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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is made this19th day of April,
2000 ("Execution Date"), by and among Kaire Holdings, Incorporated, a Delaware
corporation (the "Acquiror") with its principal place of business located at
7348 Bellaire Avenue, North Hollywood, California 91605, Kaire Holdings
Acquisition Corp., a California corporation that is a wholly-owned subsidiary of
Acquiror ("Newco"), Classic Care, Inc., a California corporation doing business
as Classic Care Pharmacy (the "Company") and Steven Oscherowitz and Sarit
Rubenstein (the "Company Shareholders")
R E C I T A L S:
WHEREAS, the Board of Directors of Newco and the Company deem advisable and in
the best interests of their respective shareholders the merger of Newco with and
into the Company (the "Merger"), upon the terms and conditions set forth herein
and in accordance with Sections 1100 through 1107 of the California Corporations
Code (the "Corporations Code") (the Company and Newco being hereinafter
sometimes referred to as the "Constituent Corporations" and the Company
following the effectiveness of the Merger being hereinafter sometimes referred
to as the "Surviving Corporation");
WHEREAS, the Company Shareholders own, beneficially and of record, all of the
outstanding capital stock of the Company, in the amounts set forth opposite each
Company Shareholder's name of Exhibit A attached hereto (the "Percentages");
WHEREAS, each of the Acquiror, Newco and the Company intend that, for federal
income tax purposes, the merger contemplated hereunder will qualify as a tax-
free reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder and any successor
thereto.
NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements set forth herein and in reliance upon the representations and
warranties contained herein, the parties hereto covenant and agree as follows:
ARTICLE 1.
THE MERGER
1.1 The Merger. Upon the terms and conditions hereinafter set forth and in
accordance with the California Corporations Code, at the Effective Time (defined
below), Newco shall be merged with and into the Company and thereupon, the
separate existence of Newco shall cease and the Company, as the Surviving
Corporation, shall continue to exist under and be governed by the California
Corporations Code.
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1.2 Filing. Subject to and as promptly as practicable after satisfaction or
waiver of the conditions set forth in Section 6 hereof, and after there has been
filed on behalf of Newco pursuant to the California Bank and Corporation Tax Law
a certificate of satisfaction of the State Franchise Tax Board that all taxes
imposed by said law have been paid or secured, the Surviving Corporation will
cause an officers' certificate from each of the Constituent Corporations setting
forth the information required by Section 1103 of the California Corporations
Code and in substantially the form of Exhibit A attached hereto (the "Merger
Certificate"), to be executed and filed along with an executed copy of this
Agreement with the Secretary of State of the State of California, as provided in
Section 1103 of the California Corporations Code.
1.3 Effective Time of the Merger. The Merger shall become effective
immediately upon the filing of an executed copy of this Agreement with the
Secretary of State of the State of California in accordance with Section 1103 of
the California Corporations Code. The date and time of such filing is sometimes
hereinafter referred to as the "Effective Time."
1.4 Articles of Incorporation and Bylaws. Upon the effectiveness of the
Merger, the Articles of Incorporation and Bylaws of the Company in effect on the
date hereof shall be the Articles of Incorporation and Bylaws, respectively, of
the Surviving Corporation.
1.5 Directors and Officers. The persons who are the directors and officers of
Newco immediately prior to the Effective Time shall, as of the Effective Time,
serve as the directors and officers, respectively, of the Surviving Corporation
until their respective successors have been duly elected and qualified in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
ARTICLE 2.
CONVERSION OF AND PAYMENT FOR STOCK
2.1 Conversion. At the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof:
(a) Each issued and outstanding share of the Company's common stock (the
"Company Shares") shall be converted into the right to receive from
Acquiror (i) $100.00, in cash (the "Cash Payment"), and (ii) 1,550 shares
of the common stock of Acquiror (the "Merger Shares") (the Cash Payment and
the Merger Shares are sometimes collectively referred to as the "Merger
Consideration.")
(b) Each issued and outstanding share of Newco shall be converted into one
validly issued, fully-paid and non-assessable share of common stock of the
Surviving Corporation.
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2.2 Payments; Escrow.
(a) on the Execution Date, Acquiror shall pay to the Company Shareholders, in
accordance with the Percentages, $300,000, in cash, which shall be non-
refundable in the event that the Merger is not consummated by June 1, 2000
(the "Drop Dead Date") as a result solely of a failure by Acquiror to
perform any of its covenants or obligations hereunder; provided that the
amount so paid shall be credited against the Cash Payment in the event the
Merger is consummated;
(b) by the close of business on May 1, 2000, Acquiror shall pay to the Company
Shareholders, in accordance with the Percentages, $200,000, in cash, which
shall be non-refundable in the event that the Merger is not consummated by
the Drop Dead Date as a result solely of a failure by Acquiror to perform
any of its covenants or obligations hereunder; provided that the amount so
paid shall be credited against the Cash Payment in the event the Merger is
consummated;
(c) at the Effective Time, Acquiror shall deposit $500,000, in cash (the
"Balance Payment"), into a mutually acceptable, interest-bearing escrow
account (the "Escrow Account"), subject to the terms and provisions of an
escrow agreement in substantially the same form as Exhibit B attached
hereto (the "Escrow Agreement"), which funds, together with all interest
earned thereon, shall be released to the Company Shareholders, in
accordance with the Percentages (i) $250,000 on July 17, 2000, plus
interest earned thereon, and (ii) $250,000 on October 15, 2000, plus all
interest earned thereon.
(d) at the Effective Time, Acquiror shall issue to the Company Shareholders, in
accordance with the Percentages, two-thirds of the Merger Shares, or
10,333,333 shares (the "Closing Shares"), issuable pursuant to Section 2.1
hereof, and the remaining one-third of the Merger Shares, or 5,166,667
shares (the "Escrow Shares") shall be deposited with the Escrow Agent
designated in the Escrow Agreement which Escrow Shares shall be subject to
the Escrow Agreement and which shall be released to the Company
Shareholders by 5:00 p.m. on January 15, 2001 (the "Release Date");
provided that if the Surviving Corporation's gross revenues for calendar
year 2000 shall be less than $8 Million, then the number of Escrow Shares
released to the Company Shareholders on the Release Date shall be reduced
by the same percentage by which the actual gross sales of the Surviving
Corporation fell short of $8 Million; provided, further, that if the
Surviving Corporation's gross revenues for calendar year 2000 exceed $10
Million, then in addition to releasing to the Company Shareholders all of
the Escrow Shares, Acquiror shall issue to the Company Shareholders, on the
Release Date, additional shares of Acquiror's common stock (the "Additional
Shares") so that the total number of shares of Acquiror's common stock
received by the Company Shareholders as Merger Consideration (i.e. 15.5
million shares) is increased by the same percentage by which actual gross
revenues of the Surviving Corporation exceeded $10 Million Dollars. For
illustration purposes only, if the Surviving Corporation's gross revenues
for calendar year 2000 are (i) $7,000,000, then the shortfall in revenues
is 12.5% and the number of Escrow Shares released to the Company
Shareholders on the Release Date would be reduced by 12.5%; or (ii)
$12,000,000, then the increase in revenues would be 20% and the number of
Merger Shares would be increased by 20% , so the Additional Shares would
equal 3,100,000 shares.
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Notwithstanding the foregoing, in the event that, prior to the Release
Date, substantially all of the business of the Company is sold in a
transaction or series of related transaction to a party unaffiliated with
Acquiror, whether pursuant to an asset sale, stock sale, merger or
otherwise (a "Company Sale"), then immediately upon effectiveness of the
Company Sale, the Escrow Shares shall be released to the Company
Shareholders. Additionally, if as of the effectiveness of the Company Sale,
the annualized gross revenues for the Company exceed $10 million, then
Acquiror shall also issue Additional Shares to the Company Shareholders,
calculated as set forth above.
2.3 Make Whole Shares. Acquiror agrees to guarantee a $0.50 per share stock
value of the Closing Shares, the Escrow Shares and the Additional Shares. The
stock price will be determined based on the average of the low and high bid
prices for Acquiror's common stock quoted for the last ten trading days prior to
three business days prior to the effectiveness of a registration covering the
subject shares as provided in the Registration Rights described below (the
"Effective Date"). In connection therewith, Acquiror agrees to subtract the
stock price, calculated as set forth above, from $0.50 and, on the Effective
Date, issue to the Company Shareholders shares of Acquiror's common stock with a
fair market value equal to the aggregate amount of such shortfall (the "Make
Whole Shares"). By way of illustration, if the Closing Shares, the Escrow
Shares and the Additional Shares total 20 million shares, but the fair market
value as determined on effective date is only $0.30 per share, then Acquiror
would have to issue to the Company Shareholders an amount of Make Whole Shares
with a fair market value equal to $4,000,000 (20 million X $0.20), or 13,333,333
shares ($4 million/$0.30 ).
2.4 Registration of Acquiror Shares. Acquiror hereby grants to the Company
Shareholders those Registration Rights set forth in Exhibit C attached hereto
regarding the Closing Shares, the Escrow Shares, the Additional Shares and the
Make Whole Shares (collectively, the "Acquiror Shares")
2.5 YesRx.com Option Package. In addition to the consideration set forth in
Section 2.1 hereof, Acquiror agrees to offer to the Company Shareholders the
right to acquire, in the aggregate no less than 5% of the outstanding capital
stock of YesRx.com, on a fully-diluted basis, if and when Acquiror spins off the
business of YesRx.com, with a per share exercise price not to exceed 70% of the
lower of either (i) the per share "strike price" for YesRx.com shares upon the
effectiveness of an initial public offering of its stock, and (ii) the fair
market value of YesRx.com shares on the date of exercise of the option.
2.6 Board of Directors. For so long as the Company Shareholders own at least
50% of the Acquiror's Shares issued to them pursuant to the Merger, the Company
Shareholders shall have the right to elect one director to the Board of
Directors of Acquiror.
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ARTICLE 3.
CERTAIN EFFECTS OF MERGER
3.1 Certain Effects of the Merger. As and after the Effective Time, the Merger
shall have the effects set forth in Section 1107 of the California Corporations
Code, including (without limitation) that the Surviving Corporation, which shall
be wholly-owned by Acquiror, will succeed, without other transfer, to all the
rights, and property of the Constituent Corporations and shall be subject to all
the debts and liabilities of each of the Constituent Corporations as if the
Surviving Corporation had itself incurred them.
3.2 Deliveries at Effective Time.
(a) By Acquiror. At the Effective Time, the Acquiror shall deliver to:
(i) the Company Shareholders, the (1) certificates representing the Closing
Shares issued in the names of the Company Shareholders in accordance with
the Percentages, (2) the Escrow Agreement, executed by Acquiror, (3) the
Acquiror's Bring Down Certificate (defined below), (4) the Newco Bring
Down Certificate; (5) Acquiror Secretary Certificate, (6) the Newco
Secretary Certificate; (7) Acquiror Good Standing Certificates; and (8)
Newco Good Standing Certificates.
(ii) Escrow Agent, the (1) Balance Payment, in cash (2) certificates
representing Escrow Shares, issued in the names of Company Shareholders in
accordance with the Percentages; and (3) the Escrow Agreement executed by
Acquiror.
(iii) Joel Rubenstein, an employment agreement in the form of Exhibit "D"
attached hereto (the "Employment Agreement").
(b) By the Sellers. At the Effective Time, the Company Shareholders
shall deliver to:
(i) the Acquiror, (1) certificates representing the Company Shares, (2) the
Escrow Agreement, executed by the Company Shareholders, (3) the Company
Bring Down Certificate, and (4) the Company Good Standing Certificates.
(ii) Escrow Agent, the Escrow Agreement executed by the Company Shareholders.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE COMPANY SHAREHOLDERS
Except as disclosed in the Disclosure Schedule attached hereto as Exhibit E, the
Company and each of the Company Shareholders represent and warrant to Acquiror
as follows:
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4.1 Organization and Capitalization of the Company. Except as set forth in
Section 4.1 of the Disclosure Schedule, the Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, with full power and authority and all necessary governmental and
regulatory licenses, permits and authorizations to carry on the businesses in
which it is engaged, to own the properties that it owns currently and to perform
its obligations under this Agreement, is duly qualified or licensed to do
business and is in good standing as a foreign corporation in all other states or
jurisdictions where the conduct of such business requires such qualification and
where the failure to be so qualified or licensed would have a material adverse
effect on the business of the Company. The authorized capital stock of the
Company consists of 20,000 shares of common stock, no par value, 10,000 shares
of which are validly issued and outstanding and are owned, beneficially and of
record, by the Company Shareholders in the respective amounts set forth on
Exhibit A.
4.2 Authorization of Agreement.
(a) Such Company Shareholder has all requisite power and authority to execute
and deliver this Agreement and to perform such company Shareholder's
obligations hereunder. The execution and delivery by such Company
Shareholder of this Agreement and the performance by such Company
Shareholder of such Company Shareholder's obligations hereunder will not
violate any of the Company's charter documents or bylaws or any order,
writ, injunction, decree, statute, law, rule or regulations applicable to
the Company or such Company Shareholder or any of the Company's or such
Company Shareholder's properties or assets, or be in conflict with, result
in a breach of or constitute a default under any note, bond, indenture,
mortgage, lease, license, franchise agreement or other agreement,
instrument or obligation to which the Company or such Company Shareholder
is a party, or result in the creation or imposition of any lien, charge or
encumbrance of any kind or nature whatsoever upon any the Company's or such
Company Shareholder's properties or assets. This Agreement and each and
every agreement, document, exhibit and instrument to be executed, delivered
and performed by such Company Shareholder in connection herewith
constitutes the valid and legally binding obligations of such Company
Shareholder enforceable against such Company Shareholder, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws from
time to time in effect affecting the enforcement of creditors' rights
generally.
(b) The Company has all requisite corporate power and authority to execute and
deliver this Agreement and to perform the Company's obligations hereunder.
The execution and delivery by the Company of this Agreement and the
performance by it of its obligations hereunder will not violate any of the
Company's charter documents or bylaws or any order, writ, injunction,
decree, statute, law, rule or regulations applicable to the Company or any
of the Company's properties or assets, or be in conflict with, result in a
breach of or constitute a default under any note, bond, indenture,
mortgage, lease, license, franchise agreement or other agreement,
instrument or obligation to which the Company is a party, or result in the
creation or imposition of any lien, charge or
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encumbrance of any kind or nature whatsoever upon any the Company's
properties or assets. This Agreement and each and every agreement,
document, exhibit and instrument to be executed, delivered and performed by
the Company in connection herewith constitutes the valid and legally
binding obligations of the Company enforceable against the Company, except
as enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws from
time to time in effect affecting the enforcement of creditors' rights
generally.
4.3 Consents. Except as set forth in Section 4.3 of the Disclosure Schedule,
no consent of, approval by, order or authorization of, or registration,
declaration or filing by the Company with any court or any governmental or
regulatory agency or authority having jurisdiction over the Company or any of
its property or assets is required on the part of the Company in connection with
the consummation of the transactions contemplated by this Agreement, excluding
any registration, declaration or filing the failure of which to effect would not
have a material adverse effect on the financial condition of the Company or the
operation of its business after the Closing.
4.4 No Default. The Company is not in default under any term or condition of
any instrument evidencing, creating or securing any indebtedness of the Company,
and there has been no default in any material obligation to be performed by the
Company under any other contract, lease, agreement, commitment or undertaking to
which it is a party or by which it or its assets or properties are bound, nor
has the Company waived any material right under any such contract, lease,
agreement, commitment or undertaking.
4.5 No Brokerage Commission. Except as set forth in Section 4.5 of the
Disclosure Schedule, no broker or finder has acted for the Company in connection
with this Agreement or the transactions contemplated hereby, and no person is
entitled to any brokerage or finder's fee or compensation in respect thereof
based in any way on agreements, arrangements or understandings made by or on
behalf of the Company.
4.6 Litigation. No litigation is pending, or, to such Company Shareholder's
knowledge, threatened, against the Company or its assets or properties that
seeks to restrain or enjoin the execution and delivery of this Agreement or any
of the documents referred to herein or the consummation of any of the
transactions contemplated hereby or thereby. The Company is not subject to any
judicial injunction or mandate or any quasi[]judicial or administrative order or
restriction directed to or against it or that would affect the its business.
There are no judgments or outstanding orders, injunctions, decrees, stipulations
or awards against the Company or any of its assets or properties.
4.7 Disclosure. No representation or warranty of the Company or such Company
Shareholder contained in this Agreement (including the exhibits hereto) contains
any untrue statement or omits to state a material fact necessary in order to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
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ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR AND NEWCO
Acquiror and Newco jointly and severally represent and warrant to the Company
and the Company Shareholders as follows:
5.1 Corporation Organization. Each of Acquiror and Newco is a corporation duly
organized, validly existing and in good standing, in the case of Acquiror, under
the laws of the State of Delaware, and in the case of Newco, under the laws of
the State of California. Newco has not engaged in any business nor has it
incurred any liabilities or obligations since it was incorporated other than
relating to this Agreement and the transactions contemplated hereby. Acquiror
has full power and authority and all necessary governmental and regulatory
licenses, permits and authorizations to carry on the businesses in which it is
engaged, to own the properties that it owns currently and to perform its
obligations under this Agreement, is duly qualified or licensed to do business
and is in good standing as a foreign corporation in all other states or
jurisdictions where the conduct of such business requires such qualification and
where the failure to be so qualified or licensed would have a material adverse
effect on the business of the Acquiror.
5.2 Authorization of Agreement. Each of Acquiror and Newco has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform their respective obligations hereunder. The execution and delivery of
this Agreement by each of Acquiror and Newco and the performance of their
respective obligations hereunder (a) have been duly and validly authorized by
all requisite corporate action and (b) will not violate their respective
charter or bylaws or any order, writ, injunction, decree, statute, rule or
regulations applicable to either of Acquiror or Newco or any of their respective
properties or assets, or be in conflict with, result in a breach of or
constitute a default under any note, bond, indenture, mortgage, lease, license,
franchise agreement or other agreement, instrument or obligation, or result in
the creation or imposition of any lien, charge or encumbrance of any kind or
nature whatsoever upon any of the properties or assets of Acquiror. This
Agreement and each and every agreement, document, exhibit and instrument to be
executed, delivered and performed by the Acquiror and/or Newco in connection
herewith constitute the valid and legally binding obligations of the Acquiror
and/or Newco, respectively, enforceable against each in accordance with their
respective terms, except as enforceability may be limited by applicable
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws from time to time in effect affecting the enforcement of
creditors' rights generally.
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5.3 Capitalization.
(a) The authorized capital stock of Acquiror consists of 400,000,000 shares of
Common Stock, approximately 80,000,000 of which are issued and outstanding.
All of the Acquiror Shares to be issued to the Company Shareholders
pursuant to this Agreement have been duly authorized and, upon issuance at
Closing, will be validly issued, fully paid and non-assessable.
(b) The authorized capital stock of Newco consists of 20,000 shares of common
stock, all of which are issued, outstanding and owned, beneficially and of
record, by Acquiror.
5.4 SEC Reports. Acquiror is a "reporting issuer" and has a class of
securities registered under Section 12(g) of the Securities and Exchange Act of
1934, as amended (the "Exchange Act"). Acquiror has made all filings with the
Securities and Exchange Commission ("SEC") that it has been required to make
under the Securities Act of 1933, as amended (the "Securities Act") and the
Exchange Act (the SEC Filings"). None of the reports contained in such SEC
Filings, as of their respective dates, (or if amended or superseded by
subsequent filings, on the dates of such filings), contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not materially misleading. The financial statements of the
Acquiror contained in such SEC Filings and reports were prepared in accordance
with GAAP consistently applied through the periods covered thereby (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q promulgated by the SEC) and
present fairly the financial condition of the Acquiror as of the indicated dates
and the results of operations of Acquiror for the indicated periods are correct
and complete in all material respects. Since the date of the Acquiror's most
recent SEC Filing (i) no event has occurred for which Acquiror is required to
file a Form 8-K but which it has not so filed and (ii) there has been no
material adverse change in the business, financial condition or results of
operation of Acquiror which was not disclosed in such SEC Filings or in press
releases disseminated to major news wires.
5.5 Consents. No consent of, approval by, order or authorization of, or
registration, declaration or filing by the Acquiror or Newco with any court or
any governmental or regulatory agency or authority having jurisdiction over the
Acquiror, Newco or any of their respective property or assets is required on the
part of the Acquiror or Newco in connection with the consummation of the
transactions contemplated by this Agreement, excluding any registration,
declaration or filing the failure of which to effect would not have a material
adverse effect on the Acquiror, Newco or the Acquiror Shares
5.6 Litigation. No litigation is pending, or, to Acquiror's knowledge,
threatened, against Acquiror, or its assets or properties that seeks to restrain
or enjoin the execution and delivery of this Agreement or any of the documents
referred to herein or the consummation of any of the transactions contemplated
hereby or thereby. The Acquiror is not subject to any judicial injunction or
mandate or any quasi[]judicial or administrative order or restriction directed
to or against it or that would affect the
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business of Acquiror. There are no judgments or outstanding orders, injunctions,
decrees, stipulations or awards against Acquiror or any of its assets or
properties.
5.7 Brokerage Commission. No broker or finder has acted for the Acquiror in
connection with this Agreement or the transactions contemplated hereby, and no
person is entitled to any brokerage or finder's fee or compensation in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of the Acquiror.
5.8 Disclosure. No representation or warranty of Acquiror contained in this
Agreement (including the exhibits hereto) contains any untrue statement or omits
to state a material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE 6.
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of Company. The obligations of the Company
to consummate the transactions contemplated hereby shall be subject to the
satisfaction, on or before the Effective Time Closing Date, of each and every
one of the following conditions, unless waived, in whole or in part, by the
Company for purposes of consummating such transaction.
(a) The representations and warranties of Acquiror and Newco set forth in this
Agreement shall be true and correct in all material respects at the
Effective Time;
(b) Acquiror and Newco shall have performed and complied with all agreements,
obligations, covenants and conditions required by this Agreement to be
performed or complied with on or prior to the Effective Time;
(c) The Company shall have received a certificate, dated the Effective Time and
signed by the President of the Acquiror to the effect set forth in Section
6.1(a) and 6.1(b) for the purpose of verifying the accuracy of such
representations and warranties as of the Effective Time and the performance
and satisfaction of such covenants and conditions ("Acquiror's Bring Down
Certificate");
(d) The Seller shall have received each of the following, dated as of the
Effective Time:
(i) A certificate executed by the Secretary of Acquiror (the Acquiror's
Secretary Certificate") certifying, as of the Effective Time, (1) a true
and complete copy of the certificate of incorporation and all amendments
thereto of Acquiror certified as of a recent date by the Secretary of State
of the State of Delaware, (2) a true and complete copy of the resolutions
of the board of directors of Acquiror authorizing the execution,
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delivery and performance of this Agreement by Acquiror and the consummation
of the transactions contemplated hereby, and (3) incumbency matters; and
(ii) A certificate executed by the Secretary of Newco (the Newco Secretary
Certificate") certifying, as of the Effective Time, (1) a true and
complete copy of the certificate of incorporation and all amendments
thereto of Newco certified as of a recent date by the Secretary of State
of the State of California, (2) a true and complete copy of the
resolutions of the board of directors of Newco authorizing the execution,
delivery and performance of this Agreement by Newco and the consummation
of the transactions contemplated hereby, and (3) incumbency matters; and
(iii) A certificate of the Secretary of State of the State of Delaware as to the
existence and good standing of the Acquiror and certificates of the
appropriate governmental authorities of each state in which Acquiror is
qualified or authorized to transact business as to the good standing and
qualification or authorization of Acquiror (the "Acquiror Good Standing
Certificates"); and
(iv) A certificate of the Secretary of State of the State of California as to
the existence and good standing of the Newco and certificates of the
appropriate governmental authorities of each state in which Newco is
qualified or authorized to transact business as to the good standing and
qualification or authorization of Newco (the "Newco Good Standing
Certificates")
(e) No action, suit or proceeding by or before any court or any governmental or
regulatory authority shall have been commenced and no investigation by any
governmental or regulatory authority shall have been commenced seeking to
restrain, prevent or challenge the transactions contemplated hereby or
seeking judgments against Acquiror.
6.2 Conditions to the Obligations of Acquiror. The obligations of the Acquiror
to effect the transactions contemplated hereby shall be subject to the
satisfaction, on or before the Effective Time, of each and every one of the
following conditions, unless waived, in whole or in part, by Acquiror for
purposes of consummating such transaction.
(a) The representations and warranties of the Company and the Company
Shareholders set forth herein shall be true and correct in all material
respects on the Effective Time with the same force and effect as if they
had been made on the Effective Time;
(b) The Company shall have performed and complied with all agreements,
obligations, covenants and conditions required by this Agreement to be
performed or complied with by the Company on or prior to the Effective
Time;
(c) The Acquiror shall have received a certificate, dated the Effective Time
and signed by the president of the Company to the effect set forth in
Section 6.2(a) and 6.2(b)
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for the purpose of verifying the accuracy of such representations and
warranties as of the Effective Time and the performance and satisfaction of
such covenants and conditions (the "Company Bring Down Certificate");
(d) Acquiror shall have received a certificate of the Secretary of State of
California as to the existence and good standing of the Company dated
within 30 days of the Effective Time and certificates of the appropriate
governmental authorities of each state in which the Company is qualified or
authorized to transact business as to the good standing and qualification
or authorization of the Company each dated within 30 days of the Effective
Time (collectively, the "Company Good Standing Certificates").
(e) No action, suit or proceeding by or before any court or any governmental or
regulatory authority shall have been commenced and no investigation by any
governmental or regulatory authority shall have been commenced seeking to
restrain, prevent or challenge the transactions contemplated hereby or
seeking judgments against the Company.
ARTICLE 7.
INDEMNIFICATION
7.1 Survival of Representations, Etc.. The representations and warranties of
the Company Shareholders and the Acquiror shall survive for a period of twelve
months following the Effective Time; provided, however, that the representations
and warranties contained in Section 5.4 hereof shall survive the Effective Time
indefinitely.
7.2 Indemnification by the Company Shareholders. Each Company Shareholder
agrees to and shall indemnify, defend (with legal counsel reasonably acceptable
to Acquiror), and hold harmless Acquiror, its officers, directors, shareholders,
employees, agents, affiliates, and assigns (the "Acquiror Affiliates") from and
against and in respect of, any liability, claim, deficiency, loss, damage,
penalty or injury, and all reasonable costs and expenses (including reasonable
attorneys' fees and costs of any suit related thereto) (collectively, "Damages")
suffered or incurred by Acquiror or any Acquiror Affiliate arising from (a) any
breach of any representation or warranty made by the Company or such Company
Shareholder in this Agreement, or any exhibit or schedule, certificate, or other
instrument furnished or to be furnished by the Company hereunder; and (b) any
breach of any covenant or agreement made by the Company or such Company
Shareholder under this Agreement.
7.3 Indemnification by the Acquiror. The Acquiror agrees to and shall
indemnify, defend (with legal counsel reasonably acceptable to the Company
Shareholders) and hold harmless each Company Shareholder, and such Company
Shareholder's spouse, heirs, legatees and assigns (the "Shareholder Affiliates")
from and against, and in respect of any Damages suffered or incurred by such
Company Shareholder or any Shareholder Affiliate, arising from (a) any breach of
any representation or warranty made by Acquiror in this Agreement or any exhibit
or schedule, certificate, or other agreement or instrument
<PAGE>
furnished or to be furnished by Acquiror hereunder; and (b) any breach of any
covenant or agreement made by Acquiror under this Agreement.
7.4 Defense of Claims. If any lawsuit or enforcement action is filed against
any party entitled to the benefit of indemnity hereunder, written notice thereof
shall be given to the indemnifying party as promptly as practicable (and in any
event not less than fifteen (15) days prior to any hearing date or other date by
which action must be taken); provided that the failure of any indemnified party
to give timely notice shall not affect rights to indemnification hereunder
except to the extent that the indemnifying party demonstrates actual damage
caused by such failure. After such notice, if the indemnifying party shall
acknowledge in writing to such indemnified party that this Agreement applies
with respect to such lawsuit or action, then the indemnifying party shall be
entitled, if it so elects, to take control of the defense and investigation of
such lawsuit or action and to employ and engage attorneys of its own choice to
handle and defend the same, at the indemnifying party's cost, risk and expense;
and such indemnified party shall cooperate in all reasonable respects, at its
cost, risk and expense, with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in such investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. The indemnifying party shall not,
without the prior written consent of the indemnified party, effect any
settlement of any proceeding in respect of which any indemnified party is a
party and indemnity has been sought hereunder unless such settlement of a claim,
investigation, suit, or other proceeding only involves a remedy for the payment
of money by the indemnifying party and includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
7.5 Default of Indemnification Obligation. If an entity or individual having
an indemnification, defense and hold harmless obligation, as above provided,
shall fail to assume such obligation, then the party or entities or both, as the
case may be, to whom such indemnification, defense and hold harmless obligation
is due shall have the right, but not the obligation, to assume and maintain such
defense (including reasonable counsel fees and costs of any suit related
thereto) and to make any settlement or pay any judgment or verdict as the
individual or entities deem necessary or appropriate in such individual's or
entities' absolute sole discretion and to charge the cost of any such
settlement, payment, expense and costs, including reasonable attorneys' fees, to
the entity or individual that had the obligation to provide such
indemnification, defense and hold harmless obligation and same shall constitute
an additional obligation of the entity or of the individual or both, as the case
may be.
7.6 Limitation on Indemnity.
(a) The indemnification obligations of the Company Shareholders and the
Acquiror with respect to any breach of any representations or warranties
pursuant to Sections 7.2(a) and 7.3(a), respectively, shall be limited to
claims for indemnity made prior to the
<PAGE>
last date of survival thereof as set forth in Section 7.1. The
indemnification obligation of the Company Shareholders and the Acquiror
with respect to any breach of any covenant, agreement or other obligations
pursuant to Sections 7.2(b) and 7.3(b), respectively, shall survive
indefinitely subject to the terms of this Agreement.
(b) Notwithstanding anything herein to the contrary, the maximum amount of
Damages for which the Company Shareholders shall be liable, in the
aggregate, pursuant to Section 7.2 hereof shall be an amount equal to the
$1 Million plus the fair market value of the Acquiror Shares at the time
the Company Shareholders become liable for such indemnification.
(c) Absent a showing of fraud, the rights and remedies provided in this Article
7 shall be the exclusive rights and remedies of an indemnified party as to
any Damages incurred by such indemnified party.
ARTICLE 8.
TERMINATION
8.1 Termination Events. This Agreement may, by notice given prior to or at the
Effective Time, be terminated:
(a) by the Company, if any of the conditions in Section 6.1 hereof have not
been satisfied immediately prior to the Effective Time or if satisfaction
of such condition is or becomes impossible (other than through the failure
of the Company to comply with its obligations under this Agreement) and the
Company has not expressly waived such condition in writing on or before the
Effective Time.
(b) by Acquiror, if any of the conditions in Section 6.2 hereof have not been
satisfied immediately prior to the Effective Time or if satisfaction of
such condition is or becomes impossible (other than through the failure of
the Acquiror to comply with its obligations under this Agreement) and the
Acquiror has not expressly waived such condition in writing on or before
the Effective Time.
(c) by mutual consent of the Acquiror and the Company; or
(d) by either the Company or the Acquiror if the Effective Time has not
occurred (other than through the failure of any party seeking to terminate
this Agreement to comply fully with its obligation sunder this Agreement)
on or before June 1, 2000, or such later date as the parties may agree upon
in writing.
8.2 Effect of Termination. In the event, and upon the effectiveness, of
termination of this Agreement as provided under Section 8.1 hereof, this
Agreement shall become null and void and have no further force or effect,
without any liability on the part of any party hereto, other than liability for
any intentional and willful breach of this Agreement occurring prior to such
termination.
<PAGE>
ARTICLE 9.
MISCELLANEOUS
9.1 Notices. All communications required or permitted under this Agreement
shall be in writing and any communication or delivery hereunder shall be deemed
to have been duly made if actually delivered or sent by electronic fax or
overnight commercial courier or registered or certified mail, postage prepaid,
addressed to the party being notified as set forth below. All such notices and
communications shall be deemed to have been received (i) on the date of
delivery; (ii) conformed facsimile transmission; (iii) one day after delivery to
an overnight commercial courier; or (iv) on the third business day after the
mailing thereof. Any party may, by written notice so delivered to the other,
change the address to which delivery shall thereafter be made. Notices to the
parties hereto shall be made at the addresses set forth below:
(a) If to the Company,
Mr. Joel Rubenstein
c/o Classic Care Pharmacy
1428 Robertson
Los Angeles, CA 90046
(b) If to Acquiror,
Mr. Steven Westlund
c/o Kaire Holdings Incorporated
7348 Bellaire Avenue
North Hollywood, CA 91605
Fax: (818) 255-4997
9.2 Assignment. Neither this Agreement nor any of the rights or obligations
hereunder may be assigned by any party without the prior written consent of the
other parties; except that Acquiror may, without such consent, assign all of its
rights (but not its obligations) under this Agreement. Subject to the
foregoing, this Agreement shall be binding upon and inure to benefit of the
parties hereto and their respective successors and assigns.
9.3 Counterparts and Facsimiles. This Agreement may be executed in multiple
counterparts and in any number of counterparts, each of which shall be deemed an
original but all of which taken together shall constitute and be deemed to be
one and the same instrument and each of which shall be considered and deemed an
original for all purposes. This Agreement shall be effective with the facsimile
signature of any of the parties set forth below and the facsimile signature
shall be deemed as an original
<PAGE>
signature for all purposes and the Agreement shall be deemed as an original for
all purposes.
9.4 Section Headings. The section headings contained in this Agreement are for
convenient reference only and shall not in any way affect the meaning or
interpretation of this Agreement.
9.5 Entire Agreement; Amendment. This Agreement, the documents to be executed
hereunder and the exhibits attached hereto constitute the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties pertaining to the subject matter hereof, and there are
no warranties, representations or other agreements among the parties in
connection with the subject matter hereof except as specifically set forth
herein or in documents delivered pursuant hereto. No supplement, amendment,
alteration, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the parties hereto. All of the exhibits
referred to in this Agreement are hereby incorporated into this Agreement by
reference and constitute a part of this Agreement.
9.6 Public Announcements. The parties hereto agree that prior to making any
public announcement or statement with respect to the transactions contemplated
by this Agreement, the party desiring to make such public announcement or
statement shall consult with the other parties hereto and the parties shall
exercise their best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all of such parties or (ii) obtain
approval of the other parties hereto to the text of a public announcement or
statement to be made solely by the party desiring to make such public
announcement; provided, however, that if any party hereto is required by law to
make such public announcement or statement, then such announcement or statement
may be made without the approval of the other parties.
9.7 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
9.8 Waiver. No waiver by any party of any default or non-performance shall be
deemed a waiver of any subsequent default or non-performance, and no waiver of
any kind shall be effective unless set forth in writing and signed by the party
against whom such waiver is to be charged.
9.9 Further Assurances. Each party covenants that at any time, and from time
to time, after the Effective Time, it will execute such additional instruments
and take such actions as may be reasonably requested by the other parties to
confirm or perfect or otherwise to carry out the intent and purposes of this
Agreement.
<PAGE>
9.10 Exhibits Not Attached. Any exhibits not attached hereto on the date of
execution of this Agreement shall be deemed to be and shall become a part of
this Agreement as if executed on the date hereof upon each of the parties
initialing and dating each such exhibit, upon their respective acceptance of its
terms, conditions and/or form.
9.11 Expenses. All expenses incurred by the parties hereto in connection with
or related to the authorization, preparation and execution of this Agreement and
the Closing of the transactions contemplated hereby, shall be borne solely and
entirely by the party that has incurred the same.
9.12 Gender. All personal pronouns used in this Agreement shall include the
other genders, whether used in the masculine, feminine or neuter gender, and the
singular shall include the plural, and vice versa, whenever appropriate.
9.13 Choice of Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, except for the laws
governing the effectuation of the Merger hereunder which shall be governed by
the California Corporations Code.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to
be executed effective as of the day and year first above written.
COMPANY SHAREHOLDERS ACQUIROR
Kaire Holdings, Incorporated
____________________________
Steven Oscherowit
By:_____________________
Print: _____________________________
Title: _____________________________
_____________________________________
Sarit Rubenstein
NEWCO
Kaire Holdings Acquisition Corp.
By: ________________________________
Print: ______________________________
COMPANY Title: _________________
CLASSIC CARE, INC.
By: _________________________________
Sarit Rubenstein, President
<PAGE>
EXHIBIT A
Shareholder No. of Company Shares Percentages
Steven Osherowitz 6700 67%
Sarit Rubenstein 3300 33%
TOTAL 10,000 100%
