FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-25238
NATURAL HEALTH TRENDS CORP.
(Exact name of Small Business Issuer as specified in its charter)
Florida 59-2705336
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2001 West Sample Road, Suite 318
Pompano Beach, FL 33064
(Address of Principal Executive Offices)
(305) 969-9771
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
The number of shares outstanding of the issuer's Common Stock, $.001 par
value, as of August 13, 1996 was 11,295,108 shares.
<PAGE>
NATURAL HEALTH TRENDS CORP.
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet as of June 30, 1996 (unaudited) 1
Consolidated Statements of Operations (unaudited) for the
Three and six months ended June 30, 1996 and 1995 2
Consolidated Statements of Cash Flows (unaudited) for the
Six months ended June 30, 1996 and 1995 3
Notes to the financial statements 4-5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 6-9
PART II - OTHER INFORMATION 10-11
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURE 12
</TABLE>
<PAGE>
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
<S> <C>
CURRENT ASSETS:
Cash $ 302,392
Marketable securities 252,584
Accounts receivable 1,044,473
Inventories 217,663
Due from related parties 148,566
Due from affiliate -
Prepaid expenses and other current assets 247,737
-------------------
TOTAL CURRENT ASSETS 2,213,415
PROPERTY, PLANT AND EQUIPMENT 3,174,009
DUE FROM OFFICERS 22,524
GOODWILL 1,516,793
DEPOSITS AND OTHER ASSETS 89,781
-------------------
$ 7,016,522
===================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 464,633
Accrued expenses 142,532
Revolving credit lines 401,732
Current portion of long term debt 46,974
Deferred revenue 562,211
Other current liabilities 73,033
-------------------
TOTAL CURRENT LIABILITIES 1,691,115
-------------------
LONG-TERM DEBT 1,923,194
DUE TO BANK 41,646
COMMON STOCK SUBJECT TO PUT 380,000
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 1,500,000 shares authorized; no shares
issued and outstanding -
Common stock, $.001 par value; 20,000,000 shares authorized;
11,189,108 shares issued and outstanding at June 30, 1996 11,189
Additional paid-in capital 5,481,930
Retained earnings (accumulated deficit) (2,132,552)
Common stock subject to put (380,000)
-------------------
TOTAL STOCKHOLDERS' EQUITY 2,980,567
-------------------
7,016,522
===================
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-------------------------------------------------------------------------
1996 1995 1996 1995
--------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
REVENUES $ 1,889,193 $ 926,327 $ 3,670,430 $ 1,903,970
COST OF SALES 1,079,190 508,200 2,090,870 974,170
--------------- ---------------- ---------------- ----------------
GROSS PROFIT 810,003 418,127 1,579,560 929,800
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,009,164 525,096 1,819,120 938,542
NON-CASH IMPUTED COMPENSATION EXPENSE - 559,000 - 559,000
--------------- ---------------- ---------------- ----------------
OPERATING INCOME (LOSS) (199,162) (665,969) (239,560) (567,742)
OTHER INCOME (EXPENSE):
Interest (net) (57,671) (40,557) (105,626) (56,520)
Write-off of deferred financing costs (314,523) - (347,974)
--------------- ---------------- ---------------- ----------------
TOTAL OTHER INCOME (EXPENSE) (57,671) (355,080) (105,626) (404,494)
--------------- ---------------- ---------------- ----------------
INCOME (LOSS) BEFORE INCOME TAXES (256,833) (1,021,049) (345,186) (972,236)
PROVISION FOR INCOME TAXES - - - 5,000
--------------- ---------------- ---------------- ----------------
NET INCOME (LOSS) $ (256,833) $ (1,021,049) $ (345,186) $ (977,236)
=============== ================ ================ ================
EARNINGS (LOSS) PER COMMON SHARE $ (0.02) $ (0.12) $ (0.03) $ (0.12)
=============== ================ ================ ================
WEIGHTED AVERAGE COMMON SHARES USED 11,189,108 8,645,058 11,132,441 8,442,236
=============== ================ ================ ================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
June 30,
-----------------------------------
1996 1995
---------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (345,186) $ (977,236)
---------------- ---------------
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 112,842 26,503
Non-cash imputed compensation expense - 559,000
Write-off of imputed deferred financing costs - 227,293
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (270,429) (171,455)
(Increase) decrease in inventories (92,776) -
(Increase) decrease in prepaid expenses (5,027) (9,999)
(Increase) decrease in deferred registration costs - 165,421
(Increase) decrease in deposits and other assets (6,352) (158,306)
Increase (decrease) in accounts payable 245,408 55,725
Increase (decrease) in accrued expenses 81,554 54,274
Increase (decrease) in deferred revenue 76,967 37,274
Increase (decrease) in deferred taxes - 5,000
Increase (decrease) in other current liabilities 11,713 39,655
---------------- ---------------
TOTAL ADJUSTMENTS 153,900 830,385
---------------- ---------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (191,286) (146,851)
---------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (399,406) (2,516,536)
Acquisition expenses (20,000) -
Purchase of marketable securities (252,584) -
---------------- ---------------
NET CASH USED IN INVESTING ACTIVITIES (671,990) (2,516,536)
---------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in due to related parties (13,958) (6,800)
Proceeds from mortgage payable - 1,875,000
Increase (desrease) in due to bank 14,343
Proceeds from notes payable and long-term debt 551,732 510,522
Payments of notes payable and long-term debt (197,092) -
Payment of dividends (184,173) -
Issuance of common stock - 2,752,090
---------------- ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 170,852 5,130,812
---------------- ---------------
NET INCREASE (DECREASE) IN CASH (692,424) 2,467,425
CASH, BEGINNING OF PERIOD 994,816 1,763
---------------- ---------------
CASH, END OF PERIOD $ 302,392 $ 2,469,188
================ ===============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
NATURAL HEALTH TRENDS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying financial statements are unaudited, but reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented. All such adjustments are of a normal and recurring nature.
The results of operations for any interim period are not necessarily indicative
of the results attainable for a full fiscal year.
2. EARNINGS (LOSS) PER SHARE
Per share information is computed based on the weighted average number of
shares outstanding during the period.
3. REVOLVING CREDIT LINES
A. The Company entered into a revolving credit line with Merrill Lynch
as of October 4, 1995 in the amount of $300,000. This revolving credit line
was activated by the Company on February 29, 1996. The revolving credit
line expires on October 31, 1996, at which time the Company is required to
pay back any and all amounts borrowed under the revolving credit line.
Interest accrues at the rate of prime plus 1%. As of June 30, 1996, the
Company had approximately $152,000 outstanding under this revolving credit
line. A $250,000 investment that the Company has with Merrill Lynch is
restricted as security for any loans under this revolving credit line.
B. In April 1996, the Company entered into a revolving credit
agreement with Capital Bank. The agreement provides for advances up to
$350,000, carries interest at 7% and matures in April 1997. A total of
$250,000 is outstanding under this agreement at June 30, 1996.
4. ACQUISITIONS
A. On January 22, 1996, the Company acquired all of the assets of Sam
Lilly, Inc., an alternative health care clinic, in exchange for 380,000 shares
of the Company's common stock. The acquisition was accounted for as a purchase.
The net assets acquired totaled approximately $9,000. As a result of this
acquisition, the Company recorded goodwill of $1,380,000.
B. On June 26, 1996, the Company acquired all of the stock of Medical
Science Consultants, Inc., Diagnostic Services, Inc., Managent Inc. and KBM
Consultants doing business as the Institute of Natural Medicine, Inc., an
alternative health care clinic, in a business combination accounted for as a
pooling of interests. The Company acquired 100% of this company in exchange for
110,000 shares of its common stock. The accompanying financial statements have
been restated to reflect the combined companies for all periods presented.
The following table presents a breakdown of amounts included in the
accompanying statement of operations attributable to each company:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
----------------------------------------- ------------------------------------------
1996 1995 1996 1995
------------------ ------------------ ----------------- ------------------
<S> <C> <C> <C> <C>
REVENUES:
Natural Health Trends Corp. $ 1,645,587 $ 725,563 $ 3,183,219 $ 1,502,442
Institute of Natural Medicine 243,606 200,764 487,211 401,528
------------------ ------------------ ----------------- ------------------
Total $ 1,889,193 $ 926,327 $ 3,670,430 $ 1,903,970
================== ================== ================= ==================
NET INCOME (LOSS):
Natural Health Trends Corp. $ (309,162) $ (1,046,129) $ (450,127) $ (1,027,396)
Institute of Natural Medicine 52,471 25,080 104,941 50,160
------------------ ------------------ ----------------- ------------------
Total $ (256,833) $ (1,021,049) $ (345,186) $ (972,236)
================== ================== ================= ==================
</TABLE>
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements and notes contained in Item 1 hereof.
On June 26, 1996, the Company acquired the Institute of Natural Medicine,
Inc. in a business combination accounted for as a pooling of interest.
Accordingly, previous financial statements have been restated and the following
discussions include the accounts of the Institute of Natural Medicine, Inc., for
all periods.
THREE MONTHS ENDED JUNE 30,1996 AND 1995
Revenues:
Total revenues were $1,889,193 for the three months ended June 30,1996
compared to $926,327 for the three months ended June 30, 1995. This represents
an increase of $962,866 or 104%.
Management believes that the increase is primarily attributable to $417,698
in fee revenue provided by the alternative health care clinic acquired by the
Company in January 1996, a $42,842 increase from the Institute of Natural
Medicine Inc., $159,208 from the Company's Oviedo school which was acquired in
November 1995, $251,626 in tuition revenue from the previously existing
Lauderhill and Miami schools due to increased enrollment and increased tuition
rates, and $29,060 in rental income which did not commence until property in
Pompano Beach, Florida ( the "Pompano Property") was acquired in May 1995.
Revenues from the Company's on campus bookstores were $96,657 for the three
months ended June 30, 1996 as compared to $55,622 for the comparable period in
1995.
Cost of sales:
Cost of sales for the three months ended June 30,1996 were $1,079,190
compared to $462,920 for the comparable period last year. Gross profit as a
percentage of revenues was 43% compared with 45% for the three months ended June
30,1995. Management believes that the decrease in gross profit percentage is
related to the change in mix of services provided by the Company, specifically
the alternative health care clinics which have higher costs for salaries and
products. Additionally, the cost attributable to the Corporate massage service
which is in the start-up stage contributed to this decrease as there was minimal
revenues from this segment of the business.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses were $1,039,164 for the three
months ended June 30,1996. This represents an increase of $548,904 over the
three months ended June 30,1995.
<PAGE>
Management believes that the increase is primarily due to the new
operations of the alternative health care clinics as well as the Company's
Oviedo school. As a percentage of revenues, these cost were 55% as compared to
58% in the 1995 period.
Non-cash Imputed Compensation Expense
During the six months ended June 30,1995, the Company expensed $559,000
relating to the issuance of 215,000 shares of the Company's common stock to
certain officers and individuals within twelve months of the Company's initial
public offering of its securities ( the "Initial Public Offering"). Such amount
represents the assumed fair market value of the shares of common stock issued to
these individuals.
This non cash expense in the second quarter of 1995 was accompanied by a
corresponding increase in the additional paid-in capital account and resulted in
no change to stockholder's equity.
Writeoff of Deferred Finance Costs
The writeoff of deferred finance costs during the six months ended June 30,
1995 in the amount of $347,974 represents the remaining deferred finance costs
relating to bridge financing in the amount of $350,000 during the first quarter
of 1995(the "Bridge Financing") and a non cash imputed common stock valuation
charge relating to other lenders.
Of such amount, $183,974 represents amortization of the remaining deferred
financing costs in connection with the Bridge Financing. Since the Bridge
Financing was repaid in full in the second quarter from the net proceeds of the
Initial Public Offering, these deferred financing costs were expensed
accordingly.
The remaining amount of $164,000 represents the assumed fair market value
for 66,923 shares of the Company's common stock issued to certain other lenders.
The $164,000 is a non cash expense and resulted in a corresponding increase in
the additional paid-in capital account. The total stockholders' equity amount
was not affected by the recording of this $164,000 non cash expense.
Interest Expense
Interest expense the three months ended June 30, 1996 was $57,671 as
compared to $40,557 for the comparable period of 1995. The increase is primarily
due to the interest on the mortgages of the Pompano Property which was acquired
in May 1995.
<PAGE>
Net Loss
For the three months ended June 30, 1996, the net loss was $256,833
compared to a net loss of $1,021,049 for the three months ended June 30, 1995.
The decrease in the loss is attributable to the impact of the individual
elements discussed above.
SIX MONTHS ENDED JUNE 30,1996 AND 1995
Revenues:
Total revenues were $3,670,430 for the six months ended June 30,1996
compared to $1,903,970 for the six months ended June 30, 1995. This represents
an increase of $1,766,460 or 93%.
Management believes that the increase is primarily attributable to $843,606
in fee revenue provided by the alternative health care clinic acquired by the
company in January 1996, an $85,683 increase from the Institute of Natural
Medicine Inc., $308,371 from the Company's Oviedo school which was acquired in
November 1995, $284,904 in tuition revenue from the previously existing
Lauderhill and Miami schools due to increased enrollment and increased tuition
rates, and $106,282 in rental income which did not commence until the Pampano
Property was acquired in May 1995. Revenues from the Company's on campus
bookstores were $178,519 for the six months ended June 30, 1996 as compared to
$55,622 for the 1995 comparable period.
Cost of sales:
Cost of sales for the six months ended June 30,1996 were $2,090,870
compared to $974,170 for the comparable period last year. Gross profit as a
percentage of revenues was 43% for the six months ended June 30, 1996 compared
with 49% for the six months ended June 30,1995. Management believes the decrease
in gross profit as a percentage of revenues in 1996 is attributable to there
being a change in the mix of services offered by the Company, specifically the
alternative health care clinics, which have higher costs for salaries and
products, in addition to the inclusion of costs attributable to the Company's
Corporate Massage service, which is still in a start-up stage, contributed to
such decrease and has provided minimal revenues to date.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses were $1,819,120 for the six
months ended June 30,1996. This represents an increase of $880,578 over the six
months ended June 30,1995. The increase is primarily due to new operations of
the alternative health care clinics as well as the Company's Oviedo school. As a
percentage of revenues, these cost were 50% as compared to 49% in the 1995
period.
<PAGE>
Non-cash Imputed Compensation Expense
During the six months ended June 30,1995, the company expensed $559,000 as
described above in the discussion on the three months ended June 30, 1996 and
1995.
Interest Expense
Interest expense for the six months ended June 30, 1996 was $105,626 as
compared to $56,520 for the comparable period of 1995.The increase is primarily
due to interest on the mortgages on the Pompano Property which was acquired in
May 1995.
Net Loss
For the six months ended June 30, 1996, the net loss was $345,186 compared
to a net loss of $972,236 for the six months ended June 30, 1995. The decrease
in the loss is attributable to the impact of the individual elements discussed
above.
Liquidity and Capital Resources
The Company has funded its working capital and capital expenditures
requirements from cash provided through borrowings from individuals and
institutions and from the sale of the Company's securities in a private
placement and the Initial Public Offering. The Company's primary source of cash
receipts is from payment for tuition, fees and books revenue from the operation
of the alternative health care clinics.The payments related to fees, tuition and
books were funded primarily from student and parent educational loans and
financial aid under various Federal and state assistance programs and, to a
significantly lesser extent, from student and parent resources.
At June 30,1996 the ratio of current assets to current liabilities was 1.31
to 1.0, and working capital was approximately $522,000.
Cash used in operations for the period ended June 30,1996 was approximately
$191,286, attributable primarily to the net loss of $256,833.
Capital expenditures, primarily related to construction for the preparation
for use of the Pompano Property, used approximately $399,000 of cash.
The Company anticipates that its net cash flow together with available
lines of credit will be sufficient to finance the Company's operations during
the next twelve months.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - NONE
Item 2. CHANGES IN SECURITIES - NONE
Item 3. DEFAULTS UPON SENIOR SECURITIES - NONE
Item 4. SUBMISSION OF MATTERS TO A VOTE OFSECURITIES HOLDERS - NONE
Item 5. OTHER INFORMATION
a)REVOLVING CREDIT LINES
A. The Company entered into a revolving credit line with Merrill Lynch as
of October 4, 1995 in the amount of $300,000. This revolving credit line was
activated by the Company on February 29, 1996. The revolving credit line expires
on October 31, 1996, at which time the Company is required to pay back any and
all amounts borrowed under the revolving credit line. Interest accrues at the
rate of prime plus 1%. As of June 30, 1996, the Company had approximately
$152,000 outstanding under this revolving credit line. A $250,000 investment
that the Company has with Merrill Lynch is restricted as security for any loans
under this revolving credit line.
B. In April 1996, the Company entered into a revolving credit agreement
with Capital Bank. The agreement provides for advances up to $350,000, carries
interest at 7% and matures in April 1997. A total of $250,000 is outstanding
under this agreement at June 30, 1996.
b)ACQUISITION
On June 26, 1996, the Company acquired all of the stock of Medical
Science Consultants, Inc., Diagnostic Services, Inc., Managent Inc. and KBM
Consultants doing business as the Institute of Natural Medicine, Inc., an
alternative health care clinic, in a business combination accounted for as a
pooling of interests. The Company acquired 100% of this company in exchange for
110,000 shares of its common stock. The accompanying financial statements have
been restated to reflect the combined companies for all periods presented.
Item 6. EXHIBITS AND REPORTS ON FORM 8 - K
a)EXHIBIT INDEX
b)REPORTS ON FORM 8 - K - NONE
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
Undersigned, thereunto duly authorized.
NATURAL HEALTH TRENDS CORP.
by: Neal Heller
President and Chief Executive Officer
Date: August 14, 1996
<PAGE>
NATURAL HEALTH TRENDS CORP. EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Dresciption of Exhibit
<S> <C>
1.1 Form of Underwriting Agreement between the Company and
Maidstone Financial Inc. (the "Underwriter").*
3.1 Amended and Restated Certificate of Incorporation of the Company.*
3.2 Amended and Restated By-Laws of the Company.*
4.1 Specimen Certificate of the Company's Common Stock.*
4.2 Form of Class A Warrant.*
4.3 Form of Class B Warrant.*
4.4 Form of Warrant Agreement between the Company and Continental Stock
Transfer & Trust Company.*
4.5 Form of Underwriter's Warrants.*
4.6 Form of Class A Warrants issued in the 1995 Bridge Financing.*
4.7 Form of Class B Warrants issued in the 1995 Bridge Financing.*
4.8 Form of Bridge Notes issued in the 1995 Bridge Financing.*
4.9 1994 Stock Option Plan.*
10.1 Form of Employment Agreement between the Company and Neal R. Heller.*
10.2 Form of Employment Agreement between the Company and Elizabeth S. Heller.*
10.3 Letter Agreement, dated December 27, 1993, between the Company and
Richard Schuman.*
10.4 Lease, dated April 29, 1993, between Florida Institute of Massage Therapy,
Inc., as tenant, and MICC Venture, as landlord, as amended.*
10.5 Lease, dated April 10, 1991, between Florida Institute of Massage Therapy,
Inc., as tenant, and Superior Investment & Development Corporation, as
agent, for SIDCOR 50/50 Associates.*
10.6 Department of Education, Office of Postsecondary Education, Office of
Student Financial Assistance Program Participation Agreement, dated
March 28, 1994, between the Company and the USDOE.*
10.7 Purchase and Sale Agreement between Merrick Venture Capital, Inc., as
seller, and the Company, as buyer.*
<PAGE>
10.8 First Mortgage Loan Documents between the Company and Trans Florida Bank
in connection with the purchase of the Pompano Property.*
10.9 Equity Credit Plan and Note, dated March , 1994, among the Company,
F.I.M.T.E., Neal R. Heller, Elizabeth S. Heller and American Bank of
Hollywood.*
10.10 Form of Financial Consulting Agreement between the Company and
Maidstone.*
10.11 Intentionally omitted.
10.12 Agreement dated June 7, 1995 between Natural Health Trends Corp. and
Justin Real Estate Corp.*
10.13 Property Management Agreement dated June 7, 1995 between Natural
Health Trends Corp. and Justin Real Estate Corp.*
10.14 Agreement and Plan of Reorganization by and among the Company, HWNC and
Sam Lilly Corp., dated as of January 22, 1996.
10.15 Employment Agreement between HWNC and Samantha Haimes dated January 22,
1996.
10.16 Employment Agreement between HWNC and Leonard Haimes, M.D. dated
January 27, 1996.
10.18 Employment Agreement between Health Wellness Nationwide Corp., Kaye
Lenzi and Natural Health Trends Corp.
16.1 Letter from Soule & Associates, P.A. on change in certifying accountant.
21.1 List of Subsidiaries.*
27.1 Financial Data Schedule.
<FN>
* Previously filed with the Company's Registration Statement No.
33-991184
</FN>
</TABLE>
AGREEMENT AND PLAN OF REORGANIZATION dated January 22, 1996, by and between
NATURAL HEALTH TRENDS CORP., a Florida corporation, with an office at 2001 West
Sample Road, Pompano Beach, Florida ("NHT") and Health Wellness Nationwide
Corp., a Florida corporation with an office at 2001 West Sample Road, Pompano
Beach, Florida ("Buyer") and SAM LILLY INC., a Florida corporation with offices
at 7300 North Federal Highway, Suite 104, Boca Raton, Florida ("Seller"), and/or
its successors or assigns.
W I T N E S S E T H :
WHEREAS, Seller is a corporation specializing in alternative medicine;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, substantially all of the assets, property and rights of Seller
employed in connection with the business of Seller in a transaction intended to
qualify as a "reorganization" within the meaning of Section 368(a)(1)(c) of the
Internal Revenue Code; and
WHEREAS, Buyer is a wholly owned Subsidiary of NHT;
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Buyer and Seller agree that:
1.Purchase and Sale of Assets.
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, and in reliance upon the representations, warranties and agreements
set forth herein, at Closing (hereafter defined) Seller shall sell, transfer and
assign to Buyer, and Buyer shall purchase and acquire from Seller, all of the
<PAGE>
right, title and interest of Seller in the "Acquired Assets" (as defined in
Section 1.2). The terms and conditions of this Agreement and the Employment
Agreements shall survive the Closing.
1.2 Acquired Assets.
1.2.1 The "Acquired Assets" hereunder shall mean all of the right, title
and interest in and to the assets, properties and rights of the Seller, of every
nature, kind and description, wherever located, tangible and intangible, real,
personal and mixed, as the same shall exist on the closing Date, including,
without limitation, the following (i) all right, title and interest of the
Seller in and to its business as a going concern, its good will, its corporate
and business names, telephone and fax numbers, and any derivatives or
combinations thereof and all other intangible assets; (ii) all interests in land
and building owned or leased by the Seller; (iii) all furniture, equipment,
computers, software programs, records, files, supplies, medicines and other
items of personal property owned or leased by the Seller exclusive of art work;
(iv) all of the Seller's cash and cash equivalents on hand and in banks,
certificates of deposit, commercial paper, stocks, bonds and other investments,
except as set forth herein; (v) all causes of action, judgments, claims, demands
and other rights of the Seller of every kind or nature; (vi) all rights of the
Seller in and to insurance policies; (vii) all accounts receivable of the
Seller, including, but not limited to, all accounts receivable arising from
services rendered prior to the Closing Date notwithstanding that invoices
related thereto have not yet been issued; (viii) all rights of the Seller
relating to, or arising out of, or under, express or implied warranties from
suppliers of the Seller with respect to the assets and properties being
transferred to the Buyer; (ix) all prepaid expenses, advances and deposits of
the Seller; (x) all books and records of the Seller, including, but not limited
to, correspondence, patient records (except for patient records which the
patient has requested not be transferred) employment records, accounting
records, property records, mailing lists, patient, customer and vendor lists and
the records and files of, or relating to, the assets, properties and rights of
the Seller being sole to the Buyer; and (xi) all of the Seller's rights, title
and interest in and to all leases, contracts, licenses,purchase orders, sales
orders,
<PAGE>
commitments and other agreements to which the Seller is a party or in which
the Seller has rights thereunder; free and clear of all liabilities,
obligations, claims liens, and encumbrances, of any kind or nature.
1.2.2 Anything contained in Section 1.2.2 hereof to the contrary
notwithstanding, the Assets shall not include the following: (i) the
consideration delivered by the Buyer to the Seller pursuant to this Agreement
for the Assets; (ii) any rights of the Seller under this Agreement (including
without limitation the right to indemnification under Section 12 hereof) or any
interests which the Seller may have or acquire under this Agreement; and (iii)
the rights to claims for refunds of taxes which are not assignable by law.
1.3 Assumed Liabilities.
(a) Buyer shall assume all of Seller's obligations on the Lease at Seller's
office on 7300 North Federal Highway, Boca Raton, Florida ("Seller's Office")
(b) Buyer shall assume only such other as liabilities listed on Schedule
1.3. (the "Assumed Liabilities").
2. Purchase Price.
2.1 Amount. The purchase price for the Acquired Business and the Acquired
Assets (the "Purchase Price") shall be 380,000 shares of Common Stock of NHT.
2.2 Payment. On the day of the Closing and subject to the adjustment
provisions of 2.3 herein, the Buyer will direct its transfer agent, Continental
Stock Transfer Co., Inc., to issue 380,000 shares of Common Stock ("Purchase
Price" and also "Shares") to Seller. The Stock Certificates for the Shares
received by the Seller, a copy of which is attached as Exhibit 2.2., shall be
subject to the following legend:
The securities represented by this Certificate have not been registered
under the Securities Act of 1933, as amended, nor the laws of any state.
Accordingly, these securities may not be offered, sold, transferred,
pledged or hypothecated in the absence of registration, or the
<PAGE>
availability, in the opinion of counsel for the issuer, of an exemption
from registration under the Securities Act of 1933, as amended, or the laws
of any state. Therefore, the stock transfer agent will effect transfer of
this Certificate only in accordance with the above instructions.
2.3 Adjustment of Purchase Price. Feldman Radin & Co., P.C., certified
public accountants, ("Auditors"), have provided Buyer with a Blance Sheet dated
as of October 31, 1995 ("Seller's Balance Sheet") which shows that the adjusted
value of the assets acquired is $8,464. Within thirty (30) days of the date
hereof, Feldman Radin & Co., P.C. will compute a Balance Sheet as of the Closing
Date. If the Adjusted Balance of the net assets acquired is less than $8,464,
Seller shall pay Buyer the difference. If the Adjusted Balance of the Net Assets
is greater than $8,464, Seller shall make no payment to Buyer.
3. Other Agreements.
3.1 At the Closing, Samantha Haimes and Leonard Haimes, M.D. shall enter
intoEmployment Agreements with Buyer in the form of Exhibits A and B,
respectively.
3.2 At the Closing Buyer shall enter into a contract with Rejuvenation
Unlimited of Florida, Inc. with respect to the Human Growth Hormone.
3.3 Seller shall at any time and from time to time after the Closing
execute and deliver such further instruments of transfer and conveyance as
shall, in the opinion of Seller's counsel, be deemed necessary.
4. Representations and Warranties of Seller.
Seller warrants and represents to, and covenants with the Buyer that:
4.1 Due Incorporation. On the date hereof Seller is, and on the Closing
Date Seller will be, a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida, and has the full corporate
power and authority to carry on its business as and where conducted, and to own
and operate its properties where and as owned leased or operated by it. Seller
is qualified to do business in each jurisdiction in which it own or
<PAGE>
leases and operates its properties, or in which the nature of its business
requires such qualification.
4.2 Full Authority. Seller has the requisite corporate power and authority
to enter into this Agreement and each agreement or contract required or
contemplated by Seller to be executed or delivered hereunder. The execution and
delivery of this Agreement and each other agreement or contract required or
contemplated to be executed and delivered by Seller in this Agreement, and the
performance by Seller of all of its obligations hereunder or thereunder have
been duly and validly authorized by Seller.
4.3 No Violations. Except as specified on Schedule 4.3, neither the
execution or delivery of this Agreement or the consummation of the transactions
contemplated in this Agreement or in any other agreement or contract the
execution and delivery of which is contemplated by this Agreement will result in
a violation or breach of, or constitute a default under, any rule, regulation,
order, decree, agreement, contract, lease or other restriction or limitation to
which Seller is a party or to which Seller or its assets or properties are
subject or bound; nor will such execution, delivery or consummation result in
the creation of any lien or other charge or encumbrance on the Acquired Assets
or result in the acceleration of any loan or security interest to which the
Acquired Assets are subject.
4.4 Binding Obligations. This Agreement and any agreement or contract the
execution and delivery of which is contemplated in this Agreement, when executed
and delivered, will be the valid, binding obligations of the Seller, enforceable
according to its terms or their terms, except as such enforcement may be limited
by the laws of bankruptcy or insolvency.
4.5 Good Title. Except as specified on Schedule 4.5, Seller has good and
marketable title to the Acquired Assets. When transferred pursuant to the terms
of this Agreement, the Acquired Assets will be free of any liens, claims,
encumbrances, liabilities or restrictions. The delivery to Buyer of the
instruments of transfer and ownership contemplated by this Agreement will vest
good and marketable
<PAGE>
title to the Acquired Assets in the Buyer, free and clear of any lien, claim,
encumbrance, liability or restriction.
4.6 Accounts Receivable and Inventory. (a) Each Account Receivable
constitutes a bona fide indebtedness of a patient or customer of Seller arising
from bona fide provision of medical services or sale to such customer of Seller.
Except as set out on Schedule 4.6, Seller knows of no material charges, offsets,
adjustments, discounts or other reductions of any Account Receivable claimed by
or due to such customer.
4.7 Authorization. Except as set out on Schedule 4.7, any authorization,
approval, order, license, permit, franchise or consent of, declaration to, or
filing or registration with, any court, governmental authority or any other
person or entity which is not a party to this Agreement which is required in
connection with the execution, delivery and performance of this Agreement by the
Seller has been obtained or effected or shall be obtained or effected on or
prior to the Closing Date.
4.8 Seller's Income Taxes. The Seller has either filed or requested
extensions to file all foreign, Federal, state, county or local income, excise,
sales, property, withholding, Social Security, franchise, license, information
return or other tax return or report due as of the date of this Agreement.
Seller shall promptly file all Federal, state, county and local income excise,
sales, property, withholding, Social Security, franchise, license, information
return and other tax returns and reports required to be filed as a result of the
Closing, including short period returns, and will create sufficient reserves to
pay all taxes and liabilities incurred by it as a result of the transactions
contemplated herein. As of the date hereof, except where a request for extension
has been filed, Seller has no known liabilities for any such taxes and has not
been notified of the commencement of any audit by any taxing authority.
4.9 Omitted.
4.10 No Litigation. Except as set forth on Schedule 4.10, there is no
material litigation or proceeding, including any administrative, arbitration or
grievance proceeding, or any governmental
<PAGE>
investigation, pending or, to the best knowledge of Seller, threatened against,
relating to or affecting Seller or its business or the Acquired Assets or the
consummation of the transactions contemplated by this Agreement.
4.11 Compliance with Law. To the best knowledge of Seller, Seller is in
compliance with all applicable statutes, rules, regulations, ordinances, codes,
orders, licenses, franchises, permits, authorizations and concessions, as such
apply to Seller or the Acquired Assets including, without limitation, any
applicable building, zoning, antipollution, environmental, occupational safety,
health or other law, ordinance or regulation in respect of any plant, warehouse,
office, structure or the operations or business of Seller. Except as set forth
on Schedule 4.11 Seller has received no notification alleging any violation of
any of the foregoing or with respect to which adequate corrective action has not
been taken.
4.12 Environmental and Safety Compliance. Without limiting the
representation and warranties contained in Section 4.12, to the best knowledge
of Seller, Seller has obtained all permits, licenses and other authorization
which are required under federal, state and local laws relating to dispensing of
medicines and controlled substances, public health and safety, worker health and
safety and pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air, surface
water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes.
To the best knowledge of Seller, Seller is in compliance with all terms and
conditions of any and all required permits, licenses, and authorizations, and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any federal, state or local law or any regulation, code, plan,
order, decrees or judgement relating to public health and safety, worker health
and safety, and pollution or protection of the environment, or any notice or
demand letter issued, entered, promulgated or approved thereunder. To the
best knowledge of Seller, there are no facts, events or conditions relating to
the past or present operations or facilities of Seller which interfere with or
prevent continued compliance with, or give rise to any legal, common law or
statutory liability under, any law, regulation or common law theory related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, or any pollutant, contaminant, or hazardous or toxic
material or waste.
4.13 Employees. Schedule 4.13 annexed hereto is an accurate and complete
list of all full time, permanent employees of Seller who, prior to the Closing,
devoted all, or substantially all, of their business time and attention to the
business of the Seller, including their job description, aggregate annual
remuneration rate, any reimbursable expense items to which they may be entitled,
and any health, retirement, bonus, deferred compensation, severance, fringe or
other employee benefit plan maintained by Seller to which they were party the
("Plans"). After the Closing, Buyer will have no obligation to the employees
listed on Schedule 4.14 (except for LH and SH) to continue their employment and
for any liability under the Plans.
4.14 Absence of Liabilities. The Seller's Balance Sheet contains all of the
liabilities which arose from the operation of the Acquired Business to the date
thereof. Except as set forth on Schedules 1.3, 4.5, 4.6, 4.7 and 4.11, after the
Closing Date, no person or entity shall have any claim against Buyer for any
obligation of the Seller except for obligations of the Seller incurred in the
usual course of its business in the period between the date hereof and the
Closing Date.
4.15 Compliance. Seller represents that any employee of Seller who provides
medical services holds a valid license to practice medicine in Florida and that
such employee is in good standing with the Florida Medical Society, all Florida
licensing and regulatory bodies having jurisdiction over such person and each
professional and medical fraternity of which such person is a member. No
employee has ever been disciplined, suspended or remanded as a physician or
barred from medical practice, no employer
<PAGE>
physicians operate any medical practice other than the work done in conjunction
with their employment with Seller and Seller's business is conducted in
accordance with all applicable ethical standards.
4.16 Disclosure. No representation or warranty by Seller, or any Schedule,
statement or document annexed hereto or to be delivered to Buyer, contains or
will contain any untrue statement of material fact or omits or will omit to
state a material fact necessary in order to make the Schedules, statements, or
documents annexed hereto or to be delivered to Buyer not misleading.
5. Post Closing Obligations, Put.
5.1 Seller's Obligations. Seller shall dissolve and the Shares shall be
distributed to Seller's shareholders in accordance with a plan of liquidation to
be adapted by Seller.
5.2 Buyer's Obligations. Holders of the Shares received by Seller hereunder
shall have the right at any time during the three year period commencing January
2, 1996 that the aggregate market value of the Shares as measured by the average
bid and asked prices on NASDAQ (or such other nationally recognized quotation
system) is less than $380,000 to sell and the Buyer agrees to buy the Shares for
$380,000 payable in equal annual installments of $100,000 each, such
installments commencing 30 days after the date notice of intent to exercise such
put is given. Holders of the Shares further agree that no Shares shall be sold
within two years after issuance as required by Rule 144 promulgated under the
Securities Act of 1933. Further, after the expiration of such two year period,
holders of Shares agree that sales of Shares in any quarter shall not exceed the
greater of (i) one percent of the outstanding common shares of the Company or
(ii) the average weekly volume of sale as reported on NASDAQ or other reporting
system for the prior four weeks.
6. Representations and Warranties of Buyer. Buyer warrants and represents
to and covenants with Seller that:
6.1 Due Incorporation. On the date hereof Buyer is, and on the Closing Date
Buyer will be, a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida, and has the full corporate
power and authority to carry on its business as and where conducted, and to own
and operate its properties where and as owned leased or operated by it. Buyer is
qualified to do business in each jurisdiction in which it own or leases and
operates its properties, or in which the nature of its business requires such
qualification.
6.2 Full Authority. Buyer has the requisite corporate power and authority
to enter into this Agreement and each agreement or contract required or
contemplated by Buyer to be executed or delivered hereunder. The execution and
delivery of this Agreement and each other agreement or contract required or
contemplated to be executed and delivered by Buyer in this Agreement, and the
performance by Buyer of all of its obligations hereunder or thereunder have been
duly and validly authorized by Buyer.
6.3 No Violations. Neither the execution or delivery of this Agreement or
the consummation of the transactions contemplated in this Agreement or in any
other agreement or contract the execution and delivery of which is contemplated
by this Agreement will result in a violation or breach of, or constitute a
default under, any rule, regulation, order, decree, agreement, contract, lease
or other restriction or limitation to which Buyer is a party or to which Buyer
or its assets or properties are subject or bound; nor will such execution,
delivery or consummation result in the creation of any lien or other charge or
encumbrance on the Acquired Assets or result in the acceleration of any loan or
security interest to which the Acquired Assets are subject.
6.4 Binding Obligations. This Agreement and any agreement or contract the
execution and delivery of which is contemplated in this Agreement, when executed
and delivered, will be the valid,
<PAGE>
binding obligations of the Buyer, enforceable according to its terms or their
terms, except as such enforcement may be limited by the laws of bankruptcy or
insolvency.
6.5 Authorizations. Except as specified on Schedule 6.5, no authorization,
approval, order, license, permit, franchise or consent of, declaration to, or
filing or registration with, any court, governmental authority or any other
person or entity which is not a party to this Agreement is required in
connection with the execution, delivery and performance of this Agreement by the
Buyer.
6.6 Purchase Price. The Common Shares representing the Purchase Price will,
on the Closing Date, be validly issued, fully paid and nonassessable.
6.7 Public Company. Buyer is a public company having a class of shares
registered under the 1933 Act and is subject to the reporting requirements of
the 1934 Act. Buyer's shares are included for trading on NASDAQ's small capital
trading system.
7. Closing.
7.1 The consummation of the transactions contemplated in this Agreement
shall take place at the offices of Buyer at 10:00 A.M. on January 22, 1996.
7.2 Covenants of the Seller
The Seller covenants and agrees as follows:
7.2.1 Between the date hereof and the Closing Date, the Seller shall give
to the Buyer and its authorized representatives full access, during regular
business hours, to any and all of its premises, properties, contracts, books and
records and will cause its officers and employees to furnish to the Buyer and
its authorized representatives any and all data and information pertaining to
the business and properties of the Seller as the Buyer or its authorized
representatives shall from time to time request. Unless and until the
acquisition contemplated herein has been consummated, the Buyer shall use
reasonable efforts to hold in confidence all information obtained pursuant to
this Agreement and, if such acquisition is not consummated, the Buyer shall use
reasonable efforts to return to the Seller all documents and other materials
received by it hereunder. Such obligation of confidentiality shall not extend to
any information which is shown to have been (i) previously known to the Buyer,
(ii) generally known to others engaged in the trade or business of the Seller,
(iii) part of public knowledge or literature, or (iv) lawfully received by the
Buyer from a third party (not including the Seller). The furnishings of any
information to the Buyer, or any investigation made by the Buyer or its
authorized representatives, shall not affect or other wise diminish or obviate
the representations and warranties made by the seller in this Agreement and the
Buyer's right to rely thereon. If the acquisition contemplated herein is
consummated, the Buyer covenants and agrees that it shall preserve and keep the
records of the Seller delivered to it hereunder for a period of one (1) year
from the Closing Date and shall make such records available to the Seller or its
authorized representatives as reasonably required by the Seller in connection
with any legal proceedings against, or governmental investigations of, the
Seller or in connection with any tax examination of the Seller, provided that
the Seller shall not be entitled to any such records in connection with any
dispute between the Seller and the Buyer arising out of, or relating to, this
Agreement.
7.2.2 From the date hereof until the Closing Date, except as otherwise
consented to or approved in writing by the Buyer or as required by this
Agreement, the Seller shall not:
(a) authorize, issue, sell or convert any securities or enter into any
agreement with respect thereto;
(b) consciously take or cause to be taken any action which results in any
damage, destruction or similar loss, whether or not covered by insurance,
materially affecting the business or properties of the Seller;
(c) other than in the ordinary course of business, sell, assign or transfer
any of its tangible assets or intangible assets;
<PAGE>
(d) other than in the ordinary course of business, mortgage, pledge, grant
or suffer to exist any lien or encumbrance or charge on any of its assets or
properties, tangible or intangible;
(e) other than in the ordinary course of business, waive any rights or
material value or cancel, discharge, satisfy or pay any debt, claim, lien,
encumbrance, liability or obligation, whether absolute, accrued, contingent or
otherwise and whether due or to become due;
(f) incur any obligation or liability (absolute or contingent, liquidated
or unliquidated, choate or inchoate) except current obligations and liabilities
incurred in the ordinary course of its business;
(g) other than in the ordinary course of business, lease or effect any
transfer of any of the Assets, properties or rights of the Seller;
(h) other than in the ordinary course of business and consistent with past
practices, enter into, make any amendment of, or terminate any lease, contract,
license or other agreement to which the Seller is a party;
(i) effect any change in the accounting practices or procedures of the
Seller;
(j) become obligated to make any payment to any stockholder of the Seller
in any capacity, or enter into any transaction of any nature with any
stockholder of the Seller in any capacity;
(k) increase the compensation payable to any of its directors, officers or
employees or become obligated to increase any such compensation;
(l) entered into any transaction other than in the ordinary course of
business, or change in any way of the business policies or practices of the
Seller.
7.2.3 The Seller shall, from the date hereof through the Closing Date,
consult with the Buyer on a regular basis with respect to all operating
decisions which could reasonably be expected to result in a change in the
business of the Seller as presently operated or which are not in the ordinary
course
<PAGE>
of the business of the Seller. In connection therewith, and subject to the
preceding sentence, the Seller shall operate its business as presently operated
and only in the normal and ordinary course, and, consistent with such operation,
shall maintain and preserve the Assets and its properties in good condition and
repair, reasonable wear and tear excepted, and will use its best efforts to
continue sales at not less than the present rate, to preserve intact its present
business organization, to keep available to the Buyer the present services of
its officers and employees and to preserve for the Buyer the goodwill of its
suppliers, customers, landlord and others having business relationships with the
Seller.
7.2.4 The Seller will maintain in full force and effect all insurance
policies listed in Schedule 7.2.4, will comply with all laws or regulations
affecting operation of its business and will give notice to the Buyer of any
unusual event of circumstances affecting its business or the Acquired Assets.
7.2.5 The representations and warranties of the Seller contained in this
Agreement or in the Schedules hereto shall be true and correct in all material
respects at the date hereof and shall also be true and correct in all material
respects at and as of the Closing Date. The Seller shall give the Buyer prompt
notice of any change in any of the information contained in the representations
and warranties of the Seller hereunder, the Schedules hereto or the documents
furnished by the Seller in connection herewith which occurs prior to the
Closing.
7.2.6 The Seller shall use reasonable efforts to take, or cause to be
taken, all actions and do or cause to be done all things necessary, proper or
advisable to consummate the transactions contemplated by this Agreement,
including, without limitation, to obtain all consents, approvals and
authorizations of third parties and to make all filings with, and give all
notices to, third parties which may be necessary or required in order to
effectuate the transactions contemplated hereby.
7.2.7 The Seller will not solicit the sale or other disposition of the
business of the Seller or any of the Assets or other properties to any person or
enter into any agreement, arrangement or understanding with respect to the sale
or other disposition thereof or any option call or commitment with
<PAGE>
respect thereto, except for the furnishing or services and related activities in
the ordinary course of business.
8. Conditions of Closing.
8.1 Buyers Obligations. The obligations of the Buyer under this Agreement
are subject to the satisfaction, on or prior to the Closing, of the following
conditions, any of which may be waived in whole or in part by the Buyer:
8.1.1 Due Performance. Seller shall have fully performed and complied with
all agreements and conditions required by this Agreement to be performed or
complied with by it on or prior to the Closing.
8.1.2 Certified Copies. The Buyer shall have received a certified copy of
resolutions duly adopted by the Board of Directors and the stockholders of the
Seller authorizing and approving the transfer of the Acquired Assets pursuant to
this Agreement and the performance by the Seller of its obligations hereunder.
8.1.3 Counsel's Opinion. The Buyer shall have received an opinion of Jay
Reynolds, Esq., Seller's counsel, dated as of the Closing Date, in the form
annexed hereto as Schedule 8.1.3.
8.1.4 No Diminution of Value. There shall have been no damage, destruction
or loss, whether or not covered by insurance, adversely affecting any of the
Acquired Assets, other than in the ordinary course of business.
8.1.5 No Adverse Changes. Seller shall not have done any act or acts, or
refrained from doing any act or acts, which impede(s) the consummation of the
transactions contemplated in this Agreement or which results in an adverse
material change in the financial condition, operation or prospects of the
Acquired Business.
<PAGE>
8.1.6 Buyer's Documents. Buyer shall have received:
(a) An executed bill of sale, instruments of assignment, and all other
instruments and documents necessary in the reasonable opinion of Buyer to
transfer the Acquired Assets to Buyer;
(b) Termination Statements in recordable form with respect to any security
interest any person may have in the Acquired Assets or the Acquired Business.
8.1.7 Agreements. The due execution and delivery of:
(a) Employment Agreement with Leonard Haimes, M.D.;
(b) Employment Agreement with Samantha Haimes; and
(c) Growth Hormone Agreement.
8.2 Seller's Obligations. The obligations of the Seller under this
Agreement are subject to the satisfaction, on or prior to the Closing, of the
following conditions, any of which may be waived in whole or in part by the
Seller:
8.2.1 Counsel's Opinion. The Seller shall have received the opinion of
Messrs. Gallet Dreyer & Berkey, LLP, Buyer's counsel, in the form annexed hereto
as Schedule 8.2.1.
8.2.2 Instruments of Assumption. The Seller shall have received such
instruments of Assumption of the Assumed Liabilities in the form reasonably
requested by Seller.
8.2.3 Purchase Price. The Seller shall have received a copy of a letter
from the Buyer authorizing the Transfer Agent of the Buyer to transfer 380,000
shares of Common Stock of Seller to Buyer and setting forth the address where
such shares shall be delivered.
9. Survival of Representations, Warranties, Etc.
<PAGE>
All of the representations, warranties, covenants and agreements made
by the parties to this Agreement shall survive the consummation of the
transactions contemplated hereunder for a period of three (3) years thereafter,
except as otherwise provided herein.
10. Indemnification.
10.1 Right to Indemnification. The Buyer and the Seller each indemnify and
hold the other harmless from and against all claims, damage, losses,
liabilities, costs and expenses (including, without limitation, settlement costs
and any legal, accounting or other expenses for investigating or defending any
actions or threatened actions) incurred by the other in connection with:
(a) Any material breach of any representation or warranty made in this
Agreement by the party against whom indemnification is sought; or
(b) Any material misrepresentation contained in any statement, certificate
or schedule to this Agreement furnished by the party against whom
indemnification is sought.
10.2 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder, the party seeking indemnification (the "Indemnified
Party") shall promptly notify each party from whom indemnification is sought
(the "Indemnifying Party") of the claim and, when known, the facts constituting
the basis for the claim. In the event of any such claim for indemnification
results from or is in connection with any claim or legal proceedings by a third
party, the notice to the Indemnifying Party shall specify, if known, the amount
or an estimate of the amount, of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld or
delayed, unless suit shall have been instituted against the Indemnified Party
and the Indemnifying Party shall not have taken control of such suit after
notification thereof, as provided in Section 10.3 of this Agreement.
<PAGE>
10.3 Defense of Claim. If a claim giving rise to indemnity hereunder
results from or arises out of any claim or legal proceeding by a person who is
not a party to this Agreement, the Indemnifying Party, at its sole cost and
expense, may, upon written notice to the Indemnified Party, assume the defense
of any such claim or legal proceeding, with counsel reasonably satisfactory to
the Indemnified Party. The Indemnified Party shall be entitled to participate in
(but not control) the defense of any such action, with its counsel and at its
own expense. If the Indemnifying Party does not assume the defense of any such
claim or litigation resulting therefrom within ten (10) days after notice of
such claim is given to the Indemnified Party, (a) the Indemnified Party may
defend against such claim or litigation in such manner as it may deem
appropriate, including, but not limited to, settling such claim or litigation,
after giving notice of the same to the Indemnifying Party, on such terms as the
Indemnified Party may deem appropriate, and (b) the Indemnifying Party shall be
entitled to participate in (but not control) the defense of such action, with
its counsel and at its own expense. If the Indemnifying Party thereafter seeks
to question the manner in which the Indemnified Party defended such third party
claim or litigation, or the amount or nature of any such settlement, the
Indemnifying Party shall have the burden to prove by a preponderance of the
evidence that the Indemnified Party did not defend or settle such third party
claim or litigation, in a reasonably prudent manner.
11. Brokers.
Buyer and Seller had no dealings with any broker or finder in connection
with this Agreement or the transactions contemplated hereby and no broker,
finder or other person is entitled to receive any broker's commission or
finder's fee or similar compensation in connection with any such transaction.
Each of the parties agrees to defend, indemnify and hold harmless, in the manner
herein provided, the other from, against, for and in respect of any and all
losses sustained by the other as a result <PAGE>
of any liability or obligation to any broker or finder on the basis of any
arrangement, agreement or acts made by or on behalf of such other party with any
person or persons whatsoever.
12. Best Efforts.
The Parties shall use their best efforts to satisfy each
obligation each of them has undertaken in this Agreement and to consummate all
of the transactions contemplated herein.
13. Miscellaneous.
13.1 Expenses. Each of the parties hereto shall bear and pay,
without any right of reimbursement from any other party, all costs, expenses and
fees incurred by it on its behalf incident to the preparation, execution and
delivery of this Agreement and the performance of such party's obligations
hereunder, whether or not the transactions contemplated by this Agreement are
consummated, including, without limitation, any broker's or finder's fees, costs
incident to the transfer of any securities and the fees and disbursements of
counsel, accountants and consultants (including investment banking advisors)
employed by such party.
13.2 Further Assurances. From time to time after the date of
this Agreement, each of the parties hereto, at the request of the other, and
without further consideration, shall execute and deliver such further documents
or instruments and shall take such other actions as the requesting party may
reasonably request in order to effect complete consummation of the transactions
contemplated by this Agreement.
13.3 Notices. Any notice permitted, required, or given
hereunder shall be in writing and shall be personally delivered; or delivered by
any prepaid overnight courier delivery service then in general use; or mailed,
registered or certified mail, return receipt requested, to the addresses
designated herein or at such other address as may be designated by notice given
hereunder:
<PAGE>
If to the Buyer: Natural Health Trends Corp.
2001 West Sample Road
Pompano Beach, Florida 33064
Attention: Neal Heller, President
with a copy to: Gallet Dreyer & Berkey, LLP
845 Third Avenue
New York, New York 10022
Attention: Martin C. Licht, Esq. and John J. Driscoll, Esq.
If to the Seller: Sam Lilly Corp.
7300 North Federal Highway
Suite 104
Boca Raton, Florida 33487
Attention: Samantha Haimes
with a copy to: Jay Reynolds, Esq.
Reynolds & Reynolds
P.O. Box 490
55 South Federal Highway
Suite 450
Boca Raton, Florida 33429-0490
Delivery shall be deemed made when actually delivered, or if mailed, three
days after delivery to a United States Post Office.
13.4 Entire Agreement. This Agreement, together with the Schedules and
Exhibits annexed hereto, sets forth the entire understanding of the parties
hereto with respect to its subject matter, merges and supersedes all prior and
contemporaneous understandings with respect to its subject matter and may not be
waived or modified, in whole or in part, except by a writing signed by each of
the parties hereto. No waiver of any provision of this Agreement in any instance
shall be deemed to be a waiver of the same or any other provision in any other
instance. Failure of any party to enforce any provision of this Agreement shall
not be construed as a waiver of its rights under such provision.
13.5 Successors and Assigns. This Agreement shall be binding upon,
enforceable against and inure to the benefit of, the parties hereto and their
respective heirs, administrators, executors, personal representatives,
successors and assigns, and nothing herein is intended to confer any right,
remedy or
<PAGE>
benefit upon any other person. This Agreement may not be assigned by any party
hereto except with the prior written consent of all the other party.
13.6 Governing Law. This Agreement shall in all respects be governed by and
construed in accordance with the laws of the State of Florida applicable to
agreements made and fully to be performed in such state, without giving effect
to conflicts of law principles.
13.7 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
13.8 Construction. Headings contained in this Agreement are for convenience
only and shall not be used in the interpretation of this Agreement. As used
herein, the singular includes the plural, and the masculine, feminine and neuter
gender each includes the others where the context so indicates.
13.9 Severability. If any provision of this Agreement is held to be invalid
or unenforceable by a court of competent jurisdiction, this Agreement shall be
interpreted and enforceable as if such provision were severed or limited, but
only to the extent necessary to render such provision and this Agreement
enforceable.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first set forth above.
Seller:
SAM LILLY CORP.
By: s\Samantha Haimes
President
Buyer:
NATURAL HEALTH TRENDS CORP.
By: s\Neal Heller
President
HEALTH WELLNESS CORP.
By: s\Neal Heller
Exhibit B
EMPLOYMENT AGREEMENT
AGREEMENT made the 18th day of January, 1996 (effective,
however, only on the Effective Date below set forth) between HEALTH WELLNESS
NATIONWIDE CORP. (the "Company"), a Delaware corporation having an office at
2001 West Sample Road, Suite 318, Pompano Beach, Florida 33064, and SAMANTHA
HAIMES (the "Employee"), residing at 7356 Mahogany Court, Boca Raton, Florida.
W I T N E S S E T H:
The Employee is president of Sam Lilly Corp., a Florida
Corporation ("Seller"). The Company and Seller are entering into an agreement of
even date (the "Agreement and Plan of Reorganization") pursuant to which the
Company will acquire the business and assets of Seller. The Company desires to
employ the Employee following such acquisition, and the Employee is willing to
be so employed, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, with the foregoing recitals deemed
incorporated hereinafter by reference and mae a part hereof, the parties agree
as follows:
1. Employment.
1.1 Term. The Company employs the Employee, and the Employee
accepts employment with the Company, in the position and with the duties
hereinafter set forth, for a term of three (3) years commencing on the Effective
Date (as defined in paragraph 1.2 below) unless sooner terminated as hereinbelow
provided.
1.2 Effective Date. The "Effective Date" as used in this
Agreement shall be deemed to be January 22, 1996.
<PAGE>
2. Duties.
2.1 General. The Employee shall be the Managing Director of a
division of the Company which operates complementary medical clinics. Employees
shall assist in establishing the first clinic at 7300 North Federal Highway,
Boca Raton, Florida ("First Clinic") and shall assist in the managements of
additional clinics; shall perform services of the same general type as
heretofore performed by her for Seller; shall manage the operations of a Health
Wellness Center at the office formerly operated by Seller, shall manage and
develop other Health Wellness Centers, and shall perform such other services
consistent with her position (including, without limitation, services for
parents, subsidiaries, divisions and affiliates of the Company) as may from time
to time be assigned to her by the Company's Board of Directors or executive
officers.
2.2 Performance. During the term of this Agreement and Plan of
Reorganization, the Employee shall devote her full time, best efforts and
attention to the business, operations and affairs of the Company and the
performance of her duties hereunder and, without the Company's consent, shall
not engage in any other business activities. Notwithstanding the foregoing, the
employee shall have the right to continue her involvement in Wellness
International Network Limited (independent MKK Distributor), Fitness For You,
Formula Technology and all endorsements, provided such business does not
conflict with her duties hereunder.
2.3 Employee's Representations. Employee represents and
warrants to and agrees with Company that:
(a) Neither the execution nor performance by the
Employee of this Agreement and Plan of Reorganization is prohibited by
or constitutes or will constitute, directly or indirectly, a breach or
violation of, or will be adversely affected by, any written or other
agreement to which Employee is or has been a party.
<PAGE>
(b) Neither Employee nor any business or entity in
which she has any interest or form which she receives any payments has,
directly or indirectly, any interest of any kind in or is entitled to
receive, and neither the Employee nor any such business or entity shall
accept, form any person any payments of any kind on account of any
services performed by the Employee therefore subsequent to the
Effective Date. In addition to any of its other rights and remedies,
the Company shall be entitled to receive (and shall also have the right
to withhold from any payments to Employee under this Agreement and Plan
of Reorganization) all amounts paid or payable to Employee or any such
other business or entity in breach or violation of this paragraph.
(c) Employee shall indemnify and hold the Company
free and harmless from and against and shall reimburse it for any and
all liabilities, damages, losses,judgments, costs and expenses
(including reasonable counsel fees and other reasonable out-of-pocket
expenses) arising out of or resulting from any claim or action by any
third party against the Company which constitutes, and the provisions
of this 2.3(c) are limited to, a breach or default by the Employee of
or under 2.3(a) and 2.3(b) above.
3. Compensation and Related Matters.
3.1 Base Salary. As Base Salary, Employee shall be paid Sixty
Five percent (65%) of the Executive Salary Pool. The Executive Salary Pool shall
be Forty Six and 76/100 percent (46.76%) of the Company's Gross Revenue for the
prior fiscal year. Gross Revenue shall be computed by the Company's auditors
within thirty days after the end of the prior fiscal year and shall not include
revenue received from Rejuvenation Unlimited of Florida, Inc. Notwithstanding
the foregoing, in the event the Executive Salary Pool exceeds $550,000, the base
salary shall not be increased, but Employee shall receive Additional
Compensation pursuant to the formula set forth in Paragraph 3.2 hereinafter.
<PAGE>
3.2 Additional Compensation. As Additional Compensation,
Employee shall be entitled to receive ten percent (10%) of the increase of Gross
Revenues of the First Clinic from year to year as long as Employee is employed.
The determination of Gross Revenue shall be made by the Company's auditors in
accordance with paragraph 3.1. In addition, throughout the term of her
employment, Employee shall receive five percent (5%) of the increase in
aggregate Gross Revenues form year to year of all Additional Clinics opened
during the term of her employment and for five years after that employment is
terminated unless it is terminated for cause.
3.3 Stock Options. Employee shall receive Ten Thousand
(10,000) Employee stock options for completion of each year hereunder. In
addition, Employee shall receive Twenty Thousand (20,000) Employee stock options
for each new Health Wellness Center opened during the term of this Agreement.
3.4 Expenses. With the prior approval of the Company, the
Employee shall be entitled to reimbursement for all travel and other business
expenses incurred in the performance of Employee's duties upon submission of
appropriate vouchers and other supporting data.
3.5 Benefits. Employee shall be entitled to (i) participate in
all general pension, profit-sharing, bonus, life, medical and other insurance,
disability and other employee benefit plans and programs at any time in effect
for executive employees of Company, provided, however, that nothing herein shall
obligate the Company to establish or maintain any employee benefit plan or
program, whether of the type referred to in this clause (i) or otherwise, and
(ii) holidays, vacations, and automobile reimbursement in accordance with the
Company's policy for executive employees.
4. Termination of Employment; Disability.
4.1 Termination.
(a) Should Employee's employment be terminated either
by the Company for any of the reasons or for causes set forth in 4.1(b)
below, or by Employee voluntarily, Employee's
<PAGE>
compensation under this Agreement and Plan of Reorganization shall end
on the effective date of such termination and the Company shall have no
obligation to pay Employee the payment provided for in subparagraph (B)
of 4.1 above. In the event of Employee's death, the salary payable
hereunder shall be paid to Employee's Estate throughout the term of
this Agreement.
(b) The "reasons or causes" for Company's termination
of Employee's employment referred to in 4.2(a) above shall mean and
include only the following, provided the Employee is given written
notice thereof:
(i) theft or embezzlement by Employee from,
or common law fraud committed by Employee against, the Company
(ii) commission by the Employee of any act
which, if successfully prosecuted by the appropriate
authorities, would constitute a felony under state or federal
law;
(iii) material breach by the Employee of
any of her obligations under paragraphs 5.1 through 5.3 below;
(iv) material breach by the Employee of any
other obligation under this Agreement and Plan of
Reorganization not cured within ten days after written notice
thereof from the Company to the Employee; or
(v) material breach of representation and
warranty under the Asset Purchase Agreement.
If Employee does not notify Company in writing within 30 days after
receipt of the aforesaid written notice of the reason or cause for
termination that the Employee disputes the Company's determination of
such reason or cause, the Company's determination shall be final and
binding on the Employee.
<PAGE>
4.2 Disability. Notwithstanding any event of disability,
Employee shall be entitled to the salary payable hereunder. Disability shall
mean determination that Employee is not able to perform his duties hereunder and
shall be determined by a panel of three physicians, one of which is appointed by
the Company, of appointed by the Employee and one jointly appointed by the two
other appointed physicians. Any payment to Employee under any disability
insurance plan maintained by the Company shall be applied against and shall
reduce the compensation payable by the Company to Employee under this Agreement.
4.3 Co-terminous. This Agreement shall be co-terminous with
the Employment Agreement entered this date between the Company and Leonard
Haimes. Any termination of that agreement shall have the effect of terminating
this Agreement.
5. Confidential Information; Non-Competition; Discoveries.
5.1 Confidential Information. The Employee shall not, at any
time during or following termination or expiration of the term of this Agreement
and Plan of Reorganization, directly or indirectly, disclose, publish or divulge
to any person (except in the regular course of the Company's business), or
appropriate, use or cause, permit or induce any person to appropriate or use,
any proprietary, secret or confidential information of the Company including,
without limitation, knowledge or information relating to its discoveries,
inventions, copyrights, trade secrets, business methods, the names or
requirements of its customers or the prices, credit or other terms extended to
its customers, all of which the Employee agrees are and will be of great value
to the Company and shall at all times be kept confidential. Upon termination or
expiration of this Agreement and Plan of Reorganization, the Employee shall
promptly deliver or return to the Company all materials of a proprietary, secret
or confidential nature relating to the Company together with any other property
of the Company which may have theretofore been delivered to or may then be in
possession of the Employee.
<PAGE>
5.2 Non-Competition. During the term of his employment and for
three-year period that this Agreement would have been in effect but for its
earlier termination, thereafter, the Employee shall not, without the prior
consent of the Company in each instance, directly or indirectly, in any manner
or capacity, whether for himself or any other person and whether as proprietor,
principal, owner, shareholder, partner, investor, director, officer, employee,
representative, distributor, consultant, independent contractor or otherwise,
engage or have any interest in any entity which is engaged in any business or
activity which competes, directly or indirectly, with any business or activity
then or theretofore conducted or engaged in by the Company including any
business within a radius of ten miles from a Clinic or a business which the
Company then plans to engage in or conduct. Notwithstanding the foregoing,
however, the Employee may at any time own in the aggregate as a passive (but not
active) investment not more than 5% of the stock or other equity interest of
any, publicly-traded entity which so competes with the Company.
5.3 Discoveries, Etc. The Employee shall promptly disclose to
the Company, or its nominee, any and all, and all knowledge of, designs,
inventions, discoveries and improvements conceived or made by the Employee
during the term of this Agreement and Plan of Reorganization and related to the
business or activities of the Company, and without further compensation, hereby
assigns and agrees to execute any and all instruments of assignment hereafter
necessary in order to assign all of her interests therein to the Company or its
nominee. Whenever requested to do so by the Company, the Employee shall execute
any and all applications, assignments and other instruments and documents which
the Company may deem necessary to apply for and obtain letters patent in the
Untied States or any foreign country or otherwise to protect the Company's
interests therein.
5.4 Reasonableness. The Employee agrees that each of the
provisions of this Section 5 is reasonable and necessary for the protection of
the Company; that each such provision is and is tended to be divisible; that if
any such provision (including any sentence, clause or part) shall be held
contrary to
<PAGE>
law or invalid or unenforceable in any respect in any jurisdiction, or as to any
one or more periods of time, areas or business activities, or any part thereof,
the remaining provisions shall not be affected but shall remain in full force
and effect as to the other and remaining parts; and that any invalid or
unenforceable provision shall be deemed, without further action on the part of
the parties hereto, modified, amended and limited to the extent necessary to
render the same valid and enforceable in such jurisdiction. The Employee further
recognizes and agrees that any violation of any of her agreements in this
Section 5 would cause such damage or injury to the Company as would be
irreparable and the exact amount of which would be impossible to ascertain and
that, for such reason, among others, the Company shall be entitled, as a matter
of course, to injunctive relief from any court of competent jurisdiction
restraining any further violation. Such right to injunctive relief shall be
cumulative and in addition to, and not in limitation of, all other rights and
remedies which the Company may possess.
5.5 Survival. The provisions of this Section 5 shall
survive the expiration or termination of this Agreement and Plan of
Reorganization for any reason.
6. Miscellaneous.
6.1 Notices. All notices under this Agreement and Plan of
Reorganization shall be in writing and shall be deemed to have been duly given
if personally delivered against receipt or it mailed by first class registered
or certified mail, return receipt requested, addressed to the Company,
attention: Chairman, President or Secretary, and to the Employee, at their
respective addresses set forth on the first page of this Agreement and Plan of
Reorganization, or to such other person or address as may be designated by like
notice hereunder. Any such notice shall be deemed to have been given on the day
delivered, if personally delivered, or on the second day after the date of
mailing if mailed.
6.2 Parties in Interest. This Agreement and Plan of
Reorganization shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
<PAGE>
representatives, successors and assigns, but no other person shall acquire or
have any rights under or by virtue of this Agreement and Plan of Reorganization,
and the obligations of the Employee under this Agreement and Plan of
Reorganization may not be assigned or delegated.
6.3 Governing Law; Severability. This Agreement and Plan of
Reorganization shall be governed by and construed and enforced in accordance
with the laws and decisions of the State of Florida applicable to contracts made
and to be performed therein without giving effect to the principles of conflict
of laws. In addition to the provisions of paragraph 5.4 above, the invalidity or
unenforceability of any other provision of this Agreement and Plan of
Reorganization, or the application thereof to any person or circumstance, in any
jurisdiction shall in no way impair, affect or prejudice the balance of this
Agreement and Plan of Reorganization, which shall remain in full force and
effect, or the application thereof to other persons and circumstances.
6.4 Entire Agreement; Modification; Waiver. This Agreement and
Plan of Reorganization contains the entire agreement and understanding between
the parties with respect to the subject matter hereof and supersedes all prior
negotiations and oral understandings, if any. Neither this Agreement and Plan of
Reorganization nor any of its provisions may be modified, amended, waived,
discharged or terminated, in whole or in part, except in writing signed by the
party to be charged. No wavier of any such provision or any breach of or default
under this Agreement and Plan of Reorganization shall be deemed or shall
constitute a waiver of any other provisions, breach or default.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement and Plan of Reorganization as of the date first above written.
HEALTH WELLNESS NATIONWIDE CORP.
By: s\Neal Heller
Neal Heller, President
EMPLOYEE
s\Samantha Haimes
Samantha Haimes
Exhibit A
EMPLOYMENT AGREEMENT
AGREEMENT made the 18th day of January, 1996 (effective,
however, only on the Effective Date below set forth) between HEALTH WELLNESS
NATIONWIDE CORP. (the "Company"), a Delaware corporation having an office at
2001 West Sample Road, Suite 318, Pompano Beach, Florida 33064, and LEONARD
HAIMES, M.D. (the "Employee"), residing at 7356 Mahogany Bend Court, Boca Raton,
Florida.
W I T N E S S E T H:
The Employee is a licensed medical doctor authorized to
practice medicine in Florida, engaged in the practice of alternative medicine
and employed by Sam Lilly Corp., a Florida Corporation ("Seller"). The Company
and Seller are entering into an agreement of even date (the "Agreement and Plan
of Reorganization") pursuant to which the Company will acquire the business and
assets of Seller. The Company desires to employ the Employee following such
acquisition, and the Employee is willing to be so employed, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, with the foregoing recitals deemed
incorporated hereinafter by reference and mae a part hereof, the parties agree
as follows:
1. Employment.
1.1 Term. The Company employs the Employee, and the Employee
accepts employment with the Company, in the position and with the duties
hereinafter set forth, for a term of three (3) years commencing on the Effective
Date (as defined in paragraph 1.02 below) unless sooner terminated as
hereinbelow provided.
1.2 Effective Date. The "Effective Date" shall be deemed
to be January 22, 1996.
<PAGE>
2. Duties.
2.1 General. The Employee shall be president of a
newly-created division of the Company ("Division"), having as a business the
operation of clinics specializing in complementary medicine. Employee shall
establish the first clinic at 7300 North Federal Highway, Boca Raton, Florida
("First Clinic") and shall perform administrative and executive services and
perform advisory medicine services for the Division consistent with his other
executive duties, shall manage and develop additional clinics of the Division
("Additional Clinics"), and shall perform such other services consistent with
his position (including, without limitation, services for parents, subsidiaries,
divisions and affiliates of the Company) as may from time to time be assigned to
him by the Company's Board of Directors or executive officers. Employee shall
have the title of President of the Division.
2.2 Performance. During the term of this Agreement, the
Employee shall devote his full time, best efforts and attention to the business,
operations and affairs of the Company and the performance of his duties
hereunder and, without the Company's consent, shall not engage in any other
business activities. Notwithstanding the foregoing, the Employee shall have the
right to continue his involvement in Wellness International Network Limited
(independent MKK Distributor), Fitness For You, FOrmula Technology and all
endorsements, provided that such activities do not interfere with Employee's
performance hereunder.
2.3 Employee's Representations. Employee represents and
warrants to and agrees with Company that:
(a) Employee is a physician duly licensed to practice
medicine in the State of Florida, is in good standing with the Florida
Medical Society and all licensing and regulatory bodies having
jurisdiction over his practice; and is in good standing with all
professional and medical societies of which he is a member. Employee
has never been disciplined, suspended or
<PAGE>
remanded as a physician or barred from medical practice, and has had no
legal actions brought against him for medical malpractice.
(b) Neither the execution nor performance by the
Employee of this Agreement is prohibited by or constitutes or will
constitute, directly or indirectly, a breach or violation of, or will
be adversely affected by, any written or other agreement to which
Employee is or has been a party.
(c) Except as permitted hereunder or pursuant to the
Agreement and Plan of Reorganization, neither Employee nor any business
or entity in which he has any interest or from which he receives any
payments has, directly or indirectly, any interest of any kind in or is
entitled to receive, and neither the Employee nor any such business or
entity shall accept, form any person any payments of any kind on
account of any services performed by the Employee therefore subsequent
to the Effective Date. In addition to any of its other rights and
remedies, the Company shall be entitled to receive (and shall also have
the right to withhold from any payments to Employee under this
Agreement) all amounts paid or payable to Employee or any such other
business or entity in breach or violation of this paragraph.
(d) Employee shall indemnify and hold the Company
free and harmless from and against and shall reimburse it for any and
all liabilities, damages, losses,judgments, costs and expenses
(including reasonable counsel fees and other reasonable out-of-pocket
expenses) arising out of or resulting from any claim or action by any
third party against the Company which constitutes, and the provisions
of this 2.3(c) are limited to, a breach or default by the Employee of
or under 2.3(a) and 2.3(b) above.
3. Compensation and Related Matters.
<PAGE>
3.1 Base Salary. Employee shall be paid Thirty Five percent
(35%) of the Executive Salary Pool. The Executive Salary Pool shall be Forty Six
and 76/100 percent (46.76%) of the Company's Gross Revenue for the prior fiscal
year. Gross Revenue shall be computed by the Company's auditors and shall not
include revenue received from Rejuvenation Unlimted of Florida, Inc. The
Executive Salary Pool cannot exceed $550,000 for the term of this Agreement.
3.2 Omitted.
3.3 Expenses. With the prior approval of the Company, Employee
shall be entitled to reimbursement for busienss expenses incurred in the
performance of Employee's duties upon submission of appropriate vouchers and
other supporting data.
3.4 Benefits. Employee shall be entitled to (i) participate in
all general pension, profit-sharing, bonus, life, medical and other insurance,
disability and other employee benefit plans and programs at any time in effect
for executive employees of Natural Health Trends, provided, however, that
nothing herein shall obligate the Company to establish or maintain any employee
benefit plan or program, whether of the type referred to in this clause (i) or
otherwise, and (ii) holidays, vacations, and automobile reimbursement in
accordance with the Company's policy for executive employees, except that
Company will pay for a life insurance policy on the life of Employee for
$1,000,000 provided Employee is insurable at commercially acceptable rates with
Samantha Haimes as beneficiary.
4. Termination of Employment; Disability.
4.1 Termination.
(a) Should Employee's employment be terminated either by the Company for
any of the reasons or for causes set forth in 4.1(b) below, or by Employee
voluntarily, Employee's compensation under this Agreement shall end on the
effective date of such termination and the Company shall have no obligation
to pay Employee the payment provided for in subparagraph (B)
<PAGE>
of 4.1 above. In the event of Employee's death, the salary payable
hereunder shall be paid to Employee's estate throughout the term of this
Agreement.
(b) The "reasons or causes" for Company's termination
of Employee's employment referred to in 4.2(a) above shall mean and
include only the following, provided the Employee is given written
notice thereof:
(i) theft or embezzlement by Employee from,
or common law fraud committed by Employee against, the Company
(ii) commission by the Employee of any act
which, if successfully prosecuted by the appropriate
authorities, would constitute a felony under state or federal
law;
(iii) material breach by the Employee of
any of his obligations under paragraphs 5.1 through 5.3 below;
(iv) material breach by the Employee of any
other obligation under this Agreement not cured within ten
days after written notice thereof from the Company to the
Employee;
(v) material breach of representation and
warranty under the
Asset Purchase Agreement; or
(vi) revocation or suspension of license to
practice medicine.
If Employee does not notify Company in writing within 30 days after
receipt of the aforesaid written notice of the reason or cause for
termination that the Employee disputes the Company's determination of
such reason or cause, the Company's determination shall be final and
binding on the Employee.
4.2 Disability. Should the Employee, by reason of
illness, mental or physical incapacity or other disability, be unable
to perform his regular duties under this Agreement for any
<PAGE>
continuous period of six months or for non-continuous periods aggregating one
year, in either such event, the Company may terminate the Employee's employment
at any time thereafter upon ten days' prior written notice to the Employee as
provided in 4.1(a) above unless prior to the expiration of such ten-day period
the Employee returns to full-time work and continues same for a period of at
least three months. Any payments to Employee under any disability insurance or
plan maintained by the Company shall be applied against and shall reduce the
compensation payable by the Company to Employee under this Agreement.
4.3 Co-terminous. This Agreement shall be co-terminous with
the Employment Agreement entered this date between the Company and Samantha
Haimes. Any termination of that agreement shall have the effect of terminating
this Agreement.
5. Confidential Information; Non-Competition; Discoveries.
5.1 Confidential Information. The Employee shall not, at any
time during or following termination or expiration of the term of this
Agreement, directly or indirectly, disclose, publish or divulge to any person
(except in the regular course of the Company's business), or appropriate, use or
cause, permit or induce any person to appropriate use, any proprietary, secret
or confidential information of the Company including, without limitation,
knowledge or information relating to its discoveries, inventions, copyrights,
trade secrets, business methods, the names or requirements of its customers or
the prices, credit or other terms extended to its customers, all of which the
Employee agrees are and will be of great value to the Company and shall at all
times be kept confidential. Upon termination or expiration of this Agreement,
the Employee shall promptly deliver or return to the Company all materials of a
proprietary, secret or confidential nature relating to the Company together with
any other property of the Company which may have theretofore been delivered to
or may then be in possession of the Employee.
5.2 Non-Competition. During the term of his employment and for three-year
period that this Agreement would have been in effect but for its earlier
termination, thereafter, the Employee shall
<PAGE>
not, without the prior consent of the Company in each instance, directly or
indirectly, in any manner or capacity, whether for himself or any other person
and whether as proprietor, principal, owner, shareholder, partner, investor,
director, officer, employee, representative, distributor, consultant,
independent contractor or otherwise, engage or have any interest in any entity
which is engaged in any business or activity which competes, directly or
indirectly, with any business or activity then or theretofore conducted or
engaged in by the Company including any business within a radius of 10 miles
from a Clinic or a business which the Company then plans to engage in or
conduct. Notwithstanding the foregoing, however, the Employee has the right to
continue the business conducted by Metabolic Health System, Inc. and Employee
may at any time own in the aggregate as a passive (but not active) investment
not more than 5% of the stock or other equity interest of any, publicly-traded
entity which so competes with the Company.
5.3 Discoveries, Etc. The Employee shall promptly disclose to
the Company, or its nominee, any and all, and all knowledge of, designs,
inventions, discoveries and improvements conceived or made by the Employee
during the term of this Agreement and related to the business or activities of
the Company, and without further compensation, hereby assigns and agrees to
execute any and all instruments of assignment hereafter necessary in order to
assign all of his interests therein to the Company or its nominee. Whenever
requested to do so by the Company, the Employee shall execute any and all
applications, assignments and other instruments and documents which the Company
may deem necessary to apply for and obtain letters patent in the Untied States
or any foreign country or otherwise to protect the Company's interests therein.
5.4 Reasonableness. The Employee agrees that each of the
provisions of this Section 5 is reasonable and necessary for the protection of
the Company; that each such provision is and is tended to be divisible; that if
any such provision (including any sentence, clause or part) shall be held
contrary to law or invalid or unenforceable in any respect in any jurisdiction,
or as to any one or more periods of time, areas or business activities, or any
part thereof, the remaining provisions shall not be affected but shall
<PAGE>
remain in full force and effect as to the other and remaining parts; and that
any invalid or unenforceable provision shall be deemed, without further action
on the part of the parties hereto, modified, amended and limited to the extent
necessary to render the same valid and enforceable in such jurisdiction. The
Employee further recognizes and agrees that any violation of any of his
agreements in this Section 5 would cause such damage or injury to the Company as
would be irreparable and the exact amount of which would be impossible to
ascertain and that, for such reason, among others, the Company shall be
entitled, as a matter of course, to injunctive relief from any court of
competent jurisdiction restraining any further violation. Such right to
injunctive relief shall be cumulative and in addition to, and not in limitation
of, all other rights and remedies which the Company may possess.
5.5 Survival. The provisions of this Section 5 shall
survive the expiration or termination of this Agreement for any reason.
6. Miscellaneous.
6.1 Notices. All notices under this Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered
against receipt or it mailed by first class registered or certified mail, return
receipt requested, addressed to the Company, attention: Chairman, President or
Secretary, and to the Employee, at their respective addresses set forth on the
first page of this Agreement, or to such other person or address as may be
designated by like notice hereunder. Any such notice shall be deemed to have
been given on the day delivered, if personally delivered, or on the second day
after the date of mailing if mailed.
6.2 Parties in Interest. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective heirs, legal representatives, successors and assigns, but no other
person shall acquire or have any rights under or by virtue of this Agreement,
and the obligations of the Employee under this Agreement may not be assigned or
delegated.
<PAGE>
6.3 Governing Law; Severability. This Agreement shall be
governed by and construed and enforced in accordance with the laws and decisions
of the State of Florida applicable to contracts made and to be performed therein
without giving effect to the principles of conflict of laws. In addition to the
provisions of paragraph 5.4 above, the invalidity or unenforceability of any
other provision of this Agreement, or the application thereof to any person or
circumstance, in any jurisdiction shall in no way impair, affect or prejudice
the balance of this Agreement, which shall remain in full force and effect, or
the application thereof to other persons and circumstances.
6.4 Entire Agreement; Modification; Waiver. This Agreement
contains the entire agreement and understanding between the parties with respect
to the subject matter hereof and supersedes all prior negotiations and oral
understandings, if any. Neither this Agreement nor any of its provisions may be
modified, amended, waived, discharged or terminated, in whole or in part, except
in writing signed by the party to be charged. No wavier of any such provision or
any breach of or default under this Agreement shall be deemed or shall
constitute a waiver of any other provisions, breach or default.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
HEALTH WELLNESS NATIONWIDE CORP.
By: s\Neal Heller
EMPLOYEE
s\Leonard Haimes, M.D.
Leonard Haimes, M.D.
EMPLOYMENT AGREEMENT
AGREEMENT made the 26th day of June, 1996 (effective, however,
only on the Effective Date below set forth) between HEALTH WELLNESS NATIONWIDE
CORP. (the "Company"), a Delaware corporation having an office at 2001 West
Sample Road, Suite 318, Pompano Beach, Florida 33064, and KAYE LENZI (the
"Employee"), residing at 2557 S.W. Cranbrook Drive, Boynton Beach, Florida
33436, and Natural Health Trends Corp., a Florida Corporation having an office
at 2001 West Sample Road, Suite 318, Pompano Beach, Florida 33064 ("NHTC").
W I T N E S S E T H:
The Employee is president and sole Shareholder of Medical
Science Consultants, Inc., Diagnostic Sciences, Inc., Managenet, Inc., KBM
Consultants, Inc., all Florida corporations (collectively, "Sellers"). The
Company and Seller are entering into an agreement of even date (the "Agreement
and Plan of Reorganization") pursuant to which the Company will acquire the
business and assets of Sellers. The Company desires to employ the Employee
following such acquisition, and the Employee is willing to be so employed, upon
the terms and conditions hereinafter set forth. The Company is a wholly-owned
subsidiary of NHTC and NHTC wishes to guarantee the obligations of the Company
hereunder.
NOW, THEREFORE, with the foregoing recitals deemed
incorporated hereinafter by reference and mae a part hereof, the parties agree
as follows:
<PAGE>
1. Employment.
1.1 Term. The Company employs the Employee, and the Employee
accepts employment with the Company, in the position and with the duties
hereinafter set forth, for a term of three (3) years commencing on the Effective
Date (as defined in paragraph 1.02 below) unless sooner terminated as
hereinbelow provided.
1.2 Effective Date. This Agreement shall be effective only if
and when the Closing under the Agreement and Plan of Reorganization (as the term
"Closing is therein defined) is consummated, and, in such event, the "Effective
Date" shall be deemed to be June 26, 1996.
2. Duties.
2.1 General. The Employee shall be Regional Director of the
Company and in this connection shall manage a clinic specializing in
complementary medicine located at 3400 Park Central Boulevard, Suite 3450, North
Pompano Beach, Florida ("Clinic"). Employee shall also perform administrative,
executive services and advisory medicine services for the Company including
managing and developing additional clinics. Employee shall perform such other
services consistent with her position (including, without limitation, services
for parents, subsidiaries, divisions and affiliates of the Company) as may from
time to time be assigned to her by the Company's Board of Directors or executive
officers.
2.2 Performance. During the term of this Agreement, the
Employee shall devote her full time, best efforts and attention to the business,
operations and affairs of the Company and the performance of her duties
hereunder and, without the Company's consent, shall not engage in any other
business activities except as set forth herein.
<PAGE>
2.3 Personal Liability. During the term of the Agreement, the Employee
shall not have any personal liability for payroll taxes for the Company or
any of its operating divisions the Company shall indemnify and hold her
harmless for same.
2.4 Employee's Representations. Employee represents and warrants to
and agrees with Company that:
(a) Employee is the sole shareholder of four
corporations, referred to as the Seller in the Agreement and Plan of
Reorganization. The Seller through the Employee operates the Clinic.
Neither Employee nor any of her staff has been disciplined, suspended
or remanded as a health care practitioner, nor barred from medical
practice, nor have had any legal actions brought against any of them
for damages resulting from services provided at the Clinic except for
Fariss D. Kimball, Jr., M.D.
(b) Neither the execution nor performance by the
Employee of this Agreement is prohibited by or constitutes or will
constitute, directly or indirectly, a breach or violation of, or will
be adversely affected by, any written or other agreement to which
Employee is or has been a party.
(c) Except as permitted hereunder or pursuant to the
Agreement and Plan of Reorganization, neither Employee nor any business
or entity in which she has any interest or from which she receives any
payments has, directly or indirectly, any interest of any kind in or is
entitled to receive, and neither the Employee nor any such business or
entity shall accept, from any person, any payments of any kind on
account of any services performed by the Employee therefore subsequent
to the Effective Date. Any revenues derived by Employee from
publications, articles, books and videos not relating
<PAGE>
to the Company are excluded. In addition to any of its other rights and
remedies, except as provided in 2.4(c), the Company shall be entitled
to receive (and shall also have the right to withhold from any payments
to Employee under this Agreement) all amounts paid or payable to
Employee or any such other business or entity in breach or violation of
this paragraph.
(d) Employee shall indemnify and hold the Company
free and harmless from and against and shall reimburse it for any and
all liabilities, damages, losses,judgments, costs and expenses
(including reasonable counsel fees and other reasonable out-of-pocket
expenses) arising out of or resulting from any claim or action by any
third party against the Company which constitutes, and the provisions
of this 2.3(c) are limited to, a breach or default by the Employee of
or under 2.4.
3. Compensation and Related Matters.
3.1 Base Salary.
(a) As compensation for her services hereunder,
Employee shall be paid a salary equal to her present yearly salary of
$100,000, provided that the Clinic's yearly revenues are not less than
$710,000.00 per annum. In the event the Clinic's revenues are less than
$355,000.00 in any six-month period (either January 1 to June 30 or
July 1 to December 31), Employee's salary shall be adjusted for the
following six-month period as follows:
<PAGE>
Employee's current salary multiplied by a fraction,
the numerator of which shall be gross revenues for
the applicable six-month period for the Clinic and
the denominator of which is $355,000.
This calculation shall be determined by the Company's accountant and
base salary will represent a percentage of overall gross revenues. Such
calculation shall be made every six months and Employee's salary will
be adjusted for the following six-month period accordingly. If gross
revenues of the Clinic are in excess of $710,000 per year, Employee
shall receive five percent (5%) of such excess. Such amount shall be
determined by the Company's regularly employed accountant and paid no
later than April 1 of the succeeding year.
(b) Except as provided herein, the Company will have
no obligation to retain any other individual after the Closing and
nothing contained herein shall be deemed to create third-party
beneficiary rights of any nature whatsoever on behalf of the Seller's
employees other than those employees the Company chooses in its
discretion to retain. However, with respect to employees of the Clinic,
for as long as Employee serves as its Director (or serves in a similar
capacity), Employee shall have authority as to the staffing and
personnel needs of the Clinic, subject to the consent of the Company,
which consent shall not be unreasonably withheld.
(c) The company agrees that Employee shall be
entitled to a bonus or other incentive compensation, as determined by
the Board of Directors of the Company, based upon Employee's
contributions to the growth and development of the business of the
<PAGE>
Company, including without limitation, the development of new
alternative medical clinics.
3.2 Expenses. The Company shall pay or reimburse the Employee
for all pre-approved travel, hotel, entertainment and other business expenses
incurred in the performance of Employee's duties upon submission of appropriate
vouchers and other supporting data.
3.3 Benefits. Employee shall be entitled to (i) participate in
all general pension, profit-sharing, bonus, life, medical and other insurance,
disability and other employee benefit plans and programs at any time in effect
for executive employees of Company, including the Natural Health Trend
Corporation's Executive Level Option Plan under which she will receive a minimum
of 2,000 options per year, provided, however, that nothing herein shall obligate
the Company to establish or maintain any employee benefit plan or program,
whether of the type referred to in this clause (i) or otherwise, and (ii)
holidays, vacations, and automobile reimbursement in accordance with the
Company's policy for executive employees, and the Company will pay for a life
insurance policy on the life of Employee in the amount of $250,000 provided
Employee is insurable at commercially acceptable rates (the beneficiary of which
shall be designated by Employee).
4. Termination of Employment; Disability.
4.1 Termination.
(a) Employee's employment may only be terminated
either by the Company for any of the reasons or for causes set forth in
4.1(b) below, or by Employee voluntarily, Employee's compensation under
this Agreement shall end on the effective date of such
<PAGE>
termination and the Company shall have no obligation to pay Employee
the payment provided for in subparagraph (a) of 3.1 above. In the event
of Employee's death, the salary payable hereunder shall be paid to
Employee's estate throughout the term of this Agreement.
(b) The "reasons or causes" for Company's termination
of Employee's employment referred to in 4.1(a) above shall mean and
include only the following, provided the Employee is given written
notice thereof:
(i) theft or embezzlement by Employee from, or common
law fraud committed by Employee against, the Company;
(ii) commission by the Employee of any act
which, if successfully prosecuted by the appropriate
authorities, would constitute a felony under state or federal
law;
(iii) material breach by the Employee of any of her
obligations under paragraphs 5.1 through 5.3 below;
(iv) material breach by the Employee of any
other obligation under this Agreement not cured within ten
days after written notice thereof from the Company to the
Employee;
(v) material breach of representation and
warranty under the Agreement and Plan of Reorganization.
If Employee does not notify Company in writing within 30 days after
receipt of the aforesaid written notice of the reason or cause for
termination that the Employee disputes
<PAGE>
the Company's determination of such reason or cause, the Company's
determination shall be final and binding on the Employee.
4.2 Disability. Should the Employee, by reason of illness,
mental or physical incapacity or other disability, be unable to perform her
regular duties under this Agreement for any continuous period of three months or
for non-continuous periods aggregating one year, in either such event, the
Company may terminate the Employee's employment at any time thereafter upon ten
days' prior written notice to the Employee as provided in 4.1(b) above unless
prior to the expiration of such ten-day period the Employee returns to full-time
work and continues same for a period of at least three months. Any payments to
Employee under any disability insurance or plan maintained by the Company shall
be applied against and shall reduce the compensation payable by the Company to
Employee under this Agreement.
5. Confidential Information; Non-Competition; Discoveries.
5.1 Confidential Information. The Employee shall not, at any
time during or following termination or expiration of the term of this
Agreement, directly or indirectly, disclose, publish or divulge to any person
(except in the regular course of the Company's business), or appropriate, use or
cause, permit or induce any person to appropriate use, any proprietary, secret
or confidential information of the Company including, without limitation,
knowledge or information relating to its discoveries, inventions, copyrights,
trade secrets, business methods, the names or requirements of its customers or
the prices, credit or other terms extended to its customers, all of which the
Employee agrees are and will be of great value to the Company and shall at all
times be kept confidential. Upon termination or expiration of this Agreement,
the
<PAGE>
Employee shall promptly deliver or return to the Company all materials of a
proprietary, secret or confidential nature relating to the Company together with
any other property of the Company which may have theretofore been delivered to
or may then be in possession of the Employee.
5.2 Non-Competition. During the term of her employment and for
three-year period after termination of her employment, the Employee shall not,
without the prior consent of the Company in each instance, directly or
indirectly, in any manner or capacity, whether for herself or any other person
and whether as proprietor, principal, owner, shareholder, partner, investor,
director, officer, employee, representative, distributor, consultant,
independent contractor or otherwise, engage or have any interest in any entity
which is engaged in any business or activity which competes, directly or
indirectly, with any business or activity then or theretofore conducted or
engaged in by the Company including any existing business within a radius of 10
miles from a Clinic or a business which the Company then operates at the time of
Employee's termination.
5.3 Discoveries, Etc. The Employee shall promptly disclose to
the Company, or its nominee, any and all, and all knowledge of, designs,
inventions, discoveries and improvements conceived or made by the Employee
during the term of this Agreement and related to the business or activities of
the Company, and without further compensation, hereby assigns and agrees to
execute any and all instruments of assignment hereafter necessary in order to
assign all of his interests therein to the Company or its nominee. Whenever
requested to do so by the Company, the Employee shall execute any and all
applications, assignments and other instruments and documents which the Company
may deem necessary to apply for and obtain letters patent in the Untied States
or any foreign country or otherwise to protect the Company's interests therein.
<PAGE>
5.4 Reasonableness. The Employee agrees that each of the
provisions of this Section 5 is reasonable and necessary for the protection of
the Company; that each such provision is and is tended to be divisible; that if
any such provision (including any sentence, clause or part) shall be held
contrary to law or invalid or unenforceable in any respect in any jurisdiction,
or as to any one or more periods of time, areas or business activities, or any
part thereof, the remaining provisions shall not be affected but shall remain in
full force and effect as to the other and remaining parts; and that any invalid
or unenforceable provision shall be deemed, without further action on the part
of the parties hereto, modified, amended and limited to the extent necessary to
render the same valid and enforceable in such jurisdiction. The Employee further
recognizes and agrees that any violation of any of her agreements in this
Section 5 would cause such damage or injury to the Company as would be
irreparable and the exact amount of which would be impossible to ascertain and
that, for such reason, among others, the Company shall be entitled, as a matter
of course, to injunctive relief from any court of competent jurisdiction
restraining any further violation. Such right to injunctive relief shall be
cumulative and in addition to, and not in limitation of, all other rights and
remedies which the Company may possess.
5.5 Survival. The provisions of this Section 5 shall survive
the expiration or termination of this Agreement for any reason, but not to
exceed the time set forth in paragraph 5.2 herein.
<PAGE>
6. Miscellaneous.
6.1 Notices. All notices under this Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered
against receipt or it mailed by first class registered or certified mail, return
receipt requested, addressed to the Company, attention: Chairman, President or
Secretary, and to the Employee, at their respective addresses set forth on the
first page of this Agreement, or to such other person or address as may be
designated by like notice hereunder. Any such notice shall be deemed to have
been given on the day delivered, if personally delivered, or on day receipted
for, if mailed.
6.2 Parties in Interest. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective heirs, legal representatives, successors and assigns, but no other
person shall acquire or have any rights under or by virtue of this Agreement,
and the obligations of the Employee under this Agreement may not be assigned or
delegated.
6.3 Governing Law; Severability. This Agreement shall be
governed by and construed and enforced in accordance with the laws and decisions
of the State of Florida applicable to contracts made and to be performed therein
without giving effect to the principles of conflict of laws. In addition to the
provisions of paragraph 5.4 above, the invalidity or unenforceability of any
other provision of this Agreement, or the application thereof to any person or
circumstance, in any jurisdiction shall in no way impair, affect or prejudice
the balance of this Agreement, which shall remain in full force and effect, or
the application thereof to other persons and circumstances.
<PAGE>
6.4 Entire Agreement; Modification; Waiver. This Agreement
contains the entire agreement and understanding between the parties with respect
to the subject matter hereof and supersedes all prior negotiations and oral
understandings, if any. Neither this Agreement nor any of its provisions may be
modified, amended, waived, discharged or terminated, in whole or in part, except
in writing signed by the party to be charged. No wavier of any such provision or
any breach of or default under this Agreement shall be deemed or shall
constitute a waiver of any other provisions, breach or default.
7. Guaranty of NHTC. All of the obligations of the
Company hereunder are guaranteed by NHTC which owns all of the issued and
outstanding shares of the Company.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
HEALTH WELLNESS NATIONWIDE CORP.
By: s\Neal Heller
EMPLOYEE
s\Kaye Lenzi
Kaye Lenzi
NATURAL HEALTH TRENDS CORP.
By: s\Neal Heller
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