* * * * STOCK EXCHANGE AGREEMENT by and between National Health & Safety Corp. and Alternative Delivery Solutions, Inc. And Clark R. Doyal James D. Schell Greg Danna Jim and Vickie Foster, JTWROS George Pjura ADS Equity Partners, LP Charles M. Preston...
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STOCK EXCHANGE AGREEMENT
by and between
National Health & Safety Corp.
and
Alternative Delivery Solutions, Inc.
And
Xxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxx
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxxxxx Xxxxx
ADS Equity Partners, LP
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxx
DoorDrop, XX
Xxxxxx Capital, LLC
(“ADS Shareholders”)
* * * * *
October 7, 2002
This Stock Exchange Agreement, dated as of October 7, 2002 (this
"Agreement"), is made and entered into by and between National
Health & Safety Corp., a Utah corporation, having its principal
office at 0000 Xxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000
(“NHLT” or the "Company"), Alternative Delivery
Solutions, Inc., a Texas corporation, having its principal offices
at 00000 Xxx Xxxxx; Xxxxx 000, Xxx Xxxxxxx, Xxxxx ("ADS"), Xxxxx X.
Xxxxx, Xxxxx X. Xxxxxx, Xxxx Xxxxx, Xxx and Xxxxxx Xxxxxx, JTWROS,
Xxxxxx Xxxxx, ADS Equity Partners, LP, Xxxxxxx X. Xxxxxxx, Xxxxx X.
Xxxx, Xxxxxx Capital, LLC and DoorDrop, LP (known
collectively as “ADS Shareholders”).
RECITALS:
A. The Company desires to
purchase and each and all of the ADS Shareholders desire to sell
all of the issued and outstanding shares of common stock of ADS,
and rights to receive ADS stock, in a stock for stock exchange that
would qualify as a tax-free reorganization under Section
368(a)(1)(B) of the Internal Revenue Code (the
“IRC”), on the terms and conditions set forth in
this Agreement. This Agreement is not intended to constitute
a share exchange pursuant to Article 5.02 of the Texas Business
Corporation Act.
B. The respective
Boards of Directors of the Company and ADS have adopted resolutions
approving and adopting the proposed plan of exchange (the
"Exchange") upon the terms and conditions hereinafter set forth in
this Agreement.
C. The ADS Shareholders
listed on Schedule 1 hereto hold ____________________ (____,000)
shares of ADS's Common Stock and Austin Capital, LLC holds
_____________ warrants entitling it to purchase ______________
shares of ADS Common Stock (the "ADS Shares"). The
attached Schedule 1 sets forth the holdings of each ADS Shareholder
opposite their respective names on said Schedule 1, which shares
represent all of the issued and outstanding shares of common stock
of ADS, taking into account all dilution.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE 1
THE EXCHANGE
1.1 The Exchange.
Upon the terms and subject to the conditions hereof, at the Closing
(as hereinafter defined) the ADS Shareholders will sell, convey,
assign, transfer and deliver to the Company stock certificate(s),
properly endorsed, representing the ADS Shares, and the
Company will issue to the ADS Shareholders, in exchange for the ADS
Shares, stock certificates representing an aggregate of Seventy
Five Percent (75%) of its common stock on a fully diluted and fully
converted basis, as of the Closing Date after the issuance of the
shares issued pursuant to this Agreement (the "Company
Shares") The number of Company Shares to be exchanged and the
exchange rate per share of ADS common stock will be determined by
multiplying the total number of shares of Common Stock of the
Company outstanding immediately prior to Closing (fully diluted and
based on the Closing Certificate provided by the Company and its
officers) by three (3).
1.2 Closing. The
closing of the Exchange (the "Closing") shall take place the sooner
of December 31, 2002, or as soon as the conditions set forth in
Article 6 have been satisfied or waived. Such date is herein
referred to as the "Closing Date." Subject to the provisions of
Article 6, the failure to consummate the Exchange on the
date and time determined pursuant to this Section 1.2
will not result in the termination of this Agreement and will not
relieve any party of any obligation hereunder.
1.3 Termination
Date. Pursuant to Article 7.2, this Agreement shall
terminate on January 1, 2003 (the “Termination Date”)
and the parties will have no further obligations to the other to
effectuate a Closing, unless Company and ADS consent and agree to
extend the Termination Date for a period not to exceed ninety (90)
days. In order to extend the Termination Date, Company and
ADS must obtain the written consent of three of the following,
which are collectively referenced herein as the
“Investors”:
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(a) |
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DoorDrop, LP |
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000 Xxxxxx Xx., Xxxxx 000 |
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Xxxxxx XX, 00000 |
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Xxxxx Xxxx Holdings, Inc., its general partner |
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Xxxxx Xxxx, President |
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(b) |
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ADS Equity Partners, LP |
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0000 Xxx Xxxx Xxxx; Xxxxx
000 |
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General Partner(s) |
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First Advisors, Inc., Xxxx Xxxxx, President |
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Austin Capital, LLC, Xxxxx Xxxxxx, Manager |
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(c) |
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Xxxxxxx X. Xxxxxxx |
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000 Xxxxxxxx |
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Xxxxxx, Xxxxx 00000 |
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(d) |
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Xxxxx X. Xxxx |
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Care Of Xxxxxxx X. Xxxxxxx |
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600 Congress |
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Xxxxxx, Xxxxx 00000 |
ARTICLE
2
REPRESENTATIONS AND WARRANTIES OF ADS AND THE ADS
SHAREHOLDERS
A. ADS hereby
represents and warrants to the Company as follows:
2.1 Organization. ADS
has been duly incorporated, is validly existing as a corporation
and is in good standing under the laws of its state of
incorporation, and has the requisite corporate power and specific
board and shareholder authority to carry on its business as now
conducted.
2.2 Capitalization. The
authorized capital stock of ADS consists of 500,000 shares of
common stock, no par value, of which ________________ shares are
issued and outstanding, and no shares of preferred stock. All of
the issued and outstanding shares of common stock are duly
authorized, validly issued, fully paid, non-assessable and free of
preemptive rights. Save and except the Austin Capital
Warrant(s) (as hereinafter defined in Section 5.7) issued pursuant
to ADS’s engagement agreement with Austin Capital, LLC (the
“Austin Capital Agreement”), there are no outstanding
or authorized options, rights, warrants, calls, convertible
securities, rights to subscribe, conversion rights or other
agreements or commitments to which ADS is a party or which are
binding upon ADS providing for the issuance or transfer by ADS of
additional shares of its capital stock and ADS has not reserved any
shares of its capital stock for issuance, nor are there any
outstanding stock option rights, phantom equity or similar rights,
contracts, arrangements or commitments. There are no voting trusts
or any other agreements or understandings with respect to the
voting of ADS's capital stock, other than as specifically set forth
herein. There are no dividends declared and unpaid on any of
the ADS Shares.
2.3 Certain Corporate
Matters. ADS is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the ownership of its properties, the employment of its
personnel or the conduct of its business requires it to be so
qualified, except where such failure would not have a material
adverse effect on ADS’s financial condition, results of
operations or business. ADS has full corporate power and authority
and all authorizations, licenses and permits necessary to carry on
the business in which it is engaged and to own and use the
properties owned and used by it, and the conduct of such business
by ADS is not in contravention of any covenant, agreement, or other
obligation of ADS or the ADS Shareholders.
2.4 Authority Relative to this
Agreement. ADS has the requisite corporate power and
authority to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance of
this Agreement by ADS and the consummation by ADS of the
transactions contemplated hereby have been duly authorized by the
Board of Directors of ADS and, except for approval by the ADS
Shareholders, no other actions on the part of ADS are necessary to
authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
ADS and constitutes a valid and binding agreement of ADS,
enforceable against ADS in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights
generally or by general principles of equity.
2.5 Consents and Approvals;
No Violations. No filing with, and no permit,
authorization, consent or approval of, any third party, public body
or authority is necessary for the consummation by ADS of the
transactions contemplated by this Agreement. Neither the execution
and delivery of this Agreement by ADS nor the consummation by ADS
of the transactions contemplated hereby, nor compliance by ADS with
any of the provisions hereof, will (a) conflict with or result in
any breach of any provisions of the Certificate of Incorporation or
Bylaws of ADS, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, contract, agreement
or other instrument or obligation to which ADS is a party or by
which it or its properties or assets may be bound or (c) violate
any order, writ, injunction, decree, statute, rule or regulation
applicable to ADS, or any of its properties or assets, except in
the case of clauses (b) and (c) for violations, breaches or
defaults which are not in the aggregate material to ADS taken as a
whole.
2.6 Disclosure. The
representations and warranties and statements of fact made by ADS
in this Agreement are, as applicable, accurate, correct and
complete and do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements and information contained herein not false or
misleading.
B. The ADS
Shareholders, individually and severally with respect to the ADS
Shares held by such ADS Shareholder, but not jointly, each
respectively represent and warrant as follows:
2.7 Ownership by ADS
Shareholders. Such ADS Shareholder is the owner of record
of the number of fully paid and non-assessable shares of common
stock of ADS set forth opposite his/her name on the attached
Schedule 1 and is transferring those shares to the Company free and
clear of any liens or encumbrances. No person other than the
ADS Shareholder owns any right, title or interest in the ADS Shares
being transferred to the Company. Such ADS Shareholder has no
basis to claim any share amount other than what is listed, whether
it be by reason of employment, contract, options, warrants, share
issuance, verbal agreement, or other contract or
arrangement.
2.8 Authorization.
Such ADS Shareholder has full power and authority to enter into
this Agreement, and this Agreement constitutes a valid and legally
binding obligation of such ADS Shareholder, enforceable against the
ADS Shareholder in accordance with its terms.
2.9 Investment Intent.
Such ADS Shareholder represents that the shares of common stock
being acquired under this Agreement are being acquired for
investment purposes only, and not with a view to reselling the
shares or dividing participation in those shares with others,
except as permitted by law. Such ADS Shareholder represents
that he/she/it has no present intent to resell or otherwise dispose
of all or any part of these shares. Such ADS Shareholder
acknowledges that the shares being received in the Exchange have
not been registered under the Securities Act of 1933 (the
“Act”). The Company may require, as a condition
of the subsequent sale or transfer of the Company Shares, an
opinion of counsel that the sale or transfer would be pursuant to
an effective registration statement under the Act or pursuant to an
exemption from such registration requirements. Such ADS
Shareholder acknowledges that the Company Shares to be received in
the Exchange shall be stamped with a legend in substantially the
following form:
“The shares represented by this Certificate have not
been registered under the Securities Act of 1933 (the
“Act”) and are “restricted securities” as
that term is defined in Rule 144 under the Act. These shares
may not be offered for sale, sold, or otherwise transferred except
pursuant to the effective registration statement under the Act, the
availability of which is to be established to the satisfaction of
the Company.”
2.10 Disclosure of
Information. Each ADS Shareholder represents that he, she
or it (i) has carefully reviewed the representations concerning the
Company contained in this Agreement and other information provided
to the ADS Shareholder on behalf of the Company and (ii) had
adequate opportunity to ask questions and receive answers from the
company regarding the terms and conditions of the Exchange and the
assets, prospects and financial condition of the Company.
ARTICLE
3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby
represents and warrants to ADS as follows:
3.1 Organization. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of Utah, and has the requisite
corporate power to carry on its business as now conducted.
3.2 Capitalization. The
Company’s capitalization was, on June 30, 2002, as set forth
in its Form 10-QSB for the quarter ended June 30, 2002. All
issued and outstanding shares of the Company Common Stock are duly
authorized, validly issued, fully paid, non-assessable and free of
preemptive rights. When issued, the Company Shares will be duly
authorized, validly issued, fully paid, non-assessable and free of
preemptive rights. Additionally, the Company has reserved and
anticipates issuing options to purchase up to 25,000,000 shares of
Company Common Stock as compensation for services. Further,
the Company expects that certain debt obligations owed by the
Company to insiders and employees, among others, will be converted
into up to 71,000,000 shares of Company Common Stock; however, the
exact amount of Company Common Stock issued in conversion of this
debt is unknown at this time, and will only be known when the
Company’s Board of Directors determines and approves a
conversion price. Except as set forth above and/or in the
Company’s Form 10-QSB dated June 30, 2002, with the SEC,
there are no outstanding or authorized options, rights, warrants,
calls, convertible securities, rights to subscribe, conversion
rights or other agreements or commitments to which the Company is a
party or which are binding upon the Company providing for the
issuance by the Company or transfer by the Company of additional
shares of the Company's capital stock and the Company has not
reserved any shares of its capital stock for issuance, nor are
there any outstanding stock option rights, phantom equity or
similar rights, contracts, arrangements or commitments. There are
no voting trusts or any other agreements or understandings with
respect to the voting of the Company's capital stock.
At or prior to the Closing, Company shall verify, certify,
represent and warrant to the ADS Shareholders and ADS the
fully-diluted, as converted capitalization as of the Closing Date,
and further determine the issued and outstanding shares of the
Company, on a fully diluted and converted basis, for the purpose of
calculating the Company Shares pursuant to Section 1.1.
3.3 Certain Corporate
Matters. The Company is duly licensed or qualified to do
business and is in good standing as a foreign corporation in every
jurisdiction in which the character of the Company's properties or
nature of the Company's business requires it to be so licensed or
qualified other than such jurisdictions in which the failure to be
so licensed or qualified does not, or insofar as can reasonably be
foreseen, in the future will not, have a material adverse effect on
its financial condition, results of operations or business. The
Company has full corporate power and authority and all
authorizations, licenses and permits necessary to carry on the
business in which it is engaged or in which it proposes presently
to engage and to own and use the properties owned and used by
it. The Company has delivered to ADS, or ADS otherwise has
had access to, true, accurate and complete copies of its
Certificate of Incorporation and Bylaws, which reflect all
restatements of and amendments made thereto at any time prior to
the date of this Agreement. The records of meetings of the
stockholders and Board of Directors of the Company are complete and
correct in all material respects. The stock records of the Company
and the stockholder lists of the Company as maintained by its
transfer agent are, to the best of Company belief, complete and
correct in all material respects and accurately reflect the record
ownership and the beneficial ownership of all the outstanding
shares of Company’s capital stock and any other outstanding
securities issued by the Company. The Company is not in
default under or in violation of any provision of its Certificate
of Incorporation or Bylaws in any material respect. The
Company is not in any material default or in violation of any
restriction, lien, encumbrance, indenture, contract, lease,
sublease, loan agreement, note or other obligation or liability by
which it is bound or to which any of its assets is subject.
3.4 Authority Relative to this
Agreement. The Company has the requisite corporate power
and authority to enter into this Agreement and carry out its
obligations hereunder. The execution, delivery and performance of
this Agreement by the Company and the consummation of the
transactions contemplated hereby have been duly authorized by the
Board of Directors of the Company and no other actions on the part
of the Company are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally or by general
principles of equity.
3.5 Consents and Approvals; No
Violations. No filing with, and no permit, authorization,
consent or approval of, any third party, public body or authority
is necessary for the consummation by the Company of the
transactions contemplated by this Agreement. Neither the execution
and delivery of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby, nor
compliance by the Company with any of the provisions hereof, will
(a) conflict with or result in any breach of any provisions of the
charter or Bylaws of Company, (b) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which the
Company is a party or by which it or any of its properties or
assets may be bound or (c) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, or
any of its properties or assets, except in the case of clauses (b)
and (c) for violations, breaches or defaults which are not in the
aggregate material to the Company taken as a whole.
3.6 Reports Filed Pursuant
to Section 12 of The Securities Exchange Act of 1934. All
reports filed by or on behalf of the Company pursuant to Section 12
and/or Section 13 of The Securities Exchange Act of 1934 are true
and correct.
3.7 Disclosure.
The representations and warranties and statements of fact made by
the Company in this Agreement are, as applicable, accurate, correct
and complete and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make
the statements and information contained herein not false or
misleading. There is no material, non-public information
regarding the Company that has not been disclosed to ADS.
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1 Conduct of Business by ADS
Pending the Closing. ADS covenants and agrees that prior
to the Closing Date:
(a) ADS shall conduct its
business and operations only in the usual and ordinary course of
business;
(b) Except as
contemplated by this Agreement and the Austin Capital Agreement,
ADS shall not directly or indirectly do any of the following: (i)
sell, pledge, dispose of or encumber any of its assets; (ii) amend
or propose to amend its Certificate of Incorporation or Bylaws;
(iii) split, combine or reclassify any outstanding shares of its
capital stock, or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or otherwise with
respect to shares of its capital stock; (iv) redeem, purchase or
acquire or offer to acquire any shares of its capital stock or
other securities; (v) create any subsidiaries; (vi) enter into or
modify any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
(c) Except as
contemplated by this Agreement and the Austin Capital Agreement,
ADS shall not (i) issue, sell, pledge or dispose of, or agree to
issue, sell, pledge or dispose of, any additional shares of, or any
options, warrants, conversion privileges or rights of any kind to
acquire any shares of, its capital stock; (ii) acquire (by merger,
consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division
or the material assets thereof; (iii) incur any indebtedness for
borrowed money, issue any debt securities or guarantee any
indebtedness to others; or (iv) enter into or modify any contract,
agreement, commitment or arrangement with respect to any of the
foregoing;
(d) ADS shall notify the
Company promptly of any material adverse event or circumstance
affecting ADS (including the filing of any material litigation
against ADS or the existence of any dispute with any person or
entity which involves a reasonable likelihood of such litigation
being commenced); and
(e) ADS shall comply in
all material respects with all legal requirements and contractual
obligations applicable to its operations and business and pay all
applicable taxes.
4.2 Other Actions By
ADS. Unless approved in writing by the Company, ADS shall
not take any action or permit any action to occur that might
reasonably be expected to result in any of the representations and
warranties of ADS contained in this Agreement becoming untrue after
the date hereof or any of the conditions to the Closing set forth
in Article 6 of this Agreement not being satisfied.
4.3 Conduct of Business by the
Company Pending the Closing. The Company covenants and
agrees that prior to the Closing Date:
(a) the Company shall
conduct its business and operations only in the usual and ordinary
course of business;
(b) Except as
contemplated by this Agreement, and as necessary to effect the
proposals contained in the Company Proxy Statement to be filed (the
“Company Proxy Statement”), the Company shall not
directly or indirectly do any of the following: (i) sell, pledge,
dispose of or encumber any of its assets; (ii) amend or propose to
amend its Certificate of Incorporation or Bylaws; (iii) split,
combine or reclassify any outstanding shares of its capital stock,
or declare, set aside or pay any dividend or other distribution
payable in cash, stock, property or otherwise with respect to
shares of its capital stock; (iv) redeem, purchase or acquire or
offer to acquire any shares of its capital stock or other
securities; (v) create any subsidiaries; (vi) enter into or modify
any contract, agreement, commitment or arrangement with respect to
any of the foregoing;
(c) Except as
contemplated by this Agreement, and those items contained in the
Company Proxy Statement to be filed, the Company shall not (i)
issue, sell, pledge or dispose of, or agree to issue, sell, pledge
or dispose of, any additional shares of, or any options, warrants,
conversion privileges or rights of any kind to acquire any shares
of, its capital stock; (ii) acquire (by merger, consolidation,
acquisition of stock or assets or otherwise) any corporation,
partnership or other business organization or division or the
material assets thereof; (iii) incur any indebtedness for borrowed
money, issue any debt securities or guarantee any indebtedness to
others; or (iv) enter into or modify any contract, agreement,
commitment or arrangement with respect to any of the
foregoing;
(d) the Company shall
notify ADS promptly of any material adverse event or circumstance
affecting ADS (including the filing of any material litigation
against the Company or the existence of any dispute with any person
or entity which involves a reasonable likelihood of such litigation
being commenced);
(e) the Company shall
comply in all material respects with all legal requirements and
contractual obligations applicable to its operations and business
and pay all applicable taxes; and
(f) the
Company’s proxy statement or statements to be filed and
shareholders’ meeting or meetings to be held prior to the
Closing Date will be limited to consideration of and voting upon
the following matters: (i) amending the Company’s
Articles of Incorporation to effect a reverse stock split and
change the number of authorized shares of capital stock, (ii)
amending the Company’s Articles of Incorporation to change
the Company’s name, (iii) election of directors, (iv)
adoption of the Company’s 2002 Stock Option Plan, and (v)
appointment of the Company’s accountants.
4.4 Other Actions.
Unless approved in writing by ADS, the Company shall not take any
action or permit any action to occur that might reasonably be
expected to result in any of the representations and warranties of
the Company contained in this Agreement becoming untrue after the
date hereof or any of the conditions to the Closing set forth in
Article 6 of this Agreement not being satisfied.
Notwithstanding the provisions in this Article 4, the
Company intends to undertake the corporate actions at or before
Closing which are contemplated by Article 5 of this
Agreement.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Access and Information.
Except for information relating to any claims any party may have
against the other, ADS and the Company shall each afford to the
other and to the other's financial advisors, legal counsel,
accountants, consultants and other representatives necessary access
throughout the period prior to the Closing to all of its books,
records, properties and personnel and, during such period in order
to allow each party to complete its due diligence review, each
shall furnish promptly to the other all information as such other
party may reasonably request.
5.2 Certain Information.
The Company, ADS and each of their respective representatives,
shall cooperate to prepare and assemble certain information
regarding the Exchange, the Company and ADS, necessary for the
stockholders of ADS to make an informed investment decision
regarding the Exchange. ADS shall deliver all of the due
diligence materials requested by the Company and/or Austin Capital,
and have executed those documents deemed necessary by Company
and/or Austin Capital to satisfy their respective concerns that ADS
has provided all information material to a thorough understanding
of the corporate and business affairs of ADS.
5.3 Proposed Board of
Directors of the Company. At the Closing, all necessary
actions would be taken to establish and/or maintain a five member
board of directors for the Company. The following will
occur:
(a) On or before October
1, 2002, the Company will nominate for election two persons
designated by ADS to the Board of Directors of the Company, such
nominees to be included in the Proxy Statement to be filed on
behalf of the Company.
(b) At Closing, provided
all conditions precedent to Closing have occurred or have been
waived, the three directors of the Company who were not designated
by ADS will resign from the Board of Directors of the Company and
as officers of the Company, and will further resign in any and all
capacities as officers or directors of any Affiliate of the
Company, thereby creating 3 vacancies on the five member Board of
Directors of the Company.
(c) At that time, the
Company Board will be comprised of two directors (as nominated by
ADS and elected by the shareholders of the Company by proxy), and
pursuant to the Bylaws of the Company, the Board of Directors shall
convene a Special Meeting of the Board to appoint directors to fill
the vacancies created by the resignations of the former Company
directors.
(d) In the event Closing
does not occur, the nominees of ADS, if elected by the shareholders
of the Company, agree to resign from the Board of Directors of
Company immediately upon request of the Chairman of the Board of
the Company.
5.4 Liquidation of MedSmart
and HealthVIP. Prior to the Closing, the Company shall
use its best efforts to liquidate or dispose of the operations of
MedSmart and Health VIP. The parties do not contemplate that
either ADS or the ADS Shareholders, upon Closing, will receive any
interest in MedSmart or HealthVIP as a result of the liquidation or
disposition of those operations and entities.
5.6 Indemnity.
Each of the parties hereto (each an “Indemnifying
Party”) respectively agree to indemnify, defend and hold the
other party hereto and its officers, directors, agents, attorneys,
and Affiliates (collectively, “Indemnified Parties”)
harmless of and from any and all losses, claims, obligations,
demands, assessments, penalties, fines, forfeitures, liabilities,
costs, damages and reasonable attorneys’ fees and expenses
assert against or incurred by reason of or relating in any manner
to:
(a) Any breach of an
Indemnifying Party’s representations, warranties, covenants
or agreements, and
(b) Any and all actions,
causes of action, suits, claims, investigations, demands, audits,
judgments, arbitration awards or other proceedings incident to any
of the matters made the subject of Subsection (a) of this Paragraph
5.6.
5.7 Austin Capital
Warrant. Pursuant to an engagement agreement by and
between ADS and Austin Capital, LLC (“Austin Capital”),
ADS agreed to issue Austin Capital a stock purchase warrant in
connection with certain consulting services provided by Austin
Capital, as more fully set forth in the referenced engagement
agreement (the “Austin Capital Warrant”). In the
event of the Closing, or the consolidation of ADS with another
entity in which the shareholders of ADS receive cash or securities
of another issuer, or any combination thereof, in exchange for
their shares of ADS common stock, or the sale of all or
substantially all of the assets of ADS, ADS and the Company agree
the Austin Capital Warrant shall be assumed by or an equivalent
warrant, option or right substituted and issued by the Company at
Closing, having the same terms and conditions as the Austin Capital
Warrant, as adjusted for price and shares purchasable thereunder as
a result of the Exchange.
5.8 Demand
Registration.
(a) As used in this
Section, the following terms shall have the following respective
meanings:
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities
Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal rule or statute and the rules and
regulations of the Commission thereunder, all as the same shall be
in effect at the time.
"Initiating Holders" means any of DoorDrop, LP, Xxxxxxx X.
Xxxxxxx, Xxxxx X. Xxxx, and ADS Equity Partners, LP.
"Registrable Securities" means (1) Company Shares issued
pursuant to this Agreement and (2) any common stock of the Company
issued or issuable in respect of the Company Shares upon any stock
split, stock dividend, recapitalization or similar event; provided,
however, that securities shall only be treated as Registrable
Securities if and so long as they have not been sold to or through
a broker or dealer or underwriter in a public distribution or a
public securities transaction. Notwithstanding the foregoing,
Registrable Securities shall not include any securities sold in a
transaction in which the transferor's rights to registration are
not assigned in accordance with the terms herein.
The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and
the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incurred by
the Company in complying with subsections (b) and (c) hereof,
including without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements
of counsel for the Company, blue sky fees and expenses, the expense
of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees
of the Company which shall be paid in any event by the Company).
Registration Expenses shall also include the fees and disbursements
for one special counsel to the selling stockholders for each
registration pursuant to subsections (b) and (c) hereof.
"Rule 144" and "Rule 145" shall mean Rules 144 and
145, respectively, promulgated under the Securities Act, or any
similar federal rules thereunder, all as the same shall be in
effect at the time.
"Securities Act" shall mean the federal Securities Act of
1933, as amended, or any similar federal rule or statute and the
rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the securities registered by the
ADS Shareholders.
(b) Requested
Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect any
registration with respect to the resale by the ADS Shareholders of
their shares of Registrable Securities, the Company will:
(1) promptly give written
notice of the proposed registration to all other ADS Shareholders;
and
(2) as soon as
practicable, effect such registration (including, without
limitation, appropriate qualification under applicable state
securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested
and as would permit or facilitate the sale and distribution by the
ADS Shareholders of all or such portion of such Registrable
Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any ADS Shareholder
or ADS Shareholders joining in such request by delivering a written
notice to such effect to the Company within twenty days after the
date of such written notice from the Company.
(3) Notwithstanding the
foregoing, the Company shall not be obligated to take any action to
effect or complete any such registration pursuant to this
Subsection (b):
(i) Unless the
requested registration would have an aggregate offering price to
the public of all Registrable Securities sought to be registered by
all ADS Shareholders exceeding $250,000;
(ii) Following the filing
of, and for 180 days immediately following the effective date of,
any registration statement pertaining to equity securities of the
Company (other than a registration of securities in a Rule 145
transaction or with respect to an employee benefit plan), provided
that the Company is actively employing in good faith commercially
reasonable efforts to cause such registration statement to become
effective;
(iii) If the Initiating Holders
are able to request a registration on Form S‑3 pursuant to
subsection (c) hereof; or
(iv) If the Company shall
furnish to the Initiating Holders a certificate signed by the
President of the Company (i) giving notice of its bona fide
intention to effect the filing of a registration statement with the
Commission, or (ii) stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to the Company
or its stockholders for a registration statement to be filed in the
near future. In such case, the Company's obligation to register,
qualify or comply under this subsection (b) may be deferred one or
more times for a period not to exceed 90 days in the
aggregate.
(v) More than two years
after the date of this Agreement.
Subject to the foregoing clauses i through vii, the Company shall
file a registration statement covering the Registrable Securities
so requested to be registered as soon as practicable after receipt
of the request or requests of the Initiating Holders.
(c) Registration on
Form S-3.
(1) In case the Company
shall receive from Initiating Holders a written request that the
Company file a registration statement on Form S-3 (or any successor
form to Form S-3) for a public offering of Registrable Securities
the aggregate price to the public of which would exceed $250,000,
and the Company is a registrant entitled to use Form S-3 to
register the Registrable Securities for such an offering, the
Company shall use best efforts to cause such Registrable Securities
to be registered for the offering on such form and to cause such
Registrable Securities to be qualified in such jurisdictions as
such ADS Shareholder or ADS Shareholders may reasonably request;
provided, however, that the Company shall not be required to effect
more than one registration pursuant to this Section in any six
month period. If such offering is to be an underwritten offering,
the underwriters shall be selected for such underwriting by a
majority in interest of the Initiating Holders, but subject to the
Company's reasonable approval. The Company shall inform the other
ADS Shareholders of the proposed registration and offer them the
opportunity to participate.
(2) Notwithstanding the
foregoing, the Company shall not be obligated to take any action
pursuant to this Section 0:
(vi.) Following the filing of, and
for 180 days immediately following the effective date of, any
registration statement pertaining to securities of the Company
(other than a registration of securities in a Rule 145 transaction
or with respect to an employee benefit plan), provided that the
Company is actively employing in good faith commercially reasonable
efforts to cause such registration statement to become
effective;
(vii.) Within six months after the Company
has effected such a registration pursuant to subsection 0, and such
registration has been declared or ordered effective; or
(viii) If the Company shall furnish
to the Initiating Holders a certificate signed by the President of
the Company (A) giving notice of its bona fide intention to effect
the filing of a registration statement with the Commission, or (B)
stating that, in the good faith judgment of the Board of Directors,
it would be seriously detrimental to the Company or its
stockholders for a registration statement to be filed in the near
future, then the Company's obligation to use its commercially
reasonable efforts to file a registration statement may be deferred
one or more times for a period not to exceed 90 days in the
aggregate.
(ix.) More than two years after the
date of this Agreement.
(d) Expenses of
Registration. All expenses other than underwriting
discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to
Section 5.8, including (without limitation) all registration,
filing and qualification fees, printers’ and accounting fees,
fees and disbursements of counsel for the Company and the
reasonable fees and disbursements, which shall not exceed $25,000,
of one counsel for the selling Initiating Holders (selected by the
selling Initiating Holders) shall be borne by the Company.
(e) Limit on Number of
Registrations. The Company shall not be obligated to file
more than two registration statements pursuant to this
Section.
(f) Registration
Procedures. In the case of each registration effected by
the Company pursuant to this Agreement, the Company will keep each
ADS Shareholder advised in writing as to the initiation of such
registration and as to the completion thereof. The Company
will:
(1) Prepare and file with
the Commission a registration statement and such amendments and
supplements as may be necessary and cause such registration
statement to become and remain effective until (i) in the case of
registrations pursuant to subsection (b) -- the earlier of (A) 120
days following the date the registration statement is declared
effective, or (B) the distribution described in the registration
statement has been completed or, (ii) in the case of a registration
pursuant to Section 0, until the distribution described in the
registration statement is effected; and
(2) Furnish to the ADS
Shareholders participating in such registration and to the
underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such ADS
Shareholders and underwriters may reasonably request in order to
facilitate the public offering of such securities.
(3) Notwithstanding the
foregoing, the Company shall notify each ADS Shareholder whose
securities are included in a registration of the happening of any
event which makes any statement made in the registration statement
or related prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or
which requires the making of any changes in the registration
statement or prospectus so that, in the case of the registration
statement, it will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and
that in the case of the prospectus, it will not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. In
such event, the Company may suspend use of the prospectus on
written notice to each participating ADS Shareholder, in which case
each participating ADS Shareholder shall not dispose of Registrable
Securities covered by the registration statement or prospectus
until copies of a supplemented or amended prospectus are
distributed to the participating ADS Shareholders or until the
participating ADS Shareholders are advised in writing by the
Company that the use of the applicable prospectus may be resumed
(the period of such suspension shall be a "Blackout Period"). The
Company shall ensure that the use of the prospectus may be resumed
as soon as practicable. The Company shall, upon the occurrence of
any event contemplated by this paragraph, prepare a supplement or
post‑effective amendment to the registration statement or a
supplement to the related prospectus or any document incorporated
therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such prospectus will not contain
an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In the
event that the Company declares one or more Blackout Periods, the
120‑day period set forth in subsection (f)(1) shall be
extended by the number of days that constitute any such Blackout
Periods. The Company shall give each ADS Shareholder due
diligence access, furnish reasonably requested comfort letters and
opinions and cooperate as reasonably requested to facilitate the
distribution.
(g)
Indemnification.
(1) The Company will
indemnify each ADS Shareholder, each of its officers and directors
and partners, and each person controlling such ADS Shareholder
within the meaning of Section 15 of the Securities Act, with
respect to which registration has been effected pursuant to this
Agreement, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any
such registration, or based on any omission (or alleged omission)
to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or any
violation by the Company of the Securities Act, the Exchange Act,
state securities laws or any rule or regulation promulgated under
such laws applicable to the Company in connection with any such
registration, and the Company will reimburse each such ADS
Shareholder, each of its officers and directors, and each person
controlling such ADS Shareholder, for any legal and any other
expenses reasonably incurred, as such expenses are incurred, in
connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company
will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based
on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such ADS
Shareholder for use therein.
(2) Each ADS Shareholder
will, if Registrable Securities held by such ADS Shareholder are
included in the securities as to which such registration is being
effected, indemnify the Company, each of its officers and
directors, each person who controls the Company within the meaning
of Section 15 of the Securities Act, each other holder of the
Company's securities covered by such registration statement, and
each such holder's, officers and directors and each person
controlling such holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, of any
violation by the ADS Shareholder of the Securities Act, the
Exchange Act, state securities laws or any rule or regulation
promulgated under such laws applicable to the ADS Shareholder, and
will reimburse the Company, such other holders, such officers,
directors, or control persons for any legal or any other expenses
reasonably incurred, as such expenses are incurred, in connection
with investigating or defending any such claim, loss, damage,
liability or action, but in the case of the Company or the other
holders or their officers, directors, or control persons, only to
the extent that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in
reliance upon and in conformity with information furnished to the
Company in writing by such ADS Shareholder for use therein.
Notwithstanding the foregoing, the liability of each ADS
Shareholder under this subsection (g)(2) shall be limited to an
amount equal to the net proceeds from the offering received by such
ADS Shareholder. A ADS Shareholder will not be required to enter
into any agreement or undertaking in connection with any
registration under this Section providing for any indemnification
or contribution on the part of such ADS Shareholder greater than
the ADS Shareholder's obligations under this subsection
(g)(2).
(3) Each party entitled
to indemnification under this subsection (g) (the "Indemnified
Party”) shall give notice to the party required to
provide indemnification (the “Indemnifying
Party”) promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified
Party (which approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party's
expense, and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless
the failure to give such notice is materially prejudicial to an
Indemnifying Party's ability to defend such action and provided
further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or there
are separate and different defenses. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party (whose consent shall not be
unreasonably withheld), consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect to such claim or
litigation.
(4) If the indemnity and
reimbursement obligation provided in any paragraph of this
subsection (g) is unavailable or insufficient to hold harmless an
Indemnified Party in respect of any losses, damages and liabilities
(or actions in respect thereof) referred to therein, then the
Indemnifying Party shall contribute to the amount paid or payable
by the Indemnified Party as a result of such losses, damages and
liabilities (or actions in respect thereof) in such proportion as
is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and the Indemnified Party on the other hand
in connection with statements or omissions which resulted in such
losses, damages and liabilities as well as any other relevant
equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission of
or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or the Indemnified Party and the
parties relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this paragraph were to
be determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable
considerations referred to in the first sentence of this
paragraph. The amount paid by an Indemnified Party as a
result of the losses, damages, and liabilities referred to in the
first sentence of this paragraph shall be deemed to include any
legal and other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any losses,
damages or liabilities which is the subject of this
paragraph.
(5) Notwithstanding the
foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into
in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(h) Information by ADS
Shareholder. The ADS Shareholder or ADS Shareholders of
Registrable Securities included in any registration shall furnish
to the Company such information regarding such ADS Shareholder or
ADS Shareholders, the Registrable Securities held by them and the
distribution proposed by such ADS Shareholder or ADS Shareholders
as the Company may reasonably request in writing and as shall be
required in connection with any registration referred to in this
Agreement.
5.9 Filing of SB-2
Registration Statement. Upon the successful completion of
the Closing, and the timely provision of the audited financial
statements of ADS, the Company covenants and agrees that it will
use its best efforts to, within thirty (30) days of the filing with
the SEC of ADS audited financial statements, file and seek
effective registration of the certain designated securities of the
Company, as determined by the Company and including without
limitation, the Company Shares and the shares underlying the Austin
Capital Warrant.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Third Party
Beneficiaries of Three Conditions of Closing the
Exchange.
(a) In consideration of
Investors providing equity financing at or about the time of
execution of this Agreement, the Company and ADS acknowledge that
the Investors are third party beneficiaries of the transaction
represented by this Agreement, only and without exception to the
limited extent of the fulfillment of the following three
conditions:
(1) At or prior to the
Closing, ADS will have received, before calculation of any fees or
expenses, a total of Five Hundred Thousand and No/100 Dollars
($500,000.00) in equity capital, from whatever sources, on the same
per share purchase price and the same or substantially similar
terms as received by the Investors.
(2) Pursuant to Paragraph
1.3, the Closing must take place on or before January 1,
2003.
(3) The Company shall
have paid and/or converted all current and long term liabilities
listed on the balance sheet dated June 30, 2002 and shall not have
incurred additional liabilities other than in the ordinary course
of business in association with the actions contemplated in this
Agreement.
(b) At least five (5)
days prior to the Closing, Company and ADS will provide Investors a
certificate, signed by both parties, representing that the
foregoing condition set forth in Paragraph 6.1(a) has been
satisfied.
(c) Further, Company and
ADS acknowledge and agree that the Closing will not take place
unless and until the foregoing conditions set forth in Paragraph
6.1 has been satisfied, or the Company and ADS have received
written statements waiving the satisfaction of any condition that
was not satisfied by the date of the Closing, such statement
requiring the affirmative consent of three of the Investors.
(d) In the event of a
failure to satisfy the conditions set forth in 6.1(b) and 6.1(c)
above, and in the event any three Investors shall waive
satisfaction of any or all of said conditions, such waiver and
consent to proceed with Closing shall serve as consent for all
Investors.
(e) Notwithstanding
anything in this Agreement to the contrary, the Investors,
individually or collectively, are not, and shall not be deemed to
be Third Party Beneficiaries to any provision of this Agreement
other than as set forth in Paragraph 6.1(b) and 6.1(c), nor shall
they be Third Party Beneficiaries, individually or collectively, to
the Agreement as a whole. Accordingly, provided the
conditions to closing in Paragraph 6.1 are met, and verified in
writing to the Investors pursuant to Paragraph 6.1(b), the
Investors, individually and collectively, agree not to assert any
claims as Third Party Beneficiaries or otherwise, which would seek
to enjoin, delay or prohibit the Closing.
6.2 Conditions to
Obligations of Each Party to Effect the Closing. The
respective obligations of each party hereto to effect the Closing
shall be subject to the fulfillment on or prior to the Closing Date
of the following conditions. None of the conditions are
waivable without written consent of Company and ADS:
(a) The Exchange and the
other proposals contained in ADS shareholder consents shall have
been approved by the ADS Shareholders in accordance with applicable
law; and
(b) No order shall have
been entered and remained in effect in any action or proceeding
before any foreign, federal or state court or governmental agency
or other foreign, federal or state regulatory or administrative
agency or commission that would prevent or make illegal the
consummation of the transactions contemplated hereby.
(c) All current long term
debt on the Company’s balance sheet will have been paid or
otherwise converted to into equity of the Company.
6.3 Additional Conditions to
ADS's Obligations. The obligations of ADS to effect the
Closing are subject to the satisfaction of the following additional
conditions on or before the Closing Date:
(a) The representations
and warranties set forth in Article 3 of this Agreement will
be true and correct in all material respects as of the date hereof
and at and as of the Closing Date as though then made;
(b) The Company shall
have performed, in all material respects, each obligation and
agreement and complied with each covenant to be performed and
complied with by them under Articles 4 and 5 of this
Agreement prior to the Closing Date;
(c) At the Closing, the
Company shall have delivered or caused to be delivered to ADS the
following:
(1) resolutions duly
adopted by the Board of Directors of the Company that have
authorized and approved the Exchange and the execution, delivery
and performance of this Agreement; and
(2) release and
termination agreements providing for the termination of certain
consulting agreements and release of claims against Company from
the following parties:
(A) First Advisors, Inc.
(B) Stack/Xxxxxx, LLP
(C) Southwest Strategic
Partners, LLC
(D) The Franklin Group,
Inc.
(3) Proposed Form 8-K
addressing the Exchange.
(4) Engagement Agreement
with SEC qualified auditor.
(5) A certificate
representing that since the date of the execution of this
Agreement, there has not been any material adverse change in the
Company’s business, and, to the knowledge of the Company, no
event has occurred or circumstance exists that reasonably would be
expected to result in such a material adverse change; and (b) since
the date of the execution of this Agreement, and except to the
extent contemplated by this Agreement, the Company has conducted
the Company’s business in the ordinary course of
business. The certificate will contain a representation
regarding the number of shares of stock of the Company then
outstanding (fully diluted) as required by Section 1.1 of this
Agreement.
(d) At the Closing, the
Company shall have delivered or caused to be delivered to the ADS
Shareholders properly issued, fully paid and non assessable shares
of the Company pursuant to Section 1.1.
6.4 Additional Conditions to
the Obligations of the Company. The respective
obligations of the Company to effect the Closing are subject to the
satisfaction of the following conditions on or before the Closing
Date:
(a) The representations
and warranties set forth in Article 2 of this Agreement will
be true and correct in all material respects as of the date hereof
and at and as of the Closing Date as though then made;
(b) ADS shall have
performed, in all material respects, each obligation and agreement
and complied with each covenant required to be performed and
complied with by it under Article 5 of this Agreement prior
to the Closing Date;
(c) No action or
proceeding before any court or governmental body will be pending or
threatened wherein a judgment, decree or order would prevent any of
the transactions contemplated hereby or cause such transactions to
be declared unlawful or rescinded; and
(d) On the Closing Date,
ADS shall have delivered to the Company the following:
(1) a certificate
executed on behalf of ADS stating that the conditions set forth in
Sections 6.4(a) through (c) of this Agreement have been
satisfied;
(2) resolutions duly
adopted by the Board of Directors of ADS authorizing and
approving the Exchange and the execution, delivery and performance
of this Agreement;
(3) certificates
representing all of the outstanding the ADS Shares to be tendered
pursuant to this Agreement, properly endorsed for transfer;
(4) Executed employment
agreements for Dub Xxxxx and Xxx Xxxxxx in the form attached;
(5) such other documents
as the Company may reasonably request in connection with the
transactions contemplated hereby; and
(6) a certificate
representing that since the date of the execution of this
Agreement, there has not been any material adverse change in ADS
business, and, to the knowledge of ADS, no event has occurred or
circumstance exists that reasonably would be expected to result in
such a material adverse change; and (b) since the date of the
execution of this Agreement, and except to the extent contemplated
by this Agreement, ADS has conducted its business in the ordinary
course of business.
ARTICLE 7
TERMINATION
7.1 Termination by Mutual
Consent. This Agreement may be terminated at any time
prior to the Closing by the mutual written consent of the parties
hereto.
7.2 Termination
Date. This Agreement shall terminate on January 1, 2003
(the “Termination Date”) and the parties will have no
further obligations to the other to effectuate a Closing, unless
Company and ADS consent and agree to extend the Termination Date
for a period not to exceed ninety (90) days, and obtain written
consent from a majority of Investors as provided for in Article
1.3.
7.2 Termination by Any
Party. This Agreement may be terminated by any party
hereto if a United States federal or state court of competent
jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued
an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non‑appealable;
provided, however, that the party seeking to terminate this
Agreement pursuant to this clause shall have used all reasonable
efforts to remove such injunction, order or decree.
7.3 Material
Breach. This Agreement may be terminated by any party if
a material breach of this Agreement has been committed and such
breach has not been waived or cured by the alleged breaching party
within 30 days of receipt of written notice from a
non‑breaching party detailing such breach.
7.4 Effect of
Termination. In the event of termination of this
Agreement pursuant to this Article 7, the obligations of the
parties hereto to consummate the Exchange shall terminate. Each
party's right of termination under this Article 7 is in
addition to any other rights it may have under this Agreement or
otherwise, and the exercise of such right of termination will not
be an election of remedies.
ARTICLE 8
GENERAL PROVISIONS
8.1 Notices. All
notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally,
sent by overnight courier or mailed by registered or certified mail
(postage prepaid and return receipt requested) to the party to whom
the same is so delivered, sent or mailed.
8.2 Interpretation. The
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise
stated.
8.3 Severability. If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated and
the parties shall negotiate in good faith to modify this Agreement
to preserve each party's anticipated benefits under this
Agreement.
8.4 Miscellaneous. This
Agreement (together with all other documents and instruments
referred to herein): (a) constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both
written and oral, among the parties with respect to the subject
matter hereof; (b) except as expressly set forth herein, is not
intended to confer upon any other person any rights or remedies
hereunder and (c) shall not be assigned by operation of law or
otherwise, except as may be mutually agreed upon by the parties
hereto.
8.5 Governing Law. This
Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
8.6 Counterparts. This
Agreement may be executed in multiple counterparts, which together
shall constitute a single agreement.
8.7 Amendment.
This Agreement may be amended, modified or supplemented only by an
instrument in writing executed by all parties hereto.
8.8 Parties In Interest: No
Third Party Beneficiaries. Except as provided in
Article 6, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs,
legal representatives, successors and assigns of the parties
hereto. This Agreement shall not be deemed to confer upon any
person not a party hereto any rights or remedies hereunder unless
expressly provided for herein, and then only to the extent so
provided.
8.9 Waiver. No
waiver by any party of any default or breach by another party of
any representation, warranty, covenant or condition contained in
this Agreement shall be deemed to be a waiver of any subsequent
default or breach by such party of the same or any other
representation, warranty, covenant or condition. No act, delay,
omission or course of dealing on the part of any party in
exercising any right, power or remedy under this Agreement or at
law or in equity shall operate as a waiver thereof or otherwise
prejudice any of such party's rights, powers and remedies. All
remedies, whether at law or in equity, shall be cumulative and the
election of any one or more shall not constitute a waiver of the
right to pursue other available remedies.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
|
NATIONAL HEALTH & SAFETY CORP. |
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|
|
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|
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|
By: |
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Xxxx X. Xxxxx |
Name: |
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Xxxx X. Xxxxx |
Title: |
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Chairman, Chief Executive Officer and President |
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ALTERNATIVE DELIVERY SOLUTIONS, INC. |
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By: |
|
Xxxxx X. “Dub” Xxxxx |
Name: |
|
Xxxxx X. “Dub” Xxxxx |
Title: |
|
Chief Executive Officer |
Shareholders of Alternative Delivery Solutions, Inc.:
Xxxxx X. “Dub”
Xxxxx
Xxxxx R. “Dub” Xxxxx
Xxxxx X.
Xxxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxx
Xxxx Xxxxx
Xxx and Xxxxxx Xxxxxx,
JTWROS
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxx and Xxxxxx Xxxxxx,
JTWROS
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxxxxx Xxxxx
Xxxxxx Xxxxx
|
ADS EQUITY PARTNERS, LP |
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Xxxx Xxxxx, President |
|
By: |
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First Advisors, Inc. |
|
Xxxx Xxxxx, President |
Xxxxxxx X.
Xxxxxxx
Xxxxxxx X. Xxxxxxx
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DoorDrop, LP |
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By: |
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Xxxxx Xxxx, President |
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Xxxxx Xxxx Holdings, Inc. |
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|
Xxxxx Xxxx, President |
Xxxxx X.
Xxxx
Xxxxx X. Xxxx
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Austin Capital, LLC |
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By: |
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Xxxxx Xxxxxx, Manager |
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|
Xxxxx Xxxxxx, Manager |
SCHEDULE
1
Alternative Delivery Systems, Inc.
Shareholders and Warrant Holders
|
Names of Shareholders |
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Number of Shares |
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|||
1. |
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Xxxxx X. “Dub” Xxxxx |
|
66,000 |
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|||
2. |
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Xxxxx X. Xxxxxx |
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22,000 |
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|||
3. |
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Xxxx Xxxxx |
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1,000 |
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0000 Xxxxxxxxx Xxxx |
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||
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Xxx Xxxxxxx, Xxxxx 00000 |
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||
|
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|||
4. |
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Xxx and Xxxxxx Xxxxxx, JTWROS |
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1,000 |
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00000 Xxxxxxxx Xxxx |
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||
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Xxx Xxxxxxx, Xxxxx 00000 |
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||
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|||
5. |
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Xxxxxx Xxxxx |
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10,000 |
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0000 Xxxxxxxxxxx |
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||
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Xxxx Xxxxxxxxx, Xxxxxxxx 00000 |
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||
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|||
6. |
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ADS Equity Partners, LP |
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_____ |
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0000 Xxx Xxxx Xxxx; Xxxxx 000 |
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Xxxxxx, Xxxxx 00000 |
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Attention: Xxxx Xxxxx |
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||
7. |
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Xxxxxxx X. Xxxxxxx |
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1,786 |
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000 Xxxxxxxx |
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||
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Xxxxxx, Xxxxx 00000 |
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||
|
|
|||
8. |
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DoorDrop, LP |
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10,714 |
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000 Xxxxxx Xx., Xxxxx 000 |
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||
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Xxxxxx XX, 00000 |
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||
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Attention: Xxxxx Xxxx Holdings, Inc. |
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||
|
|
|||
9. |
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Xxxxx X. Xxxx |
|
8,929 |
|
Care of Xxxxxxx Xxxxxxx |
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||
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000 Xxxxxxxx |
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||
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Xxxxxx, Xxxxx 00000 |
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||
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|||
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|||
|
Names of Warrant Holders: |
|
Number of Warrants |
|
|
|
|
||
1. |
|
Austin Capital, LLC |
|
_____ |
|
0000 Xxx Xxxx Xxxx; Xxxxx 000 |
|
||
|
Xxxxxx, Xxxxx 00000 |
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||
|
Attention: Xxxxx Xxxxxx |
|
* * * *
*
AMENDMENT NO. 1 TO
STOCK EXCHANGE AGREEMENT
by and between
National Health & Safety Corp.
and
Alternative Delivery Solutions, Inc.
And
Xxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxx
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxxxxx Xxxxx
ADS Equity Partners, LP
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxx
DoorDrop, XX
Xxxxxx Capital, LLC
(“ADS Shareholders”)
* * * * *
October 18, 2002
AMENDMENT NO. 1 TO
STOCK EXCHANGE AGREEMENT
This Amendment No. 1 (this "Amendment") is made as of October 18,
2002 with reference to that certain Stock Exchange Agreement dated
as of October 7, 2002 (the “Agreement”), by and among
National Health & Safety Corp., a Utah corporation, having its
principal office at 0000 Xxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000 (“NHLT” or the “Company”),
Alternative Delivery Solutions, Inc., a Texas corporation, having
its principal offices at 00000 Xxx Xxxxx; Xxxxx 000, Xxx Xxxxxxx,
Xxxxx ("ADS"), Xxxxx X. Xxxxx, Xxxxx X. Xxxxxx, Xxxx Xxxxx, Xxx and
Xxxxxx Xxxxxx, JTWROS, Xxxxxx Xxxxx, ADS Equity Partners, LP,
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxx, Xxxxxx Capital, LLC and
DoorDrop, LP (known collectively as “ADS
Shareholders”). Unless otherwise indicated herein,
capitalized terms used in this Amendment without definition shall
have the respective meanings specified in the Agreement.
RECITAL:
WHEREAS the Company and the ADS Shareholders desire to amend the
Agreement as provided below.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE
1
AMENDMENTS TO THE AGREEMENT
1.1 Amendment to Article 5,
Section 5.3 "Proposed Board of Directors of the Company."
Section 5.3 of Article 5 of the Agreement is hereby amended to read
in its entirety as follows:
5.3 Proposed Board of
Directors of the Company. At or prior to the Closing, all
necessary actions would be taken to establish and/or maintain a
five member board of directors for the Company following
Closing. The following will occur:
(a). The Company will nominate
Xxxxx X. "Dub" Xxxxx, Xxxxx X. (Xxx) Xxxxxx, and Xxxxx Xxxxxx for
election to the Board of Directors of the Company, such nominees to
be included in the Proxy Statement to be filed on behalf of the
Company.
(b). Two of the current
directors of the Company, Xxxx X. Xxxxx and Xxxxx Xxx, XX,
have been nominated for reelection to the Board in the Proxy
Statement to be filed on behalf of the Company. Three of the
current directors of the Company will not stand for
reelection.
(c). As part of the Agreement,
upon Closing, Xxxxx Xxx, XX will submit his resignation as
director, to permit the remaining directors to select his
replacement pursuant to the Company's bylaws. The newly
elected board of directors shall fill the vacancy created by Xx.
Xxx'x resignation.
(d). Upon Closing, Xxxx X.
Xxxxx and Xxxxx Xxx, XX will each resign their respective positions
as officers of the Company.
(e). In the event Closing does
not occur, Xxxxx X Xxxxx, Xxxxx X. Xxxxxx and Xxxxx Xxxxxx, if
elected as directors by the Company's shareholders, each agree to
resign from the Board of Directors immediately upon request of the
Chairman of the Board of the Company.
ARTICLE
2
EFFECTS OF THIS AMENDMENT
2.1 Reference to the
Agreement. As of and after the date hereof, each
reference in the Agreement to "this Agreement", "hereunder",
'hereof", "herein", "hereby" or words of like import referring to
the Agreement shall mean and be a reference to the Agreement as
amended by this Amendment.
2.2 No Other Effect.
Except as specifically amended by this Amendment, each term,
provision and condition of the Agreement survives, remains and
shall continue in full force and effect. Nothing in this
Amendment shall be deemed to (a) constitute a waiver of compliance
by any party to the Agreement with respect to any term, provision
or condition of the Agreement, or (b) prejudice any right or remedy
that any party to the Agreement may now have or may have in the
future under or in connection with the Agreement.
2.3 Governing Law. This
Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
2.4 Counterparts. This
Agreement may be executed in multiple counterparts, by manual or
facsimile signature, which together shall constitute a single
agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first written above.
|
NATIONAL HEALTH & SAFETY CORP. |
|
|
|
|
|
|
|
By: |
|
Xxxx X. Xxxxx |
Name: |
|
Xxxx X. Xxxxx |
Title: |
|
Chairman, Chief Executive Officer and President |
|
ALTERNATIVE DELIVERY SOLUTIONS, INC. |
|
|
|
|
|
|
|
By: |
|
Xxxxx X. “Dub” Xxxxx |
Name: |
|
Xxxxx X. “Dub” Xxxxx |
Title: |
|
Chief Executive Officer |
Shareholders of Alternative Delivery Solutions, Inc.:
Xxxxx X. “Dub”
Xxxxx
Xxxxx R. “Dub” Xxxxx
Xxxxx X.
Xxxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxx
Xxxx Xxxxx
Xxx and Xxxxxx Xxxxxx,
JTWROS
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxx and Xxxxxx Xxxxxx,
JTWROS
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxxxxx Xxxxx
Xxxxxx Xxxxx
|
ADS EQUITY PARTNERS, LP |
|
|
|
|
|
|
|
|
Xxxx Xxxxx, President |
|
By: |
|
First Advisors, Inc. |
|
Xxxx Xxxxx, President |
Xxxxxxx X.
Xxxxxxx
Xxxxxxx X. Xxxxxxx
|
DoorDrop, LP |
|
|
|
|
|
|
|
By: |
|
Xxxxx Xxxx, President |
|
Xxxxx Xxxx Holdings, Inc. |
|
|
Xxxxx Xxxx, President |
Xxxxx X.
Xxxx
Xxxxx X. Xxxx
|
|
Austin Capital, LLC |
|
|
|
|
|
|
By: |
|
Xxxxx Xxxxxx, Manager |
|
|
Xxxxx Xxxxxx, Manager |
* * * * *
AMENDMENT NO. 2 TO
STOCK EXCHANGE AGREEMENT
by and between
National Health & Safety Corp.
and
Alternative Delivery Solutions, Inc.
And
Xxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Xxxx Xxxxx
Xxx and Xxxxxx Xxxxxx, JTWROS
Xxxxxx Xxxxx
ADS Equity Partners, LP
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxx
DoorDrop, XX
Xxxxxx Capital, LLC
(“ADS Shareholders”)
* * * * *
December 27, 2002
AMENDMENT NO. 2 TO
STOCK EXCHANGE AGREEMENT
This Amendment No. 2 (this “Amendment”) is made as of
December 27, 2002 with reference to that certain Stock Exchange
Agreement dated as of October 7, 2002 and as amended on October 18,
2002 (the “Agreement”), by and among National Health
& Safety Corp., a Utah corporation, having its principal office
at 0000 Xxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000
(“NHLT” or the “Company”), Alternative
Delivery Solutions, Inc., a Texas corporation, having its principal
offices at 00000 Xxx Xxxxx; Xxxxx 000, Xxx Xxxxxxx, Xxxxx
(“ADS”), Xxxxx X. Xxxxx, Xxxxx X. Xxxxxx, Xxxx Xxxxx,
Xxx and Xxxxxx Xxxxxx, JTWROS, Xxxxxx Xxxxx, ADS Equity Partners,
LP, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxx, Xxxxxx Capital, LLC
and DoorDrop, LP (known collectively as “ADS
Shareholders”). Unless otherwise indicated herein,
capitalized terms used in this Amendment without definition shall
have the respective meanings specified in the Agreement.
RECITAL:
WHEREAS the Company and the ADS Shareholders desire to amend the
Agreement as provided below.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE
1
AMENDMENTS TO THE AGREEMENT
1.1 Amendment to Article 1,
Section 1.2 “Closing”. Section 1.2 of Article
1 of the Agreement is hereby amended to read in its entirety as
follows:
“1.2 Closing. The
closing of the Exchange (the “Closing”) shall take
place the sooner of January 31, 2003, or as soon as the conditions
set forth in Article 6 have been satisfied or waived. Such
date is herein referred to as the "Closing Date." Subject to the
provisions of Article 6, the failure to consummate the
Exchange on the date and time determined pursuant to this
Section 1.2 will not result in the termination of
this Agreement and will not relieve any party of any obligation
hereunder.
1.2 Amendment to Article 1,
Section 1.3 “Termination Date”. Section 1.3
of Article 1 of the Agreement is hereby amended to read in its
entirety as follows:
“1.3 Termination
Date. Pursuant to Article 7.2, this Agreement shall
terminate on February 1, 2003 (the “Termination Date”)
and the parties will have no further obligations to the other to
effectuate a Closing, unless Company and ADS consent and agree to
extend the Termination Date for a period not to exceed ninety (90)
days. In order to extend the Termination Date, Company and
ADS must obtain the written consent of three of the following,
which are collectively referenced herein as the
“Investors”:
(a) |
|
DoorDrop, LP |
|
|
|
|
Xxxxx Xxxx Holdings, Inc.,
its general partner |
|
|
||
(b) |
|
ADS Equity Partners,
LP |
|
||
(c) |
|
Xxxxxxx X. Xxxxxxx |
|
||
(d) |
|
Xxxxx X. Xxxx |
1.3 Amendment to Article 6,
Section 6.1 “Third Party Beneficiaries of Three
Conditions of Closing the Exchange.”, subparagraph
(a)(2). Section 6.1(a)(2) of Article 6 of the Agreement is
hereby amended to read in its entirety as follows:
(2) Pursuant to Paragraph
1.3, the Closing must take place on or before February 1,
2003.
ARTICLE
2
EFFECTS OF THIS AMENDMENT
2.1 Reference to the
Agreement. As of and after the date hereof, each
reference in the Agreement to “this Agreement”,
“hereunder”, ‘hereof”,
“herein”, “hereby” or words of like import
referring to the Agreement shall mean and be a reference to the
Agreement as amended by this Amendment.
2.2 No Other Effect.
Except as specifically amended by this Amendment, each term,
provision and condition of the Agreement survives, remains and
shall continue in full force and effect. Nothing in this
Amendment shall be deemed to (a) constitute a waiver of compliance
by any party to the Agreement with respect to any term, provision
or condition of the Agreement, or (b) prejudice any right or remedy
that any party to the Agreement may now have or may have in the
future under or in connection with the Agreement.
3.3 Governing Law. This
Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
3.4 Counterparts. This
Agreement may be executed in multiple counterparts, by manual or
facsimile signature, which together shall constitute a single
agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first written above.
|
|
NATIONAL HEALTH & SAFETY CORP. |
|
|
|
By: |
|
Xxxx X. Xxxxx |
Name: |
|
Xxxx X. Xxxxx |
|
|
|
|
|
|
|
|
Alternative Delivery Solutions, Inc. |
|
|
|
By: |
|
Xxxxx X. “Dub” Xxxxx |
Name: |
|
Xxxxx X. “Dub”
Xxxxx |
|
|
|
|
|
|
|
|
NATIONAL HEALTH & SAFETY CORP. |
|
|
|
By: |
|
Xxxx X. Xxxxx |
Name: |
|
Xxxx X. Xxxxx |
|
|
|
|
|
|
|
|
Shareholders of Alternative Delivery Solutions, Inc.: |
|
|
|
|
|
Xxxxx X.
“Dub”
Xxxxx
|
|
|
|
|
|
Xxxxx X.
Xxxxxx |
|
|
|
|
|
Xxxx
Xxxxx |
|
|
|
|
|
Xxx and Xxxxxx
Xxxxxx, JTWROS |
|
|
|
|
|
Xxx and Xxxxxx
Xxxxxx, JTWROS |
|
|
|
|
|
Xxxxxx
Xxxxx |
|
ADS Equity Partners, LP |
|
|
||
|
Xxxx Xxxxx, President |
|
By: |
|
First Advisors, Inc. |
|
Xxxx Xxxxx, President |
|
|
||
|
Xxxxxxx X. Xxxxxxx |
|
|
Xxxxxxx X. Xxxxxxx |
|
|
||
|
||
|
DoorDrop, LP |
|
|
||
|
Xxxxx Xxxx, President |
|
By: |
|
Xxxxx Xxxx Holdings, Inc. |
|
Xxxxx Xxxx, President |
|
|
||
|
Xxxxx X. Xxxx |
|
|
||
|
||
|
Austin Capital, LLC |
|
|
||
|
Xxxxx Xxxxxx, Manager |
|
By: |
|
Xxxxx Xxxxxx, Manager |