxxx R 5136 JRK Drive 1,500
Xxxxxx, XX 00000
Xxxxxxx Xxxxxxx J 000 Xxxxxxx Xxxxx Xxx X 1,875
Xxxxxxxx, XX 00000
Kennel Xxxxxxxxx Xxxxxxx 000 Xxxxxxx Xxxx 5,250
###-##-#### Xxxxxxxxxx, XX 00000
Kennel Xxxx Xxxxxxxxx 000 Xxxxxxx Xxxx 5,250
###-##-#### Xxxxxxxxxx, XX 00000
Xxxxxxxxx Xxxx 0000 Xxxxx Xxxxx Xxxx 0,000
Xxxxxxxxx, XX 00000
Xxxxxxxx Xxxxxx 000 Xxxxxx Xxxxxx, Xxx 00 60,000
Val Xxxxx, XX XXX 0XX
Xxxxxx
Xxxxxxx Xxxxxx D & Xxxxxx G 105 Beechtree 497,925
Xxxx, XX 00000
Xxxxx Xxxxxx 000 Xxxxxxxxxx Xxxxxx Xx 22,500
###-##-#### Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxxxx 000 Xxxxxx Xxxxx Xxx 000 A 2,250
Xxx Xxxxxxx, XX 00000
XxXxxxx Xxxxxxx 0 Xxxxxxxx Xxxxx Xxxxx 000 22,500
###-##-#### Xxxxxxxxx, XX 00000
Xxxxxxxx Xxxxxxx 000 Xxx-Xxx Xxxxx 15,000
Xxxxxxx XX 00000
Leisure Time Rentals & Mgmt X.X. Xxx 000 45,000
(Xxxx Xxxxxxx) ###-##-#### X. Xxxxxx Xxxxx XX 00000
Leone Xxxxxxxx Xxxxxxx 000 Xxx Xxxx Xx 000
###-##-#### N. Top Xxxx Xxxxx, XX 00000
Xxxxxxxxx Xxxxxx V & Xxxxxx Y 00000 Xxxxxxx Xxxx Xxx 000 3,750
###-##-#### ###-##-#### Xxxxxxxx Xxxxx, XX 00000
Xxxxx Xxxxxxxx X 000 Xxxxx Xxxx 7,500
###-##-#### Xxxxxxxxx, XX 00000
Xxxxx Xxxxx J & Xxxxx B 000 Xxxxxxxx Xx 000
Xxxxxxxxxxxx, XX 00000
Xxxxx Xxxxxx Xxxxx 00, Xxx 000 000
Xxxx Xxxx, XX 00000-0000
Little Xxxxxx Xxxxx 00000 Xxxxxx Xx 000
Xxx Xxxxxx, XX 00000
Xxxxxxxx Art 0000 X. Xxxxxxxxx Xx 3,750
###-##-#### Xxxxx, XX 00000
Xxxxx Xxxxx LeRoyal 0000 Xxxxxxxx Xx 0,000
###-##-#### Xxxxxxxx, XX 00000
Xxxxxxx Xxxxxx T 00000 Xxxxxxxx Xxxxx 000
Xxxxxxxxxx, XX 00000
Xxxxxxxx Xxxx 0000 Xxxxxxxx Xxxxxx 00,000
Xxxxxxx, XX 00000
Xxxxxx Xxxxxx Xxxxx 118-Conque Drive 7,500
###-##-#### Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxx W 000 Xxxx Xxx 1,500
###-##-#### Xxxxx Xxxx, XX 00000
Xxxxxx Xxxxx L. Irrevocable Trust 0000 Xxxxxxx 000 Xxxx 45,000
Xxxx Xxxx, XX 00000
XxXxxx Xxxxx X.X. Xxx 000 00,000
Xxxxxxxx, XX 00000
XxXxxxxx-Xxxxxxx Xxxxx 000 Xxxxx Xxxx 1,500
Madison, W1 25130
XxXxxxxx Air Conditioning & 915 N. San Jacinto 18,750
Heating, Inc. Xxxxxxxxx, XX 00000
00-0000000
XxXxxxxx Xxxxx K Xxxxxx 000 Xxxxxx Xxxx 37,500
Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxx 0000 Xxxx Xx 000,000
Xxxxx Xxxxxx, XX 00000
Xxxx Xxxxxx Louis 000 0/0 Xxxxxxx Xxxxxx 63,750
Xxx Xxxxxxx, XX 00000
Ming Xxxxxxx Xxxxx 0000 Xxxxxxxx Xxxx 18,750
Xxxxxxx, XX 00000
Xxxxxxxx Xxxx Xxxxx 0000 Xxxxxxxx Xxx 2,025
###-##-#### Xxx Xxxxxxx, XX 00000
Xxxxxxxx Xxxxxxx J X.X. Xxx 00 0,000
###-##-#### Xxxx, XX 00000
Xxxxx Xxxxxxx T & Xxxxxx E 000 Xxxxxxxxx Xxxxx 000
Xxxxxxx, XX 00000
Xxxxxx Xxxxx G & Xxxxxx N 000 Xxxxxxxxxx Xxx 750
###-##-#### ###-##-#### Xxxxxxx-Xxxxx, XX 00000
Xxxxx III Xxxxxxx A 0000 Xxxxxxxxx Xxxxx 7,500
###-##-#### Xxxxxxxxxx, XX 00000
Xxxx Xxxx Xxxx 000 XxxXxxxxx Xxxxx 2,250
Xxxxxx, XX 00000
Xxxxxx Xxxxx & Xxxxxx Family 00000 Xxxxxxx Xxxx #000 3,750
###-##-#### Trust Xxxxxxxx Xxxxx, XX 00000
Xxxxxxxx Xxx & Xxxxxx Rt 2 Box 16 22,500
Old Gilbert Town Rd
Rutherfordton, NC 28134
Oakley Elizabeth M 2116 Front St D-3 1,500
###-##-#### Durham, NC 27705
Olinger Darrell Murray 6654 Lower Lake Drive 7,500
Westerville, OH 43082
Ostrander Burch & Company, Inc3605 Glenwood Ave Ste 510 7,500
(Craig C Ostrander) Raleigh, NC 27622
Pastore Mario 14 Orchard Street 22,500
###-##-#### Mt Vernon, NY 10552
Phillips Terry D 1051 Darlene St 52,500
###-##-#### Palmyra, PA 17078
Queen Harold W & Linda W 606 Newbern Court 45,000
###-##-#### ###-##-#### Burlington, NC 27215
Queen Harold Walter 606 Newbem Court 825
###-##-#### Burlington, NC 27215
Reckenbeil Robert A 7101 Winding Way 3,750
###-##-#### Wake Forest NC 27587
Reynolds Charles O & Deborah 718 Ideal Drive 375
Concord, NC 28025
Reynolds James R 360 Barbara Street 30,000
Landisville, PA 17538
Rikard Larry J 201 Elam Rd 22,500
###-##-#### Lawndale, NC 28090
Rodgers Clotilda W 4326 Chilton Way 45,000
###-##-#### High Point, NC 27265
Romero Barbara M 504 East Third Street 750
Broussard, LA 70518
Ross Fannie Lenora 26118 NW CR 239 6,000
###-##-#### Alachua, FL 32615
Rourk Helen G 4810 Cameilla Drive 3,000
Myrtle Beach, SC 29577
Runion Dr Martin & Nina W 50 Tradd Rd 198,750
###-##-#### Georgetown, SC 29440
Rushing Rebecca G 313 Calypso Lane 375
Lafayette LA 70508
Sabastes Tracy E 106 Benbow Lane 37,500
Charlotte, NC 28214
Sardinas Karen Elaine 26514 NW 98th Street 1,500
###-##-#### Alachua, FL 32615
Savage Claude W 106 Benbow Lane 597,750
Charlotte, NC 28214
Savage Jr Claude W (Chris) 106 Benbow Lane 37,500
Charlotte, NC 28214
Saxon Samuel Barron 119 Sherwood Lane 1,125
Greenwood, SC 29649
Schexnayder Douglas Rene 1505 Dehart Street Apt D 2,400
New Iberia, LA 70560
Schnell Patricia S 1931 NW 32nd Terrace 3,750
###-##-#### Gainesville, FL 32605
Sexton Comelius 6916 Chamonix Place 1,500
###-##-#### Raleigh, NC 27613
Sheehan Jeffrey 4 Elm Creek Drive Apt 506 15,000
Elmhurst, IL 60126
Sherrill James R & Sylvia M 722 Sherwin Lane 22,500
Concord, NC 28025
Sidden Bobby Dean 225 Collins Rd 7,500
###-##-#### China Grove, NC 28023
Siemian Walter 9513 Lavill Ct 7,500
###-##-#### Windermere, FL 34786
Simonson Daniel & Judy JWROS HC 61 Box 23B 12,500
Loring, MT 59537
Simonson Lynn & Eunice JWROS HC 74 Box 200 12,500
Saco, MT 59261
Skidmore Eric O & Trina C 904 Lafayette Drive 3,000
###-##-#### ###-##-#### Albermarle, NC 28001
Fred B. Smith Assoc. 3009 Vanderbilt Dr #28 206,400
Huntsville, AL 35801
Smith Joseph 1608 Nella Drive 750
Athens, AL 35611
Smith Lawrence L & Dorothy 1123 NW 107th Terrace 3,750
Gainesville, FL 32606
Smith Richard Blaine 2103 Cottage Place 1,500
Greensboro, NC 27458
Smoak Ann M 927 Portabella Lane 3,000
Charleston, SC 29412
Snyder Donald & Patricia P.O. Box 276 4,500
###-##-#### ###-##-#### Clear Lake, WA 98235
(Patricia Van De Grift)
Spoon Joe F 2124 Crescent Drive 22,500
###-##-#### Graham, NC 27253
SPS Investments 4201 Congress St. Suite 350 150,000
John D. Phillip Charlotte, NC 28209
Staley Jerry D & Dorothea P. 4805 Woodcock Dr 3,750
###-##-#### ###-##-#### Greensboro, NC 27406
Starnes Rhett M 39 Willow Creek Court 1,125
Baltimore, MD 21234
Strauss Gregg 110 Rabbit Run Rd 750
Sewell, NJ 08080
Stewart Mollie M P.O. Box 130 1,500
Valhermasa Sprgs, AL 35775
Stewart Mollie M & P.O. Box 130 750
Pharaoh H. Smith Valhermasa Sprgs, AL 35775
Taitt Steven E & Nanette N 1020 S. Williamson Ave 22,500
###-##-#### ###-##-#### Elon College, NC 27244
Taylor Betty Jean H P.O. Box 547 1,500
###-##-#### Ardmore, TN 38449
Taylor Craig 11317 Snap Finger Drive 750
Charlotte, NC 28277
Teal Dorothy 46 Turquoise Way 1,125
###-##-#### Eustis, FL 32726
Thomas Jr Bradley Reed 4432 McCart Ave 750
###-##-#### Ft. Worth, TX 76115
Thomas Joel Daniel 2451 Cumberland Pkwy 750
###-##-#### Apt 3454
Atlanta, GA 30339
Thomas Mary H c/o Joanne Moorehead 750
300 Sunset Drive
Abbeville, SC 29620
Thomas Scot Rolland 2158 Cumberland Pkwy 750
256499951 Suite 4106
Atlanta, GA 30339
Thurlow David J 1929 Lunar Lane 9,375
Wilmington, NC 28405
Thyfault Trust M&C 3716 Canal Blvd #C 1,500
Hays, KS 67601
Tillman David Lane 191 Calvert Rd 750
Lacey's Spring, AL 35754
To the Top We Go, Inc 9416 Koupela Drive 82,500
(John D Brothers) Raleigh, NC 27615
Turner Eric & Alfie 3059-A Von Steuben Place 375
###-##-#### West Point, NY 10996
Turner Glenn R 103 Churchview Circle 750
###-##-#### Toney, AL 35773
Turner Henry C & Winifred E 108 Nobleton Lane 3,000
###-##-#### ###-##-#### Huntsville, AL 35806
Vales John 24525 Avenida de Marcia 150
Yorba Linda, CA 92687
Vales Recovable Living Trust 24525 Avenida de Marcia 18,750
(Nonelon Vales, Trustee) Yorba Linda, CA 92687
Van Etten Stanley H 10504 Tredwood Drive 275,808
Raleigh, NC 27615
Vincent Aubrey L & Brenda S 215 Fisk Avenue 3,750
###-##-#### 467-944701 Brownwood, TX 76801
Waite Brian D & Debra J P.O. Box 354 4,500
###-##-#### ###-##-#### Clear Lake, WA 98235
Ward Calvin Michael 1807 Pisgah Church Rd 101,250
Greensboro, NC 27455
Wasinger Keith & Kelly 8810 W. 77th Street 525
Overland Park, KS 66204
Weatherly Jack F 4604-C Mercury Drive 45,000
###-##-#### Greensboro, NC 27410
White Charles E & Patricia J 1132 Josephine Ct 3,750
###-##-#### ###-##-#### Sebring, FL 33872
Wilkinson Kenneth W & Helen W P.O. Box 1147 45,000
###-##-#### ###-##-#### Concord, NC 28026
Williams Martin 24588 Strand Drive 3,750
###-##-#### Albermarle, NC 28001
Windscheffell Stephen 3001 Castle Court 1,875
###-##-#### Salina, KS 67401
7,550,756
EXHIBIT A-1
IHI Option Holders
Number of IHI Number of Kara
Options to be Options to be Change in
Received in Received in Option Exercise
Name and Address Exchange Exchange Price
Anderson, Barbara A. 2,000 2,000 None
P. O. Box 1622
Malta, MT 59538
Anderson, Gary 2,000 2,000 None
P. O. Box 1622
Malta, MT 59538
Imperial Management Fund 1,350,000 1,350,000 None
Larry G. Smith
2435 E. North Street,
Suite 354
Greenville, SC 29615
Mayflower Venture Capital 100,000 100,000 None
Fund, LLC
2626 Glenwood Avenue,
Suite 200
Raleigh, NC 27608
Nelson, Dale 18,128 18,128 None
P. O. Box 475
Shelby, MT 59474
Savage, Claude W. 1,350,000 1,350,000 None
106 Benbow Lane
Charlotte, NC 28214
Van Etten, Stanley H. 5,256,800 5,256,800 None
10504 Tredwood Drive
Raleigh, NC 27615
Van Etten, Stanley L. 62,500 62,500 None
Route 1 Box 75
Lawsonville, NC 27022
Van Etten, Tom 100,000 100,000 None
P. O. Box 688
Wilkesboro, NC 28697
Van Etten, John 100,000 100,000 None
144 Rusty Gans Drive
Panama City, FL 32408
8,341,428 8,341,428 None
EXHIBIT B
KARA INTERNATIONAL, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1997 and 1996*
*Incorporated by Reference
EXHIBIT C
None.
EXHIBIT D
INTERNATIONAL HERITAGE, INC.
UNAUDITED BALANCE SHEET AND INCOME STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997*
and
CONSOLIDATED FINANCIAL STATEMENTS AND
SUPPLEMENTAL INFORMATION FOR THE
YEAR ENDED DECEMBER 31, 1996 AND THE
PERIOD ENDED DECEMBER 31, 1995*
*See Exhibit 19.1
EXHIBIT E
Litigation. IHI is party to various litigation which if determined
adversely to IHI could have a material adverse effect on IHI's financial
condition and results of operations. Such litigation includes but is not
limited to the following: International Heritage, Inc. v. First Data Merchant
Services Corporation, Unified Merchant Services, and Kelvin Carvana; 97 CVS
3683, Wake County Superior Court, Wake County, Raleigh, North Carolina. This
action was initiated on March 27, 1997, in the Wake County Superior Court by
IHI. Within its complaint, IHI alleged that the Defendants, First Data
Merchant Services Corporation ("First Data") and Unified Merchant Services
("UMS") had breached a contract to provide credit card processing services to
IHI. In addition, IHI alleged that all of the Defendants had defrauded IHI
and committed unfair and deceptive trade practices as a result of the actions,
in part, of the third Defendant, Kelvin Carvana, an agent of First Data and
UMS. Because IHI alleged that First Data and UMS wrongfully held funds which
belonged to IHI and had wrongfully breached the agreement with IHI, IHI sought
and initially obtained a mandatory restraining order requiring First Data and
UMS to continue with the credit card processing relationship with IHI so that
it could avoid some anticipated damages as a result of the fraudulent and
other wrongful acts of all of the Defendants. Because, in part, IHI was
successful in obtaining new credit card processors, the mandatory restraining
order has subsequently been lifted by the Court. IHI seeks damages from the
Defendants in an amount in excess of $10,000 as well as the return of
approximately $1,000,000 wrongfully held by First Data and/or UMS. In
February, 1988, First Data returned $830,000 to the Company. The return of
these funds does not effect the Company's outstanding claims against First
Data and the remaining defendants. Currently, no counterclaim has been
asserted by any of the Defendants against IHI. Management believes that,
because alternative credit card processors have been located by IHI, this
matter will not have a significant adverse impact on IHI.
International Heritage, Inc. v. Cedric Dobbins, individually and
d/b/a CL Enterprises, et al., 97 CVS 07577, Wake County Superior Court, Wake
County, Raleigh, North Carolina. This action was filed July 1, 1997 by IHI
against four of its former employees and several other individuals and
entities which, according to IHI, were the recipients of funds and personal
property belonging to IHI wrongfully taken by one or more of the former
employee defendants. The complaint alleges inter alia: wrongful taking,
conversion, fraud and conspiracy to defraud. IHI requested a temporary
restraining order and preliminary injunction to enjoin the defendants and
their agents from disposing of the assets of IHI in their possession. The
temporary restraining order was granted July 1, 1997 and an injunctive order
was issued by the court July 7, 1997. IHI has recovered over $100,000 in cash
and $35,000 in personal property and anticipates recovering (voluntarily) at
least an additional $100,000 in cash and personal property.
Donald L. Wilson v. International Heritage, Inc. 98 CVM00121, Wake
County Small Calims Court, Wake County, Raleigh, North Carolina. This action
was filed December 30, 1997 for money owed in the amount of $1,750. This
matter was settled January, 1998.
Erick S. Block and Tina Block v. International Heritage, Inc.,
97CVS12302, Wake County Superior Court, Wake county, Raleigh, North Carolina.
Complaint filed for breach of contract and failure to fulfill promises made in
presentaions. An answer denying the claims was filed. Motion to Compel
Respronses to Discovery for Eric S. Block and Tina Block was filed January 21,
1998.
Lunde Development v. International Heritage, inc., Small Claim No.
7335, Vancouver, Washington. Complaint filed alleging failure to perform a
contract for delvery of product. The Company filed an answer and request for
dismissal for lack of jurisdiction February, 1998.
Scrugs, Jordan, Dodd, Dodd & Thompson. P.A. v. Rex A. Howell and
International Heritage. Incorporated, CV-98-36, Circuit Court for Dekalb
County, Alabama. Plaintiffs in this action allege that Mr. Howell falsely made
claims that the Plaintiff law firm had endorsed the International Heritage,
Inc. ("IHI") marketing program in order to induce others to join IHI as sales
representatives. The Plaintiffs are seeking to enjoin Mr. Howell from making
fur her claims regarding the Plaintiff, to inform other IHI representatives of
the same and for costs and Attorney's fees. The Company intends to vigorously
defend this action, since such action by Mr. Howell is clearly a violation of
the Company's policies and procedures governing the conduct of
representatives.
Principals of the Company have been, or currently are involved in
legal proceedings as set forth below:
Anthony J. and Deborah M. Vrsecky v. F. N. Wolf & Co.. Inc.. Franklin
N. Wolf. Stanley H. Van Etten John E. Dell and Darin Dowell, NASD arbitration,
filed March 16, 1995. Mr. Van Etten, Chairman of the Board, President and
Chief Executive Officer of the Company, was a respondent in this action. Mr.
Van Etten answered the complaint denying all allegations. On February 5, 1996,
this case was dismissed due to the bankruptcy petition filed by F. N. Wolf &
Co., Inc. ("F. N. Wolf"). The claimants elected not to pursue their claim
against the individual respondents and, hence, the action was dismissed
against Mr. Van Etten and the other individuals named in the action as well.
James and Selwvn Matthews v. F. N. Wolf & Co.. Inc.. Stanley H. Van
Etten. John D. Brothers Franklin N. Wolf et. al., NASD arbitration, filed
August 15, 1994. Mr. Van Etten, Chairman of the Board, President and Chief
Executive Officer and Mr. Brothers, Chief Operating Officer and Director of
the Company were respondents in this action. Both Messrs. Van Etten and
Brothers filed cross claims and third party claims along with their answers.
The claims were stayed as a result of other litigation which was subsequently
settled and/or dismissed. The claimants were awarded a total of $87,750 of
which F. N. Wolf was liable for $73,000 plus $6,750 in interest, $1,000 in
costs and $5,000 in attorney's fees. F. N. Wolf subsequently filed bankruptcy.
With respect to Mr. Van Etten, the arbitration panel made a finding that Mr.
Van Etten failed to supervise a registered representative and awarded the
claimants $1,500. The claimants were also awarded $500 to be paid by Mr.
Brothers who had served as a broker in the subject transactions. The
cross-claims and third party claims filed by Messrs. Van Etten and Brothers,
were dismissed. Both Messrs. Brothers and Van Etten deny the allegations against
them but satisfied the awards to claimants in full.
Fred A. Poovey v. F. N. Wolf & Co.. Inc. and John David Brothers, NASD
arbitration filed February 23, 1994. Mr. Brothers, Chief Operating Officer and
Director of the Company was a respondent in this action. Upon the filing of
the bankruptcy petition by F. N. Wolf, this matter was dismissed and the
claimant did not elect to pursue this matter against the individual
respondent, Mr. Brothers. This matter was dismissed without any response or
action in the case.
Jerry W. Kapp. et. al. v. F. N. Wolf & Co.. Inc.. et. al., 93 CVS
02170, Wake County Superior Court; 93-207-CIV-5-BO, United States District
Court for the Eastern District of North Carolina, Raleigh Division. This
action was initiated on February 26, 1993, in the Wake County Superior Court.
The Complaint was filed by Jerry W. Kapp against F. N. Wolf and Stanley H. Van
Etten. The Plaintiff alleged that he had been damaged through the Defendant's
sale of unregistered securities, market manipulation, and fraud in connection
with the sale of securities in violation of the North Carolina Securities Act,
as well as, through common law fraud, negligent misrepresentation and breach
of an implied contract of good faith and fair dealing. The Complaint also
sought to certify as a class, all North Carolina investors who purchased
shares of Treats International Enterprises, Inc. from F. N. Wolf. Mr. Van
Etten denied the allegations. Through an answer, cross claim and third party
claim, Mr. Van Etten asserted claims against John E. Dell, Franklin N. Wolf,
James R. Guntle, John Csenge and Richard T. Sullivan. Plaintiffs later join
these parties as additional defendants as well. On August 24, 1994, F. N. Wolf
filed for Chapter 11 Bankruptcy protection in the United States District Court
for the Southern District of New York. Subsequently, the Plaintiffs were
enjoined temporarily from prosecuting the* action provided that a disclosure
statement was approved by the Bankruptcy Court and provided that a plan of
reorganization was confirmed. This matter was tried in the Wake County
Superior Court and on January 10, 1997, Mr. Dell and Mr. Wolf confessed
judgment in open court and agreed to pay $2,000,000 to dismiss the case
against Defendants Dell, Wolf, Guntle, Csenge and Sullivan. The Plaintiffs
accepted the settlement with all the individual Defendants with the exception
of Mr. Van Etten. The jury returned a verdict finding F. N. Wolf had violated
G.S. 78A-12(a)(5) by creating a scheme for the purpose of manipulating the
market in the sale of Treats stock for the purpose of defrauding investors and
G.S. 78A-S(2) by knowingly making untrue statements of material facts or
omissions. The jury found with respect to Mr. Van Etten, no liability on all
counts.
Theodore J. Kocak v. Mario Martinez. Claude W. Savage Richardo Vega
and Also Trading Corp., Mecklenberg County, North Carolina, Superior Court
Division, file number: 88-CVS-12287, entry of default and default judgment was
entered against Claude W. Savage, Director, on January 19, 1989, for the sum
of $49,000. This judgment was paid and satisfied February 28, 1997.
Gary F. Huelter v. Claude Savage. Archie S. Cobb. Jr.. William C.
Edward and Paulette Edwards. Mecklenberg County, North Carolina, District
Court Division, file number 89 CVS 4922, entry of default and default judgment
was entered against the defendants on October 9, 1990 for the sum of $86,257.
Partial Satisfaction of Judgment was filed with respect to defendant Savage,
Director of the Company, on February 26, 1997.
Bryce H. Moore v. Claude W. Savage and Wilma Jean Savage, Mecklenberg
County, North Carolina, Superior Court Division, file number: 89-CVS-11039,
entry of default and default judgment was entered against the defendants,
Claude W. Savage, Director, and his wife, jointly and severally, on June 1,
1990, in the amount of $31,430.15. This judgment was released and satisfied on
February 28, 1997.
Aubrey J. Elam v. Claude W. Savage, Mecklenberg County, North
Carolina, Superior Court Division, file number 90-CVS-5232, involved claims
for lease payments in connection with a lease dated November 25, 1991 between
Claude W. Savage, Director, Aubrey J. Elam, Jr., Timothy A. Lowary and Lincoln
National Life Insurance Company for property located at 4421 Stewart Andrew
Boulevard, Charlotte, North Carolina. This matter was voluntarily dismissed
with prejudice on February 27, 1997 upon settlement of this matter by the
parties.
Haywood Seafoods. Inc. V. Fish Farm. Inc., Mecklenberg County, North
Carolina, Superior Court Division, file number 91-CVS-14468, default judgment
was entered against the defendant, a corporation principally owned by Mr.
Savage, Director, on July 8, 1992, for $24,902.67. This judgment was canceled
February 28, 1997.
Reid v. Hung. Maricopa County, Arizona, Superior Court Division, file
number CV 96-16246, Mr. Reid, Vice President of Compliance filed an action
against Raymond Hung, former president of Quorum International, Ltd. for
slander. The suit seeks damages in excess of $10,000. This matter is currently
pending.
See Also the risk disclosures regarding the Company included in the
Proxy Statement dated February 16, 1998 distributed to all Shareholders of
Record.
EXHIBIT F
Interwest Transfer
1981 East Murray-Holladay Road
Salt Lake City, Utah 84117
Kara International, Inc.
55 West 200 North
Provo, Utah 84601
Re: Exchange of shares of International Heritage, Inc., a
North Carolina corporation ("IHI"), for shares of Kara
International, Inc., a Nevada corporation ("Kara or
the "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Plan") between the undersigned, IHI, certain other stockholders and certain
other option holders of IHI, and Kara, I acknowledge that I have approved this
exchange; that I am aware of all of the terms and conditions of the Plan; that
I have received and personally reviewed a copy of any and all material
documents regarding the Company, including, but not limited to copies of the
reports of Kara which have been filed with the Securities and Exchange
Commission under Section 15(d) of the 1934 Act during the past 12 months. I
represent and warrant that no director or officer of the Company or any
associate of either has solicited this exchange; that I am an "accredited
investor" as that term is known under the Rules and Regulations of the
Securities and Exchange Commission (see Exhibit "A" hereto); and/or, I
represent and warrant that I have sufficient knowledge and experience to
understand the nature of the exchange and am fully capable of bearing the
economic risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion of
the Plan, Kara had little, if any assets, of any measurable value, and that in
actuality, the completion of the Plan and the exchange of my shares of IHI for
shares of Kara results in a decrease in the actual percentage of ownership
that my shares of IHI represented in IHI prior to the completion of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, and that I have been encouraged to review the
information and ask any questions I may have concerning the information of any
director or officer of the Company or of the legal and accounting firms for
the Company. I understand that the accounting firm for Kara is Pritchett,
Siler & Hardy, P.C., Certified Public Accountants, 430 East 400 South, Salt
Lake City, Utah 84111, Telephone (801) 328-2727; and that legal counsel for
Kara is Leonard W. Burningham, Esq., 455 East 5th South, Suite 205, Salt Lake
City, Utah 84111, Telephone #801-363-7411.
I also understand that I must bear the economic risk of ownership
of any of the Kara shares for a long period of time, the minimum of which will
be one (1) year, as these shares are "unregistered" shares and may not be sold
unless any subsequent offer or sale is registered with the United States
Securities and Exchange Commission or otherwise exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), or other
applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to IHI for
use by Kara as they are made to induce you to issue me the shares of Kara
under the Plan, and I further represent (of my personal knowledge or by virtue
of my reliance on one or more personal representatives), and agree as follows,
to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered shares" and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company
shall reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired unless I
shall first have obtained an opinion of legal counsel to the effect that the
shares may be sold in accordance with applicable laws, rules and regulations,
and I understand that any opinion must be from legal counsel satisfactory to
the Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares being
acquired except as may be pursuant to any applicable laws, rules and
regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable of
bearing the economic risks attendant to
this investment, without qualification; and
8. I also understand that without approval of counsel for Kara,
all shares of Kara to be issued and delivered to me in exchange for my shares
of IHI shall be represented by
one stock certificate only and which such stock certificate shall be imprinted
with the following legend or a reasonable facsimile thereof on the front and
reverse sides thereof:
The shares of stock represented by this certificate
have not been registered under the Securities Act of
1933, as amended, and may not be sold or otherwise
transferred unless compliance with the registration
provisions of such Act has been made or unless
availability of an exemption from such registration
provisions has been established, or unless sold
pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be
accompanied by a letter signed by the requesting stockholder setting forth all
relevant facts relating to the request. Kara will attempt to accommodate any
stockholders' request where Kara views the request is made for valid business
or personal reasons so long as in the sole discretion of Kara, the granting of
the request will not facilitate a "public" distribution of unregistered shares
of common voting stock of Kara.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
________________________________________________________
(Name(s) and Number of Shares)
________________________________________________________
(Address)
________________________________________________________
(City, State and Zip Code)
If joint tenancy with full rights of survivorship is
desired, put the initials JTRS after your names.
Dated this ________ day of ____________________, 1998.
Very truly yours,
______________________________________
EXHIBIT "A"
"Accredited investor" shall mean any person who comes within any
of the following categories, or whom the Company reasonably believes comes
within any of the following categories, at the time of the sale of the Shares
to that person:
(1) Any bank as defined in Section 3(a)(2) of the Act, or any
savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Act, whether acting in its
individual or fiduciary capacity; any broker or dealer
registered pursuant to Section 15 of the Securities Exchange
Act of 1934; any insurance company as defined in Section
2(13) of the Act; any investment company registered under
the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; Small
Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958; any plan established
and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan
has total assets in excess of $5,000,000; employee benefit
plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by
a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association,
insurance company or registered investment adviser, or if
the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited
investors;
(2) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring securities offered, with total assets
in excess of $5,000,000;
(4) Any director, executive officer or general partner of the
issuer of the securities being offered or sold, or any
director, executive officer or general partner of a general
partner of that issuer;
(5) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his or her
purchase exceeds $1,000,000;
(6) Any natural person who had individual income in excess of
$200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in
each of those years and has a reasonable expectation of
reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated
person as described in Section 230.506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are accredited
investors.
EXHIBIT G
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Kara International, Inc., a
Nevada corporation ("Kara"), represents and warrants the following as required
by the Agreement and Plan of Reorganization (the "Plan") between Kara and
International Heritage, Inc., a North Carolina corporation ("IHI"), and
certain stockholders and certain option holders of IHI (the IHI Stockholders
or the IHI Option Holders ):
1. That he is the President of Kara and has been authorized and
empowered by its Board of Directors to execute and deliver this Certificate to
IHI and the IHI Stockholders or the IHI Option Holders.
2. Based on his personal knowledge, information, belief and
opinions of counsel for Kara regarding the Plan:
(i) All representations and warranties of Kara contained
within the Plan are true and correct;
(ii) Kara has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Kara as set forth in its
financial statements for the periods ended December
31, 1997 and 1996, except as set forth in Exhibit C to
the Plan.
KARA INTERNATIONAL, INC.
By /s/ David N. Nemelka, Jr.
David N. Nemelka, Jr., President
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of International Heritage, Inc., a
North Carolina corporation ("IHI"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Plan") between IHI,
certain of its stockholders and certain option holders (the "IHI Stockholders"
and the IHI Option Holders ) and Kara International, Inc., a Nevada
corporation ("Kara"):
1. That he is the President of IHI and has been authorized and
empowered by its Board of Directors to execute and deliver this Certificate to
Kara.
2. Based on his personal knowledge, information, belief:
(i) All representations and warranties of IHI contained
within the Plan are true and correct;
(ii) IHI has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of IHI as set forth in its
unaudited balance sheet and income statement for the
period ended December 31, 1997, and Consolidated
Financial Statements and Supplemental Information for
the Year Ended December 31, 1996, and the Period Ended
December 31, 1995, except as set forth in Exhibit E to
the Plan.
INTERNATIONAL HERITAGE, INC.
By /s/ Stanley H. Van Etten
Stanley H. Van Etten, President
